Document:

EXHIBIT 10.6

 

August 2, 2004

 

 

Mark
Miller

41087

 

RE:  Employee Intellectual Property and
Confidentiality Agreement

 

Sabre Holdings operates in a
highly competitive marketplace, where our unique knowledge, expertise and
innovation give us a distinct advantage over our competitors.  Going forward, in order to maintain this
competitive advantage, protect our intellectual property and ensure our
long-term success, an agreement containing slightly revised intellectual property
and confidentiality provisions, and new provisions restricting unfair
competition (the “Agreement”), will be a condition of employment for Sabre
Holdings subsidiaries (collectively referred to the “Company”) in the United
States.

 

As a member of the Company’s
Executive Team, the Agreement’s restrictions on unfair competition (often
referred to as a non-compete) will prohibit you from working for or assisting a
“Competing Business” for twelve (12) months following the last day of your
employment with the Company (the “Non Compete Term”). The term “Competing
Business” is specifically defined in the Agreement and a list of current examples is attached.  The list is comprised of those companies
similar in nature or purpose to those of current Company business unit(s) or
subsidiary(ies).  However, as our
business and the businesses of others evolve over time, our list of competitors
may also change.  As a result, the list
will periodically be updated and a current copy maintained by Employee
Relations.  You may request a copy of the
list from Employee Relations at any time.

 

As a benefit for accepting the
Agreement, if your employment is involuntarily terminated and the termination
is not for Cause (as defined by the Sabre Inc. Severance Plan), and as long as
you are eligible for severance pursuant to the policy, plan or written
agreement applicable to you, to the extent the number of weeks of severance pay
for which you are eligible is less than the 12 month Non-Compete Term, you
shall receive a  non-compete payment
equal to one week’s base pay for each week between when your severance pay
expires and when the Non-Compete Term expires.

 

You are asked to execute and
return the Agreement to Bob Baglio by August 20, 2004.  As a reminder, accepting the Agreement is a
condition of continued employment and the terms of the Agreement are
non-negotiable.  Should you elect to
decline the terms of the Agreement, that decision will result in termination
for Cause, and you will not be eligible for any severance payment or subsidized
medical benefits.

 

Requiring our executives to
sign a Employee Intellectual Property and Confidentiality Agreement protects
you, our employees and our future in the event someone leaves.

 

Sincerely,

 

 

cc:  Personnel File

 

 

	
  Employee #:

  	
  

  
	
  Name:

  
	
   

  
	
   

  
	
   

  
	
   

  

 

employee intellectual property and confidentiality
agreement

 

As an employee of the Company(1), I acknowledge that I
will have access to and use of Confidential and Proprietary Information, and
will receive specialized training from the Company. In consideration of these,
other benefits, and compensation, I, together with the Company (collectively,
the “Parties”), agree as follows:

 

I.  Confidentiality and Business
Interest Obligations 

 

A. Company Authorization.

 

Upon the effective date of this Agreement, the Company will provide me
with access to certain new Company Confidential and Proprietary Information
and/or copies of certain Company Confidential and Proprietary Information.  This paragraph I(A) is not dependent on
continued employment for any particular length of time, but is dependent upon,
and provided in exchange for, my full compliance with the restrictions in
paragraphs I(B), I(C) and Section II below.

 

B. Employee Confidentiality.

 

1.               I agree that,
during and after my employment, I will (a) hold all Confidential and Proprietary
Information in the strictest confidence, whether specifically marked as
confidential or not, and use all reasonable precautions to ensure that it is
properly protected and kept from unauthorized persons, and  (b) not disclose it or any part of it, except
as, and only to the extent, necessary to carry out my responsibilities as an
employee of the Company, subject to a valid non-disclosure agreement or with
the prior written consent of a duly authorized officer of the Company other
than me.

 

2.               I agree that,
during and after my employment, I will not use any Confidential and Proprietary
Information for my own benefit or the benefit of any third party.

 

3.               I agree that during
my employment I will maintain records on current and prospective Company customers,
suppliers and other business relationships that I develop or help to develop,
and I acknowledge that such records are Confidential and Proprietary
Information.

 

4.               I agree that during
my employment I will use the goodwill and contacts developed with the Company’s
customers and suppliers for the exclusive benefit of the Company.

 

5.               I agree that during
my employment I will not use or disclose to the Company any confidential or
proprietary information or trade secrets belonging to my former employers or
other third parties.  I will not bring
onto the premises of the Company any documents, materials, or any other
property

 

(1)  Capitalized terms used in this Agreement and
not otherwise defined in the text shall have the meanings assigned to such terms
in Section III(E) below.

 

 

belonging to my
former employers or other third parties to which I owe an obligation of
confidentiality.

 

6.               I agree that upon
termination of my employment, I will deliver to the Company as its sole
property all materials and other things containing or relating to Confidential
and Proprietary Information and all personal property furnished to or prepared
by me in course of, or incident to, my employment.

 

7.               I
represent and warrant that I am under no obligation (such as a non-competition
agreement) to a former employer or any other party affecting my ability: (a) to
perform the terms of this Agreement; (b) to be employed by the Company; or (c)
to otherwise perform services for the Company.

 

C. 
Creations and Proprietary Rights.

 

1.               I agree and acknowledge that all right, title
and interest with respect to all Creations and any and all related Proprietary
Rights (including all Rights to Use) shall solely vest in, inure to the sole
benefit of, and be the sole property of, the Company without any
limitation.  I agree and acknowledge that
all Creations shall be considered works made for hire and works produced in the
service of the Company within the scope of my employment.

 

2.               If, notwithstanding the foregoing, I retain
any right, title or interest with respect to any Creations or any related
Proprietary Rights, I hereby assign, transfer and convey, and agree to assign,
transfer and convey, to the Company, without any limitations or any additional
remuneration, all such right, title and interest. (2)  The rights assigned, transferred and conveyed
hereunder shall include, without limitation, all Rights to Use.

 

3.               If, notwithstanding the foregoing, I retain
any right, title or interest with respect to any Creations or any related Proprietary
Rights, or to the extent any of the rights, title and interest in and to any
Creations or any related Proprietary Rights cannot be assigned by me to the
Company, I hereby grant, and agree to grant, to the Company, without any
limitations or any additional remuneration, the worldwide, exclusive,
perpetual, irrevocable, royalty-free, transferable, freely sublicenseable
(through multiple tiers of sublicensees), right and license under all my right,
title and interest with respect to such Creations, any other Technology that is
the subject of, embodies or uses, or is made using, any Proprietary Rights
relating to such Creations, and any and all related Proprietary Rights,
including all Rights to Use.

 

4.               I will maintain
adequate and current written records of all Creations, and the creation, making, conception, invention, discovery,
development, reduction to practice or suggestion thereof.  The records will be in the form of notes,
sketches, drawings and/or any other format specified by the Company.  Such records will be available to, and remain
the sole property of, the Company.  I hereby authorize the Company to publish the
Creations and any other Technology that is the subject of, embodies or uses, or
is made using, any Proprietary Rights relating to the Creations, in the 

 

(2) FOR
CALIFORNIA EMPLOYEES ONLY: I acknowledge and understand that nothing in this
Agreement shall be construed to assign or offer to assign any of my rights in
any invention which qualifies fully under the provisions of California Labor
Code Section 2870(a): “Any provision in an employment agreement which provides
that an employee shall assign, or offer to assign, any of his or her rights in
an invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer’s
equipment, supplies, facilities, or trade secret information except for those
inventions that either:  (1) relate at
the time of conception or reduction to practice of the invention to the employer’s
business, or actual or demonstrably anticipated research or development of the
employer; or (2) result from any work performed by the employee for the
employer.”

 

 

Company’s sole discretion with or without attributing any of the
foregoing to me or identifying me in connection therewith and regardless of the
effect on such Creations and such other Technology or my relationship thereto.

 

5.               If at any time,
including after termination of my employment, the Company requests my signature
or other cooperation regarding any Creations, I will fully cooperate with the
Company.  I will provide assistance at
the request of the Company to obtain,
establish, perfect, maintain, evidence, enforce or otherwise protect any of the
rights, title and interests assigned, transferred, conveyed, or licensed (or
intended to be assigned, transferred, conveyed, or licensed) to the Company
under this Agreement, or otherwise carry out the intent and accomplish the
purposes of this Agreement.  Such
cooperation and assistance shall include, without limitation, any execution of
an assignment, transfer, conveyance, license or waiver of, or any covenant not
to institute, support, maintain or permit any action or assert any, rights, and
cooperation and assistance in any proceedings before any government authorities
or other legal proceedings, including being named a party for purposes
thereof.  Without limiting the generality
of the foregoing, to the extent permitted by applicable law, I hereby appoint
the Company as my attorney-in-fact (which appointment is coupled with an
interest), with full power of substitution and delegation, with the right (but
not the obligation) to perform any such acts and to execute, acknowledge and
deliver any such documents on my behalf, provided that the Company shall not
exercise such right unless I fail to perform such act or execute, acknowledge
or deliver such document within five (5) business days after the Company’s
written request therefor.  I will
not independently file or prosecute any patent or copyright application
relating to any Creation unless I have the prior written consent of an officer
or an attorney of the Company.

 

6.               I represent and
warrant that I have identified on Schedule A of this Agreement any and
all Technology and all related Proprietary
Rights conceived, developed, created, made, or reduced to practice by
me, either alone or with others, prior to my employment with the Company, that
relate to the business in which the Company is, has been, or reasonably can be
expected to become, involved and that I claim to own or in which I claim to
have an interest or right.  I do not and
will not claim that prior to my employment I owned any right, title or interest
in or to any Technology or any related
Proprietary Rights that relates to the business in which the Company is,
has been, or reasonably can be expected to become, involved, not specifically
listed on Schedule A of this Agreement.

 

7.               Despite the
foregoing provisions of this Section I(C), if I believe that I am entitled to
ownership of any Creation and/or Proprietary Rights related thereto, conceived,
developed, created, made or reduced to practice by me, either alone or with
others, during my employment with the Company, I will promptly notify an
officer of the Company in writing.  The
Company will consider my position, but the Company will have no obligation to
give me any ownership of or benefit from any Creation and/or Proprietary Rights
related thereto.

 

II.  Protective Covenants

 

I agree that the covenants below are reasonable and
necessary agreements for the protection of legitimate business interests of the
Company covered in the fully enforceable, ancillary agreements of the Parties,
including but not limited to those set forth in Section I above. I agree that I
will not in any proceeding, deny the reasonableness of, or assert the
unreasonableness of any portion of the covenants below. I acknowledge that
complying with the covenants below will not preclude me from engaging in a
lawful profession, trade or business, or from becoming gainfully employed.  I further acknowledge that the

 

 

covenants below are separate
and distinct obligations under this Agreement and that the failure or alleged
failure of the Company to perform its obligations under any other provisions of
this Agreement shall not constitute a defense to the enforceability of the
covenants below.

 

A. 
Competing Business/Covered Customer.

 

As used herein, “Competing Business” means any person,
corporation, partnership, limited liability company or other entity that engages
in activities so similar in nature or purpose to those of the Company business
unit(s) or subsidiary(ies) for which I worked or serviced within the last
twenty-four (24) months of my employment with the Company, such that they would
displace business opportunities, customers or suppliers of such business
unit(s) or subsidiary(ies).  Lists of
current examples of direct competitors of each Company business unit and
subsidiary are maintained by the Employee Relations department and will be
furnished upon my request.  “Covered Customer” means those entities
and/or persons (customers or suppliers) that have a continuing business
relationship or prospective business relationship with the Company and that did
business with the Company within the last twenty-four (24) months I was with
the Company and that I either: (a) received or handled Confidential and
Proprietary Information about; (b) had contact with; or (c) supervised others
who had contact with.

 

B.  Restriction on Interfering
with Employee Relationships.

 

I agree that during employment with the Company, and for a period of
twenty-four (24) months following the termination of my employment with the
Company, I will not, either directly or indirectly, participate in hiring or
attempting to hire away a Company employee or contractor, or induce or
encourage any employees or contractors of the Company to terminate their
relationship with the Company, without prior written consent of a Company
officer.

 

C.  Restriction on Interfering
with Customer and Supplier Relationships.

 

I agree that during employment
with the Company, and for a period of twelve (12) months following the
termination of my employment with the Company, I will not, directly or
indirectly, encourage or induce any Covered Customer to stop or reduce business
done with the Company, or call on, service, or solicit a Covered Customer on
behalf of a Competing Business, without prior written consent of a Company
officer.  The Parties stipulate that this
restriction is inherently limited to a reasonable geography because it is
limited to the places or locations where the Covered Customer is located at the
time.

 

D.  Restriction on Unfair
Competition.(3)

 

I agree that during employment
with the Company, and for a period of twelve (12) months following the
termination of my employment with the Company, I will not work for or assist a
Competing Business in any capacity (as employee, consultant, contractor,
officer, director, investor, agent, or otherwise) that would involve: (i) the
same or substantially similar functions or responsibilities to those I
performed for the Company; or (ii) supervision over the same or substantially
similar functions or responsibilities. 
This restriction is limited to business activities within North America
and Europe. These restrictions do not prohibit ownership of securities in
widely held corporations that are quoted and sold on the open market.  The Parties stipulate that the foregoing is
enforceable, reasonable, and necessary to protect the Company’s legitimate
business interests such as goodwill, trade secrets and confidential
information.

 

(3) This paragraph II(D) does not apply to
California employees.

 

 

E.  Survival of Restrictions.

 

I will advise any future employer of the foregoing
restrictions before accepting new employment. 
Each restriction set forth in this Section II shall survive the
termination of my employment with the Company. 
If I fail to comply with the timed restrictions in this Agreement, the
restrictive time periods provided for will be extended by one day for each day
I am found to have failed to have complied up to a maximum of  twenty-four (24) months.

 

F.  Early Resolution Conference.

 

During my employment with the Company, and for a twelve (12) month
period thereafter, I agree to: (i) give the Company written notice at least
fifteen (15) business days prior to commencing work for a Competing Business;
(ii) provide the Company with sufficient information about my new position for
the Company to determine whether such position would be likely to lead to a
violation of this Agreement; and (iii) participate in an early resolution
conference in a good faith effort to resolve any disputes between the Parties
within fifteen (15) business days of providing the Company the required notice.

 

III. 
General Provisions

 

A. 
Assignment and Severability.

 

I acknowledge and agree that
my obligations hereunder are personal, and that I shall have no right to
assign, transfer or delegate and shall not assign, transfer or delegate or
purport to assign, transfer or delegate this Agreement or any of my rights or
obligations hereunder.  This
Agreement shall bind my heirs, executors, administrators, legal representatives
and assigns and shall remain in effect in the event I am transferred to any
affiliate of the Company.  This Agreement
shall be deemed assigned to such affiliate as of my first day of employment
with such affiliate.  This Agreement
shall remain in effect for the benefit of any successor or assign of the
business of the Company, and shall inure to the benefit of such successor or
assign.

 

If any provision of this
Agreement, or the application thereof to any person, place or circumstance,
shall be held to be invalid, void or otherwise unenforceable, such provision
shall be enforced to the maximum extent possible so as to effect the intent of
the Parties, or, if incapable of such enforcement, shall be deemed to be
deleted from this Agreement, and the remainder of this Agreement and such
provisions as applied to other persons, places and circumstances shall remain
in full force and effect.

 

B. 
Governing Law and Dispute Resolution.

 

The laws of the State of Texas shall govern
the construction, interpretation and enforcement of this Agreement.  The Parties agree that any and all claims,
disputes, or controversies arising out of or related to this Agreement, or the
breach of this Agreement, shall be resolved by binding arbitration, in which
Employee has the right to be represented by counsel.  The Parties agree to submit any such claim,
dispute or controversy, within thirty (30) business days following service of
notice of the same by one party on the other, to the Judicial Arbitration and
Mediation Services (JAMS), in Dallas, Texas, for prompt resolution pursuant to
its Employment Arbitration Rules & Procedures and subject to JAMS Policy on
Employment Arbitration Minimum Standards of Procedural Fairness.  All rights, remedies and defenses applicable
to claims asserted in a court of law will apply in the arbitration, including but
not limited to, the revision to the maximum extent legally allowed to protect
the Company’s interest of any restriction on Employee deemed
unenforceable.  The decision of the
arbitrator shall be final and binding upon the Parties, and judgment may be
entered thereon in accordance with applicable law in any court having
jurisdiction.  The Parties shall bear
their own attorneys’ fees, and shall bear equally the expenses of the arbitral
proceedings, including without limitation the fees of the arbitrator.  Notwithstanding the

 

 

foregoing, either party may pursue a
temporary restraining order and/or preliminary injunctive relief, with
expedited discovery where necessary, in the Federal or state courts in Tarrant
County, Texas, to protect common law or contractual trade-secret or
Confidential and Proprietary Information rights and to prevent unfair
competition, until such time as an arbitration of all issues of final relief
regarding same can be conducted. 
Employee hereby irrevocably consents to personal jurisdiction and venue
in Tarrant County, Texas for any such action and agrees that One Thousand
Dollars ($1,000.00) is the agreed amount for the bond to be posted if the
Company seeks an injunction.

 

C. 
Entire Agreement, Resolution of Rights and Waiver.

 

This Agreement, including Schedule
A, is an amendment or novation by the Parties with respect to all prior and
contemporaneous correspondence, negotiations, agreements and understandings
among the Parties, both oral and written, regarding the subject matter hereof,
and is entered into to fully settle and resolve any: (i) potential
uncertainties regarding the Parties rights pursuant to Confidential and
Proprietary Information entrusted to me by the Company in the past; and (2)
past agreements or understandings concerning this information and the restrictions
necessary to protect it.  This Agreement,
including Schedule A, constitutes the entire agreement and understanding
of the Parties with respect to the subject matter hereof. I agree that the
Confidential and Proprietary Information that I received, handled or developed
while employed by the Company in the past are protected by and covered by the
restrictions et forth in Sections I(B), (C) and II(B), (C) and (D) above and
waive any claim to the contrary.  I acknowledge
that the Company has not made, and that I have not relied upon, any
representations or warranties concerning the subject matter of this Agreement
other than those expressly set forth herein, if any.  This Agreement may be amended only by
written agreement signed by a duly authorized officer or attorney of the
Company other than me.  The waiver of any
rights under this Agreement in any particular instance, or the failure to
enforce any provision of this Agreement in any particular instance, shall not
constitute a waiver or relinquishment of the right to enforce such provision or
enforce this Agreement generally.

 

D. 
Duty to Read.

 

I acknowledge that I have read and I understand this
Agreement.  I further agree that the
Company would not have allowed me access to and use of Confidential and
Proprietary Information, would not have provided me with the authority to
develop and use goodwill of the Company and would not have provided me with
specialized training without my acceptance of this Agreement.

 

E. 
Definitions.

 

“Company” means Sabre Inc., its
predecessors, successors, assigns, and any of its parents, subsidiaries
(including, but not limited to GetThere, Travelocity and Site59), affiliates,
divisions, related or joint venture companies, or other companies or
organizations controlled by, controlling, or under common control with it.

 

“Confidential and Proprietary Information”
means all information of business or competitive value to the Company that is
not generally known to the public and that is disclosed to or received by me,
or invented, conceived, developed, created, made, or reduced to practice by me,
in the course of my employment with the Company, including but not limited to
Technology, architecture, analyses, business plans, collections and
compilations of information, computer programs, concepts, creations, current
and/or prospective customer, supplier or other business relationship lists,
records or other information, data, designs, devices, discoveries,
documentation, drawings, employee salaries and other information, financial and
sales information, flow charts, forecasts, formulae,

 

 

hardware and hardware
configurations, ideas, improvements, know-how, manuals, methods, notes,
operating procedures, patterns, processes, projections, protocols, records,
screen displays, software, specifications, studies, strategies, structures,
surveys, system designs, techniques, tolerances, and all information obtained
by the Company with a duty of confidentiality to third parties.

 

“Creations” means any and all Technology
that (i) is created, made, conceived, invented, discovered, developed, reduced
to practice or suggested by me, alone or together with others, at any time
during my employment by the Company or, whether during or within a reasonable
time after my employment with the Company, otherwise in connection with my
activities as an employee of, or based upon any Confidential and Proprietary
Information or Proprietary Rights of, the Company, and (ii) relates in any
manner to the actual or reasonably anticipated business, research, development
or other activities of the Company, or were created, made, conceived, invented,
discovered, developed, reduced to practice or suggested using the Company’s
equipment, supplies, facilities, or Proprietary Information.  Creations shall not include Technology
expressly set forth on Schedule A.

 

“Proprietary Rights” means, throughout the
world, any and all (i) copyrights, database rights and all other rights
associated with works of authorship (including computer programs), creations or
performances, whether published or unpublished, (ii) rights with respect to
trade secrets and know-how, (iii) patents and related rights, inventor’s
certificates, design rights, industrial design rights, utility model rights,
(iv) trademark, service mark and trade dress rights and other rights relating
to source or indicia of origin, and (v) any and all other intellectual
property, industrial property, and other proprietary rights, together with (a)
all rights related to any of the foregoing, including, without limitation, rights
with respect to applications and filings for any of the foregoing, rights with
respect to registrations or renewals of any of the foregoing, and rights to
apply for, file, register, establish, maintain, extend or renew any of the
foregoing, (b) all benefits, privileges, causes of action and remedies relating
to any of the foregoing, whether before or hereafter accrued, including,
without limitation, the right to enforce and protect any of the foregoing,
including to bring legal actions against any party for all past, present and
future infringements, misappropriations or other violations of or relating to
any of the foregoing and to settle, and collect and retain the proceeds from,
any such actions, and (c) all rights to transfer and grant licenses, sublicenses
(through multiple tiers of sublicensees) and other rights with respect to any
and all of the foregoing in Company’s sole discretion.

 

“Rights to Use” means (i) all rights to
publish, copy, reproduce, adapt, modify, translate, prepare derivatives based
upon, distribute, rent, lease, lend, transmit, broadcast, publicly perform,
publicly display, otherwise communicate or make available to the public,
record, store on any medium, make, use, sell, offer for sale, have sold,
import, have imported, practice any method in connection with and otherwise use
or exploit for any purpose, throughout the world, by any and all means and in
any form or medium whatsoever, the Creations and any other Technology that is
the subject of, embodies or uses, or is made using, any Proprietary Rights
relating to the Creations and any improvements thereof, and (ii) all rights to
transfer and grant licenses, sublicenses (through multiple tiers of
sublicensees), and other rights with respect to any and all of the foregoing rights,
and to authorize any third party to exercise any of the foregoing rights, in
the Company’s sole discretion.

 

“Technology” means all materials,
information (technical and non-technical), ideas (whether or not protectable
under trade secret laws) and other subject matter, including, without
limitation, works of authorship and other creations; information fixed in any
tangible medium of expression (whether or not protectable under copyright
laws); inventions (whether or not protectable under patent laws),

 

 

invention
disclosures, discoveries, developments and patent applications; know-how and
trade secrets; plans, designs and concepts; new or useful art; artwork,
drawings, designs, diagrams, sketches and schematics; writings, reports, white
papers, notebooks, memoranda and other information; marketing requirements
documents; specifications, formulas, structures and other technical or
engineering information; prototypes, models, systems, compositions, hardware,
tools, equipment, apparatuses, instruments and other devices, products and
technology; processes, methods, techniques, procedures and work in process;
computer programs (in source code, object code or any other format),
applications, algorithms, protocols, data and databases, programmable logic and
documentation; and any copies, extracts, portions, derivatives, improvements
and enhancements thereof and modifications thereto.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

SCHEDULE
A

 

List of prior Technology
and related Proprietary Rights

 

	
  Title

  	
   

  	
  Date

  	
   

  	
  Identifying Number or Brief Description

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

o  Check
here if list continues on attached page

 

	
  Employee First Name:

  	
  Last:

  	
  MI:

  
	
   

  	
   

  	
   

  
	
  Witness First Name:

  	
  Last:

  	
  MI:

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  

 

 

	
   

  	
   

  	
   

  
	
  Employee
  signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Witness
  signatureTEMPLATE

 

 

INCENTIVE STOCK OPTION AGREEMENT FOR

EMPLOYEES UNDER THE CINERGY CORP.

1996 LONG-TERM INCENTIVE
COMPENSATION PLAN

 

 

THIS INCENTIVE 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 an incentive 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.

 

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 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 

 

1

 

Directors.  To
exercise this Option, the Optionee must send written notice to the Cinergy
Corp. Manager, Compensation, at the address noted in Section 20 or follow such
other procedures as are 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 an incentive 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 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.

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

 

 

2

 

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 beneficiaries 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.

 

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.

 

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 

 

3

 

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.                               Incentive Stock Options.

 

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

 

13.                               Disqualifying Dispositions.

 

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

 

14.                               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.

 

15.                               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.

 

16.                               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.

 

4

 

17.                               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.

 

18.                               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.

 

19.                               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.

 

20.          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.

 

21.          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.

 

 

5

 

22.          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.

 

23.          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.

 

24.          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.

 

25.             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:  _____________________________

   

           

  

 

 

6

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