THE CINCINNATI GAS &
ELECTRIC COMPANY
SAVINGS
INCENTIVE
PLAN
As Amended and Restated Effective January 1, 1995
TABLE OF CONTENTS
PAGE
ARTICLE 1: INTRODUCTION 1
ARTICLE 2: DEFINITIONS 3
ARTICLE 3: PARTICIPATION 6
ARTICLE 4: CONTRIBUTIONS 17
ARTICLE 5: INVESTMENTS 30
ARTICLE 6: ACCOUNTS 38
ARTICLE 7: VESTING AND FORFEITURES 41
ARTICLE 8: DISTRIBUTIONS 47
ARTICLE 9: WITHDRAWALS DURING EMPLOYMENT 65
ARTICLE 10: LOANS 76
ARTICLE 11: DOMESTIC RELATIONS ORDERS AND ALTERNATE PAYEES
88
ARTICLE 12: FIDUCIARIES: AUTHORITY & RESPONSIBILITY 98
ARTICLE 13: ADMINISTRATIVE PROVISIONS 107
ARTICLE 14: MISCELLANEOUS PROVISIONS 117
ARTICLE 15: DISCRIMINATION TESTING 120
ARTICLE 16: LIMITATION ON ANNUAL ADDITIONS 135
ARTICLE 17: AMENDMENT AND TERMINATION OF THE PLAN 141
INDEX 144
INTRODUCTION
ARTICLE 1: INTRODUCTION
1.1 History. The Cincinnati Gas & Electric Company
(CG&E) instituted the Employee Incentive Thrift Plan in
1967. CG&E amended the plan on October 1, 1985 for weekly
and hourly paid employees to enable those employees to
delay the payment of some income taxes and to choose from
a wider variety of investment options. As a result of the
extensive amendments, the plan was renamed The Cincinnati
Gas & Electric Company Savings Incentive Plan.
1.2 Purpose. The plan is designed to provide retirement
income to the weekly and hourly paid employees of CG&E and
certain death benefits to their beneficiaries. The plan
is designed to supplement the participants' Retirement
Income Plan benefits which in turn are to be supplemented
by the benefits payable under the Social Security Act, and
their personal savings for retirement.
1.3 Plan Qualification. CG&E has designed this plan to
comply with the provisions of Internal Revenue Code
401(a), 401(k), and 501 as a qualified pension plan and
to conform to the provisions of the Employee Retirement
Income Security Act of 1974, as amended (ERISA). All plan
provisions are subject to change at any time to the extent
necessary to retain the qualified status of the plan or to
bring it into compliance with ERISA. The plan and trust
agreement shall be construed and interpreted in a manner
that gives effect to the intent of retaining the qualified
status of the plan.
1.4 Effective Date. Except as otherwise noted with
respect to a particular provision, the effective date of
the amendment and restatement of this plan is January 1,
1995. Earlier or later amendments to this plan become
effective on the date specifically designated in the plan
document.
ADMINISTRATIVE NOTES
DEFINITIONS
ARTICLE 2: DEFINITIONS
2.1 Scope of this Article. Definitions of terms relevant
to more than one article of the plan are generally
included in this Article. Definitions of terms which are
used primarily in a single article are defined in that
article.
2.2 List of Defined Terms. This section contains a
complete list of all defined terms used in this plan.
Each defined term is followed by a reference to the
section in which it is defined.
account 6.1a)
ACP 15.1a), 15.1b)
ADP 15.1c)
alternate payee 11.5
annual addition 16.1a)
base pay 4.1
beneficial owner 3.17
beneficiary 3.16
board of directors 2.3
break in service 3.10
CG&E 2.4
CINergy 2.5
Committee 12.4
company 16.1g)
company-matched contributions
4.2c), 4.3c), 4.3d)
company-matched stock incentive
contributions 4.2d), 4.3e), 4.3f)
company stock fund 5.3a)
compensation 15.1d), 16.1b)
DCIP 2.6
deferred compensation contributions
4.2a), 4.3a)
defined benefit fraction 16.1c)
defined benefit plan 16.1d)
defined contribution fraction 16.1e)
defined contribution plan 16.1f)
distribution 8.1
distribution valuation date 8.3
DRO 11.1
eligible employee 3.2a), 3.2b)
eligible retirement plan 8.12d)
employee 3.1
entry date 3.13, 3.14
ERISA 2.7
ESA&P 3.2c)6)
excess aggregate contribution 15.1e)
excess amount 16.1h)
excess contribution 15.1f)
Fidelity Equity-Income Fund 5.3c)
Fidelity Intermediate Bond Fund 5.3d)
Fidelity Magellan Fund 5.3b)
Fidelity Retirement Money Market Fund 5.3f)
fiduciary 12.1
forfeiture 7.6a), 7.6b)
hardship 9.9
hardship withdrawals 9.10, 9.11
highly compensated employee 15.1g), 15.1h)
hour of service 3.6
IBEW 3.25a)
IRC 2.8
IUU 3.25b)
loan fund 5.3g)
mandatory distribution year 8.6a), 8.7a)
military leaves 7.5b)
money market fund 5.3e), 5.3f)
non-eligible employee 3.2c)
optional contributions 4.2b), 4.3b)
parental leaves 7.5a)
participant 3.3
plan 2.9
plan participation forms 3.15
plan year 2.10
pooled investment funds 5.4
projected annual benefit 16.1i)
quarterly account statements 6.2
RIP 2.11
rollover contributions 4.3g)
sub-account 6.1b), 6.1c)
terminated participant 3.4
the PNC fund 5.3e)
trust 12.12, 12.13
trust agreement 12.14, 12.15
trustee 12.3
USWA 3.25c)
vesting 7.1
VIR Line 5.4
window cashouts 11.13
withdrawal 9.1
year of service 3.8, 3.9
year of vesting service 7.2
2.3 Board of Directors. The board of directors is the
board of directors of The Cincinnati Gas & Electric
Company.
2.4 CG&E. CG&E is The Cincinnati Gas & Electric Company,
the plan's sponsor, and any related company which has
adopted the plan and has employees participating in the
plan.
2.5 CINergy. CINergy is CINergy Corp., the name of the
parent holding company of CG&E.
2.6 DCIP. The DCIP is the CG&E Deferred Compensation and
Investment Plan.
2.7 ERISA. ERISA is the Employee Retirement Income
Security Act of 1974, as amended.
2.8 IRC. IRC is the Internal Revenue Code of 1986, as
amended.
2.9 Plan. The plan is the CG&E Savings Incentive Plan,
as set forth in this document.
2.10 Plan Year. The plan year is the calendar year.
2.11 RIP. The RIP is the CG&E Retirement Income Plan.
2.12 SIP. The SIP is the CG&E Savings Incentive Plan.
2.13 Related Company. A related company is any entity
which is:
a) A member of a controlled group of corporations, as
defined in IRC 1563(a), ignoring IRC 1563(e)(C)(3),
and, solely for the purpose of 2.4, modifying the IRC
1563 (a) phrase "at least 80%" to read "more than
50%", and
b) An unincorporated trade or business which is under
common control with The Cincinnati Gas & Electric
Company, as determined under IRC 414(c), and
c) A member of an affiliated service group as defined
in IRC 414(m), and
d) Any entity required to be aggregated with The
Cincinnati Gas & Electric Company under IRC 414(o),
and
e) Any other subsidiary or affiliate of The Cincinnati
Gas & Electric Company designated by its board of
directors to be a related company.
PARTICIPATION
ARTICLE 3: PARTICIPATION
3.1 Employee. An employee is any person earning a wage
or salary from CG&E, including leased employees.1
3.2 Participation.
a) Eligible Employee. An eligible employee is any
full-time employee on the CG&E weekly or hourly
payroll who has completed a year of service pursuant
to 3.8. The term eligible employee shall include
employees who have completed a year of service with a
related company. A year of service performed for a
related company prior to the date the relationship
with The Cincinnati Gas & Electric Company began is
included for the purpose of determining eligibility to
participate in this plan. The term eligible employee
shall include an individual who is a citizen of the
United States and is an employee of a related company,
if that company has entered into an agreement under
IRC 3121(l).
[This sub-section should be deleted effective 01-01-96.]
b) Eligible Employee. An eligible employee is any
full-time employee on the CG&E weekly or hourly
payroll. The term eligible employee shall include an
individual who is a citizen of the United States and
is an employee of a related company, if that company
has entered into an agreement under IRC 3121(l).
[This sub-section becomes effective on 01-01-96.]
c) Non-Eligible Employees. The following defined
classes of employees are excluded from plan
participation.
1) Co-op Employees. Co-op employees are students
working for CG&E through a recognized cooperative
education program.
2) Summer Employees. Summer employees are
students employed by CG&E during the
summer.
3) Temporary Employees. Temporary
employees are employees of an employment
agency who perform services for CG&E on
specific tasks and/or for a specified time
period. Generally, temporary employees are
directly supervised by CG&E employees.
4) Part-time Employees. Part-time
employees are employees whose regular work
schedule is limited to less than 1,000
hours in any given calendar2 year.
5) Leased Employees. Leased employees are
any persons who are not on CG&E's payroll
and who have performed services for CG&E
pursuant to an agreement between CG&E and
any other person on a substantially full
time basis for a period of at least one
year. The period for which these employees
are leased employees under the terms of
this plan is limited to the term of service
for which they are assigned to CG&E.
6) Executive, Supervisory, Administrative
and Professional Employees (ESA&P).
Executive, Supervisory, Administrative and
Professional (ESA&P) employees are full-
time employees paid on a monthly or semi-
monthly salaried basis. For convenience,
the semi-monthly and monthly payrolls are
collectively called the ESA&P payroll.
7) Weekly & Hourly Paid Employees. Those
weekly & hourly paid employees who have not
completed a year of service.
[This sub-section 7)
should be deleted
effective 01-01-96.]
8) Independent Contractors. Independent
contractors are persons or entities with
whom CG&E contracts to complete specific
tasks without supervision by CG&E
employees. Employees of entities which are
independent contractors regarding tasks
performed for CG&E may be classified as
leased employees if they fall within the
definition in 3.2c)5) above.
9) Participants in Other 401(k) Plans.
Employees who are eligible to participate
in a qualified plan which includes IRC
401(k) features sponsored by any related
company are not eligible to participate in
this plan.
d) Fail-Safe Provision. In the event that any
co-op employee, summer employee, or part-time
employee completes a year of service, that
employee shall be permitted to participate in
this plan.
3.3 Participant. A participant is any eligible
employee who has assets in the plan. (See also
3.4)
3.4 Terminated Participant. A terminated
participant is a participant who has terminated
employment with CG&E by reason of death,
disability, discharge, retirement, or resignation,
but who has assets remaining in the plan.
3.5 Determining Participation and Vesting. An
hour of service is the basic unit of measurement
used to determine an employee's participation and
vesting in the plan.
3.6 Hour of Service.
a) Current Pay. An employee earns an hour of
service for each hour for which s/he is
directly or indirectly paid or entitled to
payment by CG&E during the applicable
computation period. These hours are for either
the performance of duties or on account of a
period of time during which no duties are per-
formed (irrespective of whether the employment
relationship is terminated) due to vacation,
holiday, jury duty, personal days, incapacity
(including disability) and lay-off. In these
cases participants will be credited with 8
hours of service for each normally scheduled
working day during which no duties are
performed. An hour of service for which no
duties are performed shall be calculated
pursuant to 2530.200b-2 of the U.S. Department
of Labor regulations, which are incorporated
herein by reference.
b) Back Pay. A participant earns an hour of
service for each hour for which back pay,
irrespective of mitigation of damages, has been
either awarded or agreed to by CG&E. The same
hours of service shall not be credited under
both sub-section 3.6a) above and under this
sub-section. These hours will be credited to
the employee for the computation period or
periods to which the award or agreement
pertains, rather than the computation period in
which the award, agreement, or payment is made.
c) Effect of Leaves of Absence. Generally, an
employee will not earn hours of service while
s/he is on a leave of absence. However, hours
of service credited during certain military
leaves and parental leaves under the provisions
of 7.5 also apply for purposes of determining
eligibility to participate in the plan.
d) Consistent Personnel Practices. All leaves
of absence affecting accreditation of service
under this plan shall be authorized by CG&E in
accordance with standard personnel policies
applied in a nondiscriminatory manner to all
employees similarly situated.
3.7 Limitation Upon Earning Hours of Service.
Hours of service earned by CG&E employees generally
not eligible to participate in the plan shall be
credited, but only for determining the vesting
rights of these employees upon their change of
status to plan participants. The provisions of
3.19 and 3.20 governing transfers of participants
and plan assets to and from the DCIP are an
exception to the general rule.
3.8 Year of Service.3 A year of service is 12
consecutive months of employment with CG&E,
beginning with the first hour of service, during
which the employee completes at least 1,000 hours
of service. Eligible employees who do not complete
a year of service by the first anniversary of their
employment commencement date shall be credited with
a year of service if they complete at least 1,000
hours of service during a period of 12 consecutive
months beginning with the first, and, if necessary,
any subsequent anniversary of their employment
commencement date.
[This section should be deleted effective 01-01-96.]
3.9 Year of Service. A year of service is 12
consecutive months of employment with CG&E,
beginning with the first hour of service, during
which a co-op employee, summer employee, or part-
time employee completes at least 1,000 hours of
service. Co-op employees, summer employees or
part-time employees who do not complete a year of
service by the first anniversary of their
employment commencement date shall be credited with
a year of service if they complete at least 1,000
hours of service during a period of 12 consecutive
months beginning with the first, and, if necessary,
any subsequent anniversary of their employment
commencement date.
[This section becomes effective on 01-01-96.]
3.10 Break in Service. A break in service is any
period of 12 consecutive months beginning on the
employee's employment commencement date, and on any
subsequent anniversary of that date, during which
the employee completes less than 501 hours of
service.
3.11 Commencement of Participation.4 Except with
respect to company-matched stock incentive
contributions (see 4.2d)), an eligible employee
must file a completed set of plan participation
forms5 with the Committee6 to become a participant.
See also 3.20.
[This section should be deleted effective 01-01-96.]
3.12 Commencement of Participation. An eligible
employee must notify the Committee of his or her
intent to participate in the plan, except with
respect to the company-matched stock incentive
contributions (see 4.3e) and 4.3f)), through the
use of the voice or other electronic response
system or other media authorized by CG&E.
[This section becomes effective on 01-01-96.]
3.13 Entry Date. The entry date is the date an
eligible employee becomes a participant in the
plan. The entry date is the first weekly pay date
of the month that is at least 30 days following the
date the Committee receives the plan participation
forms from the eligible employee.
[This section should be deleted effective 01-01-96.]
3.14 Entry Date. The entry date is the date an
eligible employee becomes a participant in the
plan. The entry date is the date an eligible
employee first completes an hour of service.
[This section becomes effective on 01-01-96.]
3.15 Plan Participation Forms. Plan participation
forms are the set of documents which the eligible
employee must file with the Committee in order to
participate in the plan, except with respect to the
company-matched stock incentive contributions. (See
4.2d)). The forms are:
a) The plan participation agreement, and 7
b) The beneficiary designation form.8
[This section should be deleted effective 01-01-96.]
3.16 Beneficiary. The beneficiary is the person
or entity designated in writing by a participant to
receive plan benefits after the participant's
death. (See 8.14 and 11.14)
3.17 Beneficial Owner. The beneficial owner is
the owner or beneficiary of an account with the
plan. A beneficial owner may be a participant, a
terminated participant, a participant's spouse, or
an alternate payee.
3.18 Beneficiary Designation. A participant must
designate a beneficiary. Married participants must
designate their spouse as beneficiary, unless the
participant's spouse consents to someone else
being named as beneficiary. The consent must be in
writing on the form9 approved by the Committee and
the spouse's signature must be notarized. The form
must be filed with the Committee to become
effective.10 A consenting spouse may withdraw
consent by written notice to the Committee,
notarized in the same manner as the consent. Once
the retraction of consent has been filed with and
accepted by11 the Committee, the spouse is
reinstated by plan operation as the participant's
beneficiary.
3.19 Transfer to the ESA&P Payroll. A participant
who transfers to the ESA&P payroll is no longer
eligible to participate in the plan. All of the
participant's contributions to the plan shall
cease, effective with his or her last pay date as
an employee on the weekly or hourly payroll.
3.20 Transfers From The ESA&P Payroll.
a) Transfers of DCIP Accounts. The trustee
shall transfer to this plan the DCIP account of
any employee who becomes eligible for
participation.12 The transfer shall be made as
soon as possible following the date that the
employee becomes eligible. The transferred
account shall be allocated to the sub-accounts
and the investment funds in the manner most
similar to the participant's DCIP sub-accounts.
b) Continuing Contributions. The contribution
percentages and investment directions of any
DCIP participant who becomes eligible for
participation in this plan will continue as
contributions and investment directions to this
plan.
3.21 Participatory Restrictions on the Activities
of Terminated Participants. Subject to the
limitations of 8.5a), 8.5e) and 8.6 of this
plan, a terminated participant's account will
remain in this plan until s/he takes a
distribution. A terminated participant may not
contribute to the plan, withdraw from an optional
sub-account, or obtain hardship withdrawals or
loans. A terminated participant may not reallocate
past contributions except in conjunction with a
distribution.13
[This section should be deleted effective 08-01-95.]
3.22 Participatory Restrictions on the Activities
of Terminated Participants. Subject to the
limitations of 8.5a), 8.5b), 8.5e), 8.5f), 8.6
and 8.7 of this plan, a terminated participant's
account will remain in this plan until s/he takes a
distribution. A terminated participant may not
contribute to the plan, withdraw from an optional
sub-account, or obtain hardship withdrawals or
loans.
[This section becomes effective on 08-01-95.]
3.23 Participation of Rehired Participants.
a) Non-Vested Participants.
1) 5 or Fewer Breaks in Service. Any
terminated participant in this plan or in
the DCIP, who is not yet vested in
company-matched contributions or company-
matched stock incentive contributions under
this plan or the DCIP and who is
subsequently rehired on the weekly or
hourly payroll before the completion of
5 consecutive breaks in service, becomes an
eligible employee on his or her date of
rehire. See 7.6 regarding restoration of
the company-matched sub-account.
2) More than 5 Breaks in Service. If the
individual described in sub-section
3.23a)1) above is rehired after incurring 5
consecutive breaks in service, eligibility
will be subject to the requirements of
3.2a) of this plan, beginning with the date
of rehire.
b) Vested Participants. Any terminated
participant in this plan or in the DCIP, who is
vested in company-matched contributions or
company-matched stock incentive contributions
under this plan or the DCIP and who is
subsequently rehired on the weekly or hourly
payroll becomes an eligible employee on his or
her reemployment date.14
[This section should be deleted effective 01-01-96.]
3.24 Participation of Rehired Participants. Any
terminated participant in this plan or the DCIP who
is subsequently rehired on or after January 1,
1996, on the weekly or hourly payroll is an
eligible employee on his or her reemployment date.
[This section becomes effective on 01-01-96.]
3.25 Union Representation. Eligible employees are
represented or have their benefits under this plan
bargained for by one of three labor-unions. The
union representation of eligible employees is
either under the IBEW, the IUU or the USWA.
a) IBEW. The IBEW is the International
Brotherhood of Electrical Workers. IBEW is
used in the plan as an adjective to describe
those workers bargained for by this union.
b) IUU. The IUU is the Independent Utilities
Union. IUU is used in the plan as an adjective
to describe those workers bargained for by this
union.
c) USWA. The USWA is the United Steelworkers
of America. USWA is used in the plan as an
adjective to describe those workers bargained
for by this union.
CONTRIBUTIONS
ARTICLE 4: CONTRIBUTIONS
4.1 Base Pay.
a) Definition. Base pay is the amount of straight
time wages paid to an eligible employee by CG&E on a
weekly or hourly basis for services, up to and
including a maximum of 40 hours per week.1 Base pay
excludes bonuses, shift differentials, overtime,
incentive pay, moving allowances, living2 and similar
allowances, and imputed income. Base pay includes the
amount of all elective contributions made by CG&E on
behalf of the participant pursuant to salary reduction
agreements, if the amount is not included in the gross
income of the participant under IRC 125. Base pay
includes deferred compensation contributions made
under this plan.
[This sub-section should be deleted effective 01-01-97.]
b) Definition. Base pay is the amount of straight
time wages paid to an eligible employee by CG&E on a
weekly or hourly basis for services, up to and
including a maximum of 40 hours per week.3 Base pay
excludes shift differentials, incentive pay, moving
allowances, living and similar allowances, and imputed
income. Base pay includes the amount of all elective
contributions made by CG&E on behalf of the
participant pursuant to salary reduction agreements,
if the amount is not included in the gross income of
the participant under IRC 125. Base pay includes
deferred compensation contributions made under this
plan. For purposes of determining deferred
compensation and optional contributions, base pay
includes overtime and bonuses. For purposes of
determining company-matched contributions and company-
matched stock incentive contributions, base pay
excludes overtime, but includes bonuses.
[This sub-section becomes effective on 01-01-97.]
c) Use of Base Pay. Base pay shall be taken
into account only while an employee is a
participant in the plan.
d) Limitation on Base Pay. Base pay taken into
account for determining contributions under the
plan shall not exceed $150,000, as adjusted4 by
the Commissioner of the Internal Revenue
Service for increases in the cost of living in
accordance with IRC 401(a)(17)(B).
e) Use of Base Pay Limitation. In determining
the base pay of a participant for the purpose
of determining the participant's accruals under
this plan, the rules of IRC 414(q)(6) shall
generally apply. However, the term "family"
shall include only the spouse of the
participant and any lineal descendants of the
participant who have not attained age 19 prior
to the close of the plan year. If, as a result
of this application, the adjusted $150,000
limitation is exceeded, then the limitation
shall be prorated among the affected
individuals in proportion to each such
individual's base pay prior to the application
of the limitation.
[This sub-section should be deleted effective 01-
01-97.]
4.2 Contributions. The plan will accept four
types of contributions:
a) Deferred Compensation Contributions. A
deferred compensation contribution is the
amount by which a participant directs CG&E to
reduce his or her base pay and which CG&E is
obligated to contribute to the plan.
Participants may elect to have their base pay
reduced by executing a plan participation
agreement. CG&E will then make a contribution
to the plan in an amount equal to the
participant's selected reduction each pay
period. The amount reduced, expressed in 1/2%
increments, shall not exceed 15% of the
participant's base pay.
b) Optional Contributions. An optional
contribution is the participant's voluntary
contribution made to the plan through payroll
deduction after taxes have been withheld.
Participants may choose to make contributions
to the plan each pay period through payroll
deduction. These optional contributions,
expressed in 1/2% increments, are deducted
after taxes have been withheld. The amount of
the optional contribution together with the
deferred compensation contribution, shall not
exceed 15%5 of the participant's base pay.
c) Company-Matched Contributions. The company-
matched contribution is the amount contributed
by CG&E to the participant's plan account from
its earnings based upon the participant's
deferred compensation contributions and/or
optional contributions, as applicable. For
each pay period of the participant, CG&E will
contribute out of its accumulated earnings an
amount, together with forfeitures, equal to 55%
of each participant's deferred compensation and
optional contributions up to and including 5%
of the participant's base pay. Participants'
contributions exceeding 5% of base pay will not
be matched.
d) Company-Matched Stock Incentive
Contributions. The company-matched stock
incentive contribution is the amount of CINergy
stock contributed by CG&E in addition to the
company-matched contribution. Depending on the
performance of CINergy for the year, CG&E will
contribute, if at all, an amount of CINergy
stock equal in value to between $0.10 and $0.30
for each dollar of a participant's deferred
compensation and optional contributions up to
and including 4% of the participant's base pay
for that year. Participants' contributions
exceeding 4% of base pay will not be matched.
If a participant did not make any deferred
compensation or optional contributions during
the year, s/he may still receive a company-
matched stock incentive contribution based on
the hypothetical assumption that s/he made
deferred compensation or optional contributions
of 1% of his or her base pay for that year.
[This section should be deleted effective 01-01-96.]
4.3 Contributions. The plan will accept five types
of contributions:
a) Deferred Compensation Contributions. A
deferred compensation contribution is the
amount by which a participant directs CG&E to
reduce his or her base pay and which CG&E is
obligated to contribute to the plan.
Participants may elect to have their base pay
reduced by informing the Committee through the
voice or electronic response system or other
media authorized by CG&E. CG&E will then make
a contribution to the plan in an amount equal
to the participant's selected reduction each
pay period. The amount reduced, expressed in
1/2% increments, shall not exceed 15% of the
participant's base pay.
b) Optional Contributions. An optional
contribution is the participant's voluntary
contribution made to the plan through payroll
deduction after taxes have been withheld.
Participants may choose to make contributions
to the plan each pay period through payroll
deduction. These optional contributions,
expressed in 1/2% increments, are deducted
after taxes have been withheld. The amount of
the optional contribution together with the
deferred compensation contribution, shall not
exceed 15%6 of the participant's base pay.
c) Company-Matched Contributions. The company-
matched contribution is the amount contributed
by CG&E to the participant's plan account from
its earnings based upon the participant's
deferred compensation contributions and/or
optional contributions, as applicable. For
each pay period of the participant, CG&E will
contribute out of its accumulated earnings an
amount, together with forfeitures, equal to 55%
of each participant's deferred compensation and
optional contributions up to and including 5%
of the participant's base pay. Participants'
contributions exceeding 5% of base pay will not
be matched.
[This sub-section should be deleted effective 01-
01-97.]
d) Company-Matched Contributions. The company-
matched contribution is the amount contributed
by CG&E to the participant's plan account from
its earnings based upon the participant's
deferred compensation contributions. For each
pay period of the participant, CG&E will
contribute out of its accumulated earnings an
amount, together with forfeitures, equal to 60%
of each participant's deferred compensation
contributions up to and including 5% of the
participant's base pay. Participants'
contributions exceeding 5% of base pay will not
be matched.
[This sub-section becomes effective on 01-01-97.]
e) Company-Matched Stock Incentive
Contributions. The company-matched stock
incentive contribution is the amount of CINergy
stock contributed by CG&E in addition to the
company-matched contribution. Depending on the
performance of CINergy for the year, CG&E will
contribute, if at all, an amount of CINergy
stock between $0.10 and $0.30 for each dollar
of a participant's deferred compensation and
optional contributions up to and including 4%
of the participant's base pay for that year.
Participants' contributions exceeding 4% of
base pay will not be matched. If a participant
did not make any deferred compensation or
optional contributions during the year, s/he
may still receive a company-matched stock
incentive contribution based on the
hypothetical assumption that s/he made deferred
compensation or optional contributions of 1% of
his or her base pay for that year.
[This sub-section should be deleted effective 01-
01-97.]
f) Company-Matched Stock Incentive
Contributions. The company-matched stock
incentive contribution is the amount of CINergy
stock contributed by CG&E in addition to the
company-matched contribution. Depending on the
performance of CINergy for the year, CG&E will
contribute, if at all, an amount of CINergy
stock between $0.20 and $0.40 for each dollar
of a participant's deferred compensation
contributions up to and including 5% of the
participant's base pay for that year.
Participants' deferred compensation
contributions exceeding 5% of base pay will not
be matched. If a participant did not make any
deferred compensation contributions during the
year, s/he may still receive a company-matched
stock incentive contribution based on the
hypothetical assumption that s/he made deferred
compensation contributions of 1% of his or her
base pay for that year.
[This sub-section becomes effective on 01-01-97.]
g) Rollover Contributions. A rollover
contribution is the amount contributed by a
participant to his or her plan account
attributable to a distribution from a
retirement plan of a former employer. A
participant must make a written request to the
Committee to make a rollover contribution. The
request must include a statement detailing the
type of property to be rolled over and that
such property is an eligible rollover
contribution.7 If the Committee so permits,
the participant may transfer the amount of the
rollover contribution to the trustee.
[This section becomes effective on 01-01-96.]
4.4 Contributions Due to Military Leave.
Notwithstanding any provision of this plan to the
contrary, contributions with respect to qualified
military service will be provided in accordance
with IRC 414(u).
4.5 Contributions from Sources other than Base
Pay.
a) Settlement of Disputes. Prior to the time a
participant becomes entitled to receive a lump
sum payment of wages in settlement of a dispute
with CG&E, the participant may direct
contributions to this plan from the lump sum
payment in the same percentages and allocation
to funds as are in effect at the time when the
lump sum amount is paid. CG&E may also make
company-matched contributions and/or company-
matched stock incentive contributions on the
settlement amount.
b) Lump Sum Payment in Lieu of Salary. If a
class of participants is designated by CG&E to
receive certain pay in the form of a lump sum,
the determination of whether that special pay
may be used as base pay for making
contributions to this plan shall be determined
by CG&E. CG&E may also make a determination
whether it will make company-matched
contributions and/or company-matched stock
incentive contributions for each payment of a
special lump sum. In the event that the
special pay is permitted to be used as base pay
for plan contributions, those contributions
must be in the same percentages designated by
the participant and in effect at the time when
the lump sum amount is paid.
4.6 Changing the Percentage of Contributions.
a) Participants. A participant may change the
percentage of deferred compensation
contributions or optional contributions four
times per year.8
[This sub-section should be deleted effective 01-
01-96.]
b) Participants. A participant may change the
percentage of deferred compensation
contributions and/or optional contributions at
anytime through the voice or other electronic
response system or other media authorized by
CG&E.
[This sub-section becomes effective on 01-01-96.]
c) Other Beneficial Owners. Terminated
participants, beneficiaries and alternate
payees may not contribute to this plan.
4.7 Limitation on Deferred Compensation
Contributions.
a) Maximum Amount. A participant's deferred
compensation contributions shall not exceed the
maximum deferred amount in effect for that tax
year pursuant to IRC 402(g)9. The maximum
amount for 1995 is $9,24010 and is adjusted
annually as announced by the Internal Revenue
Service.
b) Reaching Maximum Amount. At the time the
IRC 402(g) limit is reached for the amount
being deferred by a participant, his or her
deferred compensation contribution shall cease
for the remainder of that year.
c) Excess Deferred Compensation Contributions.
If a participant files a plan participation
agreement which causes CG&E to inadvertently
defer more than is permitted in 4.7a) above,
the excess deferred compensation contribution
shall be returned to the participant.11
[This sub-section should be deleted effective 01-
01-96.]
d) Excess Deferred Compensation Contributions.
If a participant informs the Committee through
the voice or other electronic response system
or other media authorized by CG&E which causes
CG&E to inadvertently defer more than is
permitted in 4.7a) above, the excess deferred
compensation contribution shall be returned to
the participant.12
[This sub-section becomes effective on 01-01-96.]
4.8 Voluntary Suspension of Contributions.
a) General Rule. Participants may suspend
either their deferred compensation or optional
contributions, or both by filing13 an
application to suspend contributions14 with the
Committee.
b) Effective Date. Voluntary suspensions shall
become effective on a pay date no later than 30
days after the application to suspend
contributions was filed with the Committee.
c) Period of Suspension. Participants may not
make the suspended type of contributions to the
plan for at least 12 months from the effective
date of the suspension.
d) Makeup of Contributions. Participants may
not make up suspended contributions.
[This section should be deleted effective 01-01-96.]
4.9 Involuntary Suspension of Contributions.
a) Hardship Withdrawals. Participants who have
obtained a hardship withdrawal shall be
automatically suspended from making deferred or
optional contributions for a period of 12
months beginning from the date of the
distribution of the hardship withdrawal.
b) Leaves of Absence. Contributions to the
plan are automatically suspended during a
participant's leave of absence, because the
participant earns no base pay from which to
contribute. When the participant returns to
work for CG&E, contributions shall automati-
cally resume with the first pay check in
accordance with the terms of the most recent
plan participation agreement.
[This sub-section should be deleted effective 01-
01-96.]
c) Leaves of Absence. Contributions to the
plan are automatically suspended during a
participant's leave of absence, because the
participant earns no base pay from which to
contribute. When the participant returns to
work for CG&E, contributions shall automati-
cally resume with the first pay check in
accordance with the terms most recently
provided by the participant on the voice or
other electronic response system or other media
authorized by CG&E.
[This sub-section becomes effective on 01-01-96.]
4.10 Resumption of Contributions. Upon the
expiration of the required period of suspension,
participants may resume making contributions to the
plan by filing a resumption of contributions form15
with the Committee. The resumption will be
effective on the first pay date of the month no
later than 30 days after the date the resumption of
contributions form was filed with the Committee.
Contributions will resume at the same percentages
of base pay as were in effect at suspension. If
the resumption of contributions form was filed
during the period of suspension, it will become
effective on the first pay date of the month
following the period of suspension.
[This section should be deleted effective 01-01-96.]
4.11 Resumption of Contributions. Upon the
expiration of the required period of suspension,
participants may resume making contributions to the
plan by informing the Committee through the voice
or other electronic response system or other media
authorized by CG&E. The resumption will be
effective on the first pay date of the month no
later than 30 days after the date the participant
informs the Committee of his or her intent to
resume contributions. Contributions will resume at
the same percentages of base pay as were in effect
at suspension. If the participant informs the
Committee during his or her suspension, the
resumption of contributions will become effective
on the first pay date of the month following the
period of suspension.
[This section becomes effective on 01-01-96.]
4.12 Remittance of Contributions. CG&E will
generally forward all deferred compensation,
optional, and company-matched contributions to the
trustee on the pay date for which the contributions
are effective. In any event, CG&E must transmit
these contributions promptly after the end of the
month in which the contributions are taken.
4.13 Return of Company-Matched Contributions and
Company-Matched Stock Incentive Contributions.
a) General Rule. Except as provided in 7.6,
15.9c)2), 15.9c)3), 16.4d) and 16.4e), and in
this section, the assets of the plan shall
never revert to or be used by CG&E.
1) Mistaken Contributions. Company-matched
contributions and company-matched stock
incentive contributions made to the trust
by reason of a mistake of fact may be
returned to CG&E within one year after the
payment of the contribution.
2) Non-deductible Contributions.
Company-matched contributions and company-
matched stock incentive contributions made
to the plan which are deemed non-deductible
pursuant to IRC 404 shall be returned to
CG&E within one year after the disallowance
of the deduction. If any portion of the
non-deductible amount is from a
participant's deferred compensation
contribution, that amount shall be returned
to the participant
INVESTMENTS
ARTICLE 5: INVESTMENTS
5.1 Principles of Investment Fund Selection. The
Committee will establish and direct the trustee to
maintain in the trust at least three investment funds,
which collectively are intended to comply with ERISA 404
c) and the regulations thereunder1.
5.2 Selection of Investment Funds. One of the investment
funds will be the company stock fund. The Committee will
select the other investment funds, following the
principles of 5.1. If a fund is added or deleted,
beneficial owners will be given the opportunity to
reallocate their past contributions and redirect their
sub-accounts among the authorized investment funds.
5.3 Investment Funds in the Plan. The following are the
investment funds2 maintained in the plan trust:
a) Company Stock Fund. The company stock fund is a
unitized fund which consists largely of shares of
CINergy common stock, and a proportionately small
amount of cash. It has been available (formerly with
CG&E common stock) since the plan was established on
October 1, 1985. The stock will be purchased at fair
market value on the open market or from CINergy
through the issuance of authorized but previously
unissued shares at the option of CINergy. The stock
may also be obtained through the exercise of stock
rights. Stock received by the trustee as a stock
dividend distribution or right is reflected by an
increase in the unit value.
b) Fidelity Magellan Fund.3 The Fidelity Magellan
Fund seeks capital appreciation by investing primarily
in common stock and securities convertible into common
stock.4 It was added as an additional investment
option on 10-01-92.
c) Fidelity Equity-Income Fund. The Fidelity Equity-
Income Fund seeks reasonable income by investing
primarily in income-producing equity securities.5 It
has been available since the plan was established on
October 1, 1985.
d) Fidelity Intermediate Bond Fund. The Fidelity
Intermediate Bond Fund seeks to obtain a high
level of current income by investing primarily in
high and upper-medium grade fixed-income obligations.6
It has been available since the plan was established
on October 1, 1985.
e) The PNC Fund (Sower Money Market Fund - Money
Market Portfolio).7 The investment objective of this
portfolio is to provide as high a level of current
interest income as is consistent with maintaining
liquidity and stability of principal.8 This fund is
called the money market fund throughout this plan. A
money market fund, but not necessarily this particular
fund, has been available since the plan was
established on October 1, 1985.
[This sub-section should be deleted effective 01-01-96.]
f) Fidelity Retirement Money Market Fund. The
investment objective of this portfolio is to provide
as high a level of current interest income as is
consistent with maintaining liquidity and stability of
principal. This fund is called the money market fund
throughout this plan. A money market fund, but not
necessarily this particular fund, has been available
since the plan was established on October 1, 1985.
[This sub-section becomes effective on 01-01-96.]
g) Loan Fund. The loan fund consists of all promis-
sory notes securing plan loans to participants. The
loan fund is administered as described in Article 10.
5.4 Vested Interest Response Line (VIR Line). The vested
interest response line is the telephone line established
and maintained by the trustee for use by participants to
access their account information and to effectuate certain
transactions affecting their accounts. The Vested
Interest Response Line is referred to as the VIR Line
throughout this plan.
5.5 Participant Investment Elections. A participant
selects investment funds for his or her future
contributions by using the investment election menu on the
VIR Line. Investments must be made in whole percentage
increments.9
5.6 Investment of Contributions. The trustee shall
invest the participants' contributions from CG&E in the
participants' current designated investment selections.
If the trustee has no record of a current investment
selection for a participant's contribution, it shall
invest the contribution in the money market fund. The
trustee shall invest all company-matched contributions and
company-matched stock incentive contributions in the
company stock fund.10
[This section should be deleted effective 01-01-96.]
5.7 Investment of Contributions. The trustee shall invest
the participants' contributions from CG&E in the
participants' current designated investment selections.
If the trustee has no record of a current investment
selection for a participant's contribution, it shall
invest the contribution in the money market fund. The
trustee shall invest all company-matched contributions and
company-matched stock incentive contributions in the
company stock fund.11 However, a participant who has
reached age 50 may elect to invest his or her company-
matched contributions and company-matched stock incentive
contributions in any one or more of the investment funds
as s/he directs by informing the Committee through the
voice or other electronic response system or other media
authorized by CG&E. Allocations must be made in whole
percentages.
[This section becomes effective on 01-01-96.]
5.8 Initial Allocation of Deferred and Optional
Contributions. A participant's deferred compensation
and/or optional contributions will be allocated to any one
or more of the investment funds as s/he directs by filing
an allocation of future contributions form with the
Committee.12. Allocations must be made in any whole
percentage. Allocations will apply to all contributions
made on or after the entry date (see 3.13). Participant-
s' contributions will be invested in the investment funds
as of the valuation date coinciding with or next following
the date on which they are received by the trustee. If
the allocation form is not yet received by the trustee
when it must allocate contributions, the contributions
will be invested in the money market fund, until the
directions for allocations are filed with the Committee.13
[This section should be deleted effective 01-01-96.]
5.9 Initial Allocation of Deferred and Optional
Contributions. A participant's deferred compensation
and/or optional contributions, collectively, will be
allocated to any one or more of the investment funds as
s/he directs by informing the Committee through the voice
or other electronic response system or other media
authorized by CG&E. Allocations must be made in any whole
percentage. Allocations will apply to all contributions
made on or after the entry date (see 3.14). Participant-
s' contributions will be invested in the investment funds
as of the valuation date coinciding with or next following
the date on which they are received by the trustee. If
the trustee has not yet received the participant's
investment directions when it must allocate contributions,
the contributions will be invested in the money market
fund, until the directions for allocations are provided by
the participant to the Committee.
[This section becomes effective on 01-01-96.]
5.10 Investment Fund Transfers of Current Balances. A
participant can select reallocation of his or her current
account balance in different investment funds and/or
different percentages of allocation by using the fund
transfers menu on the VIR Line.14 Investments must be
made in whole percentage increments. A participant may
elect or change investment funds and/or the percentages in
which contributions will be allocated once per quarter.
[This section should be deleted effective 08-01-95.]
5.11 Investment Fund Transfers of Current Balances.
Except for participants or terminated participants whose
accounts are frozen due to pending domestic relations
orders, any participant or terminated participant with an
account balance under the plan can select reallocation of
his or her current account balance in different investment
funds and/or different percentages of allocation by using
the fund transfers menu on the VIR Line.15 Investments
must be made in whole percentage increments. A
participant or terminated participant may elect or change
investment funds and/or the percentages in which
allocation will be allocated once per quarter.
[This section becomes effective on 08-01-95 and should be deleted
effective 01-01-96.]
5.12 Investment Fund Transfers of Current Balances.
Except for participants or terminated participants whose
accounts are frozen due to pending domestic relations
orders, any participant or terminated participant with an
account balance under the plan can select reallocation of
his or her current account balance in different investment
funds and/or different percentages of allocation by using
the fund transfers menu on the VIR Line.16 Investments
must be made in whole percentage increments. A
participant or terminated participant may elect or change
investment funds and/or the percentages in which
allocations will be allocated at anytime.
[This section becomes effective on 01-01-96.]
5.13 Risk of Loss. The participant (or terminated
participant) bears the effect for all gain or loss in
market value of the investments selected for his or her
plan assets. The participant (or terminated participant)
also bears the effect of any market fluctuations which
occur between the time his or her instructions are
delivered to the Committee or the trustee and the time
that the instructions are effectuated. The trustee, the
Committee, the individual Committee members, and CG&E will
not be responsible or liable to participants (or
terminated participant) for the negative or positive
effect of market fluctuations or reasonable delay in
processing transactions upon their accounts.
5.14 Voting CINergy Stock.
a) Participation Instructions. The trustee shall vote
the shares of CINergy stock credited to the accounts
of beneficial owners in accordance with the
instructions given by the beneficial owner. If the
instructions are not received by the trustee by a date
the trustee designates prior to any meeting of
shareholders of CINergy, the trustee shall vote such
uninstructed shares at its discretion.
b) Trustee Discretion. The trustee shall vote at its
discretion the CINergy stock held in the company stock
fund which have not been allocated to beneficial
owners' accounts as of the record date of any meeting
of shareholders of CINergy.
ACCOUNTS
ARTICLE 6: ACCOUNTS
6.1 Accounts and Sub-accounts.
a) Account. Each beneficial owner's total assets in
the plan shall be maintained in a separate account.
The account shall reflect all transactions regarding
the beneficial owner's assets. The assets in an
account shall be allocated among sub-accounts.
b) Sub-account. Each account must include one or more
of the following sub-accounts:
1) a deferred compensation sub-account1;
2) an optional sub-account; and
3) a company-matched sub-account.
[This sub-section should be deleted effective 01-01-96.]
c) Sub-account. Each account must include one or more
of the following sub accounts:
1) a deferred compensation sub-account;
2) an optional sub-account;
3) a company-matched sub-account; and
4) a rollover sub-account.
[This sub-section becomes effective on 01-01-96.]
d) Account Value. Each participant's account is
valued daily.2 The value of an account reflects the
number of units of each investment fund owned by the
participant and is based upon the unit price of each
fund. Both the units owned and the price reflect a
close of business valuation.3
e) Investment Ownership. The trustee owns4 all plan
assets as a fiduciary on behalf of the beneficial
owners.5
6.2 Quarterly Statements. The trustee shall prepare an
individual statement of account for each beneficial owner
on a quarterly basis.6 The statements will reflect the
status of the account and sub-accounts of the beneficial
owner. The trustee shall mail the statements to the
beneficial owners as soon as practical after each quarter
end.
VESTING AND FORFEITURES
ARTICLE 7: VESTING AND FORFEITURES
7.1 Vesting. The process by which an employee becomes
entitled to a nonforfeitable benefit under this plan.
7.2 Year of Vesting Service. Each period of 12
consecutive months of employment, beginning with the date
on which the employee first performed an hour of service
for CG&E or any related company, during which he or she
completes at least 1,000 hours of service. The
calculation period begins on the date (and subsequent
anniversaries of that date) the employee first performed
an hour of service for CG&E or a related company. Hours
of service prior to the date on which the relationship to
the Cincinnati Gas & Electric Company began are not
included for the purpose of vesting under this plan. The
hours of service of non-participating employees, leased
employees and co-ops are included in determining their
years of vesting service.
[This section should be deleted effective 01-01-96.]
7.3 Vested Benefits.
a) Vested Accrued Benefit. The portion of a
participant's account available for distribution to
the participant upon termination of employment with
CG&E.
b) Deferred Compensation Sub-account and Optional
Sub-account. Participants are immediately vested in
their deferred compensation sub-accounts and optional
sub-accounts.
[This sub-section should be deleted effective 01-01-96.]
c) Deferred Compensation Sub-account, Optional Sub-
account and Rollover Sub-account. Participants are
immediately vested in their deferred compensation sub-
accounts, optional sub-accounts and rollover sub-
accounts.
[This sub-section becomes effective on 01-01-96.]
d) Company-Matched Sub-account. Participants are
vested in their company-matched sub-accounts upon
occurrence of any of the following:
1) termination of this plan,
2) partial termination of this plan with respect
to affected participants,
3) the participant attains 5 years of vesting
service,1
4) the participant dies,
5) the participant becomes disabled,
6) the participant retires under the RIP,
7) the participant is permanently laid off for
lack of work,
8) the participant attains age 65.2
[This sub-section should be deleted effective 01-01-96.]
e) Company-Matched Sub-account. Participants who are
credited with one hour of service on or after
January 1, 1996 are immediately vested in their
company-matched sub-accounts.
[This sub-section becomes effective on 01-01-96.]
7.4 Vesting of Former Employees.
a) Impact of Breaks in Service. Non-vested former
employees who resume employment will be credited for
vesting purposes with their prior years of service so
long as the number of consecutive breaks in service
(see 3.10) incurred by the employees do not exceed
five.
[This sub-section should be deleted effective 01-01-2001.]
b) Impact of Breaks in Service. Terminated
participants who are credited with an hour of service
on or after January 1, 1996 are not subject to the
break in service rules provided in 3.10.
[This sub-section becomes effective on 01-01-96.]
c) Immediate Vesting. Former employees or partici-
pants who were vested in SIP or DCIP prior to termina-
tion of employment will retain or immediately obtain
vested status in this plan.
7.5 Special Vesting Rules.
a) Parental Leaves. For the purpose of determining a
participant's years of vesting service, a non-vested
participant who is granted a leave of absence for the
purpose of giving birth to and/or nurturing a newborn,
or adopting a child, will be granted credit for 190
hours of vesting service per month, not to exceed a
total of 501 hours, during that leave of absence.
Hours of vesting service will be granted in the year
in which the absence commences to the extent necessary
to prevent the employee from incurring a break in
service for vesting purposes. To the extent the hours
of vesting service are not needed to prevent a break
in vesting service, the employee will be credited with
the hours of vesting service in the immediately
following year to prevent the occurrence of a break in
vesting service during that year.
b) Military Leaves. Notwithstanding any provision of
this plan to the contrary, credit for vesting service
with respect to qualified military service will be
provided in accordance with IRC 414(u)3.
7.6 Forfeitures and Restorations.
a) Forfeiture. A participant who terminates
employment with CG&E and is not vested in his or her
company-matched sub-account will forfeit the amount in
the company-matched sub-account. The participant
shall be deemed to have received a distribution of
zero for the company-matched account. The forfeiture
will occur upon the participant's termination of
employment with CG&E. This forfeiture may be restored
in accordance with 7.6d) below.
[This sub-section should be deleted effective 01-01-2001.]
b) Forfeiture. A participant's benefit will be
forfeited only in accordance with 13.15 if the
participant is credited with an hour of service on or
after January 1, 1996.
[This sub-section becomes effective on 01-01-96.]
c) Use of Forfeitures. Forfeitures shall be used to
reduce the company-matched contributions which are to
be made in accordance with 4.2c), 4.3c) and 4.3d).
d) Restoration of Forfeitures. A terminated
participant, described in 7.6a) above, who resumes
employment with CG&E before incurring 5 consecutive
breaks in service shall have his or her
company-matched sub-account restored, without
dividends earned in the interim.
[This sub-section should be deleted effective 01-01-96.]
e) Restoration of Forfeitures. A terminated
participant who is credited with an hour of service on
or after January 1, 1996, shall have his or her
benefit restored in accordance with 13.15.
[This sub-section becomes effective on 01-01-96.]
f) Source of Restorations. Restorations of the
company-matched sub-account shall be made from
forfeitures during the plan year of the restoration.
If there are insufficient forfeitures to cover
restorations in any given plan year, CG&E shall make
additional contributions to cover the deficit.
DISTRIBUTIONS
ARTICLE 8: DISTRIBUTIONS
8.1 Distribution. A distribution is the delivery of all
of the vested assets in a plan account to its beneficial
owner.1
8.2 Eligibility for Distribution.
a) Termination. Terminated participants are eligible
to receive distribution upon termination of employment
for any reason2.
b) Disability. Participants and terminated
participants are eligible to receive distribution as
of the dates on which they become eligible to receive
disability benefits under the RIP if they:
1) have been granted disability benefits by the
Social Security Administration, or
2) are determined to be disabled by CG&E's medical
director.3
[This sub-section should be deleted effective 01-01-97.]
c) Death. Beneficiaries are eligible to receive
distribution upon the death of the participant from
whom their interests are derived.
d) Acceptance of a DRO. An alternate payee under a
DRO which has been accepted by the plan is given a
window opportunity to elect distribution. See 11.13.
e) Plan Termination. The Committee shall make a
distribution to all participants if the plan is
terminated without the establishment of a successor
plan.
[This sub-section should be deleted effective 01-01-96.]
f) Plan Termination. The Benefits Manager shall make
a distribution to all participants if the plan is
terminated without the establishment of a successor
plan.
[This sub-section becomes effective on 01-01-96.]
g) Sale of CG&E. The Committee shall make a
distribution to all participants if substantially all
of CG&E's assets are sold.
[This sub-section should be deleted effective 01-01-96.]
h) Sale of CG&E. The Benefits Manager shall make a
distribution to all participants if substantially all
of CG&E's assets are sold.
[This sub-section becomes effective on 01-01-96.]
i) Sale of a Subsidiary. The Committee shall make a
distribution to participants who are employed by a
CG&E subsidiary if the subsidiary is sold and the
participants are no longer employed by CG&E. If CG&E
sells a subsidiary, but retains the employees who
formerly worked for that subsidiary, those employees
will not qualify for a distribution as a result of the
sale.
[This sub-section should be deleted effective 01-01-96.]
j) Sale of a Subsidiary. The Benefits Manager shall
make a distribution to participants who are employed
by a CG&E subsidiary if the subsidiary is sold and the
participants are no longer employed by CG&E. If CG&E
sells a subsidiary, but retains the employees who
formerly worked for that subsidiary, those employees
will not qualify for a distribution as a result of the
sale.
[This sub-section becomes effective on 01-01-96.]
8.3 Distribution Valuation Date. The distribution
valuation date for a beneficial owner is the business day
on which the beneficial owner's units in the funds are
sold for the purpose of disbursing funds for a loan, a
withdrawal or a distribution.4
8.4 Valuing a Distribution. The value of an account for
the purpose of distribution shall be based upon the value
of the units in the CINergy stock funds and the mutual
funds, determined as of the distribution valuation date5.
8.5 Events Triggering Distribution. As used in this
Article, an event consists of a participant's termination,
retirement, permanent layoff for lack of work, disability,
or death.
a) Vested Benefit of $3,500 or Less. If the vested
benefit is $3,500 or less, the Committee shall make a
distribution in a lump sum.
[This sub-section should be deleted effective 01-01-96.]
b) Vested Benefit of $3,500 or Less. If the vested
benefit is $3,500 or less, the Benefits Manager shall
make a distribution in a lump sum.
[This sub-section becomes effective on 01-01-96.]
c) Vested Benefit Over $3,500.6 If the vested benefit
is over $3,500, the participant or beneficiary shall
elect to receive or delay the distribution. The
election7 must be filed with the Committee within 60
days of the event. A participant or beneficiary who
has elected to delay8 the distribution can elect a
distribution at a later time by filing an application
for distribution9 with the Committee.
[This sub-section should be deleted effective 01-01-96.]
d) Vested Benefit Over $3,500.10 If the vested bene-
fit is over $3,500, the participant or beneficiary
shall elect to receive or delay the distribution. The
election must be received by the Benefits Manager
within 60 days of the event. A participant or
beneficiary who has elected to delay11 the
distribution can elect a distribution at a later time
by informing the Benefits Manager through the voice or
other electronic response system or other media
authorized by CG&E.
[This sub-section becomes effective on 01-01-96.]
e) Mandatory Distribution After an Event. The
Committee shall disburse a distribution no later than
the 60th day after the close of the calendar year in
which the terminated participant who has been affected
by an event attains or would have attained age 65. If
the terminated employee is age 65 or older on the date
of the event, the distribution shall be made within 60
days of the year end during which the event occurred.
[This sub-section should be deleted effective 01-01-96.]
f) Mandatory Distribution After an Event. The
Benefits Manager shall disburse a distribution no
later than the 60th day after the close of the
calendar year in which the terminated participant who
has been affected by an event attains or would have
attained age 65. If the terminated employee is age 65
or older on the date of the event, the distribution
shall be made within 60 days of the year end during
which the event occurred.
[This sub-section becomes effective on 01-01-96.]
8.6 Participant's Mandatory Distribution Year. The
following rules shall apply regardless of any other
distribution provision in the plan.12
a) Definition. A participant's mandatory distribution
year is the year in which s/he attains age 70 1/2.
b) Lump Sum Distribution. The Committee shall make a
distribution of all vested benefits accrued as of the
September 30 of a participant's mandatory distribution
year. The distribution shall be in a lump sum. The
distribution shall be disbursed by April 1 following
the end of the participant's mandatory distribution
year.13
[This sub-section should be deleted effective 01-01-96.]
c) Lump Sum Distribution. The Benefits Manager shall
make a distribution of all vested benefits accrued as
of the September 30 of a participant's mandatory
distribution year. The distribution shall be in a
lump sum. The distribution shall be disbursed by
April 1 following the end of the participant's
mandatory distribution year.14
[This sub-section becomes effective on 01-01-96.]
d) Subsequent Annual Distributions. If the partici-
pant has assets in the plan after the mandatory
distribution year, the Committee shall distribute all
vested benefits accrued as of September 30 each
subsequent year, by December 31st of that year.
[This sub-section should be deleted effective 01-01-96.]
e) Subsequent Annual Distributions. If the partici-
pant has assets in the plan after the mandatory
distribution year, the Benefits Manager shall
distribute all vested benefits accrued as of September
30 each subsequent year, by December 31st of that
year.
[This sub-section becomes effective on 01-01-96.]
f) Continuing Contributions. Participants may
continue to contribute to the plan after their
mandatory distribution year.
[This section should be deleted effective 01-01-97 for all
participants, except 5% owners.]
8.7 Participant's (Other than 5% Owner's) Mandatory
Distribution Year. The following rules shall apply
regardless of any other distribution provision in the
plan.15
a) Definition. A participant's (other than a 5%
owner's) mandatory distribution year is the later of
the year in which s/he attains age 70 1/2 or retires.
A 5% owner's mandatory distribution year is the year
in which s/he attains age 70 1/2. See 8.6 above for
details.
b) Lump Sum Distribution. The Benefits Manager shall
make a distribution of all vested benefits accrued as
of the September 30 of a participant's (other than a
5% owner's) mandatory distribution year. The
distribution shall be in a lump sum. The distribution
shall be disbursed by April 1 following the end of the
participant's (other than a 5% owner's) mandatory
distribution year.16
c) Subsequent Annual Distributions. If the partici-
pant (other than a 5% owner) has assets in the plan
after the mandatory distribution year, the Benefits
Manager shall distribute all vested benefits accrued
as of September 30 each subsequent year, by December
31st of that year.
[This section becomes effective on 01-01-97 for all participants,
except 5% owners.]
8.8 Filing Forms for Distribution or Delay.
a) General Rule. A beneficial owner generally must
file an application for distribution17 90 days in
advance of disbursement of a distribution from the
plan.
[This sub-section should be deleted effective 01-01-96.]
b) General Rule. A beneficial owner generally must
apply for distribution by the voice or other
electronic response system or other media authorized
by CG&E 90 days in advance of disbursement of a
distribution from the plan.
[This sub-section becomes effective on 01-01-96.]
c) Timing A Distribution. A beneficial owner must
file an application for distribution with the
Committee at least 15 business days before
disbursement of a distribution from the plan.
[This sub-section should be deleted effective 01-01-96.]
d) Timing A Distribution. A beneficial owner must
apply for distribution with the Benefits Manager
through the voice or other electronic response system
or other media authorized by CG&E at least 15 business
days before disbursement of a distribution from the
plan.
[This sub-section becomes effective on 01-01-96.]
e) Required Elections. If a beneficial owner fails to
make a required election to immediately receive
distribution or to delay distribution, the plan may
process an election to delay distribution filed by the
Committee on behalf of the beneficial owner.
[This sub-section should be deleted effective 01-01-96.]
f) Required Elections. If a beneficial owner fails to
make a required election to immediately receive
distribution or to delay distribution, the plan may
process an election to delay distribution as requested
by the Benefits Manager on behalf of the beneficial
owner.
[This sub-section becomes effective on 01-01-96.]
g) Mandatory Distributions. Any mandatory
distribution required by the plan or the Internal
Revenue Code may be made under the authority of an
application for distribution filed by the Committee18
on behalf of the beneficial owner.
[This sub-section should be deleted effective 01-01-96.]
h) Mandatory Distributions. Any mandatory
distribution required by the plan or the Internal
Revenue Code may be made under the authority of a
request for distribution made by the Benefits
Manager19 on behalf of the beneficial owner.
[This sub-section becomes effective on 01-01-96.]
8.9 Timing of Distributions. The Committee will disburse
distributions as a lump sum or in 5 annual installments.
a) Lump Sum Distributions. The trustee shall mail a
lump sum payment to the beneficial owner approximately
15 business days following the day on which the
application for distribution was filed with the
Committee.
b) Five Annual Installments. A participant whose
employment is terminated by reason of retirement under
the terms of the RIP, disability, or permanent layoff
for lack of work, may irrevocably elect to receive his
or her account in five annual installments.20
Installment distributions are not available to
beneficiaries or to participants terminated for other
reasons.21
c) Timing of Installments. The eligible participant
may elect to receive the first installment as soon as
practical after the end of the month that the event
occurs, or as soon as practical after the end of the
year in which the event occurs. The trustee shall
disburse the first installment no later than March 122
following the calendar year when the event occurred
which triggered the distribution.
1) Amount of Each Installment. Those who have
elected 5 annual installments shall receive their
accounts as follows: 1/5 of the account in the
first installment, 1/4 of the account at the time
of the second installment, 1/3 of the account at
the time of the third installment, 1/2 of the
account at the time of the fourth installment, and
the balance of the account at the time of the last
installment.
2) Subsequent Installments. The payment date for
each subsequent installment shall be as soon as is
practicable within each plan year following the
anniversary date of the initial payment. The
balance of the account shall be revalued in
accordance with 8.4 and any CINergy stock will
continue to be voted by such a participant in
accordance with 5.14. If a participant dies
prior to receiving all installments, the remainder
in his or her account will be paid in a lump sum
to the beneficiary or, if none, in accordance with
8.14.
[This section should be deleted effective 01-01-96.]
8.10 Timing of Distributions. The Benefits Manager will
disburse distributions as a lump sum or in 5 annual
installments.
a) Lump Sum Distributions. The trustee shall mail a
lump sum payment to the beneficial owner approximately
15 business days following the day on which the
Benefits Manager was informed of the participant's
request for distribution through the voice or other
electronic response system or other media authorized
by CG&E.
b) Five Annual Installments. A participant whose
employment is terminated by reason of retirement under
the terms of the RIP, disability, or permanent layoff
for lack of work, may irrevocably elect to receive his
or her account in five annual installments.23
Installment distributions are not available to
beneficiaries or to participants terminated for other
reasons.24
c) Timing of Installments. The eligible participant
may elect to receive the first installment as soon as
practical after the end of the month that the event
occurs, or as soon as practical after the end of the
year in which the event occurs. The trustee shall
disburse the first installment no later than March 125
following the calendar year when the event occurred
which triggered the distribution.
1) Amount of Each Installment. Those who have
elected 5 annual installments shall receive their
accounts as follows: 1/5 of the account in the
first installment, 1/4 of the account at the time
of the second installment, 1/3 of the account at
the time of the third installment, 1/2 of the
account at the time of the fourth installment, and
the balance of the account at the time of the last
installment.
2) Subsequent Installments. The payment date for
each subsequent installment shall be as soon as is
practicable within each plan year following the
anniversary date of the initial payment. The
balance of the account shall be revalued in
accordance with 8.4 and any CINergy stock will
continue to be voted by such a participant in
accordance with 5.14. If a participant dies
prior to receiving all installments, the remainder
in his or her account will be paid in a lump sum
to the beneficiary or, if none, in accordance with
8.14.
[This section becomes effective on 01-01-96.]
8.11 In Kind Distribution.
a) General Rule. Distributions generally consist of a
CINergy stock certificate reflecting the value of the
units of the CINergy stock fund in the account as of
the distribution valuation date, plus cash from the
sale of all other plan investments and incidental cash
from the CINergy stock fund.
b) Company Stock Fund. To the extent that a
beneficial owner's account includes units of the
CINergy stock fund as of the distribution valuation
date, s/he may elect to receive cash in lieu of a
CINergy stock certificate.26
c) Fidelity Funds. The beneficial owner can direct
the trustee to transfer his or her Fidelity Equity
Income, Intermediate Bond and/or Magellan funds, upon
distribution, to an individual account27 at Fidelity
by submitting an application to the Committee.
[This sub-section should be deleted effective 01-01-96.]
d) Fidelity Funds. The beneficial owner can direct
the trustee to transfer his or her Fidelity Equity
Income, Intermediate Bond and/or Magellan funds, upon
distribution, to an individual account28 at Fidelity
by informing the Benefits Manager through the voice or
other electronic response system or other media
authorized by CG&E.
[This sub-section becomes effective on 01-01-96.]
8.12 Direct Rollovers to Other Plans.
a) Election.
1) Who May Elect. Participants, terminated
participants, their beneficiaries who are
surviving spouses, and alternate payees who are
former spouses of participants, may elect to have
any portion of an eligible rollover distribution
paid directly to their designated eligible
retirement plan.29 Those making this election
must be entitled to distribution or withdrawal of
their plan assets, under the terms of this plan.
The only plan assets subject to direct rollover
are those acquired by reason of being a
participant, a surviving spouse or a former spouse
alternate payee.
2) Manner of Election. This election must be made
at the time and in the manner prescribed by the
Committee.30
b) Distributions Eligible for Rollover. An eligible
rollover distribution is any distribution or
withdrawal, except as stated in 8.12c) below, of all
or any portion of the account of one of the persons
listed in 8.12a) above.
c) Distributions Not Eligible for Rollover.
1) Portions of Mandatory Distributions. The
portion of a mandatory distribution under 8.6
which is required to be distributed under IRC
401(a)(9) is not eligible for direct rollover.
[This sub-section should be deleted effective 01-01-97
for all participants, except 5% owners.]
2) Portions of Mandatory Distributions. The
portion of a mandatory distribution under 8.7
which is required to be distributed under IRC
401(a)(9) is not eligible for direct rollover.
[This sub-section becomes effective on 01-01-97 for
all participants, except 5% owners.]
3) Portions Excluded from Gross Income. The
portion of any distribution which is not able to
be included in the gross income of the beneficial
owner is not eligible for direct rollover. For
this purpose, gross income can include any
unrealized appreciation of CINergy stock.31
4) Optional Contributions. Optional contributions
are not eligible for direct rollover. However,
interest and earnings attributable to optional
contributions are eligible for direct rollover.
5) Deemed Distributions. A deemed distribution
which has occurred because of a participant's
failure to make one or more loan payments is not
eligible for direct rollover.32
6) Loan Offsets. The portion of a distribution
due to termination of the participant's employment
with CG&E which offsets the unpaid portion of a
plan loan will not be eligible for direct
rollover.33
7) Periodic Distributions.34 Any distribution
that is one of a series of substantially equal
periodic payments, made at least annually, to be
paid over the life of the beneficial owner or the
joint lives of the beneficial owner and his or her
designated beneficiary, or to be paid for a
specified period of at least 10 years is not
eligible for direct rollover.
8) Other. Returns of elective deferrals and
corrective distributions of excess contributions
and attributable net income are not eligible for
direct rollover.35 Returns of deferrals in excess
of the IRC 402(g) limits or in excess of the 415
limits are not eligible for direct rollover.
d) Eligible Retirement Plan. The definition of an
eligible retirement plan for the purpose of accepting
direct rollovers varies with the class of the person
electing the direct rollover. The eligible retirement
plan must be willing to accept the rollover
distribution.36
1) Participants and Former Spouse Alternate
Payees. Participants and former spouse alternate
payees may direct rollovers to an individual
retirement account37, an individual retirement
annuity38, an annuity plan39 or a qualified trust.40
2) Surviving Spouses. Surviving spouses may
direct rollovers only to an individual retirement
account, or an individual retirement annuity.41
8.13 Settlement Statement. The trustee shall furnish a
settlement statement42 with every distribution.43
8.14 Distribution Upon Death of a Participant or
Beneficiary. In the event that the participant dies with
assets remaining in the plan, the assets will be
distributed to the participant's beneficiary. If there is
no beneficiary, the assets will be distributed to the
participant's surviving spouse. If the participant has no
beneficiary or surviving spouse at the time of the
participant's death, assets will be distributed to the
participant's estate. If the beneficiary of a deceased
participant dies while assets remain in the plan, the
assets will be distributed to the estate of the
beneficiary. In the event an alternate payee dies with
assets remaining in the plan, the assets will be paid to
the estate of the alternate payee. In each case, the
assets will be distributed no later than the close of the
plan year which contains the fifth anniversary of the
participant's death. If the spouse of a participant or
terminated participant is the beneficiary of the plan
account, the spouse may delay distribution until the end
of the calendar year in which the participant or
terminated participant would have attained age 65. See
Section 8.5e) and 8.5f).44
8.15 Plan Hierchary for Distributions. Any sale of a
participant's plan assets, which is necessary to generate
cash for the purpose of disbursing cash in the amount of
after-tax contributions, will be made using the plan
hierarchy.
WITHDRAWALS DURING EMPLOYMENT
ARTICLE 9: WITHDRAWALS DURING EMPLOYMENT
9.1 Withdrawal.1 A withdrawal is disbursement of any
part of the vested assets of a participant to that
participant. Distribution installments are not
withdrawals. Only participants are eligible to take
withdrawals. All other beneficial owners are eligible
only for distributions.
9.2 Withdrawals from Company-Matched Sub-Accounts. A
participant may not withdraw from the company-matched
sub-account during the period s/he is employed2 by CG&E.
9.3 Withdrawals from Optional Sub-Accounts. Participants
may withdraw from their optional sub-accounts plan by
filing an application for withdrawal3 with the Committee.
The trustee will disburse the withdrawal directly to the
participant,4 or to another plan if the participant elects
and the withdrawal qualifies for direct rollover. See
8.12.
[This section should be deleted effective 01-01-96.]
9.4 Withdrawals from Optional Sub-Accounts. Participants
may withdraw from their optional sub-accounts by the voice
or other electronic response system or other media
authorized by CG&E. The trustee will disburse the
withdrawal directly to the participant5, or to another
plan if the participant elects and the withdrawal
qualifies for direct rollover. See 8.12.
[This section becomes effective on 01-01-96.]
9.5 Amount Available for Optional Withdrawal.
Participants may withdraw either a specific whole dollar
amount or the entire balance from their optional
sub-accounts. If the participant withdraws less than 100%
of his or her optional sub-account balance and requests a
second withdrawal within a 12 month period, s/he will be
required to withdraw the remaining balance.
9.6 Plan Hierarchy For Withdrawals. If the portion of
the participant's account which is to be withdrawn is
invested in more than one fund, the withdrawal amount will
be deducted from the investment funds using the plan
hierarchy.6 Each fund will be exhausted before the
withdrawal draws upon the next fund in the hierarchy.
9.7 Form of Withdrawals. Withdrawals generally consist
of a CINergy stock certificate for the units of the
CINergy stock fund in the sub-account as of the
distribution valuation date, plus cash from the sale of
all other plan investments and incidental cash from the
CINergy stock fund.
9.8 Cash In Lieu of Stock. A participant may elect to
receive cash in lieu of a CINergy stock certificate for
his or her assets in the company stock fund.7
9.9 Hardship. A hardship is an immediate and heavy
financial need of a participant which cannot be met except
through a withdrawal from the participant's deferred
compensation sub-account in the plan.
9.10 Hardship Withdrawals. A participant may apply to
the Committee for a withdrawal of all or a portion of his
or her deferred compensation sub-account. The Committee
shall not grant the request unless it qualifies under the
criteria listed in 9.13.
[This section should be deleted effective 01-01-96.]
9.11 Hardship Withdrawals. A participant may apply to
the Benefits Manager for a withdrawal of all or a portion
of his or her deferred compensation sub-account. The
Benefits Manager shall not grant the request unless it
qualifies under the criteria listed in 9.14.
[This section becomes effective on 01-01-96.]
9.12 Amount Available for Hardship Withdrawals. The
amount available for a hardship withdrawal includes all
deferred compensation contributions made in years prior to
1989, including any earnings and losses thereon, and de-
ferred compensation contributions made on or after
01-01-89, excluding earnings and losses thereon. Hardship
withdrawals are limited to the actual amount in the
participant's account.
9.13 Criteria for Granting a Hardship Withdrawal.8 The
Committee shall use the following criteria9 when
considering an application for a hardship withdrawal:
a) Immediate and Heavy Financial Need.10 The request
must be to satisfy an immediate and heavy financial
need for one of the following reasons:
1) Medical Expenses. Unreimbursed medical
expenses, as described in IRC 213(d), incurred by
the participant, the participant's spouse, or any
dependents of the participant, as defined in IRC
152, or necessary for those persons to obtain
medical care as described in IRC 213(d).
2) Purchase of a Principal Residence. Purchase,
excluding mortgage payments, of a principal
residence of the participant.
3) Tuition. Payment of tuition, related
educational fees, and room and board for the next
12 months11 of post-secondary education for the
participant, the participant's spouse, children,
or dependents.
4) Prevention of Foreclosure. Prevention of
eviction from, or foreclosure of the mortgage
upon, the principal residence of the participant.
5) Funeral Expenses. Payment of the funeral
expenses of the participant's spouse, children or
dependents.
6) Other Expenses. Any other expense identified
by the Internal Revenue Commissioner12 as an
immediate and heavy financial need.
b) Amount Necessary to Satisfy the Need. The hardship
withdrawal is limited to the amount necessary to
satisfy the need, plus any amounts necessary to pay
federal, state or local income taxes or penalties
reasonably anticipated to result from the hardship
withdrawal. The participant must submit reasonable
documentation of the existence and amount of the need.
There must be no other resources reasonably available
to satisfy the need. The participant must first take
all available non-hardship distributions/loans from
all of CG&E's other plans: RIP, DCIP, MRP13. This
includes a withdrawal of available funds from the
optional sub-account. If a plan loan is either
unavailable to the participant, or the available loan
is insufficient to meet the need of a participant, and
the other criteria of this section are met, the
Committee may grant a hardship withdrawal.
[This section should be deleted effective 01-01-96.]
9.14 Criteria for Granting a Hardship Withdrawal.14 The
Benefits Manager shall use the following criteria15 when
considering a request for a hardship withdrawal:
a) Immediate and Heavy Financial Need.16 The request
must be to satisfy an immediate and heavy financial
need for one of the following reasons:
1) Medical Expenses. Unreimbursed medical
expenses, as described in IRC 213(d), incurred by
the participant, the participant's spouse, or any
dependents of the participant, as defined in IRC
152, or necessary for those persons to obtain
medical care as described in IRC 213(d).
2) Purchase of a Principal Residence. Purchase,
excluding mortgage payments, of a principal
residence of the participant.
3) Tuition. Payment of tuition, related
educational fees, and room and board for the next
12 months17 of post-secondary education for the
participant, the participant's spouse, children,
or dependents.
4) Prevention of Foreclosure. Prevention of
eviction from, or foreclosure of the mortgage
upon, the principal residence of the participant.
5) Funeral Expenses. Payment of the funeral
expenses of the participant's spouse, children or
dependents.
6) Other Expenses. Any other expense identified
by the Internal Revenue Commissioner18 as an
immediate and heavy financial need.
b) Amount Necessary to Satisfy the Need. The hardship
withdrawal is limited to the amount necessary to
satisfy the need, plus any amounts necessary to pay
federal, state or local income taxes or penalties
reasonably anticipated to result from the hardship
withdrawal. The participant must submit reasonable
documentation of the existence and amount of the need.
There must be no other resources reasonably available
to satisfy the need. The participant must first take
all available non-hardship distributions/loans from
all of CG&E's other plans: RIP, SIP, MRP19. This
includes a withdrawal of available funds from the
optional sub-account. If a plan loan is either
unavailable to the participant, or the available loan
is insufficient to meet the need of a participant, and
the other criteria of this section are met, the
Benefits Manager may grant a hardship withdrawal.
[This section becomes effective on 01-01-96.]
9.15 Required Documentation for Hardship Withdrawals.
The participant must file the following documents with the
Committee20 for consideration of a hardship withdrawal:
a) Application. The participant must complete an
application for hardship withdrawal, including the
spouse's signature acknowledging notice of the
application, if the participant is married.
b) Documentation. The participant must attach
photocopies of all papers which document the existence
and the amount of the need.
c) Written Explanation. The participant must provide
a clear and concise explanation, in his or her own
words, of how the funds are to be used.
d) Quarterly Statement. The Committee21 will provide
a copy of the participant's most recent quarterly
statement indicating the amount of funds that are
available to the participant.
e) Personal Financial Statement. A personal financial
statement of the participant's assets and liabilities,
including the spouse's notarized signature, if the
participant is married.
[This section should be deleted effective 01-01-96.]
9.16 Required Substantiation for Hardship Withdrawals.
The participant must provide the following information to
the Benefits Manager for consideration of a hardship
withdrawal:
a) Request. The participant must make a request to
the Benefits Manager for a hardship withdrawal through
the voice or other electronic response system or other
media authorized by CG&E. If the participant is
married, the participant must furnish the Benefits
Manager with the signature of the participant's spouse
acknowledging notice by the spouse of the request.
b) Documentation. The participant must furnish
photocopies of all papers which document the existence
and the amount of the need.
c) Explanation. The participant must provide a clear
and concise explanation, in his or her own words, of
how the funds are to be used through the voice or
other electronic response system or other media
authorized by CG&E.
d) Quarterly Statement. The Benefits Manager will
provide a copy of the participant's most recent
quarterly statement indicating the amount of funds
that are available to the participant.
e) Personal Financial Statement. A personal financial
statement of the participant's assets and liabilities,
including the spouse's notarized signature, if the
participant is married.
[This section becomes effective on 01-01-96.]
9.17 Disbursement of Hardship Withdrawals.22 The trustee
will disburse23 a hardship withdrawal which has been
accepted by the Committee directly to the participant.
[This section should be deleted effective 01-01-96.]
9.18 Disbursement of Hardship Withdrawals.24 The trustee
will disburse25 a hardship withdrawal which has been
accepted by the Benefits Manager directly to the
participant.
[This section becomes effective on 01-01-96.]
9.19 Settlement Statement. The trustee shall furnish a
settlement statement26 with every distribution.27
9.20 Suspension Following Withdrawal.
a) Optional Sub-Account Withdrawal. Participants who
have withdrawn from their optional sub-accounts will
not be permitted to make optional contributions to the
plan until at least 12 months from the date of
disbursement of the withdrawal.
b) Hardship Withdrawal. A participant who is granted
a hardship withdrawal shall not be permitted to make
deferred compensation or optional contributions28 to
the plan until at least 12 months from the date of the
hardship withdrawal disbursement. The IRC 402(g)
limit on a participant's deferred compensation
contributions for the taxable year of the participant
following the taxable year in which the hardship
withdrawal occurred shall be reduced by the amount of
the participant's deferred compensation contributions
during the taxable year in which the hardship
withdrawal occurred.
LOANS
ARTICLE 10: LOANS
10.1 Eligibility for Loans1. Participants currently
receiving pay from CG&E may apply for and receive a loan
from their deferred compensation sub-accounts. No other
beneficial owners are eligible for loans. Specifically,
participants on leaves of absence,2 terminated
participants, beneficiaries and alternate payees are not
eligible to receive loans.3
10.2 Loan Requests. Participants may request loans
through the current process established by the Committee.4
The participant must complete and return the promissory
note to the trustee. Upon receipt of the completed
promissory note, the trustee will send a check for the
loan amount to the participant.
[This section should be deleted effective 01-01-96.]
10.3 Loan Requests. Participants may request loans
through the current process established by the Committee.5
The participant must execute the promissory note. The
promissory note, at the sole discretion of the Committee,
may be provided on the back of the check which is issued
to the participant for the loan amount. The promissory
note will be properly executed and legally enforceable
once the participant endorses the back of the check. The
participant's endorsement evidences that s/he agrees to
the repayment terms.
[This section becomes effective on 01-01-96.]
10.4 Limitation of Two Loans at any Given Time. A
participant may apply for and obtain a second loan while
the first loan remains outstanding. The second loan will
be granted at the then prevailing rate of interest and for
an entirely separate term of five years or less. The
outstanding balance in the participant's loan account will
reflect the total of the two loans, although the loans
will remain separate and distinct on the trustee's
records. The dollar limitation imposed by the plan for
one loan will apply to the total outstanding balance for
two loans for any given participant. A participant is
limited to two outstanding loans at any given time.
10.5 Granting Loans. Loans will be granted from the plan
for any reason.
10.6 Loan Amount.6
a) 50% of Vested Account Limited by Deferred
Compensation Sub-Account. The loaned amount cannot
exceed the lesser of $50,000 or 50% of the balance of
the participant's vested accrued benefit
(company-matched, deferred compensation and optional
sub-accounts) and will be further limited by the
actual amount in the deferred compensation
contribution sub-account on the distribution valuation
date for the loan.
[This sub-section should be deleted effective 01-01-96.]
b) 50% of Vested Account Limited by Deferred
Compensation Sub-Account and Rollover Sub-Account.
The loaned amount cannot exceed the lesser of $50,000
or 50% of the balance of the participant's vested
accrued benefit (company-matched, deferred
compensation, optional and rollover sub-accounts) and
will be further limited by the actual amount in the
deferred compensation contribution sub-account and
rollover sub-account on the distribution valuation
date for the loan.
[This sub-section becomes effective on 01-01-96.]
c) Reduction of $50,000 Maximum.7 The $50,000 maximum
loan amount is reduced by the excess (if any) of the
highest outstanding balance of loans to that
participant during the one-year period ending on the
day before the date the loan is made, over the
outstanding balances of loans to that participant made
under all qualified plans sponsored by CG&E on the
date the loan is made.
10.7 Denial of Loans. The trustee shall not loan funds to
a participant if granting the loan would result in a
violation of any federal or state8 statute or regulation
regarding loans.
10.8 Plan Hierarchy For Loans. If the participant's
deferred compensation sub-account is invested in more than
one fund, the loan amount will be deducted from the
investments funds using the plan hierarchy.9 Each fund
will be exhausted before the loan draws upon the next fund
in the hierarchy.
[This section should be deleted effective 01-01-96.]
10.9 Pro-rata Liquidation for Loans. The trustee shall
liquidate the participant's deferred compensation
sub-account investments and rollover sub-account
investments in the same proportion that each investment
bears to the entire deferred compensation contribution
sub-account and rollover sub-account except for the loan
fund. The trustee will disburse the cash produced to the
participant minus any administrative fee.
[This section becomes effective on 01-01-96.]
10.10 Valuing an Account For A Loan. The trustee shall
use the value of the account as of the opening of the
business day on which it writes the check for the loan to
the participant to determine the amount available for the
loan.
10.11 Collateral for Loans.
a) Assignment and Restriction of Withdrawals. The
participant shall assign 50% of his or her vested
accrued account, and shall sign a promissory note for
the amount of the loan, including interest, payable to
the order of the trustee. No collateral other than
the participant's interest in the plan will be
accepted as security for a plan loan. If a
participant's optional sub-account becomes collateral
for his or her loan, s/he will only be able to
withdraw from the optional sub-account the difference
between its total value and the portion of the balance
of the optional sub-account necessary as collateral
for the unpaid loan balance.
b) Effect of a DRO Upon Loan Collateral. If there are
insufficient assets10 in the deferred compensation
sub-account of a participant to satisfy the terms of a
DRO because of one or more outstanding loans, the
trustee will first take additional assets from the
participant's optional sub-account, second from the
company-matched sub-account, and finally from the loan
account portion of the deferred compensation sub-
account, in order to satisfy the DRO.
[This sub-section should be deleted effective 01-01-96.]
c) Effect of a DRO Upon Loan Collateral. If there are
insufficient assets11 in the deferred compensation
sub-account, or next in the rollover sub-account, if
any, of a participant to satisfy the terms of a DRO
because of one or more outstanding loans, the trustee
will first take additional assets from the
participant's optional sub-account, second from the
company-matched sub-account, third, from the loan
account portion of the deferred compensation sub-
account, and finally from the loan account portion of
the rollover sub-account, if any, in order to satisfy
the DRO.
[This sub-section becomes effective on 01-01-96.]
10.12 Interest Rate for Loans. The rate of interest
charged on loans will be 1/2 of 1%12 above the prime rate
charged by the trustee in its banking business on the
first business day of the month during which the
application is received by the trustee.13
[This section should be deleted effective 01-01-96.]
10.13 Interest Rate for Loans. The rate of interest
charged on loans will be a reasonable rate based on
commercial standards in the lending industry.
[This section becomes effective on 01-01-96.]
10.14 Payment of Loans. A participant who applies for a
loan must authorize CG&E to deduct loan payments from his
or her pay.14 CG&E will remit loan deductions to the
trustee concurrent with disbursements of the payroll.
10.15 Minimum and Maximum Term of Loans. The participant
shall specify the number of months for payment of the
loan, with 12 months being the minimum term, and 60 months
the maximum term.15
[This section should be deleted effective 01-01-96.]
10.16 Minimum and Maximum Term of Loans. The participant
shall specify the number of months for payment of the
loan, with 12 months being the minimum term, and 54 months
the maximum term.16
[This section becomes effective on 01-01-96.]
10.17 Investment of Loan Payments. The trustee will
direct loan payments to the investment funds according to
the participant's most recent allocation of future
contributions form that is on file.
[This section should be deleted effective 01-01-96.]
10.18 Investment of Loan Payments. The trustee will
direct loan payments to the investment funds according to
the most recently provided directions given by the
participant through the voice or other electronic response
system or other media authorized by CG&E.
[This section becomes effective on 01-01-96.]
10.19 Outstanding Loans for Terminated Participants. Upon
termination of employment, any outstanding loan of a
terminated participant is due immediately or the
outstanding amount of the loan will be in default pursuant
to 10.22 or 10.23 and reclassified as a partial
distribution.
[This section becomes effective on 01-01-96.]
10.20 Outstanding Loans for Participants on Military
Leave. Subject to the Committee's approval of such a
policy, loan repayments will be suspended under this plan
as permitted under IRC 414(u)(4).
10.21 Prepayment of Loans. A participant may pay the
remaining loan balance at any time without any pre-payment
penalties by check or money order made payable to the
trustee. The prepayment should be sent or delivered to the
Committee.17
10.22 Loan Default. A participant's loan will go into
default upon failure to make one or more payments during a
calendar year, violation of any term of the promissory
note signed by the participant, or upon declaration of the
Committee at its discretion18 under the terms of the
promissory note.
[This section should be deleted effective .]
10.23 Loan Default. A participant's loan will go into
default upon failure to timely make any payment during a
calendar year or violation of any term of the promissory
note signed by the participant.19
[This section becomes effective on __________.]
10.24 Tax Effects of Loan Default. The participant shall
pay the tax incurred for any events which arise out of any
loan transaction with the plan or any failure20 to make
payments under plan and promissory note requirements.
10.25 Curing Loan Default. A participant who has missed
one or more loan payments during a plan year may make
those payments up by direct payment to the Committee with
a check or money order made payable to the order of the
trustee in the amount of the payment, plus interest, on or
before the final valuation date of the plan year to cure
the default without tax or recharacterization
consequences.21
[This section should be deleted effective ____________.]
10.26 Curing Loan Default. A participant who misses any
loan payment may make up the missed payment by direct
payment to the Committee with a check or money order made
payable to the order of the trustee in the amount of the
payment, plus interest, on or before the last day of the
calendar quarter following the calendar quarter in which
the required payment was due to cure the default without
tax consequences.22
[This section becomes effective on __________.]
10.27 Reamortization of Loans. A participant may
reamortize a loan so long as the total time for repayment
of the loan does not exceed 60 months. Loan
reamortizations will be under the plan terms and
conditions in effect at the time of the reamortization.
[This section should be deleted effective 01-01-96.]
10.28 Reamortization of Loans. A participant who is on a
leave of absence (other than military leave) for not
longer than one year may reamortize a loan so long as the
total time for repayment of the loan does not exceed 54
months and the loan payments due after the leave expires
(or, if earlier, after the first year of the leave) are
not less than those required under the original terms of
the loan. Loan reamortizations will be under the plan
terms and conditions in effect at the time of the
reamortization.23
[This section becomes effective on 01-01-96.]
10.29 Recharacterization of Sub-accounts24. Effective as
of the final valuation date of each plan year, the trustee
shall recharacterize all or any portion of the optional
and/or company-matched sub-accounts of a participant who
has failed to make any loan payment(s) during the year, if
those missed payments are still outstanding at the final
valuation date. The amount recharacterized shall be
limited to the amount of the missed payments. The amount
recharacterized will be credited to the participant's
deferred compensation sub-account as a loan payment. The
trustee will notify the participant of the taxable amount
of the distribution. The Committee does not waive its
ability to determine that a loan is in default, or to
foreclose upon a loan, by exercising its right to
recharacterize the participant's sub-accounts under this
provision.
[This section should be deleted effective ___________.]
10.30 Loan Fund Administration
a) Single Loans. The promissory notes securing
payment of loans from plan assets will be reflected on
participants' quarterly statements under the loan fund
assets. When participants receive plan loans, their
investment allocations will reflect credits to their
loan funds in an amount equal to the principal amount
of the loan. Their other sub-accounts will reflect a
total reduction in value equivalent to the principal
amount of the loan. As participants make loan
payments, the value of the participants' loan funds
will be reduced by the amount of the payments
attributable to the principal of the loans. Principal
and interest, as they are paid, will be allocated to
investments per the most recent directions given by
the participant. Once the loan is completely repaid,
the participant's quarterly statement will reflect no
investment in the loan fund.
b) Multiple Loans. The trustee shall maintain
separate records of principal, interest, and payment
schedule for each loan that a participant has
outstanding at any given time. The participant's
statement will not reflect each separate loan. The
loan fund segment of the quarterly statements
distributed to participants will reflect the total of
all current loans outstanding to the participant.
c) Loans and DROs. The trustee will allocate as much
of the participant's loan fund to the alternate payee
as is necessary to satisfy the terms of the DRO if
there are insufficient other assets in the
participant's account due to the amount of the
participant's assets on loan. To the extent possible,
loans extended prior to the Committee's receipt of the
DRO will be allocated to the alternate payee.
However, loans extended after receipt of the DRO will
be allocated, if necessary to meet the terms of the
DRO. The participant will remain solely responsible
for loan payments, even if some portion of a loan or
loans has been allocated to an alternate payee to
satisfy the terms of a DRO.
DOMESTIC RELATIONS ORDERS
AND ALTERNATE PAYEES
ARTICLE 11: DOMESTIC RELATIONS ORDERS AND ALTERNATE PAYEES
11.1 Domestic Relations Order (DRO). A domestic relations
order is any judgment, decree or order, made pursuant to a
state domestic relations law, which provides that child
support, alimony, maintenance payments or marital property
allocation will be made from the plan assets of a
participant. A domestic relations order is referred to as
a DRO throughout the plan.
11.2 General Rule. The benefits due or to become due to
any participant are subject to a domestic relations order
accepted by the Committee.
11.3 Qualification and Acceptance of a DRO.
a) Initial Order. The DRO must meet the requirements
of IRC 414(p) and use the sample DRO language that
has been approved by the Committee1 to be considered
as qualified and to be accepted by the plan. The
Committee2 shall determine whether or not a DRO is
qualified. A court order which contains language
presuming that it is qualified shall not be binding
upon the plan.
b) Amended Orders. A DRO which modifies the terms of
a previously qualified DRO may be accepted by the
Committee. The amended DRO must meet the
qualifications of 11.3a) above, and must be filed with
the Committee before any irrevocable action has been
taken on execution of the initial DRO. Irrevocable
actions include executed cash-outs and any transaction
which the Committee decides is impossible or
impractical to attempt to reverse.
11.4 Special Conditions Applicable to DROs.
a) Prohibition of Allocating Identical Assets Multiple
Times. No DRO may allocate benefits which have been
allocated by a previously qualified and accepted DRO.
However, an amended DRO which is accepted by the plan
may reallocate benefits previously allocated without
violating this provision.
b) Applicable Plan(s). The nature of benefits
allocated to an alternate payee will be determined in
accord with the terms of the plan in effect on the
date the DRO is entered onto the records of the
issuing court.
11.5 Alternate Payee. An alternate payee is a
participant's child, spouse, former spouse or other
dependent who is designated to receive benefits under the
plan by a DRO. The Committee may rely upon the
determination of the court which issues the DRO that the
designated alternate payee in the order is entitled, under
the law of the appropriate state, to be so named.
11.6 Acknowledgment and Acceptance or Rejection of a DRO.
As soon as practical after the Committee receives a DRO,
it will send the participant and designated alternate
payee an acknowledgment of receipt, notice of acceptance
or rejection and a copy of the plan procedures for
acceptance or rejection of DROs.3 The Committee will send
a copy of the DRO and notice of acceptance or rejection to
the trustee. The Committee shall accept or reject a DRO
within 18 months of receiving it.
11.7 Division of Assets By the Trustee.
a) On Receipt of a DRO. The trustee shall freeze the
account of the participant upon receiving notice from
any plan agent that an Order purporting to be a DRO
has been received. Participants with frozen accounts
may not obtain loans or withdrawals from the plan, and
may not reallocate among funds. Distributions on
frozen accounts are subject to delay, pending
acceptance of a DRO.
b) On Rejection of a DRO. If the order is rejected,
the trustee shall keep the account of the participant
frozen for a reasonable period of time, pending
receipt of an amended DRO which is accepted by the
Committee, or direction from the Committee that the
participant's account may become active.
c) On Acceptance of a DRO. The trustee shall
segregate the plan assets into two or more accounts as
directed by the order as soon as it receives
notification that an order is accepted. The trustee
shall set up new accounts in the name of each
alternate payee under the order.4 The assets in the
sub-accounts of the alternate payees shall be
allocated among the investment funds in the same
proportions as allocated in the sub-accounts of the
participant from which they originated.
d) Participant with Outstanding Loans. If a
participant has one or more loans outstanding and
insufficient liquid deferred compensation sub-account
assets to satisfy the terms of an accepted DRO, the
trustee shall avoid allocating loan investment assets
if possible. The trustee shall first take the
necessary additional assets from the optional
sub-account until it is exhausted. Second, the trustee
shall take the necessary additional assets from the
company-matched sub-account until it is exhausted.
Finally, the trustee shall allocate the remaining
funds necessary to satisfy the DRO from the loan
investment portion of the deferred sub-account. (See
10.11b)).
[This sub-section should be deleted effective 01-01-96.]
e) Participant with Outstanding Loans. If a
participant has one or more loans outstanding and
insufficient liquid deferred compensation sub-account
assets, or next rollover sub-account assets, if any,
to satisfy the terms of an accepted DRO, the trustee
shall avoid allocating loan investment assets if
possible. The trustee shall first take the necessary
additional assets from the optional sub-account until
it is exhausted. Second, the trustee shall take the
necessary additional assets from the company-matched
sub-account until it is exhausted. Third, the trustee
shall take the necessary additional assets from the
loan investment portion of the deferred sub-account.
Finally, the trustee shall allocate the remaining
funds necessary to satisfy the DRO from the loan
investment portion of the rollover sub-account. (See
10.11c)).
[This sub-section becomes effective on 01-01-96.]
f) Denial of DRO within 18 Months. If within 18
months of the original receipt of a DRO it, or a
successor DRO, is determined to be not qualified, and
no amended DRO acceptable to the plan has been
submitted to the Committee, the assets in the
alternate payees' sub-accounts will be restored to the
sub-accounts of the participant. The trustee shall
restore the participant's account to active status.
11.8 Participatory Functions of Alternate Payees.
Alternate payees may not withdraw from any sub-account,
contribute to any sub-account, apply for loans, apply for
hardship withdrawals, or elect an installment
distribution. An alternate payee may not change his or
her investment direction of sub-accounts, except in
conjunction with a distribution. The rights of an
alternate payee are limited to: receipt of a quarterly
statement of his or her account, receipt of the account
proceeds in accord with the terms of the DRO or the plan,
a change in the allocation of past contributions in
conjunction with a distribution5, the right to all claims
procedures mandated by ERISA and the right to obtain
copies of the plan document and summary plan description
as mandated by ERISA. None of these rights under the plan
will be in effect until the Committee certifies the
pertinent DRO as qualified and so notifies the alternate
payee.
11.9 Distribution of Assets Valued at $3,500 or Less. The
Committee shall distribute any alternate payee's account
assets valued at $3,500 or less at any valuation date.
Upon the determination of the value of the account, the
alternate payee must file an application for distribution.
The Committee shall file an application for distribution
on behalf of the alternate payee if s/he does not do so
within 60 days of the determination of the value of the
account pursuant to 8.5a)6. If insufficient cash assets
are available to distribute because of loans allocated to
the account of the alternate payee, this mandatory
distribution will be delayed until there are sufficient
cash assets in the account.
[This section should be deleted effective 01-01-96.]
11.10 Distribution of Assets Valued at $3,500 or Less.
The Benefits Manager shall distribute any alternate
payee's account assets valued at $3,500 or less at any
valuation date. Upon the determination of the value of
the account, the alternate payee must apply for
distribution through the voice or other electronic
response system or other media authorized by CG&E. The
Benefits Manager shall apply for distribution on behalf of
the alternate payee if s/he does not do so within 60 days
of the determination of the value of the account pursuant
to 8.5b)7. If insufficient cash assets are available to
distribute because of loans allocated to the account of
the alternate payee, this mandatory distribution will be
delayed until there are sufficient cash assets in the
account.
[This section becomes effective on 01-01-96.]
11.11 Distribution of Assets Valued Over $3,500. If an
alternate payee's assets in the plan are valued over
$3,500, s/he is not eligible to receive a lump sum
distribution8 until the participant from whom the account
was derived reaches age 50,9 terminates employment, or
dies. An alternate payee who becomes eligible for a
distribution must file an application for a lump sum
distribution with the Committee no later than the 90 days
before the end of the year in which the participant from
whom the account was derived becomes age 65. If the
alternate payee does not file the application for
distribution in a timely manner, the Committee shall file
the application on his or her behalf pursuant to 8.5c).
[This section should be deleted effective 01-01-96.]
11.12 Distribution of Assets Valued Over $3,500. If an
alternate payee's assets in the plan are valued over
$3,500, s/he is not eligible to receive a lump sum
distribution10 until the participant from whom the account
was derived reaches age 50,11 terminates employment, or
dies. An alternate payee who becomes eligible for a
distribution must apply for a lump sum distribution with
the Benefits Manager through the voice or other electronic
response system or other media authorized by CG&E no later
than the 90 days before the end of the year in which the
participant from whom the account was derived becomes age
65. If the alternate payee does not apply for
distribution in a timely manner, the Benefits Manager
shall apply on his or her behalf pursuant to 8.5d).
[This section becomes effective on 01-01-96.]
11.13 Window Cashouts for Alternate Payees.
a) Effective Date. Alternate payees who have been
awarded benefits from this plan shall be given a
one-time opportunity to receive a lump sum payment of
all their plan interest, regardless of the amount of
the present value of the benefit.12
b) Retroactivity of Provision. Alternate payees who
had been awarded plan benefits prior to the effective
date of this provision (April 1, 1991) shall also be
given this one-time opportunity to receive their total
plan benefit.
c) Notification to Alternate Payees. Notification to
the alternate payee of this offer shall allow a
minimum of 30 days and a maximum of 90 days to make
the irrevocable election to receive the lump sum
benefit.
d) Timing of Notification. The Committee shall notify
the alternate payee of the availability of the window
cashout as soon as practical after the assets have
been allocated to the account of the alternate payee.
Notice of the window distribution shall be sent to
alternate payee with an account containing loan fund
assets, but shall indicate the delay in availability.
See 11.16.
e) Effect of Failure to Elect Window Cashout. The
plan assets of an alternate payee who does not elect a
cashout under this section shall be governed by the
other plan rules regarding distributions to alternate
payees.
11.14 Death. In the event of an alternate payee's death,
his or her remaining plan assets will be distributed to
his or her estate.
11.15 Alternate Payees' Responsibilities. Alternate
payees must notify the Committee in writing of any address
changes, or the name and address of a designated
representative. The notification should be signed and
dated by the alternate payee and should reference this
plan, and the name of the participant from whom the
account derives.
11.16 Limitation on Distribution to Alternate Payees. An
alternate payee may not receive any mandatory or elective
distribution until the alternate payee's account no longer
includes loan fund assets,13 unless the mandatory
distribution is required by the IRC or ERISA. An
alternate payee may not receive any elective distribution
until all assets allocated to the account of the alternate
payee have become vested.
FIDUCIARIES:
AUTHORITY & RESPONSIBILITY
ARTICLE 12: FIDUCIARIES: AUTHORITY & RESPONSIBILITY
12.1 Fiduciary. Any person who exercises any
discretionary authority or discretionary control
respecting management or administration of the plan or the
trust pursuant to the provisions of ERISA.
12.2 Fiduciaries. The following are named as fiduciaries:
a) the members of the Committee, and
b) the trustee.
12.3 Trustee.
a) Appointment. The board of directors shall appoint
a trustee for the plan. All assets of the plan shall
be held for use in accordance with the plan in
providing the benefits payable under the plan and for
such investment expenses as may properly be incurred
by the trustee.
b) Amendment. The trust agreement may be amended and
the trustee changed in the manner provided in the
trust agreement.
c) Responsibility. The responsibility for the reten-
tion of the trust shall lie with the trustee and not
with the Committee.
d) Voting. The trustee shall vote the shares of
CINergy stock credited to the accounts of beneficial
owners in accordance with the instructions given by
the beneficial owner. If the instructions are not
received by the trustee by the date it has designated
prior to any annual or special meeting of shareholders
of CINergy, the trustee shall vote the uninstructed
shares at its discretion. The trustee shall also vote
at its discretion the shares of CINergy stock held in
the company stock fund that have not been allocated to
participants' accounts as of the record date of any
annual or special meeting of shareholders of CINergy.
12.4 Establishment of the Committee. The Committee is the
plan administrator, commonly referred to as the SIP
Committee other than in this plan document. The Committee
shall consist of not more than five nor less than three
members, who shall be appointed by, and serve at the
pleasure of, the board of directors. Members of the
Committee may resign by delivering written resignation to
the board of directors. Resignations shall become
effective at delivery or at any later date specified
within the written statement.
12.5 Organization of the Committee. The Committee shall
elect a chairperson from their number, and a secretary and
such other officers as the Committee may designate, who
may, but need not, be members of the Committee, to serve
at the pleasure of the Committee. No member of the
Committee who is also an employee shall receive any
compensation for services as such member.
12.6 Powers of the Committee. The powers of the Committee
shall include, but not be limited to, the following:
a) Appoint Committees. The Committee may appoint
committees with any powers it deems necessary,
including an executive committee to exercise all
powers of the Committee between meetings of the
Committee.1
b) Set Meetings. The Committee may determine the
times and places for holding meetings of the
Committee, and the notice to be given of the meetings.
c) Establish a Quorum. The Committee shall determine
the number of members of the Committee necessary to
constitute a quorum for the transaction of business.
A quorum must be at least a majority of the committee
members.
d) Engage Assistants. The Committee may engage agents
and assistants, counsel, clerical, medical,
vocational, and accounting services as required to
carry out the provisions of the plan.
e) Establish an Agent. The Committee may authorize
one or more of their members or any employee as its
agent to make any payment, or to execute or deliver
any instrument on behalf of the Committee or to
perform any other function of the Committee.
[This sub-section should be deleted effective 01-01-96.]
f) Establish an Agent. The Committee may authorize
one or more of their members or any employee as its
agent to make any payment, or to execute or deliver
any instrument on behalf of the Committee or to
perform any other function of the Committee. The
Benefits Manager and the General Manager of Human
Resources Services shall serve as agents of the
Committee with respect to the duties assigned to these
persons under the plan.
[This sub-section becomes effective on 01-01-96.]
g) Select Investment Funds. The Committee shall
establish, and change as appropriate, an overall plan
for providing a diversified group of investments for
the trust assets. The Committee shall also select,
and change as appropriate, the various investment
funds.
h) Litigate on Behalf of the Plan. The Committee
shall commence or defend litigation on behalf of the
plan and represent the plan in all such proceedings
before any court or other tribunal.
i) Interpret the Plan. The Committee shall interpret
the plan, resolve any ambiguities in the plan and
establish provisions for any circumstances not
provided for in the plan, in a manner fair to plan
participants in similar circumstances and consistent
with other plan provisions.
j) Determine Eligibility for Benefits. The Committee
shall determine eligibility for benefits under the
plan, including claims to determine a participant's
rights to benefits under any former plan provision.
[This sub-section should be deleted effective 01-01-96.]
k) Determine Eligibility for Benefits. The Benefits
Manager, the General Manager of Human Resources
Services and the Committee shall determine eligibility
for benefits under the plan, including claims to
determine a participant's rights to benefits under any
former plan provision.
[This sub-section becomes effective on 01-01-96.]
l) Approve or Deny Requests for Hardship Withdrawals.
The Committee shall approve or deny requests for
hardship withdrawals, subject to the availability of
monies, under the provisions of the plan.
[This sub-section should be deleted effective 10-17-95.]
m) Approve or Deny Requests for Hardship Withdrawals.
The Senior Manager of Human Resource Strategy shall
approve or deny requests for hardship withdrawals,
subject to the availability of monies, under the
provisions of the plan.
[This sub-section becomes effective on 10-17-95 and should
be deleted effective 01-01-96.]
n) Approve or Deny Requests for Hardship Withdrawals.
The Benefits Manager shall approve or deny requests
for hardship withdrawals, subject to the availability
of monies, under the provisions of the plan. If a
request for a hardship withdrawal is denied or a
participant does not receive a response within 30 days
from the day the request was made to the Benefits
Manager, then the participant may make a request to
the General Manager of Human Resources Services for a
hardship withdrawal. If a participant's request is
denied by the General Manager of Human Resources
Services, or a participant does not receive a response
within 60 days from the day the request was made to
the General Manager of Human Resources Services, then
the participant may petition the Committee to receive
a hardship withdrawal. The Committee's decision as to
a participant's hardship withdrawal request shall be
final. See 13.3.
[This sub-section becomes effective on 01-01-96.]
o) Accept or Reject DROs2. The Committee shall
determine if a DRO which directs allocation of plan
benefits to one or more alternate payees is
qualified.3
p) Adopt Procedures. The Committee may establish
rules, regulations and procedures4 necessary for the
administration of the plan and the transaction of its
business.
q) Amend the Plan. The Committee may adopt any
amendment to ensure the continued qualification of the
plan and trust under IRC 401(a) and 501(a), to
comply with the provisions of any federal statute5 or
regulation impacting pension plans, to enhance the
delivery of benefits to participants and beneficia-
ries, to ease plan administration, or to respond to
the withdrawal of CG&E or any of its subsidiaries from
the plan. No amendment shall substantially increase
the cost of the plan without the consent of the board
of directors.
r) Require Accounting. The Committee may request
accounting and other information from the trustee.
s) Direct the Trustee. The Committee may direct the
trustee, by written instrument, to take action
consistent with plan administration and the trust
agreement.
t) Approve or Deny Requests for Rollover
Contributions. The Committee shall approve or deny
requests for rollover contributions to the plan.
[This sub-section becomes effective on 01-01-96.]
12.7 Committee Actions. All resolutions or other actions
taken by the Committee at any meeting shall be by the vote
of a majority of the members of the Committee attending
the meeting. Any decision or determination reduced to
writing and signed by a majority of the members of the
Committee shall be as fully effective as if it had been
made by a majority vote at a meeting.
12.8 Accounts and Reports. The Committee shall maintain
records of its actions and other data necessary for the
administration of the plan. The Committee shall prepare
and file any reports required by ERISA or the IRC. A copy
of these reports shall be maintained in the office of the
secretary of the Committee.
12.9 Action Taken in Good Faith. CG&E, the board of
directors, officers and employees of CG&E shall be
entitled to rely upon all information furnished by the
accountant, trustee, and all opinions given by legal
counsel. CG&E, the board of directors, officers and
employees of CG&E, and any person acting as a fiduciary
under the plan shall be fully protected from liability for
any action taken, or permitted by them in good faith, in
reliance upon any such information furnished by the
accountant, trustee, or legal counsel.
12.10 Decisions Final and Binding. The decisions of the
Committee on any matter within its authority shall be made
in the sole discretion of the Committee and shall be final
and binding on all parties, including, but not limited to,
CG&E, participants, terminated participants, beneficiaries
and alternate payees.
12.11 Insurance. CG&E may purchase insurance to cover
liability of one or more persons who serve in a fiduciary
capacity with regard to this plan.
12.12 Trust. The fund established under the trust
agreement to which all deferred contributions, optional
contributions, company-matched contributions, and
company-matched stock incentive contributions are made and
from which benefits are solely paid under the terms of the
plan. Neither CG&E nor its subsidiaries shall be required
to make direct payment of any benefit under the plan.
[This section should be deleted effective 01-01-96.]
12.13 Trust. The fund established under the trust
agreement to which all deferred contributions, optional
contributions, company-matched contributions, company-
matched stock incentive contributions, and rollover
contributions are made and from which benefits are solely
paid under the terms of the plan. Neither CG&E nor its
subsidiaries shall be required to make direct payment of
any benefit under the plan.
[This section becomes effective on 01-01-96.]
12.14 Trust Agreement. The trust agreement is the
contract between CG&E's board of directors and the trustee
governing the duties and rights of the trustee with regard
to plan funds. In accordance with the trust agreement,
the trustee shall invest all deferred contributions,
optional contributions, company-matched contributions, and
company-matched stock incentive contributions, and
earnings thereon, in the various investment funds.
[This section should be deleted effective 01-01-96.]
12.15 Trust Agreement. The trust agreement is the
contract between CG&E's board of directors and the trustee
governing the duties and rights of the trustee with regard
to plan funds. In accordance with the trust agreement,
the trustee shall invest all deferred contributions,
optional contributions, company-matched contributions,
company-matched stock incentive contributions, and
rollover contributions, and earnings thereon, in the
various investment funds.
[This section becomes effective on 01-01-96.]
12.16 Plan and Employer Identification Numbers. The
three-digit plan identification number is 002. CG&E's
employer identification number is 31-0240030. The
Committee's employer identification number is 31-0910812.
ADMINISTRATIVE PROVISIONS
ARTICLE 13: ADMINISTRATIVE PROVISIONS
13.1 Filing Documents with the Plan.
a) Filing Date. Generally, documents addressed to
the Committee or forms prepared for use by plan
participants will be considered to be filed with the
Committee or the plan on the day when they are
received by any employee benefits coordinator within
CG&E's Human Resources Department or the monthly
payroll administrator.
b) DROs. On the day a DRO is received by CG&E's Legal
Department, Human Resources Department, or the
secretary of the Committee, it will be considered to
be filed with the Committee.
c) Forms. Forms prepared under the aegis of the DCIP
Committee or the Committee for the plan will be
accepted for use under the plan unless the particular
form is inappropriate for use under this plan or has
been supplanted by a revised form.
13.2 Benefit Claims Process.
a) Written Request. Any person who claims a benefit
under this plan must file the request in writing with
the Committee.
b) Denial of a Claim. If the Committee denies the
benefit in full or in part, it will send a detailed
written reply to the claimant within 90 days after the
claim was filed. The written reply will include the
following:
1) the specific reason(s) for the denial,
referencing any specific plan provisions upon
which the decision depends; and
2) a request for any additional information
available to the claimant in support of his or her
position and an explanation, if any, of why it
would be of assistance in resolving the claim; and
3) the procedures available for a further review
of the claim.
c) Automatic Denial. If the Committee has not
responded in writing to the participant within 90 days
of the filing of the benefit claim, the participant
may consider the claim to have been denied and pursue
the request for reconsideration.
d) Acceptance of a Claim. If the Committee grants the
claim, payment will commence within 90 days of receipt
of the claim, or a notice of acceptance will be sent
to the claimant if commencement of payment is not
feasible within that time frame.
e) Reconsideration of Denial. The claimant may apply
in writing to the Committee for reconsideration of the
claim. The claimant must file for reconsideration
within 60 days of receiving the notice of denial. The
claimant or his or her authorized representative may
request the opportunity to review pertinent plan
documents and submit a written statement of issues and
comments, in conjunction with the request for
reconsideration.
f) Time-frame for Reconsideration. The Committee will
render a decision within 60 days after it receives the
request for reconsideration. If special circumstances
require extension of time for processing the request,
the decision by the Committee will be issued within
120 days after it receives the request for
reconsideration.
g) Claimant's Representative. A claimant for plan
benefits may act on his or her own behalf, or may use
a representative who is authorized to act on behalf of
the claimant, throughout the administrative claim
process.
h) Exhaustion of Administrative Remedies. If the
claim for benefits is denied or ignored in full or in
part, the claimant may file suit in federal court to
pursue the claim.
[This section should be deleted effective 01-01-96.]
13.3 Benefit Claims Process.
a) Written Request. Any person who claims a
benefit under this plan must file the request in
writing with the Benefits Manager.
b) Denial of a Claim or Failure to Respond by
Benefits Manager. If the Benefits Manager denies
the benefit in full or in part or fails to respond
within 30 days from the day a claimant files his
or her written request, then the claimant may
petition the General Manager of Human Resources
Services to review the claim.
c) Denial of a Claim by the General Manager of
Human Resources Services. If the General Manager
of Human Resources Services denies the benefit in
full or in part, he or she will send a detailed
written reply to the claimant within 60 days after
the claim was filed with the General Manager of
Human Resources Services. The written reply will
include the following:
1) the specific reason(s) for the denial,
referencing any specific plan provisions upon
which the decision depends; and
2) a request for any additional information
available to the claimant in support of his or
her position and an explanation, if any, of
why it would be of assistance in resolving the
claim; and
3) the procedures available for a further
review of the claim by the Committee.
d) Automatic Denial. If the General Manager of
Human Resources Services has not responded in
writing to the claimant within 60 days of the
filing of the benefit claim with the General
Manager of Human Resources Services, the claimant
may consider the claim to have been denied and
pursue the request for reconsideration with the
Committee.
e) Acceptance of a Claim. If the General Manager
of Human Resources Services grants the claim,
payment will commence within 60 days of receipt of
the claim by the General Manager of Human
Resources Services, or a notice of acceptance will
be sent to the claimant if commencement of payment
is not feasible within that time frame.
f) Reconsideration of Denial by the Committee.
The claimant may apply in writing to the Committee
for reconsideration of the claim. The claimant
must file for reconsideration within 60 days of
receiving the notice of denial from the General
Manager of Human Resources Services. The claimant
or his or her authorized representative may
request the opportunity to review pertinent plan
documents and submit a written statement of issues
and comments, in conjunction with the request for
reconsideration.
g) Time-frame for Reconsideration. The Committee
will render a decision within 60 days after it re-
ceives the request for reconsideration. If
special circumstances require extension of time
for processing the request, the decision by the
Committee will be issued within 120 days after it
receives the request for reconsideration.
h) Claimant's Representative. A claimant for plan
benefits may act on his or her own behalf, or may
use a representative who is authorized to act on
behalf of the claimant, throughout the
administrative claim process.
i) Exhaustion of Administrative Remedies. If the
claim for benefits is denied or ignored in full or
in part upon reconsideration by the Committee, the
claimant may file suit in federal court to pursue
the claim.
[This section becomes effective on 01-01-96.]
13.4 Uniform Administration. Decisions or actions of the
Committee with respect to the eligibility for or nature of
benefits to be provided under this plan shall be uniformly
applied to all persons similarly situated.
[This section should be deleted effective 01-01-96.]
13.5 Uniform Administration. Decisions or actions of the
Benefits Manager, the General Manager of Human Resources
Services, and the Committee with respect to the
eligibility for or nature of benefits to be provided under
this plan shall be uniformly applied to all persons
similarly situated.
[This section becomes effective on 01-01-96.]
13.6 Statutory Construction. The plan shall be construed,
enforced, and administered according to the laws of the
State of Ohio as to any matter not preempted by ERISA. In
any case that a provision of the plan is held illegal or
invalid for any reason, it shall not affect the remaining
provisions of the plan. However, the plan shall be
construed, enforced, and administered as if the illegal
provision had not been included in the plan.
13.7 Limitation of Rights of the Employee. The plan is
strictly a voluntary undertaking on the part of CG&E. The
plan is not a contract between CG&E and any employee. The
plan does not constitute consideration for, or an
inducement or condition of, the employment of any
employee. Nothing contained in the plan gives any
employee the right to be retained in the service of CG&E
or to interfere with the right of CG&E to discharge any
employee at any time. A participant does not have any
right or claim to a benefit under the plan except upon
fulfilling all of the conditions of eligibility and
qualification. The participant's right to receive the
benefit must have become fixed under the terms of the plan
and there must be funds available in the trust sufficient
to pay the benefit.
13.8 Alienation of Benefits. Benefits under the plan
shall not be subject in any manner to alienation or
assignment. Any attempt to assign or alienate plan
benefits shall be void, whether such sums remain with the
trustee or are in the course of transmission to the person
entitled to them. However, benefits are subject to DROs
accepted by the Committee.
13.9 Response to Attempted Alienation. If any
participant, pensioner, beneficiary, or alternate payee
under the plan becomes bankrupt or attempts to alienate or
assign any benefit under the plan, except as specifically
provided in the plan or by law, then his or her benefit
shall terminate. In that event the Committee shall hold
the assets of the affected participant, pensioner,
beneficiary, or alternate payee for his or her benefit.
13.10 Correction of Inadvertent Error. The Committee may,
in its discretion, recoup any benefit payment, or correct
any loan, withdrawal, or other error made in contravention
of any plan provision, whether by mistake, inadvertence or
misrepresentation. Recovery of overpayment may be
accomplished by withholding from future benefits due the
individual who was enriched by the overpayment, or may be
pursued by any other feasible and appropriate manner of
collection. Other corrections shall be made in the manner
deemed most feasible by the Committee.
13.11 Information from Beneficial Owners.
a) Each beneficial owner shall be required to furnish
the Committee, in the form prescribed by it, such
personal data, affidavits, authorization to obtain
information, and other information as the Committee
may deem appropriate for the proper operation and
administration of the plan.
b) Misrepresentations of fact by a beneficial owner to
the extent that affects their participation or
benefits hereunder shall be handled in accordance with
the rules of the Committee. In no event shall CG&E,
the Committee, or the trustee have an obligation to
provide such a beneficial owner with benefits in
excess of those which would have been provided under
the plan if there had been no misstatement or
misrepresentation.
13.12 Facility of Payment. If the Committee determines
from evidence that a claimant entitled to receive benefits
under this plan is (at the time the benefit is payable)
physically, mentally, or legally incompetent to receive
such benefit and give valid receipt therefore, and that
another person or an institution is then maintaining or
has custody of such incompetent individual, and that no
guardian, custodian or other representative of the estate
of such incompetent individual has been appointed, the
Committee may cause payment to be made to that person or
institution having custody or maintaining the participant,
former participant or beneficiary. The payment, to the
extent made, shall operate as a complete discharge of the
Committee, CG&E, and the trustee.
[This section should be deleted effective 01-01-96.]
13.13 Facility of Payment. If the Benefits Manager
determines from evidence that a claimant entitled to
receive benefits under this plan is (at the time the
benefit is payable) physically, mentally, or legally
incompetent to receive such benefit and give valid receipt
therefore, and that another person or an institution is
then maintaining or has custody of such incompetent
individual, and that no guardian, custodian or other
representative of the estate of such incompetent
individual has been appointed, the Benefits Manager may
cause payment to be made to that person or institution
having custody or maintaining the participant, former
participant or beneficiary. The payment, to the extent
made, shall operate as a complete discharge of the
Committee, CG&E, and the trustee.
[This section becomes effective on 01-01-96.]
13.14 Lost Beneficial Owner. Any benefit payment under
the plan shall be forfeited if the Committee, after
reasonable effort, is unable to locate the person to whom
payment is due. However, any forfeited benefit shall be
restored if a valid claim is made for the forfeited
benefit; first from forfeitures, and then from
company-matched contributions and company-matched stock
incentive contributions.
[This section should be deleted effective 01-01-96.]
13.15 Lost Beneficial Owner. Any benefit payment under
the plan shall be forfeited if the Benefits Manager, after
reasonable effort, is unable to locate the person to whom
payment is due. However, any forfeited benefit shall be
restored if a valid claim is made for the forfeited
benefit; first from forfeitures, and then from
company-matched contributions and company-matched stock
incentive contributions.
[This section becomes effective on 01-01-96.]
13.16 Vested Right. No person shall have any vested
rights under the plan except to the extent that vested
rights may accrue to him or her as provided under the
plan. Furthermore, any person with vested rights under
the plan shall look solely to the assets of the plan for
satisfaction of his or her vested rights.
13.17 Satisfaction of Claims. Any payment to any
beneficial owner in accordance with the terms of the plan
shall, to the extent thereof, be in full satisfaction of
all claims hereunder, whether they be against CG&E, the
Committee, or the trustee, any of whom may require the
beneficial owner or his or her legal representative, as a
condition precedent to any payment, to execute a release
and receipt therefore.
13.18 Plan Amendment Procedure.1 This plan may be amended
from time to time as necessary for compliance with laws or
regulations, as negotiated with one or more unions, or to
meet the needs of covered employees or the plan sponsor.
The board of directors, Committee members, human resources
personnel, trustee and/or record keeper personnel, plan
accountants, actuaries and attorneys, and plan
participants or beneficial owners may propose or recommend
amendments. Proposed amendments will be discussed and
adopted or rejected at Committee meetings. Those
proposing amendments are not entitled to attend the
meetings when the amendments are considered. In general
the Committee has the authority to adopt amendments, but
the board of directors reserves the authority to adopt
amendments which have a significant effect upon the
funding or cost of the plan. Amendments adopted will be
reflected in the appropriate meeting minutes. Plan
attorneys will incorporate adopted amendments into the
plan document. Material modifications will be included in
the summary of material modifications sent to participants
periodically for attachment to the summary plan
description of this plan, and eventually incorporated into
the summary plan description itself.
MISCELLANEOUS PROVISIONS
ARTICLE 14: MISCELLANEOUS PROVISIONS
14.1 Expenses. The operating expenses of the plan,
including fees paid to a servicing organization and fees
for professional services and technical or clerical
assistance, are generally paid by CG&E with some charges
specifically allocated to participants by plan terms.
CG&E reserves the right to shift some or all of the
expenses it pays to the investment funds and/or to the
individual beneficial owners.
14.2 Number. Any use of the singular shall be interpreted
to include the plural and the plural the singular.
14.3 Plan Procedures.
a) Conflicts between Plan and Procedures. Procedures
must be in accordance with the plan as it is then
being administered. Any conflict between written
procedures and written plan terms, or plan terms
required by law, adopted by the board of directors, or
the Committee pursuant to the authority delegated to
it, shall be resolved in favor of the plan terms, as
administered.
b) Sunset Provision. Any procedure, if not examined
and re-authorized by the Committee, shall automatical-
ly expire on the date 5 years from its date of
publication.
c) Expired Procedures. Any expired procedure may be
consulted for its historical value in relation to plan
administration, but it shall not be dispositive of the
administrative decision.
14.4 Titles and Headings. The names of articles, table of
contents, section and sub-section headings, and the index
of the plan have been inserted for convenience of
reference. In the event of any conflict, the text of the
plan, rather than titles, headings, etc., shall control.
14.5 Merger, Consolidation, and Transfer of Assets.
Before this plan can be merged or consolidated with any
other plan, or its assets or liabilities transferred to
another plan, each participant in the plan must be
entitled to receive a benefit immediately after the
merger, transfer, or consolidation (as if the plan had
then terminated) which is equal to or greater than the
benefit he/she would have been entitled to receive
immediately before the merger, consolidation or transfer
(as if the plan had then terminated). This plan will
accept the transfer of funds from the DCIP in accordance
with 3.20a). As a general rule, this plan will not
accept a transfer of assets from any other plan for any
reason, including rollovers and mergers.
[This section should be deleted effective 01-01-96.]
14.6 Merger, Consolidation, and Transfer of Assets.
Before this plan can be merged or consolidated with any
other plan, or its assets or liabilities transferred to
another plan, each participant in the plan must be
entitled to receive a benefit immediately after the
merger, transfer, or consolidation (as if the plan had
then terminated) which is equal to or greater than the
benefit he/she would have been entitled to receive
immediately before the merger, consolidation or transfer
(as if the plan had then terminated). This plan will
accept the transfer of funds from the DCIP in accordance
with 3.20a). This plan will accept rollovers from other
qualified retirement plans.
[This section becomes effective on 01-01-96.]
14.7 Transfer of ESOP Funds. The plan will accept a
one-time transfer of assets, at the election of partici-
pants in the CG&E Employee Stock Ownership Plan (ESOP),
from the terminated ESOP at the time the ESOP assets are
disbursed directly from the ESOP Plan Trustee to the
Trustee of this plan.
14.8 Service of Process. The secretary of the Committee
shall be the designated agent of the plan for the service
of process in connection with all matters affecting the
plan.
14.9 Warranties. Neither CG&E nor the Committee nor the
trustee warrant against any loss or diminution in the
value of accounts.
14.10 Adoption of the Plan by Subsidiaries. Any
subsidiary of CG&E may participate in the plan by
indicating its intention to that effect in writing and
delivering a copy of the instrument to the board of
directors and the trustee for acceptance in writing. Upon
acceptance by the board and the trustee, the subsidiary
will be bound by the terms of the plan and the trust
agreement, and all subsequent plan amendments. Plan
amendments are not subject to review or approval by any
subsidiary which has elected to participate in the plan.
A subsidiary may withdraw from plan participation at any
time by delivery of its written intent to withdraw at
least 60 days in advance of the effective date of the
withdrawal.
DISCRIMINATION TESTING
ARTICLE 15: DISCRIMINATION TESTING
15.1 Definitions. The following terms are defined for the
purpose of this Article only.
a) Average Contribution Percentage (ACP). The ACP is
the average of the ratios, calculated separately for
each eligible employee [see 3.2a)and 3.2b)], of the
sum of1 the eligible employee's optional
contributions, company-matched contributions, company-
matched stock incentive contributions which are fully
vested or are for participants who actually make
deferred compensation or optional contributions for
the plan year, and any recharacterized deferred
compensation contributions, to the eligible employee's
compensation for the plan year.
[This sub-section should be deleted effective 01-01-97.]
b) Average Contribution Percentage (ACP). The ACP is
the average of the ratios, calculated separately for
each eligible employee [see 3.2a)and 3.2b)], of the
sum of2 the eligible employee's optional
contributions, company-matched contributions, company-
matched stock incentive contributions which are fully
vested or are for participants who actually make
deferred compensation contributions for the plan year,
and any recharacterized deferred compensation
contributions, to the eligible employee's compensation
for the plan year.
[This sub-section becomes effective on 01-01-97.]
c) Actual Deferral Percentage (ADP). The ADP is the
average of the ratios, calculated separately for each
eligible employee, of the amount of3 deferred
compensation contributions made on behalf of the
eligible employee for the plan year, to the eligible
employee's compensation for that plan year.
d) Compensation. Compensation is the total wages
earned and other compensation including amounts paid
for sick pay, moving expense payments and
reimbursements that are not deductible under IRC
217.4 Compensation also includes employer
contributions under this plan and Code Section 125
plans which are not currently taxable to the employee.
Premiums for group term life insurance that exceed
the IRC 79(a) limits are also included in
compensation.5 Compensation is limited to $150,000 as
adjusted6 by the Internal Revenue Commissioner for
increases in the cost of living in accordance with IRC
401(a)(17)(B) in the same manner as base pay is
limited.
e) Excess Aggregate Contributions. A participant's
excess aggregate contribution for any year is the
excess of
1) The total amount of the 7contributions8 taken
into account in computing the numerator of the ACP
for a plan year for that participant over
2) the maximum amount of that participant's
contributions permitted by the ACP test.
f) Excess Contributions. A participant's excess
contribution for any year is the excess of
1) The total amount of his or her contributions
taken into account in computing the numerator of
the ADP for a plan year over
2) the maximum amount of his or her contributions
permitted by the ADP test.
g) Highly Compensated Employee.9
1) A highly compensated employee is any employee
who, during the plan year or the preceding plan
year, (A) was at any time a 5% owner, (B) received
compensation in excess of $75,000 (or such larger
amount as may be determined by the Secretary of
Treasury pursuant to IRC 415(d)), (C) received
compensation in excess of $50,000 (or such larger
amount as may be determined by the Secretary of
Treasury pursuant to IRC 415(d) and was in the
top-paid group of employees for such plan year, or
(D) was at any time an officer and received
compensation greater than 50% of the amount in
effect under IRC 415(b)(1)(A) for such plan year.
Provided, sub-sections (B) through (D) shall
apply to an employee meeting such criteria in the
plan year only if such employee is also one of the
100 employees who received the most compensation
from CG&E during the plan year. For purposes of
this sub-section 15.1g)1), "compensation" shall
include compensation from CG&E and any employer
required to be aggregated with CG&E under
IRC 414(b), (c), (m) or (o).
2) A highly compensated employee is any employee
who (A) separated from service with CG&E, or is
deemed to have separated from service, prior to
the plan year, (B) performs no service for CG&E
during the plan year, and was a highly compensated
employee during either the plan year in which such
separation from service occurred or in any plan
year ending on or after the employee's 55th
birthday.
3) The maximum number of officers which will be
considered highly compensated employees for a plan
year or preceding plan year pursuant to 1)D) above
is the lesser of (A) 50 or (B) the greater of
three employees or 10% of CG&E's employees. If no
officer of CG&E received compensation greater than
50% of the amount in effect under IRC
415(b)(1)(A) for the plan year or the preceding
plan year, the highest paid officer for such plan
year shall be treated as a highly compensated
employee.
4) For purposes of 15.1g)1)(C) above, an employee
shall be considered a member of the "top paid
group" for any year if such employee is in the
group consisting of the top 20% of the employees
of CG&E when ranked on the basis of compensation
paid during the year, pursuant to IRC 414(q)(4).
5) If an employee is a "family member" of a highly
compensated employee who is a 5% owner (or an
employee who was a highly compensated employee by
reason of being a 5% owner during the plan year in
which the employee separated from service with
CG&E or any plan year ending on or after the
employee's 55th birthday) during the plan year or
the preceding plan year, or a family member of one
of the 10 most highly compensated employees of
CG&E ranked on the basis of compensation paid by
CG&E during the plan year, then the family member
and the highly compensated employee shall be
aggregated. In such case, the family member and
highly compensated employee shall be treated as a
single employee receiving compensation and
contributions equal to the sum of the compensation
and contributions of the family member and highly
compensated employee. For purposes of 15.1g),
the term "family member" shall include the spouse,
lineal ascendants and descendants of an employee
or former employee and the spouses of such lineal
ascendants and descendants.
6) For purposes of determining whether an employee
is a highly compensated employee, the provisions
of IRC 414(q), and the regulations thereunder,
shall apply.
[This sub-section should be deleted effective 01-01-97.]
h) Highly Compensated Employee.10
1) A highly compensated employee is any employee
who (A) was at any time a 5% owner during the plan
year or the preceding plan year, or (B) received
compensation for the preceding plan year in excess
of $80,000 (or such larger amount as may be deter-
mined by the Secretary of Treasury pursuant to IRC
415(d)) and if CG&E elects, was in the top-paid
group of employees for such preceding plan year.
2) A highly compensated employee is any employee
who (A) separated from service with CG&E, or is
deemed to have separated from service, prior to
the plan year, (B) performs no service for CG&E
during the plan year, and was a highly compensated
employee during either the plan year in which such
separation from service occurred or in any plan
year ending on or after the employee's 55th
birthday.
3) For purposes of 15.1h)1)(B) above, an employee
shall be considered a member of the "top paid
group" for any year if such employee is in the
group consisting of the top 20% of the employees
of CG&E when ranked on the basis of compensation
paid during the preceding plan year, pursuant to
IRC 414(q)(4).
4) For purposes of determining whether an employee
is a highly compensated employee, the provisions
of IRC 414(q), and the regulations thereunder,
shall apply.
[This sub-section becomes effective on 01-01-97.]
15.2 ADP Testing. The ADP for highly compensated eligible
employees for each plan year must satisfy one of the
following tests11:
a) The ADP Test. The ADP for highly compensated
eligible employees for the plan year shall not exceed
the ADP for non-highly compensated eligible employees
for the plan year, multiplied by 1.25.
b) The ADP Alternative Limitation Test. The ADP for
highly compensated eligible employees for the plan
year shall not exceed the lesser of
1) 2 times the ADP for non-highly compensated
eligible employees for the plan year or,
2) 2 percentage points, plus the ADP, for
non-highly compensated eligible employees.
[This section should be deleted effective 01-01-97.]
15.3 ADP Testing. The ADP for highly compensated eligible
employees for each plan year must satisfy one of the
following tests12:
a) The ADP Test. The ADP for highly compensated
eligible employees for the plan year shall not exceed
the ADP for non-highly compensated eligible employees
for the preceding plan year (unless CG&E elects to use
current plan year percentages), multiplied by 1.25.
b) The ADP Alternative Limitation Test. The ADP for
highly compensated eligible employees for the plan
year shall not exceed the lesser of
1) 2 times the ADP for non-highly compensated
eligible employees for the preceding plan year
(unless CG&E elects to use current plan year
percentages) or,
2) 2 percentage points, plus the ADP, for
non-highly compensated eligible employees for the
preceding plan year (unless CG&E elects to use
current plan year percentages).
[This section becomes effective on 01-01-97.]
15.4 ACP Testing. The ACP test will be performed
following any recharacterization of deferred contributions
required by 15.6. The ACP for highly compensated
eligible employees for each plan year must satisfy one of
the following tests13:
a) The ACP Test. The ACP for highly compensated
eligible employees for the plan year shall not exceed
the ACP for non-highly compensated eligible employees
for the plan year, multiplied by 1.25.
b) The ACP Alternative Limitation Test. The ACP for
highly compensated eligible employees for the plan
year shall not exceed the lesser of
1) 2 times the ACP for non-highly compensated
eligible employees for the plan year or,
2) 2 percentage points, plus the ACP, for
non-highly compensated eligible employees.
[This section should be deleted effective 01-01-97.]
15.5 ACP Testing. The ACP test will be performed
following any recharacterization of deferred contributions
required by 15.7. The ACP for highly compensated
eligible employees for each plan year must satisfy one of
the following tests14:
a) The ACP Test. The ACP for highly compensated
eligible employees for the plan year shall not exceed
the ACP for non-highly compensated eligible employees
for the preceding plan year (unless CG&E elects to use
current plan year percentages), multiplied by 1.25.
b) The ACP Alternative Limitation Test. The ACP for
highly compensated eligible employees for the plan
year shall not exceed the lesser of
1) 2 times the ACP for non-highly compensated
eligible employees for the preceding plan year
(unless CG&E elects to use current plan year
percentages) or,
2) 2 percentage points, plus the ACP, for
non-highly compensated eligible employees for the
preceding plan year (unless CG&E elects to use
current plan percentages).
[This section becomes effective on 01-01-97.]
15.6 Multiple Use of Alternative Limitation. If neither
the ADP nor the ACP for highly compensated employees meets
the tests in 15.2a) and 15.4a)15, the multiple use test
of the alternative limitation must be satisfied for the
plan year. In order to satisfy the multiple use test of
the alternative limitation, the sum of the ACP for highly
compensated employees and the ADP for highly compensated
employees may not exceed the greater of the following16:
a) the sum of:
1) 1.25 times the greater of the ADP or the ACP
for non-highly compensated eligible employees, and
2) the lesser of:
A) 2 percentage points plus the lesser of the
ADP or ACP for the non-highly compensated
eligible employees, or
B) 2 times the lesser of the ADP or ACP of the
non-highly compensated eligible employees; or
b) the sum of:
1) 1.25 times the lesser of the ADP or the ACP for
non-highly compensated eligible employees, and
2) the lesser of:
A) 2 percentage points plus the greater of the
ADP or ACP of non-highly compensated eligible
employees, or
B) 2 times the greater of the ADP or ACP of
non-highly compensated eligible employees.
[This section should be deleted effective 01-01-97.]
15.7 Multiple Use of Alternative Limitation. If neither
the ADP nor the ACP for highly compensated employees meets
the tests in 15.3a) and 15.5a)17, the multiple use test
of the alternative limitation must be satisfied for the
plan year. In order to satisfy the multiple use test of
the alternative limitation, the sum of the ACP for highly
compensated employees and the ADP for highly compensated
employees may not exceed the greater of the following18:
a) the sum of:
1) 1.25 times the greater of the ADP or the ACP
for non-highly compensated eligible employees for
the preceding plan year (unless CG&E elects to use
current plan year percentages), and
2) the lesser of:
A) 2 percentage points plus the lesser of the
ADP or ACP for the non-highly compensated
eligible employees for the preceding plan year
(unless CG&E elects to use current plan year
percentages), or
B) 2 times the lesser of the ADP or ACP of the
non-highly compensated eligible employees for
the preceding plan year (unless CG&E elects to
use current plan year percentages); or
b) the sum of:
1) 1.25 times the lesser of the ADP or the ACP for
non-highly compensated eligible employees for the
preceding plan year (unless CG&E elects to use
current plan year percentages), and
2) the lesser of:
A) 2 percentage points plus the greater of the
ADP or ACP of non-highly compensated eligible
employees for the preceding plan year (unless
CG&E elects to use current plan year
percentages), or
B) 2 times the greater of the ADP or ACP of
non-highly compensated eligible employees for
the preceding plan year (unless CG&E elects to
use current plan year percentages).
[This section becomes effective on 01-01-97.]
15.8 Corrective Procedure If ADP Limitation Exceeded. If
the plan fails the ADP test provided for in this Article,
the following procedure will be followed:
a) Reduction of Highly Compensated Participants' ADP.
The ADP for highly compensated participants shall be
reduced to the maximum acceptable level determined by
the ADP test. In determining the amount of excess
contributions for each highly compensated participant,
the highest ratio will be reduced to the next highest
ratio until the maximum allowed percentage is
reached19.
[This sub-section should be deleted effective 01-01-97.]
b) Reduction of Highly Compensated Participants' ADP.
The ADP for highly compensated participants shall be
reduced to the maximum acceptable level determined by
the ADP test. Excess contributions will be returned
to the highly compensated participants who contributed
the largest dollar amounts until the maximum allowed
percentage is reached20.
[This sub-section becomes effective on 01-01-97.]
c) Recharacterization of Excess Contributions. The
amount resulting from a reduction in a participant's
deferred compensation contributions in 15.8a) or
15.8b) above shall be recharacterized as optional
contributions and treated as taxable income to the
participant in the tax year in which the participant
would have received them if he or she had originally
elected to receive them in cash. This
recharacterization normally will be made within 2 1/2
months after the close of the plan year21.
15.9 Corrective Procedure if ACP Limitation Exceeded. If
the plan fails the ACP test, the following procedure will
be followed, after recharacterizing any deferred
compensation contributions required under 15.6 or 15.7:
a) Reduction of Highly Compensated Participants' ACP.
The ACP for highly compensated participants shall be
reduced to the maximum acceptable level determined by
the ACP test. In determining the amount of excess
aggregate contributions for each highly compensated
participant, the highest ratio will be reduced to the
next highest ratio until the maximum allowed
percentage is reached.
[This sub-section should be deleted effective 01-01-97.]
b) Reduction of Highly Compensated Participants' ACP.
The ACP for highly compensated participants shall be
reduced to the maximum acceptable level determined by
the ACP test. Excess aggregate contributions will be
returned to the highly compensated participants who
contributed the largest dollar amounts until the
maximum allowed percentage is reached.
[This sub-section becomes effective on 01-01-97.]
c) Disposition of Excess Aggregate Contributions. The
aggregate excess contributions resulting from a
reduction in a highly compensated participant's ACP
ratio in 15.9a) or 15.9b) shall be disposed of as
follows:
1) Excess Optional Contributions. Any excess
optional contributions, plus the net of any income
or loss attributable to optional contributions as
of the last day of the plan year,22 normally will
be distributed to the participant within 2 1/2
months after the end of the plan year.23 However,
if distributions are not made by that time,
distributions shall be made within 12 months after
the close of the plan year.24
2) Excess Company-Matched Contributions. Any
excess company-matched contributions which are not
vested will be treated as forfeitures under
7.6c). Any excess vested company-matched
contributions25 plus the net of any income or loss
attributable to the excess company-matched
contributions as of the end of the plan year,26
shall normally be distributed to the participant
within 2 1/2 months after the end of the plan
year.27 However, if distributions are not made by
that time, distributions shall be made within 12
months after the close of the plan year.28
3) Excess Company-Matched Stock Incentive
Contributions. Any excess company-matched stock
incentive contributions which are not vested will
be treated as forfeitures under 7.6c). Any
excess vested company-matched stock incentive
contributions29 plus the net of any income or loss
attributable to the excess company-matched stock
incentive contributions as of the end of the plan
year,30 shall normally be distributed to the
participant within 2 1/2 months after the end of
the plan year.31 However, if distributions are
not made by that time, distributions shall be made
within 12 months after the close of the plan
year.32
15.10 Corrective Procedure if the Test for the Multiple
Use of Alternative Limitation is Exceeded.
If the plan fails the test for the multiple use of the
alternative limitation, the following procedure will be
followed:
a) Simultaneous Reduction of the ADP and ACP of Highly
Compensated Participants. After determining the
amount of excess contributions and excess aggregate
contributions for each highly compensated participant,
the participants with the highest individual ADP and
ACP ratios will have their ratios reduced to the next
highest ADP and ACP ratio, until the maximum multiple
use limit is reached.
[This sub-section should be deleted effective 01-01-97.]
b) Simultaneous Reduction of the ADP and ACP of Highly
Compensated Participants. After determining the
amount of excess contributions and excess aggregate
contributions for each highly compensated participant,
the participants who contributed the largest dollar
amounts will have their contributions returned, until
the maximum multiple use limit is reached.
[This sub-section becomes effective on 01-01-97.]
c) Disposition of Excess Contributions and Excess
Optional Contributions and Excess Vested
Company-Matched Contributions and Excess Vested
Company-Matched Stock Incentive Contributions. Any
excess contributions, optional contributions, vested
company-matched contributions, and vested company-
matched stock incentive contributions which are
determined by the application of 15.10a) or 15.10b),
plus the net of any income or loss attributable to the
excess contributions, optional contributions, vested
company-matched contributions, and vested company-
matched stock incentive contributions as of the last
day of the plan year, shall normally be distributed to
the participant within 2 1/2 months after the end of
the plan year.33 However, if distributions are not
made by that time, distributions shall be made within
12 months after the close of the plan year.34
LIMITATION ON ANNUAL ADDITIONS
ARTICLE 16: LIMITATION ON ANNUAL ADDITIONS
16.1 Definitions.
The following terms are defined solely for purposes of
this Article:
a) Annual Addition.1 A participant's annual addition
is the sum of the following amounts credited to the
participant's account for a plan year:
1) deferred compensation contributions;
2) company-matched contributions;
3) company-matched stock incentive contributions;
4) optional contributions; and
5) forfeitures.
b) Compensation.2 A participant's compensation for
any plan year consists of his or her total wages
earned and other compensation including amounts paid
for sick pay, moving expense payments and
reimbursements that are not deductible under IRC 217,
and premiums for group term life insurance that exceed
IRC 79(a) limits. Compensation also includes any
distribution from any non-qualified deferred
compensation plan paid to the participant while s/he
remains employed. Compensation does not include
employer contributions under this plan or any IRC 125
plan which are not currently taxable to the employee
or any distributions from a qualified deferred
compensation plan, regardless of whether such amounts
are includable in the employee's gross income when
distributed.3
c) Defined Benefit Fraction.4 The defined benefit
plan fraction applicable to a participant for any plan
year is a fraction: 1) the numerator of which is the
participant's projected annual benefit5 (determined as
of the close of the plan year) under the RIP; and 2)
the denominator of which is the lesser of 1.25
multiplied by the dollar limitation under IRC 415 for
defined benefit plans for such year, or 1.4 multiplied
by the participant's average compensation for the 3
consecutive calendar years aggregating the greatest
compensation from CG&E during which s/he participated
in the plan.
d) Defined Benefit Plan. A qualified plan as defined
in IRC 414(j).
e) Defined Contribution Fraction6. The defined
contribution fraction applicable to a participant for
any plan year is a fraction: 1) the numerator of
which is the sum of annual additions to the
participant's account under the plan as of the close
of the limitation year; and 2) the denominator of
which is the sum of the lesser of the following
amounts determined for such year and for each prior
year of service with CG&E:
1) the product of 1.25 multiplied by the dollar
limitation under IRC 415(c)(1)(A) for defined
contribution plans for such year,7 or
2) the product of 1.4 multiplied by 25% of the
participant's compensation for such year.
f) Defined Contribution Plan. A qualified plan as
defined in IRC 414(i).
g) Company. The employer that adopts this plan, and
all members of a controlled group of corporations, all
commonly controlled trades or businesses or affiliated
service groups of which the adopting employer is a
part, and any other entity required to be aggregated
with the employer pursuant to IRC 414(o)
regulations.8
h) Excess Amount. The excess of the participant's
annual additions for the plan year over the maximum
annual additions permitted under this Article for the
plan year.
i) Projected Annual Benefit.9 A participant's
projected annual benefit is an amount equal to the
annual benefit that the participant would be entitled
to receive under the terms of the defined benefit plan
in which he is a participant, assuming that:
1) the participant continues employment until his
or her normal retirement age;
2) that his or her compensation continues at the
same rate as in effect in the plan year under
consideration; and
3) that all relevant factors used to determine
benefits under such plan remain constant.
Projected annual benefit is a benefit expressed in the
form of a single life annuity disregarding any
ancillary benefits or benefits attributable to a
rollover contribution.
16.2 General Limitations. Notwithstanding any other
provisions of this plan, the maximum annual addition
credited to the account of a participant for any plan
year10 shall not exceed the lesser of:
a) $30,000, or
b) 25% of the participant's compensation for that plan
year.
16.3 Estimation of Compensation. Prior to the
determination of a participant's actual compensation for a
plan year, the maximum annual addition for a participant
may be computed using a reasonable estimation of the
participant's compensation for a plan year.
16.4 Disposition of Excess Amount. In the event the
limitations of this Article are exceeded because of an
allocation of forfeitures, a reasonable error in
estimating a participant's compensation or other
reasonable circumstances, the excess amount shall be
disposed of as follows11:
a) First, any optional contributions that are not
eligible for company-matched contributions and
company-matched stock incentive contributions will be
returned to the participant to the extent that the
return would reduce the excess amount.
[This sub-section should be deleted effective 01-01-97.]
b) First, any optional contributions will be returned
to the participant to the extent that the return would
reduce the excess amount.
[This sub-section becomes effective on 01-01-97.]
c) Second, any deferred compensation that are not
eligible for company-matched contributions and
company-matched stock incentive contributions will be
returned to the participant to the extent that the
return will reduce the excess amount.
d) Third, any company-matched contributions, made on
behalf of a participant under this plan shall be
reduced to the extent that the reduction will reduce
the excess amount. Such reduction in company-matched
contributions shall be treated as a forfeiture in
accordance with 7.6.12
e) Fourth, any company-matched stock incentive
contributions, made on behalf of a participant under
this plan shall be reduced by the amount needed to
eliminate the excess amount. Such reduction in
company-matched stock incentive contributions shall be
treated as a forfeiture in accordance with 7.6.13
16.5 Aggregation of Plans of CG&E.
a) For purposes of applying the limitation of this
Article, all defined benefit plans (whether or not
terminated) of CG&E shall be treated as one defined
benefit plan and all defined contribution plans
(whether or not terminated) shall be treated as one
defined contribution plan.14
b) If an excess amount results from the aggregation of
annual additions under this plan with annual additions
under another defined contribution plan:
1) the excess amount shall be first attributable
to this plan; and
2) such excess amount shall be treated in
accordance with 16.1h).
c) Where a participant is a participant at any time in
both a defined contribution plan and a defined benefit
plan sponsored by CG&E, the sum of the defined benefit
fraction and the defined contribution fraction for any
plan year shall not exceed 1.0. Should this limita-
tion be exceeded in any plan year, the participant's
benefits under the RIP shall be appropriately reduced
so that the defined benefit fraction is equal to the
difference between 1.0 and the defined contribution
fraction.
AMENDMENT AND TERMINATION OF THE PLAN
ARTICLE 17: AMENDMENT AND TERMINATION OF THE PLAN
17.1 Amendment of the Plan.
a) Reservation of Right. CG&E expects to continue the
plan indefinitely, but as future conditions cannot be
foreseen, the board of directors reserves the right to
amend or terminate the plan at any time.
b) Effect on Participants. No amendment shall
retroactively reduce the rights or benefits of
participants1 or permit the return to CG&E of the
CINergy stock, other securities, obligations,
deposits, or cash held by the trustee, or permit their
use or diversion for any purpose other than for the
exclusive benefits of the participants or their bene-
ficiaries. In addition, no amendment shall eliminate
an optional form of benefit or eliminate or reduce an
early retirement option with respect to benefits
attributable to service before this amendment.
c) Discontinuance of Contributions. In the event of a
complete discontinuance of company-matched
contributions or company-matched stock incentive
contributions, the company-matched sub-account will be
immediately vested.
17.2 Plan Termination.
If the plan is terminated all contributions will cease.
The Committee shall direct the trustee to determine the
value of each beneficial owner's account as of the date of
termination. The value of any unallocated plan assets
shall be allocated to the beneficial owners. Each
beneficial owner shall become fully vested in the total
value of his or her account. Each beneficial owner's
balance shall be segregated by the trustee pending
disposition. Distribution shall be made, in a single
payment, to each beneficial owner as soon as practicable
following the date of plan termination.2 No amendment
shall deprive the beneficial owners of their vested rights
upon termination of the plan.
17.3 Partial Termination.
If the plan is partially terminated, all contributions to
the accounts of all affected participants will cease. The
Committee shall direct the trustee to determine the value
of each affected beneficial owner's account as of the date
of the partial termination. The value of any unallocated
plan assets shall be allocated to beneficial owners. Each
affected beneficial owner shall become fully vested in his
or her account. Distribution shall be made, in a single
payment, to each beneficial owner as soon as practical
following the date of partial plan termination. However,
no distribution from a participant's deferred compensation
contribution sub-account shall be made at a time not
otherwise permitted under the plan. No amendment shall
deprive the affected beneficial owners of their vested
rights upon partial termination of the plan.
17.4 Liquidation of the Investment Funds.
The trust and the investment funds shall continue in
existence after the termination of the plan for such
period of time as may be required to complete the
liquidation thereof in accordance with the terms of this
Article.
INDEX
This index references the root of hyphenated words as if they
were single words, e.g. "account" will also reference the
occurrence of "sub-account".
This index also references words and phrases in the text and the
endnotes. Endnote references reflect the text page where the
endnote occurs, not the page where the endnote itself is printed.