Document:

Exhibit 10.9

 

CLASSMATES ONLINE, INC.

2004 STOCK PLAN

STOCK OPTION AGREEMENT

 

A.            The Board has adopted the Plan for
the purpose of retaining the services of selected Employees and independent
contractors who provide services to the Corporation (or any Parent or
Subsidiary).

 

B.            Optionee is to render valuable
services to the Corporation (or a Parent or Subsidiary), and this Agreement is
executed pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Corporation’s grant of an option to Optionee.

 

C.            All capitalized terms in this
Agreement shall have the meaning assigned to them in the attached Appendix.

 

NOW, THEREFORE, it is hereby
agreed as follows:

 

1.             Grant of
Option.  The Corporation hereby grants to Optionee, as
of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice.  The
Option Shares shall be purchasable from time to time during the option term
specified in Paragraph 2 at the Exercise Price.

 

2.             Option
Term.  This option shall expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.

 

3.             Limited
Transferability.

 

(a)           Except as otherwise provided in this Paragraph 3, this
option shall be neither transferable nor assignable by Optionee other than by
will or the laws of inheritance following Optionee’s death and may be
exercised, during Optionee’s lifetime, only by Optionee.

 

(b)           With the Plan Administrator’s consent, this option may
be assigned in whole or in part during Optionee’s lifetime to one or more
members of Optionee’s family or to a trust established for the exclusive
benefit of one or more such family members, to the extent such assignment is in
connection with the Optionee’s estate plan. 
The assigned portion shall be exercisable only by the person or persons
who acquire a proprietary interest in the option pursuant to such
assignment.  The terms applicable to the
assigned portion shall be the same as those in effect for this option
immediately prior to such assignment.

 

(c)           Optionee may designate one or more persons as the
beneficiary or beneficiaries of this option, and this option shall, in
accordance with such designation, automatically be transferred to such
beneficiary or beneficiaries upon the Optionee’s death while holding this
option.  Such beneficiary or
beneficiaries shall take the transferred option subject to all the terms and
conditions of this Agreement, including (without limitation) the limited time
period during which this option may, pursuant to Paragraph 5, be exercised
following Optionee’s death.

 

 

4.             Dates of
Exercise.  This option shall become exercisable for the
Option Shares in one or more installments as specified in the Grant
Notice.  As the option becomes
exercisable for such installments, those installments shall accumulate, and the
option shall remain exercisable for the accumulated installments until the
close of business on the Expiration Date or sooner termination of the option
term under Paragraph 5 or 6.

 

5.             Cessation
of Service.  The option term specified in Paragraph 2
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:

 

(a)           Should Optionee cease to remain in Service for any
reason (other than death, Permanent Disability, Misconduct or Involuntary
Termination following a Corporate Transaction or Change in Control) while this
option is outstanding, then this option shall terminate upon the earlier of (i) the expiration of the three (3) month
period measured from the date of such cessation of Service or (ii) the
close of business on the Expiration Date.

 

(b)           Should Optionee die while this option is outstanding,
then the personal representative of Optionee’s estate or the person or persons
to whom the option is transferred pursuant to Optionee’s will or the laws of
inheritance shall have the right to exercise this option.  However, if Optionee has designated one or
more beneficiaries of this option, then those persons shall have the exclusive
right to exercise this option following Optionee’s death.  Any such right to exercise this option shall
lapse, and this option shall terminate, upon the earlier
of (i) the expiration of the twelve (12)-month period measured from the
date of Optionee’s death or (ii) the close of business on the Expiration
Date.

 

(c)           Should Optionee cease Service by reason of Permanent
Disability while this option is outstanding, then this option shall terminate
upon the earlier of (i) the expiration of
the twelve (12) month period measured from the date of such cessation of
Service or (ii) the close of business on the Expiration Date.

 

(d)           Should Optionee’s Service terminate by reason of an
Involuntary Termination within twelve (12) months following a Corporate Transaction
or Change in Control while this option is outstanding, then this option shall
terminate upon the earlier of (i) the
expiration of the twelve (12) month period measured from the date of the
Optionee’s Involuntary Termination or (ii) the close of business on the
Expiration Date.

 

(e)           During the limited period of post-Service
exercisability, this option may not be exercised in the aggregate for more than
the number of Option Shares for which the option is exercisable at the time of
Optionee’s cessation of Service.  Upon
the expiration of such limited exercise period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be outstanding for
any exercisable Option Shares for which the option has not been exercised.  However, this option shall, immediately upon
Optionee’s cessation of Service for any reason, terminate and cease to be
outstanding with respect to any Option Shares for which this option is not
otherwise at that time exercisable.

 

(f)            Should Optionee’s Service be terminated for Misconduct
or should Optionee otherwise engage in any Misconduct while this option is
outstanding, then this option shall terminate immediately and cease to remain
outstanding.

 

6.             Special
Acceleration of Option.

 

(a)           This option, to the extent outstanding at the time of
a Corporate Transaction but not otherwise fully exercisable, shall
automatically accelerate so that this option shall,

 

2

 

immediately
prior to the effective date of such Corporate Transaction, become exercisable
for all of the Option Shares at the time subject to this option and may be
exercised for any or all of those Option Shares as fully vested shares of
Common Stock.  No such acceleration of
this option shall occur, however, if and to the extent: (i) this option
is, in connection with the Corporate Transaction, to be assumed by the
successor corporation (or parent thereof) or (ii) this option is to be
replaced with a cash incentive program of the successor corporation which
preserves the spread existing at the time of the Corporate Transaction on the
Option Shares for which this option is not otherwise at that time exercisable
(the excess of the Fair Market Value of those Option Shares over the aggregate
Exercise Price payable for such shares) and provides for subsequent payout in
accordance with the same option exercise/vesting schedule set forth in the
Grant Notice.

 

(b)           Immediately following the Corporate Transaction, this
option shall terminate and cease to be outstanding, except to the extent
assumed by the successor corporation (or parent thereof) in connection with the
Corporate Transaction.

 

(c)           If this option is assumed in connection with a
Corporate Transaction, then this option shall be appropriately adjusted, immediately
after such Corporate Transaction, to apply to the number and class of
securities which would have been issuable to Optionee in consummation of such
Corporate Transaction had the option been exercised immediately prior to such
Corporate Transaction, and appropriate adjustments shall also be made to the
Exercise Price, provided the aggregate Exercise Price shall remain the
same.  To the extent the holders of
Common Stock receive cash consideration for their Common Stock in consummation
of the Corporate Transaction, with the Plan Administrator’s consent prior to
the consummation of the Corporate Transaction, the successor corporation may,
in connection with the assumption or continuation of this option, substitute
one or more shares of its own common stock with a fair market value equivalent
to the cash consideration paid per share of Common Stock in such Corporate
Transaction.

 

(d)           This option shall continue, over Optionee’s period of
Service following a Corporate Transaction in which this option is assumed, to
become exercisable for the Option Shares in one or more installments in
accordance with the provisions of this Agreement and the Grant Notice.  However, immediately upon an Involuntary
Termination of Optionee’s Service within twelve (12) months following the
effective date of that Corporate Transaction, this option, to the extent
outstanding at the time but not otherwise fully exercisable, shall
automatically accelerate as to a part of the Option Shares so that the total
number of Option Shares for which this option shall be exercisable, after
taking such acceleration into account, shall be equal to the greater of (i) the
number of Option Shares for which this option could have, in accordance with
the normal Exercise Schedule (after taking into account any prior
exercises), been exercised at the time of the Optionee’s Involuntary
Termination had Optionee completed twice the amount of Service actually
completed by him or her at the time of such Involuntary Termination (but in no
event shall the number of Option Shares for which this option becomes
exercisable on such an accelerated basis exceed the number of Option Shares for
which this option would not have otherwise been exercisable at the time of such
Involuntary Termination in accordance with the normal Exercise Schedule) or (ii) the
number of Option Shares for which the Option would have become exercisable
under the normal Exercise Schedule had the Optionee actually completed
twelve (12) months of Service prior to his or her Involuntary Termination.

 

(e)           This option shall not accelerate upon the occurrence
of a Change in Control, and this option shall accordingly, over Optionee’s
period of Service following such Change in Control, continue to become
exercisable for the Option Shares in one or more installments in accordance
with the provisions of this Agreement and the Grant Notice.  However, immediately upon an Involuntary
Termination of Optionee’s Service within twelve (12) months following that
Change in Control, this option, to the extent outstanding at the time but not
otherwise fully exercisable, shall automatically

 

3

 

accelerate
as to a part of the Option Shares so that the total number of Option Shares for
which this option shall be exercisable, after taking such acceleration into
account, shall be equal to the greater of (i) the
number of Option Shares for which this option could have, in accordance with
the normal Exercise Schedule (after taking into account any prior
exercises), been exercised at the time of the Optionee’s Involuntary
Termination had Optionee completed twice the amount of Service actually
completed by him or her at the time of such Involuntary Termination (but in no
event shall the number of Option Shares for which this option becomes
exercisable on such an accelerated basis exceed the number of Option Shares for
which this option would not have otherwise been exercisable at the time of such
Involuntary Termination in accordance with the normal Exercise Schedule) or (ii) the
number of Option Shares for which the Option would have become exercisable
under the normal Exercise Schedule had the Optionee actually completed
twelve (12) months of Service prior to his or her Involuntary Termination.

 

(f)            This Agreement shall not in any way affect the right
of the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.

 

7.             Adjustment
in Option Shares.  Should any change be made to the Common Stock
by reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation’s receipt of consideration,
appropriate adjustments shall be made to (a) the total number and/or class
of securities subject to this option and (b) the Exercise Price in order
to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.

 

8.             Stockholder
Rights.  The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of
record of the purchased shares.

 

9.             Manner of
Exercising Option.

 

(a)           In order to exercise this option with respect to all
or any part of the Option Shares for which this option is at the time
exercisable, Optionee (or any other person or persons exercising the option)
must take the following actions:

 

(i)            Execute
and deliver to the Corporation a Notice of Exercise (attached hereto as Exhibit I)
for the Option Shares for which the option is exercised.

 

(ii)           Pay the
aggregate Exercise Price for the purchased shares in one or more of the
following forms:

 

(A)          cash or
check made payable to the Corporation;

 

(B)           shares of
Common Stock held by Optionee (or any other person or persons exercising the
option) for the requisite period necessary to avoid a charge to the Corporation’s
earnings for financial reporting purposes and valued at Fair Market Value on
the Exercise Date; or

 

(C)           if the
option is exercised for vested shares, through a special sale and remittance
procedure pursuant to which Optionee (or any other person or persons exercising
the option) shall concurrently provide irrevocable instructions (1) to a
brokerage firm (reasonably satisfactory to the Corporation for the purposes of
administering such procedure in compliance with the Corporation’s
pre-notification/pre-

 

4

 

clearance policies) to effect the immediate sale of the purchased
shares and remit to the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate Exercise Price payable
for the purchased shares plus all applicable Federal, state and local income
and employment taxes required to be withheld by the Corporation by reason of
such exercise and (2) to the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm on such settlement date in
order to complete the sale.

 

Except to the extent the sale and remittance procedure
is utilized in connection with the option exercise, payment of the Exercise
Price must accompany the Notice of Exercise delivered to the Corporation in
connection with the option exercise.

 

(iii)          Furnish
to the Corporation appropriate documentation that the person or persons
exercising the option (if other than Optionee) have the right to exercise this
option.

 

(iv)          Make
appropriate arrangements with the Corporation (or Parent or Subsidiary
employing or retaining Optionee) for the satisfaction of all Federal, state and
local income and employment tax withholding requirements applicable to the
option exercise.

 

(b)           As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.

 

(c)           In no event may this option be exercised for any
fractional shares.

 

10.           Compliance
with Laws and Regulations.

 

(a)           The exercise of this option and the issuance of the
Option Shares upon such exercise shall be subject to compliance by the
Corporation and Optionee with all applicable requirements of law relating
thereto and with all applicable regulations of any applicable Stock Exchange or
the Nasdaq Stock Market on which the Common Stock may be listed for trading at
the time of such exercise and issuance.

 

(b)           The inability of the Corporation to obtain approval
from any regulatory body having authority deemed by the Corporation to be
necessary to the lawful issuance and sale of any Common Stock pursuant to this
option shall relieve the Corporation of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall not
have been obtained.

 

11.           Successors
and Assigns.  Except to the extent otherwise provided in
Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of
Optionee’s estate and any beneficiaries of this option designated by Optionee.

 

12.           Notices. 
Any notice required to be given or delivered to the Corporation under
the terms of this Agreement shall be in writing and addressed to the
Corporation at its principal corporate offices. 
Any notice required to be given or delivered to Optionee shall be in
writing and addressed to Optionee at the address indicated on the Corporation’s
records.  All notices shall be deemed
effective upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.

 

5

 

13.           Construction. 
This Agreement and the option evidenced hereby are made and granted
pursuant to the Plan and are in all respects limited by and subject to the
terms of the Plan.  All decisions of the
Plan Administrator with respect to any question or issue arising under the Plan
or this Agreement shall be conclusive and binding on all persons having an
interest in this option.

 

14.           Governing
Law.  The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of Delaware
without resort to that State’s conflict-of-laws rules.

 

6

 

EXHIBIT I

NOTICE OF EXERCISE

 

FOR EXERCISES EXECUTED
THROUGH THE CORPORATION’S STOCK PLAN ADMINISTRATOR, PLEASE SEE INSTRUCTIONS AND
FORMS POSTED ON SUCH ADMINISTRATOR’S WEB SITE

 

I hereby notify United Online, Inc. (the “Corporation”)
that I elect to purchase                           
shares of the Corporation’s Common Stock (the “Purchased Shares”) at the option
exercise price of $                      
per share (the “Exercise Price”) pursuant to that certain option (the “Option”)
granted to me under the Classmates Online, Inc. 2004 Stock Plan on                          ,
                 .

 

Concurrently with the delivery of this Exercise Notice
to the Corporation, I shall hereby pay to the Corporation the Exercise Price
for the Purchased Shares in accordance with the provisions of my agreement with
the Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise.  Alternatively, I may
utilize the special broker-dealer sale and remittance procedure specified in my
agreement to effect payment of the Exercise Price.

 

                              ,

Date

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Optionee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print name in
  exact manner it is to

  	
   

  	
   

  
	
  appear on the
  stock certificate:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address to which
  certificate is to be

  sent, if different from address above:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Social Security
  Number:

  	
   

  	
   

  

 

 

APPENDIX

 

The following definitions shall be in effect under the
Agreement:

 

A.            Agreement shall mean this Stock Option
Agreement.

 

B.            Board shall mean the Corporation’s Board of
Directors.

 

C.            Change in
Control
means a change in ownership or control of the Corporation effected through
either of the following transactions:

 

(i)            the
acquisition, directly or indirectly by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls,
is controlled by, or is under common control with, the Corporation), of
beneficial ownership (within the meaning of Rule 13d-3 of the Exchange
Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation’s outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation’s stockholders, or

 

(ii)           a
change in the composition of the Board over a period of thirty-six (36) consecutive
months or less such that a majority of the Board members ceases, by reason of
one or more contested elections for Board membership, to be comprised of
individuals who either (A) have been Board members continuously since the
beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of the
Board members described in clause (A) who were still in office at the time
the Board approved such election or nomination.

 

D.            Code shall mean the Internal Revenue
Code of 1986, as amended.

 

E.             Common
Stock
shall mean shares of the Corporation’s common stock.

 

F.             Corporate
Transaction shall
mean either of the following stockholder approved transactions to which the
Corporation is a party:

 

(i)            a merger,
consolidation or reorganization approved by the Corporation’s stockholders, unless
securities representing more than fifty percent (50%) of the total combined
voting power of the voting securities of the successor corporation are
immediately thereafter beneficially owned, directly or indirectly and in
substantially the same proportion, by the persons who beneficially owned the
Corporation’s outstanding voting securities immediately prior to such
transaction, or

 

(ii)           any
stockholder-approved transfer or other disposition of all or substantially all
of the Corporation’s assets.

 

A-1

 

G.            Corporation shall mean United Online, Inc.,
a Delaware corporation, and any successor corporation to all or substantially
all of the assets or voting stock of United Online, Inc. which has assumed
the Plan.

 

H.            Employee shall mean an individual who is in
the employ of the Corporation (or any Parent or Subsidiary), subject to the
control and direction of the employer entity as to both the work to be
performed and the manner and method of performance.

 

I.              Exercise
Date
shall mean the date on which the option shall have been exercised in accordance
with Paragraph 9 of the Agreement.

 

J.             Exercise
Price
shall mean the exercise price per Option Share as specified in the Grant
Notice.

 

K.            Exercise Schedule shall mean the installment schedule specified
in the Grant Notice pursuant to which the option is to become exercisable for
the Option Shares in a series of installments over Optionee’s period of
Service.

 

L.             Expiration
Date
shall mean the date on which the option expires as specified in the Grant
Notice.

 

M.           Fair
Market Value
per share of Common Stock on any relevant date shall be determined in
accordance with the following provisions:

 

(i)            If the
Common Stock is at the time traded on the Nasdaq Stock Market, then the Fair
Market Value shall be deemed equal to the closing selling price per share of
Common Stock on the date in question, as the price is reported by the National
Association of Securities Dealers on the Nasdaq Stock Market.  If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation
exists, or

 

(ii)           If the
Common Stock is at the time listed on any Stock Exchange, then the Fair Market
Value shall be deemed equal to the closing selling price per share of Common
Stock on the date in question on the Stock Exchange determined by the Plan
Administrator to be the primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on such exchange.  If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation
exists.

 

N.            Grant
Date
shall mean the date of grant of the option as specified in the Grant Notice.

 

O.            Grant
Notice
shall mean the Notice of Grant of Stock Option or the Certificate of Stock
Option Grant accompanying the Agreement or posted on a Web site maintained by
the Corporation’s stock plan administrator containing the terms authorized by
the Corporation, pursuant to which Optionee has been informed of the basic
terms of the option evidenced hereby.

 

P.             Involuntary
Termination
shall mean the termination of Optionee’s Service by reason of:

 

A-2

 

(i)            Optionee’s
involuntary dismissal or discharge by the Corporation (or any Parent or
Subsidiary) for reasons other than Misconduct, or

 

(ii)           Optionee’s
voluntary resignation following (A) a material reduction in the scope of
his or her day-to-day responsibilities at the Corporation (or any Parent or
Subsidiary), it being understood that a change in Optionee’s title shall not,
in and of itself, be deemed a material reduction, (B) a reduction in
Optionee’s base salary or (C) a relocation of Optionee’s place of
employment by more than fifty (50) miles, provided and only if such change,
reduction or relocation is effected by the Corporation (or any Parent or
Subsidiary) without Optionee’s consent.

 

Q.            Misconduct shall mean the commission of any
act of fraud, embezzlement or dishonesty by Optionee, any unauthorized use or
disclosure by Optionee of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by Optionee adversely affecting the business or affairs of the Corporation (or
any Parent or Subsidiary) in a material manner. 
The foregoing definition shall not be deemed to be inclusive of all the
acts or omissions which the Corporation (or any Parent or Subsidiary) may
consider as grounds for the dismissal or discharge of Optionee or any other individual
in the Service of the Corporation (or any Parent or Subsidiary).

 

R.            Non-Statutory
Option
shall mean an option not intended to satisfy the requirements of Code Section 422.

 

S.             Notice of
Exercise
shall mean the notice of exercise in the form attached hereto as Exhibit I.

 

T.            Option
Shares
shall mean the number of shares of Common Stock subject to the Option as
specified in the Grant Notice.

 

U.            Optionee shall mean the person to whom the
option is granted as specified in the Grant Notice.

 

V.            Parent shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations ending with the
Corporation, provided each corporation in the unbroken chain (other than the
Corporation) owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

 

W.           Permanent
Disability
shall mean the inability of Optionee to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or has lasted or can be expected to
last for a continuous period of twelve (12) months or more.

 

X.            Plan shall mean the Classmates Online, Inc.
2004 Stock Plan, as assumed and administered by United Online, Inc..

 

Y.            Plan
Administrator
shall mean either the Board or a committee of the Board acting in its capacity
as administrator of the Plan.

 

A-3

 

Z.            Service shall mean the Optionee’s
performance of services for the Corporation (or any Parent or Subsidiary) in
the capacity of an Employee, a non-employee member of the board of directors or
an independent contractor.

 

AA.        Stock
Exchange
shall mean the American Stock Exchange or the New York Stock Exchange.

 

BB.          Subsidiary shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

 

A-4Exhibit 10.FFFF

 

CINERGY CORP.

RETIREMENT AND
CONSULTING AGREEMENT

 

This
Separation and Retirement Agreement (the “Agreement”), which is effective as of
this 5th day of May, 2005, is entered into by and between William J. Grealis
(the “Executive”) and Cinergy Services, Inc. (the “Company”), with the mutual
exchange of promises as consideration.

 

Recitals

 

WHEREAS,
the Executive intends to terminate voluntarily his employment and retire
effective as of June 1, 2005 (the “Termination Date”);

 

WHEREAS, in
connection with the Executive’s termination of employment, the Company is
willing to provide certain benefits to the Executive, provided that the
Executive (i) executes and does not timely revoke this Agreement and a waiver
and release, in the form attached to this Agreement as Exhibit A (the “Waiver and Release”) of all claims that the
Executive might assert against the Company, its parent company, any of their
subsidiaries and/or affiliated entities, and any successors or assigns to the
foregoing (collectively, “Cinergy”) and certain related entities
and individuals as set forth therein and (ii) complies with his obligations
hereunder; and

 

WHEREAS,
the parties have agreed to enter into this Agreement, which has been
specifically negotiated between the Executive and Cinergy.

 

NOW,
THEREFORE, the Company and the Executive enter into the following Agreement:

 

Agreement

 

1.             Retirement.

 

a.             Termination of Employment.  The Executive will retire, and his employment
with Cinergy will terminate, effective as of the close of business on the
Termination Date.

 

b.             Effect on Other Agreements.  Effective as of the Termination Date, this
Agreement will replace and supersede any and all prior employment, separation
and retirement agreements between Cinergy and the Executive, including but not
limited to the Employment Agreement between the Executive and Cinergy dated as
of October 11, 2002 (the “Employment Agreement”); provided, however,
that Section 3(b)(ii) of the Employment Agreement, and each provision of the
Employment Agreement that defines any defined term that is used in Section
3(b)(ii) of the Employment Agreement, but only with respect to such definition,
shall remain in full force and effect. 
Notwithstanding the foregoing, the supplemental retirement benefit
provided under Section 3(b)(ii) of the Employment Agreement shall be calculated
as if the Executive retired on February 1, 2005 if such retirement date would
result in the Executive receiving a larger supplemental retirement benefit than
if he retired on the first potential retirement date following the Termination
Date; provided, however, that consistent with
Q&A-18(b) of IRS Notice 2005-1, any additional benefit to which the
Executive is entitled pursuant to this sentence (i) shall be treated as a

 

1

 

“material modification” of Section
3(b)(ii) of the Employment Agreement only to the extent of such additional
benefit, and (ii) shall be administered and distributed in a manner that
complies with the provisions of Section 409A of the Internal Revenue Code of
1986, as amended, so as to prevent the inclusion in gross income of such
additional benefit in a taxable year that is prior to the taxable year or years
in which such benefit would otherwise actually be distributed or made available
to the Executive or his beneficiaries.

 

2.             Consideration.  In exchange for entering into this Agreement
and satisfying the conditions set forth herein, the Executive will receive the following
consideration.  The benefits described
below in this Section only shall be provided to the Executive if he satisfies
each of the conditions specified below and, upon presentation to the Executive,
the Executive timely executes and does not timely revoke the Waiver and
Release.  Notwithstanding anything herein
to the contrary, Cinergy may withhold from any amounts payable under this
Agreement such federal, state, local or other taxes as it reasonably determines
are required to be withheld pursuant to any applicable law or regulation.

 

a.             Consulting Arrangement.  In consideration for performing the
consulting services specified in Section 7, the Executive shall be provided a
retainer in the amount of $1,200,000, payable in a single lump sum as soon as
reasonably practicable after the expiration of the revocation period described
in the Waiver and Release.

 

b.             Restrictive Covenants.  In consideration for satisfying his
obligations pursuant to Section 9(b), the Executive shall be provided a payment
in the amount of $1,500,000, payable in a single lump sum as soon as reasonably
practicable after the expiration of the revocation period described in the
Waiver and Release.

 

c.             Retirement Benefits.  In consideration for satisfying all of his
obligations under this Agreement other than those contained in Sections 7 and
9(b), including but not limited to those contained in Sections 8, 9(c), 10, 11
and 13, the benefits described below in this Section 2(c) shall be provided to
the Executive in a single lump sum as soon as reasonably practicable after the
expiration of the revocation period described in the Waiver and Release.

 

i.              Lump Sum Payment.  Cinergy agrees to pay the Executive a lump
sum cash payment equal to $1,659,241. 
The Executive acknowledges and agrees that the amount listed in the
preceding sentence includes any amount to which he would otherwise be entitled
under the Cinergy Corp. Annual Incentive Plan for the 2005 performance period
and for accrued vacation pay.

 

ii.             Relocation Benefits.  The Executive will be entitled to
reimbursement from Cinergy for the reasonable costs of relocating from the
Cincinnati, Ohio, area to a new primary residence in a manner that is
consistent with the terms of Cinergy’s Relocation Program.  Notwithstanding the foregoing, if the
Executive becomes employed by another employer and is eligible to receive
relocation benefits under another employer-provided plan, any benefits provided
to the Executive hereunder will be secondary to those provided under the other
employer-provided relocation plan.  The
Executive must report to Cinergy any such relocation benefits that he actually
receives under another employer-provided plan.

 

2

 

3.             Basis for Entitlement.  The Executive acknowledges that he would not
be entitled to the benefits described in Section 2 of this Agreement absent his
termination of employment, his execution of this Agreement and the Waiver and
Release and his satisfaction of his obligations under this Agreement.

 

4.             Adequate Consideration.  The Executive agrees that the benefits
described in this Agreement constitute good, valuable and sufficient
consideration for the obligations the Executive assumes herein and in the
Waiver and Release.  The benefits offered
in exchange for the Executive’s execution of this Agreement and the Waiver and
Release exceed in kind and scope that to which the Executive would have
otherwise been legally entitled.

 

5.             Future Employment.  The Executive waives any right to assert any
claim or demand for reemployment with Cinergy.  The Executive, however, may accept an offer of
reemployment with Cinergy in the event such an offer is made.

 

6.             Acknowledgement.  The Executive acknowledges and agrees that it
is the policy of Cinergy to comply with all applicable federal, state and local
laws and regulations.  The Executive
affirms that he has reported all compliance issues and violations of federal,
state and local law or regulation or Cinergy policy of which he had knowledge
during the term of his employment, if any. 
The Executive represents and acknowledges that he has no further or
additional knowledge or information regarding compliance issues or possible
violations of federal, state or local law or regulations or Cinergy policy
other than what the Executive may have previously raised, if any.

 

7.             Consulting Arrangement.

 

a.             The Executive agrees to serve as
a business consultant to Cinergy for a period of three (3) years beginning on
the Termination Date (the “Consulting Period”). 
The consulting services will be performed at reasonable times when and as
needed, as determined by mutual agreement between Cinergy and the Executive.

 

b.             The consulting services to be
provided by the Executive during the Consulting Period will consist of
consultation with, and advice to, the officers and managerial employees of
Cinergy, as requested by Cinergy, on matters relating to Cinergy’s business
affairs about which the Executive has knowledge and experience, and shall
include but not be limited to the following.

 

i.              General strategic
issues, including mergers and acquisitions.

 

ii.             Strategic environmental
issues and regulatory relations, including state and federal regulatory matters
and Cinergy’s policies relating to new environmental regulations and laws,
carbon compliance and coal gasification.

 

iii.            Mentoring and executive
development oversight.

 

c.             The parties acknowledge that the
Executive (i) has unique and valuable expertise relating to Cinergy’s provision
of Broadband over Powerline Services (“BPL Services”), (ii) is currently a
member of the Board and audit committee of Current Communications Group, LLC
and (iii) is currently a member of the Boards of ACcess Broadband, LLC and CCB
Communications, LLC.  The Executive
agrees that the consulting services that he shall provide during the Consulting
Period may include overseeing Cinergy’s 

 

3

 

deployment of BPL Services in Cinergy’s
service territory and elsewhere through Cinergy’s investment in ACcess
Broadband, LLC and CCB Communications, LLC.

 

d.             The parties understand and agree
that all of the consulting services to be provided by the Executive under this
Agreement will be performed by him as an independent contractor and not as an
employee of Cinergy.  The Executive will
not have any authority to act as an agent or representative of Cinergy, except
to the extent expressly authorized in writing by Cinergy.  The Executive will perform his consulting
services to the best of his abilities. 
The Executive’s duties pursuant to this Section are purely those of
a consultant, and Cinergy is free to accept or reject his advice, as it deems
appropriate.  Cinergy is responsible for
all actions it chooses to take based on the Executive’s advice, and Cinergy
agrees to indemnify and hold the Executive harmless for the results of those
actions, including all losses and damages resulting from any legal or
regulatory action.

 

e.             Cinergy will reimburse the
Executive for all expenses authorized by Cinergy and incurred by the Executive
in the performance of consulting services during the Consulting Period,
including but not limited to telephone, duplication, secretarial services, mail
and courier services, and normal supplies that may reasonably be required.  Reimbursement will be made within thirty (30)
days of Cinergy’s receipt of reasonable and customary documentation.  For any travel requested and authorized by
Cinergy, the Executive will be reimbursed for all reasonable and customary
expenses, including transportation, parking, food, and lodging.

 

f.              Nothing in this Section will
(i) prohibit the Executive from seeking or accepting other employment,
engaging in any other consulting services, or participating in any other
endeavor for profit, as he deems appropriate, provided that, in so doing, he
does not breach any of his other obligations under this Agreement or
(ii) be construed as requiring the Executive to reside or work near
Cinergy’s headquarters.

 

8.             Nondisclosure of Confidential
Information.  The Executive acknowledges that the
information, observations and data obtained by him while employed by Cinergy
concerning the business or affairs of Cinergy (unless and except to the extent
the foregoing become generally known to and available for use by the public
other than as a result of the Executive’s acts or omissions to act) (hereinafter
defined as “Confidential
Information”) are
the property of Cinergy and he was and is required to hold in a fiduciary
capacity all Confidential Information obtained by him while employed by Cinergy
for the benefit of Cinergy as well as the successors and assigns thereof.  Therefore, the Executive agrees that he shall
not disclose any Confidential Information without the prior written consent of
the Chief Legal Officer or the Chief Executive Officer of Cinergy Corp. (which
may be withheld for any reason or no reason) unless and except to the extent
that such disclosure is required by any subpoena or other legal process (in
which event the Executive will give the Chief Legal Officer of Cinergy Corp.
prompt notice of such subpoena or other legal process in order to permit
Cinergy to seek appropriate protective orders), and that he shall not use any
Confidential Information for his own account without the prior written consent
of the Chief Executive Officer of Cinergy Corp. (which may be withheld for any
reason or no reason).  As soon as practicable
following the last day of the Consulting Period, the Executive shall deliver to
the Company to the attention of Mr. Timothy Verhagen, Vice President, Human
Resources, Cinergy Corp., 221 East Fourth Street, 30 AT II, Cincinnati, Ohio
45202, all memoranda, notes, plans, records, reports, computer tapes and
software and other documents and data (and copies thereof) relating to the
Confidential Information, or to the work product or the business of Cinergy
which he may possess or have under his control. 
The Executive’s 

 

4

 

obligations under this Section are in
addition to, and not in limitation of or preemption of, all other obligations
of confidentiality which the Executive may have to Cinergy under general legal
or equitable principles, and federal, state or local law.

 

9.             Non-Solicitation, Non-Competition
and Non-Disparagement.

 

a.             In General.  The Executive acknowledges that in the course
of his employment with Cinergy he may have become familiar with trade secrets
and customer lists of, and other confidential information concerning, Cinergy
and that his services have been of special, unique and extraordinary value to
Cinergy.

 

b.             Non-Solicitation
and Non-Competition.  The Executive agrees that during
the Consulting Period he will not in any manner, directly or indirectly, induce
or attempt to induce any employee of Cinergy to quit or abandon his or her
employ.  The Executive agrees that at no
time during the Consulting Period will he: (i) become employed by, enter into a
consulting arrangement with, or otherwise agree to perform personal services
for, a Competitor, (ii) acquire an ownership interest in a Competitor, provided
that the Executive may, for investment purposes, own not more than 3% of the
outstanding stock of any class of a Competitor that is publicly traded, or (iii)
solicit any customers or vendors of Cinergy on behalf of or for the benefit of
a Competitor or otherwise call on, service or solicit competing business from
customers of Cinergy.  For purposes of
this Agreement, the term “Competitor” means any person or entity that sells
goods or services that are directly competitive with those sold by a business
that (1) is being conducted by Cinergy at the time in question or (2) was being
conducted by Cinergy on the Termination Date. Notwithstanding anything in the
preceding sentence, goods or services will not be deemed to be competitive with
those of Cinergy solely as a result of the Executive being employed by or
otherwise associated with a business that is in competition with Cinergy but as
to which the Executive does not have direct or indirect responsibilities for
the products or services involved.

 

c.             Non-Disparagement.  Except as required by subpoena or other legal
process (in which event the Executive will give the Chief Legal Officer of
Cinergy Corp. prompt notice of such subpoena or other legal process in order to
permit Cinergy or any affected individual to seek appropriate protective
orders), the Executive
further agrees that he will refrain from publishing or providing any oral or
written statements about Cinergy, any of its current or former officers,
executives, directors, employees, agents or representatives or any initiative,
program or policy of Cinergy relating to any matter whatsoever that are
disparaging, slanderous, libelous or defamatory, or that disclose private or
confidential information about their business affairs, or that constitute an
intrusion into their private lives, or that give rise to unreasonable publicity
about their private lives, or that place them in a false light before the
public, or that constitute a misappropriation of their name or likeness.  Except as required by subpoena or other legal
process (in which event Cinergy will give the Executive prompt notice of such
subpoena or other legal process in order to permit the Executive to seek
appropriate protective orders), Cinergy further agrees to refrain from
publishing or providing any oral or written statements about the Executive that
are disparaging, slanderous, libelous or defamatory, or that disclose private
or confidential information about his business affairs, or that constitute an
intrusion into his private life, or that give rise to unreasonable publicity
about his private life, or that place him in a false light before the public,
or that constitute a misappropriation of his name or likeness.

 

5

 

d.             Revision.  If, at the time of enforcement of this
Section, a court holds that the restrictions stated herein are unreasonable
under circumstances then existing, the parties hereto agree that the maximum
period or scope reasonable under such circumstances will be substituted for the
stated period or scope and that the court will be allowed to revise the
restrictions contained herein to cover the maximum period or scope permitted by
law.  The parties acknowledge that any
alleged breach of this Section could result in a claim for legal and/or
equitable damages by the aggrieved party.

 

10.           Cooperation With Litigation.  Upon the Company’s request, the Executive
agrees to render reasonable assistance to Cinergy in connection with any
litigation or investigation relating to Cinergy’s business, provided that
rendering such assistance does not impose an unreasonable burden on the
Executive or interfere in any significant respect with the Executive’s
employment or other business pursuits following the Termination Date.  Such assistance shall include, but not be
limited to, providing truthful information, attending meetings, assisting with
interrogatories, giving depositions and making court appearances.  The Executive agrees to promptly notify the
Chief Legal Officer of Cinergy Corp. of any requests for information or
testimony that the Executive receives in connection with any litigation or
investigation relating to Cinergy’s business. 
The Company agrees to pay reasonable compensation to the Executive for
the Executive’s assistance in connection with any litigation or investigation
relating to Cinergy’s business, but only if such assistance is provided after the
end of the Consulting Period.

 

11.           Intellectual Property.  The Executive acknowledges that any and all
writing, documents, inventions (whether or not patentable), discoveries, trade
secrets, computer programs or instructions (whether in source code, object
code, or any other form), algorithms, formulae, plans, customer lists,
memoranda, tests, research, designs, specifications, models, data, diagrams,
flow charts, and/or techniques (whether reduced to written form or otherwise)
that the Executive made, conceived, discovered, or developed, either solely or
jointly with any other person, at any time during the term of his employment,
whether during working hours or at Cinergy’s facilities or at any other time or
location, and whether upon the request or suggestion of Cinergy or otherwise,
that relate to or are useful in any way in connection with any business carried
on by Cinergy (collectively, “Intellectual Work Product”) will be the sole and
exclusive property of Cinergy.  The
Executive will promptly and fully disclose all Intellectual Work Product to
Cinergy.  Any Intellectual Work Product
not generally known to and available for use by the public shall be considered
to be Confidential Information as defined herein.  The Executive acknowledges that all
Intellectual Work Product that is copyrightable will be considered a work made
for hire under United States Copyright Law. 
To the extent that any copyrightable Intellectual Work Product may not
be considered a work made for hire under the applicable provisions of the
Copyright Law, or to the extent that, notwithstanding the foregoing provisions,
the Executive may retain an interest in any Intellectual Work Product that is
not copyrightable, the Executive hereby irrevocably assigns and transfers to
Cinergy any and all right, title, or interest that the Executive may have in
the Intellectual Work Product under copyright, patent, trade secret and
trademark law, in perpetuity or for the longest period otherwise permitted by
law, without the necessity of further consideration.  Cinergy will be entitled to obtain and hold
in its own name all copyrights, patents, trade secrets and trademarks with
respect thereto.  At the sole request and
expense of Cinergy, the Executive will assist Cinergy in acquiring and
maintaining copyright, patent, trade secret and trademark protection upon, and
confirming its title to, such Intellectual Work Product.  The Executive’s assistance will include
signing all applications 

 

6

 

for copyright and
patent applications and other papers, cooperating in legal proceedings and
taking any other steps considered desirable by Cinergy.

 

12.           Breach of this Agreement.  Because the Executive’s services are unique
and because the Executive has access to Confidential Information and
Intellectual Work Product, the parties agree that Cinergy would be damaged
irreparably in the event any of the provisions of Sections 8, 9, 10, 11 and 13
were not performed in accordance with their specific terms or were otherwise
breached and that money damages would be an inadequate remedy for any such
non-performance or breach.  In the event
that the Executive breaches or threatens to breach any provision of this
Agreement or the Waiver and Release, the Executive agrees that Cinergy shall be
entitled to seek any and all equitable and legal relief provided by law,
specifically including immediate and permanent injunctive relief to prevent any
breach or threatened breach of any of such provisions and to enforce such
provisions specifically (without posting a bond or other security).  The Executive hereby waives any claim that
Cinergy has an adequate remedy at law. 
In addition, and to the extent not prohibited by law, the Executive
agrees that Cinergy shall be entitled to an award of all costs and attorneys’
fees reasonably incurred by Cinergy in any successful effort to enforce the
terms of this Agreement.  The Executive
agrees that the foregoing relief shall not be construed to limit or otherwise
restrict Cinergy’s ability to pursue any other remedy provided by law,
including the recovery of any actual, compensatory or punitive damages.  Moreover, if the Executive pursues any claims
that he has waived in the Waiver and Release or otherwise breaches this
Agreement, (i) the Executive agrees to immediately reimburse the Company for
all amounts received by the Executive pursuant to this Agreement to the fullest
extent permitted by law, and (ii) the Company will be relieved of any and all
obligations to make future payments to the Executive pursuant to this
Agreement.

 

13.           Return of Corporate Property.  Except as otherwise provided in this
Agreement, the Executive agrees to return to Cinergy all keys, identification
badges, electronic passes, credit cards, computer programs, and other property
belonging to Cinergy when requested and to do so by Cinergy’s representative.

 

14.           Continuing
Obligations.  The Executive
hereby affirms and acknowledges the Executive’s continuing obligations to
comply with the post-termination covenants contained in this Agreement,
including, but not limited to, the provisions of Sections 7, 8, 9, 10, 11, 12
and 13 of this Agreement and the Waiver and Release.  The Executive acknowledges that the
restrictions contained therein are valid and reasonable in every respect, are
necessary to protect Cinergy’s legitimate business interests and hereby
affirmatively waives any claim or defense to the contrary.

 

15.           No
Admission of Liability. 
The parties acknowledge that this Agreement is entered into solely for
the purpose of ending their employment relationship on an amicable basis and
shall not be construed as an admission of liability or wrongdoing by any party
and that each party expressly denies any such liability or wrongdoing.

 

16.           No
Reliance.           The
Executive does not rely, and has not relied, upon any representation or
statement made by Cinergy or by any of Cinergy’s employees, officers, agents,
stockholders, directors or attorneys with regard to the subject matter, basis
or effect of this Agreement other than those specifically contained
herein.  The Executive expressly agrees
to defend, indemnify and hold harmless Cinergy and its directors, officers,
employees, agents, representatives and insurers from and against any and all
tax assessments, tax liens, penalties or interest assessed by the Internal
Revenue Service, or any other federal, state or 

 

7

 

local taxing authority against the
Executive on account of, arising out of or in any way connected with this
Agreement.  Notwithstanding the
foregoing, in
the event that any benefits paid or payable to the Executive or for his benefit
pursuant to the terms of this Agreement or any other plan or arrangement in
connection with, or arising out of, his employment with Cinergy or a change in
ownership or effective control of Cinergy or of a substantial portion of its
assets (“Payments”) would be subject to any excise tax pursuant to Section
4999 of the Internal Revenue Code of 1986, as amended, then the Executive
will be entitled to receive an additional payment (a “Gross-Up Payment”) in an
amount such that after payment by the Executive of all taxes (including any
interest, penalties, additional tax, or similar items imposed with respect
thereto and the excise tax), including any excise tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to
the excise tax imposed upon or assessable against the Executive due
to the Payments.

 

17.           Severability.  The parties agree that each and every
paragraph, sentence, clause, term and provision of this Agreement is severable
and that, if any portion of this Agreement should be deemed not enforceable for
any reason, such portion shall be stricken and the remaining portion or
portions thereof should continue to be enforced to the fullest extent permitted
by applicable law.

 

18.           Consultation With Attorney
Advised.  The Executive is advised to consult with an
attorney prior to executing this Agreement.  The Executive acknowledges being given that
advice.  The Executive represents that he
has read and fully understands all of the provisions of this Agreement.  The Executive represents that he is
voluntarily signing this Agreement.

 

19.           Binding Effect of Agreement.   This Agreement, once signed by each of the
Executive and the Chief Executive Officer of Cinergy Corp., will be binding upon and will
operate for the benefit of the heirs, executors, administrators, assigns, and
successors in interest of the Executive and Cinergy.  Cinergy agrees that in the event of a sale,
merger, acquisition, or other change in structure (including the cessation or
restructuring of any part of Cinergy’s business) and/or ownership, Cinergy will
ensure that the contract language pertaining to the transaction confirms the
continuing liability of Cinergy (and its assigns and successors in interest) to
the Executive under this Agreement.  The
Executive agrees that Cinergy Services, Inc. (and/or any of its authorized
employees) is authorized to act for Cinergy with respect to all aspects
pertaining to this Agreement, including the administration and interpretation
of this Agreement.

 

20.           Complete Agreement.  Except as otherwise expressly provided in this
Agreement, the terms of this Agreement constitute the entire Agreement between
the parties and supersede all previous communications, representations, and
agreements, oral or written, between the parties with respect to the subject
matter of this Agreement.  No agreement
or understanding modifying this Agreement will be binding on either party
unless it is in writing and signed by an authorized representative of the party
sought to be bound.  If any part of this
Agreement is adjudged by a court of competent jurisdiction (or the
arbitrator(s) pursuant to Section 21) to be contrary to law, then this
Agreement will, in all other respects, remain effective and binding to the full
extent permitted by law.

 

8

 

21.           Arbitration.

 

a.             Any dispute between the parties under this
Agreement, the breach thereof, the Executive’s employment with Cinergy, or the
termination thereof, shall be resolved (except as provided below) through
informal arbitration by an arbitrator selected under the rules of the American
Arbitration Association (located in Cincinnati, Ohio) and the arbitration shall
be conducted in that location under the rules of said Association, to the
extent they do not conflict with this Agreement.

 

b.             Within thirty days of the notice of a demand
for arbitration, both parties shall exchange with one another documents in
their respective possession that are relevant to the dispute.  There shall be no interrogatories or
depositions taken in preparation for the arbitration; provided, however,
that the arbitrator may permit limited deposition discovery in extraordinary
circumstances and if necessary to avoid manifest injustice.  The grieving party shall file a written
statement explaining his or its claim, including relevant documentation, within
forty-five days of the notice for arbitration; the opposing party shall respond
within thirty days thereafter; and the grieving party may reply within fifteen
days of the response.   After this period
of limited discovery, a live hearing before the arbitrator will occur.  The arbitrator shall have the right only to
interpret and apply the provisions of this Agreement and may not change any of
its provisions.  The determination of the
arbitrator shall be conclusive and binding upon the parties and judgment upon
the same may be entered in any court having jurisdiction thereof.  The arbitrator shall give written notice to
the parties stating his or their determination, and shall furnish to each party
a signed copy of such determination.

 

c.             The expenses of arbitration will be borne
equally by the Executive and the Company, and each party will bear its own
costs, including attorneys’ fees; provided, however, that the arbitrator shall
have the power to award such expenses and costs, including attorneys’ fees, to
the prevailing party in accordance with applicable law and to require Cinergy
at the beginning of the proceedings to fully or partially reimburse (or provide
an advance to) the Executive for expenses (but not for costs, including
attorneys’ fees) in the event the Executive can demonstrate that the amount of
the expenses is an unreasonable impediment to adjudication of his claims in
arbitration.  If the arbitrator awards a
monetary amount to either party in excess of $1,000,000, the party against whom
the award was made may seek judicial resolution of the dispute under a de novo
standard before any court with appropriate jurisdiction over the matter.

 

d.             Notwithstanding
the foregoing, Cinergy shall not be required to seek or participate in arbitration
regarding any breach by the Executive of his agreements in Sections 8, 9, 10,
11 or 13 hereof, but may pursue its remedies
for such breach in a court of competent jurisdiction in Cincinnati, Ohio.  Any arbitration or action pursuant to this
Section will be governed by and construed in accordance with the substantive
laws of the State of Ohio, without giving effect to the principles of conflict
of laws of such State.

 

22.           Governing Law.  This Agreement will be interpreted, enforced,
and governed under the laws of the State of Ohio, without regard to any
principles of conflicts of laws.

 

9

 

IN WITNESS
WHEREOF, the parties have caused this Agreement to be executed, effective as of
the date above written.

 

	
  CINERGY
  SERVICES, INC.

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/
  James E. Rogers

  	
   

  	
  /s/
  William J. Grealis

  	
   

  
	
   

  	
  James
  E. Rogers 

  	
  William
  J. Grealis

  
	
   

  	
  Chairman
  and Chief Executive Officer

  	
   

  
					

 

10

 

EXHIBIT A

 

*****

 

WAIVER AND RELEASE AGREEMENT

 

THIS WAIVER AND RELEASE AGREEMENT (this “Waiver and Release”) is entered into by and between
William J. Grealis (the “Executive”) and Cinergy Services, Inc. (the “Company”)
(collectively, the “Parties”).

 

WHEREAS,
the Parties have entered into the Retirement and Consulting Agreement dated May
5, 2005 (the “Agreement”);

 

WHEREAS,
the Executive’s employment has been terminated in accordance with the terms of
the Agreement;

 

WHEREAS,
the Executive is required to sign this Waiver and Release in order to receive
the payment of certain compensation under the Agreement following termination
of employment; and

 

WHEREAS,
the Company has agreed to sign this Waiver and Release.

 

NOW, THEREFORE, in consideration of the promises and agreements contained
herein and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, and intending to be legally bound, the
Parties agree as follows:

 

1.             This Waiver and Release is
effective on the date hereof and will continue in effect as provided herein.

 

2.             In
consideration of the payments to be made and the benefits to be received by the
Executive pursuant to the Agreement (the “Benefits”), which the Executive
acknowledges are in addition to payment and benefits to which the Executive
would be entitled to but for the Agreement, the Executive, on behalf of
himself, his heirs, representatives, agents and assigns by dower or otherwise
hereby COVENANTS NOT TO SUE OR OTHERWISE VOLUNTARILY PARTICIPATE IN ANY LAWSUIT
AGAINST, FULLY RELEASES, INDEMNIFIES, HOLDS HARMLESS and OTHERWISE FOREVER
DISCHARGES (i) Cinergy, (ii) its compensation, benefit, incentive (including,
but not limited to, individual incentive, annual incentive, long-term incentive
and annual bonus), pension, welfare and other plans and arrangements, and any
predecessor or successor to any such plans and arrangements and (iii) any of
its current or former officers, directors, agents, executives, employees,
attorneys, insurers, shareholders, predecessors, successors or assigns, from
any and all actions, charges, claims, demands, damages or liabilities of any
kind or character whatsoever, known or unknown, which the Executive now has or
may have had whether or not based on or arising out of the Executive’s
employment relationship with Cinergy or the termination of that employment
relationship through the date of execution of this Waiver and Release, other
than workers’ compensation claims filed prior to the date of execution of this
Waiver and Release.  The Executive
acknowledges and understands that in the event the Executive files a charge or
complaint with the Equal Employment Opportunity Commission (“EEOC”), the Ohio
Civil Rights Commission (“OCRC”), the Indiana Civil Rights Commission (“ICRC”),

 

A-1

 

the Texas Workforce Commission Civil Rights Division (“TWCCRD”), the
Occupational Safety and Health Administration (“OSHA”) or the Secretary of
Labor, the Executive shall be entitled to no relief, reinstatement,
remuneration, damages, back pay, front pay, or compensation whatsoever from
Cinergy as a result of such charge or complaint.  The Executive understands and agrees that he
is waiving and releasing any and all actions and causes of action, suits,
debts, claims, complaints and demands of any kind whatsoever, in law or in
equity, including, but not limited to, the following:

 

a.             Those
arising under any federal, state or local statute, ordinance or common law
governing or relating to the Parties’ employment relationship including, but
not limited to, (i) any claims on account of, arising out of or in any way
connected with the Executive’s hiring by Cinergy, employment with Cinergy or
the termination of that employment; (ii) any claims alleged or which could have
been alleged in any charge or complaint against Cinergy, including, but not
limited to, those with the EEOC, OCRC, ICRC, TWCCRD, OSHA and the Secretary of
Labor; (iii) any claims relating to the conduct, including action or inaction,
of any executive, employee, officer, director, agent or other representative of
Cinergy; (iv) any claims of discrimination, harassment or retaliation on any
basis; (v) any claims arising from any legal restrictions on an employer’s
right to separate its employees; (vi) any claims for personal injury,
compensatory or punitive damages, front pay, back pay, liquidated damages,
treble damages, legal and/or attorneys’ fees, expenses and litigation costs or
other forms of relief; (vii) any claims for compensation and benefits; (viii)
any cause of action or claim that could have been asserted in any litigation or
other dispute resolution process, regardless of forum (judicial, arbitral or
other), against any employee, officer, director, agent or other representative
of Cinergy; (ix) any claim for, or right to, arbitration, and any claim alleged
or which could have been alleged in any charge, complaint or request for
arbitration against Cinergy; (x) any claim on account of, arising out of or in
any way connected with any employment agreement between the Executive and
Cinergy; (xi) any claim on account of, arising out of or in any way connected
with the alleged termination of the Executive’s employment for “good reason”; (xii) any claim on account of,
arising out of or in any way connected with medical, dental, life insurance or
other welfare benefit plan coverage; and (xiii) all other causes of action
sounding in contract, tort or other common law basis, including, but not
limited to: (a) the breach of any alleged oral or written contract; (b)
negligent or intentional misrepresentations; (c) wrongful discharge; (d) just
cause dismissal; (e) defamation; (f) interference with contract or business
relationship; (g) negligent or intentional infliction of emotional distress;
(h) promissory estoppel; (i) claims in equity or public policy; (j) assault;
(k) battery; (l) breach of employee handbooks, manuals or other policies; (m)
breach of fiduciary duty; (n) false imprisonment; (o) fraud; (p) invasion of
privacy; (q) whistleblower claims; and (r) negligence, negligent hiring,
retention or supervision; and

 

b.             Those
arising under any law relating to sex, age, race, color, religion, handicap or
disability, harassment, veteran status, sexual orientation, retaliation, or
national origin or Appalachian origin discrimination including, without 

 

A-2

 

limitation, any rights or claims arising under Title VII of the Civil
Rights Act of 1866 and 1964, as amended, 42 U.S.C. §§ 1981 and 2000(e) et
seq.; the Civil Rights Act of 1991; the Age Discrimination in Employment
Act of 1967, as amended, 29 U.S.C. §§ 621 et  seq., as amended by
the Older Workers Benefit Protection Act; the Americans with Disabilities Act
of 1990, as amended, 42 U.S.C. §§ 12,101 et  seq.; Sections 806
and 1107 of the Sarbanes-Oxley Act of 2002; the Fair Labor Standards Act of
1938, 29 U.S.C. §§ 201 et  seq.; the National Labor Relations Act,
29 U.S.C. §§ 151 et  seq.; the Occupational Safety and Health Act,
29 U.S.C. §§ 651 et  seq.; the Worker Adjustment and Retraining Notification
Act, 29 U.S.C. §§ 2101, et  seq.; Ohio Civil Rights Statutes, Ohio
Revised Code Chapter 4112 et  seq.; the Ohio Whistleblower Act,
Ohio Revised Code § 4113.51, et  seq.; Ohio Workers’ Compensation
Retaliation Statute, Ohio Revised Code § 4123.90; the Indiana Civil Rights Act,
IC § 22-9-1-12.1 et  seq.; Indiana Equal Pay Statute, IC §
20-8.1-6.1 et  seq.; Indiana Workers’ Compensation Statute, IC §
22-3-1-1 et  seq., Indiana Whistleblower Statute, IC § 22-5-3-3 et
seq.; the Texas Commission on Human Rights Act, Tex. Lab. Code. Ann.
§§21.001 et seq.; Tex. Lab. Code. Ann. §§21.051; Tex. Lab. Code. Ann.
§§21.055, Texas Workers’ Compensation Act, Texas Whistleblower Act, as such
statutes may be amended from time to time; and

 

c.             Those
arising out of the Employee Retirement Income Security Act of 1974; and

 

d.             Those
arising out of the Family and Medical Leave Act, 29 U.S.C. §§ 2601 et  seq.;
and

 

e.             Those
arising under the civil rights, labor and employment laws of any state,
municipality or local ordinance; and

 

f.              Any
claim for reinstatement, compensatory damages, back pay, front pay, interest,
punitive damages, special damages, legal and/or attorneys’ fees, expenses and
litigation costs including expert fees; and

 

g.             Any
other federal or state statute that affords employees or individuals protection
of any kind whatsoever.

 

3.             The Parties acknowledge that it
is their mutual and specific intent that this Waiver and Release fully complies
with the requirements of the Older Workers Benefit Protection Act (29 U.S.C. §
626) and any similar law governing the release of claims.  Accordingly, the Executive hereby
acknowledges that:

 

a.             The
Executive has consulted with an attorney prior to executing this Waiver and
Release and acknowledges being given the advice to do so.  The Executive
represents that the Executive has read and fully understands all of the
provisions of this Waiver and Release.  The Executive represents that the
Executive is voluntarily signing this Waiver and Release.

 

b.             The
Executive has been offered at least twenty-one (21) days in which to review and
consider this Waiver and Release.

 

A-3

 

c.             The
Executive waives any right to assert any claim or demand for reemployment with
Cinergy.

 

4.             The Parties agree that this
Waiver and Release shall not become effective and enforceable until the date
this Waiver and Release is signed by both Parties or seven (7) calendar days
after its execution by the Executive, whichever is later.  The Executive may revoke this Waiver and
Release for any reason by providing written notice of such intent to the
Company within seven (7) days after he has signed this Waiver and Release,
thereby forfeiting the Executive’s right to receive any Benefits and rendering
this Waiver and Release null and void in its entirety.

 

5.             The Executive hereby affirms and
acknowledges his continued obligations to comply with the post-termination
covenants contained in the Agreement, including but not limited to, the
provisions of Sections 8, 9, 10, 11, 12 and 13 of the Agreement.  The Executive acknowledges that the
restrictions contained therein are valid and reasonable in every respect, are
necessary to protect Cinergy’s legitimate business interests and hereby
affirmatively waives any claim or defense to the contrary.

 

6.             In the event that the Executive
breaches or threatens to breach any provision of this Waiver and Release, he
agrees that Cinergy shall be entitled to seek any and all equitable and legal
relief provided by law, specifically including immediate and permanent
injunctive relief.  The Executive hereby
waives any claim that Cinergy has an adequate remedy at law.  In addition, and to the extent not prohibited
by law, the Executive agrees that Cinergy shall be entitled to an award of all costs
and attorneys’ fees incurred by Cinergy in any successful effort to enforce the
terms of this Waiver and Release.  The Executive
agrees that the foregoing relief shall not be construed to limit or otherwise
restrict Cinergy’s ability to pursue any other remedy provided by law,
including the recovery of any actual, compensatory or punitive damages.  Moreover, if the Executive pursues any claims
against the Company subject to the foregoing Waiver and Release, the Executive
agrees to immediately reimburse the Company for the value of all Benefits
received to the fullest extent permitted by law.

 

7.             Cinergy hereby releases the
Executive, his heirs, representatives, agents and assigns from any and all
known claims, causes of action, grievances, damages and demands of any kind or
nature based on acts or omissions committed by the Executive during and in the
course of his employment with the Company provided such act or omission was
committed in good faith and occurred within the scope of his normal duties and
responsibilities.

 

8.             The Parties acknowledge that
this Waiver and Release is entered into solely for the purpose of ending their
employment relationship on an amicable basis and shall not be construed as an
admission of liability or wrongdoing by either Party and that both Cinergy and the
Executive have expressly denied any such liability or wrongdoing.

 

9.             Each of the promises and
obligations shall be binding upon and shall inure to the benefit of the heirs,
executors, administrators, assigns and successors in interest of each of the
Parties.

 

A-4

 

10.           The Parties agree that each and every paragraph, sentence,
clause, term and provision of this Waiver and Release is severable and that, if
any portion of this Waiver and Release should be deemed not enforceable for any
reason, such portion shall be stricken and the remaining portion or portions
thereof should continue to be enforced to the fullest extent permitted by
applicable law.

 

11.           This Waiver and Release shall be governed by and interpreted
in accordance with the laws of the State of Ohio without regard to any
applicable state’s choice of law provisions.

 

12.           The Executive represents and acknowledges that in signing
this Waiver and Release he does not rely, and has not relied, upon any
representation or statement made by Cinergy or by any of Cinergy’s employees,
officers, agents, stockholders, directors or attorneys with regard to the
subject matter, basis or effect of this Waiver and Release other than those
specifically contained herein.

 

13.           This Waiver and Release represents the entire agreement
between the Parties concerning the subject matter hereof, shall supersede any
and all prior agreements which may otherwise exist between them concerning the
subject matter hereof (specifically excluding, however, the post-termination
obligations contained in the Agreement or any other legally-binding document),
and shall not be altered, amended, modified or otherwise changed except by a
writing executed by both Parties.

 

14.           Capitalized words and terms used throughout this Waiver and
Release that are not defined in this Waiver and Release shall have the meaning
given to such word or term in the Agreement.

 

A-5

 

PLEASE READ CAREFULLY.  WITH RESPECT TO THE EMPLOYEE, THIS

 

WAIVER AND RELEASE INCLUDES A COMPLETE
RELEASE OF ALL KNOWN

 

AND UNKNOWN CLAIMS.

 

IN WITNESS WHEREOF, the Parties have themselves signed, or
caused a duly authorized agent thereof to sign, this Waiver and Release on
their behalf and thereby acknowledge their intent to be bound by its terms and
conditions.

 

	
  EMPLOYEE

  	
  CINERGY
  SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signed:

  	
  /s/
  William J. Grealis

  	
   

  	
  By:

  	
  /s/ James
  E. Rogers

  	
   

  
	
   

  	
   

  
	
  Printed: 

  	
  William
  J. Grealis

  	
  Title: 

  	
  Chairman
  and Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
  May 5,
  2005

  	
   

  	
  Dated:

  	
  May 5,
  2005

  	
   

  
									

 

A-6

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