February 11, 1999
Securities and Exchange Commission
Operations Center
6432 General Green Way
Alexandria, VA 22312-2413
Gentlemen:
We are transmitting herewith Indiana Energy, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended
December 31, 1998, pursuant to the requirements of Section 13
of the Securities Exchange Act of 1934.
Very truly yours,
/s/Douglas S. Schmidt
Douglas S. Schmidt
DSS:tmw
Enclosures
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-9091
INDIANA ENERGY, INC.
(Exact name of registrant as specified in its charter)
INDIANA 35-1654378
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification
No.)
1630 North Meridian Street, Indianapolis, Indiana 46202
(Address of principal executive offices) (Zip Code)
317-926-3351
(Registrant's telephone number, including area code)
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
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Common Stock - Without par value 29,890,736 January 31, 1999
Class Number of shares Date
TABLE OF CONTENTS
Part I - Financial Information
Consolidated Balance Sheets
at December 31, 1998, and 1997
and September 30, 1998
Consolidated Statements of Income
Three Months Ended December 31, 1998 and 1997,
and Twelve Months Ended December 31, 1998 and 1997
Consolidated Statements of Cash Flows
Three Months Ended December 31, 1998 and 1997,
and Twelve Months Ended December 31, 1998 and 1997
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Results of
Operations and Financial Condition
Part II - Other Information
Item 1 - Legal Proceedings
Item 6 - Exhibits and Reports on Form 8-K
<TABLE>
INDIANA ENERGY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Thousands - Unaudited)
December 31 September 30
1998 1997 1998
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 20 $ 20 $ 9,325
Accounts receivable, less reserves of $1,749,
$2,104 and $900 respectively (See Note 12) 28,610 53,544 10,939
Accrued unbilled revenues 40,577 46,123 6,453
Liquefied petroleum gas - at average cost 892 878 883
Gas in underground storage - at last-in,
first-out cost 18,150 17,024 19,373
Prepayments and other 6,667 5,162 5,483
94,916 122,751 52,456
INVESTMENTS IN UNCONSOLIDATED AFFILIATES 33,336 27,717 32,186
UTILITY PLANT:
Original cost 946,602 922,491 937,977
Less - accumulated depreciation and amortization 376,133 358,750 370,872
570,469 563,741 567,105
NONUTILITY PLANT:
Original cost 58,456 45,803 55,225
Less - accumulated depreciation and amortization 14,219 9,004 12,613
44,237 36,799 42,612
DEFERRED CHARGES AND OTHER ASSETS:
Unamortized debt discount and expense 12,653 8,139 12,954
Regulatory income tax asset 1,778 - 1,778
Other 4,225 6,051 3,259
18,656 14,190 17,991
$761,614 $765,198 $712,350
</TABLE>
<TABLE>
INDIANA ENERGY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(Thousands except shares - Unaudited)
December 31 September 30
1998 1997 1998
<S> <C> <C> <C>
CURRENT LIABILITIES:
Maturities and sinking fund requirements of long-term debt $ 10,174 $ 272 $ 10,119
Notes payable 56,475 72,800 33,705
Accounts payable (See Note 12) 29,677 47,324 19,416
Refundable gas costs 14,343 10,333 10,730
Customer deposits and advance payments 22,416 19,738 19,229
Accrued taxes 10,127 19,127 4,728
Accrued interest 4,984 4,361 1,974
Other current liabilities 22,773 25,480 26,319
170,969 199,435 126,220
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes 60,580 55,736 60,448
Accrued postretirement benefits other than pensions 26,150 23,744 25,388
Unamortized investment tax credit 9,082 10,012 9,313
Regulatory income tax liability - 1,874 -
Other 2,157 2,035 2,061
97,969 93,401 97,210
COMMITMENTS AND CONTINGENCIES (See Notes 7 & 11) - - -
CAPITALIZATION:
Long-term debt 183,386 167,859 183,489
Common stock (no par value) - authorized 200,000,000
shares - issued and outstanding 29,919,672,
30,121,850 and 30,063,667 shares, respectively (1) 142,295 146,791 145,586
Less unearned compensation - restricted stock grants 1,377 1,708 1,207
140,918 145,083 144,379
Retained earnings 168,372 159,420 161,052
Total common shareholders' equity 309,290 304,503 305,431
492,676 472,362 488,920
$761,614 $765,198 $712,350
(1) Adjusted to reflect the four-for-three stock split October 2, 1998.
</TABLE>
<TABLE>
INDIANA ENERGY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands except per share data)
(Unaudited)
Three Months Twelve Months
Ended December 31 Ended December 31
1998 1997 1998 1997
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Utility $ 124,947 $ 170,132 $ 420,459 $ 528,058
Other 294 203 888 356
125,241 170,335 421,347 528,414
OPERATING EXPENSES:
Cost of gas (See Note 12) 67,937 107,052 230,372 319,357
Other operating 19,326 18,020 76,902 78,778
Restructuring costs (See Note 2) - - - 39,531
Depreciation and amortization 9,915 8,906 38,664 35,417
Taxes other than income taxes 4,251 4,913 14,072 17,200
101,429 138,891 360,010 490,283
OPERATING INCOME 23,812 31,444 61,337 38,131
OTHER INCOME:
Equity in earnings of unconsolidated
affiliates (See Note 7) 1,425 1,963 6,688 9,187
Other - net 376 405 2,469 3,274
1,801 2,368 9,157 12,461
INCOME BEFORE INTEREST AND
INCOME TAXES 25,613 33,812 70,494 50,592
INTEREST EXPENSE 4,231 4,661 16,209 17,416
INCOME BEFORE INCOME TAXES 21,382 29,151 54,285 33,176
INCOME TAXES 7,106 10,795 18,161 11,602
NET INCOME $ 14,276 $ 18,356 $ 36,124 $ 21,574
AVERAGE COMMON SHARES OUTSTANDING (1) 29,970 30,121 30,078 30,111
BASIC AND DILUTED EARNINGS PER
AVERAGE SHARE OF COMMON STOCK (1) $ 0.48 $ 0.61 $ 1.20 $ 0.72
(1) Adjusted to reflect the four-for-three stock split October 2, 1998. See Note 10.
</TABLE>
<TABLE>
INDIANA ENERGY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands - Unaudited)
Three Months Twelve Months
Ended December 31 Ended December 31
1998 1997 1998 1997
<S> <C> <C> <C> <C>
CASH FLOWS FROM (REQUIRED FOR)
OPERATING ACTIVITIES:
Net income $ 14,276 $ 18,356 $ 36,124 $ 21,574
Adjustments to reconcile net income to cash
provided from operating activities -
Noncash restructuring costs - - - 32,838
Depreciation and amortization 9,962 8,953 38,851 35,604
Deferred income taxes 132 531 1,192 (12,645)
Investment tax credit (232) (232) (930) (930)
Gain on sale of assets - - (2,102) (2,923)
Undistributed earnings of unconsolidated
affiliates (1,425) (1,963) (6,688) (9,187)
8,437 7,289 30,323 42,757
Changes in assets and liabilities -
Receivables - net (51,795) (68,385) 30,480 (16,821)
Inventories 1,204 2,123 (1,191) 21,223
Accounts payable, customer deposits, advance
payments and other current liabilities 9,902 14,797 (17,676) (3,458)
Accrued taxes and interest 8,409 12,200 (8,377) 4,521
Recoverable/refundable gas costs 3,613 16,176 4,010 27,282
Prepayments (1,174) (1,309) (1,454) (3,988)
Accrued postretirement benefits other
than pensions 762 706 2,406 7,916
Other - net 1,180 (2,985) 203 (2,258)
Total adjustments (19,462) (19,388) 38,724 77,174
Net cash flows from (required for)
operations (5,186) (1,032) 74,848 98,748
CASH FLOWS FROM (REQUIRED FOR)
FINANCING ACTIVITIES:
Repurchase of common stock (3,645) - (4,834) -
Sale of long-term debt - 35,014 60,052 50,062
Reduction in long-term debt (48) (59,946) (34,623) (60,069)
Net change in short-term borrowings 22,770 49,000 (16,325) 6,000
Dividends on common stock (6,924) (6,625) (27,140) (26,023)
Net cash flows from (required for)
financing activities 12,153 17,443 (22,870) (30,030)
CASH FLOWS REQUIRED FOR INVESTING ACTIVITIES:
Capital expenditures (16,375) (16,339) (66,066) (70,533)
Nonutility investments in unconsolidated
affiliates - net (673) (100) (7,035) (1,350)
Cash distributions from unconsolidated
affiliates 776 - 7,806 -
Proceeds from sale of assets - - 13,317 3,000
Net cash flows required for investing
activities (16,272) (16,439) (51,978) (68,883)
NET INCREASE (DECREASE) IN CASH (9,305) (28) - (165)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 9,325 48 20 185
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 20 $ 20 $ 20 $ 20
</TABLE>
Indiana Energy, Inc. and Subsidiary Companies
Notes to Consolidated Financial Statements
1. Financial Statements.
The consolidated financial statements include the
accounts of Indiana Energy, Inc. (Indiana Energy or the
company) and its wholly and majority-owned subsidiaries,
after elimination of intercompany transactions. The
company's consolidated financial statements include the
operations of its regulated gas distribution subsidiary,
Indiana Gas Company, Inc., (Indiana Gas), its
nonregulated administrative services provider, IEI
Services, LLC, its financing subsidiary, IEI Capital
Corp. (Capital Corp.) and its nonutility subsidiaries
and investments grouped under its nonregulated
subsidiary, IEI Investments, Inc (IEI Investments).
The nonutility operations of IEI Investments include IGC
Energy, Inc. (IGC Energy), Energy Realty, Inc. (Energy
Realty), Energy Financial Group, Inc. and IEI Financial
Services, LLC, all indirect wholly owned subsidiaries of
Indiana Energy, and interests in ProLiance Energy, LLC,
CIGMA, LLC, Energy Systems Group, LLC, Pace Carbon
Synfuels Investors, L.P., Reliant Services, LLC and
Haddington Energy Partners, L.P.
The interim condensed consolidated financial statements
included in this report have been prepared by Indiana
Energy, without audit, as provided in the rules and
regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance
with generally accepted accounting principles have been
omitted as provided in such rules and regulations.
Indiana Energy believes that the information in this
report reflects all adjustments necessary to fairly
state the results of the interim periods reported, that
all such adjustments are of a normally recurring nature,
and the disclosures are adequate to make the information
presented not misleading. These interim financial
statements should be read in conjunction with the
financial statements and the notes thereto included in
Indiana Energy's latest annual report on Form 10-K.
Because of the seasonal nature of Indiana Energy's gas
distribution operations, the results shown on a
quarterly basis are not necessarily indicative of annual
results.
2. Corporate Restructuring.
In April 1997, the Board of Directors of Indiana Energy
approved a new growth strategy designed to support the
company's transition into a more competitive
environment.
During 1997, the Indiana Gas Board of Directors
authorized management to undertake the actions necessary
and appropriate to restructure Indiana Gas' operations
and recognize a resulting restructuring charge of $39.5
million ($24.5 million after-tax) in the fourth quarter
of fiscal 1997 as described below.
In July 1997, the company advised its employees of its
plan to reduce its work force from about 1,025 full-time
employees at June 30, 1997, to approximately 800
employees by 2002. The reductions are being implemented
through involuntary separation and attrition. Indiana
Gas recorded restructuring costs of $5.4 million during
the fourth quarter of fiscal 1997 related to the work
force reductions. These costs include separation pay in
accordance with Indiana Gas' severance policy, and net
curtailment losses related to these employees'
postretirement and pension benefits. As a result
primarily of initial work force reductions during
September 1997 and attrition, employees totaled 878 as
of December 31, 1998.
Further, Indiana Gas' management committed to sell,
abandon or otherwise dispose of certain assets,
including buildings, gas storage fields and intangible
plant. Indiana Gas recorded restructuring costs of $34.1
million during the fourth quarter of fiscal 1997 to
adjust the carrying value of those assets to estimated
fair value. Net assets held for disposal totaled $8.0
million at December 31, 1997, and were disposed of later
in fiscal 1998.
In October 1997, Indiana Energy formed a new business
unit, IEI Services, LLC (IEI Services), to provide
support services to Indiana Energy and its subsidiaries.
The formation of IEI Services was established by a
contribution of $32.2 million of fixed assets at net
book value from Indiana Gas, which subsequently
dividended its membership interest to Indiana Energy.
These assets, which relate to the provision of
administrative services, are classified in Non-utility
Plant on the Consolidated Balance Sheets. IEI Services
provides information technology, financial, human
resources, building and fleet services. These services
had been provided by Indiana Gas in the past.
3. Cash Flow Information.
For the purposes of the Consolidated Statements of Cash
Flows, Indiana Energy considers cash investments with an
original maturity of three months or less to be cash
equivalents. Cash paid during the periods reported for
interest and income taxes were as follows:
<TABLE>
Three Months Ended Twelve Months Ended
December 31 December 31
Thousands 1998 1997 1998 1997
<S> <C> <C> <C> <C>
Interest (net of
amount capitalized) $ 893 $ 2,593 $13,898 $16,051
Income taxes $1,057 $ 70 $25,717 $21,921
</TABLE>
4. Utility Revenues.
To more closely match revenues and expenses, revenues
are recorded for all gas delivered to customers but not
billed at the end of the accounting period.
5. Gas in Underground Storage.
Based on the average cost of purchased gas during
December 1998, the cost of replacing the current portion
of gas in underground storage exceeded last-in,
first-out cost at December 31, 1998, by approximately
$7,953,000.
6. Refundable or Recoverable Gas Costs.
The cost of gas purchased and refunds from suppliers,
which differ from amounts recovered through rates, are
deferred and are being recovered or refunded in
accordance with procedures approved by the Indiana
Utility Regulatory Commission (IURC).
7. ProLiance Energy, LLC.
ProLiance Energy, LLC (ProLiance) is owned jointly and
equally by IGC Energy and Citizens By-Products Coal
Company, a wholly owned subsidiary of Citizens Gas and
Coke Utility (Citizens Gas). ProLiance is the supplier
of gas and related services to both Indiana Gas and
Citizens Gas, as well as a provider of similar services
to other utilities and customers in Indiana and
surrounding states. ProLiance added power marketing in
late fiscal 1997 to the services it offers. Power
marketing involves buying electricity on the wholesale
market and then reselling it to marketers, utilities and
other customers. To effectively manage the risks
associated with power marketing, ProLiance utilizes a
disciplined approach to credit analysis, obtains letters
of credit or corporate guarantees when appropriate, and
does not "sleeve" or assume the credit risk between the
buyer and seller. IGC Energy's investment in ProLiance
is accounted for using the equity method.
On September 12, 1997, the Indiana Utility Regulatory
Commission (IURC) issued a decision finding the gas
supply and portfolio administration agreements between
ProLiance and Indiana Gas and ProLiance and Citizens Gas
(the gas supply agreements) to be consistent with the
public interest. The IURC's decision reflected the
significant gas cost savings to customers obtained by
ProLiance's services and suggested that all material
provisions of the agreements between ProLiance and the
utilities are reasonable. Nevertheless, with respect to
the pricing of gas commodity purchased from ProLiance
and two other pricing terms, the IURC concluded that
additional findings in the gas cost adjustment (GCA)
process would be appropriate and directed that these
matters be considered further in the pending,
consolidated GCA proceeding involving Indiana Gas and
Citizens Gas. The IURC has not yet established a
schedule for conducting these additional proceedings.
The IURC's September 12, 1997, decision was appealed to
the Indiana Court of Appeals by certain Petitioners
including the Indiana Office of Utility Consumer
Counselor and the Citizens Action Coalition of Indiana.
On October 8, 1998, the Indiana Court of Appeals issued
a decision which reversed and remanded the case to the
IURC with instructions that the gas supply agreements be
disapproved. The basis for the decision is that because
the gas supply agreements provide for index based
pricing of gas commodity sold by ProLiance to the
utilities, they should have been the subject of an
application for approval of an alternative regulatory
plan under Indiana statutory law. The court held that
absent this type of application, the IURC exceeded its
authority in implementing what the court saw to be
alternative regulatory treatment.
Management believes the decision incorrectly applies the
statute and on November 9, 1998, petitioned for transfer
of the case to the Indiana Supreme Court. If the Supreme
Court does not overturn the Court of Appeals' decision,
the matter will be remanded to the IURC for further
proceedings. Whether or not the Supreme Court reverses
the Court of Appeals' decision, the reasonableness of
the gas costs incurred by Indiana Gas under the gas
supply agreements will be further reviewed in the
consolidated GCA proceeding. Management takes note of
the fact that the Court of Appeals has not challenged
the IURC findings that the agreements provide
significant economic value to customers and are in the
public interest. Indiana Gas is continuing to utilize
ProLiance for its gas supply.
On or about August 11, 1998, Indiana Gas, Citizens Gas
and ProLiance each received a Civil Investigative Demand
("CID") from the United States Department of Justice
requesting information relating to Indiana Gas' and
Citizens Gas' relationship with and the activities of
ProLiance. The Department of Justice issued the CID to
gather information regarding ProLiance's formation and
operations, and to determine if trade or commerce has
been restrained. Indiana Gas is providing the Department
of Justice with information regarding the formation of
ProLiance in connection with the CID.
Indiana Gas continues to record gas costs in accordance
with the terms of the ProLiance contract and Indiana
Energy continues to record its proportional share of
ProLiance's earnings. Pretax earnings recognized from
ProLiance totaled $1.4 million and $1.8 million for the
three-month periods ended December 31, 1998 and 1997,
respectively. Pretax earnings recognized from ProLiance
totaled $7.0 million and $9.2 million for the twelve-
month periods ended December 31, 1998 and 1997,
respectively. Earnings recognized from ProLiance are
included in Equity in Earnings of Unconsolidated
Affiliates on the Consolidated Statements of Income.
Earnings recognized for the twelve months ended December
31, 1997, include $1.9 million of ProLiance's earnings
from prior periods which had previously been reserved.
At December 31, 1998, Indiana Energy has reserved
approximately $1.2 million of ProLiance earnings after
tax. Total after-tax ProLiance earnings recognized to
date approximate $11.0 million. This amount includes
earnings from all of ProLiance's business activities,
and therefore is believed to be a conservative estimate
of the upper risk limit. Resolution of the above
proceedings may also impact future operations and
earnings contributions from ProLiance. Based on the IURC's
findings described above, management believes the ProLiance
issues may be resolved near the levels that are already
being reserved, and therefore, while these proceedings are
pending, does not anticipate changing the level at which
it reserves ProLiance earnings. However, no assurance of this
outcome can be provided.
8. Pace Carbon Synfuels Investors, L.P.
On February 5, 1998, IEI Synfuels, Inc. (IEI Synfuels),
a wholly-owned, indirect subsidiary of IEI Investments,
purchased one limited partnership unit in Pace Carbon
Synfuels Investors, L.P. (Pace Carbon), a Delaware
limited partnership formed to develop, own and operate
four projects to produce and sell coal-based synthetic
fuel. Pace Carbon converts coal fines (small coal
particles) into coal pellets that are sold to major coal
users such as utilities and steel companies. This
process is eligible for federal tax credits under
Section 29 of the Internal Revenue Code (Code) and the
Internal Revenue Service has issued a private letter
ruling with respect to the four projects.
IEI Synfuels has committed an initial investment of $7.5
million in Pace Carbon (of which $5.4 million was paid
through December 31, 1998) for an 8.3 percent ownership
interest in the partnership. The balance of the initial
investment will be paid following the satisfaction by
Pace Carbon of certain project milestones regarding the
operation of the coal pellet production plants and long-
term feedstock acquisition. In addition to its initial
investment, IEI Synfuels has a continuing obligation to
invest in Pace Carbon up to approximately $43 million,
with any such additional investments expected to be
funded solely from federal tax credits that are realized
from the production and sale of coal pellets by the
projects.
The realization of the tax credits from this investment
is dependent upon a number of factors including among
others (1) the production facilities must have been in
operation by June 30, 1998, (2) adequate coal fines must
be available to produce the coal pellets, and (3) the
coal pellets must be produced and sold. All four of Pace
Carbon's coal-based synthetic fuel production facilities
were placed into service by June 30, 1998, and are
currently producing and selling pellets in a ramp up
mode, while continuing to improve the production
process. Generally all pellets produced through December
31, 1998, have been sold. Management believes that
significant project benefits, primarily in the form of
tax savings and tax credits realized, will be achieved
in the future but cannot be assured.
9. Haddington Energy Partners, L.P.
On October 9, 1998, IEI Investments committed to invest
$10 million in Haddington Energy Partners, L.P.
(Haddington). Haddington, a Delaware limited
partnership, plans to raise $100 million to invest in
six to eight projects that represent a portfolio of
development opportunities, including natural gas
gathering and storage and electric power generation.
Haddington's investment opportunities will focus on
acquiring and building on projects in progress rather
than start-up ventures. Haddington's initial closing
achieved $72 million in commitments. Through December
31, 1998, IEI Investments had paid approximately
$300,000 of its commitment in Haddington, with
additional amounts to be paid as Haddington's portfolio
grows.
10. Common Stock.
On July 31, 1998, the Board of Directors of Indiana
Energy authorized a four-for-three stock split of the
issued and outstanding shares of its common stock to
shareholders of record on September 18, 1998. The shares
were issued on October 2, 1998. All share and per share
amounts have been restated for all periods reported to
reflect the stock split.
On July 28, 1995, Indiana Energy's Board of Directors
authorized Indiana Energy to repurchase up to 700,000
shares of its outstanding common stock. During the three
months ended December 31, 1998, the company repurchased
159,200 shares with an associated cost of $3,645,000.
Of the 700,000 shares authorized, 406,300 shares remain
available for repurchase at December 31, 1998.
11. Environmental Costs.
Indiana Gas is currently conducting environmental
investigations and work at 26 sites that were the
locations of former manufactured gas plants. It has been
seeking to recover the costs of the investigations and
work from insurance carriers and other potentially
responsible parties (PRPs). The IURC has determined that
these costs are not recoverable from utility customers.
Indiana Gas has completed the process of identifying
PRPs and now has PRP agreements in place covering 19 of
the 26 sites. The agreements provide for coordination
of efforts and sharing of investigation and clean-up
costs incurred and to be incurred at the sites. PSI
Energy, Inc. is a PRP on all 19 sites. Northern Indiana
Public Service Company is a PRP on 5 of the 19 sites.
These agreements limit Indiana Gas' share of past and
future response costs at these 19 sites to between 20
and 50 percent. Based on the agreements, Indiana Gas
has recorded a receivable from PRPs for their unpaid
share of the liability for work performed by Indiana Gas
to date, as well as accrued Indiana Gas' proportionate
share of the estimated cost related to work not yet
performed.
Indiana Gas has filed a complaint in Indiana state court
to continue its pursuit of insurance coverage from four
insurance carriers, with the trial scheduled for January
of 2000. As of December 31, 1998, Indiana Gas has
obtained settlements from other insurance carriers in an
aggregate amount of approximately $14.7 million.
These environmental matters have had no material impact
on earnings since costs recorded to date approximate
insurance settlements received. While Indiana Gas has
recorded all costs which it presently expects to incur
in connection with remediation activities, it is
possible that future events may require some level of
additional remedial activities which are not presently
foreseen.
12. Affiliate Transactions.
The obligations of Capital Corp., which handles
financing for the company and its non-utility
subsidiaries, are subject to a support agreement between
the company and Capital Corp., under which the company
has committed to make payments of interest and principal
on Capital Corp.'s securities in the event of default.
Under the terms of the support agreement in addition to
the cash flow of cash dividends paid to the company by
any of its consolidated subsidiaries, the non-utility
assets of the company are available as recourse to
holders of Capital Corp.'s securities. The carrying
value of such non-utility assets reflected in the
consolidated financial statements of the company is
approximately $78.9 million at December 31, 1998.
ProLiance began providing natural gas supply and related
services to Indiana Gas effective April 1, 1996.
Indiana Gas' purchases from ProLiance for resale and for
injections into storage for the three- and twelve-month
periods ended December 31, 1998, totaled $67.4 million
and $232.2 million, respectively. Indiana Gas'
purchases from ProLiance for the three- and twelve-month
periods ended December 31, 1997, totaled $104.1 million
and $311.7 million, respectively.
ProLiance has a standby letter of credit facility with a
bank for letters up to $30 million. This facility is
secured in part by a support agreement from Indiana
Energy. Letters of credit outstanding at December 31,
1998, totaled $4.7 million.
CIGMA, LLC provides materials acquisition and related
services that are used by the company. The company's
purchases of these services during the three- and twelve-
month periods ended December 31, 1998, totaled $5.6
million and $20.3 million, respectively. The company's
purchases of these services during the three- and twelve-
month periods ended December 31, 1997, totaled $6.6
million and $16.2 million, respectively.
Indiana Energy is a one-third guarantor of certain
surety bond obligations of Energy Systems Group, LLC.
Indiana Energy's share totaled $8.1 million at December
31, 1998.
Amounts owed to affiliates totaled $26.4 million and
$35.6 million at December 31, 1998 and 1997,
respectively, and are included in Accounts Payable on
the Consolidated Balance Sheets.
Amounts due from affiliates totaled $6.0 million at
December 31, 1997, and are included in Accounts Receivable
on the Consolidated Balance Sheet.
13. Reclassifications.
Certain reclassifications have been made to the prior
periods' financial statements to conform to the current
year presentation. These reclassifications have no
impact on net income previously reported.
Indiana Energy, Inc. and Subsidiary Companies
Management's Discussion and Analysis of Results
of Operations and Financial Condition
Results of Operations
Indiana Energy, Inc.'s (Indiana Energy or the company)
consolidated earnings are from the operations of its gas
distribution subsidiary, Indiana Gas Company, Inc.
(Indiana Gas), its nonregulated administrative services
provider, IEI Services, LLC (IEI Services), and its
nonutility subsidiaries and investments grouped under its
nonregulated subsidiary, IEI Investments, Inc. (IEI
Investments).
The nonutility operations of IEI Investments include
IGC Energy, Inc. (IGC Energy), Energy Realty, Inc. (Energy
Realty), Energy Financial Group, Inc. and IEI Financial
Services, LLC, all indirect wholly owned subsidiaries of
Indiana Energy, and interests in ProLiance Energy, LLC,
CIGMA, LLC, Energy Systems Group, LLC, Pace Carbon
Synfuels Investors, L.P., Reliant Services, LLC and
Haddington Energy Partners, L.P.
The company's growth strategy provides for growing the
earnings contribution from non-utility operations to over
25 percent of its total annual earnings by 2003, and
aggressively managing costs within its utility operations
(see Growth Strategy and Corporate Restructuring).
Stock Split
On July 31, 1998, the board of directors of Indiana
Energy authorized a four-for-three stock split of the
issued and outstanding shares of its common stock to
shareholders of record on September 18, 1998. The shares
were issued on October 2, 1998. All share and per share
amounts have been restated for all periods reported to
reflect the stock split.
Earnings
Income and earnings per average share of common stock
for the three- and twelve-month periods ended December 31,
1998, when compared to the same periods one year ago, were
as follows:
<TABLE>
(Millions except Three Months Ended Twelve Months Ended
per share amounts) December 31 December 31
1998 1997 1998 1997(1)
<S> <C> <C> <C> <C>
Indiana Gas &
IEI Services $13.3 $17.2 $30.0 $13.9
IEI Investments 1.0 1.2 6.1 7.7
Net Income $14.3 $18.4 $36.1 $21.6
Earnings per
share (2):
Indiana Gas &
IEI Services $ .44 $ .57 $1.00 $ .46
IEI Investments .04 .04 .20 .26
Total $ .48 $ .61 $1.20 $ .72
(1)Reflects restructuring costs of $24.5 million after-tax or $.81
per common share at Indiana Gas (see Growth Strategy and Corporate
Restructuring).
(2)Adjusted to reflect the four-for-three stock split October 2, 1998.
</TABLE>
Utility Margin (Utility Operating Revenues Less Utility Cost of Gas)
Utility margin for the quarter ended December 31,
1998, was $57.0 million compared to $63.1 million for the
same period last year. The decrease reflects weather 19
percent warmer than the same period last year and 17
percent warmer than normal, offset somewhat by the
addition of new residential and commercial customers.
Utility margin for the twelve-month period ended
December 31, 1998, was $188.6 million compared to $208.3
million for the same period last year. The decrease is
primarily attributable to weather 22 percent warmer than
the same period last year and 21 percent warmer than
normal, offset somewhat by the addition of new residential
and commercial customers.
Total system throughput (combined sales and
transportation) decreased 13 percent (5.0 MMDth) for the
first quarter of fiscal 1999 and 11 percent (14.1 MMDth)
for the twelve-month period ended December 31, 1998,
compared to the same periods one year ago. Indiana Gas'
rates for transportation generally provide the same
margins as are earned on the sale of gas under its sales
tariffs. Approximately one-half of total system
throughput represents gas used for space heating and is
affected by weather.
Total average cost per unit of gas purchased decreased
to $3.44 for the three-month period ended December 31,
1998, compared to $3.87 for the same period one year ago.
For the twelve-month period, cost of gas per unit
decreased to $3.44 in the current period compared to $3.60
for the same period last year.
Adjustments to Indiana Gas' rates and charges related
to the cost of gas are made through gas cost adjustment
(GCA) procedures established by Indiana law and
administered by the Indiana Utility Regulatory Commission
(IURC). The GCA passes through increases and decreases in
the cost of gas to Indiana Gas' customers dollar for
dollar.
Operating Expenses (excluding Cost of Gas)
Other operating expenses increased $1.3 million for
the three-month period ended December 31, 1998, when
compared to the same period one year ago due in part to
higher labor-related costs, including training costs
related to the implementation of the company's new
customer information system. Rental expense related to
buildings previously owned also contributed to the
increase.
Other operating expenses decreased $1.9 million for
the twelve-month period when compared to the same period
last year due in part to lower labor-related costs
resulting from work force reductions.
Restructuring costs of $39.5 million (pre-tax) were
recorded in the fourth quarter of fiscal 1997 related to
the company's implementation of a new growth strategy
during that year (see Growth Strategy and Corporate
Restructuring).
Depreciation and amortization expense increased for
the three- and twelve-month periods ended December 31,
1998, when compared to the same periods one year ago due
primarily to additions to plant to serve new customers and
to maintain dependable service to existing customers.
Taxes other than income taxes decreased for the three-
month period ended December 31, 1998, when compared to the
same period one year ago due to lower gross receipts tax
expense. Taxes other than income taxes decreased for the
twelve-month period due to lower gross receipts tax
expense and lower property tax expense.
Other Income
Equity in earnings of unconsolidated affiliates
decreased for the three- and twelve-month periods ended
December 31, 1998, when compared to the same periods one
year ago due primarily to lower earnings recognized from
the company's energy marketing affiliate, ProLiance
Energy, LLC (ProLiance). Pretax earnings recognized from
ProLiance totaled $1.4 million for the first quarter of
fiscal 1999, compared to $1.8 million for the same period
one year ago. Pretax earnings recognized from ProLiance
for the twelve months ended December 31, 1998, totaled
$7.0 million compared to $9.2 million for the same period
last year. Earnings recognized for the twelve months
ended December 31, 1997, include $1.9 million of
ProLiance's earnings from prior periods which had
previously been reserved (see ProLiance Energy, LLC).
Other-net decreased for the twelve-month period ended
December 31, 1998, when compared to the same period one
year ago due primarily to the gain on the sale of certain
nonutility assets by IGC Energy reflected in the prior
period.
Interest Expense
Interest expense decreased for the three- and twelve-
month periods ended December 31, 1998, when compared to
the same periods one year ago due primarily to decreases
in interest rates.
Income Taxes
Federal and state income taxes decreased for the three-
month period ended December 31, 1998, while increasing for
the twelve-month period when compared to the same periods
one year ago due to changes in taxable income.
Other Operating Matters
Growth Strategy and Corporate Restructuring
In April 1997, the Board of Directors of Indiana
Energy approved a new growth strategy designed to
support the company's transition into a more
competitive environment. As part of the current growth
strategy, Indiana Energy will endeavor to become a
leading regional provider of energy products and
services and to grow its consolidated earnings per
share by an average of 10 percent annually through
2003. To achieve such earnings growth, Indiana Energy's
aim is to grow the earnings contribution from non-
utility operations to over 25 percent of its total
annual earnings by 2003, and to aggressively manage
costs within its utility operations.
During 1997, the Indiana Gas Board of Directors
authorized management to undertake the actions
necessary and appropriate to restructure Indiana Gas'
operations and recognize a resulting restructuring
charge of $39.5 million ($24.5 million after-tax) in
the fourth quarter of fiscal 1997 as described below.
In July 1997, the company advised its employees of
its plan to reduce its work force from about 1,025 full-
time employees at June 30, 1997, to approximately 800
employees by 2002. The reductions are being implemented
through involuntary separation and attrition. Indiana
Gas recorded restructuring costs of $5.4 million during
the fourth quarter of fiscal 1997 related to the work
force reductions. These costs include separation pay in
accordance with Indiana Gas' severance policy, and net
curtailment losses related to these employees'
postretirement and pension benefits. As a result
primarily of initial work force reductions during
September 1997 and attrition, employees totaled 878 as
of December 31, 1998.
Further, Indiana Gas' management committed to
sell, abandon or otherwise dispose of certain assets,
including buildings, gas storage fields and intangible
plant. Indiana Gas recorded restructuring costs of
$34.1 million during the fourth quarter of fiscal 1997
to adjust the carrying value of those assets to
estimated fair value. Net assets held for disposal
totaled $8.0 million at December 31, 1997, and were
disposed of later in fiscal 1998.
In October 1997, Indiana Energy formed a new
business unit, IEI Services, LLC (IEI Services), to
provide support services to Indiana Energy and its
subsidiaries. The formation of IEI Services was
established by a contribution of $32.2 million of fixed
assets at net book value from Indiana Gas, which
subsequently dividended its membership interest to
Indiana Energy. These assets, which relate to the
provision of administrative services, are classified in
Non-utility Plant on the Consolidated Balance Sheets.
IEI Services provides information technology,
financial, human resources, building and fleet
services. These services had been provided by Indiana
Gas in the past.
As a result of the restructuring, the company has
realized reductions in operating costs which should
help the company to be more successful in an
increasingly competitive energy marketplace.
ProLiance Energy, LLC
ProLiance Energy, LLC (ProLiance) is owned jointly
and equally by IGC Energy and Citizens By-Products Coal
Company, a wholly owned subsidiary of Citizens Gas and
Coke Utility (Citizens Gas). ProLiance is the supplier of
gas and related services to both Indiana Gas and Citizens
Gas, as well as a provider of similar services to other
utilities and customers in Indiana and surrounding states.
ProLiance added power marketing in late fiscal 1997 to the
services it offers. Power marketing involves buying
electricity on the wholesale market and then reselling it
to marketers, utilities and other customers. To
effectively manage the risks associated with power
marketing, ProLiance utilizes a disciplined approach to
credit analysis, obtains letters of credit or corporate
guarantees when appropriate, and does not "sleeve" or
assume the credit risk between the buyer and seller. IGC
Energy's investment in ProLiance is accounted for using
the equity method.
On September 12, 1997, the Indiana Utility Regulatory
Commission (IURC) issued a decision finding the gas supply
and portfolio administration agreements between ProLiance
and Indiana Gas and ProLiance and Citizens Gas (the gas
supply agreements) to be consistent with the public
interest. The IURC's decision reflected the significant
gas cost savings to customers obtained by ProLiance's
services and suggested that all material provisions of the
agreements between ProLiance and the utilities are
reasonable. Nevertheless, with respect to the pricing of
gas commodity purchased from ProLiance and two other
pricing terms, the IURC concluded that additional findings
in the gas cost adjustment (GCA) process would be
appropriate and directed that these matters be considered
further in the pending, consolidated GCA proceeding
involving Indiana Gas and Citizens Gas. The IURC has not
yet established a schedule for conducting these additional
proceedings.
The IURC's September 12, 1997, decision was appealed
to the Indiana Court of Appeals by certain Petitioners
including the Indiana Office of Utility Consumer Counselor
and the Citizens Action Coalition of Indiana. On October
8, 1998, the Indiana Court of Appeals issued a decision
which reversed and remanded the case to the IURC with
instructions that the gas supply agreements be
disapproved. The basis for the decision is that because
the gas supply agreements provide for index based pricing
of gas commodity sold by ProLiance to the utilities, they
should have been the subject of an application for
approval of an alternative regulatory plan under Indiana
statutory law. The court held that absent this type of
application, the IURC exceeded its authority in
implementing what the court saw to be alternative
regulatory treatment.
Management believes the decision incorrectly applies
the statute and on November 9, 1998, petitioned for
transfer of the case to the Indiana Supreme Court. If the
Supreme Court does not overturn the Court of Appeals'
decision, the matter will be remanded to the IURC for
further proceedings. Whether or not the Supreme Court
reverses the Court of Appeals' decision, the
reasonableness of the gas costs incurred by Indiana Gas
under the gas supply agreements will be further reviewed
in the consolidated GCA proceeding. Management takes note
of the fact that the Court of Appeals has not challenged
the IURC findings that the agreements provide significant
economic value to customers and are in the public
interest. Indiana Gas is continuing to utilize ProLiance
for its gas supply.
On or about August 11, 1998, Indiana Gas, Citizens Gas
and ProLiance each received a Civil Investigative Demand
("CID") from the United States Department of Justice
requesting information relating to Indiana Gas' and
Citizens Gas' relationship with and the activities of
ProLiance. The Department of Justice issued the CID to
gather information regarding ProLiance's formation and
operations, and to determine if trade or commerce has been
restrained. Indiana Gas is providing the Department of
Justice with information regarding the formation of
ProLiance in connection with the CID.
Indiana Gas continues to record gas costs in
accordance with the terms of the ProLiance contract and
Indiana Energy continues to record its proportional share
of ProLiance's earnings. Pretax earnings recognized from
ProLiance totaled $1.4 million and $1.8 million for the
three-month periods ended December 31, 1998 and 1997,
respectively. Pretax earnings recognized from ProLiance
totaled $7.0 million and $9.2 million for the twelve-month
periods ended December 31, 1998 and 1997, respectively.
Earnings recognized from ProLiance are included in Equity
in Earnings of Unconsolidated Affiliates on the
Consolidated Statements of Income. Earnings recognized for
the twelve months ended December 31, 1997, include $1.9
million of ProLiance's earnings from prior periods which
had previously been reserved.
At December 31, 1998, Indiana Energy has reserved
approximately $1.2 million of ProLiance earnings after
tax. Total after-tax ProLiance earnings recognized to date
approximate $11.0 million. This amount includes earnings
from all of ProLiance's business activities, and therefore
is believed to be a conservative estimate of the upper
risk limit. Resolution of the above proceedings may also
impact future operations and earnings contributions from
ProLiance. Based on the IURC's findings described above,
management believes the ProLiance issues may be resolved
near the levels that are already being reserved, and
therefore, while these proceedings are pending, does not
anticipate changing the level at which it reserves ProLiance
earnings. However, no assurance of this outcome can be provided.
Pace Carbon Synfuels Investors, L.P.
On February 5, 1998, IEI Synfuels, Inc. (IEI
Synfuels), a wholly-owned, indirect subsidiary of IEI
Investments, purchased one limited partnership unit in
Pace Carbon Synfuels Investors, L.P. (Pace Carbon), a
Delaware limited partnership formed to develop, own and
operate four projects to produce and sell coal-based
synthetic fuel. Pace Carbon converts coal fines (small
coal particles) into coal pellets that are sold to
major coal users such as utilities and steel companies.
This process is eligible for federal tax credits under
Section 29 of the Internal Revenue Code (Code) and the
Internal Revenue Service has issued a private letter
ruling with respect to the four projects.
IEI Synfuels has committed an initial investment
of $7.5 million in Pace Carbon (of which $5.4 million
was paid through December 31, 1998) for an 8.3 percent
ownership interest in the partnership. The balance of
the initial investment will be paid following the
satisfaction by Pace Carbon of certain project
milestones regarding the operation of the coal pellet
production plants and long-term feedstock acquisition.
In addition to its initial investment, IEI Synfuels has
a continuing obligation to invest in Pace Carbon up to
approximately $43 million, with any such additional
investments expected to be funded solely from federal
tax credits that are realized from the production and
sale of coal pellets by the projects.
The realization of the tax credits from this
investment is dependent upon a number of factors
including among others (1) the production facilities
must have been in operation by June 30, 1998, (2)
adequate coal fines must be available to produce the
coal pellets, and (3) the coal pellets must be produced
and sold. All four of Pace Carbon's coal-based
synthetic fuel production facilities were placed into
service by June 30, 1998, and are currently producing
and selling pellets in a ramp up mode, while continuing
to improve the production process. Generally all
pellets produced through December 31, 1998, have been
sold. Management believes that significant project
benefits, primarily in the form of tax savings and tax
credits realized, will be achieved in the future but
cannot be assured.
Haddington Energy Partners, L.P.
On October 9, 1998, IEI Investments committed to
invest $10 million in Haddington Energy Partners, L.P.
(Haddington). Haddington, a Delaware limited
partnership, plans to raise $100 million to invest in
six to eight projects that represent a portfolio of
development opportunities, including natural gas
gathering and storage and electric power generation.
Haddington's investment opportunities will focus on
acquiring and building on projects in progress rather
than start-up ventures. Haddington's initial closing
achieved $72 million in commitments. Through December
31, 1998, IEI Investments had paid approximately
$300,000 of its commitment in Haddington, with
additional amounts to be paid as Haddington's portfolio
grows.
The Year 2000 Issue
Many existing computer programs use only two
digits to identify a year in the date field. These
programs were designed and developed without
considering the impact of the upcoming change in the
century. If not corrected, many computer applications
could fail or create erroneous results by or at the
year 2000. This issue relates not only to information
technology (IT) but also to non-IT related equipment
and plant that may contain embedded date-sensitive
microcontrollers or microchips.
The company has identified what it believes are
its most significant worst case Year 2000 scenarios for
the purpose of helping it to focus its Year 2000
efforts. These scenarios are the interference with the
company's ability to (1) receive and deliver gas to
customers, (2) monitor gas pressure throughout the
company's gas distribution system, (3) bill and receive
payments from customers, and (4) maintain continuous
operation of its computer systems. As discussed below,
the company is taking the steps necessary to ensure
that these worst case scenarios are addressed.
The company has evaluated the Year 2000 readiness
of all IT hardware and software including the
mainframe, network, servers, personal computers, system
and application software and telecommunications. Almost
all hardware was found to be in compliance as a result
of projects conducted in 1997 and 1998. Replacements of
major customer information and billing systems, which
had already begun in 1997, were placed into service
in January 1999. These new systems, driven by the need
for additional functionality and business flexibility,
were also designed to be Year 2000 compliant. Other
maintenance and project activities conducted in 1998 and
scheduled for 1999 have been initiated to bring the
remaining software environment into compliance. The projects
include replacements, upgrades and rewrites. The
company's plan for IT items includes the following
phases and timeline: (a) Assessment - completed in
1998, (b) Strategy - completed in 1998 and (c) Design,
Implementation, Testing and Validation - in process and
to be substantially completed by June 30, 1999. The
company has not found it necessary to postpone work on
any other critical IT projects because of efforts to
achieve Year 2000 compliance.
Non-IT systems with embedded microcontrollers or
microchips are being evaluated to determine if they are
Year 2000 compliant. These systems include buildings,
transportation, monitoring equipment, process controls,
engineering and construction. The internal assessment
process has generally been completed, and few
compliance issues have been found to date. These
consist primarily of needed software upgrades for
equipment in the gas control system. It is anticipated
these upgrades will be installed by July of 1999.
The company is currently in the process of
contacting its major vendors, suppliers and customers
to gather information regarding the status of their
Year 2000 compliance. While compliance issues may be
identified from these inquiries and any issues raised
will be addressed, this process may not fully ensure
these parties' Year 2000 compliance. Disruptions in the
operations of these parties could have an adverse
financial and operational effect on the company.
The company is also formulating a contingency plan
related to Year 2000 issues. This plan will include
modifying the company's already existing plans for
business resumption, information technology disaster
recovery and gas supply contingencies, and would allow
for, among other things, alternate recovery locations,
backup power generation, adequate material supplies and
personnel requirements. This plan is expected to be in
place, tested and refined as needed by December 31,
1999.
Total costs expected to be incurred by the company
to remedy its Year 2000 issues are estimated at $1.5
million, which include costs estimated to replace
certain existing systems sooner than otherwise planned.
Management expects that Year 2000 issues will be
addressed on a schedule and in a manner that will
prevent such issues from having a material impact on
the company's financial position or results of
operations. However, while the company has and will
continue to manage its Year 2000 compliance plan, there
can be no assurance that the company will be successful
in identifying and addressing all material Year 2000
issues including those related to the company's
vendors, suppliers and customers.
Environmental Matters
Indiana Gas is currently conducting environmental
investigations and work at 26 sites that were the
locations of former manufactured gas plants. It has
been seeking to recover the costs of the investigations
and work from insurance carriers and other potentially
responsible parties (PRPs). The IURC has determined
that these costs are not recoverable from utility
customers.
Indiana Gas has completed the process of
identifying PRPs and now has PRP agreements in place
covering 19 of the 26 sites. The agreements provide
for coordination of efforts and sharing of
investigation and clean-up costs incurred and to be
incurred at the sites. PSI Energy, Inc. is a PRP on
all 19 sites. Northern Indiana Public Service Company
is a PRP on 5 of the 19 sites. These agreements limit
Indiana Gas' share of past and future response costs at
these 19 sites to between 20 and 50 percent. Based on
the agreements, Indiana Gas has recorded a receivable
from PRPs for their unpaid share of the liability for
work performed by Indiana Gas to date, as well as
accrued Indiana Gas' proportionate share of the
estimated cost related to work not yet performed.
Indiana Gas has filed a complaint in Indiana state
court to continue its pursuit of insurance coverage
from four insurance carriers, with the trial scheduled
for January of 2000. As of December 31, 1998, Indiana
Gas has obtained settlements from other insurance
carriers in an aggregate amount of approximately $14.7
million.
These environmental matters have had no material
impact on earnings since costs recorded to date
approximate insurance settlements received. While
Indiana Gas has recorded all costs which it presently
expects to incur in connection with remediation
activities, it is possible that future events may
require some level of additional remedial activities
which are not presently foreseen.
Liquidity and Capital Resources
Consolidated capitalization objectives for Indiana
Energy are 55-65 percent common equity and preferred stock
and 35-45 percent long-term debt, but may vary from time
to time, depending on particular business opportunities.
Indiana Energy's common equity component was 62 percent of
total capitalization at December 31, 1998. The long-term
debt of Indiana Energy is currently rated Aa3 by Moody's
Investors Service and A+ by Standard & Poor's Corporation.
Because of its current capital structure, the company
has the ability to issue additional long-term debt, if
necessary, to fund nonutility investments or for other
corporate purposes and still meet its capitalization
objectives. This is particularly important as it relates
to its growth strategy which provides for, among other
things, expansion of its nonutility operations.
On July 31, 1998, the Board of Directors of Indiana
Energy authorized a four-for-three stock split of the
issued and outstanding shares of its common stock to
shareholders of record on September 18, 1998. The shares
were issued on October 2, 1998.
On July 28, 1995, Indiana Energy's Board of Directors
authorized Indiana Energy to repurchase up to 700,000
shares of its outstanding common stock. During the three
months ended December 31, 1998, the company repurchased
159,200 shares with an associated cost of $3,645,000. Of
the 700,000 shares authorized, 406,300 shares remain
available for repurchase at December 31, 1998.
Indiana Gas' capitalization objectives, which are 55-
65 percent common equity and preferred stock and 35-45
percent long-term debt, remain unchanged from prior years.
Indiana Gas' common equity component was 56 percent of its
total capitalization at December 31, 1998.
New construction, normal system maintenance and
improvements, and information technology investments
needed to provide service to a growing customer base will
continue to require substantial expenditures. Capital
expenditures for fiscal 1999 are estimated at $66.8
million of which $16.4 million have been expended during
the three-month period ended December 31, 1998. For the
twelve months ended December 31, 1998, capital
expenditures totaled $66.1 million.
Nonutility investments and commitments, excluding the
continuing obligation to invest in Pace Carbon as
previously discussed, totaled approximately $10.0 million
and $18.0 million for the three- and twelve-month periods
ended December 31, 1998.
Indiana Gas' long-term goal is to internally fund at
least 75 percent of its capital expenditure program. This
will help Indiana Gas to maintain its high
creditworthiness. The long-term debt of Indiana Gas is
currently rated Aa2 by Moody's Investors Service and AA-
by Standard & Poor's Corporation. For the twelve months
ended December 31, 1998, 59 percent of Indiana Gas'
capital expenditures was funded internally (i.e. from
utility income less dividends plus charges to utility
income not requiring funds).
Short-term cash working capital is required primarily
to finance customer accounts receivable, unbilled utility
revenues resulting from cycle billing, gas in underground
storage and capital expenditures until permanently
financed. Short-term borrowings tend to be greatest during
the heating season when accounts receivable and unbilled
utility revenues are at their highest. Indiana Gas'
commercial paper is rated P-1 by Moody's and A-1+ by
Standard & Poor's. Recently, bank lines of credit have
been the primary source of short-term financing.
Forward-Looking Information
A "safe harbor" for forward-looking statements is
provided by the Private Securities Litigation Reform
Act of 1995 (Reform Act of 1995). The Reform Act of
1995 was adopted to encourage such forward-looking
statements without the threat of litigation, provided
those statements are identified as forward-looking and
are accompanied by meaningful cautionary statements
identifying important factors that could cause the
actual results to differ materially from those
projected in the statement. Certain matters described
in Management's Discussion and Analysis of Results of
Operations and Financial Condition, including, but not
limited to, Indiana Energy's earnings growth strategy,
ProLiance and Year 2000 issues, are forward-looking
statements. Such statements are based on management's
beliefs, as well as assumptions made by and information
currently available to management. When used in this
filing the words "aim," "anticipate," "endeavor,"
"estimate," "expect," "objective," "projection,"
"forecast," "goal," and similar expressions are
intended to identify forward-looking statements. In
addition to any assumptions and other factors referred
to specifically in connection with such forward-looking
statements, factors that could cause Indiana Energy's
actual results to differ materially from those
contemplated in any forward-looking statements include,
among others, the following:
Factors affecting utility operations such as
unusual weather conditions; catastrophic weather-
related damage; unusual maintenance or repairs;
unanticipated changes to gas supply costs, or
availability due to higher demand, shortages,
transportation problems or other developments;
environmental or pipeline incidents; or gas pipeline
system constraints.
Increased competition in the energy environment,
including effects of industry restructuring and
unbundling.
Regulatory factors such as unanticipated changes
in rate-setting policies or procedures; recovery of
investments made under traditional regulation, and the
frequency and timing of rate increases.
Financial or regulatory accounting principles or
policies imposed by the Financial Accounting Standards
Board, the Securities and Exchange Commission, the
Federal Energy Regulatory Commission, state public
utility commissions, state entities which regulate
natural gas transmission, gathering and processing, and
similar entities with regulatory oversight.
Economic conditions including inflation rates and
monetary fluctuations.
Changing market conditions and a variety of other
factors associated with physical energy and financial
trading activities, including, but not limited to,
price, basis, credit, liquidity, volatility, capacity,
interest rate and warranty risks.
Availability or cost of capital, resulting from
changes in: Indiana Energy, interest rates, and
securities ratings or market perceptions of the utility
industry and energy-related industries.
Employee workforce factors, including changes in
key executives, collective bargaining agreements with
union employees or work stoppages.
Legal and regulatory delays and other obstacles
associated with mergers, acquisitions and investments
in joint ventures such as the ProLiance judicial and
administrative proceedings.
Costs and other effects of legal and
administrative proceedings, settlements,
investigations, claims and other matters, including,
but not limited to, those described in the Other
Operating Matters section of Management's Discussion
and Analysis of Results of Operations and Financial
Condition.
Changes in federal, state or local legislative
requirements, such as changes in tax laws or rates,
environmental laws and regulations.
The inability of the company and its vendors,
suppliers and customers to achieve Year 2000 readiness.
Indiana Energy undertakes no obligation to publicly
update or revise any forward-looking statements,
whether as a result of changes in actual results,
changes in assumptions, or other factors affecting such
statements.
Item 1. Legal Proceedings
See Note 7 of the Notes to Consolidated Financial
Statements for discussion of litigation matters
relating to the gas supply and portfolio administration
agreements between ProLiance and Indiana Gas and
ProLiance and Citizens Gas.
See Note 11 of the Notes to Consolidated Financial
Statements for litigation matters involving insurance
carriers pertaining to Indiana Gas' former manufactured
gas plants and storage facilities.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10-A Employment Agreement between
Indiana Energy, Inc. and Lawrence
A. Ferger, effective January 1,
1999, filed herewith.
10-B Employment Agreement between
Indiana Energy, Inc. and Niel C.
Ellerbrook, effective January 1,
1999, filed herewith.
10-C Employment Agreement between
Indiana Energy, Inc. and Paul T.
Baker, effective January 1, 1999,
filed herewith.
10-D Employment Agreement between
Indiana Energy, Inc. and Anthony
E. Ard, effective January 1, 1999,
filed herewith.
10-E Employment Agreement between
Indiana Energy, Inc. and Carl L.
Chapman, effective January 1,
1999, filed herewith.
10-F Employment Agreement between
Indiana Energy, Inc. and Timothy
M. Hewitt, effective January 1,
1999, filed herewith.
10-G Indiana Energy, Inc. Unfunded
Supplemental Retirement Plan for a
Select Group of Management
Employees as amended and restated
effective December 1, 1998, filed
herewith.
10-H Indiana Energy, Inc. Nonqualified
Deferred Compensation Plan
effective January 1, 1999, filed
herewith.
10-I Amendment to the Indiana Energy,
Inc. Executive Restricted Stock
Plan effective December 1, 1998,
filed herewith.
10-J Amendment to the Indiana Energy,
Inc. Directors' Restricted Stock
Plan effective December 1, 1998,
filed herewith.
27 Financial Data Schedule, filed herewith.
(b)On October 9, 1998, Indiana Energy and
Indiana Gas filed a Current Report on Form 8-
K with respect to a press release (dated
October 9, 1998), announcing the decision by
Indiana Gas, Citizens Gas and ProLiance to
appeal the October 8, 1998, Indiana Court of
Appeals decision regarding ProLiance. Items
reported include:
Item 5. Other Events
Press release dated October 9,1998
On October 13, 1998, Indiana Energy filed a
Current Report on Form 8-K with respect to a
press release (dated October 12, 1998),
announcing IEI Investments' commitment to
invest $10 million in Haddington Energy
Partners, L.P. Items reported include:
Item 5. Other Events
Press release dated October 12,1998
On October 30, 1998, Indiana Energy and
Indiana Gas filed a Current Report on Form 8-
K with respect to the release of summary
financial information to the investment
community regarding Indiana Energy's
consolidated results of operations, financial
position and cash flows for the three- and
twelve-month periods ended September 30,
1998. Items reported include:
Item 5. Other Events
Item 7. Exhibits
99 Financial Analyst Report - Fourth
Quarter 1998
On January 27, 1999, Indiana Energy and
Indiana Gas filed a Current Report on Form 8-
K with respect to the release of summary
financial information to the investment
community regarding Indiana Energy's
consolidated results of operations, financial
position and cash flows for the three- and
twelve-month periods ended December 31, 1998.
Items reported include:
Item 5. Other Events
Item 7. Exhibits
99 Financial Analyst Report - First Quarter 1999
SIGNATURES
Pursuant to the requirements 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.
INDIANA ENERGY, INC.
Registrant
Dated February 11, 1999 /s/Niel C.Ellerbrook
Niel C. Ellerbrook
President and Chief Operating Officer
Dated February 11, 1999 /s/Jerome A. Benkert
Jerome A. Benkert
Vice President and Controller
INDIANA ENERGY, INC.
EMPLOYMENT AGREEMENT
This AGREEMENT by and among Indiana Energy, Inc. ("Indiana
Energy"), an Indiana corporation, in consideration of the
services to be performed for Indiana Energy and/or for one or
more of its direct or indirect subsidiaries or affiliates
(collectively, the "Company"), and L. A. Ferger (the "Executive"),
is dated as of the first day of January, 1999.
1. Employment Period. The Company hereby agrees to
employ the Executive, and the Executive hereby agrees to remain
in the employ of the Company subject to the terms and conditions
of this Agreement, for the period commencing on the date the
Executive affixes his signature to this Agreement (the
"Commencement Date") and ending on the third annual anniversary
of the Commencement Date (the "Employment Period"); provided,
however, that the Employment Period shall automatically be
extended without action by either party for one (1) month
periods, without further action of the parties, as of the first
month anniversary of the Commencement Date and each succeeding
monthly anniversary unless the Company or the Executive shall
have served written notice to the other party prior to
February 1, 1999, or prior to any subsequent monthly anniversary,
as the case may be, of its or his intention that the Agreement
shall terminate at the end of the thirty-six (36) month period
that begins with the monthly anniversary of the Commencement Date
immediately following the date of such written notice; provided,
further, that the Employment Period shall automatically terminate
upon the Executive's attainment of age sixty-five (65). A notice
delivered by the Company or the Executive that it or he does not
intend to extend the term of this Agreement shall hereinafter be
referred to as a "Nonrenewal Notice." 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.
2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the
Executive shall serve in the position and at the
location set forth on Exhibit A hereto.
(ii) During the Employment Period, and
excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees
to devote full attention and time during normal
business hours to the business and affairs of the
Company and to use the Executive's reasonable best
efforts to perform such responsibilities in a
professional manner. It shall not be a violation of
this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage
personal investments, so long as such activities do not
significantly interfere with the performance of the
Executive's responsibilities as an employee of the
Company in accordance with this Agreement. It is
expressly understood and agreed that to the extent that
any such activities have been conducted by the
Executive prior to the Commencement Date, the continued
conduct of such activities (or the conduct of
activities similar in nature and scope thereto)
subsequent to the Commencement Date shall not
thereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary - During the Employment
Period, the Executive shall receive an annual base
salary ("Annual Base Salary") in an amount no less than
the Executive's annual base salary in effect
immediately prior to the Commencement Date, payable in
cash. If the Annual Base Salary is increased after the
Commencement Date, the increased Base Salary amount
shall become the minimum level of Annual Salary for the
Executive. The Annual Base Salary shall be paid no
less frequently than in equal monthly installments.
(ii) Annual Bonus. During the Employment
Period, the Executive shall have an annual bonus
opportunity no less than the applicable target award
percentage in effect for the Executive's employment
level which is in effect immediately prior to the
Commencement Date or, if greater, in effect at any time
after the Commencement Date.
(iii) Long-Term Incentives. During the
Employment Period, the Executive shall be eligible to
participate in all long-term incentive plans, including
the Indiana Energy, Inc. Executive Restricted Stock
Plan (the "Restricted Stock Plan"), practices, policies
and programs to the extent applicable generally to
other peer executives of the Company and its affiliated
companies. The Executive's target award percentage
under the Restricted Stock Plan shall be no less than
the applicable target award percentage in effect for
the Executive's employment level which is in effect
immediately prior to the Commencement Date or, if
greater, the target award percentage in effect for the
Executive any time after the Commencement Date.
(iv) Savings and Retirement Plans. During the
Employment Period, the Executive shall be eligible to
participate in all savings and retirement plans,
practices, policies and programs to the extent
applicable generally to other peer executives of the
Company and its affiliated entities.
(v) Welfare and Other Benefit Plans. During
the Employment Period, the Executive and/or the
Executive's family, as the case may be, shall be
eligible for participation in and shall receive all
benefits under welfare, fringe, change of control
protection, incentive, vacation and other similar
benefit plans, practices, policies and programs
provided by the Company and its affiliated entities
(including, without limitation, medical, prescription,
dental, disability, employee life, group life,
accidental death and travel accident insurance plans
and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated
entities.
(vi) Expenses. During the Employment Period,
the Executive shall be entitled to receive prompt
reimbursement for all reasonable business expenses
incurred by the Executive, in accordance with the
policies of the Company.
(vii) Indemnity. The Executive shall be
indemnified by the Company against claims arising in
connection with the Executive's status as an employee,
officer, director or agent of the Company in accordance
with the Company's indemnity policies for its senior
executives, subject to applicable law.
3. Termination of Employment.
(a) Death or Disability. The Executive's
employment shall terminate automatically upon the
Executive's death during the Employment Period. If the
Company determines in good faith that the Disability
(as defined below) of the Executive has occurred during
the Employment Period, it may give to the Executive
written notice in accordance with Section 9(b) of this
Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment
with the Company shall terminate effective on the
thirtieth day after receipt of such notice by the
Executive (the "Disability Commencement Date"),
provided that, within the thirty day period after such
receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall have the
meaning set forth in the Company's long-term disability
plan.
(b) Cause. The Company may terminate the
Executive's employment during the Employment Period for
Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) intentional gross misconduct
by the Executive damaging in a material way to the
Company, or
(ii) a material breach of this
Agreement, after the Company has given the
Executive notice thereof and a reasonable
opportunity to cure.
(c) Good Reason. The Executive's employment
may be terminated by the Executive for Good Reason.
For purposes of this Agreement and before a Change in
Control (as defined in Section 3(f) below) of the
Company, "Good Reason" shall mean a material breach by
the Company of this Agreement after the Executive has
given the Company notice of the breach and a reasonable
opportunity to cure. After a Change in Control of the
Company, "Good Reason" shall mean, 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 immediately prior to the Change in
Control; or any removal of the Executive from or
failure to reappoint or reelect him to any of such
positions that the Executive had immediately prior to
the Change in Control, 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 Executives of the Company effected
in the preceding twelve (12) months; (iv) the
relocation of the principal executive offices of the
Company or Company affiliate, 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 immediately 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 immediately prior to the Change in
Control, including but not limited to the Company's
stock option and restricted stock plans, if any, 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; or (viii) 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.
(d) Notice of Termination. Any termination
by the Company for Cause, or by the Executive for Good
Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with
Section 9(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the
provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date
of receipt of such notice, specifies the termination
date (which date shall be not more than thirty days
after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes
to a showing of Good Reason or Cause shall not waive
any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or
the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) Date of Termination. "Date of
Termination" means (i) if the Executive's employment
is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the
Notice of Termination or any later date specified
therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be
the date on which the Company notifies the Executive of
such termination and (iii) if the Executive's
employment is terminated by reason of death or
Disability, the Date of Termination shall be the date
of death of the Executive or the Disability
Commencement Date, as the case may be.
(f) Other Termination. The Executive's
employment may be terminated by the Executive
voluntarily, without Good Reason, during a thirty (30)
day period immediately following the first annual
anniversary of a Change in Control of the Company
("Window Period"). For purposes of this Agreement, a
"Change in 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 the Company (the "Outstanding
Company 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 Company
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 the Company or any corporation
controlled by the Company 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 are
satisfied;
(ii) Individuals who, as of
January 1, 1999, 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 Company Common
Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger
or consolidation in substantially the same
proportions as their ownership, immediately prior
to such reorganization, merger or consolidation,
of the Outstanding Company Stock and Outstanding
Company Voting Securities, as the case may be, (B)
no Person (excluding the Company, any employee
benefit plan or related trust of the Company,
Indiana Gas 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 Company
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 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 Company Common Stock and Outstanding
Company Voting Securities immediately prior to
such sale or other disposition in substantially
the same proportion as their ownership,
immediately prior to such sale or other
disposition, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities,
as the case may be, (2) no Person (excluding the
Company and any employee benefit plan or related
trust of the Company, Indiana Gas 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 Company
Common Stock or Outstanding Company 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; 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 the
Company would constitute an "Change in Control"
under subsection (iii) or (iv) of this Section
3(f) of this Agreement.
Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's
employment is terminated before a Change in Control as
defined in this Section 3(f) 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 a "Change in Control" and who effectuates a
"Change in Control" or (ii) otherwise occurred in
connection with, or in anticipation of, a "Change in
Control" which actually occurs, then for all purposes
of this Agreement, the date of a "Change in Control"
with respect to the Executive shall mean the date
immediately prior to the date of such termination of
the Executive's employment.
4. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause. If, during the
Employment Period, the Company shall terminate the
Executive's employment other than for Cause, death or
Disability, or the Executive shall terminate employment for
Good Reason or without reason during the Window Period.
(i) The Company shall pay to the Executive
in a lump sum in cash within fifteen calendar days
after the Date of Termination the aggregate of the
amounts set forth in clauses A, B and C below:
A. the sum of (1) the Executive's
Annual Base Salary through the Date of Termination
to the extent not theretofore paid, (2) the
product of (x) the greater of the highest bonus
paid to or the target bonus in effect for the
Executive with respect to the three years ending
prior to the year in which the Date of Termination
occurs (the "Minimum Bonus") and (y) a fraction,
the numerator of which is the number of days in
the current calendar year through the Date of
Termination, and the denominator of which is 365
and (3) any compensation previously deferred by
the Executive (together with any accrued interest
or earnings thereon) and any other nonqualified
benefit plan balances to the extent not
theretofore paid (the sum of the amounts described
in clauses (1), (2), and (3) shall be hereinafter
referred to as the "Accrued Obligations");
provided, however, that for purposes of this
Section 4, Base Salary shall include any elective
salary reductions in effect for the Executive
under any tax qualified or non-qualified deferred
compensation plan maintained by the Company; and
B. the amount equal to the
product of (1) three or, if less, the number of
years remaining in the Executive's Employment
Period at the Date of Termination, rounded to the
nearest twelfth (1/12th) of a year, and (2) the
sum of (x) the Executive's Annual Base Salary and
(y) the Minimum Bonus; and
C. an amount equal to the excess
of (a) the actuarial equivalent of the benefit
under the Company's qualified defined benefit
retirement plan or such other qualified defined
benefit pension plan in which the Executive
participates, if any (the "Retirement Plan")
(utilizing actuarial assumptions no less favorable
to the Executive than those in effect under the
Company's Retirement Plan immediately prior to the
Commencement Date), and any excess or supplemental
retirement plan in which the Executive
participates (together, the ASERP") which the Ex
ecutive would receive if the Executive's
employment continued for the duration of the
Employment Period at the Date of Termination
assuming for this purpose that all accrued
benefits are fully vested, and, assuming that the
Executive's compensation during the duration of
the Employment Period is the sum of the Annual
Base Salary and Minimum Bonus over (b) the
actuarial equivalent of the Executive's actual
benefit (paid or payable), if any, under the
Retirement Plan and the SERP as of the Date of
Termination;
(ii) any restricted stock and any other
stock awards under the Restricted Stock Plan or any
other Company sponsored plan or arrangement that were
outstanding immediately prior to the Commencement Date
("Prior Stock Awards") shall become immediately vested
and/or exercisable, as the case may be;
(iii) for the duration of the Employment
Period at the Date of Termination, or such longer
period as may be provided by the terms of the
appropriate plan, program, practice or policy, the
Company shall continue benefits to the Executive and/or
the Executive's family at least equal to those which
would have been provided to them in accordance with the
welfare Plans, programs, practices and Policies
described in section 2(b)(v) of this Agreement if the
Executive's employment had not been terminated or, it
more favorable to the Executive, as in effect generally
at any time thereafter with respect to other peer
executives of the Company and its affiliated companies
and their families; provided, however, that if the
Executive becomes reemployed with another employer and
is eligible to receive medical or other welfare
benefits under another employer provided plan, the
medical and other welfare benefits described herein
shall be secondary to those provided under such other
plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time
of commencement of benefits) of the Executive for
retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be
considered to have remained employed for the duration
of the Employment Period after the Date of Termination
and to have retired on the last day of such period; and
(iv) to the extent not theretofore paid or
provided, the Company shall timely pay or provide to
the Executive any other amounts or benefits required to
be paid or provided or which the Executive is entitled
to receive under any plan, program, policy or practice
or contract or agreement of the Company and its
affiliated companies, excluding any severance plan or
policy except to the extent that such plan or policy
provides, in accordance with its terms, benefits with a
value in excess of the benefits payable to the
Executive under this Section 4 (such other amounts
and benefits shall be hereinafter referred to as the
"Other Benefits").
(b) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause or the
Executive terminates employment without Good Reason or not
during the Window Period, this Agreement shall terminate
without further obligations to the Executive other than the
obligation to pay to the Executive (x) Accrued Obligations
less the amount determined under Section 4(a)(i)A(2) hereof,
and (y) Other Benefits, in each case to the extent
theretofore unpaid.
(c) Death . If the Executive's employment is termi
nated by reason of the Executive's death during the
Employment Period, this Agreement shall terminate without
further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination.
(d) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during
the Employment Period, this Agreement shall terminate
without further obligations to the Executive, other than for
payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be
paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination. With respect to the provision
of Other Benefits, the term Other Benefits as utilized in
this Section 4(d) shall include, and the Executive shall be
entitled after the Disability Commencement Date to receive,
disability and other benefits as in effect generally with
respect to other peer executives of the Company and its
affiliated companies and their families.
5. Confidential Information; Noncompetition.
(a) The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or
any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of
its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment
with the Company, the Executive shall not, without the prior
written consent of the Company or as may otherwise be
required by law or legal process (provided the Company has
been given notice of and opportunity to challenge or limit
the scope of disclosure purportedly so required),
communicate or divulge any such information, knowledge or
data to anyone other than the Company and those designated
by it.
(b) In the event of a termination of the Executive by
the Company for Cause or by the Executive before a Change in
Control and without Good Reason, until the second
anniversary of the Executive's Date of Termination, the
Executive will not directly or indirectly, own, manage,
operate, control or participate in the ownership,
management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or
have any financial interest in, any business which competes,
or that is planning to compete, with the utility business of
the Company or any of its affiliates in:
(i) Indiana;
(ii) Ohio, Michigan, Illinois or Kentucky;
and
(iii) the United States.
The parties expressly agree that the terms of this limited
non-competition provision under this section are reasonable,
enforceable, and necessary to protect the Company's
interests, and are valid and enforceable. In the unlikely
event, however, that a court of competent jurisdiction were
to determine that any portion of this limited
non-competition provision is unenforceable, then the parties
agree that the remainder of the limited non-competition
provision shall remain valid and enforceable to the maximum
extent possible.
(c) Specific Enforcement/Injunctive Relief. The
Executive agrees that it would be difficult to measure
damages to the Company from any breach of the covenants
contained in Subsection (b) above, but that such damages
from any breach would be great, incalculable and
irremediable, and that damages would be an inadequate
remedy. Accordingly, the Executive agrees that the Company
may have specific performance of the terms of this Agreement
in any court permitted by this Agreement. The parties agree
however, that specific performance and the "add back"
remedies described above shall not be the exclusive
remedies, and the Company may enforce any other remedy or
remedies available to it either in law or in equity
including, but not limited to, temporary, preliminary,
and/or permanent injunctive relief.
6. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not
the Executive obtains other employment. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the
Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest
on any delayed payment at the applicable Federal rate provided
for in Section 7872(f)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code").
7. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not
he assignable by the Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
he binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if
no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary or any
termination of this Agreement notwithstanding, in the event
it shall be determined that any payment or distribution or
benefit made or provided by the Company or its affiliates to
or for the benefit of the Executive whether pursuant to this
Agreement or otherwise, and determined without regard to any
additional payments required under this Section 8 (a "Pay
ment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred
by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross- Up Payment") in an amount such
that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, in
cluding whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to
be utilized in arriving at such determination, shall be made
by the Company's independent auditor (the "Accounting Firm")
which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the
receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 8, shall be paid by the
Company to the Executive within five days of the receipt of
the Accounting Firm's determination. Any determination by
the Accounting Firm shall be binding upon the Company and
the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it
is possible that Gross-Up Payments which will not have been
made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its
remedies pursuant to Section 8(c) and the Executive
thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit
of the Executive.
(c) The Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if
successful, would require the payment by the company of the
Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date
on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior
to the expiration of such period that it desires to contest
such claim, the Executive shall:
(i) give the Company any information
reasonably requested by the Company relating to such
claim,
(ii) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing from time to time, including,
without limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company,
(iii) cooperate with the Company in good
faith in order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto)
imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing
provisions of this Section 8(c), the Company shall control
all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such
claim and may, at its sole option, either direct the
Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts,
as the Company shall determine; provided, however, that if
the Company directs the Executive to pay such claim and sue
for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and
shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further
provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is
claimed to he due is limited solely to such contested
amount. Furthermore, the Company's control of the contest
shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall
be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any
other taxing authority.
(d) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 8(c), the
Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 8(c))
promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to
Section 8(c), a determination is made that the Executive
shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior
to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to
he repaid and the amount of ouch advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required
to he paid.
9. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of Indiana, without reference to
principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall
have no force, or effect. This Agreement may not be amended
or modified otherwise than by a written agreement executed
by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall he given by hand delivery to
the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Name
Address
If to the Company:
Attention: General Counsel
Indiana Energy, Inc.
1630 North Meridian Street
Indianapolis, Indiana 46202-1496
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee,
(c) The invalidity or unenforceability of any pro
vision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(e) On and after the Commencement Date, this Agreement
shall supersede any other agreement between the parties with
respect to the subject matter hereof and any such agreement
shall be deemed terminated without any remaining obligations
of either party thereunder.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its
Board of Directors, the Company has caused these presents to be
executed in its name on its behalf, all as of the day and year
first above written.
/s/ Lawrence A. Ferger
Executive Officer
December 9, 1998
Date
Indiana Energy, Inc.
By /s/ Otto N. Frenzel III
Chairman of Compensation Committee
of Board of Directors
December 4, 1998
Date
INDIANA ENERGY, INC.
EMPLOYMENT AGREEMENT
This AGREEMENT by and among Indiana Energy, Inc. ("Indiana
Energy"), an Indiana corporation, in consideration of the
services to be performed for Indiana Energy and/or for one or
more of its direct or indirect subsidiaries or affiliates
(collectively, the "Company"), and Niel C. Ellerbrook
(the "Executive"), is dated as of the first day of January, 1999.
1. Employment Period. The Company hereby agrees to
employ the Executive, and the Executive hereby agrees to remain
in the employ of the Company subject to the terms and conditions
of this Agreement, for the period commencing on the date the
Executive affixes his signature to this Agreement (the
"Commencement Date") and ending on the third annual anniversary
of the Commencement Date (the "Employment Period"); provided,
however, that the Employment Period shall automatically be
extended without action by either party for one (1) month
periods, without further action of the parties, as of the first
month anniversary of the Commencement Date and each succeeding
monthly anniversary unless the Company or the Executive shall
have served written notice to the other party prior to
February 1, 1999, or prior to any subsequent monthly anniversary,
as the case may be, of its or his intention that the Agreement
shall terminate at the end of the thirty-six (36) month period
that begins with the monthly anniversary of the Commencement Date
immediately following the date of such written notice; provided,
further, that the Employment Period shall automatically terminate
upon the Executive's attainment of age sixty-five (65). A notice
delivered by the Company or the Executive that it or he does not
intend to extend the term of this Agreement shall hereinafter be
referred to as a "Nonrenewal Notice." 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.
2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the
Executive shall serve in the position and at the
location set forth on Exhibit A hereto.
(ii) During the Employment Period, and
excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees
to devote full attention and time during normal
business hours to the business and affairs of the
Company and to use the Executive's reasonable best
efforts to perform such responsibilities in a
professional manner. It shall not be a violation of
this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage
personal investments, so long as such activities do not
significantly interfere with the performance of the
Executive's responsibilities as an employee of the
Company in accordance with this Agreement. It is
expressly understood and agreed that to the extent that
any such activities have been conducted by the
Executive prior to the Commencement Date, the continued
conduct of such activities (or the conduct of
activities similar in nature and scope thereto)
subsequent to the Commencement Date shall not
thereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary - During the Employment
Period, the Executive shall receive an annual base
salary ("Annual Base Salary") in an amount no less than
the Executive's annual base salary in effect
immediately prior to the Commencement Date, payable in
cash. If the Annual Base Salary is increased after the
Commencement Date, the increased Base Salary amount
shall become the minimum level of Annual Salary for the
Executive. The Annual Base Salary shall be paid no
less frequently than in equal monthly installments.
(ii) Annual Bonus. During the Employment
Period, the Executive shall have an annual bonus
opportunity no less than the applicable target award
percentage in effect for the Executive's employment
level which is in effect immediately prior to the
Commencement Date or, if greater, in effect at any time
after the Commencement Date.
(iii) Long-Term Incentives. During the
Employment Period, the Executive shall be eligible to
participate in all long-term incentive plans, including
the Indiana Energy, Inc. Executive Restricted Stock
Plan (the "Restricted Stock Plan"), practices, policies
and programs to the extent applicable generally to
other peer executives of the Company and its affiliated
companies. The Executive's target award percentage
under the Restricted Stock Plan shall be no less than
the applicable target award percentage in effect for
the Executive's employment level which is in effect
immediately prior to the Commencement Date or, if
greater, the target award percentage in effect for the
Executive any time after the Commencement Date.
(iv) Savings and Retirement Plans. During the
Employment Period, the Executive shall be eligible to
participate in all savings and retirement plans,
practices, policies and programs to the extent
applicable generally to other peer executives of the
Company and its affiliated entities.
(v) Welfare and Other Benefit Plans. During
the Employment Period, the Executive and/or the
Executive's family, as the case may be, shall be
eligible for participation in and shall receive all
benefits under welfare, fringe, change of control
protection, incentive, vacation and other similar
benefit plans, practices, policies and programs
provided by the Company and its affiliated entities
(including, without limitation, medical, prescription,
dental, disability, employee life, group life,
accidental death and travel accident insurance plans
and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated
entities.
(vi) Expenses. During the Employment Period,
the Executive shall be entitled to receive prompt
reimbursement for all reasonable business expenses
incurred by the Executive, in accordance with the
policies of the Company.
(vii) Indemnity. The Executive shall be
indemnified by the Company against claims arising in
connection with the Executive's status as an employee,
officer, director or agent of the Company in accordance
with the Company's indemnity policies for its senior
executives, subject to applicable law.
3. Termination of Employment.
(a) Death or Disability. The Executive's
employment shall terminate automatically upon the
Executive's death during the Employment Period. If the
Company determines in good faith that the Disability
(as defined below) of the Executive has occurred during
the Employment Period, it may give to the Executive
written notice in accordance with Section 9(b) of this
Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment
with the Company shall terminate effective on the
thirtieth day after receipt of such notice by the
Executive (the "Disability Commencement Date"),
provided that, within the thirty day period after such
receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall have the
meaning set forth in the Company's long-term disability
plan.
(b) Cause. The Company may terminate the
Executive's employment during the Employment Period for
Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) intentional gross misconduct
by the Executive damaging in a material way to the
Company, or
(ii) a material breach of this
Agreement, after the Company has given the
Executive notice thereof and a reasonable
opportunity to cure.
(c) Good Reason. The Executive's employment
may be terminated by the Executive for Good Reason.
For purposes of this Agreement and before a Change in
Control (as defined in Section 3(f) below) of the
Company, "Good Reason" shall mean a material breach by
the Company of this Agreement after the Executive has
given the Company notice of the breach and a reasonable
opportunity to cure. After a Change in Control of the
Company, "Good Reason" shall mean, 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 immediately prior to the Change in
Control; or any removal of the Executive from or
failure to reappoint or reelect him to any of such
positions that the Executive had immediately prior to
the Change in Control, 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 Executives of the Company effected
in the preceding twelve (12) months; (iv) the
relocation of the principal executive offices of the
Company or Company affiliate, 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 immediately 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 immediately prior to the Change in
Control, including but not limited to the Company's
stock option and restricted stock plans, if any, 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; or (viii) 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.
(d) Notice of Termination. Any termination
by the Company for Cause, or by the Executive for Good
Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with
Section 9(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the
provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date
of receipt of such notice, specifies the termination
date (which date shall be not more than thirty days
after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes
to a showing of Good Reason or Cause shall not waive
any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or
the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) Date of Termination. "Date of
Termination" means (i) if the Executive's employment
is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the
Notice of Termination or any later date specified
therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be
the date on which the Company notifies the Executive of
such termination and (iii) if the Executive's
employment is terminated by reason of death or
Disability, the Date of Termination shall be the date
of death of the Executive or the Disability
Commencement Date, as the case may be.
(f) Other Termination. The Executive's
employment may be terminated by the Executive
voluntarily, without Good Reason, during a thirty (30)
day period immediately following the first annual
anniversary of a Change in Control of the Company
("Window Period"). For purposes of this Agreement, a
"Change in 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 the Company (the "Outstanding
Company 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 Company
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 the Company or any corporation
controlled by the Company 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 are
satisfied;
(ii) Individuals who, as of
January 1, 1999, 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 Company Common
Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger
or consolidation in substantially the same
proportions as their ownership, immediately prior
to such reorganization, merger or consolidation,
of the Outstanding Company Stock and Outstanding
Company Voting Securities, as the case may be, (B)
no Person (excluding the Company, any employee
benefit plan or related trust of the Company,
Indiana Gas 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 Company
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 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 Company Common Stock and Outstanding
Company Voting Securities immediately prior to
such sale or other disposition in substantially
the same proportion as their ownership,
immediately prior to such sale or other
disposition, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities,
as the case may be, (2) no Person (excluding the
Company and any employee benefit plan or related
trust of the Company, Indiana Gas 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 Company
Common Stock or Outstanding Company 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; 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 the
Company would constitute an "Change in Control"
under subsection (iii) or (iv) of this Section
3(f) of this Agreement.
Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's
employment is terminated before a Change in Control as
defined in this Section 3(f) 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 a "Change in Control" and who effectuates a
"Change in Control" or (ii) otherwise occurred in
connection with, or in anticipation of, a "Change in
Control" which actually occurs, then for all purposes
of this Agreement, the date of a "Change in Control"
with respect to the Executive shall mean the date
immediately prior to the date of such termination of
the Executive's employment.
4. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause. If, during the
Employment Period, the Company shall terminate the
Executive's employment other than for Cause, death or
Disability, or the Executive shall terminate employment for
Good Reason or without reason during the Window Period.
(i) The Company shall pay to the Executive
in a lump sum in cash within fifteen calendar days
after the Date of Termination the aggregate of the
amounts set forth in clauses A, B and C below:
A. the sum of (1) the Executive's
Annual Base Salary through the Date of Termination
to the extent not theretofore paid, (2) the
product of (x) the greater of the highest bonus
paid to or the target bonus in effect for the
Executive with respect to the three years ending
prior to the year in which the Date of Termination
occurs (the "Minimum Bonus") and (y) a fraction,
the numerator of which is the number of days in
the current calendar year through the Date of
Termination, and the denominator of which is 365
and (3) any compensation previously deferred by
the Executive (together with any accrued interest
or earnings thereon) and any other nonqualified
benefit plan balances to the extent not
theretofore paid (the sum of the amounts described
in clauses (1), (2), and (3) shall be hereinafter
referred to as the "Accrued Obligations");
provided, however, that for purposes of this
Section 4, Base Salary shall include any elective
salary reductions in effect for the Executive
under any tax qualified or non-qualified deferred
compensation plan maintained by the Company; and
B. the amount equal to the
product of (1) three or, if less, the number of
years remaining in the Executive's Employment
Period at the Date of Termination, rounded to the
nearest twelfth (1/12th) of a year, and (2) the
sum of (x) the Executive's Annual Base Salary and
(y) the Minimum Bonus; and
C. an amount equal to the excess
of (a) the actuarial equivalent of the benefit
under the Company's qualified defined benefit
retirement plan or such other qualified defined
benefit pension plan in which the Executive
participates, if any (the "Retirement Plan")
(utilizing actuarial assumptions no less favorable
to the Executive than those in effect under the
Company's Retirement Plan immediately prior to the
Commencement Date), and any excess or supplemental
retirement plan in which the Executive
participates (together, the ASERP") which the Ex
ecutive would receive if the Executive's
employment continued for the duration of the
Employment Period at the Date of Termination
assuming for this purpose that all accrued
benefits are fully vested, and, assuming that the
Executive's compensation during the duration of
the Employment Period is the sum of the Annual
Base Salary and Minimum Bonus over (b) the
actuarial equivalent of the Executive's actual
benefit (paid or payable), if any, under the
Retirement Plan and the SERP as of the Date of
Termination;
(ii) any restricted stock and any other
stock awards under the Restricted Stock Plan or any
other Company sponsored plan or arrangement that were
outstanding immediately prior to the Commencement Date
("Prior Stock Awards") shall become immediately vested
and/or exercisable, as the case may be;
(iii) for the duration of the Employment
Period at the Date of Termination, or such longer
period as may be provided by the terms of the
appropriate plan, program, practice or policy, the
Company shall continue benefits to the Executive and/or
the Executive's family at least equal to those which
would have been provided to them in accordance with the
welfare Plans, programs, practices and Policies
described in section 2(b)(v) of this Agreement if the
Executive's employment had not been terminated or, it
more favorable to the Executive, as in effect generally
at any time thereafter with respect to other peer
executives of the Company and its affiliated companies
and their families; provided, however, that if the
Executive becomes reemployed with another employer and
is eligible to receive medical or other welfare
benefits under another employer provided plan, the
medical and other welfare benefits described herein
shall be secondary to those provided under such other
plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time
of commencement of benefits) of the Executive for
retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be
considered to have remained employed for the duration
of the Employment Period after the Date of Termination
and to have retired on the last day of such period; and
(iv) to the extent not theretofore paid or
provided, the Company shall timely pay or provide to
the Executive any other amounts or benefits required to
be paid or provided or which the Executive is entitled
to receive under any plan, program, policy or practice
or contract or agreement of the Company and its
affiliated companies, excluding any severance plan or
policy except to the extent that such plan or policy
provides, in accordance with its terms, benefits with a
value in excess of the benefits payable to the
Executive under this Section 4 (such other amounts
and benefits shall be hereinafter referred to as the
"Other Benefits").
(b) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause or the
Executive terminates employment without Good Reason or not
during the Window Period, this Agreement shall terminate
without further obligations to the Executive other than the
obligation to pay to the Executive (x) Accrued Obligations
less the amount determined under Section 4(a)(i)A(2) hereof,
and (y) Other Benefits, in each case to the extent
theretofore unpaid.
(c) Death . If the Executive's employment is termi
nated by reason of the Executive's death during the
Employment Period, this Agreement shall terminate without
further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination.
(d) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during
the Employment Period, this Agreement shall terminate
without further obligations to the Executive, other than for
payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be
paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination. With respect to the provision
of Other Benefits, the term Other Benefits as utilized in
this Section 4(d) shall include, and the Executive shall be
entitled after the Disability Commencement Date to receive,
disability and other benefits as in effect generally with
respect to other peer executives of the Company and its
affiliated companies and their families.
5. Confidential Information; Noncompetition.
(a) The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or
any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of
its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment
with the Company, the Executive shall not, without the prior
written consent of the Company or as may otherwise be
required by law or legal process (provided the Company has
been given notice of and opportunity to challenge or limit
the scope of disclosure purportedly so required),
communicate or divulge any such information, knowledge or
data to anyone other than the Company and those designated
by it.
(b) In the event of a termination of the Executive by
the Company for Cause or by the Executive before a Change in
Control and without Good Reason, until the second
anniversary of the Executive's Date of Termination, the
Executive will not directly or indirectly, own, manage,
operate, control or participate in the ownership,
management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or
have any financial interest in, any business which competes,
or that is planning to compete, with the utility business of
the Company or any of its affiliates in:
(i) Indiana;
(ii) Ohio, Michigan, Illinois or Kentucky;
and
(iii) the United States.
The parties expressly agree that the terms of this limited
non-competition provision under this section are reasonable,
enforceable, and necessary to protect the Company's
interests, and are valid and enforceable. In the unlikely
event, however, that a court of competent jurisdiction were
to determine that any portion of this limited
non-competition provision is unenforceable, then the parties
agree that the remainder of the limited non-competition
provision shall remain valid and enforceable to the maximum
extent possible.
(c) Specific Enforcement/Injunctive Relief. The
Executive agrees that it would be difficult to measure
damages to the Company from any breach of the covenants
contained in Subsection (b) above, but that such damages
from any breach would be great, incalculable and
irremediable, and that damages would be an inadequate
remedy. Accordingly, the Executive agrees that the Company
may have specific performance of the terms of this Agreement
in any court permitted by this Agreement. The parties agree
however, that specific performance and the "add back"
remedies described above shall not be the exclusive
remedies, and the Company may enforce any other remedy or
remedies available to it either in law or in equity
including, but not limited to, temporary, preliminary,
and/or permanent injunctive relief.
6. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not
the Executive obtains other employment. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the
Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest
on any delayed payment at the applicable Federal rate provided
for in Section 7872(f)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code").
7. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not
he assignable by the Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
he binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if
no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary or any
termination of this Agreement notwithstanding, in the event
it shall be determined that any payment or distribution or
benefit made or provided by the Company or its affiliates to
or for the benefit of the Executive whether pursuant to this
Agreement or otherwise, and determined without regard to any
additional payments required under this Section 8 (a "Pay
ment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred
by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross- Up Payment") in an amount such
that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, in
cluding whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to
be utilized in arriving at such determination, shall be made
by the Company's independent auditor (the "Accounting Firm")
which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the
receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 8, shall be paid by the
Company to the Executive within five days of the receipt of
the Accounting Firm's determination. Any determination by
the Accounting Firm shall be binding upon the Company and
the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it
is possible that Gross-Up Payments which will not have been
made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its
remedies pursuant to Section 8(c) and the Executive
thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit
of the Executive.
(c) The Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if
successful, would require the payment by the company of the
Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date
on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior
to the expiration of such period that it desires to contest
such claim, the Executive shall:
(i) give the Company any information
reasonably requested by the Company relating to such
claim,
(ii) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing from time to time, including,
without limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company,
(iii) cooperate with the Company in good
faith in order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto)
imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing
provisions of this Section 8(c), the Company shall control
all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such
claim and may, at its sole option, either direct the
Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts,
as the Company shall determine; provided, however, that if
the Company directs the Executive to pay such claim and sue
for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and
shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further
provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is
claimed to he due is limited solely to such contested
amount. Furthermore, the Company's control of the contest
shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall
be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any
other taxing authority.
(d) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 8(c), the
Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 8(c))
promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to
Section 8(c), a determination is made that the Executive
shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior
to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to
he repaid and the amount of ouch advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required
to he paid.
9. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of Indiana, without reference to
principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall
have no force, or effect. This Agreement may not be amended
or modified otherwise than by a written agreement executed
by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall he given by hand delivery to
the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Name
Address
If to the Company:
Attention: General Counsel
Indiana Energy, Inc.
1630 North Meridian Street
Indianapolis, Indiana 46202-1496
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee,
(c) The invalidity or unenforceability of any pro
vision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(e) On and after the Commencement Date, this Agreement
shall supersede any other agreement between the parties with
respect to the subject matter hereof and any such agreement
shall be deemed terminated without any remaining obligations
of either party thereunder.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its
Board of Directors, the Company has caused these presents to be
executed in its name on its behalf, all as of the day and year
first above written.
/s/ Niel C. Ellerbrook
Executive Officer
December 9, 1998
Date
Indiana Energy, Inc.
By /s/ Otto N. Frenzel III
Chairman of Compensation Committee
of Board of Directors
December 4, 1998
Date
INDIANA ENERGY, INC.
EMPLOYMENT AGREEMENT
This AGREEMENT by and among Indiana Energy, Inc. ("Indiana
Energy"), an Indiana corporation, in consideration of the
services to be performed for Indiana Energy and/or for one or
more of its direct or indirect subsidiaries or affiliates
(collectively, the "Company"), and Paul T. Baker (the "Executive"),
is dated as of the first day of January, 1999.
1. Employment Period. The Company hereby agrees to
employ the Executive, and the Executive hereby agrees to remain
in the employ of the Company subject to the terms and conditions
of this Agreement, for the period commencing on the date the
Executive affixes his signature to this Agreement (the
"Commencement Date") and ending on the third annual anniversary
of the Commencement Date (the "Employment Period"); provided,
however, that the Employment Period shall automatically be
extended without action by either party for one (1) month
periods, without further action of the parties, as of the first
month anniversary of the Commencement Date and each succeeding
monthly anniversary unless the Company or the Executive shall
have served written notice to the other party prior to
February 1, 1999, or prior to any subsequent monthly anniversary,
as the case may be, of its or his intention that the Agreement
shall terminate at the end of the thirty-six (36) month period
that begins with the monthly anniversary of the Commencement Date
immediately following the date of such written notice; provided,
further, that the Employment Period shall automatically terminate
upon the Executive's attainment of age sixty-five (65). A notice
delivered by the Company or the Executive that it or he does not
intend to extend the term of this Agreement shall hereinafter be
referred to as a "Nonrenewal Notice." 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.
2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the
Executive shall serve in the position and at the
location set forth on Exhibit A hereto.
(ii) During the Employment Period, and
excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees
to devote full attention and time during normal
business hours to the business and affairs of the
Company and to use the Executive's reasonable best
efforts to perform such responsibilities in a
professional manner. It shall not be a violation of
this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage
personal investments, so long as such activities do not
significantly interfere with the performance of the
Executive's responsibilities as an employee of the
Company in accordance with this Agreement. It is
expressly understood and agreed that to the extent that
any such activities have been conducted by the
Executive prior to the Commencement Date, the continued
conduct of such activities (or the conduct of
activities similar in nature and scope thereto)
subsequent to the Commencement Date shall not
thereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary - During the Employment
Period, the Executive shall receive an annual base
salary ("Annual Base Salary") in an amount no less than
the Executive's annual base salary in effect
immediately prior to the Commencement Date, payable in
cash. If the Annual Base Salary is increased after the
Commencement Date, the increased Base Salary amount
shall become the minimum level of Annual Salary for the
Executive. The Annual Base Salary shall be paid no
less frequently than in equal monthly installments.
(ii) Annual Bonus. During the Employment
Period, the Executive shall have an annual bonus
opportunity no less than the applicable target award
percentage in effect for the Executive's employment
level which is in effect immediately prior to the
Commencement Date or, if greater, in effect at any time
after the Commencement Date.
(iii) Long-Term Incentives. During the
Employment Period, the Executive shall be eligible to
participate in all long-term incentive plans, including
the Indiana Energy, Inc. Executive Restricted Stock
Plan (the "Restricted Stock Plan"), practices, policies
and programs to the extent applicable generally to
other peer executives of the Company and its affiliated
companies. The Executive's target award percentage
under the Restricted Stock Plan shall be no less than
the applicable target award percentage in effect for
the Executive's employment level which is in effect
immediately prior to the Commencement Date or, if
greater, the target award percentage in effect for the
Executive any time after the Commencement Date.
(iv) Savings and Retirement Plans. During the
Employment Period, the Executive shall be eligible to
participate in all savings and retirement plans,
practices, policies and programs to the extent
applicable generally to other peer executives of the
Company and its affiliated entities.
(v) Welfare and Other Benefit Plans. During
the Employment Period, the Executive and/or the
Executive's family, as the case may be, shall be
eligible for participation in and shall receive all
benefits under welfare, fringe, change of control
protection, incentive, vacation and other similar
benefit plans, practices, policies and programs
provided by the Company and its affiliated entities
(including, without limitation, medical, prescription,
dental, disability, employee life, group life,
accidental death and travel accident insurance plans
and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated
entities.
(vi) Expenses. During the Employment Period,
the Executive shall be entitled to receive prompt
reimbursement for all reasonable business expenses
incurred by the Executive, in accordance with the
policies of the Company.
(vii) Indemnity. The Executive shall be
indemnified by the Company against claims arising in
connection with the Executive's status as an employee,
officer, director or agent of the Company in accordance
with the Company's indemnity policies for its senior
executives, subject to applicable law.
3. Termination of Employment.
(a) Death or Disability. The Executive's
employment shall terminate automatically upon the
Executive's death during the Employment Period. If the
Company determines in good faith that the Disability
(as defined below) of the Executive has occurred during
the Employment Period, it may give to the Executive
written notice in accordance with Section 9(b) of this
Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment
with the Company shall terminate effective on the
thirtieth day after receipt of such notice by the
Executive (the "Disability Commencement Date"),
provided that, within the thirty day period after such
receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall have the
meaning set forth in the Company's long-term disability
plan.
(b) Cause. The Company may terminate the
Executive's employment during the Employment Period for
Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) intentional gross misconduct
by the Executive damaging in a material way to the
Company, or
(ii) a material breach of this
Agreement, after the Company has given the
Executive notice thereof and a reasonable
opportunity to cure.
(c) Good Reason. The Executive's employment
may be terminated by the Executive for Good Reason.
For purposes of this Agreement and before a Change in
Control (as defined in Section 3(f) below) of the
Company, "Good Reason" shall mean a material breach by
the Company of this Agreement after the Executive has
given the Company notice of the breach and a reasonable
opportunity to cure. After a Change in Control of the
Company, "Good Reason" shall mean, 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 immediately prior to the Change in
Control; or any removal of the Executive from or
failure to reappoint or reelect him to any of such
positions that the Executive had immediately prior to
the Change in Control, 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 Executives of the Company effected
in the preceding twelve (12) months; (iv) the
relocation of the principal executive offices of the
Company or Company affiliate, 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 immediately 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 immediately prior to the Change in
Control, including but not limited to the Company's
stock option and restricted stock plans, if any, 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; or (viii) 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.
(d) Notice of Termination. Any termination
by the Company for Cause, or by the Executive for Good
Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with
Section 9(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the
provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date
of receipt of such notice, specifies the termination
date (which date shall be not more than thirty days
after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes
to a showing of Good Reason or Cause shall not waive
any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or
the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) Date of Termination. "Date of
Termination" means (i) if the Executive's employment
is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the
Notice of Termination or any later date specified
therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be
the date on which the Company notifies the Executive of
such termination and (iii) if the Executive's
employment is terminated by reason of death or
Disability, the Date of Termination shall be the date
of death of the Executive or the Disability
Commencement Date, as the case may be.
(f) Other Termination. The Executive's
employment may be terminated by the Executive
voluntarily, without Good Reason, during a thirty (30)
day period immediately following the first annual
anniversary of a Change in Control of the Company
("Window Period"). For purposes of this Agreement, a
"Change in 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 the Company (the "Outstanding
Company 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 Company
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 the Company or any corporation
controlled by the Company 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 are
satisfied;
(ii) Individuals who, as of
January 1, 1999, 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 Company Common
Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger
or consolidation in substantially the same
proportions as their ownership, immediately prior
to such reorganization, merger or consolidation,
of the Outstanding Company Stock and Outstanding
Company Voting Securities, as the case may be, (B)
no Person (excluding the Company, any employee
benefit plan or related trust of the Company,
Indiana Gas 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 Company
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 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 Company Common Stock and Outstanding
Company Voting Securities immediately prior to
such sale or other disposition in substantially
the same proportion as their ownership,
immediately prior to such sale or other
disposition, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities,
as the case may be, (2) no Person (excluding the
Company and any employee benefit plan or related
trust of the Company, Indiana Gas 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 Company
Common Stock or Outstanding Company 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; 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 the
Company would constitute an "Change in Control"
under subsection (iii) or (iv) of this Section
3(f) of this Agreement.
Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's
employment is terminated before a Change in Control as
defined in this Section 3(f) 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 a "Change in Control" and who effectuates a
"Change in Control" or (ii) otherwise occurred in
connection with, or in anticipation of, a "Change in
Control" which actually occurs, then for all purposes
of this Agreement, the date of a "Change in Control"
with respect to the Executive shall mean the date
immediately prior to the date of such termination of
the Executive's employment.
4. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause. If, during the
Employment Period, the Company shall terminate the
Executive's employment other than for Cause, death or
Disability, or the Executive shall terminate employment for
Good Reason or without reason during the Window Period.
(i) The Company shall pay to the Executive
in a lump sum in cash within fifteen calendar days
after the Date of Termination the aggregate of the
amounts set forth in clauses A, B and C below:
A. the sum of (1) the Executive's
Annual Base Salary through the Date of Termination
to the extent not theretofore paid, (2) the
product of (x) the greater of the highest bonus
paid to or the target bonus in effect for the
Executive with respect to the three years ending
prior to the year in which the Date of Termination
occurs (the "Minimum Bonus") and (y) a fraction,
the numerator of which is the number of days in
the current calendar year through the Date of
Termination, and the denominator of which is 365
and (3) any compensation previously deferred by
the Executive (together with any accrued interest
or earnings thereon) and any other nonqualified
benefit plan balances to the extent not
theretofore paid (the sum of the amounts described
in clauses (1), (2), and (3) shall be hereinafter
referred to as the "Accrued Obligations");
provided, however, that for purposes of this
Section 4, Base Salary shall include any elective
salary reductions in effect for the Executive
under any tax qualified or non-qualified deferred
compensation plan maintained by the Company; and
B. the amount equal to the
product of (1) three or, if less, the number of
years remaining in the Executive's Employment
Period at the Date of Termination, rounded to the
nearest twelfth (1/12th) of a year, and (2) the
sum of (x) the Executive's Annual Base Salary and
(y) the Minimum Bonus; and
C. an amount equal to the excess
of (a) the actuarial equivalent of the benefit
under the Company's qualified defined benefit
retirement plan or such other qualified defined
benefit pension plan in which the Executive
participates, if any (the "Retirement Plan")
(utilizing actuarial assumptions no less favorable
to the Executive than those in effect under the
Company's Retirement Plan immediately prior to the
Commencement Date), and any excess or supplemental
retirement plan in which the Executive
participates (together, the ASERP") which the Ex
ecutive would receive if the Executive's
employment continued for the duration of the
Employment Period at the Date of Termination
assuming for this purpose that all accrued
benefits are fully vested, and, assuming that the
Executive's compensation during the duration of
the Employment Period is the sum of the Annual
Base Salary and Minimum Bonus over (b) the
actuarial equivalent of the Executive's actual
benefit (paid or payable), if any, under the
Retirement Plan and the SERP as of the Date of
Termination;
(ii) any restricted stock and any other
stock awards under the Restricted Stock Plan or any
other Company sponsored plan or arrangement that were
outstanding immediately prior to the Commencement Date
("Prior Stock Awards") shall become immediately vested
and/or exercisable, as the case may be;
(iii) for the duration of the Employment
Period at the Date of Termination, or such longer
period as may be provided by the terms of the
appropriate plan, program, practice or policy, the
Company shall continue benefits to the Executive and/or
the Executive's family at least equal to those which
would have been provided to them in accordance with the
welfare Plans, programs, practices and Policies
described in section 2(b)(v) of this Agreement if the
Executive's employment had not been terminated or, it
more favorable to the Executive, as in effect generally
at any time thereafter with respect to other peer
executives of the Company and its affiliated companies
and their families; provided, however, that if the
Executive becomes reemployed with another employer and
is eligible to receive medical or other welfare
benefits under another employer provided plan, the
medical and other welfare benefits described herein
shall be secondary to those provided under such other
plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time
of commencement of benefits) of the Executive for
retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be
considered to have remained employed for the duration
of the Employment Period after the Date of Termination
and to have retired on the last day of such period; and
(iv) to the extent not theretofore paid or
provided, the Company shall timely pay or provide to
the Executive any other amounts or benefits required to
be paid or provided or which the Executive is entitled
to receive under any plan, program, policy or practice
or contract or agreement of the Company and its
affiliated companies, excluding any severance plan or
policy except to the extent that such plan or policy
provides, in accordance with its terms, benefits with a
value in excess of the benefits payable to the
Executive under this Section 4 (such other amounts
and benefits shall be hereinafter referred to as the
"Other Benefits").
(b) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause or the
Executive terminates employment without Good Reason or not
during the Window Period, this Agreement shall terminate
without further obligations to the Executive other than the
obligation to pay to the Executive (x) Accrued Obligations
less the amount determined under Section 4(a)(i)A(2) hereof,
and (y) Other Benefits, in each case to the extent
theretofore unpaid.
(c) Death . If the Executive's employment is termi
nated by reason of the Executive's death during the
Employment Period, this Agreement shall terminate without
further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination.
(d) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during
the Employment Period, this Agreement shall terminate
without further obligations to the Executive, other than for
payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be
paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination. With respect to the provision
of Other Benefits, the term Other Benefits as utilized in
this Section 4(d) shall include, and the Executive shall be
entitled after the Disability Commencement Date to receive,
disability and other benefits as in effect generally with
respect to other peer executives of the Company and its
affiliated companies and their families.
5. Confidential Information; Noncompetition.
(a) The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or
any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of
its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment
with the Company, the Executive shall not, without the prior
written consent of the Company or as may otherwise be
required by law or legal process (provided the Company has
been given notice of and opportunity to challenge or limit
the scope of disclosure purportedly so required),
communicate or divulge any such information, knowledge or
data to anyone other than the Company and those designated
by it.
(b) In the event of a termination of the Executive by
the Company for Cause or by the Executive before a Change in
Control and without Good Reason, until the second
anniversary of the Executive's Date of Termination, the
Executive will not directly or indirectly, own, manage,
operate, control or participate in the ownership,
management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or
have any financial interest in, any business which competes,
or that is planning to compete, with the utility business of
the Company or any of its affiliates in:
(i) Indiana;
(ii) Ohio, Michigan, Illinois or Kentucky;
and
(iii) the United States.
The parties expressly agree that the terms of this limited
non-competition provision under this section are reasonable,
enforceable, and necessary to protect the Company's
interests, and are valid and enforceable. In the unlikely
event, however, that a court of competent jurisdiction were
to determine that any portion of this limited
non-competition provision is unenforceable, then the parties
agree that the remainder of the limited non-competition
provision shall remain valid and enforceable to the maximum
extent possible.
(c) Specific Enforcement/Injunctive Relief. The
Executive agrees that it would be difficult to measure
damages to the Company from any breach of the covenants
contained in Subsection (b) above, but that such damages
from any breach would be great, incalculable and
irremediable, and that damages would be an inadequate
remedy. Accordingly, the Executive agrees that the Company
may have specific performance of the terms of this Agreement
in any court permitted by this Agreement. The parties agree
however, that specific performance and the "add back"
remedies described above shall not be the exclusive
remedies, and the Company may enforce any other remedy or
remedies available to it either in law or in equity
including, but not limited to, temporary, preliminary,
and/or permanent injunctive relief.
6. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not
the Executive obtains other employment. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the
Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest
on any delayed payment at the applicable Federal rate provided
for in Section 7872(f)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code").
7. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not
he assignable by the Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
he binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if
no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary or any
termination of this Agreement notwithstanding, in the event
it shall be determined that any payment or distribution or
benefit made or provided by the Company or its affiliates to
or for the benefit of the Executive whether pursuant to this
Agreement or otherwise, and determined without regard to any
additional payments required under this Section 8 (a "Pay
ment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred
by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross- Up Payment") in an amount such
that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, in
cluding whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to
be utilized in arriving at such determination, shall be made
by the Company's independent auditor (the "Accounting Firm")
which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the
receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 8, shall be paid by the
Company to the Executive within five days of the receipt of
the Accounting Firm's determination. Any determination by
the Accounting Firm shall be binding upon the Company and
the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it
is possible that Gross-Up Payments which will not have been
made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its
remedies pursuant to Section 8(c) and the Executive
thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit
of the Executive.
(c) The Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if
successful, would require the payment by the company of the
Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date
on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior
to the expiration of such period that it desires to contest
such claim, the Executive shall:
(i) give the Company any information
reasonably requested by the Company relating to such
claim,
(ii) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing from time to time, including,
without limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company,
(iii) cooperate with the Company in good
faith in order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto)
imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing
provisions of this Section 8(c), the Company shall control
all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such
claim and may, at its sole option, either direct the
Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts,
as the Company shall determine; provided, however, that if
the Company directs the Executive to pay such claim and sue
for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and
shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further
provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is
claimed to he due is limited solely to such contested
amount. Furthermore, the Company's control of the contest
shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall
be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any
other taxing authority.
(d) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 8(c), the
Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 8(c))
promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to
Section 8(c), a determination is made that the Executive
shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior
to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to
he repaid and the amount of ouch advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required
to he paid.
9. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of Indiana, without reference to
principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall
have no force, or effect. This Agreement may not be amended
or modified otherwise than by a written agreement executed
by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall he given by hand delivery to
the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Name
Address
If to the Company:
Attention: General Counsel
Indiana Energy, Inc.
1630 North Meridian Street
Indianapolis, Indiana 46202-1496
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee,
(c) The invalidity or unenforceability of any pro
vision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(e) On and after the Commencement Date, this Agreement
shall supersede any other agreement between the parties with
respect to the subject matter hereof and any such agreement
shall be deemed terminated without any remaining obligations
of either party thereunder.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its
Board of Directors, the Company has caused these presents to be
executed in its name on its behalf, all as of the day and year
first above written.
/s/ Paul T. Baker
Executive Officer
December 10, 1998
Date
Indiana Energy, Inc.
By /s/ Otto N. Frenzel III
Chairman of Compensation Committee
of Board of Directors
December 4, 1998
Date
INDIANA ENERGY, INC.
EMPLOYMENT AGREEMENT
This AGREEMENT by and among Indiana Energy, Inc. ("Indiana
Energy"), an Indiana corporation, in consideration of the
services to be performed for Indiana Energy and/or for one or
more of its direct or indirect subsidiaries or affiliates
(collectively, the "Company"), and Anthony E. Ard (the "Executive"),
is dated as of the first day of January, 1999.
1. Employment Period. The Company hereby agrees to
employ the Executive, and the Executive hereby agrees to remain
in the employ of the Company subject to the terms and conditions
of this Agreement, for the period commencing on the date the
Executive affixes his signature to this Agreement (the
"Commencement Date") and ending on the third annual anniversary
of the Commencement Date (the "Employment Period"); provided,
however, that the Employment Period shall automatically be
extended without action by either party for one (1) month
periods, without further action of the parties, as of the first
month anniversary of the Commencement Date and each succeeding
monthly anniversary unless the Company or the Executive shall
have served written notice to the other party prior to
February 1, 1999, or prior to any subsequent monthly anniversary,
as the case may be, of its or his intention that the Agreement
shall terminate at the end of the thirty-six (36) month period
that begins with the monthly anniversary of the Commencement Date
immediately following the date of such written notice; provided,
further, that the Employment Period shall automatically terminate
upon the Executive's attainment of age sixty-five (65). A notice
delivered by the Company or the Executive that it or he does not
intend to extend the term of this Agreement shall hereinafter be
referred to as a "Nonrenewal Notice." 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.
2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the
Executive shall serve in the position and at the
location set forth on Exhibit A hereto.
(ii) During the Employment Period, and
excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees
to devote full attention and time during normal
business hours to the business and affairs of the
Company and to use the Executive's reasonable best
efforts to perform such responsibilities in a
professional manner. It shall not be a violation of
this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage
personal investments, so long as such activities do not
significantly interfere with the performance of the
Executive's responsibilities as an employee of the
Company in accordance with this Agreement. It is
expressly understood and agreed that to the extent that
any such activities have been conducted by the
Executive prior to the Commencement Date, the continued
conduct of such activities (or the conduct of
activities similar in nature and scope thereto)
subsequent to the Commencement Date shall not
thereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary - During the Employment
Period, the Executive shall receive an annual base
salary ("Annual Base Salary") in an amount no less than
the Executive's annual base salary in effect
immediately prior to the Commencement Date, payable in
cash. If the Annual Base Salary is increased after the
Commencement Date, the increased Base Salary amount
shall become the minimum level of Annual Salary for the
Executive. The Annual Base Salary shall be paid no
less frequently than in equal monthly installments.
(ii) Annual Bonus. During the Employment
Period, the Executive shall have an annual bonus
opportunity no less than the applicable target award
percentage in effect for the Executive's employment
level which is in effect immediately prior to the
Commencement Date or, if greater, in effect at any time
after the Commencement Date.
(iii) Long-Term Incentives. During the
Employment Period, the Executive shall be eligible to
participate in all long-term incentive plans, including
the Indiana Energy, Inc. Executive Restricted Stock
Plan (the "Restricted Stock Plan"), practices, policies
and programs to the extent applicable generally to
other peer executives of the Company and its affiliated
companies. The Executive's target award percentage
under the Restricted Stock Plan shall be no less than
the applicable target award percentage in effect for
the Executive's employment level which is in effect
immediately prior to the Commencement Date or, if
greater, the target award percentage in effect for the
Executive any time after the Commencement Date.
(iv) Savings and Retirement Plans. During the
Employment Period, the Executive shall be eligible to
participate in all savings and retirement plans,
practices, policies and programs to the extent
applicable generally to other peer executives of the
Company and its affiliated entities.
(v) Welfare and Other Benefit Plans. During
the Employment Period, the Executive and/or the
Executive's family, as the case may be, shall be
eligible for participation in and shall receive all
benefits under welfare, fringe, change of control
protection, incentive, vacation and other similar
benefit plans, practices, policies and programs
provided by the Company and its affiliated entities
(including, without limitation, medical, prescription,
dental, disability, employee life, group life,
accidental death and travel accident insurance plans
and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated
entities.
(vi) Expenses. During the Employment Period,
the Executive shall be entitled to receive prompt
reimbursement for all reasonable business expenses
incurred by the Executive, in accordance with the
policies of the Company.
(vii) Indemnity. The Executive shall be
indemnified by the Company against claims arising in
connection with the Executive's status as an employee,
officer, director or agent of the Company in accordance
with the Company's indemnity policies for its senior
executives, subject to applicable law.
3. Termination of Employment.
(a) Death or Disability. The Executive's
employment shall terminate automatically upon the
Executive's death during the Employment Period. If the
Company determines in good faith that the Disability
(as defined below) of the Executive has occurred during
the Employment Period, it may give to the Executive
written notice in accordance with Section 9(b) of this
Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment
with the Company shall terminate effective on the
thirtieth day after receipt of such notice by the
Executive (the "Disability Commencement Date"),
provided that, within the thirty day period after such
receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall have the
meaning set forth in the Company's long-term disability
plan.
(b) Cause. The Company may terminate the
Executive's employment during the Employment Period for
Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) intentional gross misconduct
by the Executive damaging in a material way to the
Company, or
(ii) a material breach of this
Agreement, after the Company has given the
Executive notice thereof and a reasonable
opportunity to cure.
(c) Good Reason. The Executive's employment
may be terminated by the Executive for Good Reason.
For purposes of this Agreement and before a Change in
Control (as defined in Section 3(f) below) of the
Company, "Good Reason" shall mean a material breach by
the Company of this Agreement after the Executive has
given the Company notice of the breach and a reasonable
opportunity to cure. After a Change in Control of the
Company, "Good Reason" shall mean, 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 immediately prior to the Change in
Control; or any removal of the Executive from or
failure to reappoint or reelect him to any of such
positions that the Executive had immediately prior to
the Change in Control, 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 Executives of the Company effected
in the preceding twelve (12) months; (iv) the
relocation of the principal executive offices of the
Company or Company affiliate, 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 immediately 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 immediately prior to the Change in
Control, including but not limited to the Company's
stock option and restricted stock plans, if any, 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; or (viii) 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.
(d) Notice of Termination. Any termination
by the Company for Cause, or by the Executive for Good
Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with
Section 9(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the
provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date
of receipt of such notice, specifies the termination
date (which date shall be not more than thirty days
after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes
to a showing of Good Reason or Cause shall not waive
any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or
the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) Date of Termination. "Date of
Termination" means (i) if the Executive's employment
is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the
Notice of Termination or any later date specified
therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be
the date on which the Company notifies the Executive of
such termination and (iii) if the Executive's
employment is terminated by reason of death or
Disability, the Date of Termination shall be the date
of death of the Executive or the Disability
Commencement Date, as the case may be.
(f) Other Termination. The Executive's
employment may be terminated by the Executive
voluntarily, without Good Reason, during a thirty (30)
day period immediately following the first annual
anniversary of a Change in Control of the Company
("Window Period"). For purposes of this Agreement, a
"Change in 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 the Company (the "Outstanding
Company 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 Company
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 the Company or any corporation
controlled by the Company 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 are
satisfied;
(ii) Individuals who, as of
January 1, 1999, 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 Company Common
Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger
or consolidation in substantially the same
proportions as their ownership, immediately prior
to such reorganization, merger or consolidation,
of the Outstanding Company Stock and Outstanding
Company Voting Securities, as the case may be, (B)
no Person (excluding the Company, any employee
benefit plan or related trust of the Company,
Indiana Gas 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 Company
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 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 Company Common Stock and Outstanding
Company Voting Securities immediately prior to
such sale or other disposition in substantially
the same proportion as their ownership,
immediately prior to such sale or other
disposition, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities,
as the case may be, (2) no Person (excluding the
Company and any employee benefit plan or related
trust of the Company, Indiana Gas 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 Company
Common Stock or Outstanding Company 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; 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 the
Company would constitute an "Change in Control"
under subsection (iii) or (iv) of this Section
3(f) of this Agreement.
Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's
employment is terminated before a Change in Control as
defined in this Section 3(f) 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 a "Change in Control" and who effectuates a
"Change in Control" or (ii) otherwise occurred in
connection with, or in anticipation of, a "Change in
Control" which actually occurs, then for all purposes
of this Agreement, the date of a "Change in Control"
with respect to the Executive shall mean the date
immediately prior to the date of such termination of
the Executive's employment.
4. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause. If, during the
Employment Period, the Company shall terminate the
Executive's employment other than for Cause, death or
Disability, or the Executive shall terminate employment for
Good Reason or without reason during the Window Period.
(i) The Company shall pay to the Executive
in a lump sum in cash within fifteen calendar days
after the Date of Termination the aggregate of the
amounts set forth in clauses A, B and C below:
A. the sum of (1) the Executive's
Annual Base Salary through the Date of Termination
to the extent not theretofore paid, (2) the
product of (x) the greater of the highest bonus
paid to or the target bonus in effect for the
Executive with respect to the three years ending
prior to the year in which the Date of Termination
occurs (the "Minimum Bonus") and (y) a fraction,
the numerator of which is the number of days in
the current calendar year through the Date of
Termination, and the denominator of which is 365
and (3) any compensation previously deferred by
the Executive (together with any accrued interest
or earnings thereon) and any other nonqualified
benefit plan balances to the extent not
theretofore paid (the sum of the amounts described
in clauses (1), (2), and (3) shall be hereinafter
referred to as the "Accrued Obligations");
provided, however, that for purposes of this
Section 4, Base Salary shall include any elective
salary reductions in effect for the Executive
under any tax qualified or non-qualified deferred
compensation plan maintained by the Company; and
B. the amount equal to the
product of (1) three or, if less, the number of
years remaining in the Executive's Employment
Period at the Date of Termination, rounded to the
nearest twelfth (1/12th) of a year, and (2) the
sum of (x) the Executive's Annual Base Salary and
(y) the Minimum Bonus; and
C. an amount equal to the excess
of (a) the actuarial equivalent of the benefit
under the Company's qualified defined benefit
retirement plan or such other qualified defined
benefit pension plan in which the Executive
participates, if any (the "Retirement Plan")
(utilizing actuarial assumptions no less favorable
to the Executive than those in effect under the
Company's Retirement Plan immediately prior to the
Commencement Date), and any excess or supplemental
retirement plan in which the Executive
participates (together, the ASERP") which the Ex
ecutive would receive if the Executive's
employment continued for the duration of the
Employment Period at the Date of Termination
assuming for this purpose that all accrued
benefits are fully vested, and, assuming that the
Executive's compensation during the duration of
the Employment Period is the sum of the Annual
Base Salary and Minimum Bonus over (b) the
actuarial equivalent of the Executive's actual
benefit (paid or payable), if any, under the
Retirement Plan and the SERP as of the Date of
Termination;
(ii) any restricted stock and any other
stock awards under the Restricted Stock Plan or any
other Company sponsored plan or arrangement that were
outstanding immediately prior to the Commencement Date
("Prior Stock Awards") shall become immediately vested
and/or exercisable, as the case may be;
(iii) for the duration of the Employment
Period at the Date of Termination, or such longer
period as may be provided by the terms of the
appropriate plan, program, practice or policy, the
Company shall continue benefits to the Executive and/or
the Executive's family at least equal to those which
would have been provided to them in accordance with the
welfare Plans, programs, practices and Policies
described in section 2(b)(v) of this Agreement if the
Executive's employment had not been terminated or, it
more favorable to the Executive, as in effect generally
at any time thereafter with respect to other peer
executives of the Company and its affiliated companies
and their families; provided, however, that if the
Executive becomes reemployed with another employer and
is eligible to receive medical or other welfare
benefits under another employer provided plan, the
medical and other welfare benefits described herein
shall be secondary to those provided under such other
plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time
of commencement of benefits) of the Executive for
retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be
considered to have remained employed for the duration
of the Employment Period after the Date of Termination
and to have retired on the last day of such period; and
(iv) to the extent not theretofore paid or
provided, the Company shall timely pay or provide to
the Executive any other amounts or benefits required to
be paid or provided or which the Executive is entitled
to receive under any plan, program, policy or practice
or contract or agreement of the Company and its
affiliated companies, excluding any severance plan or
policy except to the extent that such plan or policy
provides, in accordance with its terms, benefits with a
value in excess of the benefits payable to the
Executive under this Section 4 (such other amounts
and benefits shall be hereinafter referred to as the
"Other Benefits").
(b) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause or the
Executive terminates employment without Good Reason or not
during the Window Period, this Agreement shall terminate
without further obligations to the Executive other than the
obligation to pay to the Executive (x) Accrued Obligations
less the amount determined under Section 4(a)(i)A(2) hereof,
and (y) Other Benefits, in each case to the extent
theretofore unpaid.
(c) Death . If the Executive's employment is termi
nated by reason of the Executive's death during the
Employment Period, this Agreement shall terminate without
further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination.
(d) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during
the Employment Period, this Agreement shall terminate
without further obligations to the Executive, other than for
payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be
paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination. With respect to the provision
of Other Benefits, the term Other Benefits as utilized in
this Section 4(d) shall include, and the Executive shall be
entitled after the Disability Commencement Date to receive,
disability and other benefits as in effect generally with
respect to other peer executives of the Company and its
affiliated companies and their families.
5. Confidential Information; Noncompetition.
(a) The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or
any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of
its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment
with the Company, the Executive shall not, without the prior
written consent of the Company or as may otherwise be
required by law or legal process (provided the Company has
been given notice of and opportunity to challenge or limit
the scope of disclosure purportedly so required),
communicate or divulge any such information, knowledge or
data to anyone other than the Company and those designated
by it.
(b) In the event of a termination of the Executive by
the Company for Cause or by the Executive before a Change in
Control and without Good Reason, until the second
anniversary of the Executive's Date of Termination, the
Executive will not directly or indirectly, own, manage,
operate, control or participate in the ownership,
management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or
have any financial interest in, any business which competes,
or that is planning to compete, with the utility business of
the Company or any of its affiliates in:
(i) Indiana;
(ii) Ohio, Michigan, Illinois or Kentucky;
and
(iii) the United States.
The parties expressly agree that the terms of this limited
non-competition provision under this section are reasonable,
enforceable, and necessary to protect the Company's
interests, and are valid and enforceable. In the unlikely
event, however, that a court of competent jurisdiction were
to determine that any portion of this limited
non-competition provision is unenforceable, then the parties
agree that the remainder of the limited non-competition
provision shall remain valid and enforceable to the maximum
extent possible.
(c) Specific Enforcement/Injunctive Relief. The
Executive agrees that it would be difficult to measure
damages to the Company from any breach of the covenants
contained in Subsection (b) above, but that such damages
from any breach would be great, incalculable and
irremediable, and that damages would be an inadequate
remedy. Accordingly, the Executive agrees that the Company
may have specific performance of the terms of this Agreement
in any court permitted by this Agreement. The parties agree
however, that specific performance and the "add back"
remedies described above shall not be the exclusive
remedies, and the Company may enforce any other remedy or
remedies available to it either in law or in equity
including, but not limited to, temporary, preliminary,
and/or permanent injunctive relief.
6. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not
the Executive obtains other employment. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the
Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest
on any delayed payment at the applicable Federal rate provided
for in Section 7872(f)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code").
7. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not
he assignable by the Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
he binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if
no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary or any
termination of this Agreement notwithstanding, in the event
it shall be determined that any payment or distribution or
benefit made or provided by the Company or its affiliates to
or for the benefit of the Executive whether pursuant to this
Agreement or otherwise, and determined without regard to any
additional payments required under this Section 8 (a "Pay
ment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred
by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross- Up Payment") in an amount such
that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, in
cluding whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to
be utilized in arriving at such determination, shall be made
by the Company's independent auditor (the "Accounting Firm")
which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the
receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 8, shall be paid by the
Company to the Executive within five days of the receipt of
the Accounting Firm's determination. Any determination by
the Accounting Firm shall be binding upon the Company and
the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it
is possible that Gross-Up Payments which will not have been
made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its
remedies pursuant to Section 8(c) and the Executive
thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit
of the Executive.
(c) The Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if
successful, would require the payment by the company of the
Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date
on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior
to the expiration of such period that it desires to contest
such claim, the Executive shall:
(i) give the Company any information
reasonably requested by the Company relating to such
claim,
(ii) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing from time to time, including,
without limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company,
(iii) cooperate with the Company in good
faith in order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto)
imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing
provisions of this Section 8(c), the Company shall control
all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such
claim and may, at its sole option, either direct the
Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts,
as the Company shall determine; provided, however, that if
the Company directs the Executive to pay such claim and sue
for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and
shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further
provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is
claimed to he due is limited solely to such contested
amount. Furthermore, the Company's control of the contest
shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall
be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any
other taxing authority.
(d) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 8(c), the
Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 8(c))
promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to
Section 8(c), a determination is made that the Executive
shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior
to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to
he repaid and the amount of ouch advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required
to he paid.
9. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of Indiana, without reference to
principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall
have no force, or effect. This Agreement may not be amended
or modified otherwise than by a written agreement executed
by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall he given by hand delivery to
the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Name
Address
If to the Company:
Attention: General Counsel
Indiana Energy, Inc.
1630 North Meridian Street
Indianapolis, Indiana 46202-1496
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee,
(c) The invalidity or unenforceability of any pro
vision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(e) On and after the Commencement Date, this Agreement
shall supersede any other agreement between the parties with
respect to the subject matter hereof and any such agreement
shall be deemed terminated without any remaining obligations
of either party thereunder.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its
Board of Directors, the Company has caused these presents to be
executed in its name on its behalf, all as of the day and year
first above written.
/s/ Anthony E. Ard
Executive Officer
December 9, 1998
Date
Indiana Energy, Inc.
By /s/ Otto N. Frenzel III
Chairman of Compensation Committee
of Board of Directors
December 9, 1998
Date
INDIANA ENERGY, INC.
EMPLOYMENT AGREEMENT
This AGREEMENT by and among Indiana Energy, Inc. ("Indiana
Energy"), an Indiana corporation, in consideration of the
services to be performed for Indiana Energy and/or for one or
more of its direct or indirect subsidiaries or affiliates
(collectively, the "Company"), and Carl L. Chapman (the "Executive"),
is dated as of the first day of January, 1999.
1. Employment Period. The Company hereby agrees to
employ the Executive, and the Executive hereby agrees to remain
in the employ of the Company subject to the terms and conditions
of this Agreement, for the period commencing on the date the
Executive affixes his signature to this Agreement (the
"Commencement Date") and ending on the third annual anniversary
of the Commencement Date (the "Employment Period"); provided,
however, that the Employment Period shall automatically be
extended without action by either party for one (1) month
periods, without further action of the parties, as of the first
month anniversary of the Commencement Date and each succeeding
monthly anniversary unless the Company or the Executive shall
have served written notice to the other party prior to
February 1, 1999, or prior to any subsequent monthly anniversary,
as the case may be, of its or his intention that the Agreement
shall terminate at the end of the thirty-six (36) month period
that begins with the monthly anniversary of the Commencement Date
immediately following the date of such written notice; provided,
further, that the Employment Period shall automatically terminate
upon the Executive's attainment of age sixty-five (65). A notice
delivered by the Company or the Executive that it or he does not
intend to extend the term of this Agreement shall hereinafter be
referred to as a "Nonrenewal Notice." 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.
2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the
Executive shall serve in the position and at the
location set forth on Exhibit A hereto.
(ii) During the Employment Period, and
excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees
to devote full attention and time during normal
business hours to the business and affairs of the
Company and to use the Executive's reasonable best
efforts to perform such responsibilities in a
professional manner. It shall not be a violation of
this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage
personal investments, so long as such activities do not
significantly interfere with the performance of the
Executive's responsibilities as an employee of the
Company in accordance with this Agreement. It is
expressly understood and agreed that to the extent that
any such activities have been conducted by the
Executive prior to the Commencement Date, the continued
conduct of such activities (or the conduct of
activities similar in nature and scope thereto)
subsequent to the Commencement Date shall not
thereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary - During the Employment
Period, the Executive shall receive an annual base
salary ("Annual Base Salary") in an amount no less than
the Executive's annual base salary in effect
immediately prior to the Commencement Date, payable in
cash. If the Annual Base Salary is increased after the
Commencement Date, the increased Base Salary amount
shall become the minimum level of Annual Salary for the
Executive. The Annual Base Salary shall be paid no
less frequently than in equal monthly installments.
(ii) Annual Bonus. During the Employment
Period, the Executive shall have an annual bonus
opportunity no less than the applicable target award
percentage in effect for the Executive's employment
level which is in effect immediately prior to the
Commencement Date or, if greater, in effect at any time
after the Commencement Date.
(iii) Long-Term Incentives. During the
Employment Period, the Executive shall be eligible to
participate in all long-term incentive plans, including
the Indiana Energy, Inc. Executive Restricted Stock
Plan (the "Restricted Stock Plan"), practices, policies
and programs to the extent applicable generally to
other peer executives of the Company and its affiliated
companies. The Executive's target award percentage
under the Restricted Stock Plan shall be no less than
the applicable target award percentage in effect for
the Executive's employment level which is in effect
immediately prior to the Commencement Date or, if
greater, the target award percentage in effect for the
Executive any time after the Commencement Date.
(iv) Savings and Retirement Plans. During the
Employment Period, the Executive shall be eligible to
participate in all savings and retirement plans,
practices, policies and programs to the extent
applicable generally to other peer executives of the
Company and its affiliated entities.
(v) Welfare and Other Benefit Plans. During
the Employment Period, the Executive and/or the
Executive's family, as the case may be, shall be
eligible for participation in and shall receive all
benefits under welfare, fringe, change of control
protection, incentive, vacation and other similar
benefit plans, practices, policies and programs
provided by the Company and its affiliated entities
(including, without limitation, medical, prescription,
dental, disability, employee life, group life,
accidental death and travel accident insurance plans
and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated
entities.
(vi) Expenses. During the Employment Period,
the Executive shall be entitled to receive prompt
reimbursement for all reasonable business expenses
incurred by the Executive, in accordance with the
policies of the Company.
(vii) Indemnity. The Executive shall be
indemnified by the Company against claims arising in
connection with the Executive's status as an employee,
officer, director or agent of the Company in accordance
with the Company's indemnity policies for its senior
executives, subject to applicable law.
3. Termination of Employment.
(a) Death or Disability. The Executive's
employment shall terminate automatically upon the
Executive's death during the Employment Period. If the
Company determines in good faith that the Disability
(as defined below) of the Executive has occurred during
the Employment Period, it may give to the Executive
written notice in accordance with Section 9(b) of this
Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment
with the Company shall terminate effective on the
thirtieth day after receipt of such notice by the
Executive (the "Disability Commencement Date"),
provided that, within the thirty day period after such
receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall have the
meaning set forth in the Company's long-term disability
plan.
(b) Cause. The Company may terminate the
Executive's employment during the Employment Period for
Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) intentional gross misconduct
by the Executive damaging in a material way to the
Company, or
(ii) a material breach of this
Agreement, after the Company has given the
Executive notice thereof and a reasonable
opportunity to cure.
(c) Good Reason. The Executive's employment
may be terminated by the Executive for Good Reason.
For purposes of this Agreement and before a Change in
Control (as defined in Section 3(f) below) of the
Company, "Good Reason" shall mean a material breach by
the Company of this Agreement after the Executive has
given the Company notice of the breach and a reasonable
opportunity to cure. After a Change in Control of the
Company, "Good Reason" shall mean, 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 immediately prior to the Change in
Control; or any removal of the Executive from or
failure to reappoint or reelect him to any of such
positions that the Executive had immediately prior to
the Change in Control, 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 Executives of the Company effected
in the preceding twelve (12) months; (iv) the
relocation of the principal executive offices of the
Company or Company affiliate, 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 immediately 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 immediately prior to the Change in
Control, including but not limited to the Company's
stock option and restricted stock plans, if any, 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; or (viii) 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.
(d) Notice of Termination. Any termination
by the Company for Cause, or by the Executive for Good
Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with
Section 9(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the
provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date
of receipt of such notice, specifies the termination
date (which date shall be not more than thirty days
after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes
to a showing of Good Reason or Cause shall not waive
any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or
the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) Date of Termination. "Date of
Termination" means (i) if the Executive's employment
is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the
Notice of Termination or any later date specified
therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for
Cause or Disability, the Date of Termination shall be
the date on which the Company notifies the Executive of
such termination and (iii) if the Executive's
employment is terminated by reason of death or
Disability, the Date of Termination shall be the date
of death of the Executive or the Disability
Commencement Date, as the case may be.
(f) Other Termination. The Executive's
employment may be terminated by the Executive
voluntarily, without Good Reason, during a thirty (30)
day period immediately following the first annual
anniversary of a Change in Control of the Company
("Window Period"). For purposes of this Agreement, a
"Change in 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 the Company (the "Outstanding
Company 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 Company
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 the Company or any corporation
controlled by the Company 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 are
satisfied;
(ii) Individuals who, as of
January 1, 1999, 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 Company Common
Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger
or consolidation in substantially the same
proportions as their ownership, immediately prior
to such reorganization, merger or consolidation,
of the Outstanding Company Stock and Outstanding
Company Voting Securities, as the case may be, (B)
no Person (excluding the Company, any employee
benefit plan or related trust of the Company,
Indiana Gas 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 Company
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 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 Company Common Stock and Outstanding
Company Voting Securities immediately prior to
such sale or other disposition in substantially
the same proportion as their ownership,
immediately prior to such sale or other
disposition, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities,
as the case may be, (2) no Person (excluding the
Company and any employee benefit plan or related
trust of the Company, Indiana Gas 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 Company
Common Stock or Outstanding Company 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; 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 the
Company would constitute an "Change in Control"
under subsection (iii) or (iv) of this Section
3(f) of this Agreement.
Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's
employment is terminated before a Change in Control as
defined in this Section 3(f) 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 a "Change in Control" and who effectuates a
"Change in Control" or (ii) otherwise occurred in
connection with, or in anticipation of, a "Change in
Control" which actually occurs, then for all purposes
of this Agreement, the date of a "Change in Control"
with respect to the Executive shall mean the date
immediately prior to the date of such termination of
the Executive's employment.
4. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause. If, during the
Employment Period, the Company shall terminate the
Executive's employment other than for Cause, death or
Disability, or the Executive shall terminate employment for
Good Reason or without reason during the Window Period.
(i) The Company shall pay to the Executive
in a lump sum in cash within fifteen calendar days
after the Date of Termination the aggregate of the
amounts set forth in clauses A, B and C below:
A. the sum of (1) the Executive's
Annual Base Salary through the Date of Termination
to the extent not theretofore paid, (2) the
product of (x) the greater of the highest bonus
paid to or the target bonus in effect for the
Executive with respect to the three years ending
prior to the year in which the Date of Termination
occurs (the "Minimum Bonus") and (y) a fraction,
the numerator of which is the number of days in
the current calendar year through the Date of
Termination, and the denominator of which is 365
and (3) any compensation previously deferred by
the Executive (together with any accrued interest
or earnings thereon) and any other nonqualified
benefit plan balances to the extent not
theretofore paid (the sum of the amounts described
in clauses (1), (2), and (3) shall be hereinafter
referred to as the "Accrued Obligations");
provided, however, that for purposes of this
Section 4, Base Salary shall include any elective
salary reductions in effect for the Executive
under any tax qualified or non-qualified deferred
compensation plan maintained by the Company; and
B. the amount equal to the
product of (1) three or, if less, the number of
years remaining in the Executive's Employment
Period at the Date of Termination, rounded to the
nearest twelfth (1/12th) of a year, and (2) the
sum of (x) the Executive's Annual Base Salary and
(y) the Minimum Bonus; and
C. an amount equal to the excess
of (a) the actuarial equivalent of the benefit
under the Company's qualified defined benefit
retirement plan or such other qualified defined
benefit pension plan in which the Executive
participates, if any (the "Retirement Plan")
(utilizing actuarial assumptions no less favorable
to the Executive than those in effect under the
Company's Retirement Plan immediately prior to the
Commencement Date), and any excess or supplemental
retirement plan in which the Executive
participates (together, the ASERP") which the Ex
ecutive would receive if the Executive's
employment continued for the duration of the
Employment Period at the Date of Termination
assuming for this purpose that all accrued
benefits are fully vested, and, assuming that the
Executive's compensation during the duration of
the Employment Period is the sum of the Annual
Base Salary and Minimum Bonus over (b) the
actuarial equivalent of the Executive's actual
benefit (paid or payable), if any, under the
Retirement Plan and the SERP as of the Date of
Termination;
(ii) any restricted stock and any other
stock awards under the Restricted Stock Plan or any
other Company sponsored plan or arrangement that were
outstanding immediately prior to the Commencement Date
("Prior Stock Awards") shall become immediately vested
and/or exercisable, as the case may be;
(iii) for the duration of the Employment
Period at the Date of Termination, or such longer
period as may be provided by the terms of the
appropriate plan, program, practice or policy, the
Company shall continue benefits to the Executive and/or
the Executive's family at least equal to those which
would have been provided to them in accordance with the
welfare Plans, programs, practices and Policies
described in section 2(b)(v) of this Agreement if the
Executive's employment had not been terminated or, it
more favorable to the Executive, as in effect generally
at any time thereafter with respect to other peer
executives of the Company and its affiliated companies
and their families; provided, however, that if the
Executive becomes reemployed with another employer and
is eligible to receive medical or other welfare
benefits under another employer provided plan, the
medical and other welfare benefits described herein
shall be secondary to those provided under such other
plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time
of commencement of benefits) of the Executive for
retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be
considered to have remained employed for the duration
of the Employment Period after the Date of Termination
and to have retired on the last day of such period; and
(iv) to the extent not theretofore paid or
provided, the Company shall timely pay or provide to
the Executive any other amounts or benefits required to
be paid or provided or which the Executive is entitled
to receive under any plan, program, policy or practice
or contract or agreement of the Company and its
affiliated companies, excluding any severance plan or
policy except to the extent that such plan or policy
provides, in accordance with its terms, benefits with a
value in excess of the benefits payable to the
Executive under this Section 4 (such other amounts
and benefits shall be hereinafter referred to as the
"Other Benefits").
(b) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause or the
Executive terminates employment without Good Reason or not
during the Window Period, this Agreement shall terminate
without further obligations to the Executive other than the
obligation to pay to the Executive (x) Accrued Obligations
less the amount determined under Section 4(a)(i)A(2) hereof,
and (y) Other Benefits, in each case to the extent
theretofore unpaid.
(c) Death . If the Executive's employment is termi
nated by reason of the Executive's death during the
Employment Period, this Agreement shall terminate without
further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination.
(d) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during
the Employment Period, this Agreement shall terminate
without further obligations to the Executive, other than for
payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be
paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination. With respect to the provision
of Other Benefits, the term Other Benefits as utilized in
this Section 4(d) shall include, and the Executive shall be
entitled after the Disability Commencement Date to receive,
disability and other benefits as in effect generally with
respect to other peer executives of the Company and its
affiliated companies and their families.
5. Confidential Information; Noncompetition.
(a) The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or
any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of
its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment
with the Company, the Executive shall not, without the prior
written consent of the Company or as may otherwise be
required by law or legal process (provided the Company has
been given notice of and opportunity to challenge or limit
the scope of disclosure purportedly so required),
communicate or divulge any such information, knowledge or
data to anyone other than the Company and those designated
by it.
(b) In the event of a termination of the Executive by
the Company for Cause or by the Executive before a Change in
Control and without Good Reason, until the second
anniversary of the Executive's Date of Termination, the
Executive will not directly or indirectly, own, manage,
operate, control or participate in the ownership,
management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or
have any financial interest in, any business which competes,
or that is planning to compete, with the utility business of
the Company or any of its affiliates in:
(i) Indiana;
(ii) Ohio, Michigan, Illinois or Kentucky;
and
(iii) the United States.
The parties expressly agree that the terms of this limited
non-competition provision under this section are reasonable,
enforceable, and necessary to protect the Company's
interests, and are valid and enforceable. In the unlikely
event, however, that a court of competent jurisdiction were
to determine that any portion of this limited
non-competition provision is unenforceable, then the parties
agree that the remainder of the limited non-competition
provision shall remain valid and enforceable to the maximum
extent possible.
(c) Specific Enforcement/Injunctive Relief. The
Executive agrees that it would be difficult to measure
damages to the Company from any breach of the covenants
contained in Subsection (b) above, but that such damages
from any breach would be great, incalculable and
irremediable, and that damages would be an inadequate
remedy. Accordingly, the Executive agrees that the Company
may have specific performance of the terms of this Agreement
in any court permitted by this Agreement. The parties agree
however, that specific performance and the "add back"
remedies described above shall not be the exclusive
remedies, and the Company may enforce any other remedy or
remedies available to it either in law or in equity
including, but not limited to, temporary, preliminary,
and/or permanent injunctive relief.
6. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not
the Executive obtains other employment. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the
Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest
on any delayed payment at the applicable Federal rate provided
for in Section 7872(f)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code").
7. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not
he assignable by the Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
he binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if
no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary or any
termination of this Agreement notwithstanding, in the event
it shall be determined that any payment or distribution or
benefit made or provided by the Company or its affiliates to
or for the benefit of the Executive whether pursuant to this
Agreement or otherwise, and determined without regard to any
additional payments required under this Section 8 (a "Pay
ment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred
by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise
Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross- Up Payment") in an amount such
that after payment by the Executive of all taxes (including
any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, in
cluding whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to
be utilized in arriving at such determination, shall be made
by the Company's independent auditor (the "Accounting Firm")
which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the
receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 8, shall be paid by the
Company to the Executive within five days of the receipt of
the Accounting Firm's determination. Any determination by
the Accounting Firm shall be binding upon the Company and
the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it
is possible that Gross-Up Payments which will not have been
made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its
remedies pursuant to Section 8(c) and the Executive
thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit
of the Executive.
(c) The Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if
successful, would require the payment by the company of the
Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date
on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior
to the expiration of such period that it desires to contest
such claim, the Executive shall:
(i) give the Company any information
reasonably requested by the Company relating to such
claim,
(ii) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing from time to time, including,
without limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company,
(iii) cooperate with the Company in good
faith in order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto)
imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing
provisions of this Section 8(c), the Company shall control
all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such
claim and may, at its sole option, either direct the
Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts,
as the Company shall determine; provided, however, that if
the Company directs the Executive to pay such claim and sue
for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and
shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further
provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is
claimed to he due is limited solely to such contested
amount. Furthermore, the Company's control of the contest
shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall
be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any
other taxing authority.
(d) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 8(c), the
Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 8(c))
promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to
Section 8(c), a determination is made that the Executive
shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior
to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to
he repaid and the amount of ouch advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required
to he paid.
9. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of Indiana, without reference to
principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall
have no force, or effect. This Agreement may not be amended
or modified otherwise than by a written agreement executed
by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall he given by hand delivery to
the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Name
Address
If to the Company:
Attention: General Counsel
Indiana Energy, Inc.
1630 North Meridian Street
Indianapolis, Indiana 46202-1496
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee,
(c) The invalidity or unenforceability of any pro
vision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(e) On and after the Commencement Date, this Agreement
shall supersede any other agreement between the parties with
respect to the subject matter hereof and any such agreement
shall be deemed terminated without any remaining obligations
of either party thereunder.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its
Board of Directors, the Company has caused these presents to be
executed in its name on its behalf, all as of the day and year
first above written.
/s/ Carl L. Chapman
Executive Officer
December 10, 1998
Date
Indiana Energy, Inc.
By /s/ Otto N. Frenzel III
Chairman of Compensation Committee
of Board of Directors
December 9, 1998
Date
INDIANA ENERGY, INC.
EMPLOYMENT AGREEMENT
This AGREEMENT by and among Indiana Energy, Inc. ("Indiana
Energy"), an Indiana corporation, in consideration of the
services to be performed for Indiana Energy and/or for one or
more of its direct or indirect subsidiaries or affiliates (the
"Company"), and Timothy M. Hewitt (the "Executive"), is
dated as of the first day of January, 1999.
1. Employment Period. The Company hereby agrees to
employ the Executive, and the Executive hereby agrees to remain
in the employ of the Company subject to the terms and conditions
of this Agreement, for the period commencing on the date the
Executive affixes his signature to this Agreement (the
"Commencement Date") and ending on the second annual anniversary
of the Commencement Date (the "Employment Period"); provided,
however, that the Employment Period shall automatically be
extended without action by either party for one (1) month
periods, without further action of the parties, as of the first
month anniversary of the Commencement Date and each succeeding
monthly anniversary unless the Company or the Executive shall
have served written notice to the other party prior to
February 1, 1999, or prior to any subsequent monthly anniversary,
as the case may be, of its or his intention that the Agreement
shall terminate at the end of the twenty-four (24) month period
that begins with the monthly anniversary of the Commencement Date
immediately following the date of such written notice; provided,
further, that the Employment Period shall automatically terminate
upon the Executive's attainment of age sixty-five (65). A notice
delivered by the Company or the Executive that it or he does not
intend to extend the term of this Agreement shall hereinafter be
referred to as a "Nonrenewal Notice." For purposes of this
Agreement, employment and compensation paid by any direct or
indirect subsidiary or affiliate of the Company will be deemed to
be employment and compensation paid by the Company.
2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the
Executive shall serve in the position and at the
location set forth on Exhibit A hereto or such other
executive position(s) appropriate to my training,
qualifications or experience, as the Board of Directors
may from time to time determine.
(ii) During the Employment Period, and excluding
any periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote
full attention and time during normal business hours to
the business and affairs of the Company and to use the
Executive's reasonable best efforts to perform such
responsibilities in a professional manner. It shall not
be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and
(C) manage personal investments, so long as such
activities do not significantly interfere with the
performance of the Executive's responsibilities as an
employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that
to the extent that any such activities have been
conducted by the Executive prior to the Commencement
Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope
thereto) subsequent to the Commencement Date shall not
thereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary - During the Employment Period,
the Executive shall receive an annual base salary
("Annual Base Salary") in an amount no less than the
Executive's annual base salary in effect immediately
prior to the Commencement Date, payable in cash. If
the Annual Base Salary is increased after the
Commencement Date, the increased Base Salary amount
shall become the minimum level of Annual Salary for the
Executive. The Annual Base Salary shall be paid no
less frequently than in equal monthly installments.
(ii) Annual Bonus. During the Employment Period,
the Executive shall have an annual bonus opportunity no
less than the applicable target award percentage in
effect for the Executive's employment level which is in
effect immediately prior to the Commencement Date or,
if greater, in effect at any time after the
Commencement Date.
(iii) Long-Term Incentives. During the
Employment Period, the Executive shall be eligible to
participate in all long-term incentive plans, including
the Indiana Energy, Inc. Executive Restricted Stock
Plan (the "Restricted Stock Plan"), practices, policies
and programs to the extent applicable generally to
other peer executives of the Company and its affiliated
companies. The Executive's target award percentage
under the Restricted Stock Plan shall be no less than
the applicable target award percentage in effect for
the Executive's employment level which is in effect
immediately prior to the Commencement Date or, if
greater, the target award percentage in effect for the
Executive any time after the Commencement Date.
(iv) Savings and Retirement Plans. During the
Employment Period, the Executive shall be eligible to
participate in all savings and retirement plans,
practices, policies and programs to the extent
applicable generally to other peer executives of the
Company and its affiliated entities.
(v) Welfare and Other Benefit Plans. During the
Employment Period, the Executive and/or the Executive's
family, as the case may be, shall be eligible for
participation in and shall receive all benefits under
welfare, fringe, change of control protection,
incentive, vacation and other similar benefit plans,
practices, policies and programs provided by the
Company and its affiliated entities (including, without
limitation, medical, prescription, dental, disability,
employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent
applicable generally to other peer executives of the
Company and its affiliated entities.
(vi) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt
reimbursement for all reasonable business expenses
incurred by the Executive, in accordance with the
policies of the Company.
(vii) Indemnity. The Executive shall be in
demnified by the Company against claims arising in
connection with the Executive's status as an employee,
officer, director or agent of the Company in accordance
with the Company's indemnity policies for its senior
executives, subject to applicable law.
3. Termination of Employment.
(a) Death or Disability. The Executive's
employment shall terminate automatically upon the
Executive's death during the Employment Period. If the
Company determines in good faith that the Disability
(as defined below) of the Executive has occurred during
the Employment Period, it may give to the Executive
written notice in accordance with Section 9(b) of this
Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment
with the Company shall terminate effective on the
thirtieth day after receipt of such notice by the
Executive (the "Disability Commencement Date"),
provided that, within the thirty day period after such
receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall have the
meaning set forth in the Company's long-term disability
plan.
(b) Cause. The Company may terminate the
Executive's employment during the Employment Period for
Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) intentional gross misconduct by the
Executive damaging in a material way to the
Company, or
(ii) a material breach of this
Agreement, after the Company has given the
Executive notice thereof and a reasonable
opportunity to cure.
(c) Good Reason. The Executive's employment may
be terminated by the Executive for Good Reason. For
purposes of this Agreement and before a Change in
Control (as defined in Section 3(f) below) of the
Company, "Good Reason" shall mean a material breach by
the Company of this Agreement after the Executive has
given the Company notice of the breach and a reasonable
opportunity to cure. After a Change in Control of the
Company, "Good Reason" shall mean, 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 immediately prior to the Change in
Control; or any removal of the Executive from or
failure to reappoint or reelect him to any of such
positions that the Executive had immediately prior to
the Change in Control, 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 Executives of the Company effected
in the preceding twelve (12) months; (iv) the
relocation of the principal executive offices of the
Company or Company affiliate, 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 immediately 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 immediately prior to the Change in
Control, including but not limited to the Company's
stock option and restricted stock plans, if any, 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; or (viii) 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.
(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason,
shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section
9(b) of this Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which
(i) indicates the specific termination provision in
this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for
termination of the Executive's employment under the
provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date
of receipt of such notice, specifies the termination
date (which date shall be not more than thirty days
after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes
to a showing of Good Reason or Cause shall not waive
any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or
the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) Date of Termination. "Date of Termination"
means (i) if the Executive's employment is terminated
by the Company for Cause, or by the Executive for Good
Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the
case may be, (ii) if the Executive's employment is
terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date
on which the Company notifies the Executive of such
termination and (iii) if the Executive's employment
is terminated by reason of death or Disability, the
Date of Termination shall be the date of death of the
Executive or the Disability Commencement Date, as the
case may be.
(f) Other Termination. The Executive's
employment may be terminated by the Executive
voluntarily, without Good Reason, during a thirty (30)
day period immediately following the first annual
anniversary of a Change in Control of the Company
("Window Period"). For purposes of this Agreement, a
"Change in 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 the Company (the "Outstanding Company
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 Company 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 the Company or any corporation
controlled by the Company 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 are
satisfied;
(ii) Individuals who, as of January 1, 1999,
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 Company Common Stock and Outstanding
Company Voting Securities immediately prior to
such reorganization, merger or consolidation in
substantially the same proportions as their
ownership, immediately prior to such
reorganization, merger or consolidation, of the
Outstanding Company Stock and Outstanding Company
Voting Securities, as the case may be, (B) no
Person (excluding the Company, any employee
benefit plan or related trust of the Company,
Indiana Gas 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 Company
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 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 Company Common Stock and Outstanding
Company Voting Securities immediately prior to
such sale or other disposition in substantially
the same proportion as their ownership,
immediately prior to such sale or other
disposition, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities,
as the case may be, (2) no Person (excluding the
Company and any employee benefit plan or related
trust of the Company, Indiana Gas 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 Company
Common Stock or Outstanding Company 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; 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 the Company would
constitute an "Change in Control" under subsection
(iii) or (iv) of this Section 3(f) of this
Agreement.
Notwithstanding anything contained in this Agreement to
the contrary, if the Executive's employment is
terminated before a Change in Control as defined in
this Section 3(f) 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 a
"Change in Control" and who effectuates a "Change in
Control" or (ii) otherwise occurred in connection with,
or in anticipation of, a "Change in Control" which
actually occurs, then for all purposes of this
Agreement, the date of a "Change in Control" with
respect to the Executive shall mean the date
immediately prior to the date of such termination of
the Executive's employment.
4. Obligations of the Company upon Termination.
(a) Good Reason; Other Than for Cause. If, during the
Employment Period, the Company shall terminate the
Executive's employment other than for Cause, death or
Disability, or the Executive shall terminate employment for
Good Reason or without reason during the Window Period.
(i) The Company shall pay to the Executive in a
lump sum in cash within fifteen calendar days after the
Date of Termination the aggregate of the amounts set
forth in clauses A, B and C below:
A. the sum of (1) the Executive's Annual
Base Salary through the Date of Termination to the
extent not theretofore paid, (2) the product of
(x) the greater of the highest bonus paid to or
the target bonus in effect for the Executive with
respect to the three years ending prior to the
year in which the Date of Termination occurs (the
"Minimum Bonus") and (y) a fraction, the numerator
of which is the number of days in the current
calendar year through the Date of Termination, and
the denominator of which is 365 and (3) any
compensation previously deferred by the Executive
(together with any accrued interest or earnings
thereon) and any other nonqualified benefit plan
balances to the extent not theretofore paid (the
sum of the amounts described in clauses (1), (2),
and (3) shall be hereinafter referred to as the
"Accrued Obligations"); provided, however, that
for purposes of this Section 4, Base Salary shall
include any elective salary reductions in effect
for the Executive under any tax qualified or
non-qualified deferred compensation plan
maintained by the Company; and
B. the amount equal to the product of (1)
two or, if less, the number of years remaining in
the Executive's Employment Period at the Date of
Termination, rounded to the nearest twelfth
(1/12th) of a year, and (2) the sum of (x) the
Executive's Annual Base Salary and (y) the Minimum
Bonus; and
C. an amount equal to the excess of (a) the
actuarial equivalent of the benefit under the
Company's qualified defined benefit retirement
plan or such other qualified defined benefit
pension plan in which the Executive participates,
if any (the "Retirement Plan") (utilizing
actuarial assumptions no less favorable to the
Executive than those in effect under the Company's
Retirement Plan immediately prior to the
Commencement Date), and any excess or supplemental
retirement plan in which the Executive
participates (together, the "SERP") which the Ex
ecutive would receive if the Executive's
employment continued for the duration of the
Employment Period at the Date of Termination
assuming for this purpose that all accrued
benefits are fully vested, and, assuming that the
Executive's compensation during the duration of
the Employment Period is the sum of the Annual
Base Salary and Minimum Bonus over (b) the
actuarial equivalent of the Executive's actual
benefit (paid or payable), if any, under the
Retirement Plan and the SERP as of the Date of
Termination;
(ii) any restricted stock and any other stock
awards under the Restricted Stock Plan or any other
Company sponsored plan or arrangement that were
outstanding immediately prior to the Commencement Date
("Prior Stock Awards") shall become immediately vested
and/or exercisable, as the case may be;
(iii) for the duration of the Employment
Period at the Date of Termination, or such longer
period as may be provided by the terms of the
appropriate plan, program, practice or policy, the
Company shall continue benefits to the Executive and/or
the Executive's family at least equal to those which
would have been provided to them in accordance with the
welfare Plans, programs, practices and Policies
described in section 2(b)(v) of this Agreement if the
Executive's employment had not been terminated or, it
more favorable to the Executive, as in effect generally
at any time thereafter with respect to other peer
executives of the Company and its affiliated companies
and their families; provided, however, that if the
Executive becomes reemployed with another employer and
is eligible to receive medical or other welfare
benefits under another employer provided plan, the
medical and other welfare benefits described herein
shall be secondary to those provided under such other
plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time
of commencement of benefits) of the Executive for
retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be
considered to have remained employed for the duration
of the Employment Period after the Date of Termination
and to have retired on the last day of such period; and
(iv) to the extent not theretofore paid or
provided, the Company shall timely pay or provide to
the Executive any other amounts or benefits required to
be paid or provided or which the Executive is entitled
to receive under any plan, program, policy or practice
or contract or agreement of the Company and its
affiliated companies, excluding any severance plan or
policy except to the extent that such plan or policy
provides, in accordance with its terms, benefits with a
value in excess of the benefits payable to the
Executive under this Section 4 (such other amounts
and benefits shall be hereinafter referred to as the
"Other Benefits".
(b) Cause; Other than for Good Reason. If the
Executive's employment shall be terminated for Cause or the
Executive terminates employment without Good Reason or not
during the Window Period, this Agreement shall terminate
without further obligations to the Executive other than the
obligation to pay to the Executive (x) Accrued Obligations
less the amount determined under Section 4(a)(i)A(2) hereof,
and (y) Other Benefits, in each case to the extent
theretofore unpaid.
(c) Death . If the Executive's employment is termi
nated by reason of the Executive's death during the
Employment Period, this Agreement shall terminate without
further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other
Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump
sum in cash within 30 days of the Date of Termination.
(d) Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during
the Employment Period, this Agreement shall terminate
without further obligations to the Executive, other than for
payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be
paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination. With respect to the provision
of Other Benefits, the term Other Benefits as utilized in
this Section 4(d) shall include, and the Executive shall be
entitled after the Disability Commencement Date to receive,
disability and other benefits as in effect generally with
respect to other peer executives of the Company and its
affiliated companies and their families.
5. Confidential Information; Noncompetition.
(a) The Executive shall hold in a fiduciary capacity
for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or
any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of
its affiliated companies and which shall not be or become
public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment
with the Company, the Executive shall not, without the prior
written consent of the Company or as may otherwise be
required by law or legal process (provided the Company has
been given notice of and opportunity to challenge or limit
the scope of disclosure purportedly so required),
communicate or divulge any such information, knowledge or
data to anyone other than the Company and those designated
by it.
(b) In the event of a termination of the Executive by
the Company for Cause or by the Executive before a Change in
Control and without Good Reason, until the second
anniversary of the Executive's Date of Termination, the
Executive will not directly or indirectly, own, manage,
operate, control or participate in the ownership,
management, operation or control of, or be connected as an
officer, employee, partner, director or otherwise with, or
have any financial interest in, any business which competes,
or that is planning to compete, with the utility business of
the Company or any of its affiliates in:
(i) Indiana;
(ii) Ohio, Michigan, Illinois or Kentucky; and
(iii) the United States.
The parties expressly agree that the terms of this limited
non-competition provision under this section are reasonable,
enforceable, and necessary to protect the Company's
interests, and are valid and enforceable. In the unlikely
event, however, that a court of competent jurisdiction were
to determine that any portion of this limited
non-competition provision is unenforceable, then the parties
agree that the remainder of the limited non-competition
provision shall remain valid and enforceable to the maximum
extent possible.
(c) Specific Enforcement/Injunctive Relief. The
Executive agrees that it would be difficult to measure
damages to the Company from any breach of the covenants
contained in Subsection (b) above, but that such damages
from any breach would be great, incalculable and
irremediable, and that damages would be an inadequate
remedy. Accordingly, the Executive agrees that the Company
may have specific performance of the terms of this Agreement
in any court permitted by this Agreement. The parties agree
however, that specific performance and the "add back"
remedies described above shall not be the exclusive
remedies, and the Company may enforce any other remedy or
remedies available to it either in law or in equity
including, but not limited to, temporary, preliminary,
and/or permanent injunctive relief.
6. Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not
the Executive obtains other employment. The Company agrees to pay
as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the
Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case interest
on any delayed payment at the applicable Federal rate provided
for in Section 7872(f)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code").
7. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not
he assignable by the Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and
he binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if
no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
8. Internal Revenue Code Limits. Notwithstanding anything
in this Agreement to the contrary (other than this Section), in
the event that the Company's independent auditor (the "Accounting
Firm") 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; provided,
however, that notwithstanding the preceding clause of this
sentence, if Section 280G of the Code is amended after the date
on which this Agreement has been executed and if the amendment
has the effect of reducing the amount of deductible payments that
may be made by the Company to the Executive under Section 280G of
the Code to an amount less than what would have been deductible
by the Company under Section 280G of the Code as in effect on
October 1, 1997, the maximum amount payable to the Executive
under this Agreement shall be determined without regard to any
amendment to Section 280G of the Code. Such determination by the
Accounting Firm shall be conclusive and binding upon the parties.
9. Miscellaneous.
(a) This Agreement shall be governed by and construed
in accordance with the laws of Indiana, without reference to
principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall
have no force, or effect. This Agreement may not be amended
or modified otherwise than by a written agreement executed
by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall he given by hand delivery to
the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Name
Address
If to the Company:
Attention: General Counsel
Indiana Energy, Inc.
1630 North Meridian Street
Indianapolis, Indiana 46202-1496
or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee,
(c) The invalidity or unenforceability of any pro
vision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state, local or foreign
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(e) On and after the Commencement Date, this Agreement
shall supersede any other agreement between the parties with
respect to the subject matter hereof and any such agreement
shall be deemed terminated without any remaining obligations
of either party thereunder.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its
Board of Directors, the Company has caused these presents to be
executed in its name on its behalf, all as of the day and year
first above written.
/s/ Timothy M. Hewitt
Executive Officer
December 9, 1998
Date
Indiana Energy, Inc.
By /s/ Otto N. Frenzel III
Chairman of Compensation Committee
of Board of Directors
December 4, 1998
Date
INDIANA ENERGY, INC.
UNFUNDED SUPPLEMENTAL RETIREMENT PLAN
FOR A SELECT GROUP OF MANAGEMENT EMPLOYEES
(AS AMENDED AND RESTATED EFFECTIVE DECEMBER 1, 1998)
Pursuant to rights reserved under Section 5.01 of the
Indiana Gas Company, Inc. Unfunded Supplemental Retirement Plan
For a Select Group of Management Employees (the "Plan"), Indiana
Gas Company, Inc. hereby transfers sponsorship of the Plan to
Indiana Energy, Inc. (the "Company") and hereby amends and
completely restates the Plan, effective as of December 1, 1998,
to provide, in its entirety, as follows:
PREAMBLE
This Plan is an unfunded supplemental retirement plan for a
select group of management employees of the Company and
affiliates of the Company and is designed to meet applicable
exemptions under Sections 201(2), 301(a)(3), 401(a)(1) and
4021(b)(6) of the Employee Retirement Income Security Act of
1974, as amended, and under Department of Labor Regulation
Section 2520.104-23.
ARTICLE I
DEFINITIONS
Section 1.01. Acquisition of Control. The term
"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 the Company (the
"Outstanding Energy 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 Energy Voting Securities");
provided, however, that the following acquisitions shall not
constitute an Acquisition of Control: (i) any acquisition
directly from the Company (excluding an acquisition by
virtue of the exercise of a conversion privilege), (ii) any
acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company, Indiana Gas Company, Inc. or any
corporation controlled by the Company or (iv) any
acquisition by any corporation pursuant to a reorganization,
merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses
(a), (b) and (c) of subsection (3) of this Section 1.01 are
satisfied;
(2) Individuals who, as of July 25, 1997, constitute
the Board of Directors of the Company (the "Incumbent Energy
Board") cease for any reason to constitute at least a
majority of the Board of Directors of the Company (the
"Energy Board"); provided, however, that any individual
becoming a director subsequent to the date hereof whose
election, or nomination for election by shareholders of the
Company, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Energy Board
shall be considered as though such individual were a member
of the Incumbent Energy 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 Energy Board; or
(3) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or
consolidation, (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
Energy Common Stock and Outstanding Energy 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 Energy Stock and
Outstanding Energy Voting Securities, as the case may be,
(b) no Person (excluding Energy, any employee benefit plan
or related trust of the Company, Indiana Gas Company, Inc.
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 Energy 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 Energy Board at the time of the execution of
the initial agreement providing for such reorganization,
merger or consolidation;
(4) 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
(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 Energy Common Stock and
Outstanding Energy 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 Energy Common
Stock and Outstanding Energy Voting Securities, as the case
may be, (ii) no Person (excluding the Company and any
employee benefit plan or related trust of the Company,
Indiana Gas Company, Inc. 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 Energy Common Stock or Outstanding
Energy 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
Energy Board at the time of the execution of the initial
agreement or action of the Energy Board providing for such
sale or other disposition of assets of the Company; 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 the Company would
constitute an Acquisition of Control under subsection (3) or
(4) of this Section 1.01.
Notwithstanding anything contained in this Plan, if a
Participant's employment is terminated before an Acquisition of
Control and the Participant reasonably demonstrates that such
termination (a) 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 (b) 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 the Participant shall mean the date immediately prior
to the date of such termination of the Participant's employment.
Section 1.02. Administrator. The term "Administrator"
means the Company, which shall have the sole authority to manage
and to control the operation and administration of this Plan.
Section 1.03. Average Monthly Earnings. The term "Average
Monthly Earnings" means for a Participant an amount equal to the
total salary (inclusive of bonuses, inclusive of incentive pay,
inclusive of elective deferrals by such Participant to the
Company Savings Plan and to any non-qualified deferred
compensation plan maintained by the Company and inclusive of
salary reductions elected by such Participant to a plan
maintained by the Company under Section 125 of the Code but
exclusive of awards made under the Indiana Energy, Inc. Executive
Restricted Stock Plan and exclusive of distributions under the
Company Savings Plan and the Indiana Energy, Inc. Executive
Compensation Deferral Plan) paid to such Participant by the
Company in the sixty (60) consecutive calendar month period
ending on the first (1st) to occur of:
(1) the date of such Participant's death, or
(2) the date of such Participant's Termination of
Employment.
divided by sixty (60).
Section 1.04. Board. The term "Board" means the Board of
Directors of the Company. Whenever the provisions of this Plan
require action by the Board, it may be taken by the Compensation
Committee of the Board with the same force and effect as though
taken by the entire Board.
Section 1.05. Cause. The term "Cause" means a
Participant's fraud, dishonesty, theft of corporate assets or
other gross misconduct.
Section 1.06. Code. The term "Code" means the Internal
Revenue Code of 1986 as now in effect or hereafter amended and
shall also include all regulations promulgated thereunder.
Section 1.07. Company. The term "Company" means Indiana
Energy, Inc. and any successors thereto; provided, however, that
for purposes of Section 1.03, Section 1.08, Section 1.09, Section
1.10, Section 1.11, Section 1.13, Section 1.16, Section 1.20,
Section 3.03 and Section 5.05, "Company" shall also include
Proliance Energy, L.L.C. and any entity affiliated with the
Company within the meaning of Section 414(b) of the Code and any
successor thereto.
Section 1.08. Company Contributions Accounts. The term
"Company Contributions Accounts" means for a Participant the
accounts maintained on his behalf in the Company Savings Plan and
the Company Non-Qualified Savings Plan to which Company
contributions (other than his elective deferrals) are credited
regardless whether funded, including the annual Company
contribution to the Company Savings Plan and matching
contributions made on his behalf to the Company Savings Plan and
the Company Non-Qualified Savings Plan, as adjusted to reflect
any earnings or losses credited thereto. The Company
Contributions Accountd shall reflect Company matching
contributions made to the Company Non-Qualified Savings Plan even
though such contributions, and earnings (or losses) thereon, may
not be funded and are simply bookkeeping entries.
Section 1.09. Company Pension Plan. The term "Company
Pension Plan" means the Indiana Energy, Inc. Combined
Non-Bargaining Plan as now in effect or as hereafter amended.
Section 1.10. Company Savings Plan. The term "Company
Savings Plan" means the Indiana Energy, Inc. Retirement Savings
Plan as now in effect or as hereafter amended. For all purposes
of this Plan (including, but not limited to, determining the
amount of reduction in a Participant=s benefit applicable under
Section 3.02(2)), the term "Company Savings Plan" shall also
include the Proliance Energy, L.L.C. Retirement Savings Plan as
now in effect or as hereafter amended and any other qualified
defined contribution plan maintained by the Company.
Section 1.11. Company Savings Plan Monthly Benefit
Equivalent. The term "Company Savings Plan Monthly Benefit
Equivalent" means for a Participant the amount determined by
converting such Participant's Company Contributions Accountd to a
monthly benefit for life commencing at the later of:
(1) the date of such Participant's Termination of
Employment or, if earlier, his death, or
(2) the date on which such Participant reaches age
sixty-five (65).
For purposes of making the conversion required by this Section,
the following actuarial assumptions shall be used:
Interest Assumption: 8% per year, compounded
annually
Mortality Assumption: 1983 Group Annuity Mortality Table
(unloaded) Unisex Rates
Section 1.12. Effective Date. The term "Effective Date"
means January 1, 1990.
Section 1.13. Good Reason. The term "Good Reason" means
for a Participant, without the Participant's written consent:
(1) a demotion in the Participant'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 an
Acquisition of Control;
(2) the assignment to the Participant of any duties or
responsibilities which, in his reasonable judgment, are
inconsistent with such status, position or responsibilities;
or any removal of the Participant from or failure to
reappoint or reelect him to any of such positions, except in
connection with the termination of his employment for Total
Disability, death or Cause or by him other than for Good
Reason;
(3) a reduction by the Company in the Participant's
base salary as in effect immediately prior to an Acquisition
of Control or as the same may be increased from time to time
after the Acquisition of Control or the Company's failure to
increase (within twelve (12) months of the Participant's
last increase in base salary) the Participant's base salary
after an Acquisition of 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;
(4) the relocation of the principal executive offices
of the Company or Company affiliate, whichever entity on
behalf of which the Participant 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 an Acquisition of Control, except for required
travel on the Company's business to an extent substantially
consistent with his business travel obligations at the time
of an Acquisition of Control;
(5) the failure by the Company to continue in effect
any incentive, bonus or other compensation plan in which the
Participant participates, including but not limited to the
Company's stock option and restricted stock plans, if any,
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 Acquisition of 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;
(6) the failure by the Company to continue to provide
the Participant 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 Acquisition of 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 Acquisition of
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;
(7) the failure of the Company after an Acquisition of
Control to obtain a satisfactory agreement from any
successor or assign of the Company to assume and agree to
perform any termination benefits agreement in effect for the
Participant; or
(8) any request by the Company that the Participant
participate in an unlawful act or take any action
constituting a breach of the Participant's professional
standard of conduct.
Section 1.14. Participant. The term "Participant" means
any individual who is eligible or benefits under Article II of
this Plan.
Section 1.15. Plan. The term "Plan" means the Indiana
Energy, Inc. Unfunded Supplemental Retirement Plan for a Select
Group of Management Employees.
Section 1.16. Primary Social Security Benefit. The term
"Primary Social Security Benefit" means the monthly amount of old
age insurance benefit available at age sixty-five (65) under the
provisions of Title II of the Social Security Act in effect at a
Participant's Termination of Employment. The computation of such
amount shall be made by the Company, and the fact that a
Participant does not actually receive such amount because of
failure to apply, continuance of work or for any other reason
shall be disregarded. In determining a Participant's Primary
Social Security Benefit, the Company may estimate "wages" (as
such term is interpreted for purposes of Title II of the Social
Security Act) for any calendar year beginning before the date on
which such Participant's employment with the Company commenced by
applying backwards from the earliest known complete calendar year
earnings with the Company, using the U.S. Average Wage Table or
any similar index substituted by the Social Security
Administration. For the period beginning on the date on which a
Participant terminates his employment with the Company and
ending on the date he attains age sixty-five (65), such
Participant shall be deemed to receive "wages" from the Company
at the same level in effect immediately before his Termination of
Employment.
Section 1.17. Qualified Joint and One-Half Survivor
Annuity. The term "Qualified Joint and One-Half Survivor
Annuity" means the form of payment in which a monthly income is
payable for the lifetime of a Participant and continuing
thereafter in an amount one-half (1/2) as large to such
Participant's surviving Spouse, if any, for life.
Section 1.18. Retirement Age. The term "Retirement Age"
means the date on which a Participant attains age sixty-five
(65).
Section 1.19. Spouse. The term "Spouse" means the legal
spouse of a Participant at the date of such Participant's death
or, if earlier, the date of his Termination of Employment.
Section 1.20. Termination of Employment. The term
"Termination of Employment" means the date on which a Participant
retires, resigns, incurs a Total Disability or otherwise,
voluntarily or involuntarily, terminates his full-time employment
with the Company.
Section 1.21. Total Disability. The term "Total
Disability" means a physical or mental condition arising from
bodily injury or disease which prevents a Participant from
engaging in his current position or in another position
commensurate with his current position, taking into consideration
his education, training and experience, and which is of a
character, based on the medical opinion of a licensed physician
who is not related to such Participant and who is satisfactory to
the Company, that such condition presumably will be permanent and
continuous for the remainder of such Participant's lifetime.
Section 1.22. Company Non-Qualified Savings Plan. The term
"Non-Qualified Savings Plan" means the Indiana Energy, Inc.
Deferred Compensation Plan as now in effect or as hereafter
amended.
ARTICLE II
PARTICIPATION
The individuals eligible for benefits as Participants shall
be listed on Schedule A to this Plan. The Company may add
additional Participants by action of the Board. Subject to
Section 5.01, the Company may delete Participants by action of
the Board. Any additions or deletions of Participants shall be
listed and reflected on Schedule A to the Plan.
ARTICLE III
BENEFITS
Section 3.01. Death Benefits.
(a) Pre-Retirement Death Benefit. Upon the death of a
Participant before his Termination of Employment, the Spouse, if
any, of such Participant shall be entitled to receive monthly
death benefits under this Plan for life. The monthly death
benefits shall be paid to a deceased Participant's surviving
Spouse on the first (1st) calendar day of each month, commencing
with the first (1st) month immediately following the later of (1)
the date of such deceased Participant's death or (2) the date on
which such deceased Participant would have attained age fifty
(50) but for his death. The amount of the monthly death benefits
to be paid to the Spouse of a deceased Participant shall be an
amount equal to the monthly survivor benefit which such Spouse
would have been entitled to receive had the Participant's
Termination of Employment occurred immediately before his death
and if such Participant had commenced to receive his monthly
benefit payments in the form of a Qualified Joint and One-Half
Survivor Annuity under Section 3.02 or 3.03, whichever is
applicable, based on such deceased Participant's age at the date
of his death.
(b) Post-Retirement Death Benefit. If a Participant
dies after his Termination of Employment and such Participant was
receiving monthly benefits at the time of his death under this
Plan or was entitled to receive monthly benefits under this Plan
under any other Section of this Article but such Participant's
date of death preceded the benefit commencement date, the Spouse,
if any, of such Participant shall only be entitled to benefits
hereunder if such deceased Participant was receiving or had
elected to receive his benefits in the form of a Qualified Joint
and One-Half Survivor Annuity under Section 3.02, 3.03 or 3.04,
whichever is applicable.
Section 3.02. Retirement Benefits. Upon a Participant's
Termination of Employment on or after attainment of the
Retirement Age, such Participant shall be entitled to receive
monthly retirement benefits under this Plan for life. The
benefits shall be paid on the first (1st) calendar day of each
month, commencing with the first (1st) month subsequent to the
month in which occurs a Participant's Termination of Employment
and concluding with the month in which occurs his death. The
amount of the monthly retirement benefits for a Participant shall
be equal to sixty-five percent (65%) of such Participant's
Average Monthly Earnings, less the following:
(1) the monthly benefits which such Participant is
entitled to receive under the Company Pension Plan in effect
at the date of such Participant's Termination of Employment,
assuming he elected to have his benefit payments under the
Company Pension Plan commence at age sixty-five (65) or, if
later, the date of his Termination of Employment in the form
of a life annuity;
(2) such Participant's Company Savings Plan Monthly
Benefit Equivalent; and
(3) such Participant's Primary Social Security
Benefit.
If a Participant is married at the date his benefit payments are
to commence and notwithstanding anything contained in this Plan
to the contrary, such Participant may elect to have his monthly
benefits paid in the form of an actuarially equivalent Qualified
Joint and One-Half Survivor Annuity. For purposes of this
Article, an actuarially equivalent Qualified Joint and One-Half
Survivor Annuity shall be determined in the same manner as it is
determined under the Company Pension Plan.
Section 3.03. Other Termination of Employment Benefits.
If, before attainment of the Retirement Age and not by reason of
his incurring a Total Disability, a Participant's employment with
the Company:
(a) is involuntarily terminated by the Company without
Cause,
(b) is voluntarily terminated by such Participant for
Good Reason after an Acquisition of Control, or
(c) is voluntarily terminated by such Participant with
the consent of the Chief Executive Officer or the President
of the Company or, in the case of Energy's Chief Executive
Officer or President, with the consent of the Board,
such Participant shall be entitled to receive monthly retirement
benefits under this Plan for life. The benefits shall be paid on
the first (1st) calendar day of each month, commencing with the
first (1st) month subsequent to the month in which occurs such
Participant's Termination of Employment or, if later, the month
in which such Participant attains age fifty (50) and concluding
with the month in which occurs his death. The amount of the
early monthly retirement benefits for a Participant shall be
equal to the product of:
(1) the amount of the monthly retirement benefits
determined in accordance with Section 3.02; and
(2) a fraction (not to exceed one (1)), the numerator
of which is the number of full calendar months that such
Participant was employed by the Company and the denominator
of which is the number of full calendar months that such
Participant would have been employed by the Company had his
employment continued until the Retirement Age or, if lesser,
three hundred (300);
provided, however, that the amount of the monthly payments to a
Participant shall be further reduced to the extent and in the
same manner that such payments would be reduced if made under the
Company Pension Plan to reflect the commencement of the payments
before such Participant's Retirement Age. If a Participant is
married at the date his benefit payments are to commence and
notwithstanding anything contained in this Plan to the contrary,
such Participant may elect to have his monthly benefits paid in
the form of an actuarially equivalent Qualified Joint and
One-Half Survivor Annuity. A Participant whose employment with
the Company is terminated before attainment of Retirement Age for
Cause by the Company, voluntarily by such Participant without
consent of the Board or, if his employment is terminated after an
Acquisition of Control, without consent of the Board or Good
Reason shall not be entitled to any benefits hereunder.
Section 3.04. Disability Benefits. A Participant whose
Termination of Employment is the result of his incurring a Total
Disability before the Retirement Age shall be entitled to receive
monthly disability benefits under this Plan for life. The
benefits shall be paid on the first (1st) calendar day of each
month, commencing with the first (1st) month subsequent to the
month in which such Participant attains the Retirement Age and
concluding with the month in which occurs his death. The amount
of the monthly disability benefits for a Participant under this
Section shall be determined in the same manner as retirement
benefits are calculated under Section 3.02. If a Participant is
married at the date his benefit payments are to commence and
notwithstanding anything contained in this Plan to the contrary,
such Participant may elect to have his monthly benefits paid in
the form of an actuarially equivalent Qualified Joint and
One-Half Survivor Annuity. If a Participant who incurs a Total
Disability dies before attainment of the Retirement Age, his
surviving Spouse, if any, shall be entitled to monthly benefits
for life, commencing the first (1st) month following such
Participant's death, equal to the survivor benefits that would
have been payable to the Spouse under this Section under the
Qualified Joint and One-Half Survivor Annuity form of payment had
the Participant survived to the Retirement Age; provided,
however; that the amount of the monthly payments to his surviving
Spouse shall be further reduced to the extent and in the same
manner that such payments would be reduced if made under the
Company Pension Plan to reflect the commencement of the payments
before the date that such deceased Participant would have reached
the Retirement Age.
ARTICLE IV
ADMINISTRATION
Section 4.01. Delegation of Responsibility. The Company
may delegate its duties involved in the administration of this
Plan to such person or persons whose services are deemed by it to
be necessary or convenient. However, the ultimate responsibility
for the administration of this Plan shall remain with the
Company.
Section 4.02. Payment of Benefits. The benefits under this
Plan shall be paid solely from the general assets of the Company.
No Participant or his Spouse shall have any interest in any
specific assets of the Company under the terms of this Plan.
This Plan shall not be considered to create an escrow account,
trust fund or other funding arrangement of any kind or a
fiduciary relationship between a Participant and the Company.
Section 4.03. Construction of Plan. The Company shall have
the power to construe this Plan and to determine all questions of
fact or law arising under it. It may correct any defect, supply
any omission or reconcile any inconsistency in this Plan in such
manner and to such extent as it may deem appropriate. All acts
and determinations of the Company shall be final and conclusive
on the Company, the Participants, the Spouses of deceased
Participants and on any and all other persons who may be affected
by, or have an interest in, this Plan.
ARTICLE V
MISCELLANEOUS
Section 5.01. Amendment or Termination of Plan. This Plan
may be amended, modified or terminated by the Board; provided,
however, that no such amendment, modification or termination
shall have the effect of reducing the benefits currently in pay
status to a Participant or, if applicable, his Spouse or the
benefits that would have been payable hereunder if a
Participant's employment with the Company had been terminated
without Cause by the Company immediately before such amendment,
modification or termination.
Section 5.02. Successors. This Plan and the obligations
hereunder shall be binding on any successor of the Company.
Section 5.03. Duration of Plan. Subject to Section 5.01,
this Plan shall terminate at the date on which the final benefit
payment has been made pursuant to the terms of this Plan.
Section 5.04. Choice of Law. This Plan shall be construed
and interpreted pursuant to, and in accordance with, the laws of
the State of Indiana.
Section 5.05. No Employment Contract. This Plan shall not
be construed as an agreement, consideration or inducement of
employment or as affecting in any manner the rights or
obligations of the Company or of any Participant to continue or
to terminate the employment relationship at any time.
Section 5.06. Non-Alienation. No person shall have any
right to anticipate, pledge, alienate or assign any rights under
this Plan, and any effort to do so shall be null and void. The
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 that may be permitted by law.
Section 5.07. Gender and Number. Words in the one gender
shall be construed to include the other genders where
appropriate; words in the singular or plural shall be construed
as being in the plural or singular where appropriate.
Section 5.08. Headings. The headings in this Plan are
solely for convenience of reference and shall not affect its
interpretation.
This amended and restated Plan has been executed on this
4th day of December, 1998 to be effective as of December 1, 1998.
INDIANA ENERGY, INC.
By: /s/ Otto N. Frenzel III
Its: Chairman of the
Compensation
Committee of the Board
INDIANA ENERGY, INC.
UNFUNDED SUPPLEMENTAL RETIREMENT PLAN
FOR A SELECT GROUP OF MANAGEMENT EMPLOYEES
SCHEDULE A
Revised Effective October 1, 1997
NAME
Lawrence A. Ferger
Niel C. Ellerbrook
Paul T. Baker
Anthony E. Ard
Carl L. Chapman
Timothy M. Hewitt
Steven M. Schein
Jerrold L. Ulrey
Stephen E. Williams
Thomas J. Zabor
Jerome A. Benkert, Jr.
Ronald E. Christian
Eric Schach
Christopher M. Crawford
Robert D. Stegner (Retired)
Jack L. Diley (Retired)
Kenneth J. Roberts (Retired)
Wendell L. Thaler (Retired)
INDIANA ENERGY, INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
(EFFECTIVE JANUARY 1, 1999)
TABLE OF CONTENTS
Purpose
ARTICLE 1 Definitions
ARTICLE 2 Selection, Enrollment, Eligibility
2.1 Selection by Committee
2.2 Enrollment Requirements
2.3 Eligibility; Commencement of Participation
2.4 Termination of Participation and/or Deferrals
ARTICLE 3 Deferral Commitments/Company Matching/Crediting/Taxes
3.1 Minimum Deferrals
3.2 Maximum Deferral
3.3 Elections
3.4 Withholding of Annual Deferral Amounts
3.5 Annual Company Matching Amount
3.6 Annual Rollover Amount
3.7 Restricted Stock Amount
3.8 Investment of Trust Assets
3.9 Crediting/Debiting of Account Balances
3.10 FICA and Other Taxes
3.11 Vesting
3.12 Distributions
ARTICLE 4 Short-Term Payout; Unforeseeable Financial Emergencies;
Withdrawal Election
4.1 Short-Term Payout
4.2 Other Benefits Take Precedence Over Short-Term
4.3 Withdrawal Payout/Suspensions for Unforeseeable
Financial Emergencies
4.4 Withdrawal Election
ARTICLE 5 Retirement Benefit
5.1 Retirement Benefit
5.2 Payment of Retirement Benefit
5.3 Death Prior to Completion of Retirement Benefit
ARTICLE 6 Pre-Retirement Survivor Benefit
6.1 Pre-Retirement Survivor Benefit
6.2 Payment of Pre-Retirement Survivor Benefit
ARTICLE 7 Termination Benefit
7.1 Termination Benefit
7.2 Payment of Termination Benefit
ARTICLE 8 Beneficiary Designation
8.1 Beneficiary
8.2 Beneficiary Designation; Change
8.3 Acknowledgment
8.4 No Beneficiary Designation
8.5 Doubt as to Beneficiary
8.6 Discharge of Obligations
ARTICLE 9 Leave of Absence
9.1 Paid Leave of Absence
9.2 Unpaid Leave of Absence
ARTICLE 10 Termination, Amendment or Modification
10.1 Termination
10.2 Amendment
10.3 Plan Agreement
10.4 Effect of Payment
ARTICLE 11 Administration
11.1 Committee Duties
11.2 Administration Upon Change In Control
11.3 Agents
11.4 Binding Effect of Decisions
11.5 Indemnity of Committee
11.6 Employer Information
ARTICLE 12 Other Benefits and Agreements
12.1 Coordination with Other Benefits
ARTICLE 13 Claims Procedures
13.1 Presentation of Claim
13.2 Notification of Decision
13.3 Review of a Denied Claim
13.4 Decision on Review
13.5 Legal Action
ARTICLE 14 Trust
14.1 Establishment of the Trust
14.2 Interrelationship of the Plan and the Trust
14.3 Distributions From the Trust
ARTICLE 15 Miscellaneous
15.1 Status of Plan
15.2 Unsecured General Creditor
15.3 Employer's Liability
15.4 Nonassignability
15.5 Not a Contract of Employment
15.6 Furnishing Information
15.7 Terms
15.8 Captions
15.9 Governing Law
15.10 Notice
15.11 Successors
15.12 Validity
15.13 Incompetent
15.14 Court Order
15.15 Distribution in the Event of Taxation
15.16 Insurance
15.17 Legal Fees To Enforce Rights
After Change in Control
INDIANA ENERGY, INC.
NONQUALIFIED DEFERRED COMPENSATION PLAN
Effective January 1, 1999
Purpose
The purpose of this Plan (as defined below) is to provide
specified benefits to a select group of Employees (as defined
below) and Directors (as defined below) who contribute materially
to the continued growth, development and future business success
of Indiana Energy, Inc., an Indiana corporation, and its
subsidiaries, if any, that sponsor this Plan. This Plan shall be
unfunded for tax purposes and for purposes of Title I of ERISA
(as defined below).
ARTICLE 1
Definitions
For purposes of this Plan, unless otherwise clearly apparent
from the context, the following phrases or terms shall have the
following indicated meanings:
1.1 AAccount Balance" shall mean, with respect to a Participant,
a credit on the records of the Employer equal to the sum of
(i) the Deferral Account balance, (ii) vested Company
Matching Account balance, (iii) the vested Rollover Account
balance and (iv) the Restricted Stock Account balance. The
Account Balance, and each other specified account balance,
shall be a bookkeeping entry only and shall be utilized
solely as a device for the measurement and determination of
the amounts to be paid to a Participant, or his or her
designated Beneficiary, pursuant to this Plan.
1.2 "Annual Bonus" shall mean any compensation, in addition to
Base Annual Salary relating to services performed during any
calendar year, whether or not paid in such calendar year or
included on the Federal Income Tax Form W-2 for such
calendar year, payable to a Participant as an Employee under
any Employer's annual bonus and cash incentive plans,
excluding stock options and restricted stock.
1.3 "Annual Company Matching Amount" for any one Plan Year shall
mean the amount determined in accordance with Section 3.5.
1.4 "Annual Deferral Amount" shall mean that portion of a
Participant's Base Annual Salary, Annual Bonus and/or
Directors Fees that a Participant elects to have, and is
deferred, in accordance with Article 3, for any one Plan
Year. In the event of a Participant's Retirement, death or
Termination of Employment prior to the end of a Plan Year,
such year's Annual Deferral Amount shall be the actual
amount withheld prior to such event.
1.5 "Annual Installment Method" shall mean an annual installment
payment over the number of years selected by the Participant
in accordance with this Plan, calculated in the following
manner: The Account Balance of the Participant shall be
calculated as of the close of business on the last business
day of the year. The annual installment shall be calculated
by multiplying this balance by a fraction, the numerator of
which is one, and the denominator of which is the remaining
number of annual payments due the Participant. By way of
example, if the Participant elects a 10 year Annual
Installment Method, the first payment shall be 1/10 of the
Account Balance, calculated as described in this definition.
The following year, the payment shall be 1/9 of the Account
Balance, calculated as described in this definition. Each
annual installment shall be paid on or as soon as
practicable after the last business day of the applicable
year.
1.6 "Annual Restricted Stock Amount" shall mean, with respect to
a Participant for any one Plan Year, the value of unvested
restricted stock under any Company stock incentive plan,
deferred in accordance with Section 3.7 of this Plan.
1.7 "Annual Rollover Amount" shall mean, with respect to any one
Participant for any one Plan Year, the amount determined in
accordance with Section 3.6 of this Plan.
1.8 "Base Annual Salary" shall mean the annual cash compensation
relating to services performed during any calendar year,
whether or not paid in such calendar year or included on the
Federal Income Tax Form W-2 for such calendar year,
excluding bonuses, commissions, overtime, fringe benefits,
stock options, restricted stock, relocation expenses,
incentive payments, non-monetary awards, directors fees and
other fees and allowances paid to a Participant for
employment services rendered (whether or not such allowances
are included in the Employee's gross income). Base Annual
Salary shall be calculated before reduction for compensation
voluntarily deferred or contributed by the Participant
pursuant to all qualified or non-qualified plans of any
Employer and shall be calculated to include amounts not
otherwise included in the Participant's gross income under
Code Sections 125, 402(e)(3) or 402(h), pursuant to plans
established by any Employer; provided, however, that all
such amounts will be included in compensation only to the
extent that, had there been no such plan, the amount would
have been payable in cash to the Employee.
1.9 "Beneficiary" shall mean one or more persons, trusts,
estates or other entities, designated in accordance with
Article 8, that are entitled to receive benefits under this
Plan upon the death of a Participant.
1.10 "Beneficiary Designation Form" shall mean the form
established from time to time by the Committee that a
Participant completes, signs and returns to the Committee to
designate one or more Beneficiaries.
1.11 "Board" shall mean the Board of Directors of the Company.
1.12 "Change in Control" shall mean:
(a) 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
(i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or
(ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote
generally in the election of directors (the
"Outstanding Company Voting Securities"); provided,
however, that the following acquisitions shall not
constitute an acquisition of control: (iii) any
acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion
privilege), (iv) any acquisition by the Company, (v)
any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (vi)
any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, following
such reorganization, merger or consolidation, the
conditions described in clauses (i), (ii) and (iii) of
subsection (c) of this paragraph are satisfied;
(b) Individuals who, as of January 1, 1999, constitute
the Board of Directors of the Company (the "Incumbent
Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any
individual becoming a director subsequent to the date
hereof whose election, or nomination for election by
the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of
either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board;
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or
consolidation, (i) more than 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 Company Common Stock and Outstanding
Company Voting Securities immediately prior to such
reorganization, merger or consolidation in
substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or
consolidation, of the Outstanding Company Stock and
Outstanding Company Voting Securities, as the case may
be, (ii) no Person (excluding the Company, any employee
benefit plan or related trust of the Company, Indiana
Gas 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 Company 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 (iii) at least a majority of
the members of the board of directors of the
corporation resulting from such reorganization, merger
or consolidation were members of the Incumbent Board at
the time of the execution of the initial agreement
providing for such reorganization, merger or
consolidation;
(d) Approval by the shareholders of the Company of (i)
a complete liquidation or dissolution of the Company or
(ii) the sale or other disposition of all or
substantially all of the assets of the Company, other
than to a corporation, with respect to which following
such sale or other disposition (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 Company Common Stock and Outstanding
Company Voting Securities immediately prior to such
sale or other disposition in substantially the same
proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding
Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (2) no Person
(excluding the Company and any employee benefit plan or
related trust of the Company, Indiana Gas Company, Inc.
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 Company Common Stock or Outstanding
Company 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; or
(e) 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
the Company would constitute an "Change in Control"
under subsection (c) or (d) of this Section 1.12.
Notwithstanding anything contained in this Plan to the
contrary, if a Participant's employment is terminated before
a "Change in Control" as defined in this Section 1.12 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 a "Change in Control" and who effectuates a
"Change in Control" (a "Third Party") or (ii) otherwise
occurred in connection with, or in anticipation of, a
"Change in Control" which actually occurs, then for all
purposes of this Plan, the date of a "Change in Control"
with respect to the Participant shall mean the date
immediately prior to the date of such termination of the
Participant's employment.
1.13 "Claimant" shall have the meaning set forth in Section 13.1.
1.14 "Code" shall mean the Internal Revenue Code of 1986, as it
may be amended from time to time.
1.15 "Committee" shall mean the committee described in Article
11.
1.16 "Company" shall mean Indiana Energy, Inc., an Indiana
corporation, and any successor to all or substantially all
of the Company's assets or business.
1.17 "Company Matching Account" shall mean (i) the sum of all of
a Participant's Annual Company Matching Amounts, plus (ii)
amounts credited or debited in accordance with all the
applicable crediting/debiting provisions of this Plan that
relate to the Participant's Company Matching Account, less
(iii) all distributions made to the Participant or his or
her Beneficiary pursuant to this Plan that relate to the
Participant's Company Matching Account.
1.18 "Deduction Limitation" shall mean the following described
limitation on a benefit that may otherwise be distributable
pursuant to the provisions of this Plan. Except as
otherwise provided, this limitation shall be applied to all
distributions that are subject to the Deduction Limitation"
under this Plan. If an Employer determines in good faith
prior to a Change in Control that there is a reasonable
likelihood that any compensation paid to a Participant for a
taxable year of the Employer would not be deductible by the
Employer solely by reason of the limitation under Code
Section 162(m), then to the extent deemed necessary by the
Employer to ensure that the entire amount of any
distribution to the Participant pursuant to this Plan prior
to the Change in Control is deductible, the Employer may
defer all or any portion of a distribution under this Plan.
Any amounts deferred pursuant to this limitation shall
continue to be credited/debited with additional amounts in
accordance with Section 3.10 below, even if such amount is
being paid out in installments. The amounts so deferred and
amounts credited thereon shall be distributed to the
Participant or his or her Beneficiary (in the event of the
Participant's death) at the earliest possible date, as
determined by the Employer in good faith, on which the
deductibility of compensation paid or payable to the
Participant for the taxable year of the Employer during
which the distribution is made will not be limited by Code
Section 162(m), or if earlier, the effective date of a
Change in Control. Notwithstanding anything to the contrary
in this Plan, the Deduction Limitation shall not apply to
any distributions made after a Change in Control.
1.19 "Deferral Account" shall mean (i) the sum of all of a
Participant's Annual Deferral Amounts, plus (ii) amounts
credited or debited in accordance with all the applicable
crediting/debiting provisions of this Plan that relate to
the Participant's Deferral Account, less (iii) all
distributions made to the Participant or his or her
Beneficiary pursuant to this Plan that relate to the
Participant's Deferral Account.
1.20 "Director" shall mean any member of the Board of Directors
of any Employer.
1.21 "Directors Fees" shall mean the annual fees paid by any
Employer, including retainer fees and meetings fees, as
compensation for serving on the Board; provided, however,
that for purposes of this Plan, Director Fees shall exclude
any directors fees required to be invested in Company Stock
under the Indiana Energy, Inc. Directors Restricted Stock
Plan.
1.22 "Election Form" shall mean the form established from time to
time by the Committee that a Participant completes, signs
and returns to the Committee to make an election under the
Plan.
1.23 "Employee" shall mean a person who is an employee of any
Employer, and may include, where the context requires, a
Director.
1.24 "Employer(s)" shall mean the Company and/or any of its
subsidiaries (now in existence or hereafter formed or
acquired) that have been selected by the Board to
participate in the Plan and have adopted the Plan as a
sponsor.
1.25 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as it may be amended from time to time.
1.26 "First Plan Year" shall mean the period beginning January 1,
1999 and ending December 31, 1999.
1.27 "401(k) Plan" shall be the Indiana Energy, Inc. Retirement
Savings Plan, as now in effect and as amended from time to
time.
1.28 "Participant" shall mean any Employee or Director (i) who is
selected to participate in the Plan, (ii) who elects to
participate in the Plan, (iii) who signs a Plan Agreement,
an Election Form and a Beneficiary Designation Form, (iv)
whose signed Plan Agreement, Election Form and Beneficiary
Designation Form are accepted by the Committee, (v) who
commences participation in the Plan, and (vi) whose Plan
Agreement has not terminated. A spouse or former spouse of
a Participant shall not be treated as a Participant in the
Plan or have an Account Balance under the Plan, even if he
or she has an interest in the Participant's benefits under
the Plan as a result of applicable law or property
settlements resulting from legal separation or divorce.
1.29 "Plan" shall mean this Indiana Energy, Inc. Nonqualified
Deferred Compensation Plan, which shall be evidenced by this
instrument and by each Plan Agreement, as they may be
amended from time to time.
1.30 "Plan Agreement" shall mean a written agreement, as may be
amended from time to time, which is entered into by and
between an Employer and a Participant. Each Plan Agreement
executed by a Participant and the Participant's Employer
shall provide for the entire benefit to which such
Participant is entitled under the Plan; should there be more
than one Plan Agreement, the Plan Agreement bearing the
latest date of acceptance by the Employer shall supersede
all previous Plan Agreements in their entirety and shall
govern such entitlement. The terms of any Plan Agreement
may be different for any Participant, and any Plan Agreement
may provide additional benefits not set forth in the Plan or
limit the benefits otherwise provided under the Plan;
provided, however, that any such additional benefits or
benefit limitations must be agreed to by both the Employer
and the Participant.
1.31 "Plan Year" shall, except for the First Plan Year, mean a
period beginning on January 1 of each calendar year and
continuing through December 31 of such calendar year.
1.32 "Pre-Retirement Survivor Benefit" shall mean the benefit set
forth in Article 6.
1.33 "Prior Plans" shall mean Indiana Energy, Inc. Directors
Compensation Deferral Plan and Indiana Energy, Inc.
Executive Compensation Deferred Plan, which plans were in
effect on December 31, 1998 and which plans were merged into
this Plan on January 1, 1999; provided, however, that the
distribution and investment options elected by a Participant
in the Prior Plans shall carry forward into this Plan unless
the Participant elects to opt into the applicable provisions
of this Plan; provided, further, that the provisions of the
Prior Plans are hereby incorporated herein by reference.
1.34 "Restricted Stock" shall mean unvested shares of restricted
stock selected by the Committee in its sole discretion and
awarded to the Participant under the Restricted Stock Plan.
1.35 "Restricted Stock Account" shall mean (i) the sum of the
Participant's Annual Restricted Stock Amounts, plus (ii)
amounts credited or debited in accordance with all the
applicable crediting/debiting provisions of this Plan that
relate to the Participant's Restricted Stock Account, less
(iii) all distributions made to the Participant or his or
her Beneficiary pursuant to this Plan that relate to the
Participant's Restricted Stock Account.
1.36 "Restricted Stock Amount" shall mean, for any grant of
Restricted Stock, the amount of such Restricted Stock
deferred in accordance with Section 3.7 of this Plan,
calculated using the closing price of Stock as of the end of
the trading day coinciding or closest after the date such
Restricted Stock would otherwise vest, but for the election
to defer.
1.37 "Restricted Stock Plan" shall mean the Indiana Energy, Inc.
Executive Restricted Stock Plan.
1.38 "Retirement", "Retire(s)" or "Retired" shall mean, with
respect to an Employee, severance from employment from all
Employers for any reason other than a leave of absence or
death on or after meeting the requirements for early or
normal retirement under the Company's tax qualified defined
benefit plan; and shall mean with respect to a Director who
is not an Employee, severance of all of his or her
directorships with all Employers, which may occur at any
time or may be determined to have occurred in the sole
discretion of the Committee. If a Participant is both an
Employee and a Director, Retirement shall not occur until he
or she Retires as both an Employee and a Director, which
Retirement shall be deemed to be a Retirement as a Director;
provided, however, that such a Participant may elect, at
least three years prior to Retirement and in accordance with
the policies and procedures established by the Committee, to
Retire for purposes of this Plan at the time he or she
Retires as an Employee, which Retirement shall be deemed to
be a Retirement as an Employee.
1.39 "Retirement Benefit" shall mean the benefit set forth in
Article 5.
1.40 "Rollover Account" shall mean (i) the sum of the
Participant's Annual Rollover Stock Amounts, plus (ii)
amounts credited or debited in accordance with all the
applicable crediting/debiting provisions of this Plan that
relate to the Participant's Rollover Account, less (iii) all
distributions made to the Participant or his or her
Beneficiary pursuant to this Plan that relate to the
Participant's Rollover Account.
1.41 "Rollover Amount" shall mean an amount transferred to a
Participant's Account Balance from another nonqualified plan
of the Company (including the Prior Plans), as permitted in
the sole discretion of the Committee, as provided in Section
3.6. Except for transfers from the Prior Plans, any
elections made by the Participant with regard to his or her
benefit under any other plan shall be null and void.
1.42 "Short-Term Payout" shall mean the payout set forth in
Section 4.1.
1.43 "Stock" shall mean Company common stock, without par value,
or any other equity securities of the Company designated by
the Committee.
1.44 "Termination Benefit" shall mean the benefit set forth in
Article 7.
1.45 "Termination of Employment" shall mean the severing of
employment with all Employers, or service as a Director of
all Employers, voluntarily or involuntarily, for any reason
other than Retirement, death or an authorized leave of
absence. If a Participant is both an Employee and a
Director, a Termination of Employment shall occur only upon
the termination of the last position held; provided,
however, that such a Participant may elect, at least three
years before Termination of Employment and in accordance
with the policies and procedures established by the
Committee, to be treated for purposes of this Plan as having
experienced a Termination of Employment at the time he or
she ceases employment with an Employer as an Employee.
1.46 "Trust" shall mean one or more trusts which may be
established as a grantor trust under the Code which may
function as a source of payments hereunder unless the
Employer becomes insolvent.
1.47 "Unforeseeable Financial Emergency" shall mean an
unanticipated emergency that is caused by an event beyond
the control of the Participant that would result in severe
financial hardship to the Participant resulting from (i) the
sudden and unexpected disability of the Participant or a
dependent of the Participant, (ii) a loss of the
Participant's property due to casualty, or (iii) such other
extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant, all
as determined in the sole discretion of the Committee.
ARTICLE 2
Selection, Enrollment, Eligibility
2.1 Selection by Committee. Participation in the Plan shall be
limited to a select group of management and highly
compensated Employees and Directors of the Employers, as
determined by the Committee in its sole discretion. From
that group, the Committee shall select, in its sole
discretion, Employees and Directors to participate in the
Plan.
2.2 Enrollment Requirements. As a condition to participation,
each selected Employee or Director shall complete, execute
and return to the Committee a Plan Agreement, an Election
Form and a Beneficiary Designation Form, all within 30 days
or such shorter time period established by the Committee,
after he or she is selected to participate in the Plan. In
addition, the Committee shall establish from time to time
such other enrollment requirements as it determines in its
sole discretion are necessary.
2.3 Eligibility; Commencement of Participation. Provided an
Employee or Director selected to participate in the Plan has
met all enrollment requirements set forth in this Plan and
required by the Committee, including returning all required
documents to the Committee within the specified time period,
that Employee or Director shall commence participation in
the Plan on the first day of the month following the month
in which the Employee or Director completes all enrollment
requirements. If an Employee or a Director fails to meet
all such requirements within the period required, in
accordance with Section 2.2, that Employee or Director shall
not be eligible to participate in the Plan until the first
day of the Plan Year following the delivery to and
acceptance by the Committee of the required documents.
2.4 Termination of Participation and/or Deferrals. If the
Committee determines in good faith that a Participant no
longer qualifies as a member of a select group of management
or highly compensated employees, as membership in such group
is determined in accordance with Sections 201(2), 301(a)(3)
and 401(a)(1) of ERISA, the Committee shall have the right,
in its sole discretion, to (i) terminate any deferral
election the Participant has made for the remainder of the
Plan Year in which the Participant's membership status
changes, (ii) prevent the Participant from making future
deferral elections and/or (iii) immediately distribute the
Participant's then Account Balance as a Termination Benefit
and terminate the Participant's participation in the Plan.
ARTICLE 3
Deferral Commitments/Company Matching/Crediting/Taxes
3.1 Minimum Deferrals.
(a) Base Annual Salary, Annual Bonus and Directors
Fees. For each Plan Year, a Participant may elect to
defer, as his or her Annual Deferral Amount, Base
Annual Salary and Annual Bonus in the minimum combined
amount of $5,000. If an election is made for less than
the stated minimum combined amount, or if no election
is made, the amount deferred shall be zero. There is
no minimum amount of deferrals for Directors Fees.
(b) Short Plan Year for Base Annual Salary and Annual
Bonus. Notwithstanding the foregoing, if a Participant
first becomes a Participant after the first day of a
Plan Year, or in the case of the first Plan Year of the
Plan itself, the minimum combined amount of Base Annual
Salary and Annual Bonus deferred shall be an amount
equal to the minimum set forth above, multiplied by a
fraction, the numerator of which is the number of
complete months remaining in the Plan Year and the
denominator of which is 12.
(c) Restricted Stock Amount. There is no minimum
amount of deferral for Restricted Stock.
3.2 Maximum Deferral.
(a) Base Annual Salary, Annual Bonus and Directors
Fees. For each Plan Year, a Participant may elect to
defer, as his or her Annual Deferral Amount, Base
Annual Salary, Annual Bonus and/or Directors Fees up to
the following maximum percentages for each deferral
elected:
Deferral Maximum
Percentage
Base Annual 100%
Salary
Annual Bonus 100%
Directors 100%
Fees
(b) Short Plan Year. Notwithstanding the foregoing,
if a Participant first becomes a Participant after the
first day of a Plan Year, or in the case of the first
Plan Year of the Plan itself, the maximum Annual
Deferral Amount, with respect to Base Annual Salary,
Annual Bonus and Directors Fees shall be limited to the
amount of compensation not yet earned by the
Participant as of the date the Participant submits a
Plan Agreement and Election Form to the Committee for
acceptance.
(c) Restricted Stock Amount. A Participant may elect
to defer up to 100% of his or her Restricted Stock.
3.3 Elections.
(a) First Plan Year. In connection with a
Participant's commencement of participation in the
Plan, the Participant shall make an irrevocable
deferral election for the Plan Year in which the
Participant commences participation in the Plan, along
with such other elections as the Committee deems
necessary or desirable under the Plan. For these
elections to be valid, the Election Form must be
completed and signed by the Participant, timely
delivered to the Committee (in accordance with Section
2.2 above) and accepted by the Committee.
(b) Subsequent Plan Years. For each succeeding Plan
Year, an irrevocable deferral election for that Plan
Year, and such other elections as the Committee deems
necessary or desirable under the Plan, shall be made by
timely delivering to the Committee, in accordance with
its rules and procedures, before the end of the Plan
Year preceding the Plan Year for which the election is
made, a new Election Form. If no such Election Form is
timely delivered for a Plan Year, each of the Annual
Deferral Amount, Annual Company Matching Amount and
Annual Rollover Amount shall be zero for that Plan
Year.
(c) Restricted Stock. For an election to defer
Restricted Stock Amounts to be valid: (i) a separate
irrevocable Election Form must be completed and signed
by the Participant, with respect to such Restricted
Stock; and, (ii) except for the first Plan Year, such
Election Form must be timely delivered to the Committee
and accepted by the Committee before the last calendar
day of the Plan Year immediately preceding the Plan
Year during which the Restricted Stock vests.
3.4 Withholding of Annual Deferral Amounts. For each Plan Year,
the Base Annual Salary portion of the Annual Deferral Amount
shall be withheld from each regularly scheduled Base Annual
Salary payroll in equal amounts, as adjusted from time to
time for increases and decreases in Base Annual Salary. The
Annual Bonus and/or Directors Fees portion of the Annual
Deferral Amount shall be withheld at the time the Annual
Bonus or Directors Fees are or otherwise would be paid to
the Participant, whether or not this occurs during the Plan
Year itself.
3.5 Annual Company Matching Amount. A Participant's Annual
Company Matching Amount for any Plan Year shall be equal to
100% of the Participant's Annual Deferral Amount for such
Plan Year, up to an amount that does not exceed 6% of the
Participant's Base Annual Salary, reduced by the amount of
any matching contributions made to the 401(k) Plan on his or
her behalf for the Plan Year of the 401(k) Plan that
corresponds to the Plan Year. If a Participant is not
employed by an Employer, or is no longer providing services
as a Director, as of the last business day of a Plan Year
other than by reason of his or her Retirement or death, the
Annual Company Matching Amount for such Plan Year shall be
zero. In the event of Retirement or death, a Participant
shall be credited with the Annual Company Matching Amount
for the Plan Year in which he or she Retires or dies.
3.6 Annual Rollover Amount. Subject to any terms and conditions
imposed by the Committee, for any Plan Year, a Participant
may elect to roll over an amount from any nonqualified plan
of the Company, including from any predecessor nonqualified
plan to the Plan, as permitted in the sole discretion of the
Committee (each such amount, an "Annual Rollover Amount").
Distribution and crediting and debiting of the Annual
Rollover Amount shall be governed by the terms and
conditions of the Plan, and any elections made by the
Participant with regard to his or her benefit under any
other plan shall be null and void. Notwithstanding anything
contained herein to the contrary, amounts transferred from
the Prior Plans shall be subject to the distribution and
investment provisions set forth in the Prior Plans unless
the Participant elects for the provisions of this Plan to
apply.
3.7 Restricted Stock Amount. Subject to any terms and
conditions imposed by the Committee, a Participant may elect
to defer, under the Plan, a Restricted Stock Amount. A
Restricted Stock Amount shall be credited (or debited) to
the Participant on the books of the Employer in connection
with such an election at the time the Restricted Stock would
otherwise vest under the terms of the Company stock
incentive plan, but for the election to defer. An Annual
Restricted Stock Amount shall consist of all Restricted
Stock Amounts deferred pursuant to this Section 3.7 in any
one Plan Year.
3.8 Investment of Trust Assets. If a Trust is established, the
Trustee of the Trust shall be authorized, upon written
instructions received from the Committee or investment
manager appointed by the Committee, to invest and reinvest
the assets of the Trust in accordance with the applicable
Trust Agreement, including the disposition of Stock and
reinvestment of the proceeds in one or more investment
vehicles designated by the Committee.
3.9 Crediting/Debiting of Account Balances. In accordance with,
and subject to, the rules and procedures that are
established from time to time by the Committee, in its sole
discretion, amounts shall be credited or debited to a
Participant's Account Balance in accordance with the
following rules:
(a) Election of Measurement Funds. Except as
otherwise provided in Section 3.9(f) below, a
Participant, in connection with his or her initial
deferral election in accordance with Section 3.3(a)
above, shall elect, on the Election Form, one or more
Measurement Fund(s) (as described in Section 3.9(c)
below) to be used to determine the additional amounts
to be credited to his or her Account Balance for each
day in which the Participant commences participation in
the Plan and continuing thereafter for each subsequent
day in which the Participant participates in the Plan,
unless changed in accordance with the next sentence.
Commencing with the first day that follows the
Participant's commencement of participation in the Plan
and continuing thereafter for each subsequent day in
which the Participant participates in the Plan, the
Participant may (but is not required to) elect, by
submitting an Election Form to the Committee that is
accepted by the Committee, to add or delete one or more
Measurement Fund(s) to be used to determine the
additional amounts to be credited to his or her Account
Balance, or to change the portion of his or her Account
Balance allocated to each previously or newly elected
Measurement Fund. If an election is made in accordance
with the previous sentence, it shall apply to the next
day and continue thereafter for each subsequent day in
which the Participant participates in the Plan, unless
changed in accordance with the previous sentence.
(b) Proportionate Allocation. In making any election
described in Section 3.9(a) above, the Participant
shall specify on the Election Form, in increments of
five percentage points (5%), the percentage of his or
her Account Balance to be allocated to a Measurement
Fund (as if the Participant was making an investment in
that Measurement Fund with that portion of his or her
Account Balance).
(c) Measurement Funds. The Committee shall select one
or more measurement funds ("Measurement Funds") which
can be selected by the Participants for purposes of
determining adjustments to their Account Balance, both
positive and negative. The Measurement Funds made
available shall be communicated to the Participants by
the Committee.
As necessary, the Committee may, in its sole
discretion, discontinue, substitute or add a
Measurement Fund. Each such action will take effect
within thirty (30) days of the day upon which the
Committee gives Participants advance written notice of
such change.
(d) Crediting or Debiting Method. The performance of
each elected Measurement Fund (either positive or
negative) will be determined by the Committee, in its
reasonable discretion, based on the performance of the
Measurement Funds themselves. A Participant's Account
Balance shall be credited or debited on a daily basis
based on the performance of each Measurement Fund
selected by the Participant, as determined by the
Committee in its sole discretion, as though (i) a
Participant's Account Balance were invested in the
Measurement Fund(s) selected by the Participant, in the
percentages applicable to such day, at the closing
price on such day or, if not available, the most
recently available closing price; (ii) the portion of
the Annual Deferral Amount that was actually was
invested in the Measurement Fund(s) selected by the
Participant, no later than the close of business on the
third business day after the day on which such amounts
are actually deferred from the Participant's Base
Annual Salary through reductions in his or her payroll
or Directors Fees payments, as the case may be, at the
closing price on such date; and (iii) any distribution
made to a Participant that decreases such Participant's
Account Balance ceased being invested in the
Measurement Fund(s), no earlier than three business
days prior to the distribution, at the closing price
and in the percentages applicable on such date. The
Participant's Annual Company Matching Amount shall be
credited to his or her Company Matching Account for
purposes of this Section 3.9(d) as of the close of
business on the first business day in February of the
Plan Year following the Plan Year to which it relates.
The Participant's Rollover Amount(s) shall be credited
to his or her Rollover Account for purposes of this
Section 3.9(d) no later than the close of business on
the third business day after the day on which the
Rollover Amount(s) were credited to the Participant's
Rollover Account. The Participant's Annual Restricted
Stock Amount(s) shall be credited to his or her
Restricted Stock Account for purposes of this Section
3.9(d) no later than the close of business on the third
business day after the day on which the Restricted
Stock was exercised or otherwise disposed of.
(e) No Actual Investment. Notwithstanding any other
provision of this Plan that may be interpreted to the
contrary, the Measurement Funds are to be used for
measurement purposes only, and a Participant's election
of any such Measurement Fund, the allocation to his or
her Account Balance thereto, the calculation of
additional amounts and the crediting or debiting of
such amounts to a Participant's Account Balance shall
not be considered or construed in any manner as an
actual investment of his or her Account Balance in any
such Measurement Fund. In the event that the Company
or the Trustee (as that term is defined in the Trust),
in its own discretion, decides to invest funds in any
or all of the Measurement Funds, no Participant shall
have any rights in or to such investments themselves.
Without limiting the foregoing, a Participant's Account
Balance shall at all times be a bookkeeping entry only
and shall not represent any investment made on his or
her behalf by the Company or the Trust; the Participant
shall at all times remain an unsecured creditor of the
Company.
(f) Special Rules for Company Stock. If one of the
Measurement Funds selected by the Committee is a
Company Stock fund, a Participant whose Account Balance
includes amounts credited to the Company Stock
Measurement Fund shall be provided the opportunity to
elect to receive the amount, less applicable
withholding, that he would have received in dividends
had the Participant held shares of Company Stock equal
to his proportionate share of the Company Stock
Measurement Fund. In order to receive this cash
option, a Participant shall be required to make an
irrevocable election prior to the beginning of the Plan
Year during which the cash dividend would have been
paid had the Participant held shares of Company Stock
equal to the amount of shares credited for bookkeeping
purposes under the Company Stock Measurement Fund.
3.10 FICA and Other Taxes.
(a) Annual Deferral Amounts. For each Plan Year in
which an Annual Deferral Amount is being withheld from
a Participant, the Participant's Employer(s) shall
withhold from that portion of the Participant's Base
Annual Salary, Annual Bonus and/or Directors Fees, and
Restricted Stock that is not being deferred, in a
manner determined by the Employer(s), the Participant's
share of FICA and other employment taxes on such Annual
Deferral Amount. If necessary, the Committee may
reduce the Annual Deferral Amount in order to comply
with this Section 3.10.
(b) Company Matching Amounts. When a Participant
becomes vested in a portion of his or her Company
Matching Account, the Participant's Employer(s) shall
withhold from the Participant's Base Annual Salary,
Annual Bonus, and/or Directors Fees and Restricted
Stock that is not deferred, in a manner determined by
the Employer(s), the Participant's share of FICA and
other employment taxes. If necessary, the Committee
may reduce the vested portion of the Participant's
Company Matching Account in order to comply with this
Section 3.10.
(c) Rollover Amounts. When a Participant becomes
vested in a portion of his or her Rollover Account, the
Participant's Employer(s) shall withhold from the
Participant's Base Annual Salary, Annual Bonus, and/or
Directors Fees, and Restricted Stock that is not
deferred, in a manner determined by the Employer(s),
the Participant's share of FICA and other employment
taxes. If necessary, the Committee may reduce the
vested portion of the Participant's Rollover Account in
order to comply with this Section 3.10.
(d) Annual Restricted Stock Amounts. For each Plan
Year in which an Annual Restricted Stock Amount is
being first withheld from a Participant, the
Participant's Employer(s) shall withhold from that
portion of the Participant's Base Annual Salary, Annual
Bonus, and/or Directors Fees, and Rollover Amounts and
Restricted Stock that is not being deferred, in a
manner determined by the Employer(s), the Participant's
share of FICA and other employment taxes on such Annual
Restricted Stock Amount. If necessary, the Committee
may reduce the Annual Restricted Stock Amount in order
to comply with this Section 3.10.
3.11 Vesting. A Participant shall be vested in his or her
Deferral Account and Restricted Stock Amounts all times. A
Participant shall at all times be vested in his or her
Company Matching Account to the same extent he or she is
vested in the employer match provided under the 401(k) Plan.
A Participant shall at all times be vested in his or her
Rollover Account to the extent he or she is or would be
vested in the accounts under the terms of the plans from
which such Rollover Amounts are derived.
3.12 Distributions. The Participant's Employer(s), or the
trustee of the Trust, shall withhold from any payments made
to a Participant under this Plan all federal, state and
local income, employment and other taxes required to be
withheld by the Employer(s), or the trustee of the Trust, in
connection with such payments, in amounts and in a manner to
be determined in the sole discretion of the Employer(s) and
the trustee of the Trust.
ARTICLE 4
Short-Term Payout; Unforeseeable Financial Emergencies;
Withdrawal Election
4.1 Short-Term Payout. In connection with each election to
defer an Annual Deferral Amount, a Participant may
irrevocably elect to receive a future "Short-Term Payout"
from the Plan with respect to such Annual Deferral Amount,
plus earnings (or less losses) thereon. Subject to the
Deduction Limitation, the Short-Term Payout shall be a lump
sum payment in an amount that is equal to the Annual
Deferral Amount, plus amounts credited or debited in the
manner provided in Section 3.9 above on that amount,
determined at the time that the Short-Term Payout becomes
payable (rather than the date of a Termination of
Employment). Subject to the Deduction Limitation and the
other terms and conditions of this Plan, each Short-Term
Payout elected shall be paid out during a 60 day period
commencing immediately after the last day of any Plan Year
designated by the Participant that is at least three Plan
Years after the Plan Year in which the Annual Deferral
Amount is actually deferred. By way of example, if a three
year Short-Term Payout is elected for Annual Deferral
Amounts that are deferred in the Plan Year commencing
January 1, 1999, the three year Short-Term Payout would
become payable during a 60 day period commencing January 1,
2003.
4.2 Other Benefits Take Precedence Over Short-Term. Should an
event occur that triggers a benefit under Article 5, 6, or
7, any Annual Deferral Amount, plus amounts credited or
debited thereon, that is subject to a Short-Term Payout
election under Section 4.1 shall not be paid in accordance
with Section 4.1 but shall be paid in accordance with the
other applicable Article.
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial
Emergencies. If the Participant experiences an
Unforeseeable Financial Emergency, the Participant may
petition the Committee to (i) suspend any deferrals required
to be made by a Participant and/or (ii) receive a partial or
full payout from the Plan. The payout shall not exceed the
lesser of the Participant's Account Balance, calculated as
if such Participant were receiving a Termination Benefit, or
the amount reasonably needed to satisfy the Unforeseeable
Financial Emergency. If, subject to the sole discretion of
the Committee, the petition for a suspension and/or payout
is approved, suspension shall take effect upon the date of
approval and any payout shall be made within 60 days of the
date of approval. The payment of any amount under this
Section 4.3 shall not be subject to the Deduction
Limitation.
4.4 Withdrawal Election. A Participant (or, after a
Participant's death, his or her Beneficiary) may elect, at
any time, to withdraw all of his or her Account Balance,
calculated as if there had occurred a Termination of
Employment as of the day of the election, less a withdrawal
penalty equal to 10% of such amount (the net amount shall be
referred to as the "Withdrawal Amount"). This election can
be made at any time, before or after Retirement, death or
Termination of Employment, and whether or not the
Participant (or Beneficiary) is in the process of being paid
pursuant to an installment payment schedule. If made before
Retirement, or death, a Participant's Withdrawal Amount
shall be his or her Account Balance calculated as if there
had occurred a Termination of Employment as of the day of
the election. No partial withdrawals of the Withdrawal
Amount shall be allowed. The Participant (or his or her
Beneficiary) shall make this election by giving the
Committee advance written notice of the election in a form
determined from time to time by the Committee. The
Participant (or his or her Beneficiary) shall be paid the
Withdrawal Amount within 60 days of his or her election.
Once the Withdrawal Amount is paid, the Participant's
participation in the Plan shall terminate and the
Participant shall not be eligible to participate in the Plan
for the remainder of that Plan Year and the next two full
Plan Years. The payment of this Withdrawal Amount shall not
be subject to the Deduction Limitation.
ARTICLE 5
Retirement Benefit
5.1 Retirement Benefit. Subject to the Deduction Limitation, a
Participant who Retires shall receive, as a Retirement
Benefit, his or her Account Balance.
5.2 Payment of Retirement Benefit. A Participant, in connection
with his or her commencement of participation in the Plan,
shall elect on an Election Form to receive the Retirement
Benefit in a lump sum or, if he or she so elects, pursuant
to an Annual Installment Method of 5, 10 or 15 years. The
Participant may annually change his or her election to an
allowable alternative payout period by submitting a new
Election Form to the Committee, provided that any such
Election Form is submitted at least 3 years prior to the
Participant's Retirement and is accepted by the Committee in
its sole discretion. The Election Form most recently
accepted by the Committee shall govern the payout of the
Retirement Benefit. If a Participant does not make any
election with respect to the payment of the Retirement
Benefit, then such benefit shall be payable in a lump sum.
The lump sum payment shall be made, or installment payments
shall commence, no later than 60 days after the last day of
the Plan Year which the Participant Retires.
5.3 Death Prior to Completion of Retirement Benefit. If a
Participant dies after Retirement but before the Retirement
Benefit is paid in full, the Participant's unpaid Retirement
Benefit payments shall continue and shall be paid to the
Participant's Beneficiary (a) over the remaining number of
years and in the same amounts as that benefit would have
been paid to the Participant had the Participant survived,
or (b) in a lump sum, if requested by the Beneficiary and
allowed in the sole discretion of the Committee, that is
equal to the Participant's unpaid remaining Account Balance.
Notwithstanding the foregoing, if the Participant's Account
Balance at the time of his or her death after his or her
Retirement is $35,000 or less, then the Committee may pay
the proceeds to the Participant's Beneficiary in a lump sum.
ARTICLE 6
Pre-Retirement Survivor Benefit
6.1 Pre-Retirement Survivor Benefit. Subject to the Deduction
Limitation, the Participant's Beneficiary shall receive a
Pre-Retirement Survivor Benefit equal to the Participant's
Account Balance if the Participant dies before he or she
Retires or experiences a Termination of Employment.
6.2 Payment of Pre-Retirement Survivor Benefit. A Participant,
in connection with his or her commencement of participation
in the Plan, shall elect on an Election Form whether the Pre-
Retirement Survivor Benefit shall be received by his or her
Beneficiary in a lump sum or pursuant to an Annual
Installment Method of 5, 10 or 15 years. The Participant
may annually change this election to an allowable
alternative payout period by submitting a new Election Form
to the Committee, which form must be accepted by the
Committee in its sole discretion. The Election Form most
recently accepted by the Committee prior to the
Participant's death shall govern the payout of the
Participant's Pre-Retirement Survivor Benefit. If a
Participant does not make any election with respect to the
payment of the Pre-Retirement Survivor Benefit, then such
benefit shall be paid in a lump sum. Despite the foregoing,
if the Participant's Account Balance at the time of his or
her death is less than $35,000, payment of the Pre-
Retirement Survivor Benefit may be made, in the sole
discretion of the Committee, in a lump sum. Any payment
made shall be subject to the Deduction Limitation.
ARTICLE 7
Termination Benefit
7.1 Termination Benefit. Subject to the Deduction Limitation,
the Participant shall receive a Termination Benefit, which
shall be equal to the Participant's Account Balance if a
Participant experiences a Termination of Employment prior to
his or her Retirement or death.
7.2 Payment of Termination Benefit. Payment of his or her
Termination Benefit shall be paid in a lump sum as soon as
practicable after the Participant's Termination of
Employment; provided, however, that the Committee, in its
complete and sole discretion, may elect to pay the
Termination Benefit pursuant to an Annual Installment Method
of 5, 10 or 15 years rather than in a lump sum. Any payment
made shall be subject to the Deduction Limitation.
ARTICLE 8
Beneficiary Designation
8.1 Beneficiary. Each Participant shall have the right, at any
time, to designate his or her Beneficiary(ies) (both primary
as well as contingent) to receive any benefits payable under
the Plan to a beneficiary upon the death of a Participant.
The Beneficiary designated under this Plan may be the same
as or different from the Beneficiary designation under any
other plan of an Employer in which the Participant
participates.
8.2 Beneficiary Designation; Change. A Participant shall
designate his or her Beneficiary by completing and signing
the Beneficiary Designation Form, and returning it to the
Committee or its designated agent. A Participant shall have
the right to change a Beneficiary by completing, signing and
otherwise complying with the terms of the Beneficiary
Designation Form and the Committee's rules and procedures,
as in effect from time to time. Upon the acceptance by the
Committee of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be canceled.
The Committee shall be entitled to rely on the last
Beneficiary Designation Form filed by the Participant and
accepted by the Committee prior to his or her death.
8.3 Acknowledgment. No designation or change in designation of
a Beneficiary shall be effective until received and
acknowledged in writing by the Committee or its designated
agent.
8.4 No Beneficiary Designation. If a Participant fails to
designate a Beneficiary as provided in Sections 8.1, 8.2 and
8.3 above or, if all designated Beneficiaries predecease the
Participant or die prior to complete distribution of the
Participant's benefits, then the Participant's designated
Beneficiary shall be deemed to be his or her surviving
spouse. If the Participant has no surviving spouse, the
benefits remaining under the Plan to be paid to a
Beneficiary shall be payable to the executor or personal
representative of the Participant's estate.
8.5 Doubt as to Beneficiary. If the Committee has any doubt as
to the proper Beneficiary to receive payments pursuant to
this Plan, the Committee shall have the right, exercisable
in its discretion, to cause the Participant's Employer to
withhold such payments until this matter is resolved to the
Committee's satisfaction.
8.6 Discharge of Obligations. The payment of benefits under the
Plan to a Beneficiary shall fully and completely discharge
all Employers and the Committee from all further obligations
under this Plan with respect to the Participant, and that
Participant's Plan Agreement shall terminate upon such full
payment of benefits.
ARTICLE 9
Leave of Absence
9.1 Paid Leave of Absence. If a Participant is authorized by
the Participant's Employer for any reason to take a paid
leave of absence from the employment of the Employer, the
Participant shall continue to be considered employed by the
Employer and the Annual Deferral Amount shall continue to be
withheld during such paid leave of absence in accordance
with Section 3.3.
9.2 Unpaid Leave of Absence. If a Participant is authorized by
the Participant's Employer for any reason to take an unpaid
leave of absence from the employment of the Employer,
including during any period of the Participant's disability,
the Participant shall continue to be considered employed by
the Employer and the Participant shall be excused from
making deferrals until the earlier of the date the leave of
absence expires or the Participant returns to a paid
employment status. Upon such expiration or return,
deferrals shall resume for the remaining portion of the Plan
Year in which the expiration or return occurs, based on the
deferral election, if any, made for that Plan Year. If no
election was made for that Plan Year, no deferral shall be
withheld.
ARTICLE 10
Termination, Amendment or Modification
10.1 Termination. Although each Employer anticipates that it
will continue the Plan for an indefinite period of time,
there is no guarantee that any Employer will continue the
Plan or will not terminate the Plan at any time in the
future. Accordingly, each Employer reserves the right to
discontinue its sponsorship of the Plan and/or to terminate
the Plan at any time with respect to any or all of its
participating Employees and Directors, by action of its
board of directors. Upon the termination of the Plan with
respect to any Employer, the Plan Agreements of the affected
Participants who are employed by that Employer, or in the
service of that Employer as Directors, shall terminate and
their Account Balances, determined as if they had
experienced a Termination of Employment on the date of Plan
termination or, if Plan termination occurs after the date
upon which a Participant was eligible to Retire, then with
respect to that Participant as if he or she had Retired on
the date of Plan termination, shall be paid to the
Participants as follows: Prior to a Change in Control, if
the Plan is terminated with respect to all of its
Participants, an Employer shall have the right, in its sole
discretion, and notwithstanding any elections made by the
Participant, to pay such benefits in a lump sum or pursuant
to an Annual Installment Method of up to 15 years, with
amounts credited and debited during the installment period
as provided herein. If the Plan is terminated with respect
to less than all of its Participants, an Employer shall be
required to pay such benefits in a lump sum. After a Change
in Control, the Employer shall be required to pay such
benefits in a lump sum. The termination of the Plan shall
not adversely affect any Participant or Beneficiary who has
become entitled to the payment of any benefits under the
Plan as of the date of termination; provided however, that
the Employer shall have the right to accelerate installment
payments without a premium or prepayment penalty by paying
the Account Balance in a lump sum or pursuant to an Annual
Installment Method using fewer years (provided that the
present value of all payments that will have been received
by a Participant at any given point of time under the
different payment schedule shall equal or exceed the present
value of all payments that would have been received at that
point in time under the original payment schedule).
10.2 Amendment. Any Employer may, at any time, amend or modify
the Plan in whole or in part with respect to that Employer
by the action of its board of directors; provided, however,
that: (i) no amendment or modification shall be effective to
decrease or restrict the value of a Participant's Account
Balance in existence at the time the amendment or
modification is made, calculated as if the Participant had
experienced a Termination of Employment as of the effective
date of the amendment or modification or, if the amendment
or modification occurs after the date upon which the
Participant was eligible to Retire, the Participant had
Retired as of the effective date of the amendment or
modification, and (ii) no amendment or modification of this
Section 10.2 or Section 11.2 of the Plan shall be effective.
The amendment or modification of the Plan shall not affect
any Participant or Beneficiary who has become entitled to
the payment of benefits under the Plan as of the date of the
amendment or modification; provided, however, that the
Employer shall have the right to accelerate installment
payments by paying the Account Balance in a lump sum or
pursuant to an Annual Installment Method using fewer years
(provided that the present value of all payments that will
have been received by a Participant at any given point of
time under the different payment schedule shall equal or
exceed the present value of all payments that would have
been received at that point in time under the original
payment schedule).
10.3 Plan Agreement. Despite the provisions of Sections 10.1 and
10.2 above, if a Participant's Plan Agreement contains
benefits or limitations that are not in this Plan document,
the Employer may only amend or terminate such provisions
with the consent of the Participant.
10.4 Effect of Payment. The full payment of the applicable
benefit under Articles 4, 5, 6, or 7 of the Plan shall
completely discharge all obligations to a Participant and
his or her designated Beneficiaries under this Plan and the
Participant's Plan Agreement shall terminate.
ARTICLE 11
Administration
11.1 Committee Duties. Except as otherwise provided in this
Article 11, this Plan shall be administered by the
Compensation Committee of the Board. Members of the
Committee may be Participants under this Plan. The
Committee shall also have the discretion and authority to
(i) make, amend, interpret, and enforce all appropriate
rules and regulations for the administration of this Plan
and (ii) decide or resolve any and all questions including
interpretations of this Plan, as may arise in connection
with the Plan. Any individual serving on the Committee who
is a Participant shall not vote or act on any matter
relating solely to himself or herself. When making a
determination or calculation, the Committee shall be
entitled to rely on information furnished by a Participant
or the Company.
11.2 Administration Upon Change In Control. For purposes of this
Plan, the Committee shall be the "Administrator" at all
times prior to the occurrence of a Change in Control. Upon
and after the occurrence of a Change in Control, the
"Administrator" shall be an independent third party selected
and approved by the individual who, immediately prior to
such event, was the Company's Chief Executive Officer or, if
not so identified, the Company's highest ranking officer
(the "Ex-CEO"). The Administrator shall have the
discretionary power to determine all questions arising in
connection with the administration of the Plan and the
interpretation of the Plan including, but not limited to
benefit entitlement determinations; provided, however, upon
and after the occurrence of a Change in Control, the
Administrator shall have no power to direct the investment
of Plan assets or select any investment manager or custodial
firm for the Plan. Upon and after the occurrence of a
Change in Control, the Company must: (1) pay all reasonable
administrative expenses and fees of the Administrator; (2)
indemnify the Administrator against any costs, expenses and
liabilities including, without limitation, attorney's fees
and expenses arising in connection with the performance of
the Administrator hereunder, except with respect to matters
resulting from the gross negligence or willful misconduct of
the Administrator or its employees or agents; and (3) supply
full and timely information to the Administrator or all
matters relating to the Plan, the Participants and their
Beneficiaries, the Account Balances of the Participants, the
date of circumstances of the Retirement, death or
Termination of Employment of the Participants, and such
other pertinent information as the Administrator may
reasonably require. Upon and after a Change in Control, the
Administrator may be terminated (and a replacement
appointed) by the Ex-CEO. Upon and after a Change in
Control, the Administrator may not be terminated by the
Company.
11.3 Agents. In the administration of this Plan, the Committee
may, from time to time, employ agents and delegate to them
such administrative duties as it sees fit (including acting
through a duly appointed representative) and may from time
to time consult with counsel who may be counsel to any
Employer.
11.4 Binding Effect of Decisions. The decision or action of the
Administrator with respect to any question arising out of or
in connection with the administration, interpretation and
application of the Plan and the rules and regulations
promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Plan.
11.5 Indemnity of Committee. All Employers shall indemnify and
hold harmless the members of the Committee, and any Employee
to whom the duties of the Committee may be delegated, and
the Administrator against any and all claims, losses,
damages, expenses or liabilities arising from any action or
failure to act with respect to this Plan, except in the case
of willful misconduct by the Committee, any of its members,
any such Employee or the Administrator.
11.6 Employer Information. To enable the Committee and/or
Administrator to perform its functions, the Company and each
Employer shall supply full and timely information to the
Committee and/or Administrator, as the case may be, on all
matters relating to the compensation of its Participants,
the date and circumstances of the Retirement, death or
Termination of Employment of its Participants, and such
other pertinent information as the Committee or
Administrator may reasonably require.
ARTICLE 12
Other Benefits and Agreements
12.1 Coordination with Other Benefits. The benefits provided for
a Participant and Participant's Beneficiary under the Plan
are in addition to any other benefits available to such
Participant under any other plan or program for employees of
the Participant's Employer. The Plan shall supplement and
shall not supersede, modify or amend any other such plan or
program except as may otherwise be expressly provided.
ARTICLE 13
Claims Procedures
13.1 Presentation of Claim. Any Participant or Beneficiary of a
deceased Participant (such Participant or Beneficiary being
referred to below as a "Claimant") may deliver to the
Committee a written claim for a determination with respect
to the amounts distributable to such Claimant from the Plan.
If such a claim relates to the contents of a notice received
by the Claimant, the claim must be made within 60 days after
such notice was received by the Claimant. All other claims
must be made within 180 days of the date on which the event
that caused the claim to arise occurred. The claim must
state with particularity the determination desired by the
Claimant.
13.2 Notification of Decision. The Committee shall consider a
Claimant's claim within a reasonable time, and shall notify
the Claimant in writing:
(a) that the Claimant's requested determination has
been made, and that the claim has been allowed in full;
or
(b) that the Committee has reached a conclusion
contrary, in whole or in part, to the Claimant's
requested determination, and such notice must set forth
in a manner calculated to be understood by the
Claimant:
(i) the specific reason(s) for the denial of
the claim, or any part of it;
(ii) specific reference(s) to pertinent
provisions of the Plan upon which such denial was
based;
(iii) a description of any additional
material or information necessary for the Claimant
to perfect the claim, and an explanation of why
such material or information is necessary; and
(iv) an explanation of the claim review
procedure set forth in Section 13.3 below.
13.3 Review of a Denied Claim. Within 60 days after receiving a
notice from the Committee that a claim has been denied, in
whole or in part, a Claimant (or the Claimant's duly
authorized representative) may file with the Committee a
written request for a review of the denial of the claim.
Thereafter, but not later than 30 days after the review
procedure began, the Claimant (or the Claimant's duly
authorized representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents;
and/or
(c) may request a hearing, which the Committee, in its
sole discretion, may grant.
13.4 Decision on Review. The Committee shall render its decision
on review promptly, and not later than 60 days after the
filing of a written request for review of the denial, unless
a hearing is held or other special circumstances require
additional time, in which case the Committee's decision must
be rendered within 120 days after such date. Such decision
must be written in a manner calculated to be understood by
the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan
provisions upon which the decision was based; and
(c) such other matters as the Committee deems
relevant.
13.5 Legal Action. A Claimant's compliance with the foregoing
provisions of this Article 13 is a mandatory prerequisite to
a Claimant's right to commence any legal action with respect
to any claim for benefits under this Plan.
ARTICLE 14
Trust
14.1 Establishment of the Trust. The Company may, but is not
required to, establish a Trust, and, if established, each
Employer shall at least annually transfer over to the Trust
such assets as the Employer determines, in its sole
discretion, are necessary to provide, on a present value
basis, for its respective future liabilities created with
respect to the Annual Deferral Amounts, Annual Company
Matching Amounts, Annual Rollover Amounts and Annual
Restricted Stock Amounts for such Employer's Participants
for all periods prior to the transfer, as well as any debits
and credits to the Participants' Account Balances for all
periods prior to the transfer, taking into consideration the
value of the assets in the trust at the time of the
transfer.
14.2 Interrelationship of the Plan and the Trust. The provisions
of the Plan and the Plan Agreement shall govern the rights
of a Participant to receive distributions pursuant to the
Plan. If established, the provisions of the Trust shall
govern the rights of the Employers, Participants and the
creditors of the Employers to the assets transferred to the
Trust. Each Employer shall at all times remain liable to
carry out its obligations under the Plan.
14.3 Distributions From the Trust. If established, each
Employer's obligations under the Plan may be satisfied with
Trust assets distributed pursuant to the terms of the Trust,
and any such distribution shall reduce the Employer's
obligations under this Plan.
ARTICLE 15
Miscellaneous
15.1 Status of Plan. The Plan is intended to be a plan that is
not qualified within the meaning of Code Section 401(a) and
that Ais unfunded and is maintained by an employer primarily
for the purpose of providing deferred compensation for a
select group of management or highly compensated employee"
within the meaning of ERISA Sections 201(2), 301(a)(3) and
401(a)(1). The Plan shall be administered and interpreted
to the extent possible in a manner consistent with that
intent.
15.2 Unsecured General Creditor. Participants and their
Beneficiaries, heirs, successors and assigns shall have no
legal or equitable rights, interests or claims in any
property or assets of an Employer. For purposes of the
payment of benefits under this Plan, any and all of an
Employer's assets shall be, and remain, the general,
unpledged unrestricted assets of the Employer. An
Employer's obligation under the Plan shall be merely that of
an unfunded and unsecured promise to pay money in the
future.
15.3 Employer's Liability. An Employer's liability for the
payment of benefits shall be defined only by the Plan and
the Plan Agreement, as entered into between the Employer and
a Participant. An Employer shall have no obligation to a
Participant under the Plan except as expressly provided in
the Plan and his or her Plan Agreement.
15.4 Nonassignability. Neither a Participant nor any other
person shall have any right to commute, sell, assign,
transfer, pledge, anticipate, mortgage or otherwise
encumber, transfer, hypothecate, alienate or convey in
advance of actual receipt, the amounts, if any, payable
hereunder, or any part thereof, which are, and all rights to
which are expressly declared to be, unassignable and non-
transferable. No part of the amounts payable shall, prior
to actual payment, be subject to seizure, attachment,
garnishment or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a
Participant or any other person, be transferable by
operation of law in the event of a Participant's or any
other person's bankruptcy or insolvency or be transferable
to a spouse as a result of a property settlement or
otherwise.
15.5 Not a Contract of Employment. The terms and conditions of
this Plan shall not be deemed to constitute a contract of
employment between any Employer and the Participant. Such
employment is hereby acknowledged to be an "at will"
employment relationship that can be terminated at any time
for any reason, or no reason, with or without cause, and
with or without notice, unless expressly provided in a
written employment agreement. Nothing in this Plan shall be
deemed to give a Participant the right to be retained in the
service of any Employer, either as an Employee or a
Director, or to interfere with the right of any Employer to
discipline or discharge the Participant at any time.
15.6 Furnishing Information. A Participant or his or her
Beneficiary will cooperate with the Committee by furnishing
any and all information requested by the Committee and take
such other actions as may be requested in order to
facilitate the administration of the Plan and the payments
of benefits hereunder, including but not limited to taking
such physical examinations as the Committee may deem
necessary.
15.7 Terms. Whenever any words are used herein in the masculine,
they shall be construed as though they were in the feminine
in all cases where they would so apply; and whenever any
words are used herein in the singular or in the plural, they
shall be construed as though they were used in the plural or
the singular, as the case may be, in all cases where they
would so apply.
15.8 Captions. The captions of the articles, sections and
paragraphs of this Plan are for convenience only and shall
not control or affect the meaning or construction of any of
its provisions.
15.9 Governing Law. Subject to ERISA, the provisions of this
Plan shall be construed and interpreted according to the
internal laws of the State of Indiana without regard to its
conflicts of laws principles.
15.10 Notice. Any notice or filing required or permitted to
be given to the Committee under this Plan shall be
sufficient if in writing and hand-delivered, or sent by
registered or certified mail, to the address below:
Indiana Energy, Inc.
1630 North Meridian Street
Indianapolis, Indiana 46202-1983
Attn: Thomas Zabor, Senior Vice
President, Human Resources
Such notice shall be deemed given as of the date of delivery
or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.
Any notice or filing required or permitted to be given to a
Participant under this Plan shall be sufficient if in
writing and hand-delivered, or sent by mail, to the last
known address of the Participant.
15.11 Successors. The provisions of this Plan shall bind and
inure to the benefit of the Participant's Employer and its
successors and assigns and the Participant and the
Participant's designated Beneficiaries.
15.12 Validity. In case any provision of this Plan shall be
illegal or invalid for any reason, said illegality or
invalidity shall not affect the remaining parts hereof, but
this Plan shall be construed and enforced as if such illegal
or invalid provision had never been inserted herein.
15.13 Incompetent. If the Committee determines in its
discretion that a benefit under this Plan is to be paid to a
minor, a person declared incompetent or to a person
incapable of handling the disposition of that person's
property, the Committee may direct payment of such benefit
to the guardian, legal representative or person having the
care and custody of such minor, incompetent or incapable
person. The Committee may require proof of minority,
incompetence, incapacity or guardianship, as it may deem
appropriate prior to distribution of the benefit. Any
payment of a benefit shall be a payment for the account of
the Participant and the Participant's Beneficiary, as the
case may be, and shall be a complete discharge of any
liability under the Plan for such payment amount.
15.14 Court Order. The Committee is authorized to make any
payments directed by court order in any action in which the
Plan or the Committee has been named as a party. In
addition, if a court determines that a spouse or former
spouse of a Participant has an interest in the Participant's
benefits under the Plan in connection with a property
settlement or otherwise, the Committee, in its sole
discretion, shall have the right, notwithstanding any
election made by a Participant, to immediately distribute
the spouse's or former spouse's interest in the
Participant's benefits under the Plan to that spouse or
former spouse.
15.15 Distribution in the Event of Taxation.
(a) In General. If, for any reason, all or any
portion of a Participant's benefits under this Plan
becomes taxable to the Participant prior to receipt, a
Participant may petition the Committee before a Change
in Control, or the trustee of the Trust after a Change
in Control, for a distribution of that portion of his
or her benefit that has become taxable. Upon the grant
of such a petition, which grant shall not be
unreasonably withheld (and, after a Change in Control,
shall be granted), a Participant's Employer shall
distribute to the Participant immediately available
funds in an amount equal to the taxable portion of his
or her benefit (which amount shall not exceed a
Participant's unpaid Account Balance under the Plan).
If the petition is granted, the tax liability
distribution shall be made within 90 days of the date
when the Participant's petition is granted. Such a
distribution shall affect and reduce the benefits to be
paid under this Plan. Notwithstanding anything in this
Plan to the contrary, any distribution from the
Restricted Stock Account under this Section 15.16 shall
be in the form of Stock.
(b) Trust. If a Trust is established and the Trust
terminates in accordance with Section 3.6(e) of the
Trust and benefits are distributed from the Trust to a
Participant in accordance with that Section, the
Participant's benefits under this Plan shall be reduced
to the extent of such distributions.
15.16 Insurance. The Employers, on their own behalf or, if
applicable, on behalf of the trustee of the Trust, and, in
their sole discretion, may apply for and procure insurance
on the life of the Participant, in such amounts and in such
forms as the Trust may choose. The Employers or the trustee
of the Trust, as the case may be, shall be the sole owner
and beneficiary of any such insurance. The Participant
shall have no interest whatsoever in any such policy or
policies, and at the request of the Employers shall submit
to medical examinations and supply such information and
execute such documents as may be required by the insurance
company or companies to whom the Employers have applied for
insurance.
15.17 Legal Fees To Enforce Rights After Change in Control.
The Company and each Employer is aware that upon the
occurrence of a Change in Control, the Board or the board of
directors of a Participant's Employer (which might then be
composed of new members) or a shareholder of the Company or
the Participant's Employer, or of any successor corporation
might then cause or attempt to cause the Company, the
Participant's Employer or such successor to refuse to comply
with its obligations under the Plan and might cause or
attempt to cause the Company or the Participant's Employer
to institute, or may institute, litigation seeking to deny
Participants the benefits intended under the Plan. In these
circumstances, the purpose of the Plan could be frustrated.
Accordingly, if, following a Change in Control, it should
appear to any Participant that the Company, the
Participant's Employer or any successor corporation has
failed to comply with any of its obligations under the Plan
or any agreement thereunder or, if the Company, such
Employer or any other person takes any action to declare the
Plan void or unenforceable or institutes any litigation or
other legal action designed to deny, diminish or to recover
from any Participant the benefits intended to be provided,
then the Company and the Participant's Employer irrevocably
authorize such Participant to retain counsel of his or her
choice at the expense of the Company and the Participant's
Employer (who shall be jointly and severally liable) to
represent such Participant in connection with the initiation
or defense of any litigation or other legal action, whether
by or against the Company, the Participant's Employer or any
director, officer, shareholder or other person affiliated
with the Company, the Participant's Employer or any
successor thereto in any jurisdiction.
IN WITNESS WHEREOF, the Company has signed this Plan
document as of December 4, 1998.
"Company"
Indiana Energy, Inc., an
Indiana corporation
By: /s/ Otto N. Frenzel III
Title: Chairman of the
Compensation Committee of
the Board of Directors
AMENDMENT TO THE
INDIANA ENERGY, INC.
EXECUTIVE RESTRICTED STOCK PLAN
(AS LAST AMENDED AND RESTATED EFFECTIVE OCTOBER 1, 1998)
Pursuant to rights reserved under Section 20 of the Indiana
Energy, Inc. Executive Restricted Stock Plan, originally
effective as of December 1, 1987, (the "Plan"), the Board of
Directors of Indiana Energy, Inc. further amends the Plan,
effective December 1, 1998, by the addition of a new Section 26
which provides, in its entirety, as follows:
Section 26. Conversion of Restricted Shares to Deferred
Compensation. Notwithstanding anything contained in this Plan to
the contrary, a Grantee shall be permitted to elect that
restricted Shares be transferred to a bookkeeping account
maintained under the Indiana Energy, Inc. Non-Qualified Deferred
Compensation Plan ("Energy Deferred Compensation Plan") effective
as of the vesting date of the restricted Shares in accordance
with the following rules:
(a) Any election by a Grantee to transfer the value of
restricted Shares to the Energy Deferred Compensation
Plan shall be made in accordance with rules established
by the Compensation Committee of the Board but in no
event shall any election be made later than the last
day of the calendar year immediately preceding the
calendar year in which the restricted Shares would have
become vested under the terms of this Plan;
(b) The amount to be credited to the Energy Deferred
Compensation Plan should be an amount determined by
multiplying the number of Shares elected to be
transferred by the Grantee to the Energy Deferred
Compensation Plan by the closing price of the Shares as
of the end of the trading day coinciding or closest
after the date on which the Shares to be transferred
become vested under this Plan; and
(c) The Grantee may specify either a number of Shares
or a percentage of Shares to be transferred to the
Energy Deferred Compensation Plan.
As a condition to transferring restricted Shares to the Energy
Deferred Compensation Plan, the Grantee shall be required to
deliver the restricted Shares covered by the election to the
Secretary of Energy on or before the vesting date. The Grantee
shall have no right to any dividend or voting rights with respect
to any Shares transferred to the Energy Deferred Compensation
Plan on or after the vesting date which date is the effective
date of the conversion.
This Amendment has been executed on this 4th day of
December, 1998 to be effective as of December 1, 1998.
INDIANA ENERGY, INC.
By: /s/ O. N. Frenzel III
O. N. Frenzel III, as Chairman
of the Compensation Committee
AMENDMENT TO THE
INDIANA ENERGY, INC.
DIRECTORS RESTRICTED STOCK PLAN
(AS LAST AMENDED AND RESTATED EFFECTIVE MAY 1, 1997)
Pursuant to rights reserved under Section 17 of the Indiana
Energy, Inc. Directors Restricted Stock Plan, originally
effective as of January 13, 1992, (the "Plan"), the Board of
Directors of Indiana Energy, Inc. further amends the Plan,
effective December 1, 1998, by the addition of a new Section 22
which provides, in its entirety, as follows:
Section 22. Conversion of Restricted Shares to Deferred
Compensation. Notwithstanding anything contained in this Plan to
the contrary, a Grantee shall be permitted to elect that
restricted Shares be transferred to a bookkeeping account
maintained under the Indiana Energy, Inc. Non-Qualified Deferred
Compensation Plan ("Energy Deferred Compensation Plan") effective
as of the vesting date of the restricted Shares in accordance
with the following rules:
(a) Any election by a Grantee to transfer the value of
restricted Shares to the Energy Deferred Compensation
Plan shall be made in accordance with rules established
by the Compensation Committee of the Board but in no
event shall any election be made later than the last
day of the calendar year immediately preceding the
calendar year in which the restricted Shares would have
become vested under the terms of this Plan;
(b) The amount to be credited to the Energy Deferred
Compensation Plan should be an amount determined by
multiplying the number of Shares elected to be
transferred by the Grantee to the Energy Deferred
Compensation Plan by the closing price of the Shares as
of the end of the trading day coinciding or closest
after the date on which the Shares to be transferred
become vested under this Plan; and
(c) The Grantee may specify either a number of Shares or a
percentage of Shares to be transferred to the Energy
Deferred Compensation Plan.
As a condition to transferring restricted Shares to the Energy
Deferred Compensation Plan, the Grantee shall be required to
deliver the restricted Shares covered by the election to the
Secretary of Energy on or before the vesting date. The Grantee
shall have no right to any dividend or voting rights with respect
to any Shares transferred to the Energy Deferred Compensation
Plan on or after the vesting date which date is the effective
date of the conversion.
This Amendment has been executed on this 4th day of
December, 1998 to be effective as of December 1, 1998.
INDIANA ENERGY, INC.
By: /s/ O. N. Frenzel III
O. N. Frenzel III, as Chairman
of the Compensation Committee
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Indiana
Energy, Inc.'s consolidated financial statements as of December 31, 1998, and
for the three months then ended and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-31-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 570,469
<OTHER-PROPERTY-AND-INVEST> 77,573
<TOTAL-CURRENT-ASSETS> 94,916
<TOTAL-DEFERRED-CHARGES> 18,656
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 761,614
<COMMON> 140,918
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 168,372
<TOTAL-COMMON-STOCKHOLDERS-EQ> 309,290
0
0
<LONG-TERM-DEBT-NET> 183,386
<SHORT-TERM-NOTES> 56,475
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 10,174
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 202,289
<TOT-CAPITALIZATION-AND-LIAB> 761,614
<GROSS-OPERATING-REVENUE> 125,241
<INCOME-TAX-EXPENSE> 6,423
<OTHER-OPERATING-EXPENSES> 101,429
<TOTAL-OPERATING-EXPENSES> 107,852
<OPERATING-INCOME-LOSS> 17,389
<OTHER-INCOME-NET> 1,118
<INCOME-BEFORE-INTEREST-EXPEN> 18,507
<TOTAL-INTEREST-EXPENSE> 4,231
<NET-INCOME> 14,276
0
<EARNINGS-AVAILABLE-FOR-COMM> 14,276
<COMMON-STOCK-DIVIDENDS> 6,924
<TOTAL-INTEREST-ON-BONDS> 3,389
<CASH-FLOW-OPERATIONS> (5,186)
<EPS-PRIMARY> .48
<EPS-DILUTED> .48
</TABLE>
