CINERGY CORP, U-1, 1996-02-23

CINERGY CORP
U-1, 1996-02-23
ELECTRIC & OTHER SERVICES COMBINED

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As filed with the Securities and Exchange Commission on February
23, 1996

File No. 70-____

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

__________________________________________
FORM U-1 DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________

Cinergy Corp.
139 East Fourth Street
Cincinnati, Ohio 45202

(Name of company filing this statement
and address of principal executive offices)

Cinergy Corp.

(Name of top registered holding company parent)

William L. Sheafer
Treasurer
Cinergy Corp.
(address above)

(Name and address of agent of service)

The Commission is requested to send copies of all notices, orders
and communications in connection with this Declaration to:

Cheryl M. Foley
Vice President, General Counsel
and Corporate Secretary
Cinergy Corp.
(address above)

Item 1. Description of Proposed Transactions

A. Requested Authorizations

On January 25, 1996, the Board of Directors (the "Board") of
Cinergy Corp. ("Cinergy"), a registered holding company under the
Public Utility Holding Company Act of 1935, as amended (the
"Act"), adopted a new employee incentive compensation plan, the
Cinergy Corp. 1996 Long-Term Incentive Compensation Plan (the
"Plan"), subject to approval by Cinergy's shareholders. Cinergy
hereby requests authorization (1) to solicit proxies with respect
to the Plan from the holders of its outstanding common stock,
$0.01 par value per share ("Common Stock"), for action at the
annual meeting of Cinergy's shareholders (the "Annual Meeting"),
scheduled to take place on April 26, 1996; and (2) to issue
securities under the Plan, including up to 7 million shares of
Common Stock from time to time through December 31, 2000.

B. Annual Meeting of Shareholders

Cinergy intends to submit the Plan to the holders of its
outstanding Common Stock for consideration and action at the
Annual Meeting. Assuming the presence of a quorum, approval of
the Plan requires the affirmative vote of the holders of not less
than a majority of the shares of Common Stock (each, a "Common
Share") present at the Annual Meeting in person or by proxy and
entitled to vote on the Plan. Cinergy has engaged Corporate
Investor Communications, Inc., a professional proxy solicitation
firm ("CIC"), to assist in the solicitation of proxies. The
proxy materials to be mailed to Cinergy's shareholders in
connection with the Annual Meeting are included herewith as
Exhibits B-2 through B-4.

As noted, the Annual Meeting is scheduled for April 26, 1996.
Cinergy intends to mail the related proxy materials to
shareholders on or about March 15, 1996. Accordingly, in order
to accommodate this schedule and to permit sufficient time for
advance preparation (printing of proxy materials, etc.), Cinergy
requests that the Commission issue an order by not later than
March 8, 1996 permitting Cinergy to solicit proxies with respect
to the Plan.

C. 1996 Long-Term Incentive Compensation Plan

1. Introduction

Cinergy believes that the Plan is in the best interests of the
company and its shareholders because the Plan will enable Cinergy
to provide a wide variety of long-term stock-based and cash
incentives to officers and other key employees of Cinergy and its
direct and indirect subsidiaries (the "Cinergy system"), the
ultimate effect of which should be to enhance the financial
success of the Cinergy system and increase shareholder value by
assisting Cinergy in attracting and retaining highly qualified
officers and other key employees. If approved by Cinergy's
shareholders, the Plan will afford Cinergy greater flexibility in
designing long-term compensation incentives than under any
existing Cinergy stock-based employee benefit plan./1/ To that
end, the Plan contemplates the granting to certain key employees
of stock options, stock appreciation rights, restricted stock,
cash awards, performance shares, performance awards, dividend
equivalents, and other stock-based awards. More generally, the
Plan encompasses performance-based compensation, placing a
greater portion of total pay for officers and key employees at
risk. With respect to the various stock-based incentives under
the Plan, Cinergy believes that ownership of its stock by
officers and other key employees will assist in the attraction,
retention and motivation of highly qualified employees and will
provide them with additional incentives toward pursuing and
sustaining Cinergy's growth and profitability. The Plan is thus
intended to coalesce the interests of Cinergy's shareholders and
management with a view to enhancing Cinergy's value.
A copy of the Plan is included as Exhibit B-4 and a detailed
summary thereof is included in Exhibit B-2.

2. Types of Plan Stock Awards

The Plan contemplates the grant from time to time to selected
eligible employees of stock-related awards of six general types:
(1) options to purchase Common Shares ("Options")/2/; (2) rights
to receive, upon exercise, the appreciation in fair market value
of Common Shares ("Stock Appreciation Rights" or "SARs")/3/; (3)
outright grants of Common Shares, subject to transfer
restrictions and risk of forfeiture for a specified restriction
period ("Restricted Stock") and which may, but need not, be
conditioned upon the attainment of specified Performance Measures
(defined below); (4) rights to receive (a) Common Shares, or in
lieu of all or any portion of those shares, their fair market
value ("Performance Shares") or (b) a specified dollar amount or,
in lieu of all or any portion of that amount, Common Shares
having the same fair market value ("Performance Awards"), both
conditional upon the attainment during a specified performance
period of specified Performance Measures; (5) rights to receive
Common Stock or cash or other property equal in value to
dividends paid with respect to a specified number of Common
Shares, and which may, but need not, be conditioned upon the
attainment of specified Performance Measures ("Dividend
Equivalents"); and (6) other stock-based awards which are
denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Common Shares
("Other Stock-Based Awards").

3. Shares Available for Awards

Shares used for awards under the Plan may be authorized but
unissued Common Shares or Common Shares purchased on the open
market, in private transactions or otherwise. The maximum number
of Common Shares that may be (i) issued or transferred upon the
exercise of Options or SARs, (ii) awarded as Restricted Stock and
released from substantial risk of forfeiture, (iii) issued or
transferred as Dividend Equivalents, and (iv) issued or
transferred in payment of Performance Shares, Performance Awards
or Other Stock-Based Awards which have been earned, shall not
exceed 7 million shares through year-end 2000. A copy of the
registration statement to be filed under the Securities Act of
1933 relating to the Common Shares issuable under the Plan will
be filed as Exhibit C-1.

4. Administration of Plan; Employee Eligibility
The Plan will be administered by the Compensation Committee of
the Board ("Committee"), all of whose members will be
non-employee members of the Board who are disinterested persons
within the meaning of Rule 16b-3 of the Securities Exchange Act
of 1934.

The group of employees of Cinergy and its subsidiaries who would
be eligible to receive awards under the Plan consists of
officers, employees who are employed in a significant executive,
supervisory, administrative, operational or professional
capacity, and employees who have the potential to contribute to
the future success of the Cinergy system. The Committee would
have the exclusive authority to determine, in its sole
discretion, those eligible employees to whom awards would be
granted at any time, as well as the type, size and other terms
and conditions of each granted award, subject only to the
parameters in the Plan. In that regard, no employee shall be
granted Options for more than 500,000 Common Shares or SARs
during any calendar year. In addition, no employee shall receive
awards of Restricted Stock, Dividend Equivalents, Performance
Shares, Performance Awards and Other Stock-Based Awards having an
aggregate value as of their respective dates of grant in excess
of $3 million in any calendar year. The Committee may make
grants to employees under any or a combination of all of the
various categories of awards that are authorized under the Plan.

5. Performance Measures

"Performance Measures" are criteria and objectives determined by
the Committee which (1) in the case of Performance Shares,
Performance Awards or Dividend Equivalents, the attainment of
which during the applicable performance period would be a
precondition to settlement of the award, and (2) in the case of
Restricted Stock, the failure to obtain which would cause
forfeiture of the award and/or which if met during the otherwise
applicable restriction period would cause an early termination of
the restriction period. Performance Measures applicable to any
award to an employee who is, or is determined by the Committee as
likely to become, a "covered employee" within the meaning of Code
Section 162(m) will be established in writing within the period
prescribed by that section and shall be limited to criteria and
objectives related to (1) Cinergy's or one of its subsidiary's
performance, efficiency or profitability, including stock price,
total shareholder return, market share, sales, earnings per
share, costs, net operating income, cash flow, fuel cost per
million BTU, costs per kilowatt hour, retained earnings or return
on equity; and/or (2) a covered employee's performance, which
criteria shall be based on objective or, with respect to separate
awards under the Plan, subjective performance criteria pertaining
to a covered employee's individual effort as to enhancement of
either individual performance or achievement or attainment of the
performance, efficiency or profitability of Cinergy and its
subsidiaries. In addition, the Committee may impose any other
subjective or objective criteria it may approve from time to time
for the purpose of reducing the amount otherwise payable upon
settlement of Dividend Equivalents, Performance Shares or
Performance Awards or for the purpose of increasing the number of
shares of Restricted Stock that would otherwise be forfeited
during the applicable restriction period. Except in the case of
such a covered employee, if the Committee determines that a
change in the business, operations, corporate or capital
structure of Cinergy or any of its subsidiaries, or the manner in
which it conducts its business, or other events or circumstances
render the Performance Measures unsuitable, the Committee may
modify such Performance Measures in whole or in part as the
Committee deems appropriate and equitable.

6. Options

Under the Plan, the Committee may grant Options that entitle the
optionee to purchase Common Shares at a price equal to the fair
market value on the date of grant - i.e., the average of the high
and low sales prices of a Common Share on the date of grant (or
on the preceding trading day if that date was not a trading date)
as reported by the "NYSE-Composite Transactions" in The Wall
Street Journal. Any Options granted must be evidenced by a
written agreement. The option price is payable at the time of
exercise (1) in cash or cash equivalents, (2) by the transfer to
Cinergy of nonforfeitable, unrestricted Common Shares already
owned by the optionee, or (3) with any other legal consideration
the Committee may deem appropriate.

Payment of the exercise price of any Nonqualified Stock Option
may also be made in whole or in part in the form of shares of
Restricted Stock or other Common Shares that are subject to risk
of forfeiture or restriction on transfer. When paid with such
consideration, unless otherwise determined by the Committee on or
after the date of the grant, Common Shares received by the
optionee upon the exercise of the NSO are subject to the same
risks of forfeiture or restrictions on transfer applied to the
consideration surrendered by the optionee. However, such risks
of forfeiture and restrictions on transfer shall apply only to
the same number of Common Shares surrendered by the optionee.
The Committee has the authority to specify at the time the
Options are granted that Common Shares will not be accepted in
payment of the option price until they have been owned by the
optionee for a specified period; however, the Plan does not
require any such holding period and would permit immediate
sequential exchanges of Common Shares at the time of exercise of
the Options.

No Option may be exercised more than ten years from the date of
grant. Successive grants may be made to the same optionee
regardless of whether Options previously granted to him or her
remain unexercised.

7. Stock Appreciation Rights

Any SARs granted under the Plan must be evidenced by a written
agreement. In the case of Freestanding SARs, the written
agreement would specify the number of SARs granted, the term of
the SARs (which may not exceed ten years from the date of grant),
and the time or times at which the SARs will first become
exercisable. In the case of Tandem SARs, the written agreement
would specify the Option and the number of shares to which the
SAR relates and the term of the SAR (which may not exceed that of
the related Option). Freestanding SARs may (but need not) be
made immediately exercisable. A Tandem SAR generally will be
exercisable during its term only when and to the extent the
related Option is exercisable. During the lifetime of the
grantee of either type of SAR, the SAR would be exercisable only
by the grantee or the grantee's legal representative.
For each Freestanding SAR subsequently exercised, the holder
would become entitled to receive the excess of fair market value
of a Common Share on the date of exercise over its value on the
date the SAR was granted. Exercise of a Tandem SAR would entitle
the holder to receive the excess of the aggregate fair market
value on the exercise date of the number of optioned Common
Shares with respect to which the SAR is being exercised over
their aggregate fair market value on the date the related Option
was granted. Exercise of a Tandem SAR would have the effect of
reducing the number of shares covered by the related Option by
the number with respect to which the SAR is exercised, and
exercise of the related Option would have the equivalent effect
upon a Tandem SAR. Exercised SARs may be settled in cash or
whole Common Shares (valued at the date of exercise), unless the
applicable SAR agreement further limits the form of settlement.
If the form of settlement is not specified in the SAR agreement,
the holder, at the time of exercise, may request the form he or
she wishes to receive, but the Committee will have the ultimate
authority, in its discretion, to approve or disapprove any such
request. In the absence of such a request, the Committee also
would determine the form of settlement.

8. Restricted Stock

A grant of Restricted Stock involves the immediate transfer by
Cinergy to an employee of ownership of a specific number of
Common Shares subject to a risk of forfeiture for a specified
restriction period and which may further be conditioned upon the
attainment of specified Performance Measures. During the
applicable restriction period, the awardee of Restricted Stock
would have all the voting, dividend and other rights of a record
holder of a Common Share, except that the shares would be
nontransferable and any noncash dividends or other distributions
paid upon the shares would be held by Cinergy and would be
subject to transfer restrictions and risk of forfeiture to the
same extent as the shares themselves. Upon the expiration of the
applicable restriction period and (if applicable) the attainment
of the relevant Performance Measures, full legal title to the
Common Shares covered by the grant of Restricted Stock will
thereupon vest in the employee without additional consideration
or in consideration of a payment by the employee equal to or less
than the Common Shares' fair market value.
Restricted Stock must be subject to a "substantial risk of
forfeiture" within the meaning of Code Section 83 for a period of
time to be determined by the Committee. An example would be a
provision that the Restricted Stock would be forfeited if the
employee ceased to serve Cinergy as an officer or other key
employee during a specified period of years. In order to enforce
these forfeiture provisions, the transferability of Restricted
Stock will be prohibited or restricted in a manner and to the
extent prescribed by the Committee for the period during which
the forfeiture provisions are to continue.

9. Performance Shares and Performance Awards

Any grant of a Performance Share or a Performance Award will be
evidenced by a written agreement. An employee will be given one
or more Performance Measures to meet within a specified
performance period. If by the end of the performance period the
employee has achieved the specified Performance Measures, the
employee will be deemed to have fully earned the Performance
Shares or Performance Awards. To the extent earned, the
Performance Shares or Performance Awards will be paid to the
employee at the time and in the manner determined by the
Committee in cash and/or Common Shares.

10. Dividend Equivalents

Any award of Dividend Equivalents will be evidenced by a written
agreement. The agreement shall set forth the circumstances
(including any applicable Performance Measures) under which, and
specify the number if any of, Common Shares or the amount of cash
that shall then become payable to the awardee. The Committee
shall determine the timing of the award.

11. Other Stock-Based Awards

The Committee may grant Other Stock-Based Awards (awards other
than Dividend Equivalents, Options, Performance Shares,
Performance Awards, Restricted Stock or SARs). Other Stock-Based
Awards shall be evidenced by a written agreement or by other
methods determined by the Committee. The agreement shall set
forth the circumstances (including any applicable Performance
Measures) under which, and specify the number of Common Shares if
any or the amount of cash that shall then become payable to the
awardee. The Committee shall determine the timing of the award.

12. Duration, Amendment and Termination

The Plan is intended to be of indefinite duration. However, the
provisions of the Code currently applicable to ISOs would not
permit the grant of ISOs under the Plan after the tenth
anniversary of its effective date.

At any time by action of the Board, Cinergy may amend or
terminate the Plan in whole or in part, except that certain
provisions thereof relating to the effects of a "change in
control" of Cinergy may not be amended for three years following
a change in control. In addition, without the approval of
Cinergy's shareholders, no such action may (1) increase the
maximum number of Common Shares that may be issued in respect of
awards under the Plan, (2) change the class of employees eligible
to participate in the Plan, or (3) cause the Plan to no longer
comply with Rule 16b-3 under the Securities Exchange Act of 1934.

D. Statement Pursuant to Rule 54.

Under Rule 54, in determining whether to approve the issue or
sale of a security by a registered holding company for purposes
other than the acquisition of an exempt wholesale generator
("EWG") or a foreign utility company ("FUCO"), or other
transactions by such registered holding company or its
subsidiaries other than with respect to EWGs and FUCOs, the
Commission shall not consider the effect of the capitalization or
earnings of any subsidiary which is an EWG or a FUCO if the
conditions in Rule 53(a), (b) and (c) are satisfied. As set
forth below, all applicable conditions of Rule 53(a) are and,
upon consummation of the proposed transactions, will be
satisfied, and none of the conditions specified in Rule 53(b)
exists or, as a result thereof, will exist. The following
discussion assumes the Cinergy system's existence for the dates
and periods in question.

Rule 53(a)(1): At September 30, 1995, Cinergy had invested,
directly or indirectly, an aggregate of approximately $20 million
in EWGs and FUCOs (inclusive of indirect investments through
Special Purpose Subsidiaries), located principally in Argentina.
The average of the consolidated retained earnings of Cinergy
reported on Form 10-K or Form 10-Q, as applicable, for the four
consecutive quarters ended September 30, 1995 is $908 million.
Accordingly, based on Cinergy's "consolidated retained earnings"
at September 30, 1995, the current Rule 53 aggregate investment
limitation is approximately $434 million (i.e., 50% of
"consolidated retained earnings" - $454 million - minus
"aggregate investment" at September 30, 1995 - $20 million).
Rule 53(a)(2): Cinergy maintains books and records enabling it
to identify investments in and earnings from each EWG and FUCO in
which it directly or indirectly holds an interest. At present,
Cinergy does not hold any interest in a domestic EWG; Rule
53(a)(2)(i) is therefore inapplicable.

In accordance with Rule 53(a)(2)(ii), the books and records and
financial statements of each foreign EWG and FUCO which is a
"majority-owned subsidiary company" of Cinergy are kept in
conformity with and prepared according to U.S. generally accepted
accounting principles ("GAAP"). Cinergy will provide the
Commission access to such books and records and financial
statements, or copies thereof, in English, as the Commission may
request.

In accordance with Rule 53(a)(2)(iii), for each foreign EWG and
FUCO in which Cinergy directly or indirectly owns 50% or less of
the voting securities, Cinergy will proceed in good faith, to the
extent reasonable under the circumstances, to cause each such
entity's books and records to be kept in conformity with, and the
financial statements of each such entity to be prepared according
to, GAAP. If such books and records are maintained, or such
financial statements are prepared, according to a comprehensive
body of accounting principles other than GAAP, Cinergy will, upon
request of the Commission, describe and quantify each material
variation from GAAP in the accounting principles, practices and
methods used to maintain such books and records and each material
variation from GAAP in the balance sheet line items and net
income reported in such financial statements, as the case may be.
In addition, Cinergy will proceed in good faith, to the extent
reasonable under the circumstances, to cause access by the
Commission to such books and records and financial statements, or
copies thereof, in English, as the Commission may request, and in
any event will make available to the Commission any such books
and records that are available to Cinergy.

Rule 53(a)(3): No more than 2% of the employees of Cinergy's
operating utility subsidiaries will, at any one time, directly or
indirectly, render services to EWGs and FUCOs. Based on current
staffing levels of Cinergy's domestic operating utility
subsidiaries (such companies currently employ, in the aggregate,
approximately 6100 salaried and hourly employees), no more than
122 of the employees of these companies, in the aggregate, on a
full-time equivalent basis, will be utilized at any one time in
rendering services, directly or indirectly, to EWGs and FUCOs.
Employees of PSI Energy, Inc., an Indiana utility subsidiary of
Cinergy, have rendered services to certain EWGs and FUCOs in
Argentina pursuant to the Commission's order in PSI Resources,
Inc., et al., Rel. No. 35-25674, 52 SEC Docket 2533, 2534-35
(Nov. 13, 1992).

Rule 53(a)(4): Cinergy will simultaneously submit a copy of this
Declaration and of any Rule 24 certificate hereunder, as well as
a copy of Cinergy's Form U5S and Exhibits H and I thereto, to
each public utility commission having jurisdiction over the
retail rates of any Cinergy utility subsidiary.

Rule 53(b): The provisions of Rule 53(a) are not made
inapplicable to the authorization herein requested by reason of
the provisions of Rule 53(b).

Rule 53(b)(1): Neither Cinergy nor any subsidiary thereof is the
subject of any pending bankruptcy or similar proceeding.
Rule 53(b)(2): Cinergy's average consolidated retained earnings
for the four quarters ended September 30, 1995 are $908 million ,
versus $937 million for the four quarters ended September 30,
1994, a difference of approximately $29 million (representing a
decrease of 3%).

Rule 53(b)(3): For the twelve months ended September 30, 1995,
Cinergy did not report operating losses attributable to its
direct and indirect investments in EWGs and FUCOs aggregating in
excess of 5% of consolidated retained earnings.

Item 2. Fees, Commissions and Expenses.

The fees, commissions and expenses to be incurred, directly or
indirectly, by Cinergy or any associate company thereof in
connection with the proposed transactions are estimated as
follows:

U-1 filing fee $ 2,000
Form S-8 registration fee 75,000
Printing 85,000
Postage and handling 240,000
Fees and expenses of CIC 10,000
Fees of Cinergy Services, Inc. 50,000
TOTAL $ 462,000

Item 3. Applicable Statutory Provisions.

Sections 6(a), 7 and 12(e) and Rules 54, 62 and 65 are or may be
applicable to the proposed transactions. Acquisitions by Cinergy
of issued and outstanding Common Shares in open-market
transactions would be exempt under Rule 42.

Item 4. Regulatory Approval.

No state or federal regulatory agency other than the Commission
under the Act has jurisdiction over the proposed transactions.

Item 5. Procedure.

In order to afford Cinergy adequate time for the solicitation of
proxies in advance of the Annual Meeting to be held on or about
April 26, 1996, Cinergy requests that the Commission issue and
publish not later than March 8, 1996 an order under Rule 62(d)
permitting the solicitation of proxies proposed herein, together
with the requisite notice under Rule 23 with respect to the
filing of this Declaration. Cinergy further requests that such
notice and order specify a date not later than April 4, 1996 as
the date after which the Commission may issue an order permitting
this Declaration to become effective with respect to the balance
of the transactions proposed herein.

Cinergy waives a recommended decision by a hearing officer or
other responsible officer of the Commission; consents that the
Staff of the Division of Investment Management may assist in the
preparation of the Commission's order; and requests that there be
no waiting period between the issuance of the Commission's order
and its effectiveness.

Item 6. Exhibits and Financial Statements.

(a) Exhibits:

A-1 Certificate of Incorporation of Cinergy (Exhibit to
Cinergy's 1993 Form 10-K, filed August 18, 1994, in File No.
1-11377 and hereby incorporated by reference).
A-2 By-laws of Cinergy as amended January 25, 1996.
B-1 Draft of notice of Annual Meeting
B-2 Draft of proxy statement.
B-3 Draft of form of proxy for Annual Meeting.
B-4 1996 Cinergy Long-Term Incentive Compensation Plan.
C-1 Cinergy Registration Statement on Form S-8, relating to
the Plan (to be filed by amendment)
D Not applicable.
E Not applicable.
F Preliminary opinion of counsel (to be filed by
amendment).
G Suggested form of notice and order permitting
solicitation of proxies.
(b) Financial Statements:
FS-1 Cinergy Consolidated Financial Statements, dated
December 31, 1995.
FS-2 Cinergy Financial Statements, dated December 31, 1995.
FS-3 Cinergy Consolidated Financial Data Schedules (included
in electronic submission only).
FS-4 Cinergy Financial Data Schedules (included in
electronic submission only).

Item 7. Information as to Environmental Effects.

(a) The Commission's action in this matter will not constitute
major federal action significantly affecting the quality of the
human environment.

(b) No other federal agency has prepared or is preparing an
environmental impact statement with regard to the proposed
transactions.

<PAGE>

SIGNATURE

Pursuant to the requirements of the Act, the undersigned company
has duly caused this Declaration to be signed on its behalf by
the undersigned thereunto duly authorized.

Dated: February 23, 1996

Cinergy Corp.

By: /s/ William L. Sheafer
Treasurer

<PAGE>

ENDNOTES

/1/ The existing Cinergy stock-based employee benefit plans
consist of (1) the Cinergy Employee Stock Purchase and Savings
Plan, (2) the Cinergy Stock Option Plan ("SOP"), (3) the Cinergy
Directors' Deferred Compensation Plan, and (4) the Cinergy
Performance Shares Plan ("PSP"). In addition, the 401(k) savings
plans of Cinergy's principal operating subsidiaries - PSI Energy,
Inc. and The Cincinnati Gas & Electric Company - contain a
"company match" feature that involves the issuance of Common
Stock. For further information concerning these plans, reference
is made to File No. 70-8705 and the Commission's December 1, 1995
order with respect thereto (Rel. No. 35-26422). The Plan is
intended to supersede the PSP (as of year-end 1996) and
ultimately the SOP, but would not replace any other existing
Cinergy stock-based plan.

/2/ Options meeting the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and
intended to be afforded the federal tax treatment of Code Section
422 options ("Incentive Stock Options" or "ISOs"), as well as
other Options ("Nonqualified Stock Options" or "NSOs"), may be
awarded under the Plan.

/3/ SARs granted under the Plan may be awarded either in tandem
with Options ("Tandem SARs") or on a stand-alone basis
("Freestanding SARs").

BY-LAWS

CINERGY CORP.

Adopted: October 24, 1994
Amended: January 25, 1996
<PAGE>
TABLE OF CONTENTS

Page

ARTICLE I
Offices and Headquarters

Section 1.1 Offices . . . . . . . . . . . . . . . . . . . 1
1.2 Headquarters. . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II
Stockholders

Section 2.1 Annual Meeting. . . . . . . . . . . . . . . . 2
2.2 Special Meetings. . . . . . . . . . . . . . . . . . . 3
2.3 Notice of Meetings. . . . . . . . . . . . . . . . . . 3
2.4 Quorum. . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Voting. . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 Presiding Officer and Secretary . . . . . . . . . . . 5
2.7 Proxies . . . . . . . . . . . . . . . . . . . . . . . 6
2.8 List of Stockholders. . . . . . . . . . . . . . . . . 6

ARTICLE III
Directors

Section 3.1 Number of Directors . . . . . . . . . . . . . 7
3.2 Election and Term of Directors. . . . . . . . . . . . 7
3.3 Vacancies and Newly Created Directorships . . . . . . 9
3.4 Resignation . . . . . . . . . . . . . . . . . . . . . 10
3.5 Meetings. . . . . . . . . . . . . . . . . . . . . . . 10
3.6 Quorum and Voting . . . . . . . . . . . . . . . . . . 11
3.7 Written Consent of Directors in Lieu of a Meeting . . 11
3.8 Compensation. . . . . . . . . . . . . . . . . . . . . 11
3.9 Contracts and Transactions Involving Directors. . . . 12

ARTICLE IV
Committees of the Board of Directors

Section 4.1 Appointment and Powers. . . . . . . . . . . . 13

ARTICLE V
Officers, Agents and Employees

Section 5.1 Appointment and Term of Office. . . . . . . . 14
5.2 The Chairman of the Board . . . . . . . . . . . . . . 15
5.3 Vice-Chairman . . . . . . . . . . . . . . . . . . . . 15
5.4 Chief Executive Officer . . . . . . . . . . . . . . . 16
5.5 The President . . . . . . . . . . . . . . . . . . . . 16
5.6 The Vice-Presidents . . . . . . . . . . . . . . . . . 16
5.7 The Secretary . . . . . . . . . . . . . . . . . . . . 17
5.8 The Treasurer . . . . . . . . . . . . . . . . . . . . 17
5.9 The Comptroller . . . . . . . . . . . . . . . . . . . 19
5.10 Compensation and Bond. . . . . . . . . . . . . . . . 19

ARTICLE VI
Indemnification

Section 6.1 Indemnification of Directors, Officers,
Employees and Agents . . . . . . . . . . . . . . . . . . 20
6.2 Advances for Litigation Expenses. . . . . . . . . . . 22
6.3 Indemnification Nonexclusive. . . . . . . . . . . . . 22
6.4 Indemnity Insurance . . . . . . . . . . . . . . . . . 23
6.5 Definitions . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE VII
Common Stock

Section 7.1 Certificates. . . . . . . . . . . . . . . . . 24
7.2 Transfers of Stock. . . . . . . . . . . . . . . . . . 25
7.3 Lost, Stolen or Destroyed Certificates. . . . . . . . 25
7.4 Stockholder Record Date . . . . . . . . . . . . . . . 25
7.5 Beneficial Owners . . . . . . . . . . . . . . . . . . 26

ARTICLE VIII
Seal

Section 8.1 Seal. . . . . . . . . . . . . . . . . . . . . . . 27

ARTICLE IX
Waiver of Notice

Section 9.1 Waiver of Notice. . . . . . . . . . . . . . . . . 27

ARTICLE X
Fiscal Year

Section 10.1 Fiscal Year. . . . . . . . . . . . . . . . . . . 28

ARTICLE XI
Contracts, Checks, etc.

Section 11.1. . . . . . . . . . . . .Contracts, Checks, etc. 28

ARTICLE XII
Amendments

Section 12.1. . . . . . . . . . . . . . . . . . . Amendments 28

ARTICLE XIII
Dividends

Section 13.1. . . . . . . . . . . . . . . . . . . .Dividends 30

<PAGE>
BY-LAWS
OF
CINERGY CORP. (THE "CORPORATION")

ARTICLE I
Offices and Headquarters

Section 1.1 Offices. The location of the Corporation's
principal office shall be in the City of Cincinnati, County of Hamilton,
State of Ohio. The Corporation may, in addition to the aforesaid principal
office, establish and maintain an office or offices elsewhere in Delaware,
Ohio or Indiana or in such other states and places as the Board of
Directors may from time to time find necessary or desirable, at which
office or offices the books, documents, and papers of the Corporation may
be kept.

Section 1.2 Headquarters. Subject to the sentence next
following, the Corporation's headquarters and executive offices, shall be
located in the City of Cincinnati, County of Hamilton, State of Ohio. The
location of the Corporation's headquarters and executive offices may be
changed from the City of Cincinnati, County of Hamilton, State of Ohio only
by the affirmative vote of 80% of the full Board of Directors of the
Corporation and not by the vote of any committee of the Board of Directors.
As used in these By-Laws, the term "the full Board of Directors" shall mean
all directors then in office together with any vacancies, however created.
For the avoidance of doubt and as an example only, if the Board of
Directors consists of 17 members and two vacancies exist, the affirmative
vote of 14 of the 15 members of the Corporation's Board of Directors then
in office would be required to authorize a change in location of the
Corporation's headquarters and executive offices. The headquarters and
executive offices of the Corporation's subsidiary, PSI Energy, Inc., shall
be located in the City of Plainfield, Indiana and the headquarters and
executive offices of the Corporation's subsidiary, The Cincinnati Gas &
Electric Company, shall be located in the City of Cincinnati, Ohio.

ARTICLE II
Stockholders

Section 2.1 Annual Meeting. An annual meeting of stockholders
of the Corporation for the election of directors and for the transaction of
any other proper business shall be held at such time and date in each year
as the Board of Directors may from time to time determine. The annual
meeting in each year shall be held at such hour on said day and at such
place within or without the State of Delaware as may be fixed by the Board
of Directors, or if not so fixed, at the principal business office of the
Corporation in the City of Cincinnati, County of Hamilton, State of Ohio.
In addition to all other applicable requirements for business to be
properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation,
not less than 60 days nor more than 90 days prior to the annual meeting;
provided, however, that in the event that less than 70 days' notice or
prior public disclosure of the date of the annual meeting is given or made
to stockholders, notice by the stockholders to be timely must be so
received not later than the close of business on the fifteenth day
following the date on which such notice of the date of annual meeting was
mailed or such public disclosure was made whichever first occurs. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting: (I) a brief
description of the business desired to be brought before the annual meeting
and the reasons for conducting such business at the annual meeting; (ii)
the name and record address of the stockholder proposing such business;
(iii) the class and number of shares of the Corporation which are
beneficially owned by the stockholder; and (v) any material interest of the
stockholder in the business.

Notwithstanding anything to the contrary in the By-Laws, no
business shall be conducted at the annual meeting except in accordance with
the procedures set forth in this Section 2.1; provided, however, that
nothing in this Section 2.1 shall be deemed to preclude discussion by any
stockholder of any business properly brought before the annual meeting.

Section 2.2 Special Meetings. A special meeting of the
stockholders of the Corporation entitled to vote on any business to be
considered at any such meeting may be called by the Chairman of the Board
or the President or by a majority of the members of the Board of Directors
then in office, acting with or without a meeting, or by the persons who
hold 50% of all shares outstanding and entitled to vote thereat upon notice
in writing, stating the time, place and purpose of the special meeting.
The business transacted at the special meeting shall be confined to the
purposes and objects stated in the call.

Section 2.3 Notice of Meetings. Whenever stockholders are
required or permitted to take any action at a meeting, unless notice is
waived in writing by all stockholders entitled to vote at the meeting, a
written notice of the meeting shall be given which shall state the place,
date and hour of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called.

Unless otherwise provided by law, and except as to any
stockholder duly waiving notice, the written notice of any meeting shall be
given personally or by mail, not less than 10 days nor more than 60 days
before the date of the meeting to each stockholder entitled to vote at such
meeting. If mailed, notice shall be deemed given when deposited in the
mail, postage prepaid, directed to the stockholder at his or her address as
it appears on the records of the Corporation.

When a meeting is adjourned to another time or place, notice need
not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the
adjourned meeting the Corporation may transact any business which might
have been transacted at the original meeting. If, however, the adjournment
is for more than 30 days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.

Section 2.4 Quorum. Except as otherwise provided by law or by
the Certificate of Incorporation or by these By-Laws in respect of the vote
required for a specified action, at any meeting of stockholders the holders
of a majority of the outstanding stock entitled to vote thereat, either
present, in person or represented by proxy, shall constitute a quorum for
the transaction of any business, but the stockholders present, although
less than a quorum, may adjourn the meeting to another time or place and,
except as provided in the last paragraph of Section 2.3 of these By-Laws,
notice need not be given of the adjourned meeting.

Section 2.5 Voting. Whenever directors are to be elected at a
meeting, they shall be elected by a plurality of the votes cast at the
meeting by the holders of stock entitled to vote. Whenever any corporate
action, other than the election of directors, is to be taken by vote of
stockholders at a meeting, it shall, except as otherwise required by law or
by the Certificate of Incorporation or by these By-Laws, be authorized by a
majority of the votes cast at the meeting by the holders of stock entitled
to vote thereon.

Except as otherwise provided by law, or by the Certificate of
Incorporation, each holder of record of stock of the Corporation entitled
to vote on any matter at any meeting of stockholders shall be entitled to
one (1) vote for each share of such stock standing in the name of such
holder on the stock ledger of the Corporation on the record date for the
determination of the stockholders entitled to vote at the meeting.

Upon the demand of any stockholder entitled to vote, the vote for
directors or the vote on any other matter at a meeting shall be by written
ballot, but otherwise the method of voting and the manner in which votes
are counted shall be discretionary with the presiding officer at the
meeting.

Section 2.6 Presiding Officer and Secretary. At every meeting
of stockholders the Chairman of the Board, or, in his or her absence, the
President, or, in his or her absence, the appointee of the meeting, shall
preside. The Secretary, or, in his or her absence an Assistant Secretary,
or if none be present, the appointee of the presiding officer of the
meeting, shall act as secretary of the meeting.

Section 2.7 Proxies. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate
action in writing without a meeting may authorize another person or persons
to act for him or her by proxy, but no such proxy shall be voted or acted
upon after three years from its date, unless the proxy provides for a
longer period. Every proxy shall be signed by the stockholder or by his
duly authorized attorney. A stockholder may authorize another person or
persons to act for him as proxy by transmitting or authorizing the
transmission of a telegram, cablegram, or other means of electronic
transmission to the person who will be the holder of the proxy or to a
proxy solicitation firm, proxy support service organization or like agent
duly authorized by the person who will be the holder of the proxy to
receive such transmission if such transmission is submitted with
information from which it may be determined that the transmission was
authorized by the stockholder.

Section 2.8 List of Stockholders. The officer who has charge of
the stock ledger of the Corporation shall prepare and make, at least 10
days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days prior to
the meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any stockholder who is
present.

The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by
this Section or the books of the Corporation, or to vote in person or by
proxy at any meeting of stockholders.

ARTICLE III
Directors

Section 3.1 Number of Directors. The Board of Directors shall
consist of 17 directors. This number may be changed to an odd number not
less than 15 and not more than 23 by a vote of not less than 75% of the
full Board of Directors ("Supermajority Vote"). Any such determination
made by the Board of Directors shall continue in effect unless and until
changed by the Board of Directors by Supermajority Vote, but no such change
shall affect the term of any director then in office.

Section 3.2 Election and Term of Directors. Only persons who
are nominated in accordance with the following procedures shall be eligible
for election as directors. Except as may be required by applicable law, no
person who is, at the time of nomination, 70 years of age or older shall be
eligible for election as a director. Nominations of persons as candidates
for election as directors of the Corporation may be made at a meeting of
stockholders (I) by or at the direction of the Board of Directors acting by
Supermajority Vote (or by a unanimous vote of the remaining directors if a
Supermajority Vote is not obtainable because the number of vacancies on the
Board of Directors); or (ii) by any stockholder of the Corporation entitled
to vote for the election of directors at such meeting who complies with the
notice procedures set forth herein. Any nomination other than those
governed by clause (I) of the preceding sentence shall be made pursuant to
timely notice in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice shall be delivered to or mailed and received
at the principal office of the Corporation in the State of Ohio not less
than 50 days prior to the meeting; provided, however, that if less than 60
days' notice or prior public disclosure of the date of the meeting is given
to stockholders or made public, to be timely notice by a stockholder must
be so received not later than the close of business on the tenth day
following the day on which such notice of the date of the meeting was
mailed or such public disclosure was made. Such stockholder's notice to
the Secretary shall set forth: (a) as to each person whom the stockholder
proposes to nominate for election as director: (I) the name, age, business
address, and residence address of such person; (ii) the principal
occupation or employment of such person; (iii) the class and number of any
shares of capital stock of the Corporation that are beneficially owned by
such person; and (iv) any other information relating to such person that is
required to be disclosed in solicitations for proxies for the election of
directors pursuant to any then existing rules or regulations promulgated
under the Securities Exchange Act of 1934, as amended; and (b) as to the
stockholder giving notice: (I) the name and record address of such
stockholder; (ii) the class and number of shares of capital stock of the
Corporation that are beneficially owned by such stockholder, and (iii) the
period of time such stockholder has held such shares. The Corporation may
require any proposed nominee to furnish such other information as may
reasonably be required by the Corporation to determine the eligibility of
such proposed nominee to serve as a director. No person otherwise eligible
for election as a director shall be eligible for election as a director
unless nominated as set forth herein.

Commencing on October 24, 1994 (the "Classification Date") of the
Board of Directors of the Corporation, the terms of office of the Board of
Directors shall be divided into three (3) classes, Class I, Class II and
Class III, as determined by the Board of Directors. All classes shall be
as nearly equal in number as possible.

The terms of office of directors classified shall be as follows:
(1) that of Class I shall expire at the annual meeting of stockholders that
occurs within the first year after the Classification Date, (2) that of
Class II shall expire at the annual meeting of stockholders that occurs
within the second year after the Classification Date, and (3) that of Class
III shall expire at the annual meeting of stockholders that occurs within
the third year after the Classification Date. At each annual meeting of
stockholders after the Classification Date, the successors to directors
whose terms shall expire shall be elected to serve from the time of
election and qualification until the third annual meeting following
election and until a successor shall have been elected and qualified or
until his earlier resignation, removal from office or death. As being
under 70 years of age constitutes a continuing qualification for service on
the Board of Directors, any director who reaches the age of 70 years while
in office shall, except as limited by applicable law, promptly resign from
the Corporation's Board of Directors.

Section 3.3 Vacancies and Newly Created Directorships. Vacancies
and newly created directorships resulting from any increase in the
authorized number of directors may be filled by election at a meeting of
stockholders. Except as otherwise provided by law, and notwithstanding the
provision of Section 3.6, the remaining directors, whether or not
constituting a majority of the whole authorized number of directors, may,
by not less than a Supermajority Vote (or by a unanimous vote of the
remaining directors if a Supermajority Vote is not obtainable because of
the number of vacancies on the Board of Directors) fill any vacancy in the
Board, however arising, for the unexpired term thereof. Any person elected
to fill a vacancy in the Board shall hold office until the expiration of
the term of office for the class to which he or she is elected and until a
successor is elected and qualified or until his or her earlier resignation,
removal from office or death.

Section 3.4 Resignation. Any director may resign at any time
upon written notice to the Corporation. Any such resignation shall take
effect at the time specified therein or, if the time be not specified, upon
receipt thereof, and the acceptance of such resignation, unless required by
the terms thereof, shall not be necessary to make such resignation
effective.

Section 3.5 Meetings. Meetings of the Board of Directors,
regular or special, may be held at any place within or without the State of
Delaware. Members of the Board of Directors, or of any committee
designated by the Board, may participate in a meeting of such Board or
committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can
hear each other, and participation in a meeting by such means shall
constitute presence in person at such meeting. An annual meeting of the
Board of Directors shall be held after each annual election of directors.
If such election occurs at an annual meeting of stockholders, the annual
meeting of the Board of Directors shall be held at the same place and
immediately following such meeting of stockholders, and no notice thereof
need be given. The Board of Directors may fix times and places for regular
meetings of the Board and no notice of such meetings need be given. A
special meeting of the Board of Directors shall be held whenever called by
the Chairman of the Board, the President or by the written request of at
least two (2) members of the Board of Directors, at such time and place as
shall be specified in the notice or waiver thereof. Notice of each special
meeting shall be given by the Secretary or by a person calling the meeting
to each director in writing, through the mail, not later than the second
day before the meeting, or personally served or by telephone, telecopy,
telegram, cablegram or radiogram, in each such cases, not later than the
day before the meeting, and such notice shall be deemed to be given at the
time when the same shall be transmitted.

Section 3.6 Quorum and Voting. A majority of the full Board of
Directors shall constitute a quorum for the transaction of business, but,
if there be less than a quorum at any meeting of the Board of Directors, a
majority of the directors present may adjourn the meeting from time to
time, and no further notice thereof need be given other than announcement
at the meeting which shall be so adjourned. Except as otherwise provided
by law, by the Certificate of Incorporation, or by these By-Laws
(including, without limitation, where any Supermajority Vote or any other
vote in excess of a majority is required), the vote of a majority of the
directors present at a meeting at which a quorum is present shall be the
act of the Board of Directors.

Section 3.7 Written Consent of Directors in Lieu of a Meeting.
Any action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting if all
members of the Board or of such committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes
of proceedings of the Board or committee.

Section 3.8 Compensation. Each director of the Corporation
(other than directors who are salaried officers of the Corporation or any
of its subsidiaries) shall be entitled to receive as compensation for
services such reasonable compensation, which may include pension,
disability and death benefits, as may be determined from time to time by
the Board of Directors. Reasonable compensation may also be paid to any
person other than a director officially called to attend any such meeting.

Section 3.9 Contracts and Transactions Involving Directors. No
contract or transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other
corporation, partnership, association, or other organization in which one
or more of its directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this reason, or
solely because the director or officer is present at or participates in the
meeting of the Board of Directors or committee thereof which authorizes the
contract or transaction, or solely because his, her or their votes are
counted for such purpose, if: (1) the material facts as to his or her
relationship or interest and as to the contract or transaction are
disclosed or are known to the Board of Directors or the committee, and the
Board or committee in good faith authorizes the contract or transaction by
the affirmative votes of a majority of the disinterested directors, even
though the disinterested directors be less than a quorum; or (2) the
material facts as to his or her relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (3) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified, by the Board of Directors, a committee thereof, or
the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors
or of a committee which authorizes the contract or transaction.

ARTICLE IV
Committees of the Board of Directors

Section 4.1 Appointment and Powers. The Board of Directors
shall, by resolution adopted by a majority of the Board, designate annually
(subject to Article V hereof) six of their number to constitute an
Executive Committee, and may delegate to such committee power to authorize
the seal of the Corporation to be affixed to all papers which may require
it and to exercise in the intervals between the meetings of the Board of
Directors the powers of the Board in the management of the business and
affairs of the Corporation; provided, however, that the Executive Committee
shall not have the power or authority to take any action for which a
Supermajority Vote or other vote in excess of a majority of the Board of
Directors is required. Each member of the Executive Committee shall
continue to be a member thereof only during the pleasure of a majority of
the full Board of Directors.

The Executive Committee may act by a majority of its members at a
meeting or by a writing signed by all of its members.

All action by the Executive Committee shall be reported to the
Board of Directors at its meeting next succeeding such action.

Non-employee members of such Executive Committee shall be
entitled to receive such fees and compensation as the Board of Directors
may determine.

The Board of Directors may also appoint a Finance Committee, a
Committee on Directors, an Audit Committee, a Public Policy Committee and a
Compensation Committee and may also appoint such other standing or
temporary committees from time to time as they may see fit, delegating to
such committees all or any part of their own powers (subject to the
provisions of these By-Laws); provided, however, that any compensation or
benefits to be paid to an executive officer who is also a director must be
approved by the Board of Directors. The members of such committees shall
be entitled to receive such fees as the Board may determine.

The Board of Directors shall not amend, modify, vary or waive any
of the terms of the Amended and Restated Agreement and Plan of
Reorganization by and among The Cincinnati Gas & Electric Company, PSI
Resources, Inc., PSI Energy, Inc., the Corporation, Cinergy Corp., an Ohio
corporation, and Cinergy Sub, Inc. dated as of December 11, 1992, as
amended and restated as of July 2, 1993 and as of September 10, 1993 and as
further amended as of June 20, 1994, as of July 26, 1994 and as of
September 30, 1994 (the "Merger Agreement") other than by a Supermajority
Vote of the Board of Directors.

ARTICLE V
Officers, Agents and Employees

Section 5.1 Appointment and Term of Office. The executive
officers of the Corporation, shall consist of a Chairman of the Board, a
Vice-Chairman, a Chief Executive Officer, a President, one or more Vice-
Presidents, a Secretary, a Treasurer and a Comptroller, all of whom shall
be elected by the Board of Directors by a Supermajority Vote, and shall
hold office for one (1) year and until their successors are chosen and
qualified. Any number of such offices may be held by the same person, but
no officer shall execute, acknowledge or verify any instrument in more than
one capacity. Any vacancy occurring in the office of the Chairman, Chief
Executive Officer or President shall be filed by Supermajority Vote of the
Board of Directors. The Chairman, Chief Executive Officer or President
shall be subject to removal without cause only by Supermajority Vote of the
Board of Directors at a special meeting of the Board of Directors called
for that purpose.

The Board of Directors may appoint, and may delegate power to
appoint, such other non-executive officers, agents and employees as it may
deem necessary or proper, who shall hold their offices or positions for
such terms, have such authority and perform such duties as may from time to
time be determined by or pursuant to authorization of the Board of
Directors.

Section 5.2 The Chairman of the Board. The Chairman of the
Board shall be a director and shall preside at all meetings of the Board of
Directors and, in the absence or inability to act of the Chief Executive
Officer, meetings of stockholders and shall, subject to the Board's
direction and control, be the Board's representative and medium of
communication, and shall perform such other duties as may from time-to-time
be assigned to the Chairman of the Board by Supermajority Vote of the Board
of Directors. The Chairman of the Board shall direct the long-term
strategic planning process of the Corporation and shall also lend his or
her expertise to the President, as may be requested from time-to-time by
the President. The Chairman shall be a member of the Executive Committee.
The Internal Auditing Department will report directly to the Chairman of
the Board

Section 5.3 Vice-Chairman. The Vice-Chairman of the Board shall
be a director and shall preside at meetings of the Board of Directors in
the absence or inability to act of the Chairman of the Board or meetings of
stockholders in the absence or inability to act of the Chief Executive
Officer and the Chairman of the Board. The Vice-Chairman shall perform
such other duties as may from time-to-time be assigned to him or her by
Supermajority Vote of the Board of Directors. The Vice-Chairman shall be a
member of the Executive Committee and the Corporate Governance Committee.

Section 5.4 Chief Executive Officer. The Chief Executive
Officer shall be a director and shall preside at all meetings of the
stockholders, and, in the absence or inability to act of the Chairman of
the Board and the Vice-Chairman, meetings of the Board of Directors, and
shall submit a report of the operations of the Corporation for the fiscal
year to the stockholders at their annual meeting and from time-to-time
shall report to the Board of Directors all matters within his or her
knowledge which the interests of the Corporation may require be brought to
their notice. The Chief Executive Officer shall be the chairman of the
Executive Committee and ex officio a member of all standing committees.
Where the offices of President and Chief Executive Officer are held by
different individuals, the President will report directly to the Chief
Executive Officer.

Section 5.5 The President. The President shall be the chief
operating officer of the Corporation. The President shall have general and
active management and direction of the affairs of the Corporation, shall
have supervision of all departments and of all officers of the Corporation,
shall see that the orders and resolutions of the Board of Directors and of
the Executive Committee are carried into effect, and shall have the general
powers and duties of supervision and management usually vested in the
office of President of a corporation. All corporate officers and functions
except those reporting to the Chairman of the Board or the Chief Executive
Officer shall report directly to the President.

Section 5.6 The Vice-Presidents. The Vice-Presidents shall
perform such duties as the Board of Directors shall, from time to time,
require. In the absence or incapacity of the President, the Vice President
designated by the President or Board of Directors or Executive Committee
shall exercise the powers and duties of the President.

Section 5.7 The Secretary. The Secretary shall attend all
meetings of the Board of Directors, of the Executive Committee and any
other committee of the Board of Directors and of the stockholders and act
as clerk thereof and record all votes and the minutes of all proceedings in
a book to be kept for that purpose, and shall perform like duties for the
standing committees when required.

The Secretary shall keep in safe custody the seal of the
corporation and, whenever authorized by the Board of Directors or the
Executive Committee, affix the seal to any instrument requiring the same.

The Secretary shall see that proper notice is given of all the
meetings of the stockholders of the Corporation and of the Board of
Directors and shall perform such other duties as may be prescribed from
time to time by the Board of Directors, the Chairman, the Chief Executive
Officer, or the President.

Assistant Secretaries. At the request of the Secretary, or in
his or her absence or inability to act, the Assistant Secretary or, if
there be more than one, the Assistant Secretary designated by the
Secretary, shall perform the duties of the Secretary and when so acting
shall have all the powers of and be subject to all the restrictions of the
Secretary. The Assistant Secretaries shall perform such other duties as
may from time to time be assigned to them by the President, the Secretary,
or the Board of Directors.

Section 5.8 The Treasurer. The Treasurer shall be the financial
officer of the Corporation, shall keep full and accurate accounts of all
collections, receipts and disbursements in books belonging to the
corporation, shall deposit all moneys and other valuables in the name and
to the credit of the Corporation, in such depositories as may be directed
by the Board of Directors, shall disburse the funds of the Corporation as
may be ordered by the Board of Directors, the Chairman, the Chief Executive
Officer, or the President, taking proper vouchers therefor, and shall
render to the President, the Chief Executive Officer, the Chairman, and/or
directors at all regular meetings of the Board, or whenever they may
require it, and to the annual meeting of the stockholders, an account of
all his or her transactions as Treasurer and of the financial condition of
the Corporation.

The Treasurer shall also perform such other duties as the Board
of Directors, the Chairman, the Chief Executive Officer, or the President
may from time to time require.

If required by the Board of Directors the Treasurer shall give
the Corporation a bond in a form and in a sum with surety satisfactory to
the Board of Directors for the faithful performance of the duties of his or
her office and the restoration to the Corporation in the case of his or her
death, resignation or removal from office of all books, papers, vouchers,
money and other property of whatever kind in his or her possession
belonging to the Corporation.

Assistant Treasurers. At the request of the Treasurer, or in his
or her absence or inability to act, the Assistant Treasurer or, if there be
more than one, the Assistant Treasurer designated by the Treasurer, shall
perform the duties of the Treasurer and when so acting shall have all the
powers of and be subject to all the restrictions of the Treasurer. The
Assistant Treasurers shall perform such other duties as may from time to
time be assigned to them by the President, the Treasurer, or the Board of
Directors.

Section 5.9 The Comptroller. The Comptroller shall have control
over all accounts and records of the Corporation pertaining to moneys,
properties, materials and supplies. He or she shall have executive
direction over the bookkeeping and accounting departments and shall have
general supervision over the records in all other departments pertaining to
moneys, properties, materials and supplies. He or she shall have such
other powers and duties as are incident to the office of Comptroller of a
corporation and shall be subject at all times to the direction and control
of the Board of Directors, the Chairman, the Chief Executive Officer, the
President, or a Vice President.

Assistant Comptrollers. At the request of the Comptroller, or in
his or her absence or inability to act, the Assistant Comptroller or, if
there be more than one, the Assistant Comptroller designated by the
Comptroller, shall perform the duties of the Comptroller and when so acting
shall have all the powers of and be subject to all the restrictions of the
Comptroller. The Assistant Comptrollers shall perform such other duties as
may from time to time be assigned to them by the President, the
Comptroller, or the Board of Directors.

Section 5.10 Compensation and Bond. The compensation of the
officers of the Corporation shall be fixed by the Compensation Committee of
the Board of Directors, but this power may be delegated to any officer in
respect of other officers under his or her control. The Corporation may
secure the fidelity of any or all of its officers, agents or employees by
bond or otherwise.

ARTICLE VI
Indemnification

Section 6.1 Indemnification of Directors, Officers, Employees
and Agents

(A) Any person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than any
action or suit by or in the right of the Corporation) by reason of the fact
that he or she is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise (specifically including employee
benefit plans), shall be indemnified by the Corporation, if, as and to the
extent authorized by applicable law, against expenses (specifically
including attorney's fees), judgments, fines (specifically including any
excise taxes assessed on a person with respect to an employee benefit plan)
and amounts paid in settlement actually and reasonably incurred by him or
her in connection with the defense or settlement of such action, suit or
proceeding, if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner he or she reasonably believed to be
in and not opposed to the best interests of the Corporation and, with
respect to any criminal action or proceeding, he or she had no reasonable
cause to believe his or her conduct was unlawful.

(B) The Corporation shall, to the extent not prohibited by
applicable law, indemnify or agree to indemnify any person who was or is a
party, or is threatened to be made a party, to any threatened, pending, or
completed action or suit by or in the right of the Corporation to procure a
judgement in its favor by reason of the fact that he or she is or was a
director, officer, employee, or agent of the Corporation or is or was
serving at the request of the Corporation as a director, trustee, officer,
employee, or agent of another corporation, domestic or foreign, non-profit
or for-profit, partnership, joint venture, trust or other enterprise
(specifically including employee benefit plans), against expenses
(including attorneys' fees) actually and reasonably incurred by him or her
in connection with the defense or settlement of such action or suit if he
or she acted in good faith and in a manner reasonably believed to be in or
not opposed to the best interests of the Corporation; provided that, no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.

(C) To the extent that a director, officer, employee, or agent of
the Corporation has been successful on the merits or otherwise in defense
of any action, suit, or proceeding referred to in the paragraphs (A) or (B)
of this Section, or in defense of any claim, issue, or matter therein, he
or she shall be indemnified against expenses, specifically including
attorneys' fees, actually and reasonably incurred by him or her in
connection therewith.

(D) Any indemnification under Paragraphs (A) and (B) of this
Section, unless ordered by a court, shall be made by the Corporation only
as authorized in the specific case upon a determination that
indemnification of the director, trustee, officer, employee, or agent is
proper in the circumstances because he or she has met the applicable
standard of conduct set forth in such Paragraphs (A) and (B). Such
determination shall be made as follows: (1) the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to
such action, suit, or proceeding; (2) if the quorum described in (D)(1) of
this Section is not obtainable or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion; or (3) by the stockholders.

Section 6.2 Advances for Litigation Expenses. Expenses
(including attorneys' fees) incurred by a director, officer, employee, or
agent of the Corporation in defending any civil, criminal, administrative
or investigative action, suit or proceeding, shall be paid by the
Corporation as they are incurred in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director, officer, employee, or agent: (1) to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized in this Article VI; and (2) to
cooperate reasonably with the Corporation concerning the action, suit or
proceeding.

Section 6.3 Indemnification Nonexclusive. The indemnification
provided by this Article shall not be exclusive of and shall be in addition
to any other rights granted to those seeking indemnification under the
Certificate of Incorporation, these By-Laws, any agreement, any vote of
stockholders or disinterested directors or otherwise, both as to action in
his or her official capacity and as to action in another capacity while
holding such office and shall continue as to a person who has ceased to be
a director, trustee, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of such a person.

Section 6.4 Indemnity Insurance. The Corporation may purchase
and maintain insurance or furnish similar protection, including but not
limited to trust funds, letters of credit, or self-insurance, on behalf of
or for any person who is or was a director, officer, employee, or agent of
the Corporation, or is or was serving at the request of the Corporation as
a director, trustee, officer, employee or agent of another corporation,
domestic or foreign, nonprofit or for profit, partnership, joint venture,
trust, or other enterprise, against any liability asserted against him or
her and incurred by him or her in any such capacity, or arising out of his
or her status as such, whether or not the Corporation would have the power
to indemnify him or her against such liability under this Article.
Insurance may be purchased from or maintained with a person in which the
Corporation has a financial interest.

Section 6.5 Definitions. For purposes of this Article: (1) a
person who acted in good faith and in a manner he or she reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan shall conclusively be deemed to have acted in a
manner "not opposed to the best interests of the Corporation"; (2) a person
shall be deemed to have acted in "good faith" and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation,
or, with respect to any criminal action or proceeding, to have had no
reasonable cause to believe his conduct was unlawful, if his action is
based on the records or books of account of the Corporation or another
enterprise, or on information supplied to him by the officers of the
Corporation or another enterprise in the course of their duties, or on the
advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or by an appraiser
or other expert selected with reasonable care by the Corporation or another
enterprise; (3) the term "another enterprise" as used in this Article VI
shall mean any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise of which such person is or was
serving at the request of the Corporation as a director, officer, employee
or agent; and (4) references to "the Corporation" shall include, in
addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger, which, if its separate existence had continued, would have had
power and authority to indemnify its directors, officers, employees, and
agents.

ARTICLE VII
Common Stock
Section 7.1 Certificates. Certificates for stock of the
Corporation shall be in such form as shall be approved by the Board of
Directors and shall be signed in the name of the Corporation by the
Chairman or the President or a Vice President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary. Such
certificates may be sealed with the seal of the Corporation or a facsimile
thereof. Any of or all the signatures on a certificate may be a facsimile.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to
be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he
or she were such officer, transfer agent or registrar at the date of issue.

Section 7.2 Transfers of Stock. Transfers of stock shall be
made only upon the books of the Corporation by the holder, in person or by
duly authorized attorney, and on the surrender of the certificate or
certificates for such stock properly endorsed. The Board of Directors
shall have the power to make all such rules and regulations, not
inconsistent with the Certificate of Incorporation and these By-Laws and
the law, as the Board of Directors may deem appropriate concerning the
issue, transfer and registration of certificates for stock of the
Corporation. The Board of Directors or the Finance Committee may appoint
one (1) or more transfer agents or registrars of transfers, or both, and
may require all stock certificates to bear the signature of either or both.

Section 7.3 Lost, Stolen or Destroyed Certificates. The
Corporation may issue a new stock certificate in the place of any
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the Corporation may require the owner of the lost, stolen or
destroyed certificate or his or her legal representative to give the
Corporation a bond sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any
such certificate or the issuance of any such new certificate. The Board of
Directors may require such owner to satisfy other reasonable requirements.

Section 7.4 Stockholder Record Date. In order that the
Corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which
shall not be more than 60 nor less than 10 days before the date of such
meeting, nor more than sixty days prior to any other action. Only such
stockholders as shall be stockholders of record on the date so fixed shall
be entitled to notice of, and to vote at, such meeting and any adjournment
thereof, or to give such consent, or to receive payment of such dividend or
other distribution, or to exercise such rights in respect of any such
change, conversion or exchange of stock, or to participate in such action,
as the case may be, notwithstanding any transfer of any stock on the books
of the Corporation after any record date so fixed.

If no record date is fixed by the Board of Directors, (l) the
record date for determining stockholders entitled to notice of or to vote
at a meeting of stockholders shall be at the close of business on the day
next preceding the date on which notice is given, or, if notice is waived
by all stockholders entitled to vote at the meeting, at the close of
business on the day next preceding the day on which the meeting is held and
(2) the record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.

A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
Section 7.5 Beneficial Owners. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends, and to vote as such
owner, and to hold liable for calls and assessments a person registered on
its books as the owner of shares, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part
of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by law.

ARTICLE VII
Seal
Section 8.1 Seal. The seal of the Corporation shall be circular
in form and shall bear, in addition to any other emblem or device approved
by the Board of Directors, the name of the Corporation, the year of its
incorporation and the words "Corporate Seal" and "Delaware". The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
in any other manner reproduced.

ARTICLE IX
Waiver of Notice

Section 9.1 Waiver of Notice. Whenever notice is required to be
given by statute, or under any provision of the Certificate of Incorporation
or these By-Laws, a written waiver thereof, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. In the case of a stockholder, such waiver of notice
may be signed by such stockholder's attorney or proxy duly appointed in
writing. Attendance of a person at a meeting shall constitute a waiver of
notice of such meeting, except when the person attends a meeting for the
express purpose of objecting at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors or members of a
committee of directors need be specified in any written waiver of notice.

ARTICLE X
Fiscal Year

Section 10.1 Fiscal Year. The Fiscal Year of the corporation
shall begin on the first day of January and terminate on the thirty-first
day of December each year.

ARTICLE XI
Contracts, Checks, etc.

Section 11.1 Contracts, Checks, etc. The Board of Directors or
the Finance Committee may by resolution adopted at any meeting designate
officers of the Corporation who may in the name of the Corporation execute
contracts, checks, drafts, and orders for the payment of money in its
behalf and, in the discretion of the Board of Directors or the Finance
Committee, such officers may be so authorized to sign such contracts or
checks singly without the necessity of counter-signature.

ARTICLE XII
Amendments

Section 12.1 Amendments. Except as set forth below, these By-Laws
may be amended or repealed by the Board of Directors or by the
affirmative vote of the holders of a majority of the issued and outstanding
common stock of the Corporation, or by the unanimous written consent of the
holders of the issued and outstanding common stock of the Corporation.

Notwithstanding the foregoing paragraph, the affirmative vote of
the holders of at least 80% of the issued and outstanding shares of common
stock of the Corporation shall be required to amend, alter or repeal, or
adopt any provision inconsistent with, the requirements of Section 2.2,
Section 3.1, Section 3.2, Section 3.3 or this paragraph of Section 12.1 of
these By-Laws, in addition to any requirements of law and any provisions of
the Certificate of Incorporation, any By-law, or any resolution of the
Board of Directors adopted pursuant to the Certificate of Incorporation
(and notwithstanding that a lesser percentage may be specified by law, the
Certificate of Incorporation, these By-Laws, such resolution, or
otherwise).

Notwithstanding any of the foregoing, the affirmative vote of a
majority of the holders of the issued and outstanding common stock of the
Corporation shall be required to amend, alter or repeal, or adopt any
provision inconsistent with (i) any provision of these By-Laws requiring a
Supermajority Vote of the Board of Directors (including this provision of
Section 12.1) or (ii) the responsibilities of the Chief Executive Officer
or President as set forth in Section 5.4 or Section 5.5, and the Board of
Directors shall not recommend any such amendment to such provisions to the
stockholders unless the proposed amendment is approved by the Board of
Directors acting by Supermajority Vote.

ARTICLE XIII
Dividends

Section 13.1 Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation,
if any, may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property, or in shares of the capital
stock. Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the
Board of Directors from time to time, in its absolute discretion, deems
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation,
or for any proper purpose, and the Board of Directors may modify or abolish
any such reserve.

EXHIBIT B-1
DRAFT

Cinergy Corp.
139 East Fourth Street
Cincinnati, Ohio 45202
___________________

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 26, 1996

TO THE SHAREHOLDERS OF
CINERGY CORP.:

Notice is Hereby Given that the Annual Meeting of Shareholders of Cinergy
Corp. will be held in the OAK ROOM of the CINCINNATI CLUB BUILDING, 30
GARFIELD PLACE, Cincinnati, Ohio, on Friday, April 26, 1996 at 11:00 a.m.,
eastern daylight saving time, for the purposes of:

(1) the election of six Class II directors to serve for three-year
terms expiring in 1999;

(2) the adoption of the Cinergy Corp. 1996 Long-Term Incentive
Compensation Plan;

(3) the adoption of a proposed amendment to the Cinergy Corp. Annual
Incentive Plan;

and the transaction of such other business as may legally come before the
meeting.

Only shareholders of record at the close of business on Monday,
February 26, 1996, will be entitled to vote at the meeting and at any
adjournment thereof. It is important that your shares be represented at
this meeting in order that the presence of a quorum may be assured.
Shareholders, whether or not they now expect to be present at the meeting,
are requested to mark, date and sign the enclosed proxy, and return it
promptly. An addressed envelope, on which no postage stamp is necessary if
mailed in the United States, is enclosed for use in returning the proxy. A
shareholder executing and delivering the enclosed proxy has the power to
revoke it at any time before the authority granted by the proxy is
exercised.

Cinergy Corp.

By Cheryl M. Foley, Secretary

Dated March 15, 1996

EXHIBIT B-2
DRAFT

Cinergy Corp.
139 East Fourth Street
Cincinnati, Ohio 45202
(513) 381-2000

PROXY STATEMENT

Introduction

Cinergy Corp., a Delaware corporation (the "Company"), is the
registered holding company under the Public Utility Holding Company Act of
1935 for The Cincinnati Gas & Electric Company ("CG&E"), PSI Energy, Inc.
("PSI Energy"), Cinergy Services, Inc. ("Cinergy Services"), and Cinergy
Investments, Inc. ("Cinergy Investments"). CG&E is an operating utility
primarily engaged in providing electric and gas service in the southwestern
portion of Ohio and, through its principal subsidiary, The Union Light,
Heat and Power Company ("Union Light"), in adjacent areas in Kentucky. PSI
Energy is an operating utility primarily engaged in providing electric
service in north central, central, and southern Indiana. Cinergy Services
provides management, financial, administrative, engineering, legal and
other services to the Company, CG&E, PSI Energy, and Cinergy Investments.
The Company conducts its non-regulated businesses through Cinergy
Investments and its subsidiaries.

This Proxy Statement is first being mailed on or about March 15, 1996,
to holders of the common stock of the Company in connection with the
solicitation of proxies by the Board of Directors (the "Board") of the
Company for use at the Annual Meeting of Shareholders to be held on April
26, 1996, and any adjournment of such meeting (the "Annual Meeting").

The Company's Annual Report to Shareholders, including financial
statements, for the year ended December 31, 1995 was mailed to shareholders
concurrently with or prior to the mailing of this Proxy Statement.

Voting Procedures and Rights

Only holders of record of the Company's common stock at the close of
business on February 26, 1996 (the "Record Date") will be entitled to vote
at the Annual Meeting. A majority of such holders, present in person or
represented by proxy, constitutes a quorum. The number of shares of the
Company's common stock outstanding as of the Record Date was__________.
Each share of common stock entitles its owner to one vote upon each matter
to come before the meeting.

In accordance with the General Corporation Law of the State of
Delaware and the Company's By-Laws, directors will be elected at the Annual
Meeting by a plurality of the votes cast. Each other matter to be
presented at the Annual Meeting will be determined by the vote of a
majority of the votes cast. In tabulating the vote on such other matters,
abstentions will have the same effect as negative votes; broker non-votes
will be disregarded and have no effect on the outcome of the vote. Votes
at the Annual Meeting will be tabulated preliminarily by the Company acting
as its own transfer agent. Inspectors of election, duly appointed by the
presiding officer of the Annual Meeting, will definitively count and
tabulate the votes and determine and announce the results at the meeting.
The Company has no established procedure for confidential voting.

Proxies

The enclosed proxy is solicited by the Board of the Company, which
recommends voting FOR the election of all nominees as directors, FOR the
adoption of the Cinergy Corp. 1996 Long-Term Incentive Compensation Plan,
and FOR the adoption of the proposed amendment to the Cinergy Corp. Annual
Incentive Plan. Shares of the Company's common stock represented by
properly executed proxies received at or prior to the Annual Meeting will
be voted in accordance with the instructions thereon. If no instructions
are indicated, duly executed proxies will be voted in accordance with the
recommendations of the Board. It is not anticipated that any other matters
will be brought before the Annual Meeting. However, the enclosed proxy
gives discretionary authority to the proxy holders named therein should any
other matters be presented at the Annual Meeting, and it is the intention
of the proxy holders to act on any other matters in accordance with their
best judgment.

Execution of a proxy will not prevent a shareholder from attending the
Annual Meeting and voting in person. Any shareholder giving a proxy may
revoke it at any time before it is voted by delivering to the Secretary of
the Company written notice of revocation bearing a later date than the
proxy, by delivering a duly executed proxy bearing a later date or by
voting in person at the Annual Meeting.

The Company will bear the cost of the solicitation of proxies by the
Board. The Company has engaged Corporate Investor Communications, Inc. to
assist in the solicitation of proxies for a fee estimated to be $
plus reimbursement of reasonable out-of-pocket expenses. Proxies will be
solicited by mail. In addition, officers and employees of the Company may
solicit proxies personally or by telephone; such persons will receive no
additional compensation for these services.

The Company has requested that brokerage houses and other custodians,
nominees and fiduciaries forward solicitation materials to the beneficial
owners of shares of the Company's common stock held of record by such
persons and will reimburse such brokers and other fiduciaries for their
reasonable out-of-pocket expenses incurred in connection therewith.

The solicitation of proxies, and the item set forth herein as Item 2,
have been approved by the Securities and Exchange Commission (the "SEC")
under the Public Utility Holding Company Act of 1935, as amended.

ITEM 1. ELECTION OF DIRECTORS

In accordance with the provisions of the By-Laws of the Company, the
Board is divided into three classes (Class I, Class II, and Class III),
with all classes as nearly equal in number as possible. One class of
directors is ordinarily elected at each annual meeting of shareholders for
a three-year term. Melvin Perelman, Thomas E. Petry, Jackson H. Randolph,
Philip R. Sharp, Van P. Smith, and Dudley S. Taft have been nominated by
the Board for election as Class II directors at the Annual Meeting for
terms of three years each and until their successors are duly elected and
qualified.

Duly executed and returned proxies representing shares held on the
Record Date will be voted, unless otherwise specified, in favor of the
nominees for the Board. Each nominee and continuing director is a member
of the Company's present Board. All nominees have consented to serve if
elected, but if any becomes unavailable to serve, the persons named as
proxies may exercise their discretion to vote for a substitute nominee.

Except as otherwise noted, the principal occupation or employment of
each individual set forth below has been such individual's principal
occupation or employment for the past five years and no such individual
holds another position or office with the Company. All nominees and
continuing directors, other than Messrs. Randolph and Rogers, are otherwise
unaffiliated with the Company and its subsidiaries.

The Board Recommends Voting FOR ALL Nominees,
Designated in the Proxy as Item 1.

Class II Director Nominees for Terms to Expire in 1999

Melvin Perelman, Ph.D.
Director of the Company since 1994;
Member - Corporate Governance Committee and
Finance Committee.
Director of PSI Energy from 1980 to 1995. Age 65.

Dr. Perelman served as Executive Vice President of Eli Lilly and Company,
which is engaged in the manufacturing of pharmaceuticals, until his
retirement in 1993. He also served as President of Lilly Research
Laboratories. Dr. Perelman is a director of Inhale Therapeutic Systems.
________________________________________________________________________

Thomas E. Petry
Director of the Company since 1994;
Member - Audit Committee and
Executive Committee.
Director of CG&E from 1986 to 1995. Age 56.

Mr. Petry has served as Chairman of the Board and Chief Executive Officer
of Eagle-Picher Industries, Inc., a diversified manufacturer of industrial
and automotive products, since December 1994. He was Chairman of the
Board, President and Chief Executive Officer of Eagle-Picher from April
1992 until December 1994; he previously served as Chairman of the Board and
Chief Executive Officer. A plan of reorganization that provides a basis
for emergence from Chapter 11 of the U. S. Bankruptcy Code was filed by
Eagle-Picher on February 28, 1995. Mr. Petry is a director of Insilco
Corporation, Star Banc Corporation, Star Bank, N.A., Cincinnati, Ohio, and
The Union Central Life Insurance Company.
________________________________________________________________________

Jackson H. Randolph
Director of the Company since 1993;
Member - Executive Committee.
Director of CG&E since 1983 and
PSI Energy since 1994. Age 65.

Mr. Randolph has served as Chairman of the Board of the Company, Cinergy
Investments, Cinergy Services, CG&E, PSI Energy, and Union Light since
December 1995. He served as Chairman of the Board and Chief Executive
Officer of the Company, Cinergy Investments, Cinergy Services, CG&E, and
PSI Energy from October 1994 (and of Union Light from January 1995) through
November 1995. Mr. Randolph was Chairman of the Board, President and Chief
Executive Officer of CG&E from May 1993 until October 1994 (and of Union
Light from June 1993 until January 1995); previously he served as President
and Chief Executive Officer of CG&E and Union Light. Mr. Randolph is a
director of Cincinnati Financial Corporation, PNC Bank Corp., and PNC Bank,
Ohio, N.A.
_________________________________________________________________________

Philip R. Sharp, Ph.D.
Director of the Company since 1995;
Member - Audit Committee. Age 53.

Dr. Sharp is Director of the Institute of Politics and a lecturer in public
policy at the John F. Kennedy School of Government at Harvard University in
Cambridge, Massachusetts. He is also Chairman of the Energy Board of The
Keystone Center, a not-for-profit public policy, scientific and educational
organization with locations in Keystone, Colorado and Washington, D.C. Dr.
Sharp served as a member of the U. S. House of Representatives from 1975
until January 1995, representing the second Congressional district of the
State of Indiana. He was a ranking member of the House Energy and Commerce
Committee, where he chaired the Energy and Power Subcommittee and served on
the Transportation and Hazardous Materials Subcommittee, and of the House
Natural Resources Committee, where he served on the Energy and Mineral
Resources and the Oversight and Investigations Subcommittees.
_________________________________________________________________________

Van P. Smith
Director of the Company since 1994;
Chairman - Compensation Committee and
Member - Executive Committee.
Director of PSI Energy since 1986. Age 67.

Mr. Smith is Chairman of the Board of Ontario Corporation which
manufactures precision components for semiconductor process equipment,
provides custom hardware and software products, and operates commercial
testing laboratories. He is a director of each of the subsidiaries of
Ontario Corporation, Lilly Industries, Inc., Meridian Insurance Group,
Inc., and Meridian Mutual Insurance Co.
_________________________________________________________________________

Dudley S. Taft
Director of the Company since 1994;
Chairman - Corporate Governance Committee.
Director of CG&E from 1985 to 1995. Age 55.

Mr. Taft is President and Chief Executive Officer of Taft Broadcasting
Company, which owns and operates television broadcasting stations. He is a
director of Fifth Third Bancorp, The Fifth Third Bank, The Union Central
Life Insurance Company, and U.S. Playing Card Company.
_________________________________________________________________________

Class III Directors Whose Terms Expire in 1997

Michael G. Browning
Director of the Company since 1994;
Member - Compensation Committee and
Corporate Governance Committee.
Director of PSI Energy since 1990. Age 49.

Mr. Browning is Chairman and President of Browning Investments, Inc., which
is engaged in real estate ventures. He also served as President of
Browning Real Estate, Inc., the general partner of various real estate
investment partnerships, through December 30, 1994.
_________________________________________________________________________

Phillip R. Cox
Director of the Company since 1994;
Member - Corporate Governance Committee and
Public Policy Committee.
Director of CG&E from 1994 to 1995. Age 49.

Mr. Cox is President and Chief Executive Officer of Cox Financial
Corporation, a provider of financial and estate planning services. He is a
director of Cincinnati Bell Inc., the Cincinnati office of the Federal
Reserve Bank of Cleveland, and PNC Bank, Ohio, N.A.
_________________________________________________________________________

Kenneth M. Duberstein
Director of the Company since 1994;
Member - Public Policy Committee.
Director of PSI Energy from 1990 to 1995. Age 51.

Mr. Duberstein is Chairman and Chief Executive Officer of The Duberstein
Group, Inc., a provider of planning and consulting services. He is a
director of McDonnell Douglas Corporation, and is also a member of the
Board of Governors of the American Stock Exchange.
_________________________________________________________________________

James E. Rogers
Director of the Company since 1993;
Chairman - Executive Committee.
Director of PSI Energy since 1988 and
CG&E since 1994. Age 48.

Mr. Rogers has served as Vice Chairman, President and Chief Executive
Officer of the Company and Cinergy Services, and Vice Chairman and Chief
Executive Officer of Cinergy Investments, CG&E, PSI Energy, and Union Light
since December 1995. He served as Vice Chairman, President and Chief
Operating Officer of the Company and Cinergy Services, and Vice Chairman
and Chief Operating Officer of Cinergy Investments, CG&E and PSI Energy
from October 1994 (and Vice Chairman and Chief Operating Officer of Union
Light from January 1995) through November 1995. Mr. Rogers served as
Chairman, President and Chief Executive Officer of PSI Energy from August
1990 until October 1994; he previously served as Chairman and Chief
Executive Officer. He also served as Chairman and Chief Executive Officer
of PSI Resources, Inc. from October 1993 until October 1994; he previously
served as Chairman, President and Chief Executive Officer. Mr. Rogers is a
director of Bankers Life Holding Corporation, Duke Realty Investments,
Inc., Fifth Third Bancorp, and The Fifth Third Bank.
_________________________________________________________________________

John J. Schiff, Jr.
Director of the Company since 1994;
Member - Compensation Committee.
Director of CG&E from 1986 to 1995. Age 52.

Mr. Schiff is Chairman of the Board of Cincinnati Financial Corporation, an
insurance holding company, The Cincinnati Insurance Company, and John J. &
Thomas R. Schiff & Co., Inc., an insurance agency. He is a director of
Fifth Third Bancorp, The Fifth Third Bank, and The Standard Register
Company.
_________________________________________________________________________

Oliver W. Waddell
Director of the Company since 1994;
Chairman - Finance Committee.
Director of CG&E from 1989 to 1995. Age 65.

Mr. Waddell served as Chairman of the Board of Star Banc Corporation until
his retirement in December 1993; he held the additional offices of
President and Chief Executive Officer until May 1993 and June 1993,
respectively. He was also Vice Chairman of Star Bank, N.A. from June 1993
until his retirement in December 1993; he previously served as Chairman and
Chief Executive Officer. Mr. Waddell is a director of Chiquita Brands
International, Inc., Star Banc Corporation, and Star Bank, N.A.,
Cincinnati, Ohio.
_________________________________________________________________________

Class I Directors Whose Terms Expire in 1998

Neil A. Armstrong
Director of the Company since 1994;
Member - Audit Committee and
Executive Committee.
Director of CG&E from 1973 to 1995. Age 65.

Mr. Armstrong is Chairman of the Board of AIL Systems Inc., a subsidiary of
Eaton Corp., which is engaged in the manufacturing of electronic devices
and systems. He completed his tenure as Chairman of Computing Technologies
For Aviation, Inc. in 1992. Mr. Armstrong is a director of Cincinnati
Milacron Inc., Eaton Corp., RMI Titanium Co., Thiokol Corp., and USX Corp.
________________________________________________________________________

James K. Baker
Director of the Company since 1994;
Chairman - Audit Committee and
Member - Executive Committee.
Director of PSI Energy since 1986. Age 64.

Mr. Baker has served as Vice Chairman of Arvin Industries, Inc., which is
engaged in the manufacturing of automotive parts, since February 1996; he
served as Chairman of the Board of Arvin Industries from June 1993 through
January 1996; he previously served as Chairman of the Board and Chief
Executive Officer. Mr. Baker is a director of Amcast Industrial Corp.,
Calspan SRL Corp., First Chicago NBD Corp., Geon Company, and Tokheim
Corporation.
________________________________________________________________________

Clement L. Buenger
Director of the Company since 1994;
Member - Finance Committee.
Director of CG&E from 1984 to 1995. Age 69.

Mr. Buenger was Chairman of the Board of Fifth Third Bancorp and The Fifth
Third Bank from 1991 until his retirement in 1993; he previously served as
Chairman of the Board and Chief Executive Officer. Mr. Buenger is a
director of Fifth Third Bancorp and The Fifth Third Bank

________________________________________________________________________

John A. Hillenbrand II
Director of the Company since 1994;
Chairman - Public Policy Committee and
Member - Finance Committee.
Director of PSI Energy since 1985. Age 64.

Mr. Hillenbrand principally serves as Chairman, President and Chief
Executive Officer of Glynnadam, Inc., a personal investment holding
company. He is also Chairman of Able Body Corporation and Nambe' Mills,
Inc., and Vice Chairman of Pri-Pak, Inc. Mr. Hillenbrand is a director of
Hillenbrand Industries, Inc. and National City Bank, Indiana.
________________________________________________________________________

George C. Juilfs
Director of the Company since 1994;
Member - Compensation Committee and
Public Policy Committee.
Director of CG&E from 1980 to 1995. Age 56.

Mr. Juilfs is President and Chief Executive Officer of SENCORP, an
international holding company with subsidiaries that manufacture fastening
systems, finance and lease capital equipment, and commercialize health-care
technologies.
________________________________________________________________________

Meetings and Committees of the Board

During the year ended December 31, 1995, the Board held six meetings.
All directors attended more than 75% of the aggregate number of Board
meetings and meetings of committees on which they serve with the exception
of , who attended %. In accordance with the
provisions of the By-Laws of the Company, the Board has six standing
committees which facilitate the carrying out of its responsibilities.

The Audit Committee met three times during 1995. This Committee
recommends to the Board a firm of independent certified public accountants
to conduct audits of the accounts and affairs of the Company and its
subsidiaries; reviews the scope and results of audits, as well as the
accounting procedures, internal controls, and accounting and financial
reporting policies and practices of the Company and its subsidiaries, with
the independent certified public accountants; and makes such reports and
recommendations to the Board as it deems appropriate.

The Compensation Committee met five times during 1995. The nature and
scope of the Compensation Committee's responsibilities are described in the
Board Compensation Committee Report on Executive Compensation (see page
___).

The Corporate Governance Committee met three times during 1995. This
Committee recommends to the Board the slate of nominees to directors to be
elected by the shareholders, and presents to the Board, whenever vacancies
occur, names of individuals who would make suitable directors of the
Company and consults with appropriate officers of the Company on matters
relating to the organization of the Board and its committees. The
Committee has no established procedures for consideration of nominees
recommended by shareholders.

Other standing committees of the Board include the Executive
Committee, the Finance Committee and the Public Policy Committee.

Directors' Compensation

Directors who are not employees (the "non-employee directors") receive
an annual retainer fee of $25,000 plus a fee of $1,500 for each Board
meeting attended. Non-employee directors who also serve on one or more
standing committees of the Board receive an annual retainer fee of $3,000
for each committee membership plus a fee of $1,500 for each committee
meeting attended. The fee for any Board or committee meeting held via
conference call is $750. Directors who are also employees of the Company
receive no remuneration for their services as directors.

Under the Company's Directors' Deferred Compensation Plan, each non-
employee director of the Company or any of its subsidiaries may defer fees
and have them accrued either in cash or in units representing shares of
Company common stock. If deferred in such units, the stock will be
distributed to the director at the time of retirement from the appropriate
board. Amounts deferred in cash will be paid at the same time.

Under the Company's Stock Option Plan, each non-employee director has
been granted a non-qualified stock option to purchase 12,500 shares of the
Company's common stock. Each person who is elected for the first time to
be a non-employee director is also granted a non-qualified stock option to
purchase 12,500 shares of the Company's common stock. The price per share
at which options are granted must be no less than 100% of the fair market
value of the Company's common stock on the New York Stock Exchange on the
date of the grant. Options generally vest at the rate of 20% per year over
a five-year period from the date of grant and may be exercised over a ten-year
term.

Under the Company's Retirement Plan for Directors, non-employee
directors with five or more years of service will receive annual retirement
compensation in an amount equal to the annual Board retainer fee in effect
at the time of termination of service as a director, plus the product of
the fee paid for attendance at a Board meeting multiplied by five. This
plan provides such retirement compensation for as many years as the
director served on the Board. This plan covers non-employee directors
serving on the boards of directors of the Company, Cinergy Services, CG&E
or PSI Energy. Prior service by non-employee directors of CG&E or PSI
Energy will be credited under this plan effective as of October 24, 1994.

Security Ownership of Certain Beneficial Owners and Management

The only persons or groups known to the Company to be the beneficial
owners of more than 5% of the Company's common stock, the only voting
security, as of December 31, 1995, are set forth in the following table.
This information is based on the most recently available reports filed with
the SEC pursuant to the requirements of Section 13(d) of the Securities and
Exchange Act of 1934 (the "1934 Act") and transmitted to the Company by the
persons named.

Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class

INVESCO PLC _____________shares/1/ ______%
11 Devonshire Square
London EC2M 4YR
England

PNC Bank Corp. _____________shares/2/ ______%
Fifth Ave. and Wood St.
Pittsburgh, PA 15222
________

/1/ Holder reports having shared voting and shared dispositive powers with
respect to all shares, and sole voting and sole dispositive powers with
respect to none of these shares.

/2/ Of these shares, __________________ are held by PNC Bank, Ohio, N.A.
as trustee of two benefit plans for employees of CG&E and its
subsidiaries. Under the terms of the plans, participants have the right
to vote the shares credited to their accounts; however, the trustee may,
at its discretion, vote those shares not voted by participants. Holder
reports having sole voting power with respect to __________________
shares, shared voting power with respect for ________ shares, sole
dispositive power with respect to ______________ shares, and shared
dispositive power with respect to ______________ shares.

The beneficial ownership of the Company's common stock held by each
nominee, continuing director and named executive officer (as defined on
page ___), and of units equal to one share of the Company's common stock
paid as compensation to non-employee directors, as of December 31, 1995 is
set forth in the following table.

<PAGE>
<TABLE>
<CAPTION>
Beneficial Owner Table

Amount and Nature
Name of Beneficial Owner/1/ of Beneficial Ownership/2/ Units/3/

<S> <C> <C>
Neil A. Armstrong shares
James K. Baker shares
Michael G. Browning shares
Clement L. Buenger shares
Phillip R. Cox shares
Kenneth M. Duberstein shares
William J. Grealis shares
John A. Hillenbrand II shares
George C. Juilfs shares
J. Wayne Leonard shares
John M. Mutz shares
Melvin Perelman shares
Thomas E. Petry shares
Jackson H. Randolph shares
James E. Rogers shares
John J. Schiff, Jr. Shares/4/
Philip R. Sharp shares
Van P. Smith shares
Dudley S. Taft shares
Larry E. Thomas shares
Oliver W. Waddell shares

All directors and executive shares/5/
officers as a group (representing 0. % of the class)

</TABLE>
_________

/1/ No individual listed beneficially owned more than 0. % of the
outstanding shares of common stock.
/2/ Includes shares which the individual listed has the right to acquire
within 60 days pursuant to the exercise of stock options in the following
amounts: Mr. Armstrong - ; Mr. Baker - ; Mr. Browning - ;
Mr. Buenger - ; Mr. Cox - ; Mr. Duberstein - ; Mr.
Hillenbrand - ; Mr. Juilfs - ; Mr. Leonard - ; Mr. Mutz -
; Mr. Perelman - ; Mr. Petry - ; Mr. Randolph - ; Mr.
Rogers - ; Mr. Schiff - ; Mr. Smith - ; Mr. Taft - ;
and Mr. Waddell - .
/3/ Each unit represents one share of the Company's common stock credited
to the account of the respective directors as of December 31, 1995 under
the Company's Directors' Deferred Compensation Plan.
/4/ Includes shares owned of record by a trust of which Mr. Schiff
is one of three trustees who share voting and investment power equally.
Does not include shares, as to which Mr. Schiff disclaims any
beneficial interest, held by Cincinnati Financial Corporation and certain
of its subsidiaries.
/5/ Includes shares which respective director or executive officer
individually has the right to acquire within 60 days pursuant to the
exercise of stock options.

Board Compensation Committee Report on Executive Compensation

The executive compensation program of the Company is administered by
the Compensation Committee of the Board (the "Committee"). The Committee
establishes the Company's compensation philosophy and the compensation of
the chief executive officer and all other executive officers. The
Committee also recommends and administers compensation plans for all
executive officers and key employees. The Committee is composed of Messrs.
Van P. Smith (Chairman), Michael G. Browning, George C. Juilfs, and John J.
Schiff, Jr., each of whom is an independent, non-employee director of the
Company.

Compensation Philosophy

In the Committee's report in the Company's 1995 proxy statement, the
Committee reported that it was reviewing the executive compensation
philosophies of CG&E and PSI Energy as part of its effort to establish the
Committee's philosophy. The Committee also reported that although its
philosophy was developing, it expressed an intent to emphasize incentive
compensation, both short-term and long-term, in order to tie the interests
of the executive officers and the Company's shareholders. At that time,
the Committee anticipated that base salary, annual cash incentives and
long-term incentives would play an integral part in the Company's executive
compensation program.

With assistance from an independent compensation and benefits
consulting firm which conducted a study of existing executive compensation
program structures, the Committee has formulated an integrated Company
executive compensation philosophy which includes base salary, and annual
and long-term incentives. The consulting firm has also advised as to the
retention, modification or replacement of certain existing compensation and
benefits plans and as to plan design generally.

The Company seeks to provide a total compensation program that will
attract, retain, and motivate the high quality employees needed to provide
superior service to its customers and to maximize returns to its
shareholders. Base salaries for the executive group will be targeted at
the median of comparably sized utility companies based on kilowatt hours
sold. Because of the Company's low-cost position, kilowatt hours sold is
considered to be a better size measure than revenues for constructing a
comparator group. Base salary levels will be reviewed annually. Salary
increases will be based on such factors as the Company's financial results,
each individual's performance, and the executive's role and skills. The
Company's executive compensation program seeks to link executive and
shareholder interests through cash-based and equity-based incentive plans,
in order to reward corporate and individual performance and balance short-term
and long-term considerations. Thus, annual and long-term incentive
plans will be structured to provide opportunities that are competitive with
general industry companies.

This philosophy results in a compensation mix for the chief executive
officer and senior officers, including executive officers, consisting of
annual incentive and long-term incentives accounting for at least 50% of
the employee's total compensation.

During 1995, the Committee adopted a charter which supports the
Company's executive compensation philosophy and the Committee's role in
designing and implementing that philosophy. Pursuant to the charter, the
Committee:

reviews and determines the annual base salaries, annual incentives, and
long-term incentives of the Company's executives, and develops an
appropriate balance between short-term and long-term incentives while
focusing on long-term shareholder interests; and

reviews the operation of the Company's executive compensation programs;
establishes and periodically reviews policies for the administration of
these programs; and takes steps, if appropriate, to modify such programs
and to design and implement new executive compensation programs.

Consistent with its charter and its executive compensation philosophy,
the Committee has reviewed the Company's existing short-term and long-term
incentive plans and has concluded that it would be in the best interests of
the Company and its shareholders to modify the Annual Incentive Plan and to
adopt a new long-term incentive compensation plan ( see Cinergy Corp. 1996
Long-Term Incentive Compensation Plan on page __).

Under the proposed amendment to the Annual Incentive Plan, the maximum
award opportunity for "covered employees", as that term is defined in
Internal Revenue Code Section 162(m), would be one million dollars.
Currently, the maximum award is 75% of annual base salary. Expressing the
maximum possible award for covered employees in this manner is consistent
with regulations issued by the Internal Revenue Service in December, 1995.

The proposed 1996 Long-Term Incentive Compensation Plan would
allow the Company flexibility to design long-term incentive compensation
programs which will help achieve its goals. The adoption of this plan is
subject to shareholder approval. The 1996 Long-Term Incentive Compensation
Plan is intended, in part, to replace the Company's Performance Shares
Plan.

Annual Incentive Plan

For 1995, executive officers were eligible for incentives under the
Company's Annual Incentive Plan. Approximately 400 key employees
participated in the plan in 1995 and were granted cash awards to the extent
that certain pre-determined corporate and individual goals were attained
during that year. Graduated standards for achievement were developed to
encourage each employee's contribution. The potential awards ranged from
2.5% to 55% of the annual salary of the participant (including deferred
compensation), depending upon the achievement levels and the participant's
position. The Committee reviewed and approved both the plan goals at the
beginning of the year and the achievements at the end of the year.

For 1995, the Annual Incentive Plan used a combination of corporate
and individual goals. Achievement of corporate goals and achievement of
individual goals accounted for 50% of the total possible award. The
portion of the payout in March, 1996, attributable to the corporate goals
was based on 1995 achievement in two areas: (1) earnings per share; and
(2) non-fuel operation and maintenance merger savings. The earnings per
share goal accounted for 37.5% and the merger savings goal constituted
12.5% of the total possible award. The achievement level for each of the
corporate goals was at the maximum award level for 1995.

In 1995, incentive awards for each executive officer reflected
individual achievement as well as the Company's attainment of its corporate
goals. Individual performance goals for each executive varied from
executive to executive; however, all related to the achievement of the
Company's overall strategic mission of becoming a premier general energy
services company.

For each executive officer, the Committee assessed the extent to which
each person contributed toward the accomplishment of the Company's mission
in 1995. Although its determinations were subjective, that Committee
believed that its assessment accurately measured the performance of each
executive officer.

For 1996, the Company's Annual Incentive Plan will again use a
combination of corporate and individual goals. The corporate goal will
account for 50% of the total possible award and achievement of individual
goals will account for the remaining 50%. The corporate goal for 1996 will
be based on earnings per share. For 1996, approximately 400 key employees
will participate in the plan. The potential awards will range from 2.5% to
90% of the participant's annual salary, depending upon the achievement
levels and the participant's position.

Other Compensation Decisions

The Committee, at its discretion, can award other forms of
compensation in recognition of outstanding service to the Company or any of
its subsidiaries. Consistent with that philosophy, the Committee approved
in 1995 special performance awards (as set forth in footnotes to the
Summary Compensation Table).

Long-Term Incentive Plan and Stock Option Plan

The Company's Performance Shares Plan (the "Performance Shares Plan")
is a long-term incentive plan developed to reward officers and other key
employees for contributing to long-term success by achieving corporate and
individual goals approved by the Committee. The executive officers named
in the compensation tables participate in this plan, and the same corporate
and individual goals used in the Company's Annual Incentive Plan are
applicable to this plan. The potential award opportunities are established
in the same manner as the Annual Incentive Plan, with the minimum award
opportunities ranging from 13.33% to 60% of annual salary for the full
performance cycle. Performance cycles consist of overlapping four year
periods. Because the former PSI Energy Performance Shares Plan was merged
into the Performance Shares Plan effective as of October 24, 1994, the then
existing PSI Energy performance cycles of 1992-1995 and 1994-1997 became
performance cycles under the Performance Shares Plan. Awards earned under
the 1992-1995 performance cycle by executive officers are paid in two
installments: one-half of the award was paid in February, 1996, and the
remaining portion will be paid in February, 1997. The dollar value of the
awards to Messrs. Rogers, Randolph, Mutz, Grealis, Leonard, and Thomas,
paid in February, 1996, are set forth in the Summary Compensation Table.
The next overlapping four year performance cycle under the Performance
Shares Plan began January 1, 1996 and will end December 31, 1999.

The Company's executive officers and other key employees are also
eligible for grants under the Company's Stock Option Plan. The plan is
designed to align executive compensation with shareholder interests. Both
non-qualified and incentive stock options have been granted under the plan.
Options vest at the rate of 20% per year over a five-year period from the
date of grant and may be exercised over a ten-year term.

Chief Executive Officer

Mr. Randolph's 1995 base salary was determined pursuant to an
employment agreement with the Company dated December 11, 1992, as amended
and restated effective October 24, 1994 (see Employment Agreements and
Severance Arrangements on page _____). For 1995, Mr. Randolph also earned
incentive compensation under the Annual Incentive Plan in the amount of
$_______, of which __% was based on achievement of the Company's goals and
__% was based upon the Committee's determination of his achievement of
individual goals.

Giving consideration to the accomplishments of 1995, sufficient goals
were met to obtain the maximum award available. Other goals pertaining to
_______________ were also met. The relative importance in meeting these
goals was equal in the determination of awards.

Mr. Rogers' 1995 base salary was determined pursuant to an employment
agreement with the Company dated December 11, 1992, as amended and restated
effective July 2, 1993 (see Employment Agreements and Severance
Arrangements on page ___). For 1995, Mr. Rogers also earned incentive
compensation under the Annual Incentive Plan in the amount of $_______, of
which __% was based on achievement of the Company's goals and __% was based
upon the Committee's determination of his achievement of individual goals.

Summary

The Committee has established its own executive compensation
philosophy which emphasizes incentive compensation, both short-term and
long-term, in order to tie the interests of the executive officers and the
Company's shareholders. Base salary, annual cash incentives, and long-term
incentives are an integral part of executive compensation. The Committee
has determined that the Annual Incentive Plan should be modified to
increase the maximum amount which can be awarded under that plan to
"covered employees" under Internal Revenue Code Section 162(m), and that a
new long-term incentive plan (the 1996 Long-Term Incentive Compensation
Plan) is needed to provide flexibility in designing competitive long-term
incentive programs in order to attract and retain qualified and highly
motivated executive employees in the future.

The 1993 Omnibus Budget Reconciliation Act ("OBRA") became law in
August, 1993, for compensation earned in 1994 and later. Under the law,
income tax deductions of publicly traded companies may be limited to the
extent total compensation for certain executive officers exceeds one
million dollars in any one year. Under OBRA, the deduction limit does not
apply to payments which qualify as "performance based" or compensation
which is payable under a written contract that was in effect before
February 17, 1993. The Committee has reviewed the final regulations issued
by the Internal Revenue Service and will continue to review the application
of these rules to future compensation; however, the Committee intends to
compensate executives on performance achieved, both corporate and
individual.

The tables which follow, and accompanying footnotes, reflect the
decisions covered by the above discussion.

Compensation Committee

Van P. Smith, Chairman
Michael G. Browning
George C. Juilfs
John J. Schiff, Jr.

Summary Compensation Table

The following table sets forth the compensation of Messrs. Rogers and
Randolph, each of whom served as chief executive officer at different
periods during 1995, and each of the additional four most highly
compensated executive officers (these six executive officers sometimes
hereinafter collectively referred to as the "named executive officers") for
services to the Company and its subsidiaries during the calendar years
ended December 31, 1995 and 1994. (The data presented for 1994 includes
compensation from CG&E and PSI Energy for the period January 1, 1994
through October 24, 1994.)

<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
<PAGE>
Long-Term Compensation
---------------------------------
Annual Compensation Awards Payouts
----------------------------- --------------- --------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Annual Restricted Securities Other
Compen- Stock Underling LTIP Compen-
Name and Salary Bonus/1/ sation Awards Options/Sars Payouts/2/ sation
Principal Position Year ($) ($) ($) ($) ($) ($) ($)
- ------------------ ---- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <S>
James E. Rogers 1995 /3/
Vice Chairman 1994 433,144 265,729 64,417 0 250,000 273,720 285,393
President and CEO

Jackson H. Randolph 1995 /3/
Chairman of the Board 1994 470,000 255,750 5,719 0 250,000 0 92,724

John M Mutz 1995 /5/
President, 1994 342,380 136,952 3,001 0 100,000 11,436 6,097
PSI Energy

William J. Grealis/4/ 1995 /5/
President, CG&E and
Cinergy Investments

J. Wayne Leonard 1995 /5/
Group Vice President 1994 211,208 79,203 32,146 0 100,000 81,132 93,555
and CFO

Larry E. Thomas 1995 /5/
Group Vice President 1994 209,540 78,578 29,078 0 100,000 77,345 53,945
and Chief Transfor-
mation Officer

</TABLE>

/1/ The amounts appearing in this column reflect the Annual Incentive Plan
awards earned during the year listed and paid in the following year.

/2/ The amounts appearing in this column reflect the values of the shares
and cash paid out under the Company's Performance Shares Plan as successor
to PSI Energy's Performance Shares Plan. The amounts paid in 1994 and 1995
were earned by Messrs. Rogers, Mutz, Leonard, and Thomas during the
four-year cycle from 1990 through 1993 under the PSI Energy Performance
shares Plan.

/3/ Amount includes for Messrs. Rogers and Randolph, respectively: a
deferred compensation award in the amount of $ pursuant to the terms
of each officer's Deferred Compensation Agreement; employer matching
contributions under the PSI Energy and CG&E 401(k) Plans of $ and $ ;
above-market interest on amounts deferred pursuant to the Deferred
Compensation Agreements of $ and $ ; and benefits under
Split Dollar Life Insurance Agreements of $ and $ .
Also includes for Mr. Rogers insurance premiums paid with respect to
executive/group-term life insurance and relocation compensation in the amounts
of $ and $ , respectively.

/4/ Mr. Grealis became President of Cinergy Investments effective January 16,
1995 and President of CG&E effective September 1, 1995. Prior to January 16,
1995 he was not directly employed by the Company and its subsidiaries.

/5/ Amount includes for Messrs. Mutz, Grealis, Leonard, and Thomas,
respectively: insurance premiums paid with respect to executive/group-term
life insurance of $ , $ , $ , and $ ; and employer
matching contributions under the PSI Energy 401(k) Plan of $ , $
, $ , and $ . Also includes for Messrs. Grealis, Leonard,
and Thomas, respectively, relocation compensation in the amounts of $ ,
$ , and $ . Also includes for Mr. Grealis a profession
transition allowance and supplemental life insurance of $ and $ ,
respectively. Also includes for Messrs. Leonard and Thomas, respectively,
special performance awards in the amounts of $ and $ .

Option/SAR Grants Table

The following table sets forth information concerning individual grants of
options to purchase the Company's common stock made to Mr. Grealis, the only
named executive officer granted such options during 1995.

<PAGE>
<TABLE>
<CAPTION>
SAR Grant Table

Potential
Realized Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term
- ------------------------------------------------------------------------- -------------------
(a) (b) (c) (d) (e) (f) (g)
Number of %
Securities of Total
Underlying Options/SARs Exercise
Options/SARs Granted to or Base
Granted Employees in Price Expiration 5% 10%
Name (#) Fiscal Year ($/Sh) Date ($) ($)
- ---- ---------- --------- ---------- ----------- --- ---
<S> <C> <C> <C> <C> <C> <C>
William J. Grealis

</TABLE>

Aggregated Option/SAR Exercises and Year-End Option/SAR Value Table

The following table sets forth information concerning stock options
exercised by the named executive officers during 1995, including the values
realized for such options exercised, which represent the positive spread
between the respective exercise prices and market prices on dates of
exercises, and the numbers of shares for which options were held as of
December 31, 1995, including the values for "in-the-money" options, which
represent the positive spread between the respective exercise prices of
outstanding stock options and the market price of the shares as of December 31,
1995, which was $30.625 per share.

<PAGE>
<TABLE>
<CAPTION>
Aggregated Options/SAR Exercises Table

(a) (b) (c) (d) (e)
Number of Value of
Securities Underlying Unexercised Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares FY-End FY-End
Acquired Value (#) ($)
on Exer- Realized Exercisable/ Exercisable/
Name cise (#) ($) Unexercisable Unexercisable
- ---- -------- --------- ---------------------- ---------------
<S> <C> <C> <C> <C>
James E. Rogers
Jackson H. Randolph
John M. Mutz
William J. Grealis
J. Wayne Leonard
Larry E. Thomas

</TABLE>

Long-Term Incentive Plan Awards Table

The following table sets forth the potential payouts of awards granted
under the Performance Shares Plan to Mr. Grealis, the only named executive
officer granted such award during 1995.

<PAGE>
<TABLE>
<CAPTION>
Estimated Future Payouts

Estimated Future
Payouts under Non-Stock Price-Based Plans
------------------------
(a) (b) (c) (d) (e) (f)
Number of Performance
Shares, Units or Other Thres
or Other Period Until -hold Target Maximum
Rights Maturation Shares Shares Shares
Name (#) or Payout (#) (#) (#)
- ---- -------------- ------------- ------ ------- -------
<S> <C> <C> <C> <C> <C>
William J. Grealis (1) (1)

</TABLE>

(1) The number of performance shares of the Company's common stock
contingently granted is calculated by determining the award
opportunity in dollars for the performance cycle and dividing this by
the per share price of the common stock at the time of the grant. For
the 1994 through 1997 performance period, the award opportunity for
participants is measured in terms of percentages ranging from 13.33%
to 60% of annual salary. The performance shares vest based upon the
achievement of long-term corporate and individual goals established by
the Compensation Committee of the Board at the beginning of the
performance period and measured at the end of the cycle. The actual
size of an award is determined by multiplying the amount contingently
granted by a weighted calculation reflecting the extent to which the
aggregate of the pre-established goals has been met. For the 1994
through 1997 performance period, an award of approximately twice the
number of shares as contingently granted will be made if the aggregate
of the pre-established goals are met. There is no minimum (threshold)
award and the Board may enhance the target award in recognition of
exemplary performance or achievement as to individual goals. Awards
are made in cash and Company common stock over a two-year period
immediately following each performance cycle. The amount of an award
that is generally paid in cash is equal to the amount of federal,
state and local income taxes due on each installment, plus, with
respect to the second installment, dividends otherwise payable on such
installment.

Pension Benefits

The primary pension benefits payable at retirement to each of the
named executive officers are provided pursuant to the terms of either
CG&E's non-contributory management pension plan (the "CG&E Pension Plan")
or PSI Energy's non-contributory pension plan (the "PSI Energy Pension
Plan"). Mr. Randolph is covered under the terms of the CG&E Pension Plan.
Messrs. Rogers, Mutz, Grealis, Leonard, and Thomas are covered under the
terms of the PSI Energy Pension Plan.

Under the terms of the CG&E Pension Plan, the retirement income
payable to a pensioner is 1.3% of final average pay plus 0.35% of final
average pay in excess of covered compensation, times the number of years of
credited service through 30 years, plus 0.1% of final average pay times the
number of years of credited service over 30 years. Final average pay is
the average annual salary, based on July 1 pay rates, during the employee's
five consecutive calendar years producing the highest such average within
the last 10 calendar years immediately preceding retirement. Covered
compensation is the average social security taxable wage base over a 35-year
period.

Mr. Randolph is also a vested participant in CG&E's Supplemental
Executive Retirement Plan which upon his retirement, death or disability
will provide benefits for a period of 15 years in an annual amount equal to
75% of his highest annual compensation, reduced by social security benefits
and by amounts received from the CG&E Pension Plan.

The following pension plan table illustrates the estimated annual
benefits payable to Mr. Randolph at normal retirement age 65 for the years
of service indicated under the terms of the CG&E Pension Plan and the
supplemental plan. Compensation utilized to determine benefits under the
plans includes salary and bonus as set forth within the respective columns
of the summary compensation table. Mr. Randolph's estimated credited years
of service at normal retirement age 65 are 37 years.

<PAGE>
<TABLE>
<CAPTION>
Pension Plan Table

Years of Service
----------------------------------------
<S> <C> <C> <C> <C>
Compensation 15 20 25 30 or More
$300,000 112,500 150,000 187,500 225,000
400,000 150,000 200,000 250,000 300,000
500,000 187,500 250,000 312,500 375,000
600,000 225,000 300,000 375,000 450,000
700,000 262,500 350,000 437,500 525,000
800,000 300,000 400,000 500,000 600,000
900,000 337,500 450,000 562,500 675,000
1,000,000 375,000 500,000 625,000 750,000
1,100,000 412,500 550,000 687,500 825,000

</TABLE>

The PSI Energy Pension Plan covers all of its employees who meet
certain minimum age and service requirements. Compensation utilized to
determine benefits under the PSI Energy Pension Plan includes substantially
all salaries and annual incentive compensation, including deferred
compensation for Mr. Rogers. PSI Energy Pension Plan benefits are
determined under a final average pay formula with consideration of years of
service to a maximum of 30, age at retirement and the applicable average
social security wage base. PSI Energy also maintains an Excess Benefit
Plan, in which Messrs. Rogers, Mutz, Grealis, Leonard, and Thomas
participate, designed to restore pension benefits to those individuals
whose benefits under the PSI Energy Pension Plan would otherwise exceed the
limits imposed by the Internal Revenue Code of 1986, as amended (the
"Code").

The following pension plan table illustrates the estimated annual
benefits payable as a straight-life annuity under both plans to
participants who retire at age 62. Such benefits are not subject to any
deduction for social security or other offset amounts.

<PAGE>
<TABLE>
<CAPTION>
Pension Plan Table

Years of Service
Compensation 5 10 15 20 25 30
<S> <C> <C> <C> <C> <C> <C>
$ 300,000 23,190 46,380 69,575 92,765 115,955 139,145
400,000 31,190 62,380 93,575 124,765 155,955 187,145
500,000 39,190 78,380 117,575 156,765 195,955 235,145
600,000 47,190 94,380 141,575 188,765 235,955 283,145
700,000 55,190 110,380 165,575 220,765 275,955 331,145
800,000 63,190 126,380 189,575 252,765 315,955 379,145
900,000 71,190 142,380 213,575 284,765 355,955 427,145
1,000,000 79,190 158,380 237,575 316,765 395,955 475,145
1,100,000 87,190 174,380 261,575 348,765 435,955 523,145

</TABLE>

The estimated credited years of service at age 62 for each of the
named executive officers covered under the terms of the PSI Energy Pension
Plan are as follows: Mr. Rogers, 20.22 years; Mr. Mutz, 3.39 years; Mr.
Grealis 11.69 years; Mr. Leonard, 30 years; and Mr. Thomas, 30 years.

Messrs. Rogers, Mutz, and Grealis also participate in the PSI Energy
Supplemental Retirement Plan, which is designed to provide coverage to
employees, previously designated by the board of directors of PSI Energy,
who will not otherwise qualify for full retirement benefits under the PSI
Energy Plan. The benefit provided by the PSI Energy Supplemental
Retirement Plan will be an amount equal to that which a covered employee
with maximum permitted years of participation (30 years) would have
received under the PSI Energy Plan, reduced by the actual benefit provided
by the PSI Energy Plan and the Excess Benefit Plan, and further reduced by
benefits the covered employee will be eligible to receive from retirement
plans from previous self-employment and from previous employers. The
estimated annual benefit payable at age 62 under the PSI Energy
Supplemental Retirement Plan is $ for Mr. Rogers, $ for Mr.
Mutz, and $ for Mr. Grealis.

The Company has an Executive Supplemental Life Insurance Program,
which provides key management personnel, including the named executive
officers, with additional life insurance coverage during employment, and
post-retirement deferred compensation. At the later of age 55 or
retirement, the participant's life insurance coverage under the program
will be canceled. At that time, the participant will receive the total
amount of coverage in the form of deferred compensation payable in ten
equal annual installments. The estimated annual benefit payable, at the
later of age 55 or retirement, to each of the named executive officers is $
per year over ten years.

Employment Agreements and Severance Arrangements

The Company entered into individual employment agreements with Mr.
Randolph and Mr. Rogers (each sometimes hereinafter individually referred
to as the "Executive") effective as of October 24, 1994.

Pursuant to his employment agreement, Mr. Randolph served as Chairman
and Chief Executive Officer of the Company until November 30, 1995, at
which time he relinquished the position of Chief Executive Officer; he will
continue to serve as Chairman of the Board of the Company until November
30, 2000. Mr. Rogers served as Vice Chairman, President and Chief
Operating Officer of the Company until November 30, 1995, and thereafter
has served as Vice Chairman, President and Chief Executive Officer. Mr.
Rogers' agreement is for a term of three years; however, on each annual
anniversary date it will be automatically extended for an additional year,
unless either the Company or Mr. Rogers gives timely notice otherwise.

During the terms of their agreements, Messrs. Randolph and Rogers will
receive minimum annual base salaries of $465,000 and $422,722,
respectively. Each will also be paid an annual incentive cash award of up
to a maximum of no less than 55% of his annual salary pursuant to the
Company's Annual Incentive Plan, and will be eligible to participate in all
other incentive, stock option, performance award, savings, retirement and
welfare plans applicable generally to Company employees and executives.

If the Executive's employment terminates as a result of death, his
beneficiary will receive a lump sum cash amount equal to the sum of (a) the
Executive's annual base salary through the termination date to the extent
not previously paid, (b) a pro rata portion of the benefit under the
Company's Annual Incentive Plan calculated based upon the termination date
and (c) any compensation previously deferred but not yet paid to the
Executive (with accrued interest or earnings thereon) and any unpaid
accrued vacation pay. In addition to these accrued amounts, if the Company
terminates the Executive's employment without "cause" or the Executive
terminates his employment for "good reason" (as each is defined in the
employment agreements), the Company will pay to the Executive (a) a lump
sum cash amount equal to the present value of his annual base salary and
benefit under the Company's Annual Incentive Plan payable through the end
of the term of employment, at the rate and applying the same goals and
factors in effect at the time of notice of such termination, (b) the value
of all benefits to which the Executive would have been entitled had he
remained in employment until the end of the term of employment under the
Company's Performance Shares Plan and Executive Supplemental Life Insurance
Program, (c) the value of all deferred compensation and all executive life
insurance benefits whether or not then vested or payable and (d) medical
and welfare benefits for the Executive and his family through the end of
the term of employment. If the Executive's employment is terminated by the
Company for cause or by the Executive without good reason, the Executive
will receive unpaid annual base salary accrued through the termination date
and any accrued deferred compensation.

Mr. Randolph has a severance agreement with the Company which provides
that if, within three years after October 24, 1994 he terminates his
employment for good cause or his employment is terminated by the Company
other than for disability or cause, the Company will pay him a cash amount
equal to 300% of his annualized compensation for the most recent five years
ending before October 24, 1994, less $1,000, plus a cash "gross-up" payment
equal to the federal excise tax due on such amount, if any.

Mr. Mutz has an employment agreement pursuant to which he will serve
as President of, and will be nominated for election as a director of, PSI
Energy until October 4, 1998. Commencing October 4, 1996, the term of the
employment agreement may be extended for one additional year upon mutual
agreement. During the term of his agreement, Mr. Mutz will receive a
minimum annual base salary of $330,000, will be eligible to receive an
annual incentive cash award of up to 40% of his annual base salary pursuant
to the Company's Annual Incentive Plan, will be eligible to participate in
all other incentive, stock option, performance award, savings, retirement
and welfare plans applicable generally to Company employees and executives,
and will receive other fringe benefits. In connection with his
participation in the PSI Energy Supplemental Retirement Plan, Mr. Mutz's
employment agreement provides that he will be vested in his benefit
(calculated including a profession transition allowance of $250,000 paid in
1993) at a rate of 20% per year of service beginning in 1994 without offset
for other retirement benefits, and will be guaranteed a benefit thereunder
based on its current terms even if the plan subsequently is amended to
reduce benefits or is terminated.

If Mr. Mutz's employment is terminated as a result of death, for cause
or by him without good reason, he or his beneficiary will be paid a lump
sum cash amount equal to (a) his unpaid annual base salary through the
termination date, (b) a pro rata portion of his Annual Incentive Plan
award, (c) his vested accrued benefits under the Performance Shares Plan,
the PSI Energy Pension Plan, the Excess Benefit Plan and the Supplemental
Retirement Plan and (d) any unpaid deferred compensation (including accrued
interest or earnings) and unpaid accrued vacation pay. If, instead, Mr.
Mutz's employment is terminated prior to a change in control (as defined)
without cause or by him for good reason, he will be paid (a) a lump sum
cash amount equal to the present value of his annual base salary and
maximum annual incentive cash award payable through the end of the term of
the agreement, at the rate and applying the same goals and factors in
effect at the time of notice of such termination, (b) the present value of
all benefits to which he would have been entitled had he remained in
employment until the end of the term of the agreement under the Company's
Performance Shares Plan and Executive Supplemental Life Insurance Program,
and PSI Energy's Pension Plan, Excess Benefit Plan, and Supplemental
Retirement Plan, (c) the value of all deferred compensation and all
executive life insurance benefits whether or not then vested or payable and
(d) continued medical and welfare benefits through the end of the term of
the agreement.

If Mr. Mutz's employment is terminated after a change in control he
will be paid a lump sum cash payment equal to the greater of (i) three
times the sum of his annual base salary immediately prior to the date of
his termination of employment or, if higher, the date of the change in
control, plus all incentive compensation or bonus plan amounts in effect
prior to the date of his termination of employment or, if higher, prior to
the change in control, and (ii) the present value of all annual base
salary, bonuses and incentive compensation and retirement benefits that
would otherwise be due under the agreement plus deferred compensation and
executive life insurance benefits. In addition, he will be provided life,
disability, accident and health insurance benefits for 36 months, reduced
to the extent comparable benefits are received, without cost, by him.

The Company and Mr. Grealis entered into an employment agreement which
commenced on January 16, 1995 and shall continue until June 30, 2000;
provided, however, commencing on January 1, 1999, and each January 1
thereafter, the term of the employment agreement may be extended for one
additional year upon mutual agreement. Pursuant to the terms of his
agreement, Mr. Grealis initially served as President of Cinergy Investments
and Vice President of CG&E's Gas Operations. However, Mr. Grealis may be
further assigned such other responsible executive capacity or capacities as
the boards of directors of the Company or Cinergy Services or the Company's
chief executive officer may from time to time determine. Effective
September 1, 1995, Mr. Grealis was named to the executive position of
President of CG&E in addition to retaining the executive position of
President of Cinergy Investments.

During the term of his agreement, Mr. Grealis will receive a minimum
annualized base salary of $ , will be eligible to participate in all
other incentive, stock option, performance award, savings, retirement and
welfare benefit plans applicable generally to Company employees and
executives, and will receive other fringe benefits. In connection with his
retirement, the employment agreement provides that Mr. Grealis will receive
an annual benefit of no less than $ payable as a straight-life
annuity at age 62.

If Mr. Grealis' employment is terminated as a result of death, for
cause, or by him without good reason, he or his beneficiary will be paid a
lump sum cash amount equal to (a) his unpaid annual base salary through the
termination date, (b) a pro-rata portion of his award under the Company's
Annual Incentive Plan (c) his vested accrued benefits under the Company's
Performance Shares Plan, and (d) any unpaid deferred compensation
(including accrued interest or earnings) and unpaid accrued vacation pay.
If, instead, Mr. Grealis' employment is terminated prior to a change in
control (as defined) without cause or by him for good reason, he will be
paid (a) a lump sum cash amount equal to the present value of his annual
base salary and target annual incentive cash award payable through the end
of the term of the agreement, at the rate and applying the same goals and
factors in effect at the time of notice of such termination, (b) the
present value of all benefits to which he would have been entitled had he
remained in employment until the end of the term of the agreement under the
Company's Performance Shares Plan and Executive Supplemental Life Insurance
Program, (c) the value of all deferred compensation and all executive life
insurance benefits whether or not vested or payable, and (d) continued
medical and welfare benefits through the end of the term of the agreement.

If Mr. Grealis' employment is terminated after a change in control he
will be paid a lump sum cash payment equal to the greater of (i) two times
the sum of his annual base salary immediately prior to the date of his
termination of employment or, if higher, the date of the change in control,
plus all incentive compensation or bonus plan amounts in effect prior to
the date of his termination of employment or, if higher, prior to the
change in control, and (ii) the present value of all annual base salary,
bonuses and incentive compensation and retirement benefits that would
otherwise be due under the agreement plus deferred compensation and
executive life insurance benefits. In addition, he will be provided life,
disability, accident and health insurance benefits for twenty-four months,
reduced to the extent comparable benefits are received, without cost, by
him.

The Company and Mr. Leonard entered into an employment agreement which
commenced on October 24, 1994 and shall continue until December 31, 1997;
provided, however, effective January 1, 1996, and each January 1
thereafter, the term of the employment agreement may be extended for one
additional year upon mutual agreement. Pursuant to the terms of his
agreement, Mr. Leonard has served as Group Vice President and Chief
Financial Officer of the Company and its subsidiaries. However, Mr.
Leonard may be further assigned such other responsible executive capacity
or capacities as the boards of directors of the Company or Cinergy Services
or the Company's chief executive officer may from time to time determine.
During the term of his agreement, Mr. Leonard will receive a minimum
annualized base salary of $ , will be eligible to participate in
all other incentive, stock option, performance award, savings, retirement
and welfare benefit plans applicable generally to Company employees and
executives, and will receive other fringe benefits.

If Mr. Leonard's employment is terminated as a result of death, for
cause, or by him without good reason, he or his beneficiary will be paid a
lump sum cash amount equal to (a) his unpaid annual base salary through the
termination date, (b) a pro-rata portion of his award under the Company's
Annual Incentive Plan (c) his vested accrued benefits under the Company's
Performance Shares Plan, and (d) any unpaid deferred compensation
(including accrued interest or earnings) and unpaid accrued vacation pay.
If, instead, Mr. Leonard's employment is terminated prior to a change in
control (as defined) without cause or by him for good reason, he will be
paid (a) a lump sum cash amount equal to the present value of his annual
base salary and target annual incentive cash award payable through the end
of the term of the agreement, at the rate and applying the same goals and
factors in effect at the time of notice of such termination, (b) the
present value of all benefits to which he would have been entitled had he
remained in employment until the end of the term of the agreement under the
Company's Performance Shares Plan and Executive Supplemental Life Insurance
Program, (c) the value of all deferred compensation and all executive life
insurance benefits whether or not vested or payable, and (d) continued
medical and welfare benefits through the end of the term of the agreement.

If Mr. Leonard's employment is terminated after a change in control he
will be paid a lump sum cash payment equal to the greater of (i) three
times the sum of his annual base salary immediately prior to the date of
his termination of employment or, if higher, the date of the change in
control, plus all incentive compensation or bonus plan amounts in effect
prior to the date of his termination of employment or, if higher, prior to
the change in control, and (ii) the present value of all annual base
salary, bonuses and incentive compensation and retirement benefits that
would otherwise be due under the agreement plus deferred compensation and
executive life insurance benefits. In addition, he will be provided life,
disability, accident and health insurance benefits for thirty-six months,
reduced to the extent comparable benefits are received, without cost, by
him.

The Company and Mr. Thomas entered into an employment agreement which
commenced on October 24, 1994 and shall continue until December 31, 1997;
provided, however, effective January 1, 1996, and each January 1
thereafter, the term of the employment agreement may be extended for one
additional year upon mutual agreement. Pursuant to the terms of his
agreement, Mr. Thomas initially served as Group Vice President,
Reengineering and Operation Services of the Company and its subsidiaries.
However, Mr. Thomas may be further assigned such other responsible
executive capacity or capacities as the boards of directors of the Company
or Cinergy Services or the Company's chief executive officer may from time
to time determine. Effective September 1, 1995, Mr. Thomas was named to
the executive position of Group Vice President and Chief Transformation
Officer. During the term of his agreement, Mr. Thomas will receive a
minimum annualized base salary of $ , will be eligible to
participate in all other incentive, stock option, performance award,
savings, retirement and welfare benefit plans applicable generally to
Company employees and executives, and will receive other fringe benefits.

If Mr. Thomas' employment is terminated as a result of death, for
cause, or by him without good reason, he or his beneficiary will be paid a
lump sum cash amount equal to (a) his unpaid annual base salary through the
termination date, (b) a pro-rata portion of his award under the Company's
Annual Incentive Plan (c) his vested accrued benefits under the Company's
Performance Shares Plan, and (d) any unpaid deferred compensation
(including accrued interest or earnings) and unpaid accrued vacation pay.
If, instead, Mr. Thomas' employment is terminated prior to a change in
control (as defined) without cause or by him for good reason, he will be
paid (a) a lump sum cash amount equal to the present value of his annual
base salary and target annual incentive cash award payable through the end
of the term of the agreement, at the rate and applying the same goals and
factors in effect at the time of notice of such termination, (b) the
present value of all benefits to which he would have been entitled had he
remained in employment until the end of the term of the agreement under the
Company's Performance Shares Plan and Executive Supplemental Life Insurance
Program, (c) the value of all deferred compensation and all executive life
insurance benefits whether or not vested or payable, and (d) continued
medical and welfare benefits through the end of the term of the agreement.

If Mr. Thomas' employment is terminated after a change in control he
will be paid a lump sum cash payment equal to the greater of (i) three
times the sum of his annual base salary immediately prior to the date of
his termination of employment or, if higher, the date of the change in
control, plus all incentive compensation or bonus plan amounts in effect
prior to the date of his termination of employment or, if higher, prior to
the change in control, and (ii) the present value of all annual base
salary, bonuses and incentive compensation and retirement benefits that
would otherwise be due under the agreement plus deferred compensation and
executive life insurance benefits. In addition, he will be provided life,
disability, accident and health insurance benefits for thirty-six months,
reduced to the extent comparable benefits are received, without cost, by
him.

Deferred Compensation Agreements

Mr. Randolph and CG&E, and Mr. Rogers and PSI and PSI Energy, have
entered into deferred compensation agreements effective as of January 1,
1992 (the "Deferred Compensation Agreements") pursuant to which, in lieu of
granting to each executive officer a cash increase in base salary, each
executive officer was credited with a $50,000 base salary increase in the
form of deferred compensation. Such amount will be deferred annually, in
the case of both Mr. Randolph and Mr. Rogers, for a five-year period
beginning January 1, 1992 and ending December 31, 1996, and in the case of
Mr. Rogers, for an additional five-year period beginning January 1, 1997
and ending December 31, 2001. The Deferred Compensation Agreements were
assumed by the Company effective as of October 24, 1994.

In general, Mr. Randolph's Deferred Compensation Agreement provides
that if his employment terminates for any reason, other than death or
disability, prior to January 1, 1997, he will receive the total amount of
his deferred income plus interest. If Mr. Randolph's employment terminates
on or after January 1, 1997, he will receive an annual cash benefit of
$179,000 payable for a 15-year period beginning January 2001. Proportional
benefits are payable to Mr. Randolph in the event his employment is
terminated for death or disability prior to January 1, 1997.

In general, Mr. Rogers' Deferred Compensation Agreement provides that
if his employment terminates for any reason, other than death, prior to
January 1, 1997, he will receive a lump sum cash payment equal to the total
amount deferred for the first five-year period described above plus
interest. If Mr. Rogers' employment terminates for any reason, other than
death, on or after January 1, 1997, he will receive an annual cash benefit
over a 15-year period beginning the first January following termination of
his employment, but in no event earlier than January 2003 nor later than
January 2010. The annual cash benefit amount payable for such 15-year
period ranges from $179,000 per year if payment begins in January 2003,
increasing to $554,400 per year if payment commences in January 2010.
Comparable amounts are payable to Mr. Rogers in the event his employment is
terminated for disability prior to January 1, 1997 or if Mr. Rogers dies
(I) prior to January 1, 1997 while employed or disabled, or (ii) on or
after January 1, 1997 but before commencement of payment of the 15-year
payments described above; provided, however, if Mr. Rogers becomes disabled
prior to the completion of the first award period, the amounts paid will be
proportionately reduced based on the ratio of the amount deferred to the
date of disability to the total amount that would have been deferred to the
end of the first award period. In addition, if Mr. Rogers' employment
terminates for any reason, other than death or disability, on or after
January 1, 1997, but before January 1, 2002, he will receive a lump sum
cash payment equal to the total amount deferred during the second five-year
period described above plus interest. Additionally, if Mr. Rogers'
employment terminates for any reason, other than death or disability, on or
after January 1, 2002, he will receive an additional annual benefit for a
15-year period beginning the first January following termination of his
employment, but in no event earlier than January 2008 nor later than
January 2010. The annual cash benefit amount payable for such period
ranges from $179,000 per year if payment begins in January 2008, increasing
to $247,000 per year if payment begins in January 2010. Provided that Mr.
Rogers is employed on January 1, 1997, comparable amounts are payable to
Mr. Rogers in the event his employment is terminated for disability prior
to January 1, 2002 or if Mr. Rogers dies (I) prior to January 1, 2002 while
employed or disabled, or (ii) on or after January 1, 2002 but before
commencement of payment of benefits; provided, however, if Mr. Rogers
becomes disabled prior to the completion of the second award period, his
payments will be proportionately reduced in the same manner as described
above for disability during the first award period.

Performance Graph

The following line graph compares the cumulative total average
shareholder return of the common stock of the Company with the cumulative
total returns during the same time period of the S&P Electric Utilities
Index and the S&P 500 Stock Index. The graph tracks performance from
October 25, 1994 (the initial trading date of the Company's common stock)
through December 31, 1995, and assumes a $100 investment on October 25,
1994 and dividend reinvestment.

<PAGE>
<TABLE>
<CAPTION>
Line Graph Table

October 25, 1994 December 31, 1994 December 31, 1995
<S> <C> <C> <C>
Company Common
Stock $100.00 $104.40 $145.30

S&P Electric
Utilities Index $100.00 $104.80 $137.40

S&P 500
Stock Index $100.00 $100.10 $137.70

</TABLE>

ITEM 2. ADOPTION OF CINERGY CORP. 1996 LONG-TERM INCENTIVE COMPENSATION
PLAN

Introduction

On January 25, 1996, the Company's Board adopted a new employee
incentive compensation plan, the Cinergy Corp. 1996 Long-Term Incentive
Compensation Plan (the "Plan"), subject to approval by the Company's
shareholders. If approved, the Plan will provide the Company, in this era
of utility competition, greater flexibility to design long-term
compensation incentives for the Company's officers and other key employees
by rewarding long-term performance. Accordingly, certain key employees may
be granted Stock Options, Stock Appreciation Rights, Restricted Stock, Cash
Awards, Performance Shares, Performance Awards, Dividend Equivalents, and
Other Stock-Based Awards, as described below. In utilizing the Plan, a
greater portion of pay for officers and key employees is placed at risk,
but ownership of stock assists in the attraction and retention of qualified
employees and provides them with additional incentives to devote their best
efforts to pursue and sustain the Company's growth and profitability
through the accomplishment of corporate goals. The Plan is thus intended to
coalesce the interests of the Company's shareholders, customers and
management to enhance the Company's value.

The Board believes that the approval of the Plan is in the best
interests of the Company and the shareholders because the Plan will enable
the Company to provide long-term, stock-based and cash incentives to
officers and other key employees to enhance the financial success of the
Company and increase shareholder value.

Vote Required

The rules of the New York Stock Exchange require shareholder approval
of the Plan because employee-directors of the Company and the Company's
officers would be eligible to receive awards under the Plan, and because
the Plan contemplates the issuance of the Company's common stock. In
addition, shareholder approval of the Plan is one of the requirements of
Rule 16b-3 of the SEC ("Rule 16b-3") (compliance with which exempts certain
transactions involving directors and officers from provisions of Section
16(b) of the 1934 Act which otherwise may penalize such transactions in
some cases and thereby partially frustrate the purposes of the Plan) and is
required by the Internal Revenue Code of 1986, as amended (the "Code"),
with respect to Incentive Stock Options and performance-based compensation.

Assuming the presence of a quorum at the Annual Meeting, approval of
the Plan will require the affirmative vote of the holders of a majority of
the shares of the Company's common stock present in person or represented
by proxy and entitled to vote thereat. Abstentions of the shares so
present and entitled to vote will have the same effect as shares voted
against the proposal. Broker non-votes will not be considered present for
purposes of voting on the proposal and, accordingly, will not factor into
the determination of whether or not the Plan is adopted.

Summary Of Plan Features

General. The Plan contemplates the grant from time to time to
selected eligible employees of stock-related awards of six general types:
(1) options to purchase shares of the Company's common stock ("Options");
(2) rights to receive, upon exercise, the appreciation in fair market value
of shares of the Company's common stock ("Stock Appreciation Rights" or
"SARS"); (3) outright grants of shares of the Company's common stock,
subject to transfer restrictions and risk of forfeiture for a specified
restriction period ("Restricted Stock") and which may, but need not be,
conditional upon the attainment of specified Performance Measures; (4)
rights to receive (a) shares of the Company's common stock, or in lieu of
all or any portion of those shares, their fair market value ("Performance
Shares") or (b) a specified dollar amount or, in lieu of all or any portion
of that amount, shares of the Company's common stock having the same fair
market value ("Performance Awards"), both conditional upon the attainment
during a specified performance period of specified Performance Measures;
(5) rights to receive the Company's common stock or cash or other property
equal in value to dividends paid with respect to a specified number of
shares of common stock, and which may, but need not be, conditional upon
the attainment of specified Performance Measures ("Dividend Equivalents");
and (6) other stock-based awards which are denominated or payable in,
valued in whole or in part by reference to, or otherwise based on or
related to, shares of the Company's common stock ("Other Stock-Based
Awards"). Options meeting the requirements of Code Section 422 and
intended to be afforded the federal income tax treatment of Section 422
options ("Incentive Stock Options" or "ISOs"), as well as other Options
("Nonqualified Stock Options" or "NSOs"), may be awarded under the Plan.
SARs granted under the Plan may be awarded either in tandem with Options
("Tandem SARs") or standing alone ("Freestanding SARs").

The full text of the Plan is attached to this Proxy Statement as
Exhibit A. The discussion which follows provides additional information
concerning the Plan. Because the discussion is in the nature of a summary
and does not cover all aspects of the Plan, shareholders may wish to review
Exhibit A in its entirety.

Shares Available for Award and Limits on SARs. Shares used for awards
under the Plan may be authorized but unissued shares of the Company's
common stock or may be shares of common stock acquired on the open market,
in private transactions or otherwise, or issued and outstanding shares
acquired by or on behalf of the Company in the name of an awardee (or a
permissible successor thereof) for purposes of granting or settling the
award or may be a combination of these methods. Subject to adjustment as
provided in the Plan, the number of shares of the Company's common stock
that may be (I) issued or transferred upon the exercise of Options or Stock
Appreciation Rights, (ii) awarded as Restricted Stock and released from
substantial risk of forfeiture, (iii) issued or transferred as Dividend
Equivalents, or (iv) issued or transferred in payment of Performance
Shares, Performance Awards or Other Stock-Based Awards which have been
earned, shall not in the aggregate exceed 7,000,000 shares.

Upon the payment of any portion of any exercise price by the transfer
to the Company of the Company's common stock or upon related satisfaction
of tax withholding obligations or any other payment made or benefit
realized under the Plan by the transfer or relinquishment of the Company's
common stock, there shall be deemed to have been issued or transferred only
the net number of shares actually issued or transferred by the Company less
the number of shares so transferred or relinquished. However, the number
of shares actually issued or transferred by the Company upon the exercise
of Incentive Stock Options shall not exceed 7,000,000 subject to adjustment
as provided for in the Plan.

Upon the payment in cash of a benefit provided by any award under the
Plan, any shares of the Company's common stock that were covered by that
award shall again be available for issuance or transfer under the Plan.

No employee shall be granted Options for more than 500,000 shares of
the Company's common stock or Stock Appreciation Rights during any calendar
year, subject to adjustment pursuant to the Plan. No employee shall
receive awards of Restricted Stock, Dividend Equivalents, Performance
Shares and Performance Awards, and Other Stock-Based Awards having an
aggregate value as of their respective dates of grant in excess of
$3,000,000 in any calendar year.

Administration and Eligibility. The Plan will be administered by the
Committee (as the term is defined on page __). All of the Committee
members must be non-employee directors of the Company's Board who are
disinterested persons under Rule 16b-3 promulgated under the 1934 Act and
successor rules.

The group of employees of the Company and its subsidiaries who would
be eligible to receive awards consists of officers, employees who are
employed in a significant executive, supervisory, administrative,
operational, or professional capacity, and employees who have the potential
to contribute to the future success of the Company or its subsidiaries.
However, the Committee would have exclusive authority to determine, in its
sole discretion, those eligible employees to whom awards would be granted
at any time, as well as the type, size, and other terms and conditions of
each granted award, subject only to the parameters in the Plan. The
Committee may make grants to employees under any or a combination of all of
the various categories of awards that are authorized under the Plan.

Performance Measures. Performance Measures are criteria and
objectives determined by the Committee which (1) in the case of Performance
Shares, Performance Awards or Dividend Equivalents, the attainment of which
during the applicable performance period would be a pre-condition to
settlement of the award and (2) in the case of Restricted Stock, the
failure to attain which would cause forfeiture of the award and/or which if
met during the otherwise applicable restriction period would cause an early
termination of the restriction period. Performance Measures applicable to
any award to an employee who is, or is determined by the Committee likely
to become, a "covered employee" within the meaning of Code Section
162(m)(3) shall be established in writing within the period required by
Code Section 162(m) and shall be limited to criteria and objectives related
to (1) the Company's or a subsidiary's performance, efficiency, or
profitability including, but without limitation, stock price, total
shareholder return, market share, sales, earnings per share, costs, net
operating income, cash flow, fuel cost per million BTU, costs per kilowatt
hour, retained earnings, or return on equity; and/or (2) a covered
employee's performance which criteria shall be based on objective or, with
respect to separate awards under the Plan, subjective performance criteria
pertaining to a covered employee's individual effort as to enhancement of
either individual performance or achievement or attainment of the
performance, efficiency or profitability of the Company or its
subsidiaries. However, the Committee may impose any other subjective or
objective criteria it may approve from time to time for the purpose of
reducing the amount otherwise payable upon settlement of Dividend
Equivalents, Performance Shares or Performance Awards or for the purpose of
increasing the number of shares of Restricted Stock that would otherwise be
forfeited during the applicable Restriction Period. Except in the case of
such a covered employee, if the Committee determines that a change in the
business, operation, corporate structure or capital structure of the
Company or any of its subsidiaries, or the manner in which it conducts its
business, or other events or circumstances render the Performance Measures
to be unsuitable, the Committee may modify such Performance Measures, in
whole or in part, as the Committee deems appropriate and equitable.

Options. The Committee may grant Options that entitle the optionee to
purchase shares of the Company's common stock at a price equal to the "fair
market value" on the date of grant. The "fair market value" of a share of
common stock means the average of the high and low sales prices of a share
of common stock on the date of grant, or on the preceding trading day if
that date was not a trading date, as reported by the "NYSE-Composite
Transactions" published in The Wall Street Journal. Any Options granted
must be evidenced by a written agreement. The option price is payable at
the time of exercise (I) in cash or cash equivalent, (ii) by the transfer
to the Company of nonforfeitable, unrestricted shares of the Company's
common stock that are already owned by the optionee, (iii) with any other
legal consideration the Committee may deem appropriate, or (iv) by any
combination of these methods.

Payment of the exercise price of any Nonqualified Stock Option may
also be made in whole or in part in the form of shares of Restricted Stock
or other shares of the Company's common stock that are subject to risk of
forfeiture or restriction on transfer. When paid for with such
consideration, unless otherwise determined by the Committee on or after the
date of the grant, shares of the Company's common stock received by the
optionee upon the exercise of the NSO are subject to the same risks of
forfeiture and restrictions on transfer applied to the consideration
surrendered by the optionee. However, such risks of forfeiture and
restriction on transfer shall apply only to the same number of shares of
the Company's common stock surrendered by the optionee. The Committee has
the authority to specify at the time Options are granted that the shares of
the Company's common stock will not be accepted in payment of the option
price until they have been owned by the optionee for a specified period;
however, the Plan does not require any such holding period and would permit
immediate sequential exchanges of shares of common stock at the time of
exercise of the Options.

No Option may be exercised more than ten years from the date of grant.
Successive grants may be made to the same optionee regardless of whether
Options previously granted to him or her remain unexercised.

Stock Appreciation Rights. Any SARs granted under the Plan must be
evidenced by a written agreement. In the case of Freestanding SARs, the
written agreement would specify the number of SARs granted, the term of the
SARs (which may not exceed ten years from the date of grant), and the time
or times at which the SARs will first become exercisable. In the case of
Tandem SARs, the written agreement would specify the Option and the number
of shares to which the SAR relates and the term of the SAR (which may not
exceed that of the related Option). Freestanding SARs may (but need not)
be made immediately exercisable. A Tandem SAR generally will be
exercisable during its term only when and to the extent the related Option
is exercisable. During the lifetime of the grantee of either type of SAR,
the SAR would be exercisable only by the grantee or the grantee's legal
representative.

For each Freestanding SAR subsequently exercised, the holder would
become entitled to receive the excess of fair market value of a share of
the Company's common stock on the date of exercise over its fair market
value on the date the SAR was granted. Exercise of a Tandem SAR would
entitle the holder to receive the excess of the aggregate fair market value
on the exercise date of the number of optioned shares of the Company's
common stock with respect to which the SAR is being exercised over their
aggregate fair market value on the date the related Option was granted.
Exercise of a Tandem SAR would have the effect of reducing the number of
shares covered by the related Option by the number with respect to which
the SAR is exercised, and exercise of the related Option would have the
equivalent effect upon a Tandem SAR. Exercised SARs may be settled in
cash, whole shares of the Company's common stock (valued at date of
exercise), or a combination of cash and such shares, unless the applicable
SAR agreement further limits the form of settlement. If the form of
settlement is not specified in the SAR agreement, the holder, at the time
of exercise, may request the form he or she wishes to receive, but the
Committee will have the ultimate authority, in its discretion, to approve
or disapprove any such request. In the absence of such a request, the
Committee also would determine the form of settlement.

Restricted Stock. A grant of Restricted Stock involves the immediate
transfer by the Company to an employee of ownership of a specific number of
shares of the Company's common stock that are subject to a risk of
forfeiture in consideration of the performance of services. During the
applicable restriction period, the awardee of Restricted Stock would have
all the voting, dividend, and other rights of a record holder of the
Company's common stock, except that the shares would be nontransferable,
and that any non-cash dividends or other distributions paid upon the shares
would be held by the Company and would be subject to transfer restrictions
and risk of forfeiture to the same extent as the shares themselves. The
transfer may be made without additional consideration or in consideration
of a payment by the employee equal to or less than its fair market value.
The general terms and conditions of any award of Restricted Stock must be
set forth in a written agreement, specifying the number of shares subject
to the award and the restriction period(s) established by the Committee
with respect to those shares, which must be at least three years from date
of grant, except in the case of awards that are subject to Performance
Measures (in which case the restriction period shall be at least one
year). At the time of the grant, the Committee may provide for forfeiture
of shares covered thereby if specified Performance Measures are not
attained during a restriction period and/or for early termination of a
restriction period.

Restricted Stock must be subject to a "substantial risk of forfeiture"
within the meaning of Code Section 83 for a period to be determined by the
Committee. An example would be a provision that the Restricted Stock would
be forfeited if the participant ceased to serve the Company as an officer
or other key employee during a specified period of years. In order to
enforce these forfeiture provisions, the transferability of Restricted
Stock will be prohibited or restricted in a manner and to the extent
prescribed by the Committee for the period during which the forfeiture
provisions are to continue.

Performance Shares and Performance Awards. Any grant of Performance
Shares or a Performance Award shall be evidenced by a written agreement.
An employee will be given one or more Performance Measures to meet within a
specified performance period. If by the end of the performance period the
employee has achieved the specified Performance Measures, the employee will
be deemed to have fully earned the Performance Shares or Performance
Awards. To the extent earned, the Performance Shares or Performance Awards
will be paid to the employee at the time and in the manner determined by
the Committee in cash, shares of the Company's common stock or any
combination thereof.

Dividend Equivalents. Any award of Dividend Equivalents shall be
evidenced by a written agreement. The agreement shall set forth the
circumstances (including any applicable Performance Measures) under which,
and specify the number, if any, of, shares of the Company's common stock or
the amount of cash that shall then become payable to the awardee. The
Committee shall determine the timing of the award.

Other Stock-Based Awards. The Committee may grant Other Stock-Based
Awards (awards other than a Dividend Equivalents, Options, Performance
Shares, Performance Awards, Restricted Stock or SARs). Other Stock-Based
Awards shall be evidenced by a written agreement or by other methods as
determined by the Committee. The agreement shall set forth the
circumstances (including any applicable Performance Measures) under which,
and specify the number, if any, of shares of the Company's common stock or
the amount of cash that shall then become payable to the awardee. The
Committee shall determine the timing of the award.

Effects of a Change in Control of the Company. In the event of a
"change in control" (as defined below) of the Company, unless otherwise
provided in the related written agreement pertaining to the award, (I) each
unexpired Option and Stock Appreciation Right shall be immediately
exercisable, (ii) all restrictions (other than those imposed by law) and
conditions of all Restricted Stock, Dividend Equivalents and Other Stock-Based
Awards shall be deemed fully satisfied, and (iii) all Performance
Measures of all Performance Shares and Performance Awards, Dividend
Equivalents and Other Stock-Based Awards shall be deemed fully satisfied at
the maximum criteria levels. For this purpose, a "change in control" will
occur if: (1) any person or group becomes the beneficial owner of more
than 50% of the then outstanding voting stock of the Company otherwise than
through a transaction approved by the Board, (2) the Company's shareholders
either (a) approve an agreement to merge or consolidate the Company with or
into another corporation and the Company or one of its subsidiaries will
not be the surviving company or (b) the sale of at least substantially all
of the Company's assets other than in a merger or sale that will result in
the Company's voting securities that were outstanding prior to the merger
or sale continuing to represent at least 50% of the combined voting power
of the corporation surviving the merger or purchasing the assets, or (3)
during any period of two consecutive years, individuals who at the
beginning of the period constitute the Board (and any new director whose
election by the Board or whose nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds of the directors
still in office who either were directors at the beginning of the period or
whose election or nomination was previously so approved) cease to
constitute a majority of the Board.

Tax Withholding. Unless otherwise provided in the applicable
agreement concerning an award, the Plan would permit awardees to satisfy
tax withholding requirements in connection with the exercise, vesting or
settlement of an award, (1) entirely in cash; (2) subject to Committee
approval, by delivery to the Company of a number of shares of the Company's
common stock which have an aggregate fair market value as of the tax
withholding date sufficient to satisfy all withholding requirements; (3)
subject to Committee approval, authorizing the Company to withhold shares
otherwise issuable pursuant to the award sufficient to satisfy all such
requirements; or (4) by a combination of these methods. The Company and
the employee may also make similar arrangements with respect to the payment
of taxes with respect to which withholding is not required.

Transferability. No option, or other "derivative security" within the
meaning of Rule 16b-3, is transferable by an employee except by will or the
laws of descent and distribution. Options may not be exercised during an
employee's lifetime except by the employee, or in the event of an
employee's incapacity by the employee's guardian or legal representative
acting in a fiduciary capacity on behalf of the employee under state law
and judicial supervision; however, the Committee, in its sole discretion,
may provide for the transferability of specific awards so long as such
provision will not disqualify the exemption for other awards under Rule
16b-3.

Duration, Amendment, and Termination. The Plan is intended to be of
indefinite duration. However, the provisions of the Code currently
applicable to ISOs would not permit the grant of ISOs under the Plan after
the tenth anniversary of its effective date.

The Company, at any time by action of the Board, may terminate,
modify, or amend the Plan in whole or in part, except that the provisions
of the Plan relating to the effect of a "change in control" of the Company
may not be amended for three years following a "change in control." No
such action may, without the approval of the Company's shareholders, (1)
increase the maximum number of shares of common stock that may be issued in
respect of awards under the Plan, (2) change the class of employees
eligible to participate in the Plan, or (3) cause the Plan to no longer
comply with Rule 16b-3 of the 1934 Act or any other regulatory
requirements.

New Plan Benefits. To date, no awards of any kind have been granted
under the Plan.

Federal Income Tax Consequences Of Plan

The following is a brief summary of certain of the federal income tax
consequences of the Plan. The summary reflects the federal tax law as in
effect on January 1, 1996, and does not reflect any provisions of the
income tax laws of any state or local jurisdiction. This summary is not
intended to be exhaustive.

Incentive Stock Options. No income generally will be recognized by an
optionee upon the grant or exercise of an Incentive Stock Option. If
shares of common stock are issued to an optionee pursuant to the exercise
of an Incentive Stock Option and no disqualifying disposition of the shares
is made by the optionee within two years after the date of grant or within
one year after the transfer of the shares to the optionee, then upon the
sale of the shares any amount realized in excess of an option price will be
taxed to the optionee as long-term capital gain and any loss sustained will
be a long-term capital loss.

If shares acquired upon the exercise of an Incentive Stock Option are
disposed of prior to the expiration of either holding period described
above, the optionee generally will recognize ordinary income in the year of
disposition in an amount equal to any excess of the fair market value of
the shares at the time of exercise (or, if less, the amount realized on the
disposition of the shares if a sale or exchange) over the option price paid
for the shares. Any further gain (or loss) realized by the optionee
generally will be taxed as short-term or long-term capital gain (or loss)
depending on the holding period.

Nonqualified Stock Options. In general: (I) no income will be
recognized by an optionee at the time an NSO is granted; (ii) at the time
of exercise of an NSO, ordinary income will be recognized by the optionee
in an amount equal to the difference between the option price paid for the
shares and the fair market value of the shares if they are nonrestricted on
the date of exercise; and (iii) at the time of sale of shares acquired
pursuant to the exercise of an NSO, any appreciation (or depreciation) in
the value of the shares after the date of exercise will be treated as
either short-term or long-term capital gain (or loss) depending on how long
the shares have been held.

Stock Appreciation Rights. No income will be recognized by a holder
in connection with the grant of a Tandem SAR or a Freestanding SAR. When
the SAR is exercised, the recipient normally will be required to include as
taxable ordinary income in the year of exercise an amount equal to the
amount of cash received and the fair market value of any nonrestricted
share of the Company's common stock received on the exercise.

Restricted Stock. A recipient of Restricted Stock generally will be
subject to tax at ordinary income rates on the fair market value of the
shares of Restricted Stock (reduced by any amount paid by the recipient for
such shares) at such time as the shares are no longer subject to a risk of
forfeiture or restrictions on transfer for purposes of Code Section 83.
However, a recipient who so elects under Code Section 83(b) within 30 days
of the date of transfer of the shares will have taxable ordinary income on
the date of transfer of the shares equal to the excess of the fair market
value of the shares (determined without regard to the risk of forfeiture or
restrictions on transfer) over any purchase price paid for the shares. If
a Section 83(b) election has not been made, any dividends received with
respect to shares of Restricted Stock that are subject at that time to a
risk of forfeiture or restrictions on transfer generally will be treated as
compensation that is taxable as ordinary income to the recipient.

Performance Shares, Performance Awards, Other Stock-Based Awards and
Dividend Equivalents. No income generally will be recognized upon the
grant of Performance Shares, Performance Awards, Other Stock-Based Awards
or Dividend Equivalents. Upon payment in respect of the earn-out of
Performance Shares, Performance Awards, Other Stock-Based Awards or
Dividend Equivalents, the recipient generally will be required to include
as taxable ordinary income in the year of receipt an amount equal to the
amount of cash received and the fair market value of any nonrestricted
shares of the Company's common stock received.

Special Rules Applicable to Officers. In limited circumstances where
the sale of stock that is received as the result of a grant of an award
could subject an officer to suit under Section 16(b) of the 1934 Act, the
tax consequences to the officer may differ from the tax consequences
described above. In these circumstances, unless a special election has
been made, the principal difference usually will be to postpone valuation
and taxation of the stock received so long as the sale of the stock
received could subject the officer to suit under Section 16(b) of the 1934
Act, but not longer than six months.

Tax Consequences to the Company. To the extent that an employee
recognizes ordinary income in the circumstances described above, the
Company or the subsidiary for which the employee performs services will be
entitled to a corresponding deduction provided that, among other things,
the income meets the test of reasonableness, is an ordinary and necessary
business expense, is not an "excess parachute payment" within the meaning
of Code Section 280G, and is not disallowed by the one million dollar
limitation on certain executive compensation.

The Board Recommends Voting FOR this Proposal, which is Designated in
the Proxy as Item 2.

ITEM 3. PROPOSED AMENDMENT TO THE CINERGY CORP. ANNUAL
INCENTIVE PLAN

Introduction

The Company's Annual Incentive Plan, as adopted effective October
24, 1994, is a short-term incentive compensation plan designed to benefit
eligible employees of the Company and its subsidiaries. The plan rewards the
Company's officers and other key employees for meeting established
individual, group, and corporate goals. Employees who participate in this
plan are granted awards payable in cash to the extent predetermined goals are
attained within the calendar year. The awards are payable during March
following the year for which the awards are earned. Awards are based on a
percentage of a participant's annual base salary. (For more information,
please refer to the discussion pertaining to the Annual Incentive Plan on
page __ .)

Effective January 1, 1996, the plan was amended by the Board, subject to
approval by the Company's shareholders, with respect to certain provisions of
the plan pertaining to distribution of awards and the maximum amount of award
available to individual officers.

Vote Required

Assuming the presence of a quorum at the Annual Meeting, approval
of the amendment to the plan will require the affirmative vote of the
holders of a majority of the shares of the Company's common stock present
in person or represented by proxy and entitled to vote thereat.
Abstentions of the shares so present and entitled to vote will have the
same effect as shares voted against the amendment. Broker non-votes will
not be considered present for purposes of voting on adoption of the
amendment and, accordingly, will have no effect on the outcome of the vote.

Explanation of Amendment

On December 20, 1995, the Internal Revenue Service promulgated final
regulations relating to the disallowance of deductions for employee
remuneration in excess of one million dollars. Consistent with the final
regulations, the proposed amendment to Article 20 states, as to objective
corporate and objective individual goals, the maximum dollar amount of
compensation that can be paid to a "covered employee" under the plan.
Previously, the maximum award was expressed as a percentage of annual base
salary. The term "covered employee" includes each of the named executive
officers for the applicable year. The amendment also adds total shareholder
return as an example of objective performance criteria which can constitute
corporate goals under the plan.

Effect of Amendment

ARTICLE 20, as amended.

ARTICLE 20, as hereby amended, reads as follows:

ARTICLE 20

EXECUTIVE OFFICERS

Notwithstanding any provision of the Plan to the contrary, this Article
will govern the terms of the Annual Performance Awards granted to Executive
Officers. This Article is designed to comply with Code Subsection 162(m) to
the extent applicable. All provisions in this Article, and any other
applicable provision of the Plan, shall be construed in a manner to so
comply.

(a) With respect to Executive Officers, the Plan shall be administered
by a committee (the "AIP Committee") consisting of two or more persons each
of whom is an "outside director" for purposes of Code Subsection 162(m). The
AIP Committee and Cinergy's Committee may be the same committee provided that
the membership of Cinergy's Committee satisfies the conditions set forth in
the preceding sentence.

With respect to Participants who are Executive Officers as of the
beginning of a Performance Period, the AIP Committee shall establish the
Corporate Target Goals and Individual Goals for each Performance Period
within the time necessary to satisfy the requirements of Code Subsection
162(m). Corporate Target Goals shall be based on objective performance
criteria pertaining to an Employer's performance, efficiency, or
profitability including, but without limitation, stock price, total
shareholder return, market share, sales, earnings per share, costs, net
operating income, cash flow, fuel cost per million BTU, costs per kilowatt
hour, retained earnings, or return on equity. Individual Goals shall be
based on objective or, with respect to separate awards under the Plan,
subjective performance criteria pertaining to an Executive Officer's
individual effort as to enhancement of either individual performance or
achievement or attainment of Corporate Target Goals or other Individual
Goals. Further, in the case of Participants who are Covered Employees as of
the end of the Performance Period, unless otherwise determined by the AIP
Committee, or unless otherwise designated as separate awards based on
subjective performance criteria, payments shall be made only after
achievement of the applicable performance goals has been certified by the AIP
Committee. In no event shall payment in respect of Annual Performance Awards
based on Corporate Target Goals and objective Individual Goals granted for a
Performance Period be made to a Participant who is a Covered Employee as of
the end of a Performance Period in an amount that exceeds one million
dollars.

The Board Recommends Voting FOR this Proposal, which is Designated in
the Proxy as Item 3.

Relationship with Independent Public Accountants

The independent public accountants for the Company and its
subsidiaries for the year 1995 were Arthur Andersen LLP, with offices both
in Cincinnati, Ohio and Indianapolis, Indiana. Upon recommendation of the
Audit Committee of the Board, Arthur Andersen LLP was employed for the year
1996 by the Board on January 25, 1996. Representatives of Arthur Andersen
LLP are expected to be present at the Annual Meeting with the opportunity
to make a statement if they desire to do so, and will be available to
respond to appropriate questions.

Proposals by Shareholders

In order to be considered for inclusion in the Company's Proxy
Statement for the 1997 Annual Meeting of Shareholders, proposals from
shareholders must be received by the Secretary of the Company at 139 East
Fourth Street, Cincinnati, Ohio 45202 not later than November 15, 1996.

By Order of the Board of Directors

Cheryl M. Foley
Secretary

Dated: March 15, 1996

EXHIBIT B-3
DRAFT

PROXY CINERGY CORP. PROXY

The undersigned hereby appoints Jackson H. Randolph, James E.
Rogers, and J. Wayne Leonard, or any of them, as proxies, each with the
power to appoint his substitute, and hereby authorizes them to represent
and to vote as designated hereon and in their discretion with respect to
any other business properly brought before the Annual Meeting, all the
shares of common stock of Cinergy Corp. which the undersigned is entitled
to vote at the Annual Meeting of Shareholders to be held on April 26, 1996
or any adjournment(s) or postponement(s) thereof.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. This
proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder(s). If no direction is made, the proxy will be
voted "FOR" Item 1, "FOR" Item 2, and "FOR" Item 3.

Indicate your vote by an (X). The Board of Directors recommends
voting FOR Item 1, FOR Item 2, and FOR Item 3.

ITEM

1. Election of Directors / / FOR - ALL Nominees / / WITHHELD - ALL
Nominees
(except as marked to the contrary below)

Nominees: Class II - Melvin Perelman, Thomas E. Petry, Jackson H.
Randolph, Philip R. Sharp, Van P. Smith, and Dudley S. Taft

2. Adoption of Cinergy Corp. 1996 Long-Term Incentive Compensation Plan
/ / FOR / / AGAINST / / ABSTAIN

3. Adoption of Proposed Amendment to Cinergy Corp. Annual Incentive Plan
/ / FOR / / AGAINST
/ / ABSTAIN

(Continued and to be signed and dated on the reverse side and
returned promptly in the enclosed envelope.)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED IN
ACCORDANCE WITH INSTRUCTIONS APPEARING ON THE PROXY. IN THE ABSENCE OF
SPECIFIC INSTRUCTIONS, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS, AND IN THE DISCRETION OF THE
PROXY HOLDERS AS TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE
ANNUAL MEETING.

Please check box if
you plan to attend / /
the Annual Meeting.

Signature(s): Dated ,1996
Please sign exactly as name(s) appear on this proxy, and date this
proxy. If joint account, each joint owner should sign. If signing
for a corporation or partnership or as agent, attorney or fiduciary,
indicate the capacity in which you are signing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

EXHIBIT B-4
DRAFT

EXHIBIT A

CINERGY CORP.
1996 LONG-TERM INCENTIVE COMPENSATION PLAN

INTRODUCTION

On January 25, 1996, Cinergy Corp. adopted, subject to shareholder
approval, a long-term incentive compensation plan known as the "Cinergy
Corp. 1996 Long-Term Incentive Compensation Plan" (the "Plan") for the
exclusive benefit of eligible employees of Cinergy Corp. and its
subsidiaries. The plan is a stock- and cash- based plan under which
certain eligible employees of Cinergy Corp. and its subsidiaries may be
granted awards payable in either common stock of Cinergy Corp. or cash.
Awards may consist of grants of incentive stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended, stock
options that do not constitute incentive stock options, cash amounts in
connection with certain options that do not constitute incentive stock
options, stock appreciation rights, restricted stock, performance awards
payable in cash or shares of common stock, dividend equivalents, or other
stock-based awards. The Plan, effective as of June 1, 1996, is set forth
in its entirety.

ARTICLE 1
DEFINITIONS

Whenever used in this document, the following terms shall have the
respective meanings set forth below, unless a different meaning is
plainly required by the context:

1.1 "Award" means an Option (which may be designated as an ISO or an NSO),
a Stock Appreciation Right (which may be designated as a Freestanding SAR or
a Tandem SAR), Restricted Stock, Performance Shares, Performance Awards,
Dividend Equivalents, Other Stock-Based Awards, or any other right or
interest relating to Common Stock or cash, granted to a Participant under the
Plan. Each Award shall be evidenced by an Award Agreement.

1.2 "Award Agreement" means a written agreement, in a form approved by the
Committee, which sets forth the terms and conditions of an Award. An Award
Agreement shall be subject to the express terms and conditions set forth in
the Plan, and to other terms and conditions not inconsistent with the Plan as
the Committee shall deem appropriate.

1.3 "Chief Executive Officer" means the Employee elected by Cinergy's Board
of Directors to serve as the chief executive officer of Cinergy.

1.4 "Cinergy" means Cinergy Corp., a Delaware corporation, and any
corporation which shall succeed to its business as described in Article 22
(Continuance by a Successor).

1.5 "Cinergy's Board of Directors" means the duly constituted board of
directors of Cinergy on the applicable date.

1.6 "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and interpretive rulings and regulations.

1.7 "Committee" means the duly designated Compensation Committee of
Cinergy's Board of Directors.

1.8 "Common Stock" means any authorized share of ownership of Cinergy
represented by a common stock certificate, with par value of $.01 per share,
or any other appropriate instrument evidencing the same.

1.9 "Covered Employee" shall have the meaning set forth in Code Paragraph
162(m)(3).

1.10 "Date of Grant" means the date specified by the Committee pursuant to
Section 4.1 (Committee as Administrator) on which a grant of an Award shall
become effective, which shall not be earlier than the date on which the
Committee takes action with respect to that grant.

1.11 "Dividend Equivalent" means an Award that confers upon the Employee a
right to receive cash, Common Stock, other Awards or other property equal in
value to dividends paid with respect to a specified number of shares of
Common Stock.

1.12 "Employee" means any person in the employ of an Employer.

1.13 "Employer" means Cinergy and all of its directly or indirectly held
majority or greater-owned subsidiaries.

1.14 "Fair Market Value" means, with respect to a share of Common Stock, the
average of the high and low sales prices of a share of Common Stock on the
Date of Grant, or on the preceding trading day if that date was not a trading
date, as reported by the "NYSE - Composite Transactions" published in The
Wall Street Journal.

1.15 "Freestanding SAR" means a right, granted pursuant to this Plan without
reference or relationship to any Option, of an Employee to receive cash,
shares of Common Stock, or a combination thereof, as the case may be, having
an aggregate value equal to the excess of the Fair Market Value of one share
of Common Stock on the date of exercise of the SAR over the Fair Market Value
of one share of Common Stock on the Date of Grant of the SAR.

1.16 "ISO" means an incentive stock option within the meaning of Code
Section 422.

1.17 "1934 Act" means the Securities Exchange Act of 1934, as amended from
time to time, and interpretive rulings and regulations.

1.18 "NSO" means a stock option that does not constitute an incentive stock
option within the meaning of Code Section 422.

1.19 "Option" means an ISO and/or an NSO as the context requires.

1.20 "Optionee" means any Employee who has been granted an Option or Stock
Appreciation Right by the Committee pursuant to the Plan.

1.21 "Option Price" means, with respect to each share of Common Stock
subject to an Option, the price fixed by the Committee at which the share may
be purchased pursuant to the exercise of the Option.

1.22 "Other Stock-Based Award" means an Award other than an Option,
Performance Share, Performance Award, Dividend Equivalent, Restricted Stock
or SAR that is denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, shares of Common Stock.

1.23 "Performance Awards" means an Award conferring the right, contingent
upon attainment of Performance Measures within a Performance Period, to
receive (a) a specified dollar amount or, in lieu of all or any portion of
such amount, (b) shares of Common Stock having the same Fair Market Value or
(c) the same number of shares of Restricted Stock.

1.24 "Performance Measures" means (1) in the case of Dividend Equivalents,
Performance Shares or Performance Awards, those criteria and objectives
determined by the Committee the attainment of which during the applicable
Performance Period would be a pre-condition to settlement of the Award, and
(2) in the case of Restricted Stock, those Committee-determined criteria and
objectives (if any) which, if not met during the applicable Restriction
Period, would cause a forfeiture of the Award and/or which, if met during the
otherwise applicable Restriction Period, would cause an early termination of
the Restriction Period. The Performance Measures applicable to any Award to
an Employee who is, or is determined by the Committee to be likely to become,
a Covered Employee shall be established in writing not later than 90 days
after the commencement of the Performance Period, or such other time as may
be prescribed by Code Subsection 162(m), and shall be limited to criteria and
objectives related to (1) an Employer's performance, efficiency, or
profitability including, but without limitation, stock price, total
shareholder return, market share, sales, earnings per share, costs, net
operating incomes, cash flow, fuel cost per million BTU, costs per kilowatt
hour, retained earnings, or return on equity; and/or (2) a Covered Employee's
performance, which criteria shall be based on objective or, with respect to
separate awards under the Plan, subjective performance criteria pertaining to
a Covered Employee's individual effort as to enhancement of either individual
performance or achievement or attainment of an Employer's performance,
efficiency or profitability. However, the Committee may impose any other
subjective or objective criteria it may approve from time to time for the
purpose of reducing the amount otherwise payable upon settlement of Dividend
Equivalents, Performance Shares or Performance Awards or for the purpose of
increasing the number of shares of Restricted Stock that would otherwise be
forfeited during the applicable Restriction Period. Except in the case of a
Covered Employee, if the Committee determines that a change in the business,
operation, corporate structure or capital structure of Cinergy, or the manner
in which it conducts its business, or other events or circumstances render
the Performance Measures to be unsuitable, the Committee may modify the
Performance Measures, in whole or in part, as the Committee deems appropriate
and equitable.

1.25 "Performance Period" means the period designated by the Committee
during which the Performance measures applicable to Performance Shares or
Performance Awards shall be measured. The Performance Period shall be
established on the Date of Grant of the Performance Shares or Performance
Awards. The duration of Performance Periods may vary, but shall not be less
than one year in duration.

1.26 "Performance Shares" means the right, contingent upon attainment of
Performance Measures within a Performance Period, to receive a specified
number of shares of Common Stock, which may be in the form of Restricted
Stock, or, in lieu of all or any portion of those shares, their Fair Market
Value in cash.

1.27 "Plan" means the long-term incentive compensation plan known as the
"Cinergy Corp. 1996 Long-Term Incentive Compensation Plan," as amended from
time to time. Effective as of June 1, 1996, this document sets forth the
Plan.

1.28 "Restriction Period" means the period designated by the Committee
during which Restricted Stock shall be subject to a substantial risk of
forfeiture and may not be sold, exchanged, assigned, transferred, pledged,
hypothecated or otherwise encumbered or disposed of, except as otherwise
provided in the Plan.

1.29 "Restricted Stock" means any shares of Common Stock issued pursuant to
the Plan subject to a substantial risk or forfeiture pursuant to Code Section
83 and to the restriction that they may not be sold, exchanged, assigned,
transferred, pledged, hypothecated or otherwise encumbered or disposed of,
except as otherwise provided in the Plan, prior to termination of a
Restriction Period. The restrictions may or may not be performance-based as
deemed appropriate by the Committee. Restricted Stock shall constitute
issued and outstanding shares of Common Stock for all corporate purposes.

1.30 "Stock Appreciation Right" or "SAR" means any Freestanding SAR or
Tandem SAR as the context requires.

1.31 "Tandem SAR" means a right, granted under this Plan, pursuant to which
a holder may elect to surrender an Option, or any portion thereof, that is
then exercisable, and receive in exchange therefor shares of Common Stock,
cash, or a combination thereof, as the case may be, with an aggregate value
equal to the excess of the Fair Market Value of one share of Common Stock at
the time of exercise over the per share Exercise Price specified in the
Option, multiplied by the number of shares of Common Stock covered by the
Option, or portion thereof, that is so surrendered.
The use of singular words is for practical purposes only and shall be deemed
to include the plural unless the context plainly indicates a distinction.
Certain other definitions, as required, appear in the following Articles of
the Plan.

ARTICLE 2
EFFECTIVE DATE OF PLAN

The Plan's provisions, as set forth in this document, are effective as
of June 1, 1996.

ARTICLE 3
PURPOSE OF PLAN

The Plan's purposes are to benefit shareholders of Cinergy by
encouraging and enabling the acquisition of a proprietary interest, or
to increase the proprietary interest, in Cinergy by officers and other
Employees, and to aid in attracting and retaining qualified employees,
to provide long-term incentives for sustained high levels of performance
by those persons, and to strengthen their desire to remain in the employ
or service of their Employer.

ARTICLE 4
ADMINISTRATION

4.1 Committee as Administrator.

The Plan shall be administered by the Committee which shall be comprised
of not fewer than three members of Cinergy's Board of Directors.
Members of the Committee shall be members of Cinergy's Board of
Directors who are disinterested persons under Rule 16b-3 promulgated
under the 1934 Act and successor rules ("Rule 16b-3") and, with respect
to Covered Employees, outside directors under Code Subsection 162(m).
Subject to the Plan's terms, the Committee shall have the exclusive
authority to grant Awards to Employees under the Plan, to select the
Employees to receive Awards, to determine the type, size and terms of
the Awards to be made to each Employee selected, to determine the time
when Awards to Employees will be granted, and to prescribe the form of
the Award Agreements embodying Awards made under the Plan. The
provisions and conditions of the grants of Awards, which shall be set
forth in Award Agreements, need not be the same with respect to each
Employee selected or with respect to each Award.

4.2 Committee Authority.

The Committee is authorized to establish any rules and regulations and
appoint any agents as it deems appropriate for the Plan's proper
administration and to make any determinations under and to take any
steps in connection with the Plan as it deems necessary or advisable.
Each determination or other action made or taken pursuant to the Plan,
including interpretation of the Plan and the specific conditions and
provisions of the Awards granted under the Plan by the Committee shall
be final and conclusive for all purposes and upon all persons including,
without limitation, each Employer and each Employer's board of
directors, and the affected Employee, beneficiary, legal representative,
and any other interested parties.

ARTICLE 5
ELIGIBILITY

5.1 Group of Eligible Employees.

The group of Employees eligible to receive Awards shall consist of all
Employees who are officers of an Employer, Employees who are employed
in a significant executive, supervisory, administrative, operational, or
professional capacity by an Employer, or Employees who have the
potential to contribute to the future success of an Employer, including,
without limitation, Employees designated by Cinergy or an Employer as
participants in an Employer's short-term incentive compensation plan.
Notwithstanding the foregoing, no Employee owning (after application of
the ownership rules in Code Subsection 424(d)) shares of stock
possessing more than ten percent of the total combined voting power of
all classes of stock of an Employer or of its parent or subsidiary may
be granted an ISO under the Plan unless at the time the ISO is granted
the Option Price is at least 110 percent of the Fair Market Value of the
stock subject to the ISO and the ISO by its terms is not exercisable
after the expiration of five years from the date the ISO is granted.

5.2 Designation by Committee.

From time to time, Cinergy's Chief Executive Officer may recommend to
the Committee the granting of Awards to any eligible Employee. After
reviewing the recommendations, and after considering the duties of each
recommended Employee, his or her present and potential contribution to
the success of his or her Employer, his or her other compensation
provided by his or her Employer and any other factors as it deems
relevant, the Committee in its sole discretion shall determine whether
to grant Awards to the recommended Employee.

ARTICLE 6
STOCK

6.1 Stock Subject to the Plan.

The stock to be issued, transferred and/or sold under the Plan shall be
shares of Common Stock. Cinergy may use either authorized and unissued
shares of Common Stock or treasury shares of Common Stock acquired on
the open market, in private transactions or otherwise, or issued and
outstanding shares acquired by or on behalf of Cinergy in the name of an
Award recipient (or permissible successor thereof) for purposes of
granting or settling an Award, or a combination of the foregoing.
Subject to adjustment as provided in Article 7 (Adjustment in the Number
of Shares and in Option Price), the aggregate maximum number of shares
that may be (i) issued or transferred upon the exercise of Options or
SARs, (ii) awarded as Restricted Stock and released from substantial
risk of forfeiture thereof, (iii) issued or transferred as Dividend
Equivalents, or (iv) issued or transferred in payment of Performance
Shares, Performance Awards or Other Stock-Based Awards that have been
earned is 7,000,000; provided, however, that with respect to ISOs, any
adjustment shall be made in accordance with Code Section 424.

6.2 Limitation on Grants

Upon the full or partial payment of any Option Price by the transfer to
Cinergy of Common Stock or upon satisfaction of tax withholding
obligations in connection with any Option exercise or any other
payment made or benefit realized under the Plan by the transfer or
relinquishment of Common Stock, there shall be deemed to have been
issued or transferred under the Plan only the net number of shares
of Common Stock actually issued or transferred by Cinergy less the
number of shares of Common Stock so transferred or relinquished.
However, the number of shares of Common Stock actually issued or
transferred by Cinergy upon the exercise of ISOs shall not exceed
the number of shares of Common Stock first specified above in
Section 6.1 (Stock Subject to Plan), subject to adjustment as
provided in that Section and Article 7 (Adjustment in the Number of
Shares and in Option Price).

Upon payment in cash of the benefit provided by any Award granted under
the Plan, any shares of Common Stock that were covered by that
Award shall again be available for issuance or transfer under the
Plan.

Notwithstanding any other provision of the Plan to the contrary, no
Employee shall be granted Options for more than 500,000 shares of
Common Stock or Stock Appreciation Rights during any calendar year,
subject to adjustment as provided in Article 7 (Adjustment in the
Number of Shares and in Option Price).

(d) Notwithstanding any other provision of the Plan to the contrary, in
no event shall any Employee receive awards of Restricted Stock,
Dividend Equivalents, Performance Shares and Performance Awards,
and Other Stock-Based Awards having an aggregate value as of their
respective Dates of Grant in excess of $3,000,000 in any calendar
year.

ARTICLE 7
ADJUSTMENT IN THE NUMBER OF
SHARES AND IN OPTION PRICE

If there is any change in the shares of Common Stock through the
declaration of stock dividends, stock splits, through recapitalization,
merger, consolidation, combination of shares, spin-off, other
significant distribution of assets, or otherwise, the Committee or
Cinergy's Board of Directors shall make an adjustment, if any, as it may
deem appropriate in the number of shares of Common Stock available for
Awards as well as the number of shares of Common Stock subject to any
outstanding Award and the Option Price thereof. Any adjustment may
provide for the elimination of any fractional shares that might
otherwise become subject to any Award without payment therefor.

ARTICLE 8
OPTIONS

8.1 Types of Option.

The Committee may make awards of ISOs and NSOs. The Committee, with
respect to each grant of an Option to an Optionee, shall determine
whether the Option shall be an ISO, and, upon determining that an Option
shall be an ISO, shall designate it as an ISO in the Award Agreement
evidencing the Option. If the Award Agreement evidencing an Option does
not contain a designation that it is an ISO, it shall not be an ISO, but
instead it shall be an NSO. In no event will the exercise of an ISO
affect the right to exercise an NSO, nor shall the exercise of any NSO
affect the right to exercise any ISO. No ISOs shall be granted under
the Plan after ten years from the effective date of the Plan.

The aggregate fair market value (determined in each instance on the Date
of Grant of an ISO) of the Common Stock with respect to which ISOs are
first exercisable by any Optionee in any calendar year shall not exceed
$100,000.00 or any other limit prescribed in the Code for the Optionee.
If any Employer shall adopt a stock option plan under which Options
constituting incentive stock options as defined in Code Subsection
422(b) may be granted, the fair market value of the stock on which any
incentive stock options were granted and the times at which the
incentive stock options shall first become exercisable shall be taken
into account in determining the maximum amount of ISOs that may be
granted to the Optionee in any calendar year.

8.2 Number of Shares Covered.

Each Award Agreement shall specify the number of shares of Common
Stock subject to the pertinent Option.

8.3 Duration of Options.

The duration of Options shall be determined by the Committee. Each
Award Agreement shall specify the period not in excess of ten years
during which the pertinent Option may be exercised, and the Award
Agreement shall provide that the Option shall expire at the end of that
period, and may be subject to earlier termination in the event of a
Change in Control of Cinergy as set forth in Section 21.11 (Change in
Control).

8.4 Option Price.

The Option Price shall be determined by the Committee at the time any
Option is granted, and shall be set forth in the Award Agreement. The
Option Price for NSOs and ISOs shall be no less than 100 percent of the
Fair Market Value of the Common Stock on the Date of Grant.

8.5 Manner of Exercise.

The specified number of shares with respect to which an Option is
exercised shall, subject to applicable tax withholding, be issued
following receipt by Cinergy of (I) written notice of the exercise from
the Optionee (in the form as the Committee shall have specified in the
Award Agreement or otherwise) of an Option delivered to Cinergy's
Secretary or his or her designee, and (ii) payment, as provided in this
document, of the Option Price.

8.6 Payment.

(a) The Option Price shall be paid in full at the time of exercise. No
share shall be issued or transferred until full payment has been received
therefor. Payment may be in (I) cash, (ii) nonforfeitable, unrestricted
shares of Common Stock that are already owned by the Optionee and have a
value at the time of exercise that is equal to the Option Price, (iii) any
other legal consideration that the Committee may deem appropriate, including
without limitation any form of consideration authorized under Subsection 8.6
(b), on such basis as the Committee may determine in accordance with the
Plan, and (iv) any combination of the foregoing. In addition, if the
Optionee is not an officer of Cinergy within the meaning of Section 16 of the
1934 Act, payment may be made in whole or in part by delivering a properly
executed exercise notice together with irrevocable instructions to a broker
to promptly deliver to Cinergy the total Option Price in cash and, if
desired, the amount of any taxes to be withheld from the Optionee's
compensation as a result of the Employer's withholding tax obligation, as
specified in the notice. Cash payment for the shares purchased under an NSO
may be offset by the amount of any Cash Award approved by the Committee. If
payment is made by the delivery of shares of Common Stock, the value of the
shares delivered shall be computed upon the basis of the average of the high
and low sales prices at which shares of Common Stock shall have been sold on
the date the Optionee exercises an Option, or on the preceding trading day if
that date was not a trading day as reported on the "NYSE - Composite
Transactions" as reported in The Wall Street Journal.

(b) Any grant of an NSO may provide that payment of the Option Price
may also be made in whole or in part in the form of shares of Restricted
Stock or other Common Stock that are subject to risk of forfeiture or
restrictions on transfer. Unless otherwise determined by the Committee on or
after the Date of Grant, whenever any Option Price is paid in whole or in
part by means of any of the forms of consideration specified in this
subsection, the Common Stock received by the Optionee upon the exercise of
the NSO shall be subject to the same risk of forfeiture or restrictions on
transfer as those that applied to the consideration surrendered by the
Optionee. However, the risks of forfeiture and restrictions on transfer
shall apply only to the same number of shares of Common Stock received by the
Optionee as applied to the forfeitable or restricted Common Stock surrendered
by the Optionee.

8.7 Other Terms and Conditions.

Subject to the Plan's other provisions, an Option may be exercised at
any time or from time to time during the term of the Option as to any
and all whole shares that have become subject to purchase pursuant to
the terms of the Option or the Plan, but not at any time as to fewer
than 100 shares unless the remaining shares that have become subject to
purchase are fewer than 100 shares. Options may contain any other
provisions, not inconsistent with the Plan's provisions, as the
Committee shall determine appropriate from time to time. The Committee
shall have the authority to grant Options exercisable in full at any
time during their term, or exercisable in installments at any time
during their term as the Committee shall determine. Subject to
Subsection 21.11 (Change in Control), however, no Option shall be
exercisable in whole or in part for a period of 12 months from the day
on which the Option is granted. Installments not purchased in earlier
periods shall be cumulated and be available for purchase in later
periods.

8.8 Effect of Exercise of Option on Tandem SAR

Upon the exercise of an Option with respect to which a Tandem SAR has
been granted, the number of shares of Common Stock with respect to which
the SAR shall be exercisable shall be reduced by the number of shares
with respect to which the Option has been exercised.

ARTICLE 9
STOCK APPRECIATION RIGHTS

9.1 Type of SAR.

Each SAR Award shall specify whether it relates to a Tandem SAR or to
Freestanding SARs.

9.2 Number of Optioned Shares or Freestanding SARs.

In the case of any Tandem SAR, the SAR Award shall specify the Option
and the number of shares of Common Stock subject to the Option to which
the SAR relates. Any SAR Award relating to Freestanding SARs shall
specify the number of such SARs to which it relates.

9.3 Exercise Period.

Each SAR Award shall specify the period during which the pertinent
SAR(s) may be exercised and the Award Agreement shall provide that the
SAR(s) shall expire at the end of each period (or periods) and may be
subject to earlier termination in the event of a Change in Control of
Cinergy, and described in Section 21.11 (Change in Control) or other
similar transaction or event, as provided in the Award Agreement. For
a Freestanding SAR, the expiration date shall be no later than ten years
from the Date of Grant. For Tandem SARs, the expiration date(s) shall
be no later than the date(s) of expiration of the related Option, and a
Tandem SAR shall be exercisable during its term only when and to the
extent the related Option is exercisable. A Freestanding SAR shall be
exercisable only during the period of the grantee's employment with
Cinergy or other Employer and for any post-termination exercise period
as would apply under the Award Agreement for the Option had the
Freestanding SAR Award to the grantee instead been an Award of NSOs.

9.4 Manner of Exercise.

A SAR granted under the Plan shall be exercised by the holder by
delivery to the Corporate Secretary or his or her designee of written
notice of exercise in the form as shall have been specified in the Award
Agreement or otherwise.

9.5 Payment to Holder.

If the form of consideration to be received upon exercise of the Award
is not specified in the Award Agreement, upon the exercise thereof, the
holder may request the form of consideration he or she wishes to receive
in satisfaction of the SAR, which may be in shares of Common Stock
(valued at Fair Market Value on the date of exercise of the SAR), or in
cash, or partly in cash and partly in shares of Common Stock, as the
holder shall request. However, the Committee, in its sole discretion,
may consent to or disapprove any request of the Employee to receive cash
in full or partial settlement of any SAR. Payment shall be subject to
applicable tax withholding.

9.6 Effect of Exercise of Tandem SAR on Related Option.

Upon the exercise of a Tandem SAR, the number of shares covered by the
related Option shall be reduced by the number of shares of Common Stock
with respect to which the SAR is exercised.

ARTICLE 10
RESTRICTED STOCK

10.1 Terms and Conditions.

The Committee may make Awards of Restricted Stock to Employees without
additional consideration or may offer to sell Restricted Stock to
Employees at a price that is equal to or less than its Fair Market
Value. The terms and conditions of any Restricted Stock Award shall be
as determined by the Committee and shall be set forth in the Award
Agreement. The Award Agreement shall specify the number of shares of
Common Stock subject to the Award and the applicable Restriction Period
or Periods. Any Award Agreement may provide for forfeiture of shares
covered thereby if specified Performance Measures are not attained
during a Restriction Period and/or for termination of any Restriction
Period upon attainment of Performance Measures, but in no event may any
Award Agreement permit termination of any Restriction Period earlier
than three years after the Date of Grant of the pertinent Award except
in the case of Awards that are subject to Performance Measures (in which
case the Restriction Period shall be at least one year) or in the case
of death, disability, retirement or in the event of a Change in Control
of Cinergy as described in Subsection 21.11 (Change in Control).

10.2 Certificates Evidencing Ownership of Restricted Stock.

During the Restriction Period, a certificate representing the Restricted
Stock shall be registered in the recipient's name and bear a restrictive
legend to the effect that ownership of the Restricted Stock, and the
enjoyment of all rights appurtenant to the Restricted Stock, are subject
to the restrictions, terms, and conditions provided in the Plan and the
applicable Award Agreement.

Certificates representing Restricted Stock together with stock powers or
other instruments of assignment, each endorsed in blank, which will
permit transfer to Cinergy of all or any portion of the Restricted Stock
evidenced by the certificate in the event it is forfeited, shall be
deposited by the Employee with Cinergy. Upon the termination of an
applicable Restriction Period, and subject to remittance of applicable
withholding tax, a certificate or certificates evidencing ownership of
the number of shares of Common Stock previously evidenced by the
certificate representing Restricted Stock, free of restrictive legend
(other than any relating to a right of first refusal of Cinergy or
required by any applicable securities laws), shall be issued to the
Employee, his or her beneficiary(ies), or legal representatives,
promptly after the expiration of the Restriction Period.

10.3 Rights With Respect to Shares During Restriction Period.

Subject to the terms and conditions of the Award Agreement, the
Employee, as the owner of the Common Stock issued as Restricted Stock,
shall have all rights of a shareholder including, but not limited to,
voting rights, the right to receive cash or stock dividends on the
shares, and the right to participate in any capital adjustment of
Cinergy. However, the Committee, in its discretion, may determine to
require that any dividends on Restricted Stock that is subject to an
Award be accumulated during the Restricted Period and may also subject
the payment of dividends to restrictions that may, but need not be, the
same as the restrictions applicable to the Restricted Stock. Any
dividend distributions with respect to shares of Restricted Stock other
than in the form of cash shall be held by Cinergy, and shall be subject
to the same restrictions as the shares with respect to which the
distributions were made. Any grant or sale may require that any or all
cash dividends or other distributions paid on the shares of Restricted
Stock during the Restriction Period shall be automatically sequestered
and may be reinvested on an immediate or deferred basis in additional
shares of Common Stock, which may be subject to the same restrictions as
the Committee may determine.

ARTICLE 11
PERFORMANCE SHARES AND PERFORMANCE AWARDS

11.1 Terms and Conditions.

The Committee may make Awards of Performance Shares and Performance
Awards. The terms and conditions of any Performance Share Award or
Performance Award shall be set forth in the applicable Award Agreement.
Each Award Agreement shall specify the number or amount of Performance
Shares or Performance Awards subject to the Award, the Performance
Period(s), which may be subject to earlier termination in the event of
a Change in Control of Cinergy as described in Section 21.11 (Change in
Control) or other similar transaction or event, and the Performance
Measures applicable to the Award.

11.2 Payment.

Following the end of a Performance Period applicable to a granted Award,
the Committee shall determine and certify the extent (if any) to which
Performance Measures established for the Award were attained and,
accordingly, the number, if any, of shares of Common Stock or the amount
of cash that shall then become payable to the holder of the Award. If
the Performance Shares or Performance Awards are to be paid to the
Employee in the form of shares of Restricted Stock, the recipient must
execute an Award Agreement regarding the Restricted Stock as a condition
of the issuance of such shares in his or her name.

ARTICLE 12
CASH AWARDS

The Committee may, at any time and in its discretion, grant to any
Optionee who is granted an NSO the right to receive, at the times and in
the amounts as determined by the Committee in its discretion, a cash
amount ("Cash Award") that is intended to reimburse the Optionee for all
or a portion of the federal, state, and local income taxes imposed upon
the Optionee as a consequence of the exercise of an NSO and the receipt
of such a cash payment.

ARTICLE 13
DIVIDEND EQUIVALENTS

The Committee may make Awards of Dividend Equivalents. The terms and
conditions of any Dividend Equivalent Award shall be set forth in the
applicable Award Agreement. The Award Agreement shall set forth the
circumstances (including any applicable Performance Measures) under
which, and specify the number, if any, of, shares of Common Stock or the
amount of cash that shall then become payable to the holder of the
Award. The Committee shall in its discretion determine the timing of
payment of the Award.

ARTICLE 14
OTHER STOCK-BASED AWARDS

The Committee may make Other Stock-Based Awards. The terms and
conditions of any Other Stock-Based Award shall be set forth in the
applicable Award Agreement or otherwise by the Committee. The
circumstances (including any applicable Performance Measures) under
which, and the number, if any, of, shares of Common Stock or the amount
of cash that shall then become payable to the holder of the Award shall
be set forth in the applicable Award Agreement or otherwise. The
Committee shall in its discretion determine the timing of payment of the
Award.

ARTICLE 15
REPLACEMENT AND EXTENSION OF THE TERMS
OF OPTIONS, CASH AWARDS AND RELATED STOCK
APPRECIATION RIGHTS

The Committee from time to time may permit an Optionee under the Plan or
any other stock option plan previously or subsequently adopted by an
Employer to surrender for cancellation any unexercised outstanding stock
option and related SAR and receive from his or her Employer in exchange
an Option for the number of shares of Common Stock as may be designated
by the Committee. However, the Committee may not authorize an exchange
if the stock options to be surrendered have an Option Price that is
above the Fair Market Value of the Common Stock (as calculated as
provided in Section 8.4 (Option Price)) on the date of the exchange, and
the options to be granted in exchange therefor would have an Option
Price that is less than that of the stock options to be surrendered.
Optionees also may be granted related SARs or Cash Awards as provided in
Articles 9 (Stock Appreciation Rights) and 12 (Cash Awards).

ARTICLE 16
AMENDMENT, MODIFICATION AND TERMINATION
OF THE PLAN

Cinergy, by resolution duly adopted by Cinergy's Board of Directors,
shall have the right, authority and power to alter, amend, modify,
suspend, revoke or terminate the Plan in whole or in part at any time,
including the adoption of amendments deemed necessary or desirable to
qualify the Awards under the laws of various states and under rules and
regulations promulgated by the Securities and Exchange Commission with
respect to officers and directors who are subject to the provisions of
Section 16 of the 1934 Act, to comply with any applicable provisions of
the Code, including Code Subsection 162(m) or to correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any
Award granted under the Plan, without the approval of Cinergy's
shareholders. However, no action shall be taken without the approval of
Cinergy's shareholders that would cause the Plan to no longer comply
with Rule 16b-3, or any other regulatory requirements, or Code Section
162(m), or to the extent such approval is required by other applicable
law.

No amendment or termination or modification of the Plan shall in any
manner adversely affect any Award previously granted without the consent
of the Employee, except that the Committee may amend or modify the Plan
in a manner that does adversely affect Awards previously granted upon
a finding by the Committee that the amendment or modification is in the
best interest of holders of outstanding Awards affected by the amendment
or modification.

ARTICLE 17
EFFECT OF TERMINATION OF EMPLOYMENT
OR DEATH

In the event of termination of employment by reason of death,
disability, normal retirement, early retirement with the consent of the
Employer, termination of employment to enter military or other
government or eleemosynary service or leave of absence approved by the
Employer, or in the event of hardship or other special circumstances, of
an Employee who holds an Option or Stock Appreciation Right that is not
immediately and fully exercisable, any shares of Restricted Stock as to
which the substantial risk of forfeiture or the prohibition or
restriction on transfer has not lapsed, any Performance Shares or
Performance Awards that had not been fully earned, any Common Shares
that are subject to any transfer restriction pursuant to Article 10
(Restricted Stock), any Dividend Equivalent Award or Other Stock-Based
Award that had not been fully earned or which is subject to any transfer
restrictions, the Committee may take any action that it deems to be
equitable under the circumstances or in the bests interests of Cinergy
or any other Employer, including without limitation waiving or modifying
any limitation or requirement with respect to any Award under this Plan.

ARTICLE 18
TRANSFERABILITY

No Option or other derivative security (as that term is defined in Rule
16b-3) granted pursuant to the Plan shall be transferable otherwise than
by will or by the laws of descent and distribution. During the lifetime
of an Optionee, the Option and Stock Appreciation Rights shall be
exercisable only by the Optionee personally or, in the event of the
Employee's legal incapacity, by the Employee's guardian or legal
representative acting in a fiduciary capacity on behalf of the Employee
under applicable state law and judicial supervision. Notwithstanding
the foregoing, the Committee, in its sole discretion, may provide for
the transferability of particular Awards under the Plan so long as the
provisions will not disqualify the exemption for other Awards under Rule
16b-3. Any grant made under the Plan may provide that all or any part
of the shares of Common Stock that are to be issued or transferred by
Cinergy upon the exercise of Options or Stock Appreciation Rights or in
payment of Performance Shares or Performance Awards, Dividend
Equivalents or Other Stock-Based Awards, or that are no longer subject
to the substantial risk of forfeiture and restrictions on transfer
referred to in Article 10 (Restricted Stock), shall be subject to
further restrictions upon transfer.

ARTICLE 19
SHAREHOLDER APPROVAL

The Plan shall be subject to approval by a majority vote of the votes
cast at a duly held shareholders' meeting of Cinergy at which a quorum
representing the majority of all outstanding voting stock is, either in
person or by proxy, present and voting on the Plan.

ARTICLE 20
FUNDING POLICY AND METHOD

The Plan shall be totally unfunded. No Optionee shall have any interest
in any fund or specific asset of an Employer by reason of the Plan.

ARTICLE 21
MISCELLANEOUS

21.1 No Enlargement of Employee Benefits.

The Plan is strictly a voluntary undertaking on the part of the
Employers and shall not be deemed to constitute a contract between an
Employer and any Employee or to be consideration for, or inducement to,
or a condition of, the employment of any Employee. Nothing contained in
the Plan shall be deemed to give any Employee the right to be retained
in the service of his or her Employer or to interfere with the right of
his or her Employer to discharge any Employee at any time. No Employee
shall have any right to benefits under the Plan except to the extent
provided in this document. Any Award under this Plan shall not be
deemed compensation for purposes of computing benefits or contributions
under any qualified pension plan of an Employer, and shall not affect
any benefits under any other benefit plan of any kind currently or
subsequently in effect under which the availability or amount of
benefits is related to the level of compensation.

21.2 Notice of Address.

Each Award recipient must file with the Committee, in writing, his or
her post office address and each change of post office address. Any
communication, statement or notice addressed to a person at his latest
post office address as filed with the Committee will, upon deposit in
the United States mail with postage prepaid, be binding upon that person
for all purposes of the Plan.

21.3 No Individual Liability.

It is declared to be the express purpose and intention of the Plan that,
except as otherwise required by law, no individual liability whatever
shall attach to, or be incurred by, Cinergy, its shareholders, officers,
employees, or members of Cinergy's Board of Directors, each other
Employer's shareholders, officers, employees, or members of its board of
directors, or any representatives appointed by the Committee, under or
by reason of any of the Plan's terms or conditions. Each Award
recipient shall be legally bound by the provisions of the Plan.

21.4 Governing Laws.

The Plan shall be construed and administered according to the laws of
the State of Delaware (without giving effect to the conflict of law
principles of that State) to the extent that those laws are not
preempted by the laws of the United States of America.

21.5 Risk of Participation.

Nothing contained in the Plan shall be construed either as a guarantee
by the Plan or Cinergy, its shareholders, officers, employees, or
members of Cinergy's Board of Directors, each other Employer, its
shareholders, officers, employees or members of its board of directors
of the value of any assets of the Plan or as an agreement by the Plan or
Cinergy, its shareholders, officers, employees or members of Cinergy's
Board of Directors, each other Employer, its shareholders, officers,
employees or members of its board of directors, to indemnify anyone for
any losses, damages, costs and/or expenses resulting from participation
in the Plan.

21.6 Headings.

The headings of articles, sections, subsections, paragraphs or other
parts of the Plan are for convenience of reference only and do not
define, limit, construe or otherwise affect the contents thereof.

21.7 Expenses.

All expenses of administering of the Plan shall be borne by the
Employers.

21.8 Withholding Taxes.

Cinergy shall, if required by applicable law, withhold or cause to be
withheld, federal, state and/or local taxes in connection with the
exercise, vesting or settlement of an Award. Unless otherwise provided
in the applicable Award Agreement, each Employee may satisfy any tax
withholding obligation by any of the following means, or by a
combination of these means: (i) a cash payment, (ii) subject to
Committee approval, by delivery to Cinergy of a number of shares of
Common Stock having a Fair Market Value, as of the Tax Withholding Date
(the date the withholding tax obligation first arises with respect to an
Award), sufficient to satisfy the amount of the withholding tax
obligation arising from an exercise, vesting or settlement of an Award,
(iii) subject to Committee approval, by authorizing Cinergy to withhold
from the shares of Common Stock otherwise issuable to the Employee
pursuant to the exercise or vesting of an Award, a number of shares
having a Fair Market Value, as of the Tax Withholding Date, that will
satisfy the amount of the withholding tax obligation, or (iv) by a
combination of such methods of payment. If the amount requested is not
paid, the Company may refuse to satisfy the Award. The Company and the
Employee may also
make similar arrangements with respect to the payment of any taxes with
respect to which withholding is not required.

21.9 Award Agreements.

After the Committee grants an Award to an Employee, it shall cause the
Employer to enter into a written agreement or agreements with the
Employee. Any certificates for Common Stock issued to Optionees may
bear a legend evidencing any representations or restrictions.

21.10 Rights as a Shareholder.

Grant of any Option, SAR, Dividend Equivalent, Other Stock-Based Award
or Performance Shares or Performance Award shall not confer upon the
grantee any rights of a shareholder with respect to any shares subject
to the Award. A recipient of an Award consisting of an Option, SAR,
Dividend Equivalent, Other Stock-Based Award or Performance Shares or
Performance Award or a transferee of any such Award shall have no right
as a shareholder with respect to any Common Stock covered by an Option
(or receivable upon the exercise of an Option), SAR, Dividend
Equivalent, Other Stock-Based Award or Performance Shares or Performance
Award, until the Employee or transferee shall have become the holder of
record of the Common Stock. No adjustments shall be made for dividends
in cash or other property or other distributions or rights in respect to
Common Stock for which the record date is prior to the date on which the
Employee or transferee shall have in fact become the holder of record of
the shares of Common Stock acquired pursuant to the Option, SAR,
Dividend Equivalent, Other Stock-Based Award or Performance Shares or
Performance Award.

21.11 Change in Control.

Notwithstanding anything in the Plan to the contrary, in the event of a
Change in Control of Cinergy, unless otherwise provided in the related
Award Agreement: (i) each unexpired Option and Stock Appreciation Right
shall become exercisable in full, (ii) all restrictions (other than
restrictions imposed by law) and conditions of all Restricted Stock,
Dividend Equivalents and Other Stock-Based Awards then outstanding shall
be deemed satisfied subject to any holding period limitations, (iii) all
Performance Measures of all Performance Shares and Performance Awards,
Dividend Equivalents and Other Stock-Based Awards shall be deemed fully
satisfied at the maximum criteria levels.

A Change of Control of Cinergy shall occur if (1) any "person" or
"group" (within the meaning of Sections 13 (d) and 14 (d) (2) of the
1934 Act) becomes the "beneficial owner" (as defined in Rule 13d-3 of
the 1934 Act) of more than 50 percent of the then outstanding voting
stock of Cinergy, otherwise than through a transaction arranged by, or
consummated with the prior approval of, Cinergy's Board of Directors,
(2) Cinergy's shareholders approve a definitive agreement to merge or
consolidate Cinergy 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 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 50 percent
of the combined voting power of the voting securities of the corporation
surviving the merger or purchasing the assets; or (3) during any period
of two consecutive years, individuals who at the beginning of that
period constitute Cinergy's Board of Directors (and any new director
whose election by Cinergy's Board of Directors or whose nomination for
election by Cinergy's shareholders was approved by a vote of at least
two-thirds of the directors then still in office who either were
directors at the beginning of the 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.

Notwithstanding the provisions of Article 16 (Amendment, Modification
and Termination of the Plan), the foregoing provisions of this Section
may not be amended by an amendment to the Plan effected within three
years following a Change in Control.

If the immediate exercisability of ISOs arising from a Change in Control
as described above would cause the $100,000 limitation applicable to
ISOs described in Section 8.1 (Types of Option) to be exceeded for an
Optionee, the Committee shall convert as of the effective date of the
Change in Control all or a portion of the outstanding ISOs held by the
Optionee to NSOs to the extent necessary to comply with the $100,000
limitation and to the extent permitted by Code Subsection 422(d).
However, if the Committee determines that conversion is not permitted by
the Code, the Committee shall not convert the Options and shall take any
and all other steps necessary to accelerate the exercisability of the
ISOs to the maximum extent possible under Code Subsection 422(d) without
exceeding the $100,000 limitation described above.

ARTICLE 22
CONTINUANCE BY A SUCCESSOR

In the event that Cinergy or any other Employer shall be reorganized by
way of merger, consolidation, transfer of assets or otherwise, so that
a corporation, partnership or person other than an Employer shall
succeed to all or substantially all of that Employer's business, the
successor may be substituted for the Employer under the Plan by adopting
the Plan.

IN WITNESS WHEREOF, Cinergy Corp. has caused this Plan document to be
executed and approved by its duly authorized officers effective as June 1,
1996.

CINERGY CORP.

BY:_________________________
(James E. Rogers)
Vice Chairman, President and
Chief Executive Officer
Approved:

By:_______________________
(Cheryl M. Foley)
Vice President, General Counsel and
Corporate Secretary

EXHIBIT G

PROPOSED FORM OF NOTICE

Cinergy Corp. 70-

Notice of Proposal to Issue Shares under New Incentive
Compensation Plan; Order Authorizing Proxy Solicitation

Cinergy Corp., a registered holding company located at 139 East
Fourth Street, Cincinnati, Ohio 45202 ("Cinergy"), has filed a
declaration under Sections 6(a), 7 and 12(e) of the Act and Rules
42, 54, 62 and 65 thereunder.

Cinergy seeks approvals with respect to a new long-term employee
incentive compensation plan ("Plan") adopted by its Board of
Directors ("Board") on January 25, 1996, subject to approval by
Cinergy's shareholders. The Plan, to be administered by the
Board's Compensation Committee ("Committee"), contemplates the
grant from time to time to selected eligible employees of
stock-related awards of six general types: (1) options to
purchase shares of Cinergy common stock, $0.01 par value per
share ("Common Shares"); (2) stock appreciation rights, i.e.,
rights to receive, upon exercise, the appreciation in fair market
value of Common Shares; (3) restricted stock, i.e., outright
grants of Common Shares, subject to transfer restrictions and
risk of forfeiture for a specified restriction period and which
may further be conditioned upon the attainment of specified
Performance Measures/1/; (4) rights to receive (a) Common Shares,
or in lieu of all or any portion of those shares, their fair
market value - i.e., "performance shares" - or (b) a specified
dollar amount or, in lieu of all or any portion of that amount,
Common Shares having the same fair market value - i.e.,
"performance awards" - both conditional upon the attainment
during a specified performance period of specified Performance
Measures; (5) dividend equivalents, i.e., rights to receive
Cinergy common stock or cash or other property equal in value to
dividends paid with respect to a specified number of Common
Shares, and which may, but need not, be conditioned upon the
attainment of specified Performance Measures; and (6) other
stock-based awards which are denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or
related to, Common Shares. Employees of Cinergy and its
subsidiaries who would be eligible to receive awards under the
Plan consist of officers, employees employed in a significant
executive, supervisory, administrative, operational or
professional capacity, and employees who have the potential to
contribute to the future success of the Cinergy system. The
Committee would have the exclusive authority to determine those
eligible employees to whom awards would be granted, as well as
the type, size and other terms and conditions of each granted
award, subject only to the parameters of the Plan.

Shares used for awards under the Plan may be authorized but
unissued Common Shares or Common Shares purchased on the open
market, in private transactions or otherwise. Cinergy requests
authority to issue securities under the Plan, including up to 7
million Common Shares from time to time through December 31,
2000.

The Plan is intended to be of indefinite duration./2/ However, at
any time by action of the Board, Cinergy may amend or terminate
the Plan in whole or in part, except with respect to certain
provisions thereof relating to the effects of a "change in

control" of Cinergy, which may not be amended for three years
following a change in control. In addition, without the approval
of Cinergy's shareholders, no such action may (1) increase the
maximum number of Common Shares that may be issued in respect of
awards under the Plan, or (2) change the class of employees
eligible to participate in the Plan.

Cinergy proposes to submit the Plan to the holders of its
outstanding Common Shares for action at the annual meeting
scheduled to take place on April 26, 1996, and in connection
therewith to solicit proxies from the holders of Common Shares.
Assuming the presence of a quorum, approval of the Plan requires
the affirmative vote of the holders of not less than a majority
of the Common Shares present at the meeting in person or by proxy
and entitled to vote on the Plan. Cinergy requests that the
effectiveness of its declaration with respect to such
solicitation of proxies be permitted to become effective
forthwith pursuant to Rule 62(d).

It appearing to the Commission that Cinergy's declaration
regarding the proposed solicitation of proxies should be
permitted to become effective forthwith, pursuant to Rule 62(d):

IT IS ORDERED, that the declaration regarding the proposed
solicitation of proxies be, and it hereby is, permitted to become
effective forthwith pursuant to Rule 62 and subject to the terms
and conditions prescribed in Rule 24 under the Act.

For the Commission, by the Division of Investment Management,
pursuant to delegated authority.

<PAGE>

Endnotes

/1/ "Performance Measures" are criteria and objectives determined
by the Committee which (1) in the case of performance shares,
performance awards or dividend equivalents, the attainment of
which during the applicable performance period would be a
precondition to settlement of the award, and (2) in the case of
restricted stock, the failure to obtain which would cause
forfeiture of the award and/or which if met during the otherwise
applicable restriction period would cause an early termination of
the restriction period. Performance Measures applicable to any
award to an employee who is, or is determined by the Committee as
likely to become, a "covered employee" within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended,
will be established in writing within the period prescribed by
that section and shall be limited to criteria and objectives
related to (1) Cinergy's or one of its subsidiary's performance,
efficiency or profitability, including stock price, total
shareholder return, market share, sales, earnings per share,
costs, net operating income, cash flow, fuel cost per million

FINANCIAL STATEMENTS

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

FORM U-1

CINERGY CORP.

CONSOLIDATED

AS OF DECEMBER 31, 1995

(Unaudited)

Pages 1 through 6
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1995

Pro Forma
Actual Adjustments Pro Forma
(in thousands, except per share amounts)
<S> <C> <C> <C>
OPERATING REVENUES
Electric $2,620,581 $ $2,620,581
Gas 410,852 410,852
3,031,433 - 3,031,433

OPERATING EXPENSES
Fuel used in electric production 716,754 716,754
Gas purchased 206,250 206,250
Purchased and exchanged power 47,632 47,632
Other operation 534,587 214,375 748,962
Maintenance 182,180 182,180
Depreciation 279,759 279,759
Amortization of phase-in deferrals 9,091 9,091
Post-in-service deferred operating
expenses - net (2,500) (2,500)
Income taxes 219,462 (75,031) 144,431
Taxes other than income taxes 256,086 256,086
2,449,301 139,344 2,588,645

OPERATING INCOME 582,132 (139,344) 442,788

OTHER INCOME AND EXPENSES - NET
Allowance for equity funds used during
construction 1,964 1,964
Post-in-service carrying costs 3,186 3,186
Phase-in deferred return 8,537 8,537
Income taxes 5,391 5,391
Other - net 3,497 3,497
22,575 - 22,575

INCOME BEFORE INTEREST AND OTHER CHARGES 604,707 (139,344) 465,363

INTEREST AND OTHER CHARGES
Interest on long-term debt 213,911 213,911
Other interest 20,826 20,826
Allowance for borrowed funds used
during construction (8,065) (8,065)
Preferred dividend requirements of
subsidiaries 30,853 30,853
257,525 - 257,525

NET INCOME $347,182 ($139,344) $207,838

AVERAGE COMMON SHARES OUTSTANDING 156,620 7,000 163,620

EARNINGS PER COMMON SHARE $2.22 $1.27

DIVIDENDS DECLARED PER COMMON SHARE $1.72
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA CONSOLIDATED BALANCE SHEET
AT DECEMBER 31, 1995

ASSETS
Pro Forma
Actual Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
UTILITY PLANT - ORIGINAL COST
In service
Electric $8,617,695 $ $8,617,695
Gas 680,339 680,339
Common 184,663 184,663
9,482,697 - 9,482,697
Accumulated depreciation 3,367,401 3,367,401
6,115,296 - 6,115,296
Construction work in progress 135,852 135,852
Total utility plant 6,251,148 - 6,251,148

CURRENT ASSETS
Cash and temporary cash investments 35,052 75,031 110,083
Restricted deposits 2,336 2,336
Accounts receivable less accumulated
provision of $10,360,000 for
doubtful accounts 371,150 371,150
Materials, supplies and fuel
- at average cost
Fuel for use in electric production 122,409 122,409
Gas stored for current use 21,493 21,493
Other materials and supplies 85,076 85,076
Property taxes applicable to subsequent year 116,822 116,822
Prepayments and other 32,347 32,347
786,685 75,031 861,716

OTHER ASSETS
Regulatory Assets
Amounts due from customers - income taxes 423,493 423,493
Post-in-service carrying costs and
deferred operating expenses 187,190 187,190
Phase-in deferred return and depreciation 100,388 100,388
Deferred demand-side management costs 129,400 129,400
Deferred merger costs 56,824 56,824
Unamortized costs of reacquiring debt 73,904 73,904
Other 74,911 74,911
Other 136,121 136,121
1,182,231 - 1,182,231

$8,220,064 $75,031 $8,295,095
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA CONSOLIDATED BALANCE SHEET
AT DECEMBER 31, 1995

CAPITALIZATION AND LIABILITIES
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
COMMON STOCK EQUITY
Common stock - $.01 par value;
Authorized shares - 600,000,000
Outstanding shares - 157,670,141 Actual
and 164,670,141 Pro Forma $1,577 $70 $1,647
Paid-in capital 1,597,050 214,305 1,811,355
Retained earnings 950,216 (139,344) 810,872
Total common stock equity 2,548,843 75,031 2,623,874

CUMULATIVE PREFERRED STOCK OF SUBSIDIARIES
Not subject to mandatory redemption 227,897 227,897
Subject to mandatory redemption 160,000 160,000

LONG-TERM DEBT 2,530,766 2,530,766
Total capitalization 5,467,506 75,031 5,542,537

CURRENT LIABILITIES
Long-term debt due within one year 201,900 201,900
Notes payable 165,800 165,800
Accounts payable 263,403 263,403
Litigation settlement 80,000 80,000
Accrued taxes 317,185 317,185
Accrued interest 55,995 55,995
Other 61,938 61,938
1,146,221 - 1,146,221

OTHER LIABILITIES
Deferred income taxes 1,120,900 1,120,900
Unamortized investment tax credits 185,726 185,726
Accrued pension and other postretirement
benefit costs 171,771 171,771
Other 127,940 127,940
1,606,337 - 1,606,337

$8,220,064 $75,031 $8,295,095
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA CONSOLIDATED STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1995

Pro Forma
Actual Adjustments Pro Forma
(in thousands)

<S> <C> <C> <C>
BALANCE DECEMBER 31, 1994 $877,061 $ $877,061

Net income 347,182 (139,344) 207,838
Dividends on common stock (268,851) (268,851)
Other (5,176) (5,176)

BALANCE DECEMBER 31, 1995 $950,216 ($139,344) $810,872
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.

Pro Forma Consolidated Journal Entries to Give Effect to the
Issuance of 7,000,000 Shares of Common Stock, $.01 Par Value Per Share

<S> <C> <C>
Entry No. 1

Other operation expense $214,375,000
Common stock $70,000
Paid-in capital 214,305,000

To record the issuance of 7,000,000 shares of common stock under the Cinergy Corp.
1996 Long-term Incentive Compensation Plan, at the December 31, 1995, close price
of $30-5/8 per share.

Entry No. 2

Cash and temporary cash investments $75,031,250
Income taxes $75,031,250

To record the reduction in income taxes associated with increased operation expenses
($214,375,000 at an assumed tax rate of 35%).
</TABLE>

FINANCIAL STATEMENTS

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

FORM U-1

CINERGY CORP.

AS OF DECEMBER 31, 1995

(Unaudited)

Pages 1 through 5
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA STATEMENT OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1995

Pro Forma
Actual Adjustments Pro Forma
(in thousands, except per share amounts)
<S> <C> <C> <C>
OPERATING EXPENSES
Other operation $781 $ $781
Income taxes (488) (488)
Taxes other than income taxes 84 84
377 - 377

OPERATING LOSS (377) - (377)

OTHER INCOME AND EXPENSES - NET
Equity in earnings of subsidiaries 349,086 (139,344) 209,742
Income taxes 537 537
Other - net (211) (211)
349,412 (139,344) 210,068

INCOME BEFORE INTEREST 349,035 (139,344) 209,691

INTEREST 1,853 1,853

NET INCOME 347,182 (139,344) 207,838

AVERAGE COMMON SHARES OUTSTANDING 156,620 7,000 163,620

EARNINGS PER COMMON SHARE $2.22 $1.27

DIVIDENDS DECLARED PER COMMON SHARE $1.72
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA BALANCE SHEET
AT DECEMBER 31, 1995

ASSETS
Pro Forma
Actual Adjustments Pro Forma
(dollars in thousands)
<S> <C> <C> <C>
CURRENT ASSETS
Cash and temporary cash investments $592 $ $592
Accounts receivable 26,955 26,955
27,547 - 27,547

OTHER ASSETS
Investment in subsidiaries 2,563,727 75,031 2,638,758
Other (10) (10)
2,563,717 75,031 2,638,748

$2,591,264 $75,031 $2,666,295

CAPITALIZATION AND LIABILITIES

COMMON STOCK EQUITY
Common stock - $.01 par value;
Authorized shares - 600,000,000
Outstanding shares - 157,670,141 Actual
and 164,670,141 Pro Forma $1,577 $70 $1,647
Paid-in capital 1,597,050 214,305 1,811,355
Retained earnings 950,216 (139,344) 810,872
Total common stock equity 2,548,843 75,031 2,623,874

Total capitalization 2,548,843 75,031 2,623,874

CURRENT LIABILITIES
Accounts payable 42,481 42,481
Accrued taxes 197 197
42,678 - 42,678

OTHER LIABILITIES
Deferred income taxes (258) (258)
Other 1 1
(257) - (257)

$2,591,264 $75,031 $2,666,295
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.
PRO FORMA STATEMENT OF CHANGES IN RETAINED EARNINGS
TWELVE MONTHS ENDED DECEMBER 31, 1995

Pro Forma
Actual Adjustments Pro Forma
(in thousands)

<S> <C> <C> <C>
BALANCE DECEMBER 31, 1994 $877,061 $ $877,061

Net income 347,182 (139,344) 207,838
Dividends on common stock (268,851) (268,851)
Other (5,176) (5,176)

BALANCE DECEMBER 31, 1995 $950,216 ($139,344) $810,872
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CINERGY CORP.

Pro Forma Journal Entries to Give Effect to the
Issuance of 7,000,000 Shares of Common Stock, $.01 Par Value Per Share

<S> <C> <C> <C>
Entry No. 1

Investment in subsidiaries $214,375,000
Common stock $70,000
Paid-in capital 214,305,000

To record the issuance of 7,000,000 shares of common stock under the Cinergy Corp.
1996 Long-term Incentive Compensation Plan, at the December 31, 1995, close price
of $30-5/8 per share.

Entry No. 2

Equity in earnings of subsidiaries $139,343,750
Investment in subsidiaries $139,343,750

To record the reduction in net income of subsidiaries due to increased operation expenses.
</TABLE>

<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEETS AND STATEMENTS OF INCOME AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000899652
<NAME> CINERGY CORP.
<SUBSIDIARY>
<NUMBER> 0
<NAME> CINERGY CORP. (CONSOLIDATED)
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> YEAR 12-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> JAN-01-1995 JAN-01-1995
<PERIOD-END> DEC-31-1995 DEC-31-1995
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 6,251,148 6,251,148
<OTHER-PROPERTY-AND-INVEST> 0 0
<TOTAL-CURRENT-ASSETS> 786,685 861,716
<TOTAL-DEFERRED-CHARGES> 1,046,110 1,046,110
<OTHER-ASSETS> 136,121 136,121
<TOTAL-ASSETS> 8,220,064 8,295,095
<COMMON> 1,577 1,647
<CAPITAL-SURPLUS-PAID-IN> 1,597,050 1,811,355
<RETAINED-EARNINGS> 950,216 810,872
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,548,843 2,623,874
160,000 160,000
227,897 227,897
<LONG-TERM-DEBT-NET> 2,530,766 2,530,766
<SHORT-TERM-NOTES> 165,800 165,800
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 201,900 201,900
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,384,858 2,384,858
<TOT-CAPITALIZATION-AND-LIAB> 8,220,064 8,295,095
<GROSS-OPERATING-REVENUE> 3,031,433 3,031,433
<INCOME-TAX-EXPENSE> 219,462 144,431
<OTHER-OPERATING-EXPENSES> 2,229,839 2,444,214
<TOTAL-OPERATING-EXPENSES> 2,449,301 2,588,645
<OPERATING-INCOME-LOSS> 582,132 442,788
<OTHER-INCOME-NET> 22,575 22,575
<INCOME-BEFORE-INTEREST-EXPEN> 604,707 465,363
<TOTAL-INTEREST-EXPENSE> 226,672 226,672
<NET-INCOME> 378,035 238,691
30,853 30,853
<EARNINGS-AVAILABLE-FOR-COMM> 347,182 207,838
<COMMON-STOCK-DIVIDENDS> 268,851 268,851
<TOTAL-INTEREST-ON-BONDS> 213,911 213,911
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 2.22 1.27
<EPS-DILUTED> 2.22 1.27

<S> <C> <C>
<PERIOD-TYPE> YEAR 12-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-START> JAN-01-1995 JAN-01-1995
<PERIOD-END> DEC-31-1995 DEC-31-1995
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 0 0
<OTHER-PROPERTY-AND-INVEST> 2,563,727 2,638,758
<TOTAL-CURRENT-ASSETS> 27,547 27,547
<TOTAL-DEFERRED-CHARGES> 0 0
<OTHER-ASSETS> (10) (10)
<TOTAL-ASSETS> 2,591,264 2,666,295
<COMMON> 1,577 1,647
<CAPITAL-SURPLUS-PAID-IN> 1,597,050 1,811,355
<RETAINED-EARNINGS> 950,216 810,872
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,548,843 2,623,874
0 0
0 0
<LONG-TERM-DEBT-NET> 0 0
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 42,421 42,421
<TOT-CAPITALIZATION-AND-LIAB> 2,591,264 2,666,295
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> (488) (488)
<OTHER-OPERATING-EXPENSES> 865 865
<TOTAL-OPERATING-EXPENSES> 377 377
<OPERATING-INCOME-LOSS> (377) (377)
<OTHER-INCOME-NET> 349,412 210,068
<INCOME-BEFORE-INTEREST-EXPEN> 349,035 209,691
<TOTAL-INTEREST-EXPENSE> 1,853 1,853
<NET-INCOME> 347,182 207,838
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 347,182 207,838
<COMMON-STOCK-DIVIDENDS> 268,851 268,851
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 2.22 1.27
<EPS-DILUTED> 2.22 1.27