**Exhibit10-c**

 

**TEMPLATE**

 

**INCENTIVESTOCK OPTION AGREEMENT FOR**

**EMPLOYEESUNDER THE CINERGY CORP.**

**1996LONG-TERM INCENTIVE COMPENSATION PLAN**

 

THIS INCENTIVE STOCKOPTION AGREEMENT (the “Agreement”), effective as of                               (the “Date of Grant”), is made by and between Cinergy Corp., a Delawarecorporation, and                               (the “Optionee”), an employee of Cinergy Corp. or one of its directly orindirectly held majority or greater-owned subsidiaries (collectively referredto in this Agreement as the “Company”).

 

WHEREAS, Cinergy Corp.has adopted the Cinergy Corp. 1996 Long-Term Incentive Compensation Plan, asamended from time to time (the “Plan”), pursuant to which the Optionee has beengranted an incentive stock option (the “Option”) to purchase shares of CinergyCorp. common stock, with par value of $0.01 per share (“Common Stock”),pursuant to the Plan, on the terms set forth in this Agreement; and

 

WHEREAS, theparties desire to enter into this Agreement to set forth their understandingswith respect to the grant of the Option described in this Agreement.

 

NOW, THEREFORE, inconsideration of the recitals and the mutual agreements contained in thisAgreement, the parties agree as follows:

 

**1.****                                      Option Grant.**

 

Cinergy Corp. herebygrants to the Optionee effective on the Date of Grant an Option to purchase                     shares of Common Stock, pursuant to the Plan, on the terms and conditions setforth in this Agreement.  The number of shares of Common Stock subject tothis Option, and the Option Price described below in Section 2, aresubject to adjustment as provided in the Plan.

 

**2.****                                      Purchase Price.**

 

The purchase price ofeach share of Common Stock subject to this Option is $                    (the “Option Price”).  At the time this Option is exercised, the Optioneemust pay the aggregate Option Price of the shares with respect to which theOptionee exercises the Option pursuant to one of the following methods:  (a) incash, (b) by tendering to the Company whole shares of Common Stock ownedby the Optionee, or owned jointly by the Optionee and his or her spouse (withthe spouse’s written consent), for at least six (6) months (a “Stock Swap”),which tendered shares must have a Fair Market Value (as defined in the Plan)equal to the aggregate Option Price of the shares with respect to which theOptionee exercises the Option, (c) any combination of the methodsdescribed in (a) and (b) of this sentence, or (d) any othermethod approved by the Committee (as defined in the Plan).  To exercisethis Option, the Optionee must send written notice to the Cinergy Corp.Manager, Compensation, at the address noted in Section 20 or follow suchother procedures as are specified by the Company.  The notice shall statethe number of shares of Common Stock in respect of which the Option is beingexercised, shall identify the Option as an incentive stock option, and shall besigned by the person or persons exercising the Option.  The notice shallbe accompanied by payment of the full cash Option Price for such shares ofCommon Stock, or followed as soon as practicable by the delivery of shares usedin a Stock Swap and related cash (if applicable), or any other considerationapproved by the Committee.  Certificates evidencing shares of Common Stockpurchased pursuant to this Option will not be delivered to the Optionee untilpayment has been made.

 

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**3.****                                      Term of, andRight to Exercise, Option.**

 

The term of this Option(the “Option Term”) shall be for a period of ten years from the Date of Grant,subject to earlier termination as otherwise provided in this Agreement. Exceptas otherwise provided below, the Option shall become exercisable with respectto                               (        %) of the total numberof shares of Common Stock covered by this Option on                               ,but only if the Optionee remains continuously employed with the Company fromthe Date of Grant until                               .(1) From and after the date the Optionbecomes exercisable, the shares of Common Stock subject to this Option may bepurchased at any time, or from time to time, in whole or in part, until theOption Term expires, but in no case may fewer than 100 such shares be purchasedat any one time, except to purchase all remaining shares subject to the Option.

 

**4.****                                      Effectof Termination of Employment due to Reasons other than Retirement, Death orDisability.**

 

If the Optionee ceases tobe an employee of the Company for any reason other than as a result of his orher termination of employment on or after attaining age fifty (50) with fiveyears of “Service” under the Cinergy Corp. Non-Union Employees’ Pension Plan (“Retirement”),death or disability (as defined in Section 7), this Option, to the extentexercisable on the date of termination, will remain exercisable until theearlier of (a) the date three months following the effective date of theOptionee’s termination of employment or (b) the expiration of the OptionTerm.

 

**5.****                                      Effect ofTermination of Employment Due to Retirement.**

 

If the Optionee ceases tobe an employee of the Company as a result of his or her Retirement, the Optionshall become immediately exercisable in its entirety and the Optionee mayexercise this Option in whole or in part, subject to Section 6, at anytime prior to the expiration of the Option Term.

 

**6.****                                      Effect ofDeath.**

 

Notwithstanding Section 5,if the Optionee dies either while employed by the Company or after his or hertermination of employment because of Retirement, the Option shall becomeimmediately exercisable in its entirety and may be exercised in whole or inpart by the Optionee’s executor, administrator, legatees or estatebeneficiaries at any time during the period commencing upon the Optionee’s deathand ending on the earlier of (a) the date twelve (12) months after thedate of the Optionee’s death or (b) the expiration of the Option Term.

 

**7.****                                      Effect ofDisability.**

 

In the event that theOptionee while employed by the Company becomes “disabled,” as that term isdefined under the then existing long-term disability plan of the Company inwhich the Optionee participates (or if no such plan exists, as determined bythe Committee), the Optionee will be deemed to be employed by the Companyduring his or her period of disability.

 

**8.****                                      Effect ofChange in Control.**

 

The occurrence of a “Changein Control” (as defined in the Plan) of Cinergy Corp. shall have no affect uponthe vesting and exercisability of the Option. Notwithstanding the foregoing, in the event that the Optionee’semployment is terminated by the Company without Cause or by the Optionee forGood Reason during the two-year period beginning on the “Cinergy Effective Time”,as such term is used in the Agreement and Plan of Merger by and among Duke Energy

 

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(1)          Thevesting events for stock option grants vary for each participant (e.g., cliffor graded vesting schedule).

 

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Corporation, CinergyCorp., Deer Holding Corp., Deer Acquisition Corp. and Cougar Acquisition Corp.,dated May 8, 2005, the Option to the extent it has not previouslyterminated shall immediately become vested and exercisable in full.  For purposes of this Agreement, the terms “Cause”and “Good Reason” shall have the meaning given to such terms in the most recentemployment agreement, as amended, in effect for the Optionee.

 

**9.****                                      Transferability.**

 

This Option is nottransferable or assignable otherwise than by will or the laws of descent anddistribution.  The Option may be exercised only by the Optionee, or, ifthe Optionee dies, by his or her executor, administrator, legatees, orbeneficiaries of his or her estate who are entitled to this Option, or in theevent of his or her legal incapacity, by his or her guardian or legal representativeacting on behalf of the Optionee in a fiduciary capacity under state law andcourt supervision.

 

**10.****                               Effect of Assignmentor Pledge.**

 

If the Optionee attemptsto assign or pledge shares of Common Stock covered by this Option, or if thereis a levy, attachment, execution or other legal or equitable process upon thisOption, the Company has the right to terminate this Option.

 

**11.****                               Incorporation of thePlan’s Terms.**

 

This Option is subject toall the terms, provisions and conditions of the Plan, which is incorporatedinto this Agreement by reference, and to such regulations, procedures andadministrative guidelines as may from time to time be adopted by theCommittee.  A copy of the Plan and a set of administrative guidelines havebeen furnished to the Optionee and an additional copy may be obtained from theCompany.  In the event of any conflict between the provisions of the Planor administrative guidelines (as the case may be) and the provisions of thisAgreement, the terms, conditions and provisions of the Plan and/oradministrative guidelines shall control, and this Agreement shall be deemed tobe modified accordingly.  The Committee shall have final authority tointerpret and construe the Plan and this Agreement and to make any and alldeterminations thereunder, and its decision shall be binding and conclusiveupon the Optionee and his or her legal representative in respect of anyquestions arising under the Plan, or this Agreement.

 

**12.****                               Incentive StockOptions.**

 

This Option is intendedto be an “incentive stock option” within the meaning of that term under Section 422of the Internal Revenue Code of 1986, as amended.  Subject to and upon theterms, conditions and provisions of the Plan, each and every provision of thisAgreement shall be administered, construed and interpreted so that this Optionshall so qualify as an incentive stock option.

 

**13.****                               DisqualifyingDispositions.**

 

The Optionee agrees tonotify the Company, in writing pursuant to Section 20 of the Plan orpursuant to such other procedures as are specified by the Company, immediatelyupon any sale or transfer of any shares of Common Stock received upon exerciseof this Option to the extent such sale or transfer takes place prior to thelater of (a) two years from the Date of Grant, or (b) one year fromthe date of exercise of this Option.

 

**14.****                               Expiration of Rights.**

 

Unless earlier terminatedin accordance with the terms of this Agreement, all rights to exercise thisOption will expire, in any event, ten years from the Date of Grant.

 

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**15.****                               Certificate.**

 

Certificates evidencingshares transferred upon exercise of this Option may bear a legend settingforth, among other things, such restrictions on the disposition or transfer ofthe shares as the Company may deem consistent with applicable federal and statelaws.

 

**16.****                               No Right to ContinuedEmployment.**

 

Nothing in this Optionshall restrict the right of the Company to terminate the Optionee’s employmentat any time with or without cause.

 

**17.****                               Successors.**

 

The terms of thisAgreement shall be binding upon and inure to the benefit of the Company, itssuccessors and assigns, and the Optionee and the Optionee’s beneficiaries,executors, administrators, heirs and successors.

 

**18.****                               Invalid Provision.**

 

The invalidity orunenforceability of any particular provision of this Agreement shall not affectthe other provisions of this Agreement, and this Agreement shall be construedin all respects as if such invalid or unenforceable provision has been omitted.

 

**19.****                               Modifications.**

 

No change, modificationor waiver of any provision of this Agreement shall be valid unless the same bein writing and signed by the parties.

 

**20.****                               Notices andElectronic Delivery and Signature.**

 

All notices to theCompany and the exercise of the Option herein granted, shall be addressed toCinergy Corp., 139 East Fourth Street, Cincinnati, Ohio 45202, Attention:Manager, Compensation, or such other address or in accordance with such otherprocedure as the Company may, from time to time, specify.  Notwithstandingthe foregoing, the Employee hereby consents and agrees to electronic deliveryof any Plan documents, proxy materials, annual reports and other relateddocuments, including all materials required to be distributed pursuant toapplicable securities laws.  If the Company establishes procedures for anelectronic signature system for delivery and acceptance of Plan documents(including documents relating to any programs adopted under the Plan), theEmployee hereby consents to such procedures and agrees that his or herelectronic signature is the same as, and shall have the same force and effectas, his or her manual signature.  The Employee consents and agrees thatany such procedures and delivery may be effected by a third party engaged bythe Company to provide administrative services related to the Plan, includingany program adopted under the Plan.  The Employee understands that, unlessearlier revoked by the Employee, this consent shall be effective for theduration of the Agreement and that he or she shall have the right at any timeto request written copies of any and all materials referred to above.

 

**21.****                               Headings.**

 

The headings of theSections of this Agreement are provided for convenience only and are not toserve as a basis for interpretation or construction, and shall not constitute apart of this Agreement.

 

**22.****                               Governing Law.**

 

This Agreement and theOptionee’s rights under it shall be construed and determined in accordance withthe laws of the state of Delaware.

 

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**23.****                               Entire Agreement.**

 

This Agreement and thePlan contain the entire agreement and understanding of the parties with respectto the subject matter contained in this Agreement, and supersede all priorcommunications, representations and negotiations in respect thereto.

 

**24.****                               Counterparts.**

 

This Agreement may beexecuted in counterparts, each of which shall be deemed an original, but all ofwhich together shall constitute one and the same instrument.

 

**25.****                               Satisfaction of LegalRequirements.**

 

This Option may not beexercised until the Company has been advised by counsel that all applicablelegal requirements have been met.

 

IN WITNESS WHEREOF, thisAgreement has been executed by the parties effective as of the           day of                               ,          .

 
| OPTIONEE   | CINERGY CORP. |
|------------|---------------|
|       |          |
|       |          |
| Signature: |          |   | By: |   |   |
|            |               |  |  |  |  |

 

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