Exhibit 99.1
VECTREN CORPORATION
EMPLOYMENT AGREEMENT
This AGREEMENT by and between Vectren Corporation, an
Indiana corporation (the "Company"), and Niel C. Ellerbrook
(the "Executive"), dated as of 8:00 p.m. on March 31, 2000
(the "Commencement Date").
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
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 April 30, 2000 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 as the Chairman of the Board
and Chief Executive Officer of the Company.
(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 the extent
applicable, sets forth in reasonable detail the facts
and 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 the Commencement
Date, 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) Approval by the shareholders of the
Company 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,
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 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, 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 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 Ex
ecutive 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 de
tailed 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 sue 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
sue 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 present value of the
payments made under this Agreement, without taking into
account the Gross-Up Payment, is 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:
Niel C. Ellerbrook
Vectren Corporation
20 N.W. Fourth Street
Evansville, Indiana 47741-0001
If to the Company:
Attention: Niel Ellerbrook, Chief Executive
Officer
Vectren Corporation
20 N.W. Fourth Street
Evansville, Indiana 47741-0001
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 pro
vision 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 conditioned
upon the consummation of the Agreement and Plan of Merger,
dated as of June 11, 1999 and among Indiana Energy, Inc.,
SIGCORP, Inc. and Vectren Corporation and approval of this
Agreement by the Board of Directors of the Company.
Furthermore, this Agreement supersedes any employment
agreement previously entered into by the Executive and by
the Company, its predecessors or other affiliates.
Executive hereby acknowledges that he has received
sufficient consideration for substitution of this Agreement
for any 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.
____________________________________
Niel C. Ellerbrook, the Executive
____________________________________
Date
Vectren Corporation
By___________________________________
Chairman of Compensation Committee
of Board of Directors
____________________________________
Date
