Exhibit 10.f


 


EMPLOYMENT AGREEMENT


 


This EMPLOYMENT AGREEMENT is
made and entered into as of the 24th day of September, 2002 (the
“Effective Date”), by and between Cinergy and James L. Turner (the
“Executive”).  This Agreement replaces
and supersedes any and all prior employment agreements between Cinergy and the
Executive.  The capitalized words and
terms used throughout this Agreement are defined in Section 11.


Recitals


 


A.            The Executive is currently serving as Executive Vice
President of the Company and Chief Executive Officer of the Regulated
Businesses Business Unit of Cinergy, and Cinergy desires to secure the
continued employment of the Executive in accordance with this Agreement.


 


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


 


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


 


Agreement


 


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


 


1.                                      Employment
and Term.


 


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


 


b.                                      The Employment
Period of this Agreement will commence as of the Effective Date and continue
until December 31, 2004; provided that, commencing on December 31, 2002, and on
each subsequent December 31, the Employment Period will be extended for one (1)
additional year unless either party gives the other party written notice not to
extend this Agreement at least ninety (90) days before the extension would
otherwise become effective.


 


2.                                      Duties
and Powers of Executive.


 


a.                                       Position.  The Executive will serve Cinergy as Executive
Vice President of the Company and Chief Executive Officer of the Regulated
Businesses Business Unit  of Cinergy and
he will have such responsibilities, duties, and authority as are


 


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customary for someone of
that position and such additional duties, consistent with his position, as may
be assigned to him from time to time during the Employment Period by the Board
of Directors or the Chief Executive Officer. 
Executive shall devote substantially all of Executive’s business time,
efforts and attention to the performance of Executive’s duties under this
Agreement; provided, however, that this requirement shall not
preclude Executive from reasonable participation in civic, charitable or
professional activities or the management of Executive’s passive investments,
so long as such activities do not materially interfere with the performance of
Executive’s duties under this Agreement.


 


b.                                      Place of
Performance.  In connection
with the Executive’s employment, the Executive will be based at the principal
executive offices of Cinergy, 221 East Fourth Street, Cincinnati, Ohio.  Except for required business travel to an
extent substantially consistent with the present business travel obligations of
Cinergy executives who have positions of authority comparable to that of the
Executive, the Executive will not be required to relocate to a new principal
place of business that is more than thirty (30) miles from such location.


 


3.                                      Compensation.  The Executive will receive the following
compensation for his services under this Agreement.


 


a.                                       Salary.  The Executive’s Annual Base Salary, payable
in pro rata installments not less often than semi-monthly, will be at the
annual rate of not less than $346,500. 
Any increase in the Annual Base Salary will not serve to limit or reduce
any other obligation of Cinergy under this Agreement.  The Annual Base Salary will not be reduced except for
across-the-board salary reductions similarly affecting all Cinergy management
personnel.  If Annual Base Salary is
increased or reduced during the Employment Period, then such adjusted salary
will thereafter be the Annual Base Salary for all purposes under this Agreement.


 


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 who are considered
Tier II executives for compensation purposes, except with respect to any plan,
practice, policy or program to which the Executive has waived his rights in
writing.


 


(ii)                                  Supplemental
Retirement Benefit.


 


(1)                                  Amount, Form,
Timing and Method of Payment.  If the Executive retires from Cinergy after reaching age 55, the
Executive will be entitled and fully vested in a supplemental retirement
benefit in an amount which, when expressed as an annual amount payable


 


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during the life of the
Executive, shall equal the excess of (1) 60% of the Executive’s Highest Average
Earnings over (2) his total aggregate annual benefit, payable in the form of a
single life annuity to the Executive, under all Executive Retirement
Plans.  Except as described below, the
form (e.g., the 100% joint and survivor annuity form of benefit), timing, and
method of payment of the supplemental retirement benefit payable under this
Paragraph will be the same as those elected by the Executive under the Pension
Plan, and the amount of such benefit shall be calculated after taking into
account the actuarial factors contained in the Pension Plan, provided, however,
that such benefit shall not be actuarially reduced for early commencement.


 


(2)                                  Death Benefit.  If the Executive dies after reaching age 55
but prior to his retirement from Cinergy, and if his Spouse, on the date of his
death, is living on the date the first installment of the supplemental
retirement benefit would be payable under this Paragraph, the Spouse will be
entitled to receive the supplemental retirement benefit as a Spouse’s
benefit.  The form, timing, and method
of payment of any Spouse’s benefit under this Paragraph will be the same as
those applicable to the Spouse under the Pension Plan, and the amount of such
benefit shall be calculated after taking into account the actuarial factors
contained in the Pension Plan, provided, however, that such
benefit shall not be actuarially reduced for early commencement.


 


(3)                                  Special Payment
Election Effective Upon a Change in Control.  Notwithstanding the foregoing, the Executive may make a special
payment election with respect to his supplemental retirement benefit (if any)
in accordance with the following provisions:


 


(A)                              The Executive
may elect, on a form provided by Cinergy, to receive a single lump sum cash
payment in an amount equal to the Actuarial Equivalent (as defined below) of
his supplemental retirement benefit (or the Actuarial Equivalent of the
remaining payments to be made in connection with his supplemental retirement
benefit in the event that payment of his supplemental retirement benefit has
already commenced) payable no later than 30 days after the later of the
occurrence of a Change in Control or the date of his termination of employment.


 


(B)                                Such special
payment election shall become operative only upon the occurrence of a Change in
Control and only if the Executive’s termination of employment occurs either (1)
prior to the occurrence of a Change in Control or (2) during the 24-month
period commencing upon the occurrence of a


 


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Change in Control.  Once operative, such special payment
election shall override any other payment election made by the Executive with
respect to his supplemental retirement benefit.


 


(C)                                In order to be
effective, a special payment election (or withdrawal of that election) must be
made either prior to the occurrence of a Potential Change in Control or, with
the consent of Cinergy, during the 30-day period commencing upon the occurrence
of a Potential Change in Control.  In
the event that a Potential Change in Control occurs and subsequently ceases to
exist, other than as a result of a Change in Control, such Potential Change in
Control shall be disregarded for purposes of this Section.


 


(D)                               In the event
that the Executive makes a special payment election and pursuant to that
election he becomes entitled to receive a single lump sum cash payment pursuant
to this Section payable prior to the commencement of his supplemental
retirement benefit in another form of payment, the Actuarial Equivalent of his
supplemental retirement benefit shall be calculated based on the following
assumptions:


 


(I)                                    The form of
payment for each of the Executive’s retirement benefits under the Executive
Retirement Plans and the Executive’s supplemental retirement benefit shall be a
single life annuity;


 


(II)                                The
commencement date for each of the Executive’s retirement benefits under the
Executive Retirement Plans and the Executive’s supplemental retirement benefit
shall be the first day of the calendar month coincident with or next following
his termination of employment;


 


(III)                            The term
“Actuarial Equivalent” has the meaning given to that term in the Pension Plan
with respect to lump sum payments; and


 


(IV)                            The amount of
the Executive’s supplemental retirement benefit shall not be actuarially
reduced for early commencement.


 


(E)                                 In the event
that the Executive makes a special payment election and pursuant to that
election he is entitled to receive a single lump sum cash payment payable after
the


 


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commencement of his
supplemental retirement benefit in another form of payment, his lump sum cash
payment shall be equal to the Actuarial Equivalent (as that term is used in the
Pension Plan with respect to lump sum payments) of the remaining payments to be
made in connection with his supplemental retirement benefit.


 


(iii)                               Upon his
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 his
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 his retirement.


 


(iv)                              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 one hundred five percent (105%) of
the Executive’s Annual Base Salary (the “Maximum Annual Bonus”); and (2) The
target annual bonus shall be not less than sixty percent (60%) of the
Executive’s Annual Base Salary (the “Target Annual Bonus”).


 


(v)                                 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 ninety percent (90%) of his Annual Base Salary (the “Target LTIP
Bonus”).


 


(vi)                              For purposes of
Sections 3b(iv) and 3b(v), 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.


 


c.                                       Fringe Benefits
and Perquisites.  During the
Employment Period, the Executive will be entitled to the following additional
fringe benefits in accordance with the terms and conditions of Cinergy’s
policies and practices for such fringe benefits:


 


(i)                                     Cinergy will
furnish to the Executive an automobile appropriate for the Executive’s level of
position, or, at Cinergy’s discretion, a cash allowance of equivalent
value.  Cinergy will also pay all of the
related expenses for gasoline, insurance, maintenance, and repairs, or provide
for such expenses within the cash allowance. 
All benefits provided pursuant to this Section 3c(i) shall be provided
in accordance with generally applicable procedures established from time to time
by Cinergy in its sole discretion.


 


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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.


 


(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).


 


(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, in the event any  payment to
the Executive pursuant to this Section 3c(iv) is subject to any  federal, state, or local income or
employment taxes, Cinergy shall provide to the Executive an additional payment
in an amount necessary such that after payment by the Executive of all such
taxes (calculated after assuming that the Executive pays such taxes for the
year in which the benefit occurs at the highest marginal tax rate applicable),
including the taxes imposed on the additional payment, the Executive retains an
amount equal to the benefit provided pursuant to this Section 3c(iv).


 


(v)                                 Cinergy will provide
other fringe benefits in accordance with Cinergy plans, practices, programs,
and policies in effect from time to time, commensurate with his position and at
least comparable to those received by other Cinergy Tier II executives.


 


d.                                      Expenses.  Cinergy agrees to reimburse the Executive
for all expenses, including those for travel and entertainment, properly
incurred by him in the performance of his duties under this Agreement in
accordance with the policies established from time to time by the Board of
Directors.


 


e.                                       Relocation
Benefits.  Following
termination of the Executive’s employment for any reason (other than death),
the Executive will be entitled to reimbursement from Cinergy for the reasonable
costs of relocating from the Cincinnati, Ohio, area to a new primary residence
in a manner that is consistent with the terms of the Relocation Program.  Notwithstanding the foregoing, if the
Executive becomes employed by another employer and is eligible to receive relocation
benefits under another employer-provided plan, any benefits provided to the
Executive under this Section 3e will be secondary to those provided under the
other employer-provided relocation plan. 
The Executive must report to Cinergy any such relocation benefits that
he actually receives under another employer-provided plan.


 


f.                                         Stock Options
and Stock Appreciation Rights.  Notwithstanding Section 5d, upon the occurrence of a Change in
Control, any stock options or stock appreciation rights then held by the
Executive pursuant to the LTIP or Cinergy Corp. Stock Option Plan shall, to the
extent not otherwise provided in the applicable Stock


 


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Related Documents, become
immediately exercisable.  If the
Executive terminates employment for any reason during the twenty-four (24)
month period commencing upon the occurrence of a Change in Control,
notwithstanding Section 5d, any stock options or stock appreciation rights then
held by the Executive pursuant to the LTIP or Cinergy Corp. Stock Option Plan
shall, to the extent not otherwise provided in the applicable Stock Related
Documents, remain exercisable in accordance with their terms but in no event
for a period less than the lesser of (i) three months following such
termination of employment or (ii) the remaining term of such stock option or
stock appreciation right (which remaining term shall be determined without
regard to such termination of employment).


 


4.                                      Termination
of Employment.


 


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


 


b.                                      By Cinergy for
Cause.  Cinergy may terminate the
Executive’s employment during the Employment Period for Cause.  For purposes of this Employment Agreement,
“Cause” means the following:


 


(i)                                     The willful and
continued failure by the Executive to substantially perform the Executive’s
duties with Cinergy (other than any such failure resulting from the Executive’s
incapacity due to physical or mental illness) 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 his 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.


 


(ii)                                  The breach by
the Executive of the confidentiality provisions set forth in Section 9.


 


(iii)                               The conviction
of the Executive for the commission of a felony, including the entry of a
guilty or nolo contendere plea, or any willful or grossly negligent action or
inaction by the Executive that has a materially adverse effect on Cinergy.  For purposes of this definition of Cause, no
act, or failure to act, on the Executive’s part will be deemed “willful” unless
it is done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that the Executive’s act, or failure to act, was in the best
interest of Cinergy.


 


(iv)                              Notwithstanding
the foregoing, Cinergy shall be deemed to have not terminated the employment of
the Executive for Cause unless and until there shall have been delivered to the
Executive a copy of a resolution


 


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duly adopted by the
affirmative vote of not less than a majority of the Board then in office at a
meeting of the Board called and held for such purpose (after reasonable notice
to the Executive and an opportunity for the Executive, together with his
counsel, to be heard by the Board), finding that, in the good faith opinion of
the Board, the Executive had committed an act set forth above in this Section
4b and specifying the particulars thereof in detail.


 


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


 


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


 


(i)                                     (1) A reduction
in the Executive’s Annual Base Salary, except for across-the-board salary
reductions similarly affecting all Cinergy management personnel, (2) a
reduction in the amount of the Executive’s Maximum Annual Bonus under the
Annual Incentive Plan, except for across-the-board Maximum Annual Bonus
reductions similarly affecting all Cinergy management personnel, or (3) 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.


 


(ii)                                  (1) The
material reduction without his consent of the Executive’s title, authority,
duties, or responsibilities from those in effect immediately prior to the
reduction, (2) in the event the Executive is or becomes a member of the Board
during the Employment Period, the failure by Cinergy without the consent of the
Executive to nominate the Executive for re-election to the Board, or (3) a
material adverse change in the Executive’s reporting responsibilities.


 


(iii)                               Any breach by
Cinergy of any other material provision of this Agreement (including but not
limited to the place of performance as specified in Section 2b).


 


(iv)                              The Executive’s
disability due to physical or mental illness or injury that precludes the
Executive from performing any job for which he is qualified and able to perform
based upon his education, training or experience.


 


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


 


e.                                       By the
Executive Without Good Reason.  The Executive may terminate his employment without Good Reason
upon prior written notice to the Company.


 


f.                                         Notice of
Termination.  Any
termination of the Executive’s employment by Cinergy or by the Executive during
the Employment Period (other than a termination due to the Executive’s death)
will be communicated by a written Notice of Termination to the other party to
this Agreement in accordance with Section 12b. 
For purposes of this Agreement, a “Notice of Termination” means a written
notice that specifies the particular provision of this Agreement relied upon
and that sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for terminating the Executive’s employment under the specified
provision.  The failure by the Executive
or Cinergy to set forth in the Notice of Termination any fact or circumstance
that contributes to a showing of Good Reason or Cause will not waive any right
of the Executive or Cinergy under this Agreement or preclude the Executive or
Cinergy from asserting that fact or circumstance in enforcing rights under this
Agreement.


 


g.                                      The Executive
acknowledges and agrees that he shall not sell or otherwise dispose of any
shares of Company stock acquired pursuant to the exercise of a stock option,
other than shares sold in order to pay an option exercise price or the related
tax withholding obligation, until 90 days after the Date of Termination.  Notwithstanding the foregoing, Cinergy, in
its sole discretion, may waive the restrictions contained in the previous
sentence.


 


5.                                      Obligations
of Cinergy Upon Termination.


 


a.                                       Certain
Terminations.


 


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


 


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


 


(2)                                  any amount
payable to the Executive under the Annual Incentive Plan in respect of the most
recently completed fiscal year, to the extent not theretofore paid.


 


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(3)                                  an amount equal
to the AIP Benefit for the fiscal year that includes the Date of Termination
multiplied by a fraction, the numerator of which is the number of days from the
beginning of that fiscal year to and including the Date of Termination and the
denominator of which is three hundred and sixty-five (365).  The AIP Benefit component of the calculation
will be equal to 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, determined 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.


 


(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.


 


(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.


 


(1)                                  Cinergy will
pay to the Executive a lump sum amount, in cash, equal to three (3) times the
sum of the Annual Base Salary and the 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


 


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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 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.


 


(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 his rights in writing).  The benefits described in the preceding sentence will be in
accordance with the medical and welfare benefit plans, practices, programs, or
policies of Cinergy (the “M&W Plans”) as then currently in effect and
applicable generally to other Cinergy senior executives and their
families.  In the event that any medical
or dental benefits or payments provided pursuant to this Section 5a(ii)(2)(B)
are subject to federal, state, or local income or employment 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 (calculated after
assuming that the Executive pays such taxes for the year in which the payment
or benefit occurs at the highest marginal tax rate applicable), including the
taxes imposed on the additional payment, the Executive retains an amount equal
to the medical or dental benefits or payments provided pursuant to this Section
5a(ii)(2)(B).


 


(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).


 


(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


 


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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
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.


 


(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.


 


(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.  In the event any  payment to the Executive pursuant to this Section 5a(ii)(3) is
subject to any  federal, state, or local
income or employment taxes, Cinergy shall provide to the Executive an
additional payment in an amount necessary such that after payment by the
Executive of all such taxes (calculated after assuming that the Executive pays
such taxes for the year in which his Date of Termination occurs at the highest
marginal tax rate applicable), including the taxes imposed on the additional
payment, the Executive retains an amount equal to the payment provided pursuant
to this Section 5a(ii)(3).  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.


 


(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)


 


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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.


 


(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 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 he is entitled in
accordance with the terms of the Annual Incentive Plan for the fiscal year that
includes the Date of Termination.


 


(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


 


13

















 


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.


 


(3)                                  The Executive
shall be fully vested in his accrued benefits as of the Date of Termination
under the Executive Retirement Plans, and his aggregate accrued benefits
thereunder and under Section 3b(ii) of this Agreement will be calculated, and
he will be treated for all purposes, as if he 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 he 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 he or his dependents actually receives
or that are made available to him or his 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.


 


14

















 


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 or
employment 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 (calculated after assuming that the Executive pays such taxes for
the year in which the payment or benefit occurs at the highest marginal tax
rate applicable), including the taxes imposed on the additional payment, the
Executive retains an amount equal to the benefits or payments provided pursuant
to 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 $50,000.  In the event
any  payment to the Executive pursuant
to this Section 5a(iii)(5) is subject to any 
federal, state, or local income or employment taxes, Cinergy shall
provide to the Executive an additional payment in an amount necessary such that
after payment by the Executive of all such taxes (calculated after assuming
that the Executive pays such taxes for the year in which his Date of
Termination occurs at the highest marginal tax rate applicable), including the
taxes imposed on the additional payment, the Executive retains an amount equal
to the payment provided pursuant to this Section 5a(iii)(5).  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.  In the event any  payment to the Executive pursuant to this Section 5a(iii)(6) is
subject to any  federal, state, or local
income or employment taxes, Cinergy shall provide to the Executive an
additional payment in an amount necessary such that after payment by the
Executive of all such taxes (calculated after assuming that the Executive pays
such taxes for the year in which his Date of Termination occurs at the highest
marginal tax rate applicable), including the taxes imposed on the additional
payment, the Executive retains an amount equal to the payment provided pursuant
to this Section 5a(iii)(6).  Such
payment will be transferred to the Executive within thirty (30) days


 


15

















 


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 Executive will be deemed to have incurred a Qualifying Termination
upon a Change in Control if the Executive’s employment is terminated prior to a
Change in Control, without Cause at the direction of a Person who has entered
into an agreement with Cinergy, the consummation of which will constitute a
Change in Control, or if the Executive terminates his employment for Good
Reason prior to a Change in Control if the circumstances or event that
constitutes Good Reason occurs at the direction of such a Person.


 


b.                                      Termination by
Cinergy for Cause or by the Executive Other Than for Good Reason.  Subject to the provisions of Section 7, and
notwithstanding any other provisions of this Agreement, if the Executive’s
employment is terminated for Cause during the Employment Period, or if the
Executive terminates employment during the Employment Period other than a
termination for Good Reason, Cinergy will have no further obligations to the
Executive under this Agreement other than the obligation to pay to the
Executive the Accrued Obligations, plus any other earned but unpaid
compensation, in each case to the extent not previously paid.


 


c.                                       Certain Tax
Consequences.


 


(i)                                     In the event
that any benefits paid or payable to the Executive or for his benefit pursuant
to the terms of this Agreement or any other plan or arrangement in connection
with, or arising out of, his employment with Cinergy or a change in ownership
or effective control of Cinergy or of a substantial portion of its assets (a
“Payment” or “Payments”) would be subject to any Excise Tax, then the Executive
will be entitled to receive an additional payment (a “Gross-Up Payment”) in an
amount such that after payment by the Executive of all taxes (including any
interest, penalties, additional tax, or similar items imposed with respect
thereto and the Excise Tax), including any Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon or assessable against the Executive due to the
Payments.


 


16

















 


(ii)                                  Subject to the
provisions of Section 5c, all determinations required to be made under this
Section 5c, including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by the Accounting Firm, which shall provide
detailed supporting calculations both to the Company and the Executive within
fifteen (15) business days of the receipt of notice from the Executive that
there has been a Payment, or such earlier time as is requested by the Company.  If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall, at the same time as it makes
such determination, furnish the Executive with an opinion that he has
substantial authority not to report any Excise Tax on his federal income tax
return.  All fees and expenses of the
Accounting Firm shall be borne solely by the Company.  Any Gross-Up Payment, as determined pursuant to this Section 5c,
shall be paid by Cinergy to the Executive within five (5) days of the receipt
of the Accounting Firm’s determination. 
Any determination by the Accounting Firm shall be binding upon Cinergy
and the Executive.  As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by Cinergy should have been
made (“Underpayment”), consistent with the calculations required to be made
hereunder.  In the event of any Underpayment,
the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by Cinergy to or for
the benefit of the Executive, and Cinergy shall indemnify and hold harmless the
Executive for any such Underpayment, on an after-tax basis, including interest
and penalties with respect thereto.  In
the event that the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder at the time of termination of the Executive’s
employment, the Executive shall repay to the Company, at the time that the
amount of such reduction in Excise Tax is finally determined, the portion of
the Gross-Up Payment attributable to such reduction (plus that portion of the
Gross-Up Payment attributable to the Excise Tax and federal, state and local
income and employment tax imposed on the Gross-Up Payment being repaid by the
Executive to the extent that such repayment results in a reduction in Excise
Tax and/or a federal, state or local income or employment tax deduction) plus
interest on the amount of such repayment at the rate provided in Code Section
1274(b)(2)(B).


 


(iii)                               The value of
any non-cash benefits or any deferred payment or benefit paid or payable to the
Executive will be determined in accordance with the principles of Code Sections
280G(d)(3) and (4).  For purposes of
determining the amount of the Gross-Up Payment, the Executive will be deemed to
pay federal income taxes at the highest marginal rate of federal income
taxation in the calendar year in which the Gross-Up Payment is to be made and
applicable state and local income taxes at the highest 


 


17

















 


marginal rate of taxation in
the state and locality of the Executive’s residence on the Date of Termination,
net of the maximum reduction in federal income taxes that would be obtained
from deduction of those state and local taxes.


 


(iv)                              Notwithstanding
anything contained in this Agreement to the contrary, in the event that,
according to the Accounting Firm’s determination, an Excise Tax will be imposed
on any Payment or Payments, Cinergy will pay to the applicable government
taxing authorities as Excise Tax withholding, the amount of the Excise Tax that
Cinergy has actually withheld from the Payment or Payments in accordance with
law.


 


d.                                      Value Creation
Plan and Stock Options. 
Upon the Executive’s termination of employment for any reason, the
Executive’s entitlement to restricted shares and performance shares under the
Value Creation Plan and any stock options granted under the Cinergy Corp. Stock
Option Plan, the LTIP or any other stock option plan will be determined under
the terms of the appropriate plan and any applicable administrative guidelines
and written agreements, provided, however, that following the
occurrence of a Change in Control the terms of any such plan, administrative
guideline or written agreement shall not be amended in a manner that would
adversely affect the Executive with respect to awards granted to the Executive
prior to the Change in Control.


 


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


 


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


 


6.                                      Non-Exclusivity
of Rights.  Nothing in this Agreement will prevent or limit the Executive’s
continuing or future participation in any benefit, plan, program, policy, or
practice provided by Cinergy and for which the Executive may qualify, except
with respect to any benefit to which the Executive has waived his rights in
writing or any plan,


 


18

















 


program, policy, or practice
that expressly excludes the Executive from participation.  In addition, nothing in this Agreement will
limit or otherwise affect the rights the Executive may have under any other
contract or agreement with Cinergy entered into after the Effective Date.  Amounts that are vested benefits or that the
Executive is otherwise entitled to receive under any benefit, plan, program,
policy, or practice of, or any contract or agreement entered into after the
Effective Date with Cinergy, at or subsequent to the Date of Termination, will
be payable in accordance with that benefit, plan, program, policy or practice,
or that contract or agreement, except as explicitly modified by this
Agreement.  Notwithstanding the above,
in the event that the Executive receives Severance Benefits under Section
5a(ii) or 5a(iii), (a) the Executive shall not be entitled to any benefits
under any severance plan of Cinergy, including but not limited to the Severance
Opportunity Plan for Non-Union Employees of Cinergy Corp. and (b) if the
Executive receives such Severance Benefits as a result of his termination for
Good Reason, as that term is defined in Section 4d(iv), Cinergy’s obligations
under Sections 5a(ii) and 5a(iii) shall be reduced by the amount of any
benefits payable to the Executive under any short-term or long-term disability
plan of Cinergy, the amount of which shall be determined by Cinergy in good
faith.


 


7.                                      Full
Settlement:  Mitigation.  Except as otherwise provided herein,
Cinergy’s obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations under this Agreement will not be affected
by any set-off, counterclaim, recoupment, defense, or other claim, right, or
action that Cinergy may have against the Executive or others.  In no event will the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts (including amounts for damages for breach) payable to the Executive
under any of the provisions of this Agreement and, except as provided in
Sections 3e, 5a(ii)(2) and 5a(iii)(4), those amounts will not be reduced simply
because the Executive obtains other employment.  If the Executive finally prevails on the substantial claims
brought with respect to any dispute between Cinergy and the Executive as to the
interpretation, terms, validity, or enforceability of (including any dispute
about the amount of any payment pursuant to) this Agreement, Cinergy agrees to
pay all reasonable legal fees and expenses that the Executive may reasonably
incur as a result of that dispute.


 


8.                                      Arbitration.  The parties agree that any dispute, claim,
or controversy based on common law, equity, or any federal, state, or local
statute, ordinance, or regulation (other than workers’ compensation claims)
arising out of or relating in any way to the Executive’s employment, the terms,
benefits, and conditions of employment, or concerning this Agreement or its
termination and any resulting termination of employment, including whether such
a dispute is arbitrable, shall be settled by arbitration.  This agreement to arbitrate includes but is
not limited to all claims for any form of illegal discrimination, improper or
unfair treatment or dismissal, and all tort claims.  The Executive will still have a right to file a discrimination
charge with a federal or state agency, but the final resolution of any
discrimination claim will be submitted to arbitration instead of a court or
jury.  The arbitration proceeding will
be conducted under the employment dispute resolution arbitration rules of the
American Arbitration Association in effect at the time a demand for arbitration
under the rules is made, and such proceeding will be adjudicated in the state
of Ohio in accordance with the laws of the state of Ohio.  The decision of the


 


19

















 


arbitrator(s), including
determination of the amount of any damages suffered, will be exclusive, final,
and binding on all parties, their heirs, executors, administrators, successors
and assigns.  Each party will bear its
own expenses in the arbitration for arbitrators’ fees and attorneys’ fees, for
its witnesses, and for other expenses of presenting its case.  Other arbitration costs, including
administrative fees and fees for records or transcripts, will be borne equally
by the parties.  Notwithstanding
anything in this Section to the contrary, if the Executive prevails with
respect to any dispute submitted to arbitration under this Section, Cinergy
will reimburse or pay all legal fees and expenses that the Executive may
reasonably incur as a result of the dispute as required by Section 7.


 


9.                                      Confidential
Information.  The Executive will hold in a fiduciary capacity for the benefit
of Cinergy, as well as all of Cinergy’s successors and assigns, all secret,
confidential information, knowledge, or data relating to Cinergy, and its
affiliated businesses, that the Executive obtains during the Executive’s
employment by Cinergy or any of its affiliated companies, and that has not been
or subsequently becomes public knowledge (other than by acts by the Executive
or representatives of the Executive in violation of this Agreement).  During the Employment Period and thereafter,
the Executive will not, without Cinergy’s prior written consent or as may
otherwise by required by law or legal process, communicate or divulge any such
information, knowledge, or data to anyone other than Cinergy and those
designated by it.  The Executive
understands that during the Employment Period, Cinergy may be required from
time to time to make public disclosure of the terms or existence of the
Executive’s employment relationship to comply with various laws and legal
requirements.  In addition to all other
remedies available to Cinergy in law and equity, this Agreement is subject to termination
by Cinergy for Cause under Section 4b in the event the Executive violates any
provision of this Section.


 


10.                               Successors.


 


a.                                       This Agreement
is personal to the Executive and, without Cinergy’s prior written consent,
cannot be assigned by the Executive other than Executive’s designation of a
beneficiary of any amounts payable hereunder after the Executive’s death.  This Agreement will inure to the benefit of
and be enforceable by the Executive’s legal representatives.


 


b.                                      This Agreement
will inure to the benefit of and be binding upon Cinergy and its successors and
assigns.


 


c.                                       Cinergy will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of Cinergy to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that Cinergy would be required to
perform it if no succession had taken place. 
Cinergy’s failure to obtain such an assumption and agreement prior to
the effective date of a succession will be a breach of this Agreement and will
entitle the Executive to compensation from Cinergy in the same amount and on
the same terms as if the Executive were to


 


20

















 


terminate his employment for
Good Reason upon a Change in Control, except that, for purposes of implementing
the foregoing, the date on which any such succession becomes effective will be
deemed the Date of Termination.


 


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


 


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


 


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


 


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


 


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


 


e.                                       Annual Base
Salary.  “Annual Base Salary” means,
except where otherwise specified herein, the annual base salary payable to the
Executive 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 Cinergy Corp. Annual Incentive Plan or any similar
plan or successor to the Annual Incentive Plan.


 


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


 


i.                                          COBRA.  “COBRA” means the Consolidated Omnibus
Budget Reconciliation 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 the
Effective Date:


 


(i)                                     Any Person is
or becomes the beneficial owner (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (“1934 Act”)), directly or indirectly, of
securities of the Company (not including in the securities beneficially owned
by such Person any securities acquired directly from the Company or its
affiliates) representing more than twenty percent (20%) of the combined voting
power of the Company’s then outstanding securities, excluding any Person who
becomes such a beneficial owner in connection with a transaction described in
Clause (1) of Paragraph (ii) below; or


 


21

















 


(ii)                                  There is
consummated a merger or consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation, partnership or other
entity, other than (1) a merger or consolidation that would result in the
voting securities of the Company outstanding immediately prior to that merger
or consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or its parent)
at least sixty percent (60%) of the combined voting power of the securities of
the Company or the surviving entity or its parent outstanding immediately after
the merger or consolidation, or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which
no Person is or becomes the beneficial owner, directly or indirectly, of
securities of the Company (not including in the securities beneficially owned
by such a Person any securities acquired directly from the Company or its
affiliates other than in connection with the acquisition by the Company or its
affiliates of a business) representing twenty percent (20%) or more of the
combined voting power of the Company’s then outstanding securities; or


 


(iii)                               During any
period of two (2) consecutive years, individuals who at the beginning of that
period constitute the Board of Directors and any new director (other than a
director whose initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Company’s stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of that period or whose
appointment, election, or nomination for election was previously so approved or
recommended cease for any reason to constitute a majority of the Board of
Directors; or


 


(iv)                              The
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated a sale or disposition by the
Company of all or substantially all of the Company’s assets, other than a sale
or disposition by the Company of all or substantially all of the Company’s
assets to an entity, at least sixty percent (60%) of the combined voting power
of the voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company
immediately prior to the sale.


 


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


 


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


 


22

















 


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


 


o.                                      Code.  “Code” means the Internal Revenue Code of
1986, 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’s employment is terminated by Cinergy for Cause, or by the Executive
with Good Reason, the date of receipt of the Notice of Termination or any later
date specified in the notice, as the case may be;


 


(ii)                                  if the
Executive’s employment is terminated by the Executive without Good Reason,
thirty (30) days after the date on which the Executive notifies Cinergy of the
termination;


 


(iii)                               if the
Executive’s employment 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’s employment is terminated by reason of death, the date of death.


 


r.                                         Deferred
Compensation Plan.  “Deferred
Compensation Plan” means the Cinergy Corp. Non-Qualified Deferred Incentive
Compensation Plan or any similar plan or successor to that plan.


 


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


 


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


 


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


 


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


 


w.                                    Executive
Retirement Plans.  “Executive
Retirement Plans” means the Pension Plan, the Cinergy Corp. Supplemental
Executive Retirement Plan and the Cinergy Corp. Excess Pension Plan or any
similar plans or successors to those plans.


 


23

















 


x.                                        Executive
Supplemental Life Program. 
“Executive Supplemental Life Program” means the Cinergy Corp. Executive
Supplemental Life Insurance Program or any similar program or successor to the
Executive Supplemental 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
Section 4d.


 


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


 


bb.                               Highest Average
Earnings.  “Highest
Average Earnings” shall have the meaning given to such term in the Cinergy
Corp. Supplemental Executive Retirement Plan. 
For purposes of clarity, the parties hereto acknowledge and agree that
the Executive’s Highest Average Earnings for any year shall not include any
benefits received by the Executive pursuant to Section 5 of this Agreement,
other than pursuant to Section 5a(i) of this Agreement.


 


cc.                                 Long-Term
Incentive Plan or LTIP. 
“Long-Term Incentive Plan” or “LTIP” means the long-term incentive plan
implemented under the Cinergy Corp. 1996 Long-Term Incentive Compensation Plan
or any successor to that plan.


 


dd.                               M&W Plans.  “M&W Plans” has the meaning set forth in
Section 5a(ii)(2).


 


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


 


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


 


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


 


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


 


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


 


jj.                                       Person.  “Person” has the meaning set forth in
paragraph 3(a)(9) of the 1934 Act, as modified and used in subsections 13(d)
and 14(d) of the 1934 Act; however, a Person will not include the following:


 


(i)                                     Cinergy or any
of its subsidiaries or affiliates;


 


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


 


24

















 


(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.


 


kk.                                 Potential
Change in Control.  A
“Potential Change in Control” means any period during which any of the
following circumstances exist:


 


(i)                                     The Company
enters into an agreement, the consummation of which would result in the
occurrence of a Change in Control; provided that a Potential Change in Control
shall cease to exist upon the expiration or other termination of such agreement;
or


 


(ii)                                  The Company or
any Person publicly announces an intention to take or to consider taking
actions which, if consummated, would constitute a Change in Control; provided
that a Potential Change in Control shall cease to exist when the Company or
such Person publicly announces that it no longer has such an intention; or


 


(iii)                               Any Person who
is or becomes the beneficial owner (as defined in Rule 13d-3 under the 1934
Act), directly or indirectly, of securities of the Company representing ten percent
(10%) or more of the combined voting power of the Company’s then outstanding
securities, increases such Person’s beneficial ownership of such securities by
an amount equal to five percent (5%) or more of the combined voting power of
the Company’s then outstanding securities; or


 


(iv)                              The Board of
Directors adopts a resolution to the effect that, for purposes hereof, a
Potential Change in Control has occurred.


 


Notwithstanding anything
herein to the contrary, a Potential Change in Control shall cease to exist not
later than the date that (i) the Board of Directors determines that the
Potential Change in Control no longer exists, or (ii) a Change in Control
occurs.


 


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


 


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


 


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nn.                               Severance
Benefits.  “Severance
Benefits” means the payments and benefits payable to the Executive pursuant to
Section 5.


 


oo.                               Spouse.  “Spouse” means the Executive’s lawfully
married spouse.  For this purpose,
common law marriage or a similar arrangement will not be recognized unless
otherwise required by federal law.


 


pp.                               Stock Related
Documents.  “Stock
Related Documents” means the LTIP, the Cinergy Corp. Stock Option Plan, and the
Value Creation Plan and any applicable administrative guidelines and written
agreements relating to those plans.


 


qq.                               Target Annual
Bonus.  “Target Annual Bonus” has the
meaning set forth in Section 3b.


 


rr.                                     Target LTIP
Bonus.  “Target LTIP Bonus” has the
meaning set forth in Section 3b.


 


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


 


tt.                                     Waiver and
Release.  “Waiver and Release” means a
waiver and release, in substantially the form attached to this Agreement as Exhibit
A.


 


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


 


26

















 


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.


 


f.                                         References in
this Agreement to the masculine include the feminine unless the context clearly
indicates otherwise.


 


g.                                      This instrument
contains the entire agreement of the Executive and Cinergy with respect to the
subject matter of this Agreement; and subject to any agreements evidencing
stock option or restricted stock grants described in Section 3b and the Stock
Related Documents, all promises, representations, understandings, arrangements,
and prior agreements are merged into this Agreement and accordingly superseded.


 


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


 


i.                                          Cinergy and the
Executive agree that Cinergy Services, Inc. will be authorized to act for
Cinergy with respect to all aspects pertaining to the administration and
interpretation of this Agreement.


 


27

















 


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


 


 


	
   

  	
   

  	
  CINERGY SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James E. Rogers

  	
   

  
	
   

  	
   

  	
   

  	
  James E. Rogers

  
	
   

  	
   

  	
   

  	
  Chairman and

  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ James L. Turner

  	
   

  
	
   

  	
   

  	
  James L. Turner

  
							



 


28

















 


EXHIBIT A


 


*****


 


WAIVER AND RELEASE AGREEMENT


 


THIS WAIVER AND RELEASE AGREEMENT (this “Waiver
and Release”) is entered into by and between James L. Turner (the “Executive”)
and Cinergy Corp.  (“Cinergy”)
(collectively, the “Parties”).


 


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


 


WHEREAS, the Executive’s employment has been
terminated in accordance with the terms of the Employment Agreement;


 


WHEREAS, the Executive is required to sign this
Waiver and Release in order to receive the payment of certain compensation
under the Employment Agreement following termination of employment; and


 


WHEREAS, Cinergy has agreed to sign this Waiver and
Release.


 


NOW, THEREFORE, in consideration of the
promises and agreements contained herein and other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged,
and intending to be legally bound, the Parties agree as follows:


 


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


 


2.                                       In
consideration of the payments to be made and the benefits to be received by the
Executive pursuant to Section 5 of the Employment Agreement (the “Severance
Benefits”), which the Executive acknowledges are in addition to payment and
benefits to which the Executive would be entitled to but for the Employment
Agreement, the Executive, on behalf of himself, his heirs, representatives,
agents and assigns hereby COVENANTS NOT TO SUE OR OTHERWISE VOLUNTARILY
PARTICIPATE IN ANY LAWSUIT AGAINST, FULLY RELEASES, INDEMNIFIES, HOLDS
HARMLESS, and OTHERWISE FOREVER DISCHARGES (i) Cinergy, (ii) its subsidiary or
affiliated entities, (iii) all of their present or former directors, officers,
employees, shareholders, and agents as well as (iv) all predecessors,
successors and assigns thereof (the persons listed in clauses (i) through (iv)
hereof shall be referred to collectively as the “Company”) from any and all
actions, charges, claims, demands, damages or liabilities of any kind or
character whatsoever, known or unknown, which Executive now has or may have had
through the effective date of this Waiver and Release.  Executive acknowledges and understands that
he is not hereby prevented from filing a charge of discrimination with the
Equal Employment Opportunity Commission or any state-equivalent agency or
otherwise participate in any proceedings before such Commissions.  Executive also acknowledges and understands
that in the event he does


 


29

















 


file such a charge, he shall
be entitled to no remuneration, damages, back pay, front pay, or compensation
whatsoever from the Company as a result of such charge.


 


3.                                       Without
limiting the generality of the foregoing release, it shall include:  (i) all claims or potential claims arising
under any federal, state or local laws relating to the Parties’ employment
relationship, including any claims Executive may have under the Civil Rights
Acts of 1866 and 1964, as amended, 42 U.S.C. §§ 1981 and 2000(e) et  seq.;
the Civil 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, as amended, 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, 29 U.S.C. §§ 2101, et
seq.; the Ohio Civil Rights Act, Chapter 4112 et  seq.; and
any other federal, state or local law governing the Parties’ employment
relationship; (ii) any claims on account of, arising out of or in any way
connected with Executive’s employment with the Company or leaving of that
employment; (iii) any claims alleged or which could have been alleged in any
charge or complaint against the Company; (iv) any claims relating to the
conduct of any employee, officer, director, agent or other representative of
the Company; (v) any claims of discrimination or harassment on any basis; (vi)
any claims arising from any legal restrictions on an employer’s right to
separate its employees; (vii) any claims for personal injury, compensatory or
punitive damages or other forms of relief; and (viii) all other causes of
action sounding in contract, tort or other common law basis, including: (a) the
breach of any alleged oral or written contract; (b) negligent or intentional
misrepresentations; (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
acknowledge that it is their mutual and specific intent that the above waiver
fully complies with the requirements of the Older Workers Benefit Protection
Act (29 U.S.C. § 626) and any similar law governing release of claims.  Accordingly, Executive hereby acknowledges
that:


 


(a)                                  He has
carefully read and fully understands all of the provisions of this Waiver and
Release and that he has entered into this Waiver and Release knowingly and
voluntarily after extensive negotiations and having consulted with his counsel;


 


(b)                                 The Severance
Benefits offered in exchange for Executive’s release of claims exceed in kind
and scope that to which he would have otherwise been legally entitled;


 


(c)                                  Prior to
signing this Waiver and Release, Executive had been advised in writing by this
Waiver and Release as well as other writings to seek counsel from, and has in
fact had an opportunity to consult with, an attorney of his choice concerning
its terms and conditions; and


 


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


 


30

















 


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 he 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 his continued obligations to comply with the
post-termination covenants contained in his 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 he shall not communicate, display or
otherwise reveal any of the contents of this Waiver and Release to anyone other
than his 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 his employment with Cinergy by stating that he
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 him from further discussing
the specifics of his 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 his 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, he 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 immediately reimburse the Company for the value of all
benefits received under this Waiver and Release to the fullest extent permitted
by law.


 


31

















 


9.                                       Cinergy hereby
releases the Executive, his 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 his employment with Cinergy provided such act or omission was
committed in good faith and occurred within the scope of his 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 he 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.


 


32

















 


PLEASE READ CAREFULLY. 
WITH RESPECT TO THE EXECUTIVE, THIS


 


WAIVER AND RELEASE INCLUDES A COMPLETE RELEASE OF ALL KNOWN


 


AND UNKNOWN CLAIMS.


 


IN WITNESS WHEREOF, the
Parties have themselves signed, or caused a duly authorized agent thereof to
sign, this Waiver and Release on their behalf and thereby acknowledge their
intent to be bound by its terms and conditions.


 


 


	
  EXECUTIVE

  	
   

  	
  CINERGY SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signed:

  	
  /s/ James L. Turner

  	
   

  	
  By:

  	
  /s/ James E. Rogers

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Printed:

  	
  James L. Turner

  	
   

  	
  Title:

  	
  Chairman and Chief
  Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  Dated:

  	
   

  



 


33