EXHIBIT 10.8
NONCOMPETITTON AGREEMENT
THIS NONCOMPETITION AGREEMENT is made as of February 12, 1999, by and
between Bay State Gas Company, a Massachusetts corporation ("Company"), and
Roger A. Young ("Young").
RECITALS
l. Pursuant to the Agreement and Plan of Merger dated as
of December 18, 1997 ("Merger Agreement") by and among NIPSCO Industries, Inc,
("NIPSCO"), the Company (which was previously named Acquisition Gas Company) and
Bay State Gas Company, a Massachusetts corporation ("Bay State"), Bay State
merged on this date with and into the Company ("Merger").
2. The Company and Young desire to enter arrangements to
preclude Young from engaging in activities during his employment and upon his
termination of employment with the Company (or any corporation which is a direct
or indirect subsidiary of NIPSCO) which compete with the Company, NIPSCO and its
subsidiaries or any of their predecessors.
NOW THEREFORE, in consideration of the mutual covenants and promises
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and Young, each intending to be
legally bound, agree as follows:
1. COVENANTS CONCERNING COMPETITION
(a) Covenant Not To Compete. During the term of Young's employment
with the Company and for a period of three years thereafter, Young will not in
any manner, directly or indirectly:
(i) manage, consult, be employed by, operate, join,
promote, be compensated by, render advice to, control or participate in
the business of any individual, firm, corporation, institution or
company engaged in the Same or Similar Activities (as defined below)
carried on by Bay State, the Company, NIPSCO or its subsidiaries or any
of their predecessors in any of the United States (excluding Alaska and
Hawaii); or
(ii) own or have any ownership interest in any
privately-held corporation, firm, institution or company engaged in the
Same or Similar Activities carried on by Bay State, the Company, NIPSCO
or its subsidiaries or any of their predecessors in any of the United
States (excluding Alaska and Hawaii); or
(iii) own or have an ownership interest of more than 2% of
the publicly-traded securities of any public corporation, firm,
institution or company
engaged in the Same or Similar Activities carried on by Bay State, the
Company, NIPSCO or its subsidiaries or any of their predecessors in any
of the United States (excluding Alaska and Hawaii).
For purposes of the Noncompetition Agreement, Same or Similar
Activities shall mean the operation of a: (i) natural gas utility business, (ii)
electric utility business, (iii) gas or electric generator business, (iv) gas or
electric distribution business, (v) gas transportation business, (vi) gas
pipeline or transmission business, (vii) pipeline construction business, (viii)
utility locating and marking services business, (ix) business involving the
provision of non-regulated energy products and services of a type provided by
Bay State as of this date, and (x) any business involving gas storage
facilities.
(b) Non-Solicitation. During the term of Young's employment with
the Company and for a period of three years thereafter, Young will not in any
manner, directly or indirectly, cause, persuade, solicit, induce or attempt to
do any of the foregoing in order to:
(i) cause any person, business or entity which is a
supplier or customer of the Company, NIPSCO or its subsidiaries at any
time during the term of his employment to terminate any written or oral
agreement or understanding with the Company, NIPSCO or its
subsidiaries; or
(ii) cause any person employed by the Company, NIPSCO or
its subsidiaries at any time during the term of his employment to
terminate their employment with the Company, NIPSCO or its subsidiaries
in order to work for any individual, firm, corporation, institution or
company engaged in the Same or Similar Activities carried on by the
Company, NIPSCO or its subsidiaries in any of the United States
(excluding Alaska and Hawaii).
(c) Judicial Modification of Covenants Concerning Competition. If
any provision contained in this Section 1 shall for any reason be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Section l, rather
this Section 1 shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. It is the intention of the parties
that if any of the restrictions or covenants contained herein is held to cover a
geographic area or to be of a duration of time which is not permitted by
applicable law, or in any way construed to be too broad or to any extent
invalid, such provisions shall not be construed to be null, void or of no
effect, but, to the extent such provision would be valid or enforceable under
applicable law if limited in scope or duration, a court of competent
jurisdiction shall construe and interpret or reform this Section 1 to provide
for a covenant having the maximum enforceable geographic area, time period and
other provisions (not greater than those contained herein) as shall be valid and
enforceable under such applicable law.
(d) Company's and NIPSCO's Interest. Young acknowledges that the
Company and NIPSCO and its subsidiaries have a legitimate interest which the
provisions of this Section 1 are reasonably necessary to protect, that the
restrictions on competition contained in this Section 1 are reasonable and that
the consideration set forth in Section 2 is sufficient for purposes of this
Section 1.
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(e) Survival of Obligations. If Young's employment with the
Company is terminated for any reason, Young's duties, obligations and
responsibilities under this Noncompetition Agreement shall survive and shall
continue as set forth herein.
2. CONSIDERATION
In consideration of Young entering into this Noncompetition Agreement,
Young shall be paid compensation as follows:
(a) Consideration. In consideration of Young entering into this
Noncompetition Agreement, the Company will be making principal payments to Young
in connection with this Noncompetition Agreement in the amount of $3,200,000.
Except as provided in this Section 2(a), the Company shall pay Young the payment
in the amounts shown in the column "Payment" and on the dates set forth on
Schedule 2(a) attached hereto. In the event Young is not a director of NIPSCO on
June 30, 2002, and his failure to be a director is not due to his death or
resignation as a director, then the Company shall pay Young the amount shown in
the column "Payment" for June 2002 as set forth in Schedule 2(b) attached
hereto. In the event Young is not a director of NIPSCO at any time between June
30, 1999 and June 30, 2005, and such failure is due to Young's resignation as a
director, then the Company shall pay to Young in a lump sum the sum of the
amounts set forth in the columns "End Balance" and "Payment" on Schedule 2(a)
which corresponds to the date of the calendar quarter during which such
resignation occurs. If Young dies prior to the payment by the Company of all of
the amounts set forth on Schedule 2(a) and Young has a surviving spouse, at the
option of Young's surviving spouse, the Company shall either (i) pay to Young's
surviving spouse in a lump sum the sum of the amounts set forth on Schedule 2(a)
in the columns "End Balance" and "Payment" which corresponds to the date of the
calendar quarter during which Young died or (ii) continue to pay to Young's
surviving spouse the payment plus accrued interest thereon in the amounts and on
the dates set forth on Schedule 2(a). If Young dies prior to the payment by the
Company of all of the amounts set forth on Schedule 2(a) and Young does not have
a surviving spouse, the Company shall pay to Young's Beneficiary in a lump sum
the sum of the amounts set forth on Schedule 2(a) in the columns "End Balance"
and "Payment" which corresponds to the date of the calendar quarter during which
Young died.
For purposes of this Agreement, Young's "Beneficiary" shall be any
person, trust or other entity designated in writing by Young, or if not so
designated, the personal representative of Young's estate or if no such
representative shall be appointed within six months after the date of Young's
death, Young's heirs under the laws of descent arid distribution in effect in
the state in which Young is domiciled at the date of his death.
3. BREACH
Young acknowledges that the Company would be irreparably harmed by any
breach of Section 1 and that there would be no adequate remedy at law or in
damages to compensate the Company for any such breach. Accordingly, the Company
will be entitled, in addition to any offer rights or remedies it may have at law
or in equity, to apply for an injunction enjoining and restraining Young from
doing or continuing to do any such act or any other violations or threatened
violations of Section 1.
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4. NOTICES
Any notice or communication given pursuant to this Noncompetition
Agreement must be in writing and shall be effective only if delivered
personally; or sent by facsimile transmission; or delivered by overnight courier
service; or sent by certified mall, postage paid, return receipt requested, to
the recipient at the address indicated below or to such other address as the
party being notified may have previously furnished to the other party by written
notice pursuant to this Section 4:
If to the Company or NIPSCO, to:
NIPSCO Industries, Inc.
801 East 86th Avenue
Merrillville, Indiana 46410
Telephone: (219) 647-6004
Facsimile: (219) 647-6061
Attn: Chairman, President and Chief Executive Officer
If to Young, to:
Roger A. Young
125 Mill Street
P. O. Box 95
Sherborn, Massachusetts 01770
Telephone: (548) 653-1534
Notices under this Noncompetition Agreement shall be effective and
deemed received on the date of personal delivery or facsimile transmission (as
evidenced by facsimile confirmation of transmission); on the day after sending
by overnight courier service (as evidenced by the shipping invoice signed by a
representative of the recipient); or on the date of actual delivery to the party
to whom such notice or communication was sent by certified mail, postage
prepaid, return receipt requested (as evidenced by the return receipt signed by
a representative of such party).
5. ENTIRE AGREEMENT; AMENDMENT
This Noncompetition Agreement represents the entire agreement of the
Company and Young with respect to the matters set forth in it. No amendment or
modification of the terms of this Noncompetition Agreement shall be binding upon
the parties unless reduced to writing and signed by each of the parties.
6. SEVERABILITY
Any provision of this Noncompetition Agreement prohibited by law or
deemed unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions.
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7. GOVERNING LAW
This Noncompetition Agreement shall be interpreted and construed under
the laws of the State of Indiana.
8. SUCCESSORS AND ASSIGNS
This Noncompetition Agreement shall inure to the benefit of the Company
and its successors and assigns.
9. WAIVER
No waiver by any party at any time of any breach by the other party of,
or compliance with, any condition or provision of this Noncompetition Agreement
to be performed by such other party shall be deemed a waiver of any other
provisions or conditions at the same time or at any prior or subsequent time.
10. SURVIVAL OF AGREEMENT
This Noncompetition Agreement shall survive the termination of Young's
employment with the Company and shall survive until the expiration or
termination of this Noncompetition Agreement.
11. COUNTERPARTS
This Noncompetition Agreement may be executed in counterparts, each of
which shall be deemed an original.
12. LITIGATION EXPENSES
In the event of any litigation or other proceeding between the Company
and Young with respect to the subject matter of this Agreement and the
enforcement of rights hereunder, the Company shall reimburse Young for all
reasonable costs and expenses relating to such litigation or other proceeding as
they are incurred, including reasonable attorneys fees and expenses, regardless
of whether such litigation results in any settlement or judgment or order in
favor of any party; provided, however, that any claim or action initiated by
Young relating to this Agreement shall have been made or brought after
reasonable inquiry and shall be well-grounded, in fact, and warranted by
existing law or a good faith argument for the extension, modification or
reversal of existing law, and that is not interposed for any improper purpose,
such as to harass or to cause unnecessary delay or needless increase in the cost
of litigation.
Notwithstanding any provision of Indiana law to the contrary, in no
event shall Young be required to reimburse the Company for any of the costs and
expenses relating to such litigation or other proceeding. The obligation of the
Company under this paragraph 12 shall survive the termination for any reason of
this Agreement (whether such termination is by the Company by Young, upon
expiration of this Agreement or otherwise).
[The remainder of this page left intentionally blank.]
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IN WITNESS WHEREOF, the parties, intending to be legally bound hereby,
have duly executed this Noncompetition Agreement as of the day and year first
set forth above.
BAY STATE GAS COMPANY
By: /s/ Jeffrey W. Yundt
Title: President and CEO
/s/ Roger A. Young
ROGER A. YOUNG
The undersigned hereby guarantees the performance of the Company of its
obligations hereunder.
NIPSCO INDUSTRIES, INC.
By: /s/ Mark D. Wyckoff
Title: Vice President, Human Resources
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SCHEDULE 2(a)
Roger Young Non Compete
Ending Date First Period 3/31/00
Deferral 0 quarters
Interest Only 0 quarters
Principal 22 quarters
Interest Rate 6.76% 1.69%
Quarter Beg End
Period Ending Balance Interest Principal Payment Balance
1 Mar-00 3,200,000 54,080 -4,080 50,000 3,204,080
2 Jun-00 3,204,080 54,149 -4,149 50,000 3,208,229
3 Sep-00 3,208,229 54,219 -4,219 50,000 3,212,448
4 Dec-00 3,212,448 54,290 -4,290 50,000 3,216,738
5 Mar-01 3,216,738 54,363 -4,363 50,000 3,221,101
6 Jun-01 3,221,101 54,437 -4,437 50,000 3,225,538
7 Sep-01 3,225,538 54,512 -4,512 50,000 3,230,049
8 Dec-01 3,230,049 54,588 -4,588 50,000 3,234,637
9 Mar-02 3,234,637 54,665 -4,665 50,000 3,239,303
10 Jun-02 3,239,303 54,744 -4,744 50,000 3,224,047
11 Sep-02 3,244,047 54,824 -4,824 50,000 3,248,871
12 Dec-02 3,248,871 54,906 -4,906 50,000 3,253,777
13 Mar-03 3,253,777 54,989 -4,989 50,000 3,258,766
14 Jun-03 3,258,766 55,073 -5,073 50,000 3,263,839
15 Sep-03 3,263,839 55,159 -5,159 50,000 3,268,998
16 Dec-03 3,268,998 55,246 -5,246 50,000 3,274,244
17 Mar-04 3,274,244 55,335 -5,335 50,000 3,279,579
18 Jun-04 3,279,579 55,425 -5,425 50,000 3,285,004
19 Sep-04 3,285,004 55,517 -5,517 50,000 3,290,520
20 Dec-04 3,290,520 55,610 -5,610 50,000 3,296,130
21 Mar-05 3,296,130 55,705 -5,705 50,000 3,301,835
22 Jun-05 3,301,835 55,801 3,301,835 3,357,636 0
23 Sep-05 0 0 0 0 0
24 Dec-05 0 0 0 0 0
25 Mar-06 0 0 0 0 0
26 Jun-06 0 0 0 0 0
27 Sep-06 0 0 0 0 0
28 Dec-06 0 0 0 0 0
29 Mar-07 0 0 0 0 0
30 Jun-07 0 0 0 0 0
31 Sep-07 0 0 0 0 0
32 Dec-07 0 0 0 0 0
33 Mar-08 0 0 0 0 0
34 Jun-08 0 0 0 0 0
35 Sep-08 0 0 0 0 0
36 Dec-08 0 0 0 0 0
37 Mar-09 0 0 0 0 0
38 Jun-09 0 0 0 0 0
39 Sep-09 0 0 0 0 0
40 Dec-09 0 0 0 0 0
SCHEDULE 2(b)
Roger Young Non Compete
Ending Date First Period 3/31/00
Deferral 0 quarters
Interest Only 0 quarters
Principal 22 quarters
Interest Rate 6.76% 1.69%
Quarter Beg End
Period Ending Balance Interest Principal Payment Balance
1 Mar-00 3,200,000 54,080 -4,080 50,000 3,204,080
2 Jun-00 3,204,080 54,149 -4,149 50,000 3,208,229
3 Sep-00 3,208,229 54,219 -4,219 50,000 3,212,448
4 Dec-00 3,212,448 54,290 -4,290 50,000 3,216,738
5 Mar-01 3,216,738 54,363 -4,363 50,000 3,221,101
6 Jun-01 3,221,101 54,437 -4,437 50,000 3,225,538
7 Sep-01 3,225,538 54,512 -4,512 50,000 3,230,049
8 Dec-01 3,230,049 54,588 -4,588 50,000 3,234,637
9 Mar-02 3,234,637 54,665 -4,665 50,000 3,239,303
10 Jun-02 3,239,303 54,744 3,239,303 3,294,047 0
11 Sep-02 0 0 0 0 0
12 Dec-02 0 0 0 0 0
13 Mar-03 0 0 0 0 0
14 Jun-03 0 0 0 0 0
15 Sep-03 0 0 0 0 0
16 Dec-03 0 0 0 0 0
17 Mar-04 0 0 0 0 0
18 Jun-04 0 0 0 0 0
19 Sep-04 0 0 0 0 0
20 Dec-04 0 0 0 0 0
21 Mar-05 0 0 0 0 0
22 Jun-05 0 0 0 0 0
23 Sep-05 0 0 0 0 0
24 Dec-05 0 0 0 0 0
25 Mar-06 0 0 0 0 0
26 Jun-06 0 0 0 0 0
27 Sep-06 0 0 0 0 0
28 Dec-06 0 0 0 0 0
29 Mar-07 0 0 0 0 0
30 Jun-07 0 0 0 0 0
31 Sep-07 0 0 0 0 0
32 Dec-07 0 0 0 0 0
33 Mar-08 0 0 0 0 0
34 Jun-08 0 0 0 0 0
35 Sep-08 0 0 0 0 0
36 Dec-08 0 0 0 0 0
37 Mar-09 0 0 0 0 0
38 Jun-09 0 0 0 0 0
39 Sep-09 0 0 0 0 0
40 Dec-09 0 0 0 0 0