**Exhibit 10-dddd**

 

# **EMPLOYMENT AGREEMENT**

 

 

                This EMPLOYMENT AGREEMENT is made and entered into asof the 1st day of May, 2003 (the “Effective Date”), by and betweenCinergy and Lynn J. Good (the “Executive”). This Agreement replaces and supersedes any and all prior employmentagreements between Cinergy and the Executive. The capitalized words and terms used throughout this Agreement aredefined in Section 11.

 

 

**Recitals**

 

A.            The Executive is currently serving as Vice President,Financial Project Strategy & Oversight. Cinergy desires to secure the continued employment of the Executive inaccordance with this Agreement.

 

B.            The Executive is willing to continue to remain in theemploy of Cinergy on the terms and conditions set forth in this Agreement.

 

C.            The parties intend that this Agreement will replace andsupersede any and all prior employment agreements between Cinergy (or anycomponent company or business unit of Cinergy) and the Executive.

 

**Agreement**

 

                Inconsideration of the mutual promises, covenants and agreements set forth below,the parties agree as follows:

 

**1.****                                     ****Employment and Term****.**

 

a.                                       Cinergy agreesto employ the Executive, and the Executive agrees to remain in the employ ofCinergy, in accordance with the terms and provisions of this Agreement, for theEmployment Period set forth in Section 1b. The parties agree that the Company will be responsible for carrying outall of the promises, covenants, and agreements of Cinergy set forth in thisAgreement.

 

b.                                      The EmploymentPeriod of this Agreement will commence as of the Effective Date and continueuntil December 31, 2004; provided that, commencing on December 31, 2003, and oneach subsequent December 31, the Employment Period will be extended forone (1) additional year unless either party gives the other party writtennotice not to extend this Agreement at least ninety (90) days before theextension would otherwise become effective.

 

 

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**2.             Duties and Powers of Executive.**

 

a.                                       Position.  The Executive will serve Cinergy as VicePresident, Financial Project Strategy & Oversight, or such other position(including Vice President, Controller) as Cinergy may determine from time totime, and she will have such responsibilities, duties, and authority as are customaryfor someone of that position and such additional duties, consistent with herposition, as may be assigned to her from time to time during the EmploymentPeriod by the Board of Directors, the Chief Executive Officer, or the seniorexecutive officer to whom she directly reports. Executive shall devote substantially all of Executive’s business time,efforts and attention to the performance of Executive’s duties under thisAgreement; provided, however, that this requirement shall notpreclude Executive from reasonable participation in civic, charitable orprofessional activities or the management of Executive’s passive investments,so long as such activities do not materially interfere with the performance ofExecutive’s duties under this Agreement.

 

b.                                      Place ofPerformance.  Inconnection with the Executive’s employment, the Executive will be based at theprincipal executive offices of Cinergy, 221East Fourth Street, Cincinnati, Ohio. ** **Except for required business travelto an extent substantially consistent with the present business travelobligations of Cinergy executives who have positions of authority comparable tothat of the Executive, the Executive will not be required to relocate to a newprincipal place of business that is more than thirty (30) miles from suchlocation.

 

**3.****                                     ****Compensation****.**  The Executive will receive the followingcompensation for her services under this Agreement.

 

a.                                       Salary.  The Executive’s Annual Base Salary, payablein pro-rata installments not less often than semi-monthly, will be at theannual rate of not less than $270,000. Any increase in the Annual Base Salary will not serve to limit or reduceany other obligation of Cinergy under this Agreement.  The Annual Base Salary will not be reducedexcept for across-the-board salary reductions similarly affecting all Cinergymanagement personnel.  If Annual BaseSalary is increased or reduced during the Employment Period, then such adjustedsalary will thereafter be the Annual Base Salary for all purposes under thisAgreement.

 

b.                                      Retirement,Incentive, Welfare Benefit Plans and Other Benefits.

 
| (i) |   | 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  short-term and long-term incentive, stock option, restricted stock,  performance unit, savings, retirement and welfare plans, practices, policies  and programs applicable generally to other senior executives of Cinergy at  her level in the organization, except with respect |
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|   |   | to any plan, practice,  policy or program to which the Executive has waived her rights in  writing.  The Executive will be a  participant in the Senior Executive Supplement portion of the Cinergy Corp.  Supplemental Executive Retirement Plan.   The Executive acknowledges and agrees that, except in the event of a  Change in Control, she will not be entitled to receive her benefits (if any)  in the form of a lump sum payment under the Cinergy Corp. Supplemental Executive  Retirement Plan and/or the Cinergy Corp. Excess Pension Plan. |
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| (ii) |   | Upon her retirement on or  after having attained age 50, the Executive will be eligible for  comprehensive medical and dental benefits which are not materially different  from the benefits provided to retirees under the Cinergy Corp. Welfare  Benefits Program or any similar program or successor to that program.  For purposes of determining the amount of  the monthly premiums due from the Executive, the Executive will receive from  Cinergy the maximum subsidy available as of the date of her retirement to an  active Cinergy employee with the same medical benefits  classification/eligibility as the Executive’s medical benefits  classification/eligibility on the date of her retirement. |
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| (iii) |   | The Executive will be a  participant in the Annual Incentive Plan and will be paid pursuant to the  terms and conditions of that plan, subject to the following:  (1) The maximum annual bonus shall be not  less than seventy percent (70%) of the Executive’s Annual Base Salary (the  “Maximum Annual Bonus”); and (2) The target annual bonus shall be not less  than forty percent (40%) of the Executive’s Annual Base Salary (the “Target  Annual Bonus”). |
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| (iv) |   | 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-five percent (75%) of her Annual Base Salary (the “Target LTIP  Bonus”). |
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| (v) |   | For purposes of Sections  3b(iii) and 3b(iv), the Executive’s Annual Base Salary for any calendar year  shall be increased by the amount of any Nonelective Employer Contributions  made on behalf of the Executive during such calendar year under the 401(k)  Excess Plan. |
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| (vi) |   | Cinergy  will recommend to the compensation committee of the Board (the “Committee”)  that, no later than the first Committee meeting following the Effective Date,  the Executive be granted the number of restricted shares of Cinergy Corp.  Common Stock, par value of $0.01 per share (“Common Stock”) that has an  aggregate value of $150,000 as of the date of grant, which number of shares  shall be determined as if such shares were fully vested and not subject to  any restrictions (the “Restricted Shares”). Except |
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|   |   | as otherwise provided in the applicable Stock  Related Documents and this Agreement, the Restricted Shares will be  substantially nonvested (within the meaning of Section 83 of the Code) until  the third anniversary of the date of grant, subject to the Executive’s  continued employment with Cinergy until that time. Notwithstanding the  foregoing and Section 5d, upon the occurrence of a Change in Control, any  Restricted Shares then held by the Executive shall, to the extent not otherwise  provided in the applicable Stock Related Documents, become immediately  vested. The Restricted Shares will be subject to the terms, definitions and  provisions of the applicable Stock Related Documents. |
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c.                                       FringeBenefits and Perquisites.  During the Employment Period, the Executivewill be entitled to the following additional fringe benefits in accordance withthe terms and conditions of Cinergy’s policies and practices for such fringebenefits:

 
| (i)     |       | Cinergy will furnish to the Executive an automobile  cash allowance at least comparable to that received by other Cinergy  executives at her level in the organization.                                                                                                                                                                                                                                                                                                                                                                                                                                   |
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| (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.                                                                                                                                                                                                                                                                                                                                                                                                                         |
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| (iii)   |       | Cinergy will provide paid vacation for four (4)  weeks per year (or such longer period for which Executive is otherwise  eligible under Cinergy’s policy).                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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| (iv)    |       | Cinergy will furnish to  the Executive annual financial planning and tax preparation services,  provided, however, that the cost to Cinergy of such services shall not exceed  $15,000 during any thirty-six (36) consecutive month period. Notwithstanding  the preceding sentence, any payment to the Executive pursuant to this Section  3c(iv) will be grossed-up to cover all applicable federal, state and local  income and employment taxes, calculated after assuming that the Executive  pays such taxes for the year in which the payment occurs at the highest marginal  tax rate applicable. |
| **(v)** | ** ** | **Cinergy will provide other fringe benefits in accordance  with Cinergy plans, practices, programs, and policies in effect from time to  time, commensurate with her position and at least comparable to those  received by other Cinergy executives at her level in the organization.**                                                                                                                                                                                                                                                                                                                 |

 

d.                                      Expenses.  Cinergy agrees to reimburse theExecutive for all expenses, including those for travel and entertainment,properly incurred by her in the performance of her duties under this Agreement inaccordance with the policies established from time to time by the Board ofDirectors.

 

 

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### e.                                       Stock Options and Stock Appreciation Rights.  Notwithstanding Section 5d, upon theoccurrence of a Change in Control, any stock options or stock appreciationrights then held by the Executive pursuant to the LTIP or Cinergy Corp. StockOption Plan shall, to the extent not otherwise provided in the applicable StockRelated Documents, become immediately exercisable.  If the Executive terminates employment for anyreason during the twenty-four (24) month period commencing upon the occurrenceof a Change in Control, notwithstanding Section 5d, any stock options or stockappreciation rights then held by the Executive pursuant to the LTIP or CinergyCorp. Stock Option Plan shall, to the extent not otherwise provided in theapplicable Stock Related Documents, remain exercisable in accordance with theirterms but in no event for a period less than the lesser of (i) three monthsfollowing such termination of employment or (ii) the remaining term of suchstock option or stock appreciation right (which remaining term shall bedetermined without regard to such termination of employment).

 

**4.             Termination ofEmployment.**

 

a.                                       Death.  The Executive’s employment will terminateautomatically upon the Executive’s death during the Employment Period.

 

b.                                      By Cinergy for Cause.  Cinergy may terminate the Executive’semployment 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) that, if curable, has not been  cured within 30 days 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 her duties. This event will  constitute Cause even if the Executive issues a Notice of Termination for  Good Reason pursuant to Section 4d after the Board of Directors or Chief  Executive Officer delivers a written demand for substantial performance. |
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| (ii)   |   | The breach by the  Executive of the confidentiality provisions set forth in Section 9.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
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| (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                                                                                                                                                                                                                                                                                                                                                                                                  |

 

 

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|   |   | 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. |
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c.                                       By Cinergy Without Cause.  Cinergy may, upon at least 30 days advancewritten notice to the Executive, terminate the Executive’s employment duringthe Employment Period for a reason other than Cause, but the obligations placedupon Cinergy in Section 5 will apply.

 

d.                                      By theExecutive for Good Reason.  The Executive may terminate her employmentduring the Employment Period for Good Reason. For purposes of this Agreement, “Good Reason” means the following:

 
| (i)    |   | (1) A reduction in the  Executive’s Annual Base Salary, except for across-the-board salary reductions  similarly affecting all Cinergy management personnel, or (2) a reduction in  any other benefit or payment described in Section 3 of this Agreement, except  for changes to the employee benefits programs generally affecting Cinergy  management personnel, provided that those changes, 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. |
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| (ii)   |   | (1) The material reduction  without her consent of the Executive’s title, authority, duties, or  responsibilities from those in effect immediately prior to the reduction, or  (2) a material adverse change in the Executive’s reporting responsibilities.                                                                                                                                                                                                                                                                                             |
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| (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 Section 2b).                                                                                                                                                                                                                                                                                                                                                                                                     |
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| (iv)   |   | The Executive’s  disability due to physical or mental illness or injury that precludes the  Executive from performing any job for which she is qualified and able to  perform based upon her education, training or experience.                                                                                                                                                                                                                                                                                                                              |
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| (v)    |   | A failure by the Company  to require any successor entity to the Company specifically to assume in  writing all of the Company’s obligations to the Executive under this  Agreement.                                                                                                                                                                                                                                                                                                                                                                         |

 

For purposes of determining whether Good Reasonexists with respect to a Qualifying Termination occurring on or within 24months following a Change in Control, any claim by the Executive that GoodReason exists shall be presumed to be correct unless the Company establishes tothe Board by clear and convincing evidence that Good Reason does not exist.

 

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                                                e.                                       By the Executive Without Good Reason.  The Executive may terminate her employmentwithout Good Reason upon prior written notice to the Company.

 

f.                                         Notice of Termination.  Any termination of the Executive’s employmentby Cinergy or by the Executive during the Employment Period (other than atermination due to the Executive’s death) will be communicated by a writtenNotice of Termination to the other party to this Agreement in accordance withSection 12b.  For purposes of thisAgreement, a “Notice of Termination” means a written notice that specifies theparticular provision of this Agreement relied upon and that sets forth inreasonable detail the facts and circumstances claimed to provide a basis forterminating the Executive’s employment under the specified provision.  The failure by the Executive or Cinergy toset forth in the Notice of Termination any fact or circumstance thatcontributes to a showing of Good Reason or Cause will not waive any right ofthe Executive or Cinergy under this Agreement or preclude the Executive orCinergy from asserting that fact or circumstance in enforcing rights under thisAgreement.

 

### g.                                      Sale of Company Stock.  The Executive acknowledgesand agrees that she shall not sell or otherwise dispose of any shares ofCompany stock acquired pursuant to the exercise of a stock option, other thanshares sold in order to pay an option exercise price or the related taxwithholding obligation, until 90 days after the Date of Termination.  Notwithstanding the foregoing, Cinergy, inits sole discretion, may waive the restrictions contained in the previoussentence.

 

**5.             Obligations ofCinergy Upon Termination.**

 

a.                                       CertainTerminations. 

(i)                                     If aQualifying Termination occurs during the Employment Period, Cinergy will pay tothe Executive a lump sum amount, in cash, equal to the sum of the followingAccrued Obligations:

(1)                                  thepro-rated portion of the Executive’s Annual Base Salary payable through theDate of Termination, to the extent not previously paid.

(2)                                  any amountpayable to the Executive under the Annual Incentive Plan in respect of the mostrecently completed fiscal year, to the extent not theretofore paid.

(3)                                  an amountequal to the AIP Benefit for the fiscal year that includes the Date ofTermination multiplied by a fraction, the numerator of which is the number ofdays from the beginning of that fiscal year to and including the Date ofTermination and the denominator of which is three hundred and sixty-five(365).  The AIP Benefit component of thecalculation will be equal to the annual bonus that 

 

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would have been earned by the Executive pursuant toany annual bonus or incentive plan maintained by Cinergy in respect of thefiscal year in which occurs the Date of Termination, determined by projectingCinergy’s performance and other applicable goals and objectives for the entirefiscal year based on Cinergy’s performance during the period of such fiscalyear occurring prior to the Date of Termination, and based on such otherassumptions and rates as Cinergy deems reasonable.

 
|   |   | (4) |   | the  Accrued Obligations described in this Section 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. |
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| (ii) |   | In the  event of a Qualifying Termination either prior to the occurrence of a Change  in Control, or more than twenty-four (24) months following the occurrence of  a Change in Control, Cinergy will pay the Accrued Obligations, and Cinergy  will have the following additional obligations described in this Section  5a(ii); provided, however, that each of the benefits described below in this  Section 5a(ii) shall only be provided to the Executive if, upon presentation  to the Executive following a Qualifying Termination, the Executive timely  executes and does not timely revoke the Waiver and Release. |
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|   |   | (1) |   | Cinergy  will pay to the Executive a lump sum amount, in cash, equal to two (2) times  the sum of the Annual Base Salary and the Annual Bonus.  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, other than across-the-board reductions), and shall include the  amount of any Nonelective Employer Contributions made on behalf of the  Executive under the 401(k) Excess Plan during the fiscal year in which the  Executive’s Qualifying Termination occurs, and the Annual Bonus will be the  higher of (A) the annual bonus earned by the Executive pursuant to any annual  bonus or incentive plan maintained by Cinergy in respect of the year ending  immediately prior to the fiscal year in which occurs the Date of Termination,  and (B) the annual bonus that would have been earned by the Executive  pursuant to any annual bonus or incentive plan maintained by Cinergy in  respect of the fiscal year in which occurs the Date of Termination,  calculated by projecting Cinergy’s performance and other applicable goals and  objectives for the entire fiscal year based on Cinergy’s performance during  the period of such fiscal year occurring prior to the Date of Termination,  and based on such other assumptions and rates as Cinergy deems reasonable;  provided, however that for purposes of |
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|   |   |   |   | this  Section 5a(ii)(1)(B), the Annual Bonus shall not be less than the Target  Annual Bonus, nor greater than the Maximum Annual Bonus for the year in which  the Date of Termination occurs.  This  lump sum will be paid within thirty (30) days after the expiration of the  revocation period contained in the Waiver and Release. |
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|   |   | (2) |   | Subject  to Clauses (A), (B) and (C) below, Cinergy will provide, until the end of the  Employment Period, medical and dental benefits to the Executive and/or the Executive’s  dependents 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 her 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.  In the  event that any medical or dental benefits, or payments pursuant to Section  5a(ii)(2)(B), are subject to federal, state or local income taxes, Cinergy  shall provide the Executive with an additional payment in the amount  necessary such that after payment by the Executive of all such taxes,  including the taxes imposed on the additional payment, the Executive retains  an amount equal to the medical or dental benefits or payments pursuant to  Section 5a(ii)(2)(B). |
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|   |   |   |   | (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 Section 5a(ii)(2). |
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|   |   |   |   | (B) |   | If, as  of the Executive’s Date of Termination, the provision to the Executive of the  M&W Plan benefits described in this Section 5a(ii)(2) would either  (1)  violate the terms of the M&W Plans (or any related insurance  policies) 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 Section 5a(ii)(2), a lump sum cash payment  equal to the total monthly premiums (or in the case of a self funded plan,  the cost of COBRA continuation coverage) 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 |
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|   |   |   |   |   |   | Executive’s  right to elect COBRA continuation coverage under a M&W Plan in accordance  with applicable law, and Cinergy will make the payment described in this  Clause whether or not the Executive elects COBRA continuation coverage, and  whether or not the Executive receives health coverage from another employer. |
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|   |   |   |   | (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. |
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|   |   | (3) |   | Cinergy  will pay the Executive a lump sum amount, in cash, equal to $15,000 in order  to cover tax counseling services through an agency selected by the Executive, which  amount will be grossed-up to cover all applicable federal, state and local  income and employment taxes, calculated after assuming that the Executive  pays such taxes for the year in which her Date of Termination occurs at the  highest marginal tax rate applicable.   Such payment will be transferred to the Executive within thirty (30)  days of the expiration of the revocation period contained in the Waiver and  Release. |
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| (iii) |   | In the  event of a Qualifying Termination during the twenty-four (24) month period  beginning upon the occurrence of a Change in Control, Cinergy will pay the  Accrued Obligations listed in Sections 5a(i)(1) and (2), Cinergy will pay the  Accrued Obligations listed in Section 5a(i)(3) (but only if such Qualifying  Termination occurs after the calendar year in which occurs such Change in  Control) and Cinergy will have the following additional obligations described  in this Section 5a(iii); provided, however, that each of the benefits  described below in this Section 5a(iii) shall only be provided to the  Executive if, upon presentation to the Executive following a Qualifying  Termination, the Executive timely executes and does not timely revoke the  Waiver and Release. |
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|   |   | (1) |   | Cinergy  will pay to the Executive a lump sum severance payment, in cash, equal to  three (3) times the higher of (x) the sum of the Executive’s current Annual  Base Salary and Target Annual Bonus and (y) the sum of the Executive’s Annual  Base Salary in effect immediately prior to the Change in Control and the  Change in Control Bonus.  For purposes  of the preceding sentence, the Executive’s Annual Base Salary on any given date  shall include the amount of any Nonelective Employer Contributions made on |
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|   |   |   |   | behalf  of the Executive under the 401(k) Excess Plan during the fiscal year in which  such date occurs.  For purposes of this  Agreement, the Change in Control Bonus shall mean the higher of (A) the  annual bonus earned by the Executive pursuant to any annual bonus or  incentive plan maintained by Cinergy in respect of the year ending  immediately prior to the fiscal year in which occurs the Date of Termination  or, if higher, immediately prior to the fiscal year in which occurs the  Change in Control, and (B) the annual bonus that would have been earned by  the Executive pursuant to any annual bonus or incentive plan maintained by  Cinergy in respect of the year in which occurs the Date of Termination,  calculated by projecting Cinergy’s performance and other applicable goals and  objective for the entire fiscal year based on Cinergy’s performance during  the period of such fiscal year occurring prior to the Date of Termination,  and based on such other assumptions and rates as Cinergy deems reasonable,  provided, however, that  for purposes  of this Section 5a(iii)(1)(B), such Change in Control Bonus shall not be less  than the Target Annual Bonus, nor greater than the Maximum Annual Bonus.  This lump sum will be paid within thirty  (30) days of the expiration of the revocation period contained in the Waiver  and Release.  Nothing in this Section  5a(iii)(1) shall preclude the Executive from receiving the amount, if any, to  which she is entitled in accordance with the terms of the Annual Incentive  Plan for the fiscal year that includes the Date of Termination. |
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|   |   | (2) |   | Cinergy  will pay to the Executive the lump sum present value of any benefits under  the Executive Supplemental Life Program under the terms of the applicable  plan or program as of the Date of Termination, calculated as if the Executive  was fully vested as of the Date of Termination. The lump sum present value,  assuming commencement at age 50 or the Executive’s age as of the Date of  Termination if later, will be determined using the interest rate applicable  to lump sum payments in the Cinergy Corp. Non-Union Employees’ Pension Plan  or any successor to that plan for the plan year that includes the Date of  Termination. To the extent no such interest rate is provided therein, the  annual interest rate applicable under Section 417(e)(3) of the Code, or any  successor provision thereto, for the second full calendar month preceding the  first day of the calendar year that includes the Date of Termination will be  used. This lump sum will be paid within thirty (30) days of the expiration of  the revocation period contained in the Waiver and Release. |
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|   |   | (3) |   | The  Executive shall be fully vested in her accrued benefits as of the Date of  Termination under the Executive Retirement Plans, and her |
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|   |   |   |   | aggregate  accrued benefits thereunder will be calculated, and she will be treated for  all purposes, as if she was credited with three (3) additional years of age  and service as of the Date of Termination, provided, however, that to the  extent a calculation is made regarding the actuarial equivalent amount of any  alternate form of benefit, the Executive will not be credited with three  additional years of age for purposes of such calculation.   However, Cinergy will not commence payment  of such benefits prior to the date that the Executive has attained, or is  treated (after taking into account the preceding sentence) as if she had  attained, age 50. |
|--------|--------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
|   |   | (4) |   | For a  thirty-six (36) month period after the Date of Termination, Cinergy will  arrange to provide to the Executive and/or the Executive’s dependents life,  disability, accident, and health insurance benefits substantially similar to  those that the Executive and/or the Executive’s dependents are receiving  immediately prior to the Notice of Termination at a substantially similar  cost to the Executive (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 and/or the Executive’s dependents 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 and/or the Executive’s dependents during the thirty-six (36) month  period following the Executive’s Date of Termination.  The Executive must report to Cinergy any  such benefits that she or her dependents actually receives or that are made  available to her or her dependents.  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 (or in the case of a self  funded plan, the cost of COBRA continuation coverage) that would have been  paid by Cinergy to provide those benefits to the Executive and/or the  Executive’s dependents.  Nothing in  this Section 5a(iii)(4) will affect the Executive’s right to elect COBRA  continuation coverage in accordance with applicable law, and Cinergy will  provide the benefits or make the payment described in this Clause whether or  not the Executive elects COBRA continuation coverage, and whether or not the  Executive receives health coverage from another employer.  In the event that any benefits or payments  provided pursuant to this Section 5a(iii)(4) are subject to federal, state or  local income taxes, Cinergy shall provide the Executive with an additional  payment in the amount necessary such that after payment by the Executive of |
|--------|--------|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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|   |   |   |   | all such  taxes, including taxes imposed on the additional payment, the Executive  retains an amount equal to the benefit or payments provided in this Section  5a(iii)(4). |
|--------|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
|   |   | (5) |   | In lieu  of any and all other rights with respect to the automobile assigned by  Cinergy to the Executive, Cinergy will provide the Executive with a lump sum  payment in the amount of $35,000, which amount will be grossed-up to cover  all applicable federal, state and local income and employment taxes,  calculated after assuming that the Executive pays such taxes for the year in  which her Date of Termination occurs at the highest marginal tax rate  applicable.  Such payment will be  transferred to the Executive within thirty (30) days of the expiration of the  revocation period contained in the Waiver and Release. |
|--------|--------|-----|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
|   |   | (6) |   | Cinergy will pay the  Executive a lump sum amount, in cash, equal to $15,000 in order to cover tax  counseling services through an agency selected by the Executive, which amount will be grossed-up to cover all  applicable federal, state and local income and employment taxes, calculated  after assuming that the Executive pays such taxes for the year in which her  Date of Termination occurs at the highest marginal tax rate applicable.  Such payment will be transferred to the  Executive within thirty (30) days of the expiration of the revocation period  contained in the Waiver and Release. |
|--------|--------|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
|   |   | (7) |   | Cinergy will provide  annual dues and assessments of the Executive for membership in a country club  selected by the Executive until the end of the Employment Period. |
|--------|--------|-----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
|   |   | (8) |   | Cinergy  will provide outplacement services suitable to the Executive’s position until  the end of the Employment Period or, if earlier, until the first acceptance  by the Executive of an offer of employment.    At the Executive’s discretion, 15% of Annual Base Salary may be paid  in lieu of outplacement services, which payment will be transferred to the  Executive within thirty (30) days of the expiration of the revocation period  contained in the Waiver and Release. |
|--------|--------|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

##### *** ***

For purposes of this Section 5a(iii), the Executivewill be deemed to have incurred a Qualifying Termination upon a Change inControl if the Executive’s employment is terminated prior to a Change inControl, without Cause at the direction of a Person who has entered into anagreement with Cinergy, the consummation of which will constitute a Change inControl, or if the Executive terminates her employment for Good Reason prior toa Change in Control if the circumstances or event that constitutes Good Reasonoccurs at the direction of such a Person.

 

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# ** **

 

b.                                      Termination by Cinergyfor Cause or by the Executive Other Than for Good Reason.  Subject to the provisions of Section 7, andnotwithstanding any other provisions of this Agreement, if the Executive’semployment is terminated for Cause during the Employment Period, or if theExecutive terminates employment during the Employment Period other than atermination for Good Reason, Cinergy will have no further obligations to theExecutive under this Agreement other than the obligation to pay to the Executivethe Accrued Obligations, plus any other earned but unpaid compensation, in eachcase to the extent not previously paid.

c.                                       Certain TaxConsequences.

(i)                                     In the event that any benefitspaid or payable to the Executive or for her benefit pursuant to the terms ofthis Agreement or any other plan or arrangement in connection with, or arising out of, her employment with Cinergy or achange in ownership or effective control of Cinergy or of a substantial portionof 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-UpPayment”) in an amount such that after payment by the Executive of all taxes(including any interest, penalties, additional tax, or similar items imposedwith respect thereto and the Excise Tax), including any Excise Tax imposed uponthe Gross-Up Payment, the Executive retains an amount of the Gross-Up Paymentequal to the Excise Tax imposed upon or assessable against the Executive due tothe Payments.

(ii)                                  Subject to theprovisions of Section 5c, all determinations required to be made under thisSection 5c, including whether and when a Gross-Up Payment is required and theamount of such Gross-Up Payment and the assumptions to be utilized in arrivingat such determination, shall be made by the Accounting Firm, which shallprovide detailed supporting calculations both to the Company and the Executivewithin fifteen (15) business days of the receipt of notice from the Executivethat there has been a Payment, or such earlier time as is requested by theCompany.  If the Accounting Firmdetermines that no Excise Tax is payable by the Executive, it shall, at thesame time as it makes such determination, furnish the Executive with an opinionthat she has substantial authority not to report any Excise Tax on her federalincome tax return.  All fees and expenses of the Accounting Firm shall beborne solely by the Company.  AnyGross-Up Payment, as determined pursuant to this Section 5c, shall be paid byCinergy to the Executive within five (5) days of the receipt of the AccountingFirm’s determination.  Any determinationby the Accounting Firm shall be binding upon Cinergy and the Executive.  As aresult of the uncertainty in the application of Section 4999 of the Code at thetime of the initial determination by the Accounting Firm hereunder, it ispossible that Gross-Up Payments which will not have been made by Cinergy shouldhave been made (“Underpayment”), consistent with the

 

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calculations required to be made hereunder. In the event of any Underpayment, theAccounting Firm shall determine the amount of the Underpayment that hasoccurred and any such Underpayment shall be promptly paid by Cinergy to or for thebenefit of the Executive, and Cinergy shall indemnify and hold harmlessthe Executive for any such Underpayment, on an after-tax basis, includinginterest and penalties with respect thereto.  In the event that the Excise Tax issubsequently determined to be less than the amount taken into account hereunderat the time of termination of the Executive’s employment, the Executive shallrepay to the Company, at the time that the amount of such reduction in ExciseTax is finally determined, the portion of the Gross-Up Payment attributable tosuch reduction (plus that portion of the Gross-Up Payment attributable to theExcise Tax and federal, state and local income and employment tax imposed onthe Gross-Up Payment being repaid by the Executive to the extent that suchrepayment results in a reduction in Excise Tax and/or a federal, state or localincome or employment tax deduction) plus interest on the amount of suchrepayment at the rate provided in Code Section 1274(b)(2)(B).

 

(iii)                               The value of anynon-cash benefits or any deferred payment or benefit paid or payable to theExecutive will be determined in accordance with the principles of Code Sections280G(d)(3) and (4).  For purposes ofdetermining the amount of the Gross-Up Payment, the Executive will be deemed topay federal income taxes at the highest marginal rate of federal incometaxation in the calendar year in which the Gross-Up Payment is to be made andapplicable state and local income taxes at the highest marginal rate oftaxation in the state and locality of the Executive’s residence on the Date ofTermination, net of the maximum reduction in federal income taxes that would beobtained from deduction of those state and local taxes.

 

(iv)                              Notwithstandinganything contained in this Agreement to the contrary, in the event that,according to the Accounting Firm’s determination, an Excise Tax will be imposedon any Payment or Payments, Cinergy will pay to the applicable governmenttaxing authorities as Excise Tax withholding, the amount of the Excise Tax thatCinergy has actually withheld from the Payment or Payments in accordance withlaw.

 

d.                                      Value Creation Plan andStock Options.  Upon the Executive’stermination of employment for any reason, the Executive’s entitlement torestricted shares and performance shares under the Value Creation Plan and anystock options granted under the Cinergy Corp. StockOption Plan, the LTIP or anyother stock option plan will be determinedunder the terms of the appropriate plan and any applicable administrativeguidelines and written agreements, provided, however, that following theoccurrence of a Change in Control the terms of any such plan, 

 

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administrativeguideline or written agreement shall not be amended in a manner that wouldadversely affect the Executive with respect to awards granted to the Executiveprior to the Change in Control.

 

e.                                       Benefit Plans in General. Upon the Executive’s termination of employment for any reason, theExecutive’s entitlements, if any, under all benefit plans of Cinergy, includingbut not limited to the Deferred Compensation Plan, 401(k) Excess Plan, CinergyCorp. Supplemental Executive Retirement Plan, Cinergy Corp. Excess ProfitSharing Plan and any vacation policy, shall be determined under the terms ofsuch plans, policies and any applicable administrative guidelines and writtenagreements, provided, however, that following the occurrence of aChange in Control the terms of such plans and policies and any applicableadministrative guidelines and written agreements shall not be amended in amanner that would adversely affect the Executive with respect to benefitsearned by the Executive prior to the Change in Control.

 

f.                                         Other Fees and Expenses.  Cinergy will also reimburse the Executive forall reasonable legal fees and expenses incurred by the Executive (i) insuccessfully disputing a Qualifying Termination that entitles the Executive toSeverance Benefits or (ii) in reasonably disputing whether or not Cinergy hasterminated her employment for Cause. Payment will be made within five (5) business days after delivery of theExecutive’s written request for payment accompanied by such evidence of feesand expenses incurred as Cinergy reasonably may require.

 

**6.****                                     ****Non-Exclusivityof Rights**.  Nothing in thisAgreement will prevent or limit the Executive’s continuing or futureparticipation in any benefit, plan, program, policy, or practice provided byCinergy and for which the Executive may qualify, except with respect to anybenefit to which the Executive has waived her rights in writing or any plan,program, policy, or practice that expressly excludes the Executive fromparticipation.  In addition, nothing inthis Agreement will limit or otherwise affect the rights the Executive may haveunder any other contract or agreement with Cinergy entered into after theEffective Date.  Amounts that are vestedbenefits or that the Executive is otherwise entitled to receive under anybenefit, plan, program, policy, or practice of, or any contract or agreemententered into after the Effective Date with Cinergy, at or subsequent to theDate of Termination, will be payable in accordance with that benefit, plan,program, policy or practice, or that contract or agreement, except asexplicitly modified by this Agreement. Notwithstanding the above, in the event that the Executive receivesSeverance Benefits under Section 5a(ii) or 5a(iii), (a) the Executive shall notbe entitled to any benefits under any severance plan of Cinergy, including butnot limited to the Severance Opportunity Plan for Non-Union Employees ofCinergy Corp. and (b) if the Executive receives such Severance Benefits as aresult of her termination for Good Reason, as that term is defined in Section4d(iv), Cinergy’s obligations under Sections 5a(ii) and 5a(iii) shall bereduced by the amount of any benefits payable to the Executive under anyshort-term or long-term disability plan of Cinergy, the amount of which shallbe determined by Cinergy in good faith.

 

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**7.****                                     ****FullSettlement:  Mitigation**.  Except as otherwise provided herein, Cinergy’s obligation to make the payments providedfor in this Agreement and otherwise to perform its obligations under thisAgreement will not be affected by any set-off, counterclaim, recoupment,defense, or other claim, right, or action that Cinergy may have against theExecutive or others.  In no event willthe Executive be obligated to seek other employment or take any other action byway 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 Sections 5a(ii)(2)and 5a(iii)(4), those amounts will not be reduced simply because the Executiveobtains other employment.  If theExecutive finally prevails on the substantial claims brought with respect toany dispute between Cinergy and the Executive as to the interpretation, terms,validity, or enforceability of (including any dispute about the amount of any paymentpursuant to) this Agreement, Cinergy agrees to pay all reasonable legal feesand expenses that the Executive may reasonably incur as a result of thatdispute.

 

**8.****                                     ****Arbitration**.  Any dispute between the parties under this Agreement,or any dispute between the parties relating to the breach of this Agreement,the Executive’s employment with Cinergy, or the termination thereof, will beresolved (except as provided below) through informal arbitration by anarbitrator selected under the rules of the American Arbitration Association(located in Cincinnati, Ohio) and the arbitration will be conducted in thatlocation under the rules of said Association, to the extent they do notconflict with this Agreement.  Within 30 daysof the notice of a demand for arbitration, both parties will exchange with oneanother documents in their respective possession that are relevant to thedispute.  There will be nointerrogatories or depositions taken in preparation for the arbitration; provided,however, that the arbitrator may permit limited deposition discovery inextraordinary circumstances and if necessary to avoid manifest injustice.  The grieving party will file a writtenstatement explaining his, her or its claim, including relevant documentation,within 45 days of the notice for arbitration; the opposing party will respondwithin 30 days thereafter; and the grieving party may reply within 15 days ofthe response.  After this period oflimited discovery, a live hearing before the arbitrator will occur.  The arbitrator will have the right only tointerpret and apply the provisions of this Agreement and may not change any ofits provisions.  The determination of thearbitrator will be conclusive and binding upon the parties and judgment uponthe same may be entered in any court having jurisdiction thereof.  The arbitrator will give written notice tothe parties stating his, her or its determination, and will furnish to eachparty a signed copy of such determination. Except as provided in Sections 7 and 5(f) hereof, the expenses ofarbitration will be borne equally by the Executive and Cinergy, and each partywill bear its own costs, including attorneys’ fees; provided, however, that thearbitrator shall have the power to award such expenses and costs, includingattorneys’ fees, to the prevailing party in accordance with applicable law andto require Cinergy at the beginning of the proceedings to fully or partiallyreimburse (or provide an advance to) the Executive for expenses (but not forcosts, including attorneys’ fees) in the event the Executive can demonstratethat the amount of the expenses is an unreasonable impediment to adjudicationof his or her claims in 

 

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arbitration.  If the arbitratorawards a monetary amount to either party in excess of $1,000,000, the partyagainst whom the award was made may seek judicial resolution of the disputeunder a de novo standard before any court with appropriate jurisdiction overthe matter.  Notwithstanding theforegoing, Cinergy will not be required to seek or participate in arbitrationregarding any breach by the Executive of his or her obligations under Section 9hereof, but may pursue its remedies for such breach in a court of competentjurisdiction in Cincinnati, Ohio.  Any arbitrationor action pursuant to this Section 8 will be governed by and construed inaccordance with the substantive laws of the State of Ohio, without givingeffect to the principles of conflict of laws of such State.

 

**9.****                                     ****ConfidentialInformation****.** The Executive will hold in a fiduciary capacity for the benefit ofCinergy, as well as all of Cinergy’s successors and assigns, all secret,confidential information, knowledge, or data relating to Cinergy, and itsaffiliated businesses, that the Executive obtains during the Executive’semployment by Cinergy or any of its affiliated companies, and that has not beenor subsequently becomes public knowledge (other than by acts by the Executiveor 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 mayotherwise be required by law or legal process, communicate or divulge any suchinformation, knowledge, or data to anyone other than Cinergy and thosedesignated by it.  The Executiveunderstands that during the Employment Period, Cinergy may be required fromtime to time to make public disclosure of the terms or existence of theExecutive’s employment relationship to comply with various laws and legalrequirements.  In addition to all otherremedies available to Cinergy in law and equity, this Agreement is subject totermination by Cinergy for Cause under Section 4b in the event the Executiveviolates any provision of this Section.

 

**10.****                              ****Successors****.**

 

a.                                       This Agreement ispersonal to the Executive and, without Cinergy’s prior written consent, cannotbe assigned by the Executive other than Executive’s designation of abeneficiary of any amounts payable hereunder after the Executive’s death.  This Agreement will inure to the benefit ofand be enforceable by the Executive’s legal representatives.

 

b.                                      This Agreement willinure to the benefit of and be binding upon Cinergy and its successors andassigns.

 

c.                                       Cinergy will requireany successor (whether direct or indirect, by purchase, merger, consolidationor otherwise) to all or substantially all of the business and/or assets ofCinergy to assume expressly and agree to perform this Agreement in the samemanner and to the same extent that Cinergy would be required to perform it ifno succession had taken place.  Cinergy’sfailure to obtain such an assumption and agreement prior to the effective dateof a succession will be a breach of this Agreement and will entitle theExecutive to compensation from 

 

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Cinergyin the same amount and on the same terms as if the Executive were to terminateher employment for Good Reason upon a Change in Control, except that, forpurposes of implementing the foregoing, the date on which any such successionbecomes effective will be deemed the Date of Termination.

 

**11.****                              ****Definitions****.**  As used in this Agreement, the followingterms, when capitalized, will have the following meanings:

 

a.                                       Accounting Firm.  “Accounting Firm” means Cinergy’s independent auditors.

 

b.                                      Accrued Obligations.  “Accrued Obligations” means the accruedobligations described in Section 5a(i).

 

c.                                       Agreement.  “Agreement” means this Employment Agreementbetween Cinergy and the Executive.

 

d.                                      AIP Benefit.  “AIP Benefit” means the Annual Incentive Planbenefit described in Section 5a(i).

 

e.                                       Annual Base Salary.  “Annual Base Salary” means, except where otherwise specifiedherein, the annual base salary payable to theExecutive pursuant to Section 3a.

 

f.                                         Annual Bonus.  “Annual Bonus” has the meaning set forth in Section 5a(ii)(1).

 

g.                                      Annual Incentive Plan.  “Annual Incentive Plan” means the CinergyCorp. Annual Incentive Plan or any similar plan or successor to the AnnualIncentive Plan.

 

h.                                      Board of Directors orBoard.  “Board of Directors” or “Board” means the board of directors of the Company.

 

i.                                          COBRA.  “COBRA” means the Consolidated Omnibus BudgetReconciliation Act of 1985, as amended.

 

j.                                          Cause.  “Cause” has the meaning set forth in Section 4b.

 

k.                                       Change in Control.  A “Change in Control”will be deemed to have occurred if any of the following events occur, after theEffective Date:

 

### (i)                                     Any Person isor becomes the beneficial owner (as defined in Rule 13d-3 under the SecuritiesExchange Act of 1934, as amended (“1934 Act”), directly or indirectly, of securities of theCompany (not including in the securities beneficially owned by such Person anysecurities acquired 

###  

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### directly from the Company or its affiliates) representing more than twentypercent (20%) of the combined voting power of the Company’s then outstandingsecurities, excluding any Person who becomes such a beneficialowner in connection with a transaction described in Clause (1) of Paragraph(ii) below; or

 

### (ii)           There is consummated amerger or consolidation of the Company or any direct or indirect subsidiary ofthe Company with any other corporation, partnership or other entity, other than (1) a merger or consolidation that would result in the votingsecurities of the Company outstanding immediately prior to that merger orconsolidation continuing to represent (either by remaining outstanding or bybeing converted into voting securities of the surviving entity or its parent)at least sixty percent (60%) of the combined voting power of the securities ofthe Company or the surviving entity or its parent outstanding immediately afterthe merger or consolidation, or (2) a merger or consolidation effected toimplement a recapitalization of the Company (or similar transaction) in whichno Person is or becomes the beneficialowner, directly or indirectly, of securities of the Company (not including inthe securities beneficially owned by such a Person any securities acquireddirectly from the Company or its affiliates other than in connection with theacquisition by the Company or its affiliates of a business) representing twentypercent (20%) or more of the combined voting power of the Company’s thenoutstanding securities; or

 

### (iii)          During any period oftwo (2) consecutive years, individuals who at the beginning of that periodconstitute the Board of Directors and any new director (other than a directorwhose initial assumption of office is in connection with an actual orthreatened election contest, including but not limited to a consentsolicitation, relating to the election of directors of the Company) whoseappointment or election by the Company’s stockholders was approved or recommended by a vote of at leasttwo-thirds (2/3) of the directors thenstill in office who either were directors at the beginning of that period orwhose appointment, election, or nomination for election was previously soapproved or recommended cease for any reason to constitute a majority of theBoard of Directors; or

 

(iv)          The stockholders of theCompany approve a plan of complete liquidation or dissolution of the Company orthere is consummated a sale or disposition by the Company of all orsubstantially all of the Company’s assets, other than a sale or disposition bythe 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 votingsecurities of which are owned by stockholders of the Company in substantially the same

 

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proportions as their ownership of the Company immediately prior to thesale.

 

l.                                          Change in Control Bonus.  “Change in Control Bonus” has the meaning setforth in Section 5a(iii)(1).

 

m.                                    Chief Executive Officer.  “Chief Executive Officer” means the individual who, at any relevant time, isthen serving as the chief executive officer ofthe Company.

 

n.                                      Cinergy.  “Cinergy” means the Company, itssubsidiaries, and/or its affiliates, and any successors to the foregoing.

 

o.                                      Code.  “Code” means the Internal Revenue Code of1986, as amended, and interpretive rules and regulations.

 

p.                                      Company.  “Company” means Cinergy Corp.

 

q.                                      Date of Termination.  “Date of Termination” means:

 

(i)                                     if the Executive’semployment is terminated by Cinergy for Cause, or by the Executivewith Good Reason, the date of receipt of the Notice of Termination or any laterdate specified in the notice, as the case may be;

 

(ii)                                  if the Executive’semployment is terminated by the Executive without Good Reason, thirty (30) daysafter the date on which the Executive notifies Cinergy of thetermination;

 

(iii)                               if the Executive’semployment is terminated by Cinergy other than for Cause, thirty(30) days after the date on which Cinergy notifies the Executive of the termination; and

 

(iv)                              if the Executive’semployment is terminated by reason of death, the date of death.

 

r.                                         Deferred CompensationPlan.  “Deferred Compensation Plan” meansthe Cinergy Corp. Non-Qualified Deferred Incentive Compensation Plan or anysimilar plan or successor to that plan.

 

s.                                       Effective Date.  “Effective Date” has the meaning given to that term in the firstparagraph of this Agreement.

 

t.                                         Employment Period.  “Employment Period” has the meaning set forthin Section 1b.

 

 

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u.                                      Excise Tax.  “Excise Tax” means any excise tax imposed byCode section 4999, together with any interest, penalties, additional tax orsimilar items that are incurred by the Executive with respect to the excise taximposed by Code section 4999.

 

v.                                      Executive.  “Executive” has the meaning given to that term in the firstparagraph of this Agreement.

 

w.                                    Executive RetirementPlans.  “Executive Retirement Plans” meansthe Pension Plan, the Cinergy Corp. Supplemental Executive Retirement Plan andthe Cinergy Corp. Excess Pension Plan or any similar plans or successors tothose plans.

 

x.                                        Executive SupplementalLife Program.  “ExecutiveSupplemental Life Program” means the Cinergy Corp. Executive Supplemental LifeInsurance Program or any similar program or successor to the ExecutiveSupplemental Life Program.

 

                                                y.                                      401(k) Excess Plan.  “401(k) Excess Plan” means the Cinergy Corp.401(k) Excess Plan, or any similar plan or successor to that plan.

 

                                                z.                                        Good Reason.  “Good Reason” has the meaning set forth in Section4d.

 

aa.                                 Gross-Up Payment.  “Gross-Up Payment” has the meaning set forthin Section 5c.

 

bb.                               Long-Term IncentivePlan or LTIP.  “Long-TermIncentive Plan” or “LTIP” means the long-term incentive plan implemented underthe Cinergy Corp. 1996 Long-Term Incentive Compensation Plan or any successorto that plan.

 

cc.                                 M&W Plans.  “M&W Plans” has themeaning set forth in Section 5a(ii)(2).

 

dd.                               Maximum Annual Bonus.  “MaximumAnnual Bonus” has the meaning set forth in Section 3b.

 

                                                ee.                                 Nonelective EmployerContribution.  “Nonelective Employer Contribution” has the meaning set forth in the 401(k)Excess Plan.

 

ff.                                     Notice of Termination.  “Noticeof Termination” has the meaning set forth in Section 4f.

 

                                                gg.                               Payment or Payments.  “Payment”or “Payments” has the meaning set forth in Section 5c.

 

                                                hh.                               Pension Plan.  “Pension Plan” means the Cinergy Corp.Non-Union Employees’ Pension Plan or any successor to that plan.

 

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ii.                                       Person.  “Person” has the meaning set forth inparagraph 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 or affiliates; |
|-----|--------|---------------------------------------------------|

 
| (ii) |   | A trustee or other fiduciary  holding securities under an employee benefit plan of Cinergy or its  subsidiaries or  affiliates; |
|------|--------|---------------------------------------------------------------------------------------------------------------------------------|

 
| (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. |
|------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

jj.                                       Qualifying Termination.  “Qualifying Termination” means (i)  thetermination by Cinergy of the Executive’s employment with Cinergyduring the Employment Period other than atermination for Cause or (ii)  the termination by the Executive of theExecutive’s employment with Cinergy during the Employment Period for Good Reason.

 

kk.                                 Relocation Program.  “Relocation Program” means the Cinergy Corp.Relocation Program, or any similar program or successor to that program, as ineffect on the date of the Executive’s termination of employment.

 

ll.                                       Severance Benefits.  “Severance Benefits” means the payments andbenefits payable to the Executive pursuant to Section 5.

 

mm.                           Stock Related Documents.  “Stock Related Documents” means the LTIP, theCinergy Corp. Stock Option Plan, and the Value Creation Plan and any applicableadministrative guidelines and written agreements relating to those plans.

 

nn.                               Target Annual Bonus.  “Target Annual Bonus” has the meaning setforth in Section 3b.

 

oo.                               Target LTIP Bonus.  “Target LTIP Bonus” has the meaning set forthin Section 3b.

 

pp.                               Value Creation Plan.  “Value Creation Plan” means the Value CreationPlan or any similar plan, or successor plan of the LTIP.

 

qq.                               Waiver and Release.  “Waiverand Release” means a waiver and release, in substantially the form attached tothis Agreement as Exhibit A.

 

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**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 Federal Express or  other comparable national or international overnight delivery service,  addressed in the  name of such party at the following address, whichever is applicable:                                                                                                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   | If to  the Executive:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |   | Cinergy  Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |   | 221  East Fourth Street                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   | Cincinnati,  Ohio 45201-0960                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   | If to  Cinergy:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |   | Cinergy  Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |   | 221  East Fourth Street                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   | Cincinnati,  Ohio 45201-0960                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   | 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 Section 4d or the right of Cinergy to terminate the Executive’s employment for  Cause pursuant to Section 4b, will not  be deemed to be a waiver of that provision or right or any other provision or  right of this Agreement.                                                                                                                                                |

 

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f.                                         References in thisAgreement to the masculine include the feminine unless the context clearlyindicates otherwise.

g.                                      This instrument containsthe entire agreement of the Executive and Cinergy with respect to the subjectmatter of this Agreement; and subject to any agreements evidencing stock optionor restricted stock grants described in Section 3b and theStock Related Documents, all promises, representations, understandings,arrangements, and prior agreements are merged into this Agreement andaccordingly superseded.

h.                                      This Agreement may beexecuted in counterparts, each of which will be deemed to be an original butall of which together will constitute one and the same instrument.

                                                i.                                          Cinergy and the Executive agree thatCinergy Services, Inc. will be authorized to act for Cinergy with respect toall aspects pertaining to the administration and interpretation of thisAgreement.

 

 

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IN WITNESS WHEREOF, the Executive and the Company have caused thisAgreement to be executed as of the Effective Date.

 

                                                
|   | CINERGY SERVICES INC. |
|--------|-----------------------|

 

 

 
|   |   |   |   | By:    |                     |
|--------|--------|--------|--------|--------|--------------------------|
|   |   |   |   |   | James  E. Rogers         |
|   |   |   |   |   | Chairman  and            |
|   |   |   |   |   | Chief  Executive Officer |

 

 
|  

  | EXECUTIVE    |
|----------------|--------------|
|           |         |
|           |         |
|           | Lynn J. Good |

 

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**EXHIBIT A**

*********

**WAIVER AND RELEASEAGREEMENT**

**THIS WAIVER ANDRELEASE AGREEMENT** (this “Waiver and Release”) isentered into by and between Lynn J. Good (the “Executive”) and CinergyCorp.  (“Cinergy”) (collectively, the “Parties”).

**WHEREAS**, theParties have entered into the Employment Agreement dated                           (the “Employment Agreement”);

**WHEREAS**, theExecutive’s employment has been terminated in accordance with the terms of theEmployment Agreement;

**WHEREAS**, theExecutive is required to sign this Waiver and Release in order to receive thepayment of certain compensation under the Employment Agreement followingtermination of employment; and

**WHEREAS**, Cinergyhas agreed to sign this Waiver and Release.

**NOW, THEREFORE**, inconsideration of the promises and agreements contained herein and other goodand valuable consideration, the sufficiency and receipt of which are herebyacknowledged, and intending to be legally bound, the Parties agree as follows:

*1.*                                       This Waiver and Releaseis effective on the date hereof and will continue in effect as provided herein.

*2.*                                       In consideration of thepayments to be made and the benefits to be received by the Executive pursuantto Section 5 of the Employment Agreement (the “Severance Benefits”), which theExecutive acknowledges are in addition to payment and benefits to which theExecutive would be entitled to but for the Employment Agreement, the Executive,on behalf of herself, her heirs, representatives, agents and assigns herebyCOVENANTS NOT TO SUE OR OTHERWISE VOLUNTARILY PARTICIPATE IN ANY LAWSUITAGAINST, FULLY RELEASES, INDEMNIFIES, HOLDS HARMLESS, and OTHERWISE FOREVERDISCHARGES (i) Cinergy, (ii) its subsidiary or affiliated entities, (iii) allof their present or former directors, officers, employees, shareholders, andagents as well as (iv) all predecessors, successors and assigns thereof (thepersons listed in clauses (i) through (iv) hereof shall be referred tocollectively as the “Company”) from any and all actions, charges, claims,demands, damages or liabilities of any kind or character whatsoever, known orunknown, which Executive now has or may have had through the effective date ofthis Waiver and Release.  Executiveacknowledges and understands that she is not hereby prevented from filing acharge of discrimination with the Equal Employment Opportunity Commission orany state-equivalent agency or otherwise participate in any proceedings before suchCommissions.  Executive also acknowledgesand understands that in the event she does 

* *

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* *

*file such a charge, she shall be entitled to noremuneration, damages, back pay, front pay, or compensation whatsoever from theCompany as a result of such charge.*

*3.*                                       Without limiting thegenerality of the foregoing release, it shall include:  (i) all claims or potential claims arisingunder any federal, state or local laws relating to the Parties’ employmentrelationship, including any claims Executive may have under the Civil RightsActs of 1866 and 1964, as amended, 42 U.S.C. §§ 1981 and 2000(e) et seq.; theCivil Rights Act of 1991; the Age Discrimination in Employment Act, as amended,29 U.S.C. §§ 621 et seq.; the Americans with Disabilities Act of 1990, asamended, 42 U.S.C. §§ 12,101 et seq.; the Fair Labor Standards Act, 29 U.S.C.§§ 201 et seq.; the Worker Adjustment and Retraining Notification Act, 29U.S.C. §§ 2101, et seq.; the Ohio Civil Rights Act, Chapter 4112 et seq.; andany other federal, state or local law governing the Parties’ employmentrelationship; (ii) any claims on account of, arising out of or in any wayconnected with Executive’s employment with the Company or leaving of thatemployment; (iii) any claims alleged or which could have been alleged in anycharge or complaint against the Company; (iv) any claims relating to theconduct of any employee, officer, director, agent or other representative ofthe Company; (v) any claims of discrimination or harassment on any basis; (vi)any claims arising from any legal restrictions on an employer’s right toseparate its employees; (vii) any claims for personal injury, compensatory orpunitive damages or other forms of relief; and (viii) all other causes ofaction sounding in contract, tort or other common law basis, including: (a) thebreach of any alleged oral or written contract; (b) negligent or intentionalmisrepresentations; (c) wrongful discharge; (d) just cause dismissal; (e)defamation; (f) interference with contract or business relationship; or (g)negligent or intentional infliction of emotional distress.

*4.*                                       The Parties acknowledgethat it is their mutual and specific intent that the above waiver fullycomplies with the requirements of the Older Workers Benefit Protection Act (29U.S.C. § 626) and any similar law governing release of claims.  Accordingly, Executive hereby acknowledgesthat:

(a)                                  Shehas carefully read and fully understands all of the provisions of this Waiverand Release and that she has entered into this Waiver and Release knowingly andvoluntarily after extensive negotiations and having consulted with her counsel;

(b)                                 TheSeverance Benefits offered in exchange for Executive’s release of claims exceedin kind and scope that to which she would have otherwise been legally entitled;

(c)                                  Priorto signing this Waiver and Release, Executive had been advised in writing bythis Waiver and Release as well as other writings to seek counsel from, and hasin fact had an opportunity to consult with, an attorney of her choiceconcerning its terms and conditions; and

(d)                                 Shehas been offered at least twenty-one (21) days within which to review andconsider this Waiver and Release.

 

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| *5.* | * * | *The  Parties agree that this Waiver and Release shall not become effective and  enforceable until the date this Waiver and Release is signed by both Parties  or seven (7) calendar days after its execution by Executive, whichever is  later. Executive may revoke this Waiver and Release for any reason by  providing written notice of such intent to Cinergy within seven (7) days  after she has signed this Waiver and Release, thereby forfeiting Executive’s  right to receive any Severance Benefits provided hereunder and rendering this  Waiver and Release null and void in its entirety.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|------|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *6.* | * * | *The  Executive hereby affirms and acknowledges her continued obligations to comply  with the post-termination covenants contained in her Employment Agreement,  including but not limited to, the Confidential Information provisions of  Section 9 of the Employment Agreement. Executive acknowledges that the  restrictions contained therein are valid and reasonable in every respect, are  necessary to protect the Company’s legitimate business interests and hereby  affirmatively waives any claim or defense to the contrary.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *7.* | * * | *Executive  specifically agrees and understands that the existence and terms of this  Waiver and Release are strictly CONFIDENTIAL and that such confidentiality is  a material term of this Waiver and Release. Accordingly, except as required  by law or unless authorized to do so by Cinergy in writing, Executive agrees  that she shall not communicate, display or otherwise reveal any of the  contents of this Waiver and Release to anyone other than her spouse, primary  legal counsel or financial advisor, provided, however, that they are first  advised of the confidential nature of this Waiver and Release and Executive  obtains their agreement to be bound by the same. Cinergy agrees that  Executive may respond to legitimate inquiries regarding her employment with  Cinergy by stating that she voluntarily resigned to pursue other  opportunities, that the Parties terminated their relationship on an amicable  basis and that the Parties have entered into a confidential Waiver and  Release that prohibits her from further discussing the specifics of her  separation. Nothing contained herein shall be construed to prevent Executive  from discussing or otherwise advising subsequent employers of the existence  of any obligations as set forth in her Employment Agreement. Further, nothing  contained herein shall be construed to limit or otherwise restrict the  Company’s ability to disclose the terms and conditions of this Waiver and  Release as may be required by business necessity.* |
| *8.* | * * | *In  the event that Executive breaches or threatens to breach any provision of  this Waiver and Release, she agrees that Cinergy shall be entitled to seek  any and all equitable and legal relief provided by law, specifically  including immediate and permanent injunctive relief. Executive hereby waives  any claim that Cinergy has an adequate remedy at law. In addition, and to the  extent not prohibited by law, Executive agrees that Cinergy shall be entitled  to an award of all costs and attorneys’ fees incurred by Cinergy in any  successful effort to enforce the terms of this Waiver and Release. Executive  agrees that the foregoing relief shall not be construed to limit or otherwise  restrict Cinergy’s ability to pursue any other remedy provided by law,  including the recovery of any actual, compensatory or punitive damages.  Moreover, if Executive pursues any claims against the Company subject to the  foregoing Waiver and Release, Executive agrees to*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

* *

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* *
|   |   | immediately reimburse the Company for the value of  all benefits received under this Waiver and Release to the fullest extent  permitted by law.                                                                                                                                                                                                                                                                                                                                                                      |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 9.     |   | Cinergy hereby releases the Executive, her heirs,  representatives, agents and assigns from any and all known claims, causes of  action, grievances, damages and demands of any kind or nature based on acts  or omissions committed by the Executive during and in the course of her  employment with Cinergy provided such act or omission was committed in good  faith and occurred within the scope of her normal duties and  responsibilities.                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.    |   | The Parties acknowledge that this Waiver and Release  is entered into solely for the purpose of ending their employment  relationship on an amicable basis and shall not be construed as an admission  of liability or wrongdoing by either Party and that both Cinergy and  Executive have expressly denied any such liability or wrongdoing.                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 11.    |   | Each of the promises and obligations shall be  binding upon and shall inure to the benefit of the heirs, executors,  administrators, assigns and successors in interest of each of the Parties.                                                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 12.    |   | The Parties agree that each and every paragraph,  sentence, clause, term and provision of this Waiver and Release is severable  and that, if any portion of this Waiver and Release should be deemed not  enforceable for any reason, such portion shall be stricken and the remaining  portion or portions thereof should continue to be enforced to the fullest  extent permitted by applicable law.                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 13.    |   | This Waiver and Release shall be governed by and  interpreted in accordance with the laws of the State of Ohio without regard  to any applicable state’s choice of law provisions.                                                                                                                                                                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 14.    |   | Executive represents and acknowledges that in  signing this Waiver and Release she does not rely, and has not relied, upon  any representation or statement made by Cinergy or by any of Cinergy’s  employees, officers, agents, stockholders, directors or attorneys with regard  to the subject matter, basis or effect of this Waiver and Release other than  those specifically contained herein.                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 15.    |   | This Waiver and Release represents the entire  agreement between the Parties concerning the subject matter hereof, shall  supercede any and all prior agreements which may otherwise exist between them  concerning the subject matter hereof (specifically excluding, however, the  post-termination obligations contained in any existing Employment Agreement  or other legally-binding document), and shall not be altered, amended,  modified or otherwise changed except by a writing executed by both Parties. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 16.    |   | Cinergy Corp. and the Executive agree that Cinergy  Services, Inc. will be authorized to act for Cinergy Corp. with respect to  all aspects pertaining to the administration and interpretation of this  Waiver and Release.                                                                                                                                                                                                                                                                                          |

 

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**PLEASE READCAREFULLY.  WITH RESPECT TO THEEXECUTIVE, THIS**

**WAIVER AND RELEASEINCLUDES A COMPLETE RELEASE OF ALL KNOWN**

**AND UNKNOWN CLAIMS.**

 

IN WITNESS WHEREOF, the Parties havethemselves signed, or caused a duly authorized agent thereof to sign, thisWaiver and Release on their behalf and thereby acknowledge their intent to bebound by its terms and conditions.
| EXECUTIVE | CINERGY SERVICES, INC. |
|-----------|------------------------|
|      |                   |   |   |
|      |                   |   |   |
| Signed:   | /s/ Lynn J. Good       |   | By: | /s/ James E. Rogers |   |
|      |                   |   |   |
| Printed:  | Lynn J. Good           |   | Title: | James E. Rogers |   |
|      |                   |   |   |
| Dated:    | May 1, 2003            |   | Dated | May 1, 2003 |   |
|           |                        |  |  |  |  |  |  |  |  |  |

 

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