AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered into
as of the 30th day of December, 1999 (the "Effective Date"), by and between
Cinergy and Xxxxxx X. Xxxxx, Xx. (the "Executive"). This Agreement replaces and
supersedes any and all prior employment agreements between Cinergy and the
Executive. The capitalized words and terms used throughout this Agreement are
defined in Section 11.
RECITALS
A. The Executive is currently serving as Vice President of Cinergy,
and President, Cinergy Investments Business Unit, and Cinergy desires to secure
the continued employment of the Executive in accordance with this Agreement.
B. The Executive is willing to continue to remain in the employ of
Cinergy, and any successor to Cinergy, on the terms and conditions set forth in
this Agreement.
C. The parties intend that this Agreement will replace and supersede
any and all prior employment agreements between Cinergy (or any component
company or business unit of Cinergy) and the Executive.
AGREEMENT
In consideration of the mutual premises, covenants and agreements set
forth below, the parties agree as follows:
1. EMPLOYMENT AND TERM
a. Cinergy, and any successor to Cinergy, agree to employ the
Executive, and the Executive agrees to remain in the employ of
Cinergy, in accordance with the terms and provisions of this
Agreement, for the Employment Period set forth in Subsection b.
The parties agree that the Company will be responsible for
carrying out all of the premises, covenants, and agreements of
Cinergy set forth in this Agreement.
b. The Employment Period of this Agreement will commence as of the
Effective Date and continue until December 31, 2002; provided
that, commencing on December 31, 2000, and on each subsequent
December 31, the Employment Period will be extended for one (1)
additional year unless either party gives the other party
written notice not to extend this Agreement at least ninety (90)
days before the extension would otherwise become effective.
2. DUTIES AND POWERS OF EXECUTIVE
a. POSITION. The Executive will serve Cinergy as Vice
President of Cinergy, and President, Cinergy Investments Business
Unit, and he will have such responsibilities, duties, and
authority as are customary for someone of that position and such
additional duties, consistent with his position, as may be
assigned to him from time to time during the Employment Period by
the Board of Directors or the Chief Executive Officer.
b. PLACE OF PERFORMANCE. In connection with the Executive's
employment, the Executive will be based at the principal executive
offices of Cinergy, 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxx, and,
except for required business travel to an extent substantially
consistent with the present business travel obligations of Cinergy
executives who have positions of authority comparable to that of
the Executive, the Executive will not be required to relocate to a
new principal place of business that is more than thirty (30)
miles from Cinergy's current principal executive offices.
3. COMPENSATION. The Executive will receive the following compensation for
his services under this Agreement.
a. SALARY. The Executive's Annual Base Salary, payable not
less often than semi-monthly, will be at the annual rate of not
less than $350,004.00. The Board of Directors or its designee
may, from time to time, increase the Annual Base Salary as the
Board of Directors deems to be necessary or desirable, including
without limitation adjustments to reflect increases in the cost of
living. Any increase in the Annual Base Salary will not serve to
limit or reduce any other obligation of Cinergy under this
Agreement. The Annual Base Salary will not be reduced except for
across-the-board salary reductions similarly affecting all Cinergy
management personnel. If Annual Base Salary is increased during
the Employment Period, then the increased salary will be the
Annual Base Salary for all purposes under this Agreement.
b. RETIREMENT, INCENTIVE, WELFARE BENEFIT PLANS AND OTHER
BENEFITS. During the Employment Period, the Executive will be
eligible, and Cinergy will take all necessary action to cause the
Executive to become eligible, to participate in all short-term and
long-term incentive, stock option, restricted stock, performance
unit, savings, retirement and welfare plans, practices, policies
and programs applicable generally to employees and/or other senior
executives of Cinergy who are considered Tier II executives for
compensation purposes, except with respect
to any plan, practice, policy or program to which the Executive has
waived his rights in writing.
If the Executive retires after reaching age 50, the Executive will
be entitled and fully vested in a supplemental retirement benefit
equal to the difference between (1) his total benefit under all
Executive Retirement Plans, and (2) 60% of the Executive's Highest
Average Earnings times a fraction, the numerator of which is the
Executive's Years of Participation and the denominator of which is
35. If, however, the Executive's employment is terminated
following a Change in Control, for any reason other than Cause,
the Executive will be entitled to a supplemental retirement
benefit equal to the difference between (1) his total benefit
under all Executive Retirement Plans, and (2) 60% of the
Executive's Highest Average Earnings. The form, timing, and method
of payment of the supplemental retirement benefit payable under
this Paragraph will be the same as those elected by the Executive
under the Pension Plan. If the Executive dies after reaching age
50 but prior to his retirement, and if his Spouse, on the date of
his death, is living on the date the first installment of the
supplemental retirement benefit would be payable under this
Paragraph, the Spouse will be entitled to receive the supplemental
retirement benefit as a Spouse's benefit. The form, timing, and
method of payment of any Spouse's benefit under this Paragraph
will be the same as those applicable to the Spouse under the
Pension Plan.
Upon his retirement on or after having attained age fifty (50),
the Executive will be eligible for comprehensive medical and
dental insurance pursuant to the terms of the Retirees' Medical
Plan and the Retirees' Dental Plan. The Executive, however, will
receive the full subsidy provided by Cinergy to retirees for
purposes of determining the amount of monthly premiums due from
the Executive.
The Executive will be a participant in the Annual Incentive Plan,
and the Executive will be paid pursuant to that plan an annual
benefit of up to sixty percent (60%) of the Executive's Annual
Base Salary, with a target of no less than forty percent (40%) of
the Executive's Annual Base Salary (the "Target Annual Bonus").
The Executive will be a participant in the Long-Term Incentive
Plan (the "LTIP"), and the Executive's annualized target award
opportunity under the LTIP will be equal to no less than seventy
percent (70%) of his Annual Base Salary (the "Target LTIP Bonus").
c. FRINGE BENEFITS AND PERQUISITES. During the Employment
Period, the Executive will be entitled to the following additional
fringe benefits:
(i) Cinergy will furnish to the Executive an automobile and
will pay all of the
related expenses for gasoline, insurance, maintenance, and
repairs.
(ii) Cinergy will pay the initiation fee and the annual dues,
assessments, and other membership charges of the Executive
for membership in a country club selected by the Executive.
(iii) Cinergy will provide paid vacation for four (4) weeks per
year (or longer if permitted by Cinergy's policy).
(iv) Cinergy will furnish to the Executive annual financial
planning and tax preparation services. In addition, the
Executive will be entitled to receive such other fringe
benefits in accordance with Cinergy plans, practices,
programs, and policies in effect from time to time,
commensurate with his position and at least comparable to
those received by other Cinergy senior executives.
d. EXPENSES. Cinergy agrees to reimburse the Executive for
all expenses, including those for travel and entertainment,
properly incurred by him in the performance of his duties under
this Agreement in accordance with the policies established from
time to time by the Board of Directors.
e. RELOCATION BENEFITS. Following termination of the
Executive's employment for any reason (other than death), the
Executive will be entitled to reimbursement from Cinergy for the
reasonable costs of relocating from the Cincinnati, Ohio, area to
a new primary residence in a manner that is consistent with the
terms of the Relocation Program.
4. TERMINATION OF EMPLOYMENT
a. DEATH. The Executive's employment will terminate
automatically upon the Executive's death during the Employment
Period.
b. BY CINERGY FOR CAUSE. Cinergy may terminate the
Executive's employment during the Employment Period for Cause.
For purposes of this Employment Agreement, "Cause" means the
following:
(i) The willful and continued failure by the Executive to
substantially perform the Executive's duties with Cinergy
(other than any such failure resulting from the Executive's
incapacity due to physical or mental illness) after the
Board of Directors or the Chief Executive Officer has
delivered to the Executive a written demand for substantial
performance, which demand specifically identifies the
manner in which the Executive has not substantially
performed his duties. This event will constitute Cause
even
if the Executive issues a Notice of Termination for Good
Reason pursuant to Subsection 4d after the Board of
Directors or Chief Executive Officer delivers a written
demand for substantial performance.
(ii) The breach by the Executive of the confidentiality
provisions set forth in Section 9.
(iii) The conviction of the Executive for the commission of a
felony, including the entry of a guilty or nolo contendere
plea, or any willful or grossly negligent action or
inaction by the Executive that has a materially adverse
effect on Cinergy. For purposes of this definition of
Cause, no act, or failure to act, on the Executive's part
will be deemed "willful" unless it is done, or omitted to
be done, by the Executive in bad faith and without
reasonable belief that the Executive's act, or failure to
act, was in the best interest of Cinergy.
c. BY CINERGY WITHOUT CAUSE. Cinergy may, upon at least 30 days
advance written notice to the Executive, terminate the Executive's
employment during the Employment Period for a reason other than
Cause, but the obligations placed upon Cinergy in Section 5 will
apply.
d. BY THE EXECUTIVE FOR GOOD REASON. The Executive may terminate his
employment during the Employment Period for Good Reason. For
purposes of this Agreement, "Good Reason" means the following:
(i) A reduction in the Executive's Annual Base Salary, except
for across-the-board salary reductions similarly affecting
all Cinergy management personnel, or a reduction in any
other benefit or payment described in Section 3 of this
Agreement, except for changes to the employee benefits
programs affecting all Cinergy management personnel,
provided that those changes (either individually or in the
aggregate) will not result in a material adverse change
with respect to the benefits to which the Executive was
entitled as of the Effective Date.
(ii) The material reduction without his consent of the
Executive's title, authority, duties, or responsibilities
from those in effect immediately prior to the reduction or
a material adverse change in the Executive's reporting
responsibilities.
(iii) Any breach by Cinergy of any other material provision of
this Agreement (including but not limited to the place of
performance as specified in Subsection 2b).
(iv) The Executive's disability due to physical or mental
illness or injury that precludes the Executive from
performing any job for which he is qualified and able to
perform based upon his education, training or experience.
(v) A failure by the Company to require any successor entity to
the Company specifically to assume all of the Company's
obligations to the Executive under this Agreement.
e. BY THE EXECUTIVE WITHOUT GOOD REASON. The Executive may terminate
his employment without Good Reason upon prior written notice to
the Company.
f. NOTICE OF TERMINATION. Any termination of the Executive's
employment by Cinergy or by the Executive during the Employment
Period (other than a termination due to the Executive's death)
will be communicated by a written Notice of Termination to the
other party to this Agreement in accordance with Subsection 12b.
For purposes of this Agreement, a "Notice of Termination" means a
written notice that specifies the particular provision of this
Agreement relied upon and that sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for terminating
the Executive's employment under the specified provision. The
failure by the Executive or Cinergy to set forth in the Notice of
Termination any fact or circumstance that contributes to a showing
of Good Reason or Cause will not waive any right of the Executive
or Cinergy under this Agreement or preclude the Executive or
Cinergy from asserting that fact or circumstance in enforcing
rights under this Agreement.
5. OBLIGATIONS OF CINERGY UPON TERMINATION.
a. CERTAIN TERMINATIONS.
(i) If a Termination occurs during the Employment Period,
Cinergy will pay to the Executive a lump sum amount, in
cash, equal to the sum of the following Accrued
Obligations:
(1) the Executive's Annual Base Salary through the Date
of Termination to the extent not previously paid;
(2) an amount equal to the AIP Benefit for the fiscal
year that includes the Date of Termination
multiplied by a fraction, the numerator of which is
the number of days from the beginning of that fiscal
year to and including the Date of Termination and
the denominator of which is three hundred and
sixty-five (365). The AIP Benefit will be
determined using a percentage determined by the
Chief Executive Officer, in his discretion, up to
the maximum percentage
specified in Subsection 3b, but no less than the
Target Annual Bonus.
(3) any compensation previously deferred by the
Executive (together with any accrued interest or
earnings) and any accrued vacation pay, in each case
to the extent not previously paid.
The Accrued Obligations described in this Paragraph 5a(i)
will be paid within thirty (30) days after the Date of
Termination. These Accrued Obligations are payable to the
Executive regardless of whether a Change in Control has
occurred.
(ii) Prior to the occurrence of a Change in Control, and in the
event of (A) a Termination other than by reason of the
Executive's death, or (B) the Executive's termination of
his employment during the Employment Period for Good
Reason, Cinergy will pay the Accrued Obligations, and
Cinergy will have the following obligations:
(1) Cinergy will pay to the Executive a lump sum amount,
in cash, equal to three (3) times the sum of the
Annual Base Salary and the AIP Benefit. For this
purpose, the Annual Base Salary will be at the rate
in effect at the time Notice of Termination is given
(without giving effect to any reduction in Annual
Base Salary, if any, prior to the termination). The
AIP Benefit will be determined using a percentage
determined by the Chief Executive Officer, in his
discretion, which will not be less than the
Executive's annual target percentage for the fiscal
year in which the Termination occurs and will not be
greater than the maximum percentage specified in
Subsection 3b. This lump sum will be paid within
thirty (30) days of the Date of Termination.
(2) Cinergy will pay to the Executive the value of all
deferred compensation amounts and all executive life
insurance benefits whether or not they are otherwise
currently vested or payable. Payment will be made
in accordance with the terms of the applicable plan
or program.
(3) Except as provided under Clauses (A) and (B) below,
Cinergy will continue, until the end of the
Employment Period, medical and dental benefits to
the Executive and/or the Executive's family at least
equal to those that would have been provided if the
Executive's employment had not been terminated
(excluding benefits to which the Executive has
waived his rights in writing).
The benefits described in the preceding sentence will be
in accordance with the medical and welfare benefit
plans, practices, programs, or policies of Cinergy (the
"M&W Plans") as then currently in effect and applicable
generally to other Cinergy senior executives and their
families.
(A) If, as of the Executive's Date of
Termination, the Executive meets the eligibility
requirements for Cinergy's retiree medical and
welfare benefit plans, the provision of those
retiree medical and welfare benefit plans to the
Executive will satisfy Cinergy's obligation under
this Subparagraph 5a(ii)(3).
(B) If, as of the Executive's Date of
Termination, the provision to the Executive of
the M&W Plan benefits described in this
Subparagraph 5a(ii)(3) would either (1) violate
the terms of the M&W Plans or (2) violate any of
the Code's nondiscrimination requirements
applicable to the M&W Plans, then Cinergy, in its
sole discretion, may elect to pay the Executive,
in lieu of the M&W Plan benefits described under
this Subparagraph 5a(ii)(3), a lump sum cash
payment equal to the total monthly premiums that
would have been paid by Cinergy for the Executive
under the M&W Plans from the Date of Termination
through the end of the Employment Period.
Nothing in this Clause will affect the
Executive's right to elect COBRA continuation
coverage under a M&W Plan in accordance with
applicable law.
(C) If the Executive becomes employed by
another employer and is eligible to receive
medical or other welfare benefits under another
employer-provided plan, any benefits provided to
the Executive under the M&W Plans will be
secondary to those provided under the other
employer-provided plan during the Executive's
applicable period of eligibility.
(4) Ownership of the automobile assigned to the
Executive by Cinergy will be transferred to the
Executive within 30 days of the Date of
Termination. The effect of this transfer will be
grossed up for federal and state income taxes as
soon as administratively feasible after the
transfer is effective.
(5) Cinergy will provide tax counseling services
through an agency selected by the Executive, not
to exceed Fifteen Thousand Dollars ($15,000.00)
in cost.
(iii) In the event of Termination by Cinergy or by the Executive
for Good Reason upon or during the twenty-four (24) month
period after the occurrence of a Change in Control, then in
lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination and in lieu
of any other benefits payable pursuant to Paragraph 5a(ii),
Cinergy will have the following obligations:
(1) Cinergy will pay to the Executive a lump sum
severance payment, in cash, equal to the greater of:
(A) the present value of all amounts and benefits
that would have been due under Paragraph
5a(ii), excluding Subparagraphs 5a(ii)(3),
5a(ii)(4), and 5a(ii)(5), or
(B) three (3) times the sum of (x) the higher of
the Executive's Annual Base Salary in effect
immediately prior to the occurrence of the
event or circumstance upon which the Notice
of Termination is based or in effect
immediately prior to the Change in Control,
and (y) the higher of the amount paid to the
Executive pursuant to all annual incentive
compensation or bonus plans or programs
maintained by Cinergy in the year preceding
that in which the Date of Termination occurs
or in the year preceding that in which the
Change in Control occurs; and
(2) For a thirty-six (36) month period after the Date of
Termination, Cinergy will arrange to provide the
Executive with life, disability, accident, and
health insurance benefits substantially similar to
those that the Executive is receiving immediately
prior to the Notice of Termination (without giving
effect to any reduction in those benefits subsequent
to a Change in Control that constitutes Good
Reason), except for any benefits that were waived by
the Executive in writing. If Cinergy arranges to
provide the Executive with life, disability,
accident, and health insurance benefits, those
benefits will be reduced to the extent comparable
benefits are actually received by or made available
to the Executive without cost during the thirty-six
(36) month period following the Executive's Date of
Termination. The Executive must report to Cinergy
any such benefits that he actually receives. In
lieu of the benefits described
in the preceding sentences, Cinergy, in its sole
discretion, may elect to pay to the Executive a
lump sum cash payment equal to thirty-six (36)
times the monthly premiums that would have been
paid by Cinergy to provide those benefits to the
Executive. Nothing in this Subparagraph
5a(iii)(2) will affect the Executive's right to
elect COBRA continuation coverage in accordance
with applicable law.
(3) Ownership of the automobile assigned to the
Executive by Cinergy will be transferred to the
Executive within 30 days of the Date of Termination.
The effect of this transfer will be grossed up for
federal and state income taxes as soon as
administratively feasible after the transfer is
effective.
(4) Cinergy will provide tax counseling services through
an agency selected by the Executive, not to exceed
Fifteen Thousand Dollars ($15,000.00) in cost.
For purposes of this Paragraph (iii), the Executive will be
deemed to have incurred a Termination following a Change in
Control if the Executive's employment is terminated prior
to a Change in Control, without Cause at the direction of a
Person who has entered into an agreement with Cinergy, the
consummation of which will constitute a Change in Control,
or if the Executive terminates his employment for Good
Reason prior to a Change in Control if the circumstances or
event that constitutes Good Reason occurs at the direction
of such a Person.
b. TERMINATION BY CINERGY FOR CAUSE OR BY THE EXECUTIVE OTHER THAN
FOR GOOD REASON. Subject to the provisions of Section 7, if the
Executive's employment is terminated for Cause during the
Employment Period, or if the Executive terminates employment
during the Employment Period other than a termination for Good
Reason, Cinergy will have no further obligations to the Executive
under this Agreement other than the obligation to pay to the
Executive the Accrued Obligations, plus any other earned but
unpaid compensation, in each case to the extent not previously
paid.
c. CERTAIN TAX CONSEQUENCES.
(i) In the event that any Severance Benefits paid or payable to
the Executive or for his benefit pursuant to the terms of
this Agreement or otherwise in connection with, or arising
out of, his employment with Cinergy or a change in
ownership or effective control of Cinergy or of a
substantial portion of its assets (a "Payment" or
"Payments") would be subject to any
Excise Tax, then the Executive will 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, penalties, additional
tax, or similar items imposed with respect thereto and
the Excise Tax), including any 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.
(ii) An initial determination as to whether a Gross-Up Payment
is required pursuant to this Agreement and the amount of
that Gross-Up Payment will be made at Cinergy's expense by
an Accounting Firm selected by the Executive and reasonably
acceptable to Cinergy. The Accounting Firm will provide
its determination, together with detailed supporting
calculations and documentation, to Cinergy and the
Executive within 10 days after the Date of Termination, or
such other time as requested by Cinergy or by the
Executive, and if the Accounting Firm determines that no
Excise Tax is payable by the Executive with respect to a
Payment or Payments, it will furnish the Executive with an
opinion reasonably acceptable to the Executive that no
Excise Tax will be imposed with respect to any such Payment
or Payments. Within 10 days after the Accounting Firm
delivers its determination to the Executive, the Executive
will have the right to dispute the determination. The
Gross-Up Payment, if any, as determined pursuant to this
Subsection 5c will be paid by Cinergy to the Executive
within five days of the receipt of the Accounting Firm's
determination. The existence of a dispute will not in any
way affect the Executive's right to receive the Gross-Up
Payment in accordance with the determination. If there is
no dispute, the determination will be binding, final, and
conclusive upon Cinergy and the Executive. If there is a
dispute, then Cinergy and the Executive will together
select a second Accounting Firm, which will review the
determination and the Executive's basis for the dispute and
then will render its own determination, which will be
binding, final, and conclusive on Cinergy and on the
Executive. Cinergy will bear all costs associated with
that determination, unless the determination is not greater
than the initial determination, in which case all such
costs will be borne by the Executive.
(iii) The value of any non-cash benefits or any deferred payment
or benefit paid or payable to the Executive will be
determined in accordance with the principles of Code
paragraphs 280G(d)(3) and (4). For purposes of determining
the amount of the Gross-Up Payment, the Executive will be
deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and applicable
state and local income taxes at the highest
marginal rate of 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
that would be obtained from deduction of those state and
local taxes.
(iv) Notwithstanding anything contained in this Agreement to the
contrary, in the event that, according to the Accounting
Firm's determination, an Excise Tax will be imposed on any
Payment or Payments, Cinergy will pay to the applicable
government taxing authorities as Excise Tax withholding,
the amount of the Excise Tax that Cinergy has actually
withheld from the Payment or Payments in accordance with
law.
d. VALUE CREATION PLAN AND STOCK OPTIONS. Upon the
Executive's termination of employment for any reason, the
Executive's entitlement to restricted shares and performance
shares under the Value Creation Plan and any stock options
granted under the Stock Option Plan or the LTIP will be
determined under the terms of the appropriate plan and any
applicable administrative guidelines and written agreements.
e. OTHER FEES AND EXPENSES. Cinergy will also pay to the
Executive all legal fees and expenses incurred by the Executive
in successfully disputing a Termination that entitles the
Executive to Severance Benefits. Payment will be made within
five (5) business days after delivery of the Executive's
written request for payment accompanied by such evidence of
fees and expenses incurred as Cinergy reasonably may require.
6. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement will prevent or
limit the Executive's continuing or future participation in any benefit,
plan, program, policy, or practice provided by Cinergy and for which the
Executive may qualify, except with respect to any benefit to which the
Executive has waived his rights in writing or any plan, program, policy,
or practice that expressly excludes the Executive from participation. In
addition, nothing in this Agreement will limit or otherwise affect the
rights the Executive may have under any other contract or agreement with
Cinergy entered into after the Effective Date. Amounts that are vested
benefits or that the Executive is otherwise entitled to receive under any
benefit, plan, program, policy, or practice of, or any contract or
agreement entered into after the Effective Date with Cinergy, at or
subsequent to the Date of Termination, will be payable in accordance with
that benefit, plan, program, policy or practice, or that contract or
agreement, except as explicitly modified by this Agreement.
7. FULL SETTLEMENT: MITIGATION. Cinergy's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
under this Agreement will not be affected by any set-off, counterclaim,
recoupment, defense, or other claim, right, or action that Cinergy may
have against the Executive or others. In no event will the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts (including amounts for damages for breach)
payable to the Executive under any of the provisions of this Agreement
and, except as provided in Subparagraphs 5a(ii)(3) and 5a(iii)(2), those
amounts will not be reduced simply because the Executive obtains other
employment. If the Executive finally prevails on the substantial claims
brought with respect to any dispute between Cinergy and the Executive as
to the interpretation, terms, validity, or enforceability of (including
any dispute about the amount of any payment pursuant to) this Agreement,
Cinergy agrees to pay all reasonable legal fees and expenses that the
Executive may reasonably incur as a result of that dispute.
8. ARBITRATION. The parties agree that any dispute, claim, or controversy
based on common law, equity, or any federal, state, or local statute,
ordinance, or regulation (other than workers' compensation claims)
arising out of or relating in any way to the Executive's employment, the
terms, benefits, and conditions of employment, or concerning this
Agreement or its termination and any resulting termination of employment,
including whether such a dispute is arbitrable, shall be settled by
arbitration. This agreement to arbitrate includes but is not limited to
all claims for any form of illegal discrimination, improper or unfair
treatment or dismissal, and all tort claims. The Executive will still
have a right to file a discrimination charge with a federal or state
agency, but the final resolution of any discrimination claim will be
submitted to arbitration instead of a court or jury. The arbitration
proceeding will be conducted under the employment dispute resolution
arbitration rules of the American Arbitration Association in effect at
the time a demand for arbitration under the rules is made. The decision
of the arbitrator(s), including determination of the amount of any
damages suffered, will be exclusive, final, and binding on all parties,
their heirs, executors, administrators, successors and assigns. Each
party will bear its own expenses in the arbitration for arbitrators' fees
and attorneys' fees, for its witnesses, and for other expenses of
presenting its case. Other arbitration costs, including administrative
fees and fees for records or transcripts, will be borne equally by the
parties. Notwithstanding anything in this Section to the contrary, if
the Executive prevails with respect to any dispute submitted to
arbitration under this Section, Cinergy will reimburse or pay all legal
fees and expenses that the Executive may reasonably incur as a result of
the dispute as required by Section 7.
9. CONFIDENTIAL INFORMATION. The Executive will hold in a fiduciary
capacity for the benefit of Cinergy, as well as all of Cinergy's
successors and assigns, all secret, confidential information, knowledge,
or data relating to Cinergy, and its affiliated businesses, that the
Executive obtains during the Executive's employment by Cinergy or any of
its affiliated companies, and that has not been or subsequently becomes
public knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement). During the Employment
Period and thereafter, the Executive will not, without Cinergy's prior
written consent or as may otherwise by required by law or legal process,
communicate or divulge any such information, knowledge, or data to anyone
other than Cinergy and those designated by it. The
Executive understands that during the Employment Period, Cinergy may
be required from time to time to make public disclosure of the terms
or existence of the Executive's employment relationship to comply with
various laws and legal requirements. In addition to all other
remedies available to Cinergy in law and equity, this Agreement is
subject to termination by Cinergy for Cause under Section 4b in the
event the Executive violates any provision of this Section.
10. SUCCESSORS.
a. This Agreement is personal to the Executive and, without Cinergy's
prior written consent, cannot be assigned by the Executive
otherwise than by will or the laws of descent and distribution.
This Agreement will inure to the benefit of and be enforceable by
the Executive's legal representatives.
b. This Agreement will inure to the benefit of and be binding upon
Cinergy and its successors and assigns.
c. Cinergy 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 Cinergy to
assume expressly and agree to perform this Agreement in the same
manner and to the same extent that Cinergy would be required to
perform it if no succession had taken place. Cinergy's failure to
obtain such an assumption and agreement prior to the effective
date of a succession will be a breach of this Agreement and will
entitle the Executive to compensation from Cinergy in the same
amount and on the same terms as if the Executive were to terminate
his employment for Good Reason after a Change in Control, except
that, for purposes of implementing the foregoing, the date on
which any such succession becomes effective will be deemed the
Date of Termination.
11. DEFINITIONS. As used in this Agreement, the following terms, when
capitalized, will have the following meanings:
a. 1934 ACT. "1934 Act" means the Securities Exchange Act of 1934.
b. ACCOUNTING FIRM. "Accounting Firm" means an accounting firm that
is designated as one of the five largest accounting firms in the
United States (which may include Cinergy's independent auditors).
c. ACCRUED OBLIGATIONS. "Accrued Obligations" means the accrued
obligations described in Paragraph 5a(i).
d. AGREEMENT. "Agreement" means this Amended and Restated Employment
Agreement between Cinergy and the Executive.
e. AIP BENEFIT. "AIP Benefit" means the Annual Incentive Plan
benefit described in Subsection 3b.
f. ANNUAL BASE SALARY. "Annual Base Salary" means the annual base
salary payable to the Executive pursuant to Subsection 3a.
g. ANNUAL INCENTIVE PLAN. "Annual Incentive Plan" means the Cinergy
Corp. Annual Incentive Plan or any successor to that plan.
h. BOARD OF DIRECTORS. "Board of Directors" means the board of
directors of the Company.
i. CAUSE. "Cause" has the meaning set forth in Subsection 4b.
j. CHANGE IN CONTROL. "A Change in Control" will be deemed to have
occurred if any of the following events occur, after the Effective
Date:
(i) Any "person" or "group" (within the meaning of subsection
13(d) and paragraph 14(d)(2) of the 0000 Xxx) is or becomes
the beneficial owner (as defined in Rule l3d-3 under the
1934 Act), directly or indirectly, of securities of the
Company (not including in the securities beneficially owned
by such a Person any securities acquired directly from the
Company or its affiliates) representing more than twenty
percent (20%) of the combined voting power of the Company's
then outstanding securities, excluding any person who
becomes such a beneficial owner in connection with a
transaction described in Clause (1) of Paragraph (ii)
below; or
(ii) There is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company
with any other corporation, other than (1) a merger or
consolidation that would result in the voting securities of
the Company outstanding immediately prior to that merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity or its parent) at least sixty percent
(60%) of the combined voting power of the securities of the
Company or the surviving entity or its parent outstanding
immediately after the merger or consolidation, or (2) a
merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no person is or becomes the beneficial owner,
directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such a
Person any securities acquired directly from the Company or
its affiliates other than in connection with the
acquisition by the Company or its affiliates of a business)
representing
twenty percent (20%) or more of the combined voting power
of the Company's then outstanding securities; or
(iii) During any period of two consecutive years, individuals who
at the beginning of that period constitute the Board of
Directors and any new director (other than a director whose
initial assumption of office is in connection with an
actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election
of directors of the Company) whose appointment or election
by the Company's shareholders was approved or recommended
by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the
beginning of that period or whose appointment, election, or
nomination for election was previously so approved or
recommended cease for any reason to constitute a majority
of the Board of Directors; or
(iv) The shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the
Company of all or substantially all of the Company's
assets, other than a sale or disposition by the Company of
all or substantially all of the Company's assets to an
entity, at least sixty percent (60%) of the combined voting
power of the voting securities of which are owned by
shareholders of the Company in substantially the same
proportions as their ownership of the Company immediately
prior to the sale.
k. CHIEF EXECUTIVE OFFICER. "Chief Executive Officer" means the
chief executive officer of the Company.
l. CINERGY. "Cinergy" means the Company, Cinergy Services, Inc., The
Cincinnati Gas & Electric Company, and PSI Energy, Inc.
m. CODE. "Code" means the Internal Revenue Code of 1986, as amended,
and interpretive rules and regulations.
n. COMPANY. "Company" means Cinergy Corp.
o. DATE OF TERMINATION. "Date of Termination" means:
(i) if the Executive's employment is terminated by the Company
for Cause, or by the Executive with or without Good Reason,
the date of receipt of the Notice of Termination or any
later date specified in the notice, as the case may be;
(ii) if the Executive's employment is terminated by the Company
other than for Cause, thirty (30) days after the date on
which the Company notifies the Executive of the
termination; and
(iii) if the Executive's employment is terminated by reason of
death, the date of death.
p. EARNINGS. "Earnings" means the Executive's "Earnings" as defined
in the Pension Plan but without regard to the limitation of Code
paragraph 401(a)(17).
q. EFFECTIVE DATE. "Effective Date" means December 30, 1999.
r. EMPLOYMENT PERIOD. "Employment Period" has the meaning set forth
in Subsection 1b.
s. EXCISE TAX. "Excise Tax" means any excise tax imposed by Code
section 4999, together with any interest, penalties, additional
tax or similar items that are incurred by the Executive with
respect to the excise tax imposed by Code section 4999.
t. EXECUTIVE. "Executive" means Xxxxxx X. Xxxxx, Xx.
u. EXECUTIVE RETIREMENT PLANS. The "Executive Retirement Plans" are
the Pension Plan, the Supplemental Executive Retirement Plan, and
the Cinergy Corp. Excess Pension Plan or any successor to those
plans.
v. EXECUTIVE SUPPLEMENTAL LIFE PROGRAM. "Executive Supplemental Life
Program" means the Cinergy Corp. Executive Supplemental Life
Program or any successor to that plan.
w. GOOD REASON. "Good Reason" has the meaning set forth in
Subsection 4d.
x. XXXXX-UP PAYMENT. "Gross-Up Payment" has the meaning set forth in
Subsection 5c.
y. HIGHEST AVERAGE EARNINGS. "Highest Average Earnings" means the
greater of (a) the Executive's "Highest Average Earnings" as
defined in the Pension Plan (without regard to the limitation of
Code paragraph 401(a)(17)) or (b) the Executive's Earnings for the
12 consecutive calendar months immediately preceding his
termination of employment with Cinergy.
z. M&W PLANS. "M&W Plans" has the meaning given in Subparagraph
5a(ii)(3).
aa. LONG-TERM INCENTIVE PLAN. "Long-Term Incentive Plan" means the
long-term inventive plan implemented under the Cinergy Corp. 1996
Long-Term Incentive Compensation Plan or any successor to that
plan.
bb. NOTICE OF TERMINATION. "Notice of Termination" has the meaning
set forth in Subsection 4e.
cc. PAYMENT OR PAYMENTS. "Payment" or "Payments" has the meaning set
forth in Subsection 5c.
dd. PENSION PLAN. "Pension Plan" means the Cinergy Corp. Non-Union
Employees' Pension Plan or any successor to that plan.
ee. PERSON. "Person" has the meaning set forth in paragraph 3(a)(9)
of the 1934 Act, as modified and used in subsections 13(d) and
14(d) of the 1934 Act; however, a Person will not include the
following:
(i) Cinergy or any of its subsidiaries;
(ii) A trustee or other fiduciary holding securities under an
employee benefit plan of Cinergy or its subsidiaries;
(iii) An underwriter temporarily holding securities pursuant to
an offering of those securities; or
(iv) A corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
ff. RELOCATION PROGRAM. "Relocation Program" means the Cinergy Corp.
Relocation Program or any successor to that program, as in effect
on the date of the Executive's termination of employment.
gg. RETIREES' DENTAL PLAN. "Retirees' Dental Plan" means the Cinergy
Corp. Retirees' Dental Plan or any successor to that plan.
hh. RETIREES' MEDICAL PLAN. "Retirees' Medical Plan" means the Cinergy
Corp. Retirees' Medical Plan or any successor to that plan.
ii. SEVERANCE BENEFITS. "Severance Benefits" means the payments and
benefits payable to the Executive pursuant to Section 5.
jj. SPOUSE. "Spouse" means the Executive's lawfully married spouse.
For this
purpose, common law marriage or a similar arrangement will not be
recognized unless otherwise required by federal law.
kk. STOCK RELATED DOCUMENTS. "Stock Related Documents" means the
LTIP, the Cinergy Corp. Stock Option Plan, and the Value Creation
Plan and any applicable administrative guidelines and written
agreements relating to those plans.
ll. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. "Supplemental Executive
Retirement Plan" means the Cinergy Corp. Supplemental Executive
Retirement Plan or any successor to that plan.
mm. TARGET ANNUAL BONUS. "Target Annual Bonus" has the meaning set
forth in Subsection 3b.
nn. TARGET LTIP BONUS. "Target LTIP Bonus" has the meaning set forth
in Subsection 3b.
oo. TERMINATION. "Termination" means the termination of the
Executive's employment with Cinergy other than a termination by
Cinergy for Cause.
pp. VALUE CREATION PLAN. "Value Creation Plan" means the Value
Creation Plan of the LTIP.
qq. YEARS OF PARTICIPATION. The Executive's "Years of Participation"
will equal the lesser of (i) 35 or (ii) 25 plus two additional
years for each of the Executive's birthdays that he has reached
since his 50th birthday.
12. MISCELLANEOUS.
a. This Agreement will be governed by and construed in accordance
with the laws of the State of Ohio, without reference to
principles of conflict of laws. The captions of this Agreement
are not part of its provisions and will have no force or effect.
This Agreement may not be amended, modified, repealed, waived,
extended, or discharged except by an agreement in writing signed
by the party against whom enforcement of the amendment,
modification, repeal, waiver, extension, or discharge is sought.
Only the Chief Executive Officer or his designee will have
authority on behalf of Cinergy to agree to amend, modify, repeal,
waive, extend, or discharge any provision of this Agreement.
b. All notices and other communications under this Agreement will be
in writing and will be 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:
Xxxxxx X. Xxxxx, Xx.
Cinergy Corp.
000 Xxxx Xxxxxx Xxxxxx
X 0. Xxx 000
Xxxxxxxxxx, Xxxx 00000-0000
IF TO CINERGY:
Cinergy Corp.
000 Xxxx Xxxxxx Xxxxxx
P. 0. Xxx 000
Xxxxxxxxxx, Xxxx 00000-0000
Attn: Chief Executive Officer
or to such other address as either party has furnished to the
other in writing in accordance with this Agreement. All notices
and communications will be effective when actually received by the
addressee.
c. The invalidity or unenforceability of any provision of this
Agreement will not affect the validity or enforceability of any
other provision of this Agreement.
d. Cinergy may withhold from any amounts payable under this Agreement
such federal, state, or local taxes as are required to be withheld
pursuant to any applicable law or regulation.
e. The Executive's or Cinergy's failure to insist upon strict
compliance with any provision of this Agreement or the failure to
assert any right the Executive or Cinergy may have under this
Agreement, including without limitation the right of the Executive
to terminate employment for Good Reason pursuant to Subsection 4c
or the right of Cinergy to terminate the Executive's employment
for Cause pursuant to Subsection 4b, will not be deemed to be a
waiver of that provision or right or any other provision or right
of this Agreement.
f. This instrument contains the entire agreement of the Executive and
Cinergy with respect to the subject matter of this Agreement; and
subject to any agreements evidencing stock option or restricted
stock grants described in Subsection 3b and the Stock Related
Documents, all promises, representations, understandings,
arrangements, and prior agreements are merged into this Agreement
and accordingly superseded.
g. This Agreement may be executed in counterparts, each of which will
be deemed to be an original but all of which together will
constitute one and the same instrument.
h. Cinergy and the Executive agree that Cinergy will be authorized to
act for Cinergy with respect to all aspects pertaining to the
administration and interpretation of this Agreement.
IN WITNESS WHEREOF, the Executive and the Company have caused this
Agreement to be executed as of the Effective Date.
CINERGY CORP.; CINERGY
SERVICES, INC.; THE CINCINNATI
GAS & ELECTRIC COMPANY; AND PSI
ENERGY, INC.
By:
-------------------------------
Xxxxx X. Xxxxxx
Vice Chairman and Chief
Executive Officer
EXECUTIVE
-------------------------------
Xxxxxx X. Xxxxx, Xx.
