Second Amendment to the Amended and Restated Separation ------------------------------------------------------- and Retirement Agreement and Waiver and Release of Liability ------------------------------------------------------------ Cinergy Corp. and Larry E. Thomas (the "Parties") entered into the Amended and Restated Separation and Retirement Agreement and Waiver and Release of Liability dated February 15, 2002 (the "Separation Agreement"). The Parties now desire to amend the Separation Agreement through the adoption of this Amendment, which is effective as of February 15, 2002, with the mutual exchange of promises as consideration. Capitalized words and terms used throughout this Amendment that are not defined elsewhere in this Amendment shall have the meaning given to them in the Separation Agreement. 1. Section 2k of the Separation Agreement is hereby amended by adding the following at the end thereof: "The amount of the benefit provided to the Executive pursuant to this Section 2k shall not be actuarially reduced for early commencement. 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 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: (I) The form of payment for each of the Executive's retirement benefits under the Pension Plan, the Cinergy Corp. Excess Pension Plan 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 Pension Plan, the Cinergy Corp. Excess Pension Plan 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. (F) For purposes of Section 2k, the calculation of the Executive's Highest Average Earnings shall take into account the amount of any Nonelective Employer Contributions made on behalf of the Executive under the Cinergy Corp. 401(k) Excess Plan." 2. Section 22 of the Separation Agreement is hereby amended by adding the following at the end thereof: "l. Change in Control. A "Change in Control" of the Company will be deemed to have occurred if any of the following events occur: (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 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 of the Company 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 of the Company; 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. m. 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 of the Company adopts a resolution to the effect that, for purposes hereof, a Potential Change in Control has occurred. Notwithstanding anything herein to the contrary, a Potential Change in Control shall cease to exist not later than the date that (i) the Board of Directors of the Company determines that the Potential Change in Control no longer exists, or (ii) a Change in Control occurs. n. 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: (1) the Company or any of its subsidiaries or affiliates; (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries or affiliates; (3) an underwriter temporarily holding securities pursuant to an offering of those securities; or (4) 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." IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the effective date set forth above. CINERGY CORP. Larry E. Thomas By: ------------------------------- --------------------------- Jerome A. Vennemann Executive By: ------------------------------- Timothy J. Verhagen
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10-Q Filing
Duke Energy Indiana 10-Q2002 Q2 Quarterly report
Filed: 13 Aug 02, 12:00am