EXHIBIT 10.11
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 November 4, 2002)
Jeffrey W. Yundt
259 Paul Revere Drive
Chesterton, IN 46304
Dear Jeff:
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 14 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.
3. Enhanced Retirement Benefit
You will receive an enhanced retirement benefit equal to the excess of
(1) the aggregate retirement benefit you would have received under the
NiSource Inc. Supplemental Executive Retirement Plan ("SERP") and the
NiSource Inc. and Northern Indiana Public Service Company Pension Plan
Provisions Pertaining to Salaried and Non-Exempt Employees, as in
existence on January 31, 2003 (collectively, the "Retirement Plans")
had your aggregate retirement benefit under the Retirement Plans been
calculated as if you had reached age 60 and completed 25 years of
Service and Credited Service under the Retirement Plans as of January
31, 2003, and assuming you received the greater of the threshold 2002
incentive bonus or the actual 2002 bonus you received, over (2) the
aggregate retirement benefit you are actually entitled to receive
under the terms of the Retirement Plans. This enhanced retirement
benefit will be paid at the same time and in the same form as your
actual retirement benefit payable under the SERP and will be
considered a nonqualified retirement benefit payable to you from the
Company pursuant to the SERP and not pursuant to the terms of the
NiSource Inc. and Northern Indiana Public Service Company Pension Plan
provisions pertaining to Salaried and Non-Exempt Employees. The
utilization of age 60 in the method of calculating this enhanced
retirement benefit will apply even if Paragraph 4 becomes applicable.
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 NiSource (as defined below) (**) is closed
on or before January 31, 2005, or
(b) (**)
then you will receive the benefits set forth in the CIC less the
amounts paid to you as a result of the enhanced retirement benefit
provided in Paragraph 3 of this Agreement; and provided that in lieu of
and in full satisfaction of the welfare benefits set forth by the terms
of CIC to which you may be entitled 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 there is an acquisition of NiSource under circumstances not
specifically described in the previous sentence. For purposes of this
Paragraph 4, the phrase "Acquisition of NiSource" means: (a) a merger,
consolidation or share exchange involving NiSource in a transaction
where the stockholders of NiSource own less than 50 percent of either
(i) the voting stock of the corporation which is a party to such
** Text has been omitted pursuant to a request for confidential treatment and
such text has been filed separately with the Commission. -2-
merger, consolidation or share exchange or (ii) the voting stock of the
direct or indirect parent corporation whose shares are issued to
NiSource stockholders in connection with such merger, consolidation or
share exchange; or (b) any purchase of all or substantially all of the
assets or shares of NiSource.
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 target bonus under
the 2002 incentive bonus compensation plan.
5. Vacation
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.
6. Insurance
a. Retiree Medical Coverage
You will be eligible to participate in the Company's Retiree
Medical Plan as of February 1, 2003.
b. Life Insurance
All policies currently paid or contributed to by the Company
including any split dollar plans will be transferred to you on
or before February 1, 2003 subject to the terms of those
plans, including recapture of premium on the split dollar life
insurance plan provided, however, that the split dollar policy
shall only be transferred if the cash value of the policy at
the date of transfer equals or exceeds the recapture of
premium amount.
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
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vesting of any restricted stock or nonqualified stock options, which
vest on or before January 31, 2003.
9. Outplacement Assistance
You will be eligible for a defined package of Company-paid outplacement
assistance services, tax planning and investment counseling through the
consultant of the Company's choice for up to two years at a cost not to
exceed $20,000.00
10. Executive Deferred Compensation
The Company acknowledges that you are fully vested under the Executive
Deferred Compensation Plan and you will be paid the amounts due to you
thereunder in addition to the other payments made to you as described
in this Letter Agreement.
11. 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.
12. NiSource Re-Employment
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.
13. 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 January 31, 2003. You may purchase your Company car as of
January 31, 2002 for 70 percent of Kelley Blue Book value, which will
be $16,436.00. You may keep your Palm Pilot(C) after you have returned
it to the Company for deletion of appropriate information. You will be
provided with an additional $2000.00 in lieu of your request to retain
your laptop computer.
14. Confidentiality
You acknowledge that during your employment by the Company you had
access to confidential information and confidential financial data of
the Company.
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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.
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.
15. 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,
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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, except for claims
relating to the enforcement of 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.
16. 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
retirement payments. As of the date of this Letter Agreement, you have
no outstanding charges.
17. Governing Law
This Letter Agreement shall be construed in accordance with the laws of
Indiana.
18. 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.
19. Non-Disclosure
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.
Nothing herein should be construed as a limitation on your ability to
consult with your counsel or with an administrative agency.
20. 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
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agreements, promises, representations or inducements, no matter their
form, concerning your employment with the Company. No promises or
agreements made subsequent to the execution of this Agreement by these
parties shall be binding unless reduced to writing and signed by
authorized representatives of these parties.
21. 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 15, 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 NOVEMBER 7, 2002, ON WHICH DATE THIS OFFER WILL
EXPIRE IF NOT 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/ Jeffrey W. Yundt Date: 11/5/02
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Jeffrey W. Yundt
Witness:
/s/ Donna K. Yundt Date: 11/5/02
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