TEMPLATE


 


 


NON-QUALIFIED STOCK OPTION AGREEMENT FOR


EMPLOYEES UNDER THE CINERGY CORP.


1996 LONG-TERM INCENTIVE
COMPENSATION PLAN


 


 


THIS NON-QUALIFIED STOCK OPTION AGREEMENT (the “Agreement”),
effective as of _______________ (the “Date of Grant”), is made by and between
Cinergy Corp., a Delaware corporation, and _______________ (the “Optionee”), an
employee of Cinergy Corp. or one of its directly or indirectly held majority or
greater-owned subsidiaries (collectively referred to in this Agreement as the “Company”).


 


WHEREAS, Cinergy Corp. has adopted the Cinergy Corp.
1996 Long-Term Incentive Compensation Plan, as amended from time to time (the “Plan”),
pursuant to which the Optionee has been granted a non-qualified stock option
(the “Option”) to purchase shares of Cinergy Corp. 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, the
parties desire to enter into this Agreement to set forth their understandings
with respect to the grant of the Option described in this Agreement.


 


                NOW, THEREFORE, in
consideration of the recitals and the mutual agreements contained in this
Agreement, the parties agree as follows:


 


1.                                      Option Grant.


 


Cinergy Corp. hereby grants 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 set forth in this
Agreement.  The number of shares of
Common Stock subject to this Option, and the Option Price described below in
Section 2, are subject to adjustment as provided in the Plan.  The
Option is intended to be a non-qualified stock option and shall not be treated
as an “incentive stock option” within the meaning of that term under Section
422 of the Internal Revenue Code of 1986, as amended.


 


2.                                      Purchase Price.


 


The purchase price of each share of Common Stock
subject to this Option is $__________ (the “Option Price”).  At the time this Option is exercised, the
Optionee must pay the aggregate Option Price of the shares with respect to
which the Optionee exercises the Option pursuant to one of the following
methods:  (a) in cash, (b) by tendering
to the Company whole shares of Common Stock owned by the Optionee, or owned
jointly by the Optionee and his or her spouse (with the 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 the 


 


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Optionee exercises the Option, (c) any combination of
the methods described in (a) and (b) of this sentence, or (d) any other method
approved by the Compensation Committee (the “Committee”) of Cinergy Corp.’s Board
of Directors.  To exercise this Option,
the Optionee must send written notice to the Cinergy Corp. Manager,
Compensation, at the address noted in Section 19 or follow such other procedure
as specified by the Company.  The notice
shall state the number of shares of Common Stock in respect of which the Option
is being exercised, shall identify the Option as a non-qualified stock option,
and shall be signed by the person or persons exercising the Option.  The notice shall be accompanied by payment of
the full cash Option Price for such shares of Common Stock, or followed as soon
as practicable by the delivery of shares used in a Stock Swap and related cash
(if applicable), or any other consideration approved by the Committee.  Certificates evidencing shares of Common
Stock purchased pursuant to this Option will not be delivered to the Optionee
until payment has been made.


 


3.                                      Term of, and Right 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. Except as otherwise provided below, the Option shall become
exercisable with respect to _______________ (____%) of the total number of
shares of Common Stock covered by this Option on _______________, but only if
the Optionee remains continuously employed with the Company from the Date of
Grant until _______________.(1)  From and after the date the Option becomes
exercisable, the shares of Common Stock subject to this Option may be purchased
at any time, or from time to time, in whole or in part, until the Option Term
expires, but in no case may fewer than 100 such shares be purchased at any one
time, except to purchase all remaining shares subject to the Option.


 


4.                                      Effect of Termination of
Employment due to Reasons other than Retirement, Death or Disability.


 


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


 


5.                                      Effect of Termination of
Employment Due to Retirement.


 


If the Optionee ceases to
be an employee of the Company as a result of his or her Retirement, the Option
shall become immediately exercisable in its entirety










(1) The vesting
events for stock option grants vary for each participant (e.g.,
cliff or graded vesting schedule).


 


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and the Optionee may
exercise this Option in whole or in part, subject to Section 6, at any time
prior to the expiration of the Option Term.


 


6.                                      Effect of Death.


 


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


 


7.                                      Effect of Disability.


 


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


 


8.                                      Effect of Change in
Control.


 


Notwithstanding the foregoing, in the event that a “Change
in Control” (as defined in the Plan) of Cinergy Corp. occurs while the Optionee
is employed by the Company, the Option, to the extent it has not previously
terminated, shall immediately become exercisable in full.


 


9.                                      Transferability.


 


Except as otherwise provided by the Committee, this
Option is not transferable or assignable otherwise than by will or the laws of
descent and distribution.  The Option may
be exercised only by the Optionee, or, if the Optionee dies, by his or her
executor, administrator, legatees, or beneficiaries of his or her estate who
are entitled to this Option, or in the event of his or her legal incapacity, by
his or her guardian or legal representative acting on behalf of the Optionee in
a fiduciary capacity under state law and court supervision.


 


10.                               Effect of Assignment or
Pledge.


 


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


 


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11.                               Incorporation of the Plan’s
Terms.


 


This Option is subject to all the terms, provisions
and conditions of the Plan, which is incorporated into this Agreement by
reference, and to such regulations, procedures and administrative guidelines as
may from time to time be adopted by the Committee.  A copy of the Plan and a set of
administrative guidelines have been furnished to the Optionee and an additional
copy may be obtained from the Company. 
In the event of any conflict between the provisions of the Plan or
administrative guidelines (as the case may be) and the provisions of this
Agreement, the terms, conditions and provisions of the Plan and/or
administrative guidelines shall control, and this Agreement shall be deemed to
be modified accordingly.  The Committee
shall have final authority to interpret and construe the Plan and this
Agreement and to make any and all determinations thereunder, and its decision
shall be binding and conclusive upon the Optionee and his or her legal
representative in respect of any questions arising under the Plan, or this
Agreement.


 


12.                               Tax Withholding.


 


A certificate evidencing the shares of Common Stock
purchased as a result of the exercise of this Option will not be issued until
the Optionee has satisfied his or her obligations with respect to withholding
tax.


 


13.                               Expiration of Rights.


 


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


 


14.                               Certificate.


 


Certificates evidencing shares transferred upon
exercise of this Option may bear a legend setting forth, among other things,
such restrictions on the disposition or transfer of the shares as the Company
may deem consistent with applicable federal and state laws.


 


15.                               No Right to Continued
Employment.


 


Nothing in this Option shall restrict the right of the
Company to terminate the Optionee’s employment at any time with or without
cause.


 


16.                               Successors.


 


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


 


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17.                               Invalid Provision.


 


The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions of this
Agreement, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision has been omitted.


 


18.                               Modifications.


 


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


 


19.          Notices
and Electronic Delivery and Signature.


 


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


 


20.          Headings.


 


The headings of the Sections of this Agreement are
provided for convenience only and are not to serve as a basis for interpretation
or construction, and shall not constitute a part of this Agreement.


 


21.          Governing
Law.


 


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


 


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22.          Entire
Agreement.


 


This Agreement and the Plan contain the entire
agreement and understanding of the parties with respect to the subject matter
contained in this Agreement, and supersede all prior communications, representations
and negotiations in respect thereto.


 


23.          Counterparts.


 


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


 


24.          Satisfaction
of Legal Requirements.


 


This Option may not be exercised until the Company has
been advised by counsel that all applicable legal requirements have been met.


 


 


IN WITNESS WHEREOF, this Agreement has been executed by the
parties effective as of the _____ day of _______________, _____.


 


	
  OPTIONEE

  	
  CINERGY CORP.

  
	
   

   

  Signature:  ____________________________

  	
   

   

  By:  _____________________________

           

  



 


 


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