Document:

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CONFORMED TO 30TH MARCH 1999

                                  CINERGY CORP.

     ----------------------------------------------------------------------

                                      RULES
                                     OF THE
                               1998 CINERGY CORP.
                                SHARESAVE SCHEME

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                (Adopted by a resolution of the Directors on 16th
               December 1998 and amended on 11th February 1999 and
                 approved by the Inland Revenue under the Income
                and Corporation Taxes Act 1988 on 3rd March 1999
                          under reference SRS 2185/IGB)

                                  HERBERT SMITH
                                 Exchange House
                                 Primrose Street
                                 London EC2A 2HS
                               Tel: 0171 374-8000
                               Fax: 0171 496-0043
                                    Ref: 281
                            Date: 12th February 1999

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                                  CINERGY CORP.

                                SHARESAVE SCHEME

                                    CONTENTS
                                                                           PAGE

1.     DEFINITIONS..........................................................1

2.     APPLICATION FOR OPTIONS..............................................6

3.     GRANT OF OPTIONS.....................................................8

4.     NUMBER OF SHARES IN RESPECT OF WHICH OPTIONS MAY BE GRANTED..........9

5.     RIGHTS OF EXERCISE AND LAPSE OF OPTIONS.............................10

6.     TAKEOVER, RECONSTRUCTION AND AMALGAMATION, AND LIQUIDATION..........13

7.     MANNER OF EXERCISE..................................................14

8.     TRANSFER OF SHARES..................................................16

9.     ADJUSTMENTS.........................................................16

10.    ADMINISTRATION......................................................17

11.    ALTERATIONS.........................................................18

12.    GENERAL ............................................................18

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                   RULES OF THE CINERGY CORP. SHARESAVE SCHEME

1.     DEFINITIONS

1.1    In this Scheme, the following words and expressions shall bear, unless
       the context otherwise requires, the meanings set forth below:

       "APPROPRIATE PERIOD"         the limit given by Paragraph 15(2) of
                                    Schedule 9 to the Taxes Act;

       "ASSOCIATED COMPANY"         an associated company of the Company within
                                    the meaning that expression bears in Section
                                    187(2) of the Taxes Act;

       "BONUS DATE"                 where Repayments under the Savings Contract
                                    made in connection with an Option are taken
                                    as including the 7 year bonus, the earliest
                                    date on which the 7 year bonus is payable
                                    and, in any other case, the earliest date on
                                    which any other bonus is payable under such
                                    Savings Contract;

       "THE COMMITTEE"              the Sharesave Committee of the Company as
                                    appointed by the Company by resolution on
                                    16th December 1998;

       "CLOSE COMPANY"              a close company as defined in Section 414(1)
                                    of the Taxes Act as varied by Paragraph 8 of
                                    Schedule 9 to the Taxes Act;

       "THE COMPANY"                Cinergy Corp. (registered under the laws of
                                    the State of Delaware in the United States
                                    of America);

       "CONTINUOUS SERVICE"         the meaning given to "continuous employment"
                                    in the Employment Rights Act 1996;

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       "CONTROL"                    the meaning given by Section 840 of the
                                    Taxes Act;

       "DATE OF GRANT"              the date on which an option is granted;

       "DATE OF INVITATION"         the date on which the Grantor invites
                                    applications for Options;

       "DEALING DAY"                any day on which the New York Stock Exchange
                                    is open for the transaction of business;

       "ELIGIBLE EMPLOYEE"          any individual who:

                                    (A) (1)     is an employee of a
                                                Participating Company or an
                                                executive director of a
                                                Participating Company, the
                                                latter on terms which require
                                                him to devote at least 25 hours
                                                a week (excluding meal breaks)
                                                to his duties; and

                                        (2)     is chargeable to tax in respect
                                                of his office or employment
                                                under Case I of Schedule E of
                                                the Taxes Act; and

                                        (3)     has such qualifying period (if
                                                any) of Continuous Service
                                                (being a period commencing not
                                                earlier than five years prior to
                                                the Date of Grant) as the
                                                Committee may determine; or

                                    (B)  any other employee (including an
                                         executive director) or category of
                                         employees whom the Committee may
                                         approve;

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       "EMPLOYEES' SHARE SCHEME"    the meaning given by Section 743 of the
                                    Companies Act 1985;

       "EXERCISE PRICE"             The US dollar equivalent at the applicable
                                    exchange rate at the date of exercise of the
                                    amount of Repayment under the Savings
                                    Contract entered into, such US dollar
                                    equivalent to be used to acquire up to the
                                    maximum shares possible at the date of
                                    exercise at the Option price;

       "GRANTOR"                    in relation to any Option, the Committee or
                                    the Trustee as the case may be being the
                                    person by whom the Option is to be or was
                                    granted pursuant to Rule 2.1;

       "THE NEW YORK STOCK
       EXCHANGE"                    New York Stock Exchange;

       "MARKET VALUE"               in relation to a Share on any day which is
                                    listed on the New York Stock Exchange, its
                                    middle market quotation;

       "MATERIAL INTEREST"          the meaning given by Section 187(3) of the
                                    Taxes Act;

       "MAXIMUM CONTRIBUTION"       the lesser of:

                                    (A)  such maximum monthly contribution as
                                         may be permitted pursuant to Paragraph
                                         24 of Schedule 9 to the Taxes Act; or

                                    (B)  such maximum monthly contribution as
                                         may be determined from time to time by
                                         the Committee;

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       "MEMBER OF A CONSORTIUM"     the meaning given by Section 187(7) of the
                                    Taxes Act;

       "MINIMUM CONTRIBUTION"       the minimum Monthly Contribution allowed by
                                    the Committee being an amount which is not
                                    less than the minimum Monthly Contribution
                                    permitted under the Savings Contract and not
                                    greater than L10 per month;

       "MONTHLY CONTRIBUTIONS"      monthly contributions agreed to be paid by a
                                    Participant under the Savings Contract made
                                    in connection with his Option;

       "OPTION"                     a right to purchase Shares under the Scheme
                                    which is either subsisting or (where the
                                    context so admits or requires) is proposed
                                    to be granted;

       "OPTION PRICE"               the US dollar price per Share, as determined
                                    by the Grantor, at which an Eligible
                                    Employee may acquire Shares upon the
                                    exercise of an Option being not less than 80
                                    per cent. of the Market Value on the Dealing
                                    Day preceding the Date of Invitation but
                                    subject to any adjustment pursuant to Rule
                                    9;

       "PARTICIPANT"                a director or employee, or former director
                                    or employee, to whom an Option has been
                                    granted, or (where the context so admits or
                                    requires) the personal representatives of
                                    any such person;

       "PARTICIPATING COMPANY"      (A)  the Company; and

                                    (B)  any other company which is under the
                                         Control of the Company, is a
                                         Subsidiary of the Company and is for
                                         the time being

                                                                               4
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                                         designated by the Committee as a
                                         Participating Company;

       "REPAYMENT"                  in relation to a Savings Contract, the
                                    aggregate of the 36 or 60 Monthly
                                    Contributions which the Participant has
                                    agreed to make and any bonus due at the
                                    Bonus Date;

       "SAVINGS CONTRACT"           a contract under a certified contractual
                                    savings scheme (within the meaning of
                                    Section 326 of the Taxes Act) approved by
                                    the Inland Revenue for the purpose of
                                    Schedule 9 to the Taxes Act;

       "THE SCHEME"                 this Cinergy Corp. Sharesave Scheme in its
                                    present form or as from time to time amended
                                    in accordance with the provisions hereof;

       "SHARE"                      a share in the capital of Company which
                                    satisfies the conditions specified in
                                    Paragraphs 10 to 14 (inclusive) of Schedule
                                    9 to the Taxes Act;

       "SPECIFIED AGE"              63 years of age;

       "SUBSIDIARY"                 the meaning given by Sections 736 and 736A
                                    of the Companies Act 1985;

       "TAXES ACT"                  the Income and Corporation Taxes Act 1988;

       "TRUSTEE"                    the trustee or trustees for the time being
                                    of any qualifying employee share ownership
                                    trust established by the Company pursuant to
                                    Schedule 5 to the Finance Act 1989 or any
                                    similar employees' share trust.

1.2    In this Scheme, unless the context requires otherwise:

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       (A)   the headings are inserted for convenience only and do not affect
             the interpretation of any Rule;

       (B)   a reference to a Rule is a reference to a Rule of this Scheme;

       (C)   a reference to a statute or statutory provision includes a
             reference:

             (1)    to that statute or provision as from time to time
                    consolidated, modified, re-enacted or replaced by any
                    statute or statutory provision;

             (2)    to any repealed statute or statutory provision which it
                    re-enacts (with or without modification); and

             (3)    to any subordinate legislation made under it;

       (D)   words in the singular include the plural, and vice versa;

       (E)   a reference to the masculine shall be treated as a reference to the
             feminine, and vice versa;

       (F)   if a period of time is specified and starts from a given day or the
             day of an act or event, it is to be calculated exclusive of that
             day;

       (G)   a reference to "a year" shall be a period calculated by reference
             to a previous or subsequent anniversary of a particular date.

2.     APPLICATION FOR OPTIONS

2.1    The Committee or, with the prior written approval of the Committee, the
       Trustee may, from time to time, invite applications for Options from
       all Eligible Employees, and any such invitation shall be in writing and
       shall include details of:

       (A)   eligibility;

       (B)   the Option Price (which shall be expressed in US Dollars);

       (C)   the minimum Monthly Contribution payable;

       (D)   the Maximum Contribution payable;

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       (E)   the period (or periods) the Savings Contracts are available;

       (F)   if a 5 year Savings Contract is taken out, whether, for the purpose
             of determining the number of Shares over which the Option is to be
             granted, the Repayment under the Savings Contract may be taken as
             including either the 5 year or the 7 year bonus;

       (G)   the date by which applications made pursuant to Rule 2.3 must be
             received (being neither earlier than 14 days nor later than 25 days
             after the Date of Invitation).

2.2    An application for an Option must incorporate or be accompanied by a
       proposal for a Savings Contract.

2.3    An application  for an Option shall be in writing in such form as the
       Grantor may from time to time prescribe save that it shall provide for
       the applicant to state:

       (A)   the Monthly Contributions (being a multiple of L1 and not less
             than the Minimum Monthly Contribution) to be made in connection
             with the Option for which application is made;

       (B)   that his proposed Monthly Contributions (when taken together with
             any Monthly Contributions he makes under any other Savings
             Contract) will not exceed the Maximum Contribution;

       (C)   if Eligible Employees may enter into a three or a five year Savings
             Contract, his choice in that respect;

       (D)   if Eligible Employees may elect for the Repayment under a five year
             Savings Contract to be taken as including either the five year or
             the seven year bonus, his election in that respect.

2.4    Proposals for a Savings Contract shall be limited to such building
       society, bank or European financial institution as the Committee may
       designate.

2.5    Each application shall be deemed to be for an Option over the largest
       whole number of Shares which can be acquired at the Option Price with
       the Repayment under the Savings

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       Contract entered into in connection with the Option. For this purpose
       the number of Shares should be determined by reference to the UK/US
       exchange rate on the date of exercise of the Option.

3.     GRANT OF OPTIONS

3.1    No Option shall be granted to any person if:

       (A)   at the Date of Grant that person shall have ceased to be an
             Eligible Employee; or

       (B)   that person has, or has had at any time within the 12 month period
             preceding the Date of Grant, a Material Interest in the issued
             ordinary share capital of a Close Company which is the Company or a
             company which has Control of the Company or is a Member of a
             Consortium which owns the Company.

3.2    Within 30 days of the earliest Dealing Day by reference to which the
       Option Price was fixed the Grantor may, subject to Rule 3.1 above, grant
       to each Eligible Employee who has submitted a valid application, an
       Option in respect of the number of Shares for which application has been
       deemed to be made under Rule 2.5.

3.3    The Company shall issue to each Participant an option certificate in such
       form (not inconsistent with the provisions of the Scheme) as the
       Committee may from time to time prescribe. Each such certificate shall
       specify the Date of Grant of the Option, the number and class of Shares
       over which the Option is granted, the Option Price and the Bonus Date.

3.4    Except as otherwise provided in these Rules, every Option shall be
       personal to the Participant to whom it is granted and shall not be
       transferable.

3.5    No amount shall be paid in respect of the grant of an Option.

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4.     NUMBER OF SHARES IN RESPECT OF WHICH OPTIONS MAY BE GRANTED

4.1    The maximum number of shares which may be allocated under the Scheme at
       the Date of Grant shall not exceed 0.5 percent of the issued ordinary
       share capital of the Company on 16th December 1998.

4.2    The limit in Rule 4.1 shall be increased, if necessary, at the date of
       exercise to ensure that the total contributions of the Participants under
       the Savings Contracts may be used to acquire up to the maximum number of
       Shares possible at the UK/US dollar exchange rate prevailing at the date
       of exercise at the Option Price.

4.3    In determining the above limits no account shall be taken of:

       (A)   any Shares where the right to acquire such shares was released,
             lapsed or otherwise became incapable of exercise;

       (B)   any Shares where the interest in such Shares was forfeited or
             otherwise became incapable of vesting; or

       (C)   any Shares which are comprised in options granted or awards made to
             replace grants or awards originally made under the scheme of
             another company.

4.4    References in this Rule to the "allocation" of Shares shall mean:

       (A)   in the case of any share option scheme:

             (i)  the placing by the Committee or the Trustee of unissued shares
                  under the option; and

             (ii) insofar as not taken into account under (i) above, any
                  subscription for Shares which are issued for the purpose of
                  satisfying any Option; and

       (B)   in relation to other types of Employees' Share Scheme, shall mean
             the issue and allotment of shares and references to "allocated"
             shall be construed accordingly.

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5.     RIGHTS OF EXERCISE AND LAPSE OF OPTIONS

5.1    (A)   Save as provided in Rules 5.2, 65.3, 5.4, 5.5 and Rule 6, an Option
             shall not be exercised earlier than the Bonus Date under the
             Savings Contract entered into in connection therewith.

       (B)   Save as provided in Rule 5.2, an Option shall not be exercised
             later than 6 months after the Bonus Date under the Savings Contract
             entered into in connection therewith.

       (C)   Save as provided in Rules 5.2, 5.3 and 5.4, an Option may only be
             exercised by a Participant whilst he is a director or employee of a
             Participating Company.

       (D)   An Option may not be exercised by a Participant if he has, or has
             had at any time within the 12 month period preceding the date of
             exercise, a Material Interest in the issued ordinary share capital
             of a Close Company which is the Company or a company which has
             Control of the Company or is a Member of a Consortium which owns
             the Company, nor may an Option be exercised by the personal
             representatives of a deceased Participant if the Participant had
             such a Material Interest at the date of his death.

5.2    An Option may be exercised by the personal representatives of a deceased
       Participant:

       (A)   within 12 months following the date of his death if such death
             occurs before the Bonus Date;

       (B)   within 12 months following the Bonus Date in the event of his
             death within 6 months after the Bonus Date.

5.3    An Option may be exercised by a Participant within 6 months following his
       ceasing to hold the office or employment by virtue of which he is
       eligible to participate in the Scheme by reason of:

(A)    injury or disability; or

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       (B)   redundancy within the meaning of the Employment Rights Act 1996; or

       (C)   retirement on reaching the Specified Age or any other age at which
             he is bound to retire in accordance with the terms of his contract
             of employment; or

       (D)   his office or employment being in a company of which the Company
             ceases to have Control; or

       (E)   the transfer of his contract of employment (which relates to a
             business or part of a business) to a person who is neither an
             Associated Company nor a company of which the Company has Control;
             or

       (F)   any other reason other than dismissal for gross misconduct, serious
             breach or non-observance of his contract of employment or failure
             or refusal to carry out the duties assigned to him thereunder, if
             such cessation of office or employment is more than 3 years after
             the Date of Grant.

5.4    If, at the Bonus Date, a  Participant  holds an office or  employment  in
       a company  which is not a  Participating Company but which is:-

       (A)   an Associated Company of the Company (but not because it was
             demerged by the Company); or

       (B)   a company of which the Company has Control,

       his Option may be exercised within six months of such Bonus Date.

5.5    An Option may be exercised by a Participant within 6 months following the
       date he reaches the Specified Age if he continues after that date to hold
       the office or employment by virtue of which he is eligible to participate
       in the Scheme.

5.6    No person shall be treated for the purposes of Rule 5.3 as ceasing to
       hold an office or employment by virtue of which that person is eligible
       to participate in the Scheme until that person ceases to hold any office
       or employment in the Company or any Associated Company or any company of
       which the Company has Control.

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5.7    An Option granted to a Participant shall lapse upon the occurrence of the
       earliest of the following:

       (A)   subject to (B) below,  6 months after the Bonus Date under the
             Savings  Contract  entered into in connection  with the Option;

       (B)   where the Participant dies before the Bonus Date, 12 months after
             the date of death, and where the Participant dies in the period of
             6 months after the Bonus Date, 12 months after the Bonus Date;

       (C)   the expiry of any of the 6 month periods specified in Rule 5.3(A)
             to (F), save that if at the time any of such applicable periods
             expire, time is running under the 12 month periods specified in
             Rule 5.2, the Option shall not lapse by reason of this Rule 5.7
             until the expiry of the relevant 12 month period in Rule 5.2;

       (D)   the expiry of any of the periods specified in Rules 6.3 to 6.5,
             save where an Option is released in consideration of the grant of a
             New Option over New Shares in the Acquiring Company (during one of
             the periods specified in Rules 6.3 and 6.4) pursuant to Rule 6.6;

       (E)   the Participant ceasing to hold any office or employment with a
             Participating Company or any Associated Company for any reason
             other than those specified in Rules 5.2 and 5.3;

       (F)   subject to Rule 6.5, the passing of an effective resolution, or the
             making of an order by the Court, for the winding-up of the Company;

       (G)   the Participant being deprived (otherwise than on death) of the
             legal or beneficial ownership of the Option by operation of law, or
             doing anything or omitting to do anything which causes him to be so
             deprived; and

       (H)   before an Option has become capable of being exercised, the
             Participant giving notice that he intends to stop paying Monthly
             Contributions, or being deemed under the terms of the Savings
             Contract to have given such notice, or making an application for
             Repayment of the Monthly Contributions.

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6.     TAKEOVER, RECONSTRUCTION AND AMALGAMATION, AND LIQUIDATION

6.1    If any person obtains Control of the Company as a result of making an
       offer to acquire Shares which is either unconditional or is made on a
       condition such that if it is satisfied the person making the offer will
       have Control of the Company, an Option may be exercised within 6 months
       of the time when the person making the offer has obtained Control of the
       Company and any condition subject to which the offer is made has been
       satisfied or waived.

6.2    For the purpose of Rule 6.1 a person shall be deemed to have obtained
       Control of the Company if he and others acting in concert with him have
       together obtained Control of it.

6.3    If any person becomes bound or entitled to acquire Shares under Sections
       428 to 430F of the Companies Act 1985 an Option may be exercised at any
       time when that person remains so bound or entitled and thereafter the
       Option shall lapse unless before such date the Optionholder has entered
       into an agreement pursuant to Rule 6.6.

6.4    If, under Section 425 of the Companies Act 1985, the Court sanctions a
       compromise or arrangement proposed for the purposes of, or in connection
       with, a scheme for the reconstruction of the Company or its amalgamation
       with any other company or companies, an Option may be exercised within 6
       months of the Court sanctioning the compromise or arrangement.

6.5    If a resolution for the voluntary winding-up of the Company is passed, an
       Option may be exercised within 6 months from the date of the passing of
       the resolution.

6.6    If any company ("the Acquiring Company"):

       (A)   obtains Control of the Company as a result of making -

             (1)     a general offer to acquire the whole of the issued ordinary
                     share capital of the Company is made on a condition such
                     that if it is satisfied the Acquiring Company will have
                     Control of the Company; or

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             (2)     a general offer to acquire all the shares in the Company
                     which are of the same class as the Shares which may be
                     acquired by the exercise of Options,

             in either case ignoring any Shares which are already owned by it or
             a member of the same group of companies; or

       (B)   obtains Control of the Company in pursuance of a compromise or
             arrangement sanctioned by the Court under Section 425 of the
             Companies Act 1985; or

       (C)   becomes entitled to give notice under Section 429 of the Companies
             Act 1985 that he desires to acquire Shares,

       any Participant may at any time within the Appropriate Period, by
       agreement with the Acquiring Company, release any Option granted under
       the Scheme which has not lapsed ("the Old Option") in consideration of
       the grant to him of an option ("the New Option") which (for the purposes
       of Paragraph 15 of Schedule 9 to the Taxes Act) is equivalent to the Old
       Option but relates to shares in a different company (whether the
       Acquiring Company itself or some other company falling within Paragraph
       10(b) or (c) of Schedule 9 to the Taxes Act).

6.7    The New Option shall not be regarded for the purposes of Rule 6.6 as
       equivalent to the Old Option unless the conditions set out in Paragraph
       15(3) of Schedule 9 to the Taxes Act are satisfied. Where the provisions
       of this Rule 6.7 apply, the provisions of the Scheme shall be construed
       as if:

       (A)   the New Option were granted under the Scheme at the same time as
             the Old Option; and

       (B)   except for the purposes of the definitions of "Participating
             Company" and "Subsidiary" in Rule 1, the reference to Cinergy Corp.
             in the definition of "the Company" in Rule 1 were a reference to
             the different company mentioned in Rule 6.6.

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7.     MANNER OF EXERCISE

7.1    An Option may only be exercised during the periods specified in Rules 5
       and 6, and only in US dollars to the extent possible to acquire up to the
       maximum number of Shares at the Option Price on the date of exercise with
       the US dollar equivalent at the applicable exchange rate at the date of
       exercise of such UK Sterling monies not exceeding the amount of the
       Repayment under the Savings Contract entered into in connection therewith
       as at the date of such exercise. Any excess US dollars or UK sterling
       monies exceeding the Exercise Price shall be returned to the Participant.
       No account shall be taken of such part (if any) of the Repayment of any
       Monthly Contribution, the due date for the payment of which under the
       Savings Contract arises more than one month after the date of the
       Repayment.

7.2    Subject to Rule 7.3, exercise shall be by the delivery to the Secretary
       of the Company or other duly appointed agent, of an option certificate
       stating the Option Price at which the Option may be exercised on the date
       of exercise, the amount of proceeds of the Savings Contract to be used to
       acquire the Shares, with the notice of exercise in the prescribed form
       duly completed and signed by the Participant (or by his duly authorised
       agent) together with any remittance in US dollars for the Exercise Price
       payable to the Company (as agent for the Trustee), or authority to the
       Company (as agent for the Trustee) to withdraw and apply monies equal to
       the Exercise Price from the Savings Contract, to acquire the Shares over
       which the Option is to be exercised or in such other manner as may be
       determined by the Committee. The effective date of exercise shall be the
       date of delivery of the notice of exercise. Exchange conversion
       commissions and charges may be paid for separately by the Participant.

7.3    The Exercise Price shall be payable to the Company for itself (and not as
       agent for the Trustee) in respect of Options which are granted upon the
       Company's determination that the Exercise Price shall be payable to the
       Company for itself.

                                                                              15

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8.     TRANSFER OF SHARES

8.1    Shares to be issued and allotted to the Participant pursuant to the
       exercise of an Option shall be allotted within 28 days following the
       effective date of exercise of the Option.

8.2    Subject to Rule 8.3, the Trustee shall transfer Shares to be transferred
       pursuant to the exercise of an Option within 28 days following the
       effective date of exercise of the Option.

8.3    Where the Exercise Price is payable to the Company for itself (and not as
       agent for the Trustee) in accordance with Rule 7.3, the Company shall
       issue and allot the Shares to the Participant within 28 days following
       the date of effective exercise of that Option.

8.4    Shares to be issued pursuant to the Scheme will rank pari passu in all
       respects with the Shares then in issue, except that they will not rank
       for any rights attaching to Shares by reference to a record date
       preceding the date of exercise.

8.5    Shares to be transferred pursuant to the Scheme will be transferred free
       of all liens, charges and encumbrances and together with all rights
       attaching thereto, except they will not rank for any rights attaching to
       Shares by reference to a record date preceding the date of exercise.

8.6    If and so long as the Shares are listed on the New York Stock Exchange,
       the Company shall apply for a listing for any Shares issued pursuant to
       the Scheme as soon as practicable after the allotment thereof.

9.     ADJUSTMENTS

9.1    The number of Shares over which an Option is granted, the Option Price
       thereof shall be adjusted in such manner as the Committee or, if the
       Trustee has at any time been the Grantor, the Committee and the Trustee
       together shall determine following any capitalisation issue (other than a
       scrip dividend), rights issue, subdivision, consolidation, reduction of
       share capital or any other variation of share capital of the Company to
       the intent that (as nearly as may be without involving fractions of a
       Share or an Option Price calculated to more than two places of decimals)
       the Exercise Price payable in respect of

                                                                              16
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       an Option shall remain unchanged, provided that no adjustment made
       pursuant to this Rule 9.1 shall be made without the prior approval of the
       Inland Revenue.

9.2    Subject to Rule 9.3, an adjustment may be made under Rule 9.1 which would
       have the effect of reducing the Option Price of unissued Shares to less
       than the nominal value of a Share, but only if, and to the extent that,
       the Committee shall be authorised to capitalise from the reserves of the
       Company a sum equal to the amount by which the nominal value of the
       Shares in respect of which the Option is exercisable exceeds the adjusted
       Exercise Price, and so that on exercise of any Option in respect of which
       the Option Price has been reduced, the Committee shall capitalise and
       apply such sum (if any) as is necessary to pay up the amount by which the
       aggregate nominal value of the Shares in respect of which the Option is
       exercised exceeds the Exercise Price for such Shares.

9.3    The Grantor may take such steps as it may consider necessary to notify
       Participants of any adjustment made under this Rule 9 and to call in,
       cancel, endorse, issue or reissue any option certificate consequent upon
       such adjustment.

10.    ADMINISTRATION

10.1   Any notice or other communication made under, or in connection with, the
       Scheme may be given by personal delivery or by sending the same by post,
       in the case of a company to its registered office and in the case of an
       individual to his last known address, or, where he is a director or
       employee of the Company or an Associated Company, either to his last
       known address or to the address of the place of business at which he
       performs the whole or substantially the whole of the duties of his office
       or employment, and where a notice or other communication is given by
       first-class post, it shall be deemed to have been received 48 hours after
       it was put into the post properly addressed and stamped.

10.2   The Company may distribute to Participants copies of any notice or
       document normally sent by the Company to the holders of Shares.

10.3   If any option certificate shall be worn out, defaced or lost, it may be
       replaced on such evidence being provided as the Grantor may require.

                                                                              17
<PAGE>

10.4   The Company shall at all times procure that sufficient Shares are
       available for transfer to satisfy all Options under which Shares may be
       acquired.

10.5   The decision of the Grantor and/or Committee in any dispute relating to
       an Option or the due exercise thereof or any other matter in respect of
       the Scheme shall be final and conclusive.

10.6   The costs of introducing and administering the Scheme shall be borne by
       the Company.

11.    ALTERATIONS

11.1   Subject to Rule 11.2, the Committee may at any time alter or add to all
       or any of the provisions of the Scheme in any respect, provided that if
       an alteration or addition is made at a time when the Scheme is approved
       by the Inland Revenue under Schedule 9 to the Taxes Act it shall not have
       effect until it has been approved by the Inland Revenue.

11.2   As soon as reasonably practicable after making any alteration or addition
       under Rule 11.1, the Committee shall give written notice thereof to any
       Participant affected thereby.

12.    GENERAL

12.1   The Scheme shall terminate upon the tenth anniversary of the date of its
       adoption or at any earlier time by the passing of a resolution by the
       Committee or an ordinary resolution of the Company in general meeting.
       Termination of the Scheme shall be without prejudice to the subsisting
       rights of Participants.

12.2   The Company and any Subsidiary of the Company may provide money to the
       trustees of any trust or any other person to enable them or him to
       purchase Shares to be held for the purposes of the Scheme, or enter into
       any guarantee or indemnity for these purposes, to the extent permitted by
       Section 153 of the Companies Act 1985, provided that any trust deed to be
       made for this purpose shall, at a time when the Scheme is approved by the
       Inland Revenue under Schedule 9 to the Taxes Act, have previously been
       submitted to the Inland Revenue.

                                                                              18
<PAGE>

12.3   The rights and obligations of any individual under the terms of his
       office or employment with the Company, a Participating Company, a
       Subsidiary of the Company, or an Associated Company shall not be affected
       by his participation in the Scheme or any right which he may have to
       participate therein, and an individual who participates therein shall
       waive all and any rights to compensation or damages in consequence of the
       termination of his office or employment with any such company for any
       reason whatsoever insofar as those rights arise, or may arise, from his
       ceasing to have rights under or being entitled to exercise any Option
       under the Scheme as a result of such termination, or from the loss or
       diminution in value of such rights or entitlements.

12.4   These Rules shall be governed by and construed in accordance with the law
       of England.

                                                                              19<PAGE>

                                                                  EXHIBIT 10-SS

       THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
           THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

                       DIRECTOR, OFFICER AND KEY EMPLOYEE
                     STOCK PURCHASE PROGRAM OF CINERGY CORP.

1.       PURPOSE. The Director, Officer and Key Employee Stock Purchase Program
         (the "PROGRAM") of Cinergy Corp. ("CINERGY") is adopted to facilitate
         the purchase, by the Directors, executives and certain key employees of
         Cinergy and its subsidiaries (collectively, the "COMPANY"), of shares
         of Cinergy's common stock ("COMMON STOCK"). The purchases facilitated
         by the Program are intended to achieve the following specific purposes:

                  (1)      more closely align directors', officers' and key
                           employees' financial interests with the financial
                           interests of all other shareholders of the Company;

                  (2)      increase officers' and key employees' motivation to
                           manage the Company as owners; and

                  (3)      increase the ownership of Common Stock among senior
                           management of the Company.

2.       ELIGIBILITY. To be eligible to participate in the Program, the
         individual (the "ELIGIBLE PARTICIPANT") must be: (a) a Director of the
         Company or an executive officer of the Company; or (b) an officer or a
         key employee of the Company selected by the Board of Directors, the
         Chairman of the Compensation Committee of the Board of Directors (the
         "COMPENSATION COMMITTEE") or by the Chief Executive Officer (the "CEO")
         of Cinergy (the foregoing referred to herein, singly or collectively,
         as the "PROGRAM ADMINISTRATOR").

3.       PARTICIPATION. To become a Program participant ("PARTICIPANT"), an
         Eligible Participant must satisfy the following requirements:

                  (1)      submit a completed, signed and irrevocable election
                           to purchase all or a portion of the Common Stock
                           which the Eligible Participant is eligible to
                           purchase under the Program as set forth in the
                           election form or accompanying materials furnished to
                           such Eligible Participant by the Company, in each
                           case along with a power of attorney authorizing such
                           purchases on the Participant's behalf;

                  (2)      complete and sign all necessary agreements and other
                           documents relating to the loan described in Section 4
                           hereof including, but not limited to, personal
                           financial statements and letters of instruction to
                           brokers, transfer agents and banks as are necessary
                           or appropriate under the loan described in Section 4
                           hereof, and a power of attorney authorizing
                           borrowings under such loan; and

                                     1
<PAGE>

                  (3)      satisfy all other conditions of participation
                           specified in the Program.

         The agreements and other documents specified in subsections 3(a), (b)
         and (c) must be submitted at such times and to such Company officers as
         specified by the Company. No Eligible Participant is required to
         participate in the Program.

                  Directors and executive officers may purchase between $100,000
         and $1,500,000 of Common Stock. Other officers and senior key
         employees, as designated by the CEO or the Chairman of the Compensation
         Committee, may purchase between $100,000 and $1,000,000 of Common
         Stock. Other key employees, as designated by the CEO or the Chairman of
         the Compensation Committee, may purchase between $100,000 and $500,000
         of Common Stock. Subscriptions for purchase of a dollar amount of
         Common Stock in excess of the Participants' minimum level of
         participation must be in increments of $50,000. Under the Program, a
         maximum of $50,000,000 of Common Stock may be purchased by all
         Participants. In the event that the Program is oversubscribed, there
         will be a pro rata reduction of the dollar amount of Common Stock that
         Participants are entitled to purchase under the Program, based on the
         initial dollar amount commitment of each Participant; PROVIDED,
         HOWEVER, that in no event shall the level of participation be reduced
         to below $100,000 per Participant. Directors and executive officers
         shall have the right to purchase shares not purchased by other
         Participants in such amount as is determined by the pro rata amount of
         their participation in the Program compared to the participation of the
         other Participants electing to purchase additional shares. All such
         purchases may be made by the individual Participant or by a trust,
         corporation, partnership or limited liability company controlled by the
         Participant ("PARTICIPANT DESIGNEE"; the term Participant shall include
         Participant Designee unless the context otherwise requires).

                  It is anticipated that there may be one or more additional
         election periods under the Program during which Eligible Participants
         who did not elect to participate in the Program at the time of its
         initial implementation may elect to become Participants. EACH ELIGIBLE
         PARTICIPANT MAY PARTICIPATE IN THE PROGRAM ONLY ONE TIME. THE COMPANY
         HAS NOT SET ANY DATES FOR ANY ADDITIONAL ELECTION PERIODS AND THERE CAN
         BE NO ASSURANCE THAT ANY ADDITIONAL ELECTION PERIODS WILL BE MADE
         AVAILABLE TO THE ELIGIBLE PARTICIPANTS. The decision to conduct any
         additional election periods rests solely with the Program
         Administrator.

4.       PURCHASE OF SHARES. The Program Administrator, in its sole discretion
         subject to the terms and provisions of the Program, will determine the
         timing, amount, price and mechanics of all of the purchases of shares
         of Common Stock (the "PURCHASED SHARES") through open market and
         negotiated transactions. Purchases of Purchased Shares shall be
         effected through a broker in accordance with Rule 10b-18 under the
         Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT").

                  In accordance with its sole discretion to determine the timing
         of the purchases pursuant to the Program, the Program Administrator may
         direct the broker to suspend purchases of Common Stock at any time and
         from time to time. The Program Administrator shall direct the broker to
         suspend purchases of Common Stock in the event that the market price of
         the Common Stock increases 20% or more over the closing price of the
         Common Stock on the last day of the

                                       2

<PAGE>

         Participant election period. Further, the Program Administrator shall
         direct the broker to cease making any purchases pursuant to
         Participants' commitments, and such commitments shall be terminated to
         the extent not yet satisfied, as of  the close of trading on April 24,
         2000, even if as a consequence thereof a Participant will purchase a
         dollar amount of Common Stock which is lower than the dollar amount
         which the Participant committed to purchase. Any funds borrowed by the
         Participant under the Loan (as defined below) which were not applied on
         the Participant's behalf toward the purchase of Company Common Stock
         prior to such termination of purchases will be credited toward payment
         of outstanding amounts under the Loan.

                  The shares of Common Stock purchased pursuant to the Program
         will be allocated proportionately among Participants at the end of the
         trading period during which sufficient shares of Common Stock are
         purchased to allocate the full allotment of Purchased Shares to which
         all of the Participants are entitled, based upon the percentage of the
         aggregate dollar amount of Common Stock for which the Participants have
         subscribed and the average price for all purchases of shares of Common
         Stock during the allocation period; PROVIDED, HOWEVER, that the Program
         Administrator, in his or its sole discretion, may determine to allocate
         the Purchased Shares at the end of a trading day or trading week. By
         way of example only, in the event the Program Administrator determines
         to allocate at the end of a trading day, if the Program has two
         Participants, Participant A and Participant B, and Participant A
         committed to purchase up to $500,000 of Common Stock and Participant B
         committed to purchase up to $1,000,000 of Common Stock, and on a given
         trading day, the Company arranged for the purchase of $300,000 of
         Common Stock on behalf of the Participants, $100,000 in Purchased
         Shares would be allocated to the account of Participant A and $200,000
         in Purchased Shares would be allocated to the account of Participant B.
         Purchased Shares will not include any fractional shares of Common
         Stock. Following the purchase of the total number of whole shares of
         Common Stock to which the Participant is entitled, any remaining dollar
         amount pursuant to the Participant's commitment will be credited toward
         payment of interest on the Participant's Loan (as defined below), if
         any.

                  In the event that issues arising under Section 16 of the
         Exchange Act, make impractical the use of open-market purchases on
         behalf of a Participant, the Program Administrator may elect, in his or
         its sole discretion, to allocate newly-issued shares of Cinergy to the
         Participant's account. It is intended that the timing, amount, price
         and mechanics associated with the allocation of such newly-issued
         shares will replicate as closely as possible the timing, amount, price
         and mechanics associated with the open-market purchases pursuant to the
         Program. Such newly-issued shares will not be registered under the
         Securities Act of 1933, as amended (the "SECURITIES ACT").
         Consequently, any resale of such shares will be subject to the
         restrictions of Rule 144 of the Securities Act, which include, among
         other things, a requirement that such shares be held prior to resale
         for a period of one year.

                  Cinergy has arranged the opportunity for each Participant to
         obtain (i) a loan through KeyBank National Association or an additional
         or substitute financial institution(s) (the "BANK") to fund the
         purchase of the Purchased Shares (the "PURCHASE LOAN") and (ii) a loan
         through the Bank to assist in funding interest payments on the Purchase
         Loan (together with the Purchase Loan, the "LOAN"). Each Participant
         must sign a power of attorney authorizing loans under the Bank loan
         documents and the purchase of the Purchased Shares. Each Participant is
         responsible for satisfying all of the lending requirements, including
         supplying requisite information on a timely basis, specified by the
         Bank to qualify for the Loan. Each Participant is fully obligated to

                                     3

<PAGE>

         repay to the Bank all principal, interest and any prepayment fees on
         the Loan when due and payable. Any prepayments of the Loan must be made
         in $50,000 increments, on the last day of the month and in a manner
         otherwise consistent with the terms of any interest rate swap
         agreement.

                  In the event a Participant does not wish to obtain the Loan,
         the Participant shall provide sufficient funds to fund the purchase of
         the Purchased Shares. Such Participant must execute a power of attorney
         authorizing the purchase of the Purchased Shares. If the Participant
         fails to fund the purchase of the Purchased Shares, the Participant may
         no longer participate in the Program, and all of the Purchased Shares
         not paid for will be allocated to the other Participants.

5.       REGISTRATION OF SHARES. The Purchased Shares will be registered in the
         name of the Participant or his or her designee and certificated. Each
         certificate will bear a legend referring to the Program. The
         certificates for the Purchased Shares of each Participant who
         participates in the Loan will be held for safekeeping by the Company
         for the benefit of each Participant.

6.       SHAREHOLDER RIGHTS. Each Participant will have all of the rights of a
         shareholder with respect to the Purchased Shares, including the right
         to dispose of the shares, the right to vote the shares and the right to
         receive dividends. Dividends will be deposited in the Participant's
         account at the Bank to apply towards the payment of interest on the
         Participant's Loan.

7.       SALE OF PURCHASED SHARES. Each Participant is permitted to sell all or
         any portion of the Purchased Shares; provided, that any such sale does
         not violate any provision of the Participant's Loan.

8.       LOAN GUARANTY. Cinergy and/or a subsidiary of Cinergy (the "GUARANTOR")
         will guarantee repayment to the Bank of 100% of all principal,
         interest, prepayment fees and other obligations of each Participant
         under such Participant's Loan (the "GUARANTY"). Any Guaranty issued by
         a subsidiary of Cinergy will be guaranteed by Cinergy. The issuance of
         the Guaranty is a condition to the loan arrangement Cinergy has made
         with the Bank. The terms and conditions of the Guaranty are as agreed
         by Cinergy and the Bank. Each Participant shall enter into an
         indemnification agreement to indemnify Cinergy or the Guarantor, as the
         case may be, for any losses under the Guaranty of the Loan with respect
         to the Participant. If a Participant specifies a Participant Designee,
         the Participant shall enter into an indemnification agreement to
         indemnify Cinergy or the Guarantor, as the case may be, for any losses
         under the Guaranty of the Loan with respect to the Participant
         Designee. Each Participant is fully obligated to repay to the Bank all
         principal, interest, and other amounts on the Loan when due and
         payable. Cinergy may take any action relating to the Participant and
         her or his assets, which the Program Administrator deems necessary,
         proper or desirable, (including, but not limited to, offsetting amounts
         owed to Cinergy or its subsidiaries against wages, fees or other
         amounts owed to the Participant from Cinergy) to obtain full
         reimbursement for amounts the Guarantor pays to the Bank under the
         Guaranty related to the Participant's or a Participant Designee's Loan.

9.       INTEREST PAYMENTS AND INTEREST RESERVE. The Purchase Loan will be a
         floating rate loan based on LIBOR, which will then be swapped at a time
         to be determined by the Program Administrator to a fixed rate so that
         Participants will not have interest rate risk during the term of the
         Purchase Loan. Interest on the Purchase Loan will be payable quarterly,
         on or

                                     4
<PAGE>

         about the Company's dividend payment date. Interest will be funded
         primarily from the dividends received by the Participant on the
         Purchased Shares. Interest in excess of the dividend, if any, may, at
         the option of the Participant, be paid from an interest reserve
         facility (the "INTEREST RESERVE FACILITY") made available by the Bank
         and equal to 8% of the Purchase Loan balance. If a Participant elects
         to utilize the Interest Reserve Facility, an amount will be drawn from
         the facility on the Participant's behalf to fund any interest due in
         excess of the dividend at the time of each interest payment date. Such
         amounts drawn from the Participant's Interest Reserve Facility will be
         subject to the Guaranty as set forth in Section 8. Each Participant is
         responsible for satisfying all of the lending requirements, including
         supplying requisite information on a timely basis, specified by the
         Bank to qualify for the Interest Reserve Facility. Each Participant is
         fully obligated to repay to the Bank all principal, interest and any
         prepayment fees on the Interest Reserve Facility when due and payable.

                  ALTHOUGH THE BANK WILL TAKE AN ASSIGNMENT OF THE DIVIDENDS ON
         THE PURCHASED SHARES TO SERVICE THE PURCHASE LOAN, THE PARTICIPANT WILL
         BE SOLELY RESPONSIBLE FOR PAYING ALL PRINCIPAL AND INTEREST WHEN DUE.
         IF THE CINERGY DIVIDEND WERE EVER REDUCED, A PARTICIPANT COULD INCUR
         SUBSTANTIAL QUARTERLY INTEREST PAYMENTS IN EXCESS OF THE DIVIDENDS AND
         THE INTEREST RESERVE FACILITY.

10.      MARGIN REGULATIONS.

                  (1)      None of the obligations of the Participants to
                           Cinergy or any of its subsidiaries (collectively,
                           Cinergy and its subsidiaries shall be referred to as
                           "CINERGY" for the purposes of this Section 10)
                           hereunder, or the obligations of the Participants to
                           the Bank under their respective Loan, is or will be
                           secured, directly or indirectly, by Margin Stock (as
                           such term is defined in Regulation U promulgated by
                           the Board of Governors of the Federal Reserve
                           System);

                  (2)      Neither Cinergy nor any third party acting on behalf
                           of Cinergy has taken or will take possession of a
                           Participant's Margin Stock to secure, directly or
                           indirectly, any of the obligations of such
                           Participant to Cinergy;

                  (3)      Cinergy does not and will not have any right to
                           prohibit or, in any way, restrict such Participant
                           from selling, pledging, encumbering or otherwise
                           disposing of any Margin Stock owned by such
                           Participant;

                  (4)      Such Participant has not granted and will not grant
                           Cinergy or any third party acting on behalf of
                           Cinergy the right to accelerate repayment of any of
                           the obligations under this Program of such
                           Participant if any of the Margin Stock owned by such
                           Participant is sold, pledged, encumbered or otherwise
                           disposed of by such Participant; and

                  (5)      There is no agreement or other arrangement between
                           such Participant and Cinergy or any third party
                           acting on behalf of Cinergy (and no such agreement or
                           arrangement shall be entered into so long as this
                           Program

                                      5
<PAGE>

                           is in effect or any of the obligations of such
                           Participant under this Program remain outstanding)
                           under which the Margin Stock of Participant would be
                           made more readily available as security to Cinergy
                           than to other creditors of such Participant.

11.      DEATH OR DISABILITY. Upon the death of a Participant, her or his estate
         or the Participant Designee, as the case may be, may elect to cause
         Cinergy to pay the estate or the Participant Designee, as the case may
         be, an amount equal to the balance of the Participant's Loan minus the
         value of the Purchased Shares based upon the closing price of Common
         Stock on the New York Stock Exchange on the first trading date after
         the date of death. The estate or the Participant Designee, as the case
         may be, of a deceased Participant must give to the Company written
         notification of its decision to make such an election within 60 days
         after the death of the Participant. If a Participant who is an employee
         of the Company becomes eligible for benefits under the Cinergy Corp.
         Long-Term Disability Plan (a "DISABLED PARTICIPANT"), such disabled
         Participant may elect to cause Cinergy to pay the Participant an amount
         equal to the balance of the Participant's Loan minus the value of the
         Purchased Shares based upon the closing price of Common Stock on the
         New York Stock Exchange on the first trading date after the first date
         of eligibility for payment under the Cinergy Corp. Long-Term Disability
         Plan. This Section 11 has no effect on a deceased or disabled
         Participant's sale of Purchased Shares before the Participant's death
         or disability. Payment by Cinergy of amounts described in this Section
         11 is conditioned on the payment in full of the Participant's Loan (if
         any) and the release of the Guaranty with respect thereto.

12.      OTHER TERMINATION. Within 30 days of a Participant ceasing to be a
         Director, officer or employee of Cinergy in circumstances other than as
         described in Section 11, such Participant or Participant Designee shall
         have the option to either (i) retire the Loan and release the Guaranty
         or (ii) continue the Loan until its maturity date with Cinergy's
         Guaranty.

                  Notwithstanding the above, if at such Participant's request,
         the Bank, in its sole discretion, agrees to the termination of any
         dividend assignment agreement between Cinergy, the Bank and the
         Participant or agrees to waive the Participant's obligations
         thereunder, all outstanding interest and principal under the Loan shall
         become due and payable and the Guaranty shall subsequently be
         terminated.

13.      ADMINISTRATION. The Program Administrator shall be charged with the
         administration and interpretation of the Program but may delegate the
         ministerial duties hereunder to such persons as it determines. The
         Program Administrator may adopt such rules as may be necessary or
         appropriate for the proper administration of the Program. The decision
         of the Program Administrator in all matters involving the
         interpretation and application of the Program shall be final and shall
         be given the maximum possible deference allowed by law.

14.      PAYMENT OF EXPENSES. The expenses of administering the Program shall be
         paid by the Company except those expenses which are expenses of the
         Participants.

15.      INCOME TAX CONSIDERATIONS. THIS SUMMARY IS NOT INTENDED TO DISCUSS ALL
         INCOME TAX ASPECTS OF PARTICIPATION IN THE PROGRAM OR TO CONSTITUTE TAX
         ADVICE, AND ALL PROGRAM PARTICIPANTS ARE URGED TO

                                     6

<PAGE>

         CONSULT THEIR PERSONAL TAX ADVISORS. THIS SUMMARY IS FOR INFORMATIONAL
         PURPOSES ONLY AND IS BASED ON THE TAX LAWS IN EFFECT AS OF THE
         EFFECTIVE DATE OF THIS PROGRAM, WHICH LAWS ARE SUBJECT TO CHANGE. THE
         TAX CONSEQUENCES TO EACH PARTICIPANT WILL DEPEND IN PART UPON SUCH
         PARTICIPANT'S PARTICULAR SITUATION. SPECIAL TAX CONSEQUENCES NOT
         DESCRIBED HEREIN MAY BE APPLICABLE TO CERTAIN PARTICIPANTS.

                  The dividends paid by the Company on Common Stock purchased
         through the Program will be reported to Participants and the IRS on
         Form 1099DIV. These amounts must be reported as dividend income on
         Schedule B of a Participant's federal income tax return in the year
         they are paid even though the dividends will be paid directly to the
         Bank. Note that a portion of the Company's distributions to its
         shareholders may be considered to be a capital gain dividend, in which
         case the dividend would be reported as a long-term capital gain. In
         addition, a portion of the Company's distributions to its shareholders
         may be considered to be a return of capital, which would reduce the tax
         basis of the shares purchased.

                  Provided a Participant itemizes deductions and does not take
         the standard deduction, the interest expense that is deemed to be paid
         on the Purchase Loan may be deductible as "investment interest expense"
         on Form 4952 of his or her federal income tax return. Investment
         interest expense is deductible to the extent of investment income.
         Investment income includes interest income and dividend income. Unlike
         certain other itemized deductions, investment interest expense is not
         phased out at certain income levels. Participants will be deemed to
         have paid interest on the Purchase Loan if the dividends are used to
         pay interest on the Purchase Loan. If the dividends are not sufficient
         to fully pay the accrued interest on the Loan, the interest shortfall
         may be funded through the Interest Reserve Facility. The IRS currently
         takes the position that interest paid from borrowed funds is not
         deductible until those borrowed funds are repaid.

                  Participants that do not itemize deductions may not receive
         any tax benefit from the payment of the interest expense.

                  In general, Participants will realize capital gain or loss on
         the disposition of Common Stock purchased under the Program equal to
         the difference between (i) the amount of cash received on such
         disposition and (ii) the Participant's adjusted basis of the stock.
         Currently, such gain or loss generally will constitute long-term
         capital gain or loss if the Participant has held the shares for more
         than one year.

                  The state and local tax consequences from participation in the
         Program vary widely depending on the state and municipality of a
         Participant. Many state and local tax statutes do not permit taxpayers
         to itemize deductions. Accordingly, Participants may be subject to
         state and local income taxes on the dividends paid on the Common Stock
         with no corresponding tax benefit for interest paid under the Program.
         In addition, certain states impose franchise taxes on the value of
         marketable securities held, such as the Common Stock.

16.      EMPLOYER-EMPLOYEE RELATIONSHIP. The establishment of this Program shall
         not be construed as conferring any legal or other rights upon any
         employee or any person for a

                                       7

<PAGE>

         continuation of employment, nor shall it interfere with the rights of
         the Company to discharge any employee or otherwise act with relation to
         the employee. Subject to any agreements the Company has with a
         Participant, the Company may take any action (including discharge) with
         respect to any employee or other person and may treat such person
         without regard to the effect which such action or treatment might have
         upon such person as a Participant of this Program.

17.      AMENDMENT AND TERMINATION. The Company reserves the right to change or
         discontinue this Program by action of the Program Administrator in his
         or its discretion; PROVIDED, HOWEVER, that in the case of any person to
         whom benefits under this Program had accrued upon termination of
         employment prior to such Program Administrator action, or in the case
         of any Participant who would have been entitled to benefits under this
         Program had the Participant's employment ceased prior to such change or
         discontinuance, the benefits such person had accrued under this Program
         prior to such change or discontinuance shall not be adversely affected
         thereby.

18.      WITHHOLDING. The Company shall have the right to deduct in cash
         (whether under this Program or otherwise) in connection with all
         payments by the Company to a Participant under this Program any taxes
         required by law to be withheld and to require any payments required to
         enable it to satisfy its withholding obligations.

19.      GOVERNING LAW. This Program shall be construed in accordance with the
         laws of the State of Delaware.

20.      APPROVAL. If a Participant elects to purchase Purchased Shares, such
         election shall constitute formal approval of this Program by the
         Participant and such Participant's agreement to be bound by the terms
         and conditions of the Program.

EFFECTIVE DATE:  JANUARY 7, 2000

                                      * * *

                                        8

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