Exhibit 10.ss


 


CINERGY
CORP. NON-UNION

EMPLOYEES’ 401(K) PLAN


 


(Effective as of January 1, 2003)


 

















 


TABLE OF CONTENTS


 


	
  ARTICLE 1. The Plan

  
	
  1.1

  	
  Establishment of Plan

  
	
  1.2

  	
  Applicability of Plan

  
	
  1.3

  	
  Purpose of the Plan

  
	
  1.4

  	
  Type
  of Plan

  
	
   

  	
   

  
	
  ARTICLE 2. Definitions

  
	
  2.1

  	
  Definitions

  
	
  2.2

  	
  Gender and Number

  
	
   

  	
   

  
	
  ARTICLE 3. Participation

  
	
  3.1

  	
  Participation

  
	
  3.2

  	
  Duration of Participation

  
	
  3.3

  	
  Leased
  Employees

  
	
  3.4

  	
  Reclassification

  
	
   

  	
   

  
	
  ARTICLE 4. Contributions

  
	
  4.1

  	
  Deferred Compensation Contributions

  
	
  4.2

  	
  Employee After-Tax Contributions

  
	
  4.3

  	
  Matching Contributions

  
	
  4.4

  	
  Limitations on Contributions

  
	
  4.5

  	
  Contributions Not Contingent on Profits

  
	
  4.6

  	
  Limitations on Annual Account Additions

  
	
  4.7

  	
  Rollover Contributions

  
	
  4.8

  	
  Contributions During Period of Military
  Leave

  
	
  4.9

  	
  ADP/ACP Safe Harbor

  
	
  4.10

  	
  Profit Sharing Contributions

  
	
   

  	
   

  
	
  ARTICLE 5. Vesting in Accounts

  
	
  5.1

  	
  All Accounts Except Profit Sharing
  Contributions Account

  
	
  5.2

  	
  Profit Sharing Contributions Account

  
	
  5.3

  	
  Forfeitures

  
	
   

  	
   

  
	
  ARTICLE 6. Distributions and Withdrawals

  
	
  6.1

  	
  Distribution Upon Retirement, Death,
  Disability, or Other Termination of Employment

  
	
  6.2

  	
  Commencement of Distributions

  
	
  6.3

  	
  Method of Distribution

  
	
  6.4

  	
  Hardship Withdrawals

  
	
  6.5

  	
  Loans

  
	
  6.6

  	
  Other Withdrawals Prior to Termination of
  Employment

  
	
  6.7

  	
  Withholding Taxes

  



 


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  ARTICLE 7. Investment Elections

  
	
  7.1

  	
  After-Tax, Deferred Compensation, Employer
  Match, ESOP Transfer, and Rollover Contribution Accounts

  
	
  7.2

  	
  Matching Contributions Account and Profit
  Sharing Contributions Account

  
	
  7.3

  	
  Voting and Other Rights with Respect to
  Cinergy Stock

  
	
   

  	
   

  
	
  ARTICLE 8. Accounts and Records of the Plan

  
	
  8.1

  	
  Accounts and Records

  
	
  8.2

  	
  Trust
  Fund

  
	
  8.3

  	
  Valuation and Allocation of Expenses

  
	
  8.4

  	
  Allocation of Earnings and Losses

  
	
   

  	
   

  
	
  ARTICLE 9. Financing

  
	
  9.1

  	
  Financing

  
	
  9.2

  	
  Contributions

  
	
  9.3

  	
  Nonreversion

  
	
  9.4

  	
  Rights in the Trust Fund

  
	
   

  	
   

  
	
  ARTICLE
  10. Administration

  
	
  10.1

  	
  Plan Administrator and Fiduciary

  
	
  10.2

  	
  Removal and Replacement of Benefits
  Committee Members

  
	
  10.3

  	
  Compensation and Expenses

  
	
  10.4

  	
  Delegation of Duties and Employment of
  Specialists

  
	
  10.5

  	
  Administration

  
	
  10.6

  	
  No Enlargement of Employee Rights

  
	
  10.7

  	
  Appeals from Denial of Claims

  
	
  10.8

  	
  Notice of Address and Missing Persons

  
	
  10.9

  	
  Data and Information for Benefits

  
	
  10.10

  	
  Indemnity for Liability

  
	
  10.11

  	
  Effect of a Mistake

  
	
   

  	
   

  
	
  ARTICLE
  11. Amendment and Termination

  
	
  11.1

  	
  Amendment and Termination

  
	
  11.2

  	
  Limitations on Amendments

  
	
  11.3

  	
  Effect of Bankruptcy and Other
  Contingencies Affecting an Employer

  
	
  11.4

  	
  Amendment of Vesting Schedule

  
	
   

  	
   

  
	
  ARTICLE
  12. Top-Heavy Provisions

  
	
  12.1

  	
  Application of Top-Heavy Provisions

  
	
  12.2

  	
  Definitions

  
	
  12.3

  	
  Minimum Contribution

  
	
  12.4

  	
  Limit on Annual Additions: Combined Plan
  Limit

  
	
  12.5

  	
  Collective Bargaining Agreements

  
	
   

  	
   

  
	
  ARTICLE
  13. Participation In and Withdrawal From the Plan by an Employer

  
	
  13.1

  	
  Adoption of the Plan

  
	
  13.2

  	
  Withdrawal from Participation

  



 


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  13.3

  	
  Company as Agent for Employers

  
	
   

  	
   

  
	
  ARTICLE
  14. Miscellaneous

  
	
  14.1

  	
  Beneficiary Designation

  
	
  14.2

  	
  Facility of Payment

  
	
  14.3

  	
  Nonalienation

  
	
  14.4

  	
  Applicable
  Law

  
	
  14.5

  	
  Severability

  
	
  14.6

  	
  No
  Guarantee

  
	
  14.7

  	
  Merger, Consolidation, or Transfer

  
	
  14.8

  	
  Internal Revenue Service Approval

  
	
  14.9

  	
  Special ESOP Provisions

  
	
  14.10

  	
  Electronic
  Media

  
	
   

  	
   

  
	
  Addendum

  



 


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ARTICLE 1.



THE PLAN


 


1.1                               Establishment of Plan.


 


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


 


The PSI
Energy, Inc. Employees’ 401(k) Savings Plan was originally adopted effective
October 1, 1988 by Public Service Company of Indiana, Inc., as a successor
plan to an Employee’s 401(k) Plan adopted as of January 1, 1987.


 


The Cincinnati
Gas & Electric Company instituted the Employee Incentive Thrift Plan in
1967.   Effective as of October 1,
1983, the plan was amended and renamed The Cincinnati Gas & Electric
Company Deferred Compensation and Investment Plan.


 


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, 2003, except as otherwise
specifically provided.  Except as so
provided, any person who was entitled to benefits under the Plan or a
predecessor plan as in effect on December 31, 2002, shall continue to be
entitled to the same benefits under this Plan. 
The provisions of this amendment and restatement of the Plan are
effective as of January 1, 2003 except where an interim effective date for
various law changes is otherwise provided.


 


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.


 


1.4                               Type of Plan.


 


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


 


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Code and that
includes a cash or deferred arrangement intended to qualify under
Section 401(k) of the Code.


 


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, 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, 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 PSI Energy, Inc. Employees’ 401(k) Savings Plan before January 1,
1992, including any gains and losses of the Trust Fund attributable thereto;


 


(4)                                  “ESOP Transfer Account” means that portion of 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
PSI Energy, Inc. Employees’ 401(k) Savings 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, including any gains and losses of the Trust Fund attributable
thereto;


 


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



 


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the Member pursuant to
Section 4.7, including any gains and losses of the Trust Fund attributable
thereto; and


 


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


 


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


 


(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 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 in
paragraphs (1), (2), (3), or (4) below has occurred:


 


(1)                                  Any Person 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 any securities
acquired directly from the Company or its affiliates) representing more than
twenty percent (20%) of the combined voting power of the Company’s then
outstanding securities, excluding any Person who becomes such a beneficial
owner in connection with a transaction described in clause (A) of paragraph (2)
below; or


 


(2)                                  There is
consummated a merger or consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation, partnership or other
entity, other than (A) a merger or consolidation that would result in the
voting securities of the Company outstanding immediately prior to that merger
or consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or its parent)
at least sixty percent (60%) of the combined voting power of the securities of
the Company or the surviving entity or its parent 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 the beneficial owner, directly or  indirectly, of 


 


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securities of the Company
(not including in the securities beneficially owned by such a 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 business)
representing twenty percent (20%) or more of the combined voting power of the
Company’s then outstanding securities; or


 


(3)                                  During any
period of two (2) consecutive years, individuals who at the beginning of that
period constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Company) whose appointment or election by
the Company’s stockholders was approved or recommended by a vote of at least
two-thirds (2/3) 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; or


 


(4)                                  The
stockholders 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’s 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 sixty percent (60%) of the combined
voting power of the voting securities of which are owned by stockholders of the
Company in substantially the same proportions as their ownership of the Company
immediately prior to the sale.


 


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


 


(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.


 


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(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, 4.2 and 4.3, the Employee’s “base compensation”.


 


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


 


(3)                                  for purposes of
Sections 2.1(w) and 4.6, “compensation” as defined in Section 415(c)(3) of
the Code.


 


For purposes
of this section, “base compensation”
means the Employee’s base rate of pay, exclusive of any allowances, premiums,
bonuses, overtime pay, or other forms or types of compensation, for 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
Section 125 of the Code, Section 402(e)(3) of the Code,
Section 402(h) of the Code, Section 403(b) of the Code or, for Plan
Years beginning on or after January 1, 2001, Section 132(f) of the Code.


 


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


 


(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.


 


(m)                               “Disability” means a physical or mental condition, resulting
from injury or disease, that constitutes total disability under the Company’s
long-term disability plan.


 


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


 


(o)                                 “Eligible Employee” means an Employee on the payroll of an
Employer who has attained age 18, who is not a “leased employee” (as defined in
Section 3.3), who is not classified by the Employer as a summer laborer or
a summer employee, and whose terms and conditions of employment are not
governed by a collective bargaining agreement that provides for participation
in this Plan.


 


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(p)                                 “Employee” means any person who is employed by the Company or
an Affiliate, who is classified as an employee by the Company or 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.


 


(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 13.


 


(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, and
shall consist of—


 


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


 


(2)                                  Employer Incentive Matching Contributions, as described in
Subsection 4.3(b).


 


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


 


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


 


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


 


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


 


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


 


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


 


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(x)                                   “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.


 


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


 


(z)                                   “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.


 


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


 


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


 


(cc)                            “Plan Year” means the 12-consecutive-month period ending each
December 31.


 


(dd)                          “Profit Sharing Contributions” means those contributions
made by an Employer on behalf of a Participant as described in
Section 4.10, and shall consist of —


 


(1)                                  Balanced Profit Sharing Contributions, as described in Subsection
4.10(a); and


 


(2)                                  Investor Profit Sharing Contributions, as described in Subsection
4.10(b)


 


(ee)                            “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.


 


(ff)                                “Rollover Contribution” means those contributions
made by a Participant as described in Section 4.7.


 


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


 


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


 


(ii)                                  “Trust Fund” means the assets of every kind and description held
under the Trust Agreement.


 


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(jj)                                  “Trustee” means the corporation, or individual or
individuals, or combination thereof, acting as trustee under the Trust
Agreement at any time of reference.


 


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


 


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


 


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


 


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


 


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


 


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


 


(4)                                  “Severance from
Service” means, with respect to an Employee:


 


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


 


(B)                                the first
anniversary of the first date of the Employee’s Absence from Service.  Notwithstanding the preceding sentence, if
an Employee has an Absence from Service of more than one year by reason of a
maternity or paternity absence, the Employee’s Severance from Service occurs on
the second anniversary of that absence; provided that the period between the
first and second anniversaries of the first day of such Absence from Service is
neither a period of service nor a period of severance.  For purposes of this Subparagraph (B), an Absence
from Service for maternity or paternity reasons means an absence (1) by
reason of the pregnancy of the individual, (2) by reason of the birth of a
child of that individual, (3) by reason of the placement of a child with
the individual in connection with the adoption of the child by that individual,
or (4) for purposes of caring for the child for a period beginning
immediately following its birth or placement.


 


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


 


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


 


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


 


In determining an Employee’s
total Years of Service for purposes of the Plan, all periods of employment that
are credited to the Employee will be aggregated; subject to the following
provisions:  If an Employee who first
became an Employee after December 31, 2002 incurs a Severance from Service and
is later reemployed by an Employer (or Affiliate), his period of employment
prior to his Severance from Service will, subject to all of the provisions of
the Plan, be aggregated for the purpose of determining his Years of Service
only if the Employee either had been vested in accordance with Section 5.2 at
his Severance from Service or if his Period of Severance is less than 60
consecutive months.  If an Employee’s
period of employment prior to his Severance from Service is not aggregated
pursuant to the immediately preceding sentence, the Years of Service earned for
the Employee’s period of employment prior to his Severance from Service shall
be disregarded for purposes of determining his Years of Service after his
reemployment.


 


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


 


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.


 


ARTICLE 3.



PARTICIPATION


 


3.1                               Participation.


 


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


 


10

















 


Employee shall
commence participation in the Plan as of the Eligible Employee’s Employment
Commencement Date.


 


The Eligible
Employee shall automatically commence participation in the Plan as of the
Eligible Employee’s Employment Commencement Date as to Employee Deferred
Compensation Contributions unless the Eligible Employee affirmatively notifies
the Plan Administrator, in accordance with procedures established from time to
time by the Plan Administrator, that the Eligible Employee does not desire to
commence participation in the Plan as to Employee Deferred Compensation
Contributions.  Any Eligible Employee
who affirmatively elects not to participate in the Plan as of his Employment
Commence Date as to Employee Deferred Compensation Contributions may
subsequently commence participation in the Plan as to Employee Deferred
Compensation Contributions by electing to make Employee Deferred Compensation
Contributions.  Any Eligible Employee
may elect to make Employee After-Tax Contributions or a Rollover Contribution,
pursuant to Article 4.


 


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 Section 414(n)(3) of the Code and for purposes of
determining the number and identity of Highly Compensated Employees.


 


3.4                               Reclassification.


 


In the event
that any governmental agency or court requires the Company or an Affiliate to
reclassify the common law employee or employment status of any independent
contractor or otherwise excluded employee under the Plan, the reclassified
individual nevertheless shall not be considered an Eligible Employee following
such reclassification 


 


11

















 


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


 


ARTICLE 4.



CONTRIBUTIONS


 


4.1                               Deferred Compensation Contributions.


 


Eligible
employees hired on or after January 1, 2001 are automatically enrolled as
Participants at a three percent before-tax salary contribution unless they
affirmatively elect in accordance with rules established by the Plan Administrator
not to enroll or participate.  Each
Participant may elect, in accordance with rules established by the Plan
Administrator, to reduce the Participant’s Compensation by any percentage up to
50 percent (or such other percentage as prescribed by the Plan Administrator),
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.  Deferred Compensation Contributions made to
the Plan shall initially be allocated to the portion of the Plan that is not
comprised of the ESOP Feature. 
Thereafter, to the extent that a Member directs the investment of
Deferred Compensation Contributions in the Cinergy Stock Fund pursuant to
Article 7 of the Plan, such Deferred Compensation Contributions shall be
transferred to the ESOP Feature unless and until the Member directs otherwise
pursuant to Article 7 of the Plan.


 


12

















 


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 (or such other percentage as prescribed by the Plan Administrator) 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.


 


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 be subject to certain
limitations determined by the Plan Administrator from time to time.


 


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.  Employee After-Tax
Contributions made to the Plan shall initially be allocated to the portion of
the Plan that is not comprised of the ESOP Feature.  Thereafter, to the extent that a Member directs the investment of
Employee After-Tax Contributions in the Cinergy Stock Fund pursuant to
Article 7 of the Plan, such Employee After-Tax Contributions shall be
transferred to the ESOP Feature unless and until the Member directs otherwise
pursuant to Article 7 of the Plan.


 


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 (i) 100
percent of the Participant’s Deferred Compensation Contributions with respect
to the first 3 percent of the Participant’s Compensation made on the
Participant’s behalf for the pay period, plus (ii) 50 percent of the
Participant’s Deferred Compensation Contributions with respect to the next 2
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 and allocated to the Participant’s 


 


13

















 


Matching
Contributions Account as soon as practical after the end of the pay period for
which it is made.  The Employer Base
Matching Contributions made on behalf of each Participant pursuant to this
Subsection 4.3(a) shall be subject to the withdrawal restrictions of Section
401(k)(2)(B) of the Code and Treasury Regulation Section 1.401(k)-1(d).


 


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


 


The Employer
Incentive Matching Contributions made on behalf of each Participant will be
paid by each Employer to the Trustee and allocated to the Participant’s
Matching Contributions Account as soon as administratively practicable after
determining if the corporate goals were achieved and what percentage will be
contributed.  Notwithstanding the
foregoing provisions of this Subsection 4.3(b), in no event shall the amount of
Employer Incentive Matching Contributions made on behalf of each Participant
pursuant to this Subsection 4.3(b) exceed 4 percent of the Participant’s
Compensation.


 


(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. 
The Company may use either authorized and unissued shares of Common
Stock, treasury shares or shares of Common Stock acquired on the open market,
in private transactions or otherwise, or a combination of the foregoing, for
purposes of making Employer Matching Contributions.


 


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 $12,000 (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
Section 402(g) of the Code).


 


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 


 


14

















 


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 Section 402(e)(3) of the Code) in excess of the
annual limit on elective deferrals in Section 402(g) of the Code.  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)                                 Subject to
Section 4.9, 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—


 


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


 


(2)                                  the lesser of—


 


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


 


(B)                                the actual
deferral percentage of the group of all other eligible Employees for the 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 


 


15

















 


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 Section 4979 of the
Code).  In no event, however, will the
excess contributions be left 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 Section 401(a)(4) of the Code and Section 410(b) of the Code
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 Section 401(k) of the Code under which
the Highly Compensated Employee is eligible as a single plan.


 


(c)                                  Subject to
Section 4.9, 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 Plan Year; or


 


(2)                                  the lesser of —


 


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


 


(B)                                the
contribution percentage of the group of all other eligible Employees for the
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


 


16

















 


(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.  The total amount of the reduction will be determined by reducing
the contribution ratio of the Highly Compensated Employee with the highest
contribution ratio to the higher of the contribution ratio necessary to satisfy
the limitation or the contribution ratio of the Highly Compensated Employee
with the next highest contribution 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 Employee
After-Tax Contributions of the Highly Compensated Employee with the highest
dollar amount of Employee After-Tax Contributions and Employer Matching
Contributions by the lesser of the total amount of the required reduction or
the amount required to cause that Participant’s Employee After-Tax
Contributions and Employer Matching Contributions to equal those of the Highly
Compensated Employee with the next highest dollar amount of Employee After-Tax
Contributions and Employer Matching Contributions.  This process will be repeated until the entire amount of
reduction has been allocated.


 


Any reduction
in the Employee After-Tax Contributions and Employer Matching 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 Employee After-Tax Contributions and Employer Matching Contributions were
made are not subject to excise tax under Section 4979 of the Code).  In no event, however, will the excess
contributions be left undistributed any later than the last day of the Plan
Year following the Plan Year in which the excess contributions were made.


 


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 Section 401(a)(4) of the Code and Section 410(b) of
the Code will be treated as made under a single plan.  If any plan is permissively aggregated with this Plan for purposes
of Section 401(m) of the Code, the aggregated plans must also satisfy
Section 401(a)(4) of the Code and Section 410(b) of the Code 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 Section 401(m) of the Code 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 and
Section 4.6, Compensation means an Employee’s compensation as defined in
Section 414(s) of the Code.  The
Compensation of each Employee that may be taken into account under the Plan
will not exceed the first $200,000 of an 


 


17

















 


Employee’s Compensation (as
adjusted by the Secretary of the Treasury under Section 401(a)(17) of the
Code).


 


(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 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);


 


(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


 


(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.


 


18

















 


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


 


4.5                               Contributions Not Contingent on Profits.


 


As described
in Section 1.4, a portion of this Plan is designated as a profit sharing
plan under Section 401(a) of the Code. 
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);


 


(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


 


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


 


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


 


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


 


19

















 


(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 Section 415(e)(2) of the Code) and the defined contribution plan fraction
(as defined in Section 415(e)(3) of the Code) for the Plan Year shall 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 Profit Sharing Contributions or any
part thereof will be placed in a suspense account;


 


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


 


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


 


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
Section 401(a) of the Code and exempt from tax under Section 501(a)
of the Code, less any amounts considered to be employee after-tax
contributions; or


 


20

















 


(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.


 


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


 


4.9                               ADP/ACP Safe Harbor.


 


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


 


(b)                                 If the Plan’s
definition of “Compensation” fails to satisfy the nondiscrimination
requirements of Treasury Regulation § 1.414(s)-1(d)(3) for a Plan Year, for
purposes of this Section 4.9 the amount of the Compensation of each of the
Participants described below for the Plan Year shall be increased in
incremental and successive amounts under the following leveling method:


 


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


 


(2)                                  The process
described in Subsection 4.9(b)(1) shall be repeated until the Plan’s
definition of “Compensation” passes the nondiscrimination test described in
this Section 4.9(b) for the Plan Year.


 


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


 


(1)                                  The Employer
Matching Contribution that he would be entitled to receive under
Subsection 4.3(a) if the amount of his Deferred Compensation Contributions
was deemed to be equal to the product of (A) the percentage 


 


21

















 


determined by dividing the
amount of his Deferred Compensation Contributions by his Compensation (as
determined without regard to this Section 4.9) multiplied by (B) his
Compensation (as recalculated under this Section 4.9), over


 


(2)                                  The actual
amount of Employer Matching Contributions made for him pursuant to
Subsection 4.3(a).


 


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


 


(1)                                  The term “Safe
Harbor NHCE” shall mean, for any Plan Year, a Participant who received an
Employer Matching Contribution pursuant to Subsection 4.3(a) and who is
not a Highly Compensated Employee.


 


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


 


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


 


4.10                        Profit Sharing
Contributions.


 


(a)                                  Balanced Profit Sharing Contributions.  Each Employer may, in its discretion, make a Balanced Profit
Sharing Contribution to the Plan for a Plan Year in an amount determined by the
Company.  Any Balanced Profit Sharing
Contribution made by an Employer for a Plan Year shall be allocated among
Balanced Program Employees (as defined in Subsection 4.10(c) below) who are
employed with the Employer as Balanced Program Employees on the last day of the
Plan Year.  The allocable share of each
such Balanced Program Employee shall be in the ratio which his Profit Sharing
Earnings (as defined in Subsection 4.10(c) below) bears to the aggregate of
such Profit Sharing Earnings for all such Balanced Program Employees.


 


(b)                                 Investor Profit Sharing Contributions.  Each Employer may, in its discretion, make an Investor Profit
Sharing Contribution to the Plan for a Plan Year in an amount determined by the
Company.  Any Investor Profit Sharing
Contribution made by an Employer for a Plan Year shall be allocated among
Investor Program Employees (as defined in Subsection 4.10(c) below) who are
employed with the Employer as Investor Program Employees on the last day of the
Plan Year.  The allocable share of each
such Investor Program Employee shall be in the ratio which his Profit Sharing
Earnings (as defined in Subsection 4.10(c) below) bears to the aggregate of
such Profit Sharing Earnings for all such Investor Program Employees.


 


22

















 


(c)                                  Definitions.


 


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


 


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


 


(3)                                  “Profit Sharing Earnings” means, with respect to any
Employee for any period of reference, the sum of the Employee’s:  (a) Base Salary or Base Wage,
(b) Overtime Pay, (c) Shift Premiums, (d) Work Schedule
Recognition Pay, (e) Holiday Premiums, (f) Accrued Vacation Pay,
(g) Performance Lump Sum Pay, and (h) Annual Performance Cash
Awards.  “Earnings” does not include (a) reimbursements
or other expense allowances, (b) fringe benefits (cash and noncash) other
than those named in the preceding sentence, (c) moving and relocation
expenses, (d) deferred compensation, (e) welfare benefits,
(f) Long-Term Performance Awards, (g) Executive Individual Incentive
Awards, (h) other forms of compensation or remuneration that are not
specifically named in the preceding sentence, or (i) any payments received
by an Employee from any Affiliate that is not an Employer.  Notwithstanding any other provision of the
Plan to the contrary, Profit Sharing Earnings with respect to any period ending
prior to the date on which an Employee first became eligible to participate in
the allocation of Profit Sharing Contributions shall be disregarded in
determining the amount of the Employee’s allocable share.  For purposes of this paragraph (3):


 


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


 


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


 


23

















 


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


 


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


 


(D)                               “Shift
Premiums” means, with respect to a Non-Exempt Employee, the compensation
received as a premium for services performed for the relevant period for
working a shift other than the Employer’s regular day shift pursuant to the
Employer’s applicable policy.


 


(E)                                 “Work Schedule
Recognition Pay” means, with respect to an Exempt Employee, the compensation
received as remuneration for services performed for the relevant period for
working a shift other than the Employer’s regular day shift pursuant to the
Employer’s applicable policy.


 


(F)                                 “Holiday
Premiums” means, with respect to a Non-Exempt Employee, the compensation received
as a premium for services performed for the relevant period for working on a
holiday recognized by the Employer pursuant to its applicable policy.


 


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


 


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


 


(I)                                    “Annual
Performance Cash Award” means, with respect to an Employee, the cash award
received by the Employee under the provisions of an Employer’s annual bonus or
incentive pay plan or program, including, but without limitation because of
enumeration, the Cinergy Annual Incentive Plan, the Cinergy Non-Union
Employees’ Incentive Plan, or any successor plan.


 


24

















 


(J)                                   “Long-Term
Performance Awards” means, with respect to an Employee, the cash or stock-based
award received by the Employee pursuant to the provisions of an Employer’s
long-term bonus or incentive pay plan or program, including, but without
limitation because of enumeration, the Cinergy Performance Shares Plan or the
Cinergy 1996 Long-Term Incentive Compensation Plan.


 


(K)                               “Executive
Individual Incentive Awards” means, with respect to an Employee, any cash or
stock-based award (other than Annual Performance Cash Awards) received by a
Highly Compensated Employee pursuant to the terms of any individualized bonus
or incentive pay plan or program, including, but without any limitation because
of enumeration, any retention or signing bonus.


 


(d)                                 Contributions of Cinergy Stock.  Profit Sharing 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 Profit Sharing
Contribution determined under (a) or (b) by the closing price of Cinergy Stock
on the New York Stock Exchange for the date the Profit Sharing Contributions
are made to the Trust.  The Company may
use either authorized and unissued shares of Common Stock, treasury shares or
shares of Common Stock acquired on the open market, in private transactions or
otherwise, or a combination of the foregoing, for purposes of making Profit
Sharing Contributions.


 


ARTICLE 5.



VESTING IN
ACCOUNTS


 


5.1                               All Accounts Except Profit Sharing Contributions Account.


 


A Member shall
at all times be fully vested and have a nonforfeitable interest in his
After-Tax Contributions Account, Deferred Compensation Contributions Account,
Employer Match Account, ESOP Transfer Account, Matching Contributions Account
and Rollover Contributions Account.


 


5.2                               Profit Sharing
Contributions Account.


 


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


 


5.3                               Forfeitures.


 


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


 


25

















 


his Account as
of the Member’s termination of employment. 
If the Member receives a distribution of the entire vested portion of
his Account or is deemed to have received a distribution, the non-vested
portion of the Member’s Profit Sharing Contributions Account shall be forfeited
and treated as a forfeiture upon such distribution or deemed distribution.  If the Member does not receive (or is not
deemed to have received) a distribution of the entire vested portion of his
Account prior to a Period of Severance of five years, the non-vested portion of
the Member’s Profit Sharing Account shall be forfeited and treated as a
forfeiture upon the Member having a Period of Severance of five years.  Any forfeitures (as adjusted for interim
gains or losses) shall be used to reduce the amount of contributions required
to be made by the Employer under the Plan (and any such forfeitures shall be
allocated in the manner that the contributions that would have been made by the
Employer but for this provision would have been allocated) or if the Company
elects not to use the forfeitures to reduce the amount of contributions
required by the Employer, then to pay expenses incurred in the administration
of the Plan.  A Member or former Member
who forfeited his Profit Sharing Contributions Account in accordance with this
Section 5.3 prior to a Period of Severance of five years and who again becomes
an Employee shall have his forfeited amounts (without adjustment for interim
gains or losses) recredited to a new Profit Sharing Contributions Account in
his name if and only if his Years of Service for the period prior to his
termination of employment is aggregated with his Years of Service following
reemployment in accordance with Subsection 2.1(ll).


 


ARTICLE 6.



DISTRIBUTIONS
AND WITHDRAWALS


 


6.1                               Distribution Upon Retirement, Death, Disability, or
Other Termination of Employment.


 


Upon a
Member’s termination of employment for any reason, including retirement, death,
Disability or other termination of employment, the vested 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. 
For purposes of the Plan, the Member’s Beneficiary is the surviving
spouse and will receive the vested amount of the Member’s Account unless the
spouse consents to the designation of another Beneficiary or Beneficiaries as
described in Section 14.1.


 


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 and 6.4 (and,
if applicable, Section 5.3).


 


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 vested portion of the Member’s Account balance
will be distributed commencing not later than April 1 of the year
following the later of—


 


26

















 


(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 vested portion 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 vested
portion of the Member’s Account to be distributed pursuant to Section 6.1
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 vested portion 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 in
accordance with rules prescribed by the Plan Administrator. Unless the Member
elects otherwise, distribution of the vested portion 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;


 


(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, if a Member dies after the Member’s
termination of employment but prior to receiving the full distribution of the
vested portion of the Member’s Account to which the Member is entitled under
this Article 6, any unpaid balance of the vested portion 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 Section 401(a)(9)
of the Code.  Provisions of the Plan
regarding payment of distributions will be interpreted and applied in
accordance with Section 401(a)(9) of the Code and interpretive regulations,
including proposed regulation 1.401(a)(9)-2, which will supersede any contrary
provisions of the Plan.  With respect to
distributions under the Plan made in calendar years beginning on or after
January 1, 2002, the Plan will apply the minimum distribution requirements
of Section 401(a)(9) of the Code in accordance with the regulations under
Section 401(a)(9) of the Code that 


 


27

















 


were proposed in
January 2001, notwithstanding any provision of the Plan to the
contrary.  This amendment shall continue
in effect until the end of the last calendar year beginning before the
effective date of final regulations under Section 401(a)(9) of the Code or
such other date specified in guidance published by the Internal Revenue
Service.


 


(f)                                    In the case of
a Member who is a “5-percent owner” (as defined in Section 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 and 8.4 pending payment.


 


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


 


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 may be in shares of Cinergy Stock (with fractional shares in
cash), if requested by the Member or Beneficiary.  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 and 8.4 pending
payment.  Notwithstanding the foregoing,
if the charter or bylaws of the Company or an Affiliate restrict the ownership
of substantially all outstanding shares of Cinergy Stock to current Employees
and the Trust, the distribution of the portion of a Participant’s Account
invested in the Cinergy Stock Fund may be made entirely in cash without
granting him the right to demand distribution in Cinergy Stock.


 


(b)                                 Installment Payments.  Each Participant may elect to receive a distribution in
substantially equal 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 vested portion of the Member’s
Account as of the Valuation Date of the payment by the remaining number of
annual installments.


 


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


 


28

















 


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


 


If a Member
dies prior to commencement of distribution of his Account, and the value of the
vested portion of his Account balance exceeds $5,000, the Member’s Beneficiary
may elect to receive distribution of the vested portion 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 fifth anniversary of the Member’s death.


 


The amount of
each payment will be determined by dividing the value of the vested portion 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 6.6 (and for Plan
Years commencing prior to January 1, 2000, Section 6.4), 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 Section 401(a) of the Code (and funded under a trust
that is qualified under Section 501(a) of the Code) 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 Section 401(a)(31)(C) of the Code.


 


29

















 


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 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 Section 213(d) of the Code 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 which the Commissioner to the Internal Revenue Service, through
the publication of revenue rulings, notices and other guidance of general applicability,
may from time to time designate as a deemed immediate and heavy financial need
as provided in Treasury Regulation Section 1.401-1(d)(2)(iv)(C).


 


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 (including dividend
distributions, if available, pursuant to Section 14.9(e) of the Plan) 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 


 


30

















 


(6-month
period for distributions following December 31, 2001) following receipt of the
hardship distribution; and


 


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


 


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).


 


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 will 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.


 


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.


 


31

















 


(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 —


 


(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 will 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’ will be made at least quarterly.


 


(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 (other than a withdrawal under
Section 6.6) 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.


 


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


 


32

















 


jurisdiction
over the Participant.  Any defaulted
loan will be considered outstanding to the Participant for all purposes until
the loan is repaid in full.


 


The Plan
Administrator may establish other nondiscriminatory rules relating to loans
made under this section.


 


In the
exercise of the discretion conferred upon the Plan Administrator in this
section, all Participants under similar circumstances will be treated alike,
and the provisions of this 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 vested portion of the balance in his Account in accordance with
procedures established by 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 in an amount that would cause any
outstanding loan to the Participant to violate Section 6.5.


 


(b)                                 Withdrawals of After-Tax Contributions.  A Participant may elect to withdraw any or all of the balance in
the Participant’s Employee After-Tax Contributions Account in accordance with
procedures established by 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.


 


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 accordance with
procedures established by the Plan Administrator.


 


33

















 


(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
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; provided, however, that each Participant who commences
participation as of his Employment Commencement Date will have his Deferred
Compensation Contributions automatically deposited in one or more Investment
Funds selected by the Plan Administrator and 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.


 


(e)                                  Investments in the Cinergy Stock Fund.  The Company may use either authorized and unissued shares of
Cinergy Stock, treasury shares or shares of Cinergy Stock acquired on the open
market, in private transactions or otherwise, or a combination of the
foregoing, for purposes of effecting a Member’s election to invest the Member’s
ESOP Transfer, Employer Match, After-Tax, Deferred Compensation, and Rollover
Contributions.


 


(f)                                    Initial Allocation of Deferred Compensation Contributions and Employee
After-Tax Contributions.  Deferred
Compensation Contributions and Employee After-Tax Contributions shall initially
be allocated to the portion of the Plan that is not comprised of the ESOP
Feature.  Thereafter, to the extent that
a Member directs the investment of such contributions into the Cinergy Stock
Fund pursuant to Article 7 of the Plan, such contributions shall be transferred
to the ESOP Feature unless and until the Member directs otherwise pursuant to
Article 7 of the Plan.


 


7.2                               Matching
Contributions Account and Profit Sharing Contributions Account.


 


(a)                                  Investment of Contributions.  Employer Matching Contributions and Profit Sharing 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 and Profit Sharing Contributions
Account will remain invested in the Cinergy Stock Fund until distributed under
Article 6, and may not be reallocated among the Investment Funds.  A Member who has attained age 50 may
reallocate assets in the Matching Contributions


 


34

















 


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


 


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 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.


 


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.


 


35

















 


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 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.


 


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.


 


36

















 


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 Section 404 of the Code, 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.


 


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 elected to be 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.


 


37

















 


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 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. 
Notwithstanding any provision of the Plan to the contrary, during any
conversion period, in accordance with procedures established by the Plan
Administrator, the Plan Administrator may temporarily suspend, in whole or in
part, certain provisions of the Plan, which may include, but are not limited
to, a Participant’s right to change his contribution election, a Member’s right
to change his investment election and a Member’s right to borrow or withdraw
from his Account or obtain a distribution for his Account.


 


38

















 


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


 


(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 


 


39

















 


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 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.


 


40

















 


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.


 


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 Sections 401(a)
and 501(a) of the Code, 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.


 


41

















 


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
“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 unless the conditions of
Section 411(a)(10) of the Code and Section 11.4 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 


 


42

















 


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


 


(a)                                  the amendment
is adopted;


 


(b)                                 the amendment
becomes effective; or


 


(c)                                  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.


 


ARTICLE 12.



TOP-HEAVY
PROVISIONS


 


12.1                        Application of Top-Heavy Provisions.


 


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


 


(b)                                 Aggregation Group Determination.


 


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


 


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


 


(c)                                  Calculations.  The Plan
Administrator will have responsibility to make all calculations to determine
whether this Plan is top-heavy.


 


12.2                        Definitions.


 


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


 


43

















 


include any other qualified
plan maintained by an Employer or nonparticipating Affiliate if the expanded
Aggregation Group meets the requirements of Section 401(a)(4) of the Code and
Section 410 of the Code.


 


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


 


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


 


(d)                                 “Key Employee” means a Member who is a “key employee,” as defined
in Section 416(i) of the Code.  Any
Employee who is not a Key Employee shall be a “non-Key employee” for purposes
of applying this Article 12.


 


(e)                                  “Section 416 Account” means—


 


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


 


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


 


(3)                                  the amount of
distributions to the Member or Beneficiary during the five-year period ending
on the Determination Date other than a distribution that is a tax-free Rollover
Contribution (or similar transfer) that is not initiated by the Member or that
is contributed to a plan that is maintained by an Employer or nonparticipating
Affiliate;


 


reduced by—


 


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


 


44

















 


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


 


12.3                        Minimum Contribution.


 


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


 


(b)                                 Exception.  The
contribution rate specified in Subsection (a) will not exceed the
percentage at which Employer contributions and forfeitures are allocated under
the plans of the Aggregation Group to the account of the Key Employee for whom
that percentage is the highest for the Plan Year.  For the purpose of this Subsection (b), the percentage for
each Key Employee shall be determined by dividing the Employer contributions
(excluding Employer Matching Contributions and Tax-Deferred Contributions) and
forfeitures for the Key Employee by the amount of the Key Employee’s
Compensation for the year.


 


(c)                                  Multiple Plans.  If this
Plan is determined to be top-heavy under the provisions of Section 12.1
with respect to a Plan Year, any Member who is a non-Key Employee covered under
this Plan and under a defined benefit plan maintained by the Employers and
nonparticipating Affiliates will receive a minimum contribution determined by
substituting 5 percent for 3 percent in applying the provisions of
Subsection (a).  However, no
minimum contribution under this Section will be allocable to any non-Key
Employee who participates in a defined benefit plan maintained by an Employer
or nonparticipating Affiliate and who receives the minimum benefit described in
Section 416(c)(1) of the Code under the defined benefit plan.


 


12.4                        Limit on Annual Additions: Combined Plan Limit.


 


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


 


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


 


45

















 


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


 


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


 


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


 


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


 


(1)                                  no Employer
contributions, forfeitures, or voluntary nondeductible contributions allocated
to the Member, and


 


(2)                                  no accruals
under a qualified defined benefit plan for the Member.


 


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


 


12.5                        Collective Bargaining Agreements.


 


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


 


ARTICLE 13.



PARTICIPATION
IN AND WITHDRAWAL FROM THE PLAN BY AN EMPLOYER


 


13.1                        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.


 


46

















 


13.2                        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 Section 501 of the Code, or to a group annuity contract
qualified under Section 401 of the Code, 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.


 


13.3                        Company as Agent for Employers.


 


Each Affiliate
that becomes a participating Employer pursuant to Section 13.1 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 13.2.  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.


 


ARTICLE 14.



MISCELLANEOUS


 


14.1                        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 vested 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 


 


47

















 


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.


 


14.2                        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 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.


 


14.3                        Nonalienation.


 


Except as
provided in Section 401(a)(13) of the Code, 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 Section 414(p) of the Code.  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.


 


48

















 


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
Section 414(p) of the Code.  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.


 


14.4                        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.


 


14.5                        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.


 


14.6                        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 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.


 


14.7                        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).


 


14.8                        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 Section 401(a) of the Code; and


 


49

















 


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


 


14.9                        Special ESOP Provisions.


 


(a)                                  Right of First
Refusal.


 


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


 


(b)                                 Put Option.


 


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


 


50

















 


the fair
market value determined as of the Valuation Date coinciding with or immediately
preceding the date of exercise.  Such
“put” option shall be exercised by notifying the Company in writing.  The terms of payment for the purchase of
such shares shall be reasonable.  In the
case of deferral of payment, adequate security and a reasonable rate of
interest shall be provided for any credit extended, and cumulative payments as
of any given date shall be no less than the aggregate of reasonable periodic
payments as of such date.  Periodic
payments shall be considered reasonable if annual installments, commencing
within 30 days after the “put” is exercised, are substantially equal and if the
payment period extends for not more than five years after the date the “put” is
exercised; provided, however, that such period may be extended to a date no
later than the earlier of ten years from the date the “put” is exercised or the
date the proceeds of any loan used to acquire the shares subject to the “put”
are entirely repaid.


 


(c)                                  Other Options.


 


Except as
otherwise provided in this Section, no person may be required to sell shares
held under the ESOP Feature to the Company, nor may the Trust enter into an
agreement which obligates the Trust to purchase such shares at an indefinite
time determined upon the happening of an event such as the death of a
shareholder.


 


(d)                                 Nonterminable
Protections and Rights.


 


Except as
provided in this Section or as otherwise required by applicable law, no share
held under the ESOP Feature may be subject to a put, call, or other option, or
buy-sell or similar arrangement while held by or when distributed from the
Trust, whether or not the ESOP Feature ceases to be an employee stock ownership
plan.  Moreover, if the Trustee holds or
distributes any shares held under the ESOP Feature which are not readily
tradeable on an established securities market when distributed or which cease
to be so tradeable within the otherwise applicable “put” option periods, and
the ESOP Feature ceases to be an employee stock ownership plan or the loan that
financed the purchase of such shares is repaid, the “put” option described
above shall be nonterminable with respect to such shares; provided, however,
that in the case of such shares ceasing to be so tradeable within the otherwise
applicable “put” option periods, the Company shall notify each distributee
described above who is then holding any such shares in writing on or before the
tenth day after the date the shares cease to be so tradeable that for the
remainder of such period or periods such shares are subject to a “put” option
and the terms thereof, all as set forth above; and, provided, further, that the
number of days between such tenth day and the date of which notice is actually
given, if later than on the tenth day, shall be added to the duration of the
“put” option.


 


51

















 


(e)                                  Dividend
Distributions.


 


If so
determined by the Plan Administrator, and in accordance with procedures
established by the Plan Administrator, any cash dividends payable on shares
held in the Cinergy Stock Fund attributable to the Accounts of Members and
Beneficiaries may be paid currently, or within ninety (90) days after the end
of the Plan Year in which the dividends are paid to the Trust, in cash to the
Members and Beneficiaries on a nondiscriminatory basis, or such dividends may
be paid directly to the Members and Beneficiaries, or the dividends may be paid
to the Plan and reinvested in the Cinergy Stock Fund.  If the Plan Administrator so determines, each Member or
Beneficiary to whom Cinergy Stock is attributable to their Accounts on the
record date for such dividend shall have the right to elect whether such
dividends (1) will be paid in cash to the Member or Beneficiary, or (2) will
remain in the Member’s or Beneficiary’s Account and be reinvested in Cinergy
Stock through the Cinergy Stock Fund.


 


(f)                                    Special ESOP
Valuation.


 


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


 


14.10                 Electronic
Media.


 


Notwithstanding
any provision of the Plan to the contrary, including any provision which
requires the use of a written instrument, to the extent permitted by applicable
law, the Plan Administrator may establish procedures for the use of electronic
media in communications and transactions between the Plan or the Plan
Administrator and Participants and Beneficiaries.  Electronic media may include, but are not limited to, e-mail, the
Internet, intranet systems and automated telephonic response systems.


 


* * * * * * * * * *


 


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


 


 


	
   

  	
  CINERGY CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
  Timothy J.
  Verhagen

  
	
   

  	
   

  	
  Vice
  President

  
	
   

  	
   

  	
  Human
  Resources

  



 


52

















 


CINERGY CORP.
NON-UNION

EMPLOYEES’ 401(K) PLAN


 


(Effective as of January 1, 2003)


 


ADDENDUM



EGTRRA AND 401(a)(9)
MODEL PROVISIONS


 


PREAMBLE


 


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


 


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


 


SECTION
1.  LIMITATIONS ON CONTRIBUTIONS


 


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


 


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


 


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


 


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


 


The compensation limit referred
to in (b) shall not apply to any contribution for medical benefits after separation
from service (within the meaning of Section 401(h) or
Section 419A(f)(2) of the Code) which is otherwise treated as an annual
addition.


 


SECTION
2.  INCREASE IN COMPENSATION LIMIT


 


The annual compensation of each
Participant taken into account in determining allocations for any Plan Year
beginning after December 31, 2001, shall not exceed $200,000, as adjusted
for cost-of-living increases in accordance with Section 401(a)(17)(B) of
the Code.  Annual compensation means
compensation during the Plan Year or such other consecutive 12–month
period over which compensation is otherwise determined under the Plan (the
determination 


 


1

















 


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


 


SECTION
3.  MODIFICATION OF TOP-HEAVY RULES


 


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


 


2.  Determination of Top-heavy Status.


 


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


 


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


 


2.2.1.  Distributions During Year Ending On the
Determination Date.  The present
values of accrued benefits and the amounts of account balances of an employee
as of the Determination Date shall be increased by the distributions made with
respect to the employee under the Plan and any plan aggregated with the Plan
under Section 416(g)(2) of the Code during the 1-year period ending on the
Determination Date.  The preceding
sentence shall also apply to distributions under a terminated plan which, had
it not been terminated, would have been aggregated with the Plan under
Section 416(g)(2)(A)(i) of the Code. 
In the case of a distribution made for a reason other than separation
from service, death, or disability, this provision shall be applied by
substituting “5–year period” for “1–year period.”


 


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


 


3.  Minimum Benefits.


 


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


 


2

















 


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


 


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


 


SECTION
4.  DIRECT ROLLOVERS OF PLAN
DISTRIBUTIONS


 


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


 


2.  Modification of Definition of Eligible Retirement Plan.  For purposes of the direct rollover
provisions in Section 6.3(d) of the Plan, an eligible retirement plan
shall also mean an annuity contract described in Section 403(b) of the
Code and an eligible plan under Section 457(b) of the Code which is
maintained by a state, political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state and which agrees
to separately account for amounts transferred into such plan from this
Plan.  The definition of eligible
retirement plan shall also apply in the case of a distribution to a surviving
spouse, or to a spouse or former spouse who is the alternate payee under a
qualified domestic relation order, as defined in Section 414(p) of the
Code.


 


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


 


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


 


SECTION
5.  ROLLOVERS FROM OTHER PLANS


 


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


 


Direct
Rollovers:


 


The Plan will accept a direct
rollover of an eligible rollover distribution from: (1) a qualified plan
described in Section 401(a) or 403(a) of the Code, excluding after-tax employee
contributions, 


 


3

















 


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


 


Participant
Rollover Contributions from Other Plans:


 


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


 


Participant
Rollover Contributions from IRAs:


 


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


 


SECTION
6.  ROLLOVERS DISREGARDED IN INVOLUNTARY
CASH-OUTS


 


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


 


2.  Rollovers disregarded in determining value of account balance
for involuntary distributions. For purposes of Subsection 6.2 of the Plan,
the value of a participant’s nonforfeitable account balance shall be determined
without regard to that portion of the account balance that is attributable to
rollover contributions (and earnings allocable thereto) within the meaning of
Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16) of the
Code.  If the value of the participant’s
nonforfeitable account balance as so determined is $5,000 or less, the Plan
shall immediately distribute the participant’s entire nonforfeitable account
balance.


 


SECTION
7.  REPEAL OF MULTIPLE USE TEST


 


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


 


SECTION
8.  ELECTIVE DEFERRALS — CONTRIBUTION
LIMITATION


 


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


 


4

















 


SECTION
9.  CATCH-UP CONTRIBUTIONS


 


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


 


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


 


SECTION
10.  SUSPENSION PERIOD FOLLOWING
HARDSHIP DISTRIBUTION


 


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


 


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


 


SECTION
11.  DISTRIBUTION UPON SEVERANCE FROM
EMPLOYMENT


 


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


 


2.  New Distributable Event. 
A Participant’s elective deferrals, qualified nonelective contributions,
qualified matching contributions, and earnings attributable to these
contributions shall be distributed on account of the Participant’s severance
from employment.  However, such a
distribution shall be subject to the other provisions of the Plan regarding
distributions, other than provisions that require a separation from service
before such amounts may be distributed.


 


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SECTION
12.  MINIMUM DISTRIBUTION REQUIREMENTS.


 


Minimum Distribution Requirements Article.


 


Section 1.  General Rules.


 


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


 


1.2.  Precedence.  The
requirements of this article will take precedence over any inconsistent
provisions of the Plan.


 


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


 


1.4.  TEFRA Section 242(b)(2) Elections.  Notwithstanding the other provisions of this
article, distributions may be made under a designation made before
January 1, 1984, in accordance with section 242(b)(2) of the Tax
Equity and Fiscal Responsibility Act (TEFRA) and the provisions of the Plan
that relate to section 242(b)(2) of TEFRA.


 


Section 2.  Time and Manner of Distribution.


 


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


 


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


 


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


 


(b)  If the Participant’s surviving spouse is not
the Participant’s sole designated beneficiary, then, except as provided in
section 2.2(e) below, distributions to the designated beneficiary will begin by
December 31 of the calendar year immediately following the calendar year
in which the Participant died.


 


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


 


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


 


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


 


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


 


For purposes of this
section 2.2 and section 4, unless section 2.2(d) applies,
distributions are considered to begin on the Participant’s required beginning
date.  If section 2.2(d) applies,
distributions are considered to begin on the date distributions are required to
begin to the surviving spouse under section 2.2(a).  If distributions under an annuity purchased
from an insurance company irrevocably commence to the Participant before the
Participant’s required beginning date (or to the Participant’s surviving spouse
before the date distributions are required to begin to the surviving spouse
under section 2.2(a)), the date distributions are considered to begin is
the date distributions actually commence.


 


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


 


Section 3.  Required Minimum Distributions During
Participant’s Lifetime.


 


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


 


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


 


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(b)  if the Participant’s sole designated
beneficiary for the distribution calendar year is the Participant’s spouse, the
quotient obtained by dividing the Participant’s account balance by the number
in the Joint and Last Survivor Table set forth in Section 1.401(a)(9)-9 of
the Treasury regulations, using the Participant’s and spouse’s attained ages as
of the Participant’s and spouse’s birthdays in the distribution calendar year.


 


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


 


Section 4.  Required Minimum Distributions After
Participant’s Death.


 


4.1.  Death On or After Date Distributions Begin.


 


(a)  Participant Survived by Designated
Beneficiary.  If the Participant
dies on or after the date distributions begin and there is a designated
beneficiary, the minimum amount that will be distributed for each distribution
calendar year after the year of the Participant’s death is the quotient
obtained by dividing the Participant’s account balance by the longer of the
remaining life expectancy of the Participant or the remaining life expectancy
of the Participant’s designated beneficiary, determined as follows:


 


(1)  The Participant’s remaining life expectancy
is calculated using the age of the Participant in the year of death, reduced by
one for each subsequent year.


 


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


 


(3)  If the Participant’s surviving spouse is not
the Participant’s sole designated beneficiary, the designated beneficiary’s
remaining life expectancy is calculated using the age of the beneficiary in the
year following the year of the Participant’s death, reduced by one for each
subsequent year.


 


(b)  No Designated Beneficiary.  If the Participant dies on or after the date
distributions begin and there is no designated beneficiary as of
September 30 of the year after the year of the Participant’s death, the
minimum amount that will be distributed for each distribution calendar year
after the year of the Participant’s death is the quotient obtained by dividing
the Participant’s account balance by the Participant’s remaining life
expectancy calculated using the age of the Participant in the year of death,
reduced by one for each subsequent year.


 


8

















 


4.2.  Death Before Date Distributions Begin.


 


(a)  Participant Survived by Designated
Beneficiary.  Except as provided in
section 2.2(e), if the Participant dies before the date distributions begin and
there is a designated beneficiary, the minimum amount that will be distributed
for each distribution calendar year after the year of the Participant’s death
is the quotient obtained by dividing the Participant’s account balance by the
remaining life expectancy of the Participant’s designated beneficiary, determined
as provided in section 4.1.


 


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


 


(c)  Death of Surviving Spouse Before
Distributions to Surviving Spouse Are Required to Begin.  If the Participant dies before the date
distributions begin, the Participant’s surviving spouse is the Participant’s
sole designated beneficiary, and the surviving spouse dies before distributions
are required to begin to the surviving spouse under section 2.2(a), this
section 4.2 will apply as if the surviving spouse were the Participant.


 


Section 5.  Definitions.


 


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


 


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


 


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


 


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


 


9

















 


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


 


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


 


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