Adopted by the Board of Directors
of CINergy Corp. on October 18, 1994
CINERGY CORP.
ANNUAL INCENTIVE PLAN
INTRODUCTION
On October 18, 1994, CINergy Corp. adopted a short-term incentive
compensation plan known as the "CINergy Corp. Annual Incentive Plan" (the
"Plan") for the exclusive benefit of eligible employees of CINergy Corp. and
its subsidiaries (the Employers"). Upon the "Effective Time of the Mergers"
as defined in this document, CINergy Corp. will be the holding company for PSI
Energy, Inc. and The Cincinnati Gas & Electric Company. The Plan allows the
Employers to implement annual incentive compensation programs in which certain
employees are granted awards payable in cash based upon the extent to which
certain predetermined goals are attained during the applicable calendar year.
The Plan, effective as of the Effective Time of the Mergers, is set
forth in its entirety.
ARTICLE 1
DEFINITIONS
Whenever used in this document, the following terms shall have the
respective meanings set forth below, unless a different meaning is plainly
required by the context:
1.1 "Actual Incentive" means, with respect to each Participant, the
Minimum Incentive which when adjusted in the manner set forth in
Article 6 (Annual Performance Award), constitutes the percentage
applied to a Participant's Earnings as of the applicable date as
determined by an Employer's Board of Directors (or with respect to
each Executive Officer, the AIP Committee (as defined in Article
20 (Executive Officers)) which is the actual amount of incentive
compensation opportunity available for a particular Performance
Period. However, a Participant's Actual Incentive may not exceed
his Maximum Incentive.
1.2 "Annual Performance Award" means, with respect to each
Participant, the short-term incentive compensation award to which
a Participant becomes entitled upon the attainment of certain
Corporate Target Goals and Individual Goals for a particular
Performance Period, and which is calculated in the manner set
forth in Article 7 (Annual Performance Award).
1.3 "Annual Program" means, with respect to each Employer, the annual
short term incentive compensation program adopted by that
Employer's Board of Directors to implement the Plan as set forth
in Article 4 (Employer's Election to Participate in Plan).
1.4 "Beneficiary" means, with respect to each Participant, the
recipient designated by the Participant who is, upon the
Participant's death, entitled in accordance with the Plan's terms
to receive the benefits to be paid with respect to the
Participant.
1.5 "Chief Executive Officer" means the Employee elected by an
Employer's Board of Directors to serve as the chief executive
officer of that Employer.
1.6 "CINergy" means CINergy Corp., a Delaware corporation, and any
corporation which shall succeed to its business as described in
Article 19 (Continuance by a Successor).
1.7 "CINergy's Board of Directors" means the duly constituted board of
directors of CINergy on the applicable date.
1.8 "CINergy's Committee" means the duly designated Compensation
Committee of CINergy's Board of Directors.
1.9 "Corporate Target Goal" means an objective performance criterion
pertaining to an Employer's performance, efficiency, or
profitability including, but without limitation, stock price,
market share, sales, earnings per share, costs, net operating
income, cash flow, fuel cost per million BTU, cost per
kilowatt-hour, retained earnings, or return on equity, used in
determining whether a Participant is entitled to receive an Annual
Performance Award at the end of a Performance Period. A Corporate
Target Goal is considered objective if a third party having
knowledge of the relevant facts could determine whether the goal
is met.
1.10 "Covered Employee" shall have the meaning set forth in Code
Paragraph 162(m)(3).
1.11 "Earnings" means (a) with respect to an Exempt Employee, the
amount of the Employee's total annual base salary (based on the
Employee's monthly base salary received as remuneration for
services performed for the Performance Period, exclusive of any
allowances, premiums, bonuses, overtime, or other forms or types
of compensation) for the Performance Period; provided, however,
that with respect to each Executive Officer, Earnings means the
Executive Officer's monthly base salary (exclusive of any
allowances, premiums, bonuses, overtime, or other forms or types
of compensation) determined as of the first day of the applicable
Performance Period multiplied by 12, and (b) with respect to
either a Non-Exempt Employee or a Union Employee, the amount of
the Employee's total annual base wage (based on the Employee's
hourly base rate of pay received for services performed for the
Performance Period, exclusive of any allowances, premiums,
bonuses, overtime, or other forms or types of compensation) for
the Performance Period.
1.12 "Effective Time of the Mergers" means "Effective Time" as defined
in the Amended and Restated Agreement and Plan of Reorganization
by and among The Cincinnati Gas & Electric Company, PSI Resources,
Inc., PSI Energy, Inc., CINergy, and CINergy Sub, Inc., dated as
of December 11, 1992, as subsequently amended and restated.
1.13 "Employee" means any person who, at any time on or after the
Effective Time of the Mergers, is (a) in the employ of an
Employer, (b) in the employ of an Employer, but whose time is
allocated 100 percent to another Employer, or (c) in the employ of
an Employer, but who is assigned full-time to another Employer.
1.14 "Employer" means CINergy and all of its directly or indirectly
held majority or greater-owned subsidiaries.
1.15 "Employer's Board of Directors" means the duly constituted board
of directors of an Employer on the applicable date.
1.16 "Executive Officer" means an officer of CINergy who, as of the
beginning of a Performance Period is an "executive officer" within
the meaning of Rule 3b-7 promulgated under the 1934 Act.
1.17 "Exempt Employee" means an Employee who is regularly employed by
his Employer for 30 or more hours per week, whose pay is
customarily computed on a monthly basis, and whose employment is
not subject to FLSA overtime and record keeping provisions.
1.18 "FLSA" means the Fair Labor Standards Act of 1938, as amended from
time to time, and interpretive rulings and regulations.
1.19 "Incentive Factor" means the numerical variable assigned by an
Employer's Board of Directors which corresponds to the extent to
which a Corporate Target Goal or an Individual Goal has been met
for a particular Performance Period.
1.20 "Individual Goal" means an objective or subjective performance
criterion pertaining to individual effort as to enhancement of
either individual performance or achievement or attainment of
Corporate Target Goals or other Individual Goals used in
determining whether a Participant is entitled to receive an Annual
Performance Award at the end of a Performance Period. An
Individual Goal is considered objective if a third party having
knowledge of the relevant facts could determine whether the goal
is met; otherwise an Individual Goal is considered subjective.
1.21 "Maximum Incentive" means, with respect to each Participant, the
percentage applied to a Participant's Earnings as of the
applicable date determined by an Employer's Board of Directors to
be the appropriate maximum incentive compensation opportunity for
a particular Performance Period.
1.22 "Minimum Incentive" means, with respect to each Participant, the
percentage applied to a Participant's Earnings as of the
applicable date determined by an Employer's Board of Directors to
be the appropriate minimum incentive compensation opportunity for
a particular Performance Period.
1.23 "1934 Act" means the Securities Exchange Act of 1934, as amended
from time to time, and interpretive rulings and regulations.
1.24 "Non-Exempt Employee" means an Employee who is regularly employed
by his Employer for 30 or more hours per week, whose pay is
customarily computed on an hourly, weekly, or bi-weekly basis,
whose employment is subject to FLSA overtime and record keeping
provisions, and who is not assigned to an employment position
covered by a collective bargaining agreement to which his Employer
is a party.
1.25 "Participant" means any Exempt Employee, Non-Exempt Employee, or
Union Employee selected by an Employer's Board of Directors to
participate in the Employer's Annual Program pursuant to Article 6
(Eligibility).
1.26 "Performance Period" means the period of time over which
performance with respect to a Corporate Target Goal or an
Individual Goal is measured. Each Performance Period shall
consist of a one year period beginning on January 1 of each
calendar year and ending on December 31 of the same calendar year.
The term "Performance Period" shall include any performance period
in effect under the "PSI Resources, Inc. Annual Incentive Plan,"
as amended from time to time, and the "PSI Energy, Inc. Annual
Incentive Plan," as amended from time to time, as of the Effective
Time of the Mergers.
1.27 "Plan" means the short-term incentive compensation plan known as
the "CINergy Corp. Annual Incentive Plan," as amended from time to
time. Effective as of the Effective Time of the Mergers, this
document sets forth the Plan.
1.28 "Total Disability" means, with respect to any Participant, a
mental or physical condition as result of an illness or injury
which, in the judgment of an Employer's Board of Directors, based
upon medical reports and other evidence satisfactory to the
Employer's Board of Directors prevents the Participant from
engaging in any gainful occupation for which the Participant is
reasonably qualified by reason of education, training, or
experience.
1.29 "Union Employee" means an Employee who is regularly employed by
his Employer for 30 or more hours per week, whose pay is
customarily computed on an hourly, weekly, or bi-weekly basis,
whose employment is subject to FLSA overtime and record keeping
provisions, and who is assigned to an employment position covered
by a collective bargaining agreement to which his Employer is a
party.
The uses of singular and masculine words are for practical purposes only
and shall be deemed to include the plural and feminine, respectively, unless
the context plainly indicates a distinction. Certain other definitions, as
required, appear in the following Articles of the Plan.
ARTICLE 2
EFFECTIVE DATE OF PLAN
The Plan's provisions, as set forth in this document, are effective as
of the Effective Time of the Mergers.
ARTICLE 3
PURPOSE OF PLAN
The Plan's purposes are to benefit Employers, shareholders, and
ratepayers by the accomplishment of specific challenging and demanding
corporate or personalized goals, enhancement of teamwork, motivation, high
achievement, and the attraction and retention of qualified Employees. Upon
the accomplishment of these corporate or personalized goals, the Plan provides
a reward for performance and maximum effort by Employees who contribute to an
Employer's success. The Plan is an annual incentive compensation plan in
which an Exempt Employee, a Non-Exempt Employee, or a Union Employee who is
selected to participate in an Employer's Annual Program under the Plan is
granted an award payable in cash, but only to the extent that certain
predetermined goals are attained during the applicable calendar year used to
measure performance.
ARTICLE 4
EMPLOYER'S ELECTION TO PARTICIPATE IN PLAN
Each Employer, by action of the Employer's Board of Directors, may elect
to participate in the Plan by adopting an Annual Program. Each Employer's
Annual Program shall consist of Corporate Target Goals, Individual Goals,
Actual Incentives, Incentive Factors, Maximum Incentives, and Minimum
Incentives which will further the Employer's business objectives consistent
with the Plan's purposes. An Employer's Annual Program may be based solely on
Corporate Target Goals, Individual Goals, or a combination of both Corporate
Target Goals and Individual Goals. The determinations made by an Employer's
Board of Directors under this Article shall be subject to approval by
CINergy's Committee before any Annual Performance Awards are made.
ARTICLE 5
EFFECT OF PLAN ON OTHER PLANS
At the Effective Time of the Mergers, the short-term incentive
compensation plans for PSI Energy, Inc. and PSI Resources, Inc. known
respectively as the "PSI Energy, Inc. Annual Incentive Plan" adopted effective
January 1, 1987, as amended from time to time, and the "PSI Resources, Inc.
Annual Incentive Plan" adopted effective as of January 1, 1991, shall be
merged into the Plan and entitlement to any awards shall be administered in
accordance with the Plan. In addition, employees of The Cincinnati Gas &
Electric Company as of the Effective Time of the Mergers shall be eligible to
participate on a prorated basis in the Performance Period in effect at the
Effective Time of the Mergers; provided, however, that any such employee
satisfies the eligibility requirements of Article 6 (Eligibility).
ARTICLE 6
ELIGIBILITY
(a) The group of Employees eligible to participate in the Plan shall
consist of Exempt Employees, Non-Exempt Employees, and Union Employees who
have the potential to contribute to an Employer's future success.
(b) From time to time, the Chief Executive Officer of an Employer may
recommend to the Employer's Board of Directors that any eligible Employee
(other than an Executive Officer) participate in an Annual Program under the
Plan. After reviewing the recommendations, and after considering the duties
of each recommended Employee, his present and potential contribution to the
Employer's success, his other compensation provided by his Employer, and any
other factors as it deems relevant, the Employer's Board of Directors shall
select those Employees who will participate in its Annual Program under the
Plan. Notwithstanding the foregoing, the AIP Committee (as defined in Article
20 (Executive Officers)), shall select those Executive Officers who will
participate in the Plan. When an eligible Employee becomes a Participant in
an Employer's Annual Program under the Plan at other than the beginning of a
Performance Period, the amount of any Annual Performance Award to which he may
become entitled shall be adjusted to reflect his actual time of service as a
Participant during the Performance Period.
(c) The determinations made by an Employer's Board of Directors under
this Article shall be subject to approval by CINergy's Committee before any
Annual Performance Awards are made.
ARTICLE 7
ANNUAL PERFORMANCE AWARD
The Annual Performance Award, with respect to each Participant, for each
Performance Period shall be calculated as follows:
(a) The appropriate weight for achieving a particular Corporate Target
Goal shall be determined by multiplying the Incentive Factor attributable to
the extent to which the particular Corporate Target Goal has been met for the
Performance Period times the weight (expressed as a percentage) assigned to
that Corporate Target Goal. If there are two or more Corporate Target Goals
for a particular Performance Period, then the weight for achieving each
Corporate Target Goal shall be calculated in the manner set forth in the
immediately preceding sentence;
(b) The appropriate weight for achieving a particular Individual Goal
shall be determined by multiplying the Incentive Factor attributable to the
extent to which the particular Individual Goal has been met for the
Performance Period times the weight (expressed as a percentage) assigned to
that Individual Goal. If there are two or more Individual Goals for a
particular Performance Period, then the weight for achieving each Individual
Goal shall be calculated in the manner set forth in the immediately preceding
sentence;
(c) After the weight for achieving each Corporate Target Goal and
Individual Goal for the particular Performance Period has been calculated in
the manner set forth in Paragraphs (a) and (b), the resulting percentages
shall be added and the total sum shall be multiplied by the Participant's
Minimum Incentive in order to determine the Participant's Actual Incentive;
and
(d) The Participant's Actual Incentive shall then be multiplied by the
Participant's Earnings for the applicable Performance Period. The resulting
number, expressed in terms of the nearest whole dollar, is the Participant's
Annual Performance Award.
Notwithstanding anything in the Plan to the contrary, an Employer's
Board of Directors may enhance a Participant's Annual Performance Award above
the maximum level otherwise compensable in recognition of exemplary
performance or achievement as to subjective Individual Goals.
ARTICLE 8
CORPORATE TARGET GOALS AND INDIVIDUAL GOALS
(a) The Corporate Target Goal for each Employer's Performance Period,
which Corporate Target Goal shall be applicable to all Participants, shall be
determined by the Employer's Board of Directors. When there are more than one
Corporate Target Goal for a particular Performance Period, the Employer's
Board of Directors may, but is not required to, assign each goal equal weight
and the Employer's Board of Directors may, but is not required to, condition
the entitlement to an Annual Performance Award upon the attainment of one or
more Corporate Target Goals.
(b) The Employer's Board of Directors may, but is not required to,
establish one or more Individual Goals for a Participant for each Performance
Period. When there are more than one Individual Goal for a Participant for a
particular Performance Period, the Employer's Board of Directors may, but is
not required to, assign each goal equal weight.
(c) The determinations made by an Employer's Board of Directors under
this Article shall be subject to approval by CINergy's Committee before any
Annual Performance Awards are made.
ARTICLE 9
DISTRIBUTION
After the determination and approval have been made under Article 7
(Annual Performance Award) as to the amount of Annual Performance Award to
which a Participant is entitled at the end of an Employer's Performance
Period, the resulting Annual Performance Award shall be paid to the
Participant in cash in one lump sum on the first business day of March
following the end of the Performance Period for which the Annual Performance
Award was made.
ARTICLE 10
CONDITIONS TO ANNUAL PERFORMANCE AWARDS
10.1 Government Regulations
The Plan shall be subject to all applicable laws, rules, and regulations
and to all approvals by any governmental agencies as may be required and is
designed to comply with Code Subsection 162(m).
10.2 Continued Employment
(a) A Participant whose employment with his Employer terminates by
reason of a quit, resignation, or discharge prior to the end of the particular
Performance Period shall be automatically divested of any interest in or to
any Annual Performance Award for that Performance Period. If a Participant
who has quit, resigned, or who has been discharged is re-employed by his
Employer prior to the end of the Performance Period in which the quit,
resignation, or discharge occurred, the Employee shall be reinstated as a
Participant for that Performance Period, but any Annual Performance Award
shall be adjusted to reflect the actual time of service of the re-employed
Participant during the Performance Period.
(b) A Participant whose employment with his Employer terminates by
reason of retirement or death prior to the end of the particular Performance
Period shall not necessarily be totally divested of his interest in or to any
Annual Performance Award for that Performance Period. Instead, a
determination shall be made by the Employer's Board of Directors with respect
to the retired or deceased Participant as to the amount of the Annual
Performance Award to which he would have been entitled had he been a
Participant on the last day of the applicable Performance Period as though the
retirement or death had not occurred. However, any determination shall be
adjusted to reflect the actual time of service of the retired or deceased
Participant during the Performance Period prior to the effective date of his
retirement or the date of his death.
(c) A Participant who during an applicable Performance Period has
incurred Total Disability shall not be totally divested of his interest in or
to any Annual Performance Award for that Performance Period. Instead, a
determination shall be made by the Employer's Board of Directors with respect
to the totally disabled Participant as to the amount of the Annual Performance
Award to which he would have been entitled had he not been totally disabled
during the applicable Performance Period. However, any determination shall be
adjusted to reflect the actual time of service of the totally disabled
Participant during the Performance Period.
(d) The determinations made by an Employer's Board of Directors under
this Article shall be subject to approval by CINergy's Committee before any
Annual Performance Award are made.
ARTICLE 11
BENEFICIARY
If a Participant dies prior to the date on which an Annual Performance
Award, or any installment thereof, is distributed, the Annual Performance
Award shall be paid to the highest priority person or persons surviving at the
time distribution is actually paid or commences. Distribution priorities are
as follows:
(a) The Participant's Beneficiary designated under the Participant's
last will and testament;
(b) The Participant's Beneficiary designated under his Employer's group
term life insurance plan;
(c) The Participant's surviving spouse;
(d) The Participant's surviving children, including adopted children;
(e) The Participant's surviving parents;
(f) The Participant's surviving brothers and sisters; or
(g) The Participant's estate.
Distribution of the Annual Performance Award to a Beneficiary shall be made on
the same date or dates as the Annual Performance Award would have been made to
the Participant as if then living.
ARTICLE 12
NON-ALIENATION OF BENEFITS
The Plan shall not in any manner be liable for, or subject to, the debts
or liabilities of any Participant or Beneficiary. No payee may assign any
payment due him under the Plan. No benefits at any time payable under the
Plan shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, attachment, garnishment, levy, execution, or
other legal or equitable process, or encumbrance of any kind.
ARTICLE 13
FUNDING POLICY AND METHOD
The Plan shall be totally unfunded so that CINergy or any Employer is
under merely a contractual duty to make payments when due under the Plan. No
benefit or promise to pay shall be secured in any way.
ARTICLE 14
CHANGE IN CONTROL
Notwithstanding anything in the Plan to the contrary, if a Change in
Control of CINergy occurs, each Corporate Target Goal and Individual Goal of
each Employer's Annual Program shall be deemed to have been fully satisfied at
the Maximum Incentive level and each Participant shall be entitled to receive
an Incentive Award in the same manner as though the Maximum Incentive level
had been obtained for the full Performance Period.
A Change in Control of CINergy shall occur if (a) any "person" or
"group" (within the meaning of Subsection 13(d) and Paragraph 14(d)(2) of the
1934 Act) becomes the "beneficial owner" (as defined in Rule 13d-3 under the
1934 Act) of more than 50 percent of the then outstanding voting stock of
CINergy, otherwise than through a transaction arranged by, or consummated with
the prior approval of, CINergy's Board of Directors; (b) CINergy's
shareholders approve a definitive agreement to merge or consolidate CINergy
with or into another corporation in a transaction in which neither CINergy nor
any of its subsidiaries or affiliates will be the surviving corporation, or to
sell or otherwise dispose of all or substantially all of CINergy's assets to
any person or group other than CINergy or any of its subsidiaries or
affiliates, other than a merger or a sale which will result in the voting
securities of CINergy outstanding prior to the merger or sale continuing to
represent at least 50 percent of the combined voting power of the voting
securities of the corporation surviving the merger or purchasing the assets;
or (c) during any period of two consecutive years, individuals who at the
beginning of that period constitute CINergy's Board of Directors (and any new
director whose election by the Board of Directors or whose nomination for
election by CINergy's shareholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of that period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of
CINergy's Board of Directors.
Notwithstanding the provisions of Article 18 (Amendment and
Termination), the provisions of this Article may not be amended by an
amendment to the Plan effected within three years following a Change in
Control.
ARTICLE 15
ADMINISTRATION
(a) The Plan shall be administered by CINergy's Committee which shall
consist of members of CINergy's Board of Directors who are disinterested
persons under Rule 16b-3 promulgated under the 1934 Act and successor rules
and, with respect to Covered Employees, outside directors under Code
Subsection 162(m). CINergy's Committee is authorized to establish all rules
and regulations and to appoint any agents as it deems appropriate for the
Plan's proper administration and to make any determinations under and to take
any steps in connection with the Plan for the benefits provided under the Plan
as it deems necessary or advisable. CINergy's Committee may require an
Employer to enter into agreements with each Participant as it deems
appropriate to reflect each Participant's interests under the Plan.
(b) CINergy's Committee shall have exclusive discretionary authority
and right to approve eligibility for participation in the Plan and to
interpret, construe, and regulate the Plan. The decision of CINergy's
Committee with respect to any questions arising as to the Employees selected
to participate in the Plan, the amount, and time of payment of benefits under
the Plan or any other matters concerning the Plan, including its
interpretation, construction, or regulation, shall be final, conclusive and
binding on the Employers, the Employers' Boards of Directors, Employees,
Participants, and Beneficiaries.
ARTICLE 16
MISCELLANEOUS
16.1 No Enlargement of Employee Benefits
This Plan is strictly a voluntary undertaking on the part of the
Employers and shall not be deemed to constitute a contract between the
Employers and any Employee or to be consideration for, or an inducement to, or
a condition of, the employment of any Employee. Nothing contained in the Plan
shall be deemed to give any Employee the right to be retained in the service
of any Employer or to interfere with the right of any Employer to discharge
any Employee at any time. No Employee shall have any right to benefits except
to the extent provided in the Plan. Nothing contained in the Plan shall be
deemed to give any Employee a continued entitlement to receive an Annual
Performance Award for any Performance Period. Any award under this Plan shall
not be deemed compensation for purposes of computing benefits or contributions
under any retirement plan of an Employer unless otherwise provided by that
plan, and shall not affect any benefits under any other Employer benefit plan
of any kind currently or subsequently in effect under which the availability
or amount of benefits is related to the level of compensation.
16.2 Notice of Address
Each Participant and Beneficiary entitled to benefits under the Plan
must file with CINergy's Committee, in writing, his post office address and
each change of post office address. Any communication, statement, or notice
addressed to a person at his latest post office address as filed with
CINergy's Committee will, upon deposit in the United States mail with postage
prepaid, be binding upon that person for all purposes of the Plan.
16.3 No Individual Liability
It is the Plan's express purpose and intention that, except as otherwise
required by law, no individual liability whatever shall attach to, or be
incurred by, any Employer, its shareholders, officers, employees, or members
of the board of directors of any Employer, under or by reason of any of the
Plan's terms or conditions. Each Participant shall be legally bound by the
Plan's provisions.
16.4 Delegation of Administrative Duties
Administrative duties imposed by this Plan may be delegated by CINergy's
Committee to an Employee of any Employer charged with those duties to the
extent not inconsistent with the provisions of Code Subsection 162(m).
16.5 Governing Laws
The Plan shall be construed and administered according to the laws of
the State of Delaware to the extent that those laws are not preempted by the
laws of the United States of America.
16.6 Risk of Participation
Nothing contained in the Plan shall be construed as an agreement by the
Plan or any Employer, its shareholders, officers, employees, or members of the
board of directors of any Employer, to indemnify anyone for any losses,
damages, costs and/or expenses resulting from participation in the Plan.
16.7 Headings
The headings of articles, sections, subsections, paragraphs or other
parts of the Plan are for convenience of reference only and do not define,
limit, construe or otherwise affect the contents of the Plan.
ARTICLE 17
CONTRIBUTIONS
No contributions to the Plan by Participants shall be required or
permitted under the Plan.
ARTICLE 18
AMENDMENT AND TERMINATION
CINergy, by resolution duly adopted by CINergy's Board of Directors,
shall have the right, authority, and power to alter, amend, modify, revoke, or
terminate the Plan at any time, and CINergy, by resolution of CINergy's Board
of Directors, shall also have the right, authority, and power to discontinue
or suspend the payment of benefits under the Plan.
ARTICLE 19
CONTINUANCE BY A SUCCESSOR
If CINergy is reorganized by way of merger, consolidation, transfer of
assets or otherwise, so that another corporation, partnership or person shall
succeed to all or substantially all of CINergy's business, the successor may
be substituted for CINergy under the Plan by adopting the Plan.
ARTICLE 20
EXECUTIVE OFFICERS
Notwithstanding any provision of the Plan to the contrary, this Article
will govern the terms of the Annual Performance Awards granted to Executive
Officers. This Article is designed to comply with Code Subsection 162(m) to
the extent applicable. All provisions in this Article, and any other
applicable provision of the Plan shall be construed in a manner to so comply.
(a) With respect to Executive Officers, the Plan shall be administered
by a committee (the "AIP Committee") consisting of two or more persons each of
whom is an "outside director" for purposes of Code Subsection 162(m). The AIP
Committee and CINergy's Committee may be the same committee provided that the
membership of CINergy's Committee satisfies the conditions set forth in the
preceding sentence.
(b) With respect to Participants who are Executive Officers as of the
beginning of a Performance Period, the AIP Committee shall establish the
Corporate Target Goals and Individual Goals for each Performance Period within
the time necessary to satisfy the requirements of Code Subsection 162(m).
Corporate Target Goals shall be based on objective performance criteria
pertaining to an Employer's performance, efficiency, or profitability
including, but without limitation, stock price, market share, sales, earnings
per share, costs, net operating incomes, cash flow, fuel cost per million BTU,
costs per kilowatt hour, retained earnings, or return on equity. Individual
Goals shall be based on objective or, with respect to separate awards under
the Plan, subjective performance criteria pertaining to an Executive Officer's
individual effort as to enhancement of either individual performance or
achievement or attainment of Corporate Target Goals or other Individual Goals.
Further, in the case of Participants who are Covered Employees as of the end
of the Performance Period, unless otherwise determined by the AIP Committee,
or unless otherwise designated as separate awards based on subjective
performance criteria, payments shall be made only after achievement of the
applicable performance goals has been certified by the AIP Committee. In no
event shall payment in respect of Annual Performance Awards based on Corporate
Target Goals and objective Individual Goals granted for a Performance Period
be made to a Participant who is a Covered Employee as of the end of a
Performance Period in an amount that exceeds 75 percent of the Participant's
Annual Base Salary.
IN WITNESS WHEREOF, CINergy Corp. has caused this master plan document
to be executed and approved by its duly authorized officers effective as of
the Effective Time of the Mergers.
CINERGY CORP.
BY: Jackson H. Randolph
(JACKSON H. RANDOLPH)
Chairman and
Chief Executive Officer
and
BY: James E. Rogers, Jr.
(JAMES E. ROGERS)
Vice Chairman, President and
Chief Operating Officer
APPROVED:
( )
CINERGY CORP.
ANNUAL INCENTIVE PLAN