SECURlTlES AND EXCHANGE COMMlSSlON
WASHINGTON, D. C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
(Fee Required)
For the fiscal year ended
December 31, 1994 Commission File Number 1-8644
IPALCO ENTERPRISES, INC.
(Exact name of Registrant as specified in its charter)
Indiana 35-1575582
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
25 Monument Circle
Indianapolis, Indiana 46204
(Address of principal executive offices) (Zip Code)
Registrants's telephone number, including area code: 317-261-8261
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
IPALCO Enterprises, Inc. New York Stock Exchange
Common Stock (without par value) Chicago Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to the filing requirements for at least the
past 90 days. Yes X No
-------- ---------
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. ( )
As of January 31, 1995, the aggregate market value of the voting stock
held by non-affiliates of the registrant was: $1,103,855,002. As of
January 31, 1995, there were 37,755,966 shares of the registrant's
common stock (without par value) outstanding.
-----------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the IPALCO Enterprises, Inc. definitive Proxy Statement
for the Annual Meeting of Shareholders to be held on April 19, 1995
are incorporated by reference into Part III of this Report.
PART I
Item 1. BUSINESS
ORGANIZATION
IPALCO Enterprises, Inc. (IPALCO) is a holding company
and was incorporated under the laws of the state of Indiana on
September 14, 1983. IPALCO has two (2) subsidiaries: Indianapolis
Power & Light Company (IPL), an electric utility, and Mid-America
Capital Resources, Inc. (Mid-America), a holding company for
unregulated businesses.
DESCRIPTION OF BUSINESS OF SUBSIDIARIES
INDIANAPOLIS POWER & LIGHT COMPANY
GENERAL
IPL is engaged primarily in generating, transmitting,
distributing and selling electric energy in the city of
Indianapolis and neighboring cities, towns, communities, and
adjacent rural areas, all within the state of Indiana, the most
distant point being about forty miles from Indianapolis. It also
produces, distributes and sells steam within a limited area in
such city. There have been no significant changes in the services
rendered, or in the markets or methods of distribution, since the
beginning of the fiscal year. IPL intends to do business of the
same general character as that in which it is now engaged. No
private or municipally-owned electric public utility companies are
competing with IPL in the territory it serves.
IPL operates under indeterminate permits subject to the
jurisdiction of the Indiana Utility Regulatory Commission (IURC).
Such permits are subject to revocation by the IURC for cause. The
Public Service Commission Act of Indiana (the PSC Act), which
provides for the issuance of such permits, also provides that if
the PSC Act is repealed, indeterminate permits will cease and a
utility will again come into possession of such franchises as were
surrendered at the time of the issue of the permit, but in no
event shall such reinstated franchise be terminated within less
than five years from the date of repeal of the PSC Act.
The electric utility business is affected by the various
seasonal weather patterns throughout the year and, therefore, the
operating revenues and associated operating expenses are not
generated evenly by months during the year.
IPL's electric system is directly interconnected with the
electric systems of Indiana Michigan Power Company, PSI Energy,
Inc., Southern Indiana Gas and Electric Company, Wabash Valley
Power Association and Hoosier Energy Rural Electric Cooperative,
Inc.
Also, IPL and 28 other electric utilities, known as the East
Central Area Reliability Group (the Group), are cooperating under
an agreement which provides for coordinated planning of generating
and transmission facilities and the operation of such facilities
to provide maximum reliability of bulk power supply in the nine-
state region served by the Group. Smaller electric utility
systems, Independent Power Producers, and Power Marketers
participate as associate members.
In 1994, approximately 99.6% of the total kilowatthours sold
by IPL were generated from coal, .3% from middle distillate fuel
oil and .1% from secondary steam purchased from the Indianapolis
Resource Recovery Project. In addition to use in oil-fired
generating units, fuel oil is used for start up and flame
stabilization in coal-fired generating units as well as for coal
thawing and coal handling. Gas fuel is used in IPL's newer
combustion turbines.
IPL's long-term coal contracts provide for the supply of the
major portion of its burn requirements through the year 1999,
assuming environmental regulations can be met. The long-term coal
agreements are with four suppliers and the coal is produced
entirely in the state of Indiana. These four suppliers are
located in Daviess, Greene, Knox and Warrick counties, and are
not affiliates of IPL. See Exhibits listed under Part IV
Item 14(a)3(20.1). It is presently believed that all coal used
by IPL will be mined by others. IPL normally carries a 70-day
supply of coal and fuel oil to offset unforeseen occurrences such
as labor disputes, equipment breakdowns and power sales to other
utilities. When strikes are anticipated in the coal industry,
IPL increases its stockpile to an approximate 92-day supply.
The combined cost of coal and fuel oil used in the generation
of electric energy for 1994 averaged 1.162 cents per kilowatthour
or $24.95 per equivalent ton of coal, compared with the 1993
average fuel cost for electric generation of 1.151 cents per
kilowatthour or $24.49 per equivalent ton of coal.
IPL has a long-term contract to purchase steam for use in its
steam distribution system with Ogden Martin Systems of
Indianapolis, Inc. (Ogden Martin). Ogden Martin owns and operates
the Indianapolis Resource Recovery Project which is a waste-to-
energy facility located in Marion County, Indiana. During 1994,
IPL's steam system purchased 51.1% of its total therm requirement
from Ogden Martin. Additionally, 30.2% of its 1994 one-hour peak
load was met with steam purchased from Ogden Martin. IPL also
purchased 4.9 million secondary therms which represent Ogden
Martin send-out in excess of the IPL steam system requirements.
Such secondary steam is used to produce electricity at the IPL
Perry K and Perry W facilities.
CONSTRUCTION
The cost of IPL's construction program during 1994, 1993 and
1992 was $185.6 million, $149.3 million and $115.3 million,
respectively, including Allowances for Funds Used During
Construction (AFUDC) of $7.3 million, $3.6 million and $3.2
million, respectively.
IPL's construction program is reviewed periodically and is
updated to reflect among other things the changes in economic
conditions, revised load forecasts and cost escalations under
construction contracts. The most recent projections indicate that
IPL will need about 600 megawatts (MW) of additional capacity
resources by the year 2000. IPL plans to meet this need through
the combination of the use of Demand Side Management, power
purchases and peaking turbines.
During 1992, IPL entered into a five-year firm power purchase
agreement with Indiana Michigan Power Company (IMP), which will
supply additional capacity for the near-term requirements. IPL
receives 200 MW of capacity. IPL can also elect to extend the
agreement through November 1999. See Item 7, "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" under "Capital Requirements" for additional
information regarding the IMP agreement.
IPL's construction program for the five-year period 1995-
1999, is estimated to cost $608.9 million including AFUDC. The
estimated cost of the program by year (in millions) is $213.6 in
1995; $93.6 in 1996; $87.8 in 1997; $99.1 in 1998; and $114.8 in
1999. It includes $73.6 million for two 80 MW combustion turbines
with in-service dates of 1999 and 2000, respectively. The
forecast also includes $253.1 million for additions, improvements
and extensions to transmission and distribution lines,
substations, power factor and voltage regulating equipment,
distribution transformers and street lighting distribution. With
respect to the expenditures for pollution control facilities to
comply with the Clean Air Act and with respect to the regulatory
authority of the IURC as it relates to the integrated resource
plan, see "REGULATORY MATTERS" and Item 7, "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."
FINANCING
Long-term debt, internally generated funds and
temporary short-term borrowings are forecasted to provide the
funds required for the five-year construction program.
Uncertainties which could affect this forecast include the impact
of inflation on operating expenses, the actual degree of growth in
KWH sales and the level of interchange sales with other utilities.
Additionally, IPL has authority from the IURC to redeem and
replace certain of its existing securities.
EMPLOYEE RELATIONS
As of December 31, 1994, IPL had 2,238 employees of whom
1,129 were represented by the International Brotherhood of
Electrical Workers, AFL-CIO (IBEW) and 398 were represented by the
Electric Utility Workers Union (EUWU), an unaffiliated labor
organization. In December 1993, the membership of the IBEW
ratified a new labor agreement which remains in effect until
December 16, 1996. The agreement provided for general pay
adjustments of 4% in 1993 and 3.5% in 1994, and provides for a
3.5% adjustment in 1995, and changes in pension and health care
coverage. In March 1992, the membership of the EUWU ratified a
new labor agreement which was in effect until February 27, 1995.
IPL and the EUWU are currently negotiating a new agreement, and
the current agreement has been extended through March 13, 1995.
The agreement provided for general pay adjustments of 4.5%
in both 1992 and 1993, and 3% in 1994, as well as changes in
health care coverage.
REGULATORY MATTERS
IPL is subject to regulation by the IURC as to its services
and facilities, valuation of property, the construction, purchase
or lease of electric generating facilities, classification of
accounts, rates of depreciation, rates and charges, issuance of
securities (other than evidences of indebtedness payable less than
twelve months after the date of issue), the acquisition and sale
of public utility properties or securities and certain other
matters. For a description of the current rate proceeding, see
Item 3, "LEGAL PROCEEDINGS."
In addition, IPL is subject to the jurisdiction of the
Federal Energy Regulatory Commission, in respect of short-term
borrowings not regulated by the IURC, the transmission of electric
energy in interstate commerce, the classification of its accounts
and the acquisition and sale of utility property in certain
circumstances as provided by the Federal Power Act.
IPL is also subject to federal, state, and local
environmental laws and regulations, particularly as to generating
station discharges affecting air and water quality. The impact of
such regulations on the capital and operating costs of IPL has
been and will continue to be substantial. IPL's 1995-1999
construction program includes $176 million in environmental costs,
including AFUDC, of which approximately $142 million pertains to
the Clean Air Act. Accordingly, IPL has developed a plan to
reduce sulfur dioxide and nitrogen oxide emissions from several
generating units. This plan has been approved by the IURC.
Estimated annual costs for all air, solid waste, and water
environmental compliance measures are $131 million and $27 million
in 1995 and 1996, respectively. See also Item 3, "LEGAL
PROCEEDINGS."
MID-AMERICA CAPITAL RESOURCES, INC. (Mid-America)
GENERAL
Mid-America, the holding company for the unregulated
activities of IPALCO, has as subsidiaries Indianapolis Campus
Energy, Inc. (ICE), Store Heat And Produce Energy, Inc. (SHAPE)
and Mid-America Energy Resources, Inc. (Energy Resources). Mid-
America also holds an investment in the Evergreen Media
Corporation (Evergreen). Energy Resources has as subsidiaries
Cleveland Thermal Energy Corporation (Cleveland Thermal) and
Cleveland District Cooling Corporation (Cleveland Cooling).
Energy Resources was formed on November 17, 1989, to
construct and operate a multi-phased district cooling system
located near downtown Indianapolis. Operations commenced in mid-
1991. On November 1, 1994, Energy Resources announced that its
Indianapolis, Indiana district cooling system with a cooling
capacity of 20,000 tons had become fully subscribed. In 1991,
Energy Resources acquired Cleveland Thermal, which owns and
operates the district steam heating system in Cleveland, Ohio.
During 1992, Energy Resources formed Cleveland Cooling for the
purpose of constructing and operating a district cooling system in
downtown Cleveland. Operations commenced April 15, 1993. Both
Cleveland Thermal and Cleveland Cooling jointly conduct business
under the name Cleveland Energy Resources.
At December 31, 1994, Mid-America held 70% of the
common stock of SHAPE. SHAPE conducts research and development of
energy storage technology.
ICE was formed to construct, own, and operate energy systems
in campus settings such as industrial complexes or college
campuses. During 1993, ICE entered into a contractual agreement
with Eli Lilly and Company (Lilly) to provide cooling capacity to
the Lilly Technical Center, in Indianapolis, Indiana, commencing
in 1996. Construction of the chilled water facility, located near
Morris Street and Kentucky Avenue in Indianapolis, began in late-
1994 with operations scheduled to begin in early 1996.
Mid-America holds a $7.4 million investment in Evergreen,
representing approximately 4% equity ownership at December 31, 1994.
Evergreen owns and operates eleven radio stations in major markets
across the United States.
During the next five years, 1995-1999, IPALCO may continue to
become involved in unregulated businesses through the formation of
one or more additional Mid-America subsidiaries. The sources of
capital to finance these subsidiaries will be determined at the
time they are established. Opportunities for future
diversification investments into other businesses are continually
being reviewed.
CONSTRUCTION AND FINANCING
During 1994, 1993 and 1992, the construction expenditures of
Mid-America and its subsidiaries totaled $8.6 million, $8.7
million and $29.9 million respectively. These costs were financed
with internal funds and a $9.5 million debt issue in 1991, and
a $2.4 million construction loan in 1994.
Construction requirements during the next five years are
estimated to be $15.3 million, $.5 million, $21.3 million, $22.0
million and $33.2 million for ICE, SHAPE, Energy Resources,
Cleveland Thermal and Cleveland Cooling, respectively. Such
expenditures are highly contingent upon the development of markets
for the products and services offered by the Mid-America family of
companies. The cash requirements of ICE, SHAPE, Energy Resources,
Cleveland Thermal and Cleveland Cooling are expected to be funded
by Mid-America from existing liquid assets, future cash flows from
operations and $53.3 million of project specific debt financing.
EMPLOYEES
As of December 31, 1994, Mid-America had 10 employees, Energy
Resources had 20 employees, Cleveland Thermal had 83 employees,
Cleveland Cooling had 8 employees, and SHAPE had 4 employees.
There were no labor organizations.
<TABLE>
IPALCO ENTERPRISES, INC.
STATISTICAL INFORMATION - ELECTRIC
The following table of statistical information presents additional data on IPL's operation.
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Operating Revenues (In Thousands):
Residential $ 230,805 $ 225,138 $ 212,757 $ 224,039 $ 207,734
Small industrial and commercial 129,346 127,551 126,588 135,456 134,514
Large industrial and commercial 266,703 255,945 243,446 237,200 225,586
Public lighting 6,949 7,186 7,133 7,106 7,122
Miscellaneous 7,186 7,373 6,018 6,960 6,598
-------------- -------------- -------------- -------------- --------------
Revenues - ultimate consumers 640,989 623,193 595,942 610,761 581,554
Sales for resale - REMC 1,098 897 861 900 759
Sales for resale - other 7,680 5,237 2,400 4,197 10,418
-------------- -------------- -------------- -------------- --------------
Total electric revenues $ 649,767 $ 629,327 $ 599,203 $ 615,858 $ 592,731
============== ============== ============== ============== ==============
Kilowatthour Sales (In Millions):
Residential 4,077 4,014 3,675 3,960 3,585
Small industrial and commercial 2,207 2,202 2,171 2,331 2,322
Large industrial and commercial 6,306 6,169 5,843 5,612 5,399
Public lighting 64 62 64 64 65
-------------- -------------- -------------- -------------- --------------
Sales - ultimate consumers 12,654 12,447 11,753 11,967 11,371
Sales for resale - REMC 26 24 23 23 20
Sales for resale - other 456 321 169 256 555
-------------- -------------- -------------- -------------- --------------
Total kilowatthours sold 13,136 12,792 11,945 12,246 11,946
============== ============== ============== ============== ==============
Customers at End of Year:
Residential 360,347 356,015 352,139 347,718 344,094
Small industrial and commercial 38,849 38,359 38,171 38,011 37,863
Large industrial and commercial 3,525 3,342 3,163 2,952 2,714
Public lighting 266 252 239 229 212
-------------- -------------- -------------- -------------- --------------
Total ultimate consumers 402,987 397,968 393,712 388,910 384,883
Sales for resale - REMC 1 1 1 1 1
-------------- -------------- -------------- -------------- --------------
Total electric customers 402,988 397,969 393,713 388,911 384,884
============== ============== ============== ============== ==============
Miscellaneous Statistics:
Kilowatthour output (In Millions):
Generated (net after station use) 13,580 13,254 12,525 12,851 12,254
Purchased 206 325 126 160 300
-------------- -------------- -------------- -------------- --------------
Total generated and purchased 13,786 13,579 12,651 13,011 12,554
Company use, line loss, etc. 650 787 706 765 608
-------------- -------------- -------------- -------------- --------------
Energy sold 13,136 12,792 11,945 12,246 11,946
============== ============== ============== ============== ==============
Load factor (percent) 57.64 57.44 56.72 56.37 54.83
Average BTU per net kilowatthour 10,445 10,503 10,385 10,455 10,474
Cost of fuel per million BTU $ 1.112 $ 1.096 $ 1.103 $ 1.113 $ 1.109
Cost of fuel per ton (includes oil
stated in equivalent tons of coal) $ 24.946 $ 24.488 $ 24.547 $ 24.804 $ 24.711
Summer plant capability (megawatts)* 2,907 2,829 2,829 2,829 2,829
Maximum demand on IPL system (megawatts)* 2,640 2,635 2,505 2,583 2,498
Average use per residential
customer (kilowatthours) 11,393 11,345 10,515 11,460 10,514
Average revenue per residential customer $ 645.02 $ 636.28 $ 608.68 $ 648.36 $ 609.29
Average revenue per small industrial and
commercial customer $ 3,327.04 $ 3,310.59 $ 3,305.94 $ 3,552.03 $ 3,566.13
Average revenue per large industrial and
commercial customer $ 77,960.62 $ 78,055.83 $ 79,324.43 $ 83,816.09 $ 87,065.08
Average residential revenue per
kilowatthour (cents) 5.662 5.609 5.789 5.658 5.795
* All figures are net of station use.
</TABLE>
Item 2. PROPERTIES
IPL
IPL's executive offices are located at 25 Monument Circle,
Indianapolis, Indiana. This facility contains approximately
201,300 square feet of space and contains certain administrative
operations of IPALCO's subsidiaries.
IPL also owns two service centers located at 1230 West Morris
Street and 3600 North Arlington Avenue, both in Indianapolis,
Indiana. IPL's customer service center is located at 2102 North
Illinois Street in Indianapolis.
IPL owns and operates five primarily coal-fired generating
plants, three of which are used for total electric generation and
two of which are used for a combination of electric and steam
generation. In relation to electric generation, there exists a
total gross nameplate rating of 2,960 MW, a winter capability of
2,962 MW and a summer capability of 2,907 MW. All figures are net
of station use. In relation to steam generation, there exists a
gross capacity of 2,290 Mlbs. (thousands of pounds) per hour.
Total Electric Stations:
H. T. Pritchard plant (Pritchard), 25 miles southwest of
Indianapolis (six units in service - one in 1949, 1950,
1951, two in 1953 and one in 1956) with 367 MW nameplate
rating and net winter and summer capabilities of 344 MW and
341 MW, respectively.
E. W. Stout plant (Stout) located in southwest part of Marion
County (five units in service - one each in 1941, 1947,
1958, 1961 and 1973) with 846 MW nameplate rating and net
winter and summer capabilities of 898 MW and 845 MW,
respectively.
Petersburg plant (Petersburg), located in Pike County,
Indiana (four units in service - one each in 1967, 1969,
1977 and 1986) with 1,716 MW nameplate rating and net
winter and summer capabilities of 1,690 MW and 1,690 MW,
respectively.
Combination Electric and Steam Stations:
C.C. Perry Section K plant (Perry K), in the city of
Indianapolis with 20 MW nameplate rating (net winter
capability 20 MW, summer 19 MW) for electric and a gross
capacity of 1,990 Mlbs. per hour for steam.
C.C. Perry Section W plant (Perry W), in the city of
Indianapolis with 11 MW nameplate rating (net winter
capability 10 MW, summer 12 MW) for electric and a gross
capacity of 300 Mlbs. per hour for steam.
Net electrical generation during 1994, at the Petersburg,
Stout and Pritchard stations accounted for about 74.9%, 21.1% and
4.0%, respectively, of IPL's total net generation. All steam
generation by IPL for the steam system was produced by the Perry K
and Perry W stations.
Included in the above totals are three gas turbine units at
the Stout station added in 1973 and one gas turbine added in 1994
with a combined nameplate rating of 139 MW, one diesel unit each
at Pritchard and Stout stations, and three diesel units at
Petersburg station, all added in 1967. Each diesel unit has a
nameplate rating of 3 MW.
IPL's transmission system includes 454 circuit miles of
345,000 volt lines, 360 circuit miles of 138,000 volt lines and
274 miles of 34,500 volt lines. Distribution facilities include
4,689 pole miles and 19,807 wire miles of overhead lines.
Underground distribution and service facilities include 436 miles
of conduit and 4,900 wire miles of conductor. Underground street
lighting facilities include 107 miles of conduit and 670 wire
miles of conductor. Also included in the system are 76 bulk
power substations and 84 distribution substations.
Steam distribution properties include 24 miles of mains with
276 services. Other properties include coal and other minerals,
underlying 798 acres in Sullivan County and coal underlying about
6,215 acres in Pike and Gibson Counties, Indiana. Additional
land, approximately 4,722 acres in Morgan County, Indiana and
approximately 884 acres in Switzerland County, Indiana has been
purchased for future plant sites.
All of the facilities owned by IPL are well-maintained, in
good condition and adequate to meet the present needs of IPL.
The Mortgage and Deed of Trust of IPL, together with the
Supplemental Indentures thereto (the "Mortgage"), secure first
mortgage bonds issued by IPL. Pursuant to the terms of the
Mortgage, substantially all property owned by IPALCO and its
subsidiaries is subject to a direct first mortgage lien.
OTHER SUBSIDIARIES
Energy Resources owns and operates a district cooling
facility located near downtown Indianapolis, which is designed to
distribute chilled water to subscribers located downtown for their
air conditioning needs. The plant is equipped with four 5,000 ton
chillers powered by steam purchased from IPL.
Cleveland Thermal owns and operates two steam plants in
Cleveland, Ohio, with a total of nine boilers having a gross
capacity of 1,050 Mlbs. per hour. The distribution system
includes 20 miles of mains with 230 services.
Cleveland Cooling owns and operates a district cooling
facility located near downtown Cleveland, which is designed to
distribute chilled water to subscribers located downtown for their
air conditioning needs. The plant is equipped with two 5,000 ton
chillers.
Item 3. LEGAL PROCEEDINGS
On August 18, 1993, the IURC entered an order in Cause No.
39437, approving IPL's Environmental Compliance Plan to comply
with the Clean Air Act Amendments of 1990. The estimated cost of
IPL's Environmental Compliance Plan is approximately $250 million
before including allowance for funds used during construction. A
primary part of IPL's Plan, scrubbing IPL's Petersburg 1 and 2
coal-fired units by 1996 to enable IPL to continue to burn high
sulfur coal, was opposed by the Office of Utility Consumer
Counselor (OUCC), the Citizens Action Coalition (CAC) and the
Industrial Intervenors Group (IIG). OUCC, CAC and IIG appealed
the Commission's order to the Indiana Court of Appeals. On June
17, 1994, the OUCC, CAC and IIG filed their respective appellants'
briefs. IPL filed its appellee's brief on September 6, 1994 and
the state of Indiana filed an amicus brief on October 3, 1994 in
support of the constitutionality of the Indiana law that governs
the Environmental Compliance proceedings before the IURC. On
October 24, 1994 appellants filed their reply briefs, and a
decision is anticipated during 1995.
In the retail electric rate case now pending before the IURC,
a prehearing conference was held on June 8, 1994, and an order was
issued July 20, 1994, establishing a test year ending June 30,
1994. Pursuant to the order, IPL prefiled its case-in-chief on
October 11, 1994, and hearings on IPL's case-in-chief commenced on
February 7, 1995. The order further established the following
procedural schedule: April 21, 1995, the OUCC and intervenors
prefile their respective cases-in-chief; May 26, 1995, IPL
prefiles its Supplemental testimony and rebuttal case; June 16,
1995, OUCC and intervenors file cross answering and surrebuttal
testimony; July 10, 1995, hearings commence on OUCC and
intervenors cases-in-chief and all Supplemental and rebuttal
testimony. A hearing for the public pursuant to Indiana Statute
will be held between April 21, 1995 and July 10, 1995 on a date
later to be determined by the IURC. See "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
1994 Rate Proceeding" for additional information regarding the
rate proceeding.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
EXECUTIVE OFFICERS OF THE REGISTRANT AT FEBRUARY 28, 1995.
Name, age (at December 31, 1994), and positions and offices held for
the past five years:
From To
John R. Hodowal (49)
Chairman of the Board and
President of IPALCO May, 1989
Vice President and Treasurer
of IPALCO September, 1983 May, 1989
Chairman of the Board of IPL February, 1990
Chief Executive Officer of IPL May, 1989
Executive Vice President
of IPL April, 1987 May, 1989
Ramon L. Humke (62)
Vice Chairman of IPALCO May, 1991
President and Chief Operating
Officer of IPL February, 1990
President and Chief Executive
Officer of Ameritech Services
and Senior Vice President of
Ameritech Bell Group September, 1989 February, 1990
President and Chief Executive
Officer of Indiana Bell
Telephone Company October, 1983 September, 1989
John R. Brehm (41)
Vice President and Treasurer
of IPALCO May, 1989
Assistant Secretary and Assistant
Treasurer of IPALCO December, 1983 May, 1989
Senior Vice President -
Finance and Information
Services of IPL May, 1991
Senior Vice President - Financial
Services of IPL May, 1989 May, 1991
Treasurer of IPL August, 1987 May, 1989
Maurice O. Edmonds (63)
Vice President - Corporate
Affairs of IPALCO December, 1992
Vice President - Human
Resources of IPL May, 1989 December, 1992
Vice President - General
Services of IPL July, 1988 May, 1989
N. Stuart Grauel (50)
Vice President - Public Affairs
of IPALCO May, 1991
Vice President - Public Affairs
of IPL May, 1989 May, 1991
Public Affairs Manager of IPL October, 1981 May, 1989
From To
Joseph A. Gustin (47)
President of Mid-America December, 1994
Vice President of SHAPE May, 1993
President of ICE April, 1993
President of Energy Resources May, 1991
Vice President of Mid-America May, 1991 December, 1994
Vice President of Energy
Resources January, 1990 May, 1991
Vice President - Steam Operations
of IPL May, 1989 May, 1991
Manager - Power Production of
IPL June, 1981 May, 1989
Robert W. Rawlings (53)
Senior Vice President -
Electric Production of IPL May, 1991
Vice President - Electric
Production of IPL May, 1989 May, 1991
Vice President - Engineering
and Construction of IPL April, 1986 May, 1989
Bryan G. Tabler (51)
Vice President -
Secretary and General Counsel of IPALCO January, 1995
Senior Vice President -
Secretary and General Counsel of IPL January, 1995
Partner, Barnes & Thornburg January, 1979 October, 1994
Gerald D. Waltz (55)
Senior Vice President -
Business Development of IPL May, 1991
Senior Vice President -
Engineering and Operations of IPL April, 1986 May, 1991
Max Califar (41)
Vice President - Human
Resources of IPL December, 1992
Assistant Treasurer of IPALCO May, 1989 December, 1992
Treasurer of IPL May, 1989 December, 1992
Assistant Controller of IPL July, 1987 May, 1989
Steven L. Meyer (36)
Assistant Treasurer of IPALCO May, 1993
Treasurer of IPL December, 1992
Stephen J. Plunkett (46)
Controller of IPALCO
and IPL May, 1991
Assistant Controller of
IPL May, 1989 May, 1991
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
At December 31, 1994, IPALCO had 25,682 holders of common
stock (including approximately 2,578 shareholders who hold shares
only through IPALCO's Automatic Dividend Reinvestment and Stock
Purchase Plan). IPALCO's common stock is principally traded on
the New York Stock Exchange and the Chicago Stock Exchange. The
high and low sale prices for IPALCO's common stock during 1994
and 1993 as reported on the Composite Tape in The Wall Street
Journal, were as follows:
1994 1993
High Low High Low
Sale Price Sale Price Sale Price Sale Price
---------------------- ---------------------
First Quarter $35 3/8 $31 5/8 $40 $34 3/8
Second Quarter 32 3/8 28 1/4 39 1/4 35 1/2
Third Quarter 31 3/8 28 1/2 38 3/4 35 3/4
Fourth Quarter 31 3/8 28 1/2 38 33 1/8
The high and low sale prices for IPALCO's common stock as
reported on the Composite Tape in The Wall Street Journal for the
period January 1, 1995, through February 28, 1995, were:
High - $33 7/8, Low - $29 7/8.
Quarterly dividends paid on the common stock during 1994 and
1993 were as follows:
1994 1993
---- ----
First Quarter $.51 $.49
Second Quarter .53 .51
Third Quarter .53 .51
Fourth Quarter .53 .51
The IPALCO's Board of Directors at its meeting on February 28,
1995, declared a regular quarterly dividend on common stock of $.54
per share, payable April 15, 1995, to shareholders of record on
March 24, 1995.
Dividend Restrictions
The following restrictions pertain to IPL but, to the extent
that the dividends of IPALCO depend upon IPL earnings, may have
an effect on IPALCO.
So long as any of the several series of bonds of IPL issued
under the Mortgage and Deed of Trust, dated as of May 1, 1940, as
supplemented and modified, executed by IPL to American National
Bank and Trust Company of Chicago, as Trustee, remain
outstanding, IPL is restricted in the declaration and payment of
dividends, or other distribution on shares of its capital stock
of any class, or in the purchase or redemption of such shares, to
the aggregate of its net income, as defined in Section 47 of such
Mortgage, after December 31, 1939. The amount which these
Mortgage provisions would have permitted IPL to declare and pay
as dividends at December 31, 1994, exceeded retained earnings at
that date. Such restrictions do not apply to the declaration or
payment of dividends upon any shares of capital stock of any
class to an amount in the aggregate not in excess of $1,107,155,
or to the application to purchase or redemption of any shares of
capital stock of any class of amounts not to exceed in the
aggregate the net proceeds received by IPL from the sale of any
shares of its capital stock of any class subsequent to December
31, 1939. IPL believes these restrictions will not restrict
anticipated dividends.
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA
------------------------------------
<TABLE>
<CAPTION>
(In Thousands Except Per Share Amounts 1994 1993 1992 1991 1990
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total utility operating revenues $ 686,076 $ 664,303 $ 633,203 $ 647,873 $ 621,578
Utility operating income 143,310 142,368 134,240 149,876 143,906
Allowance for funds used during
construction 9,381 5,527 5,081 2,611 2,044
Net income 92,994 75,422 88,342 101,998 96,939
Utility plant - net 1,711,772 1,608,871 1,532,964 1,488,940 1,463,622
Total assets 2,091,078 1,966,023 1,894,427 1,804,012 1,779,072
Utility construction expenditures 178,295 145,765 112,037 94,633 89,536
Nonutility construction expenditures 9,402 8,788 29,842 14,031 12,358
Common shareholders' equity 801,945 787,211 787,739 769,787 738,381
Nonredeemable cumulative
preferred stock 51,898 51,898 51,898 51,898 51,898
Long-term debt (less current
maturities and sinking
fund requirements) 665,971 541,760 550,141 547,218 536,580
Earnings per share of common stock
(based on weighted average number
of shares outstanding) 2.46 2.00 2.35 2.72 2.58
Dividends declared per share of
common stock 2.12 2.04 1.96 1.88 1.80
See consolidated financial statements.
</TABLE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
IPALCO Enterprises, Inc. (IPALCO) is a holding company
incorporated under the laws of the state of Indiana.
Indianapolis Power & Light Company (IPL) and Mid-America Capital
Resources, Inc. (Mid-America) are subsidiaries of IPALCO. Mid-
America was formed as a holding company for the unregulated
activities of IPALCO.
LIQUIDITY AND CAPITAL RESOURCES
IPL
On a national basis, competition for wholesale and retail
sales within the electric utility industry has been increasing.
In Indiana, competition has been primarily focused on the
wholesale power markets. Existing Indiana law provides for
public utilities to have an exclusive permit at the retail
level. The impact of continuing competitive pressures on IPL's
wholesale and retail electric and steam markets cannot be
determined at this time.
Rate Matters
1994 Rate Proceeding
IPL has asked the Indiana Utility Regulatory Commission
(IURC) to approve a new schedule of electric rates. The overall
rate increase amounts to about 13.9% and is estimated to
generate additional annual revenues of $87.7 million. Under
IPL's proposal, the percent of increase will vary for different
customer classes. Hearings on IPL's request began on February
7, 1995. IPL anticipates an IURC order in this proceeding
before 1996. There is no assurance that IPL's request will be
granted, or if granted, how much revenue will be produced. IPL
last received an order from the IURC authorizing an increase in
electric basic rates and charges in August 1986.
Environmental Compliance Plan
IPL is subject to the air quality provisions specified in
the federal Clean Air Act Amendments of 1990 and related
regulations (the Act). During 1993, IPL obtained an order from
the IURC approving its Environmental Compliance Plan, together
with the costs and expenses associated therewith, which provides
for the installation of sulfur dioxide and nitrogen oxide
emissions abatement equipment and the installation of continuous
emission monitoring systems to meet the requirements of both
Phase I and Phase II of the Act - See "Capital Requirements."
Certain intervenors in the hearing before the IURC have appealed
that order. Briefs on this appeal have been filed by all
parties, and a decision is anticipated during 1995. As required
by the Act, IPL filed its proposed compliance plan with the
Environmental Protection Agency (EPA) in February 1993 and
subsequently received all required EPA permits pursuant to its
plan during 1994.
Effective January 1, 1995, IPL received annual emission
"allowances" for certain of its generating units. Each
allowance permits the emission of one ton of sulfur dioxide.
IPL presently expects that annual sulfur dioxide emissions will
not exceed annual allowances provided to IPL under the Act.
Allowances not required in the operation of IPL facilities may
be reserved for future periods or sold. The value of such
unused allowances that may be available to IPL for use in future
periods or for sale is subject to a developing market and is
unknown at this time. The IURC order provides for the deferral
of net gains and losses resulting from any sale of emission
allowances. The order further provides for the amortization of
such deferrals, as an expense reduction or as an expense, to be
included in the ordinary, necessary and reasonable expenses for
ratemaking purposes, on a basis to be determined in a future
general retail electric rate proceeding.
Demand Side Management Program
On September 8, 1993, IPL obtained an order from the IURC
approving a Stipulation of Settlement Agreement between IPL, the
Office of Utility Consumer Counselor, Citizens Action Coalition
of Indiana, Inc., an industrial group, the Trustees of Indiana
University and the Indiana Alliance for Fair Competition
relating to IPL's Demand Side Management (DSM) Program. The
order provides for the deferral, as regulatory assets, and
subsequent recognition as ordinary, necessary and reasonable
expenses for ratemaking purposes of certain approved DSM costs.
The order also provides for the recording of a carrying charge
on deferred costs until recognized in the future for ratemaking
purposes. IPL has requested costs deferred through January 31,
1995, be recognized in its current electric rate proceeding.
Postretirement Benefits
On December 30, 1992, the IURC issued an order authorizing
Indiana utilities to account for postretirement benefits on the
basis required by the Statement of Financial Accounting
Standards No. 106, "Accounting for Postretirement Benefits other
than Pensions," (SFAS 106). Generally, SFAS 106 requires the
use of an accrual basis accounting method for determining annual
costs of postretirement benefits. Prior to 1993, IPL used a pay-
as-you-go method to account for such costs. IPL was required to
adopt SFAS 106 effective January 1, 1993. Additionally, the
order authorized the deferral as a regulatory asset of SFAS 106
costs in excess of such costs determined on a pay-as-you-go
basis. The order further provides for the recognition as
ordinary, necessary and reasonable expenses for ratemaking
purposes of such costs in a subsequent general rate proceeding
on an individual company basis in an amount to be determined in
each such proceeding. IPL is deferring as a regulatory asset
the nonconstruction related SFAS 106 costs associated with its
electric business. IPL is expensing its nonconstruction related
SFAS 106 costs associated with its steam business. IPL has
requested recognition as ordinary, necessary and reasonable
expenses for ratemaking purposes of its electric SFAS 106 cost,
including amortization of deferred amounts, in its current
general electric rate proceeding.
Voluntary Employee Beneficiary Association (VEBA) Trust Agreement
On August 30, 1994, the Board of Directors of IPALCO adopted
a VEBA Trust for the funding of postretirement health and life
insurance benefits for retirees and their eligible dependents
and beneficiaries of IPALCO, IPL and Mid-America. Annual
funding is discretionary and is based on the projected cost over
time of benefits to be provided to covered persons consistent
with accepted actuarial methods. To the extent these
postretirement benefits are funded, the benefits will not be
shown as a liability on IPALCO's consolidated financial
statements. The VEBA Trust Agreement provides for full funding
of the accumulated postretirement benefit obligation in the
event of certain change of control transactions.
Regulatory Asset Deferrals
Balance sheet deferrals of regulatory assets for DSM,
postretirement benefits, income taxes, Petersburg Unit 4 costs
and other such costs amounted to $86.2 million at December 31,
1994. Deferrals for such items are expected to increase during
1995 due to SFAS 106 and DSM costs and related carrying charges
until an order in IPL's current retail electric rate proceeding
becomes effective.
Future Rate Relief
IPL may petition the IURC to increase its electric rates and
charges during 1995. A final IURC order on such a request may
not occur until 1996 or 1997.
Steam Rate Order
The IURC authorized IPL to increase its steam system rates
and charges over a six-year period beginning January 13, 1993.
Accordingly, IPL will implement new steam tariffs in 1995 and
later, designed to produce estimated additional annual steam
operating revenues as follows:
<TABLE>
<CAPTION>
Additional Cumulative
Annual Annual
Year Revenues Revenues
---- ---------- ----------
<S> <C> <C>
1995 $1,552,000 $5,535,000
1996 1,625,000 7,160,000
1997 2,384,000 9,544,000
1998 370,000 9,914,000
</TABLE>
Capital Requirements
The capital requirements of IPL are primarily driven by the
need for facilities to ensure customer service reliability and
environmental compliance and by the impact of maturing long-term
debt.
Forecasted Demand & Energy
From 1994 to 1999, annual peak demand is forecasted to
experience a compound 1.3% increase, while retail kilowatthour
(KWH) sales are anticipated to increase at a 1.8% compound
growth rate. Both compound growth rates are computed assuming
normal weather conditions and include the effects of DSM. IPL
expects a reduction of about 133 megawatts (MW) of annual peak
demand by the year 1999 as a result of DSM programs.
Integrated Resource Plan
Sales growth projections indicate a need for about 600 MW of
additional capacity resources by the year 2000. These resource
requirements can be met in a variety of ways including, but not
limited to, a combination of the use of DSM, power purchases and
peaking turbines. IPL continues to review its integrated
resource plan to consider the appropriateness of all resource
options to meet capacity requirements over the decade of the
1990s and beyond.
IPL has a well-defined, near-term integrated resource plan
and is considering all reasonable options to meet its long-term
capacity requirements. The following discussion makes certain
assumptions regarding IPL's plans to meet these requirements.
In order to maintain adequate capacity reserve margins in
the near-term, IPL entered into a five-year firm power purchase
agreement with Indiana Michigan Power Company (IMP), which
expires March 31, 1997. Under this agreement, IPL is receiving
200 MW of capacity. The agreement provides for monthly capacity
payments by IPL of $1.2 million through March 31, 1997. IPL can
terminate the agreement should recognition of these demand
charges as ordinary, necessary and reasonable expenses for
ratemaking purposes be disallowed. IPL and IMP will also
exchange 50 MW of seasonal power over the 1995-1999 period.
IPL placed in-service two 80 MW combustion turbines, the
first on April 20, 1994, and the second on January 13, 1995.
Presently, IPL plans to add two additional 80 MW combustion
turbines with in-service dates in 1999 and 2000. IPL also has
options to extend the 200 MW firm power purchase agreement with
IMP through December 31, 1997, and subsequently through November
30, 1999, with capacity payments of $1.2 million per month and
$1.55 million per month, respectively. Under a 1993 agreement,
IPL has an option to purchase from PSI Energy, Inc. up to 100 MW
of limited reserve power during April 1996 through March 1997
and up to 250 MW during April 1997 through March 2001.
Environmental Compliance Construction Requests
The estimated capital cost of complying with the Act, as
approved by the IURC, is approximately $260 million, including
Allowance for Funds Used During Construction (AFUDC) of which
$92.4 million has been expended prior to 1995. IPL further
estimates that, subsequent to December 31, 1997, no significant
capital expenditures will be required to bring generating units
into compliance with the Act until the year 2010 or beyond.
Cost of Construction Program
The cost of IPL's construction program during 1994, 1993 and
1992 was $185.6 million, $149.3 million and $115.3 million,
including AFUDC of $7.3 million, $3.6 million and $3.2 million,
respectively.
IPL estimates the cost of the construction program for the
five years, 1995-1999, to be approximately $608.9 million,
including AFUDC of $33.3 million. This program is subject to
continuing review and is revised from time to time in light of
changes in the actual customer demand for electric energy, IPL's
financial condition and construction cost escalations. In
addition to costs of environmental compliance, the five-year
construction program includes $73.6 million for the two 80 MW
combustion turbines mentioned above. Additional expenditures
will be incurred beyond 1999 for the capacity with in-service
dates subsequent to 1999. Expenditures for the new capacity are
contingent upon the review of other long-term and near-term
options previously discussed.
Retirement of Long-term Debt and Equity Securities
During 1994, 1993 and 1992, IPL retired long-term debt,
including sinking fund payments, of $86.5 million, $96.9 million
and $75.0 million, respectively, which required replacement in
part with other debt securities at a lower cost.
IPL will retire $15.0 million and $11.3 million of maturing
long-term debt during 1996 and 1997, respectively, which may
require replacement in whole or in part with other debt or
equity securities. In addition, other existing higher rate debt
may be refinanced depending upon market conditions.
Financing
Financing Requirements
During the three-year period ended December 31, 1994, IPL's
permanent financing totaled $376.5 million in long-term debt.
The net proceeds of these securities were used to retire
existing long-term debt of $266.2 million, including premiums, and
to partially fund IPL's construction expenditures. The remaining
cash requirements during this three-year period were funded with
internally generated funds and short-term debt.
Long-term debt, internally generated funds and temporary
short-term borrowings are forecasted to provide the funds
required for the five-year construction program. Uncertainties
which could affect this forecast include the impact of inflation
on operating expenses, the actual degree of growth in KWH sales
and the level of interchange sales with other utilities.
Additionally, IPL has authority from the IURC to redeem and
replace certain of its existing securities.
Mortgage Restrictions
IPL is limited in its ability to issue certain securities by
restrictions under its Mortgage and Deed of Trust (Mortgage) and
its Amended Articles of Incorporation (Articles). The
restriction under the Articles requires that the net income of
IPL, as specified therein, shall be at least one and one-half
times the total interest on the funded debt and the pro forma
dividend requirements on the outstanding preferred stock and on
any preferred stock proposed to be issued, before any additional
preferred stock can be issued. The Mortgage restriction
requires that net earnings as calculated thereunder be two and
one-half times the annual interest requirements before
additional bonds can be authenticated on the basis of property
additions. Based on IPL's net earnings for the twelve months
ended December 31, 1994, the ratios under the Articles and the
Mortgage are 3.12 and 6.55, respectively. IPL believes these
requirements will not restrict any anticipated future
financings.
MID-AMERICA
Mid-America, the holding company for the unregulated
activities of IPALCO, has as subsidiaries Indianapolis Campus
Energy, Inc. (ICE), Store Heat And Produce Energy, Inc. (SHAPE),
which is 70% owned, and Mid-America Energy Resources, Inc.
(Energy Resources). Energy Resources, in addition to its own
operations, has as subsidiaries Cleveland Thermal Energy
Corporation (Cleveland Thermal) and Cleveland District Cooling
Corporation (Cleveland Cooling), which jointly do business as
Cleveland Energy Resources. Energy Resources has operated a
district cooling system in downtown Indianapolis, Indiana since
1991. On November 1, 1994, Energy Resources announced that its
Indianapolis, Indiana district cooling system with a cooling
capacity of 20,000 tons had become fully subscribed, although
plans are underway to expand the system to allow for additional
customers. Cleveland Thermal operates a district heating system
in downtown Cleveland, Ohio and was acquired by Energy Resources
in July, 1991. Cleveland Cooling began operations of its
district cooling system in downtown Cleveland, Ohio during 1993.
Also during 1993, ICE entered into an agreement to provide
chilled water to the Lilly Technical Center located near
downtown Indianapolis. Operations of this campus facility are
expected to begin in 1996. SHAPE became a majority-owned
subsidiary of Mid-America during 1993.
On December 14, 1994, Mid-America's Board of Directors
approved a Long-Term Incentive Plan (the Incentive Plan) that
covers key executives of Mid-America and certain officers of
IPALCO effective January 1, 1995.
Pursuant to the Incentive Plan, whole or fractions of eight
shares of an award pool are available to be granted. The value
of such shares is zero at the inception of the Incentive Plan
and can grow in value during the performance period (January 1,
1995 - December 31, 1999). The pool to be distributed to the
holders of such shares on December 31, 1999, will be determined
based upon the increase in the valuation of the respective Mid-
America businesses during the performance period and can amount
to .85% up to 15% of the total increase during the performance
period. A minimum increase in value above $34 million is
required before any reward is payable.
Participation in the Incentive Plan will be reviewed on an
annual basis and during the performance period as necessary.
The Compensation Committee of IPALCO's Board of Directors may
add or delete participants from the Incentive Plan and may make
modifications to the distribution of shares during the
performance period.
Construction Program
During 1994, 1993 and 1992, the construction expenditures of
Mid-America and its subsidiaries totaled $8.6 million,
$8.7 million and $29.9 million, respectively. These costs were
financed with internal funds and a $9.5 million debt issue in
1991, and a $2.4 million construction loan in 1994.
Construction requirements during the next five years are
estimated to be $15.3 million, $.5 million, $21.3 million, $22.0
million and $33.2 million, for ICE, SHAPE, Energy Resources,
Cleveland Thermal and Cleveland Cooling, respectively. Such
expenditures are highly contingent upon the development of
markets for the products and services offered by the Mid-America
family of companies. The cash requirements of Mid-America
subsidiaries are expected to be funded by Mid-America from
existing liquid assets, future cash flows from operations and
from project-specific debt financing.
Projected Operations
SHAPE, Cleveland Cooling and ICE are projected to provide
operating profits in 1996. The existing projects of Energy
Resources and Cleveland Thermal are currently projected to begin
contributing to operating profits in 1995. This projection
could be materially affected by the rate at which customers are
added and other factors.
During the next five years, 1995-1999, IPALCO may continue
to become involved in unregulated businesses through the
formation of one or more additional Mid-America subsidiaries.
The sources of capital to finance these businesses will be
determined at the time they are established.
IPALCO ENTERPRISES CONSOLIDATED
Additional information regarding IPALCO's historical cash
flows from operations, investing and financing for the past
three years, including the capital expenditures of IPL, are
disclosed in the Statements of Consolidated Cash Flows (page II-
16) and in the Notes to Consolidated Financial Statements (pages
II-19 - II-32).
RESULTS OF OPERATIONS
1994 vs. 1993
Earnings per share during 1994 were $2.46 or $.46 above the
$2.00 attained in 1993. The following discussion highlights the
factors contributing to this result.
Operations
Utility operating income increased $.9 million in 1994
compared to 1993. Contributing to this increase were higher
electric operating revenues of $20.4 million, due to increases
in retail sales of $18.0 million and wholesale sales of
$2.6 million, partially offset by a decrease in miscellaneous
electric revenue of $.2 million. Retail electric sales were
higher due to increased retail KWH sales of $11.4 million and
increased fuel cost recoveries of $6.6 million. The increase in
retail KWH sales in this year, as compared to 1993, resulted
primarily from increased industrial and residential sales
resulting from an improved economy and increased residential
customers, partially offset by slightly milder heating season
weather. Wholesale sales were higher as a result of increased
energy requirements of other utilities.
Fuel costs increased $11.4 million due to increases in
deferred fuel costs of $6.7 million, increased unit costs of
coal and oil of $2.7 million and increased fuel consumption of
$2.0 million. Other operating expenses increased $3.4 million
primarily due to an increase in administrative and general
expenses of $1.7 million, an increase in miscellaneous power
station operating expenses at the Petersburg plant of $1.2
million, and an increase in other production expenses of $.5
million.
Maintenance expenses increased $1.2 million, reflecting
increased overhead distribution expenses of $3.1 million and
increased transmission and other distribution expenses of $.7
million. These expenses were partially offset by decreased unit
overhaul expenses in 1994, compared to 1993. Depreciation
expense increased $8.7 million primarily due to an adjustment to
property held for future use and as a result of an increase in
the depreciable utility plant balance.
Taxes other than income taxes increased $1.3 million as a
result of an increase in revenues subject to Indiana gross
receipts tax. Income taxes - net, decreased $4.3 million as a
result of a decrease in pretax utility operating income.
Other Income And Deductions
Allowance for equity funds used during construction
increased $2.7 million due to an increased construction base in
1994.
During 1993, IPALCO incurred a one-time charge against
earnings of $33.9 million, before taxes ($21.1 million net of
applicable income taxes), for legal, financial and
administrative costs pertaining to IPALCO's effort to acquire
PSI Resources, Inc. There was no such charge in 1994.
Other - net, which includes the pretax operations other than
IPL, decreased $4.2 million due to lower pretax income from
nonutility investments and operations of $3.6 million. The
lower investment income reflects decreased cash balances
available for investment at IPALCO and at Mid-America, as a
result of the capital requirements of Mid-America's
subsidiaries, primarily for construction of district cooling
facilities. Operations other than IPL, in total, experienced a
net loss of $7.6 million. This compares to a net loss of
$3.1 million during 1993.
Interest Charges
Interest on long-term debt increased $4.7 million due
primarily to the issuance of $180 million long-term debt on
February 3, 1994, (6.05% Series, First Mortgage Bonds and 7.05%
Series, First Mortgage Bonds). The interest on long-term debt
was partially offset by the refinancing of three series of IPL's
First Mortgage Bonds in March 1994 as follows: the 7.4% Series,
First Mortgage Bonds; the 7 1/8% Series, First Mortgage Bonds;
and the 7.65% Series, First Mortgage Bonds; all of which were
replaced with the 6.05% Series, First Mortgage Bonds. The
allowance for borrowed funds used during construction increased
$1.2 million due to an increased construction base.
1993 vs. 1992
Earnings per share during 1993 were $2.00 or $.35 below the
$2.35 attained in 1992. The following discussion highlights the
factors contributing to this result.
Operations
Utility operating income increased $8.1 million in 1993
compared to 1992. Contributing to this increase was an increase
in electric operating revenues of $30.1 million, due to
increases in retail sales of $25.9 million, wholesale sales of
$2.8 million and miscellaneous electric revenue of $1.4 million.
Retail electric sales were higher due to increased retail KWH
sales of $31.1 million and decreased fuel cost recoveries of
$5.2 million. The increase in retail KWH sales in 1993 resulted
primarily from the return to normal weather conditions in 1993
as compared to the abnormally mild summer weather conditions in
1992. During 1992, cooling degree days were 26.5% below normal.
Wholesale sales were higher as a result of increased energy
requirements of other utilities, which were also affected by the
mild summer during 1992. The continuing health of the
Indianapolis economy also contributed to the growth in KWH
sales, particularly in the large industrial class.
Fuel costs increased $3.3 million due to increases in fuel
consumption of $9.6 million, partially offset by decreased unit
costs of coal and oil of $.5 million and deferred fuel costs of
$5.8 million. Power purchased increased $11.6 million due to
increased capacity payments of $7.2 million to IMP in accordance
with a five-year power purchase agreement, and by increased
purchases of energy as a result of the near normal weather
conditions in 1993 as compared to 1992.
Maintenance expenses increased $4.9 million. This increase
reflects higher unit overhaul and outage expenses in 1993,
partially offset by decreased distribution maintenance expenses
as a result of a severe storm in 1992 that cost $3.9 million.
Taxes other than income taxes decreased $1.7 million as a
result of lower property assessments. Income taxes - net,
increased $4.3 million as a result of the increase in pretax
utility operating income and a one percentage point increase in
the federal income tax rate.
Other Income And Deductions
During 1993, IPALCO incurred a one-time charge against
earnings of $33.9 million, before taxes ($21.1 million net of
applicable income taxes), for legal, financial and
administrative costs pertaining to IPALCO's effort to acquire
PSI Resources, Inc. The charge resulted in a decrease in
earnings per share of 56 cents.
Other - net, which includes operations other than IPL,
decreased $2.1 million due to lower pretax income from
nonutility investments and operations of $4.0 million. The
decreased investment income reflects lower interest rates and
decreased cash balances available for investment as a result of
the capital requirements of Mid-America's subsidiaries,
primarily for construction of district cooling facilities.
Operations other than IPL and excluding the one-time charge
against earnings, in total, experienced a net loss of
$3.1 million. This compares to a net loss of $1.5 million
during 1992.
Interest Charges
Interest on long-term debt decreased $1.2 million as a
result of refinancing six series of IPL's First Mortgage Bonds
as follows: the 10 1/4% Series, First Mortgage Bonds in October
1993 (replaced with the 5.50% Series, First Mortgage Bonds); the
5.80% Series, First Mortgage Bonds in October 1993 (replaced
with the 5.40% Series, First Mortgage Bonds); the 6.90% and the
6.60% Series, First Mortgage Bonds (replaced with the 6.10%
Series, First Mortgage Bonds); and the 9.30% and 9 1/2% Series,
First Mortgage Bonds in September 1992 (replaced with the 7 3/8%
Series, First Mortgage Bonds). The allowance for borrowed funds
used during construction increased due primarily to an increased
construction base. Other interest charges increased
$1.3 million due to higher notes payable balances carried during
1993.
1995
Factors having a bearing on 1995 earnings compared to 1994
will include the impact of economic conditions, weather
conditions, an increased level of construction expenditures, and
the implementation of new electric system tariff rates.
Authorized electric operating income for 1995 as determined
by the IURC is approximately $144.0 million. (IPL earned $140.4
million during 1994 and $141.2 million during 1993.)
The overall effect these factors will have on 1995 earnings
cannot be accurately determined at this time.
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
IPALCO Enterprises, Inc. and Subsidiaries:
We have audited the accompanying consolidated balance sheets and
statements of consolidated preferred stock and long-term debt of
IPALCO Enterprises, Inc. and its subsidiaries as of December 31, 1994
and 1993, and the related statements of consolidated income, common
shareholders' equity, and cash flows for each of the three years in
the period ended December 31, 1994. Our audits also included the
consolidated financial statement schedule listed in the Index at Item
14(a.)2. These financial statements and financial statement schedule
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
and financial statement 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, such consolidated financial statements present fairly,
in all material respects, the financial position of IPALCO
Enterprises, Inc. and its subsidiaries as of December 31, 1994 and
1993, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1994 in
conformity with generally accepted accounting principles. Also, in
our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly in all material respects the
information set forth therein.
Deloitte & Touche LLP
Indianapolis, Indiana
January 27, 1995
<TABLE>
IPALCO ENTERPRISES, INC. AND SUBSIDIARIES
Statements of Consolidated Income
For the Years Ended December 31, 1994, 1993 and 1992
<CAPTION>
1994 1993 1992
--------------- --------------- ---------------
(In Thousands Except Per Share Amounts)
<S> <C> <C> <C>
UTILITY OPERATING REVENUES (Note 9):
Electric $ 649,767 $ 629,327 $ 599,203
Steam 36,309 34,976 34,000
--------------- --------------- ---------------
Total operating revenues 686,076 664,303 633,203
--------------- --------------- ---------------
UTILITY OPERATING EXPENSES:
Operation:
Fuel 169,756 158,390 155,072
Other 104,273 100,890 100,447
Power purchased 19,060 19,407 7,804
Purchased steam 7,653 8,051 7,612
Maintenance 68,562 67,326 62,446
Depreciation and amortization 87,028 78,372 78,615
Taxes other than income taxes 30,891 29,627 31,348
Income taxes - net (Note 8) 55,543 59,872 55,619
--------------- --------------- ---------------
Total operating expenses 542,766 521,935 498,963
--------------- --------------- ---------------
UTILITY OPERATING INCOME 143,310 142,368 134,240
--------------- --------------- ---------------
OTHER INCOME AND (DEDUCTIONS):
Allowance for equity funds used during construction 4,672 2,010 1,985
Costs of withdrawn tender offer (Note 12) - (33,948) -
Other - net (12,010) (7,832) (5,776)
Income taxes - net (Note 8) 4,536 17,502 2,695
--------------- --------------- ---------------
Total other deductions - net (2,802) (22,268) (1,096)
--------------- --------------- ---------------
INCOME BEFORE INTEREST AND OTHER CHARGES 140,508 120,100 133,144
--------------- --------------- ---------------
INTEREST AND OTHER CHARGES:
Interest on long-term debt 46,248 41,589 42,793
Allowance for borrowed funds used during construction (4,709) (3,517) (3,096)
Other interest 1,680 2,625 1,291
Amortization of redemption premiums and expenses on
debt - net 1,113 799 632
Preferred dividend requirements of subsidiary 3,182 3,182 3,182
--------------- --------------- ---------------
Total interest and other charges - net 47,514 44,678 44,802
--------------- --------------- ---------------
NET INCOME $ 92,994 $ 75,422 $ 88,342
=============== =============== ===============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 37,741 37,668 37,597
=============== =============== ===============
EARNINGS PER SHARE OF COMMON STOCK $ 2.46 $ 2.00 $ 2.35
=============== =============== ===============
See notes to consolidated financial statements.
</TABLE>
<TABLE>
IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1994 and 1993
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
ASSETS 1994 1993
- ---------------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
UTILITY PLANT:
Utility plant in service (Note 2) $ 2,415,531 $ 2,300,682
Less accumulated depreciation 916,943 876,054
----------------- -----------------
Utility plant in service - net 1,498,588 1,424,628
Construction work in progress 191,010 168,480
Property held for future use 22,174 15,763
----------------- -----------------
Utility plant - net 1,711,772 1,608,871
----------------- -----------------
OTHER ASSETS:
Nonutility property 82,480 72,804
Less accumulated depreciation 5,809 3,482
----------------- -----------------
Nonutility property - net 76,671 69,322
Other investments 9,637 8,722
----------------- -----------------
Other assets - net 86,308 78,044
----------------- -----------------
CURRENT ASSETS:
Cash and cash equivalents 8,148 10,713
Financial investments 7,025 10,088
Accounts receivable (less allowance for doubtful
accounts - 1994, $855,000 and 1993, $672,000) 48,659 49,766
Fuel - at average cost 37,749 36,253
Materials and supplies - at average cost 57,236 56,527
Prepayments and other current assets 9,132 5,557
----------------- -----------------
Total current assets 167,949 168,904
----------------- -----------------
DEFERRED DEBITS:
Unamortized Petersburg Unit 4 carrying charges 32,521 30,587
Unamortized redemption premiums and expenses on debt (Note 6) 27,787 25,674
Other regulatory assets (Note 4) 53,661 32,954
Miscellaneous 11,080 20,989
----------------- -----------------
Total deferred debits 125,049 110,204
----------------- -----------------
TOTAL $ 2,091,078 $ 1,966,023
================= =================
See notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
CAPITALIZATION AND LIABILITIES 1994 1993
- ---------------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
CAPITALIZATION:
Common shareholders' equity (Note 5):
Common stock, no par, authorized - 145,000,000 shares,
issued and outstanding - 37,755,966 shares in 1994,
37,692,966 shares in 1993 $ 381,228 $ 379,460
Premium on 4% cumulative preferred stock 1,363 1,363
Retained earnings 419,354 406,388
----------------- -----------------
Total common shareholders' equity 801,945 787,211
Cumulative preferred stock (See Statements) 51,898 51,898
Long-term debt (See Statements) 665,971 541,760
----------------- -----------------
Total capitalization 1,519,814 1,380,869
----------------- -----------------
CURRENT LIABILITIES:
Notes payable - banks and commercial paper (Note 7) 29,753 90,000
Current maturities and sinking fund requirements 350 8,729
Accounts payable and accrued expenses 102,360 77,501
Dividends payable 21,096 20,299
Payrolls accrued 4,475 4,505
Taxes accrued 18,569 23,053
Interest accrued 14,933 11,208
Other current liabilities 8,823 5,316
----------------- -----------------
Total current liabilities 200,359 240,611
----------------- -----------------
DEFERRED CREDITS AND OTHER LONG-TERM LIABILITIES:
Accumulated deferred income taxes - net (Note 8) 280,684 268,769
Unamortized investment tax credit 53,762 57,029
Accrued postretirement benefits (Note 10) 34,854 17,840
Miscellaneous 1,605 905
----------------- -----------------
Total deferred credits and other long-term liabilities 370,905 344,543
----------------- -----------------
COMMITMENTS AND CONTINGENCIES (Note 11)
TOTAL $ 2,091,078 $ 1,966,023
================= =================
See notes to consolidated financial statements.
</TABLE>
<TABLE>
IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Statements of Consolidated Cash Flows
For the Years Ended December 31, 1994, 1993 and 1992
<CAPTION>
1994 1993 1992
--------------- --------------- ---------------
(In Thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATIONS:
Net income before preferred dividend requirements
of subsidiary $ 96,176 $ 78,604 $ 91,524
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 91,713 82,026 81,303
Income from financial investments (737) (2,159) (5,036)
Deferred income taxes and investment tax
credit adjustments - net 2,685 (1,450) 4
Allowance for funds used during construction (9,381) (5,476) (5,081)
Decrease (increase) in certain assets:
Accounts receivable 1,107 1,281 (5,799)
Fuel, materials and supplies (2,205) 8,662 (8,031)
Other current assets (3,575) (2,525) (980)
Increase (decrease) in certain liabilities:
Accounts payable 24,859 (3,682) 25,090
Taxes accrued (4,484) (911) 684
Other current liabilities 7,910 (2,484) 2,909
--------------- --------------- ---------------
Net cash provided by operating activities 204,068 151,886 176,587
--------------- --------------- ---------------
CASH FLOWS FROM INVESTING:
Purchase of marketable securities - (1,408) (16,368)
Proceeds from maturities of marketable securities - 3,258 28,168
Withdrawals from financial investments 3,800 44,244 30,000
Purchase of financial investments - - (35,000)
Construction expenditures - utility (178,295) (145,765) (112,037)
Construction expenditures - nonutility (9,402) (8,788) (29,842)
Other 5,557 (12,200) (12,721)
--------------- --------------- ---------------
Net cash used in investing activities (178,340) (120,659) (147,800)
--------------- --------------- ---------------
CASH FLOWS FROM FINANCING:
Issuance of long-term debt 202,350 96,500 80,000
Retirement of long-term debt - including premiums (87,291) (98,978) (79,958)
Short-term debt - net (60,247) 48,300 38,700
Dividends paid (82,421) (79,253) (76,076)
Exercise of stock options including related tax benefit 1,768 898 3,301
Other (2,452) (1,230) (1,202)
--------------- --------------- ---------------
Net cash used in financing activities (28,293) (33,763) (35,235)
--------------- --------------- ---------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,565) (2,536) (6,448)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 10,713 13,249 19,697
--------------- --------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,148 $ 10,713 $ 13,249
=============== =============== ===============
- -------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) $ 41,442 $ 42,695 $ 41,741
=============== =============== ===============
Income taxes $ 54,103 $ 46,846 $ 54,654
=============== =============== ===============
See notes to consolidated financial statements.
</TABLE>
<TABLE>
IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Statements of Consolidated Preferred Stock and Long-Term Debt
December 31, 1994 and 1993
<CAPTION>
1994 1993
-------------- --------------
(In Thousands)
<S> <C> <C>
CUMULATIVE PREFERRED STOCK - IPL (Note 5):
Nonredeemable - $100 par value, authorized
2,000,000 shares Call Price at
December 31, 1994
-----------------
4% Series, 100,000 shares $118.00 $ 10,000 $ 10,000
4.20% Series, 39,000 shares 103.00 3,900 3,900
4.60% Series, 30,000 shares 103.00 3,000 3,000
4.80% Series, 50,000 shares 101.00 5,000 5,000
6% Series, 100,000 shares 102.00 10,000 10,000
8.20% Series, 199,985 shares 101.00 19,998 19,998
-------------- --------------
Total cumulative preferred stock $ 51,898 $ 51,898
============== ==============
VARIABLE CLASS PREFERRED STOCK - IPL:
Par value undetermined, authorized
3,000,000 shares, none issued
LONG-TERM DEBT - IPL (Notes 2 and 6):
First mortgage bonds:
4 1/2% Series, due August 1994 $ - $ 7,500
5 1/8% Series, due April 1996 15,200 15,400
5 5/8% Series, due May 1997 11,550 11,629
7 1/8% Series, due May 1998 - 19,750
7.40% Series, due March 2002 - 33,200
7.65% Series, due March 2003 - 25,200
6.05% Series, due February 2004 80,000 -
8% Series, due October 2006 58,800 58,800
7 3/8% Series, due August 2007 80,000 80,000
9 5/8% Series, due September 2012 40,000 40,000
10 5/8% Series, due December 2014 40,000 40,000
6.10% Series, due January 2016 41,850 41,850
5.40% Series, due August 2017 24,650 24,650
9 5/8% Series, due June 2019 50,000 50,000
7.45% Series, due August 2019 23,500 23,500
5.50% Series, due October 2023 30,000 30,000
7.05% Series, due February 2024 100,000 -
Unamortized discount - net (1,079) (490)
-------------- --------------
Total first mortgage bonds 594,471 500,989
Long-term note, variable rate, Series 1991, due August 2021 40,000 40,000
Long-term note, variable rate, Series 1994A, due December 2024 20,000 -
Current maturities and sinking fund requirements (350) (8,729)
-------------- --------------
Total long-term debt - IPL 654,121 532,260
LONG-TERM DEBT - OTHER (Note 6):
Energy Resources - 7.25% long-term note, due December 2011 9,500 9,500
Indianapolis Campus Energy, Inc. - project loan 2,350 -
-------------- --------------
Total long-term debt $ 665,971 $ 541,760
============== ==============
See notes to consolidated financial statements.
</TABLE>
<TABLE>
IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Statements of Consolidated Common Shareholders' Equity
For the Years Ended December 31, 1994, 1993 and 1992
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock Premium on 4%
--------------------- Cumulative Retained
Shares Amount Preferred Stock Earnings Total
- ---------------------------------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1992 37,549 $ 375,261 $ 1,363 $ 393,163 $ 769,787
Net income 88,342 88,342
Cash dividends declared ($1.96 per share) (73,691) (73,691)
Exercise of stock options 114 3,301 3,301
------- -------------- ------------- -------------- --------------
Balance at December 31, 1992 37,663 378,562 1,363 407,814 787,739
Net income 75,422 75,422
Cash dividends declared ($2.04 per share) (76,848) (76,848)
Exercise of stock options 30 898 898
------- -------------- ------------- -------------- --------------
Balance at December 31, 1993 37,693 379,460 1,363 406,388 787,211
Net income 92,994 92,994
Cash dividends declared ($2.12 per share) (80,028) (80,028)
Exercise of stock options 63 1,768 1,768
------- -------------- ------------- -------------- --------------
Balance at December 31, 1994 37,756 $ 381,228 $ 1,363 $ 419,354 $ 801,945
======= ============== ============= ============== ==============
See notes to consolidated financial statements.
</TABLE>
IPALCO ENTERPRISES, INC. and SUBSIDIARIES
Notes to Consolidated Financial Statements
For the Years Ended December 31, 1994, 1993 and 1992
- ----------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation--IPALCO Enterprises, Inc. (IPALCO) owns
all of the outstanding common stock of its subsidiaries (collectively
referred to as Enterprises). The consolidated financial statements include
the accounts of IPALCO, its utility subsidiary, Indianapolis Power & Light
Company (IPL) and its unregulated subsidiary, Mid-America Capital
Resources, Inc. (Mid-America). Mid-America conducts its businesses through
various wholly owned subsidiaries, including Mid-America Energy Resources,
Inc. (Energy Resources), Indianapolis Campus Energy, Inc. (ICE), and one
70% owned subsidiary.
The operating components of all subsidiaries other than IPL are
included under the captions OTHER INCOME AND (DEDUCTIONS), "Other-net" and
"Income taxes-net" and INTEREST AND OTHER CHARGES in the Statements of
Consolidated Income. Revenues from these operations were not significant.
All significant intercompany items have been eliminated in consolidation.
System of Accounts--The accounts of IPL are maintained in accordance
with the system of accounts prescribed by the Indiana Utility Regulatory
Commission (IURC), which system substantially conforms to that prescribed
by the Federal Energy Regulatory Commission.
Revenues--Utility operating revenues are recorded as billed to
customers on a monthly cycle billing basis. Revenue is not accrued for
energy delivered but unbilled at the end of the year. A fuel adjustment
charge provision, which is established after public hearing, is applicable
to substantially all the rate schedules of IPL, and permits the billing or
crediting of fuel costs above or below the levels included in such rate
schedules.
Under current IURC practice, future fuel adjustment revenues may be
temporarily reduced should actual operating expenses be less than or income
levels be above amounts authorized by the IURC.
Authorized Annual Operating Income--In an IURC order dated May 6,
1992, IPL's maximum authorized annual electric operating income, for
purposes of quarterly earnings tests, was established at approximately $147
million through July 31, 1992, declining ratably to approximately $144
million at July 31, 1993. This level will be maintained until an order has
been issued in IPL's pending general electric rate proceeding.
Additionally, through the date of IPL's next general electric rate order,
IPL is required to file upward and downward adjustments in fuel cost
credits and charges on a quarterly basis.
As provided in an order dated December 21, 1992, IPL's authorized
annual steam net operating income is $6.2 million, plus any cumulative
annual underearnings occurring during the five-year period subsequent to
the implementation of the new rate tariffs.
Deferred Fuel Expense--Fuel costs recoverable in subsequent periods
under the fuel adjustment charge provision are deferred.
Allowance For Funds Used During Construction (AFUDC)--In accordance
with the prescribed uniform system of accounts, IPL capitalizes an
allowance for the net cost of funds (interest on borrowed funds and a
reasonable rate on equity funds) used for construction purposes during the
period of construction with a corresponding credit to income. IPL
capitalized amounts using pretax composite rates of 9.5%, 8.0% and 9.5%
during 1994, 1993 and 1992, respectively.
Utility Plant and Depreciation--Utility plant is stated at original
cost as defined for regulatory purposes. The cost of additions to utility
plant and replacements of retirement units of property, as distinct from
renewals of minor items which are charged to maintenance, are charged to
plant accounts. Units of property replaced or abandoned in the ordinary
course of business are retired from the plant accounts at cost; such
amounts plus removal costs, less salvage, are charged to accumulated
depreciation. Depreciation was computed by the straight-line method based
on the functional rates and averaged 3.5% during 1994 and 3.4% during 1993
and 1992. Depreciation expense for 1994 includes an adjustment to property
held for future use of approximately $3.9 million.
Statements of Cash Flows - Cash Equivalents--Enterprises considers all
highly liquid investments purchased with original maturities of 90 days or
less to be cash equivalents.
Financial Investments--Financial investments represent investments in
limited partnerships and managed asset funds which are actively managed
stock and bond funds which value their investments at market. Enterprises
accounts for these investments on the equity method.
Unamortized Petersburg Unit 4 Carrying Charges--IPL has deferred
certain post in-service date carrying charges of its investment in
Petersburg Unit 4 (Unit 4). These carrying charges include both AFUDC on
and depreciation of Unit 4 costs from the April 28, 1986, in-service date
through the August 6, 1986, IURC rate order date in which IPL's investment
in Unit 4 was included in rate base. Subsequent to August 6, 1986, IPL has
capitalized interest on the AFUDC portion of these deferred carrying
charges. In addition, IPL has capitalized $8.1 million of additional
allowance for earnings on shareholders' investment for rate-making purposes
but not for financial reporting purposes. As provided in the rate order,
the deferred carrying charges are included in IPL's currently pending
electric rate case.
Unamortized Redemption Premiums and Expenses on Debt and Preferred
Stock--In accordance with regulatory treatment, IPL defers nonsinking fund
debt redemption premiums and expenses, and amortizes such costs over the
life of the original debt or, in the case of preferred stock redemption
premiums, over 20 years.
Income Taxes--Deferred taxes are provided for all significant
temporary differences between book and taxable income. Such differences
include the use of accelerated depreciation methods for tax purposes, the
use of different book and tax depreciable lives, rates and in-service
dates, and the accelerated tax amortization of pollution control
facilities.
Investment tax credits which reduced federal income taxes in the years
they arose have been deferred and are being amortized to income over the
useful lives of the properties in accordance with regulatory treatment.
Effective January 1, 1993, Enterprises adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes" (SFAS
109), on a prospective basis. This statement requires the current
recognition of income tax expense for (a) the amount of income taxes
payable or refundable for the current year, and (b) for deferred tax
liabilities and assets for the future tax consequences of events that have
been recognized in Enterprises' financial statements or income tax returns.
The effects of income taxes are measured based on enacted laws and rates.
The adjustments required by SFAS 109 were recorded to deferred tax balance
sheet accounts, with substantially all of the offsetting adjustments to
regulatory assets and liabilities. The adoption of this standard did not
have a material impact on Enterprises' cash flows or due to the effect of
rate regulation on the results of operations.
Employee Benefit Plans--Substantially all employees of IPALCO and IPL
and certain management employees of Mid-America are covered by a
noncontributory, defined benefit pension plan (the Plan) which is funded
through two trusts. Additionally, a select group of management employees
of IPALCO, IPL and Mid-America are covered under a funded supplemental
retirement plan. Collectively, these two plans are referred to as Plans.
Benefits are based on each individual employee's years of service and
compensation. IPL's funding policy is to contribute annually not less than
the minimum required by applicable law, nor more than the maximum amount
which can be deducted for federal income tax purposes.
IPL also sponsors the Employees' Thrift Plan of Indianapolis Power &
Light Company (Thrift Plan), a defined contribution plan covering
substantially all employees of IPALCO and IPL and certain management
employees of Mid-America. Employees elect to make contributions to the
Thrift Plan based on a percentage of their annual base compensation. IPL
matches each employee's contributions in amounts up to, but not exceeding
4% of the employee's annual base compensation.
Substantially all non-management employees of Energy Resources and its
subsidiaries are covered by a contributory 401(k) plan.
Reclassification--Certain amounts from prior years' financial
statements have been reclassified to conform to the current year
presentation.
2. UTILITY PLANT IN SERVICE
The original cost of utility plant in service at December 31,
segregated by functional classifications, follows:
<TABLE>
<CAPTION>
1994 1993
- ----------------------------------------------------------------
(In Thousands)
<S> <C> <C>
Production $1,434,041 $1,387,239
Transmission 227,988 218,369
Distribution:
Electric 600,288 551,217
Steam 44,492 42,205
General 108,722 101,652
---------- ----------
Total utility plant in service $2,415,531 $2,300,682
========== ==========
</TABLE>
Substantially all of IPL's property is subject to the lien of the
indentures securing IPL's First Mortgage Bonds.
3. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments." The estimated
fair value amounts have been determined by Enterprises, using available
market information and appropriate valuation methodologies. However,
considerable judgment is required in interpreting market data to develop
the estimates of fair value. Accordingly, the estimates presented herein
are not necessarily indicative of the amounts that Enterprises could
realize in a current market exchange. The use of different market
assumptions and/or estimation methodologies may have an effect on the
estimated fair value amounts.
Cash, cash equivalents, marketable securities and notes payable--The
carrying amount approximates fair value due to the short maturity of these
instruments.
Other property - other long-term investments--Mid-America has an
investment in the publicly traded common stock of a company which owns and
operates radio stations. The fair value of this investment as determined
by the market value of its common stock at December 31, 1994 and 1993,
approximates its carrying value of $7.4 million and $7.5 million,
respectively.
Long-term debt, including current maturities and sinking fund
requirements--Interest rates that are currently available to IPL and Energy
Resources for issuance of debt with similar terms and remaining maturities
are used to estimate fair value. At December 31, 1994 and 1993 the
consolidated carrying amount of Enterprises' long-term debt, including
current maturities and sinking fund requirements, and the approximate fair
value are as follows:
<TABLE>
<CAPTION>
1994 1993
------------------------------------------------
(In Thousands)
<S> <C> <S>
Carrying amount $666,321 $550,489
Approximate fair value $624,225 $587,236
</TABLE>
4. OTHER REGULATORY ASSETS
At December 31, 1994 and 1993, IPL has deferred certain costs and
expenses which will be included as ordinary, necessary and reasonable
expenses for ratemaking purposes in future rate proceedings as follows:
<TABLE>
<CAPTION>
1994 1993
- -------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
Postretirement benefit costs in excess of
cash payments and amounts capitalized $ 25,182 $ 12,893
SFAS 109 21,054 15,091
Demand Side Management Costs 4,504 1,814
Other 2,921 3,156
-------- --------
Total $ 53,661 $ 32,954
======== ========
</TABLE>
5. CAPITAL STOCK
Common Stock:
Enterprises has a Shareholder Rights Plan designed to protect
Enterprises' shareholders against unsolicited attempts to acquire control
of Enterprises that do not offer what the Board believes is a fair and
adequate price to all shareholders. The Board declared a dividend of one
Right for each share of common stock to shareholders of record on July 11,
1990. The Rights will expire July 11, 2000. At this time, no Rights have
been distributed. The Rights are not taxable to shareholders or to
Enterprises, and they do not affect reported earnings per share. Under the
Shareholder Rights Plan, Enterprises has authorized 40,000,000 shares for
issuance.
Enterprises' Automatic Dividend Reinvestment and Stock Purchase Plan
allows common shareholders to purchase shares of common stock by
reinvestment of dividends and limited additional cash investments. The
plan provides that such shares may be purchased on the open market or
directly from Enterprises at the option of Enterprises. Enterprises is
authorized to issue 643,038 additional shares as of December 31, 1994,
pursuant to this plan.
Under the Thrift Plan, shares may be purchased either on the open
market or, if available, as original issue shares directly from
Enterprises.
Enterprises is authorized to issue 88,066 additional shares of common
stock pursuant to the Energy Resources 401(k) plan.
Enterprises has a stock option plan (1990 Plan) for key employees
under which options to acquire shares of common stock and stock
appreciation rights covering common shares may be granted. One million
shares of common stock have been authorized for issuance under the 1990
Plan. The maximum period for exercising an option may not exceed ten years
and one day after grant or ten years for incentive stock options. Upon the
first anniversary date after the grant, and each anniversary date
thereafter, these options are exercisable in proportion to the number of
years expired in a three-year period. As approved by the Board of
Directors on October 25, 1994, and subject to shareholder approval at the
April 19, 1995, Annual Meeting, the 1990 Plan is amended and restated
effective January 1, 1995, as the IPALCO Enterprises, Inc. Long-Term
Performance and Restricted Stock Incentive Plan (1995 Plan) described
below.
During 1991, the 1991 Directors' Stock Option Plan (1991 Plan) was
established. This plan provides to the nonemployee Directors of
Enterprises options to acquire shares of common stock. These options are
exercisable for the period beginning on the six month anniversary of and
ending on the ten year anniversary of the grant date. Under the 1991 Plan,
250,000 shares of common stock have been authorized for issuance and
172,000 are available for future grants.
A summary of options issued under both plans is as follows:
<TABLE>
<CAPTION>
Range of Option Number of
Price per Share Shares
- ------------------------------------------------------------------------
<S> <C> <C>
Outstanding, January 1, 1992 25.25 - 31.4375 483,000
Granted 34.25 - 35.3125 85,000
Canceled 27.875 (10,000)
Exercised 25.25 - 28.125 (114,000)
--------
Outstanding, December 31, 1992 25.25 - 35.3125 444,000
Granted 38.00 - 38.0625 462,500
Canceled 25.25 - 35.3125 (6,000)
Exercised 25.25 - 28.125 (30,000)
--------
Outstanding, December 31, 1993 25.25 - 38.0625 870,500
Granted 31.9375 20,000
Canceled 25.25 (10,000)
Exercised 31.75 - 33.25 (63,000)
--------
Outstanding, December 31, 1994 25.25 - 38.0625 817,500
========
</TABLE>
The number of shares exercisable at December 31, 1994, 1993 and 1992
were 521,169, 411,000 and 227,000, respectively.
Pursuant to the 1995 Plan, 400,000 shares of common stock of IPALCO
have been authorized for issuance and initial awards of 58,205 shares of
restricted common stock were made to participating employees on January 1,
1995. Under the 1995 Plan, shares of restricted common stock with value
equal to a stated percentage of participants' base salary are initially
awarded at the beginning of a three-year performance period, subject to
adjustment to reflect the participants' actual base salary for the first
year of each performance period (except for the first performance period
for which the average of the three years is used). The shares remain
restricted and nontransferable throughout each three-year performance
period, vesting in one-third increments on July 1 of each of the three
years following the end of the performance period. The first performance
period is from January 1, 1995, to December 31, 1997, with subsequent three-
year performance periods commencing annually on January 1 of each year from
1998 to 2004. At the end of a performance period, awards are subject to
adjustment to reflect Company performance compared to peer companies under
two performance criteria, cost-effective service and total return to
shareholders. Depending on Company performance under these criteria, final
awards may range from 200% of the initial awards to zero.
Restrictions on the payment of cash dividends or other distributions
on IPL common stock held by Enterprises and on the purchase or redemption
of such shares by IPL are contained in the indentures securing IPL's First
Mortgage Bonds. All of IPL's retained earnings at December 31, 1994, were
free of such restrictions. There are no other restrictions on the retained
earnings of Enterprises.
Cumulative Preferred Stock:
Preferred stock shareholders are entitled to two votes per share for
IPL matters, and if four full quarterly dividends are in default, they are
entitled to elect the smallest number of Directors to constitute a
majority.
6. LONG-TERM DEBT
The 9 5/8% Series due 2012, 10 5/8% Series due 2014, 6.10% Series due
2016, 5.40% Series due 2017, and 5.50% Series due 2023 were each issued to
the city of Petersburg, Indiana (City) by IPL to secure the loan of
proceeds received from a like amount of tax-exempt Pollution Control
Revenue Bonds issued by the City for the purpose of financing pollution
control facilities at IPL's Petersburg generating station.
On April 13, 1993, IPL issued a First Mortgage Bond, 6.10% Series, due
2016, in the principal amount of $41.85 million, in connection with the
issuance of the same amount of Pollution Control Refunding Revenue Bonds by
the city of Petersburg, Indiana. The net proceeds, along with other IPL
funds were used to redeem on June 1, 1993, IPL's $19.65 million First
Mortgage Bonds, 6.90% Series, due 2006, and IPL's $22.2 million First
Mortgage Bonds, 6.60% Series, due 2008, at the prices of $100 and $101,
respectively, plus accrued interest.
On October 14, 1993, IPL issued a First Mortgage Bond, 5.40% Series,
due 2017, in the principal amount of $24.65 million, in connection with the
issuance of the same amount of Pollution Control Refunding Revenue Bonds by
the city of Petersburg, Indiana. The net proceeds, along with other IPL
funds, were used to redeem on November 15, 1993, IPL's $24.65 million First
Mortgage Bonds, 5.80% Series, due 2007, at the price of $100 plus accrued
interest.
Also, on October 14, 1993, IPL issued a First Mortgage Bond, 5.50%
Series, due 2023, in the principal amount of $30.0 million, in connection
with the issuance of the same amount of Pollution Control Refunding Revenue
Bonds by the city of Petersburg, Indiana. The net proceeds, along with
other IPL funds, were used to redeem on November 15, 1993, IPL's
$30.0 million First Mortgage Bonds, 10 1/4% Series, due 2013, at the price
of $103 plus accrued interest.
On February 3, 1994, IPL issued First Mortgage Bonds, 6.05% Series,
due 2004, in the principal amount of $80 million. The net proceeds and
other funds were used to redeem on March 1, 1994, IPL's $33.2 million First
Mortgage Bonds, 7.40% Series, due 2002, at a redemption price of 101.79%,
and to redeem on March 15, 1994, IPL's $19.75 million First Mortgage Bonds,
7 1/8% Series, due 1998, at a redemption price of 101.20% and IPL's $25.2
million First Mortgage Bonds, 7.65% Series, due 2003, at a redemption price
of 102.11%. Accrued interest was also paid at the time of redemption.
Also, on February 3, 1994, IPL issued First Mortgage Bonds, 7.05%
Series, due 2024, in the principal amount of $100 million. The net
proceeds were used in part to repay outstanding unsecured promissory notes
and for construction costs.
On August 1, 1994, IPL retired First Mortgage Bond, 4.50% Series, due
August 1, 1994, in the principal amount of $7.5 million.
On December 29, 1994, IPL issued a 30-year unsecured promissory note
which was issued to the city of Petersburg, Indiana, in connection with the
issuance of $20 million of Solid Waste Disposal Revenue Bonds, due 2024, by
the city of Petersburg. This note and the related bonds provide for a
floating interest rate that will bear interest at a tax-exempt weekly rate.
The net proceeds from this issue will provide funds to pay costs of certain
facilities and equipment to be used for solid waste disposal purposes. At
the option of IPL, the bonds can be converted to First Mortgage Bonds which
would bear interest at a fixed rate.
IPL has a 30-year unsecured promissory note which was issued to the
city of Petersburg, Indiana, in connection with the issuance of $40 million
of Pollution Control Refunding Revenue Bonds, due 2021, by the city of
Petersburg. This note and the related bonds provide for a floating
interest rate that approximates tax-exempt Commercial Paper Rates. The
average interest rate on this note was 2.98% for 1994 and 2.40% for 1993.
The interest rate at the end of the year was 3.85% for 1994 and 2.39% for
1993. At the option of IPL, the bonds can be converted to First Mortgage
Bonds which would bear interest at a fixed rate.
IPL has a $60 million long-term revolving credit facility which
provides liquidity, if necessary, for the two 30-year unsecured promissory
notes. The revolving credit was unused at December 31, 1994.
Energy Resources has a 20-year unsecured note which was issued to the
city of Indianapolis, Indiana, in connection with the issuance of $9.5
million of 7.25% Exempt Facility Revenue Bonds, due 2011, by the city of
Indianapolis.
On October 7, 1994, ICE entered into an $18 million project loan which
can be converted to a $10.8 million fully amortizing 15-year secured term
loan once the project becomes operational; the net proceeds from the
project loan will provide funds to construct a chilled water facility.
Upon completion, the project will be leased to a customer under a long-term
capital lease.
Maturities and sinking fund requirements on long-term debt for the
five years subsequent to December 31, 1994, are as follows:
<TABLE>
<CAPTION>
Net Sinking Fund
Maturities Requirements Total
- --------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
1995 $ - $ 350 $ 350
1996 15,000 150 15,150
1997 11,250 - 11,250
1998 - - -
1999 - - -
</TABLE>
The Company has filed a Preliminary Official Statement with the
relevant regulatory authorities involving the sale of $40 million Pollution
Control Refunding Bonds by the city of Petersburg and the issuance by the
Company of its First Mortgage Bond in the like amount. It is anticipated
that this transaction will close in early February, 1995. The proceeds
will be used to refund the 10 5/8% Series, due December, 2014.
7. LINES OF CREDIT
IPALCO has a line of credit of $2 million, of which $.05 million was
unused at December 31, 1994. The line of credit requires the payment of a
commitment fee and expires June 29, 1995.
IPL has lines of credit with banks of $100 million at December 31,
1994, to provide loans for interim financing. These lines of credit, based
on separate formal and informal agreements, have expiration dates ranging
from January 31, 1995, to November 30, 1995, and require the payment of
commitment fees. At December 31, 1994, $95 million of these credit lines
were unused. Lines of credit supporting commercial paper were $21.4
million at December 31, 1994.
Mid-America also has a line of credit of $2 million, of which $.6 was
unused at December 31, 1994.
The weighted average interest rates on notes payable and commercial
paper outstanding were 6.30% and 3.36% at December 31, 1994 and 1993,
respectively.
8. INCOME TAXES
Federal and state income taxes charged to income are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
- -------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
Utility Operating Expenses:
Current income taxes:
Federal $45,919 $52,321 $48,504
State 6,919 7,761 7,500
------- ------- -------
Total current taxes 52,838 60,082 56,004
------- ------- -------
Deferred income taxes, net--federal and state:
Excess of tax depreciation over book
depreciation 6,615 7,109 5,254
Early retirement of bonds 271 592 1,965
Allowance for borrowed funds used during
construction (net of capitalized interest
for tax purposes) (1,187) (1,214) (1,050)
Amortization of deferred return - rate
phase-in plan (debt portion) - - (676)
Unbilled revenues 609 (1,768) 436
Accrued pension expense (1,651) (1,865) (1,965)
Miscellaneous 1,316 204 (890)
------- ------- -------
Total deferred taxes 5,973 3,058 3,074
------- ------- -------
Net amortization of investment credit (3,268) (3,268) (3,459)
------- ------- -------
Total charge to utility operating expenses 55,543 59,872 55,619
Net credit to other income and deductions (4,536) (17,502) (2,695)
------- ------- -------
Total federal and state income tax provisions $51,007 $42,370 $52,924
======= ======= =======
</TABLE>
The provision for federal income taxes (including net investment tax
credit adjustments) is less than the amount computed by applying the
statutory tax rate to pretax income. The reasons for the difference,
stated as a percentage of pretax income, are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory tax rate 35.0% 35.0% 34.0%
Effect of state income taxes (1.9) (1.5) (2.0)
Amortization of investment tax credits (2.2) (2.8) (2.4)
Preferred dividends of subsidiary 0.8 0.9 0.8
Other - net (2.4) 0.2 1.3
---- ---- ----
Effective tax rate 29.3% 31.8% 31.7%
==== ==== ====
</TABLE>
The significant items comprising Enterprises' net deferred tax
liability recognized in the consolidated balance sheets as of December 31,
1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
- ---------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
Deferred tax liabilities:
Relating to utility property $349,461 $335,824
Early retirement of bonds 7,697 7,377
Other 5,497 1,603
-------- --------
Total deferred tax liabilities 362,655 344,804
-------- --------
Deferred tax assets:
Unbilled revenue 9,538 10,148
Pension 10,865 9,033
Investment tax credit 32,846 34,842
Other 28,722 22,012
-------- --------
Total deferred tax assets 81,971 76,035
-------- --------
Net deferred tax liability $280,684 $268,769
======== ========
</TABLE>
9. RATE MATTERS
Electric Rate Case
In the retail electric rate case now pending before the IURC, a
prehearing conference was held on June 8, 1994, and an order was issued
July 20, 1994, establishing a test year ending June 30, 1994. IPL filed
its case-in-chief on October 11, 1994. The IURC has scheduled hearings on
IPL's request to begin on February 7, 1995.
Environmental Compliance Plan
On August 18, 1993, IPL obtained an Order from the IURC approving its
Environmental Compliance Plan, together with the costs and expenses
associated therewith, which provides for the installation of sulfur dioxide
and nitrogen oxide emissions abatement equipment and the installation of
continuous emission monitoring systems to meet the requirements of both
Phase I and Phase II of the Federal Clean Air Act Amendments of 1990 (the
Act). The order provides for the deferral of net gains and losses
resulting from any sale of emission allowances. The order further provides
for the amortization of such deferrals, as an expense reduction or as an
expense, to be included in the ordinary, necessary and reasonable expenses
for ratemaking purposes, on a basis to be determined in a future general
electric rate proceeding.
Steam Rate Order
By an order dated January 13, 1993, the IURC authorized IPL to
increase its steam system rates and charges over a six-year period.
Accordingly, IPL implemented new steam tariffs designed to produce
estimated additional annual steam operating revenues as follows:
<TABLE>
<CAPTION>
Additional Cumulative
Annual Annual
Year Revenues Revenues
---- ---------- ----------
<S> <C> <C>
January 13, 1993 $1,932,000 $1,932,000
January 13, 1994 2,051,000 3,983,000
January 13, 1995 1,552,000 5,535,000
January 13, 1996 1,625,000 7,160,000
January 13, 1997 2,384,000 9,544,000
January 13, 1998 370,000 9,914,000
</TABLE>
Demand Side Management Program
On September 8, 1993, IPL obtained an Order from the IURC approving a
Stipulation of Settlement Agreement between IPL, the Office of Utility
Consumer Counselor, Citizens Action Coalition of Indiana, Inc., an
industrial group, the Trustees of Indiana University and the Indiana
Alliance for Fair Competition relating to the Company's Demand Side
Management Program (DSM). The order provides for the deferral and
subsequent recognition as ordinary, necessary and reasonable expenses for
ratemaking purposes of certain approved DSM costs. The order also provides
for the recording of a return on deferred costs until recognized in the
future for ratemaking purposes.
10. EMPLOYEE BENEFIT PLANS AND OTHER POSTRETIREMENT BENEFITS
Enterprises' contributions to the Thrift Plan were $3.3 million, $3.2
million and $3.1 million in 1994, 1993 and 1992, respectively.
Net pension cost for the Plan including amounts charged to
construction is comprised of the following components:
<TABLE>
<CAPTION>
1994 1993 1992
- ---------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
Service cost--benefits earned during the period $ 7,832 $ 6,355 $ 5,563
Interest cost on projected benefit obligation 15,358 14,192 13,739
Actual return on plan assets 10,366 (40,045) (18,865)
Net amortization and deferral (27,297) 25,689 5,366
------- ------- -------
Net periodic pension cost $ 6,259 $ 6,191 $ 5,803
======= ======= =======
</TABLE>
A summary of the Plans' funding status, and the amount recognized in
the consolidated balance sheets at December 31, 1994 and 1993, follows:
<TABLE>
<CAPTION>
1994 1993
- -------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $(123,306) $(128,449)
Nonvested benefit obligation (26,394) (28,532)
--------- ---------
Accumulated benefit obligation $(149,700) $(156,981)
========= =========
Projected benefit obligation $(201,345) $(224,037)
Plan assets at fair value 199,522 218,312
--------- ---------
Funded status--plan assets less than projected
benefit obligation (1,823) (5,725)
Unrecognized net gain from past experience different
from that assumed (31,058) (22,922)
Unrecognized past service costs 21,188 22,932
Unrecognized net asset at January 1, 1987 being
amortized over an original life of 18.9 years (15,410) (16,825)
--------- ---------
Net accrued pension costs included in current
liabilities at December 31 $ (27,103) $ (22,540)
========= =========
</TABLE>
Approximately 19.5% of the Plans' assets were in equity securities,
with the remainder in fixed income securities.
Enterprises also provides certain postretirement health care and life
insurance benefits for employees, other than Mid-America's subsidiaries'
employees, who retire from active service on or after attaining age 55 and
have rendered at least 10 years of service. On January 1, 1993,
Enterprises adopted the provisions of SFAS No. 106, "Employers' Accounting
for Postretirement Benefits Other than Pensions" (SFAS 106). Generally,
SFAS 106 requires the use of an accrual basis accounting method for
determining annual costs of postretirement benefits. The January 1, 1993,
transition obligation of $122.8 million is being amortized over a 20 year
period. Prior to 1993, the cost of such benefits was recognized when
incurred and amounted to $3.5 million in 1992.
Net postretirement benefit cost, including amounts charged to
construction for 1994 and 1993 is comprised of the following components:
<TABLE>
<CAPTION>
1994 1993
- --------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
Service cost -- benefits earned during the period $ 5,144 $ 4,859
Interest cost on accumulated postretirement benefit obligation 11,097 10,838
Actual return on plan assets (435) (297)
Net amortization and deferral 5,767 5,759
-------- --------
Net periodic postretirement benefit cost $ 21,573 $ 21,159
======== ========
</TABLE>
A summary of the retiree health care and life insurance plan's funding
status, and the amount recognized in the consolidated balance sheets at
December 31, 1994 and 1993 follows:
<TABLE>
<CAPTION>
1994 1993
- -------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
Actuarial present value of accumulated postretirement
benefit obligation:
Retirees $ (55,462) $ (60,110)
Fully eligible active plan participants (19,531) (21,344)
Other active plan participants (59,073) (74,453)
--------- ---------
Total (134,066) (155,907)
Plan assets at fair value 10,570 10,135
--------- ---------
Funded status--accumulated postretirement benefit obligation in excess
of plan assets (123,496) (145,772)
Unrecognized net gain from past experience different from that assumed (21,931) 11,216
Unrecognized net obligation at January 1, 1993 being amortized over
an original life of 20 years 110,573 116,716
--------- ---------
Net accrued postretirement benefit cost included in deferred
liabilities at December 31 $ (34,854) $ (17,840)
========= =========
</TABLE>
Enterprises is expensing its nonconstruction related SFAS 106 costs
associated with its unregulated and steam businesses. The SFAS 106 costs,
net of amounts paid and capitalized for construction, associated with IPL's
electric business are being deferred as a regulatory asset on the
consolidated balance sheets, as authorized by an order of the IURC on
December 30, 1992, which provided for deferral of SFAS 106 costs in excess
of such costs determined on a cash basis. A request for inclusion of these
costs as ordinary, necessary and reasonable expenses for ratemaking
purposes has been made in IPL's pending general electric rate petition.
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation is 11.7% for 1995, gradually
declining to 5.0% in 2003. A 1% increase in the assumed health care cost
trend rate for each year would increase the accumulated postretirement
benefit obligation as of December 31, 1994, by approximately $20.5 million
and the combined service cost and interest cost for 1994 by approximately
$3.0 million.
Plan assets consist of the cash surrender value of life insurance
policies on certain retired IPL employees.
Assumptions used in determining the information above were:
<TABLE>
<CAPTION>
1994 1993 1992
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate - pension plans 8.0% 7.0% 7.5%
Discount rate - postretirement benefits 8.0% 7.0% -
Rate of increase in future compensation levels 6.1% 6.1% 6.1%
Expected long-term rate of return on assets - pension plans 8.0% 8.0% 8.0%
</TABLE>
On August 30, 1994, the Board of Directors adopted a Voluntary
Employee Beneficiary Association (VEBA) Trust Agreement for the funding of
postretirement health and life insurance benefits for retirees and their
eligible dependents and beneficiaries. Annual funding is discretionary and
is based on the projected cost over time of benefits to be provided to
covered persons consistent with acceptable actuarial methods. To the
extent these postretirement benefits are funded, the benefits will not be
shown as a liability on Enterprises' financial statements. The VEBA Trust
Agreement provides for full funding of Enterprises' accumulated
postretirement benefit obligation in the event of certain change of control
transactions.
On December 14, 1994, Mid-America's Board of Directors approved a Long-
Term Incentive Plan (the Incentive Plan) that covers key executives of Mid-
America and certain officers of IPALCO effective January 1, 1995.
Pursuant to the Incentive Plan, whole or fractions of eight shares of
an award pool are available to be granted. The value of such shares is
zero at the inception of the Incentive Plan and can grow in value during
the performance period (January 1, 1995 - December 31, 1999). The reward
pool to be distributed to the holders of such shares on December 31, 1999,
will be determined based upon the increase in the valuation of the
respective Mid-America businesses during the performance period and can
amount to .85% up to 15% of the total increase during the performance
period. A minimum increase in value above $34 million is required before
any reward is payable.
Participation in the Incentive Plan will be reviewed on an annual
basis and during the performance period as necessary. The Compensation
Committee of IPALCO's Board of Directors may add or delete participants
from the Incentive Plan and may make modifications to the distribution of
shares during the performance period.
11. COMMITMENTS AND CONTINGENCIES
In 1995, Enterprises anticipates the cost of its subsidiaries'
construction programs to be approximately $257 million.
IPL will comply with the provisions of the Act through the
installation of SO2 scrubbers and NOx facilities. The cost of complying
with the Act from 1995 through 1997, including AFUDC, is estimated to be
approximately $142 million, of which $125 million is anticipated in 1995.
During 1994, 1993, and 1992, expenditures for compliance with the Act were
$59.4 million, $13.7 million, and $20.0 million, respectively.
IPL has a five-year firm power purchase agreement with Indiana
Michigan Power Company (IMP) for 100 megawatts (MW) of capacity effective
April 1992, with the purchase of an additional 100 MW (for a total of 200
MW) beginning in April 1993. The agreement provides for monthly capacity
payments by IPL of $.6 million from April 1992 through March 1993,
increasing to a monthly amount of $1.2 million which began in April 1993
and continues through March 31, 1997. The agreement further provides that
IPL can elect to extend purchases through December 31, 1997, and
subsequently through November 30, 1999, with capacity payments of $1.2
million per month and $1.55 million per month, respectively. IPL can
terminate the agreement, should the ability to include future demand
charges in ordinary, necessary and reasonable expenses for ratemaking
purposes be disallowed. Capacity payments during 1994, 1993 and 1992 under
this agreement totaled $14.4 million, $12.6 million and $5.4 million,
respectively.
Enterprises is involved in litigation and environmental claims arising
in the normal course of business. While the results of such litigation
cannot be predicted with certainty, management, based upon advice of
counsel, believes that the final outcome will not have a material adverse
effect on the consolidated financial position and results of operations.
With respect to environmental issues, IPL has ongoing discussions with
various regulatory authorities, and continues to believe that IPL is in
compliance with its various permits, but if IPL's position is found to be
erroneous, they could be subject to fines.
12. WITHDRAWN TENDER OFFER
During the third quarter of 1993, IPALCO incurred a one-time charge
against earnings of $33.9 million before taxes ($21.1 million net of
applicable income taxes), for legal, financial and administrative costs
pertaining to IPALCO's effort to acquire PSI Resources, Inc. The charge
resulted in a decrease in earnings per share of 56 cents.
13. QUARTERLY RESULTS (UNAUDITED)
Operating results for the years ended December 31, 1994 and 1993, by
quarter, are as follows (in thousands except per share amounts):
<TABLE>
<CAPTION>
1994
-----------------------------------------------
March 31 June 30 September 30 December 31
-------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Utility operating revenues $181,178 $161,137 $183,666 $160,095
Utility operating income 41,520 29,440 42,832 29,518
Net income 30,365 16,138 28,900 17,591
Earnings per share of
common stock $ .81 $ .43 $ .77 $ .47
<CAPTION>
1993
-----------------------------------------------
March 31 June 30 September 30 December 31
-------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Utility operating revenues $169,042 $153,127 $183,264 $158,870
Utility operating income 40,068 27,354 44,520 30,426
Net income 29,868 16,520 10,987 18,047
Earnings per share of
common stock $ .79 $ .44 $ .29 $ .48
</TABLE>
The quarterly figures reflect seasonal and weather-related
fluctuations which are normal to IPL's operations. Colder weather was
experienced in the first quarter of 1994 and warmer weather was experienced
in the second quarter of 1994, while weather conditions in 1993 reflected
near normal conditions. In addition, during the third quarter of 1994, IPL
expensed approximately $3.1 million of property held for future use. See
also Note 12.
Earnings per share are computed independently for each of the quarters
presented. Therefore, the sum of the quarterly earnings per share may not
equal the total for the year.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to the directors of the registrant, set
forth in the Proxy Statement of IPALCO Enterprises, Inc.
dated March 6, 1995 (the registrant's Proxy Statement), under
"Election of Six Directors" at pages 4-8 is incorporated
herein by reference. Information relating to the
registrant's executive officers is set forth at pages I-10 -
I-12 of this Form 10-K under "Executive Officers of the
Registrant at February 28, 1995."
Item 11. EXECUTIVE COMPENSATION
Information relating to executive compensation, set forth in
the registrant's Proxy Statement under "Compensation of
Executive Officers" at pages 11-15, "Compensation of
Directors - Standard Arrangements" at page 15, "Compensation
Committee Interlocks and Insider Participation" at page 18,
"Pensions Plans" at page 20, and "Employment Contracts and
Termination of Employment and Change in Control Arrangements"
at pages 21-22, is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relating to ownership of the registrant's common
stock by persons known by the registrant to be the beneficial
owners of more than 5% of the outstanding shares of common
stock and by management, set forth in the registrant's Proxy
Statement under "Voting Securities and Beneficial Owners" at
pages 2-3 is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information relating to certain relationships and related
transactions, set forth in the registrant's Proxy Statement
under "Compensation of Directors - Certain Business
Relationships" at page 15, is incorporated herein by
reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The Consolidated Financial Statements and Supplemental
Schedule under this Item 14 (a) 1 and 2 filed in this Form 10-
K are those of IPALCO Enterprises, Inc. and subsidiaries.
1. Consolidated Financial Statements
Included in Part II of this report:
Independent Auditors' Report
Statements of Consolidated Cash Flows
for the Years Ended December 31, 1994,
1993 and 1992
Statements of Consolidated Income for the Years Ended
December 31, 1994, 1993 and 1992
Consolidated Balance Sheets, December 31, 1994 and 1993
Statements of Consolidated Preferred Stock and
Long-Term Debt, December 31, 1994 and 1993
Statements of Consolidated Common Shareholders' Equity
for the Years Ended December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
(a) 2. Consolidated Financial Statement Schedules
Included in Part IV of this report:
For each of the years ended December 31, 1994, 1993
and 1992
Schedule VIII - Valuation and Qualifying Accounts
(a) 3. Exhibits
The Exhibit Index beginning on page IV-6 of this
Annual Report on Form 10-K lists the exhibits that are
filed as part of this report.
(b) Reports on Form 8-K
IPALCO Enterprises, Inc. filed a report on Form 8-K, dated
September 27, 1994, reporting Item 5, "Other Event", and Item
7, "Exhibits", with respect to the announced delay of IPL's
proposed Patriot electric generating unit.
<TABLE>
IPALCO ENTERPRISES, INC. SCHEDULE VIII
Valuation and Qualifying Accounts
For the Years Ended December 31, 1994, 1993 and 1992
(In Thousands)
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS DEDUCTIONS
---------------------- FOR PURPOSES
CHARGED TO CHARGED FOR WHICH
BALANCE AT COSTS AND TO OTHER RESERVES BALANCE AT
DESCRIPTION JANUARY 1 EXPENSES ACCOUNTS WERE CREATED DECEMBER 31
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994:
RESERVES DEDUCTED IN CONSOLIDATED BALANCE
SHEET FROM ASSETS TO WHICH THEY APPLY:
Reserve for depreciation of utility property $ 876,054 $ 87,028 $ 0 $ 46,139 $ 916,943
Reserve for depreciation of nonutility property $ 3,482 $ 2,338 $ 0 $ 11 $ 5,809
Reserve for receivables $ 672 $ 1,894 $ 21 $ 1,732 $ 855
YEAR ENDED DECEMBER 31, 1993:
RESERVES DEDUCTED IN CONSOLIDATED BALANCE
SHEET FROM ASSETS TO WHICH THEY APPLY:
Reserve for depreciation of utility property $ 818,319 $ 78,372 $ 0 $ 20,637 $ 876,054
Reserve for depreciation of nonutility property $ 1,810 $ 1,665 $ 7 $ 0 $ 3,482
Reserve for receivables $ 688 $ 1,994 $ (11) $ 1,999 $ 672
YEAR ENDED DECEMBER 31, 1992:
RESERVES DEDUCTED IN CONSOLIDATED BALANCE
SHEET FROM ASSETS TO WHICH THEY APPLY:
Reserve for depreciation of utility property $ 756,093 $ 74,829 $ 0 $ 12,603 $ 818,319
Reserve for depreciation of nonutility property $ 600 $ 1,211 $ 0 $ 1 $ 1,810
Reserve for receivables $ 734 $ 1,986 $ 60 $ 2,092 $ 688
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
IPALCO ENTERPRISES, INC.
By /s/ John R.Hodowal
---------------------------------
(John R. Hodowal, Chairman of the
Board and President)
Date February 28, 1995
-----------------
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
(i) Principal Executive Officer:
/s/ John R. Hodowal Chairman of the Board February 28, 1995
---------------------- and President
(John R. Hodowal)
(ii) Principal Financial Officer:
/s/ John R. Brehm Vice President February 28, 1995
---------------------- and Treasurer
(John R. Brehm)
(iii) Principal Accounting Officer:
/s/ Stephen J. Plunkett Controller February 28, 1995
-----------------------
(Stephen J. Plunkett)
(iv) A majority of the Board of Directors of IPALCO Enterprises, Inc.:
/s/ Joseph D. Barnette, Jr. Director February 28, 1995
---------------------------
(Joseph D. Barnette, Jr.)
SIGNATURES (Continued)
/s/ Robert A. Borns Director February 28, 1995
---------------------------
(Robert A. Borns)
/s/ Mitchell E. Daniels, Jr. Director February 28, 1995
----------------------------
(Mitchell E. Daniels, Jr.)
/s/ Rexford C. Early Director February 28, 1995
---------------------------
(Rexford C. Early)
/s/ Otto N. Frenzel III Director February 28, 1995
---------------------------
(Otto N. Frenzel III)
/s/ Max L. Gibson Director February 28, 1995
---------------------------
(Max L. Gibson)
/s/ Edwin J. Goss Director February 28, 1995
---------------------------
(Edwin J. Goss)
/s/ Dr. Earl B. Herr, Jr. Director February 28, 1995
---------------------------
(Dr. Earl B. Herr, Jr.)
/s/ John R. Hodowal Director February 28, 1995
---------------------------
(John R. Hodowal)
/s/ Ramon L. Humke Director February 28, 1995
---------------------------
(Ramon L. Humke)
/s/ Sam H. Jones Director February 28, 1995
---------------------------
(Sam H. Jones)
/s/ Andre B. Lacy Director February 28, 1995
---------------------------
(Andre B. Lacy)
SIGNATURES (Continued)
/s/ L. Ben Lytle Director February 28, 1995
---------------------------
(L. Ben Lytle)
/s/ Thomas M. Miller Director February 28, 1995
---------------------------
(Thomas M. Miller)
/s/ Sallie W. Rowland Director February 28, 1995
---------------------------
(Sallie W. Rowland)
/s/ Thomas H. Sams Director February 28, 1995
---------------------------
(Thomas H. Sams)
EXHIBIT INDEX
Copies of documents listed below which are identified with an
asterisk (*) are incorporated herein by reference and made a part
hereof. The management contracts or compensatory plans are marked
with a double asterisk (**) after the description of the contract or
plan.
Exhibit
No. Description
------- -----------------------------------------------------------
3.1* Articles of Incorporation of IPALCO Enterprises, Inc.,
as amended. (Form 10-K for year ended 12-31-90.)
3.2* Bylaws of IPALCO Enterprises, Inc. dated April 26, 1994.
(Form 10-Q for quarter ended 6-30-94.)
4.1 IPALCO Enterprises, Inc. Automatic Dividend Reinvestment and
Stock Purchase Plan.
4.2 IPALCO Enterprises, Inc. and First Chicago Trust Company of
New York (Rights Agent) - Rights Agreement.
10.1 IPALCO Enterprises, Inc. Unfunded Deferred Compensation Plan
for Directors dated December 27, 1983, as amended. **
10.2 IPALCO Enterprises, Inc. Unfunded Deferred Compensation Plan
for Officers effective January 1, 1994. **
10.3 Directors' and Officers' Liability Insurance Policy No.
DO392B1A94 effective June 1, 1994 to June 1, 1995. **
10.4* IPALCO Enterprises, Inc. Benefit Protection Fund and Trust
Agreement effective November 1, 1988. (Form 10-K for year
ended 12-31-88.) **
10.5* Exhibit A to IPALCO Enterprises, Inc. Benefit Protection
Fund and Trust Agreement dated February 23, 1993. (Form 10-
K for year ended 12-31-93.) **
10.6* IPALCO Enterprises, Inc. Annual Incentive Plan and
Administrative Guidelines effective January 1, 1990. (Form
10-K for year ended 12-31-89.) **
10.7 IPALCO Enterprises, Inc. Long-Term Performance and
Restricted Stock Incentive Plan (as amended and restated
effective January 1, 1995). **
10.8 IPALCO Enterprises, Inc. 1990 Stock Option Plan **
10.9 IPALCO Enterprises, Inc. 1991 Directors' Stock Option Plan **
10.10 Form of Termination Benefits Agreement together with schedule
of parties to, and dates of, the Termination Benefits
Agreements **
10.11 Employment Agreement between IPALCO Enterprises, Inc.,
Indianapolis Power & Light Company and John R. Hodowal dated
July 29, 1986 **
Exhibit
No. Description
------- -------------------------------------------------------------
10.12 Voluntary Employee Beneficiary Association (VEBA) Trust
Agreement **
11.1 Computation of Per Share Earnings
20.1* Form 10-K of Indianapolis Power & Light Company for the year
ended December 31, 1994, and all exhibits thereto.
21.1 Subsidiaries of the Registrant
23.1 Independent Auditors' Consent
27.1 Financial Data Schedule
99.1* Agreement dated as of October 27, 1993, by and among IPALCO
Enterprises, Inc., Indianapolis Power & Light Company, PSI
Resources, Inc., PSI Energy, Inc., The Cincinnati Gas &
Electric Company, CINergy Corp., James E. Rogers, John R.
Hodowal and Ramon L. Humke. (Form 10-Q for quarter ended 9-
30-93.)
99.2 Amendment to Agreement, dated October 27, 1994, by and among
IPALCO Enterprises, Inc., Indianapolis Power & Light
Company, PSI Resources, Inc., PSI Energy, Inc., The
Cincinnati Gas & Electric Company, CINergy Corp., James E.
Rogers, John R. Hodowal and Ramon L. Humke.
EXHIBIT 4.1
PROSPECTUS
IPALCO ENTERPRISES, INC.
Automatic Dividend Reinvestment and Stock Purchase Plan
_________________
The Automatic Dividend Reinvestment and Stock Purchase Plan (the
"Plan") of IPALCO Enterprises, Inc. ("IPALCO") provides a simple and
convenient method for record holders (as defined in the Plan) of IPALCO's
Common Stock and employees to purchase additional shares of Common Stock
either in the form of new issue shares or on the open market, as determined
by IPALCO's Board of Directors.
Participants in the Plan may:
have dividends on all their shares automatically reinvested;
have dividends on part of their certificated shares
automatically reinvested and receive the remainder of their
dividends in cash;
continue to receive dividends on all certificated shares and
invest by making optional cash payments (including employees'
payroll deductions) of not less than $25 or more than $5,000 in
any calendar month;
invest both cash dividends and optional cash payments;
deposit their Common Stock certificates with the Plan for
safekeeping;
direct IPALCO to transfer, at no cost to participants, all or
a portion of their whole shares of Common Stock held in the
Plan to other persons.
The purchase price of new issue shares of Common Stock will be the
average of the high and low sales prices on the New York Stock Exchange
Composite Tape on the Investment Date (as defined in the Plan). The
purchase price of shares purchased on the open market will be the weighted
average of the prices of the Common Stock purchased for the Plan during any
calendar month, including brokerage commissions.
_________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
_________________
This document constitutes part of a prospectus covering securities that have
been registered under the Securities Act of 1933.
October 29, 1993
<PAGE>
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus in connection
with the offer contained herein and if given or made, such information or
representations must not be relied upon as having been authorized by IPALCO
Enterprises, Inc. This Prospectus does not constitute an offer to sell or
the solicitation of an offer to buy any of the securities offered hereby in
any jurisdiction to or from any persons to whom it is unlawful to make or
solicit such offer in such jurisdiction. Neither the delivery of this
Prospectus nor any sales made hereunder shall under any circumstances create
any implication that there has been no change in the information herein
since the date hereof.
____________________
IF YOU HAVE QUESTIONS CONCERNING THE PLAN
Please address all correspondence concerning the Plan to:
IPALCO Enterprises, Inc.
Shareholder Services
Dividend Reinvestment Plan
P.O. Box 798
Indianapolis, Indiana 46206
Telephone Local - 261-8394
Fax Number - 317-261-8288
Toll Free - 1-800-877-0153
____________________
TABLE OF CONTENTS
Page
General Information. . . . . . . . . . . . . . . . . . 3
Plan of Distribution . . . . . . . . . . . . . . . . . 3
Introduction. . . . . . . . . . . . . . . . . . . 4
Purpose . . . . . . . . . . . . . . . . . . . . . 4
Administration. . . . . . . . . . . . . . . . . . 4
Participation - General . . . . . . . . . . . . . 5
Costs . . . . . . . . . . . . . . . . . . . . . . 6
Purchases . . . . . . . . . . . . . . . . . . . . 7
Optional Cash Payments. . . . . . . . . . . . . . 8
Reports to Participants . . . . . . . . . . . . . 8
Dividends . . . . . . . . . . . . . . . . . . . . 9
Certificates for Shares . . . . . . . . . . . . . 9
Partial and Complete Withdrawals. . . . . . . . . 9
Safekeeping Service . . . . . . . . . . . . . . . 10
Transfer of Common Stock. . . . . . . . . . . . . 11
Other Information . . . . . . . . . . . . . . . . 12
Participation - Employees . . . . . . . . . . . . 14
Use of Proceeds. . . . . . . . . . . . . . . . . . . . 14
Incorporation of Certain Documents by Reference. . . . 15
Experts. . . . . . . . . . . . . . . . . . . . . . . . 16
Legal Opinions . . . . . . . . . . . . . . . . . . . . 16
Attachment "A" . . . . . . . . . . . . . . . . . . . . 17
GENERAL INFORMATION
IPALCO Enterprises, Inc. (IPALCO) is a holding company incorporated
under the laws of the State of Indiana on September 14, 1983. Pursuant to
an Agreement and Plan of Merger, effective December 31, 1983, Indianapolis
Power & Light Company (the "Company") became a subsidiary of IPALCO and all
Common Stock of the Company outstanding on December 31, 1983 was exchanged
for Common Stock of IPALCO, on a share for share basis, and all common
shareholders of the Company on that date became common shareholders of
IPALCO. The Company is engaged primarily in generating, transmitting,
distributing and selling electric energy in the City of Indianapolis and
neighboring cities, towns and communities, and adjacent rural areas, all
within the State of Indiana, the most distant point being about forty miles
from Indianapolis. It also produces, distributes and sells steam within a
limited area in such city. On July 31, 1984, Mid-America Capital Resources,
Inc. ("Mid-America") became a wholly-owned subsidiary of IPALCO and
functions as a holding company for Mid-America Energy Resources, Inc. which
operates a district cooling system in Indianapolis and Cleveland Energy
Resources which operates district steam heating and cooling systems in
Cleveland, Ohio. The principal executive offices of IPALCO are located at
25 Monument Circle, P.O. Box 1595, Indianapolis, Indiana 46206.
IPALCO is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports and other
information with the Securities and Exchange Commission. Information
concerning directors and officers, their remuneration and any material
interest of such persons in transactions with IPALCO, is disclosed in proxy
statements distributed to shareholders of IPALCO and filed with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549;
Seven World Trade Center, 13th Floor, New York, New York 10048; and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material also can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Reports, proxy material and
other information concerning IPALCO can also be inspected at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005 and
Chicago Stock Exchange, 120 South LaSalle Street, Chicago, Illinois 60603.
PLAN OF DISTRIBUTION
IPALCO hereby offers record holders of its common stock (the "Common
Stock") and its employees (hereinafter defined) the opportunity to purchase
shares of Common Stock pursuant to IPALCO's Automatic Dividend Reinvestment
and Stock Purchase Plan (the "Plan").
The Plan, as hereby amended, was adopted by resolution of IPALCO's
Board of Directors on October 26, 1993 to be effective October 29, 1993.
The Plan consists of the following 40 numbered questions and answers:
<PAGE>
Introduction
1. What does the Plan provide?
The Plan provides the opportunity for all record holders of Common
Stock ("Shareholders") and full time employees (except employees subject to
the reporting requirements of Section 16 of the Securities Exchange Act of
1934), of IPALCO and any direct or indirect subsidiary thereof
("Employees"), to have dividends reinvested and/or optional cash payments
invested in additional Common Stock to be purchased by the Plan either
directly from IPALCO in the form of new issue shares, or on the open market.
The determination whether to purchase Common Stock in the form of new issue
shares or on the open market shall be made by IPALCO's Board of Directors,
at its sole discretion, without notice to participants. Shareholders and
Employees may choose one of the following methods of participation:
(a) reinvest the cash dividends otherwise payable to them on
all or a part of the Common Stock registered in their names and on all
Common Stock held in the Plan in additional shares of Common Stock;
or
(b) continue to receive all of their cash dividends on Common
Stock held in their names and purchase Common Stock by making optional
cash payments to the Plan of not less than $25 nor more than $5,000
per month; or
(c) both reinvest cash dividends and make optional cash
payments as provided in (a) and (b) above.
Purpose
2. What is the purpose of the Plan?
The purpose of the Plan is to provide Shareholders and Employees with
a simple, convenient and relatively inexpensive method of investing cash
dividends and/or optional cash payments in Common Stock.
Administration
3. Who administers the Plan?
Indianapolis Power & Light Company as agent for the Plan (the "Agent")
will administer the Plan, keep records, send statements of account to
participants after each transaction that affects their accounts and perform
such other duties as required by the Plan. The Agent will purchase new
issue shares of Common Stock from IPALCO on behalf of participants in the
Plan. Purchases of Common Stock on the open market also will be made by the
Agent on behalf of participants through brokers consistent with applicable
securities laws and regulations relating to volume, timing and price of such
purchases during any calendar month. All shares purchased by the Agent will
be credited to the respective accounts of participants and will be held by
and registered in the nominee name of the Agent.
<PAGE>
Participation - General
4. Who is eligible to participate in the Plan?
Shareholders and Employees as defined in Question 1 are eligible to
participate in the Plan. Any beneficial owner of Common Stock that has
shares registered in the name of a broker must become a record holder by
having the Common Stock he or she selects for participation in the Plan
transferred to his or her own name.
5. How do Shareholders and Employees participate?
Shareholders may become participants in the Plan by signing the
Authorization Card and returning it to the Agent. Employees may become
participants in the manner set forth in Question 40. An Authorization Card
and a return envelope may be obtained by writing to IPALCO Enterprises,
Inc., Shareholder Services, Dividend Reinvestment Plan, P.O. Box 798,
Indianapolis, Indiana 46206 or by telephoning - 261-8394 for local calls
or 1-800-877-0153 for toll free long distance calls.
6. When may eligible Shareholders become participants in the Plan?
Shareholders may join the Plan at any time by completing the
Authorization Card and mailing it to the address set forth in Question 5.
If the Authorization Card is received on or before the record date for a
dividend payment, reinvestment of dividends will begin with that dividend,
unless the Authorization Card indicates optional cash payments only. (See
Question 15.) If the Authorization Card is received after a record date,
reinvestment of dividends will begin with the next dividend payment date.
Participants should be aware of possible delays in the ordinary course of
mail service and should allow for such delays when submitting their
Authorization Card.
7. What is an Investment Date?
An Investment Date is that date in each month when optional cash
payments and quarterly dividends are invested under the Plan; provided, that
when shares are purchased on the open market, the Agent has absolute
discretion, consistent with applicable securities laws and regulations as
to when, in what amounts and the price at which dividends and optional cash
will be used to purchase Common Stock during any calendar month. There is
only one Investment Date in each calendar month which will normally be the
15th day of the month. If an Investment Date falls on a day on which the
New York Stock Exchange is closed, the Investment Date will be the next
following trading day.
Dividends declared on Common Stock are payable January 15, April 15,
July 15 and October 15 of each year. Optional cash payments normally will
be invested on the 15th day of the month, provided such payments are
received by the Agent at least five full business days before the Investment
Date for that month. Cash payments received less than five full business
days before the Investment Date will be invested on the Investment Date for
the following month unless earlier investment is possible.
No interest will be earned or paid on optional cash payments held by
the Agent pending investment on an Investment Date.
<PAGE>
8. What does the Authorization Card provide?
The Authorization Card specifies the methods by which Shareholders and
Employees may elect to participate in the Plan. A separate Authorization
Card is required for each account of a Shareholder or Employee. The
investment options available are:
Full Reinvestment -- Reinvest cash dividends payable on all Common
Stock registered in the Shareholder's name and on all Common Stock
held in the Plan and invest any optional cash payments made by the
Shareholder.
Partial Reinvestment -- Reinvest cash dividends payable on less than
all Common Stock registered in the Shareholder's name and on all
Common Stock held in the Plan, receive cash dividends on the remaining
shares and invest any optional cash payments.
Optional Cash Only -- Invest only optional cash payments of not less
than $25 per month or more than $5,000 per month, although no
dividends are being reinvested on shares registered in the
Shareholder's name. (See also Question 24)
9. May participants change their method of participation in the Plan
after enrollment?
Yes, participants may change their method of participation in the Plan
after enrollment by selecting one of the other options permitted under
Question 8 on a new Authorization Card and signing and returning it to the
Agent; provided, the Agent receives the new Authorization Card before the
record date for the payment of the next dividend. (See Question 5 as to how
Authorization Cards may be obtained.)
Costs
10. Are any fees or expenses incurred by participants in the Plan?
Brokerage commissions resulting from open market purchases of Common
Stock made by the Agent during any calendar month, will be added to the
price per share to determine the number of shares to be purchased from
dividends and optional cash payments then available for investment under the
Plan. However, there are no brokerage commissions charged to participants
when new issue shares of Common Stock are being purchased under the Plan.
Also, if a participant withdraws from the Plan and asks the Agent to sell
his or her Common Stock held in the Plan (See Question 21), the Agent will
deduct the brokerage commission and other charges related to such sale. All
costs associated with the administration of the Plan are paid by IPALCO.
Purchases
11. How many shares of Common Stock will be purchased for a participant?
The number of shares purchased for each participant on an Investment
Date will depend on (a) whether Common Stock is being purchased from IPALCO
as new issue shares or is being purchased on the open market, (b) the total
amount of participants' dividends and optional cash payments to be invested,
(c) the price per share of Common Stock on the open market, and (d) the
brokerage commissions and other charges incurred in making open market
purchases of Common Stock. Each participant's account will be credited as
of each Investment Date with that number of shares, including fractions
computed to four decimal places, equal to the total amount to be invested
on behalf of that participant on that date, divided by the purchase price
(plus brokerage commissions and other charges related to open market
purchases) of each share of Common Stock determined as provided in Question
12.
There is no provision in the Plan for participants to order the
purchase of a specific number of shares or the purchase of shares at a
specified price. Since purchases under the Plan will not necessarily occur
on a particular date, a participant does not have the freedom to select more
precise timing for purchases.
12. What will be the price per share of Common Stock purchased under the
Plan?
The price per share of new issue shares of Common Stock purchased from
IPALCO on any Investment Date will be the average of the high and low sales
prices of the Common Stock on the New York Stock Exchange Composite Tape on
the Investment Date. In determining the purchase price, fractional cents
will be rounded to the next whole one-tenth of a cent. The high and low
sale prices on the Composite Tape normally will be published in The Wall
Street Journal on the first business day following an Investment Date.
The price per share of Common Stock purchased on the open market for
any calendar month will be the weighted average of the prices paid by the
Agent for the Common Stock purchased during the month, plus brokerage
commissions.
13. When will shares of Common Stock be purchased under the Plan?
Dividends will be reinvested on the Investment Date in the month
dividends are payable. Optional cash payments received by the Agent at
least five full business days before an Investment Date will be invested in
Common Stock in the month of receipt on the Investment Date for that month.
Optional cash payments received after such time will be applied to the
purchase of Common Stock on the next Investment Date. Under no
circumstances will interest be paid on optional cash payments held by the
Agent for investment. (See Question 7 for Investment Dates).
Optional Cash Payments
14. How does the cash payment option work?
Optional cash payments received from participants at least five full
business days before an Investment Date will be used to purchase Common
Stock on the Investment Date at the price determined under Question 12. If
participants wish to participate only through the investment of optional
cash payments, they must select that method of participation on the
Authorization Card. However, all dividends payable on shares purchased with
optional cash payments and held in a participant's Plan account will be
reinvested automatically in additional shares of Common Stock.
15. How are optional cash payments made under the Plan?
Optional cash payments may be made by participants each month
(however, see Question 40 regarding Employees). Optional cash payments
cannot be less than $25 nor more than $5,000 per month. Such cash payments
will be acknowledged by the Agent in the regular statement of account
prepared by the Agent. If the Agent receives payments totaling more than
$5,000 per month from a participant, the amount by which those payments
exceed $5,000, or if in one check, the entire amount, will be returned to
the participant. A participant may prevent investment of an optional cash
payment scheduled for the next Investment Date if the Agent is requested,
at least five full business days before that Investment Date, to return such
payment to the participant.
Any optional cash payment may be made by a participant when enrolling
in the Plan by enclosing with the Authorization Card a check or money order
payable to the order of IPALCO Enterprises, Inc. Thereafter, optional cash
payments may be made through the use of the cash payment forms sent to
participants by the Agent as a part of the statement of account. The same
amount of money need not be sent each month, and there is no obligation to
make an optional cash payment each month or any other time. Participants
who elect to make optional cash payments under the Plan must make such
payments in lawful money of the United States of America.
16. Will interest be paid by the Agent on any optional cash payments made
under the Plan?
No, interest will not be paid by IPALCO or the Agent on any optional
cash payments held for investment under the Plan. Therefore, it is
suggested that any optional cash payments participants desire to make be
sent so as to reach the Agent as nearly as possible to, but not later than,
five full business days before the Investment Date. Participants should be
aware that delays in the ordinary course of mail service do occur. So
please allow for such delays when making optional cash payments.
Reports to Participants
17. What kind of reports will be sent to participants in the Plan?
Each participant in the Plan will receive a statement of account after
completion of each transaction affecting such account, showing the
Investment Date, the amounts invested, the purchase price of the Common
Stock, the number of shares purchased, and other relevant information,
including information required by Section 6042 of the Internal Revenue Code
of 1986, as amended. All statements of accounts for any calendar year will
have been sent to each participant before the end of that calendar year.
Each statement of account normally will be sent within one week after the
Investment Date on which an investment occurred. In addition, participants
will receive copies of the same communications sent to all holders of Common
Stock, including IPALCO's interim and annual reports to shareholders and
annual meeting materials.
Dividends
18. Are dividends payable on fractional interests credited to a
participant's Plan account?
Yes, cash dividends on any fractional interest in a share of Common
Stock credited to a participant's account are automatically reinvested in
additional shares of Common Stock and credited to that account.
Certificates for Shares
19. Will certificates be issued for shares of Common Stock purchased?
Certificates for shares of Common Stock purchased under the Plan will
be issued out of a participant's account only upon written request. A form
on the reverse side of the statement of account may be used for that
purpose. However, certificates for fractional interest in shares will not
be issued under any circumstances but will be paid in cash upon withdrawal
or termination from the Plan. A statement of account will be provided not
less than quarterly to each participant which will show, among other things,
the number of shares held by the participant in his or her Plan account.
Shares credited to the account of a participant under the Plan may not
be pledged. Participants who wish to pledge their Common Stock must request
that such shares be withdrawn from the Plan and that certificates be issued
in the participant's name.
20. In whose name will certificates be registered when issued?
Certificates will be registered and issued in the same name shown on
the participant's Plan account, unless otherwise requested (See Questions
29-31).
Partial and Complete Withdrawals
21. How can a participant withdraw from the Plan?
A participant may make a partial or a complete withdrawal from the
Plan by submitting the form provided on the reverse side of the statement
of account or otherwise notifying the Agent, in writing, . . .
(a) To effect a partial withdrawal,
(i) by issuing one or more stock certificates for all whole
shares but keeping the fractional share in the Plan; or
(ii) by issuing one or more stock certificates for a part of
the whole Plan shares; or
(iii) by selling a part of the whole Plan shares; or
(b) To effect a complete withdrawal and termination of
participant's account,
(i) by issuing a stock certificate for all whole Plan shares
and sell the fractional share; or
(ii) by selling all whole Plan shares and the fractional
share.
22. When will a participant's request for withdrawal be processed?
Partial and complete withdrawals normally will be processed within
five business days after the Agent receives a request. Proceeds from any
sale of shares, less brokerage commissions, will be remitted to a
participant following settlement through a broker (normally five business
days after the sale). Any withdrawal request received on or after an ex-
dividend date (four business days before record date) will not be processed
until after the dividend relating to that record date has been reinvested.
23. Can a Shareholder reenter the Plan after a withdrawal?
Shareholders who partially withdraw from the Plan continue to have a
Plan account.
Shareholders who completely withdraw from the Plan and terminate their
account must have certificated shares of Common Stock and have filed an
Authorization Card with the Agent before they can resume participation.
24. May a participant discontinue reinvestment of dividends on
certificated shares without withdrawing from the Plan?
Yes. A participant who wishes to discontinue the reinvestment of
dividends on certificated shares of Common Stock may do so without
withdrawing from the Plan by simply changing his or her method of
participation in the Plan to optional cash only, as specified in Question
9. However, reinvestment of dividends on shares held in the Plan will
continue unless the participant completely withdraws from the Plan and
terminates his or her Plan account.
Safekeeping Service
25. What is the Plan's Safekeeping Service and how does it work?
The Plan's Safekeeping Service allows Plan participants to transfer
certificated shares of Common Stock to the Agent for safekeeping. Shares
deposited for safekeeping will be held in the name of the nominee of the
Agent and credited to participant's account under the Plan. Thereafter,
those shares will be treated the same way as other shares held in the Plan.
26. What are the advantages of the Plan's Safekeeping Service?
The Plan's Safekeeping Service offers two significant advantages to
participants. First, the risk associated with loss of a participant's
certificated shares is eliminated. Second, because certificated shares
deposited with the Plan for safekeeping are treated the same way as other
shares held in the Plan, they may be sold through the Plan in a convenient
and efficient manner, provided they have been on deposit with the Agent for
at least 60 days.
27. How may certificated shares of Common Stock be deposited with the
Plan?
A participant who wishes to deposit certificated shares of Common
Stock with the Plan must complete and return to IPALCO a letter of
transmittal substantially in the form of Attachment A hereto, together with
the Common Stock certificates registered in his or her name. Participants
are urged to send stock certificates by certified mail, return receipt
requested.
28. What happens to dividends paid on shares of Common Stock deposited
with the Plan?
Dividends paid on certificated shares of Common Stock deposited with
the Plan will be reinvested automatically in additional shares of Common
Stock until they are withdrawn from the Plan.
Transfer of Common Stock
29. May participants assign or transfer all or a part of their Plan
shares?
Yes. If a participant wishes to change the ownership of all or part
of his or her Common Stock held in the Plan, a transfer may be made by
mailing a properly executed stock power, together with a letter of
instruction, to IPALCO at the address shown under Question 5. Transfers of
less than all of a participant's shares must be made in whole shares. A
request to transfer shares held in the Plan is subject to the same
requirements that are applicable to the transfer of any certificated shares
of Common Stock, including, without limitation, the requirement of a
signature guarantee on the stock power. IPALCO will provide participants
with a form of stock power upon request.
30. If Common Stock held in the Plan is transferred to another person,
will IPALCO issue a stock certificate to the transferee?
Not unless requested by the participant. (See also Questions 19 and
20) A new Plan account will be opened in the name of the person to whom
the shares are transferred. An Authorization Form and Plan prospectus will
be mailed to such person as a new shareholder and any dividends paid on the
new account automatically will be reinvested.
31. How will the new shareholder be advised of the transfer?
IPALCO will provide the participant who requested the transfer and the
new shareholder with a statement of account to confirm establishment of the
new account and reflect current transactions.
Other Information
32. If IPALCO has a stock dividend or stock split, how will the Common
Stock held in the Plan be affected?
Any shares of Common Stock distributable by IPALCO as a stock dividend
or a stock split on shares of Common Stock credited to a participant's
account under the Plan as of the record date for such stock dividend or
stock split will be credited to that account under the Plan.
33. If IPALCO has a rights offering, how will the rights on Common Stock
held under the Plan be handled?
In a rights offering, the entitlement of each participant will include
any shares of Common Stock credited to the participant's account under the
Plan as of the record date. Rights applicable to Common Stock credited to
a participant's account under the Plan as of such record date will be sold
by the Agent as soon as practicable. The proceeds from such sale will be
considered an optional cash payment of the participant and treated
accordingly.
34. What are the responsibilities of IPALCO and the Agent under the Plan?
IPALCO and the Agent, in administering the Plan and in performing
their respective functions, shall not be liable for any act done in good
faith, or for any good faith omission to act, including, without limitation,
any claims of liability arising, or alleged to have arisen, out of the
failure to enroll an applicant, reinvest dividends, invest optional cash
payments or terminate a participant's account under the Plan.
Participants should recognize that IPALCO cannot assure them of a
profit or protect them against a loss on the value of shares of Common Stock
purchased or deposited by them under the Plan.
35. How will a participant's shares be voted at meetings of shareholders?
For each meeting of shareholders, participants in the Plan will
receive a proxy/instruction card enabling them to vote all shares registered
in their respective names, including those shares credited to participants'
accounts under the Plan.
36. What are the Federal income tax consequences of participation in the
Plan?
A participant will be treated for Federal income tax purposes as
having received, on the dividend payment date, dividends equal to the total
amount of the cash dividends payable on all Common Stock held by
participants, whether held in or outside the Plan.
Participants will not realize any taxable income at the time shares
are withdrawn from their Plan accounts. However, participants who receive,
upon withdrawal from the Plan, a cash payment for Plan shares (including
fractional shares) may realize a gain or a loss. Gains or losses may also
be realized by participants when shares are sold by them under the Plan.
The amount of such gains or losses, if any, will be the difference between
the amounts which participants receive for their shares and their tax basis.
Except in the case of participants who excluded reinvested dividends from
taxable income during the years 1982 through 1985 (see below), the tax basis
for shares purchased with reinvested dividends will equal the fair market
value of such shares on the dividend payment dates as of which the shares
were credited to participants' accounts. The tax basis of shares purchased
with optional cash payments will be the amount of such optional cash
payments.
Gain or loss from the sale of the shares will be treated as long-term
capital gain or loss if it was held for more than one year. Any gain or
loss other than long-term capital gain or loss will be treated as short-term
capital gain or loss. The present maximum federal long-term capital gain
rate is 28%.
During the years 1982 through 1985, participants were eligible to
elect to exclude from taxable income up to $750 of reinvested dividends per
year ($1,500 for a joint return). The tax basis of shares purchased with
such excluded dividends is zero for the purpose of determining taxable gain
when the shares are sold. The gain from the sale for those shares qualifies
for long-term capital gain treatment if the shares are held for more than
one year from the dividend payment date on which they were purchased.
However, if other Common Stock (regardless of how acquired) is sold between
the record date of a reinvested dividend and a date that is 12 months after
the payment date for that dividend, the sale is treated as though
participants disposed of shares which were purchased with such dividend (up
to the number of shares so purchased) and the net proceeds from the sale of
such shares will be treated as ordinary income.
37. What provision is made for foreign shareholders subject to income tax
withholding?
In the case of foreign shareholders who elect to have their dividends
reinvested and whose dividends are subject to United States income tax
withholding, the amount of the tax to be withheld will be deducted from the
amount of dividends to be reinvested. The statements of account confirming
purchases made for foreign participants will indicate the net dividend
payment reinvested. Optional cash payments received from them must be in
United States dollars.
The tax information contained in Questions 36 and 37 is provided
solely as a guide to participants, and may be subject to change by future
legislation. Participants are advised to consult their own tax advisors as
to the federal and state income tax effects of participation in the Plan.
38. May the Plan be amended or terminated?
IPALCO reserves the right to amend, suspend, modify or terminate the
Plan at any time. All participants will receive notice of any such
amendment, suspension, modification or termination. Upon termination of the
Plan, certificates for whole shares credited to a participant's account
under the Plan will be issued and a cash payment will be made for any
fractional interest in shares as provided in Question 21. The Agent
reserves the right to resign at any time upon advanced written notice to
IPALCO.
39. Who interprets the Plan?
IPALCO will interpret and regulate the Plan and any agreement
pertaining thereto, which interpretation and regulation shall be conclusive.
Participation - Employees
40. How can Employees participate in the Plan?
Employees who have Common Stock registered in their name may become
Plan participants in the same way as Shareholders, except that they also may
select payroll deduction as a means of making optional cash payments.
Employees who do not have Common Stock registered in their names are
eligible to enroll in the Plan immediately, by completing an Authorization
Card and returning it to the Agent with an optional cash payment of not less
than $25 or more than $5,000. Once Employees become Plan Participants, they
may make optional cash payments either directly to the Agent or indirectly
through payroll deductions. Plan provisions that apply generally to
optional cash payments also apply to optional cash payments made through
payroll deductions. (See Questions 14 - 16)
Employees who desire to make optional cash payments through payroll
deductions must complete a Payroll Deduction Card and return it to the
Agent. Employees who, thereafter, desire to discontinue optional cash
payments through payroll deductions, are responsible for advising the
Payroll Department to cease making such deductions from their pay.
Except as otherwise provided in this Question 40 or otherwise
specifically expressed in the Plan, once Employees become participants in
the Plan they are considered Shareholders and, as such, are subject to all
other terms and conditions of the Plan.
USE OF PROCEEDS
The proceeds to be received by IPALCO from the sale of new issue
shares of Common Stock offered hereby, after payment of the expenses
incurred in the administration of the Plan, will be placed in IPALCO's
treasury and used to meet current expenditures and for investment. IPALCO
has no basis for estimating either the number of new issue shares of Common
Stock (if any) that may be purchased under the Plan or the prices at which
such shares will be purchased.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Prospectus the
following documents heretofore filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934:
IPALCO's Annual Report on Form 10-K for the year ended December
31, 1992.
IPALCO's Quarterly Reports on Form 10-Q for the Quarters ended
March 31, 1993 and June 30, 1993.
IPALCO's definitive proxy statement, dated March 24, 1993,
filed pursuant to Section 14 of the Securities Exchange Act of
1934 in connection with the annual meeting of its shareholders
held April 21, 1993.
IPALCO's Forms 8-K dated March 15, 1993, August 5, 1993, August
18, 1993, and August 23, 1993, relating to its exchange offer
to shareholders of PSI Resources, Inc. and the termination
thereof.
All documents filed by IPALCO with the Securities and Exchange
Commission pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934, prior to the termination of the offering made by this
Prospectus, shall be deemed to be incorporated by reference in this
Prospectus and to be a part of this Prospectus from the date of the filing
of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
or is deemed to be incorporated by referenced herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
IPALCO hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been provided, on the written request of
any such person, a copy of any or all of the documents referred to above
which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents. Written requests for such copies
should be directed to Shareholder Services, Dividend Reinvestment Plan, P.O.
Box 798, Indianapolis, Indiana 46206.
EXPERTS
The consolidated financial statements and the related consolidated
financial statement schedules incorporated by reference in this prospectus
have been audited by Deloitte & Touche, independent auditors, as stated in
their reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
LEGAL OPINIONS
The legality of the Common Stock has been passed upon for IPALCO by
Barnes & Thornburg, 11 South Meridian Street, 1313 Merchants Bank Building,
Indianapolis, Indiana 46204.
<PAGE>
ATTACHMENT "A"
LETTER OF TRANSMITTAL
(Re: Safekeeping)
IPALCO Enterprises, Inc.
Attention: Shareholder Services
P. O. Box 798
Indianapolis, Indiana 46206-0798
Enclosed are Common Stock certificate(s) of IPALCO Enterprises, Inc.
("IPALCO") numbered as listed below:
Common Stock Certificate Number(s)
I (We) hereby transfer the certificate(s) listed above representing
a total of shares of IPALCO Common Stock to Indianapolis Power
& Light Company, as Agent for IPALCO's Automatic Dividend Reinvestment and
Stock Purchase Plan ("DR Plan"), to hold in DR Plan Account No.
. In accordance with the Plan, I (we) understand that the
shares deposited in said Account will be treated the same as all other
shares held in the DR Plan and that all dividends on such shares will be
reinvested automatically without any further authorization by me (us).
Dated
(X)
(X)
IPALCO ENTERPRISES, INC.
_________
Automatic Dividend
Reinvestment
and
Stock Purchase Plan
_________
P R O S P E C T U S
Dated October 29, 1993
<PAGE>
IPALCO ENTERPRISES, INC.
25 MONUMENT CIRCLE, P.O. BOX 1595
INDIANAPOLIS, INDIANA 46206-1595
EXHIBIT 4.2
IPALCO ENTERPRISES, INC.
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Rights Agent
RIGHTS AGREEMENT
Dated as of June 28, 1990
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions. . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent. . . . . . . . . . . . . 7
Section 3. Issue of Right Certificates. . . . . . . . . . . . . 7
Section 4. Form of Right Certificates . . . . . . . . . . . . . 9
Section 5. Countersignature and Registration. . . . . . . . . . 10
Section 6. Transfer, Split Up, Combination and Exchange
of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates . . . . . . . . . 10
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights . . . . . . . . . . . . . 12
Section 8. Cancellation and Destruction of
Right Certificates. . . . . . . . . . . . . . . . . 14
Section 9. Availability of Common Shares. . . . . . . . . . . . 14
Section 10. Common Shares Record Date. . . . . . . . . . . . . . 16
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights. . . . . . . . . . . . . 16
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. . . . . . . . . . . . . . . . . . 31
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. . . . . . . . . . . . . 31
Section 14. Fractional Rights and Fractional Shares. . . . . . . 35
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . 37
Section 16. Agreement of Right Holders . . . . . . . . . . . . . 38
Section 17. Right Certificate Holder Not Deemed
a Shareholder . . . . . . . . . . . . . . . . . . . 38
Section 18. Concerning the Rights Agent. . . . . . . . . . . . . 39
Section 19. Merger or Consolidation or Change of
Name of Rights Agent. . . . . . . . . . . . . . . . 40
-i-<PAGE>
Page
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . 41
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . 44
Section 22. Issuance of New Right Certificates . . . . . . . . . 45
Section 23. Redemption . . . . . . . . . . . . . . . . . . . . . 46
Section 24. Exchange . . . . . . . . . . . . . . . . . . . . . . 48
Section 25. Notice of Certain Events . . . . . . . . . . . . . . 50
Section 26. Notices. . . . . . . . . . . . . . . . . . . . . . . 51
Section 27. Supplements and Amendments . . . . . . . . . . . . . 52
Section 28. Successors . . . . . . . . . . . . . . . . . . . . . 53
Section 29. Benefits of this Agreement . . . . . . . . . . . . . 53
Section 30. Severability . . . . . . . . . . . . . . . . . . . . 54
Section 31. Governing Law. . . . . . . . . . . . . . . . . . . . 54
Section 32. Counterparts . . . . . . . . . . . . . . . . . . . . 54
Section 33. Descriptive Headings . . . . . . . . . . . . . . . . 54
Signatures . . . . . . . . . . . . . . . . . . . . . 55
Exhibit A - Form of Right Certificate
Exhibit B - Summary of Rights to Purchase Common Shares
-ii-
<PAGE>
RIGHTS AGREEMENT
Agreement, dated as of June 28, 1990, between IPALCO Enterprises,
Inc., an Indiana corporation (the "Corporation"), and First Chicago Trust
Company of New York (the "Rights Agent").
The Board of Directors of the Corporation has authorized and
declared a dividend distribution of one Common Share Purchase Right
(hereinafter referred to as a "Right") for each Common Share (as
hereinafter defined) of the Corporation outstanding and held of record as
of the Close of Business (as hereinafter defined) on July 11, 1990 (the
"Record Date"), each Right representing the right to purchase one Common
Share upon the terms and subject to the conditions herein set forth, and
has further authorized and directed the issuance of one right with
respect to each Common Share that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Redemption
Date and the Final Expiration Date (as such terms are hereinafter
defined).
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section I. Certain definitions. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean (i) any Person (other than the
Corporation or any Related Person), who or which, together with all
Affiliates and Associates (as such terms are hereinafter defined) of such
Person, shall be the Beneficial Owner (as such term is hereinafter
defined) of 20% or more of the Common Shares then outstanding, or (ii)
any Adverse Person; provided, however, that a Person shall not be deemed
to have become an Acquiring Person solely as a result of a reduction in
the number of Common Shares outstanding, unless subsequent to such
reduction such Person or any Affiliate or Associate of such Person shall
become the Beneficial Owner of any additional Common Shares other than as
a result of a stock dividend, stock split or similar transaction effected
by the Corporation in which all shareholders are treated equally.
(b) "Adverse Person" shall mean any Person declared to be an
Adverse Person by the Board of Directors upon (i) a determination by the
Board of Directors, at any time after the date of this Agreement, that
such Person, alone or together with its Affiliates and Associates, has
become, or has announced an intention to become, in one or more
transactions, the Beneficial Owner of a number of Common Shares which the
Board of Directors determines to be substantial (which amount shall in no
event be less than 15% of the Common Shares then outstanding) and (ii) a
determination by at least a majority of the Board of Directors who are
not officers of the Corporation, after reasonable inquiry and
investigation, including consultation with such persons as such directors
shall deem appropriate, that (A) such Beneficial Ownership by such Person
(1) is intended to cause the Corporation to repurchase the Common Shares
beneficially owned by such Person, (2) is intended or may reasonably be
anticipated to cause pressure on the Corporation to take action or enter
into a transaction or series of transactions to provide such Person with
short-term financial gain under circumstances in which the Board of
Directors determines that the best long-term interests of the Corporation
and its shareholders would not be served by taking such action or
entering into such transactions or series of transactions at that time,
or (3) is intended or may reasonably be anticipated to permit such Person
to acquire control of or a controlling influence over the Corporation, as
a result of such Beneficial Ownership or one or more subsequent actions
or transactions, in a manner or pursuant to one or more actions or
transactions that the Board determines to be unfair or coercive to
shareholders, or (B) such Beneficial Ownership is causing or may
reasonably be anticipated to cause a material adverse impact (including
without limitation of the Corporation's ability to maintain its
competitive position) on the business, financial condition or prospects
of the Corporation.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "beneficially own" any securities:
(i) which such Person or any of such person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such person or any of such person's
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement
or understanding (other than customary agreements with and
between underwriters and selling group members with respect
to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise;
provided, however, that a person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote or dispose of
pursuant to any agreement, arrangement or understanding;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security if
the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the
Exchange Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any
of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to Section 1(d)(ii)(B)) or
disposing of any securities of the Corporation; provided,
however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security if such
beneficial ownership arises solely as a result of such
Person's status as a "clearing agency," as defined in Section
3(a)(23) of the Securities Exchange Act of 1934, as amended.
Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase "then
outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Corporation, shall
mean the number of such securities then issued and
outstanding together with the number of such securities not
then actually issued and outstanding which such Person would
be deemed to own beneficially hereunder.
(e) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of New York
are authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M.,
eastern standard time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., eastern standard time, on
the next succeeding Business Day.
(g) "Common Shares" when used with reference to the Corporation
shall mean the shares of common stock, without par value, of the
Corporation; provided, however, that if the Corporation is the continuing
or surviving corporation in a transaction described in Section 11(a)(ii)
or Section 13(b) hereof, "Common Shares" when used with reference to the
"Corporation" shall mean the capital stock or equity security with the
greatest aggregate voting power of the Corporation. "Common Shares" when
used with reference to any Person other than the Corporation (including
an Issuer as defined in Section 13 hereof) shall mean the capital stock
or equity security with the greatest power of such other Person.
(h) "Distribution Date" shall mean the earlier of (i) the Close
of Business on the tenth calendar day after the Share Acquisition Date or
(ii) the Close of Business on the tenth business day (or such later date
as may be determined by action of the Board of Directors prior to such
time as any person becomes an Acquiring Person) after the date of the
commencement by any Person (other than the Corporation or any Related
Person), of, or of the first public announcement of the intention of any
Person (other than the Corporation or any Related Person), to commence, a
tender or exchange offer the consummation of which would result in any
person becoming the Beneficial Owner of Common Shares aggregating 30% or
more of the then outstanding Common Shares (including any such date which
is after the date of this Agreement and prior to the issuance of the
Rights).
(i) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(j) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise) of
such entity.
(k) "Purchase Price" shall have the meaning set forth in Section
7.
(l) "Redemption Date" shall have the meaning set forth in Section
7 hereof.
(m) "Related Person" shall mean (i) any Subsidiary of the
Corporation, (ii) any employee benefit or stock ownership plan of the
Corporation or any entity holding Common Shares for or pursuant to the
terms of any such plan, or (iii) any Person who acquires Common Shares
from the Corporation or any other Related Person in one or a series of
related transactions, each of which is approved by the Board of
Directors; provided, however, that if any Person who becomes a Related
Person solely by virtue of subsection (iii) above, or any Affiliate or
Associate of such Person, subsequently becomes the Beneficial Owner of
any additional Common Shares in a transaction or transactions not
approved by the Board of Directors, such Person shall no longer be deemed
a "Related Person" with respect to all Common shares of which it, or any
of its Affiliates or Associates, is the Beneficial Owner.
(n) "Share Acquisition Date" shall mean the first date of public
announcement by the Corporation or an Acquiring Person that an Acquiring
Person has become such.
(o) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person.
Section 2. Appointment of Rights Agent. The Corporation hereby
appoints the Rights Agent to act as agent for the Corporation and the
holders of the Rights (who, in accordance with Section 3 hereof, shall
prior to the Distribution Date also be the holders of the Common Shares)
in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Corporation may from time to time
appoint such co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Right Certificates.
(a) Until the Distribution Date, (i) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the certificates
for Common Shares registered in the names of the holders thereof (which
certificates shall also be deemed to be Right Certificates) and not by
separate Right Certificates, and (ii) the right to receive Right
Certificates will be transferable only in connection with the transfer of
Common Shares. As soon as practicable after the Distribution Date, the
Corporation will prepare and execute, the Rights Agent will countersign,
and the Corporation will send or cause to be sent (and the Rights Agent
will, if requested, send) by first-class, postage-prepaid mail, to each
record holder of Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the records of
the Corporation, a Right Certificate, in substantially the form of
Exhibit A hereto (a "Right Certificate"), evidencing one Right for each
Common Share so held. As of the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Corporation will send a copy of a Summary of Rights to Purchase Common
Shares, in substantially the form of Exhibit B hereto (the "Summary of
Rights"), by first-class, postage-prepaid mail, to each record holder of
Common Shares as of the close of business on the Record Date, at the
address of such holder shown on the records of the Corporation. With
respect to certificates for Common Shares outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof together with
a copy of the Summary of Rights attached thereto. Until the Distribution
Date (or the earlier of the Redemption Date or the Final Expiration
Date), the surrender for transfer of any certificate for Common Shares
outstanding on the Record Date, with or without a copy of the Summary of
Rights attached thereto, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in
the last sentence of this paragraph (c)) after the Record Date but prior
to the earliest of the Distribution Date, the Redemption Date or the
Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the
holder hereof to certain rights as set forth in a
Rights Agreement between IPALCO Enterprises, Inc.
and First Chicago Trust Company of New York,
dated as of June 28, 1990 (the "Rights
Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of
which is on file at the principal executive
offices of IPALCO Enterprises, Inc. Under
certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by
separate certificates and will no longer be
evidenced by this certificate. IPALCO
Enterprises, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement
without charge after receipt of a written request
therefor. As described in the Rights Agreement,
Rights issued to any Person who becomes an
Acquiring Person (as defined in the Rights
Agreement) shall become null and void.
With respect to such certificates containing the foregoing legend, until
the Distribution Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Corporation purchases or
acquires any Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares shall be
deemed cancelled and retired so that the Corporation shall not be
entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates
(and the forms of election to purchase Common Shares and of assignment to
be printed on the reverse thereof) shall be substantially the same as
Exhibit A hereto and may have such marks of identification or designation
and such legends, summaries or endorsements printed thereon as the
Corporation may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which the Rights may
from time to time be listed, or to conform to usage. Subject to the
provisions of Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of Common Shares as shall be set
forth therein at the price per Common Share set forth therein (the
"Purchase Price"), but the number of such Common Shares and the Purchase
Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Corporation by its
Chairman of the Board, its President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall have affixed
thereto the Corporation's seal or a facsimile thereof, and shall be
attested by the Secretary or any Assistant Secretary of the Corporation,
either manually or by facsimile signature. The Right Certificates shall
be manually countersigned by the Rights Agent and shall not be valid for
any purpose unless countersigned. In case any officer of the Corporation
who shall have signed any of the Right Certificates shall cease to be
such officer of the Corporation before countersignature by the Rights
Agent and issuance and delivery by the Corporation, such Right
Certificates, nevertheless, may be countersigned by the Rights Agent and
issued and delivered by the Corporation with the same force and effect as
though the person who signed such Right Certificates had not ceased to be
such officer of the Corporation; and any Right Certificate may be signed
on behalf of the Corporation by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the
Corporation to sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an
officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall
show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
Subject to the provisions of Section 14 hereof, at any time after the
close of business on the Distribution Date, and at or prior to the close
of business on the earlier of the Redemption Date or the Final Expiration
Date, any Right Certificate or Right Certificates (other than Right
Certificates representing Rights that have become void pursuant to
Section 11(a)(ii) hereof or that have been exchanged pursuant to Section
24 hereof) may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates, entitling the registered
holder to purchase a like number of Common Shares as the Right
Certificate or Right Certificates surrendered then entitled each holder
to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be transferred,
split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Thereupon the Rights Agent shall
countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested.
The Corporation may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any
transfer, split up, or combination or exchange of Right Certificates.
Upon receipt by the Corporation and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them,
and, at the Corporation's request, reimbursement to the Corporation and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate
if mutilated, the Corporation will make and deliver a new Right
Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The registered holder of any Right Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date upon surrender
of the Right Certificate, with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent at the office of
the Rights Agent designated for such purpose, together with payment of
the Purchase Price for each Common Share as to which the Rights are
exercised, at or prior to the earliest of (i) the close of business on
July 11, 2000 (the "Final Expiration Date"), (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the "Redemption
Date"), or (iii) the time at which such Rights are exchanged as provided
in Section 24 hereof.
(b) The Purchase Price for each Common Share pursuant to the
exercise of a Right shall initially be $50.00, shall be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof and
shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied
by payment of the Purchase Price for the shares to be purchased and an
amount equal to any applicable transfer tax required to be paid by the
holder of such Right Certificate in accordance with Section 9 hereof by
certified check, cashier's check or money order payable to the order of
the Corporation, the Rights Agent shall thereupon promptly (i)(A)
requisition from any transfer agent of the Common Shares certificates for
the number of Common Shares to be purchased and the Corporation hereby
irrevocably authorizes its transfer agent to comply with all such
requests, or (B) requisition from the depositary agent depositary
receipts representing such number of Common Shares as are to be purchased
(in which case certificates for the Common Shares represented by such
receipts shall be deposited by the transfer agent with the depositary
agent) and the Corporation hereby directs the depositary agent to comply
with such request, (ii) when appropriate, requisition from the
Corporation the amount of cash to be paid in lieu of issuance of
fractional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt, deliver such cash
to or upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder
of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 14 hereof.
(e) The Corporation covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Common
Shares or any Common Shares held in its treasury, the number of Common
Shares that will be sufficient to permit the exercise in full of all
outstanding Rights in accordance with this Section 7.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the
Corporation or to any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights
Agent, shall be cancelled by it, and no Right Certificates shall be
issued in lieu thereof except as expressly permitted by any of the
provisions of this Rights Agreement. The Corporation shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent
shall so cancel and retire, any other Right Certificate purchased or
acquired by the Corporation otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Right Certificates to the
Corporation, or shall, at the written request of the Corporation, provide
the Corporation with a microfiche copy thereof and destroy such cancelled
Right Certificates, and deliver a certificate of destruction thereof to
the Corporation.
Section 9. Availability of Common Shares.
(a) So long as the Common Shares issuable and deliverable upon
the exercise of Rights may be listed on any national securities exchange,
the Corporation shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all Common Shares reserved for
issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
(b) The Corporation shall use its best efforts to (i) file, as
soon as practicable following the later to occur of an event described in
Section 11(a)(ii) or Section 13 hereof or the Distribution Date, a
registration statement under the Securities Act of 1933, as amended (the
"Act"), with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing and (iii) cause
such registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such
securities, and (B) the earlier of the Final Expiration Date or the
Redemption Date. The Corporation will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue
sky" laws of the various states in connection with the exercisability of
the Rights; provided, however, that the Corporation may temporarily
suspend the exercisability of the Rights in order to prepare and file
such registration statement and permit it to become effective and upon
any such suspension, the Corporation shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any such provision of
this Agreement to the contrary, the Rights shall not be exercisable in
any jurisdiction unless the requisite qualification in such jurisdiction
shall have been obtained.
(c) The Corporation covenants and agrees that it will take all
such action as may be necessary to ensure that all Common Shares
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such Common Shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(d) The Corporation further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of
the Right Certificates or of any Common Shares upon the exercise of
Rights. The Corporation shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery
of Right Certificates to a person other than, or the issuance or delivery
of certificates or depositary receipts for the Common Shares in a name
other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or to deliver any
certificates or depositary receipts for Common Shares upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Corporation's reasonable
satisfaction that no such tax is due.
Section 10. Common Shares Record Date. Each person in whose name
any certificate for Common Shares is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of
the Common Shares represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date
of such surrender and payment is a date upon which the Common Shares
transfer books of the Corporation are closed, such person shall be deemed
to have become the record holder on such succeeding Business Day on which
the Common Shares transfer books of the Corporation are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a holder of Common
Shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Corporation,
except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number of Common Shares
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Corporation shall at any time
after the date of this Agreement (A) declare a dividend on
the Common Shares payable in Common Shares, (B) subdivide the
outstanding Common Shares, (C) combine the outstanding Common
Shares into a smaller number of Common Shares or (D) issue
any shares of its capital stock in a reclassification of the
Common Shares (including any such reclassification in
connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the
Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such
date and at a time when the Common Shares transfer books of
the Corporation were open, he would have owned upon such
exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the
Corporation issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in
the event that
(A) any Acquiring Person or any Associate
or Affiliate of any Acquiring Person, at any time
after the date of this Agreement, directly or
indirectly, shall (1) merge into the Corporation
or otherwise combine with the Corporation and the
Corporation shall be the continuing or surviving
corporation of such merger or combination (other
than in a transaction subject to Section 13
hereof), (2) merge or otherwise combine with any
Subsidiary of the Corporation, (3) in one or more
transactions (other than in connection with the
exercise of Rights or the exercise or conversion
of securities exercisable or convertible into
capital stock of the Corporation or any of its
Subsidiaries) transfer any assets to the
Corporation or any of its Subsidiaries in
exchange (in whole or in part) for shares of any
class of capital stock of the Corporation or any
of its Subsidiaries or for securities exercisable
for or convertible into shares of any class of
capital stock of the Corporation or of any of its
Subsidiaries, or otherwise obtain from the
Corporation or any of its Subsidiaries, with or
without consideration, any additional shares of
any class of capital stock of the Corporation or
any of its Subsidiaries or securities exercisable
for or convertible into shares of any class of
capital stock of the Corporation or any of its
Subsidiaries (other than as part of a pro rata
distribution to all holders of such shares of any
class of capital stock of the Corporation, or any
of its Subsidiaries), (4) sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise
dispose (in one or more transactions) of any
assets (including securities), to, from, with or
of, as the case may be, the Corporation or any of
its Subsidiaries (other than in a transaction
subject to Section 13 hereof), (5) receive any
compensation from the Corporation or any of its
Subsidiaries other than compensation as a
director or for full-time employment as a regular
employee, in either case, at rates in accordance
with the Corporation's (or its Subsidiaries')
past practices, or (6) receive the benefit,
directly or indirectly (except proportionately as
a shareholder), of any loans, advances,
guarantees, pledges or other financial assistance
or any tax credits or other tax advantage
provided by the Corporation or any of its
Subsidiaries, or
(B) during such time as there is an
Acquiring Person, there shall be any
reclassification of securities (including any
reverse stock split), or recapitalization or
reorganization of the Corporation, or any merger
or consolidation of the Corporation with any of
its Subsidiaries or any other transaction or
series of transactions involving the Corporation
or any of its Subsidiaries (whether or not with
or into or otherwise involving an Acquiring
Person), other than a transaction subject to
Section 13 hereof, which has the effect, directly
or indirectly of increasing by more than 1% the
proportionate share of the outstanding shares of
any class of equity securities of the Corporation
or any of its Subsidiaries beneficially owned by
any Acquiring Person or any Affiliate or
Associate thereof, or
(C) any Person (other than the
Corporation or any Related Person) who or which,
together with all Affiliates and Associates of
such Person, shall at any time after the date of
this Agreement, become the Beneficial Owner of
20% or more of the Common Shares then outstanding
(other than pursuant to any transaction set forth
in Section 13 hereof); provided, however, that a
Person shall not be deemed to have become the
Beneficial Owner of 20% or more of the Common
Shares then outstanding for the purposes of this
Section 11(a)(ii)(C) solely as a result of a
reduction in the number of Common Shares
outstanding, unless subsequent to such reduction
such Person or any Affiliate or Associate of such
Person shall become the Beneficial Owner of any
additional Common Shares, or
(D) any Person is declared to be an
Adverse Person by the Board of Directors,
then each holder of a Right shall thereafter have a right to
receive, upon exercise thereof in accordance with the terms
of this Agreement and in lieu of the number of Common Shares
for which the Right is then exercisable, such number of
Common Shares of the Corporation as shall equal the result
obtained by (x) multiplying the then current Purchase Price
by the number of Common Shares for which a Right is then
exercisable and dividing that product by (y) 50% of the then
current per share market price of the Corporation's Common
Shares (determined pursuant to Section 11(d) hereof) on the
date such Person became an Acquiring Person. In the event
that any Person shall become an Acquiring Person and the
Rights shall then be outstanding, the Corporation shall not
take any action which would eliminate or diminish the
benefits intended to be afforded by the Rights.
From and after the occurrence of the earlier of the
events described in clauses (A), (B), (C) and (D) above, any
Rights that are or were acquired or beneficially owned by
such Acquiring Person (or any Associate or Affiliate of such
Acquiring Person) shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights under
any provision of this Agreement. No Right Certificate shall
be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any Associate
or Affiliate thereof; no Right Certificate shall be issued at
any time upon the transfer of any Rights to an Acquiring
Person whose Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate; and
any Right Certificate delivered to the Rights Agent for
transfer to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or
Affiliate thereof shall be cancelled.
(iii) In the event that there shall not be sufficient
Common Shares authorized and unissued, to permit the exercise
in full of the Rights in accordance with the foregoing
subparagraph (ii), the Corporation shall take all such action
as may be necessary to authorize additional Common Shares for
issuance upon exercise of the Rights. However, if the
Corporation is unable to cause the authorization of
additional Common Shares within 90 calendar days after the
occurrence of an event in Section 11(a)(ii), then,
notwithstanding anything in this Agreement to the contrary,
the Corporation shall determine the excess of the value of
the Common Shares issuable upon the exercise of a Right over
the Purchase Price (such excess being hereinafter referred to
as the "Spread") and shall be obligated to deliver, upon the
surrender of such Right and without requiring payment of the
Purchase Price, Common Shares (to the extent available) and
cash (to the extent permitted by applicable law and any
agreements or instruments to which the Corporation is a party
in effect immediately prior to the first occurrence of an
event in Section 11(a)(ii)) in an amount equal to the Spread.
To the extent that any legal or contractual restrictions
prevent the Corporation from paying the full amount of cash
payable in accordance with the foregoing sentence, the
Corporation shall pay to holders of the Rights as to which
such payments are payable all amounts which are not then
restricted on a pro rata basis and shall continue to make
payments on a pro rata basis as funds become available until
the full amount due to each such Right holder has been paid.
(b) In case the Corporation shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Shares
entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Common Shares (or shares having
the same rights, privileges and preferences as the Common Shares
("equivalent common shares")) or securities convertible into Common
Shares or equivalent common shares at a price per Common Share or
equivalent common share (or having a conversion price per share, if a
security convertible into Common Shares or equivalent common shares) less
than the then current per share market price of the Common Shares (as
defined in Section 11(d)) on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of Common Shares
outstanding on such record date plus the number of Common Shares which
the aggregate offering price of the total number of Common Shares and/or
equivalent common shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such current market price and the denominator of which shall
be the number of Common Shares outstanding on such record date plus the
number of additional Common Shares and/or equivalent common shares to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares
of capital stock of the Corporation issuable upon exercise of one Right.
In case such subscription price may be paid in a consideration part or
all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of
Directors of the Corporation, whose determination shall be described in a
statement filed with the Rights Agent. Common Shares owned by or held
for the account of the Corporation shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event that
such rights, options or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) In case the Corporation shall fix a record date for the
making of a distribution to all holders of the Common Shares (including
any such distribution made in connection with a consolidation or merger
in which the Corporation is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular quarterly cash
dividend or a dividend payable in Common Shares) or subscription rights
or warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then
current per share market price of the Common Shares on such record date
less the fair market value (as determined in good faith by the Board of
Directors of the Corporation, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Common Share and the denominator of
which shall be such current per share market price of the Common Shares;
provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Corporation to be issued upon exercise
of one Right. Such adjustments shall be made successively whenever such
a record date is fixed; and in the event that such distribution is not so
made, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a
"Security" for the purpose of this Section 11(d)(i)) on any
date shall be deemed to be the average of the daily closing
prices per share of such Security for the 30 consecutive
Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in
the event that the current per share market price of the
Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend
or distribution on such Security payable in shares of such
Security or securities convertible into such shares, or (B)
any subdivision, combination or reclassification of such
Security and prior to the expiration of 30 Trading Days after
the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination of
reclassification, then, and in each such case, the current
per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such
Security. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is not listed or admitted
to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or
admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such
other system then in use, or, if on any such date the
Security is not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security
selected by the Board of Directors of the Corporation. The
term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Security is listed
or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Common Shares shall
be determined in accordance with the method set forth in
Section 11(d)(i). If the Common Shares are not publicly held
or so listed or traded, "current per share market price"
shall mean the fair value per share as determined in good
faith by the Board of Directors of the Corporation, whose
determination shall be described in a statement filed with
the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by
reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or
to the nearest one ten-thousandth of a Common Share or one ten-thousandth
of any other share or security as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three years
from the date of the transaction which requires such adjustment or (ii)
the date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Corporation other
than Common Shares, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Common Shares contained in Section
11(a) through (c), inclusive, and the provisions of Sections 7, 9, 10 and
13 with respect to the Common Shares shall apply on like terms to any
such other shares.
(g) All Rights originally issued by the Corporation subsequent to
any adjustment made to the purchase price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of Common
Shares purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Corporation shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as
a result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase
Price, that number of Common Shares (calculated to the nearest one ten-
thousandth of a Common Share) obtained by (i) multiplying (x) the number
of Common Shares covered by a Right immediately prior to this adjustment
by (y) the Purchase Price in effect immediately prior to such adjustment
of the Purchase Price and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Corporation may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of Common Shares
purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for
the number of Common Shares for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Corporation shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the adjustment
to be made. This record date may be the date on which the Purchase Price
is adjusted or any date thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Corporation shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Corporation, shall cause to be
distributed to such holders of record in substitution and replacement for
the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Corporation,
new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders
of record of Right Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of Common Shares issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of Common Shares
which were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the
Common Shares issuable upon exercise of the Rights, the Corporation shall
take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Corporation may validly and legally issue
fully paid and nonassessable Common Shares at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Corporation may elect to defer until the
occurrence of such event the issuing to the holder of any Right exercised
after such record date of the Common Shares and other capital stock or
securities of the Corporation, if any, issuable upon such exercise over
and above the Common Shares and other capital stock or securities of the
Corporation, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however,
that the Corporation shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Corporation shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall
determine to be advisable in order that any consolidation or subdivision
of the Common Shares, issuance wholly for cash of any Common Shares at
less than the current market price, issuance wholly for cash of Common
Shares or securities which by their terms are convertible into or
exchangeable for Common Shares, dividends on Common Shares payable in
Common Shares or issuance of rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Corporation to
holders of its Common Shares shall not be taxable to such shareholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Corporation shall (i)
declare or pay any dividend on the Common Shares payable in Common Shares
or (ii) effect a subdivision, combination or consolidation of the Common
Shares (by reclassification or otherwise than by payment of dividends in
Common Shares) into a greater or lessor number of Common Shares, then in
any such case (y) the number of Common shares purchasable after such
event upon proper exercise of each Right shall be determined by
multiplying the number of Common Shares so purchasable immediately prior
to such event by a fraction, the numerator of which is the number of
Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding
immediately after such event, and (z) each Common Share outstanding
immediately after such event shall have issued with respect to it that
number of Rights which each Common Share outstanding immediately prior to
such event had issued with respect to it. The adjustments provided for
in this Section 11(n) shall be made successively whenever such a dividend
is declared or paid or such a subdivision, combination or consolidation
is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Corporation shall promptly (a) prepare a certificate setting
forth such adjustment, and a brief statement of the facts accounting for
such adjustment, (b) file with the Rights Agent and with each transfer
agent for the Common Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance
with Section 25 hereof. The Rights Agent shall be fully protected in
relying on such certificate and shall not be deemed to have knowledge of
any adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. In the event, directly or indirectly, (a) the Corporation
shall consolidate with, or merge with and into, any other Person, (b) any
Person shall consolidate with the Corporation, or merge with and into the
Corporation and the Corporation shall be the continuing or surviving
corporation of such merger or consolidation and, in connection with such
merger or consolidation, all or part of the Common Shares shall be
changed into or exchanged for stock or other securities of any other
Person (or the Corporation) or cash or any other property, or (c) the
Corporation shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power (including without limitation
securities creating any obligation on the part of the Corporation and/or
any of its Subsidiaries) aggregating 50% or more of the assets or earning
power of the Corporation and its Subsidiaries (taken as a whole) to any
other person other than the Corporation or one or more of its wholly-
owned Subsidiaries, then, and in each such case, proper provision shall
be made so that (i) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise
thereof in accordance with the terms of this Agreement and in lieu of
Common Shares of the Corporation, such number of validly authorized and
issued, fully paid, nonassessable and freely tradeable Common Shares of
such other Person (including the Corporation as successor thereto or as
the surviving corporation), free and clear of any liens, encumbrances and
other adverse claims and not subject to any rights of call or first
refusal, as shall be equal to the result obtained by (A) multiplying the
then current Purchase Price by the number of Common Shares for which a
Right is then exercisable (without taking into account any adjustment
previously made pursuant to Section 11(a)(ii) hereof) and dividing that
product by (B) 50% of the then current per share market price of the
Common Shares of such other Person (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation, merger, sale
or transfer; (ii) the Issuer of such Common Shares shall thereafter be
liable for, and shall assume, by virtue of such consolidation, merger,
sale or transfer, all the obligations and duties of the Corporation
pursuant to this Agreement; (iii) the term "Corporation" shall thereafter
be deemed to refer to such Issuer; and (iv) such Issuer shall take such
steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares) in connection with such consummation as may
be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the Common
Shares thereafter deliverable upon the exercise of the Rights. For
purposes of this Section 13, "Issuer" shall mean (x) in the case of any
event described in Sections 13(a) or (b) above, the Person that is the
continuing, surviving, resulting or acquiring Person (including the
Corporation as the continuing or surviving corporation of a transaction
described in Section 13(b) above), and (y) in the case of any event
described in Section 13(c) above, the Person that is the party receiving
the greatest portion of the assets or earning power (including without
limitation securities creating any obligation on the part of the
Corporation and/or any of its Subsidiaries) transferred pursuant to such
transaction or transactions; provided, however, that, in any such case,
(A) if (1) no class of equity security of such Person is, at the time of
such merger, consolidation or transaction and has been continuously over
the preceding 12-month period, registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended, and (2) such Person is a
Subsidiary, directly or indirectly, of another Person, a class of equity
security of which is and has been so registered, the term "Issuer" shall
mean such other Person; and (B), in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, a class of equity
security of two or more of which are and have been so registered, the
term "Issuer" shall mean whichever of such Persons is the issuer of the
equity security having the greatest aggregate market value.
Notwithstanding the foregoing, if the Issuer in any of the events listed
above is not a corporation or other legal entity having outstanding
equity securities, then, and in each such case, (i) if the Issuer is
directly or indirectly wholly owned by a corporation or other legal
entity having outstanding equity securities, then all references to
Common Shares of the Issuer shall be deemed to be references to the
Common Shares of the corporation or other legal entity having outstanding
equity securities which ultimately controls the Issuer, and (ii) if there
is no such corporation or other legal entity having outstanding equity
securities, (Y) proper provision shall be made so that the Issuer shall
create or otherwise make available for purposes of the exercise of the
Rights in accordance with the terms of this Agreement, a type or types of
security or securities having a fair market value at least equal to the
economic value of the Common Shares which each holder of a Right would
have been entitled to receive if the Issuer had been a corporation or
other legal entity having outstanding equity securities; and (Z) all
other provisions of this Agreement shall apply to the issuer of such
securities as if such securities were Common Shares. The Corporation
shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Issuer shall have a sufficient number of
authorized Common Shares (or other securities as contemplated above)
which have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13 and
unless prior to such consummation the Corporation and such Issuer shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in this Section 13 and further
providing that as soon as practicable after the consummation of any such
consolidation, merger, sale or transfer, the Issuer will
(i) prepare and file a registration statement under
the Securities Act, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with
a prospectus at all times meeting the requirements of the
Act) until the earlier of the Expiration Date or the
Redemption Date; and
(ii) deliver to holders of the Rights historical
financial statements for the Issuer and each of its
Affiliates which comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
The Corporation shall not enter into any transaction of the kind referred
to in this Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any agreements
or arrangements which, as a result of the consummation of such
transaction, would eliminate or substantially diminish the benefits
intended to be afforded by the Rights. The provisions of this Section 13
shall similarly apply to successive mergers or consolidations or sales or
other transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Corporation shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a whole Right
shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case
as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then
in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Corporation. If on any such
date no such market maker is making a market in the Rights, the fair
value of the Rights on such date as determined in good faith by the Board
of Directors of the Corporation shall be used.
(b) The Corporation shall not be required to issue fractions of Common
Shares upon exercise of the Rights or to distribute certificates which
evidence fractional Common Shares. In lieu of fractional Common Shares, the
Corporation shall pay to the registered holders of Right Certificates at the
time such Rights are exercised as herein provided an amount in cash paid
equal to the same fraction of the current market value of one Common Share.
For the purposes of this Section 14(b), the current market value of a
Common Share shall be the closing price of a Common Share (as determined
pursuant to Section 11(d) hereof) for the Trading Day immediately prior
to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above.)
Section 15. Rights of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective holders of the
Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other
Right Certificate (or, prior to the Distribution Date, of the Common
Shares), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the
Corporation to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would
not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the
obligations of any person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right,
by accepting the same, consents and agrees with the Corporation and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Corporation and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the Distribution
Date, the associated Common Shares certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right
Certificates or the associated Common Shares certificate made by anyone
other than the Corporation or the Rights Agent) for all purposes
whatsoever, and neither the Corporation nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Hold Not Deemed A Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the Common
Shares, or any other securities of the Corporation which may at any time
be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the
rights of a shareholder of the Corporation or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting shareholders
(except as provided in Section 25 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Corporation agrees
to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights
Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the
exercise and performance of its duties hereunder. The Corporation also
agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred, in the absence of
negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability in the
premises.
The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon
any Right Certificate or certificate for the Common Shares or for other
securities of the Corporation, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by
it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper person or persons, or otherwise
upon the advice of counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the stock transfer or corporate trust business
of the Rights Agent or any successor Rights Agent, shall be the successor
to the Rights Agent under this Agreement without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In
case at the time such successor Rights Agent shall succeed to the agency
created by this Agreement any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver
such Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name
of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates
shall not have been countersigned, the Rights Agent may countersign such
Right Certificates either in its prior name or in its changed name; and
in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following
terms and conditions, by all of which the Corporation and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Corporation), and the opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with
such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Corporation prior to taking or
suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed
by any one of the Chairman of the Board, the President, any Vice
President, the Secretary or the Treasurer of the Corporation and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon
such certificate.
(c) The Rights Agent shall be liable hereunder to the Corporation
and any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in
the Right Certificates (except its countersignature thereof) or be
required to verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Corporation only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Corporation of any covenant or condition contained in this Agreement
or in any Right Certificate; nor shall it be responsible for any change
in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of
the Rights (including the manner, method or amount thereof) provided for
in Sections 3, 11, 13, 23 or 24, or the ascertaining of the existence of
facts that would require any such change or adjustment (except with
respect to the exercise of Rights that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice that such change or adjustment is
required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Common Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Common Shares will, when issued, be
validity authorized and issued, fully paid and nonassessable.
(f) The Corporation agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged
and delivered all such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the President, any Vice President,
the Secretary or the Treasurer of the Corporation, and to apply to such
officers for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered by it in good faith
in accordance with instruments of any such officer or for any delay in
acting while waiting for those instructions. Any application by the
Rights Agent for written instructions from the Corporation may, at the
option of the Rights Agent, set forth in writing any action proposed to
be taken or omitted by the Rights Agent under this Rights Agreement and
the date on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for
any action taken by, or omission of, the Rights Agent in accordance with
a proposal included in any such application on or after the date
specified in such application (which date shall not be less than five
Business Days after the date any such officer of the Corporation actually
receives such application, unless any such officer shall have consented
in writing to an earlier date) unless, prior to taking any such action
(or the effective date in the case of an omission), the Rights Agent
shall have received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Corporation or become pecuniarily interested
in any transaction in which the Corporation may be interested, or
contract with or lend money to the Corporation or otherwise act as fully
and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Corporation or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Corporation resulting
from any such act, default, neglect or misconduct, provided reasonable
care was exercised in the selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30 days' notice in writing mailed to the Corporation
and to each transfer agent of the Common Shares by registered or
certified mail, and to the holders of the Right Certificates by first-
class mail. The Corporation may remove the Rights Agent or any successor
Rights Agent upon 30 days notice in writing, mailed to the Rights Agent
or successor Rights Agent, as the case may be, and to each transfer agent
of the Common Shares by registered or certified mail, and to the holders
of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the
Corporation shall appoint a successor to the Rights Agent. If the
Corporation shall fail to make such appointment within a period of 30
days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate who
shall, with such notice, submit his Right Certificate for inspection by
the Corporation), then the registered holder of any Right Certificate may
apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the
Corporation or by such a court, shall be (i) a corporation organized and
doing business under the laws of the United States (or of any other state
of the United States so long as such corporation is authorized to do
business as a banking institution), in good standing, which is authorized
under such laws to exercise corporate trust or stock transfer powers and
is subject to supervision or examination by federal or state authority
and which has at the time of its appointment as Rights Agent a combined
capital and surplus of at least $50 million or (ii) a subsidiary of a
corporation described in clause (i) of this sentence. After appointment,
the successor Rights Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Corporation shall file notice
thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Shares, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary,
the Corporation may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and
the number or kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.
Section 23. Redemption.
(a) The Board of Directors of the Corporation may, at its option,
at any time prior to the earlier of (i) the Final Expiration Date and
(ii) the tenth calendar day following the Share Acquisition Date (or, if
the Share Acquisition Date shall have occurred prior to the Record Date,
the Close of Business on the tenth calendar day following the Record
Date), or such later date as may be specified by a majority of the Board
of Directors, redeem all but not less than all the then outstanding
Rights at a redemption price of $.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such redemption price being hereinafter referred
to as the "Redemption Price"). The redemption of the Rights by the Board
of Directors may be made effective at such time on such basis and with
such conditions as the Board of Directors in its sole discretion may
establish.
(b) If, following the occurrence of a Share Acquisition Date and
following the expiration of the right of redemption hereunder but prior
to the occurrence of an event described in Sections (A), (B), (C) or (D)
of Section 11(a)(ii) or Sections (a), (b) or (c) of Section 13
("Triggering Event") each of the following shall have occurred and remain
in effect: (i) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of Common Shares in a
transaction, or series of transactions, which did not result in the
occurrence of any Triggering Event such that such Person is thereafter a
Beneficial Owner of 10% or less of the outstanding Common Shares, (ii)
there are no other Persons, immediately following the occurrence of the
event described in clause (i), who are Acquiring Persons, and (iii) the
transfer or other disposition described in clause (i) above was other
than pursuant to a transaction, or series of transactions, which directly
or indirectly involved the Corporation or any of its Subsidiaries, then
the right of redemption set forth in Section 23(a) shall be reinstated
and thereafter be subject to the provisions of this Section.
(c) Immediately upon the action of the Board of Directors of the
Corporation ordering the redemption of the Rights pursuant to paragraph
(a) of this Section 23, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the
Redemption Price. The Corporation may, at its option pay the Redemption
Price in cash, Common Shares (based upon the current per share market
price of the Common Shares (determined pursuant to Section 11(d) hereof)
at the time of redemption) or any other form of consideration deemed
appropriate by the Board of Directors. The Corporation shall promptly
give public notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Within 10 days after such action of the
Board of Directors ordering the redemption of the Rights pursuant to
paragraph (a), the Corporation shall mail a notice of redemption to all
the holders of the then outstanding Rights at their last addresses as
they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the payment
of the Redemption Price will be made. Neither the Corporation nor any of
its Affiliates or Associates may redeem, acquire or purchase for value
any Rights at any time in any manner other than that specifically set
forth in this Section 23 or in Section 24 hereof, and other than in
connection with the purchase of Common Shares prior to the Distribution
Date.
Section 24. Exchange.
(a) The Board of Directors of the Corporation may, at its option,
at any time after any person becomes an Acquiring Person, exchange all or
part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of
Section 11(a)(ii) hereof) for Common Shares at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after any
Person (other than the Corporation, any Subsidiary of the Corporation,
any employee benefit plan of the Corporation or any such Subsidiary, or
any entity holding Common Shares for or pursuant to the terms of any such
plan), together with all Affiliates and Associates of such person,
becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of Directors of the
Corporation ordering the exchange of any Rights pursuant to subsection
(a) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only
right thereafter of a holder of such Rights shall be to receive that
number of Common Shares equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Corporation shall promptly
give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Corporation promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the Common
Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the provisions of Section
11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Corporation,
at its option, may substitute equivalent common shares, as such term is
defined in Section 11(h) hereof, for Common Shares exchangeable for
Rights, as appropriately adjusted to reflect adjustments in the voting
rights of the Common Shares pursuant to the terms thereof, so that the
fraction of an equivalent common share delivered in lieu of each Common
Share shall have the same voting rights as one Common Share.
(d) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24,
the Corporation shall take all such action as may be necessary to
authorize additional Common Shares upon exchange of the Rights.
(e) The Corporation shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional
Common Shares. In lieu of such fractional Common Shares, the Corporation
shall pay to the registered holders of the Right Certificates with regard
to which such fractional Common Shares would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of
a whole Common Share. For the purposes of this paragraph (e), the
current market value of a whole Common Share shall be the closing price
of a Common Share (as determined pursuant to Section 11(d) hereof) for
the Trading Day immediately prior to the date of exchange pursuant to
this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Corporation shall propose (i) to pay any dividend
payable in stock of any class to the holders of its Common Shares or to
make any other distribution to the holders of its Common Shares (other
than a regular quarterly cash dividend), (ii) to offer to the holders of
its Common Shares rights or warrants to subscribe for or to purchase any
additional Common Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of
its Common Shares, (iv) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in
one or more transactions, of 50% or more of the assets or earning power
of the Corporation and its Subsidiaries (taken as a whole) to, any other
Person, or (v) to effect the liquidation, dissolution or winding up of
the Corporation, then, in each such case, the Corporation shall give to
each holder of a Right Certificate, in accordance with Section 26 hereof,
a notice of such proposed action, which shall specify the record date for
the purposes of such stock dividend, or distribution of rights or
warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to
take place and the date of participation therein by the holders of the
Common Shares, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii) above at
least 10 days prior to the record date for determining holders of the
Common Shares for purposes of such action, and in the case of any such
other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of
the Common Shares, whichever shall be the earlier.
(b) In case any event set forth in Section 11(a)(ii) hereof shall
occur, then the Corporation shall as soon as practicable thereafter give
to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of the occurrence of such event, which notice shall
describe such event and the consequences of such event to holders of
Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Right Certificate to or on the Corporation shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
IPALCO Enterprises, Inc.
25 Monument Circle
Post Office Box 1595
Indianapolis, Indiana 46206
Attention: John R. Hodowal
Chairman of the Board and President
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Corporation or by
the holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address if filed in writing with the
Corporation) as follows:
First Chicago Trust Company of New York
30 West Broadway, 11th Floor
New York, New York 10007
Attention: Tenders and Exchanges Administration
Notices or demands authorized by this Agreement to be given or made by
the Corporation or the Rights Agent to the holder of any Right
Certificate shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Corporation prior to
issuance of Right Certificates; otherwise, at the address of such holder
as shown on the registry books of the Rights Agent.
Section 27. Supplements and Amendments. Prior to the Distribution
Date, if the Corporation so directs, the Corporation and the Rights Agent
shall supplement or amend any provision of this Agreement in any manner
which the Corporation may deem desirable without the approval of any
holders of Rights or certificates representing Common Shares. From and
after the Distribution Date, if the Corporation so directs, the
Corporation, upon approval by the Board of Directors and the Rights Agent
shall supplement or amend this Agreement without the approval of any
holders of Rights or Certificates representing Common Shares in order (i)
to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period
hereunder, or (iv) to change or supplement the provisions hereunder in
any manner which the Corporation, upon such approval, may deem desirable,
including without limitation the addition of other events requiring
adjustment to the Rights under Sections 11 and 13 or procedures relating
to the redemption of the Rights, which change, amendment or supplement
shall not adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an Affiliate or Associate
of any such Person); provided, however, that this Agreement may not be
supplemented or amended pursuant to this sentence to lengthen, pursuant
to clause (iii) of this sentence, any time period unless such lengthening
is specifically contemplated hereby or is for the purpose of protecting,
enhancing or clarifying the rights of, or the benefits to, the holders of
Rights. Upon the delivery of a certificate form the President or any
Vice President of the Corporation which states that the proposed
supplement or amendment is in compliance with the terms of this Section
26, the Rights Agent shall execute such supplement or amendment;
provided, however, that the failure or refusal of the Rights Agent to
execute such supplement or amendment shall not affect the validity or
effective date of any supplement or amendment adopted by the Corporation.
Notwithstanding anything in this Agreement to the contrary, no supplement
or amendment shall be made which decreases the stated Redemption Price or
the period of time remaining until the Final Expiration Date.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Corporation or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person or corporation other than the
Corporation, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Corporation,
the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right
certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Indiana and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State; provided,
however, that the contractual provisions pertaining to the Rights Agent
contained in Sections 18, 19, 20 and 21 of this Agreement shall be
governed by and construed in accordance with the laws of the state of New
York.
32. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the
provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and attested, all as of the day and year first above
written.
IPALCO ENTERPRISES, INC.
By: /s/ Marcus E. Woods
Marcus E. Woods
Secretary and General Counsel
Attest:
By: /s/ Clark L. Snyder
Clark L. Snyder, Assistant Secretary
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By: /s/ Salvatore Russo
Salvatore Russo
Assistant Vice President
Attest:
By: /s/ Joanne Gorostiola
Joanne Gorostiola
Customer Service Officer
<PAGE>
EXHIBIT A
Form of Right Certificate
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER JULY 11, 2000 OR EARLIER IF REDEMPTION
OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT
$.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT.
Right Certificate
IPALCO ENTERPRISES, INC.
This certifies that _____________________________, or registered
assigns, is the registered owner of the number rights set forth above,
each of which entitles the owner thereof, subject to the terms,
provisions and condition of the Rights Agreement, dated as of June 28,
1990 (the "Rights Agreement"), between IPALCO Enterprises, Inc., an
Indiana corporation (the "Corporation"), and First Chicago Trust Company
of New York, (the "Rights Agent"), to purchase from the Corporation at
any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M., eastern standard time, on July
11, 2000 at the office of the Rights Agent designated for such purpose,
or at the office of its successor as Rights Agent, one fully paid
nonassessable share of the Common Stock, without par value, of the
Corporation (the "Common Shares"), at a purchase price of $50.00 per
Common Shares (the "Purchase Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to purchase duly
executed. The number of Rights evidenced by this Right Certificate (and
the number of Common Shares which may be purchased upon exercise hereof)
set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of June 28, 1990, based on the Common Shares as
constituted at such date. As provided in the Rights Agreement, the
Purchase Price and the number of Common Shares which may be purchased
upon the exercise of the Rights evidenced by this Right Certificate are
subject to modification and adjustment upon the happening of certain
events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and
conditions are incorporated herein by this reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations of the
Corporation and of the holders of the Right Certificates. Copies of the
Rights Agreement are on file at the principal executive offices of the
Corporation and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be
exchanged for another Right Certificate or Right Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Common Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in
part, the holder shall be entitled to receive upon surrender hereof
another Right Certificate or Right Certificates for the number of whole
Rights not exercised. In no event will certificates for fractional
Rights be issued.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed in whole, but not in
part, by the Corporation at a redemption price of $.01 per Right or (ii)
may be exchanged in whole or in part for an equal number of Common
Shares.
No fractional Common Shares will be issued upon the exercise of any
Right or Rights evidenced hereby, but in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Common
Shares or of any other securities of the Corporation which may at any
time be issuable on the exercise hereof, not shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a shareholder of the Corporation or
any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have
been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purchase until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Corporation, and its corporate seal. Dated as of ________________ __,
19__.
ATTEST: IPALCO ENTERPRISES, INC.
__________________________ By: _____________________________________
Secretary President
Countersigned:
First Chicago Trust Company of New York
By: __________________________________
Authorized Signature
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ____________________________ hereby sells,
assigns and transfers unto
_______________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
__________________________, Attorney, to transfer the within Right
Certificate on the books of the within-named Corporation, with full power
of substitution.
Dated: ___________________________, 19___
__________________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
_________________________________________________________________________
CERTIFICATE
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
__________________________________________
Signature
_________________________________________________________________________
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To IPALCO Enterprises, Inc.:
The undersigned hereby irrevocably elects to exercise ________
Rights represented by this Right Certificate to purchase the Common
Shares issuable upon the exercise of such Rights and requests that
certificates for such Common Shares be issued in the name of:
Please insert social security
or other identifying number: _________________________
_________________________________________________________________________
(Please print name and address)
_________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of
such Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number: _________________________
_________________________________________________________________________
(Please print name and address)
_________________________________________________________________________
Dated: ___________, 19__
__________________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the national bank or trust
company having an office or correspondent in the United States.
<PAGE>
Form of Reverse Side of Right Certificate -- continued
_________________________________________________________________________
CERTIFICATE
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
__________________________________________
Signature
_________________________________________________________________________
NOTICE
The signature in the foregoing Forms of Assignment and Election
must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is
not completed, the Corporation and the Rights Agent will deem the
beneficial owner of the Rights evidenced by this Right Certificate to be
an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement) and such Assignment or Election to Purchase will
not be honored.
<PAGE>
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES
On June 26, 1990, the Board of Directors of IPALCO Enterprises,
Inc. (the "Company") declared a dividend of one common share purchase
right (a "Right" or "Rights") for each outstanding share of all common
stock, no par value (the "Common Shares"), of the Company. The dividend
is payable on July 11, 1990 (the "Record Date") to the shareholders of
record as of that date. If and when the Rights become exercisable, each
Right will entitle the registered holder to purchase from the Company one
Common Share at a purchase price of $50.00 (the "Purchase Price"),
although the price may be adjusted as described below. The description
and terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and First Chicago Trust Company of New
York, as Rights Agent (the "Rights Agent").
TRADING AND DISTRIBUTION OF RIGHTS
Initially, shareholders will not receive a separate certificate for
the Rights. The Rights will be represented by the outstanding Common
Share certificates with a copy of this Summary of Rights attached thereto
and the Rights cannot be bought, sold or otherwise traded separately from
the Common Shares. Certificates for Common Shares issued after the
Record Date will carry a notation that indicates that Rights are attached
to the Common Shares and that the terms of the Rights Agreement are
incorporated therein.
Separate certificates representing the Rights will be distributed
as soon as practicable after the "Distribution Date", which is the
earliest to occur of:
(1) 10 calendar days following a public announcement
that a person or group of affiliated or associated persons
(an "Acquiring Person") has (a) acquired beneficial ownership
of 20% or more of the outstanding Common Shares or (b) become
the beneficial owner of an amount of the outstanding Common
Shares (but not less than 15%) which the Board of Directors
determines to be substantial and which ownership the Board of
Directors determines is intended or may be reasonably
anticipated, in general, to cause the Company to take actions
determined by the Board of Directors to be not in the
Company's best long-term interests (an "Adverse Person"), or
(2) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to the
time any person or group becomes an Acquiring Person)
following the commencement or announcement of an intention to
make a tender offer or exchange offer the consummation of
which would result in the beneficial ownership by a person or
group of 30% or more of such outstanding Common Shares.
Until the Distribution Date (or earlier exchange, redemption or
expiration of the Rights), the surrender for transfer of any certificates
for Common Shares outstanding as of the Record Date, even without such
notation or a copy of this Summary of Rights being attached thereto, will
also constitute the transfer of the Rights associated with the Common
Shares represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common
Shares as of the close of business on the Distribution Date and,
thereafter, such separate Right Certificates alone will evidence the
Rights.
<PAGE>
EXERCISABILITY AND EXPIRATION
The holders of the Rights are not required to take any action until
the Rights become exercisable. As described above, the Rights are not
exercisable until the Distribution Date. Holders of the Rights will be
notified that the Rights have become exercisable when the Rights Agent
mails the Rights Certificates. The Rights will expire on July 11, 2000
(the "Final Expiration Date"), unless the Final Expiration Date is
extended or unless the Rights are earlier redeemed by the Company, in
each case, as described below.
ADJUSTMENTS
In order to protect the value of the Rights to the holders, the
Purchase Price payable, and the number of Common Shares or other
securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time (1) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the Common Shares,
(2) upon the grant to holders of the Common Shares of certain rights or
warrants to subscribe for or purchase Common Shares at a price, or
securities convertible into Common Shares with a conversion price less
than the then current market price of Common Shares, or (3) upon the
distribution to holders of the Common Shares of evidences of indebtedness
or assets (excluding regular periodic cash dividends paid out of earnings
or retained earnings or dividends payable in Common Shares) or of
subscription rights or warrants, other than those referred to above.
These adjustments are called anti-dilution provisions and are
intended to ensure that a holder of Rights will not be adversely affected
by the occurrence of such events. With certain exceptions, the Company
is not required to adjust the Purchase Price until cumulative adjustments
require a change of at least 1% in the Purchase Price. No fractional
Common Shares will be issued and in lieu thereof, an adjustment in cash
will be made based on the market price of the Common Shares on the last
trading day prior to the date of exercise.
FLIP-OVER EVENTS AND FLIP-IN EVENTS
In the event that (1) the Company is acquired in a merger or other
business combination transaction and the Company is not the surviving
corporation, or (2) any person consolidates or merges with the Company
and all or part of the Company's Common Shares are exchanged for
securities, cash or property of any other person, or (3) 50% or more of
the Company's consolidated assets or earning power are sold
(collectively, "Flip-Over Events"), proper provision will be made so that
each holder of a Right will thereafter have the right to receive, upon
the exercise thereof at the then current exercise price of the Right,
that number of shares of common stock of the acquiring company which at
the time of such transaction will have a market value of two times the
exercise price of the Right. In the event that (1) an Acquiring Person
engages in certain self-dealing transactions, or (2) a person is declared
an Adverse Person by the Board of Directors of the Company, or (3) a
person acquires 20% or more of the outstanding Common Shares
(collectively, "Flip-In Events"), proper provision shall be made so that
each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have
the right to receive upon exercise that number of Common Shares having a
market value of two times the exercise price of the Right.
EXCHANGE OPTION
At any time after a person becomes an Acquiring Person, and prior
to the acquisition by such Acquiring Person of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group
which have become void), in whole or in part, at an exchange ratio of one
Common Share per Right (subject to adjustment).
REDEMPTION
At any time prior to the tenth calendar day following the date of a
public announcement that a person or group has become an Acquiring
Person, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "Redemption
Price"). The redemption of the Rights may be made effective at such
time, on such basis and with such conditions as the Board of Directors in
its sole discretion may establish. Immediately upon any redemption of
the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
If the Board of Directors' ability to redeem the Rights pursuant to
the Rights Agreement has expired because a person or group has become an
Acquiring Person, but a Flip-Over Event or certain Flip-In Events have
not yet occurred, the redemption right will be reinstated if the
Acquiring Person disposes of a sufficient number of the Company's Common
Shares so that such person then owns only 10% or less of the outstanding
Company's Common Shares and if certain other conditions are met.
OTHER PROVISIONS
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, except that
from and after such time as any person becomes an Acquiring Person no
such amendment may adversely affect the interests of the holders of the
Rights.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of the Company, without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form
8-A dated June 29, 1990. A copy of the Rights Agreement is available
from the Company at no charge upon written request. This summary
description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by this reference.
EXHIBIT 10.1
IPALCO Enterprises, Inc.
(Corporation)
UNFUNDED DEFERRED
COMPENSATION PLAN
FOR
DIRECTORS
Adopted December 27, 1983
(As Amended November 30, 1993)
<PAGE>
UNFUNDED DEFERRED COMPENSATION PLAN
FOR DIRECTORS
RESOLVED, that effective December 27, 1983, there be and hereby is,
established and adopted, an unfunded deferred compensation plan for
Directors of this Corporation (the "Plan") with respect to their
retainer, attendance and committee fees earned on or after January 1,
1984, the terms and conditions of which are as follows:
(1) The Plan shall be unfunded so that the Corporation is under merely
a contractual duty to make payments when due under the Plan. The
promise to pay shall not be represented by notes and shall not be
secured in any way.
(2) On or before December 31 of any year a director may elect, by
written notice to the Secretary of the Corporation, to defer
receipt of all or a specified part of his or her fees for
succeeding calendar years. A person elected to fill a vacancy on
the Board and who was not a Director on the preceding December 31,
or whose term of office did not begin until after such date, may
elect, before his or her term begins, to defer all or a specified
part of his or her fees for the balance of the calendar year and
for succeeding calendar years.
(3) An election to defer fees shall continue from year to year
unless the Director terminates it in writing; provided, that
fees earned after the month in which a Director initially
becomes entitled to insurance benefits under the Social
Security Act (other than benefits under Section 223 or
benefits payable under Section 202(d) by reason of
disability) (hereinafter referred to as "Insurance Benefits")
may not be deferred pursuant to an election in item (c) of
this paragraph (3), although they may be deferred pursuant to
elections in item (a) and (b) of this paragraph (3) if the
Director has complied with the provisions herein relating to
the manner and time of making such deferral elections. No
amount deferred shall be paid to a Director until (a) he or
she ceases to be a Director, or (b) he or she attains that
age specified by the retirement income test of the Social
Security Act (Section 203(f)(3) as amended or its equivalent)
then in effect, or (c) his or her initial year of entitlement
to Insurance Benefits, whichever he or she may elect, and
then only at the times and in the manner specified below.
(4) The Corporation shall maintain an account for each Director
participating in the Plan with respect to deferred fees and credit
the account with interest at the Current Interest Rate, as later
defined. Interest credited to the account will bear interest
(compounded annually) at the same rate.
(5) Amounts deferred under Items (a) or (b) of paragraph (3) above,
together with accumulated interest, shall, at the Director's
election, be distributed either in a one lump sum payment or in
substantially equal annual installments over any period of from two
to ten years, with the lump sum or first installment being payable
as soon as practicable after the first day of the calendar year
immediately following the year in which the Director (a) ceases to
be a Director, or (b) attains that age specified by the retirement
income test of the Social Security Act (Section 203(f)(3) as
amended or its equivalent) then in effect, whichever he or she
elects, and any additional installments being payable as soon as
practicable after the first day of each succeeding year thereafter.
Amounts deferred under item (c) of paragraph (3) above, together
with an accumulated interest, shall, at the Director's election, be
distributed either in one lump sum payment or in substantially
equal consecutive annual installments payable as soon as
practicable after the first day of the first, second, third, fourth
or fifth calendar year, or any of them, following the Director's
initial year of entitlement to Insurance Benefits, whichever he or
she elects. Amounts held pending distribution pursuant to this
item shall continue to accrue interest at the Current Interest Rate
as later defined.
(6) An election as to items (a), (b) or (c) of paragraph (3) above and
as to the form and timing of the payment of deferred fees under
paragraph (5) above shall be made by the Director at the time the
Director first elects to defer receipt of all or a portion of his
or her fees under paragraph (2) above, and any such election may be
changed by a Director at any time during his or her term as a
Director; provided, that no change shall be made in a prior
election after the December 31 preceding the earlier of (a) the
first year in which the deferred amounts would, but for the change
in the election, become payable to such Director, or (b) the first
year in which such Director would be eligible to receive benefits
under this Plan if his or her election were changed as permitted by
this paragraph (6); and provided further, that no change shall be
made by a Director from a prior election made pursuant to item (a)
or item (b) of paragraph (3) to an election pursuant to item (c) of
paragraph (3) after December 31 of the year such Director becomes
entitled to Insurance Benefits. Any elections made by a Director
after any such December 31, will not be given effect by the
Corporation.
(7) If a person becomes a director, proprietor, officer, partner,
employee of, or otherwise becomes affiliated with, a business that
is in competition with the Corporation, or if such person shall
refuse a reasonable request of the Corporation to perform
consulting services after retirement while receiving payments under
the Plan, all deferred fees and interest remaining payable to such
person shall be forfeited.
(8) (a) Upon the death of a Director or a person who has ceased to be
a Director, prior to the receipt by such Director of any deferred
fees and interest from his or her account, all such deferred fees
and interest in his or her account shall be payable to his or her
estate in one lump sum within ninety (90) days following his or her
death, unless a Director elects, at any time prior to his or her
death, to have such account balance paid to a beneficiary
designated in writing by such Director; in which event, such
account balance shall be payable to such beneficiary, at the
Director's election, either in one lump sum within ninety (90) days
following the date of death, or in substantially equal annual
installments over a ten year period beginning as soon as
practicable after the first day of the calendar year immediately
following the year of death.
(b) In the event of the death of a Director or a person who has
ceased to be a Director after he or she begins receiving
installments from the deferred compensation account under paragraph
(5) above, the remaining installments shall be paid when due to his
or her designated beneficiary, if living; otherwise, the balance in
the deferred compensation account shall be paid in one lump sum to
his or her estate within ninety (90) days following his or her
death.
(c) If a designated beneficiary has begun receiving installments
under this paragraph (8), but dies before receiving the last
installment, the balance in the deferred compensation account shall
be paid in one lump sum to such beneficiary's estate within ninety
(90) days following his or her death.
(d) Amounts held by the Corporation pending distribution pursuant
to this paragraph (8) shall continue to accrue interest at the
Current Interest Rate.
(9) The chief executive officer of the Corporation shall be empowered
to place the Plan in effect under such additional conditions and
terms as shall not be inconsistent with the terms stated above and
shall not jeopardize the status of the Plan as a deferred
compensation plan allowing a Director of the Corporation not to
include deferred amounts (including interest) in gross income under
Federal income tax laws until the taxable year or years such
amounts are actually paid.
(10) The term "Current Interest Rate" shall mean the rate in effect on
December 31 of each calendar year that is equal to Indianapolis
Power & Light Company's ("IPL's") cost of capital as determined by
the Indiana Utility Regulatory Commission in IPL's last general
retail electric rate order, unless otherwise determined by this
Board of Directors.
(As Amended November 30, 1993)
EXHIBIT 10.2
IPALCO Enterprises, Inc.
UNFUNDED DEFERRED
COMPENSATION PLAN
FOR
OFFICERS
Adopted November 30, 1993
Effective as of January 1, 1994
<PAGE>
UNFUNDED DEFERRED COMPENSATION PLAN
FOR OFFICERS
RESOLVED, that effective January 1, 1994, there be and hereby is,
established and adopted, an unfunded deferred compensation plan (the
"Plan") for Officers of IPALCO Enterprises, Inc. ("IPALCO") with respect
to all or a part of their base salary earned on or after January 1, 1994,
the terms and conditions of which are as follows:
(l) The Plan shall be unfunded so that IPALCO is under merely a
contractual duty to make payments when due under the Plan. The
promise to pay shall not be represented by notes and shall not be
secured in any way. The Plan shall not be construed as an
agreement, consideration or inducement of employment or as
affecting in any manner the rights or obligations of IPALCO or of
the Officer to continue or to terminate the employment relationship
at any time.
(2) On or before December 31, 1993, or December 31 of any year
thereafter, an Officer may elect annually to defer receipt of all
or a specified part of his or her base salary by submitting to the
Secretary of IPALCO a written election for a specified period of
years that is not less than one calendar year and does not extend
beyond the year the Officer reaches his or her 70th birthday, the
form for which election is attached hereto, made a part hereof and
marked Exhibit A. A person elected as an Officer who was not an
Officer on the preceding December 31, or whose term of office did
not begin until after such date, may elect, before his or her term
begins, to defer all or a specified part of his or her base salary
for the balance of the calendar year.
(3) The amount deferred shall be withheld in twenty-six (26)
substantially equal bi-weekly installments. No amount
deferred
hereunder shall be paid to an Officer until after the end of the
period elected.
(4) IPALCO shall maintain a deferred compensation account for each
Officer participating in the Plan with respect to deferred base
salary and credit the account with interest on December 31 of each
year at the Current Interest Rate, as later defined. Interest
credited to the account will bear interest (compounded annually) at
the same rate.
(5) Any amount deferred under paragraph (2) above, together with
accumulated interest, shall, at the Officer's election, be
distributed either in a one lump sum payment or in substantially
equal annual installments over any period of from two to ten years,
with the lump sum or first installment being payable as soon as
practicable after the first day of the calendar year immediately
following the period elected and with any additional installments
being payable as soon as practicable after the first day of each
succeeding year thereafter. Amounts held pending distribution
pursuant to this item shall continue to accrue interest on December
31 of each year at the Current Interest Rate, as later defined.
(6) An election under paragraphs (2) and (5) above, as to the amount
deferred and the timing of the payment of such deferred amount,
shall be made by the Officer at the time the Officer first elects
to defer receipt of all or a part of his or her base salary. A new
election may be made each year; however, no change may be made in
an election after the December 31 preceding the year in which the
base salary is to be deferred, except that beneficiaries may be
changed at any time prior to the payment of any deferred amount.
Any change in an election made by an Officer after any such
December 31, will not be given effect by IPALCO.
(7) (a) Upon the death of an Officer or a person who has ceased to be
an Officer, prior to the receipt by such Officer of any deferred
amounts and interest from his or her account, all such deferred
amounts and interest in such account shall be payable to his or her
estate in one lump sum within ninety (90) days following his or her
death, unless an Officer elects pursuant to this paragraph (7) to
have such account balance paid to a beneficiary designated in
writing by such Officer; in which event, such account balance shall
be payable to such beneficiary, at the Officer's election, either
in one lump sum within ninety (90) days following the date of
death, or in substantially equal annual installments over a ten
year period beginning as soon as practicable after the first day of
the calendar year immediately following the year of death.
(b) In the event of the death of an Officer or a person who has
ceased to be an Officer after he or she begins receiving
installments from the deferred compensation account under paragraph
(5) above, the remaining installments shall be paid, when due, to
his or her designated beneficiary, if living; otherwise, the
balance in the deferred compensation account shall be paid in one
lump sum to his or her estate within ninety (90) days following his
or her death.
(c) If a designated beneficiary has begun receiving installments
under this paragraph (7), but dies before receiving the last
installment, the balance in the deferred compensation account shall
be paid in one lump sum to such beneficiary's estate within ninety
(90) days following his or her death.
(d) Amounts held by IPALCO pending distribution pursuant to this
paragraph (7) shall continue to accrue interest at the Current
Interest Rate, as later defined.
(8) The Officer and his or her beneficiary, as determined pursuant to
paragraph (7) above, shall not have any right to anticipate,
alienate or assign any rights under this Plan, and any effort to do
so shall be null and void. The monthly benefits payable under this
Plan shall be exempt from the claims of creditors or other
claimants and from all orders, decrees, levies and executions and
any other legal process to the fullest extent permitted by law.
(9) The chief executive officer of IPALCO shall be empowered to place
the Plan in effect under such additional conditions and terms as
shall not be inconsistent with the terms stated above and as shall
not jeopardize the status of the Plan as a deferred compensation
plan that allows an Officer of IPALCO not to include deferred
amounts (including interest) in gross income under Federal income
tax laws until the taxable year or years such amounts are actually
paid.
(10) The term "Current Interest Rate" shall mean the rate in effect on
December 31 of each calendar year that is equal to Indianapolis
Power & Light Company's ("IPL's") cost of capital as determined by
the Indiana Utility Regulatory Commission in IPL's last general
retail electric rate order, unless otherwise determined by this
Board of Directors.
<PAGE>
To: The Corporate Secretary
IPALCO Enterprises, Inc.
Officer Election to Defer 1995 Compensation
The undersigned Officer of IPALCO Enterprises, Inc. ("IPALCO"), under
the Unfunded Deferred Compensation Plan for Officers adopted November 30,
1993 by a resolution of the Board of Directors of IPALCO, which becomes
effective as of January 1, 1995, hereby elects under Paragraph 2 of the Plan
to defer $ of such Officer's 1995 base salary for year(s) (not
less than one year) beginning January 1, 1995 and ending December 31,
(not beyond the year Officer reaches his or her 70th birthday).
The undersigned Officer understands that this annual election to defer
his or her base salary, including the method for distributing deferred
amounts, is irrevocable as to the amount and period selected and will not
continue from year to year.
Additional Elections permitted under Paragraphs (5) and (7) of the Plan:
(Select A or B)
A. Distribution to be made to me in one lump sum in accordance
with the Plan following the deferral period selected.
B. Distribution to be made to me in equal annual installments over
a period of _____ years (not less than two (2) years or more
than ten (10) years) in accordance with the Plan following the
deferral period selected.
(Select C, D or E)
C. Deferred amounts to be payable to my estate in one lump sum
within ninety (90) days following my death.
D. Deferred amounts to be payable to the beneficiary designated
below in one lump sum within ninety (90) days following my
death.
E. Deferred amounts to be payable to the beneficiary designated
below in equal annual installments over a ten (10) year period
beginning the first day of the calendar year following my
death.
Beneficiary:
Name Address
Dated this day of December, 1994
Check one:
This is a new election.
a change of beneficiary.
Officer,
IPALCO Enterprises, Inc.
Exhibit A
EXHIBIT 10.3
DIRECTORS AND OFFICERS LIABILITY
INSURANCE POLICY
THIS IS A "CLAIMS-FIRST-MADE"
INSURANCE POLICY. PLEASE READ IT CAREFULLY.
Words and phrases which appear in all capital letters have the special
meanings set forth in
Section II - Definitions
AEGIS
ASSOCIATED ELECTRIC & GAS
INSURANCE SERVICES LIMITED
HAMILTON, BERMUDA
DECLARATIONS
POLICY NO. D0392B1A94
DECLARATIONS NO. 1
Item 1: This POLICY provides indemnification with respect to the
DIRECTORS and OFFICERS of:
IPALCO Enterprises, Inc.
25 Monument Circle
Indianapolis, IN 46204
Item 2: POLICY PERIOD: from the 1st day of June, 1994, to the 1st
day of June, 1995 both days at 12:01 A.M. Standard Time at
the address of the COMPANY.
Item 3: RETROACTIVE DATE: the 4th day of December, 1970 at 12:01
A.M. Standard Time at the address of the COMPANY.
Item 4: A. POLICY PREMIUM: $230,673.
B. MINIMUM PREMIUM: $ 92,269.
Item 5: Limits of Liability:
A. $ 35,000,000 Each WRONGFUL ACT
B. $ 35,000,000 Aggregate Limit of Liability for the POLICY
PERIOD
Item 6: UNDERLYING LIMITS:
This POLICY is written as primary insurance
A. If this POLICY is written as Primary Insurance with
respect to Insuring Agreement 1(A)(2) only:
(1) $ 200,000 Each WRONGFUL ACT not arising from
NUCLEAR OPERATIONS
(2) $ 200,000 Each WRONGFUL ACT arising from
NUCLEAR OPERATIONS
B. If this POLICY is written as EXCESS Insurance:
(1) (a) $ ________ Each WRONGFUL ACT
(b) $ ________ In the Aggregate for all
WRONGFUL ACTS
(2) $ ________ Each WRONGFUL ACT not covered
under Underlying Insurance
(3) In the Event of Exhaustion of the UNDERLYING
LIMIT stated in Item 6(B)(1)(b) above with
respect to Insuring Agreement I(A)(2) only:
(a) $ ________ Each WRONGFUL ACT not arising
from NUCLEAR OPERATIONS
<PAGE>
DECLARATIONS
continued
POLICY NO. D0392B1A94
DECLARATIONS NO. 1
(b) $ ________ Each WRONGFUL ACT arising from
NUCLEAR OPERATIONS
Item 7: Any notice to be provided or any payment to be made hereunder
to the COMPANY shall be made to:
NAME Mr. Bruce H. Smith
TITLE Administrator, Risk Management
ADDRESS Indianapolis Power & Light Company
25 Monument Circle
P.O. Box 1595 (Zip 46206-1595)
Indianapolis, IN 46204
Item 8: Any notice to be provided or any payment to be made hereunder
to the INSURER shall be made to:
NAME Aegis Insurance Services, Inc.
ADDRESS Harborside Financial Center
700 Plaza Two
Jersey City, New Jersey 07311-3994
ENDORSEMENTS ATTACHED AT POLICY ISSUANCE: 1-3
Countersigned at Jersey City, New Jersey
On June 9, 1994
Aegis Insurance Services, Inc.
By /s/ Karen Larson
Authorized Representative
<PAGE>
POLICY OF DIRECTORS AND OFFICERS LIABILITY INSURANCE EFFECTED
WITH ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED
HAMILTON, BERMUDA
(hereinafter referred to the "POLICY")
THIS IS A "CLAIMS-FIRST-MADE" INSURANCE POLICY.
PLEASE READ IT CAREFULLY.
Words and phrases which appear in all capital letters
have the special meanings set forth in
Section II - Definitions.
In consideration of the payment of premium, and in reliance upon all
statements made and information furnished to Associated Electric & Gas
Insurance Services Limited (hereinafter referred to as the "INSURER") by
the Application attached hereto which is hereby made a part hereof, and
subject to all the terms hereinafter provided, the INSURER agrees as
follows:
I. INSURING AGREEMENT
(A) Indemnity
(1) The INSURER shall indemnify the DIRECTORS and OFFICERS
for any and all sums which they shall become legally
obligated to pay as ULTIMATE NET LOSS for which the
COMPANY has not provided reimbursement, by reason of
any WRONGFUL ACT which takes place during the COVERAGE
PERIOD and is actually or allegedly caused, committed
or attempted by the DIRECTORS or OFFICERS while acting
in their respective capacities as DIRECTORS or
OFFICERS, provided such ULTIMATE NET LOSS arises from a
CLAIM first made against the DIRECTORS or OFFICERS
during the POLICY PERIOD or during the DISCOVERY
PERIOD, if purchased.
(2) The INSURER shall indemnify the COMPANY for any and all
sums required to reimburse it for ULTIMATE NET LOSS it
has occurred, as required or permitted by applicable
common or statutory law or under provisions of the
COMPANY'S Charter or Bylaws effected pursuant to such
law, to indemnify DIRECTORS or OFFICERS for ULTIMATE
NET LOSS which they are legally obligated to pay by
reason of any WRONGFUL ACT which takes place during the
COVERAGE PERIOD and is actually or allegedly caused,
committed or attempted by such DIRECTORS or OFFICERS
while acting in their respective capacities as
DIRECTORS or OFFICERS, provided the ULTIMATE NET LOSS
arises from a CLAIM first made against the DIRECTORS or
OFFICERS during the POLICY PERIOD or during the
DISCOVERY PERIOD, if purchased.
(B) Limits of Liability
(1) The INSURER shall only be liable hereunder for the
amount of ULTIMATE NET LOSS in excess of the UNDERLYING
LIMITS as stated in Item 6 of the Declarations as a
result of each WRONGFUL ACT covered under Insuring
Agreement I(A)(I) or I(A)(2) or both, and then only up
to the Limit of Liability stated in Item 5A of the
Declarations and further subject to the aggregate Limit
of Liability stated in Item 5B of the Declarations as
the maximum amount payable hereunder in the aggregate
for all CLAIMS first made against the DIRECTORS or
OFFICERS during both:
<PAGE>
(a) the POLICY PERIOD and
(b) the DISCOVERY PERIOD, if purchased.
Notwithstanding the foregoing, in the event that the
INSURER cancels or refuses to renew this POLICY, and a
DISCOVERY PERIOD extension is purchased by the COMPANY,
then the aggregate Limit of Liability stated in Item 5B
of the Declarations shall be reinstated but only with
respect to CLAIMS first made against the DIRECTORS or
OFFICERS during such DISCOVERY PERIOD.
(2) Multiple CLAIMS arising out of the same WRONGFUL ACT,
even if made against different DIRECTORS or OFFICERS,
shall be deemed to be a single CLAIM arising from a
single WRONGFUL ACT and to have been reported during
the POLICY PERIOD or, if purchased, during the
DISCOVERY PERIOD in which the first of such multiple
CLAIMS is made against any of the DIRECTORS or
OFFICERS. The Limits of Liability and UNDERLYING
LIMITS, stated in Items 5 and 6 of the Declarations
respectively, shall apply only once regardless of the
number of CLAIMS arising out of the same WRONGFUL ACT.
All interrelated acts shall be deemed to be a single
WRONGFUL ACT.
(3) The inclusion herein of more than one DIRECTOR or
OFFICER, or the application of both Insuring Agreements
I(A)(1) and I(A)(2), shall not operate to increase the
INSURER'S Limits of Liability as stated in Item 5 of
the Declarations.
(4) With respect to ULTIMATE NET LOSS arising out of any
WRONGFUL ACT in connection with service for a NOT-FOR-
PROFIT ORGANIZATION as provided in Section II(E)(2),
if:
(a) such WRONGFUL ACT results in liability being
imposed upon one or more DIRECTORS and OFFICERS
under this POLICY and also upon directors and
officers and general partners under any other
directors and officers or general partner
liability insurance policies issued by the
INSURER to any organization; and
(b) the total of the ULTIMATE NET LOSS under this
POLICY and the ultimate net loss under such other
policies issued by the INSURER equals or exceeds
$35,000,000;
the maximum amount payable by the INSURER under this
POLICY in the aggregate for all ULTIMATE NET LOSS
resulting from such WRONGFUL ACT shall be the lesser of
the applicable Limit of Liability provided by this
POLICY or the product of:
(i) the applicable Limit of Liability provided
by this POLICY divided by the total limits
of liability per wrongful act applicable to
such wrongful act under all policies issued
by the INSURER; and
(ii) $35,000,000.
If the amount paid under this POLICY with respect to
such WRONGFUL ACT exceeds the COMPANY'S proportionate
share of the $35,000,000 as determined above, the
COMPANY shall refund such excess to the INSURER
promptly.
(C) UNDERLYING LIMITS
(1) If this POLICY is written as Primary Insurance with
respect to Insuring Agreement I(A)(2), the UNDERLYING
LIMIT for the COMPANY for each WRONGFUL ACT shall be as
stated in Item 6A(1) of the Declarations, unless it is
based upon, arises out of or is attributable to NUCLEAR
OPERATIONS, in which event it shall be as stated in
Item 6A(2) of the Declarations;
(2) If this POLICY is written as Excess Insurance:
(a) with respect to Insuring Agreements I(A)(1) and
I(A)(2), the UNDERLYING LIMIT for each WRONGFUL
ACT shall be as stated in Item 6B(1)(a) of the
Declarations and the maximum UNDERLYING LIMIT for
all WRONGFUL ACTS shall be as stated in Item
6B(1)(b) of the Declarations;
(b) with respect to ULTIMATE NET LOSS covered
hereunder:
(i) in the event of reduction of the underlying
aggregate limit as stated in Item 6B(1)(b),
the UNDERLYING LIMIT shall be such reduced
underlying aggregate limit; or
(ii) in the event of exhaustion of the
underlying aggregate limit as stated in
Item 6B(1)(b), the UNDERLYING LIMIT shall
be as stated in Item 6B(3) of the
Declarations;
(c) with respect to any WRONGFUL ACT covered
hereunder but not covered under such Underlying
Insurance, the UNDERLYING LIMIT shall be as
stated in Item 6B(2) of the Declarations; and
(d) nothing herein shall make this POLICY subject to
the terms and conditions of any Underlying
Insurance.
(3) Only payment of indemnity or defense expenses which,
except for the amount thereof, would have been
indemnifiable under this POLICY, may reduce or exhaust
an UNDERLYING LIMIT.
(4) In the event that both Insuring Agreement I(A)(1) and
I(A)(2) are applicable to INDEMNITY and DEFENSE COST
resulting from a WRONGFUL ACT then:
(a) if this POLICY is written as Primary Insurance,
the UNDERLYING LIMIT applicable to such WRONGFUL
ACT shall be the UNDERLYING LIMIT stated in Item
6A of the Declarations; and
(b) if this POLICY is written as Excess Insurance and
the UNDERLYING LIMIT has been exhausted, the
UNDERLYING LIMIT applicable to such WRONGFUL ACT
shall be the UNDERLYING LIMIT stated in Item
6B(3);
and there shall be no UNDERLYING LIMIT applicable with
respect to coverage provided under Insuring Agreement
I(A)(1).
(5) The UNDERLYING LIMITS stated in Item 6 of the
Declarations applicable to Insuring Agreement I(A)(2)
shall apply to all INDEMNITY and/or DEFENSE COST for
which indemnification of the DIRECTORS and/or OFFICERS
by the COMPANY is legally permissible, whether or not
such indemnification is granted by the COMPANY.
II. DEFINITIONS
A. CLAIM: The term "CLAIM" shall mean:
(1) any demand, suit or proceeding against any DIRECTORS
and/or OFFICERS during the POLICY PERIOD or during the
DISCOVERY PERIOD, if purchased, which seeks actual
monetary damages or other relief and which may result
in any DIRECTORS and/or OFFICERS becoming legally
obligated to pay ULTIMATE NET LOSS by reason of any
WRONGFUL ACT actually or allegedly caused, committed or
attempted during the COVERAGE PERIOD by the DIRECTORS
and/or OFFICERS while acting in their capacity as such;
or
(2) written notice to the INSURER during the POLICY PERIOD
or during the DISCOVERY PERIOD, if purchased, by the
DIRECTORS, OFFICERS and/or the COMPANY, describing with
the specificity set forth in Condition (C) hereof,
circumstances of which they are aware involving an
identifiable WRONGFUL ACT actually or allegedly caused,
committed or attempted during the COVERAGE PERIOD by
the DIRECTORS and/or OFFICERS while acting in their
capacity as such, which circumstances are likely to
give rise to a demand, suit or proceeding being made
against such DIRECTORS and/or OFFICERS.
A CLAIM shall be deemed to be first made against a
DIRECTOR or OFFICER at the earlier of the time at which
a demand, suit or proceeding is first made against the
DIRECTOR or OFFICER, as set forth in section (1) of
this Definition or the time at which written notice is
given to the INSURER, as set forth in section (2) of
this Definition.
Multiple demands or suits arising out of the same
WRONGFUL ACT or interrelated acts shall be deemed to be
a single "CLAIM".
(B) COMPANY: The term "COMPANY" shall mean the organization(s)
named in Item 1 of the Declarations and, subject to Condition
(A) hereof, any SUBSIDIARIES of such organization(s).
(C) COVERAGE PERIOD: The term "COVERAGE PERIOD" shall mean the
period of time from the RETROACTIVE DATE to the termination
of the POLICY PERIOD.
(D) DEFENSE COST: The terms "DEFENSE COST" shall mean all
expenses incurred by or on behalf of the DIRECTORS, OFFICERS
or the COMPANY, where reimbursable under I(A)(2), in the
investigation, negotiation, settlement and defense of any
CLAIM except all salaries, wages and benefit expenses of
DIRECTORS, OFFICERS or the COMPANY.
(E) DIRECTOR and OFFICER: The terms "DIRECTOR" and "OFFICER" as
used herein, either in the singular or plural, shall mean:
<PAGE>
(1) any person who was, is now, or shall be a director,
officer or trustee of the COMPANY and any other
employee of the COMPANY who may be acting in the
capacity of a director, officer or trustee of the
COMPANY with the express authorization of a director,
officer or trustee of the COMPANY;
(2) any director, officer or trustee of the COMPANY who is
serving or has served at the specific request of the
COMPANY as a director, officer or trustee of any
outside NOT-FOR-PROFIT ORGANIZATION; or
(3) the estates, heirs, legal representatives or assigns of
deceased persons who were directors, officers or
trustee of the COMPANY at the time the WRONGFUL ACTS
upon which such CLAIMS were based were committed, and
the legal representatives or assigns of directors,
officers or trustees of the COMPANY in the event of
their incompetency, insolvency or bankruptcy;
provided, however, that the terms "DIRECTOR" and "OFFICER"
shall not include a trustee appointed pursuant to Title 11,
United States Code, or pursuant to the Securities Investor
Protection Act, a receiver appointed for the benefit of
creditors by Federal or State courts, an assignee for the
benefit of creditors or similar fiduciary appointed under
Federal or State laws for the protection of creditors or the
relief of debtors.
In the event that a CLAIM which is within the coverage
afforded under this POLICY is made against any DIRECTOR or
OFFICER and such CLAIM includes a claim against the lawful
spouse of such DIRECTOR or OFFICER solely by reason of (a)
such spousal status or (b) such spouse's ownership interest
in property or assets which are sought as recovery for
WRONGFUL ACTS of a DIRECTOR or OFFICER, such spouse shall be
deemed to be a DIRECTOR or OFFICER hereunder, but solely with
respect to such claim. In no event, however, shall the
lawful spouse of a DIRECTOR or OFFICER be deemed to be a
DIRECTOR or OFFICER as regards any CLAIM in respect of which
there is a breach of duty, neglect, error, misstatement,
misleading statement or omission actually or allegedly
caused, committed or attempted by or claimed against such
spouse, acting individually or in his or her capacity as the
spouse of a DIRECTOR or OFFICER.
(F) DISCOVERY PERIOD: The term "DISCOVERY PERIOD" shall mean the
period of time set forth in Condition (L).
(G) INDEMNITY: The term "INDEMNITY" shall mean all sums which
the DIRECTORS, OFFICERS or COMPANY, where reimbursable under
I(A)(2), shall become legally obligated to pay as damages
either by adjudication or compromise with the consent of the
INSURER, after making proper deduction for the UNDERLYING
LIMITS and all recoveries, salvages and other valid and
collectible insurance.
(H) INSURER: The term "INSURER" shall mean Associated Electric &
Gas Insurance Services Limited, Hamilton, Bermuda, a non-
assessable mutual insurance company.
(I) NOT-FOR-PROFIT ORGANIZATION: The term "NOT-FOR-PROFIT
ORGANIZATION" shall mean:
(1) an organization, no part of the income or assets of
which is distributable to its owners, stockholders or
members and which is formed and operated for a purpose
other than the pecuniary profit or financial gain of
its owners, stockholders or members; or
(2) a political action committee which is defined for these
purposes as a separate segregated fund to be utilized
for political purposes as described in the United
States Federal Election Campaign Act (2 U.S.C.
441b(2)(C)).
(J) NUCLEAR OPERATIONS: The term "NUCLEAR OPERATIONS" shall mean
the design, engineering, financing, construction, operation,
maintenance, use, ownership, conversion or decommissioning of
any "nuclear facility" as defined in the Broad Form Nuclear
Energy Liability Exclusion, which is endorsed hereto.
(K) POLICY: The term "POLICY" shall mean this insurance policy,
including the Application, the Declarations and any
endorsements issued by the INSURER to the organization first
named in Item 1 of the Declarations for the POLICY PERIOD
listed in Item 2 of the Declarations.
(L) POLICY PERIOD: The term "POLICY PERIOD" shall mean the
period of time stated in Item 2 of the Declarations.
(M) RETROACTIVE DATE: The term "RETROACTIVE DATE" shall mean the
date stated in Item 3 of the Declarations; provided, however,
with respect to any WRONGFUL ACT actually or allegedly
caused, committed or attempted by the DIRECTORS or OFFICERS
of any SUBSIDIARY formed or acquired by the COMPANY or any of
its SUBSIDIARIES after inception of the POLICY PERIOD of this
POLICY, or after inception of any other policy issued by the
INSURER to the COMPANY for a prior policy period, the term
"RETROACTIVE DATE" shall mean the date of such formation or
acquisition.
(N) SUBSIDIARIES: The term "SUBSIDIARY" shall mean any entity
more than fifty (50) percent of whose outstanding securities
representing the present right to vote for election of
directors are owned by the COMPANY and/or one or more of its
"SUBSIDIARIES".
(O) ULTIMATE NET LOSS: The term "ULTIMATE NET LOSS" shall mean
the total INDEMNITY and DEFENSE COST with respect to each
WRONGFUL ACT to which this POLICY applies.
(P) UNDERLYING LIMITS: The term "UNDERLYING LIMITS" shall mean
the amounts stated in Item 6 of the Declarations.
(Q) WRONGFUL ACT: The term "WRONGFUL ACT" shall mean any actual
or alleged breach of duty, neglect, error, misstatement,
misleading statement or omission actually or allegedly
caused, committed or attempted by any DIRECTOR or OFFICER
while acting individually or collectively in their capacity
as such, or claimed against them solely by reason of their
being DIRECTORS or OFFICERS.
All such interrelated breaches of duty, neglects, errors,
misstatements, misleading statements or omissions actually or
allegedly caused, committed or attempted by or claimed
against one or more of the DIRECTORS or OFFICERS shall be
deemed to be a single "WRONGFUL ACT".
III. EXCLUSIONS
The INSURER shall not be liable to make any payment for ULTIMATE
NET LOSS arising from any CLAIMS(S) made against any DIRECTOR or
OFFICER:
(A) (1) for any fines or penalties imposed in a criminal suit,
action or proceeding;
(2) for any fines or penalties imposed in conjunction with
political contributions, payments, commissions or
gratuities; or
(3) for any other fines or penalties imposed by final
adjudication of a court of competent jurisdiction or
any agency or commission possessing quasi-judicial
authority; or
(4) where, at inception of the POLICY PERIOD, such DIRECTOR
or OFFICER had knowledge of a fact or circumstance
which was likely to give rise to such CLAIMS(S) and
which such DIRECTOR or OFFICER failed to disclose or
misrepresented in the Application or in the process of
preparation of the Application, other than in a Renewal
Application; provided, however, that this exclusion
shall not apply to such CLAIM(S) made against any
DIRECTOR or OFFICER other than such DIRECTOR or OFFICER
who failed to disclose or misrepresented such fact or
circumstance; provided further that this exclusion
shall not limit the INSURER'S right to exercise any
remedy available to it with respect to such failure to
disclose or misrepresentation other than the remedy
provided for in this Exclusion.
(B) with respect to Insuring Agreement I(A)(1) only:
(1) based upon, arising out of or attributable to such
DIRECTOR or OFFICER having gained any personal profit,
advantage or remuneration to which such DIRECTOR or
OFFICER was not legally entitled if:
(a) a judgment or other final adjudication adverse to
such DIRECTOR or OFFICER establishes that he in
fact gained such personal profit, advantage or
remuneration; or
(b) such DIRECTOR or OFFICER has entered into a
settlement agreement to repay such personal
profit, advantage or remuneration to the COMPANY;
(2) for an accounting of profits made from the purchase or
sale by such DIRECTOR or OFFICER of securities of the
COMPANY within the meaning of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto
or similar provisions of any other federal or state
statutory or common law;
(3) brought about or contributed to by the dishonest,
fraudulent, criminal or malicious act or omission of
such DIRECTOR or OFFICER if a final adjudication
establishes that acts of active and deliberate
dishonesty were committed or attempted with actual
dishonest purpose and intent and were material to the
cause of action so adjudicated; or
(4) where such payment would be contrary to applicable law.
(C) for bodily injury, mental anguish, mental illness, emotional
upset, sickness or disease sustained by any person, death of
any person or for physical injury to or destruction of
tangible property or the loss of use thereof.
(D) for injury based upon, arising out of or attributable to:
(1) false arrest, wrongful detention or wrongful
imprisonment or malicious prosecution;
(2) wrongful entry, wrongful eviction or other invasion of
the right of private occupancy;
(3) discrimination or sexual harassment;
(4) publication or utterance:
(a) of a libel or slander or other defamatory or
disparaging material; and
(b) in violation of an individual's right of privacy;
or
(5) with respect to the COMPANY'S advertising activities:
piracy, plagiarism, unfair competition, idea
misappropriation under implied contract, or
infringement of copyright, title, slogan, registered
trademark, service mark, or trade name.
(E) based upon, arising out of or attributable to the violation
of any responsibility, obligation or duty imposed upon
fiduciaries by the Employee Retirement Income Security Act of
1974 or amendments thereto or by similar common or statutory
law of the United States of America or any state or other
jurisdiction therein.
(F) based upon, arising out of or attributable to:
(1) the rendering of advice with respect to;
(2) the interpreting of; or
(3) the handling of records in connection with the
enrollment, termination or cancellation of employees
under the COMPANY'S group life insurance, group
accident or health insurance, pension plans, employee
stock subscription plans, workers' compensation,
unemployment insurance, social security, disability
benefits and any other employee benefit programs.
(G) based upon, arising out of or attributable to any failure or
omission on the part of the DIRECTORS, OFFICERS and/or the
COMPANY to effect and maintain insurance(s) of the type and
amount which is customary with companies in the same or
similar business.
(H) (1) arising from any circumstances, written notice of which
has been given under any policy or any DISCOVERY PERIOD
thereof, which policy expired prior to or upon the
inception of this POLICY; or
(2) which is one of the number of CLAIMS arising out of the
same WRONGFUL ACT, if any CLAIM of such multiple CLAIMS
was made against the DIRECTORS or OFFICERS during any
policy or any DISCOVERY PERIOD thereof, which policy
expired prior to or upon the inception of this POLICY.
(I) if any other policy or policies also afford(s) coverage in
whole or in part for such CLAIM(S); except, this exclusion
shall not apply:
(1) to the amount of ULTIMATE NET LOSS with respect to such
CLAIM(S) which is in excess of the limit of liability
of such other policy or policies and any applicable
deductible or retention thereunder; or
(2) with respect to coverage afforded such CLAIM(S) by any
other policy or policies purchased or issued
specifically as insurance underlying or in excess of
the coverage afforded under this POLICY;
provided always that nothing herein shall be construed to
cause this POLICY to contribute with any other policy or
policies or to make this POLICY subject to any of the terms
of any other policy or policies.
(J) for any WRONGFUL ACT which took place in whole or in part
prior to the RETROACTIVE DATE.
(K) by, on behalf of, in the right of, at the request of, or for
the benefit of, any security holder of the COMPANY, and any
DIRECTOR or OFFICER, or the COMPANY, unless such CLAIM is:
(1) made derivatively by any shareholder of the COMPANY for
the benefit of the COMPANY and such shareholder is:
(a) acting totally independent of, and totally
without the suggestion, solicitation, direction,
assistance, participation or intervention of, any
DIRECTOR or OFFICER, the COMPANY, or any
affiliate of the COMPANY; and
(b) not an affiliate of the COMPANY nor any entity
within the definition of the term "COMPANY"; or
(2) made non-derivatively by a security holder who is not:
(a) a DIRECTOR or OFFICER; or
(b) an affiliate of the COMPANY or any entity within
the definition of the term "COMPANY"; or
(3) made non-derivatively by an OFFICER acting totally
independent of, and totally without the suggestion,
solicitation, direction, assistance, participation or
intervention of, any other DIRECTOR or OFFICER, the
COMPANY, or any affiliate of the COMPANY and (subject
to all the other exclusions and POLICY provisions)
arising from the wrongful termination of that OFFICER.
(L) where such CLAIM(S) arise out of such DIRECTOR'S or
OFFICER'S activities as a director, officer or trustee of any
entity other than:
(1) the COMPANY; or
(2) any outside NOT-FOR-PROFIT ORGANIZATION as provided in
Section II(E)(2).
IV. CONDITIONS
(A) Acquisition, Merger and Dissolution
(1) (a) If, after inception of the POLICY PERIOD, the
COMPANY or any of its SUBSIDIARIES forms or
acquires any SUBSIDIARY whose operations are
related to, arising from or associated with the
production, transmission, delivery or furnishing
of electricity, gas, water, or sewer service to
the public or the conveyance of telephone
messages for the public and whose total assets
are not greater in value than the lesser of
$50,000,000 or five (5) percent of the COMPANY'S
total assets, coverage shall be provided for the
DIRECTORS and OFFICERS of such newly formed or
acquired SUBSIDIARY from the date of its
formation or acquisition respectively, but only
with respect to WRONGFUL ACTS actually or
allegedly caused, committed or attempted during
that part of the POLICY PERIOD which is
subsequent to the formation or acquisition.
(b) In respect of any SUBSIDIARY formed or acquired
after the inception of the POLICY PERIOD and not
subject to paragraph (a) above, the COMPANY shall
report such formation or acquisition within
ninety (90) days thereafter and, if so reported,
upon payment of an additional premium and upon
terms as may be required by the INSURER, coverage
shall be provided for the DIRECTORS and OFFICERS
of such newly formed or acquired SUBSIDIARY from
the date of its formation or acquisition
respectively, but only with respect to WRONGFUL
ACTS actually or allegedly caused, committed or
attempted during that part of the POLICY PERIOD
which is subsequent to the formation of
acquisition.
(2) If, prior to or after inception of the POLICY PERIOD,
the COMPANY or any of its SUBSIDIARIES is or has been
acquired by or merged with any other entity, or is or
has been dissolved, coverage under this POLICY shall
continue for the POLICY PERIOD but only for DIRECTORS
and OFFICERS of the COMPANY or its SUBSIDIARIES who
were serving as such prior to such acquisition, merger
or dissolution and only with respect to WRONGFUL ACTS
actually or allegedly caused, committed or attempted
during that part of the COVERAGE PERIOD which is prior
to such acquisition, merger or dissolution.
(B) Non-Duplication of Limits
To avoid the duplication of the INSURER'S Limits of Liability
stated in Item 5 of the Declarations, the DIRECTORS, OFFICERS
and COMPANY agree that:
(1) in the event the INSURER provides INDEMNITY or DEFENSE
COSTS for any WRONGFUL ACT under this POLICY, neither
the DIRECTORS, OFFICERS nor the COMPANY shall have any
right to additional INDEMNITY or DEFENSE COSTS for such
WRONGFUL ACT under any other policy issued by the
INSURER to the DIRECTORS, OFFICERS or COMPANY that
otherwise would apply to such WRONGFUL ACT; and
(2) in the event the INSURER provides INDEMNITY or DEFENSE
COSTS for any WRONGFUL ACT under any other policy
issued by the INSURER to the DIRECTORS, OFFICERS, or
COMPANY, neither the DIRECTORS, OFFICERS nor the
COMPANY shall have any right to additional INDEMNITY or
DEFENSE COSTS for such WRONGFUL ACT under this POLICY.
(C) Notice of Claim
As a condition precedent to any rights under this POLICY, the
DIRECTORS, OFFICERS and/or the COMPANY, shall give written
notice to the INSURER as soon as practicable of any CLAIM,
which notice shall include the nature of the WRONGFUL ACT,
the alleged injury, the names of the claimants, and the
manner in which the DIRECTOR, OFFICER or COMPANY first became
aware of the CLAIM, and shall cooperate with the INSURER and
give such additional information as the INSURER may
reasonably require.
The Application or any information contained therein for this
POLICY shall not constitute a notice of CLAIM.
(D) Cooperation and Settlements
In the event of any WRONGFUL ACT which may involve this
POLICY, the DIRECTORS, OFFICERS or COMPANY without prejudice
as to liability, may proceed immediately with settlements
which in their aggregate do not exceed the UNDERLYING LIMITS.
The COMPANY shall notify the INSURER of any such settlements
made.
The INSURER shall not be called upon to assume charge of the
investigation, settlement or defense of any demand, suit or
proceeding, but the INSURER shall have the right and shall be
given the opportunity to associate with the DIRECTORS,
OFFICERS and COMPANY or any underlying insurer, or both, in
the investigation, settlement, defense and control of any
demand, suit or proceeding relative to any WRONGFUL ACT where
the demand, suit or proceeding involves or may involve the
INSURER. At all times, the DIRECTORS, OFFICERS and COMPANY
and the INSURER shall cooperate in the investigation,
settlement and defense of such demand, suit or proceeding.
The DIRECTORS, OFFICERS and COMPANY and their underlying
insurer(s) shall, at all times, use diligence and prudence in
the investigation, settlement and defense of demands, suits
or other proceedings.
(E) Appeals
In the event that the DIRECTORS, OFFICERS, COMPANY or any
underlying insurer elects not to appeal a judgment in excess
of the UNDERLYING LIMITS, the INSURER may elect to conduct
such appeal at its own cost and expense and shall be liable
for any taxable court costs and interest incidental thereto,
but in no event shall the total liability of the INSURER,
exclusive of the cost and expense of appeal exceed its Limits
of Liability stated in Item 5 of the Declarations.
(F) Subrogation
In the event of any payment under this POLICY, the INSURER
shall be subrogated to the extent of such payment to all
rights of recovery thereof, and the DIRECTORS, OFFICERS and
COMPANY shall execute all papers required and shall do
everything that may be necessary to enable the INSURER to
bring suit in the name of the DIRECTORS, OFFICERS or COMPANY.
(G) Bankruptcy or Insolvency
Bankruptcy or insolvency of the COMPANY shall not relieve the
INSURER of any of its obligations hereunder.
In the event of bankruptcy or insolvency of the COMPANY,
subject to all the terms of this POLICY, the INSURER shall
indemnify the DIRECTORS and OFFICERS under Insuring Agreement
I(A)(1) (in excess of the UNDERLYING LIMITS, if any,
applicable to Insuring Agreement I(A)(1) for ULTIMATE NET
LOSS they shall become legally obligated to pay which would
have been indemnified by the COMPANY and reimbursable by the
INSURER under Insuring Agreement I(A)(2) but for such
bankruptcy or insolvency; provided, however, that the INSURER
shall be subrogated, to the extent of any payment, to the
rights of the DIRECTORS and OFFICERS to receive
indemnification from the COMPANY but only up to the amount of
the UNDERLYING LIMITS applicable to Insuring Agreement
I(A)(2) less the amount of the UNDERLYING LIMITS, if any,
applicable to Insuring Agreement I(A)(1).
(H) Uncollectibility of Underlying Insurance
Notwithstanding any of the terms of this POLICY which might
be construed otherwise, if this POLICY is written as excess
over any Underlying Insurance, it shall drop down only in the
event of reduction or exhaustion of any aggregate limits
contained in such Underlying Insurance and shall not drop
down for any other reason including, but not limited, to,
uncollectibility (in whole or in part) because of the
financial impairment or insolvency of an underlying insurer.
The risk of uncollectibility of such Underlying Insurance (in
whole or in part) whether because of financial impairment or
insolvency of an underlying insurer or for any other reason,
is expressly retained by the DIRECTORS, OFFICERS and the
COMPANY and is not in any way or under any circumstances
insured or assumed by the INSURER.
(I) Maintenance of UNDERLYING LIMITS
If this POLICY is written as Excess Insurance, it is a
condition of this POLICY that any UNDERLYING LIMITS stated in
Item 6 of the Declarations shall be maintained in full force
and effect, except for reduction or exhaustion of any
underlying aggregate limits of liability, during the currency
of this POLICY. Failure of the COMPANY to comply with the
foregoing shall not invalidate this POLICY but in the event
of such failure, without the agreement of the INSURER, the
INSURER shall only be liable to the same extent as it would
have been had the COMPANY complied with this Condition.
(J) Changes and Assignment
The terms of this POLICY shall not be waived or changed, nor
shall an assignment of interest be binding, except by an
endorsement to this POLICY issued by the INSURER.
(K) Outside NOT-FOR-PROFIT ORGANIZATION
If any DIRECTOR or OFFICER is serving or has served at the
specific request of the COMPANY as a DIRECTOR or OFFICER of
an outside NOT-FOR-PROFIT ORGANIZATION, the coverage afforded
by this POLICY:
(1) shall be specifically excess of any other indemnity or
insurance available to such DIRECTOR or OFFICER by
reason of such service; and
(2) shall not be construed to extend to the outside NOT-
FOR-PROFIT ORGANIZATION in which the DIRECTOR or
OFFICER is serving or has served, nor to any other
director, officer or employee of such outside NOT-FOR-
PROFIT ORGANIZATION.
(L) DISCOVERY PERIOD
(1) In the event of cancellation or nonrenewal of this
POLICY by the INSURER, the COMPANY shall have the
right, upon execution of a warranty that all known
CLAIMS and facts or circumstances likely to give rise
to a CLAIM have been reported to the INSURER and
payment of an additional premium to be determined by
the INSURER which shall not exceed two hundred (200)
percent of the Policy Premium stated in Item 4 of the
Declarations, to an extension of the coverage afforded
by this POLICY with respect to any CLAIM first made
against any DIRECTOR or OFFICER during the period of
twelve (12) months after the effective date of such
cancellation or nonrenewal, but only with respect to
any WRONGFUL ACT committed during the COVERAGE PERIOD.
This right of extension shall terminate unless written
notice of such election is received by the INSURER
within thirty (30) days after the effective date of
cancellation or nonrenewal.
The offer by the INSURER of renewal on terms,
conditions or premiums different from those in effect
during the POLICY PERIOD shall not constitute
cancellation or refusal to renew this POLICY.
(2) In the event of cancellation or nonrenewal of this
POLICY by the COMPANY, the COMPANY shall have the right
upon payment of an additional premium, which shall not
exceed one hundred (100) percent of the Policy Premium
stated in Item 4 of the Declarations, to an extension
of coverage afforded by this POLICY with respect to any
CLAIM first made against any DIRECTOR or OFFICER during
the period of twelve (12) months after the effective
date of such cancellation or nonrenewal, but only with
respect to any WRONGFUL ACT during the COVERAGE PERIOD.
This right of extension shall terminate unless written
notice of such election is received by the INSURER
within thirty (30) days after the effective date of
cancellation or nonrenewal.
(3) In the event of renewal on terms and conditions
different from those in effect during the POLICY
PERIOD, the COMPANY shall have the right, upon
execution of a warranty that all known CLAIMS and facts
or circumstances likely to give rise to a CLAIM have
been reported to the INSURER and payment of an
additional premium to be determined by the INSURER
which shall not exceed two hundred (200) percent of the
Policy Premium stated in Item 4 of the Declarations, to
an extension of the original terms and conditions with
respect to any CLAIM first made against any DIRECTOR or
OFFICER during the period of twelve (12) months after
the effective date of renewal, but only with respect to
any WRONGFUL ACT committed during the COVERAGE PERIOD
and not covered by the renewal terms and conditions.
This right of extension shall terminate unless written
notice of such election is received by the INSURER
within thirty (30) days after the effective date of
renewal.
(M) Cancellation
This POLICY may be cancelled:
(1) at any time by the COMPANY by mailing written notice to
the INSURER stating when thereafter cancellation shall
be effective; or
(2) at any time by the INSURER by mailing written notice to
the COMPANY stating when, not less than ninety (90)
days from the date such notice was mailed, cancellation
shall be effective, except in the event of cancellation
for nonpayment of premiums, such cancellation shall be
effective ten (10) days after the date notice thereof
is mailed.
The proof of mailing of notice to the address of the COMPANY
stated in Item 7 of the Declarations or the address of the
INSURER stated in Item 8 of the Declarations shall be
sufficient proof of notice and the insurance under this
POLICY shall end on the effective date and hour of
cancellation stated in the notice. Delivery of such notice
either by the COMPANY or by the INSURER shall be equivalent
to mailing.
With respect to all cancellations, the premium earned and
retained by the INSURER shall be the sum of (a) the Minimum
Premium stated in Item 4B of the Declarations plus (b) the
pro-rata proportion, for the period this POLICY has been in
force, of the difference between (i) the Policy Premium
stated in Item 4A of the Declarations and (ii) the Minimum
Premium stated in Item 4B of the Declarations.
The offer by the INSURER of renewal on terms, conditions or
premiums different from those in effect during the POLICY
PERIOD shall not constitute cancellation or refusal to renew
this POLICY.
(N) Currency
All amounts stated herein are expressed in United States
Dollars and all amounts payable hereunder are payable in
United States Dollars.
(O) Sole Agent
The COMPANY first named in Item 1 of the Declarations shall
be deemed the sole agent of each DIRECTOR and OFFICER for the
purpose of requesting any endorsement to this POLICY, making
premium payments and adjustments, receipting for payments of
INDEMNITY and receiving notifications, including notice of
cancellation from the INSURER.
(P) Acts, Omissions or Warranties
The acts, omissions or warranties of any DIRECTOR or OFFICER
shall not be imputed to any other DIRECTOR or OFFICER with
respect to the coverages applicable under this POLICY.
(Q) Arbitration and Service of Suit
Any controversy or dispute arising out of or relating to an
interpretation or breach of this POLICY, shall be settled by
binding arbitration in accordance with the Rules of the
American Arbitration Association and judgment upon the award
rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereover. The arbitration process shall
be governed by and conducted in accordance with the laws of
the State of New York. The terms of this POLICY are to be
construed in an evenhanded fashion as between the DIRECTORS,
OFFICERS or COMPANY and the INSURER in accordance with the
laws of the jurisdiction in which the situation forming the
basis for this controversy arose. Where the language of this
POLICY is deemed to be ambiguous or otherwise unclear, the
issue shall be resolved in a manner most consistent with the
relevant terms of the POLICY without regard to authorship of
the language and without any presumption or arbitrary
interpretation or construction in favor of either the
DIRECTORS, OFFICERS or COMPANY or the INSURER. In reaching
any decision the arbitrators shall give due consideration for
the customs and usages of the insurance industry.
In the event of a judgment entered against the INSURER on an
arbitration award, the INSURER at the request of the
DIRECTORS, OFFICERS or COMPANY, shall submit to the
jurisdiction of any court of competent jurisdiction within
the United States of America, and shall comply with all
requirements necessary to give such court jurisdiction and
all matters relating to such judgment and its enforcement
shall be determined in accordance with the law and practice
of such court.
Service of process in such suit or any other suit against the
INSURER, may be made upon Messrs. LeBoeuf, Lamb, Greene &
MacRae, 125 West 55th Street, New York, New York 10019, and,
in any suit instituted against it under this POLICY, the
INSURER will abide by the final decision of such court or of
any appellate court in the event of any appeal.
Messrs. LeBoeuf, Lamb, Greene & MacRae are authorized and
directed to accept service of process on behalf of the
INSURER in any such suit and, upon the DIRECTORS, OFFICERS or
COMPANY'S request, to give a written undertaking to the
DIRECTORS, OFFICERS or COMPANY that they will enter a general
appearance on the INSURER'S behalf in the event such suit is
instituted.
(R) Severability
In the event that any provision of this POLICY shall be
declared or deemed to be invalid or unenforceable under any
applicable law, such invalidity or unenforceability shall not
affect the validity or enforceability of the remaining
portion of this POLICY.
(S) Non-assessability
The COMPANY (and, accordingly, any DIRECTOR or OFFICER for
whom the COMPANY acts as agent) shall only be liable under
this POLICY for the premium stated in Item 4 of the
Declarations. Neither the COMPANY nor any DIRECTOR or
OFFICER for whom the COMPANY acts as agent shall be subject
to any contingent liability or be required to pay any dues or
assessments in addition to the premium described above.
IN WITNESS WHEREOF, Associated Electric & Gas Insurance Services Limited
has caused this POLICY to be signed by its Chairman at Hamilton, Bermuda.
However, this POLICY shall not be binding upon the INSURER unless
countersigned on the Declaration Page by a duly authorized representative
of the INSURER.
/s/ Bernard J. Kennedy /s/ J.E. Bachman
Bernard J. Kennedy, Chairman J.E. Bachman, President
and Chief Executive Officer
<PAGE>
ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED
Endorsement No. 1 Effective Date of Endorsement June 1, 1994
Attached to and forming part of POLICY No. D0392B1A94
COMPANY IPALCO Enterprises, Inc.
It is understood and agreed that this POLICY is hereby amended as
indicated. All other terms and conditions of this POLICY remain
unchanged.
NUCLEAR ENERGY LIABILITY EXCLUSION (BROAD FORM)
It is agreed that:
I. This POLICY does not apply:
(A) Under any Liability Coverage, to bodily injury or property
damage:
(1) with respect to which the DIRECTORS, OFFICERS or
COMPANY under this POLICY is also an insured under a
nuclear energy liability policy issued by Nuclear
Energy Liability Insurance Association, Mutual Atomic
Energy Liability Underwriters, Nuclear Insurance
Association of Canada or any of their successors, or
would be an insured under any such policy but for its
termination upon exhaustion of its limit of liability;
or
(2) resulting from hazardous properties of nuclear material
and with respect to which (a) any person or
organization is required to maintain financial
protection pursuant to the Atomic Energy Act of 1954,
or any law amendatory thereof, or (b) the DIRECTORS,
OFFICERS or COMPANY is, or had this POLICY not been
issued would be, entitled to indemnity from the United
States of America, or any agency thereof, under any
agreement entered into by the United States of America,
or any agency thereof, with any person or organization.
(B) Under any Medical Payments Coverage, or under any
Supplementary Payments provision relating to immediate
medical or surgical relief, to expenses incurred with respect
to bodily injury resulting from the hazardous properties of
nuclear material and arising out of the operation of a
nuclear facility by any person or organization.
(C) Under any Liability Coverage, to bodily injury or property
damage resulting from the hazardous properties of nuclear
material if:
(1) the nuclear material (a) is at any nuclear facility
owned by, or operated by or on behalf of the COMPANY or
(b) has been discharged or dispersed therefrom;
(2) the nuclear material is contained in spent fuel or
waste at any time possessed, handled, used, processed,
sorted, transported or disposed of by or on behalf of
the COMPANY; or
(3) the bodily injury or property damage arises out of the
furnishing by the COMPANY of services, materials, parts
or equipment in connection with the planning, construction,
maintenance, operation or use of any nuclear facility, but
if such facility is located within the United States of
America, its territories or possessions or Canada, this
exclusion (3) applies only to property damage to such nuclear
facility and any property thereat.
II. As used in this Endorsement:
hazardous properties include radioactive, toxic or explosive
properties;
nuclear material means source material, special nuclear material or
byproduct material;
source material, special nuclear material and byproduct material
have the meanings given them in the Atomic Energy Act of 1954 or in
any law amendatory thereof;
spent fuel means any fuel element or fuel component, solid or
liquid, which has been used or exposed to radiation in a nuclear
reactor;
waste means any waste material (1) containing byproduct material
other than the tailings or wastes produced by the extraction or
concentration of uranium or thorium from any ore processed
primarily for its source material content, and (2) resulting from
the operation by any person or organization of any nuclear facility
included under the first two paragraphs of the definition of
nuclear facility;
nuclear facility means:
(a) any nuclear reactor,
(b) any equipment or device designed or used for (i) separating
the isotopes of uranium or plutonium, (ii) processing or
utilizing spent fuel, or (iii) handling, processing or
packing waste,
(c) any equipment or device used for the processing, fabricating
or alloying of special nuclear material if at any time the
total amount of such material in the custody of the COMPANY
at the premises where such equipment or device is located
consists of or contains more than 25 grams of plutonium or
uranium 233 or any combination thereof; or more than 250
grams of uranium 235, or
(d) any structure, basin, excavation, premises or place prepared
or used for the storage or disposal of waste,
and includes the site on which any of the foregoing is located, all
operations conducted on such site and all premises used for such
operations;
nuclear reactor means any apparatus designed or used to sustain
nuclear fission in a self-supporting chain reaction or to contain a
critical mass of fissionable material;
property damage includes all forms of radioactive contamination of
property.
/s/ Karen Larson
Signature of Authorized Representative
<PAGE>
ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED
Endorsement No. 2 Effective Date of Endorsement June 1, 1994
Attached to and forming part of POLICY No. D0392B1A94
COMPANY IPALCO Enterprises, Inc.
It is understood and agreed that this POLICY is hereby amended as
indicated. All other terms and conditions of this POLICY remain
unchanged.
DELETION OF FAILURE TO MAINTAIN INSURANCE EXCLUSION
Section III, EXCLUSIONS (G) Failure to Maintain Insurance Exclusion, is
deleted in its entirety.
/s/ Karen Larson
Signature of Authorized Representative
<PAGE>
ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED
Endorsement No. 3 Effective Date of Endorsement June 1, 1994
Attached to and forming part of POLICY No. D0392B1A94
COMPANY IPALCO Enterprises, Inc.
It is understood and agreed that this POLICY is hereby amended as
indicated. All other terms and conditions of this POLICY remain
unchanged.
OUTSIDE POSITION COVERAGE - FOR-PROFIT ORGANIZATIONS
I. Definition (E) DIRECTOR and OFFICER is amended to include the
following:
(4) (a) any director, officer or trustee of the COMPANY who is
named in attachment OPC-FP1 and who is serving at the
specific written request of the COMPANY in the position
of a director, officer or trustee of the outside FOR-
PROFIT ORGANIZATION, which position and FOR-PROFIT
ORGANIZATION are named in attachment OPC-FP1, while
such director, officer or trustee is acting in such
capacity; and
(b) any present or former director, officer or trustee of
the COMPANY who has served at the specific written
request of the COMPANY in the position of a director,
officer or trustee of an outside FOR-PROFIT
ORGANIZATION in respect to WRONGFUL ACTS committed
while such director, officer or trustee was acting in
such capacity; provided, however, that such director,
officer or trustee, such outside FOR-PROFIT
ORGANIZATION and such position were named in an
endorsement (similar to this Endorsement) to the
Directors' and Officers' Policy of the INSURER in force
at the time at which such director, officer or trustee
was acting in such capacity.
II. The following Definition is added to the POLICY:
(R) FOR-PROFIT ORGANIZATION: The term "FOR-PROFIT ORGANIZATION"
shall mean an organization other than a NOT-FOR-PROFIT
ORGANIZATION.
III. Exclusion (L) is hereby deleted in its entirety and replaced with
the following:
(L) where such CLAIM(S) arises out of such DIRECTOR'S or
OFFICER'S activities as a director, officer or trustee of any
entity other than:
(1) the COMPANY; or
(2) any outside NOT-FOR-PROFIT ORGANIZATION as provided in
Section II(E)(2); or
(3) any outside FOR-PROFIT ORGANIZATION as provided in an
OUTSIDE POSITION COVERAGE - FOR-PROFIT ORGANIZATIONS
Endorsement.
IV. Notwithstanding any other provision of the POLICY to the contrary,
the insurance provided by this Endorsement is specifically in
excess of and shall not contribute with any indemnification or
insurance provided by an outside FOR-PROFIT ORGANIZATION, to any
DIRECTOR or OFFICER of the COMPANY.
OUTSIDE POSITION COVERAGE - FOR-PROFIT ORGANIZATIONS
continued
Under no circumstances shall the insurance provided by this
Endorsement apply to:
(1) any director, officer or trustee of the outside FOR-PROFIT
ORGANIZATION who is or was not a DIRECTOR or OFFICER of the
COMPANY and who is not named in attachment OPC-FP1; or
(2) the outside FOR-PROFIT ORGANIZATION.
V. The Limits of Liability stated in Item 5 of the Declarations and
the UNDERLYING LIMITS stated in Item 6 of the Declarations shall
apply to the insurance provided by this Endorsement unless a
specific Limit of Liability or UNDERLYING LIMIT is stated below:
Item 5: Limits of Liability:
A. $ Each WRONGFUL ACT
B. $ Aggregate Limit of Liability of the POLICY
PERIOD
Item 6. UNDERLYING LIMITS:
This Policy is written as insurance
A. If this POLICY is written as Primary Insurance with
respect to Insuring Agreement I(A)(2) only:
(1) $ Each WRONGFUL ACT not arising from NUCLEAR
OPERATIONS
(2) $ Each WRONGFUL ACT arising from NUCLEAR
OPERATIONS
B. If this POLICY in written as Excess Insurance:
(1) (a) $ Each WRONGFUL ACT
(b) $ In the Aggregate for all WRONGFUL
ACTS
(2) $ Each WRONGFUL ACT not covered under
Underlying Insurance
(3) In the Event of Exhaustion of the UNDERLYING
LIMIT stated in Item 6(B)(1)(b) above with
respect to Insuring Agreement I(A)(2) only:
(a) $ Each WRONGFUL ACT not arising from
NUCLEAR OPERATIONS
(b) $ Each WRONGFUL ACT arising from
NUCLEAR OPERATIONS
The Limit of Liability stated in this section is part of and not in
addition to the Limits of Liability stated in Item 5 of the
Declarations.
/s/ Karen Larson
Signature of Authorized Representative
<PAGE>
ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED
Attachment OPC-FP1 to Endorsement No. 3 Effective Date of Endorsement
June 1, 1994
Attached to and forming part of POLICY No. D0392B1A94
COMPANY IPALCO Enterprises, Inc.
Name, FOR-PROFIT ORGANIZATION and position of each director, officer or
trustee of the COMPANY covered under Endorsement No. 3
NAME FOR-PROFIT ORGANIZATION POSITION
J.R. Hodowal Tecumseh Coal Corporation Director
Dan FitzGibbon Evergreen Media Corporation Director
R.L. Humke Techumseh Coal Corporation Director
EXHIBIT 10.7
IPALCO ENTERPRISES, INC.
LONG-TERM PERFORMANCE AND
RESTRICTED STOCK INCENTIVE PLAN
(As Amended and Restated Effective January 1, 1995)
<PAGE>
IPALCO ENTERPRISES, INC.
LONG-TERM PERFORMANCE AND
RESTRICTED STOCK INCENTIVE PLAN
(As Amended and Restated Effective January 1, 1995)
Pursuant to Section XI of the IPALCO Enterprises, Inc. 1990 Long-Term
Performance Incentive Plan (the "Plan"), IPALCO Enterprises, Inc. ("IPALCO")
renames the Plan and amends it to provide, in its entirety, as follows:
SECTION 1
PURPOSE
The purpose of the amended Plan (as such term is described below) is
to provide an incentive to selected key executives of the Company (as such
term is described below), by providing an opportunity to earn long-term
incentive compensation, based upon the attainment of Company performance
goals. In addition, the restricted stock component of the Plan is intended
to provide the key executives with a means of acquiring or increasing a
proprietary interest in IPALCO so that they shall have an increased
incentive to work toward the attainment of the long term growth and profit
objectives of IPALCO and its affiliated companies. Specifically, the Plan
is designed to:
A. Link, directly and indirectly, executive and shareholder
interests.
B. Attract and retain individuals of outstanding ability.
C. Encourage key Company officers to render superior
performance.
SECTION 2
DEFINITIONS
The terms defined in this Section 2 shall, for purposes of this Plan,
have the meanings herein specified, unless the context expressly or by
necessary implication otherwise requires:
A. Acquisition of Control: An "Acquisition of Control"
means:
(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 twenty
percent (20%) or more of either (A) the then outstanding shares
of common stock of IPALCO (the "Outstanding IPALCO Common
Stock") or (B) the combined voting power of the then
outstanding voting securities of IPALCO entitled to vote
generally in the election of directors (the "Outstanding IPALCO
Voting Securities"); provided, however, that the following
acquisitions shall not constitute an Acquisition of Control:
(i) any acquisition directly from IPALCO (excluding an
acquisition by virtue of the exercise of a conversion
privilege), (ii) any acquisition by IPALCO, (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by IPALCO, IPL or any corporation
controlled by IPALCO or (D) any acquisition by any corporation
pursuant to a reorganization, merger or consolidation, if,
following such reorganization, merger or consolidation, the
conditions described in clauses (A), (B) and (C) of subsection
(3) of this Section 2.A. are satisfied;
(2) Individuals who, as of the date hereof, constitute
the Board of Directors of IPALCO (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board
of Directors of IPALCO; provided, however, that any individual
becoming a director subsequent to the date hereof whose
election, or nomination for election by IPALCO's shareholders,
was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board of
Directors; or
(3) Approval by the shareholders of IPALCO of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (A)
more than sixty percent (60%) of, respectively, the then
outstanding shares of common stock of the corporation resulting
from such reorganization, merger or consolidation and the
combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding IPALCO Common Stock and Outstanding IPALCO Voting
Securities immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as their
ownership, immediately prior to such reorganization, merger or
consolidation, of the Outstanding IPALCO Stock and Outstanding
IPALCO Voting Securities, as the case may be, (B) no Person
(excluding IPALCO, any employee benefit plan or related trust
of IPALCO, IPL or such corporation resulting from such
reorganization, merger or consolidation and any Person
beneficially owning, immediately prior to such reorganization,
merger or consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or
consolidation, directly or indirectly, twenty percent (20%) or
more of the Outstanding IPALCO Common Stock or Outstanding
Voting Securities, as the case may be) beneficially owns,
directly or indirectly, twenty percent (20%) or more of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors and (C) at least a
majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time
of the execution of the initial agreement providing for such
reorganization, merger or consolidation;
(4) Approval by the shareholders of IPALCO of (A) a
complete liquidation or dissolution of IPALCO or (B) the sale
or other disposition of all or substantially all of the assets
of IPALCO, other than to a corporation, with respect to which
following such sale or other disposition (i) more than sixty
percent (60%) of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power
of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding IPALCO
Common Stock and Outstanding IPALCO Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the
Outstanding IPALCO Common Stock and Outstanding IPALCO Voting
Securities, as the case may be, (ii) no Person (excluding
IPALCO and any employee benefit plan or related trust of
IPALCO, IPL or such corporation and any Person beneficially
owning, immediately prior to such sale or other disposition,
directly or indirectly, twenty percent (20%) or more of the
Outstanding IPALCO Common Stock or Outstanding IPALCO Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of, respectively, the
then outstanding shares of common stock of such corporation and
the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors and (iii) 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 of Directors
providing for such sale or other disposition of assets of
IPALCO; or
(5) The closing, as defined in the documents relating
to, or as evidenced by a certificate of any state or federal
governmental authority in connection with, a transaction
approval of which by the shareholders of IPALCO would
constitute an "acquisition of control" under subsection (3) or
(4) of this Section 2.A. of this Plan.
Notwithstanding anything contained in this Plan to the contrary, if
a Participant's employment is terminated before an "Acquisition of
Control" as defined in this subsection (A) and the Participant
reasonably demonstrates that such termination (i) was at the request
of a third party who has indicated an intention or taken steps
reasonably calculated to effect an Acquisition of Control and who
effectuates an "Acquisition of Control" or (ii) otherwise occurred in
connection with, or in anticipation of, an Acquisition of Control
which actually occurs, then for all purposes of this Plan, the date
of an Acquisition of Control with respect to such Participant shall
mean the date immediately prior to the date of such termination of the
Participant's employment.
B. Administrative Guidelines: The guidelines established for
each Program used to administer this Plan as now in effect or as
modified from time to time by the Committee.
C. Base Salary: The aggregate base salary paid to a
Participant in a Fiscal Year.
D. Board of Directors: The Board of Directors of IPALCO.
E. Committee: The Compensation Committee of the Board of
Directors.
F. Company: IPALCO and its subsidiaries, or successors.
G. Cost Effective Service: For Performance Periods beginning
on or after January 1, 1995, the three (3) year average, as
applicable, of net income of the Company as a percentage of the sum
of the Company's total operating revenues and other income. The
Company's net income, total operating revenues and other income shall
be as reported in the Company's Uniform Statistical Report; provided,
however, that the total operating revenues and other income shall
include gross IPL revenues but, with respect to the non-utility
businesses, shall only include their net income.
H. Fiscal Year: The calendar year.
I. IPALCO: IPALCO Enterprises, Inc. or its successor.
J. IPL: Indianapolis Power & Light Company or its successor.
K. Market Price: For a Fiscal Year, the average of the
prices of a company's common stock on the New York Stock Exchange, or
other appropriate exchange, if the company's common stock is not
traded on the New York Stock Exchange, as published in The Wall Street
Journal, at the close of trading on the tenth (10th) business day of
February, May, August and November in such Fiscal Year.
L. Participant: The employees of the Company designated by
the Committee to receive an award under the Plan. The employees
eligible for designation include officers of the Company and other
employees who the Committee expect to contribute to the strategic
growth of the Company.
M. Peer Group: Those comparable investor-owned electric
utility companies or holding companies which are designated by the
Committee as members of a comparison group for a Performance Period
pursuant to Section 11 hereof.
N. Performance Incentive Award: The incentive award amount
for a Performance Period expressed as a percentage of a Participant's
Base Salary for the first (1st) fiscal year of a Performance Period;
provided, however, that for purposes of making the Share grants at the
beginning of each Performance Period, the Share grants shall be based
on the Participant's rate of base compensation in effect on the first
(1st) calendar day of the Fiscal Year; provided, however, that the
number of Shares awarded shall be increased or decreased as soon as
practicable after the end of the first (1st) Fiscal Year to reflect
the actual Base Salary paid to the Participant in such Fiscal Year.
Notwithstanding anything contained herein to the contrary, a
Participant's Base Salary for the Performance Period beginning on
January 1, 1995 shall be the average annual Base Salary paid to the
Participant for the entire three (3) year period or, if lesser, the
portion of such three (3) year period that he was employed; provided,
however, that the initial grant shall be based on the rate of Base
Salary in effect on January 1, 1995, and the adjustment for actual
Base Salary shall not be effected until the first (1st) business day
in 1998. The maximum number of Shares (including any additional
Shares awarded in accordance with Section 16 based on Performance
Period Performance Measure results) shall not have an aggregate fair
market value (with Share fair market value determined for all Shares,
including any additional Shares awarded after the end of the
Performance Period, in accordance with Section 9 based on the Share
value in the month of November preceding the beginning of the
Performance Period) in excess of the lesser of:
(1) seventy percent (70%) of a Participant's Base
Salary for the first (1st) calendar year of such Performance
Period, or
(2) one hundred percent (100%) of the annualized Base
Salary of a Participant in effect on the first (1st) calendar
day of the Performance Period;
provided, however, that with respect to the Performance Period
beginning in 1995, the seventy percent (70%) Base Salary limit shall
be applied against the total Base Salary for all three (3) calendar
years in such Performance Period, and the number "three hundred
percent (300%)" shall be substituted for the number "one hundred
percent (100%);" provided, further, that in applying these seventy
percent (70%) and one hundred percent (100%) limits, dividends paid
on restricted Shares shall be disregarded.
O. Performance Incentive Award Schedule: A schedule
containing the ranking of Cost Effective Service versus the Peer Group
and the ranking of Total Return to Shareholders versus the Peer Group,
and a percent of the Performance Incentive Award for each of the
levels of achievement listed.
P. Performance Measures: The measures used in determining
the amount of any Program Incentive Payment.
Q. Performance Period: For the period before January 1,
1995, a period of two (2), three (3), or four (4) consecutive Fiscal
Years, as applicable, commencing on the first (1st) day of the first
(1st) Fiscal Year of a Program, over which the Performance Measures
are to be taken. For the period after December 31, 1994, a period of
three (3) consecutive Fiscal Years, commencing on the first (1st) day
of the first (1st) Fiscal Year of a Program, over which the
Performance measures are to be taken. The first (1st) Performance
Period after the Performance Period beginning on January 1, 1995 shall
begin on January 1, 1998. Beginning on January 1, 1998, a new
Performance Period shall begin on the first (1st) day of each Fiscal
Year until the final Performance Period which will begin on January 1,
2004.
R. Period of Restriction: The period during which the
transfer of shares are restricted pursuant to the Plan.
S. Plan: This Long-Term Performance and Restricted Stock
Incentive Plan, as now in effect and as amended from time to time.
T. President: The President of IPALCO.
U. Program: One (1) Performance Period with its respective
Performance Incentive Awards, Performance Incentive Award Schedule,
and Participants.
V. Shares: Shares of common stock of IPALCO.
W. Total Return to Shareholders: The average return on
investment to shareholders from stock price appreciation and dividends
paid during each Fiscal Year of the Performance Period.
SECTION 3
ADMINISTRATION
The Plan shall be administered by the Committee. No member of the
Committee shall be eligible, at any time when he or she is such a member or
within one (1) year prior to his or her appointment to the Committee, to be
granted Shares under the Plan. Provided, however, that notwithstanding the
preceding clause of this sentence, a member of the Committee shall not be
precluded from participating in, the IPALCO Enterprises, Inc. 1991
Directors' Stock Option Plan or any other formula plan within the meaning
of Rule 16b-3(a)(C)(2)(i)(A) promulgated under the Exchange Act (as defined
in Section 2.A). The decision of a majority of the members of the Committee
shall constitute the decision of the Committee, and the Committee may act
either at a meeting at which a majority of its members are present or by a
written consent signed by all of its members. The Committee may appoint
individuals to act on its behalf in the administration of the Plan;
provided, however, that except as otherwise provided by the Plan, the
Committee shall have the sole, final and conclusive authority to administer,
construe and interpret the Plan.
SECTION 4
NUMBER OF SHARES SUBJECT TO THE PLAN
The total number of Shares that may be granted under the Plan may not
exceed Four Hundred Thousand (400,000) Shares, subject to adjustment as
provided in Section 6 hereof. Those Shares may consist, in whole or in
part, of authorized but unissued Shares or Shares reacquired by IPALCO,
including Shares purchased in the open market, not reserved for any other
purpose; provided, however, that the Shares granted hereunder shall be
authorized and unissued unless the Committee, in its sole discretion, takes
action to utilize open market Shares.
SECTION 5
UNUSED SHARES
In the event any Shares subject to grants made under the Plan are
forfeited pursuant to Section 16 hereof, such forfeited Shares shall again
become available for issuance under the Plan.
SECTION 6
ADJUSTMENTS IN CAPITALIZATION
In the event of any change in the outstanding Shares by reason of a
stock dividend, stock split, recapitalization, merger, consolidation,
combination, stock rights plan or exchange of shares or other similar
corporate change, the aggregate number of Shares issuable under the Plan
shall be appropriately adjusted by the Committee, whose determination shall
be conclusive. In such event, the Committee shall also have discretion to
make appropriate adjustments in the number and type of shares subject to
restricted Share grants then outstanding under the Plan pursuant to the
terms of such grants or otherwise.
SECTION 7
PARTICIPATION
A. Prior to the commencement of each Fiscal Year, Participants
shall be recommended by the President and approved by the Committee.
Participants are to be those key employees who, in the opinion of the
Committee, are in a position to make a significant contribution to the
long-term success of the Company. Participants for each Program shall be
notified of their participation prior to the beginning of the first (1st)
Fiscal Year of a Program. Participation in one (1) Program does not
guarantee participation in subsequent Programs.
B. For the Program beginning on January 1, 1995 only, the
Committee, in its sole discretion, may select additional Participants to
participate in the final one (1) or two (2) Fiscal Years of the 1995
Program. The Committee approval shall include the establishment of the
Performance Incentive Award for any new Participant. If a Participant is
added in the 1995 Program, the first (1st) Fiscal Year of his participation
shall be substituted for the first (1st) Fiscal Year of the Performance
Period for purposes of determining the number of Shares awarded under
Section 9.
C. For the Program beginning on January 1, 1995 only, the
Committee, in its sole discretion, may discontinue the participation of a
Participant for the final one (1) or two (2) Fiscal Years of the 1995
Program. If a Participant's participation is discontinued in the 1995
Program, he shall forfeit, as soon as practicable after the effective date
of his participation termination, two-thirds (2/3) of the Shares granted to
him for such Program if his participation is discontinued for the final two
(2) Fiscal Years of the 1995 Program or one-third (1/3) of the Shares
granted to him for such Program if his participation is discontinued for the
final Fiscal Year of the 1995 Program. At the end of the 1995 Program, the
reduced share grant shall be adjusted in accordance with Section 16.
SECTION 8
PERFORMANCE INCENTIVE AWARD GRANTS
A. Each Program shall be subject to the limitations and terms
provided in the Plan. A new Program shall commence on the first (1st)
anniversary date of the preceding Program. These Programs shall be
of three (3) year duration. The Performance Period beginning on
January 1, 1994 shall be cancelled, conditioned upon the majority of
Participants eligible for a bonus for the Performance Period beginning
on January 1, 1994 consenting to its cancellation.
B. The Committee shall determine for each Participant his
Performance Incentive Award for each Program. Only one (1) grant
shall be made to each Participant during each Program. Participants
shall generally be notified of their individual Performance Incentive
Award before the beginning of each Program.
SECTION 9
GRANT OF SHARES
Concurrently with the beginning of each Performance Period, the
Committee shall cause the Secretary of IPALCO to issue to each Participant
a number of restricted Shares determined by dividing:
(a) the Participant's Performance Incentive Award for such
Performance Period,
by
(b) the average of the closing of the high and low prices of the
Shares for all of the business days in the November immediately
preceding the beginning of the Performance Period (as reported
in The Wall Street Journal), rounding up or down any fractional
Share to the nearest whole Share.
Notwithstanding anything contained herein to the contrary, the Share grants
for the Performance Period beginning on January 1, 1995 are conditioned upon
the Plan being approved by IPALCO's shareholders in accordance with Section
28 hereof. At the end of the first (1st) Fiscal Year of each Performance
Period (or, in the case of the January 1, 1995 Program at the end of 1997),
the Share grants shall be adjusted, upward or downward, based on the
Participant's actual Base Salary.
SECTION 10
ESTABLISHMENT OF PERFORMANCE MEASURES
A. The Performance Measures to be used initially are IPALCO's
ranking versus the Peer Group on Cost Effective Service and Total
Return to Shareholders. The Performance Measures need not be the same
for each Program.
B. Once a Program has begun and Performance Measures and the
Performance Incentive Award Schedule have been established, they may
not be changed for that Performance Period without the prior written
approval of the majority of the Participants who may be adversely
affected by such change.
C. A Performance Incentive Award Schedule shall be
recommended by the President and approved by the Committee before
grants are made under each Program. The Committee shall approve or
modify the proposed Schedule which will contain various levels of
performance and corresponding Performance Incentive Award values.
D. If the Company disposes of a significant part of the
business of IPL, or acquires through purchase, merger, or otherwise
the capital assets of any other company, the Committee may, in its
sole and absolute discretion, adjust the Total Return to Shareholder
and Cost Effective Service targets of a Performance Incentive Award
Schedule for a Performance Period so as to reflect the financial
impact of the acquisition.
SECTION 11
DETERMINATION OF PERFORMANCE RESULTS
A. Upon the completion of a Performance Period, the Shares
awarded for each Participant shall be adjusted based upon the
Performance Incentive Award Schedule approved for that Program.
Notwithstanding the Performance Incentive Award Schedule, all of the
Shares shall be forfeited if the Committee determines that for a given
Plan Program cycle the quality and reliability of service of IPL
deteriorates to the point that, for the last two (2) consecutive years
of that cycle, voltage reductions or selective service interruptions
to the general public are necessary to maintain system integrity.
B. At or prior to the commencement of each Performance Period
for which the Committee selects one (1) or more Participants, the
Committee shall select a Peer Group of comparable investor-owned
electric utility companies or holding companies of comparable
investor-owned electric utility companies. When selecting the
membership of Peer Group for a Performance Period, the Committee shall
not be bound by any decisions regarding the composition of any Peer
Group selected for a prior or overlapping Performance Period.
C. Cost Effective Service for the Company and each company
in the Peer Group shall be the annual average of the Cost Effective
Service for the Fiscal Years in the Performance Period. The Company's
ranking shall be determined by its performance ranking versus the Peer
Group.
D. For each Performance Period, the Total Return to
Shareholders of IPALCO shall be compared with the Total Return to
Shareholders of the members of the Peer Group. Total Return to
Shareholders for IPALCO and each member of the Peer Group shall be
measured by the following formula (with appropriate adjustments for
changes in capital structure due to stock dividends, stock splits,
recapitalization, mergers, or other events having significant
distorting effect on IPALCO or on any member of the Peer Group):
1. For each Fiscal Year of the Performance Period:
(a) Subtract the Market Price of each company's
common stock for the prior Fiscal Year from the Market
Price of the company's common stock for the current
Fiscal Year.
(b) Add to the result obtained in Step (a) the
amount of all cash dividends paid by the company with
respect to its common stock during the current Fiscal
Year.
(c) Divide the result obtained in Step (b) by the
Market Price of the company's common stock for the prior
Fiscal Year.
2. The calculated values from Step 1 for the Fiscal
Years in the Performance Period shall then be converted to an
annual average for the Performance Period.
IPALCO's ranking shall be determined by its performance ranking versus
the Peer Group.
SECTION 12
RESTRICTIONS ON TRANSFERABILITY
Until the lifting of the restrictions on the Shares granted hereunder,
no Shares granted under the Plan may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, otherwise than by will or
by the laws of descent and distribution until the termination of the
applicable Period of Restriction.
SECTION 13
CERTIFICATE LEGEND
Each certificate representing restricted Shares granted pursuant to
this Plan shall bear the following legend:
"The sale or other transfer of the shares represented by this
certificate, whether voluntary, involuntary, or by operation of law,
is subject to certain restrictions on transfer set forth in the IPALCO
Enterprises, Inc. Long-Term Performance and Restricted Stock Plan and
rules of administration adopted pursuant to such Plan. A copy of the
Restricted Stock Plan and the rules of such Plan may be obtained from
the Secretary of IPALCO Enterprises, Inc."
Once the restricted Shares are released from the restrictions, the
Participant shall be entitled to have the legend required by this Section
13 removed from such Share certificate(s).
SECTION 14
VOTING RIGHTS
During the Period of Restriction, Participants holding restricted
Shares granted hereunder may exercise full voting rights with respect to
those Shares.
SECTION 15
DIVIDENDS AND OTHER DISTRIBUTIONS
During the Period of Restriction, Participants holding restricted
Shares granted hereunder shall be entitled to receive all dividends and
other distributions paid with respect to those Shares while they are so
held. If any such dividends or distributions are paid in Shares, such
Shares shall be subject to the same restrictions on transferability as the
restricted Shares with respect to which they were paid.
SECTION 16
LIFTING OF RESTRICTIONS
The restricted Share grants under the Plan shall be subject to
restrictions as to transferability and shall also be subject to forfeiture
provisions. The lifting of the transferability restrictions and the
forfeitability provisions shall be dependent on the Performance Measures
during each Performance Period and on the continued employment of the
Participant during the Period of Restriction.
As soon as practicable after the end of a Performance Period, the
Committee shall determine the adjustments, if any, that are required to be
made to the Share grants for the Performance Period based on actual results
of IPALCO under the Performance Measures for such Performance Period. This
evaluation shall be completed no later than the July 1 immediately following
the end of the Performance Period. After the adjustments are made in the
Share grants consistent with the Performance Incentive Award Schedule for
the Performance Period and after effectuating the adjustments described
above rounding up or down any fractional share to the nearest whole share,
the restrictions on the Shares held by a Participant at the end of the
Performance Period (after adjusted as described above) shall be lifted on
one-third (1/3) of the Shares as of the July 1 immediately following the
Performance Period and shall be lifted in additional one-third (1/3)
increments as of the first (1st) and second (2nd) anniversary of such
July 1; provided, however, that except as provided in Section 17, 18 or 19
hereof:
(1) the restriction shall be lifted on a July 1 only if the
Participant is still employed by the Company on such date, and
(2) if a Participant ceases to be employed by the Company
before the restrictions lapse on the Shares held by him, the Shares
still subject to restrictions shall be immediately forfeited.
Notwithstanding anything contained in this Plan to the contrary, the
Committee shall have the complete discretion to delay the lifting of the
restrictions on Shares under this Plan (including restrictions that lapse
under Sections 17 and 18) for a Participant to the extent it determines such
delay is necessary to avoid the non-deductibility of the awards under
Section 162(m) of the Internal Revenue Code of 1986, as amended; provided,
however, that any decision to delay the lifting of the restrictions shall
be required to be made and communicated to the affected Participant in
writing before the beginning of the calendar year during which the
restrictions would have been lifted but for the delay.
SECTION 17
EFFECT OF PARTICIPANT'S ATTAINMENT OF AGE 65
Notwithstanding anything contained in Section 16 hereof to the
contrary, if a Participant attains age 65 after the end of a Performance
Period but before his employment with the Company is terminated and before
the restrictions lapse on the Shares granted for such Performance Period,
the remaining employment restrictions on any Shares granted for such
Performance Period held by the Participant (after the Performance Measure
adjustments described in Section 16 are completed for such Performance
Period) shall immediately lapse on the date of his attainment of age 65.
Notwithstanding anything contained in Section 16 hereof to the
contrary, if a Participant attains age 65 before his employment with the
Company is terminated and before the end of a Performance Period but after
completing at least one (1) full Fiscal Year of employment during such
Performance Period, the remaining restrictions on any Shares attributable
to such Performance Period held by the Participant (after the number of
Shares are adjusted pursuant to the Performance Measure adjustments
described in Section 16 hereof are completed for such Performance Period)
shall lapse on the last calendar day of such Performance Period; provided,
however, that if a Participant's employment with the Company is terminated,
voluntarily or involuntarily, before his completion of at least two (2)
Fiscal Years of employment, the Participant shall only be entitled to
two-thirds (2/3) of the restricted Shares granted to him for such
Performance Period (after the Performance Measure adjustments described in
Section 16 hereof are completed for such Performance Period), rounding up
or down any fractional Share to the nearest whole Share, and the remaining
one-third (1/3) of the Shares shall be forfeited as soon as practicable
after the end of the Performance Period.
Notwithstanding anything contained in Section 16 hereof to the
contrary but only to the extent expressly approved by the Committee, the
provisions contained in the preceding two (2) paragraphs of this Section 17
shall also apply, in whole or in part, with respect to a Participant whose
employment is terminated before age sixty-five (65) but after meeting the
requirements for early retirement under the Employees' Retirement Plan of
Indianapolis Power & Light Company (or any successor plan) to the extent the
Committee waives the continued employment requirements; provided, however,
that under no circumstances shall the waiver affect the Performance Measures
adjustments provided in Section 11.
SECTION 18
EFFECT OF TERMINATION OF EMPLOYMENT DUE TO
DEATH OR DISABILITY
Notwithstanding anything contained in Section 16 hereof to the
contrary, if a Participant's employment with the Company is terminated by
reason of his death or total and permanent disability (as such term is
defined in the Employees' Retirement Plan of Indianapolis Power & Light
Company or in any successor retirement plan thereto) that occurs after the
end of the Performance Period but before the restrictions lapse on the
Shares granted for such Performance Period, the remaining restrictions on
any Shares attributable to such Performance Period held by the Participant
(after the Performance Measure adjustments described in Section 16 hereof
are completed for such Performance Period) shall immediately lapse on the
date of his death or total and permanent disability, whichever is
applicable.
Notwithstanding anything contained in Section 16 hereof to the
contrary, if a Participant's employment with the Company is terminated by
reason of his death or total and permanent disability that occurs before the
end of the Performance Period, the Participant shall be entitled to the
number of Shares granted to him at the beginning of the Performance Period
(as adjusted for Performance Periods beginning on or after January 1, 1998
to reflect the actual Base Salary paid to such Participant but only if the
Participant's death or total and permanent disability occurs after the first
(1st) Fiscal Year of the Performance Period), no further adjustments shall
be effected with respect to such Shares, and such Shares shall be fully
vested and transferable by such Participant or, if deceased, his legal
representative.
SECTION 19
ACQUISITION OF CONTROL
In the event that there is an Acquisition of Control and
notwithstanding anything contained in Section 16 to the contrary, the
lifting of the restrictions based on continued employment on the restricted
Shares held by a Participant who was employed by the Company immediately
preceding the date of the Acquisition of Control shall immediately occur.
Moreover, no Shares may be forfeited after an Acquisition of Control,
regardless of the actual performance of the Performance Measures for such
Performance Period[s] during which the Acquisition of Control occurs;
provided, however, that additional Shares (which Shares shall be freely
transferable and nonforfeitable) may be granted at the end of the
Performance Period in accordance with Section 16 hereof during which the
Acquisition of Control occurs depending upon the results of the Performance
Measures for such Performance Period.
SECTION 20
ELECTIVE SALE OF SHARES
Participants shall also be permitted to cash-in up to fifty percent
(50%) of the Shares (after the adjustments required by Section 16 are
completed) that as of any July 1 cease to be subject to the continued
employment requirements under Section 16 (the "Eligible Shares") in
accordance with the following provisions:
(a) Election to Participate. Subject to the disapproval of
the Committee, any Participant may elect to receive cash in lieu of
all or some of the Eligible Shares by tendering a written election to
the Secretary of IPALCO before the end of the calendar year
immediately preceding the July 1 on which the restrictions on such
Eligible Shares lapse, which election becomes irrevocable on the last
day of such calendar year; provided, however, that until the new rules
under Section 16 of the Exchange Act (as defined in Section 2.A) for
exemption of benefit plan transactions become applicable to
transactions by IPALCO insiders, the Committee may modify the
procedure for the cash election described above to the extent it
determines necessary to exempt the cashout as a sale under Section 16
of the Exchange Act.
(b) Payment of Cash. If a Participant elects under this
Section to receive all or a portion of his Eligible Shares in cash,
the Committee shall cause IPALCO to pay the Participant on the first
(1st) business day of the July on which the restrictions lapse an
amount determined by multiplying:
(i) the number of his Eligible Shares to be converted
into cash, by
(ii) the mean between the high and low sales price of
the Shares on the last trading date of the June immediately
preceding such July; provided, however, that until the new
rules under Section 16 of the Exchange Act for exemption of
benefit plan transactions become applicable to transactions by
IPALCO insiders and if the Committee modifies the procedures
for making the cash election in accordance with (b) above, the
applicable trading date to be used in determining the cash
payment shall be the date or dates established by the Committee
procedures.
(c) The Compensation Committee may also adopt other rules
which shall allow retired, disabled Participants and/or the
beneficiaries of deceased Participants with Shares with restrictions
that lapse in accordance with Section 17 and Section 18 to cash in the
Shares consistent with this Section.
SECTION 21
NO EMPLOYMENT CONTRACT
The Plan is not and is not intended to be an employment contract with
respect to any of the Participants, and IPALCO's and IPL's rights to
continue or to terminate the employment relationship of any Participant
shall not be affected by the Plan.
SECTION 22
AMENDMENT AND TERMINATION
The Board may at any time amend, modify, alter, or terminate the Plan;
provided, however, that without the approval of the IPALCO shareholders:
(a) the number of Shares which may be reserved for issuance under
the Plan may not be increased except as provided in Section 9
hereof;
(b) the class of employees to whom grants may be granted under the
Plan shall not be modified materially; and
(c) the benefits accruing to Participants under the Plan shall not
be increased materially within the meaning of Reg. Section
16b-3(a)(2)(ii)(A) promulgated under the Exchange Act (as
defined in Section 2.A);
provided, further, that except for the modifications expressly permitted by
the last paragraph of Section 16 hereof, any amendment, modification,
alteration or termination to the Plan which increases the restrictions as
to transferability or forfeitability of any restricted Shares granted
hereunder to a Participant, including any Performance Measure adjustments
which occur at the end of a Performance Period, shall not become effective
until the first (1st) Performance Period following the Performance Period
during which such amendment, modification, alteration or termination to the
Plan is adopted without the written consent of the majority of the
Participants adversely affected by the change.
SECTION 23
INDEMNIFICATION
Each person who is or shall have been a member of the Board of
Directors or the Committee shall be indemnified and held harmless by IPALCO
against and from any loss, cost, liability, or expense that may be imposed
upon or reasonably incurred by him in connection with or resulting from any
claim, action, suit, or proceeding to which he may be a party or in which
he may be involved by reason of any action taken or failure to act under the
Plan and against and from any and all amounts paid by him in settlement
thereof with IPALCO's approval, or paid by him in satisfaction of a judgment
in any such action, suit or proceeding against him, provided he shall give
IPALCO an opportunity, at its own expense, to handle and defend the same
before he undertakes to handle and defend it on his behalf. The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the IPALCO
Articles of Incorporation or Code of By-Laws, as a matter of law, or
otherwise, or any power that IPALCO may have to indemnify them or hold them
harmless.
SECTION 24
GOVERNING LAW
The Plan, and all grants and other documents delivered hereunder,
shall be construed in accordance with and governed by the laws of Indiana.
SECTION 25
EXPENSES OF PLAN
The expenses of administering the Plan shall be borne by IPALCO.
SECTION 26
SUCCESSORS
The Plan shall be binding upon the successors and assigns of the
Participating Employers.
SECTION 27
TAX WITHHOLDING
IPALCO or IPL, as appropriate, shall have the right to require the
Participant or other person receiving Shares to pay to IPALCO or IPL the
amount of any federal, state or local taxes which IPALCO or IPL are required
to withhold with respect to such Shares. If permitted by the Committee and
pursuant to rules established by the Committee, a Participant may make a
written election to have Shares having an aggregate fair market value, as
determined by the Committee, sufficient to satisfy the applicable
withholding taxes, withheld from the Shares otherwise to be received at the
end of the Period of Restriction. Elections by Participants to have Shares
withheld for this purpose shall be subject to the following restrictions:
(1) the elections must be made prior to the date as of which the amount of
tax withheld is determined (the "Tax Date"), (2) the elections will be
irrevocable, (3) the elections will be subject to the disapproval of the
Committee and (4) if a Participant is an officer (within the meaning of Section
16 of the Exchange Act (as defined in Section 2.A)) of IPALCO or IPL and the
Shares are registered under Section 12 of the Exchange Act, such elections
(a) may not be made within six (6) months of the award of restricted Shares
except that this limitation will not apply if death or disability of the
Participant occurs prior to the expiration of the six (6) month period), and
(b) must be made either more than six (6) months prior to the Tax Date or
in the ten (10) business day "window period" beginning on the third (3rd)
business day following the release of IPALCO's quarterly or annual financial
statements; provided, however, that until such time that the new rules under
Section 16 of the Exchange Act (as defined under Section 2.A) for exemption
of benefit plan transactions become applicable for the Plan, the election
must be made in the ten (10) day "window period" described in this Section.
SECTION 28
EFFECTIVE DATE AND DURATION OF PLAN
This amended and restated Plan shall be effective January 1, 1995;
provided, however, that the granting of Shares are conditioned upon the
approval of the Plan by the holders of a majority of the Shares present, or
represented, and entitled to vote at IPALCO's 1995 annual shareholder
meeting. The Performance Periods beginning before January 1, 1995 shall be
governed by the provisions of the Plan in effect before January 1, 1995.
Notwithstanding the above and conditioned upon the approval of the majority
of the affected Plan Participants, the Performance Period beginning on
January 1, 1994 shall be cancelled.
EXHIBIT 10.8
IPALCO ENTERPRISES, INC.
1990 STOCK OPTION PLAN
1. Purpose. The purpose of the IPALCO Enterprises, Inc. 1990
Stock Option Plan (the "Plan") is to provide to certain officers
(including officers who are members of the Board of Directors) and other
key executive employees of IPALCO Enterprises, Inc. (the "Corporation")
and of any of the eighty percent (80%) or greater owned, direct or
indirect, subsidiaries of the Corporation (individually a "Subsidiary"
and collectively the "Subsidiaries") who are materially responsible for
the management or operation of the business of the Corporation or a
Subsidiary, a favorable opportunity to acquire Common Stock, without par
value, of the Corporation ("Common Stock"), thereby providing them with
an increased incentive to work for the success of the Corporation and the
Subsidiaries and better enabling the Corporation and the Subsidiaries to
attract and retain capable executive personnel.
2. Administration of the Plan. The Plan shall be administered,
construed and interpreted by those members of the Compensation Committee
of the Board of Directors of the Corporation who are "disinterested
persons" within the meaning of the definition of that term contained in
Reg. Section 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "1934 Act") (such members shall be referred to as the
"Committee"). The decision of a majority of the members of the Committee
shall constitute the decision of the Committee, and the Committee may act
(a) at a meeting at which a majority of the members of the Committee is
present, (b) unless prohibited by the Corporation's Articles of
Incorporation or Bylaws, by simultaneous telephonic communication as
authorized by IND. CODE Section 23-1-34-1, or (c) by a written consent signed
by all members of the Committee. The Committee shall have the sole,
final and conclusive authority to determine, consistent with and subject
to the provisions of the Plan:
(a) the individuals (the "Optionees") to whom options
or successive options shall be granted under the Plan;
(b) the time when options shall be granted hereunder;
(c) the number of shares of Common Stock of the
Corporation to be covered under each option;
(d) the option price to be paid upon the exercise of
each option;
(e) the period within which each option may be
exercised;
(f) the extent to which an option is an incentive
stock option or a non-qualified stock option;
(g) the extent to which stock appreciation rights
shall be awarded in conjunction with an option; and
(h) the terms and conditions of the respective
agreements by which options and stock appreciation rights
granted shall be evidenced.
The Committee shall also have authority to prescribe, amend and rescind
rules and regulations relating to the Plan, and to make all other
determinations necessary or advisable in the administration of the Plan.
3. Eligibility. The Committee may, consistent with the purposes
of the Plan, grant options to officers and other key employees of the
Corporation or of a Subsidiary who in the opinion of the Committee are
from time to time materially responsible for the management or operation
of the business of the Corporation or of a Subsidiary; provided, however,
that in no event may any employee who owns (after application of the
ownership rules in Section 425 (d) of the Internal Revenue Code of 1986, as
amended (the "Code")) shares of stock possessing more than 10% of the
total combined voting power of all classes of stock of the Corporation be
granted an incentive stock option hereunder unless at the time such
option is granted the option price is at least 110% of the fair market
value of the Common Stock subject to the option and such incentive stock
option by its terms is not exercisable after the expiration of five (5)
years from the date such option is granted. Subject to the provisions of
Section 4 hereof, an individual who has been granted an option under the
Plan, if he is otherwise eligible, may be granted an additional option or
options if the Committee shall so determine.
4. Stock Subject to the Plan. There shall be reserved for
issuance upon the exercise of options granted under the Plan, one million
(1,000,000) shares of the Corporation's Common Stock which may be
authorized but unissued shares of the Corporation. Subject to Section 7
hereof, the shares for which options may be granted under the Plan shall
not exceed that number. If any option shall expire or terminate for any
reason without having been exercised in full, the unpurchased shares
subject thereto shall (unless the Plan shall have terminated) become
available for other options under the Plan.
5. Terms of Option. Each option granted under the Plan shall be
subject to the following terms and conditions and to such other terms and
conditions not inconsistent therewith as the Committee may deem
appropriate in each case:
(a) Option Price. The price to be paid for shares of
Common Stock upon the exercise of each option shall be
determined by the Committee at the time such option is
granted, but such price in the case of an incentive stock
option in no event shall be less than the fair market value,
as determined by the Committee consistent with the
requirements of Section 422A of the Code, of such Common Stock on
the date on which such option is granted.
(b) Period For Exercise of Option. An option shall
not be exercisable after the expiration of such period as
shall be fixed by the Committee at the time such option is
granted, but such period in no event shall exceed ten (10)
years and one day from the date on which such option is
granted; provided, however, that incentive stock options
shall have terms not in excess of ten (10) years; provided,
further, that no option shall be exercisable prior to the
date on which the Plan is approved by the shareholders of the
Corporation as required by Section 422A of the Code.
(c) Exercise of Options. The option price of each
share of Common Stock purchased upon exercise of an option
shall be paid in full (1) in cash at the time of such
exercise, (2) if the Optionee may do so without violating Section
16(b) of the 1934 Act and subject to approval by the
Committee, by delivering a properly executed exercise note
together with irrevocable instructions to a broker to deliver
promptly to the Corporation the total option price in cash
and, if desired, the amount of any taxes to be withheld from
the Optionee's compensation as a result of any withholding
tax obligation of the Corporation or any of its Subsidiaries,
as specified in such notice, or (3) subject to the approval
of the Committee, by tendering to the Corporation whole
shares of Common Stock owned by him or any combination of
whole shares of Common Stock owned by him and cash, having a
fair market value equal to the cash exercise price of the
shares with respect to which the option is being exercised.
For this purpose, the fair market value of the shares
tendered by the Optionee shall be computed as of the exercise
date in such manner as determined by the Committee,
consistent with the requirements of Section 422A of the Code. The
Committee shall have the authority to grant options
exercisable in full at any time during their term, or
exercisable in such quotas as the Committee shall determine.
An option may be exercised at any time or from time to time
during the term of the option as to any or all whole shares
which have become subject to purchase pursuant to the terms
of the option (including, without limitation, any quotas with
respect to option exercise) or the Plan.
(d) Termination of Option. If an Optionee ceases to
be an employee of the Corporation or one of the Subsidiaries
for any reason other than retirement, permanent and total
disability (within the meaning of Section 105(d)(4) of the Code),
or death, any option granted to him shall forthwith
terminate. Leave of absence approved by the Committee shall
not constitute cessation of employment. If an Optionee
ceases to be an employee of the Corporation or one of the
Subsidiaries by reason of permanent and total disability
(within the meaning of Section 105(d)(4) of the Code), any option
granted to him may be exercised by him in whole or in part
within one (1) year after the date of his termination of
employment by reason of such disability whether or not the
option was otherwise exercisable at the date of such
termination of employment. If an Optionee ceases to be an
employee of the Corporation or one of the Subsidiaries by
reason of retirement, any option granted to him may be
exercised by him in whole or in part during the period fixed
by the Committee under subsection (b) of this Section 5,
provided that the option was otherwise exercisable at the
date of such termination of employment. The term
"retirement" as used herein means an Optionee's termination
of employment on or after meeting the requirements for early
or normal retirement benefits under any then existing
Indianapolis Power & Light Company pension plan. In the
event of the death of an Optionee while in the employ of the
Corporation or the Subsidiaries or within one (1) year after
the termination of his employment by reason of retirement or
permanent and total disability (within the meaning of Section
105(d)(4) of the Code), any option granted to him may be
exercised in whole or in part at any time after the date of
such death by the executor or administrator of his estate or
by the person or persons entitled to the option by will or by
applicable laws of descent and distribution until the
expiration of the option term as fixed by the Committee,
whether or not the option was otherwise exercisable at the
date of his death. Notwithstanding the foregoing provisions
of this subsection (d), no option shall in any event be
exercisable after the expiration of the period fixed by the
Committee in accordance with subsection (b) above. An option
shall also terminate if this Plan is not approved by the
shareholders of the Corporation within the requisite time
period set forth in Section 422A of the Code.
(e) Nontransferability of Option. An Option may not
be transferred by the Optionee otherwise than by will or the
laws of descent and distribution, and during the lifetime of
the Optionee shall be exercisable only by him.
(f) Investment Representations. Unless the shares of
Common Stock subject to an option are registered under
applicable federal and state securities laws, each Optionee
by accepting an option shall be deemed to agree for himself
and his legal representatives that any option granted to him
and any and all shares of Common Stock purchased upon the
exercise of the option shall be acquired for investment and
not with a view to, or for the sale in connection with, any
distribution thereof, and each notice of the exercise of any
portion of an option shall be accompanied by a representation
in writing, signed by the Optionee or his legal
representatives, as the case may be, that the shares of
Common Stock are being acquired in good faith for investment
and not with a view to, or for sale in connection with, any
distribution thereof (except in case of the Optionee's legal
representatives for distribution, but not for sale, to his
legal heirs, legatees and other testamentary beneficiaries).
Any shares issued pursuant to an exercise of an option may,
but need not, bear a legend evidencing such representations
and restrictions. In addition, if the options and shares of
Common Stock issued pursuant to this Plan are issued in
reliance upon Rule 147, promulgated under the Securities Act
of 1933, as amended, the written representations required by
such rule shall be obtained from the Optionees prior to or at
the time they are granted options, any and all legends
required by Rule 147 shall be set forth on the certificates
representing shares of Common Stock issued pursuant to the
exercise of such options, and stop transfer instructions
shall be issued to the Corporation's recordkeeping transfer
agent with respect to such shares.
(g) Maximum Incentive Stock Options. The aggregate
fair market value (determined as of the time the option is
granted) of Common Stock subject to incentive stock options
that are exercisable for the first time by an employee during
any calendar year under the Plan or any other plan of the
Corporation or any Subsidiary shall not exceed $100,000. For
this purpose, the fair market value of such shares shall be
determined as of the date the option is granted and shall be
computed in such manner as shall be determined by the
Committee, consistent with the requirements of Section 422A of the
Code. If the immediate exercisability of incentive stock
options arising from the death or permanent and total
disability of an Optionee pursuant to Section 5(d) above or
arising from any change of control of the Corporation would
cause this $100,000 limitation to be exceeded for an
Optionee, the Committee shall convert as of the date on which
such incentive stock options become exercisable all or a
portion of the outstanding incentive stock options held by
such Optionee to non-qualified stock options to the extent
necessary to comply with the $100,000 limitation.
(h) Agreement. Each option shall be evidenced by an
agreement between the Optionee and the Corporation which
shall provide, among other things, that, with respect to
incentive stock options, the Optionees shall advise the
Corporation immediately upon any sale or transfer of the
shares of Common Stock received upon exercise of the option
to the extent such sale or transfer takes place prior to the
later of (a) two (2) years from the date of grant or (b) one
(1) year from the date of exercise.
(i) Tax Benefit. The Committee may, in its sole
discretion, include a provision in any non-qualified stock
option agreement that provides for an additional cash payment
from the Corporation to the grantee of such non-qualified
option as soon as practicable after the exercise date of such
non-qualified stock option equal to all or a portion of the
tax benefit to be received by the Corporation attributable to
its federal income tax deduction resulting from the exercise
of such non-qualified stock option.
(j) Certificates. The certificate or certificates for
the shares issuable upon an exercise of an option shall be
issued as promptly as practicable after such exercise. An
Optionee shall not have any rights of a shareholder in
respect to the shares of Common Stock subject to an option
until the date of issuance of a stock certificate to him for
such shares. In no case may a fraction of a share be
purchased or issued under the Plan, but if, upon the exercise
of an option, a fractional share would otherwise be issuable,
the Corporation shall pay cash in lieu thereof.
(k) No Right to Continued Service. Nothing in this
Plan or in any agreement entered into pursuant hereto shall
confer on any person any right to continue in the employ of
the Corporation or its Subsidiaries or affect any rights of
the Corporation, a Subsidiary, or the shareholders of the
Corporation may have to terminate his service at any time.
(l) Incentive Stock Options and Non-Qualified Stock
Options. Options granted under the Plan may be incentive
stock options under Section 422A of the Code or non-qualified stock
options. All options granted hereunder shall be clearly
identified as either incentive stock options or non-qualified
stock options. In no event shall the exercise of an
incentive stock option affect the right to exercise any non-
qualified stock option, nor shall the exercise of any non-
qualified stock option affect the right to exercise any
incentive stock option. Nothing in this Plan shall be
construed to prohibit the grant of incentive stock options
and non-qualified stock options to the same person; provided,
however, that incentive stock options and non-qualified stock
options shall not be granted in a manner whereby the exercise
of one non-qualified stock option or incentive stock option
affects the exercisability of the other.
6. Stock Appreciation Rights. The Committee may, in the event it
determines it to be necessary or desirable to create a reasonable
opportunity for an Optionee to acquire an increased ownership interest in
the Corporation, award a stock appreciation right in conjunction with
either an incentive stock option or a non-qualified stock option. Under
a stock appreciation right, the Optionee may surrender all or a part of a
stock option and receive in exchange payment of no more than 100% of the
excess of the market price of the Common Stock subject to the option over
the exercise price of the option. The award of a stock appreciation
right shall be evidenced by an agreement between the Corporation and the
Optionee, the provisions of which shall be determined by the Committee in
accordance with the provisions of the Plan.
A stock appreciation right may be exercisable at any date with
respect to no more than the number of shares for which the related stock
option is exercisable. A stock appreciation right may be exercisable
only when the per share fair market value (as determined in accordance
with Section 5(a) hereof) of the Common Stock subject to the related
option exceeds the per share exercise price of the option. Each stock
appreciation right shall terminate no later than the termination date of
the related stock option, and is transferable only with and to the extent
that the related stock option is transferable.
With respect to grantees subject to the insider trading
restrictions of Section 16(b) of the 1934 Act, stock appreciation rights may
be exercised for total or partial cash payment only during the period
extending from the third (3rd) business day through the twelfth (12th)
business day following publication of the Corporation's quarterly or
annual financial statements and only if the Corporation has been subject
to the reporting requirements of Section 13(a) of the 1934 Act for at least
one (1) year prior to such exercise and shall have filed all reports and
statements required to be filed under Section 13(a) of the 1934 Act during
that year.
The Committee may limit the payment on exercise of a stock
appreciation right to less than 100% of the increase in value, as
aforesaid, or it may set a maximum dollar amount of payment not to exceed
100% of the increase in value. Payment may be made in cash, in shares of
Common Stock, or in a combination of cash and shares of Common Stock.
Notwithstanding any other provision in the Plan to the contrary, the
Committee shall have the sole discretion either to (a) determine the form
in which payment for the stock appreciation right will be made (i.e.,
cash, shares of Common Stock or a combination thereof), or (b) to consent
to or disapprove the election of the Optionee to receive cash in full or
partial settlement of the stock appreciation right. Such consent or
disapproval must be given within seven (7) calendar days after the date
on which the Optionee initially elects the form of payment. Upon
exercise of a stock appreciation right respecting a given number of
shares subject to the option, the right to exercise the related stock
option respecting such shares shall automatically terminate.
To the extent that stock appreciation rights shall be exercised,
the incentive stock or non-qualified stock option with respect to which
the stock appreciation rights have been granted shall be deemed to have
terminated for a reason other than the exercise thereof for the purpose
of the limitation on the aggregate number of shares reserved under
Section 4 of this Plan.
7. Adjustment of Shares. In the event of any change after the
effective date of the Plan in the outstanding stock of the Corporation by
reason of any reorganization, recapitalization, stock split, stock
dividend, combination of shares, exchange of shares, merger or
consolidation, liquidation, or any other change after the effective date
of the Plan in the nature of the shares of stock of the Corporation, the
Committee shall determine what changes, if any, are appropriate in the
number and kind of shares reserved under the Plan, and in the option
price under and the number and kind of shares covered by outstanding
options granted under the Plan. Any determination of the Committee
hereunder shall be conclusive.
8. Tax Withholding. Whenever the Corporation proposes or is
required to issue or transfer shares of Common Stock under the Plan, the
Corporation shall have the right to require the Optionee or his or her
legal representative to remit to the Corporation an amount sufficient to
satisfy any federal, state and/or local withholding tax requirements
prior to the delivery of any certificate or certificates for such shares,
and whenever under the Plan payments are to be made in cash, such
payments shall be net of an amount sufficient to satisfy any federal,
state and/or local withholding tax requirements.
9. Amendment. The Board of Directors of the Corporation may amend
the Plan from time to time and, with the consent of the Optionee, the
terms and provisions of his option, except that without the approval of
the Corporation's shareholders:
(a) the number of shares of Common Stock which may be
reserved for issuance under the Plan may not be increased
except as provided in Section 7 hereof;
(b) the period during which an option may be exercised
may not be extended beyond ten (10) years and one (1) day
from the date on which such option was granted;
(c) the class of employees to whom options may be
granted under the Plan shall not be modified materially; and
(d) the benefits accruing to Optionees under the Plan
shall not be increased materially within the meaning of Reg.
Section 16b-3(a)(2)(ii)(A) promulgated under the 1934 Act if Rule
16b-3 requires shareholder approval of amendments effecting
such increases.
No amendment of the Plan, however, may, without the consent of the
Optionees, make any changes in any outstanding options theretofore
granted under the Plan which would adversely affect the rights of such
Optionees.
10. Termination. The Board of Directors of the Corporation may
terminate the Plan at any time and no option shall be granted thereafter.
Such termination, however, shall not affect the validity of any option
theretofore granted under the Plan. In any event, no incentive stock
option may be granted after the conclusion of a ten (10) year period
commencing on the date the Plan is adopted or, if earlier, the date the
Plan is approved by the Corporation's shareholders.
11. Successors. The Plan shall be binding upon the successors and
assigns of the Corporation.
12. Governing Law. The terms of any options granted hereunder and
the rights and obligations hereunder of the Corporation, the Optionees
and their successors in interest shall, except to the extent governed by
federal law, be governed by Indiana law.
13. Government and Other Regulations. The obligations of the
Corporation to issue or transfer and deliver shares under options granted
under the Plan shall be subject to compliance with all applicable laws,
governmental rules and regulations, and administrative action.
14. Effective Date. The Plan shall become effective when it shall
have been approved by the Corporation's Board of Directors; provided,
however, that the granting of any options under the Plan is conditional
upon the approval of the Plan by the Corporation's shareholders within
twelve (12) months after the adoption of the Plan by the Corporation's
Board of Directors and the options granted pursuant to the Plan may not
be exercised until the Board of Directors of the Corporation has been
advised by counsel that such approval has been obtained and all other
applicable legal requirements have been met; provided, further, that if
shareholder approval does not occur within the required twelve (12) month
period, the Plan and all outstanding options and any related stock
appreciation rights shall be deemed terminated.
EXHIBIT 10.9
IPALCO ENTERPRISES, INC.
1991 DIRECTORS' STOCK OPTION PLAN
1. Purpose. The purpose of the IPALCO Enterprises, Inc. 1991
Directors' Stock Option Plan (the "Plan") is to provide to outside
directors of IPALCO Enterprises, Inc. (the "Corporation") a favorable
opportunity to acquire Common Stock, without par value, of the
Corporation ("Common Stock"), thereby better enabling the Corporation to
attract and retain capable directors.
2. Interpretation of the Plan. The Plan shall be construed and
interpreted by the members of the Board of Directors of the Corporation
who are also employees of the Corporation or employees of a subsidiary of
the Corporation. (Such members shall be referred to as the "Committee").
The decision of a majority of the members of the Committee shall
constitute the decision of the Committee, and the Committee may act (a)
at a meeting at which a majority of the members of the Committee is
present, (b) by simultaneous telephonic communication, or (c) by a
written consent signed by all members of the Committee. The Committee
shall also have authority to prescribe, amend and rescind rules and
regulations relating to the Plan, and to make all other determinations
necessary or advisable in the interpretation and construction of the
Plan.
3. Option Grant Formula. Directors of the Corporation who are not
employed by the Corporation or by any of its subsidiaries ("Outside
Directors") shall be eligible for grants of non-qualified stock options
under this Plan. On November 1, 1991, May 1, 1992 and on each May 1
thereafter while there are still shares reserved under the Plan for which
options have not been granted (each date referred to as a "Grant Date"),
the Corporation shall grant to each Outside Director serving as a
director of the Corporation on such Grant Date and who was an Outside
Director for the twelve (12) month period immediately preceding such
Grant Date a non-qualified option to purchase two thousand (2,000) shares
of Common Stock at an option price per share equal to the average of the
high and low sales price of the Common Stock on the Composite Tape as
reported in The Wall Street Journal on the applicable Grant Date;
provided, however, that notwithstanding anything contained in this Plan
to the contrary, if a Grant Date falls on a day on which shares of Common
Stock are not traded, such Grant Date shall instead be the first day
following such Grant Date on which shares of Common Stock are traded;
provided, further, that if on a Grant Date the number of remaining shares
available for option grants is not large enough to grant each Outside
Director with an option of two thousand (2,000) shares, the number of
share covered by the final option for each Outside Director shall be
reduced proportionately to the nearest whole share so that the number of
shares granted under the Plan does not exceed the number of shares
reserved under Section 6 hereof.
4. Stock Subject to the Plan. There shall be reserved for
issuance upon the exercise of options granted under the Plan, two hundred
and fifty thousand (250,000) shares of the Corporation's Common Stock
which may be authorized but unissued shares of the Corporation. Subject
to Section 6 hereof, the shares for which options may be granted under
the Plan shall not exceed that number. If any option shall expire or
terminate for any reason without having been exercised in full, the
unpurchased shares subject thereto shall (unless the Plan shall have
terminated) become available for other options under the Plan.
5. Terms of Option. Each option granted under the Plan shall be
subject to the following terms and conditions.
(a) Period for Exercise of Option. An option shall
only be exercisable for the period beginning on the six (6)
month anniversary of the Grant Date and ending on the tenth
(10th) year anniversary of the Grant Date; provided, however,
that no option shall be exercisable prior to the six (6)
month anniversary of the date on which the Plan is approved
by the shareholders of the Corporation in the manner
prescribed by Reg. Section 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "1934 Act").
(b) Exercise of Options. The option price of each
share of Common Stock purchased upon exercise of an option
shall be paid in full (1) in cash at the time of such
exercise, (2) if the optionee may do so without violating Section
16(b) of the 1934 Act and subject to approval by the
Committee, by delivering a properly executed exercise note
together with irrevocable instructions to a broker to deliver
promptly to the Corporation the total option price in cash,
or (3) by tendering to the Corporation whole shares of Common
Stock owned by him or her or any combination of whole shares
of Common Stock owned by him and cash, having a fair market
value equal to the cash exercise price of the shares with
respect to which the option is being exercised. For this
purpose, the fair market value of the shares tendered by the
optionee shall be computed as of the exercise date in the
same manner as set forth in Section 3 with respect to the
determination of the option price. An option may be
exercised at any time or from time to time during the term of
the option as to any or all whole shares which have become
subject to purchase pursuant to the terms of the option.
(c) Termination of Option. If an optionee ceases to
be a director of the Corporation for any reason other than
the optionee's death or the optionee's involuntary removal
from the Corporation's Board of Directors during the middle
of a term, any option granted to the optionee may be
exercised by him or her in whole or in part at any time
within the five (5) year period immediately following the
date on which his or her status as a director terminated, but
the option in no event may be exercised after the period
prescribed by subsection (a) of this Section 5. In the event
of the death of an optionee while serving as a director of
the Corporation or within the five (5) year period
immediately after his or her status as a director terminated
for reasons other than his or her involuntary removal, any
option granted to the optionee may be exercised in whole or
in part at any time after the date of such death by the
executor or administrator of his or her estate or by the
person or persons entitled to the option by will or by
applicable laws of descent and distribution until the
expiration of a one (1) year period immediately following the
date of his or her death, but in no event may the option be
exercised after the expiration of the option term as
prescribed by subsection (a) of this Section 5. If an
optionee ceases to be a director of the Corporation by reason
of his or her involuntary removal from the Corporation's
Board of Directors during a middle of a term, any option
granted to the optionee shall forthwith terminate.
Notwithstanding the foregoing provisions of this subsection
(c), no option shall in any event be exercisable after the
expiration of the period fixed by subsection (a) above. An
option shall also terminate if this Plan is not approved by
the shareholders of the Corporation before May 1, 1992.
(d) Nontransferability of Option. An option may not
be transferred by the optionee otherwise than by will or the
laws of descent and distribution during his or her lifetime,
and shall be exercisable by the optionee only.
(e) Agreement. Each option grant shall be evidenced
by an agreement between the optionee and the Corporation.
(f) Certificates. The certificate or certificates for
the shares issuable upon an exercise of an option shall be
issued as promptly as practicable after such exercise. An
optionee shall not have any rights of a shareholder in
respect to the shares of Common Stock subject to an option
until the date of issuance of a stock certificate to him or
her for such shares. In no case may a fraction of a share be
purchased or issued under the Plan, but if, upon the exercise
of an option, a fractional share would otherwise be issuable,
the Corporation shall pay cash in lieu thereof.
(g) No Right to Continued Service. Nothing in this
Plan or in any agreement entered into pursuant hereto shall
confer on any person any right to continue his or her status
as a director of the Corporation or affect any rights the
shareholders of the Corporation may have to terminate his or
her status as a director at any time.
6. Adjustment of Shares. In the event of any change after the
effective date of the Plan in the outstanding stock of the Corporation by
reason of any reorganization, recapitalization, stock split, stock
dividend, combination of shares, exchange of shares, merger or
consolidation, liquidation, or any other change after the effective date
of the Plan in the nature of the shares of stock of the Corporation, the
Committee shall determine what changes, if any, are appropriate in the
number and kind of shares reserved under the Plan, and in the option
price under and the number and kind of shares covered by outstanding
options granted under the Plan. Any such determination of the Committee
hereunder shall be conclusive.
7. Amendment. The Board of Directors of the Corporation may amend
the Plan from time to time and, with the consent of the optionee, the
terms and provisions of his option, except that without the approval of
the Corporation's shareholders:
(a) the number of shares of Common Stock which may be
reserved for issuance under the Plan may not be increased
except as provided in Section 6 hereof;
(b) the period during which an option may be exercised
may not be extended beyond ten (10) years from the date on
which such option was granted;
(c) the class of individuals to whom options may be
granted under the Plan shall not be modified;
(d) amendments will not be made which would cause the
Plan or transaction by directors thereunder to cease to
comply with Rule 16b-3 promulgated under the 1934 Act, or any
successor rule; and
(e) the number of shares subject to options to be
granted to Outside Directors or the date of grant or the
exercise price and other terms thereof shall not be changed
except as provided in Section 6 hereof; provided, further,
that under no circumstances may the Plan be amended more than
once every six (6) months.
No amendment of the Plan, however, may, without the consent of the
optionees, make any changes in any outstanding options theretofore
granted under the Plan which would adversely affect the rights of such
optionees.
8. Termination. The Board of Directors of the Corporation may
terminate the Plan at any time and no option shall be granted thereafter;
provided, however, that the Plan shall automatically terminate when
options covering all shares reserved under the Plan have been granted.
Such termination, however, shall not affect the validity of any option
theretofore granted under the Plan.
9. Successors. The Plan shall be binding upon the successors and
assigns of the Corporation.
10. Governing Law. The terms of any options granted hereunder and
the rights and obligations hereunder of the Corporation, the optionees
and their successors in interest shall, except to the extent governed by
federal law, be governed by Indiana law.
11. Government and Other Regulations. The obligations of the
Corporation to issue or transfer and deliver shares under options granted
under the Plan shall be subject to compliance with all applicable laws,
governmental rules and regulations, and administrative action.
12. Effective Date. The Plan shall become effective when it shall
have been approved by the Corporation's Board of Directors; provided,
however, that the granting of any options under the Plan is conditional
upon the approval of the Plan by the holders of at least a majority of
the shares of the Corporation voting in person or proxy at a duly
constituted meeting, or adjournment thereof, held before May 1, 1992, and
the options granted pursuant to the Plan may not be exercised until the
Board of Directors of the Corporation has been advised by counsel that
such approval has been obtained and all other applicable legal
requirements have been met; provided, further, that if shareholder
approval does not occur before May 1, 1992, the Plan and all outstanding
options shall be deemed terminated.
EXHIBIT 10.10
FORM OF
TERMINATION BENEFITS AGREEMENT
AS AMENDED AND RESTATED, EFFECTIVE JANUARY 1, 1993
[See Schedule A attached hereto for a list of parties to,
and dates of, the Termination Benefits Agreements]
This Agreement, dated as of January 1, 1993, by and among IPALCO
ENTERPRISES, INC., an Indiana corporation having its principal
executive offices at 25 Monument Circle, Indianapolis, Indiana 46204
("IPALCO"), INDIANAPOLIS POWER & LIGHT COMPANY, an Indiana corporation
having its principal executive offices at 25 Monument Circle,
Indianapolis, Indiana 46204 ("IPL") (both IPALCO and IPL being
collectively referred to herein as the "Company"), and , an Indiana
resident whose mailing address is (the "Executive").
R E C I T A L S
The following facts are true:
A. The Executive is serving the Company as a key executive
officer, and is expected to continue to make a major contribution to
the profitability, growth, and financial strength of the Company.
B. The Company considers the continued services of the Executive
to be in the best interests of the Company and its shareholders, and
desires to assure itself of the availability of such continued services
in the future on an objective and impartial basis and without
distraction or conflict of interest in the event of an attempt to
obtain control of the Company.
C. The Executive is willing to remain in the employ of the
Company upon the understanding that the Company will provide him with
income security upon the terms and subject to the conditions contained
herein if his employment is terminated by the Company without cause or
if he voluntarily terminates his employment for good reason.
D. If the Company and Executive entered into one or more
Termination Benefits Agreements prior to this Agreement (the "Prior
Termination Benefits Agreements"), this Agreement is intended to
supersede and replace the Prior Termination Benefits Agreements.
A G R E E M E N T
In consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the Company and the Executive agree
as follows:
1. Undertaking. The Company agrees to pay to the Executive the
termination benefits specified in paragraph 2 hereof if (a) control of
IPALCO is acquired (as defined in paragraph 3(a) hereof) during the
term of this Agreement (as described in paragraph 5 hereof) and (b)
within three (3) years after the acquisition of control occurs (i) the
Company terminates the employment of the Executive for any reason other
than Cause (as defined in paragraph 3(b) hereof), death, the
Executive's attainment of age sixty-five (65) or total and permanent
disability, or (ii) the Executive voluntarily terminates his employment
for Good Reason (as defined in paragraph 3(c) hereof).
2. Termination Benefits. If the Executive is entitled to
termination benefits pursuant to paragraph 1 hereof, the Company agrees
to pay to the Executive as termination benefits in a lump-sum payment
within five (5) calendar days of the termination of the Executive's
employment an amount to be computed by multiplying (i) the Executive's
average annual compensation (as defined in Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code")) payable by the Company
which was includable in the gross income of the Executive for the most
recent five (5) calendar years ending coincident with or immediately
before the date on which control of the Company is acquired (or such
portion of such period during which the Executive was an employee of
the Company), by (ii) two hundred ninety-nine and ninety-nine one
hundredths percent (299.99%). For purposes of this Agreement,
employment and compensation paid by any direct or indirect subsidiary
of the Company will be deemed to be employment and compensation paid
by the Company.
3. Definitions.
(a) As used in this Agreement, the "acquisition of
control" means:
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of twenty percent
(20%) or more of either (A) the then outstanding shares
of common stock of IPALCO (the "Outstanding IPALCO
Common Stock") or (B) the combined voting power of the
then outstanding voting securities of IPALCO entitled
to vote generally in the election of directors (the
"Outstanding IPALCO Voting Securities"); provided,
however, that the following acquisitions shall not
constitute an acquisition of control: (A) any
acquisition directly from IPALCO (excluding an
acquisition by virtue of the exercise of a conversion
privilege), (B) any acquisition by IPALCO, (C) any
acquisition by any employee benefit plan (or related
trust) sponsored or maintained by IPALCO, IPL or any
corporation controlled by IPALCO or (D) any acquisition
by any corporation pursuant to a reorganization, merger
or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in
clauses (A), (B) and (C) of subsection (iii) of this
paragraph 3(a) are satisfied;
(ii) Individuals who, as of the date hereof,
constitute the Board of Directors of IPALCO (the
"Incumbent Board") cease for any reason to constitute
at least a majority of the Board of Directors of IPALCO
(the "Board"); provided, however, that any individual
becoming a director subsequent to the date hereof whose
election, or nomination for election by IPALCO's
shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent
Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial
assumption of office occurs as a result of either an
actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of
a Person other than the Board; or
(iii) Approval by the shareholders of IPALCO of a
reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or
consolidation, (A) more than sixty percent (60%) of,
respectively, the then outstanding shares of common
stock of the corporation resulting from such
reorganization, merger or consolidation and the
combined voting power of the then outstanding voting
securities of such corporation entitled to vote
generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who
were the beneficial owners, respectively, of the
Outstanding IPALCO Common Stock and Outstanding IPALCO
Voting Securities immediately prior to such
reorganization, merger or consolidation in
substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or
consolidation, of the Outstanding IPALCO Stock and
Outstanding IPALCO Voting Securities, as the case may
be, (B) no Person (excluding IPALCO, any employee
benefit plan or related trust of IPALCO, IPL or such
corporation resulting from such reorganization, merger
or consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or
consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or
consolidation, directly or indirectly, twenty percent
(20%) or more of the Outstanding IPALCO Common Stock or
Outstanding Voting Securities, as the case may be)
beneficially owns, directly or indirectly, twenty
percent (20%) or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such reorganization, merger or
consolidation or the combined voting power of the then
outstanding voting securities of such corporation
entitled to vote generally in the election of directors
and (C) at least a majority of the members of the board
of directors of the corporation resulting from such
reorganization, merger or consolidation were members of
the Incumbent Board at the time of the execution of the
initial agreement providing for such reorganization,
merger or consolidation;
(iv) Approval by the shareholders of IPALCO of (A)
a complete liquidation or dissolution of IPALCO or (B)
the sale or other disposition of all or substantially
all of the assets of IPALCO, other than to a
corporation, with respect to which following such sale
or other disposition (1) more than sixty percent (60%)
of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power
of the then outstanding voting securities of such
corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the
individuals and entities who were the beneficial
owners, respectively, of the Outstanding IPALCO Common
Stock and Outstanding IPALCO Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of
the Outstanding IPALCO Common Stock and Outstanding
IPALCO Voting Securities, as the case may be, (2) no
Person (excluding IPALCO and any employee benefit plan
or related trust of IPALCO, IPL or such corporation and
any Person beneficially owning, immediately prior to
such sale or other disposition, directly or indirectly,
twenty percent (20%) or more of the Outstanding IPALCO
Common Stock or Outstanding IPALCO Voting Securities,
as the case may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of,
respectively, the then outstanding shares of common
stock of such corporation and the combined voting power
of the then outstanding voting securities of such
corporation entitled to vote generally in the election
of directors and (3) at least a majority of the members
of the board of directors of such corporation were
members of the Incumbent Board at the time of the
execution of the initial agreement or action of the
Board providing for such sale or other disposition of
assets of IPALCO; or
(v) The closing, as defined in the documents
relating to, or as evidenced by a certificate of any
state or federal governmental authority in connection
with, a transaction approval of which by the
shareholders of IPALCO would constitute an "acquisition
of control" under subsection (iii) or (iv) of this
section 3(a) of this Agreement.
Notwithstanding anything contained in this Agreement to
the contrary, if the Executive's employment is terminated
before an "acquisition of control" as defined in this section
3(a) and the Executive reasonably demonstrates that such
termination (i) was at the request of a third party who has
indicated an intention or taken steps reasonably calculated
to effect an "acquisition of control" and who effectuates an
"acquisition of control" (a "Third Party") or (ii) otherwise
occurred in connection with, or in anticipation of, an
"acquisition of control" which actually occurs, then for all
purposes of this Agreement, the date of an "acquisition of
control" with respect to the Executive shall mean the date
immediately prior to the date of such termination of the
Executive's employment.
(b) As used in this Agreement, the term "Cause" means
fraud, dishonesty, theft of corporate assets, or other gross
misconduct by the Executive. Notwithstanding the foregoing,
the Executive shall not be deemed to have been terminated for
cause unless and until there shall have been delivered to him
a copy of a resolution duly adopted by the affirmative vote
of not less than a majority of the entire membership of the
Board at a meeting of the Board called and held for the
purpose (after reasonable notice to him and an opportunity
for him, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board
the Executive was guilty of conduct set forth above in the
first sentence of the subsection and specifying the
particulars thereof in detail.
(c) As used in this Agreement, the term "Good Reason"
means, without the Executive's written consent, (i) a
demotion in the Executive's status, position or
responsibilities which, in his reasonable judgment, does not
represent a promotion from his status, position or
responsibilities as in effect immediately prior to the change
in control; (ii) the assignment to the Executive of any
duties or responsibilities which, in his reasonable judgment,
are inconsistent with such status, position or
responsibilities; or any removal of the Executive from or
failure to reappoint or reelect him to any of such positions,
except in connection with the termination of his employment
for total and permanent disability, death or Cause or by him
other than for Good Reason; (iii) a reduction by the Company
in the Executive's base salary as in effect on the date
hereof or as the same may be increased from time to time
during the term of this Agreement or the Company's failure to
increase (within twelve (12) months of the Executive's last
increase in base salary) the Executive's base salary after a
change in control in an amount which at least equals, on a
percentage basis, the average percentage increase in base
salary for all executive and senior officers of the Company
effected in the preceding twelve (12) months; (iv) the
relocation of the principal executive offices of IPALCO or
IPL, whichever entity on behalf of which the Executive
performs a principal function of that entity as part of his
employment services, to a location outside the Indianapolis,
Indiana metropolitan area or the Company's requiring him to
be based at any place other than the location at which he
performed his duties prior to a change in control, except for
required travel on the Company's business to an extent
substantially consistent with his business travel obligations
at the time of a change in control; (v) the failure by the
Company to continue in effect any incentive, bonus or other
compensation plan in which the Executive participates,
including but not limited to the Company's stock option and
restricted stock plans, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan), with
which he has consented, has been made with respect to such
plan in connection with the change in control, or the failure
by the Company to continue his participation therein, or any
action by the Company which would directly or indirectly
materially reduce his participation therein; (vi) the failure
by the Company to continue to provide the Executive with
benefits substantially similar to those enjoyed by him or to
which he was entitled under any of the Company's pension,
profit sharing, life insurance, medical, dental, health and
accident, or disability plans in which he was participating
at the time of a change in control, the taking of any action
by the Company which would directly or indirectly materially
reduce any of such benefits or deprive him of any material
fringe benefit enjoyed by him or to which he was entitled at
the time of the change in control, or the failure by the
Company to provide him with the number of paid vacation and
sick leave days to which he is entitled on the basis of years
of service with the Company in accordance with the Company's
normal vacation policy in effect on the date hereof; (vii)
the failure of the Company to obtain a satisfactory agreement
from any successor or assign of the Company to assume and
agree to perform this Agreement; (viii) any purported
termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of paragraph 4(c) hereof (and, if applicable,
paragraph 3(b) hereof); and for purposes of this Agreement,
no such purported termination shall be effective; or (ix) any
request by the Company that the Executive participate in an
unlawful act or take any action constituting a breach of the
Executive's professional standard of conduct.
Notwithstanding anything in this paragraph 3(c) to the
contrary, the Executive's right to terminate his employment
pursuant to this paragraph 3(c) shall not be affected by his
incapacity due to physical or mental illness.
4. Additional Provisions.
(a) Enforcement of Agreement. The Company is aware
that upon the occurrence of a change in control the Board of
Directors or a shareholder of the Company may then cause or
attempt to cause the Company to refuse to comply with its
obligations under this Agreement, or may cause or attempt to
cause the Company to institute, or may institute, litigation
seeking to have this Agreement declared unenforceable, or may
take or attempt to take other action to deny the Executive
the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement could be
frustrated. It is the intent of the Company that the
Executive not be required to incur the expenses associated
with the enforcement of his rights under this Agreement by
litigation or other legal action, nor be bound to negotiate
any settlement of his rights hereunder, because the cost and
expense of such legal action or settlement would
substantially detract from the benefits intended to be
extended to the Executive hereunder. Accordingly, if
following a change in control it should appear to the
Executive that the Company has failed to comply with any of
its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation
or other legal action designed to deny, diminish or to
recover from the Executive the benefits entitled to be
provided to the Executive hereunder and that the Executive
has complied with all of his obligations under this
Agreement, the Company irrevocably authorizes the Executive
from time to time to retain counsel of his choice, at the
expense of the Company as provided in this paragraph 4(a), to
represent the Executive in connection with the initiation or
defense of any litigation or other legal action, whether such
action is by or against the Company or any director, officer,
shareholder, or other person affiliated with the Company, in
any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such
counsel, the Company irrevocably consents to the Executive
entering into an attorney-client relationship with such
counsel, and in that connection the Company and the Executive
agree that a confidential relationship shall exist between
the Executive and such counsel. The reasonable fees and
expenses of counsel selected from time to time by the
Executive as hereinabove provided shall be paid or reimbursed
to the Executive by the Company on a regular, periodic basis
upon presentation by the Executive of a statement or
statements prepared by such counsel in accordance with its
customary practices, up to a maximum aggregate amount of
$500,000. Any legal expenses incurred by the Company by
reason of any dispute between the parties as to
enforceability of or the terms contained in this Agreement,
notwithstanding the outcome of any such dispute, shall be the
sole responsibility of the Company, and the Company shall not
take any action to seek reimbursement from the Executive for
such expenses.
(b) Severance Pay; No Duty to Mitigate. The amounts
payable to the Executive under this Agreement shall not be
treated as damages but as severance compensation to which the
Executive is entitled by reason of termination of his
employment in the circumstances contemplated by this
Agreement. The Company shall not be entitled to set off
against the amounts payable to the Executive any amounts
earned by the Executive in other employment after termination
of his employment with the Company, or any amounts which
might have been earned by the Executive in other employment
had he sought such other employment.
(c) Notice of Termination. Any purported termination
by the Company or by the Executive shall be communicated by
written Notice of Termination to the other party hereto in
accordance with paragraph 4(k) hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis
for termination of his employment under the provision so
indicated. For purposes of this Agreement, no such purported
termination shall be effective without such Notice of
Termination.
(d) Internal Revenue Code. Anything in this Agreement
to the contrary notwithstanding, in the event that Deloitte
& Touche determines that any payment by the Company to or for
the benefit of the Executive pursuant to the terms of this
Agreement would be nondeductible by the Company for federal
income tax purposes because of Section 280G of the Code, then
the amount payable to or for the benefit of the Executive
pursuant to this Agreement shall be reduced (but not below
zero) to the maximum amount payable without causing the
payment to be nondeductible by the Company because of Section
280G of the Code. Such determination by Deloitte & Touche
shall be conclusive and binding upon the parties.
(e) Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective executors, administrators, heirs, personal
representatives, successors, and assigns, but neither this
Agreement nor any right hereunder may be assigned or
transferred by either party hereto, any beneficiary, or any
other person, nor be subject to alienation, anticipation,
sale, pledge, encumbrance, execution, levy, or other legal
process of any kind against the Executive, his beneficiary or
any other person. Notwithstanding the foregoing, the Company
will assign this Agreement to any corporation or other
business entity succeeding to substantially all of the
business and assets of the Company by merger, consolidation,
sale of assets, or otherwise and shall obtain the assumption
of this Agreement by such successor.
<PAGE>
(f) Entire Agreement. This Agreement contains the
entire agreement between the parties with respect to the
subject matter hereof. All representations, promises, and
prior or contemporaneous understandings among the parties
with respect to the subject matter hereof, including any
Prior Termination Benefits Agreements, are merged into and
expressed in this Agreement, and any and all prior agreements
between the parties with respect to the subject matter hereof
are hereby cancelled.
(g) Amendment. This Agreement shall not be amended,
modified, or supplemented without the written agreement of
the parties at the time of such amendment, modification, or
supplement.
(h) Governing Law. This Agreement shall be governed
by and subject to the laws of the State of Indiana.
(i) Severability. The invalidity or unenforceability
of any particular provision of this Agreement shall not
affect the other provisions, and this Agreement shall be
construed in all respects as if such invalid or unenforceable
provision had not been contained herein.
(j) Captions. The captions in this Agreement are for
convenience and identification purposes only, are not an
integral part of this Agreement, and are not to be considered
in the interpretation of any part hereof.
(k) Notices. Except as otherwise specifically
provided in this Agreement, all notices and other
communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered in person or sent
by registered or certified mail, postage prepaid, addressed
as set forth above, or to such other address as shall be
furnished in writing by any party to the others.
(l) Waivers. Except as otherwise specifically
provided in this Agreement, no waiver by either party hereto
of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other
party shall be deemed to be a valid waiver unless such waiver
is in writing or, even if in writing, shall be deemed to be
a waiver of a subsequent breach of such condition or
provision or a waiver of a similar or dissimilar provision or
condition at the same or at any prior or subsequent time.
(m) Gender. The use of the masculine gender
throughout this Agreement is solely for convenience; thus, in
cases where the Executive is female, the feminine gender
shall be deemed to be used in place of the masculine gender.
5. Term of this Agreement. This Agreement shall remain in effect
until January 1, 1998 or until the expiration of any extension thereof.
The term of this Agreement shall be automatically extended for one (1)
year periods without further action of the parties as of January 1,
1994 and each succeeding January 1 thereafter, unless IPALCO shall have
served written notice to the Executive prior to January 1, 1994 or
prior to January 1 of each succeeding year, as the case may be, of its
intention that the Agreement shall terminate at the end of the five (5)
year period that begins with the January 1 following the date of such
written notice.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
IPALCO ENTERPRISES, INC.
By:
Attest:
INDIANAPOLIS POWER & LIGHT COMPANY
By:
Attest:
<PAGE>
SCHEDULE A
TO
TERMINATION BENEFITS AGREEMENT
As Amended and Restated, Effective January 1, 1993
By and among IPALCO Enterprises, Inc., Mid-America Capital Resources,
Inc. and the following individuals:
Joseph A. Gustin
David C. Kiesel
Daniel L. Short
William A. Tracy
By and among IPALCO Enterprises, Inc., Indianapolis Power & Light
Company and the following individuals:
John C. Berlier, Jr.
John R. Brehm
Max Califar
Arthur G. Haan
John R. Hodowal
Ramon L. Humke
Donald W. Knight
Robert A. McKnight, Jr.
Steven L. Meyer
Stephen J. Plunkett
Robert W. Rawlings
Michael E. Shriner
Joseph A. Slash
Clark L. Snyder
Thomas A. Steiner
Gerald D. Waltz
John D. Wilson
Bryan G. Tabler (effective as of October 1, 1994)
By and between IPALCO Enterprises, Inc. and the following individuals:
Maurice O. Edmonds
N. Stuart Grauel
By and among IPALCO Enterprises, Inc. and Store Heat and Produce
Energy, Inc. and the following individual:
Michael J. Farmer (effective as of February 6, 1995)
EXHIBIT 10.11
EMPLOYMENT AGREEMENT
JOHN R. HODOWAL
This Agreement, dated as of July 29, 1986, is between IPALCO
ENTERPRISES, INC., an Indiana corporation having its principal executive
offices at 25 Monument Circle, Indianapolis, Indiana 46204 (the
"Company"), and JOHN R. HODOWAL, an Indiana resident whose mailing
address is 5136 E. 74th Place, Indianapolis, Indiana 46250 (the
"Executive").
R E C I T A L S
The following facts are true:
A. The Executive has for many years served the Company as a key
executive officer, and is expected to continue to make a major
contribution to the profitability, growth and financial strength of the
Company.
B. The Company considers the continued services of the Executive
to be in the best interests of the Company and its shareholders, and
desires to assure itself of the availability of such continued services
in the future.
C. The Executive is willing to remain in the employ of the
Company upon the terms and subject to the conditions hereinafter
provided.
A G R E E M E N T
In consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the Company and the Executive agree as
follows:
1. Employment. The Company hereby employs the Executive for the
Term of Employment (as defined in Paragraph 6 hereof) as Vice President
and Treasurer or in such other executive capacity, for the Company or a
major affiliate thereof, as may be determined by the Board of Directors
of the Company (the "Board"), with such duties as may be reasonably
assigned to him by the By-Laws of the Company and by the Board. During
the Term of Employment, the Executive shall devote his best efforts and
ability, skill and attention to the business of the Company and to the
promotion of its interests during normal working hours (with the
exception of absences because of vacations or illness). The Executive's
office shall continue to be located in the Indianapolis, Indiana
metropolitan area, unless he shall consent to a relocation.
2. Base Salary. During the Term of Employment, the Executive
shall receive a minimum base salary of $165,000.00 per year, payable in
monthly intervals, or such larger amount as the Board shall in its
discretion determine from time to time.
3. Fringe Benefits. During the Term of Employment, the Company
shall provide to the Executive such fringe benefits as are generally
provided to its key executive officers, including without limitation,
incentive compensation and bonus arrangements, retirement, profit-sharing
and stock bonus plans (whether qualified or nonqualified), and life,
health and accident, director and officer liability and long term
disability insurance.
4. Reimbursement of Expenses. The Company shall reimburse the
Executive for all of his reasonable expenses incurred in the performance
of his duties hereunder, in accordance with the Company's generally
applicable expense reimbursement policy as in effect from time to time
and upon compliance with all reasonable accounting and reporting
requirements as set forth in such policy.
5. Noncompetition. During the Term of Employment and thereafter
so long as the Executive is receiving payments pursuant to Paragraph 7
hereof, the Executive shall not, without the consent of the Company,
engage in, be employed by, be a director of or own an equity interest in
any business or activity competing with or of a nature similar to the
business of the Company within the Company's service territory as
constituted from time to time.
6. Term of Employment. The "Term of Employment" shall commence
on the date of this Agreement and shall continue indefinitely until three
(3) years after either the Company or the Executive gives notice to the
other party of a decision to fix the duration thereof, unless earlier
terminated as follows. The Term of Employment shall terminate early upon
the first to occur of (a) the death of the Executive, (b) the Total
Disability (as hereinafter defined) of the Executive, (c) the voluntary
retirement of the Executive upon reaching retirement age as provided in
the Employees' Retirement Plan of Indianapolis Power & Light Company as
now in effect or hereinafter amended (the "Retirement Plan"), (d)
termination of employment by the Company for Cause (as hereinafter
defined), (e) the resignation of the Executive for Good Reason (as
hereinafter defined), (f) termination of employment by the Company
without Cause on six (6) months notice, or (g) termination of employment
by the Executive on six (6) months notice. For purposes of this
Agreement, the term "Total Disability" shall mean a physical or mental
condition which prevents the Executive from performing his duties for the
Company; provided, however, that the Executive shall not be deemed to
have incurred a Total Disability unless he is eligible for disability
retirement under the Retirement Plan. The term "Cause" shall mean fraud,
dishonesty, theft of corporate assets or other gross misconduct by the
Executive. The term "Good Reason" shall mean, without the Executive's
written consent, a demotion in the Executive's status, position or
responsibilities; the assignment to the Executive of any duties which are
inconsistent with such status, position or responsibilities; or the
relocation of the principal executive offices of the Company to a
location outside the Indianapolis, Indiana metropolitan area.
7. Payments on Early Termination. In the event the Term of
Employment is terminated early by reason of Paragraphs 6(e) (resignation
for Good Reason) or 6(f) (termination by the Company without Cause), the
Company shall continue to pay to the Executive the base salary which
would have been payable pursuant to Paragraph 2 above for what would have
been the remainder of the Term of Employment had the event specified in
Paragraphs 6(e) or 6(f) not occurred. Such payments shall in no event
continue past the Executive's normal retirement age under the Retirement
Plan. The Company shall also continue for the same period to provide
life, health and accident and long term disability insurance for the
Executive and his dependents to the extent provided before such
termination and, if the Term of Employment would have ended with the
retirement of the Executive but for such early termination, the Company
shall provide such insurance thereafter to the extent generally provided
by the Company to retired employees.
Notwithstanding the foregoing:
(a) In the event the Executive receives severance benefits
from the Company as a result of such termination pursuant to any
other plan or agreement in or to which the Executive is a
participant or party, other than the Retirement Plan or the
Indianapolis Power & Light Company Unfunded Supplemental Retirement
Plan for a Select Group of Management Employees or any similar or
successor plan, such benefits shall be applied on a first dollar
basis against the payments owing to the Executive under this
Paragraph 7; and
(b) In the event that Deloitte Haskins & Sells determines
that any payment by the Company to or for the benefit of the
Executive pursuant to this Paragraph 7 would be nondeductible by
the Company for federal income tax purposes because of Section 280G
of the Internal Revenue Code of 1954, as amended from time to time
(the "Code"), then the amount payable to or for the benefit of the
Executive pursuant to this Paragraph 7 shall be reduced (but not
below zero) to the maximum amount payable without causing the
payment to be nondeductible by the Company because of Section 280G
of the Code. Such determination by Deloitte Haskins & Sells shall
be conclusive and binding upon the parties.
8. Miscellaneous.
(a) This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective executors,
administrators, heirs, personal representatives, successors, and
assigns, but neither this Agreement nor any right hereunder may be
assigned or transferred by either party hereto, any beneficiary, or
any other person, nor be subject to alienation, anticipation, sale,
pledge, encumbrance, execution, levy, or other legal process of any
kind against the Executive, his beneficiary or any other person.
Notwithstanding the foregoing, the Company will assign this
Agreement to any corporation or other business entity succeeding to
substantially all of the business and assets of the Company by
merger, consolidation, sale of assets, or otherwise and shall
obtain the assumption of this Agreement by such successor.
(b) This Agreement contains the entire agreement between
the parties with respect to the subject matter hereof. All
representations, promises, and prior or contemporaneous
understandings among the parties with respect to the subject matter
hereof are merged into and expressed in this Agreement, and any and
all prior agreements between the parties with respect to the
subject matter hereof are hereby cancelled.
(c) This Agreement shall not be amended, modified, or
supplemented without the written agreement of the parties at the
time of such amendment, modification, or supplement.
(d) This Agreement shall be governed by and subject to the
laws of the State of Indiana.
(e) The invalidity or unenforceability of any particular
provision of this particular Agreement shall not affect the other
provisions, and this Agreement shall be construed in all respects
as if such invalid or unenforceable provision had not been
contained herein.
(f) The captions in this Agreement are for convenience and
identification purposes only, are not an integral part of this
Agreement, and are not to be considered in the interpretation of
any part hereof.
(g) Except as specifically set forth in this Agreement, all
notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered in person or
sent by registered or certified mail, postage prepaid, addressed as
set forth above, or to such other address as shall be furnished in
writing by any party to the others.
(h) Except as otherwise specifically provided in this
Agreement, no waiver by either party hereto of any breach by the
other party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed to be a valid
waiver unless such waiver is in writing or, even if in writing,
shall be deemed to be a waiver of a subsequent breach of such
condition or provision or a waiver of a similar or dissimilar
provision or condition at the same or at any prior or subsequent
time.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
IPALCO ENTERPRISES, INC.
By: /s/Zane G. Todd
President
Attest:
/s/Marcus E. Woods
Secretary
/s/John R. Hodowal
John R. Hodowal
EXHIBIT 10.12
VOLUNTARY EMPLOYEE BENEFICIARY ASSOCIATION
TRUST AGREEMENT
(EFFECTIVE FEBRUARY 3, 1995)
<PAGE>
INDEX
Page
PREAMBLE ......................................... 1
ARTICLE I Establishment of Trust Fund
and Sub-Accounts ................ 3
Section 1.01. Trust Fund ................... 3
Section 1.02. Administration of Trust Fund.. 3
Section 1.03. Establishment of Sub-Accounts. 3
Section 1.04. Corporate Contributions ...... 4
Section 1.05. Member Contributions ......... 10
Section 1.06. Receipt of Contributions ..... 11
Section 1.07. Trustee Not Responsible for
Contributions .............. 11
Section 1.08. Non-Diversion of the Trust Fund 11
Section 1.09. Acceptance of Trust .......... 12
Section 1.10. Separate Accounts for Key
Employees ................... 12
Section 1.11. Establishment of Individual
Accounts .................... 13
ARTICLE II Funding ........................... 15
Section 2.01. In General ................... 15
Section 2.02. Limited Circumstances in Which
Corporation Contributions May
Be Returned ................ 15
ARTICLE III Payment of Benefits ............... 16
Section 3.01. In General ................... 16
Section 3.02. Unclaimed Benefits ........... 17
Section 3.03. Payment of Benefits on Behalf
of Minor or Legal Incompetent 17
Section 3.04. Non-Alienation of Benefits ... 18
ARTICLE IV Administration .................... 18
Section 4.01. Administration of the Trust Fund 18
Section 4.02. Administration of Each Plan .... 19
Section 4.03. Application of the Trust Fund .. 19
Section 4.04. Allocation of Expenses ......... 21
Section 4.05. Information to Be Furnished
to Trustee ................... 21
Section 4.06. Trust Year ..................... 21
Section 4.07. Accounting and Record Keeping .. 21
<PAGE>
Page
Section 4.08. Right to Judicial Settlement of
Accounts ..................... 23
Section 4.09. Non-Discrimination ............. 23
Section 4.10. Litigation by Members .......... 23
Section 4.11. Limitation on Liability ........ 24
Section 4.12. Consultation and Indemnification 24
Section 4.13. Waiver of Bond ................. 25
Section 4.14. VEBA Committee ................. 25
ARTICLE V Investment of Trust Fund ................. 26
Section 5.01. Management of Trust Fund
and Appointment of Investment
Manager ...................... 26
Section 5.02. Powers of Trustee .............. 27
ARTICLE VI Resignation, Removal, and Appointment
of Successor Trustee .............. 30
Section 6.01. Resignation .................... 30
Section 6.02. Removal ........................ 30
Section 6.03. Successor Trustee .............. 30
Section 6.04. Accounting by Trustee .......... 31
Section 6.05. Merger or Consolidation of
Trustee ....................... 32
ARTICLE VII Fiduciary Relationships and
Responsibilities .................. 32
Section 7.01. Fiduciary Relationships ........ 32
Section 7.02. Warranty of Fiduciaries ........ 33
Section 7.03. Reliance on Information from
Other Fiduciaries ............. 33
Seciton 7.04 Fiduciary Duty ................. 34
ARTICLE VIII Amendment or Termination of Agreement 34
Section 8.01. Amendment ...................... 34
Section 8.02. Limitation on Amendments ....... 35
Section 8.03. Addition of Plans .............. 35
Section 8.04. Termination .................... 35
Section 8.05. Deletion of Plans .............. 38
ARTICLE IX Miscellaneous ....................... 39
Section 9.01. Notices ........................ 39
Section 9.02. Successors and Assigns ......... 40
Section 9.03. Captions ....................... 40
Section 9.04. Number and Gender .............. 40
Section 9.05. Counterparts ................... 41
Section 9.06. Computation of Time ............ 41
Section 9.07. Persons Authorized to Act on
Behalf of Corporation ........ 41
Section 9.08. Applicable Law and Severability
of Plan Provisions ........... 41
<PAGE>
PREAMBLE
THIS AGREEMENT is to be effective as of February 3, 1995,
between IPALCO Enterprises, Inc. ("Company"), an Indiana corporation
having its principal place of business in Indianapolis, Indiana, and
Anthem Trust & Asset Management, Inc., an Indiana chartered trust
company having its principal place of business in Indianapolis,
Indiana (the "Trustee").
WITNESSETH:
WHEREAS, the Company and certain other employers identified
at Appendix 1 hereto, as such Appendix 1 may hereafter be amended
from time to time in the discretion of the Company until there is an
Acquisition of Control (as defined in Section 1.04 hereof),
affiliated with the Company within the meaning of the Treasury
Regulations promulgated under Section 501(c)(9) of the Internal
Revenue Code of 1986, as amended (the "Code") (the Company and such
employers are collectively referred to as the "Corporation") have
heretofore adopted, and may adopt in the future, plans providing
life, sickness, accident, and other benefits for the employees and
eligible retirees of the Corporation, their eligible dependents, and
their designated beneficiaries covered by the plans ("Members") to
be covered under this Agreement;
WHEREAS, plan administrators have been, or will be, duly
appointed to administer each of these plans (singularly the "Plan
Administrator" and collectively the "Plan Administrators");
<PAGE>
WHEREAS, the funds which will be contributed or transferred
to the Trustee, as and when received by the Trustee, will constitute
a trust fund to be held for the sole and exclusive benefit of the
Members under the plans identified at Appendix 2 hereto, as such
Appendix 2 may hereafter be amended, added or deleted from time to
time in the discretion of the Company until there is an Acquisition
of Control (as defined in Section 1.04 hereof) (singularly a "Plan"
and collectively the "Plans");
WHEREAS, the Company intends that the trust established by
this Agreement and the Plans shall together qualify as a voluntary
employee beneficiary association under Section 501(c)(9) of the
Code, and an employee welfare benefit plan and trust within the
meaning of Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"); and
WHEREAS, the Company desires the Trustee to hold and
administer the trust fund, and the Trustee is willing to hold and
administer such trust fund, pursuant to the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the Company and the Trustee do
hereby covenant and agree as follows:
ARTICLE I
Establishment of Trust Fund and Sub-Accounts
Section 1.01. Trust Fund. The Trustee shall hold all
assets contributed or transferred to, or earned by, it under the
terms and conditions of this Agreement, including all bank accounts,
savings accounts or certificates, all investments made and held by
the Trustee, and all monies and any other property received and held
by the Trustee for the uses and purposes set forth in this Agreement
(the "Trust Fund").
Section 1.02. Administration of Trust Fund. The Trust Fund
shall be held by the Trustee in trust and administered in accordance
with the provisions of this Agreement. The Trustee shall have
exclusive authority and discretion to manage and control the Trust
Fund, and the rights, powers, and duties of the Trustee shall be
governed by the terms and conditions of this Agreement.
Section 1.03. Establishment of Sub-Accounts. The Trustee
shall establish within the Trust Fund a separate account (singularly
a "Sub-Account" and collectively the "Sub-Accounts") for each of the
Member categories as listed from time to time on Exhibit "A" to this
Agreement; each Member category will be identified as (1) electric,
steam or non-utility, as (2) collectively bargained or non-
collectively bargained, and as (3) active employee or retiree; in
addition, each Member category will be identified with a Plan, also
as listed from time to time on Exhibit "A" to this Agreement;
provided, however, that more than one (1) Member category may be
funded through a single Sub-Account if the Company directs the
Trustee in writing.
Section 1.04. Corporation Contributions. Except as
hereinafter provided, the Corporation shall make contributions to
the Trust Fund in such amounts and at such times as it shall
determine ("Corporation Contributions"). The Corporation
Contributions shall be based on the amounts necessary to provide for
the benefits expected to become payable, or to pay any premiums
becoming due, under the Plans and to fund reasonable reserves with
respect thereto. Also except as hereinafter provided, the
Corporation shall not be required to use the Trust Fund or any other
funded mechanism to pay benefits and premiums provided under the
Plan. Notwithstanding the foregoing provisions of this Section
1.04, in the event of an Acquisition of Control (as hereinafter
defined) of the Company, the Company shall make minimum Corporation
Contributions, to be calculated by the VEBA Committee, consisting of
an amount in cash payable within thirty (30) days following the
Acquisition of Control equal to the sum of (a) the amount accruable
for service cost for post-retirement benefits currently earned or to
be earned under all Plans for the Company's fiscal year in which
the Acquisition of Control occurred, and (b) the amount of the
Corporation's accumulated post-retirement benefit obligation in
excess of Plan assets for all Plans as of the end of the Company's
fiscal year immediately preceding the Company's fiscal year in which
the Acquisition of Control occurred, and thereafter within thirty
(30) days after the start of each fiscal year shall make minimum
Corporation Contributions equal to the amount accruable for service
cost for post-retirement benefits currently earned or to be earned
under all Plans for such fiscal year. Also in the event of an
Acquisition of Control of the Company, the Corporation shall cause
all Plans in effect at any time during the twelve (12) months'
period preceding the Acquisition of Control to continue in full
force and effect at all times thereafter, with such exceptions as
may be approved by the VEBA Committee (as defined in Section 4.14
hereof). The Trustee shall be authorized and empowered to enforce
the foregoing minimum Corporation Contributions and Plan
continuation covenant in behalf of the Trust Fund and the Members,
and the Company shall indemnify the Trustee and the Trust Fund from
and against all attorneys' fees and other expenses incurred by the
Trustee in connection with or by reason of the Trustee's efforts to
enforce such obligations. For purposes of this Agreement, an
"Acquisition of Control" means the first to occur of the following
events:
(i) The acquisition by any individual,
entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the
Exchange Act) of twenty percent (20%) or more of
either (A) the then outstanding shares of common
stock of the Company (the "Outstanding IPALCO
Common Stock") or (B) the combined voting power of
the then outstanding voting securities of the
Company entitled to vote generally in the election
of directors (the "Outstanding IPALCO Voting
Securities"); provided, however, that the following
acquisitions shall not constitute an acquisition of
control: (A) any acquisition directly from the
Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (B) any
acquisition by the Company, (C) any acquisition by
any employee benefit plan (or related trust)
sponsored or maintained by any Corporation or (D)
any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if,
following such reorganization, merger or
consolidation, the conditions described in clauses
(A), (B) and (C) of subsection (iii) of this
Section 1.04 are satisfied;
(ii) Individuals who, as of the date
hereof, constitute the Board of Directors of the
Company (the "Incumbent Board") cease for any
reason to constitute at least a majority of the
Board of Directors of the Company (the "Board");
provided, however, that any individual becoming a
director subsequent to the date hereof whose
election, or nomination for election by the
Company's shareholders, was approved by a vote of
at least a majority of the directors then
comprising the Incumbent Board shall be considered
as though such individual were a member of the
Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of
office occurs as a result of either an actual or
threatened election contest (as such terms are used
in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
(iii) Approval by the Shareholders of the
Company of a reorganization, merger or
consolidation, in each case, unless, following such
reorganization, merger or consolidation, (A) more
than sixty percent (60%) of, respectively, the then
outstanding shares of common stock of the
corporation resulting from such reorganization,
merger or consolidation and the combined voting
power of the then outstanding voting securities of
such corporation entitled to vote generally in the
election of directors is then beneficially owned,
directly or indirectly, by all or substantially all
of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding
IPALCO Common Stock and Outstanding IPALCO Voting
Securities immediately prior to such
reorganization, merger or consolidation in
substantially the same proportions as their
ownership, immediately prior to such
reorganization, merger or consolidation, of the
Outstanding IPALCO Common Stock and Outstanding
IPALCO Voting Securities, as the case may be, (B)
no Person (excluding the Company, any employee
benefit plan or related trust of any Corporation 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, twenty percent (20%) or
more of the Outstanding IPALCO Common Stock or
Outstanding IPALCO Voting Securities, as the case
may be) beneficially owns, directly or indirectly,
twenty percent (20%) or more of, respectively, the
then outstanding shares of common stock of the
Corporation resulting from such reorganization,
merger or consolidation or the combined voting
power of the then outstanding voting securities of
such corporation entitled to vote generally in the
election of directors and (C) at least a majority
of the members of the board of directors of the
corporation resulting from such reorganization,
merger or consolidation were members of the
Incumbent Board at the time of the execution of the
initial agreement providing for such
reorganization, merger or consolidation; or
(iv) Approval by the shareholders of the
Company of (A) a complete liquidation or
dissolution of the Company or (B) 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 (1) more than sixty percent (60%) of,
respectively, the then outstanding shares of common
stock of such corporation and the combined voting
power of the then outstanding voting securities of
such corporation entitled to vote generally in the
election of directors is then beneficially owned,
directly or indirectly, by all or substantially all
of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding
IPALCO Common Stock and Outstanding IPALCO Voting
Securities immediately prior to such sale or other
disposition in substantially the same proportion as
their ownership, immediately prior to such sale or
other disposition, of the Outstanding IPALCO Common
Stock and Outstanding IPALCO Voting Securities, as
the case may be, (2) no Person (excluding the
Company and any employee benefit plan or related
trust of any Corporation or such corporation and
any Person beneficially owning, immediately prior
to such sale or other disposition, directly or
indirectly, twenty percent (20%) or more of the
Outstanding IPALCO Common Stock or Outstanding
IPALCO Voting Securities, as the case may be)
beneficially owns, directly or indirectly, twenty
percent (20%) or more of, respectively, the then
outstanding shares of common stock of such
corporation and the combined voting power of the
then outstanding voting securities of such
corporation entitled to vote generally in the
election of directors and (3) at least a majority
of the members of the board of directors of such
corporation were members of the Incumbent Board at
the time of the execution of the initial agreement
or action of the Board providing for such sale or
other disposition of assets of the Company.
The VEBA Committee shall be responsible for notifying the
Trustee of an Acquisition of Control.
Section 1.05. Member Contributions. Members may make
contributions to the Trust Fund if, and to the extent, allowed under
the terms of a Plan ("Member Contributions"). Member Contributions
shall be made by payroll deduction, except as otherwise determined
by a Plan Administrator, and except that any contributions required
of a Member for participation during times when a Member is not an
employee shall be made pursuant to the instructions of the Trustee
or Plan Administrator, as applicable, and in accordance with the
requirements of Section 1.06.
Section 1.06. Receipt of Contributions. The Trustee shall
receive any Corporation or Member Contributions paid to it in cash
or in such other form as it may from time to time deem acceptable,
provided that all such contributions shall be accompanied by a
certification of the payor as to the identity of the Sub-Account to
which such contribution is to be credited and, if Separate Accounts
are established in accordance with Section 1.10 of this Agreement,
the Separate Accounts to which portions of such contribution are to
be credited.
Section 1.07. Trustee Not Responsible for Contributions.
Except as provided in Section 1.04 hereof, the Trustee shall not be
responsible for the collection of any contribution under the terms
of any Plan, but shall be responsible only for property received by
it pursuant to this Agreement.
Section 1.08. Non-Diversion of the Trust Fund. No part of
the Trust Fund shall under any circumstances, including, without
limitation, operation or termination of the trust established by
this Agreement or the Plans, by exercise of a power of revocation or
amendment, or by the happening of any contingency, collateral
arrangement, or other matter, be used for, or diverted to, purposes
other than the exclusive benefit of Members and in no event shall
any part of the Trust Fund revert to the Corporation (except as
otherwise provided in Section 2.02 of this Agreement and permitted
under ERISA and under the Code). No part of the net earnings of the
Trust Fund shall inure (other than in the form of benefit payments
as provided in the Plans) to the benefit of any officer,
shareholder, or highly compensated employee of the Corporation or
any other individual, except as permitted under Section 501(c)(9) of
the Code and Regulations thereto and under ERISA.
Section 1.09. Acceptance of Trust. The Trustee by signing
this Agreement hereby accepts the trust created hereunder and agrees
to perform the duties, responsibilities, and obligations of the
Trustee under this Agreement.
Section 1.10. Separate Accounts for Key Employees. To the
extent required by Section 419A of the Code, the Trustee shall
maintain under each Sub-Account a separate account in the name of
each key employee (as such term is defined in Section 416(i) of the
Code) of the Corporation to which such account shall be credited
Corporation and Member Contributions made on his behalf for retiree
medical and life benefits ("Separate Accounts"). The manner in
which Corporation Contributions are to be allocated to the Separate
Accounts of key employees shall be determined by the VEBA Committee
consistent with and in accordance with the Treasury Regulations
promulgated under Section 419A of the Code.
Section 1.11. Establishment of Individual Accounts. In
the event of an Acquisition of Control and the resulting minimum
Corporation Contributions under Section 1.04 hereof, the Trustee,
at the direction of the VEBA Committee, shall establish with respect
to each Sub-Account individual accounts in the name of each employee
and retiree who was a covered Member eligible for benefits under the
Plan covered by such Sub-Account immediately prior to the
Acquisition of Control ("Individual Account(s)") and shall allocate
to each such Individual Account for each Sub-Account an amount equal
to the product of:
(a) a fraction, the numerator of which is
equal to the amount accruable with respect to such
employee or retiree for service cost for post-
retirement benefits currently earned or to be
earned during the current fiscal year, and all such
benefits theretofore accumulated, under such Plan
as of the date of the Acquisition of Control (the
"Employee Accrued Liability") and the denominator
of which is equal to the aggregate Employee Accrued
Liabilities for all applicable employees and
retirees; and
(b) the asset balance for such Sub-Account
after receipt of the initial minimum Corporation
Contribution required under Section 1.04.
(c) The VEBA Committee shall be responsible for
calculating the amounts to be contributed under this
Section.
For each subsequent fiscal year in which a minimum Corporation
Contribution is made pursuant to Section 1.04, the VEBA Committee
shall as soon as practicable make a similar calculation and
allocation based on the amount accruable for service cost for post-
retirement benefits currently earned or to be earned under each Plan
for such fiscal year. The cost of determining the Employee Accrued
Liabilities shall be borne by the Corporation. The Individual
Accounts established pursuant to this Section 1.11 (as subsequently
increased pursuant hereto and as adjusted pursuant to Section 4.03
and Section 4.04) shall be fully vested and non-forfeitable at the
date on which the Acquisition of Control occurs or (in the case of
persons employed after the Acquisition of Control) at such later
date as they may be established.
<PAGE>
ARTICLE II
Funding
Section 2.01. In General. The Trust Fund shall be funded
with Corporation or Member Contributions. In the event, and to the
extent, that such Contributions are not sufficient from time to
time to cover the benefits payable under the Plans and other
payments from the Trust Fund authorized hereunder, the Corporation
shall contribute or cause to be paid to the Trust Fund such amount
or amounts as may be necessary to cover the deficiency. In
addition, to the extent permitted by the Trustee and requested by
the Company, the Trust Fund may receive monies transferred from any
other fund meeting the requirements of Section 501(c)(9) of the
Code.
Section 2.02. Limited Circumstances in Which Corporation
Contributions May Be Returned. To the extent permitted by the Code
and applicable regulations, the Corporation shall have no right,
title, or interest in the Trust Fund, and no part of the Trust Fund
shall ever revert or be repaid to the Corporation, directly or
indirectly, except that Corporation Contributions made to this Trust
Fund by the Corporation as a result of a mistake of fact may be
returned to the Corporation within one (1) year after payment of
such Contributions. The Trustee may rely upon certification from
the VEBA Committee that a mistake of fact has occurred.
ARTICLE III
Payment of Benefits
Section 3.01. In General. The Trustee from time to time,
on the written directions of the Plan Administrator of a Plan, shall
make payments out of the respective Sub-Account of such Plan in the
Trust Fund to such persons, in such manner, and in such amounts as
may be specified in the written directions of such Plan
Administrator, and upon any such payment being made, the amount
thereof shall no longer constitute a part of the Trust Fund;
provided, however, that if Separate Accounts are required to be
established under a Sub-Account in the name of any key employee (as
such term is defined in Section 416(i) of the Code) of the
Corporation pursuant to Section 1.10 of this Agreement, payment of
retiree medical or life benefits to such key employee shall be paid
from the Separate Account in his name to the extent required by the
Code. To the extent Individual Accounts are established under
Section 1.11, the payment of benefits and premiums on behalf of any
Member for whose benefit an Individual Account is established shall
be charged against such Individual Account to the extent there are
sufficient assets credited to such Individual Account; provided,
however, that if the Individual Account balance is not sufficient to
meet any required benefit payments or premiums, the liability shall
be satisfied from unallocated amounts held as part of the Trust
fund. The Trustee shall not be responsible in any way for the
adequacy of a Sub-Account to meet and discharge the obligations of
the Plan for which such Sub-Account is established; and, except as
otherwise provided by ERISA, the Trustee shall be fully protected in
making payments out of a Sub-Account upon written direction from the
Plan Administrator of the Plan for which such Sub-Account is
established and shall not be liable for any payments made by it in
good faith without actual notice or knowledge of changed conditions
or status of any person receiving any such payments. The Trustee
shall also not be responsible for any payments made by an insurance
company pursuant to an insurance or other contract issued by such
insurance company to the Corporation, a Plan, or the trust created
under this Agreement.
Section 3.02. Unclaimed Benefits. If any payments directed
to be made from the Trust Fund are not claimed, the Trustee shall
notify the applicable Plan Administrator and shall dispose of such
payments as that Plan Administrator shall direct in writing,
provided that such disposition is permitted under the Code and under
ERISA.
Section 3.03. Payment of Benefits on Behalf of Minor or
Legal Incompetent. In the event that any benefit under any of the
Plans is payable to a minor or other legally incompetent person, the
Trustee shall not be required to seek the appointment of a guardian,
but shall be authorized to pay the same to any person having custody
of such minor or incompetent person, to such minor or incompetent
person without the intervention of a guardian, or to a legal
guardian of such minor or incompetent person if one has already been
appointed.
Section 3.04. Non-Alienation of Benefits. Unless otherwise
required by law or the terms of the Plans, none of the benefits,
payments, proceeds, claims, or rights of any Member hereunder shall
be subject to any claim of any creditor of any Member, and, in
particular, the same shall not be subject to attachment or
garnishment or other legal process by any creditor of any Member,
nor shall such Member have any right to alienate, pledge, encumber,
or assign any of the benefits, payments, or proceeds which he may
expect to receive, contingently or otherwise, under the Plans or
this Agreement.
ARTICLE IV
Administration
Section 4.01. Administration of the Trust Fund. The
Trustee shall be the named fiduciary with respect to the management
and investment of the Trust Fund, and shall perform all such acts,
take all such proceedings, and exercise all such rights and
privileges, although not specifically mentioned herein, as the
Trustee may deem necessary or advisable in connection therewith to
carry out the purposes of this Agreement; provided, however, that if
the Company shall appoint an investment manager with respect to the
management and investment of the Trust Fund under Section 5.01 of
this Agreement, then such investment manager shall be the named
fiduciary with respect to the management and investment of the Trust
Fund and the Trustee shall have no responsibility therefor while
such investment manager is so acting.
Section 4.02. Administration of Each Plan. Each Plan
Administrator shall be the named fiduciary of its respective Plan
and shall have authority to and shall be responsible for the
operation and administration of that Plan. The Plan Administrator
shall also have complete authority to determine the existence,
nonexistence, nature, and amount of the rights and interests of all
persons in the respective Sub-Account for that Plan.
Section 4.03. Application of the Trust Fund. The Trustee
shall use and apply the Trust Fund for the following purposes:
(a) To the payment of benefits pursuant to Article
III of this Agreement.
(b) To the payment or provision for the payment of
all reasonable and necessary expenses of collecting
Corporation and Member Contributions and administering the
affairs of the trust created by this Agreement and the Trust
Fund, to the extent permitted under ERISA and under the
Code, including, without limitation, all expenses which may
be incurred in connection with the establishment and
administration of the trust created by this Agreement and
the Trust Fund, reasonable compensation to the Trustee, the
employment of such administrative, legal, accounting,
actuarial, or other expert and clerical assistance, the
leasing of such premises and the purchase or lease of such
materials, supplies, and equipment as the Trustee, in its
discretion, deems necessary or appropriate in the
performance of its duties, all taxes of any and all kinds
whatsoever that may be levied or assessed under existing or
future laws, and all other proper charges and disbursements
of the Trustee; provided, however, that the Company, in its
discretion (except as otherwise provided herein), may
determine that the Corporation shall pay any part or all of
such fees and expenses.
(c) To establish and accumulate as part of the Trust
Fund reasonable and adequate reserves to carry out the
purposes of the trust created by this Agreement.
(d) To the payment for any bond required by ERISA
and the premiums on any insurance purchased by the Trustee
as an investment alternative for the investment of funds
held within the trust or to protect the Trust Fund from
contingent liabilities or catastrophic claims.
Section 4.04. Allocation of Expenses. The expenses
described in Section 4.03 not paid by the Corporation shall be
allocated ratably among the Sub-Accounts and, if applicable,
Individual Accounts; provided, however, that any expense incurred
solely in the administration of one of the Plans shall be charged
exclusively to the respective Sub-Account(s) of that Plan.
Section 4.05. Information to Be Furnished to Trustee. The
Corporation and Plan Administrators shall furnish to the Trustee
such information as is required or desirable for the purpose of
enabling the Trustee to carry out the provisions of this Agreement,
and, except as otherwise provided by ERISA, the Trustee may rely
upon such information as being correct.
Section 4.06. Trust Year. The trust created by this
Agreement shall utilize a trust year beginning each January 1 and
ending on the following December 31 (the "Trust Year"), which Trust
Year shall also be used for financial, tax, or other reporting
requirements that may be imposed upon the trust or the Trust Fund by
law or the terms of this Agreement.
Section 4.07. Accounting and Record Keeping. The Trustee
shall keep accurate and detailed accounts of all investments,
receipts, disbursements, and other transactions relating to each
Sub-Account and, if applicable, the Separate Accounts and/or
Individual Accounts established under each such Sub-Account, and all
such records shall be open to inspection and audit at all reasonable
times by any person designated by the Company or the respective Plan
Administrator or, if applicable, Plan Administrators. Within ninety
(90) days following the close of the Trust Year of each Plan, the
Trustee shall file with the Company and the respective Plan
Administrator or, if applicable, Plan Administrators a written
report for the Sub-Account and, if applicable, the Separate Accounts
and/or Individual Accounts established under each such Sub-Account
for that Plan setting forth all investments, receipts,
disbursements, and other transactions relating to it during such
Trust Year. If any such report is not objected to within ninety
(90) days after filing, the Trustee shall be deemed discharged from
any and all liability and accountability (except for willful
misfeasance or as otherwise provided by law) to anyone with respect
to the propriety of transactions shown in such report. To the
fullest extent permitted by law, but subject to any express
provisions of applicable law as may be in effect from time to time
to the contrary, no person other than the Company may require an
accounting or bring any action against the Trustee with respect to
the Trust Fund or its actions as Trustee.
Section 4.08. Right to Judicial Settlement of Accounts.
Notwithstanding any other provisions of this Article IV, the Trustee
shall have the right to have a judicial settlement of its accounts
with respect to any or all Sub-Accounts. In any proceeding for a
judicial settlement of the Trustee's accounts, or for instructions
in connection with the Trust Fund, the only necessary parties
thereto in addition to the Trustee shall be the Company and the Plan
Administrator or Administrators of Plans, the Sub-Accounts of which
are the object of the proceeding. If the Trustee so elects, it may
bring in any other person or persons as a party or parties
defendant.
Section 4.09. Non-Discrimination. In operating and
administering the Trust Fund, the Trustee and the Plan
Administrators shall apply all rules of procedure and regulations
adopted by them in a uniform and non-discriminatory manner, and the
trust created by this Agreement shall be operated and administered
in a manner which does not result in discrimination in favor of
shareholders, officers, or highly compensated employees of the
Corporation. Nothing contained in this Agreement shall relieve the
Trustee or Plan Administrators from any responsibility or liability
for any responsibility, obligation, or duty under ERISA.
Section 4.10. Litigation by Members. To the fullest extent
permitted by law, except for a legal action to enforce the Company's
obligations under Section 1.04 hereof, if a legal action initiated
against the Corporation, the Trustee, or a Plan Administrator by or
on behalf of any person results in a decision adverse to such
person, or if a legal action arises because of conflicting claims to
a Member's benefits, the cost to the Corporation, the Trustee, or a
Plan Administrator of defending the action shall be charged (to the
fullest extent possible) to the sums, if any, which were involved in
the action or were payable from the Trust Fund to that Member.
Section 4.11. Limitation on Liability. So long as the
Trustee has performed its duties and met its obligations pursuant to
the terms and conditions of this Agreement, it shall have no
liability whatsoever to pay any claims for benefits or expenses or
other payments authorized hereunder from the Trust Fund, or any
Sub-Account, in the event that the assets of the Trust Fund, or
Sub-Account, shall at any time be depleted. The duties and
responsibilities of the Trustee shall be governed solely by the
terms and conditions of this Agreement, and any amendments thereto,
and by the provisions of ERISA.
Section 4.12. Consultation and Indemnification. The
Trustee may consult with counsel, which may, but need not, be
counsel to the Company or to the Plans, and the Trustee shall not be
deemed imprudent by taking or refraining from taking any action in
accordance with the opinion of such counsel. The Company agrees, to
the fullest extent permitted by law, to indemnify and hold the
Trustee harmless from and against any liability that the Trustee may
incur in the administration of the Trust Fund, unless such liability
arises from the Trustee's breach of the provisions of this
Agreement. To the extent permitted by ERISA, the Trustee agrees, to
the fullest extent permitted by law, to indemnify and hold the
Company harmless from and against any liability that the Company may
incur to the extent such liability arises from the Trustee's breach
of the provisions of this Agreement; provided, however, that to the
extent the Trustee is required to indemnify the Company, the Trustee
shall fund the required payment out of its general assets and not
against the Trust Fund.
Section 4.13. Waiver of Bond. The Trustee shall not be
required to give bond or any other security for the faithful
performance of its duties under this Agreement, except such as may
be required by a law which prohibits the waiver thereof.
Section 4.14. VEBA Committee. The Company has established
a committee (the "VEBA Committee") to oversee the operation and
administration of the Voluntary Employees' Beneficiary Association
Program. The names and addresses of the initial members of the VEBA
Committee are set forth at Exhibit "B" to this Agreement. Until
there is an Acquisition of Control, the Company (through its
President or the designee of the President) may at any time, without
notice or cause, remove, replace or add members of the VEBA
Committee. In the event of an Acquisition of Control, each of the
members of the VEBA Committee immediately preceding the Acquisition
of Control shall continue as such until his or her death,
resignation or permanent disability, and any vacancy so caused shall
be filled by action of a majority of the remaining members of the
VEBA Committee. The Trustee shall update Exhibit "B" hereto as it
receives notice of changes in the names and addresses of the members
of the VEBA Committee. The VEBA Committee, acting by vote of a
majority of its members, may approve any amendments, terminations or
other changes to any Plans or to this Agreement, and may take any
other action contemplated by this Agreement, if the VEBA Committee
determines in its discretion that such action is not adverse to the
interests of the Members taken as a whole.
ARTICLE V
Investment of Trust Fund
Section 5.01. Management of Trust Fund and Appointment of
Investment Manager. The Trust Fund shall be managed, invested, and
reinvested by the Trustee, subject, however, to the right of the
Company to designate in writing an investment manager ("Investment
Manager") in accordance with Section 402(c)(3) of ERISA to manage or
invest or reinvest the Trust Fund or any part thereof, in which
event the Trustee shall not be liable for the acts or omissions of
such Investment Manager or have any authority to manage or invest
the assets of the Trust Fund which are subject to management by such
Investment Manager until said Investment Manager is dismissed by the
Company. Any such Investment Manager so designated shall have the
same powers and duties with respect to the management and investment
of that portion of the Trust Fund managed by such Investment Manager
as those granted to the Trustee hereunder, except to the extent
otherwise provided in the instrument designating such Investment
Manager.
Section 5.02. Powers of Trustee. Except as may be limited
by this Agreement or ERISA, the Trustee shall have all the powers of
a trustee under the Trust Code of the State of Indiana. Without
limiting the foregoing, the Trustee shall have the following powers
in investing the Trust Fund:
(a) To invest or reinvest all or any part of the
Trust Fund in any real or personal property as the Trustee
may deem advisable, including but not limited to:
(i) any securities normally traded by and
obtainable through a stockbroker or "over the counter"
dealer or on a recognized exchange;
(ii) any shares of an investment company
registered under the Investment Company Act of 1940,
as amended;
(iii) any insurance contracts or annuities,
provided that any such investment is permissible under
the applicable requirements of ERISA;
(iv) the deposit of all or any part of the
Trust Fund with an insurer for the payment of interest
thereon;
(v) any securities issued or guaranteed by
the United States of America or any of the
instrumentalities or states thereof or of any county,
city, town, village, school district, or other
political subdivision of any of said states;
(vi) certificates of deposit, time deposits
or savings accounts;
(vii) commercial paper, money market funds,
treasury bills, and similar investments; and
(viii) any combination of (i) through (vii)
above and, except as otherwise provided by ERISA,
without being restricted by any statute or rule of law
governing the investments in which a trustee may
invest funds held by it.
(b) To sell or exchange any part of the assets of the
Plans.
(c) To vote in person or by proxy the securities and
investment company shares which it holds as Trustee and to
delegate such power.
(d) To consent to or participate in dissolutions,
reorganizations, consolidations, mergers, sales, transfers,
or other changes in securities and investment company shares
which it holds as Trustee, and, in such connection, to
delegate its powers and to pay all assessments,
subscriptions, and other charges.
(e) To exercise all rights, privileges, options, and
elections in any insurance contracts and to pay the premiums
thereon.
(f) To retain in cash and keep unproductive of income
such amount as the Trustee may deem advisable in its
discretion and the Trustee shall not be required to pay
interest on such cash balances or on cash in its hands
pending investment.
(g) To sell, exchange, convey, or transfer any
property at any time held by the Trustee upon such terms as
it may deem advisable and no person dealing with the Trustee
shall be bound to see to the application of the purchase
money or to inquire into the propriety of any such
transaction.
(h) To enter into, compromise, compound, and settle
any debt or obligation due to or from the Trustee and to
reduce the rate of interest on, to extend or otherwise
modify, or to foreclose upon, default, or otherwise enforce
any such obligation.
(i) To cause any bonds, stocks, or other securities
held by the Trustee to be registered in or transferred into
its name as Trustee or the name of its nominee or nominees,
or to hold them unregistered or in form permitting
transferability by delivery, but at all times with full
responsibility therefor as Trustee.
(j) To borrow money upon such terms and conditions as
may be deemed advisable to carry out the purposes of this
Agreement and to pledge securities or other property in
repayment of any such loan; provided, however, that loans or
advances may be made by the Trustee hereunder by way of
overdrafts or otherwise on a temporary basis on which no
interest shall be payable.
(k) To manage, administer, operate, repair, improve
and mortgage or lease for any number of years, regardless of
any restrictions on leases made by trustee or otherwise to
deal with any real property or interest therein; to renew or
extend or to participate in the renewal or extension of any
mortgage, and to agree to the reduction in the interest on
any mortgage or other modification or change in terms of any
mortgage or guarantee thereof in any manner and upon such
terms as may be deemed advisable; to waive any defaults
whether in performance or any covenant or condition of any
mortgage or in the performance of any guarantee or to
enforce any such default in such manner as may be deemed
advisable, including the exercise and enforcement of any and
all rights of foreclosure.
(l) To invest all or any part of the Trust Fund in
interest-bearing deposits with the Trustee, or with a bank
or similar financial institution related to the Trustee if
such bank or other institution is a fiduciary with respect
to the Plan as defined in ERISA, including but not limited
to investments in time deposits, savings deposits,
certificates of deposit, or time accounts which bear a
reasonable interest rate.
(m) To employ suitable agents, accountants, and
counsel, which may, but need not, be counsel to the
Corporation or to the Plans, and to pay their reasonable
expenses and compensation.
(n) To make, execute, and deliver as Trustee any and
all deeds, leases, mortgages, advances, contracts, waivers,
releases, or other instruments in writing necessary or
proper in the employment of any of the foregoing powers.
(o) To exercise, generally, any of the powers which
an individual owner might exercise in connection with
property either real, personal, or mixed held by the Trust
Fund, and to do all other acts that the Trustee may deem
necessary or proper to carry out any of the powers set forth
in this Article or otherwise in the best interests of the
Trust Fund and Members.
(p) To settle, compromise or abandon all claims and
demands in favor of or against the Trust Fund.
(q) To appoint or employ business entities or
individuals to act as investment advisers or managers in
order to manage any portion or all of the assets of the
Trust Fund; provided, however, that the appointment of such
an investment adviser or manager:
(i) shall be subject to the approval of the
Corporation, and
(ii) shall render any such investment adviser
or manager who is appointed a fiduciary under this
Agreement and under Section 3(21) of ERISA to the
extent of such adviser's or manager's investment
duties and responsibilities to the Trust Fund, and
(iii) shall in no event cause assets to be
removed from the Trust Fund or cause the Trustee to be
eliminated.
ARTICLE VI
Resignation, Removal, and Appointment
of Successor Trustee
Section 6.01. Resignation. The Trustee may upon sixty (60)
days notice resign by written instrument addressed to the Company;
provided, however, that the Company shall be permitted to waive
prior notice of resignation.
Section 6.02. Removal. Until there is an Acquisition of
Control, the Company may remove the Trustee by a written instrument
addressed to the Trustee. In the event of an Acquisition of
Control, the Company may remove the Trustee only with the approval
of the VEBA Committee.
Section 6.03. Successor Trustee. Upon the resignation or
removal of the Trustee, the Company shall appoint a successor
Trustee, which shall have the same powers and duties as those
conferred upon the initial Trustee hereunder. Any such successor
Trustee shall evidence its acceptance of such appointment by written
instrument addressed to the Company. Upon written notice from the
Company of the acceptance of such appointment by the successor
Trustee, the Trustee shall assign, transfer, and pay over the Trust
Fund to such successor Trustee, provided that the Trustee may
reserve such sum of money as it shall deem advisable for payment of
its fees and expenses in connection with the settlement of its
account or otherwise.
Section 6.04. Accounting by Trustee. Within ninety (90)
days after the date of resignation or removal of the Trustee, the
Trustee shall furnish a written accounting of the Trust Fund, and of
each Sub-Account and, if applicable, each Separate Account and/or
Individual Account established under each such Sub-Account with
respect to the portion of the year for which the Trustee served to
the Company, the Plan administrator or, if applicable, Plan
Administrators of each respective Plan, and the successor Trustee,
which report shall set forth all investments, receipts,
disbursements, and other transactions during such period. If such
accounting is not objected to within ninety (90) days after the
receipt thereof by the Company, a Plan Administrator or Plan
Administrators, or the successor Trustee, the Trustee shall be
deemed discharged of all duties under the Plans and this Agreement
except to the extent otherwise provided by law.
Section 6.05. Merger or Consolidation of Trustee. In the
event that the Trustee shall at any time merge or consolidate with
or shall sell or transfer all or substantially all of its assets and
business to another corporation, state or federal, the corporation
resulting therefrom shall be, with the approval of the Company,
Trustee hereof in lieu of its predecessor in interest without the
execution of any instrument, provided that such successor
corporation shall be bound by the terms and conditions of this
Agreement and shall be qualified under the laws of the State of
Indiana to undertake the duties of the Trustee hereunder.
ARTICLE VII
Fiduciary Relationships and Responsibilities
Section 7.01. Fiduciary Relationships. For purposes of
ERISA, it is recognized that the Company, the Plan Administrator of
each Plan, each member of the VEBA Committee and the Trustee are
each a fiduciary (singularly a "Fiduciary" or collectively
"Fiduciaries"), but only with respect to those specific powers,
duties, responsibilities, and obligations that are specifically
assigned to them under the Plans or this Agreement.
Section 7.02. Warranty of Fiduciaries. Each Fiduciary
warrants that any directions given, information furnished, or action
taken by it shall be in accordance with the provisions of the Plans,
of this Agreement and of ERISA authorizing or providing for such
direction, information, or action. No Fiduciary guarantees the
Trust Fund in any manner against investment loss or depreciation in
asset value.
Section 7.03. Reliance on Information from Other
Fiduciaries. Except as otherwise provided by ERISA, each Fiduciary
may rely upon any direction, information, certification, or action
of another Fiduciary as being proper under the Plans or this
Agreement and is not required under the Plans or this Agreement to
inquire into the propriety of any such direction, information, or
action. It is intended that each Fiduciary shall be responsible for
the proper exercise of its own powers, duties, responsibilities, and
obligations under the Plans and this Agreement and shall not be
responsible for any act or failure to act of another Fiduciary
except as otherwise provided by ERISA.
Section 7.04. Fiduciary Duty. The Fiduciaries shall
discharge the specific powers, duties, responsibilities, or
obligations given them under the Plans or this Agreement solely in
the interests of the Members and for the exclusive purpose of
providing benefits to the Members and defraying reasonable expenses
of administering the Plans and this Agreement, and with the care,
skill, prudence, and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise
of a like character and with like aims.
ARTICLE VIII
Amendment or Termination of Agreement
Section 8.01. Amendment. This Agreement may be amended at
any time and from time to time by the Company, until there is an
Acquisition of Control, except that the duties and liabilities of
the Trustee cannot be changed without its written consent. In the
event of an Acquisition of Control, this Agreement may be amended
only with the approval of the VEBA Committee. Under no
circumstances shall an amendment result in the return or repayment
to the Corporation of any part of the corpus or income of the Trust
Fund or result in the distribution of the Trust Fund for the benefit
of anyone other than persons entitled to benefits under the Plans,
except as otherwise provided in Section 2.02 of this Agreement and
permitted under ERISA and under the Code.
Section 8.02. Limitation on Amendments. No amendment shall
be adopted which would adversely affect the qualification of the
trust created by this Agreement under Section 501(c)(9) of the Code
or alter the basic purpose of this Agreement, cause the use or
diversion of any part of the Trust Fund for purposes other than
those authorized herein, or retroactively deprive anyone of a vested
right or interest in the Trust Fund or under the terms of a Plan.
Section 8.03. Addition of Plans. Other Plans of the
Corporation presently in existence or Plans which the Corporation
shall adopt after the date of execution of this Agreement may become
covered by this Agreement upon the execution by the Company and the
Trustee of an appropriate amendment to this Agreement, which
amendment may include, without limitation, a suitable modification
to Appendix 2 and Exhibit "A" to this Agreement, provided that no
such amendment may be made if it would adversely affect the
qualification of the trust created hereunder under Section 501(c)(9)
of the Code. In determining whether any such amendment would affect
the qualification of the trust created hereunder under Section
501(c)(9) of the Code, the Trustee may rely upon the opinion of
counsel, which may, but need not, be counsel to the Corporation or
to the Plans.
Section 8.04. Termination. Until there is an Acquisition
of Control, this Agreement may be terminated at any time by the
Company. In the event of an Acquisition of Control, this Agreement
may be terminated only with the approval of the VEBA Committee.
Upon termination of this Agreement, the Trustee shall apply the
assets remaining in the Sub-Accounts of the Trust Fund, to the
extent allowed under regulations issued under Section 403(d)(2) of
ERISA and Section 501(c)(9) of the Code, as follows:
(a) For the payment of each such Sub-Account's share
of the costs, expenses, and taxes of the Trust Fund,
including fees and expenses of the Trustee and advisors to
the Trust Fund as provided in Sections 4.03 and 4.04 of this
Agreement, to the extent allowable by this Agreement.
(b) For the exclusive benefit of Members
covered by the Plans funded by the respective Sub-
Accounts, as determined by the applicable Plan
Administrator (or, if applicable, Plan
Administrators) or the Trustee, consistent with the
purposes of this Agreement, including without
limitation the purchase of other qualified benefits
under Section 501(c)(9) of the Code for Members.
In this connection, the Plan Administrators and the
Trustee may apply assets held in the Sub-Accounts
established for certain categories of Members for
the provision of qualified benefits to other
categories of Members, provided that (i) such
application would not disproportionately benefit
officers, shareholders or highly compensated
employees of the Corporation, and (ii) if and to
the extent there is upon such termination a balance
remaining in a Sub-Account attributable to Member
Contributions of a category of Members for coverage
not already provided to such category of Members,
such balance may be applied only to provide
qualified benefits for such category of Members.
(c) Notwithstanding anything contained
herein to the contrary, any funds held in any
Individual Account shall be applied only for the
benefit of the employee or retiree (or, if
applicable, the eligible dependents of the employee
or retiree) on whose behalf the Individual Account
was established.
Any such termination of this Agreement shall comply with all
requirements of ERISA and the Code. The Trustee shall not be
required to distribute assets from the Trust Fund until it is
reasonably satisfied that the requirements of the Plans, ERISA, and
the Code have been satisfactorily complied with by the Corporation,
and the Trustee may seek the opinion of counsel, which may, but need
not, be counsel to the Corporation or to the Plans, prior to making
any such distribution. From and after the date of the termination
of this Agreement, and until the final distribution of all assets of
the Trust Fund, the Trustee shall continue to have all such powers
provided under the Plans and this Agreement as are necessary and
expedient for the orderly liquidation and distribution of the Trust
Fund. The Corporation shall have no right, title, or interest in
any portion of the Trust Fund, nor shall any part of the Trust Fund
or the income therefrom revert to the Corporation, directly or
indirectly, except as otherwise provided in Section 2.02 of this
Agreement and permitted under ERISA and under the Code.
Section 8.05. Deletion of Plans. Until there is an
Acquisition of Control, Plans may be deleted from the coverage of
the trust created by this Agreement upon the execution by the
Company and the Trustee of an appropriate amendment to this
Agreement, which amendment may include, without limitation, a
suitable modification of Appendix 2 and Exhibit "A" to this
Agreement. In the event of an Acquisition of Control, a Plan may be
deleted only with the approval of the VEBA Committee. The assets of
the Sub-Account(s) for such deleted Plan shall be applied in the
manner described in Section 8.04 of this Agreement. The Trustee
shall not be required to apply assets from such Sub-Account(s) until
it is reasonably satisfied that the requirements of ERISA and the
Code have been satisfactorily complied with, and the Trustee may
seek the opinion of counsel, which may, but need not, be counsel to
the Corporation or to the pertinent Plan, prior to making any such
application. If a Sub-Account is maintained for more than one (1)
Plan and one (1) of the Plans for which the Sub-Account is
maintained is deleted, the Trustee may continue to maintain the Sub-
Account for the other Plans of the Sub-Account. From and after the
date of amendment of this Agreement and until the application of all
assets of the Sub-Account of such deleted Plan, the Trustee shall
continue to have all such powers provided under the pertinent Plan
and this Agreement as are necessary and expedient for the orderly
deletion of such Plan and application of the assets of the Sub-
Account(s) of such Plan. The Corporation shall have no right,
title, or interest in any portion of the Sub-Account(s) of such
deleted Plan, nor shall any part of such deleted Sub-Account(s) or
the income therefrom revert to the Corporation, directly or
indirectly, except as otherwise provided in Section 2.02 of this
Agreement and permitted under ERISA and under the Code.
ARTICLE IX
Miscellaneous
Section 9.01. Notices. Any and all notices permitted or
required to be made under this Agreement shall be in writing, signed
by the person giving such notice, and delivered personally, or sent
by registered or certified mail, postage prepaid, to the Company or
the Corporation at 25 Monument Circle, Indianapolis, Indiana 46204,
Attention: Chairman, VEBA Committee, with a copy to Vice President,
Human Resources, IPL, or to the Trustee at 10 West Market, Suite
1000, Indianapolis, Indiana 46204, Attention: Trust Counsel, with a
copy to Trust Division Head, or at such other address as the
addressee may from time to time specify by notice hereunder.
Section 9.02. Successors and Assigns. This Agreement shall
be binding upon and shall inure to the benefit of the parties, their
respective successors, successors in title, and assigns, and each
party agrees, on behalf of itself, its successors, successors in
title, and assigns, to execute any instruments which may be
necessary or appropriate to carry out and execute the purpose and
intentions of this Agreement, and hereby authorizes and directs its
successors, successors in title, and assigns to execute any and all
such instruments.
Section 9.03. Captions. Titles or captions of articles and
sections contained in this Agreement are inserted only as a matter
of convenience and for reference, and in no way define, limit,
extend, or describe the scope of this Agreement or the intent of any
provision hereof.
Section 9.04. Number and Gender. Whenever required by the
context, the singular number shall include the plural, the plural
number shall include the singular, and the gender of any pronoun
shall include all genders.
Section 9.05. Counterparts. This Agreement may be executed
in multiple copies, each of which shall for all purposes constitute
an Agreement, binding on the parties, and each party hereby
covenants and agrees to execute all duplicates or replacement
counterparts of this Agreement as may be required.
Section 9.06. Computation of Time. Whenever the last day
for the exercise of any privilege or the discharge of any duty
hereunder shall fall upon Saturday, Sunday, or any public or legal
holiday, whether State or Federal, the person having such privilege
or duty shall have until 5:00 p.m. on the next succeeding regular
business day to exercise such privilege or to discharge such duty.
Section 9.07. Persons Authorized to Act on Behalf of
Corporation. Whenever the Corporation, under the terms of this
Agreement, is permitted or required to do or perform any matter,
act, or thing, it shall be done and performed by any duly authorized
officer of the Corporation.
Section 9.08. Applicable Law and Severability of Plan
Provisions. Except to the extent preempted by the laws of the
United States, this Agreement shall be construed according to the
laws of the State of Indiana, and all provisions hereof shall be
administered according to the laws of such State.
If any provision of any of the Plans or of this Agreement
should be held to be illegal or invalid, such illegality or
invalidity shall not affect the remaining provisions of that Plan
and this Agreement, and they shall be construed and enforced as if
such illegal or invalid provision had never been inserted therein.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed on the 3rd day of February, 1995.
IPALCO Enterprises, Inc.
By: /s/ Ramon L. Humke
Its: Vice Chairman
Attest:
By: /s/ Wendy V. Yerkes
Its: Associate Counsel
ANTHEM TRUST & ASSET
MANAGEMENT, INC.
By: /s/ Ellen M. Deeter
Its: Vice President and Trust
Counsel
Attest:
By: /s/ Gregory P. Marquiss
Its: Senior Vice President
<PAGE>
Exhibit "A"
(Effective February 3, 1995)
List of Member Categories and Plans Funded Through the Trust Fund
Name of Member Category Effective
and Plan Date
Current & Future Retirees - Electric:
MetLife Life Insurance Benefit 1/01/36
Blue Cross Blue Shield of Indiana 5/01/88
Anthem Health Plan of Indiana 1/01/95
Current & Future Retiress - Steam:
MetLife Life Insurance Benefits 1/01/36
Blue Cross Blue Shield of Indiana 5/01/88
Anthem Health Plan of Indiana 1/01/95
Current & Future Retirees - Non-Utility:
MetLife Life Insurance Benefits 1/01/36
Anthem Health Plan of Indiana 1/01/95
<PAGE>
Exhibit "B"
(Effective February 3, 1995)
Members of the VEBA Committee
Name Address
Ramon L. Humke, Chairman IPALCO Enterprises, Inc./Indianapolis
Power & Light Company
25 Monument Circle
Indianapolis, Indiana 46204
Wendy V. Yerkes, Secretary Same
Max Califar Same
Steven L. Meyer Same
Stephen J. Plunkett Same
Jeffrey L. George Same
<PAGE>
Appendix "1"
(Effective February 3, 1995)
Participating Employers
IPALCO Enterprises, Inc.
Indianapolis Power & Light Company
Mid-America Capital Resources, Inc.
<PAGE>
Appendix "2"
(Effective February 3, 1995)
Funded Benefit Plans
Title of Plan Date of Adoption/Last Amendment
MetLife Life Insurance Benefits 1/01/36
Blue Cross Blue Shield of Indiana 5/01/88
Anthem Health Plan of Indiana 1/01/95
<TABLE>
IPALCO ENTERPRISES, INC.
Exhibit 11.1 - Computation of Per Share Earnings
For the Years Ended December 31, 1994, 1993 and 1992
<CAPTION>
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1994: Fully
Primary Diluted
Weighted Average Number of Shares ---------- ----------
Average Common Shares Outstanding at 12/31/94 37,740,585 37,740,585
Anti-Dilutive Effect for Stock Options at 12/31/94 (8,683) (8,683)
---------- ----------
Weighted Average Shares at 12/31/94 37,731,902 37,731,902
========== ==========
Net Income To Be Used To Compute Fully
Diluted Earnings Per Average Common Share (Dollars in thousands)
Net Income $92,994 $92,994
========== ==========
Earnings Per Average Common Share $2.46 (a) $2.46 (a)
========== ==========
YEAR ENDED DECEMBER 31, 1993: Fully
Primary Diluted
Weighted Average Number of Shares ---------- ----------
Average Common Shares Outstanding at 12/31/93 37,668,069 37,668,069
Dilutive Effect for Stock Options at 12/31/93 98,684 98,684
---------- ----------
Weighted Average Shares at 12/31/93 37,766,753 37,766,753
========== ==========
Net Income To Be Used To Compute Fully
Diluted Earnings Per Average Common Share (Dollars in thousands)
Net Income $75,422 $75,422
========== ==========
Earnings Per Average Common Share $2.00 (a) $2.00 (a)
========== ==========
YEAR ENDED DECEMBER 31, 1992: Fully
Primary Diluted
Weighted Average Number of Shares ---------- ----------
Average Common Shares Outstanding at 12/31/92 37,596,920 37,596,920
Dilutive Effect for Stock Options at 12/31/92 49,317 57,066
---------- ----------
Weighted Average Shares at 12/31/92 37,646,237 37,653,986
========== ==========
Net Income To Be Used To Compute Fully
Diluted Earnings Per Average Common Share (Dollars in thousands)
Net Income $88,342 $88,342
========== ==========
Earnings Per Average Common Share $2.35 (a) $2.35 (a)
========== ==========
Note:
(a) This calculation is submitted in accordance with Regulation S-K
item 601(b)(11) although not required by footnote 2 to paragraph 14 of
APB Opinion No. 15 because it results in dilution of less than 3%.
</TABLE>
Exhibit 21.1 List of Subsidiaries
-------------------- State in
Which
Subsidiary of IPALCO Enterprises, Inc. Organized
Indianapolis Power & Light Company (IPL) Indiana
Subsidiary of IPL
Property and Land Company, Inc. Indiana
Mid-America Capital Resources, Inc. Indiana
(Mid-America)
Subsidiaries of Mid-America
Indianaplis Campus Energy, Inc. (ICE) Indiana
Store Heat and Produce Energy, Inc. (SHAPE) Indiana
Mid-America Energy Resources, Inc.
(Energy Resources) Indiana
Subsidiaries of Energy Resources
Cleveland Thermal Energy Corporation Ohio
Cleveland District Cooling Corporation Ohio
Both IPL and Mid-America are wholly owned by IPALCO Enterprises, Inc.
as of December 31, 1994. Each of the subsidiaries listed for IPL, Mid-
America and Energy Resources is wholly owned except for SHAPE, which is
70% owned by Mid-America. Both Cleveland Thermal Energy Corporation and
Cleveland District Cooling Corporation conduct business under the name
Cleveland Energy Resources.
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-50823 and Post-Effective Amendment No. 2 to Registration Statement No.
2-88353 both on Form S-3, and in Registration Statement Nos. 2-88352,
33-40316, 33-45615, 33-53260, 33-50815 and 33-52039 on Form S-8 of IPALCO
Enterprises, Inc. of our report dated January 27, 1995, appearing in the
Annual Report on Form 10-K of IPALCO Enterprises, Inc. for the year ended
December 31, 1994.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Indianapolis, Indiana
March 2, 1995
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000728391
<NAME> IPALCO ENTERPRISES, INC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,711,772
<OTHER-PROPERTY-AND-INVEST> 86,308
<TOTAL-CURRENT-ASSETS> 167,949
<TOTAL-DEFERRED-CHARGES> 125,049
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,091,078
<COMMON> 381,228
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 419,354
<TOTAL-COMMON-STOCKHOLDERS-EQ> 801,945
0
51,898
<LONG-TERM-DEBT-NET> 665,971
<SHORT-TERM-NOTES> 29,753
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 350
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 541,161
<TOT-CAPITALIZATION-AND-LIAB> 2,091,078
<GROSS-OPERATING-REVENUE> 686,076
<INCOME-TAX-EXPENSE> 55,543
<OTHER-OPERATING-EXPENSES> 487,223
<TOTAL-OPERATING-EXPENSES> 542,766
<OPERATING-INCOME-LOSS> 143,310
<OTHER-INCOME-NET> (2,802)
<INCOME-BEFORE-INTEREST-EXPEN> 140,508
<TOTAL-INTEREST-EXPENSE> 47,514
<NET-INCOME> 92,994
3,182
<EARNINGS-AVAILABLE-FOR-COMM> 92,994
<COMMON-STOCK-DIVIDENDS> 79,239
<TOTAL-INTEREST-ON-BONDS> 46,248
<CASH-FLOW-OPERATIONS> 204,068
<EPS-PRIMARY> 2.46
<EPS-DILUTED> 2.46
</TABLE>
EXHIBIT 99.2
AMENDMENT TO AGREEMENT
Exhibit A to the Agreement entered into as of October 27, 1993, by and
among IPALCO Enterprises, Inc., Indianapolis Power & Light Company, PSI
Resources, Inc., PSI Energy, Inc., The Cincinnati Gas & Electric Company,
CINergy Corp., James E. Rogers, John R. Hodowal and Ramon L. Humke is hereby
amended as follows:
I.A. p. 6 - On page 6, insert the following as the last sentence in
paragraph I.A.:
"If a definitive written agreement for the IPALCO
Transmission Merger is executed between IPALCO and its
Merger Partner within five (5) years following the date of
the Agreement, CINergy shall be obligated to provide
Integration Capacity to IPALCO even though IPALCO designates
in writing that merger as the IPALCO Transmission Merger on
a date more than five (5) years following the date of the
Agreement, as described in Section I.C. below.
I.B. p. 7 - On page 7, line 1, insert the word "applicable" before the
term "CINergy Open Access Transmission Tariff" and insert
the following on page 7, line 2 after the word "Tariff":
", as filed with FERC from time to time (the "CINergy Open
Access Transmission Tariff").
I.B. p. 7 - On page 7, insert the following as the last sentence in
paragraph I.B.:
"Any tariff transmission rights provided by CINergy to
IPALCO shall be offered for such period as IPALCO requires
to meet the Integration Requirements from the date IPALCO
requests tariff transmission rights."
I.C. p. 7 - On page 7, in the third line from the bottom, add the
following after the phrase "at its sole discretion,":
"after consultation with IPALCO and after taking into
consideration the likelihood of success at the SEC."
I.E. (new) p. 9 - On page 9, at the conclusion of paragraph I.D., add the
following new
paragraph I.E., and reletter all following paragraphs:
"E. If a regulatory body with jurisdiction over the Option
selected by CINergy imposes, in a final order, any
modifications, requirements, limitations or conditions
("Regulatory Condition") to the Option selected by CINergy
and if CINergy is unable to provide Integration Capacity by
use of the other Option, CINergy will accept such Regulatory
Condition provided compliance therewith will not have a
material adverse effect on CINergy. If compliance with a
Regulatory Condition would have a material adverse effect on
CINergy, CINergy agrees to cooperate and negotiate in good
faith with IPALCO in an effort to mitigate such adverse
effect or to otherwise carry out the intent of this
Agreement. CINergy's obligations under this section shall
not be binding if IPALCO advocates, or encourages any other
party to advocate, the imposition of any Regulatory
Condition to the Option for which regulatory approval is
being sought, except that IPALCO may protect its legitimate
business interests by advocating positions in other
regulatory proceedings."
I.F. (new) p. 9 - Re-letter paragraph I.E. to I.F.
On page 9, amend paragraph I.F. (previously paragraph I.E.)
by adding a comma after the word "Conditions" on line 3,
striking the word "and" at the beginning of line 4, and
adding the following on line 6 after the word "satisfied":
", and (C) as a result of any Regulatory Condition."
I.G. (new) p. 10 - Re-letter paragraph I.F. to I.G.
III.A. p. 14 - On page 14, line 5, insert after "IPALCO Transmission
Merger" the following:
"CINergy will inform IPALCO of the amount of Integration
Capacity and the conditions limiting the amount of such
capacity that can be provided without the physical expansion
of the CINergy Transmission System. CINergy will identify
the specific constraints that limit the Integration
Capacity, identify the duration of such constraints and
operating procedures that may resolve the identified
constraints and the incremental costs thereof. CINergy will
have no obligation to change operating procedures unless
compensated for the incremental costs of such change.
Following a written request from IPALCO,"
III.A. p.14 - On page 14, insert the following after "Available
Transmission Capacity" in the last line of paragraph 1:
"Such information shall include (to the extent available to
CINergy), but not be limited to: load forecasts for
CINergy, WVPA, IMPA, and any CINergy Merger partner native
loads (if the CINergy Merger partner creates a constraint on
available transmission capacity); planned capacity additions
within the CINergy control area; CINergy, WVPA and IMPA
obligations under then-existing firm transmission and power
sales contracts; and any regulatory agency order related to
the minimum transfer capacity between PSI, CG&E and any
CINergy Merger partner.
IV.A.3.(a) - On page 21, line 5, after the phrase "reasonable manner"
add:
p. 21
", after consultation with IPALCO,"
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
Agreement to be duly executed as of October 27, 1994.
IPALCO ENTERPRISES, INC.,
by
/s/ John R. Hodowal
John R. Hodowal
Chairman of the Board and President
INDIANAPOLIS POWER & LIGHT COMPANY,
by
/s/ Ramon L. Humke
Ramon L. Humke
President and Chief Operating Officer
PSI RESOURCES, INC.,
by
Merged into CINergy Corp. 10-24-94
PSI ENERGY, INC.,
by
/s/ Larry E. Thomas
Group Vice President, Reengineering
and Operation Services
THE CINCINNATI GAS & ELECTRIC COMPANY,
by
/s/ Terry E. Bruck
Group Vice President, Wholesale Power
and Transmission Operations
CINERGY CORP.,
by
James E. Rogers
James E. Rogers
Vice Chairman, President & COO
<PAGE>
JAMES E. ROGERS
/s/ James E. Rogers
JOHN R. HODOWAL
/s/ John R. Hodowal
RAMON L. HUMKE
/s/ Ramon L. Humke
