EMPLOYMENT AGREEMENT


EMPLOYMENT AGREEMENT made and entered into as of the 1st day of 
June, 1996, by and among Cinergy Corp., a Delaware Corporation 
("Cinergy"), Cinergy Services, Inc., a Delaware Corporation 
("Cinergy Services"), The Cincinnati Gas & Electric Company, an 
Ohio Corporation ("CG&E"), PSI Energy, Inc., an Indiana 
Corporation ("PSI"), and Elizabeth K. Lanier (the "Executive").  
Cinergy, Cinergy Services, CG&E, and PSI will sometimes be 
referred to in this Employment Agreement collectively as the 
"Corporation".

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

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

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

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

1. Employment and Term.

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

b.  The Employment Period of the Executive as provided 
in Section 1(a) will commence on June 1, 1996 (the 
"Effective Date") and shall continue until May 31, 
2001, which term may be renewed for an additional 
period upon the mutual written agreement of the 
parties.

2. Duties and Powers of Executive.

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

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

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

a. Salary.  The Executive's annual base salary (the 
"Annual Base Salary"), payable not less often than 
semi-monthly, shall be at the annual rate of not less 
than $220,000.  The Board may, from time to time, 
direct such upward adjustments in the Annual Base 
Salary as the Board deems to be necessary or desirable, 
including without limitation adjustments in order to 
reflect increases in the cost of living.  Any increase 
in the Annual Base Salary shall not serve to limit or 
reduce any other obligation of the Corporation under 
this Employment Agreement.  The Annual Base Salary 
shall not be reduced after any increase thereof except 
for across-the-board salary reductions similarly 
affecting all executive management personnel of 
Cinergy, Cinergy Services, PSI and CG&E.

b. Retirement, Incentive, Welfare Benefit Plans and 
Other Benefits.  During the Employment Period and so 
long as the Executive is employed by the Corporation, 
the Executive shall be eligible, and the Corporation 
shall take such actions as may be necessary or required 
to cause the Executive to become eligible, to 
participate in all short-term and long-term incentive, 
stock option, restricted stock, performance unit, 
savings, retirement and welfare plans, practices, 
policies and programs applicable generally to employees 
and/or other senior executives of the Corporation, 
including but not limited to Cinergy's Annual Incentive 
Plan, Cinergy's Performance Shares Plan, Cinergy's 1996 
Long-Term Incentive Compensation Plan, Cinergy's 
Executive Supplemental Life Insurance Program, 
Cinergy's Stock Option Plan, PSI's Employees' 401(k) 
Savings Plan, PSI's Pension Plan, PSI's Supplemental 
Retirement Plan and PSI's Excess Benefit Plan, or any 
successors thereto, except with respect to any plan, 
practice, policy or program to which the Executive has 
waived her rights in writing.

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

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

(ii) The Corporation shall reimburse the 
initiation fee and shall pay the annual dues, 
assessments and other membership charges of the 
Executive for membership charges of the Executive 
for membership in a country club selected by the 
Executive,

(iii) The Corporation shall provide paid vacation 
for four (4) weeks per year (or longer if 
permitted by the Corporation's policy), and

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

d. Expenses.  The Corporation agrees to reimburse the 
Executive for all expenses, including those for travel 
and entertainment, properly incurred by her in the 
performance of her duties under this Employment 
Agreement in accordance with the policies established 
from time to time by the Board.



4. Termination of Employment.

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

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

(i) The willful and continued failure by the 
Executive to substantially perform the Executive's 
duties with the Corporation (other than any such 
failure resulting from Executive's incapacity due 
to physical or mental illness or any such actual 
or anticipated failure after the issuance of a 
Notice of Termination for Good Reason by the 
Executive pursuant to Section 4(c)) after a 
written demand for substantial performance is 
delivered to the Executive by the Board, which 
demand specifically identifies the manner in which 
the Board believes that the Executive has not 
substantially performed the Executive's duties, 
and the Executive fails to substantially perform 
the Executive's duties to the satisfaction of the 
Board within sixty (60) days of receipt of the 
Board's written demand for substantial 
performance; or

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

(iii)  The conviction of the Executive for the 
commission of a felony, including the entry of a 
guilty or nolo contendere plea, or any willful or 
grossly negligent action or inaction by the 
Executive that has a materially adverse effect on 
the Corporation.
  
For purposes of this definition of "Cause", no act, or 
failure to act, on the Executive's part shall be deemed 
"willful" unless done, or omitted to be done, by the 
Executive not in good faith and without reasonable 
belief that the Executive's act, or failure to act, was 
in the best interest of the Corporation.  
Notwithstanding the above definition of "Cause", the 
Corporation may terminate the Executive's employment 
during the Employment Period for a reason other than 
Cause, but the obligations placed upon the Corporation 
in Section 5 shall apply.

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

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

(ii) The material reduction without her consent of 
the Executive's title, authority, duties or 
responsibilities from those in effect immediately 
prior to the reduction;

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

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

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

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

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

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

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

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

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

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

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

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

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

(ii) The shareholders of Cinergy approve a 
definite agreement to merge or consolidate with or 
into another corporation in a transaction in which 
neither Cinergy nor any of its subsidiaries or 
affiliates will be the surviving corporation, or 
to sell or otherwise dispose of all or 
substantially all of Cinergy's assets to any 
person or group other than Cinergy or any of its 
subsidiaries or affiliates, other than a merger or 
a sale which will result in the voting securities 
of Cinergy outstanding prior to the merger or sale 
continuing to represent at least fifty percent 
(50%) of the combined voting power of the voting 
securities of the corporation surviving the merger 
or purchasing the assets; 

(iii)  During any period of two (2) consecutive years, 
individuals who at the beginning of such period 
constitute the Board of Directors of Cinergy (and 
any new director whose election by the Board of 
Directors of Cinergy or whose nomination for 
election by Cinergy's stockholders was approved by 
a vote of at least two thirds (2/3) of the 
directors then still in office who either were 
directors at the beginning of such period or whose 
election or nomination for election was previously 
so approved) cease for any reason to constitute a 
majority of Cinergy's Board of Directors; or
 
(iv)  James E. Rogers ceases to be Cinergy's Chief 
Executive Officer.

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

(i) The Corporation or any of its subsidiaries,

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

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

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

5. Obligations of the Corporation Upon Termination.

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

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

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

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

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

(4) any compensation previously deferred by 
the Executive (together with any accrued 
interest or earnings thereon) and any accrued 
vacation pay, in each case to the extent not 
previously paid.  
 
(The amounts specified in clauses (1), (2), 
(3) and (4) shall be referred to in this 
Employment Agreement as the "Accrued 
Obligations".)  The amounts specified in this 
Section 5(a)(i) shall be paid within thirty 
(30) days after the Date of Termination.  The 
Accrued Obligations described in this Section 
are payable to the Executive regardless of 
whether a Change in Control has occurred.

(ii) Prior to the occurrence of a Change in 
Control, and in the event of Termination other 
than by reason of the Executive's death, then:

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

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

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

(4) the Corporation shall continue, until the 
end of the Employment Period, medical and 
welfare benefits to the Executive and/or the 
Executive's family at least equal to those 
which would have been provided if the 
Executive's employment had not been 
terminated (excluding benefits to which the 
Executive has waived her rights in writing), 
such benefits to be in accordance with the 
most favorable medical and welfare benefit 
plans, practices, programs or policies (the 
"M&W Plans") of the Corporation as in effect 
and applicable generally to other senior 
executives of the Corporation and their 
families during the ninety (90) day period 
immediately preceding the Date of 
Termination; provided, however, that if the 
Executive becomes employed with another 
employer and is eligible to receive medical 
or other welfare benefits under another 
employer-provided plan, the benefits under 
the M&W Plans shall be secondary to those 
provided under such other plan during such 
applicable period of eligibility.

(iii) From and after the occurrence of a Change in 
Control and in the event of Termination other than 
by reason of the Executive's death, then in lieu 
of any further salary payments to the Executive 
for periods subsequent to the Date of Termination 
and in lieu of any other benefits payable pursuant 
to Section 5(a)(ii) of this Employment Agreement:

(1) The Corporation shall pay to the 
Executive a lump sum severance payment, in 
cash, equal to the greater of:

(A) the present value of all amounts and 
benefits that would have been due under 
Sections 5(a)(ii) of this Employment 
Agreement, excluding Section 
5(a)(ii)(4), and

(B) three (3) times the sum of (x) the 
higher of the Executive's Annual Base 
Salary in effect immediately prior to 
the occurrence of the event or 
circumstance upon which the Notice of 
Termination is based or in effect 
immediately prior to the Change in 
Control, and (y) the higher of the 
amount paid to the Executive pursuant to 
all incentive compensation or bonus 
plans or programs maintained by the 
Corporation, in the year preceding that 
in which the Date of Termination occurs 
or in the year preceding that in which 
the Change in Control occurs; and

(2) For a thirty-six (36) month period after 
the Date of Termination, the Corporation 
shall arrange to provide the Executive with 
life, disability, accident and health 
insurance benefits substantially similar to 
those which the Executive is receiving 
immediately prior to the Notice of 
Termination (without giving effect to any 
reduction in such benefits subsequent to a 
Change in Control which reduction constitutes 
Good Reason), except for any benefits that 
were waived by the Executive in writing.  
Benefits otherwise receivable by the 
Executive pursuant to this Section 
5(a)(iii)(2) shall be reduced to the extent 
comparable benefits are actually received by 
or made available to the Executive without 
cost during the thirty-six (36) month period 
following the Executive's termination of 
employment (and any such benefits actually 
received by the Executive shall be reported 
to the Corporation by the Executive).

The Executive's employment shall be deemed to 
have been terminated following a Change in 
Control of Cinergy without Cause or by the 
Executive for Good Reason if, in addition to 
all other applicable Terminations, the 
Executive's employment is terminated prior to 
a Change in Control without Cause at the 
direction of a Person who has entered into an 
agreement with Cinergy or any of its 
subsidiaries or affiliates, the consummation 
of which will constitute a Change in Control 
or if the Executive terminates her employment 
for Good Reason prior to a Change in Control 
if the circumstances or event which 
constitutes Good Reason occurs at the 
direction of such Person.

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

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

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

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

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

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

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

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

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

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

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

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

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

9. Successors.

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

b.  This Employment Agreement shall inure to the benefit 
of and be binding upon the Corporation, and its 
successors and assigns.
c. The Corporation shall require any successor (whether 
direct or indirect, by purchase, merger, consolidation 
or otherwise) to all or substantially all of the 
business and/or assets of the Corporation to assume 
expressly and agree to perform this Employment 
Agreement in the same manner and to the same extent 
that the Corporation would be required to perform it if 
no such succession had taken place.

10. Miscellaneous.

a. This Employment Agreement shall be governed by and 
construed in accordance with the laws of the State of 
Ohio, without reference to principles of conflict of 
laws.  The captions of this Employment Agreement are 
not part of the provisions hereof and shall have no 
force or effect.  This Employment Agreement may not be 
amended, modified, repealed, waived, extended or 
discharged except by an agreement in writing signed by 
the party against whom enforcement of such amendment, 
modification, repeal, waiver, extension or discharge is 
sought.  No person, other than pursuant to a resolution 
of the Board or a committee thereof, shall have 
authority on behalf of the Corporation to agree to 
amend, modify, repeal, waive, extend or discharge any 
provision of this Employment Agreement or anything in 
reference thereto.

b. All notices and other communications hereunder shall 
be in writing and shall be given by hand delivery to 
the other party or by registered or certified mail, 
return receipt requested, postage prepaid, addressed as 
follows:
If to the Executive:
Elizabeth K. Lanier
Cinergy Corp.
221 East Fourth Street
P. O. Box 960
Cincinnati, Ohio 45201-0960
If to the Corporation:
Cinergy Corp.
221 East Fourth Street
P. O. Box 960
Cincinnati, Ohio 45201-0960
Attn:  Chief Executive Officer

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

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

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

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

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

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

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

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


CINERGY CORP., CINERGY SERVICES, INC.,
THE CINCINNATI GAS & ELECTRIC COMPANY,
AND PSI ENERGY, INC.




By:  JAMES E. ROGERS
        James E. Rogers
        Vice Chairman and Chief Executive Officer



EXECUTIVE



ELIZABETH K. LANIER
Elizabeth K. Lanier