<PAGE>


[*REDACTED = Omitted pursuant to confidential
treatment request. Material filed separately 
with SEC.]

                                                                  EXHIBIT 10.85
                                                    Privileged and Confidential
                                                             EXECUTION ORIGINAL

                             SECOND AMENDMENT TO THE
                           NEW PARTICIPATION AGREEMENT



     This SECOND AMENDMENT TO THE NEW PARTICIPATION AGREEMENT ("AMENDMENT") 
dated this ___ day of June, 1998, is among BIG RIVERS ELECTRIC CORPORATION, a 
Kentucky rural electric cooperative ("BIG RIVERS"), LG&E ENERGY MARKETING 
INC., an Oklahoma corporation ("LEM"), WESTERN KENTUCKY LEASING CORP., a 
Kentucky corporation ("LEASECO"), WKE Station Two Inc., a Kentucky 
corporation ("STATION TWO SUBSIDIARY") and WESTERN KENTUCKY ENERGY CORP., a 
Kentucky corporation ("WKEC") (hereinafter, LEM, Leaseco, Station Two 
Subsidiary and WKEC are collectively referred to as the "LG&E PARTIES" and 
together with Big Rivers, the "PARTIES").

                                    RECITALS

     WHEREAS, the Parties are signatories to the New Participation Agreement
dated April 6, 1998, as amended by that certain Letter Agreement dated April 6,
1998 (collectively, the "New Participation Agreement").

     WHEREAS, the Parties wish to amend the New Participation Agreement in
certain respects as described herein.

     NOW, THEREFORE, in consideration of the mutual covenants set forth in this
Amendment, the Parties agree as follows:

     Each direction to capitalize or make lower case a word or phrase means to
make the initial letter of each referenced word a capital letter or a lower case
letter, as directed.

 1. NEW  PARTICIPATION  AGREEMENT.  The  Parties  hereby  agree  to amend  the
New Participation Agreement as follows:

-    Section 4.3.6 (p. 6). The phrase "and in Sections 23.3 and 23.5" is hereby
     added immediately following the words "Article 5".
-    Section 5.1.24 (p.14). In the references to "Taxing authority," "Taxing" is
     hereby made lower case.
-    Section 7.1.2 (p.17). In the reference to "tax liability", "tax" is hereby
     capitalized.
-     Section  7.3.6 (p. 19).  In the phrase  "Effective  Date,  cause the Big
     Rivers  Qualified  Plans" the word "and" is hereby  inserted  between the
     word "date" and the word "cause."
-    Section 8.1 (p.19). The reference to "LG&E Parties" is hereby changed to
     "LG&E Parties and their Affiliates." The reference to "such other LG&E
     Party's use" is hereby changed to "use by the LG&E Parties or their
     Affiliates," and the reference to "such LG&E Party agrees" is hereby
     changed to "such LG&E Party agrees, and agrees to cause its Affiliates."

<PAGE>


                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL


-    Section 9.3 (p. 22). In the parenthetical phrase "fuel and scrubber
     reagent, inventory, spare parts and materials, and supplies" the commas
     immediately following the words "reagent" and "materials" are hereby
     deleted.
-    Section 9.6  (p.24-25).  Each  reference to  "Transmission  Services and
     Interconnection  Agreement" is hereby  changed to  "Transmission  Service
     and Interconnection Agreement."
-    Section 9.7 (p. 25 ):  A new Section 9.7 is hereby added as follows:

         9.7  INCREMENTAL REVENUE ALLOCATION

              (a) On the 25th day of each month, commencing on the second
                  occurrence of a 25th day of the month after the Effective Date
                  and continuing until and including January 25, [REDACTED], Big
                  Rivers will pay to LEM [REDACTED]% of the total revenue 
                  received by Big Rivers from [REDACTED] for transmission of 
                  Tier 3 Energy to [REDACTED] (if any) during the preceding 
                  month.

              (b) On the 25th day of each month, commencing on February 25, 
                  [REDACTED] and continuing until and including January 25,
                  [REDACTED], provided that [REDACTED] has entered into a 
                  contract with Big Rivers for the transmission of Tier 3 
                  Energy to [REDACTED], which contract provides for service to
                  commence January 1, [REDACTED], is of a duration of no less
                  than [REDACTED] years, assures Big Rivers of receipt of no 
                  less than $[REDACTED] annually in transmission revenues, and
                  such minimum revenues are received by Big Rivers, Big Rivers
                  will pay to LEM an amount equal to $[REDACTED]. In addition,
                  on each February 25, commencing on February 25, [REDACTED]
                  and continuing until and including February 25, [REDACTED],
                  Big Rivers will pay LEM an amount equal to the lesser of 
                  (i) $[REDACTED] or (ii) the difference between (a) the
                  total amount of revenue received by Big Rivers from 
                  [REDACTED] for transmission of Tier 3 Energy to Southwire
                  in the preceding 12 calendar months and (b) $[REDACTED] less
                  the sum of amounts received by LEM from Big Rivers pursuant to
                  this Section 9.7(b) in the preceding 12 calendar months;
                  provided that if Big Rivers' OATT rate for firm point-to-point
                  service declines to less than $[REDACTED] per KW per month, 
                  then the amount "$[REDACTED]" set forth in the preceding
                  clause will be reduced proportionally.

-    Section  10.3  (p.26).  The  reference  to "WKEC  shall  not" is  hereby
     changed to "Neither WKEC nor its Affiliates shall."
-    Section 10.4 (p.26). The last reference to "or its Affiliates (as
     applicable)" is hereby deleted.

                                     -2-
<PAGE>

                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

-    Section 10.5 (p. 26). The word "the" is hereby  inserted  before each of
     the first,  third,  fourth and fifth  references to "Big Rivers Severance
     Plan."
-    Section 10.7  (p.28).  The  reference to "10.8.1,  10.8.2 and 10.8.3" is
     hereby changed to "10.7.1, 10.7.2 and 10.7.3."
-    Section 11.6 (p.30). In each reference to "Federal income tax," "tax" is
     hereby capitalized.
-    Section 12.1 (p.31). References to "Leaseco shall keep" and "Leaseco shall
     retain" are hereby changed to "Leaseco shall keep, or cause to be kept,"
     and "Leaseco shall retain, or cause to be retained,".
-    Section 12.4 (p. 31).  The word "notice" is hereby made plural.
-    Section 14.5 (p.36).  Each reference to "parties" is hereby capitalized.
-    Section 15.1 (p.38).  The first and second  references  to "parties" are
     hereby capitalized and the first,  second and third references to "party"
     is hereby capitalized.
-    Section 15.2.1 (p.39). The reference to "Party" is hereby made lower case.
-    Section 15.2.3 (p.39). The first reference to "Party" is hereby made lower
     case.
-    Section 15.2.6 (p.39). The reference to "Parties" is hereby made lower
     case.
-    Section 15.3.1 (p.40). The first and second references to "Party" are
     hereby made lower case and the first reference to "Parties" is hereby made
     lower case.
-    Section 15.3.2 (p.40). The last reference to "Party" is hereby made lower
     case.
-    Section 15.3.4 (p.40). The first reference to "parties" is hereby
     capitalized.
-    Section 15.3.6 (pp.40-41). Each reference to "Parties" or "Party" is hereby
     made lower case.
-    Section 15.3.7 (p.41). Each reference to "Parties" or "Party" is hereby
     made lower case.
-    Section 15.3.8 (p.41). The reference to "Parties" is hereby made lower
     case.
-    Section  16.1  (p.41).   The  first   reference  to  "party"  is  hereby
     capitalized  and the word  "provided" is hereby inserted before the first
     use of "however."
-    Section 16.2 (p.42). The first reference to "party" is hereby capitalized.
-    Section 20.3 (p.50).  The reference to "party" is hereby capitalized.
-    Section 20.6 (p. 51).  Section 20.6 is hereby  amended to be and read in
     its entirety as follows:

         20.6 DEVELOPMENT OF BUDGETS; CAPITAL BUDGET LIMITS.

              20.6.1 The Parties agree, notwithstanding the date upon which the
         Closing occurs, that they will continue to work together to (i) develop
         an Annual O&M Budget and an Annual Capital Budget with respect to the
         "Initial Budget Period" (as defined in the Facilities Operating
         Agreement or the Lease, as applicable), and (ii) consider matters of
         concern relating to the operation of the Assets and Station Two
         following the Closing with respect to which the Operating Committee is
         given a role pursuant to the terms of the Lease or the Facilities
         Operating Agreement. The applicable provisions contained in the Phase I
         or Phase II Agreements, as applicable, shall replace this provision on
         and after the Effective Date.

                                         -3-

<PAGE>

                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

     20.6.2. Notwithstanding Section 20.6.1, above, the Parties hereby
agree that the Annual Capital Budgets for the Initial Budget Period to
be agreed to by the Parties as contemplated in Schedule 3.1 attached to
this Agreement, and the Annual Capital Budgets for each Year thereafter
during the Term, shall include as the aggregate budgeted amount for the
relevant Year (or portion thereof), in respect of all Non-Incremental
Capital Costs and Henderson Non-Incremental Capital Costs (as defined
in the Station Two Agreement) that are not for Major Capital Repairs or
Henderson Major Capital Repairs, respectively, the following amounts
(the "Capital Budget Limits"), which Capital Budget Limits shall not be
increased or decreased without the written approval of the Parties, but
shall be subject to adjustment pursuant to the procedures to be
developed by Big Rivers and Leaseco as contemplated in Section 20.6.4
below, and shall be subject to the other provisions of this Section
20.6:

<TABLE>
<CAPTION>

<S>                                                        <C>
-     First Partial Year following Effective Date
         (assuming there are five full months then
         remaining in that Year):                           $
-     First full Year following Effective Date:             $
-     Second full Year following Effective Date:            $
-     Third full Year following Effective Date:             $
-     Fourth full Year following Effective Date:            $
-     Fifth full Year following Effective Date:             $
-     Sixth full Year following Effective Date:             $
-     Seventh full Year following Effective Date:           $
-     Eighth full Year following Effective Date:            $
-     Ninth full Year following Effective Date:             $
-     Tenth full Year following Effective Date:             $
-     Eleventh full Year following Effective Date:          $[REDACTED]
-     Twelfth full Year following Effective Date:           $
-     Thirteenth full Year following Effective Date:        $
-     Fourteenth full Year following Effective Date:        $
-     Fifteenth full Year following Effective Date:         $
-     Sixteenth full Year following Effective Date:         $
-     Seventeenth full Year following Effective Date:       $
-     Eighteenth full Year following Effective Date:        $
-     Nineteenth full Year following Effective Date:        $
-     Twentieth full Year following Effective Date:         $
-     Twenty-First full Year following Effective Date:      $
-     Twenty-Second full Year following Effective Date:     $
-     Twenty-Third full Year following Effective Date:      $
-     Twenty-Fourth full Year following Effective Date:     $
-     Twenty-Fifth full Year following Effective Date:      $
</TABLE>

                                         -4-
<PAGE>

                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

         Except as otherwise provided below, Big Rivers, Leaseco and/or Station
         Two Subsidiary each agree to contribute their respective share of the
         Capital Budget Limit for each Year (or portion thereof) during the
         Term, based upon their respective Capital Asset Sharing Ratios or
         Station Two Improvement Sharing Ratios (as defined in the Station Two
         Agreement), as applicable; provided, that so long as the aggregate
         budgeted amount for Non-Incremental Capital Costs and Henderson
         Non-Incremental Capital Costs that are included in the approved Annual
         Capital Budget and Operating Budget (in the case of Station Two) for a
         particular Year, but which are not for Major Capital Repairs or
         Henderson Major Capital Repairs, respectively (the "Approved Capital
         Amount"), is equal to or greater than the Big Rivers Contribution for
         that Year, then Big Rivers will contribute the entire Big Rivers
         Contribution (as defined in Section 20.6.3 below) for that Year and
         Leaseco and/or Station Two Subsidiary will contribute the remainder of
         the Approved Capital Amount; and provided further, that in the event
         the Approved Capital Amount for a particular Year is less than the Big
         Rivers Contribution for that Year, then Big Rivers alone shall
         contribute the entire Approved Capital Amount. Notwithstanding anything
         contained in this Section 20.6 to the contrary Leaseco and/or Station
         Two Subsidiary shall be entitled to propose an aggregate annual budget
         for Non-Incremental Capital Costs (exclusive of costs for Major Capital
         Repairs) and Henderson Non-Incremental Capital Costs (exclusive of
         Costs for Henderson Major Capital Repairs) that is less than the
         Capital Budget Limits for that Year, provided such budget is consistent
         with Prudent Utility Practice, and such budget as proposed by Leaseco
         and/or Station Two Subsidiary shall be approved if it meets the
         criteria for such approval in Article 6 of the Cost Sharing Agreement,
         Article 7 of the Lease and Section 8.15 or 9.8 of the Station Two
         Agreement (as applicable) notwithstanding that it may be less than the
         Capital Budget Limit. In addition to the foregoing, in the event the
         Approved Capital Amount for a particular Year is less in the aggregate
         than the Big Rivers Contribution for that Year, Big Rivers agrees to
         contribute the amount by which the Big Rivers Contribution exceeds the
         Approved Capital Amount, to fund any Non-Incremental Capital Costs and
         Henderson Non-Incremental Capital Costs (in each case exclusive of
         costs for Major Capital Repairs and Henderson Major Capital Repairs)
         that were not included in the relevant approved budget, but which (i)
         are required during that Year, consistent with Prudent Utility
         Practice, to be expended in order to address unanticipated operating
         problems at one or 

                                     -5-
<PAGE>

                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

         more of the Generating Plants, and (ii) meet the criteria and 
         conditions set forth in Article 7 of the Cost Sharing Agreement, 
         Article 8 of the Lease or Section 8.17 or 9.10 of the Station Two 
         Agreement (as applicable) for Big Rivers' obligation to fund the 
         same. Such contributions by Big Rivers will serve as an approved 
         deviation from the Annual Capital Budget for that Year as 
         contemplated in Section 6.5 of the Facilities Operating Agreement, 
         Section 7.5 of the Lease or Section 8.17(f) or 9.10(d) of the 
         Station Two Agreement, as applicable.

         20.6.3 Except as otherwise provided in this Section 20.6, Big Rivers
         agrees that its respective share of the Capital Budget Limit for each
         Year shall be the amounts set forth below (collectively, the "Big
         Rivers Contributions"), which amounts shall be paid by Big Rivers at
         the time(s) provided in Article 7 of the Cost Sharing Agreement,
         Article 8 of the Lease and Section 8.17 or 9.10 of the Station Two
         Agreement, as applicable:

<TABLE>
<CAPTION>

<S>                                      <C>
-     First Partial Year:                $
-     First full Year:                   $
-     Second full Year:                  $
-     Third full Year:                   $
-     Fourth full Year:                  $
-     Fifth full Year:                   $
-     Sixth full Year:                   $
-     Seventh full Year:                 $
-     Eighth full Year:                  $
-     Ninth full Year:                   $
-     Tenth full Year:                   $
-     Eleventh full Year:                $[REDACTED]
-     Twelfth full Year:                 $
-     Thirteenth full Year:              $
-     Fourteenth full Year:              $
-     Fifteenth full Year:               $
-     Sixteenth full Year:               $
-     Seventeenth full Year:             $
-     Eighteenth full Year:              $
-     Nineteenth full Year:              $
-     Twentieth full Year:               $
-     Twenty-First full Year:            $
-     Twenty-Second full Year:           $
-     Twenty-Third full Year:            $
-     Twenty-Fourth full Year:           $
-     Twenty-Fifth full Year:            $
</TABLE>
                                     -6-
<PAGE>
                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

         Big Rivers agrees that the amount of the Big Rivers Contribution for a
         particular Year shall not be reduced in the event the Approved Capital
         Amount is less than the Capital Budget Limit for the year, so long as
         the Approved Capital Amount is equal to or greater than the Big Rivers
         Contribution.

              20.6.4 The Parties agree that, as an additional condition to the
         Closing and the Parties' obligation to consummate the transactions
         contemplated at the Closing, Big Rivers and Leaseco must agree upon a
         mutually satisfactory procedure by which the Capital Budget Limits and
         the Big Rivers Contributions will be adjusted during the Term to
         reflect inflationary increases in the cost of Non-Incremental Capital
         Costs over that period. The Parties agree to negotiate in good faith to
         develop and agree upon that procedure at the earliest practicable time
         following the Execution Date, and shall document their agreement (if
         any) in writing at or prior to the Closing.

              20.6.5 Notwithstanding anything contained in any Operative
         Document to the contrary, but subject to the limitations and conditions
         set forth in this Section 20.6, at such time as Big Rivers shall have
         paid the entire Big Rivers Contribution for a particular Year (or the
         required portion thereof, as contemplated in Section 20.6.2 above)
         toward the funding of one or more Non-Incremental Capital Costs (other
         than for Major Capital Repairs) and/or Henderson Non-Incremental
         Capital Costs (other than for Henderson Major Capital Repairs), in
         either case in accordance with Article 7 of the Cost Sharing Agreement,
         Article 8 of the Lease and/or Section 8.17 or 9.10 of the Station Two
         Agreement (as applicable), then (a) Big Rivers shall be deemed to have
         paid its entire share of all Non-Incremental Capital Costs (other than
         for Major Capital Repairs) and Henderson 

                                     -7-
<PAGE>


         Non-Incremental Capital Costs (other than for Henderson Major 
         Capital Repairs) for that Year (or portion thereof), regardless of 
         whether additional expenditures for those or other Non-Incremental 
         Capital Costs (other than for Major Capital Repairs) or Henderson 
         Non-Incremental Capital Costs (other than for Henderson Major 
         Capital Repairs) have been budgeted for, or are thereafter required 
         during that Year for the maintenance and upkeep of the Generating 
         Plants in accordance with the Operative Documents, and (b) Leaseco 
         or Station Two Subsidiary, as applicable, agree that they shall be 
         responsible for the payment of all other Non-Incremental Capital 
         Costs (exclusive of costs for Major Capital Repairs) and Henderson 
         Non-Incremental Capital Costs (exclusive of costs for Henderson 
         Major Capital Repairs) during that Year to maintain and operate the 
         Facilities and Station Two in accordance with the Operative 
         Documents notwithstanding the Capital Budget Limit for that Year 
         (or portion thereof). Notwithstanding the immediately preceding 
         sentence or any other provision in any Operative Document to the 
         contrary, Big Rivers' payment of the Big Rivers Contribution for a 
         particular Year as contemplated above shall not, and shall not be 
         deemed to, affect, limit or eliminate Big Rivers' continuing 
         obligation under Article 7 of the Cost Sharing Agreement, Article 8 
         of the Lease or Section 8.17 or 9.10 (as applicable) of the Station 
         Two Agreement for the payment of Big Rivers' relevant Capital Asset 
         Sharing Ratio or Station Two Improvement Sharing Ratio with respect 
         to (a) any Incremental Capital Costs or Henderson Incremental 
         Capital Costs, and (b) any Non-Incremental Capital Costs for Major 
         Capital Repairs or Henderson Non-Incremental Capital Costs for 
         Henderson Major Capital Repairs, in each case that are required to 
         be funded by Big Rivers, directly or indirectly, in accordance with 
         those Articles or Sections, it being expressly understood that all 
         such obligations of Big Rivers shall continue in accordance with 
         those provisions irrespective of the provisions of this Section 
         20.6, and, where reasonably possible, shall be separately budgeted 
         for by the Parties in the Annual Capital Budgets or Operating 
         Budgets (in the case of Station Two) in accordance with the Cost 
         Sharing Agreement, the Facilities Operating Agreement, the Lease or 
         the Station Two Agreement, as applicable. In addition to the 
         foregoing, and except as otherwise provided in this Section 20.6, 
         nothing in this Section 20.6 shall be deemed to affect, limit or 
         eliminate Big Rivers' or the LG&E Parties' respective obligations 
         or liabilities under or pursuant to this or any other Operative 
         Document by reason of any misrepresentation, breach of warranty or 
         non-fulfillment of any covenant or agreement of Big Rivers or such 
         LG&E Parties, including without limitation, any indemnification and 
         hold harmless covenant of Big Rivers or such LG&E Parties set forth 
         herein or therein.

              20.6.6 To the extent any portion of a Big Rivers Contribution that
         is included in an approved Annual Capital Budget or Operating Budget
         (in the case of Station Two) is not thereafter used by Leaseco or
         Station Two Subsidiary in the Year for which payable because the
         project for which such funds were allocated was deferred or was not
         completed during that Year, after complying with the provisions of the
         Operative Documents, then such portion of the Big Rivers Contribution
         necessary to complete such project will be carried forward and included
         as an approved addition to the Annual Capital Budget or Operating
         Budget (as applicable) for the following Year (for use solely in

                                     -8-
<PAGE>


         connection with the completion of such project), but shall not serve as
         a credit against, or reduce, the Big Rivers Contribution for that
         following Year; provided, that the obligation of Big Rivers to so
         contribute any such portion of the Big Rivers Contribution in that
         following Year shall be further conditioned on either (i) Leaseco or
         Station Two Subsidiary having actually contributed, during the Year for
         which budgeted, its commitment for Non-Incremental Capital Costs or
         Henderson Non-Incremental Capital Costs that corresponds with such
         portion of the Big Rivers Contribution (based upon Leaseco's Capital
         Asset Sharing Ratio or Station Two Subsidiary's Station Two Improvement
         Sharing Ratio, as applicable), or (ii) Leaseco's or Station Two
         Subsidiary's agreement with Big Rivers to make those corresponding
         contributions at the same time in the following Year as such
         contributions are required by Big Rivers. References in this Section
         20.6 to the Operating Budgets required for Station Two shall be deemed
         to relate solely to the items and amounts set forth in those budgets
         for which Big Rivers and/or Station Two Subsidiary are responsible
         under the Station Two Agreement and the Station Two Contracts
         referenced therein.

                20.6.7 Notwithstanding anything contained in this Agreement or 
         in any other Operative Document to the contrary, the Parties agree that
         they shall not, at any time after the sixtieth (60th) day following the
         close of any Year, attempt to claim or assert any claim (A) that an
         expenditure incurred in that Year and included in the approved Annual
         O&M Budget, the approved Annual Capital Budget or the approved
         Operating Budget (in the case of Station Two) for that Year (including
         without limitation, items that were included in those budgets by
         agreement of the Parties, by decision of the Operating Committee or
         Oversight Committee (as applicable), or at the direction of an
         arbitration panel pursuant to the procedures set forth in Article 15)
         should in fact have been included in the other budget for that Year,
         (B) that an expenditure incurred in that Year and included as an
         expenditure for a Capital Asset or Station Two Improvement in any of
         those approved budgets is in fact an operation or maintenance expense
         or an Enhancement or Major Capital Improvement, or is a Capital Asset
         or Station Two Improvement that Big Rivers is not otherwise obligated
         to fund in part, (C) that an expenditure incurred in that Year and
         included as an operation or maintenance expense in any of those
         approved budgets is in fact an expenditure for a Capital Asset or
         Station Two Improvement that Big Rivers is obligated to fund in part,
         (D) that an expenditure incurred in that Year and included in those
         approved budgets is or is not for a Major Capital Repair or a Henderson
         Major Capital Repair, (E) that an expenditure incurred in that Year and

                                     -9-
<PAGE>

         included as Incremental Environmental O&M in any of those approved
         budgets is not in fact Incremental Environmental O&M, or (F) that an
         expenditure incurred in that Year and included as an operation and
         maintenance expense that is not Incremental Environmental O&M is in
         fact Incremental Environmental O&M; provided, however that nothing
         contained in this Section 20.6.7 shall be deemed to affect, limit or
         eliminate any such claims that are specifically asserted with respect
         to one or more items included in those approved budgets at any time
         prior to the expiration of the foregoing sixty-day period following the
         close of any Year, any such claims that are asserted prior to the
         approval of such budgets (or deemed approval pursuant to an arbitration
         award as contemplated above), or any claims regarding expenditures the
         approval or characterization of which was obtained by a Party through
         any misrepresentation or fraudulent or other willful misconduct, all of
         which claims shall be deemed to survive that sixty-day period for all
         purposes.

-    Section 21.4 (p.54). The phrase "but without giving effect to the conflict
     of law rules of such jurisdiction" is hereby added to the end of the
     sentence.

-    Section  22.2  (p.59).  The first and second  sentences  of Section 22.2
     are hereby  deleted and are replaced  with the  following  new  sentence:
     "LEM covenants and agrees, and Big Rivers  acknowledges and agrees,  that
     on the Closing Date and in the event the Marketing  Payment  contemplated
     in Section 4.3.9 exceeds $[REDACTED],  LEM will execute and deliver to the
     RUS a Demand  Promissory  Note in a principal  amount equal to the amount
     by which such  Marketing  Payment so exceeds $[REDACTED],  and in the form
     attached to this Agreement as Exhibit Q (the "Demand  Note")."  Exhibit Q
     attached  to  this  Amendment  shall  constitute  Exhibit  Q of  the  New
     Participation  Agreement as  contemplated  above.  The fifth  sentence of
     Section  22.2  is  hereby  amended  to be and  read  in its  entirety  as
     follows:  "Notwithstanding  the foregoing,  so long as any amount remains
     outstanding  under either of the two Promissory Notes to be issued by Big
     Rivers to the RUS  pursuant to the New RUS  Agreement  (as defined in the
     Non-Disturbance  Agreement) or under the "1983 Reimbursement  Agreement",
     the "1985 Reimbursement  Agreement" or the "AMBAC Notes" (each with AMBAC
     as referred to in Recital A of the Non-Disturbance  Agreement),  or under
     Big Rivers'  pollution  control  bonds as  outstanding  on the  Effective
     Date,  Big  Rivers  agrees  that it shall not,  and LEM  agrees  that Big
     Rivers  shall have no  obligation  to, pay any amount with respect to Big
     Rivers' Reimbursement  Obligation(s),  provided however, that interest at
     the Default Rate will continue to accrue  during all such periods  during
     which Big Rivers has no payment  obligation."  A new  sentence  is hereby
     added to the end of Section  22.2 of the New  Participation  Agreement as
     follows:  "Big Rivers'  Reimbursement  Obligation(s),  together  with its
     obligation to pay interest accruing on such reimbursement  amounts, shall
     survive  any  expiration  or  termination  of this  Agreement  and  shall
     continue to be binding on Big Rivers."

-    New Sections (p.60). New Sections 23.2 through 23.9, inclusive, are hereby
     added to Article 

                                     -10-
<PAGE>
                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

     23 of the New Participation Agreement as follows:

         23.2 COLEMAN UNIT NO. 2 ISSUES. Big Rivers agrees that it will fully
         repair and rectify, at its expense and consistent with Prudent Utility
         Practice, all equipment and operating problems at the Coleman Unit No.
         2 facility identified in the letter dated May 14, 1998 from Michael
         Core to George Basinger, as well as all other problems (whether or not
         related) that may exist and that may prevent bringing that unit back on
         line for regular operation to its full rated capacity. Big Rivers will
         use its commercially reasonable efforts to address those problems at
         the earliest practicable time, in an effort to return the Coleman Unit
         No. 2 facility on-line prior to July 14, 1998 (or as soon thereafter as
         is reasonably possible). The foregoing obligations of Big Rivers will
         survive the Closing and shall continue to be binding on Big Rivers.
         Notwithstanding the foregoing, Big Rivers acknowledges and agrees that
         the LG&E Parties shall be under no obligation to effect the Closing or
         to consummate the transactions contemplated at the Closing until such
         time as the Coleman Unit 2 facility is repaired in accordance with the
         preceding provisions.

         23.3 GREEN AND WILSON LANDFILL ISSUES. Big Rivers hereby represents and
         warrants to the LG&E Parties that the landfill located at the Green
         Station has a remaining useful life and capacity, based upon coal
         qualities that are consistent with Big Rivers' prior practices, of at
         least nine (9) years, without modification of any of the existing
         Permits relative to that landfill, without the need for capital
         improvements or the disruption or removal of materials located in that
         landfill, and based upon both vertical and horizontal measurement
         limitations, but assuming the continuation of Big Rivers' past
         operation and disposal practices by WKEC or Leaseco, as applicable,
         following the Effective Date. Big Rivers agrees that prior to the
         Closing (or as soon thereafter as is reasonably possible, using its
         commercially reasonable efforts) Big Rivers will, at its expense and
         consistent with Prudent Utility Practice, construct a new retainment
         road/wall at the Green Station landfill as contemplated by the pending
         Permit modification filed with the KNREPC and in compliance with all
         applicable Laws and Permits. Big Rivers further agrees, at its expense
         and at the earliest practicable time, to obtain all changes in existing
         Permits required for the full and lawful use and operation of the Green
         landfill (as expanded) and the Wilson landfill by the LG&E Parties
         following the Closing. In the event changes in existing Permits that
         would allow Big Rivers to forego such removal action in compliance with
         applicable Laws cannot be obtained despite Big Rivers' commercially
         reasonable efforts to do so, Big Rivers 

                                     -11-
<PAGE>
                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

         agrees, at its expense and consistent with Prudent Utility Practice, 
         to ensure that any landfill materials that have been placed or 
         disposed of outside the permitted boundaries of the Green landfill 
         and the Wilson landfill are removed along with any affected soil or 
         debris, and disposed of in compliance with applicable Laws at the 
         earliest possible time. Big Rivers also agrees to be solely 
         responsible for, and to indemnify and hold harmless the LG&E Parties 
         from and against, all claims, demands, losses, damages, liabilities, 
         costs, expenses, obligations and deficiencies (including without 
         limitation, costs of corrective or remedial actions, fines, civil or 
         criminal penalties, settlements and attorney's fees) that have been 
         or may be suffered or incurred resulting from or arising out of any 
         failure of the Green landfill and/or the Wilson landfill to comply 
         with applicable Permits and/or conditions thereof at any time prior 
         to the Closing or completion of the construction work described 
         above, or the approval by the KNREPC of changes to the existing 
         Permits as described above, whichever is later, unless such failure 
         is caused by any action by any of the LG&E Parties or any of their 
         Affiliates, successors or assigns or their respective officers, 
         employees, consultants or agents.

         23.4 COLEMAN ASH POND ISSUES. The LG&E Parties agree that, except as
         otherwise required by applicable Laws, the LG&E Parties shall not
         attempt to unilaterally close the "Southern Ash Pond" or the "Former
         Ash Pond" at the Coleman facility without the prior written consent of
         Big Rivers. Big Rivers agrees that it shall be solely responsible, at
         its expense and as and when required by applicable Laws, for promptly
         taking all actions, and duly filing all instruments and documents with
         federal, state and local governmental agencies, as shall be required to
         officially close the "Southern Ash Pond" and the "Former Ash Pond" at
         the Coleman facility (as identified on the Coleman facility site map
         prepared in connection with the Baseline Environmental Audit Report) in
         accordance with all applicable Laws, Permits and Prudent Utility
         Practice. Notwithstanding the foregoing, in the event the LG&E Parties
         elect, in their discretion, to dispose of materials in the Southern Ash
         Pond or the Former Ash Pond, WKEC or Leaseco, as applicable, shall be
         responsible for a pro rata portion of those closure costs based on the
         total amount (in tons) of ash disposed of in those ash ponds by the
         LG&E Parties as compared with the total amount of ash in the ponds at
         their closure. In addition to the foregoing, Big Rivers agrees, at its
         expense, to promptly commence and continue to dredge and excavate the
         remaining active ash pond (the "Active Ash Pond") at the Coleman
         facility in such a manner as shall be sufficient to cause the remaining
         useful life and capacity of that ash pond (based on horizontal and
         vertical measurements) as of one (1) month following the Closing to be
         at least 
                                     -12-
<PAGE>
                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

         thirteen (13) months under its existing Permits, assuming a
         continuation of the current capacity factor of the Coleman facility,
         and assuming no additional dredging or excavation of that ash pond
         during that 13-month period. All materials so dredged from the Coleman
         ash pond shall be disposed of by Big Rivers, at its expense, at a
         permitted landfill or other permitted site located outside the
         boundaries of any of the Generating Plants or related facilities other
         than the Coleman Station, and otherwise in compliance with all
         applicable Laws. Big Rivers also agrees to be solely responsible for,
         and to indemnify and hold harmless the LG&E Parties from and against,
         all claims, demands, losses, damages, liabilities, costs, expenses,
         obligations, and deficiencies (including without limitation, costs of
         corrective or remedial actions, fines, civil or criminal penalties,
         settlements and attorney's fees) that have been or may be suffered or
         incurred resulting from or arising out of (a) any failure of the Active
         Ash Pond to comply with all applicable Permits at any time prior to the
         Closing or the completion of the dredging and excavation work described
         above, whichever is later, (b) any use or disturbance of the "Southern
         Ash Pond" or the "Former Ash Pond" by Big Rivers at any time prior to
         the Closing, or any failure of those ash ponds to comply with all
         applicable Permits at any time prior to the closure of the same as
         contemplated above (except to the extent that such non-compliance is
         caused by the use of or the failure to permit (assuming they are
         otherwise permittable) those ash ponds by the LG&E Parties following
         the Closing), and (c) any delay in the closure of the "Southern Ash
         Pond" or the "Former Ash Pond" at the Coleman facility (except to the
         extent that such delay is caused by the LG&E Parties or any of their
         Affiliates, successors or assigns or their respective officers,
         employees, consultants or agents).

         23.5 COLEMAN OPACITY ISSUE. Big Rivers hereby represents and warrants
         to the LG&E Parties that Big Rivers has taken all such actions, and has
         made all such repairs (at its expense and consistent with Prudent
         Utility Practice), in respect of the Coleman facility as were necessary
         to eliminate the opacity issues or problems identified in the letter
         from Big Rivers to the KNREPC dated February 11, 1998, relating to
         opacity exceedances at that facility.

         23.6 YEAR 2000 COMPLIANCE ISSUE. Big Rivers hereby agrees to take all
         such actions, at its expense and consistent with Prudent Utility
         Practice, as shall be necessary in order to avoid any loss of
         transmission or other services in violation of its obligations under
         the Transmission Agreement or Big Rivers' Open Access Transmission
         Tariff by any of the LG&E Parties, the Members, the Smelters or Big
         Rivers over or in respect of

                                     -13-
<PAGE>
                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

         Big Rivers' transmission system and related facilities by reason of 
         the passage of time from the year 1999 to the year 2000 (otherwise 
         known as the "millennium problem" or the "Year 2000 problem").

         23.7 M&S INVENTORY. Consistent with Section 9.1 of the New
         Participation Agreement, Big Rivers and Leaseco agree that, assuming
         the Parties agree upon the procedures to be set forth on Schedule 9.1
         to this Agreement as of the Closing (which agreement is a condition to
         the Closing), the fair market value to be paid by Leaseco at the
         Closing for all materials and supplies Inventory of Big Rivers shall be
         $[REDACTED].

         23.8 MAJOR CAPITAL REPAIRS. As an additional condition to the Parties'
         obligations to consummate the transactions contemplated at the Closing,
         the Parties shall have agreed upon a definition of "Major Capital
         Repairs" which generally shall include expenditures for Capital Assets
         which (i) are necessary to repair any turbine, scrubber or boiler at
         any of the Generating Plants, (ii) are not covered by insurance or any
         warranty, (iii) are not the result of the negligence or willful
         misconduct of any of the LG&E Parties or any of their Affiliates,
         successors or assigns or their respective officers, employees,
         consultants or agents or any breach or default by any of the LG&E
         Parties or their Affiliates under any of the Operative Documents and
         (iv) exceed a threshold amount to be agreed upon by the Parties.

         23.9 MISCELLANEOUS. Notwithstanding the provisions of Section 5.1.27 of
         this Agreement, the Parties acknowledge that the representations and
         warranties of Big Rivers set forth in Sections 23.2 through 23.9,
         inclusive, shall supplement the representations and warranties set
         forth in Article 5, and shall be in addition to and not in lieu of
         those representations and warranties.

-    Section 24.3 (p.71). In the phrase "Big Rivers nor its successor or
    assigns," the word successor is hereby made plural.
-   Section 24.5 (p.72). The reference to "Mortgagees" is hereby changed to
    lower case.

 2. COST SHARING AGREEMENT. The Parties hereby agree to amend Exhibit A to the
New Participation Agreement (Cost Sharing Agreement) as follows:

-    Article 1 (p.1).  The  phrase "on  Exhibit  X" is hereby  changed to "in
     Exhibit X."
-    Section  6.7  (p.4).  The phrase  "ACTION.  Without  Meeting"  is hereby
     changed to "ACTION WITHOUT MEETING."
-    Section 6.10 (p.4).  The reference to "parties" is hereby capitalized.

                                         -14-

<PAGE>
                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

-    Section 7.1 (p.5).  The reference to "Section 5.1" is hereby  changed to
     "Article 5."
-    Section 7.3 (p.5).  The phrase "On the first day of each month  during
     the Term Leaseco and Big Rivers shall each deposit sufficient funds into
     the Capital Account based on their Capital Asset Sharing Ratios (defined
     in Section 7.4 below) (i)" is hereby  changed to "On the first day of
     each month during the Term, Leaseco and Big Rivers shall each deposit
     sufficient funds into the Capital Account based on their Capital Asset
     Sharing Ratios (defined in Section 7.4 below), but limited in the case
     of Big Rivers to the remaining Big Rivers Contribution (as defined in
     Section 20.6 of the Participation Agreement) for that Year with respect
     to  Non-Incremental Capital Costs that are not for Major Capital Repairs
     (i)".
-    Section 7.4(1) (p.6). The reference to "Incremental Capital Asset" is
     hereby changed to "Capital Asset" and the phrase "Leaseco's share of each
     Incremental Capital Cost, determined as of the date payment for such
     Capital Asset is required," is hereby changed to "Leaseco's share of each
     Incremental Capital Cost, determined as of the date payment for such
     Capital Asset is required to be made to the Capital Account pursuant to the
     forecast prepared by Leaseco pursuant to Section 7.2,".
-    Section 7.4(2) (p.7). The reference to "Non-Incremental Capital Asset" is
     hereby changed to "Capital Asset" and the phrase "Leaseco's share of each
     Non-Incremental Capital Cost" is hereby changed to "Leaseco's share of each
     Non-Incremental Capital Cost, determined as of the date payment for such
     Capital Asset is required to be made to the Capital Account pursuant to the
     forecast prepared by Leaseco pursuant to Section 7.2,".
-    Section 14.1  (p.13).  The  reference to "Notices" is hereby  changed to
     "notices (Section 21.1)."
-    Section 14.4 (p.13). The phrase "but without giving effect to the conflict
     of law rules of such jurisdiction" is hereby added to the end of the
     sentence.
-    Section 14.14.2 (p.15). In the phrase "Leaseco nor its successor or
     assigns," the word successor is hereby made plural.
-    Section 14.14.3 (p.16). The reference to "Mortgagees" is hereby made lower
     case.

 3. FACILITIES OPERATING AGREEMENT. The Parties hereby agree to amend Exhibit B
to the New Participation Agreement (Facilities Operating Agreement) as follows:

-    Section  5.4(a)  (p.3).  The  reference  to  "Big  Rivers'  transmission
     system" is hereby changed to "Big Rivers' Transmission System."
-    Section 5.6 (p.4). The phrase "the books and records that WKEC is required
     to keep pursuant to this Agreement" is hereby changed to "the books and
     records that WKEC is required to keep, or cause to be kept, pursuant to
     this Agreement."
-    Section 5.7 (p.4). The phrase "shall administer all Big Rivers' fuel supply
     agreements, procure and pay for all fuel" is hereby changed to "shall
     administer, or cause to be administered, all Big Rivers' fuel supply
     agreements, procure, or cause to be procured, and pay for all fuel."
-    Section 5.11 (p.5). The phrase "WKEC shall keep up-to-date books and
     records" is hereby changed to "WKEC shall keep, or cause to be kept,
     up-to-date books and records."
-    Section 6.5. Section 6.5 is hereby deleted and replaced in its entirety as
     follows:
                                         -15-
<PAGE>
                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

              6.5 BUDGET DEVIATIONS. WKEC shall immediately notify the Operating
         Committee of any anticipated departure of [REDACTED]% or more from an
         approved Annual Capital Budget or Annual O&M Budget. WKEC shall use
         reasonable efforts to (a) operate within [REDACTED] percent to 
         110 percent of the total approved Annual Capital Budget and 
         (b) spend at least [REDACTED] percent of the total approved Annual
         O&M Budget (not including the fuel or reagent budget). Subject to
         the provisions set forth below, any increase of [REDACTED]%
         or more proposed by WKEC to either budget shall be subject to review
         and approval by the Operating Committee (or in the case of the Annual
         Capital Budget, the Oversight Committee); provided, that such review
         and approval shall not apply to the Annual O&M Budgets that are
         included in the Initial Period Budgets, it being understood that
         increases of [REDACTED]% or more proposed by WKEC to those budgets 
         shall be permissible without that review and approval if the relevant
         expenditures are consistent with Prudent Utility Practice, in which
         case the additional costs will be borne by WKEC unless they constitute
         Incremental Environmental O&M required to be borne solely by Leaseco
         and Big Rivers in the manner provided for in Section 5 of the Cost
         Sharing Agreement. If WKEC exceeds the total budget for Non-Incremental
         Capital Costs (exclusive of such costs as are for Major Capital
         Repairs) that are included in an approved Annual Capital Budget, the
         additional cost of those Non-Incremental Capital Costs shall be borne
         by Leaseco unless the Parties otherwise agree, or unless remaining
         portions of the Big Rivers Contribution for that Year that were not
         included in the approved Annual Capital Budget are available as
         contemplated in Section 20.6.2 of the Participation Agreement (in which
         event such amounts will be applied as contemplated in that Section).
         Subject to the next succeeding sentence, if WKEC exceeds [REDACTED] 
         percent of the total budget for Incremental Capital Costs, or for Non-
         Incremental Capital Costs for Major Capital Repairs, in either case 
         that are included in an approved Annual Capital Budget, the additional
         costs of those Capital Assets shall be borne by Leaseco unless the 
         Parties otherwise agree, or unless the dispute resolution procedure 
         under Article 15 of the Participation Agreement determines that at the
         time WKEC proposed the applicable portions of the Annual Capital 
         Budget (or modification thereof) relating to those expenditures WKEC 
         acted consistent with Prudent Utility Practice, in which case the 
         additional costs shall be borne by Leaseco and Big Rivers in accordance
         with Sections 7.3 and 7.4 of the Cost Sharing Agreement. 
         Notwithstanding the provisions of the immediately preceding sentence,
         if WKEC exceeds [REDACTED] percent of the total of any budget for 
         Incremental Capital Costs, or for Non-Incremental Capital Costs for
         Major Capital Repairs, that are included in 

                                     -16-
<PAGE>

                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

         an approved Annual Capital Budget that is a part of the Initial 
         Period Budgets, the additional cost of those Capital Assets shall be 
         borne by Leaseco unless the Parties otherwise agree, or unless the 
         dispute resolution procedure under Article 15 of the Participation 
         Agreement determines that the purchase and installation of those 
         Capital Assets, and the costs thereof, are consistent with Prudent 
         Utility Practice, regardless of whether the relevant Initial Period 
         Budget, or WKEC's or Leaseco's (as applicable) actions in connection 
         with the same, were consistent with Prudent Utility Practice at the 
         time that budget was prepared, in which case the additional costs 
         shall be borne by Leaseco and Big Rivers in accordance with Sections 
         7.3 and 7.4 of the Cost Sharing Agreement. If WKEC fails or refuses 
         to use reasonable efforts to spend at least [REDACTED] percent of the
         total approved Annual Capital Budget or the total approved Annual O&M
         Budget (excluding that portion relating to Incremental Environmental 
         O&M) and pursuant to the dispute resolution procedure under Article 
         15 of the Participation Agreement it is determined that such failure 
         or refusal is inconsistent with Prudent Utility Practice, WKEC shall 
         make the omitted expenditure as required pursuant to the applicable 
         dispute resolution procedure.

-    Section 6.6 (p.8). The last sentence of Section 6.6 is hereby deleted and
     replaced with the following sentence:

         Additional capital expenditures incurred by WKEC in response to an
         Operating Emergency which are not already included in an approved
         Annual Capital Budget shall be paid for by Leaseco unless (a) the same
         represents an Incremental Capital Cost or expenditures for a Major
         Capital Repair, in which case such expenditures shall be paid by
         Leaseco and Big Rivers in accordance with Article 7 of the Cost Sharing
         Agreement, or (b) Big Rivers shall not have paid the entire Big Rivers
         Contribution for that Year toward funding of one or more
         Non-Incremental Capital Costs (other than costs for Major Capital
         Repairs) and/or Henderson Non-Incremental Capital Costs (other than
         costs for Henderson Major Capital Costs) in accordance with Article 7
         of the Cost Sharing Agreement, Article 8 of the Lease and/or Section
         8.17 or 9.10 of the Station Two Agreement (as applicable), then that
         remaining amount will be allocated to any Non-Incremental Capital Costs
         in that Year resulting from that Operating Emergency as contemplated in
         Section 20.6.2 of the Participation Agreement.

-    Section 15.2 (pp.15-16). The phrase "WKEC shall deliver to Big Rivers" is
     hereby changed to "WKEC shall deliver, or cause to be delivered, to Big
     Rivers" and the phrase "developed by WKEC" is hereby changed to "developed,
     or caused to be developed, by WKEC."

                                     -17-
<PAGE>


-    Section 17.9 (p.16). The first reference to "parties"" is hereby changed to
     "Parties'", and the second reference to "parties" is hereby capitalized.
-    Section 17.13(a) (p.17). In the phrase "Big Rivers nor its successor or
     assigns," the word successor is hereby made plural.
-    Section 17.13(b) (p.18). In the phrase "WKEC nor its successor or assigns,"
     the word successor is hereby made plural.
-    Section 17.13(c) (p.19). The reference to "Mortgagees" is hereby made lower
     case.

4. LEASE AND OPERATING AGREEMENT. The Parties hereby agree to amend Exhibit C to
the New Participation Agreement (Lease and Operating Agreement) as follows:

-    Article 1 (p.1).  The  phrase "on  Exhibit  X" is hereby  changed to "in
     Exhibit X."
-    Section   2.3.2(c).   The  reference  to  "LEM"  is  hereby  changed  to
     "Leaseco."
-     Section   2.3.2(f)(iii)   (p.5).   The  reference  to  "Federal   Energy
     Regulatory Commission" is hereby changed to "FERC."
-    Section  5.4.1  (p.8).  The  reference  to  "Big  Rivers'   transmission
     system" is hereby changed to "Big Rivers' Transmission System."
-    Section 5.4.3 (p.9). The phrase "the books and records Leaseco is required
     to keep pursuant to this Agreement" is hereby changed to "the books and
     records Leaseco is required to keep, or cause to be kept, pursuant to this
     Agreement."
-    Sections 7.5 and 7.6. Sections 7.5 and 7.6 are hereby amended to be and
     read in their entirety as follows:

              7.5 BUDGET DEVIATIONS. Leaseco shall immediately notify the
         Operating Committee of any anticipated departure of [REDACTED]% or more
         from an approved Annual Capital Budget or Annual O&M Budget. Leaseco 
         shall use reasonable efforts to (a) operate within [REDACTED] percent
         to [REDACTED] percent of the total approved Annual Capital Budget and
         (b) spend at least [REDACTED] percent of the total approved Annual 
         O&M Budget (not including the fuel and reagent budget). Subject to
         the provisions set forth below, any increase of [REDACTED]% or more
         proposed by Leaseco to either budget shall be subject to review and
         approval by the Operating Committee; provided, that such review and
         approval shall not apply to the Annual O&M Budgets that are included
         in the Initial Period Budgets, it being understood that increases of
         [REDACTED]% or more proposed by Leaseco to those budgets shall be
         permissible without that review and approval if the relevant
         expenditures are consistent with Prudent Utility Practice, in which
         case the additional costs will be borne by Leaseco unless they
         constitute Incremental Environmental O&M required to be borne solely by
         Leaseco and Big Rivers in the manner provided for in Section 2.3.3. If
         Leaseco exceeds the total budget for Non-Incremental Capital Costs
         (exclusive of such costs as are for Major Capital Repairs) that are

                                     -18-
<PAGE>


         included in an approved Annual Capital Budget, the additional cost of
         those Non-Incremental Capital Costs shall be borne by Leaseco unless
         the Parties otherwise agree, or unless remaining portions of the Big
         Rivers Contribution for that Year that were not included in the
         approved Annual Capital Budget are available as contemplated in Section
         20.6.2 of the Participation Agreement (in which event such amounts will
         be applied as contemplated in that Section). Subject to the next
         succeeding sentence, if Leaseco exceeds [REDACTED] percent of the total
         budget for Incremental Capital Costs, or for Non-Incremental Capital
         Costs for Major Capital Repairs, in either case that are included in an
         approved Annual Capital Budget, the additional costs of those Capital
         Assets shall be borne by Leaseco unless the Parties otherwise agree, or
         unless the dispute resolution procedure under Article 15 of the 
         Participation Agreement determines that at the time Leaseco proposed 
         the applicable portions of the Annual Capital Budget (or modification 
         thereof) relating to those expenditures Leaseco acted consistent with 
         Prudent Utility Practice, in which case the additional costs shall be 
         borne by Leaseco and Big Rivers in accordance with Sections 8.3 and 
         8.4. Notwithstanding the provisions of the immediately preceding 
         sentence, if Leaseco exceeds [REDACTED] percent of the total of any 
         budget for Incremental Capital Costs, or for Non-Incremental Capital
         Costs for Major Capital Repairs, that are included in an approved 
         Annual Capital Budget that is a part of the Initial Period Budgets,
         the additional cost of those Capital Assets shall be borne by Leaseco
         unless the Parties otherwise agree, or unless the dispute resolution
         procedure under Article 15 of the Participation Agreement determines 
         that the purchase and installation of those Capital Assets, and the 
         costs thereof, are consistent with Prudent Utility Practice, regardless
         of whether the relevant Initial Period Budget, or Leaseco's actions in
         connection with the same, were consistent with Prudent Utility Practice
         at the time that budget was prepared, in which case the additional
         costs shall be borne by Leaseco and Big Rivers in accordance with
         Sections 8.3 and 8.4. If Leaseco fails or refuses to use reasonable
         efforts to spend at least [REDACTED] percent of the total approved 
         Annual Capital Budget or the total approved Annual O&M Budget 
         (excluding that portion relating to Incremental Environmental O&M) and
         pursuant to the dispute resolution procedure under Article 15 of the
         Participation Agreement it is determined that such failure or refusal
         is inconsistent with Prudent Utility Practice, Leaseco shall make the
         omitted expenditure as required pursuant to the applicable dispute 
         resolution procedure.

              7.6 OPERATING EMERGENCY. Notwithstanding any other provision of
         this Agreement, in the event of an Operating Emergency, Leaseco 

                                     -19-
<PAGE>
                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

         may take such action as in its sole discretion it may deem prudent 
         or necessary to terminate the Operating Emergency, to preserve and 
         maintain the safety, integrity and operability of the Tangible 
         Assets and to maintain Capacity and the availability of the Tangible 
         Assets to the maximum extent. Additional capital expenditures 
         incurred by Leaseco in response to an Operating Emergency which are 
         not already included in an approved Annual Capital Budget shall be 
         paid for by Leaseco unless (a) the same represents an Incremental 
         Capital Cost or expenditures for a Major Capital Repair, in which 
         case such expenditures shall be paid by Leaseco and Big Rivers in 
         accordance with Article 8 of this Agreement, or (b) Big Rivers shall 
         not have paid the entire Big Rivers Contribution for that year 
         toward funding of one or more Non-Incremental Capital Costs (other 
         than costs for Major Capital Repairs) and/or Henderson 
         Non-Incremental Capital Costs (other than costs for Henderson Major 
         Capital Costs) in accordance with Article 7 of the Cost Sharing 
         Agreement, Article 8 of the Lease and/or Section 8.17 or 9.10 of the 
         Station Two Agreement (as applicable), then that remaining amount 
         will be allocated to any Non-Incremental Capital Costs resulting 
         from that Operating Emergency as contemplated in Section 20.6.2 of 
         the Participation Agreement.

-    Section  8.3 (p.15).  The phrase "On the first day of each month  during
     the Term Leaseco and Big Rivers shall each deposit  sufficient funds into
     the Capital  Account based on their Capital Asset Sharing Ratios (defined
     in Section  8.4  below)  (i)" is  hereby  changed to "On the first day of
     each month  during the Term,  Leaseco and Big Rivers  shall each  deposit
     sufficient  funds into the Capital  Account  based on their Capital Asset
     Sharing Ratios  (defined in Section 8.4  below),  but limited in the case
     of Big Rivers to the  remaining  Big Rivers  Contribution  (as defined in
     Section 20.6 of the  Participation  Agreement) for that Year with respect
     to  Non-Incremental  Capital Costs that are not for Major Capital Repairs
     (i)".
-    Section 10.2.2 (p.19). The phrase "the fixed rental payments payable by
     Leaseco under Section 2.3.2 and the Monthly Margin Payments payable by
     Leaseco pursuant to Article 2 of this Agreement" is hereby changed to the
     "fixed rental payments and the Monthly Margin Payments payable by Leaseco
     pursuant to Section 2.3.2 of this Agreement."
-    Section 11.6 (p.22).  The reference to the  "Transmission  Agreement" is
     hereby  changed  to  the   "Transmission   Service  and   Interconnection
     Agreement."
-    Section 13.4 (p.22). The phrase "but without giving effect to the conflict
     of law rules of such jurisdiction" is hereby added to the end of the
     sentence.
-    Section 13.14.2 (p.24). In the phrase "Leaseco nor its successor or
     assigns," the word successor is hereby made plural.
-    Section 13.14.3 (p.25). The reference to "Mortgagees" is hereby made lower
     case.
-    Schedule 2.3 (in the form attached hereto) is hereby added to the Lease and
     Operating Agreement.

                                     -20-
<PAGE>
                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

 5. POWER PURCHASE AGREEMENT. The Parties hereby agree to amend Exhibit D to the
New Participation Agreement (Power Purchase Agreement) as follows:

-    Section 2.2(d) (p.5). The reference to "tangible assets" is hereby
     capitalized.
-    Section 3.3(a)(iii) (p.8). The phrase "The first Monthly Margin Payment
     shall be due on the second occurrence" is hereby changed to "The first
     Monthly Margin Payment shall be due from LEM to Big Rivers on the second
     occurrence."
-    Section  3.3(a)(viii)(3)  (p.11).  The phrase "Federal Energy Regulatory
     Commission" is hereby changed to "FERC."
-    Section 4.2 (p.14). The phrase "(i) the Members may acquire Power from a
     Person other than Big Rivers after the first January 1 that is three full
     Years after the Effective Date to the extent necessary for the Members to
     fulfill their obligations to provide market-priced Power to certain of
     their non-Smelter industrial customers as contemplated in the Plan, and
     (ii)" is hereby deleted.
-    Section  4.3(b)(iv).  (p.15).  The phrase  "(determined  by reference to
     (iii), above)" is hereby deleted.
-    Section 4.3(d)(iv) (p.16). The phrase "(determined by reference to (iii),
     above)" is hereby deleted.
-    Section  4.3(e)(p.16).  The  reference to "December  31, 1997" is hereby
     changed to "December 31, 1998."
-    Section 4.4(a)(iii) (p.18). The phrases "market-priced" and "as
     contemplated in the Plan or Big Rivers' Transaction Tariff" are hereby
     deleted.
-    Section 5.4 (p.21). The references to "transmission system" are hereby
     capitalized.
-    Sections 5.5(b)(iii), 5.6, 5.6 and 5.8 (pp.22-24). The references to
     "Control Area" are hereby made lower case.
-    Section 5.7 (p.23). Section 5.7 is hereby modified by deleting the last
     sentence of the Section and inserting at the end of the second to last (now
     last) sentence the following:

         ;provided, that in the event that two or more Generating Plant units
         are off-line and Big Rivers is experiencing low voltage problems, the
         Operator of the Generating Plants will, without adjustment in the Power
         Value Amount, operate the Generating Plant units down to the design
         lagging power factor without a loss of megawatt output, but only to the
         extent necessary to produce an amount of megavars equal to [REDACTED]
         multiplied by the net output of the Generating Plants that would exist
         if the units that are off-line at the time the calculation was made are
         operating. At any time, any additional megavars requested by Big Rivers
         in excess of [REDACTED] multiplied by the net output of the Generating
         Plants, assuming no units are off-line, if available from the
         Generating Plants without loss of megawatt output capabilities, shall
         be provided to Big Rivers from LEM at LEM's rates for sale of reactive
         power set forth in its tariff for the sale of ancillary services (as
         filed with FERC and revised from time-to-time). LEM may also elect (but
         is not obligated) to 
                                     -21-
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                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

         provide, in any hour at Big Rivers' request, megavars in such 
         quantities that their production adversely impacts the Generating 
         Plants' capability to produce megawatts at the rated lagging power 
         factor, but shall do so only at the rate set forth in LEM's tariff 
         for the sale of ancillary services (as filed with FERC and revised 
         from time-to-time) or such other rates as FERC may accept for filing.

-    Section 6.2(g) (p.25). The reference to "transmission system" is hereby
     capitalized.
-    Section 6.4(a) (p.28). In the reference to "Base Power Rates," "Rates" is
     hereby made lower case.
-    Section 6.6(b) (p.30). The references to "Excess Credit" are hereby made
     lower case.
-    Section  9.1(a)  (p.32).  A close  parenthesis  is  hereby  added  after
     "Section 15.2."
-    Section 13 (p.36) is hereby deleted and left as a "Reserved" section.
-    Section  17.3  (p.40).  The  reference  to  "Mortgagees"  is hereby made
     lower case.
-    Section 18.1  (p.40).  The  reference to "Notices" is hereby  changed to
     "notices (Section 21.1)."
-    Section 18.4 (p.41). The phrase "but without giving effect to the conflict
     of law rules of such jurisdiction" is hereby added to the end of the
     sentence.
-    Signature  Block (p.42).  The reference to "LG&E Power  Marketing  Inc."
     is hereby changed to "LG&E Energy Marketing Inc."
-    Schedule 3.3(a) (in the form attached hereto) is hereby added to the Power
     Purchase Agreement.
-    Exhibit C. The reference to "26 rural delivery points" under Green River
     Electric is hereby changed to "27 rural delivery points."
-    Exhibit C. An  additional  delivery  point for Green  River  Electric is
     hereby added as follows: "ACMI  13,800 volts."
-    Exhibit C. The  reference  to  "Costain  East  Portal"  under  Henderson
     Union Electric is hereby changed to "Lodestar Energy."
-    Exhibit  C.  The  reference  to  "Green  Coal"  under   Henderson  Union
     Electric is hereby changed to "C.R. Mining."
-    Exhibit C. The  reference  to  "Peabody  Breck"  under  Henderson  Union
     Electric is hereby changed to "Peabody Breckenridge."
-    Exhibit C. The  reference to  "Providence  Mine" under  Henderson  Union
     Electric is hereby changed to "Victory Processing."
-    Exhibit C. The reference to "Sextet Dorea Mine 69,000 volts" under
     Henderson Union Electric is hereby deleted.
-    Exhibit C. An additional  delivery  point for Henderson  Union  Electric
     is hereby added as follows: "Dotiki #3  12,470 volts."

 6. TRANSMISSION SERVICE AND INTERCONNECTION AGREEMENT. The Parties hereby agree
to amend Exhibit E to the New Participation Agreement (Transmission Service and
Interconnection Agreement) as follows:

                                     -22-
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                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

-    Recital B (p.2). The reference to "ancillary services" is hereby
     capitalized.
-    Before Section 2.5 (ECAR) (p.4), a new Section is hereby added which states
     "`Default Rate' shall have the meaning set forth in Exhibit X to the
     Participation Agreement."
-    Section 2.8 (p.4).  The  reference to "`Guaranty  Agreement'"  is hereby
     changed to "`Guaranty.'"
-    Section 3.2(a)(iv) (p.9). The phrase "Chapter 11 Case" is hereby changed to
     "Big Rivers' Chapter 11 case pending before the U.S. Bankruptcy Court for
     the Western District of Kentucky, Case No.
     96-41168."
-    Section 5.1 (p.15). A comma is hereby inserted after the phrase "Big Rivers
     shall operate and maintain, or cause to be operated and maintained."
-    Section  5.2  (p.16).  The  reference  to  "Firm  Transmission  Services
     Agreement" is hereby changed to "Service Agreement."
-    Section 6.2 (p.17). The references to "Short-Term Firm Transmission
     Service" are hereby changed to "Short-Term Firm Point-to-Point Transmission
     Service" and the references to "Non-Firm Transmission Service" are hereby
     changed to "Non-Firm Point-to-Point Transmission Service."
-    Section 6.3 (p.18). The reference to "Firm Transmission Service" is hereby
     changed to "Firm Point-to-Point Transmission Service," the references to
     "Long-Term Firm Transmission Service" are hereby changed to "Long-Term Firm
     Point-to-Point Transmission Service" and the reference to "completed
     Transmission Services Agreement" is hereby changed to "a completed Service
     Agreement."
-    Section 6.5.1 (p.20). The reference to "RUS" is hereby changed to
     "Administrator of the Rural Utilities Service, U.S. Department of
     Agriculture or any successor agency or administration."
-    Section 6.5.2 (pp.21-25). The reference to "Open Access Transmission
     Tariff" is hereby changed to "Tariff," the references to "Lease" are hereby
     changed to "Lease and Operating Agreement" and the reference to
     "Transmission Service Agreement" is hereby changed to "Service Agreement."
-    Section  6.5.3  (p.25).  The  reference  to "FPA" is hereby  changed  to
     "Federal Power Act."
-    Section 7.1 (p.26). The reference to "Transmission Provider" is hereby
     changed to "Transmission Provider (as defined in FERC's Order No. 888)" and
     the reference "WKEC and Station Two Subsidiary" is hereby changed to "LEM."
-    Section  8.1.1.1  (p.27).  The  reference  to  "Transmission  system" is
     hereby changed to "Transmission System."
-    Section 8.1.1.9 (p.28). The reference to "Transmission Facilities" is
     hereby made lower case.
-    Section 8.1.2.8 (p.30). The reference to "control area" is hereby
     capitalized.
-    Section 9.1 (p.33).  The  reference  to "Firm  Transmission  Service" is
     hereby changed to "Firm Point-to-Point Transmission Service."
-    Section 9.3 (pp.34-35). The references to "Lease Agreement" and "Lease" are
     hereby changed to "Lease and Operating Agreement," the reference to "Green
     River Electric Corporation" is hereby changed to "Green River Electric,"
     and the reference to 

                                     -23-
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                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

    "Henderson Union Electric Cooperative Corporation" is hereby changed to 
    "Henderson Union."
-    Section 9.4 (p.35). The reference to "Kentucky Utilities" is hereby changed
     to "Kentucky Utilities Company" and the reference to "tariff" is hereby
     capitalized.
-    Section  9.6  (p.36).  The  reference  to  "Transmission  Providers"  is
     hereby  changed to  "Transmission  Providers  (as defined in FERC's Order
     No. 888)."
-    Section 10 (p.37).  The  references to "Non-Firm  Transmission  Credit"
     are hereby changed to "Non-Firm Transmission Use Credit."
-    Section 11.1 (p.39). The reference to "Power Contract" is hereby changed to
     "Power Purchase Agreement" and, in the reference to "Control Area
     Operator," "Operator" is hereby made lower case.
-    Section 16.3 (pp.49-51). The references to "power" and "energy" are hereby
     capitalized, the references to "Lease" are hereby changed to "Lease and
     Operating Agreement," and the references to "transmission service" and
     "transmission system" are hereby capitalized.
-    Section 18.4 (p.54). The reference to "Firm Transmission Services
     Agreements" is hereby changed to "Service Agreements for Firm
     Point-to-Point Transmission Service."
-    Exhibit 5. The reference to "26 rural delivery points" under Green River
     Electric is hereby changed to "27 rural electric points."
-    Exhibit 5. The reference to "Southwire #1 13,800 volts" under Green River
     Electric is hereby deleted.
-    Exhibit 5. The reference to "Southwire #2 13,800 volts" under Green River
     Electric is hereby deleted.
-    Exhibit 5. An  additional  delivery  point for Green  River  Electric is
     hereby added as follows: "ACMI  13,800 volts."
-    Exhibit 5. The  reference  to  "Costain  East  Portal"  under  Henderson
     Union Electric is hereby changed to "Lodestar Energy."
-    Exhibit  5.  The  reference  to  "Green  Coal"  under   Henderson  Union
     Electric is hereby changed to "C.R. Mining."
-    Exhibit 5. The  reference  to  "Peabody  Breck"  under  Henderson  Union
     Electric is hereby changed to "Peabody Breckenridge."
-    Exhibit 5. The  reference to  "Providence  Mine" under  Henderson  Union
     Electric is hereby changed to "Victory Processing."
-    Exhibit 5. The reference to "Sextet Dorea Mine 69,000 volts" under
     Henderson Union Electric is hereby deleted.
-    Exhibit 5. An additional  delivery  point for Henderson  Union  Electric
     is hereby added as follows: "Dotiki #3  12,470 volts."

 7. TAX INDEMNIFICATION AGREEMENT. The Parties hereby agree to amend Exhibit F
to the New Participation Agreement (Tax Indemnification Agreement) as follows:

-    Recital A (p.1).  The reference to  "Participation  Agreement" is hereby
     changed to "New Participation Agreement."

                                     -24-
<PAGE>
                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

-    Recitals B and C (p.1).  The  references to "LPM" are hereby  changed to
     "LEM."
-    Section 2 (p.4). The reference to "December 31, 1997" is hereby changed to
     "December 31, 1998," and the reference to "member" is hereby capitalized.
-    Section 6(c) (p.6).  The  reference to "Section 7" is hereby  changed to
     "Article 7."
-    Section 8(a) (p.7).  The  reference to "Section 7" is hereby  changed to
     "Article 7."
-    Section 9(b) (p.8).  The reference to "Operative  Agreements"  is hereby
     changed to "Operative Documents."
-    Section 11(b) (p.10). After the reference to "(July 7, 1985)," the phrase
     "("ABA Opinion 352")" is hereby added.
-    Section 11(f) (p.11). The phrase "but without giving effect to the conflict
     of law rules of such jurisdiction" is hereby added to the end of the
     sentence.

 8. MORTGAGE AND SECURITY AGREEMENT. The Parties hereby agree to amend Exhibit G
to the New Participation Agreement (Mortgage and Security Agreement) as follows:

-    The reference to "Participation Agreement" on the fourth line of page 2 is
     hereby changed to "New Participation Agreement."
-    Section 6 (p.3). The following clause is added within the parenthetical at
     the end of subpart (a) of Section 6, following the text contained in that
     parenthetical: "and which are stipulated to be Permitted Liens"; and the
     following parenthetical is hereby added at the end of subpart (b) of
     Section 6: "(which is also stipulated to be a Permitted Lien)."

 9. STATION TWO AGREEMENT. The Parties hereby agree to amend Exhibit M to the
New Participation Agreement (Station Two Agreement) as follows:

-    Section 3.5(d) (p.10). Section 3.5(d) is hereby deleted and replaced with
     the following new section: "(d) A Certificate of an authorized officer of
     Station Two Subsidiary certifying that, as of the effective date of the
     Station Two Agreement, Station Two Subsidiary is an "affiliate" of a
     utility subject to regulation by the KPSC in compliance with KRS 
     Section 96.520."
-    Section 8.7 (p.32). The phrase "keep up-to-date books and records" is
     hereby changed to "keep, or cause to be kept, up-to-date books and
     records." The phrase "retain those books and records" is hereby changed to
     "retain, or cause to be retained, those books and records."
-    Section 8.14(c) (p.50). The phrase "administer, all of Big Rivers' fuel and
     reagent supply agreements" is hereby changed to "administer, or cause to be
     administered, all of Big Rivers' fuel and reagent supply agreements." The
     phrase "procure and initially pay for all fuel and reagents" is hereby
     changed to "procure, or cause to be procured, and initially pay for all
     fuel and reagents."
-    Section 8.17(a) (p.56). The first sentence of Section 8.17(a) is hereby
     amended to be and read in its entirety as follows:

                                     -25-
<PAGE>

                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

         For purposes of this Agreement (including without limitation, Section 9
         of this Agreement, entitled "Phase II Assignments") as between Big
         Rivers and Station Two Subsidiary, "Station Two Improvements" shall
         mean any betterments, renewals, replacements or additions to the
         Station Two Assets used in the operation of Station Two and/or the Reid
         Station (but only if not otherwise accounted for under the Cost Sharing
         Agreement or the Lease, as applicable), (i) that are made pursuant to
         the Operating Budget, or an approved modification thereof, or a
         deviation therefrom as permitted by Section 8.17(f) or Section 9.10(d),
         as applicable, or that result from an Operating Emergency as
         contemplated in those Sections, or that are required to be made under
         the Station Two Contracts in the absence of an approved Operating
         Budget, and (ii) that should ordinarily be capitalized in accordance
         with the RUS Uniform System of Accounts Bulletin 1767 B, as such
         bulletin may be amended, modified, or replaced from time to time (but
         subject to the Capitalization Guidelines).

-    The  reference  on the last line of Section  8.17(a) to "Article  17" is
     hereby changed to "Article 7."
-    Section  8.17(d)  (p.59).  The  phrase  "On the first day of each  month
     during  the Phase I  Subcontract  Term  Station  Two  Subsidiary  and Big
     Rivers  shall  each  deposit   sufficient  funds  into  the  Station  Two
     Improvements  Account based on their  respective  Station Two Improvement
     Sharing Ratios  (defined in Section 8.17(e) below) (i)" is hereby changed
     to "On the first day of each month  during the Phase I  Subcontract  Term
     Station  Two  Subsidiary  and Big Rivers  shall each  deposit  sufficient
     funds  into  the  Station  Two   Improvements   Account  based  on  their
     respective  Station Two  Improvement  Sharing Ratios  (defined in Section
     8.17(e)  below) but  limited  in the case of Big Rivers to the  remaining
     Big Rivers  Contribution (as defined in Section 20.6 of the Participation
     Agreement)  for that  Year  with  respect  to  Henderson  Non-Incremental
     Capital  Costs  that are not for  Henderson  Major  Capital  Repairs  (as
     defined in the Participation Agreement) (i)".
-    Section 8.17(f). Section 8.17(f) is hereby amended to be and read in its
     entirety as follows:

              (f) Station Two Subsidiary and Big Rivers agree with each other as
         follows: Station Two Subsidiary shall immediately notify the Operating
         Committee of any anticipated departure of [REDACTED]% or more from the
         budget for Station Two Improvements or for operating and maintenance
         expenses included in any approved Operating Budget. Station Two 
         Subsidiary shall use reasonable efforts to (a) operate within 
         [REDACTED] percent to [REDACTED] percent of the total approved budget
         for Station Two Improvements included in an Operating Budget, and 
         (b) to spend at least [REDACTED] percent of the total approved budget
         for operating and maintenance expenses included in an Operating Budget
         (not including the fuel or

                                     26
<PAGE>

                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

         reagent budget). Subject to the provisions set forth below, any 
         increase of [REDACTED] percent or more proposed by Station Two
         Subsidiary to either the Station Two Improvements budget or the 
         operating and maintenance expense budget set forth in an approved
         Operating Budget shall be subject to review and approval by the 
         Operating Committee; provided, that such review and approval shall
         not apply to the operating and maintenance expense budgets that are
         included in an Operating Budget that is a part of the Initial Period
         Budgets, it being understood that increases of [REDACTED] percent or
         more proposed by Station Two Subsidiary to those budgets shall be 
         permissible without that review and approval if the relevant 
         expenditures are consistent with Prudent Utility Practice, in which
         case the additional costs that are allocable to Big Rivers under 
         the Station Two Contracts shall, as between Big Rivers and Station
         Two Subsidiary, be borne by Station Two Subsidiary unless they 
         constitute Henderson Incremental Environmental O&M required to be
         borne by both Station Two Subsidiary and Big Rivers in the manner
         provided for in Section 8.16. If Station Two Subsidiary exceeds 
         the total budget for Henderson Non-Incremental Capital Costs 
         (exclusive of such costs as are for Henderson Major Capital Repairs)
         that are included in an approved budget for Station Two Improvements
         in an Operating Budget, the additional cost of those Henderson Non-
         Incremental Capital Costs that are allocable to Big Rivers under 
         the Station Two Contracts shall, as between Big Rivers and Station
         Two Subsidiary, be borne by Station Two Subsidiary unless the 
         parties agree otherwise, or unless remaining portions of the Big 
         Rivers Contribution for that Year that were not included in the 
         approved Operating Budget are available as contemplated in
         Section 20.6.2 of the Participation Agreement (in which event such
         amounts will be applied as contemplated in that Section). Subject
         to the next succeeding sentence, if Station Two Subsidiary exceeds
         [REDACTED] percent of the total approved budget for Henderson 
         Incremental Capital Costs, or for Henderson Non-Incremental Capital
         Costs for Major Capital Repairs, in either case that are included
         in an approved Operating Budget, the additional costs of those 
         Station Two Improvements that are allocable to Big Rivers under the
         Station Two Contracts shall, as between Big Rivers and Station Two
         Subsidiary, be borne by Station Two Subsidiary unless the Parties
         otherwise agree, or unless the dispute resolution procedure under
         Article 15 of the Participation Agreement (and contemplated in 
         Section 13.5(e) of this Agreement) determines that at the time 
         Station Two Subsidiary proposed the applicable portions of the 
         Operating Budget (or modification thereof) relating to those 
         expenditures Station Two Subsidiary acted consistent with Prudent
         Utility Practice, in which case the additional costs shall be borne
         by Station Two Subsidiary and Big Rivers in accordance with 
         Sections 8.17(d) and 8.17(e) of this Agreement. Notwithstanding
         the provisions

                                     -27-
<PAGE>
                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

         of the immediately preceding sentence, if Station Two Subsidiary 
         exceeds [REDACTED] percent of the total of any approved budget for 
         Henderson Incremental Capital Costs, or for Henderson 
         Non-Incremental Capital Costs for Major Capital Repairs, that are 
         included in an Operating Budget that is a part of the Initial Period 
         Budgets, the additional cost of those Station Two Improvements that 
         are allocable to Big Rivers under the Station Two Contracts shall, 
         as between Big Rivers and Station Two Subsidiary, be borne by 
         Station Two Subsidiary unless the Parties otherwise agree, or unless 
         the dispute resolution procedure set forth in Article 15 of the 
         Participation Agreement determines that the purchase and 
         installation of those Station Two Improvements, and the costs 
         thereof, are consistent with Prudent Utility Practice, regardless of 
         whether the relevant Initial Period Budget, or Station Two 
         Subsidiary's actions in connection with the same, were consistent 
         with Prudent Utility Practice at the time that the budget was 
         prepared, in which case the additional costs that are allocable to 
         Big Rivers under the Station Two Contracts shall, as between Big 
         Rivers and Station Two Subsidiary, be borne by Station Two 
         Subsidiary and Big Rivers in accordance with Sections 8.17(d) and 
         8.17(e) of this Agreement. If Station Two Subsidiary fails or 
         refuses to use reasonable efforts to spend at least [REDACTED] percent
         of the total budget for Station Two Improvements or for operating and 
         maintenance expenses included in an approved Operating Budget 
         (excluding that portion relating to Henderson Incremental 
         Environment O&M), and pursuant to the dispute resolution procedure 
         under Article 15 of the Participation Agreement it is determined 
         that such failure or refusal was inconsistent with Prudent Utility 
         Practice, Station Two Subsidiary shall make the omitted expenditures 
         as required pursuant to the applicable dispute resolution procedure. 
         Notwithstanding anything contained in this Section 8.17(f) to the 
         contrary, Station Two Subsidiary shall in no event be required to 
         expend the monies included in an approved Operating Budget where to 
         do so would cause Station Two Subsidiary to be in breach or default 
         under any Station Two Contract. Additional capital expenditures 
         incurred by Station Two Subsidiary in response to an Operating 
         Emergency (as defined in the Participation Agreement) which are not 
         already included in an approved Operating Budget, and which are 
         allocated to Big Rivers under the Station Two Contracts shall, as 
         between Big Rivers and Station Two Subsidiary, be paid for by 
         Station Two Subsidiary unless (a) the same represents a Henderson 
         Incremental Capital Cost or expenditures for a Henderson Major 
         Capital Repair (as defined in the Participation Agreement), in which 
         case such expenditures shall be paid by Station Two Subsidiary and 
         Big Rivers in accordance with Sections 8.17(d) and 8.17(e), or (b) 
         there are remaining amounts in the Big Rivers Contribution for that 
         Year that were not included in the budget for 

                                     -28-
<PAGE>
                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

         Henderson Non-Incremental Capital Costs in the approved Operating 
         Budget, as contemplated in Section 20.6.2 of the Participation 
         Agreement, in which case that remaining amount will be allocated to 
         any Henderson Non-Incremental Capital Costs in that Year resulting 
         from that Operating Emergency as contemplated in Section 20.6.2.

-    Section 8.18 (p.62). The reference to "Section 6.3(a) of the Station Two
     Operating Agreement is hereby changed to "Section 6.3(a) of the Station Two
     Power Sales Agreement."
-    Section  9.3  (p.65).  The  reference  to "LG&E" is  hereby  changed  to
     "Station Two Subsidiary."
-    Section  9.10(c)  (p.86).  In the third  sentence,  the  phrase  "On the
     first day of each month during the Phase II  Assignment  Term Station Two
     Subsidiary and Big Rivers shall each directly  deposit  sufficient  funds
     into the  Station  Two  Improvements  Account  based on their  respective
     Station Two Improvement  Sharing Ratios (defined in Section 8.17(e)),  as
     then  applicable,  (i)" is  hereby  changed  to "On the first day of each
     month during the Phase II Assignment  Term Station Two Subsidiary and Big
     Rivers  shall  each  deposit   sufficient  funds  into  the  Station  Two
     Improvements  Account based on their  respective  Station Two Improvement
     Sharing Ratios  (defined in Section  8.17(e)),  as then  applicable,  but
     limited  in  the  case  of  Big  Rivers  to  the   remaining  Big  Rivers
     Contribution (as defined in Section 20.6 of the Participation  Agreement)
     for that Year with respect to  Henderson  Non-Incremental  Capital  Costs
     that are not for  Henderson  Major  Capital  Repairs  (as  defined in the
     Participation Agreement) (i)".
-    Section 9.10(d). Section 9.10(d) is hereby amended to be and read in its
     entirety as follows:

              (d) Station Two Subsidiary and Big Rivers agree with each other as
         follows: Station Two Subsidiary shall immediately notify the Operating
         Committee of any anticipated departure of [REDACTED]% or more from the
         budget for Station Two Improvements or for operating and maintenance 
         expenses included in any approved Operating Budget. Station Two 
         Subsidiary shall use reasonable efforts to (a) operate within 
         [REDACTED] percent to [REDACTED] percent of the total approved budget 
         for Station Two Improvements included in an Operating Budget, and 
         (b) to spend at least [REDACTED] percent of the total approved budget
         for operating and maintenance expenses included in an Operating Budget
         (not including the fuel or reagent budget). Subject to the provisions
         set forth below, any increase of [REDACTED] percent or more proposed
         by Station Two Subsidiary to either the Station Two Improvements budget
         or the operating and maintenance expense budget set forth in an 
         approved Operating Budget shall be subject to review and approval by 
         the Operating Committee; provided, that such review and approval shall
         not apply to the operating and maintenance expense budgets that are
         included in an Operating Budget that is a part of the Initial Period
         Budgets, it being understood that 

                                     -29-
<PAGE>
                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

         increases of [REDACTED] percent or more proposed by Station Two 
         Subsidiary to those budgets shall be permissible without that review
         and approval if the relevant expenditures are consistent with Prudent
         Utility Practice, in which case the additional costs shall, as 
         between Big Rivers and Station Two Subsidiary, be borne by Station 
         Two Subsidiary unless they constitute Henderson Incremental 
         Environmental O&M required to be borne by both Station Two 
         Subsidiary and Big Rivers in the manner provided for in Section 9.9. 
         If Station Two Subsidiary exceeds the total budget for Henderson 
         Non-Incremental Capital Costs (exclusive of such costs as are for 
         Henderson Major Capital Repairs (as defined in the Participation 
         Agreement) that are included in an approved budget for Station Two 
         Improvements in an Operating Budget, the additional cost of those 
         Henderson Non-Incremental Capital Costs that are allocable to 
         Station Two Subsidiary under the Station Two Contracts shall, as 
         between Big Rivers and Station Two Subsidiary, be borne by Station 
         Two Subsidiary unless the parties agree otherwise, or unless 
         remaining portions of the Big Rivers Contribution for that Year that 
         were not included in the approved Operating Budget are available as 
         contemplated in Section 20.6.2 of the Participation Agreement (in 
         which event such amounts will be applied as contemplated in that 
         Section). Subject to the next succeeding sentence, if Station Two 
         Subsidiary exceeds [REDACTED] percent of the total approved budget for
         Henderson Incremental Capital Costs, or for Henderson 
         Non-Incremental Capital Costs for Henderson Major Capital Repairs, 
         in either case that are included in an approved Operating Budget, 
         the additional costs of those Station Two Improvements that are 
         allocable to Station Two Subsidiary under the Station Two Contracts 
         shall, as between Big Rivers and Station Two Subsidiary, be borne by 
         Station Two Subsidiary unless the Parties otherwise agree, or unless 
         the dispute resolution procedure under Article 15 of the 
         Participation Agreement (and contemplated in Section 13.5(e) of this 
         Agreement) determines that at the time Station Two Subsidiary 
         proposed the applicable portions of the Operating Budget (or 
         modification thereof) relating to those expenditures Station Two 
         Subsidiary acted consistent with Prudent Utility Practice, in which 
         case the additional costs shall be borne by Station Two Subsidiary 
         and Big Rivers in accordance with Section 9.10(c) of this Agreement. 
         Notwithstanding the provisions of the immediately preceding 
         sentence, if Station Two Subsidiary exceeds 110 percent of the total 
         of any approved budget for Henderson Incremental Capital Costs, or 
         for Henderson Non-Incremental Capital Costs for Henderson Major 
         Capital Repairs, that are included in an Operating Budget that is a 
         part of the Initial Period Budgets, the additional cost of those 
         Station Two Improvements that are allocable to Big Rivers under the 
         Station Two Contracts shall, as between Big Rivers and Station Two 
         Subsidiary, be borne by Station 

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         Two Subsidiary unless the Parties otherwise agree, or unless the 
         dispute resolution procedure set forth in Article 15 of the 
         Participation Agreement determines that the purchase and 
         installation of those Station Two Improvements, and the costs 
         thereof, are consistent with Prudent Utility Practice, regardless of 
         whether the relevant Initial Period Budget, or Station Two 
         Subsidiary's actions in connection with the same, were consistent 
         with Prudent Utility Practice at the time that the budget was 
         prepared, in which case the additional costs that are allocable to 
         Station Two Subsidiary under the Station Two Contracts shall, as 
         between Big Rivers and Station Two Subsidiary, be borne by Station 
         Two Subsidiary and Big Rivers in accordance with Section 9.10(c) of 
         this Agreement. If Station Two Subsidiary fails or refuses to use 
         reasonable efforts to spend at least [REDACTED] percent of the total
         budget for Station Two Improvements or for operating and maintenance
         expenses included in an approved Operating Budget (excluding that 
         portion relating to Henderson Incremental Environmental O&M), and 
         pursuant to the dispute resolution procedure under Article 15 of the 
         Participation Agreement it is determined that such failure or 
         refusal was inconsistent with Prudent Utility Practice, Station Two 
         Subsidiary shall make the omitted expenditures as required pursuant 
         to the applicable dispute resolution procedure. Notwithstanding 
         anything contained in this Section 9.10(d) to the contrary, Station 
         Two Subsidiary shall in no event be required to expend the monies 
         included in an approved Operating Budget where to do so would cause 
         Station Two Subsidiary to be in breach or default under any Station 
         Two Contract. Additional capital expenditures incurred by Station 
         Two Subsidiary in response to an Operating Emergency (as defined in 
         the Participation Agreement) which are not already included in an 
         approved Operating Budget, and which are allocated to Station Two 
         Subsidiary under the Station Two Contracts shall, as between Big 
         Rivers and Station Two Subsidiary, be paid for by Station Two 
         Subsidiary unless (a) the same represents a Henderson Incremental 
         Capital Cost or expenditures for a Henderson Major Capital Repair, 
         in which case such expenditures shall be paid by Station Two 
         Subsidiary and Big Rivers in accordance with Section 9.10(c), or (b) 
         there are remaining amounts in the Big Rivers Contribution for that 
         Year that were not included in the budget for Henderson 
         Non-Incremental Capital Costs in the approved Operating Budget, as 
         contemplated in Section 20.6.2 of the Participation Agreement, in 
         which case that remaining amount will be allocated to any Henderson 
         Non-Incremental Capital Costs in that Year resulting from that 
         Operating Emergency as contemplated in Section 20.6.2.

-     Section 10.9 (p.120).  The first  reference to "Station Two  Subsidiary"
   is hereby changed to "Station Two Subsidiary or its Affiliates."

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                                                            EXECUTION ORIGINAL

-  Section 10.19(c)(3) (p.141). The first reference to "Station Two Subsidiary"
   is hereby changed to "Station Two Subsidiary and its agents, authorized
   representatives or employees."
-  Section 11.1(a) (p.157). In the phrase "Pre-closing Development Agreements,"
   "closing" is hereby capitalized.
-  Section 16.2 (p.229). The reference to "uncontrollable force" is hereby
   capitalized.
-  Section 17 (p.229). The reference to "section 17" is hereby capitalized.

10. ADDITIONAL DEFINITIONS TO STATION TWO AGREEMENT. The Parties agree to amend
Exhibit B to the Station Two Agreement (Additional Definitions to Station Two
Agreement) as follows:

-  Section 7 (Bankruptcy Code) is hereby moved to precede Section 6 (Bankruptcy
   Court) and those sections are hereby renumbered accordingly.
-  Section 6 (p.2).  The  reference  to "Western  District of  Kentucky" is
   hereby changed to "Western District of Kentucky, Owensboro Division."
-  Section 27 (Facilities) is hereby moved to precede Section 26 (Facilities
   Operating Agreement) and those sections are hereby renumbered accordingly.
-  Section 32 (p.5).  The  reference  to "Amended  and  Restated  Guarantee
   Agreement" is hereby changed to "New Guarantee Agreement."
-  Section 33 (p.5). Section 33 is hereby amended to be and read in its entirety
   as follows: "'GUARANTY' shall mean the Guarantee Agreement (Station Two
   Obligations) executed by LEC on the Execution Date for the benefit of
   Henderson, pursuant to which LEC guarantees the obligations of the LG&E
   Companies pursuant to the Station Two Agreement, as well as their obligations
   pursuant to the Systems Reserves Agreement and the G&A Allocation Agreement
   to be entered into in connection therewith."
-  Section 53 (p.7).  The phrase "of this Agreement" is hereby deleted.
-  Section 54 (p.7).  The phrase "of this Agreement" is hereby deleted.
-  Section 56 (p.7).  The  reference   to  "Kentucky   Public   Service
   Commission" is hereby changed to "KPSC."
-  Section 59 (p.8).  The phrase "of this Agreement" is hereby deleted.
-  Section 60 (p.8).  The phrase "of this Agreement" is hereby deleted.
-  Section 63 (p.8).  The  reference   therein   to   "subordination,
   Non-Disturbance,   Attornment  and  Inter-Creditor   Agreement"  is  hereby
   changed to "Subordination,  Non-Disturbance,  Attornment and Inter-Creditor
   Agreements."
-  Section 65 (p.8).  The reference to "Section  8.16" is hereby changed to
   "Section 8.15."
-  Section 74 (p.9).  The  phrase "PERMITTED  LIEN"  shall mean the liens
   granted  by Big Rivers in favor of the RUS and the LC Issuer  securing  all
   indebtedness  outstanding  on the  Effective  Date  to the  RUS  and the LC
   Issuer,  provided that RUS has executed a  Non-Disturbance  Agreement  with
   the LG&E Parties and WKEC,  and  including any lien of the RUS shared by an
   LC  Issuer,  provided  the LC Issuer has also  executed  a  Non-Disturbance
   Agreement  with  the  LG&E  Parties  and  KEC,  and  any of the  following
   additional  liens:" is hereby changed to  "PERMITTED  LIEN" shall mean the
   liens  granted  by Big  Rivers in favor of the 

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                                                            EXECUTION ORIGINAL

    RUS, the LC Issuer  and the [Bank]  provided  that the RUS,  the LC Issuer 
    and/or the [Bank],  in each case, has executed a Non-Disturbance  
    Agreement with the LG&E Parties,  and any of the following additional 
    liens:"
-   Section 94 (Tax or Taxes) is hereby moved to precede Section 93 (Tax
    Indemnification Agreement) and those sections are hereby renumbered
    accordingly.
-   Section 96 (p.13) Each reference to "Transmission Services and
    Interconnection Agreement" is hereby changed to "Transmission Service and
    Interconnection Agreement."
-   Section 100 (p.13). The phrase "of this Agreement" is hereby deleted.

11. G&A ALLOCATION AGREEMENT. The Parties hereby agree to amend Exhibit C to 
    the Station Two Agreement (G&A Allocation Agreement) as follows:

-   Section 4.3(d) (p.6). The reference to "each administrative building 
    occupied by personnel of Station Two Subsidiary (or its successor in 
    interest) in a Station Two Subsidiary Support Position" is hereby 
    changed to "each administrative building located in Henderson County, 
    Kentucky occupied by personnel of Station Two Subsidiary or its 
    Affiliates (or their successors in interest) in a Station Two Subsidiary 
    Support Position."
-   Section  5.2(a) (p.7).  The reference to "Section 4.2" is hereby changed
    to "Section 4.1."

12. OPERATING  RESERVES  AGREEMENT.  The  Parties  hereby  agree to amend the
"A greement  with Respect to Operating  Reserves and Amendment No. 1 to Systems
Re serves Agreement" as follows:
   
-   Section  J(a)  (p.3).  The amount "$[REDACTED] per KW" is hereby changed
    to "$[REDACTED] per KW."
-   Section  J(b)  (p.4).  The amount "$[REDACTED] per KW" is hereby changed
    to "$[REDACTED] per KW."

13. SETTLEMENT MORTGAGE. The Parties hereby agree to amend Exhibit N to the New
Participation Agreement (Settlement Mortgage) as follows:

-  The reference to "Participation Agreement" in the second sentence of the
   second full paragraph on page 1 is hereby changed to "New Participation
   Agreement."

14. EXHIBIT X. The Parties hereby agree to amend Exhibit X to the New
Participation Agreement (Definitions) as follows:

-  New  Section  (p. 1). A new section is hereby  added  between  Section 4
   (Alcan) and  Section 5  (Ancillary  Services)  which  reads:  "AMENDED  AND
   RESTATED GUARANTEE  AGREEMENT.  `AMENDED AND RESTATED GUARANTEE  AGREEMENT'
   shall mean the Guaranty  dated March 18, 1998,  and made by LEC in favor of
   Big Rivers."
-  Section 5 (p.1).  The  reference  to "Open Access  Transmission  Service
   Tariff" is hereby changed to "Open Access Transmission Tariff."
-  New Section (p.7). A new Section is hereby added between Section 59
   (Hazardous Substances) and Section 60 (Henderson Union) which reads:
   "HENDERSON MAJOR CAPITAL 

                                     -33-
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                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

   REPAIRS. `HENDERSON MAJOR CAPITAL REPAIRS' shall mean Major Capital Repairs
   conducted at or with respect to Station Two."
-  New Section (p.10). A new Section is hereby added between Section 93 (Major
   Capital Improvement) and Section 94 (Management Fee) which reads: "MAJOR
   CAPITAL REPAIRS. `MAJOR CAPITAL REPAIRS' shall be as defined by the Parties
   and set forth in a written document prior to the Closing.
-  Section 11 (Assets) is hereby moved to precede Section 10 (Assets Insurance)
   and those sections are hereby renumbered accordingly.
-  Section 14 (Bankruptcy Code) is hereby moved to precede Section 13
   (Bankruptcy Court) and those sections are hereby renumbered accordingly.
-  Section 13 (p.2).  The  reference  to "Western  District of Kentucky" is
   hereby changed to "Western District of Kentucky, Owensboro Division."
-  Section 23 (p.3) The phrase "prior to April 7, 1998" is hereby changed to "on
   or prior to May 29, 1998."
-  Section 26 (p.3). Section 26 is amended to include after the reference to
   "Annual Capital Budget" therein the following: ", an approved modification
   thereof, or a deviation therefrom as permitted by Section 6.5 of the
   Facilities Operating Agreement, Section 7.5 of the Lease, or Section 8.17(f)
   or 9.10(d) of the Station Two Agreement (as applicable), or that result from
   an Operating Emergency as contemplated in Section 6.6 of the Facilities
   Operating Agreement and Section 7.6 of the Lease."
-  Section 27 (p.3). In the reference to "Capitalization guidelines,"
   "capitalization" is hereby made lower case.
-  Section  58  (p.6).   The  phrase   "Amended  and   Restated   Guarantee
   Agreement" is hereby changed to "New Guarantee Agreement."
-  Section  86  (p.9).  The  phrase  "prior  to  April 7,  1998" is  hereby
   changed to "on or prior to May 29, 1998."
-  Section  87  (p.9).  The  phrase  "prior  to  April 7,  1998" is  hereby
   changed to "on or prior to May 29, 1998."
-  Section 95 (p.10).  The phrase "of this Agreement" is hereby deleted.
-  Section 96 (p.10).  The phrase "of this Agreement" is hereby deleted.
-  Section  98  (p.10).   The   reference  to  "Kentucky   Public   Service
   Commission" is hereby changed to "KPSC."
-  Section  102  (p.11).   The  reference  to  "Kentucky   Public   Service
   Commission" is hereby changed to "KPSC."
-  Section 103 (p.11).  The phrase "of this Agreement" is hereby deleted.
-  Section 104 (p.11).  The phrase "of this Agreement" is hereby deleted.
-  Section 106 (Minimum  Requirement)  is hereby  moved to precede  Section
   105 (Minimum Requirement Revision Event) and those sections are renumbered
   accordingly.
-  Section 123 (p.13). The reference to "the Guaranty dated" is hereby changed
   to "the Guarantee Agreement dated" and the following phrase is added to the
   end of the sentence: ",which was superseded and replaced by the Amended and
   Restated Guarantee Agreement dated March 18, 1998."

                                     -34-
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                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

-  Section 128 (Participation Agreement) is hereby amended by adding ", as
   amended" at the end of the Section.
-  Section 128 (Participation Agreement) is hereby moved to precede Section 127
   (Participation Effective Date) and those sections are renumbered accordingly.
-  Section 130 (p.14).  The phrase  "`PERMITTED  LIEN' shall mean the liens
   granted  by Big Rivers in favor of the RUS and the LC Issuer  securing  all
   indebtedness  outstanding  on the  Effective  Date  to the  RUS  and the LC
   Issuer,  provided that RUS has executed a  Non-Disturbance  Agreement  with
   the  LG&E  Parties,  and  including  any  lien of the RUS  shared  by an LC
   Issuer,  provided  the  LC  Issuer  has  also  executed  a  Non-Disturbance
   Agreement  with  the  LG&E  Parties,  and any of the  following  additional
   liens:"  is  hereby  changed  to  "`PERMITTED  LIEN'  shall  mean the liens
   granted  by Big Rivers in favor of the RUS,  the LC Issuer and the  [Bank],
   in each case,  provided  that the RUS, the LC Issuer  and/or the [Bank] has
   executed a Non-Disturbance  Agreement with the LG&E Parties, and any of the
   following additional liens:"
-  Section 158 (SO2 Allowances) is hereby moved to precede Section 166
   (Southwire) and Sections 159 through 165 are hereby renumbered accordingly.
-  Section 164 (p.18). The phrase "on or prior to April 7, 1998" is hereby
   changed to "on or prior to May 29, 1998."
-  Section  167  (p.19).  The  reference  to "the City of  Henderson's"  is
   hereby changed to "HMP&L's."
-  Section 175 (Tax or Taxes) is hereby moved to precede Section 173 (Tax Return
   or Return) and Section 174 (Tax Indemnification Agreement) and those sections
   are hereby renumbered accordingly.
-  Section 180 (p.20) Each reference to "Transmission Services and
   Interconnection Agreement" is hereby changed to "Transmission Service and
   Interconnection Agreement."
-  Section 186 (p.21).  The reference to  "Henderson"  is hereby changed to
   "HMP&L."
-  Section 189 (p.21). The phrase "of this Agreement" is hereby deleted.

15. NON-DISTURBANCE AGREEMENT. The parties hereby agree to amend the
Non-Disturbance Agreement as follows:

-  Section 1.5(c)(i) (p. 5). The phrase "excluding any sums owed in respect of
   Enhancements or Major Capital Improvements if any amounts are paid to the
   LG&E Parties under Section 1.5(b)" is hereby added at the end of the Section,
   immediately following the term "New Participation Agreement."

16. NEW GUARANTEE AGREEMENT. The parties agree to amend the New Guarantee
Agreement as follows:

-  Second  paragraph  of the  preamble,  third  sentence (p. 1). The phrase
   "as amended" is hereby added after "LG&E Affiliates."
-  Second paragraph of the preamble, last sentence (p.1). The phrase "as
   amended," preceded
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                                                   Privileged and Confidential
                                                            EXECUTION ORIGINAL

  by a comma, is hereby added after "June 9, 1997" and before the period.

17. CAPITALIZATION GUIDELINES. The parties agree to amend the Capitalization
Guidelines attached to the New Participation Agreement as Exhibit P as follows:

-  To delete  therefrom in its entirety  Section 1.a.,  which reads "a. The
   Big Rivers 20,000- item Continuing Property Record (CPR) file."
-  To renumber the remaining subsections of Section 1 as a., b. and c.
-  To change the  reference in Section  1.d.  from "a, b or c, above" to "a
   or b, above."

                                         -36-
<PAGE>

     Except as expressly provided herein, the provisions of the New 
Participation Agreement shall remain in full force and effect from and after 
the execution hereof to the same extent as prior to such execution.

     IN WITNESS WHEREOF, the Parties have caused this Amendment to be 
executed as of the day and year first written above.

                           BIG RIVERS ELECTRIC CORPORATION


                           By: /S/ MICHAEL H. CORE
                              ---------------------------
                           Printed Name:  Michael H. Core
                           Title:  President/CEO


                          WESTERN KENTUCKY ENERGY CORP.


                           By:  /S/ GEORGE BASINGER
                              ---------------------------
                           Printed Name:  George W. Basinger
                           Title:  President


                           LG&E ENERGY MARKETING INC.


                           By:  /S/ JOHN R. McCALL
                              ---------------------------
                          Printed Name: John R. McCall
                           Title:  Secretary


                           WESTERN KENTUCKY LEASING CORP.


                           By:  /S/ GEORGE BASINGER
                              ---------------------------
                           Printed Name:  George W. Basinger
                           Title:  President



                           WKE STATION TWO INC.


                           By:  /S/ GEORGE BASINGER
                              ---------------------------
                           Printed Name:  George W. Basinger
                           Title:  President

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

[* All Exhibits and Schedules REDACTED.]