Adopted by the Cinergy Corp.
Board of Directors on October 22, 1996
NOVEMBER 1, 1996
AMENDMENT TO THE CINERGY CORP.
PERFORMANCE SHARES PLAN
(Effective November 1, 1996)
The Cinergy Corp. Performance Shares Plan, as adopted on
October 18, 1994, is hereby amended effective November 1, 1996,
pursuant to Article 18 thereof, with respect to the modification
of Section 1.27, Articles 9, 12, 15, and 20.
(1) Explanation of Amendments
Section 1.27, the definition of "Performance Period", is
amended to provide that no new Performance Period shall commence
subsequent to January 1, 1996, that the fifth Performance Period
shall be shortened to three years, and that the sixth Performance
Period shall be shortened to one year.
Article 9, Distribution, is amended to provide that upon
Plan termination, Cinergy's Board of Directors may direct that
payment of any performance awards under the Plan be made in such
manner as it deems appropriate under the circumstances, and that,
in this regard, payment with respect to the sixth Performance
Period will be paid in one lump sum. This amendment will
facilitate distribution of performance awards under existing
performance periods that will be truncated in contemplation of
the Plan's termination. This Article is also amended to provide
that the shares of common stock distributed under the Plan shall
be valued for tax purposes as of the date the restrictions, if
any, under Rule 16b-3 under the Securities Exchange Act of 1934
(the "1934 Act") lapse. This amendment is in response to the
revised Rule 16b-3 regulations issued under the 1934 Act.
Article 12, Transferability Restrictions, is amended to
provide that Performance Awards under the Plan are not
transferable except by will or the laws of descent and
distribution or unless otherwise provided by the Compensation
Committee.
Currently, Articles 15, Administration, and 20, Executive
Officers, provide that the Plan shall be administered by the
Compensation Committee of Cinergy's Board of Directors which
Committee is composed of "disinterested persons" under Rule 16b-3
under the 1934 Act. The revised Rule 16b-3 regulations have
replaced the concept of "disinterested persons" with the concept
of "non-employee directors." Thus, the Plan is being amended to
substitute "non-employee directors" for "disinterested persons."
In addition, to take advantage of the flexibility available under
the revised Rule 16b-3 regulations, the Plan is amended to permit
CINergy's Board of Directors, or such other entity as the Board
may determine, to administer the Plan with respect to awards not
intended to be covered under Section 162(m) of the Internal
Revenue Code of 1986, as amended, (i.e., performance based grants
to executives subject to the one million dollar cap on
deductibility).
(2) Section 1.27 as Amended
Section 1.27, as hereby amended, reads as follows:
"1.27 `Performance Period' means the period of time over which
performance with respect to a Corporate Target Goal or an
Individual Goal is measured. The Plan is designed so that
eventually each Performance Period under an Employer's Long-
Term Program shall consist of a four year period and each
Performance Period will eventually overlap each preceding
Performance Period by two years. However, the initial
Performance Period of each Employer's Long-Term Program
shall be a three year Performance Period and the second
Performance Period shall be a two year Performance Period.
Beginning with the third Performance Period, each
Performance Period of an Employer's Long-Term Program shall
be for a four year period with each new Performance Period
beginning on the first day of January and ending four years
later on the 31st day of December so that, beginning with
the fourth Performance Period, each Performance Period will
begin every two years allowing Performance Periods to
overlap by two years. Notwithstanding any provision of the
Plan to the contrary, (a) no Performance Period shall
commence subsequent to January 1, 1996, and (b) the fifth
Performance Period shall be a three year Performance Period,
and the sixth Performance Period shall be a one year
Performance Period. The term `Performance Period' includes
any performance period in effect under the `PSI Resources,
Inc. Performance Shares Plan,' as amended from time to time,
and the `PSI Energy, Inc. Performance Shares Plan,' as
amended from time to time, as of the Effective Time of the
Mergers."
(3) Article 9 as Amended
Article 9, as hereby amended, reads as follows:
"ARTICLE 9
DISTRIBUTION
After the determination and approval have been made under
Article 7 (Contingent Grant and Performance Award) as to the
number of Performance Shares which was in fact vested with
respect to a Participant at the end of an Employer's Performance
Period, the resulting Performance Award shall be paid in a
combination of whole shares of Common Stock and cash. All
payments made in Common Stock shall be made by the Employer
either in shares of Common Stock purchased on the open market or
in shares of Common Stock newly issued for the purpose of meeting
the requirements of the Employer's obligations under the Plan as
determined by the Employer's Board of Directors and with the
approval of CINergy's Committee.
Except as otherwise provided below, no Participant shall be
entitled to receive payment of the Performance Award in one lump
sum. Instead, the Performance Award shall be payable in two
equal installments with the first installment being paid to the
Participant on the first February 1 (or as soon thereafter as
administratively feasible) following the end of the Performance
Period for which the Performance Award was made and the second
installment of the Performance Award being paid on the second
February 1 (or as soon thereafter as administratively feasible)
following the end of the Performance Period for which the
Performance Award was made.
However, in the event the Plan is modified or terminated,
CINergy's Board of Directors may
direct that distribution of any Performance Awards under the Plan
be made in such manner and at such time or times as it deems
appropriate under the circumstances. In that regard, the
Performance Award payable to Participants at the end of the sixth
Performance Period shall be payable in one lump sum payment at
such time in 1999 as the Committee may determine.
The portion of each installment of the Performance Award
allocated to Common Stock shall be made in whole shares.
However, cash shall always be distributed in lieu of any
fractional interest in shares distributable under the Plan. The
portion of the Performance Award allocated to cash shall
approximate the amount needed to pay federal, state, and local
income taxes on each installment of the Performance Award. The
portion of the second installment of the Performance Award which
is payable in cash shall be augmented by the amount of dividends,
if any, which would have been payable on the portion of the
second installment of the Performance Award which is payable in
Common Stock if the Common Stock had, in fact, been distributed
to the Participant on the first February 1 following the end of
the Performance Period for which the Performance Award was made.
If the distribution of shares of Common Stock to a
Participant under the Plan constitutes a transfer of property
pursuant to Code Subsection 83(b), then each Participant will be
notified of his right to elect to have the shares of Common Stock
valued for tax purposes as of the date of distribution. If the
election provided under Code Subsection 83(b) is not made by a
Participant, the shares of Common Stock shall be valued for tax
purposes as of the date the restrictions, if any, under Rule
16b-3 under the 1934 Act lapse. If the fair market value of the
shares of Common Stock on that date is materially different from
the value of shares of Common Stock on the distribution date, an
adjustment to the federal, state, and local income taxes
previously withheld on the distribution date shall be made by the
Employer."
(4) Article 12 as Amended
Article 12, as hereby amended, reads as follows:
"ARTICLE 12
TRANSFERABILITY RESTRICTIONS
Except with the prior approval of and upon conditions
established by the Committee, no Performance Award under the Plan
shall be transferable otherwise than by will or by the laws of
descent and distribution."
(5) Article 15 as Amended
Article 15, as hereby amended, reads as follows:
"ARTICLE 15
ADMINISTRATION
(a) Unless otherwise determined by CINergy's Board of
Directors, the Plan shall be administered by CINergy's Committee
which shall consist of two or more members of CINergy's Board of
Directors who are non-employee directors 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.
(b) Unless otherwise determined by CINergy's Board of
Directors, 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 Executive Employees selected to participate in
the Plan, the amount, form 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 each Employer, each Employer's Board
of Directors, Participants, and Beneficiaries."
(6) Article 20 as Amended
Article 20, as hereby amended, reads as follows:
"ARTICLE 20
EXECUTIVE OFFICERS
Notwithstanding any provision of the Plan to the contrary,
this Article will govern the terms of the 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 "Performance Shares Plan
Committee") consisting of two or more persons each of whom is an
"outside director" for purposes of Code Subsection 162(m) and a
"non-employee director" for purposes of Rule 16b-3 under the
Exchange Act. The Performance Shares Plan 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
Performance Shares Plan Committee shall establish the Corporate
Target 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
income, cash flow, fuel cost per million BTU, cost 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
Performance Shares Plan Committee, or unless otherwise designated
as separate awards based on subjective performance criteria, such
payments shall be made only after achievement of the applicable
performance goals has been certified by the Performance Shares
Plan Committee. In no event shall payment during any calendar
year with respect to Performance Awards based on Corporate Target
Goals and objective Individual Goals granted with respect to a
Performance Period be made to a Participant who is a Covered
Employee as of a Performance Period in amounts that exceed 150
percent of the Participant's Annual Base Salary."
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