Document:

Exhibit 10.b

 

EMPLOYMENT AGREEMENT

 

This
EMPLOYMENT AGREEMENT is made and entered into as of the 4th day of February,
2004 (the “Effective Date”), by and between Cinergy and James E. Rogers (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 Chairman of the Board, President and Chief Executive Officer of the Company,
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, 2006; provided that, commencing on December 31,
2004, 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 the
Chairman of the Board, President and Chief Executive Officer of the Company and
he will have such responsibilities, duties, and authority as are customary for
someone of that position and such additional duties, consistent with his
position, as may be

 

 

assigned to
him from time to time during the Employment Period by the Board of Directors
(excluding the Executive).  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, the
management of Executive’s passive investments or service on the board of
directors of one or more unrelated companies, 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 fifty (50) 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 $1,250,004. 
The Board of Directors may, from time to time, increase the Annual Base
Salary as the Board of Directors deems to be necessary or desirable, including
without limitation adjustments to reflect increases in the cost of living.  Any increase in the Annual Base Salary will
not serve to limit or reduce any other obligation of Cinergy under this
Agreement.  The Annual Base Salary will
not be reduced without the consent of the Executive, 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 (but only as permitted by the
preceding sentence), 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 commensurate with his position and at least comparable to those
applicable generally to 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.

 

2

 

In addition, Cinergy will
assume and continue the Insurance Agreement and the Deferred Compensation
Agreement.  Notwithstanding anything in
this Agreement to the contrary, in the event that Cinergy or any successor
fails to assume, breaches, or, at any time during their respective terms,
terminates, modifies, amends, or in any way affects, to the Executive’s
detriment and without his consent, the Insurance Agreement or the Deferred
Compensation Agreement, then the Executive will be entitled to:  (i) in the case of the Deferred Compensation
Agreement, those amounts that are described in Section 16 of the Deferred
Compensation Agreement, and (ii) in the case of the Insurance Agreement, those
amounts that are described in Section 12 of the Insurance Agreement.

 

(ii)                                  Supplemental
Retirement Benefit.

 

(1)                                  Amount,
Form, Timing and Method of Payment. 
If the Executive retires from Cinergy, the Executive will be entitled
and fully vested in a supplemental retirement benefit in an amount which, when
expressed as an annual amount payable 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.  Notwithstanding the foregoing, if the
Executive retires from Cinergy after attaining age 56 but prior to attaining
age 57, then this Section shall be applied by substituting 61-2/3% for
60%.  If the Executive retires from
Cinergy after attaining age 57 but prior to attaining age 58, then this Section
shall be applied by substituting 63-1/3% for 60%.  If the Executive retires from Cinergy after attaining age 58,
then this Section shall be applied by substituting 65% for 60%.

 

(2)                                  Death
Benefit.  If the Executive dies
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

 

3

 

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 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:

 

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(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 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.

 

(4)                              Special One-Time Payment
Election Without a Change in Control. 
Notwithstanding the foregoing, the Executive may make an election, on a
form provided by Cinergy, to receive a single lump sum cash payment in an
amount equal to one-half of the Actuarial Equivalent (as defined above in
Section 3b(ii)(3)(D)) of his supplemental retirement benefit payable no later
than 30 days after the date of his termination of employment.  In order to be effective, the special
payment election under this Section 3b(ii)(4) must be made at least one year
prior to the termination of Executive’s employment with Cinergy.  The lump sum amount payable pursuant to this
Section 3b(ii)(4) shall be calculated in accordance with the provisions of
Section 3b(ii)(3)(D).  In the event an
amount is paid to or on behalf of the Executive pursuant to this Section
3b(ii)(4), such payment shall discharge any liability under this Agreement to
or on behalf of the Executive with respect to one-half of the Actuarial
Equivalent (as defined above in Section 3b(ii)(3)(D)) of his supplemental
retirement benefit.

 

5

 

(iii)                               Upon
his retirement, 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 thirty percent
(130%) of the Executive’s Annual Base Salary (the “Maximum Annual Bonus”); and
(2) The target annual bonus shall be not less than seventy five percent (75%)
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 one hundred sixty percent (160%) of his Annual Base
Salary (the “Target LTIP Bonus”).

 

c.                                       Fringe
Benefits and Perquisites.  During
the Employment Period, the Executive will be entitled to the following
additional fringe benefits 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.

 

(ii)                                  Cinergy
will pay the initiation fee and the annual dues, assessments, and other
membership charges of the Executive for membership in up to two (2) country
clubs and one (1) luncheon club of the Executive’s choice that are used for
business purposes.

 

(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.

 

6

 

(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 applicable generally to senior
executives of Cinergy who are considered Tier I or Tier II executives for
compensation purposes.

 

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 within
the continental United States 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 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).

 

g.                                      Performance
Award.  The Executive is hereby
granted a contingent right
(the “Performance Award”) to have a Nonelective Employer Contribution
credited to his account under the 401(k) Excess Plan in an amount equal to the Fair Market Value as of the
vesting date of 129,049 shares of Common Stock (the “Shares”) (which is the number of shares
obtained by dividing $5 million by the Fair Market Value of a share of
Common Stock as of January 1, 2004),
subject to the following terms and conditions:

 

7

 

(i)                                     The
Performance Award shall vest on December 31, 2006, provided that the Executive
has been continuously employed with Cinergy as of such date and the Committee
determines as of such date that all of the applicable performance measures (as
established by the Committee and communicated to the Executive no later than
April 1, 2004) have been satisfied in full. 
Notwithstanding the foregoing, the Performance Award shall immediately
vest in full (without regard to whether the performance measures have been
satisfied) if, on or prior to December 31, 2006, the Executive dies or becomes
disabled (as that term is defined in the Cinergy Corp. Long-Term Disability Plan),
Cinergy terminates the Executive’s employment other than for Cause, the
Executive terminates employment for Good Reason, or a Change in Control
occurs.  The Performance Award shall be
credited to the Executive’s account under the 401(k) Excess Plan as soon as
administratively practicable following the vesting date.

 

(ii)                                  Unless
otherwise vested in accordance with Section 3g(i), the Executive shall forfeit
the Performance Award if he ceases to remain continuously employed by Cinergy
until the date on which the Performance Award vests.

 

(iii)                               The Executive shall have the right to
receive, during the period commencing on January 1, 2004 and ending on
the earlier of the date that the Performance Award vests in accordance with
Section 3g(i) or the date that the Performance Award is forfeited in accordance
with Section 3g(ii), cash payments equal to the amount of dividends that the
Executive would have received if he had directly owned the Shares, which
amounts shall be paid to the Executive as soon as administratively practicable
following each relevant dividend payment date.  The amounts paid under
this Section 3g(iii) shall be fully vested when paid and shall not be subject
to forfeiture if the Performance Award does not vest thereafter.

 

(iv)                              The
parties expressly agree and acknowledge that $600,000 of the Performance Award,
whether or not vested in accordance with Section 3g(i), shall be deemed to be
included in the Executive’s Annual Base Salary for each of the calendar years
2005 and 2006 for purposes of Section 3b(v) and shall be deemed included in the
Executive’s “Highest Average Earnings” for each of the calendar years 2004,
2005 and 2006 for purposes of calculating the Executive’s supplemental
retirement benefit under Section 3b(ii). 
Moreover, for each of the calendar years 2004, 2005 and 2006, the
Executive shall be entitled to receive a special cash bonus, payable no later
than March 15 of the subsequent calendar year, equal to the excess of (A) the
bonus that the Executive would have received for the applicable calendar year
under the Annual Incentive Plan had the Executive’s Annual Base Salary been
increased by $600,000, over (B) the actual bonus earned by the Executive for
the applicable calendar year under the Annual Incentive Plan.  The amounts credited under this Section
3g(iv)

 

8

 

shall not be
affected by any forfeiture of the Performance Award occuring after the relevant
crediting date.

 

(v)                                 The
Committee shall make or provide for such adjustments in the number of Shares
subject to the Performance Award as the Committee, in its sole discretion
exercised in good faith, may determine is equitably required in order to
prevent dilution or enlargement of the Executive’s rights that otherwise would
result from (A) any stock dividend, stock split, combination of shares,
recapitalization, or other change in the capital structure of the Company, (B)
any merger, consolidation, spin-off, split-off, spin-out, split-up,
reorganization, partial or complete liquidation, or other distribution of
assets or issuance of rights or warrants to purchase securities, or (C) any
other corporate transaction or event having an effect similar to any of the
foregoing. Any amounts paid under the
Performance Award shall be paid from Cinergy’s general assets, and the
Executive shall have the status of a general unsecured creditor with respect to
Cinergy’s obligations under this Section 3g.

 

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

 

9

 

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 duly adopted by the affirmative vote of not
less than a majority of the members of the Board (excluding the Executive) then
in office at a meeting of the members 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 members of the Board),
finding that, in the good faith opinion of the members of the Board (excluding
the Executive), 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) 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).

 

10

 

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

 

(v)                                 A
failure by the Company to require any successor entity to the Company
specifically to assume in writing all of the Company’s obligations to the
Executive under this Agreement.

 

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

 

f.                                         Notice
of Termination.  Any termination of
the Executive’s employment by Cinergy or by the Executive during the Employment
Period (other than a termination due to the Executive’s death) will be
communicated by a written Notice of Termination to the other party to this
Agreement in accordance with Section 12b. 
For purposes of this Agreement, a “Notice of Termination” means a
written notice that meets the following requirements:

 

(i)                                     The
notice indicates the specific termination provision in this Agreement relied
upon as the basis for termination.

 

(ii)                                  To
the extent applicable, the notice sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision specified pursuant to Paragraph (i).

 

(iii)                               If
the Date of Termination is other than the date of receipt of the notice, the
notice specifies the Date of Termination, which will be no more than 30 days
after the date the notice was given. 
The failure by the Executive or Cinergy to set forth in the Notice of
Termination any fact or circumstances 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.

 

(iv)                              A
Notice of Termination for Cause after a Change in Control has occurred must
include a copy of a resolution duly adopted by the affirmative vote of not less
three quarters (3/4) of the entire membership of the Board of Directors
(excluding the Executive) at a meeting of the Board of Directors called and
held for the purpose of considering the termination.  The resolution must include a finding that, in the good faith
opinion of the Board of Directors (excluding the Executive), the Executive was
guilty of conduct set forth in the definition of Cause, and it must specify the
particulars of the conduct in detail.

 

g.                                      Sale
of Stock.  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

 

11

 

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.

 

(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

 

12

 

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 the Annual Bonus
will be the higher of (A) the annual bonus earned by the Executive pursuant to
any annual bonus or incentive plan maintained by Cinergy in respect of the year
ending immediately prior to the fiscal year in which occurs the Date of
Termination, and (B) the annual bonus that would have been earned by the
Executive pursuant to any annual bonus or incentive plan maintained by Cinergy
in respect of the fiscal year in which occurs the Date of Termination,
calculated by projecting Cinergy’s performance and other applicable goals and
objectives for the entire fiscal year based on Cinergy’s performance during the
period of such fiscal year occurring prior to the Date of Termination, and
based on such other assumptions and rates as Cinergy deems reasonable; provided,
however that for purposes of 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)                                  With
respect to each performance share award held by the Executive pursuant to the
Value Creation Plan of the LTIP on the Date of Termination (collectively, the
“Performance Share Awards”), Cinergy will pay to the Executive an amount, in
cash, equal to the excess (if any) of (i) the amount to which the Executive
would have been entitled under each Performance Share Award if he had remained
employed by Cinergy until the end of the Employment Period, over (ii) the
amount to which he is actually entitled under such Performance Share
Award.  With respect to each Performance
Share Award, such amount shall be paid to the Executive at the same time as
other amounts are paid with respect to that Performance Share Award.

 

(3)                                  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 eligible 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).

 

13

 

The benefits
described in the preceding sentence will be in accordance with the medical and
welfare benefit plans, practices, programs, or policies of Cinergy (the
“M&W Plans”) as then currently in effect and applicable generally to other
Cinergy senior executives and their families.

 

(A)                              If,
as of the Executive’s Date of Termination, the Executive meets the eligibility
requirements for Cinergy’s retiree medical and welfare benefit plans, the
provision of those retiree medical and welfare benefit plans to the Executive
will satisfy Cinergy’s obligation under this Section 5a(ii)(3).

 

(B)                                If,
as of the Executive’s Date of Termination, the provision to the Executive of
the M&W Plan benefits described in this Section 5a(ii)(3) would either (1)
violate the terms of the M&W Plans (or any related insurance policies) or
(2) violate any of the Code’s nondiscrimination requirements applicable to the
M&W Plans, then Cinergy, in its sole discretion, may elect to pay the
Executive, in lieu of the M&W Plan benefits described under this Section
5a(ii)(3), 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.

 

(4)                                  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.  Such payment will be transferred to the Executive
within thirty (30) days of the

 

14

 

expiration of
the revocation period contained in the Waiver and Release.

 

(5)                                  In
lieu of any and all other rights with respect to the automobile assigned by
Cinergy to the Executive (or the equivalent cash allowance), Cinergy will
provide the Executive with a lump sum payment in the amount of $60,000.  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) 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 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

 

15

 

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 the Executive’s age as of the Date of Termination, will be
determined using the interest rate applicable to lump sum payments in the
Cinergy Corp. Non-Union Employees’ Pension Plan or any successor to that plan
for the plan year that includes the Date of Termination. To the extent no such
interest rate is provided therein, the annual interest rate applicable under
Section 417(e)(3) of the Code, or any successor provision thereto, for the
second full calendar month preceding the first day of the calendar year that
includes the Date of Termination will be used. This lump sum will be paid
within thirty (30) days of the expiration of the revocation period contained in
the Waiver and Release.

 

(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.

 

(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 eligible 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

 

16

 

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.  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.

 

(5)                                  In
lieu of any and all other rights with respect to the automobile assigned by
Cinergy to the Executive (or the equivalent cash allowance), Cinergy will
provide the Executive with a lump sum payment in the amount of $60,000.  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.  Such payment will be transferred to the Executive
within thirty (30) days of the expiration of the revocation period contained in
the Waiver and Release.

 

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

 

(8)                                  Cinergy
will provide outplacement services suitable to the Executive’s position until
the end of the Employment Period; provided, however, that in no
event shall the cost of such outplacement services exceed 15% of the
Executive’s Annual Base Salary.

 

17

 

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 5c and
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 compensation and/or 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.

 

(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

 

18

 

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, then, unless
otherwise treated as an impermissible loan under applicable law, 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 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.

 

19

 

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, Cinergy Corp. Excess Profit Sharing
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 termination which is
ultimately determined to constitute 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, 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

 

20

 

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)(3) 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, without regard to any
applicable state’s choice of law provisions. 
The decision of the arbitrator(s), including determination of the amount
of any damages suffered, will be exclusive, final, and binding on all parties,
their heirs, executors, administrators, successors and assigns.  Each party will bear its own expenses in the
arbitration for arbitrators’ fees and attorneys’ fees, for its witnesses, and
for other expenses of presenting its case. 
Other arbitration costs, including administrative fees and fees for
records or transcripts, will be borne equally by the parties.  Notwithstanding anything in this Section to
the contrary, if the Executive prevails with respect to any dispute submitted
to arbitration under this Section, Cinergy will reimburse or pay all legal fees
and expenses that the Executive may reasonably incur as a result of the dispute
as required by Section 7.

 

21

 

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 be 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 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).

 

22

 

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

 

(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

 

23

 

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

 

n.                                      Code.  “Code” means the Internal Revenue Code of
1986, as amended, and interpretive rules and regulations.

 

o.                                      Committee.  “Committee” means the duly designated
compensation committee of Cinergy’s Board of Directors.

 

p.                                      Common
Stock.  “Common Stock” means any
authorized share of ownership of the Company represented by a common stock
certificate, with par value of $.01 per share, or any other appropriate
instrument evidencing the same.

 

q.                                      Company.  “Company” means Cinergy Corp.

 

24

 

r.                                         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.

 

s.                                       Deferred
Compensation Agreement.  “Deferred
Compensation Agreement” means the deferred compensation agreement, dated
December 16, 1992 and effective as of January 1, 1992, between the Executive
and PSI Energy, Inc.

 

t.                                         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.

 

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

 

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

 

w.                                    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.

 

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

 

y.                                      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.

 

z.                                        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.

 

25

 

aa.                                 Fair
Market Value.  “Fair Market Value”
means, as of any particular date with respect to a share of Common Stock, the
average of the high and low sales prices of a share of Common Stock on such
date, or on the preceding trading day if that date was not a trading date, as
reported by the “NYSE -Composite Transactions” published in The Wall Street
Journal.

 

bb.                               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.

 

cc.                                 Good
Reason.  “Good Reason” has the
meaning set forth in Section 4d.

 

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

 

ee.                                 Highest
Average Earnings.  “Highest Average
Earnings” shall have the meaning given to such term in the Cinergy Corp.
Supplemental Executive Retirement Plan (as modified where relevant by Section
3g(iv) hereof), provided,
however, that any amount deferred by the Executive under the Deferred
Compensation Agreement during any relevant period shall be included in the
Executive’s Highest Average Earnings. 
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.

 

ff.                                     Insurance
Agreement.  “Insurance Agreement”
means the split dollar insurance agreement dated October 7, 1992 between the
Executive and PSI Energy, Inc., as amended effective December 11, 1992 and June
1, 2000.

 

gg.                               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.

 

hh.                               M&W
Plans.  “M&W Plans” has the
meaning set forth in Section 5a(ii)(3).

 

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

 

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

 

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

 

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

 

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

 

26

 

nn.                               Performance
Award.  “Performance Award” has the
meaning set forth in Section 3g.

 

oo.                               Performance
Share Awards.  “Performance Share
Awards” has the meaning set forth in Section 5a(ii)(2).

 

pp.                               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;

 

(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.

 

qq.                               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.

 

27

 

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.

 

rr.                                     Prime
Rate.  “Prime Rate” means the prime
rate of interest promulgated by Citibank, N.A. and in effect as of the Date of
Termination.

 

ss.                                 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.

 

tt.                                     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.

 

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

 

vv.                               Shares.  “Shares” has the meaning set forth in
Section 3g.

 

ww.                           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.

 

xx.                                   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.

 

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

 

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

 

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

 

bbb.                        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.

 

28

 

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.  No person, other than pursuant
to a resolution of the members of the Board of Directors (excluding the
Executive) or a committee of the Board of Directors (excluding the Executive),
will have authority on behalf of Cinergy to agree to amend, modify, repeal,
waive, extend, or discharge any provision of this Agreement.

 

b.                                      All
notices and other communications under this Agreement will be in writing and
will be given by hand delivery to the other party or by Federal Express or
other comparable national or international overnight delivery service,
addressed in the name of such party at the following address, whichever is
applicable:

 

If to the Executive:

Cinergy Corp.

221 East Fourth Street

Cincinnati, Ohio 45201-0960

 

If to Cinergy:

Cinergy Corp.

221 East Fourth Street

Cincinnati, Ohio 45201-0960

Attn: Chief Legal 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.

 

29

 

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.

 

 

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/  Michael G. Browning

  	
   

  
	
   

  	
   

  	
   

  	
  Michael G.
  Browning

  Chairman, Compensation Committee of the Board of Directors

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/  James E. Rogers

  	
   

  
	
   

  	
   

  	
  James E. Rogers

  	
   

  
						

 

30

 

EXHIBIT A

 

*****

 

WAIVER AND RELEASE AGREEMENT

 

THIS WAIVER AND RELEASE AGREEMENT
(this “Waiver and Release”) is entered into by and between James E. Rogers (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

 

31

 

Commissions.  Executive also
acknowledges and understands that in the event he does 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.

 

32

 

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, tax advisor and 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 reasonable 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

 

33

 

immediately reimburse the Company for the value of all benefits
received under this Waiver and Release to the fullest extent permitted by law.

 

9.                                       Cinergy hereby
releases the Executive, 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.

 

34

 

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: 

  	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  
	
  Printed:

  	
   

  	
   

  	
  Title: 

  	
   

  	
   

  
	
   

  	
   

  
	
  Dated: 

  	
   

  	
   

  	
  Dated:

  	
   

  	
   

  
										

 

35Exhibit
10.d

 

AMENDMENT
TO EMPLOYMENT AGREEMENT

 

The Employment Agreement between
Cinergy Corp., its subsidiaries and/or its affiliates (“Cinergy”) and William
J. Grealis (the “Executive”) dated as of October 11, 2002 (the “Agreement”) is
hereby amended effective as of December 17, 2003.

AMENDMENTS

1.                                       Section 3b(ii) of the Agreement is hereby amended by adding
the following new subsection (4) at the end thereof:

“(4)  Special Payment Election Without a Change in Control.  Notwithstanding the foregoing, the Executive
may make an election, on a form provided by Cinergy, to receive a single lump
sum cash payment in an amount equal to one-half of the Actuarial Equivalent (as
defined above in Section 3b(ii)(3)(D)) of his supplemental retirement benefit
payable no later than 30 days after the date of his termination of
employment.  In order to be effective,
the special payment election under this Section 3b(ii)(4) must be made either
(A) at least one year prior to the termination of the Executive’s employment
with Cinergy or (B) during 2003 and at least six months prior to the
termination of the Executive’s employment with Cinergy.  The lump sum amount payable pursuant to this
Section 3b(ii)(4) shall be calculated in accordance with the provisions of
Section 3b(ii)(3)(D).  In the event an
amount is paid to or on behalf of the Executive pursuant to this Section
3b(ii)(4), such payment shall discharge any liability under this Agreement to
or on behalf of the Executive with respect to one-half of the Actuarial
Equivalent (as defined above in Section 3b(ii)(3)(D)) of his supplemental
retirement benefit.”

 

IN WITNESS WHEREOF, the Executive and Cinergy have caused
this Amendment to the Agreement to be executed as of the date first specified
above.

 

	
   

  	
   

  	
  CINERGY
  SERVICES, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/  James E.
  Rogers

  	
   

  
	
   

  	
   

  	
   

  	
  James E. Rogers

  Chairman and

  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXECUTIVE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/  William J. Grealis

  	
   

  
	
   

  	
   

  	
  William
  J. Grealis

  	
   

  
						

 

1

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