**Exhibit10a**

 

Retention Agreement

(Duck Creek BusinessUnit)

 

This Retention Agreement (“Agreement”) is made and effective as ofMarch 1, 2002, by and between Central Illinois Light Company, an Illinoiscorporation (hereinafter referred to as the “Company”) and James L. Luckey  (hereinafter referred to as the “KeyEmployee”).

 

Whereas, the Company has provided certain benefits to Key Employeeunder the Involuntary Severance Pay Plan;

 

Whereas, in addition to the benefits provided under the InvoluntarySeverance Plan, the Company has determined it should also enter into employmentretention agreements with certain key employees of the Company;

 

Whereas, James L. Luckey is a Key Employee of the Company;

 

Whereas, the Company is a subsidiary of CILCORP Inc.;

 

Whereas, should the possibility of a Change-in-Control arise, theCompany believes it to be in the best interests of the Company to minimizeconcerns that the Key Employee might be distracted by the personaluncertainties and risks created by the possibility of a Change-in-Control;

 

Now therefore, to assure the Company that it will have the continuedservice and dedication of the Key Employee notwithstanding the possibility,threat, or occurrence of a Change-in-Control of the Company or CILCORP Inc., toinduce the Key Employee to remain in the employ of the Company, and for othergood and valuable consideration, the Company and the Key Employee agree asfollows:

 

 

Section 1.               Definitions.

 

1.1           Acquiring Company.

 

For purposes of this Agreement, the “Acquiring Company” shall mean:

 

(a)  thesurviving corporation if the Company or CILCORP Inc.  merges or consolidates with or into another corporation in atransaction in which neither The AES Corporation nor any of its wholly-ownedsubsidiaries is the surviving corporation; or

 

(b)  thecorporation, person, other entity or group (other than The AES Corporation orany of its wholly-owned subsidiaries) who acquires all or substantially all ofthe Company’s assets or all or substantially all of the assets of the Company’sDuck Creek Business 

 

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Unit whether from the Company or a wholly-owned subsidiary of theCompany; or

 

(c)  thesurviving corporation if any wholly-owned subsidiary of the Company to whichthe assets of the Company’s Duck Creek Business Unit has been transferred,merges or consolidates with or into another corporation in a transaction inwhich such wholly-owned subsidiary is not the surviving corporation.

 

1.2           AgreementPeriod.  For purposes of this Agreement,the Agreement Period shall mean the time beginning on the Effective Date andending on the earlier of (i) two (2) years from the date of a Change-in-Controloccurring on or after the Effective Date, or (ii) April 1, 2006.

 

1.3           Change-in-Control.  For purposes of this Agreement, a“Change-in-Control” of the Company shall be deemed to have occurred:

 

(a)  if theCompany or CILCORP Inc. merges or consolidates with or into another corporationin a transaction in which neither The AES Corporation nor any of itswholly-owned subsidiaries is the surviving corporation; or

 

(b)  if theCompany sells or otherwise disposes of all or substantially all of theCompany’s assets to any corporation, person, other entity or group (other thanThe AES Corporation or any of its wholly-owned subsidiaries); or

 

(c)  if anycorporation, person, other entity or group (other than The AESCorporation,  or any of its wholly-ownedsubsidiaries) becomes, directly or indirectly, the owner of fifty percent (50%)or more of the voting stock of the Company or CILCORP Inc.; or

 

(d)  if theCompany sells or otherwise disposes of all or substantially all of the assetsof the Company’s Duck Creek Business Unit to any corporation, person, otherentity or group (other than The AES Corporation or any of its wholly-ownedsubsidiaries); or

 

(e)  if anywholly-owned subsidiary of the Company to which the assets of the Company’sDuck Creek Business Unit has been transferred, merges or consolidates with orinto another corporation in a transaction in which neither The AES Corporationnor any of its wholly-owned subsidiaries is the surviving corporation;  or

 

(f)  if anywholly-owned subsidiary of the Company to which the Company’s Duck CreekBusiness Unit has been transferred, sells or otherwise disposes of all orsubstantially all of the assets of the Duck Creek Business Unit to anycorporation, person, other entity or 

 

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group (other than The AES Corporation or any of its wholly-ownedsubsidiaries); or

 

(g)  if anycorporation, person, other entity or group (other than The AES Corporation orany of its wholly-owned subsidiaries) becomes, directly or indirectly, theowner of fifty percent (50%) of the voting stock of any wholly-owned subsidiaryof the Company to which the assets of the Company’s Duck Creek Business Unithas been transferred.

 

1.4           Effective Date.  For purposes of this Agreement, theEffective Date shall mean March 1, 2002.

 

1.5           InvoluntarySeverance Pay Plan.  For purposes ofthis Agreement, the Involuntary Severance Pay Plan shall mean the InvoluntarySeverance Pay Plan established by the Company, effective July 16, 2001.

 

 

Section 2.               Terminationof Employment.

 

2.1           Termination by theCompany or the Acquiring Company with Cause. For purposes of this Agreement, the Company or the Acquiring Company mayterminate the Key Employee’s employment during the Agreement Period forCause.  In the event of suchtermination, the Company or the Acquiring Company shall give the Key Employee aNotice of Termination in conformity with Section 4 herein.  For purposes of this Agreement, Cause shallmean:

 

(a)  the KeyEmployee’s continued failure to perform substantially his/her duties with theCompany or the Acquiring Company other than such failure resulting fromDisability (as hereinafter defined), as determined by the Chief ExecutiveOfficer of the Company (the “CEO”), after a written demand for substantialperformance is delivered to the Key Employee by the CEO which specificallyidentifies the manner in which the CEO believes that the Key Employee has notsubstantially performed his/her duties; or

 

(b)  the KeyEmployee’s engaging in illegal conduct or gross misconduct which the CEObelieves is materially and demonstrably injurious to the Company, The AESCorporation (prior to the Change-in-Control) or the Acquiring Company.

 

Any act or failure to act, on the instructions of the CEO of theCompany or Acquiring Company or based on the advice of counsel for the Companyshall be conclusively presumed to be done, or omitted to be done, by the KeyEmployee in good faith and in the best interests of the Company.

 

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2.2           Termination by theKey Employee for Good Reason.

 

The Key Employee’s employment with the Company or Acquiring Companyshall be deemed to be terminated by him/her for Good Reason if, during theAgreement Period, the Key Employee terminates his/her employment relationshipwith the Company or Acquiring Company for one of the following events:

 

(a)  there is areduction by the Company or the Acquiring Company in the Key Employee’s AnnualCompensation;

 

(b)  there is amaterial reduction in the Key Employee’s benefits; or

 

(c)  theCompany or the  Acquiring Companynotifies the Key Employee that he/she will be required to change the KeyEmployee’s principal place of employment during the Agreement Period to alocation that is more than 50 miles from the Key Employee’s principal place ofemployment immediately prior to the Effective Date; or

 

(d)  theCompany or the Acquiring Company requires the Key Employee to travel onbusiness to  a substantially greaterextent than required immediately prior to the Effective Date.

 

In the event the Key Employee terminates his/her employment for GoodReason, the Key Employee shall notify the Company in accordance with Section 4within thirty (30) days of the date following the first occurrence of an eventdescribed herein.   If the Key Employeefails to notify the Company within thirty (30) days of the date following theoccurrence of an event described herein, then the Key Employee shall be deemedto have accepted the event and shall be deemed to have waived his/her right toterminate for Good Reason for that event. For purposes of this Agreement, Annual Compensation shall include BaseSalary as defined in Section 3.2, plus the annual target level of any bonusestablished for the Key Employee for the fiscal year in which aChange-in-Control occurs, assuming an achievement level of one hundred percent(100%) of any target award established under an incentive compensation or bonusor stock option plan of the Company in which the Key Employee participates, orif there was no annual target level of any bonus established for the KeyEmployee for the fiscal year in which a Change-in-Control occurs, then AnnualCompensation shall include Base Salary, plus the amount of any cash bonus andthe Black Scholes value of any stock options granted to the Key Employee forperformance/calendar year 2000.

 

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2.3           Termination byRetirement or Death.

 

For purposes of this Agreement, termination of the Key Employee’semployment based on Retirement during the Agreement Period shall mean voluntarytermination in accordance with the Company’s retirement policy, including earlyretirement, generally applicable to the Company’s salaried employees.  The Key Employee’s death during theAgreement Period shall automatically terminate his/her employment.  In either the event of retirement or death,the Company shall pay the Key Employee or the Key Employee’s beneficiary(ies)any unpaid Base Salary, as defined in Section 3.2, and pay for any accrued,unused vacation through the Date of Termination, at the salary rate then ineffect, plus all other amounts to which the Key Employee or the Key Employee’s beneficiary(ies)are entitled under any retirement, survivor’s benefits, insurance, and otherapplicable programs of the Company then in effect, and the Company shall haveno further obligations to the Key Employee and the Key Employee’sbeneficiary(ies) under this Agreement.

 

2.4           Termination byDisability.

 

If the Company determines in good faith that the Key Employee’sDisability has occurred during the Agreement Period (pursuant to the definitionof Disability as set forth in the Company’s Long-Term Disability Plan then ineffect), it may give the Key Employee written notice, in accordance withSection 4 herein, of its intention to terminate the Key Employee’semployment.  In such event, the KeyEmployee’s employment with the Company will terminate within thirty (30) daysafter written Notice of Termination is received by the Key Employee(“Disability Effective Date”) and provided that within thirty (30) days afterreceiving such notice, the Key Employee has not returned to the full-timeperformance of his/her duties.  The KeyEmployee shall receive his/her unpaid Base Salary, as defined in Section 3.2,through the Disability Effective Date at which point the Key Employee’scompensation and benefits, if any, shall be determined in accordance with theCompany’s retirement, insurance, and other applicable plans and programs ineffect on the Disability Effective Date, and the Company shall have no furtherobligations to the Key Employee under this Agreement.

 

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Section 3.               Obligationsof the Company following the Effective Date.

 

3.1           No RetentionPayment.

 

If, during the Agreement Period, the Key Employee voluntarilyterminates his/her employment with the Company, no payments under thisAgreement will be made.

 

3.2           Salary ContinuationPayment upon Termination.

 

If, during the Agreement Period, the Company or Acquiring Companyterminates the Key Employee’s employment for any reason other than for Cause,Death, Disability or Retirement or if the Key Employee terminates employmentfor Good Reason, the Key Employee shall receive, in addition to any salary,benefit or compensation due the Key Employee as of the Termination Date, (a) anamount equal to three (3) times the Key Employee’s Base Salary if theTermination Date of the Key Employee falls within the period commencing on theEffective Date and ending twelve (12) months following the date of aChange-in-Control, and two (2) times the Key Employee’s Base Salary if theTermination Date of the Key Employee falls within the period commencing withthe first  day following the anniversaryof the date of a Change-in-Control, but before the expiration of the AgreementPeriod (collectively “Salary Continuation Payment”); and less (b) an amountequal to any Severance Payments made to Key Employee under the InvoluntarySeverance Pay Plan; and plus (c) an amount equal to 18 less the total number ofmonths for which the Key Employee is to receive Severance Payments under theInvoluntary Severance Plan, times the monthly premium charged to a terminatedKey Employee who selects continuation of coverage under the Company’scomprehensive hospital and medical insurance plan (commonly known as “COBRApayments.”)  The Company shall alsoprovide the Key Employee with years of service and compensation credits, alongwith commensurate additional benefits, if any, the Key Employee would haveaccrued during the Agreement Period, but for the termination, in any qualifiedor non-qualified pension, retirement, supplemental benefit or compensation deferralplan in effect on the Termination Date.  For purposes of this Agreement, Base Salary shall only include theannual base salary payable to the Key Employee (the greater of annual base payrate in effect during the month immediately preceding the Termination Date orthe annual base pay rate in effect during the month immediately prior to aChange-in-Control), and shall not include the amount of any bonuses or stockoptions payable to the Key Employee.

 

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3.3           Timing of Payments.

 

All payments made by the Company pursuant to Section 3.2  shall be paid within thirty (30) days of theTermination Date.  As a precondition toreceiving the payments, the Key Employee shall execute a release of all claimsin favor of the Company or Acquiring Company in a form satisfactory to it.

 

3.4           Tax Indemnity.

 

In the event it shall ultimately be determined by a court or theInternal Revenue Service that any payment by the Company to or for the benefitof the Key Employee (whether paid or payable pursuant to the terms of thisAgreement) would be subject to the excise tax (including penalties andinterest) imposed by Section 4999 of the Internal Revenue Code of 1986, asamended, (the “Code”), then the Key Employee shall be entitled to receive alump sum cash payment sufficient to place the Key Employee in the same netafter-tax position as if the excise tax had not been imposed (a “gross up”payment).  The determination of themaximum gross up amount payable to the Key Employee shall be made by anaccounting firm designated by the Company and shall be paid to the Key Employeewithin thirty (30) days of such determination.

 

 

Section 4.               Notice ofTermination.

 

Any termination by the Company or Acquiring Company for Cause or Disabilityor by the Key Employee for Good Reason shall be communicated by a writtennotice of termination (“Notice of Termination”) to the other party hereto andshall mean a notice which shall indicate the specific termination provision inthis Agreement relied upon by the party, shall set forth in reasonable detailthe facts and circumstances claimed to provide a basis for termination of theKey Employee’s employment under the provision indicated, and shall set forththe date of termination (“Termination Date”). The failure by the Company or Acquiring Company, or Key Employee to setforth in the Notice of Termination any fact or circumstance which contributesto a showing of Cause or Good Reason shall not waive any right of the Companyor the Key Employee, respectively, from asserting such fact or circumstance inenforcing the Key Employee’s or the Company’s rights hereunder.

 

 

Section 5.               Not aContract of Employment.

 

The employment-at-will relationship between the Key Employee and theCompany shall continue except as modified by this Agreement.

 

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Section 6.               GoverningLaw.

 

This Agreement shall be governed by, and construed in accordance with,the laws of the State of Illinois.

 

 

Section 7.               Successorsand Assigns.

 

This Agreement shall be binding on the Company and any assignee orsuccessor in interest to the Company and of the Key Employee and his/her heirs,assigns or legatees.

 

 

Section 8.               Arbitrationand Legal Fees.

 

The Key Employee and the Company agree to have any dispute orcontroversy arising under or in connection with this Agreement settled byarbitration using an Arbitration Panel. For the purposes of this Agreement, the term “Arbitration Panel” shallmean three independent arbitrators, one of whom shall be selected by theCompany, one by the Key Employee and the third shall be selected by the twoother arbitrators.  In the event thatagreement cannot be reached on the selection of the third arbitrator, such arbitratorshall be selected by the American Arbitration Association.  All arbitrators shall be selected from alist provided by the American Arbitration Association, and all matterspresented to the Arbitration Panel shall be decided by majority vote.  The Key Employee and the Company agree thatany decision rendered in any such arbitration proceeding shall be final andbinding and that each of the parties waives their rights to seek remedies incourt, including the right to jury trial. All expenses of such arbitration, including the fees and expenses of thecounsel for the Key Employee and the Company shall be borne by the Companyand/or the Key Employee in the amount determined by the arbitrator.  Any such arbitration shall be held in theCity of Peoria, Illinois, unless the Company and Key Employee mutually agree onanother location.

 

 

Section 9.               Term ofAgreement.

 

The Agreement shall continue until, and terminate upon, the expirationof the Agreement Period.

 

 

Section 10.             Notice.

 

For purposes of this Agreement, notices and all other communicationsprovided for in this Agreement shall be in writing and shall be deemed to havebeen duly given when hand delivered or mailed by United States certified mail,return receipt requested, postage prepaid, provided that all notices to theCompany be addressed to:

 

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|   | Central Illinois Light Company |   |
|--------|--------------------------------|--------|
|   | 300 Liberty Street             |   |
|   | Peoria, Illinois   61602  |   |
|   | Attention:   President    |   |

 

or to the Corporate Secretary of any successor company at its principalplace of business;

 

and if to the Key Employee addressed to:

 
|   | James L. Luckey         |   |
|--------|-------------------------|--------|
|   | 3343 Lexington Court    |   |
|   | Peoria, IL   61615 |   |

 

 

Section 11.             Non-exclusiveRights.

 

Nothing in this Agreement shall prevent or limit the Key Employee’scontinuing or future participation in any plan, program, policy or practiceprovided by the Company or any of its subsidiaries for which the Key Employeemay qualify, nor shall it affect such rights as the Key Employee may have underany contract or agreement with the Company or any of its subsidiaries.

 

 

Section 12.             Amendmentof Agreement.

 

During the Agreement Period, this Agreement may not be terminated, oramended in any manner, which has an adverse effect on the Key Employee’s rightshereunder without the Key Employee’s written consent.  Notwithstanding any other provision hereof, the Agreement may beamended after a Change-in-Control occurs to the extent necessary in order toobtain or maintain the status of the Company’s retirement plans as qualifiedplans under Section 401(a) of the Code.

 

 

Section 13.             EntireAgreement.

 

This Agreement constitutes the entire agreement between the parties andsupercedes all prior agreements, if any, understandings and arrangements, oralor written, between the parties hereto, including the Company’s predecessors,with respect to the subject matter hereof.

 
| KEY EMPLOYEE:   |   |   | COMPANY: |                           |   |
|-----------------|--------|--------|----------|--------------------------------|--------|
|            |   |   |     |                           |   |   |   |   |
|            |   |   |     | CENTRAL ILLINOIS LIGHT COMPANY |   |   |
|            |   |   |     |                           |   |   |   |   |
|            |   |   |     |                           |   |   |   |   |
|            |   |   |     |                           | By:    |   |   |   |   |
| James L. Luckey |   |   |     |                           |   | Leonard M. Lee |   |   |   |
|            |   |   |     |                           |   | Chairman of the Board |   |   |   |
|                 |        |        |          |                                |        |  |  |  |  |  |  |

 

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