<PAGE>


                                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



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              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



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              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



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                     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



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                     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).



<PAGE>

              (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



<PAGE>

                            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).



<PAGE>

                     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.

<PAGE>


                    (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


<PAGE>

                            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


<PAGE>

                     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


<PAGE>

                     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


<PAGE>

       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


<PAGE>

       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.


<PAGE>

       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


<PAGE>

                     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


<PAGE>

                     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


<PAGE>

              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


<PAGE>

              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


<PAGE>

              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.


<PAGE>

       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.


<PAGE>

       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