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EXHIBIT 10.16
NONEMPLOYEE DIRECTOR
RETIREMENT PLAN
NIPSCO Industries, Inc.
January 1991
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NIPSCO INDUSTRIES, INC.
NONEMPLOYEE DIRECTOR RETIREMENT PLAN
Section 1. Purpose. The purpose of the NIPSCO Industries, Inc.
Nonemployee Director Retirement Plan (the "Plan") is to assist the Company in
attracting and retaining individuals of superior talent, ability, and
achievement to serve on its Board of Directors.
Section 2. Definitions. The following words and phrases shall have the
meanings set forth below unless a different meaning is required by the context:
(a) "Annual Retainer" means the amount paid by the Company to each
Nonemployee Director as annual compensation for Service as a Director
and as a member of any committee of the Board and as chairman of any
such committee, which amount is exclusive of any Board or committee
meeting fees, or remuneration under other plans, agreements, or
policies.
(b) "Board" means the Board of Directors of the Company.
(c) "Change in Control" shall have the meaning ascribed to such term in
the Company's Change in Control and Termination Agreements.
(d) "Committee" means the Nominating and Compensation Committee of the
Board.
(e) "Company" means NIPSCO Industries, Inc., an Indiana corporation,
including its subsidiaries and any successor organizations.
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(f) "Director" means an individual who is a member of the Board on or
after the Effective Date.
(g) "Disability" means any physical or mental condition of a permanent
nature which, in the sole judgment of the Committee, based upon the
advice of a competent medical professional selected by the Committee,
prevents a Director from performing his or her duties as a member of
the Board.
(h) "Effective Date" means January 1, 1991.
(i) "Eligible Nonemployee Director" means a Nonemployee Director who meets
the eligibility requirements for retirement benefits under this Plan,
as set forth in Section 4 herein. "Eligible Nonemployee Director"
also shall include any Nonemployee Director eligible to receive
retirement benefits by virtue of a Change in Control, as set forth in
Section 8 herein.
(j) "Nonemployee Director" means a Director who is not currently employed
by the Company or any subsidiary of the Company.
(k) "Plan" means the NIPSCO Industries, Inc. Nonemployee Director
Retirement Plan, including any amendments thereto.
(l) "Service" means a Director's service on the Board as a Nonemployee
Director.
(m) "Year of Service" means the 12-month period commencing with the first
day of the calendar month in which each annual meeting of the
shareholders of the Company takes
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place, and throughout which a Director served on the Board as a
Nonemployee Director.
Section 3. Administration. The Plan shall be administered by the
Committee. The Committee shall have the authority to interpret the Plan, and
any such interpretation shall be final and binding upon all parties. The Board
may amend or terminate the Plan at any time, provided that no such amendment or
termination shall adversely affect the amounts payable or vested under the Plan
before the time of such amendment or termination. The Company shall pay all
distributions made pursuant to the Plan and all costs, charges, and expenses
related to the administration of the Plan.
Section 4. Eligibility for Retirement Benefits. Any Nonemployee Director
who retires, resigns, or is terminated from Service on or after the Effective
Date, having completed at least five (5) full Years of Service, shall be
eligible to receive a retirement benefit calculated in accordance with Section
5 herein, and payable in accordance with Section 6 herein.
Section 5. Amount of Retirement Benefit. Each Eligible Nonemployee
Director shall be paid monthly payments in an amount equal to one-twelfth
(1/12) of the Annual Retainer in effect as of the effective date of his or her
retirement, resignation, or termination from Service. The number of such
payments shall equal the lesser of: (i) one hundred twenty (120); or (ii) the
number of full months of Service on the Board as a Nonemployee Director.
Section 6. Payment of Retirement Benefits. Payment of retirement
benefits to an Eligible Nonemployee Director under this Plan shall be made in
cash, and shall commence one (1) month following the termination of the
Director's Service for any reason. For this purpose, the termination of a
Director's Service for Disability shall be deemed to occur on the date that the
Committee
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designates as the date on which the definition of Disability under this Plan
has been satisfied.
Section 7. Payment in the Event of Death. In the event that an Eligible
Nonemployee Director dies prior to the receipt of all retirement benefits set
forth in this Plan, the Company shall pay the present value of the remaining
unpaid retirement benefits owing to the Nonemployee Director under this Plan in
one cash lump sum within sixty (60) calendar days following the date of death.
The interest rate to be used to determine the present value of the unpaid
retirement benefits shall be the six-month U.S. Treasury Bill rate in effect on
the date of death. Such payment shall be made to the surviving spouse of the
Director, if any. If there is no surviving spouse, then the payment shall be
made to the estate of the Director.
Section 8. Payment in the Event of Termination of Service Following a
Change in Control. In the event that the Service of any Eligible Nonemployee
Director terminates within two (2) years following the effective date of a
Change in Control, the Director shall be entitled to receive his or her
retirement benefits under this Plan in the form of a cash lump sum payment in
an amount equal to the present value of the retirement benefits such Director
is eligible to receive under this Plan.
If, within two (2) years following the effective date of a Change in
Control, the Service on the Board of a Nonemployee Director, who served on the
Board on the effective date of the Change in Control, terminates prior to the
time when the Director has served on the Board for five (5) full years, such
Director shall be entitled to receive a cash lump sum payment in an amount
equal to seventy-five percent (75%) of the present value of the retirement
benefits such Director would have been entitled to receive under this Plan had
the Director served on the Board for five (5) full years prior to termination
of Service.
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For purposes of this Section 8, the interest rate to be used to determine
the present value of the unpaid retirement benefits shall be the six-month U.S.
Treasury Bill rate in effect on the date of termination of Service. Payments
of retirement benefits under this Section 8 shall be made within sixty (60)
calendar days following the date of termination of Service on the Board.
In the event that the Committee determines that any payment, whether paid
or payable or distributed or distributable pursuant to this Plan would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, or any interest or penalty with respect to such excise tax (such
excise tax together with any interest or penalties thereon are hereinafter
referred to collectively as the "Excise Tax"), the Nonemployee Director subject
to the Excise Tax shall be paid an additional payment (a "Gross-Up Payment") in
an amount such that after the payment by such Nonemployee Director of all taxes
(together with any interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed upon the Gross-Up Payment, the Nonemployee
Director retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the payment of retirement benefits under this Plan.
Section 9. Unfunded Plan. The Plan shall be a noncontributory,
nonqualified, and unfunded plan. Retirement benefit payments under the Plan
shall represent an unsecured, general obligation of the Company, and shall be
paid by the Company from its general operating assets. No special fund or
trust shall be required to be created by the Company to fund the obligations
under the Plan, nor shall any notes or securities be issued with respect to any
retirement benefits under the Plan.
Section 10. Certain Payments. Whenever a former Director who is entitled
to receive a payment under the Plan is a person under legal disability or a
person not adjudicated incompetent but who, by reason of illness or mental or
physical disability, is, in the
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opinion of the Committee, unable to manage properly his or her affairs, then
such payments shall be paid in one of the following ways, as the Committee
deems advisable: (i) to such person directly; or (ii) to the legally appointed
guardian or conservator of such person for his or her exclusive benefit; or
(iii) in such other manner for the exclusive benefit of such person as the
committee considers advisable. Any payment made in accordance with the
provisions of this Section 10 shall be a complete discharge of any liability of
the Company for the making of such payment under the Plan.
Section 11. Miscellaneous.
(a) Neither the establishment of the Plan, nor any action taken thereunder,
shall in any way obligate: (i) the Company to nominate a Nonemployee
Director for reelection or to continue to retain a Nonemployee
Director; or (ii) a Nonemployee Director to agree to be nominated for
reelection or to continue to serve on the Board.
(b) Subject to the provisions of Section 3 hereof, the Plan may not be
cancelled by the Company upon any merger or consolidation with, or
acquisition of the Company by any other entity, but shall be binding
upon and inure to the benefit of the successors and assigns of the
Company, and the heirs, executors, administrators, and assigns of each
Eligible Nonemployee Director.
(c) The Plan shall not affect in any way the rights of any Eligible
Nonemployee Director under any deferred compensation plan or agreement
between such Director and the Company.
(d) The Plan shall be governed by and construed according to the laws of
the state of Indiana.
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