Adopted by the PSI Energy, Inc.
Board of Directors on December 17, 1996
AMENDMENT TO THE PSI ENERGY, INC.
EMPLOYEES' 401(k) SAVINGS PLAN
The PSI Energy, Inc. Employees' 401(k) Savings Plan, as amended
and restated effective January 1, 1992, and as amended effective
January 1, 1992, is hereby further amended pursuant to Article 16
thereof. Amendments with respect to the modification of Sections
3.1, 5.5, 7.6(a)(4), and 7.6(b)(4) are effective January 1, 1996.
Amendments with respect to the modification of Sections 14.1,
14.2(b), and 14.2(h) are effective April 1, 1996. Amendments
with respect to the modification of Sections 1.13, 1.79, 5.1(a),
and 5.1(c) are effective July 1, 1996.
(1) Explanation of Amendments
Section 3.1 is amended, effective January 1, 1996, by deleting
the requirement that an employee must be an employee for at least
nine months before he or she is eligible to participate in the
Plan. Thus, with the amendment each new employee is eligible to
enroll immediately in the Plan.
Section 5.5 is amended, effective January 1, 1996, to provide
that there are no limitations as to the number of times during a
calendar year that a participant may reduce or increase his or
her before-tax or after-tax contributions.
Sections 7.6(a)(4) and 7.6(b)(4) are amended, effective January
1, 1996, to lower to age 50 the age at which participants in the
Plan may reallocate balances held in the Stock Fund whenever the
Plan is on a monthly or daily accounting basis, respectively.
Sections 14.1, 14.2(b), and 14.2(h) are amended, effective April
1, 1996. Each of these sections pertains to loans from a
participant's accounts. Section 14.1 is amended to allow loan
applications to be made in any manner prescribed by PSI's
Comptroller. This amendment will allow loan applications to be
made in writing or orally by telephone. Section 14.2(b) removes
the former $1,000 minimum loan requirement and allows the
participant's rollover account to be considered in determining
the maximum available loan. Section 14.2(h) provides that
proceeds equal to the amount of a loan shall be transferred pro
rata from a participant's account and repaid proportionately into
the participant's accounts in accordance with the investment
directive in effect when the loan was made.
Section 1.13 is amended, effective July 1, 1996, to include
overtime pay as compensation subject to deferral into the Plan.
However, overtime pay will not be considered when calculating the
company matching contributions.
Section 1.79, the definition of "overtime pay" is added,
effective July 1, 1996.
Sections 5.1(a) and 5.1(c) are amended, effective July 1, 1996,
to provide that the maximum before-tax and/or after-tax
contribution that can be made annually by a participant is 15% of
the participant's eligible compensation.
(2) Amendments Effective January 1, 1996
(a) Section 3.1 as Amended
Section 3.1, as hereby amended, reads as follows:
"3.1 Eligibility Requirements for Participation.
Each Exempt Employee and Non-Exempt Employee on
January 1, 1996, who was participating in the Plan
as of December 31, 1995, shall continue as a
Participant in the Plan as of January 1, 1996.
Each other Employee may become a Participant on
the first Entry Date following the date on which
he meets all of the following requirements:
(a) The Employee has attained age 21;
(b) The Employee is an Exempt Employee or a Non-
Exempt Employee; and
(c) The Employee has elected to enroll in the
Plan pursuant to Section 3.2 (Entry Dates for
Participation).
No Employee shall become a Participant prior to
the Plan's effective date. An Employee who meets
the requirement of Items (a), and (b), but who
does not elect to enroll in the Plan pursuant to
Section 3.2 (Entry Dates for Participation), shall
be considered an `Eligible Employee.'"
(b) Section 5.5 as Amended
Section 5.5, as hereby amended, reads as follows:
"5.5 Modification of Deferred Compensation
Contribution and After-Tax Contribution.
(a) A Participant who desires to reduce or increase
the amount of his Deferred Compensation
Contribution may elect to do so, in writing, on a
form prescribed by PSI's Comptroller. There shall
be no limitation on the total number of
reductions, increases, or combination of
reductions and increases, including any
discontinuances or resumptions of Deferred
Compensation Contributions, effected by a
Participant during any Plan Year. If a Participant
elects to discontinue his Deferred Compensation
Contributions, then he shall not be able to resume
having any contributions made until the first full
Payroll Period of any calendar quarter which
quarter begins at least 90 days after the last day
of the last Payroll Period with respect to which
Deferred Compensation Contributions were
previously elected. Any election to resume
Deferred Compensation Contributions shall be made
by the Participant in the manner described in this
Subsection with respect to reducing or increasing
contributions.
(b) A Participant who desires to reduce or increase
the amount of his After-Tax Contribution may elect
to do so, in writing, on a form prescribed by
PSI's Comptroller. There will be no limitation on
the total number of reductions, increases, or
combination of reductions and increases, including
any discontinuances or resumptions of After-Tax
Contributions, effected by a Participant during
any Plan Year. If a Participant elects to
discontinue his After-Tax Contributions, then he
shall not be able to resume having contributions
made until the first full Payroll Period of any
calendar quarter which quarter begins at least 90
days after the last day of the last Payroll Period
with respect to which After-Tax Contributions were
previously elected. Any election to resume After-
Tax Contributions shall be made by the Participant
in the manner described in this Subsection with
respect to reducing or increasing the
contributions. A Participant's election to reduce
or increase either his Deferred Compensation
Contribution or his After-Tax Contribution shall
become effective as of the first day of the
Participant's first Payroll Period following by 15
days (or any shorter period of time as may be
designated by PSI's Comptroller) the date on which
PSI's Manager, Payroll-Benefits receives the
Participant's written modification election."
(c) Section 7.6(a)(4) as Amended
Section 7.6(a)(4), as hereby amended, reads as follows:
"(4) A Participant may not reallocate the Fund balances
of his Employer Matching Account or his Incentive
Matching Account with regard to Employer Matching
Contributions or Incentive Matching Contributions made
on or after January 1, 1992. Instead, these amounts
must remain invested in the Stock Fund until the
Participant attains age 55 (age 50 effective January 1,
1996) at which time the Fund balances may be
reallocated, at least once during any calendar quarter,
in multiples of five percent, among the Fund options
upon the receipt by PSI's Manager, Payroll-Benefits of
a written reallocation on a form prescribed by PSI's
Comptroller. A reallocation shall become effective as
of the first day of the first calendar quarter of a
Plan Year (or as of any other day or days of a Plan
Year as designated by PSI's Comptroller) that follows
by 15 days (or any shorter period of time as designated
by PSI's Comptroller) receipt of the proper form by
PSI's Manager, Payroll-Benefits."
(d) Section 7.6(b)(4) as Amended
Article 7.6(b)(4), as hereby amended, reads as follows:
"(4) A Participant may not reallocate the Fund
balances of his Employer Matching Account or his
Incentive Matching Amount with regard to Employer
Matching Contributions made on or after January 1,
1992. Instead, these amounts must remain invested
in the Stock Fund until the Participant attains
age 55 (age 50 effective January 1, 1996) at which
time the Fund balances may be reallocated, at
least once during any calendar quarter, in
multiples of five percent, among the Fund options
upon the receipt by PSI's Manager, Payroll-
Benefits of a written reallocation on a form
prescribed by PSI's Comptroller. A reallocation
shall become effective as of the first day of the
first calendar quarter of a Plan Year (or as of
any other day or days of a Plan Year as designated
by PSI's Comptroller) that follows by 15 days (or
any shorter period of time as designated by PSI's
Comptroller) receipt of the proper form by PSI's
Manager, Payroll-Benefits."
(3) Amendments Effective April 1, 1996
(a) Section 14.1 as Amended
Section 14.1, as hereby amended, reads as follows:
"14.1 Effective Date
Upon proper application by a Participant, in a manner
prescribed by PSI's Comptroller and delivered to PSI's
Manager, Payroll-Benefits, who shall administer the
Plan's loan program, PSI may direct the Trustee to make
a loan to a Participant subject to the requirements of
this Article and any other rules as PSI may prescribe.
In deciding whether to approve or deny any written
request for a loan, PSI's Manager, Payroll-Benefits
shall take into consideration the factors applied by
commercial banks in making loan decisions, including
the Participant's creditworthiness and the available
security for the loan. PSI shall apply the eligibility
requirements and rules for a loan uniformly to all
Participants. For purposes of this Article, the term
`Participant' includes Employees and former Employees
and Beneficiaries who are `parties in interest,' as
defined in ERISA Section 3(14)."
(b) Section 14.2(b) as Amended
Section 14.2(b), as hereby amended, reads as follows:
"(b) There is no minimum principal amount
requirement for a loan. The principal amount of
any loan to be made plus the principal amount of
all loans to a Participant outstanding at the time
the loan is to be made shall not exceed the lesser
of (1) 50% of the balance of the Participant's
Deferred Compensation Account, ESOP Transfer
Account, and Rollover Account, and (2) $50,000
reduced by the excess of the highest outstanding
balance of loans to the Participant from the Plan
during the period beginning one year and one day
before the day the loan is to be made over the
outstanding balance of loans from the Plan on the
date on which the loan is to be made. A
Participant may have no more than two loans
outstanding at any time. A loan shall be made
within 30 days after the loan is approved by PSI
or as soon thereafter as administratively
feasible. All charges, including all expenses and
fees incurred in connection with the processing,
record keeping, or refinancing of any loan are, to
the extent administratively feasible, charged to
the Participant who received the loan, except to
the extent paid by the Employers."
(c) Section 14.2(h) as Amended
Section 14.2(h), as hereby amended, reads as follows:
"(h) Amounts equal to any loans shall be
transferred pro rata from the Participant's
subaccounts under his Deferred Compensation
Account, ESOP Transfer Account, and Rollover
Account in proportion to the principal amount of
the loan. PSI's Comptroller shall establish,
operate, and maintain a loan subaccount or
otherwise account for the receipt of amounts
transferred from the Participant's Fund
subaccounts. Appropriate accounting entries
reflecting transfers shall be concurrent with the
disbursement to the Participant of amounts
borrowed. Interest received by the Trustee in
respect of amounts borrowed by a Participant shall
be credited to the Participant's loan subaccount
or otherwise properly credited at the end of each
month. Interest so allocated to a Participant
shall then be allocated proportionately among the
Participant's Fund subaccounts in accordance with
the Participant's investment directions in effect
when the loan was made. A repayment of principal
by a Participant shall be invested among the Funds
and credited proportionately to the Participant's
appropriate Fund subaccounts in accordance with
the Participant's investment directions in effect
when the loan was made. If contributions on
behalf of the Participant have been suspended or
discontinued for any other reason at the time of
any interest payment or principal repayment, the
payments or repayments shall be invested in
accordance with the investment direction in effect
when the loan was made."
(4) Amendments Effective July 1, 1996
(a) Section 1.13 as Amended
Section 1.13, as hereby amended, reads as follows:
"1.13 `Compensation' means, effective July 1,
1996, with respect to any Exempt Employee for any
period of reference, the sum of the Employee's
(1) Base Salary, (2) Overtime Pay, and (3)
Performance Lump Sum Pay, plus (4) any Deferred
Compensation Contributions made on behalf of the
Employee for the Plan Year and other elective
contributions made by the Employer on behalf of
the Employee during the Plan Year that are not
includible in gross income under Code Section
125, Paragraph 402(a)(8), Subsection 402(h), or
Subsection 403(d), provided, however, that annual
Compensation taken into account under the Plan
for any Plan Year beginning on or after January
1, 1989, shall not exceed the limitation
specified in Code Paragraph 401(a)(17) (as
adjusted for increases in the limitation pursuant
to Code Subparagraph 401(a)(17)(B)). For Plan
Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation
specified in Code Paragraph 401(a)(17) shall mean
the OBRA '93 Annual Compensation Limit. In
determining an Employee's Compensation, the rules
of Code Paragraph 414(q)(6) shall apply, except
that in applying those rules, the term `family'
shall include only the Employee's spouse and
lineal descendants who have not attained age 19
before the close of the Plan Year.
With respect to a Non-Exempt Employee,
`Compensation' means, effective July 1, 1996,
the sum of the Employee's (1) Base Wage, (2)
Overtime Pay, and (3) Performance Lump Sum Pay,
plus (4) Deferred Compensation Contributions made
on behalf of the Employee for the Plan Year and
other elective contributions made by the Employer
on behalf of the Employee during the Plan Year
that are not includable in gross income under
Code Section 125, Paragraph 402(a)(8), Subsection
402(h), or Subsection 403(b), provided, however,
that annual Compensation taken into account under
the Plan for any Plan Year beginning on or after
January 1, 1989, shall not exceed the limitation
specified in Code Paragraph 401(a)(17) (as
adjusted for increases in the limitation pursuant
to Code Subparagraph 401(a)(17)(B)). For Plan
Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation
specified in Code Paragraph 401(a)(17) shall mean
the OBRA '93 Annual Compensation Limit. In
determining an Employee's Compensation, the rules
of Code Paragraph 414(q)(6) shall apply, except
that in applying those rules, the term `family'
shall include only the Employee's spouse and
lineal descendants who have not attained age 19
before the close of the Plan Year.
Notwithstanding anything in this Subsection to
the contrary, with respect to any Exempt Employee
or Non-Exempt Employee, the term `Compensation'
shall not include Overtime Pay for purposes of
Article 6 (Employer Contributions)."
(b) Section 1.79 as Added
Section 1.79, as hereby added, reads as follows:
"1.79 `Overtime Pay' means, with respect to a Non-
Exempt Employee, the pay received at one-half times the
Employee's regular rate of pay as remuneration for
hours worked in a work day or a work week in excess of
8 hours or 40 hours, respectively, for the relevant
period. With respect to an Exempt Employee, `Overtime
Pay' means the pay received in excess of the Employee's
regular rate of pay as remuneration for hours worked in
a work day or work week in excess of the Employee's
regularly scheduled hours pursuant to the Employer's
overtime pay policy applicable to Exempt Employees ."
(c) Section 5.1(a) as Amended
Section 5.1(a), as hereby amended, reads as follows:
"(a) Deferred Compensation Contributions. Subject
to the limitations set forth in Section 5.6
(Deferred Compensation Contribution Limitation),
each Employer shall contribute to the Trust Fund,
on behalf of each Participant employed by the
Employer as a Deferred Compensation Contribution
an amount elected by the Participant equal to not
less than one percent nor more than 15 percent
(expressed as a whole percentage) of the
Participant's Compensation for the first full
Payroll Period of the month for which the
Participant's election to defer Compensation is to
become effective and shall continue for each
subsequent Payroll Period that the election is in
effect. However, if a Participant receives a
hardship withdrawal under Section 12.1 (Hardship
Withdrawals) of the Plan or under Section 12.1
(Hardship Withdrawals) of the PSI Energy, Inc.
Union Employees' 401(k) Savings Plan, the
Participant's Deferred Compensation Contributions
shall be suspended for a period of 12 months after
the receipt of the hardship withdrawal. An
election shall be made by the Participant filing
with PSI's Manager, Payroll-Benefits the written
form prescribed by PSI's Comptroller at least 15
days (or such shorter period of time as may be
designated by PSI's Comptroller) before the first
day of the month during which the election is to
be effective. The total sum of Deferred
Compensation Contributions made under this Plan
when combined with the amount of elective
deferrals made under any other Employer plan
established and maintained by any Employer or
Affiliate under Code Subsection 401(k) for a
Participant's taxable year, shall not exceed the
excess deferral limitation set forth in Code
Paragraph 402(g)(1), as adjusted pursuant to Code
Paragraph 402(g)(5). However, if a Participant
receives a hardship withdrawal under Section 12.1
(Hardship Withdrawals) of the Plan or under
Section 12.1 (Hardship Withdrawals) of the PSI
Energy, Inc. Union Employees' 401(k) Savings Plan,
the Participant may not make Deferred Compensation
Contributions for the Participant's taxable year
immediately following the taxable year of the
hardship withdrawal in excess of the applicable
limit under Code Subsection 402(g) for the next
taxable year less the amount of the Participant's
Deferred Compensation Contributions for the
taxable year of the hardship withdrawal. The
Deferred Compensation Contribution attributed to
each Participant shall be allocated to the
Participant's Deferred Compensation Account."
(d) Section 5.1(c) as Amended
Section 5.1(c), as hereby amended, reads as follows:
"(c) After-Tax Contributions. A Participant may
also elect to make an After-Tax Contribution of
his Compensation to the Trust Fund on his behalf
in an amount (expressed as a whole percentage)
which together with his Deferred Compensation
Contributions, shall not exceed 15 percent of his
Compensation (1) for the first full Payroll Period
of the month for which the Participant's election
(as described in this Paragraph) to make After-Tax
Contributions is to become effective and shall
continue for each subsequent Payroll Period that
the election is in effect (payroll deduction). In
the alternative, a Participant may elect to make
once per Plan Year an After-Tax Contribution in
lump sum payment by a check or money order by the
Participant payable to the Trustee and submitted
to PSI's Manager, Payroll-Benefits. However, the
amount of a Participant's After-Tax Contributions
for a Plan Year shall not cause the Participant's
Annual Addition to exceed his Maximum Permissible
Amount. If a Participant receives a hardship
withdrawal under Section 12.1 (Hardship
Withdrawals) of the Plan or under Section 12.1
(Hardship Withdrawals) of the PSI Energy, Inc.
Union Employees' 401(k) Savings Plan, the
Participant's After-Tax Contributions shall be
suspended for a period of 12 months after the
receipt of the hardship withdrawal. If a
Participant receives a withdrawal under Section
12.2 (Withdrawals from After-Tax Contribution
Account) of the Plan, the Participant's After-Tax
Contributions shall be suspended for a period of
12 months after the receipt of the withdrawal.
The After-Tax Contribution attributed to each
Participant shall be allocated to the
Participant's After-Tax Contribution Account. Any
election described in this Subsection shall be
made by the Participant in the same manner
described in Subsection 5.1(a) with respect to
Deferred Compensation Contributions."
This Amendment is executed and approved by the duly
authorized officers of PSI Energy, Inc., effective as of the
dates set forth herein.
PSI ENERGY, INC.
By: JAMES E. ROGERS
James E. Rogers
Vice Chairman and
Chief Executive Officer
Dated: December 30, 1996
APPROVED:
By: CHERYL M. FOLEY
Cheryl M. Foley
Vice President, General Counsel
and Corporate Secretary
Dated: December 30, 1996