EX 10.1
VECTREN CORPORATION
CHANGE IN CONTROL AGREEMENT
This VECTREN CORPORATION CHANGE IN CONTROL AGREEMENT is entered into by and between Vectren Corporation, an Indiana corporation (the “
Company
”), and _______________ (the “
Executive
”), dated as of the 31
st
day of December, 2011 (the “
Commencement Date
”).
1.
Definitions.
(a)
Affiliate. “Affiliate” shall mean any company or other entity controlled by or under common control with the Company.
(b)
Cause. “Cause” shall mean:
(i)
intentional gross misconduct by the Executive damaging in a material way to the Company or any Affiliate,
(ii)
the Executive’s commission of fraud against the Company or any Affiliate,
(iii)
the Executive’s public acts of dishonesty or conviction of a felony, or
(iv)
a material breach of this Agreement, after the Company has given the Executive notice thereof and a reasonable opportunity to cure.
(c)
Change in Control. “Change in Control” shall mean:
(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 thirty percent (30%) 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; or
(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 Commencement Date 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 Common 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, 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, thirty percent (30%) or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, thirty percent (30%) 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; or
(iv)
Approval by the shareholders of the Company of and consummation 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 or such corporation and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, thirty percent (30%) or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, thirty percent (30%) 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.
(d)
Date of Termination
. “
Date of Termination
” shall mean the date the Executive’s employment is terminated.
(e)
Disability.
“
Disability
” shall have the meaning set forth in the Company’s then current long term disability plan.
(f)
Good Reason
. “
Good Reason
” shall mean, without the Executive’s written consent, (i) a demotion in the Executive’s status, position or responsibilities which, in the Executive’s reasonable judgment, does not represent a promotion from the Executive’s status, position or responsibilities as in effect immediately prior to the Change in Control; (ii) the assignment to the Executive of any duties or responsibilities which, in the Executive’s reasonable judgment, are inconsistent with such duties or responsibilities immediately prior to the Change in Control; (iii) any removal of the Executive from or failure to reappoint or reelect the Executive to any positions that the Executive had immediately prior to the Change in Control, except in connection with the termination of the Executive’s employment for Disability, death or Cause or by the Executive other than for Good Reason; (iv) a reduction by the Company or an Affiliate in the Executive’s base salary as in effect on the date of the Change in Control or as the same may be increased from time to time by the Company or an Affiliate after the date of the Change in Control or the Company’s and its Affiliate’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 an appropriate percentage basis, an amount reasonably comparable to the percentage increases in base salary for all Company and Affiliate employees at the same employment level as the Executive effected in the preceding twelve (12) months; (v) the relocation of the principal executive offices of the Company or Affiliate, whichever entity on behalf of which the Executive performs a principal function of that entity as part of the Executive’s employment services, to a location more than fifty (50) miles outside the Evansville, Indiana metropolitan area or, if the Executive’s services are not performed in Evansville, Indiana, the Company’s or Affiliate’s requiring the Executive to be based at any place more than fifty (50) miles outside the location at which the Executive performed the Executive’s duties immediately prior to the Change in Control, except for required travel on the Company’s or Affiliate’s business to an extent substantially consistent with the Executive’s business travel obligations at the time of a Change in Control; (vi) a reduction in the Executive’s total direct compensation opportunity after the Change in Control from that available immediately prior to the Change in Control; (vii) the failure by the Company and Affiliates 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, stock award and restricted stock plans, if any, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan in connection with the Change in Control, or the failure by the Company or any Affiliate to continue the Executive’s participation therein, or any action by the Company or any Affiliate which would directly or indirectly materially reduce the Executive’s participation therein; (viii) the failure by the Company or any Affiliate to provide benefits (including, but not limited to, annual and long term bonus opportunities), in the aggregate, that are reasonably comparable to the benefits, in the aggregate, being provided for the majority of the other Company and Affiliate employees at the same employment level as the Executive prior to the Change in Control; (ix) the failure of the Company or any Affiliate to obtain a satisfactory agreement from any successor or assign of the Company and any Affiliate to assume and agree to perform this Agreement; or (x) any request by the Company or any Affiliate that the Executive participate in an unlawful act or take any action constituting a breach of the Executive’s professional standard of conduct.
(g)
Notice of Termination
. “
Notice of Termination
” shall mean 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 is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty (30) days after the giving of such notice). The failure by the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of the Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing the Executive’s rights hereunder.
(h)
Release
. “
Release
” shall mean the agreement that the Executive must execute in order to receive any severance benefits under this Agreement, which shall be approved by the Committee and shall contain only typical post separation release of all claims that the Executive may have against the Company and all Affiliates relating to the employment and termination of employment of the Executive.
2.
Termination in Connection with a Change in Control
. If during the period beginning on the Change in Control and continuing for two (2) years thereafter, the Company and all Affiliates shall terminate the Executive’s employment other than for Cause, death or Disability, or the Executive shall
resign employment for Good Reason (which shall be communicated by the Executive by Notice of Termination to the Company), then
(a)
The Company shall pay, or cause the appropriate Affiliate to pay, to the Executive in a lump sum in cash within sixty calendar days after the Date of Termination the aggregate of the amounts set forth in clauses (i) and (ii) below:
(i)
the Executive’s annual base salary, accrued and unpaid vacation and unreimbursed expenses through the Date of Termination to the extent not theretofore paid (“
Accrued Obligations
”); provided, however, that for purposes of this Section 2, annual base salary shall mean gross annual base salary and shall include, for example, any elective salary reductions in effect for the Executive under any tax qualified or non-qualified deferred compensation plan maintained by the Company or any Affiliate; and
(ii)
the amount equal to the product of (A) and (B) where:
A.
is [three / two / one], and
B.
is the sum of (1) the Executive’s annual base salary and (2) the target bonus currently in effect for the Executive; and
(b)
for the period of [three / two / one] years, 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 medical, prescription and dental plans, to the extent applicable generally to other peer executives of the Company and Affiliates as if the Executive’s employment had not been terminated or, if 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 (with the Executive responsible for the employee portion of the premiums); provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive such benefits under another employer provided plan, such benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility. It is the intention of the parties that the benefits provided for in this subparagraph meet the requirements of either one or more of (i) Treas. Reg. § 1.409A-1(b)(9)(v)(B) to the extent such rights apply during the period of time beginning on the Termination Date and during which the Executive would be entitled continuation coverage under a Company or Affiliate group health plan under COBRA such shall not provide for a deferral of compensation under Section 409A, (ii) Treas. Reg. § 1.409A-1(b)(9)(iii) due to such being payments that meet the requirements of a separation pay plan under such regulation, and/or (iii) Treas. Reg. § 1.409A-3(a)(4) due to such payments being made on a fixed schedule. 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 employment after the Date of Termination and to have retired on the last day of such period; and
(c)
to the extent not theretofore paid or provided, the Company and all Affiliates 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 all Affiliates, excluding any severance plan or policy.
Notwithstanding anything contained in this Agreement to the contrary, if the Executive’s employment is terminated before a Change in Control and the Executive reasonably demonstrates that such termination (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a “Change in Control” and who effectuates a “Change in Control” 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.
3.
Termination
. Except as otherwise provided in the last sentence of Section 2, this Agreement shall terminate upon the earlier of (a) cessation of employment of the Executive with the Company and all Affiliates for any reason or no reason prior to a Change in Control, or (b) one year after the Executive receives notice from the Company that it terminates this Agreement.
4.
Release
. Any compensation and benefits to be provided under Sections 2(a)(ii), 2(b) and 2(c) hereof shall be provided only if the Executive timely executes and does not revoke a Release. The Release must be provided by the Company within ten days after the Termination Date. The Release must be signed by the Executive or his legal representative, if applicable, and become effective and irrevocable in accordance with its terms (taking into account any applicable revocation period set forth therein), no later than the sixtieth day after the Termination Date. If the Company fails to provide the Release within ten days after the Termination Date, then the Executive shall be entitled to such compensation and benefits without being required to execute and furnish the Release. If the Release is timely delivered by the Company and the Executive fails to execute and furnish the Release, or if the Release furnished by the Executive has not become effective and irrevocable in accordance with its terms (taking into account any applicable revocation period set forth therein) within such sixty day period, the Executive will not be entitled to any payment or benefit under this Agreement other than the Accrued Obligations.
5.
Full Settlement
. After a Change in Control, 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 or any Affiliate 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 non-frivolous 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
”).
6.
Successors
.
(a)
This Agreement is personal to the Executive and without the prior written consent of the Company shall not be 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.
7.
Certain Additional Payments by the Company
.
(a)
Anything in this Agreement to the contrary notwithstanding, in the event that any compensation, payment or distribution by the Company and all Affiliates to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “
Severance Payments
”), would, but for this Section, be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “
Code
”), the following provisions shall apply:
(i)
If the Severance Payments, reduced by the sum of (1) the Excise Tax (as defined below) and (2) the total of the Federal, state, and local income and employment taxes payable by the Executive on the amount of the Severance Payments which are in excess of the Threshold Amount (as defined below), are greater than or equal to the Threshold Amount, the Executive shall be entitled to the full benefits payable under this Agreement.
(ii)
If the Threshold Amount is less than (x) the Severance Payments, but greater than (y) the Severance Payments reduced by the sum of (1) the Excise Tax and (2) the total of the Federal, state, and local income and employment taxes on the amount of the Severance Payments which are in excess of the Threshold Amount, then the benefits payable under this Agreement shall be reduced (but not below zero) to the extent necessary so that the maximum Severance Payments shall not exceed the Threshold Amount.
(b)
For the purposes of this Section, “
Threshold Amount
” shall mean three times the Executive’s “base amount” within the meaning of Section 280G(b)(3) of the Code and the regulations promulgated thereunder less one dollar ($1.00); and “
Excise Tax
” shall mean the excise tax imposed by Section 4999 of the Code, and any interest or penalties incurred by the Executive with respect to such excise tax.
(c)
The determination as to which of the alternative provisions of Section 6(a) shall apply to the Executive shall be made by a nationally recognized accounting firm selected by the Company (the “
Accounting Firm
”), which shall provide detailed supporting calculations both to the Company and the Executive within 30 business days of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Company or the Executive. For purposes of determining which of the alternative provisions of Section 6(a) shall apply, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. Any determination by the Accounting Firm shall be binding upon the Company and the Executive, absent fraud or manifest error.
(d)
In addition, notwithstanding anything herein to the contrary, (i) in the event any payments under this Section 6 are to be reduced, the reduction shall take place in a manner that produces the greatest economic advantage to the Executive (and if reduction of two or more payments produce the same economic advantage they shall be reduced proportionally), and (ii) any payment required under this Section 6 shall be made by the end of the Executive's taxable year next following the Company’s taxable year in which the Executive remits the payment. This Section 7(d) shall be interpreted consistent with Treas. Reg. § 1.409A-3(i)(1)(v).
8.
Section 409A.
(a)
Notwithstanding any provision to the contrary in this Agreement, payments or distributions to the Executive, if the Executive is at the time of termination of employment a “specified employee” (as determined under the Company’s policy for identifying specified employees) on his/her date of termination, shall not be made or commence until the earlier of the date of the Executive’s death or the first day after expiration of the six-month period immediately following the Date of Termination of the Executive and all payments that would have been made during such period shall be accumulated and paid (along with interest at the applicable federal rate under Section 7872(f)(2)(A) of the Code in effect on the Termination Date) on the first day after the earlier of death or expiration of such period; provided, however, that the six (6) month delay required under this Section shall not apply to (a) the portion of any payment that is not a deferral of compensation as set forth in Treas. Reg. § 1.409A-1(b)(9)(v), or (b) the portion of any payment resulting from the Executive’s “involuntary separation from service” (as defined in Treas. Reg. § 1.409A-1(n) and including a “separation from service for good reason,” as defined in Treas. Reg. § 1.409A-1(n)(2)) that (i) is payable no later than the last day of the second year following the year in which the separation from service occurs, and (ii) does not exceed two times the lesser of (A) the Executive’s annualized compensation for the year prior to the year in which the separation from services occurs or (B) the dollar limit described in Section 401(a)(17) of the Code.
(b)
Upon the inclusion of any amount into the Executive’s income as a result of the failure of this Agreement to comply with the requirements of Section 409A of the Code a distribution not to exceed the amount that shall be included in income shall be made as soon as is administratively practicable following the discovery of the failure of the Agreement to comply with Section 409A of the Code and the regulations promulgated thereunder. This Section shall be interpreted consistent with Treas. Reg. § 1.409A-3(j)(4)(vii).
(c)
Termination of employment of the Executive under this Agreement shall be interpreted to mean “Separation from Service” (as such term is defined in the Vectren Corporation Nonqualified Deferred Compensation Plan effective January 1, 2005, as amended).
(d)
With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A of the Code: (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit; (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year; and (iii) such payments shall be made on or before the last day of the Executive’s taxable year following the taxable year in which the expense occurred, or such earlier date as required hereunder. This Section 8(d) shall be interpreted in accordance with Treas. Reg. § 1.409A-3(i)(1)(iv)(A).
(e)
The tax treatment of the benefits provided under this Agreement is not warranted or guaranteed. The Company nor any Affiliates nor their respective directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Executive (or any other individual claiming a benefit through the Executive) as a result of this Agreement.
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 be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed with respect to the Company attention the Chairperson of the Compensation Committee at the Company’s corporate headquarters address, and with respect to the Executive at the last address of the Executive on the Company’s books and records. 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.
(f)
This Agreement shall not be construed as giving the Executive any right of employment or continuing employment with the Company or any Affiliate.
(g)
The Company and the Executive each acknowledge that each party to this Agreement has had the opportunity to be represented by counsel in connection with this Agreement. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the party that drafted it, has no application and is expressly waived.
(h)
Any dispute arising out of or in any way pertaining to this
Agreement or any other
agreement or document executed pursuant to or in connection with this
Agreement or the entitlement to severance shall be resolved by
binding arbitration to be held in Evansville, Indiana, in accordance with the
Employment Arbitration Rules and Mediation Procedures of the
American
Arbitration Association, and judgment on the award may be entered in any court having jurisdiction thereof.
(i)
Notwithstanding anything herein to the contrary, the Executive agrees that payments made to the Executive may be subject to repayment pursuant to one or more clawback or recoupment policies of the Company as are in effect at anytime and from time to time.
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.
____________________________________
__________________, the Executive
____________________________________
Date: ______________ ____, 20______
Vectren Corporation
By:
Printed:
Title:
____________________________________
Date: ______________ ____, 20______
EX 10.2
Vectren Corporation
Severance Plan for Executive Officers
1
General Information.
Vectren Corporation
(the “Company”) hereby establishes the Vectren Corporation Severance Plan for Executive Officers (this “Plan”), as set forth in this document.
This Plan is designed to provide financial protection in the event of termination of key executives of the Company and its Subsidiaries who are expected to make substantial contributions to the success of the Company and thereby provide for stability and continuity of management.
This Plan shall commence on December 31, 2011 (the “Commencement Date”) and shall continue in effect until terminated by the Committee. This Plan may be amended or modified in any respect, and may be terminated, in any such case by the Committee at any time and from time to time and in the sole discretion of the Committee;
provided
, each Participant is notified of such amendment, modification or termination and such amendment, modification or termination shall not be effective until one year after such notice is provided to each Participant. Notwithstanding the foregoing, the Committee may amend or modify this Plan, without notice and with immediate effect, if the amendment or modification (i) does not materially impair the rights of the Participant, or (ii) is a result of a material change in market conditions with respect to the benefits to be provided pursuant to this Plan as documented by an independent consultant retained by the Committee even if such change impairs the rights of any Participant.
The Company and each Subsidiary of the Company that has adopted this Plan as a participating employer are set forth on
Exhibit B
attached hereto and made a part hereof (each, a “Participating Employer”). The name of the Participating Employer with whom each Participant is employed shall be set forth next to the Participant’s name in the column titled “Participating Employer” on
Exhibit C
attached hereto and made a part hereof.
2
Definitions. For purposes of this Plan, terms not defined herein have the meaning ascribed to such terms in
Exhibit A
attached hereto and made a part hereof.
3
Eligibility and Commencement of Participation.
Eligibility to participate in this Plan shall be limited to certain key executives of the Company and its Subsidiaries who (i) are not parties to individual agreements that provide for severance benefits prior to a change in control involving the Company or any Subsidiary, and (ii) are designated as participants on
Exhibit C
attached hereto and made a part hereof by a duly adopted resolution of the Committee.
The Committee shall limit the class of persons selected to participate in this Plan to a “select group of management or highly compensated employees,” within the meaning of Sections 201, 301 and 401 of ERISA.
A Participant shall cease to be a Participant and shall have no rights hereunder, without further action, on the earlier of (i) the date that the Participant suffers a cessation of employment with the Company and its Subsidiaries unless such Participant is then entitled to a severance benefit as provided in Section 5, or (ii) the effective date that this Plan is terminated in accordance with Section 1(c). Notwithstanding anything herein to the contrary, if a Participant is a party to an agreement that may provide severance benefits after a change in control involving the Company or any Subsidiary, then the Participant’s participation in this Plan shall automatically terminate on the consummation of such change in control of the Company or any Subsidiary.
Participation in this Plan does not alter the status of a Participant as an at will employee, and nothing in this Plan will reduce or eliminate the right of the Company and its Subsidiaries to terminate a Participant’s employment at any time for any reason or no reason. This Plan does not constitute a contract of employment or impose on the Company or any Subsidiary any obligation to retain any Participant as an employee, maintain any compensation level, or maintain the status of any Participant’s employment.
4
Restrictive Covenants. As a condition to participating in this Plan, each Participant acknowledges and agrees to the following.
Each Participant acknowledges that the successful marketing, development, sales and distribution of products and rendering of services to the customers of the Company and its Affiliates require substantial time and expense. Such efforts generate for the Company and its Affiliates valuable Confidential Information (as hereinafter defined) which gives the Company and its Affiliates a business advantage over others who do not have such information. “Confidential Information” of the Company and its Affiliates includes, but is not limited to, the following information of the Company and each of its Affiliates: financial and compensation information, business strategies, plans, trade secret information, customer records, customer lists, customer data and information, computer software, business methods, tactics, techniques and processes, personnel information, marketing information, sales information, pricing information, cost information, information pertaining to the Company’s or its Affiliate’s relationships with business partners, whether or not reduced to writing or other tangible medium of expression. All Confidential Information obtained by such Participant during the course of such Participant’s employment with the Company or any Affiliate are the property of the Company or, as may be applicable, its relevant Affiliate or their respective customers. No Participant will, at anytime during employment or thereafter, use or disclose to any person or entity or otherwise exploit any Confidential Information except (i) during such Participant’s employment as is appropriate in serving the Company’s or its Affiliate’s customers, (b) when properly required to do so by law; provided, however,
that
, Participant shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and cooperate with any attempts by the Company to obtain a protective order or similar treatment, or (c) with the express written permission of the Chairperson of the Committee. This Section 4(a) of this Plan is intended, among other things, to supplement the provisions of the Indiana Uniform Trade Secrets Act, as amended from time to time, and the duties each Participant owes to the Company and its Affiliates under the common law, including, but not limited to, the duty of loyalty.
Each Participant agrees that during such Participant’s employment by the Company or any Affiliate, such Participant shall not engage, directly or indirectly, in any activity, employment or business venture, whether or not for remuneration, that is competitive with the Company’s or any Affiliate’s business, deprives the Company or any Affiliate of any business opportunity, conflicts with the Company’s or any Affiliate’s business interests or is otherwise detrimental to the Company or any Affiliate;
provided
,
however
, that Participant may purchase or otherwise acquire up to (but not more than) one percent (1%) of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Securities Exchange Act of 1934 and only if Participant is a passive investor.
The Participating Employer and each Participant acknowledges and agrees that the following limited restrictive covenants are reasonably necessary to protect the legitimate interests of the Company and its Affiliates, and such limited restrictive covenants are an essential part of, a condition of and consideration for participation in this Plan. Therefore, this limited non-solicitation provision is drafted narrowly so as to safeguard the Company’s and its Affiliate’s legitimate business interests while not unreasonably interfering with employee’s ability to obtain other employment. For a period of twelve months after separation from all Participating Employers (regardless of the reason for separation), each Participant agrees that he/she shall not (i) solicit or sell to any customer or prospective customer of the Company or any Affiliate that such Participant learned of or solicited, serviced, or sold to during such Participant’s employment with the Participating Employer, (ii) request or advise any customer of the Company or any Affiliate to withdraw, curtail, or cease such business with the Company or any Affiliate; (iii) disclose to any person or entity the identities of any customers of the Company or any Affiliate, and/or (iv) influence or attempt to influence any employee of the Company or any Affiliate to separate from the Company or any Affiliate. Each Participant agrees that the restricted period of time in this Section 4(c) and will be tolled during any periods of non-compliance by such Participant.
Each Participant agrees that, during employment and thereafter, such Participant will not make any statements to any person or entity (including, without limitation, representatives of any press or media or any employee or customer of the Company or any Affiliate) which is disparaging of the Company or any Affiliate, or their respective reputation, or the character, competence or reputation of any officer, director, executive, employee, partner, or agent of the Company or any Affiliate.
Each Participant recognizes that a breach or threatened breach by such Participant of this Section 4 will give rise to irreparable injury to the Company and its Affiliates and that money damages will not be adequate relief for such injury, and, accordingly, agrees to waive any defense that the Company or any Affiliate has an adequate remedy of law and further agrees that the Corporation and each Affiliate shall be entitled to obtain injunctive relief, including, but not limited to, temporary restraining orders, preliminary injunctions and/or permanent injunctions, without (to the extent not prohibited by law) having to post any bond or other security, to restrain or prohibit such breach or threatened breach, in addition to any other legal remedies that may be available, including the recovery of monetary damages from such Participant.
5
Termination other than for Cause or Resignation for Good Reason. If the Participating Employer shall terminate the Participant’s employment other than for Cause, death or Disability, or the Participant shall resign employment with the Participating Employer for Good Reason, then:
The Participating Employer shall pay to the Participant in a lump sum in cash within sixty days after the Termination Date the aggregate of the amounts set forth in clauses (i) and (ii) below:
the Participant’s annual base salary, accrued and unpaid vacation and unreimbursed expenses through the Termination Date to the extent not theretofore paid (“Accrued Obligations”);
provided
,
however
, that for purposes of this Section 5, annual base salary shall mean gross annual base salary and shall include, for example, any elective salary reductions in effect for the Participant under any tax qualified or non qualified deferred compensation plan maintained by the Company; and
the amount equal to the product of the number listed under the column “Severance Multiple” next to the Participant’s name on
Exhibit C
(the “Severance Multiple”),
multiplied
by the Participant’s annual base salary in effect on the Termination Date.
The Participating Employer shall pay the Participant the pro-rated portion (based on the number of days in the year of termination during which the Participant was employed) of the annual cash bonus the Participant would have received for the year of termination had he or she remained employed through the entire year (based on the actual performance of the Company and/or its Subsidiary, as applicable, for the year of termination), payable when bonuses are generally paid to the Participating Employer’s executives for the year of termination but no later than two and one half months after the end of the year in which the cash bonus was earned.
The Participating Employer shall pay the Participant in a lump sum in cash within sixty days after the Termination Date an amount equal to the product of (i) the Severance Multiple,
multiplied
by (ii) the actual amount of employer and employee contributions to the Participating Employer’s medical, prescription and dental plans in the month immediately prior to the month in which the Termination Date occurred,
multiplied
by (iii) 12.
The Participating Employer shall pay the Participant in a lump sum in cash within sixty days after the Termination Date an amount equal to the product of (i) the monthly fee of an outplacement service provider identified by the Participating Employer for the provision of a reasonable amount of outplacement services for an executive,
multiplied
by (ii) 6.
6
Termination for Cause, death or Disability or Resignation without Good Reason. If the Participating Employer shall terminate the Participant’s employment for Cause, if employment terminates for death or Disability, or if the Participant shall resign employment with the Participating Employer other than for Good Reason, then the Participant shall be entitled to only the Accrued Obligations.
7
Process for Good Reason. For the Participant to have the right to resign for Good Reason, all of the following must timely occur: (a) the Participant must provide the Participating Employer with notice of the occurrence of any of the Good Reason events within the ninety day period immediately following the first occurrence of such event and such notice describes in detail the Good Reason event and the proposed cure to such event, (b) the Participating Employer must fail to cure such event with a period of thirty days from the date of receipt of such notice, and (c) the Notice of Termination is delivered by the Participant to the Participating Employer within thirty days following the day on which the thirty day period set forth in the preceding clause (b) expires.
8
Release. Any compensation and benefits to be provided under Sections 5(a)(ii), 5(b), 5(c), and 5(d) hereof shall be provided only if the Participant timely executes and does not revoke a Release. The Release must be signed by the Participant or his legal representative, if applicable, and become effective and irrevocable in accordance with its terms (taking into account any applicable revocation period set forth therein), no later than the sixtieth day after the Termination Date. If the Participant fails to execute and furnish the Release, or if the Release furnished by the Participant has not become effective and irrevocable in accordance with its terms (taking into account any applicable revocation period set forth therein) within such sixty day period, the Participant will not be entitled to any payment or benefit under the Plan other than the Accrued Obligations.
9
No Mitigation; Clawback. In no event shall the Participant be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Participant under any of the provisions of this Plan and such amounts shall not be reduced whether or not the Participant obtains other employment. Notwithstanding anything herein to the contrary, as a condition to participating in this Plan, each Participant agrees that payments made to such Participant may be subject to repayment pursuant to one or more clawback or recoupment policies of the Company or any of its Affiliates as are in effect at anytime and from time to time.
10
Effect on Other Policies, Agreements and Benefits. Any benefits received by a Participant pursuant to this Plan shall be in lieu of any severance policy or severance plan maintained by the Company or its Affiliates (other than a stock option, restricted stock, share or unit, performance share or unit, supplemental retirement, deferred compensation or similar plan or agreement which may contain provisions operative on a termination of the Participant’s employment or may incidentally refer to accelerated vesting or accelerated payment upon a termination of employment). Any economic or other benefit to a Participant under this Plan, other than the Accrued Obligations, will not be taken into account in determining any benefits to which the Participant may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company and its Affiliates, unless provided otherwise in any such plan.
11
Administration. This Plan will be interpreted by the Committee in accordance with the terms of this Plan and their meanings as intended by the Committee. The Committee shall have the discretion, in its sole judgment, to (a) make any findings of fact needed in the administration of this Plan, (b) interpret or construe ambiguous, unclear or implied (but omitted) terms, (c) establish rules and regulations for administering this Plan and (d) take such other action as it deems necessary or appropriate. All actions and all determinations made in good faith by the Committee shall be final, binding and conclusive upon all persons claiming any interest in or under this Plan. The Committee may delegate, subject to such terms as the Committee shall determine, any of its authority hereunder to such person or persons from time to time as it may designate. In the event of such delegation, all references to the Committee in this Plan shall be deemed references to such delegates as it relates to those aspects of this Plan that have been delegated.
12
Participants Deemed to Accept Plan. By executing any agreement or by accepting any payment or benefit under this Plan, each Participant and each person claiming under or through any such Participant shall be conclusively deemed to have indicated his, her or its acceptance and ratification of, and consent to, all of the terms and conditions of this Plan and any action taken under this Plan by the Committee or the Company or its Affiliates, in any case in accordance with the terms and conditions of this Plan.
13
Successors. This Plan shall be binding upon and inure to the benefit of the Company, each other Participating Employer and any Participant and their respective successors, assigns, heirs, personal or legal representatives, executors, administrators distributees and/or legatees. The rights under this Plan are personal in nature and no Participant shall, without the consent of the Company, assign, transfer or delegate any rights or obligations hereunder, whether by gift, pledge, creation of a security interest or otherwise and, in the event of any attempted assignment or transfer contrary to this Section 13, no Participating Employer shall have liability to pay any amount so attempted to be assigned, transferred or delegated and such shall be void
ab initio
.
14
Unfunded Plan Status. All severance benefits provided under this Plan shall constitute an unfunded obligation of the applicable Participating Employer. All payments pursuant to this Plan shall be made from the general funds of the applicable Participating Employer and no special or separate fund shall be established or other segregation of assets made to assure payment. No Participant or other person shall have under any circumstances any interest in any particular property or assets of the Company or any Affiliate as a result of participating in this Plan.
15
Withholding. The Participating Employer and any Affiliate shall have the right to deduct and withhold from any amounts payable under this Plan such federal, state, local, foreign or other taxes as are required to be withheld pursuant to any applicable law or regulation.
16
Governing Law. Except to the extent preempted by federal law, the provisions of this Plan shall be governed and construed in accordance with the laws of the State of Indiana, without regard to conflict of laws principles thereof.
17
Validity and Severability. The invalidity or unenforceability of any provision of this Plan shall not affect the validity or enforceability of any other provision of this Plan, which shall remain in full force and effect, and any prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
18
Section 409A.
It is intended that the payments and benefits provided under Section 5 shall be exempt from the application of the requirements of Section 409A. This Plan shall be construed, administered and governed in a manner that affects such intent, and the Committee shall not take any action that would be inconsistent with such intent. Specifically, any taxable benefits or payments provided under this Plan are intended to be separate payments that qualify for the “short-term deferral” exception to Section 409A to the maximum extent possible, and to the extent they do not so qualify, are intended to qualify for the separation pay exceptions to Section 409A, to the maximum extent possible. To the extent that none of these exceptions (or any other available exception) applies, then notwithstanding anything contained herein to the contrary, and to the extent required to comply with Section 409A, if a Participant is a “specified employee,” as determined under the Company’s policy for identifying specified employees on his or her Termination Date, then all amounts due under this Plan that constitute a “deferral of compensation” within the meaning of Section 409A, that are provided as a result of a separation from service (as defined in accordance with the default rules under Section 409A), and that would otherwise be paid or provided during the first six months following the Termination Date, shall be accumulated through and paid or provided (together with interest at the applicable federal rate under Section 7872(f)(2)(A) of the Code in effect on the Termination Date) on the first business day that is more than six months after the date of the Termination Date (or, if the Participant dies during such six-month period, on the date of the Participant’s death).
With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A: (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit; (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year; and (iii) such payments shall be made on or before the last day of the Participant’s taxable year following the taxable year in which the expense occurred, or such earlier date as required hereunder. This Section 18(b) shall be interpreted in accordance with Treas. Reg. § 1.409A-3(i)(1)(iv)(A).
Although the Company will use its reasonable efforts to avoid the imposition of taxation, interest and penalties under Section 409A, the tax treatment of the benefits provided under this Plan is not warranted or guaranteed. Neither the Company, its Affiliates nor their respective directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by a Participant (or any other individual claiming a benefit through the Participant) as a result of this Plan.
Upon the inclusion of any amount into the Participant’s income as a result of the failure of this Agreement to comply with the requirements of Section 409A a distribution not to exceed the amount that shall be included in income shall be made as soon as is administratively practicable following the discovery of the failure of the Agreement to comply with Section 409A. This Section 18(d) shall be interpreted consistent with Treas. Reg. § 1.409A-3(j)(4)(vii).
19
Notice. For purposes of this Plan, notices and all other communications provided for in this Plan shall be in writing and shall be deemed to have been duly given when, with respect to any Participating Employer, actually delivered or mailed by United States registered mail, return receipt requested, postage pre-paid, addressed to the Chairperson of the Committee at the Company’s corporate headquarters address, and with respect to a Participant when actually delivered, emailed or mailed by United States registered mail, return receipt requested, postage prepaid and addressed to the Participant at the last address of the Participant on the Company’s books and records.
20
Dispute Resolution. Any dispute arising out of or in any way pertaining to this Plan or any other agreement or document executed pursuant to or in connection with this Plan (other than the restrictive covenants contained in any Release) or the entitlement to severance shall be resolved by binding arbitration to be held in Evansville, Indiana, in accordance with the Employment Arbitration Rules and Mediation Procedures of the American Arbitration Association, and judgment on the award may be entered in any court having jurisdiction thereof.
21
Indemnity. Each Participant shall be indemnified by such Participant’s Participating Employer against claims arising in connection with such Participant’s status as an employee, officer, director or agent of the Company or any Affiliate in accordance with the Company’s and the Participating Employer’s indemnity policies, subject to applicable law.
Exhibit A
Definitions
“
Accrued Obligations
” has the meaning given that term in Section 5(a)(i) hereof.
“
Affiliate
” means any company or other entity controlled by, controlling or under common control with, the Company.
“
Cause
” means (i) intentional gross misconduct by the Participant damaging in a material way to the Company or any Affiliate, (ii) the Participant’s commission of fraud against the Company or any Affiliate, or (iii) the Participant’s public acts of dishonesty or conviction of a felony.
“
Code
” means the Internal Revenue Code of 1986, as amended.
“
Commencement Date
” shall have the meaning set forth in Section 1(c).
“
Committee
” means the Compensation and Benefits Committee of the Board of Directors of the Company, or its delegate.
“
Company
” means Vectren Corporation.
“
Disability
” shall have the meaning set forth in the Company’s then current long term disability plan.
“
ERISA
” means the Employee Retirement Income Security Act of 1974, as amended.
“
Good Reason
” means (a) a material diminution in the Participant’s base compensation, (b) a material diminution in the Participant’s authority, duties or responsibilities, (c) a material change in the geographic location of which the Participant must perform the services, or (d) a material breach by the Company or, if applicable, the Participating Employer of this Plan.
“
Notice of Termination
” shall mean a written notice which (a) indicates the specific termination provision in this Plan relied upon, (b) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant’s employment under the provision so indicated, and (c) if the Termination Date is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty (30) days after the giving of such notice).
“
Participant
” means a key executive who meets the eligibility requirements and other conditions of Section 3 hereof, until such time as the Participant’s participation ceases in accordance with Section 3(c) hereof.
“
Participating Employer
” has the meaning ascribed to such term in Section 1(d).
“
Release
” means the agreement that a Participant must execute in order to receive any severance benefits under this Plan, which shall be approved by the Committee and shall contain, among such other terms and conditions determined by the Committee, typical post separation terms and a general release of all claims that the Participant may have against the Company and any of its Affiliates relating to the employment and termination of employment of the Participant. The Release will also contain an affirmation by the Participant of the restrictive covenants contained in this Plan and an agreement by the Participant to be bound by a non-competition covenant during the period of years equal to the Severance Multiple.
“
Section 409A
” means Section 409A of the Code and any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section 409A by the U.S. Department of Treasury or the Internal Revenue Service.
“
Severance Multiple
” has the meaning ascribed to such term in Section 5(a)(ii).
“
Subsidiary
” means any company or other entity controlled by the Company.
“
Termination Date
” means the date on which a Participant’s employment with the Participating Employer ceases.
Exhibit B
Participating Employers
The following are the Participating Employers in the Plan:
|
|
Indiana Gas Company, Inc.
|
|
|
Southern Indiana Gas and Electric Company
|
|
|
Vectren Energy Delivery of Ohio
|
|
|
Vectren Utility Holdings, Inc.
|
|
|
Vectren Energy Marketing and Services, Inc.
|
Exhibit C
Participants
|
Participant Title
|
Name
|
Severance Multiple
|
Participating Employer
|
|
Chairman, President and CEO
|
Carl L. Chapman
|
2x
|
Vectren Corporation
|
|
EVP, CFO, President Vectren Shared Services
|
Jerome A. Benkert, Jr.
|
1.5x
|
Vectren Corporation
|
|
EVP, CLO, President Vectren South
|
Ronald E. Christian
|
1.5x
|
Vectren Corporation
|
|
EVP, President of Utility Operations, VUHI
|
William S. Doty
|
1.5x
|
Vectren Utility Holdings, Inc.
|
|
President
|
John H. Bohls
|
1.5x
|
Vectren Energy Marketing and Services, Inc.
|
|
VP, Controller
|
M. Susan Hardwick
|
1x
|
Vectren Corporation
|
|
VP, General Counsel, CCO
|
Robert E. Heidorn
|
1x
|
Vectren Corporation
|
|
VP, VUHI-Energy Delivery
|
Eric J. Schach
|
1x
|
Vectren Utility Holdings, Inc.
|
|
VP, VUHI-Regulatory Affairs
|
Jerrold L. Ulrey
|
1x
|
Vectren Utility Holdings, Inc.
|
|
VP, Community Sustainability
|
Jeffrey W. Whiteside
|
1x
|
Vectren Corporation
|
|
VP, Performance Management
|
Daniel C. Bugher
|
1x
|
Vectren Corporation
|
|
VP, Investor Relations and Treasurer
|
Robert L. Goocher
|
1x
|
Vectren Corporation
|
|
VP, VUHI-Marketing and Conservation
|
L. Douglas Petitt
|
1x
|
Vectren Utility Holdings, Inc.
|
|
VP, Human Resources
|
Ellis S. Redd
|
1x
|
Vectren Corporation
|
|
President, Vectren Energy Delivery, North
|
Brad Ellsworth
|
1x
|
Indiana Gas Company, Inc.
|
|
VP, VUHI, Power Supply
|
Wayne D. Games
|
1x
|
Southern Indiana Gas and Electric Company
|
|
VP, IT and Customer Service
|
Jon K. Luttrell
|
1x
|
Vectren Corporation
|
|
VP, Government Affairs and Communications
|
Michael F. Roeder
|
1x
|
Vectren Corporation
|
|
President, Vectren Energy Delivery, Ohio
|
Colleen M. Ryan
|
1x
|
Vectren Energy Delivery of Ohio
|
|
VP, Planning and Corporate Development
|
Elizabeth I. Witte
|
1x
|
Vectren Corporation
|
