VECTREN CORPORATION
EMPLOYMENT AGREEMENT
This AGREEMENT by and between Vectren Corporation, an Indiana
corporation (the "Company"), and Xxxxxxx X. Xxxx (the "Executive"), dated as of
the 30th day of April, 2001.
1. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to remain in the employ of the
Company subject to the terms and conditions of this Agreement, for the period
commencing on April 30, 2001 (the "Commencement Date") and ending on the third
annual anniversary of the Commencement Date (the "Employment Period"); provided,
however, that the Employment Period shall automatically be extended without
action by either party for one (1) month periods, without further action of the
parties, as of the first month anniversary of the Commencement Date and each
succeeding monthly anniversary unless the Company or the Executive shall have
served written notice to the other party prior to May 31, 2001 or prior to any
subsequent monthly anniversary, as the case may be, of its or his intention that
the Agreement shall terminate at the end of the thirty-six (36) month period
that begins with the monthly anniversary of the Commencement Date immediately
following the date of such written notice; provided, further, that the
Employment Period shall automatically terminate upon the Executive's attainment
of age sixty-five (65). A notice delivered by the Company or the Executive that
it or he does not intend to extend the term of this Agreement shall hereinafter
be referred to as a "Nonrenewal Notice." For 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.
2. Terms of Employment.
-------------------
(a) Position and Duties.
-------------------
(i) During the Employment Period, the Executive shall
serve in the position and at the location set forth on Exhibit
A hereto, or such other executive position(s) appropriate to
the Executive's training, qualifications or experience, as the
Compensation Committee of the Company may from time to time
determine which position(s) are reasonably comparable to the
Executive's initial position.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote full attention and
time during normal business hours to the business and affairs
of the Company and to use the Executive's reasonable best
efforts to perform such responsibilities in a professional
manner. It shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C)
manage personal investments, so long as such activities do not
significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been
conducted by the Executive prior to the Commencement Date, the
continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to
the Commencement Date shall not thereafter be deemed to
interfere with the performance of the Executive's
responsibilities to the Company.
(b) Compensation.
------------
(i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base
Salary") in an amount no less than the Executive's annual base
salary in effect on the Commencement Date, payable in cash. If
the Annual Base Salary is increased after the Commencement
Date, the increased Base Salary amount shall become the
minimum level of Annual Salary for the Executive. The Annual
Base Salary shall be paid no less frequently than in equal
monthly installments.
(ii) Annual Bonus. During the Employment Period, the
Executive shall have an annual bonus opportunity no less than
the applicable target award percentage in effect for the
Executive's employment level which is in effect immediately
prior to the Commencement Date or, if greater, in effect at
any time after the Commencement Date.
(iii) Long-Term Incentives. During the Employment
Period the Executive shall be eligible to participate in all
long-term incentive plans and in all Company stock incentive
plans (the "Stock Incentive Plan"), practices, policies and
programs to the extent applicable generally to other peer
executives of the Company and its affiliated companies. The
Executive's awards under the Stock Incentive Plan shall be no
less than the applicable awards in effect for the Executive's
employment level which is in effect at the Commencement Date
or, if later, at the date of his initial participation in the
Stock Incentive Plan; provided, however, that if the awards
under the Stock Incentive Plan subsequently increases, the
increased award level shall become the minimum award.
(iv) Savings and Retirement Plans. During the
Employment Period, the Executive shall be eligible to
participate in all savings and retirement plans, practices,
policies and programs to the extent applicable generally to
other peer executives of the Company and its affiliated
entities. Notwithstanding anything contained in this Agreement
to the contrary and while Executive shall become a participant
in a nonqualified supplemental retirement plan ("Vectren
SERP"), the Vectren Transaction (as defined in Section 3(f) of
this Agreement) shall not be deemed to be an Acquisition of
Control for purposes of determining the Executive benefits, if
any, under the Vectren SERP.
(v) Welfare and Other Benefit Plans. During the
Employment Period, the Executive and/or the Executive's
family, as the case may be, shall be eligible for
participation in and shall receive all benefits and executive
perquisites under welfare, fringe, change of control
protection, incentive, vacation and other similar benefit
plans, practices, policies and programs provided by the
Company and its affiliated entities (including, without
limitation, medical, prescription, dental, disability,
employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company
and its affiliated entities.
(vi) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement
for all reasonable business expenses incurred by the
Executive, in accordance with the policies of the Company.
(vii) Indemnity. The Executive shall be indemnified
by the Company against claims arising in connection with the
Executive's status as an employee, officer, director or agent
of the Company in accordance with the Company's indemnity
policies for its senior executives, subject to applicable law.
3. Termination of Employment.
-------------------------
(a) Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the
Disability (as defined below) of the Executive has occurred during the
Employment Period, it may give to the Executive written notice in
accordance with Section 9(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the thirtieth
day after receipt of such notice by the Executive (the "Disability
Commencement Date"), provided that, within the thirty day period after
such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall have the meaning set forth in the Company's
long-term disability plan.
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of
this Agreement, "Cause" shall mean:
(i) intentional gross misconduct by the
Executive damaging in a material way to the Company, or
(ii) a material breach of this Agreement, after the
Company has given the Executive notice thereof and a
reasonable opportunity to cure.
(c) Good Reason. The Executive's employment may be terminated
by the Executive for Good Reason. For purposes of this Agreement and
before the conclusion of the Window Period (as defined in Section 3(f)
below) of the Company, "Good Reason" shall mean a material breach by
the Company of this Agreement after the Executive has given the Company
notice of the breach and a reasonable opportunity to cure. After the
Window Period, "Good Reason" shall mean, without the Executive's
written consent, (i) a demotion in the Executive'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 (as defined in Section 3(f)
below); (ii) the assignment to the Executive of any duties or
responsibilities which, in his reasonable judgment, are inconsistent
with such status, position or responsibilities immediately prior to the
Change in Control; or any removal of the Executive from or failure to
reappoint or reelect him to any of such positions that the Executive
had immediately prior to the Change in Control, 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 Executive'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 Executive's last increase in base
salary) the Executive'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
Executives of the Company effected in the preceding twelve (12) months;
(iv) the relocation of the principal executive offices of the Company
or Company affiliate, whichever entity on behalf of which the Executive
performs a principal function of that entity as part of his employment
services, to a location more than fifty (50) miles outside the
Evansville, Indiana metropolitan area or, if his services are not
performed in Evansville, Indiana, the Company's requiring him to be
based at any place other than the location at which he performed his
duties immediately prior to the end of the Window Period, 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 Executive
participates immediately prior to the Change in Control, 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 Executive 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; or (viii) any request by the Company
that the Executive participate in an unlawful act or take any action
constituting a breach of the Executive's professional standard of
conduct.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason, shall be communicated by
Notice of Termination to the other party hereto given in accordance
with Section 9(b) of this Agreement. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii) if
the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date
shall be not more than thirty days after the giving of such notice).
The failure by the Executive or the Company to set forth in the Notice
of Termination any fact or circumstance which contributes to a showing
of Good Reason or Cause shall not waive any right of the Executive or
the Company, respectively, hereunder or preclude the Executive or the
Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or
by the Executive for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be,
(ii) if the Executive's employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall be the date
on which the Company notifies the Executive of such termination and
(iii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Commencement Date, as the case may be.
(f) Other Termination. The Executive's employment may be
terminated by the Executive voluntarily, without Good Reason, during a
thirty (30) day period immediately following the first annual
anniversary of a Change in Control of the Company ("Window Period").
For purposes of this Agreement, a "Change in 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 the Company (the
"Outstanding Company Common Stock") or (B) the combined voting
power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however,
that the following acquisitions shall not constitute an
acquisition of control: (A) any acquisition directly from the
Company (excluding an acquisition by virtue of the exercise of
a conversion privilege), (B) any acquisition by the Company,
(C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any
corporation controlled by the Company 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 are satisfied;
(ii) Individuals who, as of April 30, 2001,
constitute the Board of Directors of the Company (the
"Incumbent Board") cease for any reason to constitute at least
a majority of the Board of Directors of the Company (the
"Board"); provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or
nomination for election by the Company'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) Consummation 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 Company Common Stock and Outstanding Company
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 Company Stock and
Outstanding Company Voting Securities, as the case may be, (B)
no Person (excluding the Company, any employee benefit plan or
related trust of the Company, one or more of its subsidiaries
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 Company 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 the Company of
(A) a complete liquidation or dissolution of the Company or
(B) the sale or other disposition of all or substantially all
of the assets of the Company, 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 Company Common Stock and Outstanding Company
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 Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (2)
no Person (excluding the Company and any employee benefit plan
or related trust of the Company, one or more of its
subsidiaries 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 Company Common Stock or Outstanding Company 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 the Company; 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 the Company would
constitute an "Change in Control" under subsection (iii) or
(iv) of this Section 3(f) of this Agreement.
Except as provided in the last sentence of this Section and
notwithstanding anything contained in this Agreement to the contrary,
if the Executive's employment is terminated before a Change in Control
as defined in this Section 3(f) 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" 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.
4. Obligations of the Company upon Termination.
-------------------------------------------
(a) Good Reason; Other Than for Cause. If, during the
Employment Period, the Company shall terminate the Executive's
employment other than for Cause, death or Disability, or the Executive
shall terminate employment for Good Reason or, if still available under
Section 3(f), without reason during the Window Period.
(i) The Company shall pay to the Executive in a lump
sum in cash within fifteen calendar days after the Date of
Termination the aggregate of the amounts set forth in clauses
A, B and C below:
A. the sum of (1) the Executive's Annual
Base Salary through the Date of Termination to the
extent not theretofore paid, (2) the product of (x)
the greater of the highest bonus paid to or the
target bonus in effect for the Executive with respect
to the three years ending prior to the year in which
the Date of Termination occurs (the "Minimum Bonus")
and (y) a fraction, the numerator of which is the
number of days in the current calendar year through
the Date of Termination, and the denominator of which
is 365 and (3) any compensation previously deferred
by the Executive (together with any accrued interest
or earnings thereon) and any other nonqualified
benefit plan balances to the extent not theretofore
paid (the sum of the amounts described in clauses
(1), (2), and (3) shall be hereinafter referred to as
the "Accrued Obligations"); provided, however, that
for purposes of this Section 4, Base Salary shall
include any elective salary reductions in effect for
the Executive under any tax qualified or
non-qualified deferred compensation plan maintained
by the Company; and
B. the amount equal to the product of
(1) and (2) where:
(1) is
(i) if the Date of
Termination occurs coincident with
or after a Change in Control, the
lesser of (a) three or (b) the
number of years, rounded to the
nearest twelfth (1/12th) of a year,
between the Date of Termination and
the Executive's attainment of age
sixty-five (65) and
(ii) if the Date of
Termination occurs prior to a Change
in Control, the number of years
remaining in the Executive's
Employment Period at the Date of
Termination, rounded to the nearest
twelfth (1/12th) of a year,
and where
(2) is the sum of (x) the
Executive's Annual Base Salary and (y) the
Minimum Bonus; and
C. an amount equal to the excess of (a) the
actuarial equivalent of the benefit under the
Company's qualified defined benefit retirement plan
or such other qualified defined benefit pension plan
in which the Executive participates, if any (the
"Retirement Plan") (utilizing actuarial assumptions
no less favorable to the Executive than those in
effect under the Company's Retirement Plan
immediately prior to the Commencement Date), and any
excess or supplemental retirement plan in which the
Executive participates (together, the "SERP") which
the Executive would receive if the Executive's
employment continued for the period determined below:
(1) if the Date of Termination
occurs coincident with or after a Change in
Control, the lesser of (a) three or (b) the
number of years, rounded to the nearest
twelfth (1/12th) of a year, between the Date
of Termination and the Executive's
attainment of age sixty-five (65) and
(2) if the Date of Termination
occurs prior to a Change in Control, the
number of years remaining in the Executive's
Employment Period at the Date of
Termination, rounded to the nearest twelfth
(1/12th) of a year, and
assuming for this purpose that all accrued benefits
are fully vested, and, assuming that the Executive's
compensation during the duration of the Employment
Period is the sum of the Annual Base Salary and
Minimum Bonus over (b) the actuarial equivalent of
the Executive's actual benefit (paid or payable), if
any, under the Retirement Plan and the SERP as of the
Date of Termination; provided, however, that such
determination shall also take into account, to the
extent applicable, any early retirement subsidy,
based on the Executive's age, service or both, for
the additional service and age that the Executive
would have realized if he remained employed for the
period described above in this subparagraph;
(ii) any restricted stock, stock options and any
other stock awards under the Stock Incentive Plan or any other
Company sponsored plan or arrangement that were outstanding
immediately prior to the Commencement Date ("Prior Stock
Awards") shall become immediately vested and/or exercisable,
as the case may be;
(iii) for the period determined below:
(1) if the Date of Termination occurs
coincident with or after a Change in Control, the
lesser of (a) three or (b) the number of years,
rounded to the nearest twelfth (1/12th) of a year,
between the Date of Termination and the Executive's
attainment of age sixty-five (65) and
(2) if the Date of Termination occurs prior
to a Change in Control, the number of years remaining
in the Executive's Employment Period at the Date of
Termination, rounded to the nearest twelfth (1/12th)
of a year, and
or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company
shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have
been provided to them in accordance with the Welfare Plans,
programs, practices, executive perquisites and Policies
described in section 2(b)(v) of this Agreement if the
Executive's employment had not been terminated or, it more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the
Company and its affiliated companies and their families;
provided, however, that if the Executive becomes reemployed
with another employer and is eligible to receive medical or
other welfare benefits under another employer provided plan,
the medical and other welfare benefits described herein shall
be secondary to those provided under such other plan during
such applicable period of eligibility. For purposes of
determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to
such plans, practices, programs and policies, the Executive
shall be considered to have remained employed for the duration
of the Employment Period after the Date of Termination and to
have retired on the last day of such period; and
(iv) to the extent not theretofore paid or provided,
the Company shall timely pay or provide to the Executive any
other amounts or benefits required to be paid or provided or
which the Executive is entitled to receive under any plan,
program, policy or practice or contract or agreement of the
Company and its affiliated companies, excluding any severance
plan or policy except to the extent that such plan or policy
provides, in accordance with its terms, benefits with a value
in excess of the benefits payable to the Executive under this
Section 4, (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(b) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause or the Executive terminates
employment without Good Reason or, if the Window Period has not been
eliminated under Section 3(f), not during the Window Period, this
Agreement shall terminate without further obligations to the Executive
other than the obligation to pay to the Executive (x) Accrued
Obligations less the amount determined under Section 4(a)(i)A(2)
hereof, and (y) Other Benefits, in each case to the extent theretofore
unpaid.
(c) Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other than for
payment of Accrued Obligations and the timely payment or provision of
Other Benefits. Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum in cash within 30
days of the Date of Termination.
(d) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of Other Benefits, the term
Other Benefits as utilized in this Section 4(d) shall include, and the
Executive shall be entitled after the Disability Commencement Date to
receive, disability and other benefits as in effect generally with
respect to other peer executives of the Company and its affiliated
companies and their families.
5. Confidential Information; Noncompetition.
----------------------------------------
(a) The Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by the
Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the
Executive shall not, without the prior written consent of the Company
or as may otherwise be required by law or legal process (provided the
Company has been given notice of and opportunity to challenge or limit
the scope of disclosure purportedly so required), communicate or
divulge any such information, knowledge or data to anyone other than
the Company and those designated by it. In addition, Executive shall
not solicit employees of the Company for at least a one (1) year period
beginning on the Date of Termination.
(b) In the event of a termination of the Executive by the
Company for Cause or by the Executive before a Change in Control and
without Good Reason, until the second anniversary of the Executive's
Date of Termination, the Executive will not directly or indirectly,
own, manage, operate, control or participate in the ownership,
management, operation or control of, or be connected as an officer,
employee, partner, director or otherwise with, or have any financial
interest in, any business which competes, or that is planning to
compete, with the utility business of the Company or any of its
affiliates or any other business in which the Company or any of its
affiliates are engaged immediately prior to the Date of Termination in:
(i) Indiana;
(ii) Ohio, Michigan, Illinois or Kentucky; and
(iii) the United States.
The parties expressly agree that the terms of this limited
non-competition provision under this section are reasonable,
enforceable, and necessary to protect the Company's interests, and are
valid and enforceable. In the unlikely event, however, that a court of
competent jurisdiction were to determine that any portion of this
limited non-competition provision is unenforceable, then the parties
agree that the remainder of the limited non-competition provision shall
remain valid and enforceable to the maximum extent possible.
(c) Specific Enforcement/Injunctive Relief. The Executive
agrees that it would be difficult to measure damages to the Company
from any breach of the covenants contained in Subsection (b) above, but
that such damages from any breach would be great, incalculable and
irremediable, and that damages would be an inadequate remedy.
Accordingly, the Executive agrees that the Company may have specific
performance of the terms of this Agreement in any court permitted by
this Agreement. The parties agree however, that specific performance
and the "add back" remedies described above shall not be the exclusive
remedies, and the Company may enforce any other remedy or remedies
available to it either in law or in equity including, but not limited
to, temporary, preliminary, and/or permanent injunctive relief.
6. Full Settlement. 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 set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").
7. Successors.
----------
(a) This Agreement is personal to the Executive and without
the prior written consent of the Company shall not he assignable by the
Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
8. Certain Additional Payments by the Company.
------------------------------------------
(a) Anything in this Agreement to the contrary or any
termination of this Agreement notwithstanding and except as provided in
subsection (e) of this Section 8, in the event it shall be determined
that any payment or distribution or benefit made or provided by the
Company or its affiliates to or for the benefit of the Executive
whether pursuant to this Agreement or otherwise, and determined without
regard to any additional payments required under this Section 8 (a
"Payment") would be subject to the excise tax imposed by Section 4999
of the Code or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive
an additional payment (a "Gross- Up Payment") in an amount such that
after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, including
whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination and whether subsection (e) is applicable, shall be made
by the Company's independent auditor (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Company and
the Executive within 15 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is
requested by the Company. All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 8, shall be paid by the Company to
the Executive within five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be
binding upon the Company and the Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time
of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the
Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 8(c) and the
Executive thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would
require the payment by the company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than
ten business days after the Executive is informed in writing of such
claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing
from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 8(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct the Executive to pay the tax claimed
and xxx for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to
payment of taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 8(c), the Executive becomes
entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company's complying with the
requirements of Section 8(c)) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 8(c), a
determination is made that the Executive shall not be entitled to any
refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the
amount of Gross-Up Payment required to he paid.
(e) Notwithstanding anything contained in this Section 8 to
the contrary, if the Executive's net after tax benefit for the payments
made under this Agreement, including the Gross-Up Payment and after
taking into account the applicable income and excise taxes (as
determined in accordance with subsection (b) of this Section 8), would
result in a net after tax benefit no greater than one hundred and five
percent (105%) of the amount payable to the Executive assuming the
Executive's payments under this Agreement were limited to the maximum
amount that could be payable without application of the excise tax
imposed by Section 4999 of the Code (the "Section 4999 Limit"), the
Executive's payments shall be limited to the Section 4999 Limit.
9. Miscellaneous.
-------------
(a) This Agreement shall be governed by and construed in
accordance with the laws of Indiana, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force, or effect. This Agreement
may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be
in writing and shall he given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
-------------------
Xxxxxxx X. Xxxx
Vectren Corporation
00 X.X. Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
If to the Company:
-----------------
Attention: Xxxx Xxxxxxxxxx, Chief Executive Officer
Vectren Corporation
00 X.X. Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee,
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) On and after the Commencement Date, this Agreement shall
supersede any other agreement between the parties with respect to the
subject matter hereof and any such agreement shall be deemed terminated
without any remaining obligations of either party thereunder.
10. Effective Date. This Agreement is effective as of April 30, 2001.
Furthermore, this Agreement supersedes the employment agreement between
Xxxxxxx X. Xxxx and Vectren Corporation dated March 31, 2000. Executive hereby
acknowledges that he has received sufficient consideration for substitution of
this Agreement for the prior employment agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ Xxxxxxx X. Xxxx
------------------------------------
Xxxxxxx X. Xxxx, the Executive
Date: May 24, 2001
Vectren Corporation
By/s/ Xxxxxx X. Xxxx XX
-----------------------------------
Xxxxxx X. Xxxx XX
Chairman of Compensation Committee
of Board of Directors
Date: June 26, 2001
EXHIBIT A
NAME POSITION LOCATION
-------- ------------ ----------
Xxxxxxx X. Xxxx Senior Vice President Evansville
