LIMITED LIABILITY COMPANY AGREEMENT
                                       OF
                          CINERGY LIMITED HOLDINGS, LLC


     This LIMITED LIABILITY COMPANY  AGREEMENT (this  "Agreement"),  dated as of
December  14,  2001,  of Cinergy  Limited  Holdings,  LLC,  a  Delaware  limited
liability company (the "Company"), is entered into by Cinergy Capital & Trading,
Inc., an Indiana corporation, as the sole member of the Company (the "Member");

                                    RECITALS

     WHEREAS,  the Company was formed on December  14, 2001,  by an  "authorized
person"  within the meaning of the Delaware  Limited  Liability  Company Act (as
amended from time to time, the "Act");

     WHEREAS,  in  accordance  with  Section  18-201(d)  of the  Act,  it is the
intention  of the  Member  that the  Agreement  be  effective  as of the date of
formation, December 14, 2001;

     WHEREAS,  the Member holds the sole limited  liability  company interest in
the Company as of December 14, 2001; and

     WHEREAS,  the Member desires to set forth its understandings  regarding its
rights, obligations and interests with respect to the affairs of the Company and
the conduct of its business.

     NOW,  THEREFORE,  in  consideration  of the agreements and  obligations set
forth  herein and for other good and  valuable  consideration,  the  receipt and
sufficiency  of which are  hereby  acknowledged,  the  Member  hereby  agrees as
follows:

                                    ARTICLE I

                                   Definitions

     Section 1.1 Definitions.  Capitalized  terms used but not otherwise defined
herein shall have the meanings assigned to them in the Act.

                                   ARTICLE II

                               General Provisions

     Section 2.1  Company  Name.  The name of the  Company is  "Cinergy  Limited
Holdings,  LLC." The  business of the Company may be conducted  upon  compliance
with all applicable laws under any other name designated by the member(s).

     Section 2.2 Registered Office; Registered Agent.

          (a) The Company  shall  maintain a  registered  office in the State of
     Delaware at, and the name and address of the Company's  registered agent in
     the State of  Delaware  is, The  Corporation  Trust  Company,  1209  Orange
     Street, Wilmington, Delaware, 19801.

          (b) The  business  address of the Company is 139 East  Fourth  Street,
     Cincinnati, Ohio, 45202, or such other place as the Member shall designate.

     Section 2.3 Nature of Business Permitted;  Powers. The Company may carry on
any lawful  business,  purpose or activity.  The Company  shall  possess and may
exercise all the powers and privileges granted by the Act or by any other law or
by this Agreement,  together with any powers incidental  thereto, so far as such
powers and privileges  are necessary or convenient to the conduct,  promotion or
attainment of the business purposes or activities of the Company.

     Section  2.4  Business  Transactions  of a  Member  with  the  Company.  In
accordance  with Section 18-107 of the Act, a member may transact  business with
the  Company  and,  subject to  applicable  law,  shall have the same rights and
obligations with respect to any such matter as a person who is not a member.

     Section 2.5 Fiscal Year. The fiscal year of the Company (the "Fiscal Year")
for financial statement purposes shall end on December 31 of each year.

     Section 2.6 Effective  Date. In  accordance  with Section  18-201(d) of the
Act, it is the intention of the Member that the Agreement be effective as of the
date of formation, December 14, 2001.

                                   ARTICLE III

                                    Member(s)

     Section 3.1  Admission of Member(s).  The Member is hereby  admitted to the
Company in respect of an Interest (as defined in Section 3.2), which is the sole
Interest  outstanding as of the effective time of this Agreement.  New member(s)
shall be admitted only with the approval of the Member.

     Section 3.2  Interests.  The Company  shall be authorized to issue a single
class of  limited  liability  company  interest  (as  defined  in the  Act,  the
"Interest"),  which shall  include  any and all  benefits to which the holder of
such Interest may be entitled in this  Agreement,  together with all obligations
of such  person to  comply  with the terms  and  provisions  of this  Agreement.
Interests may, but need not be, evidenced by a certificate of limited  liability
company interest issued by the Company.

     Section 3.3 Liability of Member(s).

          (a) All debts,  obligations  and  liabilities of the Company,  whether
     arising  in  contract,  tort or  otherwise,  shall  be  solely  the  debts,
     obligations  and  liabilities  of the  Company,  and  no  member  shall  be
     obligated  personally  for any such debt,  obligation  or  liability of the
     Company solely by reason of being a member.

          (b) Except as otherwise  expressly required by law, a member shall not
     have any liability in excess of (i) the amount of its capital  contribution
     to the Company,  (ii) its share of any assets and undistributed  profits of
     the Company, (iii) its obligation to make other payments, if any, expressly
     provided for in this Agreement or any amendment  hereto and (iv) the amount
     of any distributions wrongfully distributed to it.

     Section 3.4 Access to and Confidentiality of Information; Records.

          (a) Any member  shall have the right to obtain from the  Company  from
     time to time upon reasonable demand for any purpose  reasonably  related to
     the member's  interest as a member of the Company,  the documents and other
     information described in Section 18-305(a) of the Act.

          (b) Any demand by a member  pursuant  to this  Section 3.4 shall be in
     writing and shall state the purpose of such demand.

     Section 3.5 Meetings of Member(s).

          (a) Meetings of the member(s) may be called at any time by any member.

          (b) Except as otherwise  provided by law, if additional  member(s) are
     admitted,  a majority of the  member(s),  determined in proportion to their
     respective interests in the Company,  entitled to vote at the meeting shall
     constitute a quorum at all meetings of the member(s).

          (c) Any  action  required  to or which  may be taken at a  meeting  of
     member(s) may be taken without a meeting,  without prior notice and without
     a vote,  if a consent or consents in writing,  setting  forth the action so
     taken, shall be signed by all member(s).

          (d) Regular meetings of the member(s) shall be held at least annually.
     Member(s) may participate in a meeting by means of conference  telephone or
     similar   communications   equipment   by  means  of  which   all   persons
     participating  in the meeting can hear each other,  and  participation in a
     meeting by such means shall constitute presence in person at such meeting.

     Section 3.6 Vote. Except as specifically set forth herein, the business and
affairs  of the  Company  shall be  managed  by or under  the  direction  of the
member(s) by majority vote.

     Section 3.7 Notice.  Meetings of the  member(s)  may be held at such places
and at such times as the member(s) may from time to time  determine.  Any member
may at any time call a meeting  of the  member(s).  Written  notice of the time,
place,  and purpose of such meeting  shall be served by  registered or certified
prepaid,  first class mail, via overnight  courier using a nationally  reputable
courier,  or by fax or cable,  upon each  member and shall be given at least two
(2) business days prior to the time of the meeting.  No notice of a meeting need
be given to any member if a written waiver of notice,  executed  before or after
the meeting by such member thereunto duly authorized,  is filed with the records
of the  meeting,  or to any member who attends the  meeting  without  protesting
prior thereto or at its  commencement the lack of notice to him or her. A waiver
of notice need not specify the purposes of the meeting.

     Section 3.8 Delegation of Powers.  Subject to any  limitations set forth in
the Act, the member(s) may delegate any of its powers to officers of the Company
or to committees  consisting  of persons who may or may not be member(s).  Every
officer or committee  shall,  in the exercise of the power so delegated,  comply
with any restrictions that may be imposed on them by the member(s).

     Section 3.9  Withdrawals  and Removals of Member(s).  No member may resign,
withdraw or be removed as a member of the Company without the written consent of
all of the member(s).

                                   ARTICLE IV

                                   Management

     Section 4.1 General.  Except as specifically set forth herein, the business
and affairs of the Company  shall be managed by and under the  direction  of the
Member,  or, if  additional  members are admitted,  the members,  who shall have
full,  exclusive and complete  discretion to manage and control the business and
affairs of the Company as would (if the Company were a  corporation)  be subject
to control by a board of directors, to make all decisions affecting the business
and affairs of the Company and to take all such actions as it deems necessary or
appropriate to accomplish  the purposes of the Company as set forth herein.  The
Member or members shall serve  without  compensation  from the Company,  and the
Member or members shall bear the cost of its participation in meetings and other
activities of the Company.

     Section 4.2 Officers.

          (a) Election,  Term of Office.  Officers shall be elected  annually by
     the member(s).  Except as provided in paragraphs (b) or (c) of this Section
     4.2, each officer  shall hold office until his or her successor  shall have
     been chosen and qualified.  Any two offices,  except those of the President
     and the  Secretary,  may be held by the same person,  but no officer  shall
     execute,  acknowledge or verify any instrument in more than one capacity if
     such  instrument  is  required  by law or this  Agreement  to be  executed,
     acknowledged or verified by any two or more officers.

          (b)  Resignations  and  Removals.  Any  officer  may resign his or her
     office at any time by delivering a written  resignation  to the  member(s).
     Unless otherwise specified therein, such resignation shall take effect upon
     delivery.  Any officer may be removed from office with or without  cause by
     either the member(s) or the President.

          (c) Vacancies and Newly Created Offices. If any vacancy shall occur in
     any office by reason of death,  resignation,  removal,  disqualification or
     other cause, or if any new office shall be created, such vacancies or newly
     created  offices may be filled by the  President,  subject to approval  and
     election by the member(s).

          (d) Conduct of Business.  Subject to the provisions of this Agreement,
     the  day-to-day  operations of the Company shall be managed by its officers
     and such officers  shall have full power and authority to make all business
     decisions,  enter  into all  commitments  and take such  other  actions  in
     connection  with the  business and  operations  of the Company as they deem
     appropriate.   Such  officers  shall  perform  their  duties  in  a  manner
     consistent with this Agreement and with directions  which may be given from
     time to time by the member(s).

          (e) President. Subject to the further directives of the member(s), the
     President  shall have general and active  management of the business of the
     Company  subject to the  supervision of the  member(s),  shall see that all
     orders and  resolutions  of the member(s) are carried into effect and shall
     have  such  additional  powers  and  authority  as  are  specified  by  the
     provisions of this Agreement.

          (f)  Secretary.  The  Secretary  shall  attend  all  meetings  of  the
     member(s)  and record all the  proceedings  of the meetings and all actions
     taken  thereat in a book to be kept for that purpose and shall perform like
     duties for the standing committees when required. The Secretary shall give,
     or cause to be given,  notice of all meetings of the  member(s),  and shall
     perform  such other  duties as may be  prescribed  by the  member(s) or the
     President.  The Assistant Secretary, if there be one, shall, in the absence
     of the  Secretary  or in the  event of the  Secretary's  inability  to act,
     perform  the duties and  exercise  the  powers of the  Secretary  and shall
     perform such other duties and have such other powers as the  member(s)  may
     from time to time prescribe.

          (g) Other  Officers.  The member(s) from time to time may appoint such
     other officers or agents as it may deem advisable,  each of whom shall have
     such title,  hold office for such period,  have such  authority and perform
     such duties as the  member(s)  may  determine in its sole  discretion.  The
     member(s)  from time to time may delegate to one or more officers or agents
     the power to  appoint  any such  officers  or agents  and  prescribe  their
     respective rights, terms of office, authorities and duties.

          (h)  Officers as Agents;  Authority.  The  officers,  to the extent of
     their powers set forth in this  Agreement  and/or  delegated to them by the
     member(s),  are agents and  managers  of the Company for the purpose of the
     Company's  business,  and the actions of the officers  taken in  accordance
     with such powers shall bind the Company.

     Section 4.3 Reliance by Third Parties. Persons dealing with the Company are
entitled to rely  conclusively  upon the power and  authority  of the  member(s)
herein set forth.

     Section 4.4 Expenses.  Except as otherwise provided in this Agreement,  the
Company shall be responsible  for and shall pay all expenses out of funds of the
Company  determined by the member(s) to be available for such purpose,  provided
that such  expenses  are those of the Company or are  otherwise  incurred by the
member(s) in connection with this Agreement, including, without limitation:

          (a) all  expenses  related  to the  business  of the  Company  and all
     routine administrative  expenses of the Company,  including the maintenance
     of books and records of the Company,  the  preparation  and dispatch to any
     member(s) of checks,  financial  reports,  tax returns and notices required
     pursuant  to this  Agreement  or in  connection  with  the  holding  of any
     meetings of the members

          (b) all  expenses  incurred  in  connection  with  any  litigation  or
     arbitration  involving the Company (including the cost of any investigation
     and  preparation)  and the amount of any  judgment  or  settlement  paid in
     connection therewith;

          (c) all expenses for indemnity or contribution  payable by the Company
     to any person;

          (d) all expenses incurred in connection with the collection of amounts
     due to the Company from any person;

          (e) all  expenses  incurred  in  connection  with the  preparation  of
     amendments to this Agreement; and

          (f) expenses incurred in connection with the liquidation,  dissolution
     and winding up of the Company.

                                    ARTICLE V

                                     Finance

     Section  5.1 Form of  Contribution.  The  contribution  of a member  to the
Company  must be in cash or  property,  provided  that if there is more than one
member,  all member(s) must consent in writing to contributions of property.  To
the extent there is more than one member,  additional  contributions in the same
proportion  shall  be made by each  member,  except  as may be  approved  by all
member(s).

                                   ARTICLE VI

                                  Distribution

     Section 6.1 Distribution in Kind. Notwithstanding the provisions of Section
18-605 of the Act, a member may  receive  distributions  from the Company in any
form other than cash, and may be compelled to accept a distribution of any asset
in kind from the Company.

                                   ARTICLE VII

                             Assignment of Interests

     Section 7.1  Assignment of Interests.  A member may assign and transfer all
or any part of its Interest upon the written  consent of all other  members,  if
any.  Provided  that a transfer is permitted in  accordance  with the  preceding
sentence and the transferee agrees to be bound by the terms of this Agreement by
executing a counterpart  hereto,  such transferee  shall be deemed admitted as a
member  of  the  Company  to  the  extent  of  such  transferred  Interest,  and
immediately  thereafter the transferor  shall be deemed withdrawn as a member of
the Company to the extent of such transferred Interest.

                                  ARTICLE VIII

                                   Dissolution

     Section 8.1 Duration. The duration of the Company shall be perpetual.

     Section 8.2 Winding Up.  Subject to the  provisions  of the Act, the Member
or, if  additional  member(s) are  admitted,  the  member(s)  (acting by written
consent of all member(s)) shall have the right to wind up the Company's  affairs
in  accordance  with  Section  18-803 of the Act (and shall  promptly do so upon
dissolution of the Company) and shall also have the right to act as or appoint a
liquidating trustee in connection therewith.

     Section 8.3 Distribution of Assets. Upon the winding up of the Company, the
assets shall be distributed in the manner provided in Section 18-804 of the Act.

                                   ARTICLE IX

                         Exculpation and Indemnification

     Section  9.1  Exculpation.  Notwithstanding  any other  provisions  of this
Agreement,  whether  express  or  implied,  or  obligation  or duty at law or in
equity,  any  member,  or  any  officers,  directors,  stockholders,   partners,
employees,  representatives or agents of any of the foregoing,  nor any officer,
employee,  representative,  manager  or  agent  of  the  Company  or  any of its
affiliates  (individually,  a "Covered  Person" and  collectively,  the "Covered
Persons")  shall be liable to the  Company  or any other  person  for any act or
omission (in relation to the Company,  this Agreement,  any related  document or
any transaction or investment  contemplated  hereby or thereby) taken or omitted
in good faith by a Covered Person and in the reasonable  belief that such act or
omission is in or is not  contrary to the best  interests  of the Company and is
within the scope of authority  granted to such Covered  Person by the Agreement,
provided  that  such  act  or  omission  does  not  constitute  fraud,   willful
misconduct, bad faith, or gross negligence.

     Section 9.2  Indemnification.  To the fullest extent  permitted by law, the
Company shall  indemnify and hold harmless each Covered  Person from and against
any and all losses, claims, demands,  liabilities,  expenses,  judgments, fines,
settlements and other amounts arising from any and all claims, demands, actions,
suits or proceedings, civil, criminal, administrative or investigative, in which
the Covered Person may be involved,  or threatened to be involved, as a party or
otherwise,  by reason of its  management  of the affairs of the Company or which
relates to or arises out of the Company or its property,  business or affairs. A
Covered Person shall not be entitled to  indemnification  under this Section 9.2
with  respect  to any claim,  issue or matter in which it has  engaged in fraud,
willful misconduct, bad faith or gross negligence.

                                    ARTICLE X

                                  Miscellaneous

     Section 10.1 Amendment to this Agreement.  Except as otherwise  provided in
this  Agreement,  this  Agreement  may be  amended  by,  and only by, a  written
instrument  executed by the Member or, if  additional  member(s)  are  admitted,
unanimous consent of the member(s).

     Section  10.2  Successors;  Counterparts.  Subject  to Article  VIII,  this
Agreement  (a) shall be binding as to the  executors,  administrators,  estates,
heirs,  assigns and legal  successors,  or nominees or  representatives,  of the
Member or, if additional  member(s)  are admitted,  the member(s) and (b) may be
executed  in  several  counterparts  with  the  same  effect  as if the  parties
executing the several counterparts had all executed one counterpart.

     Section 10.3 Governing Law; Severability.  This Agreement shall be governed
by and  construed in accordance  with the laws of the State of Delaware  without
giving effect to the principles of conflict of laws thereof. In particular, this
Agreement  shall be construed to the maximum extent  possible to comply with all
the terms and conditions of the Act. If, nevertheless, it shall be determined by
a court  of  competent  jurisdiction  that any  provisions  or  wording  of this
Agreement shall be invalid or  unenforceable  under the Act or other  applicable
law,  such  invalidity  or  unenforceability  shall not  invalidate  the  entire
Agreement  and this  Agreement  shall be  construed  so as to limit  any term or
provision  so as to make it  enforceable  or valid  within the  requirements  of
applicable law, and, in the event such term or provisions  cannot be so limited,
this Agreement shall be construed to omit such invalid or unenforceable terms or
provisions.  If it shall be determined by a court of competent jurisdiction that
any provisions  relating to the  distributions and allocations of the Company or
to any  expenses  payable by the  Company  are  invalid or  unenforceable,  this
Agreement  shall be construed or interpreted so as (a) to make it enforceable or
valid and (b) to make the distributions and allocations as closely equivalent to
those set forth in this Agreement as is permissible under applicable law.

     Section 10.4 Filings.  Cecilia Temple was an "authorized person" within the
meaning of the Act for purposes of filing the original  Certificate of Formation
of the Company with the State of Delaware on December 14,  2001.  Following  the
execution  and delivery of this  Agreement,  the Member shall be an  "authorized
person" within the meaning of the Act, and shall prepare any documents  required
to be filed and recorded under the Act, and the Member shall promptly cause each
such document  required to be filed and recorded in accordance with the Act and,
to the extent  required by local law, to be filed and recorded or notice thereof
to be  published  in the  appropriate  place in each  jurisdiction  in which the
Company may  hereafter  establish  a place of  business.  The Member  shall also
promptly cause to be filed, recorded and published such statements of fictitious
business  name  and  any  other  notices,  certificates,   statements  or  other
instruments required by any provision of any applicable law of the United States
or any state or other  jurisdiction  which  governs the conduct of its  business
from time to time.

     Section  10.5  Headings.  Section  and  other  headings  contained  in this
Agreement  are for  reference  purposes  only and are not  intended to describe,
interpret,  define  or  limit  the  scope or  intent  of this  Agreement  or any
provision hereof.

     Section 10.6 Further Assurances.  Each member agrees to perform all further
acts and execute,  acknowledge  and deliver any documents that may be reasonably
necessary to carry out the provisions of this Agreement.

     Section 10.7 Notices. All notices, requests and other communications to any
member shall be in writing  (including  telecopier or similar writing) and shall
be given to such member (and any other person  designated by such member) at its
address or telecopier  number set forth in a schedule  filed with the records of
the  Company  or such  other  address or  telecopier  number as such  member may
hereafter specify for the purpose by notice. Each such notice,  request or other
communication shall be effective (a) if given by telecopier, when transmitted to
the number specified  pursuant to this Section and the appropriate  confirmation
is  received,  (b) if given  by  mail,  72 hours  after  such  communication  is
deposited in the mails with first class postage prepaid, addressed as aforesaid,
or (c) if given by any other  means,  when  delivered  at the address  specified
pursuant to this Section.

     Section 10.8 Books and Records;  Accounting.  The Member or, if  additional
member(s)  are  admitted,  the  member(s)  shall keep or cause to be kept at the
address of the Company (or at such other place as the member(s)  shall determine
in their discretion) true and full books and records regarding the status of the
business and financial condition of the Company.

     IN WITNESS WHEREOF,  the undersigned has duly executed this Agreement as of
the date first above written.


                                            CINERGY CAPITAL & TRADING, INC.



                                            By:  _______________________________
                                                   Charles J. Winger
                                                   Vice President