RETIREMENT AGREEMENT
This Retirement Agreement (this "Agreement") is entered into on this
31st day of May, 2001 between J. Xxxxxx Xxxxx ("Executive") and Vectren
Corporation ("Vectren").
WHEREAS, Executive and Vectren are parties to an Employment Agreement
dated as of March 31, 2000 (the "Employment Agreement");
WHEREAS, Executive and Vectren desire that Executive retire from
employment with Vectren prior to the expiration of the Employment Agreement; and
WHEREAS, Executive and Vectren have negotiated the following terms and
conditions for Executive's retirement.
NOW THEREFORE, in consideration of the foregoing premises and the
agreement contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows.
1. Retirement. Executive hereby tenders Executive's voluntarily
retirement from Vectren effective 11:59 p.m. Central Standard Time May 31, 2001
(the "Retirement Date"). Until that time, Executive will continue to be employed
by Vectren pursuant to the terms of the Employment Agreement. The Employment
Agreement will terminate as of the Retirement Date and Executive acknowledges
and agrees that as of the Retirement Date, Vectren shall have no further
obligations to Executive under the Employment Agreement.
2. Deferral Compensation Payment. Vectren agrees to pay Executive a
post-retirement deferral compensation payment in the gross sum of $2,097,455.50,
less all applicable payroll withholdings, including all state, local, and
federal taxes (the "Retirement Payment"). The Retirement Payment shall be
reported by Vectren on the appropriate W-2 form and shall be made as follows:
(i) $116,745.52 in one lump sum; and (ii) $1,980,700.00 shall be deferred and
payable in accordance with the schedule attached hereto as Exhibit A. Such
deferred amount shall be credited to a bookkeeping account and credited with
interest in the manner described below. Vectren is under no obligation to fund
the bookkeeping account. The deferred amount shall be paid out of the general
assets of Vectren and Executive shall be an unsecured general creditor of
Vectren with respect to the deferred amounts. The unpaid deferred amount shall
earn interest at the rate of eight percent (8%) per annum. Accrued interest on
any unpaid deferred amount shall be paid along with each payment. If Executive
dies before payment of all of the deferred amounts, the remaining payments shall
be made in accordance with the terms of this Agreement to Executive's
beneficiary as designated to Vectren and if no beneficiary has been designated
to Executive's estate.
No Retirement Payment shall be made until after the effective date of
this Agreement (as determined pursuant to Section 8). All payments shall be
mailed to Executive's address listed in Vectren's records within 30 days
following the payment due date.
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Executive hereby elects not to have Federal income tax withheld from
Executive's distributions under this Agreement. Executive acknowledges and
agrees that Executive is liable for payment of Federal income tax on the taxable
portion of any distribution to Executive and Executive may be subject to tax
penalties under the estimated tax payment rules if Executive's payments of
estimated tax are not adequate. Executive's election not to have Federal income
tax withheld from Executive's distributions will remain in effect until
Executive revokes such election by providing notice of such revocation to
Vectren in accordance with this Agreement at least 60 days prior to the
effective date of such revocation.
3. Welfare Benefits. During the Term (as defined in Section 12),
Executive shall continue to be eligible to participate in the health insurance
plan, the dental insurance plan, the vision insurance plan, the accidental death
and disability plan (in the amount of Executive's most recent base salary) and
the executive long term disability plan (collectively the "Welfare Benefit
Plans") of Vectren. Such participation by Executive during the Term shall be
governed by the terms and conditions of the respective Welfare Benefit Plan, as
such terms and conditions are amended, restated, canceled or replaced from time
to time. During the Term, Vectren and Executive shall continue to pay their
respective portions of the premium payments under such Welfare Benefit Plans in
accordance with the terms of the respective Welfare Benefit Plan, and Executive
shall be billed quarterly for Executive's portion of such premium. After the
Term until Executive is age 65, Executive's ability to continue to participate
in Vectren's health insurance plan shall be governed by the terms of such health
insurance plan as in effect at that time and thereafter. After age 65 and until
the death of Executive, during such time as Executive is covered by Medicare,
Vectren will reimburse Executive for Executive's cost of Medicare Part B and
Executive will be eligible to participate in Vectren's Medicare supplement plan.
After the Term, Executive's ability to continue to participate in Vectren's
executive long term disability plan shall be governed by the terms of such
executive long term disability plan as in effect at that time and thereafter. If
Executive elects to continue the executive long term disability plan, then (i)
Executive shall provide Vectren with written notice of such election on or
before the end of the Term, (ii) Executive shall become responsible for all
premium payments under the long term disability plan on and after the end of the
Term, and (iii) Executive shall be responsible for and pay all taxes associated
with the election to continue the long term disability plan by Executive.
Nothing in this Agreement shall in any way limit Vectren's ability to amend,
restate, cancel or replace any such Welfare Benefit Plan and the Medicare
supplement plan in Vectren's sole discretion.
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4. Term Life Insurance. During the Term, Executive shall be eligible to
receive term life insurance in the amount of two times Executive's most recent
base salary. Executive acknowledges and agrees to provide Vectren and the
insurance provider with such information as is deemed necessary to issue a term
life insurance policy on Executive including, but not limited to, a physical
examination. During the Term, Vectren shall pay all premiums for such term life
insurance. Upon expiration or earlier termination of the Term, Executive shall
have the option to assume the term life insurance policy. If Executive elects to
assume the term life insurance policy then (i) Executive shall provide Vectren
with written notice of such assumption on or before the end of the Term, (ii)
Executive shall become responsible for all premium payments under the term life
insurance policy on and after the end of the Term, and (iii) Executive shall pay
any and all taxes associated with the assumption of such term life insurance
policy.
5. Acknowledgment of Retirement Status. Executive shall be deemed
"retired" pursuant to the terms of the Vectren Corporation Executive Restricted
Stock Plan ("Restricted Stock Plan"). Vectren acknowledges that the Chief
Executive Officer (the "CEO") has consented to the early retirement of Executive
under the Restricted Stock Plan. Executive acknowledges and agrees that as a
result of Executive's retirement and the receipt of consent of such early
retirement from the CEO, Executive is entitled to 3,356 restricted shares from
the grant of restricted shares made to Executive as of October 1, 2000 under the
Restricted Stock Plan and the balance of the restricted shares granted as of
such date are forfeited. Executive further acknowledges and agrees that the
restricted shares to which Executive is entitled remain subject to the terms and
conditions of the Restricted Stock Plan including, but not limited to, the
restrictions and forfeiture provisions contained in the Restricted Stock Plan.
Notwithstanding anything contained herein to the contrary, Executive's rights
under the Vectren Corporation Nonqualified Deferred Compensation Plan (the
"Deferred Compensation Plan") and the Southern Indiana Gas & Electric Company
1994 Stock Option Plan (the "SIGECO Option Plan") shall be governed by the
provisions set forth in the Deferred Compensation Plan and the SIGECO Option
Plan and not this Agreement.
6. General Release and Waiver.
(a) Executive hereby agrees that in order to receive the considerations set
forth in this Agreement, and for other good and valuable consideration including
the Retirement Payment, the receipt and adequacy of which is hereby
acknowledged, Executive was required to sign this Agreement and that Executive,
for Executive and Executive's heirs, representatives, successors and assigns,
hereby WAIVES, RELEASES and FOREVER DISCHARGES Vectren, Vectren's current and
former affiliates and their predecessors and successors and their respective
officers, directors, shareholders, employees, and agents, both individually and
in their official capacities, from any claim, demand, action, cause of action,
or right, known or unknown, which arose at any time from the beginning of time
to the date Executive executes this Agreement relating to, arising out of, or in
any way connected with Executive's employment, the cessation of that employment,
or the compensation or benefits payable in connection with that employment or
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the cessation of that employment including, but not limited to, any claim,
demand, action, cause of action or right based on but not limited to: (i) the
Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. * 621, et
seq. and the Older Workers' Benefit Protection Act; (ii) Title VII of the Civil
Rights Act of 1964, as amended, 42 U.S.C. * 2000(e), et seq.; (iii) the
Americans With Disabilities Act of 1990, as amended, 42 U.S.C. * 12101, et seq.;
(iv) the Family & Medical Leave Act of 1993, 29 U.S.C. * 2601, et seq.; (v) the
Indiana Civil Rights Law, IND. CODE 22-9-1, et seq.; (vi) the Fair Labor
Standards Act, 29 U.S.C. * 201, et seq.; (vii) any existing or potential
entitlement or benefit under any Vectren program or plan; (viii) any agreement,
contract, or representation, whether oral or written, express or implied; and
(ix) any other federal, state, or local law, whether emanating or arising from
statute, constitution, executive order, regulation, common law, or other source
including, but not limited to, any action sounding in tort or contract, any
action relating to age, sex, disability, racial or other discrimination or any
action for wrongful discharge.
(b) Executive does not hereby waive or release (i) any right
or claim that may arise after the date of this Agreement or (ii) any
non-forfeitable rights or benefits the Executive has accrued under any
tax qualified retirement plan.
(c) Executive is specifically agreeing that Executive is
WAIVING, RELEASING and FOREVER DISCHARGING any claim, demand, action,
cause of action or right arising out of or relating to the termination
of Executive's employment, recognizing that the decision to terminate
employment is being made now, even though actual termination of
employment is taking effect later, and that the termination will take
place as provided in this Agreement without any further action on the
part of either Executive or Vectren.
7. Confidentiality and Non-Competition.
(a) Confidentiality. Executive agrees to hold in a fiduciary
capacity for the benefit of Vectren all secret or confidential
information, knowledge or data relating to Vectren or any of its
affiliated companies, and their respective businesses, which shall have
been obtained by Executive during Executive's employment by Vectren or
any of its affiliated companies and which shall not be or become public
knowledge (other than by acts by Executive or representatives of
Executive in violation of this Agreement). After the Retirement Date,
Executive shall not, without the prior written consent of Vectren or as
may otherwise be required by law or legal process (provided Vectren 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 Vectren and those
designated by it. In addition, Executive shall not solicit employees of
Vectren for the period beginning on the Retirement Date and ending on
the date one (1) year after the Term (as hereinafter defined).
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(b) Non-Compete. From the Retirement Date until the end of the
second year following the end of the Term, 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 Vectren or any of its
affiliates or any other business in which Vectren or any of its
affiliates are engaged immediately prior to the Retirement Date or
during the Term in: (i) Indiana; (ii) Ohio, (iii) Michigan, (iv)
Illinois; (v) Kentucky; and (vi) 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 Vectren'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) Damages; Specific Enforcement/Injunctive Relief. Executive
agrees that it would be difficult to measure damages to Vectren from
any breach of the covenants contained in subsections (a) and (b) above,
but that such damages from any breach would be great, incalculable and
irremediable, and that damages would be an inadequate remedy.
Accordingly, Executive agrees that upon a breach of any of the
covenants contained in subsections (a) and (b) above (i) Vectren may
have specific performance of the terms of this Agreement in any court
permitted by this Agreement and (ii) Executive shall immediately return
any payment paid pursuant to this Agreement including, but not limited
to, the Retirement Payment and waive any future payment pursuant to
this Agreement including, but not limited to, the Retirement Payment.
The parties agree, however, that specific performance, the return and
waiver of payments and the other remedies described herein shall not be
the exclusive remedies, and Vectren 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.
8. Return of Property. Immediately upon the request of Vectren,
Executive agrees to return to the custody of Vectren all Vectren property and
proprietary information, as well as all copies thereof, that are in Executive's
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possession, custody or control. This includes all tangible personal property
(such as keys, credit cards, computers, hand held devices, cell phones, etc.)
and all writings, contracts, records, files, tape recordings, correspondence,
communications, summaries, data, notes, memoranda, diskettes, or any other
source containing information which relates to or references Vectren and which
was provided by Vectren or obtained as a result of Executive's employment with
Vectren.
9. Covenant Not to Xxx. Executive agrees that Executive will not
commence any legal action or lawsuit, or otherwise assert any legal claim, in
violation of the waiver and release contained in this Agreement or on any claim
released in this Agreement, except to the extent such right to bring a legal
action may not be waived by law. Executive agrees that if Executive violates
this covenant not to xxx or this Agreement (a) that Executive's lawsuit is null
and void, and must be summarily withdrawn and/or dismissed; (b) that Executive
shall pay all costs, expenses, and damages incurred by Vectren in defending
against and as a result of Executive's lawsuit, including reasonable attorneys'
fees; (c) that Executive shall pay all costs and expenses incurred by Vectren in
seeking enforcement of this Agreement; and (d) that Executive shall immediately
return any payment paid pursuant to this Agreement including, but not limited
to, the Retirement Payment and waive any future payment pursuant to this
Agreement including, but not limited to, the Retirement Payment.
10. Knowledge and Understanding. Executive acknowledges that before
Executive signed this Agreement: (a) Executive was advised to consult with an
attorney prior to executing this Agreement, (b) Executive had a period of
twenty-one (21) days within which to consider this Agreement; and (c) Executive
is fully aware of Executive's rights, and has carefully read and fully
understands all provisions of this Agreement. Executive further acknowledges
that this Agreement has been signed freely, knowingly, and voluntarily and that
Executive has not been threatened or coerced into signing this Agreement.
Executive further acknowledges that to the extent Executive has signed this
Agreement less than twenty-one (21) days after it was furnished to Executive,
Executive does so for Executive's own personal reasons and with an understanding
that Executive could have taken the full twenty-one (21) days to consider this
Agreement.
11. Revocation and Effective Date. For a period of seven (7) days
following Executive's execution of this Agreement, Executive may revoke this
Agreement by submitting a written revocation to Vectren. Executive may revoke
this Agreement during the revocation period for any reason or no reason at all.
This Agreement shall not become effective or enforceable, and the payments and
benefits stated above shall not become payable or due, until this Agreement has
been signed by both parties and the revocation period has expired without this
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Agreement being revoked by either party. If this Agreement is not timely revoked
by either party, it shall become effective and enforceable on the eighth (8th)
day after it is executed by both parties.
12. Consulting Agreement.
(a) Commencement of Consulting Services. As of the Retirement
Date, Vectren hereby appoints and engages Executive after the
Retirement Date as an independent contractor and not as an employee,
and Executive hereby accepts appointment and engagement as a consultant
to Vectren, upon the terms and conditions contained in this Section.
(b) Term. Executive shall provide the services described in
this Section beginning on the Retirement Date and ending three years
after the Retirement Date, unless, prior to such date, Executive or
Vectren terminates, with or without cause, Executive's services (the
"Term").
(c) Activities of Executive. During the Term, Executive shall
undertake for and on behalf of, and to the extent requested by, Vectren
subject to the limitations set forth herein, to advise Vectren by
telephone, electronically, in writing or in person: (i) with respect to
the business of Vectren as it exists on the Retirement Date including,
but not limited to, environmental issues and testimony in proceedings
regarding same or (ii) with respect to other matters relating to the
business of Vectren and within the knowledge of Executive for which
consultation shall reasonably be requested by Vectren from time to
time. In performing the consulting work for Vectren, Executive shall
(i) have no formal schedule of duties or assignments, (ii) be required
to perform services for Vectren a minimum of 20 hours per month, (iii)
be subject to control and supervision of Vectren, and (iv) be required
to comply with any detailed orders and instructions given by Vectren
from time to time.
(d) Time and Place for the Performance of Executive's Duties.
In performing consulting work for Vectren, Executive shall (i) work at
such times as either Executive may elect or as Vectren may reasonably
request, and (ii) shall perform consulting work at such locations as
Vectren may reasonably require.
(e) Non-Performance Payment. If Executive fails to perform the
services required under this Agreement for the full three year period,
then Executive shall immediately pay to Vectren, or at Vectren's option
permit Vectren to offset from any amount payable to Executive, $50,000
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for each year and portion thereof that Executive did not perform the
services required; provided, however, such payments or offset shall not
be effected unless Vectren provides Executive with written notice of
Executive's failure to perform the services required and Executive
fails to cure such failure to the satisfaction of Vectren within five
calendar days after receipt of such notice.
(f) Applicability of Provisions and Extension of Time Periods.
Executive acknowledges and agrees that the confidentiality and
non-competition provisions contained in Section 4 of this Agreement
shall be applicable during the Term (provided the provision of
consulting services provided pursuant to this Section shall be
permitted) and shall be applicable after the Term for the period
provided in Section 4 as if the Retirement Date was the end of the
Term.
(g) Tax Treatment. The parties agree that payments hereunder
(i) constitute ordinary income to Executive, (ii) are deductible by
Vectren, (iii) do not constitute wages for purposes of Federal Income
Contributions Act ("FICA") but constitute earnings from self-employment
for purposes of FICA and are therefore the responsibility of Executive.
The parties agree to file tax returns and pay taxes consistent with
this subsection, to resist (and cooperate with each other in resisting)
any assertion to the contrary by any governmental agency and to
indemnify each other from and against any loss or expense by reason of
a breach of the foregoing.
13. Miscellaneous.
(a) This Agreement shall apply to Executive, as well as to
Executive's heirs, executors, and administrators. This Agreement also
shall apply to, and inure to the benefit of, Vectren, the predecessors,
successors, and assigns of Vectren and each of their respective past,
present, or future employees, agents, representatives, trustees,
officers, or directors.
(b) The parties agree that the provisions of this Agreement
are both reasonable and enforceable. However, if any provision of this
Agreement were determined to be unenforceable or invalid, the parties
agree that such provision shall be enforced to the maximum extent
permitted by law and that the remaining provisions shall remain in full
force and effect.
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(c) This Agreement shall not be considered to create an escrow
account, trust fund or other funding arrangement of any kind or a
fiduciary relationship between Executive and Vectren.
(d) Executive shall not have any right to anticipate, pledge,
alienate or assign any rights under this Agreement and any effort to do
so shall be null and void. The amounts payable under this Agreement
shall be exempt from the claims of creditors or other claimants and
from all orders, decrees, levies and executions and any other legal
process to the fullest extent that may be permitted by law.
(e) The parties acknowledge and agree that this Agreement
shall be governed, interpreted, and enforced under the laws of the
State of Indiana, without regard to conflicts of law principles.
(f) This Agreement and the other documents and agreements
executed in connection with this Agreement sets forth the complete
agreement between the parties relating to the subject matter herein.
Executive acknowledges and agrees that, in executing this Agreement,
Executive does not rely and has not relied upon any representations or
statements not set forth herein made by Vectren with regard to the
subject matter, basis, or effect of this Agreement or otherwise.
(g) Any prior agreement between Executive and Vectren and/or
Vectren's predecessors or their past and present affiliates relating to
Executive's employment, including, but not limited to, the Employment
Agreement (the "Prior Agreements") are terminated as of the Retirement
Date without any remaining obligations of either party thereunder and
are as of the Retirement Date superseded by this Agreement. All
payments made under this Agreement are in full satisfaction of all
amounts due Executive under the Prior Agreements.
(h) This Agreement may not be amended or modified other
than by a written agreement executed by the parties hereto.
(i) 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:
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If to Executive: If to Vectren:
--------------- -------------
J. Xxxxxx Xxxxx Vectren Corporation
0000 Xxxxx Xxx Xxxxx 00 X.X. Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx, General Counsel
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.
(j) This Agreement may be executed in counterparts and
when executed shall constitute one agreement.
[signature page immediately following]
IN WITNESS WHEREOF, the parties hereto have executed this Retirement
Agreement as of the date first above written.
"Vectren"
Vectren Corporation
By: /s/Xxxxxxx X. Xxxxx
Printed: Xxxxxxx X. Xxxxx
Title: Sr. Vice President
"Executive"
/s/ J. Xxxxxx Xxxxx
Printed: J. Xxxxxx Xxxxx
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EXHIBIT A
Xxxxxx Xxxxx -- Deferred Payments
Interest Rate Interest Earned Principle Payment Total Payment
6/1/01 0 0 0 0
1/2/02 4.712% $ 91,927.05 $ 975,388.78 $ 1,067,315.83
4/1/03 9.951% $ 97,057.86 $ 487,694.39 $ 584,752.25
4/1/04 8.022% $ 39,122.44 $ 487,694.39 $ 526,816.83
---------------------------------
$ 1,950,777.56 $ 2,178,884.92
=================================
