Exhibit 10.2
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is entered into this 9th day of
April, 1999 among NIPSCO Industries, Inc. ("NI"), an Indiana corporation,
Primary Energy, Inc. ("Company"), an Indiana corporation and a wholly-owned
subsidiary of NI, and Xxxxxx X. Xxxxxx, Xx. ("Consultant").
WHEREAS, NI and Company wish to enter into a consulting relationship with
Consultant; and
WHEREAS, Consultant desires to enter into a consulting relationship
with NI and Company upon the terms and conditions hereinafter contained;
NOW, THEREFORE, in consideration of the covenants and agreements herein
set forth, and of the mutual benefits accruing to NI, Company and Consultant
from the consulting relationship to be established among the parties by the
terms of this Agreement, NI, Company and Consultant agree as follows:
1. Consulting Relationship.
Company hereby retains Consultant, and Consultant hereby agrees to be
retained by Company, as an independent consultant, and not as an employee.
2. Term.
The Term of this Agreement shall begin on November 21, 2001 and shall
continue until November 20, 2003. In no event shall this Agreement be renewed or
extend beyond November 20, 2003 without the express written consent of the
parties hereto. Notwithstanding the preceding two sentences:
(a) Mutual Agreement. This Agreement may be terminated at
any time by mutual agreement of the parties hereto.
(b) Breach or Injurious Conduct. NI or Company may terminate
this Agreement at any time without notice if (i) Consultant materially
breaches any provision of this Agreement or (ii) Consultant engages in
conduct which, in the judgment of the Chief Executive Officer and the
Vice President, Human Resources of NI, is deemed to be injurious to NI
or Company.
(c) Death or Inability to Perform due to Injury or Illness.
This Agreement shall terminate as of the date of Consultant's death, or
Consultant's Inability to Perform Due to Injury or Illness. Inability
to Perform Due to Injury or Illness shall be defined as Consultant's
absence from work due to injury or illness for 15 days during any 12
month period in the Term.
(d) Failure to Meet Performance Standard. This Agreement shall
terminate as of December 31 of any calendar year ending in the Term in
which Company's Revenue does not exceed Company's Revenue for the prior
calendar year by at least two and one-half percent (2.5%). Revenue
shall mean pre-tax operating income of Company for the applicable
calendar year as defined in Company's Incentive Plan existing on the
date hereof.
(e) Relinquishment of Duties. This Agreement may, by express
written agreement of the parties hereto, be terminated upon the
relinquishment of all of Consultant's duties hereunder to Consultant's
successor identified pursuant to subsection 3(d).
(f) Change in Control. This Agreement shall terminate upon the
effective date of a Change in Control as defined in Section 6.
3. Consulting Services.
Consultant agrees that during the Term of this Agreement:
(a) He will devote his best efforts to his position as an
independent consultant for Company and will perform such
duties and execute the policies of Company as determined by
the Chief Executive Officer and the Vice President, Human
Resources of NI; provided that said duties and policies will
not be inconsistent with the nature of the duties performed by
Consultant during his active service with Company as an
officer and employee thereof immediately prior to the
commencement of the Term;
(b) Consultant shall exercise a reasonable degree of skill and
care in performing the services referred to in paragraph (a)
above;
(c) Consultant shall be available to render services to Company
under this Agreement for a minimum of 223 business days during
any 12-month period commencing on the date of this Agreement
or any anniversary thereof. Consultant shall not be obligated
to render in excess of 223 days of service during any such
12-month period, nor shall Consultant be obligated to render
services on any holiday recognized by Company. Consultant
shall be entitled to elect 25 business days during any such
12-month period for which he shall not be obligated to render
any services under this Agreement; and
(d) Consultant shall retain the title of President of Company
until such time as he identifies a successor to act as
President of Company. At such time Consultant shall relinquish
the title of President of Company and shall retain such title
as is mutually agreed upon among Consultant, NI and Company.
4. Compensation.
(a) On November 21, 2001, Consultant shall receive a start bonus,
payable in cash, in the amount of $30,000, from Company.
(b) On November 21, 2001, Consultant shall receive a grant of
restricted stock of NI, in similar amount and with similar
restrictions as the grant of NI restricted stock made to
Consultant during calendar year 2000 while he was an active
employee of Company.
(c) Company agrees to pay Consultant consulting fees for his
services performed under this Agreement at the rate of
$19,500.00 per month, increased by five percent (5%) effective
on each February 1 occurring during the Term of the Agreement;
provided that the Agreement is not otherwise terminated under
Section 2.
(d) Consultant shall be entitled to reimbursement for expenses
authorized in writing by Company and incurred by Consultant in
the performance of his duties under this Agreement.
(e) Consultant shall receive Short-Term Incentive Payments during
the Term of the Agreement payable in cash and stock, similar
to those earned by Consultant while he was an active employee
of Company during the last full calendar year immediately
preceding the commencement of the Term of the Agreement.
(f) Consultant shall receive Long-Term Incentive Payments during
the Term of the Agreement in the form of nonqualified stock
options ("NQOs") to purchase shares of common stock of NI,
payable on such terms and in such amounts as determined by the
Chief Executive Officer or the Vice President, Human Resources
of NI. In making such determination, the Chief Executive
Officer and the Vice President, Human Resources of NI shall
consider the size and features of NQOs granted to Consultant
during the last full calendar year immediately preceding the
commencement of the Term of the Agreement and the Consultant's
compensation relative to executives serving in similar
positions in the industry.
(g) The amount of Consultant's Short-Term and Long-Term Incentive
Payments shall be based on Consultant's progress in
identifying a successor as President of Company, and Company's
progress in developing projects outside the Northwest Indiana
region. The Chief Executive Officer and the Vice President,
Human Resources of NI, in their discretion, shall determine
whether such progress has been made in each area, and shall
base the terms and amounts of such Short-Term and Long-Term
Incentive Payments on such determination.
(h) Consultant shall not be entitled to participate in or receive
benefits under any NI or Company programs maintained for
employees, including, without limitation, life, medical and
disability benefits, pension, profit sharing, savings or other
retirement plans or other fringe benefits. However, Consultant
shall receive all vested benefits which he accrued prior to
his termination of active employment with Company immediately
prior to the commencement of the Term under all employee
benefit plans of NI and Company, pursuant to the terms of each
respective plan, and to participate in such plans as are
available to retired employees of NI and Company.
5. Other Conditions.
Company shall, at its expense, provide Consultant with appropriate and
sufficient space in order to allow Consultant to perform his duties hereunder.
Consultant shall have no authority over any employee or officer of Company,
except as may be necessary in the routine performance of his duties hereunder,
nor shall NI or Company be required in any manner to implement any plans or
suggestions Consultant may provide.
6. Change in Control.
A "Change in Control" shall be deemed to take place on the occurrence
of any of the following events:
(1) The acquisition by an entity, person or group (including all
Affiliates or Associates of such entity, person or group) of
beneficial ownership, as that term is defined in Rule 13d-3
under the Securities Exchange Act of 1934, of capital stock of
NI entitled to exercise more than 30% of the outstanding
voting power of all capital stock of NI entitled to vote in
elections of directors ("Voting Power");
(2) The effective time of (i) a merger or consolidation of NI with
one or more other corporations as a result of which the
holders of the outstanding Voting Power of NI immediately
prior to such merger or consolidation (other than the
surviving or resulting corporation or any Affiliate or
Associate thereof) hold less than 50% of the Voting Power of
the surviving or resulting corporation, or (ii) a transfer of
30% of the Voting Power, or a Substantial Portion of the
Property, of NI other than to an entity of which NI owns at
least 50% of the Voting Power. Substantial Portion of the
Property of NI shall mean 50% of the aggregate book value of
the assets of NI and its Affiliates and Associates as set
forth on the most recent balance sheet of NI, prepared on a
consolidated basis, by its regularly employed, independent,
certified public accountants;
(3) The election to the Board of Directors of NI of candidates who
were not recommended for election by the Board of Directors of
NI in office immediately prior to the election, if such
candidates constitute a majority of those elected in that
particular election; or
(4) The sale by NI of a majority of the capital stock of Company
to a third party in which NI holds less than 50% of the
Voting Power.
Notwithstanding the foregoing, a Change in Control shall not be deemed to take
place by virtue of any transaction in which Consultant is a participant in a
group effecting an acquisition of NI or Company and, after such acquisition,
Consultant holds an equity interest in the entity that has acquired NI or
Company.
In the event of a Change in Control, Consultant shall receive a lump
sum cash payment equal to the present value of an amount comprised of (i) all
consulting fees, as provided in Section 3 and (ii) fifty percent (50%) of the
Short-Term Incentive Payments, that would otherwise be payable under Section 3
during the remainder of the Term of the Agreement. No Long-Term Incentive
Payments shall be included in the determination of such lump sum cash payment
payable in the event of a Change in Control. In determining present value for
purposes of this Change in Control calculation, the Xxxxx'x Average Corporate
Bond Index Rate shall be used.
7. Title to Certain Tangible Property.
All tangible materials (whether original or duplicates) including, but
not in any way limited to, equipment purchase agreements, file or data base
materials in whatever form, books, manuals, sales literature, equipment price
lists, training materials, client record cards, client files, correspondence,
documents, contracts, orders, messages, memoranda, notes, agreements, invoices,
receipts, lists, software listings or printouts, specifications, models,
computer programs, and records of any kind in the possession or control of
Consultant which in any way relate or pertain to NI's business or Company's
business, including the business of the subsidiaries or affiliates of NI or
Company, whether furnished to Consultant by NI or Company or prepared, compiled
or acquired by Consultant during his consulting relationship with Company, shall
be the sole property of Company or NI. At any time upon request of Company or
NI, and in any event promptly upon termination of this Agreement, Consultant
shall deliver all such materials to Company or NI. NI and Company shall be under
no obligation to pay to Consultant any sums of money then due Consultant or
becoming due thereafter until Consultant has complied with the provisions of
this section.
8. Title to Certain Intangible Property.
Consultant shall immediately disclose and assign to Company all his
right, title and interest in any inventions, models, processes, patents,
copyrights and improvements thereon relating to services or processes or
products of NI and Company that he conceives or acquires during any consulting
relationship with NI or Company or that he may conceive or acquire during a
period of one year after termination of this Agreement.
9. Acknowledgment of Necessity of Special Covenants Contained in Sections 10,
11, and 12.
In the course of Consultant's consulting services hereunder, Consultant
will acquire valuable trade secrets, proprietary data and other confidential
information, with respect to Company's and NI's business. The parties hereto
agree that such trade secrets, proprietary data and other confidential
information include but are not limited to the following: the inventions,
models, processes, patents, copyrights, and improvements thereon described in
Section 8, NI's and Company's business and financial methods and practices,
pricing and selling techniques, file or data base materials, price lists,
software listings or printouts, computer programs, lists of NI's and Company's
customers, customer record cards, customer files, credit and financial data of
NI's and Company's suppliers and present and prospective customers, and
particular business requirements of NI's and Company's present and prospective
customers, as well as similar information relating to the subsidiaries and
affiliates of NI and Company. In addition, Consultant, on behalf of Company, may
develop a personal acquaintance with customers and prospective customers of NI
and Company, its subsidiaries and affiliates. As a consequence thereof, the
parties hereto acknowledge that Consultant will occupy a position of trust and
confidence with respect to NI's and Company's affairs, products and services.
In view of the foregoing and in consideration of the remuneration to be
paid to Consultant, Consultant acknowledges that it is reasonable and necessary
for the protection of the goodwill and business of NI and Company that
Consultant make the covenants contained in Sections 10, 11, and 12 regarding the
conduct of Consultant during and subsequent to Consultant's rendering of
services to Company, and that NI or Company will suffer irreparable injury if
Consultant engages in conduct prohibited thereby. Consultant represents that his
experience and abilities are such that observance of the aforementioned
covenants will not cause Consultant any undue hardship or unreasonably interfere
with Consultant's ability to earn a livelihood.
The covenants contained in Sections 10, 11, and 12 shall each be
construed as a separate agreement independent of any other provisions of this
Agreement, and the existence of any claim or cause of action of Consultant
against NI or Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by NI or Company of any of those
covenants.
10. Trade Secrets and Confidential Information.
Consultant, during the term of the Agreement or at any time thereafter,
will not, without the express written consent of NI or Company, directly or
indirectly communicate or divulge to, or use for his own benefit or for the
benefit of any other person, firm, association or corporation, any of NI's or
Company's trade secrets or trade secrets of either NI's or Company's
subsidiaries or affiliates, proprietary data or other confidential information
including, by way of illustration, the information described in Section 8, which
trade secrets, proprietary data and other confidential information were
communicated to or otherwise learned or acquired by Consultant in the course of
the consulting relationship covered by this Agreement, except that Consultant
may disclose such matters to the extent that disclosure is required (a) in the
course of the consulting relationship with Company or (b) by a court or other
governmental agency of competent jurisdiction. As long as such matters remain
trade secrets, proprietary data or other confidential information, Consultant
will not use such trade secrets, proprietary data or other confidential
information in any way or in any capacity other than as a consultant of Company
and to further the NI's or Company's interests.
11. NI and Company Customers.
For a period of two years following the termination of this Agreement
for any reason whatsoever (or if this period shall be unenforceable by law, then
for such period as shall be enforceable), Consultant will not contact (with a
view towards selling any product or service competitive with any product or
service sold or immediately proposed to be sold by NI, Company, or any
subsidiary or affiliate of NI or Company at the time of termination of this
Agreement) any person, firm, association or corporation (a) to which NI, Company
or any subsidiary or affiliate of NI or Company sold any product or service, (b)
which Consultant solicited, contacted or otherwise dealt with on behalf of NI or
Company or any subsidiary or affiliate of NI or Company, or (c) which Consultant
was otherwise aware was a customer of NI or Company or any subsidiary or
affiliate of NI or Company, during the twelve month period preceding the
termination of this Agreement. Consultant will not directly or indirectly make
any such contact, either for his own benefit or for the benefit of any other
person, firm, association, or corporation, and Consultant will not in any manner
assist any person, firm, association, or corporation to make any such contact.
12. Restrictive Covenants.
Consultant shall not, during the term of this Agreement and for two
years thereafter (or if this period shall be unenforceable by law, then for such
period as shall be enforceable), be associated, directly or indirectly, as
employee, proprietor, stockholder, partner, agent, representative, officer, or
otherwise, with the operation of any business that is competitive with any
business of NI or Company or their respective affiliates or subsidiaries
throughout the United States, except that Consultant's ownership (or that of his
spouse and children) of publicly traded securities of any such business
representing less than 1% of such securities outstanding shall not be considered
a violation of this section. For purposes of the preceding sentence, Consultant
shall be considered as the "stockholder" of any equity securities owned by his
spouse and all relatives and children residing in Consultant's principal
residence. Notwithstanding the foregoing, Consultant may participate in the
affairs of any governmental, educational or other charitable institution, may
engage in professional speaking and writing activities and may serve as a member
of the board of directors of publicly held corporations so long as the Chief
Executive Officer or Vice President, Human Resources of NI, in good faith, does
not determine that such activities unreasonably interfere with the business of
NI or Company or diminish Consultant's duties and obligations to NI or Company,
and Consultant shall be entitled to retain all fees, royalties and other
compensation derived form such activities in addition to the compensation and
other benefits otherwise payable to him.
13. Relief.
In the event of a breach or a threatened or intended breach of this
Agreement by any party hereto, the other parties shall be entitled, in addition
to remedies otherwise available to such parties at law or in equity, to the
following particular forms of relief:
(a) In the event Consultant breaches Section 10, 11, or 12, NI
and Company shall be entitled to injunctions, both preliminary and
permanent, enjoining such breach or threatened or intended breach, and
Consultant hereby consents to the issuance thereof forthwith in any
court of competent jurisdiction.
(b) In the event any party shall enforce any part of this
Agreement through legal proceedings, the other parties agree to pay to
such prevailing party any costs and attorney's fees reasonably incurred
by him or it in connection therewith.
The taking of any action by any party or the forbearance of any party
to take any action shall not constitute a waiver by such party of any of its
rights to remedies or relief under this Agreement or under law or equity.
14. The Complete Agreement.
This Agreement represents the complete Agreement among NI, Company and
Consultant concerning the subject matter hereof and supersedes all prior
agreements or understandings, written or oral. No attempted modification or
waiver of any of the provisions hereof shall be binding on any party unless in
writing and signed by Consultant, NI and Company. This Agreement may, by mutual
written agreement of the parties hereto, be modified upon a material change in
Consultant's duties hereunder or the relinquishment of a material portion of his
duties to a successor.
15. Notices.
Notices required under this Agreement shall be in writing and sent by
registered mail, return receipt requested, to the following addresses or to such
other address as the party being notified may have previously furnished to the
other party by written notice:
If to NI: NIPSCO Industries, Inc.
000 X. 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Vice President, Human Resources
If to Company: Primary Energy, Inc.
000 X. 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
If to Consultant: Xxxxxx X. Xxxxxx, Xx.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
16. Assignability.
This Agreement may not be assigned by any party without the prior
written consent of the other parties, except that no consent is necessary for NI
to assign this Agreement to a corporation succeeding to substantially all the
assets or business of NI whether by merger, consolidation, acquisition or
otherwise, or for Company to assign this Agreement to a corporation succeeding
to substantially all of the assets or business of Company whether by merger,
consolidation, acquisition or otherwise. This Agreement shall be binding upon
Consultant, his heirs and permitted assigns, NI, its successors and permitted
assigns, and Company, its successors and permitted assigns.
17. Severability.
Each of the sections contained in this Agreement shall be enforceable
independently of every other section in this Agreement, and the invalidity or
nonenforceability of any section shall not invalidate or render nonenforceable
any other section contained herein. If any section or provision in a section is
found invalid or unenforceable, it is the intent of the parties that a court of
competent jurisdiction shall reform the section or provisions to produce its
nearest enforceable economic equivalent.
18. Applicable Law.
It is the intention of the parties hereto that all questions with
respect to the construction and performance of this Agreement and the rights and
liabilities of the parties hereto shall be determined in accordance with the
laws of the State of Indiana. The parties hereto submit to the jurisdiction of
the courts of Indiana in respect of any matter or thing arising out of this
Agreement or pursuant thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and the year first above written.
NIPSCO Industries, Inc.
By: /s/ Xxxx X. Xxxxx
Title: Chairman, President and
Chief Executive Officer
Primary Energy, Inc.
By: /s/ Xxxx X. Xxxxxxx
Title: Assistant Secretary
By: /s/ Xxxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxx, Xx.,
Consultant
::ODMA\PCDOCS\CHI_DOCS2\268546\2 18Mar99 15:51:23
