TERMINATION BENEFITS AGREEMENT
This Agreement, dated as of July 29, 1994, by and
among INDIANA ENERGY, INC., an Indiana corporation having
its principal executive offices at 0000 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000 ("ENERGY"), INDIANA GAS
COMPANY, INC., an Indiana corporation having its principal
executive offices at 0000 Xxxxx Xxxxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxx 00000 ("INDIANA GAS") (both ENERGY and
INDIANA GAS being collectively referred to herein as the
"Company"), and XXXXXXX X. XXXXXX, an Indiana resident whose
mailing address is 0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxx 00000-0000 (the "Officer").
RECITALS
The following facts are true:
A. The Officer is serving the Company as a key
officer, and is expected to continue to make a major
contribution to the profitability, growth, and financial
strength of the Company.
B. The Company considers the continued services of the
Officer to be in the best interests of the Company and its
shareholders, and desires to assure itself of the
availability of such continued services in the future on an
objective and impartial basis and without distraction or
conflict of interest in the event of an attempt to obtain
control of the Company.
C. The Officer is willing to remain in the employ of
the Company upon the understanding that the Company will
provide him with income security upon the terms and subject
to the conditions contained herein if his employment is
terminated by the Company without cause or if he voluntarily
terminates his employment for good reason.
A G R E E M E N T
In consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the Company
and the Officer agree as follows:
1. Undertaking. The Company agrees to pay to the
Officer the termination benefits specified in paragraph 2
hereof if (a) control of ENERGY is acquired (as defined in
paragraph 3(a) hereof) during the term of this Agreement (as
described in paragraph S hereof) and (b) within three (3)
years after the acquisition of control occurs (i) the
Company terminates the employment of the Officer for any
reason other than Cause (as defined in paragraph 3(b)
hereof), death, the Officer's attainment of age sixty-five
(65) or total and permanent disability, or (ii) the Officer
voluntarily terminates his employment for Good Reason (as
defined in paragraph 3(c) hereof) or without reason during
the Window Period (as defined in paragraph 3(d) hereof).
2. Termination Benefits. If the Officer is entitled to
termination benefits pursuant to paragraph 1 hereof, the
Company agrees to pay to the Officer as termination benefits
in a lump-sum payment within five (5) calendar days of the
termination of the Officer's employment an amount equal to
the Officer's annual compensation (as determined consistent
with the provisions of Section 280G(d)(l) of the Internal
Revenue Code of 1986, as amended (the "Code") in effect on
July 29, 1994) payable by the Company which was includable
in the gross income of the Officer for the most recent
calendar year ending coincident with or immediately before
the date on which control of the Company is acquired. For
the purposes of this Agreement, employment and compensation
paid by any direct or indirect subsidiary of the Company
will be deemed to be employment and compensation paid by the
Company.
3. Definitions.
(a) As used in this Agreement, the "acquisition of control"
means:
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
twenty percent (20%) or more of either (A) the then
outstanding shares of common stock of ENERGY (the
"Outstanding ENERGY Common Stock") or (B) the combined
voting power of the then outstanding voting securities of
ENERGY entitled to vote generally in the election of
directors (the "Outstanding ENERGY Voting Securities");
provided, however, that the following acquisitions shall not
constitute an acquisition of control: (A) any acquisition
directly from ENERGY (excluding an acquisition by virtue of
the exercise of a conversion privilege), (B) any acquisition
by ENERGY, (C) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by ENERGY,
INDIANA GAS or any corporation controlled by ENERGY or (D)
any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions
described in clauses (A), (B) and (C) of subsection (iii) of
this paragraph 3(a) are satisfied;
(ii) Individuals who, as of the date hereof,
constitute the Board of Directors of ENERGY (the "Incumbent
Board") cease for any reason to constitute at least a
majority of the Board of Directors of ENERGY (the "Board");
provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination
for election by ENERGY's shareholders, was approved by a
vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A 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; or
(iii) Approval by the shareholders of ENERGY of a
reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or
consolidation, (A) more than sixty percent (60%) of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger
or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
ENERGY Common Stock and Outstanding ENERGY Voting Securities
immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as their
ownership, immediately prior to such reorganization, merger
or consolidation, of the Outstanding ENERGY Stock and
Outstanding ENERGY Voting Securities, as the case may be,
(B) no Person (excluding ENERGY, any employee benefit plan
or related trust of ENERGY, INDIANA GAS or such corporation
resulting from such reorganization, merger or consolidation
and any Person beneficially owning, immediately prior to
such reorganization, merger or consolidation and any Person
beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or
indirectly, twenty percent (20%) or more of the Outstanding
ENERGY Common Stock or Outstanding Voting Securities, as the
case may be) beneficially owns, directly or indirectly,
twenty percent (20%) or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation
or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors and (C) at least a majority of the
members of the board of directors of the corporation
resulting from such reorganization, merger or consolidation
were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such
reorganization, merger or consolidation;
(iv) Approval by the shareholders of ENERGY of (A) a
complete liquidation or dissolution of ENERGY or (B) the
sale or other disposition of all or substantially all of the
assets of ENERGY, other than to a corporation, with respect
to which following such sale or other disposition (1) more
than sixty percent (60%) of, respectively, the then
outstanding shares of common stock of such corporation and
the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding ENERGY Common Stock and
Outstanding ENERGY Voting Securities immediately prior to
such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding ENERGY Common
Stock and Outstanding ENERGY Voting Securities, as the case
may be, (2) no Person (excluding ENERGY and any employee
benefit plan or related trust of ENERGY, INDIANA GAS or such
corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or
indirectly, twenty percent (20%) or more of the Outstanding
ENERGY Common Stock or Outstanding ENERGY Voting Securities,
as the case may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of, respectively,
the then outstanding shares of common stock of such
corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (3) at
least a majority of the members of the board of directors of
such corporation were members of the Incumbent Board at the
time of the execution of the initial agreement or action of
the Board providing for such sale or other disposition of
assets of ENERGY; or
(v) The closing, as defined in the documents relating
to, or as evidenced by a certificate of any state or federal
governmental authority in connection with, a transaction
approval of which by the shareholders of ENERGY would
constitute an "acquisition of control" under subsection
(iii) or (iv) of this section 3(a) of this Agreement.
Notwithstanding anything contained in this Agreement
to the contrary, if the Officer's employment is terminated
before an "acquisition of control" as defined in this
section 3(a) and the Officer 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 an "acquisition of control" and who
effectuates an "acquisition of control" (a "Third Party") or
(ii) otherwise occurred in connection with, or in
anticipation of, an "acquisition of control" which actually
occurs, then for all purposes of this Agreement, the date of
an "acquisition of control" with respect to the Officer
shall mean the date immediately prior to the date of such
termination of the Officer's employment.
(b) As used in this Agreement, the term "Cause" means
fraud, dishonesty, theft of corporate assets, or other gross
misconduct by the Officer. Notwithstanding the foregoing,
the Officer shall not be deemed to have been terminated for
cause unless and until there shall have been delivered to
him a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the entire membership of
the Board at a meeting of the Board called and held for the
purpose (after reasonable notice to him and an opportunity
for him, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board
the Officer was guilty of conduct set forth above in the
first sentence of the subsection and specifying the
particulars thereof in detail.
(c) As used in this Agreement, the term "Good
Reason" means, without the Officer's written consent, (i) a
demotion in the Officer's status, position or
responsibilities which, in his reasonable judgment, does not
represent a promotion from his status, position or
responsibilities as in effect immediately prior to the
change in control; (ii) the assignment to the Officer of any
duties or responsibilities which, in his reasonable
judgment, are inconsistent with such status, position or
responsibilities; or any removal of the Officer from or
failure to reappoint or reelect him to any of such
positions, except in connection with the termination of his
employment for total and permanent disability, death or
Cause or by him other than for Good Reason; (iii) a
reduction by the Company in the Officer's base salary as in
effect on the date hereof or as the same may be increased
from time to time during the term of this Agreement or the
Company's failure to increase (within twelve (12) months of
the Officer's last increase in base salary) the Officer's
base salary after a change in control in an amount which at
least equals, on a percentage basis, the average percentage
increase in base salary for all executive and senior
officers of the Company effected in the preceding twelve
(12) months; (iv) the relocation of the principal executive
offices of ENERGY or INDIANA GAS, whichever entity on behalf
of which the Officer performs a principal function of that
entity as part of his employment services, to a location
outside the Indianapolis, Indiana metropolitan area or the
Company's requiring him to be based at any place other than
the location at which he performed his duties prior to a
change in control, except for required travel on the
Company's business to an extent substantially consistent
with his business travel obligations at the time of a change
in control; (v) the failure by the Company to continue in
effect any incentive, bonus or other compensation plan in
which the Officer participates, including but not limited to
the Company's stock option and restricted stock plans, if
any, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan), with which he has
consented, has been made with respect to such plan in
connection with the change in control, or the failure by the
Company to continue his participation therein, or any action
by the Company which would directly or indirectly materially
reduce his participation therein; (vi) the failure by the
Company to continue to provide the Officer with benefits
substantially similar to those enjoyed by him or to which he
was entitled under any of the Company's pension, profit
sharing, life insurance, medical, dental, health and
accident, or disability plans in which he was participating
at the time of a change in control, the taking of any action
by the Company which would directly or indirectly materially
reduce any of such benefits or deprive him of any material
fringe benefit enjoyed by him or to which he was entitled at
the time of the change in control, or the failure by the
Company to provide him with the number of paid vacation and
sick leave days to which he is entitled on the basis of
years of service with the Company in accordance with the
Company's normal vacation policy in effect on the date
hereof; (vii) the failure of the Company to obtain a
satisfactory agreement from any successor or assign of the
Company to assume and agree to perform this Agreement;
(viii) any purported termination of the Officer's employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of paragraph 4(c) hereof (and,
if applicable, paragraph 3(b) hereof); and for purposes of
this Agreement, no such purported termination shall be
effective; or (ix) any request by the Company that the
Officer participate in an unlawful act or take any action
constituting a breach of the Officer's professional standard
of conduct.
Notwithstanding anything in this paragraph 3(c) to the
contrary, the Officer's right to terminate his employment
pursuant to this paragraph 3(c) shall not be affected by his
incapacity due to physical or mental illness.
(d) As used in this Agreement, the "Window Period"
shall mean the 30-day period immediately following the first
anniversary of the acquisition of control.
4. Additional Provisions.
(a) Enforcement of Agreement. The Company is aware
that upon the occurrence of a change in control the Board of
Directors or a shareholder of the Company may then cause or
attempt to cause the Company to refuse to comply with its
obligations under this Agreement, or may cause or attempt to
cause the Company to institute, or may institute, litigation
seeking to have this Agreement declared unenforceable, or
may take or attempt to take other action to deny the Officer
the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement could be
frustrated. It is the intent of the Company that the Officer
not be required to incur the expenses associated with the
enforcement of his rights under this Agreement by litigation
or other legal action, nor be bound to negotiate any
settlement of his rights hereunder, because the cost and
expense of such legal action or settlement would
substantially detract from the benefits intended to be
extended to the Officer hereunder. Accordingly, if following
a change in control it should appear to the Officer that the
Company has failed to comply with any of its obligations
under this Agreement or in the event that the Company or any
other person takes any action to declare this Agreement void
or unenforceable, or institutes any litigation or other
legal action designed to deny, diminish or to recover from
the Officer the benefits entitled to be provided to the
Officer hereunder, and that the Officer has complied with
all of his obligations under this Agreement, the Company
irrevocably authorizes the Officer from time to time to
retain counsel of his choice, at the expense of the Company
as provided in this paragraph 4(a), to represent the Officer
in connection with the initiation or defense of any
litigation or other legal action, whether such action is by
or against the Company or any director, officer,
shareholder, or other person affiliated with the Company, in
any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such
counsel, the Company irrevocably consents to the Officer
entering into an attorney-client relationship with such
counsel, and in that connection the Company and the Officer
agree that a confidential relationship shall exist between
the Officer and such counsel. The reasonable fees and
expenses of counsel selected from time to time by the
Officer as hereinabove provided shall be paid or reimbursed
to the Officer by the Company on a regular, periodic basis
upon presentation by the Officer of a statement or
statements prepared by such counsel in accordance with its
customary practices, up to a maximum aggregate amount of
$500,000. Any legal expenses incurred by the Company by
reason of any dispute between the parties as to
enforceability of or the terms contained in this Agreement,
notwithstanding the outcome of any such dispute, shall be
the sole responsibility of the Company, and the Company
shall not take any action to seek reimbursement from the
Officer for such expenses.
(b) Severance Pay: No Duty to Mitigate. The amounts
payable to the Officer under this Agreement shall not be
treated as damages but as severance compensation to which
the Officer is entitled by reason of termination of his
employment in the circumstances contemplated by this
Agreement. The Company shall not be entitled to set off
against the amounts payable to the Officer any amounts
earned by the Officer in other employment after termination
of his employment with the Company, or any amounts which
might have been earned by the Officer in other employment
had he sought such other employment.
(c) Notice of Termination. Any purported termination
by the Company or by the Officer for Good Reason or by the
Officer without any reason during the Window Period shall be
communicated by written Notice of Termination to the other
party hereto in accordance with paragraph 4(j) hereof. For
purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to
provide a basis for termination of his employment under the
provision so indicated. For purposes of this Agreement, no
such purported termination shall be effective without such
Notice of Termination.
(d) Internal Revenue Code. Notwithstanding anything in
this Agreement to the contrary (other than this paragraph),
in the event that Xxxxxx Xxxxxxxx & Co. (or its successor)
determines that any payment by the Company to or for the
benefit of the Officer pursuant to the terms of this
Agreement would be nondeductible by the Company for federal
income tax purposes because of Section 280G of the Code,
then the amount payable to or for the benefit of the Officer
pursuant to this Agreement shall be reduced (but not below
zero) to the maximum amount payable without causing the
payment to be nondeductible by the Company because of
Section 280G of the Code; provided, however, that
notwithstanding the preceding clause of this sentence, if
Section 280G of the Code is amended after the date on which
this Agreement has been executed and if the amendment has
the effect of reducing the amount of deductible payments
that may be made by the Company to the Executive under
Section 280G of the Code to an amount less than what would
have been deductible by the Company under Section 280G of
the Code as in effect on July 29, 1994, the maximum amount
payable to the Executive under this paragraph 1(d) shall be
determined without regard to any amendment to Section 280G
of the Code; provided, further, that if solely by reason of
any amendment to Section 280G of the Code an excise tax is
imposed on the Executive under Section 4999 of the Code as a
result of payments made under this Agreement, the Company
shall increase the benefit payable to the Executive under
this Agreement by an amount ("Make Whole Payment") which,
after taking into account the additional federal, state and
local income taxes or the amount (including the Code Section
4999 excise tax that would be imposed on the Make Whole
Payment), would reimburse the Executive fully for the Code
Section 4999 tax that is imposed on the other payments made
hereunder and put the Executive in same net after-tax
position with respect to this Agreement that he would have
been but for the excise tax. Such determination by Xxxxxx
Xxxxxxxx & Co. (or its successor) shall be conclusive and
binding upon the parties.
(e) Assignment. This Agreement shall inure to the
benefit of and 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, any beneficiary, or any
other person, nor be subject to alienation, anticipation,
sale, pledge, encumbrance, execution, levy, or other legal
process of any kind against the Officer, his beneficiary or
any other person. Notwithstanding the foregoing, the Company
shall assign this Agreement to any corporation or other
business entity succeeding to substantially all of the
business and assets of the Company by merger, consolidation,
sale of assets, or otherwise and shall obtain the assumption
of this Agreement by such successor.
(f) Amendment. This Agreement shall not be amended,
modified, or supplemented without the written agreement of
the parties at the time of such amendment, modification, or
supplement.
(g) Governing Law. This Agreement shall be governed by
and subject to the laws of the State of Indiana.
(h) Severability. The invalidity or unenforceability
of any particular provision of this Agreement shall not
affect the other provisions, and this Agreement shall be
construed in all respects as if such invalid or
unenforceable provision had not been contained herein.
(i) Captions. The captions in this Agreement are for
convenience and identification purposes only, are not an
integral part of this Agreement, and are not to be
considered in the interpretation of any part hereof.
(j) Notices. Except as otherwise specifically provided
in this Agreement, all notices and other communications
hereunder shall be in writing and shall be deemed to have
been duly given if delivered in person or sent by registered
or certified mail, postage prepaid, addressed as set forth
above, or to such other address as shall be furnished in
writing by any party to the others.
(k) Waivers. Except as otherwise specifically provided
in this Agreement, no waiver by either party hereto of any
breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other
party shall be deemed to be a valid waiver unless such
waiver is in writing or, even if in writing, shall be deemed
to be a waiver of a subsequent breach of such condition or
provision or a waiver of a similar or dissimilar provision
or condition at the same or at any prior or subsequent
time.
5. Term of this Agreement. This Agreement shall remain
in effect until October 1, 1999 or until the expiration of
any extension thereof. The term of this Agreement shall be
automatically extended for one (1) year periods without
further action of the parties as of October 1, 1995 and each
succeeding October 1 thereafter, unless ENERGY shall have
served written notice to the Officer prior to October 1,
1995 or prior to October 1 of each succeeding year, as the
case may be, of its intention that the Agreement shall
terminate at the end of the five (5) year period that begins
with the October 1 following the date of such written
notice.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
INDIANA ENERGY, INC.
By: /s/O. N. Xxxxxxx III
O. N. Xxxxxxx III, as
Chairman of the Compensation Committee
Attest:
/s/Xxxxxx X. Xxxxxxxxx
Secretary or Assistant Secretary
INDIANA GAS COMPANY, INC.
By: /s/Xxxxxxxx X. Xxxxxx
President or Vice President
Attest:
/s/Xxxxxx X. Xxxxxxxxx
Secretary or Assistant Secretary
Officer
/s/Xxxxxxx X. Xxxxxx
XXXXXXX X. XXXXXX
