Adopted by the Cinergy Corp.
Board of Directors on October 22, 1996
NOVEMBER 1, 1996
AMENDMENT TO THE CINERGY CORP.
1996 LONG-TERM INCENTIVE COMPENSATION PLAN
(Effective November 1, 1996)
The Cinergy Corp. 1996 Long-Term Incentive Compensation
Plan, as adopted on January 25, 1996, is hereby amended effective
November 1, 1996, pursuant to Article 16 thereof, with respect to
the modification of Sections 4.1, 4.2, 5.2, and 8.6, and Articles
7 and 18.
(1) Explanation of Amendments
Currently, Section 4.1, Committee as Administrator, of the
Plan provides that the Plan shall be administered by the
Compensation Committee of Cinergy's Board of Directors which
committee is composed of at least three "disinterested persons"
under Rule 16b-3 under the Securities Exchange Act of 1934 (the
"1934 Act"). The revised Rule 16b-3 regulations have replaced
the concept of at least three "disinterested persons" with the
concept of at least two "non-employee directors." Thus, the Plan
is being amended to substitute "non-employee directors" for
"disinterested persons," and reduced, by one, the minimum number
of required committee members.
Currently, Section 4.2, Committee Authority, confers on the
Committee final authority for making all determinations and
taking all actions under the Plan. The revised Rule 16b-3
permits more flexibility with respect to the administration of
the Plan, and Section 4.2 is amended to enable Cinergy's Board of
Directors to take advantage of this flexibility with respect to
determinations and actions taken under the Plan.
Section 5.2, Designation by Committee, is amended to permit
either the Committee or Cinergy's Board of Directors (and not
solely the Committee, as currently provided) to grant awards
under the Plan.
Article 7, Adjustment in the Number of Shares and in Option
Price, is amended to clarify that if there is a declaration of a
stock dividend, stock split, spin-off or other event that affects
Cinergy's capital structure, then, in addition to adjustments
that the Committee or Cinergy's Board of Directors shall make to
the number of shares available for awards under the Plan and the
number of shares subject to outstanding awards and price thereof,
the Committee or Cinergy's Board of Directors shall also make
adjustments to the maximum number of shares available for grants
of awards of options or stock appreciation rights to any employee
in any calendar year. The Section of the Plan establishing this
maximum already provides that this limitation is subject to
adjustment pursuant to Article 7.
Section 8.6, Payment, is amended to clarify and to provide
additional methods of payment of the purchase price in order
exercise options under the Plan. Currently, the Plan allows
options to be exercised (i) with cash, (ii) with shares of
Cinergy common stock already owned by the optionee (a stock
exchange or stock swap), or a combination of such shares and
cash, or, (iii) except for officers or directors covered by
Section 16 of the 1934 Act, by delivering a properly executed
exercise notice together with irrevocable instructions to a
broker to deliver to Cinergy the total option price in cash and,
if desired, the amount of any taxes to be withheld from the
optionee's compensation as a result of withholding tax
obligations (a broker-financed transaction). The Section would
be modified to allow options to be purchased with (i) cash, (ii)
a stock exchange or stock swap using shares of Cinergy common
stock already owned by the optionee or owned jointly by the
optionee and his or her spouse (with the spouse's permission),
(iii) a broker-financed transaction (for any employee, officer or
director), (iv) by withholding from the shares of Cinergy common
stock issued on exercise, shares of common stock whose value
equals the purchase price, (v) any other legal consideration that
the Compensation Committee deems appropriate, or (vi) any
combination of these methods. Provisions of this Section made
obsolete by the new Rule 16b-3 regulations are deleted.
Article 18, Transferability, is amended to provide that
options or stock appreciation rights are not transferable
otherwise than by will or the laws of descent and distribution
except as otherwise allowed by the Committee. This amendment is
in response to the revised Rule 16b-3 regulations.
(2) Section 4.1 as Amended
Section 4.1, as hereby amended, reads as follows:
"4.1 Committee as Administrator.
The Plan shall be administered by the Committee which shall
be comprised of not fewer than two members of Cinergy's Board of
Directors. Members of the Committee shall be members of
Cinergy's Board of Directors who are non-employee directors
under Rule 16b-3 promulgated under the 1934 Act and successor
rules ("Rule 16b-3") and, with respect to Covered Employees,
outside directors under Code Subsection 162(m). Subject to the
Plan's terms, the Committee shall have the exclusive authority to
grant Awards to Employees under the Plan, to select the Employees
to receive Awards, to determine the type, size and terms of the
Awards to be made to each Employee selected, to determine the
time when Awards to Employees will be granted, and to prescribe
the form of the Award Agreements embodying Awards made under the
Plan. The provisions and conditions of the grants of Awards,
which shall be set forth in Award Agreements, need not be the
same with respect to each Employee selected or with respect to
each Award."
(3) Section 4.2 as Amended
Section 4.2, as hereby amended, reads as follows:
"4.2 Committee Authority.
Unless otherwise determined by Cinergy's Board of Directors,
the Committee is authorized to establish any rules and
regulations and appoint any agent 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 as it deems
necessary or advisable. Each determination or other action made
or taken pursuant to the Plan, including interpretation of the
Plan and the specific conditions and provisions of the Awards
granted under the Plan by the Committee shall be final and
conclusive for all purposes and upon all persons including,
without limitation, each Employer and each Employer's board of
directors, and the affected Employee, beneficiary, legal
representative, and any other interested parties."
(4) Section 5.2 as Amended
Section 5.2, as hereby amended, reads as follows:
"5.2 Designation by Committee or Board.
From time to time, Cinergy's Chief Executive Officer may
recommend to the Committee the granting of Awards to any eligible
Employee. After reviewing the recommendations, and after
considering the duties of each recommended Employee, his or her
present and potential contribution to the success of his or her
Employer, his or her other compensation provided by his or her
Employer and any other factors as it deems relevant, the
Committee or Cinergy's Board of Directors shall determine whether
to grant Awards to the recommended Employee."
(5) Article 7 as Amended
Article 7, as hereby amended, reads as follows:
"ARTICLE 7
ADJUSTMENT IN THE NUMBER OF
SHARES AND IN OPTION PRICE
If there is any change in the shares of Common Stock through
the declaration of stock dividends, stock splits, through
recapitalization, merger, consolidation, combination of shares,
spin-off, other significant distribution assets, or otherwise,
the Committee or Cinergy's Board of Directors shall make an
adjustment, if any, as it may deem appropriate in the number of
shares of Common Stock available for Awards or the number of
shares of Common Stock subject to any outstanding Award and the
Option Price thereof, and the maximum number of shares of Common
Stock subject to Option or Stock Appreciation Rights granted to
any Employee during any calendar year. Any adjustment may
provide for the elimination of any fractional shares that might
otherwise become subject to any Award without payment therefor."
(6) Section 8.6 as Amended
Section 8.6, as hereby amended, reads as follows:
"8.6 Payment.
(a) The Option Price shall be paid in full at the time of
exercise. No share shall be issued or transferred until full payment
has been received therefor. Payment may be in (i) cash, (ii)
nonforfeitable, unrestricted shares of Common Stock that are already
owned by the Optionee or jointly owned by the Optionee and the
Optionee's spouse (provided that the spouse's written consent is
first obtained) and have a value at the time of exercise that is
equal to the Option Price, (iii) by delivering a properly executed
exercise notice together with irrevocable instructions to a broker to
promptly deliver to Cinergy the total Option price in cash and, if
desired, the amount of any taxes to be withheld from the Optionee's
compensation as a result of the Employer's withholding tax
obligation, as specified in the notice, or (iv) by withholding from
the shares of Common Stock issued on exercise, shares of Common Stock
whose value equals the Option price, and, if desired, the amount of
any taxes to be withheld from the Optionee's compensation as a result
of the Employer's withholding tax obligation, (v) any other legal
consideration that the Committee may deem appropriate, including
without limitation any form of consideration authorized under
Subsection 8.6 (b), on such basis as the Committee may determine in
accordance with the Plan, and (vi) any combination of the foregoing.
Cash payment for the shares purchased under an NSO may be offset by
the amount of any Cash Award, as provided in Article 12 (Cash
Awards), approved by the Committee. If payment is made by the
delivery of shares of Common Stock, the value of the shares delivered
shall be computed upon the basis of the average of the high and low
sales prices at which shares of Common Stock shall have been sold on
the date the Optionee exercises an Option, or on the preceding
trading day if that date was not a trading day as reported on the
"NYSE - Composite Transactions" as reported in The Wall Street
Journal.
(b) Any grant of an NSO shall provide that payment of the
Option Price may also be made in whole or in part in the form of
shares of Restricted Stock or other Common Stock that are subject to
risk of forfeiture or restrictions on transfer. Unless otherwise
determined by the Committee on or after the Date of Grant, whenever
any Option Price is paid in whole or in part by means of any of the
forms of consideration specified in this subsection, the Common Stock
received by the Optionee upon the exercise of the NSO shall be
subject to the same risk of forfeiture or restrictions on transfer as
those that applied to the consideration surrendered by the Optionee.
However, the risks of forfeiture and restrictions on transfer shall
apply only to the same number of shares of Common Stock received by
the Optionee as applied to the forfeitable or restricted Common Stock
surrendered by the Optionee."
(7) Article 18 as Amended
Article 18, as hereby amended, reads as follows:
"ARTICLE 18
TRANSFERABILITY
Except with the prior approval of and upon conditions
established by the Committee, no Option or other derivative security
(as that term is defined in Rule 16b-3) granted pursuant to the Plan
shall be transferable otherwise than by will or by the laws of
descent and distribution. During the lifetime of an Optionee, the
Option and Stock Appreciation Rights shall be exercisable only by the
Optionee personally or, in the event of the Employee's legal
incapacity, by the Employee's guardian or legal representative acting
in a fiduciary capacity on behalf of the Employee under applicable
state law and judicial supervision. The Committee, in its sole
discretion, may provide for the transferability of particular Awards
under the Plan so long as the provisions will not disqualify the
exemption for other Awards under Rule 16b-3. Any grant made under
the Plan may provide that all or any part of the shares of Common
Stock that are to be issued or transferred by Cinergy upon the
exercise of Options or Stock Appreciation Rights or in payment of
Performance Shares on Performance Awards, Dividend Equivalents or
Other Stock-Based Awards, or that are no longer subject to the
substantial risk of forfeiture and restrictions on transfer referred
to in Article 10 (Restricted Stock), shall be subject to further
restrictions upon transfer."
This Amendment is executed and approved by the duly
authorized officers of Cinergy Corp., effective as of November 1,
1996.
CINERGY CORP.
By: _________James E. Rogers________
Vice Chairman, President, and
Chief Executive Officer
Dated: October 25, 1996
APPROVED:
By: ____Jerome A. Vennemann____
Associate General Counsel and
Assistant Corporate Secretary
Dated: October 25, 1996