EXHIBIT 10.10
Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment and such portions have been filed separately with the
Commission.
PRIVILEGED AND CONFIDENTIAL
August 28, 2002
As amended December 16, 2002
Patrick J. Mulchay
Dear Pat:
This Letter Agreement confirms our decision concerning your employment status.
As we discussed, you will retire from your employment with NiSource Corporate
Services Company. If you sign this Letter Agreement, it will constitute the
mutual agreement between you and NiSource Corporate Services Company ("the
Company" which, as used herein shall mean NiSource Inc. or any of its affiliates
or subsidiaries, including NiSource Corporate Services Company; except in
Exhibit 1, references to "NiSource" shall mean exclusively NiSource Inc.)
regarding the terms of your retirement.
1. Employment Status
Unless you are discharged for cause (which would include but not be
limited to a breach of Paragraph 12 of this Letter Agreement), you
will continue as an active employee of the Company through January
31, 2003, for all purposes, including participation in the 2002
NiSource Inc. ("NiSource") bonus plan, all Company employee benefit
plans and for purposes of vesting (a) any restricted stock in
NiSource owned by you and (b) any NiSource stock options owned by
you. Thereafter, you will retire from the Company with the benefits
set forth herein provided that you execute a release at that time in
the form attached as Exhibit 1 hereto.
2. Business Transition
You will not be required to report to your Company office or perform
your management duties after August 28, 2002 ("Separation Date")
although you may be required to render services as requested to
ensure a smooth business transition between August 28 and January
31, 2003. After your Separation Date, you agree to cooperate
whenever needed in the preparation for and/or defense of any
litigation in which the Company is involved. If your assistance is
required by the Company in such matters following the end of your
consulting arrangement, you will be paid $1,000 per day and
reimbursed for out-of-pocket expenses.
3. Consulting Arrangement
Between February 1, 2003 and March 31, 2004, you agree to provide
consulting services to the Company as requested by the CEO and COO
of the Company. You will be paid a fee of $15,000.00 per month for
said consulting services, provided that your services are not
terminated prior to March 31, 2004 for cause or due to death or
disability. These services will include but not be limited to
assistance with the establishment of an RTO, review of strategic
options and general matters related to electric operations. You will
provide these services as and you agreed that you will be an
independent contractor and you will not be eligible to participate
in the Company benefit plans except as specifically provided for in
this Letter Agreement. During the consulting arrangement, you will
be reimbursed for appropriately documented and approved business
expenses and you will be provided comparable office space. In
addition, at the termination of your consulting arrangement, you
will receive a lump sum payment of $230,000.
4. Change In Control
You acknowledge that you are not currently owed any benefits under
your Change in Control and Termination Agreement ("CIC") dated
September 1, 1997. Nonetheless, as additional consideration for your
execution of this Agreement, the Company agrees that, if
(a) an acquisition of all the outstanding stock of NiSource (**)
is closed on or before March 31, 2006, or
(b) (**)
then you will receive the benefits set forth in the CIC less the
amounts paid to you as a result of the consulting agreement provided
in Paragraph 3 of this Agreement; and provided that in lieu of any
welfare benefits set forth by the terms of the CIC to which you may
be entitled under the CIC and which you are not already receiving,
you will receive a lump sum payment equal to the present value of
such welfare benefits calculated as of the date of closing of such
acquisition. You will not receive any payments under the CIC in the
event all of the outstanding stock of NiSource is acquired under
circumstances not specifically described in the previous sentence.
In the event the CIC is triggered pursuant to this paragraph, you
agree that Section 3(a)(2) of the CIC will be based on the 2002
incentive bonus compensation plan and that Sections 3(a) (3), (4),
(5) and (6) of the CIC will not apply.
5. Vacation
**Text has been omitted pursuant to a request for confidential treatment
and such text has been filed separately with the Commission.
-2-
You are eligible to receive a lump sum payment representing
compensation for your accrued and unused vacation as of January 31,
2003. This payment will be subject to legally-mandated deductions
for Social Security and federal, state and local taxes, as well as
deductions for any contributory benefit plans in which you elect to
continue participation. Your vacation accrual through December 31,
2002 is 356 hours, with an additional 20 hours to be earned in
January; bringing your total vacation accrual to 376 hours at the
time of your retirement.
6. Retiree Medical Coverage
You will be eligible to participate in the Company's Retiree Medical
Plan as of February 1, 2003. You will continue to receive Ayco
financial counseling and tax preparation for tax years 2003 and
2004.
7. Contingent Shares
Except as provided in Paragraph 1 hereof, all contingent stock
awards granted under the NiSource Inc. 1994 Long Term Incentive Plan
or the 1988 Long Term Incentive Plan that have not vested as of
January 31, 2003 shall vest in accordance with Section 6 of the
Contingent Stock Agreements dated January 29, 2000 and January 1,
2001.
8. Long Term Incentive Program
You will continue to be treated as an active employee of the Company
through January 31, 2003 under the 1994 Long Term Incentive Plan,
for the purpose of vesting of any restricted stock or nonqualified
stock options which vest on or before January 31, 2003.
You will receive the greater of your threshold or actual bonus
earned under the 2002 NiSource Inc. bonus plan.
9. Indemnification
You will be entitled to indemnification by the Company to the same
extent as other former officers of the Company. You will also be
entitled to coverage under the directors and officers liability
insurance coverage maintained by the Company (as in effect from time
to time) to the same extent as other former officers of the Company.
10. NiSource Re-Employment
-3-
If you seek re-employment with any NiSource Company and are
subsequently rehired, management reserves the right to base any
future severance payments on your rehire date.
11. Return of Property
You agree to return to the Company any and all of its property,
including but not limited to, keys, employee identification or
security access cards, telephones, computing equipment, and credit
cards on or before March 31, 2004. As of March 31, 2004, you will be
eligible to retain ownership on a tax-paid basis of the 2001 Ford
Expedition which the Company had provided you through the period of
your consulting arrangement.
12. Confidentiality
You acknowledge that during your employment by the Company you had
access to confidential information and confidential financial data
of the Company or of other NiSource companies.
You further acknowledge that during your employment you may have
developed confidential business information for the Company, may
have made inventions, and/or may have established relationships with
the Company's customers and potential customers.
In order to preserve the property, inventions, business, and
goodwill of the Company, you agree that during and after your
employment, all knowledge and information not known to the public
respecting any Company inventions, designs, products, services,
machinery, methods, systems, improvements, forecasts, strategic and
other plans, financial data, and other confidential information,
including customer information such as names and addresses of
customers and potential customers, pricing information relating to
any services performed or products sold by the Company, and all
information relating to the special and particular business needs of
the Company or its customers and potential customers, shall remain
the exclusive property of the Company and shall be regarded by you
as strictly confidential and shall not be directly or indirectly
used or disclosed without the Company's written permission.
Moreover, you agree that upon termination of your employment, you
will promptly deliver to the Company all documentation and other
materials relating to the Company's business which are in your
possession or under your control, including customer and potential
customer lists, product lists, and marketing material, whether in
written or electronic data form; and you will delete, destroy or
discard all copies of such confidential information remaining in
your possession.
-4-
You further acknowledge and agree that the Company's remedy in the
form of monetary damages for any breach by you of any of the
provisions of this section may be inadequate and that, in addition
to any monetary damages for such breach, the Company shall be
entitled to institute and maintain any appropriate proceeding or
proceedings, including an action for specific performance and/or
injunction.
13. Release of Claims
In consideration of the payment and benefits described above, you,
on behalf of yourself and your heirs, executors, and administrators,
fully and finally settle, release, and waive any and all local,
state (including but not limited to the Indiana Civil Rights Law),
and federal civil, common law, statutory (including, but not limited
to, the AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, Title VII of
the Civil Rights Act of 1964, the Americans with Disabilities Act of
1990, the Family and Medical Leave Act of 1993, and the Employee
Retirement Income Security Act of 1974, as those Acts are amended),
and equitable claims against the Company and NiSource, Inc. and its
subsidiaries and affiliated companies, and all of the stockholders,
predecessors, successors, agents, directors, officers, employees,
representatives, and attorneys of NiSource, and its subsidiaries and
affiliated companies, known or unknown, occurring or arising prior
to you signing this Letter Agreement.
You acknowledge and agree that this release is being given only in
exchange for consideration to which you are not otherwise entitled.
14. Outstanding Charges
You hereby agree to pay the Company any outstanding amounts owed to
the Company, and further agree that by signing this agreement you
hereby authorize the Company to deduct any outstanding charges from
your consulting or retirement payments.
15. Governing Law
This Letter Agreement shall be construed in accordance with the laws
of Indiana.
16. Severability
In the event that one or more of the provisions contained in this
Letter Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, the Company shall have the option
to enforce the remainder of this Letter Agreement or to cancel it.
17. Non-Disclosure
-5-
You expressly agree to keep the terms of this Letter Agreement
strictly confidential and that you will not disclose the terms of
this Letter Agreement to anyone other than your spouse, your legal
counsel or your tax advisor, provided that they each agree to
preserve the confidentiality of the terms of this Letter Agreement.
You agree not to disparage or portray the Company in a negative
light. Any breach of this paragraph will be considered a material
breach of the Letter Agreement.
Nothing herein should be construed as a limitation on your ability
to consult with your counsel concerning your rights but you agree
that you will not assist or encourage others to bring claims against
the Company.
18. Complete Agreement
You acknowledge that in accepting this Letter Agreement, you have
not relied upon any representation or promise other than those
expressly stated in this Letter Agreement.
This Letter Agreement constitutes the complete understanding between
you and the Company relating to your separation and supersedes any
and all prior agreements, promises, representations or inducements,
no matter their form, concerning you employment with the Company. No
promises or agreements made subsequent to the execution of this
Agreement by these parties shall be binding unless reduced writing
and signed by authorized representatives of these parties.
19. Important Information
YOU ACKNOWLEDGE THAT THE COMPANY HAS ADVISED YOU TAKE UP TO 45 DAYS
TO CONSIDER THE TERMS AND CONDITIONS OUTLINED ABOVE, AND THAT THE
COMPANY HAS ALSO ADVISED YOU TO CONSULT AN ATTORNEY BEFORE SIGNING
THIS LETTER AGREEMENT. YOU ALSO HAVE THE RIGHT TO REVOKE YOUR
EXECUTION OF THIS LETTER AGREEMENT WITHIN 7 DAYS AFTER EXECUTION IN
ACCORDANCE WITH THE NOTICE TO EMPLOYEE ATTACHED HERETO.
ATTACHED TO THIS LETTER AGREEMENT AS EXHIBIT 2 ARE THE DATA
REGARDING THOSE EMPLOYEES SELECTED AND NOT SELECTED FOR THIS
PROGRAM. THE DATA INCLUDE A DESCRIPTION OF THE UNITS, JOB TITLES AND
AGES OF ALL EMPLOYEES SELECTED FOR THE PROGRAM, AND THE AGES AND JOB
TITLES OF EMPLOYEES IN THE AFFECTED UNITS NOT SELECTED FOR THE
PROGRAM.
IF YOU ACCEPT THE TERMS AND CONDITIONS OUTLINED ABOVE, INCLUDING
PARAGRAPH 13, PLEASE SIGN BOTH COPIES OF THIS LETTER AGREEMENT IN
THE SPACE PROVIDED BELOW TO SIGNIFY YOUR ACCEPTANCE, AND RETURN BOTH
COPIES TO LANETTE ZIMMERMAN BY DECEMBER 18, 2002, ON WHICH DATE THIS
OFFER WILL EXPIRE IF NOT
-6-
ACCEPTED. IF YOU ACCEPT THE TERMS AND CONDITIONS OUTLINED ABOVE,
YOUR ACCEPTANCE IS IN LIEU OF ANY AND ALL OTHER SEVERANCE PROGRAMS
OFFERED BY THE COMPANY AND YOU KNOWINGLY AND VOLUNTARILY WAIVE
PARTICIPATION IN ALL OTHER SEVERANCE PROGRAMS OFFERED BY THE
COMPANY. YOU ACKNOWLEDGE THAT THE COMPANY'S PERFORMANCE UNDER THIS
AGREEMENT CONSTITUTES FULL AND COMPLETE PAYMENT OF ALL AMOUNTS DUE
TO YOU FROM THE COMPANY AND CONSTITUTES ADDITIONAL CONSIDERATION TO
WHICH YOU ARE NOT OTHERWISE ENTITLED.
Very truly yours,
/s/ Gary L. Neale
Gary L. Neale
Accepted:
/s/ Patrick J. Mulchay Date: 12/22/02
--------------------------- ---------------------
Patrick J. Mulchay
Witness:
/s/ Denisa R.L. Margraf Date: 12/22/02
------------------------ ----------------------
-7-