**Exhibit 4-yyy**

 
| **No.   R-2003-1** |   | **$200,000,000** |
|-------------------------|--------|------------------|

 

 

**PSI ENERGY,INC.6.302% Subordinated NoteDue 2004**

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, ASAMENDED (THE “ACT”), OR THE SECURITIES OR BLUE SKY LAWS OF ANY JURISDICTION OFTHE UNITED STATES OF AMERICA (“BLUE SKY LAWS”)AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERREDEXCEPT PURSUANT TO AN EFFECTIVE REGISTRATIONSTATEMENT UNDER THE ACT OR PURSUANT TO A TRANSACTION EXEMPT FROMREGISTRATION UNDER THE ACT AND, IN EACHCASE, IN ACCORDANCE WITH ALL APPLICABLE BLUE SKY LAWS.

 

PSI Energy, Inc., a corporationduly organized and existing under the laws of the state of Indiana (hereincalled the “Company”), for value received, hereby promises to pay to CINERGYCORP., or registered assigns, the principal sum of Two Hundred Million andNo/100 Dollars ($200,000,000.00) on April 15, 2004, and to pay interest thereonfrom February 5, 2003 or from the most recent interest payment date to whichinterest has been paid or duly provided for, semiannually on April 15 and October 15 in each year,commencing April 15, 2003, at the rate of 6.302% per annum, until the principalhereof is paid or made available for payment.

 

Payment of the principal of and interest on this Note will be made atthe office or agency of the Company maintained for that purpose in Cincinnati,Ohio, in such coin or currency of the United States of America as at the timeof payment is legal tender for payment of public and private debts; provided,however, that at the option of the Company payment of interest may be made bycheck.

 

#### Interest on this Note shall be computed on the basisof a 360-day year of twelve 30-day months.

 

Any payment onthis Note due on any day which is not a Business Day in the City of Cincinnati,Ohio need not be made on such day, but may be made on the next succeedingBusiness Day with the same force and effect as if made on the due date and nointerest shall accrue for the period from and after such date.  For purposes of this Note “Business Day,”means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a dayon which banking institutions in Cincinnati, Ohio are authorized or obligatedby law or executive order to close.

 

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### **Redemption**

 

This Note issubject to redemption upon not less than 30 days’ notice by mail, at aredemption price equal to 100% of the principal amount, as a whole or in part,at the election of the Company, together with accrued interest to theredemption date.

 

In the event of redemption of this Note in part only, a new Note oflike tenor for the unredeemed portion hereof will be issued in the name of theholder hereof upon the cancellation hereof.

 

**Subordination**

 

Theindebtedness evidenced by this Note is, to the extent and in the mannerprovided herein, expressly subordinate and subject in right of payment to theprior payment in full of all Senior Debt of the Company (as definedhereinbelow) whether outstanding at the date hereof or hereafter incurred.  Each holder and owner of this Note, byaccepting the same, agrees to and shall be bound by such provisions.

 

For purposehereof, the “Senior Debt” of the Company means the principal of, premium, ifany, interest on and any other payment due pursuant to any of the following,whether outstanding at the date of execution of this Note or thereafterincurred, created or assumed: (a) all indebtedness of the Company evidenced bynotes, debentures, bonds or other securities sold by the Company for money,excluding this Note, but including all first mortgage bonds of the Companyoutstanding from time to time; (b) all indebtedness of others of the kindsdescribed in the preceding clause (a) assumed by or guaranteed in any manner bythe Company, including through an agreement to purchase, contingent orotherwise; and (c) all renewals, extensions or refundings of indebtedness ofthe kinds described in any of the preceding clauses (a) and (b); unless, in thecase of any particular indebtedness, renewal, extension or refunding, theinstrument creating or evidencing the same or the assumption or guarantee ofthe same expressly provides that such indebtedness, renewal, extension orrefunding is not superior in right of payment to or is pari passu with thisNote.

 

In the eventand during the continuation of any default in the payment of principal,premium, interest or any other payment due on any Senior Debt continuing beyondthe period of grace, if any, specified in the instrument evidencing such SeniorDebt, unless and until such default shall have been cured or waived or shallhave ceased to exist, or in the event that the maturity of any Senior Debt hasbeen accelerated because of a default, then no payment shall be made by theCompany with respect to the principal of or interest on this Note.

 

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In the eventthat, notwithstanding the foregoing, any payment shall be received by theholder of this Note when such payment is prohibited by the preceding paragraph,such payment shall be held in trust for the benefit of, and shall be paid overor delivered to, the holders of Senior Debt or their respectiverepresentatives, or to the trustee or trustees under any indenture pursuant towhich any of such Senior Debt may have been issued, as their respectiveinterests may appear.

 

Upon anypayment by the Company, or distribution of assets of the Company of any kind orcharacter, whether in cash, property or securities, to creditors upon anydissolution or winding-up or liquidation or reorganization of the Company,whether voluntary or involuntary or in bankruptcy, insolvency, receivership orother proceedings, all amounts due or to become due upon all Senior Debt shallfirst be paid in full, or payment thereof provided for in money in accordancewith its terms, before any payment is made on account of the principal orinterest on this Note; and upon any such dissolution or winding-up orliquidation or reorganization any payment by the Company, or distribution ofassets of the Company of any kind or character, whether in cash, property orsecurities, to which the holder of this Note would be entitled, except for theprovisions of this Note, shall be paid by the Company or by any receiver,trustee in bankruptcy, liquidating trustee, agent or other person making suchpayment or distribution, or by the holder of this Note if received by it,directly to the holders of Senior Debt (pro rata to such holders on the basisof the respective amounts of Senior Debt held by such holders, as calculated bythe Company) or their representative or representatives, or to the trustee ortrustees under any indenture pursuant to which any instruments evidencing anySenior Debt may have been issued, as their respective interests may appear, tothe extent necessary to pay all Senior Debt in full, in money or money’s worth,after giving effect to any concurrent payment or distribution to or for theholders of Senior Debt, before any payment or distribution is made to theholder of this Note.

 

In the event that, notwithstanding the foregoing, any payment or distributionof assets of the Company of any kind or character, whether in cash, property orsecurities, prohibited by the foregoing, shall be received by the holder ofthis Note before all Senior Debt is paid in full, or provision is made for suchpayment in money in accordance with its terms, such payment or distributionshall be held in trust for the benefit of and shall be paid over or deliveredto the holders of Senior Debt or their representative or representatives, or tothe trustee or trustees under any indenture pursuant to which any instrumentsevidencing any Senior Debt may have been issued, as their respective interestsmay appear, as calculated by the Company, for application to the payment of allSenior Debt remaining unpaid to the extent necessary to pay all Senior Debt infull in money in accordance with its terms, after giving effect to anyconcurrent payment or distribution to or for the holders of such Senior Debt.

 

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For purposesof this Note, the words, “cash, property or securities” shall not be deemed toinclude shares of stock of the Company as reorganized or readjusted, orsecurities of the Company or any other corporation provided for by a plan ofreorganization or readjustment, the payment of which is subordinated withrespect to this Note to the payment of all Senior Debt which may at the time beoutstanding; provided that (i) the Senior Debt is assumed by the newcorporation, if any, resulting from any such reorganization or readjustment,and (ii) the rights of the holders of the Senior Debt are not, without theconsent of such holders, altered by such reorganization or readjustment. Theconsolidation of the Company with, or the merger of the Company into, anothercorporation or the liquidation or dissolution of the Company following theconveyance or transfer of its property as an entirety, or substantially as anentirety, to another corporation upon the terms and conditions provided for inthis Note shall not be deemed a dissolution, winding-up, liquidation orreorganization for the purposes hereunder if such other corporation shall, as apart of such consolidation, merger, conveyance or transfer, comply with theconditions stated hereunder.

 

Subject to thepayment in full of all Senior Debt, the rights of the holder of this Note shallbe subrogated to the rights of the holders of Senior Debt to receive paymentsor distributions of cash, property or securities of the Company applicable tothe Senior Debt; and, for the purposes of such subrogation, no payment ordistributions to the holders of the Senior Debt of any cash, property orsecurities to which the holder of this Note would be entitled except for theprovisions hereunder, and no payment over to or for the benefit of the holdersof Senior Debt by the holder of this Note, shall, as between the Company, itscreditors other than holders of Senior Debt, and the holder of this Note, bedeemed to be a payment by the Company to or on account of the Senior Debt.  It is understood that the subordinationprovisions of this Note are and are intended solely for the purposes ofdefining the relative rights of the holder of this Note, on the one hand, andthe holders of the Senior Debt on the other hand.

 

Nothingcontained in this Note is intended to or shall impair, as between the Company,its creditors other than the holders of Senior Debt, and the holder of thisNote, the obligation of the Company, which is absolute and unconditional, topay the principal of and interest on this Note as and when the same shallbecome due and payable in accordance with their terms, or is intended to orshall affect the relative rights of the holder of this Note and creditors ofthe Company other than the holders of the Senior Debt, nor shall anythingherein or therein prevent the holder of this Note from exercising all remediesotherwise permitted by applicable law upon default hereunder, subject to therights, if any, of the holders of Senior Debt in respect of cash, property orsecurities of the Company received upon the exercise of any such remedy.

 

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### **Events ofDefault**

 

“Event ofDefault,” wherever used herein with respect to this Note, means any one of thefollowing events (whatever the reason for such Event of Default and whether itshall be voluntary or involuntary or be effected by operation of law orpursuant to any judgment, decree or order of any court or any order, rule orregulation of any administrative or governmental body):

 

(1)           default in thepayment of any interest upon this Note when it becomes due and payable, andcontinuance of such default for a period of 30 days; or

 

(2)           default in thepayment of the principal of this Note at its maturity; or

 

(3)           default in theperformance, or breach, of any covenant or warranty of the Company in this Note(other than a covenant or warranty a default in whose performance or whosebreach is elsewhere specifically dealt with) and continuance of such default orbreach for a period of 90 days after there has been given, by registered orcertified mail, to the Company by the holder of the Note a written noticespecifying such default or breach and requiring it to be remedied and statingthat such notice is a “Notice of Default” hereunder; or

 

(4)           the entry by a courthaving jurisdiction in the premises of (A) a decree or order for relief inrespect of the Company in an involuntary case or proceeding under anyapplicable Federal or state bankruptcy, insolvency, reorganization or othersimilar law or (B) a decree or order adjudging the Company a bankrupt orinsolvent, or approving as properly filed a petition seeking reorganization,arrangement, adjustment or composition of or in respect of the Company underany applicable Federal or state law, or appointing a custodian, receiver,liquidator, assignee, trustee, sequestrator or other similar official of theCompany or of any substantial part of its property, or ordering the winding upor liquidation of its affairs, and the continuance of any such decree or orderfor relief or any such other decree or order unstayed and in effect for aperiod of 90 consecutive days; or

 

(5)           the commencement by the Company of avoluntary case or proceeding under any applicable Federal or state bankruptcy,insolvency, reorganization or other similar law or of any other case orproceeding to be adjudicated a bankrupt or insolvent, or the consent by it tothe entry of a decree or order for relief in respect of the Company in aninvoluntary case or proceeding under any applicable Federal or state bankruptcy,insolvency, reorganization or other similar law or to the commencement of anybankruptcy or insolvency case or proceeding against it, or the filing by it ofa petition or answer or consent seeking reorganization or relief under anyapplicable Federal or state law, or the consent by it to the filing of suchpetition or to the appointment of, or taking possession of the Company or ofany substantial part of its property by, a custodian, receiver, liquidator,assignee, trustee, sequestrator or other similar official or the making by theCompany of an assignment for the benefit of creditors, or the admission by itin writing of its inability to pay its debts generally as they become due, orthe taking of corporate action by the Company in furtherance of any suchaction; or

 

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If an Event ofDefault (other than an Event of Default specified in paragraphs (4) or (5)above) occurs and is continuing, then the holder of this Note may declare theprincipal amount to be due and payable immediately, by a notice in writing tothe Company, and upon any such declaration such principal amount shall becomeimmediately due and payable.  If anEvent of Default specified in paragraphs (4) or (5) above occurs, the principalamount of this Note shall automatically, and without any declaration or otheraction on the part of the holder, become immediately due and payable.

 

No delay or omission of the holder of this Note to exercise any rightor remedy accruing upon any Event of Default shall impair any such right orremedy or constitute a waiver of any such Event of Default or an acquiescencetherein.  Every right and remedy givenby this Note or by law to the holder may be exercised from time to time, and asoften as may be deemed expedient, by the holders.

 

**Consolidations and Mergers Permitted**

 

Nothing contained in this Note shall prevent any consolidation ormerger of the Company with or into any other corporation or corporations(whether or not affiliated with the Company), or successive consolidations ormergers in which the Company or its successor or successors shall be a party orparties, or shall prevent any sale, conveyance, transfer or other dispositionof the property of the Company or its successor or successors as an entirety,or substantially as an entirety, to any other corporation (whether or notaffiliated with the Company or its successor or successors) authorized toacquire and operate the same; provided, however, the Company hereby covenantsand agrees that, upon any such consolidation, merger, sale, conveyance,transfer or other disposition, the due and punctual payment of the principal ofand interest on this Note in accordance with its terms, according to its tenor,and the due and punctual performance and observance of all the covenants andconditions of hereunder to be kept or performed by the Company, shall beexpressly assumed, by written agreement satisfactory in form to the holderexecuted and delivered to the holder by the entity formed by such consolidation,or into which the Company shall have been merged, or by the entity which shallhave acquired such property.

 

In case of any such consolidation, merger, sale, conveyance, transferor other disposition and upon the assumption by the successor corporation ofthe due and punctual payment of the principal of and interest on this Note andthe due and punctual performance of all of the covenants and conditionshereunder to be performed by the Company, such successor corporation shallsucceed to and be substituted for the Company, with the same effect as if ithad been named herein as the party of the first part, and thereupon thepredecessor corporation shall be relieved of all obligations and covenantsunder this Note.

 

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Nothingcontained in this Note shall prevent the Company from merging into itself oracquiring by purchase or otherwise all or any part of the property of any othercorporation (whether or not affiliated with the Company).

 

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IN WITNESS WHEREOF,the Company has caused this instrument to be duly executed.

 

Dated:  February 5, 2003

 
|   | PSI ENERGY, INC. |
|--------|------------------|
|   |             |
|   |             |
|   | By:              | /s/ WENDY L. AUMILLER |   |
|   |             |  Wendy L. Aumiller |
|   |             |  Treasurer |

 

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