Retention Agreement









Exhibit

10a




 




Retention Agreement




(Duck Creek Business

Unit)




 




This Retention Agreement (“Agreement”) is made and effective as of

March 1, 2002, by and between Central Illinois Light Company, an Illinois

corporation (hereinafter referred to as the “Company”) and James L. Luckey  (hereinafter referred to as the “Key

Employee”).




 




Whereas, the Company has provided certain benefits to Key Employee

under the Involuntary Severance Pay Plan;




 




Whereas, in addition to the benefits provided under the Involuntary

Severance Plan, the Company has determined it should also enter into employment

retention agreements with certain key employees of the Company;




 




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




 




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




 




Whereas, should the possibility of a Change-in-Control arise, the

Company believes it to be in the best interests of the Company to minimize

concerns that the Key Employee might be distracted by the personal

uncertainties and risks created by the possibility of a Change-in-Control;




 




Now therefore, to assure the Company that it will have the continued

service and dedication of the Key Employee notwithstanding the possibility,

threat, or occurrence of a Change-in-Control of the Company or CILCORP Inc., to

induce the Key Employee to remain in the employ of the Company, and for other

good and valuable consideration, the Company and the Key Employee agree as

follows:




 




 




Section 1.               Definitions.




 




1.1           Acquiring Company.




 




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




 




(a)  the

surviving corporation if the Company or CILCORP Inc.  merges or consolidates with or into another corporation in a

transaction in which neither The AES Corporation nor any of its wholly-owned

subsidiaries is the surviving corporation; or




 




(b)  the

corporation, person, other entity or group (other than The AES Corporation or

any of its wholly-owned subsidiaries) who acquires all or substantially all of

the Company’s assets or all or substantially all of the assets of the Company’s

Duck Creek Business 




 





























 




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

Company; or




 




(c)  the

surviving corporation if any wholly-owned subsidiary of the Company to which

the assets of the Company’s Duck Creek Business Unit has been transferred,

merges or consolidates with or into another corporation in a transaction in

which such wholly-owned subsidiary is not the surviving corporation.




 




1.2           Agreement

Period.  For purposes of this Agreement,

the Agreement Period shall mean the time beginning on the Effective Date and

ending on the earlier of (i) two (2) years from the date of a Change-in-Control

occurring on or after the Effective Date, or (ii) April 1, 2006.




 




1.3           Change-in-Control.  For purposes of this Agreement, a

“Change-in-Control” of the Company shall be deemed to have occurred:




 




(a)  if the

Company or CILCORP Inc. merges or consolidates with or into another corporation

in a transaction in which neither The AES Corporation nor any of its

wholly-owned subsidiaries is the surviving corporation; or




 




(b)  if the

Company sells or otherwise disposes of all or substantially all of the

Company’s assets to any corporation, person, other entity or group (other than

The AES Corporation or any of its wholly-owned subsidiaries); or




 




(c)  if any

corporation, person, other entity or group (other than The AES

Corporation,  or any of its wholly-owned

subsidiaries) becomes, directly or indirectly, the owner of fifty percent (50%)

or more of the voting stock of the Company or CILCORP Inc.; or




 




(d)  if the

Company sells or otherwise disposes of all or substantially all of the assets

of the Company’s Duck Creek Business Unit to any corporation, person, other

entity or group (other than The AES Corporation or any of its wholly-owned

subsidiaries); or




 




(e)  if any

wholly-owned subsidiary of the Company to which the assets of the Company’s

Duck Creek Business Unit has been transferred, merges or consolidates with or

into another corporation in a transaction in which neither The AES Corporation

nor any of its wholly-owned subsidiaries is the surviving corporation;  or




 




(f)  if any

wholly-owned subsidiary of the Company to which the Company’s Duck Creek

Business Unit has been transferred, sells or otherwise disposes of all or

substantially all of the assets of the Duck Creek Business Unit to any

corporation, person, other entity or 




 




2





























 




group (other than The AES Corporation or any of its wholly-owned

subsidiaries); or




 




(g)  if any

corporation, person, other entity or group (other than The AES Corporation or

any of its wholly-owned subsidiaries) becomes, directly or indirectly, the

owner of fifty percent (50%) of the voting stock of any wholly-owned subsidiary

of the Company to which the assets of the Company’s Duck Creek Business Unit

has been transferred.




 




1.4           Effective Date.  For purposes of this Agreement, the

Effective Date shall mean March 1, 2002.




 




1.5           Involuntary

Severance Pay Plan.  For purposes of

this Agreement, the Involuntary Severance Pay Plan shall mean the Involuntary

Severance Pay Plan established by the Company, effective July 16, 2001.




 




 




Section 2.               Termination

of Employment.




 




2.1           Termination by the

Company or the Acquiring Company with Cause. 

For purposes of this Agreement, the Company or the Acquiring Company may

terminate the Key Employee’s employment during the Agreement Period for

Cause.  In the event of such

termination, the Company or the Acquiring Company shall give the Key Employee a

Notice of Termination in conformity with Section 4 herein.  For purposes of this Agreement, Cause shall

mean:




 




(a)  the Key

Employee’s continued failure to perform substantially his/her duties with the

Company or the Acquiring Company other than such failure resulting from

Disability (as hereinafter defined), as determined by the Chief Executive

Officer of the Company (the “CEO”), after a written demand for substantial

performance is delivered to the Key Employee by the CEO which specifically

identifies the manner in which the CEO believes that the Key Employee has not

substantially performed his/her duties; or




 




(b)  the Key

Employee’s engaging in illegal conduct or gross misconduct which the CEO

believes is materially and demonstrably injurious to the Company, The AES

Corporation (prior to the Change-in-Control) or the Acquiring Company.




 




Any act or failure to act, on the instructions of the CEO of the

Company or Acquiring Company or based on the advice of counsel for the Company

shall be conclusively presumed to be done, or omitted to be done, by the Key

Employee in good faith and in the best interests of the Company.




 




3





























 




2.2           Termination by the

Key Employee for Good Reason.




 




The Key Employee’s employment with the Company or Acquiring Company

shall be deemed to be terminated by him/her for Good Reason if, during the

Agreement Period, the Key Employee terminates his/her employment relationship

with the Company or Acquiring Company for one of the following events:




 




(a)  there is a

reduction by the Company or the Acquiring Company in the Key Employee’s Annual

Compensation;




 




(b)  there is a

material reduction in the Key Employee’s benefits; or




 




(c)  the

Company or the  Acquiring Company

notifies the Key Employee that he/she will be required to change the Key

Employee’s principal place of employment during the Agreement Period to a

location that is more than 50 miles from the Key Employee’s principal place of

employment immediately prior to the Effective Date; or




 




(d)  the

Company or the Acquiring Company requires the Key Employee to travel on

business to  a substantially greater

extent than required immediately prior to the Effective Date.




 




In the event the Key Employee terminates his/her employment for Good

Reason, the Key Employee shall notify the Company in accordance with Section 4

within thirty (30) days of the date following the first occurrence of an event

described herein.   If the Key Employee

fails to notify the Company within thirty (30) days of the date following the

occurrence of an event described herein, then the Key Employee shall be deemed

to have accepted the event and shall be deemed to have waived his/her right to

terminate for Good Reason for that event. 

For purposes of this Agreement, Annual Compensation shall include Base

Salary as defined in Section 3.2, plus the annual target level of any bonus

established for the Key Employee for the fiscal year in which a

Change-in-Control occurs, assuming an achievement level of one hundred percent

(100%) of any target award established under an incentive compensation or bonus

or stock option plan of the Company in which the Key Employee participates, or

if there was no annual target level of any bonus established for the Key

Employee for the fiscal year in which a Change-in-Control occurs, then Annual

Compensation shall include Base Salary, plus the amount of any cash bonus and

the Black Scholes value of any stock options granted to the Key Employee for

performance/calendar year 2000.




 




4





























 




2.3           Termination by

Retirement or Death.




 




For purposes of this Agreement, termination of the Key Employee’s

employment based on Retirement during the Agreement Period shall mean voluntary

termination in accordance with the Company’s retirement policy, including early

retirement, generally applicable to the Company’s salaried employees.  The Key Employee’s death during the

Agreement Period shall automatically terminate his/her employment.  In either the event of retirement or death,

the Company shall pay the Key Employee or the Key Employee’s beneficiary(ies)

any unpaid Base Salary, as defined in Section 3.2, and pay for any accrued,

unused vacation through the Date of Termination, at the salary rate then in

effect, plus all other amounts to which the Key Employee or the Key Employee’s beneficiary(ies)

are entitled under any retirement, survivor’s benefits, insurance, and other

applicable programs of the Company then in effect, and the Company shall have

no further obligations to the Key Employee and the Key Employee’s

beneficiary(ies) under this Agreement.




 




2.4           Termination by

Disability.




 




If the Company determines in good faith that the Key Employee’s

Disability has occurred during the Agreement Period (pursuant to the definition

of Disability as set forth in the Company’s Long-Term Disability Plan then in

effect), it may give the Key Employee written notice, in accordance with

Section 4 herein, of its intention to terminate the Key Employee’s

employment.  In such event, the Key

Employee’s employment with the Company will terminate within thirty (30) days

after written Notice of Termination is received by the Key Employee

(“Disability Effective Date”) and provided that within thirty (30) days after

receiving such notice, the Key Employee has not returned to the full-time

performance of his/her duties.  The Key

Employee shall receive his/her unpaid Base Salary, as defined in Section 3.2,

through the Disability Effective Date at which point the Key Employee’s

compensation and benefits, if any, shall be determined in accordance with the

Company’s retirement, insurance, and other applicable plans and programs in

effect on the Disability Effective Date, and the Company shall have no further

obligations to the Key Employee under this Agreement.




 




5





























 




Section 3.               Obligations

of the Company following the Effective Date.




 




3.1           No Retention

Payment.




 




If, during the Agreement Period, the Key Employee voluntarily

terminates his/her employment with the Company, no payments under this

Agreement will be made.




 




3.2           Salary Continuation

Payment upon Termination.




 




If, during the Agreement Period, the Company or Acquiring Company

terminates the Key Employee’s employment for any reason other than for Cause,

Death, Disability or Retirement or if the Key Employee terminates employment

for Good Reason, the Key Employee shall receive, in addition to any salary,

benefit or compensation due the Key Employee as of the Termination Date, (a) an

amount equal to three (3) times the Key Employee’s Base Salary if the

Termination Date of the Key Employee falls within the period commencing on the

Effective Date and ending twelve (12) months following the date of a

Change-in-Control, and two (2) times the Key Employee’s Base Salary if the

Termination Date of the Key Employee falls within the period commencing with

the first  day following the anniversary

of the date of a Change-in-Control, but before the expiration of the Agreement

Period (collectively “Salary Continuation Payment”); and less (b) an amount

equal to any Severance Payments made to Key Employee under the Involuntary

Severance Pay Plan; and plus (c) an amount equal to 18 less the total number of

months for which the Key Employee is to receive Severance Payments under the

Involuntary Severance Plan, times the monthly premium charged to a terminated

Key Employee who selects continuation of coverage under the Company’s

comprehensive hospital and medical insurance plan (commonly known as “COBRA

payments.”)  The Company shall also

provide the Key Employee with years of service and compensation credits, along

with commensurate additional benefits, if any, the Key Employee would have

accrued during the Agreement Period, but for the termination, in any qualified

or non-qualified pension, retirement, supplemental benefit or compensation deferral

plan in effect on the Termination Date.  

For purposes of this Agreement, Base Salary shall only include the

annual base salary payable to the Key Employee (the greater of annual base pay

rate in effect during the month immediately preceding the Termination Date or

the annual base pay rate in effect during the month immediately prior to a

Change-in-Control), and shall not include the amount of any bonuses or stock

options payable to the Key Employee.




 




6





























 




3.3           Timing of Payments.




 




All payments made by the Company pursuant to Section 3.2  shall be paid within thirty (30) days of the

Termination Date.  As a precondition to

receiving the payments, the Key Employee shall execute a release of all claims

in favor of the Company or Acquiring Company in a form satisfactory to it.




 




3.4           Tax Indemnity.




 




In the event it shall ultimately be determined by a court or the

Internal Revenue Service that any payment by the Company to or for the benefit

of the Key Employee (whether paid or payable pursuant to the terms of this

Agreement) would be subject to the excise tax (including penalties and

interest) imposed by Section 4999 of the Internal Revenue Code of 1986, as

amended, (the “Code”), then the Key Employee shall be entitled to receive a

lump sum cash payment sufficient to place the Key Employee in the same net

after-tax position as if the excise tax had not been imposed (a “gross up”

payment).  The determination of the

maximum gross up amount payable to the Key Employee shall be made by an

accounting firm designated by the Company and shall be paid to the Key Employee

within thirty (30) days of such determination.




 




 




Section 4.               Notice of

Termination.




 




Any termination by the Company or Acquiring Company for Cause or Disability

or by the Key Employee for Good Reason shall be communicated by a written

notice of termination (“Notice of Termination”) to the other party hereto and

shall mean a notice which shall indicate the specific termination provision in

this Agreement relied upon by the party, shall set forth in reasonable detail

the facts and circumstances claimed to provide a basis for termination of the

Key Employee’s employment under the provision indicated, and shall set forth

the date of termination (“Termination Date”). 

The failure by the Company or Acquiring Company, or Key Employee to set

forth in the Notice of Termination any fact or circumstance which contributes

to a showing of Cause or Good Reason shall not waive any right of the Company

or the Key Employee, respectively, from asserting such fact or circumstance in

enforcing the Key Employee’s or the Company’s rights hereunder.




 




 




Section 5.               Not a

Contract of Employment.




 




The employment-at-will relationship between the Key Employee and the

Company shall continue except as modified by this Agreement.




 




7





























 




Section 6.               Governing

Law.




 




This Agreement shall be governed by, and construed in accordance with,

the laws of the State of Illinois.




 




 




Section 7.               Successors

and Assigns.




 




This Agreement shall be binding on the Company and any assignee or

successor in interest to the Company and of the Key Employee and his/her heirs,

assigns or legatees.




 




 




Section 8.               Arbitration

and Legal Fees.




 




The Key Employee and the Company agree to have any dispute or

controversy arising under or in connection with this Agreement settled by

arbitration using an Arbitration Panel. 

For the purposes of this Agreement, the term “Arbitration Panel” shall

mean three independent arbitrators, one of whom shall be selected by the

Company, one by the Key Employee and the third shall be selected by the two

other arbitrators.  In the event that

agreement cannot be reached on the selection of the third arbitrator, such arbitrator

shall be selected by the American Arbitration Association.  All arbitrators shall be selected from a

list provided by the American Arbitration Association, and all matters

presented to the Arbitration Panel shall be decided by majority vote.  The Key Employee and the Company agree that

any decision rendered in any such arbitration proceeding shall be final and

binding and that each of the parties waives their rights to seek remedies in

court, including the right to jury trial. 

All expenses of such arbitration, including the fees and expenses of the

counsel for the Key Employee and the Company shall be borne by the Company

and/or the Key Employee in the amount determined by the arbitrator.  Any such arbitration shall be held in the

City of Peoria, Illinois, unless the Company and Key Employee mutually agree on

another location.




 




 




Section 9.               Term of

Agreement.




 




The Agreement shall continue until, and terminate upon, the expiration

of the Agreement Period.




 




 




Section 10.             Notice.




 




For purposes of this Agreement, notices and all other communications

provided for in this Agreement shall be in writing and shall be deemed to have

been duly given when hand delivered or mailed by United States certified mail,

return receipt requested, postage prepaid, provided that all notices to the

Company be addressed to:




 




8





























 




	

   


  	

  Central Illinois Light Company


  	

   


  
	

   


  	

  300 Liberty Street


  	

   


  
	

   


  	

  Peoria, Illinois 

  61602


  	

   


  
	

   


  	

  Attention: 

  President


  	

   


  





 




or to the Corporate Secretary of any successor company at its principal

place of business;




 




and if to the Key Employee addressed to:




 




	

   


  	

  James L. Luckey


  	

   


  
	

   


  	

  3343 Lexington Court


  	

   


  
	

   


  	

  Peoria, IL 

  61615


  	

   


  





 




 




Section 11.             Non-exclusive

Rights.




 




Nothing in this Agreement shall prevent or limit the Key Employee’s

continuing or future participation in any plan, program, policy or practice

provided by the Company or any of its subsidiaries for which the Key Employee

may qualify, nor shall it affect such rights as the Key Employee may have under

any contract or agreement with the Company or any of its subsidiaries.




 




 




Section 12.             Amendment

of Agreement.




 




During the Agreement Period, this Agreement may not be terminated, or

amended in any manner, which has an adverse effect on the Key Employee’s rights

hereunder without the Key Employee’s written consent.  Notwithstanding any other provision hereof, the Agreement may be

amended after a Change-in-Control occurs to the extent necessary in order to

obtain or maintain the status of the Company’s retirement plans as qualified

plans under Section 401(a) of the Code.




 




 




Section 13.             Entire

Agreement.




 




This Agreement constitutes the entire agreement between the parties and

supercedes all prior agreements, if any, understandings and arrangements, oral

or written, between the parties hereto, including the Company’s predecessors,

with respect to the subject matter hereof.




 




	

  KEY EMPLOYEE:


  	

   


  	

   


  	

  COMPANY:


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

  CENTRAL ILLINOIS LIGHT COMPANY


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

  By:


  	

   


  	

   


  	

   


  	

   


  
	

  James L. Luckey


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  Leonard M. Lee


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  Chairman of the Board


  	

   


  	

   


  	

   


  
												





 




9