EQUITY OPTIONS
Information Circular
#06-0189 Derivative Securities
Date March 2, 2006
To Members, Member Organizations & Registered Option Principals
From Ann Pierre, Options Research Manager
Subject Cinergy Corp. (CIN) - Upcoming Contract Adjustment due to Merger with Duke Energy Corp. (DUK)
Shareholders of Cinergy Corp. (CIN) will meet on Friday, March 10, 2006, to vote to approve the Agreement and Plan of Merger dated (5/08/05), as stated in the joint proxy statement/prospectus (dated 2/02/06), in which CIN will merger with Duke Energy Corp. (DUK). The merger is anticipated to become effective on a date to be announced.
Under the terms of the Agreement and Plan of merger, and subject to certain conditions set forth in the joint Proxy Statement/Prospectus, each share of CIN common stock will be converted into the right to receive 1.56 DUK common stock. Cash will be paid in lieu of fractional shares.
The foregoing is a summary of the terms and conditions of the Merger Agreement and is prepared by the Exchange for the convenience of its membership. The Exchange accepts no responsibility for its accuracy or completeness. For more complete information, please refer to the conditions set forth in the joint Proxy/Prospectus.
Accordingly, pursuant to The Options Clearing Corporation's ("OCC") by-laws, upon consummation of the merger and under the terms outlined above, effective on the day after the effective date of the merger, each outstanding CIN option contract will be adjusted as follows:
1. all outstanding option contracts will be adjusted to represent 156 shares of DUK common stock, (?Merger Consideration?)
2. the symbols for all outstanding option contracts will change from CIN to CJN, to represent the contract adjustment noted above.
3. the strike prices will remain the same.
4. the multiplier for adjusted contracts will remain 100.
Example/Important Note
A CIN March 40 Call (CINCH) representing 100 CIN shares will become a CJN March 30 Call (CJNCH) representing 156 shares of DUK common stock.
Premiums and aggregate exercise prices for adjusted contracts will continue to be calculated on the basis of 100 shares per contract (i.e., despite the fact that each adjusted contract represents 156 shares of DUK common stock). For example, a premium bid of $2 for one CIN contract will represent a total premium bid of $200. Similarly, a holder of a CJN call with an exercise price of $40 will be required to pay an aggregate price of $4,000, and an assigned short will be required to deliver 156 shares of DUK common stock.
Special Operational Requirements
Member firms are advised that:
1. Orders on the Specialist's book for all CIN series will be automatically reentered on the day following the effective date of the merger to reflect the adjusted deliverable;
2. DKs resolved in the Exchange's options reconciliation room must reflect adjustments to ticker symbols.
Position and Exercise Limits
Position and exercise limits will be any combination of CJN and DUK contracts not representing more than 45,000,000 shares until the July 2006 expiration.
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Questions concerning this circular may be directed to the AMEX Derivative Securities Hotline: 800-THE-AMEX. Copies of this and other Information Circulars may be accessed on our AmexTrader.com website.
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