EMPLOYMENT AGREEMENT


     EMPLOYMENT AGREEMENT made and entered into as of the 24th day of October, 
1994, by and among Cinergy Corp., a Delaware Corporation ("Cinergy"), Cinergy 
Services, Inc., a Delaware Corporation ("Cinergy Services"), The Cincinnati 
Gas & Electric Company, an Ohio Corporation ("CG&E"), PSI Energy, Inc., an 
Indiana Corporation ("PSI"), and J. Wayne Leonard (the "Executive").  Cinergy, 
Cinergy Services, CG&E, and PSI will sometimes be referred to in this 
Employment Agreement collectively as the "Corporation".

     WHEREAS, the Corporation desires that the Executive become an employee in 
accordance with this Employment Agreement;

     WHEREAS, the Executive is willing to commit himself to the employ of the 
Corporation and any successor thereto, on the terms and conditions set forth 
in this Employment Agreement and thus to forego opportunities elsewhere; and

     WHEREAS, the parties desire to enter into this Employment Agreement as of 
the date first set forth above setting forth the terms and conditions for the 
employment relationship of the Executive;

     NOW, THEREFORE, IN CONSIDERATION of the mutual premises, covenants and 
agreements set forth below, it is hereby agreed as follows:

1.    Employment and Term.

      a.    The Corporation agrees to employ the Executive, and the Executive 
            agrees to be employed, in accordance with the terms and provisions 
            of this Employment Agreement for the period set forth below (the 
            "Employment Period").

      b.    The Employment Period of the Executive as provided in Section 1(a) 
            will commence on October 24, 1994 (the "Effective Date") and shall 
            continue until December 31, 1997; provided, however, commencing on 
            January 1, 1996, and each January 1 thereafter (the "Renewal 
            Date"), the Employment Period of this Employment Agreement may 
            automatically be extended for one (1) additional year if the 
            Corporation shall have given notice to the Executive of its intent 
            to extend this Employment Agreement prior to such Renewal Date and 
            the Executive shall not have objected to such extension in writing 
            within ten (10) business days of receipt of such notice.

2.     Duties and Powers of Executive.

       a.   Position.  The Executive shall serve the Corporation in such 
            responsible executive capacity or capacities as the Board of 
            Directors of Cinergy or Cinergy Services (the Board of Directors 
            of Cinergy or Cinergy Services, as the case may be, may be 
            referred to sometimes as the "Board") or the Chief Executive 
            Officer of Cinergy or the Chief Operating Officer of Cinergy may 
            from time to time determine and shall have such responsibilities, 
            duties and authority as may be assigned to him from time to time 
            during the Employment Period by the Board or the Chief Executive 
            Officer of Cinergy or the Chief Operating Officer of Cinergy that 
            are consistent with such responsibilities, duties and authority.  
            Upon the Effective Date of this Employment Agreement, the 
            Executive shall initially serve as Group Vice President and Chief 
            Financial Officer for the Corporation, but consistent with the 
            foregoing provisions of this Section 2(a), may be assigned to any 
            other position or positions by either the Board or the Chief 
            Executive Officer of Cinergy or the Chief Operating Officer of 
            Cinergy during the Employment Period.

b.  Place of Performance.  In connection with the Executive's employment, the 
    Executive shall be based at the principal executive offices of the 
    Corporation, 221 East Fourth Street, Cincinnati, Ohio, and, except for 
    required business travel to an extent substantially consistent with the 
    present business travel obligations of executives of the Corporation who 
    have positions of authority comparable to that of the Executive, the 
    Executive shall not be required to relocate to a new principal place of 
    business which is more that thirty (30) miles from the current principal 
    place of business of the Corporation.

3.   Compensation.  The Executive shall receive the following compensation for 
     his services under this Employment Agreement.

     a.   Salary.  The Executive's annual base salary (the "Annual Base 
          Salary"), payable not less often than semi-monthly, shall be at the 
          annual rate of not less than $250,000.00.  The Board may, from time 
          to time, direct such upward adjustments in the Annual Base Salary as 
          the Board deems to be necessary or desirable, including without 
          limitation adjustments in order to reflect increases in the cost of 
          living.  Any increase in the Annual Base Salary shall not serve to 
          limit or reduce any other obligation of the Corporation under this 
          Employment Agreement.  The Annual Base Salary shall not be reduced 
          after any increase thereof except for across-the-board salary 
          reductions similarly affecting all management personnel of Cinergy, 
          Cinergy Services, PSI or CG&E.

    b.   Retirement, Incentive, Welfare Benefit Plans and Other Benefits.  
         During the Employment Period and so long as the Executive is employed 
         by the Corporation, the Executive shall be eligible, and the 
         Corporation shall take such actions as may be necessary or required 
         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 the Corporation, including but not limited to 
         Cinergy's Annual Incentive Plan, Cinergy's Performance Shares Plan, 
         Cinergy's Executive Supplemental Life Insurance Program, Cinergy's 
         Stock Option Plan, PSI's Pension Plan and PSI's Excess Benefit Plan, 
         or any successors thereto, except with respect to any plan, practice, 
         policy or program to which the Executive has waived his rights in 
         writing.

    c.   Fringe Benefits and Perquisites.  During the Employment Period and so 
         long as the Executive is employed by the Corporation, the Executive 
         shall be entitled to the following additional fringe benefits:

         (i)    The Corporation shall furnish to the Executive an automobile 
          and shall pay all of the related expenses for gasoline, insurance, 
          maintenance and repairs, 

        (ii)    The Corporation shall pay the initiation fee and the annual 
        dues, assessments and other membership charges of the Executive for 
        membership charges of the Executive for membership in a country club 
        selected by the Executive,
      (iii)  The Corporation shall provide paid vacation for four (4) weeks 
      per year (or longer if permitted by the Corporation's policy), and

      (iv)  The Corporation shall furnish to the Executive annual financial 
      planning and tax preparation services.  In addition, the Executive shall 
      be entitled to receive such other fringe benefits in accordance with the 
      plans, practices, programs and policies of the Corporation from time to 
      time in effect, commensurate with his position and at least comparable 
      to those received by other senior executives of the Corporation.

  d.  Expenses.  The Corporation 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 Employment 
      Agreement in accordance with the policies established from time to time 
      by the Board.

  e.  Relocation Benefits.  The Executive shall be entitled to reimbursement 
      from the Corporation pursuant to the terms of the Corporation Relocation 
      Program in effect as of the day and year first written above, as well as 
      all actual expenses for temporary housing until such time as he has 
      moved into a new primary residence in the general area of the 
      Corporation's principal corporate office located in Cincinnati, Ohio.  
      The expenses described in this Section shall be "grossed up" to provide 
      for adverse tax consequences to the Executive.

4.    Termination of Employment.

  a.  Death.  The Executive's employment shall terminate automatically upon 
      the Executive's death during the Employment Period.

  b.  By the Corporation for Cause.  The Corporation may terminate the 
      Executive's employment during the Employment Period for Cause.  For 
      purposes of this Employment Agreement, "Cause" shall mean:

     (i)   The willful and continued failure by the Executive to substantially 
     perform the Executive's duties with the Corporation (other than any such 
     failure resulting from Executive's incapacity due to physical or mental 
     illness or any such actual or anticipated failure after the issuance of a 
     Notice of Termination for Good Reason by the Executive pursuant to
     Section 4(c) after a written demand for substantial performance is 
     delivered to the Executive by the Board, which demand specifically 
     identifies the manner in which the Board believes that the Executive has 
     not substantially performed the Executive's duties, or

     (ii)   The breach by the Executive of the confidentiality provisions set 
     forth in Section 8 of this Employment Agreement, or

     (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 the Corporation.  For purposes of this 
     definition of "Cause", no act, or failure to act, on the Executive's part 
     shall be deemed "willful" unless done, or omitted to be done, by the 
     
Executive not in good faith and without reasonable belief that the Executive's 
act, or failure to act, was in the best interest of the Corporation.  
Notwithstanding the above definition of "Cause", the Corporation may terminate 
the Executive's employment during the Employment Period for a reason other 
than Cause, but the obligations placed upon the Corporation in Section 5 shall 
apply.

     c.   By the Executive for Good Reason.  The Executive may terminate his 
     employment during the Employment Period for Good Reason.  For purposes of 
     this Employment Agreement, "Good Reason" shall mean:

            (i)   The reduction in the Executive's Annual Base Salary as 
            specified in Section 3(a) of this Employment Agreement, or any 
            other benefit or payment described in Section 3 of this Employment 
            Agreement, except for across-the-board salary reductions similarly 
            affecting all management personnel of Cinergy, Cinergy Services, 
            CG&E, and PSI, and changes to the employee benefits programs 
            affecting all management personnel of those Corporations, provided 
            that such changes (either individually or in the aggregate) will 
            not result in a material adverse change with respect to the 
            benefits which the Executive was entitled to receive 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;

            (iii)  Any breach by the Corporation of any other material 
            provision (including but not limited to the place of performance 
            as specified in Section 2(b);

            (iv)  The Executive's disability due to physical or mental illness 
             or injury which precludes the Executive from performing any job 
             for which he is qualified and able to perform based upon his 
             education, training or experience; or

            (v)   Any event which constitutes a "Change in Control" as defined 
            in Section 4(f) of this Employment Agreement.

      d.   Notice of Termination.  Any termination by the Corporation for 
      cause, or by the Executive for Good Reason, shall be communicated by 
      Notice of Termination to the other party to this Employment Agreement 
      given in accordance with Section 10(b) of this Employment Agreement.  
      For purposes of this Employment Agreement, a "Notice of Termination" 
      means a written notice which:

            (i)  Indicates the specific termination provision in this 
                Employment Agreement relied upon,

            (ii)  To the extent applicable, sets forth in reasonable detail 
            the facts and circumstances claimed to provide a basis for 
            termination of the Executive's employment under the provision so 
            indicated, and

             (iii)  If the Date of Termination (as defined in Section 4(e)) is 
            other than the date of receipt of such notice, specifies the 
            termination date (which date shall be not more than thirty (30) 
            days after the giving of such notice).  The failure by the 
            Executive or the Corporation to set forth in the Notice of 
            Termination any fact or circumstances which contributes to a 
            showing of Good Reason or Cause shall not waive any right of the 
            Executive or the Corporation under this Employment Agreement or 
            preclude the Executive or the Corporation from asserting such fact 
             or circumstances in enforcing the Executive's or the 
             Corporation's rights under this Employment Agreement.

       e.    Date of Termination.  "Date of Termination" means:

             (i)  If the Executive's employment is terminated by the 
             Corporation for Cause, or by the Executive for Good Reason, the 
             date of receipt of the Notice of Termination or any later date 
             specified therein, as the case may be,

            (ii)  If the Executive's employment is terminated by the 
            Corporation other than for Cause, the date on which the 
            Corporation notifies the Executive of such termination, and

            (iii)  If the Executive's employment is terminated by reason of 
             death, the date of death.

       f.   Change in Control.  A "Change in Control" shall be deemed to have 
       occurred if any of the following events occur after the Effective Date:

            (i)   Any corporation, person, other entity or group becomes the 
             "beneficial owner" (as defined in Rule 13d-3 under the Securities 
             Exchange Act of 1934) of more than fifty percent (50%) of the 
             then outstanding voting stock of Cinergy otherwise than through a 
             transaction arranged by, or consummated with, the prior approval 
             of the Board;

            (ii)   The shareholders of Cinergy approve a definite agreement to 
            merge or consolidate with or into another corporation in a 
            transaction in which neither Cinergy nor any of its subsidiaries 
            or affiliates will be the surviving corporation, or to sell or 
            otherwise dispose of all or substantially all of Cinergy's assets 
            to any person or group other than Cinergy or any of its 
            subsidiaries or affiliates, other than a merge or a sale which 
            will result in the voting securities of Cinergy outstanding prior 
            to the merger or sale continuing to represent at least fifty 
            percent (50%) of the combined voting power of the voting 
            securities of the corporation surviving the merger or purchasing 
            the assets; or
            (iii)   During any period of two (2) consecutive years, 
            individuals who at the beginning of such period constitute the 
            Board of Directors of Cinergy (and any new director whose election 
            by the Board of Directors of Cinergy or whose nomination for 
            election by Cinergy's stockholders was approved 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 such period or whose 
            election or nomination for election was previously so approved) 
            cease for any reason to constitute a majority of Cinergy's Board 
            of Directors.

      g.    Person.  "Person" shall have the meaning given in Section 3(a)(9) 
      of the Securities Exchange Act of 1934, as modified and used in Sections 
      13(d) and 14(d) thereof; however, a Person shall not include:

            (i)   The Corporation or any of its subsidiaries,

            (ii)  A trustee or other fiduciary holding securities under an 
             employee benefit plan of Cinergy or any of its subsidiaries,

            (iii)  An underwriter temporarily holding securities pursuant to 
             an offering of such securities, or

            (iv)  A corporation owned, directly or indirectly, by the 
             stockholders of Cinergy in substantially the same proportions as 
             their ownership of stock of the Corporation.

5.    Obligations of the Corporation Upon Termination.

      a.    Certain Terminations.  During the Employment Period, if the 
      Corporation shall terminate the Executive's employment (other than in 
      the case of a termination for Cause), the Executive shall terminate his 
      employment for Good Reason or the Executive's employment shall terminate 
      by reason of death (termination in any such case referred to as 
      "Termination"):

           (i)   The Corporation shall pay to the Executive a lump sum amount, 
            in case, equal to the sum of:

                  (1)   the Executive's Annual Base Salary through the Date of 
                  Termination to the extent not previously paid, 

                  (2)   an amount equal to the Cinergy Annual Incentive Plan 
                  target percentage benefit for the fiscal year that includes 
                  the Date of Termination multiplied by a fraction the 
                  numerator of which shall be the number of days from the 
                  beginning of such fiscal year to and including the Date of 
                  Termination and the denominator of which shall be three 
                  hundred and sixty-five (365),

                  (3)   an amount equal to his vested accrued benefit under 
                   the Cinergy Performance Shares Plan, and

                  (4)   any compensation previously deferred by the Executive 
                  (together with any accrued interest or earnings thereon) and 
                  any accrued vacation pay, in each case to the extent not 
                  previously paid.  
 
                         (The amounts specified in clauses (1), (2), (3) and 
                         (4) shall be referred to in this Employment Agreement 
                          as the "Accrued Obligations".)  The amounts 
                          specified in this Section 5(a)(i) shall be paid 
                          within thirty (30) days after the Date of 
                          Termination.  The Accrued Obligations described in 
                          this Section 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 Termination other than by reason of the Executive's death, 
      then:

               (1)    the Corporation shall pay to the Executive a lump sum 
               amount, in cash, equal to the present value discounted using an 
               interest rate equal to the prime rate promulgated by CitiBank, 
               N.A. and in effect as of the Date of Termination (the "Prime 
               Rate") of the Annual Base Salary, and the Cinergy Annual 
               Incentive Plan target percentage payable through the end of the 
              Employment Period, each at the rate, and using the same goals 
               and factors, in effect at the time Notice of Termination is 
               given, and paid within thirty (30) days of the Date of 
               Termination;

               (2)   the Corporation shall 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 the Corporation until the end of the 
                Employment Period, each, where applicable, at the rate of the 
                Annual Base Salary, and using the same goals and factors, in 
                effect at the time Notice of Termination is given, under the 
                Cinergy Performance Shares Plan and the Cinergy Executive 
                Supplemental Life Insurance Program minus the present value 
                (discounted at the Prime Rate) of the benefits to which he is 
                actually entitled under the above mentioned plans and 
                programs;

          (3)   the Corporation shall pay the value of all deferred 
          compensation amounts and all executive life insurance benefits 
          whether or not then vested or payable; and

          (4)   the Corporation shall continue, until the end of the 
          Employment Period, medical and welfare benefits to the Executive 
          and/or the Executive's family at least equal to those which 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), such benefits to be in accordance with the most 
          favorable medical and welfare benefit plans, practices, programs or 
          policies (the "M&W Plans") of the Corporation as in effect and 
          applicable generally to other senior executives of the Corporation 
          and their families during the ninety (90) day period immediately 
          preceding the Date of Termination; provided, however, that if the 
          Executive becomes employed with another employer and is eligible to 
          receive medical or other welfare benefits under another employer-
          provided plan, the benefits under the M&W Plans shall be secondary 
          to those provided under such other plan during such applicable 
          period of eligibility.

             (iii)    From and after the occurrence of a Change in Control and 
           in the event of Termination other than by reason of the Executive's 
           death, 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 Section 5(a)(ii) of this 
           Employment Agreement:

                (1)     The Corporation shall 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 Sections 5(a)(ii) of 
                        this Employment Agreement, excluding Section 
                        5(a)(ii)(4), and

                        (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 incentive compensation or bonus plans 
                        or programs maintained by the Corporation, 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, the Corporation shall arrange to provide the 
                  Executive with life, disability, accident and health 
                  insurance benefits substantially similar to those which the 
                  Executive is receiving immediately prior to the Notice of 
                  Termination (without giving effect to any reduction in such 
                  benefits subsequent to a Change in Control which reduction 
                  constitutes Good Reason), except for any benefits that were 
                  waived by the Executive in writing.  Benefits otherwise 
                  receivable by the Executive pursuant to this Section 
                  5(a)(iii)(2) shall 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 termination of employment 
                   (and any such benefits actually received by the Executive 
                   shall be reported to the Corporation by the Executive).

The Executive's employment shall be deemed to have been terminated following a 
Change in Control of Cinergy without Cause or by the Executive for Good Reason 
if, in addition to all other applicable Terminations, 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 or any of 
its subsidiaries or affiliates, 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 which 
constitutes Good Reason occurs at the direction of such Person.

            b.    Termination by the Corporation for Cause or by the Executive 
            Other Than for Good Reason.  Subject to the provisions of Section 
            7 of this Employment Agreement, if the Executive's employment 
            shall be terminated for Cause during the Employment Period, or if 
            the Executive terminates employment during the Employment Period 
            other than a termination for Good Reason, the Corporation shall 
            have no further obligations to the Executive under this Employment 
            Agreement other than the obligation to pay to the Executive the 
            Accrued Obligations and the amounts determined under Section 5(c), 
            plus any other earned but unpaid compensation, in each case to the 
            extent not previously paid.

            c.    Retirement Benefits on Termination.  In addition to 
            retirement benefits under PSI's Pension Plan and PSI's Excess 
            Benefit Plan, or any successors thereto, the Executive shall also 
            be eligible to participate in any supplemental executive 
            retirement plan (commonly referred to as a "SERP") sponsored by 
            the Corporation.

            d.    Survival of Section 5(c).  The provisions of Section 5(c) 
            shall survive the expiration or termination of this Employment 
            Agreement for any reason.

            e.    Certain Tax Consequences.  In the event that the Executive 
            becomes entitled to the payments and benefits described in 
            this Section 5 (the "Severance Benefits"), if any of the 
            Severance Benefits will be subject to any excise tax (the "Excise 
            Tax") imposed under Section 4999 of the Internal Revenue Code of 
            1986, as amended (the "Code"), the Corporation shall pay to the 
            Executive an additional amount (the "Gross-Up Payment") such that 
            the net amount retained by the Executive, after deduction of an 
            Excise Tax on the Severance Benefits and any federal, state and 
            local income and employment tax and Excise Tax upon the payment 
            provided for by this Section 5, shall be equal to the Severance 
            Benefits.  For purposes of determining whether any of the 
            Severance Benefits will be subject to the Excise Tax and the 
            amount of such Excise Tax, 

            (i)   any other payments or benefits received or to be received by 
            the Executive in connection with a Change in Control or the 
            Executive's termination of employment (whether pursuant to the 
            terms of this Employment Agreement or any other plan, arrangement 
            or agreement with the Corporation, any Person whose actions result 
            in a Change in Control or any Person affiliated with the 
            Corporation or such Person) shall be treated as "parachute 
            payments" within the meaning of Section 280G(b)(2) of the Code, 
            and all "excess parachute payments" within the meaning of Section 
            280G(b)(1) of the Code shall be treated as subject to the Excise
            Tax, unless in the opinion of tax counsel selected by the 
            Corporation's independent auditors and reasonably acceptable to 
            the Executive such other payments or benefits (in whole or in 
            part) do not constitute parachute payments, including by reason of 
            Section 280G(b)(4)(A) of the Code, or such excess parachute 
            payments (in whole or in part) represent reasonable compensation 
            for services actually rendered, within the meaning of Section 
            280G(b)(4)(B) of the Code, in excess of the Base Amount as 
            defined in Section 280G(b)(3) of the Code allocable to such 
            reasonable compensation, or are otherwise not subject to the 
            Excise Tax,

       (ii)  the amount of the Severance Benefits that shall be treated as 
        subject to the Excise Tax shall be equal to the lesser of

    (1)   the total amount of the Severance Benefits, or

    (2)   the amount of excess parachute payments within the meaning of 
    Section 280G(b)(1) of the Code (after applying clause (i), above), and

         (iii)   the value of any non-cash benefits or any deferred payment or 
         benefit shall be determined by the Corporation's independent auditors 
         in accordance with the principles of Section 280G(d)(3) and (4) of 
         the Code.  For purposes of determining the amount of the Gross-Up 
         Payment, the Executive shall 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 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 which would be 
         obtained from deduction of such state and local taxes.  In the event 
         that the Excise Tax is subsequently determined to be less than the 
         amount taken into account hereunder at the time of termination of the 
         Executive's employment, the Executive shall repay to the Corporation, 
         at the time that the amount of such reduction in Excise Tax is 
         finally determined, the portion of the Gross-Up Payment attributable 
         to such reduction (plus that portion of the Gross-Up Payment 
         attributable to the Excise Tax and federal, state and local income 
         and employment tax imposed on the Gross-Up Payment being repaid by 
         the Executive to the extent that such repayment results in a 
         reduction in Excise Tax and/or a federal, state or local income or 
         employment tax deduction) plus interest on the amount of such 
         repayment at the  rate provided in Section 1274(b)(2)(B) of the Code.  
         In the event that the Excise Tax is determined to exceed the amount 
         taken into account hereunder at the time of the termination of the 
         Executive's employment (including by reason of any payment the 
         existence or amount of which cannot be determined at the time of the 
         Gross-Up Payment), the Corporation shall make an additional Gross-Up 
         Payment in respect of such excess (plus any interest, penalties or 
         additions payable by the Executive with respect to such excess) at 
         the time that the amount of such excess is finally determined.  The 
         Executive and the Corporation shall each reasonably cooperate with 
         the other in connection with any administrative or judicial 
         proceedings concerning the existence or amount of liability for 
         Excise Tax with respect to the Severance Benefits.

          f.   Other Fees and Expenses.  The Corporation also shall pay to the 
          Executive all legal fees and expenses incurred by the Executive as a 
          result of a termination which entitles the Executive to the 
          Severance Benefits (including all such fees and expenses, if any, 
          incurred in disputing any such termination or in seeking in good 
          faith to obtain or enforce any benefit or right provided by this 
          Employment Agreement).  Such payments shall be made within five (5) 
          business days after delivery of the Executive's written requests for 
          payment accompanied with such evidence of fees and expenses incurred 
          as the Corporation reasonably may require.

     6.  Non-exclusivity of Rights.  Nothing in this Employment Agreement 
     shall prevent or limit the Executive's continuing or future participation 
     in any benefit, plan, program, policy or practice provided by the 
     Corporation and for which the Executive may qualify (except with respect 
     to any benefit to which the Executive has waived his rights in writing), 
     nor shall anything herein limit or otherwise affect such rights as the 
     Executive may have under any other contract or agreement entered into 
     after the date hereof with the Corporation.  Amounts which are vested 
     benefits or which 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 date hereof with, the Corporation at or 
     subsequent to the Date of Termination, shall be payable in accordance 
     with such benefit, plan, program, policy or practice, or contract or 
     agreement, except as explicitly modified by this Employment Agreement.

     7.   Full Settlement:  Mitigation.  Except as provided in Sections 
     5(a)(ii)(4) and 5(a)(iii)(2) of this Employment Agreement, the 
     Corporation's obligation to make the payments provided for in this 
     Employment Agreement and otherwise to perform its obligations under this 
     Employment Agreement shall not be affected by any set-off, counterclaim, 
     recoupment, defense or other claim, right or action which the Corporation 
     may have against the Executive or others.  In no event shall 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 
     Employment Agreement and such amounts shall not be reduced whether or not 
      the Executive obtains other employment.  If the Executive finally 
     prevails with respect to any dispute between the Corporation, the 
     Executive or others as to the interpretation, terms, validity or 
     enforceability of (including any dispute about the amount of any payment 
     pursuant to) this Employment Agreement, the Corporation agrees to pay all 
     legal fees and expenses which the Executive may reasonably incur as a 
     result of any such dispute.

     8.   Confidential Information.   The Executive shall hold in a fiduciary 
     capacity for the benefit of Cinergy, all of its subsidiary companies and 
     affiliates, as well as all successors and assigns thereof (the "Cinergy 
     Companies"), all secret, confidential information, knowledge or data 
     relating to the Cinergy Companies, and their respective businesses, that 
     shall have been obtained by the Executive during the Executive's 
     employment by the Corporation and that shall not have been or now or 
     subsequently have become public knowledge (other than by acts by the 
     Executive or representatives of the Executive in violation of this 
     Employment Agreement).  During the Employment Period and thereafter, the 
     Executive shall not, without the prior written consent of the Corporation 
     or as may otherwise by required by law or legal process, communicate or 
     divulge any such information, knowledge or data to anyone other than the 
     Corporation and those designated by it.  The Executive understands that 
     during the Employment Period, the Cinergy Companies may be required from 
     time to time to make public disclosure of the terms or existence of the 
     Executive's employment relationship in order to comply with various laws 
     and legal requirements.  In addition to all other remedies available to 
     the Corporation in law and equity, this Employment Agreement is subject 
     to termination by the Corporation for Cause under Section 4(b) in the 
     event the Executive violates any provision of this Section 8.

     9.   Successors.

          a.   This Employment Agreement is personal to the Executive and, 
          without the prior written consent of the Corporation, shall not be 
          assignable by the Executive otherwise than by will or the laws of 
          descent and distribution.  This Employment Agreement shall insure to 
          the benefits of and be enforceable by the Executive's legal 
          representatives.

          b.   This Employment Agreement shall inure to the benefit of and be 
        binding upon the Corporation, and its successors and assigns.

        c.   The Corporation shall 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 the Corporation to 
        assume expressly and agree to perform this Employment Agreement in the 
        same manner and to the same extent that the Corporation would be 
        required to perform it if no such succession had taken place.

   10.   Miscellaneous.

         a.   This Employment Agreement shall 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 Employment 
         Agreement are not part of the provisions hereof and shall have no 
         force or effect.  This Employment 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 
         such amendment, modification, repeal, waiver, extension or discharge 
         is sought.  No person, other than pursuant to a resolution of the 
         Board or a committee thereof, shall have authority on behalf of the 
         Corporation to agree to amend, modify, repeal, waive, extend or 
         discharge any provision of this Employment Agreement or anything in 
         reference thereto.

          b.   All notices and other communications hereunder shall be in 
          writing and shall 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:
J. Wayne Leonard
Cinergy Corp.
221 East Fourth Street
P. O. Box 960
Cincinnati, Ohio 45201-0960

If to the Corporation:
Cinergy Corp.
221 East Fourth Street
P. O. Box 960
Cincinnati, Ohio 45201-0960
Attn:  Vice President, General Counsel and 
          Corporate Secretary

or to such other address as either party shall have furnished to the other in 
writing in accordance with this Employment Agreement.  All notices and 
communications shall be effective when actually received by the addressee.

            c.   The invalidity or unenforceability of any provision of this 
            Employment Agreement shall not affect the validity or 
            enforceability of any other provision of this Employment 
            Agreement.

            d.   The Corporation may withhold from any amounts payable under 
            this Employment Agreement such federal, state or local taxes as 
            shall be required to be withheld pursuant to any applicable law or 
            regulation.

            e.   The Executive's or the Corporation's failure to insist upon 
            strict compliance with any provision of this Employment Agreement 
            or the failure to assert any right the Executive or the 
            Corporation may have under this Employment Agreement, including 
            without limitation the right of the Executive to terminate 
            employment for Good Reason pursuant to Section 4(c) of this 
            Employment Agreement, or the right of the Corporation to terminate 
            the Executive's employment for Cause pursuant to Section 4(b) of 
            this Employment Agreement, shall not be deemed to be a waiver of 
            such provision or right or any other provision or right of this 
            Employment Agreement.

            f.   This instrument contains the entire agreement of the 
            Executive and the Corporation with respect to the subject matter 
            hereof; and all promises, representations, understandings, 
            arrangements and prior agreements are merged into this Employment 
            Agreement and accordingly superseded.

            g.   This Employment Agreement may be executed in counterparts, 
            each of which shall be deemed to be an original but all of which 
            together will constitute one and the same instrument.

            h.   The Corporation and the Executive agree that Cinergy shall be 
            authorized to act for the Corporation with respect to all aspects 
            pertaining to the administration and interpretation of this 
            Employment Agreement.

IN WITNESS WHEREOF, the Executive and the Corporation have caused this 
Employment Agreement to be executed as of the day and year first above 
written.


CINERGY CORP.



By:          Jackson H. Randolph_________
            (Jackson H. Randolph)
     Chairman and Chief Executive Officer



CINERGY SERVICES, INC.



By:            Jackson H. Randolph_______
              (Jackson H. Randolph)
     Chairman and Chief Executive Officer



THE CINCINNATI GAS & ELECTRIC COMPANY



By:            Jackson H. Randolph_______
              (Jackson H. Randolph)
     Chairman and Chief Executive Officer



PSI ENERGY, INC.



By:            Jackson H. Randolph_______
              (Jackson H. Randolph)
     Chairman and Chief Executive Officer



EXECUTIVE



          J. Wayne Leonard___________
         (J. Wayne Leonard)