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     CINERGY CORP. UNION
     EMPLOYEES' 401(k) PLAN

     (Amended and Restated
     Effective as of January 1, 1998)

                 Exhibit 10-r

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CONTENTS

<TABLE>
=====================================================================================
<S>   <C>                                                                          <C>
      ARTICLE 1. THE PLAN                                                           1
1.1   Establishment of Plan                                                         1
1.2   Applicability of Plan                                                         1
1.3   Purpose of the Plan                                                           1

      ARTICLE 2. DEFINITIONS                                                        2
2.1   Definitions                                                                   2
2.2   Gender and Number                                                             8

      ARTICLE 3. PARTICIPATION                                                      9
3.1   Participation                                                                 9
3.2   Duration of Participation                                                     9
3.3   Leased Employees                                                              9

      ARTICLE 4. CONTRIBUTIONS                                                     10
4.1   Deferred Compensation Contributions                                          10
4.2   Employee After-Tax Contributions                                             10
4.3   Matching Contributions                                                       11
4.4   Limitations on Contributions                                                 12
4.5   Contributions Not Contingent on Profits                                      16
4.6   Limitations on Annual Account Additions                                      16
4.7   Rollover Contributions                                                       18
4.8   Contributions During Period of Military Leave                                18

      ARTICLE 5. VESTING IN ACCOUNTS                                               20
5.1   All Accounts                                                                 20

      ARTICLE 6. DISTRIBUTIONS AND WITHDRAWALS                                     21
6.1   Distribution Upon Retirement, Death, Disability, or Other
      Termination of Employment                                                    21
6.2   Commencement of Distributions                                                21
6.3   Method of Distribution                                                       22
6.4   Hardship Withdrawals                                                         23


                                       i

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6.5   Loans                                                                        25
6.6   Other Withdrawals Prior to Termination of Employment                         27
6.7   Withholding Taxes                                                            27

      ARTICLE 7. INVESTMENT ELECTIONS                                              28
7.1   After-Tax, Deferred Compensation, Employer Match, ESOP Transfer,
      and Rollover Contribution Accounts                                           28
7.2   Matching Contributions Account                                               28
7.3   Voting and Other Rights with Respect to Cinergy Stock                        28

      ARTICLE 8. ACCOUNTS AND RECORDS OF THE PLAN                                  30
8.1   Accounts and Records                                                         30
8.2   Trust Fund                                                                   30
8.3   Valuation and Allocation of Expenses                                         30
8.4   Allocation of Earnings and Losses                                            30

      ARTICLE 9. FINANCING                                                         31
9.1   Financing                                                                    31
9.2   Contributions                                                                31
9.3   Nonreversion                                                                 31
9.4   Rights in the Trust Fund                                                     31

      ARTICLE 10. ADMINISTRATION                                                   32
10.1  Plan Administrator and Fiduciary                                             32
10.2  Removal and Replacement of Benefits Committee Members                        32
10.3  Compensation and Expenses                                                    32
10.4  Delegation of Duties and Employment of Specialists                           32
10.5  Administration                                                               32
10.6  No Enlargement of Employee Rights                                            33
10.7  Appeals from Denial of Claims                                                33
10.8  Notice of Address and Missing Persons                                        34
10.9  Data and Information for Benefits                                            34
10.10 Indemnity for Liability                                                      35
10.11 Effect of a Mistake                                                          35

      ARTICLE 11. AMENDMENT AND TERMINATION                                        36
11.1  Amendment and Termination                                                    36
11.2  Limitations on Amendments                                                    36
11.3  Effect of Bankruptcy and Other Contingencies Affecting an Employer           37
11.4  Amendment of Vesting Schedule                                                37


                                      ii

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      ARTICLE 12. PARTICIPATION IN AND WITHDRAWAL FROM
      THE PLAN BY AN EMPLOYER                                                      38
12.1  Adoption of the Plan                                                         38
12.2  Withdrawal from Participation                                                38
12.3  Company as Agent for Employers                                               38

      ARTICLE 13. MISCELLANEOUS                                                    39
13.1  Beneficiary Designation                                                      39
13.2  Facility of Payment                                                          39
13.3  Nonalienation                                                                40
13.4  Applicable Law                                                               40
13.5  Severability                                                                 40
13.6  No Guarantee                                                                 40
13.7  Merger, Consolidation, or Transfer                                           41
13.8  Internal Revenue Service Approval                                            41
</TABLE>

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ARTICLE 1. THE PLAN

1.1 ESTABLISHMENT OF PLAN
PSI Energy, Inc., formerly known as Public Service Company of Indiana, Inc.,
adopted an Employees' 401(k) Savings Plan effective January 1, 1987. Effective
as of October 1, 1988, the plan was amended to cover only collectively bargained
Employees, and was renamed "The Public Service Company of Indiana, Inc.
Bargaining Unit Employees' 401(k) Savings Plan."

The plan was last amended and restated effective January 1, 1992, and as of that
date was renamed the "PSI Energy, Inc. Union Employees' 401(k) Savings Plan."
Effective January 1, 1998, Cinergy Corp. (the "Company"), the parent holding
company of PSI Energy, Inc., has assumed sponsorship of the plan, and has
renamed it the "Cinergy Corp. Union Employees' 401(k) Plan" (the "Plan"). The
Plan is hereby again amended and restated effective January 1, 1998, as set
forth in this document.

1.2   APPLICABILITY OF PLAN
The provisions of this Plan as set forth in this document are applicable only to
the Employees in current employment on or after January 1, 1998, except as
otherwise specifically provided. Except as so provided, any person who was
entitled to benefits under the Plan as in effect on December 31, 1997, shall
continue to be entitled to the same benefits under this Plan.

1.3   PURPOSE OF THE PLAN
The purpose of the Plan is to provide a convenient way for Participants to save
on a regular and long-term basis for retirement and to enable Participants to
share in the profitable operations of the Company.


                                       1
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ARTICLE 2. DEFINITIONS

2.1   DEFINITIONS
Whenever used in the Plan, the following terms, when capitalized, will have the
respective meanings set forth below, unless otherwise expressly provided in this
document.

(a)  "ACCOUNT" means the separate account maintained for each Member, which
     represents the Member's total proportionate interest in the Trust Fund as
     of any Valuation Date and which consists of the sum of the following
     subaccounts:

     (1)  "AFTER-TAX CONTRIBUTIONS ACCOUNT" means that portion of a Member's
          Account that evidences the value of the Member's Employee After-Tax
          Contributions made pursuant to section 4.2 (Employee After-Tax
          Contributions), including any gains and losses of the Trust Fund
          attributable thereto;

     (2)  "DEFERRED COMPENSATION CONTRIBUTIONS ACCOUNT" means that portion of a
          Member's Account that evidences the value of the Deferred Compensation
          Contributions made on the Member's behalf by an Employer pursuant to
          section 4.1 (Deferred Compensation Contributions), including any gains
          and losses of the Trust Fund attributable thereto;

     (3)  "EMPLOYER MATCH ACCOUNT" means that portion of a Member's Account that
          evidences the value of the matching contributions made to the Plan
          before January 1, 1992, including any gains and losses of the Trust
          Fund attributable thereto;

     (4)  "ESOP TRANSFER ACCOUNT" means that portion of a Member's Account that
          evidences the value of the Member's account balance attributable to
          amounts that the Member elected to have transferred from the Public
          Service Company of Indiana, Inc. Employee Stock Ownership Plan to the
          Plan, including any gains or losses of the Trust attributable thereto;

     (5)  "MATCHING CONTRIBUTIONS ACCOUNT" means that portion of a Member's
          Account that evidences the value of the Employer Matching
          Contributions made on the Member's behalf by an Employer pursuant to
          section 4.3 (Matching Contributions), including any gains and losses
          of the Trust Fund attributable thereto; and

     (6)  "ROLLOVER CONTRIBUTIONS ACCOUNT" means that portion of a Member's
          Account that evidences the value of any Rollover Contributions made by
          the Member pursuant to section 4.7 (Rollover Contributions), including
          any gains and losses of the Trust Fund attributable thereto.

                                       2
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(b)  "AFFILIATE" means any employer that together with the Employer is under
     common control or a member of an affiliated service group as determined
     under Code subsections 414(b), (c), (m), and (o). In determining whether an
     employer is a member of a controlled group for purposes of section 4.6
     (Limitation on Annual Account Additions), the rules of Code subsections
     414(b) and (c) shall be applied as modified by Code subsection 415(h).

(c)  "BENEFICIARY" means the person or persons who are to receive benefits under
     the Plan after a Member's death.

(d)  "BENEFITS COMMITTEE" means the Committee established pursuant to Article 10
     Administrator) 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 have occurred:

     (1)  any "person" or "group" (within the meaning of subsection 13(d) and
          paragraph 14(d)(2) of the Securities Exchange Act) is or becomes the
          "beneficial owner" (as defined in Rule 13d-3 under the Securities
          Exchange Act), directly or indirectly, of securities of the Company
          (not including in the securities beneficially owned by such person or
          group any securities acquired directly from the Company or an
          Affiliate) representing 50 percent or more of the combined voting
          power of the Company's then outstanding securities, excluding any
          person or group who becomes such a beneficial owner in connection with
          a transaction described in subsection (2)(A) below;

     (2)  there is consummated a merger or consolidation of the Company or any
          direct or indirect subsidiary of the Company with any other
          corporation, other than--

          (A)  a merger or consolidation that would result in the voting
               securities of the Company outstanding immediately prior to the
               merger or consolidation continuing to represent (either by
               remaining outstanding or by being converted into voting
               securities of the surviving entity or any parent thereof) at
               least 50 percent of the combined voting power of the securities
               of the Company or such surviving entity or any parent thereof
               outstanding immediately after the merger or consolidation; or

          (B)  a merger or consolidation effected to implement a
               recapitalization of the Company (or similar transaction) in which
               no person is or becomes a beneficial owner, directly or
               indirectly, of securities of the Company (not including in the
               securities beneficially owned by such person any securities
               acquired directly from the Company or its Affiliates other than
               in connection with the acquisition by the Company or its
               Affiliates of a

                                       3
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               business) representing 25 percent or more of the combined
               voting power of the Company's then outstanding securities;

     (3)  during any period of two consecutive years, individuals who at the
          beginning of that period constitute the Board of Directors and any new
          director (other than a director whose initial assumption of office is
          in connection with an actual or threatened election context, including
          but not limited to a consent solicitation, relating to the election of
          directors of the Company) whose appointment or election by the Board
          of Directors or nomination for election by the Company's shareholders
          was approved or recommended by a vote of at least two-thirds of the
          directors then still in office who either were directors at the
          beginning of that period or whose appointment, election, or nomination
          for election was previously so approved or recommended cease for any
          reason to constitute a majority of the Board of Directors; or

     (4)  the shareholders of the Company approve a plan of complete liquidation
          or dissolution of the Company or there is consummated an agreement for
          the sale or disposition by the Company of all or substantially all of
          the Company assets, other than a sale or disposition by the Company of
          all or substantially all of the Company's assets to an entity, at
          least 60 percent of the combined voting power of the voting securities
          of which are owned by shareholders of the Company in substantially the
          same proportions as their ownership of the Company immediately prior
          to such sale.

(g)  "CINERGY STOCK" means Cinergy Corp. common stock.

(h)  "CINERGY STOCK FUND" means the Investment Fund invested primarily in
     Cinergy Stock.

(i)  "CODE" means the Internal Revenue Code of 1986, as amended from time to
     time, and interpretive rulings and regulations.

(j)  "COMPANY" means Cinergy Corp., a Delaware corporation, and any corporation
     that succeeds to its business and adopts the Plan.

(k)  "COMPENSATION" means--

     (1)  for purposes of sections 4.1 (Deferred Compensation Contributions) and
          4.2 (Employee After-Tax Contributions), the sum of the Employee's--

          (A)  base compensation;

          (B)  overtime pay;

          (C)  performance lump sum pay; and

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          (D)  standard and variable bonuses under the Cinergy Corp. Non-Union
               Employees' Incentive Plan or the Cinergy Corp. Union Employees'
               Incentive Plan;

     (2)  for purposes of section 4.3 (Matching Contributions), the Employee's
          base compensation;

     (3)  for purposes of section 4.4 (Limitations on Contributions),
          "compensation" as defined in Code subsection 414(s); and

     (4)  for purposes of sections 2.1(v) (Definitions) and 4.6 (Limitations on
          Annual Account Additions), "compensation" as defined in Code paragraph
          415(c)(3).

     For purposes of this section--

     (i)  "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 the applicable period. For Employees paid
          on an hourly basis, the "base rate of pay" means the Employee's hourly
          base rate of pay multiplied by the Employee's hours worked during the
          applicable period. "Base compensation" shall be determined prior to
          any reductions for Deferred Compensation Contributions and other
          elective contributions made by the Employer on the Employee's behalf
          during or for the Plan Year that are not includable in gross income
          under Code section 125, Code paragraph 402(a)(8), Code subsection
          402(h), or Code subsection 403(b).

     (ii) "OVERTIME PAY" means, for Employees paid on an hourly basis, the pay
          received in excess of the Employee's regular hourly base rate of pay
          as remuneration for hours worked in a work day or a work week in
          excess of eight hours or 40 hours, respectively, for the relevant
          period. For Employees customarily paid on a salaried basis, "overtime
          pay" means the pay received in excess of the Employee's regular base
          rate of pay as remuneration for hours worked in a work day or a work
          week in excess of the Employee's regularly scheduled hours pursuant to
          the Employer's overtime pay policy applicable to those Employees.

     (iii)"PERFORMANCE LUMP SUM PAY" means the compensation received as a
          one-time payment in recognition of an Employee's merit in lieu of
          receiving an increase in the Employee's base rate of pay.

     The Compensation of each Employee that may be taken into account under the
     Plan for a Plan Year will not exceed $160,000 (as adjusted by the Secretary
     of the Treasury pursuant to Code paragraph 401(a)(17)).

                                       5
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(l)  "DEFERRED COMPENSATION CONTRIBUTIONS" means the contributions made by an
     Employer on behalf of a Participant pursuant to the Participant's election
     to reduce Compensation as described in section 4.1 (Deferred Compensation
     Contributions).

(m)  "DISABILITY" means a physical or mental condition, resulting from injury or
     disease, that in the judgment of the Plan Administrator constitutes total
     disability under the Company's long-term disability plan.

(n)  "EFFECTIVE DATE" means January 1, 1998.

(o)  "ELIGIBLE EMPLOYEE" means an Employee on the hourly or weekly payroll of
     PSI Energy, Inc. or other Employer, who has attained age 18, who is not a
     "leased employee" (as defined in section 3.6 (Leased Employee)), who is not
     classified by the Employer as a summer laborer or a summer employee, and
     whose terms and conditions of employment are governed by a collective
     bargaining agreement between an Employer and the International Brotherhood
     of Electrical Workers, Local 1393, that provides for participation in this
     Plan.

(p)  "EMPLOYEE" means any person who is employed by the Company or an Affiliate
     and who receives compensation from the Company or an Affiliate that is
     initially reported by the Company or the Affiliate on a federal wage and
     tax statement (Form W-2).

(q)  "EMPLOYEE AFTER-TAX CONTRIBUTIONS" means the contributions made by an
     Employee pursuant to an election as described in section 4.2 (Employee
     After-Tax Contributions).

(r)  "EMPLOYER" means the Company and any Affiliate that elects to become a
     party to the Plan, with the approval of the Company, by adopting the Plan
     for the benefit of its Eligible Employees in the manner described in
     Article 12 (Participation In and Withdrawal From the Plan by an Employer).

(s)  "EMPLOYER MATCHING CONTRIBUTIONS" means the contributions made by an
     Employer on behalf of a Participant, conditioned on the making of Deferred
     Compensation Contributions, as described in section 4.3 (Matching
     Contributions), and shall consist of--

     (1)  EMPLOYER BASE MATCHING CONTRIBUTIONS, as described in subsection
          4.3(a) (Matching Contributions); and

     (2)  EMPLOYER INCENTIVE MATCHING CONTRIBUTIONS, as described in subsection
          4.3(b) (Matching Contributions).

(t)  "EMPLOYMENT COMMENCEMENT DATE" means the first day on which an Employee
     first performs an hour of service (as defined in Department of Labor
     regulation

                                      6
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     2530.200b-2) as an Eligible Employee or, if applicable, the first day
     following a severance from service on which an Employee performs an hour
     of service as an Eligible Employee.

(u)  "ERISA" means the Employee Retirement Income Security Act of 1974, as
     amended from time to time, and interpretive rulings and regulations.

(v)  "HIGHLY COMPENSATED EMPLOYEE" means, with respect to any Plan Year, any
     Employee who is a 5-percent owner (as defined in Code paragraph 416(i)(1))
     during the Plan Year, or during the preceding Plan Year (or such other
     period as the Company may elect pursuant to Treasury regulations)--

     (1)  received Compensation from the Employer and all Affiliates in excess
          of $80,000 (as adjusted pursuant to Code subsection 415(d)); or

     (2)  was a 5-percent owner (as defined in Code paragraph 416(i)(1)).

(w)  "INVESTMENT FUND" means any investment fund established by the Plan
     Administrator as an investment medium for Members' Accounts in the Trust
     Fund. The Investment Funds will include the Cinergy Stock Fund. The Plan
     Administrator has the discretion to establish and terminate such Funds as
     it shall deem appropriate.

(x)  "MEMBER" means a Participant, or a former Participant or alternate payee
     who still has an Account balance in the Plan.

(y)  "PARTICIPANT" means any Employee of an Employer who has met and continues
     to meet the eligibility requirements of the Plan as set forth in section
     3.1 (Participation).

(z)  "PLAN" means the Cinergy Corp. Union Employees' 401(k) Plan, as set forth
     in this document and as subsequently amended from time to time.

(aa)  "PLAN ADMINISTRATOR" means the entity that has been designated as the
      "plan administrator" pursuant to section 10.1 (Plan Administrator and
      Fiduciary).

(bb)  "PLAN YEAR" means the 12-consecutive-month period ending each December 31.

(cc)  "RETIRE" means to terminate employment with the Employer and all
      Affiliates--

      (1) after reaching age 65; or

      (2) after reaching age 50 and completing five Years of Service.

(dd)  "ROLLOVER CONTRIBUTION" means those contributions made by a Participant as
      described in section 4.7 (Rollover Contributions).

(ee)  "SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
      amended from time to time, and interpretive rulings and regulations.

                                       7
<PAGE>

(ff)  "TRUST AGREEMENT" means any agreement establishing a trust, which forms
      part of the Plan, to receive, hold, invest, and dispose of the Trust Fund.

(gg)  "TRUST FUND" means the assets of every kind and description held under the
      Trust Agreement.

(hh)  "TRUSTEE" means the corporation, or individual or individuals, or
      combination thereof, acting as trustee under the Trust Agreement at any
      time of reference.

(ii)  "VALUATION DATE" means each business day.

(jj)  "YEAR OF SERVICE" means a year of "service," as defined for purposes of
      determining vesting under the defined benefit pension plan of the Company
      in which the Member participates.

2.2    GENDER AND NUMBER
Unless the context clearly requires otherwise, the masculine pronoun whenever
used will be construed to include the feminine and neuter pronoun, and the
singular will be construed to include the plural.

                                      8
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ARTICLE 3. PARTICIPATION

3.1 PARTICIPATION
Each Eligible Employee as of the Effective Date who was a Participant in the
Plan as of December 31, 1997 will continue to be a Participant on and after the
Effective Date.

Each other Eligible Employee may commence participation in the Plan as of the
later of the Effective Date or the Eligible Employee's Employment Commencement
Date, by electing to make Employee After-Tax or Deferred Compensation
Contributions, or by making a Rollover Contribution, pursuant to Article 4
(Contributions).

3.2 DURATION OF PARTICIPATION
A Participant shall continue to be a Participant until the Participant
terminates employment with all Employers and Affiliates; thereafter, the
Participant will be a Member for as long as the Participant has an Account
balance in the Plan.

3.3 LEASED EMPLOYEES
A person who is not an Employee of an Employer or nonparticipating Affiliate and
who performs services for an Employer or a nonparticipating Affiliate pursuant
to an agreement between the Employer or nonparticipating Affiliate and a leasing
organization will be considered a "leased employee" if the person performed the
services on a substantially full-time basis for a year and the services are
performed under the primary direction and control of the Employer or
nonparticipating Affiliate. A person who is considered a "leased employee" of an
Employer or nonparticipating Affiliate will not be considered an Employee for
purposes of participating in this Plan or receiving any contribution or benefit
under this Plan. A leased employee will be excluded from this Plan regardless of
whether the leased employee participates in any plan maintained by the leasing
organization. However, if a leased employee participates in the Plan as a result
of subsequent employment with an Employer, the leased employee will receive
credit for service for his employment as a leased employee. Notwithstanding the
preceding provisions of this section, a leased employee will be treated as an
Employee for purposes of applying the requirements described in Code paragraph
414(n)(3) and for purposes of determining the number and identity of Highly
Compensated Employees.


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ARTICLE 4. CONTRIBUTIONS

4.1 DEFERRED COMPENSATION CONTRIBUTIONS
Each Participant may elect, in accordance with rules established by the Plan
Administrator, to reduce the Participant's Compensation by any percentage up to
15 percent, in increments of one-half percent, and to have the amount by which
the Participant's Compensation is reduced contributed on the Participant's
behalf by the Employer as a Deferred Compensation Contribution to the Plan. The
election will be effective as soon as administratively possible after the date
the Employee becomes eligible to participate and notifies the Plan Administrator
of the deferral percentage.

A Participant may elect, in accordance with rules established by the Plan
Administrator, to increase, decrease, or discontinue the Participant's
Compensation reductions. Such an election will be effective as soon as
administratively possible after receipt of the election by the Plan
Administrator and will be effective only with respect to Compensation not yet
earned as of the effective date of the election.

The Plan Administrator may adopt rules concerning the administration of this
section. The Deferred Compensation Contributions made on behalf of each
Participant shall be paid by each Employer to the Trustee and allocated to the
Participant's Deferred Compensation Contributions Account as soon as practical
after the end of the pay period to which the Deferred Compensation Contributions
relate, but in no case later than the fifteenth business day of the month
following the month in which those amounts would otherwise have been payable to
the Participant.

4.2 EMPLOYEE AFTER-TAX CONTRIBUTIONS
Each Participant may elect, in accordance with rules established by the Plan
Administrator, to have Employee After-Tax Contributions made to the Plan in an
amount equal to any percentage of the Participant's Compensation up to 15
percent in increments of one-half percent. The election will be effective as
soon as administratively possible after the Eligible Employee becomes eligible
to participate and notifies the Plan Administrator of the contribution
percentage.

A Participant may elect, in accordance with rules established by the Plan
Administrator, to increase, decrease, or discontinue the Participant's Employee
After-Tax Contributions. The election will be effective as soon as
administratively possible after receipt of the election by the Plan
Administrator and will be effective only with respect to Compensation not yet
earned as of the effective date of the election.

Once during each Plan Year, a Participant may elect to make an Employee
After-Tax Contribution in the form of a lump sum payment by check or money
order payable to the Trustee and delivered to the Plan Administrator.


                                       10
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The sum of the Deferred Compensation Contributions and Employee After-Tax
Contributions made by or on behalf of an Employee for a Plan Year may not exceed
15 percent of the Employee's Compensation for that Plan Year.

The Plan Administrator may adopt rules concerning the administration of this
section. The Employee After-Tax Contributions made by each Participant shall
be paid by each Employer to the Trustee and allocated to the Participant's
After-Tax Contributions Account as soon as practical after the end of the pay
period, but in no case later than the fifteenth business day of the month
following the month in which those amounts would otherwise have been payable
to the Participant.

4.3 MATCHING CONTRIBUTIONS
(a)   BASE MATCHING CONTRIBUTIONS. For each pay period, each Employer shall
      make an Employer Base Matching Contribution on behalf of each
      Participant equal to 60 percent of the Deferred Compensation
      Contributions not in excess of 5 percent of the Participant's
      Compensation made on the Participant's behalf for the pay period.

      The Employer Base Matching Contributions made on behalf of each
      Participant shall be paid by each Employer to the Trustee as soon as
      practical after the end of the pay period for which it is made and
      allocated to the Participant's Matching Contributions Account as of the
      end of the pay period.

      If a Participant's Deferred Compensation Contributions stop before the end
      of a Plan Year because they reach the limitation in Code subsection
      402(g), then his Employer will make a catch-up Base Employer Matching
      Contribution. The catch-up Employer Base Matching Contribution will be
      equal to the difference, if any, between--

      (1) 60 percent of the Participant's total Deferred Compensation
          Contributions for the Plan Year that are not in excess of 5 percent
          of the Participant's Compensation for the Plan Year; and

      (2) the Employer Base Matching Contributions previously made for the
          Participant for the Plan Year.

(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 Matching Contribution on behalf of each Participant
      employed on the last day of the Plan Year equal to a percentage of the
      Deferred Compensation Contributions not in excess of 5 percent of the
      Participant's Compensation made on the Participant's behalf for the Plan
      Year. Such percentage shall be determined based on attainment of corporate
      goals established by the Board in its discretion. The maximum percentage
      for a Plan Year will not exceed 40 percent and will be communicated to
      Participants prior to the beginning of the Plan Year. For purposes of this
      subsection (b), a Participant who does not make any Deferred Compensation


                                       11
<PAGE>

      Contributions for a Plan Year will be deemed to have made Deferred
      Compensation Contributions equal to 1 percent of the Participant's
      Compensation for the Plan Year.

      The Employer Incentive Matching Contributions made on behalf of each
      Participant will be paid by each Employer to the Trustee as soon as
      practical following the end of the Plan Year and will be allocated to the
      Participant's Matching Contributions Account as soon as administratively
      possible after determining if the corporate goals were achieved and what
      percentage will be contributed.

(c)   CONTRIBUTIONS OF CINERGY STOCK. Employer Matching Contributions may be
      made in cash or in shares of Cinergy Stock. Contributions in shares of
      Cinergy Stock will be determined by dividing the amount of the Employer
      Matching Contribution determined under (a) or (b) by the closing price of
      Cinergy Stock on the New York Stock Exchange for the date the Employer
      Matching Contributions are made to the Trust.

4.4 LIMITATIONS ON CONTRIBUTIONS
(a)   In no event shall any Employer make Deferred Compensation Contributions
      for any calendar year, with respect to any Participant, in excess of
      $10,000 (as adjusted by the Secretary of the Treasury to reflect increases
      in the cost of living). This limit will be applied by aggregating all
      plans and arrangements maintained by the Company and all Affiliates that
      provide for elective deferrals (as defined in Code subsection 402(g)).

      If this limit would be exceeded by contributions to this Plan, the Plan
      Administrator shall distribute the amount of the excess (plus earnings
      thereon) to the Member. If this limit would be exceeded by the
      contribution of excess elective deferrals to this Plan and to the plan of
      another employer, the Plan Administrator will distribute the amount of the
      excess (plus earnings thereon) to the Member if the Member provides the
      Plan Administrator with a written claim requesting a refund of the excess
      on or before March 1 of the following calendar year. Excess elective
      deferrals means elective deferrals (under Code paragraph 402(a)(8)) in
      excess of the annual limit on elective deferrals in Code subsection
      402(g). The Plan Administrator may require additional proof regarding the
      existence of excess elective deferrals.

      A distribution of excess elective deferrals, adjusted for earnings and
      losses, will be made no later than the April 15 of the calendar year
      following the calendar year in which the excess elective deferrals were
      made.

(b)   In no event will any Employer make Deferred Compensation Contributions for
      any Plan Year that would cause the actual deferral percentage of the group
      of Highly Compensated Employees eligible to participate in the Plan to
      exceed the greater of--


                                       12
<PAGE>

      (1) one and one-quarter times the actual deferral percentage of the group
          of all other eligible Employees for the preceding Plan Year; or

      (2) the lesser of--

          (A)  two times the actual deferral percentage of the group of all
               other eligible Employees for the preceding Plan Year; or

          (B)  the actual deferral percentage of the group of all other eligible
               Employees for the preceding Plan Year plus two percentage points.

          The actual deferral percentage of each group of eligible Employees for
          any Plan Year will be the average of the ratios (calculated separately
          for each eligible Employee in each group) of--

          (i)  the Deferred Compensation Contributions made on behalf of each
               eligible Employee for the Plan Year to

          (ii) the eligible Employee's Compensation (earned while the Employee
               was eligible to participate in the Plan) for the Plan Year.

          To the extent necessary to conform to this limitation, the Plan
          Administrator shall reduce Deferred Compensation Contributions made on
          behalf of the Highly Compensated Employees. The total amount of the
          reduction will be determined by reducing the deferral ratio of the
          Highly Compensated Employee with the highest deferral ratio to the
          higher of the deferral ratio necessary to satisfy the limitation or
          the deferral ratio of the Highly Compensated Employee with the next
          highest deferral ratio. This process will be repeated until the
          limitation is satisfied. The reduction so calculated will be allocated
          to some or all Highly Compensated Employees by reducing the Deferred
          Compensation Contributions of the Highly Compensated Employee with the
          highest dollar amount of Deferred Compensation Contributions by the
          lesser of the total amount of the required reduction or the amount
          required to cause that Participant's Deferred Compensation
          Contributions to equal those of the Highly Compensated Employee with
          the next highest dollar amount of Deferred Compensation Contributions.
          This process will be repeated until the entire amount of the reduction
          has been allocated.

          Any reduction in the Deferred Compensation Contributions allocated to
          any Participant will be refunded to the Participant as soon as
          administratively possible, as provided in rules adopted by the Plan
          Administrator (amounts refunded within 2 1/2 months after the Plan
          Year in which the Deferred Compensation Contributions were made are
          not subject to excise tax under Code section 4979). In no event,
          however, will the excess contributions be left


                                       13
<PAGE>

          undistributed any later than the last day of the Plan Year following
          the Plan Year in which the excess contributions were made.

          Deferred Compensation Contributions made under this Plan and all
          before-tax contributions made under any other plan that is aggregated
          with this Plan for purposes of Code paragraph 401(a)(4) and Code
          subsection 410(b) will be treated as made under a single plan. The
          deferral ratio of any Highly Compensated Employee will be determined
          by treating all plans subject to Code subsection 401(k) under which
          the Highly Compensated Employee is eligible as a single plan.

(c)   In no event will Employee After-Tax Contributions and Employer Matching
      Contributions for any Plan Year be made that would cause the contribution
      percentage of the group of Highly Compensated Employees eligible to
      participate in the Plan to exceed the greater of--

      (1) one and one-quarter times the contribution percentage of the group of
          all other eligible Employees for the preceding Plan Year; or

      (2) the lesser of--

          (A)  two times the contribution percentage of the group of all other
               eligible Employees for the preceding Plan Year; or

          (B)  the contribution percentage of the group of all other eligible
               Employees for the preceding Plan Year plus two percentage points.

      The contribution percentage of each group of eligible Employees for any
      Plan Year will be the average of the ratios (calculated separately for
      each eligible Employee in each group) of--

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

      (ii)the eligible Employee's Compensation (earned while the Employee was
          eligible to participate in the Plan) for the Plan Year.

      To the extent necessary to conform to this limitation, the Plan
      Administrator will reduce and allocate Employee After-Tax Contributions
      and Employer Matching Contributions made on behalf of the Highly
      Compensated Employees in a manner similar to the method used in subsection
      (b). Any such reduction in Employee After-Tax Contributions and the
      Employer Matching Contributions allocated to any Participant will be paid
      to the Participant, within the time limits for refunds of Deferred
      Compensation Contributions set forth in subsection 4.4(b) (Limitations on
      Contributions).


                                       14
<PAGE>

      All Employee After-Tax and Employer Matching Contributions made under this
      Plan and all after-tax contributions made under any other plan that is
      aggregated with this Plan for purposes of Code paragraph 401(a)(4)and Code
      subsection 410(b) will be treated as made under a single plan. If any plan
      is permissively aggregated with this Plan for purposes of Code subsection
      401(m), the aggregated plans must also satisfy Code paragraph 401(a)(4)
      and Code subsection 410(b) as though they were a single plan. The
      contribution percentage ratio of any Highly Compensated Employee will be
      determined by treating all plans subject to Code section 401(m) under
      which the Highly Compensated Employee is eligible as a single plan.

(d)   For purposes of satisfying the limits on contributions described in this
      section 4.4 (Limitations on Contributions) and section 4.6 (Limitations on
      Annual Account Additions), Compensation means an Employee's compensation
      as defined in Code subsection 414(s). The Compensation of each Employee
      that may be taken into account under the Plan will not exceed the first
      $160,000 of an Employee's Compensation (as adjusted by the Secretary of
      the Treasury under Code paragraph 401(a)(17)).

(e)   The Plan Administrator may comply with the requirements of this section by
      combining contributions under any other defined contribution plan
      maintained by the Company or any Affiliate. Any such combination will be
      done in compliance with the guidelines, if any, established by the
      Secretary of the Treasury. To the extent permitted by applicable
      regulations, the Plan Administrator may elect to take Deferred
      Compensation Contributions into account in applying the contribution
      percentage test of subsection (c).

(f)   The Plan Administrator may take such additional action as it considers
      appropriate to ensure compliance with the requirements of this section.
      Such action may include, but is not limited to, reducing the maximum
      amount of Deferred Compensation Contributions and/or Employee After-Tax
      Contributions that can be contributed on behalf of or by any group of
      Highly Compensated Employees.

(g)   The Plan will not be treated as complying with the limits in this section
      4.4 (Limitations on Contributions) if--

      (1) the actual deferral percentage of the group of participants who are
          Highly Compensated Employees only complies with the limits in
          paragraph 4.4(b)(2) (Limitations on Contributions);

      (2) the contribution percentage of the group of participants who are
          Highly Compensated Employees only complies with the limit in
          subsection (c)(2) above; and


                                       15
<PAGE>

      (3) the sum of the actual deferral percentage and contribution percentage
          of the group of Participants who are Highly Compensated Employees
          exceed the "Aggregate Limit."

(h)   For purposes of subsection (g) above, the "Aggregate Limit" means the sum
      of--

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

      (2) the lesser of--

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

          (B)  the sum of two percentage points and the lesser of the actual
               deferral percentage or contribution percentage of the group of
               all other Participants for the preceding Plan Year.

(i)   For purposes of the limitations described in subsections (b) and (c), the
      Plan Administrator may elect to use the deferral ratio and/or contribution
      ratio for the group of Participants other than Highly Compensated
      Employees for the Plan Year being tested, rather than the preceding Plan
      Year, provided that once such an election is made it may not be changed,
      except as provided by the Secretary of the Treasury.

4.5 CONTRIBUTIONS NOT CONTINGENT ON PROFITS
This Plan is designated as a profit sharing plan under Code subsection 401(a).
However, payment by an Employer of contributions to the Plan will not be
contingent upon the existence of current or accumulated profits of the Employer.

4.6 LIMITATIONS ON ANNUAL ACCOUNT ADDITIONS
(a)   ANNUAL ACCOUNT ADDITION. "Annual Account Addition" means for any
      Participant for any Plan Year, which will also be the limitation year, the
      sum of--

      (1) Employer contributions made for the Participant under any qualified
          defined contribution plan for the Plan Year (including any amounts
          refunded to the Participant or forfeited pursuant to section 4.4
          (Limitations on Contributions));

      (2) the Participant's contributions to any qualified defined contribution
          plan for the Plan Year;

      (3) forfeitures allocated to the Participant under any defined
          contribution plan for the Plan Year; and


                                       16

<PAGE>

      (4) contributions allocated on the Participant's behalf to any individual
          medical account within the meaning of Code paragraph 415(l)(2) or
          attributable to medical benefits allocated to an account established
          under Code subsection 419A(d).

      "Any defined contribution plan" means all defined contribution plans of
      the Company and Affiliates considered as one plan.

      A Rollover Contribution pursuant to section 4.7 (Rollover Contributions)
      will not be included as part of any Participant's Annual Account Addition.

(b)   LIMITATION. A Participant's Annual Account Addition for any Plan Year will
      not exceed the lesser of--

      (1) the greater of $30,000, or one-fourth of the defined benefit dollar
          limitation set forth in Code subsection 415(b) in effect for the Plan
          Year; or

      (2) 25 percent of the Participant's Compensation for the Plan Year.

(c)   ADDITIONAL LIMITATION. If in any Plan Year beginning prior to January 1,
      2000, a Participant is covered both under any defined contribution plan
      and under any defined benefit plan, the sum of the defined benefit plan
      fraction (as defined in Code paragraph 415(e)(2)) and the defined
      contribution plan fraction (as defined in Code paragraph 415(e)(3)) for
      the Plan Year shall not exceed one. It is intended that the contributions
      under any defined contribution plan will be reduced to the extent
      necessary to prevent the sum of those fractions for any Plan Year from
      exceeding one before reducing benefits payable under any defined benefit
      plan. "Any defined benefit plan" means all defined benefit 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 Addition exceeds the limitation determined under subsection
      (b) above, the excess will not be allocated to the Participant's accounts
      in any defined contribution plan but shall be handled in the following
      manner and order until the excess is eliminated:

      (1) the Participant's portion of the allocation of Employee After-Tax
          Contributions or any part thereof will be refunded to the Participant;

      (2) the Participant's portion of the allocation of Deferred Compensation
          Contributions or any part thereof will be refunded to the Participant;
          and

      (3) the Participant's portion of the allocation of Employer Matching
          Contributions or any part thereof will be placed in a suspense
          account.


                                       17
<PAGE>

      The amount held in a suspense account that is attributable to
      contributions of an Employer will be used to reduce contributions by that
      Employer for the next following Plan Year.

      A suspense account shall share in the gains and losses of the Trust Fund
      on the same basis as other Accounts.

      The above reductions shall be applied to this Plan first, and thereafter
      to any other defined contribution plan.

4.7 ROLLOVER CONTRIBUTIONS
An Eligible Employee of an Employer may, in accordance with procedures approved
by the Plan Administrator, contribute the following amounts to the Plan:

(a)   part or all of a distribution or proceeds from a sale of distributed
      property that qualifies as an "eligible rollover distribution" from a
      trust described in Code subsection 401(a) and exempt from tax under Code
      subsection 501(a), less any amounts considered to be employee after-tax
      contributions; or

(b)   a distribution from an individual retirement account or annuity, the
      entire amount of which is from a source described in (a) above.

Such a contribution must be paid over to the Trustee (or transferred directly
from a prior plan) on or before the sixtieth day after receipt by the Eligible
Employee of the distribution and shall be held in the trust under this Plan as a
completely separate account in the name of the Eligible Employee whose interest
is being held. That account shall be fully vested and nonforfeitable.

4.8 CONTRIBUTIONS DURING PERIOD OF MILITARY LEAVE
(a)   Notwithstanding any provision of this Plan to the contrary, contributions
      and service credit with respect to qualified military service will be
      provided in accordance with Code subsection 414(u).

(b)   Without regard to any limitations on contributions set forth in this Plan,
      a Participant who is credited with Service because of a period of service
      in the uniformed services of the United States may elect to contribute to
      the Plan the Deferred Compensation Contributions that could have been
      contributed to the Plan in accordance with the provisions of the Plan had
      he or she remained continuously employed by an Employer throughout that
      period of absence ("make-up contributions"). The amount of make-up
      contributions shall be determined on the basis of the Participant's
      Compensation in effect immediately prior to the period of absence and the
      terms of the Plan at that time. Any Deferred Compensation Contributions so
      determined shall be limited as provided in section 4.4 (Limitations on
      Contributions) with respect to the Plan Year or Plan Years to which the
      contributions relate rather than the Plan


                                       18
<PAGE>

      Year or Plan Years in which payment is made. Any payment to the Plan
      described in this paragraph shall be made during the period, beginning
      with the date of reemployment, the duration of which is the lesser of
      three times the period of absence or five years. Earnings (or losses)
      on make-up contributions shall be credited commencing with the date the
      make-up contribution is made in accordance with the provisions of
      Articles 3 (Participation) and 4 (Contributions).

(c)   All contributions under this section 4.8 are considered "annual
      additions," as defined in Code paragraph 415(c)(2) and shall be limited in
      accordance with the provisions of section 4.6 (Limitations on Annual
      Account Additions) with respect to the Plan Year or Plan Years to which
      the contributions relate rather than the Plan Year in which payment is
      made.


                                       19


<PAGE>

ARTICLE 5. VESTING IN ACCOUNTS

5.1 ALL ACCOUNTS
A Member shall at all times be fully vested and have a nonforfeitable interest
all of his Accounts.


                                       20
<PAGE>

ARTICLE 6. DISTRIBUTIONS AND WITHDRAWALS

6.1 DISTRIBUTION UPON RETIREMENT, DEATH, DISABILITY, OR OTHER TERMINATION OF
EMPLOYMENT
Upon a Member's termination of employment, the full amount of the Member's
Account will be distributable to the Member, or to the Member's Beneficiary in
case of the Member's death.

The Account will be determined as of the Valuation Date coincident with the date
of distribution and will be distributed as provided in sections 6.3 (Method of
Distribution) and 6.4 (Hardship Withdrawals).

6.2 COMMENCEMENT OF DISTRIBUTIONS
(a)   Except as provided in subsection (f), if a Member did not reach age 70 1/2
      before January 1, 1999, the Member's Account balance will be distributed
      commencing not later than April 1 of the year following the later of--

      (1) the calendar year in which the Member reaches age 70 1/2; or

      (2) the calendar year in which the Member retires.

      If a Member reaches age 70 1/2 on or after January 1, 1997, but before
      January 1, 1999, distribution of the Member's Account balance must
      commence by April 1 of the calendar year following the calendar year in
      which he reaches age 70 1/2 unless he elects to defer commencement of the
      distribution until a date no later than April 1 of the calendar year
      following the calendar year in which the Member retires.

(b)   If the Member's Account to be distributed pursuant to section 6.1
      (Distribution Upon Death, Disability, or Other Termination of Employment)
      does not exceed $5,000 (or such higher amount as may be permitted under
      applicable law or regulation), then the distribution will be made as soon
      as practicable following termination of employment. If the value of the
      Member's Account exceeds $5,000 (or such higher permitted amount), then
      the distribution will be made as of any Valuation Date elected by the
      Member, subject to (a) through (g).

(c)   A Member who has terminated employment may elect to commence distribution
      of his Accounts by giving 15 days' (or such shorter period designated by
      the Plan Administrator) prior notice to, and in accordance with such other
      rules prescribed by the Plan Administrator. Unless the Member elects
      otherwise, distribution of a Member's Account will begin not later than
      the sixtieth day after the close of the Plan Year in which occurs the
      latest of--

      (1) the Member's sixty-fifth birthday;


                                       21
<PAGE>

      (2) the tenth anniversary of the Plan Year in which the Member began
          participation in the Plan; or

      (3) the Member's termination of employment with the Employer and all
          Affiliates.

(d)   Except as otherwise provided in section 6.3 (Method of Distribution), if
      a Member dies after the Member's termination of employment but prior to
      receiving the full distribution of the Member's Account to which the
      Member is entitled under this Article 6 (Distribution and Withdrawals),
      any unpaid balance of the Member's Account at the time of the Member's
      death will be distributed to the Member's Beneficiary in a lump sum, as
      soon as practicable after the Member's death.

(e)   All distributions under this Plan will be made in accordance with Code
      paragraph 401(a)(9). Provisions of the Plan regarding payment of
      distributions will be interpreted and applied in accordance with Code
      paragraph 401(a)(9) and interpretive regulations, including proposed
      regulation 1.401(a)(9)-2, which will supersede any contrary provisions of
      the Plan.

(f)   In the case of a Member who is a "5-percent owner" (as defined in Code
      paragraph 401(a)(9)), in no event may the distribution of the Member's
      benefits commence later than April 1 of the calendar year following the
      year in which the Member attains age 70 1/2, regardless of whether the
      Member has terminated employment.

(g)   Amounts payable under the Plan shall continue to be maintained and
      adjusted under sections 8.3 (Valuation and Allocation of Expenses) and 8.4
      (Allocation of Earnings and Losses) pending payment.

6.3 METHOD OF DISTRIBUTION
(a)   GENERAL. Except as otherwise provided in (b), all distributions will be in
      a lump sum. Distributions of amounts invested in the Cinergy Stock Fund
      will be in shares of Cinergy Stock (with fractional shares in cash),
      unless the Member or Beneficiary elects to receive the distribution in
      cash. Distributions of all other amounts will be in cash. Amounts payable
      under the Plan will continue to be maintained and adjusted under sections
      8.3 (Valuation and Allocation of Expenses) and 8.4 (Allocation of Earnings
      and Losses) pending payment.

(b)   INSTALLMENT PAYMENTS. A Member who Retires and whose Account balance at
      termination of employment is greater than $5,000 may elect to have
      distributions made in annual installments over a period not exceeding 10
      years. The period also will not exceed the greater of the Member's life
      expectancy or the joint and survivor life expectancy of the Member and the
      Member's Beneficiary, as of the date payments commence. The amount of each
      payment will be determined by dividing the value of the Member's Account
      as of the Valuation Date of the payment by the remaining number of annual
      installments.


                                       22
<PAGE>

(c)   DISTRIBUTIONS TO BENEFICIARIES. If a Member dies after commencement of
      installment payments, remaining installments will be paid to the Member's
      Beneficiary. In lieu of continuing installment payments, the Beneficiary
      may elect to have the remaining Account balance paid in a lump sum.

      If a Member dies prior to commencement of distribution of his Account, and
      the value of his Account balance exceeds $5,000, the Member's Beneficiary
      may elect to receive distribution of the Member's Account in a lump sum or
      in annual installments over a period not exceeding the greater of ten
      years or the Beneficiary's life expectancy as of the date payments
      commence. Benefits will either:

      (1) be completely distributed by December 31 of the calendar year
          containing the fifth anniversary of the Member's death; or

      (2) be paid in annual installments, as described above, commencing on a
          date elected by the Beneficiary, but not later than--

          (A)  December 31 of 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 31 of the calendar year containing the first anniversary
               of the Member's death.

      The amount of each payment will be determined by dividing the value of the
      Member's Account as of the Valuation Date of the payment by the remaining
      number of installments.

(d)   DIRECT ROLLOVERS. A Member or a Member's spouse entitled to a distribution
      under the Plan, or a Member entitled to a withdrawal distribution under
      section 6.4 or 6.6, may elect to have all or part of the otherwise taxable
      portion of the distribution transferred directly from the Trust Fund to an
      "eligible retirement plan."

      For purposes of this provision, an "eligible retirement plan" means an
      individual retirement account, an individual retirement annuity other than
      an endowment contract, or, in the case of a Member (but not a Member's
      spouse), a defined contribution plan qualified under Code subsection
      401(a) (and funded under a trust that is qualified under Code subsection
      501(a)) that accepts rollover contributions.

      This provision shall not apply to any distribution the taxable amount of
      which is less than $200 or to any other distribution that is not an
      "eligible rollover distribution" within the meaning of Code subparagraph
      401(a)(31)(C).

6.4 HARDSHIP WITHDRAWALS
A Participant may apply for a hardship withdrawal from the Participant's
Deferred Compensation and Rollover Accounts. A hardship withdrawal shall only be
made if the Plan


                                       23
<PAGE>

Administrator determines under nondiscriminatory and objective standards
established for that purpose, that the withdrawal is necessary to satisfy one
of the following financial needs:

(a)   payment of medical expenses described in Code subsection 213(d) incurred
      by the Participant, the Participant's spouse, or any dependents of the
      Participant and not covered by insurance;

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

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

(d)   the need to prevent the eviction of the Participant from the principal
      residence or foreclosure on the mortgage of the Participant's principal
      residence;

(e)   funeral expenses of a member of the Participant's immediate family; and

(f)   any other circumstances as shall be described in uniform rules promulgated
      by the Plan Administrator.

The amount necessary to satisfy such a financial need includes an amount
necessary to pay income taxes and penalties reasonably anticipated to result
from the withdrawal.

A hardship withdrawal will be deemed necessary to satisfy such a financial need
if the Plan Administrator determines under nondiscriminatory and objective
standards established for that purpose, that the following requirements are met:

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

(2)   the Participant has previously obtained all other distributions and
      nontaxable loans currently available from the Employer's plans;

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

(4)   all plans maintained by the Employer suspend all elective contributions
      and employee contributions by or on behalf of the Participant for the
      12-month period following receipt of the hardship distribution; and

(5)   Deferred Compensation Contributions (if any) made by the Participant for
      the Plan Year during which the suspension in (d) above ends shall not,
      when aggregated with Deferred Compensation Contributions in the Plan Year
      the suspension begins, exceed the limitation imposed under Code subsection
      402(g).


                                       24
<PAGE>

That portion of a hardship distribution made from the Participant's Deferred
Compensation Contributions Account may be made only from Deferred Compensation
Contributions. Such a distribution may not include any earnings credited to the
Deferred Compensation Contributions Account.

No withdrawal may be made from a Participant's Account in an amount that would
cause any outstanding loan to the Participant to violate subsection 6.5(c)
(Loans) or in an amount greater than the excess of 125 percent of the balance of
the Deferred Compensation Account over the aggregate of amounts owing with
respect to any loans made to the Participant plus interest, if any, due thereon.

6.5 LOANS
Each Participant, and to the extent required under applicable regulations, each
former Participant who is a "party-in-interest" as defined under section 3(14)
of ERISA, may, with the approval of the Plan Administrator, borrow amounts from
the Participant's Deferred Compensation Contributions Account, ESOP Transfer
Account, or Rollover Contribution Account. Approval of loans shall be made in
accordance with the provisions of this section and uniform and nondiscriminatory
standards and policies adopted and interpreted by the Plan Administrator.

No more than two loans will be outstanding to a Participant at any time. The
Plan Administrator may establish other nondiscriminatory rules relating to loans
made under this section.

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

Each loan will be secured by a pledge of not more than 50 percent of the vested
and nonforfeitable portion of the Participant's Account. The terms of the loan
will be determined under uniform and nondiscriminatory standards and policies
adopted by and interpreted by the Plan Administrator, subject to the following
conditions:

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

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

(c)   The amount of the loan (when added to the outstanding balance of all other
      loans to the Participant from the Participant's Account) will not exceed
      the lesser of--

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


                                       25
<PAGE>

          (A)  the highest outstanding balance of loans from the Plan during the
               one-year period ending on the day before the loan was made, over

          (B)  the outstanding balance of loans from the Plan on the date the
               loan is made; or

      (2) 50 percent of the vested and nonforfeitable portion of the
          Participant's Account at the relevant time.

(d)   A loan shall be evidenced by a promissory note, in such form and
      containing such terms and conditions as the Plan Administrator from time
      to time directs.

(e)   Payments of principal and interest will be made by approximately equal
      payments on a basis that would permit the loan to be levelly amortized
      over its term. Payments by former Participants who are
      "parties-in-interest" shall be made at least quarterly.

      Payments by active Participants will be made by payroll deduction.
      Prepayment of the entire amount of principal and interest may be made at
      any time without penalty.

(f)   Appropriate disclosure will be made pursuant to the Truth in Lending Act
      to the extent applicable.

(g)   Amounts of principal and interest received on a loan will be credited to
      the Participant's Account using the Participant's current investment
      election, and the outstanding loan balance will be considered an
      investment of the assets of the Account.

(h)   Loans will be made on a pro rata basis from the available funds of each of
      the Investment Funds in which the Participant's Account is invested at the
      time the loan is made. Repayments will be credited to the Participant's
      Account in accordance with the Participant's investment elections in
      effect at the time of repayment.

(i)   In the event that a distribution under this Article 6 (Distributions and
      Withdrawals) (other than a withdrawal under section 6.6 (Other Withdrawals
      Prior to Termination of Employment)) becomes payable before the loan is
      repaid in full, the unpaid principal and interest will become due and
      payable, and the Plan will first satisfy the indebtedness from the amount
      in the Participant's Account before making any payments to the Participant
      or to a Beneficiary.

(j)   Reasonable loan set-up and/or maintenance fees may be charged to the
      Member's Account with respect to each loan made to the Member by the Plan,
      as established by the Plan Administrator.

In the exercise of the discretion conferred upon the Plan Administrator in this
section, all Participants under similar circumstances shall be treated alike,
and the provisions of this


                                       26
<PAGE>

section will not be utilized in any manner to discriminate 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 any or all of the balance in his Account upon 15 days
      (or such shorter period designated by the Plan Administrator) prior notice
      to the Plan Administrator. Such withdrawals shall be made in a lump sum
      and will be elected in accordance with rules established for that purpose
      by the Plan Administrator.

      No withdrawal will be made under this section that would cause the
      Participant's Deferred Compensation Account to be less than 125 percent of
      the outstanding balance of all loans (or such lesser percent designated by
      the Plan Administrator) outstanding to the Participant.

(b)   WITHDRAWALS OF AFTER-TAX CONTRIBUTIONS. A Participant may elect to
      withdraw any or all of the balance in the Participant's Employee After-Tax
      Contributions Account upon 15 days (or such shorter period designated by
      the Plan Administrator) prior notice to the Plan Administrator.
      Withdrawals shall be made in a lump sum and shall be elected in accordance
      with rules established for such purpose by the Plan Administrator.

6.7 WITHHOLDING TAXES
An Employer may withhold from a Member's compensation and the Trustee may
withhold from any payment under this Plan any taxes required to be withheld with
respect to contributions or benefits under this Plan and such sum as the
Employer or Trustee may reasonably estimate as necessary to cover any taxes for
which they may be liable and that may be assessed with respect to contributions
or benefits under this Plan.


                                       27
<PAGE>

ARTICLE 7. INVESTMENT ELECTIONS

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, Deferred Compensation, and Rollover Contributions made on the
      Participant's behalf invested in any one or more of the Investment Funds
      in increments of 1 percent, in accordance with procedures established by
      the Plan Administrator.

(b)   INVESTMENT TRANSFERS. Each Member may elect as of any date to have the
      assets in the Member's ESOP Transfer, Employer Match, After-Tax, Deferred
      Compensation, and Rollover Contributions Accounts reallocated among the
      Investment Funds, in increments of 1 percent, in accordance with
      procedures established by the Plan Administrator.

(c)   INVESTMENT ELECTIONS. Each Participant may make the elections described in
      subsection (a) by making an election with the Plan Administrator upon
      becoming a Participant. Such elections may be changed with respect to
      future After-Tax, Deferred Compensation, or Rollover Contributions as of
      any date in accordance with procedures established by the Plan
      Administrator.

(d)   TRANSFER OF ASSETS. The Plan Administrator shall cause the transfer of
      moneys or other property from the appropriate Investment Fund to the other
      Investment Fund as may be necessary to carry out the aggregate transfer
      transactions elected by the Members, in accordance with uniform rules
      therefor established by the Plan Administrator.

7.2 MATCHING CONTRIBUTIONS ACCOUNT
(a)   INVESTMENT OF CONTRIBUTIONS. Employer Matching Contributions made 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 the Member's Matching Contributions Account will remain invested in the
      Cinergy Stock Fund until distributed under Article 6 (Distributions and
      Withdrawals), and may not be reallocated among the Investment Funds. A
      Member who has attained age 50 may reallocate assets in the Matching
      Contributions Account among the Investment Funds, in accordance with the
      provisions of subsection 7.1(b) (After-Tax, Deferred Compensation, ESOP
      Transfer, Employer Match, and Rollover Contributions Accounts).

7.3 VOTING AND OTHER RIGHTS WITH RESPECT TO CINERGY STOCK
(a)   GENERAL. Each Member having an interest in the Cinergy Stock Fund shall
      have the right to direct the manner in which shares of Cinergy Stock held
      in such Fund shall


                                       28
<PAGE>

      be voted, and direct the manner in which all other rights appurtenant to
      such shares 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 which Cinergy Stock has voting rights, the Trustee shall cause
      to be furnished to each Member with an interest in the Cinergy Stock Fund
      a copy of the proxy solicitation materials with respect to the meeting.
      The Trustee shall use its best efforts to timely distribute to each Member
      all information to be distributed to shareholders in connection with any
      tender or exchange offer with respect to Cinergy Stock. The materials
      and/or information shall include any forms and instructions as may be
      necessary for the Member to direct the manner of voting on each matter to
      be brought before a meeting or to direct a response to a tender or
      exchange offer.

(c)   VOTING OR TENDER OF SHARES. Subject to the requirements of ERISA, the
      Trustee shall vote or tender Cinergy Stock corresponding to the interest
      of the Member in the Cinergy Stock Fund in accordance with the Member's
      directions issued in accordance with the instructions provided under (b).
      The Trustee shall vote or tender any Cinergy Stock with respect to which
      directions are not issued under this section in the manner determined by
      the Trustee in the Trustee's discretion.


                                       29

<PAGE>

ARTICLE 8. ACCOUNTS AND RECORDS OF THE PLAN

8.1 ACCOUNTS AND RECORDS
The Accounts and records of the Plan shall be maintained by the Plan
Administrator and shall accurately disclose the status of the Accounts of each
Member or each Member's Beneficiary in the Plan.

Each Member shall be advised from time to time, at least once quarterly during
each Plan Year, as to the status of the Member's Account.

8.2 TRUST FUND
Each Member shall have an undivided proportionate interest in the Trust Fund,
which shall be measured by the proportion that the market value of the Member's
Account bears to the total market value of all Accounts as of the date that the
interest is being determined.

8.3 VALUATION AND ALLOCATION OF EXPENSES
As of each Valuation Date, the Trustee shall determine the fair market value of
the Trust Fund after first deducting any expenses that have not been paid by the
Employers. Unless paid by the Employers and subject to such limitations as may
be imposed by the Act or other applicable law, all costs and expenses incurred
in connection with the general administration of the Plan and the Trust shall be
chargeable to the Trust Fund.

8.4 ALLOCATION OF EARNINGS AND LOSSES
As of each Valuation Date, the Plan Administrator, with the assistance of the
Trustee, shall allocate the net earnings and gains or losses of each Investment
Fund of the Trust Fund since the preceding Valuation Date to each Member's
Account in the same proportion that the market value of the Member's Account in
the Investment Fund bears to the total market value of all Members' Accounts in
the Investment Fund; and, for this purpose, the Plan Administrator shall adopt
uniform rules that conform to applicable law and generally accepted accounting
practices. The foregoing shall not apply to the loan fund, which shall be
accounted for separately so that interest on a Participant's loan is credited
solely to the Participant's Account.


                                       30
<PAGE>

ARTICLE 9. FINANCING

9.1 FINANCING
The Company shall enter into a Trust Agreement to implement and carry out the
provisions of the Plan and to finance the benefits under the Plan. All rights
that may accrue to any person under the Plan shall be subject to all the terms
and provisions of the Trust Agreement. The Company may modify the Trust
Agreement in accordance with the terms of that Agreement from time to time to
accomplish the purposes of the Plan.

9.2 CONTRIBUTIONS
The Employers shall make such contributions to the Trust Fund as are required by
the provisions of the Plan, subject to the right of the Company to amend,
modify, or terminate the Plan.

9.3 NONREVERSION
No Employer shall have any right, title, or interest in the contributions made
to the Trust Fund, and no part of the Trust Fund shall revert to any Employer,
except that if a contribution is made to the Trust Fund by an Employer by a
mistake of fact, then the contribution may be returned to the Employer within
one year after the payment of the contribution; and if any part or all of a
contribution is disallowed as a deduction under Code section 404, then to the
extent the contribution is disallowed as a deduction it may be returned to the
Employer within one year after the disallowance.

9.4 RIGHTS IN THE TRUST FUND
Persons eligible for benefits under the Plan are entitled to look only to the
Trust Fund 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 as expressly provided in the Plan.


                                       31
<PAGE>

Article 10. ADMINISTRATION

10.1 PLAN ADMINISTRATOR AND FIDUCIARY
The Benefits Committee will be the Plan Administrator of the Plan within the
meaning of section 3(16)(A) of ERISA, a fiduciary with respect to the Plan
within the meaning of sections 3(21)(A)(i) and (iii) of ERISA, and the named
fiduciary under section 402 of ERISA. The Benefits Committee will consist of the
number of members, not fewer than three, that is specified from time to time by
the Board. All members of the Benefits Committee will be Employees or officers
of an Employer.

10.2 REMOVAL AND REPLACEMENT OF BENEFITS COMMITTEE MEMBERS
The members of the Benefits Committee will serve at the pleasure of the Board
and may be removed by the Board with or without cause. Any vacancy among the
members will be filled by the Board. A Benefits Committee member will be deemed
to be removed as of the date on which the Benefits Committee member becomes
disqualified from membership on the Benefits Committee. A member of the Benefits
Committee may resign by delivering his written resignation to any other member
of the Benefits Committee. A resignation will become effective on the date
specified in the instrument of resignation.

10.3 COMPENSATION AND EXPENSES
All reasonable expenses incurred in the administration of the Plan will be paid
from the Trust Fund to the extent not paid by the Employers. Such expenses will
include any expenses incident to the administration of the Plan, including, but
not limited to, fees of accountants, counsel, and other specialists.

10.4 DELEGATION OF DUTIES AND EMPLOYMENT OF SPECIALISTS
The Benefits Committee may designate any person, subcommittee, or other entity
to carry out any of its responsibilities under the Plan, in which case every
reference herein made to the Benefits Committee will be deemed to mean or
include the designee(s) as to matters within the designee's jurisdiction. Any
such designation will be in writing and will be kept with the records of the
Plan. The Benefits Committee or its designee may authorize one or more of its
members or any agent to execute or deliver any instrument or instruments on its
behalf, and may employ such counsel, auditors, and other specialists, and such
clerical, medical, actuarial, and other services as may be required to carry out
the provisions of the Plan. Those expenses shall be paid by the Trust to the
extent not paid by the Employers.

10.5 ADMINISTRATION
The Benefits Committee shall be responsible for the administration of the
Plan. The Benefits Committee will have all powers necessary 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 the Plan's business. In
making any such determination or rule, the Benefits Committee will pursue
uniform policies as from time to time established by the Benefits Committee
and will not discriminate in favor of or against any Member. The Benefits
Committee will have the


                                       32
<PAGE>

exclusive right to make any finding of fact necessary or appropriate for any
purpose under the Plan including, but not limited to, the determination of
the eligibility for and the amount of any benefit payable under the Plan. The
Benefits Committee will have discretionary authority to interpret the terms
and provisions of the Plan and to determine any and all questions arising
under the Plan or in connection with Plan administration, including, without
limitation, the right to remedy or resolve possible ambiguities,
inconsistencies, or omissions, by general rule or particular decision. In
exercising its rights under this section to make findings of fact under the
Plan, interpret the terms and provisions of the Plan, and determine all
questions arising under the Plan or in connection with Plan administration,
the Benefits Committee will be granted the fullest discretion permitted by
law. The Benefits Committee will make, or cause to be made, all reports or
other filings necessary to meet both the reporting and disclosure
requirements and other filing requirements of ERISA that are the
responsibility of "plan administrators" under ERISA. To the extent permitted
by law, all findings of fact, determinations, interpretations, and decisions
of the Benefits Committee will be conclusive and binding upon all persons
having or claiming to have any interest or right under the Plan.

10.6 NO ENLARGEMENT OF EMPLOYEE RIGHTS
Nothing contained in the Plan will be deemed to give any Employee the right to
be retained in the service of an Employer or to interfere with the right of an
Employer to discipline or discharge any Employee at any time.

10.7 APPEALS FROM DENIAL OF CLAIMS
Claims for benefits under the Plan will be made in writing to the Plan
Administrator or its designee. If any claim for benefits under the Plan, or
request for loan or hardship distribution under the Plan, is wholly or partially
denied, the claimant will be given notice of the denial in writing within a
reasonable period of time not to exceed 90 days after receipt of the claim,
unless special circumstances require an extension of time for processing, 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 the termination of the initial period. The extension notice will
indicate the special circumstances requiring an extension of time and the date
by which the Plan expects to render final notification. Notice of the denial
will be written in a manner calculated to be understood by the claimant and will
include the following information:

(a)   the specific reasons for the denial;

(b)   specific reference to pertinent Plan provisions on which the denial is
      based;

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


                                       33
<PAGE>

(d)   an explanation of the Plan's claim review procedure.

Within 60 days after the claimant's receipt of written notice of the claim's
denial, the claimant, or his duly authorized representative, may file a written
request with the Benefits Committee requesting a full and fair review of the
denial of the claimant's claim for benefits. In connection with the claimant's
appeal of the denial of his claim for benefits, the claimant may review
pertinent documents in the Benefit Committee's possession and may submit issues
and comments in writing. The Benefits Committee will make a decision on review
promptly, but not later than the date of the meeting of the Benefits Committee
that immediately follows the receipt of the claimant's request for review,
unless the request for review is filed within 30 days before the date of that
meeting. In that case, a decision will be made as soon as possible but not later
than the date of the second Benefits Committee meeting following receipt of the
request for review. If special circumstances require a further extension of time
for processing, a decision will be rendered not later than the third Benefits
Committee meeting following receipt of the claimant's request for review. If an
extension of time for review is required because of special circumstances,
written notice of the extension will be sent to the claimant before the
extension commences. The extension notice will indicate the special
circumstances requiring an extension of time and the date by which the Benefits
Committee expects to render the final decision. The decision on review will be
in writing and written in a manner calculated to be understood by the claimant,
and will set forth the specific reason or reasons for the decision and will
contain specific references to the pertinent Plan provisions on which the
decision is based. If the decision on review is not furnished to the claimant
within 60 days of receipt of the request for review, or within 120 days after
its receipt if special circumstances required an extension of time, the claim
will be deemed denied on review.

10.8 NOTICE OF ADDRESS AND MISSING PERSONS
Each person entitled to benefits under the Plan must file with the Plan
Administrator, in writing, the person's post office address and each change of
post office address. Any communication, statement, or notice addressed to such a
person at the latest reported post office address will be binding upon the
person for all purposes of the Plan, and neither the Plan Administrator nor the
Employers or Trustee shall be obliged to search for or ascertain the person's
whereabouts. In the event that the person cannot be located, the Plan
Administrator may direct that the benefit and all further benefits with respect
to that person shall be discontinued, all liability for the payment thereof
shall terminate and the balance in such Member's Account shall be deemed a
forfeiture; provided, however, that in the event of the subsequent reappearance
of the Member or Beneficiary prior to termination of the Plan, the benefits that
were due and payable and that the person missed shall be paid in a single sum
and the future benefits due the person shall be reinstated in full.

10.9 DATA AND INFORMATION FOR BENEFITS
All persons claiming benefits under the Plan must furnish to the Plan
Administrator or its designated agent such documents, evidence, or information
as the Plan Administrator or its


                                       34
<PAGE>

designated agent considers necessary or desirable for the purpose of
administering the Plan; and a person must furnish such information promptly
and sign such documents as the Plan Administrator or its designated agent may
require before any benefits become payable under the Plan.

10.10 INDEMNITY FOR LIABILITY
The Company shall indemnify each member of the Benefits Committee and each other
individual who is directed by the Company to carry out responsibilities and
duties imposed by the Plan against any and all claims, losses, damages, and
expenses, including counsel fees, incurred by the individual and any liability,
including any amounts paid in settlement with the Company's approval, arising
from the individual's action or failure to act, except when the same is
judicially determined to be attributable to the gross negligence or willful
misconduct of that individual. The Company shall pay the premiums on any bond
secured under this section and shall be entitled to reimbursement by the other
Employers for their proportionate share.

10.11 EFFECT OF A MISTAKE
In the event of a mistake or misstatement as to the eligibility, participation,
or service of any Member, or the amount of payments made or to be made to a
Member or Beneficiary, the Plan Administrator shall, if possible, cause to be
withheld or accelerated or otherwise make adjustment of such amounts of payments
as will in its sole judgment result in the Member or Beneficiary receiving the
proper amount of payments under this Plan.


                                       35
<PAGE>

ARTICLE 11. AMENDMENT AND TERMINATION

11.1 AMENDMENT AND TERMINATION
(a)   The Company reserves the right to alter, amend, revoke, or terminate the
      Plan at any time. The Board shall generally have the authority to adopt
      amendments; however, the Benefits Committee or the compensation committee
      of the Board may adopt any amendment to ensure the continued qualification
      of the Plan and Trust Fund under Code subsections 401(a) and 501(a), to
      comply with the provisions of any federal statute or regulation impacting
      pension plans, to enhance the delivery of benefits to Members and
      Beneficiaries, to ease Plan administration, or to respond to the
      withdrawal of any Employer from the Plan. Notwithstanding the preceding
      sentence, no amendment by the Benefits Committee or the compensation
      committee of the Board shall substantially increase the cost of the Plan
      without the Board's consent. The Board, or any person or persons duly
      authorized by the Board, shall also have the right, authority, and power
      to terminate the Plan and to discontinue or suspend contributions to the
      Plan.

(b)   While each Employer contemplates carrying out the provisions of the Plan
      indefinitely with respect to its Employees, no Employer shall be under any
      obligation or liability whatsoever to maintain the Plan for any minimum or
      other period of time.

(c)   Upon any termination of the Plan in its entirety, or with respect to any
      Employer, the Company shall give written notice thereof to the Trustee and
      any Employer involved.

(d)   Except as provided by law, upon any termination of the Plan, no Employer
      with respect to whom the Plan is terminated (including the Company) shall
      thereafter be under any obligation, liability, or responsibility
      whatsoever to make any contribution or payment to the Trust Fund, the
      Plan, any Member, any Beneficiary, or any other person, trust, or fund
      whatsoever, for any purpose whatsoever under or in connection with the
      Plan.

11.2 LIMITATIONS ON AMENDMENTS
The provisions of this Article are subject to and limited by the following
restrictions:

(a)   No amendment will operate either directly or indirectly to give any
      Employer any interest whatsoever in any funds or property held by the
      Trustee under the terms of this Plan or the Trust Agreement, or to permit
      the corpus or income of the Trust to be used for or diverted to purposes
      other than the exclusive benefit of Members or their Beneficiaries.

(b)   No such amendment will operate either directly or indirectly to deprive
      any Member of any portion of the Member's vested and nonforfeitable
      interest or right to any


                                       36
<PAGE>

      "section 411(d)(6) protected benefit" (as defined in Treasury regulation
      section 1.411(d)-4) as of the time of such amendment.

(c)   No amendment will modify the vesting provisions of Article 5 (Vesting in
      Accounts) unless the conditions of Code section 411(a)(10) and section
      11.4 (Amendments of Vesting Schedule) are met.

11.3 EFFECT OF BANKRUPTCY AND OTHER CONTINGENCIES AFFECTING AN EMPLOYER
In the event an Employer terminates its connection with the Plan, or in the
event an Employer is dissolved, liquidated, or is by appropriate legal
proceedings adjudged a bankrupt, or in the event judicial proceedings of any
kind result in the involuntary dissolution of an Employer, the Plan shall be
terminated with respect to that Employer. The merger, consolidation, or
reorganization of an Employer, or the sale by it of all or substantially all of
its assets, shall not terminate the Plan if there is delivery to that Employer
by the Employer's successor or by the purchaser of all or substantially all of
the Employer's assets, of a written instrument requesting that the successor or
purchaser be substituted for the Employer and agreeing to perform all the
provisions of this Plan 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 under this Plan, and that
Employer shall be relieved and released from any obligations of any kind,
character, or description imposed upon it under the Plan or the Trust Agreement.

11.4 AMENDMENT OF VESTING SCHEDULE
If the Plan is amended to provide a different vesting schedule, each person
adversely affected--

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

(b)   who has completed at least three years of service,

may elect to have the amendment disregarded in determining the vested percentage
of the Participant's Account. That election must be in writing and delivered to
the Plan Administrator within the election period. Upon delivery, the
Participant's election will be irrevocable. The election period begins on the
date the amendment is adopted and ends 60 days after the latest of the date--

(1)   the amendment is adopted;

(2)   the amendment becomes effective; or

(3)   the Plan Administrator delivers a written notice of the amendment to the
      Participant.

No amendment to the Plan's vesting schedule may decrease the vesting that any
Member has earned as of the date of the amendment.


                                       37
<PAGE>

ARTICLE 12. PARTICIPATION IN AND WITHDRAWAL FROM THE PLAN BY AN EMPLOYER

12.1 ADOPTION OF THE PLAN
With the Company's consent, any Affiliate may become an Employer under the Plan
and may elect by--

(a)   taking appropriate action to adopt the Plan;

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

(c)   becoming a party to the trust agreement establishing the Trust Fund; and

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

12.2 WITHDRAWAL FROM PARTICIPATION
Any Employer may, with the Company's consent, withdraw from participation in the
Plan at any time by filing with the Company a duly certified copy of a
resolution of its board of directors to that effect and giving notice of its
intended withdrawal to the Company and the Trustee prior to the effective date
of withdrawal. Distribution may be implemented through continuation of the Trust
Fund, or transfer to another trust fund exempt from tax under Code section 501,
or to a group annuity contract qualified under Code section 401, or distribution
may be made as an immediate cash payment in accordance with the directions of
the Plan Administrator; provided, however, that no such action shall divert any
part of the fund to any purpose other than the exclusive benefit of the
Employees of that Employer.

12.3 COMPANY AS AGENT FOR EMPLOYERS
Each Affiliate that becomes a participating Employer pursuant to section 12.1
(Adoption of Plan) by doing so will be deemed to have appointed the Company its
agent to exercise on its behalf all of the powers and authorities conferred upon
the Company by the terms of the Plan, including, but not limited to, the power
to amend and terminate the Plan. The Company's authority to act as agent will
continue unless and until that portion of the Trust Fund held for the benefit of
Employees of the particular Employer and their beneficiaries are transferred or
distributed pursuant to section 12.2 (Withdrawal from Participation). Each
Employer will, from time to time, upon the Company's request, furnish to the
Company any data and information as the Company requires in the performance of
its duties.


                                       38

<PAGE>

ARTICLE 13. MISCELLANEOUS

13.1 BENEFICIARY DESIGNATION
(a)   Each Member may designate, 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 to receive the Member's interest in the Plan in
      the event of the Member's death, but the designation will not be effective
      for any purpose until it has been filed by the Member during the Member's
      lifetime with the Plan Administrator. The Member may, from time to time
      during the Member's lifetime, on a form approved by and filed with the
      Plan Administrator, change the Member's Beneficiary or Beneficiaries.

(b)   The Beneficiary of each Member who is married will be the Member's
      surviving spouse, unless that spouse consents in writing to the
      designation of another Beneficiary or Beneficiaries. The consent must
      specifically acknowledge the identity of the nonspousal Beneficiary, or
      must specifically acknowledge and waive the right to limit the consent to
      a specific Beneficiary. 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 Beneficiary without the written consent
      of the Member's spouse, unless the spouse's prior consent expressly
      permits designations by the Member without any requirement of further
      consent by the spouse. The consent of a Member's spouse will be
      irrevocable unless and until the Member changes the Member's designation
      of Beneficiaries. Upon the divorce of a Member and the Member's spouse,
      any designation of the spouse as the Member's Beneficiary will be deemed
      to be revoked.

(c)   In the event that a Member fails to designate a Beneficiary, or if for any
      reason his designation is legally ineffective, or if all designated
      Beneficiaries predecease the Member or die simultaneously with the Member,
      distribution will be made to the Member's spouse; or if none, to the
      Member's children in equal shares; or if none, to the Member's parents in
      equal shares; or if none, to the Member's estate. If any such Beneficiary
      dies before receiving the distribution that would have been made to the
      Beneficiary had the Beneficiary not died, then, for the purposes of the
      Plan, the distribution that would have been received by the Beneficiary
      will be made to the Beneficiary's estate.

(d)   The written consent described in subsection (b) must acknowledge the
      effect of the election and must be witnessed by a notary public.

13.2 FACILITY OF PAYMENT
If any benefit under the Plan is payable to a person whom the Plan Administrator
knows is a minor or otherwise under legal incapacity, the Plan Administrator or
its designee may have the payment made to the legal guardian of that person or
to such person or organization as a


                                       39

<PAGE>

court of competent jurisdiction may direct. To the extent permitted by law, any
payment made under this section shall be a complete discharge of any liability
under the Plan to that person.

13.3 NONALIENATION
Except as provided in Code paragraph 401(a)(13), neither benefits payable at any
time under the Plan nor the corpus or income of the Trust Fund will be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
attachment, garnishment, levy, execution, or other legal or equitable process or
encumbrance of any kind. No payee may assign any payment due him under the Plan.
Any attempt to alienate, sell, transfer, assign, pledge, or otherwise encumber
any such benefit, whether presently or thereafter payable, will be void. The
Trust Fund will not in any manner 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 be made in accordance with the
applicable requirements of any qualified domestic relation order, as defined in
Code subsection 414(p). The Plan Administrator will establish procedures to
determine whether domestic relations orders are "qualified domestic relations
orders" and to administer distributions under qualified domestic relations
orders.

In the event that a qualified domestic relations order provides for the payment
of all or a portion of a Member's Accounts to an alternate payee, distribution
to the alternate payee may be made at any time specified in the order,
irrespective of whether the Member has reached the earliest retirement age, as
defined in Code subsection 414(p). In the event that a qualified domestic
relations order provides for the immediate payment 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 administratively feasible following the Plan
Administrator's determination that the order is a qualified domestic relations
order.

13.4 APPLICABLE LAW
The Plan and all rights hereunder shall be governed by and construed in
accordance with the laws of the State of Ohio to the extent those laws have not
been preempted by applicable federal law.

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

13.6 NO GUARANTEE
Neither the Plan Administrator, the Company, the Employers, nor the Trustee in
any way guarantees the Trust Fund from loss or depreciation nor the payment of
any money that may be or become due to any person from the Trust Fund. Nothing
contained in this Plan will be deemed to give any Participant, Member, or
Beneficiary an interest in any specific part of the


                                      40

<PAGE>

Trust Fund or any other interest except the right to receive benefits out of
the Trust Fund in accordance with the provisions of the Plan and the Trust
Agreement.

13.7 MERGER, CONSOLIDATION, OR TRANSFER
In the case of any merger or consolidation with, or transfer of assets and
liabilities to any other plan, provisions will be made so that each Member will
receive a benefit immediately after the merger, consolidation, or transfer (if
the Plan had then terminated) that is equal to or greater than the benefit the
Member would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had then terminated).

13.8 INTERNAL REVENUE SERVICE APPROVAL
The Company intends to obtain a ruling or rulings by the District Director of
Internal Revenue that--

(a)   the Plan, as in effect from time to time, with respect to all Employers,
      meets the requirements of Code subsection 401(a); and

(b)   any and all contributions made by the Employers under the Plan are
      deductible for income tax purposes under Code subsection 404(a) or any
      other applicable provisions of the Code.

                                * * * * * * * * * *


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<PAGE>

IN WITNESS WHEREOF, Cinergy Corp. has caused this instrument to be executed by
its duly authorized officers effective as of January 1, 1998.


                                        CINERGY CORP.


APPROVED:
                                        By _______________________________
                                           Madeleine W. Ludlow

                                           Its ___________________________

By _______________________________

   Its ___________________________



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