Exhibit 10.1
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EMPLOYMENT AGREEMENT
TERM SHEET
XXXXX X. XXXXXX
1. Basic premise - No changes to be made to Xx. Xxxxxx' existing agreement
unless:
(a) required to reflect changes mandated by the transactions (the
"Merger") contemplated by the Agreement and Plan of Merger by and
among Duke Energy Corporation, Cinergy Corp., Deer Holding Corp., Deer
Acquisition Corp. and Cougar Acquisition Corp. (the "Merger
Agreement")
(b) as specifically reflected in this term sheet
2. Changes mandated by the corporate transaction
(a) References to Cinergy Corp. ("Cinergy") shall automatically refer to
Deer Holding Corp. ("Holdco") as of the Closing Date
(b) Required move to Charlotte
(i) principal executive offices in Charlotte to be specified as the
principal place of performance post-closing (ss.2(b)(1))
(ii) will not constitute a "Good Reason" trigger (ss.ss.2(b) and
4(d)(iii)) (1)
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(1) Note that section references are to Xx. Xxxxxx' existing agreement
(c) Xx. Xxxxxx to be named as President and CEO of Holdco effective upon
the closing of the corporate transaction
(i) Duties and Powers - modify the current positions, duties and
responsibilities of Xx. Xxxxxx (ss.2(a)) to reflect post-closing
status as Holdco President and CEO, subject to Exhibit C to the
Merger Agreement
(d) Compensation
(i) Unless otherwise agreed by the parties, Xx. Xxxxxx' compensation
arrangements will remain in place post-closing
(ii) The parties will negotiate in good faith to restructure the
current compensation arrangements to provide that Xx. Xxxxxx will
be paid substantially in the form of equity compensation by which
Duke Energy Corporation CEO is presently compensated; it being
understood that Xx. Xxxxxx' restructured compensation will be no
less favorable in economic value than his existing compensation
arrangements. The valuation determination will be made by an
independent nationally recognized human resources consulting firm
mutually selected by Holdco and Xx. Xxxxxx, or, in the absence of
agreement on the firm to be selected, such consulting firm as
shall be selected by an arbitrator appointed in accordance with
the rules of the American Arbitration Association then in effect
(iii) SERP benefit - The present value of the SERP benefit
(ss.3(b)(ii)) will be quantified immediately prior to the closing
of the Merger and will be deferred, with market-based earnings
credited thereon, in compliance with ss.409A of the Internal
Revenue Code. If it is determined at any time prior to or
following the closing that the SERP benefit should fail to comply
with ss.409A for any reason, Xx. Xxxxxx and Cinergy or Holdco (as
applicable) in good faith shall negotiate to restructure the SERP
benefit so as to make it compliant, provided that, in no event
will such restructuring adversely affect such pre-tax present
value of the SERP benefit
(e) Arbitration clause (ss.8) should be modified to provide for any
proceeding to take place in Charlotte, NC
(f) Governing law (ss.12(a)) - change from Ohio to North Carolina
(g) Notice provision - update to reflect Charlotte address of Holdco
3. Other changes/Comments
(a) Three-year term of employment commencing upon closing of the Merger,
with back-end consecutive one-year "evergreen" renewals if neither
party gives notice prior to a specified date (e.g., six months) prior
to the end of the three-year employment term (or extended one-year
term, as applicable)
(b) Severance - Unless otherwise agreed by the parties, if Xx. Xxxxxx is
involuntarily terminated without Cause or quits for Good Reason on or
prior to the second anniversary of the closing of the Merger or within
two years following a change in control of Holdco, then he will
receive an amount no less than the economic value to which he would
otherwise be entitled under his existing employment agreement had he
terminated employment under such circumstances immediately following
the closing of the transaction; provided, however, that if his
termination of employment occurs at any time following the second
anniversary of the closing of the Merger (other than within two years
following a change in control of Holdco), then he will receive an
amount no less than the economic value to which he would otherwise be
entitled under his existing employment agreement had he terminated
employment immediately prior to the occurrence of a change in control
of Cinergy (and, in either case, such economic value shall be
determined without regard to the form of his then restructured
compensation arrangements)
(c) Relocation benefits - Xx. Xxxxxx will be reimbursed for all direct and
indirect relocation costs
(d) Stock sale limitations - remove limitation on the sale, during
employment, of Cinergy shares acquired upon exercise of stock options
(ss.4(g)), such removal to be effective as of the closing of the
transaction (but Xx. Xxxxxx shall remain subject to Duke Energy
Corporation/Holdco stock ownership guidelines which have been
represented to Xx. Xxxxxx as being a 100,000 share minimum)
As soon as reasonably practicable following the execution of this term sheet but
in any event prior to the closing of the corporate transaction, Cinergy, Duke
Energy Corporation and Holdco will each take such action (or cause their
respective affiliates to take such action) as may be necessary and appropriate
to effectuate the foregoing in a new or amended employment agreement to be
entered into or assumed by Holdco for Xx. Xxxxxx, which agreement shall take
effect as of the effective date of the closing of the mergers contemplated by
the Merger Agreement; provided, however, that ss.2(d)(iii) hereof shall take
effect immediately upon the execution of this term sheet. Until such time as a
new or amended employment agreement becomes effective, this term sheet shall
govern the respective parties' rights and obligations and shall constitute an
amendment of Xx. Xxxxxx' employment agreement when deemed effective as provided
hereinabove.
IN WITNESS WHEREOF, the parties signing hereinbelow have executed this term
sheet this 8th day of May, 2005, intending to be legally bound thereby.
CINERGY CORP.
By: /s/ Xxxx X. Xxxxx
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XXXX X. XXXXX
DUKE ENERGY CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
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XXXX X. XXXXXXXX
DEER HOLDING CORP.
By: /s/ Xxx X. Xxxx
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XXX X. XXXX
/s/ Xxxxx X. Xxxxxx
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XXXXX X. XXXXXX
