**Exhibit 10.ss**

 

**CINERGYCORP. NON-UNIONEMPLOYEES’ 401(K) PLAN**

** **

(Effective as of January 1, 2003)

 

----

 

**TABLE OF CONTENTS**

 
| ARTICLE 1. The Plan                      |
|------------------------------------------|
| 1.1                                      | Establishment of Plan |
| 1.2                                      | Applicability of Plan |
| 1.3                                      | Purpose of the Plan |
| 1.4                                      | Type  of Plan |
|                                     |   |
| ARTICLE 2. Definitions                   |
| 2.1                                      | Definitions |
| 2.2                                      | Gender and Number |
|                                     |   |
| ARTICLE 3. Participation                 |
| 3.1                                      | Participation |
| 3.2                                      | Duration of Participation |
| 3.3                                      | Leased  Employees |
| 3.4                                      | Reclassification |
|                                     |   |
| ARTICLE 4. Contributions                 |
| 4.1                                      | Deferred Compensation Contributions |
| 4.2                                      | Employee After-Tax Contributions |
| 4.3                                      | Matching Contributions |
| 4.4                                      | Limitations on Contributions |
| 4.5                                      | Contributions Not Contingent on Profits |
| 4.6                                      | Limitations on Annual Account Additions |
| 4.7                                      | Rollover Contributions |
| 4.8                                      | Contributions During Period of Military  Leave |
| 4.9                                      | ADP/ACP Safe Harbor |
| 4.10                                     | Profit Sharing Contributions |
|                                     |   |
| ARTICLE 5. Vesting in Accounts           |
| 5.1                                      | All Accounts Except Profit Sharing  Contributions Account |
| 5.2                                      | Profit Sharing Contributions Account |
| 5.3                                      | Forfeitures |
|                                     |   |
| ARTICLE 6. Distributions and Withdrawals |
| 6.1                                      | Distribution Upon Retirement, Death,  Disability, or Other Termination of Employment |
| 6.2                                      | Commencement of Distributions |
| 6.3                                      | Method of Distribution |
| 6.4                                      | Hardship Withdrawals |
| 6.5                                      | Loans |
| 6.6                                      | Other Withdrawals Prior to Termination of  Employment |
| 6.7                                      | Withholding Taxes |

 

i

----

 
| ARTICLE 7. Investment Elections                                           |
|---------------------------------------------------------------------------|
| 7.1                                                                       | After-Tax, Deferred Compensation, Employer  Match, ESOP Transfer, and Rollover Contribution Accounts |
| 7.2                                                                       | Matching Contributions Account and Profit  Sharing Contributions Account |
| 7.3                                                                       | Voting and Other Rights with Respect to  Cinergy Stock |
|                                                                      |   |
| ARTICLE 8. Accounts and Records of the Plan                               |
| 8.1                                                                       | Accounts and Records |
| 8.2                                                                       | Trust  Fund |
| 8.3                                                                       | Valuation and Allocation of Expenses |
| 8.4                                                                       | Allocation of Earnings and Losses |
|                                                                      |   |
| ARTICLE 9. Financing                                                      |
| 9.1                                                                       | Financing |
| 9.2                                                                       | Contributions |
| 9.3                                                                       | Nonreversion |
| 9.4                                                                       | Rights in the Trust Fund |
|                                                                      |   |
| ARTICLE  10. Administration                                               |
| 10.1                                                                      | Plan Administrator and Fiduciary |
| 10.2                                                                      | Removal and Replacement of Benefits  Committee Members |
| 10.3                                                                      | Compensation and Expenses |
| 10.4                                                                      | Delegation of Duties and Employment of  Specialists |
| 10.5                                                                      | Administration |
| 10.6                                                                      | No Enlargement of Employee Rights |
| 10.7                                                                      | Appeals from Denial of Claims |
| 10.8                                                                      | Notice of Address and Missing Persons |
| 10.9                                                                      | Data and Information for Benefits |
| 10.10                                                                     | Indemnity for Liability |
| 10.11                                                                     | Effect of a Mistake |
|                                                                      |   |
| ARTICLE  11. Amendment and Termination                                    |
| 11.1                                                                      | Amendment and Termination |
| 11.2                                                                      | Limitations on Amendments |
| 11.3                                                                      | Effect of Bankruptcy and Other  Contingencies Affecting an Employer |
| 11.4                                                                      | Amendment of Vesting Schedule |
|                                                                      |   |
| ARTICLE  12. Top-Heavy Provisions                                         |
| 12.1                                                                      | Application of Top-Heavy Provisions |
| 12.2                                                                      | Definitions |
| 12.3                                                                      | Minimum Contribution |
| 12.4                                                                      | Limit on Annual Additions: Combined Plan  Limit |
| 12.5                                                                      | Collective Bargaining Agreements |
|                                                                      |   |
| ARTICLE  13. Participation In and Withdrawal From the Plan by an Employer |
| 13.1                                                                      | Adoption of the Plan |
| 13.2                                                                      | Withdrawal from Participation |

 

ii

----

 
| 13.3                       | Company as Agent for Employers     |
|----------------------------|------------------------------------|
|                       |                               |
| ARTICLE  14. Miscellaneous |
| 14.1                       | Beneficiary Designation            |
| 14.2                       | Facility of Payment                |
| 14.3                       | Nonalienation                      |
| 14.4                       | Applicable  Law                    |
| 14.5                       | Severability                       |
| 14.6                       | No  Guarantee                      |
| 14.7                       | Merger, Consolidation, or Transfer |
| 14.8                       | Internal Revenue Service Approval  |
| 14.9                       | Special ESOP Provisions            |
| 14.10                      | Electronic  Media                  |
|                       |                               |
| Addendum                   |

 

iii

----

 

# **ARTICLE 1.****THE PLAN**

#  

## **1.1**                               Establishment of Plan.

## ** **

Effective asof January 1, 1998, Cinergy Corp. (the “Company”) established the Cinergy Corp.Non-Union Employees’ 401(k) Plan (the “Plan”) for the benefit of its eligiblenon-union employees.  The Plan is theresult of the January 1, 1998 merger of the PSI Energy, Inc. Employees’ 401(k)Savings Plan and The Cincinnati Gas & Electric Company DeferredCompensation and Investment Plan.

 

The PSIEnergy, Inc. Employees’ 401(k) Savings Plan was originally adopted effectiveOctober 1, 1988 by Public Service Company of Indiana, Inc., as a successorplan to an Employee’s 401(k) Plan adopted as of January 1, 1987.

 

The CincinnatiGas & Electric Company instituted the Employee Incentive Thrift Plan in1967.   Effective as of October 1,1983, the plan was amended and renamed The Cincinnati Gas & ElectricCompany Deferred Compensation and Investment Plan.

 

## **1.2**                               Applicability of Plan.

## ** **

The provisionsof this Plan as set forth in this document are applicable only to the Employeesin current employment on or after January 1, 2003, except as otherwisespecifically provided.  Except as soprovided, any person who was entitled to benefits under the Plan or apredecessor plan as in effect on December 31, 2002, shall continue to beentitled to the same benefits under this Plan. The provisions of this amendment and restatement of the Plan areeffective as of January 1, 2003 except where an interim effective date forvarious law changes is otherwise provided.

 

## **1.3**                               Purpose of the Plan.

## ** **

The purpose ofthe Plan is to provide a convenient way for Participants to save on a regularand long-term basis for retirement and to enable Participants to share in theprofitable operations of the Company.

 

## **1.4**                               Type of Plan.

## ** **

The Plan isintended to be an “ERISA Section 404(c) plan” as defined in Department of LaborRegulations Section 2550.404c-1(b) and an “eligible individual account plan”within the meaning of ERISA Section 407(d)(3). Effective as of January 1, 2002, (i) the portion of the Planthat is held at any one time in the Cinergy Stock Fund is designated as an“employee stock ownership plan” within the meaning of Section 4975(e)(7) of theCode designed to invest primarily in Cinergy Stock and is intended to qualifyunder Section 401(a) of the Code as a stock bonus plan and (ii) the portionof the Plan that at any one time is not held in the Cinergy Stock Fund is aprofit sharing plan for purposes of Section 401(a)(27)(B) of the Code thatis intended to qualify under Section 401(a) of the 

 

1

----

 

Code and thatincludes a cash or deferred arrangement intended to qualify underSection 401(k) of the Code.

 

# **ARTICLE 2.****DEFINITIONS**

#  

## **2.1**                               Definitions.

## ** **

Whenever usedin the Plan, the following terms, when capitalized, will have the respectivemeanings set forth below, unless otherwise expressly provided in this document.

 

### (a)                                  **“Account”** means the separate account maintained for eachMember, which represents the Member’s total proportionate interest in the TrustFund as of any Valuation Date and which consists of the sum of the followingsubaccounts:

###  

#### (1)                                  **“After-Tax Contributions Account”** means that portion of aMember’s Account that evidences the value of the Member’s Employee After-TaxContributions made pursuant to Section 4.2, including any gains and lossesof the Trust Fund attributable thereto;

####  

#### (2)                                  **“Deferred Compensation Contributions Account”** means thatportion of a Member’s Account that evidences the value of the DeferredCompensation Contributions made on the Member’s behalf by an Employer pursuantto Section 4.1, including any gains and losses of the Trust Fundattributable thereto;

####  

#### (3)                                  **“Employer Match Account”** means that portion of aMember’s Account that evidences the value of the matching contributions made tothe PSI Energy, Inc. Employees’ 401(k) Savings Plan before January 1,1992, including any gains and losses of the Trust Fund attributable thereto;

####  

#### (4)                                  **“ESOP Transfer Account”** means that portion of aMember’s Account that evidences the value of the Member’s account balanceattributable to amounts that the Member elected to have transferred from thePublic Service Company of Indiana, Inc. Employee Stock Ownership Plan to thePSI Energy, Inc. Employees’ 401(k) Savings Plan, including any gains or lossesof the Trust attributable thereto;

####  

#### (5)                                  **“Matching Contributions Account”** means that portion of aMember’s Account that evidences the value of the Employer MatchingContributions made on the Member’s behalf by an Employer pursuant toSection 4.3, including any gains and losses of the Trust Fund attributablethereto;

####  

#### (6)                                  **“Rollover Contributions Account”** means that portion of aMember’s Account that evidences the value of any Rollover Contributions made by

 

2

----

 

#### the Member pursuant toSection 4.7, including any gains and losses of the Trust Fund attributablethereto; and

####  

#### (7)                                  **“Profit Sharing Contributions Account”** means that portion of aMember’s Account that evidences the value of any Profit Sharing Contributionsmade on the Member’s behalf by an Employer pursuant to Section 4.10,including any gains and losses of the Trust Fund attributable thereto.

####  

### (b)                                 **“Affiliate”** means any employer that together with the Employeris under common control or a member of an affiliated service group asdetermined under Sections 414(b), (c), (m), and (o) of the Code.  In determining whether an employer is amember of a controlled group for purposes of Section 4.6, the rules ofSections 414(b) and (c) of the Code shall be applied as modified bySection 415(h) of the Code.

###  

### (c)                                  **“Beneficiary”** means the person or persons who are to receivebenefits under the Plan after a Member’s death.

###  

### (d)                                 **“Benefits Committee”** means the Committeeestablished pursuant to Article 10 to serve as Plan Administrator.

###  

### (e)                                  **“Board”** means the Board of Directors of the Company.

###  

### (f)                                    **“Change in Control”** means any of the following events inparagraphs (1), (2), (3), or (4) below has occurred:

###  

#### (1)                                  Any Person isor becomes the beneficial owner (as defined in Rule 13d-3 under the SecuritiesExchange Act), directly or indirectly, of securities of the Company (notincluding in the securities beneficially owned by such Person any securitiesacquired directly from the Company or its affiliates) representing more thantwenty percent (20%) of the combined voting power of the Company’s thenoutstanding securities, excluding any Person who becomes such a beneficialowner in connection with a transaction described in clause (A) of paragraph (2)below; or

####  

#### (2)                                  There isconsummated a merger or consolidation of the Company or any direct or indirectsubsidiary of the Company with any other corporation, partnership or otherentity, other than (A) a merger or consolidation that would result in thevoting securities of the Company outstanding immediately prior to that mergeror consolidation continuing to represent (either by remaining outstanding or bybeing converted into voting securities of the surviving entity or its parent)at least sixty percent (60%) of the combined voting power of the securities ofthe Company or the surviving entity or its parent outstanding immediately afterthe merger or consolidation, or (B) a merger or consolidation effected toimplement a recapitalization of the Company (or similar transaction) in whichno Person is or becomes the beneficial owner, directly or  indirectly, of 

 

3

----

 

#### securities of the Company(not including in the securities beneficially owned by such a Person anysecurities acquired directly from the Company or its affiliates other than inconnection with the acquisition by the Company or its affiliates of a business)representing twenty percent (20%) or more of the combined voting power of theCompany’s then outstanding securities; or

####  

#### (3)                                  During anyperiod of two (2) consecutive years, individuals who at the beginning of thatperiod constitute the Board and any new director (other than a director whoseinitial assumption of office is in connection with an actual or threatenedelection contest, including but not limited to a consent solicitation, relatingto the election of directors of the Company) whose appointment or election bythe Company’s stockholders was approved or recommended by a vote of at leasttwo-thirds (2/3) of the directors then still in office who either were directorsat the beginning of that period or whose appointment, election, or nominationfor election was previously so approved or recommended cease for any reason toconstitute a majority of the Board; or

####  

#### (4)                                  Thestockholders of the Company approve a plan of complete liquidation ordissolution of the Company or there is consummated an agreement for the sale ordisposition by the Company of all or substantially all of the Company’s assets,other than a sale or disposition by the Company of all or substantially all ofthe Company’s assets to an entity, at least sixty percent (60%) of the combinedvoting power of the voting securities of which are owned by stockholders of theCompany in substantially the same proportions as their ownership of the Companyimmediately prior to the sale.

####  

#### (5)                                  For purposes ofthis subsection 2.1(f), “Person” has the meaning set forth in paragraph 3(a)(9)of the Securities Exchange Act, as modified and used in subsections 13(d) and14(d) of the Securities Exchange Act; however, a Person will not include thefollowing: (1) the Company or any of its subsidiaries or affiliates; (2) atrustee or other fiduciary holding securities under an employee benefit plan ofthe Company or any of its subsidiaries or affiliates; (3) an underwriter temporarilyholding securities pursuant to an offering of those securities; or (4) acorporation owned, directly or indirectly, by the stockholders of the Companyin substantially the same proportions as their ownership of stock of theCompany.

####  

### (g)                                 **“Cinergy Stock”** means Cinergy Corp. common stock.

###  

### (h)                                 **“Cinergy Stock Fund”** means the Investment Fundinvested primarily in Cinergy Stock.

###  

### (i)                                     **“Code”** means the Internal Revenue Code of 1986, as amendedfrom time to time, and interpretive rulings and regulations.

 

4

----

 

### (j)                                     **“Company”** means Cinergy Corp., a Delaware corporation, andany corporation that succeeds to its business and adopts the Plan.

###  

### (k)                                  **“Compensation”** means—

###  

#### (1)                                  for purposes ofSections 4.1, 4.2 and 4.3, the Employee’s “base compensation”.

####  

#### (2)                                  for purposes ofSection 4.4, “compensation” as defined in Section 414(s) of the Code;and

####  

#### (3)                                  for purposes ofSections 2.1(w) and 4.6, “compensation” as defined in Section 415(c)(3) ofthe Code.

####  

For purposesof this section, **“base compensation”**means the Employee’s base rate of pay, exclusive of any allowances, premiums,bonuses, overtime pay, or other forms or types of compensation, for theapplicable period.  For Employees paidon an hourly basis, the “base rate of pay” means the Employee’s hourly baserate of pay multiplied by the Employee’s hours worked during the applicableperiod.  “Base compensation” shall bedetermined prior to any reductions for Deferred Compensation Contributions andother elective contributions made by the Employer on the Employee’s behalfduring or for the Plan Year that are not includable in gross income underSection 125 of the Code, Section 402(e)(3) of the Code,Section 402(h) of the Code, Section 403(b) of the Code or, for PlanYears beginning on or after January 1, 2001, Section 132(f) of the Code.

 

TheCompensation of each Employee that may be taken into account under the Plan fora Plan Year will not exceed $200,000 (as adjusted by the Secretary of theTreasury pursuant to Section 401(a)(17) of the Code).  For purposes of this Subsection 2.1(k), Compensation shallinclude any elective amounts that are not includible in the gross income of theemployee by reason of Section 132(f)(4) of the Code.

 

### (l)                                     **“Deferred Compensation Contributions”** means the contributionsmade by an Employer on behalf of a Participant pursuant to the Participant’selection to reduce Compensation as described in Section 4.1.

###  

### (m)                               **“Disability”** means a physical or mental condition, resultingfrom injury or disease, that constitutes total disability under the Company’slong-term disability plan.

###  

### (n)                                 **“Effective Date”** means January 1, 2003.

###  

### (o)                                 **“Eligible Employee”** means an Employee on the payroll of anEmployer who has attained age 18, who is not a “leased employee” (as defined inSection 3.3), who is not classified by the Employer as a summer laborer ora summer employee, and whose terms and conditions of employment are notgoverned by a collective bargaining agreement that provides for participationin this Plan.

 

5

----

 

### (p)                                 **“Employee”** means any person who is employed by the Company oran Affiliate, who is classified as an employee by the Company or Affiliate andwho receives compensation from the Company or an Affiliate that is initiallyreported by the Company or the Affiliate on a federal wage and tax statement(Form W–2).

###  

### (q)                                 **“Employee After-Tax Contributions”** means the contributionsmade by an Employee pursuant to an election as described in Section 4.2.

###  

### (r)                                    **“Employer”** means the Company and any Affiliate that elects tobecome a party to the Plan, with the approval of the Company, by adopting thePlan for the benefit of its Eligible Employees in the manner described inArticle 13.

###  

### (s)                                  **“Employer Matching Contributions”** means the contributionsmade by an Employer on behalf of a Participant, conditioned on the making ofDeferred Compensation Contributions, as described in Section 4.3, andshall consist of—

###  

#### (1)                                  **Employer Base Matching Contributions**, as described in Subsection 4.3(a);and

####  

#### (2)                                  **Employer Incentive Matching Contributions**, as described inSubsection 4.3(b).

####  

### (t)                                    **“Employment Commencement Date”** means the first day onwhich an Employee first performs an hour of service as an Eligible Employee or,if applicable, the first day following a severance from service on which anEmployee performs an hour of service as an Eligible Employee.  For purposes of this Subsection 2.1(t), theterm “hour of service” shall mean, with respect to any Employee, each hour forwhich the Employee is paid, or entitled to payment, by an Employer for theperformance of duties for that Employer.

###  

### (u)                                 **“ERISA”** means the Employee Retirement Income Security Actof 1974, as amended from time to time, and interpretive rulings andregulations.

###  

### (v)                                 **“ESOP Feature”** means the portion of the Plan that, as described inSection 1.4, has been designated as an “employee stock ownership plan”within the meaning of Section 4975(e)(7) of the Code.

###  

### (w)                               **“Highly Compensated Employee”** means, with respect to anyPlan Year, any Employee who is a 5-percent owner (as defined in Section416(i)(1) of the Code) during the Plan Year, or during the preceding Plan Year(or such other period as the Company may elect pursuant to Treasuryregulations)—

###  

#### (1)                                  receivedCompensation from the Employer and all Affiliates in excess of $80,000 (asadjusted pursuant to Section 415(d) of the Code); or

####  

#### (2)                                  was a 5-percentowner (as defined in Section 416(i)(1) of the Code).

 

6

----

 

### (x)                                   **“Investment Fund”** means any investment fund established by thePlan Administrator as an investment medium for Members’ Accounts in the TrustFund.  The Investment Funds will includethe Cinergy Stock Fund.  The PlanAdministrator has the discretion to establish and terminate such Funds as itshall deem appropriate.

###  

### (y)                                 **“Member”** means a Participant, or a former Participant oralternate payee who still has an Account balance in the Plan.

###  

### (z)                                   **“Participant”** means any Employee of an Employer who has met andcontinues to meet the eligibility requirements of the Plan as set forth inSection 3.1.

###  

### (aa)                            **“Plan”** means the Cinergy Corp. Non-Union Employees’401(k) Plan, as set forth in this document and as subsequently amended fromtime to time.

###  

### (bb)                          **“Plan Administrator”** means the entity that hasbeen designated as the “plan administrator” pursuant to Section 10.1.

###  

### (cc)                            **“Plan Year”** means the 12-consecutive-month period ending eachDecember 31.

###  

### (dd)                          **“Profit Sharing Contributions”** means those contributionsmade by an Employer on behalf of a Participant as described inSection 4.10, and shall consist of —

###  

#### (1)                                  **Balanced Profit Sharing Contributions**, as described in Subsection4.10(a); and

####  

#### (2)                                  **Investor Profit Sharing Contributions**, as described in Subsection4.10(b)

####  

### (ee)                            **“Retire”** means to terminate employment with the Employer andall Affiliates—

###  

#### (1)                                  after reachingage 65; or

####  

#### (2)                                  after reachingage 50 and completing five Years of Service.

####  

### (ff)                                **“Rollover Contribution”** means those contributionsmade by a Participant as described in Section 4.7.

###  

### (gg)                          **“Securities Exchange Act”** means the SecuritiesExchange Act of 1934, as amended from time to time, and interpretive rulingsand regulations.

###  

### (hh)                          **“Trust Agreement”** means any agreement establishing a trust,which forms part of the Plan, to receive, hold, invest, and dispose of theTrust Fund.

###  

### (ii)                                  **“Trust Fund”** means the assets of every kind and description heldunder the Trust Agreement.

 

7

----

 

### (jj)                                  **“Trustee”** means the corporation, or individual orindividuals, or combination thereof, acting as trustee under the TrustAgreement at any time of reference.

###  

### (kk)                            **“Valuation Date”** means each business day.

###  

### (ll)                                  **“Years of Service”** means, with respect to an Employee, theperiod of time during which the employment relationship exists between theEmployee and the Employer, the length of which is determined as follows:  An Employee will be credited with Years ofService for the period of time beginning with the later of (i) his attainmentof age 18 or (b) his Service Commencement Date and ending on his Severance fromService Date and for each Period of Credited Severance.  For purposes of this Subsection 2.1(ll):

###  

#### (1)                                  “ServiceCommencement Date” means, with respect to each Employee, the date as of whichthe Employee is first entitled to be credited with an Hour of Service.

####  

#### (2)                                  “Hour ofService” means, with respect to any Employee, any of the following:  (A) each hour for which he is paid, orentitled to payment, by an Employer for the performance of duties for thatEmployer; (B) each other hour for which back pay, irrespective of mitigation ofdamages, has been either awarded to him or agreed to be paid to him by anEmployer; (C) each other hour for which he is absent from his normal period ofemployment with his Employer due to an approved military leave, maternityleave, paternity leave, adoption leave, worker’s compensation leave, personalleave of six consecutive months or less, sick leave of six consecutive monthsor less, or total disability qualifying him for benefits under the Company’sLong-Term Disability Plan for a period of no more than twelve months; and (D)each other hour for which he is paid, or entitled to payment, by an Employerfor a period of time during which he does not perform any duties for thatEmployer (irrespective of whether or not his employment relationship with thatEmployer has terminated) due to vacation, holiday, illness, incapacity(including disability), layoff, jury duty, witness duty, military duty, orleave of absence.  In computing an Hourof Service, the Plan may use the equivalencies set forth in paragraph (e)of 29 C.F.R. §2530.200b–3. However, if different equivalencies are used for differentclassifications of Employees, then those classifications must be reasonable andconsistently applied.  Each Hour ofService will be credited to the Employee for the appropriate computation periodin accordance with the provisions of paragraphs (b) and (c) of29 C.F.R. §2530.200b–2, and each Hour of Service, when aggregated fora particular computation period, will constitute the Hours of Service creditedto the Employee for that computation period. However, no Employee will be credited under (D) of this Paragraph2.1(ll)(2) either with more than 501 Hours of Service on account of anysingle continuous period during which the Employee performs no duties for anEmployer irrespective of whether or not that period occurs in a 

 

8

----

 

#### single computation period,or with an hour for which the Employee is paid, or entitled to payment, by anEmployer if that payment is made solely for the purposes of either reimbursingthe Employee for medical or medically related expenses incurred by the Employeeor complying with applicable worker’s compensation, unemployment compensation,or disability insurance laws.  However,the crediting of Hours of Service for back pay awarded or agreed to withrespect to periods described in (D) of this Paragraph 2.1(ll)(2) will besubject to the same limitations set forth in the immediately preceding sentencewith respect to (D) of this Paragraph 2.1(ll)(2).

####  

#### (3)                                  “Severance fromService Date” means, with respect to each Employee, the date of his Severancefrom Service.

####  

#### (4)                                  “Severance fromService” means, with respect to an Employee:

####  

##### (A)                              the date oftermination of his employment relationship with his Employer by reason of aquit, resignation, discharge, retirement, death, or layoff of the Employee foran indefinite period of time made without any expectation on the part of theEmployer at the time of layoff to recall the Employee, for employment with theEmployer as an Employee within 12 months from the date of the commencementof the layoff; or

#####  

##### (B)                                the firstanniversary of the first date of the Employee’s Absence from Service.  Notwithstanding the preceding sentence, ifan Employee has an Absence from Service of more than one year by reason of amaternity or paternity absence, the Employee’s Severance from Service occurs onthe second anniversary of that absence; provided that the period between thefirst and second anniversaries of the first day of such Absence from Service isneither a period of service nor a period of severance.  For purposes of this Subparagraph (B), an Absencefrom Service for maternity or paternity reasons means an absence (1) byreason of the pregnancy of the individual, (2) by reason of the birth of achild of that individual, (3) by reason of the placement of a child withthe individual in connection with the adoption of the child by that individual,or (4) for purposes of caring for the child for a period beginningimmediately following its birth or placement.

#####  

#### (5)                                  “Absence fromService” means, with respect to each Employee, his absence from service (withor without pay) with his Employer for any reason other than a quit,resignation, discharge, retirement, or death, including, but without limitationbecause of enumeration, vacation, holiday, sickness, disability, leave ofabsence (unless otherwise required by applicable law), or other layoff.

 

9

----

 

#### (6)                                  “Period ofCredited Severance” means, with respect to each Employee who has incurred aSeverance from Service, and who, within 12 months of his Severance fromService Date, performs an Hour of Service, the Period of Severance commencingon the Employee’s Severance from Service Date and ending on the date thereafterupon which he first performs an Hour of Service.  In the case of an Employee who has incurred a Severance fromService that occurs during an Absence from Service by reason of a maternity orpaternity absence as defined in Subparagraph 2.1(ll)(4)(B), the period betweenthe first and second anniversaries of the first day of absence will not be aPeriod of Credited Severance.

####  

#### (7)                                  “Period of Severance”means, with respect to each Employee, the period of time commencing on hisSeverance from Service Date and ending on the date thereafter upon which hefirst performs an Hour of Service.

####  

### In determining an Employee’stotal Years of Service for purposes of the Plan, all periods of employment thatare credited to the Employee will be aggregated; subject to the followingprovisions:  If an Employee who firstbecame an Employee after December 31, 2002 incurs a Severance from Service andis later reemployed by an Employer (or Affiliate), his period of employmentprior to his Severance from Service will, subject to all of the provisions ofthe Plan, be aggregated for the purpose of determining his Years of Serviceonly if the Employee either had been vested in accordance with Section 5.2 athis Severance from Service or if his Period of Severance is less than 60consecutive months.  If an Employee’speriod of employment prior to his Severance from Service is not aggregatedpursuant to the immediately preceding sentence, the Years of Service earned forthe Employee’s period of employment prior to his Severance from Service shallbe disregarded for purposes of determining his Years of Service after hisreemployment.

###  

### In no event will an Employeereceive credit more than once for the same period of employment.

###  

## **2.2**                               Gender and Number.

 

Unless thecontext clearly requires otherwise, the masculine pronoun whenever used will beconstrued to include the feminine and neuter pronoun, and the singular will beconstrued to include the plural.

 

# **ARTICLE 3.****PARTICIPATION**

#  

## **3.1**                               Participation.

 

Each EligibleEmployee who was a participant in the Plan immediately prior to the EffectiveDate will remain a Participant on the Effective Date.  Each other Eligible 

 

10

----

 

Employee shallcommence participation in the Plan as of the Eligible Employee’s EmploymentCommencement Date.

 

The EligibleEmployee shall automatically commence participation in the Plan as of theEligible Employee’s Employment Commencement Date as to Employee DeferredCompensation Contributions unless the Eligible Employee affirmatively notifiesthe Plan Administrator, in accordance with procedures established from time totime by the Plan Administrator, that the Eligible Employee does not desire tocommence participation in the Plan as to Employee Deferred CompensationContributions.  Any Eligible Employeewho affirmatively elects not to participate in the Plan as of his EmploymentCommence Date as to Employee Deferred Compensation Contributions maysubsequently commence participation in the Plan as to Employee DeferredCompensation Contributions by electing to make Employee Deferred CompensationContributions.  Any Eligible Employeemay elect to make Employee After-Tax Contributions or a Rollover Contribution,pursuant to Article 4.

 

## **3.2**                               Duration of Participation.

## ** **

A Participantshall continue to be a Participant until the Participant terminates employmentwith all Employers and Affiliates; thereafter, the Participant will be a Memberfor as long as the Participant has an Account balance in the Plan.

 

## **3.3**                               Leased Employees.

## ** **

A person whois not an Employee of an Employer or nonparticipating Affiliate and whoperforms services for an Employer or a nonparticipating Affiliate pursuant toan agreement between the Employer or nonparticipating Affiliate and a leasingorganization will be considered a “leased employee” if the person performed theservices on a substantially full-time basis for a year and the services areperformed under the primary direction and control of the Employer ornonparticipating Affiliate.  A personwho is considered a “leased employee” of an Employer or nonparticipatingAffiliate will not be considered an Employee for purposes of participating inthis Plan or receiving any contribution or benefit under this Plan.  A leased employee will be excluded from thisPlan regardless of whether the leased employee participates in any planmaintained by the leasing organization. However, if a leased employee participates in the Plan as a result ofsubsequent employment with an Employer, the leased employee will receive creditfor service for his employment as a leased employee.  Notwithstanding the preceding provisions of this section, aleased employee will be treated as an Employee for purposes of applying therequirements described in Section 414(n)(3) of the Code and for purposes ofdetermining the number and identity of Highly Compensated Employees.

 

## **3.4**                               Reclassification.

## ** **

In the eventthat any governmental agency or court requires the Company or an Affiliate toreclassify the common law employee or employment status of any independentcontractor or otherwise excluded employee under the Plan, the reclassifiedindividual nevertheless shall not be considered an Eligible Employee followingsuch reclassification 

 

11

----

 

and,therefore, shall not be entitled to participate in the Plan as a result of thereclassification.  Similarly, in theevent that any governmental agency or court otherwise requires the Company oran Affiliate to reclassify the employment status of any individual eligible forparticipation under the Plan (such as a summer laborer or a summer employee),the reclassified individual nevertheless shall retain his original status forpurposes of the Plan following such reclassification and, therefore, shall notbe entitled to participate in the Plan in a different manner as a result of thereclassification.

 

# **ARTICLE 4.****CONTRIBUTIONS**

#  

## **4.1**                               Deferred Compensation Contributions.

## ** **

Eligibleemployees hired on or after January 1, 2001 are automatically enrolled asParticipants at a three percent before-tax salary contribution unless theyaffirmatively elect in accordance with rules established by the Plan Administratornot to enroll or participate.  EachParticipant may elect, in accordance with rules established by the PlanAdministrator, to reduce the Participant’s Compensation by any percentage up to50 percent (or such other percentage as prescribed by the Plan Administrator),in increments of one-half percent, and to have the amount by which theParticipant’s Compensation is reduced contributed on the Participant’s behalfby the Employer as a Deferred Compensation Contribution to the Plan.  The election will be effective as soon asadministratively possible after the date the Employee becomes eligible toparticipate and notifies the Plan Administrator of the deferral percentage.

 

A Participantmay elect, in accordance with rules established by the Plan Administrator, toincrease, decrease, or discontinue the Participant’s Compensationreductions.  Such an election will beeffective as soon as administratively possible after receipt of the election bythe Plan Administrator and will be effective only with respect to Compensationnot yet earned as of the effective date of the election.

 

The PlanAdministrator may adopt rules concerning the administration of thissection.  The Deferred CompensationContributions made on behalf of each Participant shall be paid by each Employerto the Trustee and allocated to the Participant’s Deferred CompensationContributions Account as soon as practical after the end of the pay period towhich the Deferred Compensation Contributions relate, but in no case later thanthe fifteenth business day of the month following the month in which thoseamounts would otherwise have been payable to the Participant.  Deferred Compensation Contributions made tothe Plan shall initially be allocated to the portion of the Plan that is notcomprised of the ESOP Feature. Thereafter, to the extent that a Member directs the investment ofDeferred Compensation Contributions in the Cinergy Stock Fund pursuant toArticle 7 of the Plan, such Deferred Compensation Contributions shall betransferred to the ESOP Feature unless and until the Member directs otherwisepursuant to Article 7 of the Plan.

 

12

----

 

## **4.2**                               Employee After-Tax Contributions.

## ** **

EachParticipant may elect, in accordance with rules established by the PlanAdministrator, to have Employee After-Tax Contributions made to the Plan in anamount equal to any percentage of the Participant’s Compensation up to 15percent (or such other percentage as prescribed by the Plan Administrator) inincrements of one-half percent.  Theelection will be effective as soon as administratively possible after theEligible Employee becomes eligible to participate and notifies the PlanAdministrator of the contribution percentage.

 

A Participantmay elect, in accordance with rules established by the Plan Administrator, toincrease, decrease, or discontinue the Participant’s Employee After-TaxContributions. The election will be effective as soon as administrativelypossible after receipt of the election by the Plan Administrator and will beeffective only with respect to Compensation not yet earned as of the effectivedate of the election.

 

Once duringeach Plan Year, a Participant may elect to make an Employee After-TaxContribution in the form of a lump sum payment by check or money order payableto the Trustee and delivered to the Plan Administrator.

 

The sum of theDeferred Compensation Contributions and Employee After-Tax Contributions madeby or on behalf of an Employee for a Plan Year may be subject to certainlimitations determined by the Plan Administrator from time to time.

 

The PlanAdministrator may adopt rules concerning the administration of this section.The Employee After-Tax Contributions made by each Participant shall be paid byeach Employer to the Trustee and allocated to the Participant’s After-TaxContributions Account as soon as practical after the end of the pay period, butin no case later than the fifteenth business day of the month following themonth in which those amounts would otherwise have been payable to theParticipant.  Employee After-TaxContributions made to the Plan shall initially be allocated to the portion ofthe Plan that is not comprised of the ESOP Feature.  Thereafter, to the extent that a Member directs the investment ofEmployee After-Tax Contributions in the Cinergy Stock Fund pursuant toArticle 7 of the Plan, such Employee After-Tax Contributions shall betransferred to the ESOP Feature unless and until the Member directs otherwisepursuant to Article 7 of the Plan.

 

## **4.3**                               Matching Contributions.

## ** **

### (a)                                  **Base Matching Contributions**.  For each pay period, each Employer shall make an Employer BaseMatching Contribution on behalf of each Participant equal to (i) 100percent of the Participant’s Deferred Compensation Contributions with respectto the first 3 percent of the Participant’s Compensation made on theParticipant’s behalf for the pay period, plus (ii) 50 percent of theParticipant’s Deferred Compensation Contributions with respect to the next 2percent of the Participant’s Compensation made on the Participant’s behalf forthe pay period.

###  

The EmployerBase Matching Contributions made on behalf of each Participant shall be paid byeach Employer to the Trustee and allocated to the Participant’s 

 

13

----

 

MatchingContributions Account as soon as practical after the end of the pay period forwhich it is made.  The Employer BaseMatching Contributions made on behalf of each Participant pursuant to thisSubsection 4.3(a) shall be subject to the withdrawal restrictions of Section401(k)(2)(B) of the Code and Treasury Regulation Section 1.401(k)-1(d).

 

### (b)                                 **Incentive Matching Contributions**.  In addition to the Employer Base Matching Contribution under (a),for each Plan Year each Employer may make an Employer Incentive MatchingContribution on behalf of each Participant employed on the last day of the PlanYear equal to a percentage (to be specified by the Plan Administrator) of theDeferred Compensation Contributions made on the Participant’s behalf for thePlan Year.  Such percentage shall bedetermined based on attainment of corporate goals established by the PlanAdministrator in its discretion.

###  

The EmployerIncentive Matching Contributions made on behalf of each Participant will bepaid by each Employer to the Trustee and allocated to the Participant’sMatching Contributions Account as soon as administratively practicable afterdetermining if the corporate goals were achieved and what percentage will becontributed.  Notwithstanding theforegoing provisions of this Subsection 4.3(b), in no event shall the amount ofEmployer Incentive Matching Contributions made on behalf of each Participantpursuant to this Subsection 4.3(b) exceed 4 percent of the Participant’sCompensation.

 

### (c)                                  **Contributions of Cinergy Stock**.  Employer Matching Contributions may be made in cash or in sharesof Cinergy Stock.  Contributions inshares of Cinergy Stock will be determined by dividing the amount of theEmployer Matching Contribution determined under (a) or (b) by the closing priceof Cinergy Stock on the New York Stock Exchange for the date the EmployerMatching Contributions are made to the Trust. The Company may use either authorized and unissued shares of CommonStock, treasury shares or shares of Common Stock acquired on the open market,in private transactions or otherwise, or a combination of the foregoing, forpurposes of making Employer Matching Contributions.

###  

## **4.4**                               Limitations on Contributions.

## ** **

### (a)                                  In no eventshall any Employer make Deferred Compensation Contributions for any calendaryear, with respect to any Participant, in excess of $12,000 (as adjusted by theSecretary of the Treasury to reflect increases in the cost of living). Thislimit will be applied by aggregating all plans and arrangements maintained by theCompany and all Affiliates that provide for elective deferrals (as defined inSection 402(g) of the Code).

###  

If this limitwould be exceeded by contributions to this Plan, the Plan Administrator shalldistribute the amount of the excess (plus earnings thereon) to the Member.  If this limit would be exceeded by thecontribution of excess elective deferrals to this Plan and to the plan ofanother employer, the Plan 

 

14

----

 

Administratorwill distribute the amount of the excess (plus earnings thereon) to the Memberif the Member provides the Plan Administrator with a written claim requesting arefund of the excess on or before March 1 of the following calendaryear.  Excess elective deferrals meanselective deferrals (under Section 402(e)(3) of the Code) in excess of theannual limit on elective deferrals in Section 402(g) of the Code.  The Plan Administrator may requireadditional proof regarding the existence of excess elective deferrals.

 

A distributionof excess elective deferrals, adjusted for earnings and losses, will be made nolater than the April 15 of the calendar year following the calendar yearin which the excess elective deferrals were made.

 

### (b)                                 Subject toSection 4.9, in no event will any Employer make Deferred CompensationContributions for any Plan Year that would cause the actual deferral percentageof the group of Highly Compensated Employees eligible to participate in thePlan to exceed the greater of—

###  

#### (1)                                  one andone-quarter times the actual deferral percentage of the group of all othereligible Employees for the Plan Year; or

####  

#### (2)                                  the lesser of—

####  

##### (A)                              two times theactual deferral percentage of the group of all other eligible Employees for thePlan Year; or

#####  

##### (B)                                the actualdeferral percentage of the group of all other eligible Employees for the PlanYear plus two percentage points.

#####  

The actualdeferral percentage of each group of eligible Employees for any Plan Year willbe the average of the ratios (calculated separately for each eligible Employeein each group) of—

 

###### (i)                                     the DeferredCompensation Contributions made on behalf of each eligible Employee for thePlan Year to

######  

###### (ii)                                  the eligibleEmployee’s Compensation (earned while the Employee was eligible to participatein the Plan) for the Plan Year.

######  

To the extentnecessary to conform to this limitation, the Plan Administrator shall reduceDeferred Compensation Contributions made on behalf of the Highly CompensatedEmployees.  The total amount of thereduction will be determined by reducing the deferral ratio of the HighlyCompensated Employee with the highest deferral ratio to the higher of thedeferral ratio necessary to satisfy the limitation or the deferral ratio of theHighly Compensated Employee with the next highest deferral ratio.  This process will be repeated until thelimitation is satisfied.  The reductionso calculated will be allocated to some or all Highly Compensated Employees byreducing the Deferred Compensation Contributions of the Highly CompensatedEmployee with the highest dollar amount of Deferred 

 

15

----

 

CompensationContributions by the lesser of the total amount of the required reduction orthe amount required to cause that Participant’s Deferred CompensationContributions to equal those of the Highly Compensated Employee with the nexthighest dollar amount of Deferred Compensation Contributions. This process willbe repeated until the entire amount of the reduction has been allocated.

 

Any reductionin the Deferred Compensation Contributions allocated to any Participant will berefunded to the Participant as soon as administratively possible, as providedin rules adopted by the Plan Administrator (amounts refunded within 2 1/2months after the Plan Year in which the Deferred Compensation Contributionswere made are not subject to excise tax under Section 4979 of theCode).  In no event, however, will theexcess contributions be left undistributed any later than the last day of thePlan Year following the Plan Year in which the excess contributions were made.

 

DeferredCompensation Contributions made under this Plan and all before-taxcontributions made under any other plan that is aggregated with this Plan forpurposes of Section 401(a)(4) of the Code and Section 410(b) of the Codewill be treated as made under a single plan. The deferral ratio of any Highly Compensated Employee will be determinedby treating all plans subject to Section 401(k) of the Code under whichthe Highly Compensated Employee is eligible as a single plan.

 

### (c)                                  Subject toSection 4.9, in no event will Employee After-Tax Contributions andEmployer Matching Contributions for any Plan Year be made that would cause thecontribution percentage of the group of Highly Compensated Employees eligibleto participate in the Plan to exceed the greater of  —

###  

#### (1)                                  one andone-quarter times the contribution percentage of the group of all othereligible Employees for the Plan Year; or

####  

#### (2)                                  the lesser of —

####  

##### (A)                              two times thecontribution percentage of the group of all other eligible Employees for thePlan Year; or

#####  

##### (B)                                thecontribution percentage of the group of all other eligible Employees for thePlan Year plus two percentage points.

#####  

Thecontribution percentage of each group of eligible Employees for any Plan Yearwill be the average of the ratios (calculated separately for each eligibleEmployee in each group) of —

 

###### (i)                                     the sum of theEmployee After-Tax Contributions and the Employer Matching Contributions madeon behalf of each eligible Employee for the Plan Year to

######  

###### 16

###### 

######  

###### (ii)                                  the eligibleEmployee’s Compensation (earned while the Employee was eligible to participatein the Plan) for the Plan Year.

######  

To the extentnecessary to conform to this limitation, the Plan Administrator will reduce andallocate Employee After-Tax Contributions and Employer Matching Contributionsmade on behalf of the Highly Compensated Employees.  The total amount of the reduction will be determined by reducingthe contribution ratio of the Highly Compensated Employee with the highestcontribution ratio to the higher of the contribution ratio necessary to satisfythe limitation or the contribution ratio of the Highly Compensated Employeewith the next highest contribution ratio. This process will be repeated until the limitation is satisfied.  The reduction so calculated will beallocated to some or all Highly Compensated Employees by reducing the EmployeeAfter-Tax Contributions of the Highly Compensated Employee with the highestdollar amount of Employee After-Tax Contributions and Employer MatchingContributions by the lesser of the total amount of the required reduction orthe amount required to cause that Participant’s Employee After-TaxContributions and Employer Matching Contributions to equal those of the HighlyCompensated Employee with the next highest dollar amount of Employee After-TaxContributions and Employer Matching Contributions.  This process will be repeated until the entire amount ofreduction has been allocated.

 

Any reductionin the Employee After-Tax Contributions and Employer Matching Contributionsallocated to any Participant will be refunded to the Participant as soon asadministratively possible, as provided in rules adopted by the PlanAdministrator (amounts refunded within 2 1⁄2 months after the Plan Year in whichthe Employee After-Tax Contributions and Employer Matching Contributions weremade are not subject to excise tax under Section 4979 of the Code).  In no event, however, will the excesscontributions be left undistributed any later than the last day of the PlanYear following the Plan Year in which the excess contributions were made.

 

All EmployeeAfter-Tax and Employer Matching Contributions made under this Plan and allafter-tax contributions made under any other plan that is aggregated with thisPlan for purposes of Section 401(a)(4) of the Code and Section 410(b) ofthe Code will be treated as made under a single plan.  If any plan is permissively aggregated with this Plan for purposesof Section 401(m) of the Code, the aggregated plans must also satisfySection 401(a)(4) of the Code and Section 410(b) of the Code as thoughthey were a single plan.  Thecontribution percentage ratio of any Highly Compensated Employee will be determinedby treating all plans subject to Section 401(m) of the Code under whichthe Highly Compensated Employee is eligible as a single plan.

 

### (d)                                 For purposes ofsatisfying the limits on contributions described in this Section 4.4 andSection 4.6, Compensation means an Employee’s compensation as defined inSection 414(s) of the Code.  TheCompensation of each Employee that may be taken into account under the Planwill not exceed the first $200,000 of an 

###  

### 17

### 

###  

### Employee’s Compensation (asadjusted by the Secretary of the Treasury under Section 401(a)(17) of theCode).

###  

### (e)                                  The PlanAdministrator may comply with the requirements of this Section bycombining contributions under any other defined contribution plan maintained bythe Company or any Affiliate.  Any suchcombination will be done in compliance with the guidelines, if any, establishedby the Secretary of the Treasury.  Tothe extent permitted by applicable regulations, the Plan Administrator mayelect to take Deferred Compensation Contributions into account in applying thecontribution percentage test of Subsection (c).

###  

### (f)                                    The PlanAdministrator may take such additional action as it considers appropriate toensure compliance with the requirements of this section.  Such action may include, but is not limitedto, reducing the maximum amount of Deferred Compensation Contributions and/orEmployee After-Tax Contributions that can be contributed on behalf of or by anygroup of Highly Compensated Employees.

###  

### (g)                                 The Plan willnot be treated as complying with the limits in this Section 4.4 if—

###  

#### (1)                                  the actualdeferral percentage of the group of participants who are Highly CompensatedEmployees only complies with the limits in paragraph 4.4(b)(2);

####  

#### (2)                                  thecontribution percentage of the group of participants who are Highly CompensatedEmployees only complies with the limit in Subsection (c)(2) above; and

####  

#### (3)                                  the sum of theactual deferral percentage and contribution percentage of the group ofParticipants who are Highly Compensated Employees exceed the “Aggregate Limit.”

####  

### (h)                                 For purposes ofSubsection (g) above, the “Aggregate Limit” means the sum of—

###  

#### (1)                                  one andone-quarter times the greater of the actual deferral percentage or contributionpercentage of the group of all other Participants for the preceding Plan Year;and

####  

#### (2)                                  the lesser of—

####  

##### (A)                              two times thelesser of the actual deferral percentage or contribution percentage of thegroup of all other Participants for the preceding Plan Year; or

#####  

##### (B)                                the sum of twopercentage points and the lesser of the actual deferral percentage orcontribution percentage of the group of all other Participants for thepreceding Plan Year.

#####  

18

----

 

### (i)                                     If multiple useof the alternative limitation occurs with respect to two or more plans orarrangements maintained by an Employer, it will be corrected by first reducingthe actual deferral percentage, then the actual contribution percentage, andthen a combination of these two methods.

###  

## **4.5**                               Contributions Not Contingent on Profits.

## ** **

As describedin Section 1.4, a portion of this Plan is designated as a profit sharingplan under Section 401(a) of the Code. However, payment by an Employer of contributions to the Plan will not becontingent upon the existence of current or accumulated profits of theEmployer.

 

## **4.6**                               Limitations on Annual Account Additions.

## ** **

### (a)                                  **Annual Account Addition**.  “Annual Account Addition” means for any Participant for any PlanYear, which will also be the limitation year, the sum of—

###  

#### (1)                                  Employercontributions made for the Participant under any qualified defined contributionplan for the Plan Year (including any amounts refunded to the Participant orforfeited pursuant to Section 4.4);

####  

#### (2)                                  theParticipant’s contributions to any qualified defined contribution plan for thePlan Year;

####  

#### (3)                                  forfeituresallocated to the Participant under any defined contribution plan for the PlanYear; and

####  

#### (4)                                  contributionsallocated on the Participant’s behalf to any individual medical account withinthe meaning of Section 415(l)(2) of the Code or attributable to medicalbenefits allocated to an account established under Section 419A(d) of theCode.

####  

“Any definedcontribution plan” means all defined contribution plans of the Company andAffiliates considered as one plan.

 

A RolloverContribution pursuant to Section 4.7 will not be included as part of anyParticipant’s Annual Account Addition.

 

### (b)                                 **Limitation**.  AParticipant’s Annual Account Addition for any Plan Year will not exceed thelesser of—

###  

#### (1)                                  $30,000 (asadjusted by the Secretary of the Treasury under Section 415(d) of the Code)and, for limitation years beginning on or after January 1, 2002, $40,000 (asadjusted by the Secretary of the Treasury under Section 415(d) of the Code); or

####  

#### (2)                                  25 percent ofthe Participant’s Compensation for the Plan Year.

####  

#### 19

#### 

####  

### (c)                                  **Additional Limitation**.  If in any Plan Year beginning prior to January 1, 2000, aParticipant is covered both under any defined contribution plan and under anydefined benefit plan, the sum of the defined benefit plan fraction (as definedin Section 415(e)(2) of the Code) and the defined contribution plan fraction(as defined in Section 415(e)(3) of the Code) for the Plan Year shall notexceed one.  It is intended that thecontributions under any defined contribution plan will be reduced to the extentnecessary to prevent the sum of those fractions for any Plan Year fromexceeding one before reducing benefits payable under any defined benefit plan.  “Any defined benefit plan” means all definedbenefit plans of the Company and Affiliates considered as one plan.

###  

### (d)                                 **Reduction in Annual Account Additions**.  If in any Plan Year a Participant’s Annual Account Additionexceeds the limitation determined under Subsection (b) above, the excesswill not be allocated to the Participant’s accounts in any defined contributionplan but shall be handled in the following manner and order until the excess iseliminated:

###  

#### (1)                                  theParticipant’s portion of the allocation of Employee After-Tax Contributions orany part thereof will be refunded to the Participant;

####  

#### (2)                                  theParticipant’s portion of the allocation of Profit Sharing Contributions or anypart thereof will be placed in a suspense account;

####  

#### (3)                                  theParticipant’s portion of the allocation of Deferred Compensation Contributionsor any part thereof will be refunded to the Participant; and

####  

#### (4)                                  theParticipant’s portion of the allocation of Employer Matching Contributions orany part thereof will be placed in a suspense account.

####  

The amountheld in a suspense account that is attributable to contributions of an Employerwill be used to reduce contributions by that Employer for the next followingPlan Year.

 

A suspenseaccount shall share in the gains and losses of the Trust Fund on the same basisas other Accounts.

 

The abovereductions shall be applied to this Plan first, and thereafter to any otherdefined contribution plan.

 

## **4.7**                               Rollover Contributions.

## ** **

An EligibleEmployee of an Employer may, in accordance with procedures approved by the PlanAdministrator, contribute the following amounts to the Plan:

 

### (a)                                  part or all ofa distribution or proceeds from a sale of distributed property that qualifiesas an “eligible rollover distribution” from a trust described inSection 401(a) of the Code and exempt from tax under Section 501(a)of the Code, less any amounts considered to be employee after-taxcontributions; or

###  

20

----

 

### (b)                                 a distributionfrom an individual retirement account or annuity, the entire amount of which isfrom a source described in (a) above.

###  

Such acontribution must be paid over to the Trustee (or transferred directly from aprior plan) on or before the sixtieth day after receipt by the EligibleEmployee of the distribution and shall be held in the trust under this Plan asa completely separate account in the name of the Eligible Employee whoseinterest is being held.  That accountshall be fully vested and nonforfeitable.

 

## **4.8**                               Contributions During Period of Military Leave.

## ** **

Notwithstandingany provision of this Plan to the contrary, effective December 12, 1994,contributions and service credit with respect to qualified military servicewill be provided in accordance with Section 414(u) of the Code.

 

## **4.9**                               ADP/ACP Safe Harbor.

## ** **

### (a)                                  The Plan is intendedto satisfy the actual deferral percentage test contained in Section 4.4(b)of the Plan and, with respect to Employer Matching Contributions, the actualcontribution percentage test contained in Section 4.4(c) of the Plan,respectively, by meeting the requirements of the design-based safe harborscontained in Section 401(k)(12) and 401(m)(11) of the Code.

###  

### (b)                                 If the Plan’sdefinition of “Compensation” fails to satisfy the nondiscriminationrequirements of Treasury Regulation § 1.414(s)-1(d)(3) for a Plan Year, forpurposes of this Section 4.9 the amount of the Compensation of each of theParticipants described below for the Plan Year shall be increased inincremental and successive amounts under the following leveling method:

###  

#### (1)                                  TheCompensation of the Safe Harbor NHCE with the highest Excluded Bonus Percentageshall be increased by the lesser of the amount necessary for either(A) the Plan’s definition of “Compensation” to pass the nondiscriminationtest described in this Section 4.9(b) for the Plan Year or (B) hisExcluded Bonus Percentage to equal the Excluded Bonus Percentage of the SafeHarbor NHCE with the next highest Excluded Bonus Percentage; and

####  

#### (2)                                  The processdescribed in Subsection 4.9(b)(1) shall be repeated until the Plan’sdefinition of “Compensation” passes the nondiscrimination test described inthis Section 4.9(b) for the Plan Year.

####  

### (c)                                  Each SafeHarbor NHCE whose Compensation is increased pursuant to Subsection 4.9(b)for a Plan Year will be entitled to an additional Employer MatchingContribution for the Plan Year equal to the excess of:

###  

#### (1)                                  The EmployerMatching Contribution that he would be entitled to receive underSubsection 4.3(a) if the amount of his Deferred Compensation Contributionswas deemed to be equal to the product of (A) the percentage 

####  

#### 21

#### 

####  

#### determined by dividing theamount of his Deferred Compensation Contributions by his Compensation (asdetermined without regard to this Section 4.9) multiplied by (B) hisCompensation (as recalculated under this Section 4.9), over

####  

#### (2)                                  The actualamount of Employer Matching Contributions made for him pursuant toSubsection 4.3(a).

####  

### (d)                                 For purposes ofthis Section 4.9, the following terms shall be defined as follows:

###  

#### (1)                                  The term “SafeHarbor NHCE” shall mean, for any Plan Year, a Participant who received anEmployer Matching Contribution pursuant to Subsection 4.3(a) and who isnot a Highly Compensated Employee.

####  

#### (2)                                  The term“Excluded Bonus Percentage” shall mean the percentage equal to (A) theamount of the Participant’s bonus for the Plan Year, to the extent not includedin his Compensation, divided by (B) his Compensation for the Plan Year,determined without regard to any compensation exclusions.

####  

### (e)                                  For each PlanYear that the Plan satisfies the actual contribution percentage test pursuantto the safe harbor contained in Section 401(m)(11) of the Code, Section 4.4(c)shall apply only with respect to Employee After-Tax Contributions and shall beinterpreted accordingly.

###  

## **4.10**                        Profit SharingContributions.

## ** **

### (a)                                  **Balanced Profit Sharing Contributions**.  Each Employer may, in its discretion, make a Balanced ProfitSharing Contribution to the Plan for a Plan Year in an amount determined by theCompany.  Any Balanced Profit SharingContribution made by an Employer for a Plan Year shall be allocated amongBalanced Program Employees (as defined in Subsection 4.10(c) below) who areemployed with the Employer as Balanced Program Employees on the last day of thePlan Year.  The allocable share of eachsuch Balanced Program Employee shall be in the ratio which his Profit SharingEarnings (as defined in Subsection 4.10(c) below) bears to the aggregate ofsuch Profit Sharing Earnings for all such Balanced Program Employees.

###  

### (b)                                 **Investor Profit Sharing Contributions**.  Each Employer may, in its discretion, make an Investor ProfitSharing Contribution to the Plan for a Plan Year in an amount determined by theCompany.  Any Investor Profit SharingContribution made by an Employer for a Plan Year shall be allocated amongInvestor Program Employees (as defined in Subsection 4.10(c) below) who areemployed with the Employer as Investor Program Employees on the last day of thePlan Year.  The allocable share of eachsuch Investor Program Employee shall be in the ratio which his Profit SharingEarnings (as defined in Subsection 4.10(c) below) bears to the aggregate ofsuch Profit Sharing Earnings for all such Investor Program Employees.

###  

### 22

### 

###  

### (c)                                  **Definitions.**

###  

#### (1)                                  **“Balanced Program Employee”** means an Eligible Employeewho for the Plan Year participates in a defined benefit plan maintained by theEmployer and is covered under such defined benefit plan by a cash balanceformula described as the “balanced formula” under such defined benefit plan.

####  

#### (2)                                  **“Investor Program Employee”** means an Eligible Employeewho for the Plan Year participates in a defined benefit plan maintained by theEmployer and is covered under such defined benefit plan by a cash balanceformula described as the “investor formula” under such defined benefit plan.

####  

#### (3)                                  **“Profit Sharing Earnings”** means, with respect to anyEmployee for any period of reference, the sum of the Employee’s:  (a) Base Salary or Base Wage,(b) Overtime Pay, (c) Shift Premiums, (d) Work ScheduleRecognition Pay, (e) Holiday Premiums, (f) Accrued Vacation Pay,(g) Performance Lump Sum Pay, and (h) Annual Performance CashAwards.  “Earnings” does not include (a) reimbursementsor other expense allowances, (b) fringe benefits (cash and noncash) otherthan those named in the preceding sentence, (c) moving and relocationexpenses, (d) deferred compensation, (e) welfare benefits,(f) Long-Term Performance Awards, (g) Executive Individual IncentiveAwards, (h) other forms of compensation or remuneration that are notspecifically named in the preceding sentence, or (i) any payments receivedby an Employee from any Affiliate that is not an Employer.  Notwithstanding any other provision of thePlan to the contrary, Profit Sharing Earnings with respect to any period endingprior to the date on which an Employee first became eligible to participate inthe allocation of Profit Sharing Contributions shall be disregarded indetermining the amount of the Employee’s allocable share.  For purposes of this paragraph (3):

####  

##### (A)                              “Base Salary”means, with respect to an Employee whose pay is customarily computed on asalaried basis, and whose employment is not subject to the Fair Labor StandardsAct of 1938, as amended from time to time, and interpretive rulings andregulations thereunder (“FLSA”) overtime and recordkeeping provisions (“ExemptEmployee”), the monthly base salary received as remuneration for servicesperformed for the relevant period, exclusive of any allowances, premiums,bonuses, overtime, or other forms or types of compensation.

#####  

##### (B)                                “Base Wage” means, with respect to an Employee whosepay is customarily computed on an hourly, weekly, or bi-weekly basis, and whoseemployment is subject to FLSA overtime and recordkeeping provisions (“Non-ExemptEmployee”), the hourly 

#####  

23

----

 

##### base rate of pay received as remuneration for services performed forthe relevant period, exclusive of any allowances, premiums, bonuses, overtime,or other forms or types of compensation, multiplied by his hours worked duringthe applicable period.

#####  

##### (C)                                “Overtime Pay”means, with respect to an Employee, the compensation received as remunerationconsistent with the requirements of the FLSA, or for services performed for therelevant period for hours worked beyond the Employee’s regularly scheduled workhours pursuant to the Employer’s applicable policy.

#####  

##### (D)                               “ShiftPremiums” means, with respect to a Non-Exempt Employee, the compensationreceived as a premium for services performed for the relevant period forworking a shift other than the Employer’s regular day shift pursuant to theEmployer’s applicable policy.

#####  

##### (E)                                 “Work ScheduleRecognition Pay” means, with respect to an Exempt Employee, the compensationreceived as remuneration for services performed for the relevant period forworking a shift other than the Employer’s regular day shift pursuant to theEmployer’s applicable policy.

#####  

##### (F)                                 “HolidayPremiums” means, with respect to a Non-Exempt Employee, the compensation receivedas a premium for services performed for the relevant period for working on aholiday recognized by the Employer pursuant to its applicable policy.

#####  

##### (G)                                “AccruedVacation Pay” means, with respect to an Exempt Employee or a Non-ExemptEmployee, the compensation received at his severance from service for unusedaccrued vacation pursuant to the Employer’s applicable policy.

#####  

##### (H)                               “PerformanceLump Sum Pay” means, with respect to an Exempt Employee or a Non-ExemptEmployee, the compensation received as remuneration based upon the Employee’sperformance when the Employer’s applicable merit pay policy would otherwisepreclude a performance based increase.

#####  

##### (I)                                    “AnnualPerformance Cash Award” means, with respect to an Employee, the cash awardreceived by the Employee under the provisions of an Employer’s annual bonus orincentive pay plan or program, including, but without limitation because ofenumeration, the Cinergy Annual Incentive Plan, the Cinergy Non-UnionEmployees’ Incentive Plan, or any successor plan.

#####  

24

----

 

##### (J)                                   “Long-TermPerformance Awards” means, with respect to an Employee, the cash or stock-basedaward received by the Employee pursuant to the provisions of an Employer’slong-term bonus or incentive pay plan or program, including, but withoutlimitation because of enumeration, the Cinergy Performance Shares Plan or theCinergy 1996 Long-Term Incentive Compensation Plan.

#####  

##### (K)                               “ExecutiveIndividual Incentive Awards” means, with respect to an Employee, any cash orstock-based award (other than Annual Performance Cash Awards) received by aHighly Compensated Employee pursuant to the terms of any individualized bonusor incentive pay plan or program, including, but without any limitation becauseof enumeration, any retention or signing bonus.

#####  

### (d)                                 **Contributions of Cinergy Stock**.  Profit Sharing Contributions may be made in cash or in shares ofCinergy Stock.  Contributions in sharesof Cinergy Stock will be determined by dividing the amount of the Profit SharingContribution determined under (a) or (b) by the closing price of Cinergy Stockon the New York Stock Exchange for the date the Profit Sharing Contributionsare made to the Trust.  The Company mayuse either authorized and unissued shares of Common Stock, treasury shares orshares of Common Stock acquired on the open market, in private transactions orotherwise, or a combination of the foregoing, for purposes of making ProfitSharing Contributions.

###  

# **ARTICLE 5.****VESTING INACCOUNTS**

#  

## **5.1**                               All Accounts Except Profit Sharing Contributions Account.

## ** **

A Member shallat all times be fully vested and have a nonforfeitable interest in hisAfter-Tax Contributions Account, Deferred Compensation Contributions Account,Employer Match Account, ESOP Transfer Account, Matching Contributions Accountand Rollover Contributions Account.

 

## **5.2**                               Profit SharingContributions Account.

## ** **

A Member shallbe fully vested and have a nonforfeitable interest in his Profit SharingContributions Account upon the earlier of (i) completion of three Years ofService or (ii) after reaching age 65 while an Employee.

 

## **5.3**                               Forfeitures.

## ** **

Upon aMember’s termination of employment for any reason, including retirement, death,Disability or other termination of employment, the Member’s Profit SharingAccount shall be distributable as provided in Article 6.  If the value of the vested portion of theMember’s Account is zero, the Member shall be deemed to have received adistribution of 

 

25

----

 

his Account asof the Member’s termination of employment. If the Member receives a distribution of the entire vested portion ofhis Account or is deemed to have received a distribution, the non-vestedportion of the Member’s Profit Sharing Contributions Account shall be forfeitedand treated as a forfeiture upon such distribution or deemed distribution.  If the Member does not receive (or is notdeemed to have received) a distribution of the entire vested portion of hisAccount prior to a Period of Severance of five years, the non-vested portion ofthe Member’s Profit Sharing Account shall be forfeited and treated as aforfeiture upon the Member having a Period of Severance of five years.  Any forfeitures (as adjusted for interimgains or losses) shall be used to reduce the amount of contributions requiredto be made by the Employer under the Plan (and any such forfeitures shall beallocated in the manner that the contributions that would have been made by theEmployer but for this provision would have been allocated) or if the Companyelects not to use the forfeitures to reduce the amount of contributionsrequired by the Employer, then to pay expenses incurred in the administrationof the Plan.  A Member or former Memberwho forfeited his Profit Sharing Contributions Account in accordance with thisSection 5.3 prior to a Period of Severance of five years and who again becomesan Employee shall have his forfeited amounts (without adjustment for interimgains or losses) recredited to a new Profit Sharing Contributions Account inhis name if and only if his Years of Service for the period prior to histermination of employment is aggregated with his Years of Service followingreemployment in accordance with Subsection 2.1(ll).

 

# **ARTICLE 6.****DISTRIBUTIONSAND WITHDRAWALS**

#  

## **6.1**                               Distribution Upon Retirement, Death, Disability, orOther Termination of Employment.

## ** **

Upon aMember’s termination of employment for any reason, including retirement, death,Disability or other termination of employment, the vested amount of theMember’s Account will be distributable to the Member, or to the Member’sBeneficiary in case of the Member’s death. For purposes of the Plan, the Member’s Beneficiary is the survivingspouse and will receive the vested amount of the Member’s Account unless thespouse consents to the designation of another Beneficiary or Beneficiaries asdescribed in Section 14.1.

 

The Accountwill be determined as of the Valuation Date coincident with the date ofdistribution and will be distributed as provided in Sections 6.3 and 6.4 (and,if applicable, Section 5.3).

 

## **6.2**                               Commencement of Distributions.

## ** **

### (a)                                  Except asprovided in Subsection (f), if a Member did not reach age 70 1/2before January 1, 1999, the vested portion of the Member’s Account balancewill be distributed commencing not later than April 1 of the yearfollowing the later of—

###  

### 26

### 

###  

#### (1)                                  the calendaryear in which the Member reaches age 70 1/2; or

####  

#### (2)                                  the calendaryear in which the Member retires.

####  

If a Memberreaches age 70 1/2 on or after January 1, 1997, but beforeJanuary 1, 1999, distribution of the vested portion of the Member’sAccount balance must commence by April 1 of the calendar year followingthe calendar year in which he reaches age 70 1/2 unless he elects to defercommencement of the distribution until a date no later than April 1 of thecalendar year following the calendar year in which the Member retires.

 

### (b)                                 If the vestedportion of the Member’s Account to be distributed pursuant to Section 6.1does not exceed $5,000 (or such higher amount as may be permitted underapplicable law or regulation), then the distribution will be made as soon aspracticable following termination of employment.  If the value of the vested portion of the Member’s Accountexceeds $5,000 (or such higher permitted amount), then the distribution will bemade as of any Valuation Date elected by the Member, subject to (a) through(g).

###  

### (c)                                  A Member whohas terminated employment may elect to commence distribution of his Accounts inaccordance with rules prescribed by the Plan Administrator. Unless the Memberelects otherwise, distribution of the vested portion of a Member’s Account willbegin not later than the sixtieth day after the close of the Plan Year in whichoccurs the latest of—

###  

#### (1)                                  the Member’ssixty-fifth birthday;

####  

#### (2)                                  the tenthanniversary of the Plan Year in which the Member began participation in thePlan; or

####  

#### (3)                                  the Member’stermination of employment with the Employer and all Affiliates.

####  

### (d)                                 Except asotherwise provided in Section 6.3, if a Member dies after the Member’stermination of employment but prior to receiving the full distribution of thevested portion of the Member’s Account to which the Member is entitled underthis Article 6, any unpaid balance of the vested portion of the Member’sAccount at the time of the Member’s death will be distributed to the Member’sBeneficiary in a lump sum, as soon as practicable after the Member’s death.

###  

### (e)                                  Alldistributions under this Plan will be made in accordance with Section 401(a)(9)of the Code.  Provisions of the Planregarding payment of distributions will be interpreted and applied inaccordance with Section 401(a)(9) of the Code and interpretive regulations,including proposed regulation 1.401(a)(9)-2, which will supersede any contraryprovisions of the Plan.  With respect todistributions under the Plan made in calendar years beginning on or afterJanuary 1, 2002, the Plan will apply the minimum distribution requirementsof Section 401(a)(9) of the Code in accordance with the regulations underSection 401(a)(9) of the Code that 

###  

27

----

 

### were proposed inJanuary 2001, notwithstanding any provision of the Plan to thecontrary.  This amendment shall continuein effect until the end of the last calendar year beginning before theeffective date of final regulations under Section 401(a)(9) of the Code orsuch other date specified in guidance published by the Internal RevenueService.

###  

### (f)                                    In the case ofa Member who is a “5-percent owner” (as defined in Section 401(a)(9)), in noevent may the distribution of the Member’s benefits commence later thanApril 1 of the calendar year following the year in which the Memberattains age 70 1/2, regardless of whether the Member has terminated employment.

###  

### (g)                                 Amounts payableunder the Plan shall continue to be maintained and adjusted underSections 8.3 and 8.4 pending payment.

###  

### (h)                                 EachParticipant shall have the right to elect to receive a distribution of theParticipant’s Account commencing not later than one year after the end of thePlan Year (i) during which the Participant terminates employment or he incurs aDisability, or (ii) which is the fifth Plan Year following the Plan Year duringwhich the Participant terminates employment for any other reason unless theParticipant is reemployed by an Employer before such time.

###  

## **6.3**                               Method of Distribution.

## ** **

### (a)                                  **General**.  Except asotherwise provided in (b), all distributions will be in a lump sum.  Distributions of amounts invested in theCinergy Stock Fund may be in shares of Cinergy Stock (with fractional shares incash), if requested by the Member or Beneficiary.  Distributions of all other amounts will be in cash.  Amounts payable under the Plan will continueto be maintained and adjusted under Sections 8.3 and 8.4 pendingpayment.  Notwithstanding the foregoing,if the charter or bylaws of the Company or an Affiliate restrict the ownershipof substantially all outstanding shares of Cinergy Stock to current Employeesand the Trust, the distribution of the portion of a Participant’s Accountinvested in the Cinergy Stock Fund may be made entirely in cash withoutgranting him the right to demand distribution in Cinergy Stock.

###  

### (b)                                 **Installment Payments**.  Each Participant may elect to receive a distribution insubstantially equal annual installments over a period not exceeding 10years.  The period also will not exceedthe greater of the Member’s life expectancy or the joint and survivor lifeexpectancy of the Member and the Member’s Beneficiary, as of the date paymentscommence.  The amount of each paymentwill be determined by dividing the value of the vested portion of the Member’sAccount as of the Valuation Date of the payment by the remaining number ofannual installments.

###  

### (c)                                  **Distributions to Beneficiaries**.  If a Member dies after commencement of installment payments,remaining installments will be paid to the Member’s 

###  

28

----

 

### Beneficiary.  In lieu of continuing installment payments,the Beneficiary may elect to have the remaining Account balance paid in a lumpsum.

###  

If a Memberdies prior to commencement of distribution of his Account, and the value of thevested portion of his Account balance exceeds $5,000, the Member’s Beneficiarymay elect to receive distribution of the vested portion of the Member’s Accountin a lump sum or in annual installments over a period not exceeding the greaterof ten years or the Beneficiary’s life expectancy as of the date paymentscommence.  Benefits will either:

 

#### (1)                                  be completelydistributed by December 31 of the calendar year containing the fifthanniversary of the Member’s death; or

####  

#### (2)                                  be paid inannual installments, as described above, commencing on a date elected by theBeneficiary, but not later than—

####  

##### (A)                              December 31of the calendar year in which the Member would have attained age 70 1/2,if the Beneficiary is the Member’s spouse; or

#####  

##### (B)                                December 31of the calendar year containing the fifth anniversary of the Member’s death.

#####  

The amount ofeach payment will be determined by dividing the value of the vested portion ofthe Member’s Account as of the Valuation Date of the payment by the remainingnumber of installments.

 

### (d)                                 **Direct Rollovers**.  AMember or a Member’s spouse entitled to a distribution under the Plan, or a Memberentitled to a withdrawal distribution under Section 6.6 (and for PlanYears commencing prior to January 1, 2000, Section 6.4), may elect to haveall or part of the otherwise taxable portion of the distribution transferreddirectly from the Trust Fund to an “eligible retirement plan.”

###  

For purposesof this provision, an “eligible retirement plan” means an individual retirementaccount, an individual retirement annuity other than an endowment contract, orin the case of a Member (but not a Member’s spouse), a defined contributionplan qualified under Section 401(a) of the Code (and funded under a trustthat is qualified under Section 501(a) of the Code) that accepts rollovercontributions.

 

This provisionshall not apply to any distribution the taxable amount of which is less than$200 or to any other distribution that is not an “eligible rolloverdistribution” within the meaning of Section 401(a)(31)(C) of the Code.

 

29

----

 

## **6.4**                               Hardship Withdrawals.

## ** **

A Participantmay apply for a hardship withdrawal from the Participant’s DeferredCompensation and Rollover Accounts.  Ahardship withdrawal shall only be made if the Plan Administrator determinesunder nondiscriminatory and objective standards established for that purpose,that the withdrawal is necessary to satisfy one of the following financialneeds:

 

### (a)                                  payment ofmedical expenses described in Section 213(d) of the Code incurred by theParticipant, the Participant’s spouse, or any dependents of the Participant andnot covered by insurance;

###  

### (b)                                 purchase(excluding mortgage payments) of a principal residence of the Participant;

###  

### (c)                                  payment oftuition and room and board for the next year of post-secondary education (i.e.,education requiring a high school diploma as a prerequisite) for theParticipant, or the Participant’s spouse, children, or other dependents;

###  

### (d)                                 the need toprevent the eviction of the Participant from the principal residence orforeclosure on the mortgage of the Participant’s principal residence;

###  

### (e)                                  funeralexpenses of a member of the Participant’s immediate family; and

###  

### (f)                                    any othercircumstances which the Commissioner to the Internal Revenue Service, throughthe publication of revenue rulings, notices and other guidance of general applicability,may from time to time designate as a deemed immediate and heavy financial needas provided in Treasury Regulation Section 1.401-1(d)(2)(iv)(C).

###  

The amountnecessary to satisfy such a financial need includes an amount necessary to payincome taxes and penalties reasonably anticipated to result from thewithdrawal.

 

A hardshipwithdrawal will be deemed necessary to satisfy such a financial need if thePlan Administrator determines under nondiscriminatory and objective standardsestablished for that purpose, that the following requirements are met:

 

(1)                                  thedistribution does not exceed the amount of the financial need;

 

(2)                                  the Participanthas previously obtained all other distributions (including dividenddistributions, if available, pursuant to Section 14.9(e) of the Plan) andnontaxable loans currently available from the Employer’s plans;

 

(3)                                  the financialneed cannot be satisfied from other sources reasonably available to theParticipant, including resources of the Participant’s spouse and minor children;

 

(4)                                  all plansmaintained by the Employer suspend all elective contributions and employeecontributions by or on behalf of the Participant for the 12-month period 

 

30

----

 

(6-monthperiod for distributions following December 31, 2001) following receipt of thehardship distribution; and

 

(5)                                  For calendaryears beginning before January 1, 2002, Deferred Compensation Contributions (ifany) made by the Participant for the Plan Year during which the suspension in(4) above ends shall not, when aggregated with Deferred CompensationContributions in the Plan Year the suspension begins, exceed the limitationimposed under Section 402(g) of the Code.

 

That portionof a hardship distribution made from the Participant’s Deferred CompensationContributions Account may be made only from Deferred CompensationContributions.  Such a distribution maynot include any earnings credited to the Deferred Compensation ContributionsAccount.

 

No withdrawalmay be made from a Participant’s Account in an amount that would cause anyoutstanding loan to the Participant to violate Subsection 6.5(c).

 

## **6.5**                               Loans.

## ** **

EachParticipant, and to the extent required under applicable regulations, eachformer Participant who is a ‘party-in-interest’ as defined underSection 3(14) of ERISA, may, with the approval of the Plan Administrator,borrow amounts from the Participant’s Deferred Compensation ContributionsAccount, ESOP Transfer Account, or Rollover Contribution Account.  Approval of loans will be made in accordancewith the provisions of this Section and uniform and nondiscriminatorystandards and policies adopted and interpreted by the Plan Administrator.

 

No more thantwo loans will be outstanding to a Participant at any time.

 

Each requestfor a loan will be submitted in a manner prescribed by the PlanAdministrator.  Each loan will be madeas soon as administratively possible following loan approval.  The Plan Administrator may require that arequest for a loan be submitted within a certain period of time prior to aproposed loan date.

 

Each loan willbe secured by a pledge of not more than 50 percent of the vested andnonforfeitable portion of the Participant’s Account.

 

The terms ofthe loan will be determined under uniform and nondiscriminatory standards andpolicies adopted by and interpreted by the Plan Administrator, subject to thefollowing conditions:

 

### (a)                                  The term of aloan will not extend beyond 54 months.

###  

### (b)                                 A loan willbear a commercially reasonable rate of interest, which will not be less thanthe rates being charged at the time a loan is made by entities in the businessof making loans of similar type and kind.

###  

### 31

### 

###  

### (c)                                  The amount ofthe loan (when added to the outstanding balance of all other loans to theParticipant from the Participant’s Account) will not exceed the lesser of —

###  

#### (1)                                  $50,000,reduced by the excess (if any) of —

####  

##### (A)                              the highestoutstanding balance of loans from the Plan during the one-year period ending onthe day before the loan was made, over

#####  

##### (B)                                the outstandingbalance of loans from the Plan on the date the loan is made; or

#####  

#### (2)                                  50 percent ofthe vested and nonforfeitable portion of the Participant’s Account at therelevant time.

####  

### (d)                                 A loan will beevidenced by a promissory note, in such form and containing such terms andconditions as the Plan Administrator from time to time directs.

###  

### (e)                                  Payments ofprincipal and interest will be made by approximately equal payments on a basisthat would permit the loan to be levelly amortized over its term.  Payments by former Participants who are‘parties-in-interest’ will be made at least quarterly.

###  

### (f)                                    Appropriatedisclosure will be made pursuant to the Truth in Lending Act to the extentapplicable.

###  

### (g)                                 Amounts of principaland interest received on a loan will be credited to the Participant’s Accountusing the Participant’s current investment election, and the outstanding loanbalance will be considered an investment of the assets of the Account.

###  

### (h)                                 Loans will be madeon a pro rata basis from the available funds of each of the Investment Funds inwhich the Participant’s Account is invested at the time the loan is made.  Repayments will be credited to theParticipant’s Account in accordance with the Participant’s investment electionsin effect at the time of repayment.

###  

### (i)                                     In the eventthat a distribution under this Article 6 (other than a withdrawal underSection 6.6) becomes payable before the loan is repaid in full, the unpaidprincipal and interest will become due and payable, and the Plan will firstsatisfy the indebtedness from the amount in the Participant’s Account beforemaking any payments to the Participant or to a Beneficiary.

###  

### (j)                                     Reasonable loanset-up and/or maintenance fees may be charged to the Member’s Account withrespect to each loan made to the Member by the Plan, as established by the PlanAdministrator.

###  

### (k)                                  Payrolldeductions used to repay a Participant’s loan may not be discontinued by theParticipant except upon order of a federal Bankruptcy Court having 

###  

32

----

 

jurisdictionover the Participant.  Any defaultedloan will be considered outstanding to the Participant for all purposes untilthe loan is repaid in full.

 

The PlanAdministrator may establish other nondiscriminatory rules relating to loansmade under this section.

 

In theexercise of the discretion conferred upon the Plan Administrator in thissection, all Participants under similar circumstances will be treated alike,and the provisions of this Section will not be utilized in any manner todiscriminate in favor of Highly Compensated Employees.

 

## **6.6**                               Other Withdrawals Prior to Termination of Employment.

## ** **

### (a)                                  **Withdrawals At or After Age 59 1/2**.  A Participant who has attained age 59 1/2 may withdraw anyor all of the vested portion of the balance in his Account in accordance withprocedures established by the Plan Administrator.  Such withdrawals shall be made in a lump sum and will be electedin accordance with rules established for that purpose by the PlanAdministrator.

###  

No withdrawalwill be made under this Section in an amount that would cause anyoutstanding loan to the Participant to violate Section 6.5.

 

### (b)                                 **Withdrawals of After-Tax Contributions**.  A Participant may elect to withdraw any or all of the balance inthe Participant’s Employee After-Tax Contributions Account in accordance withprocedures established by the Plan Administrator.  Withdrawals shall be made in a lump sum and shall be elected inaccordance with rules established for such purpose by the Plan Administrator.

###  

## **6.7**                               Withholding Taxes.

## ** **

An Employermay withhold from a Member’s compensation and the Trustee may withhold from anypayment under this Plan any taxes required to be withheld with respect tocontributions or benefits under this Plan and such sum as the Employer orTrustee may reasonably estimate as necessary to cover any taxes for which theymay be liable and that may be assessed with respect to contributions orbenefits under this Plan.

 

# **ARTICLE 7.****INVESTMENTELECTIONS**

#  

## **7.1**                               After-Tax, Deferred Compensation, Employer Match,ESOP Transfer, and Rollover Contribution Accounts.

## ** **

### (a)                                  **Investment of Contributions.**  Each Participant may elect to have the After-Tax, DeferredCompensation, and Rollover Contributions made on the Participant’s behalfinvested in any one or more of the Investment Funds in accordance withprocedures established by the Plan Administrator.

###  

### 33

### 

###  

### (b)                                 **Investment Transfers**.  Each Member may elect as of any date to have the assets in theMember’s ESOP Transfer, Employer Match, After-Tax, Deferred Compensation, andRollover Contributions Accounts reallocated among the Investment Funds inaccordance with procedures established by the Plan Administrator.

###  

### (c)                                  **Investment Elections**.  Each Participant may make the elections described inSubsection (a) by making an election with the Plan Administrator uponbecoming a Participant; provided, however, that each Participant who commencesparticipation as of his Employment Commencement Date will have his DeferredCompensation Contributions automatically deposited in one or more InvestmentFunds selected by the Plan Administrator and in accordance with proceduresestablished by the Plan Administrator.

###  

### (d)                                 **Transfer of Assets**.  ThePlan Administrator shall cause the transfer of moneys or other property fromthe appropriate Investment Fund to the other Investment Fund as may benecessary to carry out the aggregate transfer transactions elected by theMembers, in accordance with uniform rules therefor established by the PlanAdministrator.

###  

### (e)                                  **Investments in the Cinergy Stock Fund**.  The Company may use either authorized and unissued shares ofCinergy Stock, treasury shares or shares of Cinergy Stock acquired on the openmarket, in private transactions or otherwise, or a combination of theforegoing, for purposes of effecting a Member’s election to invest the Member’sESOP Transfer, Employer Match, After-Tax, Deferred Compensation, and RolloverContributions.

###  

### (f)                                    **Initial Allocation of Deferred Compensation Contributions and EmployeeAfter-Tax Contributions. **DeferredCompensation Contributions and Employee After-Tax Contributions shall initiallybe allocated to the portion of the Plan that is not comprised of the ESOPFeature.  Thereafter, to the extent thata Member directs the investment of such contributions into the Cinergy StockFund pursuant to Article 7 of the Plan, such contributions shall be transferredto the ESOP Feature unless and until the Member directs otherwise pursuant toArticle 7 of the Plan.

###  

## **7.2**                               MatchingContributions Account and Profit Sharing Contributions Account.

## ** **

### (a)                                  **Investment of Contributions**.  Employer Matching Contributions and Profit Sharing Contributionsmade to the Participant’s Accounts shall be invested in the Cinergy Stock Fund.

###  

### (b)                                 **Investment Transfers**.  Except as otherwise provided in this section, assets in theMember’s Matching Contributions Account and Profit Sharing ContributionsAccount will remain invested in the Cinergy Stock Fund until distributed underArticle 6, and may not be reallocated among the Investment Funds.  A Member who has attained age 50 mayreallocate assets in the Matching Contributions

###  

34

----

 

### Account and Profit SharingContributions Account among the Investment Funds, in accordance with theprovisions of Subsection 7.1(b). Without limitation with respect to the immediately preceding sentence, aMember may reallocate the assets in the Profit Sharing Account attributable to ProfitSharing Contributions (as adjusted for earnings and losses) that have beeninvested in the Cinergy Stock Fund for a period of at least three years amongthe Investment Funds, in accordance with the provisions of Subsection 7.1(b).

###  

## **7.3**                               Voting and Other Rights with Respect to CinergyStock.

## ** **

### (a)                                  **General**.  EachMember having an interest in the Cinergy Stock Fund shall have the right todirect the manner in which shares of Cinergy Stock held in such Fund shall bevoted, and direct the manner in which all other rights appurtenant to suchshares shall be exercised, as if the Member was the shareholder of record.

###  

### (b)                                 **Provision of Information**.  Prior to each annual or special shareholders’ meeting at whichCinergy Stock has voting rights, the Trustee shall cause to be furnished toeach Member with an interest in the Cinergy Stock Fund a copy of the proxysolicitation materials with respect to the meeting.  The Trustee shall use its best efforts to timely distribute toeach Member all information to be distributed to shareholders in connectionwith any tender or exchange offer with respect to Cinergy Stock.  The materials and/or information shallinclude any forms and instructions as may be necessary for the Member to directthe manner of voting on each matter to be brought before a meeting or to directa response to a tender or exchange offer.

###  

### (c)                                  **Voting or Tender of Shares**.  Subject to the requirements of ERISA, the Trustee shall vote ortender Cinergy Stock corresponding to the interest of the Member in the CinergyStock Fund in accordance with the Member’s directions issued in accordance withthe instructions provided under (b). The Trustee shall vote or tender any Cinergy Stock with respect to whichdirections are not issued under this Section in the manner determined bythe Trustee in the Trustee’s discretion.

###  

# **ARTICLE 8.****ACCOUNTSAND RECORDS OF THE PLAN**

#  

## **8.1**                               Accounts and Records.

## ** **

The Accountsand records of the Plan shall be maintained by the Plan Administrator and shallaccurately disclose the status of the Accounts of each Member or each Member’sBeneficiary in the Plan.

 

Each Membershall be advised from time to time, at least once quarterly during each PlanYear, as to the status of the Member’s Account.

 

35

----

 

## **8.2**                               Trust Fund.

## ** **

Each Membershall have an undivided proportionate interest in the Trust Fund, which shallbe measured by the proportion that the market value of the Member’s Accountbears to the total market value of all Accounts as of the date that theinterest is being determined.

 

## **8.3**                               Valuation and Allocation of Expenses.

## ** **

As of eachValuation Date, the Trustee shall determine the fair market value of the TrustFund after first deducting any expenses that have not been paid by theEmployers.  Unless paid by the Employersand subject to such limitations as may be imposed by applicable law, all costsand expenses incurred in connection with the general administration of the Planand the Trust shall be chargeable to the Trust Fund.

 

## **8.4**                               Allocation of Earnings and Losses.

## ** **

As of eachValuation Date, the Plan Administrator, with the assistance of the Trustee,shall allocate the net earnings and gains or losses of each Investment Fund ofthe Trust Fund since the preceding Valuation Date to each Member’s Account inthe same proportion that the market value of the Member’s Account in theInvestment Fund bears to the total market value of all Members’ Accounts in theInvestment Fund; and, for this purpose, the Plan Administrator shall adoptuniform rules that conform to applicable law and generally accepted accountingpractices.  The foregoing shall notapply to the loan fund, which shall be accounted for separately so thatinterest on a Participant’s loan is credited solely to the Participant’sAccount.

 

# **ARTICLE 9.****FINANCING**

#  

## **9.1**                               Financing.

## ** **

The Companyshall enter into a Trust Agreement to implement and carry out the provisions ofthe Plan and to finance the benefits under the Plan.  All rights that may accrue to any person under the Plan shall besubject to all the terms and provisions of the Trust Agreement.  The Company may modify the Trust Agreementin accordance with the terms of that Agreement from time to time to accomplishthe purposes of the Plan.

 

## **9.2**                               Contributions.

## ** **

The Employersshall make such contributions to the Trust Fund as are required by theprovisions of the Plan, subject to the right of the Company to amend, modify,or terminate the Plan.

 

36

----

 

## **9.3**                               Nonreversion.

## ** **

No Employershall have any right, title, or interest in the contributions made to the TrustFund, and no part of the Trust Fund shall revert to any Employer, except thatif a contribution is made to the Trust Fund by an Employer by a mistake offact, then the contribution may be returned to the Employer within one yearafter the payment of the contribution; and if any part or all of a contributionis disallowed as a deduction under Section 404 of the Code, then to theextent the contribution is disallowed as a deduction it may be returned to theEmployer within one year after the disallowance.

 

## **9.4**                               Rights in the Trust Fund.

## ** **

Personseligible for benefits under the Plan are entitled to look only to the TrustFund for the payment of those benefits and have no claim against any Employer,the Plan Administrator, or any other person. No person has any right or interest in the Trust Fund except asexpressly provided in the Plan.

 

# **ARTICLE 10.****ADMINISTRATION**

#  

## **10.1**                        Plan Administrator and Fiduciary.

## ** **

The BenefitsCommittee will be the Plan Administrator of the Plan within the meaning ofSection 3(16)(A) of ERISA, a fiduciary with respect to the Plan within themeaning of Sections 3(21)(A)(i) and (iii) of ERISA, and the namedfiduciary under Section 402 of ERISA. The Benefits Committee will consist of the number of members, not fewerthan three, that is specified from time to time by the Board.  All members of the Benefits Committee willbe Employees or officers of an Employer.

 

## **10.2**                        Removal and Replacement of Benefits CommitteeMembers.

## ** **

The members ofthe Benefits Committee will serve at the pleasure of the Board and may beremoved by the Board with or without cause. Any vacancy among the members will be filled by the Board.  A Benefits Committee member will be deemedto be removed as of the date on which the Benefits Committee member becomesdisqualified from membership on the Benefits Committee.  A member of the Benefits Committee mayresign by delivering his written resignation to any other member of theBenefits Committee.  A resignation willbecome effective on the date specified in the instrument of resignation.

 

## **10.3**                        Compensation and Expenses.

## ** **

All reasonableexpenses incurred in the administration of the Plan will be paid from the TrustFund to the extent not elected to be paid by the Employers.  Such expenses will include any expensesincident to the administration of the Plan, including, but not limited to, feesof accountants, counsel, and other specialists.

 

37

----

 

## **10.4**                        Delegation of Duties and Employment of Specialists.

## ** **

The BenefitsCommittee may designate any person, subcommittee, or other entity to carry outany of its responsibilities under the Plan, in which case every referenceherein made to the Benefits Committee will be deemed to mean or include thedesignee(s) as to matters within the designee’s jurisdiction.  Any such designation will be in writing andwill be kept with the records of the Plan. The Benefits Committee or its designee may authorize one or more of itsmembers or any agent to execute or deliver any instrument or instruments on itsbehalf, and may employ such counsel, auditors, and other specialists, and suchclerical, medical, actuarial, and other services as may be required to carryout the provisions of the Plan.  Thoseexpenses shall be paid by the Trust to the extent not paid by the Employers.

 

## **10.5**                        Administration.

## ** **

The BenefitsCommittee shall be responsible for the administration of the Plan.  The Benefits Committee will have all powersnecessary to carry out the provisions of the Plan and may, from time to time,establish rules for the administration of the Plan and the transaction of thePlan’s business.  In making any suchdetermination or rule, the Benefits Committee will pursue uniform policies asfrom time to time established by the Benefits Committee and will notdiscriminate in favor of or against any Member.  The Benefits Committee will have the exclusive right to make anyfinding of fact necessary or appropriate for any purpose under the Planincluding, but not limited to, the determination of the eligibility for and theamount of any benefit payable under the Plan. The Benefits Committee will havediscretionary authority to interpret the terms and provisions of the Plan andto determine any and all questions arising under the Plan or in connection withPlan administration, including, without limitation, the right to remedy orresolve possible ambiguities, inconsistencies, or omissions, by general rule orparticular decision.  In exercising itsrights under this Section to make findings of fact under the Plan,interpret the terms and provisions of the Plan, and determine all questionsarising under the Plan or in connection with Plan administration, the BenefitsCommittee will be granted the fullest discretion permitted by law.  The Benefits Committee will make, or causeto be made, all reports or other filings necessary to meet both the reportingand disclosure requirements and other filing requirements of ERISA that are theresponsibility of “plan administrators” under ERISA.  To the extent permitted by law, all findings of fact,determinations, interpretations, and decisions of the Benefits Committee willbe conclusive and binding upon all persons having or claiming to have anyinterest or right under the Plan. Notwithstanding any provision of the Plan to the contrary, during anyconversion period, in accordance with procedures established by the PlanAdministrator, the Plan Administrator may temporarily suspend, in whole or inpart, certain provisions of the Plan, which may include, but are not limitedto, a Participant’s right to change his contribution election, a Member’s rightto change his investment election and a Member’s right to borrow or withdrawfrom his Account or obtain a distribution for his Account.

 

38

----

 

## **10.6**                        No Enlargement of Employee Rights.

## ** **

Nothingcontained in the Plan will be deemed to give any Employee the right to beretained in the service of an Employer or to interfere with the right of anEmployer to discipline or discharge any Employee at any time.

 

## **10.7**                        Appeals from Denial of Claims.

## ** **

Claims forbenefits under the Plan will be made in writing to the Plan Administrator orits designee.  If any claim for benefitsunder the Plan, or request for loan or hardship distribution under the Plan, iswholly or partially denied, the claimant will be given notice of the denial inwriting within a reasonable period of time not to exceed 90 days after receiptof the claim, unless special circumstances require an extension of time forprocessing, in which case notification will be rendered as soon as possible,but not later than 180 days after the claim’s receipt.  If an extension of time for processing is required,written notice of the extension will be furnished to the claimant prior to thetermination of the initial period.  Theextension notice will indicate the special circumstances requiring an extensionof time and the date by which the Plan expects to render finalnotification.  Notice of the denial willbe written in a manner calculated to be understood by the claimant and willinclude the following information:

 

### (a)                                  the specificreasons for the denial;

###  

### (b)                                 specificreference to pertinent Plan provisions on which the denial is based;

###  

### (c)                                  a descriptionof any additional material or information necessary for the claimant to perfectthe claim and an explanation of why that material or information is necessary;and

###  

### (d)                                 an explanationof the Plan’s claim review procedure.

###  

Within 60 daysafter the claimant’s receipt of written notice of the claim’s denial, theclaimant, or his duly authorized representative, may file a written requestwith the Benefits Committee requesting a full and fair review of the denial ofthe claimant’s claim for benefits.  Inconnection with the claimant’s appeal of the denial of his claim for benefits,the claimant may review pertinent documents in the Benefit Committee’spossession and may submit issues and comments in writing.  The Benefits Committee will make a decisionon review promptly, but not later than the date of the meeting of the BenefitsCommittee that immediately follows the receipt of the claimant’s request forreview, unless the request for review is filed within 30 days before the dateof that meeting.  In that case, adecision will be made as soon as possible but not later than the date of thesecond Benefits Committee meeting following receipt of the request forreview.  If special circumstancesrequire a further extension of time for processing, a decision will be renderednot later than the third Benefits Committee meeting following receipt of theclaimant’s request for review.  If anextension of time for review is required because of special circumstances, writtennotice of the extension will be sent to the claimant before the extensioncommences.  The extension notice willindicate the special circumstances requiring an extension of time and the dateby which the Benefits 

 

39

----

 

Committeeexpects to render the final decision. The decision on review will be in writing and written in a mannercalculated to be understood by the claimant, and will set forth the specificreason or reasons for the decision and will contain specific references to thepertinent Plan provisions on which the decision is based.  If the decision on review is not furnishedto the claimant within 60 days of receipt of the request for review, or within120 days after its receipt if special circumstances required an extension oftime, the claim will be deemed denied on review.

 

## **10.8**                        Notice of Address and Missing Persons.

## ** **

Each personentitled to benefits under the Plan must file with the Plan Administrator, inwriting, the person’s post office address and each change of post office address.  Any communication, statement, or noticeaddressed to such a person at the latest reported post office address will bebinding upon the person for all purposes of the Plan, and neither the PlanAdministrator nor the Employers or Trustee shall be obliged to search for orascertain the person’s whereabouts.  Inthe event that the person cannot be located, the Plan Administrator may directthat the benefit and all further benefits with respect to that person shall bediscontinued, all liability for the payment thereof shall terminate and thebalance in such Member’s Account shall be deemed a forfeiture; provided,however, that in the event of the subsequent reappearance of the Member orBeneficiary prior to termination of the Plan, the benefits that were due andpayable and that the person missed shall be paid in a single sum and the futurebenefits due the person shall be reinstated in full.

 

## **10.9**                        Data and Information for Benefits.

## ** **

All personsclaiming benefits under the Plan must furnish to the Plan Administrator or itsdesignated agent such documents, evidence, or information as the PlanAdministrator or its designated agent considers necessary or desirable for thepurpose of administering the Plan; and a person must furnish such informationpromptly and sign such documents as the Plan Administrator or its designatedagent may require before any benefits become payable under the Plan.

 

## **10.10**                 Indemnity for Liability.

## ** **

The Companyshall indemnify each member of the Benefits Committee and each other individualwho is directed by the Company to carry out responsibilities and duties imposedby the Plan against any and all claims, losses, damages, and expenses,including counsel fees, incurred by the individual and any liability, includingany amounts paid in settlement with the Company’s approval, arising from theindividual’s action or failure to act, except when the same is judiciallydetermined to be attributable to the gross negligence or willful misconduct ofthat individual.  The Company shall paythe premiums on any bond secured under this Section and shall be entitledto reimbursement by the other Employers for their proportionate share.

 

40

----

 

## **10.11**                 Effect of a Mistake.

## ** **

In the eventof a mistake or misstatement as to the eligibility, participation, or serviceof any Member, or the amount of payments made or to be made to a Member orBeneficiary, the Plan Administrator shall, if possible, cause to be withheld oraccelerated or otherwise make adjustment of such amounts of payments as will inits sole judgment result in the Member or Beneficiary receiving the properamount of payments under this Plan.

 

# **ARTICLE 11.****AMENDMENTAND TERMINATION**

#  

## **11.1**                        Amendment and Termination.

## ** **

### (a)                                  The Companyreserves the right to alter, amend, revoke, or terminate the Plan at anytime.  The Board shall generally havethe authority to adopt amendments; however, the Benefits Committee or thecompensation committee of the Board may adopt any amendment to ensure thecontinued qualification of the Plan and Trust Fund under Sections 401(a)and 501(a) of the Code, to comply with the provisions of any federal statute orregulation impacting pension plans, to enhance the delivery of benefits toMembers and Beneficiaries, to ease Plan administration, or to respond to thewithdrawal of any Employer from the Plan. Notwithstanding the precedingsentence, no amendment by the Benefits Committee or the compensation committeeof the Board shall substantially increase the cost of the Plan without the Board’sconsent.  The Board, or any person orpersons duly authorized by the Board, shall also have the right, authority, andpower to terminate the Plan and to discontinue or suspend contributions to thePlan.

###  

### (b)                                 While eachEmployer contemplates carrying out the provisions of the Plan indefinitely withrespect to its Employees, no Employer shall be under any obligation orliability whatsoever to maintain the Plan for any minimum or other period oftime.

###  

### (c)                                  Upon anytermination of the Plan in its entirety, or with respect to any Employer, theCompany shall give written notice thereof to the Trustee and any Employerinvolved.

###  

### (d)                                 Except asprovided by law, upon any termination of the Plan, no Employer with respect towhom the Plan is terminated (including the Company) shall thereafter be underany obligation, liability, or responsibility whatsoever to make anycontribution or payment to the Trust Fund, the Plan, any Member, anyBeneficiary, or any other person, trust, or fund whatsoever, for any purpose whatsoeverunder or in connection with the Plan.

###  

### 41

### 

###  

## **11.2**                        Limitations on Amendments.

## ** **

The provisionsof this Article are subject to and limited by the following restrictions:

 

### (a)                                  No amendmentwill operate either directly or indirectly to give any Employer any interestwhatsoever in any funds or property held by the Trustee under the terms of thisPlan or the Trust Agreement, or to permit the corpus or income of the Trust tobe used for or diverted to purposes other than the exclusive benefit of Membersor their Beneficiaries.

###  

### (b)                                 No suchamendment will operate either directly or indirectly to deprive any Member ofany portion of the Member’s vested and nonforfeitable interest or right to any“Section 411(d)(6) protected benefit” (as defined in Treasury regulationSection 1.411(d)–4) as of the time of such amendment.

###  

### (c)                                  No amendmentwill modify the vesting provisions of Article 5 unless the conditions ofSection 411(a)(10) of the Code and Section 11.4 are met.

###  

## **11.3**                        Effect of Bankruptcy and Other ContingenciesAffecting an Employer.

## ** **

In the eventan Employer terminates its connection with the Plan, or in the event anEmployer is dissolved, liquidated, or is by appropriate legal proceedingsadjudged a bankrupt, or in the event judicial proceedings of any kind result inthe involuntary dissolution of an Employer, the Plan shall be terminated withrespect to that Employer. The merger, consolidation, or reorganization of anEmployer, or the sale by it of all or substantially all of its assets, shallnot terminate the Plan if there is delivery to that Employer by the Employer’ssuccessor or by the purchaser of all or substantially all of the Employer’sassets, of a written instrument requesting that the successor or purchaser besubstituted for the Employer and agreeing to perform all the provisions of thisPlan that the Employer is required to perform. Upon the receipt of that instrument, with the approval of the Company,the successor, or the purchaser will be substituted for that Employer underthis Plan, and that Employer shall be relieved and released from anyobligations of any kind, character, or description imposed upon it under thePlan or the Trust Agreement.

 

## **11.4**                        Amendment of Vesting Schedule.

## ** **

If the Plan isamended to provide a different vesting schedule, each person adverselyaffected—

 

### (a)                                  who is aParticipant during the election period below; and

###  

### (b)                                 who hascompleted at least three years of service

###  

may elect tohave the amendment disregarded in determining the vested percentage of theParticipant’s Account.  That electionmust be in writing and delivered to the Plan Administrator within the electionperiod.  Upon delivery, theParticipant’s election will be 

 

42

----

 

irrevocable.  The election period begins on the date theamendment is adopted and ends 60 days after the latest of the date—

 

### (a)                                  the amendmentis adopted;

###  

### (b)                                 the amendmentbecomes effective; or

###  

### (c)                                  the PlanAdministrator delivers a written notice of the amendment to the Participant.

###  

No amendmentto the Plan’s vesting schedule may decrease the vesting that any Member hasearned as of the date of the amendment.

 

# **ARTICLE 12.****TOP-HEAVYPROVISIONS**

#  

## **12.1**                        Application of Top-Heavy Provisions.

## ** **

### (a)                                  **Single Plan Determination**.  Except as provided in Subsection (b)(2), if as of aDetermination Date, the sum of the amount of the Section 416 Accounts of KeyEmployees and the Beneficiaries of deceased Key Employees exceeds 60 percent ofthe amount of the Section 416 Accounts of all Employees and Beneficiaries(excluding former Key Employees), the Plan is top-heavy, and the provisions ofthis Article will become applicable.

###  

### (b)                                 **Aggregation Group Determination**.

###  

#### (1)                                  If as of aDetermination Date this Plan is part of an Aggregation Group that is top-heavy,the provisions of this Article will become applicable. Top-heaviness for thepurpose of this Subsection shall be determined with respect to theAggregation Group in the same manner as described in Subsection (a) above.

####  

#### (2)                                  If this Plan istop-heavy under Subsection (a), but the Aggregation Group is nottop-heavy, the Plan will not be top-heavy, and this Article will not apply.

####  

### (c)                                  **Calculations**.  The PlanAdministrator will have responsibility to make all calculations to determinewhether this Plan is top-heavy.

###  

## **12.2**                        Definitions.

## ** **

### (a)                                  **“Aggregation Group”** means this Plan and all other plansmaintained by the Employers and nonparticipating Affiliates that cover a KeyEmployee and any other plan that enables a plan covering a Key Employee to meetthe requirements of Section 401(a)(4) of the Code or Section 410 of theCode.  In addition, at the election ofthe Plan Administrator, the Aggregation Group may be expanded to 

###  

### 43

### 

###  

### include any other qualifiedplan maintained by an Employer or nonparticipating Affiliate if the expandedAggregation Group meets the requirements of Section 401(a)(4) of the Code andSection 410 of the Code.

###  

### (b)                                 **“Compensation”** means the Member’s compensation, salaries, andother amounts received for personal services rendered in the course ofemployment with Employers and nonparticipating Affiliates, including thoseitems described in Treasury regulation 1.415–2(d)(1) and, for Plan Yearscommencing on or after January 1, 2001, amounts not includable in gross incomeunder Section 132(f) of the Code. The annual Compensation of each Member that may be taken into accountunder the Plan shall not exceed the first $160,000 (as adjusted by the Secretaryof the Treasury under Section 401(a)(17)).

###  

### (c)                                  **“Determination Date”** means the last day of thePlan Year immediately preceding the Plan Year for which top-heaviness is to bedetermined or, in the case of the first Plan Year of a new plan, the last day ofthat Plan Year.

###  

### (d)                                 **“Key Employee”** means a Member who is a “key employee,” as definedin Section 416(i) of the Code.  AnyEmployee who is not a Key Employee shall be a “non-Key employee” for purposesof applying this Article 12.

###  

### (e)                                  **“Section 416 Account”** means—

###  

#### (1)                                  the amountcredited as of a Determination Date to a Member’s or Beneficiary’s account,under the Plan and under any other qualified defined contribution plan that ispart of an Aggregation Group (including amounts to be credited as of the DeterminationDate but that have not yet been contributed);

####  

#### (2)                                  the presentvalue of the accrued benefit credited to a Member or Beneficiary under aqualified defined benefit plan that is part of an Aggregation Group; and

####  

#### (3)                                  the amount ofdistributions to the Member or Beneficiary during the five-year period endingon the Determination Date other than a distribution that is a tax-free RolloverContribution (or similar transfer) that is not initiated by the Member or thatis contributed to a plan that is maintained by an Employer or nonparticipatingAffiliate;

####  

reduced by—

 

#### (4)                                  the amount ofRollover Contributions (or similar transfers) and earnings thereon credited asof a Determination Date under the Plan or a plan forming part of an AggregationGroup that is attributable to a Rollover Contribution (or similar transfer)accepted after December 31, 1983, initiated by the Member and derived froma plan not maintained by an Employer or nonparticipating Affiliate.

####  

#### 44

#### 

####  

The Account ofa Member who was a Key Employee and who subsequently meets none of theconditions of Subsection (c) for the Plan Year containing theDetermination Date is not a Section 416 Account and will be excluded from allcomputations under this Article. If a Member has not performed any services foran Employer or nonparticipating Affiliate during the five-year period ending onthe Determination Date, any account of that Member (and any accrued benefit forthat Member) will not be taken into account in computing top-heaviness underthis Article.

 

## **12.3**                        Minimum Contribution.

## ** **

### (a)                                  **General**.  If thisPlan is determined to be top-heavy under the provisions of Section 12.1with respect to a Plan Year, the sum of Employer contributions (excludingEmployer Matching Contributions and Tax-Deferred Contributions) and forfeituresunder all qualified defined contribution plans allocated to the accounts ofeach Member in the Aggregation Group who is not a Key Employee and is anEmployee on the last day of the Plan Year will not be less than 3 percent ofthe Member’s Compensation.

###  

### (b)                                 **Exception**.  Thecontribution rate specified in Subsection (a) will not exceed thepercentage at which Employer contributions and forfeitures are allocated underthe plans of the Aggregation Group to the account of the Key Employee for whomthat percentage is the highest for the Plan Year.  For the purpose of this Subsection (b), the percentage foreach Key Employee shall be determined by dividing the Employer contributions(excluding Employer Matching Contributions and Tax-Deferred Contributions) andforfeitures for the Key Employee by the amount of the Key Employee’sCompensation for the year.

###  

### (c)                                  **Multiple Plans**.  If thisPlan is determined to be top-heavy under the provisions of Section 12.1with respect to a Plan Year, any Member who is a non-Key Employee covered underthis Plan and under a defined benefit plan maintained by the Employers andnonparticipating Affiliates will receive a minimum contribution determined bysubstituting 5 percent for 3 percent in applying the provisions ofSubsection (a).  However, nominimum contribution under this Section will be allocable to any non-KeyEmployee who participates in a defined benefit plan maintained by an Employeror nonparticipating Affiliate and who receives the minimum benefit described inSection 416(c)(1) of the Code under the defined benefit plan.

###  

## **12.4**                        Limit on Annual Additions: Combined Plan Limit.

## ** **

### (a)                                  **General**.  If thisPlan is determined to be top-heavy under Section 12.1, Section 4.6 ofthis Plan will be applied by substituting 1.0 for 1.25 in applying theprovisions of Section 415(e)(2) and (e)(3) of the Code.

###  

Thetransitional rule of Section 415(e)(6)(B)(i) of the Code will be applied bysubstituting “$41,500” for “$51,875.”

 

45

----

 

### (b)                                 **Exception**. Subsection (a) will not apply if this Plan would not be top-heavyif “90 percent” is substituted for “60 percent” in Section 12.1, but inthat case—

###  

#### (1)                                  Subsection 12.3(a)will be applied by substituting “4 percent” for “3 percent”; and

####  

#### (2)                                  Subsection 12.3(c)will be applied by substituting “7.5 percent” for “5 percent.”

####  

### (c)                                  **Transitional Rule**.  If,but for this Subsection (c), Subsection (a) would begin to apply withrespect to the Plan, the application of Subsection (a) shall be suspendedwith respect to a Member so long as there are—

###  

#### (1)                                  no Employercontributions, forfeitures, or voluntary nondeductible contributions allocatedto the Member, and

####  

#### (2)                                  no accrualsunder a qualified defined benefit plan for the Member.

####  

### (d)                                 **Applicability.** Notwithstanding any provision of the Plan to the contrary, thisSubsection 12.4 shall apply only in a Plan Year beginning prior to January 1,2000.

###  

## **12.5**                        Collective Bargaining Agreements.

## ** **

The requirementsof Sections 12.3 and 12.4 will not apply with respect to any Employeeincluded in a unit of Employees covered by a collective bargaining agreementbetween Employee representatives and an Employer or nonparticipating Affiliateif retirement benefits were the subject of good faith bargaining between theEmployee representatives and the Employer or nonparticipating Affiliate.

 

# **ARTICLE 13.****PARTICIPATIONIN AND WITHDRAWAL FROM THE PLAN BY AN EMPLOYER**

#  

## **13.1**                        Adoption of the Plan.

## ** **

With theCompany’s consent, any Affiliate may become an Employer under the Plan and mayelect by—

 

### (a)                                  takingappropriate action to adopt the Plan;

###  

### (b)                                 filing with theCompany a duly certified copy of the Plan as adopted by the Affiliate;

###  

### (c)                                  becoming aparty to the trust agreement establishing the Trust Fund; and

###  

### (d)                                 executing anddelivering documents and taking any other action as may be necessary ordesirable to put the Plan into effect with respect to it.

###  

### 46

### 

###  

## **13.2**                        Withdrawal from Participation.

## ** **

Any Employermay, with the Company’s consent, withdraw from participation in the Plan at anytime by filing with the Company a duly certified copy of a resolution of itsboard of directors to that effect and giving notice of its intended withdrawalto the Company and the Trustee prior to the effective date of withdrawal.  Distribution may be implemented throughcontinuation of the Trust Fund, or transfer to another trust fund exempt fromtax under Section 501 of the Code, or to a group annuity contractqualified under Section 401 of the Code, or distribution may be made as animmediate cash payment in accordance with the directions of the PlanAdministrator; provided, however, that no such action shall divert any part ofthe fund to any purpose other than the exclusive benefit of the Employees ofthat Employer.

 

## **13.3**                        Company as Agent for Employers.

## ** **

Each Affiliatethat becomes a participating Employer pursuant to Section 13.1 by doing sowill be deemed to have appointed the Company its agent to exercise on itsbehalf all of the powers and authorities conferred upon the Company by theterms of the Plan, including, but not limited to, the power to amend andterminate the Plan.  The Company’sauthority to act as agent will continue unless and until that portion of theTrust Fund held for the benefit of Employees of the particular Employer andtheir beneficiaries are transferred or distributed pursuant toSection 13.2.  Each Employer will,from time to time, upon the Company’s request, furnish to the Company any dataand information as the Company requires in the performance of its duties.

 

# **ARTICLE 14.****MISCELLANEOUS**

#  

## **14.1**                        Beneficiary Designation.

## ** **

### (a)                                  Each Member maydesignate, on a form provided for that purpose by the Plan Administrator, a Beneficiary(which may be an entity other than a natural person) or Beneficiaries toreceive the Member’s vested interest in the Plan in the event of the Member’sdeath, but the designation will not be effective for any purpose until it hasbeen filed by the Member during the Member’s lifetime with the PlanAdministrator.  The Member may, fromtime to time during the Member’s lifetime, on a form approved by and filed withthe Plan Administrator, change the Member’s Beneficiary or Beneficiaries.

###  

### (b)                                 The Beneficiaryof each Member who is married will be the Member’s surviving spouse, unlessthat spouse consents in writing to the designation of another Beneficiary orBeneficiaries.  The consent mustspecifically acknowledge the identity of the nonspousal Beneficiary, or mustspecifically acknowledge and waive the right to limit the consent to a specificBeneficiary.  Each married Member may,from time to time, change the Member’s designation of Beneficiaries; provided,however, that the Member may not change the Member’s 

###  

### 47

### 

###  

### Beneficiary without thewritten consent of the Member’s spouse, unless the spouse’s prior consentexpressly permits designations by the Member without any requirement of furtherconsent by the spouse.  The consent of aMember’s spouse will be irrevocable unless and until the Member changes theMember’s designation of Beneficiaries. Upon the divorce of a Member and the Member’s spouse, any designation ofthe spouse as the Member’s Beneficiary will be deemed to be revoked.

###  

### (c)                                  In the eventthat a Member fails to designate a Beneficiary, or if for any reason hisdesignation is legally ineffective, or if all designated Beneficiariespredecease the Member or die simultaneously with the Member, distribution willbe made to the Member’s spouse; or if none, to the Member’s children in equalshares; or if none, to the Member’s parents in equal shares; or if none, to theMember’s estate. If any such Beneficiary dies before receiving the distributionthat would have been made to the Beneficiary had the Beneficiary not died,then, for the purposes of the Plan, the distribution that would have beenreceived by the Beneficiary will be made to the Beneficiary’s estate.

###  

### (d)                                 The writtenconsent described in Subsection (b) must acknowledge the effect of theelection and must be witnessed by a notary public.

###  

## **14.2**                        Facility of Payment.

## ** **

If any benefitunder the Plan is payable to a person whom the Plan Administrator knows is aminor or otherwise under legal incapacity, the Plan Administrator or itsdesignee may have the payment made to the legal guardian of that person or tosuch person or organization as a court of competent jurisdiction maydirect.  To the extent permitted by law,any payment made under this Section shall be a complete discharge of anyliability under the Plan to that person.

 

## **14.3**                        Nonalienation.

## ** **

Except asprovided in Section 401(a)(13) of the Code, neither benefits payable at anytime under the Plan nor the corpus or income of the Trust Fund will be subjectin any manner to anticipation, alienation, sale, transfer, assignment, pledge,attachment, garnishment, levy, execution, or other legal or equitable processor encumbrance of any kind.  No payeemay assign any payment due him under the Plan. Any attempt to alienate, sell, transfer, assign, pledge, or otherwiseencumber any such benefit, whether presently or thereafter payable, will bevoid.  The Trust Fund will not in anymanner be liable for, or subject to, the debts or liabilities of any Member,Beneficiary, or any other person entitled to any benefit.  However, the payment of benefits will bemade in accordance with the applicable requirements of any qualified domesticrelation order, as defined in Section 414(p) of the Code.  The Plan Administrator will establishprocedures to determine whether domestic relations orders are “qualifieddomestic relations orders” and to administer distributions under qualifieddomestic relations orders.

 

48

----

 

In the eventthat a qualified domestic relations order provides for the payment of all or aportion of a Member’s Accounts to an alternate payee, distribution to thealternate payee may be made at any time specified in the order, irrespective ofwhether the Member has reached the earliest retirement age, as defined inSection 414(p) of the Code.  In theevent that a qualified domestic relations order provides for the immediatepayment of all or a portion of a Member’s Accounts to an alternate payee,distribution will be made pursuant to the order as soon as administrativelyfeasible following the Plan Administrator’s determination that the order is aqualified domestic relations order.

 

## **14.4**                        Applicable Law.

## ** **

The Plan andall rights hereunder shall be governed by and construed in accordance with thelaws of the State of Ohio to the extent those laws have not been preempted byapplicable federal law.

 

## **14.5**                        Severability.

## ** **

If a provisionof this Plan will be held illegal or invalid, the illegality or invalidity willnot affect the remaining parts of the Plan, and the Plan will be construed andenforced as if the illegal or invalid provision had not been included in thisPlan.

 

## **14.6**                        No Guarantee.

## ** **

Neither thePlan Administrator, the Company, the Employers, nor the Trustee in any wayguarantees the Trust Fund from loss or depreciation nor the payment of anymoney that may be or become due to any person from the Trust Fund.  Nothing contained in this Plan will bedeemed to give any Participant, Member, or Beneficiary an interest in anyspecific part of the Trust Fund or any other interest except the right toreceive benefits out of the Trust Fund in accordance with the provisions of thePlan and the Trust Agreement.

 

## **14.7**                        Merger, Consolidation, or Transfer.

## ** **

In the case ofany merger or consolidation with, or transfer of assets and liabilities to anyother plan, provisions will be made so that each Member will receive a benefitimmediately after the merger, consolidation, or transfer (if the Plan had thenterminated) that is equal to or greater than the benefit the Member would havebeen entitled to receive immediately before the merger, consolidation, ortransfer (if the Plan had then terminated).

 

## **14.8**                        Internal Revenue Service Approval.

## ** **

The Companyintends to obtain a ruling or rulings by the District Director of InternalRevenue that—

 

### (a)                                  the Plan, as ineffect from time to time, with respect to all Employers, meets the requirementsof Section 401(a) of the Code; and

###  

### 49

### 

###  

### (b)                                 any and allcontributions made by the Employers under the Plan are deductible for incometax purposes under Section 404(a) of the Code or any other applicableprovisions of the Code.

###  

## **14.9**                        Special ESOP Provisions.

## ** **

### (a)                                  Right of FirstRefusal.

###  

At any time atwhich Cinergy Stock ceases to be publicly traded within the meaning of TreasuryRegulation Section 54.4975-7(b)(1)(iv), all shares held under the ESOP Featuredistributed by the Trustee may, as determined by the Plan Administrator, besubject to a “right of first refusal.” Such a “right” shall provide that prior to any subsequent transfer, theshares must first be offered in writing to the Trust, and then, if refused bythe Trust, to the Company.  In the eventthat the proposed transfer constitutes a gift or other such transfer at lessthan fair market value, the price per share shall be the fair market valuedetermined as of the Valuation Date coinciding with or immediately precedingthe date offered to the Trust, or in the event of a proposed purchase by aprospective bona fide purchaser other than an Affiliate, the offer to theTrustee and the Company shall be at the greater of fair market value determinedas of the Valuation Date coinciding with or immediately preceding the dateoffered to the Trust or at the price offered to be paid by the prospective bonafide purchaser; provided, however, that in the case of a purchase by the Trustfrom a disqualified person (as defined in Section 4975 of the Code) the priceper share shall be determined as of the date of the purchase; and, provided,further, that the Trust shall not purchase any shares when the purchase priceof such shares is in excess of fair market value.  The Trust or the Company, as the case may be, may accept theoffer at any time during a period not exceeding fourteen days after receipt ofsuch offer.  The right of first refusalshall lapse fourteen days after the security holder gives written notice to theTrust of its right of first refusal with respect to the shares.

 

### (b)                                 Put Option.

###  

At any time atwhich Cinergy Stock held under the ESOP Feature has ceased to be readilytradeable on an established securities market, a Participant or Beneficiaryshall be granted at any such time that such shares are distributed to him, anoption to “put” such shares to the Company; provided, however, that the Trustshall have the option to assume the rights and obligations of the Company atthe time the “put” option is exercised. Such “put” option shall provide that, for a period of 60 days (excludingany period during which the Company is prohibited from honoring the “put”option by applicable federal or state law) after such shares are distributed bythe Trustee to a Participant or Beneficiary, the Participant or Beneficiaryshall have the right to have the Company purchase such shares at their fairmarket value, and if the “put” option is not exercised within such 60-dayperiod, it may be exercised within an additional period of 60 days during thePlan Year next commencing after the date such shares were distributed by theTrustee.  For purposes of this Section,fair market value shall be based on 

 

50

----

 

the fairmarket value determined as of the Valuation Date coinciding with or immediatelypreceding the date of exercise.  Such“put” option shall be exercised by notifying the Company in writing.  The terms of payment for the purchase ofsuch shares shall be reasonable.  In thecase of deferral of payment, adequate security and a reasonable rate ofinterest shall be provided for any credit extended, and cumulative payments asof any given date shall be no less than the aggregate of reasonable periodicpayments as of such date.  Periodicpayments shall be considered reasonable if annual installments, commencingwithin 30 days after the “put” is exercised, are substantially equal and if thepayment period extends for not more than five years after the date the “put” isexercised; provided, however, that such period may be extended to a date nolater than the earlier of ten years from the date the “put” is exercised or thedate the proceeds of any loan used to acquire the shares subject to the “put”are entirely repaid.

 

### (c)                                  Other Options.

###  

Except asotherwise provided in this Section, no person may be required to sell sharesheld under the ESOP Feature to the Company, nor may the Trust enter into anagreement which obligates the Trust to purchase such shares at an indefinitetime determined upon the happening of an event such as the death of ashareholder.

 

### (d)                                 NonterminableProtections and Rights.

###  

Except asprovided in this Section or as otherwise required by applicable law, no shareheld under the ESOP Feature may be subject to a put, call, or other option, orbuy-sell or similar arrangement while held by or when distributed from theTrust, whether or not the ESOP Feature ceases to be an employee stock ownershipplan.  Moreover, if the Trustee holds ordistributes any shares held under the ESOP Feature which are not readilytradeable on an established securities market when distributed or which ceaseto be so tradeable within the otherwise applicable “put” option periods, andthe ESOP Feature ceases to be an employee stock ownership plan or the loan thatfinanced the purchase of such shares is repaid, the “put” option describedabove shall be nonterminable with respect to such shares; provided, however,that in the case of such shares ceasing to be so tradeable within the otherwiseapplicable “put” option periods, the Company shall notify each distributeedescribed above who is then holding any such shares in writing on or before thetenth day after the date the shares cease to be so tradeable that for theremainder of such period or periods such shares are subject to a “put” optionand the terms thereof, all as set forth above; and, provided, further, that thenumber of days between such tenth day and the date of which notice is actuallygiven, if later than on the tenth day, shall be added to the duration of the“put” option.

 

51

----

 

### (e)                                  DividendDistributions.

###  

If sodetermined by the Plan Administrator, and in accordance with proceduresestablished by the Plan Administrator, any cash dividends payable on sharesheld in the Cinergy Stock Fund attributable to the Accounts of Members andBeneficiaries may be paid currently, or within ninety (90) days after the endof the Plan Year in which the dividends are paid to the Trust, in cash to theMembers and Beneficiaries on a nondiscriminatory basis, or such dividends maybe paid directly to the Members and Beneficiaries, or the dividends may be paidto the Plan and reinvested in the Cinergy Stock Fund.  If the Plan Administrator so determines, each Member orBeneficiary to whom Cinergy Stock is attributable to their Accounts on therecord date for such dividend shall have the right to elect whether suchdividends (1) will be paid in cash to the Member or Beneficiary, or (2) willremain in the Member’s or Beneficiary’s Account and be reinvested in CinergyStock through the Cinergy Stock Fund.

 

### (f)                                    Special ESOPValuation.

###  

At any time atwhich Cinergy Stock held under the ESOP Feature has ceased to be readilytradeable on an established securities market, valuation of such Cinergy Stockwith respect to activities carried on by the Plan shall be by an independentappraiser in accordance with Section 401(a)(28)(C) of the Code.

 

## **14.10**                 ElectronicMedia.

## ** **

Notwithstandingany provision of the Plan to the contrary, including any provision whichrequires the use of a written instrument, to the extent permitted by applicablelaw, the Plan Administrator may establish procedures for the use of electronicmedia in communications and transactions between the Plan or the PlanAdministrator and Participants and Beneficiaries.  Electronic media may include, but are not limited to, e-mail, theInternet, intranet systems and automated telephonic response systems.

 

* * * * * * * * * *

 

**In Witness Whereof**,Cinergy Corp. has caused this instrument to be executed by its duly authorizedofficer on this 20th day of December, 2002.

 

 
|   | CINERGY CORP. |
|--------|---------------|
|   |          |   |
|   |          |   |
|   | By:           |   |   |
|   |          | Timothy J.  Verhagen |
|   |          | Vice  President |
|   |          | Human  Resources |

 

52

----

 

**CINERGY CORP.NON-UNIONEMPLOYEES’ 401(K) PLAN**

** **

(Effective as of January 1, 2003)

** **

**ADDENDUM******EGTRRA AND 401(a)(9)MODEL PROVISIONS

 

PREAMBLE

 

1.  Adoption and Effective Date of Addendum.  This Addendum to the Plan is adopted toreflect certain provisions of the Economic Growth and Tax Relief ReconciliationAct of 2001 (“EGTRRA”).  This Addendumis intended as good faith compliance with the requirements of EGTRRA and is tobe construed in accordance with EGTRRA and guidance issued thereunder.  Except as otherwise provided, this Addendumshall be effective as of the first day of the first Plan Year beginning afterDecember 31, 2001.

 

2.  Supersession of Inconsistent Provisions.  This Addendum shall supersede the provisionsof the Plan to the extent those provisions are inconsistent with the provisionsof this Addendum.

 

SECTION1.  LIMITATIONS ON CONTRIBUTIONS

 

1.  Effective Date. This section shall be effective for limitation years beginning afterDecember 31, 2001.

 

2.  Maximum Annual Addition. Except to the extent permitted under section 9 of this Addendum andSection 414(v) of the Code, if applicable, the annual addition that may becontributed or allocated to a Participant’s Account under the Plan for anylimitation year shall not exceed the lesser of:

 

(a)                                  $40,000,as adjusted for increases in the cost-of-living under Section 415(d) ofthe Code, or

 

(b)                                 100percent of the Participant’s compensation, within the meaning ofSection 415(c)(3) of the Code, for the limitation year.

 

The compensation limit referredto in (b) shall not apply to any contribution for medical benefits after separationfrom service (within the meaning of Section 401(h) orSection 419A(f)(2) of the Code) which is otherwise treated as an annualaddition.

 

SECTION2.  INCREASE IN COMPENSATION LIMIT

 

The annual compensation of eachParticipant taken into account in determining allocations for any Plan Yearbeginning after December 31, 2001, shall not exceed $200,000, as adjustedfor cost-of-living increases in accordance with Section 401(a)(17)(B) ofthe Code.  Annual compensation meanscompensation during the Plan Year or such other consecutive 12–monthperiod over which compensation is otherwise determined under the Plan (thedetermination 

 

1

----

 

period).  The cost-of-living adjustment in effect fora calendar year applies to annual compensation for the determination periodthat begins with or within such calendar year.

 

SECTION3.  MODIFICATION OF TOP-HEAVY RULES

 

1.  Effective Date. This section shall apply for purposes of determining whether the Plan isa top-heavy plan under Section 416(g) of the Code for Plan Years beginningafter December 31, 2001, and whether the Plan satisfies the minimumbenefits requirements of Section 416(c) of the Code for such years.  This section amends Article 12 of the Plan.

 

2.  Determination of Top-heavy Status.

 

2.1  Key Employee.  KeyEmployee means any employee or former employee (including any deceasedemployee) who at any time during the Plan Year that includes the DeterminationDate was an officer of an Employer or Affiliate having annual compensationgreater than $130,000 (as adjusted under Section 416(i)(1) of the Code forPlan Years beginning after December 31, 2002), a 5-percent owner of anEmployer or Affiliate, or a 1-percent owner of an Employer or Affiliate havingannual compensation of more than $150,000. For this purpose, annual compensation means compensation within themeaning of Section 415(c)(3) of the Code. The determination of who is a Key Employee will be made in accordancewith Section 416(i)(1) of the Code and the applicable regulations andother guidance of general applicability issued thereunder.

 

2.2  Determination of Present Values and Amounts.  This section 2.2 shall apply forpurposes of determining the present values of accrued benefits and the amountsof account balances of employees as of the Determination Date.

 

2.2.1.  Distributions During Year Ending On theDetermination Date.  The presentvalues of accrued benefits and the amounts of account balances of an employeeas of the Determination Date shall be increased by the distributions made withrespect to the employee under the Plan and any plan aggregated with the Planunder Section 416(g)(2) of the Code during the 1-year period ending on theDetermination Date.  The precedingsentence shall also apply to distributions under a terminated plan which, hadit not been terminated, would have been aggregated with the Plan underSection 416(g)(2)(A)(i) of the Code. In the case of a distribution made for a reason other than separationfrom service, death, or disability, this provision shall be applied bysubstituting “5–year period” for “1–year period.”

 

2.2.2  Employees Not Performing Services During Year Ending On theDetermination Date.  The accruedbenefits and accounts of any individual who has not performed services for theEmployer and Affiliates during the 1–year period ending on theDetermination Date shall not be taken into account.

 

3.  Minimum Benefits.

 

3.1  Matching Contributions. Employer Matching Contributions shall be taken into account for purposesof satisfying the minimum contribution requirements of Section 416(c)(2)of the Code and the Plan.  The precedingsentence shall apply with respect to matching contributions under the Plan or,if the Plan provides that the minimum contribution requirement shall be met inanother plan, such other plan.  EmployerMatching Contributions that are used to satisfy the 

 

2

----

 

minimum contributionrequirements shall be treated as matching contributions for purposes of theactual contribution percentage test and other requirements ofSection 401(m) of the Code.

 

3.2  Contributions Under Other Plans.  No minimum contribution made under the Plan will be allocable toany non-key Employee who participates in a defined benefit plan maintained byan Employer or nonparticipating Affiliate and who receives the minimum benefitdescribed in Section 416(c)(1) of the Code under the defined benefit plan.

 

SECTION4.  DIRECT ROLLOVERS OF PLANDISTRIBUTIONS

 

1.  Effective Date. This section shall apply to distributions made after December 31,2001.

 

2.  Modification of Definition of Eligible Retirement Plan.  For purposes of the direct rolloverprovisions in Section 6.3(d) of the Plan, an eligible retirement planshall also mean an annuity contract described in Section 403(b) of theCode and an eligible plan under Section 457(b) of the Code which ismaintained by a state, political subdivision of a state, or any agency orinstrumentality of a state or political subdivision of a state and which agreesto separately account for amounts transferred into such plan from thisPlan.  The definition of eligibleretirement plan shall also apply in the case of a distribution to a survivingspouse, or to a spouse or former spouse who is the alternate payee under aqualified domestic relation order, as defined in Section 414(p) of theCode.

 

3.  Modification of Definition of Eligible Rollover Distributionto Exclude Hardship Distributions. For purposes of the direct rollover provisions in Section 6.3(d) ofthe Plan, any amount that is distributed on account of hardship shall not be aneligible rollover distribution and the distributee may not elect to have anyportion of such a distribution paid directly to an eligible retirement plan.

 

4.  Modification of Definition of Eligible Rollover Distributionto Include After-tax Employee Contributions.  For purposes of the direct rollover provisions inSection 6.3(d) of the Plan, a portion of a distribution shall not fail tobe an eligible rollover distribution merely because the portion consists ofafter-tax employee contributions which are not includible in gross income.  However, such portion may be transferredonly to an individual retirement account or annuity described inSection 408(a) or (b) of the Code, or to a qualified defined contributionplan described in Section 401(a) or 403(a) of the Code that agrees toseparately account for amounts so transferred, including separately accountingfor the portion of such distribution which is includible in gross income andthe portion of such distribution which is not so includible.

 

SECTION5.  ROLLOVERS FROM OTHER PLANS

 

The Plan will acceptparticipant rollover contributions and/or direct rollovers of distributionsmade after December 31, 2001, from the types of plans specified below,beginning January 1, 2003:

 

DirectRollovers:

 

The Plan will accept a directrollover of an eligible rollover distribution from: (1) a qualified plandescribed in Section 401(a) or 403(a) of the Code, excluding after-tax employeecontributions, 

 

3

----

 

(2) a qualified plan describedin Section 401(a) or 403(a) of the Code, including after-tax employeecontributions, (3) an annuity contract described in Section 403(b) of the Code,excluding after-tax employee contributions and (4) an eligible plan underSection 457(b) of the Code which is maintained by a state, politicalsubdivision of a state, or any agency or instrumentality of a state orpolitical subdivision of a state.

 

ParticipantRollover Contributions from Other Plans:

 

The Plan will accept aparticipant contribution of an eligible rollover distribution from:  (1) a qualified plan described in Section401(a) or 403(a) of the Code, (2) an annuity contract described in Section 403(b)of the Code, and (3) an eligible plan under Section 457(b) of the Code which ismaintained by a state, political subdivision of a state, or any agency orinstrumentality of a state or political subdivision of a state.

 

ParticipantRollover Contributions from IRAs:

 

The Plan will accept aparticipant rollover contribution of the portion of a distribution from anindividual retirement account or annuity described in Section 408(a) or 408(b)of the Code that is eligible to be rolled over and would otherwise beincludible in gross income.

 

SECTION6.  ROLLOVERS DISREGARDED IN INVOLUNTARYCASH-OUTS

 

1.  Applicability and effective date. This section shall beeffective with respect to distributions made after December 31, 2002.

 

2.  Rollovers disregarded in determining value of account balancefor involuntary distributions. For purposes of Subsection 6.2 of the Plan,the value of a participant’s nonforfeitable account balance shall be determinedwithout regard to that portion of the account balance that is attributable torollover contributions (and earnings allocable thereto) within the meaning ofSections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16) of theCode.  If the value of the participant’snonforfeitable account balance as so determined is $5,000 or less, the Planshall immediately distribute the participant’s entire nonforfeitable accountbalance.

 

SECTION7.  REPEAL OF MULTIPLE USE TEST

 

The multiple use test describedin Treasury Regulation Section 1.401(m)-2 and Section 4.4(g)-(i) ofthe Plan shall not apply for Plan Years beginning after December 31, 2001.

 

SECTION8.  ELECTIVE DEFERRALS — CONTRIBUTIONLIMITATION

 

No Participant shall bepermitted to have elective deferrals made under this Plan, or any otherqualified plan maintained by the Employer or any Affiliate during any taxableyear, in excess of the dollar limitation contained in Section 402(g) ofthe Code in effect for such taxable year, except to the extent permitted underSection 9 of this Addendum and Section 414(v) of the Code, ifapplicable.

 

4

----

 

SECTION9.  CATCH-UP CONTRIBUTIONS

 

1.  Catch-up Contributions. This section shall apply to contributions after December 31, 2001.  All employees who are eligible to makeelective deferrals under this Plan and who would attain age 50 before theclose of the Plan Year shall be eligible to make catch-up contributions inaccordance with, and subject to the limitations of, Section 414(v) of theCode.  Such catch-up contributions shallnot be taken into account for purposes of the provisions of the Planimplementing the required limitations of Sections 402(g) and 415 of theCode.  The Plan shall not be treated asfailing to satisfy the provisions of the Plan implementing the requirements ofSection 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416 of the Code, asapplicable, by reason of the making of such catch-up contributions.

 

2.  No Matching of Catch-up Contributions.  Employer Matching Contributions shall not bemade with respect to catch-up contributions.

 

SECTION10.  SUSPENSION PERIOD FOLLOWINGHARDSHIP DISTRIBUTION

 

1.  Suspension Period. A Participant who receives a distribution of elective deferrals afterDecember 31, 2001, on account of hardship shall be prohibited from makingelective deferrals and employee contributions under this and all other plans ofthe Employer or any Affiliate for 6 months after receipt of thedistribution.  A Participant whoreceives a distribution of elective deferrals in calendar year 2001 on accountof hardship shall be prohibited from making elective deferrals and employeecontributions under this and all other plans of the Employer or any Affiliatefor 6 months after receipt of the distribution or until January 1, 2002,if later.

 

2.  Deferral Limit After Suspension.  For calendar years beginning after December 31, 2001, aParticipant who receives a distribution of elective deferrals after December31, 2000, on account of hardship shall be limited in making elective deferrals followingthe suspension period as provided by Section 402(g) of the Code, without regardto the further limitation of Treasury Regulation Section1.401(k)-1(d)(2)(iv)(B)(3).

 

SECTION11.  DISTRIBUTION UPON SEVERANCE FROMEMPLOYMENT

 

1.  Effective Date. This section shall apply for distributions and severances fromemployment occurring after December 31, 2001, regardless of when theseverance from employment occurred.

 

2.  New Distributable Event. A Participant’s elective deferrals, qualified nonelective contributions,qualified matching contributions, and earnings attributable to thesecontributions shall be distributed on account of the Participant’s severancefrom employment.  However, such adistribution shall be subject to the other provisions of the Plan regardingdistributions, other than provisions that require a separation from servicebefore such amounts may be distributed.

 

5

----

 

SECTION12.  MINIMUM DISTRIBUTION REQUIREMENTS.

 

Minimum Distribution Requirements Article.

 

Section 1.  General Rules.

 

1.1.  Effective Date. The provisions of this article will apply for purposes of determiningrequired minimum distributions for calendar years beginning with the 2003calendar year.

 

1.2.  Precedence.  Therequirements of this article will take precedence over any inconsistentprovisions of the Plan.

 

1.3.  Requirements of Treasury Regulations Incorporated.  All distributions required under thisarticle will be determined and made in accordance with the Treasury regulationsunder Section 401(a)(9) of the Code.

 

1.4.  TEFRA Section 242(b)(2) Elections.  Notwithstanding the other provisions of thisarticle, distributions may be made under a designation made beforeJanuary 1, 1984, in accordance with section 242(b)(2) of the TaxEquity and Fiscal Responsibility Act (TEFRA) and the provisions of the Planthat relate to section 242(b)(2) of TEFRA.

 

Section 2.  Time and Manner of Distribution.

 

2.1.  Required Beginning Date. The Participant’s entire interest will be distributed, or begin to bedistributed, to the Participant no later than the Participant’s requiredbeginning date.

 

2.2.  Death of Participant Before Distributions Begin.  If the Participant dies before distributionsbegin, the Participant’s entire interest will be distributed, or begin to bedistributed, no later than as follows:

 

(a)  If the Participant’s surviving spouse is theParticipant’s sole designated beneficiary, then, except as provided in section2.2(e) below, distributions to the surviving spouse will begin by December 31of the calendar year immediately following the calendar year in which theParticipant died, or by December 31 of the calendar year in which theParticipant would have attained age 70 1/2, if later.

 

(b)  If the Participant’s surviving spouse is notthe Participant’s sole designated beneficiary, then, except as provided insection 2.2(e) below, distributions to the designated beneficiary will begin byDecember 31 of the calendar year immediately following the calendar yearin which the Participant died.

 

(c)  If there is no designated beneficiary as ofSeptember 30 of the year following the year of the Participant’s death,the Participant’s entire interest will be distributed by December 31 ofthe calendar year containing the fifth anniversary of the Participant’s death.

 

(d)  If the Participant’s surviving spouse is theParticipant’s sole designated beneficiary and the surviving spouse dies afterthe Participant but before distributions to the 

 

6

----

 

survivingspouse begin, this section 2.2, other than section 2.2(a), will applyas if the surviving spouse were the Participant.

 

(e)  If the Participant dies before distributionsbegin and there is a designated beneficiary, distribution to the designated beneficiaryis not required to begin by the date specified in the foregoing provisions ofthis section 2.2, but the Participant’s entire interest will bedistributed to the designated beneficiary by December 31 of the calendaryear containing the fifth anniversary of the Participant’s death.  If the Participant’s surviving spouse is theParticipant’s sole designated beneficiary and the surviving spouse dies afterthe Participant but before distributions to either the Participant or thesurviving spouse begin, the immediately preceding sentence will apply as if thesurviving spouse were the Participant. Participants or beneficiaries may elect on an individual basis whetherthe 5-year rule or the life expectancy rule in sections 2.2 and 4.2 ofthis article applies to distributions after the death of a Participant who hasa designated beneficiary.  The electionmust be made no later than the earlier of September 30 of the calendaryear in which distribution would otherwise be required to begin under thissection 2.2, or by September 30 of the calendar year which containsthe fifth anniversary of the Participant’s (or, if applicable, survivingspouse’s) death.  If neither theParticipant nor beneficiary makes an election under this paragraph,distributions will be made in accordance with the foregoing provisions of thissection 2.2 and section 4.2 of this article.

 

For purposes of thissection 2.2 and section 4, unless section 2.2(d) applies,distributions are considered to begin on the Participant’s required beginningdate.  If section 2.2(d) applies,distributions are considered to begin on the date distributions are required tobegin to the surviving spouse under section 2.2(a).  If distributions under an annuity purchasedfrom an insurance company irrevocably commence to the Participant before theParticipant’s required beginning date (or to the Participant’s surviving spousebefore the date distributions are required to begin to the surviving spouseunder section 2.2(a)), the date distributions are considered to begin isthe date distributions actually commence.

 

2.3.  Forms of Distribution. Unless the Participant’s interest is distributed in the form of anannuity purchased from an insurance company or in a single sum on or before therequired beginning date, as of the first distribution calendar yeardistributions will be made in accordance with sections 3 and 4 of thisarticle.  If the Participant’s interestis distributed in the form of an annuity purchased from an insurance company,distributions thereunder will be made in accordance with the requirements ofSection 401(a)(9) of the Code and the Treasury regulations.

 

Section 3.  Required Minimum Distributions DuringParticipant’s Lifetime.

 

3.1.  Amount of Required Minimum Distribution For Each DistributionCalendar Year.  During theParticipant’s lifetime, the minimum amount that will be distributed for eachdistribution calendar year is the lesser of:

 

(a)  the quotient obtained by dividing theParticipant’s account balance by the distribution period in the UniformLifetime Table set forth in Section 1.401(a)(9)-9 of the Treasuryregulations, using the Participant’s age as of the Participant’s birthday inthe distribution calendar year; or

 

7

----

 

(b)  if the Participant’s sole designatedbeneficiary for the distribution calendar year is the Participant’s spouse, thequotient obtained by dividing the Participant’s account balance by the numberin the Joint and Last Survivor Table set forth in Section 1.401(a)(9)-9 ofthe Treasury regulations, using the Participant’s and spouse’s attained ages asof the Participant’s and spouse’s birthdays in the distribution calendar year.

 

3.2.  Lifetime Required Minimum Distributions Continue Through Yearof Participant’s Death.  Requiredminimum distributions will be determined under this section 3 beginningwith the first distribution calendar year and up to and including thedistribution calendar year that includes the Participant’s date of death.

 

Section 4.  Required Minimum Distributions AfterParticipant’s Death.

 

4.1.  Death On or After Date Distributions Begin.

 

(a)  Participant Survived by DesignatedBeneficiary.  If the Participantdies on or after the date distributions begin and there is a designatedbeneficiary, the minimum amount that will be distributed for each distributioncalendar year after the year of the Participant’s death is the quotientobtained by dividing the Participant’s account balance by the longer of theremaining life expectancy of the Participant or the remaining life expectancyof the Participant’s designated beneficiary, determined as follows:

 

(1)  The Participant’s remaining life expectancyis calculated using the age of the Participant in the year of death, reduced byone for each subsequent year.

 

(2)  If the Participant’ssurviving spouse is the Participant’s sole designated beneficiary, theremaining life expectancy of the surviving spouse is calculated for eachdistribution calendar year after the year of the Participant’s death using thesurviving spouse’s age as of the spouse’s birthday in that year.  For distribution calendar years after theyear of the surviving spouse’s death, the remaining life expectancy of thesurviving spouse is calculated using the age of the surviving spouse as of thespouse’s birthday in the calendar year of the spouse’s death, reduced by onefor each subsequent calendar year.

 

(3)  If the Participant’s surviving spouse is notthe Participant’s sole designated beneficiary, the designated beneficiary’sremaining life expectancy is calculated using the age of the beneficiary in theyear following the year of the Participant’s death, reduced by one for eachsubsequent year.

 

(b)  No Designated Beneficiary.  If the Participant dies on or after the datedistributions begin and there is no designated beneficiary as ofSeptember 30 of the year after the year of the Participant’s death, theminimum amount that will be distributed for each distribution calendar yearafter the year of the Participant’s death is the quotient obtained by dividingthe Participant’s account balance by the Participant’s remaining lifeexpectancy calculated using the age of the Participant in the year of death,reduced by one for each subsequent year.

 

8

----

 

4.2.  Death Before Date Distributions Begin.

 

(a)  Participant Survived by DesignatedBeneficiary.  Except as provided insection 2.2(e), if the Participant dies before the date distributions begin andthere is a designated beneficiary, the minimum amount that will be distributedfor each distribution calendar year after the year of the Participant’s deathis the quotient obtained by dividing the Participant’s account balance by theremaining life expectancy of the Participant’s designated beneficiary, determinedas provided in section 4.1.

 

(b)  No Designated Beneficiary.  If the Participant dies before the datedistributions begin and there is no designated beneficiary as ofSeptember 30 of the year following the year of the Participant’s death,distribution of the Participant’s entire interest will be completed byDecember 31 of the calendar year containing the fifth anniversary of theParticipant’s death.

 

(c)  Death of Surviving Spouse BeforeDistributions to Surviving Spouse Are Required to Begin.  If the Participant dies before the datedistributions begin, the Participant’s surviving spouse is the Participant’ssole designated beneficiary, and the surviving spouse dies before distributionsare required to begin to the surviving spouse under section 2.2(a), thissection 4.2 will apply as if the surviving spouse were the Participant.

 

Section 5.  Definitions.

 

5.1.  Designated Beneficiary. The individual who is designated as the Beneficiary under Section 14.1of the Plan and is the designated beneficiary under Section 401(a)(9) ofthe Code and Section 1.401(a)(9)-1, Q&A-4, of the Treasuryregulations.

 

5.2.  Distribution Calendar Year.  A calendar year for which a minimum distribution isrequired.  For distributions beginningbefore the Participant’s death, the first distribution calendar year is thecalendar year immediately preceding the calendar year which contains theParticipant’s required beginning date. For distributions beginning after the Participant’s death, the firstdistribution calendar year is the calendar year in which distributions arerequired to begin under section 2.2. The required minimum distribution for the Participant’s firstdistribution calendar year will be made on or before the Participant’s requiredbeginning date.  The required minimumdistribution for other distribution calendar years, including the requiredminimum distribution for the distribution calendar year in which theParticipant’s required beginning date occurs, will be made on or beforeDecember 31 of that distribution calendar year.

 

5.3.  Life Expectancy. Life expectancy as computed by use of the Single Life Table inSection 1.401(a)(9)-9 of the Treasury regulations.

 

5.4.  Participant’s Account Balance.  The account balance as of the last valuation date in the calendaryear immediately preceding the distribution calendar year (valuation calendaryear) increased by the amount of any contributions made and allocated orforfeitures allocated to the account balance as of dates in the valuationcalendar year after the valuation date and decreased by distributions made inthe valuation calendar year after the valuation date.  The account balance for the valuation calendar year includes anyamounts rolled over or transferred to the 

 

9

----

 

Plan either in the valuationcalendar year or in the distribution calendar year if distributed ortransferred in the valuation calendar year.

 

5.5.  Required Beginning Date. The date specified in Section 6.2(a) of the Plan.

 

10

----