Document:

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                                                                   EXHIBIT 4.2

                               PURCHASE AGREEMENT

                  THIS AGREEMENT is made as of the 30th day of January, 2001, by
and between Triangle Pharmaceuticals, Inc. (the "Company"), a corporation
organized under the laws of the State of Delaware, with its principal offices at
4 University Place, 4611 University Drive, Durham, North Carolina 27707 and the
purchaser whose name and address is set forth on the signature page hereof (the
"Purchaser").

                  IN CONSIDERATION of the mutual covenants contained in this
Agreement, the Company and the Purchaser agree as follows:

                  SECTION 1. AUTHORIZATION OF SALE OF THE SHARES. Subject to the
terms and conditions of this Agreement, the Company has authorized the sale of
up to 7,700,000 shares (the "Shares") of common stock, par value $0.001 per
share (the "Common Stock"), of the Company.

                  SECTION 2. AGREEMENT TO SELL AND PURCHASE THE SHARES. At the
Closing (as defined in Section 3), the Company will sell to the Purchaser and
the Purchaser will buy from the Company, upon the terms and conditions
hereinafter set forth, the number of Shares (at the purchase price) shown below:

                                Price Per
       Number to Be              Share In                  Aggregate
        Purchased                Dollars                    Price
       ------------             ---------                  ---------

                  The Company proposes to enter into this same form of purchase
agreement with certain other investors (the "Other Purchasers") and expects to
complete sales of the Shares to them. The Purchaser and the Other Purchasers are
hereinafter sometimes collectively referred to as the "Purchasers," and this
Agreement and the agreements executed by the Other Purchasers are hereinafter
sometimes collectively referred to as the "Agreements." The term "Placement
Agent" shall mean Banc of America Securities LLC.

                  SECTION 3. DELIVERY OF THE SHARES AT THE CLOSING. The
completion of the purchase and sale of the Shares (the "Closing") shall occur
within three business days (or on such other later date as the Placement Agent
and the Company both agree) of the date of receipt by the Company of
confirmation by the Securities and Exchange Commission (the "Commission") of the
Commission's willingness to declare effective the registration statement to be
filed by the Company pursuant to Section 7.1 hereof (the "Registration
Statement") at a place and time (the "Closing Date") to be agreed upon by the
Company and the Placement Agent and of which the Purchasers will be notified by
facsimile transmission or otherwise.

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                  At the Closing, the Company shall deliver to the Purchaser one
or more stock certificates registered in the name of the Purchaser, or in such
nominee name(s) as designated by the Purchaser in writing, representing the
number of Shares set forth in Section 2 above. The name(s) in which the stock
certificates are to be registered are set forth in the Stock Certificate
Questionnaire attached hereto as part of Appendix I. The Company's obligation to
complete the purchase and sale of the Shares and deliver such stock
certificate(s) to the Purchaser at the Closing shall be subject to the following
conditions, any one or more of which may be waived by the Company: (a) receipt
by the Company of same-day funds in the full amount of the purchase price for
the Shares being purchased hereunder; (b) completion of the purchases and sales
under the Agreements with all of the Other Purchasers; and (c) the accuracy of
the representations and warranties made by the Purchasers and the fulfillment of
those undertakings of the Purchasers to be fulfilled prior to the Closing. The
Purchaser's obligation to accept delivery of such stock certificate(s) and to
pay for the Shares evidenced thereby shall be subject to the following
conditions: (a) the Commission has notified the Company of the Commission's
willingness to declare the Registration Statement effective on or prior to the
75th day after the date such Registration Statement was filed by the Company;
and (b) the accuracy in all material respects of the representations and
warranties made by the Company herein and the fulfillment in all material
respects of those undertakings of the Company to be fulfilled prior to Closing.
The Purchaser's obligations hereunder are expressly not conditioned on the
purchase by any or all of the Other Purchasers of the Shares that they have
agreed to purchase from the Company.

SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The Company
hereby represents and warrants to, and covenants with, the Purchaser as follows:

                  4.1 ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and the Company is qualified to do
business as a foreign corporation in each jurisdiction in which qualification is
required, except where failure to so qualify would not have a Material Adverse
Effect (as defined herein). The Company has only one subsidiary, which is a
direct, wholly-owned subsidiary (the "Subsidiary") of the Company and which has
no material assets, other than those license agreements described in the
Company's 10-K for the year ended December 31, 1999 (Exhibit A). The Subsidiary
is duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is qualified to do business as a foreign
corporation in each jurisdiction in which qualification is required, except
where failure to so qualify would not have a Material Adverse Effect.

                  4.2 AUTHORIZED CAPITAL STOCK. Except as disclosed in or
contemplated by the Confidential Private Placement Memorandum dated January 17,
2001 prepared by the Company, including all Exhibits (except Exhibit G),
supplements and amendments thereto (the "Private Placement Memorandum"), the
Company had authorized and outstanding capital stock as set forth under the
heading "Capitalization" in the Private Placement Memorandum as of the date set
forth therein; the issued and outstanding shares of the Company's Common Stock
have been duly authorized and validly issued, are fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws, were
not issued in violation of or subject to any preemptive rights or other rights
to subscribe for or purchase securities, and conform in all

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material respects to the description thereof contained in the Private Placement
Memorandum. Except as disclosed in or contemplated by the Private Placement
Memorandum (including the issuance of options under the Company's 1996 Stock
Incentive Plan and the issuance of shares of Common Stock pursuant to the
Company's Employee Stock Purchase Plan after September 30, 1998), the Company
does not have outstanding any options to purchase, or any preemptive rights or
other rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
its capital stock, any shares of capital stock of any subsidiary or any such
options, rights, convertible securities or obligations. The description of the
Company's stock, stock bonus and other stock plans or arrangements and the
options or other rights granted and exercised thereunder, set forth in the
Private Placement Memorandum accurately and fairly presents the information
required to be shown with respect to such plans, arrangements, options and
rights.

                  4.3 ISSUANCE, SALE AND DELIVERY OF THE SHARES. The Shares have
been duly authorized and, when issued, delivered and paid for in the manner set
forth in this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform in all material respects to the description
thereof set forth in the Private Placement Memorandum. No preemptive rights or
other rights to subscribe for or purchase exist with respect to the issuance and
sale of the Shares by the Company pursuant to this Agreement. No stockholder of
the Company has any right (which has not been waived or has not expired by
reason of lapse of time following notification of the Company's intent to file
the Registration Statement) to require the Company to register the sale of any
shares owned by such stockholder under the Securities Act of 1933, as amended
(the "Securities Act"), in the Registration Statement. No further approval or
authority of the stockholders or the Board of Directors of the Company will be
required for the issuance and sale of the Shares to be sold by the Company as
contemplated herein.

                  4.4 DUE EXECUTION, DELIVERY AND PERFORMANCE OF THE AGREEMENTS.
The Company has full legal right, corporate power and authority to enter into
the Agreements and perform the transactions contemplated hereby. The Agreements
have been duly authorized, executed and delivered by the Company. The making and
performance of the Agreements by the Company and the consummation of the
transactions herein contemplated will not violate any provision of the
organizational documents of the Company or its Subsidiary and will not result in
the creation of any lien, charge, security interest or encumbrance upon any
assets of the Company or its Subsidiary pursuant to the terms or provisions of,
or will not conflict with, result in the breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a default under
any agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which the Company or its Subsidiary is a party or
by which the Company or its Subsidiary or their respective properties may be
bound or affected and in each case which would have a material adverse effect on
the condition (financial or otherwise), properties, business, prospects or
results of operations of the Company and its Subsidiary taken as a whole (a
"Material Adverse Effect") or, to the Company's knowledge, any statute or any
authorization, judgment, decree, order, rule or regulation of any court or any
regulatory body, administrative agency or other governmental body applicable to
the Company or its Subsidiary or any of its respective properties. No consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the execution
and delivery of this Agreement or the consummation of the

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transactions contemplated by this Agreement, except for compliance with the Blue
Sky laws and federal securities laws applicable to the offering of the Shares.
Upon their execution and delivery, and assuming the valid execution thereof by
the respective Purchasers, the Agreements will constitute valid and binding
obligations of the Company, enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of the Company in Section 7.3 hereof may be
legally unenforceable.

                  4.5 ACCOUNTANTS. PricewaterhouseCoopers LLP, who has expressed
its opinion with respect to the consolidated financial statements to be
incorporated by reference from the Company's Annual Report on Form 10-K for the
year ended December 31, 1999 into the Registration Statement and the Prospectus
which forms a part thereof, are independent accountants as required by the
Securities Act and the rules and regulations promulgated thereunder (the "Rules
and Regulations").

                  4.6 NO DEFAULTS. Except as disclosed in the Private Placement
Memorandum, and except as to defaults, violations and breaches which
individually or in the aggregate would not be material to the Company or its
Subsidiary taken as a whole, neither the Company nor its Subsidiary is in
violation or default of any provision of its certificate of incorporation or
bylaws, or other organizational documents, or in breach of or default with
respect to any provision of any agreement, judgment, decree, order, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other instrument
to which it is a party or by which it or any of its properties are bound; and
there does not exist any state of fact which, with notice or lapse of time or
both, would constitute an event of default on the part of the Company or its
Subsidiary as defined in such documents, except such defaults which individually
or in the aggregate would not be material to the Company and its Subsidiary
taken as a whole.

                  4.7. CONTRACTS. The contracts described in the Private
Placement Memorandum that are material to the Company and its Subsidiary taken
as a whole, are in full force and effect on the date hereof; and neither the
Company nor its Subsidiary is, nor to the Company's knowledge is any other
party, in breach of or default under any of such contracts which would have a
Material Adverse Effect.

                  4.8 NO ACTIONS. Except as disclosed in the Private Placement
Memorandum, there are no legal or governmental actions, suits or proceedings
pending or, to the Company's knowledge, threatened to which the Company or its
Subsidiary is or may be a part or of which property owned or leased by the
Company or its Subsidiary is or may be the subject, or related to environmental
or discrimination matters, which actions, suits or proceedings, individually or
in the aggregate, might prevent or might reasonably be expected to materially
and adversely affect the transactions contemplated by this Agreement or result
in a material adverse change in the condition (financial or otherwise),
properties, business, prospects or results of operations of the Company and its
Subsidiary, taken as a whole (a "Material Adverse Change"); and no labor
disturbance by the employees of the Company or its Subsidiary exists, to the
Company's

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knowledge, or is imminent which might reasonably be expected to have a Material
Adverse Effect. Except as disclosed in the Private Placement Memorandum, neither
the Company nor its Subsidiary is a party to or subject to the provisions of any
material injunction, judgment, decree or order of any court, regulatory body
administrative agency or other governmental body.

                  4.9 PROPERTIES. Each of the Company and its Subsidiary has
good and marketable title to all the properties and assets reflected as owned by
it in the consolidated financial statements included in the Private Placement
Memorandum, subject to no lien, mortgage, pledge, charge or encumbrance of any
kind except (i) those, if any, reflected in such consolidated financial
statements, or (ii) those which are not material in amount and do not adversely
affect the use made and promised to be made of such property by the Company or
its Subsidiary. Each of the Company and its Subsidiary holds its leased
properties under valid and binding leases, with such exceptions as are not
materially significant in relation to their respective businesses. Except as
disclosed in the Private Placement Memorandum, each of the Company and its
Subsidiary owns or leases all such properties as are necessary to its operations
as now conducted.

                  4.10 NO MATERIAL CHANGE. Since September 30, 2000 and except
as described in or specifically contemplated by the Private Placement
Memorandum, (i) the Company and its Subsidiary have not incurred any material
liabilities or obligations, indirect, or contingent, or entered into any
material verbal or written agreement or other transaction which is not in the
ordinary course of business or which could reasonably be expected to result in a
material reduction in the future earnings of the Company; (ii) the Company and
its Subsidiary have not sustained any material loss or interference with their
businesses or properties from fire, flood, windstorm, accident or other calamity
not covered by insurance; (iii) the Company and its Subsidiary have not paid or
declared any dividends or other distributions with respect to their capital
stock and none of the Company and its Subsidiary is in default in the payment of
principal or interest on any outstanding debt obligations; (iv) there has not
been any change in the capital stock of the Company or its Subsidiary other than
the sale of the Shares hereunder and shares or options issued pursuant to
employee equity incentive plans or purchase plans approved by the Company's
Board of Directors, or indebtedness material to the Company or its Subsidiary
(other than in the ordinary course of business); and (v) except for the
operating losses and negative cash flow the Company has continued to incur,
there has not been a Material Adverse Change.

                  4.11 INTELLECTUAL PROPERTY. Except as disclosed in or
specifically contemplated by the Private Placement Memorandum, (i) the Company
and its Subsidiary own or have obtained valid and enforceable licenses or
options for the inventions, patent applications, patents, trademarks (both
registered and unregistered), tradenames, copyrights and trade secrets necessary
for the conduct of the Company's and its Subsidiary's respective businesses as
currently conducted and as the Private Placement Memorandum indicates the
Company and its Subsidiary contemplate conducting (collectively, the
"Intellectual Property"); and (ii) to the Company's knowledge (for each of the
following subsections (a) through (e)): (a) there are no third parties who have
any ownership rights to any Intellectual Property that is owned by, or has been
licensed to, the Company or its Subsidiary for the product indications described
in the Private Placement Memorandum that would preclude the Company or its
Subsidiary from

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conducting their respective businesses as currently conducted and as the Private
Placement Memorandum indicates the Company and its Subsidiary contemplate
conducting, except for the ownership rights of the owners of the Intellectual
Property licensed or optioned by the Company or its Subsidiary; (b) there are
currently no sales of any products that would constitute an infringement by
third parties of any Intellectual Property owned, licensed or optioned by the
Company or its Subsidiary; (c) there is no pending or threatened action, suit,
proceeding or claim by others challenging the rights of the Company or its
Subsidiary in or to any Intellectual Property owned, licensed or optioned by the
Company or its Subsidiary, other than non-material claims; (d) there is no
pending or threatened action, suit, proceeding or claim by others challenging
the validity or scope of any Intellectual Property owned, licensed or optioned
by the Company, other than non-material claims; and (e) there is no pending or
threatened action, suit, proceeding or claim by others that the Company
infringes or otherwise violates any patent, trademark, copyright, trade secret
or other proprietary right of others, other than non-material claims.

                  4.12 COMPLIANCE. None of the Company and its Subsidiary has
been advised, nor do they have any reason to believe, that they are not
conducting business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which they are conducting their business,
including, without limitation, all applicable local, state and federal
environmental laws and regulations; except where failure to be so in compliance
would not have a Material Adverse Effect.

                  4.13 TAXES. Each of the Company and its Subsidiary has filed
all necessary federal, state and foreign income and franchise tax returns and
has paid or accrued all taxes shown as due thereon, and each of the Company and
its Subsidiary has no knowledge of a tax deficiency which has been or might be
asserted or threatened against it which could have a Material Adverse Effect.

                  4.14 TRANSFER TAXES. On the Closing Date, all stock transfer
or other taxes (other than income taxes) which are required to be paid in
connection with the sale and transfer of the Shares to be sold to the Purchaser
hereunder will be, or will have been, fully paid or provided for by the Company
and all laws imposing such taxes will be or will have been fully complied with.

                  4.15 INVESTMENT COMPANY. The Company is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for an investment company, within the meaning of the Investment Company Act of
1940, as amended.

                  4.16 OFFERING MATERIALS. The Company has not distributed and
will not distribute prior to the Closing Date any offering material in
connection with the offering and sale of the Shares other than the Private
Placement Memorandum or any amendment or supplement thereto. The Company has not
in the past nor will it hereafter take any action independent of the Placement
Agent to sell, offer for sale or solicit offers to buy any securities of the
Company which would bring the offer, issuance or sale of the Shares, as
contemplated by this Agreement, within the provisions of Section 5 of the
Securities Act, unless such offer, issuance or sale was or shall be within the
exemptions of Section 4 of the Securities Act.

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                  4.17 INSURANCE. Each of the Company and its Subsidiary
maintains insurance of the types and in the amounts that the Company reasonably
believes is adequate for its business, including, but not limited to, insurance
covering all real and personal property owned or leased by the Company or its
Subsidiary against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against by similarly situated companies, all of which
insurance is in full force and effect.

                  4.18 CONTRIBUTIONS. Neither the Company at any time since its
incorporation nor its Subsidiary at any time since it was acquired by the
Company has, directly or indirectly, (i) made any unlawful contribution to any
candidate for public office, or failed to disclose fully any contribution in
violation of law, or (ii) made any payment to any federal or state governmental
officer or official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof.

                  4.19 ADDITIONAL INFORMATION. The information contained in the
following documents, which the Placement Agent has furnished to the Purchaser,
or will furnish prior to the Closing, is or will be true and correct in all
material respects as of their respective final dates:

                  (a) the Company's Annual Report on Form 10-K for the fiscal
         year ended December 31, 1999 (without exhibits);

                  (b) the Company's Proxy Statement for the 2000 Annual Meeting
         of Stockholders;

                  (c) the Company's Quarterly Reports on Form 10-Q for the
         fiscal quarters ended March 31, 2000, June 30, 2000 and September 30,
         2000 (each without exhibits);

                  (d) the Company's Current Report on Form 8-K filed with the
         Commission on November 3, 2000 (without exhibits);

                  (e) the Registration Statement;

                  (f) the Private Placement Memorandum, including all addenda
         and exhibits thereto (other than the Appendices); and

                  (g) all other documents, if any, filed by the Company with the
         Securities and Exchange Commission since September 30, 2000 pursuant to
         the reporting requirements of the Securities Exchange Act of 1934, as
         amended (the "Exchange Act").

                  4.20 LEGAL OPINION. Prior to the Closing, Brobeck, Phleger &
Harrison, LLP, counsel to the Company, will deliver its legal opinion to the
Placement Agent reasonably satisfactory to the Placement Agent and counsel to
the Placement Agent. Such opinion shall also state that each of the Purchasers
may rely thereon as though it were addressed directly to such Purchaser.

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                  4.21 INTELLECTUAL PROPERTY OPINION. Prior to the Closing, King
& Spalding, patent counsel for the Company, will deliver its legal opinion to
the Placement Agent reasonably satisfactory to the Placement Agent and counsel
to the Placement Agent. Such opinion shall state that each of the Purchasers may
rely thereon as though it were addressed directly to such Purchaser.

                  4.22 NO INTEGRATION. Neither the Company nor any of its
affiliates nor any person acting on the Company's behalf has, directly or
indirectly, at any time within the past six (6) months made, nor will any such
party make within six (6) months of the Closing Date, any offer or sale of any
security or solicitation of any offer to buy any security under circumstances,
that in the opinion of the Company's counsel, concurred by the Placement Agent's
counsel, would eliminate the availability of the exemption from registration
under Regulation D under the Securities Act in connection with the offer and
sale of the Securities as contemplated hereby.

                  4.23 CERTIFICATE. At the Closing, the Company will deliver to
Purchaser a certificate executed by the Chairman of the Board or President and
the chief financial or accounting officer of the Company, dated the Closing
Date, in form and substance reasonably satisfactory to the Purchasers, to the
effect that the representations and warranties of the Company set forth in this
Section 4 are true and correct in all material respects as of the date of this
Agreement and as of the Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions herein on its part to be performed
or satisfied on or prior to such Closing Date.

                  SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
PURCHASER. (a) The Purchaser represents and warrants to, and covenants with, the
Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to investments in
shares representing an investment decision like that involved in the purchase of
the Shares, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Shares; (ii) the Purchaser is
acquiring the number of Shares set forth in Section 2 above in the ordinary
course of its business and for its own account for investment only and with no
present intention of distributing any of such Shares or any arrangement or
understanding with any other persons regarding the distribution of such Shares;
(iii) the Purchaser will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act and the Rules and Regulations; (iv) the Purchaser has
completed or caused to be completed the Registration Statement Questionnaire
attached hereto as part of Appendix I, for use in preparation of the
Registration Statement, and the answers thereto are true and correct as of the
date hereof and will be true and correct as of the effective date of the
Registration Statement; (v) the Purchaser has, in connection with its decision
to purchase the number of Shares set forth in Section 2 above, relied solely
upon the Private Placement Memorandum and the documents included therein and the
representations and warranties of the Company contained herein; and (vi) the
Purchaser is either a "large institutional accredited investor" as defined in
Rule 501(a)(1), (2), (3), (7) or (8) (and within the meaning of the SEC
No-Action Letters: Black Box, Inc. (June 26, 1990) and Squadron, Elenoff,
Pleasant & Lehrer (February 28, 1992)) or is a "qualified institutional buyer"
as such term is defined in Rule 144A(a)(1) under the Securities Act.

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                  (b) The Purchaser understands that the Shares are being
         offered and sold to it in reliance upon specific exemptions from the
         registration requirements of the Securities Act, the Rules and
         Regulations and state securities laws and that the Company is relying
         upon the truth and accuracy of, and the Purchaser's compliance with,
         the representations, warranties, agreements, acknowledgments and
         understandings of the Purchaser set forth herein in order to determine
         the availability of such exemptions and the eligibility of the
         Purchaser to acquire the Shares.

                  (c) The Purchaser understands that the information contained
         in the Private Placement Memorandum is strictly confidential and
         proprietary to the Company and has been prepared from the Company's
         publicly available documents and other information and is being
         submitted to the Purchaser solely for such Purchaser's confidential
         use. The Purchaser agrees to use the information contained in the
         Private Placement Memorandum for the sole purpose of evaluating a
         possible investment in the Shares and the Purchaser hereby acknowledges
         that except as required by applicable securities laws, it is prohibited
         from reproducing or distributing the Private Placement Memorandum, this
         Purchase Agreement, or any other offering materials, in whole or in
         part, or divulging or discussing any of their contents. Further, the
         Purchaser understands and expressly agrees that the existence and
         nature of all conversations and presentations, if any, regarding the
         Company and this offering, as well as any other information about the
         Company received by the Purchaser in connection with this Offering must
         be kept strictly confidential. The Purchaser understands that the
         federal securities laws impose restrictions on trading based on
         information regarding this offering. In addition, the Purchaser hereby
         acknowledges that unauthorized disclosure of information regarding this
         offering may cause the Company to violate Regulation FD.

                  (d) The Purchaser understands that its investment in the
         Shares involves a significant degree of risk and that the market price
         of the Common Stock has been volatile and that no representation is
         being made as to the future value of the Common Stock. The Purchaser
         has the knowledge and experience in financial and business matters as
         to be capable of evaluating the merits and risks of an investment in
         the Shares and has the ability to bear the economic risks of an
         investment in the Shares.

                  (e) The Purchaser understands that no United States federal or
         state agency or any other government or governmental agency has passed
         upon or made any recommendation or endorsement of the Shares.

                  (f) The Purchaser understands that until the Shares may be
         sold pursuant to Rule 144 under the Securities Act without any
         restriction as to the number of securities as of a particular date that
         can then be immediately sold, the Shares may bear a restrictive legend
         in substantially the following form (and a stop transfer order may be
         placed against transfer of the certificates for the Shares):

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                  "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
                  SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE
                  ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
                  SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL, IN FORM,
                  SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE COMPANY, THAT
                  REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD
                  PURSUANT TO RULE 144 UNDER SAID ACT."

                  (g) The Purchaser's principal executive offices are in the
         jurisdiction set forth immediately below the Purchaser's name on the
         signature pages hereto.

                  (h) The Purchaser hereby covenants with the Company not to
         make any sale of the Shares under the Registration Statement without
         effectively causing the prospectus delivery requirement under the
         Securities Act to be satisfied, and the Purchaser acknowledges and
         agrees that such Shares are not transferable on the books of the
         Company unless the certificate submitted to the transfer agent
         evidencing the Shares is accompanied by a separate Purchaser's
         Certificate of Subsequent Sale: (i) in the form of Appendix II hereto,
         (ii) executed by an officer of, or other authorized person designated
         by, the Purchaser, and (iii) to the effect that (A) the Shares have
         been sold in accordance with the Registration Statement, the Securities
         Act and any applicable state securities or blue sky laws and (B) the
         requirement of delivering a current prospectus has been satisfied. The
         Purchaser acknowledges that there may occasionally be times when the
         Company must suspend the use of the prospectus forming a part of the
         Registration Statement until such time as an amendment to the
         Registration Statement has been filed by the Company and declared
         effective by the Commission, or until such time as the Company has
         filed an appropriate report with the Commission pursuant to the
         Exchange Act. The Purchaser hereby covenants that it will not sell any
         Shares pursuant to said prospectus during the period commencing at the
         time at which the Company gives the Purchaser written notice of the
         suspension of the use of said prospectus and ending at the time the
         Company gives the Purchaser written notice that the Purchaser may
         thereafter effect sales pursuant to said prospectus. The Company hereby
         covenants that it will promptly notify the Purchaser of the
         commencement and ending of such period. The Purchaser further covenants
         to notify the Company promptly of the sale of all of its Shares.

                  (i) The Purchaser further represents and warrants to, and
         covenants with, the Company that (i) the Purchaser has full right,
         power, authority and capacity to enter into this Agreement and to
         consummate the transactions contemplated hereby and has taken all
         necessary action to authorize the execution, delivery and performance
         of this Agreement, and (ii) upon the execution and delivery of this
         Agreement, this Agreement shall constitute a legal, valid and binding
         obligation of the Purchaser, enforceable in accordance with its terms,
         except as enforceability may be limited by applicable bankruptcy,
         insolvency, reorganization, moratorium or similar laws affecting
         creditors' and contracting parties' rights generally and except as
         enforceability may be subject to general principles of equity
         (regardless of whether such enforceability is considered in a

                                      -10-
<PAGE>

         proceeding in equity or at law) and except as the indemnification
         agreements of the Purchaser in Section 7.3 hereof may be legally
         unenforceable.

                  (j) The Purchaser hereby represents that if the Purchaser is
         not a United States person (as such term is defined under Regulation S
         of the Securities Act), the Purchaser has satisfied itself as to the
         full observance of the laws of its jurisdiction in connection with any
         invitation to subscribe for the Shares or any use of this Agreement,
         including (i) the legal requirements within its jurisdiction for the
         purchase of the Shares, (ii) any foreign exchange restrictions
         applicable to such purchase, (iii) any governmental or other consents
         that may need to be obtained and (iv) the income tax and other tax
         consequences, if any, that may be relevant to the purchase, holding,
         redemption, sale or transfer of the Shares. The Purchaser further
         represents that its subscription and payment for, and its continued
         beneficial ownership of the Shares, will not violate any applicable
         securities or other laws of its jurisdiction.

                  SECTION 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. Notwithstanding any investigation made by any party to this
Agreement or by the Placement Agent, all covenants, agreements, representations
and warranties made by the Company and the Purchaser herein and in the
certificates for the Shares delivered pursuant hereto shall survive the
execution of this Agreement, the delivery to the Purchaser of the Shares being
purchased and the payment therefor.

                  SECTION 7. REGISTRATION OF THE SHARES; COMPLIANCE WITH THE
SECURITIES ACT.

                  7.1      REGISTRATION PROCEDURES AND EXPENSES. The Company
                           shall:

                  (a)      as soon as practicable, prepare and file with the
                           Commission the Registration Statement on Form S-3
                           relating to the sale of the Shares by the Purchaser
                           from time to time on the Nasdaq National Market or
                           the facilities of any national securities exchange on
                           which the Common Stock is then traded or in
                           privately-negotiated transactions;

                  (b)      use its reasonable efforts, subject to receipt of
                           necessary information from the Purchasers, to cause
                           the Commission to notify the Company of the
                           Commission's willingness to declare the Registration
                           Statement effective within 75 days after the
                           Registration Statement is filed by the Company;

                  (c)      promptly prepare and file with the Commission such
                           amendments and supplements to the Registration
                           Statement and the prospectus used in connection
                           therewith as may be necessary to keep the
                           Registration Statement effective until the earlier of
                           (i) two years after the effective date of the
                           Registration Statement or (ii) the date on which the
                           Shares may be resold by the Purchasers without
                           registration by reason of Rule 144(k) under the
                           Securities Act or any other rule of similar effect;

                                      -11-
<PAGE>

                  (d)      furnish to the Purchaser with respect to the Shares
                           registered under the Registration Statement (and to
                           each underwriter, if any, of such Shares) such number
                           of copies of prospectuses and such other documents as
                           the Purchaser may reasonably request, in order to
                           facilitate the public sale or other disposition of
                           all or any of the Shares by the Purchaser; PROVIDED,
                           HOWEVER, that the obligation of the Company to
                           deliver copies of prospectuses to the Purchaser shall
                           be subject to the receipt by the Company of
                           reasonable assurances from the Purchaser that the
                           Purchaser will comply with the applicable provisions
                           of the Securities Act and of such other securities or
                           blue sky laws as may be applicable in connection with
                           any use of such prospectuses;

                  (e)      file documents required of the Company for normal
                           blue sky clearance in states specified in writing by
                           the Purchaser; PROVIDED, HOWEVER, that the Company
                           shall not be required to qualify to do business or
                           consent to service of process in any jurisdiction in
                           which it is not now so qualified or has not so
                           consented; and

                  (f)      bear all expenses in connection with the procedures
                           in paragraphs (a) through (e) of this Section 7.1 and
                           the registration of the Shares pursuant to the
                           Registration Statement, other than fees and expenses,
                           if any, of counsel or other advisers to the Purchaser
                           or the Other Purchasers or underwriting discounts,
                           brokerage fees and commissions incurred by the
                           Purchaser or the Other Purchasers, if any.

                  7.2 TRANSFER OF SHARES AFTER REGISTRATION. The Purchaser
agrees that it will not effect any disposition of the Shares or its right to
purchase the Shares that would constitute a sale within the meaning of the
Securities Act, except as contemplated in the Registration Statement referred to
in Section 7.1, and that it will promptly notify the Company of any changes in
the information set forth in the Registration Statement regarding the Purchaser
or its plan of distribution.

                  7.3  INDEMNIFICATION.  For the purpose of this Section 7.3:

                  (i)      the term "Purchaser/Affiliate" shall mean any
                           affiliates of the Purchaser and any person who
                           controls the Purchaser or any affiliate of the
                           Purchaser within the meaning of Section 15 of the
                           Securities Act or Section 20 of the Exchange Act; and

                  (ii)     the term "Registration Statement" shall include any
                           final prospectus, exhibit, supplement or amendment
                           included in or relating to, and any document
                           incorporated by reference in, the Registration
                           Statement referred to in Section 7.1.

                  (a) The Company agrees to indemnify and hold harmless each of
the Purchasers and each Purchaser/Affiliate, against any losses, claims,
damages, liabilities or

                                      -12-
<PAGE>

expenses, joint or several, to which such Purchasers or such
Purchaser/Affiliates may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company), insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, including the prospectus, financial statements and schedules, and all
other documents filed as a part thereof, as amended at the time of effectiveness
of the Registration Statement, including any information deemed to be a part
thereof as of the time of effectiveness pursuant to paragraph (b) of Rule 430A,
or pursuant to Rule 434, of the Rules and Regulations, or the prospectus, in the
form first filed with the Commission pursuant to Rule 424(b) of the Regulations,
or filed as part of the Registration Statement at the time of effectiveness if
no Rule 424(b) filing is required (the "Prospectus"), or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state in any of them a material fact required to be stated therein
or necessary to make the statements in the Registration Statement or any
amendment or supplement thereto not misleading or in the Prospectus or any
amendment or supplement thereto not misleading in the light of the circumstances
under which they were made, or arise out of or are based in whole or in part on
any inaccuracy in the representations and warranties of the Company contained in
this Agreement, or any failure of the Company to perform its obligations
hereunder or under law, and will reimburse each Purchaser and each such
Purchaser/Affiliate for any legal and other expenses as such expenses are
reasonably incurred by such Purchaser or such Purchaser/Affiliate in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; PROVIDED, HOWEVER, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon (i) an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Purchaser expressly for use therein, or (ii)
the failure of such Purchaser to comply with the covenants and agreements
contained in Sections 5(h) or 7.2 hereof respecting the sale of the Shares, or
(iii) the inaccuracy of any representations made by such Purchaser herein or
(iv) any statement or omission in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to the Purchaser prior to the pertinent
sale or sales by the Purchaser.

                  (b) Each Purchaser will severally, but not jointly, indemnify
and hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, against any losses, claims, damages, liabilities or expenses
to which the Company, each of its directors, each of its officers who signed the
Registration Statement or controlling person may become subject, under the
Securities Act, the Exchange Act, or any other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof as contemplated below) arise out of or are based upon
(i) any failure to comply with the covenants and agreements contained in
Sections 5(h) or 7.2 hereof respecting the sale of the Shares or (ii) the
inaccuracy of any representation made by such

                                      -13-
<PAGE>

Purchaser herein or (iii) any untrue or alleged untrue statement of any material
fact contained in the Registration Statement, the Prospectus, or any amendment
or supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements in the Registration Statement or any amendment
or supplement thereto not misleading or in the Prospectus or any amendment or
supplement thereto not misleading in the light of the circumstances under which
they were made, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Purchaser expressly for use
therein, and will reimburse the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person for any
legal and other expense reasonably incurred by the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action.

                  (c) Promptly after receipt by an indemnified party under this
Section 7.3 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 7.3 promptly notify the indemnifying party
in writing thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party for
contribution or otherwise than under the indemnity agreement contained in this
Section 7.3 or to the extent it is not prejudiced as a result of such failure.
In case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the extent
that it may wish, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party; PROVIDED, HOWEVER, if the defendants in any such action
include both the indemnified party, and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be a conflict
of interest, based upon the advice of such indemnified party's counsel, between
the positions of the indemnifying party and the indemnified party in conducting
the defense of any such action or that there may be legal defenses available to
it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assume such legal defenses
and to otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying party
to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 7.3 for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party shall have
employed such counsel in connection with the assumption of legal defenses in
accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, approved by such indemnifying party in the case
of paragraph (a), representing the indemnified parties who are parties to such
action, plus local counsel, if appropriate) or (ii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a

                                      -14-
<PAGE>

reasonable time after notice of commencement of action, in each of which cases
the reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party.

                  (d) If the indemnification provided for in this Section 7.3 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a), (b) or (c) of this Section 7.3 in respect to any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any losses, claims, damages, liabilities or expenses referred to
herein (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Purchaser from the placement of the Common Stock
contemplated by this Agreement or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
the relative fault of the Company and the Purchaser in connection with the
statements or omissions or inaccuracies in the representations and warranties in
this Agreement that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and each Purchaser on the other
shall be deemed to be in the same proportion as the amount paid by such
Purchaser to the Company pursuant to this Agreement for the Shares purchased by
such Purchaser that were sold pursuant to the Registration Statement bears to
the difference (the "Difference") between the amount such Purchaser paid for the
Shares that were sold pursuant to the Registration Statement and the amount
received by such Purchaser from such sale. The relative fault of the Company on
the one hand and each Purchaser on the other shall be determined by reference
to, among other things, whether the untrue or alleged statement of a material
fact or the omission or alleged omission to state a material fact or the
inaccurate or the alleged inaccurate representation and/or warranty relates to
information supplied by the Company or by such Purchaser and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
paragraph (c) of this Section 7.3, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim. The provisions set forth in paragraph (c) of this Section
7.3 with respect to the notice of the threat or commencement of any threat or
action shall apply if a claim for contribution is to be made under this
paragraph (d); PROVIDED, HOWEVER, that no additional notice shall be required
with respect to any threat or action for which notice has been given under
paragraph (c) for purposes of indemnification. The Company and each Purchaser
agree that it would not be just and equitable if contribution pursuant to this
Section 7.3 were determined solely by pro rata allocation (even if the Purchaser
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this paragraph. Notwithstanding the provisions of this Section 7.3, no
Purchaser shall be required to contribute any amount in excess of the amount by
which the Difference exceeds the amount of any damages that such Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Purchasers' obligations to contribute pursuant
to this Section 7.3 are several and not joint.

                                      -15-
<PAGE>

                  7.4 TERMINATION OF CONDITIONS AND OBLIGATIONS. The conditions
precedent imposed by Section 5 or this Section 7 upon the transferability of the
Shares shall cease and terminate as to any particular number of the Shares upon
the passage of two years from the effective date of the Registration Statement
covering such Shares or at such time as an opinion of counsel satisfactory in
form and substance to the Company shall have been rendered to the effect that
such conditions are not necessary in order to comply with the Securities Act.

                  7.5 INFORMATION AVAILABLE. So long as the Registration
Statement is effective covering the resale of Shares owned by the Purchaser, the
Company will furnish to the Purchaser:

                  (a)      as soon as practicable (but in the case of the
                           Company's Annual Report to Stockholders, within 150
                           days after the end of each fiscal year of the
                           Company), one copy of (i) its Annual Report to
                           Stockholders (which Annual Report shall contain
                           financial statements audited in accordance with
                           generally accepted accounting principles in the
                           United States of America by a firm of certified
                           public accountants of recognized standing), (ii) if
                           not included in substance in the Annual Report to
                           Stockholders, upon the request of the Purchaser, its
                           Annual Report on Form 10-K, (iii) upon the request of
                           the Purchaser, each of its Quarterly Reports to its
                           stockholders and, if not included in substance in its
                           quarterly report to stockholders, its quarterly
                           report on Form 10-Q, (iv) a copy of the Registration
                           Statement (the foregoing, in each case, excluding
                           exhibits);

                  (b)      upon the request of the Purchaser, all exhibits
                           excluded by the parenthetical to subparagraph (a)(iv)
                           of this Section 7.5; and

                  (c)      upon the request of the Purchaser, a reasonable
                           number of copies of the prospectuses to supply to any
                           other party requiring such prospectuses;

and the Company, upon the reasonable request of the Purchaser, will meet with
the Purchaser or a representative thereof at the Company's headquarters to
discuss information relevant for disclosure in the Registration Statement
covering the Shares and will otherwise reasonably cooperate with any Purchaser
conducting an investigation for the purpose of reducing or eliminating such
Purchaser's exposure to liability under the Securities Act, including the
reasonable production of information at the Company's headquarters, subject to
appropriate confidentiality limitations.

                  SECTION 8. BROKER'S FEE. The Purchaser acknowledges that the
Company intends to pay to the Placement Agent a fee in respect of the sale of
the Shares to the Purchaser. Each of the parties hereto hereby represents that,
on the basis of any actions and agreements by it, there are no other brokers or
finders entitled to compensation in connection with the sale of the Shares to
the Purchaser.

                                      -16-
<PAGE>

                  SECTION 9. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, confirmed facsimile or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
mailed and shall be delivered as addressed as follows:

                  (a)      if to the Company, to:

                                    Triangle Pharmaceuticals, Inc.
                                    4 University Place
                                    4611 University Drive
                                    Durham, North Carolina  27707
                                    Attention:  Andrew Finkle, Esq.
                                    Facsimile:  (919) 402-1192

                           with a copy to:

                                    Brobeck, Phleger & Harrison LLP
                                    1633 Broadway
                                    47th Floor
                                    New York, New York  10019
                                    Attention:   Luci Staller Altman, Esq.
                                    Telephone:  (212) 237-2520
                                    Facsimile:   (212) 586-7878

                           or to such other person at such other place as the
                           Company shall designate to the Purchaser in writing;
                           and

                  (b)      if to the Purchaser, at its address as set forth at
                           the end of this Agreement, or at such other address
                           or addresses as may have been furnished to the
                           Company in writing.

                  SECTION 10. CHANGES. This Agreement may not be modified or
amended except pursuant to an instrument in writing signed by the Company and
the Purchaser.

                  SECTION 11. HEADINGS. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.

                  SECTION 12. SEVERABILITY. In case any provision contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.

                  SECTION 13. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York and the
federal law of the United States of America.

                                      -17-
<PAGE>

                  SECTION 14. COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties. Facsimile signatures shall be deemed
original signatures.

                  SECTION 15. ENTIRE AGREEMENT. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Purchaser
makes any representation, warranty, covenant or undertaking with respect to such
matters.

                  SECTION 16. THIRD PARTY BENEFICIARIES. This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.

                                      -18-
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

                                      TRIANGLE PHARMACEUTICALS, INC.

                                      By:
                                         ----------------------------------
                                            Name:
                                            Title:

Print or Type:
                                      Name of Purchaser
                                        (Individual or Institution):

                                      ---------------------------------

                                      Name of Individual
                                        representing Purchaser
                                        (if an Institution):

                                      ---------------------------------

                                      Title of Individual
                                        representing Purchaser
                                        (if an Institution):

                                      ---------------------------------

Signature by:
                                      Individual Purchaser or Individual
                                        representing Purchaser:

                                      ---------------------------------

                                      Address:
                                                     ---------------------------

                                      Telephone:
                                                     ---------------------------

                                      Facsimile:
                                                     ---------------------------

                                      -19-
<PAGE>

                     SUMMARY INSTRUCTION SHEET FOR PURCHASER

                   (to be read in conjunction with the entire
                        Purchase Agreement which follows)

A.       Complete the following items on BOTH Purchase Agreements:

         1.       Page 19 - Signature:

                  (i)      Name of Purchaser (Individual or Institution)

                  (ii)     Name of Individual representing Purchaser (if an
                           Institution)

                  (iii)    Title of Individual representing Purchaser (if an
                           Institution)

                  (iv)     Signature of Individual Purchaser or Individual
                           representing Purchaser

         2.       Appendix I - Stock Certificate Questionnaire:

                  Provide the information requested by the Stock Certificate
                  Questionnaire.

         3.       Return BOTH properly completed and signed Purchase Agreements
                  including the properly completed Appendix I to:

                           Banc of America Securities LLC
                           9 West 57th Street
                           New York, NY  10019
                           Attention:  Isaac Osaki, Esq.

B.       Instructions regarding the transfer of funds for the purchase of Shares
         will be sent by facsimile to the Purchaser by the Placement Agent at a
         later date.

C.       Upon the resale of the Shares by the Purchasers after the Registration
         Statement covering the Shares is effective, as described in the
         Purchase Agreement, the Purchaser:

                  (i)      must deliver a current prospectus of the Company to
                           the buyer (prospectuses must be obtained from the
                           Company at the Purchaser's request); and

                  (ii)     must send a letter in the form of Appendix II to the
                           Company so that the Shares may be properly
                           transferred.

<PAGE>

                                                                      Appendix I

TRIANGLE PHARMACEUTICALS, INC.
STOCK CERTIFICATE QUESTIONNAIRE

         Pursuant to Section 3 of the Agreement, please provide us with the
following information:

1.       The exact name that your Shares
         are to be registered in (this is
         the name that will appear on your
         stock certificate(s)). You may use
         a nominee name if appropriate:                  _______________________

2.       The relationship between the Purchaser
         of the Shares and the Registered Holder
         listed in response to item 1 above:             _______________________

3.       The mailing address of the Registered
         Holder listed in response to item 1 above:      _______________________

                                                         _______________________

                                                         _______________________

                                                         _______________________

4.       The Social Security Number or Tax
         Identification Number of the Registered
         Holder listed in response to item 1 above:      _______________________

<PAGE>

                                                                      Appendix I

                         TRIANGLE PHARMACEUTICALS, INC.
                      REGISTRATION STATEMENT QUESTIONNAIRE

                  In connection with the preparation of the Registration
Statement, please provide us with the following information:

                  1. Pursuant to the "Selling Shareholder" section of the
Registration Statement, please state your or your organization's name exactly as
it should appear in the Registration Statement:

                  2. Please provide the number of shares that you or your
organization will own immediately after Closing, including those Shares
purchased by you or your organization pursuant to this Purchase Agreement and
those shares purchased by you or your organization through other transactions:

                  3. Have you or your organization had any position, office or
other material relationship within the past three years with the Company or its
affiliates?

                           _____ Yes         _____ No

                  If yes, please indicate the nature of any such relationships
below:

                  --------------------------------------------------------------

                  --------------------------------------------------------------

                  --------------------------------------------------------------

                  4. Are you (i) an NASD Member (see definition), (ii) a
Controlling (see definition) shareholder of an NASD Member, (iii) a Person
Associated with a Member of the NASD (see definition), or (iv) an Underwriter or
a Related Person (see definition) with respect to the proposed offering; or (b)
do you own any shares or other securities of any NASD Member not purchased in
the open market; or (c) have you made any outstanding subordinated loans to any
NASD Member?

<PAGE>

         Answer:  / / Yes  / / No     If "yes," please describe below

                  --------------------------------------------------------------

                  --------------------------------------------------------------

                  --------------------------------------------------------------

         NASD MEMBER. The term "NASD member" means either any broker or dealer
admitted to membership in the National Association of Securities Dealers, Inc.
("NASD"). (NASD Manual, By-laws Article I, Definitions)

       CONTROL. The term "control" (including the terms "controlling,"
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power, either individually or with others, to direct or cause
the direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise. (Rule 405 under the
Securities Act of 1933, as amended)

       PERSON ASSOCIATED WITH A MEMBER OF THE NASD. The term "person associated
with a member of the NASD" means every sole proprietor, partner, officer,
director, branch manager or executive representative of any NASD Member, or any
natural person occupying a similar status or performing similar functions, or
any natural person engaged in the investment banking or securities business who
is directly OR INDIRECTLY controlling or controlled by a NASD Member, whether or
not such person is registered or exempt from registration with the NASD pursuant
to its bylaws. (NASD Manual, By-laws Article I, Definitions)

       UNDERWRITER OR A RELATED PERSON. The term "underwriter or a related
person" means, with respect to a proposed offering, underwriters, underwriters'
counsel, financial consultants and advisors, finders, members of the selling or
distribution group, and any and all other persons associated with or related to
any of such persons. (NASD Interpretation)

                                       2

<PAGE>

                                                                     APPENDIX II

Attention:

                   PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE

         The undersigned, [an officer of, or other person duly authorized by]

-------------------------------------------------------------
         [fill in official name of individual or institution]

hereby certifies that he/she [said institution] is the Purchaser
of the shares evidenced by the attached certificate, and as such,
sold such shares on________in accordance with
                    [date]

Registration Statement number _____________________________________
                                           [fill in the number of or otherwise

________________________________ and the requirement of delivering a
identify Registration Statement]

current prospectus by the Company has been complied with in connection with such
sale.

Print or Type:

          Name of Purchaser
            (Individual or
             Institution):       ______________________

          Name of Individual
            representing
            Purchaser (if an
            Institution)         ______________________

          Title of Individual
            representing
            Purchaser (if an
            Institution):        ______________________

<PAGE>

Signature by:

          Individual Purchaser
            or Individual repre-
            senting Purchaser:   ______________________

                                       2<PAGE>

                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT is made and entered into as of the 12th day
of February, 2001 (the "Effective Date"), by and between Cinergy and R. Foster
Duncan (the "Executive"). The capitalized words and terms used throughout this
Agreement are defined in Section 11.

                                    RECITALS

         A. The Executive is qualified and available to assume responsibility
for and hold the position of Executive Vice President and Chief Financial
Officer of Cinergy. Cinergy desires to secure the employment of the Executive in
accordance with this Agreement.

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

                                    AGREEMENT

         In consideration of the mutual promises, 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 enter and 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 promises, 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, 2003;
                  provided that, commencing on December 31, 2001, and on each
                  subsequent December 31, the Employment Period will be extended
                  for one (1) additional year unless either party gives the
                  other party written notice not to extend this Agreement at
                  least ninety (90) days before the extension would otherwise
                  become effective.

2.       DUTIES AND POWERS OF EXECUTIVE

         a.       POSITION. The Executive will serve Cinergy as Executive Vice
                  President and Chief Financial Officer, 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.

<PAGE>

         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 $475,000.00. The Board of Directors or its designee
                  may, from time to time, increase the Annual Base Salary as the
                  Board of Directors deems to be necessary or desirable,
                  including without limitation adjustments to reflect increases
                  in the cost of living. Any increase in the Annual Base Salary
                  will not serve to limit or reduce any other obligation of
                  Cinergy under this Agreement. The Annual Base Salary will not
                  be reduced except for across-the-board salary reductions
                  similarly affecting all Cinergy management personnel. If
                  Annual Base Salary is increased during the Employment Period,
                  then the increased salary will be the Annual Base Salary for
                  all purposes under this Agreement.

         b.       RETIREMENT, INCENTIVE, WELFARE BENEFIT PLANS AND OTHER
                  BENEFITS. During the Employment Period, the Executive will be
                  eligible, and Cinergy will take all necessary action to cause
                  the Executive to become eligible, to participate in all
                  short-term and long-term incentive, stock option, restricted
                  stock, performance unit, savings, retirement and welfare
                  plans, practices, policies and programs applicable generally
                  to employees and/or other senior executives of Cinergy who are
                  considered Tier II executives for compensation purposes,
                  except with respect to any plan, practice, policy or program
                  to which the Executive has waived his rights in writing.

                  The Executive will be a participant in the Senior Executive
                  Supplement portion of the Cinergy Corp. Supplemental Executive
                  Retirement Plan and will be fully and immediately vested, as
                  of the Effective Date of this Agreement, in any benefit that
                  he accrues under that 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, as of the Effective Date of this Agreement, for
                  purposes of determining the amount of monthly premiums due
                  from the Executive.

                                       -2-
<PAGE>

                  The Executive will be a participant in the Annual Incentive
                  Plan, and the Executive will be paid pursuant to that plan an
                  annual benefit of up to ninety percent (90%) of the
                  Executive's Annual Base Salary, with a target of no less than
                  sixty percent (60%) of the Executive's Annual Base Salary (the
                  "Target Annual Bonus"); provided, however, the guaranteed
                  minimum bonus for the years 2001 and 2002 will be no less than
                  $190,000.00 per year.

                  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
                  ninety percent (90%) of his Annual Base Salary (the "Target
                  LTIP Bonus").

                  The Company will grant an option to acquire 200,000 shares of
                  the Company's common stock pursuant to an option granted under
                  the terms of the Company's 1996 Long-Term Incentive
                  Compensation Plan, which options will vest ratably over a five
                  year period from the date of grant with a grant price based on
                  the "fair market value" of a share of the Company's common
                  stock as set forth in the terms of the plan document.

         c.       TRANSITION ALLOWANCE. On the Effective Date or as soon
                  thereafter as administratively feasible, Cinergy will pay to
                  the Executive the sum of $250,000.00 (reduced by applicable
                  federal, state, and local tax withholding), as a transition
                  allowance as consideration for the Executive's decision to
                  accept employment with Cinergy and adhere to the terms of this
                  Agreement.

         d.       FRINGE BENEFITS AND PERQUISITES. During the Employment Period,
                  the Executive will be entitled to the following additional
                  fringe benefits:

                  (i)      Cinergy will furnish to the Executive an automobile
                           and will pay all of the related expenses for
                           gasoline, insurance, maintenance, and repairs.

                  (ii)     Cinergy will pay the initiation fee and the annual
                           dues, assessments, and other membership charges of
                           the Executive for membership in a country club and a
                           luncheon 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 provide benefits under the Executive
                           Supplement Life Program.

                  (v)      Cinergy will pay to relocate the Executive and his
                           immediate family to the Cincinnati, Ohio area under
                           the terms of the Relocation Program.

                  (vi)     Cinergy will furnish to the Executive an annual
                           physical exam and annual financial planning and tax
                           preparation services. In addition, the Executive will
                           be entitled to receive such other fringe benefits in
                           accordance with

                                       -3-
<PAGE>

                           Cinergy plans, practices, programs, and policies in
                           effect from time to time, commensurate with his
                           position and at least comparable to those received
                           by other Cinergy senior executives.

         e.       EXPENSES. Cinergy agrees to reimburse the Executive for all
                  expenses, including those for travel and entertainment,
                  properly incurred by him in the performance of his duties
                  under this Agreement in accordance with the policies
                  established from time to time by the Board of Directors.

         f.       RELOCATION BENEFITS. Following termination of the Executive's
                  employment for any reason (other than death), the Executive
                  will be entitled to reimbursement from Cinergy for the
                  reasonable costs of relocating from the Cincinnati, Ohio, area
                  to a new primary residence in the forty-eight contiguous
                  United States in a manner that is consistent with the terms of
                  the Relocation Program.

4.       TERMINATION OF EMPLOYMENT

         a.       DEATH. The Executive's employment will terminate automatically
                  upon the Executive's death during the Employment Period.

         b.       BY CINERGY FOR CAUSE. Cinergy may terminate the Executive's
                  employment during the Employment Period for Cause. For
                  purposes of this Employment Agreement, "Cause" means the
                  following:

                  (i)      The willful and continued failure by the Executive to
                           substantially perform the Executive's duties with
                           Cinergy (other than any such failure resulting from
                           the Executive's incapacity due to physical or mental
                           illness) after the Board of Directors or the Chief
                           Executive Officer has delivered to the Executive a
                           written demand for substantial performance, which
                           demand specifically identifies the manner in which
                           the Executive has not substantially performed his
                           duties. This event will constitute Cause even if the
                           Executive issues a Notice of Termination for Good
                           Reason pursuant to Subsection 4d after the Board of
                           Directors or Chief Executive Officer delivers a
                           written demand for substantial performance.

                  (ii)     The breach by the Executive of the confidentiality
                           provisions set forth in Section 9.

                  (iii)    The conviction of the Executive for the commission of
                           a felony, including the entry of a guilty or nolo
                           contendere plea, or any willful or grossly negligent
                           action or inaction by the Executive that has a
                           materially adverse effect on Cinergy. For purposes of
                           this definition of Cause, no act, or failure to act,
                           on the Executive's part will be deemed "willful"
                           unless it is done, or omitted to be done, by the
                           Executive in bad faith and without reasonable belief
                           that the Executive's act, or failure to act, was in
                           the best interest of Cinergy.

                                    -4-
<PAGE>

         c.       BY CINERGY WITHOUT CAUSE. Cinergy may, upon at least 30 days
                  advance written notice to the Executive, terminate the
                  Executive's employment during the Employment Period for a
                  reason other than Cause, but the obligations placed upon
                  Cinergy in Section 5 will apply.

         d.       BY THE EXECUTIVE FOR GOOD REASON. The Executive may terminate
                  his employment during the Employment Period for Good Reason.
                  For purposes of this Agreement, "Good Reason" means the
                  following:

                  (i)      A reduction in the Executive's Annual Base Salary,
                           except for across-the-board salary reductions
                           similarly affecting all Cinergy management personnel,
                           or a reduction in any other benefit or payment
                           described in Section 3 of this Agreement, except for
                           changes to the employee benefits programs affecting
                           all Cinergy management personnel, provided that those
                           changes (either individually or in the aggregate)
                           will not result in a material adverse change with
                           respect to the benefits to which the Executive was
                           entitled as of the Effective Date.

                  (ii)     The material reduction without his consent of the
                           Executive's title, authority, duties, or
                           responsibilities from those in effect immediately
                           prior to the reduction or a material adverse change
                           in the Executive's reporting responsibilities.

                  (iii)    Any breach by Cinergy of any other material provision
                           of this Agreement (including but not limited to the
                           place of performance as specified in Subsection 2b).

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

                  (v)      A failure by any successor entity to the Company 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

                                   -5-
<PAGE>

                  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
                                    component of the calculation will be
                                    determined using a percentage determined by
                                    the Chief Executive Officer, in his
                                    discretion, up to the maximum percentage
                                    specified in Subsection 3b, but no less than
                                    the Target Annual Bonus; and

                           (3)      any vested Deferred Compensation (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)     In the event of a Termination prior to, or greater
                           than twenty-four (24) months subsequent to, the
                           occurrence of a Change in Control, and other than by
                           reason of the Executive's death, 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 two (2) times the
                                    sum of the Annual Base Salary and the Target
                                    Annual Bonus. 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

                                   -6-
<PAGE>

                                    Salary, if any, prior to the termination).
                                    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 (A) any Deferred Compensation, beyond
                                    that included in the Accrued Obligations and
                                    (B) any benefits under the Executive
                                    Supplemental Life Program, to the extent
                                    that these amounts are vested and payable
                                    under the terms of the applicable plan or
                                    program as of the Date of Termination.

                           (3)      Except as provided under Clauses (A) and (B)
                                    below, Cinergy will continue, until the end
                                    of the Employment Period, medical and dental
                                    benefits to the Executive and/or the
                                    Executive's family at least equal to those
                                    that would have been provided if the
                                    Executive's employment had not been
                                    terminated (excluding benefits to which the
                                    Executive has waived his rights in writing).
                                    The benefits described in the preceding
                                    sentence will be in accordance with the
                                    medical and welfare benefit plans,
                                    practices, programs, or policies of Cinergy
                                    (the "M&W Plans") as then currently in
                                    effect and applicable generally to other
                                    Cinergy senior executives and their
                                    families.

                                    (A)     If, as of the Executive's Date of
                                            Termination, the Executive meets the
                                            eligibility requirements for
                                            Cinergy's retiree medical and
                                            welfare benefit plans, the provision
                                            of those retiree medical and welfare
                                            benefit plans to the Executive will
                                            satisfy Cinergy's obligation under
                                            this Subparagraph 5a(ii)(3).

                                    (B)      If, as of the Executive's Date of
                                             Termination, the provision to the
                                             Executive of the M&W Plan benefits
                                             described in this Subparagraph
                                             5a(ii)(3) would either (1) violate
                                             the terms of the M&W Plans or (2)
                                             violate any of the Code's
                                             nondiscrimination requirements
                                             applicable to the M&W Plans, then
                                             Cinergy, in its sole discretion,
                                             may elect to pay the Executive, in
                                             lieu of the M&W Plan benefits
                                             described under this Subparagraph
                                             5a(ii)(3), a lump sum cash payment
                                             equal to the total monthly premiums
                                             that would have been paid by
                                             Cinergy for the Executive under the
                                             M&W Plans from the Date of
                                             Termination through the end of the
                                             Employment Period. Nothing in this
                                             Clause will affect the Executive's
                                             right to elect COBRA continuation
                                             coverage under a M&W Plan in
                                             accordance with applicable law.

                                    -7-
<PAGE>

                                    (C)     If the Executive becomes employed by
                                            another employer and is eligible to
                                            receive medical or other welfare
                                            benefits under another
                                            employer-provided plan, any benefits
                                            provided to the Executive under the
                                            M&W Plans will be secondary to those
                                            provided under the other
                                            employer-provided plan during the
                                            Executive's applicable period of
                                            eligibility.

                           (4)      Ownership of the automobile assigned to the
                                    Executive by Cinergy will be transferred to
                                    the Executive within 30 days of the Date of
                                    Termination. The effect of this transfer
                                    will be grossed up for federal and state
                                    income taxes as soon as administratively
                                    feasible after the transfer is effective.

                           (5)      Cinergy will provide tax counseling services
                                    through an agency selected by the Executive,
                                    not to exceed Fifteen Thousand Dollars
                                    ($15,000.00) in cost.

                  (iii)    In the event of Termination 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 three
                                    (3) times the higher of (x) the sum of the
                                    Executive's current Annual Base Salary and
                                    AIP Benefit, or (y) the sum of the Executive
                                    Annual Base Salary in effect immediately
                                    prior to the Change in Control and his AIP
                                    Benefit for 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)     Cinergy will pay to the Executive the value
                                   of (A) any Deferred Compensation, beyond that
                                   included in the Accrued Obligations and (B)
                                   any benefits under the Executive Supplemental
                                   Life Program, to the extent that these
                                   amounts are vested and payable under the
                                   terms of the applicable plan or program as of
                                   the Date of Termination.

                           (3)     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,

                                   -8-
<PAGE>

                                    disability, accident, and health
                                    insurance benefits, those benefits will
                                    be reduced to the extent comparable
                                    benefits are actually received by or made
                                    available to the Executive without cost
                                    during the thirty-six (36) month period
                                    following the Executive's Date of
                                    Termination. The Executive must report to
                                    Cinergy any such benefits that he
                                    actually receives. In lieu of the
                                    benefits described in the preceding
                                    sentences, Cinergy, in its sole
                                    discretion, may elect to pay to the
                                    Executive a lump sum cash payment equal
                                    to thirty-six (36) times the monthly
                                    premiums that would have been paid by
                                    Cinergy to provide those benefits to the
                                    Executive. Nothing in this Subparagraph
                                    5a(iii)(3) will affect the Executive's
                                    right to elect COBRA continuation
                                    coverage in accordance with applicable
                                    law.

                           (4)      Ownership of the automobile assigned to the
                                    Executive by Cinergy will be transferred to
                                    the Executive within 30 days of the Date of
                                    Termination. The effect of this transfer
                                    will be grossed up for federal and state
                                    income taxes as soon as administratively
                                    feasible after the transfer is effective.

                           (5)      Cinergy will provide tax counseling services
                                    through an agency selected by the Executive,
                                    not to exceed Fifteen Thousand Dollars
                                    ($15,000.00) in cost.

                           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,
                  and notwithstanding any other provisions of this Agreement, 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

                                      -9-
<PAGE>

                           change in ownership or effective control of
                           Cinergy or of a substantial portion of its assets
                           (a "Payment" or "Payments") would be subject to
                           any Excise Tax, then the Executive will be
                           entitled to receive an additional payment (a
                           "Gross-Up Payment") in an amount such that after
                           payment by the Executive of all taxes (including
                           any interest, penalties, additional tax, or
                           similar items imposed with respect thereto and the
                           Excise Tax), including any Excise Tax imposed upon
                           the Gross-Up Payment, the Executive retains an
                           amount of the Gross-Up Payment equal to the Excise
                           Tax imposed upon the Payments.

                  (ii)     An initial determination as to whether a Gross-Up
                           Payment is required pursuant to this Agreement and
                           the amount of that Gross-Up Payment will be made at
                           Cinergy's expense by an Accounting Firm selected by
                           the Executive and reasonably acceptable to Cinergy.
                           The Accounting Firm will provide its determination,
                           together with detailed supporting calculations and
                           documentation, to Cinergy and the Executive within 10
                           days after the Date of Termination, or such other
                           time as requested by Cinergy or by the Executive, and
                           if the Accounting Firm determines that no Excise Tax
                           is payable by the Executive with respect to a Payment
                           or Payments, it will furnish the Executive with an
                           opinion reasonably acceptable to the Executive that
                           no Excise Tax will be imposed with respect to any
                           such Payment or Payments. Within 10 days after the
                           Accounting Firm delivers its determination to the
                           Executive, the Executive will have the right to
                           dispute the determination. The Gross-Up Payment, if
                           any, as determined pursuant to this Subsection 5c
                           will be paid by Cinergy to the Executive within five
                           days of the receipt of the Accounting Firm's
                           determination. The existence of a dispute will not in
                           any way affect the Executive's right to receive the
                           Gross-Up Payment in accordance with the
                           determination. If there is no dispute, the
                           determination will be binding, final, and conclusive
                           upon Cinergy and the Executive. If there is a
                           dispute, then Cinergy and the Executive will together
                           select a second Accounting Firm, which will review
                           the determination and the Executive's basis for the
                           dispute and then will render its own determination,
                           which will be binding, final, and conclusive on
                           Cinergy and on the Executive. Cinergy will bear all
                           costs associated with that determination, unless the
                           determination is not greater than the initial
                           determination, in which case all such costs will be
                           borne by the Executive.

                  (iii)    The value of any non-cash benefits or any deferred
                           payment or benefit paid or payable to the Executive
                           will be determined in accordance with the principles
                           of Code paragraphs 280G(d)(3) and (4). For purposes
                           of determining the amount of the Gross-Up Payment,
                           the Executive will be deemed to pay federal income
                           taxes at the highest marginal rate of federal income
                           taxation in the calendar year in which the Gross-Up
                           Payment is to be made and applicable state and local
                           income taxes at the highest marginal rate of taxation
                           in the state and locality of the Executive's

                                 -10-
<PAGE>

                           residence on the Date of Termination, net of the
                           maximum reduction in federal income taxes that would
                           be obtained from deduction of those state and local
                           taxes.

                  (iv)     Notwithstanding anything contained in this Agreement
                           to the contrary, in the event that, according to the
                           Accounting Firm's determination, an Excise Tax will
                           be imposed on any Payment or Payments, Cinergy will
                           pay to the applicable government taxing authorities
                           as Excise Tax withholding, the amount of the Excise
                           Tax that Cinergy has actually withheld from the
                           Payment or Payments in accordance with law.

         d.       VALUE CREATION PLAN AND STOCK OPTIONS. Upon the Executive's
                  termination of employment for any reason, the Executive's
                  entitlement to restricted shares and performance shares under
                  the Value Creation Plan and any stock options granted under
                  the Stock Option Plan or the LTIP will be determined under the
                  terms of the appropriate plan and any applicable
                  administrative guidelines and written agreements.

         e.       OTHER FEES AND EXPENSES. Cinergy will also pay to the
                  Executive all legal fees and expenses incurred by the
                  Executive in successfully disputing a Termination that
                  entitles the Executive to Severance Benefits. Payment will be
                  made within five (5) business days after delivery of the
                  Executive's written request for payment accompanied by such
                  evidence of fees and expenses incurred as Cinergy reasonably
                  may require.

6.       NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement will prevent or
         limit the Executive's continuing or future participation in any
         benefit, plan, program, policy, or practice provided by Cinergy and for
         which the Executive may qualify, except with respect to any benefit to
         which the Executive has waived his rights in writing or any plan,
         program, policy, or practice that expressly excludes the Executive from
         participation. In addition, nothing in this Agreement will limit or
         otherwise affect the rights the Executive may have under any other
         contract or agreement with Cinergy entered into after the Effective
         Date. Amounts that are vested benefits or that the Executive is
         otherwise entitled to receive under any benefit, plan, program, policy,
         or practice of, or any contract or agreement entered into after the
         Effective Date with Cinergy, at or subsequent to the Date of
         Termination, will be payable in accordance with that benefit, plan,
         program, policy or practice, or that contract or agreement, except as
         explicitly modified by this Agreement.

7.       FULL SETTLEMENT: MITIGATION. Cinergy's obligation to make the payments
         provided for in this Agreement and otherwise to perform its obligations
         under this Agreement will not be affected by any set-off, counterclaim,
         recoupment, defense, or other claim, right, or action that Cinergy may
         have against the Executive or others. In no event will the Executive be
         obligated to seek other employment or take any other action by way of
         mitigation of the amounts (including amounts for damages for breach)
         payable to the Executive under any of the provisions of this Agreement
         and, except as provided in Subparagraphs 5a(ii)(3)

                                     -11-

<PAGE>

         and 5a(iii)(3), those amounts will not be reduced simply because
         the Executive obtains other employment. If the Executive finally
         prevails on the substantial claims brought with respect to any
         dispute between Cinergy and the Executive as to the interpretation,
         terms, validity, or enforceability of (including any dispute about
         the amount of any payment pursuant to) this Agreement, Cinergy
         agrees to pay all reasonable legal fees and expenses that the
         Executive may reasonably incur as a result of that dispute.

8.       ARBITRATION. The parties agree that any dispute, claim, or controversy
         based on common law, equity, or any federal, state, or local statute,
         ordinance, or regulation (other than workers' compensation claims)
         arising out of or relating in any way to the Executive's employment,
         the terms, benefits, and conditions of employment, or concerning this
         Agreement or its termination and any resulting termination of
         employment, including whether such a dispute is arbitrable, shall be
         settled by arbitration. This agreement to arbitrate includes but is not
         limited to all claims for any form of illegal discrimination, improper
         or unfair treatment or dismissal, and all tort claims. The Executive
         will still have a right to file a discrimination charge with a federal
         or state agency, but the final resolution of any discrimination claim
         will be submitted to arbitration instead of a court or jury. The
         arbitration proceeding will be conducted under the employment dispute
         resolution arbitration rules of the American Arbitration Association in
         effect at the time a demand for arbitration under the rules is made.
         The decision of the arbitrator(s), including determination of the
         amount of any damages suffered, will be exclusive, final, and binding
         on all parties, their heirs, executors, administrators, successors and
         assigns. Each party will bear its own expenses in the arbitration for
         arbitrators' fees and attorneys' fees, for its witnesses, and for other
         expenses of presenting its case. Other arbitration costs, including
         administrative fees and fees for records or transcripts, will be borne
         equally by the parties. Notwithstanding anything in this Section to the
         contrary, if the Executive prevails with respect to any dispute
         submitted to arbitration under this Section, Cinergy will reimburse or
         pay all legal fees and expenses that the Executive may reasonably incur
         as a result of the dispute as required by Section 7.

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

                                     -12-

<PAGE>

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 Employment Agreement between
                  Cinergy and the Executive.

         e.       AIP BENEFIT. "AIP Benefit" means the Annual Incentive Plan
                  benefit described in Subsection 3b.

         f.       ANNUAL BASE SALARY. "Annual Base Salary" means the annual base
                  salary payable to the Executive pursuant to Subsection 3a.

         g.       ANNUAL INCENTIVE PLAN. "Annual Incentive Plan" means the
                  Cinergy Corp. Annual Incentive Plan or any successor to that
                  plan.

                                     -13-

<PAGE>

         h.       BOARD OF DIRECTORS. "Board of Directors" means the board of
                  directors of the Company.

         i.       CAUSE. "Cause" has the meaning set forth in Subsection 4b.

         j.       CHANGE IN CONTROL. A "Change in Control" will be deemed to
                  have occurred if any of the following events occur, after the
                  Effective Date:

                  (i)      Any "person" or "group" (within the meaning of
                           subsection 13(d) and paragraph 14(d)(2) of the 1934
                           Act) is or becomes the beneficial owner (as defined
                           in Rule l3d-3 under the 1934 Act), directly or
                           indirectly, of securities of the Company (not
                           including in the securities beneficially owned by
                           such a Person any securities acquired directly from
                           the Company or its affiliates) representing more than
                           twenty percent (20%) of the combined voting power of
                           the Company's then outstanding securities, excluding
                           any person who becomes such a beneficial owner in
                           connection with a transaction described in Clause (1)
                           of Paragraph (ii) below; or

                  (ii)     There is consummated a merger or consolidation of the
                           Company or any direct or indirect subsidiary of the
                           Company with any other corporation, other than (1) a
                           merger or consolidation that would result in the
                           voting securities of the Company outstanding
                           immediately prior to that merger or consolidation
                           continuing to represent (either by remaining
                           outstanding or by being converted into voting
                           securities of the surviving entity or its parent) at
                           least sixty percent (60%) of the combined voting
                           power of the securities of the Company or the
                           surviving entity or its parent outstanding
                           immediately after the merger or consolidation, or (2)
                           a merger or consolidation effected to implement a
                           recapitalization of the Company (or similar
                           transaction) in which no person is or becomes the
                           beneficial owner, directly or indirectly, of
                           securities of the Company (not including in the
                           securities beneficially owned by such a Person any
                           securities acquired directly from the Company or its
                           affiliates other than in connection with the
                           acquisition by the Company or its affiliates of a
                           business) representing twenty percent (20%) or more
                           of the combined voting power of the Company's then
                           outstanding securities; or

                  (iii)    During any period of two consecutive years,
                           individuals who at the beginning of that period
                           constitute the Board of Directors and any new
                           director (other than a director whose initial
                           assumption of office is in connection with an actual
                           or threatened election contest, including but not
                           limited to a consent solicitation, relating to the
                           election of directors of the Company) whose
                           appointment or election by the Company's shareholders
                           was approved or recommended by a vote of at least
                           two-thirds (2/3) of the directors then still in
                           office who either were directors at the beginning of
                           that period or whose appointment, election, or
                           nomination for election was

                                     -14-

<PAGE>

                           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, its subsidiaries, and/or
                  its affiliates.

         m.       CODE. "Code" means the Internal Revenue Code of 1986, as
                  amended, and interpretive rules and regulations.

         n.       COMPANY.  "Company" means Cinergy Corp.

         o.       DATE OF TERMINATION.  "Date of Termination" means:

                  (i)      if the Executive's employment is terminated by the
                           Company for Cause, or by the Executive with or
                           without Good Reason, the date of receipt of the
                           Notice of Termination or any later date specified in
                           the notice, as the case may be;

                  (ii)     if the Executive's employment is terminated by the
                           Company other than for Cause, thirty (30) days after
                           the date on which the Company notifies the Executive
                           of the termination; and

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

         p.       DEFERRED COMPENSATION. "Deferred Compensation" means
                  compensation deferred by the Executive pursuant to the Cinergy
                  Corp. Non-Qualified Deferred Incentive Compensation Plan and
                  employer contributions, if any, credited to the Executive
                  under the terms of that Plan.

         q.       EARNINGS. "Earnings" means the Executive's "Earnings" as
                  defined in the Pension Plan but without regard to the
                  limitation of Code paragraph 401(a)(17).

         r.       EFFECTIVE DATE. "Effective Date" means February 12, 2001.

                                     -15-

<PAGE>

         s.       EMPLOYMENT PERIOD. "Employment Period" has the meaning set
                  forth in Subsection 1b.

         t.       EXCISE TAX. "Excise Tax" means any excise tax imposed by Code
                  section 4999, together with any interest, penalties,
                  additional tax or similar items that are incurred by the
                  Executive with respect to the excise tax imposed by Code
                  section 4999.

         u.       EXECUTIVE.  "Executive" means R. Foster Duncan.

         v.       EXECUTIVE RETIREMENT PLANS. The "Executive Retirement Plans"
                  are the Pension Plan, the Supplemental Executive Retirement
                  Plan, and the Cinergy Corp. Excess Pension Plan or any
                  successor to those plans.

         w.       EXECUTIVE SUPPLEMENTAL LIFE PROGRAM. "Executive Supplemental
                  Life Program" means the Cinergy Corp. Executive Supplemental
                  Life Program or any successor to that plan.

         x.       GOOD REASON. "Good Reason" has the meaning set forth in
                  Subsection 4d.

         y.       GROSS-UP PAYMENT. "Gross-Up Payment" has the meaning set forth
                  in Subsection 5c.

         z.       M&W PLANS. "M&W Plans" has the meaning given in Subparagraph
                  5a(ii)(3).

         aa.      LONG-TERM INCENTIVE PLAN. "Long-Term Incentive Plan" means the
                  long-term inventive plan implemented under the Cinergy Corp.
                  1996 Long-Term Incentive Compensation Plan or any successor to
                  that plan.

         bb.      NOTICE OF TERMINATION. "Notice of Termination" has the meaning
                  set forth in Subsection 4e.

         cc.      PAYMENT OR PAYMENTS. "Payment" or "Payments" has the meaning
                  set forth in Subsection 5c.

         dd.      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;

                                     -16-

<PAGE>

                  (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.

         ee.      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.

         ff.      RETIREES' DENTAL PLAN. "Retirees' Dental Plan" means the
                  Cinergy Corp. Retirees' Dental Plan or any successor to that
                  plan.

         gg.      RETIREES' MEDICAL PLAN. "Retirees' Medical Plan" means the
                  Cinergy Corp. Retirees' Medical Plan or any successor to that
                  plan.

         hh.      SEVERANCE BENEFITS. "Severance Benefits" means the payments
                  and benefits payable to the Executive pursuant to Section 5.

         ii.      SPOUSE. "Spouse" means the Executive's lawfully married
                  spouse. For this purpose, common law marriage or a similar
                  arrangement will not be recognized unless otherwise required
                  by federal law.

         jj.      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.

         kk.      TARGET ANNUAL BONUS. "Target Annual Bonus" has the meaning set
                  forth in Subsection 3b.

         ll.      TARGET LTIP BONUS. "Target LTIP Bonus" has the meaning set
                  forth in Subsection 3b.

         mm.      TERMINATION. "Termination" means (1) the termination by
                  Cinergy of the Executive's employment with Cinergy other than
                  a termination for Cause or (2) the termination by the
                  Executive of the Executive's employment with Cinergy for Good
                  Reason.

         nn.      VALUE CREATION PLAN. "Value Creation Plan" means the Value
                  Creation Plan of the LTIP.

12.      MISCELLANEOUS.

         a.       This Agreement will be governed by and construed in accordance
                  with the laws of the State of Ohio, without reference to
                  principles of conflict of laws. The captions

                                     -17-

<PAGE>

                  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:
                  R. Foster Duncan
                  Cinergy Corp.
                  221 East Fourth Street
                  P. O. Box 960
                  Cincinnati, Ohio 45201-0960

                  IF TO CINERGY:
                  Cinergy Corp.
                  221 East Fourth Street
                  P. O. 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 4d 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.

                                     -18-

<PAGE>

         f.       This instrument contains the entire agreement of the Executive
                  and Cinergy with respect to the subject matter of this
                  Agreement; and subject to any agreements evidencing stock
                  option or restricted stock grants described in Subsection 3b
                  and the Stock Related Documents, all promises,
                  representations, understandings, arrangements, and prior
                  agreements are merged into this Agreement and accordingly
                  superseded.

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

         h.       Cinergy and the Executive agree that Cinergy Services, Inc.
                  will be authorized to act for Cinergy with respect to all
                  aspects pertaining to the administration and interpretation of
                  this Agreement.

         IN WITNESS WHEREOF, the Executive and the Company have caused this
Agreement to be executed as of the Effective Date.

                                         CINERGY SERVICES, INC.

                                         By:_________________________________
                                            James E. Rogers
                                            Chairman and Chief Executive
                                            Officer

                                         EXECUTIVE

                                         By:_________________________________
                                            R. Foster Duncan

                                     -19-

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