EXHIBIT 10-C
FORMATION AGREEMENT
AMONG
INDIANA ENERGY, INC.,
INDIANA GAS COMPANY, INC.,
IGC ENERGY, INC.,
INDIANA ENERGY SERVICES, INC.,
CITIZENS GAS & COKE UTILITY,
CITIZENS BY-PRODUCTS COAL COMPANY,
CITIZENS ENERGY SERVICES CORPORATION,
AND
PROLIANCE ENERGY, LLC
Dated as of
March 15, 1996
INDEX
RECITALS 1
AGREEMENT 2
ARTICLE 1
CAPITAL CONTRIBUTION 2
ARTICLE 2
GAS SALES AND PORTFOLIO ADMINISTRATION AGREEMENTS 2
2.1 Execution of Agreements 2
2.2 Contracts to be Assigned or Released 2
2.3 Assumed Liabilities 3
2.4 Satisfaction of Assumed Liabilities by the Company 4
ARTICLE 3
PRORATIONS AND ADJUSTMENTS 4
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF IEI 5
4.1 Organization 5
4.2 Authority; Enforceability 5
4.3 Consents 5
4.4 No Conflicts 5
4.5 Subsidiaries 6
4.6 Financial Statements 6
4.7 Claims 6
4.8 No Misrepresentations 7
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CITIZENS 7
5.1 Organization 7
5.2 Authority; Enforceability 7
5.3 Consents 8
5.4 No Conflicts 8
5.5 Subsidiaries 8
5.6 Financial Statements 8
5.7 Claims 9
5.8 No Misrepresentations 9
ARTICLE 6
CLOSING 9
ARTICLE 7
COVENANTS 9
7.1 Miscellaneous Covenants 9
7.2 Covenants of the IEI Companies 10
7.2A Covenants of the Citizens Companies 11
ARTICLE 8
SURVIVAL 12
8.1Survival of Representations, Warranties and Covenants 12
8.2 Hold Harmless by IEI 12
8.3 Hold Harmless by Citizens 13
8.4 Hold Harmless by the Company 14
8.5 Administration of Claims 14
8.6 The Company's Right of Setoff 15
ARTICLE 9
CONSTRUCTION; MISCELLANEOUS 16
9.1 Definitions 16
9.2 Notices 18
9.3 Binding Effect 20
9.4 Headings 20
9.5 Exhibits and Schedules 20
9.6 Counterparts 20
9.7 Governing Law 20
9.8 Waivers 20
9.9 Pronouns 20
9.10 Time Periods 20
9.11 No Strict Construction 20
9.12 Modification 20
9.13 Entire Agreement 21
FORMATION AGREEMENT
THIS FORMATION AGREEMENT (the "Agreement"), dated as of
March 15, 1996 is made and entered into by and among Indiana
Energy, Inc., an Indiana corporation ("IEI"), Indiana Gas
Company, Inc., an Indiana gas utility corporation and wholly-
owned subsidiary of IEI ("IGC"), IGC Energy, Inc., an Indiana
corporation and indirect wholly-owned subsidiary of IEI
("Energy"), Indiana Energy Services, Inc., an Indiana corporation
and wholly owned subsidiary of Energy ("IES"), City of
Indianapolis by and through its Board of Directors for Utilities
of the Department of Public Utilities, as successor trustee of a
public charitable trust, d/b/a Citizens Gas & Coke Utility
("Citizens"), Citizens By-Products Coal Company, a West Virginia
corporation and wholly-owned subsidiary of Citizens ("By-
Products"), Citizens Energy Services Corporation, an Indiana
corporation and wholly owned subsidiary of By-Products ("CESCO"),
and Proliance Energy, LLC, an Indiana limited liability company
(the "Company"), the sole members of which are Energy and By-
Products.
RECITALS
A. Each of IGC and Citizens is a local gas distribution
company which purchases gas transportation and related services
from affiliated and non-affiliated third parties.
B. Energy and By-Products have caused the formation of the
Company for the purpose of providing administration and sales
service related to natural gas supply, storage, transportation,
acquisition, planning and marketing, for the benefit of IGC,
Citizens and other potential customers. Energy and By-Products
entered into a Fundamental Operating Agreement dated March 15,
1996, with respect to the Company (the "Operating Agreement").
C. As part of the formation of the Company, (i) each of
IGC and Citizens will enter into assignment, release or agency
contracts with the Company for all of the pipeline services and
gas supply contracts to which it is a party, (ii) each of IES and
CESCO will enter into assignment, release or agency contracts
with the Company for all of the gas marketing, management, and
pipeline services contracts to which it is a party and (iii)
Energy and By-Products will contribute capital to the Company in
the amount of $500,000 each.
D. The parties acknowledge that in measuring the success
of the Company they will employ multiple criteria, including, but
not limited to, the Company's earnings performance, the quality
of the services the Company provides to the parties, and the
quality of the services the Company provides to other customers.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual
covenants and promises contained herein, and for other good and
valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto agree as follows (certain
capitalized terms are defined in Section 9.1):
ARTICLE 1
CAPITAL CONTRIBUTION
On the Closing Date, Energy and By-Products shall contribute
capital to the Company in the amount of $500,000 each in cash and
in exchange therefor shall receive a 50% Limited Liability
Company Interest in the Company.
ARTICLE 2
GAS SALES AND PORTFOLIO ADMINISTRATION AGREEMENTS
2.1 Execution of Agreements. At the Closing, IGC and
Citizens shall each enter into a Gas Sales and Portfolio
Administration Agreement with the Company in a form mutually
agreeable to the parties.
2.2 Contracts to be Assigned or Released.
(a) As of the Closing, IGC shall enter into
assignment, release or agency contracts with the Company for, and
the Company shall, subject to the terms and conditions of the
applicable assignment, release or agency contracts delivered at
Closing, accept all of the gas transportation, storage and supply
Contracts to which IGC is a party (the "IGC Contracts"). The IGC
Contracts are listed on Schedule 2.2(a), as hereafter
supplemented by IGC from time to time.
(b) As of the Closing, IES shall enter into
assignment, release or agency contracts with the Company for, and
the Company shall, subject to the terms and conditions of the
applicable assignment, release or agency contracts delivered at
Closing, accept all gas marketing, management and transportation
Contracts to which it is a party (the "IES Contracts"). The IES
Contracts are listed on Schedule 2.2(b), as hereafter
supplemented by IES from time to time.
(c) As of the Closing, Citizens shall assign or
release to the Company, and the Company shall, subject to the
terms and conditions of the applicable assignment, release or
agency contracts delivered at Closing, accept, all of the gas
transportation, storage and supply Contracts to which Citizens is
a party (the "Citizens Contracts"). The Citizens Contracts are
listed on Schedule 2.2(c), as hereafter supplemented by Citizens
from time to time.
(d) As of the Closing, CESCO shall enter into
assignment, release or agency contracts with the Company for, and
the Company shall, subject to the terms and conditions of the
applicable assignment, release or agency contracts delivered at
Closing, accept, all gas marketing, management and transportation
contracts to which it is a party (the "CESCO Contracts"). The
CESCO Contracts are listed on Schedule 2.2(d), as hereafter
supplemented by CESCO from time to time.
(e) Anything herein to the contrary notwithstanding,
to the extent that the parties intend for a particular Contract
to be assigned to the Company and a required third party consent
to assignment has not been obtained prior to Closing, the
assigning party shall execute and deliver as of the Closing a
form of assignment with respect thereto and shall use
commercially reasonable efforts to obtain the consent of the
third party thereto on terms and conditions contained in such
assignment or such other terms and conditions as are reasonably
acceptable to the Citizens Companies and the IEI Companies.
Further, in the event that as of the Closing the Company and the
appropriate party cannot obtain a third party consent for the
assignment or release of any Contract or an assignment or release
would not be economically desirable or timely for the Company or
such party, such party as of the Closing hereby appoints the
Company as agent for all purposes to administer such contract
until such time as an assignment or release is effected.
2.3 Assumed Liabilities. As of the Closing, the Company
hereby assumes, subject to the terms and conditions of the
applicable assignment, release or agency contract delivered at
Closing, only the following liabilities with respect to the IGC
Contracts, IES Contracts, Citizens Contracts and CESCO Contracts:
(a) Obligations with respect to each of the IGC
Contracts which relate to supplies or service provided from and
after April 1, 1996 under the IGC Contracts, but only to the
extent such obligations are not attributable to any breach of or
default under such Contracts by IGC (including, but not limited
to, defaults arising from or related to the consummation of the
transactions contemplated hereby, but excluding defaults
attributable to any elections by the Company at or subsequent to
Closing) (collectively, the "IGC Assumed Liabilities").
(b) Obligations with respect to each of the IES
Contracts which relate to supplies or service provided from and
after April 1, 1996 under the IES Contracts, but only to the
extent such obligations are not attributable to any breach of or
default under such Contracts by IES (including, but not limited
to, defaults arising from or related to the consummation of the
transactions contemplated hereby, but excluding defaults
attributable to any elections by the Company at or subsequent to
Closing) (collectively, the "IES Assumed Liabilities").
(c) Obligations with respect to each of the Citizens
Contracts which relate to supplies or service provided from and
after April 1, 1996 under the Citizens Contracts, but only to the
extent such obligations are not attributable to any breach or
default under any such Contracts by Citizens (including, but not
limited to, defaults arising from or related to the consummation
of the transactions contemplated hereby, but excluding defaults
attributable to any elections by the Company at or subsequent to
Closing) (collectively, the "Citizens Assumed Liabilities").
(d) Obligations with respect to each of the CESCO
Contracts which relate to supplies or service provided from and
after April 1, 1996 under the CESCO Contracts, but only to the
extent such obligations are not attributable to any breach or
default under any such Contracts by CESCO (including, but not
limited to, defaults arising from or related to the consummation
of the transactions contemplated hereby, but excluding defaults
attributable to any elections by the Company at or subsequent to
Closing) (collectively, the "CESCO Assumed Liabilities").
(e) Nothing in this Agreement shall be construed to
impose upon the Company any Liabilities of IGC, IES, Citizens or
CESCO (including, but not limited to, any liabilities which
relate to supplies or service provided on or before March 31,
1996, including, but not limited to, refund obligations to
customers for supplies or service provided on or before March 31,
1996) except as expressly set forth in this Section 2.1.
2.4 Satisfaction of Assumed Liabilities by the Company.
The Company agrees to pay or otherwise satisfy and discharge in
accordance with their terms all of the IGC Assumed Liabilities,
IES Assumed Liabilities, Citizens Assumed Liabilities and CESCO
Assumed Liabilities.
ARTICLE 3
PRORATIONS AND ADJUSTMENTS
Except as otherwise provided in the applicable Gas Sales and
Portfolio Administration Agreement, each of IGC, IES, Citizens
and CESCO shall be entitled to receive the proceeds of billings
and related adjustments with respect to supplies or service
provided by it on or before March 31, 1996 and the Company shall
be entitled to receive the proceeds of billings and related
adjustments with respect to supplies or service provided by it
from and after April 1, 1996. Each of IGC, IES, Citizens, CESCO
and the Company agrees to make any adjusting payment to the other
as shall be necessary to reflect this proration.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF IEI
IEI, represents and warrants to Citizens, By-Products
and CESCO (sometimes herein referred to individually as a
"Citizens Company" or collectively as the "Citizens Companies")
as follows:
4.1 Organization. Each of IEI, IGC, Energy and IES
(sometimes herein referred to individually as an "IEI Company" or
collectively as the "IEI Companies") is a corporation, or in the
case of IGC, a public utility corporation, duly organized and
validly existing under the laws of the State of Indiana, with
full corporate and other power and authority to carry on its
business as it is now being conducted, to own or hold under lease
the properties which it owns or holds under lease and perform all
of its obligations under the agreements and instruments to which
it is a party or by which it is bound. Each of the IEI Companies
is duly qualified to do business as a foreign corporation and is
in good standing under the laws of each state or other
jurisdiction in which the ownership or leasing of the properties
owned by it or the nature of the activities conducted by it
requires such qualification. Schedule 4.1 lists each such
jurisdiction.
4.2 Authority; Enforceability. Each of the IEI Companies
has full corporate power and authority to execute, deliver and
perform this Agreement and all other agreements and documents to
be executed and delivered by it in connection herewith. All
requisite corporate action to approve, execute, deliver and
perform this Agreement and each other agreement and document
delivered or to be delivered by the IEI Companies in connection
herewith has been or will be taken by each of the IEI Companies
and copies of all requisite corporate records and approvals,
certified by the Secretary or Assistant Secretary of each of IEI,
IGC, Energy or IES, have been or will be delivered to the
Citizens Companies. This Agreement and each other agreement and
document delivered by the IEI Companies in connection herewith
have been or will be duly executed and delivered by the IEI
Company which is a party thereto and constitute or will
constitute the legal, valid and binding obligations of the IEI
Company which is a party thereto enforceable in accordance with
their respective terms.
4.3 Consents. Except to the extent not having a material
adverse effect on the business, properties, financial condition
or results of the Company or the IEI Companies taken as a whole,
and except as set forth in Schedule 4.3 and for any approvals
from, or filings with, the Indiana Utility Regulatory Commission
("IURC") or any taxing authorities, no approval or consent of, or
filing with, any Person or Governmental Authority is required to
be made by the IEI Companies in connection with the transactions
contemplated hereby or the execution, delivery or performance by
any of the IEI Companies of this Agreement or any other agreement
or document delivered by or on behalf of the IEI Companies in
connection herewith.
4.4 No Conflicts. Except to the extent not having a
material adverse effect on the business, properties, financial
condition or results of the Company or the IEI Companies taken as
a whole, and except as set forth in Schedule 4.4, no action taken
by or on behalf of any of the IEI Companies in connection
herewith, including, but not limited to, the execution, delivery
and performance of this Agreement, and each other agreement and
document delivered by any of them in connection herewith:
(a) contravenes, conflicts with or results in a
violation or breach of any of the provisions of, or gives any
Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or
cancel, terminate or modify, any IGC Contract or IES Contract;
(b) contravenes, conflicts with or violates: (i) any
Law; (ii) the Articles of Incorporation or Bylaws of any IEI
Company; (iii) any Contract by which any of the IEI Companies or
their assets is bound; or (iv) any order, arbitration award,
judgment, decree or other similar restriction to which any of the
IEI Companies or their assets is subject, if such contravention,
conflict or violation has or can reasonably be expected to have a
material adverse effect on the business, properties, financial
position or results of operations of the Company or the IEI
Companies taken as a whole;
(c) constitutes an event which, after notice or lapse
of time or both, would result in any of the foregoing.
4.5 Subsidiaries. IEI owns of record and beneficially all
of the outstanding shares of capital stock of each of IGC and IEI
Investments, Inc. free and clear of all Liens. IEI Investments,
Inc. owns of record and beneficially all of the outstanding
capital stock of Energy free and clear of all Liens. Energy owns
of record and beneficially all of the outstanding shares of
capital stock of IES free and clear of all Liens.
4.6 Financial Statements. IES has delivered to Citizens an
unaudited balance sheet of IES as of September 30, 1995 and the
related unaudited statement of income, common shareholders'
equity and cash flow for the year ended September 30, 1995. Such
financial statements fairly present the financial position and
results of operations, changes in common shareholders' equity and
cash flows of IES as of and for the periods indicated, in each
case in conformity with generally accepted accounting principles
consistently applied, except, in the case of the interim
unaudited financial statements, for normal and recurring year end
audit adjustments which will not have a material adverse effect
on the financial condition or business of IES. Since September
30, 1995, there has not been any material adverse change in the
business or financial condition of IES.
4.7 Claims. There is no litigation, claim, governmental or
other proceeding or investigation pending or, to the Knowledge of
the IEI Companies, threatened against any of the IEI Companies
which if adversely determined would have a material adverse
effect on the business properties, financial condition or results
of operations of the Company or the IEI Companies taken as a
whole or hinder the consummation of the transactions contemplated
hereby.
4.8 No Misrepresentations. No representation or warranty
made by any of the IEI Companies in this Agreement or in the
Exhibits or Schedules hereto contains any untrue statement of a
material fact or omits to state a material fact required to be
stated herein or therein to make the statements contained in any
such representation or warranty, in light of the circumstances
under which they were made, not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CITIZENS
Citizens represents and warrants to the IEI Companies as
follows:
5.1 Organization. Citizens is the Trustee of a public
charitable trust duly organized and existing under the laws of
the State of Indiana and operates pursuant to the authority of
IND. CODE 8-1-11.1-1 et seq. By-Products is a corporation
duly organized, validly existing and in good standing under the
laws of the State of West Virginia. CESCO is a corporation duly
organized and validly existing under the laws of the State of
Indiana. Each of the Citizens Companies has full corporate and
other power and authority to carry on its business as it is now
being conducted, to own or hold under lease the properties which
it owns or holds under lease and perform all of its obligations
under the agreements and instruments to which it is a party or by
which it is bound. Each of By-Products and CESCO is duly
qualified to do business as a foreign corporation and is in good
standing (where relevant) under the laws of each state or other
jurisdiction in which the ownership or leasing of the properties
owned by it or the nature of the activities conducted by it
require such qualification. Schedule 5.1 lists each such
jurisdiction.
5.2 Authority; Enforceability. Each of the Citizens
Companies has full corporate or trust power and authority (as
applicable) to execute, deliver and perform this Agreement and
all other agreements and documents to be executed and delivered
by it in connection herewith. All requisite corporate or trust
and other action (as applicable) to approve, execute, deliver and
perform this Agreement and each other agreement and document
delivered or to be delivered by the Citizens Companies in
connection herewith has been or will be taken by each of the
Citizens Companies and copies of all requisite records and
corporate or trust approvals (as applicable), certified by the
Secretary or Assistant Secretary of each of Citizens, By-Products
and CESCO, have been or will be delivered to the IEI Companies.
This Agreement and each other agreement and document delivered by
the Citizens Companies in connection herewith have been or will
be duly executed and delivered by the Citizens Company which is a
party thereto and constitute or will constitute the legal, valid
and binding obligations of the Citizens Company which is a party
thereto enforceable in accordance with their respective terms.
5.3 Consents. Except to the extent not having a material
adverse effect on the business, properties, financial condition
or results of the Company or the Citizens Companies taken as a
whole, and except as set forth in Schedule 5.3 and for any
approvals from, or filings with, the IURC or any taxing
authorities, no approval or consent of, or filing with, any
Person or Governmental Authority is required to be made by the
Citizens Companies in connection with the transactions
contemplated hereby or the execution, delivery or performance by
any of the Citizens Companies of this Agreement or any other
agreement or document delivered by or on behalf of the Citizens
Companies in connection herewith.
5.4 No Conflicts. Except to the extent not having a
material adverse effect on the business, properties, financial
condition or results of the Company or the Citizens Companies
taken as a whole, and except as set forth in Schedule 5.4, no
action taken by or on behalf of any of the Citizens Companies in
connection herewith, including, but not limited to, the
execution, delivery and performance of this Agreement, and each
other agreement and document delivered by any of them in
connection herewith:
(a) contravenes, conflicts with or results in a
violation or breach of any of the provisions of, or gives any
Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or
cancel, terminate or modify, any Citizens Contract or CESCO
Contracts;
(b) contravenes, conflicts with or violates: (i) any
Law; (ii) the Articles of Incorporation, Bylaws or other
organizational documents of any Citizens Company; (iii) any
Contract by which any of the Citizens Companies or their assets
is bound; (iv) any order, arbitration award, judgment, decree or
other similar restriction to which any of the Citizens Companies
or their assets is subject, if such contravention, conflict or
violation has, or can reasonably be expected to have, a material
adverse effect on the business, properties, financial condition
or results of operations of the Company or the Citizens Companies
taken as a whole;
(c) constitutes an event which, after notice or lapse
of time or both, would result in any of the foregoing.
5.5 Subsidiaries. Citizens owns of record and beneficially
all of the outstanding shares of capital stock of By-Products
free and clear of all Liens, except for Liens securing Citizens
revenue bonds and commercial paper. By-Products owns of record
and beneficially all of the outstanding shares of capital stock
of CESCO free and clear of all Liens, except for Liens securing
Citizens revenue bonds and commercial paper.
5.6 Financial Statements. Citizens has delivered to IEI an
unaudited balance sheet of CESCO as of September 30, 1995 and the
related unaudited statement of income and cash flow for the year
ended September 30, 1995. Such financial statements fairly
present the financial position and results of operations and cash
flows of CESCO as of and for the periods indicated, in each case
in conformity with generally accepted accounting principles
consistently applied, except, in the case of the interim
unaudited financial statements, for normal and recurring year end
audit adjustments which will not have a material adverse effect
on the financial condition or business of CESCO. Since September
30, 1995, there has not been any material adverse change in the
business or financial condition of CESCO.
5.7 Claims. There is no litigation, claim, governmental or
other proceeding or investigation pending or, to the Knowledge of
the Citizens Companies, threatened against any of the Citizens
Companies which if adversely determined would have a material
adverse effect on the business, properties, financial condition
or results of operations of the Company or the Citizens Companies
taken as a whole or hinder the consummation of the transactions
contemplated hereby.
5.8 No Misrepresentations. No representation or warranty
made by any of the Citizens Companies in this Agreement or in the
Exhibits or Schedules hereto contains any untrue statement of a
material fact or omits to state a material fact required to be
stated herein or therein to make the statements contained in any
such representation or warranty, in light of the circumstances
under which they were made, not misleading.
ARTICLE 6
CLOSING
Consummation of the transactions contemplated hereby
(the "Closing") shall take place on March 15, 1996, the date of
execution of this Agreement (the "Closing Date").
ARTICLE 7
COVENANTS
7.1 Miscellaneous Covenants.
7.1.1 Publicity. All public announcements relating to
this Agreement or the transactions contemplated hereby will be
made only as may be agreed upon by the Board of Representatives
of the Company as provided in Article II of the Operating
Agreement or as required by Law. If public disclosure or notice
is required by Law, the disclosing party will use its best
efforts to give the other prior written notice of the disclosure
to be made.
7.1.2 Expenses. The IEI Companies shall pay all of the
expenses incident to the transactions contemplated by this
Agreement which are incurred by the IEI Companies or their
representatives and the Citizens Companies shall pay all of the
expenses incident to the transactions contemplated by this
Agreement which are incurred by the Citizens Companies or their
representatives.
7.1.3 No Assignment. No assignment by any party of this
Agreement or any right or obligation hereunder may be made
without the prior written consent of all other parties and any
assignment attempted without that consent will be void.
7.1.4 Affiliate Contracts. To the extent required by
Law, each of IGC and Citizens shall cause to be filed with the
IURC all contracts with the Company.
7.1.5. Start-Up Assistance. To facilitate the initial
planning and operation of the Company's business, each of IEI
Companies and the Citizens Companies shall provide to the Company
such employees, facilities, supplies and other property as the
Company may reasonably request. Each of IGC and Citizens shall
reserve the right to designate which of its employees shall be
provided to the Company. It is contemplated that the IEI
Companies and the Citizens Companies shall be requested to
provide such assistance on a roughly equal basis, and shall be
compensated on the basis of their direct out-of-pocket costs or
on such other fair and reasonable basis as the Company may
determine.
7.1.6. Wind-Up Provisions. The parties hereto incorporate
by reference the provisions of Section 6.05 of the Operating
Agreement and agree to comply with, and be bound by, such
provisions. The parties further agree that such provisions shall
not be amended without the consent of all parties to this
Agreement.
7.1.7 Credit Enhancements for the Company. If the Company
is required to provide Affiliate guaranties or equivalent
assurances ("Credit Enhancements") to unrelated parties to enable
the Company to obtain lines of credit, enter into contracts or
otherwise engage in activities in the normal course of its
business, each of IEI and Citizens agrees that it shall provide,
on a several and not joint basis, fifty percent (50%) of the
required Credit Enhancements, directly or through an Affiliate
thereof, in form and substance acceptable to each such unrelated
party.
7.2 Covenants of the IEI Companies.
7.2.1 Confidentiality. Except as may be required by
Law, the IEI Companies agree not to disclose, or use to the
detriment of the Company, directly or indirectly, any
Confidential Information, at any time after the Closing. If the
disclosure of Confidential Information is required by Law, the
IEI Companies agree to use their best efforts to provide the
Company and the Citizens Companies an opportunity to object to
the disclosure and as much prior written notice as is possible
under the circumstances. The IEI Companies acknowledge that
following the Closing all of the Confidential Information will be
the exclusive proprietary property of the Company, whether or not
prepared in whole or in part by the IEI Companies and whether or
not disclosed to or entrusted to the custody of the IEI
Companies.
7.2.2 IEI Companies Restrictive Covenant. Unless
Citizens otherwise agrees in writing, during the term of the
existence and prior to the dissolution of the Company, (a) the
IEI Companies shall refer and provide exclusively to the Company,
and the Company shall have the exclusive right (as between the
IEI Companies and the Company) to pursue all opportunities
available to the IEI Companies, or any of them, to provide
natural gas or natural gas marketing, sales, management or
related services to customer locations outside the service areas
of IEI's utility Affiliates as in effect from time to time, and
(b) the IEI Companies and each of them shall not, directly or
indirectly, whether as owner, principal, shareholder, partner,
member, investor, manager, operator, consultant or otherwise,
compete with the Company in the provision of natural gas or of
natural gas marketing, sales, management or related services to
customer locations outside the service areas of IEI's utility
Affiliates as in effect from time to time. The restriction set
forth above shall not, however, apply to the sale, lease or
promotion of gas appliances.
7.2.3 Equitable Relief. The IEI Companies agree that
money damages alone will not be a sufficient remedy for any
breach of the provisions of this Section 7.2, and that in
addition to all other remedies the Company shall be entitled to
specific performance and injunctive or other equitable relief as
a remedy for any such breach, and the IEI Companies waive the
securing or posting of any bond in connection with such remedy.
7.2.4 Reformation. If any of the covenants contained in
this Section 7.2 is found by a court of competent jurisdiction to
be invalid or unenforceable as against public policy or for any
other reason, such court is directed to exercise its discretion
to reform such covenant to the end that the IEI Companies shall
be subject to confidentiality and noninterference covenants that
are reasonable under the circumstances and are enforceable by the
Company.
7.2A Covenants of the Citizens Companies.
7.2A.1 Confidentiality. Except as may be required by
Law, the Citizens Companies agree not to disclose, or use to the
detriment of the Company, directly or indirectly, any
Confidential Information, at any time after the Closing. If the
disclosure of Confidential Information is required by Law, the
Citizens Companies agree to use their best efforts to provide the
Company and the IEI Companies an opportunity to object to the
disclosure and as much prior written notice as is possible under
the circumstances. The Citizens Companies acknowledge that
following the Closing all of the Confidential Information will be
the exclusive proprietary property of the Company, whether or not
prepared in whole or in part by the Citizens Companies and
whether or not disclosed to or entrusted to the custody of the
Citizens Companies.
7.2A.2 Citizens Companies Restrictive Covenant. Unless
IEI otherwise expressly agrees in writing, during the term of the
existence and prior to dissolution of the Company, (a) the
Citizens Companies shall refer and provide exclusively to the
Company, and the Company shall have the exclusive right (as
between the Citizens Companies and the Company) to pursue all
opportunities available to the Citizens Companies, or any of
them, to provide natural gas or natural gas marketing, sales,
management or related services to customer locations outside the
service area of Citizens, and (b) the Citizens Companies and each
of them shall not, directly or indirectly, whether as owner,
principal, shareholder, partner, member, investor, manager,
operator, consultant or otherwise, compete with the Company in
the provision of natural gas or of natural gas supply, marketing,
sales, management or related services to customer locations
outside the service area of Citizens. The restriction set forth
above shall not, however, apply to the sale, lease or promotion
of gas appliances or to natural gas wellhead sales by Citizens
Resource Development Corporation.
7.2A.3 Equitable Relief. The Citizens Companies agree
that money damages alone will not be a sufficient remedy for any
breach of the provisions of this Section 7.2A, and that, in
addition to all other remedies, the Company shall be entitled to
specific performance and injunctive or other equitable relief as
a remedy for any such breach, and the Citizens Companies waive
the securing or posting of any bond in connection with such
remedy.
7.2A.4 Reformation. If any of the covenants contained in
this Section 7.2A is found by a court of competent jurisdiction
to be invalid or unenforceable as against public policy or for
any other reason, such court is directed to exercise its
discretion to reform such covenant to the end that the Citizens
Companies shall be subject to confidentiality and noninterference
covenants that are reasonable under the circumstances and are
enforceable by the Company.
ARTICLE 8
SURVIVAL
8.1 Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants of the IEI
Companies and the Citizens Companies in this Agreement shall
survive the Closing and continue to be binding regardless of any
investigation made at any time by any party.
8.2 Hold Harmless by IEI. Each of the IEI Companies,
jointly and severally, agrees to hold harmless the Company, its
Affiliates and partners, employees and agents ("the Company
Parties") and the Citizens Companies and their Affiliates,
shareholders, directors, employees and agents from, and reimburse
them for:
(a) Representations. All Liability, loss, damage or
deficiency resulting from or arising out of any inaccuracy in or
breach of any representation or warranty by IEI in this Agreement
or in any other agreement or document delivered by or on behalf
of IEI in connection herewith;
(b) Covenants. All Liability, loss, damage or
deficiency resulting from or arising out of any breach or
nonperformance of any covenant or obligation made or incurred by
the IEI Companies herein or in any other agreement or document
delivered by or on behalf of the IEI Companies in connection
herewith;
(c) Liabilities. Any imposition or attempted imposi
tion by a third party upon any of the Company Parties or the
Citizens Companies of any Liability of the IEI Companies which
the Company has not specifically agreed to assume under Section
2.3 of this Agreement, regardless of whether any such Liability
results from or arises out of any inaccuracy in or breach of any
representation or warranty by the IEI Companies herein;
(d) Brokers and Finders. All Liability, loss, damage
or deficiency resulting from or arising out of the claims of any
broker, finder or other Person acting in a similar capacity on
behalf of the IEI Companies in connection with the transactions
herein contemplated; and
(e) Costs. Any and all reasonable costs and expenses
(including, but not limited to, legal and accounting fees)
related to any of the foregoing.
(f) Savings Clause. IEI agrees that, if any provision
of this Section 8.2 is held invalid or unenforceable by any court
of competent jurisdiction, IEI will agree to such valid and
enforceable construction or revision of this Section 8.2 as shall
maximize the ability of the Citizens Companies and their
Affiliates, directors, shareholders, employees and agents to
realize the benefits and rights intended to be granted to them by
this Section 8.2.
8.3 Hold Harmless by Citizens. To the maximum extent
permitted by law, each of the Citizens Companies, jointly and
severally, agrees to hold harmless the Company Parties and the
IEI Companies and their Affiliates, directors, shareholders,
employees and agents from and reimburse them for:
(a) Representations. All Liability, loss, damage or
deficiency resulting from or arising out of any inaccuracy in or
breach of any representation or warranty by Citizens in this
Agreement or in any other agreement or document delivered by or
on behalf of Citizens in connection herewith;
(b) Covenants. All Liability, loss, damage or
deficiency resulting from or arising out of any breach or
nonperformance of any covenant or obligation made or incurred by
the Citizens Companies herein or in any other agreement or
document delivered by or on behalf of the Citizens Companies in
connection herewith;
(c) Liabilities. Any imposition or attempted imposi
tion by a third party upon any of the Company Parties or the IEI
Companies of any Liability of the Citizens Companies which the
Company has not specifically agreed to assume under Section 2.3
of this Agreement, regardless of whether any such Liability
results from or arises out of any inaccuracy in or breach of any
representation or warranty by the Citizens Companies herein;
(d) Brokers and Finders. All Liability, loss, damage
or deficiency resulting from or arising out the claims of any
broker, finder or other Person acting in a similar capacity on
behalf of the Citizens Companies in connection with the
transactions herein contemplated; and
(e) Costs. Any and all reasonable related costs and
expenses (including, but not limited to, legal and accounting
fees) related to any of the foregoing.
(f) Savings Clause. Citizens agrees that, if any
provision of this Section 8.3 is held invalid or unenforceable by
any court of competent jurisdiction, Citizens will agree to such
valid and enforceable construction or revision of this Section
8.3 as shall maximize the ability of the IEI Companies and their
Affiliates, directors, shareholders, employees and agents to
realize the benefits and rights intended to be granted to them by
this Section 8.3.
8.4 Hold Harmless by the Company. The Company shall
indemnify each of the IEI Companies and the Citizens Companies
and their respective Affiliates, shareholders, directors,
employees and agents (collectively, "Indemnitees" or
individually, "Indemnitee") from and against:
(a) Covenants. All Liability, loss, damage or
deficiency suffered by an Indemnitee resulting from or arising
out of any breach or nonperformance of any covenant or obligation
made or incurred by the Company herein or in any other agreement
or document delivered by or on behalf of the Company in
connection herewith;
(b) Third Party Claims. All Liability, loss, damage
or deficiency suffered by an Indemnitee resulting from or arising
out of any third party claim against such Indemnitee attributable
to the acts or omissions of the Company, unless such Liability,
loss or damage resulted from the gross negligence or willful
misconduct of the Indemnitee;
(c) Costs. Any and all reasonable related costs and
expenses (including, but not limited to, legal and accounting
fees) related to any of the foregoing.
8.5 Administration of Claims.
(a) Defense. If any claim ("Claim") is hereafter made
by a third party which might result in a right under this Article
8, the party or parties entitled (or claiming entitlement) to
such right (the "Affected Party") may make demand for
indemnification hereunder by giving written notice to the party
or parties required (or claimed to be required) to provide such
indemnification (the "Responsible Party") stating in reasonable
detail the nature of the Claim so far as known to the Affected
Party. Such notice shall be given within a reasonable time after
the Affected Party shall become aware of the Claim, adequate to
permit timely defensive action if such time is available.
Failure to give timely notice will not affect the obligations of
the Responsible Party to hold harmless and reimburse the Affected
Party except to the extent that such failure causes prejudice to
the Responsible Party. The Affected Party shall permit the
Responsible Party to participate in the defense of such Claim or
any litigation resulting therefrom, but such participation shall
be at the expense of the Responsible Party. The Affected Party
shall also permit the Responsible Party to assume the defense of
such Claim or any litigation resulting therefrom (unless the
Claim or litigation seeks injunctive or other equitable relief),
provided that (i) counsel selected to conduct the defense of such
Claim or litigation shall be reasonably satisfactory to the
Affected Party and (ii) the Responsible Party shall irrevocably
acknowledge in writing complete responsibility for such claim or
litigation and agree to hold harmless and reimburse the Affected
Party therefor and furnishes, upon request by Affected Party,
reasonable evidence of its financial ability to indemnify. After
such assumption of the defense by the Responsible Party, the
Responsible Party shall not be liable under this Article 8 for
any legal or other expenses subsequently incurred by the Affected
Party in connection with such defense, but the Affected Party may
participate in such defense at its expense. If a Responsible
Party assumes the defense of a proceeding, (a) no compromise or
settlement thereof or consent to entry of a judgment may be
effected by the Responsible Party without the consent of the
Affected Party unless (i) there is no finding or admission of any
violation of law or any violation of the rights of any Person and
no effect on any other claims that may be made against the
Affected Party and (ii) the sole relief provided is monetary
damages that are paid in full by the Responsible Party; (b) the
Responsible Party shall have no liability with respect to any
settlement or compromise effected without its consent.
(b) Consent. If the Responsible Party does not assume
control of the defense of such a proceeding or claim, the entire
defense of the proceeding or claim by the Affected Party, any
settlement made by the Affected Party, and any judgment entered
in the proceeding or claim shall be deemed to have been consented
to by, and shall be binding on, the Responsible Party as fully as
though it alone had assumed the defense thereof and a judgment
had been entered in the proceeding or claim in the amount of such
settlement or judgment, except that the right of the Responsible
Party to contest the right of the Affected Party to
indemnification under this Agreement with respect to the
proceeding or claim shall not be extinguished.
(c) Exception. Notwithstanding the provisions of
Sections 8.5(a) and (b), if the Responsible Party may not assume
such control by reason of the fact that an injunction or other
equitable relief is being sought, but irrevocably acknowledges in
writing complete responsibility for the money damages, the
Affected Party may not settle the money damage portion of such
claim without the consent (not to be unreasonably withheld) of
the Responsible Party.
(d) Cooperation. The parties hereto agree to
cooperate fully with each other in connection with the defense,
negotiation or settlement of any such proceeding or claim.
8.6 The Company's Right of Setoff. The Company shall have
the right, following liquidation of any claim for indemnification
under this Agreement to setoff against any amount payable to
either the IEI Companies or the Citizens Companies pursuant to
the Operating Agreement (including, but not limited to,
distributions of cash and property by the Company), any other
agreement referenced hereby or otherwise any amount for which the
Company is entitled to indemnification hereunder.
ARTICLE 9
CONSTRUCTION; MISCELLANEOUS
9.1 Definitions. Accounting terms used herein and not
otherwise defined herein shall have the meanings attributed to
them under generally accepted accounting principles. When used
in this Agreement, the following terms in all of their tenses and
cases shall have the meanings assigned to them below or elsewhere
in this Agreement as indicated below:
"Affected Party" is defined in Section 8.5(a).
"Affiliate" of any Person means any person directly or
indirectly controlling, controlled by or under common control
with any such Person, and any officer, director or controlling
person of such Person.
"Agreement" is this Formation Agreement, dated as of
March 15, 1996 by and among IEI, IGC, Energy, IES, Citizens, By-
Products, CESCO and the Company.
"By-Products" means Citizens By-Products Coal Company,
a West Virginia corporation and wholly-owned subsidiary of
Citizens.
"CESCO" means Citizens Energy Services Corporation, an
Indiana corporation and wholly owned subsidiary of By-Products.
"CESCO Assumed Liabilities" is defined in Section
2.3(d).
"Citizens" means City of Indianapolis by and through
its Board of Directors for Utilities of the Department of Public
Utilities, as successor trustee of a public charitable trust,
d/b/a Citizens Gas & Coke Utility.
"Citizens Companies" or "Citizens Company" is defined
in Article 4, preamble.
"Citizens Assumed Liabilities" is defined in
Section 2.3(c).
"CESCO Contracts" is defined in Section 2.2(d).
"Citizens Contracts" is defined in Section 2.2(c).
"Claim" is defined in Section 8.5(a).
"Closing" and "Closing Date" are defined in Article 6.
"The Company" means Proliance Energy, LLC, an Indiana
limited liability company.
"The Company Parties" is defined in Section 8.2.
"Confidential Information" means all information
relating to the business of the Company to the extent such
information is not intended to be disseminated to the public or
is otherwise not generally available for lawful use by the
competitors of the IEI Companies, the Citizens Companies or the
Company, including, but not limited to, information relating to
the Company's present or proposed products, services, strategies,
pricing, customers, representatives, suppliers, distributors,
technology, finances, employee compensation, computer software
and hardware, inventions, developments, or Trade Secrets.
"Contract" means any commitment, understanding,
instrument, lease, pledge, mortgage, indenture, note, license,
agreement, purchase or sale order, contract, promise, or similar
arrangement evidencing or creating any obligation, whether
written or oral.
"Credit Enhancement" is defined in Section 7.1.7.
"Energy" means IGC Energy, Inc., an Indiana corporation
and wholly-owned subsidiary of IEI.
"Governmental Authority" means any foreign, federal,
state, regional or local authority, agency, body, court or
instrumentality, regulatory or otherwise, which, in whole or in
part, was formed by or operates under the auspices of any
foreign, federal, state, regional or local government and has on
the Closing Date jurisdiction over any of the IEI Companies, the
Citizens Companies and the Company.
"Governmental Authorization" means any permit, license,
franchise, approval, consent, ratification, permission,
confirmation, endorsement, waiver, certification, registration,
qualification or other authorization issued, granted or given by
or under the authority of any Governmental Authority or pursuant
to any legal requirement.
"IEI" means Indiana Energy, Inc., an Indiana
corporation.
"IEI Companies" or "IEI Company" is defined in Section
4.1.
"IES" means Indiana Energy Services, Inc., an Indiana
corporation and wholly owned subsidiary of Energy.
"IES Assumed Liabilities" is defined in Section 2.3(b).
"IES Contracts" is defined in Section 2.2(b).
"IGC" means Indiana Gas Company, Inc., an Indiana gas
utility corporation and wholly-owned subsidiary of IEI.
"IGC Assumed Liabilities" is defined in Section 2.3(a).
"IGC Contracts" is defined in Section 2.2(a).
"IURC" is defined in Section 4.3.
"Law" means any common law and any federal, state,
regional, local or foreign law, rule, statute, ordinance, rule,
order or regulation, in force on the Closing.
"Liabilities" means responsibilities, obligations,
duties, commitments, claims and liabilities of any and every
kind, whether known or unknown, accrued, absolute, contingent or
otherwise.
"Liens" means any lien, charge, covenant, condition,
easement, adverse claim, demand, encumbrance, limitation,
security interest, option, pledge or any other title defect or
restriction of any kind.
"The Operating Agreement" is defined in Recital B.
"Person" means any individual, corporation,
partnership, association or any other entity or organization.
"Responsible Party" is defined in Section 8.5(a).
"to the Knowledge of" a corporate entity means the
actual knowledge of any officer, director, key employee or
manager of such entity and also means the knowledge such a Person
would have had after a diligent review of the relevant books and
records.
"Trade Secret" means any information which if known to
a competitor of the owner of the information could be harmful to
the owner of the information.
9.2 Notices. All notices shall be in writing and shall be
delivered personally, telegraphed, telexed, sent by facsimile
transmission or sent by certified, registered or express mail,
postage prepaid as follows:
(a) If to the IEI Companies, to:
Indiana Energy, Inc.
1630 N. Meridian Street
Indianapolis, Indiana 46202
Attention: Lawrence A. Ferger
Chairman, President and
Chief Executive Officer
With a copy to:
Ronald E. Christian
Secretary
Indiana Energy, Inc.
1630 N. Meridian Street
Indianapolis, Indiana 46202
(b) If to the Citizens Companies, to:
Citizens Gas & Coke Utility
2020 N. Meridian Street
Indianapolis, Indiana 46202
Attention: Donald L. Lindemann
President and Chief Executive Officer
With a copy to:
Harry V. Huffman
Assistant Secretary
Citizens Gas & Coke Utility
2020 N. Meridian Street
Indianapolis, Indiana 46202
(c) If to the Company:
Proliance Energy, LLC
One North Capitol Avenue
Indianapolis, Indiana 46204
Attention: CT Corporation System
With a copy to:
Carl L. Chapman
President
Proliance Energy, LLC
1630 N. Meridian Street
Indianapolis, Indiana 46202
or to such other address as may have been designated in a prior
notice. Notices sent by registered or certified mail, postage
prepaid, return receipt requested, shall be deemed to have been
given two (2) business days after being mailed, and otherwise
notices shall be deemed to have been given when received by the
Person to whom the notice is addressed or any other Person with
apparent authority to accept notices on behalf of the Person to
whom the notice is addressed.
9.3 Binding Effect. Except as may be otherwise provided
herein, this Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement is intended or
shall be construed to confer on any Person other than the parties
any rights or benefits hereunder.
9.4 Headings. The headings in this Agreement are intended
solely for convenience of reference and shall be given no effect
in the construction or interpretation of this Agreement.
9.5 Exhibits and Schedules. The Exhibits and Schedules
referred to in this Agreement shall be deemed to be a part of
this Agreement.
9.6 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original,
and all of which together shall constitute one and the same
document.
9.7 Governing Law. This Agreement shall be governed by and
construed under Indiana law, without regard to conflict of laws
principles.
9.8 Waivers. Compliance with the provisions of this
Agreement may be waived only by a written instrument specifically
referring to this Agreement and signed by the party waiving
compliance. No course of dealing, nor any failure or delay in
exercising any right, shall be construed as a waiver, and no
single or partial exercise of a right shall preclude any other or
further exercise of that or any other right.
9.9 Pronouns. The use of a particular pronoun herein shall
not be restrictive as to gender or number but shall be
interpreted in all cases as the context may require.
9.10 Time Periods. Any action required hereunder to be
taken within a certain number of days shall be taken within that
number of calendar days; provided, however, that if the last day
for taking such action falls on a weekend or a holiday, the
period during which such action may be taken shall be
automatically extended to the next business day.
9.11 No Strict Construction. The language used in this
Agreement has been negotiated by the parties and shall not be
construed against either party.
9.12 Modification. No supplement, modification or
amendment of this Agreement shall be binding unless made in a
written instrument which is signed by all of the parties and
which specifically refers to this Agreement.
9.13 Entire Agreement. This Agreement and the agreements
and documents referred to in this Agreement or delivered
hereunder are the exclusive statement of the agreement among the
parties concerning the subject matter hereof. All negotiations
among the parties are merged into this Agreement, and there are
no representations, warranties, covenants, understandings or
agreements, oral or otherwise, in relation thereto among the
parties other than those incorporated herein and to be delivered
hereunder.
INTENDING TO BE LEGALLY BOUND, the parties have signed this
Agreement as of the date first above written.
PROLIANCE ENERGY, LLC
an Indiana limited liability company
("the Company")
By: /s/Carl L. Chapman
Printed: Carl L. Chapman
Title: President
INDIANA ENERGY, INC., an Indiana IGC ENERGY, INC., an
corporation ("IEI") Indiana corporation
("Energy")
By: /s/Lawrence A. Ferger By: /s/Paul T. Baker
Printed: Lawrence A. Ferger Printed: Paul T. Baker
Title: Chairman, President and Title: President
Chief Executive Officer
INDIANA GAS COMPANY, INC., INDIANA ENERGY SERVICES, INC.,
an Indiana corporation ("IGC") an Indiana corporation
("IES")
By: /s/Niel C. Ellerbrook By: /s/Stephen E. Williams
Printed: Niel C. Ellerbrook Printed: Stephen E. Williams
Title: Senior Vice President and Title: Vice President
Chief Financial Officer
City of Indianapolis by and through its CITIZENS BY-PRODUCTS COAL COMPANY.
Board of Directors for Utilities of its a West Virginia corporation ("By-Products")
Department of Public Utilities, a
municipal corporation of the State of Indiana,
as successor trustee of a public charitable trust,
d/b/a CITIZENS GAS & COKE UTILITY By: /s/Donald L. Lindemann
("Citizens")
Printed: Donald L. Lindemann
By: /s/Donald L. Lindemann Title: President
Donald L. Lindemann, President
CITIZENS ENERGY SERVICES CORPORATION,
an Indiana corporation ("CESCO")
ATTEST:
/s/Harry V. Huffman By: /s/Fredrick L. Lekse
Harry V. Huffman, Assistant Secretary
Printed: Fredrick L. Lekse
Title: President
Schedules
Schedule 2.2(a) IGC Contracts
Schedule 2.2(b) IES Contracts
Schedule 2.2(c) Citizens Contracts
Schedule 2.2(d) CESCO Contracts
Schedule 4.1 IEI Companies Jurisdictions
Schedule 4.3 IEI Companies Consents
Schedule 4.4 IEI Companies Conflicts
Schedule 5.1 Citizens Companies Jurisdictions
Schedule 5.3 Citizens Companies Consents
Schedule 5.4 Citizens Companies Conflicts