Southern Indiana Gas & Electric Co – ‘DEF 14A’ for 12/31/93

As of:  Wednesday, 2/23/94   ·   For:  12/31/93   ·   Accession #:  891554-94-10   ·   File #:  1-03553

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Definitive Proxy Solicitation Material   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Notice and Proxy Statement                            19    104K 
 2: EX-99       Form of Proxy                                          2±     7K 

DEF 14A   —   Notice and Proxy Statement
Document Table of Contents

DEF 14A
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant /_/                                                     
Filed by a Party other than the Registrant /X/                                  

Check the appropriate box:                                                      

/_/ Preliminary Proxy Statement                                                 
/X/ Definitive Proxy Statement                                                  
/_/ Definitive Additional Materials                                             
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12               

SOUTHERN INDIANA GAS & ELECTRIC COMPANY 
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

SOUTHERN INDIANA GAS & ELECTRIC COMPANY 
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):                              

/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a(i)(1) or 14a-6(j)(2).        
/_/ $500 per each party to the controversy pursuant to                          
Exchange Act Rule 14a-6(i)(3).                                          
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.    

1) Title of each class of securities to which transaction applies:              

   _____________________________________________________________________________

2) Aggregate number of securities to which transaction applies:                 

   _____________________________________________________________________________

3) Per unit price or other underlying value of transaction computed             
pursuant to Exchange Act Rule 0-11:*                                      

   _____________________________________________________________________________

4) Proposed maximum aggregate value of transaction:                             

   _____________________________________________________________________________

/_/ Check box if any part of the fee is offset as provided by                   
Exchange Act Rule 0-11(a)(2) and identify the filing for which          
the offsetting fee was paid previously.  Identify the previous          
filing by registration statement number, or the form or schedule        
and the date of its filing.                                             

    1) Amount previously paid: _________________________________________________

    2) Form, Schedule or Registration No. ______________________________________

    3) Filing party: ___________________________________________________________

    4) Date filed: _____________________________________________________________

___________                                                                     
*Set forth the amount on which the filing fee is calculated and state how it was
determined.                                                                   

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SOUTHERN INDIANA GAS AND ELECTRIC COMPANY 
20 N.W. FOURTH STREET 
EVANSVILLE, INDIANA 47741-0001

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held March 22, 1994 

TO THE STOCKHOLDERS OF                                                          
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY:                                      

     NOTICE IS HEREBY GIVEN that the annual meeting of  stockholders of SOUTHERN
INDIANA GAS AND ELECTRIC COMPANY is called and will be held on Tuesday, the 22nd
day of March, 1994, at 3:00 P.M., Central Standard Time, at the Company's Norman
P. Wagner Center  Administration  Building,  One North Main Street,  Evansville,
Indiana, for the following purposes:                                            

     1.   To elect three directors of the Company to serve a term of three years
and until their successors are duly elected and qualified;  

     2.   To   consider  a  proposal   to  approve  a  Stock   Option  Plan  for
implementation in 1994;                                     

     3.   To ratify the  appointment of Arthur  Andersen & Co., as the Company's
auditors; and                                               

     4.   To transact any and all business in connection  with the foregoing and
          any other  business  that may properly come before the meeting and any
adjournment or adjournments thereof.                        

                                             By Order of the Board of Directors,

                      A. E. Goebel
                   Secretary

Evansville, Indiana                                                             
February 22, 1994                                                               

     It is important that your stock be represented at the meeting in order that
a quorum will be assured. Stockholders, whether or not they expect to be present
at the meeting,  are requested to fill in, date and sign the enclosed proxy card
and return it promptly in the accompanying addressed envelope, which requires no
postage. If you attend the meeting and so request, the proxy will not be voted. 

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Location of March 24, 1994
Shareholders' Meeting 

(Printed version contains map showing location of meeting)

Norman P. Wagner Operations Center
Southern Indiana Gas and Electric Company 
One N. Main Street 465-4153 

Parking for  shareholders  will be provided in the  Employee
and  Visitor's  parking  lot on the corner of North Main and
Division  Streets.  Please  use the  entrance  marked  "Main
Street  Entrance"  on the above map.  Entry to the  building
will be through the doors indicated by the arrow.           

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SOUTHERN INDIANA GAS AND ELECTRIC COMPANY 
20 N.W. FOURTH STREET 
EVANSVILLE, INDIANA 47741 

PROXY STATEMENT 
FOR 
ANNUAL MEETING OF STOCKHOLDERS
MARCH 22, 1994

     The management  solicits your proxy for use at the annual  meeting.  Shares
held in your name and represented by your proxy will be voted as you instruct if
your  proxy  is  duly  executed  and  returned  prior  to  the  meeting.  Shares
represented  by proxies that are returned  signed but without  instructions  for
voting will be voted as recommended  by the  management.  Shares  represented by
proxies  that are  returned  unsigned  or  improperly  marked will be treated as
abstentions  for  voting  purposes.  Abstentions  and broker  non-votes  are not
counted in the tally of shares voted at the  meeting.  You may revoke your proxy
at any time before it is  exercised by written  notice to the Company,  received
prior  to the  time  of the  meeting,  or  orally  at  the  meeting.  Dissenting
stockholders  in  connection  with any item  presented  do not  have  rights  of
appraisal.  The proxy and this statement were first mailed to stockholders on or
about February 22, 1994.                                                        

     If you are a participant in the Company's  Automatic Dividend  Reinvestment
and Stock Purchase Plan (the "Plan"),  whole shares  credited to your account in
the Plan will be voted by the Plan Agent in accordance with a voting instruction
form that  will be  furnished  to you by the Plan  Agent,  provided  the form is
completed  by you  and  returned  to the  Plan  Agent.  If the  separate  voting
instruction form is returned signed but without  instructions,  your Plan shares
will  be  voted  in  accordance  with  the   recommendations  of  the  Company's
management.  If the separate voting  instruction form for the Plan shares is not
returned to the Plan Agent or if it is returned  unsigned or improperly  marked,
none of your Plan shares will be voted unless you vote in person. If you wish to
vote the Plan shares in person,  a proxy may be obtained  upon  written  request
received by the Plan Agent (Harris Trust & Savings Bank,  Reinvestment Services,
P.O. Box A3309, Chicago, Illinois 60690) at least 15 days prior to the meeting. 

Matters to be Voted Upon                                                        

     As of this date, the only known business to be presented at the 1994 annual
meeting of stockholders is (1) the election of three directors of the Company to
serve for a term of three years and until their  successors are duly elected and
qualified,  (2) the  consideration  of a proposal to approve a Stock Option Plan
for  implementation  in 1994,  and (3) the  ratification  of the  appointment of
Arthur Andersen & Co., as the Company's auditors for 1994. However, the enclosed
proxy authorizes the proxy holders named therein to vote on all matters that may
properly come before the meeting and it is the intention of the proxy holders to
take such action in connection  therewith as shall be in  accordance  with their
best  judgement.  Only shares held by those  present at the meeting or for which
proxies are returned will be considered to be  represented  at the meeting.  For
the purpose of determining a quorum,  all shares  represented at the meeting are
counted  without regard to abstentions or broker  non-votes as to any particular
item.                                                                           

Record Date                                                                     

     The Board of  Directors  has fixed  February  4, 1994,  as the date for the
determination of stockholders  entitled to notice of and to vote at the meeting.
Only  stockholders  of record at the close of business on February 4, 1994, will
be entitled to vote at the meeting or at any  adjournments  thereof,  unless the
Board of Directors  fixes a new record date for the  adjourned  meeting which it
must do if the adjourned meeting date is after July 20, 1994.                   

Voting Securities                                                               

     The Company's voting securities outstanding on the record date consisted of
85,895 shares of 4.8% Preferred  Stock,  25,000 shares of 4.75% Preferred Stock,
75,000 shares of 6.50% Preferred Stock,  and 15,705,427  shares of Common Stock.
Each share is entitled to one vote on each  question  presented to a vote of the
stockholders at the meeting.  However,  unless the holder personally  appears at
the meeting,  shares for which no proxy is returned  (whether  registered in the
name of the actual  holder  thereof  or in  nominee or street  name) will not be
voted.                                                                          

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Cost and Method of Solicitation                                                 

     The  cost of  preparing,  assembling,  printing,  and  mailing  this  proxy
statement,  the enclosed  proxy and any other material which may be furnished to
the  stockholders in connection with the solicitation of proxies for the meeting
will  be  borne  by the  Company.  In  order  to be  assured  that a  quorum  of
outstanding stock of the Company will be represented at the meeting, proxies may
be solicited by officers and regular  employees of the Company,  personally,  by
telephone,  telegraph,  fax, or mail, and if deemed  advisable,  the Company may
also engage the services of Continental  Stock Transfer & Trust Co., 2 Broadway,
New York,  New York 10004 and /or D. F. King & Co.,  Inc., 77 Water Street,  New
York, New York 10005. It is anticipated that the cost of such solicitations will
not exceed $10,000 plus reasonable  out-of-pocket expenses. The Company may also
reimburse  brokers,  banks,  nominees and other  fiduciaries for postage and the
reasonable  clerical  expense of  forwarding  the proxy  material to  beneficial
owners of stock.                                                                

Security Ownership of Certain Beneficial Owners                                 

     As of December 31, 1993,  each of the following  stockholders  was known to
the  management  of the  Company  to be the  beneficial  owner of more than five
percent of the outstanding shares of any class of voting securities as set forth
below.                                                                          

                                  Amount and
Title                                               Nature of         Percent   
of                Name and Address of               Beneficial        of        
Class             Beneficial Owner                  Ownership         Class     
-----             ---------------                   ----------        -----     

Preferred Stock,  HAMAC & Co.                       15,000 Shares       8.1%    
$100 Par Value    c/o Crestar Bank                  Registered Owner            
Box 26246                                   
Richmond, VA 23261                          

              IDS Certificate Company           75,000 Shares      40.3%
      c/o IDS Financial Services, Inc.  Registered Owner
3000 IDS Tower-10                           
Minneapolis, MN 55440                       

Item 1--Election of Directors                                                   

     The  Board  of  Directors  consists  of 11  members  of whom  approximately
one-third  are  elected  each  year to serve  terms of three  years or until the
director's  earlier  retirement  pursuant to the Board of Director's  Retirement
Policy.  It is intended  that the  enclosed  form of proxy will be voted for the
election of Messrs.  Ronald G. Reherman,  Donald E. Smith,  and James S. Vinson,
all of whom are now  members of the  Board,  for  three-year  terms or until the
director's  earlier  retirement.  In any  election  of  directors,  the  persons
receiving  a  plurality  of the votes cast are  elected to the  vacancies  to be
filled.                                                                         

     Each of the  three  nominees  has  signified  his  willingness  to serve if
elected.  If,  however,  any situation  should arise under which any such person
should be unable to serve, the authority  granted in the enclosed proxy card may
be  exercised  by the proxy  holders for the purpose of voting for a  substitute
nominee.  Set forth below is  information  with  respect to the nominees and the
other  members  of the  Board of  Directors.  If not  otherwise  indicated,  the
principal  occupation  listed for any  individual has been the same for at least
five years.                                                                     

The Board of Directors recommends a vote "for" all of 
the nominees listed below.

Nominees for election for terms to expire in 1997                               

Ronald G. Reherman, 58, Chairman,  President, and Chief Executive Officer of the
Company since April 1991;  President and Chief Executive  Officer of the Company
1990-1991;  President  and Chief  Operating  Officer of the  Company  1988-1990;
Executive Vice  President and General  Manager of the Company  1985-1988.  He is
also a director of Ohio Valley Electric Corp.,  Indiana-Kentucky Electric Corp.,
National City Bancshares and the National City Bank of Evansville. He has been a
director of the Company since 1985.                                             

Donald E. Smith, 67, Chairman,  President,  and Chief Executive Officer of First
Financial  Corporation,   Terre  Haute,  Indiana;  Chairman,   President,  Chief
Executive Officer, and director of Terre Haute First National Bank, Terre Haute,
Indiana; President and director of Terre Haute Oil Corp., President and director
of Princeton Mining Co. Inc.,  President and director of Deep Vein Coal Company;

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and President and director of R. J. Oil Co., all of Terre Haute,  Indiana; and a
director of Blackhawk  Coal  Corporation.  He has been a director of the Company
since 1964.                                                                     

James S. Vinson,  52,  President and  Professor of Physics at the  University of
Evansville in Evansville, Indiana since 1987. Vice President of Academic Affairs
and Professor of Physics at Trinity University at San Antonio,  Texas 1983-1987.
He has been a director of the Company since 1989.                               

Current directors whose terms expire in 1995                                    

Donald A. Rausch,  63,  Chairman of the Board,  President,  and Chief  Executive
Officer, since 1990, of UF Bancorp, Inc., Evansville,  Indiana;  Chairman of the
Board and  President,  since 1985,  of Union Federal  Savings Bank,  Evansville,
Indiana. He has been a director of the Company since 1982.                      

John H.  Schroeder,  73,  Chairman,  since 1990, and President,  1952-1990,  and
director  of Crescent  Plastics  Inc.,  Evansville,  Indiana,  manufacturers  of
plastic products. He is also Chairman and director of Cresline Plastic Pipe Co.,
Inc.,  and Wabash  Plastics,  Inc. He has been a director  of the Company  since
1982.                                                                           

Richard W.  Shymanski,  57,  President,  since  1983,  of  Harding,  Shymanski &
Company,  Professional  Corporation,  Certified Public Accountants,  Evansville,
Indiana. He has been a director of the Company since 1989.                      

Norman P. Wagner, 69, Chairman of the Board of the Company  1990-1991;  Chairman
and Chief Executive Officer of the Company 1988-1990;  Chairman,  President, and
Chief Executive Officer 1986-1988.  He is a director of CNB Bancshares,  Inc. of
Evansville. He has been a director of the Company since 1978.                   

Current directors whose terms expire in 1996                                    

Melvin H. Dodson, 72, President, since 1958, and director of Dodson Engineering,
Inc.,  Evansville,  Indiana,  consultants  to  the  petroleum  and  natural  gas
industries. He has been a director of the Company since 1970.                   

Walter R. Emge,  71,  President and director of Porca  Company,  of Fort Branch,
Indiana,  formerly  Emge Packing Co., Inc. He has been a director of the Company
since 1972.                                                                     

Robert L. Koch II, 55,  President  and Chief  Executive  Officer of George  Koch
Sons, Inc.,  Evansville,  Indiana,  manufacturers of industrial painting systems
and  distributors  of  heating  and  air  conditioning  equipment.  He is also a
director of CNB Bancshares,  Inc. of Evansville and Bindley Western  Industries,
Inc. of Indianapolis, Indiana. He has been a director of the Company since 1986.

Jerry  A.  Lamb,  59,   Chairman  of  the  Board  of  American  Sheet  Extrusion
Corporation,  Evansville,  Indiana, manufacturers of plastic molded products. He
is also a  director  of CNB  Bancshares,  Inc.,  of  Evansville.  He has  been a
director of the Company since January 1, 1993.                                  

     Certain  relationships and related  transactions.  Melvin H. Dodson is sole
owner  of  Dodson  Engineering,  Inc.  which  firm  in  1993  performed  certain
consulting  and  operational  services  relative to gas  storage  fields and oil
producing  properties for the Company,  and is expected to perform such services
in 1994. During 1993, the cost of such services was $216,710,  which the Company
believes to be a fair and reasonable price for the services rendered.           

     Committees  and meetings of the Board of Directors.  The Board of Directors
conducts its business  through meetings of the Board and through its committees.
The Board of Directors has established three standing committees,  the Executive
Committee,  the Audit Committee,  and the Compensation  Committee.  There are no
nominating or other committees of the Board of Directors.                       

     The Executive  Committee  acts on behalf of the Board of Directors when the
Board is not in session,  except on those matters  which  require  action of the
full Board. The committee,  which met 14 times in 1993,  meets as required.  The
members of the committee are Ronald G.  Reherman  (Chairman),  Melvin H. Dodson,
Donald A. Rausch, John H. Schroeder, and Norman P. Wagner.                      

     The Audit  Committee,  which met twice in 1993, meets at least twice a year
with the independent  auditors of the Company and the internal auditing staff to
review  audit  procedures  and  recommendations  for  improvements  in  internal
controls.  The members of this committee are Donald E. Smith (Chairman),  Melvin
H. Dodson, Walter R. Emge, Jerry A. Lamb, and Donald A. Rausch.                 

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     The  Compensation  Committee,  which met three  times in 1993,  advises and
recommends  to the Board of Directors the salaries to be paid to the Chairman of
the Board (when also serving as an employee of the Company), the Chief Executive
Officer,  the President,  the Chief Operating  Officer,  and the Chief Financial
Officer.  The committee also  administers  the Company's  Corporate  Performance
Plan. The members of this committee are Richard W. Shymanski (Chairman),  Robert
L. Koch II, John H. Schroeder, James S. Vinson, and Norman P. Wagner.           

     The Board of Directors had 13 meetings  during 1993.  No director  attended
fewer than 75 percent of the Board of  Directors  meetings or the  aggregate  of
such  meetings  and  meetings  of the  committees  of the Board of which he is a
member.                                                                         

     Compensation  of  directors.  Each  non-employee  member  of the  Board  of
Directors is paid an annual fee of $12,000 plus $600 for each meeting  attended.
Each non-employee director is paid $600 for each meeting of the Executive, Audit
or  Compensation  committees  attended.  Directors are  reimbursed  for ordinary
expenses incurred in performance of their duties.                               

Security Ownership of Directors and Executive Officers                          

The following table shows the beneficial ownership,  reported to the Corporation
as of December 31, 1993, of Common Stock of the Company,  by each director,  the
Chief Executive  Officer,  and each of the other executive officers named in the
Compensation Table found under "Executive Compensation" below. Also shown is the
total ownership for such persons and other executive  officers of the Company as
a group. No member of the group is the beneficial  owner of any of the Company's
Preferred Stock.                                                                

                                                        [Enlarge/Download Table]

                                                      Amount and Nature of Beneficial Ownership (2)         
                                            ----------------------------------------------------------------
Name of Beneficial Owner (1)                Direct           Indirect           Total       Percent of Class
-------------------------                   ------           --------           -----       ----------------
                                                                                                            
Melvin H. Dodson.........................   30,400             2,066           32,466              0.21%    
Walter R. Emge...........................    4,533                --            4,533              0.03     
Robert L. Koch II........................    1,777                --            1,777              0.01     
Jerry A. Lamb............................      500                --              500                --     
Donald A. Rausch.........................    5,409                --            5,409              0.03     
Ronald G. Reherman.......................    5,766               373            6,139              0.04     
John H. Schroeder........................   13,854             1,421           15,275              0.10     
Richard W. Shymanski.....................      932             3,376            4,308              0.03     
Donald E. Smith (3)......................   10,947               803           11,750              0.07     
James S. Vinson..........................      137                --              137                --     
Norman P. Wagner.........................    3,737            13,461           17,198              0.11     
Andrew E. Goebel.........................    3,296                --            3,296              0.02     
J. Gordon Hurst..........................    1,296                --            1,296              0.01     
All of the above and other                                                                                  
executive officers as a group (15).......                                     104,901              0.67     

<FN>                                                                                                        
-----------                                                                                                 
(1)  Beneficial  ownership  includes  those shares over which an individual  has                            
     sole or shared voting,  or investment  powers,  such as shares in which the                            
     spouse,  minor children or other relatives  living in the home of the named                            
     person  have a  beneficial  interest  and  shares  held  in  the  Company's                            
     Automatic  Dividend  Reinvestment  and Stock  Purchase Plan and other trust                            
     accounts.                                                                                              

(2)  Includes  shares held jointly or in other  capacities,  as to which in some                            
     cases beneficial ownership is disclaimed.                                                              

(3)  Donald E. Smith is a director and  President of Princeton  Mining  Company,                            
     which owns  240,124  shares of the  Company's  Common  Stock;  director and                            
     President of R. J. Oil and Refining Co., Inc.,  which owns 86,221 shares of                            
     the Company's Common Stock;  director of Blackhawk Coal Corporation,  which                            
     owns 125,733 shares of the Company's Common Stock; Chairman, CEO, President                            
     and director of Terre Haute First National Bank,  which holds 27,848 shares                            
     of the  Company's  Common Stock as trustee;  and  President and director of                            
     Terre  Haute Oil  Corporation,  which  owns 2,133  shares of the  Company's                            
     Common Stock. The aggregate  number of such shares  represents 3.07 percent                            
     of the Company's Common Stock outstanding.                                                             

</FN>                                                                                                       

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Item 2--Approve Adoption of Stock Option Plan                                   

     The  Company's  Board of  Directors  believes  that the  future  growth and
profitability of the Company depends, in large measure, on its ability to retain
and motivate key employees. To further this goal, and to relate the compensation
of such key  employees  directly to the returns  realized by  shareholders,  the
Board has  adopted the  Southern  Indiana Gas and  Electric  Company  1994 Stock
Option Plan (the "Stock  Option  Plan")  subject to approval of the Stock Option
Plan by the Company's  shareholders  and, to the extent  authorized but unissued
stock is used,  the  approval of the  issuance  of Common  Stock under the Stock
Option Plan by the Indiana Utility Regulatory Commission ("IURC").              

     The Stock Option Plan is intended to promote the  interests of the Company,
its  shareholders  and its customers by ensuring  continuity  of management  and
increased  incentive  on the part of  officers  and other key  employees  of the
Company  responsible for major  contributions to effective  management,  through
facilitating their acquisition of equity interests in the Company.  Accordingly,
the Board  recommends that the Company's  shareholders  approve  adoption of the
Stock  Option  Plan,  the text of which is  attached  as Exhibit A to this Proxy
Statement.                                                                      

     Summary of the Stock Option  Plan.  The Stock  Option Plan  authorizes  the
granting  of options to purchase up to 500,000  shares of the  Company's  Common
Stock to officers and key employees of the Company and its subsidiaries. Options
granted  under the Stock  Option Plan may  constitute  incentive  stock  options
("ISOs")  (within  the meaning of Section 422 of the  Internal  Revenue  Code of
1986,  as  amended  (the  "Code")  or   nonqualified   stock  options   ("NSOs")
(collectively, "Options").                                                      

     Common  Stock  issued  pursuant  to the  Stock  Option  Plan may be  either
authorized but unissued  Common Stock or reacquired  Common Stock,  or both. The
Stock Option Plan will be administered by the Compensation Committee, consisting
of at least three  Directors  of the  Corporation,  no member of which may be an
employee of the  Corporation or a subsidiary or shall have been eligible  within
one year prior to the  director's  appointment  to  receive an Option  under the
Stock  Option  Plan or any other plan of the Company or its  subsidiaries  under
which  participants are entitled to receive Common Stock (except as permitted by
Rule 16b-3(c)(2)(i) under the Securities Exchange Act of 1934).                 

     The  Compensation  Committee will determine the employees to whom grants of
Options will be made under the Stock  Option  Plan,  the number and terms of the
Options to be granted to each employee selected,  the time or times when Options
will be granted,  the period during which Options will be  exercisable,  and the
exercise  price per share of Common  Stock.  The exercise  price may not be less
than the fair market  value of a share of Common Stock at the date the Option is
granted.  The aggregate fair market value,  determined on the date of grant,  of
shares with  respect to which ISOs are  granted  which are  exercisable  for the
first time by an employee  during any calendar  year under the Stock Option Plan
and any other plan of the Company or its  subsidiaries  may not exceed $100,000.
No officer or key employee is eligible to receive an ISO if he or she owns stock
(including  stock the ownership of which is attributed to him or her pursuant to
Section 424(d) of the Code)  possessing more than 10 percent of the total voting
power of all classes of stock of the Company or a subsidiary.                   

     The Option  exercise  price will be payable by the  optionee  in cash or by
tendering to the Company previously  acquired shares of Company common stock, or
by any combination of cash and stock,  including,  if arranged through a broker,
cash related to a proposed sale of Option shares. Options granted to an employee
under the Stock Option Plan may not be  transferred  by the  employee  otherwise
than by will or by the laws of descent and distribution,  and such Option may be
exercisable  during such  person's  lifetime  only by the employee or his or her
guardian or personal representative.                                            

     The terms of an Option may provide that it will be or become exercisable at
such  times or upon  such  events as the  Compensation  Committee  may  specify;
provided,  however,  that except in the case of disability of the optionee after
grant, no option will be exercisable  during the six-month  period following its
grant.  No Option may be exercisable  after the expiration of ten years from the
date such  Option is  granted.  The terms of an Option  may  provide  that it is
exercisable only in specified  installments during the Option period but in that
case may also provide that it will nevertheless  become exercisable in full upon
the happening of certain events.                                                

     If an optionee's employment with the Corporation or a subsidiary terminates
for any reason  (other than the  Optionee's  death,  disability or retirement or
upon the Company's  termination  of the optionee's  employment  for cause),  the
Option  granted  to such  person  will,  except  as  otherwise  provided  by the
Compensation  Committee,  expire  on the  date  of  such  other  termination  of
employment.  In the event of  termination  for cause,  the Option will terminate

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upon  receipt  of  notice  of  such  termination.  In the  event  an  optionee's
employment  terminates due to retirement or  disability,  ISO's will terminate 3
months after such termination in the case of retirement and 12 months after such
termination  in the case of  disability,  and NSO's will terminate 5 years after
such  termination  or, in each case, on their  respective  expiration  dates, if
earlier.  Upon the death of an Option  holder,  the Option will terminate on the
earlier of the Option's expiration date or one year from date of death.         

     The  Compensation   Committee  may,  from  time  to  time,  grant  dividend
equivalents  in respect of Options,  crediting a grantee with an amount equal to
the  amount of cash or stock  dividends  that would have been paid on the shares
covered by the Option if the covered shares had been issued and outstanding on a
given record date. Such dividend equivalents will be paid only in cash.         

     The Stock Option Plan provides that, if there occurs a change in the number
of  outstanding   shares  of  Common  Stock  by  reason  of  a   reorganization,
recapitalization,  stock split, stock dividend,  combination of shares,  merger,
consolidation, rights offering or other change in the corporate structure of the
Company,  the Compensation  Committee may make such adjustments,  if any, as are
appropriate  in the number and kind of shares that may be issued under the Stock
Option  Plan,  including  in the number and kind of shares  which are subject to
outstanding Options, or in the Option price thereof.                            

     The Board may  discontinue  the Stock  Option Plan at any time and may from
time to time amend or revise the terms of the Stock  Option Plan as permitted by
applicable  statutes,  except  that it may  not  revoke  or  alter  in a  manner
unfavorable to the Option holders,  any Options then  outstanding,  or amend the
Stock Option Plan without shareholder approval so as to materially: (i) increase
the benefits accruing to participants under the Stock Option Plan; (ii) increase
the number of securities  which may be issued under the Stock Option Plan; (iii)
modify the requirements as to eligibility for  participation in the Stock Option
Plan; or (iv) increase the cost of the Stock Option Plan to the Company.        

     The Stock Option Plan will terminate on December 20, 2003 unless terminated
earlier by action of the Board.  As of February 4, 1994, the market price of the
Company's common stock was $305/8 per share.                                    

     It is not  possible  at this  time to  determine  the  Options  that may be
granted to the Company's Executive Officers under the Stock Option Plan.        

     Federal income tax consequences.  Under the present provisions of the Code,
the Federal income tax  consequences  of the Stock Option Plan are summarized as
follows:                                                                        

          1. With respect to NSOs:  The  granting of an NSO to an employee  will
     not result in taxable  income to the  employee or a deduction  in computing
     the income tax of the Company or any  subsidiary.  Upon exercise of an NSO,
     the excess of the fair market value of the shares  acquired over the Option
     price is (a) taxable to the optionee as ordinary  income and (b) deductible
     in computing the  Company's  income tax,  subject to satisfying  applicable
     withholding  requirements and general rules relating to  reasonableness  of
compensation.                                                         

          2. With respect to ISOs: An optionee will not be deemed to receive any
     income at the time an ISO is granted or  exercised,  although  the exercise
     may give rise to alternative minimum tax liability for the optionee.  If an
     optionee  does not  dispose of the shares  acquired  on  exercise of an ISO
     within the two year period  beginning on the day after the day of the grant
     of the  ISO or  within  the one  year  period  beginning  on the day of the
     transfer of the shares to him or her, under present  Federal income tax law
     the gain (if any) on a  subsequent  sale (i.e.,  the excess of the proceeds
     received over the option price) will be long-term capital gain and any loss
     he or she may sustain on such sale will be treated as a  long-term  capital
loss.                                                                 

     If the  optionee  disposes  of the  shares  within the two year or one year
period referred to above, the disposition is a "disqualifying  disposition," and
the optionee will generally  realize  ordinary income taxable as compensation in
the year of the  disqualifying  disposition  to the  extent of the excess of the
fair market value of the shares on the date of purchase  over the option  price,
and the balance, if any, will be long-term or short-term capital gain depending,
generally, on whether the shares were held more than one year. To the extent the
optionee  recognizes   compensation  income  with  respect  to  a  disqualifying
disposition, the Corporation will be entitled to a corresponding deduction.     

     Required votes.  Provided a majority of shares entitled to vote are present
at the meeting,  the affirmative vote of the holders of a majority of the shares
voted at the meeting is required  to approve  the  adoption of the Stock  Option
Plan.                                                                           

 The Board of Directors recommends a vote "for" this proposal.

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Executive Compensation                                                          

     General. The following table sets forth compensation paid by the Company to
each of the executive  officers of the Company during the past three years whose
total cash compensation for the calendar year 1993 exceeded $100,000.           

                                                        [Enlarge/Download Table]


                           Summary Compensation Table                                                        

          (a)                                  (b)         (c)         (d)            (e)             (f)    
                                                    Annual Compensation                                      
                                              ------------------------------                                 
                                                                                    Long-Term      All Other 
Name and Principal Position                   Year       Salary     Bonus (1)  Compensation (2)  Compensation
---------------------------                   ----       -------    --------   ----------------  ------------
                                                                                                             
Ronald G. Reherman                            1993      $275,250      $25,720        None          $ 1,700(3)
Chairman of the Board                         1992       252,575       23,500        None           11,300(3)
President and Chief Executive Officer         1991       229,010       30,938        None           17,400(3)

Andrew E. Goebel                              1993       150,542       21,750        None             None   
Senior Vice President, Chief Financial        1992       143,646       13,850        None             None   
Officer, Secretary and Treasurer              1991       136,781       19,538        None             None   

J. Gordon Hurst                               1993       133,708       18,750        None             None   
Senior Vice President                         1992       122,292       11,200        None             None   
and General Manager of Operations             1991       109,917       15,300        None             None   

<FN>                                                                                                         
-----------                                                                                                  

(1)  These amounts are cash awards under the Corporate Performance Plan based on                             
     performance  for the prior  plan  year as  described  in the  report of the                             
     Compensation Committee below.                                                                           

(2)  The  Company had no  long-term  compensation  plans  during any of the last                             
     three years and no award or payment of  restricted  stock,  options,  stock                             
     appreciation rights, or cash, or any other form of long-term  compensation,                             
     for or during these years. See "Compensation  Committee Report on Executive                             
     Compensation," beginning on page 8, and the information provided under Item                             
     2, for a discussion of a Stock Option Plan applicable to certain  officers,                             
     staff and managers of the Company.                                                                      

(3)  Amounts listed represent  directors fees.  Pursuant to a Board of Directors                             
     policy  adopted in 1991,  directors  fees to employee  directors  have been                             
     phased out over a three-year period ending February 28, 1993.                                           
</FN>                                                                                                        

     Change of control agreements.  In order to insure the Company of continuity
of management and operations in the event of a change of control of the Company,
agreements  have been  entered  into between the Company and all of the officers
named  in  the  compensation   table  above.  The  agreements  provide  for  the
continuation of salary of the named officers for the lesser of a period of three
years,  or until  retirement age, at their existing  compensation  levels in the
event of a change of control of the Company.                                    

     Retirement  plans.  All officers  participate  in the  Company's  trusteed,
non-contributory tax-qualified Pension Plan for Salaried Employees (the "Pension
Plan").  Retirement  income,  as defined  in the  Pension  Plan,  is based on an
employee's  average monthly  earnings during the  highest-paid  five consecutive
years in the Pension Plan of the employee's final 10 years of continuous service
prior to retirement or other  termination of employment and is calculated in two
increments:  1.33  percent of such  average  monthly  earnings  for each year of
accredited service or part thereof up to a maximum of 30 years; plus .67 percent
of such average  monthly  earnings for each year of  accredited  service or part
thereof in excess of 30 years to a maximum of 10 years.  Earnings do not include
compensation  received under the Company's  Corporate  Performance Plan. Amounts
payable  under the  Pension  Plan are not  subject to social  security  or other
offset.                                                                         

     The years of service in the Pension Plan credited to officers  named in the
compensation  table above are R. G. Reherman-30 years, 6 months; A. E. Goebel-21
years, 1 month; and J. G. Hurst-24 years.                                       

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     The following  table  illustrates the estimated  retirement  income payable
under the Pension Plan, based on the specific  remuneration  levels and years of
service classification shown.                                                   

                                                        [Enlarge/Download Table]

                                          Pension Plan Table                                          

                                                           Years of Service                           
                                 ---------------------------------------------------------------------
   Covered                                                                                            
Remuneration                         15            20             25            30             35     
------------                      --------      --------       --------      --------       --------  
                                                                                                      
 $100,000...................      $19,950        $26,600        $33,250      $39,900         $43,260  
  125,000...................       24,940         33,250         41,560       49,875          54,060  
  150,000* and above........       29,925         39,900         49,875       59,850          64,870  

<FN>                                                                                                  
---------                                                                                             
* As of January 1, 1994,  the OMNIBUS  Budget  Reconciliation  Act of 1993 (OBRA                      
  '93)  limited  annual   compensation  to  $150,000  for  purposes  of  pension                      
  calculations under tax-qualified pension plans.                                                     
</FN>                                                                                                 

     The  Company  has  a  non-qualified   Supplemental   Retirement  Plan  (the
"Supplemental Plan') covering certain senior officers of the Company who qualify
under the applicable length of service and other eligibility  provisions.  It is
presently  anticipated  that Mr.  Goebel and Mr. Hurst will qualify for benefits
under the  Supplemental  Plan. The  Supplemental  Plan provides for supplemental
retirement  income to be paid such that, when combined with benefits  receivable
under the Company's  Pension Plan, total retirement  benefits paid will be equal
to 50 percent of the  average of the senior  officer's  final  three  years base
salary excluding bonuses. In the case of death, survivor benefits are payable to
surviving  spouses,  if any, at an actuarially  adjusted level.  The Company has
entered into an agreement with Mr. Reherman that is similar to the  Supplemental
Plan  except  that the  retirement  income  paid is equal to 60  percent  of his
highest annualized salary as Chief Executive Officer of the Company. The Company
has purchased  life insurance on the  participants  sufficient in amount to fund
actuarially all of the future  liabilities  under the Supplemental  Plan and the
agreement.                                                                      

     Death benefit plan. The Company has a Supplemental  Post  Retirement  Death
Benefits  Plan for  officers  and other  senior  executives  to provide  retired
participants  with the equivalent of 25-35 percent of the  pre-retirement  group
life  insurance  benefit under the Company's  group  insurance plan for salaried
employees. The Company has purchased insurance on the lives of the participants,
which is projected to allow the Company to recover the entire cost of this plan.

     Stock Option Plan. The Southern Indiana Gas and Electric Company 1994 Stock
Option Plan (the  "Option  Plan") was adopted by the Board of  Directors  at its
meeting  held  December  21,  1993,  subject  to  shareholder  approval  and any
necessary regulatory approval.  (The Option Plan is being submitted to a vote of
shareholders  at this year's Annual  Meeting.) No options will be granted unless
and until shareholder  approval has been obtained and no securities or cash were
realized by participants  during the year 1993. (See Item No. 2 on pages 5-6 for
additional information.)                                                        

Compensation Committee Report on Executive Compensation                         

     The Company's Executive  Compensation Program is administered and monitored
by the Compensation Committee of the Board of Directors.  The main objectives of
the program are:                                                                

o    attract and retain an outstanding management team,               

o    motivate and reward outstanding performance results, and         

     o    focus attention on plans,  goals, and initiatives  which enhance value
to the shareholders and customers of the Company.           

     Prior  to  1994,  the  executive  compensation  program  consisted  of  two
elements:  base salaries,  and an annual Corporate  Performance  Incentive Plan.
During 1993, the  Compensation  Committee and the Board of Directors  approved a
long-term stock option plan,  effective January 1, 1994,  subject to approval by
the shareholders of the Corporation and any necessary  regulatory  approval.  In
addition,  several  changes  were  made  to  the  annual  Corporate  Performance
Incentive Plan for  implementation  during the 1994 plan year and beyond.  These
matters are discussed below.                                                    

     Base Salary Plan.  The  Compensation  Committee  determines the annual base
salaries for the  Company's  mandatory  officers  and the salary  ranges for all
officer  positions.  The  determination of officer salaries and salary ranges is
based upon  competitive  norms  (averages)  for similar  positions in reasonably
comparable  electric and combination  utility companies.  The Company retains an
independent   consultant  to  provide  such   information  to  the  Compensation
Committee.                                                                      

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     Adjustments  to  actual  base  salaries  take  into  consideration  two key
variables:  1) the performance of the officer, and 2) the level of actual salary
compared with the midpoint of the  applicable  salary range,  where  midpoint is
defined as the competitive salary norm for the position. In general, individuals
whose performance is deemed fully competent over several years would be expected
to achieve a base salary at the midpoint level.                                 

     Corporate  Performance  Incentive  Plan. The annual  Corporate  Performance
Incentive Plan (the  "Performance  Plan") provides for the payment of additional
compensation contingent upon the achievement of certain specific stockholder and
customer-related   goals.   Approximately  25  officers  and  senior  management
personnel  participate in the Performance  Plan.  Goal  achievement is primarily
judged  on a  comparison  with the  results  of ten  similar  companies  in five
critical  results areas as set forth in the table on page 10. In addition,  plan
participants are also judged on their  achievement of specific  individual goals
which are developed in support of corporate  objectives.  These individual goals
are often, but not  exclusively,  related to the  implementation  of initiatives
contained in the Company's long-term strategic plan.                            

     Through the 1993 Performance Plan year,  payments,  if any, could amount to
5-25  percent  of  base  salary  on  an  individual  basis.   During  1993,  the
Compensation  Committee  approved a plan design change in potential award levels
for the three senior officers of the Corporation.  Beginning in 1994, the award,
if any,  for the chief  Executive  Officer  can amount to 20-30  percent of base
salary, and the awards, if any, for the two senior vice presidents can amount to
10-30 percent of base salary.  These changes were made to bring the  Performance
Plan into closer  alignment with  competitive  norms which recognize the greater
responsibilities of senior officers of the corporation.  Total payments, if any,
under the  Performance  Plan are limited in the  aggregate  to one and  one-half
percent of net income of the Company earned during the Performance Plan Year.   

     In  addition,  the  Performance  Plan for 1994 and  beyond  was  revised to
include  comparison  of  five-year   cumulative  total  return  as  a  corporate
performance   measure  replacing  three  year  annual  net  income  growth.  The
Compensation  Committee believes this new performance  measure provides a better
and broader gauge of shareholder  value,  and is more in keeping with the spirit
and intent of the required performance graph included herein.                   

     The Company  retains an independent  consultant to assist in the process of
goal formulation and to provide an independent assessment of goal achievement to
the Compensation  Committee at the end of each Performance Plan year. The annual
awards under the  Performance  Plan for years 1991,  1992, and 1933 are shown in
column (d) of the Summary Compensation Table.                                   

     Long-Term Stock Option Plan.  During 1933, the  Compensation  Committee and
the Board of Directors adopted a long-term stock option plan,  effective January
1, 1994,  subject to approval by the  Company's  stockholders  and any necessary
regulatory  approval.  The  Compensation  Committee  believes that stock options
provide a desirable method of long-term  compensation because they closely align
the  interests  of  management  with  long-term  shareholder  value.  They  also
encourage equity ownership in the Company by plan participants.                 

     If approved by  shareholders,  it is  anticipated  that stock option grants
will be awarded to approximately 25 officers and senior management  personnel of
the  Company.  A  description  of the  Long-Term  Stock  Option Plan is provided
herein.                                                                         

     Discussion  of CEO Pay.  Consistent  with  overall  executive  compensation
program  philosophy,  the  Compensation  Committee  structured  the CEO's  total
compensation  during  1993  based on the  overall  performance  of the  Company,
competitive pay levels for CEO's in the utility industry,  and a multi-year plan
for the CEO to achieve a base salary level at or about the established  midpoint
for the position.                                                               

     During  1993,  the  Compensation   Committee  took  the  following  actions
regarding the CEO:                                                              

          1.  Increased  base salary to $280,000 per year.  This  represented an
     increase  of 8.9%,  but is still below the  midpoint  of the salary  range.
     Assuming continued favorable corporate performance,  it is anticipated that
midpoint salary level will be achieved within two more years.         

          2.  Provided a cash  incentive of $25,720,  based on results  achieved
under the Corporate Performance Incentive Plan.                       

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     During the Performance Plan year, SIGECO's  performance as measured against
its ten company comparison group resulted in the following:                     

Key Performance Index                            Objective   SIGECO Rating      
--------------------------------------------------------------------------------

Market to Book Ratio                             Highest     2nd best (highest) 

3-Year Average Annual Net Income Growth          Highest     8th best (highest) 

Electric Revenue per Kwh                         Lowest      2nd best (lowest)  

Gas Revenue per Mcf                              Lowest      2nd best (lowest)  

3-Year Average Annual Growth of Net              Lowest      7th best (lowest)  
Operating Expense per Customer                                                  

     Under the  Performance  Plan formula,  these  performance  ratings earned a
threshold incentive award of 10% of base salary for the CEO.                    

Compensation Committee                                                

  R. W. Shymanski, Chairman           J. S. Vinson
  R. L. Koch II                       N. P. Wagner
J.H. Schroeder                                

Performance Comparisons                                                         

     As required by the Securities and Exchange Commission, set forth below is a
line graph  comparing  the yearly  change in the  cumulative  total  shareholder
return on the Company's  common stock,  assuming  reinvestment of all dividends,
against the  cumulative  total return of the S & P Composite 500 Stock Index and
the S & P Utilities Index, over the past five years.                            

Comparison of Five-Year Cumulative Total Return 

                     1988   1989   1990   1991   1992   1993
                     ----   ----   ----   ----   ----   ----
SIGECO ...........    100    116    128    187    197    206
S&P 500 ... ......    100    132    131    166    178    197
S&P Utilities ....    100    147    143    164    178    203

(this table appeared as a line chart in the printed proxy)

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Compensation Committee Interlocks and Insider Participation                     

     None  of the  members  of the  Compensation  Committee  were  employees  or
officers of the Company at the time of their  committee  action.  Mr. Wagner was
formerly an officer of the Company,  as  described on page 3 under  "Election of
Directors." He also serves as non-employee  Chairman and Chief Executive Officer
of the Company's subsidiary, Southern Indiana Properties, Inc. It is the opinion
of the Board of Directors that Mr.  Wagner's years of experience in the industry
and  familiarity  with  industry  practices  provides  valuable  insight  to the
Compensation Committee in the discharge of its duties.                          

     Mr. Goebel, an executive  officer of the Company,  is a member of the Board
of Directors of UF Bancorp, Inc., of which Mr. Rausch is Chairman, President and
Chief Executive Officer.                                                        

Item 3-Ratification of Appointment of Auditors                                  

     It is intended that, unless otherwise specified by the stockholders,  votes
will  be  cast  pursuant  to  the  proxies  hereby  solicited  in  favor  of the
ratification  of the  appointment by the Company's  Board of Directors of Arthur
Andersen & Co. as  independent  auditors of the  Company for the year 1994.  The
Arthur  Andersen firm has acted for the Company in this capacity since 1918. The
Company  is  advised  that  neither  the  firm nor any of its  partners  has any
financial  interest in or any connection with the Company except in the capacity
of the Company's auditors. A representative of Arthur Andersen & Co. will attend
the annual meeting of stockholders and will be available to answer any questions
and may make a statement if he so desires.                                      

The Board of Directors recommends a vote "for" ratification 
of the appointment of auditors. 

Stockholders Proposals                                                          

     Proposals by  stockholders  to be  presented at the next annual  meeting of
stockholders  to be held on March 28, 1995 must be received by the Company on or
before October 25, 1994 for inclusion in the Company's Proxy Statement  relating
to such matters.                                                                

                     By Order of the Board of Directors,

        A.E. Goebel, Secretary

Evansville, Indiana                                                             
Date:  February 22, 1994                                                        

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                                                                       EXHIBIT A

SOUTHERN INDIANA GAS & ELECTRIC COMPANY 
1994 STOCK OPTION PLAN

I. Purpose                                                                      

     The purposes of Southern Indiana Gas & Electric Company's 1994 Stock Option
Plan (the "Plan") are to promote the long-term success of Southern Indiana Gas &
Electric Company (the "Company") and its subsidiaries,  and to attract,  retain,
and motivate key employees while creating a long-term mutuality of interest with
shareholders by encouraging and enabling stock ownership.                       

II. Administration                                                              

     (a) The Plan  shall be  administered  by the  Compensation  Committee  (the
"Committee"),  consisting of three or more non-employee  members of the Board of
Directors  of the Company  (the  "Board"),  all of whom shall be  "disinterested
persons"  as such term is defined in the rules of the  Securities  and  Exchange
Commission, as amended from time to time.                                       

     (b) The  Committee  shall have all the powers  vested in it by the terms of
the Plan,  such powers to include  exclusive  authority  (within the limitations
described  herein) to select the employees to be granted  options,  to determine
the size and terms of the options to be granted to each  employee  selected,  to
determine  the time when options  will be granted,  the period  during,  and the
events upon which, options will be exercisable, and to prescribe the form of the
agreements  embodying  options  granted under the Plan.  The Committee  shall be
authorized  to interpret  the Plan and the options  granted  under the Plan,  to
establish, amend and rescind any rules and regulations relating to the Plan, and
to make any other  determinations  which it believes  necessary or advisable for
the administration of the Plan. The Committee may correct any defect, supply any
omission  or  reconcile  any  inconsistency  in the Plan or in any option in the
manner and to the extent the Committee  deems necessary or desirable to place it
into effect.                                                                    

     (c) The Committee shall maintain a written record of its  proceedings.  Any
decision  of the  Committee  in the  administration  of the Plan,  as  described
herein, shall be final and conclusive.  The Committee may act only by a majority
of its members in office,  except that the members thereof may authorize any one
or more of their  number or any  officer of the  Company to execute  and deliver
documents on behalf of the Committee.                                           

III. Eligibility For Award                                                      

     Key employees of the Company or any  subsidiary of the Company are eligible
to receive options under the Plan.                                              

IV. Allotment of Shares                                                         

     Shares of common  stock of the Company to be issued under the Plan shall be
made  available,  at the  discretion  of the Board and subject to any  necessary
regulatory  approval,  either from authorized but unissued shares or from issued
shares  reacquired  by the Company.  Subject to provisions of Section IX hereof,
the aggregate number of shares of common stock that may be issued under the Plan
shall not exceed 500,000 shares. Where options are for any reason cancelled,  or
expire or terminate  unexercised,  the shares covered by such option shall again
be available  for grant of options  within the limits  provided by the preceding
sentence.  Options may be allotted  to eligible  employees  at such times and in
such amounts as the Committee, in its sole discretion, may determine,  provided,
however,  that in the case of options  which are intended to be incentive  stock
options  ("Incentive  Stock  Options")  within the meaning of Section 422 of the
Internal Revenue Code of 1986 (the "Code"):                                     

     (i)  the option  holder,  at the time the option is granted,  shall not own
          common stock equaling more than 10% of the total combined voting power
of all classes of stock of the Company, and                 

    (ii)  the aggregate Fair Market Value  (determined at the time the option is
          granted)  of  the  stock  with   respect  to  which  the  options  are
          exercisable  for the first time by an  individual  during any calendar
          year (under all such plans of the Company and any parent or subsidiary
corporations) shall not exceed $100,000.                    

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V. Granting of Options                                                          

     All options  granted  under the Plan shall be in such form as the Committee
may from  time to time  approve.  The  Committee  shall  determine  in each case
whether the options are Incentive Stock Options or  Nonqualified  Stock Options.
All options  granted under the Plan shall be subject to the following  terms and
conditions:                                                                     

     (a)  Option Price. The Committee shall determine the option price per share
          with respect to each option  granted;  provided,  however,  the option
          price  shall  not be less than  100% of the Fair  Market  Value of the
common stock at the date the option is granted.             

     (b)  Period of Option. Unless a shorter period is fixed by the Committee or
          another  provision of this Plan, each option may be exercised during a
period of ten years from the date the option was granted.   

     (c)  Payment. The option price shall be payable (i) in cash, (ii) by tender
          to the Company of shares of Company stock owned by the option  holder,
          (iii)  by  delivery  (in  form  approved  by  the   Committee)  of  an
          irrevocable  direction  to  a  securities  broker  acceptable  to  the
          Committee to (x) sell shares  subject to the option and to deliver all
          or a part of the sales  proceeds to the Company in payment of all or a
          part of the  purchase  price and  withholding  taxes due or (y) pledge
          shares  subject to the option to the broker as security for a loan and
          to  deliver  all or a part of the  loan  proceeds  to the  Company  in
          payment of all or a part of the purchase price and  withholding  taxes
          due, or (iv) by any  combination of the foregoing.  No shares shall be
          issued  until full  payment has been made or  satisfactorily  arranged
          for.  A  holder  of an  option  shall  have  none of the  rights  of a
shareholder until the shares are issued.                    

     (d)  Exercise of Options.  The shares covered by an option may be purchased
          on such  installments  and on such exercise dates as the Committee may
          determine,  provided, however, that no option shall become exercisable
          until at least six months after grant unless  disability of the option
          holder occurs  before the  expiration  of the  six-month  period.  Any
          shares not purchased on the applicable  exercise date may be purchased
          thereafter at anytime prior to the final expiration of the option.  In
          no event shall any option be  exercisable  after the expiration of ten
          years from the date upon which the option  was  granted.  Each  option
          shall become  exercisable  according to terms set by the  Committee at
          the time of grant, except as specified in Section VII (Acceleration of
          Exercisability on Change of Control). The Committee may direct that an
          option become  exercisable in  installments,  which need not be annual
          installments,  over a period  which  may be less  than the term of the
          option.  At such time as an installment shall become  exercisable,  it
          may be exercised at anytime  thereafter  in whole or in part until the
          expiration or  termination  of the option.  The Committee  may, in its
          sole  discretion,   prescribe  shorter  or  longer  time  periods  and
  additional requirements with respect to exercise of an option.

     (e)  Nontransferability  of Options.  An option  granted under the Plan may
          not  be  transferred  except  by  will  or the  laws  of  descent  and
          distribution and, during the lifetime of the employee to whom granted,
          may be  exercised  only by such  employee,  or his or her  guardian or
legal representative.                                       

     (f)  Termination of Employment.  Upon the termination of an option holder's
          employment (for any reason other than retirement, disability, death or
          termination  for willful or gross  misconduct),  all rights  under the
          Plan will expire immediately on date of such termination. If an option
          holder's employment is terminated for willful or gross misconduct,  as
          determined by the Board, all rights under the option shall expire upon
   receipt by the option holder of the notice of such termination.

     (g)  Retirement  or  Disability  of an  Option  Holder.  In the event of an
          option holder's  disability (within the meaning of Section 22(e)(3) of
          the Code) or retirement as an employee,  option privileges shall apply
          to those shares immediately purchasable at the date of separation from
          service. The Committee,  in its sole discretion,  may provide that any
          options  outstanding  but  not  yet  exercisable  upon  date  of  such
          separation from service of the option holder may become exercisable in
          accordance  with a schedule  determined  by the  Committee;  provided,
          however,  that in the event of  retirement  no  options  shall  become
          exercisable  until at least six months after grant.  Option privileges
          under  Incentive  Stock Options shall expire unless  exercised  within
          three months from the date of separation in the case of retirement, or
          within twelve months in the case of disability,  but no later than the
          date  on  which  the  option   terminates.   Option  privileges  under
          Nonqualified  Stock Options shall expire unless  exercised within five
          years from the date of separation, but no later than the date on which
the option terminates.                                      

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     (h)  Death of Option  Holder.  Upon the death of an option  holder,  option
          privileges   shall  apply  to  those  shares  which  were  immediately
          purchasable  at the time of  death.  Option  privileges  shall  expire
          unless exercised by legal  representatives or beneficiaries within one
          year  after the date of the  employee's  death,  but no later than the
date on which the option terminates.                        

VI. Cash Payment                                                                

     The  Committee  may,  from time to time,  grant or provide for the grant of
dividend  equivalents in respect of options.  In respect of any such option that
is outstanding on a dividend  record date for shares covered by the option,  the
optionee  may be  credited  with an amount  equal to the amount of cash or stock
dividends  that would have been paid on the shares covered by the options if the
covered  shares had been issued and  outstanding  on the  dividend  record date.
Subject  to the terms of this Plan and any  applicable  option  agreements,  the
Committee  shall  establish  rules and  procedures  governing  the  crediting of
dividend equivalents,  including the timing and payment contingencies that apply
to the dividend equivalents, as the Committee deems necessary or appropriate and
which shall comply with Rule 16b-3 under the Securities Exchange Act of 1934, as
amended,  and other applicable law.  Dividend  equivalents shall be paid only in
cash.                                                                           

VII. Acceleration of Exercisability on Change of Control                        

     Upon a Change of Control of the Company,  all options  theretofore  granted
and not previously exercisable shall become fully exercisable to the same extent
and in the same manner as if they had become  exercisable  by passage of time in
accordance with the provisions of the Plan relating to periods of exercisability
and to termination of employment.                                               

A "Change of Control" shall be deemed to have occurred if:            

     (i)  any individual, firm, trust, partnership,  association, corporation or
          other entity becomes the beneficial owner, directly or indirectly,  of
          20% or more of the outstanding voting stock of the Company,  provided,
          however,  that such an event shall not  constitute a Change of Control
          if such  shareholder  has  established  an agreement with the Company,
          approved by the Board,  which  materially  restricts the right of such
          shareholder  to direct or influence the  management or policies of the
Company; or                                                 

    (ii)  in any  solicitation  of  proxies  from the  security  holders  of the
          Company for the election of directors,  proxies are solicited by or on
          behalf of a person  or  entity  other  than the  Board  and,  upon the
          conclusion of such solicitation, nominees of such person or entity are
          elected to one-half  or more of the then  available  positions  on the
Board.                                                      

     The merger or consolidation of the Company with any other entity shall not,
as such,  be regarded as a Change of Control for the purposes of this Plan.  The
effect of such a merger or  consolidation  shall be determined by the provisions
of this Section.                                                                

VIII. Fair Market Value                                                         

     "Fair  Market  Value"  shall mean the value of a share of common stock on a
particular date, determined as follows: (i) if the common stock is not listed on
such date on any national securities  exchange,  the average between the highest
"bid" and lowest  "offered"  quotations of a share on such date (or, if none, on
the most recent date on which there were bid and offered  quotations of a share,
as  reported  by  the  National  Association  of  Securities  Dealers  Automated
Quotations  System, or other similar service selected by the Committee;  (ii) if
the  common  stock is  neither  listed  on such  date on a  national  securities
exchange nor traded in the  over-the-counter  market, the fair market value of a
share on such date as determined in good faith by the Committee; or (iii) if the
common  stock  is  listed  on  such  date  on one or  more  national  securities
exchanges,  the last  reported sale price of a share on such date as recorded on
the composite  tape system,  or, if such system does not cover the common stock,
the last reported  sale price of a share on such date on the principal  national
securities exchange on which the common stock is listed or, if no sale of common
stock took place on such date,  the last  reported  sale price of a share on the
most recent day on which a sale of a share took place as recorded by such system
or on such exchange, as the case may be.                                        

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IX. Adjustment in the Event of Recapitalization                                 

     In the event of a  reorganization,  recapitalization,  stock  split,  stock
dividend, combination of shares, merger, consolidation,  rights offering, or any
other change in the corporate structure of the Company, the Committee shall make
such  adjustments,  if any, as are  appropriate in the number and kind of shares
that may be issued under the Plan,  in the number and kind of shares  covered by
the options granted and in the option price.                                    

X. Amendments and Discontinuance                                                

     The  Board may  discontinue  the Plan at any time and may from time to time
amend or  revise  the terms of the Plan as  permitted  by  applicable  statutes,
except that it may not revoke or alter, in a manner  unfavorable to the holders,
any options then outstanding,  or amend the Plan without shareholder approval so
as to materially:  (i) increase the benefits accruing to participants  under the
Plan; (ii) increase the number of securities which may be issued under the Plan;
(iii) modify the  requirements as to eligibility for  participation in the Plan;
or (iv) increase the cost of the Plan to the Company.                           

XI. Compliance With Rule 16b-3                                                  

     With respect to persons  subject to Section 16 of the  Securities  Exchange
Act of 1934 (the "1934 Act"), transactions under the Plan are intended to comply
with all applicable  conditions of Rule 16b-3 or its  successors  under the 1934
Act. To the extent any  provisions of the Plan or action by the Committee  fails
to so comply,  it shall be deemed null and void,  if permitted by law and deemed
advisable by the Committee.                                                     

XII. Miscellaneous                                                              

     By  accepting  any  benefits  under the Plan,  each option  holder and each
person claiming under or through such optionee shall be  conclusively  deemed to
have indicated  acceptance and ratification of, and consent to, any action taken
or made or to be taken or made under the Plan by the  Company,  the  Board,  the
Committee or any other committee appointed by the Board. No option holder or any
person  claiming  under or through him or her shall have any right or  interest,
whether vested or otherwise,  in the Plan or in any option, unless and until all
of the terms,  conditions  and  provisions  of the Plan and the  related  option
agreement  that affect such option  holder or such other  person shall have been
complied with.  Nothing  contained in the Plan or in any agreement shall require
the  Company to  segregate  or earmark any cash or other  property.  Neither the
adoption  of the Plan nor its  operation  shall in any way affect the rights and
powers of the Company or any of its subsidiaries to dismiss and/or discharge any
employee at any time.                                                           

     The  provisions  of the Plan shall  take  precedence  over any  conflicting
provision contained in an option. The Plan shall be governed by and construed in
accordance with the internal  substantive laws, and not the choice of law rules,
of the State of Indiana. If any term or provision of the Plan is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms and provisions will remain in full force and effect and will in no way
be affected, impaired or invalidated.                                           

XIII. Withholding Obligations                                                   

     (a)  As a condition to the delivery of any shares  pursuant to the exercise
          of an option, the Committee may require that the optionee, at the time
          of such exercise,  pay to the Company an amount  sufficient to satisfy
any applicable tax withholding obligations.                 

     (b)  The  Committee,  in its sole  discretion,  may permit an  optionee  to
          satisfy all or a part of the withholding  tax obligations  incident to
          the exercise of an option by having the  Committee  withhold a portion
          of the shares that would  otherwise be issuable to the optionee.  Such
          shares  shall be valued  based on their fair market  value on the date
          the tax withholding is required to be made. Any such share withholding
          with respect to an optionee  subject to Section  16(a) of the Exchange
          Act shall be subject to such  limitations  as the Committee may impose
      to comply with the requirements of Section 16 of the Exchange Act.

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XIV. Securities Law Compliance                                                  

     No shares shall be issued hereunder unless counsel for the Company shall be
satisfied that such issuance will be in compliance with  applicable  Federal and
state securities laws.                                                          

XV. Effective Date and Term of The Plan                                         

     The 1994  Stock  Option  Plan  shall  become  effective  on January 1, 1994
subject  to prior  approval  of the  shareholders.  No option  shall be  granted
pursuant to this Plan after  December 20,  2003.  However,  options  theretofore
granted  may extend  beyond  that date in  accordance  with their  terms and the
provisions of the Plan.                                                         

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Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘DEF 14A’ Filing		Date		First		Last			Other Filings
		12/20/03		9		19
		3/28/95		14
		10/25/94		14
		7/20/94		4
		3/24/94		3
		3/22/94		2		4
Filed on:		2/23/94
		2/22/94		2		14
		2/4/94		4		9
		1/1/94		11		19
For Period End:		12/31/93		5		7			10-K,  U-3A-2
		12/21/93		11
		2/28/93		10
		1/1/93		6
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