10-K405

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

/x/  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
or
/ /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to      

Commission File Number	Registrant, State of Incorporation, Address and Telephone Number	I.R.S. Employer Identification No.
1-11377	CINERGY CORP.	31-1385023
	(A Delaware Corporation)
	139 East Fourth Street
	Cincinnati, Ohio 45202
	(513) 287-2644
1-1232	THE CINCINNATI GAS & ELECTRIC COMPANY	31-0240030
	(An Ohio Corporation)
	139 East Fourth Street
	Cincinnati, Ohio 45202
	(513) 287-2644
1-3543	PSI ENERGY, INC.	35-0594457
	(An Indiana Corporation)
	1000 East Main Street
	Plainfield, Indiana 46168
	(513) 287-2644
2-7793	THE UNION LIGHT, HEAT AND POWER COMPANY	31-0473080
	(A Kentucky Corporation)
	139 East Fourth Street
	Cincinnati, Ohio 45202
	(513) 287-2644

Each of the following classes or series of securities registered pursuant to Section 12(b) of the Act is registered on the New York Stock Exchange:

Registrant	Title of each class
Cinergy Corp.	Common Stock
The Cincinnati Gas & Electric Company	Cumulative Preferred Stock	4	%
	Junior Subordinated Debentures	8.28	%
PSI Energy, Inc.	Cumulative Preferred Stock	4.32	%
	Cumulative Preferred Stock	4.16	%
	Cumulative Preferred Stock	67/8	%

   Securities registered pursuant to Section 12(g) of the Act: None

   Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that such registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /x/ No / /

   Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants' knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (X)

   Requirements pursuant to Item 405 of Regulation S-K are not applicable for The Union Light, Heat and Power Company.

The Union Light, Heat and Power Company meets the conditions set forth in General Instruction I (1)(a) and (b) of Form 10-K and is therefore filing this Form 10-K with the reduced disclosure format specified in General Instruction I (2) of Form 10-K.

   As of February 29, 2000, the aggregate market value of the common equity of Cinergy Corp. held by nonaffiliates (shareholders who are not directors or executive officers) was $3.3 billion. All of the common stock of The Cincinnati Gas & Electric Company and PSI Energy, Inc. is owned by Cinergy Corp., and all of the common stock of The Union Light, Heat and Power Company is owned by The Cincinnati Gas & Electric Company. As of February 29, 2000, each registrant had the following shares of common stock outstanding:

Registrant	Description	Shares
Cinergy Corp.	Par value $.01 per share	158,923,399
The Cincinnati Gas & Electric Company	Par value $8.50 per share	89,663,086
PSI Energy, Inc.	Without par value, stated value $.01 per share	53,913,701
The Union Light, Heat and Power Company	Par value $15.00 per share	585,333

DOCUMENTS INCORPORATED BY REFERENCE

   Portions of the Proxy Statement of Cinergy Corp. dated March 15, 2000, and the Information Statement of PSI Energy, Inc. dated March 22, 2000, are incorporated by reference into Part III of this report.

   This combined Form 10-K is separately filed by Cinergy Corp., The Cincinnati Gas & Electric Company, PSI Energy, Inc., and The Union Light, Heat and Power Company. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to registrants other than itself.

TABLE OF CONTENTS
Item Number		Page Number
	PART I
1	Business
	General Developments	3
	Organization	3
	Business Units	5
	Other Developments	9
	Future Expectations/Trends, Capital Resources, and Year 2000	10
2	Properties
	Commodities	10
	Delivery	11
	Cinergy Investments	12
	International	12
	General Information	12
3	Legal Proceedings
	New Source Review and Notices of Violation	12
	Manufactured Gas Plant Claims	12
4	Submission of Matters to a Vote of Security Holders	12
	Executive Officers	13
	PART II
5	Market for Registrant's Common Equity and Related Stockholder Matters	17
6	Selected Financial Data	18
	Cautionary Statements Regarding Forward-Looking Information	19
7	Management's Discussion and Analysis of Financial Condition and Results of Operations
	Introduction	20
	Organization	20
	Liquidity	21
	Capital Resources	30
	1999 Results of Operations—Historical	33
	1998 Results of Operations—Historical	38
	Results of Operations—Future	42
7A	Quantitative and Qualitative Disclosures About Market Risk	55
	Index to Financial Statements and Financial Statement Schedules	56
8	Financial Statements and Supplementary Data	57
9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	125
	PART III
10	Directors and Executive Officers of the Registrants
	Board of Directors	126
	Executive Officers	126
11	Executive Compensation	126
12	Security Ownership of Certain Beneficial Owners and Management	127
13	Certain Relationships and Related Transactions	128
	PART IV
14	Exhibits, Financial Statement Schedules, and Reports on Form 8-K
	Financial Statements and Schedules	128
	Reports on Form 8-K	128
	Exhibits	128
	Signatures	140

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PART I.

ITEM 1.  BUSINESS

GENERAL DEVELOPMENTS

    In 1996, the Securities and Exchange Commission (SEC) wrote guidelines to help make shareholder communications more understandable. These guidelines were termed "plain English". This year, we have written our annual report in accordance with these guidelines. Our objective is to present a more user-friendly, understandable, and logically-flowing document for our readers.

    In connection with this change, we (which includes Cinergy Corp. and all of our regulated and non-regulated subsidiaries, also Cinergy) are, at times, referred to in the first person ("we", "our", or "us").

ORGANIZATION

Cinergy Corp., a Delaware corporation created in October 1994, owns all outstanding common stock of The Cincinnati Gas & Electric Company (CG&E) and PSI Energy, Inc. (PSI), both of which are public utility subsidiaries. As a result of this ownership, we are considered a utility holding company. Because we are a holding company whose utility subsidiaries operate in multiple states, we are registered with and are subject to regulation by the SEC under the Public Utility Holding Company Act of 1935, as amended (PUHCA). Our other direct subsidiaries are:

•

Cinergy Services, Inc. (Services);



•

Cinergy Investments, Inc. (Investments); and



•

Cinergy Global Resources, Inc. (Global Resources).

CG&E, an Ohio corporation, is a combination electric and gas public utility company that provides service in the southwestern portion of Ohio and, through its subsidiaries, in nearby areas of Kentucky and Indiana. It has five wholly-owned utility subsidiaries and one wholly-owned non-utility subsidiary. CG&E's principal utility subsidiary, The Union Light, Heat and Power Company (ULH&P), is a Kentucky corporation that provides electric and gas service in northern Kentucky. CG&E's other subsidiaries are insignificant to its results of operations.

PSI, an Indiana corporation, is an electric utility that provides service in north central, central, and southern Indiana.

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    The following table presents further information related to the operations of our domestic utility subsidiaries (our operating companies):

	Principal Line(s) of Business		Major Cities Served	Approximate Population Served
CG&E and subsidiaries	•	Generation, transmission, distribution, and sale of electricity	Cincinnati, OH Middletown, OH Covington, KY	2,005,000
	•	Sale and/or transportation of natural gas	Florence, KY Newport, KY Lawrenceburg, IN
PSI	•	Generation, transmission, distribution, and sale of electricity	Bloomington, IN Columbus, IN Kokomo, IN Lafayette, IN New Albany, IN Terre Haute, IN	2,182,000
ULH&P	•	Transmission, distribution, and sale of electricity	Covington, KY Florence, KY	328,000
	•	Sale and transportation of natural gas	Newport, KY

    Services is a service company that provides our regulated and non-regulated subsidiaries with a variety of centralized administrative, management, and support services. Investments holds most of our domestic non-regulated businesses and investments. Global Resources primarily holds our international businesses and investments.

    We had 8,950 employees at December 31, 1999, of whom 947 were employed by our international subsidiaries. We have collective bargaining agreements with the International Brotherhood of Electrical Workers (IBEW), the United Steelworkers of America (USWA), the Independent Utilities Union (IUU), and various international union organizations. The following table indicates the number of employees by classification:

Classification	Cinergy		CG&E		PSI		ULH&P
IBEW	2,795		1,097	(1)	1,308	(4)	62	(1)
USWA	402		291	(2)	N/A		87	(2)
IUU	985		490	(3)	N/A		66	(3)
Non-Bargaining	3,821		369		672		21
International	947	(5)	N/A		N/A		N/A
	8,950		2,247		1,980		236

(1)

Contract will expire April 1, 2006.

(2)

Contract will expire May 15, 2002.

(3)

Contract will expire April 1, 2001.

(4)

Contract will expire April 30, 2002.

(5)

Of this number, 547 belonged to bargaining units.

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BUSINESS UNITS

    We conduct operations through our subsidiaries, and we manage through the following four business units:

•

Energy Commodities Business Unit (Commodities);



•

Energy Delivery Business Unit (Delivery);



•

Cinergy Investments Business Unit (Cinergy Investments); and



•

International Business Unit (International).

    The following section describes the activities of our business units. (See Note 15 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 137 for financial information by business unit.)

Commodities

    Commodities operates and maintains our domestic electric generating plants and some of our jointly-owned plants. As of December 31, 1999, the total winter electric capability (including our portion of the total capacity for the jointly-owned plants) of these generating plants was 11,221 megawatts (MW, the basic unit of electric energy equal to 1 million watts) of electricity. These plants are mostly coal fired. (See "Item 2. Properties" on page 12 for a further discussion of the generating facilities.) Commodities also conducts the following activities: (1) wholesale energy marketing and trading, (2) energy risk management, (3) financial restructuring services, and (4) proprietary arbitrage activities. (See the "Market Risk Sensitive Instruments and Positions" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 61 for information on risks associated with these activities.)

    Fuel Supply  Each year, through CG&E and PSI, we purchase approximately 28 million tons of coal to generate electricity. The majority of this coal is obtained through long-term coal supply agreements. The remaining coal is purchased either on the spot market or through short-term supply agreements. We receive our coal supply primarily from mines located in West Virginia, Ohio, Kentucky, Indiana, Illinois, and Pennsylvania.

    Commodities monitors alternative sources of coal to assure a continuing availability of economical fuel supplies. As such, it will maintain its practice of purchasing a portion of coal requirements on the spot market and will continue to investigate least-cost coal options in connection with compliance with the 1990 amendments to the Clean Air Act (CAA). (See the "Environmental Issues" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 27 for further information.)

CG&E and PSI believe that they can continue to obtain enough coal to meet future needs. However, future environmental requirements may significantly impact the availability and price of coal.

    Purchased Power  In addition to the purchase of power to meet the energy needs of our wholesale customers, we have to, based on factors such as outages, extreme weather conditions, growth, and other factors associated with supplying full requirements electricity, purchase power to meet the requirements of our retail native load customers (end-use customers within our operating companies' franchise service territory). We believe we can obtain enough purchased power to meet future needs. However, during periods of excessive demand, such as those which occurred in the summers of 1999 and 1998, the price and availability of these purchases may be significantly impacted. (See the "Significant Rate Developments" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 60 for additional information on PSI's proposed Purchased Power Tracker.)

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    Environmental Matters  The Acid Rain Program of the 1990 amendments to the CAA required reductions in both sulfur dioxide and nitrogen oxide (NO_X) emissions from utility sources. Our estimate for compliance with the NO_X limits proposed in 1998 and the related rulemakings is currently $500 million to $700 million (in 1999 dollars) by May 2003, approximately $105 million of which is estimated to be spent in 2000. In 1999, we spent $16 million for other environmental compliance activities as compared to $18 million in 1998. Forecasted expenditures for other environmental compliance activities are $5 million for 2000 and $35 million for 2000-2004. (See the "Environmental Issues" and "Construction" sections of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" beginning on page 27 for further information.)

Delivery

    Delivery plans, constructs, operates, and maintains our operating companies' transmission and distribution systems and provides gas and electric energy to customers. Delivery operated 44,799 circuit miles (the total length in miles of separate circuits) of electric lines to provide regulated transmission and distribution service to 1.5 million customers as of December 31, 1999. Delivery operated 7,543 miles of gas mains (gas distribution lines that serve as a common source of supply for more than one service line) and service lines to provide regulated transmission and distribution service to approximately 478,000 customers as of December 31, 1999. (See "Item 2. Properties" on page 12 for a further discussion of the transmission and distribution lines owned by our operating companies.)

    Electric Operations  Delivery (through our operating companies) and other non-affiliated utilities in an eight-state region participate in the East Central Area Reliability Coordination Agreement (ECAR Agreement). The ECAR Agreement coordinates the planning and operation of generation and transmission facilities, which provides for maximum reliability of regional bulk power supply. (See the "Midwest ISO" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 60 for a discussion of our involvement in a coalition for operation of a regional transmission system.)

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    The following map illustrates the interconnections between our electric systems and other utilities.

[MAP TO GO HERE]

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    Electricity Supply  Delivery currently receives all of its electricity from Commodities at a transfer price based upon current regulatory ratemaking methodology. When electric deregulation legislation is implemented in Ohio, Delivery may continue to make some electricity purchases through Commodities, but will also receive some electric commodity from other suppliers as customers begin choosing alternatives. (See the "Retail Market Developments" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 54 for a discussion of comprehensive electric deregulation legislation that was passed in Ohio on July 6, 1999.)

ULH&P purchases its energy from CG&E pursuant to a Federal Energy Regulatory Commission (FERC)-approved contract that expires January 1, 2002.

    Gas Supply  Delivery is responsible for the purchase and the subsequent delivery of natural gas to native load customers. In 1999, firm supply (gas intended to be available at all times) purchase commitment agreements provided approximately 50% of the natural gas supply. The remaining gas was purchased on the spot market. These firm supply agreements feature two levels of gas supply, specifically (1) base load, which is a continuous supply to meet normal demand requirements, and (2) swing load, which is gas available on a daily basis to accommodate changes in demand. Delivery pays reservation charges for base load and swing load supplies. These charges secure delivery from the supplier during periods of extreme weather or high demand. (See the "Gas Industry" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 67 for further information.)

    Interstate pipelines either (1) transport gas purchased directly to the distribution systems or (2) inject gas purchased into pipeline storage facilities for future withdrawal and delivery. The majority of the gas supply comes from the Gulf of Mexico coastal areas of Texas and Louisiana. In addition, a limited supply comes from the Appalachian region, from the mid-continent (Arkansas-Oklahoma) basin, and from methane gas recovered from an Ohio landfill. Delivery expects the natural gas market will remain competitive in future years. However, short-term price fluctuations could occur as a result of weather conditions, supply, demand, and storage inventories.

    Revenue Data and Customer Base  The percent of operating revenues derived from electricity sales and from the sale and/or transportation of natural gas for the years ended December 31 were as follows:

	Operating Revenues
	1999		1998		1997
Registrant	Electric %	Gas %	Electric %	Gas %	Electric %	Gas %
Cinergy	73	27	81	19	88	12
CG&E and subsidiaries	85	15	86	14	80	20
PSI	100	N/A	100	N/A	100	N/A
ULH&P	75	25	75	25	71	29

    Electric and gas sales are seasonal. Electricity usage peaks during the summer and gas usage peaks during the winter. Air conditioning increases electricity demand and heating increases the demand for electricity and gas.

    The service territory of CG&E and its utility subsidiaries, including ULH&P, is heavily populated and is characterized by a stable residential customer base and a diverse mix of industrial customers. The territory served by PSI is composed of residential, agricultural, and widely diversified industrial customers. No single customer provides more than 10% of operating revenues (electric or gas) for any of our operating companies.

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Cinergy Investments

    Cinergy Investments manages the development, marketing, and sales of our domestic non-regulated retail energy and energy-related products and services. This is accomplished through various subsidiaries and joint ventures. These products and services include the following:

•

energy management and consulting services to commercial customers that operate retail facilities (for example, finding more efficient ways for a customer to use energy);



•

utility operations/services to other utilities (for example, providing underground locating and construction services for other utilities); and



•

building, operating, and maintaining combined heat and power facilities for large industrial customers through joint ventures with Trigen Energy Corporation.

International

    International directs and manages our international business holdings, which include wholly- and jointly-owned companies in six countries. In addition, International also directs our renewable energy investing activities (for example, wind farms) both inside and outside the United States (U.S.).

    On July 15, 1999, we sold our 50% ownership interest in Avon Energy Partners Holdings (Avon Energy), the parent company of Midlands Electricity plc (Midlands), to GPU, Inc. (GPU). Prior to the sale, Midlands had provided the majority of International's earnings. Currently, the majority of International's remaining investments are in companies located in the Czech Republic. (See Note 10 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 126 for further information on the sale of our ownership interest in Avon Energy.)

    International continues to pursue energy-related investment opportunities in international businesses and in domestic renewable energy opportunities. The timing of these investments depends on changing market conditions and regulatory approvals. Our international investments present certain risks, including foreign exchange risk. (See the "Market Risk Sensitive Instruments and Positions" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 61 for further information on these risks and how we address our exposure to them.)

OTHER DEVELOPMENTS

    During 1998, the SEC issued an order under the PUHCA permitting us to invest amounts up to 100% of our consolidated retained earnings (for these purposes, computed as the average consolidated retained earnings of the four most recent quarterly periods) in foreign utility companies (FUCOs, which are companies all of whose utility assets and operations are located outside the U.S. and which are used for the generation, transmission, or distribution of electric energy for sale, or the distribution of gas at retail) and exempt wholesale generators (EWGs, which are special-purpose entities that own or operate domestic or foreign electric generating facilities whose power is sold entirely at wholesale). At December 31, 1999, consolidated retained earnings were approximately $1 billion, and our total investment in EWGs and FUCOs was approximately $580 million.

    On November 16, 1999, we filed a request with the SEC under the PUHCA for additional authority to, among other things, (1) issue and/or sell additional debt and common stock, and (2) increase the amount we can invest in EWGs and FUCOs, as further discussed in the "Capital Resources" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 38. While we currently cannot predict the outcome of this request, the existing limits could restrict our ability to invest in desired transactions.

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FUTURE EXPECTATIONS/TRENDS, CAPITAL RESOURCES, AND YEAR 2000

    See the information appearing under the same captions in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" beginning on page 25 for discussions of "Future Expectations/Trends", "Capital Resources", and "Year 2000". Comprehensive electric deregulation legislation was passed in Ohio on July 6, 1999, as further discussed in the "Retail Market Developments" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 54. If CG&E's Proposed Transition Plan is approved, it will materially affect the nature of CG&E's operations.

ITEM 2. PROPERTIES

COMMODITIES

    Our operating companies' total winter electric capabilities reflected in MW (MW is the basic unit of electric energy equal to 1 million watts), as of December 31, 1999, are shown in the table that follows. Our electric generating plants are located in Ohio, Kentucky, and Indiana and are wholly- or jointly-owned facilities.

Registrant(1)	Stations	Coal MW	Natural Gas MW	Oil MW	Hydro MW	Total MW
CG&E	9	4,186	736	323	—	5,245
PSI	8	5,550	120	261	45	5,976
Cinergy	17	9,736	856	584	45	11,221

(1)

This table includes only our portion of the total capacity for the jointly-owned plants. Refer to Note 13 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 135 for a discussion of jointly-owned plants.

    During July 1999, we incurred peak loads of 5,041 MW for CG&E and 5,637 MW for PSI. We are forecasting our peak load and kilowatt hour (kWh, kilowatt hour is the basic unit of electric energy equal to 1,000 watts supplied for one hour continuously) sales to each have an annual growth of 2% for CG&E, and 1% for PSI for the period 2000 through 2004. This forecast includes the following assumptions:

•

increase in demand at a specific point and time;



•

alternative energy choices;



•

population growth; and



•

new residential and commercial construction.

    This forecast excludes non-firm power transactions (a non-guaranteed commitment to deliver power) and any potential off-system (purchases in the open market), long-term firm power sales.

    On September 30, 1999, one of our non-regulated subsidiaries formed a partnership with Duke Energy North America LLC. This partnership will jointly construct and own three wholesale generating facilities to be located in southwestern Ohio, and east central and western Indiana, with total capacity of approximately 1,400 MW. These facilities will be natural gas-fired peaking stations with commercial operations anticipated for the summer of 2000. Our portion (50%) of the output will be sold to and marketed by Cinergy Capital & Trading (a wholly-owned subsidiary of Investments) or another Cinergy affiliate.

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    During 1999, our electric generating plants operated reliably, as evidenced by our annual capacity factor of 69% (excluding natural gas peaking stations), and at satisfactory levels of utilization. A capacity factor is a percentage that tells how much of a power plant's capacity is used over time.

    Comprehensive electric deregulation legislation was passed in Ohio on July 6, 1999, as further discussed in the "Retail Market Developments" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 54. If CG&E's Proposed Transition Plan is approved it will materially affect the nature of CG&E's operations.

DELIVERY

Electric

    The electric transmission and distribution systems (excluding our proportionate share of jointly-owned facilities) for our operating companies, as of December 31, 1999, are indicated in the following table:

Registrant	Electric Transmission Systems	Electric Distribution Systems	Substation Combined Capacity
	(circuit miles)	(circuit miles)	(kilovolt-amperes)(1)
CG&E	1,635	15,113	20,500,554
ULH&P	105	2,598	1,090,798
Other subsidiaries	40	10	—
CG&E and subsidiaries	1,780	17,721	21,591,352
PSI	5,252	20,046	28,570,000
Cinergy	7,032	37,767	50,161,352

(1)

Kilovolt-amperes (1,000 volt-amperes) are a broad measure of our substation transformer capacity.

    Our operating companies' electric systems are interconnected with thirteen other utilities. Refer to the map on page 8 illustrating these interconnected utility companies.

    Our electric transmission and distribution systems are designed and constructed to further the goal of providing reliable service to our customers. Every effort is made to ensure that sufficient facilities are in service to meet this goal without installing facilities beyond what is required to operate reliably and within design or designed parameters. Through our ongoing review of these systems, enhancements are developed and constructed to meet our planning, loading, and reliability guidelines. This process allows us to prudently invest in capacity additions only when and where they are required.

    During 1998, the FERC approved the formation of the Midwest Independent Transmission System Operator, Inc. (Midwest ISO), which is further discussed in the "Midwest ISO" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 60. The Midwest ISO will oversee the combined transmission systems of its 14 current members. This joint effort will help to facilitate a reliable and efficient market for electric power and facilitate open transmission access consistent with FERC policies.

Gas

    As of December 31, 1999, the natural gas transmission and distribution systems of CG&E and its subsidiaries had 7,543 miles of mains and service lines located in southwestern Ohio, southeastern Indiana, and northern Kentucky. CG&E and its subsidiaries also own three underground caverns with a total storage capacity of 23 million gallons of liquid propane. As of December 31, 1999, we had 20 million gallons of liquid propane in storage. This liquid propane is used in the three propane/air

11

peak shaving plants located in Ohio and Kentucky. These plants convert liquid propane into natural gas to be used only during peak demand periods and emergencies. During 1999, CG&E and its subsidiaries' natural gas transmission and distribution systems operated reliably, at a load factor of 30%, and at satisfactory levels of utilization. Load factor is used to indicate the percentage of capacity of an energy facility, such as gas distribution, that is utilized at a given period of time.

CINERGY INVESTMENTS

    As of December 31, 1999, we have ownership interest and/or operating control in cogeneration (simultaneous production of two or more forms of useable energy from a single fuel source) plants producing 312 MW of electricity through our various Trigen-Cinergy Solutions LLC (Trigen-Cinergy) joint ventures. Trigen-Cinergy builds, owns, operates, and maintains combined heat and power facilities for large industrial customers. During 2000, Trigen-Cinergy anticipates starting construction of three new cogeneration plants which will produce an additional 45 MW of electricity.

INTERNATIONAL

    As of December 31, 1999, our international subsidiaries and jointly-owned investments had ownership interests in generating plants producing 164 MW of electricity. In addition, we own four district heating plants and have a minority interest in a fifth district heating plant in the Czech Republic that, in total, provide 1,480 MW of thermal steam capacity, which may be used to produce 186 MW of electricity. We also own interests in 1,243 miles of transmission and distribution systems through jointly-owned investments. We serve 40,000 transmission and distribution customers, 518 retail district heating and district electric customers, and 106 wholesale heating and electric customers.

    On July 15, 1999, we sold our 50% ownership interest in Avon Energy to GPU. See Note 10 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 126 for further information.

GENERAL INFORMATION

    The utility property of both CG&E and PSI are subject to the lien of each applicable company's first mortgage bond indenture.

ITEM 3. LEGAL PROCEEDINGS

NEW SOURCE REVIEW AND NOTICES OF VIOLATION

    See Notes 12(c) and (e) of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" beginning on page 132 for a discussion of the lawsuit and notices of violation filed by the U.S. Environmental Protection Agency against Cinergy, CG&E, and PSI.

MANUFACTURED GAS PLANT CLAIMS

    See Note 12(d) of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 133 for a further discussion of manufactured gas plant sites as they relate to our operating companies.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    No matters were submitted to a vote of security holders for Cinergy, CG&E, or PSI during the fourth quarter of 1999.

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EXECUTIVE OFFICERS

    The names of the executive officers of each registrant, their ages (as of December 31, 1999), the positions they hold, held, or have been elected to as of this report filing date, and their business experience during the past five years appear below.

		Positions and Length of Service
Name
	Age	Cinergy Corp.	CG&E	PSI
Vicky A. Bailey(1)	47			President 2/2000 - present
John Bryant(2)	53	Vice President 1/98 - present
Michael J. Cyrus(3)	44	President, Energy Commodities Business Unit 3/99 - present Vice President 4/98 - present Chief Operating Officer, Energy Commodities Business Unit 11/98 - 3/99	Vice President 4/99 - present	Vice President 4/99 - present
Cheryl M. Foley	52	Vice President and Secretary 3/99 - present President, International Business Unit 1/97 - present Vice President, General Counsel, and Secretary 10/94 - 3/99	Vice President 3/99 - present Vice President and General Counsel 4/98 - 3/99 Vice President, General Counsel, and Secretary 1/95 - 4/98	Vice President and Secretary 3/99 - present Vice President, General Counsel, and Secretary 4/91 - 3/99
William J. Grealis(4)	54	Vice President, Corporate Services, and Chief Strategic Officer 8/98 - present Vice President 1/95 - 8/98	Vice President, Corporate Services, and Chief Strategic Officer 8/98 - present Vice President 4/98 - 8/98 President 1/95 - 3/98	Vice President, Corporate Services, and Chief Strategic Officer 8/98 - present Vice President 4/98 - 8/98
J. Joseph Hale, Jr.(5)	50	Vice President 12/96 - present	Vice President 8/98 - present General Manager, Marketing Operations 1/95 - 8/98	Interim President 6/99 - 2/2000 Vice President 8/98 - present
M. Stephen Harkness(6)	51	Vice President 12/96 - present General Manager, Corporate Development and Financial Services 10/94 - 12/96
Donald B. Ingle, Jr.(7)	50	President, Cinergy Investments Business Unit 3/99 - present Vice President 10/97 - present	Vice President 10/97 - 3/99	Vice President 10/97 - 3/99

13

Madeleine W. Ludlow(8)	45	Vice President and Chief Financial Officer 3/99 - present Vice President 4/98 - 3/99 President, Energy Commodities Business Unit 4/98 - 3/99 Vice President and Chief Financial Officer 4/97 - 4/98	Vice President and Chief Financial Officer 3/99 - present Vice President 4/98 - 3/99 Vice President and Chief Financial Officer 4/97 - 4/98	Vice President and Chief Financial Officer 3/99 - present Vice President 4/98 - 3/99 Vice President and Chief Financial Officer 4/97 - 4/98
Jackson H. Randolph	69	Chairman 12/95 - present Chairman and Chief Executive Officer 10/94 - 12/95	Chairman 12/95 - present Chairman and Chief Executive Officer 10/94 - 12/95	Chairman 12/95 - present Chairman and Chief Executive Officer 10/94 - 12/95
Bernard F. Roberts	47	Vice President and Comptroller 3/99 - present Vice President and Chief Financial Officer, Energy Commodities Business Unit 7/96 - 3/99 Assistant Treasurer 12/94 - 7/96	Vice President and Comptroller 3/99 - present Assistant Treasurer 1/95 - 7/96	Vice President and Comptroller 3/99 - present Assistant Treasurer 12/94 - 7/96
James E. Rogers	52	Vice Chairman, President, and Chief Executive Officer 12/95 - present Vice Chairman, President, and Chief Operating Officer 10/94 - 12/95	Vice Chairman and Chief Executive Officer 12/95 - present Vice Chairman and Chief Operating Officer 10/94 - 12/95	Vice Chairman and Chief Executive Officer 12/95 - present Vice Chairman and Chief Operating Officer 10/94 - 12/95
William L. Sheafer(9)	56	Vice President and Treasurer 4/97 - 12/99 Treasurer 12/94 - 4/97	Vice President and Treasurer 4/97 - 12/99 Treasurer 2/87 - 4/97	Vice President and Treasurer 4/97 - 12/99 Treasurer 12/94 - 4/97
Larry E. Thomas(10)	54	Vice President 4/97 - present President, Energy Delivery Business Unit 5/96 - present Group Vice President and Chief Transformation Officer 9/95 - 4/97 Group Vice President, Reengineering and Operations Services 10/94 - 9/95	Vice President 4/97 - present Group Vice President and Chief Transformation Officer 9/95 - 4/97 Group Vice President, Reengineering and Operations Services 1/95 - 9/95	Vice President 4/97 - present Group Vice President and Chief Transformation Officer 9/95 - 4/97 Group Vice President, Reengineering and Operations Services 1/95 - 9/95
Andrew M. Turk(9)(11)	40	Vice President and Treasurer 1/2000 - present	Vice President and Treasurer 1/2000 - present	Vice President and Treasurer 1/2000 - present

14

James L. Turner(12)	40	Vice President 4/99 - present Senior Counsel 6/95 - 3/97	President 2/99 - present
Jerome A. Vennemann	49	Vice President and General Counsel 1/2000 - present Acting General Counsel 3/99 - 1/2000 Assistant Secretary 12/94 - present Associate General Counsel 2/96 - 3/99 Senior Counsel 10/94 - 2/96	Vice President and General Counsel 1/2000 - present Acting General Counsel 3/99 - 1/2000 Secretary 4/98 - present Associate General Counsel 2/96 - 3/99 Assistant Secretary 1/95 - 4/98 Senior Counsel 10/94 - 2/96	Vice President and General Counsel 1/2000 - present Acting General Counsel 3/99 - 1/2000 Assistant Secretary 12/94 - present Associate General Counsel 2/96 - 3/99 Senior Counsel 10/94 - 2/96
Charles J. Winger	54	Vice President 3/99 - present Vice President and Chief Financial Officer 4/98 - 3/99 Vice President 8/97 - 4/98 Vice President and Comptroller 4/97 - 8/97 Comptroller 12/94 - 4/97	Vice President and Chief Financial Officer 4/98 - 3/99 Vice President and Comptroller 4/97 - 8/97 Comptroller 1/95 - 4/97	Vice President and Chief Financial Officer 4/98 - 3/99 Vice President and Comptroller 4/97 - 8/97 Comptroller 3/84 - 4/97

None of the officers are related in any manner. Our executive officers hold the offices set opposite their names until the next annual meeting of the Board of Directors and until their successors have been elected and qualified.

(1)

Prior to joining Cinergy, Ms. Bailey served as Commissioner of the FERC, a position she had held since 1993.

(2)

Mr. Bryant has also served in the following roles:

•

Generation Director of Midlands (1992 - 1996);

•

Executive Generation Director of Midlands (1996 - 1997); and

•

Managing Director of Cinergy Global Power Services Limited, Cinergy's international project development subsidiary (1997 - present).

(3)

Prior to joining Cinergy, Mr. Cyrus was Senior Vice President of Trading and Operations with Electric Clearinghouse, Inc. (ECI; a non-affiliate of Cinergy), the power subsidiary of Natural Gas Clearinghouse (NGC; a non-affiliate of Cinergy) in Houston, Texas, a position he had held since 1997. Mr. Cyrus joined NGC in 1993, holding various executive positions involving energy trading, marketing, and risk management. Prior to serving as Senior Vice President of ECI, Mr. Cyrus was President of NGC Canada and Executive Vice President of Novagas Clearinghouse Ltd., where he had oversight responsibilities for NGC's Canadian commercial operations.

15

(4)

Mr. Grealis served as President of Investments from 1995 to March 1999. Mr. Grealis has also served in the following roles:

•

Interim President, PSI Investments, Inc. (1992 - 1994);

•

President, Gas Business Unit of CG&E (1995); and

•

President, Cinergy's Energy Services Business Unit (1996 - 5/97).

Prior to joining Cinergy, Mr. Grealis was a partner in the Washington, D.C. law firm of Akin, Gump, Strauss, Hauer & Feld L.L.P.

(5)

Since 1992, Mr. Hale has served as President of Cinergy Foundation, Inc., a  Cinergy affiliate that is organized and operated exclusively for charitable purposes.

(6)

Since 1996, Mr. Harkness has served as Executive Vice President and Chief Operating Officer of Trigen-Cinergy, a joint venture company formed by Cinergy and Trigen Energy Corporation.

(7)

Mr. Ingle has served as President of Investments since March 1999. From 1995 to March 1999, he served as Contract Consultant for Investments. Mr. Ingle also served as President of Cinergy's Energy Services Business Unit (1997 - 3/99). Prior to joining Cinergy, Mr. Ingle was President and Chief Executive Officer for Cornerstone Industries, Inc., a non-affiliate of  Cinergy.

(8)

Prior to joining Cinergy, Ms. Ludlow had the following business experience:

•

Vice President and Treasurer of Enterprise Diversified Holdings Incorporated, a subsidiary of Public Service Enterprise Group Incorporated (PSEG, a non-affiliate of Cinergy) (1992 - 1996); and

•

Vice President of PSEG (1996 - 1997).

(9)

Effective January 1, 2000, Mr. Sheafer retired and Andrew M. Turk succeeded him as Vice President and Treasurer for  Cinergy, CG&E and PSI.

(10)

Effective January 10, 2000, Cinergy's Economic Development, Community Affairs, State Regulatory Affairs and State Governmental Affairs were merged into the Energy Delivery Business Unit, of which Mr. Thomas is President (since its formation in 1996). These areas were combined with the former energy services functions to form a new unit called Customer Services, of which Mr. James L. Turner is Vice President, reporting to Mr. Thomas (refer to note 12 below).

(11)

Mr. Turk has served since 1997 as Vice President of International Development for Cinergy Global Power, Inc. Also, Mr. Turk served as finance director of Midlands Power International, the non-regulated subsidiary of Midlands from 1993 to 1997.

(12)

In addition to serving as President of CG&E and as Vice President of Services, effective January 10, 2000, Mr. Turner was named Vice President of Customer Services, reporting to Mr. Thomas in this capacity. Customer Service is part of the Energy Delivery Business Unit, and includes Cinergy's Economic Development, Community Affairs, State Regulatory Affairs, and State Governmental Affairs groups, along with Cinergy's energy services functions. Previously, Mr. Turner had full responsibility for  Cinergy's Government and Regulatory Affairs Department (from April 1998 until January 2000). Prior to that, in March 1997, Mr. Turner was appointed Vice President of Services, having responsibility for the coordination of transition issues across all corporate subsidiaries in the move for full customer choice. Before joining Cinergy's legal department in June 1995, Mr. Turner was a principal in the Indianapolis law firm of Lewis & Kappes, P.C. (non-affiliate of Cinergy), representing industrial customers in utility regulatory and legislative matters.

16

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    Our common stock is listed on the New York Stock Exchange. The high and low stock prices for each quarter for the past two years are indicated below:

	High			Low
1999
First Quarter	$	34	1/2	$	27	1/2
Second Quarter		34	3/16		28	3/16
Third Quarter		32	9/16		27	5/8
Fourth Quarter		29	1/2		23	3/4
1998
First Quarter	$	38	11/16	$	33
Second Quarter		37	5/16		31	5/8
Third Quarter		38	7/8		30	13/16
Fourth Quarter		39	7/8		33	3/4

    On February 29, 2000, the closing price of our common stock was $21.375.

    We hold all of CG&E and PSI common stock, and CG&E holds all ULH &P common stock. Therefore, no public trading market exists for CG&E, PSI and ULH &P.

    As of February 29, 2000, we had 64,826 common stockholders of record.

    We declared dividends on common stock of $.45 per share for each quarter of 1998 and 1999. The dividends paid by our operating companies for the past two years were as follows:

Registrant	Quarter	1999		1998
		(in thousands)
CG&E	First	$	71,400	$	42,600
	Second		71,500		42,600
	Third		53,600		46,400
	Fourth		53,600		46,400
PSI	First	$	—	$	28,400
	Second		—		40,399	(1)
	Third		17,900		25,000
	Fourth		18,000		25,000
ULH&P	First	$	—	$	—
	Second		4,976		4,975
	Third		—		—
	Fourth		4,683		3,512

(1)

During the second quarter of 1998, PSI paid a non-cash dividend on common stock of approximately $12 million.

    See Note 2(b) of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 109 for a brief description of the registrants' common stock dividend restrictions.

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ITEM 6. SELECTED FINANCIAL DATA

	1999(1)		1998		1997		1996		1995
	(in millions, except per share amounts)
Cinergy
Operating revenues	$	5,938	$	5,911	$	4,387	$	3,276	$	3,023
Net income before extraordinary item		404		261		363		335		347
Net income		404		261		253		335		347
Common Stock
Earnings per share (EPS)
Net income before extraordinary item		2.54		1.65		2.30		2.00		2.22
Net income		2.54		1.65		1.61		2.00		2.22
EPS—assuming dilution
Net income before extraordinary item		2.53		1.65		2.28		1.99		2.20
Net income		2.53		1.65		1.59		1.99		2.20
Dividends declared per share		1.80		1.80		1.80		1.74		1.72
Total assets		9,617		9,687		8,858		8,725		8,103
Cumulative preferred stock of subsidiaries subject to mandatory redemption		—		—		—		—		160
Long-term debt		2,989		2,604		2,151		2,326		2,347
Long-term debt due within one year		31		136		85		140		202
CG&E
Operating revenues	$	2,551	$	2,856	$	2,452	$	1,976	$	1,848
Net income		234		216		239		227		236
Total assets		4,917		5,154		4,914		4,844		5,081
Cumulative preferred stock subject to mandatory redemption		—		—		—		—		160
Long-term debt		1,206		1,220		1,324		1,381		1,518
Long-term debt due within one year		—		130		—		130		152
PSI
Operating revenues	$	2,136	$	2,403	$	1,960	$	1,332	$	1,248
Net income		117		52		132		126		146
Total assets		3,835		3,584		3,406		3,295		3,076
Long-term debt		1,212		1,026		826		945		828
Long-term debt due within one year		31		6		85		10		50

(1)

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" beginning on page 25, and "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data," beginning on page 100, for factors affecting earnings and discussion of material uncertainties for Cinergy, CG&E, and PSI.

18

    In 1996, the Securities and Exchange Commission (SEC) wrote guidelines to help make shareholder communications more understandable. These guidelines were termed "plain English". This year, we have written our annual report in accordance with these guidelines. Our objective is to present a more user-friendly, understandable, and logically-flowing document for our readers.

    In connection with this change, we (which includes Cinergy Corp. and all of our regulated and non-regulated subsidiaries, also Cinergy) are, at times, referred to in the first person ("we", "our", or "us").

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

    "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" (MD&A) discusses various matters that should make management's corporate vision of the future more clear for you. Management's goals and aspirations are outlined and specific projections may be made. These goals and projections are considered forward-looking statements and are based on management's beliefs and assumptions.

    Forward-looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. Factors that could cause actual results to differ are often presented with forward-looking statements. In addition, other factors could cause actual results to differ materially from those indicated in any forward-looking statement. These include:

•

Factors affecting operations, such as:



(1)

unusual weather conditions;



(2)

catastrophic weather-related damage;



(3)

unscheduled generation outages;



(4)

unusual maintenance or repairs;



(5)

unanticipated changes in fossil fuel costs, gas supply costs, or availability constraints;



(6)

environmental incidents; and



(7)

electric transmission or gas pipeline system constraints.




•

Legislative and regulatory initiatives regarding deregulation of the industry, including Ohio's comprehensive deregulation legislation and the outcome of The Cincinnati Gas & Electric Company's (CG&E) Proposed Transition Plan.



•

The timing and extent of the entry of additional competition in electric or gas markets and the effects of continued industry consolidation through the pursuit of mergers, acquisitions, and strategic alliances.



•

Regulatory factors such as changes in the policies or procedures that set rates, changes in our ability to recover investments made under traditional regulation through rates, and changes to the frequency and timing of rate increases.



•

Financial or regulatory accounting principles or policies imposed by governing bodies.



•

Political, legal, and economic conditions and developments in the United States (U.S.) and the foreign countries in which we have a presence. This would include inflation rates and monetary fluctuations.



•

Changing market conditions and other factors related to physical energy and financial trading activities. These would include price, basis, credit, liquidity, volatility, capacity, transmission, currency exchange rates, interest rates, and warranty risks.

19

•

The performance of projects undertaken by our non-regulated businesses and the success of efforts to invest in and develop new opportunities.



•

Availability of, or cost of capital.



•

Employee workforce factors, including changes in key executives, collective bargaining agreements with union employees, and work stoppages.



•

Legal and regulatory delays and other obstacles associated with mergers, acquisitions, and investments in joint ventures.



•

Costs and effects of legal and administrative proceedings, settlements, investigations, and claims. Examples can be found in Note 12 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" beginning on page 131.



•

Changes in international, federal, state, or local legislative requirements, such as changes in tax laws, tax rates, and environmental laws and regulations.



•

Potential remaining challenges related to Year 2000 readiness.

    Unless we otherwise have a duty to do so, the SEC's rules do not require forward-looking statements to be revised or updated (whether as a result of changes in actual results, changes in assumptions, or other factors affecting the statements). Our forward-looking statements reflect our best beliefs as of the time they are made and may not be updated for subsequent developments.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

    In MD&A, we explain our general operating environment, as well as our liquidity, capital resources, and results of operations. Specifically, we discuss the following:

•

factors affecting current and future operations;



•

why revenues and expenses changed from period to period;



•

how the above items affect our overall financial condition;



•

what our expenditures for construction and other commitments were during 1999, and what we expect them to be in 2000-2004; and



•

potential sources of cash for future capital expenditures.

ORGANIZATION

Cinergy Corp., a Delaware corporation created in October 1994, owns all outstanding common stock of CG&E and PSI Energy, Inc. (PSI), both of which are public utility subsidiaries. As a result of this ownership, we are considered a utility holding company. Because we are a holding company whose utility subsidiaries operate in multiple states, we are registered with and are subject to regulation by the SEC under the Public Utility Holding Company Act of 1935, as amended (PUHCA). Our other direct subsidiaries are:

•

Cinergy Services, Inc. (Services);



•

Cinergy Investments, Inc. (Investments); and



•

Cinergy Global Resources, Inc. (Global Resources).

20

CG&E, an Ohio corporation, is a combination electric and gas public utility company that provides service in the southwestern portion of Ohio and, through its subsidiaries, in nearby areas of Kentucky and Indiana. It has five wholly-owned utility subsidiaries and one wholly-owned non-utility subsidiary. CG&E's principal utility subsidiary, The Union Light, Heat and Power Company (ULH&P), is a Kentucky corporation that provides electric and gas service in northern Kentucky. CG&E's other subsidiaries are insignificant to its results of operations.

PSI, an Indiana corporation, is an electric utility that provides service in north central, central, and southern Indiana.

    The following table presents further information related to the operations of our domestic utility companies (our operating companies):

	Principal Line(s) of Business
CG&E	•Generation, transmission, distribution, and sale of electricity
	•Sale and/or transportation of natural gas
PSI	•Generation, transmission, distribution, and sale of electricity
ULH&P	•Transmission, distribution, and sale of electricity
	•Sale and transportation of natural gas

    Services is a service company that provides our regulated and non-regulated subsidiaries with a variety of centralized administrative, management, and support services. Investments holds most of our domestic non-regulated businesses and investments. Global Resources primarily holds our international businesses and investments.

    The majority of our operating revenues are derived from the sale of electricity and the sale and/or transportation of natural gas.

    We conduct operations through our subsidiaries, and we manage through the following four business units:

•

Energy Commodities Business Unit (Commodities);



•

Energy Delivery Business Unit (Delivery);



•

Cinergy Investments Business Unit (Cinergy Investments); and



•

International Business Unit (International).

    See Note 15 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 137 for financial information by business unit.

LIQUIDITY

    In the "Liquidity" section, we discuss 1999 cash flows, environmental issues, construction and other commitments, other investing activities, and Year 2000 as they relate to our current and future cash needs. In the "Capital Resources" section beginning on page 38, we discuss how we intend to meet these capital requirements.

1999 Cash Flows

    Our Cash and cash equivalents decreased $18 million during 1999. The significant uses of cash during 1999 were:

•

the net redemption of $77 million in short-term and long-term debt;

21

•

the payment of $286 million in common stock dividends;



•

construction expenditures of $386 million; and



•

investments in consolidated and unconsolidated subsidiaries of $309 million. (This amount includes the September 30, 1999, transaction where we formed a partnership with Duke Energy North America LLC (Duke), as discussed in the "Construction and Other Commitments" section on page 34.)

    Offsetting these decreases were the following sources of cash:

•

proceeds of $690 million from the sale of our 50% ownership interest in Avon Energy Partners Holdings (Avon Energy), the parent company of Midlands Electricity plc (Midlands), to GPU, Inc. (GPU), as discussed in Note 10 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 126; and



•

cash from ongoing operating activities.

    For further detail regarding the classification of these items, see our Consolidated Statements of Cash Flows in "Item 8. Financial Statements and Supplementary Data" on page 77.

Environmental Issues

    In the "Environmental Issues" section, we discuss the Acid Rain Program, ozone transport rulemakings, ambient air standards and regional haze, global climate change, air toxics, new source review, and manufactured gas plants as they relate to us and our operating companies.

    Acid Rain Program  The Acid Rain Program of the 1990 amendments to the Clean Air Act (CAA) required reductions in both sulfur dioxide (SO₂) and nitrogen oxide (NO_X) emissions from utility sources. The revisions established two phases for reductions of these emissions. The revisions required compliance under Phase I by January 1, 1995, and required compliance under Phase II by January 1, 2000. The U.S. Environmental Protection Agency (EPA) allocated emission allowances to the utility sources (for example, our electric generating units operated by Commodities) to achieve the SO₂ reduction objectives of the Acid Rain Program. Each allowance permits one ton of SO₂ emissions. The Acid Rain Program allows compliance with the SO₂ reduction objectives to be achieved on a national level; therefore, companies may comply with the requirements by (1) reducing emissions, or (2) purchasing emission allowances from other sources.

    We complied with Phase I prior to January 1, 1995. We implemented Phase II compliance by (1) using lower-sulfur coal blends in our generating units, and (2) using an emission allowance banking strategy. This cost-effective strategy allows us to implement Phase II SO₂ reduction requirements while maintaining optimal flexibility to meet (1) changes in output due to increased customer choice, and (2) potentially significant future environmental requirements.

    To meet Phase II NO_X reduction requirements, we (1) have changed the burners on our generating units, and (2) are using a system-wide NO_X emission averaging strategy (where the overall emission average of all of our generating units must be below a certain level).

    Ozone Transport Rulemakings  In June 1997, the Ozone Transport Assessment Group, which consists of 37 states, made a wide range of recommendations to the EPA to address the impact of ozone transport on serious non-attainment areas (geographic areas defined by the EPA as non-compliant with ozone standards) in the Northeast, Midwest, and South. Ozone transport refers to wind-blown movement of ozone-causing materials across city and state boundaries. In late 1997, the EPA published a proposed call for revisions to State Implementation Plans (SIPs). (A SIP is a state's implementation plan for achieving emissions reductions to address air quality concerns.)

22

    NO_X SIP Call  In October 1998, the EPA finalized its ozone transport rule, also known as the NO_X SIP Call. It applies to 22 states in the eastern half of the U.S., including the three states in which our electric utilities operate, and also proposes a model NO_X emission allowance trading program. If implemented by the states, the trading program would allow us to buy NO_X emission allowances from, or sell NO_X emission allowances to, other companies as necessary. This rule recommends that states reduce NO_X emissions from primarily industrial and utility sources to a certain level by May 2003. The EPA gave the affected states until September 30, 1999, to incorporate NO_X reductions and, in the discretion of the state, a trading program into their SIPs. The EPA proposed to implement a federal plan to accomplish the equivalent NO_X reductions by May 2003 if states failed to revise their SIPs. The EPA must approve all SIPs.

    Ohio, Indiana, a number of other states, and various industry groups (some of which we are a member), filed legal challenges to the NO_X SIP Call in late 1998. On May 25, 1999, the U.S. Circuit Court of Appeals for the District of Columbia (Court of Appeals) granted a request for a deferral of the rule and indefinitely suspended the September 30 filing deadline, pending further review by the Court of Appeals. The Court of Appeals heard arguments on the case on November 9, 1999, and is expected to make a decision in the first quarter of 2000.

    Section 126 Petitions  In February 1998, the northeast states filed petitions seeking the EPA's assistance in reducing ozone in the eastern U.S. under Section 126 of the CAA. The EPA believes that Section 126 petitions allow a state to claim that another state is contributing to its air quality problem and request that the EPA require the upwind state to reduce its emissions. On April 30, 1999, the EPA found that the Midwest facilities (including most of our generating facilities) named in the petitions are significantly contributing to ozone problems in the northeast for both the one- and eight-hour ozone level health standards. Industry has challenged the EPA's findings and related rulemaking.

    Based on a court decision regarding ambient (outside) air standards (discussed below) and the May 25 court decision (previously discussed), in June 1999, the EPA modified and re-proposed the Section 126 petitions rulemaking to address only the one-hour ozone standard. The EPA also limited the petitions to 12 states instead of the original 22 states. Indiana, Kentucky, and Ohio would still have to meet the same NO_X emissions requirements through a 12-state trading program.

    In December 1999, the EPA granted four Section 126 petitions relating to NO_X emissions. This ruling affects all of our Ohio and Kentucky facilities, as well as some of our Indiana facilities, and requires us to reduce our NO_X emissions to a certain level by May 2003. We are appealing this ruling; however, we currently cannot predict the outcome of the appeal. Compliance with this EPA finding is anticipated to require us to perform substantially all of the NO_X reduction work that would be required under the NO_X SIP Call. In the event the EPA successfully implements either program (the NO_X SIP Call or the Section 126 petitions), capital expenditures for compliance are substantially the same, and are currently estimated at $500 million to $700 million (in 1999 dollars) by May 2003. This estimate depends on several factors, including:

•

final determination regarding both the timing and strictness of the final required NO_X reductions;



•

emission output of our generating units;



•

availability of adequate supplies of resources to construct the necessary control equipment; and



•

whether a viable market will exist to buy and sell NO_X allowances.

    State Ozone Plans  On November 15, 1999, the State of Indiana and the Commonwealth of Kentucky (along with Jefferson County, Kentucky) jointly filed an amendment to their SIPs on how they intend to bring the greater Louisville area, including Floyd and Clark Counties in Indiana, into attainment with the one-hour ozone standard. The area did not reach attainment by the required date

23

of November 15, 1997, reportedly due in part to transported ozone from outside the area. Recognizing the failure of the area to reach attainment and the need for regional NO_X reductions, on May 21, 1999, the EPA published a proposed rule to extend the attainment date to 2003, if the states enact adequate regional NO_X reductions.

    The SIP amendments call for, among other things, statewide NO_X reductions from utilities in Indiana, Kentucky, and surrounding states which are less stringent than the EPA's NO_X SIP Call. The states of Indiana and Kentucky have committed to adopt utility NO_X control rules by December 2000 that would require controls be installed by May 2003. Currently, the states have not yet decided whether their rules would include a NO_X trading program or some other compliance mechanism. Because the rulemakings are in the early stages, the financial impact cannot currently be estimated.

    Ambient Air Standards and Regional Haze  During 1997, the EPA revised the National Ambient Air Quality Standards for ozone and fine particulate matter and proposed rules for regional haze. Fine particulate matter refers to very small solid or liquid particles in the air. Regional haze involves fine particulate matter that impairs visibility in national parks. It was anticipated that utility NO_X reductions called for in the EPA's final NO_X SIP Call would address both the one-hour ozone standard and the new eight-hour ozone standard. With the recent challenges to the NO_X SIP Call and the eight-hour ozone standard (discussed below), it is unclear to what extent additional NO_X reductions will be required of utilities to address eight-hour ozone non-attainment issues.

    The EPA estimates it will take up to five years to collect sufficient ambient air monitoring data to determine fine particulate matter non-attainment areas. The states will then determine the sources of the particulates and determine a regional emission reduction plan. We currently cannot predict the exact amount and timing of required reductions.

    On May 14, 1999, the Court of Appeals ruled that both the new eight-hour ozone standard and the fine particulate matter standard were found questionable and were determined to be unenforceable by the EPA. In June 1999, the EPA appealed the decision. On October 29, 1999, the full Court of Appeals rejected the EPA's request for reconsideration. In January 2000, the EPA appealed to the U.S. Supreme Court. We currently cannot determine the outcome of the appeals process and the effects on future emissions reduction requirements.

    The EPA published the final regional haze rule on July 1, 1999. This rule establishes planning and emission reduction timelines for states to use to improve visibility in national parks throughout the U.S. The ultimate effect of the new regional haze rule could be requirements for (1) newer and cleaner technologies and additional controls on conventional particulates, and (2) reductions in SO₂ and NO_X emissions from utility sources. If more utility emissions reductions are required, the compliance cost could be significant. In August 1999, several industry groups (some of which we are a member) filed a petition for reconsideration of the regional haze rules with the courts. We currently cannot determine the outcome or effects of the courts' or states' determination.

    Global Climate Change  In December 1997, delegates to the United Nations' climate summit in Japan adopted an agreement, the Kyoto Protocol, to address global warming. The Kyoto Protocol establishes legally binding greenhouse gas emission (man-made pollutants thought to be artificially warming the earth's atmosphere) targets for developed nations. On November 12, 1998, the U.S. signed the Kyoto Protocol; however, it will not be effective in the U.S. until it is approved by a two-thirds vote of the U.S. Senate, which is currently deemed unlikely.

    Because of a lack of support for the Kyoto Protocol or similar legislation, significant uncertainty exists about how and when greenhouse gas emissions reductions will be required. Our plan for managing the potential risk and uncertainty of regulations relating to climate change includes the following:

•

implementing cost-effective greenhouse gas emission reduction and offsetting activities;



•

funding research of more efficient and alternative electric generating technologies;

24

•

funding research to better understand the causes and consequences of climate change; and



•

encouraging a global discussion of the issues and how best to manage them.

    We believe that voluntary programs, such as the U.S. Department of Energy Climate Challenge Program that we joined in 1995, are the most cost-effective way to limit greenhouse gas emissions.

    Air Toxics  The air toxics provisions of the CAA Amendments delayed possible air toxics regulation of fossil-fueled steam utility plants until the EPA completed a study. The final report, issued in February 1998, confirmed that utility air toxic emissions pose little risk to public health. It stated that mercury is the pollutant of the greatest concern and requires further study. A Mercury Study Report, issued in December 1997, stated that mercury is not a risk to the average American and expressed uncertainty about whether reductions in current domestic sources would reduce human mercury exposure. U.S. utilities are a large domestic source, but they are insignificant when compared to global mercury emissions. The EPA was unable to show a feasible mercury control technology for coal-fired utilities.

    In November 1998, the EPA finalized its mercury Information Collection Request (ICR). The ICR required all generating units to provide detailed information about coal use and mercury content during 1999. The EPA also selected about 100 generating units for one-time stack sampling. We completed testing at Gibson Generating Station Unit No. 3 and the Wabash River Repowering Project in October 1999. The EPA is planning to make its regulatory determination on the need for additional regulation by the fourth quarter of 2000. If more air toxics regulations are issued, the compliance cost could be significant. We currently cannot predict the outcome or effects of the EPA's determination.

    New Source Review  The CAA's New Source Review (NSR) provisions require that a company obtain a pre-construction permit if it plans to build a new stationary source of pollution or make a major change to an existing facility unless the changes are exempt. In July 1998, the EPA requested comments on proposed revisions to the NSR rules that would change NSR applicability by eliminating exemptions contained in the current regulation. We believe that if these changes are finalized, it will be significantly harder to maintain our facilities without triggering the NSR permit requirements.

    Since July 1999, CG&E and PSI have received requests from the EPA (Region 5), under Section 114 of the CAA, seeking documents and information regarding capital and maintenance expenditures at several of their respective generating stations. These activities are part of an industry-wide investigation assessing compliance with the NSR and the New Source Performance Standards (NSPS, emissions standards that apply to new and changed units) of the CAA at electric generating stations.

    On September 15, 1999, and on November 3, 1999, the Attorneys General of the States of New York and Connecticut, respectively, issued letters notifying Cinergy and CG &E of their intent to sue under the citizens suit provisions of the CAA. New York and Connecticut allege violations of the CAA by constructing and continuing to operate a major change to CG&E's W.C. Beckjord Station (Beckjord) without obtaining the required NSR pre-construction permits.

    On November 3, 1999, the EPA sued a number of holding companies and electric utilities, including Cinergy, CG&E, and PSI, in various U.S. District Courts. The Cinergy, CG&E, and PSI suit alleges violations of the CAA at some of our generating stations relating to NSR and NSPS requirements. The suit seeks (1) injunctive relief to require installation of pollution control technology on each of the generating units at Beckjord and PSI's Cayuga Generating Station (Cayuga), and (2) civil penalties in amounts of up to $27,500 per day for each violation.

    On March 1, 2000, the EPA filed an amended complaint against Cinergy, CG&E, and PSI. The amended complaint added the alleged violations of the NSR requirements of the CAA at two of our generating stations contained in the notice of violation (NOV) filed by the EPA on November 3, 1999.

25

It also added claims for relief alleging violations of (1) nonattainment NSR, (2) Indiana and Ohio SIPs, and (3) particulate matter emission limits (as discussed in the 'Other' section on page 33). The amended complaint seeks (1) injunctive relief to require installation of pollution control technology on each of the generating units at Beckjord, Cayuga, and PSI's Wabash River and Gallagher Generating Stations, and such other measures as necessary, and (2) civil penalties in amounts of up to $27,500 per day for each violation. We believe the allegations contained in the amended complaint are without merit and plan to defend the suit vigorously in court. At this time, it is not possible to determine the likelihood that the EPA will prevail on its claims or whether resolution of this matter will have a material effect on our financial condition.

    On March 1, 2000, the EPA also filed an amended complaint alleging violations of the CAA relating to NSR, Prevention of Significant Deterioration, and Ohio SIP requirements regarding a generating station operated by the Columbus Southern Power Company (CSP) and jointly-owned by CSP, The Dayton Power and Light Company, and CG&E. The EPA is seeking injunctive relief and civil penalties of up to $27,500 per day for each violation. We believe the allegations in the amended complaint are without merit. At this time, it is not possible to determine the likelihood that the EPA will prevail on its claims or whether resolution of this matter will have a material effect on our financial condition.

    Refer to Note 12(c) of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 132 for a more detailed discussion of NSR issues.

Manufactured Gas Plant (MGP) Sites  PSI received claims from Indiana Gas Company, Inc. (IGC) in 1994, and from Northern Indiana Public Service Company (NIPSCO) in 1995, as more fully discussed in Note 12(d)(ii) of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 133. The basis of these claims was that PSI is a Potentially Responsible Party with respect to certain MGP sites under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). The claims further asserted that PSI is legally responsible for the costs of investigating and remediating the sites.

    In November 1998, NIPSCO, IGC, and PSI entered into a Site Participation and Cost Sharing Agreement. The agreement allocated CERCLA liability for past and future costs at seven MGP sites in Indiana among the three companies. Similar agreements were reached between IGC and PSI that allocate CERCLA liability at 14 MGP sites with which NIPSCO was not involved. These agreements conclude all CERCLA and similar claims between the three companies related to MGP sites. The parties continue to investigate and remediate the sites, as appropriate under the agreements and applicable laws. The Indiana Department of Environmental Management (IDEM) oversees investigation and cleanup of some of the sites.

PSI notified its insurance carriers of the claims related to MGP sites raised by IGC, NIPSCO, and IDEM. In April 1998, PSI filed suit against its general liability insurance carriers. Among other matters, PSI requested a declaratory judgment that would obligate its insurance carriers to (1) defend MGP claims against PSI, or (2) pay PSI's costs of defense and compensate PSI for its costs of investigating, preventing, mitigating, and remediating damage to property and paying claims related to MGP sites. The case has been set for trial beginning in May 2001. PSI cannot predict the outcome of this litigation. Currently, reserves recorded related to MGP sites are immaterial to our financial condition or results of operations. However, as further investigation and remediation activities are performed at these sites, the potential liability for MGP sites could be material to our financial position or results of operations.

    Other  On November 30, 1999, the EPA filed a NOV against Cinergy and CG &E because emissions of particulate matter at Beckjord exceeded the allowable limit. The NOV indicated that the EPA may (1) issue an administrative penalty order, or (2) file a civil action seeking injunctive relief and civil penalties of up to $27,500 per day for each violation. The allegations contained in this NOV were

26

incorporated within the March 1, 2000, amended complaint, as discussed in the "New Source Review" section on page 31. We are currently unable to determine whether resolution of this matter will have a material effect on our financial condition.

    See Notes 12(b), (c), (d), and (e) of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data", beginning on page 131, for a more detailed discussion of the status of these environmental issues.

Construction and Other Commitments

    Construction  Actual construction expenditures for 1999 and forecasted construction expenditures in nominal dollars for 2000 and for the next five years (2000-2004) are presented in the table below:

	Actual Expenditures		Forecasted Expenditures
	1999		2000		2000-2004
	(in millions)
Cinergy	$	386	$	495	$	2,002
CG&E and subsidiaries		194		284		1,044
PSI		189		211		958
ULH&P		28		28		123

    This table includes forecasted expenditures for 2000 of $65 million for preparing utility systems for customer choice. This table excludes an estimate of expenditures necessary to comply with the EPA's proposed stricter NO_X emission control standards associated with the 22-state NO_X SIP Call and Section 126 petitions (as discussed in the "Environmental Issues" section beginning on page 27). In the event the EPA successfully implements either program (the NO_X SIP Call or the Section 126 petitions), capital expenditures for compliance are substantially the same, and are currently estimated at $500 million to $700 million (in 1999 dollars) by May 2003, approximately $105 million of which is estimated to be spent in 2000.

    All forecasted amounts reflect the following assumptions relating to the factors below, which may change significantly:

•

the general economy;



•

capital markets;



•

construction programs;



•

legislative and regulatory actions;



•

frequency and timing of rate increases; and



•

other related factors.

    Other Commitments  Committed projects for both international and domestic non-regulated investment activities of approximately $160 million for 2000 are excluded from the table above. On September 30, 1999, one of our non-regulated subsidiaries formed a partnership with Duke. This partnership will jointly construct and own three wholesale generating facilities in southwestern Ohio, and east central and western Indiana, with total capacity of approximately 1,400 megawatts (MW). These facilities will be natural gas-fired peaking stations with commercial operation anticipated for the summer of 2000. Our portion (50%) of the remaining capital expenditures to complete this project is estimated at $110 million for 2000 and is included in the $160 million discussed above.

    Additionally, Commodities constantly assesses the adequacy of its available power supply in order to meet the demands of its customers. It must consider other supply alternatives to pursue to most

27

effectively meet demands, mitigate risks, and satisfy regulatory requirements. Supply alternatives include the following:

•

investments in existing facilities;



•

investments in new facilities; and/or



•

acquisitions of power supply from the market.

Other Investing Activities

    Our mission is to be one of the top five in our industry within two years on the following five key dimensions: market capitalization, number of customers, electric and gas commodity trading, international presence, and productivity.

    In pursuit of these goals, we have entered into various growth initiatives, including: (1) energy marketing and trading; (2) retail energy products and services; and (3) additional international investments. We are constantly working toward maximizing the value of existing operations and assets and continue to explore the potential for mergers, acquisitions, and strategic alliances.

    Our ability to invest in growth initiatives is limited by certain legal and regulatory requirements, including the PUHCA. The PUHCA restricts the amount which can be invested in non-utility businesses. Also, the timing and amount of investments in the non-utility businesses is dependent on the development and favorable evaluations of opportunities. Under the PUHCA regulations, we are allowed to invest or commit to invest in certain non-utility businesses, including:

1.  Exempt Wholesale Generators (EWG) and Foreign Utility Companies (FUCO)

An EWG is a special purpose entity that owns or operates domestic or foreign electric generating facilities whose power is sold entirely at wholesale. A FUCO is a company all of whose utility assets and operations are located outside the U.S. and which are used for the generation, transmission, or distribution of electric energy for sale, or the distribution of gas at retail.

The SEC has issued an order under the PUHCA permitting Cinergy to invest, on a recourse basis, an amount equal to 100% of consolidated retained earnings in EWGs and FUCOs. The definition of consolidated retained earnings, under the applicable SEC regulations, is the average consolidated retained earnings of the four most recent quarterly periods. At December 31, 1999, we had invested or committed to invest $580 million of the approximately $1 billion available.

On November 16, 1999, we filed a request with the SEC under the PUHCA for additional authority to, among other things, increase the amount we can invest in EWGs and FUCOs, as further discussed in the "Capital Resources" section on page 38 and the "Retail Market Developments" section beginning on page 54. While we currently cannot predict the outcome of this request, the existing limits could restrict our ability to invest in desired transactions.

2.  Qualifying Facilities and Energy Related Non-utility Entities

SEC regulations under the PUHCA permit Cinergy to invest and/or guarantee an amount equal to 15% of consolidated capitalization (consolidated capitalization is the sum of Notes payable and other short-term obligations, Long-term debt (including amounts due within one year), Cumulative preferred stock of subsidiaries, and total Common stock equity) in domestic qualifying cogeneration and small power production plants (qualifying facilities) and certain other domestic energy-related non-utility entities. At December 31, 1999, we had invested and/or guaranteed approximately $650 million of the $948 million available.

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Year 2000

    The Year 2000 concern generally existed because many computer systems and applications, including those systems embedded in equipment and facilities, used two-digit date fields rather than four-digit date fields to designate an applicable year. As a result, these systems and applications were not expected to properly recognize dates including and beyond the Year 2000. The potential consequences of this action included data miscalculations and inaccuracies or operational malfunctions and failures, which could have materially affected a company's financial position, operating results, and cash flows.

Cinergy established a centrally managed, company-wide initiative, known as the Cinergy Year 2000 Readiness Program, to identify, evaluate, and address Year 2000 issues. The Cinergy Year 2000 Readiness Program, which began in the fourth quarter of 1996, was generally focused on three elements that were integral to this initiative: (1) business continuity, (2) risk management, and (3) regulatory compliance.

    Under the Cinergy Year 2000 Readiness Program, we achieved a target date of June 30, 1999, for the remediation and testing of our mission-critical generation, transmission, and distribution systems, components, and applications (gas and electric). An innovative remediation and testing effort, which we also completed on June 30, 1999, involved resetting the clocks on all of our generation units and operating them as if January 1, 2000, had already occurred.

    In August of 1999, the North American Electric Reliability Council (NERC) submitted a final status report to the Department of Energy, in which we were listed as a "Y2K Ready" organization. In September of 1999, we participated in the NERC-sponsored national preparedness drill. The goal of this drill was to rehearse, under simulated conditions, key portions of our administrative, operating, communications, and contingency plans for the transition into the Year 2000. We were successful in meeting the objectives of this drill.

    We reviewed and assessed the potential for business disruption in various scenarios, including the most reasonably likely worst-case scenario, and provided for key operational back up, recovery, and restoration alternatives. We also established a supplier compliance program, and worked with our critical suppliers in an effort to minimize risks.

    The total cost for the inventory, assessment, remediation, testing, and upgrading of our systems as a result of the Year 2000 effort was approximately $13 million. These expenses included labor, hardware and related software upgrades.

    Our rollover to the Year 2000 was uneventful. All mission critical systems for gas and electric service performed without any disruption to customer service. We had a force of 1,100 employees in place during the rollover to monitor systems, substations, power generating stations, gas regulating stations and other facilities. Our systems continue to operate without problems related to the Year 2000.

    The above information is a Year 2000 Readiness Disclosure pursuant to the Federal Year 2000 Information and Readiness Disclosure Act.

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CAPITAL RESOURCES

    During 1999, we met our capital requirements through a combination of internally generated funds and debt issuances. We expect to meet our future capital needs through a combination of internally and externally generated funds, including the issuance of debt and/or equity securities.

    See the "Proposed Financing Authority" section on page 42 for information on our request for additional authority to issue debt, guarantees, and common stock.

Internally Generated Funds

    Currently, a substantial portion of our revenues and corresponding cash flows are derived from our regulated operations. With the recent passage of legislation throughout several states, we believe it is likely the generation component of the electric utility industry will ultimately be deregulated. (Within our own utility jurisdictions, only the State of Ohio has passed similar legislation during 1999. Refer to the "Retail Market Developments" section on page 54.) In the interim, revenues provided by our regulated operations will continue as our primary source of funds. As a low cost provider of energy service, we believe we will be successful in a competitive environment. However, as the industry becomes more competitive, future cash flows from operations could be subject to a higher degree of volatility than under our present regulatory structure.

Debt

    We may be required to secure authority to issue debt from the SEC under the PUHCA and the state utility commissions of Ohio, Kentucky, and Indiana. The SEC under the PUHCA regulates the issuance of debt for Cinergy Corp. Our three state utility commissions regulate the issuance of debt for our operating companies.

    Cinergy Corp.  has current authorization from the SEC under the PUHCA to issue and sell short-term notes and commercial paper and long-term unsecured debt through December 31, 2002, provided the total principal amount of all these debt securities may not exceed $2 billion at any time. In addition, Cinergy Corp.'s long-term debt cannot exceed $400 million at any time. As of December 31, 1999, Cinergy Corp. has $400  million of long-term debt outstanding, and therefore, under the current authorization, it cannot issue any additional long-term debt. See the "Proposed Financing Authority" section on page 42 for information on our request for additional authority to issue debt.

    Short-term Debt  In connection with this SEC authorization, Cinergy Corp. has established lines of credit. As of December 31, 1999, all of its $645 million established lines were unused and available.

    Our operating companies have regulatory authority to borrow up to a total of $853 million in short-term debt ($453 million for CG&E and its subsidiaries including $50 million for ULH&P, and $400 million for PSI). In connection with this authority, we have established lines of credit for CG &E and PSI of which, $124 million and $110 million, respectively, remained unused and available at December 31, 1999.

    As of December 31, 1999, our non-regulated subsidiaries have $83 million in short-term debt and established lines of credit of which, $.6 million was unused and available. Our non-regulated subsidiaries have the availability of funds from Cinergy Corp. if the need arises.

Cinergy Corp.'s established lines of credit also provide credit support for our commercial paper program, which is limited to a maximum principal amount of $400 million. As of December 31, 1999, Cinergy Corp. has not used any of the established principal amount, leaving $400 million available. CG&E and PSI also have the capacity to issue commercial paper, which must be supported by available committed lines of the respective company. The maximum outstanding principal amount for CG&E is

30

$200 million and for PSI is $100 million. Neither CG&E nor PSI issued commercial paper in 1999 or 1998.

    For a detailed discussion of the registrants' short-term indebtedness, refer to Note 5 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 117.

    Long-term Debt  Under the PUHCA authorization mentioned above, we are able to issue and sell long-term debt at the parent holding company level. In addition, Cinergy Corp.'s long-term debt cannot exceed $400 million at any time. As of December 31, 1999, Cinergy Corp. has $400 million of long-term debt outstanding, and therefore, under the current authorization, it cannot issue any additional long-term debt.

    Currently, our operating companies have the following types of outstanding long-term debt: First Mortgage Bonds and other Secured Notes, and Senior and Junior Unsecured Debt. Under our existing authority, the remaining unissued debt, as of February 29, 2000, is reflected in the following table:

Authorizing Agency	CG&E		PSI		ULH&P
	(in millions)
Applicable State Utility Commission (Secured or Unsecured Debt)	$	200	$	400	$	30

    We may, at any time, request additional long-term debt authorization to increase our authority. This request is subject to regulatory approval which may or may not be granted.

    As of December 31, 1999, through shelf registrations filed with the SEC under the Securities Act of 1933, we could issue the following amounts of debt securities:

	CG&E		PSI		ULH&P
	(in millions)
First Mortgage Bonds and Other Secured Notes	$	300	$	265	$	20
Senior or Junior Unsecured Debt		50		400		30

    Capital Leases  We are able to enter into capital leases under state regulatory authorizations. However, our ability to enter into capital leases is limited to the total authorized limit granted by the applicable state utility commission. We may, at any time, request additional capital lease authorization to increase our limits. This request is subject to approval by the applicable state utility commission and may or may not be granted. Under our existing authority, the remaining unused capital lease authority, is $86 million for CG&E, $100 million for PSI, and $24 million for ULH&P.

Common Stock

    Cinergy Corp.  has authority to issue additional shares of common stock on the open market to meet future capital requirements. However, we do not have plans to issue common stock for capital requirements in the foreseeable future. We generally use open market purchases of common stock to satisfy the majority of our obligations of our various stock-based employee plans. We plan to continue using market purchases of common stock to satisfy these obligations. This decision will be reevaluated as future capital requirements are considered.

    The following table reflects the number of shares purchased and issued for our various stock-based plans for the following years:

	1999	1998	1997
	(in thousands)
Purchased Shares	748	861	1,700
Issued Shares	291	194	66

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    The SEC authorized us under the PUHCA to issue and sell an additional 22 million shares of common stock for these stock-based employee plans. This authorization expires December 31, 2000. Also, we have authority to issue and sell an additional 30 million shares of common stock for general corporate purposes, which expires December 31, 2002. See the "Proposed Financing Authority" section on page 42 for information on our request for additional authority to issue common stock.

Dividend Restrictions

    For a discussion of dividend restrictions, refer to Note 2(b) of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 109.

Securities Ratings

    As of February 29, 2000, the major credit rating agencies rated our securities as follows:

	D&P(1)	Fitch(2)	Moody's(3)	S&P(4)
Cinergy Corp.
Corporate Credit	BBB+	BBB+	Baa2	BBB+
Commercial Paper	D-2	F-2	P-2	A-2
CG&E
Secured Debt	A-	A-	A3	A-
Senior Unsecured Debt	BBB+	BBB+	Baa1	BBB+
Junior Unsecured Debt	BBB	BBB+	Baa2	BBB
Preferred Stock	BBB	BBB+	Baa1	BBB
Commercial Paper	D-1-	F-1	P-2	Not Rated
PSI
Secured Debt	A-	A-	A3	A-
Senior Unsecured Debt	BBB+	BBB+	Baa1	BBB+
Junior Unsecured Debt	BBB	BBB	Baa1	BBB
Preferred Stock	BBB	BBB	Baa1	BBB
Commercial Paper	D-1-	F-1	P-2	Not Rated
ULH&P
Secured Debt	A-	Not Rated	Not Rated	A-
Unsecured Debt	Not Rated	Not Rated	Baa1	BBB+

(1)

Duff & Phelps Credit Rating Co. (D&P)

(2)

Fitch IBCA, Inc. (Fitch)

(3)

Moody's Investors Service (Moody's)

(4)

Standard & Poor's Ratings Services (S&P)

    These securities ratings may be revised or withdrawn at any time, and each rating should be evaluated independently of any other rating.

Guarantees

    We are subject to a SEC order under the PUHCA which limits the amounts Cinergy Corp. can have outstanding under guarantees (promises to pay by one party in the event of default by another party) at any one time to $1 billion. As of December 31, 1999, we had $515 million outstanding under the guarantees issued. See the "Proposed Financing Authority" section on page 42 for information on our request for additional authority to issue guarantees.

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    In February 2000, Cinergy Corp. issued approximately $43 million in guarantees for loans and the associated interest related to the Director, Officer and Key Employee Stock Purchase Program. For a detailed discussion of this program, refer to Note 2(d) of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 115.

Proposed Financing Authority

    On November 16, 1999, Cinergy Corp. filed a request with the SEC under the PUHCA for additional authority to issue and/or sell:

•

up to $4.4 billion aggregate principal amount of any combination of short- and long-term debt;



•

up to $2 billion outstanding amounts under guarantees issued; and



•

up to 75 million additional shares of common stock.

    We proposed to use the proceeds from the transactions described above for general corporate purposes, including additional investments in EWGs and FUCOs.

    This request would increase the amount we can invest in EWGs and FUCOs to an amount equal to 100% of consolidated retained earnings plus $2 billion, excluding our aggregate investment in one or more EWG affiliates formed to acquire all or a substantial portion of the existing generating facilities owned by our utility subsidiaries. We currently cannot predict the outcome of this request.

Sale of Accounts Receivable

    For the detailed discussion of our sales of accounts receivable, refer to Note 6 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 120.

    The format of the following Results of Operations discussions has been changed from the format of prior periods. Unlike prior reports, the Results of Operations discussions for Cinergy, CG&E, and PSI are combined within this section.

1999 RESULTS OF OPERATIONS

SUMMARY OF RESULTS

    Electric and gas margins and net income for Cinergy, CG&E, and PSI for the years ended December 31, 1999, and 1998, were as follows:

	Cinergy(1)				CG&E				PSI
	1999		1998		1999		1998		1999		1998
					(in thousands)
Electric gross margin	$	2,052,602	$	1,909,423	$	1,108,371	$	1,045,556	$	922,053	$	855,527
Gas gross margin		212,153		204,684		204,016		203,748		—		—
Net income		403,641		260,968		233,576		215,812		117,199		52,038

(1)

The results of Cinergy also include amounts related to non-registrants.

    Our 1999 diluted earnings per share (EPS) increased to $2.53 from $1.65 per share for 1998.

    The overall increase in EPS for 1999 is mainly due to our international operations and our regulated electric operations. The contribution to earnings of our international operations increased $.36 per share for the year ended December 31, 1999, compared with a year ago, primarily the result of the sale of our 50% ownership interest in Avon Energy to GPU. Earnings from regulated operations had a net increase of $.55 per share for the year ended December 31, 1999, compared with a year earlier. The increase is primarily due to an overall return to more normal weather in 1999 and growth

33

in retail electric revenues. This retail revenue growth reflects an increase in residential and commercial customers and growth in the industrial market. Included in this overall increase is a $.36 per share reduction related to energy marketing and trading losses experienced in July 1999. Our electric margins were positively impacted $12 million or $.07 per share (net of fuel and income taxes) as a result of a change in estimate of PSI's utility services delivered but unbilled at month end which occurred during the third quarter of 1999.

    The 1999 increase in earnings from regulated operations was also impacted by the following 1998 charges:

•

a reduction of $.14 per share for the effects of milder than normal weather;



•

a charge of $.32 per share related to a settlement with Wabash Valley Power Association, Inc. (WVPA). (See Note 18 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 144 for a discussion of the WVPA settlement.); and



•

total charges of $.54 per share due to losses related to our energy marketing and trading activity.

    The explanations below follow the line items on the Statements of Income for Cinergy, CG&E, and PSI, which begin on page 73. However, only the line items that varied significantly from prior periods are discussed.

ELECTRIC OPERATING REVENUES

	Cinergy(1)						CG&E						PSI
	1999		1998		% Change		1999		1998		% Change		1999		1998		% Change
							(in millions)
Retail	$	2,725	$	2,553	7		$	1,468	$	1,392	5		$	1,258	$	1,161	8
Wholesale		1,455		2,140	(32	)		687		1,046	(34	)		840		1,206	(30	)
Other		133		70	90			20		15	33			38		36	6
Total	$	4,313	$	4,763	(9	)	$	2,175	$	2,453	(11	)	$	2,136	$	2,403	(11	)

(1)

The results of Cinergy also include amounts related to non-registrants.

Electric operating revenues for Cinergy, CG&E, and PSI decreased for 1999, as compared to 1998, due to a decrease in volumes on non-firm wholesale transactions related to energy marketing and trading activity. Partially offsetting the decline was an increase in the average price per kilowatt hour (kWh) realized for non-firm power transactions and higher firm wholesale kWh sales. Non-firm power is power without a guaranteed commitment for physical delivery. Retail kWh sales also increased as a result of new residential and commercial customers, growth in the industrial market, and an overall return to more normal weather. Our electric margins were positively impacted $12 million or $.07 per share (net of fuel and income taxes) as a result of a change in estimate of PSI's utility services delivered but unbilled at month end which occurred during the third quarter of 1999.

34

GAS OPERATING REVENUES

	Cinergy(1)						CG&E
	1999		1998		% Change		1999		1998		% Change
					(in millions)
Non-regulated	$	1,221	$	698	75		$	—	$	—	—
Retail		320		357	(10	)		320		357	(10	)
Transportation		51		41	24			51		41	24
Other		4		4	—			5		5	—
Total	$	1,596	$	1,100	45		$	376	$	403	(7	)

(1)

The results of Cinergy also include amounts related to non-registrants.

Gas operating revenues for Cinergy increased in 1999, when compared to 1998. This increase reflects a full year's realization of the gas operating revenues of Cinergy Marketing and Trading, LLC (Marketing & Trading), an indirect subsidiary of Cinergy that was acquired in June  1998. Based on the actual results of Marketing & Trading for 1998, if we had owned it for all of 1998, our 1999 revenues, as compared to 1998, would have increased due to a higher price received per thousand cubic feet (mcf) sold.

CG&E's retail gas revenues decreased 10% due to a decline in mcf sales. This resulted primarily from milder weather experienced during the first quarter of 1999. This decline was partially offset by an increase in transportation revenues due to the continued progression of full-service customers (customers who purchase gas and utilize the transportation services of CG&E) purchasing gas directly from suppliers and using transportation services provided by CG&E.

OPERATING EXPENSES

	Cinergy(1)						CG&E						PSI
	1999		1998		% Change		1999		1998		% Change		1999		1998		% Change
							(in millions)
Fuel	$	761	$	730	4		$	341	$	339	1		$	397	$	382	4
Purchased and exchanged power		1,499		2,124	(29	)		726		1,068	(32	)		817		1,166	(30	)
Gas purchased		1,384		895	55			172		200	(14	)		—		—	—
Operation		775		784	(1	)		316		300	5			355		409	(13	)
Maintenance		206		192	7			100		93	8			106		100	6
Depreciation and amortization		354		326	9			204		191	7			136		131	4
Taxes other than income taxes		266		275	(3	)		212		217	(2	)		53		54	(2	)
Total	$	5,245	$	5,326	(2	)	$	2,071	$	2,408	(14	)	$	1,864	$	2,242	(17	)

(1)

The results of Cinergy also include amounts related to non-registrants.

35

Fuel

Fuel represents the cost of coal, natural gas, and oil that is used to generate electricity. The following table details the changes to fuel expense from 1998 to 1999:

	Cinergy(1)			CG&E			PSI
	(in millions)
1998 fuel expense	$	730		$	339		$	382
Increase (Decrease) due to changes in:
Price of fuel		—			4			(5	)
Deferred fuel cost		(10	)		(15	)		5
kWh generation		28			13			15
Other		13			—			—
1999 fuel expense	$	761		$	341		$	397

(1)

The results of Cinergy also include amounts related to non-registrants.

Purchased and Exchanged Power

Purchased and exchanged power represents the electricity that is bought to be sold through our energy marketing and trading activities. This expense decreased for Cinergy, CG&E, and PSI in 1999. This decrease was primarily due to a reduction in purchases of non-firm wholesale power as a result of a decline in sales volume in the energy marketing and trading operations. Included in purchased and exchanged power are additional costs related to energy marketing and trading losses experienced in July 1999, as previously indicated above in "Summary of Results", as well as, losses related to our 1998 energy marketing and trading activity. (See "Market Risk Sensitive Instruments and Positions" on page 61 and Note 1(j) of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 106 for discussions on our energy marketing and trading operations.)

Gas Purchased

Gas purchased expense increased for Cinergy in 1999, when compared to 1998. This increase primarily reflects a full year's Gas purchased volumes for Marketing & Trading in 1999, as previously indicated above in "Gas Operating Revenues".

CG&E's Gas purchased expense decreased for 1999, as compared to 1998. This decline is mainly due to decreased sales volume as previously indicated above in "Gas Operating Revenues".

Operation

PSI's Operation costs decreased in 1999, in comparison to 1998. This decrease was the result of a one-time charge of $80 million in 1998 for the implementation of the 1989 settlement with WVPA. (See Note 18 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 144 for a discussion of the WVPA settlement.)

Maintenance

Cinergy's, CG&E's, and PSI's  Maintenance costs increased in 1999, as compared to 1998, primarily as a result of planned outages and repairs at certain production facilities. These activities represent a return to a more normal level of maintenance expenditures.

36

Depreciation and Amortization

Cinergy's, CG&E's, and PSI's Depreciation and amortization costs increased in 1999, as compared to 1998. These increases were the result of additions to depreciable plant. Additionally, Cinergy's and CG&E's increases also included the amortization of phase-in deferrals reflecting the Public Utilities Commission of Ohio (PUCO)-approved phase-in plan for CG&E's William H. Zimmer Generating Station (Zimmer).

EQUITY IN EARNINGS OF UNCONSOLIDATED SUBSIDIARIES

Cinergy's Equity in earnings of unconsolidated subsidiaries increased $7 million (13%) in 1999, as compared to 1998. This increase was primarily driven by the earnings of our non-regulated domestic and international subsidiaries. Included in Equity in earnings of unconsolidated subsidiaries was $58 million for 1999, and $57 million for 1998, related to our 50% ownership interest in Avon Energy. As a result of the sale of our ownership interest (as discussed below), our Equity in earnings of unconsolidated subsidiaries  will reflect a decline in future periods.

GAIN ON SALE OF INVESTMENT IN UNCONSOLIDATED SUBSIDIARY

    On July 15, 1999, we sold our 50% ownership interest in Avon Energy to GPU, as previously indicated above in "Summary of Results". The sale resulted in a net contribution to earnings of approximately $.43 per share (basic and diluted). For a further discussion of this transaction, see Note 10 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 126.

PREFERRED DIVIDEND REQUIREMENTS

Cinergy's Preferred dividend requirements of subsidiaries and PSI's Preferred dividend requirement each decreased $1 million for 1999, as compared to 1998. These decreases were attributable to PSI's redemption of all outstanding shares of its 7.44% Series Cumulative Preferred Stock on March 1, 1998.

ULH&P

    The format of the following Results of Operations discussion has been changed from the format of prior reports. Unlike prior reports, the Results of Operations discussion for ULH&P is presented only for the year ended December 31, 1999, in accordance with General Instructions I(2)(a).

    Electric and gas margins and net income for ULH&P for the years ended December 31, 1999, and 1998 were as follows:

	ULH&P
	1999		1998
	(in thousands)
Electric gross margin	$	51,678	$	48,792
Gas gross margin		36,038		32,650
Net income		12,274		13,550

    The increases in Electric and Gas operating revenues for the year ended December 31, 1999, compared to 1998, were primarily attributable to higher retail kWh and mcf sales, resulting from growth in the number of electric and gas residential and commercial customers. In addition, Electric operating revenues increased due to an overall return to more normal weather. These increases in sales volume also correspond with increases in Electricity purchased from parent company for resale and Gas purchased  expenses.

37

    The increase in Operation and Maintenance costs for the year ended December 31, 1999, as compared to 1998, was the result of increased maintenance of overhead lines and gas mains.

    The increase in Depreciation for the year ended December 31, 1999, as compared to 1998, was primarily due to additions to depreciable plant. The Interest expense increase for the year ended December 31, 1999, as compared to 1998, was primarily due to the issuance of $20 million of debt during the fourth quarter of 1998.

1998 RESULTS OF OPERATIONS

SUMMARY OF RESULTS

    Electric and gas margins and net income for Cinergy, CG&E, and PSI for the years ended December 31, 1998, and 1997, were as follows:

	Cinergy(1)				CG&E				PSI
	1998		1997		1998		1997		1998		1997
	(in thousands)
Electric gross margin	$	1,909,423	$	1,948,905	$	1,045,556	$	1,060,231	$	855,527	$	901,222
Gas gross margin		204,684		227,398		203,748		229,497		—		—
Net income		260,968		253,238		215,812		239,153		52,038		132,205

(1)

The results of Cinergy also include amounts related to non-registrants.

    Earnings of $1.65 per share in 1998 were up $.04 per share compared with $1.61 per share in 1997. Included in 1997 results was a one-time extraordinary charge of $.69 per share for the windfall profits tax levied against our 50% ownership interest in Midlands. (See Note 17 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 144 for a discussion of the windfall profits tax.)

    Our 1998 EPS reflects the following:

•

a reduction of $.14 per share for the effects of milder than normal weather;



•

a charge of $.32 per share related to a previously reported settlement with WVPA (See Note 18 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 144 for a discussion of the WVPA settlement.); and



•

total charges of $.54 per share due to losses related to our energy marketing and trading activity.

    The explanations below follow the line items on the Statements of Income for Cinergy, CG&E, and PSI, which begin on page 73. However, only the line items that varied significantly from prior periods are discussed.

38

ELECTRIC OPERATING REVENUES

	Cinergy(1)					CG&E						PSI
	1998		1997		% Change	1998		1997		% Change		1998		1997		% Change
	(in millions)
Retail	$	2,553	$	2,455	4	$	1,392	$	1,315	6		$	1,161	$	1,140	2
Wholesale		2,140		1,368	56		1,046		623	68			1,206		787	53
Other		70		39	79		15		18	(17	)		36		33	9
Total	$	4,763	$	3,862	23	$	2,453	$	1,956	25		$	2,403	$	1,960	23

(1)

The results of Cinergy also include amounts related to non-registrants.

Electric operating revenues for Cinergy, CG&E, and PSI increased for 1998, as compared to 1997. Wholesale revenues increased primarily due to increased sales volume and a higher average price per kWh realized on non-firm wholesale transactions, which were a result of our energy marketing and trading activity. Retail kWh sales increased due to warmer weather in 1998, when compared to 1997, and as a result of an increase in the number of residential and commercial customers.

GAS OPERATING REVENUES

	Cinergy(1)						CG&E
	1998		1997		% Change		1998		1997		% Change
	(in millions)
Non-regulated	$	698	$	29	2,307		$	—	$	—	—
Retail		357		454	(21	)		357		454	(21	)
Transportation		41		33	24			41		33	24
Other		4		4	—			5		9	(44	)
Total	$	1,100	$	520	112		$	403	$	496	(19	)

(1)

The results of Cinergy  also include amounts related to non-registrants.

Gas operating revenues for Cinergy increased for 1998, when compared to 1997, primarily due to the gas operating revenues of Marketing & Trading, an indirect subsidiary of Cinergy that was acquired in June 1998. Partially offsetting this increase was the decline in retail sales for CG&E.

CG&E's retail sales decreased due to lower mcf volumes reflecting, in part, the milder weather during the first quarter of 1998, and a reduction in the number of full-service residential, commercial, and industrial customers. In addition, CG&E's transportation revenues increased as full-service customers continued the trend of purchasing gas directly from suppliers and using transportation services provided by CG&E.

39

OPERATING EXPENSES

	Cinergy(1)					CG&E						PSI
	1998		1997		% Change	1998		1997		% Change		1998		1997		% Change
								(in millions)
Fuel	$	730	$	693	5	$	339	$	300	13		$	382	$	393	(3	)
Purchased and exchanged power		2,124		1,220	74		1,068		596	79			1,166		666	75
Gas purchased		895		292	207		200		266	(25	)		—		—	—
Operation		784		667	18		300		308	(3	)		409		345	19
Maintenance		192		177	8		93		90	3			100		86	16
Depreciation and amortization		326		307	6		191		180	6			131		127	3
Taxes other than income taxes		275		265	4		217		212	2			54		54	—
Total	$	5,326	$	3,621	47	$	2,408	$	1,952	23		$	2,242	$	1,671	34

(1)

The results of Cinergy also include amounts related to non-registrants.

Fuel

    The following table details the changes to fuel expense from 1997 to 1998:

	Cinergy(1)			CG&E			PSI
	(in millions)
1997 fuel expense	$	693		$	300		$	393
Increase (Decrease) due to changes in:
Price of fuel		(23	)		(4	)		(19	)
Deferred fuel cost		22			33			(11	)
kWh generation		29			10			19
Other		9			—			—
1998 fuel expense	$	730		$	339		$	382

(1)

The results of Cinergy also include amounts related to non-registrants.

Purchased and Exchanged Power

Purchased and exchanged power expense increased for Cinergy, CG&E, and PSI in 1998. This increase was primarily the result of more purchases of non-firm wholesale power due to an increase in energy marketing and trading activity and an increase in the average price paid per kWh. Also in 1998, Cinergy  recognized $135 million ($73 million for CG&E, and $62 million for PSI), of unrealized losses related to our energy marketing and trading activity. (See "Market Risk Sensitive Instruments and Positions" on page 61 and Note 1(j) of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 106 for discussions on our energy marketing and trading activity.)

Gas Purchased

Gas purchased expense increased for Cinergy in 1998, primarily due to the Gas purchased expense of Marketing & Trading, an indirect subsidiary of Cinergy, that was acquired in June 1998. CG&E's Gas purchased expense decreased because of a decline in the volumes purchased, due to lower demand, and a lower average cost per mcf of gas purchased.

40

Operation

Cinergy's and PSI's Operation costs increased in 1998, as compared to 1997. These increases primarily relate to a one-time charge of $80 million for the implementation of the 1989 settlement with WVPA. (See Note 18 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 144 for a discussion of the WVPA settlement.) Additionally, Cinergy's increase was also the result of additional costs related to new initiatives of the non-regulated businesses.

Maintenance

Cinergy's and PSI's Maintenance costs increased in 1998, as compared to 1997, primarily due to increases in boiler plant maintenance costs and distribution line maintenance costs resulting from storm damage.

Depreciation and Amortization

Cinergy's and CG&E's Depreciation and amortization costs increased in 1998, as compared to 1997. These increases primarily relate to an increase of $9 million attributable to the amortization of phase-in deferrals reflecting the PUCO-approved phase-in plan for Zimmer.

EQUITY IN EARNINGS OF UNCONSOLIDATED SUBSIDIARIES

Cinergy's Equity in earnings of unconsolidated subsidiaries decreased $9 million (15%) in 1998, as compared to 1997. The majority of this decrease reflects a decline in the earnings of Midlands, resulting from milder weather conditions and a one-time penalty imposed (in 1998) on each electric distribution company caused by the delay in opening the electricity supply business to competition.

INTEREST

CG&E's Interest expense decreased $14 million (12%) in 1998, as compared to 1997, due to decreases in both interest on long-term debt and other interest expense. The decrease in interest expense on long-term debt is primarily due to a net redemption of approximately $86 million of long-term debt during the period of March 1997 through December 1998. The decrease in other interest is due to a reduction in average short-term borrowings.

PSI's Interest expense increased $5 million (6%) for 1998, as compared to 1997. Interest on long-term debt increased $9 million, due primarily to the net issuance of approximately $163 million of long-term debt during the period from March 1998 to December 1998. Offsetting this increase was a decrease in other interest expense, primarily resulting from a reduction in average short-term borrowings and lower short-term interest rates.

INCOME TAXES

Cinergy's Income taxes decreased $96 million (45%) in 1998, as compared to 1997, due to a decrease in taxable income over the prior year and the increased utilization of foreign tax credits.

PREFERRED DIVIDEND REQUIREMENTS

Cinergy's Preferred dividend requirements of subsidiaries and PSI's Preferred dividend requirement each decreased $6 million in 1998, as compared to 1997. These decreases resulted from PSI's redemption of all outstanding shares of its 7.44% Series Cumulative Preferred Stock on March 1, 1998.

41

EXTRAORDINARY ITEM

Extraordinary item—equity share of windfall profits tax represents the one-time charge for the windfall profits tax levied against Midlands, recorded in 1997. (See Note 17 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 144.)

FUTURE EXPECTATIONS/TRENDS

    In the "Future Expectations/Trends" section, we discuss electric and gas industry developments, market risk sensitive instruments and positions, impact of acquisitions and dispositions, inflation, and accounting changes. Each of these discussions will address the current status and potential future impact on our results of operations and financial condition.

ELECTRIC INDUSTRY

    The utility industry has traditionally operated as a regulated monopoly but is transitioning to an environment of increased wholesale and retail competition. Regulatory and legislative decisions being made at the federal and state levels aimed at promoting customer choice are shaping this transition. Customer choice provides the customer the ability to select an energy supplier (the company that generates or supplies the power), in an open and competitive marketplace. This emerging environment presents significant challenges, which are discussed below.

Wholesale Market Developments

    In 1996, the Federal Energy Regulatory Commission (FERC) issued orders to open the wholesale electric markets to competition. Competitors within the wholesale market include both utilities and non-utilities such as exempt wholesale generators, independent power producers, and power marketers. We are involved in wholesale power marketing and trading through Commodities.

    In late June 1998, and again in late July 1999, Midwest wholesale electric power markets experienced unprecedented price spikes. These price spikes were caused by a number of factors including (1) unseasonably hot weather, (2) unplanned generating unit outages, (3) transmission constraints, and (4) increased electric commodity market volatility. These simultaneous events created temporary but extreme prices in the Midwest electricity markets. As a result, during 1999 and 1998, we recorded after tax charges to income of $0.36 per share and $0.54 per share, respectively. In response to these events, we are aggressively pursuing a combination of mitigation strategies. These strategies, along with the expiration of the legacy wholesale contracts discussed below, the anticipated effects of recently enacted customer choice legislation in Ohio beginning in 2001, new contracts for additional transmission from outside the region, and general market maturation, should result in reduced exposure to the consequences of extreme weather and operating conditions and, therefore, the risk of future financial losses in 2000 and beyond.

    Supply-side Actions  On September 30, 1999, one of our non-regulated subsidiaries formed a partnership with Duke, in an effort to increase the available generating capacity for use during peak demand periods. This partnership will jointly construct and own three wholesale generating facilities to be located in southwestern Ohio, and east central and western Indiana, with total capacity of approximately 1,400 MW. These facilities will be natural gas-fired peaking stations with commercial operation anticipated for the summer of 2000. Our portion (50%) of the output will be sold to and marketed by Cinergy Capital & Trading (a wholly-owned subsidiary of Investments) or another Cinergy affiliate. We are supplementing this additional capability with block power purchases for the summer of 2000 peak period.

42

    Demand-side Actions  Demand on our system is expected to be reduced in future years as a result of the roll-off of existing wholesale contractual obligations and peak load management initiatives recently developed by us.

    Over the next five years, our wholesale obligations will decline from almost 3,000 MW of obligations in 1999 to about 1,000 MW in 2005. In addition to the normal expiration of contract commitments over time, we are pursuing contract restructurings with certain wholesale customers.

    Finally, Ohio's recently enacted customer choice legislation contemplates that 20% of CG&E's retail load be switched to alternative suppliers by June 2003. In its transition plan filed with the PUCO, CG&E indicated that it currently has no plans to replace these customers by acquiring new retail customers, although CG&E reserved the flexibility to replace load in the wholesale market to the extent it chooses.

    For further discussion, see the "Market Risk Sensitive Instruments and Positions" section on page 61.

Retail Market Developments

    Currently, regulatory and legislative initiatives shaping the transition to a competitive retail market are the responsibilities of the individual states. Many states, including Ohio, have enacted electric utility deregulation legislation. In general, these initiatives have sought to separate the electric utility service into its basic components (generation, transmission, and distribution) and offer each component separately for sale. This separation is referred to as unbundling of the integrated services. We currently supply (either through generation or open market purchase), transmit, and distribute electricity to all retail customers in our service area. Under the customer choice initiatives, we would continue to transmit and distribute electricity; however, the customer could purchase electricity from any available supplier. The following sections will further discuss the current status of deregulation legislation in the states of Ohio, Indiana, and Kentucky, each of which includes a portion of our service territory.

    Federal Update  The Clinton Administration has introduced a bill—the Comprehensive Electricity Competition Act—that would grant all retail electric customers the right to choose their electricity supplier beginning January 1, 2003. The legislation would allow a state regulatory authority to opt out of the retail competition system if the authority conducted a public proceeding and determined that the electric customers of that state would be better served by a monopoly system or an alternative retail competition plan. A "compromise bipartisan" deregulation bill introduced on May 26, 1999, by Representatives Largent (R-OK) and Markey (D-MA) includes similar mandates and opt out provisions with an effective date of January 1, 2002.

    Both the U.S. House of Representatives and the U.S. Senate continue to hold hearings on electric restructuring to see if consensus legislation can be developed, but it is uncertain whether federal retail customer choice legislation will be passed by this Congress.

    Ohio  On July 6, 1999, Ohio Governor Robert Taft signed Amended Substitute Senate Bill No. 3 (Electric Restructuring Bill, the Bill), beginning the transition to electric deregulation and customer choice for the State of Ohio. The Electric Restructuring Bill creates a competitive electric retail service market beginning January 1, 2001. The legislation provides for a market development period that begins January 1, 2001, and ends no later than December 31, 2005. Ohio electric utilities have an opportunity to recover PUCO-approved transition costs during the market development period. CG&E is seeking to recover all generation-related regulatory assets and above-market generation costs as allowable transition costs. The legislation also freezes retail electric rates during the market development period, except for a five-percent reduction in the generation component of residential rates and other potential adjustments. Furthermore, the legislation contemplates that twenty percent of the current electric retail customers will switch suppliers no later than December 31, 2003.

43

    The Electric Restructuring Bill required each utility supplying retail electric service in Ohio to file a comprehensive proposed transition plan with the PUCO addressing specific requirements of the legislation. CG&E filed its plan on December 28, 1999. The PUCO is required to issue a transition order no later than October 31, 2000. Consumers will be allowed to begin selecting alternative electricity suppliers beginning January 1, 2001.

    As required by the Electric Restructuring Bill, CG&E's Proposed Transition Plan (Transition Plan) is comprised of the following eight component plans:

(1)

Rate Unbundling Plan;



(2)

Corporate Separation Plan;



(3)

Operational Support Plan;



(4)

Employee Assistance Plan;



(5)

Consumer Education Plan;



(6)

Application for Receipt of Transition Revenues (Transition Revenue Plan);



(7)

Independent Transmission Plan; and



(8)

Shopping Incentive Plan.

    Rate Unbundling Plan  The Electric Restructuring Bill requires the unbundling of retail electric rates in effect on October 4, 1999. The Bill also requires creation of new tariffs that will facilitate the transition to effective customer choice.

    The CG&E Rate Unbundling Plan complies with the guidelines set forth in the legislation and separates CG&E's current retail electric rates into a transmission service component, a distribution service component, and a generation service component.

    Corporate Separation Plan  The Electric Restructuring Bill requires a corporate separation plan to ensure that a regulated utility (transmission and distribution services) will not extend any undue preference or advantage to any affiliate, division, or part of its own business engaged in competitive retail generation service. To this end, the legislation calls for the operational control of transmission assets to reside with a FERC-approved transmission entity that will not have control of any generation assets.

    To meet these requirements, CG&E's Proposed Transition Plan provides for corporate separation of competitive retail electric services and other products and services from noncompetitive retail electric services. Also, CG&E plans to transfer the operational control of its transmission assets to Midwest Independent Transmission System Operator, Inc. (Midwest ISO), a FERC-approved transmission entity.

    To further the policy goals of the legislation, CG&E has requested approval from the PUCO to establish an EWG. In order to create an EWG, CG&E must apply to the FERC for approval. Because Cinergy is a registered holding company under the PUHCA, before the FERC approves such an application, the Ohio, Indiana, and Kentucky state utility commissions must find that the transfer of CG&E's generating assets to an EWG: (1) will benefit consumers, (2) is in the public interest, and (3) does not violate state law. CG&E believes that its plan meets each of these requirements.

    Operational Support Plan  The Electric Restructuring Bill requires the submission of an operational support plan. This plan should address the operational support systems and business processes necessary to ensure a successful implementation of the customer's ability to choose its generation supplier.

44

CG&E's operational support plan complies with the guidelines and requirements established by the legislation and includes the following:

•

the financial, technical and managerial requirements for Certified Suppliers (a certified supplier is a supplier who has applied for and received permission from the State of Ohio to market electricity to consumers);



•

the enrollment process for customers who choose a Certified Supplier;



•

the load forecasting and settlement process to ensure that Certified Suppliers are supplying the electricity needs of their retail customers; and



•

the metering, billing and payment processes.

    Employee Assistance Plan  The Electric Restructuring Bill requires the submission of an employee assistance plan that addresses severance, retraining, early retirement, retention, outplacement, and other assistance for utilities' employees whose employment is adversely affected by electric restructuring during the market development period (January 1, 2001 through December 31, 2005).

    To address this requirement, CG&E developed a plan for both non-union and union employees. For non-union employees, CG&E's plan describes severance and ancillary benefits. CG&E reserves the right to implement involuntary workforce reductions to achieve any reductions necessary, but intends to initially use voluntary reductions, if such reductions become necessary. For union employees, to date CG&E has met with one collective bargaining agent to discuss potential effects of restructuring on these union employees. This union membership approved a new agreement on February 4, 2000.

    Consumer Education Plan  The Electric Restructuring Bill calls for Ohio utilities to spend, in the aggregate, up to $16 million in the first year of the market development period, and $17 million throughout the remainder of the market development period, educating Ohio consumers on their opportunity to choose an alternative supplier of electricity.

    Through participation in the Ohio Electric Utility Institute (OEUI), CG&E will support a statewide consumer education plan. Additionally, CG&E has developed a comprehensive service territory-specific consumer education campaign designed to educate Ohio consumers on how to exercise their right to choose. CG&E estimates its share of the costs associated with the consumer education program will not be material. As discussed further below, CG&E is requesting full recovery of these costs.

    Application for Receipt of Transition Revenues (Transition Revenue Plan)  The Electric Restructuring Bill provides that a utility's proposed transition plan may include an application to receive transition revenues. Transition revenues are collected in two ways: (1) through the payment of the generation component of unbundled rates by customers who do not switch generation suppliers, and (2) through payment of nonbypassable transition charges by customers who switch generation suppliers. Transition costs are costs that meet the following criteria:

•

prudently incurred;



•

legitimate, net, verifiable, and directly assignable or allocable to Ohio retail electric generation consumers;



•

unrecoverable in a competitive market; and



•

CG&E would otherwise be entitled an opportunity to recover in rates as a regulated utility.

    The legislation requires that the PUCO must establish nonbypassable transition charges so that a utility has an opportunity to collect its transition revenues from customers that choose an alternative supplier during the market development period.

45

CG&E filed, with its Proposed Transition Plan, a request to recover generation-related regulatory assets and other transition costs through the receipt of transition revenues, beginning January 1, 2001. CG&E is seeking recovery of two primary components of transition costs. First, CG&E is requesting recovery of the balance of the Ohio retail jurisdictional generation-related assets on the books and records as of December 31, 2000, including a return on the unamortized balance. At December 31, 1999, the balance of the generation-related assets was approximately $436 million. The projected jurisdictional balance at December 31, 2000, is approximately $364 million. CG&E is requesting recovery to continue until December 31, 2010, or until the balance, including carrying costs, is fully amortized. CG&E has proposed to recover this amount utilizing the total amount that is currently included in rates for the recovery of regulatory assets. Additionally, CG&E is requesting recovery of other transition costs during the market development period, consisting primarily of above-market generation costs. As included in CG&E's Proposed Transition Plan, the projected balance at December 31, 2000, of these above-market generation costs is approximately $563 million. The transition costs associated with any above-market generation assets represents the difference between the net investment in such assets on CG&E's books and records as of December 31, 2000, and its market value, including carrying costs. CG&E has proposed to recover this amount through an adjustment mechanism that includes a periodic update of other transition costs, revenues and charges for changes in the market price of electricity. The carrying costs on CG&E's total transition costs are estimated at $311 million.

    In addition, CG&E has requested that the costs described below be considered regulatory assets and deferred for future recovery in regulated utility rates, including carrying costs, after the market development period. These items total an estimated $116 million.

•

incremental costs incurred to prepare utility systems for customer choice, including computerized customer service system costs;



•

incremental costs incurred in presenting the Proposed Transition Plan;



•

incremental costs incurred for the Consumer Education Plan;



•

incremental costs incurred for the Independent Transmission Plan, including Midwest ISO costs;



•

incremental costs for CG&E's share of the PUCO's Proposed Transition Plan consultant; and



•

incremental costs to create an EWG.

CG&E is requesting this ratemaking treatment because each of the above items represents direct and incremental costs of transitioning to a competitive electric industry. CG&E will need to incur these costs in order to provide a safe, efficient and reliable public utility service. These costs are neither currently included in CG&E's rates nor recoverable in a competitive environment. To the extent that the PUCO does not allow deferral of these costs, they will be expensed as incurred.

    Independent Transmission Plan  The Electric Restructuring Bill requires that a utility not own or control transmission facilities located in Ohio as of January 1, 2001, unless it belongs to and transfers control of the transmission facilities to an operational "qualifying transmission entity" that meets nine requirements as set forth in the Bill.

    To this end, CG&E has agreed to transfer functional control of its transmission facilities to the FERC-approved Midwest ISO. The requirements for FERC approval are substantially similar to the "qualifying transmission entity" test in the Bill. As a result, the FERC's approval of the Midwest ISO should satisfy the nine requirements set forth in the Bill requiring the Midwest ISO be a "qualifying transmission entity". For additional information about the Midwest ISO, see the "Midwest ISO" section on page 60.

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    Shopping Incentive Plan  The Electric Restructuring Bill requires that the PUCO consider, in prescribing the transition charge for each customer class, a shopping incentive designed to induce, at a minimum, a twenty percent load switching rate by customer class halfway through the market development period, but not later than December 31, 2003.

CG&E's Shopping Incentive Plan describes the methodologies employed in arriving at a load switching forecast and additional factors that have been considered in developing a methodology for implementing a shopping incentive designed to induce at least a twenty percent load switching by customer class by December 31, 2003.

CG&E has further requested that, before implementing a shopping incentive credit to induce additional switching, the PUCO consider foregoing the mandatory five percent decrease in the unbundled generation component for residential customers. If switching levels remain below the twenty percent level or significantly below forecast, CG&E proposes that a shopping incentive credit then be implemented and adjusted by customer class until the twenty percent threshold has been achieved.

    Conclusion  While CG&E believes there is sound basis for the various requests made in its Proposed Transition Plan, it is currently unable to predict the extent to which the Proposed Transition Plan will be approved and its resulting effect on results of operations, cash flows, and financial position. CG&E is seeking to recover all generation-related regulatory assets and above-market generation costs as allowable transition costs. CG&E believes its current accounting for regulatory assets has been consistent with the regulatory orders issued by the PUCO and that such costs should be recovered in future rates. However, to the extent requested recovery of generation-related regulatory assets is disallowed or generating assets are financially impaired, CG&E will be required to recognize a loss under generally accepted accounting principles. With regard to these assets, CG&E will continue to apply Statement No. 71 until the effect of deregulation is estimable.

    Indiana  In January 1999, electric deregulation legislation was introduced into the Indiana General Assembly. Proposed and supported by a group of large industrial customers, this legislation did not pass in the 1999 session of the Indiana General Assembly. Due to a "short session" in 2000, the Indiana General Assembly is not expected to consider any electric deregulation initiatives. We will continue to work with the other Indiana investor-owned utilities in an effort to draft acceptable customer choice legislation. The outcome of this effort remains uncertain.

    Kentucky  Throughout 1999, a special Kentucky Electricity Restructuring Task Force, convened by the Kentucky legislature, studied the issues of electric deregulation. In January 2000, the Task Force issued a final report to Kentucky Governor Paul Patton recommending that lawmakers wait until the 2002 General Assembly before considering any deregulation legislation that would open the state's electric industry to competition.

Other

    Our operating companies currently apply the provisions of Statement 71. Statement 71 applies to the financial statements of a rate-regulated company. The provisions allow our operating companies to capitalize (record as a deferred asset) costs that would normally be charged to expense. These costs are classified as regulatory assets in the accompanying financial statements and the majority have been approved by regulators for future recovery from customers through our rates. As of December 31, 1999, our operating companies have $1,055 million of net regulatory assets, of which $956 million have been approved for recovery.

    As of December 31, 1999, our regulated operations continue to meet each of the criteria required for the use of Statement 71. However, as states implement deregulation legislation, the application of Statement 71 will need to be reviewed. This potential change in accounting practice could create future extraordinary losses to the extent these regulatory assets are determined not to be recoverable. The

47

effect of the discontinuance of Statement 71 on the results of operations, cash flows, or statements of position cannot be determined until deregulation legislation plans have been approved by each state in which we do business. See "Ohio" section of "Retail Market Developments" on page 54 for details of how the Ohio deregulation legislation plan could affect our application of Statement 71.

Midwest ISO

    As part of the effort to create a competitive wholesale power marketplace, the FERC approved the formation of the Midwest ISO during 1998. The Midwest ISO will oversee the combined transmission systems of its members. The organization is expected to begin operations in late 2001. This effort will help to facilitate a reliable and efficient market for electric power and create open transmission access consistent with FERC policies. The Midwest ISO currently includes 14 members with over 69,000 miles of transmission lines in 16 states and an aggregate investment of over $8.5 billion. In December 1999, the Midwest ISO announced plans to combine operations with the Mid-Continent Power Pool and the Southwest Power Area Pool.

Repeal of PUHCA

    Various proposals to repeal or amend the PUHCA are pending before Congress. In February 1999, the Senate Banking, Housing and Urban Affairs Committee reported out of committee S.313, a bill to repeal the PUHCA. S.313 is awaiting action by the full Senate. In June 1999, H.R.2363, a bill to repeal the PUHCA was introduced in the U.S. House of Representatives as a companion to S.313. H.R.2363 is awaiting action by the House Commerce Committee.

    The Clinton Administration has introduced legislation which repeals the PUHCA as part of a broader restructuring of the electricity industry. In October 1999, the House Subcommittee on Energy and Commerce reported out to the full House Commerce Committee H.R.2944, which would also repeal the PUHCA as part of a broader restructuring of the electricity industry. We support the repeal of the PUHCA either as part of broader restructuring of the electricity industry or as separate legislation.

Significant Rate Developments

    Purchased Power Tracker  On May 28, 1999, PSI filed a petition with the Indiana Utility Regulatory Commission (IURC) seeking approval of a purchased power tracking mechanism (tracker). This request is designed to provide for the recovery of costs related to purchases of power necessary to meet native load requirements to the extent such costs are not sought through the existing fuel adjustment clause. The tracker is intended to apply to a limited number of purchases made for the purpose of ensuring adequate power reserves to meet peak retail native load requirements, which in recent years have coincided with periods of extreme price volatility. As proposed by PSI, the tracker would only apply to capacity purchases which are presented to the IURC for review and approval as to reasonableness under the circumstances.

    A hearing on this request was completed on December 9, 1999. An order is expected by the second quarter of 2000.

Coal Gasification  PSI and Dynegy, Inc. (Dynegy, formerly Destec) entered into a 25-year contract for the provision of coal gasification services beginning in November 1995. The agreement required PSI to pay Dynegy a base monthly fee including certain monthly operating expenses. PSI received authorization in the September 1996 Order (an IURC order issued in September 1996 on PSI's retail rate proceeding) for the inclusion of these costs in retail rates. In addition, PSI  received authorization to defer, for subsequent recovery in retail rates, the base monthly fees and expenses incurred prior to the effective date of the September 1996 Order.

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    During the third quarter of 1998, PSI reached an agreement with Dynegy to purchase the remainder of its 25-year contract for coal gasification services. The settlement agreement specified a purchase price of $247 million.

    In anticipation of the buyout, PSI and the Indiana Office of Utility Consumer Counselor (UCC) came to a settlement agreement with respect to the proper ratemaking treatment of the buyout fee and other buyout implementation costs in June 1999. The agreement provides for PSI's retail electric rates to be decreased to eliminate jurisdictional costs associated with the gasification services agreement. In order to offset the buyout costs of the contract, the agreement allows PSI to recover the retail electric jurisdictional portion of the buyout fee and the associated buyout implementation costs through its rates with carrying costs on unrecovered amounts, over an eighteen-year period. In September 1999, the IURC approved the settlement agreement. In September 1999, PSI recorded a regulatory asset to reflect the buyout fee and the associated buyout implementation costs. In October 1999, PSI issued $265 million in debentures due in 2007 to fund the buyout of the remaining term of the contract and for the estimated cost of plant modifications to allow the use of natural gas.

MARKET RISK SENSITIVE INSTRUMENTS AND POSITIONS

Energy Commodities Sensitivity

    The transactions associated with Commodities' energy marketing and trading activities give rise to various risks, including market risk. Market risk represents the potential risk of loss from adverse changes in the market price of electricity or other energy commodities. As Commodities continues to develop its energy marketing and trading business (and due to its substantial investment in generation assets), its exposure to movements in the price of electricity and other energy commodities may become greater. As a result, we may be subject to increased future earnings volatility.

    The energy marketing and trading activities of Commodities principally consist of CG&E's and PSI's power marketing and trading operations. These operations market and trade over-the-counter (an informal market where the buying/selling of commodities occurs) contracts for the purchase and sale of electricity primarily in the Midwest region of the U.S.. The power marketing and trading operation consists of both physical and trading activities. Transactions are designated as a physical activity when there is intent and ability to physically deliver the power from company-owned generation. All other transactions are considered trading activities. Substantially all of the contracts in both the physical and trading portfolios commit us to purchase or sell electricity at fixed prices in the future. Commodities also markets and trades over-the-counter option contracts. Substantially all of the contracts in the physical portfolio require settlement by physical delivery of electricity. Contracts within the trading portfolio generally require settlement by physical delivery or are netted out in accordance with industry trading standards. The use of these types of physical commodity instruments is designed to allow Commodities to (1) manage and hedge contractual commitments, (2) reduce exposure relative to the volatility of cash market prices, and (3) take advantage of selected arbitrage opportunities.

    Commodities structures and modifies its net position to capture the following:

•

expected changes in future demand;



•

seasonal market pricing characteristics;



•

overall market sentiment; and



•

price relationships between different time periods and trading regions.

    At times a net open position is created or is allowed to continue when Commodities believes future changes in prices and market conditions may possibly result in profitable positions. Position imbalances can also occur due to the basic lack of liquidity in the wholesale power market. The existence of net open positions can potentially result in an adverse impact on our financial condition or

49

results of operations. This potential adverse impact could be realized if the market price of electric power does not react in the manner or direction expected.

    Commodities measures the market risk inherent in the trading portfolio employing value-at-risk analysis and other methodologies, which utilize forward price curves in electric power markets to quantify estimates of the magnitude and probability of potential future losses related to open contract positions. Value-at-risk is a statistical measure used to quantify the potential loss in fair value of the trading portfolio over a particular period of time, with a specified likelihood of occurrence, due to an adverse market movement. Because most of the contracts in the physical portfolio require physical delivery of electricity and generally do not allow for net cash settlement, these contracts are not included in the value-at-risk analysis.

    Our value-at-risk is reported as a percentage of operating income, based on a 95% confidence interval, utilizing one-day holding periods. This means that on a given day (one-day holding period) there is a 95% chance (confidence interval) that our trading portfolio will lose less than the stated percentage of operating income. We disclose our value-at-risk for power activities as a percent of consolidated operating income for a one-day basis at December 31, the average one-day basis at the end of each quarter, and the daily basis at December 31 of each year. On a one-day basis as of December 31, 1999, the value-at-risk for the power trading activity was less than 1% of 1999 consolidated operating income and as of December 31, 1998, was less than 1% of 1998 consolidated operating income. On a one-day basis at the end of each quarter, the value-at-risk for the power trading activity was less than 1% of consolidated operating income in 1999, and less than 2% in 1998. The daily value-at-risk for the power trading portfolio as of December 31, 1998, was less than 1% of 1999 consolidated operating income and as of December 31, 1997, was also less than 1% of 1998 consolidated operating income. The value-at-risk model uses the variance-covariance statistical modeling technique and historical volatilities and correlations over the past 200-day period. The estimated market prices used to value these transactions for value-at-risk purposes reflect the use of established pricing models and various factors including quotations from exchanges and over-the-counter markets, price volatility factors, the time value of money, and location differentials.

    Commodities, through some of our non-regulated subsidiaries, actively markets physical natural gas and actively trades derivative commodity instruments which are usually settled in cash, including forwards, futures, swaps, and options. The aggregated value-at-risk amounts associated with these other trading and hedging activities were less than $2 million as of December 31, 1999, and less than $1 million at December 31, 1998. The market risk exposures of these non-regulated trading activities is not considered significant to our financial condition or results of operations.

    Credit Risk  Credit risk is the exposure to economic losses that would occur as a result of nonperformance by counterparties, pursuant to the terms of their contractual obligations. Specific components of credit risk include counterparty default risk, collateral risk, concentration risk, and settlement risk.

    Our concentration of credit risk with respect to Delivery's trade accounts receivable from electric and gas retail customers is limited. The large number of customers and the diversified customer base of residential, commercial, and industrial customers significantly reduce our credit risk. Contracts within the physical portfolio of Commodities' power marketing and trading operations are primarily with traditional electric cooperatives and municipalities and other investor-owned utilities. At December 31, 1999, we do not believe we have significant exposure to credit risk with our trade accounts receivable within Delivery and our physical portfolio within Commodities.

    Contracts within the trading portfolio of Commodities' power marketing and trading operations are primarily with power marketers and other investor-owned utilities. As of December 31, 1999, approximately 75% of the activity within the trading portfolio represent commitments with 10 counterparties, compared to 10 counterparties representing approximately 73% of the activity at

50

December 31, 1998. The majority of these contracts are for terms of one year or less. Counterparty credit exposure within the power-trading portfolio is routinely factored into the mark-to-market valuation. As a result of the extreme volatility experienced in the Midwest power markets during 1998, several new entrants into the market experienced financial difficulties and failed to perform their contractual obligations. This resulted in us recording bad debt provisions of approximately $13 million with respect to settled transactions. At December 31, 1999, our exposure to credit risk within the power-trading portfolio is not believed to be significant. As the competitive electric power market continues to develop, counterparties will increasingly include new market entrants, such as other power marketers, brokers, and commodity traders. This increased level of new market entrants, as well as competitive pressures on existing market participants, could increase Commodities' exposure to credit risk with respect to its power marketing and trading operation.

    As of December 31, 1999, approximately one-third of the activity within the physical gas marketing and trading portfolio represents commitments with 10 counterparties, compared to 10 counterparties representing approximately 37% of the activity at December 31, 1998. Credit risk losses related to gas and other commodity physical and trading operations have not been significant. At December 31, 1999, the credit risk within the gas and other commodity trading portfolios is not believed to be significant because of the characteristics of counterparties and customers with which transactions are executed.

    Potential exposure to credit risk also exists from our use of financial derivatives such as currency swaps, foreign exchange forward contracts, and interest rate swaps. Because these financial instruments are transacted only with highly rated financial institutions, we do not anticipate nonperformance by any of the counterparties.

    Risk Management  We manage, on a portfolio basis, the market risks in our energy marketing and trading transactions subject to parameters established by our Risk Policy Committee. Our market and credit risks are monitored by the risk management and credit functions to ensure compliance with stated risk management policies and procedures. These functions operate independently from the business units which originate and actively manage the market and credit risk exposures. The policies and procedures are periodically reviewed and monitored to ensure their responsiveness to changing market and business conditions. In addition, efforts are ongoing to develop systems to improve the timeliness and quality of market and credit risk information.

    We have a risk management function and have implemented active risk management policies and procedures. These policies and procedures allow us to manage and minimize corporate and business unit exposure to: price risks and associated volatilities, credit risks, and other market risks. We also maintain counterparty credit policies to manage and minimize our exposure to credit risk.

    These policies include:

•

requiring parent company guarantees, under certain circumstances;



•

various forms of collateral, under certain circumstances; and



•

the use of mutual netting/closeout agreements.

Exchange Rate Sensitivity

    From time to time, we may utilize foreign exchange forward contracts and currency swaps to hedge certain of our net investments in foreign operations. These contracts and swaps allow us to hedge our position against currency exchange rate fluctuations.

    Through our investments in Midlands, we had exposure to fluctuations in the U.S. dollar/United Kingdom pound sterling exchange rate. We used dollar denominated variable interest rate debt to fund the investment and hedged our exposure through a currency swap. On July 15, 1999, we sold our 50% ownership interest in Avon Energy to GPU, as discussed in Note 10 of the "Notes to Financial

51

Statements" in "Item 8. Financial Statements and Supplementary Data" on page 126. As a result of this transaction, we terminated the hedging contracts related to the investment.

    We also have exposure to fluctuations in the U.S. dollar/Czech koruna rate through our investments in the Czech Republic. We have historically hedged the exchange rate exposure related to certain of the Czech koruna denominated investments through foreign exchange forward contracts. However, during the second quarter of 1999, we settled these forward exchange contracts. The settlement costs were not material. The remaining foreign exchange hedging contracts are not significant.

    Exposure to fluctuations in exchange rates between the U.S. dollar and the currencies of foreign countries where we have investments do exist. When it is appropriate we will hedge our exposure to cash flow transactions, such as a dividend payment by one of our foreign subsidiaries. At December 31, 1999, we do not believe we have a material exposure to the currency risk attributable to these investments.

Interest Rate Sensitivity

    Our exposure to changes in interest rates consists of short-term debt instruments, pollution control debt, sale of accounts receivable, and the Woodsdale capital lease. The following table reflects the different instruments used and the method of benchmarking interest rates, as of December 31, 1999, and 1998:

	Interest Benchmark		1999		1998
			(in millions)
Short-term Bank Loans/Commercial Paper	•  Short-term Money Market	Cinergy	$	283	$	637
	•  LIBOR(1)	CG&E		51		5
		PSI		150		90
Pollution Control Debt	•  Daily Market	Cinergy		267		267
		CG&E		184		184
		PSI		83		83
Sale of Accounts Receivable	•  Short-term Money Market	Cinergy		257		253
		CG&E		157		166
		ULH&P		21		16
		PSI		100		87
Woodsdale Capital Lease	•  LIBOR(1)	Cinergy		22		22
		CG&E		22		22

(1) London Inter-Bank Offered Rate (LIBOR)

    The weighted-average interest rates on the above instruments at December 31, 1999, and 1998, were as follows:

	1999		1998
Short-term Bank Loans/Commercial Paper	6.2	%	6.0	%
Pollution Control Debt	4.1	%	4.0	%
Sale of Accounts Receivable	6.1	%	6.0	%
Woodsdale Capital Lease	5.3	%	5.3	%

    Current forward yield curves project an increase in applicable short-term interest rates over the next five years.

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    The following table presents principal cash repayments by maturity date and other selected information for each registrant's long-term fixed-rate debt, other debt, and capital lease obligations as of December 31, 1999:

	Expected Maturity Date
Liabilities	2000			2001			2002			2003			2004			There- after			Total			Fair Value
	(in millions)
Cinergy
Long-term Debt(1)	$	132	(6)	$	90	(4)	$	124		$	177	(5)	$	311		$	2,177		$	3,011		$	2,798
Weighted-average interest rate(2)		6.2	%		5.2	%		7.3	%		6.2	%		6.2	%		7.0	%		6.8	%
Other(3)	$	.9		$	1.0		$	1.1		$	1.3		$	1.5		$	16.6		$	22.4		$	22.4
Weighted-average interest rate(2)		8.4	%		8.4	%		8.4	%		8.4	%		8.4	%		8.4	%		8.4	%
Capital Lease
Fixed rate	$	.7		$	.7		$	.8		$	.8		$	.9		$	6.1		$	10.0		$	10.0
Interest rate		6.7	%		6.7	%		6.7	%		6.7	%		6.7	%		6.7	%		6.7	%
Variable rate		—		$	22			—			—			—			—		$	22		$	22
Weighted-average interest rate(2)		—			5.3	%		—			—			—			—			5.3	%
CG&E and subsidiaries
Long-term Debt(1)		—		$	1		$	100		$	120	(5)	$	110		$	878		$	1,209		$	1,065
Weighted-average interest rate(2)		—			9.8	%		7.3	%		6.3	%		6.5	%		6.9	%		6.8	%
Capital Lease
Fixed rate	$	.3		$	.3		$	.3		$	.4		$	.4		$	2.6		$	4.3		$	4.3
Interest rate		6.7	%		6.7	%		6.7	%		6.7	%		6.7	%		6.7	%		6.7	%
Variable rate		—		$	22			—			—			—			—		$	22		$	22
Weighted-average interest rate(2)		—			5.3	%		—			—			—			—			5.3	%
PSI
Long-term Debt(1)	$	132	(6)	$	89	(4)	$	24		$	57		$	1		$	949		$	1,252		$	1,215
Weighted-average interest rate(2)		6.0	%		5.2	%		7.6	%		5.9	%		6.0	%		7.3	%		7.0	%
Capital Lease
Fixed rate	$	.4		$	.4		$	.4		$	.5		$	.5		$	3.5		$	5.7		$	5.7
Interest rate		6.7	%		6.7	%		6.7	%		6.7	%		6.7	%		6.7	%		6.7	%
ULH&P
Long-term Debt(1)		—			—			—		$	20			—		$	55		$	75		$	71
Weighted-average interest rate(2)		—			—			—			6.1	%		—			7.3	%		7.0	%
Capital Lease
Fixed rate	$	.1		$	.1		$	.1		$	.1		$	.1		$	.5		$	1.0		$	1.0
Interest rate		6.7	%		6.7	%		6.7	%		6.7	%		6.7	%		6.7	%		6.7	%

(1)

All long-term debt is fixed rate and includes amounts reflected as long-term debt due within one year.

(2)

The weighted-average interest rate is calculated as follows: (1) for long-term debt obligations, the weighted-average interest rate is based on the coupon rates of the debt that is maturing in the year reported; (2) for the variable rate capital leases, the interest rate is based on a spread over 3-month LIBOR, and averaged to be approximately 6% in 1999; (3) for the fixed rate capital leases, the interest rate is fixed at 6.71% with an amortizing principal structure; and (4) for the Foote Creek III Investment, the interest rate is based on a spread over 6- and 12-month LIBOR.

(3)

Variable rate debt related to an investment under Global Resources.

(4)

6.00% Debentures due December 14, 2016, reflected as maturing in 2001, as the interest rate resets on December 14, 2001.

(5)

6.35% Debentures due June 15, 2038, reflected as maturing in 2003, as the interest rate resets on June 15, 2003.

(6)

6.35% Debentures due November 15, 2006, reflected as maturing in 2000, as the Debentures are putable back to PSI on November 15, 2000.

    Our current policy in managing exposure to fluctuations in interest rates is to maintain 25% of the total amount outstanding debt in floating interest rate debt instruments. To help maintain this level of exposure, we have previously entered into interest rate swaps. Under these swaps, we have agreed with other parties to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts calculated on an agreed notional principal amount. When less than 25% of the

53

outstanding debt had floating interest rates, we entered into swaps whereby we would receive a fixed rate and pay a floating rate. When more than 25% of the outstanding debt had fixed interest rates, we entered into swaps that allowed us to receive a floating rate while paying a fixed rate. At December 31, 1999, the composition of our debt consisted of slightly less than 25% of the outstanding amount having floating interest rates. PSI has an outstanding interest rate swap agreement that will increase this percentage of floating rate debt in the second half of 2000. Under the agreement, which has a notional amount of $100 million, PSI will pay a floating rate and receive a fixed rate for a six month period. The floating rate will be based on a short-term money market index. At December 31, 1999, the fair value of this interest rate swap was not significant. In the future, we will continually monitor market conditions to evaluate whether to increase, or decrease, our level of exposure to fluctuations in interest rates.

GAS INDUSTRY

Legislation

Customer Choice In November 1997, the State of Ohio commenced a customer choice program for the gas utility industry. This voluntary program gives residential and small commercial customers the opportunity to select their own gas supplier. Approximately two-thirds of the gas customers in the State of Ohio are eligible to participate. This program excludes large industrial, commercial, and educational institution customers because they already have the ability to select their own gas supplier.

    Although the gas supplier may vary by customer, CG&E continues to provide gas transportation services for substantially all customers within its franchise territory.

Regulations

PUCO Order In 1996, the PUCO approved an overall increase in gas revenues of 2.5%, or $9.3 million annually, for CG&E. In establishing the rate increase, the PUCO excluded certain requests made by CG&E. In April 1997, CG&E filed a notice of appeal with the Supreme Court of Ohio to challenge the PUCO decisions. On July 7, 1999, the Supreme Court issued a ruling on the appeal. The ruling resulted in a revision in rates generating a $3 million increase in annual revenues for CG&E, which represents less than a one percent increase in retail rates. The implementation of this incremental rate change began in the third quarter of 1999.

IMPACT OF ACQUISITIONS AND DISPOSITIONS

Acquisitions

    During 1999, we invested an additional $309 million in consolidated and unconsolidated subsidiaries, the most significant of which is the partnership with Duke. The Duke partnership is discussed in the "Wholesale Market Developments" section on page 53.

Dispositions

    During 1999, we sold our 50% ownership interest in Avon Energy to GPU. See Note 10 of the "Notes to Financial Statements" in "Item 8. Financial Statements and Supplementary Data" on page 126 for an additional discussion of this sale.

INFLATION

    We believe that the recent inflation rates do not materially impact our financial condition. However, under existing regulatory practice, only the historical cost of plant is recoverable from customers. As a result, cash flows designed to provide recovery of historical plant costs may not be adequate to replace plant in future years.

54

ACCOUNTING CHANGES

    During the second quarter of 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (Statement 133). This standard requires companies to record derivative instruments as assets or liabilities, measured at fair value. Changes in the derivative's fair value must be recognized currently in earnings unless specific hedge accounting criteria are met. Hedges are transactions entered into for the purpose of reducing exposure to one or more types of business risk. Gains and losses on derivatives that qualify as hedges can offset related results on the hedged item in the income statement.

    This standard, as subsequently amended by Statement of Financial Accounting Standards No. 137, Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133 (Statement 137), is effective for fiscal years beginning after June 15, 2000. The purpose of Statement 137 was to delay the effective date of Statement 133 by one year. We expect to reflect the adoption of this standard in financial statements issued beginning in the first quarter of 2001. In recognition of the complexity of this new standard, the Derivatives Implementation Group has been formed by the FASB. In preparation for our implementation of this new standard, we have formed a cross-functional project team. The project team is identifying and analyzing all contracts which could be subject to the new standard, developing required documentation, defining relevant processes and information systems needs, and promoting internal awareness of the requirements and potential effects of the new standard. While we continue to analyze and follow the development of implementation guidelines, at this time we are unable to predict whether the implementation of this accounting standard will be material to our results of operations or financial position. However, the adoption of Statement 133 could increase volatility in earnings and other comprehensive income.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    Reference is made to the "Market Risk Sensitive Instruments and Positions" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 61.

55

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

	Page Number
FINANCIAL STATEMENTS
Report of Independent Public Accountants	57
Cinergy Corp. and Subsidiaries
Consolidated Statements of Income for the three years ended December 31, 1999	59
Consolidated Balance Sheets at December 31, 1999 and 1998	60
Consolidated Statements of Changes in Common Stock Equity for the three years ended December 31, 1999	62
Consolidated Statements of Cash Flows for the three years ended December 31, 1999	63
The Cincinnati Gas & Electric Company and Subsidiaries
Consolidated Statements of Income for the three years ended December 31, 1999	65
Consolidated Balance Sheets at December 31, 1999 and 1998	66
Consolidated Statements of Changes in Common Stock Equity for the three years ended December 31, 1999	68
Consolidated Statements of Cash Flows for the three years ended December 31, 1999	69
Consolidated Statements of Capitalization at December 31, 1999 and 1998	70
PSI Energy, Inc. and Subsidiary
Consolidated Statements of Income for the three years ended December 31, 1999	73
Consolidated Balance Sheets at December 31, 1999 and 1998	74
Consolidated Statements of Changes in Common Stock Equity for the three years ended December 31, 1999	76
Consolidated Statements of Cash Flows for the three years ended December 31, 1999	77
Consolidated Statements of Capitalization at December 31, 1999 and 1998	78
The Union Light, Heat and Power Company
Statements of Income for the three years ended December 31, 1999	80
Balance Sheets at December 31, 1999 and 1998	81
Statements of Changes in Common Stock Equity for the three years ended December 31, 1999	83
Statements of Cash Flows for the three years ended December 31, 1999	84
Statements of Capitalization at December 31, 1999 and 1998	85
Notes to Financial Statements	86
FINANCIAL STATEMENT SCHEDULES
Schedule II—Valuation and Qualifying Accounts
Cinergy	136
CG&E	137
PSI	138
ULH&P	139

    The information required to be submitted in schedules other than those indicated above has been included in the balance sheets, the statements of income, related schedules, the notes thereto, or omitted as not required by the Rules of Regulation S-X.

56

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

         To the Board of Directors of Cinergy Corp., The Cincinnati Gas & Electric Company, PSI Energy, Inc., and The Union Light, Heat and Power Company:

    We have audited the financial statements of Cinergy Corp. (a Delaware Corporation), The Cincinnati Gas & Electric Company (an Ohio Corporation), PSI Energy, Inc. (an Indiana Corporation), and The Union Light, Heat and Power Company (a Kentucky Corporation), as of December 31, 1999 and 1998, and for each of the three years in the period ended December 31, 1999, as listed in the index on page 70. These financial statements and the schedules referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.

    We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cinergy Corp., The Cincinnati Gas & Electric Company, PSI Energy, Inc., and The Union Light, Heat and Power Company as of December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States.

    As explained in Note 1 to the consolidated financial statements, the Company changed its method of accounting for its energy trading and risk management activities effective December 31, 1998.

    Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed in the index on page 70 pursuant to Item 14, are presented for purposes of complying with the Securities and Exchange Commissions Rules and Regulations under the Securities Exchange Act of 1934 and are not a required part of the basic financial statements. The schedules have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth in relation to the basic financial statements taken as a whole.

Arthur Andersen LLP
Cincinnati, Ohio
January 26, 2000

57

CINERGY CORP.
AND SUBSIDIARY COMPANIES

58

CINERGY CORP.

CONSOLIDATED STATEMENTS OF INCOME

	1999		1998			1997
	(in thousands, except per share amounts)
Operating Revenues
Electric	$	4,312,899	$	4,763,289		$	3,861,698
Gas		1,596,146		1,099,629			519,536
Other		28,843		48,373			5,867
Total Operating Revenues		5,937,888		5,911,291			4,387,101
Operating Expenses
Fuel and purchased and exchanged power		2,260,297		2,853,866			1,912,793
Gas purchased		1,383,993		894,945			292,138
Operation and maintenance		981,054		976,289			843,887
Depreciation and amortization		353,820		326,492			306,922
Taxes other than income taxes		265,501		274,635			265,693
Total Operating Expenses		5,244,665		5,326,227			3,621,433
Operating Income		693,223		585,064			765,668
Equity in Earnings of Unconsolidated Subsidiaries		58,021		51,484			60,392
Gain on Sale of Investment in Unconsolidated Subsidiary (Note 10)		99,272		—			—
Miscellaneous—Net		2,031		(8,289	)		(1,534	)
Interest		234,778		243,587			236,319
Income Before Taxes		617,769		384,672			588,207
Income Taxes (Note 11)		208,671		117,187			213,000
Preferred Dividend Requirements of Subsidiaries		5,457		6,517			12,569
Net Income Before Extraordinary Item	$	403,641	$	260,968		$	362,638
Extraordinary Item—Equity Share of Windfall Profits Tax (Less Applicable Income Taxes of $0) (Note 17)		—		—			(109,400	)
Net Income	$	403,641	$	260,968		$	253,238
Average Common Shares Outstanding		158,863		158,238			157,685
Earnings Per Common Share (Note 16)
Net income before extraordinary item	$	2.54	$	1.65		$	2.30
Net Income	$	2.54	$	1.65		$	1.61
Earnings Per Common Share—Assuming Dilution (Note 16)
Net income before extraordinary item	$	2.53	$	1.65		$	2.28
Net income	$	2.53	$	1.65		$	1.59
Dividends Declared Per Common Share	$	1.80	$	1.80		$	1.80

The accompanying notes as they relate to Cinergy Corp. are an
integral part of these consolidated financial statements.

59

CINERGY CORP.

CONSOLIDATED BALANCE SHEETS

	December 31
	1999		1998
	(dollars in thousands)
ASSETS
Current Assets
Cash and cash equivalents	$	81,919	$	100,154
Restricted deposits		628		3,587
Notes receivable		481		64
Accounts receivable less accumulated provision for doubtful accounts of $26,811 at December 31, 1999, and $25,622 at December 31, 1998 (Note 6)		706,068		580,305
Materials, supplies, and fuel—at average cost		205,749		202,747
Energy risk management assets (Note 1(j))		131,145		283,924
Prepayments and other		77,701		74,849
Total Current Assets		1,203,691		1,245,630
Utility Plant—Original Cost
In service
Electric		9,414,744		9,222,261
Gas		824,427		786,188
Common		189,124		186,364
Total		10,428,295		10,194,813
Accumulated depreciation		4,259,877		4,040,247
Total		6,168,418		6,154,566
Construction work in progress		249,054		189,883
Total Utility Plant		6,417,472		6,344,449
Other Assets
Regulatory assets (Note 1(c))		1,055,012		970,767
Investments in unconsolidated subsidiaries (Note 10)		358,853		574,401
Energy risk management assets (Note 1(j))		26,624		73,662
Other		555,296		478,472
Total Other Assets		1,995,785		2,097,302
Total Assets	$	9,616,948	$	9,687,381

The accompanying notes as they relate to Cinergy Corp. are an
integral part of these consolidated financial statements.

60

CINERGY CORP.

CONSOLIDATED BALANCE SHEETS

	December 31
	1999			1998
	(dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	734,937		$	668,860
Accrued taxes		219,266			228,347
Accrued interest		49,354			51,679
Notes payable and other short-term obligations (Note 5)		550,194			903,700
Long-term debt due within one year (Note 4)		31,000			136,000
Energy risk management liabilities (Note 1(j))		126,682			398,538
Other		76,774			93,376
Total Current Liabilities		1,788,207			2,480,500
Non-Current Liabilities
Long-term debt (Notes 4 and 18)		2,989,242			2,604,467
Deferred income taxes (Note 11)		1,174,818			1,091,075
Unamortized investment tax credits		147,550			156,757
Accrued pension and other postretirement benefit costs (Note 9)		355,917			315,147
Energy risk management liabilities (Note 1(j))		132,041			107,194
Other		282,855			298,370
Total Non-Current Liabilities		5,082,423			4,573,010
Total Liabilities		6,870,630			7,053,510
Cumulative Preferred Stock of Subsidiaries (Note 3) Not subject to mandatory redemption		92,597			92,640
Common Stock Equity (Note 2)
Common Stock—$.01 par value; authorized shares—600,000,000; outstanding shares—158,923,399 in 1999 and 158,664,532 in 1998		1,589			1,587
Paid-in capital		1,597,554			1,595,237
Retained earnings		1,064,319			945,214
Accumulated other comprehensive income (loss)		(9,741	)		(807	)
Total Common Stock Equity		2,653,721			2,541,231
Commitments and Contingencies (Note 12)
Total Liabilities and Shareholders' Equity	$	9,616,948		$	9,687,381

The accompanying notes as they relate to Cinergy Corp. are an
integral part of these consolidated financial statements.

61

CINERGY CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY

	Common Stock			Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income/(Loss)			Total Common Stock Equity
	(dollars in thousands)
1997
Beginning balance	$	1,577		$	1,590,735		$	993,526		$	(1,384	)	$	2,584,454
Comprehensive income:
Net income								253,238						253,238
Other comprehensive income (loss), net of tax effect of $1,595
Foreign currency translation adjustment											(394	)		(394	)
Minimum pension liability adjustment											(1,083	)		(1,083	)
Total comprehensive income														251,761
Issuance of 65,529 shares of common stock—net					2,066									2,066
Treasury shares purchased		(11	)		(46,199	)								(46,210	)
Treasury shares reissued		11			21,975									21,986
Dividends on common stock (see page 73 for per share amounts)								(283,866	)					(283,866	)
Other					4,487			4,522						9,009
Ending balance	$	1,577		$	1,573,064		$	967,420		$	(2,861	)	$	2,539,200
1998
Comprehensive income:
Net income								260,968						260,968
Other comprehensive income (loss), net of tax effect of $(1,813)
Foreign currency translation adjustment											2,160			2,160
Minimum pension liability adjustment											(106	)		(106	)
Total comprehensive income														263,022
Issuance of 919,874 shares of common stock—net		10			30,225									30,235
Treasury shares purchased		(3	)		(8,205	)								(8,208	)
Treasury shares reissued		3			12,455									12,458
Dividends on common stock (see page 73 for per share amounts)								(284,703	)					(284,703	)
Other					(12,302	)		1,529						(10,773	)
Ending balance	$	1,587		$	1,595,237		$	945,214		$	(807	)	$	2,541,231
1999
Comprehensive income:
Net income								403,641						403,641
Other comprehensive income (loss), net of tax effect of $5,833
Foreign currency translation adjustment											(9,781	)		(9,781	)
Minimum pension liability adjustment											(1,239	)		(1,239	)
Unrealized gains on grantor and rabbi trusts											2,086			2,086
Total comprehensive income														394,707
Issuance of 258,867 shares of common stock—net		2			6,720									6,722
Treasury shares purchased					(233	)								(233	)
Treasury shares reissued					3,660									3,660
Dividends on common stock (see page 73 for per share amounts)								(284,545	)					(284,545	)
Other					(7,830	)		9						(7,821	)
Ending balance	$	1,589		$	1,597,554		$	1,064,319		$	(9,741	)	$	2,653,721

The accompanying notes as they relate to Cinergy Corp. are an
integral part of these consolidated financial statements.

62

CINERGY CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	1999			1998			1997
	(dollars in thousands)
Operating Activities
Net income	$	403,641		$	260,968		$	253,238
Items providing or (using) cash currently:
Depreciation and amortization		353,820			326,492			306,922
Wabash Valley Power Association, Inc. settlement		—			80,000			—
Deferred income taxes and investment tax credits—net		96,067			(107,835	)		67,638
Unrealized (gain) loss from energy risk management activities		(47,192	)		135,000			15,000
Equity in earnings of unconsolidated subsidiaries		(44,904	)		(45,374	)		(35,239	)
Gain on sale of investment in unconsolidated subsidiary		(99,272	)		—			—
Allowance for equity funds used during construction		(3,633	)		(1,668	)		(98	)
Regulatory assets—net		(203,224	)		46,856			33,605
Extraordinary item—equity share of windfall profits tax		—			—			109,400
Changes in current assets and current liabilities:
Restricted deposits		2,959			(1,268	)		(598	)
Accounts and notes receivable		(118,561	)		(45,811	)		(217,157	)
Materials, supplies, and fuel		(3,002	)		(33,484	)		21,817
Accounts payable		61,590			44,535			183,296
Accrued taxes and interest		(11,406	)		46,371			(21,414	)
Other items—net		(44,265	)		19,226			17,168
Net cash provided by operating activities		342,618			724,008			733,578
Financing Activities
Change in short-term debt		(353,506	)		(245,413	)		191,811
Issuance of long-term debt		829,948			785,554			100,062
Redemption of long-term debt		(553,191	)		(384,520	)		(336,312	)
Retirement of preferred stock of subsidiaries		(34	)		(85,299	)		(16,269	)
Issuance of common stock		6,722			3,724			2,066
Dividends on common stock		(285,925	)		(283,884	)		(283,866	)
Net cash used in financing activities		(355,986	)		(209,838	)		(342,508	)
Investing Activities
Construction expenditures (less allowance for equity funds used during construction)		(386,293	)		(368,609	)		(328,055	)
Acquisition of businesses (net of cash acquired)		(24,500	)		(63,412	)		—
Investments in unconsolidated subsidiaries		(284,343	)		(35,305	)		(29,032	)
Sale of investment in unconsolidated subsidiary		690,269			—			—
Net cash used in investing activities		(4,867	)		(467,326	)		(357,087	)
Net increase (decrease) in cash and cash equivalents		(18,235	)		46,844			33,983
Cash and cash equivalents at beginning of period		100,154			53,310			19,327
Cash and cash equivalents at end of period	$	81,919		$	100,154		$	53,310
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for:
Interest (net of amount capitalized)	$	232,019		$	236,982		$	241,349
Income taxes	$	130,179		$	179,677		$	140,655

The accompanying notes as they relate to Cinergy Corp. are an
integral part of these consolidated financial statements.

63

THE CINCINNATI GAS & ELECTRIC COMPANY
AND SUBSIDIARY COMPANIES

64

THE CINCINNATI GAS & ELECTRIC COMPANY

CONSOLIDATED STATEMENTS OF INCOME

	1999			1998			1997
	(dollars in thousands)
Operating Revenues
Electric	$	2,174,861		$	2,452,692		$	1,956,256
Gas		376,013			403,431			495,620
Total Operating Revenues		2,550,874			2,856,123			2,451,876
Operating Expenses
Fuel and purchased and exchanged power		1,066,490			1,407,136			896,025
Gas purchased		171,997			199,683			266,123
Operation and maintenance		416,257			392,841			398,336
Depreciation and amortization		204,468			191,109			180,191
Taxes other than income taxes		212,193			217,691			211,303
Total Operating Expenses		2,071,405			2,408,460			1,951,978
Operating Income		479,469			447,663			499,898
Miscellaneous—Net		(2,480	)		(1,291	)		(6,156	)
Interest		99,737			102,238			115,828
Income Before Taxes		377,252			344,134			377,914
Income Taxes (Note 11)		143,676			128,322			138,761
Net Income	$	233,576		$	215,812		$	239,153
Preferred Dividend Requirement		856			858			868
Net Income Applicable to Common Stock	$	232,720		$	214,954		$	238,285

The accompanying notes as they relate to The Cincinnati Gas & Electric Company
are an integral part of these consolidated financial statements.

65

THE CINCINNATI GAS & ELECTRIC COMPANY

CONSOLIDATED BALANCE SHEETS

	December 31
	1999		1998
	(dollars in thousands)
ASSETS
Current Assets
Cash and cash equivalents	$	9,554	$	26,989
Restricted deposits		132		1,172
Notes receivable from affiliated companies		—		84,358
Accounts receivable less accumulated provision for doubtful accounts of $16,740 at December 31, 1999, and $17,607 at December 31, 1998 (Note 6)		279,591		205,060
Accounts receivable from affiliated companies		12,718		22,636
Materials, supplies, and fuel—at average cost		98,999		115,294
Energy risk management assets (Note 1(j))		63,926		141,962
Prepayments and other		35,527		40,158
Total Current Assets		500,447		637,629
Utility Plant—Original Cost
In service
Electric		4,875,633		4,806,958
Gas		824,427		786,188
Common		189,124		186,364
Total		5,889,184		5,779,510
Accumulated depreciation		2,279,587		2,147,298
Total		3,609,597		3,632,212
Construction work in progress		153,229		119,993
Total Utility Plant		3,762,826		3,752,205
Other Assets
Regulatory assets (Note 1(c))		536,224		627,036
Energy risk management assets (Note 1(j))		7,368		36,831
Other		109,753		100,061
Total Other Assets		653,345		763,928
Total Assets	$	4,916,618	$	5,153,762

The accompanying notes as they relate to The Cincinnati Gas & Electric Company
are an integral part of these consolidated financial statements.

66

THE CINCINNATI GAS & ELECTRIC COMPANY

CONSOLIDATED BALANCE SHEETS

	December 31
	1999			1998
	(dollars in thousands)
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Accounts payable	$	253,115		$	282,743
Accounts payable to affiliated companies		65,256			13,166
Accrued taxes		136,118			151,455
Accrued interest		17,375			20,571
Notes payable and other short-term obligations (Note 5)		234,702			189,283
Notes payable to affiliated companies		60,360			17,020
Long-term debt due within one year (Note 4)		—			130,000
Energy risk management liabilities (Note 1(j))		60,478			199,269
Other		25,468			26,422
Total Current Liabilities		852,872			1,029,929
Non-Current Liabilities
Long-term debt (Note 4)		1,205,916			1,219,778
Deferred income taxes (Note 11)		720,168			771,145
Unamortized investment tax credits		104,655			110,801
Accrued pension and other postretirement benefit costs (Note 9)		154,718			146,361
Energy risk management liabilities (Note 1(j))		57,644			53,597
Other		140,794			134,991
Total Non-Current Liabilities		2,383,895			2,436,673
Total Liabilities		3,236,767			3,466,602
Cumulative Preferred Stock (Note 3)
Not subject to mandatory redemption		20,686			20,717
Common Stock Equity (Note 2)
Common Stock—$8.50 par value; authorized shares—120,000,000; outstanding shares—89,663,086 in 1999 and 1998		762,136			762,136
Paid-in capital		562,851			553,926
Retained earnings		335,144			351,505
Accumulated other comprehensive income (loss)		(966	)		(1,124	)
Total Common Stock Equity		1,659,165			1,666,443
Commitments and Contingencies (Note 12)
Total Liabilities and Shareholder's Equity	$	4,916,618		$	5,153,762

The accompanying notes as they relate to The Cincinnati Gas & Electric Company
are an integral part of these consolidated financial statements.

67

THE CINCINNATI GAS & ELECTRIC COMPANY

CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY

	Common Stock		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income/(Loss)			Total Common Stock Equity
	(dollars in thousands)
1997
Beginning balance	$	762,136	$	536,276		$	247,403		$			$	1,545,815
Comprehensive income:
Net income							239,153						239,153
Other comprehensive income (loss), net of tax effect of $404
Minimum pension liability adjustment										(750	)		(750	)
Total comprehensive income													238,403
Dividends on preferred stock							(871	)					(871	)
Dividends on common stock							(170,400	)					(170,400	)
Other				(1,627	)		(732	)					(2,359	)
Ending balance	$	762,136	$	534,649		$	314,553		$	(750	)	$	1,610,588
1998
Comprehensive income:
Net income							215,812						215,812
Other comprehensive income (loss), net of tax effect of $201
Minimum pension liability adjustment										(374	)		(374	)
Total comprehensive income													215,438
Dividends on preferred stock							(859	)					(859	)
Dividends on common stock							(178,000	)					(178,000	)
Contribution from parent company for reallocation of taxes				19,253									19,253
Other				24			(1	)					23
Ending balance	$	762,136	$	553,926		$	351,505		$	(1,124	)	$	1,666,443
1999
Comprehensive income:
Net income							233,576						233,576
Other comprehensive income (loss), net of tax effect of $(85)
Minimum pension liability adjustment										158			158
Total comprehensive income													233,734
Dividends on preferred stock							(856	)					(856	)
Dividends on common stock							(250,100	)					(250,100	)
Contribution from parent company for reallocation of taxes				8,920									8,920
Other				5			1,019						1,024
Ending balance	$	762,136	$	562,851		$	335,144		$	(966	)	$	1,659,165

The accompanying notes as they relate to The Cincinnati Gas & Electric Company
are an integral part of these consolidated financial statements.

68

THE CINCINNATI GAS & ELECTRIC COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

	1999			1998			1997
	(dollars in thousands)
Operating Activities
Net income	$	233,576		$	215,812		$	239,153
Items providing or (using) cash currently:
Depreciation and amortization		204,468			191,109			180,191
Deferred income taxes and investment tax credits—net		2,366			(27,045	)		16,443
Unrealized (gain) loss from energy risk management activities		(27,245	)		73,000			2,000
Allowance for equity funds used during construction		(2,565	)		(1,647	)		(98	)
Regulatory assets—net		14,325			4,606			6,472
Changes in current assets and current liabilities:
Accounts and notes receivable		17,676			(55,788	)		(105,829	)
Materials, supplies, and fuel		16,295			(7,327	)		6,872
Accounts payable		22,462			35,550			81,569
Accrued taxes and interest		(18,533	)		(2,533	)		(272	)
Other items—net		20,541			35,423			2,620
Net cash provided by operating activities		483,366			461,160			429,121
Financing Activities
Change in short-term debt		88,759			(94,950	)		86,662
Issuance of long-term debt		19,818			243,186			100,062
Redemption of long-term debt		(164,264	)		(220,409	)		(290,612	)
Retirement of preferred stock		(26	)		(52	)		(234	)
Dividends on preferred stock		(856	)		(859	)		(871	)
Dividends on common stock		(250,100	)		(178,000	)		(170,400	)
Net cash used in financing activities		(306,669	)		(251,084	)		(275,393	)
Investing Activities
Construction expenditures (less allowance for equity funds used during construction)		(194,132	)		(185,436	)		(156,499	)
Net cash used in investing activities		(194,132	)		(185,436	)		(156,499	)
Net increase (decrease) in cash and cash equivalents		(17,435	)		24,640			(2,771	)
Cash and cash equivalents at beginning of period		26,989			2,349			5,120
Cash and cash equivalents at end of period	$	9,554		$	26,989		$	2,349
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for:
Interest (net of amount capitalized)	$	101,264		$	107,419		$	120,434
Income taxes	$	159,241		$	125,704		$	106,154

The accompanying notes as they relate to The Cincinnati Gas & Electric Company
are an integral part of these consolidated financial statements.

69

THE CINCINNATI GAS & ELECTRIC COMPANY

CONSOLIDATED STATEMENTS OF CAPITALIZATION

	December 31
	1999			1998
	(dollars in thousands)
Long-term Debt (excludes current portion)
CG&E
First Mortgage Bonds:
71/4% Series due September 1, 2002	$	100,000		$	100,000
6.45% Series due February 15, 2004		110,000			110,000
7.20% Series due October 1, 2023		265,500			300,000
5.45% Series due January 1, 2024 (Pollution Control)		46,700			46,700
51/2% Series due January 1, 2024 (Pollution Control)		48,000			48,000
Total first mortgage bonds		570,200			604,700
Pollution Control Notes:
6.50% due November 15, 2022		12,721			12,721
Other Long-term Debt:
Liquid Asset Notes with Coupon Exchange
(LANCE) due October 1, 2007; (Redeemable at the option of CG&E)
(Variable interest rate set at 6.50% commencing October 1, 1999)
(Holders of not less than 662/3% in an aggregate principal amount of the LANCEs have the one-time right to convert from the 6.50% fixed rate to a London Interbank Offered Rate (LIBOR)-based floating rate at any interest rate payment date between October 1, 1999 and October 1, 2002)		100,000			100,000
6.40% Debentures due April 1, 2008		100,000			100,000
6.90% Debentures due June 1, 2025 (Redeemable at the option of the holders on June 1, 2005)		150,000			150,000
8.28% Junior Subordinated Debentures due July 1, 2025		100,000			100,000
6.35% Debentures due June 15, 2038 (Interest rate resets June 15, 2003)		100,000			100,000
Total other long-term debt		550,000			550,000
Unamortized Premium and Discount—Net		(2,762	)		(3,396	)
Total long-term debt		1,130,159			1,164,025
ULH&P
Other Long-term Debt:
6.11% Debentures due December 8, 2003		20,000			20,000
6.50% Debentures due April 30, 2008		20,000			20,000
7.65% Debentures due July 15, 2025		15,000			15,000
7.875% Senior Unsecured Debentures due September 15, 2009		20,000			—
Total other long-term debt		75,000			55,000
Unamortized Premium and Discount—Net		(443	)		(447	)
Total long-term debt		74,557			54,553
Lawrenceburg Gas Company
First Mortgage Bonds:
93/4% Series due October 1, 2001		1,200			1,200
Total CG&E Consolidated long-term debt	$	1,205,916		$	1,219,778

70

THE CINCINNATI GAS & ELECTRIC COMPANY

CONSOLIDATED STATEMENTS OF CAPITALIZATION (Continued)

Cumulative Preferred Stock
					December 31
Par/Stated Value	Authorized Shares	Shares Outstanding		Mandatory Redemption
			Series		1999			1998
					(dollars in thousands)
$100	6,000,000	206,859	4%-43/4%	No	$	20,686		$	20,717
Common Stock Equity
Common Stock—$8.50 par value; authorized shares—120,000,000; outstanding shares—89,663,086 in 1999 and 1998						762,136			762,136
Paid-in capital						562,851			553,926
Retained earnings						335,144			351,505
Accumulated other comprehensive income (loss)						(966	)		(1,124	)
Total common stock equity						1,659,165			1,666,443
Total Capitalization					$	2,885,767		$	2,906,938

The accompanying notes as they relate to The Cincinnati Gas & Electric Company
are an integral part of these consolidated financial statements.

71

PSI ENERGY, INC.
AND SUBSIDIARY COMPANY

72

PSI ENERGY, INC.

CONSOLIDATED STATEMENTS OF INCOME

	1999		1998		1997
	(dollars in thousands)
Operating Revenues
Electric	$	2,135,706	$	2,403,038	$	1,960,395
Operating Expenses
Fuel and purchased and exchanged power		1,213,653		1,547,511		1,059,173
Operation and maintenance		460,707		509,138		431,355
Depreciation and amortization		136,402		130,604		126,731
Taxes other than income taxes		52,920		54,541		53,721
Total Operating Expenses		1,863,682		2,241,794		1,670,980
Operating Income		272,024		161,244		289,415
Miscellaneous—Net		655		3,300		4,624
Interest		86,265		89,359		84,454
Income Before Taxes		186,414		75,185		209,585
Income Taxes (Note 11)		69,215		23,147		77,380
Net Income	$	117,199	$	52,038	$	132,205
Preferred Dividend Requirement		4,601		5,659		11,701
Net Income Applicable to Common Stock	$	112,598	$	46,379	$	120,504

The accompanying notes as they relate to PSI Energy, Inc.
are an integral part of these consolidated financial statements.

73

PSI ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

	December 31
	1999		1998
	(dollars in thousands)
ASSETS
Current Assets
Cash and cash equivalents	$	8,842	$	18,788
Restricted deposits		—		2,414
Notes receivable		481		73
Notes receivable from affiliated companies		60,360		17,024
Accounts receivable less accumulated provision for doubtful accounts of $9,934 at December 31, 1999, and $7,893 at December 31, 1998 (Note 6)		253,022		225,449
Accounts receivable from affiliated companies		42,715		384
Materials, supplies, and fuel—at average cost		103,490		80,445
Energy risk management assets (Note 1(j))		63,927		141,962
Prepayments and other		36,173		31,461
Total Current Assets		569,010		518,000
Utility Plant—Original Cost
In service
Electric		4,539,111		4,415,303
Accumulated depreciation		1,980,290		1,892,949
Total		2,558,821		2,522,354
Construction work in progress		95,825		69,891
Total Utility Plant		2,654,646		2,592,245
Other Assets
Regulatory assets (Note 1(c))		518,788		343,731
Energy risk management assets (Note 1(j))		7,368		36,831
Other		85,024		93,012
Total Other Assets		611,180		473,574
Total Assets	$	3,834,836	$	3,583,819

The accompanying notes as they relate to PSI Energy, Inc.
are an integral part of these consolidated financial statements.

74

PSI ENERGY, INC.
  
CONSOLIDATED BALANCE SHEETS

	December 31
	1999		1998
	(dollars in thousands)
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Accounts payable	$	241,072	$	217,959
Accounts payable to affiliated companies		6,762		30,145
Accrued taxes		93,056		58,901
Accrued interest		26,989		28,335
Notes payable and other short-term obligations (Note 5)		232,597		173,162
Notes payable to affiliated companies		6,707		102,946
Long-term debt due within one year (Note 4)		31,000		6,000
Energy risk management liabilities (Note 1(j))		60,478		199,269
Other		1,986		2,227
Total Current Liabilities		700,647		818,944
Non-Current Liabilities
Long-term debt (Notes 4 and 18)		1,211,552		1,025,659
Deferred income taxes (Note 11)		460,748		364,049
Unamortized investment tax credits		42,895		45,956
Accrued pension and other postretirement benefit costs (Note 9)		129,103		112,387
Energy risk management liabilities (Note 1(j))		57,645		53,597
Other		104,638		115,656
Total Non-Current Liabilities		2,006,581		1,717,304
Total Liabilities		2,707,228		2,536,248
Cumulative Preferred Stock (Note 3)
Not subject to mandatory redemption		71,911		71,923
Common Stock Equity (Note 2)
Common Stock—without par value; $.01 stated value; authorized shares—60,000,000; outstanding shares—53,913,701 in 1999 and 1998		539		539
Paid-in capital		411,198		410,739
Retained earnings		642,569		564,865
Accumulated other comprehensive income (loss)		1,391		(495	)
Total Common Stock Equity		1,055,697		975,648
Commitments and Contingencies (Note 12)
Total Liabilities and Shareholder's Equity	$	3,834,836	$	3,583,819

The accompanying notes as they relate to PSI Energy, Inc.
are an integral part of these consolidated financial statements.

75

PSI ENERGY, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY

	Common Stock		Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income/(Loss)			Total Common Stock Equity
	(dollars in thousands)
1997
Beginning balance	$	539	$	402,947		$	627,342		$	(1,253	)	$	1,029,575
Comprehensive income:
Net income							132,205						132,205
Other comprehensive income (loss), net of tax effect of $203
Minimum pension liability adjustment										(333	)		(333	)
Total comprehensive income													131,872
Dividends on preferred stock							(11,795	)					(11,795	)
Dividends on common stock							(113,600	)					(113,600	)
Other				(2,054	)		3,662						1,608
Ending balance	$	539	$	400,893		$	637,814		$	(1,586	)	$	1,037,660
1998
Comprehensive income:
Net income							52,038						52,038
Other comprehensive income (loss), net of tax effect of $(666)
Minimum pension liability adjustment										1,091			1,091
Total comprehensive income													53,129
Dividends on preferred stock							(6,187	)					(6,187	)
Dividends on common stock							(106,800	)					(106,800	)
Non-cash dividend on common stock							(11,999	)					(11,999	)
Contribution from parent company for reallocation of taxes				9,823									9,823
Other				23			(1	)					22
Ending balance	$	539	$	410,739		$	564,865		$	(495	)	$	975,648
1999
Comprehensive income:
Net income							117,199						117,199
Other comprehensive income (loss), net of tax effect of $100
Minimum pension liability adjustment										(163	)		(163	)
Unrealized gain on grantor trust										2,049			2,049
Total comprehensive income													119,085
Dividends on preferred stock							(4,601	)					(4,601	)
Dividends on common stock							(35,900	)					(35,900	)
Contribution from parent company for reallocation of taxes				457									457
Other				2			1,006						1,008
Ending balance	$	539	$	411,198		$	642,569		$	1,391		$	1,055,697

The accompanying notes as they relate to PSI Energy, Inc.
are an integral part of these consolidated financial statements.

76

PSI ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	1999			1998			1997
	(dollars in thousands)
Operating Activities
Net income	$	117,199		$	52,038		$	132,205
Items providing or (using) cash currently:
Depreciation and amortization		136,402			130,604			126,731
Wabash Valley Power Association, Inc. settlement		—			80,000			—
Deferred income taxes and investment tax credits-net		102,878			(57,130	)		35,661
Unrealized (gain) loss from energy risk management activities		(27,245	)		62,000			13,000
Allowance for equity funds used during construction		(1,068	)		(21	)		—
Regulatory assets-net		(217,549	)		42,250			27,134
Changes in current assets and current liabilities:
Restricted deposits		2,414			(1,268	)		(596	)
Accounts and notes receivable		(118,183	)		(16,850	)		(149,290	)
Materials, supplies, and fuel		(23,045	)		(25,256	)		14,944
Accounts payable		(270	)		(7,086	)		126,979
Accrued taxes and interest		32,809			(3,437	)		(6,578	)
Other items-net		42,491			1,044			1,630
Net cash provided by operating activities		46,833			256,888			321,820
Financing Activities
Change in short-term debt		(36,804	)		69,073			22,120
Issuance of long-term debt		589,225			200,228			—
Redemption of long-term debt		(379,484	)		(164,111	)		(45,700	)
Retirement of preferred stock		(8	)		(85,247	)		(16,035	)
Dividends on preferred stock		(4,601	)		(6,187	)		(11,795	)
Dividends on common stock		(35,900	)		(106,800	)		(113,600	)
Net cash provided by (used in) financing activities		132,428			(93,044	)		(165,010	)
Investing Activities
Construction expenditures (less allowance for equity funds used during construction)		(189,207	)		(163,225	)		(141,552	)
Net cash used in investing activities		(189,207	)		(163,225	)		(141,552	)
Net increase (decrease) in cash and cash equivalents		(9,946	)		619			15,258
Cash and cash equivalents at beginning of period		18,788			18,169			2,911
Cash and cash equivalents at end of period	$	8,842		$	18,788		$	18,169
Supplemental Disclosure of Cash Flow Information
Cash paid (received) during the year for:
Interest (net of amount capitalized)	$	86,256		$	80,712		$	83,726
Income taxes	$	(54,099	)	$	63,957		$	58,671

The accompanying notes as they relate to PSI Energy, Inc.
are an integral part of these consolidated financial statements.

77

PSI ENERGY, INC.

CONSOLIDATED STATEMENTS OF CAPITALIZATION

					December 31
					1999		1998
					(dollars in thousands)
Long-term Debt (excludes current portion)
First Mortgage Bonds:
Series TT, 73/8%, due March 15, 2012 (Pollution Control)					$	10,000	$	10,000
Series UU, 71/2%, due March 15, 2015 (Pollution Control)						14,250		14,250
Series YY, 5.60%, due February 15, 2023 (Pollution Control)						29,945		29,945
Series ZZ, 53/4%, due February 15, 2028 (Pollution Control)						50,000		50,000
Series AAA, 71/8%, due February 1, 2024						30,000		50,000
Series BBB, 8.0%, due July 15, 2009						124,665		—
Series CCC, 8.850%, due January 15, 2022						53,055		—
Series DDD, 8.310%, due September 1, 2032						38,000		—
Total first mortgage bonds						349,915		154,195
Secured Medium-term Notes:
Series A, 7.61% to 8.81%, due November 1, 2001 to June 1, 2022						75,800		284,000
Series B, 5.93% to 8.24%, due September 17, 2003 to August 22, 2022						126,000		195,000
(Series A and B, 7.019% weighted average interest rate and 14 year weighted average remaining life)
Total secured medium-term notes						201,800		479,000
Other Long-term Debt:
Series 1994A Promissory Note, non-interest bearing, due January 3, 2001						19,825		19,825
6.35% Debentures due November 15, 2006 (Redeemable in whole or in part at the option of the holders on November 15, 2000)						100,000		100,000
6.00% Debentures due December 14, 2016 (Redeemable in whole or in part at the option of the holders on December 14, 2001)						50,000		50,000
6.50% Synthetic Putable Yield Securities due August 1, 2026						50,000		50,000
7.25% Junior Maturing Principal Securities due March 15, 2028						2,658		100,000
6.00% Rural Utilities Service (RUS) Obligation payable in annual installments (Note 18)						84,798		85,620
6.52% Senior Notes due March 15, 2009						97,342		—
7.85% Debentures due October 15, 2007						265,000		—
Total other long-term debt						669,623		405,445
Unamortized Premium and Discount—Net						(9,786)		(12,981)
Total long-term debt						1,211,552		1,025,659
Cumulative Preferred Stock
Par/Stated Value	Authorized Shares	Shares Outstanding	Series	Mandatory Redemption
$100	5,000,000	639,626	31/2%-67/8%	No		63,963		63,975
$ 25	5,000,000	317,924	4.16%-4.32%	No		7,948		7,948
Total preferred stock						71,911		71,923
Common Stock Equity
Common Stock—without par value; $0.01 stated value; authorized shares—60,000,000; outstanding shares—53,913,701 in 1999 and 1998						539		539
Paid-in capital						411,198		410,739
Retained earnings						642,569		564,865
Accumulated other comprehensive income (loss)						1,391		(495)
Total common stock equity						1,055,697		975,648
Total Capitalization					$	2,339,160	$	2,073,230

The accompanying notes as they relate to PSI Energy, Inc.
are an integral part of these consolidated financial statements.

78

THE UNION LIGHT, HEAT AND POWER COMPANY

79

THE UNION LIGHT, HEAT AND POWER COMPANY

STATEMENTS OF INCOME

	1999			1998			1997
	(dollars in thousands)
Operating Revenues
Electric	$	210,234		$	191,359		$	192,774
Gas		70,728			65,454			78,848
Total Operating Revenues		280,962			256,813			271,622
Operating Expenses
Electricity purchased from parent company for resale		158,556			142,567			145,906
Gas purchased		34,690			32,804			44,354
Operation and maintenance		38,611			37,131			36,917
Depreciation		14,830			13,148			12,369
Taxes other than income taxes		4,136			3,993			4,055
Total Operating Expenses		250,823			229,643			243,601
Operating Income		30,139			27,170			28,021
Miscellaneous—Net		(1,567	)		(1,242	)		(1,850	)
Interest		6,114			4,604			4,768
Income Before Taxes		22,458			21,324			21,403
Income Taxes (Note 11)		10,184			7,774			8,486
Net Income	$	12,274		$	13,550		$	12,917

The accompanying notes as they relate to The Union Light, Heat and Power Company
are an integral part of these financial statements.

80

THE UNION LIGHT, HEAT AND POWER COMPANY

BALANCE SHEETS

	December 31
	1999		1998
	(dollars in thousands)
ASSETS
Current Assets
Cash and cash equivalents	$	3,641	$	3,244
Accounts receivable less accumulated provision for doubtful accounts of $1,513 at December 31, 1999, and $1,248 at December 31, 1998 (Note 6)		17,786		14,125
Accounts receivable from affiliated companies		775		666
Materials, supplies, and fuel—at average cost		7,654		8,269
Prepayments and other		219		308
Total Current Assets		30,075		26,612
Utility Plant—Original Cost
In service
Electric		222,035		232,222
Gas		173,011		164,040
Common		42,351		18,908
Total		437,397		415,170
Accumulated depreciation		154,607		143,386
Total		282,790		271,784
Construction work in progress		13,761		11,444
Total Utility Plant		296,551		283,228
Other Assets
Regulatory assets (Note 1(c))		10,639		10,978
Other		5,000		3,767
Total Other Assets		15,639		14,745
Total Assets	$	342,265	$	324,585

The accompanying notes as they relate to The Union Light, Heat and Power Company
are an integral part of these financial statements.

81

THE UNION LIGHT, HEAT AND POWER COMPANY

BALANCE SHEETS

	December 31
	1999		1998
	(dollars in thousands)
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Accounts payable	$	8,487	$	5,903
Accounts payable to affiliated companies		20,122		14,986
Accrued taxes		739		3,216
Accrued interest		1,298		1,959
Notes payable to affiliated companies		37,752		31,817
Long-term debt due within one year (Note 4)		—		20,000
Other		4,062		4,247
Total Current Liabilities		72,460		82,128
Non-Current Liabilities
Long-term debt (Note 4)		74,557		54,553
Deferred income taxes (Note 11)		23,000		26,134
Unamortized investment tax credits		3,961		4,238
Accrued pension and other postretirement benefit costs (Note 9)		12,333		11,678
Amounts due to customers—income taxes		11,308		8,959
Other		12,596		8,077
Total Non-Current Liabilities		137,755		113,639
Total Liabilities		210,215		195,767
Common Stock Equity (Note 2)
Common Stock—$15.00 par value; authorized shares—1,000,000; outstanding shares—585,333 in 1999 and 1998		8,780		8,780
Paid-in capital		20,142		19,525
Retained earnings		103,128		100,513
Total Common Stock Equity		132,050		128,818
Commitments and Contingencies (Note 12)
Total Liabilities and Shareholder's Equity	$	342,265	$	324,585

The accompanying notes as they relate to The Union Light, Heat and Power Company
are an integral part of these financial statements.

82

THE UNION LIGHT, HEAT AND POWER COMPANY

STATEMENTS OF CHANGES IN COMMON STOCK EQUITY

	Common Stock		Paid-in Capital			Retained Earnings			Total Common Stock Equity
	(dollars in thousands)
1997
Beginning balance	$	8,780	$	18,839		$	92,484		$	120,103
Net income							12,917			12,917
Dividends on common stock							(9,951	)		(9,951	)
Other				(156	)					(156	)
Ending balance	$	8,780	$	18,683		$	95,450		$	122,913
1998
Net income							13,550			13,550
Dividends on common stock							(8,487	)		(8,487	)
Contribution from parent for reallocation of taxes				843						843
Other				(1	)					(1	)
Ending balance	$	8,780	$	19,525		$	100,513		$	128,818
1999
Net income							12,274			12,274
Dividends on common stock							(9,659	)		(9,659	)
Contribution from parent for reallocation of taxes				617						617
Ending balance	$	8,780	$	20,142		$	103,128		$	132,050

The accompanying notes as they relate to The Union Light, Heat and Power Company
are an integral part of these financial statements.

83

THE UNION LIGHT, HEAT AND POWER COMPANY

STATEMENTS OF CASH FLOWS

	1999			1998			1997
	(dollars in thousands)
Operating Activities
Net income	$	12,274		$	13,550		$	12,917
Items providing or (using) cash currently:
Depreciation		14,830			13,148			12,369
Deferred income taxes and investment tax credits—net		(738	)		(261	)		(6,124	)
Allowance for equity funds used during construction		(36	)		(142	)		(97	)
Regulatory assets—net		138			3			100
Changes in current assets and current liabilities:
Accounts receivable		(5,099	)		(4,820	)		4,507
Materials, supplies, and fuel		615			(2,175	)		973
Accounts payable		7,720			(9,920	)		2,020
Accrued taxes and interest		(3,138	)		(2,443	)		7,920
Other items—net		5,971			3,228			5,343
Net cash provided by operating activities		32,537			10,168			39,928
Financing Activities
Change in short-term debt		5,935			8,330			(7,162	)
Issuance of long-term debt		19,818			40,066			—
Redemption of long-term debt		(20,000	)		(10,118	)		—
Dividends of common stock		(9,659	)		(8,487	)		(9,951	)
Net cash provided by (used in) financing activities		(3,906	)		29,791			(17,113	)
Investing Activities
Construction expenditures (less allowance for equity funds used during construction)		(28,234	)		(37,261	)		(23,466	)
Net cash used in investing activities		(28,234	)		(37,261	)		(23,466	)
Net increase (decrease) in cash and cash equivalents		397			2,698			(651	)
Cash and cash equivalents at beginning of period		3,244			546			1,197
Cash and cash equivalents at end of period	$	3,641		$	3,244		$	546
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for:
Interest (net of amount capitalized)	$	6,691		$	4,257		$	4,641
Income taxes	$	12,794		$	11,305		$	2,859

The accompanying notes as they relate to The Union Light, Heat and Power Company
are an integral part of these financial statements.

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THE UNION LIGHT, HEAT AND POWER COMPANY

STATEMENTS OF CAPITALIZATION

	December 31
	1999			1998
	(dollars in thousands)
Long-term Debt (excludes current portion)
Other Long-term Debt:
6.11% Debentures due December 8, 2003	$	20,000		$	20,000
6.50% Debentures due April 30, 2008		20,000			20,000
7.65% Debentures due July 15, 2025		15,000			15,000
7.875% Debentures due September 15, 2009		20,000			—
Total other long-term debt		75,000			55,000
Unamortized Premium and Discount—Net		(443	)		(447	)
Total long-term debt		74,557			54,553
Common Stock Equity
Common Stock—$15.00 par value; authorized shares—1,000,000; outstanding shares—585,333 in 1999 and 1998		8,780			8,780
Paid-in capital		20,142			19,525
Retained earnings		103,128			100,513
Total common stock equity		132,050			128,818
Total Capitalization	$	206,607		$	183,371

The accompanying notes as they relate to The Union Light, Heat and Power Company
are an integral part of these financial statements.

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NOTES TO FINANCIAL STATEMENTS

    In 1996, the Securities and Exchange Commission (SEC) wrote guidelines to help make shareholder communications more understandable. These guidelines were termed "plain English". This year, we have written our annual report in accordance with these guidelines. Our objective is to present a more user-friendly, understandable, and logically-flowing document for our readers.

    In connection with this change, we (which includes Cinergy Corp. and all of our regulated and non-regulated subsidiaries, also Cinergy) are, at times, referred to in the first person ("we", "our", or "us").

1. Summary of Significant Accounting Policies

    (a) Nature of Operations Cinergy Corp., a Delaware corporation created in October 1994, owns all outstanding common stock of The Cincinnati Gas & Electric Company (CG&E) and PSI Energy, Inc. (PSI), both of which are public utility subsidiaries. As a result of this ownership, we are considered a utility holding company. Because we are a holding company whose utility subsidiaries operate in multiple states, we are registered with and are subject to regulation by the SEC under the Public Utility Holding Company Act of 1935, as amended (PUHCA). Our other direct subsidiaries are:

•

Cinergy Services, Inc. (Services);



•

Cinergy Investments, Inc. (Investments); and



•

Cinergy Global Resources, Inc. (Global Resources).

CG&E, an Ohio corporation, is a combination electric and gas public utility company that provides service in the southwestern portion of Ohio and, through its subsidiaries, in nearby areas of Kentucky and Indiana. It has five wholly-owned utility subsidiaries and one wholly-owned non-utility subsidiary. CG&E's principal utility subsidiary, The Union Light, Heat and Power Company (ULH&P), is a Kentucky corporation that provides electric and gas service in northern Kentucky. CG&E's other subsidiaries are insignificant to its results of operations.

PSI, an Indiana corporation, is an electric utility that provides service in north central, central, and southern Indiana.

    The following table presents further information related to the operations of our domestic utility companies (our operating companies):

	Principal Line(s) of Business
CG&E	•  Generation, transmission, distribution, and sale of electricity
	•  Sale and/or transportation of natural gas
PSI	•  Generation, transmission, distribution, and sale of electricity
ULH&P	•  Transmission, distribution, and sale of electricity
	•  Sale and transportation of natural gas

    Services is a service company that provides our regulated and non-regulated subsidiaries with a variety of centralized administrative, management, and support services. Investments holds most of our domestic non-regulated businesses and investments. Global Resources primarily holds our international businesses and investments.

    The majority of our operating revenues are derived from the sale of electricity and the sale and/or transportation of natural gas.

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    We conduct operations through our subsidiaries, and we manage through the following four business units:

•

Energy Commodities Business Unit (Commodities);



•

Energy Delivery Business Unit (Delivery);



•

Cinergy Investments Business Unit (Cinergy Investments); and



•

International Business Unit (International).

See Note 15 on page 137 for financial information by business unit.

    (b) Presentation  We use two different methods to report investments in subsidiaries or other companies: the consolidation method or the equity method. Additionally, we use estimates and have reclassified certain amounts in the preparation of the financial statements.

    Consolidation Method  We use consolidation when we own a majority of the voting stock of or have the ability to control the subsidiary. We eliminate all significant intercompany transactions when we consolidate these accounts. Our consolidated financial statements include the accounts of Cinergy, CG &E, and PSI, and their wholly-owned subsidiaries.

    Equity Method  We use the equity method to report investments, joint ventures, partnerships, subsidiaries and affiliated companies in which we do not have control, but have the ability to exercise influence over operating and financial policies (generally, 20% to 50% ownership). Under the equity method, we report:

•

our investment in the entity as Investments in unconsolidated subsidiaries in our Consolidated Balance Sheets, on page 74; and



•

our percentage share of the earnings from the entity as Equity in earnings of unconsolidated subsidiaries in our Consolidated Statements of Income, on page 73.

    Use of Estimates  Management makes estimates and assumptions when preparing financial statements under generally accepted accounting principles. Actual results could differ, as these estimates and assumptions involve judgment. These estimates and assumptions affect various matters, including:

•

the reported amounts of assets and liabilities in our Balance Sheets at the dates of the financial statements;



•

the disclosure of contingent assets and liabilities at the dates of the financial statements; and



•

the reported amounts of revenues and expenses in our Statements of Income during the reporting periods.

    Reclassifications  We have reclassified certain prior-year amounts in the financial statements of Cinergy, CG&E, PSI, and ULH&P for comparative purposes.

    (c) Regulation  Our operating companies and certain of our non-utility subsidiaries must comply with the rules prescribed by the SEC under the PUHCA. Our operating companies must also comply with the rules prescribed by the Federal Energy Regulatory Commission (FERC) and the state utility commissions of Ohio, Indiana, and Kentucky.

    Our operating companies use the same accounting policies and practices for financial reporting purposes as non-regulated companies under generally accepted accounting principles. However,

87

sometimes actions by the FERC and the state utility commissions result in accounting treatment different from that used by non-regulated companies. When this occurs, we apply the provisions of Statement of Financial Accounting Standards No. 71, Accounting for the Effects of Certain Types of Regulation  (Statement 71).

    In accordance with Statement 71, we record regulatory assets and liabilities (that is, expenses deferred for future recovery from customers or obligations to be refunded to customers) on our Balance Sheets.

    Our regulatory assets and amounts authorized for recovery through regulatory orders at December 31, 1999, and 1998, are as follows:

	1999						1998
	CG&E(1)		PSI		Cinergy		CG&E(1)		PSI		Cinergy
	(in millions)
Amounts due from customers—income taxes(2)	$	276	$	18	$	294	$	331	$	26	$	357
Dynegy gas services agreement buyout costs(3)		—		250		250		—		—		—
Post-in-service carrying costs and deferred operating expenses		121		42		163		128		43		171
Coal contract buyout cost(4)		—		77		77		—		99		99
Deferred demand-side management (DSM)		38		11		49		40		43		83
Phase-in deferred return and depreciation(5)		54		—		54		75		—		75
Deferred merger costs		15		65		80		16		69		85
Unamortized costs of reacquiring debt		31		30		61		34		29		63
Coal gasification services expenses		—		16		16		—		19		19
Other		1		10		11		3		16		19
Total regulatory assets	$	536	$	519	$	1,055	$	627	$	344	$	971
Authorized for recovery(6)	$	467	$	489	$	956	$	553	$	334	$	887

(1)

Includes $11 million at December 31, 1999, and $11 million at December 31, 1998, related to ULH&P (for deferred merger costs, unamortized costs of reacquiring debt and other regulatory assets). Of these amounts, $4 million at December 31, 1999, and $4 million at December 31, 1998, have been authorized for recovery.

(2)

The various regulatory commissions overseeing the regulated business operations of our operating companies regulate income tax provisions reflected in customer rates. In accordance with the provisions of Statement 71, we have recorded net regulatory assets for CG&E and PSI and a regulatory liability for ULH&P.

(3)

PSI reached an agreement with Dynegy, Inc. (Dynegy) to purchase the remainder of its 25-year contract for coal gasification services. In accordance with an order from the Indiana Utility Regulatory Commission (IURC), PSI will begin recovering this asset over an 18-year period upon termination of the gas services agreement in 2000.

(4)

In August 1996, PSI entered into a coal supply agreement, which expires December 31, 2000. The agreement provides for a buyout charge, which is being recovered through the fuel adjustment clauses through December 2002.

(5)

In accordance with an order from the Public Utilities Commission of Ohio (PUCO), CG&E is recovering this asset over a seven-year period, which began in May 1995.

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(6)

At December 31, 1999, these amounts are being recovered through rates charged to customers over a period ranging from 1 to 28 years for CG&E, 1 to 32 years for PSI, and 3 to 21 years for ULH&P.

    Based on regulatory authority and the regulatory environment in which we currently operate, we believe that we continue to meet the requirements of Statement 71.

    Comprehensive electric deregulation legislation was passed in Ohio on July 6, 1999. As required by the legislation, CG&E filed its Proposed Transition Plan (Transition Plan) for approval by the PUCO on December 28, 1999. While CG&E believes there is sound basis for the various requests made in its Proposed Transition Plan, it is currently unable to predict the extent to which the Proposed Transition Plan will be approved and its resulting effect on results of operations, cash flows, and financial position. CG&E is seeking to recover all generation-related regulatory assets and above-market generation costs as allowable transition costs. CG&E believes its current accounting for regulatory assets discussed above has been consistent with the regulatory orders issued by the PUCO and that such costs should be recovered in future rates. However, to the extent requested recovery of generation-related regulatory assets is disallowed or generating assets are financially impaired, CG&E will be required to recognize a loss under generally accepted accounting principles. With regard to these assets, CG&E will continue to apply Statement 71 until the effect of deregulation is estimable.

    (d) Statements of Cash Flows  We define Cash equivalents as investments with maturities of three months or less when acquired. See Note 18 for information concerning non-cash financing transactions.

    (e) Operating Revenues and Fuel Costs  Our operating companies record Operating revenues for electric and gas service, including unbilled revenues and the associated expenses, when they provide the service to the customers. The associated expenses include:

•

the fuel used to generate electricity;



•

electricity purchased from others; and



•

natural gas purchased from others.

    These expenses are shown in our Statements of Income as Fuel and purchased and exchanged power and Gas purchased. Any portion of these costs that are recoverable or refundable to customers in future periods is deferred in either Accounts receivable or Accounts payable in our Balance Sheets.

    Indiana law limits the amount of fuel costs that PSI can recover to an amount that will not result in earning a return in excess of that allowed by the IURC.

    (f)  Utility Plant  Utility plant includes the utility business property and equipment that is in use, being held for future use, or under construction. We report our utility plant at its original cost, which includes:

•

material;



•

salaries;



•

payroll taxes;



•

fringe benefits;



•

an allowance for funds used during construction (described in (h) below); and



•

other miscellaneous amounts.

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    Most of our operating companies' utility property serves as collateral under each company's first mortgage bond indenture.

    (g) Depreciation and Maintenance  We determine the provisions for depreciation expense using the straight-line method. The depreciation rates are based on periodic studies of the estimated useful lives (the number of years we expect to be able to use the properties) and the cost to remove the properties. The average depreciation rates for utility plant, excluding software, are discussed in the table below.

	1999		1998		1997
CG&E and its subsidiaries
Electric	2.9	%	2.9	%	2.9	%
Gas	2.9		2.9		2.9
Common	2.7		2.6		3.0
ULH&P
Electric	3.3		3.4		3.3
Gas	3.1		3.1		3.1
Common	5.2		5.0		5.0
PSI	3.0		3.0		3.0

    (h) Allowance for Funds Used During Construction  Our operating companies finance construction projects with borrowed funds and equity funds. Regulatory authorities allow us to record the costs of these funds as part of the cost of construction projects. The Allowance for Funds Used During Construction (AFUDC) is calculated using a methodology authorized by the regulatory authorities. AFUDC rates are compounded semi-annually and are as follows:

	1999		1998		1997
Cinergy average	7.3	%	6.6	%	6.3	%
CG&E and its subsidiaries average	8.0		7.1		6.4
ULH&P average	5.3		6.1		6.9
PSI average	6.5		5.6		5.9

    The borrowed funds component of AFUDC, which is recorded on a pre-tax basis, is as follows:

	1999		1998		1997
	(in millions)
Cinergy	$	5.6	$	7.5	$	5.4
CG&E and its subsidiaries		3.4		5.5		4.6
ULH&P		0.2		0.6		0.2
PSI		2.2		2.0		0.8

    (i)  Federal and State Income Taxes  Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, requires us to report revenues and expenses differently for financial reporting than for income tax return purposes. The tax effects of these differences are reported as deferred income tax assets or liabilities in our Balance Sheets and are based on current income tax rates in effect.

    Investment tax credits, which have been used to reduce our federal income taxes payable, have been deferred for financial reporting purposes. These deferred investment tax credits are being amortized over the useful lives of the property to which they are related.

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    (j)  Energy Marketing and Trading  We market and trade electricity, natural gas, and other energy-related products. We designate transactions as physical or trading at the time they are originated. Physical refers to our intent and projected ability to fulfill obligations from company-owned assets. We sell generation to third parties when it is not required to meet native load requirements (end-use customers within our operating companies' franchise service territory). We account for physical transactions on a settlement basis and trading transactions using the mark-to-market method of accounting. Under the mark-to-market method of accounting, trading transactions are shown at fair value in our Consolidated Balance Sheets as Energy risk management assets—and Energy risk management liabilities—current and long-term. We reflect changes in fair value resulting in unrealized gains and losses in Fuel and purchased and exchanged power and Gas purchased. We record the revenues and costs for all transactions in our Consolidated Statements of Income when the contracts are settled. We recognize revenues in Operating revenues; costs are recorded in Fuel and purchased and exchanged power and Gas purchased. Prior to December 31, 1998, we accounted for and valued trading transactions at the aggregate of lower of cost or market. Under this method, only the net value of the trading portfolio is recorded as a liability in our Consolidated Balance Sheets.

    Although we intend to settle physical contracts with company-owned generation, there are times when we have to settle these contracts with power purchased on the open trading markets. The cost of these purchases could be in excess of the associated revenues. We recognize the gains or losses on these transactions as the power is delivered. Open market purchases may occur for the following reasons:

•

generating station outages;



•

least-cost alternative;



•

native load requirements; and



•

extreme weather.

    We value contracts in the trading portfolio using end of the period market prices, utilizing the following factors (as applicable):

•

closing exchange prices (that is, closing prices for standardized electricity products traded on an organized exchange such as the New York Mercantile Exchange);



•

broker dealer and over-the-counter price quotations; and



•

model pricing (which considers time value and historical volatility factors of electricity pricing underlying any options and contractual commitments).

    We anticipate that some of these obligations, even though considered trading contracts, will ultimately be settled using company-owned generation. The cost of this generation is usually below the market price at which the trading portfolio has been valued.

    We expect earnings volatility from period to period due to the risks associated with marketing and trading electricity, natural gas, and other energy-related products.

    Commodities, through Cinergy Marketing & Trading, LLC (Marketing & Trading), and International, through Cinergy Global Trading Limited, market and trade natural gas and other energy-related products. For physical gas sales, transactions are recorded when the contracts are settled, due to the exchange of title to the natural gas throughout the earnings process. Energy risk management assets and liabilities, as well as gross margins from trading activities are recorded in our consolidated financial statements.

91

    (k) Financial Derivatives  We use derivative financial instruments to manage: (1) funding costs; (2) exposures to fluctuations in interest rates; and (3) exposures to foreign currency exchange rates. These financial instruments must be designated as a hedge (for example, an offset of foreign exchange or interest rate risks) at the inception of the contract and must be effective at reducing the risk associated with the underlying instrument. An underlying instrument is one that gives rise to the derivative financial instrument. Accordingly, changes in the market values of instruments designated as hedges must be highly correlated with changes in the market values of the underlying instrument.

    From time to time, we may utilize foreign exchange forward contracts (for example, a contract obligating one party to buy, and the other to sell, a specified quantity of a foreign currency for a fixed price at a future date) and currency swaps (for example, a contract whereby two parties exchange principal and interest cash flows denominated in different currencies) to hedge certain of our net investments in foreign operations. Accordingly, any translation gains and losses are recorded in Accumulated other comprehensive income (loss), which is a component of Common stock equity. Aggregate translation losses related to these instruments are reflected net in Current liabilities in our Consolidated Balance Sheets. At December 31, 1999, no such instruments were held.

    We also use interest rate swaps (an agreement by two parties to exchange fixed-interest rate cash flows for floating-interest rate cash flows). We use the accrual method to account for these interest rate swaps. Accordingly, gains and losses are calculated based on the difference between the fixed-rate and the floating-rate interest amounts, using agreed upon principal amounts. These gains and losses are recognized in our Consolidated Statements of Income as a component of Interest over the life of the agreement.

    (l)  Accounting Changes  During the second quarter of 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities
(Statement 133). This standard requires companies to record derivative instruments as assets or liabilities, measured at fair value. Changes in the derivative's fair value must be recognized currently in earnings unless specific hedge accounting criteria are met. Hedges are transactions entered into for the purpose of reducing exposure to one or more types of business risk. Gains and losses on derivatives that qualify as hedges can offset related results on the hedged item in the income statement.

    This standard, as subsequently amended by Statement of Financial Accounting Standards No. 137, Accounting for Derivative Instruments and Hedging Activities—Deferral of the Effective Date of FASB Statement No. 133 (Statement 137), is effective for fiscal years beginning after June 15, 2000. The purpose of Statement 137 was to delay the effective date of Statement 133 by one year. We expect to reflect the adoption of this standard in financial statements issued beginning in the first quarter of 2001. In recognition of the complexity of this new standard, the Derivatives Implementation Group has been formed by the FASB. In preparation for our implementation of this new standard, we have formed a cross-functional project team. The project team is identifying and analyzing all contracts which could be subject to the new standard, developing required documentation, defining relevant processes and information systems needs, and promoting internal awareness of the requirements and potential effects of the new standard. While we continue to analyze and follow the development of implementation guidelines, at this time we are unable to predict whether the implementation of this accounting standard will be material to our results of operations and financial position. However, the adoption of Statement 133 could increase volatility in earnings and other comprehensive income.

    (m) Translation of Foreign Currency  We translate the assets and liabilities of foreign subsidiaries, whose functional currency (generally that is the local currency of the country in which the subsidiary is located) is not the United States (U.S.) dollar, using the appropriate exchange rate as of the end of the

92

year. We translate income and expense items using the average exchange rate prevailing during the month the respective transaction occurs. We record translation gains and losses in Accumulated other comprehensive income (loss),  which is a component of Common stock equity.

    (n) Related Party Transactions  Services provides our regulated and non-regulated subsidiaries with a variety of centralized administrative, management, and support services in accordance with agreements approved by the SEC under the PUHCA. The cost of these services are charged to our operating companies on a direct basis, or for general costs which cannot be directly attributed, based on predetermined allocation factors, including the following:

•

sales ratio;



•

electric peak load ratio;



•

number of employees ratio;



•

number of customers ratio;



•

construction expenditures ratio; and



•

other statistical information ratios.

    These costs were as follows for the years ended December 31:

	1999		1998		1997
	(in millions)
CG&E and its subsidiaries	$	208	$	207	$	254
PSI		168		183		218
ULH&P		23		24		26

    At December 31, 1999, and 1998, the Balance Sheets of our operating companies included the following amounts payable to Services:

	1999		1998
	(in millions)
CG&E and its subsidiaries	$	23	$	11
PSI		7		9
ULH&P		2		3

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2. Common Stock

    (a) Changes In Common Stock Outstanding  The following table reflects selected information related to our shares of common stock reserved for stock-based plans.

		Shares Issued
	Shares Reserved at Dec. 31, 1999
		1999	1998	1997
Cinergy Corp. 1996 Long-term Incentive Compensation Plan (LTIP)	6,956,386	—	—	43,614
Cinergy Corp. Stock Option Plan	4,110,358	255,828	192,591	22,219
Cinergy Corp. Employee Stock Purchase and Savings Plan	1,931,112	266	1,006	—
Cinergy Corp. UK Sharesave Scheme	75,000	—	—	—
Cinergy Corp. Retirement Plan for Directors	175,000	—	—	—
Cinergy Corp. Directors' Equity Compensation Plan	75,000	—	—	—
Cinergy Corp. Directors' Deferred Compensation Plan	200,000	—	—	—
Cinergy Corp. 401k Plans	6,469,373	—	—	—
Cinergy Corp. Dividend Reinvestment and Stock Purchase Plan	1,798,486	—	—	—
Cinergy Corp. Performance Shares Plan (PSP)	736,751	34,550	—	—

    We retired 31,777 shares of common stock in 1999; 44,981 shares in 1998; and 304 shares in 1997, mainly representing shares tendered as payment for the exercise of previously granted stock options.

Cinergy Corp. owns all of the common stock of CG&E and PSI. All of ULH&P's common stock is held by CG&E.

    (b) Dividend Restrictions  Cinergy Corp.'s ability to pay dividends to common stock shareholders is principally dependent on the ability of CG&E and PSI to pay Cinergy Corp. common dividends. CG&E and PSI cannot purchase or otherwise acquire for value or pay dividends on their common stock if preferred stock dividends are in arrears. The amount of common stock dividends that each company can pay also is limited by certain capitalization and earnings requirements under CG&E'sand PSI's credit instruments. Currently, these requirements do not impact the ability of either company to pay dividends on its common stock.

    (c) Stock-based Compensation Plans  We currently have the following seven stock-based compensation plans:

•

LTIP;



•

Stock Option Plan;



•

Employee Stock Purchase and Savings Plan;



•

Sharesave Scheme;



•

Retirement Plan for Directors;



•

Directors' Equity Compensation Plan; and



•

Directors' Deferred Compensation Plan.

    In the sections below, we will further discuss the LTIP, the Stock Option plan, and the Employee Stock Purchase and Savings Plan. The activity in 1999 for the remaining stock-based compensation plans was not significant.

94

    We account for our stock-based compensation plans under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25). Under APB 25, stock option-type awards are recorded at intrinsic value. In 1999, we recognized a $7 million reduction in compensation cost, before income taxes, in the Consolidated Statements of Income related to our stock-based compensation plans. This reduction was a result of our revised estimates for the performance-based shares accrued under the LTIP plan for cycle I. For further discussion see section (i) below. For 1998, and 1997, we recognized compensation cost related to stock-based compensation plans, before income taxes, of $1 million and $6 million, respectively, in the Consolidated Statements of Income.

    Net income for 1999, 1998 and 1997, assuming compensation cost for these plans had been determined at fair value, consistent with the provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (Statement 123), would have been unchanged for 1999, reduced by $3 million for 1998, and reduced by $2 million for 1997. Earnings per share (EPS) would have been reduced by $.02 basic and $.03 diluted for 1998, and $.02 basic and $.01 diluted for 1997.

    In estimating the pro forma amounts, the fair value method of accounting was not applied to options granted prior to January 1, 1995. This is in accordance with the provisions of Statement 123. As a result, the pro forma effect on net income and EPS may not be representative of future years. In addition, the pro forma amounts reflect certain assumptions used in estimating fair values. These fair value assumptions are described under each applicable plan discussion below.

     (i) LTIP  The LTIP was originally adopted in 1996. Under this plan, certain key employees may be granted stock options and the opportunity to earn performance-based shares. For each performance cycle, stock options are granted to participants at fair market value on the date of grant. The number of shares of common stock to be awarded under the LTIP is limited to a total of 7,000,000 shares.

    LTIP stock option activity for 1999, 1998, and 1997 is summarized as follows:

	Shares Subject to Option		Weighted Average Exercise Price
Balance at December 31, 1996	—			—
Options granted	369,600		$	33.60
Balance at December 31, 1997	369,600			33.60
Options granted	471,400			38.19
Options forfeited	(68,000	)		36.06
Balance at December 31, 1998	773,000			36.19
Options granted	2,663,600			25.48
Options forfeited	(59,500	)		35.65
Balance at December 31, 1999	3,377,100		$	27.75
Options Exercisable:
At December 31, 1998	11,600		$	36.05
At December 31, 1999	88,600		$	35.78

    The weighted average fair value of options granted was $2.57 in 1999, $4.68 in 1998, and $3.54 in 1997. The fair values of options granted were estimated as of the date of grant using a Black-Scholes

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option-pricing model. The weighted averages for the assumptions used in determining the fair values of options granted were as follows:

	1999		1998		1997
Risk-free interest rate	6.1	%	5.6	%	6.2	%
Expected dividend yield	7.2	%	4.8	%	5.4	%
Expected lives	5.5	yrs.	5.6	yrs.	5.4	yrs.
Expected common stock variance	3.8	%	1.8	%	1.7	%

    Price ranges, along with certain other information, for the options outstanding under the LTIP at December 31, 1999, are as follows:

	Outstanding					Exercisable
Exercise Price Range	Number	Weighted Average Exercise Price		Weighted Average Contractual Life		Number	Weighted Average Exercise Price
$23.81-$23.88	2,232,900	$	23.81	10.0	yrs.	—	$	—
$33.31-$34.50	744,500	$	33.88	8.3	yrs.	52,600	$	33.86
$35.91-$38.59	399,700	$	38.33	8.0	yrs.	36,000	$	38.59

    In January 2000, approximately 1.2 million stock options at $24.38 per share were granted under the LTIP.

    Entitlement to performance based shares is based on Cinergy's Total Shareholder Return (TSR) over designated performance cycles as measured against a peer group. In January 2000, a target grant of performance based shares was made for the following periods, which are structured to phase-in during three overlapping performance cycles.

Cycle	Performance Period	Target Grant of Shares
		(in thousands)
II	2000	120
III	2000-2001	241
IV	2000-2002	362

    Potential awards for cycles II and III are prorated for the length of the cycle. Participants may earn additional performance shares if Cinergy's TSR exceeds that of the peer group. No shares were earned in Cycle I (1997 - 1999).

    (ii)   Stock Option Plan  The Stock Option Plan is designed to align executive compensation with shareholder interests. Under the Stock Option Plan, incentive and non-qualified stock options, stock appreciation rights (SARs), and SARs in tandem with stock options may be granted to key employees, officers, and outside directors. The activity under this plan has predominantly consisted of the issuance of stock options. Options are granted at the fair market value of the shares on the date of grant. Options generally vest over five years at a rate of 20% per year, beginning on the date of grant, and expiring 10 years from the date of grant. The total number of shares of common stock available under the Stock Option Plan may not exceed 5,000,000 shares. No stock options may be granted under the plan after October 24, 2004.

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    Stock Option Plan activity for 1999, 1998, and 1997 is summarized as follows:

	Shares Subject to Option		Weighted Average Exercise Price
Balance at December 31, 1996	3,334,637		$	23.57
Options exercised	(380,162	)		21.71
Balance at December 31, 1997	2,954,475			23.79
Options granted	480,000			36.88
Options exercised	(430,961	)		21.62
Options forfeited	(100,000	)		26.92
Balance at December 31, 1998	2,903,514			26.17
Options granted	152,500			24.66
Options exercised	(259,865	)		21.51
Options forfeited	(36,000	)		25.89
Balance at December 31, 1999	2,760,149		$	26.53
Options Exercisable:
At December 31, 1997	1,389,975		$	22.58
At December 31, 1998	1,535,514			23.61
At December 31, 1999	1,898,149			24.67

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    The weighted average fair value of options granted during 1999 was $2.40 and $4.53 in 1998. The fair values of options granted were estimated as of the date of grant using a Black-Scholes option-pricing model. The weighted averages for the assumptions used in determining the fair values of options granted in 1999 and 1998 (no options were granted during 1997), were as follows:

	1999	1998
Risk-free interest rate	6.2%	5.6%
Expected dividend yield	7.3%	4.8%
Expected lives	6.5 yrs.	6.5 yrs.
Expected common stock variance	3.9%	2.0%

    Price ranges, along with certain other information, for options outstanding under the Stock Option Plan at December 31, 1999, are as follows:

		Outstanding				Exercisable
Exercise Price Range		Number	Weighted Average Exercise Price		Weighted Average Contractual Life	Number	Weighted Average Exercise Price
$	15.09 - $22.88	797,647	$	22.61	4.6 yrs.	797,647	$	22.61
$	23.81 - $25.19	1,193,529	$	24.27	5.7 yrs.	811,029	$	24.33
$	28.44 - $36.88	768,973	$	34.09	6.3 yrs.	289,473	$	31.30

    (iii)  Employee Stock Purchase and Savings Plan  The Employee Stock Purchase and Savings Plan allows essentially all full-time, regular employees to purchase shares of common stock pursuant to a stock option feature. Under the Employee Stock Purchase and Savings Plan, after-tax funds are withheld from a participant's compensation during a 26-month offering period and are deposited in an interest-bearing account. At the end of the offering period, participants may apply amounts deposited in the account, plus interest, toward the purchase of shares of common stock. The purchase price is equal to 95% of the fair market value of a share of common stock on the first date of the offering period. Any funds not applied toward the purchase of shares are returned to the participant. A participant may elect to terminate participation in the plan at any time. Participation also will terminate if the participant's employment ceases. Upon termination of participation, all funds, including interest, are returned to the participant without penalty. The third (current) offering period began March 1, 1999, and ends April 30, 2001. The purchase price for all shares under this offering is $27.73. The second offering period ended February 28, 1999. At the end of the second offering of the Plan, the market price was below the established share price; therefore in accordance with the Plan provisions, all participants in the Plan at February 28, 1999, were distributed cash funds in March 1999. The total number of shares of common stock available under the Employee Stock Purchase and Savings Plan may not exceed 2,000,000.

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    Employee Stock Purchase and Savings Plan activity for 1999, 1998, and 1997 is summarized as follows:

	Shares Subject to Option		Weighted Average Exercise Price
Balance at December 31, 1996	—			—
Options granted	338,947		$	31.83
Options exercised	(95	)		31.83
Options forfeited	(12,485	)		31.83
Balance at December 31, 1997	326,367			31.83
Options exercised	(3,342	)		31.83
Options forfeited	(25,651	)		31.83
Balance at December 31, 1998	297,374			31.83
Options granted	368,889			27.73
Options exercised	(266	)		27.73
Options forfeited	(306,692	)		27.73
Balance at December 31, 1999	359,305		$	27.73

    The weighted average fair value of options granted was $3.97 in 1999, and $3.08 in 1997. The fair values of options granted were estimated as of the date of grant using a Black-Scholes option-pricing model. The weighted averages for the assumptions used in determining the fair values of options granted were as follows:

	1999	1997
Risk-free interest rate	5.0%	5.9%
Expected dividend yield	6.2%	5.4%
Expected lives	2.0 yrs.	2.0 yrs.
Expected common stock variance	5.2%	1.6%

    (d) Director, Officer and Key Employee Stock Purchase Program In December 1999, Cinergy Corp. adopted the Director, Officer and Key Employee Stock Purchase Program (the Program). The purpose of the Program is to facilitate the purchase of Cinergy Corp.'s common stock by its directors, officers and key employees, thereby further aligning their interests with those of its shareholders.

    In February 2000, Cinergy Corp. purchased approximately 1.6 million shares of common stock on behalf of the participants at an average price of $24.82 per share.

    Participants had the option of financing the purchases through a five-year credit facility arranged by Cinergy Corp. with a bank. Each participant is obligated to repay the bank any loan principal, interest, and prepayment fees, and each has assigned his or her dividend rights on the purchased shares to the bank to be applied to interest payments as due on the loan.

    Services, and in part, Cinergy Corp., have guaranteed repayment to the bank of 100% of each participant's loan obligations and the associated interest, and each participant has agreed to indemnify the guarantor for any payments made by it under the guaranty on the participant's behalf. A participant's obligations to the bank are unsecured, and no restrictions are placed on the participant's ability to sell, pledge or otherwise encumber or dispose of his or her purchased shares.

    (e) PSP  The PSP was a long-term incentive plan developed to reward officers and other key employees for achieving corporate and individual goals. Under the PSP, participants were granted contingent shares of common stock. As of December 31, 1996, we ceased accrual of incentive

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compensation under the PSP, and a final payout of approximately 35,000 shares was made in February 1999.

3. Change in Preferred Stock of Subsidiaries

    In 1998, PSI redeemed approximately 3.4 million shares of its $25 par value, 7.44% series of preferred stock for $85 million. All other classes of preferred stock redeemed from 1997 to 1999 were immaterial for CG&E and PSI. Refer to the Consolidated Statements of Capitalization for detailed information for CG&E (on page 84) and PSI (on page 92).

4. Long-Term Debt

    Refer to the Statements of Capitalization for detailed information for CG&E (on page 84), PSI (on page 92), and ULH&P (on page 99). In addition, Cinergy Corp. and Global Resources also have the following total long-term debt (excluding Long-term debt due within one year, which is reflected in Current liabilities in the Consolidated Balance Sheets):

	December 31
	1999			1998
	(dollars in thousands)
Cinergy Corp.
Other Long-term Debt
6.53% Debentures due December 16, 2008	$	200,000		$	200,000
6.125% Debentures due April 15, 2004		200,000			—
		400,000			200,000
Unamortized Discount		(333	)		(87	)
Total—Cinergy Corp.	$	399,667		$	199,913
Global Resources
Other Long-term Debt
6.20% Debentures due November 3, 2008	$	150,000		$	150,000
Variable interest rate set at 7.56% commencing August 6, 1999, due July 6, 2012		15,300			—
Variable interest rate set at 8.44% commencing August 6, 1999, due July 6, 2009		7,100			—
Other		—			9,443
Total Other Long-term Debt		172,400			159,443
Unamortized Discount		(293	)		(326	)
Total—Global Resources	$	172,107		$	159,117
Operating Companies
CG&E and its subsidiaries	$	1,205,916		$	1,219,778
PSI		1,211,552			1,025,659
Total—Cinergy	$	2,989,242		$	2,604,467

    The following table reflects the long-term debt maturities for the next five years, excluding any redemptions due to the exercise of call or put provisions. Callable means the issuer has the right to buy

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back a given security from the holder at a specified price before maturity. Putable means the holder has the right to sell a given security back to the issuer at a specified price before maturity.

	Cinergy and Subsidiaries		CG&E and Subsidiaries			PSI
	(in millions)
2000	$	33	$	—		$	31
2001		41		1			39
2002		125		100			24
2003		78		20	(1)		57
2004		313		110			1
	$	590	$	231		$	152

(1)

CG&E and subsidiaries include ULH&P's $20 million maturing in 2003.

    Maintenance and replacement fund provisions contained in PSI's first mortgage bond indenture require: (1) cash payments, (2) bond retirements, or (3) pledges of unfunded property additions each year based on an amount related to PSI's net revenues.

5. Notes Payable and Other Short-term Obligations

    Short-term obligations may include:

•

short-term notes;



•

commercial paper;



•

variable rate pollution control notes; and



•

money pooling.

    Short-term Notes  Short-term borrowings mature within one year from the date of issuance. We mainly use unsecured revolving lines of credit for short-term borrowings. A portion of each company's committed lines is used to provide credit support for commercial paper (discussed below) and other uncommitted lines. When committed lines are reserved for commercial paper or other uncommitted lines, they are not available for additional borrowings. The fees we paid to secure short-term notes were immaterial during the period from 1997 to 1999.

    At December 31, 1999, Cinergy Corp. did not have any borrowings or commercial paper outstanding related to its $645 million revolving and uncommitted lines. The acquisition line shown in the table to follow was initially established to fund the purchase of Avon Energy Partners Holdings (Avon Energy), the parent company of Midlands Electricity plc (Midlands). However, on July 15, 1999, we sold our 50% ownership interest in Avon Energy to GPU, Inc. (GPU), and as a result of this transaction, the available acquisition line has been eliminated. For a discussion of this transaction, see Note 10 on page 126.

    Global Resources established a $100 million revolving credit agreement in 1998, which expired on August 29, 1999, and was not extended or replaced.

    Commercial Paper  The commercial paper (debt instruments exchanged between companies) program is limited to a maximum outstanding principal amount of $400 million for Cinergy Corp. CG&E and PSI also have the capacity to issue commercial paper, which must be supported by available committed lines of the respective company. The maximum outstanding principal amount for CG&E is $200 million and for PSI is $100 million. Neither CG&E nor PSI issued commercial paper in 1999 or 1998.

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    Variable Rate Pollution Control NotesCG&E and PSI have issued variable rate pollution control notes (tax-exempt notes obtained to finance equipment or land development to control pollution). Because the holders of these notes have the right to redeem their notes on any business day, they are reflected in Notes payable and other short-term obligations in the Consolidated Balance Sheets for Cinergy on page 74, for CG&E on page 80, and for PSI on page 88.

    The following tables summarize our Notes payable and other short-term obligations; but exclude Notes payable to affiliated companies.

Cinergy

	December 31, 1999							December 31, 1998
	Established Lines			Outstanding		Weighted Average Rate		Established Lines		Outstanding			Weighted Average Rate
				(in millions)						(in millions)
Cinergy Corp.
Committed lines
Acquisition line	$	—		$	—	—		$	160	$	160		5.61	%
Revolving line		600			—	—			600		245		5.68
Uncommitted lines		45			—	—			45		50	(1)	5.84
Commercial paper		—			—	—			—		50		5.78
Operating companies
Committed lines		195			120	6.68	%		300		—		—
Uncommitted lines		300			81	6.44			410		95		5.90
Pollution control notes		N/A			267	4.10			N/A		267		3.83
Non-regulated subsidiaries
Revolving lines		14	(2)		13	6.26			105		5		13.11
Short-term debt		69			69	6.86			33		32		13.11
Cinergy Total				$	550	5.41	%			$	904		5.20	%

(1)

Excess over Established Line represents amount sold by dealers to other investors.

(2)

Does not include a $150 million revolving line established by one of our non-utility unconsolidated subsidiaries. There were no borrowings under this line at December 31, 1999.

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CG&E

	December 31, 1999						December 31, 1998
	Established Lines		Outstanding		Weighted Average Rate		Established Lines		Outstanding		Weighted Average Rate
			(in millions)						(in millions)
Committed lines	$	65	$	30	6.27	%	$	100	$	—	—	%
Uncommitted lines		130		21	6.42			215		5	5.28
Pollution control notes		N/A		184	4.08			N/A		184	3.78
Total			$	235	4.57	%			$	189	3.83	%

PSI

	December 31, 1999						December 31, 1998
	Established Lines		Outstanding		Weighted Average Rate		Established Lines		Outstanding		Weighted Average Rate
			(in millions)						(in millions)
Committed lines	$	130	$	90	6.81	%	$	200	$	—	—	%
Uncommitted lines		170		60	6.44			195		90	5.93
Pollution control notes		N/A		83	4.15			N/A		83	3.94
Total			$	233	5.77	%			$	173	4.98	%

    Money Pool  Our operating companies and their subsidiaries participate in a money pool arrangement to better manage cash and working capital requirements. Under this arrangement, our operating companies and their subsidiaries with surplus short-term funds provide short-term loans to each other. This surplus cash may be from internal or external sources. The amounts outstanding under this money pool arrangement are shown as Notes receivable from affiliated companies or Notes payable to affiliated companies on the Consolidated Balance Sheets for CG&E on pages 80 through 81, PSI on pages 88 through 89, and the Balance Sheets for ULH&P on pages 95 through 96.

6. Sale of Accounts Receivable

    In 1996, CG&E, PSI, and ULH&P entered into an agreement to sell, on a revolving basis, undivided percentage interests in certain of their accounts receivable up to an aggregate maximum of $350 million. The Accounts receivable on the Consolidated Balance Sheets of Cinergy, CG&E, and PSI and on the Balance Sheets of ULH&P are net of the amounts sold at December 31, 1999, and 1998. The following table shows the amounts sold, net of reserves for 1999:

Sale of Accounts Receivable
(in millions)

Cinergy	$	257
CG&E and subsidiaries		157
PSI		100
ULH&P		21

7. Leases

    (a) Operating Leases  We have entered into operating lease agreements for various facilities and properties such as computer, communications, transportation equipment, and office space. Total rental payments on operating leases for each of the past three years are detailed below in the table. This table

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also shows future minimum lease payments required for operating leases with remaining non-cancelable lease terms in excess of one year as of December 31, 1999:

							Estimated Minimum Payments
	Actual Payments
																	After 2004
	1997		1998		1999		2000		2001		2002		2003		2004				Total
	(in millions)
Cinergy	$	36	$	42	$	50	$	36	$	28	$	18	$	13	$	10	$	35	$	140
CG&E and subsidiaries		18		21		27		11		10		8		6		5		20		60
PSI		18		21		21		9		8		6		5		4		13		45
ULH&P(1)		1		3		4		—		—		—		—		—		—		—

(1)

Estimated Minimum Payments are immaterial.

    (b) Capital Leases  In February 1999, CG&E, PSI, and ULH &P entered into capital lease arrangements to fund the purchase of gas and electric meters. The terms are for 120 months commencing December 1999, with early buyout options at 48, 72, and 105 months. Since the objective is to own the meters indefinitely, the companies plan to exercise the buyout option at month 105. The lease rate used to determine the monthly payments is 6.06%. The meters are depreciated at the same rate as if they were owned by the companies. CG&E, PSI, and ULH&P each recorded a capital lease obligation, included in Non-current liabilities—other. The total minimum lease payments, as if the buyout option is exercised at month 105, and the present value are shown below:

	Total Minimum Lease Payments
	Cinergy			CG&E and subsidiaries			PSI			ULH&P
	(in thousands)
Total minimum lease payments(1)	$	13,935		$	6,025		$	7,910		$	1,255
Less: amount representing interest		(3,838	)		(1,659	)		(2,179	)		(346	)
Present value of minimum lease payments	$	10,097		$	4,366		$	5,731		$	909

(1)

Annual Minimum Lease Payments are immaterial.

    In 1996, CG&E entered into a sale-leaseback agreement for certain equipment at Woodsdale Generating Station. The lease is a capital lease with an initial lease term of five years. At the end of this term, the lease may be renewed at mutually agreeable terms or CG&E may purchase the equipment at the original sale amount. The monthly lease payment is interest only and is based on the applicable London Inter-bank Offered Rate (LIBOR). LIBOR is the rate at which the highest rated banks offer to lend to one another. Interest rates are frequently quoted as a spread to LIBOR. The capital lease obligation will not be reduced over the initial lease term. The equipment under the capital lease is depreciated at the same rate as if CG&E owned it. CG&E recorded a capital lease obligation, included in Non-current liabilities—other, of $22 million, which is the book value of the equipment at the beginning of the lease.

8. Financial Instruments

    (a) Financial Derivatives  We have entered into financial derivative contracts for the purposes described below.

    (i)  Interest Rate Risk Management  Our current policy in managing exposure to fluctuations in interest rates is to maintain 25% of the total amount outstanding debt in floating interest rate debt instruments. To help maintain this level of exposure, we have previously entered into interest rate swaps. Under these swaps, we have agreed with other parties to exchange, at specified intervals, the

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difference between fixed-rate and floating-rate interest amounts calculated on an agreed notional principal amount. When less than 25% of the outstanding debt had floating interest rates, we entered into swaps whereby we would receive a fixed rate and pay a floating rate. When more than 25% of the outstanding debt had fixed interest rates, we entered into swaps that allowed us to receive a floating rate while paying a fixed rate. At December 31, 1999, the composition of the total amount of debt outstanding consisted of slightly less than 25% of the outstanding amount having floating interest rates. PSI has an outstanding interest rate swap agreement that will increase this percentage of floating rate debt in the second half of 2000. Under the agreement, which has a notional amount of $100 million, PSI will pay a floating rate and receive a fixed rate for a six month period. The floating rate will be based on a short-term money market index. At December 31, 1999, the fair value of this interest rate swap was not significant. In the future, we will continually monitor market conditions to evaluate whether to increase, or decrease, our level of exposure to fluctuations in interest rates.

    (ii)  Foreign Exchange Hedging Activity  From time to time, we may utilize foreign exchange forward contracts and currency swaps to hedge certain of our net investments in foreign operations. These contracts and swaps allow us to hedge our position against currency exchange rate fluctuations.

    Exposure to fluctuations in exchange rates between the U.S. dollar and the currencies of foreign countries where we have investments do exist. When it is appropriate we will hedge our exposure to cash flow transactions, such as a dividend payment by one of our foreign subsidiaries. At December 31, 1999, we do not believe we have a material exposure to the currency risk attributable to these investments.

    (b) Fair Value of Other Financial Instruments  The estimated fair values of other financial instruments were as follows (this information does not claim to be a valuation of the companies as a whole):

	December 31, 1999				December 31, 1998
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(in millions)
Financial Instruments
Cinergy
First mortgage bonds and other long-term debt (includes amounts reflected as long-term debt due within one year)	$	3,020	$	2,820	$	2,740	$	2,934
CG&E and subsidiaries
First mortgage bonds and other long-term debt (includes amounts reflected as long-term debt due within one year)	$	1,206	$	1,065	$	1,350	$	1,415
PSI
First mortgage bonds and other long-term debt (includes amounts reflected as long-term debt due within one year)	$	1,243	$	1,215	$	1,032	$	1,134
ULH&P
First mortgage bonds and other long-term debt	$	75	$	71	$	75	$	78

    The following methods and assumptions were used to estimate the fair values of each major class of instruments:

    Cash and cash equivalents, Restricted deposits, and Notes payable and other short-term obligations  Due to the short period to maturity, the carrying amounts reflected on the Balance Sheets approximate fair values.

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    Long-term debt  The fair values of long-term debt issues were estimated based on the latest quoted market prices or, if not listed on the New York Stock Exchange, on the present value of future cash flows. The discount rates used approximate the incremental borrowing costs for similar instruments.

    (c) Concentrations of Credit Risk  Credit risk is the exposure to economic losses that would occur as a result of nonperformance by counterparties, pursuant to the terms of their contractual obligations. Specific components of credit risk include counterparty default risk, collateral risk, concentration risk, and settlement risk.

    Our concentration of credit risk with respect to Delivery's trade accounts receivable from electric and gas retail customers is limited. The large number of customers and diversified customer base of residential, commercial, and industrial customers significantly reduces our credit risk. Contracts within the physical portfolio of Commodities' power marketing and trading operations are primarily with the traditional electric cooperatives and municipalities and other investor-owned utilities. At December 31, 1999, we do not believe we have significant exposure to credit risk with our trade accounts receivable within Delivery and our physical portfolio within Commodities.

    Contracts within the trading portfolio of the power marketing and trading operations are primarily with power marketers and other investor-owned utilities. As of December 31, 1999, approximately 75% of the activity within the trading portfolio represents commitments with 10 counterparties. The majority of these contracts are for terms of one year or less. Counterparty credit exposure within the power-trading portfolio is routinely factored into the mark-to-market valuation. As a result of the extreme volatility experienced in the Midwest power markets during 1998, several new entrants into the market experienced financial difficulties and failed to perform their contractual obligations. This resulted in us recording bad debt provisions of approximately $13 million with respect to settled transactions. At December 31, 1999, our exposure to credit risk within the power-trading portfolio is not believed to be significant. As the competitive electric power market continues to develop, counterparties will increasingly include new market entrants, such as other power marketers, brokers, and commodity traders. This increased level of new market entrants, as well as competitive pressures on existing market participants, could increase Commodities' exposure to credit risk with respect to its power marketing and trading operations.

    As of December 31, 1999, approximately one-third of the activity within the physical gas marketing and trading portfolio represents commitments with 10 counterparties. Credit risk losses related to gas and other commodity physical and trading operations have not been significant. At December 31, 1999, the credit risk within the gas and commodity trading portfolios is not believed to be significant because of the characteristics of counterparties and customers with which transactions are executed.

    Potential exposure to credit risk also exists from our use of financial derivatives such as currency swaps, foreign exchange forward contracts, and interest rate swaps. Because these financial instruments are transacted only with highly rated financial institutions, we do not anticipate nonperformance by any of the counterparties.

9. Pension and Other Postretirement Benefits

    We provide benefits to retirees in the form of pensions and other postretirement benefits.

    Our defined benefit pension plans cover substantially all United States (U.S.) employees meeting certain minimum age and service requirements. A final average pay formula determines plan benefits. These plan benefits are based on (1) years of participation, (2) age at retirement, and (3) the applicable average Social Security wage base or benefit amount.

    Effective January 1, 1998, we reconfigured our defined benefit pension plans. The reconfigured plans cover the same employees as the previous plans and established a uniform final average pay

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formula for all employees. The reconfiguration of the pension plans did not have a significant impact on our financial position or results of operations.

    Our pension plan funding policy for U.S. employees is to contribute at least the amount required by the Employee Retirement Income Security Act of 1974, and up to the amount deductible for income tax purposes. The pension plans' assets consist of investments in equity and fixed income securities.

    We provide certain health care and life insurance benefits to retired U.S. employees and their eligible dependents. These benefits are subject to the retiree meeting minimum age and service requirements. The health care benefits include medical coverage, dental coverage, and prescription drugs and are subject to certain limitations, such as deductibles and co-payments. Prior to January 1, 1997, CG&E and PSI employees had separate postretirement benefit plans. Effective January 1, 1997, most of our active U.S. employees are eligible to receive essentially the same postretirement health care benefits. Certain classes of employees (based on age) and all retirees have been grandfathered under benefit provisions in place prior to January 1, 1997. CG&E does not pre-fund its obligations for these postretirement benefits. During 1999, PSI began pre-funding its obligations as authorized by the IURC through a grantor trust.

    Our benefit plans' costs for the past three years, as well as the actuarial assumptions used in determining these costs, included the following components:

	Pension Benefits									Other Postretirement Benefits
	1999			1998			1997			1999			1998			1997
	(in millions)
Service cost	$	24.8		$	21.8		$	19.8		$	3.5		$	4.1		$	3.1
Interest cost		70.8			71.6			67.8			16.2			16.1			16.3
Expected return on plans' assets		(72.0	)		(66.9	)		(62.8	)		—			—			—
Amortization of transition obligation/(asset)		(1.3	)		(1.3	)		(1.3	)		5.0			5.0			5.0
Amortization of prior service cost		4.5			4.4			4.4			—			—			—
Recognized actuarial (gain) loss		.6			—			(.3	)		.8			.4			.3
Net periodic benefit cost	$	27.4		$	29.6		$	27.6		$	25.5		$	25.6		$	24.7
Actuarial assumptions:
Discount rate		7.50	%		6.75	%		7.50	%		7.50	%		6.75	%		7.50	%
Rate of future compensation increase		4.50			3.75			4.50			N/A			N/A			N/A
Rate of return on plans' assets		9.00			9.00			9.00			N/A			N/A			N/A

    For measurement purposes, we assumed an 8% annual rate of increase in the per capita cost of covered health care benefits for 2000. It was assumed that the rate would decrease gradually to 5% in 2008 and remain at that level thereafter.

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    The following table provides a reconciliation of the changes in the plans' benefit obligations and fair value of assets over the two-year period ended December 31, 1999, and a statement of the funded status as of December 31 of both years.

	Pension Benefits						Other Postretirement Benefits
	1999			1998			1999			1998
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of period	$	1,052.1		$	960.3		$	246.5		$	221.9
Service cost		24.8			21.8			3.5			4.1
Interest cost		70.8			71.6			16.2			16.1
Amendments		1.1			1.0			—			—
Actuarial (gain)/loss		(90.3	)		53.6			(18.4	)		17.4
Benefits paid		(56.5	)		(56.2	)		(13.4	)		(13.0	)
Benefit obligation at end of period		1,002.0			1,052.1			234.4			246.5
Change in plan assets
Fair value of plan assets at beginning of period		865.3			888.1			—			—
Actual return on plan assets		137.3			9.9			—			—
Employer contribution		—			23.5			13.4			13.0
Benefits paid		(56.5	)		(56.2	)		(13.4	)		(13.0	)
Fair value of plan assets at end of period		946.1			865.3			—			—
Funded status		(55.9	)		(186.8	)		(234.4	)		(246.5	)
Unrecognized prior service cost		39.9			43.3			—			—
Unrecognized net actuarial (gain)/loss		(180.6	)		(24.1	)		20.1			40.3
Unrecognized net transition (asset)/obligation		(5.8	)		(7.1	)		60.8			65.8
Accrued benefit cost at December 31	$	(202.4	)	$	(174.7	)	$	(153.5	)	$	(140.4	)

    Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:

	One-Percentage-Point Increase		One-Percentage-Point Decrease
	(in millions)
Effect on total of service and interest cost components	$	2.8	$	(2.4	)
Effect on postretirement benefit obligation		30.1		(26.2	)

    In addition, we sponsor non-qualified pension plans (plans that do not meet the criteria for tax benefits) that cover officers, certain other key employees, and non-employee directors. We began funding certain of these non-qualified plans through a rabbi trust in 1999.

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    The pension benefit obligations and pension cost under these plans were as follows:

	1999		1998
	(in millions)
Pension benefit obligations	$	37.0	$	31.4
Pension cost		4.0		4.5

10. Investments/Dispositions in Unconsolidated Subsidiaries

    On July 15, 1999, we sold our 50% ownership interest in Avon Energy to GPU. In exchange for our interest in Avon Energy, we received 452.5 million pounds sterling (approximately $700 million). As a result of the transaction, we realized a net contribution to earnings of approximately $.43 per share (basic and diluted), after deducting financing, transaction, and currency costs.

    Pro forma information is presented below. This reflects the net income and earnings per share without the investment in Avon Energy for 1999 and 1998.

	Year Ended December 31
	1999					1998
	Net Income			Earnings per Share(1)		Net Income			Earnings per Share(2)
	(in millions, except for earnings per share)
Cinergy	$	404		$	2.54	$	261		$	1.65
Pro forma adjustments:
Equity in earnings of Avon Energy		(58	)				(57	)
Gain on sale of investment in Avon Energy		(99	)				—
Interest expense		21					43
Income taxes		40					(18	)
Pro forma result	$	308		$	1.94	$	229		$	1.45

(1)

Represents basic earnings per share. Diluted earnings per share were $2.53, and pro forma diluted earnings per share were $1.93.

(2)

Both basic and diluted.

    On September 30, 1999, one of our non-regulated subsidiaries formed a partnership with Duke Energy North America LLC (Duke). This partnership will jointly construct and own three wholesale generating facilities located in southwestern Ohio, and east central and western Indiana, with total capacity of approximately 1,400 megawatts (MW). These facilities will be natural gas-fired peaking stations with commercial operations anticipated for the summer of 2000. Our portion (50%) of the output will be sold to and marketed by Cinergy Capital & Trading (a wholly-owned subsidiary of Investments) or another Cinergy affiliate.

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11. Income Taxes

    The following table shows the significant components of Cinergy, CG&E, and PSI net deferred income tax liabilities as of December 31, 1999, and 1998:

	Cinergy(1)				CG&E				PSI
	1999		1998		1999		1998		1999		1998
	(in millions)				(in millions)				(in millions)
Deferred Income Tax Liability
Utility plant	$	1,130.4	$	1,104.2	$	696.0	$	694.4	$	434.4	$	409.8
Unamortized costs of reacquiring debt		20.9		21.2		10.5		10.5		10.4		10.7
Deferred operating expenses and carrying costs		43.5		73.3		26.9		55.2		16.6		18.1
Amounts due from customers- income taxes		95.6		121.7		91.6		114.6		4.0		7.1
Foreign income taxes		2.7		—		—		—		—		—
Dynegy gas services agreement buyout costs		94.9		—		—		—		94.9		—
Other		53.0		73.8		23.3		57.1		6.8		14.2
Total Deferred Income Tax Liability		1,441.0		1,394.2		848.3		931.8		567.1		459.9
Deferred Income Tax Asset
Unamortized investment tax credits		53.6		57.0		37.3		39.5		16.3		17.5
Accrued pension and other benefit costs		88.0		89.0		34.3		41.3		26.9		20.7
Net energy risk management liabilities		32.3		54.5		11.5		26.3		20.9		28.2
Rural Utilities Service (RUS) obligation		30.7		29.5		—		—		30.7		29.5
Investments in unconsolidated subsidiaries		—		13.1		—		—		—		—
Other		61.6		60.0		45.0		53.6		11.6		—
Total Deferred Income Tax Asset		266.2		303.1		128.1		160.7		106.4		95.9
Net Deferred Income Tax Liability	$	1,174.8	$	1,091.1	$	720.2	$	771.1	$	460.7	$	364.0

(1)

Cinergy's net deferred income tax liability does not equal the sum of the net deferred income tax liabilities of  CG&E and PSI because of foreign subsidiary activity included at the Cinergy and other subsidiaries' level.

    We will file a consolidated federal income tax return for the year ended December 31, 1999. The current tax liability is allocated among the members of the group pursuant to a tax sharing agreement filed with the SEC under the PUHCA.

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    The following table indicates a summary of federal and state income taxes charged (credited) to income:

	Cinergy									CG&E									PSI
	1999			1998			1997			1999			1998			1997			1999			1998			1997
	(in millions)									(in millions)									(in millions)
Current Income Taxes
Federal	$	114.0		$	209.0		$	133.3		$	137.3		$	151.7		$	117.1		$	(30.6	)	$	69.8		$	35.0
State		(1.5	)		16.9			12.1			4.0			3.9			5.2			(3.1	)		10.5			6.8
Total Current Income Taxes		112.5			225.9			145.4			141.3			155.6			122.3			(33.7	)		80.3			41.8
Deferred Income Taxes
Federal
Depreciation and other utility plant-related items		24.0			25.3			26.7			13.8			14.7			13.6			10.2			10.7			13.3
Pension and other benefit costs		(10.5	)		(3.3	)		.9			(5.3	)		5.0			(2.8	)		(5.0	)		(1.9	)		3.7
Litigation settlement		—			—			1.8			—			—			—			—			—			6.2
RUS obligations		—			(22.5	)		(3.5	)		—			—			—			—			(22.5	)		(3.5	)
Unrealized energy risk management losses		(5.1	)		(49.4	)		(1.5	)		(11.6	)		(25.2	)		(.7	)		6.5			(24.2	)		(.8	)
Fuel costs		4.3			(1.0	)		4.4			2.7			(1.5	)		(5.5	)		1.6			.5			9.9
Dynegy gas services agreement buyout costs		83.6			—			—			—			—			—			83.6			—			—
Coal contract buyout		4.2			3.1			5.5			—			—			—			4.2			3.1			5.5
Coal gasification payments		—			—			—			—			—			—			—			(1.0	)		7.7
Other items-net		(9.3	)		(43.9	)		40.5			8.3			(13.7	)		19.1			(8.7	)		(12.7	)		(6.2	)
Total Deferred Federal Income Taxes		91.2			(91.7	)		74.8			7.9			(20.7	)		23.7			92.4			(48.0	)		35.8
State		14.2			(7.4	)		2.4			.6			(.4	)		(1.0	)		13.6			(5.8	)		3.3
Total Deferred Income Taxes		105.4			(99.1	)		77.2			8.5			(21.1	)		22.7			106.0			(53.8	)		39.1
Investment Tax Credits—Net		(9.2	)		(9.6	)		(9.6	)		(6.1	)		(6.2	)		(6.2	)		(3.1	)		(3.4	)		(3.5	)
Total Income Taxes	$	208.7		$	117.2		$	213.0		$	143.7		$	128.3		$	138.8		$	69.2		$	23.1		$	77.4

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    The following table presents a reconciliation of federal income taxes (which are calculated by multiplying the statutory federal income tax rate by book income before extraordinary items and federal income tax) to the federal income tax expense reported in the Consolidated Statements of Income for Cinergy, CG&E, and PSI.

	Cinergy									CG&E									PSI
	1999			1998			1997			1999			1998			1997			1999			1998			1997
	(in millions)									(in millions)									(in millions)
Statutory federal income tax provision	$	209.9		$	129.0		$	196.4		$	130.4		$	119.2		$	130.8		$	61.6		$	24.7		$	69.8
Increases (Reductions) in taxes resulting from:
Amortization of investment tax credits		(9.2	)		(9.6	)		(9.6	)		(6.1	)		(6.2	)		(6.2	)		(3.1	)		(3.4	)		(3.5	)
Depreciation and other utility plant-related differences		14.4			10.4			11.7			11.6			9.0			9.8			—			—			—
Preferred dividend requirements of subsidiaries		5.4			2.3			4.4			—			—			—			—			—			—
Foreign tax adjustments		(15.5	)		(20.0	)		(13.2	)		—			—			—			—			—			—
Other-net		(9.0	)		(4.4	)		8.8			3.2			2.8			.1			.2			(2.9	)		1.0
Federal income tax expense	$	196.0		$	107.7		$	198.5		$	139.1		$	124.8		$	134.5		$	58.7		$	18.4		$	67.3

    The following table shows the significant components of ULH&P net deferred income tax liability as of December 31, 1999, and 1998:

	ULH&P
	1999		1998
	(in thousands)
Deferred Income Tax Liability
Utility plant	$	34,903	$	34,442
Unamortized costs of reacquiring debt		1,356		1,390
Deferred fuel costs		—		1,557
Other		2,062		2,626
Total Deferred Income Tax Liability		38,321		40,015
Deferred Income Tax Asset
Unamortized investment tax credits		1,608		1,720
Amounts due to customers-income taxes		4,618		3,616
Deferred fuel costs		949		—
Accrued pension and other benefit costs		2,282		2,658
Other		5,864		5,887
Total Deferred Income Tax Asset		15,321		13,881
Net Deferred Income Tax Liability	$	23,000	$	26,134

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    The following table indicates a summary of federal and state income taxes charged (credited) to income:

	ULH&P
	1999			1998			1997
	(in thousands)
Current Income Taxes
Federal	$	8,668		$	6,699		$	11,607
State		2,253			1,336			3,002
Total Current Income Taxes		10,921			8,035			14,609
Deferred Income Taxes
Federal
Depreciation and other utility plant-related items		831			420			847
Pension and other benefit costs		40			319			—
Fuel costs		(1,385	)		820			(5,486	)
Unamortized costs of reacquiring debt		(39	)		(58	)		(122	)
Service company allocations		324			(1,376	)		(36	)
Other items-net		(155	)		(415	)		48
Total Deferred Federal Income Taxes		(384	)		(290	)		(4,749	)
State
Depreciation and other utility plant-related items		271			196			287
Fuel costs		(356	)		211			(1,404	)
Other items-net		9			(99	)		23
Total Deferred State Income Taxes		(76	)		308			(1,094	)
Total Deferred Income Taxes		(460	)		18			(5,843	)
Investment Tax Credits-Net		(277	)		(279	)		(280	)
Total Income Taxes	$	10,184		$	7,774		$	8,486

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    The following table presents a reconciliation of federal income taxes (which are calculated by multiplying the statutory federal income tax rate by book income and federal income tax) to the federal income tax expense reported in the Statement of Income for ULH&P.

	1999			ULH&P 1998			1997
	(in thousands)
Statutory federal income tax provision	$	7,098		$	6,937		$	6,823
Increases (Reductions) in taxes resulting from:
Amortization of investment tax credits		(277	)		(279	)		(280	)
Depreciation and other utility plant-related differences		94			(168	)		96
Other- net		1,092			(360	)		(61	)
Federal income tax expense	$	8,007		$	6,130		$	6,578

12. Commitments and Contingencies

    (a) Construction and Other Commitments  Forecasted construction expenditures in nominal dollars for 2000 and for the next five years (2000-2004) are presented in the table below:

	2000		2000-2004
	(in millions)
Cinergy	$	495	$	2,002
CG&E and subsidiaries		284		1,044
PSI		211		958
ULH&P		28		123

    This table includes forecasted expenditures for 2000 of $65 million for preparing utility systems for customer choice. This forecast excludes an estimate of expenditures necessary to comply with the United States Environmental Protection Agency's (EPA's) proposed stricter nitrogen oxide (NO_X) emission control standards, as discussed below.

    Committed projects for both international and domestic non-regulated investment activities of approximately $160 million for 2000 are excluded from the table above. On September 30, 1999, one of our non-regulated subsidiaries formed a partnership with Duke, as discussed in Note 10 on page 126. Our portion (50%) of the remaining capital expenditures to complete this project is estimated at $110 million for 2000 and is included in the $160 million discussed above.

    (b) Ozone Transport Rulemaking  In October 1998, the EPA finalized its ozone transport rule, also known as the NO_X SIP Call. (A SIP is a state's implementation plan for achieving emissions reductions to address air quality concerns.) It applies to 22 states in the eastern half of the U.S., including the three states in which our electric utilities operate. This rule recommends that states reduce NO_X emissions from primarily industrial and utility sources to a certain level by May 2003. The EPA gave the affected states until September 30, 1999, to incorporate NO_X reductions with a trading program into their SIPs. The EPA proposed to implement a federal plan to accomplish the equivalent NO_X reductions by May 2003 if the states failed to revise their SIPs. The EPA must approve all SIPs.

    Ohio, Indiana, a number of other states, and various industry groups (some of which we are a member), filed legal challenges to the NO_X SIP Call in late 1998. On May 25, 1999, the U.S. Circuit Court of Appeals for the District of Columbia (Court of Appeals) granted a request for a deferral of the rule and indefinitely suspended the September 30 filing deadline, pending further review by the Court of Appeals. The Court of Appeals heard arguments on the case on November 9, 1999, and is expected to make a decision in the first quarter of 2000.

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    In December 1999, the EPA granted four Section 126 petitions relating to NO_X emissions. The EPA believes that these petitions, which are filed under Section 126 of the Clean Air Act (CAA), allow a state to claim that another state is contributing to its air quality problem and request that the EPA require the upwind state to reduce its emissions. This ruling affects all of our Ohio and Kentucky facilities, as well as some of our Indiana facilities, and requires us to reduce our NO_X emissions to a certain level by May 2003. We are appealing this ruling; however, we currently cannot predict the outcome of the appeal. Compliance with this EPA finding is anticipated to require us to perform substantially all of the NO_X reduction work that would be required under the NO_X SIP Call. In the event the EPA successfully implements either program (the NO_X SIP Call or the Section 126 petitions), capital expenditures for compliance are substantially the same, and are currently estimated at $500 million to $700 million (in 1999 dollars) by May 2003, approximately $105 million of which is estimated to be spent in 2000. This estimate depends on several factors, including:

•

final determination regarding both the timing and strictness of the final required NO_X reductions;



•

emission output of our generating units;



•

availability of adequate supplies of resources to construct the necessary control equipment; and



•

whether a viable market will exist to buy and sell NO_X allowances.

    (c) New Source Review (NSR)  Since July 1999, CG&E and PSI have received requests from the EPA (Region 5), under Section 114 of the CAA, seeking documents and information regarding capital and maintenance expenditures at several of their generating stations. These activities are part of an industry-wide investigation assessing compliance with the NSR and the New Source Performance Standards (NSPS, emissions standards that apply to new and changed units) of the CAA at electric generating stations. The NSR provisions require that a company obtain a pre-construction permit if it plans to build a new stationary source of pollution or make a major change to an existing facility unless the changes are exempt.

    On November 3, 1999, the EPA sued a number of holding companies and electric utilities, including Cinergy, CG&E, and PSI, in various U.S. District Courts. The Cinergy, CG&E, and PSI suit alleges violations of the CAA at some of our generating stations relating to NSR and NSPS requirements. The suit seeks (1) injunctive relief to require installation of pollution control technology on each of the generating units at Beckjord and PSI's Cayuga Generating Station (Cayuga), and (2) civil penalties in amounts of up to $27,500 per day for each violation.

    On March 1, 2000, the EPA filed an amended complaint against Cinergy, CG&E, and PSI. The amended complaint added the alleged violations of the NSR requirements of the CAA at two of our generating stations contained in the notice of violation (NOV) filed by the EPA on November 3, 1999. It also added claims for relief alleging violations of (1) nonattainment NSR, (2) Indiana and Ohio SIPs, and (3) particulate matter emission limits (as discussed in Note 12(e) on page 134). The amended complaint seeks (1) injunctive relief to require installation of pollution control technology on each of the generating units at Beckjord, Cayuga, and PSI's Wabash River and Gallagher Generating Stations, and such other measures as necessary, and (2) civil penalties in amounts of up to $27,500 per day for each violation. We believe the allegations contained in the amended complaint are without merit and plan to defend the suit vigorously in court. At this time, it is not possible to determine the likelihood that the EPA will prevail on its claims or whether resolution of this matter will have a material effect on our financial condition.

    On March 1, 2000, the EPA also filed an amended complaint alleging violations of the CAA relating to NSR, Prevention of Significant Deterioration, and Ohio SIP requirements regarding a generating station operated by the Columbus Southern Power Company (CSP) and jointly-owned by CSP, The Dayton Power and Light Company, and CG&E. The EPA is seeking injunctive relief and civil

115

penalties of up to $27,500 per day for each violation. We believe the allegations in the amended complaint are without merit. At this time, it is not possible to determine the likelihood that the EPA will prevail on its claims or whether resolution of this matter will have a material effect on our financial condition.

    (d) Manufactured Gas Plant (MGP) Sites

     (i) General  Prior to the 1950s, gas was produced at MGP sites through a process that involved the heating of coal and/or oil. The gas produced from this process was sold for residential, commercial, and industrial uses.

    (ii) PSI  Coal tar residues, related hydrocarbons, and various metals associated with MGP sites have been found at former MGP sites in Indiana, including at least 21 sites which PSI or its predecessors previously owned. PSI acquired four of the sites from Northern Indiana Public Service Company (NIPSCO) in 1931. At the same time, PSI sold NIPSCO the sites located in Goshen and Warsaw, Indiana. In 1945, PSI sold 19 of these sites (including the four sites it acquired from NIPSCO) to the predecessor of the Indiana Gas Company, Inc. (IGC). IGC later sold the site located in Rochester, Indiana, to NIPSCO.

    IGC (in 1994) and NIPSCO (in 1995) both made claims against PSI. The basis of these claims was that PSI is a Potentially Responsible Party with respect to the 21 MGP sites under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). The claims further asserted that PSI is therefore legally responsible for the costs of investigating and remediating the sites. In August of 1997, NIPSCO filed suit against PSI in federal court claiming recovery (pursuant to CERCLA) of NIPSCO's past and future costs of investigating and remediating MGP related contamination at the Goshen MGP site.

    In November 1998, NIPSCO, IGC, and PSI entered into a Site Participation and Cost Sharing Agreement. The agreement allocated CERCLA liability for past and future costs at seven MGP sites in Indiana among the three companies. As a result of the agreement, NIPSCO's lawsuit against PSI was dismissed. The parties have assigned lead responsibility for managing further investigation and remediation activities at each of the sites to one of the parties. Similar agreements were reached between IGC and PSI that allocate CERCLA liability at 14 MGP sites with which NIPSCO was not involved. These agreements conclude all CERCLA and similar claims between the three companies related to MGP sites. The parties continue to investigate and remediate the sites, as appropriate under the agreements and applicable laws. The Indiana Department of Environmental Management (IDEM) oversees investigation and cleanup of some of the sites.

PSI notified its insurance carriers of the claims related to MGP sites raised by IGC, NIPSCO, and the IDEM. In April 1998, PSI filed suit in Hendricks County Circuit Court in the State of Indiana against its general liability insurance carriers. Among other matters, PSI requested a declaratory judgment that would obligate its insurance carriers to (1)  defend MGP claims against PSI, or (2) pay PSI's costs of defense and compensate PSI for its costs of investigating, preventing, mitigating, and remediating damage to property and paying claims related to MGP sites. The case was moved to the Hendricks County Superior Court 1 on a request for a change of judge. The Hendricks County Superior Court 1 has set the case for trial beginning in May 2001. It ordered the parties to meet certain deadlines for discovery proceedings based upon this trial date. PSI cannot predict the outcome of this litigation.

PSI has accrued costs for the sites related to investigation, remediation, and groundwater monitoring for the work performed to date. The estimated costs for such remedial activities are accrued when the costs are probable and can be reasonably estimated. PSI does not believe it can provide an estimate of the reasonably possible total remediation costs for any site before a remedial investigation/feasibility study has been completed. To the extent remediation is necessary, the timing of

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the remediation activities impacts the cost of remediation. Therefore, PSI currently cannot determine the total costs that may be incurred in connection with the remediation of all sites, to the extent that remediation is required. According to current information, these future costs at the 21 Indiana MGP sites are not material to our financial condition or results of operations. As further investigation and remediation activities are performed at these sites, the potential liability for the 21 MGP sites could be material to our financial position or results of operations.

    (iii) CG&ECG&E and its utility subsidiaries are aware of potential sites where MGP activities have occurred at some time in the past. None of these sites is known to present a risk to the environment. CG&E and its utility subsidiaries have begun preliminary site assessments to obtain information about some of these MGP sites.

    (e) Other  On November 30, 1999, the EPA filed a NOV against Cinergy and CG&E because emissions of particulate matter (very small solid particles in the air) at CG&E's W.C. Beckjord Generating Station exceeded the allowable limit. The NOV indicated that the EPA may (1) issue an administrative penalty order, or (2) file a civil action seeking injunctive relief and civil penalties of up to $27,500 per day for each violation. The allegations contained in this NOV were incorporated within the March 1, 2000, amended complaint, as discussed in Note 12(c) on page 132. We are currently unable to determine whether resolution of this matter will have a material effect on our financial condition.

13. Jointly-Owned Plant

CG&E, CSP, and DP&L jointly own electric generating units and related transmission facilities. PSI is also a joint-owner of Gibson Generating Station (Gibson) Unit 5 with Wabash Valley Power Association, Inc. (WVPA), and Indiana Municipal Power Agency (IMPA). Additionally, PSI is a joint-owner with WVPA and IMPA of certain transmission property and local facilities. These facilities constitute part of the integrated transmission and distribution systems, which are operated and maintained by PSI. The Consolidated Statements of Income reflect CG&E's and PSI's portions of all operating costs associated with the jointly-owned facilities.

CG&E's and PSI's investments in jointly-owned plant or facilities are as follows:

	Ownership Share		Utility Plant in Service		Accumulated Depreciation		Construction Work in Progress
	(dollars in millions)
CG&E
Production:
Miami Fort Station (Units 7 and 8)	64.00	%	$	216	$	125	$	9
W.C. Beckjord Station (Unit 6)	37.50			42		27		1
J.M. Stuart Station(1)	39.00			277		135		5
Conesville Station (Unit 4)(1)	40.00			75		41		2
William H. Zimmer Station(1)	46.50			1,222		311		12
East Bend Station	69.00			333		180		3
Killen Station	33.00			187		96		1
Transmission	Various			65		34		—
PSI
Production:
Gibson (Unit 5)	50.05			214		107		1
Transmission and local facilities	94.68			2		1		—

(1)

Station is not operated by CG&E.

117

14. Quarterly Financial Data (unaudited)

	Cinergy						CG&E						PSI
Quarter Ended
	1999			1998			1999			1998			1999			1998
	(in millions, except per share amounts)
March 31
Operating Revenues	$	1,402		$	1,348		$	645		$	767		$	482		$	592
Operating Income		234			226			155			141			86			90
Net Income		127			106			80			71			40			43
Basic Earnings Per Share		.80			.67			N/A			N/A			N/A			N/A
Diluted Earnings Per Share		.80			.67			N/A			N/A			N/A			N/A
June 30
Operating Revenues	$	1,275		$	1,168		$	531		$	590		$	463		$	511
Operating Income		137			3	(3,4)		88			43	(3)		61			(29)	(3,4)
Net Income (Loss)		59			(25)	(3,4)		39			13	(3)		26			(31)	(3,4)
Basic Earnings (Loss) Per Share		.37			(.16)	(3,4)		N/A			N/A			N/A			N/A
Diluted Earnings (Loss) Per Share		.37			(.16)	(3,4)		N/A			N/A			N/A			N/A
September 30
Operating Revenues	$	1,782	(7)	$	1,977		$	738		$	884		$	707	(7)	$	807
Operating Income		137	(2,7)		204	(5)		104	(2)		147	(5)		47	(2,7)		65	(5)
Net Income		122	(1,2,7)		109	(5)		48	(2)		79	(5)		16	(2,7)		27	(5)
Basic Earnings Per Share		.77	(1,2,7)		.69	(5)		N/A			N/A			N/A			N/A
Diluted Earnings Per Share		.76	(1,2,7)		.69	(5)		N/A			N/A			N/A			N/A
December 31
Operating Revenues	$	1,479		$	1,418		$	637		$	615		$	484		$	493
Operating Income		185			152	(6)		132			117	(6)		78			35	(6)
Net Income		96			71	(6)		67			53	(6)		35			13	(6)
Basic Earnings Per Share		.60			.45	(6)		N/A			N/A			N/A			N/A
Diluted Earnings Per Share		.60			.45	(6)		N/A			N/A			N/A			N/A
Total
Operating Revenues	$	5,938		$	5,911		$	2,551		$	2,856		$	2,136		$	2,403
Operating Income		693			585			479			448			272			161
Net Income		404			261			234			216			117			52
Basic Earnings Per Share		2.54			1.65			N/A			N/A			N/A			N/A
Diluted Earnings Per Share		2.53			1.65			N/A			N/A			N/A			N/A

(1)

In the third quarter of 1999, we realized a net contribution to earnings of approximately $.43 per share (basic and diluted) when we sold our 50% ownership interest in Avon Energy to GPU. For a discussion of this transaction, see Note 10.

(2)

In the third quarter of 1999, through CG&E and PSI, we experienced extreme weather conditions which resulted in a reduction in net income of $57 million ($16 million for CG&E, $41 million for  PSI) after tax or $.36 per share (basic and diluted).

(3)

In the second quarter of 1998, we recorded charges of $65 million, pretax ($58 million for CG&E and $7 million for PSI) related to power marketing and trading operations which constitutes, after tax, $.26 per share (basic and diluted). For a discussion of the energy marketing and trading operations, see Note 1(j).

(4)

In the second quarter of 1998, we, through PSI, recorded a charge against earnings of $80 million ($50 million after tax or $.32 per share basic and diluted) for a settlement related to the Marble Hill nuclear project. For a discussion of this settlement, see Note 18.

(5)

In the third quarter of 1998, we recorded charges of $20 million pretax ($(5) million for CG&E and $25 million for PSI) related to power marketing and trading operations which constitutes, after tax, $.08 per share (basic and diluted). For a discussion of the energy marketing and trading operations, see Note 1(j).

(6)

In the fourth quarter of 1998, we recorded charges of $50 million, pretax ($20 million for CG&E and $30 million for PSI) related to power marketing and trading operations which constitutes, after tax, $.20 per share (basic and diluted). For a discussion of the energy marketing and trading operations, see Note 1(j).

(7)

In the third quarter of 1999, Cinergy's electric margins, through PSI's, were positively impacted by $12 million pretax, or $.07 per share (basic and diluted) after tax, as a result of a change in estimate of PSI's utility services delivered but unbilled at month end.

118

15. Financial Information by Business Segment

    During 1998, we adopted the requirements of Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information (Statement 131). Statement 131 requires disclosures about reportable operating segments in annual and interim condensed financial statements based on the following:

•

products and services;



•

geography;



•

legal structure;



•

management structure; or



•

any other manner in which management divides a company.

    Our business units were initially formed during the second half of 1996 and began operating as separately identifiable business units in 1997. In early 1999, we made certain organizational changes to further align the business units to reflect our strategic vision. Prior years' financial information has been restated to conform with the current year's presentation. Each business unit has its own management structure, headed by a business unit president who reports directly to our chief executive officer. As discussed in Note 1(a) on page 100, our business units are Commodities, Delivery, Cinergy Investments, and International. Each business unit and its responsibilities are described below.

    Commodities operates and maintains our domestic electric generating plants and some of our jointly-owned plants. It also conducts the following activities: (1) wholesale energy marketing and trading, (2) energy risk management, (3) financial restructuring services, and (4) proprietary arbitrage activities. Commodities earns revenues from external customers from its marketing, trading, and risk management activities. Commodities earns intersegment revenues from the sale of electric power to Delivery.

    Delivery plans, constructs, operates, and maintains our operating companies' transmission and distribution systems and provides gas and electric energy to consumers. Delivery earns revenues from customers other than consumers primarily by transmitting electric power through our transmission system. Delivery currently receives all of its electricity from Commodities at a transfer price based upon current regulatory ratemaking methodology.

    Cinergy Investments manages the development, marketing, and sales of our domestic non-regulated retail energy and energy-related products and services. This is accomplished through various subsidiaries and joint ventures. Cinergy Investments earns all of its revenues from the sale of such products and services to ultimate consumers. These products and services include the following:

•

energy management and consulting services to commercial customers that operate retail facilities (for example, finding more efficient ways for a customer to use energy);



•

utility operations/services to other utilities (for example, providing underground locating and construction services for other utilities); and



•

building, operating, and maintaining combined heat and power facilities through joint ventures with Trigen Energy Corporation.

    International directs and manages our international business holdings, which include wholly- and jointly-owned companies in six countries. In addition, International also directs our renewable energy investing activities (for example, wind farms) both inside and outside the U.S. International earns (1) revenues, and (2) equity earnings from unconsolidated companies primarily from energy-related businesses.

119

    Financial information by (1) business units, (2) products and services, and (3) geographic areas and long-lived assets for the years ending December 31, 1999, 1998, and 1997, is as follows:

Business Units

	1999
	Cinergy Business Units
	Commodities			Delivery		Cinergy Investments			International		Total		All Other(1)		Reconciling Eliminations(2)			Consolidated
	(in millions)
Operating revenues—
External customers	$	2,586		$	3,232	$	59		$	61	$	5,938	$	—	$	—		$	5,938
Intersegment revenues		1,857			—		—			—		1,857		—		(1,857	)		—
Depreciation and amortization(3)		209			138		—			7		354		—		—			354
Equity in earnings of unconsolidated subsidiaries		(2	)		—		—			60		58		—		—			58
Gain on sale of investment in unconsolidated subsidiary		—			—		—			99		99		—		—			99
Interest expense(4)		96			102		4			32		234		1		—			235
Income taxes		70			120		(6	)		25		209		—		—			209
Segment profit (loss)(5)		136			184		(9	)		93		404		—		—			404
Total segment assets		5,042			4,058		130			340		9,570		47		—			9,617
Investments in unconsolidated subsidiaries		257			—		25			77		359		—		—			359
Total expenditures for long-lived assets		131			256		3			—		390		—		—			390

(1)

The All Other category represents miscellaneous corporate items which are not allocated to business units for purposes of segment profit measurement.

(2)

The Reconciling Eliminations category eliminates the intersegment revenues of Commodities.

(3)

The components of depreciation and amortization include depreciation of fixed assets, amortization of intangible assets, amortization of phase-in deferrals, and amortization of post-in-service deferred operating expenses.

(4)

Interest income is deemed immaterial.

(5)

Management utilizes segment profit (loss) after taxes to evaluate segment profitability.

120

	1998
	Cinergy Business Units
	Commodities			Delivery		Cinergy Investments			International			Total		All Other(1)			Reconciling Eliminations(2)			Consolidated
	(in millions)
Operating revenues—
External customers	$	2,726		$	3,090	$	52		$	43		$	5,911	$	—		$	—		$	5,911
Intersegment revenues		1,782			—		—			—			1,782		—			(1,782	)		—
Depreciation and amortization(3)		197			127		—			2			326		—			—			326
Equity in earnings of unconsolidated subsidiaries		(1	)		—		(4	)		56			51		—			—			51
Interest expense(4)		95			91		—			51			237		7			—			244
Income taxes		57			90		(6	)		(17	)		124		(7	)		—			117
Segment profit (loss)(5)		94			157		(11	)		32			272		(11	)		—			261
Total segment assets		4,863			3,987		42			752			9,644		43			—			9,687
Investments in unconsolidated subsidiaries		—			—		8			566			574		—			—			574
Total expenditures for long-lived assets		108			242		3			—			353		17			—			370

(1)

The All Other category represents miscellaneous corporate items which are not allocated to business units for purposes of segment profit measurement.

(2)

The Reconciling Eliminations category eliminates the intersegment revenues of Commodities.

(3)

The components of depreciation and amortization include depreciation of fixed assets, amortization of intangible assets, amortization of phase-in deferrals, and amortization of post-in-service deferred operating expenses.

(4)

Interest income is deemed immaterial.

(5)

Management utilizes segment profit (loss) after taxes to evaluate segment profitability.

121

	1997
	Cinergy Business Units
	Commodities		Delivery		Cinergy Investments			International			Total			All Other(1)			Reconciling Eliminations(2)			Consolidated
	(in millions)
Operating revenues—
External customers	$	1,287	$	3,066	$	32		$	2		$	4,387		$	—		$	—		$	4,387
Intersegment revenues		1,688		—		—			—			1,688			—			(1,688	)		—
Depreciation and amortization(3)		184		123		—			—			307			—			—			307
Equity in earnings of unconsolidated subsidiaries		—		—		(3	)		63			60			—			—			60
Interest expense(4)		108		88		1			39			236			—			—			236
Income taxes		123		91		(3	)		5			216			(3	)		—			213
Extraordinary item(5)		—		—		—			(109	)		(109	)		—			—			(109	)
Segment profit (loss)(6)		207		148		(7	)		16			364			(1	)		—			363
Total segment assets		4,380		3,870		26			562			8,838			20			—			8,858
Investments in unconsolidated subsidiaries		—		—		3			535			538			—			—			538
Total expenditures for long-lived assets		78		231		6			—			315			13			—			328

(1)

The All Other category represents miscellaneous corporate items which are not allocated to business units for purposes of segment profit measurement.

(2)

The Reconciling Eliminations category eliminates the intersegment revenues of Commodities.

(3)

The components of depreciation and amortization include depreciation of fixed assets, amortization of intangible assets, amortization of phase-in deferrals, and amortization of post-in-service deferred operating expenses.

(4)

Interest income is deemed immaterial.

(5)

Windfall profits tax. (See Note 17.)

(6)

Management utilizes segment profit (loss) after taxes to evaluate segment profitability.

122

Products and Services
(in millions)
	Revenues
							Energy Marketing and Trading
	Utility
Year
	Electric		Gas		Total		Electric		Gas		Total		Other		Consolidated
1999	$	2,938	$	420	$	3,358	$	1,375	$	1,176	$	2,551	$	29	$	5,938
1998		2,707		441		3,148		2,056		659		2,715		48		5,911
1997		2,579		491		3,070		1,283		28		1,311		6		4,387

    Our products and services focus on providing utility services (the supply of electric energy and gas supply) and energy marketing and trading services.

Geographic Areas and Long-Lived Assets
(in millions)
			Revenues
			International
Year	Domestic		UK(1)		All Other(2)		Total		Consolidated
1999	$	5,877	$	—	$	61	$	61	$	5,938
1998		5,868		—		43		43		5,911
1997		4,385		—		2		2		4,387

			Long-Lived Assets
			International
Year	Domestic		UK(1)		All Other(2)		Total		Consolidated
1999	$	7,841	$	2	$	277	$	279	$	8,120
1998		7,375		501		209		710		8,085
1997		7,264		505		44		549		7,813

(1)

As discussed in Note 10, on July 15, 1999, we sold our 50% ownership interest in Avon Energy to GPU. Prior to the sale, Midlands had provided the majority of International's earnings.

(2)

We own four district heating plants and have a minoirty interest in a fifth district heating plant in the Czech Republic that, in total, provide 1,480 MW of thermal steam capacity, which may be used to produce 186 MW of electricity. These plants' assets and results of operations are consolidated into our financial statements. International accounts for its remaining long-lived assets as equity method investments. As a result, revenues from International are insignificant.

123

16. Earnings Per Share

    A reconciliation of earnings per common share (basic EPS) to earnings per common share assuming dilution (diluted EPS) is presented below:

	Income		Shares	EPS
	(in millions, except per share amounts)
1999
Earnings per common share:
Net income	$	404	159	$	2.54
Effect of dilutive securities:
Common stock options			—
EPS-assuming dilution:
Net income plus assumed conversions	$	404	159	$	2.53
1998
Earnings per common share:
Net income	$	261	158	$	1.65
Effect of dilutive securities:
Common stock options			1
EPS-assuming dilution:
Net income plus assumed conversions	$	261	159	$	1.65
1997
Earnings per common share:
Net income before extraordinary item(1)	$	363	158	$	2.30
Effect of dilutive securities:
Common stock options			1
EPS-assuming dilution:
Net income before extraordinary item plus assumed conversions	$	363	159	$	2.28
(1) The after-tax EPS impact of the extraordinary item—equity share of windfall profits tax in 1997 was $.69 for both basic and diluted EPS.

Options to purchase shares of common stock are excluded from the calculation of EPS-assuming dilution when the exercise prices of these options are greater than the average market price of the common shares during the period. For 1999 and 1998, approximately two million and one million shares, respectively, were excluded from the EPS-assuming dilution calculation. For 1997, shares excluded from this calculation were immaterial.

124

17. Extraordinary Item—Equity Share of Windfall Profits Tax

     During the third quarter of 1997, a windfall profits tax was enacted into law in Great Britain. This tax was levied against a limited number of British companies, including Midlands, which had previously been owned and operated by the government. The government believed these companies were undervalued at the time of transition to private entities. As a result, the tax was levied and seen as a recovery of funds by the government.

    Our share of the tax was approximately 67 million pounds sterling. This translates to $109 million or $.69 per share, basic and diluted. We recorded the tax as an extraordinary item in the 1997 Consolidated Statement of Income. No related tax benefit was recorded for the charge. The windfall profit tax is not deductible for corporate income tax purposes in Great Britain. Also, we expect that any potential benefits derived for U.S. federal income taxes will not be significant.

18. Wabash Valley Power Association Settlement

     In February 1989, PSI and WVPA entered into a settlement agreement to resolve all claims related to Marble Hill, a nuclear project canceled in 1984. Implementation of the settlement was contingent on a number of events. During 1998, PSI reached agreement on all matters with the relevant parties and, as a result, recorded a liability to the RUS. PSI will repay the obligation to the RUS with interest over a 35-year term. The net proceeds from a 35-year power sales agreement with WVPA will be used to fund the principal and interest on the obligation to the RUS. Assumption of the liability (recorded as Long-term debt in the Consolidated Balance Sheet) resulted in a charge against earnings of $80 million ($50 million after tax or $.32 per share basic and diluted) in the second quarter of 1998.

19. Ohio Deregulation

     On July 6, 1999, Ohio Governor Robert Taft signed Amended Substitute Senate Bill No. 3 (Electric Restructuring Bill), beginning the transition to electric deregulation and customer choice for the state of Ohio. The Electric Restructuring Bill creates a competitive electric retail service market beginning January 1, 2001. The legislation provides for a market development period that begins January 1, 2001, and ends no later than December 31, 2005. Ohio electric utilities have an opportunity to recover Public Utilities Commission of Ohio (PUCO)-approved transition costs during the market development period. CG&E is seeking to recover all generation-related regulatory assets and above-market generation costs as allowable transition costs. The legislation also freezes retail electric rates during the market development period, except for a five percent reduction in the generation component of residential rates and other potential adjustments. Furthermore, the legislation contemplates that twenty percent of the current electric retail customers will switch suppliers no later than December 31, 2003.

    The Electric Restructuring Bill has required each utility supplying retail electric service in Ohio to file a comprehensive proposed transition plan with the PUCO addressing specific requirements of the legislation. CG&E filed its plan on December 28, 1999. The PUCO is required to issue a transition order no later than October 31, 2000. Consumers will be allowed to begin selecting alternative electricity suppliers beginning January 1, 2001.

    While CG&E believes there is sound basis for the various requests made in its Proposed Transition Plan, it is currently unable to predict the extent to which the Proposed Transition Plan will be approved and its resulting effect on results of operations, cash flows, and financial position. CG&E is seeking to recover all generation-related regulatory assets and above-market generation costs as allowable transition costs. CG&E believes its current accounting for regulatory assets has been consistent with the regulatory orders issued by the PUCO and that such costs should be recovered in future rates. However, to the extent requested recovery of generation-related regulatory assets is disallowed or generating assets are financially impaired, CG&E will be required to recognize a loss under generally accepted accounting principles. With regard to these assets, CG&E will continue to apply Statement 71 until the effect of deregulation is estimable.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None.

125

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS

BOARD OF DIRECTORS

    Information regarding Cinergy Corp.'s directors is incorporated by reference from its definitive Proxy Statement for the 2000 Annual Meeting of Shareholders.

    The directors of The Cincinnati Gas & Electric Company (CG&E) at February 29, 2000, are as follows:

•

Jackson H. Randolph—Mr. Randolph, age 69, is Chairman of  CG&E, a position he has held since 1995. He has served as a director of CG&E since 1983. His current term as director expires April 26, 2000.



•

James E. Rogers—Mr. Rogers, age 52, is Vice Chairman and Chief Executive Officer of  CG&E, a position he has held since 1995. He has served as a director of CG&E since 1994. His current term as director expires April 26, 2000.



•

James L. Turner—Mr. Turner, age 40, is President of  CG&E, a position he has held since 1999. Before joining Cinergy Corp.'s legal department in June 1995, Mr. Turner was a principal in the Indianapolis law firm of Lewis & Kappes, P.C., representing industrial customers in utility regulatory and legislative matters. In March 1997, Mr. Turner was appointed Vice President of Cinergy Services, Inc., having responsibility for the coordination of transition issues across all corporate subsidiaries in the move for full customer choice. From April 1998 to January 2000, he was responsible for Cinergy Corp.'s Government and Regulatory Affairs department. Effective January 2000, he was appointed Vice President of Customer Services. He has served as a director of CG&E since February 15, 1999. His current term as director expires April 26, 2000.

    Information regarding PSI Energy, Inc.'s (PSI) directors is incorporated by reference from its 2000 Information Statement.

EXECUTIVE OFFICERS

    The information included in Part I of this report on pages 17 through 20 under the caption "Executive Officers" is referenced in reliance upon General Instruction G to Form 10-K and Instruction 3 to Item 401 (b) of Regulation S-K.

ITEM 11. EXECUTIVE COMPENSATION

    Information regarding Cinergy Corp.'s executive compensation is incorporated by reference from its definitive Proxy Statement for the 2000 Annual Meeting of Shareholders.

    Information regarding CG&E's executive compensation is incorporated by reference from Cinergy Corp.'s definitive Proxy Statement for the 2000 Annual Meeting of Shareholders, except for the following information regarding the compensation of directors.

    Each non-employee director of CG&E is eligible to receive an annual retainer fee of $8,000 plus a fee of $1,000 for each CG&E board of directors' meeting attended. However, any non-employee director of CG&E who also serves as a non-employee director of Cinergy Corp. or any of its affiliates shall not receive the annual retainer fee, or any compensation for attendance at any CG&E board meeting that is held concurrently or consecutively with a meeting of our board of directors. All CG&E directors currently are also employees of Cinergy Corp. and/or its subsidiaries, and receive no compensation for their services as directors.

126

    Under the Directors' Deferred Compensation Plan, each non-employee director of Cinergy Corp. and its subsidiaries may choose to defer his or her fees into a bookkeeping account denominated in either:

•

units representing shares of our common stock, and/or



•

cash.

    If deferred in units, dividends are credited to the director's account, acquiring additional units at the same time and rate as dividends are paid to holders of common stock. Amounts deferred in cash earn interest at the annual rate (adjusted quarterly) equal to the interest rate for a one-year certificate of deposit, as quoted in The Wall Street Journal for the first business day of the calendar quarter. Deferred units are distributed as shares of common stock, and accrued cash accounts are paid in cash, generally after the director retires from the appropriate board.

    Effective January 1, 1999, the Retirement Plan for Directors was amended and restated to eliminate the award of future benefits. Each of the non-employee directors with an accrued benefit through December 31, 1998 was permitted to convert it from cash to units representing shares of common stock. If converted to stock units, dividends are credited to the director's account, acquiring additional units at the same time and rate as dividends are paid to holders of our common stock. A director's account is distributed as shares of common stock after he or she retires from the appropriate board. Each non-employee director of Cinergy Corp. and/or its subsidiaries who retired before January 1, 1999, or who chose not to convert the cash benefit, will receive an annual cash payment equal to the fees in effect at the time of retirement from the appropriate board.

    Information regarding PSI's executive compensation is incorporated by reference from its 2000 Information Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    Information regarding Cinergy Corp.'s security ownership of certain beneficial owners and management is incorporated by reference from its definitive Proxy Statement for the 2000 Annual Meeting of Shareholders.

Cinergy Corp. owns all outstanding shares of common stock of CG&E, CG&E's only voting security. Pursuant to Section 13(d) of the Securities Exchange Act of 1934, a beneficial owner of a security is any person who directly or indirectly has or shares voting or investment power over such security. No person or group is known by the management of CG&E to be the beneficial owner of more than 5% of CG&E's class of cumulative preferred stock as of December 31, 1999.

127

CG&E's directors and executive officers did not beneficially own shares of any series of the class of CG&E's cumulative preferred stock as of February 28, 1999. The beneficial ownership of Cinergy Corp. common stock held by each director and named executive officer as of February 29, 2000, is set forth in the following table:

Name of Beneficial Owner(1)	Amount and Nature of Beneficial Ownership(2)
Michael J. Cyrus	108,059 shares
William J. Grealis	233,373 shares
Jackson H. Randolph	267,726 shares
James E. Rogers	736,553 shares
Larry E. Thomas	253,982 shares
James L. Turner	10,880 shares
All directors and executive officers as a group	2,017,469 shares (representing 1.27% of the class	)

(1)

No individual listed beneficially owned more than 0.464% of the outstanding shares of our common stock.

(2)

Includes shares which there is a right to acquire within 60 days pursuant to the exercise of stock options in the following amounts: Mr. Grealis—113,937; Mr. Randolph—141,258; Mr. Rogers—461,029; Mr. Thomas—100,916; Mr. Turner—2,300; and all directors and executive officers as a group—962,086.

    Information regarding PSI's security ownership of certain beneficial owners and management is incorporated by reference to its 2000 Information Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Information regarding Cinergy Corp.'s and CG&E's certain relationships and related transactions is incorporated by reference from Cinergy Corp.'s definitive Proxy Statement for the 2000 Annual Meeting of Shareholders.

    Information regarding PSI's certain relationships and related transactions is incorporated by reference from its 2000 Information Statement.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

Financial Statements and Schedules

    Refer to the page captioned "Index to Financial Statements and Financial Statement Schedules", on page 70 of this report, for an index of our financial statements and financial statement schedules included in this report.

Form 8-K

    No reports on Form 8-K were filed during the quarter.

Exhibits

    Copies of the documents listed below which are identified with an asterisk (*) have heretofore been filed with the Securities and Exchange Commission and are incorporated herein by reference and made a part hereof. Exhibits identified with a pound sign (#) are being filed herewith by the registrant

128

identified in the exhibit discussion below and are incorporated herein by reference with respect to any other designated registrant. Exhibits not so identified are filed herewith:

Exhibit Designation	Registrant	Nature of Exhibit	Filed as Exhibit to:
Articles of Incorporation/ By-laws
3-a	Cinergy(1)	*Certificate of Incorporation of Cinergy, a Delaware corporation.	Cinergy 1993 Form 10-K.
3-b	Cinergy	*By-laws of Cinergy as amended October 15, 1998.	Cinergy October 15, 1998, Form 8-K.
3-c	Cinergy	*By-Laws of Cinergy, as amended on April 21, 1999.	Cinergy March 31, 1999, Form 10-Q.
3-d	CG&E(2)	*Amended Articles of Incorporation of CG&E effective October 23, 1996.	CG&E September 30, 1996, Form 10-Q.
3-e	CG&E	*Regulations of CG&E as amended, April 25, 1996.	CG&E March 31, 1996, Form 10-Q.
3-f	PSI(3)	*Amended Articles of Consolidation of PSI, as amended to April 20, 1995.	PSI June 30, 1995, Form 10-Q.
3-g	PSI	*Amendment to Article D of the Amended Articles of Consolidation of PSI, effective July 10, 1997.	Cinergy 1997 Form 10-K.
3-h	PSI	*By-laws of PSI, as amended to December 17, 1996.	PSI March 31, 1997, Form 10-Q.
3-i	ULH&P(4)	*Restated Articles of Incorporation made effective May 7, 1976.	ULH&P Form 8-K, May 1976.
3-j	ULH&P	*By-laws of ULH&P as amended, adopted May 8, 1996.	ULH&P March 31, 1996, Form 10-Q.
3-k	ULH&P	*Amendment to Restated Articles of Incorporation of ULH&P (Article Third) and Amendment to the By-laws of ULH&P (Article 1), both effective July 24, 1997.	Cinergy 1997 Form 10-K.
Instruments defining the rights of holders, incl. indentures
4-a	Cinergy PSI	*Original Indenture (First Mortgage Bonds) dated September 1, 1939, between PSI and The First National Bank of Chicago, as Trustee, and LaSalle National Bank as Successor Trustee.	Exhibit A-Part 3 in File No. 70-258 Supplemental Indenture dated March 30, 1984.
4-b	Cinergy PSI	*Twenty-fifth Supplemental Indenture between PSI and The First National Bank of Chicago dated September 1, 1978.	File No. 2-62543.
4-c	Cinergy PSI	*Thirty-fifth Supplemental Indenture between PSI and The First National Bank of Chicago dated March 30, 1984.	PSI 1984 Form 10-K.
4-d	Cinergy PSI	*Forty-second Supplemental Indenture between PSI and LaSalle National Bank dated August 1, 1988.	PSI 1988 Form 10-K.
4-e	Cinergy PSI	*Forty-fourth Supplemental Indenture between PSI and LaSalle National Bank dated March 15, 1990.	PSI 1990 Form 10-K.
4-f	Cinergy PSI	*Forty-fifth Supplemental Indenture between PSI and LaSalle National Bank dated March 15, 1990.	PSI 1990 Form 10-K.
4-g	Cinergy	*Forty-sixth Supplemental Indenture between PSI and LaSalle National Bank dated June 1, 1990.	PSI 1991 Form 10-K.
4-h	Cinergy PSI	*Forty-seventh Supplemental Indenture between PSI and LaSalle National Bank dated July 15, 1991.	PSI 1991 Form 10-K.

129

4-i	Cinergy PSI	*Forty-eighth Supplemental Indenture between PSI and LaSalle National Bank dated July 15, 1992.	PSI 1992 Form 10-K.
4-j	Cinergy PSI	*Forty-ninth Supplemental Indenture between PSI and LaSalle National Bank dated February 15, 1993.	PSI 1992 Form 10-K.
4-k	Cinergy PSI	*Fiftieth Supplemental Indenture between PSI and LaSalle National Bank dated February 15, 1993.	PSI 1992 Form 10-K.
4-l	Cinergy PSI	*Fifty-first Supplemental Indenture between PSI and LaSalle National Bank dated February 1, 1994.	PSI 1993 Form 10-K.
4-m	Cinergy PSI	*Fifty-second Supplemental Indenture between PSI and LaSalle National Bank, as Trustee, dated as of April 30, 1999.	PSI March 31, 1999, Form 10-Q.
4-n	Cinergy PSI	*Indenture (Secured Medium-term Notes, Series A), dated July 15, 1991, between PSI and LaSalle National Bank, as Trustee.	PSI Form 10-K/A, Amendment No. 2, dated July 15, 1993.
4-o	Cinergy PSI	*Indenture (Secured Medium-term Notes, Series B), dated July 15, 1992, between PSI and LaSalle National Bank, as Trustee.	PSI Form 10-K/A, Amendment No. 2, dated July 15, 1993.
4-p	Cinergy PSI	*Loan Agreement between PSI and the City of Princeton, Indiana dated as of November 7, 1996.	PSI September 30, 1996, Form 10-Q.
4-q	Cinergy PSI	*Loan Agreement between PSI and the City of Princeton, Indiana dated as of February 1, 1997.	Cinergy 1996 Form 10-K.
4-r	Cinergy PSI	*Indenture dated November 15, 1996, between PSI and The Fifth Third Bank, as Trustee.	Cinergy 1996 Form 10-K.
4-s	Cinergy PSI	*First Supplemental Indenture dated November 15, 1996, between PSI and The Fifth Third Bank, as Trustee.	Cinergy 1996 Form 10-K.
4-t	Cinergy PSI	*Third Supplemental Indenture dated as of March 15, 1998, between PSI and The Fifth Third Bank, as Trustee.	Cinergy 1997 Form 10-K.
4-u	Cinergy PSI	*Fourth Supplemental Indenture dated as of August 5, 1998, between PSI and The Fifth Third Bank, as Trustee.	PSI June 30, 1998, Form 10-Q.
4-v	Cinergy PSI	*Fifth Supplemental Indenture dated as of December 15, 1998, between PSI and The Fifth Third Bank, as Trustee.	PSI 1998 Form 10-K.
4-w	Cinergy PSI	*Sixth Supplemental Indenture between PSI and Fifth Third Bank, as Trustee, dated as of April 30, 1999.	PSI March 31, 1999, Form 10-Q.
4-x	Cinergy PSI	*Seventh Supplemental Indenture dated as of October 20, 1999, between PSI and Fifth Third Bank as Trustee.	PSI September 30, 1999, Form 10-Q.
4-y	Cinergy PSI	*Unsecured Promissory Note dated October 14, 1998, between PSI and the Rural Utilities Service.	PSI 1998 Form 10-K.
4-z	Cinergy PSI	*Loan Agreement between PSI and the Indiana Department Finance Authority dated as of July 15, 1998.	PSI June 30, 1998, Form 10-Q.
4-aa	Cinergy CG&E	*Original Indenture (First Mortgage Bonds) between CG&E and The Bank of New York (as Trustee) dated as of August 1, 1936.	CG&E Registration Statement No. 2-2374.
4-bb	Cinergy CG&E	*Fourteenth Supplemental Indenture between CG&E and The Bank of New York dated as of November 2, 1972.	CG&E Registration Statement No. 2-60961.
4-cc	Cinergy CG&E	*Thirty-third Supplemental Indenture between CG&E and The Bank of New York dated as of September 1, 1992.	CG&E Registration Statement No. 33-53578.
4-dd	Cinergy CG&E	*Thirty-fourth Supplemental Indenture between CG&E and The Bank of New York dated as of October 1, 1993.	CG&E September 30, 1993, Form 10-Q.
4-ee	Cinergy CG&E	*Thirty-fifth Supplemental Indenture between CG&E and The Bank of New York dated as of January 1, 1994.	CG&E Registration Statement No. 33-52335.

130

4-ff	Cinergy CG&E	*Thirty-sixth Supplemental Indenture between CG&E and The Bank of New York dated as of February 15, 1994.	CG&E Registration Statement No. 33-52335.
4-gg	Cinergy CG&E	*Thirty-seventh Supplemental Indenture between CG&E and The Bank of New York dated as of October 14, 1996.	Cinergy 1996 Form 10-K.
4-hh	Cinergy CG&E	*Loan Agreement between CG&E and the County of Boone, Kentucky dated as of February 1, 1985.	CG&E 1984 Form 10-K.
4-ii	Cinergy CG&E	*Repayment Agreement between CG&E and The Dayton Power and Light Company dated as of December 23, 1992.	CG&E 1992 Form 10-K.
4-jj	Cinergy CG&E	*Loan Agreement between CG&E and the County of Boone, Kentucky dated as of January 1, 1994.	CG&E 1993 Form 10-K.
4-kk	Cinergy CG&E	*Loan Agreement between CG&E and the State of Ohio Air Quality Development Authority dated as of December 1, 1985.	CG&E 1985 Form 10-K.
4-ll	Cinergy CG&E	*Loan Agreement between CG&E and the State of Ohio Air Quality Development Authority dated as of December 1, 1985.	CG&E 1985 Form 10-K.
4-mm	Cinergy CG&E	*Loan Agreement between CG&E and the State of Ohio Air Quality Development Authority dated as of September 13, 1995.	CG&E September 30, 1995, Form 10-Q.
4-nn	Cinergy CG&E	*Loan Agreement between CG&E and the State of Ohio Air Quality Development Authority dated as of September 13, 1995.	CG&E September 30, 1995, Form 10-Q.
4-oo	Cinergy CG&E	*Loan Agreement between CG&E and the State of Ohio Water Development Authority dated as of January 1, 1994.	CG&E 1993 Form 10-K.
4-pp	Cinergy CG&E	*Loan Agreement between CG&E and the State of Ohio Air Quality Development Authority dated as of January 1, 1994.	CG&E 1993 Form 10-K.
4-qq	Cinergy CG&E	*Original Indenture (Unsecured Debt Securities) between CG&E and The Fifth Third Bank dated as of May 15, 1995.	CG&E Form 8-A dated July 24, 1995.
4-rr	Cinergy CG&E	*First Supplemental Indenture between CG&E and The Fifth Third Bank dated as of June 1, 1995.	CG&E June 30, 1995, Form 10-Q.
4-ss	Cinergy CG&E	*Second Supplemental Indenture between CG&E and The Fifth Third Bank dated as of June 30, 1995.	CG&E Form 8-A dated July 24, 1995.
4-tt	Cinergy CG&E	*Third Supplemental Indenture between CG&E and The Fifth Third Bank dated as of October 9, 1997.	CG&E September 30, 1997, Form 10-Q.
4-uu	Cinergy CG&E	*Fourth Supplemental Indenture between CG&E and The Fifth Third Bank dated as of April 1, 1998.	CG&E March 31, 1998, Form 10-Q.
4-vv	Cinergy CG&E	*Fifth Supplemental Indenture between CG&E and The Fifth Third Bank dated as of June 9, 1998.	CG&E June 30, 1998, Form 10-Q.
4-ww	Cinergy CG&E ULH&P	*Original Indenture (First Mortgage Bonds) between ULH&P and The Bank of New York dated as of February 1, 1949.	ULH&P Registration Statement No. 2-7793.
4-xx	Cinergy CG&E ULH&P	*Fifth Supplemental Indenture between ULH&P and The Bank of New York dated as of January 1, 1967.	CG&E Registration Statement No. 2-60961.
4-yy	Cinergy CG&E ULH&P	*Thirteenth Supplemental Indenture between ULH&P and The Bank of New York dated as of August 1, 1992.	ULH&P 1992 Form 10-K.
4-zz	Cinergy CG&E ULH&P	*Original Indenture (Unsecured Debt Securities) between ULH&P and the Fifth Third Bank dated as of July 1, 1995.	ULH&P June 30, 1995, Form 10-Q.
4-aaa	Cinergy CG&E ULH&P	*First Supplemental Indenture between ULH&P and The Fifth Third Bank dated as of July 15, 1995.	ULH&P June 30, 1995, Form 10-Q.

131

4-bbb	Cinergy CG&E ULH&P	*Second Supplemental Indenture between ULH&P and The Fifth Third Bank dated as of April 30, 1998.	ULH&P March 31, 1998, Form 10-Q.
4-ccc	Cinergy CG&E ULH&P	*Third Supplemental Indenture between ULH&P and The Fifth Third Bank dated as of December 8, 1998.	ULH&P 1998 Form 10-K.
4-ddd	Cinergy CG&E ULH&P	*Fourth Supplemental Indenture dated as of September 17, 1999, between ULH&P and Fifth Third Bank as Trustee.	ULH&P September 30, 1999 Form 10-Q.
4-eee	Cinergy	*Base Indenture dated as of October 15, 1998, between Cinergy Global Resources, Inc. ("Global Resources") and The Fifth Third Bank as Trustee.	Cinergy September 30, 1998, Form 10-Q.
4-fff	Cinergy	*First Supplemental Indenture dated as of October 15, 1998, between Global Resources and The Fifth Third Bank as Trustee.	Cinergy September 30, 1998, Form 10-Q.
4-ggg	Cinergy	*Indenture dated as of December 16, 1998, between Cinergy and The Fifth Third Bank.	Cinergy 1998 Form 10-K.
4-hhh	Cinergy	*Indenture between Cinergy and Fifth Third Bank, as Trustee, dated as of April 15, 1999.	Cinergy March 31, 1999, Form 10-Q.
Material contracts
10-a	Cinergy CG&E PSI	*†Amended and Restated Employment Agreement dated October 24, 1994, among CG&E, Cinergy Corp. (an Ohio corporation), Cinergy, PSI Resources, Inc., and Jackson H. Randolph.	Cinergy 1994 Form 10-K.
10-b	Cinergy CG&E PSI	†Amended and Restated Employment Agreement dated December 30, 1999, among Cinergy, Services, CG&E, and PSI and James E. Rogers.	Cinergy 1999 Form 10-K.
10-c	Cinergy CG&E PSI	†Amended and Restated Employment Agreement dated December 30, 1999, among Cinergy, Services, CG&E, and PSI and William J. Grealis.	Cinergy 1999 Form 10-K.
10-d	Cinergy CG&E PSI	†Amended and Restated Employment Agreement dated December 30, 1999, among Cinergy, Services, CG&E, PSI and Larry  E. Thomas.	Cinergy 1999 Form 10-K.
10-e	Cinergy CG&E PSI	†Amended and Restated Employment Agreement dated December 30, 1999, among Cinergy, Services, CG&E, PSI and Cheryl M. Foley.	Cinergy 1999 Form 10-K.
10-f	Cinergy CG&E PSI	†Amended and Restated Employment Agreement dated December 30, 1999, among Cinergy, Services, CG&E, PSI and Madeleine W. Ludlow.	Cinergy 1999 Form 10-K.
10-g	Cinergy CG&E PSI	†Amended and Restated Employment Agreement dated December 30, 1999, among Cinergy, Services, CG&E, PSI, and Donald B. Ingle, Jr.	Cinergy 1999 Form 10-K.
10-h	Cinergy CG&E PSI	†Amended and Restated Employment Agreement dated December 30, 1999, among Cinergy, Services, CG&E, PSI and Michael J. Cyrus.	Cinergy 1999 Form 10-K.
10-i	Cinergy CG&E PSI	†Employment Agreement dated December 30, 1999 among Cinergy, Services, CG&E, PSI and Jerome A. Vennemann.	Cinergy 1999 Form 10-K.
10-j	Cinergy CG&E PSI	†Amended and Restated Employment Agreement dated December 30, 1999, among Cinergy, Services, CG&E, PSI and Charles J. Winger.	Cinergy 1999 Form 10-K.
10-k	Cinergy PSI	Deferred Compensation Agreement, effective as of January 1, 1992, between PSI and James E. Rogers, Jr.	PSI For 10-K/A, Amendment No. 1, dated April 29, 1993.

132

10-l	Cinergy PSI	*†Split Dollar Life Insurance Agreement, effective as of January 1, 1992, between PSI and James E. Rogers, Jr.	PSI Form 10-K/A, Amendment No. 1, dated April 29, 1993.
10-m	Cinergy PSI	*†First Amendment to Split Dollar Life Insurance Agreement between PSI and James E. Rogers, Jr. dated December 11, 1992.	PSI Form 10-K/A, Amendment No. 1, dated April 29, 1993.
10-n	Cinergy CG&E	*†Deferred Compensation Agreement between CG&E and Jackson H. Randolph dated January 1, 1992.	CG&E 1992 Form 10-K.
10-o	Cinergy CG&E	*†Split Dollar Insurance Agreement, effective as of May 1, 1993, between CG&E and Jackson H. Randolph.	Cinergy 1994 Form 10-K.
10-p	Cinergy CG&E	*†Amended and Restated Supplemental Retirement Income Agreement between CG&E and Jackson H. Randolph.	Cinergy 1995 Form 10-K.
10-q	Cinergy CG&E	*†Amended and Restated Supplemental Executive Retirement Income Agreement between CG&E and certain executive officers.	Cinergy 1997 Form 10-K.
10-r	Cinergy	†Cinergy Union Employees' 401(k) Plan as amended and restated effective January 1, 1998, adopted December 18, 1997.	Cinergy 1999 Form 10-K.
10-s	Cinergy	†Amendment to Cinergy Union Employees' 401(k) Plan, adopted December 10, 1999, effective December 1, 1999.	Cinergy 1999 Form 10-K.
10-t	Cinergy	†Cinergy Non-Union Employees' 401(k) Plan as amended and restated effective January 1, 1998, adopted December 18, 1997.	Cinergy 1999 Form 10-K.
10-u	Cinergy	†Amendment to Cinergy Non-Union Employees' 401(k) Plan, adopted December 10, 1999, effective December 1, 1999.	Cinergy 1999 Form 10-K.
10-v	Cinergy	†Cinergy Union Employees' Savings Incentive Plan as amended and restated effective January 1, 1998, adopted December 18, 1997.	Cinergy 1999 Form 10-K.
10-w	Cinergy	†Amendment to Cinergy Union Employees' Savings Incentive Plan, effective December 1, 1999, adopted December 10, 1999.	Cinergy 1999 Form 10-K.
10-x	Cinergy	†Cinergy Supplemental Executive Retirement Plan amended and restated effective January 1, 1999, adopted October 15, 1998.	Cinergy 1999 Form 10-K.
10-y		Left blank intentionally.
10-z	Cinergy	*†1997 Amendments to Various Compensation and Benefit Plans of Cinergy, adopted January 30, 1997.	Cinergy 1997 Form 10-K.
10-aa	Cinergy	*†Cinergy Stock Option Plan, adopted October 18, 1994, effective October 24, 1994.	Cinergy Form S-8, filed October 19, 1994.
10-bb	Cinergy	*†Amendment to Cinergy Stock Option Plan, amended October 22, 1996, effective November 1, 1996.	Cinergy September 30, 1996, Form 10-Q.
10-cc	Cinergy	*†Cinergy Annual Incentive Plan, adopted October 18, 1994, effective October 24, 1994.	Cinergy 1994 Form 10-K.
10-dd	Cinergy	*†Amendment to Cinergy Annual Incentive Plan, amended January 25, 1996, effective January 1, 1996.	Cinergy 1996 10-K.
10-ee	Cinergy	*Cinergy Employee Stock Purchase and Savings Plan, adopted October 18, 1994, effective October 24, 1994.	Cinergy Form S-8, filed October 19, 1994.
10-ff	Cinergy	*Amendment to Cinergy Employee Stock Purchase and Savings Plan, adopted April 26, 1996, effective January 1, 1996.	Cinergy June 30, 1996, Form 10-Q.

133

10-gg	Cinergy	*Amendment to Cinergy Employee Stock Purchase and Savings Plan, adopted October 22, 1996, effective November 1, 1996.	Cinergy September 30, 1996, Form 10-Q.
10-hh	Cinergy	†Cinergy UK Sharesave Scheme, adopted and effective December 16, 1999.	Cinergy 1999 Form 10-K.
10-ii	Cinergy	*†Cinergy Directors' Deferred Compensation Plan, adopted October 18, 1994, effective October 24, 1994.	Cinergy Form S-8, filed October 19, 1994.
10-jj	Cinergy	*†Amendment to Cinergy Directors' Deferred Compensation Plan, adopted October 22, 1996.	Cinergy September 30, 1996, Form 10-Q.
10-kk	Cinergy	*†Cinergy Retirement Plan for Directors, adopted October 18, 1994, effective October 24, 1994.	Cinergy 1994 Form 10-K.
10-ll	Cinergy	*Cinergy Retirement Plan for Directors, amended and restated effective January 1, 1999, adopted October 15, 1998.	Schedule 14A Definitive Proxy Statement filed March 12, 1999.
10-mm	Cinergy	Cinergy Directors' Equity Compensation Plan adopted October 15, 1998, effective January 1, 1999.	Schedule 14A Definitive Proxy Statement filed March 12, 1999.
10-nn	Cinergy	*†Cinergy Executive Supplemental Life Insurance Program adopted October 18, 1994, effective October 24, 1994, consisting of Defined Benefit Deferred Compensation Agreement, Executive Supplemental Life Insurance Program Split Dollar Agreement I, and Executive Supplemental Life Insurance Program Split Dollar Agreement II.	Cinergy 1994 Form 10-K.
10-oo	Cinergy	*†Cinergy 1996 Long-Term Incentive Compensation Plan, adopted April 26, 1996.	Cinergy Schedule 14A Definitive Proxy Statement filed March 13, 1996.
10-pp	Cinergy	*†Amendment to Cinergy 1996 Long-Term Incentive Compensation Plan, adopted October 22, 1996, effective November 1, 1996.	Cinergy September 30, 1996, Form 10-Q.
10-qq	Cinergy	*†Cinergy 401(k) Excess Plan, effective January 1, 1997, adopted December 17, 1996.	Cinergy 1996 Form 10-K.
10-rr	Cinergy	*†Cinergy Nonqualified Deferred Incentive Compensation Plan, effective January 1, 1997, adopted December 17, 1996.	Cinergy 1996 Form 10-K.
10-ss	Cinergy	Cinergy Director, Officer and Key Employee Stock Purchase Program, effective January 7, 2000, adopted December 10, 1999.	Cinergy 1999 Form 10-K.
10-tt	Cinergy	†Cinergy Non-Union Employees' Pension Plan as amended and restated effective January 1, 1998, adopted December 18, 1997.	Cinergy 1999 Form 10-K.
10-uu	Cinergy	†Cinergy Union Employees' Pension Plan as amended and restated effective January 1, 1998, adopted December 18, 1997.	Cinergy 1999 Form 10-K.
10-vv	Cinergy	†Cinergy Union Employees' Retirement Income Plan as amended and restated effective January 1, 1998, adopted December 18, 1997.	Cinergy 1999 Form 10-K.
Subsidiaries of the registrant
21	Cinergy CG&E PSI	Subsidiaries of Cinergy, CG&E, and PSI

134

Consent of experts and counsel
23	Cinergy CG&E PSI ULH&P	Consent of Independent Public Accountants
Power of attorney
24	Cinergy CG&E PSI ULH&P	Power of Attorney
Financial data schedule
27	Cinergy CG&E PSI ULH&P	Financial Data Schedules (included in electronic submission only)

†

Management contract, compensation plan, or arrangement required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K

(1)

Cinergy Corp. (Cinergy) in file number 1-11377

(2)

The Cincinnati Gas & Electric Company (CG&E) in file number 1-1232

(3)

PSI Energy, Inc. (PSI) in file number 1-3543

(4)

The Union Light, Heat and Power Company (ULH&P) in file number 2-7793

135

SCHEDULE II

CINERGY CORP.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

FOR THE THREE YEARS ENDED DECEMBER 31, 1999
(in thousands)

			Additions				Deductions
Description	Balance at Beginning of Period		Charged to Income		Charged to Other Accounts		For Purposes for Which Reserves Were Created		Other		Balance at Close of Period
Col. A	Col. B		Col. C				Col. D				Col. E
Accumulated Provisions Deducted from Applicable Assets
Allowance for Doubtful Accounts
1999	$	25,622	$	20,805	$	3,777	$	23,393	$	—	$	26,811
1998	$	10,382	$	29,430	$	4,022	$	18,212	$	—	$	25,622
1997	$	10,618	$	12,582	$	5,609	$	18,427	$	—	$	10,382

136

SCHEDULE II

THE CINCINNATI GAS & ELECTRIC COMPANY

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

FOR THE THREE YEARS ENDED DECEMBER 31, 1999
(in thousands)

			Additions				Deductions
Description	Balance at Beginning of Period		Charged to Income		Charged to Other Accounts		For Purposes for Which Reserves Were Created		Other		Balance at Close of Period
Col. A	Col. B		Col. C				Col. D				Col. E
Accumulated Provisions Deducted from Applicable Assets
Allowance for Doubtful Accounts
1999	$	17,607	$	9,754	$	4,017	$	14,638	$	—	$	16,740
1998	$	9,199	$	16,131	$	4,021	$	11,744	$	—	$	17,607
1997	$	9,178	$	6,484	$	5,609	$	12,072	$	—	$	9,199

137

SCHEDULE II

PSI ENERGY, INC.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

FOR THE THREE YEARS ENDED DECEMBER 31, 1999
(in thousands)

Col. A	Col. B		Col. C					Col. D				Col. E
			Additions					Deductions
Description	Balance at Beginning of Period		Charged to Income		Charged to Other Accounts			For Purposes for Which Reserves Were Created		Other		Balance at Close of Period
Accumulated Provisions Deducted from Applicable Assets
Allowance for Doubtful Accounts
1999	$	7,893	$	11,036	$	(240	)	$	8,755	$	—	$	9,934
1998	$	1,183	$	13,178	$	—		$	6,468	$	—	$	7,893
1997	$	1,269	$	6,098	$	—		$	6,184	$	—	$	1,183

138

SCHEDULE II

THE UNION LIGHT, HEAT AND POWER COMPANY

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

FOR THE THREE YEARS ENDED DECEMBER 31, 1999
(in thousands)

Col. A	Col. B		Col. C				Col. D				Col. E
			Additions				Deductions
Description	Balance at Beginning of Period		Charged to Income		Charged to Other Accounts		For Purposes for Which Reserves Were Created		Other		Balance at Close of Period
Accumulated Provisions Deducted from Applicable Assets
Allowance for Doubtful Accounts
1999	$	1,248	$	2,169	$	693	$	2,597	$	—	$	1,513
1998	$	996	$	1,861	$	583	$	2,192	$	—	$	1,248
1997	$	1,024	$	1,579	$	691	$	2,298	$	—	$	996

139

SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, Cinergy Corp., The Cincinnati Gas & Electric Company, PSI Energy, Inc., and The Union Light, Heat and Power Company have each duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CINERGY CORP.
THE CINCINNATI GAS & ELECTRIC COMPANY
PSI ENERGY, INC.
THE UNION LIGHT, HEAT AND POWER COMPANY
Registrants

Date: February 29, 2000

By /s/ JAMES E. ROGERS


James E. Rogers
Vice Chairman

140

    Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the indicated registrants and in the capacities and on the dates indicated:

Signature	Title	Date
Cinergy, CG&E, and PSI
Jackson H. Randolph	Chairman
Cinergy
Neil A. Armstrong	Director
Phillip R. Cox	Director
Kenneth M. Duberstein	Director
George C. Juilfs	Director
Melvin Perelman	Director
Thomas E. Petry	Director
Mary L. Schapiro	Director
John J. Schiff, Jr.	Director
Philip R. Sharp	Director
Dudley S. Taft	Director
Oliver W. Waddell	Director
Cinergy and PSI
James K. Baker	Director
Michael G. Browning	Director
John A. Hillenbrand II	Director
CG&E and ULH&P
James L. Turner	President and Director
Cinergy, CG&E, PSI, and ULH&P

/s/ JAMES E. ROGERS James E. Rogers Attorney-in-fact for all the foregoing persons	Vice Chairman, Chief Executive Officer, and Director President of Cinergy (Principal Executive Officer)	February 29, 2000
/s/ MADELEINE W. LUDLOW Madeleine W. Ludlow	Vice President and Chief Financial Officer Director of ULH&P (Principal Financial Officer)	February 29, 2000
/s/ BERNARD F. ROBERTS Bernard F. Roberts	Vice President and Comptroller (Principal Accounting Officer)	February 29, 2000

141

QuickLinks

PART I.
[MAP TO GO HERE]
PART II
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
CINERGY CORP. AND SUBSIDIARY COMPANIES
NOTES TO FINANCIAL STATEMENTS
Sale of Accounts Receivable (in millions)
PART III
SIGNATURES

EX-10.B

                                AMENDED AND RESTATED
                                EMPLOYMENT AGREEMENT


       This AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered into
as of the 30th day of December, 1999 (the "Effective Date"), by and between
Cinergy and James E. Rogers (the "Executive").  This Agreement replaces and
supersedes any and all prior employment agreements between Cinergy and the
Executive.  The capitalized words and terms used throughout this Agreement are
defined in Section 11.

                                       RECITALS

       A.     The Executive is currently serving as Vice Chairman, President,
and Chief Executive Officer of the Company, and Cinergy desires to secure the
continued employment of the Executive in accordance with this Agreement.

       B.     The Executive is willing to continue to remain in the employ of
Cinergy, and any successor to Cinergy, on the terms and conditions set forth in
this Agreement.

       C.     The parties intend that this Agreement will replace and supersede
any and all prior employment agreements between Cinergy (or any component
company or business unit of Cinergy) and the Executive.


                                     AGREEMENT

       In consideration of the mutual premises, covenants and agreements set
forth below, the parties agree as follows:

1.     EMPLOYMENT AND TERM

       a.     Cinergy, and any successor to Cinergy, agree to employ the
              Executive, and the Executive agrees to remain in the employ of
              Cinergy, in accordance with the terms and provisions of this
              Agreement, for the Employment Period set forth in Subsection b.
              The parties agree that the Company will be responsible for
              carrying out all of the premises, covenants, and agreements of
              Cinergy set forth in this Agreement.

       b.     The Employment Period of this Agreement will commence as of the
              Effective Date and continue until December 31, 2002; provided
              that, commencing on December 31, 2000, and on each subsequent
              December 31, the Employment Period will be extended for one (1)
              additional year unless either party gives the other party written
              notice not to extend this Agreement at least ninety (90) days
              before the extension would otherwise become effective.



2.     DUTIES AND POWERS OF EXECUTIVE

              a.     POSITION.  The Executive will serve Cinergy as Vice
              Chairman, President, and Chief Executive Officer of the
              Company, and he will have such responsibilities, duties, and
              authority as are customary for someone of that position,
              including those set forth in Annex A to this Agreement, and
              such additional duties, consistent with his position, as may be
              assigned to him from time to time during the Employment Period
              by the Board of Directors.  During the Employment Period, the
              Company will cause the Executive to be nominated as Vice
              Chairman of the Board of Directors at the annual meeting of
              Cinergy's shareholders.

              b.     PLACE OF PERFORMANCE.  In connection with the
              Executive's employment, the Executive will be based at the
              principal executive offices of Cinergy, 221 East Fourth Street,
              Cincinnati, Ohio, and, except for required business travel to
              an extent substantially consistent with the present business
              travel obligations of Cinergy executives who have positions of
              authority comparable to that of the Executive, the Executive
              will not be required to relocate to a new principal place of
              business that is more than thirty (30) miles from Cinergy's
              current principal executive offices.

3.     COMPENSATION.  The Executive will receive the following compensation for
       his services under this Agreement.

              a.     SALARY.  The Executive's Annual Base Salary, payable not
              less often than semi-monthly, will be at the annual rate of not
              less than $810,000.00.  The Board of Directors may, from time
              to time, increase the Annual Base Salary as the Board of
              Directors deems to be necessary or desirable, including without
              limitation adjustments to reflect increases in the cost of
              living.  Any increase in the Annual Base Salary will not serve
              to limit or reduce any other obligation of Cinergy under this
              Agreement.  The Annual Base Salary will not be reduced except
              for across-the-board salary reductions similarly affecting all
              Cinergy management personnel.  If Annual Base Salary is
              increased during the Employment Period, then the increased
              salary will be the Annual Base Salary for all purposes under
              this Agreement.

              b.     RETIREMENT, INCENTIVE, WELFARE BENEFIT PLANS AND OTHER
              BENEFITS. During the Employment Period, the Executive will be
              eligible, and Cinergy will take all necessary action to cause
              the Executive to become eligible, to participate in all
              short-term and long-term incentive, stock option, restricted
              stock, performance unit, savings, retirement and welfare plans,
              practices, policies and programs applicable generally to
              employees and/or other senior executives of Cinergy who are
              considered Tier II executives for compensation purposes, except
              with respect to any plan, practice, policy or program to which
              the Executive has waived his rights in writing.



              In addition, Cinergy will assume and continue the Split Dollar
              Agreement and the Deferred Compensation Agreement.
              Notwithstanding anything in this Agreement to the contrary, in
              the event that Cinergy or any successor fails to assume,
              breaches, or, at any time during their respective terms,
              terminates, modifies, amends, or in any way affects, to the
              Executive's detriment and without his consent, the Split Dollar
              Agreement or the Deferred Compensation Agreement, then the
              Executive will be entitled to: (i) in the case of the Deferred
              Compensation Agreement, those amounts that are described in
              Section 16 of the Deferred Compensation Agreement, and (ii) in
              the case of the Split Dollar Agreement, those amounts that are
              described in Section 12 of the Split Dollar Agreement.

              If the Executive retires after reaching age 50, the Executive will
              be entitled and fully vested in a supplemental retirement benefit
              equal to the difference between (1) his total benefit under all
              Executive Retirement Plans, and (2) 60% of the Executive's Highest
              Average Earnings times a fraction, the numerator of which is the
              Executive's Years of Participation and the denominator of which is
              35.  If, however, the Executive's employment is terminated
              following a Change in Control, for any reason other than Cause,
              the Executive will be entitled to a supplemental retirement
              benefit equal to the difference between (1) his total benefit
              under all Executive Retirement Plans, and (2) 60% of the
              Executive's Highest Average Earnings. The form, timing, and method
              of payment of the supplemental retirement benefit payable under
              this Paragraph will be the same as those elected by the Executive
              under the Pension Plan.  If the Executive dies after reaching age
              50 but prior to his retirement, and if his Spouse, on the date of
              his death, is living on the date the first installment of the
              supplemental retirement benefit would be payable under this
              Paragraph, the Spouse will be entitled to receive the supplemental
              retirement benefit as a Spouse's benefit.  The form, timing, and
              method of payment of any Spouse's benefit under this Paragraph
              will be the same as those applicable to the Spouse under the
              Pension Plan.

              Upon his retirement on or after having attained age fifty (50),
              the Executive will be eligible for comprehensive medical and
              dental insurance pursuant to the terms of the Retirees' Medical
              Plan and the Retirees' Dental Plan.  The Executive, however, will
              receive the full subsidy provided by Cinergy to retirees for
              purposes of determining the amount of monthly premiums due from
              the Executive.

              The Executive will be a participant in the Annual Incentive Plan,
              and the Executive will be paid pursuant to that plan an annual
              benefit of up to ninety percent (90%) of the Executive's Annual
              Base Salary, with a target of no less than forty percent (40%) of
              the Executive's Annual Base Salary (the "Target Annual Bonus").

              The Executive will be a participant in the Long-Term Incentive
              Plan (the "LTIP"), and the Executive's annualized target award
              opportunity under the LTIP will be



              equal to no less than one hundred percent (100%) of his Annual
              Base Salary (the "Target LTIP Bonus").

              c.     FRINGE BENEFITS AND PERQUISITES.  During the Employment
              Period, the Executive will be entitled to the following
              additional fringe benefits:

              (i)    Cinergy will furnish to the Executive an automobile and
                     will pay all of the related expenses for gasoline,
                     insurance, maintenance, and repairs.

              (ii)   Cinergy will pay the initiation fee and the annual dues,
                     assessments, and other membership charges of the Executive
                     for membership in the country clubs and associations of the
                     Executive's choice that are used for business purposes.

              (iii)  Cinergy will provide paid vacation for four (4) weeks per
                     year (or longer if permitted by Cinergy's policy).

              (iv)   Cinergy will furnish to the Executive annual financial
                     planning and tax preparation services.  In addition, the
                     Executive will be entitled to receive such other fringe
                     benefits in accordance with Cinergy plans, practices,
                     programs, and policies in effect from time to time,
                     commensurate with his position and at least comparable to
                     those received by other Cinergy senior executives.

              d.     EXPENSES.  Cinergy agrees to reimburse the Executive for
              all expenses, including those for travel and entertainment,
              properly incurred by him in the performance of his duties under
              this Agreement in accordance with the policies established from
              time to time by the Board of Directors.

              e.     RELOCATION BENEFITS.  Following termination of the
              Executive's employment for any reason (other than death), the
              Executive will be entitled to reimbursement from Cinergy for
              the reasonable costs of relocating from the Cincinnati, Ohio,
              area to a new primary residence in a manner that is consistent
              with the terms of the Relocation Program.

4.     TERMINATION OF EMPLOYMENT

              a.     DEATH.  The Executive's employment will terminate
              automatically upon the Executive's death during the Employment
              Period.

              b.     BY CINERGY FOR CAUSE.  Cinergy may terminate the
              Executive's employment during the Employment Period for Cause.
              For purposes of this Employment Agreement, "Cause" means the
              conviction of the Executive for the commission of a felony
              that, at the time of its commission, has a materially adverse
              effect on Cinergy.



       c.     BY CINERGY WITHOUT CAUSE.  Cinergy may, upon at least 30 days
              advance written notice to the Executive, terminate the Executive's
              employment during the Employment Period for a reason other than
              Cause, but the obligations placed upon Cinergy in Section 5 will
              apply.

       d.     BY THE EXECUTIVE FOR GOOD REASON.  The Executive may terminate his
              employment during the Employment Period for Good Reason.  For
              purposes of this Agreement, "Good Reason" means the following:

              (i)    A reduction in the Executive's Annual Base Salary, except
                     for across-the-board salary reductions similarly affecting
                     all Cinergy management personnel, or a reduction in any
                     other benefit or payment described in Section 3 of this
                     Agreement, except for changes to the employee benefits
                     programs affecting all Cinergy management personnel,
                     provided that those changes (either individually or in the
                     aggregate) will not result in a material adverse change
                     with respect to the benefits to which the Executive was
                     entitled as of the Effective Date.

              (ii)   The material reduction without his consent of the
                     Executive's title, authority, duties, or responsibilities
                     from those in effect immediately prior to the reduction or
                     a material adverse change in the Executive's reporting
                     responsibilities.

              (iii)  Any breach by Cinergy of any other material provision of
                     this Agreement (including but not limited to the place of
                     performance as specified in Subsection 2b).

              (iv)   The Executive's disability due to physical or mental
                     illness or injury that precludes the Executive from
                     performing any job for which he is qualified and able to
                     perform based upon his education, training or experience.

              (v)    A failure by the Company to require any successor entity to
                     the Company specifically to assume all of the Company's
                     obligations to the Executive under this Agreement.

       e.     BY THE EXECUTIVE WITHOUT GOOD REASON.  The Executive may terminate
              his employment without Good Reason upon prior written notice to
              the Company.

       f.     NOTICE OF TERMINATION.  Any termination of the Executive's
              employment by Cinergy or by the Executive during the Employment
              Period (other than a termination due to the Executive's death)
              will be communicated by a written Notice of Termination to the
              other party to this Agreement in accordance with Subsection 12b.
              For purposes of this Agreement, a "Notice of Termination" means a
              written notice that meets the following requirements:



              (i)    The notice indicates the specific termination provision in
                     this Agreement relied upon as the basis for termination.

              (ii)   To the extent applicable, the notice sets forth in
                     reasonable detail the facts
                     and circumstances claimed to provide a basis for
                     termination of the Executive's employment under the
                     provision specified pursuant to Paragraph (i).

              (iii)  If the Date of Termination is other than the date of
                     receipt of the notice, the notice specifies the Date of
                     Termination, which will be no more than 30 days after the
                     date the notice was given. The failure by the Executive or
                     Cinergy to set forth in the Notice of Termination any fact
                     or circumstances that contributes to a showing of Good
                     Reason or Cause will not waive any right of the Executive
                     or Cinergy under this Agreement or preclude the Executive
                     or Cinergy from asserting that fact or circumstance in
                     enforcing rights under this Agreement.

              (iv)   A Notice of Termination for Cause after a Change in Control
                     has occurred must include a copy of a resolution duly
                     adopted by the affirmative vote of not less three quarters
                     (3/4) of the entire membership of the Board of Directors at
                     a meeting of the Board of Directors called and held for the
                     purpose of considering the termination.  The resolution
                     must include a finding that, in the good faith opinion of
                     the Board of Directors, the Executive was guilty of conduct
                     set forth in the definition of Cause, and it must specify
                     the particulars of the conduct in detail.

5.     OBLIGATIONS OF CINERGY UPON TERMINATION.

       a.     CERTAIN TERMINATIONS.

              (i)    If a Termination occurs during the Employment Period,
                     Cinergy will pay to the Executive a lump sum amount, in
                     cash, equal to the sum of the following Accrued
                     Obligations:

                     (1)    the Executive's Annual Base Salary through the Date
                            of Termination to the extent not previously paid;

                     (2)    an amount equal to the AIP Benefit for the fiscal
                            year that includes the Date of Termination
                            multiplied by a fraction, the numerator of which
                            is the number of days from the beginning of that
                            fiscal year to and including the Date of
                            Termination and the denominator of which is three
                            hundred and sixty-five (365).  The AIP Benefit
                            will be determined using a percentage determined
                            by the Board of Directors, in its discretion, up
                            to the maximum percentage specified in Subsection
                            3b, but no less than the Target Annual



                            Bonus.

                     (3)    any compensation previously deferred by the
                            Executive (together with any accrued interest or
                            earnings) and any accrued vacation pay, in each case
                            to the extent not previously paid.

                     The Accrued Obligations described in this Paragraph 5a(i)
                     will be paid within thirty (30) days after the Date of
                     Termination.  These Accrued Obligations are payable to the
                     Executive regardless of whether a Change in Control has
                     occurred.

              (ii)   Prior to the occurrence of a Change in Control, and in the
                     event of (A) a Termination other than by reason of the
                     Executive's death, or (B) the Executive's termination of
                     his employment during the Employment Period for Good
                     Reason, Cinergy will pay the Accrued Obligations, and
                     Cinergy will have the following obligations:

                     (1)    Cinergy will pay to the Executive a lump sum amount,
                            in cash, equal to three (3) times the sum of the
                            Annual Base Salary and the AIP Benefit.  For this
                            purpose, the Annual Base Salary will be at the rate
                            in effect at the time Notice of Termination is given
                            (without giving effect to any reduction in Annual
                            Base Salary, if any, prior to the termination).  The
                            AIP Benefit will be determined using a percentage
                            determined by the Chief Executive Officer, in his
                            discretion, which will not be less than the
                            Executive's annual target percentage for the fiscal
                            year in which the Termination occurs and will not be
                            greater than the maximum percentage specified in
                            Subsection 3b.  This lump sum will be paid within
                            thirty (30) days of the Date of Termination.

                     (2)    Cinergy will pay to the Executive the value of all
                            deferred compensation amounts and all executive life
                            insurance benefits whether or not they are otherwise
                            currently vested or payable.  Payment will be made
                            in accordance with the terms of the applicable plan
                            or program.

                     (3)    Cinergy will pay to the Executive, within 30 days of
                            the Date of Termination, a lump sum amount, in cash,
                            equal to the present value, discounted at the Prime
                            Rate, of all benefits to which the Executive would
                            have been entitled had he remained employed by
                            Cinergy until the end of the Employment Period,
                            each, where applicable, at the rate of Annual Base
                            Salary, and using the same goals and factors, in
                            effect at the time Notice of Termination is given,
                            under the Value Creation Plan of the LTIP, the
                            Performance Shares Plan, and the Executive
                            Supplemental Life Insurance



                            Program, minus the present value, discounted at
                            the Prime Rate, of the benefits to which he is
                            actually entitled under these plans and programs.

                     (4)    Except as provided under Clauses (A) and (B) below,
                            Cinergy will continue, until the end of the
                            Employment Period, medical and dental benefits to
                            the Executive and/or the Executive's family at least
                            equal to those that would have been provided if the
                            Executive's employment had not been terminated
                            (excluding benefits to which the Executive has
                            waived his rights in writing).  The benefits
                            described in the preceding sentence will be in
                            accordance with the medical and welfare benefit
                            plans, practices, programs, or policies of Cinergy
                            (the "M&W Plans") as then currently in effect and
                            applicable generally to other Cinergy senior
                            executives and their families.

                            (A)    If, as of the Executive's Date of
                            Termination, the Executive meets the eligibility
                            requirements for Cinergy's retiree medical and
                            welfare benefit plans, the provision of those
                            retiree medical and welfare benefit plans to the
                            Executive will satisfy Cinergy's obligation under
                            this Subparagraph 5a(ii)(3).

                            (B)    If, as of the Executive's Date of
                            Termination, the provision to the Executive of
                            the M&W Plan benefits described in this
                            Subparagraph 5a(ii)(3) would either (1) violate
                            the terms of the M&W Plans or (2) violate any of
                            the Code's nondiscrimination requirements
                            applicable to the M&W Plans, then Cinergy, in its
                            sole discretion, may elect to pay the Executive,
                            in lieu of the M&W Plan benefits described under
                            this Subparagraph 5a(ii)(3), a lump sum cash
                            payment equal to the total monthly premiums that
                            would have been paid by Cinergy for the Executive
                            under the M&W Plans from the Date of Termination
                            through the end of the Employment Period.
                            Nothing in this Clause will affect the
                            Executive's right to elect COBRA continuation
                            coverage under a M&W Plan in accordance with
                            applicable law.

                            (C)    If the Executive becomes employed by another
                            employer and is eligible to receive medical or other
                            welfare benefits under another employer-provided
                            plan, any benefits provided to the Executive under
                            the M&W Plans will be secondary to those provided
                            under the other employer-provided plan during the
                            Executive's applicable period of



                            eligibility.

                     (5)    Ownership of the automobile assigned to the
                            Executive by Cinergy will be transferred to the
                            Executive within 30 days of the Date of Termination.
                            The effect of this transfer will be grossed up for
                            federal and state income taxes as soon as
                            administratively feasible after the transfer is
                            effective.

                     (6)    Cinergy will provide tax counseling services through
                            an agency selected by the Executive, not to exceed
                            Fifteen Thousand Dollars ($15,000.00) in cost.

              (iii)  In the event of Termination by Cinergy or by the Executive
                     for Good Reason during the twenty-four (24) month period
                     after the occurrence of a Change in Control, then in lieu
                     of any further salary payments to the Executive for periods
                     subsequent to the Date of Termination and in lieu of any
                     other benefits payable pursuant to Paragraph 5a(ii),
                     Cinergy will have the following obligations:

                     (1)    Cinergy will pay to the Executive a lump sum
                            severance payment, in cash, equal to the greater of:

                            (A)    the present value of all amounts and benefits
                                   that would have been due under Paragraph
                                   5a(ii), excluding Subparagraphs 5a(ii)(3),
                                   5a(ii)(4), 5a(ii)(5), or

                            (B)    three (3) times the sum of (x) the higher of
                                   the Executive's Annual Base Salary in effect
                                   immediately prior to the occurrence of the
                                   event or circumstance upon which the Notice
                                   of Termination is based or in effect
                                   immediately prior to the Change in Control,
                                   and (y) the higher of the amount paid to the
                                   Executive pursuant to all annual incentive
                                   compensation or bonus plans or programs
                                   maintained by Cinergy in the year preceding
                                   that in which the Date of Termination occurs
                                   or in the year preceding that in which the
                                   Change in Control occurs; and

                     (2)    For a thirty-six (36) month period after the Date of
                            Termination, Cinergy will arrange to provide the
                            Executive with life, disability, accident, and
                            health insurance benefits substantially similar to
                            those that the Executive is receiving immediately
                            prior to the Notice of Termination (without giving
                            effect to any reduction in those benefits subsequent
                            to a Change in Control that constitutes Good
                            Reason), except for any benefits that were waived by
                            the Executive in writing.  If Cinergy arranges to
                            provide the Executive with life,



                            disability, accident, and health insurance
                            benefits, those benefits will be reduced to the
                            extent comparable benefits are actually received
                            by or made available to the Executive without
                            cost during the thirty-six (36) month period
                            following the Executive's Date of Termination.
                            The Executive must report to Cinergy any such
                            benefits that he actually receives.  In lieu of
                            the benefits described in the preceding
                            sentences, Cinergy, in its sole discretion, may
                            elect to pay to the Executive a lump sum cash
                            payment equal to thirty-six (36) times the
                            monthly premiums that would have been paid by
                            Cinergy to provide those benefits to the
                            Executive.  Nothing in this Subparagraph
                            5a(iii)(2) will affect the Executive's right to
                            elect COBRA continuation coverage in accordance
                            with applicable law.

                     (3)    Ownership of the automobile assigned to the
                            Executive by Cinergy will be transferred to the
                            Executive within 30 days of the Date of Termination.
                            The effect of this transfer will be grossed up for
                            federal and state income taxes as soon as
                            administratively feasible after the transfer is
                            effective.

                     (4)    Cinergy will provide tax counseling services through
                            an agency selected by the Executive, not to exceed
                            Fifteen Thousand Dollars ($15,000.00) in cost.

                     For purposes of this Paragraph (iii), the Executive will be
                     deemed to have incurred a Termination following a Change in
                     Control if the Executive's employment is terminated prior
                     to a Change in Control, without Cause at the direction of a
                     Person who has entered into an agreement with Cinergy, the
                     consummation of which will constitute a Change in Control,
                     or if the Executive terminates his employment for Good
                     Reason prior to a Change in Control if the circumstances or
                     event that constitutes Good Reason occurs at the direction
                     of such a Person.

       b.     TERMINATION BY CINERGY FOR CAUSE OR BY THE EXECUTIVE OTHER THAN
              FOR GOOD REASON.  Subject to the provisions of Subsections 5c and
              Section 7, if the Executive's employment is terminated for Cause
              during the Employment Period, or if the Executive terminates
              employment during the Employment Period other than a termination
              for Good Reason, Cinergy will have no further obligations to the
              Executive under this Agreement other than the obligation to pay to
              the Executive the Accrued Obligations, plus any other earned but
              unpaid compensation, in each case to the extent not previously
              paid.


       c.     CERTAIN TAX CONSEQUENCES.





              (i)    In the event that any Severance Benefits paid or payable to
                     the Executive or for his benefit pursuant to the terms of
                     this Agreement or otherwise in connection with, or arising
                     out of, his employment with Cinergy or a change in
                     ownership or effective control of Cinergy or of a
                     substantial portion of its assets (a "Payment" or
                     "Payments") would be subject to any Excise Tax, then the
                     Executive will be entitled to receive an additional payment
                     (a "Gross-Up Payment") in an amount such that after payment
                     by the Executive of all taxes (including any interest,
                     penalties, additional tax, or similar items imposed with
                     respect thereto and the Excise Tax), including any Excise
                     Tax imposed upon the Gross-Up Payment, the Executive
                     retains an amount of the Gross-Up Payment equal to the
                     Excise Tax imposed upon the Payments.

              (ii)   An initial determination as to whether a Gross-Up Payment
                     is required pursuant to this Agreement and the amount of
                     that Gross-Up Payment will be made at Cinergy's expense by
                     an Accounting Firm selected by the Executive and reasonably
                     acceptable to Cinergy.  The Accounting Firm will provide
                     its determination, together with detailed supporting
                     calculations and documentation, to Cinergy and the
                     Executive within 10 days after the Date of Termination, or
                     such other time as requested by Cinergy or by the
                     Executive, and if the Accounting Firm determines that no
                     Excise Tax is payable by the Executive with respect to a
                     Payment or Payments, it will furnish the Executive with an
                     opinion reasonably acceptable to the Executive that no
                     Excise Tax will be imposed with respect to any such Payment
                     or Payments.  Within 10 days after the Accounting Firm
                     delivers its determination to the Executive, the Executive
                     will have the right to dispute the determination.  The
                     Gross-Up Payment, if any, as determined pursuant to this
                     Subsection 5c will be paid by Cinergy to the Executive
                     within five days of the receipt of the Accounting Firm's
                     determination.  The existence of a dispute will not in any
                     way affect the Executive's right to receive the Gross-Up
                     Payment in accordance with the determination.  If there is
                     no dispute, the determination will be binding, final, and
                     conclusive upon Cinergy and the Executive.  If there is a
                     dispute, then Cinergy and the Executive will together
                     select a second Accounting Firm, which will review the
                     determination and the Executive's basis for the dispute and
                     then will render its own determination, which will be
                     binding, final, and conclusive on Cinergy and on the
                     Executive.  Cinergy will bear all costs associated with
                     that determination, unless the determination is not greater
                     than the initial determination, in which case all such
                     costs will be borne by the Executive.

              (iii)  The value of any non-cash benefits or any deferred payment
                     or benefit paid or payable to the Executive will be
                     determined in accordance with the principles of Code
                     paragraphs 280G(d)(3) and (4).  For purposes of



                     determining the amount of the Gross-Up Payment, the
                     Executive will be deemed to pay federal income taxes at
                     the highest marginal rate of federal income taxation in
                     the calendar year in which the Gross-Up Payment is to be
                     made and applicable state and local income taxes at the
                     highest marginal rate of taxation in the state and
                     locality of the Executive's residence on the Date of
                     Termination, net of the maximum reduction in federal
                     income taxes that would be obtained from deduction of
                     those state and local taxes.

              (iv)   Notwithstanding anything contained in this Agreement to the
                     contrary, in the event that, according to the Accounting
                     Firm's determination, an Excise Tax will be imposed on any
                     Payment or Payments, Cinergy will pay to the applicable
                     government taxing authorities as Excise Tax withholding,
                     the amount of the Excise Tax that Cinergy has actually
                     withheld from the Payment or Payments in accordance with
                     law.

       d.     VALUE CREATION PLAN AND STOCK OPTIONS.  Upon the Executive's
              termination of employment for any reason, the Executive's
              entitlement to restricted shares and performance shares under the
              Value Creation Plan and any stock options granted under the Stock
              Option Plan or the LTIP will be determined under the terms of the
              appropriate plan and any applicable administrative guidelines and
              written agreements.

       e.     OTHER FEES AND EXPENSES.  Cinergy will also pay to the Executive
              all legal fees and expenses incurred by the Executive in
              successfully disputing a Termination that entitles the Executive
              to Severance Benefits.  Payment will be made within five (5)
              business days after delivery of the Executive's written request
              for payment accompanied by such evidence of fees and expenses
              incurred as Cinergy reasonably may require.

6.     NON-EXCLUSIVITY OF RIGHTS.  Nothing in this Agreement will prevent or
       limit the Executive's continuing or future participation in any benefit,
       plan, program, policy, or practice provided by Cinergy and for which the
       Executive may qualify, except with respect to any benefit to which the
       Executive has waived his rights in writing or any plan, program, policy,
       or practice that expressly excludes the Executive from participation.  In
       addition, nothing in this Agreement will limit or otherwise affect the
       rights the Executive may have under any other contract or agreement with
       Cinergy entered into after the Effective Date.  Amounts that are vested
       benefits or that the Executive is otherwise entitled to receive under any
       benefit, plan, program, policy, or practice of, or any contract or
       agreement entered into after the Effective Date with Cinergy, at or
       subsequent to the Date of Termination, will be payable in accordance with
       that benefit, plan, program, policy or practice, or that contract or
       agreement, except as explicitly modified by this Agreement.

7.     FULL SETTLEMENT:  MITIGATION.  Cinergy's obligation to make the payments
       provided for in this Agreement and otherwise to perform its obligations
       under this Agreement will not be



       affected by any set-off, counterclaim, recoupment, defense, or other
       claim, right, or action that Cinergy may have against the Executive or
       others.  In no event will the Executive be obligated to seek other
       employment or take any other action by way of mitigation of the
       amounts (including amounts for damages for breach) payable to the
       Executive under any of the provisions of this Agreement and, except as
       provided in Subparagraphs 5a(ii)(3) and 5a(iii)(2), those amounts will
       not be reduced simply because the Executive obtains other employment.
       If the Executive finally prevails on the substantial claims brought
       with respect to any dispute between Cinergy and the Executive as to
       the interpretation, terms, validity, or enforceability of (including
       any dispute about the amount of any payment pursuant to) this
       Agreement, Cinergy agrees to pay all reasonable legal fees and
       expenses that the Executive may reasonably incur as a result of that
       dispute.

8.     ARBITRATION.  The parties agree that any dispute, claim, or controversy
       based on common law, equity, or any federal, state, or local statute,
       ordinance, or regulation (other than workers' compensation claims)
       arising out of or relating in any way to the Executive's employment, the
       terms, benefits, and conditions of employment, or concerning this
       Agreement or its termination and any resulting termination of employment,
       including whether such a dispute is arbitrable, shall be settled by
       arbitration.  This agreement to arbitrate includes but is not limited to
       all claims for any form of illegal discrimination, improper or unfair
       treatment or dismissal, and all tort claims.  The Executive will still
       have a right to file a discrimination charge with a federal or state
       agency, but the final resolution of any discrimination claim will be
       submitted to arbitration instead of a court or jury.  The arbitration
       proceeding will be conducted under the employment dispute resolution
       arbitration rules of the American Arbitration Association in effect at
       the time a demand for arbitration under the rules is made.  The decision
       of the arbitrator(s), including determination of the amount of any
       damages suffered, will be exclusive, final, and binding on all parties,
       their heirs, executors, administrators, successors and assigns.  Each
       party will bear its own expenses in the arbitration for arbitrators' fees
       and attorneys' fees, for its witnesses, and for other expenses of
       presenting its case.  Other arbitration costs, including administrative
       fees and fees for records or transcripts, will be borne equally by the
       parties.  Notwithstanding anything in this Section to the contrary, if
       the Executive prevails with respect to any dispute submitted to
       arbitration under this Section, Cinergy will reimburse or pay all legal
       fees and expenses that the Executive may reasonably incur as a result of
       the dispute as required by Section 7.

9.     CONFIDENTIAL INFORMATION.  The Executive will hold in a fiduciary
       capacity for the benefit of Cinergy, as well as all of Cinergy's
       successors and assigns, all secret, confidential information, knowledge,
       or data relating to Cinergy, and its affiliated businesses, that the
       Executive obtains during the Executive's employment by Cinergy or any of
       its affiliated companies, and that has not been or subsequently becomes
       public knowledge (other than by acts by the Executive or representatives
       of the Executive in violation of this Agreement).  During the Employment
       Period and thereafter, the Executive will not, without Cinergy's prior
       written consent or as may otherwise by required by law or legal process,
       communicate or divulge any such information, knowledge, or data to anyone
       other than Cinergy and those designated by it.  The



       Executive understands that during the Employment Period, Cinergy may
       be required from time to time to make public disclosure of the terms
       or existence of the Executive's employment relationship to comply with
       various laws and legal requirements.

10.    SUCCESSORS.

       a.     This Agreement is personal to the Executive and, without Cinergy's
              prior written consent, cannot be assigned by the Executive
              otherwise than by will or the laws of descent and distribution.
              This Agreement will inure to the benefit of and be enforceable by
              the Executive's legal representatives.

       b.     This Agreement will inure to the benefit of and be binding upon
              Cinergy and its successors and assigns.

       c.     Cinergy will require any successor (whether direct or indirect, by
              purchase, merger, consolidation or otherwise) to all or
              substantially all of the business and/or assets of Cinergy to
              assume expressly and agree to perform this Agreement in the same
              manner and to the same extent that Cinergy would be required to
              perform it if no succession had taken place.  Cinergy's failure to
              obtain such an assumption and agreement prior to the effective
              date of a succession will be a breach of this Agreement and will
              entitle the Executive to compensation from Cinergy in the same
              amount and on the same terms as if the Executive were to terminate
              his employment for Good Reason after a Change in Control, except
              that, for purposes of implementing the foregoing, the date on
              which any such succession becomes effective will be deemed the
              Date of Termination.

11.    DEFINITIONS.  As used in this Agreement, the following terms, when
       capitalized, will have the following meanings:

       a.     1934 ACT.  "1934 Act" means the Securities Exchange Act of 1934.

       b.     ACCOUNTING FIRM.  "Accounting Firm" means an accounting firm that
              is designated as one of the five largest accounting firms in the
              United States (which may include Cinergy's independent auditors).

       c.     ACCRUED OBLIGATIONS.  "Accrued Obligations" means the accrued
              obligations described in Paragraph 5a(i).

       d.     AGREEMENT.  "Agreement" means this Amended and Restated Employment
              Agreement between Cinergy and the Executive.

       e.     AIP BENEFIT.  "AIP Benefit" means the Annual Incentive Plan
              benefit described in Subsection 3b.

       f.     ANNUAL BASE SALARY.  "Annual Base Salary" means the annual base
              salary payable



              to the Executive pursuant to Subsection 3a.

       g.     ANNUAL INCENTIVE PLAN.  "Annual Incentive Plan" means the Cinergy
              Corp. Annual Incentive Plan or any successor to that plan.

       h.     BOARD OF DIRECTORS.  "Board of Directors" means the board of
              directors of the Company.

       i.     CAUSE.  "Cause" has the meaning set forth in Subsection 4b.

       j.     CHANGE IN CONTROL.  "A Change in Control" will be deemed to have
              occurred if any of the following events occur, after the Effective
              Date:

              (i)    Any "person" or "group" (within the meaning of subsection
                     13(d) and paragraph 14(d)(2) of the 1934 Act) is or becomes
                     the beneficial owner (as defined in Rule l3d-3 under the
                     1934 Act), directly or indirectly, of securities of the
                     Company (not including in the securities beneficially owned
                     by such a Person any securities acquired directly from the
                     Company or its affiliates) representing more than twenty
                     percent (20%) of the combined voting power of the Company's
                     then outstanding securities, excluding any person who
                     becomes such a beneficial owner in connection with a
                     transaction described in Clause (1) of Paragraph (ii)
                     below; or

              (ii)   There is consummated a merger or consolidation of the
                     Company or any direct or indirect subsidiary of the Company
                     with any other corporation, other than (1) a merger or
                     consolidation that would result in the voting securities of
                     the Company outstanding immediately prior to that merger or
                     consolidation continuing to represent (either by remaining
                     outstanding or by being converted into voting securities of
                     the surviving entity or its parent) at least sixty percent
                     (60%) of the combined voting power of the securities of the
                     Company or the surviving entity or its parent outstanding
                     immediately after the merger or consolidation, or (2) a
                     merger or consolidation effected to implement a
                     recapitalization of the Company (or similar transaction) in
                     which no person is or becomes the beneficial owner,
                     directly or indirectly, of securities of the Company (not
                     including in the securities beneficially owned by such a
                     Person any securities acquired directly from the Company or
                     its affiliates other than in connection with the
                     acquisition by the Company or its affiliates of a business)
                     representing twenty percent (20%) or more of the combined
                     voting power of the Company's then outstanding securities;
                     or

              (iii)  During any period of two consecutive years, individuals who
                     at the beginning of that period constitute the Board of
                     Directors and any new director (other than a director whose
                     initial assumption of office is in connection with an
                     actual or threatened election contest, including but not
                     limited to a consent



                     solicitation, relating to the election of directors of
                     the Company) whose appointment or election by the
                     Company's shareholders was approved or recommended by a
                     vote of at least two-thirds (2/3) of the directors then
                     still in office who either were directors at the
                     beginning of that period or whose appointment, election,
                     or nomination for election was previously so approved or
                     recommended cease for any reason to constitute a
                     majority of the Board of Directors; or

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

       k.     CINERGY.  "Cinergy" means the Company, Cinergy Services, Inc., The
              Cincinnati Gas & Electric Company, and PSI Energy, Inc.

       l.     CODE.  "Code" means the Internal Revenue Code of 1986, as amended,
              and interpretive rules and regulations.

       m.     COMPANY.  "Company" means Cinergy Corp.

       n.     DATE OF TERMINATION.  "Date of Termination" means:

              (i)    if the Executive's employment is terminated by the Company
                     for Cause, or by the Executive with or without Good Reason,
                     the date of receipt of the Notice of Termination or any
                     later date specified in the notice, as the case may be;

              (ii)   if the Executive's employment is terminated by the Company
                     other than for Cause, thirty (30) days after the date on
                     which the Company notifies the Executive of the
                     termination; and

              (iii)  if the Executive's employment is terminated by reason of
                     death, the date of death.

       o.     DEFERRED COMPENSATION AGREEMENT.  "Deferred Compensation
              Agreement" means the deferred compensation agreement, effective
              January 1, 1992, between the Executive and PSI Energy, Inc.

       p.     EARNINGS.  "Earnings" means the Executive's "Earnings" as defined
              in the Pension



              Plan but without regard to the limitation of Code paragraph
              401(a)(17).

       q.     EFFECTIVE DATE.  "Effective Date" means December 30, 1999.

       r.     EMPLOYMENT PERIOD.  "Employment Period" has the meaning set forth
              in Subsection 1b.

       s.     EXCISE TAX.  "Excise Tax" means any excise tax imposed by Code
              section 4999, together with any interest, penalties, additional
              tax or similar items that are incurred by the Executive with
              respect to the excise tax imposed by Code section 4999.

       t.     EXECUTIVE.  "Executive" means James E. Rogers.

       u.     EXECUTIVE RETIREMENT PLANS.  The "Executive Retirement Plans" are
              the Pension Plan, the Supplemental Executive Retirement Plan, and
              the Cinergy Corp. Excess Pension Plan or any successor to those
              plans.

       v.     EXECUTIVE SUPPLEMENTAL LIFE PROGRAM.  "Executive Supplemental Life
              Program" means the Cinergy Corp. Executive Supplemental Life
              Program or any successor to that plan.

       w.     GOOD REASON.  "Good Reason" has the meaning set forth in
              Subsection 4d.

       x.     GROSS-UP PAYMENT.  "Gross-Up Payment" has the meaning set forth in
              Subsection 5c.

       y.     HIGHEST AVERAGE EARNINGS.  "Highest Average Earnings" means the
              greater of (a) the Executive's "Highest Average Earnings" as
              defined in the Pension Plan (without regard to the limitation of
              Code paragraph 401(a)(17)) plus any amount deferred under the
              Deferred Compensation Agreement during that 36-month period, or
              (b) the Executive's Earnings for the 12 consecutive calendar
              months immediately preceding his termination of employment with
              Cinergy, plus any amounts deferred under the Deferred Compensation
              Agreement during that 12-month period.

       z.     M&W PLANS.  "M&W Plans" has the meaning given in Subparagraph
              5a(ii)(3).

       aa.    LONG-TERM INCENTIVE PLAN.  "Long-Term Incentive Plan" means the
              long-term inventive plan implemented under the Cinergy Corp. 1996
              Long-Term Incentive Compensation Plan or any successor to that
              plan.

       bb.    NOTICE OF TERMINATION.  "Notice of Termination" has the meaning
              set forth in Subsection 4e.



       cc.    PAYMENT OR PAYMENTS.  "Payment" or "Payments" has the meaning set
              forth in Subsection 5c.

       dd.    PENSION PLAN.  "Pension Plan" means the Cinergy Corp. Non-Union
              Employees' Pension Plan or any successor to that plan.

       ee.    PERFORMANCE SHARES PLAN.  "Performance Shares Plan" means the
              Cinergy Corp. Performance Shares Plan or any successor to that
              plan.

       ff.    PERSON.  "Person" has the meaning set forth in paragraph 3(a)(9)
              of the 1934 Act, as modified and used in subsections 13(d) and
              14(d) of the 1934 Act; however, a Person will not include the
              following:

              (i)    Cinergy or any of its subsidiaries;

              (ii)   A trustee or other fiduciary holding securities under an
                     employee benefit plan of Cinergy or its subsidiaries;

              (iii)  An underwriter temporarily holding securities pursuant
                     to an offering of those securities; or

              (iv)   A corporation owned, directly or indirectly, by the
                     stockholders of the Company in substantially the same
                     proportions as their ownership of stock of the Company.

       gg.    PRIME RATE. "Prime Rate" means the prime rate of interest
              promulgated by Citibank, N.A. and in effect as of the Date of
              Termination.

       hh.    RELOCATION PROGRAM.  "Relocation Program" means the Cinergy Corp.
              Relocation Program or any successor to that program, as in effect
              on the date of the Executive's termination of employment.

       ii.    RETIREES' DENTAL PLAN.  "Retirees' Dental Plan" means the Cinergy
              Corp. Retirees' Dental Plan or any successor to that plan.

       jj.    RETIREES' MEDICAL PLAN. "Retirees' Medical Plan" means the Cinergy
              Corp. Retirees' Medical Plan or any successor to that plan.

       kk.    SEVERANCE BENEFITS.  "Severance Benefits" means the payments and
              benefits payable to the Executive pursuant to Section 5.

       ll.    SPLIT DOLLAR AGREEMENT.  "Split Dollar Agreement" means the split
              dollar insurance agreement, dated October 7, 1992, between the
              Executive and PSI Energy, Inc.



       mm.    SPOUSE.  "Spouse" means the Executive's lawfully married spouse.
              For this purpose, common law marriage or a similar arrangement
              will not be recognized unless otherwise required by federal law.

       nn.    STOCK RELATED DOCUMENTS.  "Stock Related Documents" means the
              LTIP, the Cinergy Corp. Stock Option Plan, and the Value Creation
              Plan and any applicable administrative guidelines and written
              agreements relating to those plans.

       oo.    SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.  "Supplemental Executive
              Retirement Plan" means the Cinergy Corp. Supplemental Executive
              Retirement Plan or any successor to that plan.

       pp.    TARGET ANNUAL BONUS.  "Target Annual Bonus" has the meaning set
              forth in Subsection 3b.

       qq.    TARGET LTIP BONUS.  "Target LTIP Bonus" has the meaning set forth
              in Subsection 3b.

       rr.    TERMINATION.  "Termination" means the termination of the
              Executive's employment with Cinergy other than a termination by
              Cinergy for Cause.

       ss.    VALUE CREATION PLAN.  "Value Creation Plan" means the Value
              Creation Plan of the LTIP.

       tt.    YEARS OF PARTICIPATION.  The Executive's "Years of Participation"
              will equal the lesser of (i) 35 or (ii) 25 plus two additional
              years for each of the Executive's birthdays that he has reached
              since his 50th birthday.

12.    MISCELLANEOUS.

       a.     This Agreement will be governed by and construed in accordance
              with the laws of the State of Ohio, without reference to
              principles of conflict of laws.  The captions of this Agreement
              are not part of its provisions and will have no force or effect.
              This Agreement may not be amended, modified, repealed, waived,
              extended, or discharged except by an agreement in writing signed
              by the party against whom enforcement of the amendment,
              modification, repeal, waiver, extension, or discharge is sought.
              No person, other than pursuant to a resolution of the Board of
              Directors or a committee of the Board of Directors, will have
              authority on behalf of Cinergy to agree to amend, modify, repeal,
              waive, extend, or discharge any provision of this Agreement.

       b.     All notices and other communications under this Agreement will be
              in writing and will be given by hand delivery to the other party
              or by registered or certified mail, return receipt requested,
              postage prepaid, addressed as follows:



              IF TO THE EXECUTIVE:
              James E. Rogers
              Cinergy Corp.
              221 East Fourth Street
              P 0. Box 960
              Cincinnati, Ohio 45201-0960

              IF TO CINERGY:
              Cinergy Corp.
              221 East Fourth Street
              P. 0. Box 960
              Cincinnati, Ohio  45201-0960
              Attn: Vice President and General Counsel


              or to such other address as either party has furnished to the
              other in writing in accordance with this Agreement.  All notices
              and communications will be effective when actually received by the
              addressee.

       c.     The invalidity or unenforceability of any provision of this
              Agreement will not affect the validity or enforceability of any
              other provision of this Agreement.

       d.     Cinergy may withhold from any amounts payable under this Agreement
              such federal, state, or local taxes as are required to be withheld
              pursuant to any applicable law or regulation.

       e.     The Executive's or Cinergy's failure to insist upon strict
              compliance with any provision of this Agreement or the failure to
              assert any right the Executive or Cinergy may have under this
              Agreement, including without limitation the right of the Executive
              to terminate employment for Good Reason pursuant to Subsection 4c
              or the right of Cinergy to terminate the Executive's employment
              for Cause pursuant to Subsection 4b, will not be deemed to be a
              waiver of that provision or right or any other provision or right
              of this Agreement.

       f.     This instrument contains the entire agreement of the Executive and
              Cinergy with respect to the subject matter of this Agreement; and
              subject to any agreements evidencing stock option or restricted
              stock grants described in Subsection 3b and the Stock Related
              Documents, all promises, representations, understandings,
              arrangements, and prior agreements are merged into this Agreement
              and accordingly superseded.

       g.     This Agreement may be executed in counterparts, each of which will
              be deemed to be an original but all of which together will
              constitute one and the same instrument.



       h.     Cinergy and the Executive agree that Cinergy will be authorized to
              act for Cinergy with respect to all aspects pertaining to the
              administration and interpretation of this Agreement.

       IN WITNESS WHEREOF, the Executive and the Company have caused this
Agreement to be executed as of the Effective Date.

                                                 CINERGY CORP.; CINERGY
                                                 SERVICES, INC.; THE CINCINNATI
                                                 GAS & ELECTRIC COMPANY; AND PSI
                                                 ENERGY, INC.


                                          By:_________________________________
                                                 Michael Browning
                                                 Chairman, Compensation
                                                 Committee of the Board of
                                                 Directors

                                                 EXECUTIVE


                                             _________________________________
                                                 James E. Rogers

EX-10.C

                                AMENDED AND RESTATED
                                EMPLOYMENT AGREEMENT


       This AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered into
as of the 30th day of December, 1999 (the "Effective Date"), by and between
Cinergy and William J. Grealis (the "Executive").  This Agreement replaces and
supersedes any and all prior employment agreements between Cinergy and the
Executive.  The capitalized words and terms used throughout this Agreement are
defined in Section 11.


                                       RECITALS

       A.     The Executive is currently serving as Vice President, Corporate
Services of Cinergy, and Cinergy desires to secure the continued employment of
the Executive in accordance with this Agreement.

       B.     The Executive is willing to continue to remain in the employ of
Cinergy, and any successor to Cinergy, on the terms and conditions set forth in
this Agreement.

       C.     The parties intend that this Agreement will replace and supersede
any and all prior employment agreements between Cinergy (or any component
company or business unit of Cinergy) and the Executive.


                                     AGREEMENT

       In consideration of the mutual premises, covenants and agreements set
forth below, the parties agree as follows:

1.     EMPLOYMENT AND TERM

       a.     Cinergy, and any successor to Cinergy, agree to employ the
              Executive, and the Executive agrees to remain in the employ of
              Cinergy, in accordance with the terms and provisions of this
              Agreement, for the Employment Period set forth in Subsection b.
              The parties agree that the Company will be responsible for
              carrying out all of the premises, covenants, and agreements of
              Cinergy set forth in this Agreement.

       b.     The Employment Period of this Agreement will commence as of the
              Effective Date and continue until December 31, 2002; provided
              that, commencing on December 31, 2000, and on each subsequent
              December 31, the Employment Period will be extended for one (1)
              additional year unless either party gives the other party





              written notice not to extend this Agreement at least ninety (90)
              days before the extension would otherwise become effective.

2.     DUTIES AND POWERS OF EXECUTIVE

       a.     POSITION.  The Executive will serve Cinergy as Vice President,
              Corporate Services of Cinergy, and he will have such
              responsibilities, duties, and authority as are customary for
              someone of that position and such additional duties, consistent
              with his position, as may be assigned to him from time to time
              during the Employment Period by the Board of Directors or the
              Chief Executive Officer.

       b.     PLACE OF PERFORMANCE.  In connection with the Executive's
              employment, the Executive will be based at the principal executive
              offices of Cinergy, 221 East Fourth Street, Cincinnati, Ohio, and,
              except for required business travel to an extent substantially
              consistent with the present business travel obligations of Cinergy
              executives who have positions of authority comparable to that of
              the Executive, the Executive will not be required to relocate to a
              new principal place of business that is more than thirty (30)
              miles from Cinergy's current principal executive offices.

3.     COMPENSATION.  The Executive will receive the following compensation for
       his services under this Agreement.

       a.     SALARY.  The Executive's Annual Base Salary, payable not less
              often than semi-monthly, will be at the annual rate of not less
              than $440,004.00.  The Board of Directors or its designee may,
              from time to time, increase the Annual Base Salary as the Board of
              Directors deems to be necessary or desirable, including without
              limitation adjustments to reflect increases in the cost of living.
              Any increase in the Annual Base Salary will not serve to limit or
              reduce any other obligation of Cinergy under this Agreement.  The
              Annual Base Salary will not be reduced except for across-the-board
              salary reductions similarly affecting all Cinergy management
              personnel.  If Annual Base Salary is increased during the
              Employment Period, then the increased salary will be the Annual
              Base Salary for all purposes under this Agreement.

       b.     RETIREMENT, INCENTIVE, WELFARE BENEFIT PLANS AND OTHER BENEFITS.
              During the Employment Period, the Executive will be eligible, and
              Cinergy will take all necessary action to cause the Executive to
              become eligible, to participate in all short-term and long-term
              incentive, stock option, restricted stock, performance unit,
              savings, retirement and welfare plans, practices, policies and
              programs applicable generally to employees and/or other senior
              executives of Cinergy who are considered Tier II executives for
              compensation purposes, except with respect to any plan, practice,
              policy or program to which the Executive has waived his





              rights in writing.

              If the Executive retires after reaching age 50, the Executive will
              be entitled and fully vested in a supplemental retirement benefit
              equal to the difference between (1) his total benefit under all
              Executive Retirement Plans, and (2) the greater of (i) 60% of the
              Executive's Highest Average Earnings times a fraction, the
              numerator of which is the Executive's Years of Participation and
              the denominator of which is 35, and (ii) $283,000 per year,
              payable as a straight life annuity.  If, however, the Executive's
              employment is terminated following a Change in Control, for any
              reason other than Cause, the Executive will be entitled to a
              supplemental retirement benefit equal to the difference between
              (1) his total benefit under all Executive Retirement Plans, and
              (2) 60% of the Executive's Highest Average Earnings. The form,
              timing, and method of payment of the supplemental retirement
              benefit payable under this Paragraph will be the same as those
              elected by the Executive under the Pension Plan.  If the Executive
              dies after reaching age 50 but prior to his retirement, and if his
              Spouse, on the date of his death, is living on the date the first
              installment of the supplemental retirement benefit would be
              payable under this Paragraph, the Spouse will be entitled to
              receive the supplemental retirement benefit as a Spouse's benefit.
              The form, timing, and method of payment of any Spouse's benefit
              under this Paragraph will be the same as those applicable to the
              Spouse under the Pension Plan.

              Upon his retirement on or after having attained age fifty (50),
              the Executive will be eligible for comprehensive medical and
              dental insurance pursuant to the terms of the Retirees' Medical
              Plan and the Retirees' Dental Plan.  The Executive, however, will
              receive the full subsidy provided by Cinergy to retirees for
              purposes of determining the amount of monthly premiums due from
              the Executive.

              The Executive will be a participant in the Annual Incentive Plan,
              and the Executive will be paid pursuant to that plan an annual
              benefit of up to sixty percent (60%) of the Executive's Annual
              Base Salary, with a target of no less than forty percent (40%) of
              the Executive's Annual Base Salary (the "Target Annual Bonus").

              The Executive will be a participant in the Long-Term Incentive
              Plan (the "LTIP"), and the Executive's annualized target award
              opportunity under the LTIP will be equal to no less than seventy
              percent (70%) of his Annual Base Salary (the "Target LTIP Bonus").

       c.     FRINGE BENEFITS AND PERQUISITES.  During the Employment Period,
              the Executive will be entitled to the following additional fringe
              benefits:

              (i)    Cinergy will furnish to the Executive an automobile and
                     will pay all of the





                     related expenses for gasoline, insurance, maintenance, and
                     repairs.

              (ii)   Cinergy will pay the initiation fee and the annual dues,
                     assessments, and other membership charges of the Executive
                     for membership in a country club selected by the Executive.

              (iii)  Cinergy will provide paid vacation for four (4) weeks per
                     year (or longer if permitted by Cinergy's policy).

              (iv)   Cinergy will furnish to the Executive annual financial
                     planning and tax preparation services.  In addition, the
                     Executive will be entitled to receive such other fringe
                     benefits in accordance with Cinergy plans, practices,
                     programs, and policies in effect from time to time,
                     commensurate with his position and at least comparable to
                     those received by other Cinergy senior executives.

       d.     EXPENSES.  Cinergy agrees to reimburse the Executive for all
              expenses, including those for travel and entertainment, properly
              incurred by his in the performance of his duties under this
              Agreement in accordance with the policies established from time to
              time by the Board of Directors.

       e.     RELOCATION BENEFITS.  Following termination of the Executive's
              employment for any reason (other than death), the Executive will
              be entitled to reimbursement from Cinergy for the reasonable costs
              of relocating from the Cincinnati, Ohio, area to a new primary
              residence in a manner that is consistent with the terms of the
              Relocation Program.

4.     TERMINATION OF EMPLOYMENT

       a.     DEATH.  The Executive's employment will terminate automatically
              upon the Executive's death during the Employment Period.

       b.     BY CINERGY FOR CAUSE.  Cinergy may terminate the Executive's
              employment during the Employment Period for Cause.  For purposes
              of this Employment Agreement, "Cause" means the following:

              (i)    The willful and continued failure by the Executive to
                     substantially perform the Executive's duties with Cinergy
                     (other than any such failure resulting from the Executive's
                     incapacity due to physical or mental illness) after the
                     Board of Directors or the Chief Executive Officer has
                     delivered to the Executive a written demand for substantial
                     performance, which demand specifically identifies the
                     manner in which the Executive has not substantially
                     performed his duties.  This event will constitute Cause
                     even





                     if the Executive issues a Notice of Termination for Good
                     Reason pursuant to Subsection 4d after the Board of
                     Directors or Chief Executive Officer delivers a written
                     demand for substantial performance.

              (ii)   The breach by the Executive of the confidentiality
                     provisions set forth in Section 9.

              (iii)  The conviction of the Executive for the commission of a
                     felony, including the entry of a guilty or nolo contendere
                     plea, or any willful or grossly negligent action or
                     inaction by the Executive that has a materially adverse
                     effect on Cinergy.  For purposes of this definition of
                     Cause, no act, or failure to act, on the Executive's part
                     will be deemed "willful" unless it is done, or omitted to
                     be done, by the Executive in bad faith and without
                     reasonable belief that the Executive's act, or failure to
                     act, was in the best interest of Cinergy.

       c.     BY CINERGY WITHOUT CAUSE.  Cinergy may, upon at least 30 days
              advance written notice to the Executive, terminate the Executive's
              employment during the Employment Period for a reason other than
              Cause, but the obligations placed upon Cinergy in Section 5 will
              apply.

       d.     BY THE EXECUTIVE FOR GOOD REASON.  The Executive may terminate his
              employment during the Employment Period for Good Reason.  For
              purposes of this Agreement, "Good Reason" means the following:

              (i)    A reduction in the Executive's Annual Base Salary, except
                     for across-the-board salary reductions similarly affecting
                     all Cinergy management personnel, or a reduction in any
                     other benefit or payment described in Section 3 of this
                     Agreement, except for changes to the employee benefits
                     programs affecting all Cinergy management personnel,
                     provided that those changes (either individually or in the
                     aggregate) will not result in a material adverse change
                     with respect to the benefits to which the Executive was
                     entitled as of the Effective Date.

              (ii)   The material reduction without his consent of the
                     Executive's title, authority, duties, or responsibilities
                     from those in effect immediately prior to the reduction or
                     a material adverse change in the Executive's reporting
                     responsibilities.

              (iii)  Any breach by Cinergy of any other material provision of
                     this Agreement (including but not limited to the place of
                     performance as specified in Subsection 2b).





              (iv)   The Executive's disability due to physical or mental
                     illness or injury that precludes the Executive from
                     performing any job for which he is qualified and able to
                     perform based upon his education, training or experience.

              (v)    A failure by the Company to require any successor entity to
                     the Company specifically to assume all of the Company's
                     obligations to the Executive under this Agreement.

       e.     BY THE EXECUTIVE WITHOUT GOOD REASON.  The Executive may terminate
              his employment without Good Reason upon prior written notice to
              the Company.

       f.     NOTICE OF TERMINATION.  Any termination of the Executive's
              employment by Cinergy or by the Executive during the Employment
              Period (other than a termination due to the Executive's death)
              will be communicated by a written Notice of Termination to the
              other party to this Agreement in accordance with Subsection 12b.
              For purposes of this Agreement, a "Notice of Termination" means a
              written notice that specifies the particular provision of this
              Agreement relied upon and that sets forth in reasonable detail the
              facts and circumstances claimed to provide a basis for terminating
              the Executive's employment under the specified provision.  The
              failure by the Executive or Cinergy to set forth in the Notice of
              Termination any fact or circumstance that contributes to a showing
              of Good Reason or Cause will not waive any right of the Executive
              or Cinergy under this Agreement or preclude the Executive or
              Cinergy from asserting that fact or circumstance in enforcing
              rights under this Agreement.

5.     OBLIGATIONS OF CINERGY UPON TERMINATION.

       a.     CERTAIN TERMINATIONS.

              (i)    If a Termination occurs during the Employment Period,
                     Cinergy will pay to the Executive a lump sum amount, in
                     cash, equal to the sum of the following Accrued
                     Obligations:

                     (1)    the Executive's Annual Base Salary through the Date
                            of Termination to the extent not previously paid;

                     (2)    an amount equal to the AIP Benefit for the fiscal
                            year that includes the Date of Termination
                            multiplied by a fraction, the numerator of which
                            is the number of days from the beginning of that
                            fiscal year to and including the Date of
                            Termination and the denominator of which is three
                            hundred and sixty-five (365).  The AIP Benefit
                            will be determined using a percentage determined
                            by the Chief Executive Officer, in his
                            discretion, up to the maximum percentage





                            specified in Subsection 3b, but no less than the
                            Target Annual Bonus.

                     (3)    any compensation previously deferred by the
                            Executive (together with any accrued interest or
                            earnings) and any accrued vacation pay, in each case
                            to the extent not previously paid.

                     The Accrued Obligations described in this Paragraph 5a(i)
                     will be paid within thirty (30) days after the Date of
                     Termination.  These Accrued Obligations are payable to the
                     Executive regardless of whether a Change in Control has
                     occurred.

              (ii)   Prior to the occurrence of a Change in Control, and in the
                     event of (A) a Termination other than by reason of the
                     Executive's death, or (B) the Executive's termination of
                     his employment during the Employment Period for Good
                     Reason, Cinergy will pay the Accrued Obligations, and
                     Cinergy will have the following obligations:

                     (1)    Cinergy will pay to the Executive a lump sum amount,
                            in cash, equal to three (3) times the sum of the
                            Annual Base Salary and the AIP Benefit.  For this
                            purpose, the Annual Base Salary will be at the rate
                            in effect at the time Notice of Termination is given
                            (without giving effect to any reduction in Annual
                            Base Salary, if any, prior to the termination).  The
                            AIP Benefit will be determined using a percentage
                            determined by the Chief Executive Officer, in his
                            discretion, which will not be less than the
                            Executive's annual target percentage for the fiscal
                            year in which the Termination occurs and will not be
                            greater than the maximum percentage specified in
                            Subsection 3b.  This lump sum will be paid within
                            thirty (30) days of the Date of Termination.

                     (2)    Cinergy will pay to the Executive the value of all
                            deferred compensation amounts and all executive life
                            insurance benefits whether or not they are otherwise
                            currently vested or payable.  Payment will be made
                            in accordance with the terms of the applicable plan
                            or program.

                     (3)    Except as provided under Clauses (A) and (B) below,
                            Cinergy will continue, until the end of the
                            Employment Period, medical and dental benefits to
                            the Executive and/or the Executive's family at least
                            equal to those that would have been provided if the
                            Executive's employment had not been terminated
                            (excluding benefits to which the Executive has
                            waived his rights in writing).





                     The benefits described in the preceding sentence will be in
                     accordance with the medical and welfare benefit plans,
                     practices, programs, or policies of Cinergy (the "M&W
                     Plans") as then currently in effect and applicable
                     generally to other Cinergy senior executives and their
                     families.

                     (A)    If, as of the Executive's Date of Termination, the
                            Executive meets the eligibility requirements for
                            Cinergy's retiree medical and welfare benefit plans,
                            the provision of those retiree medical and welfare
                            benefit plans to the Executive will satisfy
                            Cinergy's obligation under this Subparagraph
                            5a(ii)(3).

                     (B)    If, as of the Executive's Date of Termination, the
                            provision to the Executive of the M&W Plan benefits
                            described in this Subparagraph 5a(ii)(3) would
                            either (1) violate the terms of the M&W Plans or
                            (2) violate any of the Code's nondiscrimination
                            requirements applicable to the M&W Plans, then
                            Cinergy, in its sole discretion, may elect to pay
                            the Executive, in lieu of the M&W Plan benefits
                            described under this Subparagraph 5a(ii)(3), a lump
                            sum cash payment equal to the total monthly premiums
                            that would have been paid by Cinergy for the
                            Executive under the M&W Plans from the Date of
                            Termination through the end of the Employment
                            Period.  Nothing in this Clause will affect the
                            Executive's right to elect COBRA continuation
                            coverage under a M&W Plan in accordance with
                            applicable law.

                     (C)    If the Executive becomes employed by another
                            employer and is eligible to receive medical or other
                            welfare benefits under another employer-provided
                            plan, any benefits provided to the Executive under
                            the M&W Plans will be secondary to those provided
                            under the other employer-provided plan during the
                            Executive's applicable period of eligibility.

       (4)    Ownership of the automobile assigned to the Executive by Cinergy
              will be transferred to the Executive within 30 days of the Date of
              Termination.  The effect of this transfer will be grossed up for
              federal and state income taxes as soon as administratively
              feasible after the transfer is effective.




                    (5)    Cinergy will provide tax counseling services through
                    an agency selected by the Executive, not to exceed Fifteen
                    Thousand Dollars ($15,000.00) in cost.

             (iii)  In the event of Termination by Cinergy or by the Executive
                    for Good Reason upon or during the twenty-four (24) month
                    period after the occurrence of a Change in Control, then in
                    lieu of any further salary payments to the Executive for
                    periods subsequent to the Date of Termination and in lieu
                    of any other benefits payable pursuant to Paragraph 5a(ii),
                    Cinergy will have the following obligations:

                     (1)    Cinergy will pay to the Executive a lump sum
                            severance payment, in cash, equal to the greater of:

                            (A)    the present value of all amounts and benefits
                                   that would have been due under Paragraph
                                   5a(ii), excluding Subparagraphs 5a(ii)(3),
                                   5a(ii)(4), and 5a(ii)(5), or

                            (B)    three (3) times the sum of (x) the higher of
                                   the Executive's Annual Base Salary in effect
                                   immediately prior to the occurrence of the
                                   event or circumstance upon which the Notice
                                   of Termination is based or in effect
                                   immediately prior to the Change in Control,
                                   and (y) the higher of the amount paid to the
                                   Executive pursuant to all annual incentive
                                   compensation or bonus plans or programs
                                   maintained by Cinergy in the year preceding
                                   that in which the Date of Termination occurs
                                   or in the year preceding that in which the
                                   Change in Control occurs; and

                     (2)    For a thirty-six (36) month period after the Date of
                            Termination, Cinergy will arrange to provide the
                            Executive with life, disability, accident, and
                            health insurance benefits substantially similar to
                            those that the Executive is receiving immediately
                            prior to the Notice of Termination (without giving
                            effect to any reduction in those benefits subsequent
                            to a Change in Control that constitutes Good
                            Reason), except for any benefits that were waived by
                            the Executive in writing.  If Cinergy arranges to
                            provide the Executive with life, disability,
                            accident, and health insurance benefits, those
                            benefits will be reduced to the extent comparable
                            benefits are actually received by or made available
                            to the Executive without cost during the thirty-six
                            (36) month period following the Executive's Date of
                            Termination.  The Executive must report to Cinergy
                            any such benefits that he actually receives.  In
                            lieu of the benefits described




                            in the preceding sentences, Cinergy, in its sole
                            discretion, may elect to pay to the Executive a
                            lump sum cash payment equal to thirty-six (36)
                            times the monthly premiums that would have been
                            paid by Cinergy to provide those benefits to the
                            Executive.  Nothing in this Subparagraph 5a(iii)(2)
                            will affect the Executive's right to elect COBRA
                            continuation coverage in accordance with applicable
                            law.

                     (3)    Ownership of the automobile assigned to the
                            Executive by Cinergy will be transferred to the
                            Executive within 30 days of the Date of Termination.
                            The effect of this transfer will be grossed up for
                            federal and state income taxes as soon as
                            administratively feasible after the transfer is
                            effective.

                     (4)    Cinergy will provide tax counseling services through
                            an agency selected by the Executive, not to exceed
                            Fifteen Thousand Dollars ($15,000.00) in cost.

                     For purposes of this Paragraph (iii), the Executive will be
                     deemed to have incurred a Termination following a Change in
                     Control if the Executive's employment is terminated prior
                     to a Change in Control, without Cause at the direction of a
                     Person who has entered into an agreement with Cinergy, the
                     consummation of which will constitute a Change in Control,
                     or if the Executive terminates his employment for Good
                     Reason prior to a Change in Control if the circumstances or
                     event that constitutes Good Reason occurs at the direction
                     of such a Person.

       b.     TERMINATION BY CINERGY FOR CAUSE OR BY THE EXECUTIVE OTHER THAN
              FOR GOOD REASON.  Subject to the provisions of Section 7, if the
              Executive's employment is terminated for Cause during the
              Employment Period, or if the Executive terminates employment
              during the Employment Period other than a termination for Good
              Reason, Cinergy will have no further obligations to the Executive
              under this Agreement other than the obligation to pay to the
              Executive the Accrued Obligations, plus any other earned but
              unpaid compensation, in each case to the extent not previously
              paid.

       c.     CERTAIN TAX CONSEQUENCES.

              (i)    In the event that any Severance Benefits paid or payable to
                     the Executive or for his benefit pursuant to the terms of
                     this Agreement or otherwise in connection with, or arising
                     out of, his employment with Cinergy or a change in
                     ownership or effective control of Cinergy or of a
                     substantial portion of its assets (a "Payment" or
                     "Payments") would be subject to any




                     Excise Tax, then the Executive will be entitled to receive
                     an additional payment (a "Gross-Up Payment") in an amount
                     such that after payment by the Executive of all taxes
                     (including any interest, penalties, additional tax, or
                     similar items imposed with respect thereto and the Excise
                     Tax), including any Excise Tax imposed upon the Gross-Up
                     Payment, the Executive retains an amount of the Gross-Up
                     Payment equal to the Excise Tax imposed upon the Payments.

              (ii)   An initial determination as to whether a Gross-Up Payment
                     is required pursuant to this Agreement and the amount of
                     that Gross-Up Payment will be made at Cinergy's expense by
                     an Accounting Firm selected by the Executive and reasonably
                     acceptable to Cinergy.  The Accounting Firm will provide
                     its determination, together with detailed supporting
                     calculations and documentation, to Cinergy and the
                     Executive within 10 days after the Date of Termination, or
                     such other time as requested by Cinergy or by the
                     Executive, and if the Accounting Firm determines that no
                     Excise Tax is payable by the Executive with respect to a
                     Payment or Payments, it will furnish the Executive with an
                     opinion reasonably acceptable to the Executive that no
                     Excise Tax will be imposed with respect to any such Payment
                     or Payments.  Within 10 days after the Accounting Firm
                     delivers its determination to the Executive, the Executive
                     will have the right to dispute the determination.  The
                     Gross-Up Payment, if any, as determined pursuant to this
                     Subsection 5c will be paid by Cinergy to the Executive
                     within five days of the receipt of the Accounting Firm's
                     determination.  The existence of a dispute will not in any
                     way affect the Executive's right to receive the Gross-Up
                     Payment in accordance with the determination.  If there is
                     no dispute, the determination will be binding, final, and
                     conclusive upon Cinergy and the Executive.  If there is a
                     dispute, then Cinergy and the Executive will together
                     select a second Accounting Firm, which will review the
                     determination and the Executive's basis for the dispute and
                     then will render its own determination, which will be
                     binding, final, and conclusive on Cinergy and on the
                     Executive.  Cinergy will bear all costs associated with
                     that determination, unless the determination is not greater
                     than the initial determination, in which case all such
                     costs will be borne by the Executive.

              (iii)  The value of any non-cash benefits or any deferred payment
                     or benefit paid or payable to the Executive will be
                     determined in accordance with the principles of Code
                     paragraphs 280G(d)(3) and (4).  For purposes of determining
                     the amount of the Gross-Up Payment, the Executive will be
                     deemed to pay federal income taxes at the highest




                     marginal rate of federal income taxation in the calendar
                     year in which the Gross-Up Payment is to be made and
                     applicable state and local income taxes at the highest
                     marginal rate of taxation in the state and locality of the
                     Executive's residence on the Date of Termination, net of
                     the maximum reduction in federal income taxes that would be
                     obtained from deduction of those state and local taxes.

              (iv)   Notwithstanding anything contained in this Agreement to the
                     contrary, in the event that, according to the Accounting
                     Firm's determination, an Excise Tax will be imposed on any
                     Payment or Payments, Cinergy will pay to the applicable
                     government taxing authorities as Excise Tax withholding,
                     the amount of the Excise Tax that Cinergy has actually
                     withheld from the Payment or Payments in accordance with
                     law.

       d.     VALUE CREATION PLAN AND STOCK OPTIONS.  Upon the Executive's
              termination of employment for any reason, the Executive's
              entitlement to restricted shares and performance shares under the
              Value Creation Plan and any stock options granted under the Stock
              Option Plan or the LTIP will be determined under the terms of the
              appropriate plan and any applicable administrative guidelines and
              written agreements.

       e.     OTHER FEES AND EXPENSES.  Cinergy will also pay to the Executive
              all legal fees and expenses incurred by the Executive in
              successfully disputing a Termination that entitles the Executive
              to Severance Benefits.  Payment will be made within five (5)
              business days after delivery of the Executive's written request
              for payment accompanied by such evidence of fees and expenses
              incurred as Cinergy reasonably may require.

6.     NON-EXCLUSIVITY OF RIGHTS.  Nothing in this Agreement will prevent or
       limit the Executive's continuing or future participation in any benefit,
       plan, program, policy, or practice provided by Cinergy and for which the
       Executive may qualify, except with respect to any benefit to which the
       Executive has waived his rights in writing or any plan, program, policy,
       or practice that expressly excludes the Executive from participation.  In
       addition, nothing in this Agreement will limit or otherwise affect the
       rights the Executive may have under any other contract or agreement with
       Cinergy entered into after the Effective Date.  Amounts that are vested
       benefits or that the Executive is otherwise entitled to receive under any
       benefit, plan, program, policy, or practice of, or any contract or
       agreement entered into after the Effective Date with Cinergy, at or
       subsequent to the Date of Termination, will be payable in accordance with
       that benefit, plan, program, policy or practice, or that contract or
       agreement, except as explicitly modified by this Agreement.

7.     FULL SETTLEMENT:  MITIGATION.  Cinergy's obligation to make the payments
       provided for in this Agreement and otherwise to perform its obligations
       under this Agreement will not be affected by any set-off, counterclaim,
       recoupment, defense, or other claim, right, or action that Cinergy may
       have against the Executive or others.  In no event will the Executive be




       obligated to seek other employment or take any other action by way of
       mitigation of the amounts (including amounts for damages for breach)
       payable to the Executive under any of the provisions of this Agreement
       and, except as provided in Subparagraphs 5a(ii)(3) and 5a(iii)(2), those
       amounts will not be reduced simply because the Executive obtains other
       employment.  If the Executive finally prevails on the substantial claims
       brought with respect to any dispute between Cinergy and the Executive as
       to the interpretation, terms, validity, or enforceability of (including
       any dispute about the amount of any payment pursuant to) this Agreement,
       Cinergy agrees to pay all reasonable legal fees and expenses that the
       Executive may reasonably incur as a result of that dispute.

8.     ARBITRATION.  The parties agree that any dispute, claim, or controversy
       based on common law, equity, or any federal, state, or local statute,
       ordinance, or regulation (other than workers' compensation claims)
       arising out of or relating in any way to the Executive's employment, the
       terms, benefits, and conditions of employment, or concerning this
       Agreement or its termination and any resulting termination of employment,
       including whether such a dispute is arbitrable, shall be settled by
       arbitration.  This agreement to arbitrate includes but is not limited to
       all claims for any form of illegal discrimination, improper or unfair
       treatment or dismissal, and all tort claims.  The Executive will still
       have a right to file a discrimination charge with a federal or state
       agency, but the final resolution of any discrimination claim will be
       submitted to arbitration instead of a court or jury.  The arbitration
       proceeding will be conducted under the employment dispute resolution
       arbitration rules of the American Arbitration Association in effect at
       the time a demand for arbitration under the rules is made.  The decision
       of the arbitrator(s), including determination of the amount of any
       damages suffered, will be exclusive, final, and binding on all parties,
       their heirs, executors, administrators, successors and assigns.  Each
       party will bear its own expenses in the arbitration for arbitrators' fees
       and attorneys' fees, for its witnesses, and for other expenses of
       presenting its case.  Other arbitration costs, including administrative
       fees and fees for records or transcripts, will be borne equally by the
       parties.  Notwithstanding anything in this Section to the contrary, if
       the Executive prevails with respect to any dispute submitted to
       arbitration under this Section, Cinergy will reimburse or pay all legal
       fees and expenses that the Executive may reasonably incur as a result of
       the dispute as required by Section 7.

9.     CONFIDENTIAL INFORMATION.  The Executive will hold in a fiduciary
       capacity for the benefit of Cinergy, as well as all of Cinergy's
       successors and assigns, all secret, confidential information, knowledge,
       or data relating to Cinergy, and its affiliated businesses, that the
       Executive obtains during the Executive's employment by Cinergy or any of
       its affiliated companies, and that has not been or subsequently becomes
       public knowledge (other than by acts by the Executive or representatives
       of the Executive in violation of this Agreement).  During the Employment
       Period and thereafter, the Executive will not, without Cinergy's prior
       written consent or as may otherwise by required by law or legal process,
       communicate or divulge any such information, knowledge, or data to anyone
       other than Cinergy and those designated by it.  The




       Executive understands that during the Employment Period, Cinergy may be
       required from time to time to make public disclosure of the terms or
       existence of the Executive's employment relationship to comply with
       various laws and legal requirements.  In addition to all other remedies
       available to Cinergy in law and equity, this Agreement is subject to
       termination by Cinergy for Cause under Section 4b in the event the
       Executive violates any provision of this Section.

10.    SUCCESSORS.

       a.     This Agreement is personal to the Executive and, without Cinergy's
              prior written consent, cannot be assigned by the Executive
              otherwise than by will or the laws of descent and distribution.
              This Agreement will inure to the benefit of and be enforceable by
              the Executive's legal representatives.

       b.     This Agreement will inure to the benefit of and be binding upon
              Cinergy and its successors and assigns.

       c.     Cinergy will require any successor (whether direct or indirect, by
              purchase, merger, consolidation or otherwise) to all or
              substantially all of the business and/or assets of Cinergy to
              assume expressly and agree to perform this Agreement in the same
              manner and to the same extent that Cinergy would be required to
              perform it if no succession had taken place.  Cinergy's failure to
              obtain such an assumption and agreement prior to the effective
              date of a succession will be a breach of this Agreement and will
              entitle the Executive to compensation from Cinergy in the same
              amount and on the same terms as if the Executive were to terminate
              his employment for Good Reason after a Change in Control, except
              that, for purposes of implementing the foregoing, the date on
              which any such succession becomes effective will be deemed the
              Date of Termination.

11.    DEFINITIONS.  As used in this Agreement, the following terms, when
       capitalized, will have the following meanings:

       a.     1934 ACT.  "1934 Act" means the Securities Exchange Act of 1934.

       b.     ACCOUNTING FIRM.  "Accounting Firm" means an accounting firm that
              is designated as one of the five largest accounting firms in the
              United States (which may include Cinergy's independent auditors).

       c.     ACCRUED OBLIGATIONS.  "Accrued Obligations" means the accrued
              obligations described in Paragraph 5a(i).

       d.     AGREEMENT.  "Agreement" means this Amended and Restated Employment
              Agreement between Cinergy and the Executive.




       e.     AIP BENEFIT.  "AIP Benefit" means the Annual Incentive Plan
              benefit described in Subsection 3b.

       f.     ANNUAL BASE SALARY.  "Annual Base Salary" means the annual base
              salary payable to the Executive pursuant to Subsection 3a.

       g.     ANNUAL INCENTIVE PLAN.  "Annual Incentive Plan" means the Cinergy
              Corp. Annual Incentive Plan or any successor to that plan.

       h.     BOARD OF DIRECTORS.  "Board of Directors" means the board of
              directors of the Company.

       i.     CAUSE.  "Cause" has the meaning set forth in Subsection 4b.

       j.     CHANGE IN CONTROL.  "A Change in Control" will be deemed to have
              occurred if any of the following events occur, after the Effective
              Date:

              (i)    Any "person" or "group" (within the meaning of subsection
                     13(d) and paragraph 14(d)(2) of the 1934 Act) is or becomes
                     the beneficial owner (as defined in Rule l3d-3 under the
                     1934 Act), directly or indirectly, of securities of the
                     Company (not including in the securities beneficially owned
                     by such a Person any securities acquired directly from the
                     Company or its affiliates) representing more than twenty
                     percent (20%) of the combined voting power of the Company's
                     then outstanding securities, excluding any person who
                     becomes such a beneficial owner in connection with a
                     transaction described in Clause (1) of Paragraph (ii)
                     below; or

              (ii)   There is consummated a merger or consolidation of the
                     Company or any direct or indirect subsidiary of the Company
                     with any other corporation, other than (1) a merger or
                     consolidation that would result in the voting securities of
                     the Company outstanding immediately prior to that merger or
                     consolidation continuing to represent (either by remaining
                     outstanding or by being converted into voting securities of
                     the surviving entity or its parent) at least sixty percent
                     (60%) of the combined voting power of the securities of the
                     Company or the surviving entity or its parent outstanding
                     immediately after the merger or consolidation, or (2) a
                     merger or consolidation effected to implement a
                     recapitalization of the Company (or similar transaction) in
                     which no person is or becomes the beneficial owner,
                     directly or indirectly, of securities of the Company (not
                     including in the securities beneficially owned by such a
                     Person any securities acquired directly from the Company or
                     its affiliates other than in connection with the
                     acquisition by the Company or its affiliates of a business)
                     representing twenty percent (20%) or more of the combined
                     voting power of the




                     Company's then outstanding securities; or

              (iii)  During any period of two consecutive years, individuals who
                     at the beginning of that period constitute the Board of
                     Directors and any new director (other than a director whose
                     initial assumption of office is in connection with an
                     actual or threatened election contest, including but not
                     limited to a consent solicitation, relating to the election
                     of directors of the Company) whose appointment or election
                     by the Company's shareholders was approved or recommended
                     by a vote of at least two-thirds (2/3) of the directors
                     then still in office who either were directors at the
                     beginning of that period or whose appointment, election, or
                     nomination for election was previously so approved or
                     recommended cease for any reason to constitute a majority
                     of the Board of Directors; or

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

       k.     CHIEF EXECUTIVE OFFICER.  "Chief Executive Officer" means the
              chief executive officer of the Company.

       l.     CINERGY.  "Cinergy" means the Company, Cinergy Services, Inc., The
              Cincinnati Gas & Electric Company, and PSI Energy, Inc.

       m.     CODE.  "Code" means the Internal Revenue Code of 1986, as amended,
              and interpretive rules and regulations.

       n.     COMPANY.  "Company" means Cinergy Corp.

       o.     DATE OF TERMINATION.  "Date of Termination" means:

              (i)    if the Executive's employment is terminated by the Company
                     for Cause, or by the Executive with or without Good Reason,
                     the date of receipt of the Notice of Termination or any
                     later date specified in the notice, as the case may be;

              (ii)   if the Executive's employment is terminated by the Company
                     other than




                     for Cause, thirty (30) days after the date on which the
                     Company notifies the Executive of the termination; and

              (iii)  if the Executive's employment is terminated by reason of
                     death, the date of death.

       p.     EARNINGS.  "Earnings" means the Executive's "Earnings" as defined
              in the Pension Plan but without regard to the limitation of Code
              paragraph 401(a)(17).

       q.     EFFECTIVE DATE.  "Effective Date" means December 30, 1999.

       r.     EMPLOYMENT PERIOD.  "Employment Period" has the meaning set forth
              in Subsection 1b.

       s.     EXCISE TAX.  "Excise Tax" means any excise tax imposed by Code
              section 4999, together with any interest, penalties, additional
              tax or similar items that are incurred by the Executive with
              respect to the excise tax imposed by Code section 4999.

       t.     EXECUTIVE.  "Executive" means William J. Grealis.

       u.     EXECUTIVE RETIREMENT PLANS.  The "Executive Retirement Plans" are
              the Pension Plan, the Supplemental Executive Retirement Plan, and
              the Cinergy Corp. Excess Pension Plan or any successor to those
              plans.

       v.     EXECUTIVE SUPPLEMENTAL LIFE PROGRAM.  "Executive Supplemental Life
              Program" means the Cinergy Corp. Executive Supplemental Life
              Program or any successor to that plan.

       w.     GOOD REASON.  "Good Reason" has the meaning set forth in
              Subsection 4d.

       x.     GROSS-UP PAYMENT.  "Gross-Up Payment" has the meaning set forth in
              Subsection 5c.

       y.     HIGHEST AVERAGE EARNINGS.  "Highest Average Earnings" means the
              greater of (a) the Executive's "Highest Average Earnings" as
              defined in the Pension Plan (without regard to the limitation of
              Code paragraph 401(a)(17)) or (b) the Executive's Earnings for the
              12 consecutive calendar months immediately preceding his
              termination of employment with Cinergy.

       z.     M&W PLANS.  "M&W Plans" has the meaning given in Subparagraph
              5a(ii)(3).

       aa.    LONG-TERM INCENTIVE PLAN.  "Long-Term Incentive Plan" means the
              long-term




              inventive plan implemented under the Cinergy Corp. 1996
              Long-Term Incentive Compensation Plan or any successor to that
              plan.

       bb.    NOTICE OF TERMINATION.  "Notice of Termination" has the meaning
              set forth in Subsection 4e.

       cc.    PAYMENT OR PAYMENTS.  "Payment" or "Payments" has the meaning set
              forth in Subsection 5c.

       dd.    PENSION PLAN.  "Pension Plan" means the Cinergy Corp. Non-Union
              Employees' Pension Plan or any successor to that plan.

       ee.    PERSON.  "Person" has the meaning set forth in paragraph 3(a)(9)
              of the 1934 Act, as modified and used in subsections 13(d) and
              14(d) of the 1934 Act; however, a Person will not include the
              following:

              (i)    Cinergy or any of its subsidiaries;

              (ii)   A trustee or other fiduciary holding securities under an
                     employee benefit plan of Cinergy or its subsidiaries;

              (iii)  An underwriter temporarily holding securities pursuant
                     to an offering of those securities; or

              (iv)   A corporation owned, directly or indirectly, by the
                     stockholders of the Company in substantially the same
                     proportions as their ownership of stock of the Company.

       ff.    RELOCATION PROGRAM.  "Relocation Program" means the Cinergy Corp.
              Relocation Program or any successor to that program, as in effect
              on the date of the Executive's termination of employment.

       gg.    RETIREES' DENTAL PLAN.  "Retirees' Dental Plan" means the Cinergy
              Corp. Retirees' Dental Plan or any successor to that plan.

       hh.    RETIREES' MEDICAL PLAN. "Retirees' Medical Plan" means the Cinergy
              Corp. Retirees' Medical Plan or any successor to that plan.

       ii.    SEVERANCE BENEFITS.  "Severance Benefits" means the payments and
              benefits payable to the Executive pursuant to Section 5.

       jj.    SPOUSE.  "Spouse" means the Executive's lawfully married spouse.
              For this purpose, common law marriage or a similar arrangement
              will not be recognized




              unless otherwise required by federal law.

       kk.    STOCK RELATED DOCUMENTS.  "Stock Related Documents" means the
              LTIP, the Cinergy Corp. Stock Option Plan, and the Value Creation
              Plan and any applicable administrative guidelines and written
              agreements relating to those plans.

       ll.    SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.  "Supplemental Executive
              Retirement Plan" means the Cinergy Corp. Supplemental Executive
              Retirement Plan or any successor to that plan.

       mm.    TARGET ANNUAL BONUS.  "Target Annual Bonus" has the meaning set
              forth in Subsection 3b.

       nn.    TARGET LTIP BONUS.  "Target LTIP Bonus" has the meaning set forth
              in Subsection 3b.

       oo.    TERMINATION.  "Termination" means the termination of the
              Executive's employment with Cinergy other than a termination by
              Cinergy for Cause.

       pp.    VALUE CREATION PLAN.  "Value Creation Plan" means the Value
              Creation Plan of the LTIP.

       qq.    YEARS OF PARTICIPATION.  The Executive's "Years of Participation"
              will equal the lesser of (i) 35 or (ii) 25 plus two additional
              years for each of the Executive's birthdays that he has reached
              since his 50th birthday.

12.    MISCELLANEOUS.

       a.     This Agreement will be governed by and construed in accordance
              with the laws of the State of Ohio, without reference to
              principles of conflict of laws.  The captions of this Agreement
              are not part of its provisions and will have no force or effect.
              This Agreement may not be amended, modified, repealed, waived,
              extended, or discharged except by an agreement in writing signed
              by the party against whom enforcement of the amendment,
              modification, repeal, waiver, extension, or discharge is sought.
              Only the Chief Executive Officer or his designee will have
              authority on behalf of Cinergy to agree to amend, modify, repeal,
              waive, extend, or discharge any provision of this Agreement.

       b.     All notices and other communications under this Agreement will be
              in writing and will be given by hand delivery to the other party
              or by registered or certified mail, return receipt requested,
              postage prepaid, addressed as follows:

              IF TO THE EXECUTIVE:
              William J. Grealis




              Cinergy Corp.
              221 East Fourth Street
              P 0. Box 960
              Cincinnati, Ohio 45201-0960

              IF TO CINERGY:
              Cinergy Corp.
              221 East Fourth Street
              P. 0. Box 960
              Cincinnati, Ohio  45201-0960
              Attn: Chief Executive Officer


              or to such other address as either party has furnished to the
              other in writing in accordance with this Agreement.  All notices
              and communications will be effective when actually received by the
              addressee.

       c.     The invalidity or unenforceability of any provision of this
              Agreement will not affect the validity or enforceability of any
              other provision of this Agreement.

       d.     Cinergy may withhold from any amounts payable under this Agreement
              such federal, state, or local taxes as are required to be withheld
              pursuant to any applicable law or regulation.

       e.     The Executive's or Cinergy's failure to insist upon strict
              compliance with any provision of this Agreement or the failure to
              assert any right the Executive or Cinergy may have under this
              Agreement, including without limitation the right of the Executive
              to terminate employment for Good Reason pursuant to Subsection 4c
              or the right of Cinergy to terminate the Executive's employment
              for Cause pursuant to Subsection 4b, will not be deemed to be a
              waiver of that provision or right or any other provision or right
              of this Agreement.

       f.     This instrument contains the entire agreement of the Executive and
              Cinergy with respect to the subject matter of this Agreement; and
              subject to any agreements evidencing stock option or restricted
              stock grants described in Subsection 3b and the Stock Related
              Documents, all promises, representations, understandings,
              arrangements, and prior agreements are merged into this Agreement
              and accordingly superseded.

       g.     This Agreement may be executed in counterparts, each of which will
              be deemed to be an original but all of which together will
              constitute one and the same instrument.




       h.     Cinergy and the Executive agree that Cinergy will be authorized to
              act for Cinergy with respect to all aspects pertaining to the
              administration and interpretation of this Agreement.




       IN WITNESS WHEREOF, the Executive and the Company have caused this
Agreement to be executed as of the Effective Date.

                                          CINERGY CORP.; CINERGY SERVICES,
                                          INC.; THE CINCINNATI GAS &
                                          ELECTRIC COMPANY; AND PSI
                                          ENERGY, INC.


                                          By:_________________________________
                                              James E. Rogers
                                              Vice Chairman and Chief Executive
                                              Officer


                                          EXECUTIVE


                                          ____________________________________
                                          William J. Grealis

EX-10.D

                                AMENDED AND RESTATED
                                EMPLOYMENT AGREEMENT


       This AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered into
as of the 30th day of December, 1999 (the "Effective Date"), by and between
Cinergy and Larry E. Thomas (the "Executive").  This Agreement replaces and
supersedes any and all prior employment agreements between Cinergy and the
Executive.  The capitalized words and terms used throughout this Agreement are
defined in Section 11.

                                       RECITALS

       A.     The Executive is currently serving as Vice President of Cinergy
and as President, Energy Delivery Business Unit of Cinergy, and Cinergy desires
to secure the continued employment of the Executive in accordance with this
Agreement.

       B.     The Executive is willing to continue to remain in the employ of
Cinergy, and any successor to Cinergy, on the terms and conditions set forth in
this Agreement.

       C.     The parties intend that this Agreement will replace and supersede
any and all prior employment agreements between Cinergy (or any component
company or business unit of Cinergy) and the Executive.


                                     AGREEMENT

       In consideration of the mutual premises, covenants and agreements set
forth below, the parties agree as follows:

1.     EMPLOYMENT AND TERM

       a.     Cinergy, and any successor to Cinergy, agree to employ the
              Executive, and the Executive agrees to remain in the employ of
              Cinergy, in accordance with the terms and provisions of this
              Agreement, for the Employment Period set forth in Subsection b.
              The parties agree that the Company will be responsible for
              carrying out all of the premises, covenants, and agreements of
              Cinergy set forth in this Agreement.

       b.     The Employment Period of this Agreement will commence as of the
              Effective Date and continue until December 31, 2002; provided
              that, commencing on December 31, 2000, and on each subsequent
              December 31, the Employment Period will be extended for one (1)
              additional year unless either party gives the other party written
              notice not to extend this Agreement at least ninety (90) days
              before the extension would otherwise become effective.



2.     DUTIES AND POWERS OF EXECUTIVE

              a.     POSITION.  The Executive will serve Cinergy as Vice
              President of Cinergy and as President, Energy Delivery Business
              Unit of Cinergy, and he will have such responsibilities,
              duties, and authority as are customary for someone of that
              position and such additional duties, consistent with his
              position, as may be assigned to him from time to time during
              the Employment Period by the Board of Directors or the Chief
              Executive Officer.

              b.     PLACE OF PERFORMANCE.  In connection with the
              Executive's employment, the Executive will be based at the
              principal executive offices of Cinergy, 221 East Fourth Street,
              Cincinnati, Ohio, and, except for required business travel to
              an extent substantially consistent with the present business
              travel obligations of Cinergy executives who have positions of
              authority comparable to that of the Executive, the Executive
              will not be required to relocate to a new principal place of
              business that is more than thirty (30) miles from Cinergy's
              current principal executive offices.

3.     COMPENSATION.  The Executive will receive the following compensation for
       his services under this Agreement.

              a.     SALARY.  The Executive's Annual Base Salary, payable not
              less often than semi-monthly, will be at the annual rate of not
              less than $390,000.00.  The Board of Directors or its designee
              may, from time to time, increase the Annual Base Salary as the
              Board of Directors deems to be necessary or desirable,
              including without limitation adjustments to reflect increases
              in the cost of living. Any increase in the Annual Base Salary
              will not serve to limit or reduce any other obligation of
              Cinergy under this Agreement.  The Annual Base Salary will not
              be reduced except for across-the-board salary reductions
              similarly affecting all Cinergy management personnel.  If
              Annual Base Salary is increased during the Employment Period,
              then the increased salary will be the Annual Base Salary for
              all purposes under this Agreement.

              b.     RETIREMENT, INCENTIVE, WELFARE BENEFIT PLANS AND OTHER
              BENEFITS. During the Employment Period, the Executive will be
              eligible, and Cinergy will take all necessary action to cause
              the Executive to become eligible, to participate in all
              short-term and long-term incentive, stock option, restricted
              stock, performance unit, savings, retirement and welfare plans,
              practices, policies and programs applicable generally to
              employees and/or other senior executives of Cinergy who are
              considered Tier II executives for compensation purposes, except
              with respect to any plan, practice, policy or program to which
              the Executive has waived his rights in writing.

              If the Executive retires after reaching age 50, the Executive will
              be entitled and



              fully vested in a supplemental retirement benefit equal to the
              difference between (1) his total benefit under all Executive
              Retirement Plans, and (2) 60% of the Executive's Highest
              Average Earnings times a fraction, the numerator of which is
              the Executive's Years of Participation and the denominator of
              which is 35.  If, however, the Executive's employment is
              terminated following a Change in Control, for any reason other
              than Cause, the Executive will be entitled to a supplemental
              retirement benefit equal to the difference between (1) his
              total benefit under all Executive Retirement Plans, and (2) 60%
              of the Executive's Highest Average Earnings. The form, timing,
              and method of payment of the supplemental retirement benefit
              payable under this Paragraph will be the same as those elected
              by the Executive under the Pension Plan.  If the Executive dies
              after reaching age 50 but prior to his retirement, and if his
              Spouse, on the date of his death, is living on the date the
              first installment of the supplemental retirement benefit would
              be payable under this Paragraph, the Spouse will be entitled to
              receive the supplemental retirement benefit as a Spouse's
              benefit.  The form, timing, and method of payment of any
              Spouse's benefit under this Paragraph will be the same as those
              applicable to the Spouse under the Pension Plan.

              Upon his retirement on or after having attained age fifty (50),
              the Executive will be eligible for comprehensive medical and
              dental insurance pursuant to the terms of the Retirees' Medical
              Plan and the Retirees' Dental Plan.  The Executive, however, will
              receive the full subsidy provided by Cinergy to retirees for
              purposes of determining the amount of monthly premiums due from
              the Executive.

              The Executive will be a participant in the Annual Incentive Plan,
              and the Executive will be paid pursuant to that plan an annual
              benefit of up to sixty percent (60%) of the Executive's Annual
              Base Salary, with a target of no less than forty percent (40%) of
              the Executive's Annual Base Salary (the "Target Annual Bonus").

              The Executive will be a participant in the Long-Term Incentive
              Plan (the "LTIP"), and the Executive's annualized target award
              opportunity under the LTIP will be equal to no less than seventy
              percent (70%) of his Annual Base Salary (the "Target LTIP Bonus").

              c.     FRINGE BENEFITS AND PERQUISITES.  During the Employment
              Period, the Executive will be entitled to the following
              additional fringe benefits:

              (i)    Cinergy will furnish to the Executive an automobile and
                     will pay all of the related expenses for gasoline,
                     insurance, maintenance, and repairs.

              (ii)   Cinergy will pay the initiation fee and the annual dues,
                     assessments, and other membership charges of the Executive
                     for membership in a country club selected by the Executive.



              (iii)  Cinergy will provide paid vacation for four (4) weeks per
                     year (or longer if permitted by Cinergy's policy).

              (iv)   Cinergy will furnish to the Executive annual financial
                     planning and tax preparation services.  In addition, the
                     Executive will be entitled to receive such other fringe
                     benefits in accordance with Cinergy plans, practices,
                     programs, and policies in effect from time to time,
                     commensurate with his position and at least comparable to
                     those received by other Cinergy senior executives.

              d.     EXPENSES.  Cinergy agrees to reimburse the Executive for
              all expenses, including those for travel and entertainment,
              properly incurred by him in the performance of his duties under
              this Agreement in accordance with the policies established from
              time to time by the Board of Directors.

              e.     RELOCATION BENEFITS.  Following termination of the
              Executive's employment for any reason (other than death), the
              Executive will be entitled to reimbursement from Cinergy for
              the reasonable costs of relocating from the Cincinnati, Ohio,
              area to a new primary residence in a manner that is consistent
              with the terms of the Relocation Program.

4.     TERMINATION OF EMPLOYMENT

              a.     DEATH.  The Executive's employment will terminate
              automatically upon the Executive's death during the Employment
              Period.

              b.     BY CINERGY FOR CAUSE.  Cinergy may terminate the
              Executive's employment during the Employment Period for Cause.
              For purposes of this Employment Agreement, "Cause" means the
              following:

              (i)    The willful and continued failure by the Executive to
                     substantially perform the Executive's duties with Cinergy
                     (other than any such failure resulting from the Executive's
                     incapacity due to physical or mental illness) after the
                     Board of Directors or the Chief Executive Officer has
                     delivered to the Executive a written demand for substantial
                     performance, which demand specifically identifies the
                     manner in which the Executive has not substantially
                     performed his duties.  This event will constitute Cause
                     even if the Executive issues a Notice of Termination for
                     Good Reason pursuant to Subsection 4d after the Board of
                     Directors or Chief Executive Officer delivers a written
                     demand for substantial performance.

              (ii)   The breach by the Executive of the confidentiality
                     provisions set forth in Section 9.

              (iii)  The conviction of the Executive for the commission of a
                     felony, including the



                     entry of a guilty or nolo contendere plea, or any
                     willful or grossly negligent action or inaction by the
                     Executive that has a materially adverse effect on
                     Cinergy.  For purposes of this definition of Cause, no
                     act, or failure to act, on the Executive's part will be
                     deemed "willful" unless it is done, or omitted to be
                     done, by the Executive in bad faith and without
                     reasonable belief that the Executive's act, or failure
                     to act, was in the best interest of Cinergy.

       c.     BY CINERGY WITHOUT CAUSE.  Cinergy may, upon at least 30 days
              advance written notice to the Executive, terminate the Executive's
              employment during the Employment Period for a reason other than
              Cause, but the obligations placed upon Cinergy in Section 5 will
              apply.

       d.     BY THE EXECUTIVE FOR GOOD REASON.  The Executive may terminate his
              employment during the Employment Period for Good Reason.  For
              purposes of this Agreement, "Good Reason" means the following:

              (i)    A reduction in the Executive's Annual Base Salary, except
                     for across-the-board salary reductions similarly affecting
                     all Cinergy management personnel, or a reduction in any
                     other benefit or payment described in Section 3 of this
                     Agreement, except for changes to the employee benefits
                     programs affecting all Cinergy management personnel,
                     provided that those changes (either individually or in the
                     aggregate) will not result in a material adverse change
                     with respect to the benefits to which the Executive was
                     entitled as of the Effective Date.

              (ii)   The material reduction without his consent of the
                     Executive's title, authority, duties, or responsibilities
                     from those in effect immediately prior to the reduction or
                     a material adverse change in the Executive's reporting
                     responsibilities.

              (iii)  Any breach by Cinergy of any other material provision of
                     this Agreement (including but not limited to the place of
                     performance as specified in Subsection 2b).

              (iv)   The Executive's disability due to physical or mental
                     illness or injury that precludes the Executive from
                     performing any job for which he is qualified and able to
                     perform based upon his education, training or experience.

              (v)    A failure by the Company to require any successor entity to
                     the Company specifically to assume all of the Company's
                     obligations to the Executive under this Agreement.

       e.     BY THE EXECUTIVE WITHOUT GOOD REASON.  The Executive may terminate
              his employment without Good Reason upon prior written notice to
              the Company.



       f.     NOTICE OF TERMINATION.  Any termination of the Executive's
              employment by Cinergy or by the Executive during the Employment
              Period (other than a termination due to the Executive's death)
              will be communicated by a written Notice of Termination to the
              other party to this Agreement in accordance with Subsection 12b.
              For purposes of this Agreement, a "Notice of Termination" means a
              written notice that specifies the particular provision of this
              Agreement relied upon and that sets forth in reasonable detail the
              facts and circumstances claimed to provide a basis for terminating
              the Executive's employment under the specified provision.  The
              failure by the Executive or Cinergy to set forth in the Notice of
              Termination any fact or circumstance that contributes to a showing
              of Good Reason or Cause will not waive any right of the Executive
              or Cinergy under this Agreement or preclude the Executive or
              Cinergy from asserting that fact or circumstance in enforcing
              rights under this Agreement.

5.     OBLIGATIONS OF CINERGY UPON TERMINATION.

       a.     CERTAIN TERMINATIONS.

              (i)    If a Termination occurs during the Employment Period,
                     Cinergy will pay to the Executive a lump sum amount, in
                     cash, equal to the sum of the following Accrued
                     Obligations:

                     (1)    the Executive's Annual Base Salary through the Date
                            of Termination to the extent not previously paid;

                     (2)    an amount equal to the AIP Benefit for the fiscal
                            year that includes the Date of Termination
                            multiplied by a fraction, the numerator of which
                            is the number of days from the beginning of that
                            fiscal year to and including the Date of
                            Termination and the denominator of which is three
                            hundred and sixty-five (365).  The AIP Benefit
                            will be determined using a percentage determined
                            by the Chief Executive Officer, in his
                            discretion, up to the maximum percentage
                            specified in Subsection 3b, but no less than the
                            Target Annual Bonus.

                     (3)    any compensation previously deferred by the
                            Executive (together with any accrued interest or
                            earnings) and any accrued vacation pay, in each case
                            to the extent not previously paid.

                     The Accrued Obligations described in this Paragraph 5a(i)
                     will be paid within thirty (30) days after the Date of
                     Termination.  These Accrued Obligations are payable to the
                     Executive regardless of whether a Change in Control has
                     occurred.



              (ii)   Prior to the occurrence of a Change in Control, and in the
                     event of (A) a Termination other than by reason of the
                     Executive's death, or (B) the Executive's termination of
                     his employment during the Employment Period for Good
                     Reason, Cinergy will pay the Accrued Obligations, and
                     Cinergy will have the following obligations:

                     (1)    Cinergy will pay to the Executive a lump sum amount,
                            in cash, equal to three (3) times the sum of the
                            Annual Base Salary and the AIP Benefit.  For this
                            purpose, the Annual Base Salary will be at the rate
                            in effect at the time Notice of Termination is given
                            (without giving effect to any reduction in Annual
                            Base Salary, if any, prior to the termination).  The
                            AIP Benefit will be determined using a percentage
                            determined by the Chief Executive Officer, in his
                            discretion, which will not be less than the
                            Executive's annual target percentage for the fiscal
                            year in which the Termination occurs and will not be
                            greater than the maximum percentage specified in
                            Subsection 3b.  This lump sum will be paid within
                            thirty (30) days of the Date of Termination.

                     (2)    Cinergy will pay to the Executive the value of all
                            deferred compensation amounts and all executive life
                            insurance benefits whether or not they are otherwise
                            currently vested or payable.  Payment will be made
                            in accordance with the terms of the applicable plan
                            or program.

                     (3)    Except as provided under Clauses (A) and (B) below,
                            Cinergy will continue, until the end of the
                            Employment Period, medical and dental benefits to
                            the Executive and/or the Executive's family at least
                            equal to those that would have been provided if the
                            Executive's employment had not been terminated
                            (excluding benefits to which the Executive has
                            waived his rights in writing).  The benefits
                            described in the preceding sentence will be in
                            accordance with the medical and welfare benefit
                            plans, practices, programs, or policies of Cinergy
                            (the "M&W Plans") as then currently in effect and
                            applicable generally to other Cinergy senior
                            executives and their families.

                                (A)    If, as of the Executive's Date of
                                Termination, the Executive meets the
                                eligibility requirements for Cinergy's
                                retiree medical and welfare benefit plans,
                                the provision of those retiree medical and
                                welfare benefit plans to the Executive will
                                satisfy Cinergy's obligation under this
                                Subparagraph 5a(ii)(3).

                                (B)    If, as of the Executive's Date of
                                Termination, the provision



                                to the Executive of the M&W Plan benefits
                                described in this Subparagraph 5a(ii)(3)
                                would either (1) violate the terms of the M&W
                                Plans or (2) violate any of the Code's
                                nondiscrimination requirements applicable to
                                the M&W Plans, then Cinergy, in its sole
                                discretion, may elect to pay the Executive,
                                in lieu of the M&W Plan benefits described
                                under this Subparagraph 5a(ii)(3), a lump sum
                                cash payment equal to the total monthly
                                premiums that would have been paid by Cinergy
                                for the Executive under the M&W Plans from
                                the Date of Termination through the end of
                                the Employment Period.  Nothing in this
                                Clause will affect the Executive's right to
                                elect COBRA continuation coverage under a M&W
                                Plan in accordance with applicable law.

                                     (C)    If the Executive becomes employed
                                     by another employer and is eligible to
                                     receive medical or other welfare
                                     benefits under another employer-provided
                                     plan, any benefits provided to the
                                     Executive under the M&W Plans will be
                                     secondary to those provided under the
                                     other employer-provided plan during the
                                     Executive's applicable period of
                                     eligibility.

                     (4)    Ownership of the automobile assigned to the
                            Executive by Cinergy will be transferred to the
                            Executive within 30 days of the Date of
                            Termination.  The effect of this transfer will be
                            grossed up for federal and state income taxes as
                            soon as administratively feasible after the
                            transfer is effective.

                     (5)    Cinergy will provide tax counseling services
                            through an agency selected by the Executive, not
                            to exceed Fifteen Thousand Dollars ($15,000.00)
                            in cost.

              (iii)  In the event of Termination by Cinergy or by the Executive
                     for Good Reason upon or during the twenty-four (24) month
                     period after the occurrence of a Change in Control, then in
                     lieu of any further salary payments to the Executive for
                     periods subsequent to the Date of Termination and in lieu
                     of any other benefits payable pursuant to Paragraph 5a(ii),
                     Cinergy will have the following obligations:

                     (1)    Cinergy will pay to the Executive a lump sum
                            severance payment, in cash, equal to the greater of:

                            (A)    the present value of all amounts and benefits
                                   that would have been due under Paragraph
                                   5a(ii), excluding Subparagraphs 5a(ii)(3),
                                   5a(ii)(4), and 5a(ii)(5), or



                            (B)    three (3) times the sum of (x) the higher of
                                   the Executive's Annual Base Salary in effect
                                   immediately prior to the occurrence of the
                                   event or circumstance upon which the Notice
                                   of Termination is based or in effect
                                   immediately prior to the Change in Control,
                                   and (y) the higher of the amount paid to the
                                   Executive pursuant to all annual incentive
                                   compensation or bonus plans or programs
                                   maintained by Cinergy in the year preceding
                                   that in which the Date of Termination occurs
                                   or in the year preceding that in which the
                                   Change in Control occurs; and

                     (2)    For a thirty-six (36) month period after the Date of
                            Termination, Cinergy will arrange to provide the
                            Executive with life, disability, accident, and
                            health insurance benefits substantially similar to
                            those that the Executive is receiving immediately
                            prior to the Notice of Termination (without giving
                            effect to any reduction in those benefits subsequent
                            to a Change in Control that constitutes Good
                            Reason), except for any benefits that were waived by
                            the Executive in writing.  If Cinergy arranges to
                            provide the Executive with life, disability,
                            accident, and health insurance benefits, those
                            benefits will be reduced to the extent comparable
                            benefits are actually received by or made available
                            to the Executive without cost during the thirty-six
                            (36) month period following the Executive's Date of
                            Termination.  The Executive must report to Cinergy
                            any such benefits that he actually receives.  In
                            lieu of the benefits described in the preceding
                            sentences, Cinergy, in its sole discretion, may
                            elect to pay to the Executive a lump sum cash
                            payment equal to thirty-six (36) times the monthly
                            premiums that would have been paid by Cinergy to
                            provide those benefits to the Executive.  Nothing in
                            this Subparagraph 5a(iii)(2) will affect the
                            Executive's right to elect COBRA continuation
                            coverage in accordance with applicable law.

                     (3)    Ownership of the automobile assigned to the
                            Executive by Cinergy will be transferred to the
                            Executive within 30 days of the Date of Termination.
                            The effect of this transfer will be grossed up for
                            federal and state income taxes as soon as
                            administratively feasible after the transfer is
                            effective.

                     (4)    Cinergy will provide tax counseling services through
                            an agency selected by the Executive, not to exceed
                            Fifteen Thousand Dollars ($15,000.00) in cost.

                     For purposes of this Paragraph (iii), the Executive will be
                     deemed to have incurred a Termination following a Change in
                     Control if the Executive's



                     employment is terminated prior to a Change in Control,
                     without Cause at the direction of a Person who has
                     entered into an agreement with Cinergy, the consummation
                     of which will constitute a Change in Control, or if the
                     Executive terminates his employment for Good Reason
                     prior to a Change in Control if the circumstances or
                     event that constitutes Good Reason occurs at the
                     direction of such a Person.

       b.     TERMINATION BY CINERGY FOR CAUSE OR BY THE EXECUTIVE OTHER THAN
              FOR GOOD REASON.  Subject to the provisions of Section 7, if the
              Executive's employment is terminated for Cause during the
              Employment Period, or if the Executive terminates employment
              during the Employment Period other than a termination for Good
              Reason, Cinergy will have no further obligations to the Executive
              under this Agreement other than the obligation to pay to the
              Executive the Accrued Obligations, plus any other earned but
              unpaid compensation, in each case to the extent not previously
              paid.

       c.     CERTAIN TAX CONSEQUENCES.

              (i)    In the event that any Severance Benefits paid or payable to
                     the Executive or for his benefit pursuant to the terms of
                     this Agreement otherwise in connection with, or arising out
                     of, his employment with Cinergy or a change in ownership or
                     effective control of Cinergy or of a substantial portion of
                     its assets (a "Payment" or "Payments") would be subject to
                     any Excise Tax, then the Executive will be entitled to
                     receive an additional payment (a "Gross-Up Payment") in an
                     amount such that after payment by the Executive of all
                     taxes (including any interest, penalties, additional tax,
                     or similar items imposed with respect thereto and the
                     Excise Tax), including any Excise Tax imposed upon the
                     Gross-Up Payment, the Executive retains an amount of the
                     Gross-Up Payment equal to the Excise Tax imposed upon the
                     Payments.

              (ii)   An initial determination as to whether a Gross-Up Payment
                     is required pursuant to this Agreement and the amount of
                     that Gross-Up Payment will be made at Cinergy's expense by
                     an Accounting Firm selected by the Executive and reasonably
                     acceptable to Cinergy.  The Accounting Firm will provide
                     its determination, together with detailed supporting
                     calculations and documentation, to Cinergy and the
                     Executive within 10 days after the Date of Termination, or
                     such other time as requested by Cinergy or by the
                     Executive, and if the Accounting Firm determines that no
                     Excise Tax is payable by the Executive with respect to a
                     Payment or Payments, it will furnish the Executive with an
                     opinion reasonably acceptable to the Executive that no
                     Excise Tax will be imposed with respect to any such Payment
                     or Payments.  Within 10 days after the Accounting Firm
                     delivers its determination to the Executive, the Executive
                     will have the right to dispute the determination.  The
                     Gross-Up Payment, if



                     any, as determined pursuant to this Subsection 5c will
                     be paid by Cinergy to the Executive within five days of
                     the receipt of the Accounting Firm's determination.  The
                     existence of a dispute will not in any way affect the
                     Executive's right to receive the Gross-Up Payment in
                     accordance with the determination.  If there is no
                     dispute, the determination will be binding, final, and
                     conclusive upon Cinergy and the Executive.  If there is
                     a dispute, then Cinergy and the Executive will together
                     select a second Accounting Firm, which will review the
                     determination and the Executive's basis for the dispute
                     and then will render its own determination, which will
                     be binding, final, and conclusive on Cinergy and on the
                     Executive.  Cinergy will bear all costs associated with
                     that determination, unless the determination is not
                     greater than the initial determination, in which case
                     all such costs will be borne by the Executive.

              (iii)  The value of any non-cash benefits or any deferred payment
                     or benefit paid or payable to the Executive will be
                     determined in accordance with the principles of Code
                     paragraphs 280G(d)(3) and (4).  For purposes of determining
                     the amount of the Gross-Up Payment, the Executive will be
                     deemed to pay federal income taxes at the highest marginal
                     rate of federal income taxation in the calendar year in
                     which the Gross-Up Payment is to be made and applicable
                     state and local income taxes at the highest marginal rate
                     of taxation in the state and locality of the Executive's
                     residence on the Date of Termination, net of the maximum
                     reduction in federal income taxes that would be obtained
                     from deduction of those state and local taxes.

              (iv)   Notwithstanding anything contained in this Agreement to the
                     contrary, in the event that, according to the Accounting
                     Firm's determination, an Excise Tax will be imposed on any
                     Payment or Payments, Cinergy will pay to the applicable
                     government taxing authorities as Excise Tax withholding,
                     the amount of the Excise Tax that Cinergy has actually
                     withheld from the Payment or Payments in accordance with
                     law.

              d.     VALUE CREATION PLAN AND STOCK OPTIONS.  Upon the
              Executive's termination of employment for any reason, the
              Executive's entitlement to restricted shares and performance
              shares under the Value Creation Plan and any stock options
              granted under the Stock Option Plan or the LTIP will be
              determined under the terms of the appropriate plan and any
              applicable administrative guidelines and written agreements.

              e.     OTHER FEES AND EXPENSES.  Cinergy will also pay to the
              Executive all legal fees and expenses incurred by the Executive
              in successfully disputing a Termination that entitles the
              Executive to Severance Benefits.  Payment will be made within
              five (5) business days after delivery of the Executive's
              written request for payment accompanied by such evidence of
              fees and expenses incurred as Cinergy



       reasonably may require.

6.     NON-EXCLUSIVITY OF RIGHTS.  Nothing in this Agreement will prevent or
       limit the Executive's continuing or future participation in any benefit,
       plan, program, policy, or practice provided by Cinergy and for which the
       Executive may qualify, except with respect to any benefit to which the
       Executive has waived his rights in writing or any plan, program, policy,
       or practice that expressly excludes the Executive from participation.  In
       addition, nothing in this Agreement will limit or otherwise affect the
       rights the Executive may have under any other contract or agreement with
       Cinergy entered into after the Effective Date.  Amounts that are vested
       benefits or that the Executive is otherwise entitled to receive under any
       benefit, plan, program, policy, or practice of, or any contract or
       agreement entered into after the Effective Date with Cinergy, at or
       subsequent to the Date of Termination, will be payable in accordance with
       that benefit, plan, program, policy or practice, or that contract or
       agreement, except as explicitly modified by this Agreement.

7.     FULL SETTLEMENT:  MITIGATION.  Cinergy's obligation to make the payments
       provided for in this Agreement and otherwise to perform its obligations
       under this Agreement will not be affected by any set-off, counterclaim,
       recoupment, defense, or other claim, right, or action that Cinergy may
       have against the Executive or others.  In no event will the Executive be
       obligated to seek other employment or take any other action by way of
       mitigation of the amounts (including amounts for damages for breach)
       payable to the Executive under any of the provisions of this Agreement
       and, except as provided in Subparagraphs 5a(ii)(3) and 5a(iii)(2), those
       amounts will not be reduced simply because the Executive obtains other
       employment.  If the Executive finally prevails on the substantial claims
       brought with respect to any dispute between Cinergy and the Executive as
       to the interpretation, terms, validity, or enforceability of (including
       any dispute about the amount of any payment pursuant to) this Agreement,
       Cinergy agrees to pay all reasonable legal fees and expenses that the
       Executive may reasonably incur as a result of that dispute.

8.     ARBITRATION.  The parties agree that any dispute, claim, or controversy
       based on common law, equity, or any federal, state, or local statute,
       ordinance, or regulation (other than workers' compensation claims)
       arising out of or relating in any way to the Executive's employment, the
       terms, benefits, and conditions of employment, or concerning this
       Agreement or its termination and any resulting termination of employment,
       including whether such a dispute is arbitrable, shall be settled by
       arbitration.  This agreement to arbitrate includes but is not limited to
       all claims for any form of illegal discrimination, improper or unfair
       treatment or dismissal, and all tort claims.  The Executive will still
       have a right to file a discrimination charge with a federal or state
       agency, but the final resolution of any discrimination claim will be
       submitted to arbitration instead of a court or jury.  The arbitration
       proceeding will be conducted under the employment dispute resolution
       arbitration rules of the American Arbitration Association in effect at
       the time a demand for arbitration under the rules is made.  The decision
       of the arbitrator(s), including determination of the amount of any
       damages suffered, will be exclusive, final, and binding on all parties,
       their heirs, executors, administrators, successors and assigns.  Each
       party will bear its own expenses in the arbitration for arbitrators' fees
       and attorneys'



       fees, for its witnesses, and for other expenses of presenting its
       case.  Other arbitration costs, including administrative fees and fees
       for records or transcripts, will be borne equally by the parties.
       Notwithstanding anything in this Section to the contrary, if the
       Executive prevails with respect to any dispute submitted to
       arbitration under this Section, Cinergy will reimburse or pay all
       legal fees and expenses that the Executive may reasonably incur as a
       result of the dispute as required by Section 7.

9.     CONFIDENTIAL INFORMATION.  The Executive will hold in a fiduciary
       capacity for the benefit of Cinergy, as well as all of Cinergy's
       successors and assigns, all secret, confidential information, knowledge,
       or data relating to Cinergy, and its affiliated businesses, that the
       Executive obtains during the Executive's employment by Cinergy or any of
       its affiliated companies, and that has not been or subsequently becomes
       public knowledge (other than by acts by the Executive or representatives
       of the Executive in violation of this Agreement).  During the Employment
       Period and thereafter, the Executive will not, without Cinergy's prior
       written consent or as may otherwise by required by law or legal process,
       communicate or divulge any such information, knowledge, or data to anyone
       other than Cinergy and those designated by it.  The Executive understands
       that during the Employment Period, Cinergy may be required from time to
       time to make public disclosure of the terms or existence of the
       Executive's employment relationship to comply with various laws and legal
       requirements.  In addition to all other remedies available to Cinergy in
       law and equity, this Agreement is subject to termination by Cinergy for
       Cause under Section 4b in the event the Executive violates any provision
       of this Section.

10.    SUCCESSORS.

       a.     This Agreement is personal to the Executive and, without Cinergy's
              prior written consent, cannot be assigned by the Executive
              otherwise than by will or the laws of descent and distribution.
              This Agreement will inure to the benefit of and be enforceable by
              the Executive's legal representatives.

       b.     This Agreement will inure to the benefit of and be binding upon
              Cinergy and its successors and assigns.

       c.     Cinergy will require any successor (whether direct or indirect, by
              purchase, merger, consolidation or otherwise) to all or
              substantially all of the business and/or assets of Cinergy to
              assume expressly and agree to perform this Agreement in the same
              manner and to the same extent that Cinergy would be required to
              perform it if no succession had taken place.  Cinergy's failure to
              obtain such an assumption and agreement prior to the effective
              date of a succession will be a breach of this Agreement and will
              entitle the Executive to compensation from Cinergy in the same
              amount and on the same terms as if the Executive were to terminate
              his employment for Good Reason after a Change in Control, except
              that, for purposes of implementing the foregoing, the date on
              which any such succession becomes effective will be deemed the
              Date of Termination.




11.    DEFINITIONS.  As used in this Agreement, the following terms, when
       capitalized, will have the following meanings:

       a.     1934 ACT.  "1934 Act" means the Securities Exchange Act of 1934.

       b.     ACCOUNTING FIRM.  "Accounting Firm" means an accounting firm that
              is designated as one of the five largest accounting firms in the
              United States (which may include Cinergy's independent auditors).

       c.     ACCRUED OBLIGATIONS.  "Accrued Obligations" means the accrued
              obligations described in Paragraph 5a(i).

       d.     AGREEMENT.  "Agreement" means this Amended and Restated Employment
              Agreement between Cinergy and the Executive.

       e.     AIP BENEFIT.  "AIP Benefit" means the Annual Incentive Plan
              benefit described in Subsection 3b.

       f.     ANNUAL BASE SALARY.  "Annual Base Salary" means the annual base
              salary payable to the Executive pursuant to Subsection 3a.

       g.     ANNUAL INCENTIVE PLAN.  "Annual Incentive Plan" means the Cinergy
              Corp. Annual Incentive Plan or any successor to that plan.

       h.     BOARD OF DIRECTORS.  "Board of Directors" means the board of
              directors of the Company.

       i.     CAUSE.  "Cause" has the meaning set forth in Subsection 4b.

       j.     CHANGE IN CONTROL.  "A Change in Control" will be deemed to have
              occurred if any of the following events occur, after the Effective
              Date:

              (i)    Any "person" or "group" (within the meaning of subsection
                     13(d) and paragraph 14(d)(2) of the 1934 Act) is or becomes
                     the beneficial owner (as defined in Rule l3d-3 under the
                     1934 Act), directly or indirectly, of securities of the
                     Company (not including in the securities beneficially owned
                     by such a Person any securities acquired directly from the
                     Company or its affiliates) representing more than twenty
                     percent (20%) of the combined voting power of the Company's
                     then outstanding securities, excluding any person who
                     becomes such a beneficial owner in connection with a
                     transaction described in Clause (1) of Paragraph (ii)
                     below; or

              (ii)   There is consummated a merger or consolidation of the
                     Company or any direct or indirect subsidiary of the Company
                     with any other corporation,



                     other than (1) a merger or consolidation that would result
                     in the voting securities of the Company outstanding
                     immediately prior to that merger or consolidation
                     continuing to represent (either by remaining outstanding
                     or by being converted into voting securities of the
                     surviving entity or its parent) at least sixty percent
                     (60%) of the combined voting power of the securities of the
                     Company or the surviving entity or its parent outstanding
                     immediately after the merger or consolidation, or (2) a
                     merger or consolidation effected to implement a
                     recapitalization of the Company (or similar transaction) in
                     which no person is or becomes the beneficial owner,
                     directly or indirectly, of securities of the Company (not
                     including in the securities beneficially owned by such a
                     Person any securities acquired directly from the Company or
                     its affiliates other than in connection with the
                     acquisition by the Company or its affiliates of a business)
                     representing twenty percent (20%) or more of the combined
                     voting power of the Company's then outstanding securities;
                     or

              (iii)  During any period of two consecutive years, individuals who
                     at the beginning of that period constitute the Board of
                     Directors and any new director (other than a director whose
                     initial assumption of office is in connection with an
                     actual or threatened election contest, including but not
                     limited to a consent solicitation, relating to the election
                     of directors of the Company) whose appointment or election
                     by the Company's shareholders was approved or recommended
                     by a vote of at least two-thirds (2/3) of the directors
                     then still in office who either were directors at the
                     beginning of that period or whose appointment, election, or
                     nomination for election was previously so approved or
                     recommended cease for any reason to constitute a majority
                     of the Board of Directors; or

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

       k.     CHIEF EXECUTIVE OFFICER.  "Chief Executive Officer" means the
              chief executive officer of the Company.

       l.     CINERGY.  "Cinergy" means the Company, Cinergy Services, Inc., The
              Cincinnati Gas & Electric Company, and PSI Energy, Inc.

       m.     CODE.  "Code" means the Internal Revenue Code of 1986, as amended,
              and



              interpretive rules and regulations.

       n.     COMPANY.  "Company" means Cinergy Corp.

       o.     DATE OF TERMINATION.  "Date of Termination" means:

              (i)    if the Executive's employment is terminated by the Company
                     for Cause, or by the Executive with or without Good Reason,
                     the date of receipt of the Notice of Termination or any
                     later date specified in the notice, as the case may be;

              (ii)   if the Executive's employment is terminated by the Company
                     other than for Cause, thirty (30) days after the date on
                     which the Company notifies the Executive of the
                     termination; and

              (iii)  if the Executive's employment is terminated by reason of
                     death, the date of death.

       p.     EARNINGS.  "Earnings" means the Executive's "Earnings" as defined
              in the Pension Plan but without regard to the limitation of Code
              paragraph 401(a)(17).

       q.     EFFECTIVE DATE.  "Effective Date" means December 30, 1999.

       r.     EMPLOYMENT PERIOD.  "Employment Period" has the meaning set forth
              in Subsection 1b.

       s.     EXCISE TAX.  "Excise Tax" means any excise tax imposed by Code
              section 4999, together with any interest, penalties, additional
              tax or similar items that are incurred by the Executive with
              respect to the excise tax imposed by Code section 4999.

       t.     EXECUTIVE.  "Executive" means Larry E. Thomas.

       u.     EXECUTIVE RETIREMENT PLANS.  The "Executive Retirement Plans" are
              the Pension Plan, the Supplemental Executive Retirement Plan, and
              the Cinergy Corp. Excess Pension Plan or any successor to those
              plans.

       v.     EXECUTIVE SUPPLEMENTAL LIFE PROGRAM.  "Executive Supplemental Life
              Program" means the Cinergy Corp. Executive Supplemental Life
              Program or any successor to that plan.

       w.     GOOD REASON.  "Good Reason" has the meaning set forth in
              Subsection 4d.

       x.     GROSS-UP PAYMENT.  "Gross-Up Payment" has the meaning set forth in
              Subsection 5c.



       y.     HIGHEST AVERAGE EARNINGS.  "Highest Average Earnings" means the
              greater of (a) the Executive's "Highest Average Earnings" as
              defined in the Pension Plan (without regard to the limitation of
              Code paragraph 401(a)(17)) or (b) the Executive's Earnings for the
              12 consecutive calendar months immediately preceding his
              termination of employment with Cinergy.

       z.     M&W PLANS.  "M&W Plans" has the meaning given in Subparagraph
              5a(ii)(3).

       aa.    LONG-TERM INCENTIVE PLAN.  "Long-Term Incentive Plan" means the
              long-term inventive plan implemented under the Cinergy Corp. 1996
              Long-Term Incentive Compensation Plan or any successor to that
              plan.

       bb.    NOTICE OF TERMINATION.  "Notice of Termination" has the meaning
              set forth in Subsection 4e.

       cc.    PAYMENT OR PAYMENTS.  "Payment" or "Payments" has the meaning set
              forth in Subsection 5c.

       dd.    PENSION PLAN.  "Pension Plan" means the Cinergy Corp. Non-Union
              Employees' Pension Plan or any successor to that plan.

       ee.    PERSON.  "Person" has the meaning set forth in paragraph 3(a)(9)
              of the 1934 Act, as modified and used in subsections 13(d) and
              14(d) of the 1934 Act; however, a Person will not include the
              following:

                   (i)    Cinergy or any of its subsidiaries;

                   (ii)   A trustee or other fiduciary holding securities under
                   an employee benefit plan of Cinergy or its subsidiaries;

                   (iii)  An underwriter temporarily holding securities pursuant
                   to an offering of those securities; or

                   (iv)   A corporation owned, directly or indirectly, by the
                   stockholders of the Company in substantially the same
                   proportions as their ownership of stock of the Company.

       ff.    RELOCATION PROGRAM.  "Relocation Program" means the Cinergy Corp.
              Relocation Program or any successor to that program, as in effect
              on the date of the Executive's termination of employment.

       gg.    RETIREES' DENTAL PLAN.  "Retirees' Dental Plan" means the Cinergy
              Corp. Retirees' Dental Plan or any successor to that plan.



       hh.    RETIREES' MEDICAL PLAN. "Retirees' Medical Plan" means the Cinergy
              Corp. Retirees' Medical Plan or any successor to that plan.

       ii.    SEVERANCE BENEFITS.  "Severance Benefits" means the payments and
              benefits payable to the Executive pursuant to Section 5.

       jj.    SPOUSE.  "Spouse" means the Executive's lawfully married spouse.
              For this purpose, common law marriage or a similar arrangement
              will not be recognized unless otherwise required by federal law.

       kk.    STOCK RELATED DOCUMENTS.  "Stock Related Documents" means the
              LTIP, the Cinergy Corp. Stock Option Plan, and the Value Creation
              Plan and any applicable administrative guidelines and written
              agreements relating to those plans.

       ll.    SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.  "Supplemental Executive
              Retirement Plan" means the Cinergy Corp. Supplemental Executive
              Retirement Plan or any successor to that plan.

       mm.    TARGET ANNUAL BONUS.  "Target Annual Bonus" has the meaning set
              forth in Subsection 3b.

       nn.    TARGET LTIP BONUS.  "Target LTIP Bonus" has the meaning set forth
              in Subsection 3b.

       oo.    TERMINATION.  "Termination" means the termination of the
              Executive's employment with Cinergy other than a termination by
              Cinergy for Cause.

       pp.    VALUE CREATION PLAN.  "Value Creation Plan" means the Value
              Creation Plan of the LTIP.

       qq.    YEARS OF PARTICIPATION.  The Executive's "Years of Participation"
              will equal the lesser of (i) 35 or (ii) 25 plus two additional
              years for each of the Executive's birthdays that he has reached
              since his 50th birthday.


12.    MISCELLANEOUS.

       a.     This Agreement will be governed by and construed in accordance
              with the laws of the State of Ohio, without reference to
              principles of conflict of laws.  The captions of this Agreement
              are not part of its provisions and will have no force or effect.
              This Agreement may not be amended, modified, repealed, waived,
              extended, or discharged except by an agreement in writing signed
              by the party against whom enforcement of the amendment,
              modification, repeal, waiver, extension, or discharge is sought.
              Only the Chief Executive Officer or his designee will have
              authority on behalf of Cinergy to agree to amend, modify, repeal,
              waive, extend,



              or discharge any provision of this Agreement.

       b.     All notices and other communications under this Agreement will be
              in writing and will be given by hand delivery to the other party
              or by registered or certified mail, return receipt requested,
              postage prepaid, addressed as follows:

              IF TO THE EXECUTIVE:
              Larry E. Thomas
              Cinergy Corp.
              221 East Fourth Street
              P.O. Box 960
              Cincinnati, Ohio  45201-0960

              IF TO CINERGY:
              Cinergy Corp.
              221 East Fourth Street
              P. 0. Box 960
              Cincinnati, Ohio  45201-0960
              Attn: Chief Executive Officer

              or to such other address as either party has furnished to the
              other in writing in accordance with this Agreement.  All notices
              and communications will be effective when actually received by the
              addressee.

       c.     The invalidity or unenforceability of any provision of this
              Agreement will not affect the validity or enforceability of any
              other provision of this Agreement.

       d.     Cinergy may withhold from any amounts payable under this Agreement
              such federal, state, or local taxes as are required to be withheld
              pursuant to any applicable law or regulation.

       e.     The Executive's or Cinergy's failure to insist upon strict
              compliance with any provision of this Agreement or the failure to
              assert any right the Executive or Cinergy may have under this
              Agreement, including without limitation the right of the Executive
              to terminate employment for Good Reason pursuant to Subsection 4c
              or the right of Cinergy to terminate the Executive's employment
              for Cause pursuant to Subsection 4b, will not be deemed to be a
              waiver of that provision or right or any other provision or right
              of this Agreement.

       f.     This instrument contains the entire agreement of the Executive and
              Cinergy with respect to the subject matter of this Agreement; and
              subject to any agreements evidencing stock option or restricted
              stock grants described in Subsection 3b and the Stock Related
              Documents, all promises, representations, understandings,
              arrangements, and prior agreements are merged into this Agreement
              and accordingly superseded.



       g.     This Agreement may be executed in counterparts, each of which will
              be deemed to be an original but all of which together will
              constitute one and the same instrument.

       h.     Cinergy and the Executive agree that Cinergy will be authorized to
              act for Cinergy with respect to all aspects pertaining to the
              administration and interpretation of this Agreement.

       IN WITNESS WHEREOF, the Executive and the Company have caused this
Agreement to be executed as of the Effective Date.

                                          CINERGY CORP.; CINERGY SERVICES, INC.;
                                          THE CINCINNATI GAS & ELECTRIC COMPANY;
                                          AND PSI ENERGY, INC.


                                          By:_________________________________
                                              James E. Rogers
                                              Vice Chairman and Chief
                                              Executive Officer


                                          EXECUTIVE


                                          ____________________________________
                                          Larry E. Thomas

EX-10.E

                                AMENDED AND RESTATED
                                EMPLOYMENT AGREEMENT


       This AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered into
as of the 30th day of December, 1999 (the "Effective Date"), by and between
Cinergy and Cheryl M. Foley (the "Executive").  This Agreement replaces and
supersedes any and all prior employment agreements between Cinergy and the
Executive.  The capitalized words and terms used throughout this Agreement are
defined in Section 11.


                                       RECITALS

       A.     The Executive is currently serving as Vice President and Corporate
Secretary of the Company, and President, International Business Unit of the
Company, and Cinergy desires to secure the continued employment of the Executive
in accordance with this Agreement.

       B.     The Executive is willing to continue to remain in the employ of
Cinergy, and any successor to Cinergy, on the terms and conditions set forth in
this Agreement.

       C.     The parties intend that this Agreement will replace and supersede
any and all prior employment agreements between Cinergy (or any component
company or business unit of Cinergy) and the Executive.


                                     AGREEMENT

       In consideration of the mutual premises, covenants and agreements set
forth below, the parties agree as follows:

1.     EMPLOYMENT AND TERM

       a.     Cinergy, and any successor to Cinergy, agree to employ the
              Executive, and the Executive agrees to remain in the employ of
              Cinergy, in accordance with the terms and provisions of this
              Agreement, for the Employment Period set forth in Subsection b.
              The parties agree that the Company will be responsible for
              carrying out all of the premises, covenants, and agreements of
              Cinergy set forth in this Agreement.

       b.     The Employment Period of this Agreement will commence as of the
              Effective Date and continue until December 31, 2002; provided
              that, commencing on December 31, 2000, and on each subsequent
              December 31, the Employment Period will be extended for one (1)
              additional year unless either party gives the other party




              written notice not to extend this Agreement at least ninety (90)
              days before the extension would otherwise become effective.

2.     DUTIES AND POWERS OF EXECUTIVE

       a.     POSITION.  The Executive will serve Cinergy as Vice President and
              Corporate Secretary of the Company, and President,
              International Business Unit of the Company, and she will have
              such responsibilities, duties, and authority as are customary
              for someone of that position and such additional duties,
              consistent with her position, as may be assigned to her from
              time to time during the Employment Period by the Board of
              Directors or the Chief Executive Officer.

       b.     PLACE OF PERFORMANCE.  In connection with the Executive's
              employment, the Executive will be based at the principal executive
              offices of Cinergy, 221 East Fourth Street, Cincinnati, Ohio, and,
              except for required business travel to an extent substantially
              consistent with the present business travel obligations of
              Cinergy executives who have positions of authority comparable
              to that of the Executive, the Executive will not be required to
              relocate to a new principal place of business that is more than
              thirty (30) miles from Cinergy's current principal executive
              offices.

3.     COMPENSATION.  The Executive will receive the following compensation for
       her services under this Agreement.

       a.     SALARY.  The Executive's Annual Base Salary, payable not
              less often than semi-monthly, will be at the annual rate of not
              less than $390,000.00.  The Board of Directors or its designee
              may, from time to time, increase the Annual Base Salary as the
              Board of Directors deems to be necessary or desirable,
              including without limitation adjustments to reflect increases
              in the cost of living. Any increase in the Annual Base Salary
              will not serve to limit or reduce any other obligation of
              Cinergy under this Agreement.  The Annual Base Salary will not
              be reduced except for across-the-board salary reductions
              similarly affecting all Cinergy management personnel.  If
              Annual Base Salary is increased during the Employment Period,
              then the increased salary will be the Annual Base Salary for
              all purposes under this Agreement.

       b.     RETIREMENT, INCENTIVE, WELFARE BENEFIT PLANS AND OTHER BENEFITS.
              During the Employment Period, the Executive will be eligible, and
              Cinergy will take all necessary action to cause the Executive to
              become eligible, to participate in all short-term and long-term
              incentive, stock option, restricted stock, performance unit,
              savings, retirement and welfare plans, practices, policies and
              programs applicable generally to employees and/or other senior
              executives of Cinergy who are considered Tier II executives for
              compensation purposes, except with respect to any plan, practice,
              policy or program to which the Executive has waived her




              rights in writing.

              If the Executive retires after reaching age 50, the Executive will
              be entitled and fully vested in a supplemental retirement benefit
              equal to the difference between (1) her total benefit under all
              Executive Retirement Plans, and (2) 60% of the Executive's Highest
              Average Earnings times a fraction, the numerator of which is the
              Executive's Years of Participation and the denominator of which is
              35.  If, however, the Executive's employment is terminated
              following a Change in Control, for any reason other than Cause,
              the Executive will be entitled to a supplemental retirement
              benefit equal to the difference between (1) her total benefit
              under all Executive Retirement Plans, and (2) 60% of the
              Executive's Highest Average Earnings. The form, timing, and method
              of payment of the supplemental retirement benefit payable under
              this Paragraph will be the same as those elected by the Executive
              under the Pension Plan.  If the Executive dies after reaching age
              50 but prior to her retirement, and if her Spouse, on the date of
              her death, is living on the date the first installment of the
              supplemental retirement benefit would be payable under this
              Paragraph, the Spouse will be entitled to receive the supplemental
              retirement benefit as a Spouse's benefit.  The form, timing, and
              method of payment of any Spouse's benefit under this Paragraph
              will be the same as those applicable to the Spouse under the
              Pension Plan.

              Upon her retirement on or after having attained age fifty (50),
              the Executive will be eligible for comprehensive medical and
              dental insurance pursuant to the terms of the Retirees' Medical
              Plan and the Retirees' Dental Plan.  The Executive, however, will
              receive the full subsidy provided by Cinergy to retirees for
              purposes of determining the amount of monthly premiums due from
              the Executive.

              The Executive will be a participant in the Annual Incentive Plan,
              and the Executive will be paid pursuant to that plan an annual
              benefit of up to sixty percent (60%) of the Executive's Annual
              Base Salary, with a target of no less than forty percent (40%) of
              the Executive's Annual Base Salary (the "Target Annual Bonus").

              The Executive will be a participant in the Long-Term Incentive
              Plan (the "LTIP"), and the Executive's annualized target award
              opportunity under the LTIP will be equal to no less than seventy
              percent (70%) of her Annual Base Salary (the "Target LTIP Bonus").

       c.     FRINGE BENEFITS AND PERQUISITES.  During the Employment Period,
              the Executive will be entitled to the following additional fringe
              benefits:

              (i)    Cinergy will furnish to the Executive an automobile and
                     will pay all of the related expenses for gasoline,
                     insurance, maintenance, and repairs.




              (ii)   Cinergy will pay the initiation fee and the annual dues,
                     assessments, and other membership charges of the Executive
                     for membership in a country club selected by the Executive.

              (iii)  Cinergy will provide paid vacation for four (4) weeks per
                     year (or longer if permitted by Cinergy's policy).

              (iv)   Cinergy will furnish to the Executive annual financial
                     planning and tax preparation services.  In addition, the
                     Executive will be entitled to receive such other fringe
                     benefits in accordance with Cinergy plans, practices,
                     programs, and policies in effect from time to time,
                     commensurate with her position and at least comparable to
                     those received by other Cinergy senior executives.

       d.     EXPENSES.  Cinergy agrees to reimburse the Executive for all
              expenses, including those for travel and entertainment,  properly
              incurred by her in the performance of her duties under this
              Agreement in accordance with the policies established from time to
              time by the Board of Directors.

       e.     RELOCATION BENEFITS.  Following termination of the Executive's
              employment for any reason (other than death), the Executive will
              be entitled to reimbursement from Cinergy for the reasonable costs
              of relocating from the Cincinnati, Ohio, area to a new primary
              residence in a manner that is consistent with the terms of the
              Relocation Program.

4.     TERMINATION OF EMPLOYMENT

       a.     DEATH.  The Executive's employment will terminate automatically
              upon the Executive's death during the Employment Period.

       b.     BY CINERGY FOR CAUSE.  Cinergy may terminate the
              Executive's employment during the Employment Period for Cause.
              For purposes of this Employment Agreement, "Cause" means the
              following:

              (i)    The willful and continued failure by the Executive to
                     substantially perform the Executive's duties with Cinergy
                     (other than any such failure resulting from the Executive's
                     incapacity due to physical or mental illness) after the
                     Board of Directors or the Chief Executive Officer has
                     delivered to the Executive a written demand for substantial
                     performance, which demand specifically identifies the
                     manner in which the Executive has not substantially
                     performed her duties.  This event will constitute Cause
                     even if the Executive issues a Notice of Termination for
                     Good Reason pursuant




                     to Subsection 4d after the Board of Directors or Chief
                     Executive Officer delivers a written demand for
                     substantial performance.

              (ii)   The breach by the Executive of the confidentiality
                     provisions set forth in Section 9.

              (iii)  The conviction of the Executive for the commission of a
                     felony, including the entry of a guilty or nolo contendere
                     plea, or any willful or grossly negligent action or
                     inaction by the Executive that has a materially adverse
                     effect on Cinergy.  For purposes of this definition of
                     Cause, no act, or failure to act, on the Executive's part
                     will be deemed "willful" unless it is done, or omitted to
                     be done, by the Executive in bad faith and without
                     reasonable belief that the Executive's act, or failure to
                     act, was in the best interest of Cinergy.

       c.     BY CINERGY WITHOUT CAUSE.  Cinergy may, upon at least 30 days
              advance written notice to the Executive, terminate the Executive's
              employment during the Employment Period for a reason other than
              Cause, but the obligations placed upon Cinergy in Section 5 will
              apply.

       d.     BY THE EXECUTIVE FOR GOOD REASON.  The Executive may terminate her
              employment during the Employment Period for Good Reason.  For
              purposes of this Agreement, "Good Reason" means the following:

              (i)    A reduction in the Executive's Annual Base Salary, except
                     for across-the-board salary reductions similarly affecting
                     all Cinergy management personnel, or a reduction in any
                     other benefit or payment described in Section 3 of this
                     Agreement, except for changes to the employee benefits
                     programs affecting all Cinergy management personnel,
                     provided that those changes (either individually or in the
                     aggregate) will not result in a material adverse change
                     with respect to the benefits to which the Executive was
                     entitled as of the Effective Date.

              (ii)   The material reduction without her consent of the
                     Executive's title, authority, duties, or responsibilities
                     from those in effect immediately prior to the reduction or
                     a material adverse change in the Executive's reporting
                     responsibilities.

              (iii)  Any breach by Cinergy of any other material provision of
                     this Agreement (including but not limited to the place of
                     performance as specified in Subsection 2b).

              (iv)   The Executive's disability due to physical or mental
                     illness or injury that




                     precludes the Executive from performing any job for which
                     she is qualified and able to perform based upon her
                     education, training or experience.

              (v)    A failure by the Company to require any successor entity to
                     the Company specifically to assume all of the Company's
                     obligations to the Executive under this Agreement.

       e.     BY THE EXECUTIVE WITHOUT GOOD REASON.  The Executive may terminate
              her employment without Good Reason upon prior written notice to
              the Company.

       f.     NOTICE OF TERMINATION.  Any termination of the Executive's
              employment by Cinergy or by the Executive during the Employment
              Period (other than a termination due to the Executive' death) will
              be communicated by a written Notice of Termination to the other
              party to this Agreement in accordance with Subsection 12b.  For
              purposes of this Agreement, a "Notice of Termination" means a
              written notice that specifies the particular provision of this
              Agreement relied upon and that sets forth in reasonable detail the
              facts and circumstances claimed to provide a basis for terminating
              the Executive's employment under the specified provision.  The
              failure by the Executive or Cinergy to set forth in the Notice of
              Termination any fact or circumstance that contributes to a showing
              of Good Reason or Cause will not waive any right of the Executive
              or Cinergy under this Agreement or preclude the Executive or
              Cinergy from asserting that fact or circumstance in enforcing
              rights under this Agreement.

5.     OBLIGATIONS OF CINERGY UPON TERMINATION.

       a.     CERTAIN TERMINATIONS.

              (i)    If a Termination occurs during the Employment Period,
                     Cinergy will pay to the Executive a lump sum amount, in
                     cash, equal to the sum of the following Accrued
                     Obligations:

                     (1)    the Executive's Annual Base Salary through the Date
                            of Termination to the extent not previously paid;

                     (2)    an amount equal to the AIP Benefit for the fiscal
                            year that includes the Date of Termination
                            multiplied by a fraction, the numerator of which
                            is the number of days from the beginning of that
                            fiscal year to and including the Date of
                            Termination and the denominator of which is three
                            hundred and sixty-five (365).  The AIP Benefit
                            will be determined using a percentage determined
                            by the Chief Executive Officer, in his
                            discretion, up to the maximum percentage




                            specified in Subsection 3b, but no less than the
                            Target Annual Bonus.

                     (3)    any compensation previously deferred by the
                            Executive (together with any accrued interest or
                            earnings) and any accrued vacation pay, in each case
                            to the extent not previously paid.

                     The Accrued Obligations described in this Paragraph 5a(i)
                     will be paid within thirty (30) days after the Date of
                     Termination.  These Accrued Obligations are payable to the
                     Executive regardless of whether a Change in Control has
                     occurred.

              (ii)   Prior to the occurrence of a Change in Control, and in the
                     event of (A) a Termination other than by reason of the
                     Executive's death, or (B) the Executive's termination of
                     her employment during the Employment Period for Good
                     Reason, Cinergy will pay the Accrued Obligations, and
                     Cinergy will have the following obligations:

                     (1)    Cinergy will pay to the Executive a lump sum amount,
                            in cash, equal to three (3) times the sum of the
                            Annual Base Salary and the AIP Benefit.  For this
                            purpose, the Annual Base Salary will be at the rate
                            in effect at the time Notice of Termination is given
                            (without giving effect to any reduction in Annual
                            Base Salary, if any, prior to the termination).  The
                            AIP Benefit will be determined using a percentage
                            determined by the Chief Executive Officer, in his
                            discretion, which will not be less than the
                            Executive's annual target percentage for the fiscal
                            year in which the Termination occurs and will not be
                            greater than the maximum percentage specified in
                            Subsection 3b.  This lump sum will be paid within
                            thirty (30) days of the Date of Termination.

                     (2)    Cinergy will pay to the Executive the value of all
                            deferred compensation amounts and all executive life
                            insurance benefits whether or not they are otherwise
                            currently vested or payable.  Payment will be made
                            in accordance with the terms of the applicable plan
                            or program.

                     (3)    Except as provided under Clauses (A) and (B) below,
                            Cinergy will continue, until the end of the
                            Employment Period, medical and dental benefits to
                            the Executive and/or the Executive's family at least
                            equal to those that would have been provided if the
                            Executive's employment had not been terminated
                            (excluding benefits to which the Executive has
                            waived her rights in writing).



                            The benefits described in the preceding sentence
                            will be in accordance with the medical and welfare
                            benefit plans, practices, programs, or policies of
                            Cinergy (the "M&W Plans") as then currently in
                            effect and applicable generally to other Cinergy
                            senior executives and their families.

                                   (A)    If, as of the Executive's Date of
                                   Termination, the Executive meets the
                                   eligibility requirements for Cinergy's
                                   retiree medical and welfare benefit plans,
                                   the provision of those retiree medical and
                                   welfare benefit plans to the Executive will
                                   satisfy Cinergy's obligation under this
                                   Subparagraph 5a(ii)(3).

                                   (B)    If, as of the Executive's Date of
                                   Termination, the provision to the Executive
                                   of the M&W Plan benefits described in this
                                   Subparagraph 5a(ii)(3) would either (1)
                                   violate the terms of the M&W Plans or (2)
                                   violate any of the Code's nondiscrimination
                                   requirements applicable to the M&W Plans,
                                   then Cinergy, in its sole discretion, may
                                   elect to pay the Executive, in lieu of the
                                   M&W Plan benefits described under this
                                   Subparagraph 5a(ii)(3), a lump sum cash
                                   payment equal to the total monthly premiums
                                   that would have been paid by Cinergy for the
                                   Executive under the M&W Plans from the Date
                                   of Termination through the end of the
                                   Employment Period.  Nothing in this Clause
                                   will affect the Executive's right to elect
                                   COBRA continuation coverage under a M&W Plan
                                   in accordance with applicable law.

                                   (C)    If the Executive becomes employed by
                                   another employer and is eligible to receive
                                   medical or other welfare benefits under
                                   another employer-provided plan, any benefits
                                   provided to the Executive under the M&W Plans
                                   will be secondary to those provided under the
                                   other employer-provided plan during the
                                   Executive's applicable period of eligibility.

                     (4)    Ownership of the automobile assigned to the
                            Executive by Cinergy will be transferred to the
                            Executive within 30 days of the Date of Termination.
                            The effect of this transfer will be grossed up for
                            federal and state income taxes as soon as
                            administratively feasible after the transfer is
                            effective.



                     (5)    Cinergy will provide tax counseling services through
                            an agency selected by the Executive, not to exceed
                            Fifteen Thousand Dollars ($15,000.00) in cost.

              (iii)  In the event of Termination by Cinergy or by the Executive
                     for Good Reason upon or during the twenty-four (24) month
                     period after the occurrence of a Change in Control, then in
                     lieu of any further salary payments to the Executive for
                     periods subsequent to the Date of Termination and in lieu
                     of any other benefits payable pursuant to Paragraph 5a(ii),
                     Cinergy will have the following obligations:

                     (1)    Cinergy will pay to the Executive a lump sum
                            severance payment, in cash, equal to the greater of:

                            (A)    the present value of all amounts and benefits
                                   that would have been due under Paragraph
                                   5a(ii), excluding Subparagraphs 5a(ii)(3),
                                   5a(ii)(4), and 5a(ii)(5), or

                            (B)    three (3) times the sum of (x) the higher of
                                   the Executive's Annual Base Salary in effect
                                   immediately prior to the occurrence of the
                                   event or circumstance upon which the Notice
                                   of Termination is based or in effect
                                   immediately prior to the Change in Control,
                                   and (y) the higher of the amount paid to the
                                   Executive pursuant to all annual incentive
                                   compensation or bonus plans or programs
                                   maintained by Cinergy in the year preceding
                                   that in which the Date of Termination occurs
                                   or in the year preceding that in which the
                                   Change in Control occurs; and

                     (2)    For a thirty-six (36) month period after the Date of
                            Termination, Cinergy will arrange to provide the
                            Executive with life, disability, accident, and
                            health insurance benefits substantially similar to
                            those that the Executive is receiving immediately
                            prior to the Notice of Termination (without giving
                            effect to any reduction in those benefits subsequent
                            to a Change in Control that constitutes Good
                            Reason), except for any benefits that were waived by
                            the Executive in writing.  If Cinergy arranges to
                            provide the Executive with life, disability,
                            accident, and health insurance benefits, those
                            benefits will be reduced to the extent comparable
                            benefits are actually received by or made available
                            to the Executive without cost during the thirty-six
                            (36) month period following the Executive's Date of
                            Termination.  The Executive must report to Cinergy
                            any such benefits that she actually receives.  In
                            lieu of the benefits described



                            in the preceding sentences, Cinergy, in its sole
                            discretion, may elect to pay to the Executive a lump
                            sum cash payment equal to thirty-six (36) times the
                            monthly premiums that would have been paid by
                            Cinergy to provide those benefits to the Executive.
                            Nothing in this Subparagraph 5a(iii)(2) will affect
                            the Executive's right to elect COBRA continuation
                            coverage in accordance with applicable law.

                     (3)    Ownership of the automobile assigned to the
                            Executive by Cinergy will be transferred to the
                            Executive within 30 days of the Date of Termination.
                            The effect of this transfer will be grossed up for
                            federal and state income taxes as soon as
                            administratively feasible after the transfer is
                            effective.

                     (4)    Cinergy will provide tax counseling services through
                            an agency selected by the Executive, not to exceed
                            Fifteen Thousand Dollars ($15,000.00) in cost.

                     For purposes of this Paragraph (iii), the Executive will be
                     deemed to have incurred a Termination following a Change in
                     Control if the Executive's employment is terminated prior
                     to a Change in Control, without Cause at the direction of a
                     Person who has entered into an agreement with Cinergy, the
                     consummation of which will constitute a Change in Control,
                     or if the Executive terminates her employment for Good
                     Reason prior to a Change in Control if the circumstances or
                     event that constitutes Good Reason occurs at the direction
                     of such a Person.

       b.     TERMINATION BY CINERGY FOR CAUSE OR BY THE EXECUTIVE OTHER THAN
              FOR GOOD REASON.  Subject to the provisions of Section 7, if the
              Executive's employment is terminated for Cause during the
              Employment Period, or if the Executive terminates employment
              during the Employment Period other than a termination for Good
              Reason, Cinergy will have no further obligations to the Executive
              under this Agreement other than the obligation to pay to the
              Executive the Accrued Obligations, plus any other earned but
              unpaid compensation, in each case to the extent not previously
              paid.

       c.     CERTAIN TAX CONSEQUENCES.

              (i)    In the event that any Severance Benefits paid or payable to
                     the Executive or for her benefit pursuant to the terms of
                     this Agreement or otherwise in connection with, or arising
                     out of, her employment with Cinergy or a change in
                     ownership or effective control of Cinergy or of a
                     substantial portion of its assets (a "Payment" or
                     "Payments") would be subject to any



                     Excise Tax, then the Executive will be entitled to receive
                     an additional payment (a "Gross-Up Payment") in an amount
                     such that after payment by the Executive of all taxes
                     (including any interest, penalties, additional tax, or
                     similar items imposed with respect thereto and the Excise
                     Tax), including any Excise Tax imposed upon the Gross-Up
                     Payment, the Executive retains an amount of the Gross-Up
                     Payment equal to the Excise Tax imposed upon the Payments.

              (ii)   An initial determination as to whether a Gross-Up Payment
                     is required pursuant to this Agreement and the amount of
                     that Gross-Up Payment will be made at Cinergy's expense by
                     an Accounting Firm selected by the Executive and reasonably
                     acceptable to Cinergy.  The Accounting Firm will provide
                     its determination, together with detailed supporting
                     calculations and documentation, to Cinergy and the
                     Executive within 10 days after the Date of Termination, or
                     such other time as requested by Cinergy or by the
                     Executive, and if the Accounting Firm determines that no
                     Excise Tax is payable by the Executive with respect to a
                     Payment or Payments, it will furnish the Executive with an
                     opinion reasonably acceptable to the Executive that no
                     Excise Tax will be imposed with respect to any such Payment
                     or Payments.  Within 10 days after the Accounting Firm
                     delivers its determination to the Executive, the Executive
                     will have the right to dispute the determination.  The
                     Gross-Up Payment, if any, as determined pursuant to this
                     Subsection 5c will be paid by Cinergy to the Executive
                     within five days of the receipt of the Accounting Firm's
                     determination.  The existence of a dispute will not in any
                     way affect the Executive's right to receive the Gross-Up
                     Payment in accordance with the determination.  If there is
                     no dispute, the determination will be binding, final, and
                     conclusive upon Cinergy and the Executive.  If there is a
                     dispute, then Cinergy and the Executive will together
                     select a second Accounting Firm, which will review the
                     determination and the Executive's basis for the dispute and
                     then will render its own determination, which will be
                     binding, final, and conclusive on Cinergy and on the
                     Executive.  Cinergy will bear all costs associated with
                     that determination, unless the determination is not greater
                     than the initial determination, in which case all such
                     costs will be borne by the Executive.

              (iii)  The value of any non-cash benefits or any deferred payment
                     or benefit paid or payable to the Executive will be
                     determined in accordance with the principles of Code
                     paragraphs 280G(d)(3) and (4).  For purposes of determining
                     the amount of the Gross-Up Payment, the Executive will be
                     deemed to pay federal income taxes at the highest marginal
                     rate of federal income taxation in the calendar year in
                     which the Gross-Up Payment is to be made and applicable
                     state and local income taxes at the highest



                     marginal rate of taxation in the state and locality of the
                     Executive's residence on the Date of Termination, net of
                     the maximum reduction in federal income taxes that would be
                     obtained from deduction of those state and local taxes.

              (iv)   Notwithstanding anything contained in this Agreement to the
                     contrary, in the event that, according to the Accounting
                     Firm's determination, an Excise Tax will be imposed on any
                     Payment or Payments, Cinergy will pay to the applicable
                     government taxing authorities as Excise Tax withholding,
                     the amount of the Excise Tax that Cinergy has actually
                     withheld from the Payment or Payments in accordance with
                     law.


              d.     VALUE CREATION PLAN AND STOCK OPTIONS.  Upon the
              Executive's termination of employment for any reason, the
              Executive's entitlement to restricted shares and performance
              shares under the Value Creation Plan and any stock options granted
              under the Stock Option Plan or the LTIP will be determined under
              the terms of the appropriate plan and any applicable
              administrative guidelines and written agreements.

              e.     OTHER FEES AND EXPENSES.  Cinergy will also pay to the
              Executive all legal fees and expenses incurred by the Executive in
              successfully disputing a Termination that entitles the Executive
              to Severance Benefits.  Payment will be made within five (5)
              business days after delivery of the Executive's written request
              for payment accompanied by such evidence of fees and expenses
              incurred as Cinergy reasonably may require.

6.     NON-EXCLUSIVITY OF RIGHTS.  Nothing in this Agreement will prevent or
       limit the Executive's continuing or future participation in any benefit,
       plan, program, policy, or practice provided by Cinergy and for which the
       Executive may qualify, except with respect to any benefit to which the
       Executive has waived her rights in writing or any plan, program, policy,
       or practice that expressly excludes the Executive from participation.  In
       addition, nothing in this Agreement will limit or otherwise affect the
       rights the Executive may have under any other contract or agreement with
       Cinergy entered into after the Effective Date.  Amounts that are vested
       benefits or that the Executive is otherwise entitled to receive under any
       benefit, plan, program, policy, or practice of, or any contract or
       agreement entered into after the Effective Date with Cinergy, at or
       subsequent to the Date of Termination, will be payable in accordance with
       that benefit, plan, program, policy or practice, or that contract or
       agreement, except as explicitly modified by this Agreement.

7.     FULL SETTLEMENT:  MITIGATION.  Cinergy's obligation to make the payments
       provided for in this Agreement and otherwise to perform its obligations
       under this Agreement will not be affected by any set-off, counterclaim,
       recoupment, defense, or other claim, right, or action



       that Cinergy may have against the Executive or others.  In no event will
       the Executive be obligated to seek other employment or take any other
       action by way of mitigation of the amounts (including amounts for damages
       for breach) payable to the Executive under any of the provisions of this
       Agreement and, except as provided in Subparagraphs 5a(ii)(3) and 5a(iii)
       (2), those amounts will not be reduced simply because the Executive
       obtains other employment.  If the Executive finally prevails on the
       substantial claims brought with respect to any dispute between Cinergy
       and the Executive as to the interpretation, terms, validity, or
       enforceability of (including any dispute about the amount of any payment
       pursuant to) this Agreement, Cinergy agrees to pay all reasonable legal
       fees and expenses that the Executive may reasonably incur as a result of
       that dispute.

8.     ARBITRATION.  The parties agree that any dispute, claim, or controversy
       based on common law, equity, or any federal, state, or local statute,
       ordinance, or regulation (other than workers' compensation claims)
       arising out of or relating in any way to the Executive's employment, the
       terms, benefits, and conditions of employment, or concerning this
       Agreement or its termination and any resulting termination of employment,
       including whether such a dispute is arbitrable, shall be settled by
       arbitration.  This agreement to arbitrate includes but is not limited to
       all claims for any form of illegal discrimination, improper or unfair
       treatment or dismissal, and all tort claims.  The Executive will still
       have a right to file a discrimination charge with a federal or state
       agency, but the final resolution of any discrimination claim will be
       submitted to arbitration instead of a court or jury.  The arbitration
       proceeding will be conducted under the employment dispute resolution
       arbitration rules of the American Arbitration Association in effect at
       the time a demand for arbitration under the rules is made.  The decision
       of the arbitrator(s), including determination of the amount of any
       damages suffered, will be exclusive, final, and binding on all parties,
       their heirs, executors, administrators, successors and assigns.  Each
       party will bear its own expenses in the arbitration for arbitrators' fees
       and attorneys' fees, for its witnesses, and for other expenses of
       presenting its case.  Other arbitration costs, including administrative
       fees and fees for records or transcripts, will be borne equally by the
       parties.  Notwithstanding anything in this Section to the contrary, if
       the Executive prevails with respect to any dispute submitted to
       arbitration under this Section, Cinergy will reimburse or pay all legal
       fees and expenses that the Executive may reasonably incur as a result of
       the dispute as required by Section 7.

9.     CONFIDENTIAL INFORMATION.  The Executive will hold in a fiduciary
       capacity for the benefit of Cinergy, as well as all of Cinergy's
       successors and assigns, all secret, confidential information, knowledge,
       or data relating to Cinergy, and its affiliated businesses, that the
       Executive obtains during the Executive's employment by Cinergy or any of
       its affiliated companies, and that has not been or subsequently becomes
       public knowledge (other than by acts by the Executive or representatives
       of the Executive in violation of this Agreement).  During the Employment
       Period and thereafter, the Executive will not, without Cinergy's prior
       written consent or as may otherwise by required by law or legal process,
       communicate or divulge any such information,



       knowledge, or data to anyone other than Cinergy and those designated by
       it.  The Executive understands that during the Employment Period,
       Cinergy may be required from time to time to make public disclosure of
       the terms or existence of the Executive's employment relationship to
       comply with various laws and legal requirements.  In addition to all
       other remedies available to Cinergy in law and equity, this Agreement is
       subject to termination by Cinergy for Cause under Section 4b in the event
       the Executive violates any provision of this Section.

10.    SUCCESSORS.

       a.     This Agreement is personal to the Executive and, without Cinergy's
              prior written consent, cannot be assigned by the Executive
              otherwise than by will or the laws of descent and distribution.
              This Agreement will inure to the benefit of and be enforceable by
              the Executive's legal representatives.

       b.     This Agreement will inure to the benefit of and be binding upon
              Cinergy and its successors and assigns.

       c.     Cinergy will require any successor (whether direct or indirect, by
              purchase, merger, consolidation or otherwise) to all or
              substantially all of the business and/or assets of Cinergy to
              assume expressly and agree to perform this Agreement in the same
              manner and to the same extent that Cinergy would be required to
              perform it if no succession had taken place.  Cinergy's failure to
              obtain such an assumption and agreement prior to the effective
              date of a succession will be a breach of this Agreement and will
              entitle the Executive to compensation from Cinergy in the same
              amount and on the same terms as if the Executive were to terminate
              her employment for Good Reason after a Change in Control, except
              that, for purposes of implementing the foregoing, the date on
              which any such succession becomes effective will be deemed the
              Date of Termination.

11.    DEFINITIONS.  As used in this Agreement, the following terms, when
       capitalized, will have the following meanings:

       a.     1934 ACT.  "1934 Act" means the Securities Exchange Act of 1934.

       b.     ACCOUNTING FIRM.  "Accounting Firm" means an accounting firm that
              is designated as one of the five largest accounting firms in the
              United States (which may include Cinergy's independent auditors).

       c.     ACCRUED OBLIGATIONS.  "Accrued Obligations" means the accrued
              obligations described in Paragraph 5a(i).

       d.     AGREEMENT.  "Agreement" means this Amended and Restated Employment



              Agreement between Cinergy and the Executive.

       e.     AIP BENEFIT.  "AIP Benefit" means the Annual Incentive Plan
              benefit described in Subsection 3b.

       f.     ANNUAL BASE SALARY.  "Annual Base Salary" means the annual base
              salary payable to the Executive pursuant to Subsection 3a.

       g.     ANNUAL INCENTIVE PLAN.  "Annual Incentive Plan" means the Cinergy
              Corp. Annual Incentive Plan or any successor to that plan.

       h.     BOARD OF DIRECTORS.  "Board of Directors" means the board of
              directors of the Company.

       i.     CAUSE.  "Cause" has the meaning set forth in Subsection 4b.

       j.     CHANGE IN CONTROL.  "A Change in Control" will be deemed to have
              occurred if any of the following events occur, after the Effective
              Date:

              (i)    Any "person" or "group" (within the meaning of subsection
                     13(d) and paragraph 14(d)(2) of the 1934 Act) is or becomes
                     the beneficial owner (as defined in Rule l3d-3 under the
                     1934 Act), directly or indirectly, of securities of the
                     Company (not including in the securities beneficially owned
                     by such a Person any securities acquired directly from the
                     Company or its affiliates) representing more than twenty
                     percent (20%) of the combined voting power of the Company's
                     then outstanding securities, excluding any person who
                     becomes such a beneficial owner in connection with a
                     transaction described in Clause (1) of Paragraph (ii)
                     below; or

              (ii)   There is consummated a merger or consolidation of the
                     Company or any direct or indirect subsidiary of the Company
                     with any other corporation, other than (1) a merger or
                     consolidation that would result in the voting securities of
                     the Company outstanding immediately prior to that merger or
                     consolidation continuing to represent (either by remaining
                     outstanding or by being converted into voting securities of
                     the surviving entity or its parent) at least sixty percent
                     (60%) of the combined voting power of the securities of the
                     Company or the surviving entity or its parent outstanding
                     immediately after the merger or consolidation, or (2) a
                     merger or consolidation effected to implement a
                     recapitalization of the Company (or similar transaction) in
                     which no person is or becomes the beneficial owner,
                     directly or indirectly, of securities of the Company (not
                     including in the securities beneficially owned by such a
                     Person any securities acquired directly from the Company or
                     its affiliates other than in connection with



                     the acquisition by the Company or its affiliates of a
                     business) representing twenty percent (20%) or more of the
                     combined voting power of the Company's then outstanding
                     securities; or

              (iii)  During any period of two consecutive years, individuals who
                     at the beginning of that period constitute the Board of
                     Directors and any new director (other than a director whose
                     initial assumption of office is in connection with an
                     actual or threatened election contest, including but not
                     limited to a consent solicitation, relating to the election
                     of directors of the Company) whose appointment or election
                     by the Company's shareholders was approved or recommended
                     by a vote of at least two-thirds (2/3) of the directors
                     then still in office who either were directors at the
                     beginning of that period or whose appointment, election, or
                     nomination for election was previously so approved or
                     recommended cease for any reason to constitute a majority
                     of the Board of Directors; or

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

       k.     CHIEF EXECUTIVE OFFICER.  "Chief Executive Officer" means the
              chief executive officer of the Company.

       l.     CINERGY.  "Cinergy" means the Company, Cinergy Services, Inc., The
              Cincinnati Gas & Electric Company, and PSI Energy, Inc.

       m.     CODE.  "Code" means the Internal Revenue Code of 1986, as amended,
              and interpretive rules and regulations.

       n.     COMPANY.  "Company" means Cinergy Corp.

       o.     DATE OF TERMINATION.  "Date of Termination" means:

              (i)    if the Executive's employment is terminated by the Company
                     for Cause, or by the Executive with or without Good Reason,
                     the date of receipt of the Notice of Termination or any
                     later date specified in the notice, as the case may be;




              (ii)   if the Executive's employment is terminated by the Company
                     other than for Cause, thirty (30) days after the date on
                     which the Company notifies the Executive of the
                     termination; and

              (iii)  if the Executive's employment is terminated by reason of
                     death, the date of death.

       p.     EARNINGS.  "Earnings" means the Executive's "Earnings" as defined
              in the Pension Plan but without regard to the limitation of Code
              paragraph 401(a)(17).

       q.     EFFECTIVE DATE.  "Effective Date" means December 30, 1999.

       r.     EMPLOYMENT PERIOD.  "Employment Period" has the meaning set forth
              in Subsection 1b.

       s.     EXCISE TAX.  "Excise Tax" means any excise tax imposed by Code
              section 4999, together with any interest, penalties, additional
              tax or similar items that are incurred by the Executive with
              respect to the excise tax imposed by Code section 4999.

       t.     EXECUTIVE.  "Executive" means Cheryl M. Foley.

       u.     EXECUTIVE RETIREMENT PLANS.  The "Executive Retirement Plans" are
              the Pension Plan, the Supplemental Executive Retirement Plan, and
              the Cinergy Corp. Excess Pension Plan or any successor to those
              plans.

       v.     EXECUTIVE SUPPLEMENTAL LIFE PROGRAM.  "Executive Supplemental Life
              Program" means the Cinergy Corp. Executive Supplemental Life
              Program or any successor to that plan.

       w.     GOOD REASON.  "Good Reason" has the meaning set forth in
              Subsection 4d.

       x.     GROSS-UP PAYMENT.  "Gross-Up Payment" has the meaning set forth in
              Subsection 5c.

       y.     HIGHEST AVERAGE EARNINGS.  "Highest Average Earnings" means the
              greater of (a) the Executive's "Highest Average Earnings" as
              defined in the Pension Plan (without regard to the limitation of
              Code paragraph 401(a)(17)) or (b) the Executive's Earnings for the
              12 consecutive calendar months immediately preceding her
              termination of employment with Cinergy.

       z.     M&W PLANS.  "M&W Plans" has the meaning given in Subparagraph
              5a(ii)(3).



       aa.    LONG-TERM INCENTIVE PLAN.  "Long-Term Incentive Plan" means the
              long-term inventive plan implemented under the Cinergy Corp. 1996
              Long-Term Incentive Compensation Plan or any successor to that
              plan.

       bb.    NOTICE OF TERMINATION.  "Notice of Termination" has the meaning
              set forth in Subsection 4e.

       cc.    PAYMENT OR PAYMENTS.  "Payment" or "Payments" has the meaning set
              forth in Subsection 5c.

       dd.    PENSION PLAN.  "Pension Plan" means the Cinergy Corp. Non-Union
              Employees' Pension Plan or any successor to that plan.

       ee.    PERSON.  "Person" has the meaning set forth in paragraph 3(a)(9)
              of the 1934 Act, as modified and used in subsections 13(d) and
              14(d) of the 1934 Act; however, a Person will not include the
              following:

                     (i)    Cinergy or any of its subsidiaries;

                     (ii)   A trustee or other fiduciary holding securities
                     under an employee benefit plan of Cinergy or its
                     subsidiaries;

                     (iii)  An underwriter temporarily holding securities
                     pursuant to an offering of those securities; or

                     (iv)   A corporation owned, directly or indirectly, by
                     the stockholders of the Company in substantially the
                     same proportions as their ownership of stock of the
                     Company.

       ff.    RELOCATION PROGRAM.  "Relocation Program" means the Cinergy Corp.
              Relocation Program or any successor to that program, as in effect
              on the date of the Executive's termination of employment.

       gg.    RETIREES' DENTAL PLAN.  "Retirees' Dental Plan" means the Cinergy
              Corp. Retirees' Dental Plan or any successor to that plan.

       hh.    RETIREES' MEDICAL PLAN. "Retirees' Medical Plan" means the Cinergy
              Corp. Retirees' Medical Plan or any successor to that plan.

       ii.    SEVERANCE BENEFITS.  "Severance Benefits" means the payments and
              benefits payable to the Executive pursuant to Section 5.



       jj.    SPOUSE.  "Spouse" means the Executive's lawfully married spouse.
              For this purpose, common law marriage or a similar arrangement
              will not be recognized unless otherwise required by federal law.

       kk.    STOCK RELATED DOCUMENTS.  "Stock Related Documents" means the
              LTIP, the Cinergy Corp. Stock Option Plan, and the Value Creation
              Plan and any applicable administrative guidelines and written
              agreements relating to those plans.

       ll.    SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.  "Supplemental Executive
              Retirement Plan" means the Cinergy Corp. Supplemental Executive
              Retirement Plan or any successor to that plan.

       mm.    TARGET ANNUAL BONUS.  "Target Annual Bonus" has the meaning set
              forth in Subsection 3b.

       nn.    TARGET LTIP BONUS.  "Target LTIP Bonus" has the meaning set forth
              in Subsection 3b.

       oo.    TERMINATION.  "Termination" means the termination of the
              Executive's employment with Cinergy other than a termination by
              Cinergy for Cause.

       pp.    VALUE CREATION PLAN.  "Value Creation Plan" means the Value
              Creation Plan of the LTIP.

       qq.    YEARS OF PARTICIPATION.  The Executive's "Years of Participation"
              will equal the lesser of (i) 35 or (ii) 25 plus two additional
              years for each of the Executive's birthdays that she has reached
              since her 50th birthday.


12.    MISCELLANEOUS.

       a.     This Agreement will be governed by and construed in accordance
              with the laws of the State of Ohio, without reference to
              principles of conflict of laws.  The captions of this Agreement
              are not part of its provisions and will have no force or effect.
              This Agreement may not be amended, modified, repealed, waived,
              extended, or discharged except by an agreement in writing signed
              by the party against whom enforcement of the amendment,
              modification, repeal, waiver, extension, or discharge is sought.
              Only the Chief Executive Officer or his designee will have
              authority on behalf of Cinergy to agree to amend, modify, repeal,
              waive, extend, or discharge any provision of this Agreement.

       b.     All notices and other communications under this Agreement will be
              in writing and will be given by hand delivery to the other party
              or by registered or certified mail, return receipt requested,
              postage prepaid, addressed as follows:



              IF TO THE EXECUTIVE:
              Cheryl M. Foley
              Cinergy Corp.
              221 East Fourth Street
              P 0. Box 960
              Cincinnati, Ohio 45201-0960

              IF TO CINERGY:
              Cinergy Corp.
              221 East Fourth Street
              P. 0. Box 960
              Cincinnati, Ohio  45201-0960
              Attn: Chief Executive Officer


              or to such other address as either party has furnished to the
              other in writing in accordance with this Agreement.  All notices
              and communications will be effective when actually received by the
              addressee.

       c.     The invalidity or unenforceability of any provision of this
              Agreement will not affect the validity or enforceability of any
              other provision of this Agreement.

       d.     Cinergy may withhold from any amounts payable under this Agreement
              such federal, state, or local taxes as are required to be withheld
              pursuant to any applicable law or regulation.

       e.     The Executive's or Cinergy's failure to insist upon strict
              compliance with any provision of this Agreement or the failure to
              assert any right the Executive or Cinergy may have under this
              Agreement, including without limitation the right of the Executive
              to terminate employment for Good Reason pursuant to Subsection 4c
              or the right of Cinergy to terminate the Executive's employment
              for Cause pursuant to Subsection 4b, will not be deemed to be a
              waiver of that provision or right or any other provision or right
              of this Agreement.

       f.     This instrument contains the entire agreement of the Executive and
              Cinergy with respect to the subject matter of this Agreement; and
              subject to any agreements evidencing stock option or restricted
              stock grants described in Subsection 3b and the Stock Related
              Documents, all promises, representations, understandings,
              arrangements, and prior agreements are merged into this Agreement
              and accordingly superseded.

       g.     This Agreement may be executed in counterparts, each of which will
              be deemed



              to be an original but all of which together will constitute one
              and the same instrument.

       h.     Cinergy and the Executive agree that Cinergy will be authorized to
              act for Cinergy with respect to all aspects pertaining to the
              administration and interpretation of this Agreement.



       IN WITNESS WHEREOF, the Executive and the Company have caused this
Agreement to be executed as of the Effective Date.

                                                 CINERGY CORP.; CINERGY
                                                 SERVICES, INC.; THE CINCINNATI
                                                 GAS & ELECTRIC COMPANY; AND PSI
                                                 ENERGY, INC.


                                          By:
                                             ---------------------------------
                                                 James E. Rogers
                                                 Vice Chairman and Chief
                                                 Executive Officer


                                                 EXECUTIVE



                                          ------------------------------------
                                                 Cheryl M. Foley

EX-10.F

                                AMENDED AND RESTATED
                                EMPLOYMENT AGREEMENT


       This AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered into
as of the 30th day of December, 1999 (the "Effective Date"), by and between
Cinergy and Madeleine W. Ludlow (the "Executive").  This Agreement replaces and
supersedes any and all prior employment agreements between Cinergy and the
Executive.  The capitalized words and terms used throughout this Agreement are
defined in Section 11.


                                       RECITALS

       A.     The Executive is currently serving as Vice President and Chief
Financial Officer of Cinergy, and Cinergy desires to secure the continued
employment of the Executive in accordance with this Agreement.

       B.     The Executive is willing to continue to remain in the employ of
Cinergy, and any successor to Cinergy, on the terms and conditions set forth in
this Agreement.

       C.     The parties intend that this Agreement will replace and supersede
any and all prior employment agreements between Cinergy (or any component
company or business unit of Cinergy) and the Executive.


                                     AGREEMENT

       In consideration of the mutual premises, covenants and agreements set
forth below, the parties agree as follows:

1.     EMPLOYMENT AND TERM

       a.     Cinergy, and any successor to Cinergy, agree to employ the
              Executive, and the Executive agrees to remain in the employ of
              Cinergy, in accordance with the terms and provisions of this
              Agreement, for the Employment Period set forth in Subsection b.
              The parties agree that the Company will be responsible for
              carrying out all of the premises, covenants, and agreements of
              Cinergy set forth in this Agreement.

       b.     The Employment Period of this Agreement will commence as of the
              Effective Date and continue until December 31, 2002; provided
              that, commencing on December 31, 2000, and on each subsequent
              December 31, the Employment Period will be extended for one (1)
              additional year unless either party gives the other party




              written notice not to extend this Agreement at least ninety (90)
              days before the extension would otherwise become effective.

2.     DUTIES AND POWERS OF EXECUTIVE

              a.     POSITION.  The Executive will serve Cinergy as Vice
              President and Chief Financial Officer, and she will have such
              responsibilities, duties, and authority as are customary for
              someone of that position, and such additional duties, consistent
              with her position, as may be assigned to her from time to time
              during the Employment Period by the Board of Directors or the
              Chief Executive Officer.

              b.     PLACE OF PERFORMANCE.  In connection with the Executive's
              employment, the Executive will be based at the principal executive
              offices of Cinergy, 221 East Fourth Street, Cincinnati, Ohio, and,
              except for required business travel to an extent substantially
              consistent with the present business travel obligations of Cinergy
              executives who have positions of authority comparable to that of
              the Executive, the Executive will not be required to relocate to a
              new principal place of business that is more than thirty (30)
              miles from Cinergy's current principal executive offices.

3.     COMPENSATION.  The Executive will receive the following compensation for
       her services under this Agreement.

              a.     SALARY.  The Executive's Annual Base Salary, payable not
              less often than semi-monthly, will be at the annual rate of not
              less than $375,000.00.  The Board of Directors or its designee
              may, from time to time, increase the Annual Base Salary as the
              Board of Directors deems to be necessary or desirable, including
              without limitation adjustments to reflect increases in the cost of
              living. Any increase in the Annual Base Salary will not serve to
              limit or reduce any other obligation of Cinergy under this
              Agreement.  The Annual Base Salary will not be reduced except for
              across-the-board salary reductions similarly affecting all Cinergy
              management personnel.  If Annual Base Salary is increased during
              the Employment Period, then the increased salary will be the
              Annual Base Salary for all purposes under this Agreement.

       b.     RETIREMENT, INCENTIVE, WELFARE BENEFIT PLANS AND OTHER BENEFITS.
              During the Employment Period, the Executive will be eligible, and
              Cinergy will take all necessary action to cause the Executive to
              become eligible, to participate in all short-term and long-term
              incentive, stock option, restricted stock, performance unit,
              savings, retirement and welfare plans, practices, policies and
              programs applicable generally to employees and/or other senior
              executives of Cinergy who are considered Tier II executives for
              compensation purposes, except with respect to any plan, practice,
              policy or program to which the Executive has waived her




              rights in writing.

              If the Executive retires after reaching age 55, the Executive will
              be entitled and fully vested in a supplemental retirement benefit
              equal to the difference between (1) her total benefit under all
              Executive Retirement Plans, and (2) 60% of the Executive's Highest
              Average Earnings. The form, timing, and method of payment of the
              supplemental retirement benefit payable under this Paragraph will
              be the same as those elected by the Executive under the Pension
              Plan.  If the Executive dies after reaching age 55 but prior to
              her retirement, and if her Spouse, on the date of her death, is
              living on the date the first installment of the supplemental
              retirement benefit would be payable under this Paragraph, the
              Spouse will be entitled to receive the supplemental retirement
              benefit as a Spouse's benefit.  The form, timing, and method of
              payment of any Spouse's benefit under this Paragraph will be the
              same as those applicable to the Spouse under the Pension Plan.

              Upon her retirement on or after having attained age fifty (50),
              the Executive will be eligible for comprehensive medical and
              dental insurance pursuant to the terms of the Retirees' Medical
              Plan and the Retirees' Dental Plan.  The Executive, however, will
              receive the full subsidy provided by Cinergy to retirees for
              purposes of determining the amount of monthly premiums due from
              the Executive.

              The Executive will be a participant in the Annual Incentive Plan,
              and the Executive will be paid pursuant to that plan an annual
              benefit of up to sixty percent (60%) of the Executive's Annual
              Base Salary, with a target of no less than forty percent (40%) of
              the Executive's Annual Base Salary (the "Target Annual Bonus").

              The Executive will be a participant in the Long-Term Incentive
              Plan (the "LTIP"), and the Executive's annualized target award
              opportunity under the LTIP will be equal to no less than seventy
              percent (70%) of her Annual Base Salary (the "Target LTIP Bonus").

       c.     FRINGE BENEFITS AND PERQUISITES.  During the Employment Period,
              the Executive will be entitled to the following additional fringe
              benefits:

              (i)    Cinergy will furnish to the Executive an automobile and
                     will pay all of the related expenses for gasoline,
                     insurance, maintenance, and repairs.

              (ii)   Cinergy will pay the initiation fee and the annual dues,
                     assessments, and other membership charges of the Executive
                     for membership in a country club selected by the Executive.




              (iii)  Cinergy will provide paid vacation for four (4) weeks per
                     year (or longer if permitted by Cinergy's policy).

              (iv)   Cinergy will furnish to the Executive annual financial
                     planning and tax preparation services.  In addition, the
                     Executive will be entitled to receive such other fringe
                     benefits in accordance with Cinergy plans, practices,
                     programs, and policies in effect from time to time,
                     commensurate with her position and at least comparable to
                     those received by other Cinergy senior executives.

       d.     EXPENSES.  Cinergy agrees to reimburse the Executive for all
              expenses, including those for travel and entertainment, properly
              incurred by her in the performance of her duties under this
              Agreement in accordance with the policies established from time to
              time by the Board of Directors.

       e.     RELOCATION BENEFITS.  Following termination of the Executive's
              employment for any reason (other than death), the Executive will
              be entitled to reimbursement from Cinergy for the reasonable costs
              of relocating from the Cincinnati, Ohio, area to a new primary
              residence in a manner that is consistent with the terms of the
              Relocation Program.

4.     TERMINATION OF EMPLOYMENT

              a.     DEATH.  The Executive's employment will terminate
              automatically upon the Executive's death during the Employment
              Period.

              b.     BY CINERGY FOR CAUSE.  Cinergy may terminate the
              Executive's employment during the Employment Period for Cause.
              For purposes of this Employment Agreement, "Cause" means the
              following:

              (i)    The willful and continued failure by the Executive to
                     substantially perform the Executive's duties with Cinergy
                     (other than any such failure resulting from the Executive's
                     incapacity due to physical or mental illness) after the
                     Board of Directors or the Chief Executive Officer has
                     delivered to the Executive a written demand for substantial
                     performance, which demand specifically identifies the
                     manner in which the Executive has not substantially
                     performed her duties.  This event will constitute Cause
                     even if the Executive issues a Notice of Termination for
                     Good Reason pursuant to Subsection 4d after the Board of
                     Directors or Chief Executive Officer delivers a written
                     demand for substantial performance.

              (ii)   The breach by the Executive of the confidentiality
                     provisions set forth in Section 9.




              (iii)  The conviction of the Executive for the commission of a
                     felony, including the entry of a guilty or nolo contendere
                     plea, or any willful or grossly negligent action or
                     inaction by the Executive that has a materially adverse
                     effect on Cinergy.  For purposes of this definition of
                     Cause, no act, or failure to act, on the Executive's part
                     will be deemed "willful" unless it is done, or omitted to
                     be done, by the Executive in bad faith and without
                     reasonable belief that the Executive's act, or failure to
                     act, was in the best interest of Cinergy.

       c.     BY CINERGY WITHOUT CAUSE.  Cinergy may, upon at least 30 days
              advance written notice to the Executive, terminate the Executive's
              employment during the Employment Period for a reason other than
              Cause, but the obligations placed upon Cinergy in Section 5 will
              apply.

       d.     BY THE EXECUTIVE FOR GOOD REASON.  The Executive may terminate her
              employment during the Employment Period for Good Reason.  For
              purposes of this Agreement, "Good Reason" means the following:

              (i)    A reduction in the Executive's Annual Base Salary, except
                     for across-the-board salary reductions similarly affecting
                     all Cinergy management personnel, or a reduction in any
                     other benefit or payment described in Section 3 of this
                     Agreement, except for changes to the employee benefits
                     programs affecting all Cinergy management personnel,
                     provided that those changes (either individually or in the
                     aggregate) will not result in a material adverse change
                     with respect to the benefits to which the Executive was
                     entitled as of the Effective Date.

              (ii)   The material reduction without her consent of the
                     Executive's title, authority, duties, or responsibilities
                     from those in effect immediately prior to the reduction or
                     a material adverse change in the Executive's reporting
                     responsibilities.

              (iii)  Any breach by Cinergy of any other material provision of
                     this Agreement (including but not limited to the place of
                     performance as specified in Subsection 2b).

              (iv)   The Executive's disability due to physical or mental
                     illness or injury that precludes the Executive from
                     performing any job for which she is qualified and able to
                     perform based upon her education, training or experience.

              (v)    A failure by the Company to require any successor entity to
                     the Company




                     specifically to assume all of the Company's obligations to
                     the Executive under this Agreement.

       e.     BY THE EXECUTIVE WITHOUT GOOD REASON.  The Executive may terminate
              her employment without Good Reason upon prior written notice to
              the Company.

       f.     NOTICE OF TERMINATION.  Any termination of the Executive's
              employment by Cinergy or by the Executive during the Employment
              Period (other than a termination due to the Executive's death)
              will be communicated by a written Notice of Termination to the
              other party to this Agreement in accordance with Subsection 12b.
              For purposes of this Agreement, a "Notice of Termination" means a
              written notice that specifies the particular provision of this
              Agreement relied upon and that sets forth in reasonable detail the
              facts and circumstances claimed to provide a basis for terminating
              the Executive's employment under the specified provision.  The
              failure by the Executive or Cinergy to set forth in the Notice of
              Termination any fact or circumstance that contributes to a showing
              of Good Reason or Cause will not waive any right of the Executive
              or Cinergy under this Agreement or preclude the Executive or
              Cinergy from asserting that fact or circumstance in enforcing
              rights under this Agreement.

5.     OBLIGATIONS OF CINERGY UPON TERMINATION.

       a.     CERTAIN TERMINATIONS.

              (i)    If a Termination occurs during the Employment Period,
                     Cinergy will pay to the Executive a lump sum amount, in
                     cash, equal to the sum of the following Accrued
                     Obligations:

                     (1)    the Executive's Annual Base Salary through the Date
                            of Termination to the extent not previously paid;

                     (2)    an amount equal to the AIP Benefit for the fiscal
                            year that includes the Date of Termination
                            multiplied by a fraction, the numerator of which is
                            the number of days from the beginning of that fiscal
                            year to and including the Date of Termination and
                            the denominator of which is three hundred and
                            sixty-five (365).  The AIP Benefit will be
                            determined using a percentage determined by the
                            Chief Executive Officer, in her discretion, up to
                            the maximum percentage specified in Subsection 3b,
                            but no less than the Target Annual Bonus.

                     (3)    any compensation previously deferred by the
                            Executive (together with any accrued interest or
                            earnings) and any accrued vacation pay, in each




                            case to the extent not previously paid.

                     The Accrued Obligations described in this Paragraph 5a(i)
                     will be paid within thirty (30) days after the Date of
                     Termination.  These Accrued Obligations are payable to the
                     Executive regardless of whether a Change in Control has
                     occurred.

              (ii)   Prior to the occurrence of a Change in Control, and in the
                     event of (A) a Termination other than by reason of the
                     Executive's death, or (B) the Executive's termination of
                     her employment during the Employment Period for Good
                     Reason, Cinergy will pay the Accrued Obligations, and
                     Cinergy will have the following obligations:

                     (1)    Cinergy will pay to the Executive a lump sum amount,
                            in cash, equal to three (3) times the sum of the
                            Annual Base Salary and the AIP Benefit.  For this
                            purpose, the Annual Base Salary will be at the rate
                            in effect at the time Notice of Termination is given
                            (without giving effect to any reduction in Annual
                            Base Salary, if any, prior to the termination.  The
                            AIP Benefit will be determined using a percentage
                            determined by the Chief Executive Officer, in her
                            discretion, which will not be less than the
                            Executive's annual target percentage for the fiscal
                            year in which the Termination occurs and will not be
                            greater than the maximum percentage specified in
                            Subsection 3b.  This lump sum will be paid within
                            thirty (30) days of the Date of Termination.

                     (2)    If the Executive terminates employment prior to
                            reaching age 50, Cinergy will pay to the Executive
                            the value of all deferred compensation amounts
                            previously deferred by the Executive whether or not
                            they are otherwise currently payable.  Cinergy will
                            also pay to the Executive the present value
                            (discounted at the Prime Rate) of all amounts to
                            which the Executive would have been entitled had she
                            remained in employment with Cinergy until the end of
                            the Employment Period under the Executive
                            Supplemental Life Program.

                            If the Executive terminates employment on or after
                            reaching age 50, Cinergy will pay to the Executive
                            the value of all deferred compensation amounts and
                            all executive life insurance benefits whether or not
                            they are otherwise currently vested or payable.
                            Payment will be made in accordance with the terms of
                            the applicable plan or program.




                     (3)    Except as provided under Clauses (A) and (B) below,
                            Cinergy will continue, until the end of the
                            Employment Period, medical and dental benefits to
                            the Executive and/or the Executive's family at least
                            equal to those that would have been provided if the
                            Executive's employment had not been terminated
                            (excluding benefits to which the Executive has
                            waived her rights in writing).  The benefits
                            described in the preceding sentence will be in
                            accordance with the medical and welfare benefit
                            plans, practices, programs, or policies of Cinergy
                            (the "M&W Plans") as then currently in effect and
                            applicable generally to other Cinergy senior
                            executives and their families.

                                (A)    If, as of the Executive's Date of
                                Termination, the Executive meets the
                                eligibility requirements for Cinergy's
                                retiree medical and welfare benefit plans,
                                the provision of those retiree medical and
                                welfare benefit plans to the Executive will
                                satisfy Cinergy's obligation under this
                                Subparagraph 5a(ii)(3).

                                (B)    If, as of the Executive's Date of
                                Termination, the provision to the Executive
                                of the M&W Plan benefits described in this
                                Subparagraph 5a(ii)(3) would either (1)
                                violate the terms of the M&W Plans or (2)
                                violate any of the Code's nondiscrimination
                                requirements applicable to the M&W Plans,
                                then Cinergy, in its sole discretion, may
                                elect to pay the Executive, in lieu of the
                                M&W Plan benefits described under this
                                Subparagraph 5a(ii)(3), a lump sum cash
                                payment equal to the total monthly premiums
                                that would have been paid by Cinergy for the
                                Executive under the M&W Plans from the Date
                                of Termination through the end of the
                                Employment Period.  Nothing in this Clause
                                will affect the Executive's right to elect
                                COBRA continuation coverage under a M&W Plan
                                in accordance with applicable law.

                                (C)    If the Executive becomes employed by
                                another employer and is eligible to receive
                                medical or other welfare benefits under
                                another employer-provided plan, any benefits
                                provided to the Executive under the M&W Plans
                                will be secondary to those provided under the
                                other employer-provided plan during the
                                Executive's applicable period of eligibility.



                     (4)    Ownership of the automobile assigned to the
                            Executive by Cinergy will be transferred to the
                            Executive within 30 days of the Date of
                            Termination.  The effect of this transfer will be
                            grossed up for federal and state income taxes as
                            soon as administratively feasible after the
                            transfer is effective.

                     (5)    Cinergy will provide tax counseling services
                            through an agency selected by the Executive, not
                            to exceed Fifteen Thousand Dollars ($15,000.00)
                            in cost.

              (iii)  In the event of Termination by Cinergy or by the Executive
                     for Good Reason upon or during the twenty-four (24) month
                     period after the occurrence of a Change in Control, then in
                     lieu of any further salary payments to the Executive for
                     periods subsequent to the Date of Termination and in lieu
                     of any other benefits payable pursuant to Paragraph 5a(ii),
                     Cinergy will have the following obligations:

                     (1)    Cinergy will pay to the Executive a lump sum
                            severance payment, in cash, equal to the greater of:

                            (A)    the present value of all amounts and benefits
                                   that would have been due under Paragraph
                                   5a(ii), excluding Subparagraphs 5a(ii)(3),
                                   5a(ii)(4), and 5a(ii)(5), or

                            (B)    three (3) times the sum of (x) the higher of
                                   the Executive's Annual Base Salary in effect
                                   immediately prior to the occurrence of the
                                   event or circumstance upon which the Notice
                                   of Termination is based or in effect
                                   immediately prior to the Change in Control,
                                   and (y) the higher of the amount paid to the
                                   Executive pursuant to all annual incentive
                                   compensation or bonus plans or programs
                                   maintained by Cinergy in the year preceding
                                   that in which the Date of Termination occurs
                                   or in the year preceding that in which the
                                   Change in Control occurs; and

                     (2)    For a thirty-six (36) month period after the Date of
                            Termination, Cinergy will arrange to provide the
                            Executive with life, disability, accident, and
                            health insurance benefits substantially similar to
                            those that the Executive is receiving immediately
                            prior to the Notice of Termination (without giving
                            effect to any reduction in those benefits subsequent
                            to a Change in Control that constitutes Good
                            Reason), except for any benefits that were waived by
                            the Executive



                            in writing.  If Cinergy arranges to
                            provide the Executive with life, disability,
                            accident, and health insurance benefits, those
                            benefits will be reduced to the extent comparable
                            benefits are actually received by or made available
                            to the Executive without cost during the thirty-six
                            (36) month period following the Executive's Date of
                            Termination.  The Executive must report to Cinergy
                            any such benefits that she actually receives.  In
                            lieu of the benefits described in the preceding
                            sentences, Cinergy, in its sole discretion, may
                            elect to pay to the Executive a lump sum cash
                            payment equal to thirty-six (36) times the monthly
                            premiums that would have been paid by Cinergy to
                            provide those benefits to the Executive.  Nothing in
                            this Subparagraph 5a(iii)(2) will affect the
                            Executive's right to elect COBRA continuation
                            coverage in accordance with applicable law.

              (3)    Ownership of the automobile assigned to the Executive by
                     Cinergy will be transferred to the Executive within 30 days
                     of the Date of Termination.  The effect of this transfer
                     will be grossed up for federal and state income taxes as
                     soon as administratively feasible after the transfer is
                     effective.

              (4)    Cinergy will provide tax counseling services through an
                     agency selected by the Executive, not to exceed Fifteen
                     Thousand Dollars ($15,000.00) in cost.

                     For purposes of this Paragraph (iii), the Executive will
                     be deemed to have incurred a Termination following a
                     Change in Control if the Executive's employment is
                     terminated prior to a Change in Control, without Cause
                     at the direction of a Person who has entered into an
                     agreement with Cinergy, the consummation of which will
                     constitute a Change in Control, or if the Executive
                     terminates her employment for Good Reason prior to a
                     Change in Control if the circumstances or event that
                     constitutes Good Reason occurs at the direction of such
                     a Person.

       b.     TERMINATION BY CINERGY FOR CAUSE OR BY THE EXECUTIVE OTHER THAN
              FOR GOOD REASON.  Subject to the provisions of Section 7, if the
              Executive's employment is terminated for Cause during the
              Employment Period, or if the Executive terminates employment
              during the Employment Period other than a termination for Good
              Reason, Cinergy will have no further obligations to the Executive
              under this Agreement other than the obligation to pay to the
              Executive the Accrued Obligations, plus any other earned but
              unpaid compensation, in each case to the extent not previously
              paid.

       c.     CERTAIN TAX CONSEQUENCES.



              (i)    In the event that any Severance Benefits paid or payable to
                     the Executive or for her benefit pursuant to the terms of
                     this Agreement or otherwise in connection with, or arising
                     out of, her employment with Cinergy or a change in
                     ownership or effective control of Cinergy or of a
                     substantial portion of its assets (a "Payment" or
                     "Payments") would be subject to any Excise Tax, then the
                     Executive will be entitled to receive an additional payment
                     (a "Gross-Up Payment") in an amount such that after payment
                     by the Executive of all taxes (including any interest,
                     penalties, additional tax, or similar items imposed with
                     respect thereto and the Excise Tax), including any Excise
                     Tax imposed upon the Gross-Up Payment, the Executive
                     retains an amount of the Gross-Up Payment equal to the
                     Excise Tax imposed upon the Payments.

              (ii)   An initial determination as to whether a Gross-Up Payment
                     is required pursuant to this Agreement and the amount of
                     that Gross-Up Payment will be made at Cinergy's expense by
                     an Accounting Firm selected by the Executive and reasonably
                     acceptable to Cinergy.  The Accounting Firm will provide
                     its determination, together with detailed supporting
                     calculations and documentation, to Cinergy and the
                     Executive within 10 days after the Date of Termination, or
                     such other time as requested by Cinergy or by the
                     Executive, and if the Accounting Firm determines that no
                     Excise Tax is payable by the Executive with respect to a
                     Payment or Payments, it will furnish the Executive with an
                     opinion reasonably acceptable to the Executive that no
                     Excise Tax will be imposed with respect to any such Payment
                     or Payments.  Within 10 days after the Accounting Firm
                     delivers its determination to the Executive, the Executive
                     will have the right to dispute the determination.  The
                     Gross-Up Payment, if any, as determined pursuant to this
                     Subsection 5c will be paid by Cinergy to the Executive
                     within five days of the receipt of the Accounting Firm's
                     determination.  The existence of a dispute will not in any
                     way affect the Executive's right to receive the Gross-Up
                     Payment in accordance with the determination.  If there is
                     no dispute, the determination will be binding, final, and
                     conclusive upon Cinergy and the Executive.  If there is a
                     dispute, then Cinergy and the Executive will together
                     select a second Accounting Firm, which will review the
                     determination and the Executive's basis for the dispute and
                     then will render its own determination, which will be
                     binding, final, and conclusive on Cinergy and on the
                     Executive.  Cinergy will bear all costs associated with
                     that determination, unless the determination is not greater
                     than the initial determination, in which case all such
                     costs will be borne by the Executive.

              (iii)  The value of any non-cash benefits or any deferred payment
                     or benefit paid



                     or payable to the Executive will be determined in
                     accordance with the principles of Code paragraphs
                     280G(d)(3) and (4).  For purposes of determining the
                     amount of the Gross-Up Payment, the Executive will be
                     deemed to pay federal income taxes at the highest
                     marginal rate of federal income taxation in the calendar
                     year in which the Gross-Up Payment is to be made and
                     applicable state and local income taxes at the highest
                     marginal rate of taxation in the state and locality of
                     the Executive's residence on the Date of Termination,
                     net of the maximum reduction in federal income taxes
                     that would be obtained from deduction of those state and
                     local taxes.

              (iv)   Notwithstanding anything contained in this Agreement to the
                     contrary, in the event that, according to the Accounting
                     Firm's determination, an Excise Tax will be imposed on any
                     Payment or Payments, Cinergy will pay to the applicable
                     government taxing authorities as Excise Tax withholding,
                     the amount of the Excise Tax that Cinergy has actually
                     withheld from the Payment or Payments in according with
                     law.

              d.     VALUE CREATION PLAN AND STOCK OPTIONS.  Upon the
              Executive's termination of employment for any reason, and
              except as otherwise provided in this Agreement, the Executive's
              entitlement to restricted shares and performance shares under
              the Value Creation Plan and any stock options granted under the
              Stock Option Plan or the LTIP will be determined under the
              terms of the appropriate plan and any applicable administrative
              guidelines and written agreements.

              e.     OTHER FEES AND EXPENSES.  Cinergy will also pay to the
              Executive all legal fees and expenses incurred by the Executive
              in successfully disputing a Termination that entitles the
              Executive to Severance Benefits.  Payment will be made within
              five (5) business days after delivery of the Executive's
              written request for payment accompanied by such evidence of
              fees and expenses incurred as Cinergy reasonably may require.

6.     NON-EXCLUSIVITY OF RIGHTS.  Nothing in this Agreement will prevent or
       limit the Executive's continuing or future participation in any benefit,
       plan, program, policy, or practice provided by Cinergy and for which the
       Executive may qualify, except with respect to any benefit to which the
       Executive has waived her rights in writing or any plan, program, policy,
       or practice that expressly excludes the Executive from participation.  In
       addition, nothing in this Agreement will limit or otherwise affect the
       rights the Executive may have under any other contract or agreement with
       Cinergy entered into after the Effective Date.  Amounts that are vested
       benefits or that the Executive is otherwise entitled to receive under any
       benefit, plan, program, policy, or practice of, or any contract or
       agreement entered into after the Effective Date with Cinergy, at or
       subsequent to the Date of Termination, will be payable in accordance with
       that benefit, plan, program, policy or



       practice, or that contract or agreement, except as explicitly modified
       by this Agreement.

7.     FULL SETTLEMENT:  MITIGATION.  Cinergy's obligation to make the payments
       provided for in this Agreement and otherwise to perform its obligations
       under this Agreement will not be affected by any set-off, counterclaim,
       recoupment, defense, or other claim, right, or action that Cinergy may
       have against the Executive or others.  In no event will the Executive be
       obligated to seek other employment or take any other action by way of
       mitigation of the amounts (including amounts for damages for breach)
       payable to the Executive under any of the provisions of this Agreement
       and, except as provided in Subparagraphs 5a(ii)(3) and 5a(iii)(2), those
       amounts will not be reduced simply because the Executive obtains other
       employment.  If the Executive finally prevails on the substantial claims
       brought with respect to any dispute between Cinergy and the Executive as
       to the interpretation, terms, validity, or enforceability of (including
       any dispute about the amount of any payment pursuant to) this Agreement,
       Cinergy agrees to pay all reasonable legal fees and expenses that the
       Executive may reasonably incur as a result of that dispute.

8.     ARBITRATION.  The parties agree that any dispute, claim, or controversy
       based on common law, equity, or any federal, state, or local statute,
       ordinance, or regulation (other than workers' compensation claims)
       arising out of or relating in any way to the Executive's employment, the
       terms, benefits, and conditions of employment, or concerning this
       Agreement or its termination and any resulting termination of employment,
       including whether such a dispute is arbitrable, shall be settled by
       arbitration.  This agreement to arbitrate includes but is not limited to
       all claims for any form of illegal discrimination, improper or unfair
       treatment or dismissal, and all tort claims.  The Executive will still
       have a right to file a discrimination charge with a federal or state
       agency, but the final resolution of any discrimination claim will be
       submitted to arbitration instead of a court or jury.  The arbitration
       proceeding will be conducted under the employment dispute resolution
       arbitration rules of the American Arbitration Association in effect at
       the time a demand for arbitration under the rules is made.  The decision
       of the arbitrator(s), including determination of the amount of any
       damages suffered, will be exclusive, final, and binding on all parties,
       their heirs, executors, administrators, successors and assigns.  Each
       party will bear its own expenses in the arbitration for arbitrators' fees
       and attorneys' fees, for its witnesses, and for other expenses of
       presenting its case.  Other arbitration costs, including administrative
       fees and fees for records or transcripts, will be borne equally by the
       parties.  Notwithstanding anything in this Section to the contrary, if
       the Executive prevails with respect to any dispute submitted to
       arbitration under this Section, Cinergy will reimburse or pay all legal
       fees and expenses that the Executive may reasonably incur as a result of
       the dispute as required by Section 7.

9.     CONFIDENTIAL INFORMATION.  The Executive will hold in a fiduciary
       capacity for the benefit of Cinergy, as well as all of Cinergy's
       successors and assigns, all secret, confidential information, knowledge,
       or data relating to Cinergy, and its affiliated businesses, that the
       Executive obtains during the Executive's employment by Cinergy or



       any of its affiliated companies, and that has not been or subsequently
       becomes public knowledge (other than by acts by the Executive or
       representatives of the Executive in violation of this Agreement).
       During the Employment Period and thereafter, the Executive will not,
       without Cinergy's prior written consent or as may otherwise by
       required by law or legal process, communicate or divulge any such
       information, knowledge, or data to anyone other than Cinergy and those
       designated by it.  The Executive understands that during the
       Employment Period, Cinergy may be required from time to time to make
       public disclosure of the terms or existence of the Executive's
       employment relationship to comply with various laws and legal
       requirements.  In addition to all other remedies available to Cinergy
       in law and equity, this Agreement is subject to termination by Cinergy
       for Cause under Section 4b in the event the Executive violates any
       provision of this Section.

10.    SUCCESSORS.

       a.     This Agreement is personal to the Executive and, without Cinergy's
              prior written consent, cannot be assigned by the Executive
              otherwise than by will or the laws of descent and distribution.
              This Agreement will inure to the benefit of and be enforceable by
              the Executive's legal representatives.

       b.     This Agreement will inure to the benefit of and be binding upon
              Cinergy and its successors and assigns.

       c.     Cinergy will require any successor (whether direct or indirect, by
              purchase, merger, consolidation or otherwise) to all or
              substantially all of the business and/or assets of Cinergy to
              assume expressly and agree to perform this Agreement in the same
              manner and to the same extent that Cinergy would be required to
              perform it if no succession had taken place.  Cinergy's failure to
              obtain such an assumption and agreement prior to the effective
              date of a succession will be a breach of this Agreement and will
              entitle the Executive to compensation from Cinergy in the same
              amount and on the same terms as if the Executive were to terminate
              her employment for Good Reason after a Change in Control, except
              that, for purposes of implementing the foregoing, the date on
              which any such succession becomes effective will be deemed the
              Date of Termination.

11.    DEFINITIONS.  As used in this Agreement, the following terms, when
       capitalized, will have the following meanings:

       a.     1934 ACT.  "1934 Act" means the Securities Exchange Act of 1934.

       b.     ACCOUNTING FIRM.  "Accounting Firm" means an accounting firm that
              is designated as one of the five largest accounting firms in the
              United States (which may include Cinergy's independent auditors).



       c.     ACCRUED OBLIGATIONS.  "Accrued Obligations" means the accrued
              obligations described in Paragraph 5a(i).

       d.     AGREEMENT.  "Agreement" means this Amended and Restated Employment
              Agreement between Cinergy and the Executive.

       e.     AIP BENEFIT.  "AIP Benefit" means the Annual Incentive Plan
              benefit described in Subsection 3b.

       f.     ANNUAL BASE SALARY.  "Annual Base Salary" means the annual base
              salary payable to the Executive pursuant to Subsection 3a.

       g.     ANNUAL INCENTIVE PLAN.  "Annual Incentive Plan" means the Cinergy
              Corp. Annual Incentive Plan or any successor to that plan.

       h.     BOARD OF DIRECTORS.  "Board of Directors" means the board of
              directors of the Company.

       i.     CAUSE.  "Cause" has the meaning set forth in Subsection 4b.

       j.     CHANGE IN CONTROL.  "A Change in Control" will be deemed to have
              occurred if any of the following events occur, after the Effective
              Date:

              (i)    Any "person" or "group" (within the meaning of subsection
                     13(d) and paragraph 14(d)(2) of the 1934 Act) is or becomes
                     the beneficial owner (as defined in Rule l3d-3 under the
                     1934 Act), directly or indirectly, of securities of the
                     Company (not including in the securities beneficially owned
                     by such a Person any securities acquired directly from the
                     Company or its affiliates) representing more than twenty
                     percent (20%) of the combined voting power of the Company's
                     then outstanding securities, excluding any person who
                     becomes such a beneficial owner in connection with a
                     transaction described in Clause (1) of Paragraph (ii)
                     below; or

              (ii)   There is consummated a merger or consolidation of the
                     Company or any direct or indirect subsidiary of the Company
                     with any other corporation, other than (1) a merger or
                     consolidation that would result in the voting securities of
                     the Company outstanding immediately prior to that merger or
                     consolidation continuing to represent (either by remaining
                     outstanding or by being converted into voting securities of
                     the surviving entity or its parent) at least sixty percent
                     (60%) of the combined voting power of the securities of the
                     Company or the surviving entity or its parent outstanding
                     immediately after the merger or consolidation, or (2) a
                     merger or consolidation effected to implement a
                     recapitalization of the Company (or



                     similar transaction) in which no person is or becomes the
                     beneficial owner, directly or indirectly, of securities of
                     the Company (not including in the securities beneficially
                     owned by such a Person any securities acquired directly
                     from the Company or its affiliates other than in connection
                     with the acquisition by the Company or its affiliates of a
                     business) representing twenty percent (20%) or more of the
                     combined voting power of the Company's then outstanding
                     securities; or

              (iii)  During any period of two consecutive years, individuals who
                     at the beginning of that period constitute the Board of
                     Directors and any new director (other than a director whose
                     initial assumption of office is in connection with an
                     actual or threatened election contest, including but not
                     limited to a consent solicitation, relating to the election
                     of directors of the Company) whose appointment or election
                     by the Company's shareholders was approved or recommended
                     by a vote of at least two-thirds (2/3) of the directors
                     then still in office who either were directors at the
                     beginning of that period or whose appointment, election, or
                     nomination for election was previously so approved or
                     recommended cease for any reason to constitute a majority
                     of the Board of Directors; or

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

       k.     CHIEF EXECUTIVE OFFICER.  "Chief Executive Officer" means the
              chief executive officer of the Company.

       l.     CINERGY.  "Cinergy" means the Company, Cinergy Services, Inc., The
              Cincinnati Gas & Electric Company, and PSI Energy, Inc.

       m.     CODE.  "Code" means the Internal Revenue Code of 1986, as amended,
              and interpretive rules and regulations.

       n.     COMPANY.  "Company" means Cinergy Corp.

       o.     DATE OF TERMINATION.  "Date of Termination" means:



              (i)    if the Executive's employment is terminated by the Company
                     for Cause, or by the Executive with or without Good Reason,
                     the date of receipt of the Notice of Termination or any
                     later date specified in the notice, as the case may be;

              (ii)   if the Executive's employment is terminated by the Company
                     other than for Cause, thirty (30) days after the date on
                     which the Company notifies the Executive of the
                     termination; and

              (iii)  if the Executive's employment is terminated by reason of
                     death, the date of death.

       p.     EARNINGS.  "Earnings" means the Executive's "Earnings" as defined
              in the Pension Plan but without regard to the limitation of Code
              paragraph 401(a)(17).

       q.     EFFECTIVE DATE.  "Effective Date" means December 30, 1999.

       r.     EMPLOYMENT PERIOD.  "Employment Period" has the meaning set forth
              in Subsection 1b.

       s.     EXCISE TAX.  "Excise Tax" means any excise tax imposed by Code
              section 4999, together with any interest, penalties, additional
              tax or similar items that are incurred by the Executive with
              respect to the excise tax imposed by Code section 4999.

       t.     EXECUTIVE.  "Executive" means Madeleine W. Ludlow.

       u.     EXECUTIVE RETIREMENT PLANS.  The "Executive Retirement Plans" are
              the Pension Plan, the Supplemental Executive Retirement Plan, and
              the Cinergy Corp. Excess Pension Plan or any successor to those
              plans.

       v.     EXECUTIVE SUPPLEMENTAL LIFE PROGRAM.  "Executive Supplemental Life
              Program" means the Cinergy Corp. Executive Supplemental Life
              Program or any successor to that plan.

       w.     GOOD REASON.  "Good Reason" has the meaning set forth in
              Subsection 4d.

       x.     GROSS-UP PAYMENT.  "Gross-Up Payment" has the meaning set forth in
              Subsection 5c.

       y.     HIGHEST AVERAGE EARNINGS.  "Highest Average Earnings" means the
              greater of (a) the Executive's "Highest Average Earnings" as
              defined in the Pension Plan (without regard to the limitation of
              Code paragraph 401(a)(17)) or (b) the



              Executive's Earnings for the 12 consecutive calendar months
              immediately preceding her termination of employment with Cinergy.

       z.     M&W PLANS.  "M&W Plans" has the meaning given in Subparagraph
              5a(ii)(3).

       aa.    LONG-TERM INCENTIVE PLAN.  "Long-Term Incentive Plan" means the
              long-term inventive plan implemented under the Cinergy Corp. 1996
              Long-Term Incentive Compensation Plan or any successor to that
              plan.

       bb.    NOTICE OF TERMINATION.  "Notice of Termination" has the meaning
              set forth in Subsection 4e.

       cc.    PAYMENT OR PAYMENTS.  "Payment" or "Payments" has the meaning set
              forth in Subsection 5c.

       dd.    PENSION PLAN.  "Pension Plan" means the Cinergy Corp. Non-Union
              Employees' Pension Plan or any successor to that plan.

       ee.    PERSON.  "Person" has the meaning set forth in paragraph 3(a)(9)
              of the 1934 Act, as modified and used in subsections 13(d) and
              14(d) of the 1934 Act; however, a Person will not include the
              following:

                    (i)    Cinergy or any of its subsidiaries;

                    (ii)   A trustee or other fiduciary holding securities
                    under an employee benefit plan of Cinergy or its
                    subsidiaries;

                    (iii)  An underwriter temporarily holding securities
                    pursuant to an offering of those securities; or

                    (iv)   A corporation owned, directly or indirectly, by the
                    stockholders of the Company in substantially the same
                    proportions as their ownership of stock of the Company.

       ff.    RELOCATION PROGRAM.  "Relocation Program" means the Cinergy Corp.
              Relocation Program or any successor to that program, as in effect
              on the date of the Executive's termination of employment.

       gg.    RETIREES' DENTAL PLAN.  "Retirees' Dental Plan" means the Cinergy
              Corp. Retirees' Dental Plan or any successor to that plan.

       hh.    RETIREES' MEDICAL PLAN. "Retirees' Medical Plan" means the Cinergy
              Corp. Retirees' Medical Plan or any successor to that plan.



       ii.    SEVERANCE BENEFITS.  "Severance Benefits" means the payments and
              benefits payable to the Executive pursuant to Section 5.

       jj.    SPOUSE.  "Spouse" means the Executive's lawfully married spouse.
              For this purpose, common law marriage or a similar arrangement
              will not be recognized unless otherwise required by federal law.

       kk.    STOCK RELATED DOCUMENTS.  "Stock Related Documents" means the
              LTIP, the Cinergy Corp. Stock Option Plan, and the Value Creation
              Plan and any applicable administrative guidelines and written
              agreements relating to those plans.

       ll.    SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.  "Supplemental Executive
              Retirement Plan" means the Cinergy Corp. Supplemental Executive
              Retirement Plan or any successor to that plan.

       mm.    TARGET ANNUAL BONUS.  "Target Annual Bonus" has the meaning set
              forth in Subsection 3b.

       nn.    TARGET LTIP BONUS.  "Target LTIP Bonus" has the meaning set forth
              in Subsection 3b.

       oo.    TERMINATION.  "Termination" means the termination of the
              Executive's employment with Cinergy other than a termination by
              Cinergy for Cause.

       pp.    VALUE CREATION PLAN.  "Value Creation Plan" means the Value
              Creation Plan of the LTIP.

12.    MISCELLANEOUS.

       a.     This Agreement will be governed by and construed in accordance
              with the laws of the State of Ohio, without reference to
              principles of conflict of laws.  The captions of this Agreement
              are not part of its provisions and will have no force or effect.
              This Agreement may not be amended, modified, repealed, waived,
              extended, or discharged except by an agreement in writing signed
              by the party against whom enforcement of the amendment,
              modification, repeal, waiver, extension, or discharge is sought.
              Only the Chief Executive Officer or his designee will have
              authority on behalf of Cinergy to agree to amend, modify, repeal,
              waive, extend, or discharge any provision of this Agreement.

       b.     All notices and other communications under this Agreement will be
              in writing and will be given by hand delivery to the other party
              or by registered or certified mail, return receipt requested,
              postage prepaid, addressed as follows:



              IF TO THE EXECUTIVE:
              Madeleine W. Ludlow
              Cinergy Corp.
              221 East Fourth Street
              P 0. Box 960
              Cincinnati, Ohio 45201-0960



              IF TO CINERGY:
              Cinergy Corp.
              221 East Fourth Street
              P. 0. Box 960
              Cincinnati, Ohio  45201-0960
              Attn: Chief Executive Officer


              or to such other address as either party has furnished to the
              other in writing in accordance with this Agreement.  All notices
              and communications will be effective when actually received by the
              addressee.

       c.     The invalidity or unenforceability of any provision of this
              Agreement will not affect the validity or enforceability of any
              other provision of this Agreement.

       d.     Cinergy may withhold from any amounts payable under this Agreement
              such federal, state, or local taxes as are required to be withheld
              pursuant to any applicable law or regulation.

       e.     The Executive's or Cinergy's failure to insist upon strict
              compliance with any provision of this Agreement or the failure to
              assert any right the Executive or Cinergy may have under this
              Agreement, including without limitation the right of the Executive
              to terminate employment for Good Reason pursuant to Subsection 4c
              or the right of Cinergy to terminate the Executive's employment
              for Cause pursuant to Subsection 4b, will not be deemed to be a
              waiver of that provision or right or any other provision or right
              of this Agreement.

       f.     This instrument contains the entire agreement of the Executive and
              Cinergy with respect to the subject matter of this Agreement; and
              subject to any agreements evidencing stock option or restricted
              stock grants described in Subsection 3b and



              the Stock Related Documents, all promises, representations,
              understandings, arrangements, and prior agreements are merged
              into this Agreement and accordingly superseded.

       g.     This Agreement may be executed in counterparts, each of which will
              be deemed to be an original but all of which together will
              constitute one and the same instrument.

       h.     Cinergy and the Executive agree that Cinergy will be authorized to
              act for Cinergy with respect to all aspects pertaining to the
              administration and interpretation of this Agreement.



       IN WITNESS WHEREOF, the Executive and the Company have caused this
Agreement to be executed as of the Effective Date.

                                          CINERGY CORP.; CINERGY
                                          SERVICES, INC.; THE CINCINNATI
                                          GAS & ELECTRIC COMPANY; AND PSI
                                          ENERGY, INC.


                                          By:_________________________________
                                                 James E. Rogers
                                                 Vice Chairman and Chief
                                                 Executive Officer


                                          EXECUTIVE


                                          ____________________________________
                                                 Madeleine W. Ludlow

EX-10.G

                                AMENDED AND RESTATED
                                EMPLOYMENT AGREEMENT


       This AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered into
as of the 30th day of December, 1999 (the "Effective Date"), by and between
Cinergy and Donald B. Ingle, Jr. (the "Executive").  This Agreement replaces and
supersedes any and all prior employment agreements between Cinergy and the
Executive.  The capitalized words and terms used throughout this Agreement are
defined in Section 11.


                                       RECITALS

       A.     The Executive is currently serving as Vice President of Cinergy,
and President, Cinergy Investments Business Unit, and Cinergy desires to secure
the continued employment of the Executive in accordance with this Agreement.

       B.     The Executive is willing to continue to remain in the employ of
Cinergy, and any successor to Cinergy, on the terms and conditions set forth in
this Agreement.

       C.     The parties intend that this Agreement will replace and supersede
any and all prior employment agreements between Cinergy (or any component
company or business unit of Cinergy) and the Executive.


                                     AGREEMENT

       In consideration of the mutual premises, covenants and agreements set
forth below, the parties agree as follows:

1.     EMPLOYMENT AND TERM

       a.     Cinergy, and any successor to Cinergy, agree to employ the
              Executive, and the Executive agrees to remain in the employ of
              Cinergy, in accordance with the terms and provisions of this
              Agreement, for the Employment Period set forth in Subsection b.
              The parties agree that the Company will be responsible for
              carrying out all of the premises, covenants, and agreements of
              Cinergy set forth in this Agreement.

       b.     The Employment Period of this Agreement will commence as of the
              Effective Date and continue until December 31, 2002; provided
              that, commencing on December 31, 2000, and on each subsequent
              December 31, the Employment Period will be extended for one (1)
              additional year unless either party gives the other party




              written notice not to extend this Agreement at least ninety (90)
              days before the extension would otherwise become effective.

2.     DUTIES AND POWERS OF EXECUTIVE

              a.     POSITION.  The Executive will serve Cinergy as Vice
              President of Cinergy, and President, Cinergy Investments Business
              Unit, and he will have such responsibilities, duties, and
              authority as are customary for someone of that position and such
              additional duties, consistent with his position, as may be
              assigned to him from time to time during the Employment Period by
              the Board of Directors or the Chief Executive Officer.

              b.     PLACE OF PERFORMANCE.  In connection with the Executive's
              employment, the Executive will be based at the principal executive
              offices of Cinergy, 221 East Fourth Street, Cincinnati, Ohio, and,
              except for required business travel to an extent substantially
              consistent with the present business travel obligations of Cinergy
              executives who have positions of authority comparable to that of
              the Executive, the Executive will not be required to relocate to a
              new principal place of business that is more than thirty (30)
              miles from Cinergy's current principal executive offices.

3.     COMPENSATION.  The Executive will receive the following compensation for
       his services under this Agreement.

              a.     SALARY.  The Executive's Annual Base Salary, payable not
              less often than semi-monthly, will be at the annual rate of not
              less than $350,004.00.  The Board of Directors or its designee
              may, from time to time, increase the Annual Base Salary as the
              Board of Directors deems to be necessary or desirable, including
              without limitation adjustments to reflect increases in the cost of
              living. Any increase in the Annual Base Salary will not serve to
              limit or reduce any other obligation of Cinergy under this
              Agreement.  The Annual Base Salary will not be reduced except for
              across-the-board salary reductions similarly affecting all Cinergy
              management personnel.  If Annual Base Salary is increased during
              the Employment Period, then the increased salary will be the
              Annual Base Salary for all purposes under this Agreement.

              b.     RETIREMENT, INCENTIVE, WELFARE BENEFIT PLANS AND OTHER
              BENEFITS. During the Employment Period, the Executive will be
              eligible, and Cinergy will take all necessary action to cause the
              Executive to become eligible, to participate in all short-term and
              long-term incentive, stock option, restricted stock, performance
              unit, savings, retirement and welfare plans, practices, policies
              and programs applicable generally to employees and/or other senior
              executives of Cinergy who are considered Tier II executives for
              compensation purposes, except with respect




       to any plan, practice, policy or program to which the Executive has
       waived his rights in writing.

              If the Executive retires after reaching age 50, the Executive will
              be entitled and fully vested in a supplemental retirement benefit
              equal to the difference between (1) his total benefit under all
              Executive Retirement Plans, and (2) 60% of the Executive's Highest
              Average Earnings times a fraction, the numerator of which is the
              Executive's Years of Participation and the denominator of which is
              35.  If, however, the Executive's employment is terminated
              following a Change in Control, for any reason other than Cause,
              the Executive will be entitled to a supplemental retirement
              benefit equal to the difference between (1) his total benefit
              under all Executive Retirement Plans, and (2) 60% of the
              Executive's Highest Average Earnings. The form, timing, and method
              of payment of the supplemental retirement benefit payable under
              this Paragraph will be the same as those elected by the Executive
              under the Pension Plan.  If the Executive dies after reaching age
              50 but prior to his retirement, and if his Spouse, on the date of
              his death, is living on the date the first installment of the
              supplemental retirement benefit would be payable under this
              Paragraph, the Spouse will be entitled to receive the supplemental
              retirement benefit as a Spouse's benefit.  The form, timing, and
              method of payment of any Spouse's benefit under this Paragraph
              will be the same as those applicable to the Spouse under the
              Pension Plan.

              Upon his retirement on or after having attained age fifty (50),
              the Executive will be eligible for comprehensive medical and
              dental insurance pursuant to the terms of the Retirees' Medical
              Plan and the Retirees' Dental Plan.  The Executive, however, will
              receive the full subsidy provided by Cinergy to retirees for
              purposes of determining the amount of monthly premiums due from
              the Executive.

              The Executive will be a participant in the Annual Incentive Plan,
              and the Executive will be paid pursuant to that plan an annual
              benefit of up to sixty percent (60%) of the Executive's Annual
              Base Salary, with a target of no less than forty percent (40%) of
              the Executive's Annual Base Salary (the "Target Annual Bonus").

              The Executive will be a participant in the Long-Term Incentive
              Plan (the "LTIP"), and the Executive's annualized target award
              opportunity under the LTIP will be equal to no less than seventy
              percent (70%) of his Annual Base Salary (the "Target LTIP Bonus").

              c.     FRINGE BENEFITS AND PERQUISITES.  During the Employment
              Period, the Executive will be entitled to the following additional
              fringe benefits:

              (i)    Cinergy will furnish to the Executive an automobile and
                     will pay all of the




                     related expenses for gasoline, insurance, maintenance, and
                     repairs.

              (ii)   Cinergy will pay the initiation fee and the annual dues,
                     assessments, and other membership charges of the Executive
                     for membership in a country club selected by the Executive.

              (iii)  Cinergy will provide paid vacation for four (4) weeks per
                     year (or longer if permitted by Cinergy's policy).

              (iv)   Cinergy will furnish to the Executive annual financial
                     planning and tax preparation services.  In addition, the
                     Executive will be entitled to receive such other fringe
                     benefits in accordance with Cinergy plans, practices,
                     programs, and policies in effect from time to time,
                     commensurate with his position and at least comparable to
                     those received by other Cinergy senior executives.

              d.     EXPENSES.  Cinergy agrees to reimburse the Executive for
              all expenses, including those for travel and entertainment,
              properly incurred by him in the performance of his duties under
              this Agreement in accordance with the policies established from
              time to time by the Board of Directors.

              e.     RELOCATION BENEFITS.  Following termination of the
              Executive's employment for any reason (other than death), the
              Executive will be entitled to reimbursement from Cinergy for the
              reasonable costs of relocating from the Cincinnati, Ohio, area to
              a new primary residence in a manner that is consistent with the
              terms of the Relocation Program.

4.     TERMINATION OF EMPLOYMENT

              a.     DEATH.  The Executive's employment will terminate
              automatically upon the Executive's death during the Employment
              Period.

              b.     BY CINERGY FOR CAUSE.  Cinergy may terminate the
              Executive's employment during the Employment Period for Cause.
              For purposes of this Employment Agreement, "Cause" means the
              following:

              (i)    The willful and continued failure by the Executive to
                     substantially perform the Executive's duties with Cinergy
                     (other than any such failure resulting from the Executive's
                     incapacity due to physical or mental illness) after the
                     Board of Directors or the Chief Executive Officer has
                     delivered to the Executive a written demand for substantial
                     performance, which demand specifically identifies the
                     manner in which the Executive has not substantially
                     performed his duties.  This event will constitute Cause
                     even




                     if the Executive issues a Notice of Termination for Good
                     Reason pursuant to Subsection 4d after the Board of
                     Directors or Chief Executive Officer delivers a written
                     demand for substantial performance.

              (ii)   The breach by the Executive of the confidentiality
                     provisions set forth in Section 9.

              (iii)  The conviction of the Executive for the commission of a
                     felony, including the entry of a guilty or nolo contendere
                     plea, or any willful or grossly negligent action or
                     inaction by the Executive that has a materially adverse
                     effect on Cinergy.  For purposes of this definition of
                     Cause, no act, or failure to act, on the Executive's part
                     will be deemed "willful" unless it is done, or omitted to
                     be done, by the Executive in bad faith and without
                     reasonable belief that the Executive's act, or failure to
                     act, was in the best interest of Cinergy.

       c.     BY CINERGY WITHOUT CAUSE.  Cinergy may, upon at least 30 days
              advance written notice to the Executive, terminate the Executive's
              employment during the Employment Period for a reason other than
              Cause, but the obligations placed upon Cinergy in Section 5 will
              apply.

       d.     BY THE EXECUTIVE FOR GOOD REASON.  The Executive may terminate his
              employment during the Employment Period for Good Reason.  For
              purposes of this Agreement, "Good Reason" means the following:

              (i)    A reduction in the Executive's Annual Base Salary, except
                     for across-the-board salary reductions similarly affecting
                     all Cinergy management personnel, or a reduction in any
                     other benefit or payment described in Section 3 of this
                     Agreement, except for changes to the employee benefits
                     programs affecting all Cinergy management personnel,
                     provided that those changes (either individually or in the
                     aggregate) will not result in a material adverse change
                     with respect to the benefits to which the Executive was
                     entitled as of the Effective Date.

              (ii)   The material reduction without his consent of the
                     Executive's title, authority, duties, or responsibilities
                     from those in effect immediately prior to the reduction or
                     a material adverse change in the Executive's reporting
                     responsibilities.

              (iii)  Any breach by Cinergy of any other material provision of
                     this Agreement (including but not limited to the place of
                     performance as specified in Subsection 2b).




              (iv)   The Executive's disability due to physical or mental
                     illness or injury that precludes the Executive from
                     performing any job for which he is qualified and able to
                     perform based upon his education, training or experience.

              (v)    A failure by the Company to require any successor entity to
                     the Company specifically to assume all of the Company's
                     obligations to the Executive under this Agreement.

       e.     BY THE EXECUTIVE WITHOUT GOOD REASON.  The Executive may terminate
              his employment without Good Reason upon prior written notice to
              the Company.

       f.     NOTICE OF TERMINATION.  Any termination of the Executive's
              employment by Cinergy or by the Executive during the Employment
              Period (other than a termination due to the Executive's death)
              will be communicated by a written Notice of Termination to the
              other party to this Agreement in accordance with Subsection 12b.
              For purposes of this Agreement, a "Notice of Termination" means a
              written notice that specifies the particular provision of this
              Agreement relied upon and that sets forth in reasonable detail the
              facts and circumstances claimed to provide a basis for terminating
              the Executive's employment under the specified provision.  The
              failure by the Executive or Cinergy to set forth in the Notice of
              Termination any fact or circumstance that contributes to a showing
              of Good Reason or Cause will not waive any right of the Executive
              or Cinergy under this Agreement or preclude the Executive or
              Cinergy from asserting that fact or circumstance in enforcing
              rights under this Agreement.

5.     OBLIGATIONS OF CINERGY UPON TERMINATION.

       a.     CERTAIN TERMINATIONS.

              (i)    If a Termination occurs during the Employment Period,
                     Cinergy will pay to the Executive a lump sum amount, in
                     cash, equal to the sum of the following Accrued
                     Obligations:

                     (1)    the Executive's Annual Base Salary through the Date
                            of Termination to the extent not previously paid;

                     (2)    an amount equal to the AIP Benefit for the fiscal
                            year that includes the Date of Termination
                            multiplied by a fraction, the numerator of which is
                            the number of days from the beginning of that fiscal
                            year to and including the Date of Termination and
                            the denominator of which is three hundred and
                            sixty-five (365).  The AIP Benefit will be
                            determined using a percentage determined by the
                            Chief Executive Officer, in his discretion, up to
                            the maximum percentage




                            specified in Subsection 3b, but no less than the
                            Target Annual Bonus.

                     (3)    any compensation previously deferred by the
                            Executive (together with any accrued interest or
                            earnings) and any accrued vacation pay, in each case
                            to the extent not previously paid.

                     The Accrued Obligations described in this Paragraph 5a(i)
                     will be paid within thirty (30) days after the Date of
                     Termination.  These Accrued Obligations are payable to the
                     Executive regardless of whether a Change in Control has
                     occurred.

              (ii)   Prior to the occurrence of a Change in Control, and in the
                     event of (A) a Termination other than by reason of the
                     Executive's death, or (B) the Executive's termination of
                     his employment during the Employment Period for Good
                     Reason, Cinergy will pay the Accrued Obligations, and
                     Cinergy will have the following obligations:

                     (1)    Cinergy will pay to the Executive a lump sum amount,
                            in cash, equal to three (3) times the sum of the
                            Annual Base Salary and the AIP Benefit.  For this
                            purpose, the Annual Base Salary will be at the rate
                            in effect at the time Notice of Termination is given
                            (without giving effect to any reduction in Annual
                            Base Salary, if any, prior to the termination).  The
                            AIP Benefit will be determined using a percentage
                            determined by the Chief Executive Officer, in his
                            discretion, which will not be less than the
                            Executive's annual target percentage for the fiscal
                            year in which the Termination occurs and will not be
                            greater than the maximum percentage specified in
                            Subsection 3b.  This lump sum will be paid within
                            thirty (30) days of the Date of Termination.

                     (2)    Cinergy will pay to the Executive the value of all
                            deferred compensation amounts and all executive life
                            insurance benefits whether or not they are otherwise
                            currently vested or payable.  Payment will be made
                            in accordance with the terms of the applicable plan
                            or program.

                     (3)    Except as provided under Clauses (A) and (B) below,
                            Cinergy will continue, until the end of the
                            Employment Period, medical and dental benefits to
                            the Executive and/or the Executive's family at least
                            equal to those that would have been provided if the
                            Executive's employment had not been terminated
                            (excluding benefits to which the Executive has
                            waived his rights in writing).





                     The benefits described in the preceding sentence will be
                     in accordance with the medical and welfare benefit
                     plans, practices, programs, or policies of Cinergy (the
                     "M&W Plans") as then currently in effect and applicable
                     generally to other Cinergy senior executives and their
                     families.

                            (A)    If, as of the Executive's Date of
                            Termination, the Executive meets the eligibility
                            requirements for Cinergy's retiree medical and
                            welfare benefit plans, the provision of those
                            retiree medical and welfare benefit plans to the
                            Executive will satisfy Cinergy's obligation under
                            this Subparagraph 5a(ii)(3).

                            (B)    If, as of the Executive's Date of
                            Termination, the provision to the Executive of
                            the M&W Plan benefits described in this
                            Subparagraph 5a(ii)(3) would either (1) violate
                            the terms of the M&W Plans or (2) violate any of
                            the Code's nondiscrimination requirements
                            applicable to the M&W Plans, then Cinergy, in its
                            sole discretion, may elect to pay the Executive,
                            in lieu of the M&W Plan benefits described under
                            this Subparagraph 5a(ii)(3), a lump sum cash
                            payment equal to the total monthly premiums that
                            would have been paid by Cinergy for the Executive
                            under the M&W Plans from the Date of Termination
                            through the end of the Employment Period.
                            Nothing in this Clause will affect the
                            Executive's right to elect COBRA continuation
                            coverage under a M&W Plan in accordance with
                            applicable law.

                            (C)    If the Executive becomes employed by
                            another employer and is eligible to receive
                            medical or other welfare benefits under another
                            employer-provided plan, any benefits provided to
                            the Executive under the M&W Plans will be
                            secondary to those provided under the other
                            employer-provided plan during the Executive's
                            applicable period of eligibility.

                     (4)    Ownership of the automobile assigned to the
                            Executive by Cinergy will be transferred to the
                            Executive within 30 days of the Date of
                            Termination.  The effect of this transfer will be
                            grossed up for federal and state income taxes as
                            soon as administratively feasible after the
                            transfer is effective.



                     (5)    Cinergy will provide tax counseling services
                            through an agency selected by the Executive, not
                            to exceed Fifteen Thousand Dollars ($15,000.00)
                            in cost.

              (iii)  In the event of Termination by Cinergy or by the Executive
                     for Good Reason upon or during the twenty-four (24) month
                     period after the occurrence of a Change in Control, then in
                     lieu of any further salary payments to the Executive for
                     periods subsequent to the Date of Termination and in lieu
                     of any other benefits payable pursuant to Paragraph 5a(ii),
                     Cinergy will have the following obligations:

                     (1)    Cinergy will pay to the Executive a lump sum
                            severance payment, in cash, equal to the greater of:

                            (A)    the present value of all amounts and benefits
                                   that would have been due under Paragraph
                                   5a(ii), excluding Subparagraphs 5a(ii)(3),
                                   5a(ii)(4), and 5a(ii)(5), or

                            (B)    three (3) times the sum of (x) the higher of
                                   the Executive's Annual Base Salary in effect
                                   immediately prior to the occurrence of the
                                   event or circumstance upon which the Notice
                                   of Termination is based or in effect
                                   immediately prior to the Change in Control,
                                   and (y) the higher of the amount paid to the
                                   Executive pursuant to all annual incentive
                                   compensation or bonus plans or programs
                                   maintained by Cinergy in the year preceding
                                   that in which the Date of Termination occurs
                                   or in the year preceding that in which the
                                   Change in Control occurs; and

                     (2)    For a thirty-six (36) month period after the Date of
                            Termination, Cinergy will arrange to provide the
                            Executive with life, disability, accident, and
                            health insurance benefits substantially similar to
                            those that the Executive is receiving immediately
                            prior to the Notice of Termination (without giving
                            effect to any reduction in those benefits subsequent
                            to a Change in Control that constitutes Good
                            Reason), except for any benefits that were waived by
                            the Executive in writing.  If Cinergy arranges to
                            provide the Executive with life, disability,
                            accident, and health insurance benefits, those
                            benefits will be reduced to the extent comparable
                            benefits are actually received by or made available
                            to the Executive without cost during the thirty-six
                            (36) month period following the Executive's Date of
                            Termination.  The Executive must report to Cinergy
                            any such benefits that he actually receives.  In
                            lieu of the benefits described



                            in the preceding sentences, Cinergy, in its sole
                            discretion, may elect to pay to the Executive a
                            lump sum cash payment equal to thirty-six (36)
                            times the monthly premiums that would have been
                            paid by Cinergy to provide those benefits to the
                            Executive.  Nothing in this Subparagraph
                            5a(iii)(2) will affect the Executive's right to
                            elect COBRA continuation coverage in accordance
                            with applicable law.

                     (3)    Ownership of the automobile assigned to the
                            Executive by Cinergy will be transferred to the
                            Executive within 30 days of the Date of Termination.
                            The effect of this transfer will be grossed up for
                            federal and state income taxes as soon as
                            administratively feasible after the transfer is
                            effective.

                     (4)    Cinergy will provide tax counseling services through
                            an agency selected by the Executive, not to exceed
                            Fifteen Thousand Dollars ($15,000.00) in cost.

                     For purposes of this Paragraph (iii), the Executive will be
                     deemed to have incurred a Termination following a Change in
                     Control if the Executive's employment is terminated prior
                     to a Change in Control, without Cause at the direction of a
                     Person who has entered into an agreement with Cinergy, the
                     consummation of which will constitute a Change in Control,
                     or if the Executive terminates his employment for Good
                     Reason prior to a Change in Control if the circumstances or
                     event that constitutes Good Reason occurs at the direction
                     of such a Person.

       b.     TERMINATION BY CINERGY FOR CAUSE OR BY THE EXECUTIVE OTHER THAN
              FOR GOOD REASON.  Subject to the provisions of Section 7, if the
              Executive's employment is terminated for Cause during the
              Employment Period, or if the Executive terminates employment
              during the Employment Period other than a termination for Good
              Reason, Cinergy will have no further obligations to the Executive
              under this Agreement other than the obligation to pay to the
              Executive the Accrued Obligations, plus any other earned but
              unpaid compensation, in each case to the extent not previously
              paid.

       c.     CERTAIN TAX CONSEQUENCES.

              (i)    In the event that any Severance Benefits paid or payable to
                     the Executive or for his benefit pursuant to the terms of
                     this Agreement or otherwise in connection with, or arising
                     out of, his employment with Cinergy or a change in
                     ownership or effective control of Cinergy or of a
                     substantial portion of its assets (a "Payment" or
                     "Payments") would be subject to any



                     Excise Tax, then the Executive will be entitled to
                     receive an additional payment (a "Gross-Up Payment") in
                     an amount such that after payment by the Executive of
                     all taxes (including any interest, penalties, additional
                     tax, or similar items imposed with respect thereto and
                     the Excise Tax), including any Excise Tax imposed upon
                     the Gross-Up Payment, the Executive retains an amount of
                     the Gross-Up Payment equal to the Excise Tax imposed
                     upon the Payments.

              (ii)   An initial determination as to whether a Gross-Up Payment
                     is required pursuant to this Agreement and the amount of
                     that Gross-Up Payment will be made at Cinergy's expense by
                     an Accounting Firm selected by the Executive and reasonably
                     acceptable to Cinergy.  The Accounting Firm will provide
                     its determination, together with detailed supporting
                     calculations and documentation, to Cinergy and the
                     Executive within 10 days after the Date of Termination, or
                     such other time as requested by Cinergy or by the
                     Executive, and if the Accounting Firm determines that no
                     Excise Tax is payable by the Executive with respect to a
                     Payment or Payments, it will furnish the Executive with an
                     opinion reasonably acceptable to the Executive that no
                     Excise Tax will be imposed with respect to any such Payment
                     or Payments.  Within 10 days after the Accounting Firm
                     delivers its determination to the Executive, the Executive
                     will have the right to dispute the determination.  The
                     Gross-Up Payment, if any, as determined pursuant to this
                     Subsection 5c will be paid by Cinergy to the Executive
                     within five days of the receipt of the Accounting Firm's
                     determination.  The existence of a dispute will not in any
                     way affect the Executive's right to receive the Gross-Up
                     Payment in accordance with the determination.  If there is
                     no dispute, the determination will be binding, final, and
                     conclusive upon Cinergy and the Executive.  If there is a
                     dispute, then Cinergy and the Executive will together
                     select a second Accounting Firm, which will review the
                     determination and the Executive's basis for the dispute and
                     then will render its own determination, which will be
                     binding, final, and conclusive on Cinergy and on the
                     Executive.  Cinergy will bear all costs associated with
                     that determination, unless the determination is not greater
                     than the initial determination, in which case all such
                     costs will be borne by the Executive.

              (iii)  The value of any non-cash benefits or any deferred payment
                     or benefit paid or payable to the Executive will be
                     determined in accordance with the principles of Code
                     paragraphs 280G(d)(3) and (4).  For purposes of determining
                     the amount of the Gross-Up Payment, the Executive will be
                     deemed to pay federal income taxes at the highest marginal
                     rate of federal income taxation in the calendar year in
                     which the Gross-Up Payment is to be made and applicable
                     state and local income taxes at the highest



                     marginal rate of taxation in the state and locality of
                     the Executive's residence on the Date of Termination,
                     net of the maximum reduction in federal income taxes
                     that would be obtained from deduction of those state and
                     local taxes.

              (iv)   Notwithstanding anything contained in this Agreement to the
                     contrary, in the event that, according to the Accounting
                     Firm's determination, an Excise Tax will be imposed on any
                     Payment or Payments, Cinergy will pay to the applicable
                     government taxing authorities as Excise Tax withholding,
                     the amount of the Excise Tax that Cinergy has actually
                     withheld from the Payment or Payments in accordance with
                     law.

              d.     VALUE CREATION PLAN AND STOCK OPTIONS.  Upon the
              Executive's termination of employment for any reason, the
              Executive's entitlement to restricted shares and performance
              shares under the Value Creation Plan and any stock options
              granted under the Stock Option Plan or the LTIP will be
              determined under the terms of the appropriate plan and any
              applicable administrative guidelines and written agreements.

              e.     OTHER FEES AND EXPENSES.  Cinergy will also pay to the
              Executive all legal fees and expenses incurred by the Executive
              in successfully disputing a Termination that entitles the
              Executive to Severance Benefits.  Payment will be made within
              five (5) business days after delivery of the Executive's
              written request for payment accompanied by such evidence of
              fees and expenses incurred as Cinergy reasonably may require.

6.     NON-EXCLUSIVITY OF RIGHTS.  Nothing in this Agreement will prevent or
       limit the Executive's continuing or future participation in any benefit,
       plan, program, policy, or practice provided by Cinergy and for which the
       Executive may qualify, except with respect to any benefit to which the
       Executive has waived his rights in writing or any plan, program, policy,
       or practice that expressly excludes the Executive from participation.  In
       addition, nothing in this Agreement will limit or otherwise affect the
       rights the Executive may have under any other contract or agreement with
       Cinergy entered into after the Effective Date.  Amounts that are vested
       benefits or that the Executive is otherwise entitled to receive under any
       benefit, plan, program, policy, or practice of, or any contract or
       agreement entered into after the Effective Date with Cinergy, at or
       subsequent to the Date of Termination, will be payable in accordance with
       that benefit, plan, program, policy or practice, or that contract or
       agreement, except as explicitly modified by this Agreement.

7.     FULL SETTLEMENT:  MITIGATION.  Cinergy's obligation to make the payments
       provided for in this Agreement and otherwise to perform its obligations
       under this Agreement will not be affected by any set-off, counterclaim,
       recoupment, defense, or other claim, right, or action that Cinergy may
       have against the Executive or others.  In no event will the Executive be



       obligated to seek other employment or take any other action by way of
       mitigation of the amounts (including amounts for damages for breach)
       payable to the Executive under any of the provisions of this Agreement
       and, except as provided in Subparagraphs 5a(ii)(3) and 5a(iii)(2), those
       amounts will not be reduced simply because the Executive obtains other
       employment.  If the Executive finally prevails on the substantial claims
       brought with respect to any dispute between Cinergy and the Executive as
       to the interpretation, terms, validity, or enforceability of (including
       any dispute about the amount of any payment pursuant to) this Agreement,
       Cinergy agrees to pay all reasonable legal fees and expenses that the
       Executive may reasonably incur as a result of that dispute.

8.     ARBITRATION.  The parties agree that any dispute, claim, or controversy
       based on common law, equity, or any federal, state, or local statute,
       ordinance, or regulation (other than workers' compensation claims)
       arising out of or relating in any way to the Executive's employment, the
       terms, benefits, and conditions of employment, or concerning this
       Agreement or its termination and any resulting termination of employment,
       including whether such a dispute is arbitrable, shall be settled by
       arbitration.  This agreement to arbitrate includes but is not limited to
       all claims for any form of illegal discrimination, improper or unfair
       treatment or dismissal, and all tort claims.  The Executive will still
       have a right to file a discrimination charge with a federal or state
       agency, but the final resolution of any discrimination claim will be
       submitted to arbitration instead of a court or jury.  The arbitration
       proceeding will be conducted under the employment dispute resolution
       arbitration rules of the American Arbitration Association in effect at
       the time a demand for arbitration under the rules is made.  The decision
       of the arbitrator(s), including determination of the amount of any
       damages suffered, will be exclusive, final, and binding on all parties,
       their heirs, executors, administrators, successors and assigns.  Each
       party will bear its own expenses in the arbitration for arbitrators' fees
       and attorneys' fees, for its witnesses, and for other expenses of
       presenting its case.  Other arbitration costs, including administrative
       fees and fees for records or transcripts, will be borne equally by the
       parties.  Notwithstanding anything in this Section to the contrary, if
       the Executive prevails with respect to any dispute submitted to
       arbitration under this Section, Cinergy will reimburse or pay all legal
       fees and expenses that the Executive may reasonably incur as a result of
       the dispute as required by Section 7.

9.     CONFIDENTIAL INFORMATION.  The Executive will hold in a fiduciary
       capacity for the benefit of Cinergy, as well as all of Cinergy's
       successors and assigns, all secret, confidential information, knowledge,
       or data relating to Cinergy, and its affiliated businesses, that the
       Executive obtains during the Executive's employment by Cinergy or any of
       its affiliated companies, and that has not been or subsequently becomes
       public knowledge (other than by acts by the Executive or representatives
       of the Executive in violation of this Agreement).  During the Employment
       Period and thereafter, the Executive will not, without Cinergy's prior
       written consent or as may otherwise by required by law or legal process,
       communicate or divulge any such information, knowledge, or data to anyone
       other than Cinergy and those designated by it.  The



       Executive understands that during the Employment Period, Cinergy may
       be required from time to time to make public disclosure of the terms
       or existence of the Executive's employment relationship to comply with
       various laws and legal requirements.  In addition to all other
       remedies available to Cinergy in law and equity, this Agreement is
       subject to termination by Cinergy for Cause under Section 4b in the
       event the Executive violates any provision of this Section.

10.    SUCCESSORS.

       a.     This Agreement is personal to the Executive and, without Cinergy's
              prior written consent, cannot be assigned by the Executive
              otherwise than by will or the laws of descent and distribution.
              This Agreement will inure to the benefit of and be enforceable by
              the Executive's legal representatives.

       b.     This Agreement will inure to the benefit of and be binding upon
              Cinergy and its successors and assigns.

       c.     Cinergy will require any successor (whether direct or indirect, by
              purchase, merger, consolidation or otherwise) to all or
              substantially all of the business and/or assets of Cinergy to
              assume expressly and agree to perform this Agreement in the same
              manner and to the same extent that Cinergy would be required to
              perform it if no succession had taken place.  Cinergy's failure to
              obtain such an assumption and agreement prior to the effective
              date of a succession will be a breach of this Agreement and will
              entitle the Executive to compensation from Cinergy in the same
              amount and on the same terms as if the Executive were to terminate
              his employment for Good Reason after a Change in Control, except
              that, for purposes of implementing the foregoing, the date on
              which any such succession becomes effective will be deemed the
              Date of Termination.

11.    DEFINITIONS.  As used in this Agreement, the following terms, when
       capitalized, will have the following meanings:

       a.     1934 ACT.  "1934 Act" means the Securities Exchange Act of 1934.

       b.     ACCOUNTING FIRM.  "Accounting Firm" means an accounting firm that
              is designated as one of the five largest accounting firms in the
              United States (which may include Cinergy's independent auditors).

       c.     ACCRUED OBLIGATIONS.  "Accrued Obligations" means the accrued
              obligations described in Paragraph 5a(i).

       d.     AGREEMENT.  "Agreement" means this Amended and Restated Employment
              Agreement between Cinergy and the Executive.




       e.     AIP BENEFIT.  "AIP Benefit" means the Annual Incentive Plan
              benefit described in Subsection 3b.

       f.     ANNUAL BASE SALARY.  "Annual Base Salary" means the annual base
              salary payable to the Executive pursuant to Subsection 3a.

       g.     ANNUAL INCENTIVE PLAN.  "Annual Incentive Plan" means the Cinergy
              Corp. Annual Incentive Plan or any successor to that plan.

       h.     BOARD OF DIRECTORS.  "Board of Directors" means the board of
              directors of the Company.

       i.     CAUSE.  "Cause" has the meaning set forth in Subsection 4b.

       j.     CHANGE IN CONTROL.  "A Change in Control" will be deemed to have
              occurred if any of the following events occur, after the Effective
              Date:

              (i)    Any "person" or "group" (within the meaning of subsection
                     13(d) and paragraph 14(d)(2) of the 1934 Act) is or becomes
                     the beneficial owner (as defined in Rule l3d-3 under the
                     1934 Act), directly or indirectly, of securities of the
                     Company (not including in the securities beneficially owned
                     by such a Person any securities acquired directly from the
                     Company or its affiliates) representing more than twenty
                     percent (20%) of the combined voting power of the Company's
                     then outstanding securities, excluding any person who
                     becomes such a beneficial owner in connection with a
                     transaction described in Clause (1) of Paragraph (ii)
                     below; or

              (ii)   There is consummated a merger or consolidation of the
                     Company or any direct or indirect subsidiary of the Company
                     with any other corporation, other than (1) a merger or
                     consolidation that would result in the voting securities of
                     the Company outstanding immediately prior to that merger or
                     consolidation continuing to represent (either by remaining
                     outstanding or by being converted into voting securities of
                     the surviving entity or its parent) at least sixty percent
                     (60%) of the combined voting power of the securities of the
                     Company or the surviving entity or its parent outstanding
                     immediately after the merger or consolidation, or (2) a
                     merger or consolidation effected to implement a
                     recapitalization of the Company (or similar transaction) in
                     which no person is or becomes the beneficial owner,
                     directly or indirectly, of securities of the Company (not
                     including in the securities beneficially owned by such a
                     Person any securities acquired directly from the Company or
                     its affiliates other than in connection with the
                     acquisition by the Company or its affiliates of a business)
                     representing



                     twenty percent (20%) or more of the combined voting power
                     of the Company's then outstanding securities; or

              (iii)  During any period of two consecutive years, individuals who
                     at the beginning of that period constitute the Board of
                     Directors and any new director (other than a director whose
                     initial assumption of office is in connection with an
                     actual or threatened election contest, including but not
                     limited to a consent solicitation, relating to the election
                     of directors of the Company) whose appointment or election
                     by the Company's shareholders was approved or recommended
                     by a vote of at least two-thirds (2/3) of the directors
                     then still in office who either were directors at the
                     beginning of that period or whose appointment, election, or
                     nomination for election was previously so approved or
                     recommended cease for any reason to constitute a majority
                     of the Board of Directors; or

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

       k.     CHIEF EXECUTIVE OFFICER.  "Chief Executive Officer" means the
              chief executive officer of the Company.

       l.     CINERGY.  "Cinergy" means the Company, Cinergy Services, Inc., The
              Cincinnati Gas & Electric Company, and PSI Energy, Inc.

       m.     CODE.  "Code" means the Internal Revenue Code of 1986, as amended,
              and interpretive rules and regulations.

       n.     COMPANY.  "Company" means Cinergy Corp.

       o.     DATE OF TERMINATION.  "Date of Termination" means:

              (i)    if the Executive's employment is terminated by the Company
                     for Cause, or by the Executive with or without Good Reason,
                     the date of receipt of the Notice of Termination or any
                     later date specified in the notice, as the case may be;



              (ii)   if the Executive's employment is terminated by the Company
                     other than for Cause, thirty (30) days after the date on
                     which the Company notifies the Executive of the
                     termination; and

              (iii)  if the Executive's employment is terminated by reason of
                     death, the date of death.

       p.     EARNINGS.  "Earnings" means the Executive's "Earnings" as defined
              in the Pension Plan but without regard to the limitation of Code
              paragraph 401(a)(17).

       q.     EFFECTIVE DATE.  "Effective Date" means December 30, 1999.

       r.     EMPLOYMENT PERIOD.  "Employment Period" has the meaning set forth
              in Subsection 1b.

       s.     EXCISE TAX.  "Excise Tax" means any excise tax imposed by Code
              section 4999, together with any interest, penalties, additional
              tax or similar items that are incurred by the Executive with
              respect to the excise tax imposed by Code section 4999.

       t.     EXECUTIVE.  "Executive" means Donald B. Ingle, Jr.

       u.     EXECUTIVE RETIREMENT PLANS.  The "Executive Retirement Plans" are
              the Pension Plan, the Supplemental Executive Retirement Plan, and
              the Cinergy Corp. Excess Pension Plan or any successor to those
              plans.

       v.     EXECUTIVE SUPPLEMENTAL LIFE PROGRAM.  "Executive Supplemental Life
              Program" means the Cinergy Corp. Executive Supplemental Life
              Program or any successor to that plan.

       w.     GOOD REASON.  "Good Reason" has the meaning set forth in
              Subsection 4d.

       x.     GROSS-UP PAYMENT.  "Gross-Up Payment" has the meaning set forth in
              Subsection 5c.

       y.     HIGHEST AVERAGE EARNINGS.  "Highest Average Earnings" means the
              greater of (a) the Executive's "Highest Average Earnings" as
              defined in the Pension Plan (without regard to the limitation of
              Code paragraph 401(a)(17)) or (b) the Executive's Earnings for the
              12 consecutive calendar months immediately preceding his
              termination of employment with Cinergy.

       z.     M&W PLANS.  "M&W Plans" has the meaning given in Subparagraph
              5a(ii)(3).



       aa.    LONG-TERM INCENTIVE PLAN.  "Long-Term Incentive Plan" means the
              long-term inventive plan implemented under the Cinergy Corp. 1996
              Long-Term Incentive Compensation Plan or any successor to that
              plan.

       bb.    NOTICE OF TERMINATION.  "Notice of Termination" has the meaning
              set forth in Subsection 4e.

       cc.    PAYMENT OR PAYMENTS.  "Payment" or "Payments" has the meaning set
              forth in Subsection 5c.

       dd.    PENSION PLAN.  "Pension Plan" means the Cinergy Corp. Non-Union
              Employees' Pension Plan or any successor to that plan.

       ee.    PERSON.  "Person" has the meaning set forth in paragraph 3(a)(9)
              of the 1934 Act, as modified and used in subsections 13(d) and
              14(d) of the 1934 Act; however, a Person will not include the
              following:

              (i)    Cinergy or any of its subsidiaries;

              (ii)   A trustee or other fiduciary holding securities under an
                     employee benefit plan of Cinergy or its subsidiaries;

              (iii)  An underwriter temporarily holding securities pursuant to
                     an offering of those securities; or

              (iv)   A corporation owned, directly or indirectly, by the
                     stockholders of the Company in substantially the same
                     proportions as their ownership of stock of the Company.

       ff.    RELOCATION PROGRAM.  "Relocation Program" means the Cinergy Corp.
              Relocation Program or any successor to that program, as in effect
              on the date of the Executive's termination of employment.

       gg.    RETIREES' DENTAL PLAN.  "Retirees' Dental Plan" means the Cinergy
              Corp. Retirees' Dental Plan or any successor to that plan.

       hh.    RETIREES' MEDICAL PLAN. "Retirees' Medical Plan" means the Cinergy
              Corp. Retirees' Medical Plan or any successor to that plan.

       ii.    SEVERANCE BENEFITS.  "Severance Benefits" means the payments and
              benefits payable to the Executive pursuant to Section 5.

       jj.    SPOUSE.  "Spouse" means the Executive's lawfully married spouse.
              For this



              purpose, common law marriage or a similar arrangement will not be
              recognized unless otherwise required by federal law.

       kk.    STOCK RELATED DOCUMENTS.  "Stock Related Documents" means the
              LTIP, the Cinergy Corp. Stock Option Plan, and the Value Creation
              Plan and any applicable administrative guidelines and written
              agreements relating to those plans.

       ll.    SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.  "Supplemental Executive
              Retirement Plan" means the Cinergy Corp. Supplemental Executive
              Retirement Plan or any successor to that plan.

       mm.    TARGET ANNUAL BONUS.  "Target Annual Bonus" has the meaning set
              forth in Subsection 3b.

       nn.    TARGET LTIP BONUS.  "Target LTIP Bonus" has the meaning set forth
              in Subsection 3b.

       oo.    TERMINATION.  "Termination" means the termination of the
              Executive's employment with Cinergy other than a termination by
              Cinergy for Cause.

       pp.    VALUE CREATION PLAN.  "Value Creation Plan" means the Value
              Creation Plan of the LTIP.

       qq.    YEARS OF PARTICIPATION.  The Executive's "Years of Participation"
              will equal the lesser of (i) 35 or (ii) 25 plus two additional
              years for each of the Executive's birthdays that he has reached
              since his 50th birthday.

12.    MISCELLANEOUS.

       a.     This Agreement will be governed by and construed in accordance
              with the laws of the State of Ohio, without reference to
              principles of conflict of laws.  The captions of this Agreement
              are not part of its provisions and will have no force or effect.
              This Agreement may not be amended, modified, repealed, waived,
              extended, or discharged except by an agreement in writing signed
              by the party against whom enforcement of the amendment,
              modification, repeal, waiver, extension, or discharge is sought.
              Only the Chief Executive Officer or his designee will have
              authority on behalf of Cinergy to agree to amend, modify, repeal,
              waive, extend, or discharge any provision of this Agreement.

       b.     All notices and other communications under this Agreement will be
              in writing and will be given by hand delivery to the other party
              or by registered or certified mail, return receipt requested,
              postage prepaid, addressed as follows:

              IF TO THE EXECUTIVE:



              Donald B. Ingle, Jr.
              Cinergy Corp.
              221 East Fourth Street
              P 0. Box 960
              Cincinnati, Ohio 45201-0960



              IF TO CINERGY:
              Cinergy Corp.
              221 East Fourth Street
              P. 0. Box 960
              Cincinnati, Ohio  45201-0960
              Attn: Chief Executive Officer


              or to such other address as either party has furnished to the
              other in writing in accordance with this Agreement.  All notices
              and communications will be effective when actually received by the
              addressee.

       c.     The invalidity or unenforceability of any provision of this
              Agreement will not affect the validity or enforceability of any
              other provision of this Agreement.

       d.     Cinergy may withhold from any amounts payable under this Agreement
              such federal, state, or local taxes as are required to be withheld
              pursuant to any applicable law or regulation.

       e.     The Executive's or Cinergy's failure to insist upon strict
              compliance with any provision of this Agreement or the failure to
              assert any right the Executive or Cinergy may have under this
              Agreement, including without limitation the right of the Executive
              to terminate employment for Good Reason pursuant to Subsection 4c
              or the right of Cinergy to terminate the Executive's employment
              for Cause pursuant to Subsection 4b, will not be deemed to be a
              waiver of that provision or right or any other provision or right
              of this Agreement.

       f.     This instrument contains the entire agreement of the Executive and
              Cinergy with respect to the subject matter of this Agreement; and
              subject to any agreements evidencing stock option or restricted
              stock grants described in Subsection 3b and the Stock Related
              Documents, all promises, representations, understandings,
              arrangements, and prior agreements are merged into this Agreement
              and accordingly superseded.

       g.     This Agreement may be executed in counterparts, each of which will
              be deemed to be an original but all of which together will
              constitute one and the same instrument.

       h.     Cinergy and the Executive agree that Cinergy will be authorized to
              act for Cinergy with respect to all aspects pertaining to the
              administration and interpretation of this Agreement.



       IN WITNESS WHEREOF, the Executive and the Company have caused this
Agreement to be executed as of the Effective Date.

                                                 CINERGY CORP.; CINERGY
                                                 SERVICES, INC.; THE CINCINNATI
                                                 GAS & ELECTRIC COMPANY; AND PSI
                                                 ENERGY, INC.


                                          By:
                                                 -------------------------------
                                                 James E. Rogers
                                                 Vice Chairman and Chief
                                                 Executive Officer


                                                 EXECUTIVE


                                                 -------------------------------
                                                 Donald B. Ingle, Jr.

EX-10.H

                                AMENDED AND RESTATED
                                EMPLOYMENT AGREEMENT


       This AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered into
as of the 30th day of December, 1999 (the "Effective Date"), by and between
Cinergy and Michael J. Cyrus (the "Executive").  This Agreement replaces and
supersedes any and all prior employment agreements between Cinergy and the
Executive.  The capitalized words and terms used throughout this Agreement are
defined in Section 11.


                                      RECITALS

       A.     The Executive is currently serving as Executive Vice President of
CCT, and Cinergy desires to secure the continued employment of the Executive in
accordance with this Agreement.

       B.     The Executive is willing to continue to remain in the employ of
Cinergy, and any successor to Cinergy, on the terms and conditions set forth in
this Agreement.

       C.     The parties intend that this Agreement will replace and supersede
any and all prior employment agreements between Cinergy (or any component
company or business unit of Cinergy) and the Executive.


                                     AGREEMENT

       In consideration of the mutual premises, covenants and agreements set
forth below, the parties agree as follows:

1.     EMPLOYMENT AND TERM

       a.     Cinergy, and any successor to Cinergy, agree to employ the
              Executive, and the Executive agrees to remain in the employ of
              Cinergy, in accordance with the terms and provisions of this
              Agreement, for the Employment Period set forth in Subsection b.
              The parties agree that the Company will be responsible for
              carrying out all of the premises, covenants, and agreements of
              Cinergy set forth in this Agreement.

       b.     The Employment Period of this Agreement will commence as of the
              Effective Date and continue until December 31, 2002; provided
              that, commencing on December 31, 2000, and on each subsequent
              December 31, the Employment Period will be extended for one (1)
              additional year unless either party gives the other party





              written notice not to extend this Agreement at least ninety (90)
              days before the extension would otherwise become effective.

2.     DUTIES AND POWERS OF EXECUTIVE

       a.     POSITION.  The Executive will serve Cinergy as Executive Vice
              President of CCT, and he will have such responsibilities, duties,
              and authority as are customary for someone of that position and
              such additional duties, consistent with his position, as may be
              assigned to him from time to time during the Employment Period by
              the Board of Directors or the Chief Executive Officer.

       b.     PLACE OF PERFORMANCE.  In connection with the Executive's
              employment, the Executive will be based at the principal executive
              offices of Cinergy, 221 East Fourth Street, Cincinnati, Ohio, and,
              except for required business travel to an extent substantially
              consistent with the present business travel obligations of Cinergy
              executives who have positions of authority comparable to that of
              the Executive, the Executive will not be required to relocate to a
              new principal place of business that is more than thirty (30)
              miles from Cinergy's current principal executive offices.

3.     COMPENSATION.  The Executive will receive the following compensation for
       his services under this Agreement.

       a.     SALARY.  The Executive's Annual Base Salary, payable not less
              often than semi-monthly, will be at the annual rate of not less
              than $495,000.00.  The Board of Directors may, from time to time,
              increase the Annual Base Salary as the Board of Directors deems to
              be necessary or desirable, including without limitation
              adjustments to reflect increases in the cost of living.  Any
              increase in the Annual Base Salary will not serve to limit or
              reduce any other obligation of Cinergy under this Agreement.  The
              Annual Base Salary will not be reduced except for across-the-board
              salary reductions similarly affecting all Cinergy management
              personnel.  If Annual Base Salary is increased during the
              Employment Period, then the increased salary will be the Annual
              Base Salary for all purposes under this Agreement.

       b.     RETENTION ALLOWANCE.  Effective April 6, 1998, the Compensation
              Committee of the Board of Directors granted the Executive a number
              of restricted shares of Cinergy's common stock, subject to the
              terms and conditions set forth in a restricted stock agreement
              dated April 6, 1998, between the Company and the Executive and
              attached to and made part of this Agreement.

       c.     RETIREMENT, INCENTIVE, WELFARE BENEFIT PLANS AND OTHER BENEFITS.
              During the Employment Period, the Executive will be eligible, and
              Cinergy will take all necessary action to cause the Executive to
              become eligible, to participate in all





              short-term and long-term incentive, stock option, restricted
              stock, performance unit, savings, retirement and welfare plans,
              practices, policies and programs applicable generally to
              employees and/or other senior executives of Cinergy who are
              considered Tier II executives for compensation purposes, except
              with respect to any plan, practice, policy or program to which
              the Executive has waived his rights in writing.

              If the Executive retires after reaching age 55, the Executive will
              be entitled and fully vested in a supplemental retirement benefit
              equal to the difference between (1) his total benefit under all
              Executive Retirement Plans, and (2) 60% of the Executive's Highest
              Average Earnings. The form, timing, and method of payment of the
              supplemental retirement benefit payable under this Paragraph will
              be the same as those elected by the Executive under the Pension
              Plan.  If the Executive dies after reaching age 55 but prior to
              his retirement, and if his Spouse, on the date of his death, is
              living on the date the first installment of the supplemental
              retirement benefit would be payable under this Paragraph, the
              Spouse will be entitled to receive the supplemental retirement
              benefit as a Spouse's benefit.  The form, timing, and method of
              payment of any Spouse's benefit under this Paragraph will be the
              same as those applicable to the Spouse under the Pension Plan.

              Upon his retirement on or after having attained age fifty (50),
              the Executive will be eligible for comprehensive medical and
              dental insurance pursuant to the terms of the Retirees' Medical
              Plan and the Retirees' Dental Plan.  The Executive, however, will
              receive the full subsidy provided by Cinergy to retirees for
              purposes of determining the amount of monthly premiums due from
              the Executive.

              The Executive will be a participant in the Annual Incentive Plan,
              and the Executive will be paid pursuant to that plan an annual
              benefit of up to sixty percent (60%) of the Executive's Annual
              Base Salary, with  a target of no less than forty percent (40%) of
              the Executive's Annual Base Salary (the "Target Annual Bonus").

              The Executive will be a participant in the Long-Term Incentive
              Plan (the "LTIP"), and the Executive's annualized target award
              opportunity under the LTIP will be equal to no less than seventy
              percent (70%) of his Annual Base Salary (the "Target LTIP Bonus"),
              and the Executive's award under the Value Creation Plan for the
              first performance cycle (1997-1999) under the LTIP will be
              prorated on the basis of sixty-six and two-thirds percent (66
              2/3%), rather than on his employment date in 1998.

       d.     FRINGE BENEFITS AND PERQUISITES.  During the Employment Period,
              the Executive will be entitled to the following additional fringe
              benefits:





              (i)    Cinergy will furnish to the Executive an automobile and
                     will pay all of the related expenses for gasoline,
                     insurance, maintenance, and repairs.

              (ii)   Cinergy will pay the initiation fee and the annual dues,
                     assessments, and other membership charges of the Executive
                     for membership in a country club selected by the Executive.

              (iii)  Cinergy will provide paid vacation for four (4) weeks per
                     year (or longer if permitted by Cinergy's policy).

              (iv)   Cinergy will furnish to the Executive annual financial
                     planning and tax preparation services.  In addition, the
                     Executive will be entitled to receive such other fringe
                     benefits in accordance with Cinergy plans, practices,
                     programs, and policies in effect from time to time,
                     commensurate with his position and at least comparable to
                     those received by other Cinergy senior executives.

       e.     EXPENSES.  Cinergy agrees to reimburse the Executive for all
              expenses, including those for travel and entertainment, properly
              incurred by his in the performance of his duties under this
              Agreement in accordance with the policies established from time to
              time by the Board of Directors.

       f.     RELOCATION BENEFITS.  Following termination of the Executive's
              employment for any reason (other than death), the Executive will
              be entitled to reimbursement from Cinergy for the reasonable costs
              of relocating from the Cincinnati, Ohio, area to a new primary
              residence in a manner that is consistent with the terms of the
              Relocation Program.

4.     TERMINATION OF EMPLOYMENT

       a.     DEATH.  The Executive's employment will terminate automatically
              upon the Executive's death during the Employment Period.

       b.     BY CINERGY FOR CAUSE.  Cinergy may terminate the Executive's
              employment during the Employment Period for Cause.  For purposes
              of this Employment Agreement, "Cause" means the following:

              (i)    The willful and continued failure by the Executive to
                     substantially perform the Executive's duties with Cinergy
                     (other than any such failure resulting from the Executive's
                     incapacity due to physical or mental illness) after the
                     Board of Directors or the Chief Executive Officer has
                     delivered to the Executive a written demand for substantial
                     performance, which demand





                     specifically identifies the manner in which the
                     Executive has not substantially performed his duties.
                     This event will constitute Cause even if the Executive
                     issues a Notice of Termination for Good Reason pursuant
                     to Subsection 4d after the Board of Directors or Chief
                     Executive Officer delivers a written demand for
                     substantial performance.

              (ii)   The breach by the Executive of the confidentiality
                     provisions set forth in Section 9.

              (iii)  The conviction of the Executive for the commission of a
                     felony, including the entry of a guilty or nolo contendere
                     plea, or any willful or grossly negligent action or
                     inaction by the Executive that has a materially adverse
                     effect on Cinergy.  For purposes of this definition of
                     Cause, no act, or failure to act, on the Executive's part
                     will be deemed "willful" unless it is done, or omitted to
                     be done, by the Executive in bad faith and without
                     reasonable belief that the Executive's act, or failure to
                     act, was in the best interest of Cinergy.

       c.     BY CINERGY WITHOUT CAUSE.  Cinergy may, upon at least 30 days
              advance written notice to the Executive, terminate the Executive's
              employment during the Employment Period for a reason other than
              Cause, but the obligations placed upon Cinergy in Section 5 will
              apply.

       d.     BY THE EXECUTIVE FOR GOOD REASON.  The Executive may terminate his
              employment during the Employment Period for Good Reason.  For
              purposes of this Agreement, "Good Reason" means the following:

              (i)    A reduction in the Executive's Annual Base Salary, except
                     for across-the-board salary reductions similarly affecting
                     all Cinergy management personnel, or a reduction in any
                     other benefit or payment described in Section 3 of this
                     Agreement, except for changes to the employee benefits
                     programs affecting all Cinergy management personnel,
                     provided that those changes (either individually or in the
                     aggregate) will not result in a material adverse change
                     with respect to the benefits to which the Executive was
                     entitled as of the Effective Date.

              (ii)   The material reduction without his consent of the
                     Executive's title, authority, duties, or responsibilities
                     from those in effect immediately prior to the reduction or
                     a material adverse change in the Executive's reporting
                     responsibilities.

              (iii)  Any breach by Cinergy of any other material provision of
                     this Agreement (including but not limited to the place of
                     performance as specified in





                     Subsection 2b).

              (iv)   The Executive's disability due to physical or mental
                     illness or injury that precludes the Executive from
                     performing any job for which he is qualified and able to
                     perform based upon his education, training or experience.

              (v)    A failure by the Company to require any successor entity to
                     the Company specifically to assume all of the Company's
                     obligations to the Executive under this Agreement.

       e.     BY THE EXECUTIVE WITHOUT GOOD REASON.  The Executive may terminate
              his employment without Good Reason upon prior written notice to
              the Company.

       f.     NOTICE OF TERMINATION.  Any termination of the Executive's
              employment by Cinergy, or by the Executive during the Employment
              Period (other than a termination due to the Executive's death),
              will be communicated by a written Notice of Termination to the
              other party to this Agreement in accordance with Subsection 12b.
              For purposes of this Agreement, a "Notice of Termination" means a
              written notice that specifies the particular provision of this
              Agreement relied upon and that sets forth in reasonable details
              the facts and circumstances claimed to provide a basis for
              terminating the Executive's employment under the specified
              provision.  The failure by the Executive or Cinergy to set forth
              in the Notice of Termination any fact or circumstance that
              contributes to a showing of Good Reason or Cause will not waive
              any right of the Executive or Cinergy under this Agreement or
              preclude the Executive or Cinergy from asserting that fact or
              circumstance in enforcing rights under this Agreement.

5.     OBLIGATIONS OF CINERGY UPON TERMINATION.

       a.     CERTAIN TERMINATIONS.

              (i)    If a Termination occurs during the Employment Period,
                     Cinergy will pay to the Executive a lump sum amount, in
                     cash, equal to the sum of the following Accrued
                     Obligations:

                     (1)    the Executive's Annual Base Salary through the Date
                            of Termination to the extent not previously paid;

                     (2)    an amount equal to the AIP Benefit for the fiscal
                            year that includes the Date of Termination
                            multiplied by a fraction, the numerator of which is
                            the number of days from the beginning of that fiscal
                            year to and including the Date of Termination and
                            the denominator of which is three hundred and
                            sixty-five (365).  The AIP Benefit will





                            be determined using a percentage determined by
                            the Chief Executive Officer, in his discretion,
                            up to the maximum percentage specified in
                            Subsection 3b but no less than the Target Annual
                            Bonus.

                     (3)    any compensation previously deferred by the
                            Executive (together with any accrued interest or
                            earnings) and any accrued vacation pay, in each case
                            to the extent not previously paid.

                     The Accrued Obligations described in this Paragraph 5a(i)
                     will be paid within thirty (30) days after the Date of
                     Termination.  These Accrued Obligations are payable to the
                     Executive regardless of whether a Change in Control has
                     occurred.

              (ii)   Prior to the occurrence of a Change in Control, and in the
                     event of (A) a Termination other than by reason of the
                     Executive's death or (B) the Executive's termination of his
                     employment during the Employment Period for Good Reason,
                     Cinergy will pay the Accrued Obligations, and Cinergy will
                     have the following obligations:

                     (1)    Cinergy will pay to the Executive a lump sum amount,
                            in cash, equal to three (3) times the sum of the
                            Annual Base Salary and the AIP Benefit.  For this
                            purpose, the Annual Base Salary will be at the rate
                            in effect at the time Notice of Termination is given
                            (without giving effect to any reduction in Annual
                            Base Salary, if any, prior to the termination).  The
                            AIP Benefit will be determined using a percentage
                            determined by the Chief Executive Officer, in his
                            discretion, which will not be less than the
                            Executive's annual target percentage for the fiscal
                            year in which the Termination occurs and will not be
                            greater than the maximum percentage specified in
                            Subsection 3b.  This lump sum will be paid within
                            thirty (30) days of the Date of Termination.

                     (2)    If the Executive terminates employment with Cinergy
                            prior to reaching age 50, Cinergy will pay to the
                            Executive, within 30 days of the Date of
                            Termination, a lump sum amount, in cash, equal to
                            the present value, discounted at the Prime Rate, of
                            all benefits to which the Executive would have been
                            entitled had he remained employed by Cinergy until
                            the end of the Employment Period, each, where
                            applicable, at the rate of Annual Base Salary, and
                            using the same goals and factors, in effect at the
                            time Notice of Termination is given, under the Value
                            Creation Plan of the LTIP and the Executive
                            Supplemental Life Insurance Program, minus the
                            present





                            value, discounted at the Prime Rate, of the
                            benefits to which he is actually entitled under
                            these plans and programs.  Cinergy will also pay
                            to the Executive the value of all of his deferred
                            compensation amounts, whether or not they are
                            otherwise currently payable.

                            If the Executive terminates employment on or after
                            reaching age 50, Cinergy will pay to the Executive
                            the value of all deferred compensation amounts and
                            all executive life insurance benefits whether or not
                            they are otherwise currently vested or payable.
                            Payment will be made in accordance with the terms of
                            the applicable plan or program.

                     (3)    Except as provided under Clauses (A) and (B) below,
                            Cinergy will continue, until the end of the
                            Employment Period, medical and dental benefits to
                            the Executive and/or the Executive's family at least
                            equal to those that would have been provided if the
                            Executive's employment had not been terminated
                            (excluding benefits to which the Executive has
                            waived his rights in writing).  The benefits
                            described in the preceding sentence will be in
                            accordance with the medical and welfare benefit
                            plans, practices, programs, or policies of Cinergy
                            (the "M&W Plans") as then currently in effect and
                            applicable generally to other Cinergy senior
                            executives and their families.

                                 (A)    If, as of the Executive's Date of
                                        Termination, the Executive meets the
                                        eligibility requirements for
                                        Cinergy's retiree medical and welfare
                                        benefit plans, the provision of those
                                        retiree medical and welfare benefit
                                        plans to the Executive will satisfy
                                        Cinergy's obligation under this
                                        Subparagraph 5a(ii)(3).

                                 (B)    If, as of the Executive's Date of
                                        Termination, the provision to the
                                        Executive of the M&W Plan benefits
                                        described in this Subparagraph
                                        5a(ii)(3) would either (1) violate
                                        the terms of the M&W Plans or (2)
                                        violate any of the Code's
                                        nondiscrimination requirements
                                        applicable to the M&W Plans, then
                                        Cinergy, in its sole discretion, may
                                        elect to pay the Executive, in lieu
                                        of the M&W Plan benefits described
                                        under this Subparagraph 5a(ii)(3), a
                                        lump sum cash payment equal to the
                                        total monthly premiums that would
                                        have been paid by Cinergy for the
                                        Executive under the M&W Plans from
                                        the Date of Termination through the
                                        end of the Employment Period.
                                        Nothing in this Clause will



                                        affect the Executive's right to elect
                                        COBRA continuation coverage under a
                                        M&W Plan in accordance with
                                        applicable law.

                                 (C)    If the Executive becomes employed by
                                        another employer and is eligible to
                                        receive medical or other welfare
                                        benefits under another
                                        employer-provided plan, any benefits
                                        provided to the Executive under the
                                        M&W Plans will be secondary to those
                                        provided under the other
                                        employer-provided plan during the
                                        Executive's applicable period of
                                        eligibility.

                     (4)    Ownership of the automobile assigned to the
                     Executive by Cinergy will be transferred to the
                     Executive within 30 days of the Date of Termination.
                     The effect of this transfer will be grossed up for
                     federal and state income taxes as soon as
                     administratively feasible after the transfer is
                     effective.

                     (5)    Cinergy will provide tax counseling services
                     through an agency selected by the Executive, not to
                     exceed Fifteen Thousand Dollars ($15,000.00) in cost.

              (iii)  In the event of Termination, by Cinergy or by the Executive
                     for Good Reason, upon or during the twenty-four (24) month
                     period after the occurrence of a Change in Control, then in
                     lieu of any further salary payments to the Executive for
                     periods subsequent to the Date of Termination and in lieu
                     of any other benefits payable pursuant to Paragraph 5a(ii),
                     Cinergy will have the following obligations:

                     (1)    Cinergy will pay to the Executive a lump sum
                            severance payment, in cash, equal to the greater of:

                            (A)    the present value of all amounts and benefits
                                   that would have been due under Paragraph
                                   5a(ii), excluding Subparagraphs 5a(ii)(3),
                                   5a(ii)(4), 5a(ii)(5), or

                            (B)    three (3) times the sum of (x) the higher of
                                   the Executive's Annual Base Salary in effect
                                   immediately prior to the occurrence of the
                                   event or circumstance upon which the Notice
                                   of Termination is based or in effect
                                   immediately prior to the Change in Control,
                                   and (y) the higher of the amount paid to the
                                   Executive pursuant to all annual incentive
                                   compensation or bonus plans or programs





                                   maintained by Cinergy in the year preceding
                                   that in which the Date of Termination occurs
                                   or in the year preceding that in which the
                                   Change in Control occurs; and

                     (2)    For a thirty-six (36) month period after the Date of
                            Termination, Cinergy will arrange to provide the
                            Executive with life, disability, accident, and
                            health insurance benefits substantially similar to
                            those that the Executive is receiving immediately
                            prior to the Notice of Termination (without giving
                            effect to any reduction in those benefits subsequent
                            to a Change in Control that constitutes Good
                            Reason), except for any benefits that were waived by
                            the Executive in writing.  If Cinergy arranges to
                            provide the Executive with life, disability,
                            accident, and health insurance benefits, those
                            benefits will be reduced to the extent comparable
                            benefits are actually received by or made available
                            to the Executive without cost during the thirty-six
                            (36) month period following the Executive's Date of
                            Termination.  The Executive must report to Cinergy
                            any such benefits that he actually receives.  In
                            lieu of the benefits described in the preceding
                            sentences, Cinergy, in its sole discretion, may
                            elect to pay to the Executive a lump sum cash
                            payment equal to thirty-six (36) times the monthly
                            premiums that would have been paid by Cinergy to
                            provide those benefits to the Executive.  Nothing in
                            this Subparagraph 5a(iii)(2) will affect the
                            Executive's right to elect COBRA continuation
                            coverage in accordance with applicable law.

                     For purposes of this Paragraph (iii), the Executive will be
                     deemed to have incurred a Termination following a Change in
                     Control if the Executive's employment is terminated prior
                     to a Change in Control, without Cause at the direction of a
                     Person who has entered into an agreement with Cinergy, the
                     consummation of which will constitute a Change in Control,
                     or if the Executive terminates his employment for Good
                     Reason prior to a Change in Control if the circumstances or
                     event that constitutes Good Reason occurs at the direction
                     of such a Person.

       b.     TERMINATION BY CINERGY FOR CAUSE OR BY THE EXECUTIVE OTHER THAN
              FOR GOOD REASON.  Subject to the provisions of Section 7, if the
              Executive's employment is terminated for Cause during the
              Employment Period, or if the Executive terminates employment
              during the Employment Period other than a termination for Good
              Reason, Cinergy will have no further obligations to the Executive
              under this Agreement other than the obligation to pay to the
              Executive the Accrued Obligations, plus any other earned but
              unpaid compensation, in each case to the extent not previously
              paid.





       c.     CERTAIN TAX CONSEQUENCES.

              (i)    In the event that any Severance Benefits paid or payable to
                     the Executive or for his benefit pursuant to the terms of
                     this Agreement or otherwise in connection with, or arising
                     out of, his employment with Cinergy or a change in
                     ownership or effective control of Cinergy or of a
                     substantial portion of its assets, (a "Payment" or
                     "Payments") would be subject to any Excise Tax, then the
                     Executive will be entitled to receive an additional payment
                     (a "Gross-Up Payment") in an amount such that after payment
                     by the Executive of all taxes (including any interest,
                     penalties, additional tax, or similar items imposed with
                     respect thereto and the Excise Tax), including any Excise
                     Tax imposed upon the Gross-Up Payment, the Executive
                     retains an amount of the Gross-Up Payment equal to the
                     Excise Tax imposed upon the Payments.

              (ii)   An initial determination as to whether a Gross-Up Payment
                     is required pursuant to this Agreement and the amount of
                     that Gross-Up Payment will be made at Cinergy's expense by
                     an Accounting Firm selected by the Executive and reasonably
                     acceptable to Cinergy.  The Accounting Firm will provide
                     its determination, together with detailed supporting
                     calculations and documentation, to Cinergy and the
                     Executive within 10 days after the Date of Termination, or
                     such other time as requested by Cinergy or by the
                     Executive, and if the Accounting Firm determines that no
                     Excise Tax is payable by the Executive with respect to a
                     Payment or Payments, it will furnish the Executive with an
                     opinion reasonably acceptable to the Executive that no
                     Excise Tax will be imposed with respect to any such Payment
                     or Payments.  Within ten days after the Accounting Firm
                     delivers its determination to the Executive, the Executive
                     will have the right to dispute the determination.  The
                     Gross-Up Payment, if any, as determined pursuant to this
                     Subsection 5c will be paid by Cinergy to the Executive
                     within five days of the receipt of the Accounting Firm's
                     determination.  The existence of a dispute will not in any
                     way affect the Executive's right to receive the Gross-Up
                     Payment in accordance with the determination.  If there is
                     no dispute, the determination will be binding, final, and
                     conclusive upon Cinergy and the Executive.  If there is a
                     dispute, then Cinergy and the Executive will together
                     select a second Accounting Firm, which will review the
                     determination and the Executive's basis for the dispute and
                     then will render its own determination, which will be
                     binding, final, and conclusive on Cinergy and on the
                     Executive.  Cinergy will bear all costs associated with
                     that determination, unless the determination is not greater
                     than the initial determination, in which case all such
                     costs will be borne by the Executive.





              (iii)  The value of any non-cash benefits or any deferred payment
                     or benefit paid or payable to the Executive will be
                     determined in accordance with the principles of Code
                     paragraphs 280G(d)(3) and (4).  For purposes of determining
                     the amount of the Gross-Up Payment, the Executive will be
                     deemed to pay federal income taxes at the highest marginal
                     rate of federal income taxation in the calendar year in
                     which the Gross-Up Payment is to be made and applicable
                     state and local income taxes at the highest marginal rate
                     of taxation in the state and locality of the Executive's
                     residence on the Date of Termination, net of the maximum
                     reduction in federal income taxes that would be obtained
                     from deduction of those state and local taxes.

              (iv)   Notwithstanding anything contained in this Agreement to the
                     contrary, in the event that, according to the Accounting
                     Firm's determination, an Excise Tax will be imposed on any
                     Payment or Payments, Cinergy will pay to the applicable
                     government taxing authorities as Excise Tax withholding,
                     the amount of the Excise Tax that Cinergy has actually
                     withheld from the Payment or Payments in accordance with
                     law.

              d.     VALUE CREATION PLAN AND STOCK OPTIONS.  Upon the
              Executive's termination of employment for any reason, and
              except as otherwise provided in this Agreement, the Executive's
              entitlement to restricted shares and performance shares under
              the Value Creation Plan and any stock options granted under the
              Stock Option Plan or the LTIP will be determined under the
              terms of the appropriate plan and any applicable administrative
              guidelines and written agreements.

              e.     OTHER FEES AND EXPENSES.  Cinergy will also pay to the
              Executive all legal fees and expenses incurred by the Executive
              in successfully disputing a Termination that entitles the
              Executive to Severance Benefits.  Payment will be made within
              five (5) business days after delivery of the Executive's
              written request for payment accompanied by such evidence of
              fees and expenses incurred as Cinergy reasonably may require.

6.     NON-EXCLUSIVITY OF RIGHTS.  Nothing in this Agreement will prevent or
       limit the Executive's continuing or future participation in any benefit,
       plan, program, policy, or practice provided by Cinergy and for which the
       Executive may qualify, except with respect to any benefit to which the
       Executive has waived his rights in writing or any plan, program, policy,
       or practice that expressly excludes the Executive from participation.  In
       addition, nothing in this Agreement will limit or otherwise affect the
       rights the Executive may have under any other contract or agreement with
       Cinergy entered into after the Effective Date.  Amounts that are vested
       benefits or that the Executive is otherwise entitled to receive under any
       benefit, plan, program, policy, or practice of, or any contract or
       agreement



       entered into after the Effective Date with Cinergy, at or subsequent
       to the Date of Termination, will be payable in accordance with that
       benefit, plan, program, policy or practice, or that contract or
       agreement, except as explicitly modified by this Agreement.

7.     FULL SETTLEMENT:  MITIGATION.  Cinergy's obligation to make the payments
       provided for in this Agreement and otherwise to perform its obligations
       under this Agreement will not be affected by any set-off, counterclaim,
       recoupment, defense, or other claim, right, or action that Cinergy may
       have against the Executive or others.  In no event will the Executive be
       obligated to seek other employment or take any other action by way of
       mitigation of the amounts (including amounts for damages for breach)
       payable to the Executive under any of the provisions of this Agreement
       and, except as provided in Subparagraphs 5a(ii)(3) and 5a(iii)(2), those
       amounts will not be reduced simply because the Executive obtains other
       employment.  If the Executive finally prevails on the substantial claims
       brought with respect to any dispute between Cinergy and the Executive as
       to the interpretation, terms, validity, or enforceability of (including
       any dispute about the amount of any payment pursuant to) this Agreement,
       Cinergy agrees to pay all reasonable legal fees and expenses that the
       Executive may reasonably incur as a result of that dispute.

8.     ARBITRATION.  The parties agree that any dispute, claim, or controversy
       based on common law, equity, or any federal, state, or local statute,
       ordinance, or regulation (other than workers' compensation claims)
       arising out of or relating in any way to the Executive's employment, the
       terms, benefits, and conditions of employment, or concerning this
       Agreement or its termination and any resulting termination of employment,
       including whether such a dispute is arbitrable, shall be settled by
       arbitration.  This agreement to arbitrate includes but is not limited to
       all claims for any form of illegal discrimination, improper or unfair
       treatment or dismissal, and all tort claims.  The Executive will still
       have a right to file a discrimination charge with a federal or state
       agency, but the final resolution of any discrimination claim will be
       submitted to arbitration instead of a court or jury.  The arbitration
       proceeding will be conducted under the employment dispute resolution
       arbitration rules of the American Arbitration Association in effect at
       the time a demand for arbitration under the rules is made.  The decision
       of the arbitrator(s), including determination of the amount of any
       damages suffered, will be exclusive, final, and binding on all parties,
       their heirs, executors, administrators, successors and assigns.  Each
       party will bear its own expenses in the arbitration for arbitrators' fees
       and attorneys' fees, for its witnesses, and for other expenses of
       presenting its case.  Other arbitration costs, including administrative
       fees and fees for records or transcripts, will be borne equally by the
       parties.  Notwithstanding anything in this Section to the contrary, if
       the Executive prevails with respect to any dispute submitted to
       arbitration under this Section, Cinergy will reimburse or pay all legal
       fees and expenses that the Executive may reasonably incur as a result of
       the dispute as required by Section 7.

9.     CONFIDENTIAL INFORMATION.  The Executive will hold in a fiduciary
       capacity for the benefit of Cinergy, as well as all of Cinergy's
       successors and assigns, all secret,



       confidential information, knowledge, or data relating to Cinergy, and
       its affiliated businesses, that the Executive obtains during the
       Executive's employment by Cinergy or any of its affiliated companies,
       and that has not been or subsequently becomes public knowledge (other
       than by acts by the Executive or representatives of the Executive in
       violation of this Agreement).  During the Employment Period and
       thereafter, the Executive will not, without Cinergy's prior written
       consent or as may otherwise by required by law or legal process,
       communicate or divulge any such information, knowledge, or data to
       anyone other than Cinergy and those designated by it.  The Executive
       understands that during the Employment Period, Cinergy may be required
       from time to time to make public disclosure of the terms or existence
       of the Executive's employment relationship to comply with various laws
       and legal requirements.  In addition to all other remedies available
       to Cinergy in law and equity, this Agreement is subject to termination
       by Cinergy for Cause under Section 4b in the event the Executive
       violates any provision of this Section.

10.    SUCCESSORS.

       a.     This Agreement is personal to the Executive and, without Cinergy's
              prior written consent, cannot be assigned by the Executive
              otherwise than by will or the laws of descent and distribution.
              This Agreement will inure to the benefit of and be enforceable by
              the Executive's legal representatives.

       b.     This Agreement will inure to the benefit of and be binding upon
              Cinergy and its successors and assigns.

       c.     Cinergy will require any successor (whether direct or indirect, by
              purchase, merger, consolidation or otherwise) to all or
              substantially all of the business and/or assets of Cinergy to
              assume expressly and agree to perform this Agreement in the same
              manner and to the same extent that Cinergy would be required to
              perform it if no succession had taken place.  Cinergy's failure to
              obtain such an assumption and agreement prior to the effective
              date of a succession will be a breach of this Agreement and will
              entitle the Executive to compensation from Cinergy in the same
              amount and on the same terms as if the Executive were to terminate
              his employment for Good Reason after a Change in Control, except
              that, for purposes of implementing the foregoing, the date on
              which any such succession becomes effective will be deemed the
              Date of Termination.

11.    DEFINITIONS.  As used in this Agreement, the following terms, when
       capitalized, will have the following meanings:

       a.     1934 ACT.  "1934 Act" means the Securities Exchange Act of 1934.

       b.     ACCOUNTING FIRM.  "Accounting Firm" means an accounting firm that
              is



              designated as one of the five largest accounting firms in the
              United States (which may include Cinergy's independent auditors).

       c.     ACCRUED OBLIGATIONS.  "Accrued Obligations" means the accrued
              obligations described in Paragraph 5a(i).

       d.     AGREEMENT.  "Agreement" means this Amended and Restated Employment
              Agreement between Cinergy and the Executive.

       e.     AIP BENEFIT.  "AIP Benefit" means the Annual Incentive Plan
              benefit described in Subsection 3b.

       f.     ANNUAL BASE SALARY.  "Annual Base Salary" means the annual base
              salary payable to the Executive pursuant to Subsection 3a.

       g.     ANNUAL INCENTIVE PLAN.  "Annual Incentive Plan" means the Cinergy
              Corp. Annual Incentive Plan or any successor to that plan.

       h.     BOARD OF DIRECTORS.  "Board of Directors" means the board of
              directors of the Company.

       i.     CAUSE.  "Cause" has the meaning set forth in Subsection 4b.

       j.     CCT.  "CCT" means Cinergy Capital & Trading, Inc., an Indiana
              corporation.

       k.     CHANGE IN CONTROL.  "A Change in Control" will be deemed to have
              occurred if any of the following events occur, after the Effective
              Date:

              (i)    Any "person" or "group" (within the meaning of subsection
                     13(d) and paragraph 14(d)(2) of the 1934 Act) is or becomes
                     the beneficial owner (as defined in Rule l3d-3 under the
                     1934 Act), directly or indirectly, of securities of the
                     Company (not including in the securities beneficially owned
                     by such a Person any securities acquired directly from the
                     Company or its affiliates) representing more than twenty
                     percent (20%) of the combined voting power of the Company's
                     then outstanding securities, excluding any person who
                     becomes such a beneficial owner in connection with a
                     transaction described in Clause (1) of Paragraph (ii)
                     below; or

              (ii)   There is consummated a merger or consolidation of the
                     Company or any direct or indirect subsidiary of the Company
                     with any other corporation, other than (1) a merger or
                     consolidation that would result in the voting securities of
                     the Company outstanding immediately prior to that merger or
                     consolidation continuing to represent (either by remaining
                     outstanding or



                     by being converted into voting securities of the
                     surviving entity or its parent) at least sixty percent
                     (60%) of the combined voting power of the securities of
                     the Company or the surviving entity or its parent
                     outstanding immediately after the merger or
                     consolidation, or (2) a merger or consolidation effected
                     to implement a recapitalization of the Company (or
                     similar transaction) in which no person is or becomes
                     the beneficial owner, directly or indirectly, of
                     securities of the Company (not including in the
                     securities beneficially owned by such a Person any
                     securities acquired directly from the Company or its
                     affiliates other than in connection with the acquisition
                     by the Company or its affiliates of a business)
                     representing twenty percent (20%) or more of the
                     combined voting power of the Company's then outstanding
                     securities; or

              (iii)  During any period of two consecutive years, individuals who
                     at the beginning of that period constitute the Board of
                     Directors and any new director (other than a director whose
                     initial assumption of office is in connection with an
                     actual or threatened election contest, including but not
                     limited to a consent solicitation, relating to the election
                     of directors of the Company) whose appointment or election
                     by the Company's shareholders was approved or recommended
                     by a vote of at least two-thirds (2/3) of the directors
                     then still in office who either were directors at the
                     beginning of that period or whose appointment, election, or
                     nomination for election was previously so approved or
                     recommended cease for any reason to constitute a majority
                     of the Board of Directors; or

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

       l.     CHIEF EXECUTIVE OFFICER.  "Chief Executive Officer" means the
              chief executive officer of the Company.

       m.     CINERGY.  "Cinergy" means the Company, Cinergy Services, Inc., The
              Cincinnati Gas & Electric Company, and PSI Energy, Inc.

       n.     CODE.  "Code" means the Internal Revenue Code of 1986, as amended,
              and interpretive rules and regulations.



       o.     COMPANY.  "Company" means Cinergy Corp.

       p.     DATE OF TERMINATION.  "Date of Termination" means:

              (i)    if the Executive's employment is terminated by the Company
                     for Cause, or by the Executive with or without Good Reason,
                     the date of receipt of the Notice of Termination or any
                     later date specified in the notice, as the case may be;

              (ii)   if the Executive's employment is terminated by the Company
                     other than for Cause, thirty (30) days after the date on
                     which the Company notifies the Executive of the
                     termination; and

              (iii)  if the Executive's employment is terminated by reason of
                     death, the date of death.

       q.     EARNINGS.  "Earnings" means the Executive's "Earnings" as defined
              in the Pension Plan but without regard to the limitation of Code
              paragraph 401(a)(17).

       r.     EFFECTIVE DATE.  "Effective Date" means December 30, 1999.

       s.     EMPLOYMENT PERIOD.  "Employment Period" has the meaning set forth
              in Subsection 1b.

       t.     EXCISE TAX.  "Excise Tax" means any excise tax imposed by Code
              section 4999, together with any interest, penalties, additional
              tax or similar items that are incurred by the Executive with
              respect to the excise tax imposed by Code section 4999.

       u.     EXECUTIVE.  "Executive" means Michael J. Cyrus.

       v.     EXECUTIVE RETIREMENT PLANS.  The "Executive Retirement Plans" are
              the Pension Plan, the Supplemental Executive Retirement Plan, and
              the Cinergy Corp. Excess Pension Plan or any successor to those
              plans.

       w.     EXECUTIVE SUPPLEMENTAL LIFE PROGRAM.  "Executive Supplemental Life
              Program" means the Cinergy Corp. Executive Supplemental Life
              Program or any successor to that plan.

       x.     GOOD REASON.  "Good Reason" has the meaning set forth in
              Subsection 4d.

       y.     GROSS-UP PAYMENT.  "Gross-Up Payment" has the meaning set forth in
              Subsection



              5c.

       z.     HIGHEST AVERAGE EARNINGS.  "Highest Average Earnings" means the
              greater of (a) the Executive's "Highest Average Earnings" as
              defined in the Pension Plan (without regard to the limitation of
              Code paragraph 401(a)(17)) or (b) the Executive's Earnings for the
              12 consecutive calendar months immediately preceding his
              termination of employment with Cinergy.

       aa.    M&W PLANS.  "M&W Plans" has the meaning given in Subparagraph
              5a(ii)(3).

       bb.    LONG-TERM INCENTIVE PLAN.  "Long-Term Incentive Plan" means the
              long-term inventive plan implemented under the Cinergy Corp. 1996
              Long-Term Incentive Compensation Plan or any successor to that
              plan.

       cc.    NOTICE OF TERMINATION.  "Notice of Termination" has the meaning
              set forth in Subsection 4e.

       dd.    PAYMENT OR PAYMENTS.  "Payment" or "Payments" has the meaning set
              forth in Subsection 5c.

       ee.    PENSION PLAN.  "Pension Plan" means the Cinergy Corp. Non-Union
              Employees' Pension Plan or any successor to that plan.

       ff.    PERSON.  "Person" has the meaning set forth in paragraph 3(a)(9)
              of the 1934 Act, as modified and used in subsections 13(d) and
              14(d) of the 1934 Act; however, a Person will not include the
              following:

                     (i)    Cinergy or any of its subsidiaries;

                     (ii)   A trustee or other fiduciary holding securities
                     under an employee benefit plan of Cinergy or its
                     subsidiaries;

                     (iii)  An underwriter temporarily holding securities
                     pursuant to an offering of those securities; or

                     (iv)   A corporation owned, directly or indirectly, by
                     the stockholders of the Company in substantially the
                     same proportions as their ownership of stock of the
                     Company.

       gg.    PRIME RATE.  "Prime Rate" means the prime rate of interest
              promulgated by Citibank, N.A. and in effect as of the Date of
              Termination.

       hh.    RELOCATION PROGRAM.  "Relocation Program" means the Cinergy Corp.
              Relocation



              Program or any successor to that program, as in effect
              on the date of the Executive's termination of employment.

       ii.    RETIREES' DENTAL PLAN.  "Retirees' Dental Plan" means the Cinergy
              Corp. Retirees' Dental Plan or any successor to that plan.

       jj.    RETIREES' MEDICAL PLAN. "Retirees' Medical Plan" means the Cinergy
              Corp. Retirees' Medical Plan or any successor to that plan.

       kk.    SEVERANCE BENEFITS.  "Severance Benefits" means the payments and
              benefits payable to the Executive pursuant to Section 5.

       ll.    SPOUSE.  "Spouse" means the Executive's lawfully married spouse.
              For this purpose, common law marriage or a similar arrangement
              will not be recognized unless otherwise required by federal law.

       mm.    STOCK RELATED DOCUMENTS.  "Stock Related Documents" means the
              LTIP, the Cinergy Corp. Stock Option Plan, and the Value Creation
              Plan and any applicable administrative guidelines and written
              agreements relating to those plans.

       nn.    SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.  "Supplemental Executive
              Retirement Plan" means the Cinergy Corp. Supplemental Executive
              Retirement Plan or any successor to that plan.

       oo.    TARGET ANNUAL BONUS.  "Target Annual Bonus" has the meaning set
              forth in Subsection 3b.

       pp.    TARGET LTIP BONUS.  "Target LTIP Bonus" has the meaning set forth
              in Subsection 3b.

       qq.    TERMINATION.  "Termination" means the termination of the
              Executive's employment with Cinergy other than a termination by
              Cinergy for Cause.

       rr.    VALUE CREATION PLAN.  "Value Creation Plan" means the Value
              Creation Plan of the LTIP.

12.    MISCELLANEOUS.

       a.     This Agreement will be governed by and construed in accordance
              with the laws of the State of Ohio, without reference to
              principles of conflict of laws.  The captions of this Agreement
              are not part of its provisions and will have no force or effect.
              This Agreement may not be amended, modified, repealed, waived,
              extended, or discharged except by an agreement in writing signed
              by the party against whom



              enforcement of the amendment, modification, repeal, waiver,
              extension, or discharge is sought. Only the Chief Executive
              Officer or his designee will have authority on behalf of
              Cinergy to agree to amend, modify, repeal, waive, extend, or
              discharge any provision of this Agreement.

       b.     All notices and other communications under this Agreement will be
              in writing and will be given by hand delivery to the other party
              or by registered or certified mail, return receipt requested,
              postage prepaid, addressed as follows:




              IF TO THE EXECUTIVE:
              Michael J. Cyrus
              Cinergy Corp.
              221 East Fourth Street
              P 0. Box 960
              Cincinnati, Ohio 45201-0960

              IF TO CINERGY:
              Cinergy Corp.
              221 East Fourth Street
              P. 0. Box 960
              Cincinnati, Ohio  45201-0960
              Attn: Chief Executive Officer


              or to such other address as either party has furnished to the
              other in writing in accordance with this Agreement.  All notices
              and communications will be effective when actually received by the
              addressee.

       c.     The invalidity or unenforceability of any provision of this
              Agreement will not affect the validity or enforceability of any
              other provision of this Agreement.

       d.     Cinergy may withhold from any amounts payable under this Agreement
              such federal, state, or local taxes as are required to be withheld
              pursuant to any applicable law or regulation.

       e.     The Executive's or Cinergy's failure to insist upon strict
              compliance with any provision of this Agreement or the failure to
              assert any right the Executive or Cinergy may have under this
              Agreement, including without limitation the right of the Executive
              to terminate employment for Good Reason pursuant to Subsection 4c
              or the right of Cinergy to terminate the Executive's employment
              for Cause pursuant to



              Subsection 4b, will not be deemed to be a waiver of that
              provision or right or any other provision or right of this
              Agreement.

       f.     This instrument contains the entire agreement of the Executive and
              Cinergy with respect to the subject matter of this Agreement; and
              subject to any agreements evidencing stock option or restricted
              stock grants described in Subsection 3b and the Stock Related
              Documents, all promises, representations, understandings,
              arrangements, and prior agreements are merged into this Agreement
              and accordingly superseded.

       g.     This Agreement may be executed in counterparts, each of which will
              be deemed to be an original but all of which together will
              constitute one and the same instrument.

       h.     Cinergy and the Executive agree that Cinergy will be authorized to
              act for Cinergy with respect to all aspects pertaining to the
              administration and interpretation of this Agreement.

       IN WITNESS WHEREOF, the Executive and the Company have caused this
Agreement to be executed as of the Effective Date.

                                                 CINERGY CORP.; CINERGY
                                                 SERVICES, INC.; THE CINCINNATI
                                                 GAS & ELECTRIC COMPANY; AND PSI
                                                 ENERGY, INC.


                                          By:
                                             ---------------------------------
                                                 James E. Rogers
                                                 Vice Chairman and Chief
                                                 Executive Officer


                                                 EXECUTIVE



                                          ------------------------------------
                                                 Michael J. Cyrus

EX-10.I

                                AMENDED AND RESTATED
                                EMPLOYMENT AGREEMENT


       This AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered into
as of the 30th day of December, 1999 (the "Effective Date"), by and between
Cinergy and Jerome A. Vennemann (the "Executive").  This Agreement replaces and
supersedes any and all prior employment agreements between Cinergy and the
Executive.  The capitalized words and terms used throughout this Agreement are
defined in Section 11.


                                   RECITALS

       A.     The Executive is currently serving as Vice President and General
Counsel of Cinergy, and Cinergy desires to secure the continued employment of
the Executive in accordance with this Agreement.

       B.     The Executive is willing to continue to remain in the employ of
Cinergy, and any successor to Cinergy, on the terms and conditions set forth in
this Agreement.

       C.     The parties intend that this Agreement will replace and supersede
any and all prior employment agreements between Cinergy (or any component
company or business unit of Cinergy) and the Executive.


                                  AGREEMENT

       In consideration of the mutual premises, covenants and agreements set
forth below, the parties agree as follows:

1.     EMPLOYMENT AND TERM

       a.     Cinergy, and any successor to Cinergy, agree to employ the
              Executive, and the Executive agrees to remain in the employ of
              Cinergy, in accordance with the terms and provisions of this
              Agreement, for the Employment Period set forth in Subsection b.
              The parties agree that the Company will be responsible for
              carrying out all of the premises, covenants, and agreements of
              Cinergy set forth in this Agreement.

       b.     The Employment Period of this Agreement will commence as of the
              Effective Date and continue until December 31, 2002; provided
              that, commencing on December 31, 2000, and on each subsequent
              December 31, the Employment Period will be extended for one (1)
              additional year unless either party gives the other party



              written notice not to extend this Agreement at least ninety (90)
              days before the extension would otherwise become effective.

2.     DUTIES AND POWERS OF EXECUTIVE

              a.     POSITION.  The Executive will serve Cinergy as Vice
              President and General Counsel and he will have such
              responsibilities, duties, and authority as are customary for
              someone of that position, and such additional duties, consistent
              with his position, as may be assigned to him from time to time
              during the Employment Period by the Board of Directors or the
              Chief Executive Officer.

              b.     PLACE OF PERFORMANCE.  In connection with the Executive's
              employment, the Executive will be based at the principal executive
              offices of Cinergy, 221 East Fourth Street, Cincinnati, Ohio, and,
              except for required business travel to an extent substantially
              consistent with the present business travel obligations of Cinergy
              executives who have positions of authority comparable to that of
              the Executive, the Executive will not be required to relocate to a
              new principal place of business that is more than thirty (30)
              miles from Cinergy's current principal executive offices.

3.     COMPENSATION.  The Executive will receive the following compensation for
       his services under this Agreement.

              a.     SALARY.  The Executive's Annual Base Salary, payable not
              less often than semi-monthly, will be at the annual rate of not
              less than $152,272.00.  The Board of Directors or its designee
              may, from time to time, increase the Annual Base Salary as the
              Board of Directors deems to be necessary or desirable, including
              without limitation adjustments to reflect increases in the cost of
              living. Any increase in the Annual Base Salary will not serve to
              limit or reduce any other obligation of Cinergy under this
              Agreement.  The Annual Base Salary will not be reduced except for
              across-the-board salary reductions similarly affecting all Cinergy
              management personnel.  If Annual Base Salary is increased during
              the Employment Period, then the increased salary will be the
              Annual Base Salary for all purposes under this Agreement.

       b.     RETIREMENT, INCENTIVE, WELFARE BENEFIT PLANS AND OTHER
              BENEFITS.  During the Employment Period, the Executive will be
              eligible, and Cinergy will take all necessary action to cause the
              Executive to become eligible, to participate in all short-term and
              long-term incentive, stock option, restricted stock, performance
              unit, savings, retirement and welfare plans, practices, policies
              and programs applicable generally to employees and/or other senior
              executives of Cinergy who are considered Tier II executives for
              compensation purposes, except with respect to any plan, practice,
              policy or program to which the Executive has waived his



              rights in writing.

              If the Executive retires after reaching age 55, the Executive will
              be entitled and fully vested in a supplemental retirement benefit
              equal to the difference between (1) his total benefit under all
              Executive Retirement Plans, and (2) 60% of the Executive's Highest
              Average Earnings. The form, timing, and method of payment of the
              supplemental retirement benefit payable under this Paragraph will
              be the same as those elected by the Executive under the Pension
              Plan.  If the Executive dies after reaching age 55 but prior to
              his retirement, and if his Spouse, on the date of his death, is
              living on the date the first installment of the supplemental
              retirement benefit would be payable under this Paragraph, the
              Spouse will be entitled to receive the supplemental retirement
              benefit as a Spouse's benefit.  The form, timing, and method of
              payment of any Spouse's benefit under this Paragraph will be the
              same as those applicable to the Spouse under the Pension Plan.

              Upon his retirement on or after having attained age fifty (50),
              the Executive will be eligible for comprehensive medical and
              dental insurance pursuant to the terms of the Retirees' Medical
              Plan and the Retirees' Dental Plan.  The Executive, however, will
              receive the full subsidy provided by Cinergy to retirees for
              purposes of determining the amount of monthly premiums due from
              the Executive.

              The Executive will be a participant in the Annual Incentive Plan,
              and the Executive will be paid pursuant to that plan an annual
              benefit of up to sixty percent (60%) of the Executive's Annual
              Base Salary, with a target of no less than forty percent (40%) of
              the Executive's Annual Base Salary (the "Target Annual Bonus").

              The Executive will be a participant in the Long-Term Incentive
              Plan (the "LTIP"), and the Executive's annualized target award
              opportunity under the LTIP will be equal to no less than seventy
              percent (70%) of his Annual Base Salary (the "Target LTIP Bonus").

       c.     FRINGE BENEFITS AND PERQUISITES.  During the Employment Period,
              the Executive will be entitled to the following additional fringe
              benefits:

              (i)    Cinergy will furnish to the Executive an automobile and
                     will pay all of the related expenses for gasoline,
                     insurance, maintenance, and repairs.

              (ii)   Cinergy will pay the initiation fee and the annual dues,
                     assessments, and other membership charges of the Executive
                     for membership in a country club selected by the Executive.



              (iii)  Cinergy will provide paid vacation for four (4) weeks per
                     year (or longer if permitted by Cinergy's policy).

              (iv)   Cinergy will furnish to the Executive annual financial
                     planning and tax preparation services.  In addition, the
                     Executive will be entitled to receive such other fringe
                     benefits in accordance with Cinergy plans, practices,
                     programs, and policies in effect from time to time,
                     commensurate with his position and at least comparable to
                     those received by other Cinergy senior executives.

       d.     EXPENSES.  Cinergy agrees to reimburse the Executive for all
              expenses, including those for travel and entertainment, properly
              incurred by him in the performance of his duties under this
              Agreement in accordance with the policies established from time to
              time by the Board of Directors.

       e.     RELOCATION BENEFITS.  Following termination of the Executive's
              employment for any reason (other than death), the Executive will
              be entitled to reimbursement from Cinergy for the reasonable costs
              of relocating from the Cincinnati, Ohio, area to a new primary
              residence in a manner that is consistent with the terms of the
              Relocation Program.

4.     TERMINATION OF EMPLOYMENT

             a.     DEATH.  The Executive's employment will terminate
             automatically upon the Executive's death during the
             Employment Period.

             b.     BY CINERGY FOR CAUSE.  Cinergy may terminate the Executive's
             employment during the Employment Period for Cause.  For purposes of
             this Employment Agreement, "Cause" means the following:

             (i)    The willful and continued failure by the Executive to
                    substantially perform the Executive's duties with Cinergy
                    (other than any such failure resulting from the
                    Executive's incapacity due to physical or mental illness)
                    after the Board of Directors or the Chief Executive
                    Officer has delivered to the Executive a written demand
                    for substantial performance, which demand specifically
                    identifies the manner in which the Executive has not
                    substantially performed his duties.  This event will
                    constitute Cause even if the Executive issues a Notice of
                    Termination for Good Reason pursuant to Subsection 4d
                    after the Board of Directors or Chief Executive Officer
                    delivers a written demand for substantial performance.

             (ii)   The breach by the Executive of the confidentiality
                    provisions set forth in Section 9.



             (iii)  The conviction of the Executive for the commission of a
                    felony, including the entry of a guilty or nolo
                    contendere plea, or any willful or grossly negligent
                    action or inaction by the Executive that has a materially
                    adverse effect on Cinergy.  For purposes of this
                    definition of Cause, no act, or failure to act, on the
                    Executive's part will be deemed "willful" unless it is
                    done, or omitted to be done, by the Executive in bad
                    faith and without reasonable belief that the Executive's
                    act, or failure to act, was in the best interest of
                    Cinergy.

       c.    BY CINERGY WITHOUT CAUSE.  Cinergy may, upon at least 30 days
             advance written notice to the Executive, terminate the Executive's
             employment during the Employment Period for a reason other than
             Cause, but the obligations placed upon Cinergy in Section 5 will
             apply.

       d.    BY THE EXECUTIVE FOR GOOD REASON.  The Executive may terminate his
             employment during the Employment Period for Good Reason.  For
             purposes of this Agreement, "Good Reason" means the following:

             (i)    A reduction in the Executive's Annual Base Salary, except
                    for across-the-board salary reductions similarly affecting
                    all Cinergy management personnel, or a reduction in any
                    other benefit or payment described in Section 3 of this
                    Agreement, except for changes to the employee benefits
                    programs affecting all Cinergy management personnel,
                    provided that those changes (either individually or in the
                    aggregate) will not result in a material adverse change
                    with respect to the benefits to which the Executive was
                    entitled as of the Effective Date.

             (ii)   The material reduction without his consent of the
                    Executive's title, authority, duties, or responsibilities
                    from those in effect immediately prior to the reduction or
                    a material adverse change in the Executive's reporting
                    responsibilities.

             (iii)  Any breach by Cinergy of any other material provision of
                    this Agreement (including but not limited to the place of
                    performance as specified in Subsection 2b).

             (iv)   The Executive's disability due to physical or mental
                    illness or injury that precludes the Executive from
                    performing any job for which he is qualified and able to
                    perform based upon his education, training or experience.

             (v)    A failure by the Company to require any successor entity to
                    the Company specifically to assume all of the Company's
                    obligations to the Executive



                    under this Agreement.

       e.    BY THE EXECUTIVE WITHOUT GOOD REASON.  The Executive may terminate
             his employment without Good Reason upon prior written notice to
             the Company.

       f.    NOTICE OF TERMINATION.  Any termination of the Executive's
             employment by Cinergy or by the Executive during the Employment
             Period (other than a termination due to the Executive's death)
             will be communicated by a written Notice of Termination to the
             other party to this Agreement in accordance with Subsection 12b.
             For purposes of this Agreement, a "Notice of Termination" means a
             written notice that specifies the particular provision of this
             Agreement relied upon and that sets forth in reasonable detail the
             facts and circumstances claimed to provide a basis for terminating
             the Executive's employment under the specified provision.  The
             failure by the Executive or Cinergy to set forth in the Notice of
             Termination any fact or circumstance that contributes to a showing
             of Good Reason or Cause will not waive any right of the Executive
             or Cinergy under this Agreement or preclude the Executive or
             Cinergy from asserting that fact or circumstance in enforcing
             rights under this Agreement.

5.     OBLIGATIONS OF CINERGY UPON TERMINATION.

       a.    CERTAIN TERMINATIONS.

             (i)    If a Termination occurs during the Employment Period,
                    Cinergy will pay to the Executive a lump sum amount, in
                    cash, equal to the sum of the following Accrued
                    Obligations:

                    (1)    the Executive's Annual Base Salary through the Date
                           of Termination to the extent not previously paid;

                    (2)    an amount equal to the AIP Benefit for the fiscal
                           year that includes the Date of Termination
                           multiplied by a fraction, the numerator of which is
                           the number of days from the beginning of that fiscal
                           year to and including the Date of Termination and
                           the denominator of which is three hundred and
                           sixty-five (365).  The AIP Benefit will be
                           determined using a percentage determined by the
                           Chief Executive Officer, in his discretion, up to
                           the maximum percentage specified in Subsection 3b,
                           but no less than the Target Annual Bonus.

                    (3)    any compensation previously deferred by the
                           Executive (together with any accrued interest or
                           earnings) and any accrued vacation pay, in each case
                           to the extent not previously paid.



                    The Accrued Obligations described in this Paragraph 5a(i)
                    will be paid within thirty (30) days after the Date of
                    Termination.  These Accrued Obligations are payable to the
                    Executive regardless of whether a Change in Control has
                    occurred.

             (ii)   Prior to the occurrence of a Change in Control, and in the
                    event of (A) a Termination other than by reason of the
                    Executive's death, or (B) the Executive's termination of
                    his employment during the Employment Period for Good
                    Reason, Cinergy will pay the Accrued Obligations, and
                    Cinergy will have the following obligations:

                    (1)    Cinergy will pay to the Executive a lump sum amount,
                           in cash, equal to three (3) times the sum of the
                           Annual Base Salary and the AIP Benefit.  For this
                           purpose, the Annual Base Salary will be at the rate
                           in effect at the time Notice of Termination is given
                           (without giving effect to any reduction in Annual
                           Base Salary, if any, prior to the termination.  The
                           AIP Benefit will be determined using a percentage
                           determined by the Chief Executive Officer, in his
                           discretion, which will not be less than the
                           Executive's annual target percentage for the fiscal
                           year in which the Termination occurs and will not be
                           greater than the maximum percentage specified in
                           Subsection 3b.  This lump sum will be paid within
                           thirty (30) days of the Date of Termination.

                    (2)    If the Executive terminates employment prior to
                           reaching age 50, Cinergy will pay to the Executive
                           the value of all deferred compensation amounts
                           previously deferred by the Executive whether or not
                           they are otherwise currently payable.  Cinergy will
                           also pay to the Executive the present value
                           (discounted at the Prime Rate) of all amounts to
                           which the Executive would have been entitled had he
                           remained in employment with Cinergy until the end of
                           the Employment Period under the Executive
                           Supplemental Life Program.

                           If the Executive terminates employment on or after
                           reaching age 50, Cinergy will pay to the Executive
                           the value of all deferred compensation amounts and
                           all executive life insurance benefits whether or not
                           they are otherwise currently vested or payable.
                           Payment will be made in accordance with the terms of
                           the applicable plan or program.

                    (3)    Except as provided under Clauses (A) and (B) below,
                           Cinergy will



                           continue, until the end of the Employment Period,
                           medical and dental benefits to the Executive and/or
                           the Executive's family at least equal to those that
                           would have been provided if the Executive's
                           employment had not been terminated (excluding
                           benefits to which the Executive has waived his
                           rights in writing).  The benefits described in the
                           preceding sentence will be in accordance with the
                           medical and welfare benefit plans, practices,
                           programs, or policies of Cinergy (the "M&W Plans")
                           as then currently in effect and applicable generally
                           to other Cinergy senior executives and their
                           families.

                                 (A)    If, as of the Executive's Date of
                                 Termination, the Executive meets the
                                 eligibility requirements for Cinergy's
                                 retiree medical and welfare benefit plans,
                                 the provision of those retiree medical and
                                 welfare benefit plans to the Executive will
                                 satisfy Cinergy's obligation under this
                                 Subparagraph 5a(ii)(3).

                                 (B)    If, as of the Executive's Date of
                                 Termination, the provision to the Executive
                                 of the M&W Plan benefits described in this
                                 Subparagraph 5a(ii)(3) would either (1)
                                 violate the terms of the M&W Plans or (2)
                                 violate any of the Code's nondiscrimination
                                 requirements applicable to the M&W Plans,
                                 then Cinergy, in its sole discretion, may
                                 elect to pay the Executive, in lieu of the
                                 M&W Plan benefits described under this
                                 Subparagraph 5a(ii) (3), a lump sum cash
                                 payment equal to the total monthly premiums
                                 that would have been paid by Cinergy for the
                                 Executive under the M&W Plans from the Date
                                 of Termination through the end of the
                                 Employment Period.  Nothing in this Clause
                                 will affect the Executive's right to elect
                                 COBRA continuation coverage under a M&W Plan
                                 in accordance with applicable law.

                                 (C)    If the Executive becomes employed by
                                 another employer and is eligible to receive
                                 medical or other welfare benefits under
                                 another employer-provided plan, any benefits
                                 provided to the Executive under the M&W
                                 Plans will be secondary to those provided
                                 under the other employer-provided plan
                                 during the Executive's applicable period of
                                 eligibility.

                    (4)    Ownership of the automobile assigned to the
                           Executive by Cinergy will be



                           transferred to the Executive within 30 days of the
                           Date of Termination.  The effect of this transfer
                           will be grossed up for federal and state income
                           taxes as soon as administratively feasible after
                           the transfer is effective.

                    (5)    Cinergy will provide tax counseling services
                           through an agency selected by the Executive, not
                           to exceed Fifteen Thousand Dollars ($15,000.00) in
                           cost.

             (iii)  In the event of Termination by Cinergy or by the Executive
                    for Good Reason upon or during the twenty-four (24) month
                    period after the occurrence of a Change in Control, then in
                    lieu of any further salary payments to the Executive for
                    periods subsequent to the Date of Termination and in lieu
                    of any other benefits payable pursuant to Paragraph 5a(ii),
                    Cinergy will have the following obligations:

                    (1)    Cinergy will pay to the Executive a lump sum
                           severance payment, in cash, equal to the greater of:

                           (A)    the present value of all amounts and benefits
                                  that would have been due under Paragraph
                                  5a(ii), excluding Subparagraphs 5a(ii)(3),
                                  5a(ii)(4), and 5a(ii)(5), or

                           (B)    three (3) times the sum of (x) the higher of
                                  the Executive's Annual Base Salary in effect
                                  immediately prior to the occurrence of the
                                  event or circumstance upon which the Notice
                                  of Termination is based or in effect
                                  immediately prior to the Change in Control,
                                  and (y) the higher of the amount paid to the
                                  Executive pursuant to all annual incentive
                                  compensation or bonus plans or programs
                                  maintained by Cinergy in the year preceding
                                  that in which the Date of Termination occurs
                                  or in the year preceding that in which the
                                  Change in Control occurs; and

                    (2)    For a thirty-six (36) month period after the Date of
                           Termination, Cinergy will arrange to provide the
                           Executive with life, disability, accident, and
                           health insurance benefits substantially similar to
                           those that the Executive is receiving immediately
                           prior to the Notice of Termination (without giving
                           effect to any reduction in those benefits subsequent
                           to a Change in Control that constitutes Good
                           Reason), except for any benefits that were waived by
                           the Executive in writing.  If Cinergy arranges to
                           provide the Executive with life, disability,
                           accident, and health insurance benefits, those
                           benefits



                           will be reduced to the extent comparable benefits
                           are actually received by or made available to the
                           Executive without cost during the thirty-six (36)
                           month period following the Executive's Date of
                           Termination.  The Executive must report to Cinergy
                           any such benefits that he actually receives.  In
                           lieu of the benefits described in the preceding
                           sentences, Cinergy, in its sole discretion, may
                           elect to pay to the Executive a lump sum cash
                           payment equal to thirty-six (36) times the monthly
                           premiums that would have been paid by Cinergy to
                           provide those benefits to the Executive.  Nothing in
                           this Subparagraph 5a(iii)(2) will affect the
                           Executive's right to elect COBRA continuation
                           coverage in accordance with applicable law.

             (3)    Ownership of the automobile assigned to the Executive by
                    Cinergy will be transferred to the Executive within 30 days
                    of the Date of Termination.  The effect of this transfer
                    will be grossed up for federal and state income taxes as
                    soon as administratively feasible after the transfer is
                    effective.

             (4)    Cinergy will provide tax counseling services through an
                    agency selected by the Executive, not to exceed Fifteen
                    Thousand Dollars ($15,000.00) in cost.

                    For purposes of this Paragraph (iii), the Executive will
                    be deemed to have incurred a Termination following a
                    Change in Control if the Executive's employment is
                    terminated prior to a Change in Control, without Cause at
                    the direction of a Person who has entered into an
                    agreement with Cinergy, the consummation of which will
                    constitute a Change in Control, or if the Executive
                    terminates his employment for Good Reason prior to a
                    Change in Control if the circumstances or event that
                    constitutes Good Reason occurs at the direction of such a
                    Person.

       b.    TERMINATION BY CINERGY FOR CAUSE OR BY THE EXECUTIVE OTHER THAN
             FOR GOOD REASON.  Subject to the provisions of Section 7, if the
             Executive's employment is terminated for Cause during the
             Employment Period, or if the Executive terminates employment
             during the Employment Period other than a termination for Good
             Reason, Cinergy will have no further obligations to the Executive
             under this Agreement other than the obligation to pay to the
             Executive the Accrued Obligations, plus any other earned but
             unpaid compensation, in each case to the extent not previously
             paid.

       c.    CERTAIN TAX CONSEQUENCES.

             (i)    In the event that any Severance Benefits paid or payable to
                    the Executive



                    or for his benefit pursuant to the terms of this Agreement
                    or otherwise in connection with, or arising out of, his
                    employment with Cinergy or a change in ownership or
                    effective control of Cinergy or of a substantial portion of
                    its assets (a "Payment" or "Payments") would be subject to
                    any Excise Tax, then the Executive will be entitled to
                    receive an additional payment (a "Gross-Up Payment") in an
                    amount such that after payment by the Executive of all
                    taxes (including any interest, penalties, additional tax,
                    or similar items imposed with respect thereto and the
                    Excise Tax), including any Excise Tax imposed upon the
                    Gross-Up Payment, the Executive retains an amount of the
                    Gross-Up Payment equal to the Excise Tax imposed upon the
                    Payments.

             (ii)   An initial determination as to whether a Gross-Up Payment
                    is required pursuant to this Agreement and the amount of
                    that Gross-Up Payment will be made at Cinergy's expense by
                    an Accounting Firm selected by the Executive and reasonably
                    acceptable to Cinergy.  The Accounting Firm will provide
                    its determination, together with detailed supporting
                    calculations and documentation, to Cinergy and the
                    Executive within 10 days after the Date of Termination, or
                    such other time as requested by Cinergy or by the
                    Executive, and if the Accounting Firm determines that no
                    Excise Tax is payable by the Executive with respect to a
                    Payment or Payments, it will furnish the Executive with an
                    opinion reasonably acceptable to the Executive that no
                    Excise Tax will be imposed with respect to any such Payment
                    or Payments.  Within 10 days after the Accounting Firm
                    delivers its determination to the Executive, the Executive
                    will have the right to dispute the determination.  The
                    Gross-Up Payment, if any, as determined pursuant to this
                    Subsection 5c will be paid by Cinergy to the Executive
                    within five days of the receipt of the Accounting Firm's
                    determination.  The existence of a dispute will not in any
                    way affect the Executive's right to receive the Gross-Up
                    Payment in accordance with the determination.  If there is
                    no dispute, the determination will be binding, final, and
                    conclusive upon Cinergy and the Executive.  If there is a
                    dispute, then Cinergy and the Executive will together
                    select a second Accounting Firm, which will review the
                    determination and the Executive's basis for the dispute and
                    then will render its own determination, which will be
                    binding, final, and conclusive on Cinergy and on the
                    Executive.  Cinergy will bear all costs associated with
                    that determination, unless the determination is not greater
                    than the initial determination, in which case all such
                    costs will be borne by the Executive.

             (iii)  The value of any non-cash benefits or any deferred payment
                    or benefit paid or payable to the Executive will be
                    determined in accordance with the principles of Code
                    paragraphs 280G(d)(3) and (4).  For purposes of



                    determining the amount of the Gross-Up Payment, the
                    Executive will be deemed to pay federal income taxes at the
                    highest marginal rate of federal income taxation in the
                    calendar year in which the Gross-Up Payment is to be made
                    and applicable state and local income taxes at the highest
                    marginal rate of taxation in the state and locality of the
                    Executive's residence on the Date of Termination, net of
                    the maximum reduction in federal income taxes that would be
                    obtained from deduction of those state and local taxes.

             (iv)   Notwithstanding anything contained in this Agreement to the
                    contrary, in the event that, according to the Accounting
                    Firm's determination, an Excise Tax will be imposed on any
                    Payment or Payments, Cinergy will pay to the applicable
                    government taxing authorities as Excise Tax withholding,
                    the amount of the Excise Tax that Cinergy has actually
                    withheld from the Payment or Payments in according with
                    law.

       d.    VALUE CREATION PLAN AND STOCK OPTIONS.  Upon the Executive's
             termination of employment for any reason, and except as otherwise
             provided in this Agreement, the Executive's entitlement to
             restricted shares and performance shares under the Value Creation
             Plan and any stock options granted under the Stock Option Plan or
             the LTIP will be determined under the terms of the appropriate
             plan and any applicable administrative guidelines and written
             agreements.

       e.    OTHER FEES AND EXPENSES.  Cinergy will also pay to the Executive
             all legal fees and expenses incurred by the Executive in
             successfully disputing a Termination that entitles the Executive
             to Severance Benefits.  Payment will be made within five (5)
             business days after delivery of the Executive's written request
             for payment accompanied by such evidence of fees and expenses
             incurred as Cinergy reasonably may require.

6.     NON-EXCLUSIVITY OF RIGHTS.  Nothing in this Agreement will prevent or
       limit the Executive's continuing or future participation in any benefit,
       plan, program, policy, or practice provided by Cinergy and for which the
       Executive may qualify, except with respect to any benefit to which the
       Executive has waived his rights in writing or any plan, program, policy,
       or practice that expressly excludes the Executive from participation.  In
       addition, nothing in this Agreement will limit or otherwise affect the
       rights the Executive may have under any other contract or agreement with
       Cinergy entered into after the Effective Date.  Amounts that are vested
       benefits or that the Executive is otherwise entitled to receive under any
       benefit, plan, program, policy, or practice of, or any contract or
       agreement entered into after the Effective Date with Cinergy, at or
       subsequent to the Date of Termination, will be payable in accordance with
       that benefit, plan, program, policy or practice, or that contract or
       agreement, except as explicitly modified by this Agreement.




7.     FULL SETTLEMENT:  MITIGATION.  Cinergy's obligation to make the payments
       provided for in this Agreement and otherwise to perform its obligations
       under this Agreement will not be affected by any set-off, counterclaim,
       recoupment, defense, or other claim, right, or action that Cinergy may
       have against the Executive or others.  In no event will the Executive be
       obligated to seek other employment or take any other action by way of
       mitigation of the amounts (including amounts for damages for breach)
       payable to the Executive under any of the provisions of this Agreement
       and, except as provided in Subparagraphs 5a(ii)(3) and 5a(iii)(2), those
       amounts will not be reduced simply because the Executive obtains other
       employment.  If the Executive finally prevails on the substantial claims
       brought with respect to any dispute between Cinergy and the Executive as
       to the interpretation, terms, validity, or enforceability of (including
       any dispute about the amount of any payment pursuant to) this Agreement,
       Cinergy agrees to pay all reasonable legal fees and expenses that the
       Executive may reasonably incur as a result of that dispute.

8.     ARBITRATION.  The parties agree that any dispute, claim, or controversy
       based on common law, equity, or any federal, state, or local statute,
       ordinance, or regulation (other than workers' compensation claims)
       arising out of or relating in any way to the Executive's employment, the
       terms, benefits, and conditions of employment, or concerning this
       Agreement or its termination and any resulting termination of employment,
       including whether such a dispute is arbitrable, shall be settled by
       arbitration.  This agreement to arbitrate includes but is not limited to
       all claims for any form of illegal discrimination, improper or unfair
       treatment or dismissal, and all tort claims.  The Executive will still
       have a right to file a discrimination charge with a federal or state
       agency, but the final resolution of any discrimination claim will be
       submitted to arbitration instead of a court or jury.  The arbitration
       proceeding will be conducted under the employment dispute resolution
       arbitration rules of the American Arbitration Association in effect at
       the time a demand for arbitration under the rules is made.  The decision
       of the arbitrator(s), including determination of the amount of any
       damages suffered, will be exclusive, final, and binding on all parties,
       their heirs, executors, administrators, successors and assigns.  Each
       party will bear its own expenses in the arbitration for arbitrators' fees
       and attorneys' fees, for its witnesses, and for other expenses of
       presenting its case.  Other arbitration costs, including administrative
       fees and fees for records or transcripts, will be borne equally by the
       parties.  Notwithstanding anything in this Section to the contrary, if
       the Executive prevails with respect to any dispute submitted to
       arbitration under this Section, Cinergy will reimburse or pay all legal
       fees and expenses that the Executive may reasonably incur as a result of
       the dispute as required by Section 7.

9.     CONFIDENTIAL INFORMATION.  The Executive will hold in a fiduciary
       capacity for the benefit of Cinergy, as well as all of Cinergy's
       successors and assigns, all secret, confidential information, knowledge,
       or data relating to Cinergy, and its affiliated businesses, that the
       Executive obtains during the Executive's employment by Cinergy or any of
       its affiliated companies, and that has not been or subsequently becomes
       public knowledge (other than by acts by the Executive or representatives
       of the Executive in




       violation of this Agreement).  During the Employment Period and
       thereafter, the Executive will not, without Cinergy's prior written
       consent or as may otherwise by required by law or legal process,
       communicate or divulge any such information, knowledge, or data to
       anyone other than Cinergy and those designated by it.  The Executive
       understands that during the Employment Period, Cinergy may be required
       from time to time to make public disclosure of the terms or existence
       of the Executive's employment relationship to comply with various laws
       and legal requirements.  In addition to all other remedies available
       to Cinergy in law and equity, this Agreement is subject to termination
       by Cinergy for Cause under Section 4b in the event the Executive
       violates any provision of this Section.

10.    SUCCESSORS.

       a.     This Agreement is personal to the Executive and, without Cinergy's
              prior written consent, cannot be assigned by the Executive
              otherwise than by will or the laws of descent and distribution.
              This Agreement will inure to the benefit of and be enforceable by
              the Executive's legal representatives.

       b.     This Agreement will inure to the benefit of and be binding upon
              Cinergy and its successors and assigns.

       c.     Cinergy will require any successor (whether direct or indirect, by
              purchase, merger, consolidation or otherwise) to all or
              substantially all of the business and/or assets of Cinergy to
              assume expressly and agree to perform this Agreement in the same
              manner and to the same extent that Cinergy would be required to
              perform it if no succession had taken place.  Cinergy's failure to
              obtain such an assumption and agreement prior to the effective
              date of a succession will be a breach of this Agreement and will
              entitle the Executive to compensation from Cinergy in the same
              amount and on the same terms as if the Executive were to terminate
              his employment for Good Reason after a Change in Control, except
              that, for purposes of implementing the foregoing, the date on
              which any such succession becomes effective will be deemed the
              Date of Termination.

11.    DEFINITIONS.  As used in this Agreement, the following terms, when
       capitalized, will have the following meanings:

       a.     1934 ACT.  "1934 Act" means the Securities Exchange Act of 1934.

       b.     ACCOUNTING FIRM.  "Accounting Firm" means an accounting firm that
              is designated as one of the five largest accounting firms in the
              United States (which may include Cinergy's independent auditors).

       c.     ACCRUED OBLIGATIONS.  "Accrued Obligations" means the accrued
              obligations described in Paragraph 5a(i).





       d.     AGREEMENT.  "Agreement" means this Amended and Restated Employment
              Agreement between Cinergy and the Executive.

       e.     AIP BENEFIT.  "AIP Benefit" means the Annual Incentive Plan
              benefit described in Subsection 3b.

       f.     ANNUAL BASE SALARY.  "Annual Base Salary" means the annual base
              salary payable to the Executive pursuant to Subsection 3a.

       g.     ANNUAL INCENTIVE PLAN.  "Annual Incentive Plan" means the Cinergy
              Corp. Annual Incentive Plan or any successor to that plan.

       h.     BOARD OF DIRECTORS.  "Board of Directors" means the board of
              directors of the Company.

       i.     CAUSE.  "Cause" has the meaning set forth in Subsection 4b.

       j.     CHANGE IN CONTROL.  "A Change in Control" will be deemed to have
              occurred if any of the following events occur, after the Effective
              Date:

              (i)    Any "person" or "group" (within the meaning of subsection
                     13(d) and paragraph 14(d)(2) of the 1934 Act) is or becomes
                     the beneficial owner (as defined in Rule l3d-3 under the
                     1934 Act), directly or indirectly, of securities of the
                     Company (not including in the securities beneficially owned
                     by such a Person any securities acquired directly from the
                     Company or its affiliates) representing more than twenty
                     percent (20%) of the combined voting power of the Company's
                     then outstanding securities, excluding any person who
                     becomes such a beneficial owner in connection with a
                     transaction described in Clause (1) of Paragraph (ii)
                     below; or

              (ii)   There is consummated a merger or consolidation of the
                     Company or any direct or indirect subsidiary of the Company
                     with any other corporation, other than (1) a merger or
                     consolidation that would result in the voting securities of
                     the Company outstanding immediately prior to that merger or
                     consolidation continuing to represent (either by remaining
                     outstanding or by being converted into voting securities of
                     the surviving entity or its parent) at least sixty percent
                     (60%) of the combined voting power of the securities of the
                     Company or the surviving entity or its parent outstanding
                     immediately after the merger or consolidation, or (2) a
                     merger or consolidation effected to implement a
                     recapitalization of the Company (or similar transaction) in
                     which no person is or becomes the beneficial owner,
                     directly or indirectly, of securities of the Company (not
                     including in the





                     securities beneficially owned by such a Person any
                     securities acquired directly from the Company or its
                     affiliates other than in connection with the acquisition
                     by the Company or its affiliates of a business)
                     representing twenty percent (20%) or more of the
                     combined voting power of the Company's then outstanding
                     securities; or

              (iii)  During any period of two consecutive years, individuals who
                     at the beginning of that period constitute the Board of
                     Directors and any new director (other than a director whose
                     initial assumption of office is in connection with an
                     actual or threatened election contest, including but not
                     limited to a consent solicitation, relating to the election
                     of directors of the Company) whose appointment or election
                     by the Company's shareholders was approved or recommended
                     by a vote of at least two-thirds (2/3) of the directors
                     then still in office who either were directors at the
                     beginning of that period or whose appointment, election, or
                     nomination for election was previously so approved or
                     recommended cease for any reason to constitute a majority
                     of the Board of Directors; or

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

       k.     CHIEF EXECUTIVE OFFICER.  "Chief Executive Officer" means the
              chief executive officer of the Company.

       l.     CINERGY.  "Cinergy" means the Company, Cinergy Services, Inc., The
              Cincinnati Gas & Electric Company, and PSI Energy, Inc.

       m.     CODE.  "Code" means the Internal Revenue Code of 1986, as amended,
              and interpretive rules and regulations.

       n.     COMPANY.  "Company" means Cinergy Corp.

       o.     DATE OF TERMINATION.  "Date of Termination" means:

              (i)    if the Executive's employment is terminated by the Company
                     for Cause, or by the Executive with or without Good Reason,
                     the date of receipt of the





                     Notice of Termination or any later date specified in the
                     notice, as the case may be;

              (ii)   if the Executive's employment is terminated by the Company
                     other than for Cause, thirty (30) days after the date on
                     which the Company notifies the Executive of the
                     termination; and

              (iii)  if the Executive's employment is terminated by reason of
                     death, the date of death.

       p.     EARNINGS.  "Earnings" means the Executive's "Earnings" as defined
              in the Pension Plan but without regard to the limitation of Code
              paragraph 401(a)(17).

       q.     EFFECTIVE DATE.  "Effective Date" means December 30, 1999.

       r.     EMPLOYMENT PERIOD.  "Employment Period" has the meaning set forth
              in Subsection 1b.

       s.     EXCISE TAX.  "Excise Tax" means any excise tax imposed by Code
              section 4999, together with any interest, penalties, additional
              tax or similar items that are incurred by the Executive with
              respect to the excise tax imposed by Code section 4999.

       t.     EXECUTIVE.  "Executive" means Jerry Vennemann.

       u.     EXECUTIVE RETIREMENT PLANS.  The "Executive Retirement Plans" are
              the Pension Plan, the Supplemental Executive Retirement Plan, and
              the Cinergy Corp. Excess Pension Plan or any successor to those
              plans.

       v.     EXECUTIVE SUPPLEMENTAL LIFE PROGRAM.  "Executive Supplemental Life
              Program" means the Cinergy Corp. Executive Supplemental Life
              Program or any successor to that plan.

       w.     GOOD REASON.  "Good Reason" has the meaning set forth in
              Subsection 4d.

       x.     GROSS-UP PAYMENT.  "Gross-Up Payment" has the meaning set forth in
              Subsection 5c.

       y.     HIGHEST AVERAGE EARNINGS.  "Highest Average Earnings" means the
              greater of (a) the Executive's "Highest Average Earnings" as
              defined in the Pension Plan (without regard to the limitation of
              Code paragraph 401(a)(17)) or (b) the Executive's Earnings for the
              12 consecutive calendar months immediately preceding his
              termination of employment with Cinergy.





       z.     M&W PLANS.  "M&W Plans" has the meaning given in Subparagraph
              5a(ii)(3).

       aa.    LONG-TERM INCENTIVE PLAN.  "Long-Term Incentive Plan" means the
              long-term inventive plan implemented under the Cinergy Corp. 1996
              Long-Term Incentive Compensation Plan or any successor to that
              plan.

       bb.    NOTICE OF TERMINATION.  "Notice of Termination" has the meaning
              set forth in Subsection 4e.

       cc.    PAYMENT OR PAYMENTS.  "Payment" or "Payments" has the meaning set
              forth in Subsection 5c.

       dd.    PENSION PLAN.  "Pension Plan" means the Cinergy Corp. Non-Union
              Employees' Pension Plan or any successor to that plan.

       ee.    PERSON.  "Person" has the meaning set forth in paragraph 3(a)(9)
              of the 1934 Act, as modified and used in subsections 13(d) and
              14(d) of the 1934 Act; however, a Person will not include the
              following:

              (i)    Cinergy or any of its subsidiaries;

              (ii)   A trustee or other fiduciary holding securities under an
                     employee benefit plan of Cinergy or its subsidiaries;

              (iii)  An underwriter temporarily holding securities pursuant to
                     an offering of those securities; or

              (iv)   A corporation owned, directly or indirectly, by the
                     stockholders of the Company in substantially the same
                     proportions as their ownership of stock of the Company.

       ff.    RELOCATION PROGRAM.  "Relocation Program" means the Cinergy Corp.
              Relocation Program or any successor to that program, as in effect
              on the date of the Executive's termination of employment.

       gg.    RETIREES' DENTAL PLAN.  "Retirees' Dental Plan" means the Cinergy
              Corp. Retirees' Dental Plan or any successor to that plan.

       hh.    RETIREES' MEDICAL PLAN. "Retirees' Medical Plan" means the Cinergy
              Corp. Retirees' Medical Plan or any successor to that plan.

       ii.    SEVERANCE BENEFITS.  "Severance Benefits" means the payments and
              benefits





              payable to the Executive pursuant to Section 5.

       jj.    SPOUSE.  "Spouse" means the Executive's lawfully married spouse.
              For this purpose, common law marriage or a similar arrangement
              will not be recognized unless otherwise required by federal law.

       kk.    STOCK RELATED DOCUMENTS.  "Stock Related Documents" means the
              LTIP, the Cinergy Corp. Stock Option Plan, and the Value Creation
              Plan and any applicable administrative guidelines and written
              agreements relating to those plans.

       ll.    SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.  "Supplemental Executive
              Retirement Plan" means the Cinergy Corp. Supplemental Executive
              Retirement Plan or any successor to that plan.

       mm.    TARGET ANNUAL BONUS.  "Target Annual Bonus" has the meaning set
              forth in Subsection 3b.

       nn.    TARGET LTIP BONUS.  "Target LTIP Bonus" has the meaning set forth
              in Subsection 3b.

       oo.    TERMINATION.  "Termination" means the termination of the
              Executive's employment with Cinergy other than a termination by
              Cinergy for Cause.

       pp.    VALUE CREATION PLAN.  "Value Creation Plan" means the Value
              Creation Plan of the LTIP.

12.    MISCELLANEOUS.

       a.     This Agreement will be governed by and construed in accordance
              with the laws of the State of Ohio, without reference to
              principles of conflict of laws.  The captions of this Agreement
              are not part of its provisions and will have no force or effect.
              This Agreement may not be amended, modified, repealed, waived,
              extended, or discharged except by an agreement in writing signed
              by the party against whom enforcement of the amendment,
              modification, repeal, waiver, extension, or discharge is sought.
              Only the Chief Executive Officer or his designee will have
              authority on behalf of Cinergy to agree to amend, modify, repeal,
              waive, extend, or discharge any provision of this Agreement.

       b.     All notices and other communications under this Agreement will be
              in writing and will be given by hand delivery to the other party
              or by registered or certified mail, return receipt requested,
              postage prepaid, addressed as follows:

              IF TO THE EXECUTIVE:





              Jerome A. Vennemann
              Cinergy Corp.
              221 East Fourth Street
              P 0. Box 960
              Cincinnati, Ohio 45201-0960






              IF TO CINERGY:
              Cinergy Corp.
              221 East Fourth Street
              P. 0. Box 960
              Cincinnati, Ohio  45201-0960
              Attn: Chief Executive Officer


              or to such other address as either party has furnished to the
              other in writing in accordance with this Agreement.  All notices
              and communications will be effective when actually received by the
              addressee.

       c.     The invalidity or unenforceability of any provision of this
              Agreement will not affect the validity or enforceability of any
              other provision of this Agreement.

       d.     Cinergy may withhold from any amounts payable under this Agreement
              such federal, state, or local taxes as are required to be withheld
              pursuant to any applicable law or regulation.

       e.     The Executive's or Cinergy's failure to insist upon strict
              compliance with any provision of this Agreement or the failure to
              assert any right the Executive or Cinergy may have under this
              Agreement, including without limitation the right of the Executive
              to terminate employment for Good Reason pursuant to Subsection 4c
              or the right of Cinergy to terminate the Executive's employment
              for Cause pursuant to Subsection 4b, will not be deemed to be a
              waiver of that provision or right or any other provision or right
              of this Agreement.

       f.     This instrument contains the entire agreement of the Executive and
              Cinergy with respect to the subject matter of this Agreement; and
              subject to any agreements evidencing stock option or restricted
              stock grants described in Subsection 3b and the Stock Related
              Documents, all promises, representations, understandings,
              arrangements, and prior agreements are merged into this Agreement
              and





              accordingly superseded.

       g.     This Agreement may be executed in counterparts, each of which will
              be deemed to be an original but all of which together will
              constitute one and the same instrument.

       h.     Cinergy and the Executive agree that Cinergy will be authorized to
              act for Cinergy with respect to all aspects pertaining to the
              administration and interpretation of this Agreement.





       IN WITNESS WHEREOF, the Executive and the Company have caused this
Agreement to be executed as of the Effective Date.

                                          CINERGY CORP.; CINERGY SERVICES, INC.;
                                          THE CINCINNATI GAS & ELECTRIC COMPANY;
                                          AND PSI ENERGY, INC.


                                          By:_________________________________
                                             James E. Rogers
                                             Vice Chairman and Chief
                                             Executive Officer


                                          EXECUTIVE


                                          ____________________________________
                                          Jerome A. Vennemann

EX-10.J

                                AMENDED AND RESTATED
                                EMPLOYMENT AGREEMENT


       This AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered into
as of the 30th day of December, 1999 (the "Effective Date"), by and between
Cinergy and Charles J. Winger (the "Executive").  This Agreement replaces and
supersedes any and all prior employment agreements between Cinergy and the
Executive.  The capitalized words and terms used throughout this Agreement are
defined in Section 11.

                                       RECITALS

       A.     The Executive is currently serving as Vice President, Corporate
Development of Cinergy, and Cinergy desires to secure the continued employment
of the Executive in accordance with this Agreement.

       B.     The Executive is willing to continue to remain in the employ of
Cinergy, and any successor to Cinergy, on the terms and conditions set forth in
this Agreement.

       C.     The parties intend that this Agreement will replace and supersede
any and all prior employment agreements between Cinergy (or any component
company or business unit of Cinergy) and the Executive.


                                     AGREEMENT

       In consideration of the mutual premises, covenants and agreements set
forth below, the parties agree as follows:

1.     EMPLOYMENT AND TERM

       a.     Cinergy, and any successor to Cinergy, agree to employ the
              Executive, and the Executive agrees to remain in the employ of
              Cinergy, in accordance with the terms and provisions of this
              Agreement, for the Employment Period set forth in Subsection b.
              The parties agree that the Company will be responsible for
              carrying out all of the premises, covenants, and agreements of
              Cinergy set forth in this Agreement.

       b.     The Employment Period of this Agreement will commence as of the
              Effective Date and continue until December 31, 2002; provided
              that, commencing on December 31, 2000, and on each subsequent
              December 31, the Employment Period will be extended for one (1)
              additional year unless either party gives the other party written
              notice not to extend this Agreement at least ninety (90) days
              before the




              extension would otherwise become effective.

2.     DUTIES AND POWERS OF EXECUTIVE

              a.     POSITION.  The Executive will serve Cinergy as Vice
              President, Corporate Development of Cinergy, and he will have such
              responsibilities, duties, and authority as are customary for
              someone of that position and such additional duties, consistent
              with his position, as may be assigned to him from time to time
              during the Employment Period by the Board of Directors or the
              Chief Executive Officer.

              b.     PLACE OF PERFORMANCE.  In connection with the Executive's
              employment, the Executive will be based at the principal executive
              offices of Cinergy, 221 East Fourth Street, Cincinnati, Ohio, and,
              except for required business travel to an extent substantially
              consistent with the present business travel obligations of Cinergy
              executives who have positions of authority comparable to that of
              the Executive, the Executive will not be required to relocate to a
              new principal place of business that is more than thirty (30)
              miles from Cinergy's current principal executive offices.

3.     COMPENSATION.  The Executive will receive the following compensation for
       his services under this Agreement.

              a.     SALARY.  The Executive's Annual Base Salary, payable not
              less often than semi-monthly, will be at the annual rate of not
              less than $275,000.00.  The Board of Directors or its designee
              may, from time to time, increase the Annual Base Salary as the
              Board of Directors deems to be necessary or desirable, including
              without limitation adjustments to reflect increases in the cost of
              living. Any increase in the Annual Base Salary will not serve to
              limit or reduce any other obligation of Cinergy under this
              Agreement.  The Annual Base Salary will not be reduced except for
              across-the-board salary reductions similarly affecting all Cinergy
              management personnel.  If Annual Base Salary is increased during
              the Employment Period, then the increased salary will be the
              Annual Base Salary for all purposes under this Agreement.

              b.     RETIREMENT, INCENTIVE, WELFARE BENEFIT PLANS AND OTHER
              BENEFITS. During the Employment Period, the Executive will be
              eligible, and Cinergy will take all necessary action to cause the
              Executive to become eligible, to participate in all short-term and
              long-term incentive, stock option, restricted stock, performance
              unit, savings, retirement and welfare plans, practices, policies
              and programs applicable generally to employees and/or other senior
              executives of Cinergy who are considered Tier II executives for
              compensation purposes, except with respect to any plan, practice,
              policy or program to which the Executive has waived his rights in
              writing.




              If the Executive retires after reaching age 50, the Executive will
              be entitled and fully vested in a supplemental retirement benefit
              equal to the difference between (1) his total benefit under all
              Executive Retirement Plans, and (2) 60% of the Executive's Highest
              Average Earnings times a fraction, the numerator of which is the
              Executive's Years of Participation and the denominator of which is
              35.  If, however, the Executive's employment is terminated
              following a Change in Control, for any reason other than Cause,
              the Executive will be entitled to a supplemental retirement
              benefit equal to the difference between (1) his total benefit
              under all Executive Retirement Plans, and (2) 60% of the
              Executive's Highest Average Earnings. The form, timing, and method
              of payment of the supplemental retirement benefit payable under
              this Paragraph will be the same as those elected by the Executive
              under the Pension Plan.  If the Executive dies after reaching age
              50 but prior to his retirement, and if his Spouse, on the date of
              his death, is living on the date the first installment of the
              supplemental retirement benefit would be payable under this
              Paragraph, the Spouse will be entitled to receive the supplemental
              retirement benefit as a Spouse's benefit.  The form, timing, and
              method of payment of any Spouse's benefit under this Paragraph
              will be the same as those applicable to the Spouse under the
              Pension Plan.

              Upon his retirement on or after having attained age fifty (50),
              the Executive will be eligible for comprehensive medical and
              dental insurance pursuant to the terms of the Retirees' Medical
              Plan and the Retirees' Dental Plan.  The Executive, however, will
              receive the full subsidy provided by Cinergy to retirees for
              purposes of determining the amount of monthly premiums due from
              the Executive.

              The Executive will be a participant in the Annual Incentive Plan,
              and the Executive will be paid pursuant to that plan an annual
              benefit of up to sixty percent (60%) of the Executive's Annual
              Base Salary, with a target of no less than forty percent (40%) of
              the Executive's Annual Base Salary (the "Target Annual Bonus").

              The Executive will be a participant in the Long-Term Incentive
              Plan (the "LTIP"), and the Executive's annualized target award
              opportunity under the LTIP will be equal to no less than seventy
              percent (70%) of his Annual Base Salary (the "Target LTIP Bonus").

              c.     FRINGE BENEFITS AND PERQUISITES.  During the Employment
              Period, the Executive will be entitled to the following additional
              fringe benefits:

              (i)    Cinergy will furnish to the Executive an automobile and
                     will pay all of the related expenses for gasoline,
                     insurance, maintenance, and repairs.




              (ii)   Cinergy will pay the initiation fee and the annual dues,
                     assessments, and other membership charges of the Executive
                     for membership in a country club selected by the Executive.

              (iii)  Cinergy will provide paid vacation for four (4) weeks per
                     year (or longer if permitted by Cinergy's policy).

              (iv)   Cinergy will furnish to the Executive annual financial
                     planning and tax preparation services.  In addition, the
                     Executive will be entitled to receive such other fringe
                     benefits in accordance with Cinergy plans, practices,
                     programs, and policies in effect from time to time,
                     commensurate with his position and at least comparable to
                     those received by other Cinergy senior executives.

              d.     EXPENSES.  Cinergy agrees to reimburse the Executive for
              all expenses, including those for travel and entertainment,
              properly incurred by him in the performance of his duties under
              this Agreement in accordance with the policies established from
              time to time by the Board of Directors.

              e.     RELOCATION BENEFITS.  Following termination of the
              Executive's employment for any reason (other than death), the
              Executive will be entitled to reimbursement from Cinergy for the
              reasonable costs of relocating from the Cincinnati, Ohio, area to
              a new primary residence in a manner that is consistent with the
              terms of the Relocation Program.

4.     TERMINATION OF EMPLOYMENT

              a.     DEATH.  The Executive's employment will terminate
              automatically upon the Executive's death during the Employment
              Period.

              b.     BY CINERGY FOR CAUSE.  Cinergy may terminate the
              Executive's employment during the Employment Period for Cause.
              For purposes of this Employment Agreement, "Cause" means the
              following:

              (i)    The willful and continued failure by the Executive to
                     substantially perform the Executive's duties with Cinergy
                     (other than any such failure resulting from the Executive's
                     incapacity due to physical or mental illness) after the
                     Board of Directors or the Chief Executive Officer has
                     delivered to the Executive a written demand for substantial
                     performance, which demand specifically identifies the
                     manner in which the Executive has not substantially
                     performed his duties.  This event will constitute Cause
                     even if the Executive issues a Notice of Termination for
                     Good Reason pursuant to Subsection 4d after the Board of
                     Directors or Chief Executive Officer




                     delivers a written demand for substantial performance.

              (ii)   The breach by the Executive of the confidentiality
                     provisions set forth in Section 9.

              (iii)  The conviction of the Executive for the commission of a
                     felony, including the entry of a guilty or nolo contendere
                     plea, or any willful or grossly negligent action or
                     inaction by the Executive that has a materially adverse
                     effect on Cinergy.  For purposes of this definition of
                     Cause, no act, or failure to act, on the Executive's part
                     will be deemed "willful" unless it is done, or omitted to
                     be done, by the Executive in bad faith and without
                     reasonable belief that the Executive's act, or failure to
                     act, was in the best interest of Cinergy.

       c.     BY CINERGY WITHOUT CAUSE.  Cinergy may, upon at least 30 days
              advance written notice to the Executive, terminate the Executive's
              employment during the Employment Period for a reason other than
              Cause, but the obligations placed upon Cinergy in Section 5 will
              apply.

       d.     BY THE EXECUTIVE FOR GOOD REASON.  The Executive may terminate his
              employment during the Employment Period for Good Reason.  For
              purposes of this Agreement, "Good Reason" means the following:

              (i)    A reduction in the Executive's Annual Base Salary, except
                     for across-the-board salary reductions similarly affecting
                     all Cinergy management personnel, or a reduction in any
                     other benefit or payment described in Section 3 of this
                     Agreement, except for changes to the employee benefits
                     programs affecting all Cinergy management personnel,
                     provided that those changes (either individually or in the
                     aggregate) will not result in a material adverse change
                     with respect to the benefits to which the Executive was
                     entitled as of the Effective Date.

              (ii)   The material reduction without his consent of the
                     Executive's title, authority, duties, or responsibilities
                     from those in effect immediately prior to the reduction or
                     a material adverse change in the Executive's reporting
                     responsibilities.

              (iii)  Any breach by Cinergy of any other material provision of
                     this Agreement (including but not limited to the place of
                     performance as specified in Subsection 2b).

              (iv)   The Executive's disability due to physical or mental
                     illness or injury that precludes the Executive from
                     performing any job for which he is qualified




                     and able to perform based upon his education, training or
                     experience.

              (v)    A failure by the Company to require any successor entity to
                     the Company specifically to assume all of the Company's
                     obligations to the Executive under this Agreement.

       e.     BY THE EXECUTIVE WITHOUT GOOD REASON.  The Executive may terminate
              his employment without Good Reason upon prior written notice to
              the Company.

       f.     NOTICE OF TERMINATION.  Any termination of the Executive's
              employment by Cinergy or by the Executive during the Employment
              Period (other than a termination due to the Executive's death)
              will be communicated by a written Notice of Termination to the
              other party to this Agreement in accordance with Subsection 12b.
              For purposes of this Agreement, a "Notice of Termination" means a
              written notice that specifies the particular provision of this
              Agreement relied upon and that sets forth in reasonable detail the
              facts and circumstances claimed to provide a basis for terminating
              the Executive's employment under the specified provision.  The
              failure by the Executive or Cinergy to set forth in the Notice of
              Termination any fact or circumstance that contributes to a showing
              of Good Reason or Cause will not waive any right of the Executive
              or Cinergy under this Agreement or preclude the Executive or
              Cinergy from asserting that fact or circumstance in enforcing
              rights under this Agreement.

5.     OBLIGATIONS OF CINERGY UPON TERMINATION.

       a.     CERTAIN TERMINATIONS.

              (i)    If a Termination occurs during the Employment Period,
                     Cinergy will pay to the Executive a lump sum amount, in
                     cash, equal to the sum of the following Accrued
                     Obligations:

                     (1)    the Executive's Annual Base Salary through the Date
                            of Termination to the extent not previously paid;

                     (2)    an amount equal to the AIP Benefit for the fiscal
                            year that includes the Date of Termination
                            multiplied by a fraction, the numerator of which is
                            the number of days from the beginning of that fiscal
                            year to and including the Date of Termination and
                            the denominator of which is three hundred and
                            sixty-five (365).  The AIP Benefit will be
                            determined using a percentage determined by the
                            Chief Executive Officer, in his discretion, up to
                            the maximum percentage specified in Subsection 3b,
                            but no less than the Target Annual Bonus.




                     (3)    any compensation previously deferred by the
                            Executive (together with any accrued interest or
                            earnings) and any accrued vacation pay, in each case
                            to the extent not previously paid.

                     The Accrued Obligations described in this Paragraph 5a(i)
                     will be paid within thirty (30) days after the Date of
                     Termination.  These Accrued Obligations are payable to the
                     Executive regardless of whether a Change in Control has
                     occurred.

              (ii)   Prior to the occurrence of a Change in Control, and in the
                     event of (A) a Termination other than by reason of the
                     Executive's death, or (B) the Executive's termination of
                     his employment during the Employment Period for Good
                     Reason, Cinergy will pay the Accrued Obligations, and
                     Cinergy will have the following obligations:

                     (1)    Cinergy will pay to the Executive a lump sum amount,
                            in cash, equal to three (3) times the sum of the
                            Annual Base Salary and the AIP Benefit.  For this
                            purpose, the Annual Base Salary will be at the rate
                            in effect at the time Notice of Termination is given
                            (without giving effect to any reduction in Annual
                            Base Salary, if any, prior to the termination).  The
                            AIP Benefit will be determined using a percentage
                            determined by the Chief Executive Officer, in his
                            discretion, which will not be less than the
                            Executive's annual target percentage for the fiscal
                            year in which the Termination occurs and will not be
                            greater than the maximum percentage specified in
                            Subsection 3b.  This lump sum will be paid within
                            thirty (30) days of the Date of Termination.

                     (2)    Cinergy will pay to the Executive the value of all
                            deferred compensation amounts and all executive life
                            insurance benefits whether or not they are otherwise
                            currently vested or payable.  Payment will be made
                            in accordance with the terms of the applicable plan
                            or program.

                     (3)    Except as provided under Clauses (A) and (B) below,
                            Cinergy will continue, until the end of the
                            Employment Period, medical and dental benefits to
                            the Executive and/or the Executive's family at least
                            equal to those that would have been provided if the
                            Executive's employment had not been terminated
                            (excluding benefits to which the Executive has
                            waived his rights in writing).  The benefits
                            described in the preceding sentence will be in
                            accordance with the medical and welfare benefit
                            plans, practices,




                            programs, or policies of Cinergy (the "M&W Plans")
                            as then currently in effect and applicable generally
                            to other Cinergy senior executives and their
                            families.

                            (A)    If, as of the Executive's Date of
                            Termination, the Executive meets the eligibility
                            requirements for Cinergy's retiree medical and
                            welfare benefit plans, the provision of those
                            retiree medical and welfare benefit plans to the
                            Executive will satisfy Cinergy's obligation under
                            this Subparagraph 5a(ii)(3).

                            (B)    If, as of the Executive's Date of
                            Termination, the provision to the Executive of the
                            M&W Plan benefits described in this Subparagraph
                            5a(ii)(3) would either (1) violate the terms of the
                            M&W Plans or (2) violate any of the Code's
                            nondiscrimination requirements applicable to the M&W
                            Plans, then Cinergy, in its sole discretion, may
                            elect to pay the Executive, in lieu of the M&W Plan
                            benefits described under this Subparagraph
                            5a(ii)(3), a lump sum cash payment equal to the
                            total monthly premiums that would have been paid by
                            Cinergy for the Executive under the M&W Plans from
                            the Date of Termination through the end of the
                            Employment Period.  Nothing in this Clause will
                            affect the Executive's right to elect COBRA
                            continuation coverage under a M&W Plan in accordance
                            with applicable law.

                            (C)    If the Executive becomes employed by another
                            employer and is eligible to receive medical or other
                            welfare benefits under another employer-provided
                            plan, any benefits provided to the Executive under
                            the M&W Plans will be secondary to those provided
                            under the other employer-provided plan during the
                            Executive's applicable period of eligibility.

                     (4)    Ownership of the automobile assigned to the
                            Executive by Cinergy will be transferred to the
                            Executive within 30 days of the Date of Termination.
                            The effect of this transfer will be grossed up for
                            federal and state income taxes as soon as
                            administratively feasible after the transfer is
                            effective.

                     (5)    Cinergy will provide tax counseling services through
                            an agency selected by the Executive, not to exceed
                            Fifteen Thousand Dollars




                            ($15,000.00) in cost.

              (iii)  In the event of Termination by Cinergy or by the Executive
                     for Good Reason upon or during the twenty-four (24) month
                     period after the occurrence of a Change in Control, then in
                     lieu of any further salary payments to the Executive for
                     periods subsequent to the Date of Termination and in lieu
                     of any other benefits payable pursuant to Paragraph 5a(ii),
                     Cinergy will have the following obligations:

                     (1)    Cinergy will pay to the Executive a lump sum
                            severance payment, in cash, equal to the greater of:

                            (A)    the present value of all amounts and benefits
                                   that would have been due under Paragraph
                                   5a(ii), excluding Subparagraphs 5a(ii)(3),
                                   5a(ii)(4), and 5a(ii)(5), or

                            (B)    three (3) times the sum of (x) the higher of
                                   the Executive's Annual Base Salary in effect
                                   immediately prior to the occurrence of the
                                   event or circumstance upon which the Notice
                                   of Termination is based or in effect
                                   immediately prior to the Change in Control,
                                   and (y) the higher of the amount paid to the
                                   Executive pursuant to all annual incentive
                                   compensation or bonus plans or programs
                                   maintained by Cinergy in the year preceding
                                   that in which the Date of Termination occurs
                                   or in the year preceding that in which the
                                   Change in Control occurs; and

                     (2)    For a thirty-six (36) month period after the Date of
                            Termination, Cinergy will arrange to provide the
                            Executive with life, disability, accident, and
                            health insurance benefits substantially similar to
                            those that the Executive is receiving immediately
                            prior to the Notice of Termination (without giving
                            effect to any reduction in those benefits subsequent
                            to a Change in Control that constitutes Good
                            Reason), except for any benefits that were waived by
                            the Executive in writing.  If Cinergy arranges to
                            provide the Executive with life, disability,
                            accident, and health insurance benefits, those
                            benefits will be reduced to the extent comparable
                            benefits are actually received by or made available
                            to the Executive without cost during the thirty-six
                            (36) month period following the Executive's Date of
                            Termination.  The Executive must report to Cinergy
                            any such benefits that he actually receives.  In
                            lieu of the benefits described in the preceding
                            sentences, Cinergy, in its sole discretion, may
                            elect to pay to the Executive a lump sum cash
                            payment equal to




                            thirty-six (36) times the monthly premiums that
                            would have been paid by Cinergy to provide those
                            benefits to the Executive.  Nothing in this
                            Subparagraph 5a(iii)(2) will affect the Executive's
                            right to elect COBRA continuation coverage in
                            accordance with applicable law.

                     (3)    Ownership of the automobile assigned to the
                            Executive by Cinergy will be transferred to the
                            Executive within 30 days of the Date of Termination.
                            The effect of this transfer will be grossed up for
                            federal and state income taxes as soon as
                            administratively feasible after the transfer is
                            effective.

                     (4)    Cinergy will provide tax counseling services through
                     an agency selected by the Executive, not to exceed Fifteen
                     Thousand Dollars ($15,000.00) in cost.

                     For purposes of this Paragraph (iii), the Executive will be
                     deemed to have incurred a Termination following a Change in
                     Control if the Executive's employment is terminated prior
                     to a Change in Control, without Cause at the direction of a
                     Person who has entered into an agreement with Cinergy, the
                     consummation of which will constitute a Change in Control,
                     or if the Executive terminates his employment for Good
                     Reason prior to a Change in Control if the circumstances or
                     event that constitutes Good Reason occurs at the direction
                     of such a Person.

       b.     TERMINATION BY CINERGY FOR CAUSE OR BY THE EXECUTIVE OTHER THAN
              FOR GOOD REASON.  Subject to the provisions of Section 7, if the
              Executive's employment is terminated for Cause during the
              Employment Period, or if the Executive terminates employment
              during the Employment Period other than a termination for Good
              Reason, Cinergy will have no further obligations to the Executive
              under this Agreement other than the obligation to pay to the
              Executive the Accrued Obligations, plus any other earned but
              unpaid compensation, in each case to the extent not previously
              paid.

       c.     CERTAIN TAX CONSEQUENCES.

              (i)    In the event that any Severance Benefits paid or payable to
                     the Executive or for his benefit pursuant to the terms of
                     this Agreement or otherwise in connection with, or arising
                     out of, his employment with Cinergy or a change in
                     ownership or effective control of Cinergy or of a
                     substantial portion of its assets (a "Payment" or
                     "Payments") would be subject to any Excise Tax, then the
                     Executive will be entitled to receive an additional payment
                     (a "Gross-Up Payment") in an amount such that after payment
                     by




                     the Executive of all taxes (including any interest,
                     penalties, additional tax, or similar items imposed with
                     respect thereto and the Excise Tax), including any Excise
                     Tax imposed upon the Gross-Up Payment, the Executive
                     retains an amount of the Gross-Up Payment equal to the
                     Excise Tax imposed upon the Payments.

              (ii)   An initial determination as to whether a Gross-Up Payment
                     is required pursuant to this Agreement and the amount of
                     that Gross-Up Payment will be made at Cinergy's expense by
                     an Accounting Firm selected by the Executive and reasonably
                     acceptable to Cinergy.  The Accounting Firm will provide
                     its determination, together with detailed supporting
                     calculations and documentation, to Cinergy and the
                     Executive within 10 days after the Date of Termination, or
                     such other time as requested by Cinergy or by the
                     Executive, and if the Accounting Firm determines that no
                     Excise Tax is payable by the Executive with respect to a
                     Payment or Payments, it will furnish the Executive with an
                     opinion reasonably acceptable to the Executive that no
                     Excise Tax will be imposed with respect to any such Payment
                     or Payments.  Within 10 days after the Accounting Firm
                     delivers its determination to the Executive, the Executive
                     will have the right to dispute the determination.  The
                     Gross-Up Payment, if any, as determined pursuant to this
                     Subsection 5c will be paid by Cinergy to the Executive
                     within five days of the receipt of the Accounting Firm's
                     determination.  The existence of a dispute will not in any
                     way affect the Executive's right to receive the Gross-Up
                     Payment in accordance with the determination.  If there is
                     no dispute, the determination will be binding, final, and
                     conclusive upon Cinergy and the Executive.  If there is a
                     dispute, then Cinergy and the Executive will together
                     select a second Accounting Firm, which will review the
                     determination and the Executive's basis for the dispute and
                     then will render its own determination, which will be
                     binding, final, and conclusive on Cinergy and on the
                     Executive.  Cinergy will bear all costs associated with
                     that determination, unless the determination is not greater
                     than the initial determination, in which case all such
                     costs will be borne by the Executive.

              (iii)  The value of any non-cash benefits or any deferred payment
                     or benefit paid or payable to the Executive will be
                     determined in accordance with the principles of Code
                     paragraphs 280G(d)(3) and (4).  For purposes of determining
                     the amount of the Gross-Up Payment, the Executive will be
                     deemed to pay federal income taxes at the highest marginal
                     rate of federal income taxation in the calendar year in
                     which the Gross-Up Payment is to be made and applicable
                     state and local income taxes at the highest marginal rate
                     of taxation in the state and locality of the Executive's
                     residence on the Date of Termination, net of the maximum
                     reduction in




                     federal income taxes that would be obtained from deduction
                     of those state and local taxes.

              (iv)   Notwithstanding anything contained in this Agreement to the
                     contrary, in the event that, according to the Accounting
                     Firm's determination, an Excise Tax will be imposed on any
                     Payment or Payments, Cinergy will pay to the applicable
                     government taxing authorities as Excise Tax withholding,
                     the amount of the Excise Tax that Cinergy has actually
                     withheld from the Payment or Payments in accordance with
                     law.



              d.     VALUE CREATION PLAN AND STOCK OPTIONS.  Upon the
              Executive's termination of employment for any reason, the
              Executive's entitlement to restricted shares and performance
              shares under the Value Creation Plan and any stock options
              granted under the Stock Option Plan or the LTIP will be
              determined under the terms of the appropriate plan and any
              applicable administrative guidelines and written agreements.

              e.     OTHER FEES AND EXPENSES.  Cinergy will also pay to the
              Executive all legal fees and expenses incurred by the Executive in
              successfully disputing a Termination that entitles the Executive
              to Severance Benefits.  Payment will be made within five (5)
              business days after delivery of the Executive's written request
              for payment accompanied by such evidence of fees and expenses
              incurred as Cinergy reasonably may require.

6.     NON-EXCLUSIVITY OF RIGHTS.  Nothing in this Agreement will prevent or
       limit the Executive's continuing or future participation in any benefit,
       plan, program, policy, or practice provided by Cinergy and for which the
       Executive may qualify, except with respect to any benefit to which the
       Executive has waived his rights in writing or any plan, program, policy,
       or practice that expressly excludes the Executive from participation.  In
       addition, nothing in this Agreement will limit or otherwise affect the
       rights the Executive may have under any other contract or agreement with
       Cinergy entered into after the Effective Date.  Amounts that are vested
       benefits or that the Executive is otherwise entitled to receive under any
       benefit, plan, program, policy, or practice of, or any contract or
       agreement entered into after the Effective Date with Cinergy, at or
       subsequent to the Date of Termination, will be payable in accordance with
       that benefit, plan, program, policy or practice, or that contract or
       agreement, except as explicitly modified by this Agreement.

7.     FULL SETTLEMENT:  MITIGATION.  Cinergy's obligation to make the payments
       provided for in this Agreement and otherwise to perform its obligations
       under this Agreement will not be affected by any set-off, counterclaim,
       recoupment, defense, or other claim, right, or action that Cinergy may
       have against the Executive or others.  In no event will the Executive be




       obligated to seek other employment or take any other action by way of
       mitigation of the amounts (including amounts for damages for breach)
       payable to the Executive under any of the provisions of this Agreement
       and, except as provided in Subparagraphs 5a(ii)(3) and 5a(iii)(2), those
       amounts will not be reduced simply because the Executive obtains other
       employment.  If the Executive finally prevails on the substantial claims
       brought with respect to any dispute between Cinergy and the Executive as
       to the interpretation, terms, validity, or enforceability of (including
       any dispute about the amount of any payment pursuant to) this Agreement,
       Cinergy agrees to pay all reasonable legal fees and expenses that the
       Executive may reasonably incur as a result of that dispute.

8.     ARBITRATION.  The parties agree that any dispute, claim, or controversy
       based on common law, equity, or any federal, state, or local statute,
       ordinance, or regulation (other than workers' compensation claims)
       arising out of or relating in any way to the Executive's employment, the
       terms, benefits, and conditions of employment, or concerning this
       Agreement or its termination and any resulting termination of employment,
       including whether such a dispute is arbitrable, shall be settled by
       arbitration.  This agreement to arbitrate includes but is not limited to
       all claims for any form of illegal discrimination, improper or unfair
       treatment or dismissal, and all tort claims.  The Executive will still
       have a right to file a discrimination charge with a federal or state
       agency, but the final resolution of any discrimination claim will be
       submitted to arbitration instead of a court or jury.  The arbitration
       proceeding will be conducted under the employment dispute resolution
       arbitration rules of the American Arbitration Association in effect at
       the time a demand for arbitration under the rules is made.  The decision
       of the arbitrator(s), including determination of the amount of any
       damages suffered, will be exclusive, final, and binding on all parties,
       their heirs, executors, administrators, successors and assigns.  Each
       party will bear its own expenses in the arbitration for arbitrators' fees
       and attorneys' fees, for its witnesses, and for other expenses of
       presenting its case.  Other arbitration costs, including administrative
       fees and fees for records or transcripts, will be borne equally by the
       parties.  Notwithstanding anything in this Section to the contrary, if
       the Executive prevails with respect to any dispute submitted to
       arbitration under this Section, Cinergy will reimburse or pay all legal
       fees and expenses that the Executive may reasonably incur as a result of
       the dispute as required by Section 7.

9.     CONFIDENTIAL INFORMATION.  The Executive will hold in a fiduciary
       capacity for the benefit of Cinergy, as well as all of Cinergy's
       successors and assigns, all secret, confidential information, knowledge,
       or data relating to Cinergy, and its affiliated businesses, that the
       Executive obtains during the Executive's employment by Cinergy or any of
       its affiliated companies, and that has not been or subsequently becomes
       public knowledge (other than by acts by the Executive or representatives
       of the Executive in violation of this Agreement).  During the Employment
       Period and thereafter, the Executive will not, without Cinergy's prior
       written consent or as may otherwise by required by law or legal process,
       communicate or divulge any such information, knowledge, or data to anyone
       other than Cinergy and those designated by it.  The




       Executive understands that during the Employment Period, Cinergy may be
       required from time to time to make public disclosure of the terms or
       existence of the Executive's employment relationship to comply with
       various laws and legal requirements.  In addition to all other remedies
       available to Cinergy in law and equity, this Agreement is subject to
       termination by Cinergy for Cause under Section 4b in the event the
       Executive violates any provision of this Section.

10.    SUCCESSORS.

       a.     This Agreement is personal to the Executive and, without Cinergy's
              prior written consent, cannot be assigned by the Executive
              otherwise than by will or the laws of descent and distribution.
              This Agreement will inure to the benefit of and be enforceable by
              the Executive's legal representatives.

       b.     This Agreement will inure to the benefit of and be binding upon
              Cinergy and its successors and assigns.

       c.     Cinergy will require any successor (whether direct or indirect, by
              purchase, merger, consolidation or otherwise) to all or
              substantially all of the business and/or assets of Cinergy to
              assume expressly and agree to perform this Agreement in the same
              manner and to the same extent that Cinergy would be required to
              perform it if no succession had taken place.  Cinergy's failure to
              obtain such an assumption and agreement prior to the effective
              date of a succession will be a breach of this Agreement and will
              entitle the Executive to compensation from Cinergy in the same
              amount and on the same terms as if the Executive were to terminate
              his employment for Good Reason after a Change in Control, except
              that, for purposes of implementing the foregoing, the date on
              which any such succession becomes effective will be deemed the
              Date of Termination.

11.    DEFINITIONS.  As used in this Agreement, the following terms, when
       capitalized, will have the following meanings:

       a.     1934 ACT.  "1934 Act" means the Securities Exchange Act of 1934.

       b.     ACCOUNTING FIRM.  "Accounting Firm" means an accounting firm that
              is designated as one of the five largest accounting firms in the
              United States (which may include Cinergy's independent auditors).

       c.     ACCRUED OBLIGATIONS.  "Accrued Obligations" means the accrued
              obligations described in Paragraph 5a(i).

       d.     AGREEMENT.  "Agreement" means this Amended and Restated Employment
              Agreement between Cinergy and the Executive.





       e.     AIP BENEFIT.  "AIP Benefit" means the Annual Incentive Plan
              benefit described in Subsection 3b.

       f.     ANNUAL BASE SALARY.  "Annual Base Salary" means the annual base
              salary payable to the Executive pursuant to Subsection 3a.

       g.     ANNUAL INCENTIVE PLAN.  "Annual Incentive Plan" means the Cinergy
              Corp. Annual Incentive Plan or any successor to that plan.

       h.     BOARD OF DIRECTORS.  "Board of Directors" means the board of
              directors of the Company.

       i.     CAUSE.  "Cause" has the meaning set forth in Subsection 4b.

       j.     CHANGE IN CONTROL.  "A Change in Control" will be deemed to have
              occurred if any of the following events occur, after the Effective
              Date:

              (i)    Any "person" or "group" (within the meaning of subsection
                     13(d) and paragraph 14(d)(2) of the 1934 Act) is or becomes
                     the beneficial owner (as defined in Rule l3d-3 under the
                     1934 Act), directly or indirectly, of securities of the
                     Company (not including in the securities beneficially owned
                     by such a Person any securities acquired directly from the
                     Company or its affiliates) representing more than twenty
                     percent (20%) of the combined voting power of the Company's
                     then outstanding securities, excluding any person who
                     becomes such a beneficial owner in connection with a
                     transaction described in Clause (1) of Paragraph (ii)
                     below; or

              (ii)   There is consummated a merger or consolidation of the
                     Company or any direct or indirect subsidiary of the Company
                     with any other corporation, other than (1) a merger or
                     consolidation that would result in the voting securities of
                     the Company outstanding immediately prior to that merger or
                     consolidation continuing to represent (either by remaining
                     outstanding or by being converted into voting securities of
                     the surviving entity or its parent) at least sixty percent
                     (60%) of the combined voting power of the securities of the
                     Company or the surviving entity or its parent outstanding
                     immediately after the merger or consolidation, or (2) a
                     merger or consolidation effected to implement a
                     recapitalization of the Company (or similar transaction) in
                     which no person is or becomes the beneficial owner,
                     directly or indirectly, of securities of the Company (not
                     including in the securities beneficially owned by such a
                     Person any securities acquired directly from the Company or
                     its affiliates other than in connection with the
                     acquisition by the Company or its affiliates of a business)
                     representing



                     twenty percent (20%) or more of the combined voting
                     power of the Company's then outstanding securities; or

              (iii)  During any period of two consecutive years, individuals who
                     at the beginning of that period constitute the Board of
                     Directors and any new director (other than a director whose
                     initial assumption of office is in connection with an
                     actual or threatened election contest, including but not
                     limited to a consent solicitation, relating to the election
                     of directors of the Company) whose appointment or election
                     by the Company's shareholders was approved or recommended
                     by a vote of at least two-thirds (2/3) of the directors
                     then still in office who either were directors at the
                     beginning of that period or whose appointment, election, or
                     nomination for election was previously so approved or
                     recommended cease for any reason to constitute a majority
                     of the Board of Directors; or

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

       k.     CHIEF EXECUTIVE OFFICER.  "Chief Executive Officer" means the
              chief executive officer of the Company.

       l.     CINERGY.  "Cinergy" means the Company, Cinergy Services, Inc., The
              Cincinnati Gas & Electric Company, and PSI Energy, Inc.

       m.     CODE.  "Code" means the Internal Revenue Code of 1986, as amended,
              and interpretive rules and regulations.

       n.     COMPANY.  "Company" means Cinergy Corp.

       o.     DATE OF TERMINATION.  "Date of Termination" means:

              (i)    if the Executive's employment is terminated by the Company
                     for Cause, or by the Executive with or without Good Reason,
                     the date of receipt of the Notice of Termination or any
                     later date specified in the notice, as the case may be;



              (ii)   if the Executive's employment is terminated by the Company
                     other than for Cause, thirty (30) days after the date on
                     which the Company notifies the Executive of the
                     termination; and

              (iii)  if the Executive's employment is terminated by reason of
                     death, the date of death.

       p.     EARNINGS.  "Earnings" means the Executive's "Earnings" as defined
              in the Pension Plan but without regard to the limitation of Code
              paragraph 401(a)(17).

       q.     EFFECTIVE DATE.  "Effective Date" means December 30, 1999.

       r.     EMPLOYMENT PERIOD.  "Employment Period" has the meaning set forth
              in Subsection 1b.

       s.     EXCISE TAX.  "Excise Tax" means any excise tax imposed by Code
              section 4999, together with any interest, penalties, additional
              tax or similar items that are incurred by the Executive with
              respect to the excise tax imposed by Code section 4999.

       t.     EXECUTIVE.  "Executive" means Charles J. Winger.

       u.     EXECUTIVE RETIREMENT PLANS.  The "Executive Retirement Plans" are
              the Pension Plan, the Supplemental Executive Retirement Plan, and
              the Cinergy Corp. Excess Pension Plan or any successor to those
              plans.

       v.     EXECUTIVE SUPPLEMENTAL LIFE PROGRAM.  "Executive Supplemental Life
              Program" means the Cinergy Corp. Executive Supplemental Life
              Program or any successor to that plan.

       w.     GOOD REASON.  "Good Reason" has the meaning set forth in
              Subsection 4d.

       x.     GROSS-UP PAYMENT.  "Gross-Up Payment" has the meaning set forth in
              Subsection 5c.

       y.     HIGHEST AVERAGE EARNINGS.  "Highest Average Earnings" means the
              greater of (a) the Executive's "Highest Average Earnings" as
              defined in the Pension Plan (without regard to the limitation of
              Code paragraph 401(a)(17)) or (b) the Executive's Earnings for the
              12 consecutive calendar months immediately preceding his
              termination of employment with Cinergy.

       z.     M&W PLANS.  "M&W Plans" has the meaning given in Subparagraph
              5a(ii)(3).



       aa.    LONG-TERM INCENTIVE PLAN.  "Long-Term Incentive Plan" means the
              long-term inventive plan implemented under the Cinergy Corp. 1996
              Long-Term Incentive Compensation Plan or any successor to that
              plan.

       bb.    NOTICE OF TERMINATION.  "Notice of Termination" has the meaning
              set forth in Subsection 4e.

       cc.    PAYMENT OR PAYMENTS.  "Payment" or "Payments" has the meaning set
              forth in Subsection 5c.

       dd.    PENSION PLAN.  "Pension Plan" means the Cinergy Corp. Non-Union
              Employees' Pension Plan or any successor to that plan.

       ee.    PERSON.  "Person" has the meaning set forth in paragraph 3(a)(9)
              of the 1934 Act, as modified and used in subsections 13(d) and
              14(d) of the 1934 Act; however, a Person will not include the
              following:

                    (i)    Cinergy or any of its subsidiaries;

                    (ii)   A trustee or other fiduciary holding securities
                    under an employee benefit plan of Cinergy or its
                    subsidiaries;

                    (iii)  An underwriter temporarily holding securities
                    pursuant to an offering of those securities; or

                    (iv)   A corporation owned, directly or indirectly, by
                    the stockholders of the Company in substantially the
                    same proportions as their ownership of stock of the
                    Company.

       ff.    RELOCATION PROGRAM.  "Relocation Program" means the Cinergy Corp.
              Relocation Program or any successor to that program, as in effect
              on the date of the Executive's termination of employment.

       gg.    RETIREES' DENTAL PLAN.  "Retirees' Dental Plan" means the Cinergy
              Corp. Retirees' Dental Plan or any successor to that plan.

       hh.    RETIREES' MEDICAL PLAN. "Retirees' Medical Plan" means the Cinergy
              Corp. Retirees' Medical Plan or any successor to that plan.

       ii.    SEVERANCE BENEFITS.  "Severance Benefits" means the payments and
              benefits payable to the Executive pursuant to Section 5.

       jj.    SPOUSE.  "Spouse" means the Executive's lawfully married spouse.
              For this



              purpose, common law marriage or a similar arrangement will not
              be recognized unless otherwise required by federal law.

       kk.    STOCK RELATED DOCUMENTS.  "Stock Related Documents" means the
              LTIP, the Cinergy Corp. Stock Option Plan, and the Value Creation
              Plan and any applicable administrative guidelines and written
              agreements relating to those plans.

       ll.    SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN.  "Supplemental Executive
              Retirement Plan" means the Cinergy Corp. Supplemental Executive
              Retirement Plan or any successor to that plan.

       mm.    TARGET ANNUAL BONUS.  "Target Annual Bonus" has the meaning set
              forth in Subsection 3b.

       nn.    TARGET LTIP BONUS.  "Target LTIP Bonus" has the meaning set forth
              in Subsection 3b.

       oo.    TERMINATION.  "Termination" means the termination of the
              Executive's employment with Cinergy other than a termination by
              Cinergy for Cause.

       pp.    VALUE CREATION PLAN.  "Value Creation Plan" means the Value
              Creation Plan of the LTIP.

       qq.    YEARS OF PARTICIPATION.  The Executive's "Years of Participation"
              will equal the lesser of (i) 35 or (ii) 25 plus two additional
              years for each of the Executive's birthdays that he has reached
              since his 50th birthday.

12.    MISCELLANEOUS.

       a.     This Agreement will be governed by and construed in accordance
              with the laws of the State of Ohio, without reference to
              principles of conflict of laws.  The captions of this Agreement
              are not part of its provisions and will have no force or effect.
              This Agreement may not be amended, modified, repealed, waived,
              extended, or discharged except by an agreement in writing signed
              by the party against whom enforcement of the amendment,
              modification, repeal, waiver, extension, or discharge is sought.
              Only the Chief Executive Officer or his designee will have
              authority on behalf of Cinergy to agree to amend, modify, repeal,
              waive, extend, or discharge any provision of this Agreement.

       b.     All notices and other communications under this Agreement will be
              in writing and will be given by hand delivery to the other party
              or by registered or certified mail, return receipt requested,
              postage prepaid, addressed as follows:



              IF TO THE EXECUTIVE:
              Charles J. Winger
              Cinergy Corp.
              221 East Fourth Street
              P.O. Box 960
              Cincinnati, Ohio  45201-0960

              IF TO CINERGY:
              Cinergy Corp.
              221 East Fourth Street
              P. 0. Box 960
              Cincinnati, Ohio  45201-0960
              Attn: Chief Executive Officer

              or to such other address as either party has furnished to the
              other in writing in accordance with this Agreement.  All notices
              and communications will be effective when actually received by the
              addressee.

       c.     The invalidity or unenforceability of any provision of this
              Agreement will not affect the validity or enforceability of any
              other provision of this Agreement.

       d.     Cinergy may withhold from any amounts payable under this Agreement
              such federal, state, or local taxes as are required to be withheld
              pursuant to any applicable law or regulation.

       e.     The Executive's or Cinergy's failure to insist upon strict
              compliance with any provision of this Agreement or the failure to
              assert any right the Executive or Cinergy may have under this
              Agreement, including without limitation the right of the Executive
              to terminate employment for Good Reason pursuant to Subsection 4c
              or the right of Cinergy to terminate the Executive's employment
              for Cause pursuant to Subsection 4b, will not be deemed to be a
              waiver of that provision or right or any other provision or right
              of this Agreement.

       f.     This instrument contains the entire agreement of the Executive and
              Cinergy with respect to the subject matter of this Agreement; and
              subject to any agreements evidencing stock option or restricted
              stock grants described in Subsection 3b and the Stock Related
              Documents, all promises, representations, understandings,
              arrangements, and prior agreements are merged into this Agreement
              and accordingly superseded.

       g.     This Agreement may be executed in counterparts, each of which will
              be deemed to be an original but all of which together will
              constitute one and the same instrument.



       h.     Cinergy and the Executive agree that Cinergy will be authorized to
              act for Cinergy with respect to all aspects pertaining to the
              administration and interpretation of this Agreement.



       IN WITNESS WHEREOF, the Executive and the Company have caused this
Agreement to be executed as of the Effective Date.

                                          CINERGY CORP.; CINERGY SERVICES, INC.;
                                          THE CINCINNATI GAS & ELECTRIC COMPANY;
                                          AND PSI ENERGY, INC.


                                          By:
                                             ---------------------------------
                                                 James E. Rogers
                                                 Vice Chairman and Chief
                                                 Executive Officer


                                                 EXECUTIVE



                                          ------------------------------------
                                                 Charles J. Winger

EX-10.R

     CINERGY CORP. UNION
     EMPLOYEES' 401(k) PLAN

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

                 Exhibit 10-r



CONTENTS


=====================================================================================
                                                                             
      ARTICLE 1. THE PLAN                                                           1
1.1   Establishment of Plan                                                         1
1.2   Applicability of Plan                                                         1
1.3   Purpose of the Plan                                                           1

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

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

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

      ARTICLE 5. VESTING IN ACCOUNTS                                               20
5.1   All Accounts                                                                 20

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


                                       i



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

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

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

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

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

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


                                      ii



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

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


                                      iii



ARTICLE 1. THE PLAN

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

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

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

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


                                       1


ARTICLE 2. DEFINITIONS

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

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

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

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

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

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

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

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

                                       2


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

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

(d)  "BENEFITS COMMITTEE" means the Committee established pursuant to Article 10
     Administrator) to serve as Plan Administrator.

(e)  "BOARD" means the Board of Directors of the Company.

(f)  "CHANGE IN CONTROL" means any of the following events have occurred:

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

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

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

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

                                       3

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

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

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

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

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

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

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

(k)  "COMPENSATION" means--

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

          (A)  base compensation;

          (B)  overtime pay;

          (C)  performance lump sum pay; and

                                       4


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

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

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

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

     For purposes of this section--

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

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

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

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

                                       5


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

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

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

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

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

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

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

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

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

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

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

                                      6

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

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

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

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

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

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

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

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

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

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

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

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

      (1) after reaching age 65; or

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

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

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

                                       7


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

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

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

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

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

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

                                      8


ARTICLE 3. PARTICIPATION

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

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

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

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


                                       9


ARTICLE 4. CONTRIBUTIONS

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

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

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

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

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

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


                                       10


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

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

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

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

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

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

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

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


                                       11


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

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

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

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

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

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

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


                                       12


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

      (2) the lesser of--

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

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

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

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

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

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

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


                                       13


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

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

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

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

      (2) the lesser of--

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

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

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

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

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

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


                                       14


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

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

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

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

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

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

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


                                       15


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

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

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

      (2) the lesser of--

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

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

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

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

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

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

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

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


                                       16



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

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

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

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

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

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

(c)   ADDITIONAL LIMITATION. If in any Plan Year beginning prior to January 1,
      2000, a Participant is covered both under any defined contribution plan
      and under any defined benefit plan, the sum of the defined benefit plan
      fraction (as defined in Code paragraph 415(e)(2)) and the defined
      contribution plan fraction (as defined in Code paragraph 415(e)(3)) for
      the Plan Year shall not exceed one. It is intended that the contributions
      under any defined contribution plan will be reduced to the extent
      necessary to prevent the sum of those fractions for any Plan Year from
      exceeding one before reducing benefits payable under any defined benefit
      plan. "Any defined benefit plan" means all defined benefit plans of the
      Company and Affiliates considered as one plan.

(d)   REDUCTION IN ANNUAL ACCOUNT ADDITIONS. If in any Plan Year a Participant's
      Annual Account Addition exceeds the limitation determined under subsection
      (b) above, the excess will not be allocated to the Participant's accounts
      in any defined contribution plan but shall be handled in the following
      manner and order until the excess is eliminated:

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

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

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


                                       17


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

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

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

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

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

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

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

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

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


                                       18


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

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


                                       19




ARTICLE 5. VESTING IN ACCOUNTS

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


                                       20


ARTICLE 6. DISTRIBUTIONS AND WITHDRAWALS

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

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

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

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

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

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

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

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

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


                                       21


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

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

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

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

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

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

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

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


                                       22


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

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

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

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

          (A)  December 31 of the calendar year in which the Member would have
               attained age 70 1/2, if the Beneficiary is the Member's spouse;
               or

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

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

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

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

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

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


                                       23


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

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

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

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

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

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

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

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

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

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

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

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

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

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


                                       24


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

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

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

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

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

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

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

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

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

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


                                       25


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

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

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

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

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

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

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

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

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

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

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

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


                                       26


section will not be utilized in any manner to discriminate in favor of Highly
Compensated Employees.

6.6 OTHER WITHDRAWALS PRIOR TO TERMINATION OF EMPLOYMENT
(a)   WITHDRAWALS AT OR AFTER AGE 59 1/2. A Participant who has attained age
      59 1/2 may withdraw any or all of the balance in his Account upon 15 days
      (or such shorter period designated by the Plan Administrator) prior notice
      to the Plan Administrator. Such withdrawals shall be made in a lump sum
      and will be elected in accordance with rules established for that purpose
      by the Plan Administrator.

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

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

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


                                       27


ARTICLE 7. INVESTMENT ELECTIONS

7.1 AFTER-TAX, DEFERRED COMPENSATION, EMPLOYER MATCH, ESOP TRANSFER, AND
ROLLOVER CONTRIBUTION ACCOUNTS
(a)   INVESTMENT OF CONTRIBUTIONS. Each Participant may elect to have the
      After-Tax, Deferred Compensation, and Rollover Contributions made on the
      Participant's behalf invested in any one or more of the Investment Funds
      in increments of 1 percent, in accordance with procedures established by
      the Plan Administrator.

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

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

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

7.2 MATCHING CONTRIBUTIONS ACCOUNT
(a)   INVESTMENT OF CONTRIBUTIONS. Employer Matching Contributions made to the
      Participant's Accounts shall be invested in the Cinergy Stock Fund.

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

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


                                       28


      be voted, and direct the manner in which all other rights appurtenant to
      such shares shall be exercised, as if the Member was the shareholder of
      record.

(b)   PROVISION OF INFORMATION. Prior to each annual or special shareholders'
      meeting at which Cinergy Stock has voting rights, the Trustee shall cause
      to be furnished to each Member with an interest in the Cinergy Stock Fund
      a copy of the proxy solicitation materials with respect to the meeting.
      The Trustee shall use its best efforts to timely distribute to each Member
      all information to be distributed to shareholders in connection with any
      tender or exchange offer with respect to Cinergy Stock. The materials
      and/or information shall include any forms and instructions as may be
      necessary for the Member to direct the manner of voting on each matter to
      be brought before a meeting or to direct a response to a tender or
      exchange offer.

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


                                       29



ARTICLE 8. ACCOUNTS AND RECORDS OF THE PLAN

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

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

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

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

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


                                       30


ARTICLE 9. FINANCING

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

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

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

9.4 RIGHTS IN THE TRUST FUND
Persons eligible for benefits under the Plan are entitled to look only to the
Trust Fund for the payment of those benefits and have no claim against any
Employer, the Plan Administrator, or any other person. No person has any right
or interest in the Trust Fund except as expressly provided in the Plan.


                                       31


Article 10. ADMINISTRATION

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

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

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

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

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


                                       32


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

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

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

(a)   the specific reasons for the denial;

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

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


                                       33


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

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

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

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


                                       34


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

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

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


                                       35


ARTICLE 11. AMENDMENT AND TERMINATION

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

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

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

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

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

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

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


                                       36


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

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

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

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

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

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

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

(1)   the amendment is adopted;

(2)   the amendment becomes effective; or

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

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


                                       37


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

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

(a)   taking appropriate action to adopt the Plan;

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

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

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

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

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


                                       38



ARTICLE 13. MISCELLANEOUS

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

(b)   The Beneficiary of each Member who is married will be the Member's
      surviving spouse, unless that spouse consents in writing to the
      designation of another Beneficiary or Beneficiaries. The consent must
      specifically acknowledge the identity of the nonspousal Beneficiary, or
      must specifically acknowledge and waive the right to limit the consent to
      a specific Beneficiary. Each married Member may, from time to time, change
      the Member's designation of Beneficiaries; provided, however, that the
      Member may not change the Member's Beneficiary without the written consent
      of the Member's spouse, unless the spouse's prior consent expressly
      permits designations by the Member without any requirement of further
      consent by the spouse. The consent of a Member's spouse will be
      irrevocable unless and until the Member changes the Member's designation
      of Beneficiaries. Upon the divorce of a Member and the Member's spouse,
      any designation of the spouse as the Member's Beneficiary will be deemed
      to be revoked.

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

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

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


                                       39



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

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

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

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

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

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


                                      40



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

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

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

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

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

                                * * * * * * * * * *


                                       41



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


                                        CINERGY CORP.


APPROVED:
                                        By _______________________________
                                           Madeleine W. Ludlow

                                           Its ___________________________

By _______________________________

   Its ___________________________



                                       42

EX-10.S

                                                   APPROVED BY THE CINERGY CORP.
                                         BOARD OF DIRECTORS ON DECEMBER 10, 1999

              JANUARY 1, 2000 AMENDMENT TO THE CINERGY CORP. UNION
                             EMPLOYEES' 401(k) PLAN

         The Cinergy Corp. Union Employees' 401(k) Plan, as amended and restated
effective January 1, 1998, is hereby amended pursuant to Article 11 thereof.
Amendments with respect to the modification of Sections 3.1, 4.1, and 7.1 are
effective January 1, 2000.

(1)      EXPLANATION OF AMENDMENTS

         The purpose of the amendments is to provide for automatic or passive
enrollment in the Plan as of each new employee's employment date. Section 3.1 is
amended, effective January 1, 2000, by providing that each new employee is
automatically enrolled in the Plan as a participant on his/her employment date
as to before-tax contributions unless the employee notifies the Plan
administrator in writing that he/she declines participation.

         Section 4.1 is amended, effective January 1, 2000, to provide that each
new employee who is enrolled as a participant as of his/her employment date as
to before-tax contributions will be deemed to have made an initial deferred
percentage election of one percent.

         Section 7.1 is amended, effective January 1, 2000, to provide that the
automatic deferrals of new employees who are enrolled as participants as of
their employment dates as to before-tax contributions will be deposited in one
or more investment funds selected by the Plan Administrator and in accordance
with procedures established by the Plan Administrator.

(2)      AMENDMENTS EFFECTIVE JANUARY 1, 2000

         (a)      SECTION 3.1 AS AMENDED

                  Section 3.1, as hereby amended, reads as follows:

                  "3.1     PARTICIPATION.

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

                           Prior to January 1, 2000, each other Eligible
                           Employee may commence participation in the Plan as of
                           the later of the Effective Date or the Eligible
                           Employee's Employment Commencement


                           Date, by electing to make Employee After-Tax or
                           Deferred  Compensation Contributions, or by making a
                           Rollover Contribution, pursuant to Article 4
                           (Contributions).

                           On or after January 1, 2000, each other Eligible
                           Employee shall automatically commence participation
                           in the Plan as of the Eligible Employee's Employment
                           Commencement Date as to Employee Deferred
                           Compensation Contributions unless the Eligible
                           Employee affirmatively notifies the Plan
                           Administrator in writing that the Eligible Employee
                           does not desire to commence participation in the
                           Plan. Any Eligible Employee who affirmatively elects
                           not to participate in the Plan as of his Employment
                           Commence Date may subsequently commence participation
                           in the Plan by electing to make After-Tax or Deferred
                           Compensation Contributions, or by making a Rollover
                           Contribution, pursuant to Article 4 (Contributions).
                           Any Eligible Employee who commences participation as
                           of his Employment Commencement Date may also elect to
                           make Employee After-Tax Contributions or a Rollover
                           Contribution, pursuant to Article 4 (Contributions)."

         (b)      SECTION 4.1 AS AMENDED

                  Section 4.1, as hereby amended, reads as follows:

                  "4.1     DEFERRED COMPENSATION CONTRIBUTIONS

                            Each Participant may elect, in accordance with rules
                            established by the Plan Administrator, to reduce the
                            Participant's Compensation by any percentage up to
                            15 percent, in increments of one-half percent, and
                            to have the amount by which the Participant's
                            Compensation is reduced contributed on the
                            Participant's behalf by the Employer as a Deferred
                            Compensation Contribution to the Plan. Prior to
                            January 1, 2000, the election will be effective as
                            soon as administratively possible after the date the
                            Employee becomes eligible to participate and
                            notifies the Plan Administrator of the deferral
                            percentage. On or after January 1, 2000, each
                            Eligible Employee who becomes a Participant as of
                            his Employment Commencement Date will be deemed to
                            have made an initial deferral percentage election of
                            1 percent.

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

                            The Plan Administrator may adopt rules concerning
                            the administration of this section. The Deferred
                            Compensation Contributions made on behalf of each
                            Participant shall be paid by


                            each Employer to the Trustee and allocated to the
                            Participant's Deferred Compensation Contributions
                            Account as soon as practical after the end of the
                            pay period to which the Deferred Compensation
                            Contributions relate, but in no case later than
                            the fifteenth business day of the month following
                            the month in which those amounts would otherwise
                            have been payable to the Participant."

         (c)      SECTION 7.1 AS AMENDED

                  Section 7.1, as hereby amended, reads as follows:

                  "7.1     AFTER-TAX, DEFERRED COMPENSATION, EMPLOYER MATCH,
                           ESOP TRANSFER, AND ROLLOVER CONTRIBUTION ACCOUNTS

                           (a)      INVESTMENT OF CONTRIBUTIONS. Each
                                    Participant may elect to have the After-Tax,
                                    Deferred Compensation, and Rollover
                                    Contributions made on the Participant's
                                    behalf invested in any one or more of the
                                    Investment Funds in increments of 1 percent,
                                    in accordance with procedures established by
                                    the Plan Administrator.

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

                           (c)      INVESTMENT ELECTIONS. Each Participant may
                                    make the elections described in subsection
                                    (a) by making an election with the Plan
                                    Administrator upon becoming a Participant;
                                    PROVIDED, HOWEVER, that each Participant who
                                    (on or after January 1, 2000) commences
                                    participation as of his Employment
                                    Commencement Date will have his Deferred
                                    Compensation Contributions automatically
                                    deposited in one or more Investment Funds
                                    selected by the Plan Administrator and in
                                    accordance with procedures established by
                                    the Plan Administrator.

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

         This Amendment is executed and approved by the duly authorized officers
         of Cinergy Corp., effective as of the dates set forth herein.



                                            CINERGY CORP.


                                            By: ____________________________
                                                         James E. Rogers
                                                        Vice Chairman and
                                                     Chief Executive Officer


                                            Dated: _________________________


APPROVED:


By: _________________________________
           Jerome A. Vennemann
         Acting General Counsel
    and Assistant Corporate Secretary


Dated: ______________________________

EX-10.T

              CINERGY CORP. NON-UNION
              EMPLOYEES' 401(k) PLAN

              (Effective as of January 1, 1998)











                                                          Exhibit 10-t



CONTENTS


=========================================================================================
                                                                                
       ARTICLE 1. THE PLAN                                                             1
1.1    Establishment of Plan                                                           1
1.2    Applicability of Plan                                                           1
1.3    Purpose of the Plan                                                             1

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

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

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

       ARTICLE 5. VESTING IN ACCOUNTS                                                 20
5.1    All Accounts                                                                   20

       ARTICLE 6. DISTRIBUTIONS AND WITHDRAWALS                                       21
6.1    Distribution Upon Retirement, Death, Disability, or Other Termination
       of Employment                                                                  21
6.2    Commencement of Distributions                                                  21
6.3    Method of Distribution                                                         22
6.4    Hardship Withdrawals                                                           23
6.5    Loans                                                                          25


                                       i



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

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

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

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

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

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

       ARTICLE 12. TOP-HEAVY PROVISIONS                                               38
12.1   Application of Top-Heavy Provisions                                            38


                                       ii



12.2   Definitions                                                                   38
12.3   Minimum Contribution                                                          39
12.4   Limit on Annual Additions: Combined Plan Limit                                40
12.5   Collective Bargaining Agreements                                              41

       ARTICLE 13. PARTICIPATION IN AND WITHDRAWAL FROM THE PLAN
       BY AN EMPLOYER                                                                42
13.1   Adoption of the Plan                                                          42
13.2   Withdrawal from Participation                                                 42
13.3   Company as Agent for Employers                                                42

       ARTICLE 14. MISCELLANEOUS                                                     43
14.1   Beneficiary Designation                                                       43
14.2   Facility of Payment                                                           43
14.3   Nonalienation                                                                 44
14.4   Applicable Law                                                                44
14.5   Severability                                                                  44
14.6   No Guarantee                                                                  44
14.7   Merger, Consolidation, or Transfer                                            45
14.8   Internal Revenue Service Approval                                             45




                                      iii



ARTICLE 1. THE PLAN

1.1 ESTABLISHMENT OF PLAN

As of January 1, 1998, Cinergy Corp. (the "Company") has established the
Cinergy Corp. Non-Union Employees' 401(k) Plan (the "Plan") for the benefit
of its eligible non-union employees. The Plan is a new plan resulting from
the January 1, 1998 merger of the PSI Energy, Inc. Employees' 401(k) Savings
Plan and The Cincinnati Gas & Electric Company Deferred Compensation and
Investment Plan.

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

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

1.2 APPLICABILITY OF PLAN

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

1.3 PURPOSE OF THE PLAN

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


                                       1


ARTICLE 2. DEFINITIONS

2.1 DEFINITIONS

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

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

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

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

      (3) "EMPLOYER MATCH ACCOUNT" means that portion of a Member's Account that
          evidences the value of the matching contributions made to the PSI
          Energy, Inc. Employees' 401(k) Savings Plan before January 1, 1992,
          including any gains and losses of the Trust Fund attributable thereto;

      (4) "ESOP TRANSFER ACCOUNT" means that portion of a Member's Account that
          evidences the value of the Member's account balance attributable to
          amounts that the Member elected to have transferred from the Public
          Service Company of Indiana, Inc. Employee Stock Ownership Plan to the
          PSI Energy, Inc. Employees' 401(k) Savings Plan, including any gains
          or losses of the Trust attributable thereto;

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

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


                                       2


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

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

(d)   "BENEFITS COMMITTEE" means the Committee established pursuant to Article
      10 (Administrator) to serve as Plan Administrator.

(e)   "BOARD" means the Board of Directors of the Company.

(f)   "CHANGE IN CONTROL" means any of the following events have occurred:

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

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

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

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


                                       3


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

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

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

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

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

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

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

(k)   "COMPENSATION" means--

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

          (A)  base compensation;

          (B)  overtime pay;

          (C)  performance lump sum pay; and


                                       4


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

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

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

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

      For purposes of this section--

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

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

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

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


                                       5


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

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

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

(o)   "ELIGIBLE EMPLOYEE" means an Employee employed by the Employer who has
      attained age 18, and who is not a "leased employee" (as defined in section
      3.6 (Leased Employee)), who is not classified by the Employer as a summer
      laborer or a summer employee, and whose terms and conditions of employment
      are not governed by a collective bargaining agreement that provides for
      participation in this Plan.

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

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

(r)   "EMPLOYER" means the Company and any Affiliate that elects to become a
      party to the Plan, with the approval of the Company, by adopting the Plan
      for the benefit of its Eligible Employees in the manner described in
      Article 13 (Participation In and Withdrawal From the Plan by an Employer).

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

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

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

(t)   "EMPLOYMENT COMMENCEMENT DATE" means the first day on which an Employee
      first performs an hour of service (as defined in Department of Labor
      regulation 2530.200b-2) as an Eligible Employee or, if applicable, the
      first day following a


                                       6


      severance from service on which an Employee performs an hour of service
      as an Eligible Employee.

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

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

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

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

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

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

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

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

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

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

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

      (1) after reaching age 65; or

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

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

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


                                       7


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

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

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

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

(jj)  "YEAR OF SERVICE" means a year of "service," as defined in section 1.94 of
      the Cinergy Corp. Non-Union Employees' Pension Plan.

2.2 GENDER AND NUMBER

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


                                       8


ARTICLE 3. PARTICIPATION

3.1 PARTICIPATION

Each Eligible Employee as of the Effective Date who was a Participant in the
PSI Energy, Inc. Employees' 401(k) Savings Plan or The Cincinnati Gas &
Electric Company Deferred Compensation & Investment Plan as of December 31,
1997 will become a Participant on the Effective Date.

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

3.2 DURATION OF PARTICIPATION

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

3.3 LEASED EMPLOYEES

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


                                       9


ARTICLE 4. CONTRIBUTIONS

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

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

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

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

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

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


                                      10



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

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

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

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

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

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

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

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


                                      11




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

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

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

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

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

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

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


                                      12




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

      (2) the lesser of--

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

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

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

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

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

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

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


                                      13




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

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

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

      (2)  the lesser of--

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

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

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

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

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

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

      All Employee After-Tax and Employer Matching Contributions made under this
      Plan and all after-tax contributions made under any other plan that is
      aggregated with this Plan for purposes of Code paragraph 401(a)(4)and Code
      subsection 410(b) will be


                                      14





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

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

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

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

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

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

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

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

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


                                      15




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

      (2)  the lesser of--

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

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

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

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

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

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

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

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

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


                                      16





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

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

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

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

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

(c)   ADDITIONAL LIMITATION. If in any Plan Year beginning prior to January 1,
      2000, a Participant is covered both under any defined contribution plan
      and under any defined benefit plan, the sum of the defined benefit plan
      fraction (as defined in Code paragraph 415(e)(2)) and the defined
      contribution plan fraction (as defined in Code paragraph 415(e)(3)) for
      the Plan Year shall not exceed one. It is intended that the contributions
      under any defined contribution plan will be reduced to the extent
      necessary to prevent the sum of those fractions for any Plan Year from
      exceeding one before reducing benefits payable under any defined benefit
      plan. "Any defined benefit plan" means all defined benefit plans of the
      Company and Affiliates considered as one plan.

(d)   REDUCTION IN ANNUAL ACCOUNT ADDITIONS. If in any Plan Year a Participant's
      Annual Account Addition exceeds the limitation determined under subsection
      (b) above, the excess will not be allocated to the Participant's accounts
      in any defined contribution plan but shall be handled in the following
      manner and order until the excess is eliminated:

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

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

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

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


                                      17




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

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

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

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

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

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

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

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


                                      18




      commencing with the date the make-up contribution is made in accordance
      with the provisions of Article 3 (Participation) and 4 (Contributions).

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


                                      19


ARTICLE 5. VESTING IN ACCOUNTS

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

                                     20


ARTICLE 6. DISTRIBUTIONS AND WITHDRAWALS

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

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

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

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

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

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

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

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

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

                                     21


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

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

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

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

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

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

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

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

                                     22


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

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

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

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

           (A) December 31 of the calendar year in which the Member would have
               attained age 70 1/2, if the Beneficiary is the Member's spouse;
               or

           (B) December 31 of the calendar year containing the fifth anniversary
               of the Member's death.

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

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

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

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

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

                                     23


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

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

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

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

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

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

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

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

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

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

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

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

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

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


                                       24


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

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

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

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

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

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

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

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

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

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

                                     25


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

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

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

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

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

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

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

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

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

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

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

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

                                     26


section will not be utilized in any manner to discriminate in favor of Highly
Compensated Employees.

6.6 OTHER WITHDRAWALS PRIOR TO TERMINATION OF EMPLOYMENT
(a)   WITHDRAWALS AT OR AFTER AGE 59 1/2. A Participant who has attained age
      59 1/2 may withdraw any or all of the balance in his Account upon 15 days
      (or such shorter period designated by the Plan Administrator) prior notice
      to the Plan Administrator. Such withdrawals shall be made in a lump sum
      and will be elected in accordance with rules established for that purpose
      by the Plan Administrator.

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

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

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

                                     27


ARTICLE 7. INVESTMENT ELECTIONS

7.1 AFTER-TAX, DEFERRED COMPENSATION, EMPLOYER MATCH, ESOP TRANSFER, AND
ROLLOVER CONTRIBUTION ACCOUNTS
(a)   INVESTMENT OF CONTRIBUTIONS. Each Participant may elect to have the After-
      Tax, Deferred Compensation, and Rollover Contributions made on the
      Participant's behalf invested in any one or more of the Investment Funds
      in increments of 1 percent, in accordance with procedures established by
      the Plan Administrator.

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

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

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

7.2 MATCHING CONTRIBUTIONS ACCOUNT
(a)   INVESTMENT OF CONTRIBUTIONS. Employer Matching Contributions made to the
      Participant's Accounts shall be invested in the Cinergy Stock Fund.

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

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

                                     28


      be voted, and direct the manner in which all other rights appurtenant to
      such shares shall be exercised, as if the Member was the shareholder of
      record.

(b)   PROVISION OF INFORMATION. Prior to each annual or special shareholders'
      meeting at which Cinergy Stock has voting rights, the Trustee shall cause
      to be furnished to each Member with an interest in the Cinergy Stock Fund
      a copy of the proxy solicitation materials with respect to the meeting.
      The Trustee shall use its best efforts to timely distribute to each Member
      all information to be distributed to shareholders in connection with any
      tender or exchange offer with respect to Cinergy Stock. The materials
      and/or information shall include any forms and instructions as may be
      necessary for the Member to direct the manner of voting on each matter to
      be brought before a meeting or to direct a response to a tender or
      exchange offer.

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



                                     29


ARTICLE 8. ACCOUNTS AND RECORDS OF THE PLAN

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

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

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

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

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


                                       30



ARTICLE 9. FINANCING

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

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

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

9.4 RIGHTS IN THE TRUST FUND
Persons eligible for benefits under the Plan are entitled to look only to the
Trust Fund for the payment of those benefits and have no claim against any
Employer, the Plan Administrator, or any other person. No person has any right
or interest in the Trust Fund except as expressly provided in the Plan.


                                       31



ARTICLE 10. ADMINISTRATION

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

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

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

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

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


                                       32



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

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

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

(a)   the specific reasons for the denial;

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

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


                                       33



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

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

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

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


                                       34



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

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

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



                                       35



ARTICLE 11. AMENDMENT AND TERMINATION

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

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

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

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

11.2 LIMITATIONS ON AMENDMENTS
The provisions of this Article are subject to and limited by the following
restrictions:
(a)   No amendment will operate either directly or indirectly to give any
      Employer any interest whatsoever in any funds or property held by the
      Trustee under the terms of this Plan or the Trust Agreement, or to permit
      the corpus or income of the Trust to be used for or diverted to purposes
      other than the exclusive benefit of Members or their Beneficiaries.

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


                                       36



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

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

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

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

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

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

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

(1)   the amendment is adopted;

(2)   the amendment becomes effective; or

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

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


                                       37



ARTICLE 12. TOP-HEAVY PROVISIONS

12.1  APPLICATION OF TOP-HEAVY PROVISIONS
(a)   SINGLE PLAN DETERMINATION. Except as provided in subsection (b)(2), if as
      of a Determination Date, the sum of the amount of the Section 416 Accounts
      of Key Employees and the Beneficiaries of deceased Key Employees exceeds
      60 percent of the amount of the Section 416 Accounts of all Employees and
      Beneficiaries (excluding former Key Employees), the Plan is top-heavy, and
      the provisions of this Article will become applicable.

(b)   AGGREGATION GROUP DETERMINATION.

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

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

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

12.2 DEFINITIONS
(a)   "AGGREGATION GROUP" means this Plan and all other plans maintained by the
      Employers and nonparticipating Affiliates that cover a Key Employee and
      any other plan that enables a plan covering a Key Employee to meet the
      requirements of Code paragraph 401(a)(4) or section 410. In addition, at
      the election of the Plan Administrator, the Aggregation Group may be
      expanded to include any other qualified plan maintained by an Employer or
      nonparticipating Affiliate if the expanded Aggregation Group meets the
      requirements of Code paragraph 401(a)(4) and Code section 410.

(b)   "COMPENSATION" means the Member's compensation, salaries, and other
      amounts received for personal services rendered in the course of
      employment with Employers and nonparticipating Affiliates, including those
      items described in Treasury regulation 1.415-2(d)(1). The annual
      Compensation of each Member that may be taken into account under the Plan
      shall not exceed the first $160,000 (as adjusted by the Secretary of the
      Treasury under Code paragraph 401(a)(17)).

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

                                       38


(d)   "KEY EMPLOYEE" means a Member who is a "key employee," as defined in
      Code subsection 416(i). Any Employee who is not a Key Employee shall be
      a "non-Key employee" for purposes of applying this Article 12
      (Top-Heavy Provisions).

(e)   "SECTION 416 ACCOUNT" means--

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

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

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

      reduced by--

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

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

12.3 MINIMUM CONTRIBUTION
(a)   GENERAL. If this Plan is determined to be top-heavy under the provisions
      of section 12.1 (Application of Top-Heavy Provisions) with respect to a
      Plan Year, the sum of Employer contributions (excluding Employer Matching
      Contributions and Tax-Deferred Contributions) and forfeitures under all
      qualified defined contribution plans allocated to the accounts of each
      Member in the Aggregation Group who is not a

                                      39


      Key Employee and is an Employee on the last day of the Plan Year will
      not be less than 3 percent of the Member's Compensation.

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

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

12.4 LIMIT ON ANNUAL ADDITIONS: COMBINED PLAN LIMIT
(a)   GENERAL. If this Plan is determined to be top-heavy under section 12.1,
      section 4.6 of this Plan will be applied by substituting 1.0 for 1.25 in
      applying the provisions of Code paragraphs 415(e)(2) and (e)(3).

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

(b)   EXCEPTION. Subsection (a) will not apply if this Plan would not be
      top-heavy if "90 percent" is substituted for "60 percent" in section
      12.1, but in that case--

      (1)  subsection 12.3(a) (Minimum Contribution) will be applied by
           substituting "4 percent" for "3 percent"; and

      (2)  subsection 12.3(c) (Minimum Contribution) will be applied by
           substituting "7.5 percent" for "5 percent."

(c)   TRANSITIONAL RULE. If, but for this subsection (c), subsection (a) would
      begin to apply with respect to the Plan, the application of subsection (a)
      shall be suspended with respect to a Member so long as there are--

                                      40


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

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

12.5 COLLECTIVE BARGAINING AGREEMENTS
The requirements of sections 12.3 (Minimum Contributions) and 12.4 (Limit on
Annual Additions: Combined Plan Limit) will not apply with respect to any
Employee included in a unit of Employees covered by a collective bargaining
agreement between Employee representatives and an Employer or nonparticipating
Affiliate if retirement benefits were the subject of good faith bargaining
between the Employee representatives and the Employer or nonparticipating
Affiliate.

                                      41


ARTICLE 13. PARTICIPATION IN AND WITHDRAWAL FROM THE PLAN BY AN EMPLOYER

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

(a)   taking appropriate action to adopt the Plan;

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

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

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

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

13.3 COMPANY AS AGENT FOR EMPLOYERS
Each Affiliate that becomes a participating Employer pursuant to section 13.1
(Adoption of Plan) by doing so will be deemed to have appointed the Company its
agent to exercise on its behalf all of the powers and authorities conferred upon
the Company by the terms of the Plan, including, but not limited to, the power
to amend and terminate the Plan. The Company's authority to act as agent will
continue unless and until that portion of the Trust Fund held for the benefit of
Employees of the particular Employer and their beneficiaries are transferred or
distributed pursuant to section 13.2 (Withdrawal from Participation). Each
Employer will, from time to time, upon the Company's request, furnish to the
Company any data and information as the Company requires in the performance of
its duties.

                                      42


ARTICLE 14. MISCELLANEOUS

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

(b)   The Beneficiary of each Member who is married will be the Member's
      surviving spouse, unless that spouse consents in writing to the
      designation of another Beneficiary or Beneficiaries. The consent must
      specifically acknowledge the identity of the nonspousal Beneficiary, or
      must specifically acknowledge and waive the right to limit the consent to
      a specific Beneficiary. Each married Member may, from time to time, change
      the Member's designation of Beneficiaries; provided, however, that the
      Member may not change the Member's Beneficiary without the written consent
      of the Member's spouse, unless the spouse's prior consent expressly
      permits designations by the Member without any requirement of further
      consent by the spouse. The consent of a Member's spouse will be
      irrevocable unless and until the Member changes the Member's designation
      of Beneficiaries. Upon the divorce of a Member and the Member's spouse,
      any designation of the spouse as the Member's Beneficiary will be deemed
      to be revoked.

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

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

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

                                      43


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

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

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

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

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

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

                                      44


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

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

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

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

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

                                * * * * * * * * * *

                                      45


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


                                   CINERGY CORP.


APPROVED:
                                   By_____________________________________
                                         Madeleine W. Ludlow

                                        Its_______________________________
By_______________________________

      Its________________________


                                       46

EX-10.U

                                                   APPROVED BY THE CINERGY CORP.
                                         BOARD OF DIRECTORS ON DECEMBER 10, 1999

            JANUARY 1, 2000 AMENDMENT TO THE CINERGY CORP. NON-UNION
                             EMPLOYEES' 401(k) PLAN

         The Cinergy Corp. Non-Union Employees' 401(k) Plan, as amended and
restated effective January 1, 1998, is hereby amended pursuant to Article 11
thereof. Amendments with respect to the modification of Sections 3.1, 4.1,
and 7.1 are effective January 1, 2000.

(1)      EXPLANATION OF AMENDMENTS

         The purpose of the amendments is to provide for automatic or passive
enrollment in the Plan as of each new employee's employment date. Section 3.1
is amended, effective January 1, 2000, by providing that each new employee is
automatically enrolled in the Plan as a participant on his/her employment
date as to before-tax contributions unless the employee notifies the Plan
administrator in writing that he/she declines participation.

         Section 4.1 is amended, effective January 1, 2000, to provide that
each new employee who is enrolled as a participant as of his/her employment
date as to before-tax contributions will be deemed to have made an initial
deferred percentage election of one percent.

         Section 7.1 is amended, effective January 1, 2000, to provide that
the automatic deferrals of new employees who are enrolled as participants as
of their employment dates as to before-tax contributions will be deposited in
one or more investment funds selected by the Plan Administrator and in
accordance with procedures established by the Plan Administrator.

(2)      AMENDMENTS EFFECTIVE JANUARY 1, 2000

         (a)      SECTION 3.1 AS AMENDED

                  Section 3.1, as hereby amended, reads as follows:

                  "3.1     PARTICIPATION.

                           Each Eligible Employee as of the Effective Date who
                           was a Participant in the PSI Energy Inc. Employees'
                           401(k) Savings Plan or The Cincinnati Gas & Electric
                           Company Deferred Compensation & Investment Plan as of
                           December 31, 1997 will become a participant on the
                           Effective Date.

                           Prior to January 1, 2000, each other Eligible
                           Employee may commence participation in the Plan as of
                           the later of the Effective Date or the Eligible
                           Employee's Employment Commencement Date, by electing
                           to make Employee After-Tax or Deferred




                           Compensation Contributions, or by making a  Rollover
                           Contribution, pursuant to Article 4 (Contributions).

                           On or after January 1, 2000, each other Eligible
                           Employee shall automatically commence participation
                           in the Plan as of the Eligible Employee's Employment
                           Commencement Date as to Employee Deferred
                           Compensation Contributions unless the Eligible
                           Employee affirmatively notifies the Plan
                           Administrator in writing that the Eligible Employee
                           does not desire to commence participation in the
                           Plan. Any Eligible Employee who affirmatively elects
                           not to participate in the Plan as of his Employment
                           Commence Date may subsequently commence participation
                           in the Plan by electing to make After-Tax or Deferred
                           Compensation Contributions, or by making a Rollover
                           Contribution, pursuant to Article 4 (Contributions).
                           Any Eligible Employee who commences participation as
                           of his Employment Commencement Date may also elect to
                           make Employee After-Tax Contributions or a Rollover
                           Contribution, pursuant to Article 4 (Contributions)."

         (b)      SECTION 4.1 AS AMENDED

                  Section 4.1, as hereby amended, reads as follows:

                  "4.1     DEFERRED COMPENSATION CONTRIBUTIONS

                            Each Participant may elect, in accordance with rules
                            established by the Plan Administrator, to reduce the
                            Participant's Compensation by any percentage up to
                            15 percent, in increments of one-half percent, and
                            to have the amount by which the Participant's
                            Compensation is reduced contributed on the
                            Participant's behalf by the Employer as a Deferred
                            Compensation Contribution to the Plan. Prior to
                            January 1, 2000, the election will be effective as
                            soon as administratively possible after the date the
                            Employee becomes eligible to participate and
                            notifies the Plan Administrator of the deferral
                            percentage. On or after January 1, 2000, each
                            Eligible Employee who becomes a Participant as of
                            his Employment Commencement Date will be deemed to
                            have made an initial deferral percentage election of
                            1 percent.

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

                            The Plan Administrator may adopt rules concerning
                            the administration of this section. The Deferred
                            Compensation Contributions made on behalf of each
                            Participant shall be paid by each Employer to the
                            Trustee and allocated to the Participant's




                            Deferred Compensation Contributions Account as
                            soon as practical after the end of the pay period
                            to which the Deferred Compensation Contributions
                            relate, but in no case later than the fifteenth
                            business day of the month following the month in
                            which those amounts would otherwise have been
                            payable to the Participant."

         (c)      SECTION 7.1 AS AMENDED

                  Section 7.1, as hereby amended, reads as follows:

                  "7.1     AFTER-TAX, DEFERRED COMPENSATION, EMPLOYER MATCH,
                           ESOP TRANSFER, AND ROLLOVER CONTRIBUTION ACCOUNTS

                           (a)      INVESTMENT OF CONTRIBUTIONS. Each
                                    Participant may elect to have the After-Tax,
                                    Deferred Compensation, and Rollover
                                    Contributions made on the Participant's
                                    behalf invested in any one or more of the
                                    Investment Funds in increments of 1 percent,
                                    in accordance with procedures established by
                                    the Plan Administrator.

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

                           (c)      INVESTMENT ELECTIONS. Each Participant may
                                    make the elections described in subsection
                                    (a) by making an election with the Plan
                                    Administrator upon becoming a Participant;
                                    PROVIDED, HOWEVER, that each Participant who
                                    (on or after January 1, 2000) commences
                                    participation as of his Employment
                                    Commencement Date will have his Deferred
                                    Compensation Contributions automatically
                                    deposited in one or more Investment Funds
                                    selected by the Plan Administrator and in
                                    accordance with procedures established by
                                    the Plan Administrator.

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

         This Amendment is executed and approved by the duly authorized officers
         of Cinergy Corp., effective as of the dates set forth herein.


                                            CINERGY CORP.





                                            By: ____________________________
                                                         James E. Rogers
                                                        Vice Chairman and
                                                     Chief Executive Officer


                                            Dated: ____________________________

APPROVED:



By:      _________________________________

                 Jerome A. Vennemann
               Acting General Counsel
         and Assistant Corporate Secretary

Dated:   _________________________________

EX-10.V

     CINERGY CORP. UNION EMPLOYEES'
     SAVINGS INCENTIVE PLAN

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




                                                                    Exhibit 10-v









CONTENTS


============================================================================
                                                                    
      ARTICLE 1. THE PLAN                                                  1
1.1   Establishment of Plan                                                1
1.2   Applicability of Plan                                                1
1.3   Purpose of the Plan                                                  1

      ARTICLE 2. DEFINITIONS                                               2
2.1   Definitions                                                          2
2.2   Gender and Number                                                    9

      ARTICLE 3. PARTICIPATION                                             10
3.1   Participation                                                        10
3.2   Duration of Participation                                            10
3.3   Leased Employees                                                     10

      ARTICLE 4. CONTRIBUTIONS                                             11
4.1   Deferred Compensation Contributions                                  11
4.2   Employee After-Tax Contributions                                     11
4.3   Matching Contributions                                               12
4.4   Limitations on Contributions                                         13
4.5   Contributions Not Contingent on Profits                              17
4.6   Limitations on Annual Account Additions                              17
4.7   Rollover Contributions                                               19
4.8   Contributions During Period of Military Leave                        19

      ARTICLE 5. VESTING IN ACCOUNTS                                       21
5.1   All Accounts                                                         21

      ARTICLE 6. DISTRIBUTIONS AND WITHDRAWALS                             22
6.1   Distribution Upon Retirement, Death, Disability, or Other
      Termination of Employment                                            22
6.2   Commencement of Distributions                                        22
6.3   Method of Distribution                                               23
6.4   Hardship Withdrawals                                                 24

                                       i



6.5   Loans                                                                26
6.6   Other Withdrawals Prior to Termination of Employment                 28
6.7   Withholding Taxes                                                    28

      ARTICLE 7. INVESTMENT ELECTIONS                                      29
7.1   After-Tax, Deferred Compensation, and Rollover Contribution Accounts 29
7.2   Matching Contributions Account                                       29
7.3   Voting and Other Rights with Respect to Cinergy Stock                29

      ARTICLE 8. ACCOUNTS AND RECORDS OF THE PLAN                          31
8.1   Accounts and Records                                                 31
8.2   Trust Fund                                                           31
8.3   Valuation and Allocation of Expenses                                 31
8.4   Allocation of Earnings and Losses                                    31

      ARTICLE 9. FINANCING                                                 32
9.1   Financing                                                            32
9.2   Contributions                                                        32
9.3   Nonreversion                                                         32
9.4   Rights in the Trust Fund                                             32

      ARTICLE 10. ADMINISTRATION                                           33
10.1  Plan Administrator and Fiduciary                                     33
10.2  Removal and Replacement of Benefits Committee Members                33
10.3  Compensation and Expenses                                            33
10.4  Delegation of Duties and Employment of Specialists                   33
10.5  Administration                                                       33
10.6  No Enlargement of Employee Rights                                    34
10.7  Appeals from Denial of Claims                                        34
10.8  Notice of Address and Missing Persons                                35
10.9  Data and Information for Benefits                                    35
10.10 Indemnity for Liability                                              36
10.11 Effect of a Mistake                                                  36

      ARTICLE 11. AMENDMENT AND TERMINATION                                37
11.1  Amendment and Termination                                            37
11.2  Limitations on Amendments                                            37
11.3  Effect of Bankruptcy and Other Contingencies Affecting an Employer   38
11.4  Amendment of Vesting Schedule                                        38

                                       ii



      ARTICLE 12. PARTICIPATION IN AND WITHDRAWAL FROM
      THE PLAN BY AN EMPLOYER                                              39
12.1  Adoption of the Plan                                                 39
12.2  Withdrawal from Participation                                        39
12.3  Company as Agent for Employers                                       39

      ARTICLE 13. MISCELLANEOUS                                            40
13.1  Beneficiary Designation                                              40
13.2  Facility of Payment                                                  40
13.3  Nonalienation                                                        41
13.4  Applicable Law                                                       41
13.5  Severability                                                         41
13.6  No Guarantee                                                         41
13.7  Merger, Consolidation, or Transfer                                   42
13.8  Internal Revenue Service Approval                                    42










                                      iii



ARTICLE 1.  THE PLAN

1.1 ESTABLISHMENT OF PLAN
The Cincinnati Gas & Electric Company instituted the Employee Incentive Thrift
Plan in 1967. Effective as of October 1, 1985, the plan was amended with respect
to weekly and hourly paid employees and renamed The Cincinnati Gas & Electric
Company Savings Incentive Plan.

The plan was last amended and restated effective January 1, 1995. Effective
January 1, 1998, Cinergy Corp. (the "Company"), the parent holding company of
The Cincinnati Gas & Electric Company, has assumed sponsorship of the plan, and
has renamed it the Cinergy Corp. Union Employees' Savings Incentive Plan (the
"Plan"). The Plan is hereby again amended and restated effective January 1,
1998, as set forth in this document.

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

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


                                       1



ARTICLE 2. DEFINITIONS

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

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

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

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

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

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

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

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


                                       2



(d)   "BENEFITS COMMITTEE" means the Committee established pursuant to Article
      10 Administrator) to serve as Plan Administrator.

(e)   "BOARD" means the Board of Directors of the Company.

(f)   "CHANGE IN CONTROL" means any of the following events have occurred:

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

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

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

           (B) a merger or consolidation effected to implement a
               recapitalization of the Company (or similar transaction) in which
               no person is or becomes a beneficial owner, directly or
               indirectly, of securities of the Company (not including in the
               securities beneficially owned by such person any securities
               acquired directly from the Company or its Affiliates other than
               in connection with the acquisition by the Company or its
               Affiliates of a business) representing 25 percent or more of the
               combined voting power of the Company's then outstanding
               securities;

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


                                       3



           the directors then still in office who either were directors at the
           beginning of that period or whose appointment, election, or
           nomination for election was previously so approved or recommended
           cease for any reason to constitute a majority of the Board of
           Directors; or

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

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

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

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

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

(k)   "COMPENSATION" means--

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

           (A) base compensation;

           (B) overtime pay;

           (C) performance lump sum pay; and

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

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

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


                                       4



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


                                       5



      For purposes of this section--

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

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

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

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

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

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

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

(o)   "ELIGIBLE EMPLOYEE" means an Employee on the hourly or weekly payroll of
      Cincinnati Gas & Electric Company (or other Employer) who has attained age
      18, and who is not a "leased employee" (as defined in section 3.6 (Leased
      Employee)), who is not classified by the Employer as a summer laborer or a
      summer employee,


                                       6



      and whose terms and conditions of employment are governed by a collective
      bargaining agreement between an Employer and the Independent Utilities
      Union (IUU); the International Brotherhood of Electrical Workers, Local
      1347; or the United Steelworkers Union, Local 12049 or Local 14214, that
      provides for participation in this Plan.

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

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

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

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

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

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

(t)   "EMPLOYMENT COMMENCEMENT DATE" means the first day on which an Employee
      first performs an hour of service (as defined in Department of Labor
      regulation 2530.200b-2) as an Eligible Employee or, if applicable, the
      first day following a severance from service on which an Employee performs
      an hour of service as an Eligible Employee.

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

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


                                       7



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

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

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

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

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

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

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

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

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

      (1)   after reaching age 65; or

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

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

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

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

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

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

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


                                       8



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

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


                                       9



ARTICLE 3. PARTICIPATION

3.1 PARTICIPATION

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

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

3.2 DURATION OF PARTICIPATION

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

3.3 LEASED EMPLOYEES

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


                                       10


ARTICLE 4. CONTRIBUTIONS

4.1 DEFERRED COMPENSATION CONTRIBUTIONS

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

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

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

4.2 EMPLOYEE AFTER-TAX CONTRIBUTIONS

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

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

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


                                       11


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

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

4.3 MATCHING CONTRIBUTIONS

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

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

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

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

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

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


                                       12


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

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

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

4.4 LIMITATIONS ON CONTRIBUTIONS

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

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

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

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


                                       13


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

      (2)   the lesser of--

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

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

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

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

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

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

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


                                       14


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

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

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

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

      (2)  the lesser of--

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

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

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

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

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

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


                                       15


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

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

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

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

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

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

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


                                       16


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

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

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

      (2)  the lesser of--

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

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

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

4.5 CONTRIBUTIONS NOT CONTINGENT ON PROFITS

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

4.6 LIMITATIONS ON ANNUAL ACCOUNT ADDITIONS

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

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

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

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


                                       17


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

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

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

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

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

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

(c)   ADDITIONAL LIMITATION. If in any Plan Year beginning prior to January 1,
      2000, a Participant is covered both under any defined contribution plan
      and under any defined benefit plan, the sum of the defined benefit plan
      fraction (as defined in Code paragraph 415(e)(2)) and the defined
      contribution plan fraction (as defined in Code paragraph 415(e)(3)) for
      the Plan Year shall not exceed one. It is intended that the contributions
      under any defined contribution plan will be reduced to the extent
      necessary to prevent the sum of those fractions for any Plan Year from
      exceeding one before reducing benefits payable under any defined benefit
      plan. "Any defined benefit plan" means all defined benefit plans of the
      Company and Affiliates considered as one plan.

(d)   REDUCTION IN ANNUAL ACCOUNT ADDITIONS. If in any Plan Year a Participant's
      Annual Account Addition exceeds the limitation determined under subsection
      (b) above, the excess will not be allocated to the Participant's accounts
      in any defined contribution plan but shall be handled in the following
      manner and order until the excess is eliminated:

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

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

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


                                       18


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

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

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

4.7 ROLLOVER CONTRIBUTIONS

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

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

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

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

4.8 CONTRIBUTIONS DURING PERIOD OF MILITARY LEAVE

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

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


                                       19


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

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


                                       20


ARTICLE 5. VESTING IN ACCOUNTS

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


                                       21



Article 6. DISTRIBUTIONS AND WITHDRAWALS

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

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

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

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

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

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

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

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

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


                                       22



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

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

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

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

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

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

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

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


                                       23



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

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

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

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

           (A) December 31 of the calendar year in which the Member would have
               attained age 70 1/2, if the Beneficiary is the Member's spouse;
               or

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

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

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

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

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

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


                                       24



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

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

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

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

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

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

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

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

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

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

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

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

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

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


                                       25



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

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

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

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

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

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

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

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

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

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


                                       26



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

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

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

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

(e)   Payments of principal and interest will be made by approximately equal
      payments on a basis that would permit the loan to be levelly amortized
      over its term. Payments by former Participants who are
      "parties-in-interest" shall be made at least quarterly.

      Payments by active Participants will be made by payroll deduction.
      Prepayment of the entire amount of principal and interest may be made at
      any time without penalty.

(f)   Appropriate disclosure will be made pursuant to the Truth in Lending Act
      to the extent applicable.

(g)   Amounts of principal and interest received on a loan will be credited to
      the Participant's Account using the Participant's current investment
      election, and the outstanding loan balance will be considered an
      investment of the assets of the Account.

(h)   Loans will be made on a pro rata basis from the available funds of each of
      the Investment Funds in which the Participant's Account is invested at the
      time the loan is made. Repayments will be credited to the Participant's
      Account in accordance with the Participant's investment elections in
      effect at the time of repayment.

(i)   In the event that a distribution under this Article 6 (Distributions and
      Withdrawals) (other than a withdrawal under section 6.6 (Other Withdrawals
      Prior to Termination of Employment)) becomes payable before the loan is
      repaid in full, the unpaid principal and interest will become due and
      payable, and the Plan will first satisfy the indebtedness from the amount
      in the Participant's Account before making any payments to the Participant
      or to a Beneficiary.

(j)   Reasonable loan set-up and/or maintenance fees may be charged to the
      Member's Account with respect to each loan made to the Member by the Plan,
      as established by the Plan Administrator.

In the exercise of the discretion conferred upon the Plan Administrator in this
section, all Participants under similar circumstances shall be treated alike,
and the provisions of this


                                       27



section will not be utilized in any manner to discriminate in favor of Highly
Compensated Employees.

6.6 OTHER WITHDRAWALS PRIOR TO TERMINATION OF EMPLOYMENT
(a)   WITHDRAWALS AT OR AFTER AGE 59 1/2. A Participant who has attained age
      59 1/2 may withdraw any or all of the balance in his Account upon 15 days
      (or such shorter period designated by the Plan Administrator) prior notice
      to the Plan Administrator. Such withdrawals shall be made in a lump sum
      and will be elected in accordance with rules established for that purpose
      by the Plan Administrator.

      No withdrawal will be made under this section that would cause the
      Participant's Deferred Compensation Account to be less than 125 percent of
      the outstanding balance of all loans (or such lesser percent designated by
      the Plan Administrator) outstanding to the Participant.

(b)   WITHDRAWALS OF AFTER-TAX CONTRIBUTIONS. A Participant may elect to
      withdraw any or all of the balance in the Participant's Employee After-Tax
      Contributions Account upon 15 days (or such shorter period designated by
      the Plan Administrator) prior notice to the Plan Administrator.
      Withdrawals shall be made in a lump sum and shall be elected in accordance
      with rules established for such purpose by the Plan Administrator.

6.7 WITHHOLDING TAXES
An Employer may withhold from a Member's compensation and the Trustee may
withhold from any payment under this Plan any taxes required to be withheld with
respect to contributions or benefits under this Plan and such sum as the
Employer or Trustee may reasonably estimate as necessary to cover any taxes for
which they may be liable and that may be assessed with respect to contributions
or benefits under this Plan.


                                       28



ARTICLE 7. INVESTMENT ELECTIONS

7.1 AFTER-TAX, DEFERRED COMPENSATION, AND ROLLOVER CONTRIBUTION ACCOUNTS
(a)   INVESTMENT OF CONTRIBUTIONS. Each Participant may elect to have the
      After-Tax, Deferred Compensation, and Rollover Contributions made on the
      Participant's behalf invested in any one or more of the Investment Funds
      in increments of 1 percent, in accordance with procedures established by
      the Plan Administrator.

(b)   INVESTMENT TRANSFERS. Each Member may elect as of any date to have the
      assets in the Member's After-Tax, Deferred Compensation, and Rollover
      Contributions Accounts reallocated among the Investment Funds, in
      increments of 1 percent, in accordance with procedures established by the
      Plan Administrator.

(c)   INVESTMENT ELECTIONS. Each Participant may make the elections described in
      subsection (a) by making an election with the Plan Administrator upon
      becoming a Participant. Such elections may be changed with respect to
      future After-Tax, Deferred Compensation, or Rollover Contributions as of
      any date in accordance with procedures established by the Plan
      Administrator.

(d)   TRANSFER OF ASSETS. The Plan Administrator shall cause the transfer of
      moneys or other property from the appropriate Investment Fund to the other
      Investment Fund as may be necessary to carry out the aggregate transfer
      transactions elected by the Members, in accordance with uniform rules
      therefor established by the Plan Administrator.

7.2 MATCHING CONTRIBUTIONS ACCOUNT
(a)   INVESTMENT OF CONTRIBUTIONS. Employer Matching Contributions made to the
      Participant's Accounts shall be invested in the Cinergy Stock Fund.

(b)   INVESTMENT TRANSFERS. Except as otherwise provided in this section, assets
      in the Member's Matching Contributions Account will remain invested in the
      Cinergy Stock Fund until distributed under Article 6 (Distributions and
      Withdrawals), and may not be reallocated among the Investment Funds. A
      Member who has attained age 50 may reallocate assets in the Matching
      Contributions Account among the Investment Funds, in accordance with the
      provisions of subsection 7.1(b) (After-Tax, Deferred Compensation, and
      Rollover Contributions Accounts).

7.3 VOTING AND OTHER RIGHTS WITH RESPECT TO CINERGY STOCK
(a)   GENERAL. Each Member having an interest in the Cinergy Stock Fund shall
      have the right to direct the manner in which shares of Cinergy Stock held
      in such Fund shall be voted, and direct the manner in which all other
      rights appurtenant to such shares shall be exercised, as if the Member was
      the shareholder of record.


                                       29



(b)   PROVISION OF INFORMATION. Prior to each annual or special shareholders'
      meeting at which Cinergy Stock has voting rights, the Trustee shall cause
      to be furnished to each Member with an interest in the Cinergy Stock Fund
      a copy of the proxy solicitation materials with respect to the meeting.
      The Trustee shall use its best efforts to timely distribute to each Member
      all information to be distributed to shareholders in connection with any
      tender or exchange offer with respect to Cinergy Stock. The materials
      and/or information shall include any forms and instructions as may be
      necessary for the Member to direct the manner of voting on each matter to
      be brought before a meeting or to direct a response to a tender or
      exchange offer.

(c)   VOTING OR TENDER OF SHARES. Subject to the requirements of ERISA, the
      Trustee shall vote or tender Cinergy Stock corresponding to the interest
      of the Member in the Cinergy Stock Fund in accordance with the Member's
      directions issued in accordance with the instructions provided under (b).
      The Trustee shall vote or tender any Cinergy Stock with respect to which
      directions are not issued under this section in the manner determined by
      the Trustee in the Trustee's discretion.


                                       30



ARTICLE 8. ACCOUNTS AND RECORDS OF THE PLAN

8.1 ACCOUNTS AND RECORDS
The Accounts and records of the Plan shall be maintained by the Plan
Administrator and shall accurately disclose the status of the Accounts of each
Member or each Member's Beneficiary in the Plan.

Each Member shall be advised from time to time, at least once quarterly during
each Plan Year, as to the status of the Member's Account.

8.2 TRUST FUND
Each Member shall have an undivided proportionate interest in the Trust Fund,
which shall be measured by the proportion that the market value of the Member's
Account bears to the total market value of all Accounts as of the date that the
interest is being determined.

8.3 VALUATION AND ALLOCATION OF EXPENSES
As of each Valuation Date, the Trustee shall determine the fair market value of
the Trust Fund after first deducting any expenses that have not been paid by the
Employers. Unless paid by the Employers and subject to such limitations as may
be imposed by the Act or other applicable law, all costs and expenses incurred
in connection with the general administration of the Plan and the Trust shall be
chargeable to the Trust Fund.

8.4 ALLOCATION OF EARNINGS AND LOSSES
As of each Valuation Date, the Plan Administrator, with the assistance of the
Trustee, shall allocate the net earnings and gains or losses of each Investment
Fund of the Trust Fund since the preceding Valuation Date to each Member's
Account in the same proportion that the market value of the Member's Account in
the Investment Fund bears to the total market value of all Members' Accounts in
the Investment Fund; and, for this purpose, the Plan Administrator shall adopt
uniform rules that conform to applicable law and generally accepted accounting
practices. The foregoing shall not apply to the loan fund, which shall be
accounted for separately so that interest on a Participant's loan is credited
solely to the Participant's Account.


                                       31



ARTICLE 9. FINANCING

9.1 FINANCING
The Company shall enter into a Trust Agreement to implement and carry out the
provisions of the Plan and to finance the benefits under the Plan. All rights
that may accrue to any person under the Plan shall be subject to all the terms
and provisions of the Trust Agreement. The Company may modify the Trust
Agreement in accordance with the terms of that Agreement from time to time to
accomplish the purposes of the Plan.

9.2 CONTRIBUTIONS
The Employers shall make such contributions to the Trust Fund as are required by
the provisions of the Plan, subject to the right of the Company to amend,
modify, or terminate the Plan.

9.3 NONREVERSION
No Employer shall have any right, title, or interest in the contributions made
to the Trust Fund, and no part of the Trust Fund shall revert to any Employer,
except that if a contribution is made to the Trust Fund by an Employer by a
mistake of fact, then the contribution may be returned to the Employer within
one year after the payment of the contribution; and if any part or all of a
contribution is disallowed as a deduction under Code section 404, then to the
extent the contribution is disallowed as a deduction it may be returned to the
Employer within one year after the disallowance.

9.4 RIGHTS IN THE TRUST FUND
Persons eligible for benefits under the Plan are entitled to look only to the
Trust Fund for the payment of those benefits and have no claim against any
Employer, the Plan Administrator, or any other person. No person has any right
or interest in the Trust Fund except as expressly provided in the Plan.


                                       32



ARTICLE 10. ADMINISTRATION

10.1 PLAN ADMINISTRATOR AND FIDUCIARY
The Benefits Committee will be the Plan Administrator of the Plan within the
meaning of section 3(16)(A) of ERISA, a fiduciary with respect to the Plan
within the meaning of sections 3(21)(A)(i) and (iii) of ERISA, and the named
fiduciary under section 402 of ERISA. The Benefits Committee will consist of the
number of members, not fewer than three, that is specified from time to time by
the Board. All members of the Benefits Committee will be Employees or officers
of an Employer.

10.2 REMOVAL AND REPLACEMENT OF BENEFITS COMMITTEE MEMBERS
The members of the Benefits Committee will serve at the pleasure of the Board
and may be removed by the Board with or without cause. Any vacancy among the
members will be filled by the Board. A Benefits Committee member will be deemed
to be removed as of the date on which the Benefits Committee member becomes
disqualified from membership on the Benefits Committee. A member of the Benefits
Committee may resign by delivering his written resignation to any other member
of the Benefits Committee. A resignation will become effective on the date
specified in the instrument of resignation.

10.3 COMPENSATION AND EXPENSES
All reasonable expenses incurred in the administration of the Plan will be paid
from the Trust Fund to the extent not paid by the Employers. Such expenses will
include any expenses incident to the administration of the Plan, including, but
not limited to, fees of accountants, counsel, and other specialists.

10.4 DELEGATION OF DUTIES AND EMPLOYMENT OF SPECIALISTS
The Benefits Committee may designate any person, subcommittee, or other entity
to carry out any of its responsibilities under the Plan, in which case every
reference herein made to the Benefits Committee will be deemed to mean or
include the designee(s) as to matters within the designee's jurisdiction. Any
such designation will be in writing and will be kept with the records of the
Plan. The Benefits Committee or its designee may authorize one or more of its
members or any agent to execute or deliver any instrument or instruments on its
behalf, and may employ such counsel, auditors, and other specialists, and such
clerical, medical, actuarial, and other services as may be required to carry out
the provisions of the Plan. Those expenses shall be paid by the Trust to the
extent not paid by the Employers.

10.5 ADMINISTRATION
The Benefits Committee shall be responsible for the administration of the Plan.
The Benefits Committee will have all powers necessary to carry out the
provisions of the Plan and may, from time to time, establish rules for the
administration of the Plan and the transaction of the Plan's business. In making
any such determination or rule, the Benefits Committee will pursue uniform
policies as from time to time established by the Benefits Committee and will not
discriminate in favor of or against any Member. The Benefits Committee will have
the


                                       33



exclusive right to make any finding of fact necessary or appropriate for any
purpose under the Plan including, but not limited to, the determination of the
eligibility for and the amount of any benefit payable under the Plan. The
Benefits Committee will have discretionary authority to interpret the terms and
provisions of the Plan and to determine any and all questions arising under the
Plan or in connection with Plan administration, including, without limitation,
the right to remedy or resolve possible ambiguities, inconsistencies, or
omissions, by general rule or particular decision. In exercising its rights
under this section to make findings of fact under the Plan, interpret the terms
and provisions of the Plan, and determine all questions arising under the Plan
or in connection with Plan administration, the Benefits Committee will be
granted the fullest discretion permitted by law. The Benefits Committee will
make, or cause to be made, all reports or other filings necessary to meet both
the reporting and disclosure requirements and other filing requirements of ERISA
that are the responsibility of "plan administrators" under ERISA. To the extent
permitted by law, all findings of fact, determinations, interpretations, and
decisions of the Benefits Committee will be conclusive and binding upon all
persons having or claiming to have any interest or right under the Plan.

10.6 NO ENLARGEMENT OF EMPLOYEE RIGHTS
Nothing contained in the Plan will be deemed to give any Employee the right to
be retained in the service of an Employer or to interfere with the right of an
Employer to discipline or discharge any Employee at any time.

10.7 APPEALS FROM DENIAL OF CLAIMS
Claims for benefits under the Plan will be made in writing to the Plan
Administrator or its designee. If any claim for benefits under the Plan, or
request for loan or hardship distribution under the Plan, is wholly or partially
denied, the claimant will be given notice of the denial in writing within a
reasonable period of time not to exceed 90 days after receipt of the claim,
unless special circumstances require an extension of time for processing, in
which case notification will be rendered as soon as possible, but not later than
180 days after the claim's receipt. If an extension of time for processing is
required, written notice of the extension will be furnished to the claimant
prior to the termination of the initial period. The extension notice will
indicate the special circumstances requiring an extension of time and the date
by which the Plan expects to render final notification. Notice of the denial
will be written in a manner calculated to be understood by the claimant and will
include the following information:

(a)   the specific reasons for the denial;

(b)   specific reference to pertinent Plan provisions on which the denial is
      based;

(c)   a description of any additional material or information necessary for the
      claimant to perfect the claim and an explanation of why that material or
      information is necessary; and


                                       34



(d)   an explanation of the Plan's claim review procedure.

Within 60 days after the claimant's receipt of written notice of the claim's
denial, the claimant, or his duly authorized representative, may file a written
request with the Benefits Committee requesting a full and fair review of the
denial of the claimant's claim for benefits. In connection with the claimant's
appeal of the denial of his claim for benefits, the claimant may review
pertinent documents in the Benefit Committee's possession and may submit issues
and comments in writing. The Benefits Committee will make a decision on review
promptly, but not later than the date of the meeting of the Benefits Committee
that immediately follows the receipt of the claimant's request for review,
unless the request for review is filed within 30 days before the date of that
meeting. In that case, a decision will be made as soon as possible but not later
than the date of the second Benefits Committee meeting following receipt of the
request for review. If special circumstances require a further extension of time
for processing, a decision will be rendered not later than the third Benefits
Committee meeting following receipt of the claimant's request for review. If an
extension of time for review is required because of special circumstances,
written notice of the extension will be sent to the claimant before the
extension commences. The extension notice will indicate the special
circumstances requiring an extension of time and the date by which the Benefits
Committee expects to render the final decision. The decision on review will be
in writing and written in a manner calculated to be understood by the claimant,
and will set forth the specific reason or reasons for the decision and will
contain specific references to the pertinent Plan provisions on which the
decision is based. If the decision on review is not furnished to the claimant
within 60 days of receipt of the request for review, or within 120 days after
its receipt if special circumstances required an extension of time, the claim
will be deemed denied on review.

10.8 NOTICE OF ADDRESS AND MISSING PERSONS
Each person entitled to benefits under the Plan must file with the Plan
Administrator, in writing, the person's post office address and each change of
post office address. Any communication, statement, or notice addressed to such a
person at the latest reported post office address will be binding upon the
person for all purposes of the Plan, and neither the Plan Administrator nor the
Employers or Trustee shall be obliged to search for or ascertain the person's
whereabouts. In the event that the person cannot be located, the Plan
Administrator may direct that the benefit and all further benefits with respect
to that person shall be discontinued, all liability for the payment thereof
shall terminate and the balance in such Member's Account shall be deemed a
forfeiture; provided, however, that in the event of the subsequent reappearance
of the Member or Beneficiary prior to termination of the Plan, the benefits that
were due and payable and that the person missed shall be paid in a single sum
and the future benefits due the person shall be reinstated in full.

10.9 DATA AND INFORMATION FOR BENEFITS
All persons claiming benefits under the Plan must furnish to the Plan
Administrator or its designated agent such documents, evidence, or information
as the Plan Administrator or its


                                       35



designated agent considers necessary or desirable for the purpose of
administering the Plan; and a person must furnish such information promptly
and sign such documents as the Plan Administrator or its designated agent may
require before any benefits become payable under the Plan.

10.10 INDEMNITY FOR LIABILITY
The Company shall indemnify each member of the Benefits Committee and each other
individual who is directed by the Company to carry out responsibilities and
duties imposed by the Plan against any and all claims, losses, damages, and
expenses, including counsel fees, incurred by the individual and any liability,
including any amounts paid in settlement with the Company's approval, arising
from the individual's action or failure to act, except when the same is
judicially determined to be attributable to the gross negligence or willful
misconduct of that individual. The Company shall pay the premiums on any bond
secured under this section and shall be entitled to reimbursement by the other
Employers for their proportionate share.

10.11 EFFECT OF A MISTAKE
In the event of a mistake or misstatement as to the eligibility, participation,
or service of any Member, or the amount of payments made or to be made to a
Member or Beneficiary, the Plan Administrator shall, if possible, cause to be
withheld or accelerated or otherwise make adjustment of such amounts of payments
as will in its sole judgment result in the Member or Beneficiary receiving the
proper amount of payments under this Plan.


                                       36



ARTICLE 11. AMENDMENT AND TERMINATION

11.1 AMENDMENT AND TERMINATION
(a)   The Company reserves the right to alter, amend, revoke, or terminate the
      Plan at any time. The Board shall generally have the authority to adopt
      amendments; however, the Benefits Committee or the compensation committee
      of the Board may adopt any amendment to ensure the continued qualification
      of the Plan and Trust Fund under Code subsections 401(a) and 501(a), to
      comply with the provisions of any federal statute or regulation impacting
      pension plans, to enhance the delivery of benefits to Members and
      Beneficiaries, to ease Plan administration, or to respond to the
      withdrawal of any Employer from the Plan. Notwithstanding the preceding
      sentence, no amendment by the Benefits Committee or the compensation
      committee of the Board shall substantially increase the cost of the Plan
      without the Board's consent. The Board, or any person or persons duly
      authorized by the Board, shall also have the right, authority, and power
      to terminate the Plan and to discontinue or suspend contributions to the
      Plan.

(b)   While each Employer contemplates carrying out the provisions of the Plan
      indefinitely with respect to its Employees, no Employer shall be under any
      obligation or liability whatsoever to maintain the Plan for any minimum or
      other period of time.

(c)   Upon any termination of the Plan in its entirety, or with respect to any
      Employer, the Company shall give written notice thereof to the Trustee and
      any Employer involved.

(d)   Except as provided by law, upon any termination of the Plan, no Employer
      with respect to whom the Plan is terminated (including the Company) shall
      thereafter be under any obligation, liability, or responsibility
      whatsoever to make any contribution or payment to the Trust Fund, the
      Plan, any Member, any Beneficiary, or any other person, trust, or fund
      whatsoever, for any purpose whatsoever under or in connection with the
      Plan.

11.2 LIMITATIONS ON AMENDMENTS
The provisions of this Article are subject to and limited by the following
restrictions:

(a)   No amendment will operate either directly or indirectly to give any
      Employer any interest whatsoever in any funds or property held by the
      Trustee under the terms of this Plan or the Trust Agreement, or to permit
      the corpus or income of the Trust to be used for or diverted to purposes
      other than the exclusive benefit of Members or their Beneficiaries.

(b)   No such amendment will operate either directly or indirectly to deprive
      any Member of any portion of the Member's vested and nonforfeitable
      interest or right to any


                                       37



      "section 411(d)(6) protected benefit" (as defined in Treasury regulation
      section 1.411(d)-4) as of the time of such amendment.

(c)   No amendment will modify the vesting provisions of Article 5 (Vesting in
      Accounts) unless the conditions of Code section 411(a)(10) and section
      11.4 (Amendments of Vesting Schedule) are met.

11.3 EFFECT OF BANKRUPTCY AND OTHER CONTINGENCIES AFFECTING AN EMPLOYER
In the event an Employer terminates its connection with the Plan, or in the
event an Employer is dissolved, liquidated, or is by appropriate legal
proceedings adjudged a bankrupt, or in the event judicial proceedings of any
kind result in the involuntary dissolution of an Employer, the Plan shall be
terminated with respect to that Employer. The merger, consolidation, or
reorganization of an Employer, or the sale by it of all or substantially all of
its assets, shall not terminate the Plan if there is delivery to that Employer
by the Employer's successor or by the purchaser of all or substantially all of
the Employer's assets, of a written instrument requesting that the successor or
purchaser be substituted for the Employer and agreeing to perform all the
provisions of this Plan that the Employer is required to perform. Upon the
receipt of that instrument, with the approval of the Company, the successor, or
the purchaser will be substituted for that Employer under this Plan, and that
Employer shall be relieved and released from any obligations of any kind,
character, or description imposed upon it under the Plan or the Trust Agreement.

11.4 AMENDMENT OF VESTING SCHEDULE
If the Plan is amended to provide a different vesting schedule, each person
adversely affected--

(a)   who is a Participant during the election period below; and

(b)   who has completed at least three years of service,

may elect to have the amendment disregarded in determining the vested percentage
of the Participant's Account. That election must be in writing and delivered to
the Plan Administrator within the election period. Upon delivery, the
Participant's election will be irrevocable. The election period begins on the
date the amendment is adopted and ends 60 days after the latest of the date--

(1)   the amendment is adopted;

(2)   the amendment becomes effective; or

(3)   the Plan Administrator delivers a written notice of the amendment to the
      Participant.

No amendment to the Plan's vesting schedule may decrease the vesting that any
Member has earned as of the date of the amendment.


                                       38



ARTICLE 12. PARTICIPATION IN AND WITHDRAWAL FROM THE PLAN BY AN EMPLOYER

12.1 ADOPTION OF THE PLAN
With the Company's consent, any Affiliate may become an Employer under the Plan
and may elect by--

(a)   taking appropriate action to adopt the Plan;

(b)   filing with the Company a duly certified copy of the Plan as adopted by
      the Affiliate;

(c)   becoming a party to the trust agreement establishing the Trust Fund; and

(d)   executing and delivering documents and taking any other action as may be
      necessary or desirable to put the Plan into effect with respect to it.

12.2 WITHDRAWAL FROM PARTICIPATION
Any Employer may, with the Company's consent, withdraw from participation in the
Plan at any time by filing with the Company a duly certified copy of a
resolution of its board of directors to that effect and giving notice of its
intended withdrawal to the Company and the Trustee prior to the effective date
of withdrawal. Distribution may be implemented through continuation of the Trust
Fund, or transfer to another trust fund exempt from tax under Code section 501,
or to a group annuity contract qualified under Code section 401, or distribution
may be made as an immediate cash payment in accordance with the directions of
the Plan Administrator; provided, however, that no such action shall divert any
part of the fund to any purpose other than the exclusive benefit of the
Employees of that Employer.

12.3 COMPANY AS AGENT FOR EMPLOYERS
Each Affiliate that becomes a participating Employer pursuant to section 12.1
(Adoption of Plan) by doing so will be deemed to have appointed the Company its
agent to exercise on its behalf all of the powers and authorities conferred upon
the Company by the terms of the Plan, including, but not limited to, the power
to amend and terminate the Plan. The Company's authority to act as agent will
continue unless and until that portion of the Trust Fund held for the benefit of
Employees of the particular Employer and their beneficiaries are transferred or
distributed pursuant to section 12.2 (Withdrawal from Participation). Each
Employer will, from time to time, upon the Company's request, furnish to the
Company any data and information as the Company requires in the performance of
its duties.


                                       39



ARTICLE 13. MISCELLANEOUS

13.1 BENEFICIARY DESIGNATION
(a)   Each Member may designate, on a form provided for that purpose by the Plan
      Administrator, a Beneficiary (which may be an entity other than a natural
      person) or Beneficiaries to receive the Member's interest in the Plan in
      the event of the Member's death, but the designation will not be effective
      for any purpose until it has been filed by the Member during the Member's
      lifetime with the Plan Administrator. The Member may, from time to time
      during the Member's lifetime, on a form approved by and filed with the
      Plan Administrator, change the Member's Beneficiary or Beneficiaries.

(b)   The Beneficiary of each Member who is married will be the Member's
      surviving spouse, unless that spouse consents in writing to the
      designation of another Beneficiary or Beneficiaries. The consent must
      specifically acknowledge the identity of the nonspousal Beneficiary, or
      must specifically acknowledge and waive the right to limit the consent to
      a specific Beneficiary. Each married Member may, from time to time, change
      the Member's designation of Beneficiaries; provided, however, that the
      Member may not change the Member's Beneficiary without the written consent
      of the Member's spouse, unless the spouse's prior consent expressly
      permits designations by the Member without any requirement of further
      consent by the spouse. The consent of a Member's spouse will be
      irrevocable unless and until the Member changes the Member's designation
      of Beneficiaries. Upon the divorce of a Member and the Member's spouse,
      any designation of the spouse as the Member's Beneficiary will be deemed
      to be revoked.

(c)   In the event that a Member fails to designate a Beneficiary, or if for any
      reason his designation is legally ineffective, or if all designated
      Beneficiaries predecease the Member or die simultaneously with the Member,
      distribution will be made to the Member's spouse; or if none, to the
      Member's children in equal shares; or if none, to the Member's parents in
      equal shares; or if none, to the Member's estate. If any such Beneficiary
      dies before receiving the distribution that would have been made to the
      Beneficiary had the Beneficiary not died, then, for the purposes of the
      Plan, the distribution that would have been received by the Beneficiary
      will be made to the Beneficiary's estate.

(d)   The written consent described in subsection (b) must acknowledge the
      effect of the election and must be witnessed by a notary public.

13.2 FACILITY OF PAYMENT
If any benefit under the Plan is payable to a person whom the Plan Administrator
knows is a minor or otherwise under legal incapacity, the Plan Administrator or
its designee may have the payment made to the legal guardian of that person or
to such person or organization as a


                                       40



court of competent jurisdiction may direct. To the extent permitted by law,
any payment made under this section shall be a complete discharge of any
liability under the Plan to that person.

13.3 NONALIENATION
Except as provided in Code paragraph 401(a)(13), neither benefits payable at any
time under the Plan nor the corpus or income of the Trust Fund will be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
attachment, garnishment, levy, execution, or other legal or equitable process or
encumbrance of any kind. No payee may assign any payment due him under the Plan.
Any attempt to alienate, sell, transfer, assign, pledge, or otherwise encumber
any such benefit, whether presently or thereafter payable, will be void. The
Trust Fund will not in any manner be liable for, or subject to, the debts or
liabilities of any Member, Beneficiary, or any other person entitled to any
benefit. However, the payment of benefits will be made in accordance with the
applicable requirements of any qualified domestic relation order, as defined in
Code subsection 414(p). The Plan Administrator will establish procedures to
determine whether domestic relations orders are "qualified domestic relations
orders" and to administer distributions under qualified domestic relations
orders.

In the event that a qualified domestic relations order provides for the payment
of all or a portion of a Member's Accounts to an alternate payee, distribution
to the alternate payee may be made at any time specified in the order,
irrespective of whether the Member has reached the earliest retirement age, as
defined in Code subsection 414(p). In the event that a qualified domestic
relations order provides for the immediate payment of all or a portion of a
Member's Accounts to an alternate payee, distribution will be made pursuant to
the order as soon as administratively feasible following the Plan
Administrator's determination that the order is a qualified domestic relations
order.

13.4 APPLICABLE LAW
The Plan and all rights hereunder shall be governed by and construed in
accordance with the laws of the State of Ohio to the extent those laws have not
been preempted by applicable federal law.

13.5 SEVERABILITY
If a provision of this Plan will be held illegal or invalid, the illegality or
invalidity will not affect the remaining parts of the Plan, and the Plan will be
construed and enforced as if the illegal or invalid provision had not been
included in this Plan.

13.6 NO GUARANTEE
Neither the Plan Administrator, the Company, the Employers, nor the Trustee in
any way guarantees the Trust Fund from loss or depreciation nor the payment of
any money that may be or become due to any person from the Trust Fund. Nothing
contained in this Plan will be deemed to give any Participant, Member, or
Beneficiary an interest in any specific part of the


                                       41



Trust Fund or any other interest except the right to receive benefits out of
the Trust Fund in accordance with the provisions of the Plan and the Trust
Agreement.

13.7 MERGER, CONSOLIDATION, OR TRANSFER
In the case of any merger or consolidation with, or transfer of assets and
liabilities to any other plan, provisions will be made so that each Member will
receive a benefit immediately after the merger, consolidation, or transfer (if
the Plan had then terminated) that is equal to or greater than the benefit the
Member would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had then terminated).

13.8 INTERNAL REVENUE SERVICE APPROVAL
The Company intends to obtain a ruling or rulings by the District Director of
Internal Revenue that--

(a)   the Plan, as in effect from time to time, with respect to all Employers,
      meets the requirements of Code subsection 401(a); and

(b)   any and all contributions made by the Employers under the Plan are
      deductible for income tax purposes under Code subsection 404(a) or any
      other applicable provisions of the Code.

                              * * * * * * * * * *


                                       42



IN WITNESS WHEREOF, Cinergy Corp. has caused this instrument to be executed
by its duly authorized officers effective as of January 1, 1998.


                                       CINERGY CORP.

APPROVED:
                                       By _____________________________________
                                          Madeleine W. Ludlow

                                          Its _________________________________

By _________________________________

   Its _____________________________


                                       43

EX-10.W

                                                   APPROVED BY THE CINERGY CORP.
                                         BOARD OF DIRECTORS ON DECEMBER 10, 1999

              JANUARY 1, 2000 AMENDMENT TO THE CINERGY CORP. UNION
                       EMPLOYEES' SAVINGS INCENTIVE PLAN

         The Cinergy Corp. Union Employees' Savings Incentive Plan, as amended
and restated effective January 1, 1998, is hereby amended pursuant to Article 11
thereof. Amendments with respect to the modification of Sections 3.1, 4.1, and
7.1 are effective January 1, 2000.

(1)      EXPLANATION OF AMENDMENTS

         The purpose of the amendments is to provide for automatic or passive
enrollment in the Plan as of each new employee's employment date. Section 3.1 is
amended, effective January 1, 2000, by providing that each new employee is
automatically enrolled in the Plan as a participant on his/her employment date
as to before-tax contributions unless the employee notifies the Plan
administrator in writing that he/she declines participation.

         Section 4.1 is amended, effective January 1, 2000, to provide that each
new employee who is enrolled as a participant as of his/her employment date as
to before-tax contributions will be deemed to have made an initial deferred
percentage election of one percent.

         Section 7.1 is amended, effective January 1, 2000, to provide that the
automatic deferrals of new employees who are enrolled as participants as of
their employment dates as to before-tax contributions will be deposited in one
or more investment funds selected by the Plan Administrator and in accordance
with procedures established by the Plan Administrator.

(2)      AMENDMENTS EFFECTIVE JANUARY 1, 2000

         (a)      SECTION 3.1 AS AMENDED

                  Section 3.1, as hereby amended, reads as follows:

                   "3.1    PARTICIPATION.

                           Each Eligible Employee as of the Effective Date who
                           was a Participant in the Plan as of December 31, 1997
                           will continue to be a participant on the Effective
                           Date.

                           Prior to January 1, 2000, each other Eligible
                           Employee may commence participation in the Plan as of
                           the later of the Effective Date or the Eligible
                           Employee's Employment Commencement Date, by electing
                           to make Employee After-Tax or Deferred



                           Compensation Contributions, or by making a Rollover
                           Contribution, pursuant to Article 4 (Contributions).

                           On or after January 1, 2000, each other Eligible
                           Employee shall automatically commence participation
                           in the Plan as of the Eligible Employee's Employment
                           Commencement Date as to Employee Deferred
                           Compensation Contributions unless the Eligible
                           Employee affirmatively notifies the Plan
                           Administrator in writing that the Eligible Employee
                           does not desire to commence participation in the
                           Plan. Any Eligible Employee who affirmatively elects
                           not to participate in the Plan as of his Employment
                           Commence Date may subsequently commence participation
                           in the Plan by electing to make After-Tax or Deferred
                           Compensation Contributions, or by making a Rollover
                           Contribution, pursuant to Article 4 (Contributions).
                           Any Eligible Employee who commences participation as
                           of his Employment Commencement Date may also elect to
                           make Employee After-Tax Contributions or a Rollover
                           Contribution, pursuant to Article 4 (Contributions)."

         (b)      SECTION 4.1 AS AMENDED

                  Section 4.1, as hereby amended, reads as follows:

                  "4.1     DEFERRED COMPENSATION CONTRIBUTIONS

                            Each Participant may elect, in accordance with rules
                            established by the Plan Administrator, to reduce the
                            Participant's Compensation by any percentage up to
                            15 percent, in increments of one-half percent, and
                            to have the amount by which the Participant's
                            Compensation is reduced contributed on the
                            Participant's behalf by the Employer as a Deferred
                            Compensation Contribution to the Plan. Prior to
                            January 1, 2000, the election will be effective as
                            soon as administratively possible after the date the
                            Employee becomes eligible to participate and
                            notifies the Plan Administrator of the deferral
                            percentage. On or after January 1, 2000, each
                            Eligible Employee who becomes a Participant as of
                            his Employment Commencement Date will be deemed to
                            have made an initial deferral percentage election of
                            1 percent.

                            A participant may elect, in accordance with rules
                            established by the Plan Administrator, to increase,
                            decrease, or discontinue the Participant's
                            Compensation reductions. Such an election will be
                            effective as soon as administratively possible after
                            receipt of the election by the Plan Administrator
                            and will be effective only with respect to
                            Compensation not yet earned as of the effective date
                            of the election.

                            The Plan Administrator may adopt rules concerning
                            the administration of this section. The Deferred
                            Compensation



                            Contributions made on behalf of each Participant
                            shall be paid by each Employer to the Trustee and
                            allocated to the Participant's Deferred
                            Compensation Contributions Account as soon as
                            practical after the end of the pay period to
                            which the Deferred Compensation Contributions
                            relate, but in no case later than the fifteenth
                            business day of the month following the month in
                            which those amounts would otherwise have been
                            payable to the Participant."

         (c)      SECTION 7.1 AS AMENDED

                  Section 7.1, as hereby amended, reads as follows:

                  "7.1     AFTER-TAX, DEFERRED COMPENSATION, EMPLOYER MATCH,
                           ESOP TRANSFER, AND ROLLOVER CONTRIBUTION ACCOUNTS

                           (a)      INVESTMENT OF CONTRIBUTIONS. Each
                                    Participant may elect to have the After-Tax,
                                    Deferred Compensation, and Rollover
                                    Contributions made on the Participant's
                                    behalf invested in any one or more of the
                                    Investment Funds in increments of 1 percent,
                                    in accordance with procedures established by
                                    the Plan Administrator.

                           (b)      INVESTMENT TRANSFERS. Each Member may elect
                                    as of any date to have the assets in the
                                    Member's ESOP Transfer, Employer Match,
                                    After-Tax, Deferred Compensation, and
                                    Rollover Contributions Accounts reallocated
                                    among the Investment Funds, in increments of
                                    1 percent, in accordance with procedures
                                    established by the Plan Administrator.

                           (c)      INVESTMENT ELECTIONS. Each Participant may
                                    make the elections described in subsection
                                    (a) by making an election with the Plan
                                    Administrator upon becoming a Participant;
                                    PROVIDED, HOWEVER, that each Participant who
                                    (on or after January 1, 2000) commences
                                    participation as of his Employment
                                    Commencement Date will have his Deferred
                                    Compensation Contributions automatically
                                    deposited in one or more Investment Funds
                                    selected by the Plan Administrator and in
                                    accordance with procedures established by
                                    the Plan Administrator.

                           (d)      TRANSFER OF ASSETS. The Plan Administrator
                                    shall cause the transfer of moneys or other
                                    property from the appropriate Investment
                                    Fund to the other Investment Fund as may be
                                    necessary to carry out the aggregate
                                    transfer transactions elected by the
                                    Members, in accordance with uniform rules
                                    therefor established by the Plan
                                    Administrator."

         This Amendment is executed and approved by the duly authorized officers
         of Cinergy Corp., effective as of the dates set forth herein.



                                            CINERGY CORP.


                                            By: ____________________________
                                                        James E. Rogers
                                                       Vice Chairman and
                                                    Chief Executive Officer


                                            Dated: ____________________________


APPROVED:



By: ___________________________
            Jerome A. Vennemann
           Acting General Counsel
    and Assistant Corporate Secretary

Dated:___________________________

EX-10.X

             NOTE:  THIS TABLE OF CONTENTS IS NOT PART OF THE CINERGY CORP.
                    SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN; INSTEAD, THIS TABLE
                    OF CONTENTS IS MERELY FOR CONVENIENCE OF REFERENCE.

                                  TABLE OF CONTENTS


                                                                                 Page
                                                                                 ----
                                                                                
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

ARTICLE 1  DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

ARTICLE 2  EFFECTIVE DATE OF THE PLAN. . . . . . . . . . . . . . . . . . . . . . . .6

ARTICLE 3  AMOUNT OF LIFE-ONLY PENSION -- MID-CAREER BENEFIT . . . . . . . . . . . .7
     3.1   Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
     3.2   Order In Which Benefits Determined. . . . . . . . . . . . . . . . . . . .7
     3.3   Mid-Career Benefit At Or After Age 62 . . . . . . . . . . . . . . . . . .7
     3.4   Mid-Career Benefit At Early Retirement Date . . . . . . . . . . . . . . .8

ARTICLE 4  AMOUNT OF LIFE-ONLY PENSION -- SENIOR EXECUTIVE SUPPLEMENT. . . . . . . .8
     4.1   Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
     4.2   Order In Which Benefits Determined. . . . . . . . . . . . . . . . . . . .9
     4.3   Senior Executive Supplement At or After Age 62. . . . . . . . . . . . . .9
     4.4   Senior Executive Supplement At Early Retirement Date. . . . . . . . . . 10

ARTICLE 5  SEVERANCE FROM SERVICE-VESTING. . . . . . . . . . . . . . . . . . . . . 10
     5.1   Vesting Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . 10
     5.2   Severance From Service Before Vesting . . . . . . . . . . . . . . . . . 10
     5.3   Mid-Career Benefit For Severance From Service After Vesting . . . . . . 11
     5.4   Senior Executive Supplement For Severance From Service After Vesting. . 11
     5.5   Reemployment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE 6  SPOUSE'S BENEFIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
     6.1   Determination of Spouse's Benefit -- Mid-Career Benefit . . . . . . . . 12
     6.2   Determination of Spouse's Benefit -- Senior Executive Supplement. . . . 13
     6.3   Method of Payment of Spouse's Benefit . . . . . . . . . . . . . . . . . 14

ARTICLE 7  FORMS OF PENSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15


ARTICLE 8  PAYMENT OF PENSION. . . . . . . . . . . . . . . . . . . . . . . . . . . 15



                                                                                
     8.1   Timing of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
     8.2   Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
     8.3   Small Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
     8.4   Facility of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 15
     8.5   Suspension of Benefits. . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE 9  NONALIENATION OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE 10 ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
     10.1  Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
     10.2  Removal and Replacement of Committee Members. . . . . . . . . . . . . . 16
     10.3  Disqualification and Resignation. . . . . . . . . . . . . . . . . . . . 17
     10.4  Chairperson, Services, and Counsel. . . . . . . . . . . . . . . . . . . 17
     10.5  Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
     10.6  Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
     10.7  Action Without Meeting. . . . . . . . . . . . . . . . . . . . . . . . . 17
     10.8  Correction of Defects . . . . . . . . . . . . . . . . . . . . . . . . . 18
     10.9  Reliance Upon Legal Counsel . . . . . . . . . . . . . . . . . . . . . . 18
     10.10 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
     10.11 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
     10.12 Powers and Duties of Committee. . . . . . . . . . . . . . . . . . . . . 18

ARTICLE 11 BENEFIT CLAIMS PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE 12 FUNDING POLICY AND METHOD . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE 13 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
     13.1  No Enlargement of Employee Rights . . . . . . . . . . . . . . . . . . . 20
     13.2  Notice of Address . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
     13.3  Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
     13.4  No Individual Liability . . . . . . . . . . . . . . . . . . . . . . . . 21
     13.5  Governing Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
     13.6  Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
     13.7  Interpretation and Regulation of Plan . . . . . . . . . . . . . . . . . 21
     13.8  Communications by Participants. . . . . . . . . . . . . . . . . . . . . 21
     13.9  Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE 14 CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

ARTICLE 15 CONTINUED APPROVAL OF CINERGY'S PENSION PLAN. . . . . . . . . . . . . . 22


ARTICLE 16 AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 22
     16.1  Authority to Amend. . . . . . . . . . . . . . . . . . . . . . . . . . . 22



                                        -ii-



                                                                                
     16.2  Merger, Consolidation, and Change in Control. . . . . . . . . . . . . . 22

ARTICLE 17 PARTICIPATION BY OTHER EMPLOYERS. . . . . . . . . . . . . . . . . . . . 23
     17.1  Adoption of the Plan. . . . . . . . . . . . . . . . . . . . . . . . . . 23
     17.2  Withdrawal from Participation . . . . . . . . . . . . . . . . . . . . . 23
     17.3  Cinergy as Agent for Employers. . . . . . . . . . . . . . . . . . . . . 23

ARTICLE 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

CONTINUANCE BY A SUCCESSOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23


                                  -iii-


                                                                 ADOPTED BY THE
                                                             BOARD OF DIRECTORS
                                                               OCTOBER 15, 1998


                CINERGY CORP. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
                (As Amended and Restated Effective January 1, 1999)

                                     INTRODUCTION

           Effective January 1, 1983, PSI Energy, Inc. (formerly Public Service
Company of Indiana, Inc.) ("PSI") adopted an unfunded supplemental retirement
plan for eligible members of a select group of its management or otherwise
highly compensated employees who contributed to PSI's success, but who were not
career service employees of PSI.  The plan was known as the PSI Energy, Inc.
Supplemental Retirement Plan.  PSI intended that the Plan be an unfunded pension
plan maintained for a select group of management employees, as described in
29 C.F.R. Section 2520.104-23.

           As a result of a corporate reorganization and merger that became
effective October 24, 1994 (the "Merger"), PSI and The Cincinnati Gas & Electric
Company ("CG&E") became wholly-owned subsidiaries of Cinergy Corp. ("Cinergy"),
a public utility holding company under the Public Utility Holding Company Act of
1935.  Effective January 1, 1997, the PSI Supplemental Retirement Plan was
renamed the "Cinergy Corp. Supplemental Retirement Plan" (the "Plan"), and the
Plan became applicable to Cinergy and any employer (as defined in the Plan) that
adopts the Plan with the consent of Cinergy.  PSI became a participating
employer effective January 1, 1983.  CG&E, Union Light, Heat & Power Company,
and Lawrenceburg Gas Company became participating employers effective January 1,
1997, and Cinergy Resources, Inc., Cinergy Services, Inc., Cinergy Capital &
Trading, Inc., and Cinergy Solutions, Inc. became participating employers
effective January 1, 1998.

           The purpose of the Plan is to provide supplemental retirement income
for eligible employees of Cinergy.  The Plan's mid-career benefit provides
supplemental retirement income for certain Employees who would not be considered
career service employees of Cinergy under the Cinergy Corp. Non-Union Employees'
Pension Plan.  The Plan's senior executive supplement provides supplemental
retirement income for Senior Executive Employees based on a percentage of their
total pay from Cinergy.  The Plan is a nonqualified plan.

           This document is a continuation of and complete restatement of the
Plan.  The Plan, as effective January 1, 1999, is set forth in its entirety.



                                     ARTICLE 1
                                    DEFINITIONS

          As used in this document, the following words and phrases, when
capitalized, will have the meanings set forth below, unless a different meaning
is plainly required by the context.

          1.1  "Active Participant" means a Participant who is accruing benefits
under the Plan on the applicable date.

          1.2  "Actual Separation Date" means:

          (a)  with respect to a Participant who either (1) retires on or after
     Age 62 or (2) who retires on an Early Retirement Date, the first day of the
     calendar month coincident with or following the Participant's Severance
     from Service Date; or

          (b)  with respect to a Participant who incurs a Severance from Service
     before he reaches age 50 and who is entitled to benefits determined under
     the provisions of Section 5.3 (Mid-Career Benefit For Severance from
     Service After Vesting) or Section 5.4 (Senior Executive Supplement For
     Severance From Service After Vesting), the Participant's Severance from
     Service Date.

          (c)  with respect to all other Participants, the Participant's
     Severance from Service Date.

          1.3  "Actuarial Equivalent" means "Actuarial Equivalent" as defined in
Cinergy's Pension Plan.

          1.4  "Additional Separation Date" means "Additional Separation Date"
as defined in Cinergy's Pension Plan.

          1.5  "Affiliate" means any employer that together with an Employer is
under common control or a member of an affiliated service group as determined
under Code subsections 414(b), (c), (m), and (o).

          1.6  "Age 62" means, with respect to each Participant, the first day
of the calendar month coincident with or following his 62nd birthday.

          1.7  "Beneficiary" means, with respect to each Participant, the person
or persons who are to receive benefits under the Plan after the Participant's
death.

          1.8  "Board of Directors" means the duly constituted board of
directors of Cinergy on the applicable date.

                                 -2-



          1.9  "Change in Control" means "Change in Control" as defined in
Cinergy's Pension Plan.

          1.10 "Cinergy" means Cinergy Corp., a Delaware corporation, and any
corporation that succeeds to its business and adopts the Plan.

          1.11 "Cinergy's Excess Pension Plan" means the plan known as the
"Cinergy Corp. Excess Pension Plan," as amended from time to time.

          1.12 "Cinergy's Pension Plan" means the Code qualified pension plan
known as the "Cinergy Corp. Non-Union Employees' Pension Plan," as amended from
time to time.

          1.13 "Claimant" means a person submitting a claim for benefits under
the Plan.

          1.14 "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and interpretive rulings and regulations.

          1.15 "Committee" means the benefits committee established pursuant to
Article 10 (Administration) to serve as administrator of the Plan.

          1.16 "Contingent Annuitant" means, with respect to any Participant
electing a contingent pension option under Cinergy's Pension Plan, the person
designated by the Participant to receive a contingent pension after the
Participant's death.

          1.17 "Disability Date" means, with respect to a Participant, the date
the Participant is first determined to be totally disabled under Cinergy's Long
Term Disability Plan, as amended from time to time.

          1.18 "Early Retirement Date" means, with respect to each Participant
who has satisfied the Vesting Requirement and whose Severance from Service
occurs on or after his 50th birthday but prior to Age 62, the first day of the
calendar month coincident with or following his Severance from Service.

          1.19 "Earnings" means "Earnings" as defined in Cinergy's Pension Plan;
provided, however, that an Employee's Earnings for any period will not be
limited pursuant to Code paragraph 401(a)(17).

          1.20 "Employee" means any person in the employ of an Employer at any
time on or after January 1, 1999, and who is a member of a select group of
management or highly compensated employees of an Employer, as determined by the
Board of Directors or its designee.

          1.21 "Employer" means Cinergy and any Affiliate that, with the consent
of the Board of Directors or its designee, elects to participate in the Plan
pursuant to Section 17.1

                                     -3-



(Adoption of Plan) and any successor corporation or other organization or
entity that adopts the Plan pursuant to Article 18 (Continuance by a
Successor).  If any Affiliate withdraws from participation in the Plan
pursuant to Section 17.2 (Withdrawal from Participation), that Affiliate will
cease to be an Employer.

          1.22 "Employment Commencement Date" means "Employment Commencement
Date" as defined in Cinergy's Pension Plan.

          1.23 "Highest Average Earnings" means the greater of (a) the
Participant's "Highest Average Earnings" as defined in Cinergy's Pension Plan
(without regard to the limitation of Code paragraph 401(a)(17)) or (b) the
Participant's Earnings for the 12 consecutive calendar months immediately
preceding his Severance from Service Date.

          1.24 "Hour of Service" means an "Hour of Service" as defined in
Cinergy's Pension Plan.

          1.25 "Initial Separation Date" means, with respect to a Participant
who is entitled to benefits under the provisions of Article 3 (Amount of
Life-Only Pension -- Mid-Career Benefit), Article 4 (Amount of Life-Only
Pension -- Senior Executive Supplement), or Article 5 (Severance from
Service-Vesting), the first day of the calendar month coincident with or
following the Participant's initial Severance from Service Date.

          1.26 "Insolvent" means, with respect to Cinergy, Cinergy being unable
to pay its debts as they are due, or Cinergy being subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.

          1.27 "Nonforfeitable" means, with respect to a Participant's claim for
benefits under the Plan, that the claim is unconditional, legally enforceable,
and not subject to divestment except in accordance with specific Plan
provisions.

          1.28 "Participant" means any Employee who has met the eligibility
requirements set forth in Article 3 (Amount of Life-Only Pension--Mid-Career
Benefit) or Article 4 (Amount of Life-Only Pension-Senior Executive Supplement)
and for whom benefits are to be provided under the Plan.

          1.29 "Participation" means, with respect to each Participant, 35
multiplied by a fraction (not to exceed a ratio of 1.00), the numerator of which
is equal to the number of years (to the nearest whole calendar month) of
"participation," as defined in Cinergy's Pension Plan, that has been accumulated
by the Participant under Cinergy's Pension Plan as of the applicable date, and
the denominator of which is the Participant's Potential Participation Years.

                                 -4-



          1.30 "Plan" means the supplemental executive retirement plan known as
the "Cinergy Corp. Supplemental Executive Retirement Plan," as amended from time
to time.  This document sets forth the Plan as effective January 1, 1999.

          1.31 "Plan Year" means the calendar year.

          1.32 "Potential Participation Years" means, with respect to each
Participant, the number of years (to the nearest whole calendar month) of
"Participation," as defined in Cinergy's Pension Plan, the Participant will have
accumulated as of the date the Participant reaches Age 62, assuming the
Participant remains an Employee continuously until Age 62.

          1.33 "Rabbi Trust" means the grantor trust that Cinergy, in its sole
discretion, may establish pursuant to Article 12 (Funding Policy and Method) for
the deposit of funds to be used for the exclusive purpose of paying benefits
accrued under the Plan, subject to the claims of Cinergy's general creditors in
the event Cinergy becomes Insolvent.

          1.34 "Reduced Primary Social Security Benefit" means "Reduced Primary
Social Security Benefit" as defined in Cinergy's Pension Plan.

          1.35 "Reemployed Retiree" means a Participant, other than a Terminated
Vested Participant, who is reemployed by an Employer after his Initial
Separation Date or an Additional Separation Date.

          1.36 "Reemployed Terminated Vested Participant" means a Terminated
Vested Participant who is reemployed by an Employer after his Initial Separation
Date or an Additional Separation Date.

          1.37 "Reemployment Commencement Date" means, with respect to an
Employee who incurs a Severance from Service and is later reemployed by an
Employer, the date upon which the Employee first performs an Hour of Service
after his reemployment.

          1.38 "Retired Participant" means a former Participant, other than a
Terminated Vested Participant, while alive on and after his Actual Separation
Date.

          1.39 "Senior Executive Employee" means any Employee who is classified
by Cinergy as a Senior Executive Employee.

          1.40 "Senior Executive Service" means, with respect to each Employee,
the period of an Employee's Service on or after October 1, 1994, that was
accrued while the Employee was a Senior Executive Employee.

          1.41 "Service" means, with respect to each Employee, "Service" as
defined in Cinergy's Pension Plan.

                                    -5-



          1.42 "Severance from Service" means, with respect to an Employee,
"Severance from Service" as defined in Cinergy's Pension Plan.

          1.43 "Severance from Service Date" means, with respect to each
Employee, the date of his Severance from Service.

          1.44 "Spouse" means, with respect to any Participant, the
Participant's lawfully married Spouse, if any, on the applicable date.  The Plan
will not recognize common law marriages or similar arrangements unless required
to do so by federal law.

          1.45 "Terminated Vested Participant" means a Participant who is
entitled to benefits under the provisions of Section 5.3 (Mid-Career Benefit For
Severance From Service After Vesting) or Section 5.4 (Senior Executive
Supplement For Severance From Service After Vesting).

          1.46 "Total Pay Replacement Percentage" means the percentage of a
Participant's Highest Average Earnings to which a Participant will be entitled
under Article 4 (Amount of Life Only Pension -- Senior Executive Supplement).  A
Participant's Total Pay Replacement Percentage will equal the product of four
percent (4%) and the number of his years of Senior Executive Service not in
excess of 15 (in whole years) as of the applicable date.  If a Senior Executive
Employee becomes totally disabled and qualifies for benefits under Cinergy's
Long-Term Disability Plan, his years of Senior Executive Service for purposes of
the preceding sentence will include the period of time beginning on the Senior
Executive Employee's Disability Date and ending on the date he elects under
Cinergy's Pension Plan to begin receiving his pension.

          1.47 "Vesting Requirement" means, with respect to each Participant,
the requirements for the vesting of his accrued benefits under the Plan as set
forth in Section 5.1 (Vesting Requirement).

          The uses of singular and masculine words are for practical purposes
only and will be deemed to include the plural and feminine, respectively, unless
the context plainly indicates a distinction.  Certain other definitions, as
required, appear in the following Articles of the Plan.


                                     ARTICLE 2
                             EFFECTIVE DATE OF THE PLAN

          The effective date of this restated Plan is January 1, 1999, as to
Cinergy, and will be effective with respect to any other Employer as of the date
that Employer elects to participate in the Plan pursuant to Article 17
(Participation by Other Employers).

                                 -6-



          This restated Plan applies only to Employees who are credited with at
least one Hour of Service on or after January 1, 1999.  This restated Plan will
not affect the rights of former Participants (and their Beneficiaries) who
retired, died, or otherwise terminated their employment with an Employer prior
to January 1, 1999.  The rights, if any, of those former Participants (and their
Beneficiaries), and the amounts of their benefits, if any, will be governed by
the Plan's provisions as the same were in effect immediately prior to January 1,
1999.


                                     ARTICLE 3
                 AMOUNT OF LIFE-ONLY PENSION -- MID-CAREER BENEFIT

          3.1  ELIGIBILITY

          Eligibility for the pension payable under this Article will be
determined by the Board of Directors or its designee, in its sole discretion, on
an individual basis from among those individuals classified as Employees.  An
Employee designated in a resolution adopted by the Board of Directors or its
designee as eligible for the pension payable under this Article will become a
Participant on the date specified in the resolution or, if no date is specified
in the resolution, the later of:  (a) the first day of the calendar month
coincident with or following the adoption of the resolution, or (b) the first
day of the first calendar month coincident with or following the Employee's
Employment Commencement Date.  An Employee who becomes a Participant pursuant to
this Article, and who subsequently incurs a Severance from Service and is later
reemployed by an Employer, will resume his status as a Participant on his
Reemployment Commencement Date, provided he is reemployed as an Employee.

          3.2  ORDER IN WHICH BENEFITS DETERMINED

          The annual amount of Nonforfeitable pension payable under this Article
to a Participant or his Beneficiary will be calculated after the amount of
benefits payable to the Participant or his Beneficiary under both Cinergy's
Pension Plan and Cinergy's Excess Pension Plan have been calculated.  In no
event, however, will a Participant's benefits under this Plan be less than the
supplemental retirement benefits to which the Participant is entitled under the
terms of his or her individual employment agreement, if any, with the Employer.
The individual employment agreements listed in Addendum A are hereby
incorporated by reference and made part of this Plan.

          3.3  MID-CAREER BENEFIT AT OR AFTER AGE 62

          Subject to the provisions of Article 7 (Forms of Pension), the annual
amount of Nonforfeitable pension payable under this Article to a Participant who
has satisfied the Vesting Requirement and whose Actual Separation Date is on or
after Age 62 will be equal to the annual amount of pension that would have been
payable to the Participant, for the Participant's remaining lifetime only, under
Cinergy's Pension Plan and Cinergy's Excess Pension Plan, as in

                                 -7-



effect on the Participant's Actual Separation Date, if the Participant's
years of "participation" as defined under Cinergy's Pension Plan were equal
to the Participant's years of Participation under this Plan, reduced by:

          (a)  100 percent of the annual amount of pension actually payable on
     the Participant's behalf under Cinergy's Pension Plan and Cinergy's Excess
     Pension Plan, as in effect on the Participant's Actual Separation Date,
     calculated as a straight-life annuity for the Participant commencing as of
     the Participant's age (not less than Age 62) on the date of the
     commencement of benefits on the Participant's behalf under Cinergy's
     Pension Plan; and

          (b)  50 percent of the Participant's Reduced Primary Social Security
     Benefit.

The Participant's pension payable under this Section will never be less than $0.

          3.4  MID-CAREER BENEFIT AT EARLY RETIREMENT DATE

          (a)  Subject to the provisions of Article 7 (Forms of Pension), the
     annual amount of Nonforfeitable pension payable under this Article to a
     Participant who has satisfied the Vesting Requirement and who elects an
     Early Retirement Date will be computed under Section 3.3 (Mid-Career
     Benefit At or After Age 62), as of his Early Retirement Date.

          (b)  The benefits of a Participant who elects an Early Retirement Date
     will begin on the date the Employee reaches Age 62, or if the Employee so
     elects under Cinergy's Pension Plan, at an earlier date before the date he
     reaches Age 62.  If the Employee elects under Cinergy's Pension Plan to
     have his benefit begin before Age 62, the amount of the Employee's
     Nonforfeitable annual pension under Section 3.3 will be multiplied by the
     appropriate early payment factor, if any, under Section 4.4 of Cinergy's
     Pension Plan (General Method of Computing Annual Pension for Retirement at
     Early Retirement Date).



                                     ARTICLE 4
             AMOUNT OF LIFE-ONLY PENSION -- SENIOR EXECUTIVE SUPPLEMENT

          4.1  ELIGIBILITY

          A Senior Executive Employee will become a Participant for purposes of
this Article on the first date he is classified as a Senior Executive Employee.
A Senior Executive Employee who becomes a Participant pursuant to this Article,
and who subsequently incurs a Severance from Service and is later reemployed by
an Employer, will resume his status as a

                                  -8-



Participant on his Reemployment Commencement Date, provided he is reemployed
as a Senior Executive Employee.

          4.2  ORDER IN WHICH BENEFITS DETERMINED

          (a)  The annual amount of Nonforfeitable pension payable under this
     Article to a Participant or his Beneficiary will be calculated after the
     amount of benefits payable to the Participant or his Beneficiary under both
     Cinergy's Pension Plan and Cinergy's Excess Pension Plan.

          (b)  If an Employee is eligible for a life-only pension calculated
     under Article 3 (Amount of Life-Only Pension -- Mid-Career Benefit), and
     the Employee is also eligible for a Senior Executive Supplement under this
     Article, he will receive the greater of the amount of his life-only pension
     calculated under Article 3 (Amount of Life-Only Pension -- Mid-Career
     Benefit) or this Article 4 (Amount of Life-Only Pension -- Senior Executive
     Supplement).

          (c)  In no event will a Participant's benefits under this Plan be less
     than the supplemental retirement benefits to which the Participant is
     entitled under the terms of his or her individual employment agreement, if
     any, with the Employer.  The individual employment agreements listed in
     Addendum A are hereby incorporated by reference and made part of this Plan.

          4.3  SENIOR EXECUTIVE SUPPLEMENT AT OR AFTER AGE 62

          Subject to the provisions of Article 7 (Forms of Pension), the annual
amount of Nonforfeitable pension payable under this Article to a Participant who
has satisfied the Vesting Requirement and whose Actual Separation Date is on or
after Age 62 will be equal to the product of:

          (a)  his Highest Average Earnings; and

          (b)  his Total Pay Replacement Percentage,
reduced by:

          (c)  100 percent of the annual amount of pension actually payable on
     the Participant's behalf under Cinergy's Pension Plan and Cinergy's Excess
     Pension Plan, as in effect on the Participant's Actual Separation Date,
     calculated as a straight-life annuity for the Participant commencing as of
     the Participant's age (not less than Age 62) on the date of the
     commencement of benefits on the Participant's behalf under Cinergy's
     Pension Plan; and

          (d)  50 percent of the Participant's Reduced Primary Social Security
     Benefit.

                                      -9-



A Participant's pension payable under this Section will never be less than $0.

          4.4  SENIOR EXECUTIVE SUPPLEMENT AT EARLY RETIREMENT DATE

          (a)  Subject to the provisions of Article 7 (Forms of Pension), the
     annual amount of Nonforfeitable pension payable under this Article to a
     Participant who has satisfied the Vesting Requirement and who elects an
     Early Retirement Date will be computed under Section 4.3 (Senior Executive
     Supplement At or After Age 62), as of his Early Retirement Date.

          (b)  The benefits of a Participant who elects an Early Retirement Date
     will begin on the date the Employee reaches Age 62, or if the Employee so
     elects under Cinergy's Pension Plan, at an earlier date before the date he
     reaches Age 62.  If the Employee elects under Cinergy's Pension Plan to
     have the benefit begin before Age 62, the amount of the Employee's
     Nonforfeitable annual pension under Section 4.3 will be multiplied by the
     appropriate early payment factor, if any, under Section 4.4 of Cinergy's
     Pension Plan (General Method of Computing Annual Pension for Retirement at
     Early Retirement Date).


                                     ARTICLE 5
                           SEVERANCE FROM SERVICE-VESTING

          5.1  VESTING REQUIREMENT

          A Participant will satisfy the Vesting Requirement for the Mid-Career
Benefit under the Plan upon his completion of five years of Service and then
will have a Nonforfeitable right to his accrued benefit under the Plan.  A
Participant will satisfy the Vesting Requirement for the Senior Executive
Supplement under the Plan upon both his completion of five years of Senior
Executive Service and reaching age 50 and then will have a Nonforfeitable right
to his accrued benefit under the Plan.  However, a Participant who becomes
totally disabled or who continues as an Employee on or after the date that he
reaches his 62nd birthday will be deemed to satisfy the Vesting Requirement
under the Plan as of his Disability Date, or the date he reaches his 62nd
birthday, whichever is applicable, if he has not otherwise satisfied the Vesting
Requirement under the Plan.

          5.2  SEVERANCE FROM SERVICE BEFORE VESTING

          If a Participant incurs a Severance from Service before he has
satisfied the Vesting Requirement, and he is not reemployed by an Employer, he
will have no further interest in, or right to, any benefits under the Plan.

                                  -10-



          5.3  MID-CAREER BENEFIT FOR SEVERANCE FROM SERVICE AFTER VESTING

          (a)  If a Participant who is eligible for a mid-career benefit under
     Article 3 incurs a Severance from Service before his 50th birthday but
     after satisfying the Vesting Requirement, and he is not later reemployed by
     an Employer, he will be entitled to receive a pension commencing at Age 62,
     if he is then living.  Subject to the provisions of Article 7 (Forms of
     Pension), the annual amount of pension then payable under the Plan to the
     Participant will be equal to the annual amount of pension that would have
     been payable to the Participant, for the Participant's remaining lifetime
     only, under Cinergy's Pension Plan and Cinergy's Excess Pension Plan, as in
     effect on the Participant's applicable Severance from Service Date, if the
     Participant's years of "participation" as defined under Cinergy's Pension
     Plan were equal to the Participant's years of Participation under this
     Plan, reduced by:

               (1)  100 percent of the annual amount of pension actually payable
          on the Participant's behalf under Cinergy's Pension Plan and Cinergy's
          Excess Pension Plan, as in effect on the Participant's applicable
          Severance from Service Date, calculated as a straight-life annuity for
          the Participant commencing as of Age 62; and

               (2)  50 percent of the Participant's Reduced Primary Social
          Security Benefit.

     A Participant's pension payable under this Section will never be less than
     $0.

          (b)  A Participant may elect under Cinergy's Pension Plan to begin
     receiving his pension on any date on or after his 50th birthday and before
     he reaches Age 62.  If the Participant elects under Cinergy's Pension Plan
     to begin receiving a pension prior to Age 62, then the annual amount of his
     pension under Subsection (a) will be reduced by the applicable early
     payment factor under Section 4.5 of Cinergy's Pension Plan (General Method
     of Computing Annual Pension for a Terminated Vested Participant), as in
     effect on the Participant's applicable Severance from Service Date.

          5.4  SENIOR EXECUTIVE SUPPLEMENT FOR SEVERANCE FROM SERVICE AFTER
VESTING

          (a)  If a Participant who is eligible for a Senior Executive
     Supplement under Article 4 incurs a Severance from Service due to a
     disability before his 50th birthday and has thus satisfied the Vesting
     Requirement as of his Disability Date, and he is not later reemployed by an
     Employer, he will be entitled to receive a pension commencing at Age 62, if
     he is then living.  Subject to the provisions of Article 7 (Forms of
     Pension), the annual amount of pension then payable under the Plan to the
     Participant will be equal to the product of:

                                   -11-



               (1)  his Highest Average Earnings as of his Disability Date; and

               (2)   his Total Pay Replacement Percentage as of the date he
          elects under Cinergy's Pension Plan to begin receiving his pension,

          reduced by:

               (3)  100 percent of the annual amount of pension actually payable
          on the Participant's behalf under Cinergy's Pension Plan and Cinergy's
          Excess Pension Plan, as in effect on the Participant's applicable
          Severance from Service Date, calculated as a straight-life annuity for
          the Participant commencing as of Age 62; and

               (4)  50 percent of the Participant's Reduced Primary Social
          Security Benefit.

     A Participant's pension payable under this Section will never be less than
     $0.

          (b)  A disabled Participant may elect under Cinergy's Pension Plan to
     begin receiving his pension on any date on or after his 50th birthday and
     before he reaches Age 62.  If the Participant elects under Cinergy's
     Pension Plan to begin receiving a pension prior to Age 62, then the annual
     amount of the pension under Subsection (a) will be reduced by the
     applicable early payment factor under Section 4.5 of Cinergy's Pension Plan
     (General Method of Computing Annual Pension for a Terminated Vested
     Participant), as in effect on the Participant's applicable Severance from
     Service Date.

          5.5  REEMPLOYMENT

          If an Employee incurs a Severance from Service and is later reemployed
by an Employer, his two (or more) periods of employment will, subject to all of
the provisions of the Plan, be aggregated for the purpose of determining his
years of Participation, his years of Service, and his years of Senior Executive
Service.



                                     ARTICLE 6
                                  SPOUSE'S BENEFIT

          6.1  DETERMINATION OF SPOUSE'S BENEFIT -- MID-CAREER BENEFIT

          Upon the death of either (a) an Active Participant who has satisfied
the Vesting Requirement under Cinergy's Pension Plan (an "Eligible Active
Participant") or (b) a former Participant who has satisfied the Vesting
Requirement under Cinergy's Pension Plan, whose employment with his Employer
terminated before the Participant reached age 50, and whose

                                -12-



pension under the Plan had not yet begun on the date of his death (an
"Eligible Former Participant"), his Spouse on the date of his death, if
living on the date of the first installment payable as set forth below, will
be entitled to receive an annual pension under the Plan as a Spouse's
Benefit.  The annual amount of the Spouse's Benefit will be determined as
follows:

          (a)  If, at the date of his death, the Participant was either an
     Eligible Active Participant or an Eligible Former Participant who had
     reached age 50, the Spouse's Benefit will be equal to the annual amount of
     pension that would have been payable to the Spouse under the provisions of
     Cinergy's Pension Plan and Cinergy's Excess Pension Plan, as in effect on
     the date of the Participant's death, if the Participant's years of
     "participation" as defined under Cinergy's Pension Plan were equal to the
     Participant's years of Participation under this Plan, reduced by:

               (1)  100 percent of the annual death benefit actually payable to
          the Participant's Spouse under Cinergy's Pension Plan and Cinergy's
          Excess Pension Plan, as in effect on the date of the Participant's
          death; and

               (2)  50 percent of the Participant's Reduced Primary Social
          Security Benefit, calculated as of the date of the Participant's
          death.

          (b)  If the Participant had not reached Age 62 as of the date of his
     death, then the annual amount of the Spouse's Benefit under Subsection (a)
     will be reduced by the applicable early payment factor under
     Subsection 6.1(a) of Cinergy's Pension Plan (Determination of Spouse's
     Benefit).

          (c)  If, at the date of his death, the Participant was either an
     Eligible Active Participant or an Eligible Former Participant who, in
     either case, had not reached age 50, the annual amount of the Spouse's
     Benefit under Subsection (a) will be calculated in the manner prescribed by
     Subsection 6.1(c) of Cinergy's Pension Plan (Determination of Spouse's
     Benefit).

A Spouse's Benefit payable under this Section will never be less than $0.

          6.2  DETERMINATION OF SPOUSE'S BENEFIT -- SENIOR EXECUTIVE SUPPLEMENT

          Upon the death of either (a) an Active Participant who has satisfied
the Vesting Requirement, (b) an Active Participant who was a Senior Executive
Employee and who has completed 5 years of Senior Executive Service ("Eligible
Active Participant"), or (c) a former Participant who was a Senior Executive
Employee and who has satisfied the Vesting Requirement as of his Disability
Date, whose employment with his Employer terminated before the Participant
reached age 50, and whose pension had not yet begun on the date of his death
("Eligible Former Participant"), his Spouse on the date of his death, if living
on the date of the first installment payable as set forth below, will be
entitled to receive an annual pension under

                                  -13-



the Plan as a Spouse's Benefit.  The annual amount of the Spouse's Benefit
will be determined as follows:

          (a)  If, at the date of his death, the Participant was an Eligible
     Active Participant who had reached age 50, the Spouse's Benefit will be
     equal to the product of:

               (1)  the Participant's Highest Average Earnings; and

               (2)  his Total Pay Replacement Percentage,

          as of the date of his death, reduced by:

               (3)  100 percent of the annual amount of pension actually payable
          to the Participant's Spouse under Cinergy's Pension Plan and Excess
          Pension Plan, as in effect on the date of the Participant's death; and

               (4)  50 percent of the Participant's Reduced Primary Social
          Security Benefit, calculated as of the date of the Participant's
          death.

          (b)  If the Participant had not reached Age 62 as of the date of his
     death, then the annual amount of the Spouse's Benefit under Subsection (a)
     will be reduced by the applicable early payment factor under Subsection
     6.1(a) of Cinergy's Pension Plan (Determination of Spouse's Benefit).

          (c)  If, at the date of his death, the Participant was either an
     Eligible Active Participant or an Eligible Former Participant who, in
     either case, had not reached age 50, the annual amount of the Spouse's
     Benefit under Subsection (a) will be calculated in the manner prescribed by
     Subsection 6.1(c) of Cinergy's Pension Plan (Determination of Spouse's
     Benefit).

A Spouse's Benefit payable under this Section will never be less than $0.

          6.3  METHOD OF PAYMENT OF SPOUSE'S BENEFIT

          A Spouse's Benefit will be payable in equal monthly installments, each
installment being equal to 1/12th of the annual amount as determined pursuant to
this Article.  If at the date of his death the Eligible Active Participant or
Eligible Former Participant had reached age 50, the first monthly installment
will be payable to the Participant's Spouse on the first day of the calendar
month coincident with or following the date of the Participant's death, if his
Spouse is then living.  If at the date of his death the Participant had not
reached age 50, the first monthly installment will be payable to the
Participant's Spouse on the first day of the calendar month coincident with or
following the date the Participant would have reached age 50, had he survived
until that date, if his Spouse is then living.  In either event, subsequent
monthly

                                 -14-



installments will be payable on the first day of each month and will cease
upon the payment of the installment due on the first day of the calendar
month in which the Spouse dies.

                                     ARTICLE 7
                                  FORMS OF PENSION

          The form of a pension payable under the Plan to a Participant will be
made in the same form in which the pension payable to the Participant under
Article 7 of Cinergy's Pension Plan is made.


                                     ARTICLE 8
                                 PAYMENT OF PENSION

          8.1  TIMING OF PAYMENT

          The payment of benefits under this Plan to a Participant will begin as
of the same date his benefits under Cinergy's Pension Plan begin.

          8.2  METHOD OF PAYMENT

          Unless specified elsewhere in the Plan, all pension payments under the
Plan will normally be payable in equal monthly installments, with each monthly
installment equal to 1/12th of the annual amount payable.  Pension payments will
be (a) made by check to the order of the Participant, his Spouse, his
Beneficiary, or his Contingent Annuitant, as applicable, and mailed to that
person's address as it appears on the Employer's records, or (b) deposited
directly into an account of the Participant, his Spouse, or his Contingent
Annuitant, as applicable, maintained by the recipient at a bank, savings and
loan, or other financial institution, as directed by the recipient.

          8.3  SMALL BENEFITS

          Notwithstanding any other provision of the Plan, where the Actuarial
Equivalent present value of a Participant's Nonforfeitable pension or Spouse's
Benefit under this Plan does not exceed $5,000, the Committee or its designee
will pay the pension or Spouse's Benefit in a single-sum cash payment equal to
the Actuarial Equivalent of the pension or Spouse's Benefit otherwise payable.



          8.4  FACILITY OF PAYMENT

                                      -15-



          If any benefit under the Plan is payable to a person whom the
Committee knows is a minor or otherwise under legal incapacity, the Committee or
its designee may have the payment made to the legal guardian of that person or
to the person or organization as a court of competent jurisdiction may direct.
To the extent permitted by law, any payment under this Section will be a
complete discharge of any liability under the Plan to that person.

          8.5  SUSPENSION OF BENEFITS

          Notwithstanding any other provision of the Plan, any pension benefit
payments being received under this Plan by a Reemployed Retiree or a Reemployed
Terminated Vested Participant and any pension benefit payments that would
otherwise begin with respect to that individual during his reemployment with the
Employer, will be subject to Section 8.5 (Benefits for Late Retirees, Reemployed
Retirees, and Reemployed Terminated Vested Participants) of Cinergy's Pension
Plan, except that Subsection 8.5(b) will not apply.


                                     ARTICLE 9
                             NONALIENATION OF BENEFITS

          The Plan will not in any manner be liable for, or subject to, the
debts or liabilities of any Participant, Beneficiary, Contingent Annuitant,
Spouse, or any other person entitled to any Plan benefit.  No payee may assign
any payment due him under the Plan.  No pension or other benefits at any time
payable under the Plan will be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, attachment, garnishment, levy,
execution, or other legal or equitable process, or encumbrance of any kind.  Any
attempt to alienate, sell, transfer, assign, or otherwise encumber any such
benefit, whether presently or thereafter payable, will be void.


                                     ARTICLE 10
                                   ADMINISTRATION

          10.1 ADMINISTRATOR

          The Benefits Committee will be the administrator of the Plan.  The
Committee will consist of the number of members, not fewer than three, that is
specified from time to time by the Board of Directors or its designee.  All
members of the Committee will be employees or officers of an Employer.  All
members of the Committee will serve without compensation.



          10.2 REMOVAL AND REPLACEMENT OF COMMITTEE MEMBERS

                                    -16-



          The members of the Committee will serve at the pleasure of the Board
of Directors and may be removed by the Board of Directors or its designee with
or without cause.  Any vacancy among the members will be filled by the Board of
Directors or its designee.

          10.3 DISQUALIFICATION AND RESIGNATION

          On the date when a Committee member is neither an employee nor an
officer of an Employer, he will be disqualified from membership on the
Committee.  A member of the Committee may resign by delivering his written
resignation to any other member of the Committee.  A resignation will become
effective on the date specified in the instrument of resignation.

          10.4 CHAIRPERSON, SERVICES, AND COUNSEL

          The members of the Committee will elect one of their members as
Chairperson and will elect a Secretary, who may be, but need not be, one of the
members of the Committee. Cinergy will provide the Committee, at Cinergy's
expense, with such clerical, accounting, actuarial, and other services as may be
reasonably required by the Committee in carrying out its responsibilities.  The
Committee may employ counsel, who may be, but need not be, counsel to Cinergy.

          10.5 MEETINGS

          The Committee will hold meetings upon such notice, at the places, and
at the times as the Committee may from time to time determine.

          10.6 QUORUM

          A majority of the members of the Committee at the time holding office
will constitute a quorum for the transaction of business.  All resolutions and
other action taken by the Committee at any meeting will be by the vote of the
majority of the members of the Committee present at the meeting.

          10.7 ACTION WITHOUT MEETING

          Any decision, order, direction, or other action, made in writing
signed by a majority of the members of the Committee at the time holding office
will constitute valid and effective action of the Committee, whether or not the
matter to which that decision, order, direction, or other action pertains had
already been acted upon at a duly called and held meeting of the Committee.

                                   -17-

          10.8 CORRECTION OF DEFECTS

          The Committee may correct any defect or supply any omission or
reconcile any error or inconsistency in its previous proceedings, decisions,
orders, directions, or other actions in the manner and to the extent as it deems
advisable to carry out the purposes of the Plan.

          10.9 RELIANCE UPON LEGAL COUNSEL

          The members of the Committee, and Cinergy and its officers and
directors, will be entitled to rely upon all opinions given by legal counsel
selected by the Committee.

          10.10 EXPENSES

          In the performance of its duties, the Committee is authorized to incur
reasonable expenses, including counsel fees, which will be paid by the Employer.

          10.11 INDEMNIFICATION

          Cinergy agrees to indemnify and hold harmless each member of the
Committee against any cost, expense, or liability (including any sum paid in
settlement of any claim with the approval of the Board of Directors) arising out
of any act or omission to act as a member of the Committee, except only acts and
omissions representing willful misconduct, fraud, or lack of good faith.

          10.12 POWERS AND DUTIES OF COMMITTEE

          Subject to the specific limitations stated in this document, the
Committee will have the following powers, duties, and responsibilities:

          (a)   to carry out the Plan's general administration;

          (b)   to cause to be prepared all forms necessary or appropriate for
     the Plan's administration;

          (c)   to keep appropriate books and records, including minutes of the
     Committee's meetings;

          (d)   to give directions as to the amounts to be disbursed to
     Participants and others under the Plan's provisions;

          (e)   to determine, with discretionary authority and consistent with
     the provisions of this document, all questions of the eligibility, rights,
     and status of Participants and others under the Plan;

                                      -18-



          (f)   to exercise all other powers and duties specifically conferred
     upon the Committee elsewhere in this document;

          (g)   to interpret, with discretionary authority, the provisions of
     the Plan and to resolve, with discretionary authority, all disputed
     questions of Plan interpretation and benefit eligibility; and

          (h)   to employ agents to assist it in performing its administrative
     duties.

          The Committee will at all times make similar decisions on similar
questions involving similar circumstances.  Subject to the provisions of
Article 11 (Benefit Claims Procedures), all decisions of the Committee made in
good faith on all matters within the scope of its authority under the provisions
of this document will be final and binding upon all persons.


                                     ARTICLE 11
                             BENEFIT CLAIMS PROCEDURES

          Claims for benefits under the Plan will be made in writing to the
Committee or its designee.  If a claim for benefits is wholly or partially
denied, the Committee or its designee will notify the Claimant of the claim's
denial within a reasonable period of time.  The Committee or its designee is
authorized to develop more fully the Plan's benefit claims procedures by
establishing from time to time various rules and procedures.

          Within 60 days after the Claimant's receipt of written notice of the
claim's denial, the Claimant, or his duly authorized representative, may file a
written request with the Committee requesting a full and fair review of the
denial of the Claimant's claim for benefits.  In connection with the Claimant's
appeal of the denial of his claim for benefits, the Claimant may review
pertinent documents in the Committee's possession and may submit issues and
comments in writing.  The Committee will make a decision on review promptly
after receipt of the Claimant's request for review.  The decision on review will
be in writing and written in a manner calculated to be understood by the
Claimant, will set forth the specific reason or reasons for the decision, and
will contain a specific reference to the pertinent Plan provisions on which the
decision is based.  If the decision on review is not furnished to the Claimant
within 60 days of receipt of the request for review, the claim will be deemed
denied on review.


                                     ARTICLE 12
                             FUNDING POLICY AND METHOD

          The Plan will be totally unfunded, so that the Employer's obligation
to pay benefits under the Plan is merely a contractual duty to make payments
when due under the Plan. The Employer's promise to pay benefits under the Plan
will be unsecured, will be paid out of the

                                   -19-



Employer's general assets and, except as provided in the following paragraph,
Cinergy will not set aside or segregate assets for the purpose of paying
benefits under the Plan.

          Notwithstanding the preceding paragraph, Cinergy, in its sole
discretion, may establish a Rabbi Trust.  The Employer, in its sole discretion,
may make such contributions to the Rabbi Trust as the Committee determines are
appropriate to enable the Employer to pay benefits under the Plan.  Any Rabbi
Trust established under this Article will be created pursuant to a written trust
document that substantially conforms to the model form of rabbi trust agreement
approved by the Internal Revenue Service in Revenue Procedure 92-64 (as amended
from time to time).


                                     ARTICLE 13
                                   MISCELLANEOUS

          13.1  NO ENLARGEMENT OF EMPLOYEE RIGHTS

          This Plan is strictly a voluntary undertaking on the part of each
Employer and will not be deemed to constitute a contract between the Employer
and any Employee or to be consideration for, or an inducement to, or a condition
of, the employment of any Employee. Nothing contained in the Plan will be deemed
to give any Employee the right to be retained in the service of any Employer or
to interfere with the right of any Employer to discharge any Employee at any
time.  No person will have any right to pension benefits except to the extent
provided in the Plan.

          13.2  NOTICE OF ADDRESS

          Each Participant, Retired Participant, Terminated Vested Participant,
Beneficiary, Contingent Annuitant, and Spouse entitled to benefits under the
Plan must submit to the Committee or its designee his post office address and
each change of post office address.  Any communication, statement, or notice
addressed to a person at his latest post office address as filed with the
Committee or its designee will, upon deposit in the United States mail with
postage prepaid, be binding upon that person for all Plan purposes, and the
Committee will not be obliged to search for, or to ascertain the whereabouts of,
any person, except as otherwise required by law.

          13.3  DATA

          Participants, Retired Participants, Terminated Vested Participants,
Beneficiaries, Contingent Annuitants, and Spouses must furnish to the Committee
or its designee any documents, evidence, or information that the Committee
considers necessary or desirable for the purposes of administering the Plan, or
to protect the Committee; and it will be a condition of the

                                  -20-



Plan that each person must furnish this information promptly and sign
required documents before any benefits become payable under the Plan.

          13.4  NO INDIVIDUAL LIABILITY

          It is the express purpose and intention of the Plan that no individual
liability whatever will attach to, or be incurred by, the shareholders,
officers, or members of the board of directors of any Employer, or the
Committee, or its members, or any fiduciary designated pursuant to Section 10.12
(Powers and Duties of Committee), or any representatives appointed by Cinergy,
under or by reason of any of the terms or conditions of the Plan.

          13.5  GOVERNING LAWS

          The Plan will be construed and administered according to the internal
laws of the State of Ohio to the extent that those laws are not preempted by
federal law.

          13.6  SEVERABILITY

          If any part of the Plan is adjudged by a court of competent
jurisdiction to be contrary to the laws governing the Plan, then the Plan will,
in all other respects, be and remain legally effective and binding to the full
extent permissible under the law.

          13.7  INTERPRETATION AND REGULATION OF PLAN

          Cinergy, by action of the Committee, reserves the right to interpret
and regulate the Plan, by exercise of discretionary authority, and its
interpretation and regulation will be legally effective and binding on all
parties concerned.

          13.8  COMMUNICATIONS BY PARTICIPANTS

          All communications by Participants and other concerned parties
concerning the Plan must be in writing and directed to Cinergy's General
Manager, Benefits, 1000 East Main Street, Plainfield, Indiana 46168.

          13.9  HEADINGS

          The headings of Articles, Sections, Subsections, Paragraphs, or other
parts of the Plan are for convenience of reference only and do not define,
limit, construe, or otherwise affect the contents of this document.

                                    -21-



                                     ARTICLE 14
                                   CONTRIBUTIONS

          No contributions to the Plan by Participants will be required or
permitted under the Plan.

          During the continuance of the Plan and for the purpose of providing
the benefits contemplated under the Plan, each Employer intends to pay out of
its general assets, from time to time, those sums of money which the Committee
deems sufficient to provide the benefits under the Plan.


                                     ARTICLE 15
                    CONTINUED APPROVAL OF CINERGY'S PENSION PLAN

          The Plan, as set forth in this document, is intended to provide
retirement benefits supplemental to those provided under Cinergy's Pension Plan.
The implementation and continuance of the Plan are expressly conditioned upon
the absence of any disqualifying effects of implementation and continuance upon
Cinergy's Pension Plan under the Code.  Any modification, amendment, or
termination of the Plan may be made, retroactive or otherwise, as necessary or
appropriate to maintain the qualification of Cinergy's Pension Plan under the
Code or to otherwise cause Cinergy's Pension Plan to comply with any applicable
requirements of the Employee Retirement Income Security Act of 1974, as amended
from time to time.


                                     ARTICLE 16
                             AMENDMENT AND TERMINATION

          16.1  AUTHORITY TO AMEND

          Cinergy, by resolution of the Board of Directors or by any person or
persons duly authorized by resolution by the Board of Directors, will have the
right, authority, and power to alter, amend, modify, revoke, or terminate the
Plan, and Cinergy, by resolution of the Board of Directors or by any person or
persons duly authorized by resolution by the Board of Directors, will also have
the right, authority and power to terminate the Plan and to discontinue or
suspend the payment of benefits under the Plan.

          16.2  MERGER, CONSOLIDATION, AND CHANGE IN CONTROL

          If Cinergy should be reorganized by merger, consolidation, transfer of
assets, or otherwise, so that a corporation, partnership, or person shall
succeed to all or substantially all of Cinergy's business, or a Change in
Control of Cinergy occurs, then the obligations and responsibilities of Cinergy
under the Plan will be assumed by any successor, acquiring

                                 -22-



corporation, or controlling entity, and all of the rights, privileges, and
benefits of the Participants under the Plan will continue.  Notwithstanding
the provisions of Section 16.1 (Authority to Amend), the provisions of this
Section may not be amended by an amendment to the Plan effective within three
years of the occurrence of any of the events described in the preceding
sentence.

                                     ARTICLE 17
                          PARTICIPATION BY OTHER EMPLOYERS

          17.1  ADOPTION OF THE PLAN

          With Cinergy's consent, any Affiliate may become a participating
Employer under the Plan by (a) taking appropriate action to adopt the Plan;
(b) filing with Cinergy a duly certified copy of the Plan as adopted by the
Affiliate; and (c) executing and delivering any documents and taking any other
action as may be necessary or desirable to put the Plan into effect with respect
to that corporation or entity.

          17.2  WITHDRAWAL FROM PARTICIPATION

          Any Employer may, with Cinergy's consent, withdraw from participation
in the Plan at any time by filing with Cinergy a duly certified copy of a
resolution of its board of directors to that effect and giving notice of its
intended withdrawal to Cinergy prior to the effective date of withdrawal.

          17.3  CINERGY AS AGENT FOR EMPLOYERS

          Each Affiliate that becomes a participating Employer pursuant to
Section 17.1 (Adoption of the Plan) or Article 18 (Continuance by a Successor)
by so doing will be deemed to have appointed Cinergy its agent to exercise on
its behalf all of the powers and authorities conferred upon Cinergy by the terms
of the Plan, including, but not limited to, the power to amend and terminate the
Plan.  Each Employer must, from time to time, upon Cinergy's request, furnish to
Cinergy any data and information as Cinergy requires in the performance of its
duties.


                                     ARTICLE 18
                             CONTINUANCE BY A SUCCESSOR

          If Cinergy or any other Employer is reorganized by way of merger,
consolidation, transfer of assets, or otherwise, so that a corporation,
partnership or person other than an Employer succeeds to all or substantially
all of the Employer's business, the successor may be substituted for the
Employer under the Plan by adopting the Plan.  Benefit payments by the Employer
will be automatically suspended from the effective date of any reorganization
until the date upon which the substitution of the successor corporation for the
Employer under the Plan

                                   -23-



becomes effective.  If, within 90 days following the effective date of any
reorganization, the successor has not elected to become a party to the Plan,
or if the Employer adopts a plan of complete liquidation other than in
connection with a reorganization, the Plan will be automatically terminated
with respect to Employees of the Employer as of the close of business on the
90th day following the effective date of the reorganization or as of the
close of business on the date of adoption of the plan of complete
liquidation, as the case may be.

          IN WITNESS WHEREOF, Cinergy Corp. has caused this Plan to be executed
and approved by its duly authorized officers, effective as of January 1, 1999.


                              By: ___________________________________
                                  Madeleine W. Ludlow
                                  Vice President and Chief Financial Officer


                              Dated: ________________________________


APPROVED:


____________________________________
Jerome A. Vennemann
Acting General Counsel and
Assistant Corporate Secretary


Dated:  ______________________________

                                         -24-



ADDENDUM A



                CINERGY CORP. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN



The following is the list of individual Employment Agreements (and related
agreements) that are incorporated into and made a part of this Plan pursuant to
Sections 3.2 and 4.2 of the Plan:

          -     John T. Ambrose, amended and restated effective November 1,
                1997, and as amended effective July 15, 1999
          -     Michael J. Cyrus, effective April 6, 1998
          -     Cheryl M. Foley, amended and restated effective March 1, 1999
          -     William J. Grealis, amended and restated effective March 1, 1999
          -     J. Joseph Hale, Jr., amended and restated effective March 1,
                1999
          -     M. Stephen Harkness, effective July 1, 1998
          -     Donald B. Ingle, Jr., amended and restated effective March 1,
                1999
          -     Albert S. Keys, effective January 15, 1997, and as amended
                effective January 29, 1997
          -     Jerry W. Liggett, Amended and Restated Executive Severance
                Agreement and General Release, dated March 12, 1999
          -     Madeleine W. Ludlow, amended and restated effective March 1,
                1999
          -     John M. Mutz, effective October 4, 1993, and as subsequently
                amended effective August 30, 1996, January 29, 1997, September
                24, 1998, and December 31, 1998
          -     Vladimir Prerad, effective June 1, 1996
          -     Jackson H. Randolph, amended and restated effective October 24,
                1994
          -     L. C. Randolph, Jr., effective January 20, 1997
          -     Bernard F. Roberts, effective March 1, 1999
          -     James E. Rogers, Second Amended and Restated Employment
                Agreement effective September 22, 1998
          -     William L. Sheafer, effective July 1, 1998
          -     John P. Steffen, effective July 1, 1998
          -     Larry E. Thomas, amended and restated effective March 1, 1999,
                and as amended effective September 1, 1999
          -     James L. Turner, effective February 16, 1999
          -     William F. Tyndall, effective August 25, 1998
          -     Charles J. Winger, amended and restated effective March 1, 1999,
                and as amended effective September 1, 1999

                                   -25-

EX-10.HH

CONFORMED TO 30TH MARCH 1999






                                  CINERGY CORP.







     ----------------------------------------------------------------------

                                      RULES
                                     OF THE
                               1998 CINERGY CORP.
                                SHARESAVE SCHEME

     ----------------------------------------------------------------------
                (Adopted by a resolution of the Directors on 16th
               December 1998 and amended on 11th February 1999 and
                 approved by the Inland Revenue under the Income
                and Corporation Taxes Act 1988 on 3rd March 1999
                          under reference SRS 2185/IGB)













                                  HERBERT SMITH
                                 Exchange House
                                 Primrose Street
                                 London EC2A 2HS
                               Tel: 0171 374-8000
                               Fax: 0171 496-0043
                                    Ref: 281
                            Date: 12th February 1999




                                  CINERGY CORP.

                                SHARESAVE SCHEME

                                    CONTENTS
                                                                           PAGE

1.     DEFINITIONS..........................................................1

2.     APPLICATION FOR OPTIONS..............................................6

3.     GRANT OF OPTIONS.....................................................8

4.     NUMBER OF SHARES IN RESPECT OF WHICH OPTIONS MAY BE GRANTED..........9

5.     RIGHTS OF EXERCISE AND LAPSE OF OPTIONS.............................10

6.     TAKEOVER, RECONSTRUCTION AND AMALGAMATION, AND LIQUIDATION..........13

7.     MANNER OF EXERCISE..................................................14

8.     TRANSFER OF SHARES..................................................16

9.     ADJUSTMENTS.........................................................16

10.    ADMINISTRATION......................................................17

11.    ALTERATIONS.........................................................18

12.    GENERAL ............................................................18







                   RULES OF THE CINERGY CORP. SHARESAVE SCHEME


1.     DEFINITIONS


1.1    In this Scheme, the following words and expressions shall bear, unless
       the context otherwise requires, the meanings set forth below:

       "APPROPRIATE PERIOD"         the limit given by Paragraph 15(2) of
                                    Schedule 9 to the Taxes Act;

       "ASSOCIATED COMPANY"         an associated company of the Company within
                                    the meaning that expression bears in Section
                                    187(2) of the Taxes Act;

       "BONUS DATE"                 where Repayments under the Savings Contract
                                    made in connection with an Option are taken
                                    as including the 7 year bonus, the earliest
                                    date on which the 7 year bonus is payable
                                    and, in any other case, the earliest date on
                                    which any other bonus is payable under such
                                    Savings Contract;

       "THE COMMITTEE"              the Sharesave Committee of the Company as
                                    appointed by the Company by resolution on
                                    16th December 1998;

       "CLOSE COMPANY"              a close company as defined in Section 414(1)
                                    of the Taxes Act as varied by Paragraph 8 of
                                    Schedule 9 to the Taxes Act;

       "THE COMPANY"                Cinergy Corp. (registered under the laws of
                                    the State of Delaware in the United States
                                    of America);

       "CONTINUOUS SERVICE"         the meaning given to "continuous employment"
                                    in the Employment Rights Act 1996;


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       "CONTROL"                    the meaning given by Section 840 of the
                                    Taxes Act;

       "DATE OF GRANT"              the date on which an option is granted;

       "DATE OF INVITATION"         the date on which the Grantor invites
                                    applications for Options;

       "DEALING DAY"                any day on which the New York Stock Exchange
                                    is open for the transaction of business;

       "ELIGIBLE EMPLOYEE"          any individual who:

                                    (A) (1)     is an employee of a
                                                Participating Company or an
                                                executive director of a
                                                Participating Company, the
                                                latter on terms which require
                                                him to devote at least 25 hours
                                                a week (excluding meal breaks)
                                                to his duties; and

                                        (2)     is chargeable to tax in respect
                                                of his office or employment
                                                under Case I of Schedule E of
                                                the Taxes Act; and

                                        (3)     has such qualifying period (if
                                                any) of Continuous Service
                                                (being a period commencing not
                                                earlier than five years prior to
                                                the Date of Grant) as the
                                                Committee may determine; or

                                    (B)  any other employee (including an
                                         executive director) or category of
                                         employees whom the Committee may
                                         approve;


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       "EMPLOYEES' SHARE SCHEME"    the meaning given by Section 743 of the
                                    Companies Act 1985;

       "EXERCISE PRICE"             The US dollar equivalent at the applicable
                                    exchange rate at the date of exercise of the
                                    amount of Repayment under the Savings
                                    Contract entered into, such US dollar
                                    equivalent to be used to acquire up to the
                                    maximum shares possible at the date of
                                    exercise at the Option price;

       "GRANTOR"                    in relation to any Option, the Committee or
                                    the Trustee as the case may be being the
                                    person by whom the Option is to be or was
                                    granted pursuant to Rule 2.1;

       "THE NEW YORK STOCK
       EXCHANGE"                    New York Stock Exchange;

       "MARKET VALUE"               in relation to a Share on any day which is
                                    listed on the New York Stock Exchange, its
                                    middle market quotation;

       "MATERIAL INTEREST"          the meaning given by Section 187(3) of the
                                    Taxes Act;

       "MAXIMUM CONTRIBUTION"       the lesser of:

                                    (A)  such maximum monthly contribution as
                                         may be permitted pursuant to Paragraph
                                         24 of Schedule 9 to the Taxes Act; or

                                    (B)  such maximum monthly contribution as
                                         may be determined from time to time by
                                         the Committee;


                                                                               3



       "MEMBER OF A CONSORTIUM"     the meaning given by Section 187(7) of the
                                    Taxes Act;

       "MINIMUM CONTRIBUTION"       the minimum Monthly Contribution allowed by
                                    the Committee being an amount which is not
                                    less than the minimum Monthly Contribution
                                    permitted under the Savings Contract and not
                                    greater than L10 per month;

       "MONTHLY CONTRIBUTIONS"      monthly contributions agreed to be paid by a
                                    Participant under the Savings Contract made
                                    in connection with his Option;

       "OPTION"                     a right to purchase Shares under the Scheme
                                    which is either subsisting or (where the
                                    context so admits or requires) is proposed
                                    to be granted;

       "OPTION PRICE"               the US dollar price per Share, as determined
                                    by the Grantor, at which an Eligible
                                    Employee may acquire Shares upon the
                                    exercise of an Option being not less than 80
                                    per cent. of the Market Value on the Dealing
                                    Day preceding the Date of Invitation but
                                    subject to any adjustment pursuant to Rule
                                    9;

       "PARTICIPANT"                a director or employee, or former director
                                    or employee, to whom an Option has been
                                    granted, or (where the context so admits or
                                    requires) the personal representatives of
                                    any such person;

       "PARTICIPATING COMPANY"      (A)  the Company; and

                                    (B)  any other company which is under the
                                         Control of the Company, is a
                                         Subsidiary of the Company and is for
                                         the time being


                                                                               4


                                         designated by the Committee as a
                                         Participating Company;

       "REPAYMENT"                  in relation to a Savings Contract, the
                                    aggregate of the 36 or 60 Monthly
                                    Contributions which the Participant has
                                    agreed to make and any bonus due at the
                                    Bonus Date;

       "SAVINGS CONTRACT"           a contract under a certified contractual
                                    savings scheme (within the meaning of
                                    Section 326 of the Taxes Act) approved by
                                    the Inland Revenue for the purpose of
                                    Schedule 9 to the Taxes Act;

       "THE SCHEME"                 this Cinergy Corp. Sharesave Scheme in its
                                    present form or as from time to time amended
                                    in accordance with the provisions hereof;

       "SHARE"                      a share in the capital of Company which
                                    satisfies the conditions specified in
                                    Paragraphs 10 to 14 (inclusive) of Schedule
                                    9 to the Taxes Act;

       "SPECIFIED AGE"              63 years of age;

       "SUBSIDIARY"                 the meaning given by Sections 736 and 736A
                                    of the Companies Act 1985;

       "TAXES ACT"                  the Income and Corporation Taxes Act 1988;

       "TRUSTEE"                    the trustee or trustees for the time being
                                    of any qualifying employee share ownership
                                    trust established by the Company pursuant to
                                    Schedule 5 to the Finance Act 1989 or any
                                    similar employees' share trust.

1.2    In this Scheme, unless the context requires otherwise:


                                                                               5



       (A)   the headings are inserted for convenience only and do not affect
             the interpretation of any Rule;

       (B)   a reference to a Rule is a reference to a Rule of this Scheme;

       (C)   a reference to a statute or statutory provision includes a
             reference:

             (1)    to that statute or provision as from time to time
                    consolidated, modified, re-enacted or replaced by any
                    statute or statutory provision;

             (2)    to any repealed statute or statutory provision which it
                    re-enacts (with or without modification); and

             (3)    to any subordinate legislation made under it;

       (D)   words in the singular include the plural, and vice versa;

       (E)   a reference to the masculine shall be treated as a reference to the
             feminine, and vice versa;

       (F)   if a period of time is specified and starts from a given day or the
             day of an act or event, it is to be calculated exclusive of that
             day;

       (G)   a reference to "a year" shall be a period calculated by reference
             to a previous or subsequent anniversary of a particular date.

2.     APPLICATION FOR OPTIONS

2.1    The Committee or, with the prior written approval of the Committee, the
       Trustee may, from time to time, invite applications for Options from
       all Eligible Employees, and any such invitation shall be in writing and
       shall include details of:

       (A)   eligibility;

       (B)   the Option Price (which shall be expressed in US Dollars);

       (C)   the minimum Monthly Contribution payable;

       (D)   the Maximum Contribution payable;


                                                                               6



       (E)   the period (or periods) the Savings Contracts are available;

       (F)   if a 5 year Savings Contract is taken out, whether, for the purpose
             of determining the number of Shares over which the Option is to be
             granted, the Repayment under the Savings Contract may be taken as
             including either the 5 year or the 7 year bonus;

       (G)   the date by which applications made pursuant to Rule 2.3 must be
             received (being neither earlier than 14 days nor later than 25 days
             after the Date of Invitation).

2.2    An application for an Option must incorporate or be accompanied by a
       proposal for a Savings Contract.

2.3    An application  for an Option shall be in writing in such form as the
       Grantor may from time to time prescribe save that it shall provide for
       the applicant to state:

       (A)   the Monthly Contributions (being a multiple of L1 and not less
             than the Minimum Monthly Contribution) to be made in connection
             with the Option for which application is made;

       (B)   that his proposed Monthly Contributions (when taken together with
             any Monthly Contributions he makes under any other Savings
             Contract) will not exceed the Maximum Contribution;

       (C)   if Eligible Employees may enter into a three or a five year Savings
             Contract, his choice in that respect;

       (D)   if Eligible Employees may elect for the Repayment under a five year
             Savings Contract to be taken as including either the five year or
             the seven year bonus, his election in that respect.

2.4    Proposals for a Savings Contract shall be limited to such building
       society, bank or European financial institution as the Committee may
       designate.

2.5    Each application shall be deemed to be for an Option over the largest
       whole number of Shares which can be acquired at the Option Price with
       the Repayment under the Savings


                                                                               7



       Contract entered into in connection with the Option. For this purpose
       the number of Shares should be determined by reference to the UK/US
       exchange rate on the date of exercise of the Option.

3.     GRANT OF OPTIONS

3.1    No Option shall be granted to any person if:

       (A)   at the Date of Grant that person shall have ceased to be an
             Eligible Employee; or

       (B)   that person has, or has had at any time within the 12 month period
             preceding the Date of Grant, a Material Interest in the issued
             ordinary share capital of a Close Company which is the Company or a
             company which has Control of the Company or is a Member of a
             Consortium which owns the Company.

3.2    Within 30 days of the earliest Dealing Day by reference to which the
       Option Price was fixed the Grantor may, subject to Rule 3.1 above, grant
       to each Eligible Employee who has submitted a valid application, an
       Option in respect of the number of Shares for which application has been
       deemed to be made under Rule 2.5.

3.3    The Company shall issue to each Participant an option certificate in such
       form (not inconsistent with the provisions of the Scheme) as the
       Committee may from time to time prescribe. Each such certificate shall
       specify the Date of Grant of the Option, the number and class of Shares
       over which the Option is granted, the Option Price and the Bonus Date.

3.4    Except as otherwise provided in these Rules, every Option shall be
       personal to the Participant to whom it is granted and shall not be
       transferable.

3.5    No amount shall be paid in respect of the grant of an Option.


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4.     NUMBER OF SHARES IN RESPECT OF WHICH OPTIONS MAY BE GRANTED

4.1    The maximum number of shares which may be allocated under the Scheme at
       the Date of Grant shall not exceed 0.5 percent of the issued ordinary
       share capital of the Company on 16th December 1998.

4.2    The limit in Rule 4.1 shall be increased, if necessary, at the date of
       exercise to ensure that the total contributions of the Participants under
       the Savings Contracts may be used to acquire up to the maximum number of
       Shares possible at the UK/US dollar exchange rate prevailing at the date
       of exercise at the Option Price.

4.3    In determining the above limits no account shall be taken of:

       (A)   any Shares where the right to acquire such shares was released,
             lapsed or otherwise became incapable of exercise;

       (B)   any Shares where the interest in such Shares was forfeited or
             otherwise became incapable of vesting; or

       (C)   any Shares which are comprised in options granted or awards made to
             replace grants or awards originally made under the scheme of
             another company.

4.4    References in this Rule to the "allocation" of Shares shall mean:

       (A)   in the case of any share option scheme:

             (i)  the placing by the Committee or the Trustee of unissued shares
                  under the option; and

             (ii) insofar as not taken into account under (i) above, any
                  subscription for Shares which are issued for the purpose of
                  satisfying any Option; and

       (B)   in relation to other types of Employees' Share Scheme, shall mean
             the issue and allotment of shares and references to "allocated"
             shall be construed accordingly.


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5.     RIGHTS OF EXERCISE AND LAPSE OF OPTIONS

5.1    (A)   Save as provided in Rules 5.2, 65.3, 5.4, 5.5 and Rule 6, an Option
             shall not be exercised earlier than the Bonus Date under the
             Savings Contract entered into in connection therewith.

       (B)   Save as provided in Rule 5.2, an Option shall not be exercised
             later than 6 months after the Bonus Date under the Savings Contract
             entered into in connection therewith.

       (C)   Save as provided in Rules 5.2, 5.3 and 5.4, an Option may only be
             exercised by a Participant whilst he is a director or employee of a
             Participating Company.

       (D)   An Option may not be exercised by a Participant if he has, or has
             had at any time within the 12 month period preceding the date of
             exercise, a Material Interest in the issued ordinary share capital
             of a Close Company which is the Company or a company which has
             Control of the Company or is a Member of a Consortium which owns
             the Company, nor may an Option be exercised by the personal
             representatives of a deceased Participant if the Participant had
             such a Material Interest at the date of his death.


5.2    An Option may be exercised by the personal representatives of a deceased
       Participant:

       (A)   within 12 months following the date of his death if such death
             occurs before the Bonus Date;

       (B)   within 12 months following the Bonus Date in the event of his
             death within 6 months after the Bonus Date.

5.3    An Option may be exercised by a Participant within 6 months following his
       ceasing to hold the office or employment by virtue of which he is
       eligible to participate in the Scheme by reason of:

(A)    injury or disability; or


                                                                              10



       (B)   redundancy within the meaning of the Employment Rights Act 1996; or

       (C)   retirement on reaching the Specified Age or any other age at which
             he is bound to retire in accordance with the terms of his contract
             of employment; or

       (D)   his office or employment being in a company of which the Company
             ceases to have Control; or

       (E)   the transfer of his contract of employment (which relates to a
             business or part of a business) to a person who is neither an
             Associated Company nor a company of which the Company has Control;
             or

       (F)   any other reason other than dismissal for gross misconduct, serious
             breach or non-observance of his contract of employment or failure
             or refusal to carry out the duties assigned to him thereunder, if
             such cessation of office or employment is more than 3 years after
             the Date of Grant.

5.4    If, at the Bonus Date, a  Participant  holds an office or  employment  in
       a company  which is not a  Participating Company but which is:-

       (A)   an Associated Company of the Company (but not because it was
             demerged by the Company); or

       (B)   a company of which the Company has Control,

       his Option may be exercised within six months of such Bonus Date.

5.5    An Option may be exercised by a Participant within 6 months following the
       date he reaches the Specified Age if he continues after that date to hold
       the office or employment by virtue of which he is eligible to participate
       in the Scheme.

5.6    No person shall be treated for the purposes of Rule 5.3 as ceasing to
       hold an office or employment by virtue of which that person is eligible
       to participate in the Scheme until that person ceases to hold any office
       or employment in the Company or any Associated Company or any company of
       which the Company has Control.


                                                                              11


5.7    An Option granted to a Participant shall lapse upon the occurrence of the
       earliest of the following:

       (A)   subject to (B) below,  6 months after the Bonus Date under the
             Savings  Contract  entered into in connection  with the Option;

       (B)   where the Participant dies before the Bonus Date, 12 months after
             the date of death, and where the Participant dies in the period of
             6 months after the Bonus Date, 12 months after the Bonus Date;

       (C)   the expiry of any of the 6 month periods specified in Rule 5.3(A)
             to (F), save that if at the time any of such applicable periods
             expire, time is running under the 12 month periods specified in
             Rule 5.2, the Option shall not lapse by reason of this Rule 5.7
             until the expiry of the relevant 12 month period in Rule 5.2;

       (D)   the expiry of any of the periods specified in Rules 6.3 to 6.5,
             save where an Option is released in consideration of the grant of a
             New Option over New Shares in the Acquiring Company (during one of
             the periods specified in Rules 6.3 and 6.4) pursuant to Rule 6.6;

       (E)   the Participant ceasing to hold any office or employment with a
             Participating Company or any Associated Company for any reason
             other than those specified in Rules 5.2 and 5.3;

       (F)   subject to Rule 6.5, the passing of an effective resolution, or the
             making of an order by the Court, for the winding-up of the Company;

       (G)   the Participant being deprived (otherwise than on death) of the
             legal or beneficial ownership of the Option by operation of law, or
             doing anything or omitting to do anything which causes him to be so
             deprived; and

       (H)   before an Option has become capable of being exercised, the
             Participant giving notice that he intends to stop paying Monthly
             Contributions, or being deemed under the terms of the Savings
             Contract to have given such notice, or making an application for
             Repayment of the Monthly Contributions.


                                                                              12



6.     TAKEOVER, RECONSTRUCTION AND AMALGAMATION, AND LIQUIDATION

6.1    If any person obtains Control of the Company as a result of making an
       offer to acquire Shares which is either unconditional or is made on a
       condition such that if it is satisfied the person making the offer will
       have Control of the Company, an Option may be exercised within 6 months
       of the time when the person making the offer has obtained Control of the
       Company and any condition subject to which the offer is made has been
       satisfied or waived.

6.2    For the purpose of Rule 6.1 a person shall be deemed to have obtained
       Control of the Company if he and others acting in concert with him have
       together obtained Control of it.

6.3    If any person becomes bound or entitled to acquire Shares under Sections
       428 to 430F of the Companies Act 1985 an Option may be exercised at any
       time when that person remains so bound or entitled and thereafter the
       Option shall lapse unless before such date the Optionholder has entered
       into an agreement pursuant to Rule 6.6.

6.4    If, under Section 425 of the Companies Act 1985, the Court sanctions a
       compromise or arrangement proposed for the purposes of, or in connection
       with, a scheme for the reconstruction of the Company or its amalgamation
       with any other company or companies, an Option may be exercised within 6
       months of the Court sanctioning the compromise or arrangement.

6.5    If a resolution for the voluntary winding-up of the Company is passed, an
       Option may be exercised within 6 months from the date of the passing of
       the resolution.

6.6    If any company ("the Acquiring Company"):

       (A)   obtains Control of the Company as a result of making -

             (1)     a general offer to acquire the whole of the issued ordinary
                     share capital of the Company is made on a condition such
                     that if it is satisfied the Acquiring Company will have
                     Control of the Company; or


                                                                              13



             (2)     a general offer to acquire all the shares in the Company
                     which are of the same class as the Shares which may be
                     acquired by the exercise of Options,

             in either case ignoring any Shares which are already owned by it or
             a member of the same group of companies; or

       (B)   obtains Control of the Company in pursuance of a compromise or
             arrangement sanctioned by the Court under Section 425 of the
             Companies Act 1985; or

       (C)   becomes entitled to give notice under Section 429 of the Companies
             Act 1985 that he desires to acquire Shares,

       any Participant may at any time within the Appropriate Period, by
       agreement with the Acquiring Company, release any Option granted under
       the Scheme which has not lapsed ("the Old Option") in consideration of
       the grant to him of an option ("the New Option") which (for the purposes
       of Paragraph 15 of Schedule 9 to the Taxes Act) is equivalent to the Old
       Option but relates to shares in a different company (whether the
       Acquiring Company itself or some other company falling within Paragraph
       10(b) or (c) of Schedule 9 to the Taxes Act).

6.7    The New Option shall not be regarded for the purposes of Rule 6.6 as
       equivalent to the Old Option unless the conditions set out in Paragraph
       15(3) of Schedule 9 to the Taxes Act are satisfied. Where the provisions
       of this Rule 6.7 apply, the provisions of the Scheme shall be construed
       as if:

       (A)   the New Option were granted under the Scheme at the same time as
             the Old Option; and

       (B)   except for the purposes of the definitions of "Participating
             Company" and "Subsidiary" in Rule 1, the reference to Cinergy Corp.
             in the definition of "the Company" in Rule 1 were a reference to
             the different company mentioned in Rule 6.6.


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7.     MANNER OF EXERCISE

7.1    An Option may only be exercised during the periods specified in Rules 5
       and 6, and only in US dollars to the extent possible to acquire up to the
       maximum number of Shares at the Option Price on the date of exercise with
       the US dollar equivalent at the applicable exchange rate at the date of
       exercise of such UK Sterling monies not exceeding the amount of the
       Repayment under the Savings Contract entered into in connection therewith
       as at the date of such exercise. Any excess US dollars or UK sterling
       monies exceeding the Exercise Price shall be returned to the Participant.
       No account shall be taken of such part (if any) of the Repayment of any
       Monthly Contribution, the due date for the payment of which under the
       Savings Contract arises more than one month after the date of the
       Repayment.

7.2    Subject to Rule 7.3, exercise shall be by the delivery to the Secretary
       of the Company or other duly appointed agent, of an option certificate
       stating the Option Price at which the Option may be exercised on the date
       of exercise, the amount of proceeds of the Savings Contract to be used to
       acquire the Shares, with the notice of exercise in the prescribed form
       duly completed and signed by the Participant (or by his duly authorised
       agent) together with any remittance in US dollars for the Exercise Price
       payable to the Company (as agent for the Trustee), or authority to the
       Company (as agent for the Trustee) to withdraw and apply monies equal to
       the Exercise Price from the Savings Contract, to acquire the Shares over
       which the Option is to be exercised or in such other manner as may be
       determined by the Committee. The effective date of exercise shall be the
       date of delivery of the notice of exercise. Exchange conversion
       commissions and charges may be paid for separately by the Participant.

7.3    The Exercise Price shall be payable to the Company for itself (and not as
       agent for the Trustee) in respect of Options which are granted upon the
       Company's determination that the Exercise Price shall be payable to the
       Company for itself.


                                                                              15




8.     TRANSFER OF SHARES

8.1    Shares to be issued and allotted to the Participant pursuant to the
       exercise of an Option shall be allotted within 28 days following the
       effective date of exercise of the Option.

8.2    Subject to Rule 8.3, the Trustee shall transfer Shares to be transferred
       pursuant to the exercise of an Option within 28 days following the
       effective date of exercise of the Option.

8.3    Where the Exercise Price is payable to the Company for itself (and not as
       agent for the Trustee) in accordance with Rule 7.3, the Company shall
       issue and allot the Shares to the Participant within 28 days following
       the date of effective exercise of that Option.

8.4    Shares to be issued pursuant to the Scheme will rank pari passu in all
       respects with the Shares then in issue, except that they will not rank
       for any rights attaching to Shares by reference to a record date
       preceding the date of exercise.

8.5    Shares to be transferred pursuant to the Scheme will be transferred free
       of all liens, charges and encumbrances and together with all rights
       attaching thereto, except they will not rank for any rights attaching to
       Shares by reference to a record date preceding the date of exercise.

8.6    If and so long as the Shares are listed on the New York Stock Exchange,
       the Company shall apply for a listing for any Shares issued pursuant to
       the Scheme as soon as practicable after the allotment thereof.

9.     ADJUSTMENTS

9.1    The number of Shares over which an Option is granted, the Option Price
       thereof shall be adjusted in such manner as the Committee or, if the
       Trustee has at any time been the Grantor, the Committee and the Trustee
       together shall determine following any capitalisation issue (other than a
       scrip dividend), rights issue, subdivision, consolidation, reduction of
       share capital or any other variation of share capital of the Company to
       the intent that (as nearly as may be without involving fractions of a
       Share or an Option Price calculated to more than two places of decimals)
       the Exercise Price payable in respect of


                                                                              16


       an Option shall remain unchanged, provided that no adjustment made
       pursuant to this Rule 9.1 shall be made without the prior approval of the
       Inland Revenue.

9.2    Subject to Rule 9.3, an adjustment may be made under Rule 9.1 which would
       have the effect of reducing the Option Price of unissued Shares to less
       than the nominal value of a Share, but only if, and to the extent that,
       the Committee shall be authorised to capitalise from the reserves of the
       Company a sum equal to the amount by which the nominal value of the
       Shares in respect of which the Option is exercisable exceeds the adjusted
       Exercise Price, and so that on exercise of any Option in respect of which
       the Option Price has been reduced, the Committee shall capitalise and
       apply such sum (if any) as is necessary to pay up the amount by which the
       aggregate nominal value of the Shares in respect of which the Option is
       exercised exceeds the Exercise Price for such Shares.

9.3    The Grantor may take such steps as it may consider necessary to notify
       Participants of any adjustment made under this Rule 9 and to call in,
       cancel, endorse, issue or reissue any option certificate consequent upon
       such adjustment.

10.    ADMINISTRATION

10.1   Any notice or other communication made under, or in connection with, the
       Scheme may be given by personal delivery or by sending the same by post,
       in the case of a company to its registered office and in the case of an
       individual to his last known address, or, where he is a director or
       employee of the Company or an Associated Company, either to his last
       known address or to the address of the place of business at which he
       performs the whole or substantially the whole of the duties of his office
       or employment, and where a notice or other communication is given by
       first-class post, it shall be deemed to have been received 48 hours after
       it was put into the post properly addressed and stamped.

10.2   The Company may distribute to Participants copies of any notice or
       document normally sent by the Company to the holders of Shares.

10.3   If any option certificate shall be worn out, defaced or lost, it may be
       replaced on such evidence being provided as the Grantor may require.


                                                                              17


10.4   The Company shall at all times procure that sufficient Shares are
       available for transfer to satisfy all Options under which Shares may be
       acquired.

10.5   The decision of the Grantor and/or Committee in any dispute relating to
       an Option or the due exercise thereof or any other matter in respect of
       the Scheme shall be final and conclusive.

10.6   The costs of introducing and administering the Scheme shall be borne by
       the Company.

11.    ALTERATIONS

11.1   Subject to Rule 11.2, the Committee may at any time alter or add to all
       or any of the provisions of the Scheme in any respect, provided that if
       an alteration or addition is made at a time when the Scheme is approved
       by the Inland Revenue under Schedule 9 to the Taxes Act it shall not have
       effect until it has been approved by the Inland Revenue.

11.2   As soon as reasonably practicable after making any alteration or addition
       under Rule 11.1, the Committee shall give written notice thereof to any
       Participant affected thereby.

12.    GENERAL

12.1   The Scheme shall terminate upon the tenth anniversary of the date of its
       adoption or at any earlier time by the passing of a resolution by the
       Committee or an ordinary resolution of the Company in general meeting.
       Termination of the Scheme shall be without prejudice to the subsisting
       rights of Participants.

12.2   The Company and any Subsidiary of the Company may provide money to the
       trustees of any trust or any other person to enable them or him to
       purchase Shares to be held for the purposes of the Scheme, or enter into
       any guarantee or indemnity for these purposes, to the extent permitted by
       Section 153 of the Companies Act 1985, provided that any trust deed to be
       made for this purpose shall, at a time when the Scheme is approved by the
       Inland Revenue under Schedule 9 to the Taxes Act, have previously been
       submitted to the Inland Revenue.


                                                                              18


12.3   The rights and obligations of any individual under the terms of his
       office or employment with the Company, a Participating Company, a
       Subsidiary of the Company, or an Associated Company shall not be affected
       by his participation in the Scheme or any right which he may have to
       participate therein, and an individual who participates therein shall
       waive all and any rights to compensation or damages in consequence of the
       termination of his office or employment with any such company for any
       reason whatsoever insofar as those rights arise, or may arise, from his
       ceasing to have rights under or being entitled to exercise any Option
       under the Scheme as a result of such termination, or from the loss or
       diminution in value of such rights or entitlements.

12.4   These Rules shall be governed by and construed in accordance with the law
       of England.


                                                                              19

EX-10.SS

                                                                  EXHIBIT 10-SS

       THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
           THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

                       DIRECTOR, OFFICER AND KEY EMPLOYEE
                     STOCK PURCHASE PROGRAM OF CINERGY CORP.

1.       PURPOSE. The Director, Officer and Key Employee Stock Purchase Program
         (the "PROGRAM") of Cinergy Corp. ("CINERGY") is adopted to facilitate
         the purchase, by the Directors, executives and certain key employees of
         Cinergy and its subsidiaries (collectively, the "COMPANY"), of shares
         of Cinergy's common stock ("COMMON STOCK"). The purchases facilitated
         by the Program are intended to achieve the following specific purposes:

                  (1)      more closely align directors', officers' and key
                           employees' financial interests with the financial
                           interests of all other shareholders of the Company;

                  (2)      increase officers' and key employees' motivation to
                           manage the Company as owners; and

                  (3)      increase the ownership of Common Stock among senior
                           management of the Company.

2.       ELIGIBILITY. To be eligible to participate in the Program, the
         individual (the "ELIGIBLE PARTICIPANT") must be: (a) a Director of the
         Company or an executive officer of the Company; or (b) an officer or a
         key employee of the Company selected by the Board of Directors, the
         Chairman of the Compensation Committee of the Board of Directors (the
         "COMPENSATION COMMITTEE") or by the Chief Executive Officer (the "CEO")
         of Cinergy (the foregoing referred to herein, singly or collectively,
         as the "PROGRAM ADMINISTRATOR").

3.       PARTICIPATION. To become a Program participant ("PARTICIPANT"), an
         Eligible Participant must satisfy the following requirements:

                  (1)      submit a completed, signed and irrevocable election
                           to purchase all or a portion of the Common Stock
                           which the Eligible Participant is eligible to
                           purchase under the Program as set forth in the
                           election form or accompanying materials furnished to
                           such Eligible Participant by the Company, in each
                           case along with a power of attorney authorizing such
                           purchases on the Participant's behalf;

                  (2)      complete and sign all necessary agreements and other
                           documents relating to the loan described in Section 4
                           hereof including, but not limited to, personal
                           financial statements and letters of instruction to
                           brokers, transfer agents and banks as are necessary
                           or appropriate under the loan described in Section 4
                           hereof, and a power of attorney authorizing
                           borrowings under such loan; and

                                     1



                  (3)      satisfy all other conditions of participation
                           specified in the Program.

         The agreements and other documents specified in subsections 3(a), (b)
         and (c) must be submitted at such times and to such Company officers as
         specified by the Company. No Eligible Participant is required to
         participate in the Program.

                  Directors and executive officers may purchase between $100,000
         and $1,500,000 of Common Stock. Other officers and senior key
         employees, as designated by the CEO or the Chairman of the Compensation
         Committee, may purchase between $100,000 and $1,000,000 of Common
         Stock. Other key employees, as designated by the CEO or the Chairman of
         the Compensation Committee, may purchase between $100,000 and $500,000
         of Common Stock. Subscriptions for purchase of a dollar amount of
         Common Stock in excess of the Participants' minimum level of
         participation must be in increments of $50,000. Under the Program, a
         maximum of $50,000,000 of Common Stock may be purchased by all
         Participants. In the event that the Program is oversubscribed, there
         will be a pro rata reduction of the dollar amount of Common Stock that
         Participants are entitled to purchase under the Program, based on the
         initial dollar amount commitment of each Participant; PROVIDED,
         HOWEVER, that in no event shall the level of participation be reduced
         to below $100,000 per Participant. Directors and executive officers
         shall have the right to purchase shares not purchased by other
         Participants in such amount as is determined by the pro rata amount of
         their participation in the Program compared to the participation of the
         other Participants electing to purchase additional shares. All such
         purchases may be made by the individual Participant or by a trust,
         corporation, partnership or limited liability company controlled by the
         Participant ("PARTICIPANT DESIGNEE"; the term Participant shall include
         Participant Designee unless the context otherwise requires).

                  It is anticipated that there may be one or more additional
         election periods under the Program during which Eligible Participants
         who did not elect to participate in the Program at the time of its
         initial implementation may elect to become Participants. EACH ELIGIBLE
         PARTICIPANT MAY PARTICIPATE IN THE PROGRAM ONLY ONE TIME. THE COMPANY
         HAS NOT SET ANY DATES FOR ANY ADDITIONAL ELECTION PERIODS AND THERE CAN
         BE NO ASSURANCE THAT ANY ADDITIONAL ELECTION PERIODS WILL BE MADE
         AVAILABLE TO THE ELIGIBLE PARTICIPANTS. The decision to conduct any
         additional election periods rests solely with the Program
         Administrator.

4.       PURCHASE OF SHARES. The Program Administrator, in its sole discretion
         subject to the terms and provisions of the Program, will determine the
         timing, amount, price and mechanics of all of the purchases of shares
         of Common Stock (the "PURCHASED SHARES") through open market and
         negotiated transactions. Purchases of Purchased Shares shall be
         effected through a broker in accordance with Rule 10b-18 under the
         Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT").

                  In accordance with its sole discretion to determine the timing
         of the purchases pursuant to the Program, the Program Administrator may
         direct the broker to suspend purchases of Common Stock at any time and
         from time to time. The Program Administrator shall direct the broker to
         suspend purchases of Common Stock in the event that the market price of
         the Common Stock increases 20% or more over the closing price of the
         Common Stock on the last day of the


                                       2



         Participant election period. Further, the Program Administrator shall
         direct the broker to cease making any purchases pursuant to
         Participants' commitments, and such commitments shall be terminated to
         the extent not yet satisfied, as of  the close of trading on April 24,
         2000, even if as a consequence thereof a Participant will purchase a
         dollar amount of Common Stock which is lower than the dollar amount
         which the Participant committed to purchase. Any funds borrowed by the
         Participant under the Loan (as defined below) which were not applied on
         the Participant's behalf toward the purchase of Company Common Stock
         prior to such termination of purchases will be credited toward payment
         of outstanding amounts under the Loan.

                  The shares of Common Stock purchased pursuant to the Program
         will be allocated proportionately among Participants at the end of the
         trading period during which sufficient shares of Common Stock are
         purchased to allocate the full allotment of Purchased Shares to which
         all of the Participants are entitled, based upon the percentage of the
         aggregate dollar amount of Common Stock for which the Participants have
         subscribed and the average price for all purchases of shares of Common
         Stock during the allocation period; PROVIDED, HOWEVER, that the Program
         Administrator, in his or its sole discretion, may determine to allocate
         the Purchased Shares at the end of a trading day or trading week. By
         way of example only, in the event the Program Administrator determines
         to allocate at the end of a trading day, if the Program has two
         Participants, Participant A and Participant B, and Participant A
         committed to purchase up to $500,000 of Common Stock and Participant B
         committed to purchase up to $1,000,000 of Common Stock, and on a given
         trading day, the Company arranged for the purchase of $300,000 of
         Common Stock on behalf of the Participants, $100,000 in Purchased
         Shares would be allocated to the account of Participant A and $200,000
         in Purchased Shares would be allocated to the account of Participant B.
         Purchased Shares will not include any fractional shares of Common
         Stock. Following the purchase of the total number of whole shares of
         Common Stock to which the Participant is entitled, any remaining dollar
         amount pursuant to the Participant's commitment will be credited toward
         payment of interest on the Participant's Loan (as defined below), if
         any.

                  In the event that issues arising under Section 16 of the
         Exchange Act, make impractical the use of open-market purchases on
         behalf of a Participant, the Program Administrator may elect, in his or
         its sole discretion, to allocate newly-issued shares of Cinergy to the
         Participant's account. It is intended that the timing, amount, price
         and mechanics associated with the allocation of such newly-issued
         shares will replicate as closely as possible the timing, amount, price
         and mechanics associated with the open-market purchases pursuant to the
         Program. Such newly-issued shares will not be registered under the
         Securities Act of 1933, as amended (the "SECURITIES ACT").
         Consequently, any resale of such shares will be subject to the
         restrictions of Rule 144 of the Securities Act, which include, among
         other things, a requirement that such shares be held prior to resale
         for a period of one year.

                  Cinergy has arranged the opportunity for each Participant to
         obtain (i) a loan through KeyBank National Association or an additional
         or substitute financial institution(s) (the "BANK") to fund the
         purchase of the Purchased Shares (the "PURCHASE LOAN") and (ii) a loan
         through the Bank to assist in funding interest payments on the Purchase
         Loan (together with the Purchase Loan, the "LOAN"). Each Participant
         must sign a power of attorney authorizing loans under the Bank loan
         documents and the purchase of the Purchased Shares. Each Participant is
         responsible for satisfying all of the lending requirements, including
         supplying requisite information on a timely basis, specified by the
         Bank to qualify for the Loan. Each Participant is fully obligated to

                                     3



         repay to the Bank all principal, interest and any prepayment fees on
         the Loan when due and payable. Any prepayments of the Loan must be made
         in $50,000 increments, on the last day of the month and in a manner
         otherwise consistent with the terms of any interest rate swap
         agreement.

                  In the event a Participant does not wish to obtain the Loan,
         the Participant shall provide sufficient funds to fund the purchase of
         the Purchased Shares. Such Participant must execute a power of attorney
         authorizing the purchase of the Purchased Shares. If the Participant
         fails to fund the purchase of the Purchased Shares, the Participant may
         no longer participate in the Program, and all of the Purchased Shares
         not paid for will be allocated to the other Participants.

5.       REGISTRATION OF SHARES. The Purchased Shares will be registered in the
         name of the Participant or his or her designee and certificated. Each
         certificate will bear a legend referring to the Program. The
         certificates for the Purchased Shares of each Participant who
         participates in the Loan will be held for safekeeping by the Company
         for the benefit of each Participant.

6.       SHAREHOLDER RIGHTS. Each Participant will have all of the rights of a
         shareholder with respect to the Purchased Shares, including the right
         to dispose of the shares, the right to vote the shares and the right to
         receive dividends. Dividends will be deposited in the Participant's
         account at the Bank to apply towards the payment of interest on the
         Participant's Loan.

7.       SALE OF PURCHASED SHARES. Each Participant is permitted to sell all or
         any portion of the Purchased Shares; provided, that any such sale does
         not violate any provision of the Participant's Loan.

8.       LOAN GUARANTY. Cinergy and/or a subsidiary of Cinergy (the "GUARANTOR")
         will guarantee repayment to the Bank of 100% of all principal,
         interest, prepayment fees and other obligations of each Participant
         under such Participant's Loan (the "GUARANTY"). Any Guaranty issued by
         a subsidiary of Cinergy will be guaranteed by Cinergy. The issuance of
         the Guaranty is a condition to the loan arrangement Cinergy has made
         with the Bank. The terms and conditions of the Guaranty are as agreed
         by Cinergy and the Bank. Each Participant shall enter into an
         indemnification agreement to indemnify Cinergy or the Guarantor, as the
         case may be, for any losses under the Guaranty of the Loan with respect
         to the Participant. If a Participant specifies a Participant Designee,
         the Participant shall enter into an indemnification agreement to
         indemnify Cinergy or the Guarantor, as the case may be, for any losses
         under the Guaranty of the Loan with respect to the Participant
         Designee. Each Participant is fully obligated to repay to the Bank all
         principal, interest, and other amounts on the Loan when due and
         payable. Cinergy may take any action relating to the Participant and
         her or his assets, which the Program Administrator deems necessary,
         proper or desirable, (including, but not limited to, offsetting amounts
         owed to Cinergy or its subsidiaries against wages, fees or other
         amounts owed to the Participant from Cinergy) to obtain full
         reimbursement for amounts the Guarantor pays to the Bank under the
         Guaranty related to the Participant's or a Participant Designee's Loan.

9.       INTEREST PAYMENTS AND INTEREST RESERVE. The Purchase Loan will be a
         floating rate loan based on LIBOR, which will then be swapped at a time
         to be determined by the Program Administrator to a fixed rate so that
         Participants will not have interest rate risk during the term of the
         Purchase Loan. Interest on the Purchase Loan will be payable quarterly,
         on or

                                     4


         about the Company's dividend payment date. Interest will be funded
         primarily from the dividends received by the Participant on the
         Purchased Shares. Interest in excess of the dividend, if any, may, at
         the option of the Participant, be paid from an interest reserve
         facility (the "INTEREST RESERVE FACILITY") made available by the Bank
         and equal to 8% of the Purchase Loan balance. If a Participant elects
         to utilize the Interest Reserve Facility, an amount will be drawn from
         the facility on the Participant's behalf to fund any interest due in
         excess of the dividend at the time of each interest payment date. Such
         amounts drawn from the Participant's Interest Reserve Facility will be
         subject to the Guaranty as set forth in Section 8. Each Participant is
         responsible for satisfying all of the lending requirements, including
         supplying requisite information on a timely basis, specified by the
         Bank to qualify for the Interest Reserve Facility. Each Participant is
         fully obligated to repay to the Bank all principal, interest and any
         prepayment fees on the Interest Reserve Facility when due and payable.

                  ALTHOUGH THE BANK WILL TAKE AN ASSIGNMENT OF THE DIVIDENDS ON
         THE PURCHASED SHARES TO SERVICE THE PURCHASE LOAN, THE PARTICIPANT WILL
         BE SOLELY RESPONSIBLE FOR PAYING ALL PRINCIPAL AND INTEREST WHEN DUE.
         IF THE CINERGY DIVIDEND WERE EVER REDUCED, A PARTICIPANT COULD INCUR
         SUBSTANTIAL QUARTERLY INTEREST PAYMENTS IN EXCESS OF THE DIVIDENDS AND
         THE INTEREST RESERVE FACILITY.

10.      MARGIN REGULATIONS.

                  (1)      None of the obligations of the Participants to
                           Cinergy or any of its subsidiaries (collectively,
                           Cinergy and its subsidiaries shall be referred to as
                           "CINERGY" for the purposes of this Section 10)
                           hereunder, or the obligations of the Participants to
                           the Bank under their respective Loan, is or will be
                           secured, directly or indirectly, by Margin Stock (as
                           such term is defined in Regulation U promulgated by
                           the Board of Governors of the Federal Reserve
                           System);

                  (2)      Neither Cinergy nor any third party acting on behalf
                           of Cinergy has taken or will take possession of a
                           Participant's Margin Stock to secure, directly or
                           indirectly, any of the obligations of such
                           Participant to Cinergy;

                  (3)      Cinergy does not and will not have any right to
                           prohibit or, in any way, restrict such Participant
                           from selling, pledging, encumbering or otherwise
                           disposing of any Margin Stock owned by such
                           Participant;

                  (4)      Such Participant has not granted and will not grant
                           Cinergy or any third party acting on behalf of
                           Cinergy the right to accelerate repayment of any of
                           the obligations under this Program of such
                           Participant if any of the Margin Stock owned by such
                           Participant is sold, pledged, encumbered or otherwise
                           disposed of by such Participant; and

                  (5)      There is no agreement or other arrangement between
                           such Participant and Cinergy or any third party
                           acting on behalf of Cinergy (and no such agreement or
                           arrangement shall be entered into so long as this
                           Program

                                      5


                           is in effect or any of the obligations of such
                           Participant under this Program remain outstanding)
                           under which the Margin Stock of Participant would be
                           made more readily available as security to Cinergy
                           than to other creditors of such Participant.

11.      DEATH OR DISABILITY. Upon the death of a Participant, her or his estate
         or the Participant Designee, as the case may be, may elect to cause
         Cinergy to pay the estate or the Participant Designee, as the case may
         be, an amount equal to the balance of the Participant's Loan minus the
         value of the Purchased Shares based upon the closing price of Common
         Stock on the New York Stock Exchange on the first trading date after
         the date of death. The estate or the Participant Designee, as the case
         may be, of a deceased Participant must give to the Company written
         notification of its decision to make such an election within 60 days
         after the death of the Participant. If a Participant who is an employee
         of the Company becomes eligible for benefits under the Cinergy Corp.
         Long-Term Disability Plan (a "DISABLED PARTICIPANT"), such disabled
         Participant may elect to cause Cinergy to pay the Participant an amount
         equal to the balance of the Participant's Loan minus the value of the
         Purchased Shares based upon the closing price of Common Stock on the
         New York Stock Exchange on the first trading date after the first date
         of eligibility for payment under the Cinergy Corp. Long-Term Disability
         Plan. This Section 11 has no effect on a deceased or disabled
         Participant's sale of Purchased Shares before the Participant's death
         or disability. Payment by Cinergy of amounts described in this Section
         11 is conditioned on the payment in full of the Participant's Loan (if
         any) and the release of the Guaranty with respect thereto.

12.      OTHER TERMINATION. Within 30 days of a Participant ceasing to be a
         Director, officer or employee of Cinergy in circumstances other than as
         described in Section 11, such Participant or Participant Designee shall
         have the option to either (i) retire the Loan and release the Guaranty
         or (ii) continue the Loan until its maturity date with Cinergy's
         Guaranty.

                  Notwithstanding the above, if at such Participant's request,
         the Bank, in its sole discretion, agrees to the termination of any
         dividend assignment agreement between Cinergy, the Bank and the
         Participant or agrees to waive the Participant's obligations
         thereunder, all outstanding interest and principal under the Loan shall
         become due and payable and the Guaranty shall subsequently be
         terminated.

13.      ADMINISTRATION. The Program Administrator shall be charged with the
         administration and interpretation of the Program but may delegate the
         ministerial duties hereunder to such persons as it determines. The
         Program Administrator may adopt such rules as may be necessary or
         appropriate for the proper administration of the Program. The decision
         of the Program Administrator in all matters involving the
         interpretation and application of the Program shall be final and shall
         be given the maximum possible deference allowed by law.

14.      PAYMENT OF EXPENSES. The expenses of administering the Program shall be
         paid by the Company except those expenses which are expenses of the
         Participants.

15.      INCOME TAX CONSIDERATIONS. THIS SUMMARY IS NOT INTENDED TO DISCUSS ALL
         INCOME TAX ASPECTS OF PARTICIPATION IN THE PROGRAM OR TO CONSTITUTE TAX
         ADVICE, AND ALL PROGRAM PARTICIPANTS ARE URGED TO

                                     6



         CONSULT THEIR PERSONAL TAX ADVISORS. THIS SUMMARY IS FOR INFORMATIONAL
         PURPOSES ONLY AND IS BASED ON THE TAX LAWS IN EFFECT AS OF THE
         EFFECTIVE DATE OF THIS PROGRAM, WHICH LAWS ARE SUBJECT TO CHANGE. THE
         TAX CONSEQUENCES TO EACH PARTICIPANT WILL DEPEND IN PART UPON SUCH
         PARTICIPANT'S PARTICULAR SITUATION. SPECIAL TAX CONSEQUENCES NOT
         DESCRIBED HEREIN MAY BE APPLICABLE TO CERTAIN PARTICIPANTS.

                  The dividends paid by the Company on Common Stock purchased
         through the Program will be reported to Participants and the IRS on
         Form 1099DIV. These amounts must be reported as dividend income on
         Schedule B of a Participant's federal income tax return in the year
         they are paid even though the dividends will be paid directly to the
         Bank. Note that a portion of the Company's distributions to its
         shareholders may be considered to be a capital gain dividend, in which
         case the dividend would be reported as a long-term capital gain. In
         addition, a portion of the Company's distributions to its shareholders
         may be considered to be a return of capital, which would reduce the tax
         basis of the shares purchased.

                  Provided a Participant itemizes deductions and does not take
         the standard deduction, the interest expense that is deemed to be paid
         on the Purchase Loan may be deductible as "investment interest expense"
         on Form 4952 of his or her federal income tax return. Investment
         interest expense is deductible to the extent of investment income.
         Investment income includes interest income and dividend income. Unlike
         certain other itemized deductions, investment interest expense is not
         phased out at certain income levels. Participants will be deemed to
         have paid interest on the Purchase Loan if the dividends are used to
         pay interest on the Purchase Loan. If the dividends are not sufficient
         to fully pay the accrued interest on the Loan, the interest shortfall
         may be funded through the Interest Reserve Facility. The IRS currently
         takes the position that interest paid from borrowed funds is not
         deductible until those borrowed funds are repaid.

                  Participants that do not itemize deductions may not receive
         any tax benefit from the payment of the interest expense.

                  In general, Participants will realize capital gain or loss on
         the disposition of Common Stock purchased under the Program equal to
         the difference between (i) the amount of cash received on such
         disposition and (ii) the Participant's adjusted basis of the stock.
         Currently, such gain or loss generally will constitute long-term
         capital gain or loss if the Participant has held the shares for more
         than one year.

                  The state and local tax consequences from participation in the
         Program vary widely depending on the state and municipality of a
         Participant. Many state and local tax statutes do not permit taxpayers
         to itemize deductions. Accordingly, Participants may be subject to
         state and local income taxes on the dividends paid on the Common Stock
         with no corresponding tax benefit for interest paid under the Program.
         In addition, certain states impose franchise taxes on the value of
         marketable securities held, such as the Common Stock.

16.      EMPLOYER-EMPLOYEE RELATIONSHIP. The establishment of this Program shall
         not be construed as conferring any legal or other rights upon any
         employee or any person for a

                                       7



         continuation of employment, nor shall it interfere with the rights of
         the Company to discharge any employee or otherwise act with relation to
         the employee. Subject to any agreements the Company has with a
         Participant, the Company may take any action (including discharge) with
         respect to any employee or other person and may treat such person
         without regard to the effect which such action or treatment might have
         upon such person as a Participant of this Program.

17.      AMENDMENT AND TERMINATION. The Company reserves the right to change or
         discontinue this Program by action of the Program Administrator in his
         or its discretion; PROVIDED, HOWEVER, that in the case of any person to
         whom benefits under this Program had accrued upon termination of
         employment prior to such Program Administrator action, or in the case
         of any Participant who would have been entitled to benefits under this
         Program had the Participant's employment ceased prior to such change or
         discontinuance, the benefits such person had accrued under this Program
         prior to such change or discontinuance shall not be adversely affected
         thereby.

18.      WITHHOLDING. The Company shall have the right to deduct in cash
         (whether under this Program or otherwise) in connection with all
         payments by the Company to a Participant under this Program any taxes
         required by law to be withheld and to require any payments required to
         enable it to satisfy its withholding obligations.

19.      GOVERNING LAW. This Program shall be construed in accordance with the
         laws of the State of Delaware.

20.      APPROVAL. If a Participant elects to purchase Purchased Shares, such
         election shall constitute formal approval of this Program by the
         Participant and such Participant's agreement to be bound by the terms
         and conditions of the Program.

EFFECTIVE DATE:  JANUARY 7, 2000

                                      * * *

                                        8

EX-10.TT

                  NOTE:  THIS TABLE OF CONTENTS IS NOT PART OF THE
                  CINERGY CORP. NON-UNION EMPLOYEES' PENSION
                  PLAN; INSTEAD, THIS TABLE OF CONTENTS IS MERELY
                  FOR CONVENIENCE OF REFERENCE

                                                 TABLE OF CONTENTS


                                                                                                           Page

                                                                                                          
INTRODUCTION .................................................................................................1

ARTICLE 1     DEFINITIONS.....................................................................................1

ARTICLE 2     EFFECTIVE DATE OF PLAN.........................................................................32

ARTICLE 3     ELIGIBILITY AND PARTICIPATION..................................................................32
     3.1      Date of Participation..........................................................................32
     3.2      Intermittent Employees and Temporary Employees.................................................33
     3.3      Leased Employees...............................................................................33
     3.4      Transfers of Employment........................................................................33
     3.5      Transfers of Participants and Plan Assets To and From the Cinergy Corp.
              Union Employees' Retirement Income Plan and Cinergy Corp. Union
              Employees' Pension Plan........................................................................34

ARTICLE 4     AMOUNT OF LIFE-ONLY PENSION....................................................................36
     4.1      Normal Retirement Pension Formula..............................................................36
     4.2      Normal Retirement Benefits for Participants in the PSI Plan....................................36
     4.3      Normal Retirement Benefits for Participants in the MRP or RIP..................................37
     4.4      General Method of Computing Annual Pension for Retirement at Early
              Retirement Date................................................................................37
     4.5      General Method of Computing Annual Pension for a Terminated Vested
              Participant....................................................................................42
     4.6      Maximum Pension................................................................................45
     4.7      Benefits if Plan Becomes a Top-Heavy Plan......................................................48

ARTICLE 5     SEVERANCE FROM SERVICE-VESTING.................................................................49
     5.1      Vesting Requirement............................................................................49
     5.2      Severance from Service before Vesting..........................................................50
     5.3      Severance from Service after Vesting...........................................................51

ARTICLE 6     SPOUSE'S BENEFIT...............................................................................51
     6.1      Determination of Spouse's Benefit..............................................................51
     6.2      Method of Payment of Spouse's Benefit..........................................................54

ARTICLE 7     FORMS OF PENSION...............................................................................55

                                                         1



                                                                                                          
     7.1      Normal Forms of Pension........................................................................55
     7.2      Optional Forms of Retirement Income............................................................57

ARTICLE 8     PAYMENT OF PENSION.............................................................................68
     8.1      Timing of Payment..............................................................................68
     8.2      Method of Payment..............................................................................69
     8.3      Small Benefits.................................................................................69
     8.4      Facility of Payment............................................................................69
     8.5      Benefits for Late Retirees, Reemployed Retirees and Reemployed Terminated
              Vested Participants............................................................................70
     8.6      Required Payment of Benefits...................................................................71
     8.7      Direct Rollovers of Eligible Distributions.....................................................76

ARTICLE 9     RETIREE MEDICAL/DENTAL BENEFITS................................................................76
     9.1      Purpose........................................................................................76
     9.2      Eligibility....................................................................................77
     9.3      Separate Account...............................................................................77
     9.4      Impossibility of Diversion Prior To Satisfaction of All Liabilities............................77
     9.5      Reversion Upon Satisfaction of All Liabilities.................................................77
     9.6      Forfeitures....................................................................................78
     9.7      Employer Contributions To The Medical/Dental Benefits Account..................................78
     9.8      Medical/Dental Benefits........................................................................78

ARTICLE 10    NONALIENATION OF BENEFITS......................................................................79

ARTICLE 11    ADMINISTRATION.................................................................................79
     11.1     Administrator..................................................................................79
     11.2     Removal and Replacement of Committee Members...................................................80
     11.3     Disqualification and Resignation...............................................................80
     11.4     Chairperson, Services, and Counsel.............................................................80
     11.5     Meetings.......................................................................................80
     11.6     Quorum.........................................................................................81
     11.7     Action Without Meeting.........................................................................81
     11.8     Notice to Trustee of Changes in Membership.....................................................81
     11.9     Correction of Defects..........................................................................81
     11.10    Reliance Upon Legal Counsel....................................................................82
     11.11    Expenses.......................................................................................82
     11.12    Indemnification................................................................................82
     11.13    Powers and Duties of Committee.................................................................82
     11.14    Matters Specifically Excluded from Jurisdiction................................................84

ARTICLE 12    BENEFIT CLAIMS PROCEDURES......................................................................84

ARTICLE 13    FUNDING POLICY AND METHOD......................................................................85
ARTICLE 14    MISCELLANEOUS..................................................................................86
     14.1     No Enlargement of Employee Benefits............................................................86


                                                                2



                                                                                                         
     14.2     Reemployment...................................................................................86
     14.3     Qualified Military Service.....................................................................87
     14.4     Notice of Address..............................................................................87
     14.5     Data...........................................................................................87
     14.6     No Individual Liability........................................................................88
     14.7     Participant's Statement of Agreement...........................................................88
     14.8     No Diversion of Assets.........................................................................88
     14.9     Governing Laws.................................................................................88
     14.10    Severability...................................................................................89
     14.11    Interpretation and Regulation of Plan..........................................................89
     14.12    Communications by Participants.................................................................89
     14.13    Headings.......................................................................................89
     14.14    Accrued Benefit Not to be Decreased by Amendment...............................................89

ARTICLE 15    TRUSTS AND INSURANCE CONTRACTS.................................................................90
     15.1     Trusts and Insurance Contracts.................................................................90
     15.2     Irrevocability.................................................................................91
     15.3     Sufficiency of Pension Fund....................................................................91

ARTICLE 16    CONTRIBUTIONS..................................................................................92

ARTICLE 17    APPROVAL UNDER INTERNAL REVENUE CODE...........................................................92

ARTICLE 18    TEMPORARY RESTRICTIONS ON BENEFITS.............................................................92
     18.1     Temporary Restrictions.........................................................................92

ARTICLE 19    AMENDMENT AND TERMINATION......................................................................94
     19.1     Right to Amend or Terminate....................................................................94
     19.2     Effect of Termination..........................................................................95
     19.3     Merger and Consolidation of Plan...............................................................97
     19.4     Post-Change in Control Merger, Consolidation, or Transfer of Pension Plan
              Assets or Liabilities..........................................................................97
     19.5     General Protection of Benefits in the Event of a Change in Control.............................98
     19.6     Post-Change in Control Surplus Reversion.......................................................98

ARTICLE 20    AUTHORIZED TRANSACTION.........................................................................99

ARTICLE 21    PARTICIPATION BY OTHER EMPLOYERS...............................................................99
     21.1     Adoption of Plan...............................................................................99
     21.2     Withdrawal from Participation.................................................................100
     21.3     Cinergy as Agent for Employers................................................................101

ARTICLE 22    CONTINUANCE BY A SUCCESSOR....................................................................101
ARTICLE 23    PROVISIONS RELATING TO TOP-HEAVY PLAN.........................................................102
     23.1     Construction of this Section..................................................................102
     23.2     Top-Heavy Determination.......................................................................102


                                                              3



                                                                                                         
ARTICLE 24    MERGER WITH THE MRP...........................................................................104
     24.1     Acceptance of Assets and Liabilities of MRP Trust.............................................104
     24.2     Participation of MRP Participants.............................................................104

ARTICLE 25    SPIN OFF OF PSI PLAN..........................................................................105
     25.1     Acceptance of Assets and Liabilities of PSI Plan Trust........................................105
     25.2     Participation of PSI Plan Participants........................................................105


                                                              4


                                  ADOPTED PURSUANT TO RESOLUTIONS OF THE CINERGY
                                CORP. BOARD OF DIRECTORS DATED DECEMBER 18, 1997

                             CINERGY CORP. NON-UNION

                             EMPLOYEES' PENSION PLAN

               (As Amended and Restated Effective January 1, 1998)

                                  INTRODUCTION

This Plan is a complete restatement of the MRP, effective January 1, 1998.
Effective January 1, 1998, the MRP is renamed the Cinergy Corp. Non-Union
Employees' Pension Plan. Also, effective as of December 31, 1997, the assets and
liabilities of the PSI Plan attributable to Eligible Employees are merged into
this Plan.

This Plan is maintained for the exclusive benefit of Eligible Employees. The
purpose of the Plan is to provide retirement income for Eligible Employees. The
Plan is designed to satisfy the requirements of Code subsection 401(a) and the
applicable requirements of ERISA

                                    ARTICLE 1
                                   DEFINITIONS

As used in this document, the following words and phrases, when capitalized,
will have the meanings set forth below, unless a different meaning is plainly
required by the context.

1.1      "Absence from Service" means, with respect to each Employee, his
         absence from service (with or without pay) with his Employer for any
         reason other than a quit, resignation, discharge, retirement, or death,
         including, but without limitation because of enumeration, vacation,
         holiday, sickness, disability, leave of absence (unless otherwise
         required by applicable law), or other layoff. If an Employee is totally
         disabled and qualifies for benefits under Cinergy's Long-Term
         Disability Plan, the expiration of his Absence from

                                      1



         Service will not occur until the later of (a) the date he no longer
         qualifies for benefits under Cinergy's Long-Term Disability Plan, or
         (b) his Normal Retirement Date, Early Retirement Date, or Actual
         Separation Date, whichever is applicable.

1.2      "Accrued Vacation Pay" means, with respect to an Exempt Employee or a
         Non-Exempt Employee, the compensation received at his Severance from
         Service for unused accrued vacation pursuant to the Employer's
         applicable policy.

1.3      "Active Participant" means a Participant for whom benefits are being
         accrued under the Plan on the applicable date.

1.4      "Actual Separation Date" means:

         (a)      with respect to a Participant who either (1) retires on or
                  after his Normal Retirement Date, or (2) who retires on an
                  Early Retirement Date, the first day of the calendar month
                  coincident with or following the date of the Participant's
                  Severance from Service; or

         (b)      with respect to a Participant who incurs a Severance from
                  Service before he reaches age 50 and who is entitled to
                  benefits determined under the provisions of Section 5.3
                  (Severance from Service after Vesting), the date of the
                  Participant's Severance from Service.

1.5      "Actuarial Equivalent" means a benefit having the same actuarially
         determined value as the benefit that the Actuarial Equivalent replaces.
         The determination of an Actuarial Equivalent will be based on the
         following actuarial assumptions, except as provided in Subsection (c)
         or (d) below:

                                            2



         (a)      MORTALITY:

                  Participants in accordance with the UP-1984 Table, with no
                  rating of ages; Spouses and Contingent Annuitants in
                  accordance with the UP-1984 Table, with ages rated down three
                  years;

         (b)      INTEREST:

                  7-1/2% per annum, compounded annually.

         (c)      With respect to any lump sum payment that may be payable under
                  the Plan during a Plan Year, the Actuarial Equivalent will be
                  calculated using the mortality table as prescribed from time
                  to time by the Secretary of the Treasury (currently the 1983
                  Group Annuity Mortality Table with a 50/50 mix of males and
                  females) and an interest rate equal to the annual rate of
                  interest on 30 year Treasury securities as specified by the
                  Commissioner of Internal Revenue for the second full calendar
                  month preceding the first day of the Plan Year.

         (d)      In the case of a Participant who had an accrued benefit under
                  the MRP, RIP, or the PSI Plan as of December 31, 1997, and who
                  has a Severance from Service Date after December 31, 1997, no
                  benefit determination will produce an amount that is less than
                  that which would have been produced utilizing both the
                  actuarial assumptions specified in the MRP, RIP, or the PSI
                  Plan, whichever is applicable, as in effect on December 31,
                  1997, and the annual pension accrued as of December 31, 1997,
                  determined under the provisions of the MRP, the RIP, or the
                  PSI Plan, whichever is applicable, as then in effect.

1.6      "Additional Separation Date" means, with respect to a Participant who
         has an Initial Separation Date and who is later reemployed by an
         Employer, the first day of the calendar month coincident with or
         following the Participant's next Severance from Service Date.

                                         3



         However, if the Participant has multiple Severance from Service Dates
         after his Initial Separation Date, then he will have an Additional
         Separation Date for each Severance from Service, which will be the
         first day of the calendar month coincident with or following the
         Participant's applicable Severance from Service Date.

1.7      "Affiliate" means any employer that together with the Employer is under
         common control or a member of an affiliated service group as determined
         under Code subsections 414(b), (c), (m), and (o). In determining
         whether an employer is a member of a controlled group for purposes of
         Section 4.6 (Maximum Pension), the rules of Code subsections 414(b) and
         (c) will be applied as modified by Code subsection 415(h).

1.8      "Aggregate Account" means, with respect to a Participant who is also
         participating in a Qualified Defined Contribution Plan that is included
         in an Aggregation Group, the sum of: (a) the Participant's account
         balance under the plan as of the Valuation Date; (b) an adjustment for
         any contributions due under the plan as of the Determination Date (the
         adjustment will be the amount of any contributions actually made after
         the Valuation Date but before the Determination Date, except for the
         first Plan Year when the adjustment will also reflect the amount of any
         contributions made after the Determination Date that are allocated as
         of a date in the first Plan Year); and (c) any Plan distributions made
         within the Plan Year that includes the Determination Date or within the
         four preceding Plan Years. However, in the case of distributions made
         after the Valuation Date and prior to the Determination Date,
         distributions are not included as distributions for Top-Heavy purposes
         to the extent that the distributions are already included in the
         Participant's Aggregate Account balance as of the Valuation Date.

1.9      "Aggregation Group" means either a Required Aggregation Group or a
         Permissive Aggregation Group.

                                    4



1.10     "Annual Addition" means, with respect to a Participant for a Plan Year,
         the following amounts credited to a Participant's account in any
         Qualified Defined Contribution Plan maintained by the Employer or an
         Affiliate for the Plan Year: employer contributions, employee
         contributions (other than rollover contributions); forfeitures; amounts
         allocated, after March 31, 1984, to an individual medical account, as
         defined in Code paragraph 415(l)(2), that is part of a pension or
         annuity plan maintained by the Employer or an Affiliate; and amounts
         derived from contributions paid or accrued after March 31, 1984, that
         are attributable to post-retirement medical benefits, allocated to the
         separate account of a Key Employee, under a welfare benefit fund, as
         defined in Code subsection 419(e), maintained by the Employer or an
         Affiliate.

1.11     "Annual Pension" means, with respect to a Participant, the amount of
         the Participant's pension, expressed as an annual benefit for the
         Participant's lifetime.

1.12     "Annual Performance Cash Award" means, with respect to an Employee, the
         cash award received by the Employee under the provisions of an
         Employer's annual bonus or incentive pay plan or program, including,
         but without limitation because of enumeration, the Cinergy Annual
         Incentive Plan, the Cinergy Non-Union Employees' Incentive Plan, or any
         successor Plan.

1.13     "Annuity Starting Date" means, with respect to a Participant, the first
         day of the first period for which a Plan benefit is paid as an annuity
         or, in the case of a benefit not payable in the form of an annuity, the
         first day on which all events have occurred that entitle the
         Participant to the benefit.

1.14     "Base Salary" means, with respect to an Exempt Employee, the monthly
         base salary received as remuneration for services performed for the
         relevant period, exclusive of any allowances, premiums, bonuses,
         overtime, or other forms or types of compensation.

                                    5



1.15     "Base Wage" means, with respect to a Non-Exempt Employee, the hourly
         base rate of pay received as remuneration for services performed for
         the relevant period, exclusive of any allowances, premiums, bonuses,
         overtime, or other forms or types of compensation, multiplied by his
         hours worked during the applicable period.

1.16     "Beneficiary" means, with respect to each Participant, the person or
         persons who are to receive benefits under the Plan after the
         Participant's death.

1.17     "Board of Directors" means the duly constituted board of directors of
         Cinergy on the applicable date.

1.18     "Break in Service" means, with respect to each Regular Employee, a
         Period of Severance of at least 12 consecutive months. With respect to
         an Intermittent Employee or a Temporary Employee, a "Break in Service"
         means a Plan Year during which he completes 500 or fewer Hours of
         Service.

1.19     "CG&E" means The Cincinnati Gas & Electric Company, and any related
         company that adopted the MRP or the RIP.

1.20     "Change in Control" means any of the following events have occurred:

         (a)      Any "person" or "group" (within the meaning of subsection
                  13(d) and paragraph 14(d)(2) of the Securities Exchange Act)
                  is or becomes the "beneficial owner" (as defined in Rule 13d-3
                  under the Securities Exchange Act), directly or indirectly, of
                  securities of Cinergy (not including in the securities
                  beneficially owned by such person or group any securities
                  acquired directly from Cinergy or an Affiliate) representing
                  50% or more of the combined voting power of Cinergy's then
                  outstanding securities, excluding any person or group who
                  becomes such a beneficial owner in connection with a
                  transaction described in Paragraph (1) of Subsection (b)
                  below;

                                         6



         (b)      There is consummated a merger or consolidation of
                  Cinergy or any direct or indirect subsidiary of Cinergy with
                  any other corporation, other than (1) a merger or
                  consolidation that would result in the voting securities of
                  Cinergy outstanding immediately prior to the merger or
                  consolidation continuing to represent (either by remaining
                  outstanding or by being converted into voting securities of
                  the surviving entity or any parent thereof) at least 50% of
                  the combined voting power of the securities of Cinergy or such
                  surviving entity or any parent thereof outstanding immediately
                  after the merger or consolidation, or (2) a merger or
                  consolidation effected to implement a recapitalization of
                  Cinergy (or similar transaction) in which no person is or
                  becomes the beneficial owner, directly or indirectly, of
                  securities of Cinergy (not including in the securities
                  beneficially owned by such person any securities acquired
                  directly from Cinergy or its Affiliates other than in
                  connection with the acquisition by Cinergy or its Affiliates
                  of a business) representing 25% or more of the combined voting
                  power of Cinergy's then outstanding securities;

         (c)      During any period of two consecutive years, individuals who at
                  the beginning of that period constitute the Board of Directors
                  and any new director (other than a director whose initial
                  assumption of office is in connection with an actual or
                  threatened election context, including but not limited to a
                  consent solicitation, relating to the election of directors of
                  Cinergy) whose appointment or election by the Board of
                  Directors or nomination for election by Cinergy's shareholders
                  was approved or recommended by a vote of at least two-thirds
                  (2/3) of the directors then still in office who either were
                  directors at the beginning of that period or whose
                  appointment, election or nomination for election was
                  previously so approved or recommended cease for any reason to
                  constitute a majority of the Board of Directors; or

         (d)      The shareholders of Cinergy approve a plan of complete
                  liquidation or dissolution of Cinergy or there is consummated
                  an agreement for the sale or disposition by Cinergy of all or
                  substantially all of Cinergy's assets, other than a sale or
                  disposition by

                                          7



                  Cinergy of all or substantially all of Cinergy's assets to an
                  entity, at least 60% of the combined voting power of the
                  voting securities of which are owned by shareholders of
                  Cinergy in substantially the same proportions as their
                  ownership of Cinergy immediately prior to such sale.

1.21     "Cinergy" means Cinergy Corp., a Delaware corporation, and any
         corporation that succeeds to its business and adopts the Plan.

1.22     "Claimant" means a person submitting a claim for benefits under the
         Plan.

1.23     "Code" means the Internal Revenue Code of 1986, as amended from time to
         time, and interpretive rulings and regulations.

1.24     "Committee" means the benefits committee established pursuant to
         Article 11 (Administration) to serve as Plan administrator.

1.25     "Contingent Annuitant" means, with respect to any Participant electing
         a contingent pension option under Section 7.2 (Optional Forms of
         Retirement Income), the person designated by the Participant to receive
         a contingent pension after the Participant's death.

1.26     "Covered Compensation" means, with respect to a Participant, the
         average (without indexing) of the annual Social Security taxable wage
         bases under the Social Security Act for each year during the 35
         calendar years ending with the last day of the calendar year in which
         the Participant reaches his Social Security Retirement Age.

1.27     "Defined Benefit Plan Fraction" means, with respect to an individual
         participating in one or more Qualified Defined Benefit Plans for any
         calendar year, the fraction, the numerator of which is the individual's
         Projected Annual Benefit under the Qualified Defined Benefit Plans
         (determined as of the end of the calendar year), and the denominator of
         which is the

                                       8



         lesser of: (a) the product of 1.25 (1.0 if the Plan is a Top-Heavy
         Plan for the particular calendar year) multiplied by the dollar
         limitation in effect under Code subparagraph 415(b)(1)(A) for that
         calendar year, or (b) the product of 1.4 multiplied by the amount that
         may be taken into account under Code subparagraph 415(b)(1)(B) with
         respect to the individual under the Qualified Defined Benefit Plans
         for the calendar year.

1.28     "Defined Contribution Plan Fraction" means, with respect to an
         individual participating in one or more Qualified Defined Contribution
         Plans for any calendar year, the fraction, the numerator of which is
         the sum of the Annual Additions with respect to the Participant
         (determined as of the close of the calendar year), and the denominator
         of which is the lesser of the following amounts (determined for that
         calendar year and for each prior calendar year of service with the
         Employer): (a) the product of 1.25 (1.0 if the Plan is a Top-Heavy Plan
         for the particular calendar year) multiplied by the dollar limitation
         in effect under Code subparagraph 415(c)(1)(A) for the calendar year
         (determined without regard to Code paragraph 415(c)(6)), or (b) the
         product of 1.4 multiplied by the amount that may be taken into account
         under Code subparagraph 415(c)(1)(B) with respect to that individual
         under all Qualified Defined Contribution Plans for the calendar year.

1.29     "Dependent" means any individual who is eligible for coverage under the
         Medical/Dental Plan as the "spouse" or "dependent" of an Eligible
         Retiree.

1.30     "Determination Date" means, for purposes of determining whether the
         Plan is a Top-Heavy Plan for any Plan Year, the last day of the
         preceding Plan Year, or, for the first Plan Year, the last day of the
         Plan Year.

1.31     "Direct Rollover" means a payment by the Plan to the Eligible
         Retirement Plan specified by the Distributee.

                                       9



1.32     "Disability Date" means, with respect to a Participant, the date the
         Participant is first determined to be totally disabled under Cinergy's
         Long Term Disability Plan, as amended from time to time.

1.33     "Distributee" means an Employee or former Employee. In addition, the
         Employee's or former Employee's surviving Spouse, and the Employee's or
         former Employee's Spouse who is the alternate payee under a Qualified
         Domestic Relations Order are Distributees with regard to the interest
         of the Spouse or former Spouse.

1.34     "Early Retirement Date" means, with respect to each Participant who has
         satisfied the Vesting Requirement, and whose Severance from Service
         occurs on or after his 50th birthday but prior to his Normal Retirement
         Date, the first day of the calendar month coincident with or following
         his Severance from Service.

1.35     "Earnings" means, with respect to any Employee for any period of
         reference, the sum of the Employee's: (a) Base Salary or Base Wage, (b)
         Overtime Pay, (c) Shift Premiums, (d) Work Schedule Recognition Pay,
         (e) Holiday Premiums, (f) Accrued Vacation Pay, (g) Sabbatical Vacation
         Pay, (h) Performance Lump Sum Pay, and (i) Annual Performance Cash
         Awards. "Earnings" does not include (a) reimbursements or other expense
         allowances, (b) fringe benefits (cash and noncash) other than those
         named in the preceding sentence, (c) moving and relocation expenses,
         (d) deferred compensation, (e) welfare benefits, (f) Long-Term
         Performance Awards, (g) Executive Individual Incentive Awards, (h)
         other forms of compensation or remuneration that are not specifically
         named in the preceding sentence, or (i) any payments received by an
         Employee from any Affiliate that is not an Employer.

         Notwithstanding the foregoing provisions of this Section, an Employee's
         Earnings taken into account for any Plan Year will not exceed $150,000,
         as adjusted pursuant to Code paragraph 401(a)(17).

                                      10



1.36     "Eligible Employee" means an Employee other than a Leased Employee or
         an Employee whose terms and conditions of employment are governed by a
         collective bargaining agreement that does not provide for participation
         in this Plan.

1.37     "Eligible Individual" means an Eligible Retiree or a Dependent.

1.38     "Eligible Retiree" means an individual who:

         (a)      is a Retired Participant who is also eligible to participate
                  in the Medical/Dental Plan, and

         (b)      is not a Key Employee at any time during the current Plan Year
                  and has not been a Key Employee at any time during any
                  previous Plan Year for which contributions were made for that
                  individual's benefit to the Medical/Dental Benefits Account.

1.39     "Eligible Retirement Plan" means an individual retirement account
         described in Code subsection 408(a), an individual retirement annuity
         described in Code subsection 408(b), an annuity plan described in Code
         subsection 403(a), or a qualified trust described in Code subsection
         401(a), that accepts the Distributee's Eligible Rollover Distribution.
         However, in the case of an Eligible Rollover Distribution to a
         surviving Spouse, an Eligible Retirement Plan is an individual
         retirement account or individual retirement annuity.

1.40     "Eligible Rollover Distribution" means any distribution of all or a
         portion of the balance to the credit of the Distributee, except that an
         Eligible Rollover Distribution does not include: any distribution that
         is one of a series of substantially equal periodic payments (not less
         frequently than annually) made for the life (or life expectancy) of the
         Distributee or the joint lives (or joint life expectancies) of the
         Distributee and the Distributee's Beneficiary, or for a specified
         period of ten years or more; any distribution to the extent that the
         distribution is required under Code paragraph 401(a)(9); and the
         portion of any

                                       11



         distribution that is not includable in gross income (determined without
         regard to the exclusion for net unrealized appreciation with respect to
         employer securities).

1.41     "Employee" means any person who is employed by an Employer, other than
         as an employee classified by his Employer as a summer laborer or summer
         employee, and who receives compensation that the Employer initially
         reports on a federal wage and tax statement (Form W-2). For purposes of
         crediting Service or Years of Eligibility Service for purposes of
         eligibility to participate and vesting and, except as otherwise
         provided, for purposes of the rules set out in Section 4.6 (Maximum
         Pension) and Article 23 (Provisions Relating to Top-Heavy Plan), the
         term "Employee" includes a Leased Employee.

1.42     "Employer" means Cinergy and any Affiliate that, with the consent of
         the Board of Directors, elects to participate in the Plan pursuant to
         Section 21.1 (Adoption of Plan) and any successor corporation or other
         organization or entity that adopts the Plan pursuant to Article 22
         (Continuance by a Successor). If any Affiliate withdraws from
         participation in the Plan pursuant to Section 21.2 (Withdrawal from
         Participation), that Affiliate will cease to be an Employer.

1.43     "Employment Commencement Date" means, with respect to each Employee,
         the date as of which the Employee is first entitled to be credited with
         an Hour of Service.

1.44     "ERISA" means the Employee Retirement Income Security Act of 1974, as
         amended from time to time, and interpretive rulings and regulations.

1.45     "Executive Individual Incentive Awards" means, with respect to an
         Employee, any cash or stock-based award (other than Annual Performance
         Cash Awards) received by a Highly Compensated Participant pursuant to
         the terms of any individualized bonus or incentive pay plan or program,
         including, but without any limitation because of enumeration, any
         retention or signing bonus.

                                          12



1.46     "Exempt Employee" means an Eligible Employee whose pay is customarily
         computed on a salaried basis, and whose employment is not subject to
         FLSA overtime and record keeping provisions.

1.47     "Final Average Earnings" means the average of the Participant's Section
         415 Compensation over the five consecutive years of employment with his
         Employer that provide the highest average, excluding compensation in
         years before January 1, 1984, and compensation in years after the close
         of the last Plan Year in which the Plan is determined to be a Top-Heavy
         Plan.

1.48     "FLSA" means the Fair Labor Standards Act of 1938, as amended from time
         to time, and interpretive rulings and regulations.

1.49     "Group Annuity Contract" means Group Annuity Contract No. 9599GAC
         issued by John Hancock Mutual Life Insurance Company, as amended or
         replaced from time to time.

1.50     "Highest Average Earnings" means a Participant's highest average annual
         Earnings for any three consecutive calendar years out of his last ten
         years of Participation. However, if the Participant completes fewer
         than three years of Participation, his Highest Average Earnings will
         mean his average annual Earnings for his total years of Participation.
         If a Participant is totally disabled and qualifies for benefits under
         Cinergy's Long-Term Disability Plan until his Normal Retirement Date,
         Early Retirement Date, or Actual Separation Date, whichever is
         applicable, his Severance from Service Date will be deemed for purposes
         of this section to be his Disability Date. For purposes of this
         Section, if a Participant's Severance from Service Date is other than
         December 31, the following periods will be treated as a period of three
         consecutive calendar years:

         (a)      His months of Participation in the calendar year that includes
                  his Severance from Service Date; plus

                                       13



         (b)      The two (or fewer) full calendar years of Participation prior
                  to his Severance from Service Date; plus

         (c)      From the calendar year immediately preceding the period
                  described in Subsection (b), the lesser of (1) the
                  Participant's months of Participation in that year, or (2) the
                  number of months equal to 12 minus the number of months
                  included pursuant to Subsection (a). A Participant's Earnings
                  will be deemed to have been earned ratably throughout the
                  period described in this Subsection (c).

1.51     "Highly Compensated Participant" means a highly compensated active
         Employee and a highly compensated former Employee. A highly compensated
         active Employee includes any Employee who performs service for the
         Employer during the Plan Year and who (a) is a 5% owner for that Plan
         Year or was a 5% owner for the prior Plan Year; or (b) for the
         preceding Plan Year received compensation from the Employer in excess
         of $80,000 (as adjusted pursuant to Code subsection 415(d)). The
         Employer does not elect to require that a highly compensated active
         Employee must be a member of the Employer's top-paid group for the
         preceding Plan Year.

         A highly compensated former Employee includes any Employee who
         terminated employment (or was deemed to have terminated employment)
         prior to the Plan Year, performs no service for the Employer during the
         Plan Year, and was a highly compensated active Employee for either the
         Plan Year during which he terminated employment or any Plan Year ending
         on or after the Employee's 55th birthday.

         The determination of who is a Highly Compensated Participant, including
         the determination of the number and identity of Employees in the
         top-paid group and the compensation that is considered, will be made in
         accordance with Code subsection 414(q).

                                       14



1.52     "Holiday Premiums" means, with respect to a Non-Exempt Employee, the
         compensation received as a premium for services performed for the
         relevant period for working on a holiday recognized by the Employer
         pursuant to its applicable policy.

1.53     "Hour of Service" means, with respect to any Employee, any of the
         following:

         (a)      each hour for which he is paid, or entitled to payment, by an
                  Employer for the performance of duties for that Employer;

         (b)      each other hour for which back pay, irrespective of mitigation
                  of damages, has been either awarded to him or agreed to be
                  paid to him by an Employer;

         (c)      each other hour for which he is absent from his normal period
                  of employment with his Employer due to an approved military
                  leave, maternity leave, paternity leave, adoption leave,
                  worker's compensation leave, personal leave of six consecutive
                  months or less, or sick leave of six consecutive months or
                  less; or a total disability that qualifies him for benefits
                  under Cinergy's Long-Term Disability Plan; and

         (d)      each other hour for which he is paid, or entitled to payment,
                  by an Employer for a period of time during which he does not
                  perform any duties for that Employer (irrespective of whether
                  or not his employment relationship with that Employer has
                  terminated) due to vacation, holiday, illness, incapacity
                  (including disability), layoff, jury duty, witness duty,
                  military duty, or leave of absence.

                  In computing an Hour of Service, the Plan may use the
                  equivalencies set forth in paragraph (e) of 29 C.F.R.
                  Section.2530.200b-3. However, if different equivalencies are
                  used for different classifications of Employees, then those
                  classifications must be reasonable and consistently applied.
                  Each Hour of Service will be credited to the Employee for the
                  appropriate computation period in accordance with the

                                            15



                  provisions of paragraphs (b) and (c) of 29 C.F.R.
                  Section.2530.200b-2, and each Hour of Service, when aggregated
                  for a particular computation period, will constitute the Hours
                  of Service credited to the Employee for that computation
                  period. However, no Employee will be credited under Subsection
                  (d) either with more than 501 Hours of Service on account of
                  any single continuous period during which the Employee
                  performs no duties for an Employer irrespective of whether or
                  not that period occurs in a single computation period, or with
                  an hour for which the Employee is paid, or entitled to
                  payment, by an Employer if that payment is made solely for
                  the purposes of either reimbursing the Employee for medical
                  or medically related expenses incurred by the Employee or
                  complying with applicable worker's compensation, unemployment
                  compensation, or disability insurance laws. However, the
                  crediting of Hours of Service for back pay awarded or agreed
                  to with respect to periods described in Subsection (d) of this
                  Section will be subject to the same limitations set forth in
                  the immediately preceding sentence with respect to Subsection
                  (d).

1.54     "Initial Separation Date" means, with respect to a Participant who is
         entitled to benefits under the provisions of Section 5.1 (Vesting
         Requirement), Section 5.2 (Severance from Service before Vesting), or
         Section 5.3 (Severance from Service after Vesting), the first day of
         the calendar month coincident with or following the Participant's
         initial Severance from Service Date.

1.55     "Insurance Company" means any insurance company holding any part of the
         Pension Fund.

1.56     "Intermittent Employee" means an Eligible Employee who performs
         services intermittently from time to time as needed by the Employer and
         as mutually agreed by the Employer and the Employee.

                                     16



1.57     "Key Employee" means an Employee or former Employee of an Employer who,
         at any time during the determination period, is:

         (a)      an officer of an Employer having annual Section 415
                  Compensation from his Employer greater than 50 percent of the
                  amount in effect under Code subparagraph 415(b)(1)(A) for any
                  Plan Year;

         (b)      one of the ten Employees having annual Section 415
                  Compensation from his Employer of more than the limitation in
                  effect under Code subparagraph 415(c)(1)(A) and owning (or
                  considered as owning within the meaning of Code section 318)
                  the largest interests in the Employer.

         (c)      the owner (or considered as the owner within the meaning of
                  Code section 318) either of more than five percent of the
                  outstanding stock of Cinergy, or stock possessing more than
                  five percent of the total combined voting power of all stock
                  of Cinergy; or

         (d)      the recipient of at least $150,000 in annual Section 415
                  Compensation from the Employer and who owns (or is considered
                  as owning within the meaning of Code section 318) either more
                  than one percent of the outstanding stock of Cinergy or stock
                  possessing more than one percent of the total combined voting
                  power of all stock of Cinergy.

         However, no more than 50 Employees of an Employer will be deemed to be
         officers for any particular Plan Year. Also, the term Key Employee
         includes the beneficiaries of a Key Employee. For purposes of
         Subsection (b) above, if two Employees have the same interest in the
         Employer, the Employee having greater annual Earnings from his Employer
         will be treated as having a larger interest. The determination of who
         is a Key Employee will be made in accordance with Code paragraph
         416(i)(1).

                                     17



1.58     "Leased Employee" means any person who performs services for another
         person, the "recipient," but who is not an employee of the recipient,
         if (a) the services are provided pursuant to an agreement between the
         recipient and any other person, (b) the person has performed the
         services for the recipient (or for the recipient and related persons)
         on a substantially full-time basis for a period of at least one year,
         and (c) the services are performed under the primary direction and
         control of the recipient. A Leased Employee will not be considered an
         employee of the recipient if:

         (a)      that employee is covered by a money purchase pension plan
                  providing:

                  (1)      a non-integrated employer contribution rate of at
                           least 10 percent of compensation, as defined in Code
                           paragraph 415(c)(3), but including amounts
                           contributed pursuant to a salary reduction agreement
                           that are excludable from the Employee's gross income
                           under Code section 125, Code paragraph 402(a)(8), or
                           Code subsections 402(h) or 403(b);

                  (2)      immediate participation;

                  (3)      full and immediate vesting; and

         (b)      leased employees do not constitute more than 20 percent of the
                  recipient's non-highly compensated work force.

1.59     "Long-Term Performance Awards" means, with respect to an Employee, the
         cash or stock-based award received by the Employee pursuant to the
         provisions of an Employer's long-term bonus or incentive pay plan or
         program, including, but without limitation because of enumeration, the
         Cinergy Performance Shares Plan or the Cinergy 1996 Long-Term Incentive
         Compensation Plan.

                                      18



1.60     "Medical/Dental Benefits" means the benefits specified and payable
         under Section 9.8 (Medical/Dental Benefits) from the Medical/Dental
         Benefits Account.

1.61     "Medical/Dental Benefits Account" means the separate account
         established pursuant to Article 9 (Retiree Medical/Dental Benefits) for
         contributions to fund benefits payable under Article 9 (Retiree
         Medical/Dental Benefits).

1.62     "Medical/Dental Plan" means any plan or program that is established by
         the Employer to provide medical or dental insurance coverage or medical
         or dental expense reimbursements to Eligible Individuals.

1.63     "MRP" means The Cincinnati Gas & Electric Company Management Retirement
         Plan, as in effect immediately prior to January 1, 1998.

1.64     "Non-Exempt Employee" means an Eligible Employee whose pay is
         customarily computed on an hourly, weekly, or bi-weekly basis, and
         whose employment is subject to FLSA overtime and record keeping
         provisions.

1.65     "Nonforfeitable" means, with respect to a Participant's claim for
         benefits under the Plan, that the claim is unconditional, legally
         enforceable, and not subject to divestment except in accordance with
         the Plan's specific provisions, including, but without limitation
         because of enumeration, the provisions of Section 15.3 (Sufficiency of
         Pension Fund).

1.66     "Normal Retirement Date" means, with respect to each Participant, the
         first day of the calendar month coincident with or following his 65th
         birthday.

1.67     "Option Effective Date" means a Participant's Actual Separation Date,
         unless further extended with respect to a Participant making a timely
         election during the applicable election period, in which case the
         Option Effective Date will be the first day of the

                                    19



         calendar month coincident with or following the last day of the
         applicable election period, provided he has timely elected the option
         on or before that date.

1.68     "Overtime Pay" means, with respect to an Employee, the compensation
         received as remuneration consistent with the requirements of the FLSA,
         or for services performed for the relevant period for hours worked
         beyond the Employee's regularly scheduled work hours pursuant to the
         Employer's applicable policy.

1.69     "Participant" means any Eligible Employee who has met the eligibility
         requirements set forth in Article 3 (Eligibility and Participation) and
         for whom benefits are to be provided under the Plan.

1.70     "Participation" means, with respect to an Eligible Employee, the period
         of time during which he is treated as a Participant in the Plan, the
         length of which will be determined as follows:

         (a)      A Regular Employee will be credited with Participation for the
                  period of time beginning with the later of (1) January 1,
                  1998, or (2) his Employment Commencement Date and ending on
                  his Severance from Service Date.

         (b)      A Regular Employee will be credited with Participation for any
                  Period of Credited Severance during which he is a Participant
                  or former Participant.

         (c)      An Intermittent Employee or Temporary Employee who has become
                  a Participant pursuant to Section 3.2 (Intermittent Employees
                  and Temporary Employees) will be credited, retroactively if
                  necessary, with Participation beginning on the later of (1)
                  January 1, 1998, or (2) his Employment Commencement Date. An
                  Intermittent Employee or Temporary Employee will be credited
                  with one year of Participation for each Plan Year in which he
                  completes at least 1,000 Hours of Service. An Intermittent
                  Employee or Temporary Employee will not be credited

                                          20



                  with any Participation for any Plan Year in which he completes
                  less than 1,000 Hours of Service.

         (d)      If an Intermittent or Temporary Employee becomes a Regular
                  Employee on a date other than the first day of a Plan Year,
                  all of his Hours of Service completed during the Plan Year in
                  which the change in employment status occurred will be
                  counted. If the Employee completes at least 1,000 Hours of
                  Service during that Plan Year, he will be credited with one
                  year of Participation for the Plan Year in which the change
                  occurred. If the Employee does not complete at least 1,000
                  Hours of Service during the Plan Year in which the change
                  occurred, he will be credited with one month of Participation
                  for each calendar month during that Plan Year in which he is
                  credited with at least one Hour of Service as a Regular
                  Employee.

         (e)      Notwithstanding any other provision of this Plan to the
                  contrary, an Eligible Employee who accrued "years of
                  accredited service" (as defined in the MRP and the RIP) under
                  the MRP or the RIP or "years of participation" (as defined in
                  the PSI Plan) under the PSI Plan will be credited with years
                  of Participation under this Plan for the years of accredited
                  service credited to him under the MRP or the RIP and the years
                  of participation credited to him under the PSI Plan before
                  January 1, 1998.

         (f)      In determining an Eligible Employee's total Participation for
                  purposes of the Plan, all periods of service that are credited
                  to the Employee under Subsections (a) through (e) above will
                  be aggregated. In no event will an Employee be credited more
                  than once for the same period of Participation. For purposes
                  of determining a Regular Employee's total Participation, the
                  Regular Employee will be credited with one month of
                  Participation for each calendar month in which he is a
                  Participant in the Plan and is credited with at least one Hour
                  of Service. A Regular Employee will be credited with one year
                  of Participation for each 12

                                          21



                  months of Participation with which he is credited pursuant to
                  the preceding sentence.

         (g)      Notwithstanding Subsection (f), if an Eligible Employee is a
                  Reemployed Retiree or a Reemployed Terminated Vested
                  Participant, and his "years of participation" (as defined in
                  the PSI Plan) under the PSI Plan or his "years of accredited
                  service" (as defined in the MRP or RIP) under the MRP or RIP
                  were subject to a maximum under the pension formula applicable
                  to the Eligible Employee at the time he incurred a Severance
                  from Service, that Eligible Employee's total Participation
                  when he again incurs a Severance from Service under the Plan
                  will not exceed the sum of his maximum pre-1998 years and the
                  Eligible Employee's years of Participation during his period
                  of reemployment.

1.71     "Pension Fund" or "Fund" means the fund established in consequence of
         and for the purposes of the Plan to provide the benefits under the
         Plan, including all funds held in all trusts and group annuity
         contracts that are being used as funding media for the Plan.

1.72     "Performance Lump Sum Pay" means, with respect to an Exempt Employee or
         a Non-Exempt Employee, the compensation received as remuneration based
         upon the Employee's performance when the Employer's applicable merit
         pay policy would otherwise preclude a performance based increase.

1.73     "Period of Credited Severance" means, with respect to each Regular
         Employee who has incurred a Severance from Service, and who, within 12
         Months of his Severance from Service Date, performs an Hour of Service,
         the Period of Severance commencing on the Regular Employee's Severance
         from Service Date and ending on the date thereafter upon which he first
         performs an Hour of Service. In the case of a Regular Employee who has
         incurred a Severance from Service that occurs during an Absence from
         Service by reason of a maternity or paternity absence as defined in
         Subsection 1.94(b), the period between

                                    22



         the first and second anniversaries of the first day of absence will
         not be a Period of Credited Severance.

1.74     "Period of Severance" means, with respect to each Regular Employee, the
         period of time commencing on his Severance from Service Date and ending
         on the date thereafter upon which he first performs an Hour of Service.

1.75     "Permissive Aggregation Group" means an Aggregation Group that may
         include any other plan not required to be included in the Required
         Aggregation Group, provided the resulting group, taken as a whole,
         would continue to satisfy the provisions of Code paragraph 401(a)(4)
         and Code section 410.

1.76     "Plan" means the pension plan known as the "Cinergy Corp. Non-Union
         Employees' Pension Plan," as amended, from time to time. As effective
         January 1, 1998, this document sets forth the Plan.

1.77     "Plan Year" means the calendar year.

1.78     "Present Value of Accrued Benefits" means, with respect to Top-Heavy
         Plan status, the sum of:

         (a)      the present value of the Plan's accrued benefits using the
                  1983 Group Annuity Mortality Tables (separate tables for males
                  and females) and 7-1/2% interest, and

         (b)      any Plan distributions made within the Plan Year that includes
                  the Determination Date or within the four preceding Plan
                  Years. However, in the case of distributions made after the
                  Valuation Date and prior to the Determination Date, the
                  distributions are not included as distributions for Top-Heavy
                  Plan purposes to

                                         23



                  the extent that the distributions are already included in
                  the Participant's present value of accrued benefits as of the
                  Valuation Date.

1.79     "Projected Annual Benefit" means, with respect to any Participant
         participating in a Qualified Defined Benefit Plan maintained by an
         Employer or an Affiliate, the annual straight life annuity benefit to
         which the Participant would be entitled under that Qualified Defined
         Benefit Plan based upon the following assumptions:

         (a)      the Participant will continue as an employee of an Employer
                  until reaching the Participant's normal retirement age under
                  the plan (or the Participant's current age if that is later);

         (b)      the Participant's compensation used to determine benefits
                  under the plan for the calendar year under consideration will
                  remain the same until the date the Participant attains the age
                  described in Paragraph (a); and

         (c)      all other relevant factors used to determine benefits under
                  the plan for the calendar year under consideration will remain
                  constant for all future calendar years.

1.80     "PSI Plan" means the PSI Energy, Inc. Pension Plan, as in effect
         immediately prior to January 1, 1998.

1.81     "Qualified Defined Benefit Plan" means any qualified defined benefit
         plan as defined in Code subsections 414(j) and 415(k).

1.82     "Qualified Defined Contribution Plan" means any qualified defined
         contribution plan as defined in Code subsections 414(i) and 415(k).

1.83     "Qualified Domestic Relations Order" means a qualified domestic
         relations order as defined in Code subsection 414(p).

                                     24



1.84     "Reduced Primary Social Security Benefit" means the reduced amount of
         primary federal old age insurance benefit estimated by the Committee
         that is, or would be, payable or estimated to become payable to a
         Participant at his earliest eligibility date. The estimate is based on
         the Social Security Act as in effect at the Participant's Option
         Effective Date. If a Participant supplies documentation from the Social
         Security Administration of his or her actual Reduced Primary Social
         Security Benefit at least 60 days before his or her Option Effective
         Date, that amount will be used in lieu of the estimate referred to
         above. A Reduced Primary Social Security Benefit calculated using
         actual documentation will not be recalculated.

1.85     "Reemployed Retiree" means a Participant, other than a Terminated
         Vested Participant, who is reemployed by an Employer after his Initial
         Separation Date or an Additional Separation Date.

1.86     "Reemployed Terminated Vested Participant" means a Terminated Vested
         Participant who is reemployed by an Employer after his Initial
         Separation Date or an Additional Separation Date.

1.87     "Reemployment Commencement Date" means, with respect to an Eligible
         Employee who incurs a Severance from Service and is later reemployed by
         an Employer, the date upon which the Eligible Employee first performs
         an Hour of Service after his reemployment.

1.88     "Regular Employee" means an Eligible Employee who is not an
         Intermittent Employee or a Temporary Employee.

1.89     "Required Aggregation Group" means an Aggregation Group consisting of
         each plan of an Employer, including any terminated plan, in which a Key
         Employee has been a Participant in the Plan Year containing the
         Determination Date or any of the four preceding Plan Years, and each
         other plan of the Employer that enables any plan in which

                                  25



         a Key Employee participates to meet the requirements of Code subsection
         401(a) or Code section 410.

1.90     "Retired Participant" means a former Participant, other than a
         Terminated Vested Participant, while alive on and after his Actual
         Separation Date.

1.91     "RIP" means The Cincinnati Gas & Electric Company Retirement Income
         Plan, as in effect immediately prior to January 1, 1998.

1.92     "Sabbatical Vacation Pay" means, with respect to an Employee, the
         compensation received as remuneration for the weeks of accrued vacation
         accumulated pursuant to the Employer's applicable policy for the
         purpose of taking an extended vacation beyond the number of weeks of
         vacation to which the Employee would normally be entitled.

1.93     "Section 415 Compensation" means an Eligible Employee's earned income,
         wages, salaries, and fees for professional services, and other amounts
         received for personal services actually rendered in the course of
         employment with the Employer (including, but not limited to,
         commissions paid salesmen, compensation for services on the basis of a
         percentage of profits, commissions on insurance premiums, tips and
         bonuses) and, except as provided in the following sentence, excluding
         the following: (a) Employer contributions to a plan of deferred
         compensation that are not included in the Employee's gross income for
         the taxable year in which contributed or any distributions from a plan
         of deferred compensation; (b) amounts realized from the exercise of a
         nonqualified stock option, or when restricted stock (or property) held
         by the Employee either becomes freely transferable or is no longer
         subject to a substantial risk of forfeiture; and (c) amounts realized
         from the sale, exchange, or other disposition of stock acquired under a
         qualified stock option. Notwithstanding the foregoing, Section 415
         Compensation will include any elective deferral as defined in Code
         paragraph 402(g)(3) and amounts contributed by an Employer pursuant to
         a salary reduction agreement that are excludable from the Employee's
         gross income under Code section 125 or 457.

                                    26



1.94     "Securities Exchange Act" means the Securities Exchange Act of 1934, as
         amended from time to time, and interpretive rulings and regulations.

1.95     "Service" means, with respect to an Eligible Employee, the period of
         time during which the employment relationship exists between the
         Eligible Employee and the Employer, the length of which is determined
         as follows:

         (a)      A Regular Employee will be credited with Service for the
                  period of time beginning with his Employment Commencement Date
                  and ending on his Severance from Service Date.

         (b)      A Regular Employee will be credited with Service for each
                  Period of Credited Severance.

         (c)      An Intermittent Employee or Temporary Employee who has
                  completed one Year of Eligibility Service will be credited,
                  retroactively if necessary, with Service beginning on his
                  Employment Commencement Date. An Intermittent Employee or
                  Temporary Employee will be credited with one year of Service
                  for each Plan Year in which he completes at least 1,000 Hours
                  of Service. An Intermittent Employee or Temporary Employee
                  will not be credited with any Service for any Plan Year in
                  which he completes less than 1,000 Hours of Service.

         (d)      If an Intermittent or Temporary Employee becomes a Regular
                  Employee on a date other than the first day of a Plan Year,
                  all of his Hours of Service completed during the Plan Year in
                  which the change in employment status occurred will be
                  counted. If the Employee completes at least 1,000 Hours of
                  Service during that Plan Year, he will be credited with one
                  year of Service for the Plan Year in which the change
                  occurred. If the Employee does not complete at least 1,000
                  Hours of Service during the Plan Year in which the change
                  occurred, he will be credited

                                       27



                  with one month of Service for each calendar month during
                  that Plan Year in which he is credited with at least one
                  Hour of Service as a Regular Employee.

         (e)      An Eligible Employee will be credited with Service for any
                  period of Service with an Affiliate after he has reached age
                  18, which will be determined as if he had been employed by the
                  Employer during that period.

         (f)      Notwithstanding any other provision of the Plan to the
                  contrary, any Eligible Employee who accrued "years of service"
                  (as defined in the PSI Plan) under the PSI Plan or "years of
                  vesting service" (as defined in the MRP or RIP) under the MRP
                  or the RIP will be credited with Service for the years of
                  service credited to him under the PSI Plan and the years of
                  vesting service credited to him under the MRP or RIP before
                  January 1, 1998.

         (g)      In determining an Eligible Employee's total Service for
                  purposes of the Plan, all periods of Service that are credited
                  to the Employee under Subsections (a) through (f) above will
                  be aggregated. In no event will an Employee receive credit
                  more than once for the same period of Service. For purposes of
                  determining a Regular Employee's total Service, the Regular
                  Employee will be credited with one month of Service for each
                  calendar month in which he is credited with at least one Hour
                  of Service. A Regular Employee will be credited with one year
                  of Service for each 12 months of Service with which he is
                  credited pursuant to the preceding sentence.

1.96     "Severance from Service" means, with respect to an Employee:

         (a)      the date of termination of his employment relationship with
                  his Employer by reason of a quit, resignation, discharge,
                  retirement, death, or layoff of the Employee for an indefinite
                  period of time made without any expectation on the part of the
                  Employer at the time of layoff to recall the Employee, for
                  employment

                                            28



                  with the Employer as an Employee within 12 months from the
                  date of the commencement of the layoff; or

         (b)      the first anniversary of the first date of the Employee's
                  Absence from Service, or, if later, the expiration of an
                  Absence from Service. Notwithstanding the preceding sentence,
                  if an Employee has an Absence from Service of more than one
                  year by reason of a maternity or paternity absence, the
                  Employee's Severance from Service occurs on the second
                  anniversary of that absence. For purposes of this Subsection,
                  an Absence from Service for maternity or paternity reasons
                  means an absence (1) by reason of the pregnancy of the
                  individual, (2) by reason of the birth of a child of that
                  individual, (3) by reason of the placement of a child with the
                  individual in connection with the adoption of the child by
                  that individual, or (4) for purposes of caring for the child
                  for a period beginning immediately following its birth or
                  placement.

         For purposes of this Subsection, the term "Employer" includes all
         Affiliates, and an Employee or former Employee will not be treated as
         having incurred a Severance from Service until the employment
         relationship between the Employee and all Employers and Affiliates is
         terminated.

1.97     "Severance from Service Date" means, with respect to each Employee, the
         date of his Severance from Service.

1.98     "Shift Premiums" means, with respect to a Non-Exempt Employee, the
         compensation received as a premium for services performed for the
         relevant period for working a shift other than the Employer's regular
         day shift pursuant to the Employer's applicable policy.

1.99     "Social Security Act" means the federal Social Security Act, 42
         U.S.C. Section .301, ET SEQ., as amended from time to time, and
         interpretive rulings and regulations.

                                      29



1.100    "Social Security Retirement Age" means respectively (a) age 65 for a
         Participant born before January 1, 1938; (b) age 66 for a Participant
         born after December 31, 1937, but before January 1, 1955; and (c) age
         67 for a Participant born after December 31, 1954.

1.101    "Spouse" means, with respect to any Participant, the Participant's
         lawfully married spouse, if any, on the applicable date. The Plan will
         not recognize common law marriages or similar arrangements unless
         required to do so by federal law. A former Spouse will also be
         considered a Spouse to the extent provided under a Qualified Domestic
         Relations Order.

1.102    "Super Top-Heavy Plan" means a Qualified Defined Benefit Plan or a
         Qualified Defined Contribution Plan described in Section 23.2
         (Top-Heavy Determination).

1.103    "Temporary Employee" means an Eligible Employee who is regularly
         scheduled to work less than 20 hours per week or to work on a non-fixed
         schedule.

1.104    "Terminated Vested Participant" means a Participant who is entitled to
         benefits under the provisions of Section 5.3 (Severance from Service
         After Vesting).

1.105    "Top-Heavy Group" means an Aggregation Group described in Section 23.2
         (Top-Heavy Determination).

1.106    "Top-Heavy Plan" means a Qualified Defined Benefit Plan or a Qualified
         Defined Contribution Plan described in Section 23.2 (Top-Heavy
         Determination).

1.107    "Top-Heavy Plan Year" means a particular Plan Year for which the Plan
         is a Top-Heavy Plan.

1.108    "Trust Fund" means the trust established by the Employer to fund the
         Plan.

                                      30



1.109    "Trustee" means the person or entity designated by Cinergy to act as
         trustee of any trust forming a part of the Pension Fund.

1.110    "Valuation Date" means, in connection with Article 23 (Provisions
         Relating to Top-Heavy Plans), the most recent valuation date for
         minimum funding purposes under the Plan that falls within or ends with
         the 12 month period ending on the Determination Date.

1.111    "Vesting Requirement" means, with respect to each Participant, the
         requirements for the vesting of his accrued benefits under the Plan.

1.112    "Work Schedule Recognition Pay" means, with respect to an Exempt
         Employee, the compensation received as remuneration for services
         performed for the relevant period for working a shift other than the
         Employer's regular day shift pursuant to the Employer's applicable
         policy.

1.113    "Year of Eligibility Service" means, with respect to an Intermittent
         Employee or a Temporary Employee, a measuring year during which he
         completes at least 1,000 Hours of Service. The first measuring year
         begins on the later of the Employee's (a) Employment Commencement Date
         (or, with respect to any periods after a Severance from Service, his
         Reemployment Commencement Date) or (b) his 18th birthday, and
         subsequent measuring years will be the Plan Year, beginning with the
         first Plan Year that begins after the Employee's Employment
         Commencement date (or, if applicable, Reemployment Commencement Date).
         If an Intermittent Employee or a Temporary Employee has a Severance
         from Service during a measuring year and has a subsequent Reemployment
         Commencement Date during that measuring year, then: (a) for purposes of
         determining whether the Employee accumulated a Year of Eligibility
         Service during the measuring year, the total Hours of Service
         accumulated by the Employee during that measuring year both before and
         after the Severance from Service will be aggregated, and (b) for
         purposes of determining whether the Employee accumulated a Year of
         Eligibility Service during the measuring year commencing on his
         Reemployment Commencement

                                      31



         Date, the total Hours of Service accumulated by the Employee during
         that subsequent measuring year will be aggregated.

The uses of singular and masculine words are for practical purposes only and
will be deemed to include the plural and feminine, respectively, unless the
context plainly indicates a distinction. Certain other definitions, as required,
appear in the following Articles of the Plan.

                                    ARTICLE 2

                             EFFECTIVE DATE OF PLAN

The original effective date of the MRP was January 1, 1990. The effective date
of this Plan restatement is January 1, 1998, as to Cinergy, and will be
effective with respect to any other Employer as of the date that Employer elects
to participate in the Plan pursuant to Section 21.1 (Adoption of Plan).

This Plan restatement applies only to Eligible Employees who are credited with
at least one Hour of Service on or after January 1, 1998. This Plan restatement
will not affect the rights of former Eligible Employees (and their
Beneficiaries) who retired, died, or otherwise terminated their employment with
an Employer prior to January 1, 1998. The rights, if any, of those former
Eligible Employees (and their Beneficiaries), and the amounts of their benefits,
if any, will be governed by the provisions of the PSI Plan, the RIP or the MRP,
whichever is applicable.

                                    ARTICLE 3

                          ELIGIBILITY AND PARTICIPATION

3.1      DATE OF PARTICIPATION

         Each Employee who is an Eligible Employee on January 1, 1998, and who
         was participating as of December 31, 1997, in either the MRP, the RIP,
         or the PSI Plan, will become a Participant as of January 1, 1998.
         Except as provided in Section 3.2

                                        32



         (Intermittent Employees and Temporary Employees), each other Eligible
         Employee will automatically become a Participant on the latest of
         January 1, 1998, his Employment Commencement Date, or the date he
         reaches age 18. An Eligible Employee who becomes a Participant,
         subsequently incurs a Severance from Service, and is later reemployed
         by an Employer will again become a Participant on his Reemployment
         Commencement Date.


3.2      INTERMITTENT EMPLOYEES AND TEMPORARY EMPLOYEES

         Notwithstanding the provisions in Section 3.1 (Date of Participation),
         an Intermittent Employee or a Temporary Employee who was not
         participating in either the MRP, the RIP, or the PSI Plan as of
         December 31, 1997, will not become a Participant until he has completed
         one Year of Eligibility Service. Upon completion of one Year of
         Eligibility Service, an Intermittent or Temporary Employee will become
         a Participant retroactive to the later of January 1, 1998, or his
         Employment Commencement Date.

3.3      LEASED EMPLOYEES

         A Leased Employee will be excluded from participation in the Plan.
         However, if a Leased Employee is subsequently employed by an Employer
         as an Eligible Employee, his time as a Leased Employee of an Employer
         will be considered for purposes of determining eligibility under this
         Article and vesting under Article 5 (Severance from Service --
         Vesting).

3.4      TRANSFERS OF EMPLOYMENT

         If a Participant is transferred from one Employer to another or from an
         Employer to an Affiliate, he will continue to participate in the Plan
         until an event occurs that would have terminated his participation had
         he continued in the service of an Employer, except that payments
         received by a Participant from any Affiliate that is not an Employer
         will not be

                                    33



         treated as Earnings for purposes of determining the amount of
         retirement benefits to which the Participant will be entitled. Any
         period of employment with an Affiliate that is not an Employer will be
         taken into account for purposes of determining when an Employee is
         eligible to participate in the Plan pursuant to Section 3.2
         (Intermittent Employees and Temporary Employees) and for purposes of
         determining when a Participant has satisfied the Vesting Requirement.

         If a Participant is transferred from an Employer to an Affiliate that
         has not elected to participate in the Plan pursuant to Section 21.1
         (Adoption of Plan), the Participant's accrued benefit under the Plan as
         of the date of the transfer will be preserved. The Participant's
         service after the transfer will not be considered in determining the
         Participant's years of Participation, but will be considered in
         determining the Participant's years of Service.

3.5      TRANSFERS OF PARTICIPANTS AND PLAN ASSETS TO AND FROM THE CINERGY CORP.
         UNION EMPLOYEES' RETIREMENT INCOME PLAN AND CINERGY CORP. UNION
         EMPLOYEES' PENSION PLAN.

         (a)      If a Participant in the Plan remains an Employee but becomes
                  ineligible to participate in the Plan, he will become a
                  participant in the Cinergy Corp. Union Employees' Retirement
                  Income Plan or the Cinergy Corp. Union Employees' Pension
                  Plan, if he is an "eligible employee" as defined in either of
                  those plans, as of the first day of the month during which his
                  change in Employee status become effective.

         (b)      If a participant in the Cinergy Corp. Union Employees'
                  Retirement Income Plan or the Cinergy Corp. Union Employees'
                  Pension Plan remains an Employee but becomes ineligible to
                  participate in his current plan, he will become a Participant
                  in the Plan, if he is an Eligible Employee, as of the first
                  day of the month during which his change in Employee status
                  becomes effective.

                                        34


         (c)      A transfer of assets between the Plan and the Cinergy Corp.
                  Union Employees' Retirement Income Plan or the Cinergy Corp.
                  Union Employees' Pension Plan will follow the requirements of
                  Code subsection 414(1). The value of the benefits to be
                  transferred will be based upon the Plan's actuarial valuation
                  assumptions at the time of the transfer. The actual transfer
                  of assets will occur as soon as administratively practicable
                  after the change in the Participant's Employee status.

         (d)      A Participant who has earned years and/or partial years of
                  "participation" under the Cinergy Corp. Union Employees'
                  Retirement Income Plan or the Cinergy Corp. Union Employees'
                  Pension Plan, and who then becomes a Participant in this Plan,
                  will be credited under this Plan with his total years of
                  "participation" earned under the Cinergy Corp. Union
                  Employees' Retirement Income Plan or the Cinergy Corp. Union
                  Employees' Pension Plan as if they were earned under this
                  Plan. A Participant will not be credited with more years of
                  Participation than he would have earned if the total of all
                  his years of Participation under the Plan and all his years of
                  "participation" under the Cinergy Corp. Union Employees'
                  Retirement Income Plan and the Cinergy Corp. Union Employees'
                  Pension Plan had been earned solely as a Participant of this
                  Plan. The benefit paid to a Participant under this Plan will
                  never be less than the benefit the Participant earned in the
                  Cinergy Corp. Employees' Retirement Income Plan and/or the
                  Cinergy Corp. Union Employees' Pension Plan prior to his
                  change in Employee status.

                                          35



                                    ARTICLE 4

                           AMOUNT OF LIFE-ONLY PENSION

4.1      NORMAL RETIREMENT PENSION FORMULA

         Except as otherwise expressly provided in this Article, a Participant
         who retires on or after his Normal Retirement Date will be entitled to
         a Nonforfeitable Annual Pension under this Plan equal to the sum of (a)
         plus (b), where (a) is equal to:

                  (1)      1.1 percent of the Participant's Highest Average
                           Earnings plus

                  (2)      0.5 percent of the amount by which his Highest
                           Average Earnings exceed his applicable Covered
                           Compensation, multiplied by the number of his years
                           of Participation not in excess of 35;

and (b) is equal to 1.4 percent of the Participant's Highest Average Earnings,
multiplied by the number of his years of Participation in excess of 35.

4.2      NORMAL RETIREMENT BENEFITS FOR PARTICIPANTS IN THE PSI PLAN

         The normal retirement Nonforfeitable Annual Pension of a Participant
         who was a participant in the PSI Plan as of December 31, 1997, will be
         the greater of (a) or (b), where (a) is the Participant's Annual
         Pension calculated under Section 4.1 (Normal Retirement Pension
         Formula) and (b) is the Participant's annual accrued benefit calculated
         under the PSI Plan as of December 31, 1997. The formulas used to
         calculate a Participant's annual accrued benefit under the PSI Plan as
         in effect on December 31, 1997, are set forth in Addendum A to this
         Plan.

                                       36



4.3      NORMAL RETIREMENT BENEFITS FOR PARTICIPANTS IN THE MRP OR RIP

         The normal retirement Nonforfeitable Annual Pension of a Participant
         who was a participant in the MRP or RIP as of December 31, 1997, will
         be the greater of (a) or (b), where (a) is the Participant's Annual
         Pension calculated under Section 4.1 (Normal Retirement Pension
         Formula) and (b) is the Participant's annual accrued benefit calculated
         under the MRP or RIP as of December 31, 1997. The formulas used to
         calculate a Participant's annual accrued benefit under the MRP or RIP
         as in effect on December 31, 1997, are set forth in Addendum B to this
         Plan.

4.4      GENERAL METHOD OF COMPUTING ANNUAL PENSION FOR RETIREMENT AT EARLY
         RETIREMENT DATE

         (a)      Subject to the following provisions of this Section, a
                  Participant who retires on an Early Retirement Date, will be
                  entitled to a Nonforfeitable Annual Pension computed under
                  Section 4.1 (Normal Retirement Pension Formula). The benefits
                  will begin on the Employee's Normal Retirement Date, or, if
                  the Employee so elects, at an earlier date on or after his
                  Early Retirement Date. If the Employee elects to have the
                  benefit begin before his 62nd birthday, the amount of the
                  Employee's Nonforfeitable Annual Pension will be multiplied by
                  the appropriate early payment factor as obtained from the
                  following table:

                                       37





       EARLY PAYMENT     EARLY PAYMENT     EARLY PAYMENT     EARLY PAYMENT    EARLY PAYMENT     EARLY PAYMENT
          PERIOD             FACTOR            PERIOD           FACTOR            PERIOD           FACTOR
       -------------     -------------     -------------     -------------    -------------     -------------
        YR.      MO.                        YR.      MO.                       YR.      MO.
        --       --                         --       --                        --       --
                                                                                
         0        0               1.0000     4        0              0.7333     8        0              0.5667
         0        1               0.9944     4        1              0.7278     8        1              0.5639
         0        2               0.9889     4        2              0.7222     8        2              0.5611
         0        3               0.9833     4        3              0.7167     8        3              0.5584
         0        4               0.9778     4        4              0.7111     8        4              0.5556
         0        5               0.9722     4        5              0.7056     8        5              0.5528
         0        6               0.9667     4        6              0.7000     8        6              0.5500
         0        7               0.9611     4        7              0.6944     8        7              0.5473
         0        8               0.9556     4        8              0.6889     8        8              0.5445
         0        9               0.9500     4        9              0.6833     8        9              0.5417
         0        10              0.9444     4       10              0.6778     8       10              0.5389
         0        11              0.9389     4       11              0.6722     8       11              0.5361
         1        0               0.9333     5        0              0.6667     9        0              0.5334
         1        1               0.9278     5        1              0.6639     9        1              0.5300
         1        2               0.9222     5        2              0.6611     9        2              0.5265
         1        3               0.9167     5        3              0.6584     9        3              0.5231
         1        4               0.9111     5        4              0.6556     9        4              0.5196
         1        5               0.9056     5        5              0.6528     9        5              0.5162
         1        6               0.9000     5        6              0.6500     9        6              0.5127
         1        7               0.8944     5        7              0.6473     9        7              0.5093
         1        8               0.8889     5        8              0.6445     9        8              0.5059
         1        9               0.8833     5        9              0.6417     9        9              0.5024
         1        10              0.8778     5       10              0.6389     9       10              0.4990
         1        11              0.8722     5       11              0.6361     9       11              0.4955
         2        0               0.8667     6        0              0.6334    10        0              0.4921
         2        1               0.8611     6        1              0.6306    10        1              0.4889
         2        2               0.8556     6        2              0.6278    10        2              0.4858
         2        3               0.8500     6        3              0.6250    10        3              0.4826
         2        4               0.8444     6        4              0.6223    10        4              0.4795
         2        5               0.8389     6        5              0.6195    10        5              0.4763
         2        6               0.8333     6        6              0.6167    10        6              0.4732
         2        7               0.8278     6        7              0.6139    10        7              0.4700
         2        8               0.8222     6        8              0.6111    10        8              0.4668
         2        9               0.8167     6        9              0.6084    10        9              0.4637
         2        10              0.8111     6       10              0.6056    10       10              0.4605
         2        11              0.8056     6       11              0.6028    10       11              0.4574
         3        0               0.8000     7        0              0.6000    11        0              0.4542
         3        1               0.7944     7        1              0.5973    11        1              0.4513
         3        2               0.7889     7        2              0.5945    11        2              0.4485
         3        3               0.7833     7        3              0.5917    11        3              0.4456
         3        4               0.7778     7        4              0.5889    11        4              0.4427
         3        5               0.7722     7        5              0.5861    11        5              0.4398
         3        6               0.7667     7        6              0.5834    11        6              0.4370
         3        7               0.7611     7        7              0.5806    11        7              0.4341
         3        8               0.7556     7        8              0.5778    11        8              0.4312
         3        9               0.7500     7        9              0.5750    11        9              0.4283
         3        10              0.7444     7       10              0.5723    11       10              0.4255
         3        11              0.7389     7       11              0.5695    11       11              0.4226
                                                                               12        0              0.4197

                                             38



                  In using the above table, the order of required steps is as
                  follows:

                  (1)      determine the Participant's "early payment period,"
                           which is the number of whole calendar months by which
                           the actual commencement of his pension payments
                           precedes the first day of the calendar month
                           coincident with or following his 62nd birthday;

                  (2)      use the early payment period as determined in Step
                           (1) to identify the applicable early payment factor;
                           and

                  (3)      multiply the applicable early payment factor times
                           the amount of the Participant's Annual Pension
                           determined under Section 4.1 (Normal Retirement
                           Pension Formula).

         (b)      Notwithstanding any other provision of this Section except
                  Subsection (e), the early retirement Nonforfeitable Annual
                  Pension payable to a Participant who (1) was a participant in
                  the PSI Plan as of December 31, 1997, and (2) became a
                  participant in the PSI Plan prior to May 1, 1970, will be
                  computed under Section 4.2 (Normal Retirement Benefits for
                  Participants in the PSI Plan) and will be reduced by
                  multiplying the amount of the Participant's Nonforfeitable
                  Annual Pension by the early payment factor described in
                  Subsection (a); provided, however, that his early retirement
                  Nonforfeitable Annual Pension will not be less than the
                  product of:

                  (A)      the amount computed under PSI Pension Formula 3 (as
                           described in Addendum A) as of the following date:

                           (i)      December 31, 1989, with respect to an
                                    Employee who is not a Highly Compensated
                                    Participant; or

                                      39



                           (ii)     December 31, 1988, with respect to a Highly
                                    Compensated Participant; and

                  (B)      the early payment factor determined as described in
                           Subsection (a), except that the early payment period
                           will be the number of whole calendar months by which
                           the commencement of the Participant's pension
                           payments precedes the first day of the calendar month
                           coincident with or following his 60th birthday.

         (c)      Notwithstanding any other provision of this Section except
                  Subsection (e), the early retirement Nonforfeitable Annual
                  Pension payable to a Participant who (1) was a participant in
                  the PSI Plan as of December 31, 1997, and (2) became a
                  participant in the PSI Plan on or after May 1, 1970, will be
                  computed under Section 4.2 (Normal Retirement Benefits for
                  Participants in the PSI Plan) and will be reduced by
                  multiplying the amount of the Participant's Nonforfeitable
                  Annual Pension by the early payment factor described in
                  Subsection (a); provided, however, that his early retirement
                  Nonforfeitable Annual Pension will not be less than the
                  product of:

                  (A)      the amount computed under PSI Pension Formula 2 (as
                           described in Addendum A) as of the following date:

                           (i)      December 31, 1989, with respect to an
                                    Employee who is not a Highly Compensated
                                    Participant; or

                           (ii)     December 31, 1988, with respect to a Highly
                                    Compensated Participant; and

                  (B)      the early payment factor determined as described in
                           Subsection (a).

                                             40



         (d)      Notwithstanding any other provision of this Section except
                  Subsection (e), the early retirement Nonforfeitable Annual
                  Pension payable to a Participant who was a participant in the
                  MRP or the RIP as of December 31, 1997, will be the greater of
                  the amounts calculated under (a) and (b) of Section 4.3
                  (Normal Retirement Benefits for Participants in the MRP or
                  RIP), after those amounts are reduced as follows:

                  (1)      The Participant's Nonforfeitable Annual Pension
                           calculated under Section 4.1(Normal Retirement
                           Pension Formula) will be reduced by multiplying the
                           amount of the Participant's Annual Pension by the
                           early payment factor described in Subsection (a).

                  (2)      The Participant's annual accrued benefit calculated
                           under the MRP or the RIP as of December 31, 1997,
                           will be reduced by multiplying the Participant's
                           annual accrued benefit as of December 31, 1997, by
                           the product of (A) 5/12 of one percent and (B) the
                           number of whole calendar months by which the actual
                           commencement of the Participant's pension payments
                           precedes the first day of the calendar month
                           coincident with or following the Participant's 60th
                           birthday.

         (e)      If, as of his applicable Severance from Service Date, a
                  Participant has reached age 55, and the sum of his age (in
                  whole years) attained as of that date and the number of his
                  years of Service (in whole years) accumulated as of that date
                  equals or exceeds 85, he will receive a Nonforfeitable Annual
                  Pension computed under the appropriate early retirement Annual
                  Pension formula described in this Section, but the amount of
                  the Participant's pension will not be multiplied by the early
                  payment factor that otherwise would be applicable.

         (f)      A Participant who is eligible to terminate employment
                  voluntarily under the Redeployment Status Opportunity
                  provisions of the Severance Opportunity Plan

                                         41



                  for Non-Union Employees of Cinergy Corp., as amended from
                  time to time, is eligible to receive a Nonforfeitable Annual
                  Pension computed under the appropriate early retirement Annual
                  Pension formula described in this Section, but the amount of
                  the Participant's pension will not be multiplied by the early
                  payment factor that otherwise would be applicable, provided
                  that: (1) as of his applicable Severance from Service Date,
                  the Participant has reached age 50, but not yet reached age
                  55, (2) he elects under Article 8 (Payment of Pension) to
                  defer receipt of his pension to at least age 55, and (3) the
                  sum of his age (in whole years) attained as of the date that
                  the receipt of the pension under the Plan begins pursuant to
                  Paragraph (2) and his years of Service (in whole years)
                  accumulated as of his Severance from Service Date equals or
                  exceeds 85.

4.5      GENERAL METHOD OF COMPUTING ANNUAL PENSION FOR A TERMINATED VESTED
         PARTICIPANT

         (a)      Subject to the following provisions of this Section, the
                  amount of Nonforfeitable Annual Pension payable to a former
                  Participant who is described in Section 5.3 (Severance from
                  Service After Vesting), and whose Actual Separation Date
                  occurred on or before his Normal Retirement Date, will be
                  computed under Section 4.1 (Normal Retirement Pension
                  Formula). The benefits will begin on the Employee's Normal
                  Retirement Date or, if the Employee so elects, at an earlier
                  date on or after his Early Retirement Date. If the Employee
                  elects to have the benefits begin before his Normal Retirement
                  Date, the amount of the Employee's Nonforfeitable Annual
                  Pension will be reduced by five percent for each calendar year
                  (or .4166 percent for each calendar month) by which the
                  commencement of his pension payments precedes his Normal
                  Retirement Date.

         (b)      Notwithstanding any other provision of this Section, the
                  terminated vested Nonforfeitable Annual Pension payable to a
                  Participant who was a participant in the PSI Plan as of
                  December 31, 1997, will be the greater of the amounts
                  calculated under (a) and (b) of Section 4.2 (Normal Retirement
                  Benefits for

                                            42



                  Participants in the PSI Plan), after those amounts are reduced
                  for early payment as follows:

                  (1)      The Participant's Annual Pension calculated under
                           Section 4.1 (Normal Retirement Pension Formula) is
                           reduced as described in Subsection (a).

                  (2)      If the Participant elects to have his benefit begin
                           before his Normal Retirement Date, the Participant's
                           annual accrued benefit under the PSI Plan as of
                           December 31, 1997, is reduced by multiplying that
                           annual accrued benefit by the appropriate early
                           payment factor as obtained from the table in
                           Subsection 4.4(a) (General Method of Computing Annual
                           Pension for Retirement at Early Retirement Date).

         (c)      Notwithstanding any other provisions of this Section, the
                  terminated vested Nonforfeitable Annual Pension payable to a
                  Participant who (1) was a participant in the PSI Plan as of
                  December 31, 1997, and (2) became a participant in the PSI
                  Plan prior to May 1, 1970, will not be less than the product
                  of:

                  (A)      The amount computed under PSI Pension Formula 5 (as
                           set forth in Addendum A) as of the following date:

                           (i)      December 31, 1989, with respect to an
                                    Employee who is not a Highly Compensated
                                    Participant; or

                           (ii)     December 31, 1988, with respect to a Highly
                                    Compensated Participant; and

                  (B)      If the Participant elects to have his benefit begin
                           before his Normal Retirement Date, the early payment
                           factor as obtained from the table in Subsection
                           4.4(a) (General Method of Computing Annual Pension
                           for

                                              43



                           Retirement at Early Retirement Date), except that
                           the early payment period will be the number of whole
                           calendar months by which the commencement of the
                           Participant's pension payments precedes the first day
                           of the calendar month coincident or following his
                           60th birthday.

         (d)      Notwithstanding any other provisions of this Section, the
                  terminated vested Nonforfeitable Annual Pension payable to a
                  Participant who (1) was a participant in the PSI Plan as of
                  December 31, 1997, and (2) became a participant in the PSI
                  Plan on or after May 1, 1970, will not be less than the
                  product of:

                  (A)      The amount computed under PSI Pension Formula 6 (as
                           set forth in Addendum A) as of the following date:

                           (i)      December 31, 1989, with respect to an
                                    Employee who is not a Highly Compensated
                                    Participant; or

                           (ii)     December 31, 1988, with respect to a Highly
                                    Compensated Participant; and

                  (B)      If the Participant elects to have his benefit begin
                           before his Normal Retirement Date, the early payment
                           factor determined as obtained from the table in
                           Subsection 4.4(a) (General Method of Computing Annual
                           Pension for Retirement at Early Retirement Date).

         (e)      Notwithstanding any other provision of this Section, the
                  terminated vested Nonforfeitable Annual Pension payable to a
                  Participant who was a participant in the MRP or the RIP as of
                  December 31, 1997, will be the greater of the amounts
                  calculated under (a) or (b) of Section 4.3 (Normal Retirement
                  Benefits for Participants in the MRP or RIP), after each of
                  those amounts is reduced by five percent for each calendar
                  year (or .4166 percent for each calendar month) by

                                           44



                  which the commencement of the Participant's pension payments
                  precedes his Normal Retirement Date.

4.6      MAXIMUM PENSION

         (a)      Each Participant whose Annual Pension as otherwise determined
                  pursuant to the provisions of this Article and as modified by
                  the applicable provisions of Section 7.1 (Normal Forms of
                  Pensions) exceeds $1,000 multiplied by the Employee's years of
                  Service with the Employer (not exceeding ten), or who has ever
                  participated in a Qualified Defined Contribution Plan, will in
                  no event be entitled to an Annual Pension that exceeds the
                  lesser of:

                  (1)      $90,000 (as adjusted for increases in the limitation
                           pursuant to Code subsection 415(d)); or

                  (2)      100 percent of his highest average annual Section 415
                           Compensation from his Employer for any three
                           consecutive years of Service; provided, that if he
                           has fewer than three years of Service, then 100
                           percent of his highest average annual Section 415
                           Compensation from his Employer for his total years of
                           Service will be construed as the limiting amount.

         However, if a Participant has fewer than ten years of Participation at
         his Normal Retirement Date or Early Retirement Date, whichever is
         applicable, then the dollar limitation of Paragraph (1) will be
         multiplied by a fraction, the numerator of which is the number of the
         Participant's years of Participation (including fractional years of
         Participation) and the denominator of which is ten. However, the
         maximum benefit will never be reduced to less than 1/10th of the
         applicable limitation.

         (b)      If any benefit under the Plan begins before the Participant's
                  Social Security Retirement Age, but on or after the
                  Participant reaches age 62, the determination

                                      45



                  as to whether the $90,000 limit set forth in Subsection (a)
                  has been satisfied will be made, in accordance with
                  regulations prescribed by the Secretary, by reducing the
                  limitation of Subsection (a). The reduction under the
                  preceding sentence will be made in the manner as the
                  Secretary may prescribe that is consistent with the reduction
                  for old-age insurance benefits commencing before the Social
                  Security Retirement Age under the Social Security Act. If any
                  benefit under the Plan begins before the Participant reaches
                  age 62, the determination as to whether the $90,000 limit
                  set forth in Subsection (a) has been satisfied will be made,
                  in accordance with regulations prescribed by the Secretary,
                  by reducing the limitation of Subsection (a) so that
                  the limitation (as reduced) equals an Annual Pension
                  (beginning when the retirement income benefit begins) that
                  is actuarially equivalent to the reduced $90,000 Annual
                  Pension beginning at age 62 as determined under this
                  Subsection.

         (c)      If any benefit under the Plan begins after the Participant's
                  Social Security Retirement Age, the determination as to
                  whether the $90,000 limitation set forth in Subsection (a) has
                  been satisfied will be made, in accordance with regulations
                  prescribed by the Secretary, by increasing, if necessary, the
                  limitation of Subsection (a) so that the limitation (as
                  increased) equals an Annual Pension (beginning when the
                  retirement income benefit begins) that is actuarially
                  equivalent to a $90,000 Annual Pension beginning at the Social
                  Security Retirement Age.

         (d)      In general, the maximum annual benefit means a benefit payable
                  annually in the form of a single life annuity (without
                  ancillary benefits). If a Participant's pension under the Plan
                  is payable in any form other than a single life annuity, the
                  determination as to whether the limitations of this Section
                  have been satisfied will be made by adjusting the benefit so
                  that it is the actuarial equivalent of a single life annuity.
                  For purposes of this Section, any ancillary benefit not
                  directly related to retirement income benefits, and that
                  portion of any joint and survivor annuity

                                       46



                  that constitutes a Qualified Joint and Survivor Annuity under
                  Subsection 7.1(b) (Normal Forms of Pension), will not be
                  taken into account.

         (e)      For benefits commencing in Plan Years beginning on or after
                  January 1, 1995, and except as provided in this Plan, the
                  adjustments to the limitations under Subsections (b), (c), and
                  (d) will be calculated as described in this Subsection. For
                  purposes of adjusting the limit for an Annual Pension
                  commencing prior to age 62 under Subsection (b), the $90,000
                  limitation will be equal to the lesser of the equivalent
                  $90,000 limitation that is computed using the interest rate
                  and mortality table (or other tabular factor) specified in the
                  Plan for equivalence for early retirement benefits, and the
                  equivalent $90,000 limitation that is computed using a 5
                  percent interest rate assumption and the mortality table
                  prescribed from time to time by the Secretary for this
                  purpose. For purposes of adjusting any form of optional
                  benefit to a straight life annuity under Subsection (d), the
                  actuarially equivalent life annuity will be equal to the
                  greater of the annuity benefit that is computed using the
                  interest rate and mortality table (or other tabular factor)
                  specified in the Plan for adjusting benefits in the same form,
                  and the annuity benefit that is computed using a 5 percent
                  interest rate assumption and the mortality table prescribed
                  from time to time by the Secretary for this purpose. For
                  purposes of adjusting for any form of benefit subject to Code
                  paragraph 417(e)(3), an interest rate assumption equal to the
                  annual rate of interest on 30 year Treasury securities for
                  November of the preceding Plan Year, as specified by the
                  Commissioner of Internal Revenue, will be substituted for the
                  5 percent interest rate assumption set forth in the preceding
                  sentences. For purposes of adjusting the limit under
                  Subsection (c), the $90,000 limitation for an Annual Pension
                  beginning after Social Security Retirement Age will be the
                  lesser of the equivalent $90,000 limitation that is computed
                  using the interest rate and mortality table (or other tabular
                  factor) specified in the Plan for equivalence of delayed
                  retirement benefits, and the equivalent $90,000 limitation
                  that is computed using a 5 percent interest rate assumption
                  and the mortality table prescribed from time to time by

                                         47



                  the Secretary for this purpose. Notwithstanding the preceding
                  provisions of this Subsection, this Subsection will not apply
                  to the accrued benefit of any Participant under the Plan as of
                  December 31, 1997, after applying Code section 415 as in
                  effect on December 7, 1994, for each possible Annuity Starting
                  Date and each optional form of benefit under the Plan.

         (f)      Notwithstanding the foregoing, the maximum annual benefit
                  payable under this Section will not be less than the actuarial
                  equivalent of the Participant's single life annuity, accrued
                  under the Plan, as of December 31, 1997, determined by using
                  the Plan's actuarial assumptions as in effect on December 31,
                  1997.

         (g)      If for any particular Plan Year, a Participant is also
                  participating in one or more Qualified Defined Contribution
                  Plans maintained by his Employer, then the sum of the
                  Participant's aggregate Defined Benefit Plan Fraction and the
                  Participant's aggregate Defined Contribution Plan Fraction
                  will not exceed 1.0. If the sum exceeds 1.0, then the Employer
                  will reduce the Participant's benefits in this Plan so that
                  the sum equals 1.0. The Participant's maximum Annual Pension
                  will be determined under the provisions of this Article
                  without regard to the $10,000 minimum amount referred to in
                  the first paragraph of this Section. This Subsection will be
                  repealed, effective January 1, 2000, for any Participant who
                  is credited with at least one Hour of Service on or after
                  January 1, 2000.

4.7      BENEFITS IF PLAN BECOMES A TOP-HEAVY PLAN

         If the Plan becomes a Top-Heavy Plan, the minimum accrued benefit of
         any Participant who was at no time a Key Employee will be equal to two
         percent of the Participant's Final Average Earnings multiplied by the
         number of Top-Heavy Plan Years in which he completed at least 1,000
         Hours of Service, but not more than ten years.

                                      48



         If a non-Key Employee participates in the Plan and a Qualified Defined
         Contribution Plan included in a Required Aggregation Group that is
         Top-Heavy, the minimum benefits will be provided under this Plan.

         No increase in addition to the minimum accrued benefit described above
         will be made in the event the Plan becomes a Super Top-Heavy Plan.

                                    ARTICLE 5

                         SEVERANCE FROM SERVICE-VESTING

5.1      VESTING REQUIREMENT

         (a)      A Participant will satisfy the Vesting Requirement under the
                  Plan upon his completion of five years of Service and then
                  will have a Nonforfeitable right to his accrued benefit under
                  the Plan. A Participant who is an Employee on his Normal
                  Retirement Date will be deemed to satisfy the Vesting
                  Requirement as of that date if he has not already satisfied
                  the Vesting Requirement under the Plan. Notwithstanding the
                  preceding provisions of this Subsection, the Nonforfeitable
                  percentage of each Participant's right to his accrued benefit
                  derived from Employer contributions, because of a change to
                  the vesting schedule, will be not less than the Participant's
                  vested percentage, computed under the Plan as of the date
                  immediately prior to the change, without regard to the change.
                  Moreover, each Participant whose Nonforfeitable percentage of
                  his accrued benefit derived from Employer contributions is
                  determined under an amended vesting schedule, and who has
                  completed at least three years of Service as of the date of
                  the amendment may elect, within a reasonable period after the
                  adoption of the amended vesting schedule, to have the
                  Nonforfeitable percentage of his accrued benefit derived from
                  Employer contributions determined without regard to the
                  amendment if his Nonforfeitable percentage under the Plan as
                  amended is, at any time, less than the percentage determined
                  without regard to the amendment.

                                        49



         (b)      If the Plan becomes a Top-Heavy Plan, the above Vesting
                  Requirement will not apply. Instead, each Participant's
                  Accrued Benefit under the Plan will be partially or fully
                  vested in accordance with the following schedule:

                         YEARS OF SERVICE                 PERCENT VESTED
                           2                                      20%
                           3                                      40%
                           4                                      60%
                           5 or more                             100%

                  In any Plan Year (other than a Top-Heavy Plan Year) that
                  succeeds one or more Top-Heavy Plan Years the following will
                  apply:

                  (1)      a Participant with five or more years of Service as
                           of the beginning of the Plan Year will become 100
                           percent vested in all his accrued benefits;

                  (2)      a Participant with at least two but less than five
                           years of Service as of the beginning of the Plan Year
                           will remain vested in his accrued benefit as of that
                           date in accordance with the Top-Heavy Vesting
                           schedule, but will vest in any forfeitable portion
                           and in any further accruals in accordance with
                           Subsection (a);

                  (3)      any other Participant will, as of that date, again be
                           subject to the provisions of Subsection (a) with
                           respect to all of his accrued benefit.

5.2      SEVERANCE FROM SERVICE BEFORE VESTING

         If a Participant incurs a Severance from Service before he has
         satisfied the Vesting Requirement and is not reemployed by an Employer,
         he will have no further interest in, or right to, any benefits under
         the Plan, except as otherwise provided in Section 14.2 (Reemployment).
         If upon a Severance from Service, a Participant is zero percent vested

                                         50



         in his benefits under the Plan, the vested portion of his Plan benefits
         will be deemed distributed to him as of his Severance from Service
         Date.

5.3      SEVERANCE FROM SERVICE AFTER VESTING

         If a Participant incurs a Severance from Service before his 50th
         birthday, but after satisfying the Vesting Requirement, he will be
         entitled to receive a pension commencing on his 50th birthday, if he is
         then living, or the Participant may elect to begin receiving his
         benefit at any time on or after his Early Retirement Date. Subject to
         the provisions of Section 4.6 (Maximum Pension) and Article 7 (Forms of
         Pension), the amount of Nonforfeitable Annual Pension payable will be
         determined pursuant to the provisions of Section 4.5 (General Method of
         Computing Annual Pension for a Terminated Vested Participant).

                                    ARTICLE 6

                                SPOUSE'S BENEFIT

6.1      DETERMINATION OF SPOUSE'S BENEFIT

         Upon the death of either (a) an Active Participant who has satisfied
         the Vesting Requirement (an "Eligible Active Participant"), or (b) a
         former Participant who has satisfied the Vesting Requirement, whose
         employment with his Employer terminated before the Participant reached
         age 50, and whose pension under the Plan had not yet begun on the date
         of his death (an "Eligible Former Participant"), the Participant's
         Spouse on the date of his death, if living on the date of the first
         installment payable, as set forth below, will be entitled to receive a
         pension under the Plan as a Spouse's Benefit. The annual amount of the
         Spouse's Benefit will be determined as follows:

         (a)      If, at the date of his death, the Participant was either an
                  Eligible Active Participant or an Eligible Former Participant
                  who had reached age 50, the Spouse's benefit

                                      51



                  will equal 100 percent of the Annual Pension that the
                  Participant would have received, commencing on the first
                  day of the calendar month coincident with or following the
                  date of his death, if (1) he had retired as of the first day
                  of the calendar month coincident with or following his death,
                  thus establishing an Early Retirement Date, (2) the amount
                  of Annual Pension commencing on the Early Retirement Date
                  had been determined pursuant to the applicable provisions of
                  Section 4.4 (General Method of Computing Annual Pension
                  for Retirement at Early Retirement Date), and (3) his pension
                  had been payable under the single-life option applicable
                  to him pursuant to Subsection 7.1(a) (Normal Forms of
                  Pension). However, subject to Subsection (b), if the
                  Participant's Spouse is more than eight years younger
                  than the Participant, the Spouse will receive the actuarial
                  equivalent of the benefit payable to a Spouse exactly eight
                  years younger than the Participant, calculated by multiplying
                  the Annual Pension that the Participant would have received
                  times the appropriate early payment factor under Subsection
                  4.4(a) (General Method of Computing Annual Pension for
                  Retirement at Early Retirement Date) and then multiplying the
                  resulting product by the appropriate Spouse's benefit factor
                  as obtained from the following table:

                                          52





                      PARTICIPANT'S AGE                 PARTICIPANT'S AGE AT DEATH
                LESS SPOUSE'S AGE (IN YEARS)               50-59        60 OR OLDER
                                                                  
                           8 or less                       1.00               1.00
                           9                                .91                .90
                          10                                .82                .81
                          11                                .75                .72
                          12                                .68                .65
                          13                                .62                .59
                          14                                .56                .54
                          15                                .51                .49
                          16                                .47                .44
                          17                                .43                .40
                          18                                .39                .36
                          19                                .36                .33
                          20                                .33                .30
                          21                                .30                .28
                          22                                .28                .26
                          23                                .26                .24
                          24                                .24                .22
                          25                                .22                .20


         (b)      Notwithstanding Subsection (a), if a Participant who had
                  reached age 50 at the date of his death was a participant in
                  the MRP or the RIP as of December 31, 1997, the Spouse's
                  benefit attributable to the Participant's accrued benefit
                  under the MRP or the RIP as of December 31, 1997, will be
                  calculated by multiplying the Participant's annual accrued
                  benefit under the MRP or the RIP as of December 31, 1997, by
                  the early payment factor described under Paragraph 4.4(d)(2)
                  (General Method of Computing Annual Pension for Retirement at
                  Early Retirement Date), and then multiplying the resulting
                  product by the MRP/RIP Spousal and Contingent Annuitant
                  benefit factor as obtained from the table in Addendum C of the
                  Plan.

         (c)      If, at the date of his death, the Participant was either an
                  Eligible Active Participant or an Eligible Former Participant
                  who, in either case, had not reached age 50, the Spouse's
                  benefit will equal 100 percent of the Annual Pension that the
                  Participant would have received commencing on the first day of
                  the calendar month coincident with or following his 50th
                  birthday, if (1) his Severance from Service

                                       53



                  Date, in the case of an Eligible Active Participant, had been
                  the date of his death, (2) the amount of Annual Pension
                  (including the appropriate early payment reduction factor) had
                  been determined pursuant to the applicable provisions of
                  Section 4.5 (General Method of Computing Annual Pension for
                  Terminated Vested Participant), (3) he had survived and
                  elected to begin receiving pension payments on the first day
                  of the calendar month coincident with or following his 50th
                  birthday, and (4) his pension had been payable under the 100
                  percent option applicable to him pursuant to Subsection 7.1(b)
                  (Normal Forms of Pension).

         (d)      Notwithstanding Subsection (c), if a Participant who had not
                  attained age 50 at the date of his death was a participant in
                  the MRP or the RIP as of December 31, 1997, the Spouse's
                  benefit attributable to the Participant's accrued benefit
                  under the MRP or the RIP as of December 31, 1997, will be
                  calculated by multiplying the Participant's annual accrued
                  benefit under the MRP or the RIP as of December 31, 1997, by
                  the early payment factor described under Subsection 4.5(e)
                  (General Method of Computing Annual Pension for Terminated
                  Vested Participant) and then multiplying the resulting product
                  by the MRP/RIP Spousal and Contingent Annuitant benefit factor
                  as obtained from the table in Addendum C of the Plan.

6.2      METHOD OF PAYMENT OF SPOUSE'S BENEFIT

         A Spouse's benefit will be payable in equal monthly installments, each
         equal to 1/12th of the Annual Pension as determined pursuant to this
         Article. If at the date of his death the Eligible Active Participant or
         Eligible Former Participant had reached age 50, the first monthly
         installment of the Spouse's benefit will be payable to the
         Participant's Spouse on the first day of the calendar month coincident
         with or following the date of the Participant's death, if his Spouse is
         then living, unless the Spouse elects to defer payment until the date
         the Participant would have reached age 62. If at the date of his death
         the Participant had not reached age 50, the first monthly installment
         will be payable to the

                                    54



         Participant's Spouse on the first day of the calendar month coincident
         with or following the date the Participant would have reached age 50,
         had he survived until that date, if his Spouse is then living, unless
         the Spouse elects to defer payment until the date the Participant
         would have reached age 65. In either event, subsequent monthly
         installments will be payable on the first day of each month and will
         cease upon the payment of the installment due on the first day of the
         calendar month in which the Spouse dies.

                                    ARTICLE 7

                                FORMS OF PENSION

7.1      NORMAL FORMS OF PENSION

         (a)      UNMARRIED PARTICIPANTS

                  The normal form of pension payable under the Plan to a
                  Participant who is not married on his Annuity Starting Date
                  and who does not otherwise elect an optional form of pension
                  under Section 7.2 (Optional Forms of Retirement Income), will
                  be a single-life income payable in equal monthly installments
                  throughout the Participant's lifetime, ceasing with the
                  installment due on the first day of the calendar month in
                  which his death occurs. Each monthly installment will equal
                  1/12th of the Annual Pension as determined pursuant to Article
                  4 (Amount of Life-Only Pension), or Article 5 (Severance from
                  Service-Vesting), whichever is applicable to the Participant.

         (b)      MARRIED PARTICIPANTS

                  The normal form of pension payable under the Plan to a
                  Participant who is married on his Annuity Starting Date and
                  who does not otherwise elect an optional form of pension under
                  Section 7.2 (Optional Forms of Retirement

                                      55



                  Income) is a "Qualified Joint and Survivor Annuity," which
                  will be paid as follows:

                  (1)      To the Participant:

                           A reduced pension based on the 100 percent option in
                           equal monthly installments payable on his Annuity
                           Starting Date and on the first day of each calendar
                           month thereafter. The reduced amount payable to the
                           Participant will be the Actuarial Equivalent of the
                           amount that would otherwise be paid to the
                           Participant if he were unmarried. Payments will cease
                           with the installment due on the first day of the
                           calendar month in which the Participant dies.

                           If a Participant has an annual accrued benefit under
                           the MRP or the RIP as of December 31, 1997, the
                           reduced pension payable to him will not be less than
                           the Participant's annual accrued benefit under the
                           MRP or the RIP as of December 31, 1997, multiplied by
                           the applicable MRP/RIP Spousal and Contingent
                           Annuitant benefit factor from the table in Addendum C
                           to the Plan.

                  (2)      To his Spouse:

                           A pension payable in equal monthly installments, each
                           monthly installment being equal to 100 percent of the
                           monthly installment paid to the Participant. The
                           first installment will be payable on the first day of
                           the calendar month following the Participant's death,
                           if the Spouse is then living; subsequent installments
                           are payable on the first day of each calendar month,
                           ceasing with the installment due on the first day of
                           the calendar month in which the Spouse dies. If the
                           Participant's Spouse predeceases the Participant
                           after reduced pension payments under this

                                          56



                           Subsection have begun, payments will be made to the
                           Participant after the Spouse's death in the form of
                           an unreduced single life annuity pursuant to
                           Subsection (a) as of the first day of the month after
                           the Participant notifies the Committee of the
                           Spouse's death.

                           If a Participant who is entitled to benefits under
                           the provisions of Section 4.4 (General Method of
                           Computing Annual Pension for Retirement at Early
                           Retirement Date) dies after his Actual Separation
                           Date, but prior to the commencement of pension
                           payments, and if the Participant's Actual Separation
                           Date is on or after his 50th birthday, under the
                           normal form of pension applicable to him, his Spouse
                           will be entitled to receive, commencing on the first
                           day of the calendar month following the Participant's
                           death, if the Spouse is then living, a monthly
                           pension, with each monthly installment equal to the
                           amount that would have been payable to the Spouse
                           following the Participant's death pursuant to his
                           election, or if no election is made, then pursuant to
                           the provisions of this Paragraph (b)(2), if the
                           Participant had begun receiving pension benefits on
                           the first day of the calendar month in which the
                           Participant died.

7.2      OPTIONAL FORMS OF RETIREMENT INCOME

         Subject to the following conditions, a Participant, by making a request
         to the Committee or its designee within the election period specified
         in this Section, may elect to receive, in lieu of the normal form of
         pension applicable to him under Section 7.1 (Normal Forms of Pension),
         one of the optional forms of pension specified under this Section (the
         "Contingent Pension Option"). Each election must be made by the
         Participant in a manner prescribed by the Committee or its designee.
         The election of the Contingent Pension Option will take effect at a
         specified date, referred to as the "Option Effective Date." The amount
         of pension payable under any optional form will be the Actuarial

                                       57



         Equivalent of the pension to which the Participant would otherwise be
         entitled under the Plan.

         At least 30 days but no more than 90 days before a Participant's
         Annuity Starting Date, the Committee or its designee will provide the
         Participant whose normal form of pension applicable to him is described
         in Subsection 7.1(a) (Normal Forms of Pension) with a written
         explanation of (a) the terms and conditions of the normal form of
         pension benefits applicable to him under Subsection 7.1(a) (Normal
         Forms of Pension); (b) the Participant's ability to elect to receive,
         in lieu of the normal form of pension applicable to him under
         Subsection 7.1(a) (Normal Forms of Pension), an optional form of
         pension under this Section; (c) the relative financial effect of the
         election on his pension benefits; (d) the availability of additional
         information describing the particular financial effect of the election
         upon his pension benefit; and (e) the procedures the Participants must
         follow to obtain the additional information.

         The Committee or its designee will provide each Participant whose
         normal form of pension is a Qualified Joint and Survivor Annuity, at
         least 30 days but no more than 90 days before the Participant's Annuity
         Starting Date, a written explanation of (a) the terms and conditions of
         the Qualified Joint and Survivor Annuity, (b) the Participant's right
         to make and the effect of an election to waive a Qualified Joint and
         Survivor Annuity, (c) the rights of a Participant's Spouse with respect
         to the selection of benefit forms, and (d) the right to make and the
         effect of a revocation of a previous election to waive the Qualified
         Joint and Survivor Annuity. A Participant may elect to waive any
         requirement that the Applicable Election Period extend at least 30 days
         after the Committee provides the Participant with the written
         explanations described in this Section, if the distribution begins more
         than seven days after the applicable written explanation is provided.
         If the Participant is married, the Participant's Spouse must consent to
         the waiver in writing before a notary public or a Plan representative.

                                          58



         To be effective, an election to waive the Qualified Joint and Survivor
         Annuity must be made in writing during the 90 day period ending on the
         Annuity Starting Date and, if the Participant is married, it must be
         consented to by the Participant's Spouse. The election must designate a
         Beneficiary (or a form of benefits) that may not be changed (except
         back to a Qualified Joint and Survivor Annuity) without the Spouse's
         consent, unless the Spouse's original consent expressly permits
         designations by the Participant without any requirements of further
         consent by the Spouse. The Spouse's consent must be given in writing
         during the 90 day period ending on the Annuity Starting Date, must
         acknowledge the effect of the election and the consent, and must be
         witnessed by a Plan representative or notary public. If the Participant
         establishes to the satisfaction of a Plan representative that the
         Spouse's written consent cannot be obtained because there is no Spouse
         or the Spouse cannot be located, the Spouse's consent will be deemed to
         have been given. If a Participant is legally separated from his Spouse
         or has been abandoned by his Spouse (within the meaning of local law)
         and the Participant has a court order to such effect, the Spouse's
         consent will not be required unless a Qualified Domestic Relations
         Order provides otherwise. Any Spousal consent will be valid only with
         respect to the Spouse who signs the consent, or in the event of a
         deemed consent, the designated Spouse. If a Participant's Spouse is
         legally incompetent to give consent, the Spouse's legal guardian (even
         if the guardian is the Participant) may give consent. A Participant may
         revoke a prior effective election at any time prior to the receipt of
         benefits.

         (a)      SINGLE-LIFE OPTION

                  A married Participant whose normal form of pension is a
                  Qualified Joint and Survivor Annuity may elect, in lieu of all
                  payments otherwise payable, a single-life pension that
                  provides payments to the Participant in equal monthly
                  installments throughout his lifetime, ceasing with the
                  installment due on the first day of the calendar month in
                  which the Participant dies. Each monthly installment will be
                  equal to 1/12th of the Annual Pension as determined pursuant


                                       59


                  to Article 4 (Amount of Life-Only Pension), Article 5
                  (Severance from Service-Vesting) or Article 6 (Spouse's
                  Benefit), whichever is applicable.

         (b)      CONTINGENT PENSION OPTION

                  A Participant may elect, in lieu of all payments otherwise
                  payable on and after the Option Effective Date, the Contingent
                  Pension Option providing payments as follows:

                  (1)      To the Participant:

                           A reduced pension beginning on the Option Effective
                           Date, with subsequent monthly payments payable on the
                           first day of each subsequent calendar month
                           throughout his remaining lifetime, terminating with
                           the payment due on the first day of the calendar
                           month in which he dies. The reduced amount payable to
                           the Participant will be determined in accordance with
                           the Participant's choice of the 100 percent, 66 2/3
                           percent, or 50 percent option and will be the
                           Actuarial Equivalent of the amount that would
                           otherwise be paid to the Participant under the
                           single-life annuity option applicable to him pursuant
                           to Subsection 7.2(a) (Optional Forms of Retirement
                           Income). An option cannot be elected, modified, or
                           rescinded after the Option Effective Date.

                           If a Participant has an annual accrued benefit under
                           the MRP or the RIP as of December 31, 1997, the
                           reduced pension payable to him will not be less than
                           the Participant's annual accrued benefit under the
                           MRP or the RIP as of December 31, 1997, multiplied by
                           (A) for the 100 percent option, the applicable
                           MRP/RIP Spousal and Contingent Annuitant Benefit
                           factor from the table in Addendum C to the Plan, or
                           (B) for the 50 percent


                                       60


                           option, the applicable 50 percent Contingent
                           Annuitant Benefit factor from the table in
                           Addendum D to the Plan.

                  (2)      To the Contingent Annuitant designated by the
                           Participant at the time he elects this option:

                           A contingent pension beginning on the first day of
                           the calendar month following the calendar month in
                           which the Participant's death occurs if the
                           Participant dies on or after the Option Effective
                           Date, and if the Contingent Annuitant is then living,
                           with subsequent monthly payments payable on the first
                           day of each subsequent calendar month throughout the
                           Contingent Annuitant's remaining lifetime,
                           terminating with the monthly payment due on the first
                           day of the calendar month in which the Contingent
                           Annuitant dies. However, if the Participant had
                           elected to defer his pension payments, the Contingent
                           Annuitant may elect, at any time prior to the date
                           contingent pension payments actually begin, to have
                           the payments begin after the Participant's death on
                           the first day of any calendar month coincident with
                           or prior to the date the Participant had elected to
                           start receiving his pension payments.

                           The monthly amount payable to the Contingent
                           Annuitant will be a specified percentage of the
                           reduced pension payable under this option to the
                           Participant, as specified by the Participant. This
                           percentage will be either 100 percent, 66 2/3
                           percent, or 50 percent. Notwithstanding the
                           foregoing, if the Contingent Annuitant is other than
                           the Participant's Spouse, the Contingent Pension
                           Option may be elected only if the requirements of 26
                           C.F.R. Section 1.401(a)(9)-2 are satisfied.

                  An option will not become effective, and payments will be made
                  as otherwise provided in the Plan as if this option had never
                  been elected, if: (a) the Participant


                                       61


                  is not living on the Option Effective Date, (b) the
                  Participant does not, within 90 days after his election, and
                  not later than the Option Effective Date, furnish evidence,
                  satisfactory to the Committee, of the age of his Contingent
                  Annuitant, or (c) the Participant elects, prior to the Option
                  Effective Date, to cancel the option. If the Participant's
                  Contingent Annuitant predeceases the Participant after the
                  contingent pension payments have begun, the option will be
                  canceled and no longer effective, and payments will be made
                  to the Participant in the form of an unreduced single-life
                  annuity applicable to him pursuant to Subsection 7.2(a)
                  (Optional Forms of Retirement Income) as of the first day
                  of the month after the Participant notifies the Committee
                  of the Contingent Annuitant's death.

         (c)      LIFE WITH TEN YEAR CERTAIN OPTION

                  A Participant may, in lieu of all payments otherwise payable
                  on and after the Option Effective Date, elect the Life with
                  Ten Year Certain Option providing payments as follows:

                  (1)      To the Participant:

                           A reduced pension beginning on the Option Effective
                           Date with subsequent monthly payments payable on the
                           first day of each calendar month thereafter for ten
                           years or throughout his remaining lifetime, whichever
                           is longer, terminating with the payment due on the
                           first day of the calendar month after the end of ten
                           years or in which the Participant dies, whichever is
                           applicable.

                           If the Participant elects the Life with Ten Year
                           Certain Option, the amount of the Participant's
                           Nonforfeitable annual pension will be determined by
                           multiplying his Annual Pension by the appropriate
                           Life with Ten Year Certain Factor as obtained from
                           the following table:


                                       62




                               LIFE WITH TEN YEAR CERTAIN FACTORS
                               ----------------------------------
                       AGE            FACTOR           AGE           FACTOR
                       ---            ------           ---           ------
                                                            
                       50             .9869            70            .9065
                       51             .9855            71            .8977
                       52             .9839            72            .8883
                       53             .9823            73            .8780
                       54             .9803            74            .8670
                       55             .9783            75            .8553
                       56             .9760            76            .8429
                       57             .9734            77            .8299
                       58             .9706            78            .8163
                       59             .9674            79            .8021
                       60             .9639            80            .7875
                       61             .9601            81            .7723
                       62             .9558            82            .7569
                       63             .9511            83            .7413
                       64             .9461            84            .7253
                       65             .9407            85            .7090
                       66             .9347            86            .6925
                       67             .9285            87            .6758
                       68             .9217            88            .6591
                       69             .9145            89            .6424
                                                       90            .6259


                  (2)      To the Beneficiary designated by the Participant at
                           the time he elects this option:

                           If the Participant dies prior to the end of ten years
                           from the date of his initial pension payment, a
                           contingent pension payable on the first day of the
                           calendar month following the calendar month in which
                           the Participant dies if the Participant's death is on
                           or after the Option Effective Date and if the
                           Beneficiary is then living, with subsequent monthly
                           payments being payable on the first day of each
                           calendar month for the balance of ten years from the
                           date of the Participant's Option Effective Date.


                                      63


         (d)      LIFE ANNUITY LEVEL INCOME OPTION

                  A Participant who retires prior to reaching age 62 may elect,
                  in lieu of all payments otherwise payable on and after the
                  Option Effective Date, the Life Annuity Level Income Option,
                  which provides payments to the Participant that are adjusted
                  for the months before and after the Participant is eligible to
                  receive benefits under the Social Security Act at age 62.

                  The Participant will receive a reduced pension on the Option
                  Effective Date, with subsequent monthly payments payable on
                  the first day of each calendar month thereafter for his
                  remaining lifetime, terminating with the payment due on the
                  first day of the calendar month in which his death occurs. The
                  reduced pension the Participant receives will be calculated as
                  follows:

                  (1)      Subject to Paragraph (5), the Participant's Annual
                           Pension will be determined under Article 4 (Amount of
                           Life-Only Pension), Article 5 (Severance From
                           Service-Vesting), or Article 6 (Spouse's Benefit),
                           whichever is applicable.

                  (2)      Subject to Paragraph (5), the Participant's Reduced
                           Primary Social Security Benefit will be multiplied by
                           the appropriate Level Income Option factor from the
                           table in Addendum E to the Plan.

                  (3)      The sum of the amounts determined under Paragraphs
                           (1) and (2) will equal the Level Income Option
                           benefit payable to the Participant prior to age 62,
                           which is the first date he is eligible to begin
                           receiving Social Security Act benefits.


                                       64


                  (4)      The Level Income Option benefit payable to the
                           Participant after he reaches age 62 will equal the
                           amount determined in Paragraph (3), minus the
                           Participant's Reduced Primary Social Security
                           Benefit.

                  (5)      If a Participant has an annual accrued benefit under
                           the MRP or the RIP as of December 31, 1997, the Level
                           Income Option benefit payable to that Participant
                           will not be less than the sum of (A) and (B), where
                           (A) equals the Participant's annual accrued benefit
                           under the MRP or the RIP as of December 31, 1997, and
                           (B) equals the Participant's Reduced Primary Social
                           Security Benefit multiplied by the appropriate
                           MRP/RIP Level Income Option factor from the table in
                           Addendum F to the Plan.

         (e)      100 PERCENT CONTINGENT ANNUITANT LEVEL INCOME OPTION

                  A Participant who retires prior to reaching age 62 may, in
                  lieu of all payments otherwise payable on after the Option
                  Effective Date, elect the 100 Percent Contingent Annuitant
                  Level Income Option, which provides payments as follows:

                  (1)      To the Participant:

                           A reduced pension that is adjusted for the months
                           before and after the Participant is eligible to
                           receive benefits under the Social Security Act at age
                           62. The Participant will receive a reduced pension on
                           the Option Effective Date, with subsequent monthly
                           payments payable on the first day of the calendar
                           month thereafter for his remaining lifetime,
                           terminating with the payment due on the first day of
                           the calendar month in which the Participant dies.

                           The reduced pension the Participant receives under
                           this option will be calculated as follows:


                                       65


                           (A)      Subject to Subparagraph (F), the
                                    Participant's Annual Pension will be
                                    determined under Article 4 (Amount of
                                    Life-Only Pension), Article 5 (Severance
                                    From Service-Vesting), or Article 6
                                    (Spouse's Benefit), whichever is applicable.

                           (B)      The Participant's Annual Pension will be
                                    converted to a reduced pension based on the
                                    100 percent Contingent Pension Option under
                                    Subsection 7.2(b) (Optional
                                    Forms of Retirement Income).

                           (C)      Subject to Subparagraph (F), the
                                    Participant's Reduced Primary Social
                                    Security Benefit will be multiplied by the
                                    appropriate Level Income Option factor from
                                    the table in Addendum E to the Plan.

                           (D)      The sum of the amounts determined under
                                    Subparagraphs (B) and (C) will equal the
                                    Level Income Option benefit payable to the
                                    Participant prior to age 62, which is the
                                    first date he is eligible to begin receiving
                                    Social Security Act benefits.

                           (E)      The Level Income Option benefit payable to
                                    the Participant after he attains age 62 will
                                    equal the amount determined in Subparagraph
                                    (D), minus the Participant's Reduced Primary
                                    Social Security Benefit.

                           (F)      If a Participant has an annual accrued
                                    benefit under the MRP or the RIP as of
                                    December 31, 1997, the Level Income Option
                                    benefit payable to that Participant will not
                                    be less than the sum of (i) and (ii), where
                                    (i) equals the Participant's annual accrued
                                    benefit under the MRP or RIP as of December
                                    31, 1997, converted to a reduced pension
                                    based on the 100 percent Contingent
                                    Annuitant Pension Option under Subsection
                                    7.2(b) (Optional Forms of Retirement


                                       66


                                    Income), and (ii) equals the Participant's
                                    Reduced Primary Social Security Benefit
                                    multiplied by the appropriate MRP/RIP Level
                                    Income Option factor from the table in
                                    Addendum F to the Plan.

                  (2)      To the Contingent Annuitant:

                           A contingent pension beginning on the first day of
                           the calendar month following the calendar month in
                           which the Participant dies if the Participant dies on
                           or after the Option Effective Date, and if the
                           Contingent Annuitant is then living; with subsequent
                           monthly payments payable on the first day of each
                           subsequent calendar month throughout the Contingent
                           Annuitant's remaining lifetime, terminating with the
                           monthly payment due on the first day of the calendar
                           month in which the Contingent Annuitant dies.
                           However, if the Participant had elected to defer his
                           pension payments, the Contingent Annuitant may elect
                           at any time prior to the date contingent pension
                           payments actually begin, to have the payments begin
                           after the Participant's death on the first day of any
                           calendar month coincident with or prior to the date
                           the Participant had elected to start receiving
                           payments.

                           The monthly amount payable to the Contingent
                           Annuitant will equal 100 percent of the reduced
                           pension that would have been payable under this
                           option to the Participant.

                  An option will not become effective, and payments will be made
                  as otherwise provided in the Plan as if this option had never
                  been elected, if: (a) the Participant is not living on the
                  Option Effective Date, (b) the Participant does not, within 90
                  days after his election, but not later than the Option
                  Effective Date, furnish evidence, satisfactory to the
                  Committee, of the age of his Contingent Annuitant, or (c) the
                  Participant elects, prior to the Option Effective Date, to
                  cancel the option.


                                       67


                  If the Participant's Contingent Annuitant predeceases the
                  Participant after the contingent pension payments have begun,
                  the option will be canceled and no longer effective, and
                  payments will be made to the Participant in the form of a
                  reduced single-life annuity level income option applicable to
                  him pursuant to Subsection 7.2(d) (Optional Forms of
                  Retirement Income) as of the first day of the month
                  after the Participant notifies the Committee of the Contingent
                  Annuitant's death. An option cannot be elected, modified, or
                  rescinded after the Option Effective Date.

                                    ARTICLE 8

                               PAYMENT OF PENSION

8.1      TIMING OF PAYMENT

         This Section is subject to the provisions of Section 8.6 (Required
         Payment of Benefits).

         A Participant who ceases to be an Employee as of his Normal Retirement
         Date will begin receiving any pension payable to him under the Plan as
         of his Normal Retirement Date. A Participant who continues as an
         Employee after his Normal Retirement Date will begin receiving the
         pension payable to him under the Plan as of the first day of the
         calendar month coincident with or following his Severance from Service.

         A Participant who ceases to be an Employee as of an Early Retirement
         Date will begin receiving his pension at his Normal Retirement Date
         unless he elects to begin receiving his pension on either his Early
         Retirement Date or the first day of a calendar month between his Early
         Retirement Date and his Normal Retirement Date (the "Deferred Pension
         Payment Date"); provided he has made the required election, in a manner
         prescribed by the Committee, prior to the date he wants his pension to
         begin.


                                       68


8.2      METHOD OF PAYMENT

         Unless specified elsewhere in the Plan, all pension payments under the
         Plan will normally be payable in equal monthly installments, with each
         monthly installment equal to 1/12th of the annual amount payable.
         Pension payments will be (a) made by check to the order of the
         Participant, his Spouse, or his Contingent Annuitant, as applicable,
         and mailed to that person's address as it appears on the Employer's
         records, or (b) deposited directly into an account of the Participant,
         his Spouse, or his Contingent Annuitant, as applicable, maintained by
         the recipient at a bank, savings and loan, or other financial
         institution, as directed by the recipient.

8.3      SMALL BENEFITS

         Notwithstanding the provisions of Sections 6.2 (Method of Payment of
         Spouse's Benefit) and 7.2 (Optional Forms of Retirement Income), where
         the Actuarial Equivalent present value of a Participant's
         Nonforfeitable pension or Spouse's benefit under Section 6.1
         (Determination of Spouse's Benefit) does not exceed $5,000, the
         Committee or its designee will pay the Nonforfeitable pension or
         Spouse's benefit (if applicable) in a single-sum cash payment equal to
         the Actuarial Equivalent of the pension or Spouse's benefit otherwise
         payable.

8.4      FACILITY OF PAYMENT

         If any benefit under the Plan is payable to a person whom the Committee
         knows is a minor or otherwise under legal incapacity, the Committee or
         its designee may have the payment made to the legal guardian of that
         person or to the person or organization as a court of competent
         jurisdiction may direct. To the extent permitted by law, any payment
         under this Section will be a complete discharge of any liability under
         the Plan to that person.

                                          69



8.5      BENEFITS FOR LATE RETIREES, REEMPLOYED RETIREES AND REEMPLOYED
         TERMINATED VESTED PARTICIPANTS

         (a)      LATE RETIREES

                  A Participant may postpone his retirement and continue his
                  employment with an Employer after his Normal Retirement Date.
                  If a Participant continues employment after his Normal
                  Retirement Date, he will continue to accrue years of Service
                  and years of Participation during this time period up to the
                  date of his actual retirement. The Participant's benefit will
                  be calculated under Article 4 (Amount of Life-Only Pension),
                  Article 5 (Severance From Service-Vesting), or Article 6
                  (Spouse's Benefit), whichever is applicable, as of his
                  Severance from Service Date.

         (b)      SUSPENSION OF RETIREMENT BENEFIT NOTICE FOR PARTICIPANT WHO
                  CONTINUES EMPLOYMENT AFTER HIS NORMAL RETIREMENT DATE

                  When a Participant continues in employment with an Employer
                  beyond his Normal Retirement Date, benefits will not begin
                  during that continued period of employment unless required
                  under Section 8.6 (Required Payment of Benefits). The
                  Participant will be sent a notification described in Section.
                  2530.203-3(b)(4) of the Department of Labor regulations,
                  provided that the suspension of benefits notice is limited to
                  periods of service within the context of Section.
                  2530.203-3(c) of the Department of Labor regulations.

         (c)      REEMPLOYED RETIREES AND REEMPLOYED VESTED TERMINATED
                  PARTICIPANTS

                  A Reemployed Retiree or Reemployed Vested Terminated
                  Participant who resumes employment will continue to receive
                  any pension benefit payments under the Plan to which he is
                  entitled, and will begin to receive any pension benefit

                                     70



                  payments under the Plan, as if he were not reemployed. When
                  a Reemployed Retiree or Reemployed Terminated Vested
                  Participant again incurs a Severance from Service, his
                  Annual Pension will, subject to all of the provisions of the
                  Plan, be recalculated by aggregating his years of
                  Participation and by considering his Earnings during his
                  period of reemployment; provided, however, that the
                  Participant's benefits as recalculated will not be less than
                  the Actuarial Equivalent of his Annual Pension prior to his
                  reemployment. The Participant's recalculated Annual Pension
                  will be reduced by the Actuarial Equivalent of the pension
                  benefits already paid to the Participant. Any pension benefit
                  payable to a Spouse or Contingent Annuitant will also be based
                  on the Participant's pension benefit, as so recalculated and
                  reduced.

         (d)      QUESTIONS CONCERNING EFFECT ON REEMPLOYMENT

                  The Plan's benefit claims procedures may be used by an
                  individual who has questions concerning the effect of
                  reemployment by his Employer upon his pension benefit
                  payments.

         (e)      ADDITIONAL RULES AND PROCEDURES

                  The Committee is authorized to develop more fully the
                  provisions of this Section by establishing, from time to time,
                  various rules and procedures consistent with ERISA, the Code,
                  and the Plan.

8.6      REQUIRED PAYMENT OF BENEFITS

         This Section has been included in the Plan to comply with the
         limitations imposed by Code paragraphs 401(a)(9) and 401(a)(14), and it
         will not be construed as providing for a form of benefit not otherwise
         provided under the Plan. Notwithstanding any provision of this Plan to
         the contrary, any distribution under the Plan will be made in
         accordance with

                                        71



         regulations under Code paragraph 401(a)(9), including proposed federal
         income tax regulation 1.401(a)(9)-2, and will comply with the following
         rules:

         (a)      Unless a Participant elects otherwise, the payment of his
                  benefits under the Plan must begin not later than the 60th day
                  after the end of the Plan Year in which occurs the latest of:
                  (1) the Participant's 65th birthday; (2) the 10th anniversary
                  of the Plan Year in which the Participant began participation
                  in the Plan; or (3) termination of the Participant's
                  employment with the Employer.

         (b)      For purposes of this Article, "required beginning date" means
                  (1) with respect to a Participant who is not a 5 percent owner
                  as described in Code section 416 and who did not reach age
                  70 1/2 before January 1, 1997, April 1 of the calendar year
                  following the later of (A) the calendar year in which the
                  Participant reaches age 70 1/2, or (B) the calendar year in
                  which the Participant retires; or (2) with respect to a
                  Participant who is a 5 percent owner as described in Code
                  section 416, or any Participant who reached age 70 1/2 before
                  January 1, 1997, April 1 of the calendar year following the
                  calendar year in which the Participant reaches age 70 1/2. The
                  Plan will provide an actuarial increase to a Participant's
                  interest in the Plan for the period beginning on the April 1
                  of the calendar year following the calendar year in which the
                  Participant reaches age 70 1/2 and ending on the date on which
                  benefits begin after the Participant's retirement in an amount
                  sufficient to satisfy Code paragraph 401(a)(9). The benefits
                  payable to the Participant at the end of the period described
                  in the preceding sentence will be no less than the Actuarial
                  Equivalent of the benefit that would have been payable to the
                  Participant as of the April 1 of the calendar year following
                  the calendar year in which the Participant reached 70 1/2.

         (c)      Notwithstanding any other provision of this Plan, the entire
                  interest of each Participant will be distributed either: (1)
                  in a lump sum payment not later than the required beginning
                  date, or (2) in a series of payments beginning not later than
                  the

                                            72



                  required beginning date over the life of the Participant
                  or over the lives of the Participant and the designated
                  Beneficiary (or over a period not extending beyond the life
                  expectancy of the Participant or the life expectancy of the
                  Participant and a designated Beneficiary). If the
                  Participant's interest is to be paid in the form of annuity
                  distributions under the Plan, payments under the annuity will
                  satisfy the following requirements:

                  (1)      The annuity distributions must be paid in periodic
                           payments made at intervals not longer than one year.

                  (2)      For purposes of computing the distribution period,
                           life expectancies or joint and last survivor
                           expectancies will not be recalculated.

                  (3)      Once payments have begun, the distribution period may
                           not be lengthened even if that period would be
                           shorter than the permitted maximum period.

                  (4)      Payments must either be non-increasing or increase
                           only as follows:

                           (A)      with any percentage increase in a specified
                                    and generally recognized cost-of-living
                                    index;

                           (B)      to the extent of the reduction to the amount
                                    of the Participant's payments to provide for
                                    a survivor benefit upon death, but only if
                                    the Beneficiary or Contingent Annuitant
                                    whose life was being used to determine the
                                    distribution period dies and the payments
                                    continue otherwise over the life of the
                                    Participant;

                           (C)      to provide cash refunds of employee
                                    contributions upon the Participant's death;
                                    or

                                      73



                           (D)      because of an increase in benefits under the
                                    Plan.

                  (5)      If the annuity is a life annuity (or a life annuity
                           with a period certain not exceeding 20 years), the
                           amount that must be distributed on or before the
                           Participant's required beginning date (or, in the
                           case of distributions after the death of the
                           Participant, the date distributions are required to
                           begin after the Participant's death) will be the
                           payment that is required for one payment interval.
                           The second payment need not be made until the end of
                           the next payment interval even if that payment
                           interval ends in the next calendar year. Payment
                           intervals are the periods for which payments are
                           received, e.g., bi-monthly, monthly, semi-annually or
                           annually. If the annuity is a period certain annuity
                           without a life contingency (or is a life annuity with
                           a period exceeding 20 years), periodic payments for
                           each distribution calendar year will be combined and
                           treated as an annual amount. The amount that must be
                           distributed by the Participant's required beginning
                           date (or, in the case of distributions after the
                           death of the Participant, the date distributions are
                           required to begin after the Participant's death) is
                           the annual amount for the first distribution calendar
                           year. The annual amount for other distribution
                           calendar years, including the annual amount for the
                           calendar year in which the Participant's required
                           beginning date (or the date distributions are
                           required to begin after the Participant's death)
                           occurs, must be distributed on or before December 31
                           of the calendar year for which the distribution is
                           required.

         (d)      If (1) the distribution of a Participant's interest has begun
                  in accordance with Subsection (c), and (2) the Participant
                  dies before his entire interest has been distributed to him,
                  the remaining portion of his interest will be distributed at
                  least as rapidly as under the method of distribution being
                  used under Subsection (c) as of the date of his death.

                                      74



         (e)      Except as provided in Subsection (f), if a Participant dies
                  before the distribution of his interest has begun in
                  accordance with Subsection (c), the Participant's entire
                  interest will be distributed within five years after his
                  death.

         (f)      For purposes of Subsection (c), any portion of a distribution
                  that is payable to (or for the benefit of) a designated
                  Beneficiary will be treated as completely distributed on the
                  date on which distribution began if:

                  (1)      that portion is to be distributed (in accordance with
                           regulations prescribed by the Secretary) over the
                           life of the designated Beneficiary (or over a period
                           not extending beyond the life expectancy of the
                           Beneficiary), and

                  (2)      distributions begin by the latest of (A) one year
                           after the date of the Participant's death, (B) any
                           later date that the Secretary may establish by
                           regulations, or (C) if the Beneficiary is the
                           Participant's surviving Spouse, the date on which the
                           Participant would have attained age 70-1/2.

         (g)      If the designated Beneficiary is the Participant's surviving
                  Spouse, and if the surviving Spouse dies before the
                  distributions to the Spouse begin, Subsections (c), (e), and
                  (f) will be applied as if the surviving Spouse were the
                  Participant.

         (h)      For purposes of Subsection (f), payment will be calculated by
                  use of the expected return multiples specified in Tables V and
                  VI of 26 C.F.R. Section.1.72-9. The life expectancy of a
                  designated Beneficiary will be calculated at the time payment
                  first commences without further recalculation.

         (i)      For purposes of Subsections (c), (d), (e), and (f), if any
                  amounts payable to a child of the Participant becomes payable
                  to the Participant's surviving Spouse and the child reaches
                  the age of majority, that amount will be treated as if it had
                  been paid to the surviving Spouse.

                                        75



         (j)      Unless paid to the surviving Spouse under a Qualified Joint
                  and Survivor Annuity, the method of distribution selected must
                  assure that at least 50 percent of the present value of the
                  amount available for distribution is paid within the
                  Participant's life expectancy.

         (k)      If a Participant reaches age 70 1/2 on or after January 1,
                  1997, but before January 1, 1999, the Plan will deem the
                  Participant's "required beginning date" to be April 1 of the
                  calendar year following the calendar year in which the
                  Participant reaches age 70 1/2 unless the Participant elects,
                  with his Spouse's consent, to defer commencement of his Plan
                  benefits until a date no later than April 1 of the calendar
                  year following the calendar year in which the Participant
                  retires.

8.7      DIRECT ROLLOVERS OF ELIGIBLE DISTRIBUTIONS

         Notwithstanding any provision of the Plan to the contrary that would
         otherwise limit a Distributee's election under this Section, a
         Distributee may elect, at the time and in the manner prescribed by the
         Committee, to have any portion of an Eligible Rollover Distribution
         paid directly to an Eligible Retirement Plan specified by the
         Distributee in a Direct Rollover.

                                    ARTICLE 9

                         RETIREE MEDICAL/DENTAL BENEFITS

9.1      PURPOSE

         This Article provides for the payment of certain Medical/Dental
         Benefits to Eligible Retirees and to their Dependents under the Plan.
         The Medical/Dental Benefits described in this Article are intended to
         meet the requirements of Code subsection 401(h) and its interpretive
         regulations.

                                      76



9.2      ELIGIBILITY

         Only Eligible Individuals will be eligible to receive Medical/Dental
         Benefits (or to have Medical/Dental Benefits paid on their behalf)
         under this Article.

9.3      SEPARATE ACCOUNT

         A Medical/Dental Benefits Account will be established and maintained
         with respect to contributions made to fund the benefits payable under
         this Article, which will be kept separate (for recordkeeping purposes
         only) from the amounts contributed to the Plan to fund all other
         benefits. The funds in the Medical/Dental Benefits Account may be
         invested with funds contributed to the Plan to fund other benefits
         without identification of which assets of the Plan are allocable to the
         Medical/Dental Benefits Account and which are allocable to fund other
         benefits. Where the assets are not so allocated, however, the earnings
         on the assets will be allocated in a reasonable manner between the
         Medical/Dental Benefits Account and the amounts funding other benefits
         under the Plan.

9.4      IMPOSSIBILITY OF DIVERSION PRIOR TO SATISFACTION OF ALL LIABILITIES

         Prior to the satisfaction of all liabilities under this Article to
         provide for the payment of Medical/Dental Benefits, no part of the
         corpus or income of the Medical/Dental Benefits Account may be (within
         the taxable year or thereafter) used for, or diverted to, any purpose
         other than providing Medical/Dental Benefits or paying any reasonable
         expenses attributable to the administration of the Medical/Dental
         Benefits Account.

9.5      REVERSION UPON SATISFACTION OF ALL LIABILITIES

         Notwithstanding the provisions of Section 14.8 (No Diversion of
         Assets), any amounts that are contributed to fund Medical/Dental
         Benefits and that remain in the Medical/Dental Benefits Account upon
         the satisfaction of all liabilities arising out of the

                                       77



         operation of this Article are to be returned to Eligible Retirees,
         in proportion to their respective total contributions to the
         Medical/Dental Benefits Account.

9.6      FORFEITURES

         In the event an Eligible Individual's interest in the Medical/Dental
         Benefits Account is forfeited prior to termination of the Plan, an
         amount equal to the amount of the forfeiture will be applied as soon as
         possible to reduce Employer contributions to the Plan to fund the
         Medical/Dental Benefits under this Article.

9.7      EMPLOYER CONTRIBUTIONS TO THE MEDICAL/DENTAL BENEFITS ACCOUNT

         For each Plan Year, the Employer will contribute to the Medical/Dental
         Benefits Account the amount necessary to fund Medical/Dental Benefits,
         as determined by the Plan's actuaries, provided that the contributions
         mandated by this sentence will be reasonable, and will be reduced (but
         not below zero) as required so that the aggregate actual contributions
         made to the Medical/Dental Benefits Account will not exceed 25% of the
         total aggregate actual contributions (other than any contributions to
         fund past service credits) made to the Plan. All contributions to the
         Medical/Dental Benefits Account will be paid to the Trustee, who will
         hold them in Trust for the payment of Medical/Dental Benefits under
         this Article. At the time an Employer makes a contribution to the Plan,
         it will designate the portion allocable to the Medical/Dental Benefits
         Account.

9.8      MEDICAL/DENTAL BENEFITS

         The Medical/Dental Benefits under the Plan will be those benefits
         payable to or on behalf of Eligible Individuals in accordance with the
         terms of a Medical/Dental Plan.

                                      78




                                   ARTICLE 10

                            NONALIENATION OF BENEFITS

The Pension Fund will not in any manner be liable for, or subject to, the
debts or liabilities of any Participant, Beneficiary, Contingent Annuitant,
or Spouse, or any other person entitled to any benefit. No payee may assign
any payment due him under the Plan. No pension or other benefits at any time
payable from the Pension Fund will be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, attachment, garnishment,
levy, execution, or other legal or equitable process or encumbrance of any
kind. Any attempt to alienate, sell, transfer, assign, or otherwise encumber
any such benefit, whether presently or thereafter payable, will be void.
However, the payment of benefits under the Plan will be made in accordance
with the applicable requirements of any Qualified Domestic Relations Order
entered by a court of competent jurisdiction or a state administrative
agency. The Committee will establish procedures to determine whether the
domestic relations orders are Qualified Domestic Relations Orders and to
administer distributions under Qualified Domestic Relations Orders.

                                   ARTICLE 11

                                 ADMINISTRATION

11.1     ADMINISTRATOR

         The Committee will be the administrator of the Plan. The Committee will
         consist of the number of members, not fewer than three, that is
         specified from time to time by the Board of Directors. All members of
         the Committee will be Employees or officers of an Employer. All members
         of the Committee will serve without compensation.





                                      79





11.2     REMOVAL AND REPLACEMENT OF COMMITTEE MEMBERS

         The members of the Committee will serve at the pleasure of the Board of
         Directors and may be removed by the Board of Directors with or without
         cause. Any vacancy among the members will be filled by the Board of
         Directors.

11.3     DISQUALIFICATION AND RESIGNATION

         On the date when a Committee member is neither an Employee nor an
         officer of an Employer, he will be disqualified from membership on the
         Committee. A member of the Committee may resign by delivering his
         written resignation to any other member of the Committee. A resignation
         will become effective on the date specified in the instrument of
         resignation.

11.4     CHAIRPERSON, SERVICES, AND COUNSEL

         The members of the Committee will elect one of their members as
         Chairperson and will elect a Secretary, who may be, but need not be,
         one of the members of the Committee. Cinergy will provide the
         Committee, at Cinergy's expense, with such clerical, accounting,
         actuarial, and other services as may be reasonably required by the
         Committee in carrying out its responsibilities. The Committee may
         employ counsel, who may be, but need not be, counsel to Cinergy.

11.5     MEETINGS

         The Committee will hold meetings upon such notice, at the places, and
         at the times as the Committee may from time to time determine, but no
         less often than quarterly.



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11.6     QUORUM

         A majority of the members of the Committee at the time holding office
         will constitute a quorum for the transaction of business. All
         resolutions and other action taken by the Committee at any meeting will
         be by the vote of the majority of the members of the Committee present
         at the meeting.

11.7     ACTION WITHOUT MEETING

         Any decision, order, direction, or other action, including orders and
         directions to the Trustee or Insurance Company, made in writing signed
         by a majority of the members of the Committee at the time holding
         office will constitute valid and effective action of the Committee,
         whether or not the matter to which that decision, order, direction, or
         other action pertains had already been acted upon at a duly called and
         held meeting of the Committee.

11.8     NOTICE TO TRUSTEE OF CHANGES IN MEMBERSHIP

         The Trustee will not be charged with notice of any change in the
         membership of the Committee unless and until it has received a
         certified copy of the resolution or vote of the Board of Directors
         effecting the change.

11.9     CORRECTION OF DEFECTS

         The Committee may correct any defect or supply any omission or
         reconcile any error or inconsistency in its previous proceedings,
         decisions, orders, directions, or other actions in a manner and to such
         extent as it will deem advisable to carry out the purposes of the Plan.



                                      81





11.10    RELIANCE UPON LEGAL COUNSEL

         The members of the Committee, and Cinergy, and Cinergy's officers and
         directors, will be entitled to rely upon all opinions given by legal
         counsel selected by the Committee.

11.11    EXPENSES

         In the performance of its duties, the Committee is authorized to incur
         reasonable expenses, including counsel fees. All operating expenses of
         the Plan, including insurance premiums payable to the Pension Benefit
         Guaranty Corporation, fees for professional services, and technical or
         clerical assistance, will be paid from the Pension Fund, to the extent
         not paid by the Employer. Investment expenses and any federal, state,
         or local taxes that may be levied against the Pension Fund will also be
         paid from the Pension Fund.

11.12    INDEMNIFICATION

         Cinergy agrees to indemnify and hold harmless each member of the
         Committee against any cost, expense, or liability (including any sum
         paid in settlement of any claim with the approval of the Board of
         Directors) arising out of any act or omission to act as a member of the
         Committee, except only acts and omissions representing willful
         misconduct, fraud, or lack of good faith.

11.13    POWERS AND DUTIES OF COMMITTEE

         Subject to the specific limitations stated in this document, the
         Committee will have the following powers, duties, and responsibilities:

         (a)      to carry out the Plan's general administration;



                                      82





         (b)      to cause to be prepared all forms necessary or appropriate for
                  the Plan's administration;

         (c)      to keep appropriate books and records, including minutes of
                  the Committee's meetings;

         (d)      to determine, consistent with the provisions of this document,
                  the manner in which the Pension Fund will be allocated and
                  disbursed;

         (e)      to give directions to the Trustee or Insurance Company as to
                  the amounts to be disbursed to Participants and others under
                  the Plan's provisions;

         (f)      to determine, with discretionary authority and consistent with
                  the provisions of this document, all questions of the
                  eligibility, rights, and status of Participants and others
                  under the Plan;

         (g)      to exercise all other powers and duties specifically conferred
                  upon the Committee elsewhere in this document and the Trust
                  Agreement or Group Annuity Contract;

         (h)      to exercise all duties and responsibilities imposed by ERISA
                  upon the Committee as the Plan's administrator;

         (i)      to interpret, with discretionary authority, the provisions of
                  the Plan and to resolve, with discretionary authority, all
                  disputed questions of Plan interpretation and benefit
                  eligibility;

         (j)      to employ agents to assist it in performing its administrative
                  duties; and

         (k)      to allocate and delegate its fiduciary responsibilities in
                  accordance with ERISA section 405.



                                      83





         The Committee will at all times make similar decisions on similar
         questions involving similar circumstances. Subject to the provisions
         of ERISA and to the provisions of Article 12 (Benefit Claims
         Procedures) relating to claims, all decisions of the Committee made
         in good faith on all matters within the scope of its authority under
         the provisions of this document will be final and binding upon all
         persons.


11.14    MATTERS SPECIFICALLY EXCLUDED FROM JURISDICTION

         Notwithstanding any other provision of this document, the Committee
         will have no power, duty, or authority with respect to determination of
         the amounts to be contributed by the Employer to the Pension Fund or
         Trust Fund.

                                   ARTICLE 12

                            BENEFIT CLAIMS PROCEDURES

Claims for benefits under the Plan will be made in writing to the Committee
or its designee. If a claim for benefits is wholly or partially denied, the
Committee or its designee will notify the Claimant of the claim's denial
within a reasonable period of time not to exceed 90 days after the claim's
receipt, unless special circumstances require an extension of time for
processing, in which case notification will be rendered as soon as possible,
but not later than 180 days after the claim's receipt. If an extension of
time for processing is required, written notice of the extension will be
furnished to the Claimant prior to the termination of the initial 90 day
period. The extension notice will indicate the special circumstances
requiring an extension of time and the date by which the Plan expects to
render final notification. The notice of denial will be written in a manner
calculated to be understood by the Claimant and will set forth (a) the
specific reason or reasons for the denial, (b) a specific reference to the
pertinent Plan provisions on which the denial is based, (c) a description of
any additional material or information necessary for the Claimant to perfect
the claim and an explanation of why that material or information is
necessary, and (d) appropriate information as to the steps to be taken if the
Claimant wishes to submit the claim for review. The Committee or its designee
is authorized to develop more fully



                                      84





the Plan's benefit claims procedures by establishing from time to time,
various rules and procedures consistent with ERISA.

Within 60 days after the Claimant's receipt of written notice of the claim's
denial, the Claimant, or his duly authorized representative, may file a
written request with the Committee requesting a full and fair review of the
denial of the Claimant's claim for benefits. In connection with the
Claimant's appeal of the denial of his claim for benefits, the Claimant may
review pertinent documents in the Committee's possession and may submit
issues and comments in writing. The Committee will make a decision on review
promptly, but not later than the date of the Committee meeting that
immediately follows the receipt of the Claimant's request for review, unless
the request for review is filed within 30 days before the date of that
meeting. In that case, a decision will be made as soon as possible, but not
later than the date of the second Committee meeting following receipt of the
request for review. If special circumstances require a further extension of
time for processing, a decision will be rendered not later than the third
Committee meeting following receipt of the Claimant's request for review. If
an extension of time for review is required because of special circumstances,
written notice of the extension will be sent to the Claimant before the
extension begins. The extension notice will indicate the special
circumstances requiring an extension of time and the date by which the
Committee expects to render the final decision. The decision on review will
be in writing and written in a manner calculated to be understood by the
Claimant, will set forth the specific reason or reasons for the decision, and
will contain a specific reference to the pertinent Plan provisions on which
the decision is based. If the decision on review is not furnished to the
Claimant within 60 days of receipt of the request for review, or within 120
days after its receipt if special circumstances required an extension of
time, the claim will be deemed denied on review.

                                   ARTICLE 13

                            FUNDING POLICY AND METHOD

Cinergy will establish and carry out a funding policy and method for the Plan
consistent with (a) the Plan's past experience, (b) the Plan's anticipated
experience, (c) the Plan's objectives,



                                      85





(d) the requirements of ERISA, and (e) the requirements of the Code. Cinergy
will (a) communicate the funding policy and method to the Committee, (b)
periodically review the funding policy and method, and (c) document all
action taken with respect to the funding policy and method.

                                   ARTICLE 14

                                  MISCELLANEOUS

14.1     NO ENLARGEMENT OF EMPLOYEE BENEFITS

         This Plan is strictly a voluntary undertaking on the part of each
         Employer and will not be deemed to constitute a contract between an
         Employer and any Employee or to be consideration for, or an inducement
         to, or a condition of, the employment of any Employee. Nothing
         contained in the Plan will be deemed to give any Employee the right to
         be retained in the service of an Employer or to interfere with the
         right of the Employer to discharge any Employee at any time. No
         Employee, prior to his retirement under conditions of eligibility for
         pension benefits or prior to his satisfying the Vesting Requirement
         will have any right to, or interest in, any portion of any fund arising
         from his Employer's contributions under this Plan or, in any event,
         other than as specifically provided in the Plan. No person will have
         any right to pension benefits except to the extent provided in the
         Plan.

14.2     REEMPLOYMENT

         If an Eligible Employee incurs a Severance from Service and is later
         reemployed by an Employer, his two (or more) periods of employment
         will, subject to all of the provisions of the Plan, be aggregated for
         the purpose of determining his Year of Eligibility Service, his years
         of Participation, and his years of Service.



                                      86





14.3     QUALIFIED MILITARY SERVICE

         Notwithstanding any provision of this Plan to the contrary,
         contributions, benefits, and service credits with respect to qualified
         military service will be provided in accordance with Code subsection
         414(u)

14.4     NOTICE OF ADDRESS

         Each Participant, Retired Participant, Terminated Vested Participant,
         Beneficiary, Contingent Annuitant, and Spouse entitled to benefits
         under the Plan must submit to the Committee or its designee his post
         office address and each change of post office address. Any
         communication, statement, or notice addressed to a person at his latest
         post office address filed with the Committee or its designee will, upon
         deposit in the United States mail with postage prepaid, be binding upon
         that person for all purposes of the Plan, and neither the Insurance
         Company, the Committee, nor the Trustee will be obliged to search for,
         or to ascertain the whereabouts of, any person.

14.5     DATA

         Participants, Retired Participants, Terminated Vested Participants,
         Beneficiaries, Contingent Annuitants, and Spouses must furnish to the
         Committee, the Insurance Company, and the Trustee any documents,
         evidence, or information that the Committee, the Insurance Company, or
         the Trustee considers necessary or desirable for the purpose of
         administering the Plan, or to protect the Committee, the Insurance
         Company, or Trustee; and it will be a condition of the Plan that each
         person must furnish this information promptly and sign required
         documents before any benefits become payable under the Plan.



                                      87





14.6     NO INDIVIDUAL LIABILITY

         It is the express purpose and intention of the Plan that, except as
         otherwise required by law, no individual liability whatever will attach
         to, or be incurred by, the shareholders, officers, or members of the
         board of directors of any Employer, or the Committee, or its members,
         or any fiduciary designated pursuant to Section 11.13 (Powers and
         Duties of Committee), or any representatives appointed by Cinergy under
         the Plan, under or by reason of any of the terms or conditions of the
         Plan.

14.7     PARTICIPANT'S STATEMENT OF AGREEMENT

         Cinergy will have the right, at any time, to require any Participant to
         agree in writing to be bound by the Plan's provisions. However, the
         absence of an agreement will not relieve any Participant from being
         legally bound by the provisions of the Plan.

14.8     NO DIVERSION OF ASSETS

         None of the assets of the Pension Fund may be used for, or diverted to,
         purposes other than the exclusive benefit of the Participants and their
         Beneficiaries. However, nothing in this Section will prohibit the
         return to the Employers, in accordance with the provisions of ERISA
         subsection 403(c), of a contribution (or a portion of a contribution)
         by the Employers to the Pension Fund if the contribution is (a) made by
         reason of mistake of fact, (b) conditioned on the initial qualification
         of the Plan under Code subsection 401(a), or (c) conditioned upon its
         deductibility under Code section 404 and the deduction is not fully
         allowed.

14.9     GOVERNING LAWS

         The Plan will be construed and administered according to the internal
         laws of the State of Ohio to the extent that those laws are not
         preempted by federal law.



                                      88





14.10    SEVERABILITY

         If any part of the Plan is adjudged by a court of competent
         jurisdiction to be contrary to the laws governing the Plan, then the
         Plan will, in all other respects, be and remain legally effective and
         binding to the full extent permissible under the law.

14.11    INTERPRETATION AND REGULATION OF PLAN

         Cinergy, by action of the Committee, reserves the right to interpret
         and regulate the Plan, by exercise of discretionary authority, and its
         interpretation and regulation will be legally effective and binding on
         all parties concerned.

14.12    COMMUNICATIONS BY PARTICIPANTS

         All communications by Participants and other concerned parties
         concerning the Plan will be in writing and directed to the Committee or
         its designee.

14.13    HEADINGS

         The headings of Articles, Sections, Subsections, Paragraphs or other
         parts of the Plan are for convenience of reference only and do not
         define, limit, construe, or otherwise affect the contents of this
         document.

14.14    ACCRUED BENEFIT NOT TO BE DECREASED BY AMENDMENT

         Notwithstanding any other provisions of the Plan to the contrary, no
         accrued benefit of a Participant under the Plan will be decreased by an
         amendment to the Plan, other than an amendment described in Code
         paragraph 412(c)(8) or ERISA section 4281. For purposes of this
         Subsection, an amendment to the Plan that has the effect of:



                                      89





         (a)      eliminating or reducing an early retirement benefit or a
                  retirement-type subsidy (as defined in the regulations under
                  Code paragraph 411(d)(6)), or

         (b)      eliminating an optional form of benefit, with respect to
                  benefits attributable to service before the amendment,

         will be treated as reducing the accrued benefit of a Participant. In
         the case of any retirement-type subsidy, the preceding sentence will
         apply only with respect to a Participant who satisfies (either before
         or after the amendment) the preamendment conditions for the subsidy.

                                   ARTICLE 15

                         TRUSTS AND INSURANCE CONTRACTS

15.1     TRUSTS AND INSURANCE CONTRACTS

         As part of the Plan, the Employers have established a Pension Fund. The
         Pension Fund may consist of a trust, or a fund under a group annuity
         contract issued by an Insurance Company, or a combination of each.
         Benefits may, however, be provided through other trusts or insurance
         contracts as Cinergy, in its sole discretion, may establish or cause to
         be established or entered into for the purposes of carrying out the
         Plan. Cinergy will determine the form and terms of any trust and will
         also determine the terms and provisions of any group annuity contract.
         Cinergy may also, in its sole discretion, cause any funds held by any
         Insurance Company, or any Trust Fund held by any Trustee, for the
         purpose of providing benefits under the Plan, to be transferred to any
         other Insurance Company, or qualified Trustee, to be held for the same
         purpose.



                                      90





15.2     IRREVOCABILITY

         The Employers will have no right, title, or interest in the Pension
         Fund or to the contributions made under the Plan, and no part of the
         Pension Fund will revert to the Employers, except that upon termination
         of the Plan and after satisfaction or provision for the satisfaction of
         all fixed and contingent liabilities or obligations to persons entitled
         to benefits upon the termination, any balance remaining in the Pension
         Fund will be distributed to the Employers. However, nothing in this
         Section will prohibit the return, in accordance with the provisions of
         ERISA subsection 403(c), to the Employers of a contribution (or a
         portion of a contribution) by the Employers to the Pension Fund if the
         contribution is (a) made by reason of mistake of fact, (b) conditioned
         on the initial qualification of the Plan under Code subsection 401(a),
         or (c) conditioned upon its deductibility under Code section 404 and
         the deduction is not fully allowed.

15.3     SUFFICIENCY OF PENSION FUND

         The Employer intends the Plan to be a permanent, as distinguished from
         a temporary, program. Except as otherwise provided by the Code or
         ERISA, however, the Employer will not be under any liability to make
         contributions to the Pension Fund. Benefits under the Plan are to be
         paid only from the Pension Fund and only to the extent that the Pension
         Fund is sufficient for that purpose. Neither Cinergy, nor any of the
         officers, employees, members of the Board of Directors, the Committee,
         or representatives of Cinergy guarantees in any manner nor, unless
         otherwise required by law, will be liable for the payment of benefits
         under the Plan. Except as otherwise provided by ERISA, any person
         having any claim under, or in connection with, the Plan must look
         solely to the Pension Fund for satisfaction.



                                      91





                                   ARTICLE 16

                                  CONTRIBUTIONS

No contributions to the Plan by Participants will be required or permitted under
the Plan.

During the continuance of the Plan and for the purpose of providing the benefits
contemplated under the Plan, the Employer intends to deposit, from time to time,
with the Trustee or with the Insurance Company, sums of money, to be held in the
Pension Fund, which, together with the earnings of the Pension Fund, will be
deemed sufficient to provide the benefits of the Plan and to satisfy the minimum
funding standards set forth in ERISA. All contributions by the Employer to the
Pension Fund are expressly conditioned upon deductibility under Code section
404.

                                   ARTICLE 17

                      APPROVAL UNDER INTERNAL REVENUE CODE

The Plan as set forth in this document is intended to comply with the
requirements of Code subsection 401(a), so that the income of the Pension Fund
may be exempt from federal income taxes and so that contributions of the
Employers under the Plan may be deductible for federal income tax purposes under
Code section 404. Any modification or amendment of the Plan may be made,
retroactive or otherwise, as necessary or appropriate to establish and maintain
its qualified status under the Code, or to otherwise comply with ERISA.

                                   ARTICLE 18

                       TEMPORARY RESTRICTIONS ON BENEFITS

18.1     TEMPORARY RESTRICTIONS

         (a)      Notwithstanding any other provisions of the Plan, the benefit
                  of any Highly Compensated Participant upon the Plan's
                  termination will be limited to a benefit that is
                  nondiscriminatory under Code paragraph 401(a)(4).



                                      92





         (b)      Upon the Plan's termination, annual payments of Plan benefits
                  made on behalf of any of the 25 highest paid Employees or
                  former Employees of the Employer and the Affiliates in a
                  particular Plan Year will be restricted to an amount equal in
                  each Plan Year to:

                  (1)      the payments that would be made on behalf of the
                           Employee under a single life annuity that is the
                           Actuarial Equivalent of the accrued benefit and other
                           benefits to which the Employee is entitled under the
                           Plan (other than a social security supplement), plus

                  (2)      the amount of the payments that the Employee is
                           entitled to receive under a social security
                           supplement.

         (c)      The restrictions of Subsection (b) will not apply to payments
                  made to an Employee who is one of the 25 highest paid
                  Employees or former Employees if any one of the following
                  requirements is satisfied:

                  (1)      After payment to the Employee of all benefits payable
                           to the Employee under the Plan, the value of the
                           Plan's assets equals or exceeds 110 percent of the
                           value of the Plan's current liabilities as defined
                           under Code paragraph 412(l)(7). The value of Plan
                           assets and the value of current liabilities for this
                           purpose must be determined as of the same date;

                  (2)      The value of the benefits payable to the Employee
                           under the Plan is less than one percent of the value
                           of the Plan's current liabilities before
                           distribution, or

                  (3)      The value of the benefits payable to the Employee
                           does not exceed $5,000.



                                      93





                                   ARTICLE 19

                            AMENDMENT AND TERMINATION

19.1     RIGHT TO AMEND OR TERMINATE

         Cinergy reserves the right to modify, alter, amend, revoke or terminate
         the Plan and/or any Trust Fund or group annuity contract that may be
         established or entered into to effectuate and implement the Plan at any
         time. The Board of Directors will generally have the authority to adopt
         amendments; however, the Committee or the compensation committee of the
         Board of Directors may adopt any amendment to ensure the continued
         qualification of the Plan and Pension Fund under Code subsections
         401(a) and 501(a), to comply with the provisions of any federal statute
         or regulation impacting pension plans, to enhance the delivery of
         benefits to Participants and Beneficiaries, to ease Plan
         administration, or to respond to the withdrawal of any Employer from
         the Plan. Notwithstanding the preceding sentence, no amendment by the
         Committee or the compensation committee of the Board of Directors will
         substantially increase the cost of the Plan without the Board of
         Directors' consent.

         The Board of Directors, or any person or persons duly authorized by the
         Board of Directors, will also have the right, authority, and power to
         terminate the Plan and to discontinue or suspend the payment of
         contributions to provide benefits under the Plan (except for the
         provision of any agreement which has been entered into between an
         Employer and a labor union representing Eligible Employees). However,
         no action taken pursuant to this Section will operate to enlarge the
         right of Cinergy under Section 15.2 (Irrevocability).



                                      94





19.2     EFFECT OF TERMINATION

         If a partial or complete termination of the Plan occurs, all
         Participants with respect to whom the Plan is being so terminated will
         have a Nonforfeitable right to their benefits accrued under the Plan up
         to the date of termination of the Plan to the extent then funded.

         Except as otherwise required by ERISA section 4044, Cinergy will direct
         the Trustee and/or Insurance Company to segregate the Pension Fund, as
         determined by Cinergy to be attributable to the group that is
         terminating its participation in the Plan, and to make separate
         allocations of the segregated assets among the respective persons
         having interests in them. The separate allocations will be made as
         follows:

         (a)      First, either:

                  (1)      in the case of the pension of a Retired Participant,
                           a Terminated Vested Participant, a Spouse, or a
                           Contingent Annuitant that began at least three years
                           prior to the termination date of the Plan, that
                           portion of the pension that is based on the
                           provisions of the Plan as in effect at any time
                           during the five-year period ending on the termination
                           date, which would result in the least amount, or

                  (2)      in the case of the pension of an Active Participant,
                           a Participant who has incurred a Severance from
                           Service, or either a Retired Participant or a
                           Terminated Vested Participant not included in
                           Paragraph (1) of this Subsection (a) that three years
                           prior to the termination date of the Plan would have
                           began had the Participant then become a Retired
                           Participant, a Terminated Vested Participant, or the
                           Participant's Spouse or Contingent Annuitant, that
                           portion of the pension that is based on the
                           provisions of the Plan that were in effect at any
                           time during the five-year period ending on the
                           termination date, which would result in the least
                           amount;



                                      95





         (b)      Second, all other pensions under the Plan that are guaranteed
                  by the Pension Benefit Guaranty Corporation;

         (c)      Third, all other pensions with respect to both (1) Retired
                  Participants, Terminated Vested Participants, Spouses, and
                  Contingent Annuitants and (2) Active Participants and
                  Participants who have incurred a Severance from Service who,
                  as of the date of termination of the Plan, have
                  completed the Vesting Requirement of the Plan; and

         (d) All other pensions under the Plan.

                  If the balance of the Pension Fund allocable to the
                  terminating group that is remaining after allocations have
                  been made with respect to all pensions in a preceding class or
                  group is insufficient to allocate the full Actuarial
                  Equivalent of pensions to all persons in the class or group
                  for which it is then being applied, the balance will be
                  allocated to each person in the class or group in the
                  proportion to which the Actuarial Equivalent of the pension
                  allocable to him pursuant to the class or group bears to the
                  total Actuarial Equivalent of the pensions so allocable to all
                  persons in the class or group. However, if the balance is
                  sufficient to allocate a portion only of the full Actuarial
                  Equivalent of the pensions set forth in Subsection (c), then
                  the amounts of pension otherwise provided will be redetermined
                  based on the provisions of the Plan as in effect five years
                  prior to the termination date, or, if applicable, as of the
                  later date as will provide for the allocation of the full
                  Actuarial Equivalent thereof.

                  The amounts so allocated will, subject to the rights of the
                  Insurance Company under the Group Annuity Contract governing
                  allocations of small annuities, be purchased under the Group
                  Annuity Contract or other group annuity contract.



                                      96





                  Any balance remaining in the Pension Fund that is allocable to
                  the terminating group, and after all allocations have been
                  made pursuant to the foregoing provisions of this Subsection,
                  will be allocated to the Employers.

19.3     MERGER AND CONSOLIDATION OF PLAN

         In the case of any merger or consolidation with, or transfer of assets
         and liabilities to, any other plan, provisions will be made so that
         each Participant in the Plan on the date thereof (if the Plan had then
         terminated) would receive a benefit immediately after the merger,
         consolidation or transfer that is equal to, or greater than, the
         benefit he would have been entitled to receive immediately prior to the
         merger, consolidation, or transfer if the Plan had then terminated.

19.4     POST-CHANGE IN CONTROL MERGER, CONSOLIDATION, OR TRANSFER OF PENSION
         PLAN ASSETS OR LIABILITIES

         Notwithstanding the preceding provisions of this Article or any other
         provision of this Plan, in the event of any merger or consolidation of
         this Plan with another employee benefit plan or any transfer of assets
         or liabilities of this Plan to another plan that is effected within
         three years following a Change in Control, (a) the accrued benefit of
         each Participant who is actively employed by an Employer as of the
         effective date of the merger, consolidation, or transfer of assets or
         liabilities and with respect to whom liability for the payment of
         benefits under the Plan is being merged or consolidated with or
         transferred to another plan will become fully vested; (b) the vested
         accrued benefit of each Participant, former Participant, and
         Beneficiary with respect to whom any liability for the payment of
         benefits under the Plan is being merged or consolidated with or
         transferred to another plan will be increased in accordance with
         Section 19.6 (Post-Change in Control Surplus Reversion) as if the Plan
         had terminated immediately prior to any merger, consolidation, or
         transfer (and for purposes of calculating the increase, the accrued
         benefits of all other Participants, former Participants and their
         Beneficiaries will



                                      97





         be deemed to have increased in accordance with Section 19.6
         (Post-Change in Control Surplus Reversion)); and (c) prior to
         consummation of any merger, consolidation, or transfer, the accrued
         benefit (as increased, if applicable) of each Participant, former
         Participant, and Beneficiary with respect to whom liability for the
         payment of benefits under the Plan is being merged or consolidated
         with or transferred to another plan will be satisfied by the purchase
         of a guaranteed annuity contract from a financially sound insurance
         company that represents an irrevocable commitment to satisfy the
         accrued benefit (as increased, if applicable) of the person.
         Notwithstanding the provisions of Section 19.1 (Right to Amend or
         Terminate), the provisions of this Section may not be amended by an
         amendment to the Plan effective within three years following a Change
         in Control.

19.5     GENERAL PROTECTION OF BENEFITS IN THE EVENT OF A CHANGE IN CONTROL

         Notwithstanding any other provisions of this Plan, for a period of
         three years following a Change in Control, the provisions of this Plan
         may not be amended in any manner that would adversely affect in any way
         the computation or amount of or the entitlement to retirement benefits
         under the Plan, including, but not limited to, any adverse change in or
         to (a) the rate at which benefits accrue or vest, (b) the compensation
         recognized under the Plan, or (c) the optional forms of payment
         available to a Participant or Beneficiary under the Plan, including the
         time of commencement of benefits and any actuarial factors utilized.
         Notwithstanding the provisions of Section 19.1 (Right to Amend or
         Terminate), the provisions of this Section may not be amended by an
         amendment effective within three years following a Change in Control.

19.6     POST-CHANGE IN CONTROL SURPLUS REVERSION

         Notwithstanding the preceding provisions of this Article or any other
         provision of the Plan, in the event this Plan is terminated within
         three years following a Change in Control, the assets of the Plan will
         be applied in accordance with the preceding provisions



                                      98





         of this Article to satisfy all liabilities to Participants, former
         Participants, and their Beneficiaries. If, after satisfaction of the
         liabilities, there are assets remaining in the Plan, the balance will
         be applied on a pro rata basis based upon final vested benefit to
         increase the benefits of the Participants, former Participants, and
         their Beneficiaries, subject however, to the applicable legal
         limitations on benefits payable from tax qualified plans.
         Notwithstanding the provisions of Section 19.1 (Right to Amend or
         Terminate), the provisions of this Section may not be amended by an
         amendment to the Plan effected within three years following a Change
         in Control.

                                   ARTICLE 20

                             AUTHORIZED TRANSACTION

Cinergy will have the right, authority, and power to transfer some or all of the
assets of the Plan, including contributions and earnings, to a pooled investment
fund of an insurance company qualified to do business in one or more states of
the United States, even though that insurance company might otherwise be a
"party in interest," as that term is defined in ERISA; provided, the insurance
company receives not more than reasonable compensation with respect to the
transaction.

                                   ARTICLE 21

                        PARTICIPATION BY OTHER EMPLOYERS

21.1     ADOPTION OF PLAN

         With Cinergy's consent, any Affiliate may become a participating
         Employer under the Plan by (a) taking appropriate action to adopt the
         Plan, (b) filing with Cinergy a duly certified copy of the Plan as
         adopted by the Affiliate, (c) becoming a party to the trust agreement
         establishing the Trust Fund, and (d) executing and delivering documents
         and taking any other action as may be necessary or desirable to put the
         Plan into effect with respect to it.



                                      99




21.2     WITHDRAWAL FROM PARTICIPATION

         Any Employer may, with Cinergy's consent, withdraw from participation
         in the Plan at any time by filing with Cinergy a duly certified copy of
         a resolution of its board of directors to that effect and giving notice
         of its intended withdrawal to Cinergy, the Trustee, and Insurance
         Company prior to the effective date of withdrawal. If an Employer
         withdraws from the Plan, Cinergy will determine the portion of the
         Pension Fund held by the Trustee or Insurance Company that is
         applicable to the Participants and former Participants of the
         withdrawing Employer and direct the Trustee and Insurance Company to
         segregate its portion in a separate trust. The separate trust will be
         held and administered as a part of the separate plan of the withdrawn
         Employer. The portion of the Pension Fund applicable to the
         Participants and former Participants of a particular Employer will be
         the sum of:

         (a)      the total amount of the accrued benefits applicable to the
                  Participants and former Participants of the withdrawing
                  Employer, and

         (b)      an amount that bears the same ratio to the excess, if any, of:

                  (1)      the total of the Pension Fund over

                  (2)      the total amount of the accrued benefits applicable
                           to the Participants and former Participants of the
                           withdrawing Employer bears to the total amount of the
                           accrued benefits applicable to all Participants and
                           former Participants.

Notwithstanding the preceding sentence, if the total amount of the present value
of the accrued benefits applicable to the Participants and former Participants
of the withdrawing Employer (when combined with the value of any other assets
segregated during that Plan Year) is less than three percent of the total of the
Pension Fund as of at least one day in the Plan Year during which

                                     100



the withdrawal occurs, the portion of the Pension Fund applicable to the
Participants and former Participants of the withdrawing Employer will be
equal to the present value of those Participants' accrued benefits.

21.3     CINERGY AS AGENT FOR EMPLOYERS

         Each Affiliate that becomes a participating Employer pursuant to
         Section 21.1 (Adoption of Plan) or Article 22 (Continuance by a
         Successor) by so doing will be deemed to have appointed Cinergy its
         agent to exercise on its behalf all of the powers and authorities
         conferred upon Cinergy by the terms of the Plan, including, but not
         limited to the power to amend and terminate the Plan. Cinergy's
         authority to act as agent will continue unless and until the portion of
         the Pension Fund held for the benefit of Employees of the particular
         Employer and their Beneficiaries is set aside in a separate trust as
         provided in Section 21.2 (Withdrawal from Participation). Each Employer
         will, from time to time, upon Cinergy's request, furnish to Cinergy any
         data and information as Cinergy requires in the performance of its
         duties.

                                   ARTICLE 22

                           CONTINUANCE BY A SUCCESSOR

If Cinergy or any other Employer is reorganized by way of merger, consolidation,
transfer of assets, or otherwise, so that a corporation, partnership, or person
other than an Employer succeeds to all or substantially all of the Employer's
business, the successor may be substituted for the Employer under the Plan by
adopting the Plan and becoming a party to the trust agreement. Contributions by
the Employer will be automatically suspended from the effective date of any
reorganization until the date upon which the substitution of the successor
corporation for the Employer under the Plan becomes effective. If, within 90
days following the effective date of any reorganization, the successor does not
elect to become a party to the Plan, or if the Employer adopts a plan of
complete liquidation other than in connection with a reorganization, the Plan
will be automatically terminated with respect to employees of the Employer as of
the

                                     101



close of business on the 90th day following the effective date of
reorganization or as of the close of business on the date of adoption of a
plan of complete liquidation, as the case may be, and Cinergy will direct the
Trustee to distribute the portion of the Trust Fund applicable to that
Employer in the manner provided in Section 21.2 (Withdrawal from
Participation).

                                   ARTICLE 23

                      PROVISIONS RELATING TO TOP-HEAVY PLAN

23.1     CONSTRUCTION OF THIS SECTION

         This Article will be construed in accordance with Code section 416.

23.2     TOP-HEAVY DETERMINATION

         For each Plan Year, the Committee will determine whether the Plan is a
         Top-Heavy Plan or a Super Top-Heavy Plan.

         (a)      The Plan constitutes a "Top-Heavy Plan" for any Plan Year in
                  which, as of the Determination Date, (1) the Present Value of
                  Accrued Benefits of Key Employees or (2) the sum of the
                  Present Value of Accrued Benefits of Key Employees under the
                  Plan and the Aggregate Accounts of Key Employees under any
                  Qualified Defined Contribution Plan of an Aggregation Group,
                  exceeds 60 percent of the Present Value of Accrued Benefits or
                  the Present Value of Accrued Benefits under the Plan and the
                  Aggregate Accounts of all Participants under any Qualified
                  Defined Contribution Plan of an Aggregation Group.

                  If any Participant is a non-Key Employee for any Plan Year,
                  but the Participant was a Key Employee for any prior Plan
                  Year, the Participant's Present Value of Accrued Benefits
                  and/or Aggregate Account Balance will not be taken into

                                     102


                  account for purposes of determining whether this Plan is a
                  Top-Heavy Plan (or whether any Aggregation Group that includes
                  this Plan is a Top-Heavy Group)

         (b)      The Plan constitutes a "Super Top-Heavy Plan" for any Plan
                  Year in which, as of the Determination Date, (1) the Present
                  Value of Accrued Benefits of Key Employees or (2) the sum of
                  the Present Value of Accrued Benefits of Key Employees under
                  the Plan and the Aggregate Accounts of Key Employees under any
                  Qualified Defined Contribution Plan of an Aggregation Group,
                  exceeds 90 percent of the Present Value of Accrued Benefits or
                  the Present Value of Accrued Benefits under the Plan and the
                  Aggregate Accounts of all Participants under any Qualified
                  Defined Contribution Plan of an Aggregation Group.

         (c)      Top-Heavy Group means an Aggregation Group in which, as of the
                  Determination Date, the sum of:

                  (1)      the Present Value of Accrued Benefits of Key
                           Employees under all Qualified Defined Benefit Plans
                           included in the group, and

                  (2)      the Aggregate Accounts of Key Employees under
                           Qualified Defined Contribution Plans included in the
                           group,

                  exceeds 60 percent of a similar sum determined for all
                  Participants.

         (d)      In the case of a Permissive Aggregation Group, only a plan
                  that is part of the Required Aggregation Group will be
                  considered a Top-Heavy Plan if the Permissive Aggregation
                  Group is a Top-Heavy Group. No plan in the Permissive
                  Aggregation Group will be considered a Top-Heavy Plan if the
                  Permissive Aggregation Group is not a Top-Heavy Group.

                                     103



         (e)      In the case of a Required Aggregation Group, each plan in the
                  group will be considered a Top-Heavy Plan if the Required
                  Aggregation Group is a Top-Heavy Group.

                                   ARTICLE 24

                               MERGER WITH THE MRP

24.1     ACCEPTANCE OF ASSETS AND LIABILITIES OF MRP TRUST

         As soon as practicable after January 1, 1998 (but not before 30 days
         after the required notification has been filed with the Internal
         Revenue Service), the Trustee will accept a transfer from the trustee
         or funding agent of the MRP of all of the assets and liabilities of the
         trust or insurance or annuity contracts through which the MRP is
         funded.

24.2     PARTICIPATION OF MRP PARTICIPANTS

         Each individual who was a participant in the MRP as of December 31,
         1997, will remain a Participant in the Plan on January 1, 1998. Each
         participant or former participant in the MRP who as of the date of the
         transfer referred to in Section 24.1 (the "Transfer Date") is receiving
         benefits under the MRP or has retired or incurred a severance from
         service with CG&E and has a right to receive future benefits under the
         MRP will be entitled to receive benefits under the Plan as of the
         Transfer Date. A beneficiary entitled to benefits under the MRP as of
         the Transfer Date will become entitled to benefits under the restated
         Plan as of that date. The Annual Pension of a Participant described in
         this Section will at no time be less than the Participant's accrued
         benefit under the MRP as of the Transfer Date.

                                     104



                                   ARTICLE 25

                              SPIN OFF OF PSI PLAN

25.1     ACCEPTANCE OF ASSETS AND LIABILITIES OF PSI PLAN TRUST

         On December 31, 1997, the assets and liabilities attributable to Exempt
         Employees and Non-Exempt Employees who were participants in the PSI
         Plan as of that date were spun off from the PSI Plan. As soon as
         practicable after January 1, 1998 (but not before 30 days after the
         required notification has been filed with the Internal Revenue
         Service), the Trustee will accept a transfer from the trustee or
         funding agent of that spun-off portion of the PSI Plan of all of the
         assets and liabilities of the trust or insurance or annuity contracts
         through which the spun-off portion of the PSI Plan is funded.

25.2     PARTICIPATION OF PSI PLAN PARTICIPANTS

         Each Exempt Employee or Non-Exempt Employee who was a participant in
         the PSI Plan as of December 31, 1997, will become a participant in this
         Plan on January 1, 1998. Each participant or former participant in the
         PSI Plan who as of the date of the transfer referred to in Section 25.1
         (the "PSI Transfer Date") is receiving benefits under the PSI Plan or
         has retired or incurred a severance from service with PSI and has a
         right to receive future benefits under the PSI Plan will become a
         Participant as of the PSI Transfer Date. A beneficiary entitled to
         benefits under the PSI Plan as of the PSI Transfer Date will instead
         become entitled to benefits under this Plan as of that date. The Annual
         Pension of a Participant described in this Section will at no time be
         less than the Participant's accrued benefit under the PSI Plan as of
         the PSI Transfer Date.

                                     105



         Cinergy Corp. has caused this document to be executed by its duly
authorized officers, effective January 1, 1998.

                             By:
                                    ------------------------------------------
                                    Madeleine W. Ludlow
                                    Vice President and Chief Financial Officer

                              Dated:
                                    ------------------------------------------

APPROVED:

- ---------------------------------
Jerome A. Vennemann
Acting General Counsel
and Assistant Corporate Secretary

Dated:
       --------------------------


                                     106


                                   ADDENDUM A

                       Cinergy Corp. Non-Union Employees'
                                  Pension Plan

I.       PSI PENSION FORMULAS

         The five remaining basic pension formulas used to determine benefits
         under the PSI Plan are as follows:

         A.       PSI NORMAL RETIREMENT PENSION FORMULA 1

                  The Annual Pension computed under PSI Pension Formula 1 equals
                  (1) 1.1 percent of the Participant's PSI Highest Average
                  Earnings, plus (2) 0.5 percent of the amount by which his PSI
                  Highest Average Earnings exceed his applicable PSI Covered
                  Compensation, multiplied by the number of his Years of
                  Participation accrued as of December 31, 1997, up to a maximum
                  of 35.

         B.       PSI NORMAL RETIREMENT PENSION FORMULA 2

                  The Annual Pension computed under PSI Pension Formula 2 equals
                  the excess of:

                  (1)      1-2/3 percent of the Participant's PSI Highest
                           Average Earnings, multiplied by the number of his
                           Years of Participation not in excess of 30; over

                  (2)      1-2/3 percent of the Participant's Annual Primary
                           Social Security Amount that he is expected to be
                           entitled to receive either at his Normal Retirement
                           Date or at his Disability Date if his disability
                           continues to his Normal Retirement Date, in any event
                           multiplied by the number of his Years of
                           Participation not in excess of 30.

         C.       PSI NORMAL RETIREMENT PENSION FORMULA 3

                  The Annual Pension computed under PSI Pension Formula 3 equals
                  the excess of:

                  (1)      2 percent of the Participant's PSI Highest Average
                           Earnings, multiplied by the number of his Years of
                           Participation not in excess of 25, over

                  (2)      2 percent of the Participant's Annual Primary Social
                           Security Amount that he is expected to be entitled to
                           receive either upon the attainment of age 62 on the
                           assumption that he receives no "wages" or
                           "remuneration," as defined in the Social Security
                           Act, between

                                       1



                           December 31, 1989 (December 31, 1988, for a Highly
                           Compensated Participant), and his attainment of age
                           62, or if he is still employed by his Employer on or
                           after his attainment of age 62, as of the earlier of
                           December 31, 1989 (December 31, 1988, for a Highly
                           Compensated Participant), or his Normal Retirement
                           Date, or at his Disability Date if his disability
                           continues up until the date otherwise determined
                           under this Paragraph (2), in any event multiplied
                           by the number of his Years of Participation not in
                           excess of 25.

         D.       PSI TERMINATED VESTED PENSION FORMULA 5

                  The Annual Pension computed under PSI Pension Formula 5 equals
                  the excess of:

                  (1)      2 percent of the Participant's PSI Highest Average
                           Earnings, multiplied by the number of his Years of
                           Participation not in excess of 25, over

                  (2)      a fraction, the numerator of which is his actual
                           Years of Participation and the denominator of which
                           is the Years of Participation he would have
                           accumulated at his Normal Retirement Date if during
                           each year after December 31, 1989 (December 31, 1988,
                           for a Highly Compensated Participant), he had
                           completed at least 2,000 Hours of Service, of 50
                           percent of the Participant's Annual Primary Social
                           Security Amount that he is entitled to receive upon
                           the attainment of age 60 on the assumption that his
                           rate of Earnings as of December 31, 1989 (December
                           31, 1988, for a Highly Compensated Participant), had
                           continued unchanged until age 60.

         E.       PSI  TERMINATED VESTED PENSION FORMULA 6

                  The Annual Pension computed under PSI Pension Formula 6 equals
                  the excess of:

                  (1)      1-2/3 percent of the Participant's PSI Highest
                           Average Earnings, multiplied by the number of his
                           Years of Participation not in excess of 30; over

                  (2)      a fraction, the numerator of which is his actual
                           Years of Participation and the denominator of which
                           is the Years of Participation he would have
                           accumulated at his Normal Retirement Date if during
                           each year after December 31, 1989 (December 31, 1988,
                           for a Highly Compensated Participant), he had
                           completed at least 2,000 Hours of Service, of 50
                           percent of the Participant's Annual Primary Social
                           Security Amount that he is entitled to receive upon
                           the attainment of age 60 on the assumption that his
                           rate of Earnings as of

                                       2



                           December 31, 1989 (December 31, 1988, for a Highly
                           Compensated Participant), had continued unchanged
                           until age 60.

II.      GENERAL METHOD OF COMPUTING ACCRUED BENEFIT UNDER THE PSI PLAN FOR
         NORMAL RETIREMENT

         (a)      Subject to the following provisions of this Section, the
                  amount of the accrued benefit under the PSI Plan as of
                  December 31, 1997, of a Participant who was a participant in
                  the PSI Plan as of December 31, 1997, will be computed under
                  PSI Pension Formula 1.

         (b)      Notwithstanding any other provisions of this Section, the
                  accrued benefit under the PSI Plan as of December 31, 1997, of
                  a Participant who became a participant in the PSI Plan prior
                  to May 1, 1970, will not be less than the amount computed
                  under PSI Pension Formula 3 as of the following date:

                  (1)      December 31, 1989, with respect to an Employee who is
                           not a Highly Compensated Participant; or

                  (2)      December 31, 1988, with respect to a Highly
                           Compensated Participant.

         (c)      Notwithstanding any other provisions of this Section, the
                  accrued benefit under the PSI Plan as of December 31, 1997, of
                  a Participant who became a participant in the PSI Plan on or
                  after May 1, 1970, will not be less than the amount computed
                  under PSI Pension Formula 2 as of the following date:

                  (1)      December 31, 1989, with respect to an Employee who is
                           not a Highly Compensated Participant; or

                  (2)      December 31, 1988, with respect to a Highly
                           Compensated Participant.

III.     PSI DEFINITIONS

         The capitalized terms will have the meanings set forth in the Plan. In
         addition, the following words and phrases have the meanings set forth
         in this Addendum:

         (a)      "Annual Primary Social Security Amount" means, with respect to
                  a Participant, the annual amount available under the
                  provisions of Title II of the Social Security Act as in effect
                  on December 31, 1989 (December 31, 1988, for a Highly
                  Compensated Participant), determined without regard to

                                       3



                  any increases in benefit levels, wage base increases, or
                  changes in the types of benefits that take effect after that
                  date, but including any recomputation in benefits due solely
                  to the Participant's "wages" and "remuneration," as defined
                  in the Social Security Act, in calendar year 1989 or 1988,
                  whichever is applicable.

         (b)      "Disability Date" means, with respect to a Participant who
                  participated in the PSI Plan, the date the Participant is
                  determined to be totally disabled by reason of a particular
                  disability under PSI's Long Term Disability Plan, as amended
                  from time to time.

         (c)      "Nine Months of Elapsed Time Service" means, with respect to a
                  Participant who participated in the PSI Plan, the nine
                  consecutive month period commencing on his Employment
                  Commencement Date, provided that the Employee does not in that
                  period incur a Severance from Service that is part of a Break
                  in Service; or, the nine consecutive month period commencing
                  on the Employee's Reemployment Commencement Date (or
                  successive Reemployment Commencement Dates), provided that the
                  Employee does not in that period incur a Severance from
                  Service that is part of a Break in Service. If the Employee
                  does not incur a Severance from Service during the applicable
                  nine consecutive month period, then the Employee shall be
                  deemed to have completed Nine Months of Elapsed Time Service
                  as of the last day of the nine consecutive month period.

         (d)      "Normal Retirement Date" means, with respect to each
                  Participant who participated in the PSI Plan, the first day of
                  the calendar month coincident with or following (a) his 65th
                  birthday, or (b) the fifth anniversary date of his employment,
                  whichever is later.

         (e)      "Participation Commencement Date" means, with respect to an
                  Employee who was a participant in the PSI Plan prior to
                  January 1, 1989, the date the Employee became a participant
                  under the PSI Plan's terms as they existed prior to January 1,
                  1990, and with respect to an Employee who was not a
                  participant in the PSI Plan prior to January 1, 1989, the
                  later of (a) January 1, 1989, or (b) the first day of the
                  calendar month coincident with or following the date the
                  Employee first completes Nine Months of Elapsed Time Service
                  and has attained his 21st birthday; provided that on the later
                  date he is classified by his Employer as an Employee. If an
                  Employee has completed Nine Months of Elapsed Time Service and
                  has attained his 21st birthday, but is not classified by his
                  Employer as an Employee on the later date, his "Participation
                  Commencement Date" shall be the first day of the calendar
                  month coincident with or following the first day after the
                  later date on which he is classified by his Employer as an
                  Employee.

         (f)      "PSI Covered Compensation" means, with respect to a
                  Participant who participated in the PSI Plan as of December
                  31, 1997, the average (without indexing) of the annual Social
                  Security taxable

                                       4



                  wage bases under the Social Security Act for each year during
                  the 35 calendar years ending with the last day of the calendar
                  year in which the Participant attains his Social Security
                  Retirement Age, but no later than December 31, 1997.

         (g)      "PSI Highest Average Earnings" means, with respect to a
                  Participant who participated in the PSI Plan as of December
                  31, 1997, the Participant's highest average annual Earnings
                  for any three consecutive calendar years out of the
                  Participant's 10 or fewer years of participation under the PSI
                  Plan ending on December 31, 1997. If Earnings for any Plan
                  Year beginning before January 1, 1994 are taken into account
                  in determining a Participant's PSI Highest Average Earnings,
                  the Earnings for that Plan Year will be subject to the
                  limitation of Code paragraph 401(a)(17) that was in effect for
                  that Plan Year and the Participant's Nonforfeitable Annual
                  Pension will not be less than the Participant's accrued
                  benefit under the PSI Plan as of December 31, 1993.

         (h)      "Years of Participation" means, with respect to each
                  Participant who participated in the PSI Plan as of December
                  31, 1997, the sum of the following whole and fractional years:

                  (1)      with respect to the period prior to January 1, 1976,
                           the number of years (to the last completed 1/12th
                           year) of his "participating service" (as defined in
                           the PSI Plan as in effect on December 31, 1975,
                           except that the last sentence of Section 1.6 of the
                           PSI Plan will not apply) as of January 1, 1976; plus

                  (2)      with respect to each Plan Year of his participation
                           in the PSI Plan on or after January 1, 1976, and
                           before January 1, 1998 (excluding the Plan Years in
                           which his Participation Commencement Date and his
                           Reemployment Commencement Date, if applicable, occur,
                           to the extent one or both of those dates are on or
                           after January 1, 1976), one Year of Participation if
                           he completes at least 2,000 Hours of Service during
                           that Plan Year; otherwise, a fraction of a Year of
                           Participation, the numerator of which is the number
                           of Hours of Service which he completes during a Plan
                           Year and the denominator of which is 2,000; provided,
                           however, that if he completes less than 1,000 Hours
                           of Service during a Plan Year, no portion of a Year
                           of Participation will be granted; plus

                  (3)      with respect to the Plan Years during which his
                           Participation Commencement Date and/or his
                           Reemployment Commencement Date, if applicable, occur,
                           to the extent one or both of the dates occur on or
                           after January 1, 1976, and before January 1, 1998,
                           either one Year of Participation, or, if the month
                           and day of his Participation Commencement Date or
                           Reemployment Commencement Date within the Plan Year
                           is after January 1, a fraction thereof, the numerator
                           of

                                       5



                           which is the number of complete calendar months in
                           that Plan Year during which he is a participant in
                           the PSI Plan and the denominator of which is 12.
                           However, if the number of Hours of Service that he
                           completes as a participant in the PSI Plan during the
                           respective Plan Year is less than the product of
                           166-2/3 multiplied by the number of complete calendar
                           months during which he is a participant in the PSI
                           Plan in the Plan Year, then the Year of
                           Participation, or fraction thereof, as otherwise
                           determined pursuant to this Paragraph (c), will be
                           multiplied by the ratio of the number of Hours of
                           Service that he completes as a participant in the PSI
                           Plan during the Plan Year to 166-2/3 multiplied by
                           the number of complete calendar months during which
                           he is a participant in the PSI Plan in the Plan Year.
                           If the number of Hours of Service that he completes
                           as a PSI Plan participant during the Plan Year is
                           less than the product of 83-1/3 multiplied by the
                           number of complete calendar months during which he is
                           a PSI Plan participant in the Plan Year, no portion
                           of a Year of Participation shall be granted.

         With respect to any Plan Year wholly or partially included in a
         calendar year used to calculate the Participant's PSI Plan Highest
         Average Earnings, if the PSI Plan participant fails to complete at
         least 2,000 Hours of Service during that Plan Year, then, in lieu of
         any fraction of a Year of Participation as otherwise determined under
         either Paragraph (b) or Paragraph (c), the PSI Plan participant will be
         granted a fraction of a Year of Participation: the numerator of which
         is equal to the sum of the number of Hours of Service which the PSI
         Plan participant completes as a PSI Plan participant during those
         calendar months of the Plan Year that are not included in that calendar
         year, and the greater of (A) the number of Hours of Service that the
         PSI Plan participant completes during those calendar months of the Plan
         Year that are included in such calendar year or (B) the product of
         166-2/3 multiplied by the number of calendar months of the Plan Year
         that are included in the calendar year; and the denominator of which is
         2,000. A PSI Plan participant's Years of Participation will be
         adjusted, if necessary, pursuant to Section 4.5 (Special Adjustments)
         or Section 4.8 (Benefits Adjustment for Participants Covered by Certain
         Programs) of the PSI Plan.

                                       6


                                   ADDENDUM B

                 Cinergy Corp. Non-Union Employees' Pension Plan

I.       MRP NORMAL RETIREMENT FORMULA

         A Participant's annual accrued benefit computed under the MRP Normal
         Retirement Formula as of December 31, 1997, equals 1.3 percent of the
         Participant's MRP Final Average Compensation, plus .35 percent of MRP
         Final Average Compensation in excess of MRP Covered Compensation
         multiplied times the Participant's Years of Accredited Service to and
         including 30 years; plus .1 percent of the Participant's MRP Final
         Average Compensation times the Participant's Years of Accredited
         Service in excess of 30 years.

II.      RIP NORMAL RETIREMENT FORMULA

         A Participant's annual accrued benefit computed under the RIP Normal
         Retirement Formula as of December 31, 1997, equals 57 percent of the
         Participant's RIP Final Average Compensation reduced by one-half of his
         or her Primary Social Security Benefit. If the Participant has less
         than 30 Years of Accredited Service as of December 31, 1997, the amount
         will be further reduced by 1/30 for each full year less than 30 years.
         If the Participant has more than 30 Years of Accredited Service as of
         December 31, 1997, the amount will be increased by $6.00 for each Year
         of Accredited Service over 30 years.

III.     MRP AND RIP DEFINITIONS

         For purposes of the MRP and RIP formulas, the capitalized terms will
         have the meanings set forth in the Plan. In addition, the following
         words and phrases will have the meanings set forth in this Addendum:

         (a)      "CG&E Service" means, with respect to an Employee, the period
                  of time during which the employment relationship exists
                  between the Employee and CG&E on or before December 31, 1997,
                  the length of which is determined as follows:

                  (1)      An Employee will be credited with CG&E Service for
                           the period of time beginning with his Employment
                           Commencement Date and ending on December 31, 1997.

                  (2)      An Employee will be credited with CG&E Service for
                           each Period of Credited Severance occurring on or
                           before December 31, 1997.

                                       1



                  (3)      An Employee will be credited with CG&E Service for
                           any period of service with a related company (as
                           determined under Code subsections 414(b), (c), and
                           (m)), which will be determined as if he had been
                           employed by CG&E during that period.

                  (4)      In determining an Employee's total CG&E Service for
                           purposes of the MRP or RIP, all periods of CG&E
                           Service that are credited to the Employee under
                           Paragraphs (1) through (3) above will be aggregated.
                           In no event will an Employee receive credit more than
                           once for the same period of CG&E Service. For
                           purposes of determining an Employee's total CG&E
                           Service, the Employee will be credited with one month
                           of CG&E Service for each month during which he is
                           credited with at least one Hour of Service. Those
                           total months of CG&E Service will then be rounded up
                           to the next highest number of whole calendar years.

         (b)      "DCIP" means The Cincinnati Gas & Electric Company Deferred
                  Compensation and Investment Plan.

         (c)      "MRP Covered Compensation" means, with respect to a
                  Participant who was a participant in the MRP as of December
                  31, 1997, the average (without indexing) of the annual Social
                  Security taxable wage bases under the Social Security Act for
                  each year during the 35 calendar years ending with the last
                  day of the calendar year in which the Participant attains his
                  Social Security Retirement Age, but no later than December 31,
                  1997.

         (d)      "MRP Final Average Compensation" means, with respect to a
                  Participant who was a participant in the MRP as of December
                  31, 1997, the average of the five consecutive calendar years
                  of compensation as defined in (1) below, that produce the
                  highest average within the 10 calendar years ending on
                  December 31, 1997.

                  (1)      For purposes of this definition, "compensation" means
                           the annual rate of base pay determined on July 1 of
                           each year prior to 1998. For these purposes, base pay
                           is the wage or salary assigned to each specific job
                           title or position. Base pay does not include
                           overtime, bonuses, severance, or any other special
                           pay. Base pay, however, shall include deferred
                           compensation contributions (as that term is defined
                           under the DCIP and SIP) and will also include any
                           other elective contribution made by CG&E to a plan
                           covered by Code section 125, which contribution is
                           not included in the gross income of the MRP
                           participant. If compensation for any Plan Year
                           beginning before January 1, 1994, is taken into
                           account in determining an MRP participant's MRP Final
                           Average Compensation, the compensation for that Plan
                           Year will be subject to the limitation of Code
                           paragraph

                                       2



                           401(a)(17) that was in effect for that year and the
                           Participant's Nonforfeitable Annual Pension will not
                           be less than the Participant's accrued benefit under
                           the MRP as of December 31, 1993.

                  (2)      For purposes of this definition, an MRP participant's
                           base pay will be converted to an annual rate of
                           compensation using the formula appropriate to the MRP
                           participant's base pay, as follows:

                           (A)      SEMI-MONTHLY RATE. The annual compensation
                                    for an MRP participant paid on a
                                    semi-monthly basis is 24 times the
                                    participant's July 1 semi-monthly base pay.

                           (B)      MONTHLY RATE. The annual compensation for an
                                    MRP participant paid on a monthly basis is
                                    12 times the participant's July 1 monthly
                                    base pay.

                           (C)      HOURLY RATE. The annual compensation for an
                                    MRP participant paid on an hourly basis is
                                    2,080 times the participant's July 1 hourly
                                    base pay.

                           (D)      WEEKLY RATE. The annual compensation for an
                                    MRP participant paid on a weekly basis is 52
                                    times the participant's weekly base pay.

                  (3)      The compensation of an MRP participant who has no
                           salary or wage rate on July 1 of a calendar year
                           because he is on an unpaid leave of absence or
                           temporary suspension will be calculated using his
                           latest rate of pay prior to July 1 of that year, if
                           the MRP participant returns to active employment
                           before his Severance from Service Date. If the MRP
                           participant is on unpaid leave or suspension on July
                           1 of a year, and the participant does not return to
                           active employment before his Severance from Service
                           Date, his compensation for that calendar year will be
                           zero.

         (e)      "Primary Social Security Benefit" means the primary federal
                  old age insurance benefit estimated by the Committee that is,
                  or would be, payable to an RIP participant at age 65 based on
                  the federal Social Security Act in effect on December 31,
                  1997.

                  The Primary Social Security Benefit of an RIP participant who
                  had not attained age 65 by December 31, 1997, will be
                  determined by assuming that he continued to receive
                  compensation after December 31, 1997, at the rate of
                  compensation in effect immediately prior to that, to age 55,
                  and zero compensation from age 55 thereafter until age 65.

                                       3



                  If an RIP participant was hired after 1950, he will be
                  provided with written notice of his right to supply actual
                  pre-employment earnings history, or the financial consequences
                  of failing to supply such history, and that the RIP
                  participant can obtain his actual earnings history on a
                  year-by-year basis from the Social Security administration.

                  If an RIP participant whose pre-CG&E employment earnings
                  history was estimated supplies documentation from the Social
                  Security administration of his actual year-by-year earnings
                  history, the RIP participant's Primary Social Security Benefit
                  that previously was estimated will be recalculated using
                  actual pre-CG&E employment earnings. Such documentation must
                  be supplied no later than 6 months following the later of:

                  (1)      the date of the RIP participant's termination of
                           employment (by retirement or otherwise), or

                  (2)      the date that the RIP participant is notified of the
                           benefit to which he is entitled.

         (f)      "RIP Final Average Compensation" means, with respect to a
                  Participant who was a participant in the RIP as of December
                  31, 1997, the average of the four consecutive calendar years
                  of compensation, as defined in (1) below, that produce the
                  highest average within the 10 calendar years ending on
                  December 31, 1997.

                  (1)      For purposes of this definition, "compensation" means
                           the annual rate of base pay determined on July 1 of
                           each year prior to 1998. For these purposes, base pay
                           is the wage or salary assigned to each specific job
                           title or position. Base pay does not include
                           overtime, bonuses, severance, or any other special
                           pay. Base pay, however, will include deferred
                           compensation contributions (as that term is defined
                           under the DCIP and SIP) and will also include any
                           other elective contribution made by CG&E to a plan
                           covered by Code section 125, which contribution is
                           not included in the gross income of the RIP
                           participant. If compensation for any Plan Year
                           beginning before January 1, 1994, is taken into
                           account in determining an RIP Participant's RIP Final
                           Average Compensation, the compensation for that Plan
                           Year will be subject to the limitation of Code
                           paragraph 401(a)(17) that was in effect for that year
                           and the Participant's Nonforfeitable Annual Pension
                           will not be less than the Participant's accrued
                           benefit under the RIP as of December 31, 1993.

                  (2)      For purposes of this definition, an RIP participant's
                           base pay will be converted to an annual rate of
                           compensation using the formula appropriate to the
                           participant's base pay, as follows:

                                       4



                           (A)      SEMI-MONTHLY RATE. The annual compensation
                                    for an RIP participant paid on a
                                    semi-monthly basis is 24 times the
                                    participant's July 1 semi-monthly base pay.

                           (B)      MONTHLY RATE. The annual compensation for an
                                    RIP participant paid on a monthly basis is
                                    12 times the participant's July 1 monthly
                                    base pay.

                           (C)      HOURLY RATE. The annual compensation for an
                                    RIP participant paid on an hourly basis is
                                    2,080 times the participant's July 1 hourly
                                    base pay.

                           (D)      WEEKLY RATE. The annual compensation for an
                                    RIP participant paid on a weekly basis is 52
                                    times the participant's weekly base pay.

                  (3)      The compensation of an RIP participant who has no
                           salary or wage rate on July 1 of a calendar year
                           because he is on an unpaid leave of absence or
                           temporary suspension will be calculated using his
                           latest rate of pay prior to July 1 of that year, if
                           the RIP participant returns to active employment
                           before his Severance from Service Date. If the RIP
                           participant is on unpaid leave or suspension on July
                           1 of a year, and the participant does not return to
                           active employment before his Severance from Service
                           Date, his compensation for that calendar year will be
                           zero.

         (g)      "SIP" means The Cincinnati Gas & Electric Company Savings
                  Incentive Plan.

(h)      "Years of Accredited Service" means the number of years equal to the
         length of the Employee's CG&E Service on or before December 31, 1997,
         during which the Employee is treated as a participant in the MRP or
         RIP. The calculation of an Employee's Years of Accredited Service will
         begin on the first day of the month during which the Employee became
         eligible to participate in the MRP or the RIP.

                                       5



                                   ADDENDUM C

              MRP/RIP 100% Spousal and Contingent Annuitant Benefit



        NUMBER OF FULL YEARS                                         NUMBER OF FULL YEARS
           THE SPOUSE OR                                                 THE SPOUSE OR
        CONTINGENT ANNUITANT                                         CONTINGENT ANNUITANT
              WAS BORN                                                     WAS BORN
       AFTER THE PARTICIPANT                 FACTOR                  AFTER THE PARTICIPANT               FACTOR
       ---------------------                 ------                  ---------------------               ------
                                                                                                
                 0                            .911                            20                          .861
                 1                            .908                            21                          .859
                 2                            .905                            22                          .858
                 3                            .902                            23                          .856
                 4                            .899                            24                          .855
                 5                            .896                            25                          .853
                 6                            .893                            26                          .852
                 7                            .890                            27                          .851
                 8                            .887                            28                          .850
                 9                            .885                            29                          .849
                 10                           .882                            30                          .848
                 11                           .880                            31                          .847
                 12                           .877                            32                          .846
                 13                           .875                            33                          .845
                 14                           .872                            34                          .844
                 15                           .870                            35                          .844
                 16                           .868                            36                          .843
                 17                           .866                            37                          .842
                 18                           .864                            28                          .842
                 19                           .863                            39                          .841
                                                                              40                          .841


                                       1





        NUMBER OF FULL YEARS                                         NUMBER OF FULL YEARS
           THE SPOUSE OR                                                 THE SPOUSE OR
        CONTINGENT ANNUITANT                                         CONTINGENT ANNUITANT
          WAS BORN BEFORE                                               WAS BORN BEFORE
       THE PRIMARY ANNUITANT                 FACTOR                  THE PRIMARY ANNUITANT               FACTOR
       ---------------------                 ------                  ---------------------               ------
                                                                                                
                 0                            .911                            20                          .973
                 1                            .915                            21                          .975
                 2                            .918                            22                          .977
                 3                            .922                            23                          .979
                 4                            .925                            24                          .981
                 5                            .928                            25                          .982
                 6                            .932                            26                          .984
                 7                            .935                            27                          .985
                 8                            .939                            28                          .986
                 9                            .942                            29                          .987
                 10                           .945                            30                          .988
                 11                           .949
                 12                           .952
                 13                           .955
                 14                           .958
                 15                           .961
                 16                           .963
                 17                           .966
                 18                           .968
                 19                           .971



Morality:   1971 TPF&C Forecast Mortality Table (Employee rate based on
            85% male; Contingent Annuitant rate based on 85% female)
Interest:   7.5%
Subsidy:    Factors include a 50% subsidy provided by the Company
Effective:  January 1, 1984

                                       2


                                   Addendum D
                    MRP/RIP 50% Contingent Annuitant Factors

                       PENSIONER WHOSE RETIREMENT AGE IS:



  BENEFICIARY'S                                                                                               BENEFICIARY'S
     AGE AT                                                                                                      AGE AT
   PENSIONER'S                                                                                                 PENSIONER'S
   RETIREMENT      25    26    27    28   29    30    31    32    33   34    35    36    37     38   39    40  RETIREMENT
- ---------------- ----- ----- ----- ----- ---- ----- ----- ----- ----- ----- ----- ----- ----- ----- ---- ----- ------------
                                                           
       20        .985  .984  .982  .981  .979  .978  .976  .974  .972  .970  .967  .965  .962  .959  .956 .952     20
       21        .985  .984  .983  .981  .980  .978  .976  .974  .972  .970  .968  .965  .962  .959  .956 .952     21
       22        .985  .984  .983  .982  .980  .979  .977  .975  .973  .971  .968  .966  .963  .960  .957 .953     22
       23        .986  .985  .983  .982  .981  .979  .977  .975  .973  .971  .969  .966  .964  .961  .958 .954     23
       24        .986  .985  .984  .982  .981  .979  .978  .976  .974  .972  .969  .967  .964  .961  .958 .954     24

       25        .987  .985  .984  .983  .981  .980  .978  .976  .974  .972  .970  .968  .965  .962  .959 .955     25
       26        .987  .986  .985  .983  .982  .980  .979  .977  .975  .973  .971  .968  .966  .963  .960 .955     26
       27        .987  .986  .985  .984  .982  .981  .979  .977  .976  .974  .971  .969  .966  .963  .960 .956     27
       28        .988  .987  .985  .984  .983  .981  .980  .978  .976  .974  .972  .970  .967  .964  .961 .957     28
       29        .988  .987  .986  .985  .983  .982  .980  .979  .977  .975  .973  .970  .968  .965  .962 .957     29

       30        .988  .987  .986  .985  .984  .982  .981  .979  .977  .975  .973  .971  .968  .966  .963 .958     30
       31        .989  .988  .987  .986  .984  .983  .981  .980  .978  .976  .974  .972  .969  .967  .964 .959     31
       32        .989  .988  .987  .986  .985  .983  .982  .980  .979  .977  .975  .972  .970  .967  .965 .960     32
       33        .989  .989  .988  .986  .985  .984  .983  .981  .979  .977  .975  .973  .971  .968  .965 .960     33
       34        .990  .989  .988  .987  .986  .984  .983  .982  .980  .978  .976  .974  .972  .969  .966 .961     34

       35        .990  .989  .988  .987  .986  .985  .984  .982  .981  .979  .977  .975  .972  .970  .967 .962     35
       36        .991  .990  .989  .988  .987  .985  .984  .983  .981  .979  .978  .976  .973  .971  .968 .963     36
       37        .991  .990  .989  .988  .987  .986  .985  .983  .982  .980  .978  .976  .974  .972  .969 .964     37
       38        .991  .990  .990  .989  .988  .987  .985  .984  .982  .981  .979  .977  .975  .973  .970 .965     38
       39        .992  .991  .990  .989  .988  .987  .986  .985  .983  .982  .980  .978  .976  .974  .971 .966     39



                                      1





                                   Addendum D
                    MRP/RIP 50% Contingent Annuitant Factors
                       PENSIONER WHOSE RETIREMENT AGE IS:




  BENEFICIARY'S                                                                                                  BENEFICIARY'S
     AGE AT                                                                                                         AGE AT
   PENSIONER'S                                                                                                    PENSIONER'S
   RETIREMENT     25    26    27    28    29    30    31    32    33    34    35    36    37    38    39    40    RETIREMENT
                                                              
       40        .992  .991  .990  .990  .989  .988  .986  .985  .984  .982  .981  .979  .977  .974  .972  .967       40
       41        .992  .992  .991  .990  .989  .988  .987  .986  .984  .983  .981  .979  .978  .975  .973  .968       41
       42        .993  .992  .991  .990  .990  .989  .987  .986  .985  .984  .982  .980  .978  .976  .974  .968       42
       43        .993  .992  .992  .991  .990  .989  .988  .987  .986  .984  .983  .981  .979  .977  .975  .969       43
       44        .993  .993  .992  .991  .990  .990  .989  .987  .986  .985  .983  .982  .980  .978  .976  .970       44

       45        .994  .993  .992  .992  .991  .990  .989  .988  .987  .986  .984  .983  .981  .979  .977  .971       45
       46        .994  .993  .993  .992  .991  .990  .990  .989  .987  .986  .985  .983  .982  .980  .978  .972       46
       47        .994  .994  .993  .992  .992  .991  .990  .989  .988  .987  .986  .984  .983  .981  .979  .973       47
       48        .994  .994  .993  .993  .992  .991  .991  .990  .989  .987  .986  .985  .983  .982  .980  .974       48
       49        .995  .994  .994  .993  .992  .992  .991  .990  .989  .988  .987  .986  .984  .983  .981  .975       49

       50        .995  .994  .994  .993  .993  .992  .991  .991  .990  .989  .988  .986  .985  .983  .982  .976       50
       51        .995  .995  .994  .994  .993  .993  .992  .991  .990  .989  .988  .987  .986  .984  .983  .977       51
       52        .995  .995  .995  .994  .994  .993  .992  .992  .991  .990  .989  .988  .986  .985  .983  .978       52
       53        .996  .995  .995  .994  .994  .993  .993  .992  .991  .990  .989  .988  .987  .986  .984  .979       53
       54        .996  .996  .995  .995  .994  .994  .993  .992  .992  .991  .990  .989  .988  .986  .985  .980       54
- ---------------  ----  ----  ----  ----  ----  ----  ----  ----  ----  ----  ----  ----  ----  ----  ----  ----  ------------
                  25    26    27    28    29    30    31    32    33    34    35    36    37    38    39    40

                       PENSIONER WHOSE RETIREMENT AGE IS:

Mortality:        1971 TPF&C Forecast Mortality Table (Pensioner rate based on
                  85% male; Beneficiary rate based on 85%
female)
Interest Rate:    7.5%
Effective:        January 1, 1984
Prepared by:      Towers Perrin


                                      2





                                   Addendum D
                    MRP/RIP 50% Contingent Annuitant Factors
                       PENSIONER WHOSE RETIREMENT AGE IS:




  BENEFICIARY'S                                                                                                    BENEFICIARY'S
     AGE AT                                                                                                           AGE AT
   PENSIONER'S                                                                                                      PENSIONER'S
   RETIREMENT       25    26    27    28    29    30    31    32    33    34    35    36    37    38    39    40    RETIREMENT
- ----------------   ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------------
                                                                
       55          .996  .996  .995  .995  .995  .994  .994  .993  .992  .991  .991  .990  .988  .987  .986  .981       55
       56          .996  .996  .996  .995  .995  .994  .994  .993  .993  .992  .991  .990  .989  .988  .987  .982       56
       57          .997  .996  .996  .996  .995  .995  .994  .994  .993  .992  .992  .991  .990  .989  .987  .983       57
       58          .997  .996  .996  .996  .995  .995  .995  .994  .994  .993  .992  .991  .990  .989  .988  .984       58
       59          .997  .997  .996  .996  .996  .995  .995  .994  .994  .993  .993  .992  .991  .990  .989  .985       59

       60          .997  .997  .997  .996  .996  .996  .995  .995  .994  .994  .993  .992  .992  .991  .990  .985       60
       61          .997  .997  .997  .997  .996  .996  .996  .995  .995  .994  .994  .993  .992  .991  .990  .986       61
       62          .997  .997  .997  .997  .997  .996  .996  .995  .995  .995  .994  .993  .993  .992  .991  .987       62
       63          .998  .997  .997  .997  .997  .997  .996  .996  .995  .995  .994  .994  .993  .992  .992  .988       63
       64          .998  .998  .997  .997  .997  .997  .996  .996  .996  .995  .995  .994  .994  .993  .992  .989       64

       65          .998  .998  .998  .997  .997  .997  .997  .996  .996  .996  .995  .995  .994  .993  .993  .989       65
       66          .998  .998  .998  .998  .997  .997  .997  .997  .996  .996  .996  .995  .995  .994  .993  .990       66
       67          .998  .998  .998  .998  .998  .997  .997  .997  .997  .996  .996  .995  .995  .994  .994  .991       67
       68          .998  .998  .998  .998  .998  .998  .997  .997  .997  .997  .996  .996  .995  .995  .994  .991       68
       69          .998  .998  .998  .998  .998  .998  .998  .997  .997  .997  .997  .996  .996  .995  .995  .992       69

       70          .999  .998  .998  .998  .998  .998  .998  .998  .997  .997  .997  .996  .996  .996  .995  .992       70
       71          .999  .999  .999  .998  .998  .998  .998  .998  .998  .997  .997  .997  .996  .996  .996  .993       71
       72          .999  .999  .999  .999  .998  .998  .998  .998  .998  .998  .997  .997  .997  .996  .996  .994       72
       73          .999  .999  .999  .999  .999  .998  .998  .998  .998  .998  .998  .997  .997  .997  .996  .994       73
       74          .999  .999  .999  .999  .999  .999  .998  .998  .998  .998  .998  .997  .997  .997  .997  .995       74


                                      3





                                   Addendum D
                    MRP/RIP 50% Contingent Annuitant Factors
                       PENSIONER WHOSE RETIREMENT AGE IS:

  BENEFICIARY'S                                                                                                      BENEFICIARY'S
     AGE AT                                                                                                              AGE AT
   PENSIONER'S                                                                                                         PENSIONER'S
   RETIREMENT       25     26     27     28    29    30    31    32    33    34    35    36    37    38    39    40    RETIREMENT
       75          .999   .999   .999   .999  .999  .999  .999  .998  .998  .998  .998  .998  .997  .997  .997  .995       75
       76          .999   .999   .999   .999  .999  .999  .999  .999  .998  .998  .998  .998  .998  .997  .997  .995       76
       77          .999   .999   .999   .999  .999  .999  .999  .999  .999  .998  .998  .998  .998  .998  .997  .996       77
       78          .999   .999   .999   .999  .999  .999  .999  .999  .999  .999  .998  .998  .998  .998  .998  .996       78
       79          .999   .999   .999   .999  .999  .999  .999  .999  .999  .999  .999  .998  .998  .998  .998  .996       79

       80          .999   .999   .999   .999  .999  .999  .999  .999  .999  .999  .999  .999  .998  .998  .998  .997       80
       81          .999   .999   .999   .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .998  .998  .997       81
       82          .999   .999   .999   .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .998  .997       82
       83          .999   .999   .999   .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .998       83
       84          .999   .999   .999   .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .998       84

       85          .999   .999   .999   .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .998       85
       86          .999   .999   .999   .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .998       86
       87         1.000   .999   .999   .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .998       87
       88         1.000  1.000   .999   .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .998       88
       89         1.000  1.000  1.000  1.000  .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .999  .999       89
- ---------------   -----  -----  -----  -----  ----  ----  ----  ----  ----  ----  ----  ----  ----  ----  ----  ---- ------------
                     25     26     27     28    29    30    31    32    33    34    35    36    37    38    39    40

                       PENSIONER WHOSE RETIREMENT AGE IS:

Mortality:        1971 TPF&C Forecast Mortality Table (Pensioner rate based on
                  85% male; Beneficiary rate based on
85% female)
Interest Rate:    7.5%
Effective:        January 1, 1984
Prepared by:      Towers Perrin



                                   Addendum D
                    MRP/RIP 50% Contingent Annuitant Factors
                       PENSIONER WHOSE RETIREMENT AGE IS:




  BENEFICIARY'S                                                                                                     BENEFICIARY'S
     AGE AT                                                                                                           AGE AT
   PENSIONER'S                                                                                                       PENSIONER'S
   RETIREMENT     40    41    42    43    44    45    46    46    48    49    50    51    52    53    54     55      RETIREMENT
- ---------------- ----  ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------- --------------
                                                                
       20        .952  .948  .945  .941  .936  .932  .927  .922  .917  .911  .905  .899  .893  .886  .879   .872         20



                                      4





       21        .952  .949  .945  .941  .937  .932  .928  .923  .917  .912  .906  .900  .894  .887  .880   .873         21
       22        .953  .949  .946  .942  .937  .933  .928  .923  .918  .912  .907  .901  .894  .888  .881   .873         22
       23        .954  .950  .946  .942  .938  .933  .929  .924  .919  .913  .907  .901  .895  .888  .881   .874         23
       24        .954  .951  .947  .943  .939  .934  .929  .924  .919  .914  .908  .902  .896  .889  .882   .875         24

       25        .955  .951  .947  .943  .939  .935  .930  .925  .920  .914  .909  .903  .896  .890  .883   .876         25
       26        .955  .952  .948  .944  .940  .936  .931  .926  .921  .915  .910  .904  .897  .891  .884   .877         26
       27        .956  .953  .949  .945  .941  .936  .932  .927  .922  .916  .910  .904  .898  .892  .885   .878         27
       28        .957  .953  .950  .946  .941  .937  .932  .928  .922  .917  .911  .905  .899  .893  .886   .878         28
       29        .957  .954  .950  .946  .942  .938  .933  .928  .923  .918  .912  .906  .900  .894  .887   .879         29

       30        .958  .955  .951  .947  .943  .939  .934  .929  .924  .919  .913  .907  .901  .895  .888   .881         30
       31        .959  .955  .952  .948  .944  .940  .935  .930  .925  .920  .914  .908  .902  .896  .889   .882         31
       32        .960  .956  .953  .949  .945  .941  .936  .931  .926  .921  .915  .909  .903  .897  .890   .883         32
       33        .960  .957  .954  .950  .946  .942  .937  .932  .927  .922  .916  .911  .904  .898  .891   .884         33
       34        .961  .958  .954  .951  .947  .943  .938  .933  .928  .923  .918  .912  .906  .899  .893   .885         34

       35        .962  .959  .955  .952  .948  .944  .939  .934  .929  .924  .919  .913  .907  .901  .894   .887         35
       36        .963  .960  .956  .953  .949  .945  .940  .936  .931  .926  .920  .914  .908  .902  .895   .888         36
       37        .964  .961  .957  .954  .950  .946  .941  .937  .932  .927  .921  .916  .910  .903  .897   .890         37
       38        .965  .962  .958  .955  .951  .947  .943  .938  .933  .928  .923  .917  .911  .905  .898   .891         38
       39        .966  .963  .959  .956  .952  .948  .944  .939  .935  .929  .924  .919  .913  .906  .900   .893         39






                                   Addendum D
                    MRP/RIP 50% Contingent Annuitant Factors
                       PENSIONER WHOSE RETIREMENT AGE IS:

  BENEFICIARY'S                                                                                                    BENEFICIARY'S
     AGE AT                                                                                                           AGE AT
   PENSIONER'S                                                                                                      PENSIONER'S
   RETIREMENT      25    26    27    28    29    30    31    32    33    34    35    36    37    38    39     40    RETIREMENT

       40         .967  .964  .960  .957  .953  .949  .945  .941  .936  .931  .926  .920  .914  .908  .902   .895       40
       41         .968  .965  .961  .958  .954  .950  .946  .942  .937  .932  .927  .922  .916  .910  .903   .897       41
       42         .968  .966  .963  .959  .956  .952  .948  .943  .939  .934  .929  .923  .918  .912  .905   .898       42
       43         .969  .967  .964  .960  .957  .953  .949  .945  .940  .935  .930  .925  .919  .913  .907   .900       43
       44         .970  .968  .965  .961  .958  .954  .950  .946  .942  .937  .932  .927  .921  .915  .909   .902       44

       45         .971  .969  .966  .963  .959  .956  .952  .948  .943  .939  .934  .929  .923  .917  .911   .904       45



                                      5





       46         .972  .970  .967  .964  .961  .957  .953  .949  .945  .940  .935  .930  .925  .919  .913   .907       46
       47         .973  .971  .968  .965  .962  .958  .955  .951  .946  .942  .937  .932  .927  .921  .915   .909       47
       48         .974  .972  .969  .966  .963  .960  .956  .952  .948  .944  .939  .934  .929  .923  .917   .911       48
       49         .975  .973  .970  .968  .964  .961  .958  .954  .950  .945  .941  .936  .931  .925  .920   .913       49

       50         .976  .974  .972  .969  .966  .963  .959  .955  .951  .947  .943  .938  .933  .928  .922   .916       50
       51         .977  .975  .973  .970  .967  .964  .961  .957  .953  .949  .945  .940  .935  .930  .924   .918       51
       52         .978  .976  .974  .971  .968  .965  .962  .959  .955  .951  .947  .942  .937  .932  .926   .921       52
       53         .979  .977  .975  .972  .970  .967  .964  .960  .957  .953  .948  .944  .939  .934  .929   .923       53
       54         .980  .978  .976  .974  .971  .968  .965  .962  .958  .954  .950  .946  .941  .937  .931   .926       54
- ---------------- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ---- ------- -------------
                   40    41    42    43    44    45    46    47    48    49    50    51    52    53    54     55


                       PENSIONER WHOSE RETIREMENT AGE IS:

Mortality:        1971 TPF&C Forecast Mortality Table (Pensioner rate based on
                  85% male; Beneficiary rate based on
85% female)
Interest Rate:    7.5%
Effective:        January 1, 1984
Prepared by:      Towers Perrin




                                      6





                                   Addendum D
                    MRP/RIP 50% Contingent Annuitant Factors
                       PENSIONER WHOSE RETIREMENT AGE IS:




  BENEFICIARY'S                                                                                                    BENEFICIARY'S
     AGE AT                                                                                                           AGE AT
   PENSIONER'S                                                                                                      PENSIONER'S
   RETIREMENT     40    41    42    43    44    45    46    47    48    49    50    51    52    53    54    55      RETIREMENT
- ---------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------ --------------
                                                               
       55        .981  .979  .977  .975  .972  .969  .966  .963  .960  .956  .952  .948  .944  .939  .934  .928         55
       56        .982  .980  .978  .976  .973  .971  .968  .965  .962  .958  .954  .950  .946  .941  .936  .931         56
       57        .983  .981  .979  .977  .975  .972  .969  .966  .963  .960  .956  .952  .948  .943  .939  .933         57
       58        .984  .982  .980  .978  .976  .973  .971  .968  .965  .962  .958  .954  .950  .946  .941  .936         58
       59        .985  .983  .981  .979  .977  .975  .972  .969  .966  .963  .960  .956  .952  .948  .943  .939         59

       60        .985  .984  .982  .980  .978  .976  .974  .971  .968  .965  .962  .958  .954  .950  .946  .941         60
       61        .986  .985  .983  .981  .979  .977  .975  .972  .970  .967  .964  .960  .957  .953  .948  .944         61
       62        .987  .986  .984  .982  .981  .978  .976  .974  .971  .968  .965  .962  .959  .955  .951  .946         62
       63        .988  .987  .985  .983  .982  .980  .978  .975  .973  .970  .967  .964  .961  .957  .953  .949         63
       64        .989  .987  .986  .984  .983  .981  .979  .977  .974  .972  .969  .966  .963  .959  .956  .952         64

       65        .989  .988  .987  .985  .984  .982  .980  .978  .976  .973  .971  .968  .965  .961  .958  .954         65
       66        .990  .989  .988  .986  .985  .983  .981  .979  .977  .975  .972  .970  .967  .964  .960  .957         66
       67        .991  .990  .988  .987  .986  .984  .982  .981  .979  .976  .974  .971  .969  .966  .962  .959         67
       68        .991  .990  .989  .988  .987  .985  .984  .982  .980  .978  .976  .973  .971  .968  .965  .961         68
       69        .992  .991  .990  .989  .988  .986  .985  .983  .981  .979  .977  .975  .972  .970  .967  .964         69

       70        .992  .992  .991  .990  .988  .987  .986  .984  .982  .981  .979  .976  .974  .972  .969  .966         70
       71        .993  .992  .991  .990  .989  .988  .987  .985  .984  .982  .980  .978  .976  .974  .971  .968         71
       72        .994  .993  .992  .991  .990  .989  .988  .986  .985  .983  .981  .980  .978  .975  .973  .970         72
       73        .994  .993  .993  .992  .991  .990  .988  .987  .986  .984  .983  .981  .979  .977  .975  .972         73
       74        .995  .994  .993  .992  .991  .990  .989  .988  .987  .985  .984  .982  .981  .979  .977  .974         74



                                      7





                                   Addendum D
                    MRP/RIP 50% Contingent Annuitant Factors
                       PENSIONER WHOSE RETIREMENT AGE IS:

  BENEFICIARY'S                                                                                                   BENEFICIARY'S
     AGE AT                                                                                                          AGE AT
   PENSIONER'S                                                                                                     PENSIONER'S
   RETIREMENT      40    41    42    43    44    45    46    47    48    49    50    51    52    53    54    55    RETIREMENT

       75         .995  .994  .994  .993  .992  .991  .990  .989  .988  .987  .985  .984  .982  .980  .978  .976        75
       76         .995  .995  .994  .993  .993  .992  .991  .990  .989  .988  .986  .985  .983  .982  .980  .978        76
       77         .996  .995  .995  .994  .993  .992  .992  .991  .990  .988  .987  .986  .985  .983  .981  .979        77
       78         .996  .996  .995  .994  .994  .993  .992  .991  .990  .989  .988  .987  .986  .984  .983  .981        78
       79         .996  .996  .995  .995  .994  .994  .993  .992  .991  .990  .989  .988  .987  .985  .984  .982        79

       80         .997  .996  .996  .995  .995  .994  .993  .993  .992  .991  .990  .989  .988  .987  .985  .984        80
       81         .997  .997  .996  .996  .995  .995  .994  .993  .993  .992  .991  .990  .989  .988  .986  .985        81
       82         .997  .997  .997  .996  .996  .995  .995  .994  .993  .992  .992  .991  .990  .989  .988  .986        82
       83         .998  .997  .997  .996  .996  .996  .995  .994  .994  .993  .992  .992  .991  .990  .989  .987        83
       84         .998  .997  .997  .997  .996  .996  .995  .995  .994  .994  .993  .992  .991  .991  .990  .989        84

       85         .998  .998  .997  .997  .997  .996  .996  .995  .995  .994  .994  .993  .992  .991  .990  .990        85
       86         .998  .998  .998  .997  .997  .997  .996  .996  .995  .995  .994  .994  .993  .992  .991  .990        86
       87         .998  .998  .998  .998  .997  .997  .997  .996  .996  .995  .995  .994  .993  .993  .992  .991        87
       88         .998  .998  .998  .998  .998  .997  .997  .997  .996  .996  .995  .995  .994  .993  .993  .992        88
       89         .999  .998  .998  .998  .998  .997  .997  .997  .996  .996  .996  .995  .995  .994  .993  .993        89
- ----------------  ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------------
                   40    41    42    43    44    45    46    47    48    49    50    51    52    53    54    55

                       PENSIONER WHOSE RETIREMENT AGE IS:

Mortality:        1971 TPF&C Forecast Mortality Table (Pensioner rate based on
                  85% male; Beneficiary rate based on
85% female)
Interest Rate:    7.5%
Effective:        January 1, 1984
Prepared by:      Towers Perrin



                                      8




                                   Addendum D
                    MRP/RIP 50% Contingent Annuitant Factors
                       PENSIONER WHOSE RETIREMENT AGE IS:



  BENEFICIARY'S                                                                                                  BENEFICIARY'S
     AGE AT                                                                                                          AGE AT
   PENSIONER'S                                                                                                     PENSIONER'S
   RETIREMENT     55    56    57    58    59    60    61    62    63    64    65    66    67    68    69    70     RETIREMENT
- ---------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -------------
                                                              

       20        .872  .864  .856  .848  .839  .829  .819  .809  .798  .786  .774  .762  .749  .735  .722  .708        20
       21        .873  .865  .857  .849  .839  .830  .820  .810  .799  .787  .775  .762  .749  .736  .722  .708        21
       22        .873  .866  .858  .849  .840  .831  .821  .810  .799  .788  .776  .763  .750  .737  .723  .709        22
       23        .874  .867  .858  .850  .841  .831  .821  .811  .800  .788  .776  .764  .751  .737  .724  .710        23
       24        .875  .867  .859  .851  .842  .832  .822  .812  .801  .789  .777  .765  .752  .738  .725  .711        24

       25        .876  .868  .860  .852  .843  .833  .823  .813  .802  .790  .778  .765  .752  .739  .725  .712        25
       26        .877  .869  .861  .852  .843  .834  .824  .814  .803  .791  .779  .766  .753  .740  .726  .712        26
       27        .878  .870  .862  .853  .844  .835  .825  .815  .804  .792  .780  .767  .754  .741  .727  .713        27
       28        .878  .871  .863  .854  .845  .836  .826  .816  .805  .793  .781  .768  .755  .742  .728  .715        28
       29        .879  .872  .864  .855  .847  .837  .827  .817  .806  .794  .782  .770  .757  .743  .730  .716        29

       30        .881  .873  .865  .857  .848  .838  .828  .818  .807  .795  .783  .771  .758  .744  .731  .717        30
       31        .882  .874  .866  .858  .849  .839  .830  .819  .808  .797  .785  .772  .759  .746  .732  .718        31
       32        .883  .875  .867  .859  .850  .841  .831  .820  .810  .798  .786  .773  .760  .747  .733  .719        32
       33        .884  .877  .869  .860  .851  .842  .832  .822  .811  .799  .787  .775  .762  .748  .735  .721        33
       34        .885  .878  .870  .862  .853  .844  .834  .823  .812  .801  .789  .776  .763  .750  .736  .722        34

       35        .887  .879  .872  .863  .854  .845  .835  .825  .814  .802  .790  .778  .765  .752  .738  .724        35
       36        .888  .881  .873  .865  .856  .847  .837  .826  .816  .804  .792  .780  .767  .753  .740  .726        36
       37        .890  .882  .875  .866  .858  .848  .839  .828  .817  .806  .794  .781  .768  .755  .742  .728        37
       38        .891  .884  .876  .868  .859  .850  .840  .830  .819  .808  .796  .783  .770  .757  .743  .730        38
       39        .893  .886  .878  .870  .861  .852  .842  .832  .821  .810  .798  .785  .772  .759  .746  .732        39




                                      9





                                   Addendum D
                    MRP/RIP 50% Contingent Annuitant Factors
                       PENSIONER WHOSE RETIREMENT AGE IS:



  BENEFICIARY'S                                                                                                   BENEFICIARY'S
     AGE AT                                                                                                          AGE AT
   PENSIONER'S                                                                                                     PENSIONER'S
   RETIREMENT     55    56    57    58    59    60    61    62    63    64    65    66    67    68    69    70     RETIREMENT
                                                              

       40        .895  .888  .880  .872  .863  .854  .844  .834  .823  .812  .800  .787  .775  .761  .748  .734       40
       41        .897  .889  .882  .874  .865  .856  .846  .836  .825  .814  .802  .790  .777  .764  .750  .736       41
       42        .898  .891  .884  .876  .867  .858  .848  .838  .828  .816  .804  .792  .779  .766  .752  .739       42
       43        .900  .893  .886  .878  .869  .860  .851  .841  .830  .819  .807  .794  .782  .769  .755  .741       43
       44        .902  .895  .888  .880  .872  .863  .853  .843  .832  .821  .809  .797  .784  .771  .758  .744       44

       45        .904  .897  .890  .882  .874  .865  .856  .846  .835  .824  .812  .800  .787  .774  .761  .747       45
       46        .907  .900  .892  .885  .876  .867  .858  .848  .838  .827  .815  .803  .790  .777  .763  .750       46
       47        .909  .902  .895  .887  .879  .870  .861  .851  .841  .829  .818  .806  .793  .780  .767  .753       47
       48        .911  .904  .897  .890  .881  .873  .864  .854  .843  .832  .821  .809  .796  .783  .770  .756       48
       49        .913  .907  .900  .892  .884  .876  .866  .857  .847  .836  .824  .812  .800  .787  .773  .760       49

       50        .916  .909  .902  .895  .887  .878  .869  .860  .850  .839  .827  .815  .803  .790  .777  .763       50
       51        .918  .912  .905  .898  .890  .881  .872  .863  .853  .842  .831  .819  .807  .794  .781  .767       51
       52        .921  .914  .908  .900  .893  .884  .876  .866  .856  .846  .834  .823  .810  .798  .784  .771       52
       53        .923  .917  .910  .903  .896  .888  .879  .870  .860  .849  .838  .826  .814  .801  .788  .775       53
       54        .926  .920  .913  .906  .899  .891  .882  .873  .863  .853  .842  .830  .818  .806  .793  .779       54
- ---------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -------------
                  55    56    57    58    59    60    61    62    63    64    65    66    67    68    69    70



                       PENSIONER WHOSE RETIREMENT AGE IS:

Mortality:        1971 TPF&C Forecast Mortality Table (Pensioner rate based on
                  85% male; Beneficiary rate based on 85% female)
Interest Rate:    7.5%
Effective:        January 1, 1984
Prepared by:      Towers Perrin





                                      10





                                   Addendum D
                    MRP/RIP 50% Contingent Annuitant Factors
                       PENSIONER WHOSE RETIREMENT AGE IS:



  BENEFICIARY'S                                                                                                   BENEFICIARY'S
     AGE AT                                                                                                          AGE AT
   PENSIONER'S                                                                                                     PENSIONER'S
   RETIREMENT     55    56    57    58    59    60    61    62    63    64    65    66    67    68    69    70     RETIREMENT
- ---------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- --------------
                                                               
       55        .928  .922  .916  .909  .902  .894  .885  .876  .867  .857  .846  .834  .822  .810  .797  .784        55
       56        .931  .925  .919  .912  .905  .897  .889  .880  .871  .860  .850  .838  .826  .814  .801  .788        56
       57        .933  .928  .922  .915  .908  .901  .892  .884  .874  .864  .854  .842  .831  .819  .806  .793        57
       58        .936  .931  .925  .918  .911  .904  .896  .887  .878  .868  .858  .847  .835  .823  .811  .798        58
       59        .939  .933  .928  .921  .915  .907  .900  .891  .882  .873  .862  .851  .840  .828  .816  .803        59

       60        .941  .936  .931  .924  .918  .911  .903  .895  .886  .877  .867  .856  .845  .833  .821  .808        60
       61        .944  .939  .933  .928  .921  .914  .907  .899  .890  .881  .871  .860  .849  .838  .826  .813        61
       62        .946  .942  .936  .931  .925  .918  .911  .903  .894  .885  .876  .865  .854  .843  .831  .819        62
       63        .949  .944  .939  .934  .928  .921  .914  .907  .899  .890  .880  .870  .859  .848  .836  .824        63
       64        .952  .947  .942  .937  .931  .925  .918  .911  .903  .894  .885  .875  .864  .854  .842  .830        64

       65        .954  .950  .945  .940  .935  .929  .922  .915  .907  .899  .890  .880  .870  .859  .848  .836        65
       66        .957  .953  .948  .943  .938  .932  .926  .919  .911  .903  .894  .885  .875  .865  .854  .842        66
       67        .959  .955  .951  .946  .941  .936  .930  .923  .916  .908  .899  .890  .880  .870  .859  .848        67
       68        .961  .958  .954  .949  .944  .939  .933  .927  .920  .912  .904  .895  .886  .876  .865  .854        68
       69        .964  .960  .956  .952  .948  .943  .937  .931  .924  .917  .909  .900  .891  .881  .871  .861        69

       70        .966  .963  .959  .955  .951  .946  .941  .935  .928  .921  .914  .905  .896  .887  .877  .867        70
       71        .968  .965  .962  .958  .954  .949  .944  .939  .932  .926  .918  .910  .902  .893  .883  .873        71
       72        .970  .967  .964  .961  .957  .952  .948  .942  .936  .930  .923  .915  .907  .898  .889  .879        72
       73        .972  .970  .967  .963  .959  .955  .951  .946  .940  .934  .927  .920  .912  .904  .895  .886        73
       74        .974  .972  .969  .966  .962  .958  .954  .949  .944  .938  .932  .925  .917  .909  .901  .892        74



                                      11





                                   Addendum D
                    MRP/RIP 50% Contingent Annuitant Factors
                       PENSIONER WHOSE RETIREMENT AGE IS:



  BENEFICIARY'S                                                                                                    BENEFICIARY'S
     AGE AT                                                                                                           AGE AT
   PENSIONER'S                                                                                                      PENSIONER'S
   RETIREMENT     55    56    57    58    59    60    61    62    63    64    65    66    67    68    69    70      RETIREMENT
                                                                

       75        .976  .974  .971  .968  .965  .961  .957  .953  .948  .942  .936  .929  .922  .915  .906  .898        75
       76        .978  .976  .973  .970  .967  .964  .960  .956  .951  .946  .940  .934  .927  .920  .912  .904        76
       77        .979  .977  .975  .973  .970  .966  .963  .959  .954  .950  .944  .938  .932  .925  .917  .909        77
       78        .981  .979  .977  .975  .972  .969  .966  .962  .958  .953  .948  .942  .936  .929  .922  .915        78
       79        .982  .981  .979  .976  .974  .971  .968  .965  .961  .956  .951  .946  .940  .934  .927  .920        79

       80        .984  .982  .980  .978  .976  .973  .971  .967  .964  .960  .955  .950  .944  .938  .932  .925        80
       81        .985  .984  .982  .980  .978  .975  .973  .970  .966  .963  .958  .954  .948  .943  .937  .930        81
       82        .986  .985  .983  .982  .980  .977  .975  .972  .969  .965  .961  .957  .952  .947  .941  .935        82
       83        .987  .986  .985  .983  .981  .979  .977  .974  .972  .968  .965  .960  .956  .951  .946  .940        83
       84        .989  .987  .986  .985  .983  .981  .979  .977  .974  .971  .967  .963  .959  .955  .950  .944        84

       85        .990  .988  .987  .986  .984  .983  .981  .979  .976  .973  .970  .966  .962  .958  .954  .949        85
       86        .990  .989  .988  .987  .986  .984  .982  .980  .978  .975  .972  .969  .965  .961  .957  .952        86
       87        .991  .990  .989  .988  .987  .986  .984  .982  .980  .977  .975  .972  .968  .965  .960  .956        87
       88        .992  .991  .990  .989  .988  .987  .985  .984  .982  .979  .977  .974  .971  .967  .964  .960        88
       89        .993  .992  .991  .990  .989  .988  .987  .985  .983  .981  .979  .976  .973  .970  .967  .963        89
- ---------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- --------------
                  55    56    57    58    59    60    61    62    63    64    65    66    67    68    69    70


                       PENSIONER WHOSE RETIREMENT AGE IS:

Mortality:        1971 TPF&C Forecast Mortality Table (Pensioner rate based on
                  85% male; Beneficiary rate based on 85% female)
Interest Rate:    7.5%
Effective:        January 1, 1984
Prepared by:      Towers Perrin



                                      12




                                   Addendum D
                    MRP/RIP 50% Contingent Annuitant Factors
                       PENSIONER WHOSE RETIREMENT AGE IS:



  BENEFICIARY'S                                                                                                   BENEFICIARY'S
     AGE AT                                                                                                          AGE AT
   PENSIONER'S                                                                                                     PENSIONER'S
   RETIREMENT     70    71    72    73    74    75    76    77    78    79    80    81    82    83    84    85     RETIREMENT
- ---------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- --------------
                                                               
       20        .708  .694  .679  .665  .650  .634  .619  .602  .586  .569  .553  .537  .521  .505  .490  .475        20
       21        .708  .694  .680  .666  .651  .635  .619  .603  .586  .570  .554  .537  .522  .506  .490  .475        21
       22        .709  .695  .681  .666  .651  .636  .620  .603  .587  .571  .554  .538  .522  .506  .491  .476        22
       23        .710  .696  .681  .667  .652  .637  .621  .604  .588  .571  .555  .539  .523  .507  .492  .477        23
       24        .711  .697  .682  .668  .653  .637  .621  .605  .588  .572  .556  .540  .524  .508  .492  .477        24

       25        .712  .697  .683  .669  .654  .638  .622  .606  .589  .573  .556  .540  .524  .509  .493  .478        25
       26        .712  .698  .684  .670  .655  .639  .623  .607  .590  .574  .557  .541  .525  .509  .494  .479        26
       27        .713  .699  .685  .671  .656  .640  .624  .608  .591  .575  .558  .542  .526  .510  .495  .480        27
       28        .715  .700  .686  .672  .657  .641  .625  .609  .592  .576  .559  .543  .527  .511  .496  .480        28
       29        .716  .702  .687  .673  .658  .642  .626  .610  .593  .577  .560  .544  .528  .512  .497  .481        29

       30        .717  .703  .688  .674  .659  .643  .627  .611  .594  .578  .561  .545  .529  .513  .498  .482        30
       31        .718  .704  .690  .675  .660  .645  .628  .612  .595  .579  .562  .546  .530  .514  .499  .483        31
       32        .719  .705  .691  .676  .661  .646  .630  .613  .597  .580  .564  .547  .531  .515  .500  .485        32
       33        .721  .707  .692  .678  .663  .647  .631  .615  .598  .582  .565  .549  .533  .517  .501  .486        33
       34        .722  .708  .694  .679  .664  .649  .633  .616  .600  .583  .566  .550  .534  .518  .502  .487        34

       35        .724  .710  .696  .681  .666  .650  .634  .618  .601  .585  .568  .552  .535  .520  .504  .488        35
       36        .726  .712  .697  .683  .668  .652  .636  .619  .603  .586  .570  .553  .537  .521  .505  .490        36
       37        .728  .713  .699  .685  .669  .654  .638  .621  .605  .588  .571  .555  .539  .523  .507  .492        37
       38        .730  .715  .701  .686  .671  .656  .640  .623  .606  .590  .573  .557  .541  .525  .509  .493        38
       39        .732  .717  .703  .689  .673  .658  .642  .625  .608  .592  .575  .559  .542  .526  .511  .495        39



                                      13




                                   Addendum D
                    MRP/RIP 50% Contingent Annuitant Factors
                       PENSIONER WHOSE RETIREMENT AGE IS:



  BENEFICIARY'S                                                                                                    BENEFICIARY'S
     AGE AT                                                                                                           AGE AT
   PENSIONER'S                                                                                                      PENSIONER'S
   RETIREMENT     70    71    72    73    74    75    76    77    78    79    80    81    82    83    84    85      RETIREMENT
                                                               
       40        .734  .720  .705  .691  .676  .660  .644  .627  .611  .594  .577  .561  .544  .528  .513  .497         40
       41        .736  .722  .708  .693  .678  .662  .646  .630  .613  .596  .579  .563  .547  .531  .515  .499         41
       42        .739  .724  .710  .696  .680  .665  .649  .632  .615  .599  .582  .565  .549  .533  .517  .501         42
       43        .741  .727  .713  .698  .683  .667  .651  .635  .618  .601  .584  .568  .551  .535  .519  .504         43
       44        .744  .730  .715  .701  .686  .670  .654  .637  .621  .604  .587  .570  .554  .538  .522  .506         44

       45        .747  .733  .718  .704  .689  .673  .657  .640  .623  .607  .590  .573  .557  .541  .525  .509         45
       46        .750  .736  .721  .707  .692  .676  .660  .643  .626  .610  .593  .576  .560  .543  .527  .512         46
       47        .753  .739  .725  .710  .695  .679  .663  .647  .630  .613  .596  .579  .563  .547  .530  .515         47
       48        .756  .742  .728  .713  .698  .683  .667  .650  .633  .616  .599  .583  .566  .550  .534  .518         48
       49        .760  .746  .732  .717  .702  .686  .670  .654  .637  .620  .603  .586  .570  .553  .537  .521         49

       50        .763  .749  .735  .721  .706  .690  .674  .657  .640  .624  .607  .590  .573  .557  .541  .525         50
       51        .767  .753  .739  .725  .710  .694  .678  .661  .644  .628  .611  .594  .577  .561  .544  .528         51
       52        .771  .757  .743  .729  .714  .698  .682  .665  .649  .632  .615  .598  .581  .565  .548  .532         52
       53        .775  .761  .747  .733  .718  .703  .686  .670  .653  .636  .619  .602  .585  .569  .553  .537         53
       54        .779  .766  .752  .737  .722  .707  .691  .674  .657  .640  .623  .607  .590  .573  .557  .541         54
- ---------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ---- ------- --------------
                  70    71    72    73    74    75    76    77    78    79    80    81    82    83    84    85


                       PENSIONER WHOSE RETIREMENT AGE IS:

Mortality:        1971 TPF&C Forecast Mortality Table (Pensioner rate based on
                  85% male; Beneficiary rate based on 85% female)
Interest Rate:    7.5%
Effective:        January 1, 1984
Prepared by:      Towers Perrin



                                      14




                                   Addendum D
                    MRP/RIP 50% Contingent Annuitant Factors
                       PENSIONER WHOSE RETIREMENT AGE IS:




  BENEFICIARY'S                                                                                                   BENEFICIARY'S
     AGE AT                                                                                                          AGE AT
   PENSIONER'S                                                                                                     PENSIONER'S
   RETIREMENT     70    71    72    73    74    75    76    77    78    79    80    81    82    83    84    85     RETIREMENT
- ---------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -------------
                                                               

       55        .784  .770  .756  .742  .727  .712  .696  .679  .662  .645  .628  .611  .595  .578  .562  .545        55
       56        .788  .775  .761  .747  .732  .717  .700  .684  .667  .650  .633  .616  .599  .583  .566  .550        56
       57        .793  .779  .766  .752  .737  .722  .706  .689  .672  .655  .638  .621  .605  .588  .571  .555        57
       58        .798  .784  .771  .757  .742  .727  .711  .694  .678  .661  .644  .627  .610  .593  .577  .560        58
       59        .803  .789  .776  .762  .748  .732  .716  .700  .683  .666  .649  .632  .616  .599  .582  .566        59

       60        .808  .795  .781  .768  .753  .738  .722  .706  .689  .672  .655  .638  .621  .605  .588  .572        60
       61        .813  .800  .787  .773  .759  .744  .728  .712  .695  .678  .661  .644  .628  .611  .594  .578        61
       62        .819  .806  .793  .779  .765  .750  .734  .718  .702  .685  .668  .651  .634  .617  .601  .584        62
       63        .824  .812  .799  .785  .771  .756  .741  .725  .708  .691  .675  .658  .641  .624  .607  .591        63
       64        .830  .818  .805  .792  .778  .763  .748  .732  .715  .699  .682  .665  .648  .631  .615  .598        64

       65        .836  .824  .811  .798  .784  .770  .755  .739  .722  .706  .689  .672  .656  .639  .622  .606        65
       66        .842  .830  .818  .805  .791  .777  .762  .746  .730  .713  .697  .680  .663  .647  .630  .614        66
       67        .848  .836  .824  .812  .798  .784  .769  .754  .738  .721  .705  .688  .672  .655  .638  .622        67
       68        .854  .843  .831  .819  .806  .792  .777  .762  .746  .730  .713  .697  .680  .663  .647  .630        68
       69        .861  .849  .838  .826  .813  .799  .785  .770  .754  .738  .722  .705  .689  .672  .656  .639        69

       70        .867  .856  .845  .833  .820  .807  .793  .778  .762  .747  .730  .714  .698  .682  .665  .649        70
       71        .873  .863  .852  .840  .828  .815  .801  .786  .771  .755  .739  .723  .707  .691  .675  .658        71
       72        .879  .869  .859  .847  .835  .823  .809  .795  .780  .764  .749  .733  .717  .701  .684  .668        72
       73        .886  .876  .865  .855  .843  .831  .817  .803  .788  .773  .758  .742  .727  .711  .694  .678        73
       74        .892  .882  .872  .862  .850  .838  .825  .812  .797  .782  .767  .752  .736  .721  .705  .689        74



                                      15





                                   Addendum D
                    MRP/RIP 50% Contingent Annuitant Factors
                       PENSIONER WHOSE RETIREMENT AGE IS:



  BENEFICIARY'S                                                                                                   BENEFICIARY'S
     AGE AT                                                                                                          AGE AT
   PENSIONER'S                                                                                                     PENSIONER'S
   RETIREMENT     70    71    72    73    74    75    76    77    78    79    80    81    82    83    84    85     RETIREMENT
                                                               
       75        .898  .889  .879  .869  .858  .846  .834  .820  .806  .792  .777  .762  .746  .731  .715  .699         75
       76        .904  .895  .886  .876  .865  .854  .842  .829  .815  .801  .786  .771  .756  .741  .725  .710         76
       77        .909  .901  .892  .883  .872  .862  .850  .837  .824  .810  .796  .781  .766  .751  .736  .721         77
       78        .915  .907  .898  .889  .880  .869  .858  .845  .832  .819  .805  .791  .776  .762  .747  .731         78
       79        .920  .912  .904  .896  .886  .876  .865  .853  .841  .828  .814  .801  .786  .772  .757  .742         79

       80        .925  .918  .910  .902  .893  .884  .873  .861  .849  .837  .824  .810  .796  .782  .768  .753         80
       81        .930  .923  .916  .908  .900  .891  .880  .869  .858  .846  .833  .820  .807  .793  .779  .764         81
       82        .935  .929  .922  .914  .906  .898  .888  .877  .866  .854  .842  .830  .817  .803  .790  .776         82
       83        .940  .934  .927  .920  .913  .904  .895  .885  .874  .863  .851  .839  .827  .814  .800  .787         83
       84        .944  .939  .932  .926  .919  .911  .902  .892  .882  .871  .860  .849  .836  .824  .811  .798         84

       85        .949  .943  .937  .931  .924  .917  .909  .900  .890  .880  .869  .858  .846  .834  .821  .809         85
       86        .952  .947  .942  .936  .930  .923  .915  .906  .897  .887  .877  .866  .855  .843  .831  .819         86
       87        .956  .951  .946  .941  .935  .928  .921  .913  .904  .895  .885  .875  .864  .853  .841  .829         87
       88        .960  .955  .950  .945  .940  .934  .927  .919  .910  .902  .892  .882  .872  .862  .850  .839         88
       89        .963  .959  .954  .949  .944  .938  .932  .925  .917  .908  .899  .890  .880  .870  .859  .848         89
- ---------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------ -------------
                  70    71    72    73    74    75    76    77    78    79    80    81    82    83    84    85


                       PENSIONER WHOSE RETIREMENT AGE IS:

Mortality:        1971 TPF&C Forecast Mortality Table (Pensioner rate based on
                  85% male; Beneficiary rate based on 85% female)
Interest Rate:    7.5%
Effective:        January 1, 1984
Prepared by:      Towers Perrin



                                      16





                                 ADDENDUM E

      LEVEL INCOME OPTION -- FACTORS USING UP84 MORTALITY AND 7.5% INTERESt




  AGE       0/12     1/12       2/12     3/12       4/12     5/12       6/12     7/12       8/12     9/12      10/12     11/12
  ---       ----     ----       ----     ----       ----     ----       ----     ----       ----     ----      -----     -----
                                                                                    
   50     0.30410   0.30651   0.30892   0.31133   0.31374   0.31615   0.31856   0.32097   0.32338   0.32579   0.32820   0.33061
   51     0.33302   0.33570   0.33837   0.34105   0.34373   0.34641   0.34908   0.35176   0.35444   0.35712   0.35979   0.36247
   52     0.36515   0.36813   0.37111   0.37408   0.37706   0.38004   0.38302   0.38600   0.38898   0.39195   0.39493   0.39791
   53     0.40089   0.40421   0.40753   0.41085   0.41417   0.41749   0.42080   0.42412   0.42744   0.43076   0.43408   0.43740
   54     0.44072   0.44443   0.44814   0.45185   0.45556   0.45927   0.46297   0.46668   0.47039   0.47410   0.47781   0.48152
   55     0.48523   0.48938   0.49353   0.49768   0.50184   0.50599   0.51014   0.51429   0.51844   0.52259   0.52675   0.53090
   56     0.53505   0.53971   0.54437   0.54903   0.55369   0.55835   0.56301   0.56767   0.57233   0.57699   0.58165   0.58631
   57     0.59097   0.59621   0.60146   0.60670   0.61194   0.61719   0.62243   0.62767   0.63292   0.63816   0.64340   0.64865
   58     0.65389   0.65980   0.66572   0.67163   0.67755   0.68346   0.68938   0.69529   0.70121   0.70712   0.71304   0.71895
   59     0.72487   0.73156   0.73825   0.74494   0.75164   0.75833   0.76502   0.77171   0.77840   0.78509   0.79179   0.79848
   60     0.80517   0.81276   0.82035   0.82795   0.83554   0.84313   0.85072   0.85832   0.86591   0.87350   0.88109   0.88869
   61     0.89628   0.90492   0.91357   0.92221   0.93085   0.93950   0.94814   0.95678   0.96543   0.97407   0.98271   0.99136
   62     1.00000



Mortality:        1971 TPF&C Forecast Mortality Table (85% male rate, 15%
                  female rate)
Interest:         7.5%



                                      1




                                                    ADDENDUM F
                                        MRP/RIP LEVEL INCOME OPTION FACTORS



   AGE       0/12      1/12      2/12     3/12       4/12     5/12       6/12     7/12       8/12     9/12      10/12     11/12
   ---       ----      ----      ----     ----       ----     ----       ----     ----       ----     ----      -----     -----
                                                                                     
    50     0.30906   0.31148   0.31390   0.31632   0.31875   0.32117   0.32359   0.32601   0.32843   0.33085   0.33328   0.33570
    51     0.33812   0.34080   0.34349   0.34617   0.34886   0.35154   0.35423   0.35691   0.35960   0.36228   0.36497   0.36765
    52     0.37034   0.37332   0.37630   0.37929   0.38227   0.38525   0.38823   0.39122   0.39420   0.39718   0.40016   0.40315
    53     0.40613   0.40945   0.41277   0.41608   0.41940   0.42272   0.42604   0.42936   0.43268   0.43599   0.43931   0.44263
    54     0.44595   0.44965   0.45335   0.45705   0.46075   0.46445   0.46815   0.47186   0.47556   0.47926   0.48296   0.48666
    55     0.49036   0.49450   0.49863   0.50277   0.50690   0.51104   0.51517   0.51931   0.52345   0.52758   0.53172   0.53585
    56     0.53999   0.54462   0.54926   0.55389   0.55852   0.56316   0.56779   0.57242   0.57706   0.58169   0.58632   0.59096
    57     0.59559   0.60079   0.60599   0.61120   0.61640   0.62160   0.62680   0.63201   0.63721   0.64241   0.64761   0.65282
    58     0.65802   0.66388   0.66974   0.67560   0.68146   0.68732   0.69317   0.69903   0.70489   0.71075   0.71661   0.72247
    59     0.72833   0.73495   0.74157   0.74818   0.75480   0.76142   0.76804   0.77466   0.78128   0.78789   0.79451   0.80113
    60     0.80775   0.81525   0.82274   0.83024   0.83774   0.84524   0.85273   0.86023   0.86773   0.87523   0.88272   0.89022
    61     0.89772   0.90624   0.91477   0.92329   0.93181   0.94034   0.94886   0.95738   0.96591   0.97443   0.98295   0.99148
    62     1.00000



Mortality:        1971 TPF&C Forecast Mortality Table (85% male rate, 15%
                  female rate)
Interest:         7.5%




                                      1

EX-10.UU

          NOTE:  THIS TABLE OF CONTENTS IS NOT PART OF THE CINERGY
          CORP. UNION EMPLOYEES' PENSION PLAN; INSTEAD, THIS TABLE OF
          CONTENTS IS MERELY FOR CONVENIENCE OF REFERENCE





                                 TABLE OF CONTENTS

                                                                                 PAGE
                                                                           
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

ARTICLE 1   DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

ARTICLE 2   EFFECTIVE DATE OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . 30

ARTICLE 3   ELIGIBILITY AND PARTICIPATION. . . . . . . . . . . . . . . . . . . . . 30
     3.1    Date of Participation. . . . . . . . . . . . . . . . . . . . . . . . . 30
     3.2    Leased Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
     3.3    Transfers of Employment. . . . . . . . . . . . . . . . . . . . . . . . 31
     3.4    Transfers of Participants and Plan Assets to and from the Cinergy
            Corp. Non-Union Employees' Pension Plan and Cinergy Corp. Union
            Employees' Retirement Income Plan. . . . . . . . . . . . . . . . . . . 32

ARTICLE 4   AMOUNT OF LIFE-ONLY PENSION. . . . . . . . . . . . . . . . . . . . . . 33
     4.1    Normal Retirement Pension Formula. . . . . . . . . . . . . . . . . . . 33
     4.2    Normal Retirement Benefits for Pre-1998 Participants . . . . . . . . . 34
     4.3    General Method of Computing Accrued Benefit Under the Plan's Pre-1998
            Formulas for Normal Retirement . . . . . . . . . . . . . . . . . . . . 37
     4.4    General Method of Computing Annual Pension for Retirement at
            Early Retirement Date. . . . . . . . . . . . . . . . . . . . . . . . . 38
     4.5    General Method of Computing Annual Pension for a Terminated Vested
            Participant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
     4.6    Maximum Pension. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

ARTICLE 5   SEVERANCE FROM SERVICE-VESTING . . . . . . . . . . . . . . . . . . . . 49
     5.1    Vesting Requirement. . . . . . . . . . . . . . . . . . . . . . . . . . 49
     5.2    Severance from Service before Vesting. . . . . . . . . . . . . . . . . 50
     5.3    Severance from Service after Vesting . . . . . . . . . . . . . . . . . 50

ARTICLE 6   SPOUSE'S BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
     6.1    Determination of Spouse's Benefit. . . . . . . . . . . . . . . . . . . 50
     6.2    Method of Payment of Spouse's Benefit. . . . . . . . . . . . . . . . . 53


                                                                   Exhibit 10-uu



ARTICLE 7   FORMS OF PENSION . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
     7.1    Normal Forms of Pension. . . . . . . . . . . . . . . . . . . . . . . . 53
     7.2    Optional Forms of Retirement Income. . . . . . . . . . . . . . . . . . 55

ARTICLE 8   PAYMENT OF PENSION . . . . . . . . . . . . . . . . . . . . . . . . . . 65
     8.1    Timing of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
     8.2    Method of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 66
     8.3    Small Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
     8.4    Facility of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . 67
     8.5    Benefits for Late Retirees, Reemployed Retirees and Reemployed
            Terminated Vested Participants . . . . . . . . . . . . . . . . . . . . 67
     8.6    Required Payment of Benefits . . . . . . . . . . . . . . . . . . . . . 69
     8.7    Direct Rollovers of Eligible Distributions . . . . . . . . . . . . . . 73

ARTICLE 9   RETIREE MEDICAL/DENTAL BENEFITS. . . . . . . . . . . . . . . . . . . . 74
     9.1    Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
     9.2    Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
     9.3    Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
     9.4    Impossibility of Diversion Prior To Satisfaction of All Liabilities. . 75
     9.5    Reversion Upon Satisfaction of All Liabilities . . . . . . . . . . . . 75
     9.6    Forfeitures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
     9.7    Employer Contributions To The Medical/Dental Benefits Account. . . . . 75
     9.8    Medical/Dental Benefits. . . . . . . . . . . . . . . . . . . . . . . . 76

ARTICLE 10  NONALIENATION OF BENEFITS. . . . . . . . . . . . . . . . . . . . . . . 76

ARTICLE 11  ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
     11.1   Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
     11.2   Removal and Replacement of Committee Members . . . . . . . . . . . . . 77
     11.3   Qualification and Resignation. . . . . . . . . . . . . . . . . . . . . 77
     11.4   Chairperson, Services, and Counsel . . . . . . . . . . . . . . . . . . 77
     11.5   Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
     11.6   Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
     11.7   Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . 78
     11.8   Notice to Trustee of Changes in Membership . . . . . . . . . . . . . . 78
     11.9   Correction of Defects. . . . . . . . . . . . . . . . . . . . . . . . . 79
     11.10  Reliance Upon Legal Counsel. . . . . . . . . . . . . . . . . . . . . . 79
     11.11  Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
     11.12  Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
     11.13  Powers and Duties of Committee . . . . . . . . . . . . . . . . . . . . 80
     11.14  Matters Specifically Excluded from Jurisdiction. . . . . . . . . . . . 81



                                                                   Exhibit 10-uu
                                       ii



ARTICLE 12  BENEFIT CLAIMS PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . 81

ARTICLE 13  FUNDING POLICY AND METHOD. . . . . . . . . . . . . . . . . . . . . . . 83

ARTICLE 14  MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
     14.1   No Enlargement of Employee Benefits. . . . . . . . . . . . . . . . . . 83
     14.2   Reemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
     14.3   Qualified Military Service . . . . . . . . . . . . . . . . . . . . . . 84
     14.4   Notice of Address. . . . . . . . . . . . . . . . . . . . . . . . . . . 84
     14.5   Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
     14.6   No Individual Liability. . . . . . . . . . . . . . . . . . . . . . . . 85
     14.7   Participant's Statement of Agreement . . . . . . . . . . . . . . . . . 85
     14.8   No Diversion of Assets . . . . . . . . . . . . . . . . . . . . . . . . 85
     14.9   Governing Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
     14.10  Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
     14.11  Interpretation and Regulation of Plan. . . . . . . . . . . . . . . . . 86
     14.12  Communications by Participants . . . . . . . . . . . . . . . . . . . . 86
     14.13  Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
     14.14  Accrued Benefit Not to be Decreased by Amendment . . . . . . . . . . . 87

ARTICLE 15  TRUSTS AND INSURANCE CONTRACTS . . . . . . . . . . . . . . . . . . . . 87
     15.1   Trusts and Insurance Contracts . . . . . . . . . . . . . . . . . . . . 87
     15.2   Irrevocability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
     15.3   Sufficiency of Pension Fund. . . . . . . . . . . . . . . . . . . . . . 88

ARTICLE 16  CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

ARTICLE 17  APPROVAL UNDER INTERNAL REVENUE CODE . . . . . . . . . . . . . . . . . 89

ARTICLE 18  AMENDMENT AND TERMINATION. . . . . . . . . . . . . . . . . . . . . . . 89
     18.1   Right to Amend or Terminate. . . . . . . . . . . . . . . . . . . . . . 89
     18.2   Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . 90
     18.3   Merger and Consolidation of Plan . . . . . . . . . . . . . . . . . . . 92
     18.4   Post-Change in Control Merger, Consolidation, or Transfer of
            Pension Plan Assets or Liabilities . . . . . . . . . . . . . . . . . . 93
     18.5   General Protection of Benefits in the Event of a Change in
            Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
     18.6   Post-Change in Control Surplus Reversion . . . . . . . . . . . . . . . 94

ARTICLE 19  AUTHORIZED TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . 95



                                                                   Exhibit 10-uu

                                       iii




ARTICLE 20  PARTICIPATION BY OTHER EMPLOYERS . . . . . . . . . . . . . . . . . . . 95
     20.1   Adoption of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
     20.2   Withdrawal from Participation. . . . . . . . . . . . . . . . . . . . . 95
     20.3   Cinergy as Agent for Employers . . . . . . . . . . . . . . . . . . . . 96

ARTICLE 21  CONTINUANCE BY A SUCCESSOR . . . . . . . . . . . . . . . . . . . . . . 97



















                                                                   Exhibit 10-uu

                                       iv



                                  ADOPTED PURSUANT TO RESOLUTIONS OF THE CINERGY
                                CORP. BOARD OF DIRECTORS DATED DECEMBER 18, 1997


                                CINERGY CORP. UNION

                              EMPLOYEES' PENSION PLAN

                (As Amended and Restated Effective January 1, 1998)


                                     INTRODUCTION


Effective March 1, 1941, PSI Energy, Inc. (formerly named Public Service
Company of Indiana, Inc.) ("PSI") adopted a pension plan for the exclusive
benefit of its eligible employees.  Prior to May 1, 1970, the pension plan,
as amended from time to time, was embodied in Group Annuity Contract No.
34GAC between PSI and John Hancock Mutual Life Insurance Co.  Effective May
1, 1970, the pension plan was amended and restated in a document entitled
"Public Service Company of Indiana, Inc. Pension Plan" (the "Plan").

This Plan is maintained for the exclusive benefit of the Eligible Employees.
The purpose of the Plan is to provide retirement income for Eligible
Employees. The Plan is designed to satisfy the requirements of Code
subsection 401(a) and the applicable requirements of ERISA.  The Plan has
been restated on several occasions in order to comply with applicable legal
requirements and to make other changes.  This document is a continuation and
complete restatement of the Plan, effective January 1, 1998.  Effective
January 1, 1998, the Plan is renamed the Cinergy Corp. Union Employees'
Pension Plan.  Also, effective as of December 31, 1997, the assets and
liabilities attributable to exempt employees and non-exempt employees who
were participants in the Plan as of that date were spun off from the Plan and
transferred to the Cinergy Corp. Non-Union Employees' Pension Plan.





                                                                   Exhibit 10-uu



                                    ARTICLE 1
                                   DEFINITIONS


As used in this document, the following words and phrases, when capitalized,
will have the meanings set forth below, unless a different meaning is plainly
required by the context.


1.1    "Absence from Service" means, with respect to each Employee, his absence
       from service (with or without pay) with his Employer for any reason other
       than a quit, resignation, discharge, retirement, or death, including, but
       without limitation because of enumeration, vacation, holiday, sickness,
       disability, leave of absence (unless otherwise required by applicable
       law), or other layoff.  If an Employee is totally disabled and qualifies
       for benefits under Cinergy's Long-Term Disability Plan, the expiration of
       his Absence from Service will not occur until the later of (a) the date
       he no longer qualifies for benefits under Cinergy's Long-Term Disability
       Plan, or (b) his Normal Retirement Date, Early Retirement Date, or Actual
       Separation Date, whichever is applicable.


1.2    "Accrued Vacation Pay" means, with respect to an Employee, the
       compensation received at his Severance from Service for unused accrued
       vacation pursuant to the Employer's applicable policy.


1.3    "Active Participant" means a Participant for whom benefits are being
       accrued under the Plan on the applicable date.


1.4    "Actual Separation Date" means:


       (a)    with respect to a Participant who either (1) retires on or after
              his Normal Retirement Date, or (2) who retires on an Early
              Retirement Date, the first day of the calendar month coincident
              with or following the date of the Participant's Severance from
              Service; or




                                       2                           Exhibit 10-uu



       (b)    with respect to a Participant who incurs a Severance from Service
              before he reaches age 50 and who is entitled to benefits
              determined under the provisions of Section 5.3 (Severance from
              Service after Vesting), the date of the Participant's Severance
              from Service.


1.5    "Actuarial Equivalent" means a benefit having the same actuarially
       determined value as the benefit that the Actuarial Equivalent replaces.
       The determination of an Actuarial Equivalent will be based on the
       following actuarial assumptions, except as provided in Subsection (c) or
       (d) below:


       (a)    MORTALITY:


              Participants in accordance with the UP-1984 Table, with no rating
              of ages;
              Spouses and Contingent Annuitants in accordance with the UP-1984
              Table, with ages rated down three years;


       (b)    INTEREST:


              7-1/2% per annum, compounded annually.


       (c)    With respect to any lump sum payment that may be payable under the
              Plan during a Plan Year, the Actuarial Equivalent will be
              calculated using the mortality table as prescribed from time to
              time by the Secretary of the Treasury (currently the 1983 Group
              Annuity Mortality Table with a 50/50 mix of males and females) and
              an interest rate equal to the annual rate of interest on 30 year
              Treasury securities as specified by the Commissioner of Internal
              Revenue for the second full calendar month preceding the first day
              of the Plan Year.


       (d)    In the case of a Participant who had an accrued benefit under the
              Plan as of December 31, 1997, and who has a Severance from Service
              Date after December 31, 1997, no benefit determination will
              produce an amount that is less


                                       3                           Exhibit 10-uu



              than that which would have been produced utilizing both the
              actuarial assumptions specified in the Plan as in effect on
              December 31, 1997, and the annual pension accrued as of December
              31, 1997, determined under the provisions of the Plan as then in
              effect.


1.6    "Additional Separation Date" means, with respect to a Participant who has
       an Initial Separation Date and who is later reemployed by an Employer,
       the first day of the calendar month coincident with or following the
       Participant's next Severance from Service Date.  However, if the
       Participant has multiple Severance from Service Dates after his Initial
       Separation Date, then he will have an Additional Separation Date for each
       Severance from Service, which will be the first day of the calendar month
       coincident with or following the Participant's applicable Severance from
       Service Date.


1.7    "Affiliate" means any employer that together with the Employer is under
       common control or a member of an affiliated service group as determined
       under Code subsections 414(b), (c), (m), and (o).  In determining whether
       an employer is a member of a controlled group for purposes of Section 4.6
       (Maximum Pension), the rules of Code subsections 414(b) and (c) will be
       applied as modified by Code subsection 415(h).


1.8    "Annual Addition" means, with respect to a Participant for a Plan Year,
       the following amounts credited to a Participant's accounts in any
       Qualified Defined Contribution Plan maintained by the Employer or an
       Affiliate for the Plan Year: employer contributions, employee
       contributions (other than rollover contributions); forfeitures; amounts
       allocated, after March 31, 1984, to an individual medical account, as
       defined in Code paragraph 415(l)(2), that is part of a pension or annuity
       plan maintained by the Employer or an Affiliate; and amounts derived from
       contributions paid or accrued after March 31, 1984, that are attributable
       to post-retirement medical benefits, allocated to the separate account of
       a Key Employee, under a welfare benefit fund, as defined in Code
       subsection 419(e), maintained by the Employer or an Affiliate.

1.9    "Annual Pension" means, with respect to a Participant, the amount of the
       Participant's pension, expressed as an annual benefit for the
       Participant's lifetime.


                                       4                           Exhibit 10-uu



1.10   "Annual Primary Social Security Amount" means, with respect to a
       Participant, the annual amount available under the provisions of Title II
       of the Social Security Act as in effect on December 31, 1989
       (December 31, 1988, for a Highly Compensated Participant), determined
       without regard to any increases in benefit levels, wage base increases,
       or changes in the types of benefits that take effect after that date, but
       including any recomputation in benefits due solely to the Participant's
       "wages" and "remuneration," as defined in the Social Security Act, in
       calendar year 1989 or 1988, whichever is applicable.


1.11   "Annual Performance Cash Award" means, with respect to an Employee, the
       cash award received by the Employee under the provisions of an Employer's
       annual bonus or incentive pay plan or program, including, but without
       limitation because of enumeration, the Union Employees' Incentive Plan,
       or any successor Plan.


1.12   "Annuity Starting Date" means, with respect to a Participant, the first
       day of the first period for which a Plan benefit is paid as an annuity
       or, in the case of a benefit not payable in the form of an annuity, the
       first day on which all events have occurred that entitle the Participant
       to the benefit.


1.13   "Base Wage" means, with respect to an Employee, the hourly or weekly base
       rate of pay received as remuneration for services performed for the
       relevant period, exclusive of any allowances, premiums, bonuses,
       overtime, or other forms or types of compensation, multiplied by his
       hours worked during the applicable period.


1.14   "Beneficiary" means, with respect to each Participant, the person or
       persons who are to receive benefits under the Plan after the
       Participant's death.


1.15   "Board of Directors" means the duly constituted board of directors of
       Cinergy on the applicable date.


                                       5                           Exhibit 10-uu



1.16   "Break in Service" means, with respect to an Employee, a Period of
       Severance of at least 12 consecutive months.


1.17   "Change in Control" means any of the following events have occurred:


       (a)    Any "person" or "group" (within the meaning of subsection 13(d)
              and paragraph 14(d)(2) of the Securities Exchange Act) is or
              becomes the "beneficial owner" (as defined in Rule 13d-3 under the
              Securities Exchange Act), directly or indirectly, of securities of
              Cinergy (not including in the securities beneficially owned by
              such person or group any securities acquired directly from Cinergy
              or an Affiliate) representing 50% or more of the combined voting
              power of Cinergy's then outstanding securities, excluding any
              person or group who becomes such a beneficial owner in connection
              with a transaction described in Paragraph (1) of Subsection (b)
              below;


       (b)    There is consummated a merger or consolidation of Cinergy or any
              direct or indirect subsidiary of Cinergy with any other
              corporation, other than (1) a merger or consolidation that would
              result in the voting securities of Cinergy outstanding immediately
              prior to the merger or consolidation continuing to represent
              (either by remaining outstanding or by being converted into voting
              securities of the surviving entity or any parent thereof) at least
              50% of the combined voting power of the securities of Cinergy or
              such surviving entity or any parent thereof outstanding
              immediately after the merger or consolidation, or (2) a merger or
              consolidation effected to implement a recapitalization of Cinergy
              (or similar transaction) in which no person is or becomes the
              beneficial owner, directly or indirectly, of securities of Cinergy
              (not including in the securities beneficially owned by such person
              any securities acquired directly from Cinergy or its Affiliates
              other than in connection with the acquisition by Cinergy or its
              Affiliates of a business) representing 25% or more of the combined
              voting power of Cinergy's then outstanding securities;


                                       6                           Exhibit 10-uu


       (c)    During any period of two consecutive years, individuals who at the
              beginning of that period constitute the Board of Directors and any
              new director (other than a director whose initial assumption of
              office is in connection with an actual or threatened election
              context, including but not limited to a consent solicitation,
              relating to the election of directors of Cinergy) whose
              appointment or election by the Board of Directors or nomination
              for election by Cinergy's shareholders was approved or recommended
              by a vote of at least two-thirds (2/3) of the directors then still
              in office who either were directors at the beginning of that
              period or whose appointment, election or nomination for election
              was previously so approved or recommended cease for any reason to
              constitute a majority of the Board of Directors; or

       (d)    The shareholders of Cinergy approve a plan of complete liquidation
              or dissolution of Cinergy or there is consummated an agreement for
              the sale or disposition by Cinergy of all or substantially all of
              Cinergy's assets, other than a sale or disposition by Cinergy of
              all or substantially all of Cinergy's assets to an entity, at
              least 60% of the combined voting power of the voting securities of
              which are owned by shareholders of Cinergy in substantially the
              same proportions as their ownership of Cinergy immediately prior
              to such sale.

1.18   "Cinergy" means Cinergy Corp., a Delaware corporation, and any
       corporation that succeeds to its business and adopts the Plan.

1.19   "Claimant" means a person submitting a claim for benefits under the Plan.

1.20   "Code" means the Internal Revenue Code of 1986, as amended from time to
       time, and interpretive rulings and regulations.

1.21   "Committee" means the benefits committee established pursuant to
       Article 11 (Administration) to serve as Plan administrator.

                                       7                           Exhibit 10-uu


1.22   "Contingent Annuitant" means, with respect to any Participant electing a
       contingent pension option under Section 7.2 (Optional Forms of Retirement
       Income), the person designated by the Participant to receive a contingent
       pension after the Participant's death.

1.23   "Covered Compensation" means, with respect to a Participant, the average
       (without indexing) of the annual Social Security taxable wage bases under
       the Social Security Act for each year during the 35 calendar years ending
       with the last day of the calendar year in which the Participant reaches
       his Social Security Retirement Age.

1.24   "Defined Benefit Plan Fraction" means, with respect to an individual
       participating in one or more Qualified Defined Benefit Plans for any
       calendar year, the fraction, the numerator of which is the individual's
       Projected Annual Benefit under the Qualified Defined Benefit Plans
       (determined as of the end of the calendar year), and the denominator of
       which is the lesser of:  (a) the product of 1.25 multiplied by the dollar
       limitation in effect under Code subparagraph 415(b)(1)(A) for that
       calendar year, or (b) the product of 1.4 multiplied by the amount that
       may be taken into account under Code subparagraph 415(b)(1)(B) with
       respect to the individual under the Qualified Defined Benefit Plans for
       the calendar year.

1.25   "Defined Contribution Plan Fraction" means, with respect to an individual
       participating in one or more Qualified Defined Contribution Plans for any
       calendar year, the fraction, the numerator of which is the sum of the
       Annual Additions with respect to the Participant (determined as of the
       close of the calendar year), and the denominator of which is the lesser
       of the following amounts (determined for that calendar year and for each
       prior calendar year of service with the Employer):  (a) the product
       of 1.25 multiplied by the dollar limitation in effect under Code
       subparagraph 415(c)(1)(A) for the calendar year (determined without
       regard to Code paragraph 415(c)(6)), or (b) the product of 1.4 multiplied
       by the amount that may be taken into account under Code
       subparagraph 415(c)(1)(B) with respect to that individual under all
       Qualified Defined Contribution Plans for the calendar year.

                                       8                           Exhibit 10-uu


1.26   "Dependent" means any individual who is eligible for coverage under the
       Medical/Dental Plan as the "spouse" or "dependent" of an Eligible
       Retiree.

1.27   "Direct Rollover" means a payment by the Plan to the Eligible Retirement
       Plan specified by the Distributee.

1.28   "Disability Date" means, with respect to a Participant, the date the
       Participant is first determined to be totally disabled under Cinergy's
       Long Term Disability Plan, as amended from time to time.  With respect to
       a Participant who participated in the Plan prior to January 1, 1998,
       "Disability Date" means the date prior to January 1, 1998, that the
       Participant is first determined to be totally disabled by reason of a
       particular disability under PSI's Long Term Disability Plan, as amended
       from time to time.

1.29   "Distributee" means an Employee or former Employee.  In addition, the
       Employee's or former Employee's surviving Spouse, and the Employee's or
       former Employee's Spouse who is the alternate payee under a Qualified
       Domestic Relations Order are Distributees with regard to the interest of
       the Spouse or former Spouse.

1.30   "Early Retirement Date" means, with respect to each Participant who has
       satisfied the Vesting Requirement, and whose Severance from Service
       occurs on or after his 50th birthday but prior to his Normal Retirement
       Date, the first day of the calendar month coincident with or following
       his Severance from Service.

1.31   "Earnings" means, with respect to any Employee for any period of
       reference, the sum of the Employee's: (a) Base Wage, (b) Overtime Pay,
       (c) Shift Premiums, (d) Holiday Premiums, (e) Accrued Vacation Pay, (f)
       Sabbatical Vacation Pay, (g) Service Watch Payments, and (h) Annual
       Performance Cash Awards. "Earnings" does not include (a) reimbursements
       or other expense allowances, (b) fringe benefits (cash and noncash) other
       than those named in the preceding sentence, (c) moving and relocation
       expenses, (d) deferred compensation, (e) welfare benefits, (f) Long-Term
       Performance Awards, (g) other forms of compensation or remuneration that
       are not specifically named in the

                                       9                           Exhibit 10-uu


       preceding sentence, or (h) any payments received by an Employee from any
       Affiliate that is not an Employer.

       Notwithstanding the foregoing provisions of this Section, an Employee's
       Earnings taken into account for any Plan Year will not exceed $150,000,
       as adjusted pursuant to Code paragraph 401(a)(17).

1.32   "Eligible Employee" means an Employee other than a Leased Employee whose
       pay is customarily computed on an hourly, weekly, or bi-weekly basis;
       whose employment is subject to FLSA overtime and recordkeeping
       provisions; and who is assigned to an employment position that is
       governed by a collective bargaining agreement to which the Employer is a
       party and which provides for participation in this Plan.

1.33   "Eligible Individual" means an Eligible Retiree or a Dependent.

1.34   "Eligible Retiree" means an individual who:

       (a)    is a Retired Participant who is also eligible to participate in
              the Medical/Dental Plan, and

       (b)    is not a Key Employee at any time during the current Plan Year and
              has not been a Key Employee at any time during any previous Plan
              Year for which contributions were made for that individual's
              benefit to the Medical/Dental Benefits Account.

1.35   "Eligible Retirement Plan" means an individual retirement account
       described in Code subsection 408(a), an individual retirement annuity
       described in Code subsection 408(b), an annuity plan described in Code
       subsection 403(a), or a qualified trust described in Code
       subsection 401(a), that accepts the Distributee's Eligible Rollover
       Distribution.  However, in the case of an Eligible Rollover Distribution
       to a surviving Spouse, an Eligible Retirement Plan is an individual
       retirement account or individual retirement annuity.

                                       10                          Exhibit 10-uu


1.36   "Eligible Rollover Distribution" means any distribution of all or a
       portion of the balance to the credit of the Distributee, except that an
       Eligible Rollover Distribution does not include:  any distribution that
       is one of a series of substantially equal periodic payments (not less
       frequently than annually) made for the life (or life expectancy) of the
       Distributee or the joint lives (or joint life expectancies) of the
       Distributee and the Distributee's Beneficiary, or for a specified period
       of ten years or more; any distribution to the extent that the
       distribution is required under Code paragraph 401(a)(9); and the portion
       of any distribution that is not includable in gross income (determined
       without regard to the exclusion for net unrealized appreciation with
       respect to employer securities).

1.37   "Employee" means any person who is employed by an Employer, other than as
       an employee classified by his Employer as a summer laborer or summer
       employee, and who receives compensation that the Employer initially
       reports on a federal wage and tax statement (Form W-2).  For purposes of
       crediting Service for vesting and, except as otherwise provided, for
       purposes of the rules set out in Section 4.6 (Maximum Pension), the term
       "Employee" includes a Leased Employee.

1.38   "Employer" means Cinergy and any Affiliate that, with the consent of the
       Board of Directors, elects to participate in the Plan pursuant to
       Section 20.1 (Adoption of Plan) and any successor corporation or other
       organization or entity that adopts the Plan pursuant to Article 21
       (Continuance by a Successor).  If any Affiliate withdraws from
       participation in the Plan pursuant to Section 20.2 (Withdrawal from
       Participation), that Affiliate will cease to be an Employer.

1.39   "Employment Commencement Date" means, with respect to each Employee, the
       date as of which the Employee is first entitled to be credited with an
       Hour of Service.

1.40   "ERISA" means the Employee Retirement Income Security Act of 1974, as
       amended from time to time, and interpretive rulings and regulations.

                                       11                          Exhibit 10-uu


1.41   "FLSA" means the Fair Labor Standards Act of 1938, as amended from time
       to time, and interpretive rulings and regulations.

1.42   "Group Annuity Contract" means Group Annuity Contract No. 9599GAC issued
       by John Hancock Mutual Life Insurance Company, as amended or replaced
       from time to time.

1.43   "Highest Average Earnings" means a Participant's highest average annual
       Earnings for any three consecutive calendar years out of his last ten
       years of Participation.  However, if the Participant completes fewer than
       three years of Participation, his Highest Average Earnings will mean his
       average annual Earnings for his total years of Participation.  If a
       Participant is totally disabled and qualifies for benefits under
       Cinergy's Long Term Disability Plan until his Normal Retirement Date,
       Early Retirement Date, or Actual Separation Date, whichever is
       applicable, his Severance from Service Date will be deemed for purposes
       of this section to be his Disability Date.

       For purposes of this Section, if a Participant's Severance from Service
       Date is other than December 31, the following periods will be treated as
       a period of three consecutive calendar years:

       (a)    His months of Participation in the calendar year that includes his
              Severance from Service Date; plus

       (b)    The two (or fewer) full calendar years of Participation prior to
              his Severance from Service Date; plus

       (c)    From the calendar year immediately preceding the period described
              in Subsection (b), the lesser of (1) the Participant's months of
              Participation in that year, or (2) the number of months equal to
              12 minus the number of months included pursuant to Subsection (a).
              A Participant's Earnings will be deemed to have been earned
              ratably throughout the period described in this Subsection (c).

                                       12                          Exhibit 10-uu


1.44   "Highly Compensated Participant" means a highly compensated active
       Employee and a highly compensated former Employee.  A highly compensated
       active Employee includes any Employee who performs service for the
       Employer during the Plan Year and who (a) is a 5% owner for that Plan
       Year or was a 5% owner for the prior Plan Year; or (b) for the preceding
       Plan Year received compensation from the Employer in excess of $80,000
       (as adjusted pursuant to Code subsection 415(d)).  The Employer does not
       elect to require that a highly compensated active Employee must be a
       member of the Employer's top-paid group for the preceding Plan Year.

       A highly compensated former Employee includes any Employee who terminated
       employment (or was deemed to have terminated employment) prior to the
       Plan Year, performs no service for the Employer during the Plan Year, and
       was a highly compensated active Employee for either the Plan Year during
       which he terminated employment or any Plan Year ending on or after the
       Employee's 55th birthday.

       The determination of who is a Highly Compensated Participant, including
       the determination of the number and identity of Employees in the top-paid
       group and the compensation that is considered, will be made in accordance
       with Code subsection 414(q).

1.45   "Holiday Premiums" means, with respect to an Employee, the compensation
       received as a premium for services performed for the relevant period for
       working on a holiday recognized by the Employer pursuant to its
       applicable policy.

1.46   "Hour of Service" means, with respect to any Employee, any of the
       following:

       (a)    each hour for which he is paid, or entitled to payment, by an
              Employer for the performance of duties for that Employer;

       (b)    each other hour for which back pay, irrespective of mitigation of
              damages, has been either awarded to him or agreed to be paid to
              him by an Employer;

                                       13                          Exhibit 10-uu


       (c)    each other hour for which he is absent from his normal period of
              employment with his Employer due to an approved military leave,
              maternity leave, paternity leave, adoption leave, worker's
              compensation leave, personal leave of six consecutive months or
              less, or sick leave of six consecutive months or less, or a total
              disability that qualifies him for benefits under Cinergy's
              Long-Term Disability Plan; and

       (d)    each other hour for which he is paid, or entitled to payment, by
              an Employer for a period of time during which he does not perform
              any duties for that Employer (irrespective of whether or not his
              employment relationship with that Employer has terminated) due to
              vacation, holiday, illness, incapacity (including disability),
              layoff, jury duty, witness duty, military duty, or leave of
              absence.

       In computing an Hour of Service, the Plan may use the equivalencies set
       forth in paragraph (e) of 29 C.F.R. Section 2530.200b-3.  However, if
       different equivalencies are used for different classifications of
       Employees, then those classifications must be reasonable and consistently
       applied.  Each Hour of Service will be credited to the Employee for the
       appropriate computation period in accordance with the provisions of
       paragraphs (b) and (c) of 29 C.F.R. Section 2530.200b-2, and each Hour of
       Service, when aggregated for a particular computation period, will
       constitute the Hours of Service credited to the Employee for that
       computation period.  However, no Employee will be credited under
       Subsection (d) either with more than 501 Hours of Service on account of
       any single continuous period during which the Employee performs no duties
       for an Employer irrespective of whether or not that period occurs in a
       single computation period, or with an hour for which the Employee is
       paid, or entitled to payment, by an Employer if that payment is made
       solely for the purposes of either reimbursing the Employee for medical or
       medically related expenses incurred by the Employee or complying with
       applicable worker's compensation, unemployment compensation, or
       disability insurance laws.  However, the crediting of Hours of Service
       for back pay awarded or agreed to with

                                       14                          Exhibit 10-uu


       respect to periods described in Subsection (d) of this Section will be
       subject to the same limitations set forth in the immediately preceding
       sentence with respect to Subsection (d).

1.47   "Initial Separation Date" means, with respect to a Participant who is
       entitled to benefits under the provisions of Section 5.1 (Vesting
       Requirement), Section 5.2 (Severance from Service before Vesting), or
       Section 5.3 (Severance from Service after Vesting), the first day of the
       calendar month coincident with or following the Participant's initial
       Severance from Service Date.

1.48   "Insurance Company" means any insurance company holding any part of the
       Pension Fund.

1.49   "Key Employee" means an Employee or former Employee of an Employer who,
       at any time during the determination period, is:

       (a)    an officer of an Employer having annual Section 415 Compensation
              from his Employer greater than 50 percent of the amount in effect
              under Code subparagraph 415(b)(1)(A) for any Plan Year;

       (b)    one of the ten Employees having annual Section 415 Compensation
              from his Employer of more than the limitation in effect under Code
              subparagraph 415(c)(1)(A) and owning (or considered as owning
              within the meaning of Code section 318) the largest interests in
              the Employer.

       (c)    the owner (or considered as the owner within the meaning of Code
              section 318) either of more than five percent of the outstanding
              stock of Cinergy, or stock possessing more than five percent of
              the total combined voting power of all stock of Cinergy; or

       (d)    the recipient of at least $150,000 in annual Section 415
              Compensation from the Employer and who owns (or is considered as
              owning within the meaning of Code

                                       15                          Exhibit 10-uu


              section 318) either more than one percent of the outstanding stock
              of Cinergy or stock possessing more than one percent of the total
              combined voting power of all stock of Cinergy.

       However, no more than 50 Employees of an Employer will be deemed to be
       officers for any particular Plan Year.  Also, the term Key Employee
       includes the beneficiaries of a Key Employee.  For purposes of
       Subsection (b) above, if two Employees have the same interest in the
       Employer, the Employee having greater annual Earnings from his Employer
       will be treated as having a larger interest.  The determination of who is
       a Key Employee will be made in accordance with Code paragraph 416(i)(1).

1.50   "Leased Employee" means any person who performs services for another
       person, the "recipient," but who is not an employee of the recipient, if
       (a) the services are provided pursuant to an agreement between the
       recipient and any other person, (b) the person has performed the services
       for the recipient (or for the recipient and related persons) on a
       substantially full-time basis for a period of at least one year, and
       (c) the services are performed under the primary direction and control of
       the recipient.  A Leased Employee will not be considered an employee of
       the recipient if:

       (a)    that employee is covered by a money purchase pension plan
              providing:

              (1)    a non-integrated employer contribution rate of at least
                     10 percent of compensation, as defined in Code
                     paragraph 415(c)(3), which includes amounts contributed
                     pursuant to a salary reduction agreement that are
                     excludable from the Employee's gross income under Code
                     section 125, Code paragraph 402(a)(8), or Code
                     subsections 402(h) or 403(b);

              (2)    immediate participation;

              (3)    full and immediate vesting; and

                                       16                          Exhibit 10-uu



       (b)    leased employees do not constitute more than 20 percent of the
              recipient's non-highly compensated work force.

1.51   "Long-Term Performance Awards" means, with respect to an Employee, the
       cash or stock-based award received by the Employee pursuant to the
       provisions of an Employer's long-term bonus or incentive pay plan or
       program, including, but without limitation because of enumeration, the
       Cinergy 1996 Long-Term Incentive Compensation Plan.

1.52   "Medical/Dental Benefits" means the benefits specified and payable under
       Section 9.8 (Medical/Dental Benefits) from the Medical/Dental Benefits
       Account.

1.53   "Medical/Dental Benefits Account" means the separate account established
       pursuant to Article 9 (Retiree Medical/Dental Benefits) for contributions
       to fund benefits payable under Article 9 (Retiree Medical/Dental
       Benefits).

1.54   "Medical/Dental Plan" means any plan or program that is established by
       the Employer to provide medical or dental insurance coverage or medical
       or dental expense reimbursements to Eligible Individuals.

1.55   "Nine Months of Elapsed Time Service" means, with respect to a
       Participant who participated in the Plan as of December 31, 1997, the
       nine consecutive month period commencing on his Employment Commencement
       Date, provided that the Employee does not in that period incur a
       Severance from Service that is part of a Break in Service; or, the nine
       consecutive month period commencing on the Employee's Reemployment
       Commencement Date (or successive Reemployment Commencement Dates),
       provided that the Employee does not in that period incur a Severance from
       Service that is part of a Break in Service.  If the Employee does not
       incur a Severance from Service during the applicable nine consecutive
       month period, then the Employee will be deemed to have completed Nine
       Months of Elapsed Time Service as of the last day of the nine consecutive
       month period.

                                       17                          Exhibit 10-uu


1.56   "Nonforfeitable" means, with respect to a Participant's claim for
       benefits under the Plan, that the claim is unconditional, legally
       enforceable, and not subject to divestment except in accordance with the
       Plan's specific provisions, including, but without limitation because of
       enumeration, the provisions of Section 15.3 (Sufficiency of Pension
       Fund).

1.57   "Normal Retirement Date" means, with respect to each Participant, the
       first day of the calendar month coincident with or following his
       65th birthday.

1.58   "Option Effective Date" means a Participant's Actual Separation Date,
       unless further extended with respect to a Participant making a timely
       election during the applicable election period, in which case the Option
       Effective Date will be the first day of the calendar month coincident
       with or following the last day of the applicable election period,
       provided he has timely elected the option on or before that date.

1.59   "Overtime Pay" means, with respect to an Employee, the compensation
       received as remuneration consistent with the requirements of the FLSA, or
       for services performed for the relevant period for hours worked beyond
       the Employee's regularly scheduled work hours pursuant to the Employer's
       applicable policy.

1.60   "Participant" means any Eligible Employee who has met the eligibility
       requirements set forth in Article 3 (Eligibility and Participation) and
       for whom benefits are to be provided under the Plan.

1.61   "Participation" means, with respect to an Eligible Employee, the period
       of time during which he is treated as a Participant in the Plan, the
       length of which will be determined as follows:

       (a)    Notwithstanding any other provision of this Plan to the contrary,
              an Eligible Employee who accrued Pre-1998 Years of Participation
              under the Plan will be credited with his Pre-1998 Years of
              Participation.

                                       18                          Exhibit 10-uu


       (b)    An Eligible Employee will be credited with Participation for the
              period of time beginning with the later of (1) January 1, 1998, or
              (2) his Employment Commencement Date and ending on his Severance
              from Service Date.

       (c)    An Eligible Employee will be credited with Participation for any
              Period of Credited Severance during which he is a Participant or
              former Participant.

       (d)    In determining an Eligible Employee's total Participation for
              purposes of the Plan, all periods of service that are credited to
              the Eligible Employee under Subsections (a) through (c) above will
              be aggregated.  In no event will an Employee be credited more than
              once for the same period of Participation.  For purposes of
              determining an Eligible Employee's total Participation, the
              Eligible Employee will be credited with one month of Participation
              for each calendar month in which he is a Participant in the Plan
              and is credited with at least one Hour of Service.  An Eligible
              Employee will be credited with one year of Participation for each
              12 months of Participation with which he is credited pursuant to
              the preceding sentence.

       (e)    Notwithstanding Subsection (d), if an Eligible Employee is a
              Reemployed Retiree or a Reemployed Terminated Vested Participant,
              and his Pre-1998 Years of Participation were subject to a maximum
              under the pension formula applicable to the Eligible Employee at
              the time he incurred a Severance from Service, that Eligible
              Employee's total Participation when he again incurs a Severance
              from Service under the Plan will not exceed the sum of his maximum
              pre-1998 Years of Participation and the Eligible Employee's years
              of Participation during his period of reemployment.

1.62   "Participation Commencement Date" means, with respect to an Employee who
       was a  participant in the Plan prior to January 1, 1989, the date the
       Employee became a Participant under the Plan's terms as they existed
       prior to January 1, 1990, and with respect to an Employee who was not a
       Participant in the Plan prior to January 1, 1989, the

                                       19                          Exhibit 10-uu


       later of (a) January 1, 1989, or (b) the first day of the calendar month
       coincident with or following the date the Employee first completes Nine
       Months of Elapsed Time Service and has attained his 21st birthday;
       provided that on the later date he is classified by his Employer as an
       Employee. If an Employee has completed Nine Months of Elapsed Time
       Service and has attained his 21st birthday, but is not classified by his
       Employer as an Employee on the later date, his Participation Commencement
       Date will be the first day of the calendar month coincident with or
       following the first day after the later date on which he is classified by
       his Employer as an Employee.

1.63   "Pension Fund" or "Fund" means the fund established in consequence of and
       for the purposes of the Plan to provide the benefits under the Plan,
       including all funds held in all trusts and group annuity contracts that
       are being used as funding media for the Plan.

1.64   "Period of Credited Severance" means, with respect to each Eligible
       Employee who has incurred a Severance from Service, and who, within
       12 Months of his Severance from Service Date, performs an Hour of
       Service, the Period of Severance commencing on the Eligible Employee's
       Severance from Service Date and ending on the date thereafter upon which
       he first performs an Hour of Service.  In the case of an Eligible
       Employee who has incurred a Severance from Service that occurs during an
       Absence from Service by reason of a maternity or paternity absence as
       defined in Subsection 1.88(b), the period between the first and second
       anniversaries of the first day of absence will not be a Period of
       Credited Severance.

1.65   "Period of Severance" means, with respect to each Eligible Employee, the
       period of time commencing on his Severance from Service Date and ending
       on the date thereafter upon which he first performs an Hour of Service.

1.66   "Plan" means the pension plan known as the "Cinergy Corp. Union
       Employees' Pension Plan," as amended, from time to time.  As effective
       January 1, 1998, this document sets forth the Plan.

1.67   "Plan Year" means the calendar year.

                                       20                          Exhibit 10-uu


1.68   "Pre-1998 Covered Compensation" means, with respect to a Participant who
       participated in the Plan as of December 31, 1997, the average (without
       indexing) of the annual Social Security taxable wage bases under the
       Social Security Act for each year during the 35 calendar years ending
       with the last day of the calendar year in which the Participant attains
       his Social Security Retirement Age, but no later than December 31, 1997.

1.69   "Pre-1998 Highest Average Earnings" means, with respect to a Participant
       who participated in the Plan as of December 31, 1997, the Participant's
       highest average annual Earnings for any three consecutive calendar years
       out of the Participant's 10 or fewer Pre-1998 Years of Participation.
       However, if the Participant completes fewer than three Pre-1998 Years of
       Participation, his Pre-1998 Highest Average Earnings will mean his
       average annual Earnings for his total Pre-1998 Years of Participation.
       If Earnings for any Plan Year beginning before January 1, 1994 are taken
       into account in determining a Participant's Pre-1998 Highest Average
       Earnings, the Earnings for that Plan Year will be subject to the
       limitation of Code paragraph 401(a)(17) that was in effect for that Plan
       Year and the Participant's Nonforfeitable Annual Pension will not be less
       than the Participant's accrued benefit under the Plan as of December 31,
       1993.

1.70   "Pre-1998 Normal Retirement Date" means, with respect to each Participant
       who participated in the Plan as of December 31, 1997, the first day of
       the calendar month coincident with or following (a) his 65th birthday, or
       (b) the fifth anniversary date of his employment, whichever is later.

1.71   "Pre-1998 Years of Participation" means, with respect to each Participant
       who participated in the Plan as of December 31, 1997, the sum of the
       following whole and fractional years:

       (a)    with respect to the period prior to January 1, 1976, the number of
              years (to the last completed 1/12th year) of his "participating
              service" (as defined in the Plan as in effect on December 31,
              1975, except that the last sentence of Section 1.6 of the Plan
              will not apply) as of January 1, 1976; plus

                                       21                          Exhibit 10-uu


       (b)    with respect to each Plan Year of his participation in the Plan on
              or after January 1, 1976, and before January 1, 1998 (excluding
              the Plan Years in which his Participation Commencement Date and
              his Reemployment Commencement Date, if applicable, occur, to the
              extent one or both of those dates are on or after January 1,
              1976), one Pre-1998 Year of Participation if he completes at least
              2,000 Hours of Service during that Plan Year; otherwise, a
              fraction of a Pre-1998 Year of Participation, the numerator of
              which is the number of Hours of Service which he completes during
              a Plan Year and the denominator of which is 2,000; provided,
              however, that if he completes less than 1,000 Hours of Service
              during a Plan Year, no portion of a Pre-1998 Year of Participation
              will be granted; plus

       (c)    with respect to the Plan Years during which his Participation
              Commencement Date and/or his Reemployment Commencement Date, if
              applicable, occur, to the extent one or both of the dates occur on
              or after January 1, 1976, and before January 1, 1998, either one
              Pre-1998 Year of Participation, or, if the month and day of his
              Participation Commencement Date or Reemployment Commencement Date
              within the Plan Year is after January 1, a fraction thereof, the
              numerator of which is the number of complete calendar months in
              that Plan Year during which he is a Participant and the
              denominator of which is 12.  However, if the number of Hours of
              Service that he completes as a Participant during the respective
              Plan Year is less than the product of 166-2/3 multiplied by the
              number of complete calendar months during which he is a
              Participant in the Plan Year, then the Pre-1998 Year of
              Participation, or fraction thereof, as otherwise determined
              pursuant to this Paragraph (c), will be multiplied by the ratio of
              the number of Hours of Service that he completes as a Participant
              during the Plan Year to 166-2/3 multiplied by the number of
              complete calendar months during which he is a Participant in the
              Plan Year.  If the number of Hours of Service that he completes as
              a Participant during the Plan Year is less than the product
              of 83-1/3 multiplied by the number of complete calendar months
              during which he is a Participant in the Plan Year, no portion of a
              Pre-1998 Year of Participation will be granted.

                                       22                          Exhibit 10-uu


       With respect to any Plan Year wholly or partially included in a calendar
       year used to calculate the Participant's Pre-1998 Highest Average
       Earnings, if the Participant fails to complete at least 2,000 Hours of
       Service during that Plan Year, then, in lieu of any fraction of a
       Pre-1998 Year of Participation as otherwise determined under either
       Paragraph (b) or Paragraph (c), the Participant will be granted a
       fraction of Pre-1998 Year of Participation: the numerator of which is
       equal to the sum of the number of Hours of Service which the Participant
       completes as a Participant during those calendar months of the Plan Year
       that are not included in that calendar year, and the greater of (A) the
       number of Hours of Service that the Participant completes during those
       calendar months of the Plan Year that are included in such calendar year
       or (B) the product of 166-2/3 multiplied by the number of calendar months
       of the Plan Year that are included in the calendar year; and the
       denominator of which is 2,000. A Participant's Pre-1998 Years of
       Participation will be adjusted, if necessary, pursuant to Section 4.5
       (Special Adjustments) or Section 4.8 (Benefits Adjustment for
       Participants Covered by Certain Programs) of the Plan as in effect on
       December 31, 1997.

1.72   "Projected Annual Benefit" means, with respect to any Participant
       participating in a Qualified Defined Benefit Plan maintained by an
       Employer or an Affiliate, the annual straight life annuity benefit to
       which the Participant would be entitled under that Qualified Defined
       Benefit Plan based upon the following assumptions:

       (a)    the Participant will continue as an employee of an Employer until
              reaching the Participant's normal retirement age under the plan
              (or the Participant's current age if that is later);

       (b)    the Participant's compensation used to determine benefits under
              the plan for the calendar year under consideration will remain the
              same until the date the Participant attains the age described in
              Paragraph (a); and

                                       23                          Exhibit 10-uu


       (c)    all other relevant factors used to determine benefits under the
              plan for the calendar year under consideration will remain
              constant for all future calendar years.

1.73   "PSI" means PSI Energy, Inc., an Indiana corporation, and any related
       company that had adopted the Plan as of December 31, 1997.

1.74   "Qualified Defined Benefit Plan" means any qualified defined benefit plan
       as defined in Code subsections 414(j) and 415(k).

1.75   "Qualified Defined Contribution Plan" means any qualified defined
       contribution plan as defined in Code subsections 414(i) and 415(k).

1.76   "Qualified Domestic Relations Order" means a qualified domestic relations
       order as defined in Code subsection 414(p).

1.77   "Reduced Primary Social Security Benefit" means the reduced amount of
       primary federal old age insurance benefit estimated by the Committee that
       is, or would be, payable or estimated to become payable to a Participant
       at his earliest eligibility date.  The estimate is based on the Social
       Security Act as in effect at the Participant's Option Effective Date.  If
       a Participant supplies documentation from the Social Security
       Administration of his or her actual Reduced Primary Social Security
       Benefit at least 60 days before his or her Option Effective Date, that
       amount will be used in lieu of the estimate referred to above.  A Reduced
       Primary Social Security Benefit calculated using actual documentation
       will not be recalculated.

1.78   "Reemployed Retiree" means a Participant, other than a Terminated Vested
       Participant, who is reemployed by an Employer after his Initial
       Separation Date or an Additional Separation Date.

                                       24                          Exhibit 10-uu


1.79   "Reemployed Terminated Vested Participant" means a Terminated Vested
       Participant who is reemployed by an Employer after his Initial Separation
       Date or an Additional Separation Date.

1.80   "Reemployment Commencement Date" means, with respect to an Eligible
       Employee who incurs a Severance from Service and is later reemployed by
       an Employer, the date upon which the Eligible Employee first performs an
       Hour of Service after his reemployment.

1.81   "Retired Participant" means a former Participant, other than a Terminated
       Vested Participant, while alive on and after his Actual Separation Date.

1.82   "Sabbatical Vacation Pay" means, with respect to an Employee, the
       compensation received as remuneration for the weeks of accrued vacation
       accumulated pursuant to the Employer's applicable policy for the purpose
       of taking an extended vacation beyond the number of weeks of vacation to
       which the Employee would normally be entitled.

1.83   "Section 415 Compensation" means an Eligible Employee's earned income,
       wages, salaries, and fees for professional services, and other amounts
       received for personal services actually rendered in the course of
       employment with the Employer (including, but not limited to, commissions
       paid salesmen, compensation for services on the basis of a percentage of
       profits, commissions on insurance premiums, tips and bonuses) and, except
       as provided in the following sentence, excluding the following:
       (a) Employer contributions to a plan of deferred compensation that are
       not included in the Employee's gross income for the taxable year in which
       contributed or any distributions from a plan of deferred compensation;
       (b) amounts realized from the exercise of a nonqualified stock option, or
       when restricted stock (or property) held by the Employee either becomes
       freely transferable or is no longer subject to a substantial risk of
       forfeiture; and (c) amounts realized from the sale, exchange, or other
       disposition of stock acquired under a qualified stock option.
       Notwithstanding the foregoing, Section 415 Compensation will include any
       elective deferral as defined in Code paragraph 402(g)(3) and amounts
       contributed by an

                                       25                          Exhibit 10-uu


       Employer pursuant to a salary reduction agreement that are excludable
       from the Employee's gross income under Code section 125 or 457.

1.84   "Securities Exchange Act" means the Securities Exchange Act of 1934, as
       amended from time to time, and interpretive rulings and regulations.

1.85   "Service" means, with respect to an Eligible Employee, the period of time
       during which the employment relationship exists between the Eligible
       Employee and the Employer, the length of which is determined as follows:

       (a)    Notwithstanding any other provision of the Plan to the contrary,
              any Eligible Employee who accrued "years of service" (as defined
              in the Plan as of December 31, 1997) under the Plan will be
              credited with Service for the "years of service" credited to him
              under the Plan before January 1, 1998.

       (b)    An Eligible Employee will be credited with Service for the period
              of time beginning with his Employment Commencement Date and ending
              on his Severance from Service Date.

       (c)    An Eligible Employee will be credited with Service for each Period
              of Credited Severance.

       (d)    An Eligible Employee will be credited with Service for any period
              of Service with an Affiliate after he has reached age 18, which
              will be determined as if he had been employed by the Employer
              during that period.

       (e)    In determining an Eligible Employee's total Service for purposes
              of the Plan, all periods of Service that are credited to the
              Employee under Subsections (a) through (d) above will be
              aggregated.  In no event will an Employee receive credit more than
              once for the same period of Service.  For purposes of determining
              an Eligible Employee's total Service, the Eligible Employee will
              be credited with one month

                                       26                          Exhibit 10-uu


              of Service for each calendar month in which he is credited with at
              least one Hour of Service. An Eligible Employee will be credited
              with one year of Service for each 12 months of Service with which
              he is credited pursuant to the preceding sentence.

1.86   "Service Watch Payments" mean, with respect to an Employee, the
       compensation received as a premium for serving on stand-by duty for the
       relevant period pursuant to the Employer's applicable policy.

1.87   "Severance from Service" means, with respect to an Employee:

       (a)    the date of termination of his employment relationship with his
              Employer by reason of a quit, resignation, discharge, retirement,
              death, or layoff of the Employee for an indefinite period of time
              made without any expectation on the part of the Employer at the
              time of layoff to recall the Employee, for employment with the
              Employer as an Employee within 12 months from the date of the
              commencement of the layoff; or

       (b)    the first anniversary of the first date of the Employee's Absence
              from Service, or, if later, the expiration of an Absence from
              Service.  Notwithstanding the preceding sentence, if an Employee
              has an Absence from Service of more than one year by reason of a
              maternity or paternity absence, the Employee's Severance from
              Service occurs on the second anniversary of that absence.  For
              purposes of this Subsection, an Absence from Service for maternity
              or paternity reasons means an absence (1) by reason of the
              pregnancy of the individual, (2) by reason of the birth of a child
              of that individual, (3) by reason of the placement of a child with
              the individual in connection with the adoption of the child by
              that individual, or (4) for purposes of caring for the child for a
              period beginning immediately following its birth or placement.

                                       27                          Exhibit 10-uu


       For purposes of this Subsection, the term "Employer" includes all
       Affiliates, and an Employee or former Employee will not be treated as
       having incurred a Severance from Service until the employment
       relationship between the Employee and all Employers and Affiliates is
       terminated.

1.88   "Severance from Service Date" means, with respect to each Employee, the
       date of his Severance from Service.

1.89   "Shift Premiums" mean, with respect to an Employee, the compensation
       received as a premium for services performed for the relevant period for
       working a shift other than the Employer's regular day shift pursuant to
       the Employer's applicable policy.

1.90   "Social Security Act" means the federal Social Security Act, 42 U.S.C.
       Section 301, ET SEQ., as amended from time to time, and interpretive
       rulings and regulations.

1.91   "Social Security Retirement Age" means respectively (a) age 65 for a
       Participant born before January 1, 1938; (b) age 66 for a Participant
       born after December 31, 1937, but before January 1, 1955; and (c) age 67
       for a Participant born after December 31, 1954.

1.92   "Spouse" means, with respect to any Participant, the Participant's
       lawfully married spouse, if any, on the applicable date.  The Plan will
       not recognize common law marriages or similar arrangements unless
       required to do so by federal law.  A former Spouse will also be
       considered a Spouse to the extent provided under a Qualified Domestic
       Relations Order.

1.93   "Terminated Vested Participant" means a Participant who is entitled to
       benefits under the provisions of Section 5.3 (Severance from Service
       After Vesting).

1.94   "Trust Fund" means the trust established by the Employer to fund the
       Plan.

                                       28                          Exhibit 10-uu


1.95   "Trustee" means the person or entity designated by Cinergy to act as
       trustee of any trust forming a part of the Pension Fund.

1.96   "Vesting Requirement" means, with respect to each Participant, the
       requirements for the vesting of his accrued benefits under the Plan.

The uses of singular and masculine words are for practical purposes only and
will be deemed to include the plural and feminine, respectively, unless the
context plainly indicates a distinction.  Certain other definitions, as
required, appear in the following Articles of the Plan.

                                  ARTICLE 2
                             EFFECTIVE DATE OF PLAN

The original effective date of this Plan was March 1, 1941.  The effective
date of this Plan restatement is, unless otherwise specified, January 1,
1998, as to Cinergy, and will be effective with respect to any other Employer
as of the date that Employer elects to participate in the Plan pursuant to
Section 20.1 (Adoption of Plan).

This restatement applies only to Eligible Employees who are credited with at
least one Hour of Service on or after January 1, 1998.  This Plan will not
affect the rights of former Eligible Employees (and their Beneficiaries) who
retired, died, or otherwise terminated their employment with an Employer
prior to January 1, 1998.  The rights, if any, of those former Eligible
Employees (and their Beneficiaries), and the amounts of their benefits, if
any, will continue to be governed by the provisions of the Plan in effect
prior to January 1, 1998.

                                  ARTICLE 3
                        ELIGIBILITY AND PARTICIPATION

3.1    DATE OF PARTICIPATION

       Each Employee who is an Eligible Employee on January 1, 1998, and who was
       participating in the Plan as of December 31, 1997, will continue to be a
       Participant as of

                                       29                          Exhibit 10-uu


       January 1, 1998. Each other Eligible Employee will automatically become a
       Participant on the latest of January 1, 1998, his Employment Commencement
       Date, or the date he reaches age 18. An Eligible Employee who becomes a
       Participant, subsequently incurs a Severance from Service, and is later
       reemployed by an Employer will again become a Participant on his
       Reemployment Commencement Date.

3.2    LEASED EMPLOYEES

       A Leased Employee will be excluded from participation in the Plan.
       However, if a Leased Employee is subsequently employed by an Employer as
       an Eligible Employee, his time as a Leased Employee of an Employer will
       be considered for purposes of determining eligibility under this Article
       and vesting under Article 5 (Severance from Service -- Vesting).

3.3    TRANSFERS OF EMPLOYMENT

       If a Participant is transferred from one Employer to another or from an
       Employer to an Affiliate, he will continue to participate in the Plan
       until an event occurs that would have terminated his participation had he
       continued in the service of an Employer, except that payments received by
       a Participant from any Affiliate that is not an Employer will not be
       treated as Earnings for purposes of determining the amount of retirement
       benefits to which the Participant will be entitled.  Any period of
       employment with an Affiliate that is not an Employer will be taken into
       account for purposes of determining when a Participant has satisfied the
       Vesting Requirement.

       If a Participant is transferred from an Employer to an Affiliate that has
       not elected to participate in the Plan pursuant to Section 20.1 (Adoption
       of Plan), the Participant's accrued benefit under the Plan as of the date
       of the transfer will be preserved.  The Participant's service after the
       transfer will not be considered in determining the Participant's years of
       Participation, but will be considered in determining the Participant's
       years of Service.

                                       30                          Exhibit 10-uu


3.4    TRANSFERS OF PARTICIPANTS AND PLAN ASSETS TO AND FROM THE CINERGY CORP.
       NON-UNION EMPLOYEES' PENSION PLAN AND CINERGY CORP. UNION EMPLOYEES'
       RETIREMENT INCOME PLAN

       (a)    If a Participant in the Plan remains an Employee but becomes
              ineligible to participate in the Plan, he will become a
              participant in the Cinergy Corp. Non-Union Employees' Pension Plan
              or the Cinergy Corp. Union Employees' Retirement Income Plan, if
              he is an "eligible employee" as defined in either of those plans,
              as of the first day of the month during which his change in
              Employee status becomes effective.

       (b)    If a Participant in the Cinergy Corp. Non-Union Employees' Pension
              Plan or the Cinergy Corp. Union Employees' Retirement Income Plan
              remains an Employee but becomes ineligible to participate in his
              current plan, he will become a Participant in the Plan, if he is
              an Eligible Employee, as of the first day of the month during
              which his change in Employee status becomes effective.

       (c)    A transfer of assets between the Plan and the Cinergy Corp.
              Non-Union Employees' Pension Plan or the Cinergy Corp. Union
              Employees' Retirement Income Plan will follow the requirements of
              Code subsection 414(1). The value of the benefits to be
              transferred will be based upon the Plan's actuarial valuation
              assumptions at the time of the transfer. The actual transfer of
              assets will occur as soon as administratively practicable after
              the change in the Participant's Employee status.

       (d)    A Participant who has earned years and/or partial years of
              "participation" under the Cinergy Corp. Non-Union Employees'
              Pension Plan or the Cinergy Corp. Union Employees' Retirement
              Income Plan and who then becomes a Participant in this Plan, will
              be credited under this Plan with his total years of
              "participation" earned under the Cinergy Corp. Non-Union
              Employees' Pension Plan or the Cinergy Corp. Union Employees'
              Retirement Income Plan, as if they were earned

                                       31                          Exhibit 10-uu


              under this Plan. A Participant will not be credited with more
              years of Participation than he would have earned if the total of
              all his years of Participation under the Plan and all his years of
              "participation" under the Cinergy Corp. Non-Union Employees'
              Pension Plan and the Cinergy Corp. Union Employees' Retirement
              Income Plan had been earned solely as a Participant of this Plan.
              The benefit paid to a Participant under this Plan will never be
              less than the benefit the Participant earned in the Cinergy Corp.
              Non-Union Employees' Pension Plan and/or the Cinergy Corp. Union
              Employees' Retirement Income Plan prior to his change in Employee
              status.

                                  ARTICLE 4
                         AMOUNT OF LIFE-ONLY PENSION

4.1    NORMAL RETIREMENT PENSION FORMULA

       Except as otherwise expressly provided in this Article, a Participant who
       retires on or after his Normal Retirement Date will be entitled to a
       Nonforfeitable Annual Pension under this Plan equal to the sum of (a)
       plus (b), where (a) is equal to:

              (1)    1.1 percent of the Participant's Highest Average Earnings
                     plus

              (2)    0.5 percent of the amount by which his Highest Average
                     Earnings exceed his applicable Covered Compensation,
                     multiplied by the number of his years of Participation not
                     in excess of 35;

       and (b) is equal to 1.4 percent of the Participant's Highest Average
       Earnings, multiplied by the number of his years of Participation in
       excess of 35.


4.2    NORMAL RETIREMENT BENEFITS FOR PRE-1998 PARTICIPANTS

                                       32                          Exhibit 10-uu


       The normal retirement Nonforfeitable Annual Pension of a Participant who
       was a Participant in the Plan as of December 31, 1997, will be the
       greater of (a) or (b), where (a) is the Participant's Annual Pension
       calculated under Section 4.1 (Normal Retirement Pension Formula) and
       (b) is the Participant's annual accrued benefit calculated under the Plan
       as of December 31, 1997.  The applicable formulas used to calculate a
       Participant's annual accrued benefit under the Plan as in effect on
       December 31, 1997, are as follows:

       (a)    NORMAL RETIREMENT PENSION FORMULA 1

              The Annual Pension computed under Pension Formula 1 equals
              (1) 1.1 percent of the Participant's Pre-1998 Highest Average
              Earnings, plus (2) 0.5 percent of the amount by which his Pre-1998
              Highest Average Earnings exceed his applicable Pre-1998 Covered
              Compensation, multiplied by the number of his Pre-1998 Years of
              Participation, up to a maximum of 35.

       (b)    NORMAL RETIREMENT PENSION FORMULA 2

       The Annual Pension computed under Pension Formula 2 equals the excess of:

              (1)    1-2/3 percent of the Participant's Pre-1998 Highest Average
                     Earnings, multiplied by the number of his Pre-1998 Years of
                     Participation not in excess of 30; over

              (2)    1-2/3 percent of the Participant's Annual Primary Social
                     Security Amount that he is expected to be entitled to
                     receive either at his Pre-1998 Normal Retirement Date or at
                     his Disability Date if his disability continues to his
                     Pre-1998 Normal Retirement Date, in any event multiplied by
                     the number of his Pre-1998 Years of Participation not in
                     excess of 30.

       (c)    PSI NORMAL RETIREMENT PENSION FORMULA 3

                                       33                          Exhibit 10-uu


              The Annual Pension computed under Pension Formula 3 equals the
       excess of:

              (1)    2 percent of the Participant's Pre-1998 Highest Average
                     Earnings, multiplied by the number of his Pre-1998 Years of
                     Participation not in excess of 25, over

              (2)    2 percent of the Participant's Annual Primary Social
                     Security Amount that he is expected to be entitled to
                     receive either upon the attainment of age 62 on the
                     assumption that he receives no "wages" or "remuneration,"
                     as defined in the Social Security Act, between December 31,
                     1989 (December 31, 1988, for a Highly Compensated
                     Participant), and his attainment of age 62, or if he is
                     still employed by his Employer on or after his attainment
                     of age 62, as of the earlier of December 31, 1989
                     (December 31, 1988, for a Highly Compensated Participant),
                     or his Pre-1998 Normal Retirement Date, or at his
                     Disability Date if his disability continues up until the
                     date otherwise determined under this Paragraph (2), in any
                     event multiplied by the number of his Pre-1998 Years of
                     Participation not in excess of 25.

       (d)    TERMINATED VESTED PENSION FORMULA 5

              The Annual Pension computed under Pension Formula 5 equals the
              excess of:

              (1)    2 percent of the Participant's Pre-1998 Highest Average
                     Earnings, multiplied by the number of his Pre-1998 Years of
                     Participation not in excess of 25, over

              (2)    a fraction, the numerator of which is his actual Pre-1998
                     Years of Participation and the denominator of which is the
                     Pre-1998 Years of Participation he would have accumulated
                     at his Pre-1998 Normal Retirement Date if during each year
                     after December 31, 1989

                                       34                          Exhibit 10-uu


                     (December 31, 1988, for a Highly Compensated Participant)
                     he had completed at least 2,000 Hours of Service, of 50
                     percent of the Participant's Annual Primary Social Security
                     Amount that he is entitled to receive upon the attainment
                     of age 60 on the assumption that his rate of Earnings as of
                     December 31, 1989 (December 31, 1988, for a Highly
                     Compensated Participant), had continued unchanged until age
                     60.

       (e)    TERMINATED VESTED PENSION FORMULA 6

              The Annual Pension computed under Pension Formula 6 equals the
              excess of:

              (1)    1-2/3 percent of the Participant's Pre-1998 Highest Average
                     Earnings, multiplied by the number of his Pre-1998 Years of
                     Participation not in excess of 30; over

              (2)    a fraction, the numerator of which is his actual Pre-1998
                     Years of Participation and the denominator of which is the
                     Years of Participation he would have accumulated at his
                     Pre-1998 Normal Retirement Date if during each year after
                     December 31, 1989 (December 31, 1988, for a Highly
                     Compensated Participant) he had completed at least
                     2,000 Hours of Service, of 50 percent of the Participant's
                     Annual Primary Social Security Amount that he is entitled
                     to receive upon the attainment of age 60 on the assumption
                     that his rate of Earnings as of December 31, 1989
                     (December 31, 1988, for a Highly Compensated Participant),
                     had continued unchanged until age 60.

4.3    GENERAL METHOD OF COMPUTING ACCRUED BENEFIT UNDER THE PLAN'S PRE-1998
       FORMULAS FOR NORMAL RETIREMENT

       (a)    Subject to the following provisions of this Section, the amount of
              the accrued benefit under the Plan as of December 31, 1997, of a
              Participant who was a

                                       35                          Exhibit 10-uu


              Participant in the Plan as of December 31, 1997, will be computed
              under Pension Formula 1 in Subsection 4.2(a) (Normal Retirement
              Benefits for Pre-1998 Participants).

       (b)    Notwithstanding any other provisions of this Section, the accrued
              benefit under the Plan as of December 31, 1997, of a Participant
              who became a Participant in the Plan prior to May 1, 1970,  will
              not be less than the amount computed under Pension Formula 3 in
              Subsection 4.2(c) (Normal Retirement Benefits for Pre-1998
              Participants) as of the following date:

              (1)    December 31, 1989, with respect to an Employee who is not a
                     Highly Compensated Participant; or

              (2)    December 31, 1988, with respect to a Highly Compensated
              Participant.

       (c)    Notwithstanding any other provisions of this Section, the accrued
              benefit under the Plan as of December 31, 1997, of a Participant
              who became a Participant in the Plan on or after May 1, 1970, will
              not be less than the amount computed under Pension Formula 2 in
              Subsection 4.2(b) (Normal Retirement Benefits for Pre-1998
              Participants) as of the following date:

              (1)    December 31, 1989, with respect to an Employee who is not a
                     Highly Compensated Participant; or

              (2)    December 31, 1988, with respect to a Highly Compensated
              Participant.

4.4    GENERAL METHOD OF COMPUTING ANNUAL PENSION FOR RETIREMENT AT EARLY
RETIREMENT DATE

       (a)    Subject to the following provisions of this Section, a Participant
              who retires on an Early Retirement Date, will be entitled to a
              Nonforfeitable Annual Pension computed under Section 4.1 (Normal
              Retirement Pension Formula).  The benefits will begin on the
              Employee's Normal Retirement Date, or, if the Employee so


                                       36                          Exhibit 10-uu



              elects, at an earlier date on or after his Early Retirement Date.
              If the Employee elects to have the benefit begin before his 62nd
              birthday, the amount of the Employee's Nonforfeitable Annual
              Pension will be multiplied by the appropriate early payment factor
              as obtained from the following table:

                                        37






    EARLY                      EARLY                     EARLY
   PAYMENT                   PAYMENT                    PAYMENT
    PERIOD          EARLY     PERIOD           EARLY     PERIOD           EARLY
    ------         PAYMENT    ------          PAYMENT    ------          PAYMENT
  YR.    MO.        FACTOR   YR.   MO.         FACTOR  YR.    MO.         FACTOR
  ---    ---        ------   ---   ---         ------  ---    ---         ------
                                                  
   0      0         1.0000    4     0          0.7333   8      0          0.5667
   0      1         0.9944    4     1          0.7278   8      1          0.5639
   0      2         0.9889    4     2          0.7222   8      2          0.5611
   0      3         0.9833    4     3          0.7167   8      3          0.5584
   0      4         0.9778    4     4          0.7111   8      4          0.5556
   0      5         0.9722    4     5          0.7056   8      5          0.5528
   0      6         0.9667    4     6          0.7000   8      6          0.5500
   0      7         0.9611    4     7          0.6944   8      7          0.5473
   0      8         0.9556    4     8          0.6889   8      8          0.5445
   0      9         0.9500    4     9          0.6833   8      9          0.5417
   0      10        0.9444    4     10         0.6778   8      10         0.5389
   0      11        0.9389    4     11         0.6722   8      11         0.5361
   1      0         0.9333    5     0          0.6667   9      0          0.5334
   1      1         0.9278    5     1          0.6639   9      1          0.5300
   1      2         0.9222    5     2          0.6611   9      2          0.5265
   1      3         0.9167    5     3          0.6584   9      3          0.5231
   1      4         0.9111    5     4          0.6556   9      4          0.5196
   1      5         0.9056    5     5          0.6528   9      5          0.5162
   1      6         0.9000    5     6          0.6500   9      6          0.5127
   1      7         0.8944    5     7          0.6473   9      7          0.5093
   1      8         0.8889    5     8          0.6445   9      8          0.5059
   1      9         0.8833    5     9          0.6417   9      9          0.5024
   1      10        0.8778    5     10         0.6389   9      10         0.4990
   1      11        0.8722    5     11         0.6361   9      11         0.4955
   2      0         0.8667    6     0          0.6334   10     0          0.4921
   2      1         0.8611    6     1          0.6306   10     1          0.4889
   2      2         0.8556    6     2          0.6278   10     2          0.4858
   2      3         0.8500    6     3          0.6250   10     3          0.4826
   2      4         0.8444    6     4          0.6223   10     4          0.4795
   2      5         0.8389    6     5          0.6195   10     5          0.4763
   2      6         0.8333    6     6          0.6167   10     6          0.4732
   2      7         0.8278    6     7          0.6139   10     7          0.4700
   2      8         0.8222    6     8          0.6111   10     8          0.4668
   2      9         0.8167    6     9          0.6084   10     9          0.4637
   2      10        0.8111    6     10         0.6056   10     10         0.4605
   2      11        0.8056    6     11         0.6028   10     11         0.4574
   3      0         0.8000    7     0          0.6000   11     0          0.4542
   3      1         0.7944    7     1          0.5973   11     1          0.4513
   3      2         0.7889    7     2          0.5945   11     2          0.4485
   3      3         0.7833    7     3          0.5917   11     3          0.4456
   3      4         0.7778    7     4          0.5889   11     4          0.4427
   3      5         0.7722    7     5          0.5861   11     5          0.4398
   3      6         0.7667    7     6          0.5834   11     6          0.4370
   3      7         0.7611    7     7          0.5806   11     7          0.4341
   3      8         0.7556    7     8          0.5778   11     8          0.4312
   3      9         0.7500    7     9          0.5750   11     9          0.4283
   3      10        0.7444    7     10         0.5723   11     10         0.4255
   3      11        0.7389    7     11         0.5695   11     11         0.4226
                                                        12     0          0.4197



                                        38



              In using the above table, the order of required steps is as
              follows:

              (1)    determine the Participant's "early payment period," which
                     is the number of whole calendar months by which the actual
                     commencement of his pension payments precedes the first day
                     of the calendar month coincident with or following his
                     62nd birthday;

              (2)    use the early payment period as determined in Step (1) to
                     identify the applicable early payment factor; and

              (3)    multiply the applicable early payment factor times the
                     amount of the Participant's Annual Pension determined under
                     Section 4.1 (Normal Retirement Pension Formula).

       (b)    Notwithstanding any other provision of this Section except
              Subsection (d), the early retirement Nonforfeitable Annual Pension
              payable to a Participant who (1) was a Participant in the Plan as
              of December 31, 1997, and (2) became a Participant in the Plan
              prior to May 1, 1970, will be computed under Section 4.2 (Normal
              Retirement Benefits for Pre-1998 Participants) and Section 4.3
              (General Method of Computing Accrued Benefit Under the Plan's
              Pre-1998 Formulas for Normal Retirement) and will be reduced by
              multiplying the amount of the Participant's Nonforfeitable Annual
              Pension by the early payment factor described in Subsection (a);
              provided, however, that his early retirement Nonforfeitable Annual
              Pension will not be less than the product of:

              (A)    the amount computed under Pension Formula 3 in
                     Subsection 4.2(c) (Normal Retirement Benefits for Pre-1998
                     Participants) as of the following date:

                     (i)    December 31, 1989, with respect to an Employee who
                            is not a Highly Compensated Participant; or


                                        39



                     (ii)   December 31, 1988, with respect to a Highly
                            Compensated Participant; and

              (B)    the early payment factor determined as described in
                     Subsection (a), except that the early payment period will
                     be the number of whole calendar months by which the
                     commencement of the Participant's pension payments precedes
                     the first day of the calendar month coincident with or
                     following his 60th birthday.

       (c)    Notwithstanding any other provision of this Section except
              Subsection (d), the early retirement Nonforfeitable Annual Pension
              payable to a Participant who (1) was a Participant in the Plan as
              of December 31, 1997, and (2) became a Participant in the Plan on
              or after May 1, 1970, will be computed under Section 4.2 (Normal
              Retirement Benefits for Pre-1998 Participants) and Section 4.3
              (General Method of Computing Accrued Benefit Under the Plan's
              Pre-1998 Formulas for Normal Retirement) and will be reduced by
              multiplying the amount of the Participant's Nonforfeitable Annual
              Pension by the early payment factor described in Subsection (a);
              provided, however, that his early retirement Nonforfeitable Annual
              Pension will not be less than the product of:

              (1)    the amount computed under Pension Formula 2 in
                     Subsection 4.2(b) (Normal Retirement Benefits for Pre-1998
                     Participants) as of the following date:

                     (A)    December 31, 1989, with respect to an Employee who
                            is not a Highly Compensated Participant; or

                     (B)    December 31, 1988, with respect to a Highly
                            Compensated Participant; and

              (2)    the early payment factor determined as described in
                     Subsection (a).


                                        40



       (d)    If, as of his applicable Severance from Service Date, a
              Participant has reached age 55, and the sum of his age (in whole
              years) attained as of that date and the number of his years of
              Service (in whole years) accumulated as of that date equals or
              exceeds 85, he will receive a Nonforfeitable Annual Pension
              computed under the appropriate early retirement Annual Pension
              formula described in this Section, but the amount of the
              Participant's pension will not be multiplied by the early payment
              factor that otherwise would be applicable.

       (e)    A Participant who is eligible to terminate employment voluntarily
              under the Redeployment Status Opportunity provisions of the
              Severance Opportunity Plan for Union Employees of Cinergy Corp.,
              as amended from time to time, is eligible to receive a
              Nonforfeitable Annual Pension computed under the appropriate early
              retirement Annual Pension formula described in this Section, but
              the amount of the Participant's pension will not be multiplied by
              the early payment factor that otherwise would be applicable,
              provided that:  (1) as of his applicable Severance from Service
              Date, the Participant has reached age 50, but not yet reached age
              55, (2) he elects under Article 8 (Payment of Pension) to defer
              receipt of his pension to at least age 55, and (3) the sum of his
              age (in whole years) attained as of the date that the receipt of
              the pension under the Plan begins pursuant to Paragraph (2) and
              his years of Service (in whole years) accumulated as of his
              Severance from Service Date equals or exceeds 85.

4.5    GENERAL METHOD OF COMPUTING ANNUAL PENSION FOR A TERMINATED VESTED
       PARTICIPANT

       (a)    Subject to the following provisions of this Section, the amount of
              Nonforfeitable Annual Pension payable to a former Participant who
              is described in Section 5.3 (Severance from Service After
              Vesting), and whose Actual Separation Date


                                        41



              occurred on or before his Normal Retirement Date, will be computed
              under Section 4.1 (Normal Retirement Pension Formula). The
              benefits will begin on the Employee's Normal Retirement Date or,
              if the Employee so elects, at an earlier date on or after his
              Early Retirement Date. If the Employee elects to have the benefits
              begin before his Normal Retirement Date, the amount of the
              Employee's Nonforfeitable Annual Pension will be reduced by five
              percent for each calendar year (or .4166 percent for each calendar
              month) by which the commencement of his pension payments precedes
              his Normal Retirement Date.

       (b)    Notwithstanding any other provision of this Section, the
              terminated vested Nonforfeitable Annual Pension payable to a
              Participant who was a Participant in the Plan as of December 31,
              1997, will be the greater of the amounts calculated under (a) and
              (b) of Section 4.2 (Normal Retirement Benefits for Pre-1998
              Participants in the Plan), after those amounts are reduced for
              early payment as follows:

              (1)    The Participant's Annual Pension calculated under
                     Section 4.1 (Normal Retirement Pension Formula) is reduced
                     as described in Subsection (a).

              (2)    If the Participant elects to have his benefit begin before
                     his Normal Retirement Date, the Participant's annual
                     accrued benefit under the Plan as of December 31, 1997, is
                     reduced by multiplying that annual accrued benefit by the
                     appropriate early payment factor as obtained from the table
                     in Subsection 4.4(a) (General Method of Computing Annual
                     Pension for Retirement at Early Retirement Date).

       (c)    Notwithstanding any other provisions of this Section, the
              terminated vested Nonforfeitable Annual Pension payable to a
              Participant who (1) was a Participant in the Plan as of
              December 31, 1997, and (2) became a Participant in the Plan prior
              to May 1, 1970, will not be less than the product of:


                                        42



              (A)    The amount computed under Pension Formula 5 in
                     Subsection 4.2(d) (Normal Retirement Benefits for Pre-1998
                     Participants) as of the following date:

                     (i)    December 31, 1989, with respect to an Employee who
                            is not a Highly Compensated Participant; or

                     (ii)   December 31, 1988, with respect to a Highly
                            Compensated Participant; and

              (B)    If the Participant elects to have his benefit begin before
                     his Normal Retirement Date, the early payment factor as
                     obtained from the table in Subsection 4.4(a) (General
                     Method of Computing Annual Pension for Retirement at Early
                     Retirement Date), except that the early payment period will
                     be the number of whole calendar months by which the
                     commencement of the Participant's pension payments precedes
                     the first day of the calendar month coincident or following
                     his 60th birthday.

       (d)    Notwithstanding any other provisions of this Section, the
              terminated vested Nonforfeitable Annual Pension payable to a
              Participant who (1) was a Participant in the Plan as of
              December 31, 1997, and (2) became a Participant in the Plan on or
              after May 1, 1970, will not be less than the product of:

              (1)    The amount computed under Pension Formula 6 in
                     Subsection 4.2(e) (Normal Retirement Benefits for Pre-1998
                     Participants) as of the following date:

                     (A)    December 31, 1989, with respect to an Employee who
                            is not a Highly Compensated Participant; or


                                        43



                     (B)    December 31, 1988, with respect to a Highly
                            Compensated Participant; and

              (2)    If the Participant elects to have his benefit begin before
                     his Normal Retirement Date, the early payment factor
                     determined as obtained from the table in Subsection 4.4(a)
                     (General Method of Computing Annual Pension for Retirement
                     at Early Retirement Date).

4.6    MAXIMUM PENSION

       (a)    Each Participant whose Annual Pension as otherwise determined
              pursuant to the provisions of this Article and as modified by the
              applicable provisions of Section 7.1 (Normal Forms of Pensions)
              exceeds $1,000 multiplied by the Employee's years of Service with
              the Employer (not exceeding ten), or who has ever participated in
              a Qualified Defined Contribution Plan, will in no event be
              entitled to an Annual Pension (as determined on a Plan Year basis)
              that exceeds the lesser of:

              (1)    $90,000 (as adjusted for increases in the limitation
                     pursuant to Code subsection 415(d)); or

              (2)    100 percent of his highest average annual Section 415
                     Compensation from his Employer for any three consecutive
                     years of Service; provided, that if he has fewer than three
                     years of Service, then 100 percent of his highest average
                     annual Section 415 Compensation from his Employer for his
                     total years of Service will be construed as the limiting
                     amount.

       However, if a Participant has fewer than ten years of Participation at
       his Normal Retirement Date or Early Retirement Date, whichever is
       applicable, then the dollar limitation of Paragraph (1) will be
       multiplied by a fraction, the numerator of which is the number of the
       Participant's years of Participation (including fractional years of


                                        44



       Participation) and the denominator of which is ten.  However, the maximum
       benefit will never be reduced to less than 1/10th of the applicable
       limitation.

       (b)    If any benefit under the plan begins before the Participant's
              Social Security Retirement Age, but on or after the Participant
              reaches age 62, the determination as to whether the $90,000 limit
              set forth in Subsection (a) has been satisfied will be made, in
              accordance with regulations prescribed by the Secretary, by
              reducing the limitation of Subsection (a).  The reduction under
              the preceding sentence will be made in the manner as the Secretary
              may prescribe that is consistent with the reduction for old-age
              insurance benefits commencing before the Social Security
              Retirement Age under the Social Security Act.  If any benefit
              under the Plan begins before the Participant reaches age 62, the
              determination as to whether the $90,000 limit set forth in
              Subsection (a) has been satisfied will be made, in accordance with
              regulations prescribed by the Secretary, by reducing the
              limitation of Subsection (a) so that the limitation (as reduced)
              equals an Annual Pension (beginning when the retirement income
              benefit begins) that is actuarially equivalent to the reduced
              $90,000 Annual Pension beginning at age 62 as determined under
              this Subsection.

       (c)    If any benefit under the Plan begins after the Participant's
              Social Security Retirement Age, the determination as to whether
              the $90,000 limitation set forth in Subsection (a) has been
              satisfied will be made, in accordance with regulations prescribed
              by the Secretary, by increasing, if necessary, the limitation of
              Subsection (a) so that the limitation (as increased) equals an
              Annual Pension (beginning when the retirement income benefit
              begins) that is actuarially equivalent to a $90,000 Annual Pension
              beginning at the Social Security Retirement Age.

       (d)    In general, the maximum annual benefit means a benefit payable
              annually in the form of a single life annuity (without ancillary
              benefits).  If a Participant's pension under the Plan is payable
              in any form other than a single life annuity, the


                                        45



              determination as to whether the limitations of this Section have
              been satisfied will be made by adjusting the benefit so that it is
              the actuarial equivalent of a single life annuity. For purposes of
              this Section, any ancillary benefit not directly related to
              retirement income benefits, and that portion of any joint and
              survivor annuity that constitutes a Qualified Joint and Survivor
              Annuity under Subsection 7.1(b) (Normal Forms of Pension), will
              not be taken into account.

       (e)    For benefits commencing in Plan Years beginning on or after
              January 1, 1995, and except as provided in this Plan, the
              adjustments to the limitations under Subsections (b), (c), and (d)
              will be calculated as described in this Subsection.  For purposes
              of adjusting the limit for an Annual Pension commencing prior to
              age 62 under Subsection (b), the $90,000 limitation will be equal
              to the lesser of the equivalent $90,000 limitation that is
              computed using the interest rate and mortality table (or other
              tabular factor) specified in the Plan for equivalence for early
              retirement benefits, and the equivalent $90,000 limitation that is
              computed using a 5 percent interest rate assumption and the
              mortality table prescribed from time to time by the Secretary for
              this purpose.  For purposes of adjusting any form of optional
              benefit to a straight life annuity under Subsection (d), the
              actuarially equivalent life annuity will be equal to the greater
              of the annuity benefit that is computed using the interest rate
              and mortality table (or other tabular factor) specified in the
              Plan for adjusting benefits in the same form, and the annuity
              benefit that is computed using a 5 percent interest rate
              assumption and the mortality table prescribed from time to time by
              the Secretary for this purpose.  For purposes of adjusting for any
              form of benefit subject to Code paragraph 417(e)(3), an interest
              rate assumption equal to the annual rate of interest on 30 year
              Treasury securities for November of the preceding Plan Year, as
              specified by the Commissioner of Internal Revenue, will be
              substituted for the 5 percent interest rate assumption set forth
              in the preceding sentences.  For purposes of adjusting the limit
              under Subsection (c), the $90,000 limitation for an Annual Pension
              beginning after Social Security Retirement Age will be the lesser
              of the equivalent $90,000 limitation that is computed using the
              interest rate and mortality table (or


                                        46


              other tabular factor) specified in the Plan for equivalence of
              delayed retirement benefits, and the eqivalent $90,000 limitation
              that is computed using a 5 percent interest rate assumption and
              the mortality table prescribed from time to time by the Secretary
              for this purpose. Notwithstanding the preceding provisions of this
              Subsection, this Subsection will not apply to the accrued benefit
              of any Participant under the Plan as of December 31, 1997, after
              applying Code section 415 as in effect on December 7, 1994, for
              each possible Annuity Starting Date and each optional form of
              benefit under the Plan.

       (f)    Notwithstanding the foregoing, the maximum annual benefit payable
              under this Section will not be less than the actuarial equivalent
              of the Participant's single life annuity, accrued under the Plan,
              as of December 31, 1997, determined by using the Plan's actuarial
              assumptions as in effect on December 31, 1997.

       (g)    If for any particular Plan Year, a Participant is also
              participating in one or more Qualified Defined Contribution Plans
              maintained by his Employer, then the sum of the Participant's
              aggregate Defined Benefit Plan Fraction and the Participant's
              aggregate Defined Contribution Plan Fraction will not exceed 1.0.
              If the sum exceeds 1.0, then the Employer will reduce the
              Participant's benefits in this Plan so that the sum equals 1.0.
              The Participant's maximum Annual Pension will be determined under
              the provisions of this Article without regard to the $10,000
              minimum amount referred to in the first paragraph of this Section.
              This Subsection will be repealed, effective January 1, 2000, for
              any Participant who is credited with at least one Hour of Service
              on or after January 1, 2000.

                                     ARTICLE 5

                           SEVERANCE FROM SERVICE-VESTING

5.1    VESTING REQUIREMENT


                                        47



       A Participant will satisfy the Vesting Requirement under the Plan upon
       his completion of five years of Service and then will have a
       Nonforfeitable right to his accrued benefit under the Plan.  A
       Participant who is an Employee on his Normal Retirement Date will be
       deemed to satisfy the Vesting Requirement as of that date if he has not
       already satisfied the Vesting Requirement under the Plan.
       Notwithstanding the preceding provisions of this Subsection, the
       Nonforfeitable percentage of each Participant's right to his accrued
       benefit derived from Employer contributions, because of a change to the
       vesting schedule, will be not less than the Participant's vested
       percentage, computed under the Plan as of the date immediately prior to
       the change, without regard to the change.  Moreover, each Participant
       whose Nonforfeitable percentage of his accrued benefit derived from
       Employer contributions is determined under an amended vesting schedule,
       and who has completed at least three years of Service as of the date of
       the amendment may elect, within a reasonable period after the adoption of
       the amended vesting schedule, to have the Nonforfeitable percentage of
       his accrued benefit derived from Employer contributions determined
       without regard to the amendment if his Nonforfeitable percentage under
       the Plan as amended is, at any time, less than the percentage determined
       without regard to the amendment.

5.2    SEVERANCE FROM SERVICE BEFORE VESTING

       If a Participant incurs a Severance from Service before he has satisfied
       the Vesting Requirement and is not reemployed by an Employer, he will
       have no further interest in, or right to, any benefits under the Plan,
       except as otherwise provided in Section 14.2 (Reemployment).  If upon a
       Severance from Service, a Participant is zero percent vested in his
       benefits under the Plan, the vested portion of his Plan benefits will be
       deemed distributed to him as of his Severance from Service Date.


5.3    SEVERANCE FROM SERVICE AFTER VESTING


                                        48



       If a Participant incurs a Severance from Service before his
       50th birthday, but after satisfying the Vesting Requirement, he will be
       entitled to receive a pension commencing on his 50th birthday, if he is
       then living, or the Participant may elect to begin receiving his benefit
       at any time on or after his Early Retirement Date.  Subject to the
       provisions of Section 4.6 (Maximum Pension) and Article 7 (Forms of
       Pension), the amount of Nonforfeitable Annual Pension payable will be
       determined pursuant to the provisions of Section 4.5 (General Method of
       Computing Annual Pension for a Terminated Vested Participant).

                                     ARTICLE 6

                                  SPOUSE'S BENEFIT

6.1    DETERMINATION OF SPOUSE'S BENEFIT

       Upon the death of either (a) an Active Participant who has satisfied the
       Vesting Requirement (an "Eligible Active Participant"), or (b) a former
       Participant who has satisfied the Vesting Requirement, whose employment
       with his Employer terminated before the Participant reached age 50, and
       whose pension under the Plan had not yet begun on the date of his death
       (an "Eligible Former Participant"), the Participant's Spouse on the date
       of his death, if living on the date of the first installment payable, as
       set forth below, will be entitled to receive a pension under the Plan as
       a Spouse's Benefit.  The annual amount of the Spouse's Benefit will be
       determined as follows:

       (a)    If, at the date of his death, the Participant was either an
              Eligible Active Participant or an Eligible Former Participant who
              had reached age 50, the Spouse's benefit will equal 100 percent of
              the Annual Pension that the Participant would have received,
              commencing on the first day of the calendar month coincident with
              or following the date of his death, if (1) he had retired as of
              the first day of the calendar month coincident with or following
              his death, thus establishing an Early Retirement Date, (2) the
              amount of Annual Pension commencing on the Early Retirement Date
              had been determined pursuant to the applicable provisions of


                                        49



              Section 4.4 (General Method of Computing Annual Pension for
              Retirement at Early Retirement Date), and (3) his pension had been
              payable under the single-life option applicable to him pursuant to
              Subsection 7.1(a) (Normal Forms of Pension).  However, subject to
              Subsection (b), if the Participant's Spouse is more than
              eight years younger than the Participant, the Spouse will receive
              the actuarial equivalent of the benefit payable to a Spouse
              exactly eight years younger than the Participant, calculated by
              multiplying the Annual Pension that the Participant would have
              received times the appropriate early payment factor under
              Subsection 4.4(a) (General Method of Computing Annual Pension for
              Retirement at Early Retirement Date) and then multiplying the
              resulting product by the appropriate Spouse's benefit factor as
              obtained from the following table:





               Participant's Age            Participant's Age at Death
         Less Spouse's Age (in years)       50-59           60 or older
         ----------------------------       -----           -----------
                                                      
                    8 or less                1.00             1.00
                    9                         .91              .90
                   10                         .82              .81
                   11                         .75              .72
                   12                         .68              .65
                   13                         .62              .59
                   14                         .56              .54
                   15                         .51              .49
                   16                         .47              .44
                   17                         .43              .40
                   18                         .39              .36
                   19                         .36              .33
                   20                         .33              .30
                   21                         .30              .28
                   22                         .28              .26


                                        50



                   23                         .26              .24
                   24                         .24              .22
                   25                         .22              .20




       (b)    If, at the date of his death, the Participant was either an
              Eligible Active Participant or an Eligible Former Participant who,
              in either case, had not reached age 50, the Spouse's benefit will
              equal 100 percent of the Annual Pension that the Participant would
              have received commencing on the first day of the calendar month
              coincident with or following his 50th birthday, if (1) his
              Severance from Service Date, in the case of an Eligible Active
              Participant, had been the date of his death, (2) the amount of
              Annual Pension (including the appropriate early payment reduction
              factor) had been determined pursuant to the applicable provisions
              of Section 4.5 (General Method of Computing Annual Pension for
              Terminated Vested Participant), (3) he had survived and elected to
              begin receiving pension payments on the first day of the calendar
              month coincident with or following his 50th birthday, and (4) his
              pension had been payable under the 100 percent option applicable
              to him pursuant to Subsection 7.1(b) (Normal Forms of Pension).

6.2    METHOD OF PAYMENT OF SPOUSE'S BENEFIT

       A Spouse's benefit will be payable in equal monthly installments, each
       equal to 1/12th of the Annual Pension as determined pursuant to this
       Article.  If at the date of his death the Eligible Active Participant or
       Eligible Former Participant had reached age 50, the first monthly
       installment of the Spouse's benefit will be payable to the Participant's
       Spouse on the first day of the calendar month coincident with or
       following the date of the Participant's death, if his Spouse is then
       living, unless the Spouse elects to defer payment until the date the
       Participant would have reached age 62.  If at the date of his death the
       Participant had not reached age 50, the first monthly installment will be
       payable to the Participant's Spouse on the first day of the calendar
       month coincident with or following the date the Participant would have
       reached age 50, had he survived until that date, if his


                                        51



       Spouse is then living, unless the Spouse elects to defer payment until
       the date the Participant would have reached age 65. In either event,
       subsequent monthly installments will be payable on the first day of each
       month and will cease upon the payment of the installment due on the first
       day of the calendar month in which the Spouse dies.

                                     ARTICLE 7

                                  FORMS OF PENSION

7.1    NORMAL FORMS OF PENSION

       (a)    UNMARRIED PARTICIPANTS

              The normal form of pension payable under the Plan to a Participant
              who is not married on his Annuity Starting Date and who does not
              otherwise elect an optional form of pension under Section 7.2
              (Optional Forms of Retirement Income), will be a single-life
              income payable in equal monthly installments throughout the
              Participant's lifetime, ceasing with the installment due on the
              first day of the calendar month in which his death occurs.  Each
              monthly installment will equal 1/12th of the Annual Pension as
              determined pursuant to Article 4 (Amount of Life-Only Pension), or
              Article 5 (Severance from Service-Vesting), whichever is
              applicable to the Participant.

       (b)    MARRIED PARTICIPANTS

              The normal form of pension payable under the Plan to a Participant
              who is married on his Annuity Starting Date and who does not
              otherwise elect an optional form of pension under Section 7.2
              (Optional Forms of Retirement Income) is a "Qualified Joint and
              Survivor Annuity," which will be paid as follows:

              (1)    To the Participant:


                                        52



                     A reduced pension based on the 100 percent option in equal
                     monthly installments payable on his Annuity Starting Date
                     and on the first day of each calendar month thereafter.
                     The reduced amount payable to the Participant will be the
                     Actuarial Equivalent of the amount that would otherwise be
                     paid to the Participant if he were unmarried.  Payments
                     will cease with the installment due on the first day of the
                     calendar month in which the Participant dies.

              (2)    To his Spouse:

                     A pension payable in equal monthly installments, each
                     monthly installment being equal to 100 percent of the
                     monthly installment paid to the Participant.  The first
                     installment will be payable on the first day of the
                     calendar month following the Participant's death, if the
                     Spouse is then living; subsequent installments are payable
                     on the first day of each calendar month, ceasing with the
                     installment due on the first day of the calendar month in
                     which the Spouse dies.  If the Participant's Spouse
                     predeceases the Participant after reduced pension payments
                     under this Subsection have begun, payments will be made to
                     the Participant after the Spouse's death in the form of an
                     unreduced single life annuity pursuant to Subsection (a) as
                     of the first day of the month after the Participant
                     notifies the Committee of the Spouse's death.

                     If a Participant who is entitled to benefits under the
                     provisions of Section 4.4 (General Method of Computing
                     Annual Pension for Retirement at Early Retirement Date)
                     dies after his Actual Separation Date, but prior to the
                     commencement of pension payments, and if the Participant's
                     Actual Separation Date is on or after his 50th birthday,
                     under the normal form of pension applicable to him, his
                     Spouse will be entitled to receive, commencing on the first
                     day of the calendar month following


                                        53



                     the Participant's death, if the Spouse is then living, a
                     monthly pension, with each monthly installment equal to the
                     amount that would have been payable to the Spouse following
                     the Participant's death pursuant to his election, or if no
                     election is made, then pursuant to the provisions of this
                     Paragraph (b)(2), if the Participant had begun receiving
                     pension benefits on the first day of the calendar month in
                     which the Participant died.

7.2    OPTIONAL FORMS OF RETIREMENT INCOME

       Subject to the following conditions, a Participant, by making a request
       to the Committee or its designee within the election period specified in
       this Section, may elect to receive, in lieu of the normal form of pension
       applicable to him under Section 7.1 (Normal Forms of Pension), one of the
       optional forms of pension specified under this Section (the "Contingent
       Pension Option").  Each election must be made by the Participant in a
       manner prescribed by the Committee or its designee.  The election of the
       Contingent Pension Option will take effect at a specified date, referred
       to as the "Option Effective Date."  The amount of pension payable under
       any optional form will be the Actuarial Equivalent of the pension to
       which the Participant would otherwise be entitled under the Plan.

       At least 30 days but no more than 90 days before a Participant's Annuity
       Starting Date, the Committee or its designee will provide the Participant
       whose normal form of pension applicable to him is described in
       Subsection 7.1(a) (Normal Forms of Pension) with a written explanation of
       (a) the terms and conditions of the normal form of pension benefits
       applicable to him under Subsection 7.1(a) (Normal Forms of Pension);
       (b) the Participant's ability to elect to receive, in lieu of the normal
       form of pension applicable to him under Subsection 7.1(a) (Normal Forms
       of Pension), an optional form of pension under this Section; (c) the
       relative financial effect of the election on his pension benefits;
       (d) the availability of additional information describing the particular
       financial effect of the election upon his pension benefit; and (e) the
       procedures the Participants must follow to obtain the additional
       information.


                                        54



       The Committee or its designee will provide each Participant whose normal
       form of pension is a Qualified Joint and Survivor Annuity, at least
       30 days but no more than 90 days before the Participant's Annuity
       Starting Date, a written explanation of (a) the terms and conditions of
       the Qualified Joint and Survivor Annuity, (b) the Participant's right to
       make and the effect of an election to waive a Qualified Joint and
       Survivor Annuity, (c) the rights of a Participant's Spouse with respect
       to the selection of benefit forms, and (d) the right to make and the
       effect of a revocation of a previous election to waive the Qualified
       Joint and Survivor Annuity.  A Participant may elect to waive any
       requirement that the Applicable Election Period extend at least 30 days
       after the Committee provides the Participant with the written
       explanations described in this Section, if the distribution begins more
       than seven days after the applicable written explanation is provided.  If
       the Participant is married, the Participant's Spouse must consent to the
       waiver in writing before a notary public or a Plan representative.

       To be effective, an election to waive the Qualified Joint and Survivor
       Annuity must be made in writing during the 90 day period ending on the
       Annuity Starting Date and, if the Participant is married, it must be
       consented to by the Participant's Spouse.  The election must designate a
       Beneficiary (or a form of benefits) that may not be changed (except back
       to a Qualified Joint and Survivor Annuity) without the Spouse's consent,
       unless the Spouse's original consent expressly permits designations by
       the Participant without any requirements of further consent by the
       Spouse.  The Spouse's consent must be given in writing during the 90 day
       period ending on the Annuity Starting Date, must acknowledge the effect
       of the election and the consent, and must be witnessed by a Plan
       representative or notary public.  If the Participant establishes to the
       satisfaction of a Plan representative that the Spouse's written consent
       cannot be obtained because there is no Spouse or the Spouse cannot be
       located, the Spouse's consent will be deemed to have been given.  If a
       Participant is legally separated from his Spouse or has been abandoned by
       his Spouse (within the meaning of local law) and the Participant has a
       court order to such effect, the Spouse's consent will not be required
       unless a Qualified Domestic Relations Order provides otherwise.  Any
       Spousal consent will be valid only with respect


                                        55



       to the Spouse who signs the consent, or in the event of a deemed consent,
       the designated Spouse. If a Participant's Spouse is legally incompetent
       to give consent, the Spouse's legal guardian (even if the guardian is the
       Participant) may give consent. A Participant may revoke a prior effective
       election at any time prior to the receipt of benefits.

       (a)    SINGLE-LIFE OPTION

              A married Participant whose normal form of pension is a Qualified
              Joint and Survivor Annuity may elect, in lieu of all payments
              otherwise payable, a single-life pension that provides payments to
              the Participant in equal monthly installments throughout his
              lifetime, ceasing with the installment due on the first day of the
              calendar month in which the Participant dies.  Each monthly
              installment will be equal to 1/12th of the Annual Pension as
              determined pursuant to Article 4 (Amount of Life-Only Pension),
              Article 5 (Severance from Service-Vesting) or Article 6 (Spouse's
              Benefit), whichever is applicable.

       (b)    CONTINGENT PENSION OPTION

              A Participant may elect, in lieu of all payments otherwise payable
              on and after the Option Effective Date, the Contingent Pension
              Option providing payments as follows:

              (1)    To the Participant:

                     A reduced pension beginning on the Option Effective Date,
                     with subsequent monthly payments payable on the first day
                     of each subsequent calendar month throughout his remaining
                     lifetime, terminating with the payment due on the first day
                     of the calendar month in which he dies.  The reduced amount
                     payable to the Participant will be determined in accordance
                     with the Participant's choice of the 100 percent, 66 2/3
                     percent, or 50 percent option and will be the Actuarial
                     Equivalent of the amount


                                        56


                     that would otherwise be paid to the Participant under the
                     single-life annuity option applicable to him pursuant to
                     Subsection 7.2(a) (Optional Forms of Retirement Income). An
                     option cannot be elected, modified, or rescinded after the
                     Option Effective Date.

              (2)    To the Contingent Annuitant designated by the Participant
                     at the time he elects this option:

                     A contingent pension beginning on the first day of the
                     calendar month following the calendar month in which the
                     Participant's death occurs if the Participant dies on or
                     after the Option Effective Date, and if the Contingent
                     Annuitant is then living, with subsequent monthly payments
                     payable on the first day of each subsequent calendar month
                     throughout the Contingent Annuitant's remaining lifetime,
                     terminating with the monthly payment due on the first day
                     of the calendar month in which the Contingent Annuitant
                     dies.  However, if the Participant had elected to defer his
                     pension payments, the Contingent Annuitant may elect, at
                     any time prior to the date contingent pension payments
                     actually begin, to have the payments begin after the
                     Participant's death on the first day of any calendar month
                     coincident with or prior to the date the Participant had
                     elected to start receiving his pension payments.

                     The monthly amount payable to the Contingent Annuitant will
                     be a specified percentage of the reduced pension payable
                     under this option to the Participant, as specified by the
                     Participant.  This percentage will be either 100 percent,
                     66 2/3 percent, or 50 percent.  Notwithstanding the
                     foregoing, if the Contingent Annuitant is other than the
                     Participant's Spouse, the Contingent Pension Option may be
                     elected only if the requirements of 26 C.F.R. Section
                     1.401(a)(9)-2 are satisfied.


                                        57



              An option will not become effective, and payments will be made as
              otherwise provided in the Plan as if this option had never been
              elected, if:  (a) the Participant is not living on the Option
              Effective Date, (b) the Participant does not, within 90 days after
              his election, and not later than the Option Effective Date,
              furnish evidence, satisfactory to the Committee, of the age of his
              Contingent Annuitant, or (c) the Participant elects, prior to the
              Option Effective Date, to cancel the option.  If the Participant's
              Contingent Annuitant predeceases the Participant after the
              contingent pension payments have begun, the option will be
              canceled and no longer effective, and payments will be made to the
              Participant in the form of an unreduced single-life annuity
              applicable to him pursuant to Subsection 7.2(a) (Optional Forms of
              Retirement Income) as of the first day of the month after the
              Participant notifies the Committee of the Contingent Annuitant's
              death.

       (c)    LIFE WITH TEN YEAR CERTAIN OPTION

              A Participant may, in lieu of all payments otherwise payable on
              and after the Option Effective Date, elect the Life with Ten Year
              Certain Option providing payments as follows:

              (1)    To the Participant:

                     A reduced pension beginning on the Option Effective Date
                     with subsequent monthly payments payable on the first day
                     of each calendar month thereafter for ten years or
                     throughout his remaining lifetime, whichever is longer,
                     terminating with the payment due on the first day of the
                     calendar month after the end of ten years or in which the
                     Participant dies, whichever is applicable.

                     If the Participant elects the Life with Ten Year Certain
                     Option, the amount of the Participant's Nonforfeitable
                     annual pension will be determined by multiplying his Annual
                     Pension by the appropriate Life with Ten Year Certain
                     Factor as obtained from the following table:


                                        58






                       LIFE WITH TEN YEAR CERTAIN FACTORS
                       ----------------------------------
                       Age       Factor    Age    Factor
                       ---       ------    ---    ------
                                         
                        50       .9869      70    .9065
                        51       .9855      71    .8977
                        52       .9839      72    .8883
                        53       .9823      73    .8780
                        54       .9803      74    .8670
                        55       .9783      75    .8553
                        56       .9760      76    .8429
                        57       .9734      77    .8299
                        58       .9706      78    .8163
                        59       .9674      79    .8021
                        60       .9639      80    .7875
                        61       .9601      81    .7723
                        62       .9558      82    .7569
                        63       .9511      83    .7413
                        64       .9461      84    .7253
                        65       .9407      85    .7090
                        66       .9347      86    .6925
                        67       .9285      87    .6758
                        68       .9217      88    .6591
                        69       .9145      89    .6424
                                            90    .6259



              (2)    To the Beneficiary designated by the Participant at the
                     time he elects this option:


                                        59



                     If the Participant dies prior to the end of ten years from
                     the date of his initial pension payment, a contingent
                     pension payable on the first day of the calendar month
                     following the calendar month in which the Participant dies
                     if the Participant's death is on or after the Option
                     Effective Date and if the Beneficiary is then living, with
                     subsequent monthly payments being payable on the first day
                     of each calendar month for the balance of ten years from
                     the date of the Participant's Option Effective Date.

       (d)    LIFE ANNUITY LEVEL INCOME OPTION

              A Participant who retires prior to reaching age 62 may elect, in
              lieu of all payments otherwise payable on and after the Option
              Effective Date, the Life Annuity Level Income Option, which
              provides payments to the Participant that are adjusted for the
              months before and after the Participant is eligible to receive
              benefits under the Social Security Act at age 62.

              The Participant will receive a reduced pension on the Option
              Effective Date, with subsequent monthly payments payable on the
              first day of each calendar month thereafter for his remaining
              lifetime, terminating with the payment due on the first day of the
              calendar month in which his death occurs.  The reduced pension the
              Participant receives will be calculated as follows:

              (1)    The Participant's Annual Pension will be determined under
                     Article 4 (Amount of Life-Only Pension), Article 5
                     (Severance From Service-Vesting), or Article 6 (Spouse's
                     Benefit), whichever is applicable.


                                        60



              (2)    The Participant's Reduced Primary Social Security Benefit
                     will be multiplied by the appropriate Level Income Option
                     factor from the table in Addendum A to the Plan.

              (3)    The sum of the amounts determined under Paragraphs (1) and
                     (2) will equal the Level Income Option benefit payable to
                     the Participant prior to age 62, which is the first date he
                     is eligible to begin receiving Social Security Act
                     benefits.

              (4)    The Level Income Option benefit payable to the Participant
                     after he reaches age 62 will equal the amount determined in
                     Paragraph (3), minus the Participant's Reduced Primary
                     Social Security Benefit.

       (e)    100 PERCENT CONTINGENT ANNUITANT LEVEL INCOME OPTION

              A Participant who retires prior to reaching age 62 may, in lieu of
              all payments otherwise payable on after the Option Effective Date,
              elect the 100 Percent Contingent Annuitant Level Income Option,
              which provides payments as follows:

              (1)    To the Participant:

                     A reduced pension that is adjusted for the months before
                     and after the Participant is eligible to receive benefits
                     under the Social Security Act at age 62.  The Participant
                     will receive a reduced pension on the Option Effective
                     Date, with subsequent monthly payments payable on the first
                     day of the calendar month thereafter for his remaining
                     lifetime, terminating with the payment due on the first day
                     of the calendar month in which the Participant dies.

                     The reduced pension the Participant receives under this
                     option will be calculated as follows:


                                        61



                     (A)    The Participant's Annual Pension will be determined
                            under Article 4 (Amount of Life-Only Pension),
                            Article 5 (Severance From Service-Vesting), or
                            Article 6 (Spouse's Benefit), whichever is
                            applicable.

                     (B)    The Participant's Annual Pension will be converted
                            to a reduced pension based on the 100 percent
                            Contingent Pension Option under Subsection 7.2(b)
                            (Optional Forms of Retirement Income).

                     (C)    The Participant's Reduced Primary Social Security
                            Benefit will be multiplied by the appropriate Level
                            Income Option factor from the table in Addendum A to
                            the Plan.

                     (D)    The sum of the amounts determined under
                            Subparagraphs (B) and (C) will equal the Level
                            Income Option benefit payable to the Participant
                            prior to age 62, which is the first date he is
                            eligible to begin receiving Social Security Act
                            benefits.

                     (E)    The Level Income Option benefit payable to the
                            Participant after he attains age 62 will equal the
                            amount determined in Subparagraph (D), minus the
                            Participant's Reduced Primary Social Security
                            Benefit.

              (2)    To the Contingent Annuitant:

                     A contingent pension beginning on the first day of the
                     calendar month following the calendar month in which the
                     Participant dies if the Participant dies on or after the
                     Option Effective Date, and if the Contingent Annuitant is
                     then living; with subsequent monthly payments payable on
                     the first day of each subsequent calendar month throughout
                     the Contingent Annuitant's remaining lifetime, terminating
                     with the monthly


                                        62



                     payment due on the first day of the calendar month in which
                     the Contingent Annuitant dies. However, if the Participant
                     had elected to defer his pension payments, the Contingent
                     Annuitant may elect at any time prior to the date
                     contingent pension payments actually begin, to have the
                     payments begin after the Participant's death on the first
                     day of any calendar month coincident with or prior to the
                     date the Participant had elected to start receiving
                     payments.

                     The monthly amount payable to the Contingent Annuitant will
                     equal 100 percent of the reduced pension that would have
                     been payable under this option to the Participant.

              An option will not become effective, and payments will be made as
              otherwise provided in the Plan as if this option had never been
              elected, if:  (a) the Participant is not living on the Option
              Effective Date, (b) the Participant does not, within 90 days after
              his election, but not later than the Option Effective Date,
              furnish evidence, satisfactory to the Committee, of the age of his
              Contingent Annuitant, or (c) the Participant elects, prior to the
              Option Effective Date, to cancel the option.  If the Participant's
              Contingent Annuitant predeceases the Participant after the
              contingent pension payments have begun, the option will be
              canceled and no longer effective, and payments will be made to the
              Participant in the form of a reduced single-life annuity level
              income option applicable to him pursuant to Subsection 7.2(d)
              (Optional Forms of Retirement Income) as of the first day of the
              month after the Participants notifies the Committee of the
              Contingent Annuitant's death.  An option cannot be elected,
              modified, or rescinded after the Option Effective Date.

                                     ARTICLE 8

                                 PAYMENT OF PENSION

8.1    TIMING OF PAYMENT


                                        63



       This Section is subject to the provisions of Section 8.6 (Required
       Payment of Benefits).

       A Participant who ceases to be an Employee as of his Normal Retirement
       Date will begin receiving any pension payable to him under the Plan as of
       his Normal Retirement Date.  A Participant who continues as an Employee
       after his Normal Retirement Date will begin receiving the pension payable
       to him under the Plan as of the first day of the calendar month
       coincident with or following his Severance from Service.

       A Participant who ceases to be an Employee as of an Early Retirement Date
       will begin receiving his pension at his Normal Retirement Date unless he
       elects to begin receiving his pension on either his Early Retirement Date
       or the first day of a calendar month between his Early Retirement Date
       and his Normal Retirement Date (the "Deferred Pension Payment Date");
       provided he has made the required election, in a manner prescribed by the
       Committee, prior to the date he wants his pension to begin.

8.2    METHOD OF PAYMENT

       Unless specified elsewhere in the Plan, all pension payments under the
       Plan will normally be payable in equal monthly installments, with each
       monthly installment equal to 1/12th of the annual amount payable.
       Pension payments will be (a) made by check to the order of the
       Participant, his Spouse, his Beneficiary, or his Contingent Annuitant, as
       applicable, and mailed to that person's address as it appears on the
       Employer's records, or (b) deposited directly into an account of the
       Participant, his Spouse, his Beneficiary, or his Contingent Annuitant, as
       applicable, maintained by the recipient at a bank, savings and loan, or
       other financial institution, as directed by the recipient.

8.3    SMALL BENEFITS

       Notwithstanding the provisions of Sections 6.2 (Method of Payment of
       Spouse's Benefit) and 7.2 (Optional Forms of Retirement Income), where
       the Actuarial Equivalent present


                                        64



       value of a Participant's Nonforfeitable pension or Spouse's benefit under
       Section 6.1 (Determination of Spouse's Benefit) does not exceed $5,000,
       the Committee or its designee will pay the Nonforfeitable pension or
       Spouse's benefit (if applicable) in a single-sum cash payment equal to
       the Actuarial Equivalent of the pension or Spouse's benefit otherwise
       payable.

8.4    FACILITY OF PAYMENT

       If any benefit under the Plan is payable to a person whom the Committee
       knows is a minor or otherwise under legal incapacity, the Committee or
       its designee may have the payment made to the legal guardian of that
       person or to the person or organization as a court of competent
       jurisdiction may direct.  To the extent permitted by law, any payment
       under this Section will be a complete discharge of any liability under
       the Plan to that person.

8.5    BENEFITS FOR LATE RETIREES, REEMPLOYED RETIREES AND REEMPLOYED TERMINATED
       VESTED PARTICIPANTS

       (a)    LATE RETIREES

              A Participant may postpone his retirement and continue his
              employment with an Employer after his Normal Retirement Date.  If
              a Participant continues employment after his Normal Retirement
              Date, he will continue to accrue years of Service and years of
              Participation during this time period up to the date of his actual
              retirement.  The Participant's benefit will be calculated under
              Article 4 (Amount of Life-Only Pension), Article 5 (Severance From
              Service-Vesting), or Article 6 (Spouse's Benefit), whichever is
              applicable, as of his Severance from Service Date.

       (b)    SUSPENSION OF RETIREMENT BENEFIT NOTICE FOR PARTICIPANT WHO
              CONTINUES EMPLOYMENT AFTER HIS NORMAL RETIREMENT DATE


                                        65



              When a Participant continues in employment with an Employer beyond
              his Normal Retirement Date, benefits will not begin during that
              continued period of employment unless required under Section 8.6
              (Required Payment of Benefits).  The Participant will be sent a
              notification described in Section 2530.203-3(b)(4) of the
              Department of Labor regulations, provided that the suspension of
              benefits notice is limited to periods of service within the
              context of Section 2530.203-3(c) of the Department of Labor
              regulations.

       (c)    REEMPLOYED RETIREES AND REEMPLOYED VESTED TERMINATED PARTICIPANTS

              A Reemployed Retiree or Reemployed Vested Terminated Participant
              who resumes employment will continue to receive any pension
              benefit payments under the Plan to which he is entitled, and will
              begin to receive any pension benefit payments under the Plan, as
              if he were not reemployed.  When a Reemployed Retiree or
              Reemployed Terminated Vested Participant again incurs a Severance
              from Service, his Annual Pension will, subject to all of the
              provisions of the Plan, be recalculated by aggregating his years
              of Participation and by considering his Earnings during his period
              of reemployment; provided, however, that the Participant's
              benefits as recalculated will not be less than the Actuarial
              Equivalent of his Annual Pension prior to his reemployment.  The
              Participant's recalculated Annual Pension will be reduced by the
              Actuarial Equivalent of the pension benefits already paid to the
              Participant.  Any pension benefit payable to a Spouse or
              Contingent Annuitant will also be based on the Participant's
              pension benefit, as so recalculated and reduced.

       (d)    QUESTIONS CONCERNING EFFECT ON REEMPLOYMENT

              The Plan's benefit claims procedures may be used by an individual
              who has questions concerning the effect of reemployment by his
              Employer upon his pension benefit payments.


                                        66


       (e)    ADDITIONAL RULES AND PROCEDURES


              The Committee is authorized to develop more fully the provisions
              of this Section by establishing, from time to time, various rules
              and procedures consistent with ERISA, the Code, and the Plan.


8.6    REQUIRED PAYMENT OF BENEFITS


       This Section has been included in the Plan to comply with the
       limitations imposed by Code paragraphs 401(a)(9) and 401(a)(14), and
       it will not be construed as providing for a form of benefit not
       otherwise provided under the Plan.  Notwithstanding any provision of
       this Plan to the contrary, any distribution under the Plan will be
       made in accordance with regulations under Code paragraph 401(a)(9),
       including proposed federal income tax regulation 1.401(a)(9)-2, and
       will comply with the following rules:


       (a)    Unless a Participant elects otherwise, the payment of his
              benefits under the Plan must begin not later than the 60th day
              after the end of the Plan Year in which occurs the latest of:
              (1) the Participant's 65th birthday; (2) the 10th anniversary
              of the Plan Year in which the Participant began participation
              in the Plan; or (3) termination of the Participant's employment
              with the Employer.


       (b)    For purposes of this Article, "required beginning date" means
              (1) with respect to a Participant who is not a 5 percent owner
              as described in Code section 416 and who did not reach age
              70 1/2 before January 1, 1997, April 1 of the calendar year
              following the later of (A) the calendar year in which the
              Participant reaches age 70 1/2, or (B) the calendar year in
              which the Participant retires; or (2) with respect to a
              Participant who is a 5 percent owner as described in Code
              section 416, or any Participant who reached age 70 1/2 before
              January 1, 1997, April 1 of the calendar

                                      67


              year following the calendar year in which the Participant
              reaches age 70 1/2.  The Plan will provide an actuarial increase
              to a Participant's interest in the Plan for the period
              beginning on the April 1 of the calendar year following the
              calendar year in which the Participant reaches age 70 1/2 and
              ending on the date on which benefits begin after the
              Participant's retirement in an amount sufficient to satisfy
              Code paragraph 401(a)(9).  The benefits payable to the
              Participant at the end of the period described in the preceding
              sentence will be no less than the Actuarial Equivalent of the
              benefit that would have been payable to the Participant as of
              the April 1 of the calendar year following the calendar year in
              which the Participant reached 70 1/2.


       (c)    Notwithstanding any other provision of this Plan, the entire
              interest of each Participant will be distributed either:  (1)
              in a lump sum payment not later than the required beginning
              date, or (2) in a series of payments beginning not later than
              the required beginning date over the life of the Participant or
              over the lives of the Participant and the designated
              Beneficiary (or over a period not extending beyond the life
              expectancy of the Participant or the life expectancy of the
              Participant and a designated Beneficiary).  If the
              Participant's interest is to be paid in the form of annuity
              distributions under the Plan, payments under the annuity will
              satisfy the following requirements:


              (1)    The annuity distributions must be paid in periodic
                     payments made at intervals not longer than one year.


              (2)    For purposes of computing the distribution period, life
                     expectancies or joint and last survivor expectancies will
                     not be recalculated.


              (3)    Once payments have begun, the distribution period may not
                     be lengthened even if that period would be shorter than
                     the permitted maximum period.


              (4)    Payments must either be non-increasing or increase only as
                     follows:

                                      68


                     (A)    with any percentage increase in a specified and
                            generally recognized cost-of-living index;


                     (B)    to the extent of the reduction to the amount of the
                            Participant's payments to provide for a survivor
                            benefit upon death, but only if the Beneficiary or
                            Contingent Annuitant whose life was being used to
                            determine the distribution period dies and the
                            payments continue otherwise over the life of the
                            Participant;


                     (C)    to provide cash refunds of employee contributions
                            upon the Participant's death; or


                     (D)    because of an increase in benefits under the Plan.


              (5)    If the annuity is a life annuity (or a life annuity with a
                     period certain not exceeding 20 years), the amount that
                     must be distributed on or before the Participant's
                     required beginning date (or, in the case of
                     distributions after the death of the Participant, the
                     date distributions are required to begin after the
                     Participant's death) will be the payment that is
                     required for one payment interval.  The second payment
                     need not be made until the end of the next payment
                     interval even if that payment interval ends in the next
                     calendar year.  Payment intervals are the periods for
                     which payments are received, e.g., bi-monthly, monthly,
                     semi-annually or annually.  If the annuity is a period
                     certain annuity without a life contingency (or is a life
                     annuity with a period exceeding 20 years), periodic
                     payments for each distribution calendar year will be
                     combined and treated as an annual amount.  The amount
                     that must be distributed by the Participant's required
                     beginning date (or, in the case of distributions after
                     the death of the Participant, the date distributions are
                     required to begin after the Participant's death) is the
                     annual amount for the first distribution calendar

                                      69


                     year. The annual amount for other distribution calendar
                     years, including the annual amount for the calendar year
                     in which the Participant's required beginning date (or
                     the date distributions are required to begin after the
                     Participant's death) occurs, must be distributed on or
                     before December 31 of the calendar year for which the
                     distribution is required.


       (d)    If (1) the distribution of a Participant's interest has begun in
              accordance with Subsection (c), and (2) the Participant dies
              before his entire interest has been distributed to him, the
              remaining portion of his interest will be distributed at least as
              rapidly as under the method of distribution being used under
              Subsection (c) as of the date of his death.


       (e)    Except as provided in Subsection (f), if a Participant dies
              before the distribution of his interest has begun in accordance
              with Subsection (c), the Participant's entire interest will be
              distributed within five years after his death.


       (f)    For purposes of Subsection (c), any portion of a distribution
              that is payable to (or for the benefit of) a designated
              Beneficiary will be treated as completely distributed on the
              date on which distribution began if:


              (1)    that portion is to be distributed (in accordance with
                     regulations prescribed by the Secretary) over the life of
                     the designated Beneficiary (or over a period not extending
                     beyond the life expectancy of the Beneficiary), and


              (2)    distributions begin by the latest of (A) one year after
                     the date of the Participant's death, (B) any later date
                     that the Secretary may establish by regulations, or (C)
                     if the Beneficiary is the Participant's surviving
                     Spouse, the date on which the Participant would have
                     attained age 70 1/2.

                                      70


       (g)    If the designated Beneficiary is the Participant's surviving
              Spouse, and if the surviving Spouse dies before the
              distributions to the Spouse begin, Subsections (c), (e), and
              (f) will be applied as if the surviving Spouse were the
              Participant.


       (h)    For purposes of Subsection (f), payment will be calculated by use
              of the expected return multiples specified in Tables V and VI
              of 26 C.F.R. Section 1.72-9.  The life expectancy of a
              designated Beneficiary will be calculated at the time payment
              first commences without further recalculation.


       (i)    For purposes of Subsections (c), (d), (e), and (f), if any
              amounts payable to a child of the Participant becomes payable
              to the Participant's surviving Spouse and the child reaches the
              age of majority, that amount will be treated as if it had been
              paid to the surviving Spouse.


       (j)    Unless paid to the surviving Spouse under a Qualified Joint and
              Survivor Annuity, the method of distribution selected must assure
              that at least 50 percent of the present value of the amount
              available for distribution is paid within the Participant's life
              expectancy.


       (k)    If a Participant reaches age 70 1/2 on or after January 1, 1997,
              but before January 1, 1999, the Plan will deem the
              Participant's "required beginning date" to be April 1 of the
              calendar year following the calendar year in which the
              Participant reaches age 70 1/2 unless the Participant elects,
              with his Spouse's consent, to defer commencement of his Plan
              benefits until a date no later than April 1 of the calendar
              year following the calendar year in which the Participant
              retires.


8.7    DIRECT ROLLOVERS OF ELIGIBLE DISTRIBUTIONS


       Notwithstanding any provision of the Plan to the contrary that would
       otherwise limit a Distributee's election under this Section, a
       Distributee may elect, at the time and in the manner prescribed by the
       Committee, to have any portion of an Eligible Rollover

                                      71


       Distribution paid directly to an Eligible Retirement Plan specified by
       the Distributee in a Direct Rollover.


                                      ARTICLE 9

                          RETIREE MEDICAL/DENTAL BENEFITS


9.1    PURPOSE


       This Article provides for the payment of certain Medical/Dental Benefits
       to Eligible Retirees and to their Dependents under the Plan.  The
       Medical/Dental Benefits described in this Article are intended to meet
       the requirements of Code subsection 401(h) and its interpretive
       regulations.


9.2    ELIGIBILITY


       Only Eligible Individuals will be eligible to receive Medical/Dental
       Benefits (or to have Medical/Dental Benefits paid on their behalf) under
       this Article.


9.3    SEPARATE ACCOUNT


        A Medical/Dental Benefits Account will be established and maintained
       with respect to contributions made to fund the benefits payable under
       this Article, which will be kept separate (for recordkeeping purposes
       only) from the amounts contributed to the Plan to fund all other
       benefits.  The funds in the Medical/Dental Benefits Account may be
       invested with funds contributed to the Plan to fund other benefits
       without identification of which assets of the Plan are allocable to
       the Medical/Dental Benefits Account and which are allocable to fund
       other benefits.  Where the assets are not so allocated, however, the
       earnings on the assets will be allocated in a reasonable manner
       between the Medical/Dental Benefits Account and the amounts funding
       other benefits under the Plan.


9.4    IMPOSSIBILITY OF DIVERSION PRIOR TO SATISFACTION OF ALL LIABILITIES

                                      72


       Prior to the satisfaction of all liabilities under this Article to
       provide for the payment of Medical/Dental Benefits, no part of the
       corpus or income of the Medical/Dental Benefits Account may be (within
       the taxable year or thereafter) used for, or diverted to, any purpose
       other than providing Medical/Dental Benefits or paying any reasonable
       expenses attributable to the administration of the Medical/Dental
       Benefits Account.


9.5    REVERSION UPON SATISFACTION OF ALL LIABILITIES


       Notwithstanding the provisions of Section 14.8 (No Diversion of
       Assets), any amounts that are contributed to fund Medical/Dental
       Benefits and that remain in the Medical/Dental Benefits Account upon
       the satisfaction of all liabilities arising out of the operation of
       this Article are to be returned to Eligible Retirees, in proportion to
       their respective total contributions to the Medical/Dental Benefits
       Account.

9.6    FORFEITURES


       In the event an Eligible Individual's interest in the Medical/Dental
       Benefits Account is forfeited prior to termination of the Plan, an
       amount equal to the amount of the forfeiture will be applied as soon
       as possible to reduce Employer contributions to the Plan to fund the
       Medical/Dental Benefits under this Article.

9.7    EMPLOYER CONTRIBUTIONS TO THE MEDICAL/DENTAL BENEFITS ACCOUNT


       For each Plan Year, the Employer will contribute to the Medical/Dental
       Benefits Account the amount necessary to fund Medical/Dental Benefits,
       as determined by the Plan's actuaries, provided that the contributions
       mandated by this sentence will be reasonable, and will be reduced (but
       not below zero) as required so that the aggregate actual contributions
       made to the Medical/Dental Benefits Account will not exceed 25% of the
       total aggregate actual contributions (other than any contributions to
       fund past service credits) made to the Plan.  All contributions to the
       Medical/Dental Benefits Account will be paid to the Trustee, who will
       hold them in Trust for the payment of Medical/Dental

                                      73


       Benefits under this Article. At the time an Employer makes a
       contribution to the Plan, it will designate the portion allocable to
       the Medical/Dental Benefits Account.


9.8    MEDICAL/DENTAL BENEFITS


       The Medical/Dental Benefits under the Plan will be those benefits
       payable to or on behalf of Eligible Individuals in accordance with the
       terms of a Medical/Dental Plan.


                                     ARTICLE 10

                             NONALIENATION OF BENEFITS


The Pension Fund will not in any manner be liable for, or subject to, the
debts or liabilities of any Participant, Beneficiary, Contingent Annuitant,
or Spouse, or any other person entitled to any benefit.  No payee may assign
any payment due him under the Plan.  No pension or other benefits at any time
payable from the Pension Fund will be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, attachment, garnishment,
levy, execution, or other legal or equitable process or encumbrance of any
kind.  Any attempt to alienate, sell, transfer, assign, or otherwise encumber
any such benefit, whether presently or thereafter payable, will be void.
However, the payment of benefits under the Plan will be made in accordance
with the applicable requirements of any Qualified Domestic Relations Order
entered by a court of competent jurisdiction or a state administrative
agency.  The Committee will establish procedures to determine whether the
domestic relations orders are Qualified Domestic Relations Orders and to
administer distributions under Qualified Domestic Relations Orders.


                                   ARTICLE 11

                                 ADMINISTRATION


11.1   ADMINISTRATOR

                                      74


       The Committee will be the administrator of the Plan.  The Committee
       will consist of the number of members, not fewer than three, that is
       specified from time to time by the Board of Directors.  All members of
       the Committee will be Employees or officers of an Employer.  All
       members of the Committee will serve without compensation.

11.2   REMOVAL AND REPLACEMENT OF COMMITTEE MEMBERS


       The members of the Committee will serve at the pleasure of the Board of
       Directors and may be removed by the Board of Directors with or without
       cause.  Any vacancy among the members will be filled by the Board of
       Directors.


11.3   DISQUALIFICATION AND RESIGNATION


       On the date when a Committee member is neither an Employee nor an officer
       of an Employer, he will be disqualified from membership on the Committee.
       A member of the Committee may resign by delivering his written
       resignation to any other member of the Committee.  A resignation will
       become effective on the date specified in the instrument of resignation.


11.4   CHAIRPERSON, SERVICES, AND COUNSEL


       The members of the Committee will elect one of their members as
       Chairperson and will elect a Secretary, who may be, but need not be, one
       of the members of the Committee.  Cinergy will provide the Committee, at
       Cinergy's expense, with such clerical, accounting, actuarial, and other
       services as may be reasonably required by the Committee in carrying out
       its responsibilities.  The Committee may employ counsel, who may be, but
       need not be, counsel to Cinergy.


11.5   MEETINGS

                                      75


       The Committee will hold meetings upon such notice, at the places, and at
       the times as the Committee may from time to time determine, but no less
       often than quarterly.


11.6   QUORUM


       A majority of the members of the Committee at the time holding office
       will constitute a quorum for the transaction of business.  All
       resolutions and other action taken by the Committee at any meeting will
       be by the vote of the majority of the members of the Committee present at
       the meeting.


11.7   ACTION WITHOUT MEETING


       Any decision, order, direction, or other action, including orders and
       directions to the Trustee or Insurance Company, made in writing signed by
       a majority of the members of the Committee at the time holding office
       will constitute valid and effective action of the Committee, whether or
       not the matter to which that decision, order, direction, or other action
       pertains had already been acted upon at a duly called and held meeting of
       the Committee.


11.8   NOTICE TO TRUSTEE OF CHANGES IN MEMBERSHIP


       The Trustee will not be charged with notice of any change in the
       membership of the Committee unless and until it has received a certified
       copy of the resolution or vote of the Board of Directors effecting the
       change.


11.9   CORRECTION OF DEFECTS


       The Committee may correct any defect or supply any omission or reconcile
       any error or inconsistency in its previous proceedings, decisions,
       orders, directions, or other actions in a manner and to such extent as it
       will deem advisable to carry out the purposes of the Plan.

                                      76


11.10  RELIANCE UPON LEGAL COUNSEL


       The members of the Committee, and Cinergy, and Cinergy's officers and
       directors, will be entitled to rely upon all opinions given by legal
       counsel selected by the Committee.


11.11  EXPENSES


       In the performance of its duties, the Committee is authorized to incur
       reasonable expenses, including counsel fees.  All operating expenses of
       the Plan, including insurance premiums payable to the Pension Benefit
       Guaranty Corporation, fees for professional services, and technical or
       clerical assistance, will be paid from the Pension Fund, to the extent
       not paid by the Employer.  Investment expenses and any federal, state, or
       local taxes that may be levied against the Pension Fund will also be paid
       from the Pension Fund.


11.12  INDEMNIFICATION


       Cinergy agrees to indemnify and hold harmless each member of the
       Committee against any cost, expense, or liability (including any sum paid
       in settlement of any claim with the approval of the Board of Directors)
       arising out of any act or omission to act as a member of the Committee,
       except only acts and omissions representing willful misconduct, fraud, or
       lack of good faith.


11.13  POWERS AND DUTIES OF COMMITTEE


       Subject to the specific limitations stated in this document, the
       Committee will have the following powers, duties, and responsibilities:


       (a)    to carry out the Plan's general administration;

                                      77



       (b)    to cause to be prepared all forms necessary or appropriate for the
              Plan's administration;


       (c)    to keep appropriate books and records, including minutes of the
              Committee's meetings;


       (d)    to determine, consistent with the provisions of this document, the
              manner in which the Pension Fund will be allocated and disbursed;


       (e)    to give directions to the Trustee or Insurance Company as to the
              amounts to be disbursed to Participants and others under the
              Plan's provisions;


       (f)    to determine, with discretionary authority and consistent with the
              provisions of this document, all questions of the eligibility,
              rights, and status of Participants and others under the Plan;


       (g)    to exercise all other powers and duties specifically conferred
              upon the Committee elsewhere in this document and the Trust
              Agreement or Group Annuity Contract;


       (h)    to exercise all duties and responsibilities imposed by ERISA upon
              the Committee as the Plan's administrator;


       (i)    to interpret, with discretionary authority, the provisions of the
              Plan and to resolve, with discretionary authority, all disputed
              questions of Plan interpretation and benefit eligibility;


       (j)    to employ agents to assist it in performing its administrative
              duties; and


       (k)    to allocate and delegate its fiduciary responsibilities in
              accordance with ERISA section 405.

                                      78



       The Committee will at all times make similar decisions on similar
       questions involving similar circumstances.  Subject to the provisions of
       ERISA and to the provisions of Article 12 (Benefit Claims Procedures)
       relating to claims, all decisions of the Committee made in good faith on
       all matters within the scope of its authority under the provisions of
       this document will be final and binding upon all persons.


11.14  MATTERS SPECIFICALLY EXCLUDED FROM JURISDICTION


       Notwithstanding any other provision of this document, the Committee will
       have no power, duty, or authority with respect to determination of the
       amounts to be contributed by the Employer to the Pension Fund or Trust
       Fund.


                                     ARTICLE 12

                             BENEFIT CLAIMS PROCEDURES


Claims for benefits under the Plan will be made in writing to the Committee or
its designee.  If a claim for benefits is wholly or partially denied, the
Committee or its designee will notify the Claimant of the claim's denial within
a reasonable period of time not to exceed 90 days after the claim's receipt,
unless special circumstances require an extension of time for processing, in
which case notification will be rendered as soon as possible, but not later than
180 days after the claim's receipt.  If an extension of time for processing is
required, written notice of the extension will be furnished to the Claimant
prior to the termination of the initial 90 day period.  The extension notice
will indicate the special circumstances requiring an extension of time and the
date by which the Plan expects to render final notification.  The notice of
denial will be written in a manner calculated to be understood by the Claimant
and will set forth (a) the specific reason or reasons for the denial, (b) a
specific reference to the pertinent Plan provisions on which the denial is
based, (c) a description of any additional material or information necessary for
the Claimant to perfect the claim and an explanation of why that material or
information is necessary, and (d) appropriate information as to the steps to be
taken if the Claimant wishes to submit the claim for review.  The Committee or
its designee is authorized to develop more fully

                                      79



the Plan's benefit claims procedures by establishing from time to time, various
rules and procedures consistent with ERISA.


Within 60 days after the Claimant's receipt of written notice of the claim's
denial, the Claimant, or his duly authorized representative, may file a written
request with the Committee requesting a full and fair review of the denial of
the Claimant's claim for benefits.  In connection with the Claimant's appeal of
the denial of his claim for benefits, the Claimant may review pertinent
documents in the Committee's possession and may submit issues and comments in
writing.  The Committee will make a decision on review promptly, but not later
than the date of the Committee meeting that immediately follows the receipt of
the Claimant's request for review, unless the request for review is filed within
30 days before the date of that meeting.  In that case, a decision will be made
as soon as possible, but not later than the date of the second Committee meeting
following receipt of the request for review.  If special circumstances require a
further extension of time for processing, a decision will be rendered not later
than the third Committee meeting following receipt of the Claimant's request for
review.  If an extension of time for review is required because of special
circumstances, written notice of the extension will be sent to the Claimant
before the extension begins.  The extension notice will indicate the special
circumstances requiring an extension of time and the date by which the Committee
expects to render the final decision.  The decision on review will be in writing
and written in a manner calculated to be understood by the Claimant, will set
forth the specific reason or reasons for the decision, and will contain a
specific reference to the pertinent Plan provisions on which the decision is
based.  If the decision on review is not furnished to the Claimant within
60 days of receipt of the request for review, or within 120 days after its
receipt if special circumstances required an extension of time, the claim will
be deemed denied on review.


                                     ARTICLE 13

                             FUNDING POLICY AND METHOD


Cinergy will establish and carry out a funding policy and method for the Plan
consistent with (a) the Plan's past experience, (b) the Plan's anticipated
experience, (c) the Plan's objectives, (d) the requirements of ERISA, and
(e) the requirements of the Code.  Cinergy will

                                      80



(a) communicate the funding policy and method to the Committee, (b) periodically
review the funding policy and method, and (c) document all action taken with
respect to the funding policy and method.


                                     ARTICLE 14

                                   MISCELLANEOUS


14.1   NO ENLARGEMENT OF EMPLOYEE BENEFITS


       This Plan is strictly a voluntary undertaking on the part of each
       Employer and will not be deemed to constitute a contract between an
       Employer and any Employee or to be consideration for, or an inducement
       to, or a condition of, the employment of any Employee.  Nothing contained
       in the Plan will be deemed to give any Employee the right to be retained
       in the service of an Employer or to interfere with the right of the
       Employer to discharge any Employee at any time.  No Employee, prior to
       his retirement under conditions of eligibility for pension benefits or
       prior to his satisfying the Vesting Requirement will have any right to,
       or interest in, any portion of any fund arising from his Employer's
       contributions under this Plan or, in any event, other than as
       specifically provided in the Plan.  No person will have any right to
       pension benefits except to the extent provided in the Plan.

14.2   REEMPLOYMENT


       If an Eligible Employee incurs a Severance from Service and is later
       reemployed by an Employer, his two (or more) periods of employment will,
       subject to all of the provisions of the Plan, be aggregated for the
       purpose of determining his years of Participation, and his years of
       Service.


14.3   QUALIFIED MILITARY SERVICE

                                      81



       Notwithstanding any provision of this Plan to the contrary,
       contributions, benefits, and service credits with respect to qualified
       military service will be provided in accordance with Code subsection
       414(u).


14.4   NOTICE OF ADDRESS


       Each Participant, Retired Participant, Terminated Vested Participant,
       Beneficiary, Contingent Annuitant, and Spouse entitled to benefits under
       the Plan must submit to the Committee or its designee his post office
       address and each change of post office address.  Any communication,
       statement, or notice addressed to a person at his latest post office
       address filed with the Committee or its designee will, upon deposit in
       the United States mail with postage prepaid, be binding upon that person
       for all purposes of the Plan, and neither the Insurance Company, the
       Committee, nor the Trustee will be obliged to search for, or to ascertain
       the whereabouts of, any person.


14.5   DATA


       Participants, Retired Participants, Terminated Vested Participants,
       Beneficiaries, Contingent Annuitants, and Spouses must furnish to the
       Committee, the Insurance Company, and the Trustee any documents,
       evidence, or information that the Committee, the Insurance Company, or
       the Trustee considers necessary or desirable for the purpose of
       administering the Plan, or to protect the Committee, the Insurance
       Company, or Trustee; and it will be a condition of the Plan that each
       person must furnish this information promptly and sign required documents
       before any benefits become payable under the Plan.


14.6   NO INDIVIDUAL LIABILITY


       It is the express purpose and intention of the Plan that, except as
       otherwise required by law, no individual liability whatever will attach
       to, or be incurred by, the shareholders, officers, or members of the
       board of directors of any Employer, or the Committee, or its

                                      82



       members, or any fiduciary designated pursuant to Section 11.13 (Powers
       and Duties of Committee), or any representatives appointed by Cinergy
       under the Plan, under or by reason of any of the terms or conditions of
       the Plan.


14.7   PARTICIPANT'S STATEMENT OF AGREEMENT


       Cinergy will have the right, at any time, to require any Participant to
       agree in writing to be bound by the Plan's provisions.  However, the
       absence of an agreement will not relieve any Participant from being
       legally bound by the provisions of the Plan.


14.8   NO DIVERSION OF ASSETS


       None of the assets of the Pension Fund may be used for, or diverted to,
       purposes other than the exclusive benefit of the Participants and their
       Beneficiaries.  However, nothing in this Section will prohibit the return
       to the Employers, in accordance with the provisions of ERISA
       subsection 403(c), of a contribution (or a portion of a contribution) by
       the Employers to the Pension Fund if the contribution is (a) made by
       reason of mistake of fact, (b) conditioned on the initial qualification
       of the Plan under Code subsection 401(a), or (c) conditioned upon its
       deductibility under Code section 404 and the deduction is not fully
       allowed.

14.9   GOVERNING LAWS


       The Plan will be construed and administered according to the internal
       laws of the State of Ohio to the extent that those laws are not preempted
       by federal law.


14.10  SEVERABILITY


       If any part of the Plan is adjudged by a court of competent jurisdiction
       to be contrary to the laws governing the Plan, then the Plan will, in all
       other respects, be and remain legally effective and binding to the full
       extent permissible under the law.

                                      83



14.11  INTERPRETATION AND REGULATION OF PLAN


       Cinergy, by action of the Committee, reserves the right to interpret and
       regulate the Plan, by exercise of discretionary authority, and its
       interpretation and regulation will be legally effective and binding on
       all parties concerned.


14.12  COMMUNICATIONS BY PARTICIPANTS


       All communications by Participants and other concerned parties concerning
       the Plan will be in writing and directed to the Committee or its
       designee.


14.13  HEADINGS


       The headings of Articles, Sections, Subsections, Paragraphs or other
       parts of the Plan are for convenience of reference only and do not
       define, limit, construe, or otherwise affect the contents of this
       document.


14.14  ACCRUED BENEFIT NOT TO BE DECREASED BY AMENDMENT


       Notwithstanding any other provisions of the Plan to the contrary, no
       accrued benefit of a Participant under the Plan will be decreased by an
       amendment to the Plan, other than an amendment described in Code
       paragraph 412(c)(8) or ERISA section 4281.  For purposes of this
       Subsection, an amendment to the Plan that has the effect of:


       (a)    eliminating or reducing an early retirement benefit or a
              retirement-type subsidy (as defined in the regulations under Code
              paragraph 411(d)(6)), or


       (b)    eliminating an optional form of benefit, with respect to benefits
              attributable to service before the amendment,

                                      84



       will be treated as reducing the accrued benefit of a Participant. In the
       case of any retirement-type subsidy, the preceding sentence will apply
       only with respect to a Participant who satisfies (either before or after
       the amendment) the preamendment conditions for the subsidy.


                                     ARTICLE 15

                           TRUSTS AND INSURANCE CONTRACTS


15.1   TRUSTS AND INSURANCE CONTRACTS


       As part of the Plan, the Employers have established a Pension Fund.  The
       Pension Fund may consist of a trust, or a fund under a group annuity
       contract issued by an Insurance Company, or a combination of each.
       Benefits may, however, be provided through other trusts or insurance
       contracts as Cinergy, in its sole discretion, may establish or cause to
       be established or entered into for the purposes of carrying out the Plan.
       Cinergy will determine the form and terms of any trust and will also
       determine the terms and provisions of any group annuity contract.
       Cinergy may also, in its sole discretion, cause any funds held by any
       Insurance Company, or any Trust Fund held by any Trustee, for the purpose
       of providing benefits under the Plan, to be transferred to any other
       Insurance Company, or qualified Trustee, to be held for the same purpose.


15.2   IRREVOCABILITY


       The Employers will have no right, title, or interest in the Pension Fund
       or to the contributions made under the Plan, and no part of the Pension
       Fund will revert to the Employers, except that upon termination of the
       Plan and after satisfaction or provision for the satisfaction of all
       fixed and contingent liabilities or obligations to persons entitled to
       benefits upon the termination, any balance remaining in the Pension Fund
       will be distributed to the Employers.  However, nothing in this
       Section will prohibit the return, in accordance with the provisions of
       ERISA subsection 403(c), to the Employers of a

                                      85



       contribution (or a portion of a contribution) by the Employers to the
       Pension Fund if the contribution is (a) made by reason of mistake of
       fact, (b) conditioned on the initial qualification of the Plan under Code
       subsection 401(a), or (c) conditioned upon its deductibility under Code
       section 404 and the deduction is not fully allowed.


15.3   SUFFICIENCY OF PENSION FUND


       The Employer intends the Plan to be a permanent, as distinguished from a
       temporary, program.  Except as otherwise provided by the Code or ERISA,
       however, the Employer will not be under any liability to make
       contributions to the Pension Fund.  Benefits under the Plan are to be
       paid only from the Pension Fund and only to the extent that the Pension
       Fund is sufficient for that purpose.  Neither Cinergy, nor any of the
       officers, employees, members of the Board of Directors, the Committee, or
       representatives of Cinergy guarantees in any manner nor, unless otherwise
       required by law, will be liable for the payment of benefits under the
       Plan.  Except as otherwise provided by ERISA, any person having any claim
       under, or in connection with, the Plan must look solely to the Pension
       Fund for satisfaction.

                                     ARTICLE 16

                                   CONTRIBUTIONS


No contributions to the Plan by Participants will be required or permitted under
the Plan.


During the continuance of the Plan and for the purpose of providing the benefits
contemplated under the Plan, the Employer intends to deposit, from time to time,
with the Trustee or with the Insurance Company, sums of money, to be held in the
Pension Fund, which, together with the earnings of the Pension Fund, will be
deemed sufficient to provide the benefits of the Plan and to satisfy the minimum
funding standards set forth in ERISA.  All contributions by the Employer to the
Pension Fund are expressly conditioned upon deductibility under Code
section 404.


                                     ARTICLE 17

                        APPROVAL UNDER INTERNAL REVENUE CODE

                                      86



The Plan as set forth in this document is intended to comply with the
requirements of Code subsection 401(a), so that the income of the Pension
Fund may be exempt from federal income taxes and so that contributions of the
Employers under the Plan may be deductible for federal income tax purposes
under Code section 404.  Any modification or amendment of the Plan may be
made, retroactive or otherwise, as necessary or appropriate to establish and
maintain its qualified status under the Code, or to otherwise comply with
ERISA.

                                     ARTICLE 18
                             AMENDMENT AND TERMINATION

18.1   RIGHT TO AMEND OR TERMINATE

       Cinergy reserves the right to modify, alter, amend, revoke or terminate
       the Plan and/or any Trust Fund or group annuity contract that may be
       established or entered into to effectuate and implement the Plan at any
       time.  The Board of Directors will generally have the authority to adopt
       amendments; however, the Committee or the compensation committee of the
       Board of Directors may adopt any amendment to ensure the continued
       qualification of the Plan and Pension Fund under Code subsections 401(a)
       and 501(a), to comply with the provisions of any federal statute or
       regulation impacting pension plans, to enhance the delivery of benefits
       to Participants and Beneficiaries, to ease Plan administration, or to
       respond to the withdrawal of any Employer from the Plan.  Notwithstanding
       the preceding sentence, no amendment by the Committee or the compensation
       committee of the Board of Directors will substantially increase the cost
       of the Plan without the Board of Directors' consent.


       The Board of Directors, or any person or persons duly authorized by the
       Board of Directors, will also have the right, authority, and power to
       terminate the Plan and to discontinue or suspend the payment of
       contributions to provide benefits under the Plan (except for the
       provision of any agreement which has been entered into between an
       Employer and a labor union representing Eligible Employees).  However, no
       action taken


                                       87



       pursuant to this Section will operate to enlarge the right of Cinergy
       under Section 15.2 (Irrevocability).

18.2   EFFECT OF TERMINATION

       If a partial or complete termination of the Plan occurs, all Participants
       with respect to whom the Plan is being so terminated will have a
       Nonforfeitable right to their benefits accrued under the Plan up to the
       date of termination of the Plan to the extent then funded.

       Except as otherwise required by ERISA section 4044, Cinergy will direct
       the Trustee and/or Insurance Company to segregate the Pension Fund, as
       determined by Cinergy to be attributable to the group that is terminating
       its participation in the Plan, and to make separate allocations of the
       segregated assets among the respective persons having interests in them.
       The separate allocations will be made as follows:

       (a)    First, either:

              (1)    in the case of the pension of a Retired Participant, a
                     Terminated Vested Participant, a Spouse, or a Contingent
                     Annuitant that began at least three years prior to the
                     termination date of the Plan, that portion of the pension
                     that is based on the provisions of the Plan as in effect at
                     any time during the five-year period ending on the
                     termination date, which would result in the least amount,
                     or

              (2)    in the case of the pension of an Active Participant, a
                     Participant who has incurred a Severance from Service, or
                     either a Retired Participant or a Terminated Vested
                     Participant not included in Paragraph (1) of this
                     Subsection (a) that three years prior to the termination
                     date of the Plan would have begun had the Participant then
                     become a Retired Participant, a Terminated Vested
                     Participant, or the Participant's Spouse or Contingent
                     Annuitant, that portion of the pension that is based on the
                     provisions of the


                                       88



                     Plan that were in effect at any time during the five-year
                     period ending on the termination date, which would result
                     in the least amount;

       (b)    Second, all other pensions under the Plan that are guaranteed by
              the Pension Benefit Guaranty Corporation;

       (c)    Third, all other pensions with respect to both (1) Retired
              Participants, Terminated Vested Participants, Spouses, and
              Contingent Annuitants and (2) Active Participants and Participants
              who have incurred a Severance from Service who, as of the date of
              termination of the Plan, have completed the Vesting Requirement of
              the Plan; and

       (d)    All other pensions under the Plan.

              If the balance of the Pension Fund allocable to the terminating
              group that is remaining after allocations have been made with
              respect to all pensions in a preceding class or group is
              insufficient to allocate the full Actuarial Equivalent of pensions
              to all persons in the class or group for which it is then being
              applied, the balance will be allocated to each person in the class
              or group in the proportion to which the Actuarial Equivalent of
              the pension allocable to him pursuant to the class or group bears
              to the total Actuarial Equivalent of the pensions so allocable to
              all persons in the class or group.  However, if the balance is
              sufficient to allocate a portion only of the full Actuarial
              Equivalent of the pensions set forth in Subsection (c), then the
              amounts of pension otherwise provided will be redetermined based
              on the provisions of the Plan as in effect five years prior to the
              termination date, or, if applicable, as of the later date as will
              provide for the allocation of the full Actuarial Equivalent
              thereof.

              The amounts so allocated will, subject to the rights of the
              Insurance Company under the Group Annuity Contract governing
              allocations of small annuities, be purchased under the Group
              Annuity Contract or other group annuity contract.


                                       89



              Any balance remaining in the Pension Fund that is allocable to the
              terminating group, and after all allocations have been made
              pursuant to the foregoing provisions of this Subsection, will be
              allocated to the Employers.

18.3   MERGER AND CONSOLIDATION OF PLAN

       In the case of any merger or consolidation with, or transfer of assets
       and liabilities to, any other plan, provisions will be made so that each
       Participant in the Plan on the date thereof (if the Plan had then
       terminated) would receive a benefit immediately after the merger,
       consolidation or transfer that is equal to, or greater than, the benefit
       he would have been entitled to receive immediately prior to the merger,
       consolidation, or transfer if the Plan had then terminated.

18.4   POST-CHANGE IN CONTROL MERGER, CONSOLIDATION, OR TRANSFER OF PENSION PLAN
       ASSETS OR LIABILITIES

       Notwithstanding the preceding provisions of this Article or any other
       provision of this Plan, in the event of any merger or consolidation of
       this Plan with another employee benefit plan or any transfer of assets or
       liabilities of this Plan to another plan that is effected within three
       years following a Change in Control, (a) the accrued benefit of each
       Participant who is actively employed by an Employer as of the effective
       date of the merger, consolidation, or transfer of assets or liabilities
       and with respect to whom liability for the payment of benefits under the
       Plan is being merged or consolidated with or transferred to another plan
       will become fully vested; (b) the vested accrued benefit of each
       Participant, former Participant, and Beneficiary with respect to whom any
       liability for the payment of benefits under the Plan is being merged or
       consolidated with or transferred to another plan will be increased in
       accordance with Section 18.6 (Post-Change in Control Surplus Reversion)
       as if the Plan had terminated immediately prior to any merger,
       consolidation, or transfer (and for purposes of calculating the
       increase, the accrued benefits of all other Participants, former
       Participants and their Beneficiaries will be deemed to have increased in
       accordance with Section 18.6 (Post-Change in Control


                                       90



       Surplus Reversion)); and (c) prior to consummation of any merger,
       consolidation, or transfer, the accrued benefit (as increased, if
       applicable) of each Participant, former Participant, and Beneficiary
       with respect to whom liability for the payment of benefits under the
       Plan is being merged or consolidated with or transferred to another plan
       will be satisfied by the purchase of a guaranteed annuity contract from
       a financially sound insurance company that represents an irrevocable
       commitment to satisfy the accrued benefit (as increased, if applicable)
       of the person. Notwithstanding the provisions of Section 18.1 (Right to
       Amend or Terminate), the provisions of this Section may not be amended
       by an amendment to the Plan effective within three years following a
       Change in Control.

18.5   GENERAL PROTECTION OF BENEFITS IN THE EVENT OF A CHANGE IN CONTROL

       Notwithstanding any other provisions of this Plan, for a period of three
       years following a Change in Control, the provisions of this Plan may not
       be amended in any manner that would adversely affect in any way the
       computation or amount of or the entitlement to retirement benefits under
       the Plan, including, but not limited to, any adverse change in or to
       (a) the rate at which benefits accrue or vest, (b) the compensation
       recognized under the Plan, or (c) the optional forms of payment available
       to a Participant or Beneficiary under the Plan, including the time of
       commencement of benefits and any actuarial factors utilized.
       Notwithstanding the provisions of Section 18.1 (Right to Amend or
       Terminate), the provisions of this Section may not be amended by an
       amendment effective within three years following a Change in Control.

18.6   POST-CHANGE IN CONTROL SURPLUS REVERSION

       Notwithstanding the preceding provisions of this Article or any other
       provision of the Plan, in the event this Plan is terminated within three
       years following a Change in Control, the assets of the Plan will be
       applied in accordance with the preceding provisions of this Article to
       satisfy all liabilities to Participants, former Participants, and their


                                       91



       Beneficiaries.  If, after satisfaction of the liabilities, there are
       assets remaining in the Plan, the balance will be applied on a pro rata
       basis based upon final vested benefit to increase the benefits of the
       Participants, former Participants, and their Beneficiaries, subject
       however, to the applicable legal limitations on benefits payable from tax
       qualified plans.  Notwithstanding the provisions of Section 18.1 (Right
       to Amend or Terminate), the provisions of this Section may not be amended
       by an amendment to the Plan effected within three years following a
       Change in Control.


                                     ARTICLE 19
                               AUTHORIZED TRANSACTION

Cinergy will have the right, authority, and power to transfer some or all of the
assets of the Plan, including contributions and earnings, to a pooled investment
fund of an insurance company qualified to do business in one or more states of
the United States, even though that insurance company might otherwise be a
"party in interest," as that term is defined in ERISA; provided, the insurance
company receives not more than reasonable compensation with respect to the
transaction.


                                     ARTICLE 20
                          PARTICIPATION BY OTHER EMPLOYERS

20.1   ADOPTION OF PLAN

       With Cinergy's consent, any Affiliate may become a participating Employer
       under the Plan by (a) taking appropriate action to adopt the Plan,
       (b) filing with Cinergy a duly certified copy of the Plan as adopted by
       the Affiliate, (c) becoming a party to the trust agreement establishing
       the Trust Fund, and (d) executing and delivering documents and


                                       92



       taking any other action as may be necessary or desirable to put the Plan
       into effect with respect to it.


20.2   WITHDRAWAL FROM PARTICIPATION

       Any Employer may, with Cinergy's consent, withdraw from participation in
       the Plan at any time by filing with Cinergy a duly certified copy of a
       resolution of its board of directors to that effect and giving notice of
       its intended withdrawal to Cinergy, the Trustee, and Insurance Company
       prior to the effective date of withdrawal.  If an Employer withdraws from
       the Plan, Cinergy will determine the portion of the Pension Fund held by
       the Trustee or Insurance Company that is applicable to the Participants
       and former Participants of the withdrawing Employer and direct the
       Trustee and Insurance Company to segregate its portion in a separate
       trust.  The separate trust will be held and administered as a part of the
       separate plan of the withdrawn Employer.  The portion of the Pension Fund
       applicable to the Participants and former Participants of a particular
       Employer will be the sum of:

       (a)    the total amount of the accrued benefits applicable to the
              Participants and former Participants of the withdrawing Employer,
              and

       (b)    an amount that bears the same ratio to the excess, if any, of:

              (1)    the total of the Pension Fund over

              (2)    the total amount of the accrued benefits applicable to the
                     Participants and former Participants of the withdrawing
                     Employer bears to the total amount of the accrued benefits
                     applicable to all Participants and former Participants.

       Notwithstanding the preceding sentence, if the total amount of the
       present value of the accrued benefits applicable to the Participants and
       former Participants of the withdrawing


                                       93



       Employer (when combined with the value of any other assets segregated
       during that Plan Year) is less than three percent of the total of the
       Pension Fund as of at least one day in the Plan Year during which the
       withdrawal occurs, the portion of the Pension Fund applicable to the
       Participants and former Participants of the withdrawing Employer will be
       equal to the present value of those Participants' accrued benefits.

20.3   CINERGY AS AGENT FOR EMPLOYERS

       Each Affiliate that becomes a participating Employer pursuant to 20.1
       (Adoption of Plan) or Article 22 (Continuance by a Successor) by so doing
       will be deemed to have appointed Cinergy its agent to exercise on its
       behalf all of the powers and authorities conferred upon Cinergy by the
       terms of the Plan, including, but not limited to the power to amend and
       terminate the Plan.  Cinergy's authority to act as agent will continue
       unless and until the portion of the Pension Fund held for the benefit of
       Employees of the particular Employer and their Beneficiaries is set aside
       in a separate trust as provided in Section 20.2 (Withdrawal from
       Participation).  Each Employer will, from time to time, upon Cinergy's
       request, furnish to Cinergy any data and information as Cinergy requires
       in the performance of its duties.


                                     ARTICLE 21
                             CONTINUANCE BY A SUCCESSOR

If Cinergy or any other Employer is reorganized by way of merger, consolidation,
transfer of assets, or otherwise, so that a corporation, partnership, or person
other than an Employer succeeds to all or substantially all of the Employer's
business, the successor may be substituted for the Employer under the Plan by
adopting the Plan and becoming a party to the trust agreement.  Contributions by
the Employer will be automatically suspended from the effective date of any
reorganization until the date upon which the substitution of the successor
corporation for the Employer under the Plan becomes effective.  If, within
90 days following the effective date of any reorganization, the successor does
not elect to become a party to the Plan, or if the Employer adopts a plan of
complete liquidation other than in connection with a reorganization,


                                       94



the Plan will be automatically terminated with respect to employees of the
Employer as of the close of business on the 90th day following the effective
date of reorganization or as of the close of business on the date of adoption of
a plan of complete liquidation, as the case may be, and Cinergy will direct the
Trustee to distribute the portion of the Trust Fund applicable to that Employer
in the manner provided in Section 20.2 (Withdrawal from Participation).


       Cinergy Corp. has caused this document to be executed by its duly
authorized officers, effective January 1, 1998.




                                       By:    _______________________________
                                              Madeleine W. Ludlow
                                              Vice President and Chief
                                              Financial Officer

                                       Dated: _______________________________
APPROVED:

_______________________________
Jerome A. Vennemann
Acting General Counsel
and Assistant Corporate Secretary


Dated: _________________________


                                       95



                                   ADDENDUM A

      LEVEL INCOME OPTION -- FACTORS USING UP84 MORTALITY AND 7.5% INTEREST



   Age       0/12      1/12      2/12      3/12       4/12      5/12      6/12      7/12      8/12      9/12     10/12      11/12
   ---       ----      ----      ----      ----       ----      ----      ----      ----      ----      ----     -----      -----
                                                                                       
    50     0.30410   0.30651   0.30892   0.31133    0.31374   0.31615   0.31856   0.32097   0.32338   0.32579   0.32820    0.33061
    51     0.33302   0.33570   0.33837   0.34105    0.34373   0.34641   0.34908   0.35176   0.35444   0.35712   0.35979    0.36247
    52     0.36515   0.36813   0.37111   0.37408    0.37706   0.38004   0.38302   0.38600   0.38898   0.39195   0.39493    0.39791
    53     0.40089   0.40421   0.40753   0.41085    0.41417   0.41749   0.42080   0.42412   0.42744   0.43076   0.43408    0.43740
    54     0.44072   0.44443   0.44814   0.45185    0.45556   0.45927   0.46297   0.46668   0.47039   0.47410   0.47781    0.48152
    55     0.48523   0.48938   0.49353   0.49768    0.50184   0.50599   0.51014   0.51429   0.51844   0.52259   0.52675    0.53090
    56     0.53505   0.53971   0.54437   0.54903    0.55369   0.55835   0.56301   0.56767   0.57233   0.57699   0.58165    0.58631
    57     0.59097   0.59621   0.60146   0.60670    0.61194   0.61719   0.62243   0.62767   0.63292   0.63816   0.64340    0.64865
    58     0.65389   0.65980   0.66572   0.67163    0.67755   0.68346   0.68938   0.69529   0.70121   0.70712   0.71304    0.71895
    59     0.72487   0.73156   0.73825   0.74494    0.75164   0.75833   0.76502   0.77171   0.77840   0.78509   0.79179    0.79848
    60     0.80517   0.81276   0.82035   0.82795    0.83554   0.84313   0.85072   0.85832   0.86591   0.87350   0.88109    0.88869
    61     0.89628   0.90492   0.91357   0.92221    0.93085   0.93950   0.94814   0.95678   0.96543   0.97407   0.98271    0.99136
    62     1.00000

EX-10.VV

               NOTE:  THIS TABLE OF CONTENTS IS NOT PART OF THE
               CINERGY CORP. UNION EMPLOYEES' RETIREMENT INCOME PLAN;
               INSTEAD, THIS TABLE OF CONTENTS IS MERELY FOR
               CONVENIENCE OF REFERENCE

                                 TABLE OF CONTENTS


                                                                                 PAGE
                                                                              
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

ARTICLE  1  DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

ARTICLE  2  EFFECTIVE DATE OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE  3  ELIGIBILITY AND PARTICIPATION  . . . . . . . . . . . . . . . . . . . . 29
     3.1    Date of Participation. . . . . . . . . . . . . . . . . . . . . . . . . 29
     3.2    Leased Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
     3.3    Transfers of Employment. . . . . . . . . . . . . . . . . . . . . . . . 29
     3.4    Transfers of Participants and Plan Assets To and From the Cinergy
            Corp. Non-Union Employees' Pension Plan and Cinergy Corp. Union
            Employees' Pension Plan. . . . . . . . . . . . . . . . . . . . . . . . 30

ARTICLE  4  AMOUNT OF LIFE-ONLY PENSION. . . . . . . . . . . . . . . . . . . . . . 31
     4.1    Normal Retirement Pension Formula. . . . . . . . . . . . . . . . . . . 31
     4.2    Normal Retirement Benefits for Pre-1998 Participants . . . . . . . . . 32
     4.3    General Method of Computing Annual Pension for Retirement at
            Early Retirement Date. . . . . . . . . . . . . . . . . . . . . . . . . 32
     4.4    General Method of Computing Annual Pension for a Terminated
            Vested Participant . . . . . . . . . . . . . . . . . . . . . . . . . . 35
     4.5    Maximum Pension. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

ARTICLE  5  SEVERANCE FROM SERVICE-VESTING . . . . . . . . . . . . . . . . . . . . 40
     5.1    Vesting Requirement. . . . . . . . . . . . . . . . . . . . . . . . . . 40
     5.2    Severance from Service before Vesting. . . . . . . . . . . . . . . . . 40
     5.3    Severance from Service after Vesting . . . . . . . . . . . . . . . . . 41

ARTICLE  6  SPOUSE'S BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
     6.1    Determination of Spouse's Benefit. . . . . . . . . . . . . . . . . . . 41
     6.2    Method of Payment of Spouse's Benefit. . . . . . . . . . . . . . . . . 44

ARTICLE  7  FORMS OF PENSION . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
     7.1    Normal Forms of Pension. . . . . . . . . . . . . . . . . . . . . . . . 45
     7.2    Optional Forms of Retirement Income. . . . . . . . . . . . . . . . . . 47

ARTICLE  8  PAYMENT OF PENSION . . . . . . . . . . . . . . . . . . . . . . . . . . 58
     8.1    Timing of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
     8.2    Method of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . 58



     8.3    Small Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
     8.4    Facility of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . 59
     8.5    Benefits for Late Retirees, Reemployed Retirees and Reemployed
            Terminated Vested Participants . . . . . . . . . . . . . . . . . . . . 59
     8.6    Required Payment of Benefits . . . . . . . . . . . . . . . . . . . . . 61
     8.7    Direct Rollovers of Eligible Distributions . . . . . . . . . . . . . . 66

ARTICLE  9  RETIREE MEDICAL/DENTAL BENEFITS. . . . . . . . . . . . . . . . . . . . 66
     9.1    Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
     9.2    Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
     9.3    Separate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
     9.4    Impossibility of Diversion Prior To Satisfaction of All
            Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
     9.5    Reversion Upon Satisfaction of All Liabilities . . . . . . . . . . . . 67
     9.6    Forfeitures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
     9.7    Employer Contributions To The Medical/Dental Benefits Account. . . . . 67
     9.8    Medical/Dental Benefits. . . . . . . . . . . . . . . . . . . . . . . . 68

ARTICLE  10 NONALIENATION OF BENEFITS. . . . . . . . . . . . . . . . . . . . . . . 68

ARTICLE  11 ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
     11.1   Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
     11.2   Removal and Replacement of Committee Members . . . . . . . . . . . . . 69
     11.3   Disqualification and Resignation . . . . . . . . . . . . . . . . . . . 69
     11.4   Chairperson, Services, and Counsel . . . . . . . . . . . . . . . . . . 69
     11.5   Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
     11.6   Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
     11.7   Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . 70
     11.8   Notice to Trustee of Changes in Membership . . . . . . . . . . . . . . 70
     11.9   Correction of Defects. . . . . . . . . . . . . . . . . . . . . . . . . 71
     11.10  Reliance Upon Legal Counsel. . . . . . . . . . . . . . . . . . . . . . 71
     11.11  Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
     11.12  Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
     11.13  Powers and Duties of Committee . . . . . . . . . . . . . . . . . . . . 72
     11.14  Matters Specifically Excluded from Jurisdiction. . . . . . . . . . . . 73

ARTICLE  12 BENEFIT CLAIMS PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . 73

ARTICLE  13 FUNDING POLICY AND METHOD. . . . . . . . . . . . . . . . . . . . . . . 75

ARTICLE  14 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
     14.1   No Enlargement of Employee Benefits. . . . . . . . . . . . . . . . . . 75
     14.2   Reemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
     14.3   Qualified Military Service . . . . . . . . . . . . . . . . . . . . . . 76
     14.4   Notice of Address. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
     14.5   Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
     14.6   No Individual Liability. . . . . . . . . . . . . . . . . . . . . . . . 77
     14.7   Participant's Statement of Agreement . . . . . . . . . . . . . . . . . 77

                                          ii


     14.8   No Diversion of Assets . . . . . . . . . . . . . . . . . . . . . . . . 77
     14.9   Governing Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
     14.10  Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
     14.11  Interpretation and Regulation of Plan. . . . . . . . . . . . . . . . . 78
     14.12  Communications by Participants . . . . . . . . . . . . . . . . . . . . 78
     14.13  Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
     14.14  Accrued Benefit Not to be Decreased by Amendment . . . . . . . . . . . 79

ARTICLE  15 TRUSTS AND INSURANCE CONTRACTS . . . . . . . . . . . . . . . . . . . . 79
     15.1   Trusts and Insurance Contracts . . . . . . . . . . . . . . . . . . . . 79
     15.2   Irrevocability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
     15.3   Sufficiency of Pension Fund. . . . . . . . . . . . . . . . . . . . . . 80

ARTICLE  16 CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

ARTICLE  17 APPROVAL UNDER INTERNAL REVENUE CODE . . . . . . . . . . . . . . . . . 81

ARTICLE  18 AMENDMENT AND TERMINATION. . . . . . . . . . . . . . . . . . . . . . . 81
     18.1   Right to Amend or Terminate. . . . . . . . . . . . . . . . . . . . . . 81
     18.2   Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . 82
     18.3   Merger and Consolidation of Plan . . . . . . . . . . . . . . . . . . . 84
     18.4   Post-Change in Control Merger, Consolidation, or Transfer of
            Pension Plan Assets or Liabilities . . . . . . . . . . . . . . . . . . 85
     18.5   General Protection of Benefits in the Event of a Change in
            Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
     18.6   Post-Change in Control Surplus Reversion . . . . . . . . . . . . . . . 86

ARTICLE  19 AUTHORIZED TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . 87

ARTICLE  20 PARTICIPATION BY OTHER EMPLOYERS . . . . . . . . . . . . . . . . . . . 87
     20.1   Adoption of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
     20.2   Withdrawal from Participation. . . . . . . . . . . . . . . . . . . . . 87
     20.3   Cinergy as Agent for Employers . . . . . . . . . . . . . . . . . . . . 88

ARTICLE  21 CONTINUANCE BY A SUCCESSOR . . . . . . . . . . . . . . . . . . . . . . 89



                                         iii


                                 ADOPTED PURSUANT TO RESOLUTIONS OF THE CINERGY
                               CORP. BOARD OF DIRECTORS DATED DECEMBER 18, 1997


               CINERGY CORP. UNION EMPLOYEES' RETIREMENT INCOME PLAN

                (As Amended and Restated Effective January 1, 1998)


                                    INTRODUCTION

Effective December 31, 1946, The Cincinnati Gas & Electric Company adopted The
Cincinnati Gas & Electric Company Retirement Income Plan.  The Plan has been
restated on several occasions in order to comply with applicable legal
requirements and to make other changes.  This document is a complete restatement
of the Plan, effective January 1, 1998.  Also, effective January 1, 1998, the
Plan is renamed the Cinergy Corp. Union Employees' Retirement Income Plan.


This Plan is maintained for the exclusive benefit of Eligible Employees.  The
purpose of the Plan is to provide retirement income for Eligible Employees.  The
Plan is designed to satisfy the requirements of Code subsection 401(a) and the
applicable requirements of ERISA.


                                     ARTICLE 1

                                    DEFINITIONS


As used in this document, the following words and phrases, when capitalized,
will have the meanings set forth below, unless a different meaning is plainly
required by the context.


1.1    "Absence from Service" means, with respect to each Employee, his absence
       from service (with or without pay) with his Employer for any reason other
       than a quit, resignation, discharge, retirement, or death, including, but
       without limitation because of enumeration, vacation, holiday, sickness,
       disability, leave of absence (unless otherwise required by applicable
       law), or other layoff.

                                          1


1.2    "Accrued Vacation Pay" means, with respect to an Employee, the
       compensation received at his Severance from Service for unused accrued
       vacation pursuant to the Employer's applicable policy.


1.3    "Active Participant" means a Participant for whom benefits are being
       accrued under the Plan on the applicable date.


1.4    "Actual Separation Date" means:


       (a)    with respect to a Participant who either (1) retires on or after
              his Normal Retirement Date, or (2) who retires on an Early
              Retirement Date, the first day of the calendar month coincident
              with or following the date of the Participant's Severance from
              Service; or


       (b)    with respect to a Participant who incurs a Severance from Service
              before he reaches age 50 and who is entitled to benefits
              determined under the provisions of Section 5.3 (Severance from
              Service after Vesting), the date of the Participant's Severance
              from Service.


1.5    "Actuarial Equivalent" means a benefit having the same actuarially
       determined value as the benefit that the Actuarial Equivalent replaces.
       The determination of an Actuarial Equivalent will be based on the
       following actuarial assumptions, except as provided in Subsection (c) or
       (d) below:


       (a)    MORTALITY:


              Participants in accordance with the UP-1984 Table, with no rating
              of ages;Spouses and Contingent Annuitants in accordance with the
              UP-1984 Table, with ages rated down three years;

                                          2


       (b)    INTEREST:


              7-1/2% per annum, compounded annually.


       (c)    With respect to any lump sum payment that may be payable under the
              Plan during a Plan Year, the Actuarial Equivalent will be
              calculated using the mortality table as prescribed from time to
              time by the Secretary of the Treasury (currently the 1983 Group
              Annuity Mortality Table with a 50/50 mix of males and females) and
              an interest rate equal to the annual rate of interest on 30 year
              Treasury securities as specified by the Commissioner of Internal
              Revenue for the second full calendar month preceding the first day
              of the Plan Year.


       (d)    In the case of a Participant who had an accrued benefit under the
              Plan as of December 31, 1997, and who has a Severance from Service
              Date after December 31, 1997, no benefit determination will
              produce an amount that is less than that which would have been
              produced utilizing both the actuarial assumptions specified in the
              Plan as in effect on December 31, 1997, and the annual pension
              accrued as of December 31, 1997, determined under the provisions
              of the Plan, as then in effect.


1.6    "Additional Separation Date" means, with respect to a Participant who has
       an Initial Separation Date and who is later reemployed by an Employer,
       the first day of the calendar month coincident with or following the
       Participant's next Severance from Service Date.  However, if the
       Participant has multiple Severance from Service Dates after his Initial
       Separation Date, then he will have an Additional Separation Date for each
       Severance from Service, which will be the first day of the calendar month
       coincident with or following the Participant's applicable Severance from
       Service Date.


1.7    "Affiliate" means any employer that together with the Employer is under
       common control or a member of an affiliated service group as determined
       under Code subsections 414(b), (c), (m), and (o).  In determining whether
       an employer is a member

                                          3


       of a controlled group for purposes of Section 4.5 (Maximum Pension), the
       rules of Code subsections 414(b) and (c) will be applied as modified by
       Code subsection 415(h).


1.8    "Annual Addition" means, with respect to a Participant for a Plan Year,
       the following amounts credited to a Participant's account in any
       Qualified Defined Contribution Plan maintained by the Employer or an
       Affiliate for the Plan Year:  employer contributions, employee
       contributions (other than rollover contributions); forfeitures; amounts
       allocated, after March 31, 1984, to an individual medical account, as
       defined in Code paragraph 415(l)(2), that is part of a pension or annuity
       plan maintained by the Employer or an Affiliate; and amounts derived from
       contributions paid or accrued after March 31, 1984, that are attributable
       to post-retirement medical benefits, allocated to the separate account of
       a Key Employee, under a welfare benefit fund, as defined in Code
       subsection 419(e), maintained by the Employer or an Affiliate.


1.9    "Annual Pension" means, with respect to a Participant, the amount of the
       Participant's pension, expressed as an annual benefit for the
       Participant's lifetime.


1.10   "Annual Performance Cash Award" means, with respect to an Employee, the
       cash award received by the Employee under the provisions of an Employer's
       annual bonus or incentive pay plan or program, including, but without
       limitation because of enumeration, the Union Employees' Incentive Plan or
       any successor Plan.


1.11   "Annuity Starting Date" means, with respect to a Participant, the first
       day of the first period for which a Plan benefit is paid as an annuity
       or, in the case of a benefit not payable in the form of an annuity, the
       first day on which all events have occurred that entitle the Participant
       to the benefit.


1.12   "Base Wage" means, with respect to an Employee, the hourly or weekly base
       rate of pay received as remuneration for services performed for the
       relevant period, exclusive of any allowances, premiums, bonuses,
       overtime, or other forms or types of compensation, multiplied by his
       hours worked during the applicable period.

                                          4


1.13   "Beneficiary" means, with respect to each Participant, the person or
       persons who are to receive benefits under the Plan after the
       Participant's death.


1.14   "Board of Directors" means the duly constituted board of directors of
       Cinergy on the applicable date.


1.15   "Break in Service" means, with respect to an Employee, a Period of
       Severance of at least 12 consecutive months.


1.16   "CG&E" means The Cincinnati Gas & Electric Company, and any related
       company that adopted the Plan on or before December 31, 1997.


1.17   "Change in Control" means any of the following events have occurred:


       (a)    Any "person" or "group" (within the meaning of subsection 13(d)
              and paragraph 14(d)(2) of the Securities Exchange Act) is or
              becomes the "beneficial owner" (as defined in Rule 13d-3 under the
              Securities Exchange Act), directly or indirectly, of securities of
              Cinergy (not including in the securities beneficially owned by
              such person or group any securities acquired directly from Cinergy
              or an Affiliate) representing 50% or more of the combined voting
              power of Cinergy's then outstanding securities, excluding any
              person or group who becomes such a beneficial owner in connection
              with a transaction described in Paragraph (1) of Subsection (b)
              below;


       (b)    There is consummated a merger or consolidation of Cinergy or any
              direct or indirect subsidiary of Cinergy with any other
              corporation, other than (1) a merger or consolidation that would
              result in the voting securities of Cinergy outstanding immediately
              prior to the merger or consolidation continuing to represent
              (either by remaining outstanding or by being converted into voting
              securities of the surviving entity or any parent thereof) at least
              50% of the combined voting power of the securities of Cinergy or
              such surviving entity or any parent thereof

                                          5


              outstanding immediately after the merger or consolidation, or
              (2) a merger or consolidation effected to implement a
              recapitalization of Cinergy (or similar transaction) in which no
              person is or becomes the beneficial owner, directly or indirectly,
              of securities of Cinergy (not including in the securities
              beneficially owned by such person any securities acquired directly
              from Cinergy or its Affiliates other than in connection with the
              acquisition by Cinergy or its Affiliates of a business)
              representing 25% or more of the combined voting power of Cinergy's
              then outstanding securities;


       (c)    During any period of two consecutive years, individuals who at the
              beginning of that period constitute the Board of Directors and any
              new director (other than a director whose initial assumption of
              office is in connection with an actual or threatened election
              context, including but not limited to a consent solicitation,
              relating to the election of directors of Cinergy) whose
              appointment or election by the Board of Directors or nomination
              for election by Cinergy's shareholders was approved or recommended
              by a vote of at least two-thirds (2/3) of the directors then still
              in office who either were directors at the beginning of that
              period or whose appointment, election or nomination for election
              was previously so approved or recommended cease for any reason to
              constitute a majority of the Board of Directors; or


       (d)    The shareholders of Cinergy approve a plan of complete liquidation
              or dissolution of Cinergy or there is consummated an agreement for
              the sale or disposition by Cinergy of all or substantially all of
              Cinergy's assets, other than a sale or disposition by Cinergy of
              all or substantially all of Cinergy's assets to an entity, at
              least 60% of the combined voting power of the voting securities of
              which are owned by shareholders of Cinergy in substantially the
              same proportions as their ownership of Cinergy immediately prior
              to such sale.


1.18   "Cinergy" means Cinergy Corp., a Delaware corporation, and any
       corporation that succeeds to its business and adopts the Plan.

                                          6


1.19   "Claimant" means a person submitting a claim for benefits under the Plan.


1.20   "Code" means the Internal Revenue Code of 1986, as amended from time to
       time, and interpretive rulings and regulations.


1.21   "Committee" means the benefits committee established pursuant to
       Article 11 (Administration) to serve as Plan administrator.


1.22   "Contingent Annuitant" means, with respect to any Participant electing a
       contingent pension option under Section 7.2 (Optional Forms of Retirement
       Income), the person designated by the Participant to receive a contingent
       pension after the Participant's death.


1.23   "Covered Compensation" means, with respect to a Participant, the average
       (without indexing) of the annual Social Security taxable wage bases under
       the Social Security Act for each year during the 35 calendar years ending
       with the last day of the calendar year in which the Participant reaches
       his Social Security Retirement Age.


1.24   "DCIP" means The Cincinnati Gas & Electric Company Deferred Compensation
       and Investment Plan.


1.25   "Defined Benefit Plan Fraction" means, with respect to an individual
       participating in one or more Qualified Defined Benefit Plans for any
       calendar year, the fraction, the numerator of which is the individual's
       Projected Annual Benefit under the Qualified Defined Benefit Plans
       (determined as of the end of the calendar year), and the denominator of
       which is the lesser of:  (a) the product of 1.25 multiplied by the dollar
       limitation in effect under Code subparagraph 415(b)(1)(A) for that
       calendar year, or (b) the product of 1.4 multiplied by the amount that
       may be taken into account under Code subparagraph 415(b)(1)(B) with
       respect to the individual under the Qualified Defined Benefit Plans for
       the calendar year.

                                          7


1.26   "Defined Contribution Plan Fraction" means, with respect to an individual
       participating in one or more Qualified Defined Contribution Plans for any
       calendar year, the fraction, the numerator of which is the sum of the
       Annual Additions with respect to the Participant (determined as of the
       close of the calendar year), and the denominator of which is the lesser
       of the following amounts (determined for that calendar year and for each
       prior calendar year of service with the Employer):  (a) the product
       of 1.25 multiplied by the dollar limitation in effect under Code
       subparagraph 415(c)(1)(A) for the calendar year (determined without
       regard to Code paragraph 415(c)(6)), or (b) the product of 1.4 multiplied
       by the amount that may be taken into account under Code
       subparagraph 415(c)(1)(B) with respect to that individual under all
       Qualified Defined Contribution Plans for the calendar year.


1.27   "Dependent" means any individual who is eligible for coverage under the
       Medical/Dental Plan as the "spouse" or "dependent" of an Eligible
       Retiree.


1.28   "Direct Rollover" means a payment by the Plan to the Eligible Retirement
       Plan specified by the Distributee.


1.29   "Disability Date" means, with respect to a Participant, the date the
       Participant is first determined to be totally disabled under Cinergy's
       Long Term Disability Plan, as amended from time to time.


1.30   "Distributee" means an Employee or former Employee.  In addition, the
       Employee's or former Employee's surviving Spouse, and the Employee's or
       former Employee's Spouse who is the alternate payee under a Qualified
       Domestic Relations Order are Distributees with regard to the interest of
       the Spouse or former Spouse.


1.31   "Early Retirement Date" means, with respect to each Participant who has
       satisfied the Vesting Requirement, and whose Severance from Service
       occurs on or after his 50th birthday but prior to his Normal Retirement
       Date, the first day of the calendar month coincident with or following
       his Severance from Service.

                                          8


1.32   "Earnings" means, with respect to any Employee for any period of
       reference, the sum of the Employee's:  (a) Base Wage, (b) Overtime Pay,
       (c) Shift Premiums, (d) Holiday Premiums, (e) Accrued Vacation Pay,
       (f) Sabbatical Vacation Pay, (g) Service Watch Payments, and (h) Annual
       Performance Cash Awards.  "Earnings" does not include (a) reimbursements
       or other expense allowances, (b) fringe benefits (cash and noncash) other
       than those named in the preceding sentence, (c) moving and relocation
       expenses, (d) deferred compensation, (e) welfare benefits, (f)
       Long-Term Performance Awards, (g) other forms of compensation or
       remuneration that are not specifically named in the preceding sentence,
       or (h) any payments received by an Employee from any Affiliate that is
       not an Employer.


       If an Eligible Employee takes a leave of absence to act as Business
       Manager and/or Assistant Business Manager of Local Union 1347 of the
       International Brotherhood of Electrical Workers, AFL-CIO, his Earnings
       for the period of his leave of absence will be deemed to be the Earnings
       the Eligible Employee received immediately prior to his leave of absence;
       provided, however, that his Earnings for the period of his leave will be
       adjusted to reflect any cost-of-living increases the Eligible Employee
       would have received during that period under the collective bargaining
       agreement between Local Union 1347 and the Employer.


       Notwithstanding the foregoing provisions of this Section, an Employee's
       Earnings taken into account for any Plan Year will not exceed $150,000,
       as adjusted pursuant to Code paragraph 401(a)(17).


1.33   "Effective Date" means the Plan's original effective date of December 31,
       1946.


1.34   "Eligible Employee" means an Employee other than a Leased Employee whose
       pay is customarily computed on an hourly, weekly, or bi-weekly basis;
       whose employment is subject to FLSA overtime and record keeping
       provisions; and who is assigned to an employment position that is
       governed by a collective bargaining agreement to which the Employer is a
       party and which provides for participation in the Plan.

                                          9


1.35   "Eligible Individual" means an Eligible Retiree or a Dependent.


1.36   "Eligible Retiree" means an individual who:


       (a)    is a Retired Participant who is also eligible to participate in
              the Medical/Dental Plan, and


       (b)    is not a Key Employee at any time during the current Plan Year and
              has not been a Key Employee at any time during any previous Plan
              Year for which contributions were made for that individual's
              benefit to the Medical/Dental Benefits Account.


1.37   "Eligible Retirement Plan" means an individual retirement account
       described in Code subsection 408(a), an individual retirement annuity
       described in Code subsection 408(b), an annuity plan described in Code
       subsection 403(a), or a qualified trust described in Code
       subsection 401(a), that accepts the Distributee's Eligible Rollover
       Distribution.  However, in the case of an Eligible Rollover Distribution
       to a surviving Spouse, an Eligible Retirement Plan is an individual
       retirement account or individual retirement annuity.


1.38   "Eligible Rollover Distribution" means any distribution of all or a
       portion of the balance to the credit of the Distributee, except that an
       Eligible Rollover Distribution does not include:  any distribution that
       is one of a series of substantially equal periodic payments (not less
       frequently than annually) made for the life (or life expectancy) of the
       Distributee or the joint lives (or joint life expectancies) of the
       Distributee and the Distributee's Beneficiary, or for a specified period
       of ten years or more; any distribution to the extent that the
       distribution is required under Code paragraph 401(a)(9); and the portion
       of any distribution that is not includable in gross income (determined
       without regard to the exclusion for net unrealized appreciation with
       respect to employer securities).

                                          10


1.39   "Employee" means any person who is employed by an Employer, other than as
       an employee classified by his Employer as a summer laborer or summer
       employee, and who receives compensation that the Employer initially
       reports on a federal wage and tax statement (Form W-2).  For purposes of
       crediting Service for vesting and, except as otherwise provided, for
       purposes of the rules set out in Section 4.5 (Maximum Pension), the term
       "Employee" includes a Leased Employee.


1.40   "Employer" means Cinergy and any Affiliate that, with the consent of the
       Board of Directors, elects to participate in the Plan pursuant to
       Section 20.1 (Adoption of Plan) and any successor corporation or other
       organization or entity that adopts the Plan pursuant to Article 21
       (Continuance by a Successor).  If any Affiliate withdraws from
       participation in the Plan pursuant to Section 20.2 (Withdrawal from
       Participation), that Affiliate will cease to be an Employer.


1.41   "Employment Commencement Date" means, with respect to each Employee, the
       date as of which the Employee is first entitled to be credited with an
       Hour of Service.


1.42   "ERISA" means the Employee Retirement Income Security Act of 1974, as
       amended from time to time, and interpretive rulings and regulations.


1.43   "FLSA" means the Fair Labor Standards Act of 1938, as amended from time
       to time, and interpretive rulings and regulations.


1.44   "Highest Average Earnings" means a Participant's highest average annual
       Earnings for any three consecutive calendar years out of his last ten
       years of Participation.  However, if the Participant completes fewer than
       three years of Participation, his Highest Average Earnings will mean his
       average annual Earnings for his total years of Participation.  If a
       Participant is totally disabled and qualifies for benefits under
       Cinergy's Long Term Disability Plan until his Normal Retirement Date,
       Early Retirement Date, or Actual Separation Date, whichever is
       applicable, his Severance from Service Date will be deemed for purposes
       of this Section to be his Disability Date.

                                          11


       For purposes of this Section, if a Participant's Severance from Service
       Date is other than December 31, the following periods will be treated as
       a period of three consecutive calendar years:


       (a)    His months of Participation in the calendar year that includes his
              Severance from Service Date; plus


       (b)    The two (or fewer) full calendar years of Participation prior to
              his Severance from Service Date; plus


       (c)    From the calendar year immediately preceding the period described
              in Subsection (b), the lesser of (1) the Participant's months of
              Participation in that year, or (2) the number of months equal to
              12 minus the number of months included pursuant to Subsection (a).
              A Participant's Earnings will be deemed to have been earned
              ratably throughout the period described in this Subsection (c).


1.45   "Holiday Premiums" means, with respect to an Employee, the compensation
       received as a premium for services performed for the relevant period for
       working on a holiday recognized by the Employer pursuant to its
       applicable policy.


1.46   "Hour of Service" means, with respect to any Employee, any of the
       following:


       (a)    each hour for which he is paid, or entitled to payment, by an
              Employer for the performance of duties for that Employer;


       (b)    each other hour for which back pay, irrespective of mitigation of
              damages, has been either awarded to him or agreed to be paid to
              him by an Employer;


       (c)    each other hour for which he is absent from his normal period of
              employment with his Employer due to an approved military leave,
              maternity leave, paternity

                                          12


              leave, adoption leave, worker's compensation leave, personal leave
              of six consecutive months or less, or sick leave of six
              consecutive months or less; and


       (d)    each other hour for which he is paid, or entitled to payment, by
              an Employer for a period of time during which he does not perform
              any duties for that Employer (irrespective of whether or not his
              employment relationship with that Employer has terminated) due to
              vacation, holiday, illness, incapacity (including disability),
              layoff, jury duty, witness duty, military duty, or leave of
              absence.


       In computing an Hour of Service, the Plan may use the equivalencies set
       forth in paragraph (e) of 29 C.F.R. Section 2530.200b-3.  However, if
       different equivalencies are used for different classifications of
       Employees, then those classifications must be reasonable and consistently
       applied.  Each Hour of Service will be credited to the Employee for the
       appropriate computation period in accordance with the provisions of
       paragraphs (b) and (c) of 29 C.F.R. Section 2530.200b-2, and each Hour of
       Service, when aggregated for a particular computation period, will
       constitute the Hours of Service credited to the Employee for that
       computation period.  However, no Employee will be credited under
       Subsection (d) either with more than 501 Hours of Service on account of
       any single continuous period during which the Employee performs no duties
       for an Employer irrespective of whether or not that period occurs in a
       single computation period, or with an hour for which the Employee is
       paid, or entitled to payment, by an Employer if that payment is made
       solely for the purposes of either reimbursing the Employee for medical or
       medically related expenses incurred by the Employee or complying with
       applicable worker's compensation, unemployment compensation, or
       disability insurance laws.  However, the crediting of Hours of Service
       for back pay awarded or agreed to with respect to periods described in
       Subsection (d) of this Section will be subject to the same limitations
       set forth in the immediately preceding sentence with respect to
       Subsection (d).


1.47   "Initial Separation Date" means, with respect to a Participant who is
       entitled to benefits under the provisions of Section 5.1 (Vesting
       Requirement), Section 5.2 (Severance from Service before Vesting), or
       Section 5.3 (Severance from Service after Vesting), the first

                                          13


       day of the calendar month coincident with or following the Participant's
       initial Severance from Service Date.


1.48   "Key Employee" means an Employee or former Employee of an Employer who,
       at any time during the determination period, is:


       (a)    an officer of an Employer having annual Section 415 Compensation
              from his Employer greater than 50 percent of the amount in effect
              under Code subparagraph 415(b)(1)(A) for any Plan Year;


       (b)    one of the ten Employees having annual Section 415 Compensation
              from his Employer of more than the limitation in effect under Code
              subparagraph 415(c)(1)(A) and owning (or considered as owning
              within the meaning of Code section 318) the largest interests in
              the Employer.


       (c)    the owner (or considered as the owner within the meaning of Code
              section 318) either of more than five percent of the outstanding
              stock of Cinergy, or stock possessing more than five percent of
              the total combined voting power of all stock of Cinergy; or


       (d)    the recipient of at least $150,000 in annual Section 415
              Compensation from the Employer and who owns (or is considered as
              owning within the meaning of Code section 318) either more than
              one percent of the outstanding stock of Cinergy or stock
              possessing more than one percent of the total combined voting
              power of all stock of Cinergy.


       However, no more than 50 Employees of an Employer will be deemed to be
       officers for any particular Plan Year.  Also, the term Key Employee
       includes the beneficiaries of a Key Employee.  For purposes of
       Subsection (b) above, if two Employees have the same interest in the
       Employer, the Employee having greater annual Earnings from his

                                          14


       Employer will be treated as having a larger interest.  The determination
       of who is a Key Employee will be made in accordance with Code
       paragraph 416(i)(1).


1.49   "Leased Employee" means any person who performs services for another
       person, the "recipient," but who is not an employee of the recipient, if
       (a) the services are provided pursuant to an agreement between the
       recipient and any other person, (b) the person has performed the services
       for the recipient (or for the recipient and related persons) on a
       substantially full-time basis for a period of at least one year, and
       (c) the services are performed under the primary direction and control of
       the recipient.  A Leased Employee will not be considered an employee of
       the recipient if:


       (a)    that employee is covered by a money purchase pension plan
              providing:


              (1)    a non-integrated employer contribution rate of at least
                     10 percent of compensation, as defined in Code
                     paragraph 415(c)(3), which includes amounts contributed
                     pursuant to a salary reduction agreement that are
                     excludable from the Employee's gross income under Code
                     section 125, Code paragraph 402(a)(8), or Code
                     subsections 402(h) or 403(b);


              (2)    immediate participation;


              (3)    full and immediate vesting; and


       (b)    leased employees do not constitute more than 20 percent of the
              recipient's non-highly compensated work force.


1.50   "Long-Term Performance Awards" means, with respect to an Employee, the
       cash or stock-based award received by the Employee pursuant to the
       provisions of an Employer's long-term bonus or incentive pay plan or
       program, including, but without limitation because of enumeration, the
       Cinergy 1996 Long-Term Incentive Compensation Plan.

                                          15


1.51   "Medical/Dental Benefits" means the benefits specified and payable under
       Section 9.8 (Medical/Dental Benefits) from the Medical/Dental Benefits
       Account.


1.52   "Medical/Dental Benefits Account" means the separate account established
       pursuant to Article 9 (Retiree Medical/Dental Benefits) for contributions
       to fund benefits payable under Article 9 (Retiree Medical/Dental
       Benefits).


1.53   "Medical/Dental Plan" means any plan or program that is established by
       the Employer to provide medical or dental insurance coverage or medical
       or dental expense reimbursements to Eligible Individuals.


1.54   "Nonforfeitable" means, with respect to a Participant's claim for
       benefits under the Plan, that the claim is unconditional, legally
       enforceable, and not subject to divestment except in accordance with the
       Plan's specific provisions, including, but without limitation because of
       enumeration, the provisions of Section 15.3 (Sufficiency of Pension
       Fund).


1.55   "Normal Retirement Date" means, with respect to each Participant, the
       first day of the calendar month coincident with or following his
       65th birthday.


1.56   "Option Effective Date" means a Participant's Actual Separation Date,
       unless further extended with respect to a Participant making a timely
       election during the applicable election period, in which case the Option
       Effective Date will be the first day of the calendar month coincident
       with or following the last day of the applicable election period,
       provided he has timely elected the option on or before that date.


1.57   "Overtime Pay" means, with respect to an Employee, the compensation
       received as remuneration consistent with the requirements of the FLSA, or
       for services performed for the relevant period for hours worked beyond
       the Employee's regularly scheduled work hours pursuant to the Employer's
       applicable policy.

                                          16


1.58   "Participant" means any Eligible Employee who has met the eligibility
       requirements set forth in Article 3 (Eligibility and Participation) and
       for whom benefits are to be provided under the Plan.


1.59   "Participation" means, with respect to an Eligible Employee, the period
       of time during which he is treated as a Participant in the Plan, the
       length of which will be determined as follows:


       (a)    Notwithstanding any other provision of this Plan to the contrary,
              an Eligible Employee who accrued Pre-1998 Years of Accredited
              Service prior to January 1, 1998, under the Plan will be credited
              with years of Participation for the Pre-1998 Years of Accredited
              Service credited to him.


       (b)    An Eligible Employee will be credited with Participation for the
              period of time beginning with the later of (1) January 1, 1998, or
              (2) his Employment Commencement Date and ending on his Severance
              from Service Date.


       (c)    An Eligible Employee will be credited with Participation for any
              Period of Credited Severance during which he is a Participant or
              former Participant.


       (d)    Notwithstanding any other provision of this Plan to the contrary,
              an Eligible Employee who is a Participant and who takes a leave of
              absence to act as Business Manager and/or Assistant Business
              Manager for Local Union 1347 of the International Brotherhood of
              Electrical Workers, AFL-CIO, will be credited with Participation
              for the period of time during which he acts as Business Manager
              and/or Assistant Business Manager.  This Subsection will be
              effective only through the duration of the 1996-2001 collective
              bargaining agreement between Local Union 1347 and the Employer,
              unless it is extended by agreement of the parties or by operation
              of law.

                                          17


       (e)    In determining an Eligible Employee's total Participation for
              purposes of the Plan, all periods of service that are credited to
              the Employee under Subsections (a) through (d) above will be
              aggregated.  In no event will an Employee be credited more than
              once for the same period of Participation.  For purposes of
              determining an Eligible Employee's total Participation, the
              Eligible Employee will be credited with one month of Participation
              for each calendar month in which he is a Participant in the Plan
              and is credited with at least one Hour of Service.  An Eligible
              Employee will be credited with one year of Participation for each
              12 months of Participation with which he is credited pursuant to
              the preceding sentence.


1.60   "Pension Fund" or "Fund" means the fund established in consequence of and
       for the purposes of the Plan to provide the benefits under the Plan,
       including all funds held in all trusts and group annuity contracts that
       are being used as funding media for the Plan.


1.61   "Period of Credited Severance" means, with respect to each Eligible
       Employee who has incurred a Severance from Service, and who, within
       12 Months of his Severance from Service Date, performs an Hour of
       Service, the Period of Severance commencing on the Eligible Employee's
       Severance from Service Date and ending on the date thereafter upon which
       he first performs an Hour of Service.  In the case of an Eligible
       Employee who has incurred a Severance from Service that occurs during an
       Absence from Service by reason of a maternity or paternity absence as
       defined in Subsection 1.83(b), the period between the first and second
       anniversaries of the first day of absence will not be a Period of
       Credited Severance.


1.62   "Period of Severance" means, with respect to each Eligible Employee, the
       period of time commencing on his Severance from Service Date and ending
       on the date thereafter upon which he first performs an Hour of Service.

                                          18


1.63   "Plan" means the pension plan known as the "Cinergy Corp. Union
       Employees' Retirement Income Plan," as amended, from time to time.  As
       effective January 1, 1998, this document sets forth the Plan.


1.64   "Plan Year" means the calendar year.


1.65   "Pre-1998 CG&E Service" means, with respect to an Employee, the period of
       time during which the employment relationship exists between the Employee
       and CG&E on or before December 31, 1997, the length of which is
       determined as follows:


       (a)    An Employee will be credited with Pre-1998 CG&E Service for the
              period of time beginning with his Employment Commencement Date and
              ending on December 31, 1997.


       (b)    An Employee will be credited with Pre-1998 CG&E Service for each
              Period of Credited Severance occurring on or before December 31,
              1997.


       (c)    An Employee will be credited with Pre-1998 CG&E Service for any
              period of service on or before December 31, 1997, with a related
              company of CG&E (as determined under Code subsections 414(b), (c),
              and (m)), which will be determined as if he had been employed by
              CG&E during that period.


       (d)    In determining an Employee's total Pre-1998 CG&E Service for
              purposes of the Plan, all periods of Pre-1998 CG&E Service that
              are credited to the Employee under Subsections (a) through (c)
              above will be aggregated.  In no event will an Employee receive
              credit more than once for the same period of Pre-1998 CG&E
              Service.  For purposes of determining an Employee's total Pre-1998
              CG&E Service, the Employee will be credited with one month of
              Pre-1998 CG&E Service for each month during which he is credited
              with at least one Hour of Service.  Those total months of Pre-1998
              CG&E Service will then be rounded up to the next highest number of
              whole calendar years.

                                          19


1.66   "Pre-1998 Final Average Compensation" means, with respect to a
       Participant who was a Participant in the Plan as of December 31, 1997,
       the average of the four consecutive calendar years of compensation, as
       defined in (a) below, that produce the highest average within the 10
       calendar years ending on December 31, 1997.


       (a)    For purposes of this definition, "compensation" means the annual
              rate of base pay determined on July 1 of each year prior to 1998.
              For these purposes, base pay is the wage or salary assigned to
              each specific job title or position.  Base pay does not include
              overtime, bonuses, severance, or any other special pay.  Base pay,
              however, will include deferred compensation contributions (as that
              term is defined under the DCIP and SIP) and will also include any
              other elective contribution made by CG&E to a plan covered by Code
              section 125, which contribution is not included in the gross
              income of the Participant.  If compensation for any Plan Year
              beginning before January 1, 1994, is taken into account in
              determining a Participant's Pre-1998 Final Average Compensation,
              the compensation for that Plan Year will be subject to the
              limitation of Code paragraph 401(a)(17) that was in effect for
              that year and the Participant's Nonforfeitable Annual Pension will
              not be less than the Participant's accrued benefit under the Plan
              as of December 31, 1993.


       (b)    For purposes of this definition, a Participant's base pay will be
              converted to an annual rate of compensation using the formula
              appropriate to the Participant's base pay, as follows:


              (1)    SEMI-MONTHLY RATE.  The annual compensation for a
                     Participant paid on a semi-monthly basis is 24 times the
                     Participant's July 1 semi-monthly base pay.


              (2)    MONTHLY RATE.  The annual compensation for a Participant
                     paid on a monthly basis is 12 times the Participant's
                     July 1 monthly base pay.

                                          20


              (3)    HOURLY RATE.  The annual compensation for a Participant
                     paid on an hourly basis is 2,080 times the Participant's
                     July 1 hourly base pay.


              (4)    WEEKLY RATE.  The annual compensation for a participant
                     paid on a weekly basis is 52 times the Participant's weekly
                     base pay.


       (c)    The compensation of a Participant who has no salary or wage rate
              on July 1 of a calendar year because he is on an unpaid leave of
              absence or temporary suspension will be calculated using his
              latest rate of pay prior to July 1 of that year, if the
              Participant returns to active employment before his Severance from
              Service Date.  If the Participant is on unpaid leave or suspension
              on July 1 of a year, and the Participant does not return to active
              employment before his Severance from Service Date, his
              compensation for that calendar year will be zero.


1.67   "Pre-1998 Years of Accredited Service" means the number of years equal to
       the length of the Employee's Pre-1998 CG&E Service, during which the
       Employee is treated as a Participant in the Plan.  The calculation of an
       Employee's Pre-1998 Years of Accredited Service will begin on the first
       day of the month during which the Employee became eligible to participate
       in the Plan.


1.68   "Primary Social Security Benefit" means the primary federal old age
       insurance benefit estimated by the Committee that is, or would be,
       payable to a Plan Participant at age 65 based on the federal Social
       Security Act in effect on December 31, 1997.


       The Primary Social Security Benefit of a Participant who had not attained
       age 65 by December 31, 1997,  will be determined by assuming that he
       continued to receive compensation after December 31, 1997, at the rate of
       compensation in effect immediately prior to that, to age 55, and zero
       compensation from age 55 thereafter until age 65.

                                          21


       If a Participant was hired after 1950, he will be provided with written
       notice of his right to supply actual pre-employment earnings history, of
       the financial consequences of failing to supply such history, and that
       the Participant can obtain his actual earnings history on a year-by-year
       basis from the Social Security administration.


       If a Participant whose pre-CG&E employment earnings history was estimated
       supplies documentation from the Social Security administration of his
       actual year-by-year earnings history, the Participant's Primary Social
       Security Benefit that previously was estimated will be recalculated using
       actual pre-CG&E employment earnings.  Such documentation must be supplied
       no later than 6 months following the later of:


       (a)    the date of the Participant's Severance from Service, or


       (b)    the date that the Participant is notified of the benefit to which
              he is entitled.


1.69   "Projected Annual Benefit" means, with respect to any Participant
       participating in a Qualified Defined Benefit Plan maintained by an
       Employer or an Affiliate, the annual straight life annuity benefit to
       which the Participant would be entitled under that Qualified Defined
       Benefit Plan based upon the following assumptions:


       (a)    the Participant will continue as an employee of an Employer until
              reaching the Participant's normal retirement age under the plan
              (or the Participant's current age if that is later);


       (b)    the Participant's compensation used to determine benefits under
              the plan for the calendar year under consideration will remain the
              same until the date the Participant attains the age described in
              Paragraph (a); and


       (c)    all other relevant factors used to determine benefits under the
              plan for the calendar year under consideration will remain
              constant for all future calendar years.

                                          22


1.70   "Qualified Defined Benefit Plan" means any qualified defined benefit plan
       as defined in Code subsections 414(j) and 415(k).


1.71   "Qualified Defined Contribution Plan" means any qualified defined
       contribution plan as defined in Code subsections 414(i) and 415(k).


1.72   "Qualified Domestic Relations Order" means a qualified domestic relations
       order as defined in Code subsection 414(p).


1.73   "Reduced Primary Social Security Benefit" means the reduced amount of
       primary federal old age insurance benefit estimated by the Committee that
       is, or would be, payable or estimated to become payable to a Participant
       at his earliest eligibility date.  The estimate is based on the Social
       Security Act as in effect at the Participant's Option Effective Date.  If
       a Participant supplies documentation from the Social Security
       Administration of his or her actual Reduced Primary Social Security
       Benefit at least 60 days before his or her Option Effective Date, that
       amount will be used in lieu of the estimate referred to above.  A Reduced
       Primary Social Security Benefit calculated using actual documentation
       will not be recalculated.


1.74   "Reemployed Retiree" means a Participant, other than a Terminated Vested
       Participant, who is reemployed by an Employer after his Initial
       Separation Date or an Additional Separation Date.


1.75   "Reemployed Terminated Vested Participant" means a Terminated Vested
       Participant who is reemployed by an Employer after his Initial Separation
       Date or an Additional Separation Date.


1.76   "Reemployment Commencement Date" means, with respect to an Eligible
       Employee who incurs a Severance from Service and is later reemployed by
       an Employer, the date upon which the Eligible Employee first performs an
       Hour of Service after his reemployment.

                                          23


1.77   "Retired Participant" means a former Participant, other than a Terminated
       Vested Participant, while alive on and after his Actual Separation Date.


1.78   "Sabbatical Vacation Pay" means, with respect to an Employee, the
       compensation received as remuneration for the weeks of accrued vacation
       accumulated pursuant to the Employer's applicable policy for the purpose
       of taking an extended vacation beyond the number of weeks of vacation to
       which the Employee would normally be entitled.


1.79   "Section 415 Compensation" means an Eligible Employee's earned income,
       wages, salaries, and fees for professional services, and other amounts
       received for personal services actually rendered in the course of
       employment with the Employer (including, but not limited to, commissions
       paid salesmen, compensation for services on the basis of a percentage of
       profits, commissions on insurance premiums, tips and bonuses) and, except
       as provided in the following sentence, excluding the following:
       (a) Employer contributions to a plan of deferred compensation that are
       not included in the Employee's gross income for the taxable year in which
       contributed or any distributions from a plan of deferred compensation;
       (b) amounts realized from the exercise of a nonqualified stock option, or
       when restricted stock (or property) held by the Employee either becomes
       freely transferable or is no longer subject to a substantial risk of
       forfeiture; and (c) amounts realized from the sale, exchange, or other
       disposition of stock acquired under a qualified stock option.
       Notwithstanding the foregoing, Section 415 Compensation will include any
       elective deferral as defined in Code paragraph 402(g)(3) and amounts
       contributed by an Employer pursuant to a salary reduction agreement that
       are excludable from the Employee's gross income under Code section 125 or
       457.


1.80   "Securities Exchange Act" means the Securities Exchange Act of 1934, as
       amended from time to time, and interpretive rulings and regulations.


1.81   "Service" means, with respect to an Eligible Employee, the period of time
       during which the employment relationship exists between the Eligible
       Employee and the Employer, the length of which is determined as follows:

                                          24


       (a)    Notwithstanding any other provision of the Plan to the contrary,
              any Eligible Employee who accrued "years of vesting service" (as
              defined in the Plan as of December 31, 1997) under the Plan will
              be credited with Service for the "years of vesting service"
              credited to him under the Plan before January 1, 1998.


       (b)    An Eligible Employee will be credited with Service for the period
              of time beginning with his Employment Commencement Date and ending
              on his Severance from Service Date.


       (c)    An Eligible Employee will be credited with Service for each Period
              of Credited Severance.


       (d)    An Eligible Employee will be credited with Service for any period
              of Service with an Affiliate after he has reached age 18, which
              will be determined as if he had been employed by the Employer
              during that period.


       (e)    Notwithstanding any other provision of the Plan to the contrary,
              an Eligible Employee who takes a leave of absence to act as
              Business Manager and/or Assistant Business Manager for Local
              Union 1347 of the International Brotherhood of Electrical Workers,
              AFL-CIO, will be credited with Service for the period of time
              during which he acts as Business Manager and/or Assistant Business
              Manager.  This Subsection will be effective only through the
              duration of the 1996-2001 collective bargaining agreement between
              Local Union 1347 and the Employer, unless it is extended by
              agreement of the parties or by operation of law.


       (f)    In determining an Eligible Employee's total Service for purposes
              of the Plan, all periods of Service that are credited to the
              Employee under Subsections (a) through (e) above will be
              aggregated.  In no event will an Employee receive credit more than
              once for the same period of Service.  For purposes of determining
              an Eligible Employee's total Service, the Eligible Employee will
              be credited with

                                          25


              one month of Service for each calendar month in which he is
              credited with at least one Hour of Service.  An Eligible Employee
              will be credited with one year of Service for each 12 months of
              Service with which he is credited pursuant to the preceding
              sentence.


1.82   "Service Watch Payments" mean, with respect to an Eligible Employee, the
       compensation received as a premium for serving on stand-by duty for the
       relevant period pursuant to the Employer's applicable policy.


1.83   "Severance from Service" means, with respect to an Employee:


       (a)    the date of termination of his employment relationship with his
              Employer by reason of a quit, resignation, discharge, retirement,
              death, or layoff of the Employee for an indefinite period of time
              made without any expectation on the part of the Employer at the
              time of layoff to recall the Employee, for employment with the
              Employer as an Employee within 12 months from the date of the
              commencement of the layoff; or


       (b)    the first anniversary of the first date of the Employee's Absence
              from Service, or, if later, the expiration of an Absence from
              Service.  Notwithstanding the preceding sentence, if an Employee
              has an Absence from Service of more than one year by reason of a
              maternity or paternity absence, the Employee's Severance from
              Service occurs on the second anniversary of that absence.  For
              purposes of this Subsection, an Absence from Service for maternity
              or paternity reasons means an absence (1) by reason of the
              pregnancy of the individual, (2) by reason of the birth of a child
              of that individual, (3) by reason of the placement of a child with
              the individual in connection with the adoption of the child by
              that individual, or (4) for purposes of caring for the child for a
              period beginning immediately following its birth or placement.

                                          26


       For purposes of this Subsection, the term "Employer" includes all
       Affiliates, and an Employee or former Employee will not be treated as
       having incurred a Severance from Service until the employment
       relationship between the Employee and all Employers and Affiliates is
       terminated.


1.84   "Severance from Service Date" means, with respect to each Employee, the
       date of his Severance from Service.


1.85   "Shift Premiums" means, with respect to an Eligible Employee, the
       compensation received as a premium for services performed for the
       relevant period for working a shift other than the Employer's regular day
       shift pursuant to the Employer's applicable policy.


1.86   "SIP" means The Cincinnati Gas & Electric Savings Incentive Plan.


1.87   "Social Security Act" means the federal Social Security Act, 42 U.S.C.
       Section 301, ET SEQ., as amended from time to time, and interpretive
       rulings and regulations.


1.88   "Social Security Retirement Age" means respectively (a) age 65 for a
       Participant born before January 1, 1938; (b) age 66 for a Participant
       born after December 31, 1937, but before January 1, 1955; and (c) age 67
       for a Participant born after December 31, 1954.


1.89   "Spouse" means, with respect to any Participant, the Participant's
       lawfully married spouse, if any, on the applicable date.  The Plan will
       not recognize common law marriages or similar arrangements unless
       required to do so by federal law.  A former Spouse will also be
       considered a Spouse to the extent provided under a Qualified Domestic
       Relations Order.


1.90   "Terminated Vested Participant" means a Participant who is entitled to
       benefits under the provisions of Section 5.3 (Severance from Service
       After Vesting).


1.91   "Trust Fund" means the trust established by the Employer to fund the
       Plan.

                                          27


1.92   "Trustee" means the person or entity designated by Cinergy to act as
       trustee of any trust forming a part of the Pension Fund.


1.93   "Vesting Requirement" means, with respect to each Participant, the
       requirements for the vesting of his accrued benefits under the Plan.


The uses of singular and masculine words are for practical purposes only and
will be deemed to include the plural and feminine, respectively, unless the
context plainly indicates a distinction.  Certain other definitions, as
required, appear in the following Articles of the Plan.


                                     ARTICLE 2

                               EFFECTIVE DATE OF PLAN

The original effective date of this Plan was December 31, 1946.  The effective
date of this Plan restatement is January 1, 1998, as to Cinergy, and will be
effective with respect to any other Employer as of the date that Employer elects
to participate in the Plan pursuant to Section 20.1 (Adoption of Plan).


This restatement applies only to Eligible Employees who are credited with at
least one Hour of Service on or after January 1, 1998.  This Plan will not
affect the rights of former Eligible Employees (and their Beneficiaries) who
retired, died, or otherwise terminated their employment with an Employer prior
to January 1, 1998.  The rights, if any, of those former Eligible Employees (and
their Beneficiaries), and the amounts of their benefits, if any, will be
governed by the provisions of the Plan as in effect prior to January 1, 1998.


                                          28


                                     ARTICLE 3

                           ELIGIBILITY AND PARTICIPATION


3.1    DATE OF PARTICIPATION

       Each Employee who is an Eligible Employee on January 1, 1998, and who was
       participating in the Plan as of December 31, 1997, will continue to be a
       Participant as of January 1, 1998.  Each other Eligible Employee will
       automatically become a Participant on the later of his Employment
       Commencement Date or the date he reaches age 18.  An Eligible Employee
       who becomes a Participant, subsequently incurs a Severance from Service,
       and is later reemployed by an Employer will again become a Participant on
       his Reemployment Commencement Date.


3.2    LEASED EMPLOYEES

       A Leased Employee will be excluded from participation in the Plan.
       However, if a Leased Employee is subsequently employed by an Employer as
       an Eligible Employee, his time as a Leased Employee of an Employer will
       be considered for purposes of determining eligibility under this Article
       and vesting under Article 5 (Severance from Service -- Vesting).


3.3    TRANSFERS OF EMPLOYMENT

       If a Participant is transferred from one Employer to another or from an
       Employer to an Affiliate, he will continue to participate in the Plan
       until an event occurs that would have terminated his participation had he
       continued in the service of an Employer, except that payments received by
       a Participant from any Affiliate that is not an Employer will not be
       treated as Earnings for purposes of determining the amount of retirement
       benefits to which the Participant will be entitled.  Any period of
       employment with an Affiliate that is not an Employer will be taken into
       account for purposes of determining when a Participant has satisfied the
       Vesting Requirement.

                                          29


       If a Participant is transferred from an Employer to an Affiliate that has
       not elected to participate in the Plan pursuant to Section 20.1 (Adoption
       of Plan), the Participant's accrued benefit under the Plan as of the date
       of the transfer will be preserved.  The Participant's service after the
       transfer will not be considered in determining the Participant's years of
       Participation, but will be considered in determining the Participant's
       years of Service.


3.4    TRANSFERS OF PARTICIPANTS AND PLAN ASSETS TO AND FROM THE CINERGY CORP.
       NON-UNION EMPLOYEES' PENSION PLAN AND CINERGY CORP. UNION EMPLOYEES'
       PENSION PLAN.


       (a)    If a Participant in the Plan remains an Employee but becomes
              ineligible to participate in the Plan, he will become a
              participant in the Cinergy Corp. Non-Union Employees' Pension Plan
              or the Cinergy Corp. Union Employees' Pension Plan, if he is an
              "eligible employee" as defined in either of those plans, as of the
              first day of the month during which his change in Employee status
              becomes effective.


       (b)    If a participant in the Cinergy Corp. Non-Union Employees' Pension
              Plan or the Cinergy Corp. Union Employees' Pension Plan remains an
              Employee but becomes  ineligible to participate in his current
              plan, he will become a Participant in the Plan, if he is an
              Eligible Employee, as of the first day of the month during which
              his change in Employee status becomes effective.


       (c)    A transfer of assets between the Plan and the Cinergy Corp.
              Non-Union Employees' Pension Plan or the Cinergy Corp. Union
              Employees' Pension Plan will follow the requirements of Code
              subsection 414(1).  The value of the benefits to be transferred
              will be based upon the Plan's actuarial valuation assumptions at
              the time of the transfer.  The actual transfer of assets will
              occur as soon as administratively practicable after the change in
              the Participant's Employee status.

                                          30


       (d)    A Participant who has earned years and/or partial years of
              "participation" under the Cinergy Corp. Non-Union Employees'
              Pension Plan or the Cinergy Corp. Union Employees' Pension Plan,
              and who then becomes a Participant in this Plan, will be credited
              under this Plan with his total years of "participation" earned
              under the Cinergy Corp. Non-Union Employees' Pension Plan or the
              Cinergy Corp. Union Employees' Pension Plan as if they were earned
              under this Plan.  A Participant will not be credited with more
              years of Participation than he would have earned if the total of
              all his years of Participation under the Plan and all his years of
              "participation" under the Cinergy Corp. Non-Union Employees'
              Pension Plan and the Cinergy Corp. Union Employees' Pension Plan
              had been earned solely as a Participant of this Plan.  The benefit
              paid to a Participant under this Plan will never be less than the
              benefit the Participant earned in the Cinergy Corp. Non-Union
              Employees' Pension Plan and/or the Cinergy Corp. Union Employees'
              Pension Plan prior to his change in Employee status.


                                     ARTICLE 4

                            AMOUNT OF LIFE-ONLY PENSION


4.1    NORMAL RETIREMENT PENSION FORMULA


       Except as otherwise expressly provided in this Article, a Participant who
       retires on or after his Normal Retirement Date will be entitled to a
       Nonforfeitable Annual Pension under this Plan equal to the sum of (a)
       plus (b), where (a) is equal to:


              (1)    1.1 percent of the Participant's Highest Average Earnings
                     plus


              (2)    0.5 percent of the amount by which his Highest Average
                     Earnings exceed his applicable Covered Compensation,
                     multiplied by the number of his years of Participation not
                     in excess of 35;

                                          31


       and (b) is equal to 1.4 percent of the Participant's Highest Average
       Earnings, multiplied by the number of his years of Participation in
       excess of 35.


4.2    NORMAL RETIREMENT BENEFITS FOR PRE-1998 PARTICIPANTS


       The normal retirement Nonforfeitable Annual Pension of a Participant who
       was a Participant in the Plan as of December 31, 1997, will be the
       greater of (a) or (b), where (a) is the Participant's Annual Pension
       calculated under Section 4.1 (Normal Retirement Pension Formula) and
       (b) is the Participant's annual accrued benefit calculated under the Plan
       as of December 31, 1997.  A Participant's annual accrued benefit computed
       under the Plan's Normal Retirement Formula as of December 31, 1997,
       equals 57 percent of the Participant's Pre-1998 Final Average
       Compensation reduced by one-half of his or her Primary Social Security
       Benefit.  If the Participant has less than 30 Pre-1998 Years of
       Accredited Service, the amount will be further reduced by 1/30 for each
       full year less than 30 years.  If the Participant has more than 30
       Pre-1998 Years of Accredited Service, the amount will be increased by
       $6.00 for each Pre-1998 Year of Accredited Service over 30 years.


4.3    GENERAL METHOD OF COMPUTING ANNUAL PENSION FOR RETIREMENT AT EARLY
       RETIREMENT DATE


       (a)    Subject to the following provisions of this Section, a Participant
              who retires on an Early Retirement Date, will be entitled to a
              Nonforfeitable Annual Pension computed under Section 4.1 (Normal
              Retirement Pension Formula).  The benefits will begin on the
              Employee's Normal Retirement Date, or, if the Employee so elects,
              at an earlier date on or after his Early Retirement Date.  If the
              Employee elects to have the benefit begin before his
              62nd birthday, the amount of the Employee's Nonforfeitable Annual
              Pension will be multiplied by the appropriate early payment factor
              as obtained from the following table:

                                          32




             EARLY              EARLY               EARLY
            PAYMENT            PAYMENT             PAYMENT
            PERIOD     EARLY    PERIOD     EARLY    PERIOD     EARLY
            ------    PAYMENT   ------    PAYMENT   ------    PAYMENT
           YR.  MO.    FACTOR  YR.  MO.    FACTOR  YR.  MO.    FACTOR
           ---  ---    ------  ---  ---    ------  ---  ---    ------
                                      
            0    0     1.0000   4    0     0.7333   8    0     0.5667
            0    1     0.9944   4    1     0.7278   8    1     0.5639
            0    2     0.9889   4    2     0.7222   8    2     0.5611
            0    3     0.9833   4    3     0.7167   8    3     0.5584
            0    4     0.9778   4    4     0.7111   8    4     0.5556
            0    5     0.9722   4    5     0.7056   8    5     0.5528
            0    6     0.9667   4    6     0.7000   8    6     0.5500
            0    7     0.9611   4    7     0.6944   8    7     0.5473
            0    8     0.9556   4    8     0.6889   8    8     0.5445
            0    9     0.9500   4    9     0.6833   8    9     0.5417
            0    10    0.9444   4    10    0.6778   8    10    0.5389
            0    11    0.9389   4    11    0.6722   8    11    0.5361
            1    0     0.9333   5    0     0.6667   9    0     0.5334
            1    1     0.9278   5    1     0.6639   9    1     0.5300
            1    2     0.9222   5    2     0.6611   9    2     0.5265
            1    3     0.9167   5    3     0.6584   9    3     0.5231
            1    4     0.9111   5    4     0.6556   9    4     0.5196
            1    5     0.9056   5    5     0.6528   9    5     0.5162
            1    6     0.9000   5    6     0.6500   9    6     0.5127
            1    7     0.8944   5    7     0.6473   9    7     0.5093
            1    8     0.8889   5    8     0.6445   9    8     0.5059
            1    9     0.8833   5    9     0.6417   9    9     0.5024
            1    10    0.8778   5    10    0.6389   9    10    0.4990
            1    11    0.8722   5    11    0.6361   9    11    0.4955
            2    0     0.8667   6    0     0.6334   10   0     0.4921
            2    1     0.8611   6    1     0.6306   10   1     0.4889
            2    2     0.8556   6    2     0.6278   10   2     0.4858
            2    3     0.8500   6    3     0.6250   10   3     0.4826
            2    4     0.8444   6    4     0.6223   10   4     0.4795
            2    5     0.8389   6    5     0.6195   10   5     0.4763
            2    6     0.8333   6    6     0.6167   10   6     0.4732
            2    7     0.8278   6    7     0.6139   10   7     0.4700
            2    8     0.8222   6    8     0.6111   10   8     0.4668
            2    9     0.8167   6    9     0.6084   10   9     0.4637
            2    10    0.8111   6    10    0.6056   10   10    0.4605
            2    11    0.8056   6    11    0.6028   10   11    0.4574
            3    0     0.8000   7    0     0.6000   11   0     0.4542
            3    1     0.7944   7    1     0.5973   11   1     0.4513
            3    2     0.7889   7    2     0.5945   11   2     0.4485
            3    3     0.7833   7    3     0.5917   11   3     0.4456
            3    4     0.7778   7    4     0.5889   11   4     0.4427
            3    5     0.7722   7    5     0.5861   11   5     0.4398
            3    6     0.7667   7    6     0.5834   11   6     0.4370
            3    7     0.7611   7    7     0.5806   11   7     0.4341
            3    8     0.7556   7    8     0.5778   11   8     0.4312
            3    9     0.7500   7    9     0.5750   11   9     0.4283
            3    10    0.7444   7    10    0.5723   11   10    0.4255
            3    11    0.7389   7    11    0.5695   11   11    0.4226
                                                    12   0     0.4197


                                          33


              In using the above table, the order of required steps is as
              follows:


              (1)    determine the Participant's "early payment period," which
                     is the number of whole calendar months by which the actual
                     commencement of his pension payments precedes the first day
                     of the calendar month coincident with or following his
                     62nd birthday;


              (2)    use the early payment period as determined in Step (1) to
                     identify the applicable early payment factor; and


              (3)    multiply the applicable early payment factor times the
                     amount of the Participant's Annual Pension determined under
                     Section 4.1 (Normal Retirement Pension Formula).


       (b)    Notwithstanding any other provision of this Section except
              Subsection (c), the early retirement Nonforfeitable Annual Pension
              payable to a Participant who was a participant in the Plan as of
              December 31, 1997, will be the greater of the amounts calculated
              under (a) and (b) of Section 4.2 (Normal Retirement Benefits for
              Pre-1998 Participants), after those amounts are reduced as
              follows:


              (1)    The Participant's Nonforfeitable Annual Pension calculated
                     under Section 4.1 (Normal Retirement Pension Formula) will
                     be reduced by multiplying the amount of the Participant's
                     Annual Pension by the early payment factor described in
                     Subsection (a).


              (2)    The Participant's annual accrued benefit calculated under
                     the Plan as of December 31, 1997, will be reduced by
                     multiplying the Participant's annual accrued benefit as of
                     December 31, 1997, by the product of (A) 5/12 of one
                     percent and (B) the number of whole calendar months by
                     which the actual commencement of the Participant's pension
                     payments

                                          34


                     precedes the first day of the calendar month coincident
                     with or following the Participant's 60th birthday.


       (c)    If, as of his applicable Severance from Service Date, a
              Participant has reached age 55, and the sum of his age (in whole
              years) attained as of that date and the number of his years of
              Service (in whole years) accumulated as of that date equals or
              exceeds 85, he will receive a Nonforfeitable Annual Pension
              computed under the appropriate early retirement Annual Pension
              formula described in this Section, but the amount of the
              Participant's pension will not be multiplied by the early payment
              factor that otherwise would be applicable.


       (d)    A Participant who is eligible to terminate employment voluntarily
              under the Redeployment Status Opportunity provisions of the
              Severance Opportunity Plan for Union Employees of Cinergy Corp.,
              as amended from time to time, is eligible to receive a
              Nonforfeitable Annual Pension computed under the appropriate early
              retirement Annual Pension formula described in this Section, but
              the amount of the Participant's pension will not be multiplied by
              the early payment factor that otherwise would be applicable,
              provided that:  (1) as of his applicable Severance from Service
              Date, the Participant has reached age 50, but not yet reached age
              55, (2) he elects under Article 8 (Payment of Pension) to defer
              receipt of his pension to at least age 55, and (3) the sum of his
              age (in whole years) attained as of the date that the receipt of
              the pension under the Plan begins pursuant to Paragraph (2) and
              his years of Service (in whole years) accumulated as of his
              Severance from Service Date equals or exceeds 85.


4.4    GENERAL METHOD OF COMPUTING ANNUAL PENSION FOR A TERMINATED VESTED
       PARTICIPANT


       (a)    Subject to the following provisions of this Section, the amount of
              Nonforfeitable Annual Pension payable to a former Participant who
              is described in Section 5.3 (Severance from Service After
              Vesting), and whose Actual Separation Date occurred on or before
              his Normal Retirement Date, will be computed under

                                          35


              Section 4.1 (Normal Retirement Pension Formula).  The benefits
              will begin on the Employee's Normal Retirement Date or, if the
              Employee so elects, at an earlier date on or after his Early
              Retirement Date.  If the Employee elects to have the benefits
              begin before his Normal Retirement Date, the amount of the
              Employee's Nonforfeitable Annual Pension will be reduced by five
              percent for each calendar year (or .4166 percent for each calendar
              month) by which the commencement of his pension payments precedes
              his Normal Retirement Date.


       (b)    Notwithstanding any other provision of this Section, the
              terminated vested Nonforfeitable Annual Pension payable to a
              Participant who was a Participant in the Plan as of December 31,
              1997, will be the greater of the amounts calculated under (a) or
              (b) of Section 4.2 (Normal Retirement Benefits for Pre-1998
              Participants), after each of those amounts is reduced by five
              percent for each calendar year (or .4166 percent for each calendar
              month) by which the commencement of the Participant's pension
              payments precedes his Normal Retirement Date.


4.5    MAXIMUM PENSION


       (a)    Each Participant whose Annual Pension as otherwise determined
              pursuant to the provisions of this Article and as modified by the
              applicable provisions of Section 7.1 (Normal Forms of Pensions)
              exceeds $1,000 multiplied by the Employee's years of Service with
              the Employer (not exceeding ten), or who has ever participated in
              a Qualified Defined Contribution Plan, will in no event be
              entitled to an Annual Pension that exceeds the lesser of:


              (1)    $90,000 (as adjusted for increases in the limitation
                     pursuant to Code subsection 415(d)); or


              (2)    100 percent of his highest average annual Section 415
                     Compensation from his Employer for any three consecutive
                     years of Service; provided, that if

                                          36


                     he has fewer than three years of Service, then 100 percent
                     of his highest average annual Section 415 Compensation from
                     his Employer for his total years of Service will be
                     construed as the limiting amount.


       However, if a Participant has fewer than ten years of Participation at
       his Normal Retirement Date or Early Retirement Date, whichever is
       applicable, then the dollar limitation of Paragraph (1) will be
       multiplied by a fraction, the numerator of which is the number of the
       Participant's years of Participation (including fractional years of
       Participation) and the denominator of which is ten.  However, the maximum
       benefit will never be reduced to less than 1/10th of the applicable
       limitation.


       (b)    If any benefit under the Plan begins before the Participant's
              Social Security Retirement Age, but on or after the Participant
              reaches age 62, the determination as to whether the $90,000 limit
              set forth in Subsection (a) has been satisfied will be made, in
              accordance with regulations prescribed by the Secretary, by
              reducing the limitation of Subsection (a).  The reduction under
              the preceding sentence will be made in the manner as the Secretary
              may prescribe that is consistent with the reduction for old-age
              insurance benefits commencing before the Social Security
              Retirement Age under the Social Security Act.  If any benefit
              under the Plan begins before the Participant reaches age 62, the
              determination as to whether the $90,000 limit set forth in
              Subsection (a) has been satisfied will be made, in accordance with
              regulations prescribed by the Secretary, by reducing the
              limitation of Subsection (a) so that the limitation (as reduced)
              equals an Annual Pension (beginning when the retirement income
              benefit begins) that is actuarially equivalent to the reduced
              $90,000 Annual Pension beginning at age 62 as determined under
              this Subsection.


       (c)    If any benefit under the Plan begins after the Participant's
              Social Security Retirement Age, the determination as to whether
              the $90,000 limitation set forth in Subsection (a) has been
              satisfied will be made, in accordance with regulations prescribed
              by the Secretary, by increasing, if necessary, the limitation of

                                          37


              Subsection (a) so that the limitation (as increased) equals an
              Annual Pension (beginning when the retirement income benefit
              begins) that is actuarially equivalent to a $90,000 Annual Pension
              beginning at the Social Security Retirement Age.


       (d)    In general, the maximum annual benefit means a benefit payable
              annually in the form of a single life annuity (without ancillary
              benefits).  If a Participant's pension under the Plan is payable
              in any form other than a single life annuity, the determination as
              to whether the limitations of this Section have been satisfied
              will be made by adjusting the benefit so that it is the actuarial
              equivalent of a single life annuity.  For purposes of this
              Section, any ancillary benefit not directly related to retirement
              income benefits, and that portion of any joint and survivor
              annuity that constitutes a Qualified Joint and Survivor Annuity
              under Subsection 7.1(b) (Normal Forms of Pension), will not be
              taken into account.


       (e)    For benefits commencing in Plan Years beginning on or after
              January 1, 1995, and except as provided in this Plan, the
              adjustments to the limitations under Subsections (b), (c), and (d)
              will be calculated as described in this Subsection.  For purposes
              of adjusting the limit for an Annual Pension commencing prior to
              age 62 under Subsection (b), the $90,000 limitation will be equal
              to the lesser of the equivalent $90,000 limitation that is
              computed using the interest rate and mortality table (or other
              tabular factor) specified in the Plan for equivalence for early
              retirement benefits, and the equivalent $90,000 limitation that is
              computed using a 5 percent interest rate assumption and the
              mortality table prescribed from time to time by the Secretary for
              this purpose.  For purposes of adjusting any form of optional
              benefit to a straight life annuity under Subsection (d), the
              actuarially equivalent life annuity will be equal to the greater
              of the annuity benefit that is computed using the interest rate
              and mortality table (or other tabular factor) specified in the
              Plan for adjusting benefits in the same form, and the annuity
              benefit that is computed using a 5 percent interest rate
              assumption and the mortality table prescribed from time to time by
              the Secretary for this purpose.  For

                                          38


              purposes of adjusting for any form of benefit subject to Code
              paragraph 417(e)(3), an interest rate assumption equal to the
              annual rate of interest on 30 year Treasury securities for
              November of the preceding Plan Year, as specified by the
              Commissioner of Internal Revenue, will be substituted for the 5
              percent interest rate assumption set forth in the preceding
              sentences.  For purposes of adjusting the limit under Subsection
              (c), the $90,000 limitation for an Annual Pension beginning after
              Social Security Retirement Age will be the lesser of the
              equivalent $90,000 limitation that is computed using the interest
              rate and mortality table (or other tabular factor) specified in
              the Plan for equivalence of delayed retirement benefits, and the
              eqivalent $90,000 limitation that is computed using a 5 percent
              interest rate assumption and the mortality table prescribed from
              time to time by the Secretary for this purpose.  Notwithstanding
              the preceding provisions of this Subsection, this Subsection will
              not apply to the accrued benefit of any Participant under the Plan
              as of December 31, 1997, after applying Code section 415 as in
              effect on December 7, 1994, for each possible Annuity Starting
              Date and each optional form of benefit under the Plan.


       (f)    Notwithstanding the foregoing, the maximum annual benefit payable
              under this Section will not be less than the actuarial equivalent
              of the Participant's single life annuity, accrued under the Plan,
              as of December 31, 1997, determined by using the Plan's actuarial
              assumptions as in effect on December 31, 1997.


       (g)    If for any particular Plan Year, a Participant is also
              participating in one or more Qualified Defined Contribution Plans
              maintained by his Employer, then the sum of the Participant's
              aggregate Defined Benefit Plan Fraction and the Participant's
              aggregate Defined Contribution Plan Fraction will not exceed 1.0.
              If the sum exceeds 1.0, then the Employer will reduce the
              Participant's benefits in this Plan so that the sum equals 1.0.
              The Participant's maximum Annual Pension will be determined under
              the provisions of this Article without regard to the $10,000
              minimum amount referred to in the first paragraph of this Section.
              This

                                          39


              Subsection will be repealed effective January 1, 2000, for any
              Participant who is credited with at least one Hour of Service on
              or after January 1, 2000.


                                     ARTICLE 5

                           SEVERANCE FROM SERVICE-VESTING


5.1    VESTING REQUIREMENT


       A Participant will satisfy the Vesting Requirement under the Plan upon
       his completion of five years of Service and then will have a
       Nonforfeitable right to his accrued benefit under the Plan.  A
       Participant who is an Employee on his Normal Retirement Date will be
       deemed to satisfy the Vesting Requirement as of that date if he has not
       already satisfied the Vesting Requirement under the Plan.
       Notwithstanding the preceding provisions of this Subsection, the
       Nonforfeitable percentage of each Participant's right to his accrued
       benefit derived from Employer contributions, because of a change to the
       vesting schedule, will be not less than the Participant's vested
       percentage, computed under the Plan as of the date immediately prior to
       the change, without regard to the change.  Moreover, each Participant
       whose Nonforfeitable percentage of his accrued benefit derived from
       Employer contributions is determined under an amended vesting schedule,
       and who has completed at least three years of Service as of the date of
       the amendment may elect, within a reasonable period after the adoption of
       the amended vesting schedule, to have the Nonforfeitable percentage of
       his accrued benefit derived from Employer contributions determined
       without regard to the amendment if his Nonforfeitable percentage under
       the Plan as amended is, at any time, less than the percentage determined
       without regard to the amendment.


5.2    SEVERANCE FROM SERVICE BEFORE VESTING


       If a Participant incurs a Severance from Service before he has satisfied
       the Vesting Requirement and is not reemployed by an Employer, he will
       have no further interest in, or right to, any benefits under the Plan,
       except as otherwise provided in Section 14.2

                                          40


       (Reemployment).  If upon a Severance from Service, a Participant is zero
       percent vested in his benefits under the Plan, the vested portion of his
       Plan benefits will be deemed distributed to him as of his Severance from
       Service Date.


5.3    SEVERANCE FROM SERVICE AFTER VESTING


       If a Participant incurs a Severance from Service before his
       50th birthday, but after satisfying the Vesting Requirement, he will be
       entitled to receive a pension commencing on his 50th birthday, if he is
       then living, or the Participant may elect to begin receiving his benefit
       at any time on or after his Early Retirement Date.  Subject to the
       provisions of Section 4.5 (Maximum Pension) and Article 7 (Forms of
       Pension), the amount of Nonforfeitable Annual Pension payable will be
       determined pursuant to the provisions of Section 4.4 (General Method of
       Computing Annual Pension for a Terminated Vested Participant).


                                     ARTICLE 6

                                  SPOUSE'S BENEFIT


6.1    DETERMINATION OF SPOUSE'S BENEFIT


       Upon the death of either (a) an Active Participant who has satisfied the
       Vesting Requirement (an "Eligible Active Participant"), or (b) a former
       Participant who has satisfied the Vesting Requirement, whose employment
       with his Employer terminated before the Participant reached age 50, and
       whose pension under the Plan had not yet begun on the date of his death
       (an "Eligible Former Participant"), the Participant's Spouse on the date
       of his death, if living on the date of the first installment payable, as
       set forth below, will be entitled to receive a pension under the Plan as
       a Spouse's Benefit.  The annual amount of the Spouse's Benefit will be
       determined as follows:


       (a)    If, at the date of his death, the Participant was either an
              Eligible Active Participant or an Eligible Former Participant who
              had reached age 50, the Spouse's benefit

                                          41


              will equal 100 percent of the Annual Pension that the Participant
              would have received, commencing on the first day of the calendar
              month coincident with or following the date of his death, if
              (1) he had retired as of the first day of the calendar month
              coincident with or following his death, thus establishing an Early
              Retirement Date, (2) the amount of Annual Pension commencing on
              the Early Retirement Date had been determined pursuant to the
              applicable provisions of Section 4.3 (General Method of Computing
              Annual Pension for Retirement at Early Retirement Date), and
              (3) his pension had been payable under the single-life option
              applicable to him pursuant to Subsection 7.1(a) (Normal Forms of
              Pension).  However, subject to Subsection (b), if the
              Participant's Spouse is more than eight years younger than the
              Participant, the Spouse will receive the actuarial equivalent of
              the benefit payable to a Spouse exactly eight years younger than
              the Participant, calculated by multiplying the Annual Pension that
              the Participant would have received times the appropriate early
              payment factor under Subsection 4.3(a) (General Method of
              Computing Annual Pension for Retirement at Early Retirement Date)
              and then multiplying the resulting product by the appropriate
              Spouse's benefit factor as obtained from the following table:



                                          42




         Participant's Age       Participant's Age at Death
    Less Spouse's Age (in years)  50-59             60 or older
    ----------------------------  -----             -----------
                                              
                    8 or less     1.00                1.00
                    9              .91                 .90
                   10              .82                 .81
                   11              .75                 .72
                   12              .68                 .65
                   13              .62                 .59
                   14              .56                 .54
                   15              .51                 .49
                   16              .47                 .44
                   17              .43                 .40
                   18              .39                 .36
                   19              .36                 .33
                   20              .33                 .30
                   21              .30                 .28
                   22              .28                 .26
                   23              .26                 .24
                   24              .24                 .22
                   25              .22                 .20



       (b)    Notwithstanding Subsection (a), if a Participant who had reached
              age 50 at the date of his death was a Participant in the Plan as
              of December 31, 1997, the Spouse's benefit attributable to the
              Participant's accrued benefit under the Plan as of December 31,
              1997, will be calculated by multiplying the Participant's annual
              accrued benefit under the Plan as of December 31, 1997, by the
              early payment factor described under Paragraph 4.3(b)(2) (General
              Method of Computing Annual Pension for Retirement at Early
              Retirement Date), and then multiplying the resulting product by
              the Pre-1998 RIP Spousal and Contingent Annuitant benefit factor
              as obtained from the table in Addendum A of the Plan.


       (c)    If, at the date of his death, the Participant was either an
              Eligible Active Participant or an Eligible Former Participant who,
              in either case, had not reached age 50, the Spouse's benefit will
              equal 100 percent of the Annual Pension that the Participant would
              have received commencing on the first day of the calendar month
              coincident with or following his 50th birthday, if (1) his
              Severance from Service

                                          43


              Date, in the case of an Eligible Active Participant, had been the
              date of his death, (2) the amount of Annual Pension (including the
              appropriate early payment reduction factor) had been determined
              pursuant to the applicable provisions of Section 4.4 (General
              Method of Computing Annual Pension for Terminated Vested
              Participant), (3) he had survived and elected to begin receiving
              pension payments on the first day of the calendar month coincident
              with or following his 50th birthday, and (4) his pension had been
              payable under the 100 percent option applicable to him pursuant to
              Subsection 7.1(b) (Normal Forms of Pension).


       (d)    Notwithstanding Subsection (c), if a Participant who had not
              attained age 50 at the date of his death was a Participant in the
              Plan as of December 31, 1997, the Spouse's benefit attributable to
              the Participant's accrued benefit under the Plan as of
              December 31, 1997, will be calculated by multiplying the
              Participant's annual accrued benefit under the Plan as of
              December 31, 1997, by the early payment factor described under
              Subsection 4.4(b) (General Method of Computing Annual Pension for
              Terminated Vested Participant) and then multiplying the resulting
              product by the Pre-1998 RIP Spousal and Contingent Annuitant
              benefit factor as obtained from the table in Addendum A of the
              Plan.


6.2    METHOD OF PAYMENT OF SPOUSE'S BENEFIT


       A Spouse's benefit will be payable in equal monthly installments, each
       equal to 1/12th of the Annual Pension as determined pursuant to this
       Article.  If at the date of his death the Eligible Active Participant or
       Eligible Former Participant had reached age 50, the first monthly
       installment of the Spouse's benefit will be payable to the Participant's
       Spouse on the first day of the calendar month coincident with or
       following the date of the Participant's death, if his Spouse is then
       living, unless the Spouse elects to defer payment until the date the
       Participant would have reached age 62.  If at the date of his death the
       Participant had not reached age 50, the first monthly installment will be
       payable to the Participant's Spouse on the first day of the calendar
       month coincident with or following the date the Participant would have
       reached age 50, had he survived until that date, if his

                                          44


       Spouse is then living, unless the Spouse elects to defer payment until
       the date the Participant would have reached age 65.  In either event,
       subsequent monthly installments will be payable on the first day of each
       month and will cease upon the payment of the installment due on the first
       day of the calendar month in which the Spouse dies.


                                     ARTICLE 7

                                  FORMS OF PENSION


7.1    NORMAL FORMS OF PENSION


       (a)    UNMARRIED PARTICIPANTS


              The normal form of pension payable under the Plan to a Participant
              who is not married on his Annuity Starting Date and who does not
              otherwise elect an optional form of pension under Section 7.2
              (Optional Forms of Retirement Income), will be a single-life
              income payable in equal monthly installments throughout the
              Participant's lifetime, ceasing with the installment due on the
              first day of the calendar month in which his death occurs.  Each
              monthly installment will equal 1/12th of the Annual Pension as
              determined pursuant to Article 4 (Amount of Life-Only Pension), or
              Article 5 (Severance from Service-Vesting), whichever is
              applicable to the Participant.


       (b)    MARRIED PARTICIPANTS


              The normal form of pension payable under the Plan to a Participant
              who is married on his Annuity Starting Date and who does not
              otherwise elect an optional form of pension under Section 7.2
              (Optional Forms of Retirement Income) is a "Qualified Joint and
              Survivor Annuity," which will be paid as follows:

                                          45


              (1)    To the Participant:


                     A reduced pension based on the 100 percent option in equal
                     monthly installments payable on his Annuity Starting Date
                     and on the first day of each calendar month thereafter.
                     The reduced amount payable to the Participant will be the
                     Actuarial Equivalent of the amount that would otherwise be
                     paid to the Participant if he were unmarried.  Payments
                     will cease with the installment due on the first day of the
                     calendar month in which the Participant dies.


                     If a Participant has an annual accrued benefit under the
                     Plan as of December 31, 1997, the reduced pension payable
                     to him will not be less than the Participant's annual
                     accrued benefit under the Plan as of December 31, 1997,
                     multiplied by the applicable Pre-1998 100 percent RIP
                     Spousal and Contingent Annuitant benefit factor from the
                     table in Addendum A to the Plan.


              (2)    To his Spouse:


                     A pension payable in equal monthly installments, each
                     monthly installment being equal to 100 percent of the
                     monthly installment paid to the Participant.  The first
                     installment will be payable on the first day of the
                     calendar month following the Participant's death, if the
                     Spouse is then living; subsequent installments are payable
                     on the first day of each calendar month, ceasing with the
                     installment due on the first day of the calendar month in
                     which the Spouse dies.  If the Participant's Spouse
                     predeceases the Participant after reduced pension payments
                     under this Subsection have begun, payments will be made to
                     the Participant after the Spouse's death in the form of an
                     unreduced single life annuity pursuant to Subsection (a) as
                     of the first day of the month after the Participant
                     notifies the Committee of the Spouse's death.

                                          46


                     If a Participant who is entitled to benefits under the
                     provisions of Section 4.3 (General Method of Computing
                     Annual Pension for Retirement at Early Retirement Date)
                     dies after his Actual Separation Date, but prior to the
                     commencement of pension payments, and if the Participant's
                     Actual Separation Date is on or after his 50th birthday,
                     under the normal form of pension applicable to him, his
                     Spouse will be entitled to receive, commencing on the first
                     day of the calendar month following the Participant's
                     death, if the Spouse is then living, a monthly pension,
                     with each monthly installment equal to the amount that
                     would have been payable to the Spouse following the
                     Participant's death pursuant to his election, or if no
                     election is made, then pursuant to the provisions of this
                     Paragraph (b)(2), if the Participant had begun receiving
                     pension benefits on the first day of the calendar month in
                     which the Participant died.


7.2    OPTIONAL FORMS OF RETIREMENT INCOME


       Subject to the following conditions, a Participant, by making a request
       to the Committee or its designee within the election period specified in
       this Section, may elect to receive, in lieu of the normal form of pension
       applicable to him under Section 7.1 (Normal Forms of Pension), one of the
       optional forms of pension specified under this Section (the "Contingent
       Pension Option").  Each election must be made by the Participant in a
       manner prescribed by the Committee or its designee.  The election of the
       Contingent Pension Option will take effect at a specified date, referred
       to as the "Option Effective Date."  The amount of pension payable under
       any optional form will be the Actuarial Equivalent of the pension to
       which the Participant would otherwise be entitled under the Plan.


       At least 30 days but no more than 90 days before a Participant's Annuity
       Starting Date, the Committee or its designee will provide the Participant
       whose normal form of pension applicable to him is described in
       Subsection 7.1(a) (Normal Forms of Pension) with a written explanation of
       (a) the terms and conditions of the normal form of pension benefits

                                          47


       applicable to him under Subsection 7.1(a) (Normal Forms of Pension);
       (b) the Participant's ability to elect to receive, in lieu of the normal
       form of pension applicable to him under Subsection 7.1(a) (Normal Forms
       of Pension), an optional form of pension under this Section; (c) the
       relative financial effect of the election on his pension benefits;
       (d) the availability of additional information describing the particular
       financial effect of the election upon his pension benefit; and (e) the
       procedures the Participants must follow to obtain the additional
       information.


       The Committee or its designee will provide each Participant whose normal
       form of pension is a Qualified Joint and Survivor Annuity, at least
       30 days but no more than 90 days before the Participant's Annuity
       Starting Date, a written explanation of (a) the terms and conditions of
       the Qualified Joint and Survivor Annuity, (b) the Participant's right to
       make and the effect of an election to waive a Qualified Joint and
       Survivor Annuity, (c) the rights of a Participant's Spouse with respect
       to the selection of benefit forms, and (d) the right to make and the
       effect of a revocation of a previous election to waive the Qualified
       Joint and Survivor Annuity.  A Participant may elect to waive any
       requirement that the Applicable Election Period extend at least 30 days
       after the Committee provides the Participant with the written
       explanations described in this Section, if the distribution begins more
       than seven days after the applicable written explanation is provided.  If
       the Participant is married, the Participant's Spouse must consent to the
       waiver in writing before a notary public or a Plan representative.


       To be effective, an election to waive the Qualified Joint and Survivor
       Annuity must be made in writing during the 90 day period ending on the
       Annuity Starting Date and, if the Participant is married, it must be
       consented to by the Participant's Spouse.  The election must designate a
       Beneficiary (or a form of benefits) that may not be changed (except back
       to a Qualified Joint and Survivor Annuity) without the Spouse's consent,
       unless the Spouse's original consent expressly permits designations by
       the Participant without any requirements of further consent by the
       Spouse.  The Spouse's consent must be given in writing during the 90 day
       period ending on the Annuity Starting Date, must acknowledge the effect
       of the election and the consent, and must be witnessed by a Plan

                                          48


       representative or notary public.  If the Participant establishes to the
       satisfaction of a Plan representative that the Spouse's written consent
       cannot be obtained because there is no Spouse or the Spouse cannot be
       located, the Spouse's consent will be deemed to have been given.  If a
       Participant is legally separated from his Spouse or has been abandoned by
       his Spouse (within the meaning of local law) and the Participant has a
       court order to such effect, the Spouse's consent will not be required
       unless a Qualified Domestic Relations Order provides otherwise.  Any
       Spousal consent will be valid only with respect to the Spouse who signs
       the consent, or in the event of a deemed consent, the designated Spouse.
       If a Participant's Spouse is legally incompetent to give consent, the
       Spouse's legal guardian (even if the guardian is the Participant) may
       give consent.  A Participant may revoke a prior effective election at any
       time prior to the receipt of benefits.


       (a)    SINGLE-LIFE OPTION


              A married Participant whose normal form of pension is a Qualified
              Joint and Survivor Annuity may elect, in lieu of all payments
              otherwise payable, a single-life pension that provides payments to
              the Participant in equal monthly installments throughout his
              lifetime, ceasing with the installment due on the first day of the
              calendar month in which the Participant dies.  Each monthly
              installment will be equal to 1/12th of the Annual Pension as
              determined pursuant to Article 4 (Amount of Life-Only Pension),
              Article 5 (Severance from Service-Vesting), or Article 6 (Spouse's
              Benefit), whichever is applicable.


       (b)    CONTINGENT PENSION OPTION


              A Participant may elect, in lieu of all payments otherwise payable
              on and after the Option Effective Date, the Contingent Pension
              Option providing payments as follows:

                                          49


              (1)    To the Participant:


                     A reduced pension beginning on the Option Effective Date,
                     with subsequent monthly payments payable on the first day
                     of each subsequent calendar month throughout his remaining
                     lifetime, terminating with the payment due on the first day
                     of the calendar month in which he dies.  The reduced amount
                     payable to the Participant will be determined in accordance
                     with the Participant's choice of the 100 percent, 662/3
                     percent, or 50 percent option and will be the Actuarial
                     Equivalent of the amount that would otherwise be paid to
                     the Participant under the single-life annuity option
                     applicable to him pursuant to Subsection 7.2(a) (Optional
                     Forms of Retirement Income).  An option cannot be elected,
                     modified, or rescinded after the Option Effective Date.


                     If a Participant has an annual accrued benefit under the
                     Plan as of December 31, 1997, the reduced pension payable
                     to him will not be less than the Participant's annual
                     accrued benefit under the Plan as of December 31, 1997,
                     multiplied by (A) for the 100 percent option, the
                     applicable Pre-1998 100 percent RIP Spousal and Contingent
                     Annuitant Benefit factor from the table in Addendum A to
                     the Plan, or (B) for the 50 percent option, the applicable
                     Pre-1998 RIP 50 percent Contingent Annuitant Benefit factor
                     from the table in Addendum B to the Plan.


              (2)    To the Contingent Annuitant designated by the Participant
                     at the time he elects this option:


                     A contingent pension beginning on the first day of the
                     calendar month following the calendar month in which the
                     Participant's death occurs if the Participant dies on or
                     after the Option Effective Date, and if the Contingent
                     Annuitant is then living, with subsequent monthly payments
                     payable on the first day of each subsequent calendar month
                     throughout the

                                          50


                     Contingent Annuitant's remaining lifetime, terminating with
                     the monthly payment due on the first day of the calendar
                     month in which the Contingent Annuitant dies.  However, if
                     the Participant had elected to defer his pension payments,
                     the Contingent Annuitant may elect, at any time prior to
                     the date contingent pension payments actually begin, to
                     have the payments begin after the Participant's death on
                     the first day of any calendar month coincident with or
                     prior to the date the Participant had elected to start
                     receiving his pension payments.


                     The monthly amount payable to the Contingent Annuitant will
                     be a specified percentage of the reduced pension payable
                     under this option to the Participant, as specified by the
                     Participant.  This percentage will be either 100 percent,
                     662/3 percent, or 50 percent.  Notwithstanding the
                     foregoing, if the Contingent Annuitant is other than the
                     Participant's Spouse, the Contingent Pension Option may be
                     elected only if the requirements of 26 C.F.R. Section
                     1.401(a)(9)-2 are satisfied.


              An option will not become effective, and payments will be made as
              otherwise provided in the Plan as if this option had never been
              elected, if:  (a) the Participant is not living on the Option
              Effective Date, (b) the Participant does not, within 90 days after
              his election, and not later than the Option Effective Date,
              furnish evidence, satisfactory to the Committee, of the age of his
              Contingent Annuitant, or (c) the Participant elects, prior to the
              Option Effective Date, to cancel the option.  If the Participant's
              Contingent Annuitant predeceases the Participant after the
              contingent pension payments have begun, the option will be
              canceled and no longer effective, and payments will be made to the
              Participant in the form of an unreduced single-life annuity
              applicable to him pursuant to Subsection 7.2(a) (Optional Forms of
              Retirement Income) as of the first day of the month after the
              Participant notifies the Committee of the Contingent Annuitant's
              death.

                                          51


       (c)    LIFE WITH TEN YEAR CERTAIN OPTION


              A Participant may, in lieu of all payments otherwise payable on
              and after the Option Effective Date, elect the Life with Ten Year
              Certain Option providing payments as follows:


              (1)    To the Participant:


                     A reduced pension beginning on the Option Effective Date
                     with subsequent monthly payments payable on the first day
                     of each calendar month thereafter for ten years or
                     throughout his remaining lifetime, whichever is longer,
                     terminating with the payment due on the first day of the
                     calendar month after the end of ten years or in which the
                     Participant dies, whichever is applicable.


                     If the Participant elects the Life with Ten Year Certain
                     Option, the amount of the Participant's Nonforfeitable
                     annual pension will be determined by multiplying his Annual
                     Pension by the appropriate Life with Ten Year Certain
                     Factor as obtained from the following table:

                                          52




                    LIFE WITH TEN YEAR CERTAIN FACTORS
                    ----------------------------------
                   Age    Factor    Age           Factor
                   ---    ------    ---           ------
                                         
                    50    .9869      70            .9065

                    51    .9855      71            .8977

                    52    .9839      72            .8883

                    53    .9823      73            .8780

                    54    .9803      74            .8670

                    55    .9783      75            .8553

                    56    .9760      76            .8429

                    57    .9734      77            .8299

                    58    .9706      78            .8163

                    59    .9674      79            .8021

                    60    .9639      80            .7875

                    61    .9601      81            .7723

                    62    .9558      82            .7569

                    63    .9511      83            .7413

                    64    .9461      84            .7253

                    65    .9407      85            .7090

                    66    .9347      86            .6925

                    67    .9285      87            .6758

                    68    .9217      88            .6591

                    69    .9145      89            .6424

                                     90            .6259



              (2)    To the Beneficiary designated by the Participant at the
                     time he elects this option:


                     If the Participant dies prior to the end of ten years from
                     the date of his initial pension payment, a contingent
                     pension payable on the first day of the calendar month
                     following the calendar month in which the Participant dies
                     if the Participant's death is on or after the Option
                     Effective Date and if the Beneficiary is then living, with
                     subsequent monthly payments being payable on the first day
                     of each calendar month for the balance of ten years from
                     the date of the Participant's Option Effective Date.

                                          53


              d)     LIFE ANNUITY LEVEL INCOME OPTION


              A Participant who retires prior to reaching age 62 may elect, in
              lieu of all payments otherwise payable on and after the Option
              Effective Date, the Life Annuity Level Income Option, which
              provides payments to the Participant that are adjusted for the
              months before and after the Participant is eligible to receive
              benefits under the Social Security Act at age 62.


              The Participant will receive a reduced pension on the Option
              Effective Date, with subsequent monthly payments payable on the
              first day of each calendar month thereafter for his remaining
              lifetime, terminating with the payment due on the first day of the
              calendar month in which his death occurs.  The reduced pension the
              Participant receives will be calculated as follows:


              (1)    Subject to Paragraph (5), the Participant's Annual Pension
                     will be determined under Article 4 (Amount of Life-Only
                     Pension), Article 5 (Severance From Service-Vesting), or
                     Article 6 (Spouse's Benefit), whichever is applicable.


              (2)    Subject to Paragraph (5), the Participant's Reduced Primary
                     Social Security Benefit will be multiplied by the
                     appropriate Level Income Option factor from the table in
                     Addendum C to the Plan.


              (3)    The sum of the amounts determined under Paragraphs (1) and
                     (2) will equal the Level Income Option benefit payable to
                     the Participant prior to age 62, which is the first date he
                     is eligible to begin receiving Social Security Act
                     benefits.


              (4)    The Level Income Option benefit payable to the Participant
                     after he reaches age 62 will equal the amount determined in
                     Paragraph (3), minus the Participant's Reduced Primary
                     Social Security Benefit.

                                          54


              (5)    If a Participant has an annual accrued benefit under the
                     Plan as of December 31, 1997, the Level Income Option
                     benefit payable to that Participant will not be less than
                     the sum of (A) and (B), where (A) equals the Participant's
                     annual accrued benefit under the Plan as of December 31,
                     1997, and (B) equals the Participant's Reduced Primary
                     Social Security Benefit multiplied by the appropriate
                     Pre-1998 RIP Level Income Option factor from the table in
                     Addendum D to the Plan.


              e)     100 PERCENT CONTINGENT ANNUITANT LEVEL INCOME OPTION


              A Participant who retires prior to reaching age 62 may, in lieu of
              all payments otherwise payable on after the Option Effective Date,
              elect the 100 Percent Contingent Annuitant Level Income Option,
              which provides payments as follows:


                     (1)    To the Participant:


                     A reduced pension that is adjusted for the months before
                     and after the Participant is eligible to receive benefits
                     under the Social Security Act at age 62.  The Participant
                     will receive a reduced pension on the Option Effective
                     Date, with subsequent monthly payments payable on the first
                     day of the calendar month thereafter for his remaining
                     lifetime, terminating with the payment due on the first day
                     of the calendar month in which the Participant dies.


                     The reduced pension the Participant receives under this
                     option will be calculated as follows:


                     (A)    Subject to Subparagraph (F), the Participant's
                            Annual Pension will be determined under Article 4
                            (Amount of Life-Only Pension), Article 5 (Severance
                            From Service-Vesting), or Article 6 (Spouse's
                            Benefit), whichever is applicable.

                                          55


                     (B)    The Participant's Annual Pension will be converted
                            to a reduced pension based on the 100 percent
                            Contingent Pension Option under Subsection 7.2(b)
                            (Optional Forms of Retirement Income).


                     (C)    Subject to Subparagraph (F), the Participant's
                            Reduced Primary Social Security Benefit will be
                            multiplied by the appropriate Level Income Option
                            factor from the table in Addendum C to the Plan.


                     (D)    The sum of the amounts determined under
                            Subparagraphs (B) and (C) will equal the Level
                            Income Option benefit payable to the Participant
                            prior to age 62, which is the first date he is
                            eligible to begin receiving Social Security Act
                            benefits.


                     (E)    The Level Income Option benefit payable to the
                            Participant after he attains age 62 will equal the
                            amount determined in Subparagraph (D), minus the
                            Participant's Reduced Primary Social Security
                            Benefit.


                     (F)    If a Participant has an annual accrued benefit under
                            the Plan as of December 31, 1997, the Level Income
                            Option benefit payable to that Participant will not
                            be less than the sum of (i) and (ii), where
                            (i) equals the Participant's annual accrued benefit
                            under the Plan as of December 31, 1997, converted to
                            a reduced pension based on the 100 percent
                            Contingent Annuitant Pension Option under
                            Subsection 7.2(b) (Optional Forms of Retirement
                            Income), and (ii) equals the Participant's Reduced
                            Primary Social Security Benefit multiplied by the
                            appropriate Pre-1998 RIP Level Income Option factor
                            from the table in Addendum D to the Plan.

                                          56


              (2)    To the Contingent Annuitant:


                     A contingent pension beginning on the first day of the
                     calendar month following the calendar month in which the
                     Participant dies if the Participant dies on or after the
                     Option Effective Date, and if the Contingent Annuitant is
                     then living; with subsequent monthly payments payable on
                     the first day of each subsequent calendar month throughout
                     the Contingent Annuitant's remaining lifetime, terminating
                     with the monthly payment due on the first day of the
                     calendar month in which the Contingent Annuitant dies.
                     However, if the Participant had elected to defer his
                     pension payments, the Contingent Annuitant may elect at any
                     time prior to the date contingent pension payments actually
                     begin, to have the payments begin after the Participant's
                     death on the first day of any calendar month coincident
                     with or prior to the date the Participant had elected to
                     start receiving payments.


                     The monthly amount payable to the Contingent Annuitant will
                     equal 100 percent of the reduced pension that would have
                     been payable under this option to the Participant.


              An option will not become effective, and payments will be made as
              otherwise provided in the Plan as if this option had never been
              elected, if:  (a) the Participant is not living on the Option
              Effective Date, (b) the Participant does not, within 90 days after
              his election, but not later than the Option Effective Date,
              furnish evidence, satisfactory to the Committee, of the age of his
              Contingent Annuitant, or (c) the Participant elects, prior to the
              Option Effective Date, to cancel the option.  If the Participant's
              Contingent Annuitant predeceases the Participant after the
              contingent pension payments have begun, the option will be
              canceled and no longer effective, and payments will be made to the
              Participant in the form of a reduced single-life annuity level
              income option applicable to him pursuant to Subsection 7.2(d)
              (Optional Forms of Retirement Income) as of the first day of

                                          57


              the month after the Participant notifies the Committee of the
              Contingent Annuitant's death.  An option cannot be elected,
              modified, or rescinded after the Option Effective Date.


                                     ARTICLE 8

                                 PAYMENT OF PENSION


8.1    TIMING OF PAYMENT


       This Section is subject to the provisions of Section 8.6 (Required
       Payment of Benefits).


       A Participant who ceases to be an Employee as of his Normal Retirement
       Date will begin receiving any pension payable to him under the Plan as of
       his Normal Retirement Date.  A Participant who continues as an Employee
       after his Normal Retirement Date will begin receiving the pension payable
       to him under the Plan as of the first day of the calendar month
       coincident with or following his Severance from Service.


       A Participant who ceases to be an Employee as of an Early Retirement Date
       will begin receiving his pension at his Normal Retirement Date unless he
       elects to begin receiving his pension on either his Early Retirement Date
       or the first day of a calendar month between his Early Retirement Date
       and his Normal Retirement Date (the "Deferred Pension Payment Date");
       provided he has made the required election, in a manner prescribed by the
       Committee, prior to the date he wants his pension to begin.


8.2    METHOD OF PAYMENT


       Unless specified elsewhere in the Plan, all pension payments under the
       Plan will normally be payable in equal monthly installments, with each
       monthly installment equal to 1/12th of the annual amount payable.
       Pension payments will be (a) made by check to the order of the
       Participant, his Spouse, his Beneficiary, or his Contingent Annuitant, as
       applicable, and mailed to that person's address as it appears on the
       Employer's records,

                                          58


       or (b) deposited directly into an account of the Participant, his Spouse,
       his Beneficiary, or his Contingent Annuitant, as applicable, maintained
       by the recipient at a bank, savings and loan, or other financial
       institution, as directed by the recipient.


8.3    SMALL BENEFITS


       Notwithstanding the provisions of Sections 6.2 (Method of Payment of
       Spouse's Benefit) and 7.2 (Optional Forms of Retirement Income), where
       the Actuarial Equivalent present value of a Participant's Nonforfeitable
       pension or Spouse's benefit under Section 6.1 (Determination of Spouse's
       Benefit) does not exceed $5,000, the Committee or its designee will pay
       the Nonforfeitable pension or Spouse's benefit (if applicable) in a
       single-sum cash payment equal to the Actuarial Equivalent of the pension
       or Spouse's benefit otherwise payable.


8.4.   FACILITY OF PAYMENT


       If any benefit under the Plan is payable to a person whom the Committee
       knows is a minor or otherwise under legal incapacity, the Committee or
       its designee may have the payment made to the legal guardian of that
       person or to the person or organization as a court of competent
       jurisdiction may direct.  To the extent permitted by law, any payment
       under this Section will be a complete discharge of any liability under
       the Plan to that person.


8.5    BENEFITS FOR LATE RETIREES, REEMPLOYED RETIREES AND REEMPLOYED TERMINATED
       VESTED PARTICIPANTS


       (a)    LATE RETIREES


              A Participant may postpone his retirement and continue his
              employment with an Employer after his Normal Retirement Date.  If
              a Participant continues employment after his Normal Retirement
              Date, he will continue to accrue years of

                                          59


              Service and years of Participation during this time period up to
              the date of his actual retirement.  The Participant's benefit will
              be calculated under Article 4 (Amount of Life-Only Pension),
              Article 5 (Severance From Service-Vesting), or Article 6 (Spouse's
              Benefit), whichever is applicable, as of his Severance from
              Service Date.


       (b)    SUSPENSION OF RETIREMENT BENEFIT NOTICE FOR PARTICIPANT WHO
              CONTINUES EMPLOYMENT AFTER HIS NORMAL RETIREMENT DATE


              When a Participant continues in employment with an Employer beyond
              his Normal Retirement Date, benefits will not begin during that
              continued period of employment unless required under Section 8.6
              (Required Payment of Benefits).  The Participant will be sent a
              notification described in Section  2530.203-3(b)(4) of the
              Department of Labor regulations, provided that the suspension of
              benefits notice is limited to periods of service within the
              context of Section  2530.203-3(c) of the Department of Labor
              regulations.


       (c)    REEMPLOYED RETIREES AND REEMPLOYED VESTED TERMINATED PARTICIPANTS


              A Reemployed Retiree or Reemployed Vested Terminated Participant
              who resumes employment will continue to receive any pension
              benefit payments under the Plan to which he is entitled, and will
              begin to receive any pension benefit payments under the Plan, as
              if he were not reemployed.  When a Reemployed Retiree or
              Reemployed Terminated Vested Participant again incurs a Severance
              from Service, his Annual Pension will, subject to all of the
              provisions of the Plan, be recalculated by aggregating his years
              of Participation and by considering his Earnings during his period
              of reemployment; provided, however, that the Participant's
              benefits as recalculated will not be less than the Actuarial
              Equivalent of his Annual Pension prior to his reemployment.  The
              Participant's recalculated Annual Pension will be reduced by the
              Actuarial Equivalent of the pension benefits already paid to the
              Participant.  Any pension benefit payable to a Spouse

                                          60


              or Contingent Annuitant will also be based on the Participant's
              pension benefit, as so recalculated and reduced.


       (d)    QUESTIONS CONCERNING EFFECT ON REEMPLOYMENT


              The Plan's benefit claims procedures may be used by an individual
              who has questions concerning the effect of reemployment by his
              Employer upon his pension benefit payments.


       (e)    ADDITIONAL RULES AND PROCEDURES


              The Committee is authorized to develop more fully the provisions
              of this Section by establishing, from time to time, various rules
              and procedures consistent with ERISA, the Code, and the Plan.


8.6    REQUIRED PAYMENT OF BENEFITS


       This Section has been included in the Plan to comply with the limitations
       imposed by Code paragraphs 401(a)(9) and 401(a)(14), and it will not be
       construed as providing for a form of benefit not otherwise provided under
       the Plan.  Notwithstanding any provision of this Plan to the contrary,
       any distribution under the Plan will be made in accordance with
       regulations under Code paragraph 401(a)(9), including proposed federal
       income tax regulation 1.401(a)(9)-2, and will comply with the following
       rules:


       (a)    Unless a Participant elects otherwise, the payment of his benefits
              under the Plan must begin not later than the 60th day after the
              end of the Plan Year in which occurs the latest of:  (1) the
              Participant's 65th birthday; (2) the 10th anniversary of the Plan
              Year in which the Participant began participation in the Plan; or
              (3) termination of the Participant's employment with the Employer.

                                          61


       (b)    For purposes of this Article, "required beginning date" means
              (1) with respect to a Participant who is not a 5 percent owner as
              described in Code section 416 and who did not reach age 70 1/2
              before January 1, 1997, April 1 of the calendar year following the
              later of (A) the calendar year in which the Participant reaches
              age 70 1/2, or (B) the calendar year in which the Participant
              retires; or (2) with respect to a Participant who is a 5 percent
              owner as described in Code section 416, or any Participant who
              reached age 70 1/2 before January 1, 1997, April 1 of the calendar
              year following the calendar year in which the Participant reaches
              age 70 1/2.  The Plan will provide an actuarial increase to a
              Participant's interest in the Plan for the period beginning on the
              April 1 of the calendar year following the calendar year in which
              the Participant reaches age 70 1/2 and ending on the date on which
              benefits begin after the Participant's retirement in an amount
              sufficient to satisfy Code paragraph 401(a)(9).  The benefits
              payable to the Participant at the end of the period described in
              the preceding sentence will be no less than the Actuarial
              Equivalent of the benefit that would have been payable to the
              Participant as of the April 1 of the calendar year following the
              calendar year in which the Participant reached 70 1/2.


       (c)    Notwithstanding any other provision of this Plan, the entire
              interest of each Participant will be distributed either:  (1) in a
              lump sum payment not later than the required beginning date, or
              (2) in a series of payments beginning not later than the required
              beginning date over the life of the Participant or over the lives
              of the Participant and the designated Beneficiary (or over a
              period not extending beyond the life expectancy of the Participant
              or the life expectancy of the Participant and a designated
              Beneficiary).  If the Participant's interest is to be paid in the
              form of annuity distributions under the Plan, payments under the
              annuity will satisfy the following requirements:


              (1)    The annuity distributions must be paid in periodic payments
                     made at intervals not longer than one year.

                                          62


              (2)    For purposes of computing the distribution period, life
                     expectancies or joint and last survivor expectancies will
                     not be recalculated.


              (3)    Once payments have begun, the distribution period may not
                     be lengthened even if that period would be shorter than the
                     permitted maximum period.


              (4)    Payments must either be non-increasing or increase only as
                     follows:


                     (A)    with any percentage increase in a specified and
                            generally recognized cost-of-living index;


                     (B)    to the extent of the reduction to the amount of the
                            Participant's payments to provide for a survivor
                            benefit upon death, but only if the Beneficiary or
                            Contingent Annuitant whose life was being used to
                            determine the distribution period dies and the
                            payments continue otherwise over the life of the
                            Participant;


                     (C)    to provide cash refunds of employee contributions
                            upon the Participant's death; or


                     (D)    because of an increase in benefits under the Plan.


              (5)    If the annuity is a life annuity (or a life annuity with a
                     period certain not exceeding 20 years), the amount that
                     must be distributed on or before the Participant's required
                     beginning date (or, in the case of distributions after the
                     death of the Participant, the date distributions are
                     required to begin after the Participant's death) will be
                     the payment that is required for one payment interval.  The
                     second payment need not be made until the end of the next
                     payment interval even if that payment interval ends in the
                     next calendar year.  Payment intervals are the periods for
                     which payments are received, e.g., bi-monthly, monthly,
                     semi-annually or annually.  If the

                                          63


                     annuity is a period certain annuity without a life
                     contingency (or is a life annuity with a period exceeding
                     20 years), periodic payments for each distribution calendar
                     year will be combined and treated as an annual amount.  The
                     amount that must be distributed by the Participant's
                     required beginning date (or, in the case of distributions
                     after the death of the Participant, the date distributions
                     are required to begin after the Participant's death) is the
                     annual amount for the first distribution calendar year.
                     The annual amount for other distribution calendar years,
                     including the annual amount for the calendar year in which
                     the Participant's required beginning date (or the date
                     distributions are required to begin after the Participant's
                     death) occurs, must be distributed on or before December 31
                     of the calendar year for which the distribution is
                     required.


       (d)    If (1) the distribution of a Participant's interest has begun in
              accordance with Subsection (c), and (2) the Participant dies
              before his entire interest has been distributed to him, the
              remaining portion of his interest will be distributed at least as
              rapidly as under the method of distribution being used under
              Subsection (c) as of the date of his death.


       (e)    Except as provided in Subsection (f), if a Participant dies before
              the distribution of his interest has begun in accordance with
              Subsection (c), the Participant's entire interest will be
              distributed within five years after his death.


       (f)    For purposes of Subsection (c), any portion of a distribution that
              is payable to (or for the benefit of) a designated Beneficiary
              will be treated as completely distributed on the date on which
              distribution began if:


              (1)    that portion is to be distributed (in accordance with
                     regulations prescribed by the Secretary) over the life of
                     the designated Beneficiary (or over a period not extending
                     beyond the life expectancy of the Beneficiary), and

                                          64


              (2)    distributions begin by the latest of (A) one year after the
                     date of the Participant's death, (B) any later date that
                     the Secretary may establish by regulations, or (C) if the
                     Beneficiary is the Participant's surviving Spouse, the date
                     on which the Participant would have attained age 70-1/2.


       (g)    If the designated Beneficiary is the Participant's surviving
              Spouse, and if the surviving Spouse dies before the distributions
              to the Spouse begin, Subsections (c), (e), and (f) will be applied
              as if the surviving Spouse were the Participant.


       (h)    For purposes of Subsection (f), payment will be calculated by use
              of the expected return multiples specified in Tables V and VI of
              26 C.F.R. Section 1.72-9.  The life expectancy of a designated
              Beneficiary will be calculated at the time payment first commences
              without further recalculation.


       (i)    For purposes of Subsections (c), (d), (e), and (f), if any amounts
              payable to a child of the Participant becomes payable to the
              Participant's surviving Spouse and the child reaches the age of
              majority, that amount will be treated as if it had been paid to
              the surviving Spouse.


       (j)    Unless paid to the surviving Spouse under a Qualified Joint and
              Survivor Annuity, the method of distribution selected must assure
              that at least 50 percent of the present value of the amount
              available for distribution is paid within the Participant's life
              expectancy.


       (k)    If a Participant reaches age 70 1/2 on or after January 1, 1997,
              but before January 1, 1999, the Plan will deem the Participant's
              "required beginning date" to be April 1 of the calendar year
              following the calendar year in which the Participant reaches age
              70 1/2 unless the Participant elects, with his Spouse's consent,
              to defer commencement of his Plan benefits until a date no later
              than April 1 of the calendar year following the calendar year in
              which the Participant retires.

                                          65


8.7    DIRECT ROLLOVERS OF ELIGIBLE DISTRIBUTIONS


       Notwithstanding any provision of the Plan to the contrary that would
       otherwise limit a Distributee's election under this Section, a
       Distributee may elect, at the time and in the manner prescribed by the
       Committee, to have any portion of an Eligible Rollover Distribution paid
       directly to an Eligible Retirement Plan specified by the Distributee in a
       Direct Rollover.


                                     ARTICLE 9

                          RETIREE MEDICAL/DENTAL BENEFITS


9.1    PURPOSE


       This Article provides for the payment of certain Medical/Dental Benefits
       to Eligible Retirees and to their Dependents under the Plan.  The
       Medical/Dental Benefits described in this Article are intended to meet
       the requirements of Code subsection 401(h) and its interpretive
       regulations.


9.2    ELIGIBILITY


       Only Eligible Individuals will be eligible to receive Medical/Dental
       Benefits (or to have Medical/Dental Benefits paid on their behalf) under
       this Article.


9.3    SEPARATE ACCOUNT


       A Medical/Dental Benefits Account will be established and maintained with
       respect to contributions made to fund the benefits payable under this
       Article, which will be kept separate (for record keeping purposes only)
       from the amounts contributed to the Plan to fund all other benefits.  The
       funds in the Medical/Dental Benefits Account may be invested with funds
       contributed to the Plan to fund other benefits without identification of
       which assets of the Plan are allocable to the Medical/Dental Benefits
       Account and which

                                          66


       are allocable to fund other benefits.  Where the assets are not so
       allocated, however, the earnings on the assets will be allocated in a
       reasonable manner between the Medical/Dental Benefits Account and the
       amounts funding other benefits under the Plan.


9.4    IMPOSSIBILITY OF DIVERSION PRIOR TO SATISFACTION OF ALL LIABILITIES


       Prior to the satisfaction of all liabilities under this Article to
       provide for the payment of Medical/Dental Benefits, no part of the corpus
       or income of the Medical/Dental Benefits Account may be (within the
       taxable year or thereafter) used for, or diverted to, any purpose other
       than providing Medical/Dental Benefits or paying any reasonable expenses
       attributable to the administration of the Medical/Dental Benefits
       Account.


9.5    REVERSION UPON SATISFACTION OF ALL LIABILITIES


       Notwithstanding the provisions of Section 14.8 (No Diversion of Assets),
       any amounts that are contributed to fund Medical/Dental Benefits and that
       remain in the Medical/Dental Benefits Account upon the satisfaction of
       all liabilities arising out of the operation of this Article are to be
       returned to Eligible Retirees, in proportion to their respective total
       contributions to the Medical/Dental Benefits Account.


9.6    FORFEITURES


       In the event an Eligible Individual's interest in the Medical/Dental
       Benefits Account is forfeited prior to termination of the Plan, an amount
       equal to the amount of the forfeiture will be applied as soon as possible
       to reduce Employer contributions to the Plan to fund the Medical/Dental
       Benefits under this Article.


9.7    EMPLOYER CONTRIBUTIONS TO THE MEDICAL/DENTAL BENEFITS ACCOUNT


       For each Plan Year, the Employer will contribute to the Medical/Dental
       Benefits Account the amount necessary to fund Medical/Dental Benefits, as
       determined by the Plan's

                                          67


       actuaries, provided that the contributions mandated by this sentence will
       be reasonable, and will be reduced (but not below zero) as required so
       that the aggregate actual contributions made to the Medical/Dental
       Benefits Account will not exceed 25% of the total aggregate actual
       contributions (other than any contributions to fund past service credits)
       made to the Plan.  All contributions to the Medical/Dental Benefits
       Account will be paid to the Trustee, who will hold them in Trust for the
       payment of Medical/Dental Benefits under this Article.  At the time an
       Employer makes a contribution to the Plan, it will designate the portion
       allocable to the Medical/Dental Benefits Account.


9.8    MEDICAL/DENTAL BENEFITS


       The Medical/Dental Benefits under the Plan will be those benefits payable
       to or on behalf of Eligible Individuals in accordance with the terms of a
       Medical/Dental Plan.


                                     ARTICLE 10

                             NONALIENATION OF BENEFITS


The Pension Fund will not in any manner be liable for, or subject to, the debts
or liabilities of any Participant, Beneficiary, Contingent Annuitant, or Spouse,
or any other person entitled to any benefit.  No payee may assign any payment
due him under the Plan.  No pension or other benefits at any time payable from
the Pension Fund will be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, attachment, garnishment, levy, execution, or
other legal or equitable process or encumbrance of any kind.  Any attempt to
alienate, sell, transfer, assign, or otherwise encumber any such benefit,
whether presently or thereafter payable, will be void.  However, the payment of
benefits under the Plan will be made in accordance with the applicable
requirements of any Qualified Domestic Relations Order entered by a court of
competent jurisdiction or a state administrative agency.  The Committee will
establish procedures to determine whether the domestic relations orders are
Qualified Domestic Relations Orders and to administer distributions under
Qualified Domestic Relations Orders.

                                          68


                                     ARTICLE 11

                                   ADMINISTRATION


11.1   ADMINISTRATOR


       The Committee will be the administrator of the Plan.  The Committee will
       consist of the number of members, not fewer than three, that is specified
       from time to time by the Board of Directors.  All members of the
       Committee will be Employees or officers of an Employer.  All members of
       the Committee will serve without compensation.


11.2   REMOVAL AND REPLACEMENT OF COMMITTEE MEMBERS


       The members of the Committee will serve at the pleasure of the Board of
       Directors and may be removed by the Board of Directors with or without
       cause.  Any vacancy among the members will be filled by the Board of
       Directors.


11.3   DISQUALIFICATION AND RESIGNATION


       On the date when a Committee member is neither an Employee nor an officer
       of an Employer, he will be disqualified from membership on the Committee.
       A member of the Committee may resign by delivering his written
       resignation to any other member of the Committee.  A resignation will
       become effective on the date specified in the instrument of resignation.


11.4   CHAIRPERSON, SERVICES, AND COUNSEL


       The members of the Committee will elect one of their members as
       Chairperson and will elect a Secretary, who may be, but need not be, one
       of the members of the Committee.  Cinergy will provide the Committee, at
       Cinergy's expense, with such clerical, accounting, actuarial, and other
       services as may be reasonably required by the Committee

                                          69


       in carrying out its responsibilities.  The Committee may employ counsel,
       who may be, but need not be, counsel to Cinergy.


11.5   MEETINGS


       The Committee will hold meetings upon such notice, at the places, and at
       the times as the Committee may from time to time determine, but no less
       often than quarterly.


11.6   QUORUM


       A majority of the members of the Committee at the time holding office
       will constitute a quorum for the transaction of business.  All
       resolutions and other action taken by the Committee at any meeting will
       be by the vote of the majority of the members of the Committee present at
       the meeting.


11.7   ACTION WITHOUT MEETING


       Any decision, order, direction, or other action, including orders and
       directions to the Trustee or Insurance Company, made in writing signed by
       a majority of the members of the Committee at the time holding office
       will constitute valid and effective action of the Committee, whether or
       not the matter to which that decision, order, direction, or other action
       pertains had already been acted upon at a duly called and held meeting of
       the Committee.


11.8   NOTICE TO TRUSTEE OF CHANGES IN MEMBERSHIP


       The Trustee will not be charged with notice of any change in the
       membership of the Committee unless and until it has received a certified
       copy of the resolution or vote of the Board of Directors effecting the
       change.

                                          70


11.9   CORRECTION OF DEFECTS


       The Committee may correct any defect or supply any omission or reconcile
       any error or inconsistency in its previous proceedings, decisions,
       orders, directions, or other actions in a manner and to such extent as it
       will deem advisable to carry out the purposes of the Plan.


11.10  RELIANCE UPON LEGAL COUNSEL


       The members of the Committee, and Cinergy, and Cinergy's officers and
       directors, will be entitled to rely upon all opinions given by legal
       counsel selected by the Committee.


11.11  EXPENSES


       In the performance of its duties, the Committee is authorized to incur
       reasonable expenses, including counsel fees.  All operating expenses of
       the Plan, including insurance premiums payable to the Pension Benefit
       Guaranty Corporation, fees for professional services, and technical or
       clerical assistance, will be paid from the Pension Fund, to the extent
       not paid by the Employer.  Investment expenses and any federal, state, or
       local taxes that may be levied against the Pension Fund will also be paid
       from the Pension Fund.


11.12  INDEMNIFICATION


       Cinergy agrees to indemnify and hold harmless each member of the
       Committee against any cost, expense, or liability (including any sum paid
       in settlement of any claim with the approval of the Board of Directors)
       arising out of any act or omission to act as a member of the Committee,
       except only acts and omissions representing willful misconduct, fraud, or
       lack of good faith.

                                          71


11.13  POWERS AND DUTIES OF COMMITTEE


       Subject to the specific limitations stated in this document, the
       Committee will have the following powers, duties, and responsibilities:


       (a)    to carry out the Plan's general administration;


       (b)    to cause to be prepared all forms necessary or appropriate for the
              Plan's administration;


       (c)    to keep appropriate books and records, including minutes of the
              Committee's meetings;


       (d)    to determine, consistent with the provisions of this document, the
              manner in which the Pension Fund will be allocated and disbursed;


       (e)    to give directions to the Trustee as to the amounts to be
              disbursed to Participants and others under the Plan's provisions;


       (f)    to determine, with discretionary authority and consistent with the
              provisions of this document, all questions of the eligibility,
              rights, and status of Participants and others under the Plan;


       (g)    to exercise all other powers and duties specifically conferred
              upon the Committee elsewhere in this document and the Trust
              Agreement;


       (h)    to exercise all duties and responsibilities imposed by ERISA upon
              the Committee as the Plan's administrator;

                                          72


       (i)    to interpret, with discretionary authority, the provisions of the
              Plan and to resolve, with discretionary authority, all disputed
              questions of Plan interpretation and benefit eligibility;


       (j)    to employ agents to assist it in performing its administrative
              duties; and


       (k)    to allocate and delegate its fiduciary responsibilities in
              accordance with ERISA section 405.


       The Committee will at all times make similar decisions on similar
       questions involving similar circumstances.  Subject to the provisions of
       ERISA and to the provisions of Article 12 (Benefit Claims Procedures)
       relating to claims, all decisions of the Committee made in good faith on
       all matters within the scope of its authority under the provisions of
       this document will be final and binding upon all persons.


11.14  MATTERS SPECIFICALLY EXCLUDED FROM JURISDICTION


       Notwithstanding any other provision of this document, the Committee will
       have no power, duty, or authority with respect to determination of the
       amounts to be contributed by the Employer to the Pension Fund or Trust
       Fund.


                                     ARTICLE 12

                             BENEFIT CLAIMS PROCEDURES


Claims for benefits under the Plan will be made in writing to the Committee or
its designee.  If a claim for benefits is wholly or partially denied, the
Committee or its designee will notify the Claimant of the claim's denial within
a reasonable period of time not to exceed 90 days after the claim's receipt,
unless special circumstances require an extension of time for processing, in
which case notification will be rendered as soon as possible, but not later than
180 days after the claim's receipt.  If an extension of time for processing is
required, written notice of the extension will be furnished to the Claimant
prior to the termination of the initial 90 day period.  The

                                          73


extension notice will indicate the special circumstances requiring an extension
of time and the date by which the Plan expects to render final notification.
The notice of denial will be written in a manner calculated to be understood by
the Claimant and will set forth (a) the specific reason or reasons for the
denial, (b) a specific reference to the pertinent Plan provisions on which the
denial is based, (c) a description of any additional material or information
necessary for the Claimant to perfect the claim and an explanation of why that
material or information is necessary, and (d) appropriate information as to the
steps to be taken if the Claimant wishes to submit the claim for review.  The
Committee or its designee is authorized to develop more fully the Plan's benefit
claims procedures by establishing from time to time, various rules and
procedures consistent with ERISA.


Within 60 days after the Claimant's receipt of written notice of the claim's
denial, the Claimant, or his duly authorized representative, may file a written
request with the Committee requesting a full and fair review of the denial of
the Claimant's claim for benefits.  In connection with the Claimant's appeal of
the denial of his claim for benefits, the Claimant may review pertinent
documents in the Committee's possession and may submit issues and comments in
writing.  The Committee will make a decision on review promptly, but not later
than the date of the Committee meeting that immediately follows the receipt of
the Claimant's request for review, unless the request for review is filed within
30 days before the date of that meeting.  In that case, a decision will be made
as soon as possible, but not later than the date of the second Committee meeting
following receipt of the request for review.  If special circumstances require a
further extension of time for processing, a decision will be rendered not later
than the third Committee meeting following receipt of the Claimant's request for
review.  If an extension of time for review is required because of special
circumstances, written notice of the extension will be sent to the Claimant
before the extension begins.  The extension notice will indicate the special
circumstances requiring an extension of time and the date by which the Committee
expects to render the final decision.  The decision on review will be in writing
and written in a manner calculated to be understood by the Claimant, will set
forth the specific reason or reasons for the decision, and will contain a
specific reference to the pertinent Plan provisions on which the decision is
based.  If the decision on review is not furnished to the Claimant within
60 days of

                                          74


receipt of the request for review, or within 120 days after its receipt if
special circumstances required an extension of time, the claim will be deemed
denied on review.


                                     ARTICLE 13

                             FUNDING POLICY AND METHOD


Cinergy will establish and carry out a funding policy and method for the Plan
consistent with (a) the Plan's past experience, (b) the Plan's anticipated
experience, (c) the Plan's objectives, (d) the requirements of ERISA, and
(e) the requirements of the Code.  Cinergy will (a) communicate the funding
policy and method to the Committee, (b) periodically review the funding policy
and method, and (c) document all action taken with respect to the funding policy
and method.


                                     ARTICLE 14

                                   MISCELLANEOUS


14.1   NO ENLARGEMENT OF EMPLOYEE BENEFITS


       This Plan is strictly a voluntary undertaking on the part of each
       Employer and will not be deemed to constitute a contract between an
       Employer and any Employee or to be consideration for, or an inducement
       to, or a condition of, the employment of any Employee.  Nothing contained
       in the Plan will be deemed to give any Employee the right to be retained
       in the service of an Employer or to interfere with the right of the
       Employer to discharge any Employee at any time.  No Employee, prior to
       his retirement under conditions of eligibility for pension benefits or
       prior to his satisfying the Vesting Requirement will have any right to,
       or interest in, any portion of any fund arising from his Employer's
       contributions under this Plan or, in any event, other than as
       specifically provided in the Plan.  No person will have any right to
       pension benefits except to the extent provided in the Plan.

                                          75


14.2   REEMPLOYMENT


       If an Eligible Employee incurs a Severance from Service and is later
       reemployed by an Employer, his two (or more) periods of employment will,
       subject to all of the provisions of the Plan, be aggregated for the
       purpose of determining his years of Participation, and his years of
       Service.


14.3   QUALIFIED MILITARY SERVICE


       Notwithstanding any provision of this Plan to the contrary,
       contributions, benefits, and service credits with respect to qualified
       military service will be provided in accordance with Code subsection
       414(u).


14.4   NOTICE OF ADDRESS


       Each Participant, Retired Participant, Terminated Vested Participant,
       Beneficiary, Contingent Annuitant, and Spouse entitled to benefits under
       the Plan must submit to the Committee or its designee his post office
       address and each change of post office address.  Any communication,
       statement, or notice addressed to a person at his latest post office
       address filed with the Committee or its designee will, upon deposit in
       the United States mail with postage prepaid, be binding upon that person
       for all purposes of the Plan, and neither the Insurance Company, the
       Committee, nor the Trustee will be obliged to search for, or to ascertain
       the whereabouts of, any person.


14.5   DATA


       Participants, Retired Participants, Terminated Vested Participants,
       Beneficiaries, Contingent Annuitants, and Spouses must furnish to the
       Committee and the Trustee any documents, evidence, or information that
       the Committee or the Trustee considers necessary or desirable for the
       purpose of administering the Plan, or to protect the Committee or
       Trustee; and it will be a condition of the Plan that each person must
       furnish

                                          76


       this information promptly and sign required documents before any benefits
       become payable under the Plan.


14.6   NO INDIVIDUAL LIABILITY


       It is the express purpose and intention of the Plan that, except as
       otherwise required by law, no individual liability whatever will attach
       to, or be incurred by, the shareholders, officers, or members of the
       board of directors of any Employer, or the Committee, or its members, or
       any fiduciary designated pursuant to Section 11.13 (Powers and Duties of
       Committee), or any representatives appointed by Cinergy under the Plan,
       under or by reason of any of the terms or conditions of the Plan.


14.7   PARTICIPANT'S STATEMENT OF AGREEMENT


       Cinergy will have the right, at any time, to require any Participant to
       agree in writing to be bound by the Plan's provisions.  However, the
       absence of an agreement will not relieve any Participant from being
       legally bound by the provisions of the Plan.


14.8   NO DIVERSION OF ASSETS


       None of the assets of the Pension Fund may be used for, or diverted to,
       purposes other than the exclusive benefit of the Participants and their
       Beneficiaries.  However, nothing in this Section will prohibit the return
       to the Employers, in accordance with the provisions of ERISA
       subsection 403(c), of a contribution (or a portion of a contribution) by
       the Employers to the Pension Fund if the contribution is (a) made by
       reason of mistake of fact, (b) conditioned on the initial qualification
       of the Plan under Code subsection 401(a), or (c) conditioned upon its
       deductibility under Code section 404 and the deduction is not fully
       allowed.

                                          77


14.9   GOVERNING LAWS


       The Plan will be construed and administered according to the internal
       laws of the State of Ohio to the extent that those laws are not preempted
       by federal law.


14.10  SEVERABILITY


       If any part of the Plan is adjudged by a court of competent jurisdiction
       to be contrary to the laws governing the Plan, then the Plan will, in all
       other respects, be and remain legally effective and binding to the full
       extent permissible under the law.


14.11  INTERPRETATION AND REGULATION OF PLAN


       Cinergy, by action of the Committee, reserves the right to interpret and
       regulate the Plan, by exercise of discretionary authority, and its
       interpretation and regulation will be legally effective and binding on
       all parties concerned.


14.12  COMMUNICATIONS BY PARTICIPANTS


       All communications by Participants and other concerned parties concerning
       the Plan will be in writing and directed to the Committee or its
       designee.


14.13  HEADINGS


       The headings of Articles, Sections, Subsections, Paragraphs or other
       parts of the Plan are for convenience of reference only and do not
       define, limit, construe, or otherwise affect the contents of this
       document.

                                          78


14.14  ACCRUED BENEFIT NOT TO BE DECREASED BY AMENDMENT


       Notwithstanding any other provisions of the Plan to the contrary, no
       accrued benefit of a Participant under the Plan will be decreased by an
       amendment to the Plan, other than an amendment described in Code
       paragraph 412(c)(8) or ERISA section 4281.  For purposes of this
       Subsection, an amendment to the Plan that has the effect of:


       (a)    eliminating or reducing an early retirement benefit or a
              retirement-type subsidy (as defined in the regulations under Code
              paragraph 411(d)(6)), or


       (b)    eliminating an optional form of benefit, with respect to benefits
              attributable to service before the amendment,


       will be treated as reducing the accrued benefit of a Participant.  In the
       case of any retirement-type subsidy, the preceding sentence will apply
       only with respect to a Participant who satisfies (either before or after
       the amendment) the preamendment conditions for the subsidy.


                                     ARTICLE 15

                           TRUSTS AND INSURANCE CONTRACTS


15.1   TRUSTS AND INSURANCE CONTRACTS


       As part of the Plan, the Employers have established a Pension Fund.  The
       Pension Fund may consist of a trust, or a fund under a group annuity
       contract issued by an insurance company, or a combination of each.
       Benefits may, however, be provided through other trusts or insurance
       contracts as Cinergy, in its sole discretion, may establish or cause to
       be established or entered into for the purposes of carrying out the Plan.
       Cinergy will determine the form and terms of any trust and will also
       determine the terms and provisions of any group annuity contract.
       Cinergy may also, in its sole discretion, cause any funds held by any
       insurance company, or any Trust Fund held by any Trustee, for the

                                          79


       purpose of providing benefits under the Plan, to be transferred to any
       other insurance company, or qualified Trustee, to be held for the same
       purpose.


15.2   IRREVOCABILITY


       The Employers will have no right, title, or interest in the Pension Fund
       or to the contributions made under the Plan, and no part of the Pension
       Fund will revert to the Employers, except that upon termination of the
       Plan and after satisfaction or provision for the satisfaction of all
       fixed and contingent liabilities or obligations to persons entitled to
       benefits upon the termination, any balance remaining in the Pension Fund
       will be distributed to the Employers.  However, nothing in this
       Section will prohibit the return, in accordance with the provisions of
       ERISA subsection 403(c), to the Employers of a contribution (or a portion
       of a contribution) by the Employers to the Pension Fund if the
       contribution is (a) made by reason of mistake of fact, (b) conditioned on
       the initial qualification of the Plan under Code subsection 401(a), or
       (c) conditioned upon its deductibility under Code section 404 and the
       deduction is not fully allowed.


15.3   SUFFICIENCY OF PENSION FUND


       The Employer intends the Plan to be a permanent, as distinguished from a
       temporary, program.  Except as otherwise provided by the Code or ERISA,
       however, the Employer will not be under any liability to make
       contributions to the Pension Fund.  Benefits under the Plan are to be
       paid only from the Pension Fund and only to the extent that the Pension
       Fund is sufficient for that purpose.  Neither Cinergy, nor any of the
       officers, employees, members of the Board of Directors, the Committee, or
       representatives of Cinergy guarantees in any manner nor, unless otherwise
       required by law, will be liable for the payment of benefits under the
       Plan.  Except as otherwise provided by ERISA, any person having any claim
       under, or in connection with, the Plan must look solely to the Pension
       Fund for satisfaction.

                                          80


                                     ARTICLE 16

                                   CONTRIBUTIONS


No contributions to the Plan by Participants will be required or permitted under
the Plan.


During the continuance of the Plan and for the purpose of providing the benefits
contemplated under the Plan, the Employer intends to deposit, from time to time,
with the Trustee or with the Insurance Company, sums of money, to be held in the
Pension Fund, which, together with the earnings of the Pension Fund, will be
deemed sufficient to provide the benefits of the Plan and to satisfy the minimum
funding standards set forth in ERISA.  All contributions by the Employer to the
Pension Fund are expressly conditioned upon deductibility under Code
section 404.


                                     ARTICLE 17

                        APPROVAL UNDER INTERNAL REVENUE CODE


The Plan as set forth in this document is intended to comply with the
requirements of Code subsection 401(a), so that the income of the Pension Fund
may be exempt from federal income taxes and so that contributions of the
Employers under the Plan may be deductible for federal income tax purposes under
Code section 404.  Any modification or amendment of the Plan may be made,
retroactive or otherwise, as necessary or appropriate to establish and maintain
its qualified status under the Code, or to otherwise comply with ERISA.


                                     ARTICLE 18

                             AMENDMENT AND TERMINATION


18.1   RIGHT TO AMEND OR TERMINATE


       Cinergy reserves the right to modify, alter, amend, revoke or terminate
       the Plan and/or any Trust Fund or group annuity contract that may be
       established or entered into to effectuate and implement the Plan at any
       time.  The Board of Directors will generally have the authority to adopt
       amendments; however, the Committee or the compensation

                                          81


       committee of the Board of Directors may adopt any amendment to ensure the
       continued qualification of the Plan and Pension Fund under Code
       subsections 401(a) and 501(a), to comply with the provisions of any
       federal statute or regulation impacting pension plans, to enhance the
       delivery of benefits to Participants and Beneficiaries, to ease Plan
       administration, or to respond to the withdrawal of any Employer from the
       Plan.  Notwithstanding the preceding sentence, no amendment by the
       Committee or the compensation committee of the Board of Directors will
       substantially increase the cost of the Plan without the Board of
       Directors' consent.


       The Board of Directors, or any person or persons duly authorized by the
       Board of Directors, will also have the right, authority, and power to
       terminate the Plan and to discontinue or suspend the payment of
       contributions to provide benefits under the Plan (except for the
       provision of any agreement which has been entered into between an
       Employer and a labor union representing Eligible Employees).  However, no
       action taken pursuant to this Section will operate to enlarge the right
       of Cinergy under Section 15.2 (Irrevocability).


18.2   EFFECT OF TERMINATION


       If a partial or complete termination of the Plan occurs, all Participants
       with respect to whom the Plan is being so terminated will have a
       Nonforfeitable right to their benefits accrued under the Plan up to the
       date of termination of the Plan to the extent then funded.


       Except as otherwise required by ERISA section 4044, Cinergy will direct
       the Trustee to segregate the Pension Fund, as determined by Cinergy to be
       attributable to the group that is terminating its participation in the
       Plan, and to make separate allocations of the segregated assets among the
       respective persons having interests in them.  The separate allocations
       will be made as follows:

                                          82


       (a)    First, either:


              (1)    in the case of the pension of a Retired Participant, a
                     Terminated Vested Participant, a Spouse, or a Contingent
                     Annuitant that began at least three years prior to the
                     termination date of the Plan, that portion of the pension
                     that is based on the provisions of the Plan as in effect at
                     any time during the five-year period ending on the
                     termination date, which would result in the least amount,
                     or


              (2)    in the case of the pension of an Active Participant, a
                     Participant who has incurred a Severance from Service, or
                     either a Retired Participant or a Terminated Vested
                     Participant not included in Paragraph (1) of this
                     Subsection (a) that three years prior to the termination
                     date of the Plan would have begun had the Participant then
                     become a Retired Participant, a Terminated Vested
                     Participant, or the Participant's Spouse or Contingent
                     Annuitant, that portion of the pension that is based on the
                     provisions of the Plan that were in effect at any time
                     during the five-year period ending on the termination date,
                     which would result in the least amount;


       (b)    Second, all other pensions under the Plan that are guaranteed by
              the Pension Benefit Guaranty Corporation;


       (c)    Third, all other pensions with respect to both (1) Retired
              Participants, Terminated Vested Participants, Spouses, and
              Contingent Annuitants and (2) Active Participants and Participants
              who have incurred a Severance from Service who, as of the date of
              termination of the Plan, have completed the Vesting Requirement of
              the Plan; and


       (d)    All other pensions under the Plan.

                                          83


              If the balance of the Pension Fund allocable to the terminating
              group that is remaining after allocations have been made with
              respect to all pensions in a preceding class or group is
              insufficient to allocate the full Actuarial Equivalent of pensions
              to all persons in the class or group for which it is then being
              applied, the balance will be allocated to each person in the class
              or group in the proportion to which the Actuarial Equivalent of
              the pension allocable to him pursuant to the class or group bears
              to the total Actuarial Equivalent of the pensions so allocable to
              all persons in the class or group.  However, if the balance is
              sufficient to allocate a portion only of the full Actuarial
              Equivalent of the pensions set forth in Subsection (c), then the
              amounts of pension otherwise provided will be redetermined based
              on the provisions of the Plan as in effect five years prior to the
              termination date, or, if applicable, as of the later date as will
              provide for the allocation of the full Actuarial Equivalent
              thereof.


              The amounts so allocated will be purchased under a group annuity
              contract.


              Any balance remaining in the Pension Fund that is allocable to the
              terminating group, and after all allocations have been made
              pursuant to the foregoing provisions of this Subsection, will be
              allocated to the Employers.


18.3   MERGER AND CONSOLIDATION OF PLAN


       In the case of any merger or consolidation with, or transfer of assets
       and liabilities to, any other plan, provisions will be made so that each
       Participant in the Plan on the date thereof (if the Plan had then
       terminated) would receive a benefit immediately after the merger,
       consolidation or transfer that is equal to, or greater than, the benefit
       he would have been entitled to receive immediately prior to the merger,
       consolidation, or transfer if the Plan had then terminated.

                                          84


18.4   POST-CHANGE IN CONTROL MERGER, CONSOLIDATION, OR TRANSFER OF PENSION PLAN
       ASSETS OR LIABILITIES


       Notwithstanding the preceding provisions of this Article or any other
       provision of this Plan, in the event of any merger or consolidation of
       this Plan with another employee benefit plan or any transfer of assets or
       liabilities of this Plan to another plan that is effected within three
       years following a Change in Control, (a) the accrued benefit of each
       Participant who is actively employed by an Employer as of the effective
       date of the merger, consolidation, or transfer of assets or liabilities
       and with respect to whom liability for the payment of benefits under the
       Plan is being merged or consolidated with or transferred to another plan
       will become fully vested; (b) the vested accrued benefit of each
       Participant, former Participant, and Beneficiary with respect to whom any
       liability for the payment of benefits under the Plan is being merged or
       consolidated with or transferred to another plan will be increased in
       accordance with Section 18.6 (Post-Change in Control Surplus Reversion)
       as if the Plan had terminated immediately prior to any merger,
       consolidation, or transfer (and for purposes of calculating the increase,
       the accrued benefits of all other Participants, former Participants and
       their Beneficiaries will be deemed to have increased in accordance with
       Section 18.6 (Post-Change in Control Surplus Reversion)); and (c) prior
       to consummation of any merger, consolidation, or transfer, the accrued
       benefit (as increased, if applicable) of each Participant, former
       Participant, and Beneficiary with respect to whom liability for the
       payment of benefits under the Plan is being merged or consolidated with
       or transferred to another plan will be satisfied by the purchase of a
       guaranteed annuity contract from a financially sound insurance company
       that represents an irrevocable commitment to satisfy the accrued benefit
       (as increased, if applicable) of the person.  Notwithstanding the
       provisions of Section 18.1 (Right to Amend or Terminate), the provisions
       of this Section may not be amended by an amendment to the Plan effective
       within three years following a Change in Control.

                                          85


18.5   GENERAL PROTECTION OF BENEFITS IN THE EVENT OF A CHANGE IN CONTROL


       Notwithstanding any other provisions of this Plan, for a period of three
       years following a Change in Control, the provisions of this Plan may not
       be amended in any manner that would adversely affect in any way the
       computation or amount of or the entitlement to retirement benefits under
       the Plan, including, but not limited to, any adverse change in or to
       (a) the rate at which benefits accrue or vest, (b) the compensation
       recognized under the Plan, or (c) the optional forms of payment available
       to a Participant or Beneficiary under the Plan, including the time of
       commencement of benefits and any actuarial factors utilized.
       Notwithstanding the provisions of Section 18.1 (Right to Amend or
       Terminate), the provisions of this Section may not be amended by an
       amendment effective within three years following a Change in Control.


18.6   POST-CHANGE IN CONTROL SURPLUS REVERSION


       Notwithstanding the preceding provisions of this Article or any other
       provision of the Plan, in the event this Plan is terminated within three
       years following a Change in Control, the assets of the Plan will be
       applied in accordance with the preceding provisions of this Article to
       satisfy all liabilities to Participants, former Participants, and their
       Beneficiaries.  If, after satisfaction of the liabilities, there are
       assets remaining in the Plan, the balance will be applied on a pro rata
       basis based upon final vested benefit to increase the benefits of the
       Participants, former Participants, and their Beneficiaries, subject
       however, to the applicable legal limitations on benefits payable from tax
       qualified plans.  Notwithstanding the provisions of Section 18.1 (Right
       to Amend or Terminate), the provisions of this Section may not be amended
       by an amendment to the Plan effected within three years following a
       Change in Control.

                                          86


                                     ARTICLE 19

                               AUTHORIZED TRANSACTION


Cinergy will have the right, authority, and power to transfer some or all of the
assets of the Plan, including contributions and earnings, to a pooled investment
fund of an insurance company qualified to do business in one or more states of
the United States, even though that insurance company might otherwise be a
"party in interest," as that term is defined in ERISA; provided, the insurance
company receives not more than reasonable compensation with respect to the
transaction.


                                     ARTICLE 20

                          PARTICIPATION BY OTHER EMPLOYERS


20.1   ADOPTION OF PLAN


       With Cinergy's consent, any Affiliate may become a participating Employer
       under the Plan by (a) taking appropriate action to adopt the Plan,
       (b) filing with Cinergy a duly certified copy of the Plan as adopted by
       the Affiliate, (c) becoming a party to the trust agreement establishing
       the Trust Fund, and (d) executing and delivering documents and taking any
       other action as may be necessary or desirable to put the Plan into effect
       with respect to it.


20.2   WITHDRAWAL FROM PARTICIPATION


       Any Employer may, with Cinergy's consent, withdraw from participation in
       the Plan at any time by filing with Cinergy a duly certified copy of a
       resolution of its board of directors to that effect and giving notice of
       its intended withdrawal to Cinergy, the Trustee, and Insurance Company
       prior to the effective date of withdrawal.  If an Employer withdraws from
       the Plan, Cinergy will determine the portion of the Pension Fund held by
       the Trustee or Insurance Company that is applicable to the Participants
       and former Participants of the withdrawing Employer and direct the
       Trustee to segregate its

                                          87


       portion in a separate trust.  The separate trust will be held and
       administered as a part of the separate plan of the withdrawn Employer.
       The portion of the Pension Fund applicable to the Participants and former
       Participants of a particular Employer will be the sum of:


       (a)    the total amount of the accrued benefits applicable to the
              Participants and former Participants of the withdrawing Employer,
              and


       (b)    an amount that bears the same ratio to the excess, if any, of:


              (1)    the total of the Pension Fund over


              (2)    the total amount of the accrued benefits applicable to the
                     Participants and former Participants of the withdrawing
                     Employer bears to the total amount of the accrued benefits
                     applicable to all Participants and former Participants.


Notwithstanding the preceding sentence, if the total amount of the present value
of the accrued benefits applicable to the Participants and former Participants
of the withdrawing Employer (when combined with the value of any other assets
segregated during that Plan Year) is less than three percent of the total of the
Pension Fund as of at least one day in the Plan Year during which the withdrawal
occurs, the portion of the Pension Fund applicable to the Participants and
former Participants of the withdrawing Employer will be equal to the present
value of those Participants' accrued benefits.


20.3   CINERGY AS AGENT FOR EMPLOYERS


       Each Affiliate that becomes a participating Employer pursuant to
       Section 20.1 (Adoption of Plan) or Article 21 (Continuance by a
       Successor) by so doing will be deemed to have appointed Cinergy its agent
       to exercise on its behalf all of the powers and authorities conferred
       upon Cinergy by the terms of the Plan, including, but not limited to the
       power

                                          88


       to amend and terminate the Plan.  Cinergy's authority to act as agent
       will continue unless and until the portion of the Pension Fund held for
       the benefit of Employees of the particular Employer and their
       Beneficiaries is set aside in a separate trust as provided in
       Section 20.2 (Withdrawal from Participation).  Each Employer will, from
       time to time, upon Cinergy's request, furnish to Cinergy any data and
       information as Cinergy requires in the performance of its duties.


                                     ARTICLE 21

                             CONTINUANCE BY A SUCCESSOR


If Cinergy or any other Employer is reorganized by way of merger, consolidation,
transfer of assets, or otherwise, so that a corporation, partnership, or person
other than an Employer succeeds to all or substantially all of the Employer's
business, the successor may be substituted for the Employer under the Plan by
adopting the Plan and becoming a party to the trust agreement.  Contributions by
the Employer will be automatically suspended from the effective date of any
reorganization until the date upon which the substitution of the successor
corporation for the Employer under the Plan becomes effective.  If, within
90 days following the effective date of any reorganization, the successor does
not elect to become a party to the Plan, or if the Employer adopts a plan of
complete liquidation other than in connection with a reorganization, the Plan
will be automatically terminated with respect to employees of the Employer as of
the close of business on the 90th day following the effective date of
reorganization or as of the close of business on the date of adoption of a plan
of complete liquidation, as the case may be, and Cinergy will direct the Trustee
to distribute the portion of the Trust Fund applicable to that Employer in the
manner provided in Section 20.2 (Withdrawal from Participation).

                                          89


              Cinergy Corp. has caused this document to be executed by its duly
authorized officers, effective January 1, 1998.


                                          By:    _____________________________
                                                 Madeleine W. Ludlow
                                                 Vice President and Chief
                                                 Financial Officer

                                          Dated: _______________________________


APPROVED:

_______________________________
Jerome A. Vennemann
Acting General Counsel
and Assistant Corporate Secretary


Dated: _________________________




                                          90


                                     ADDENDUM A

             Pre-1998 RIP 100% Spousal and Contingent Annuitant Benefit




  NUMBER OF FULL YEARS                       NUMBER OF FULL YEARS
      THE SPOUSE OR                             THE SPOUSE OR
  CONTINGENT ANNUITANT                       CONTINGENT ANNUITANT
        WAS BORN                                   WAS BORN
  AFTER THE PARTICIPANT      FACTOR         AFTER THE PARTICIPANT       FACTOR
  ---------------------      ------         ---------------------       ------
                                                               
            0                 .911                    20                 .861
            1                 .908                    21                 .859
            2                 .905                    22                 .858
            3                 .902                    23                 .856
            4                 .899                    24                 .855
            5                 .896                    25                 .853
            6                 .893                    26                 .852
            7                 .890                    27                 .851
            8                 .887                    28                 .850
            9                 .885                    29                 .849
           10                 .882                    30                 .848
           11                 .880                    31                 .847
           12                 .877                    32                 .846
           13                 .875                    33                 .845
           14                 .872                    34                 .844
           15                 .870                    35                 .844
           16                 .868                    36                 .843
           17                 .866                    37                 .842
           18                 .864                    28                 .842
           19                  863                    39                 .841
                                                      40                 .841


                                          1





  NUMBER OF FULL YEARS                       NUMBER OF FULL YEARS
      The Spouse Or                             THE SPOUSE OR
  CONTINGENT ANNUITANT                       CONTINGENT ANNUITANT
     WAS BORN BEFORE                           WAS BORN BEFORE
  THE PRIMARY ANNUITANT      FACTOR         THE PRIMARY ANNUITANT       FACTOR
  ---------------------      ------         ---------------------       ------
                                                               
            0                 .911                    20                 .973
            1                 .915                    21                 .975
            2                 .918                    22                 .977
            3                 .922                    23                 .979
            4                 .925                    24                 .981
            5                 .928                    25                 .982
            6                 .932                    26                 .984
            7                 .935                    27                 .985
            8                 .939                    28                 .986
            9                 .942                    29                 .987
           10                 .945                    30                 .988
           11                 .949
           12                 .952
           13                 .955
           14                 .958
           15                 .961
           16                 .963
           17                 .966
           18                 .968
           19                 .971


Morality:     1971 TPF&C Forecast Mortality Table (Employee rate based on 85%
              male; Contingent Annuitant rate based on 85% female)
Interest:     7.5%
Subsidy:      Factors include a 50% subsidy provided by the Company
Effective:    January 1, 1984

                                          2


                                     Addendum B
                   Pre-1998 RIP 50% Contingent Annuitant Factors

                         PENSIONER WHOSE RETIREMENT AGE IS:



 BENEFICIARY'S                                                                                                         BENEFICIARY'S
    AGE AT                                                                                                                AGE AT
  PENSIONER'S                                                                                                           PENSIONER'S
  RETIREMENT    25    26     27    28     29     30    31     32    33     34     35    36     37     38    39    40    RETIREMENT
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                    
      20       .985  .984   .982  .981   .979   .978  .976   .974  .972   .970   .967  .965   .962   .959  .956  .952       20

      21       .985  .984   .983  .981   .980   .978  .976   .974  .972   .970   .968  .965   .962   .959  .956  .952       21

      22       .985  .984   .983  .982   .980   .979  .977   .975  .973   .971   .968  .966   .963   .960  .957  .953       22

      23       .986  .985   .983  .982   .981   .979  .977   .975  .973   .971   .969  .966   .964   .961  .958  .954       23

      24       .986  .985   .984  .982   .981   .979  .978   .976  .974   .972   .969  .967   .964   .961  .958  .954       24


      25       .987  .985   .984  .983   .981   .980  .978   .976  .974   .972   .970  .968   .965   .962  .959  .955       25

      26       .987  .986   .985  .983   .982   .980  .979   .977  .975   .973   .971  .968   .966   .963  .960  .955       26

      27       .987  .986   .985  .984   .982   .981  .979   .977  .976   .974   .971  .969   .966   .963  .960  .956       27

      28       .988  .987   .985  .984   .983   .981  .980   .978  .976   .974   .972  .970   .967   .964  .961  .957       28

      29       .988  .987   .986  .985   .983   .982  .980   .979  .977   .975   .973  .970   .968   .965  .962  .957       29


      30       .988  .987   .986  .985   .984   .982  .981   .979  .977   .975   .973  .971   .968   .966  .963  .958       30

      31       .989  .988   .987  .986   .984   .983  .981   .980  .978   .976   .974  .972   .969   .967  .964  .959       31

      32       .989  .988   .987  .986   .985   .983  .982   .980  .979   .977   .975  .972   .970   .967  .965  .960       32

      33       .989  .989   .988  .986   .985   .984  .983   .981  .979   .977   .975  .973   .971   .968  .965  .960       33

      34       .990  .989   .988  .987   .986   .984  .983   .982  .980   .978   .976  .974   .972   .969  .966  .961       34


      35       .990  .989   .988  .987   .986   .985  .984   .982  .981   .979   .977  .975   .972   .970  .967  .962       35

      36       .991  .990   .989  .988   .987   .985  .984   .983  .981   .979   .978  .976   .973   .971  .968  .963       36

      37       .991  .990   .989  .988   .987   .986  .985   .983  .982   .980   .978  .976   .974   .972  .969  .964       37

      38       .991  .990   .990  .989   .988   .987  .985   .984  .982   .981   .979  .977   .975   .973  .970  .965       38

      39       .992  .991   .990  .989   .988   .987  .986   .985  .983   .982   .980  .978   .976   .974  .971  .966       39



                                          1


                                     Addendum B
                   Pre-1998 RIP 50% Contingent Annuitant Factors

                         PENSIONER WHOSE RETIREMENT AGE IS:



 BENEFICIARY'S                                                                                                         BENEFICIARY'S
    AGE AT                                                                                                                AGE AT
  PENSIONER'S                                                                                                           PENSIONER'S
  RETIREMENT    25    26     27    28     29     30    31     32    33     34     35    36     37     38    39    40    RETIREMENT
                                                                    
      40       .992  .991   .990  .990   .989   .988  .986   .985  .984   .982   .981  .979   .977   .974  .972  .967       40

      41       .992  .992   .991  .990   .989   .988  .987   .986  .984   .983   .981  .979   .978   .975  .973  .968       41

      42       .993  .992   .991  .990   .990   .989  .987   .986  .985   .984   .982  .980   .978   .976  .974  .968       42

      43       .993  .992   .992  .991   .990   .989  .988   .987  .986   .984   .983  .981   .979   .977  .975  .969       43

      44       .993  .993   .992  .991   .990   .990  .989   .987  .986   .985   .983  .982   .980   .978  .976  .970       44


      45       .994  .993   .992  .992   .991   .990  .989   .988  .987   .986   .984  .983   .981   .979  .977  .971       45

      46       .994  .993   .993  .992   .991   .990  .990   .989  .987   .986   .985  .983   .982   .980  .978  .972       46

      47       .994  .994   .993  .992   .992   .991  .990   .989  .988   .987   .986  .984   .983   .981  .979  .973       47

      48       .994  .994   .993  .993   .992   .991  .991   .990  .989   .987   .986  .985   .983   .982  .980  .974       48

      49       .995  .994   .994  .993   .992   .992  .991   .990  .989   .988   .987  .986   .984   .983  .981  .975       49


      50       .995  .994   .994  .993   .993   .992  .991   .991  .990   .989   .988  .986   .985   .983  .982  .976       50

      51       .995  .995   .994  .994   .993   .993  .992   .991  .990   .989   .988  .987   .986   .984  .983  .977       51

      52       .995  .995   .995  .994   .994   .993  .992   .992  .991   .990   .989  .988   .986   .985  .983  .978       52

      53       .996  .995   .995  .994   .994   .993  .993   .992  .991   .990   .989  .988   .987   .986  .984  .979       53

      54       .996  .996   .995  .995   .994   .994  .993   .992  .992   .991   .990  .989   .988   .986  .985  .980       54

- ------------------------------------------------------------------------------------------------------------------------------------
                25    26     27    28     29     30    31     32    33     34     35    36     37     38    39    40




                          PENSIONER WHOSE RETIREMENT AGE IS:

Mortality:           1971 TPF&C Forecast Mortality Table (Pensioner rate based
                     on 85% male; Beneficiary rate based on 85% female)
Interest Rate:       7.5%
Effective:           January 1, 1984
Prepared by:         Towers Perrin

                                          2


                                     Addendum B
                   Pre-1998 RIP 50% Contingent Annuitant Factors

                         PENSIONER WHOSE RETIREMENT AGE IS:



 BENEFICIARY'S                                                                                                         BENEFICIARY'S
    AGE AT                                                                                                                AGE AT
  PENSIONER'S                                                                                                           PENSIONER'S
  RETIREMENT    25    26     27    28     29     30    31     32    33     34     35    36     37     38    39    40    RETIREMENT
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                    
      55       .996  .996   .995  .995   .995   .994  .994   .993  .992   .991   .991  .990   .988   .987  .986  .981       55

      56       .996  .996   .996  .995   .995   .994  .994   .993  .993   .992   .991  .990   .989   .988  .987  .982       56

      57       .997  .996   .996  .996   .995   .995  .994   .994  .993   .992   .992  .991   .990   .989  .987  .983       57

      58       .997  .996   .996  .996   .995   .995  .995   .994  .994   .993   .992  .991   .990   .989  .988  .984       58

      59       .997  .997   .996  .996   .996   .995  .995   .994  .994   .993   .993  .992   .991   .990  .989  .985       59


      60       .997  .997   .997  .996   .996   .996  .995   .995  .994   .994   .993  .992   .992   .991  .990  .985       60

      61       .997  .997   .997  .997   .996   .996  .996   .995  .995   .994   .994  .993   .992   .991  .990  .986       61

      62       .997  .997   .997  .997   .997   .996  .996   .995  .995   .995   .994  .993   .993   .992  .991  .987       62

      63       .998  .997   .997  .997   .997   .997  .996   .996  .995   .995   .994  .994   .993   .992  .992  .988       63

      64       .998  .998   .997  .997   .997   .997  .996   .996  .996   .995   .995  .994   .994   .993  .992   989       64


      65       .998  .998   .998  .997   .997   .997  .997   .996  .996   .996   .995  .995   .994   .993  .993  .989       65

      66       .998  .998   .998  .998   .997   .997  .997   .997  .996   .996   .996  .995   .995   .994  .993  .990       66

      67       .998  .998   .998  .998   .998   .997  .997   .997  .997   .996   .996  .995   .995   .994  .994  .991       67

      68       .998  .998   .998  .998   .998   .998  .997   .997  .997   .997   .996  .996   .995   .995  .994  .991       68

      69       .998  .998   .998  .998   .998   .998  .998   .997  .997   .997   .997  .996   .996   .995  .995  .992       69


      70       .999  .998   .998  .998   .998   .998  .998   .998  .997   .997   .997  .996   .996   .996  .995  .992       70

      71       .999  .999   .999  .998   .998   .998  .998   .998  .998   .997   .997  .997   .996   .996  .996  .993       71

      72       .999  .999   .999  .999   .998   .998  .998   .998  .998   .998   .997  .997   .997   .996  .996  .994       72

      73       .999  .999   .999  .999   .999   .998  .998   .998  .998   .998   .998  .997   .997   .997  .996  .994       73

      74       .999  .999   .999  .999   .999   .999  .998   .998  .998   .998   .998  .997   .997   .997  .997  .995       74



                                          3


                                     Addendum B
                   Pre-1998 RIP 50% Contingent Annuitant Factors

                         PENSIONER WHOSE RETIREMENT AGE IS:



 BENEFICIARY'S                                                                                                         BENEFICIARY'S
    AGE AT                                                                                                                AGE AT
  PENSIONER'S                                                                                                           PENSIONER'S
  RETIREMENT    25    26     27    28     29     30    31     32    33     34     35    36     37     38    39    40    RETIREMENT
                                                                    
      75       .999  .999   .999  .999   .999   .999  .999   .998  .998   .998   .998  .998   .997   .997  .997  .995       75

      76       .999  .999   .999  .999   .999   .999  .999   .999  .998   .998   .998  .998   .998   .997  .997  .995       76

      77       .999  .999   .999  .999   .999   .999  .999   .999  .999   .998   .998  .998   .998   .998  .997  .996       77

      78       .999  .999   .999  .999   .999   .999  .999   .999  .999   .999   .998  .998   .998   .998  .998  .996       78

      79       .999  .999   .999  .999   .999   .999  .999   .999  .999   .999   .999  .998   .998   .998  .998  .996       79


      80       .999  .999   .999  .999   .999   .999  .999   .999  .999   .999   .999  .999   .998   .998  .998  .997       80

      81       .999  .999   .999  .999   .999   .999  .999   .999  .999   .999   .999  .999   .999   .998  .998  .997       81

      82       .999  .999   .999  .999   .999   .999  .999   .999  .999   .999   .999  .999   .999   .999  .998  .997       82

      83       .999  .999   .999  .999   .999   .999  .999   .999  .999   .999   .999  .999   .999   .999  .999  .998       83

      84       .999  .999   .999  .999   .999   .999  .999   .999  .999   .999   .999  .999   .999   .999  .999  .998       84


      85       .999  .999   .999  .999   .999   .999  .999   .999  .999   .999   .999  .999   .999   .999  .999  .998       85

      86       .999  .999   .999  .999   .999   .999  .999   .999  .999   .999   .999  .999   .999   .999  .999  .998       86

      87       1.000 .999   .999  .999   .999   .999  .999   .999  .999   .999   .999  .999   .999   .999  .999  .998       87


      88       1.000 1.000  .999  .999   .999   .999  .999   .999  .999   .999   .999  .999   .999   .999  .999  .998       88

      89       1.000 1.000  1.000 1.000  .999   .999  .999   .999  .999   .999   .999  .999   .999   .999  .999  .999       89
- ------------------------------------------------------------------------------------------------------------------------------------
                25    26     27    28     29     30    31     32    33     34     35    36     37     38    39    40


                          PENSIONER WHOSE RETIREMENT AGE IS:

Mortality:           1971 TPF&C Forecast Mortality Table (Pensioner rate based
                     on 85% male; Beneficiary rate based on 85% female)
Interest Rate:       7.5%
Effective:           January 1, 1984
Prepared by:         Towers Perrin

                                          4


                                     Addendum B
                   Pre-1998 RIP 50% Contingent Annuitant Factors

                         PENSIONER WHOSE RETIREMENT AGE IS:



 BENEFICIARY'S                                                                                                         BENEFICIARY'S
    AGE AT                                                                                                                AGE AT
  PENSIONER'S                                                                                                           PENSIONER'S
  RETIREMENT    40    41     42    43     44     45    46     46    48     49     50    51     52     53    54    55    RETIREMENT
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                    

      20       .952  .948   .945  .941   .936   .932  .927   .922  .917   .911   .905  .899   .893   .886  .879  .872       20

      21       .952  .949   .945  .941   .937   .932  .928   .923  .917   .912   .906  .900   .894   .887  .880  .873       21

      22       .953  .949   .946  .942   .937   .933  .928   .923  .918   .912   .907  .901   .894   .888  .881  .873       22

      23       .954  .950   .946  .942   .938   .933  .929   .924  .919   .913   .907  .901   .895   .888  .881  .874       23

      24       .954  .951   .947  .943   .939   .934  .929   .924  .919   .914   .908  .902   .896   .889  .882  .875       24


      25       .955  .951   .947  .943   .939   .935  .930   .925  .920   .914   .909  .903   .896   .890  .883  .876       25

      26       .955  .952   .948  .944   .940   .936  .931   .926  .921   .915   .910  .904   .897   .891  .884  .877       26

      27       .956  .953   .949  .945   .941   .936  .932   .927  .922   .916   .910  .904   .898   .892  .885  .878       27

      28       .957  .953   .950  .946   .941   .937  .932   .928  .922   .917   .911  .905   .899   .893  .886  .878       28

      29       .957  .954   .950  .946   .942   .938  .933   .928  .923   .918   .912  .906   .900   .894  .887  .879       29


      30       .958  .955   .951  .947   .943   .939  .934   .929  .924   .919   .913  .907   .901   .895  .888  .881       30

      31       .959  .955   .952  .948   .944   .940  .935   .930  .925   .920   .914  .908   .902   .896  .889  .882       31

      32       .960  .956   .953  .949   .945   .941  .936   .931  .926   .921   .915  .909   .903   .897  .890  .883       32

      33       .960  .957   .954  .950   .946   .942  .937   .932  .927   .922   .916  .911   .904   .898  .891  .884       33

      34       .961  .958   .954  .951   .947   .943  .938   .933  .928   .923   .918  .912   .906   .899  .893  .885       34


      35       .962  .959   .955  .952   .948   .944  .939   .934  .929   .924   .919  .913   .907   .901  .894  .887       35

      36       .963  .960   .956  .953   .949   .945  .940   .936  .931   .926   .920  .914   .908   .902  .895  .888       36

      37       .964  .961   .957  .954   .950   .946  .941   .937  .932   .927   .921  .916   .910   .903  .897  .890       37

      38       .965  .962   .958  .955   .951   .947  .943   .938  .933   .928   .923  .917   .911   .905  .898  .891       38

      39       .966  .963   .959  .956   .952   .948  .944   .939  .935   .929   .924  .919   .913   .906  .900  .893       39



                                          5


                                     Addendum B
                   Pre-1998 RIP 50% Contingent Annuitant Factors

                         PENSIONER WHOSE RETIREMENT AGE IS:



 BENEFICIARY'S                                                                                                         BENEFICIARY'S
    AGE AT                                                                                                                AGE AT
  PENSIONER'S                                                                                                           PENSIONER'S
  RETIREMENT    40    41     42    43     44     45    46     47    48     49     50    51     52     53    54    55    RETIREMENT
                                                                    

      40       .967  .964   .960  .957   .953   .949  .945   .941  .936   .931   .926  .920   .914   .908  .902  .895       40

      41       .968  .965   .961  .958   .954   .950  .946   .942  .937   .932   .927  .922   .916   .910  .903  .897       41

      42       .968  .966   .963  .959   .956   .952  .948   .943  .939   .934   .929  .923   .918   .912  .905  .898       42

      43       .969  .967   .964  .960   .957   .953  .949   .945  .940   .935   .930  .925   .919   .913  .907  .900       43

      44       .970  .968   .965  .961   .958   .954  .950   .946  .942   .937   .932  .927   .921   .915  .909  .902       44


      45       .971  .969   .966  .963   .959   .956  .952   .948  .943   .939   .934  .929   .923   .917  .911  .904       45

      46       .972  .970   .967  .964   .961   .957  .953   .949  .945   .940   .935  .930   .925   .919  .913  .907       46

      47       .973  .971   .968  .965   .962   .958  .955   .951  .946   .942   .937  .932   .927   .921  .915  .909       47

      48       .974  .972   .969  .966   .963   .960  .956   .952  .948   .944   .939  .934   .929   .923  .917  .911       48

      49       .975  .973   .970  .968   .964   .961  .958   .954  .950   .945   .941  .936   .931   .925  .920  .913       49


      50       .976  .974   .972  .969   .966   .963  .959   .955  .951   .947   .943  .938   .933   .928  .922  .916       50

      51       .977  .975   .973  .970   .967   .964  .961   .957  .953   .949   .945  .940   .935   .930  .924  .918       51

      52       .978  .976   .974  .971   .968   .965  .962   .959  .955   .951   .947  .942   .937   .932  .926  .921       52

      53       .979  .977   .975  .972   .970   .967  .964   .960  .957   .953   .948  .944   .939   .934  .929  .923       53

      54       .980  .978   .976  .974   .971   .968  .965   .962  .958   .954   .950  .946   .941   .937  .931  .926       54

- ------------------------------------------------------------------------------------------------------------------------------------
                40    41     42    43     44     45    46     47    48     49     50    51     52     53    54    55


                          PENSIONER WHOSE RETIREMENT AGE IS:

Mortality:           1971 TPF&C Forecast Mortality Table (Pensioner rate based
                     on 85% male; Beneficiary rate based on 85% female)
Interest Rate:       7.5%
Effective:           January 1, 1984
Prepared by:         Towers Perrin

                                          6



                                     Addendum B
                   Pre-1998 RIP 50% Contingent Annuitant Factors

                         PENSIONER WHOSE RETIREMENT AGE IS:



 BENEFICIARY'S                                                                                                         BENEFICIARY'S
    AGE AT                                                                                                                AGE AT
  PENSIONER'S                                                                                                           PENSIONER'S
  RETIREMENT    40    41     42    43     44     45    46     47    48     49     50    51     52     53    54    55    RETIREMENT
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                    
      55       .981  .979   .977  .975   .972   .969  .966   .963  .960   .956   .952  .948   .944   .939  .934  .928       55

      56       .982  .980   .978  .976   .973   .971  .968   .965  .962   .958   .954  .950   .946   .941  .936  .931       56

      57       .983  .981   .979  .977   .975   .972  .969   .966  .963   .960   .956  .952   .948   .943  .939  .933       57

      58       .984  .982   .980  .978   .976   .973  .971   .968  .965   .962   .958  .954   .950   .946  .941  .936       58

      59       .985  .983   .981  .979   .977   .975  .972   .969  .966   .963   .960  .956   .952   .948  .943  .939       59


      60       .985  .984   .982  .980   .978   .976  .974   .971  .968   .965   .962  .958   .954   .950  .946  .941       60

      61       .986  .985   .983  .981   .979   .977  .975   .972  .970   .967   .964  .960   .957   .953  .948  .944       61

      62       .987  .986   .984  .982   .981   .978  .976   .974  .971   .968   .965  .962   .959   .955  .951  .946       62

      63       .988  .987   .985  .983   .982   .980  .978   .975  .973   .970   .967  .964   .961   .957  .953  .949       63

      64       .989  .987   .986  .984   .983   .981  .979   .977  .974   .972   .969  .966   .963   .959  .956  .952       64


      65       .989  .988   .987  .985   .984   .982  .980   .978  .976   .973   .971  .968   .965   .961  .958  .954       65

      66       .990  .989   .988  .986   .985   .983  .981   .979  .977   .975   .972  .970   .967   .964  .960  .957       66

      67       .991  .990   .988  .987   .986   .984  .982   .981  .979   .976   .974  .971   .969   .966  .962  .959       67

      68       .991  .990   .989  .988   .987   .985  .984   .982  .980   .978   .976  .973   .971   .968  .965  .961       68

      69       .992  .991   .990  .989   .988   .986  .985   .983  .981   .979   .977  .975   .972   .970  .967  .964       69


      70       .992  .992   .991  .990   .988   .987  .986   .984  .982   .981   .979  .976   .974   .972  .969  .966       70

      71       .993  .992   .991  .990   .989   .988  .987   .985  .984   .982   .980  .978   .976   .974  .971  .968       71

      72       .994  .993   .992  .991   .990   .989  .988   .986  .985   .983   .981  .980   .978   .975  .973  .970       72

      73       .994  .993   .993  .992   .991   .990  .988   .987  .986   .984   .983  .981   .979   .977  .975  .972       73

      74       .995  .994   .993  .992   .991   .990  .989   .988  .987   .985   .984  .982   .981   .979  .977  .974       74



                                          7


                                     Addendum B
                   Pre-1998 RIP 50% Contingent Annuitant Factors

                         PENSIONER WHOSE RETIREMENT AGE IS:



 BENEFICIARY'S                                                                                                         BENEFICIARY'S
    AGE AT                                                                                                                AGE AT
  PENSIONER'S                                                                                                           PENSIONER'S
  RETIREMENT    40    41     42    43     44     45    46     47    48     49     50    51     52     53    54    55    RETIREMENT
                                                                    
      75       .995  .994   .994  .993   .992   .991  .990   .989  .988   .987   .985  .984   .982   .980  .978  .976       75

      76       .995  .995   .994  .993   .993   .992  .991   .990  .989   .988   .986  .985   .983   .982  .980  .978       76

      77       .996  .995   .995  .994   .993   .992  .992   .991  .990   .988   .987  .986   .985   .983  .981  .979       77

      78       .996  .996   .995  .994   .994   .993  .992   .991  .990   .989   .988  .987   .986   .984  .983  .981       78

      79       .996  .996   .995  .995   .994   .994  .993   .992  .991   .990   .989  .988   .987   .985  .984  .982       79


      80       .997  .996   .996  .995   .995   .994  .993   .993  .992   .991   .990  .989   .988   .987  .985  .984       80

      81       .997  .997   .996  .996   .995   .995  .994   .993  .993   .992   .991  .990   .989   .988  .986  .985       81

      82       .997  .997   .997  .996   .996   .995  .995   .994  .993   .992   .992  .991   .990   .989  .988  .986       82

      83       .998  .997   .997  .996   .996   .996  .995   .994  .994   .993   .992  .992   .991   .990  .989  .987       83

      84       .998  .997   .997  .997   .996   .996  .995   .995  .994   .994   .993  .992   .991   .991  .990  .989       84


      85       .998  .998   .997  .997   .997   .996  .996   .995  .995   .994   .994  .993   .992   .991  .990  .990       85

      86       .998  .998   .998  .997   .997   .997  .996   .996  .995   .995   .994  .994   .993   .992  .991  .990       86

      87       .998  .998   .998  .998   .997   .997  .997   .996  .996   .995   .995  .994   .993   .993  .992  .991       87

      88       .998  .998   .998  .998   .998   .997  .997   .997  .996   .996   .995  .995   .994   .993  .993  .992       88

      89       .999  .998   .998  .998   .998   .997  .997   .997  .996   .996   .996  .995   .995   .994  .993  .993       89
- ------------------------------------------------------------------------------------------------------------------------------------
                40    41     42    43     44     45    46     47    48     49     50    51     52     53    54    55


                          PENSIONER WHOSE RETIREMENT AGE IS:

Mortality:           1971 TPF&C Forecast Mortality Table (Pensioner rate based
                     on 85% male; Beneficiary rate based on 85% female)
Interest Rate:       7.5%
Effective:           January 1, 1984
Prepared by:         Towers Perrin

                                          8


                                     Addendum B
                   Pre-1998 RIP 50% Contingent Annuitant Factors

                         PENSIONER WHOSE RETIREMENT AGE IS:



 BENEFICIARY'S                                                                                                         BENEFICIARY'S
    AGE AT                                                                                                                AGE AT
  PENSIONER'S                                                                                                           PENSIONER'S
  RETIREMENT    55    56     57    58     59     60    61     62    63     64     65    66     67     68    69    70    RETIREMENT
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                    

      20       .872  .864   .856  .848   .839   .829  .819   .809  .798   .786   .774  .762   .749   .735  .722  .708       20

      21       .873  .865   .857  .849   .839   .830  .820   .810  .799   .787   .775  .762   .749   .736  .722  .708       21

      22       .873  .866   .858  .849   .840   .831  .821   .810  .799   .788   .776  .763   .750   .737  .723  .709       22

      23       .874  .867   .858  .850   .841   .831  .821   .811  .800   .788   .776  .764   .751   .737  .724  .710       23

      24       .875  .867   .859  .851   .842   .832  .822   .812  .801   .789   .777  .765   .752   .738  .725  .711       24


      25       .876  .868   .860  .852   .843   .833  .823   .813  .802   .790   .778  .765   .752   .739  .725  .712       25

      26       .877  .869   .861  .852   .843   .834  .824   .814  .803   .791   .779  .766   .753   .740  .726  .712       26

      27       .878  .870   .862  .853   .844   .835  .825   .815  .804   .792   .780  .767   .754   .741  .727  .713       27

      28       .878  .871   .863  .854   .845   .836  .826   .816  .805   .793   .781  .768   .755   .742  .728  .715       28

      29       .879  .872   .864  .855   .847   .837  .827   .817  .806   .794   .782  .770   .757   .743  .730  .716       29


      30       .881  .873   .865  .857   .848   .838  .828   .818  .807   .795   .783  .771   .758   .744  .731  .717       30

      31       .882  .874   .866  .858   .849   .839  .830   .819  .808   .797   .785  .772   .759   .746  .732  .718       31

      32       .883  .875   .867  .859   .850   .841  .831   .820  .810   .798   .786  .773   .760   .747  .733  .719       32

      33       .884  .877   .869  .860   .851   .842  .832   .822  .811   .799   .787  .775   .762   .748  .735  .721       33

      34       .885  .878   .870  .862   .853   .844  .834   .823  .812   .801   .789  .776   .763   .750  .736  .722       34


      35       .887  .879   .872  .863   .854   .845  .835   .825  .814   .802   .790  .778   .765   .752  .738  .724       35

      36       .888  .881   .873  .865   .856   .847  .837   .826  .816   .804   .792  .780   .767   .753  .740  .726       36

      37       .890  .882   .875  .866   .858   .848  .839   .828  .817   .806   .794  .781   .768   .755  .742  .728       37

      38       .891  .884   .876  .868   .859   .850  .840   .830  .819   .808   .796  .783   .770   .757  .743  .730       38

      39       .893  .886   .878  .870   .861   .852  .842   .832  .821   .810   .798  .785   .772   .759  .746  .732       39


                                          9


                                     Addendum B
                   Pre-1998 RIP 50% Contingent Annuitant Factors

                         PENSIONER WHOSE RETIREMENT AGE IS:



 BENEFICIARY'S                                                                                                         BENEFICIARY'S
    AGE AT                                                                                                                AGE AT
  PENSIONER'S                                                                                                           PENSIONER'S
  RETIREMENT    55    56     57    58     59     60    61     62    63     64     65    66     67     68    69    70    RETIREMENT
                                                                    
      40       .895  .888   .880  .872   .863   .854  .844   .834  .823   .812   .800  .787   .775   .761  .748  .734       40

      41       .897  .889   .882  .874   .865   .856  .846   .836  .825   .814   .802  .790   .777   .764  .750  .736       41

      42       .898  .891   .884  .876   .867   .858  .848   .838  .828   .816   .804  .792   .779   .766  .752  .739       42

      43       .900  .893   .886  .878   .869   .860  .851   .841  .830   .819   .807  .794   .782   .769  .755  .741       43

      44       .902  .895   .888  .880   .872   .863  .853   .843  .832   .821   .809  .797   .784   .771  .758  .744       44


      45       .904  .897   .890  .882   .874   .865  .856   .846  .835   .824   .812  .800   .787   .774  .761  .747       45

      46       .907  .900   .892  .885   .876   .867  .858   .848  .838   .827   .815  .803   .790   .777  .763  .750       46

      47       .909  .902   .895  .887   .879   .870  .861   .851  .841   .829   .818  .806   .793   .780  .767  .753       47

      48       .911  .904   .897  .890   .881   .873  .864   .854  .843   .832   .821  .809   .796   .783  .770  .756       48

      49       .913  .907   .900  .892   .884   .876  .866   .857  .847   .836   .824  .812   .800   .787  .773  .760       49


      50       .916  .909   .902  .895   .887   .878  .869   .860  .850   .839   .827  .815   .803   .790  .777  .763       50

      51       .918  .912   .905  .898   .890   .881  .872   .863  .853   .842   .831  .819   .807   .794  .781  .767       51

      52       .921  .914   .908  .900   .893   .884  .876   .866  .856   .846   .834  .823   .810   .798  .784  .771       52

      53       .923  .917   .910  .903   .896   .888  .879   .870  .860   .849   .838  .826   .814   .801  .788  .775       53

      54       .926  .920   .913  .906   .899   .891  .882   .873  .863   .853   .842  .830   .818   .806  .793  .779       54

- ------------------------------------------------------------------------------------------------------------------------------------
                55    56     57    58     59     60    61     62    63    64      65    66     67     68    69    70



                          PENSIONER WHOSE RETIREMENT AGE IS:

Mortality:           1971 TPF&C Forecast Mortality Table (Pensioner rate based
                     on 85% male; Beneficiary rate based on 85% female)
Interest Rate:       7.5%
Effective:           January 1, 1984
Prepared by:         Towers Perrin

                                          10


                                     Addendum B
                   Pre-1998 RIP 50% Contingent Annuitant Factors

                         PENSIONER WHOSE RETIREMENT AGE IS:



 BENEFICIARY'S                                                                                                         BENEFICIARY'S
    AGE AT                                                                                                                AGE AT
  PENSIONER'S                                                                                                           PENSIONER'S
  RETIREMENT    55    56     57    58     59     60    61     62    63     64     65    66     67     68    69    70    RETIREMENT
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                    
      55       .928  .922   .916  .909   .902   .894  .885   .876  .867   .857   .846  .834   .822   .810  .797  .784       55

      56       .931  .925   .919  .912   .905   .897  .889   .880  .871   .860   .850  .838   .826   .814  .801  .788       56

      57       .933  .928   .922  .915   .908   .901  .892   .884  .874   .864   .854  .842   .831   .819  .806  .793       57

      58       .936  .931   .925  .918   .911   .904  .896   .887  .878   .868   .858  .847   .835   .823  .811  .798       58

      59       .939  .933   .928  .921   .915   .907  .900   .891  .882   .873   .862  .851   .840   .828  .816  .803       59


      60       .941  .936   .931  .924   .918   .911  .903   .895  .886   .877   .867  .856   .845   .833  .821  .808       60

      61       .944  .939   .933  .928   .921   .914  .907   .899  .890   .881   .871  .860   .849   .838  .826  .813       61

      62       .946  .942   .936  .931   .925   .918  .911   .903  .894   .885   .876  .865   .854   .843  .831  .819       62

      63       .949  .944   .939  .934   .928   .921  .914   .907  .899   .890   .880  .870   .859   .848  .836  .824       63

      64       .952  .947   .942  .937   .931   .925  .918   .911  .903   .894   .885  .875   .864   .854  .842  .830       64


      65       .954  .950   .945  .940   .935   .929  .922   .915  .907   .899   .890  .880   .870   .859  .848  .836       65

      66       .957  .953   .948  .943   .938   .932  .926   .919  .911   .903   .894  .885   .875   .865  .854  .842       66

      67       .959  .955   .951  .946   .941   .936  .930   .923  .916   .908   .899  .890   .880   .870  .859  .848       67

      68       .961  .958   .954  .949   .944   .939  .933   .927  .920   .912   .904  .895   .886   .876  .865  .854       68

      69       .964  .960   .956  .952   .948   .943  .937   .931  .924   .917   .909  .900   .891   .881  .871  .861       69


      70       .966  .963   .959  .955   .951   .946  .941   .935  .928   .921   .914  .905   .896   .887  .877  .867       70

      71       .968  .965   .962  .958   .954   .949  .944   .939  .932   .926   .918  .910   .902   .893  .883  .873       71

      72       .970  .967   .964  .961   .957   .952  .948   .942  .936   .930   .923  .915   .907   .898  .889  .879       72

      73       .972  .970   .967  .963   .959   .955  .951   .946  .940   .934   .927  .920   .912   .904  .895  .886       73

      74       .974  .972   .969  .966   .962   .958  .954   .949  .944   .938   .932  .925   .917   .909  .901  .892       74


                                          11


                                     Addendum B
                   Pre-1998 RIP 50% Contingent Annuitant Factors

                         PENSIONER WHOSE RETIREMENT AGE IS:



 BENEFICIARY'S                                                                                                         BENEFICIARY'S
    AGE AT                                                                                                                AGE AT
  PENSIONER'S                                                                                                           PENSIONER'S
  RETIREMENT    55    56     57    58     59     60    61     62    63     64     65    66     67     68    69    70    RETIREMENT
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                    
      75       .976  .974   .971  .968   .965   .961  .957   .953  .948   .942   .936  .929   .922   .915  .906  .898       75

      76       .978  .976   .973  .970   .967   .964  .960   .956  .951   .946   .940  .934   .927   .920  .912  .904       76

      77       .979  .977   .975  .973   .970   .966  .963   .959  .954   .950   .944  .938   .932   .925  .917  .909       77

      78       .981  .979   .977  .975   .972   .969  .966   .962  .958   .953   .948  .942   .936   .929  .922  .915       78

      79       .982  .981   .979  .976   .974   .971  .968   .965  .961   .956   .951  .946   .940   .934  .927  .920       79


      80       .984  .982   .980  .978   .976   .973  .971   .967  .964   .960   .955  .950   .944   .938  .932  .925       80

      81       .985  .984   .982  .980   .978   .975  .973   .970  .966   .963   .958  .954   .948   .943  .937  .930       81

      82       .986  .985   .983  .982   .980   .977  .975   .972  .969   .965   .961  .957   .952   .947  .941  .935       82

      83       .987  .986   .985  .983   .981   .979  .977   .974  .972   .968   .965  .960   .956   .951  .946  .940       83

      84       .989  .987   .986  .985   .983   .981  .979   .977  .974   .971   .967  .963   .959   .955  .950  .944       84


      85       .990  .988   .987  .986   .984   .983  .981   .979  .976   .973   .970  .966   .962   .958  .954  .949       85

      86       .990  .989   .988  .987   .986   .984  .982   .980  .978   .975   .972  .969   .965   .961  .957  .952       86

      87       .991  .990   .989  .988   .987   .986  .984   .982  .980   .977   .975  .972   .968   .965  .960  .956       87

      88       .992  .991   .990  .989   .988   .987  .985   .984  .982   .979   .977  .974   .971   .967  .964  .960       88

      89       .993  .992   .991  .990   .989   .988  .987   .985  .983   .981   .979  .976   .973   .970  .967  .963       89

- ------------------------------------------------------------------------------------------------------------------------------------
                55    56     57    58     59     60    61     62    63     64     65    66     67     68    69    70



                          PENSIONER WHOSE RETIREMENT AGE IS:

Mortality:           1971 TPF&C Forecast Mortality Table (Pensioner rate based
                     on 85% male; Beneficiary rate based on 85% female)
Interest Rate:       7.5%
Effective:           January 1, 1984
Prepared by:         Towers Perrin

                                          12


                                     Addendum B
                   Pre-1998 RIP 50% Contingent Annuitant Factors

                         PENSIONER WHOSE RETIREMENT AGE IS:



 BENEFICIARY'S                                                                                                         BENEFICIARY'S
    AGE AT                                                                                                                AGE AT
  PENSIONER'S                                                                                                           PENSIONER'S
  RETIREMENT    70    71     72    73     74     75    76     77    78     79     80    81     82     83    84    85    RETIREMENT
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                    
      20       .708  .694   .679  .665   .650   .634  .619   .602  .586   .569   .553  .537   .521   .505  .490  .475       20

      21       .708  .694   .680  .666   .651   .635  .619   .603  .586   .570   .554  .537   .522   .506  .490  .475       21

      22       .709  .695   .681  .666   .651   .636  .620   .603  .587   .571   .554  .538   .522   .506  .491  .476       22

      23       .710  .696   .681  .667   .652   .637  .621   .604  .588   .571   .555  .539   .523   .507  .492  .477       23

      24       .711  .697   .682  .668   .653   .637  .621   .605  .588   .572   .556  .540   .524   .508  .492  .477       24


      25       .712  .697   .683  .669   .654   .638  .622   .606  .589   .573   .556  .540   .524   .509  .493  .478       25

      26       .712  .698   .684  .670   .655   .639  .623   .607  .590   .574   .557  .541   .525   .509  .494  .479       26

      27       .713  .699   .685  .671   .656   .640  .624   .608  .591   .575   .558  .542   .526   .510  .495  .480       27

      28       .715  .700   .686  .672   .657   .641  .625   .609  .592   .576   .559  .543   .527   .511  .496  .480       28

      29       .716  .702   .687  .673   .658   .642  .626   .610  .593   .577   .560  .544   .528   .512  .497  .481       29


      30       .717  .703   .688  .674   .659   .643  .627   .611  .594   .578   .561  .545   .529   .513  .498  .482       30

      31       .718  .704   .690  .675   .660   .645  .628   .612  .595   .579   .562  .546   .530   .514  .499  .483       31

      32       .719  .705   .691  .676   .661   .646  .630   .613  .597   .580   .564  .547   .531   .515  .500  .485       32

      33       .721  .707   .692  .678   .663   .647  .631   .615  .598   .582   .565  .549   .533   .517  .501  .486       33

      34       .722  .708   .694  .679   .664   .649  .633   .616  .600   .583   .566  .550   .534   .518  .502  .487       34


      35       .724  .710   .696  .681   .666   .650  .634   .618  .601   .585   .568  .552   .535   .520  .504  .488       35

      36       .726  .712   .697  .683   .668   .652  .636   .619  .603   .586   .570  .553   .537   .521  .505  .490       36

      37       .728  .713   .699  .685   .669   .654  .638   .621  .605   .588   .571  .555   .539   .523  .507  .492       37

      38       .730  .715   .701  .686   .671   .656  .640   .623  .606   .590   .573  .557   .541   .525  .509  .493       38

      39       .732  .717   .703  .689   .673   .658  .642   .625  .608   .592   .575  .559   .542   .526  .511  .495       39


                                          13



                                     Addendum B
                   Pre-1998 RIP 50% Contingent Annuitant Factors

                         PENSIONER WHOSE RETIREMENT AGE IS:



 BENEFICIARY'S                                                                                                         BENEFICIARY'S
    AGE AT                                                                                                                AGE AT
  PENSIONER'S                                                                                                           PENSIONER'S
  RETIREMENT    70    71     72    73     74     75    76     77    78     79     80    81     82     83    84    85    RETIREMENT
                                                                    
      40       .734  .720   .705  .691   .676   .660  .644   .627  .611   .594   .577  .561   .544   .528  .513  .497       40

      41       .736  .722   .708  .693   .678   .662  .646   .630  .613   .596   .579  .563   .547   .531  .515  .499       41

      42       .739  .724   .710  .696   .680   .665  .649   .632  .615   .599   .582  .565   .549   .533  .517  .501       42

      43       .741  .727   .713  .698   .683   .667  .651   .635  .618   .601   .584  .568   .551   .535  .519  .504       43

      44       .744  .730   .715  .701   .686   .670  .654   .637  .621   .604   .587  .570   .554   .538  .522  .506       44


      45       .747  .733   .718  .704   .689   .673  .657   .640  .623   .607   .590  .573   .557   .541  .525  .509       45

      46       .750  .736   .721  .707   .692   .676  .660   .643  .626   .610   .593  .576   .560   .543  .527  .512       46

      47       .753  .739   .725  .710   .695   .679  .663   .647  .630   .613   .596  .579   .563   .547  .530  .515       47

      48       .756  .742   .728  .713   .698   .683  .667   .650  .633   .616   .599  .583   .566   .550  .534  .518       48

      49       .760  .746   .732  .717   .702   .686  .670   .654  .637   .620   .603  .586   .570   .553  .537  .521       49


      50       .763  .749   .735  .721   .706   .690  .674   .657  .640   .624   .607  .590   .573   .557  .541  .525       50

      51       .767  .753   .739  .725   .710   .694  .678   .661  .644   .628   .611  .594   .577   .561  .544  .528       51

      52       .771  .757   .743  .729   .714   .698  .682   .665  .649   .632   .615  .598   .581   .565  .548  .532       52

      53       .775  .761   .747  .733   .718   .703  .686   .670  .653   .636   .619  .602   .585   .569  .553  .537       53

      54       .779  .766   .752  .737   .722   .707  .691   .674  .657   .640   .623  .607   .590   .573  .557  .541       54

- ------------------------------------------------------------------------------------------------------------------------------------
                70    71     72    73     74     75    76     77    78     79     80    81     82     83    84    85


                          PENSIONER WHOSE RETIREMENT AGE IS:

Mortality:           1971 TPF&C Forecast Mortality Table (Pensioner rate based
                     on 85% male; Beneficiary rate based on 85% female)
Interest Rate:       7.5%
Effective:           January 1, 1984
Prepared by:         Towers Perrin

                                          14



                                     Addendum B
                   Pre-1998 RIP 50% Contingent Annuitant Factors

                         PENSIONER WHOSE RETIREMENT AGE IS:



 BENEFICIARY'S                                                                                                         BENEFICIARY'S
    AGE AT                                                                                                                AGE AT
  PENSIONER'S                                                                                                           PENSIONER'S
  RETIREMENT    70    71     72    73     74     75    76     77    78     79     80    81     82     83    84    85    RETIREMENT
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                    
      55       .784  .770   .756  .742   .727   .712  .696   .679  .662   .645   .628  .611   .595   .578  .562  .545       55

      56       .788  .775   .761  .747   .732   .717  .700   .684  .667   .650   .633  .616   .599   .583  .566  .550       56

      57       .793  .779   .766  .752   .737   .722  .706   .689  .672   .655   .638  .621   .605   .588  .571  .555       57

      58       .798  .784   .771  .757   .742   .727  .711   .694  .678   .661   .644  .627   .610   .593  .577  .560       58

      59       .803  .789   .776  .762   .748   .732  .716   .700  .683   .666   .649  .632   .616   .599  .582  .566       59


      60       .808  .795   .781  .768   .753   .738  .722   .706  .689   .672   .655  .638   .621   .605  .588  .572       60

      61       .813  .800   .787  .773   .759   .744  .728   .712  .695   .678   .661  .644   .628   .611  .594  .578       61

      62       .819  .806   .793  .779   .765   .750  .734   .718  .702   .685   .668  .651   .634   .617  .601  .584       62

      63       .824  .812   .799  .785   .771   .756  .741   .725  .708   .691   .675  .658   .641   .624  .607  .591       63

      64       .830  .818   .805  .792   .778   .763  .748   .732  .715   .699   .682  .665   .648   .631  .615  .598       64


      65       .836  .824   .811  .798   .784   .770  .755   .739  .722   .706   .689  .672   .656   .639  .622  .606       65

      66       .842  .830   .818  .805   .791   .777  .762   .746  .730   .713   .697  .680   .663   .647  .630  .614       66

      67       .848  .836   .824  .812   .798   .784  .769   .754  .738   .721   .705  .688   .672   .655  .638  .622       67

      68       .854  .843   .831  .819   .806   .792  .777   .762  .746   .730   .713  .697   .680   .663  .647  .630       68

      69       .861  .849   .838  .826   .813   .799  .785   .770  .754   .738   .722  .705   .689   .672  .656  .639       69


      70       .867  .856   .845  .833   .820   .807  .793   .778  .762   .747   .730  .714   .698   .682  .665  .649       70

      71       .873  .863   .852  .840   .828   .815  .801   .786  .771   .755   .739  .723   .707   .691  .675  .658       71

      72       .879  .869   .859  .847   .835   .823  .809   .795  .780   .764   .749  .733   .717   .701  .684  .668       72

      73       .886  .876   .865  .855   .843   .831  .817   .803  .788   .773   .758  .742   .727   .711  .694  .678       73

      74       .892  .882   .872  .862   .850   .838  .825   .812  .797   .782   .767  .752   .736   .721  .705  .689       74

                                          15


                                     Addendum B
                   Pre-1998 RIP 50% Contingent Annuitant Factors

                         PENSIONER WHOSE RETIREMENT AGE IS:



 BENEFICIARY'S                                                                                                         BENEFICIARY'S
    AGE AT                                                                                                                AGE AT
  PENSIONER'S                                                                                                           PENSIONER'S
  RETIREMENT    70    71     72    73     74     75    76     77    78     79     80    81     82     83    84    85    RETIREMENT
                                                                    
      75       .898  .889   .879  .869   .858   .846  .834   .820  .806   .792   .777  .762   .746   .731  .715  .699       75

      76       .904  .895   .886  .876   .865   .854  .842   .829  .815   .801   .786  .771   .756   .741  .725  .710       76

      77       .909  .901   .892  .883   .872   .862  .850   .837  .824   .810   .796  .781   .766   .751  .736  .721       77

      78       .915  .907   .898  .889   .880   .869  .858   .845  .832   .819   .805  .791   .776   .762  .747  .731       78

      79       .920  .912   .904  .896   .886   .876  .865   .853  .841   .828   .814  .801   .786   .772  .757  .742       79


      80       .925  .918   .910  .902   .893   .884  .873   .861  .849   .837   .824  .810   .796   .782  .768  .753       80

      81       .930  .923   .916  .908   .900   .891  .880   .869  .858   .846   .833  .820   .807   .793  .779  .764       81

      82       .935  .929   .922  .914   .906   .898  .888   .877  .866   .854   .842  .830   .817   .803  .790  .776       82

      83       .940  .934   .927  .920   .913   .904  .895   .885  .874   .863   .851  .839   .827   .814  .800  .787       83

      84       .944  .939   .932  .926   .919   .911  .902   .892  .882   .871   .860  .849   .836   .824  .811  .798       84


      85       .949  .943   .937  .931   .924   .917  .909   .900  .890   .880   .869  .858   .846   .834  .821  .809       85

      86       .952  .947   .942  .936   .930   .923  .915   .906  .897   .887   .877  .866   .855   .843  .831  .819       86

      87       .956  .951   .946  .941   .935   .928  .921   .913  .904   .895   .885  .875   .864   .853  .841  .829       87

      88       .960  .955   .950  .945   .940   .934  .927   .919  .910   .902   .892  .882   .872   .862  .850  .839       88

      89       .963  .959   .954  .949   .944   .938  .932   .925  .917   .908   .899  .890   .880   .870  .859  .848       89

- ------------------------------------------------------------------------------------------------------------------------------------
                70    71     72    73     74     75    76     77    78     79     80    81     82     83    84    85


                          PENSIONER WHOSE RETIREMENT AGE IS:

Mortality:           1971 TPF&C Forecast Mortality Table (Pensioner rate based
                     on 85% male; Beneficiary rate based on 85% female)
Interest Rate:       7.5%
Effective:           January 1, 1984
Prepared by:         Towers Perrin

                                          16


                                      ADDENDUM C

        LEVEL INCOME OPTION -- FACTORS USING UP84 MORTALITY AND 7.5% INTEREST




    AGE      0/12      1/12      2/12      3/12       4/12      5/12      6/12      7/12      8/12      9/12      10/12      11/12
    ---      ----      ----      ----      ----       ----      ----      ----      ----      ----      ----      -----      -----
                                                                                       
    50     0.30410   0.30651   0.30892   0.31133    0.31374   0.31615   0.31856   0.32097   0.32338   0.32579   0.32820    0.33061

    51     0.33302   0.33570   0.33837   0.34105    0.34373   0.34641   0.34908   0.35176   0.35444   0.35712   0.35979    0.36247

    52     0.36515   0.36813   0.37111   0.37408    0.37706   0.38004   0.38302   0.38600   0.38898   0.39195   0.39493    0.39791

    53     0.40089   0.40421   0.40753   0.41085    0.41417   0.41749   0.42080   0.42412   0.42744   0.43076   0.43408    0.43740

    54     0.44072   0.44443   0.44814   0.45185    0.45556   0.45927   0.46297   0.46668   0.47039   0.47410   0.47781    0.48152

    55     0.48523   0.48938   0.49353   0.49768    0.50184   0.50599   0.51014   0.51429   0.51844   0.52259   0.52675    0.53090

    56     0.53505   0.53971   0.54437   0.54903    0.55369   0.55835   0.56301   0.56767   0.57233   0.57699   0.58165    0.58631

    57     0.59097   0.59621   0.60146   0.60670    0.61194   0.61719   0.62243   0.62767   0.63292   0.63816   0.64340    0.64865

    58     0.65389   0.65980   0.66572   0.67163    0.67755   0.68346   0.68938   0.69529   0.70121   0.70712   0.71304    0.71895

    59     0.72487   0.73156   0.73825   0.74494    0.75164   0.75833   0.76502   0.77171   0.77840   0.78509   0.79179    0.79848

    60     0.80517   0.81276   0.82035   0.82795    0.83554   0.84313   0.85072   0.85832   0.86591   0.87350   0.88109    0.88869

    61     0.89628   0.90492   0.91357   0.92221    0.93085   0.93950   0.94814   0.95678   0.96543   0.97407   0.98271    0.99136

    62     1.00000



                                          1


                                      ADDENDUM D

                       PRE-1998 RIP LEVEL INCOME OPTION FACTORS




    AGE      0/12      1/12      2/12      3/12       4/12      5/12      6/12      7/12      8/12      9/12      10/12      11/12
    ---      ----      ----      ----      ----       ----      ----      ----      ----      ----      ----      -----      -----
                                                                                       
    50     0.30906   0.31148   0.31390   0.31632    0.31875   0.32117   0.32359   0.32601   0.32843   0.33085   0.33328    0.33570

    51     0.33812   0.34080   0.34349   0.34617    0.34886   0.35154   0.35423   0.35691   0.35960   0.36228   0.36497    0.36765

    52     0.37034   0.37332   0.37630   0.37929    0.38227   0.38525   0.38823   0.39122   0.39420   0.39718   0.40016    0.40315

    53     0.40613   0.40945   0.41277   0.41608    0.41940   0.42272   0.42604   0.42936   0.43268   0.43599   0.43931    0.44263

    54     0.44595   0.44965   0.45335   0.45705    0.46075   0.46445   0.46815   0.47186   0.47556   0.47926   0.48296    0.48666

    55     0.49036   0.49450   0.49863   0.50277    0.50690   0.51104   0.51517   0.51931   0.52345   0.52758   0.53172    0.53585

    56     0.53999   0.54462   0.54926   0.55389    0.55852   0.56316   0.56779   0.57242   0.57706   0.58169   0.58632    0.59096

    57     0.59559   0.60079   0.60599   0.61120    0.61640   0.62160   0.62680   0.63201   0.63721   0.64241   0.64761    0.65282

    58     0.65802   0.66388   0.66974   0.67560    0.68146   0.68732   0.69317   0.69903   0.70489   0.71075   0.71661    0.72247

    59     0.72833   0.73495   0.74157   0.74818    0.75480   0.76142   0.76804   0.77466   0.78128   0.78789   0.79451    0.80113

    60     0.80775   0.81525   0.82274   0.83024    0.83774   0.84524   0.85273   0.86023   0.86773   0.87523   0.88272    0.89022

    61     0.89772   0.90624   0.91477   0.92329    0.93181   0.94034   0.94886   0.95738   0.96591   0.97443   0.98295    0.99148

    62     1.00000


Mortality:    1971 TPF&C Forecast Mortality Table (85% male rate, 15% female
              rate)
Interest:     7.5%

                                          1

EX-21

                               SUBSIDIARY LISTING

     The following is a listing of the subsidiaries of each registrant and their
     state of incorporation or organization indented to show degree of
     remoteness from registrant.




                                                                                              STATE OR COUNTRY OF
                                                                                                ORGANIZATION OR
                                 NAME OF COMPANY                                                 INCORPORATION
                 (Indentation indicates subsidiary relationship)

                                                                                           
       CINERGY CORP.                                                                          Delaware

          THE CINCINNATI GAS & ELECTRIC COMPANY                                               Ohio
            The Union Light, Heat and Power Company                                           Kentucky
            Tri-State Improvement Company                                                     Ohio
            Lawrenceburg Gas Company                                                          Indiana
            The West Harrison Gas and Electric Company                                        Indiana
            Miami Power Corporation                                                           Indiana
            KO Transmission Company                                                           Kentucky

          PSI ENERGY, INC.                                                                    Indiana
            South Construction Company, Inc.                                                  Indiana
          Cinergy Services, Inc.                                                              Delaware
          CINERGY INVESTMENTS, INC.                                                           Delaware
            CINERGY-CADENCE, INC.                                                             Indiana
              Cadence Network LLC                                                             Delaware
            CINERGY CAPITAL & TRADING, INC.                                                   Indiana
              CinCap MVC OpCo, LLC                                                            Delaware
              CinCap IV, LLC                                                                  Delaware
              CinCap V, LLC                                                                   Delaware
              CinCap VI, LLC                                                                  Delaware
              CINCAP VIII, LLC                                                                Delaware
                VMC GENERATING COMPANY                                                        Texas
                  CinCap VII, LLC                                                             Delaware
                  Duke Energy Madison, LLC                                                    Delaware
                  Duke Energy Vermillion, LLC                                                 Delaware
              Westwood Operating Company, LLC                                                 Delaware
              CinPower I, LLC                                                                 Delaware
              Cinergy Marketing & Trading, LLC                                                Delaware
            CINERGY COMMUNICATIONS, INC.                                                      Delaware
              Cinergy Telecommunications Networks Holdings, Inc.                              Delaware
              Lattice Communications, LLC                                                     Delaware
            Cinergy Engineering, Inc.                                                         Ohio
            CINERGY-CENTRUS, INC.                                                             Delaware
              Centrus, LLP                                                                    Indiana
            Cinergy-Centrus Communications, Inc.                                              Delaware
            Cinergy Resources, Inc.                                                           Delaware
            CINERGY SOLUTIONS, INC.                                                           Delaware
              1388368 Ontario Inc.                                                            Ontario
                Cinergy Solutions Limited Partnership                                         Ontario
              3036243 Nova Scotia Company                                                     Nova Scotia
                Cinergy Solutions Limited Partnership                                         Ontario
              Cinergy Business Solutions, Inc.                                                Delaware
                Rose Technology Group Limited                                                 Ontario
              Cinergy Customer Care, Inc.                                                     Delaware
              Cinergy EPCOM, LLC                                                              Delaware
              Cinergy EPCOM College Park, LLC                                                 Delaware
              Cinergy Solutions of Golden, Inc.                                               Delaware
              Cinergy Solutions of Tuscola, Inc.                                              Delaware
              Energy Equipment Leasing LLC                                                    Delaware
              Trigen-Cinergy Solutions LLC                                                    Delaware
              Trigen-Cinergy Solutions of Ashtabula, LLC                                      Delaware
              Trigen-Cinergy Solutions of Baltimore LLC                                       Delaware


                                                                      Exhibit 21



              Trigen-Cinergy Solutions of Boca Raton, LLC                                     Delaware
              Trigen-Cinergy Solutions of Cincinnati LLC                                      Ohio
              Trigen-Cinergy Solutions of College Park, LLC                                   Delaware
              Trigen-Cinergy Solutions of Danville LLC                                        Delaware
              Trigen-Cinergy Solutions of Illinois L.L.C.                                     Delaware
              Trigen-Cinergy Solutions of Lansing LLC                                         Delaware
              Trigen-Cinergy Solutions of Orlando LLC                                         Delaware
              Trigen-Cinergy Solutions of Owings Mills LLC                                    Delaware
              Trigen-Cinergy Solutions of Owings Mills Energy Equipment Leasing, LLC          Delaware
              Trigen-Cinergy Solutions of St. Paul LLC                                        Delaware
                St. Paul Cogeneration LLC                                                     Minnesota
              Trigen-Cinergy Solutions of Rochester LLC                                       Delaware
              Trigen-Cinergy Solutions of Silver Grove LLC                                    Delaware
              Trigen-Cinergy Solutions of Tuscola, LLC                                        Delaware
            CINERGY SUPPLY NETWORK, INC.                                                      Delaware
              Reliant Services, LLC                                                           Indiana
            Cinergy Technology, Inc.                                                          Indiana
            Enertech Associates, Inc.                                                         Ohio
          CINERGY GLOBAL RESOURCES, INC.                                                      Delaware
            CINERGY GLOBAL POWER, INC.                                                        Delaware
              CINERGY GLOBAL ELY, INC.                                                        Delaware
                EPR ELY POWER LIMITED                                                         England
                  EPR Ely Limited                                                             England
                    Ely Power Limited                                                         England
                    Anglian Straw Limited                                                     England
              CINERGY GLOBAL FOOTE CREEK, INC.                                                Delaware
                Foote Creek III, LLC                                                          Delaware
              CINERGY GLOBAL FOOTE CREEK  II, INC.                                            Delaware
                Foote Creek II, LLC                                                           Delaware
              CINERGY GLOBAL POWER SERVICES LIMITED                                           England
                Cinergy Global Power Limited                                                  England
                MPI International Limited                                                     England
              CINERGY GLOBAL POWER (UK) LIMITED                                               England
                Cinergy Global Trading Limited                                                England
              CINERGY GLOBAL SAN GORGONIO, INC.                                               Delaware
                San Gorgonio Westwinds II, LLC                                                California
              CINERGY GLOBAL HOLDINGS, INC.                                                   Delaware
                CINERGY HOLDINGS B.V.                                                         The Netherlands
                  CINERGY ZAMBIA B.V.                                                         The Netherlands
                    Copperbelt Energy Corporation PLC                                         Republic of Zambia
                  CINERGY TURBINES B.V.                                                       The Netherlands
                    EOS PAX I S.L. (EOS I)                                                    Spain
                    EOS PAX IIa S.L. (EOS II)                                                 Spain
                  CINERGY HYDRO B.V.                                                          The Netherlands
                   CONSTRUCCIONES Y REPRESENTACIONES INDUSTRIALES S.A.                        Spain
                      Cinergy Global Power Iberia, S.A.                                       Spain
                        Escambeo, S.L.                                                        Spain
                      Parque Eolico de Ascoy, S.A.                                            Spain
                      Ventoabrego, S.L.                                                       Spain
                    Vendresse Limited                                                         Isle of Man
                    CINERGY 1 B.V.                                                            The Netherlands
                     STARTEKOR INVESTEERINGUTE OU                                             Estonia
                        Aktsiaselts Narva Elektrivork                                         Estonia
                    CINERGY GLOBAL RESOURCES 1 B.V.                                           The Netherlands
                      Moravske Teplarny a.s.                                                  Czech Republic
                      Plzenska Energetika s.r.o.                                              Czech Republic
                      Cinergy Global Resources a.s.                                           Czech Republic
                      Cinergetika U/L a.s.                                                    Czech Republic
                      Energetika Chropyne a.s.                                                Czech Republic
                      Teplarna Otrokovice a.s.                                                Czech Republic
                    CINERGY 2 B.V.                                                            The Netherlands
                      Desarrollo Eolico del Ebro S.A.                                         Spain
                      Northeolic Pico Gallo, S.L.                                             Spain


                                                                      Exhibit 21



                      Desarrollos Eolico El Aguila, S.A.                                      Spain
                      Sinergia Aragonesa, S.L.                                                Spain
                  CINERGY GLOBAL BAGHABARI I B.V.                                             The Netherlands
                    Baghabari Power Company Limited                                           Bangladesh
                  CINERGY GLOBAL BAGHABARI II B.V.                                            The Netherlands
                    Baghabari Power Company Limited                                           Bangladesh
                  Cinergy Global 3 B.V.                                                       The Netherlands
                  Cinergy Global 4 B.V.                                                       The Netherlands
              CINERGY GLOBAL (CAYMAN) HOLDINGS, INC.                                          Cayman Islands
                Cinergy Global Hydrocarbons Pakistan                                          Cayman Islands
                Cinergy Global Tsavo Power                                                    Cayman Islands
                Cinergy MPI IV, Inc.                                                          Cayman Islands
                Cinergy MPI V, Inc.                                                           Cayman Islands
                Cinergy MPI VI, Inc.                                                          Cayman Islands
                Cinergy MPI VII, Inc.                                                         Cayman Islands
                Cinergy MPI VIII, Inc.                                                        Cayman Islands
                Cinergy MPI IX, Inc.                                                          Cayman Islands
                Cinergy MPI X, Inc.                                                           Cayman Islands
                Cinergy MPI XI, Inc.                                                          Cayman Islands
                Cinergy MPI, XII, Inc.                                                        Cayman Islands
                Cinergy MPI XIII, Inc.                                                        Cayman Islands
                Cinergy MPI XIV, Inc.                                                         Cayman Islands
                Cinergy MPI XV, Inc.                                                          Cayman Islands
              Midlands Hydrocarbons (Bangladesh) Limited                                      England
              Powermid No. 1                                                                  England
            CINERGY UK, INC.                                                                  Delaware
            PSI ARGENTINA, INC.                                                               Indiana
              Costanera Power Corp.                                                           Indiana
           PSI Energy Argentina, Inc.                                                         Indiana



                                                                      Exhibit 21

EX-23

Consent of Independent Public Accountants


As independent public accountants, we hereby consent to the incorporation by
reference of our report, dated January 26, 2000, included in this Annual Report
on Form 10-K for the year ended December 31, 1999, into (i) Cinergy Corp.'s
previously filed Registration Statement Nos. 33-55267, 33-55291, 33-55293,
33-55713, 33-56067, 33-56089, 33-56091, 33-56093, 33-56095, 333-17531, 333-83461
and 333-83467; (ii) PSI Energy, Inc.'s previously filed Registration Statement
Nos. 33-48612 and 33-57064; (iii) The Cincinnati Gas & Electric Company's
previously filed Registration Statement Nos. 33-45116, 33-52335 and 33-58967;
and (iv) The Union Light, Heat and Power Company's previously filed Registration
Statement No. 33-40245.




Arthur Andersen LLP
Cincinnati, Ohio,
March 3, 2000


                                                                   Exhibit 23

EX-24

                                                                      Exhibit 24



                                POWER OF ATTORNEY


         KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of James E. Rogers and Madeleine W. Ludlow, or either of them, the
undersigned's true and lawful attorney-in-fact and agent to execute for and on
behalf of the undersigned, in the undersigned's capacity as a director of
Cinergy Corp., the Form 10-K Annual Report of said corporation for the fiscal
year ended December 31, 1999, and to deliver said Form 10-K Annual Report so
signed for filing with the Securities and Exchange Commission.

         The undersigned does hereby ratify and confirm all that said
attorneys-in-fact and agents, or either of them, shall lawfully do by virtue
hereof.

         IN WITNESS WHEREOF, the undersigned has hereunto caused this Power of
Attorney to be executed on this 16th day of February, 2000.





                                                     /s/ Kenneth M. Duberstein
                                                     -------------------------
                                                     Kenneth M. Duberstein



                                POWER OF ATTORNEY


         KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of James E. Rogers and Madeleine W. Ludlow, or either of them, the
undersigned's true and lawful attorney-in-fact and agent to execute for and on
behalf of the undersigned, in the undersigned's capacity as a director of each
of Cinergy Corp. and PSI Energy, Inc., the Form 10-K Annual Report of each
corporation for the fiscal year ended December 31, 1999, and to deliver said
Form 10-K Annual Reports so signed for filing with the Securities and Exchange
Commission.

         The undersigned does hereby ratify and confirm all that said
attorneys-in-fact and agents, or either of them, shall lawfully do by virtue
hereof.

         IN WITNESS WHEREOF, the undersigned has hereunto caused this Power of
Attorney to be executed on this 21st day of February, 2000.





                                                     /s/ John A. Hillenbrand II
                                                     ---------------------------
                                                     John A. Hillenbrand II



                                POWER OF ATTORNEY


         KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of James E. Rogers and Madeleine W. Ludlow, or either of them, the
undersigned's true and lawful attorney-in-fact and agent to execute for and on
behalf of the undersigned, in the undersigned's capacity as a director of
Cinergy Corp., the Form 10-K Annual Report of said corporation for the fiscal
year ended December 31, 1999, and to deliver said Form 10-K Annual Report so
signed for filing with the Securities and Exchange Commission.

         The undersigned does hereby ratify and confirm all that said
attorneys-in-fact and agents, or either of them, shall lawfully do by virtue
hereof.

         IN WITNESS WHEREOF, the undersigned has hereunto caused this Power of
Attorney to be executed on this 16th day of February, 2000.





                                                     /s/ George C. Juilfs
                                                     ---------------------------
                                                     George C. Juilfs



                                POWER OF ATTORNEY


         KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of James E. Rogers and Madeleine W. Ludlow, or either of them, the
undersigned's true and lawful attorney-in-fact and agent to execute for and on
behalf of the undersigned, in the undersigned's capacity as a director of
Cinergy Corp., the Form 10-K Annual Report of said corporation for the fiscal
year ended December 31, 1999, and to deliver said Form 10-K Annual Report so
signed for filing with the Securities and Exchange Commission.

         The undersigned does hereby ratify and confirm all that said
attorneys-in-fact and agents, or either of them, shall lawfully do by virtue
hereof.

         IN WITNESS WHEREOF, the undersigned has hereunto caused this Power of
Attorney to be executed on this 16th day of February, 2000.





                                                     /s/ Melvin Perelman
                                                     ---------------------------
                                                     Melvin Perelman



                                POWER OF ATTORNEY


         KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of James E. Rogers and Madeleine W. Ludlow, or either of them, the
undersigned's true and lawful attorney-in-fact and agent to execute for and on
behalf of the undersigned, in the undersigned's capacity as a director of
Cinergy Corp., the Form 10-K Annual Report of said corporation for the fiscal
year ended December 31, 1999, and to deliver said Form 10-K Annual Report so
signed for filing with the Securities and Exchange Commission.

         The undersigned does hereby ratify and confirm all that said
attorneys-in-fact and agents, or either of them, shall lawfully do by virtue
hereof.

         IN WITNESS WHEREOF, the undersigned has hereunto caused this Power of
Attorney to be executed on this 16th day of February, 2000.





                                                     /s/ Thomas E. Petry
                                                     ---------------------------
                                                     Thomas E. Petry



                                POWER OF ATTORNEY


         KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of James E. Rogers and Madeleine W. Ludlow, or either of them, the
undersigned's true and lawful attorney-in-fact and agent to execute for and on
behalf of the undersigned, in the undersigned's capacity as a director of each
of Cinergy Corp., The Cincinnati Gas & Electric Company, and PSI Energy, Inc.,
the Form 10-K Annual Report of each corporation for the fiscal year ended
December 31, 1999, and to deliver said Form 10-K Annual Reports so signed for
filing with the Securities and Exchange Commission.

         The undersigned does hereby ratify and confirm all that said
attorneys-in-fact and agents, or either of them, shall lawfully do by virtue
hereof.

         IN WITNESS WHEREOF, the undersigned has hereunto caused this Power of
Attorney to be executed on this 18th day of February, 2000.





                                                     /s/ Jackson H. Randolph
                                                     ---------------------------
                                                     Jackson H. Randolph



                                POWER OF ATTORNEY


         KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of James E. Rogers and Madeleine W. Ludlow, or either of them, the
undersigned's true and lawful attorney-in-fact and agent to execute for and on
behalf of the undersigned, in the undersigned's capacity as a director of
Cinergy Corp., the Form 10-K Annual Report of said corporation for the fiscal
year ended December 31, 1999, and to deliver said Form 10-K Annual Report so
signed for filing with the Securities and Exchange Commission.

         The undersigned does hereby ratify and confirm all that said
attorneys-in-fact and agents, or either of them, shall lawfully do by virtue
hereof.

         IN WITNESS WHEREOF, the undersigned has hereunto caused this Power of
Attorney to be executed on this 16th day of February, 2000.





                                                     /s/ Mary L. Schapiro
                                                     ---------------------------
                                                     Mary L. Schapiro





                                POWER OF ATTORNEY


         KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of James E. Rogers and Madeleine W. Ludlow, or either of them, the
undersigned's true and lawful attorney-in-fact and agent to execute for and on
behalf of the undersigned, in the undersigned's capacity as a director of
Cinergy Corp., the Form 10-K Annual Report of said corporation for the fiscal
year ended December 31, 1999, and to deliver said Form 10-K Annual Report so
signed for filing with the Securities and Exchange Commission.

         The undersigned does hereby ratify and confirm all that said
attorneys-in-fact and agents, or either of them, shall lawfully do by virtue
hereof.

         IN WITNESS WHEREOF, the undersigned has hereunto caused this Power of
Attorney to be executed on this 21st day of February, 2000.





                                                     /s/ John J. Schiff, Jr.
                                                     ---------------------------
                                                     John J. Schiff, Jr.



                                POWER OF ATTORNEY


         KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of James E. Rogers and Madeleine W. Ludlow, or either of them, the
undersigned's true and lawful attorney-in-fact and agent to execute for and on
behalf of the undersigned, in the undersigned's capacity as a director of
Cinergy Corp., the Form 10-K Annual Report of said corporation for the fiscal
year ended December 31, 1999, and to deliver said Form 10-K Annual Report so
signed for filing with the Securities and Exchange Commission.

         The undersigned does hereby ratify and confirm all that said
attorneys-in-fact and agents, or either of them, shall lawfully do by virtue
hereof.

         IN WITNESS WHEREOF, the undersigned has hereunto caused this Power of
Attorney to be executed on this 18th day of February, 2000.





                                                     /s/ Dudley S. Taft
                                                     ---------------------------
                                                     Dudley S. Taft



                                POWER OF ATTORNEY


         KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of James E. Rogers and Madeleine W. Ludlow, or either of them, the
undersigned's true and lawful attorney-in-fact and agent to execute for and on
behalf of the undersigned, in the undersigned's capacity as a director of each
of The Cincinnati Gas & Electric Company and The Union Light, Heat and Power
Company, the Form 10-K Annual Report of each corporation for the fiscal year
ended December 31, 1999, and to deliver said Form 10-K Annual Reports so signed
for filing with the Securities and Exchange Commission.

         The undersigned does hereby ratify and confirm all that said
attorneys-in-fact and agents, or either of them, shall lawfully do by virtue
hereof.

         IN WITNESS WHEREOF, the undersigned has hereunto caused this Power of
Attorney to be executed on this 17th day of February, 2000.





                                                     /s/ James L. Turner
                                                     ---------------------------
                                                     James L. Turner



                                POWER OF ATTORNEY


         KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of James E. Rogers and Madeleine W. Ludlow, or either of them, the
undersigned's true and lawful attorney-in-fact and agent to execute for and on
behalf of the undersigned, in the undersigned's capacity as a director of
Cinergy Corp., the Form 10-K Annual Report of said corporation for the fiscal
year ended December 31, 1999, and to deliver said Form 10-K Annual Report so
signed for filing with the Securities and Exchange Commission.

         The undersigned does hereby ratify and confirm all that said
attorneys-in-fact and agents, or either of them, shall lawfully do by virtue
hereof.

         IN WITNESS WHEREOF, the undersigned has hereunto caused this Power of
Attorney to be executed on this 18th day of February, 2000.





                                                     /s/ Oliver W. Waddell
                                                     ---------------------------
                                                     Oliver W. Waddell



                                POWER OF ATTORNEY


         KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of James E. Rogers and Madeleine W. Ludlow, or either of them, the
undersigned's true and lawful attorney-in-fact and agent to execute for and on
behalf of the undersigned, in the undersigned's capacity as a director of
Cinergy Corp., the Form 10-K Annual Report of said corporation for the fiscal
year ended December 31, 1999, and to deliver said Form 10-K Annual Report so
signed for filing with the Securities and Exchange Commission.

         The undersigned does hereby ratify and confirm all that said
attorneys-in-fact and agents, or either of them, shall lawfully do by virtue
hereof.

         IN WITNESS WHEREOF, the undersigned has hereunto caused this Power of
Attorney to be executed on this 17th day of February, 2000.





                                                     /s/ Neil A. Armstrong
                                                     ---------------------------
                                                     Neil A. Armstrong



                                POWER OF ATTORNEY


         KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of James E. Rogers and Madeleine W. Ludlow, or either of them, the
undersigned's true and lawful attorney-in-fact and agent to execute for and on
behalf of the undersigned, in the undersigned's capacity as a director of each
of Cinergy Corp. and PSI Energy, Inc., the Form 10-K Annual Report of each
corporation for the fiscal year ended December 31, 1999, and to deliver said
Form 10-K Annual Reports so signed for filing with the Securities and Exchange
Commission.

         The undersigned does hereby ratify and confirm all that said
attorneys-in-fact and agents, or either of them, shall lawfully do by virtue
hereof.

         IN WITNESS WHEREOF, the undersigned has hereunto caused this Power of
Attorney to be executed on this 16th day of February, 2000.





                                                     /s/ James K. Baker
                                                     ---------------------------
                                                     James K. Baker



                                POWER OF ATTORNEY


         KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of James E. Rogers and Madeleine W. Ludlow, or either of them, the
undersigned's true and lawful attorney-in-fact and agent to execute for and on
behalf of the undersigned, in the undersigned's capacity as a director of each
of Cinergy Corp. and PSI Energy, Inc., the Form 10-K Annual Report of each
corporation for the fiscal year ended December 31, 1999, and to deliver said
Form 10-K Annual Reports so signed for filing with the Securities and Exchange
Commission.

         The undersigned does hereby ratify and confirm all that said
attorneys-in-fact and agents, or either of them, shall lawfully do by virtue
hereof.

         IN WITNESS WHEREOF, the undersigned has hereunto caused this Power of
Attorney to be executed on this 21st day of February, 2000.





                                                     /s/ Michael G. Browning
                                                     ---------------------------
                                                     Michael G. Browning



                                POWER OF ATTORNEY


         KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of James E. Rogers and Madeleine W. Ludlow, or either of them, the
undersigned's true and lawful attorney-in-fact and agent to execute for and on
behalf of the undersigned, in the undersigned's capacity as a director of
Cinergy Corp., the Form 10-K Annual Report of said corporation for the fiscal
year ended December 31, 1999, and to deliver said Form 10-K Annual Report so
signed for filing with the Securities and Exchange Commission.

         The undersigned does hereby ratify and confirm all that said
attorneys-in-fact and agents, or either of them, shall lawfully do by virtue
hereof.

         IN WITNESS WHEREOF, the undersigned has hereunto caused this Power of
Attorney to be executed on this 17th day of February, 2000.





                                                     /s/ Phillip R. Cox
                                                     ---------------------------
                                                     Phillip R. Cox



                                POWER OF ATTORNEY


         KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of James E. Rogers and Madeleine W. Ludlow, or either of them, the
undersigned's true and lawful attorney-in-fact and agent to execute for and on
behalf of the undersigned, in the undersigned's capacity as a director of
Cinergy Corp., the Form 10-K Annual Report of said corporation for the fiscal
year ended December 31, 1999, and to deliver said Form 10-K Annual Report so
signed for filing with the Securities and Exchange Commission.

         The undersigned does hereby ratify and confirm all that said
attorneys-in-fact and agents, or either of them, shall lawfully do by virtue
hereof.

         IN WITNESS WHEREOF, the undersigned has hereunto caused this Power of
Attorney to be executed on this 18th day of February, 2000.





                                                     /s/ Philip R. Sharp
                                                     -------------------
                                                     Philip R. Sharp

                                                                     Exhibit 24

EX-27.1

 


<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED
STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.

<CIK> 0000899652
<NAME> CARYL WEST
<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               DEC-31-1999
<BOOK-VALUE>                                  PER-BOOK
<TOTAL-NET-UTILITY-PLANT>                    6,417,472
<OTHER-PROPERTY-AND-INVEST>                    358,853
<TOTAL-CURRENT-ASSETS>                       1,203,691
<TOTAL-DEFERRED-CHARGES>                     1,055,012
<OTHER-ASSETS>                                 581,920
<TOTAL-ASSETS>                               9,616,948
<COMMON>                                         1,589
<CAPITAL-SURPLUS-PAID-IN>                    1,597,554
<RETAINED-EARNINGS>                          1,054,578
<TOTAL-COMMON-STOCKHOLDERS-EQ>               2,653,721
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                     92,597
<LONG-TERM-DEBT-NET>                         2,989,242
<SHORT-TERM-NOTES>                             550,194
<LONG-TERM-NOTES-PAYABLE>                            0
<COMMERCIAL-PAPER-OBLIGATIONS>                       0
<LONG-TERM-DEBT-CURRENT-PORT>                   31,000
<PREFERRED-STOCK-CURRENT>                            0
<CAPITAL-LEASE-OBLIGATIONS>                          0
<LEASES-CURRENT>                                     0
<OTHER-ITEMS-CAPITAL-AND-LIAB>               3,300,194
<TOT-CAPITALIZATION-AND-LIAB>                9,616,948
<GROSS-OPERATING-REVENUE>                    5,937,888
<INCOME-TAX-EXPENSE>                           208,671
<OTHER-OPERATING-EXPENSES>                   5,244,665
<TOTAL-OPERATING-EXPENSES>                   5,453,336
<OPERATING-INCOME-LOSS>                        484,552
<OTHER-INCOME-NET>                             159,324
<INCOME-BEFORE-INTEREST-EXPEN>                 643,876
<TOTAL-INTEREST-EXPENSE>                       234,778
<NET-INCOME>                                   409,098
<PREFERRED-STOCK-DIVIDENDS>                      5,457
<EARNINGS-AVAILABLE-FOR-COMM>                  403,641
<COMMON-STOCK-DIVIDENDS>                     (284,545)
<TOTAL-INTEREST-ON-BONDS>                      205,798
<CASH-FLOW-OPERATIONS>                         342,618
<EPS-BASIC>                                       2.54
<EPS-DILUTED>                                     2.53


 

EX-27.2

 


<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED
STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.

<CIK> 0000020290
<NAME> CARYL WEST
<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               DEC-31-1999
<BOOK-VALUE>                                  PER-BOOK
<TOTAL-NET-UTILITY-PLANT>                    3,762,826
<OTHER-PROPERTY-AND-INVEST>                          0
<TOTAL-CURRENT-ASSETS>                         500,447
<TOTAL-DEFERRED-CHARGES>                       536,224
<OTHER-ASSETS>                                 117,121
<TOTAL-ASSETS>                               4,916,618
<COMMON>                                       762,136
<CAPITAL-SURPLUS-PAID-IN>                      562,851
<RETAINED-EARNINGS>                            334,178
<TOTAL-COMMON-STOCKHOLDERS-EQ>               1,659,165
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                     20,686
<LONG-TERM-DEBT-NET>                         1,205,916
<SHORT-TERM-NOTES>                             234,702
<LONG-TERM-NOTES-PAYABLE>                            0
<COMMERCIAL-PAPER-OBLIGATIONS>                       0
<LONG-TERM-DEBT-CURRENT-PORT>                   60,360
<PREFERRED-STOCK-CURRENT>                            0
<CAPITAL-LEASE-OBLIGATIONS>                          0
<LEASES-CURRENT>                                     0
<OTHER-ITEMS-CAPITAL-AND-LIAB>               1,735,789
<TOT-CAPITALIZATION-AND-LIAB>                4,916,618
<GROSS-OPERATING-REVENUE>                    2,550,874
<INCOME-TAX-EXPENSE>                           143,676
<OTHER-OPERATING-EXPENSES>                   2,071,405
<TOTAL-OPERATING-EXPENSES>                   2,215,081
<OPERATING-INCOME-LOSS>                        335,793
<OTHER-INCOME-NET>                             (2,480)
<INCOME-BEFORE-INTEREST-EXPEN>                 333,313
<TOTAL-INTEREST-EXPENSE>                        99,737
<NET-INCOME>                                   233,576
<PREFERRED-STOCK-DIVIDENDS>                        856
<EARNINGS-AVAILABLE-FOR-COMM>                  232,720
<COMMON-STOCK-DIVIDENDS>                     (250,100)
<TOTAL-INTEREST-ON-BONDS>                       95,611
<CASH-FLOW-OPERATIONS>                         483,366
<EPS-BASIC>                                       0.00
<EPS-DILUTED>                                     0.00


 

EX-27.3

 


<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED
STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.

<CIK> 0000081020
<NAME> CARYL WEST
<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               DEC-31-1999
<BOOK-VALUE>                                  PER-BOOK
<TOTAL-NET-UTILITY-PLANT>                    2,654,646
<OTHER-PROPERTY-AND-INVEST>                          0
<TOTAL-CURRENT-ASSETS>                         596,010
<TOTAL-DEFERRED-CHARGES>                       518,788
<OTHER-ASSETS>                                  92,392
<TOTAL-ASSETS>                               3,834,836
<COMMON>                                           539
<CAPITAL-SURPLUS-PAID-IN>                      411,198
<RETAINED-EARNINGS>                            643,960
<TOTAL-COMMON-STOCKHOLDERS-EQ>               1,055,697
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                     71,911
<LONG-TERM-DEBT-NET>                         1,211,552
<SHORT-TERM-NOTES>                             232,597
<LONG-TERM-NOTES-PAYABLE>                            0
<COMMERCIAL-PAPER-OBLIGATIONS>                       0
<LONG-TERM-DEBT-CURRENT-PORT>                    6,707
<PREFERRED-STOCK-CURRENT>                            0
<CAPITAL-LEASE-OBLIGATIONS>                          0
<LEASES-CURRENT>                                     0
<OTHER-ITEMS-CAPITAL-AND-LIAB>               1,256,372
<TOT-CAPITALIZATION-AND-LIAB>                3,834,836
<GROSS-OPERATING-REVENUE>                    2,135,706
<INCOME-TAX-EXPENSE>                            69,215
<OTHER-OPERATING-EXPENSES>                   1,863,682
<TOTAL-OPERATING-EXPENSES>                   1,932,897
<OPERATING-INCOME-LOSS>                        202,809
<OTHER-INCOME-NET>                                 655
<INCOME-BEFORE-INTEREST-EXPEN>                 203,464
<TOTAL-INTEREST-EXPENSE>                        86,265
<NET-INCOME>                                   117,199
<PREFERRED-STOCK-DIVIDENDS>                      4,601
<EARNINGS-AVAILABLE-FOR-COMM>                  112,598
<COMMON-STOCK-DIVIDENDS>                      (35,900)
<TOTAL-INTEREST-ON-BONDS>                       77,090
<CASH-FLOW-OPERATIONS>                          46,833
<EPS-BASIC>                                       0.00
<EPS-DILUTED>                                     0.00


 

EX-27.4

 


<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED
STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.

<CIK> 0000100858
<NAME> CARYL WEST
<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               DEC-31-1999
<BOOK-VALUE>                                  PER-BOOK
<TOTAL-NET-UTILITY-PLANT>                      296,551
<OTHER-PROPERTY-AND-INVEST>                          0
<TOTAL-CURRENT-ASSETS>                          30,075
<TOTAL-DEFERRED-CHARGES>                        10,639
<OTHER-ASSETS>                                   5,000
<TOTAL-ASSETS>                                 342,265
<COMMON>                                         8,780
<CAPITAL-SURPLUS-PAID-IN>                       20,142
<RETAINED-EARNINGS>                            103,128
<TOTAL-COMMON-STOCKHOLDERS-EQ>                 132,050
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<LONG-TERM-DEBT-NET>                            74,557
<SHORT-TERM-NOTES>                              37,752
<LONG-TERM-NOTES-PAYABLE>                            0
<COMMERCIAL-PAPER-OBLIGATIONS>                       0
<LONG-TERM-DEBT-CURRENT-PORT>                        0
<PREFERRED-STOCK-CURRENT>                            0
<CAPITAL-LEASE-OBLIGATIONS>                          0
<LEASES-CURRENT>                                     0
<OTHER-ITEMS-CAPITAL-AND-LIAB>                  97,906
<TOT-CAPITALIZATION-AND-LIAB>                  342,265
<GROSS-OPERATING-REVENUE>                      280,962
<INCOME-TAX-EXPENSE>                            10,184
<OTHER-OPERATING-EXPENSES>                     250,823
<TOTAL-OPERATING-EXPENSES>                     261,007
<OPERATING-INCOME-LOSS>                         19,955
<OTHER-INCOME-NET>                             (1,567)
<INCOME-BEFORE-INTEREST-EXPEN>                  18,388
<TOTAL-INTEREST-EXPENSE>                         6,114
<NET-INCOME>                                    12,274
<PREFERRED-STOCK-DIVIDENDS>                          0
<EARNINGS-AVAILABLE-FOR-COMM>                   12,274
<COMMON-STOCK-DIVIDENDS>                       (9,659)
<TOTAL-INTEREST-ON-BONDS>                        5,192
<CASH-FLOW-OPERATIONS>                          32,537
<EPS-BASIC>                                       0.00
<EPS-DILUTED>                                     0.00