TEMPLATE


 


 


PHANTOM
STOCK AGREEMENT FOR


EMPLOYEES
UNDER THE CINERGY CORP.


1996
LONG-TERM INCENTIVE COMPENSATION PLAN


 


 


THIS PHANTOM STOCK AGREEMENT (the “Agreement”),
effective as of _______________ (the “Date of Grant”), is made by and between
Cinergy Corp., a Delaware corporation, and _______________ (the “Employee”), an
employee of Cinergy Corp. or one of its directly or indirectly held majority or
greater-owned subsidiaries (collectively referred to herein 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 Employee has been granted the right, contingent upon the
Employee satisfying certain vesting requirements, to receive a lump sum cash
payment, the amount of which shall be based on the value of a certain,
predetermined number of shares of Cinergy Corp. Common Stock, with par value of
$0.01 per share (“Common Stock”), 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 contingent right described in this Agreement, such
contingent right sometimes referred to herein as “Phantom Stock Right.”


 


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


 


1.                                      Contingent Award.


 


(a)                                  Award of Phantom Stock
Right.  In consideration of Employee’s
service for the Company, Cinergy Corp. hereby grants a Phantom Stock Right to
Employee and shall establish an account (the “Account”) in the name of Employee
on the books and records of Cinergy Corp. and credit the Account with _______
Phantom Stock Right units.  Each Phantom
Stock Right unit shall correspond to one share of Common Stock.


 


(b)                                 Vesting of Phantom Stock
Right.  Subject to earlier forfeiture as described
below, the Phantom Stock Right shall become fully vested in its entirety if the
Employee is continuously employed by the Company from  the Date of Grant until the earliest to occur
of the following dates (i) _______________, (ii) the date of the Employee’s
death, (iii) the date on which the Company terminates the Employee’s employment
other than for Cause, (iv) the date on which the Employee voluntarily terminates



 


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                                                employment for
Good Reason, or (v) the date of a Change in Control as defined in the Plan.(1)


 


(c)                                  Forfeiture of Phantom
Stock Right.  The Employee
shall forfeit his or her Phantom Stock Right in its entirety if he or she ceases
to remain continuously employed by the Company until the date on which the
Phantom Stock Right vests in accordance with Section 1(b) hereof.


 


(d)                                 Definitions.  Where used herein, the term “Cause” shall
mean ____________________, and the term “Good Reason” shall mean ____________________.


 


2.                   Payout Calculation and Form of Payment.


 


Except as otherwise
provided herein, in the event that Phantom Stock Right  units become fully vested in accordance with
Section 1(b), the Employee shall be entitled to receive a lump sum cash payment
equal to the sum of (a) the product of (i) the number of Phantom Stock Right
units vesting, adjusted as provided in this Agreement, and (ii) the Fair Market
Value (as that term is defined in the Plan) of a share of Common Stock as of
the date the Phantom Stock Right units vest, plus (b) the product of (i) the
number of Phantom Stock Right units vesting and (ii) the aggregate amount of
cash dividends paid on a share of Common Stock from the Date of Grant through
the date of payment.  Such payment shall
be made as soon as administratively practicable following the date on which the
Phantom Stock Right units become vested. 
The Company shall have the right to deduct from all payments made to the
Employee pursuant to this Agreement such federal, state or local taxes as are,
in the reasonable opinion of the Company, required to be withheld by the
Company with respect to such payment.


 


3.                                      Adjustments.


 


The Compensation Committee of Cinergy Corp.’s Board of
Directors (the “Committee”) may make or provide for such adjustments in the
number of Phantom Stock Right units covered by this Agreement as the Committee,
in its sole discretion exercised in good faith, may determine is equitably
required in order to prevent dilution or enlargement of Employee’s rights that
otherwise would result from (i) any stock dividend, stock split, combination of
shares, recapitalization, or other change in the capital structure of Cinergy
Corp., (ii) 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 (iii) any
other corporate transaction or event having an effect similar to any of the
foregoing.  In the event of any such 










(1) The vesting events for phantom stock
grants vary for each participant.  Some
phantom stock grants incorporate cliff vesting schedules while others use a
graded vesting schedule.  The phantom
stock grants may incorporate some or all of the items set forth in Section
1(b).


 


 


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transaction or event, the Committee, in its sole
discretion exercised in good faith, may provide, in substitution for the
Phantom Stock Right, such alternative consideration as it may determine to be
equitable in the circumstances and may require in connection therewith the
surrender of the Phantom Stock Right.


 


4.                                      Transferability.


 


The contingent rights set forth in this Agreement are
not transferable otherwise than by will or the laws of descent and
distribution.


 


5.                                      Effect of Assignment or
Pledge.


 


If the Employee assigns or pledges contingent rights
covered by this Agreement or attempts to do so, or if there is a levy,
attachment, execution or other legal or equitable process upon the contingent
rights, Cinergy Corp. shall have the right to terminate this Agreement.


 


6.                                      Incorporation of the Plan’s
Terms.


 


This Agreement is subject to all of the terms,
provisions and conditions of the Plan, which is incorporated into this
Agreement by reference, and to such regulations as may from time to time be
adopted by the Committee.  A copy of the
Plan has been furnished to the Employee and an additional copy may be obtained
from Cinergy Corp.  In the event of any
conflict between the provisions of the Plan and the provisions of this
Agreement, the terms, conditions and provisions of the Plan 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 Employee and his or her legal representative in respect of any
questions arising under the Plan, or this Agreement.


 


7.                                      No Right to Continued
Employment.


 


Solely for purposes of
this Agreement, Employee shall be deemed to be employed by the Company during
all periods in which he or she is receiving benefits under any Cinergy-sponsored
short-term or long-term disability plan or program; provided, however, that nothing
in this Agreement shall restrict the right of the Company to terminate the
Employee’s employment at any time with or without Cause.


 


8.                                      Successors.


 


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


 


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9.                                      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.


 


10.                               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.


 


11.          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.


 


12.          Governing
Law.


 


Except to the extent
pre-empted by federal law, this Agreement and the Employee’s rights under it
shall be construed and determined in accordance with the laws of the state of
Delaware.


 


13.          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.


 


14.          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.


 


15.      Satisfaction
of Legal Requirements.


 


No payment will be made under this Agreement until the
Company has been advised by counsel that all applicable legal requirements have
been met.


 


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16.          Source of Payment.


 


Any payments to Employee
under this Agreement shall be paid from the Company’s general assets, and
Employee shall have the status of a general unsecured creditor with respect to
the Company’s obligations to make payments under this Agreement.  Employee acknowledges that the Company shall
have no obligation to set aside any assets to fund its obligations under this
Agreement.


 


17.          Notices
and Electronic Delivery and Signature.


 


All notices to the Company 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.


 


 


IN WITNESS WHEREOF, this
Agreement has been executed by the parties effective as of the date set forth
herein.


 


 


	
  EMPLOYEE

  	
  CINERGY CORP.

  
	
   

   

  Signature:  _________________________

                   
  

  	
   

   

  By:  ______________________________

           

  



 


 


 


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