EXECUTIVE AGREEMENT
THIS AGREEMENT entered into between SOUTHERN INDIANA GAS AND
ELECTRIC COMPANY (hereinafter sometimes referred to as
"Company") and XXXXXX X. XXXXXXXX (hereinafter sometimes
referred to as "Executive"), this 1st day of January, 1997.
WITNESSETH:
WHEREAS:
A. Executive is an officer of Company and important to its
management and to the well being of Company, its
stockholders and ratepayers.
B. SIGCORP, Inc. ("SIGCORP") is the owner of all or a
majority of the issued and outstanding shares of Company
common stock.
C. Company desires to assure both itself and Executive of
continuity of Company management and operations in the event
of a Change in Control of SIGCORP.
D. This Executive Agreement is not intended to and shall
not materially alter the compensation and benefits that
Executive could reasonably expect in the absence of a Change
in Control of SIGCORP and therefore this Agreement, though
taking effect upon execution hereof, will be operative only
upon a Change in Control of SIGCORP, as that phrase is
hereinafter defined.
E. Executive is willing to remain in the employ of Company
following a Change in Control of SIGCORP upon the terms and
conditions hereinafter set forth and such additional terms
and conditions as mutually agreed upon by Executive and
Company.
NOW, THEREFORE, in order to achieve the aforesaid purposes
it is hereby agreed by and between the parties as follows:
1. Operation of Agreement
This Agreement shall be effective immediately upon its
execution by the parties, but, anything in this Agreement to
the contrary notwithstanding, neither the Agreement nor any
provision of it shall be operative unless and until there
has been a Change in Control of SIGCORP as defined in
paragraph 2 below. Upon the occurrence of a Change in
Control of SIGCORP, this Agreement and all provisions
thereof shall become operative immediately.
2. Definitions
The following words and phrases as used herein shall have
the following meanings:
"Cause" means (i) the willful and continued failure of
Executive substantially to perform the duties commensurate
with his position (other than as a result of physical or
mental illness or injury), after the Board of Directors of
the Company (the "Company Board") delivers to the Executive
a written demand for substantial performance that
specifically identifies the manner in which the Company
Board believes that the Executive has not substantially
performed such duties; or (ii) illegal conduct or gross
misconduct by the Executive, in either case that is willful
and results in material and demonstrable damage to the
business or reputation of the Company. No act or failure to
act on the part of the Executive shall be considered
"willful" unless it is done, or omitted to be done, by the
Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of
the Company. Any determination of whether Cause exists
shall be made by a resolution adopted by a vote at least two-
thirds of the Company Board after the Executive has been
notified in writing of the Company Board's intention to hold
such vote and been given an opportunity to be heard by the
Company Board (with the assistance of the Executive's
counsel, if the Executive so desires).
"Change in Control" shall mean and shall be deemed to have
occurred upon the happening of any one or more of the
following:
(a) An acquisition (other than directly from SIGCORP) of
any voting securities of SIGCORP (the "Voting Securities")
by any "Person" (as the term person is used for purposes of
Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), immediately after
which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
twenty percent (20%) or more of the combined voting power of
SIGCORP's then outstanding Voting Securities; provided,
however, that in determining whether a Change in Control has
occurred, Voting Securities which are acquired in a "Non-
Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an
acquisition by (i) an employee benefit plan (or a trust
forming a part thereof) maintained by (A) SIGCORP or (B) any
corporation or other Person of which a majority of its
voting power or its voting equity securities or equity
interest is owned, directly or indirectly, by SIGCORP (for
purposes of this definition, a "Subsidiary") (ii) SIGCORP or
its Subsidiaries, or (iii) any Person in connection with a
"Non-Control Transaction" (as hereinafter defined);
(b) The individuals who, as of the date of this Agreement,
are members of the Board of Directors of SIGCORP (the
"Incumbent Board"), cease for any reason to constitute a
majority of the members of the Board of Directors of
SIGCORP; provided, however, that if the election, or
nomination for election by SIGCORP's common stockholders, of
any new director was approved by a vote of a majority of the
Incumbent Board, such new director shall, for purposes of
this Plan, be considered as a member of the Incumbent Board;
provided, further, however, that no individual shall be
considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in
Rule 14a-11 promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board of Directors
of SIGCORP (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest
or Proxy Contest; or
(c) A merger, consolidation or reorganization involving
SIGCORP, unless such merger, consolidation or reorganization
is a "Non-Control Transaction." A "Non-Control Transaction"
shall mean a merger, consolidation or reorganization of
SIGCORP where:
(i) the stockholders of SIGCORP, immediately before such
merger, consolidation or reorganization, own directly or
indirectly immediately following such merger, consolidation
or reorganization, at least seventy-five percent (75%) of
the combined voting power of the outstanding voting
securities of the corporation resulting from such merger or
consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as their
ownership of the Voting Securities immediately before such
merger, consolidation or reorganization,
(ii) the individuals who were members of the Board of
Directors of SIGCORP immediately prior to the execution of
the agreement providing for such merger, consolidation or
reorganization constitute a majority of the members of the
board of directors of the Surviving Corporation, or a
corporation beneficially owning, directly or indirectly, a
majority of the Voting Securities of the Surviving
Corporation, and
(iii) no Person other than (1) SIGCORP, (2) any
Subsidiary, (3) any employee benefit plan (or any trust
forming a part thereof) maintained by SIGCORP, the Surviving
Corporation, or any Subsidiary, or (4) any Person who,
immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of twenty percent
(20%) or more of the then outstanding Voting Securities),
has Beneficial Ownership of twenty percent (20%) or more of
the combined voting power of the Surviving Corporation's
then outstanding voting securities.
(d) The sale or other disposition of all or substantially
all of the assets of SIGCORP to any Person (other than a
transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person (the "Subject
Person") acquired Beneficial Ownership of more than the
permitted amount of the then outstanding Voting Securities
as a result of the acquisition of Voting Securities by
SIGCORP or any Subsidiary which, by reducing the number of
Voting Securities then outstanding, increases the
proportional number of shares Beneficially Owned by the
Subject Persons, provided that if a Change in Control would
occur (but for the operation of this sentence) as a result
of the acquisition of Voting Securities by SIGCORP or such
Subsidiary, and after such share acquisition by the Company,
the Subject Person becomes the Beneficial Owner of any
additional Voting Securities which increases the percentage
of the then outstanding Voting Securities Beneficially Owned
by the Subject Person, then a Change in Control shall occur.
Notwithstanding anything contained in this Agreement to the
contrary, if the Executive's employment is terminated prior
to a Change in Control and the Executive reasonably
demonstrates that such termination (i) was at the request of
a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control and who
effectuates a Change in Control (a "Third Party") or (ii)
otherwise occurred in connection with, or in anticipation
of, a Change in Control which actually occurs, then for all
purposes of this Agreement, the date of a Change in Control
with respect to the Executive shall mean the date
immediately prior to the date of such termination of the
Executive's employment.
"Disability" shall mean and be deemed to have occurred six
(6) months after Executive shall have become totally and
permanently disabled by bodily or mental injury or disease,
so that Executive is prevented from actively engaging in any
full time executive employment or remuneration or profit, as
determined and certified by any active full time practicing
physician who is a member in good standing of the
Vanderburgh County Medical Society or any successor
organization.
"Effective Date" means the date of a Change in Control.
"Good Reason" means (i) Executive's ceasing to serve as
Chairman of either of SIGCORP or the Company, without the
consent of Executive, or a change in Executive's status,
title, position or responsibilities (including reporting
responsibilities) with either of SIGCORP or the Company,
without the consent of the Executive, which, in Executive's
reasonable judgment, represents an adverse change from his
status, title, position or responsibilities as in effect
immediately prior thereto; (ii) the assignment to Executive
of any duties or responsibilities which are inconsistent
with his status, title, position or responsibilities; (iii)
a reduction in Executive's base salary or the aggregate
amount of the other compensation and benefits which
Executive was entitled to receive immediately prior to the
Change in Control, or any failure to pay Executive any
compensation or benefits to which he is entitled on a timely
basis; (iv) Company's requiring Executive to be based at any
place outside a 00-xxxx xxxxxx xxxx Xxxxxxxxxx, Xxxxxxx,
except for reasonably required travel on Company business
which is not greater than such travel requirements prior to
the Change in Control; (v) the insolvency or the filing (by
any party, including Company) of a petition for bankruptcy
of Company or SIGCORP; (vi) any material breach by Company
of any provision of this Agreement; (vii) any purported
termination of Executive's employment for Cause by Company
which does not comply with the terms of this Agreement; or
(viii) the failure of Company to obtain an agreement from
any successor or assign of Company to assume and agree to
perform this Agreement. A termination of employment by
Executive for Good Reason shall be effectuated by giving
Company written notice of the termination within six (6)
months of the event constituting Good Reason, setting forth
in reasonable detail the specific conduct of Company that
constitutes Good Reason. A termination of employment by
Executive for Good Reason shall be effective on the fifth
(5th) business day following the date such notice is given,
unless the notice sets forth a later date (which date shall
in no event be later than thirty (30) days after the notice
is given).
"Term" means the period of time commencing on the Effective
Date and expiring on the earliest to occur of (i) the third
anniversary of the Effective Date, (ii) Executive's
sixty-fifth (65th) birthday, (iii) Executive's death, (iv)
termination of Executive's employment by Company for Cause
or Disability, or (v) termination of Executive's employment
by Executive other than for Good Reason. Notwithstanding
anything to the contrary the rights and obligations of the
parties under Sections 5, 6 and 7 shall survive the
expiration of the Term to the extent necessary to give
effect to the provisions contained therein.
3. Executive's Employment With Company
Throughout the Term, Executive shall be employed as
President and Chief Executive Officer of Company or such
other entity as shall then be the principal successor to the
business, assets and properties of Company and shall
continue to have similar or greater responsibility and
authority in such position as he had immediately prior to
the Effective Date.
During the term:
(a) Executive shall devote his full business time and
efforts to the business and affairs of Company or the
successor to Company by which Executive is then employed
pursuant to this Agreement; provided, however, that
Executive shall not be precluded from serving as a director
or member of a committee or board of any other entity which
involves no conflict of interest with Company or its
successor.
(b) Executive shall have duties, responsibilities and
authority consistent with the position held by Executive as
of the date hereof.
(c) The business, assets and properties of Company or its
successor, by whom Executive is employed pursuant to this
Agreement, as well as the support services and facilities
available to Executive, shall not differ materially from
those of Company as existent one (1) year prior to the
Effective Date.
4. Executive's Compensation During Term
Executive shall be entitled to the following compensation
from Company throughout the Term:
(a) base salary at no less than the annual rate in effect
immediately prior to the Effective Date, but with increases
subsequent to the Effective Date as may be made from time to
time as warranted; and
(b) continuing participation in any corporate compensation
plans, pension plans, insurance, medical and hospitalization
programs, employment contracts and any other employee
benefit plans, practices or arrangements in effect
immediately prior to the Effective Date and as same may be
modified, supplemented or replaced without material
reduction in value and benefits to Executive.
5. Termination Of Executive's Employment
(a) In the event of Executive's termination of employment
during the Term by reason of his voluntary termination of
employment with Company for Good Reason, or termination of
Executive's employment by the Company for any reason other
than Cause or Disability:
(i) Company shall pay to Executive, at Executive's option,
either in annual payments or in a lump sum not later than
thirty (30) days after such termination, an amount equal to
Executive's current annual authorized base salary,
multiplied by the number of years (computed to the nearest
month) by which his age, at the time of such termination of
Executive's employment, is less than age 65; however, in no
event shall said lump sum payment or annual payments be more
than three times Executive's current annual authorized base
salary. The payment of such lump sum amount or annual
payments to Executive shall not affect the obligations of
Company, or its successor, under any plan, other agreement
or arrangement pursuant to which Executive is entitled to
any retirement, pension, stock and insurance, benefits,
payments and welfare contributions applicable to former or
retired management employees of Company, generally; and
(ii) For a period of three (3) years following such
termination of Executive's employment Company shall, at its
expense, continue on behalf of Executive and his dependents
and beneficiaries the life insurance, disability, medical,
dental and hospitalization benefits provided to other
similarly situated executives (and their dependents and
beneficiaries) who continue in the employ of Company;
provided, however, that if Executive obtains any such
benefits under the benefit plans of a subsequent employer,
Company's obligation to provide such benefits will be
reduced to the extent that the combined benefit received by
the Executive and his dependents and beneficiaries in all
events is no less favorable than the benefit that would be
received if the benefits under Company's plans and
arrangements. The period during which benefits must be
continued under Section 4980B of the Internal Revenue Code
and Section 601 of the Employee Retirement Income Security
Act of 1974 shall be reduced by the period during which
benefits are continued hereunder.
In the event of Executive's death following a termination of
employment as described in paragraph (a) above, any amounts
that would otherwise have been payable to Executive under
subparagraph (a)(i) shall be paid to Executive's estate and
the benefits under subparagraph (a)(ii) shall continue to be
provided to Executive's dependents and beneficiaries for the
specified time period.
(b) In the event that Executive's employment is terminated
by Company for Cause or Disability or by Executive without
Good Reason or by reason of Executive's death, Executive (or
his estate) will be entitled to receive only the
compensation earned but unpaid as of the date of termination
of his employment, plus such other benefits to which he or
his estate may be entitled under Company plans.
6. Non-Competition, Confidentiality and Non-Solicitation
(a) Upon Executive's receipt of a payment pursuant to
Paragraph 5 hereof, Executive shall not, prior to attaining
age 65, or within three (3) years after the Effective Date,
become an officer, director or employee of, consultant to or
majority shareholder in any entity that competes with
Company, its subsidiaries or its successor or successors
within a 150 mile radius of Evansville, Indiana.
(b) In recognition that Executive's work for the Company
has given him and will continue to give him access to trade
secrets of and confidential information concerning Company
and SIGCORP, Executive shall not, during his employment,
disclose, or after termination thereof, use or disclose to
any other person any confidential information related to the
business of Company or any affiliate, including without
limitation, trade secrets, processes, know-how, technical
data, training manuals, list of customers, prospects or
suppliers, or other business contacts, and Executive
confirms that such information is the exclusive property of
Company. Upon termination of his employment hereunder,
Executive agrees to return to Company all property of
Company and its affiliates, if any, of which he has
possession as well as all notebooks, and other data relating
to records, customers, investigations, or management studies
or inventions made by him. In addition, any confidentiality
agreements between Executive and Company (or any predecessor
thereof) are incorporated by reference into this Agreement
and shall continue to be given full force and effect.
Notwithstanding anything to the contrary contained herein,
Executive shall be under no obligation to maintain the
confidentiality of any information which (i) is or becomes
part of the public domain through no act or omission
attributable to Executive; (ii) is required by law to be
disclosed; provided, that, if required to be disclosed by
law, Executive shall provide Company with prompt notice of
such requirement so that Company may seek an appropriate
protective order; (iii) is deemed by Company not to be
confidential information; or (iv) Executive may receive from
any third party who is unaffiliated with Company and who is
not under an obligation to maintain the confidentiality of
any such information.
(c) Executive agrees that he shall not (i) during the
course of his employment and (ii) for a period of three (3)
years after the Effective Date, either voluntarily or
involuntarily, for any reason whatsoever, directly or
indirectly, individually or on behalf of persons not now
parties to this Agreement, solicit or endeavor to solicit
any other employee, employees, consultant and/or consultants
of Company or SIGCORP to leave employment with Company or
SIGCORP in order to accept employment of any kind with any
other person, firm, partnership, or corporation.
7. Remedies.
(a) Any controversy, dispute or claim arising under this
Agreement, or any breach thereof, shall be subject to
arbitration (by a single arbitrator) conducted in
Evansville, Indiana in accordance with the then existing
rules of the American Arbitration Association, and judgment
upon any award rendered by the arbitrator may be entered by
any federal or state court having jurisdiction thereof. The
parties intend that this agreement to arbitrate be valid,
enforceable and irrevocable. Notwithstanding the foregoing,
the Executive agrees that any breach of the terms of Section
6 would result in irreparable injury and damage to the
Company for which the Company would have no adequate remedy
at law; the Executive therefore also agrees that in the
event of said breach or any threat of breach, (in addition
to the right of the Company to pursue other remedies through
arbitration, including, but not limited to, damages) the
Company shall be entitled to an immediate injunction and
restraining order to prevent such breach or threatened
breach or continued breach by Executive or any and all
persons or entities acting for or with the Executive. The
Executive further agrees that the covenants of Section 6 are
reasonable. Should a court or arbitrator determine,
however, that any portion of Section 6 is unreasonable,
either in period of time, geographical area, or otherwise,
the parties hereto agree that the covenant should be
interpreted and enforced to the maximum extent which such
court or arbitrator deems reasonable. All arbitrator's fees
and all other costs of any arbitration or judicial
proceeding hereunder shall be borne by the Company.
(b) The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and
counsel) incurred by the Executive as they become due as a
result of (i) the Executive's termination of employment
(including all such fees and expenses, if any, incurred in
contesting or disputing any such termination of employment),
(ii) the Executive's hearing before the Company Board in
connection with any proposal to terminate the Executive's
employment for Cause, or (iii) the Executive's seeking to
obtain or enforce any right or benefit provided by this
Agreement.
(c) The Executive shall be under no duty to mitigate any
amounts payable by the Company under this Agreement and such
amounts shall not be reduced or set-off by any other assets
or income of the Executive. The Company's obligation to
make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be
affected by any other circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense
or other right which the Company may have against the
Executive or others.
8. Binding Effect And Assignment
This Agreement shall inure to the benefit of and shall be
binding upon the parties hereto and their respective
executors, administrators, heirs, personal representatives,
successors and assigns, but neither this Agreement nor any
right hereunder may be assigned or transferred by either
party hereto. Notwithstanding the foregoing, the Company
shall assign this Agreement to any person or entity
succeeding to substantially all of the business and assets
of Company upon a Change in Control and upon such a Change
in Control Company shall obtain the assumption of this
Agreement by any such successor.
9. Notices
Any notice to a party required or permitted to be given
hereunder shall be in writing and shall be deemed given when
mailed by registered or certified mail to such party at such
party's address as specified below:
If to the Company, to:
Southern Indiana Gas and Electric Company
Attention: Chief Executive Officer
00-00 X.X. Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
If to Executive, to: His last known address shown on the
records of Company.
10. Severability
If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
11. Amendments
This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
12. Governing Law
This Agreement shall be construed in accordance with the law
of the State of Indiana.
13. Effect of Headings
The paragraph headings herein are for convenience only and
shall not affect the construction hereof.
14. Excise Tax Limitation
(a) Notwithstanding anything contained in this Agreement to
the contrary, to the extent that the payments and benefits
provided under this Agreement and benefits provided to, or
for the benefit of, Executive under any other plan or
agreement of Company or SIGCORP (such payments or benefits
are collectively referred to as the "Payments") would be
subject to the excise tax (the "Excise Tax") imposed under
Section 4999 of the Internal Revenue Code, the Payments
shall be reduced (but not below zero) if and to the extent
necessary so that no Payment to be made or benefit to be
provided to Executive shall be subject to the Excise Tax.
Unless Executive shall have given prior written notice
specifying a different order to Company to effectuate the
reduction of the Payments, Company shall reduce or eliminate
the Payments, by first reducing or eliminating those
payments or benefits which are not payable in cash and then
by reducing or eliminating cash payments, in each case in
reverse order beginning with payments or benefits which are
to be paid the farthest in time from the date of the
termination of Executive's employment. Any notice given by
Executive pursuant to the preceding sentence shall take
precedence over the provisions of any other plan,
arrangement or agreement governing Executive's rights and
entitlements to any benefits or compensation.
(b) An initial determination as to whether the Payments
shall be reduced and the amount of such reduction shall be
made at Company's expense by an accounting firm selected by
Company which is designated as one of the five largest
accounting firms in the United States. The accounting firm
shall provide its determination, together with detailed
supporting calculations and documentation to Company and
Executive within five (5) days of the date of the
termination of Executive's employment, or such other time as
requested by the Company or by Executive (provided Executive
reasonably believes that any of the Payments may be subject
to the Excise Tax) and if the accounting firm determines
that no Excise Tax is payable by Executive with respect to a
Payment or Payments, it shall furnish Executive with an
opinion reasonably acceptable to Executive that no Excise
Tax will be imposed with respect to any such Payment or
Payments. Within ten (10) days of the delivery of the
determination of the accounting firm to Executive, Executive
shall have the right to dispute the determination. If there
is no dispute, the determination shall be binding, final and
conclusive upon Company and Executive.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed the day and year first above
written.
SOUTHERN INDIANA GAS AND
ELECTRIC COMPANY
By: X. X. Xxxxxx
X. X. Xxxxxx
Senior Vice President
EXECUTIVE
Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
AGREED TO:
SIGCORP, INC.
By: X. X. Xxxxxx
X. X. Xxxxxx
Secretary & Treasurer
