<PAGE>

                                                                    Exhibit 4.38

                             SUPPLEMENTAL INDENTURE

                                      FROM

                       LOUISVILLE GAS AND ELECTRIC COMPANY

                                       TO

                          HARRIS TRUST AND SAVINGS BANK
                                     TRUSTEE

                                    ---------

                              DATED AUGUST 1, 2000


                                    ---------

                         SUPPLEMENTAL TO TRUST INDENTURE

                             DATED NOVEMBER 1, 1949


<PAGE>


                                TABLE OF CONTENTS

                          ---------------------------
<TABLE>
<CAPTION>
                                                                                               PAGE
                                                                                               ----

<S>               <C>                                                                          <C>
Parties..........................................................................................1
Recitals.........................................................................................1
Form of Bonds of Pollution Control Series Z .....................................................6
Further Recitals ...............................................................................10

                                             ARTICLE I.
               SPECIFIC SUBJECTION OF PROPERTY TO THE LIEN OF THE ORIGINAL INDENTURE.

Section 1.01-     Grant of certain property, including all personal property to
                  comply with Uniform Commercial Code of the State of Kentucky,
                  subject to permissible encumbrances and other exceptions
                  contained in Original Indenture ..............................................11

                                             ARTICLE II.
                         PROVISIONS OF BONDS OF POLLUTION CONTROL SERIES Z.

Section 2.01-     Terms of Bonds of Pollution Control Series Z .................................12
Section 2.02-     Payment of principal and interest-Bonds of Pollution Control Series Z ........12
Section 2.03-     Bonds of Pollution Control Series Z deemed fully paid upon payment of
                  corresponding Pollution Control Revenue Bonds ................................13
Section 2.04-     Interchangeability of bonds ..................................................14
Section 2.05-     Charges upon exchange or transfer of bonds ...................................14

                                            ARTICLE III.
                                           MISCELLANEOUS.

Section 3.01-     Recitals of fact, except as stated, are statements of the Company ............14
Section 3.02-     Supplemental Indenture to be construed as a part of the Original Indenture....15
Section 3.03-     (a) Trust Indenture Act to control ...........................................15
                  (b) Severability of provisions contained in Supplemental Indenture and bonds..15
Section 3.04-     Word "Indenture" as used herein includes in its meaning the Original
                  Indenture and all indentures supplemental thereto ............................15
Section 3.05-     References to either party in Supplemental Indenture include successors
                  or assigns....................................................................15
Section 3.06-     (a) Provision for execution in counterparts ..................................15
                  (b) Table of contents and descriptive headings of Articles not to
                  affect meaning ...............................................................15

Schedule A        .............................................................................A-1
</TABLE>

                                                 i


<PAGE>



SUPPLEMENTAL INDENTURE, made as of the 1st day of August, 2000, by and between
LOUISVILLE GAS AND ELECTRIC COMPANY, a corporation duly organized and existing
under and by virtue of the laws of the Commonwealth of Kentucky, having its
principal office in the City of Louisville, County of Jefferson, in said
Commonwealth of Kentucky (the "Company"), the party of the first part, and
HARRIS TRUST AND SAVINGS BANK, a corporation duly organized and existing under
and by virtue of the laws of the State of Illinois, having its principal office
at Two North LaSalle Street, City of Chicago, County of Cook, State of Illinois
60602, as Trustee (the "Trustee"), party of the second part;

WITNESSETH:

         WHEREAS, the Company has heretofore executed and delivered its Trust
Indenture (the "Original Indenture"), made as of November 1, 1949, whereby the
Company granted, bargained, sold, warranted, released, conveyed, assigned,
transferred, mortgaged, pledged, set over and confirmed unto the Trustee under
said Indenture and to its respective successors in trust, all property, real,
personal and mixed then owned or thereafter acquired or to be acquired by the
Company (except as therein excepted from the lien thereof) and subject to the
rights reserved by the Company in and by the provisions of the Original
Indenture, to be held by said Trustee in trust in accordance with the provisions
of the Original Indenture for the equal pro rata benefit and security of all and
each of the bonds issued and to be issued thereunder in accordance with the
provisions thereof, and

         WHEREAS, Section 2.01 of the Original Indenture provides that bonds may
be issued thereunder in one or more series, each series to have such distinctive
designation as the Board of Directors of the Company may select for such series;
and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture, bonds of a series designated "First
Mortgage Bonds, Series due November 1, 1979," bearing interest at the rate of 2
3/4% per annum; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated February 1, 1952, bonds of a series designated "First Mortgage
Bonds, Series due February 1, 1982," bearing interest at the rate of 3 1/8% per
annum; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated February 1, 1954, bonds of a series designated "First Mortgage
Bonds, Series due February 1, 1984," bearing interest at the rate of 3 1/8% per
annum; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated September 1, 1957, bonds of a series designated "First Mortgage
Bonds, Series due September 1, 1987," bearing interest at the rate of 4 7/8% per
annum; and


                                        1
<PAGE>

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated October 1, 1960, bonds of a series designated "First Mortgage
Bonds, Series due October 1, 1990," bearing interest at the rate of 4 7/8% per
annum; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated June 1, 1966, bonds of a series designated "First Mortgage
Bonds, Series due June 1, 1996," bearing interest at the rate of 5 5/8% per
annum; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated June 1, 1968, bonds of a series designated "First Mortgage
Bonds, Series due June 1, 1998," bearing interest at the rate of 6 3/4% per
annum; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated June 1, 1970, bonds of a series designated "First Mortgage
Bonds, Series due July 1, 2000," bearing interest at the rate of 9 1/4% per
annum; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated August 1, 1971, bonds of a series designated "First Mortgage
Bonds, Series due August 1, 2001," bearing interest at the rate of 8 1/4% per
annum; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated June 1, 1972, bonds of a series designated "First Mortgage
Bonds, Series due July 1, 2002," bearing interest at the rate of 7 1/2% per
annum; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated February 1, 1975, bonds of a series designated "First Mortgage
Bonds, Series due March 1, 2005," bearing interest at the rate of 8 7/8% per
annum; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated September 1, 1975, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series A," bearing interest as provided therein and
maturing September 1, 2000; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated September 1, 1976, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series B," bearing interest as provided therein and
maturing September 1, 2006; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated October 1, 1976, bonds


                                       2
<PAGE>

of a series designated "First Mortgage Bonds, Series due November 1, 2006,"
bearing interest at the rate of 8 1/2% per annum; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated June 1, 1978, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series C," bearing interest as provided therein and
maturing June 1,1998/2008;and

         WHEREAS, the Company has heretofore executed and delivered to the
Trustee a Supplemental Indenture dated February 15, 1979, setting forth duly
adopted modifications and alterations to the Original Indenture and all
Supplemental Indentures thereto; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated September 1, 1979, bonds of a series designated "First Mortgage
Bonds, Series due October 1, 2009," bearing interest at the rate of 10 1/8% per
annum; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated September 15, 1979, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series D," bearing interest as provided therein and
maturing October 1, 2004/2009; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated September 15, 1981, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series E," bearing interest as provided therein and
maturing September 15, 1984; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated March 1, 1982, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series F," bearing interest as provided therein and
maturing March 1, 2012; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated March 15, 1982, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series G," bearing interest as provided therein and
maturing March 1, 2012; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated September 15, 1982, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series H," bearing interest as provided therein and
maturing September 15, 1992; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated February 15, 1984, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series I," bearing interest as provided therein and
maturing February 15, 2011; and


                                       3
<PAGE>

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated July 1, 1985, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series J," bearing interest as provided therein and
maturing July 1,1995/2015; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated November 15, 1986, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series K," bearing interest as provided therein and
maturing December 1, 2016; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated November 16, 1986, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series L," bearing interest as provided therein and
maturing December 1, 2016; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated August 1, 1987, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series M," bearing interest as provided therein and
maturing August 1, 1997; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated February 1, 1989, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series N," bearing interest as provided therein and
maturing February 1, 2019; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated February 2 1989, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series 0," bearing interest as provided therein and
maturing February 1, 2019; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated June 15, 1990, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series P," bearing interest as provided therein and
maturing June 15, 2015; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated November 1, 1990, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series Q," and bonds of a series designated "First
Mortgage Bonds, Pollution Control Series R," each series bearing interest as
provided therein and maturing November 1, 2020; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated September 1, 1992, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series S," bearing interest as provided therein and
maturing September 1, 2017; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated September 2, 1992,


                                       4
<PAGE>

bonds of a series designated "First Mortgage Bonds, Pollution Control Series T,"
bearing interest as provided therein and maturing September 1, 2017; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated August 15, 1993, bonds of a series designated "First Mortgage
Bonds, Series due August 15, 2003," bearing interest at the rate of 6% per
annum; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated August 16, 1993, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series U," bearing interest as provided therein and
maturing August 15, 2013 and bonds of a series designated "First Mortgage Bonds,
Pollution Control Series V," bearing interest as provided therein and maturing
August 15, 2019; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated October 15, 1993, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series W," bearing interest as provided therein and
maturing October 15, 2020, and bonds of a series designated "First Mortgage
Bonds, Pollution Control Series X," bearing interest as provided therein and
maturing April 15, 2023; and

         WHEREAS, the Company has heretofore issued in accordance with the
provisions of the Original Indenture as supplemented by the Supplemental
Indenture dated May 1, 2000, bonds of a series designated "First Mortgage Bonds,
Pollution Control Series Y," bearing interest as provided therein and maturing
May 1, 2027; and

         WHEREAS, the County of Trimble in the Commonwealth of Kentucky (the
"County") has agreed to issue $83,335,000 principal amount of its Pollution
Control Revenue Bonds, 2000 Series A (Louisville Gas and Electric Company
Project) (the "Pollution Control Revenue Bonds") pursuant to the provisions of
the Indenture of Trust, dated as of August 1, 2000 (the "Pollution Control
Indenture"), between and among the County and The Bank of New York, as Trustee,
Paying Agent and Bond Registrar (said Trustee or any successor trustee under the
Pollution Control Indenture being hereinafter referred to as the "Pollution
Control Trustee"); and

         WHEREAS, the proceeds of the Pollution Control Revenue Bonds (other
than any accrued interest, if any, thereon) will be loaned by the County to the
Company pursuant to the provisions of a Loan Agreement, dated as of August 1,
2000, between the County and the Company (the "Agreement"), to provide a portion
of the funds required to pay and discharge $83,335,000 in outstanding principal
amount of "County of Trimble, Kentucky, Pollution Control Revenue Bonds, 1990
Series A (Louisville Gas and Electric Company Project)," dated November 1, 1990
(the "Refunded Bonds"), which Refunded Bonds were used to finance the
acquisition, construction, installation and equipping of certain facilities for
the control, containment, reduction and abatement of air and water pollution at
the Trimble County Generating Station of the Company, which facilities are
hereinafter sometimes referred to as the "Project," which Project is located in
the County and which Project is more fully described in Exhibit A to the
Agreement; and


                                       5
<PAGE>

         WHEREAS, payments by the Company under and pursuant to the Agreement
have been assigned by the County to the Pollution Control Trustee in order to
secure the payment of the Pollution Control Revenue Bonds; and

         WHEREAS, in order to further secure the payment of the Pollution
Control Revenue Bonds, the Company desires to provide for the issuance under the
Original Indenture to the Pollution Control Trustee of a new series of bonds
designated "First Mortgage Bonds, Pollution Control Series Z" (sometimes called
"Bonds of Pollution Control Series Z"), in a principal amount equal to the
principal amount of the Pollution Control Revenue Bonds, and with corresponding
terms and maturity, the Bonds of Pollution Control Series Z to be issued as
registered bonds without coupons in denominations of a multiple of $1,000; and
the Bonds of Pollution Control Series Z are to be substantially in the form and
tenor following, to-wit:

                  (Form of Bonds of Pollution Control Series Z)

         This Bond has not been registered under the Securities Act of 1933, as
amended, and may not be offered or sold in contravention of said Act and is not
transferable except to a successor Trustee under the Indenture of Trust dated as
of August 1, 2000, from the County of Trimble, Kentucky, to The Bank of New
York, as Trustee, Paying Agent and Bond Registrar.

                       LOUISVILLE GAS AND ELECTRIC COMPANY
          (Incorporated under the laws of the Commonwealth of Kentucky)
                               First Mortgage Bond
                           Pollution Control Series Z

No                                                    $
   ------------                                        -------------------------

         Louisville Gas and Electric Company, a corporation organized and
existing under and by virtue of the laws of the Commonwealth of Kentucky (herein
called the "Company"), for value received, hereby promises to pay to The Bank of
New York, New York, New York, as Trustee under the Indenture of Trust (the
"Pollution Control Indenture") dated as of August 1, 2000, from the County of
Trimble, Kentucky, to The Bank of New York, or any successor trustee under the
Pollution Control Indenture (the "Pollution Control Trustee") and at the office
of Harris Trust and Savings Bank, Chicago, Illinois (the "Trustee") the sum of
                            Dollars in lawful money of the United States of
--------------------------
America on the Demand Redemption Date, as hereinafter defined, and to pay on the
Demand Redemption Date to the Pollution Control Trustee, interest hereon from
the Initial Interest Accrual Date, as hereinafter defined, to the Demand
Redemption Date at the same rate or rates per annum then and thereafter from
time to time borne by the Pollution Control Revenue Bonds, in like money, said
interest being payable at the office of the Trustee in Chicago, Illinois,
subject to the provisions hereinafter set forth in the event of a rescission of
a Redemption Demand, as hereinafter defined.

         This bond is one of a duly authorized issue of bonds of the Company,
known as its First Mortgage Bonds, unlimited in aggregate principal amount,
which issue of bonds consists, or may consist of several series of varying
denominations, dates and tenors, all issued and to be issued under and equally
secured (except in so far as a sinking fund, or similar fund, established in
accordance with the provisions of the Indenture may afford additional security
for the bonds- of


                                       6
<PAGE>

any specific series) by a Trust Indenture dated November 1, 1949 (the "Original
Indenture"), and Supplemental Indentures thereto dated February 1, 1952,
February 1, 1954, September 1, 1957, October 1, 1960, June 1, 1966, June 1,
1968, June 1, 1970, August 1, 1971, June 1, 1972, February 1, 1975, September 1,
1975, September 1, 1976, October 1, 1976, June 1, 1978, February 15, 1979,
September 1, 1979, September 15, 1979, September 15, 1981, March 1, 1982, March
15, 1982, September 15, 1982, February 15, 1984, July 1, 1985, November 15,
1986, November 16, 1986, August 1, 1987, February 1, 1989, February 2, 1989,
June 15, 1990, November 1, 1990, September 1, 1992, September 2, 1992, August
15, 1993, August 16, 1993, October 15, 1993, May 1, 2000 and August 1, 2000 (all
of which instruments are herein collectively called the "Indenture"), executed
by the Company to the Trustee, to which Indenture reference is hereby made for a
description of the property mortgaged and pledged, the nature and extent of the
security, the rights of the holders of the bonds as to such security, and the
terms and conditions upon which the bonds may be issued under the Indenture and
are secured. The principal hereof may be declared or may become due on the
conditions, in the manner and at the time set forth in the Indenture, upon the
happening of a completed default as in the Indenture provided. The Indenture
provides that such declaration may in certain events be waived by the holders of
a majority in principal amount of the bonds outstanding.

         This bond is one of a series of bonds of the Company issued under the
Indenture and designated as First Mortgage Bonds, Pollution Control Series Z.
The bonds of this Series have been issued to the Pollution Control Trustee under
the Pollution Control Indenture to secure payment of the Pollution Control
Revenue Bonds, 2000 Series A (Louisville Gas and Electric Company Project) (the
"Pollution Control Revenue Bonds") issued by the County of Trimble, Kentucky
(the "County") under the Pollution Control Indenture, the proceeds of which have
been or are to be loaned to the Company pursuant to the provisions of the Loan
Agreement dated as of August 1, 2000 (the "Agreement") between the Company and
the County. The maturity of the obligation represented by the bonds of this
Series is August 1, 2030. The date of maturity of the obligation represented by
the bonds of this Series is hereinafter referred to as the Final Maturity Date.
The bonds of this Series shall bear interest from the Initial Interest Accrual
Date, as hereinafter defined, at the same rate or rates per annum then and
thereafter from time to time borne by the Pollution Control Revenue Bonds.

         With the consent of the Company and to the extent permitted by and as
provided in the Indenture, the rights and obligations of the Company and/or of
the holders of the bonds, and/or the terms and provisions of the Indenture
and/or of any instruments supplemental thereto may be modified or altered by
affirmative vote of the holders of at least seventy percent in principal amount
of the bonds then outstanding under the Indenture and any instruments
supplemental thereto (excluding bonds disqualified from voting by reason of the
interest of the Company or of certain related persons therein as provided in the
Indenture), and by the affirmative vote of at least seventy percent in principal
amount of the bonds of any series entitled to vote then outstanding under the
Indenture and any instruments supplemental thereto (excluding bonds disqualified
from voting as aforesaid) and affected by such modification or alteration, in
case one or more but less than all of the series of bonds then outstanding are
so affected; provided that no such modification or alteration shall permit the
extension of the maturity of the principal of this bond or the reduction in the
rate of interest, if any, hereon or any other modification in the terms of
payment of such principal or interest, if any, or the taking of certain other
action as more fully set forth in the Indenture, without the consent of the
holder hereof.


                                       7
<PAGE>

         Except as provided in the next succeeding paragraph, in the event of a
default under Section 9.1 of the Agreement or in the event of a default in the
payment of the principal of, premium, if any, or interest (and such default in
the payment of interest continues for the full grace period, if any, permitted
by the Pollution Control Indenture and the Pollution Control Revenue Bonds) on
the Pollution Control Revenue Bonds, whether at maturity, by tender for
purchase, by acceleration, by sinking fund, redemption or otherwise, as and when
the same becomes due, the bonds of this Series shall be redeemable in whole upon
receipt by the Trustee of a written demand (hereinafter called a "Redemption
Demand") from the Pollution Control Trustee stating that there has been such a
default, stating that it is acting pursuant to the authorization granted by
Section 9.02(c) of the Pollution Control Indenture, specifying the last date to
which interest on the Pollution Control Revenue Bonds has been paid (such date
being hereinafter referred to as the "Initial Interest Accrual Date") and
demanding redemption of the bonds of this Series. The Trustee shall, within 10
days after receiving such Redemption Demand, mail a copy thereof to the Company
marked to indicate the date of its receipt by the TRUSTEE. Promptly upon receipt
by the Company of such copy of a Redemption Demand, the Company shall fix a date
on which it will redeem the bonds of this Series so demanded to be redeemed
(hereinafter called the "Demand Redemption Date"). Notice of the date fixed as
and for the Demand Redemption Date shall be mailed by the Company to the Trustee
at least 30 days prior to such Demand Redemption Date. The date to be fixed by
the Company as and for the Demand Redemption Date may be any date up to and
including the earlier of (i) the 120th day after receipt by the Trustee of the
Redemption Demand or (ii) the Final Maturity Date, provided that if the Trustee
shall not have received such notice fixing the Demand Redemption Date within 90
days after receipt by it of the Redemption Demand, the Demand Redemption Date
shall be deemed to be the earlier of (i) the 120th day after receipt by the
Trustee of the Redemption Demand or (ii) the Final Maturity Date. The Trustee
shall mail notice of the Demand Redemption Date (such notice being hereinafter
called the "Demand Redemption Notice") to the Pollution Control Trustee not more
than 10 nor less than five days prior to the Demand Redemption Date.
Notwithstanding the foregoing, if a default to which this paragraph is
applicable is existing on the Final Maturity Date, such date shall be deemed to
be the Demand Redemption Date without further action (including actions
specified in this paragraph) by the Pollution Control Trustee, the Trustee or
the Company. The bonds of this Series shall be redeemed by the Company on the
Demand Redemption Date, upon surrender thereof by the Pollution Control Trustee
to the Trustee, at a redemption price equal to the principal amount thereof,
plus accrued interest thereon at the rate per annum set forth in the third
paragraph of this Bond, from the Initial Interest Accrual Date to the Demand
Redemption Date. If a Redemption Demand is rescinded by the Pollution Control
Trustee by written notice to the Trustee prior to the Demand Redemption Date, no
Demand Redemption Notice shall be given, or, if already given, shall be
automatically annulled, and interest on the bonds of this Series shall cease to
accrue, all interest accrued thereon shall be automatically rescinded and
cancelled and the Company shall not be obligated to make any payments of
principal of or interest on the bonds of this Series; but no such rescission
shall extend to or affect any subsequent default or impair any right consequent
thereon.

         In the event that all of the bonds outstanding under the Indenture
shall have become immediately due and payable, whether by declaration or
otherwise, and such acceleration shall not have been annulled, the bonds of this
Series shall bear interest at the rate per annum set forth in the third
paragraph of this bond, from the Initial Interest Accrual Date, as specified in
a


                                       8
<PAGE>

written notice to the Trustee from the Pollution Control Trustee, and the
principal of and interest on the bonds of this Series from the Initial Interest
Accrual Date shall be payable in accordance with the provisions of the
Indenture.

         Upon payment of the principal of and premium, if any, and interest on
the Pollution Control Revenue Bonds, whether at maturity or prior to maturity by
redemption or otherwise, and the surrender thereof to and cancellation thereof
by the Pollution Control Trustee (other than any Pollution Control Revenue Bond
that was cancelled by the Pollution Control Trustee and for which one or more
other Pollution Control Revenue Bonds were delivered and authenticated pursuant
to the Pollution Control Indenture in lieu of or in exchange or substitution for
such cancelled Pollution Control Revenue Bond), or upon provision for the
payment thereof having been made in accordance with the Pollution Control
Indenture, bonds of this Series in a principal amount equal to the principal
amount of the Pollution Control Revenue Bonds so surrendered and cancelled or
for the provision for which payment has been made shall be deemed fully paid and
the obligations of the Company thereunder shall be terminated, and such bonds of
this Series shall be surrendered by the Pollution Control Trustee to the Trustee
and shall be cancelled by the Trustee. From and after the Release Date (as
defined below), the bonds of this Series shall be deemed fully paid, satisfied
and discharged and the obligations of the Company hereunder and thereunder shall
be terminated. The Release Date shall be the date that the Bond Insurer (as such
term is defined in the Pollution Control Indenture), at the request of the
Company, consents to the release of the bonds of this Series as security for the
Pollution Control Revenue Bonds, provided that in no event shall that date be
later than the date as of which all bonds issued under the Indenture prior to
the date of initial issuance of this bond (and excluding bonds of this Series
and First Mortgage Bonds, Pollution Control Series Y) have been retired through
payment, redemption or otherwise (including those bonds "deemed to be redeemed"
within the meaning of that term as used in Article X of the Original Indenture)
at, before or after the maturity thereof. On the Release Date, the bonds of this
Series shall be surrendered by the Pollution Control Trustee to the Trustee
whereupon the bonds of said Series so surrendered shall be cancelled by the
Trustee.

         No recourse shall be had for the payment of principal of, or interest,
if any, on this bond, or any part thereof, or of any claim based hereon or in
respect hereof or of the Indenture, against any incorporator, or any past,
present or future stockholder, officer or director of the Company or of any
predecessor or successor corporation, either directly or through the Company, or
through any such predecessor or successor corporation, or through any receiver
or trustee in bankruptcy, whether by virtue of any constitution, statute or rule
of law or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released, as more fully provided in the
Indenture.

         This bond shall not be valid or become obligatory for any purpose
unless and until the certificate of authentication hereon shall have been signed
by or on behalf of Harris Trust and Savings Bank, as Trustee under the
Indenture, or its successor thereunder.


                                       9
<PAGE>

         IN WITNESS WHEREOF, LOUISVILLE GAS AND ELECTRIC COMPANY has caused this
instrument to be signed in its name by its President or a Vice President or with
the facsimile signature of its President, and its corporate seal, or a facsimile
thereof, to be hereto affixed and attested by its Secretary or Assistant
Secretary or with the facsimile signature of its Secretary.

         Dated

                                       LOUISVILLE GAS AND ELECTRIC COMPANY

Attest:                               By
                                         ---------------------------------------
                                                      Vice President

         -------------------------
             Assistant Secretary

and

         WHEREAS, the Company is desirous of specifically assigning, conveying,
mortgaging, pledging, transferring and setting over additional property unto the
Trustee and to its respective successors in trust; and

         WHEREAS, Sections 4.01 and 21.03 of the Original Indenture provide in
substance that the Company and the Trustee may enter into indentures
supplemental thereto for the purposes, among others, of creating and setting
forth the particulars of any new series of bonds and of providing the terms and
conditions of the issue of the bonds of any series not expressly provided for in
the Original Indenture and of assigning, conveying, mortgaging, pledging and
transferring unto the Trustee additional property of the Company, and for any
other purpose not inconsistent with the terms of the Original Indenture; and

         WHEREAS, the execution and delivery of this Supplemental Indenture have
been duly authorized by a resolution adopted by the Board of Directors of the
Company;

         NOW, THEREFORE, THIS INDENTURE WITNESSETH:

         Louisville Gas and Electric Company, in consideration of the premises
and of one dollar to it duly paid by the Trustee at or before the ensealing and
delivery of these presents, the receipt whereof is hereby acknowledged, and
other good and valuable considerations, does hereby covenant and agree to and
with Harris Trust and Savings Bank, as Trustee, and its successors in the trust
under the Indenture for the benefit of those who hold or shall hold the bonds
issued or to be issued thereunder, as follows:

                                   ARTICLE I

      SPECIFIC SUBJECTION OF PROPERTY TO THE LIEN OF THE ORIGINAL INDENTURE

       Section 1.01.  The Company in order better to secure the payment, both of
principal and interest, of all bonds of the Company at any time outstanding
under the Indenture, according to


                                       10
<PAGE>

their tenor and effect, and the performance of and compliance with the covenants
and conditions in the Indenture contained, has granted, bargained, sold,
warranted, released, conveyed, assigned, transferred, mortgaged, pledged, set
over and confirmed and by these presents does grant, bargain, sell, warrant,
release, convey, assign, transfer, mortgage, pledge, set over and confirm unto
[Harris Trust and Savings Bank,] as Trustee and to its respective successors in
said trust forever, subject to the rights reserved by the Company in and by the
provisions of the Indenture, all the property described and mentioned or
enumerated in a schedule hereto annexed and marked Schedule A, reference to said
schedule being hereby made with the same force and effect as if the same were
incorporated herein at length; together with all and singular the tenements,
hereditaments and appurtenances belonging or in any wise appertaining to the
aforesaid property or any part thereof with the reversion and reversions,
remainder and remainders, tolls, rents and revenues, issues, income, product and
profits thereof;

         Also, in order to subject all of the personal property and chattels of
the Company to the lien of the Indenture in conformity with the provisions of
the Uniform Commercial Code of the Commonwealth of Kentucky, all steam, hydro
and other electric generating plants, including buildings and other structures,
turbines, generators, boilers, condensing equipment, and all other equipment;
substations; electric transmission and distribution systems, including
structures, poles, towers, fixtures, conduits, insulators, wires, cables,
transformers, services and meters; steam and heating mains and equipment; gas
generating and coke plants, including buildings, holders and other structures,
boilers and other boiler plant equipment, benches, retorts, coke ovens, water
gas sets, condensing and purification equipment, piping and other accessory
works equipment; facilities for gas storage whether above or below surface; gas
transmission and distribution systems, including structures, mains, compressor
stations, purifier stations, pressure holders, governors, services and meters;
office, shop, garage and other general buildings and structures, furniture and
fixtures; and all municipal and other franchises and all leaseholds, licenses,
permits, easements, and privileges; all as now owned or hereafter acquired by
the Company pursuant to the provisions of the Original Indenture; and

         All the estate, right, title and interest and claim whatsoever, at law
as well as in equity, which the Company now has or may hereafter acquire in and
to the aforesaid property and franchises and every part and parcel thereof;

         Excluding, however, (1) all shares of stock, bonds, notes, evidences of
indebtedness and other securities other than such as may be or are required to
be deposited from time to time with the Trustee in accordance with the
provisions of the Indenture; (2) cash on hand and in banks other than such as
may be or is required to be deposited from time to time with the Trustee in
accordance with the provisions of the Indenture; (3) contracts, claims, bills
and accounts receivable and chooses in action other than such as may be or are
required to be from time to time assigned to the Trustee in accordance with the
provisions of the Indenture; (4) motor vehicles, (5) any stock of goods, wares
and merchandise, equipment, materials and supplies acquired for the purpose of
sale or lease in the usual course of business or for the purpose of consumption
in the operation, construction or repair of any of the properties of the
Company; and (6) the properties described in Schedule B annexed to the Original
Indenture.

         To have and to hold all said property, real, personal and mixed,
mortgaged, pledged or conveyed by the Company as aforesaid, or intended so to
be, unto the Trustee and its successors


                                       11
<PAGE>

and assigns forever, subject, however, to permissible encumbrances as defined in
Section 1.09 of the Original Indenture and to the further reservations,
covenants, conditions, uses and trusts set forth in the Indenture, in trust
nevertheless for the same purposes and upon the same conditions as are set forth
in the Indenture.

                                   ARTICLE II

                PROVISIONS OF BONDS OF POLLUTION CONTROL SERIES Z

       Section 2.01. There is hereby created, for issuance under the Original
Indenture, a series of bonds designated Pollution Control Series Z, each of
which shall bear the descriptive title "First Mortgage Bonds, Pollution Control
Series Z" and the form thereof shall contain suitable provisions with respect to
the matters specified in this section. The Bonds of Pollution Control Series Z
shall be printed, lithographed or typewritten and shall be substantially of the
tenor and purport previously recited. The Bonds of Pollution Control Series Z
shall be issued as registered bonds without coupons in denominations of a
multiple of $1,000 and shall be registered in the name of the Pollution Control
Trustee. The Bonds of Pollution Control Series Z shall be dated as of the date
of their authentication.

         The Bonds of Pollution Control Series Z shall be payable, both as to
principal and interest, at the office of the Trustee in Chicago, Illinois, in
lawful money of the United States of America. The maturity of the obligation
represented by the Bonds of Pollution Control Series Z is August 1, 2030. The
date of maturity of the obligation represented by the Bonds of Pollution Control
Series Z is hereinafter referred to as the Final Maturity Date. The Bonds of
Pollution Control Series Z shall bear interest from the Initial Interest Accrual
Date, as hereinafter defined, at the same rate or rates then and thereafter from
time to time borne by the Pollution Control Revenue Bonds.

       Section 2.02. Except as provided in the next succeeding paragraph of this
Section 2.02, in the event of a default under Section 9.1 of the Agreement or in
the event of a default in the payment of the principal of, premium, if any, or
interest (and such default in the payment of interest continues for the full
grace period, if any, permitted by the Pollution Control Indenture and the
Pollution Control Revenue Bonds) on the Pollution Control Revenue Bonds, whether
at maturity, by tender for purchase, by acceleration, by sinking fund,
redemption or otherwise, as and when the same becomes due, the Bonds of
Pollution Control Series Z shall be redeemable in whole upon receipt by the
Trustee of a written demand (hereinafter called a "Redemption Demand") from the
Pollution Control Trustee stating that there has been such a default, stating
that it is acting pursuant to the authorization granted by Section 9.02(c) of
the Pollution Control Indenture, specifying the last date to which interest on
the Pollution Control Revenue Bonds has been paid (such date being hereinafter
referred to as the "Initial Interest Accrual Date") and demanding redemption of
the Bonds of Pollution Control Series Z. The Trustee shall, within 10 days after
receiving such Redemption Demand, mail a copy thereof to the Company marked to
indicate the date of its receipt by the Trustee. Promptly upon receipt by the
Company of such copy of a Redemption Demand, the Company shall fix a date on
which it will redeem the Bonds of Pollution Control Series Z so demanded to be
redeemed (hereinafter called the "Demand Redemption Date"). Notice of the date
fixed as the Demand Redemption Date shall be mailed by the Company to the
Trustee at least 30 days prior to such Demand Redemption Date. The


                                       12
<PAGE>

date to be fixed by the Company as and for the Demand Redemption Date may be any
date up to and including the earlier of (i) the 120th day after receipt by the
Trustee of the Redemption Demand or (ii) the Final Maturity Date, provided that
if the Trustee shall not have received such notice fixing the Demand Redemption
Date within 90 days after receipt by it of the Redemption Demand, the Demand
Redemption Date shall be deemed to be the earlier of (i) the 120th day after
receipt by the Trustee of the Redemption Demand or (ii) the Final Maturity Date.
The Trustee shall mail notice of the Demand Redemption Date (such notice being
hereinafter called the "Demand Redemption Notice") to the Pollution Control
Trustee not more than 10 nor less than five days prior to the Demand Redemption
Date. Notwithstanding the foregoing, if a default to which this paragraph is
applicable is existing on the Final Maturity Date, such date shall be deemed to
be the Demand Redemption Date without further action (including actions
specified in this paragraph) by the Pollution Control Trustee, the Trustee or
the Company. The Bonds of Pollution Control Series Z shall be redeemed by the
Company on the Demand Redemption Date, upon surrender thereof by the Pollution
Control Trustee to the Trustee, at a redemption price equal to the principal
amount thereof, plus accrued interest thereon at the rate per annum set forth in
Section 2.01 hereof, from the Initial Interest Accrual Date to the Demand
Redemption Date. If a Redemption Demand is rescinded by the Pollution Control
Trustee by written notice to the Trustee prior to the Demand Redemption Date, no
Demand Redemption Notice shall be given, or, if already given, shall be
automatically annulled, and interest on the Bonds of Pollution Control Series Z
shall cease to accrue, all interest accrued thereon shall be automatically
rescinded and cancelled and the Company shall not be obligated to make any
payments of principal of or interest on the Bonds of Pollution Control Series Z;
but no such rescission shall extend to or affect any subsequent default or
impair any right consequent thereon.

         In the event that all of the bonds outstanding under the Indenture
shall have become immediately due and payable, whether by declaration or
otherwise, and such acceleration shall not have been annulled, the Bonds of
Pollution Control Series Z shall bear interest at the rate per annum set forth
in Section 2.01 hereof, from the Interest Accrual Date, as specified in a
written notice to the Trustee from the Pollution Control Trustee, and the
principal of and interest on the Bonds of Pollution Control Series Z from the
Initial Interest Accrual Date shall be payable in accordance with the provisions
of the Indenture.

         Anything herein contained to the contrary notwithstanding, the Trustee
is not authorized to take any action pursuant to a Redemption Demand or a
rescission thereof or a written notice required by this Section 2.02, and such
Redemption Demand, rescission or notice shall be of no force or effect, unless
it is executed in the name of the Pollution Control Trustee by one of its Vice
Presidents.

       Section 2.03. Upon payment of the principal of and premium, if any, and
interest on the Pollution Control Revenue Bonds, whether at maturity or prior to
maturity by redemption or otherwise, and the surrender thereof to and
cancellation thereof by the Pollution Control Trustee (other than any Pollution
Control Revenue Bond that was cancelled by the Pollution Control Trustee and for
which one or more other Pollution Control Revenue Bonds were delivered and
authenticated pursuant to the Pollution Control Indenture in lieu of or in
exchange or substitution for such cancelled Pollution Control Revenue Bond), or
upon provision for the payment thereof having been made in accordance with the
Pollution Control Indenture, Bonds of Pollution


                                       13
<PAGE>

Control Series Z in a principal amount equal to the principal amount of the
Pollution Control Revenue Bonds so surrendered and cancelled or for the
provision for which payment has been made shall be deemed fully paid and the
obligations of the Company thereunder shall be terminated, and such Bonds of
Pollution Control Series Z shall be surrendered by the Pollution Control Trustee
to the Trustee and shall be cancelled and destroyed by the Trustee, and a
certificate of such cancellation and destruction shall be delivered to the
Company. From and after the Release Date (as defined below), the bonds of this
Series shall be deemed fully paid, satisfied and discharged and the obligations
of the Company hereunder and thereunder shall be terminated. The Release Date
shall be the date that the Bond Insurer (as such term is defined in the
Pollution Control Indenture), at the request of the Company, consents to the
release of the bonds of this Series as security for the Pollution Control
Revenue Bonds, provided that in no event shall that date be later than the date
as of which all bonds issued under the Indenture prior to the date of initial
issuance of this bond (and excluding bonds of this Series and First Mortgage
Bonds, Pollution Control Series Y) have been retired through payment, redemption
or otherwise (including those bonds "deemed to be redeemed" within the meaning
of that term as used in Article X of the Original Indenture) at, before or after
the maturity thereof. On the Release Date, the bonds of this Series shall be
surrendered by the Pollution Control Trustee to the Trustee whereupon the Bonds
of said Series so surrendered shall be cancelled by the Trustee.

       Section 2.04. Prior to the Release Date, the Pollution Control Trustee as
the registered holder of the Bonds of Pollution Control Z at its option may
surrender the same at the office of the Trustee, in Chicago, Illinois, or
elsewhere, if authorized by the Company, for cancellation, in exchange for other
bonds of the same series of the same aggregate principal amount. Thereupon, and
upon receipt of any payment required under the provisions of Section 2.05
hereof, the Company shall execute and deliver to the Trustee and the Trustee
shall authenticate and deliver such other registered bonds to such registered
holder at its office or at any other place specified as aforesaid.

       Section 2.05. No charge shall be made by the Company for any exchange or
transfer of Bonds of Pollution Control Series Z other than for taxes or other
governmental charges, if any, that may be imposed in relation thereto.

                                  ARTICLE III.

                                  MISCELLANEOUS

       Section 3.01. The recitals of fact herein and in the bonds (except the
Trustee's Certificate) shall be taken as statements of the Company and shall not
be construed as made or warranted by the Trustee. The Trustee makes no
representations as to the value of any of the property subject to the lien of
the Indenture, or any part thereof, or as to the title of the Company thereto,
or as to the security afforded thereby and hereby, or as to the validity of this
Supplemental Indenture and the Trustee shall incur no responsibility in respect
of such matters.

       Section 3.02. This Supplemental Indenture shall be construed in
connection with and as a part of the Original Indenture.


                                       14
<PAGE>

       Section 3.03. (a) If any provision of this Supplemental Indenture limits,
qualifies or conflicts with another provision of the Original Indenture or this
Supplemental Indenture required to be included in indentures qualified under the
Trust Indenture Act of 1939, as amended (as enacted prior to the date of this
Supplemental Indenture) by any of the provisions of Sections 310 to 317,
inclusive, of the said Act, such required provision shall control.

       (b) In case any one or more of the provisions contained in this
Supplemental Indenture or in the bonds issued hereunder shall be invalid,
illegal, or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected, impaired, prejudiced or disturbed thereby.

       Section 3.04. Wherever in this Supplemental Indenture the word
"Indenture" is used without either prefix, "Original" or "Supplemental," such
word was used intentionally to include in its meaning both the Original
Indenture and all indentures supplemental thereto.

       Section 3.05. Wherever in this Supplemental Indenture either of the
parties hereto is named or referred to, this shall be deemed to include the
successors or assigns of such party, and all the covenants and agreements in
this Supplemental Indenture contained by or on behalf of the Company or by or on
behalf of the Trustee shall bind and inure to the benefit of the respective
successors and assigns of such parties, whether so expressed or not.

       Section 3.06. (a) This Supplemental Indenture may be simultaneously
executed in several counterparts, and all said counterparts executed and
delivered, each as an original, shall constitute but one and the same
instrument.

       (b) The Table of Contents and the descriptive headings of the several
Articles of this Supplemental Indenture were formulated, used and inserted in
this Supplemental Indenture for convenience only and shall not be deemed to
affect the meaning or construction of any of the provisions hereof.


                                       15
<PAGE>

         IN WITNESS WHEREOF, the party of the first part has caused its
corporate name and seal to be hereunto affixed and this Supplemental Indenture
to be signed by its Treasurer, and attested by its Executive Vice President,
General Counsel and Corporate Secretary for and in its behalf, and the party of
the second part to evidence its acceptance of the trust hereby created, has
caused its corporate name and seal to be hereunto affixed, and this Supplemental
Indenture to be signed by one of its Vice Presidents, and attested by its
Secretary or an Assistant Secretary, for and in its behalf, all done as of the
1st day of August, 2000.

                           LOUISVILLE GAS AND ELECTRIC COMPANY

                           By

                                             /s/ C.A. Markel
                                             C.A. Markel
                                             TREASURER

(CORPORATE SEAL)

ATTEST:
           /s/ John R. McCall
           JOHN R. MCCALL
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND
CORPORATE SECRETARY

                           HARRIS TRUST AND SAVINGS BANK

                           By

                                             /s/ F.A. Pierson
                                             F.A. Pierson
                                             VICE PRESIDENT

(CORPORATE SEAL)

ATTEST:

           /s/ C. Potter
           C. Potter
        ASSISTANT SECRETARY


                                       16
<PAGE>




COMMONWEALTH  OF KENTUCKY               ] SS:

COUNTY OF JEFFERSON

         BE IT REMEMBERED that on this   4TH day of August, 2000, before me, a
                                       --   -
Notary Public duly commissioned in and for the County and Commonwealth
aforesaid, personally appeared C.A. MARKEL and JOHN R. MCCALL, respectively,
Treasurer and Executive Vice President, General Counsel and Corporate Secretary
of Louisville Gas and Electric Company, a corporation organized and existing
under and by virtue of the laws of the Commonwealth of Kentucky, who are
personally known to me to be such officers, respectively, and who are personally
known to me to be the same persons who executed as officers the foregoing
instrument of writing, and such persons duly acknowledged before me the
execution of the foregoing instrument of writing to be their act and deed and
the act and deed of said corporation.

         WITNESS my hand and notarial seal this   4th  day of August, 2000.
                                                -    -

                                                  /s/ Kathy L. Wilson
                                                      NOTARY PUBLIC
                                            KENTUCKY, COMMONWEALTH AT LARGE
                                                                 (Notarial Seal)

                              My Commission Expires: Jan. 22, 2001

                                                                Kathy L . Wilson
                                                                   Notary Public
                                                              State at Large, KY
                                                  Commission Expires: 01-22-2001


                                       17
<PAGE>




STATE OF ILLINOIS
                              ] SS:
COUNTY OF COOK

         BE IT REMEMBERED that on this   3rd    day of August, 2000, before me,
                                       -     --
a Notary Public duly commissioned in and for the County and State aforesaid,
personally appeared F.A. PIERSON and C. POTTER , respectively, Vice President
and Assistant Secretary of Harris Trust and Savings Bank, a corporation
organized and existing under and by virtue of the laws of the State of Illinois,
who are personally known to me to be such officers, respectively, and who are
personally known to me to be the same persons who executed as officers the
foregoing instrument of writing, and such persons duly acknowledged before me
the execution of the foregoing instrument of writing to be their act and deed
and the act and deed of said corporation.

         WITNESS my hand and notarial seal this   3rd   day of August, 2000.
                                                -     -

                                              /s/ Linda Ellen Garcia
                                       NOTARY PUBLIC IN AND FOR THE COUNTY OF
                                             COOK AND STATE OF ILLINOIS
                                                                 (Notarial Seal)
"OFFICIAL SEAL"
LINDA ELLEN GARCIA                    My Commission Expires: 9/23/2002
Notary Public, State of Illinois
My Commission Exp. 09/23/2002


This Instrument Prepared by:
Angela N. Gardner
Gardner Law Offices
11414 Main Street
Suite 102
Louisville, Kentucky 40243

By             /s/ Angela N. Gardner
               Angela N. Gardner, Esq.
               (502) 244-2034


                                       18
<PAGE>

                                   SCHEDULE A

         The following property situated, lying and being in the County of
Jefferson, State of Kentucky, to wit:

REAL PROPERTY

         Containing 7-1/2 acres, more or less, and is that part of the property
conveyed to John A. Floersch, Roman Catholic Bishop of Louisville, by Deed dated
August 11, 1931, and of record in Deed Book 1486, Page 224, in the Office of the
Clerk of Jefferson County, Kentucky, as lies West of U.S. Highway 42 which
Highway was conveyed by the Right Reverend John A. Floersch, Roman Catholic
Bishop of Louisville to Commonwealth of Kentucky through its State Highway
Commission, by Deed dated June 28, 1935, and of record in Deed Book 1577, Page
553, in the Office aforesaid.

         The property conveyed being more accurately described as:

                                    TRACT 1:

         Beginning at an existing pipe in the west line of U.S. Highway 42 at a
         point common to Lot No. 17 of Glenwood Subdivision, Section 1, as shown
         on a plat recorded in Plat and Subdivision Book 13, Page 80 in the
         office of the Clerk of Jefferson County, Kentucky; thence along the
         west line of said Highway, North 11 degrees 33 minutes 02 seconds East,
         85.77 feet to a point; thence along said west line along a curve to the
         left having a radius of 11,379.88 feet and a chord measuring North 10
         degrees 01 minute 27 seconds East, 611.60 feet to an existing pin and
         cap in the southerly line of said Interstate 71, South 58 degrees 48
         minutes 33 seconds West 346.82 feet to an existing pin and cap thence
         continuing along said southerly line along a curve to the right having
         a radius of 3,014.79 feet and a chord measuring South 60 degrees 12
         minutes 12 seconds West, 126.73 feet to an existing pin and cap; thence
         leaving the southerly line of said Interstate 71, South 32 degrees 32
         minutes 00 seconds East, 526.29 feet to the point of beginning
         containing 2.9 acres.

                                    TRACT 2:

         Beginning at a pin and cap with an identification number of #2988
         (typical) set at the intersection of the northerly line of Interstate
         71 and the westerly line of U.S. Highway 42, said pin being located
         50.00 feet from the centerline of U.S. Highway 42 and 130.00 feet from
         the centerline of Interstate 71; thence continuing along the northerly
         line of said Interstate, South 56 degrees 33 minutes 57 seconds West,
         380.97 feet to a pin and


<PAGE>

         cap set; thence South 66 degrees 43 minutes 39 seconds West 246.45 feet
         to a pin and cap set; thence South 62 degrees 20 minutes 04 seconds
         West, 122.45 feet to a pin and cap set in the line of Regal Hill
         Subdivision, Section 2, recorded in Plat and Subdivision Book 17, Page
         28 in the Office of the Clerk of Jefferson County, Kentucky; thence
         leaving the northerly line of said Interstate along a line common to
         Regal Hill Subdivision, Section 1, recorded in Plat and Subdivision
         Book 12, Page 108 in the aforesaid Clerk's office, North 56 degrees 23
         minutes 40 seconds East 806.40 to a pin and cap set in the westerly
         line of U.s. Highway 42; thence with the line of said Highway along a
         curve to the right having a radius of 11,409.16 feet and a chord
         measuring South 6 degrees 12 minutes 47 seconds West, 75.53 feet to the
         point of beginning, containing 32,494 square feet.

         Being the same property conveyed to A. William Ferriell and Ann C.
Ferriell, husband and wife and Terry A. Turbeville, married by deed dated May 8,
1997 of record in Deed Book 6882, Page 89, in the Office aforesaid.

         Being the same property conveyed to Louisville Gas and Electric Company
by deed dated November 29, 1999 of record in Deed Book 7361, Page 0914 in the
Office aforesaid.


ELECTRIC TRANSMISSION LINES

         A 138KV steel pole transmission line #3891 in Jefferson County,
Kentucky. This line is built between Hurstbourne Substation to Bluegrass
Substation at a distance of approximately 2.02 miles.

         A 138KV steel pole transmission line #3829 in Jefferson County,
Kentucky. This line is built between Ashbottom Substation to Grade Lane
Substation at a distance of approximately 1.50 miles. This distance reflects .92
miles of overhead lines and .58 miles of underground lines.

         A 138KV steel pole transmission line #3835 in Jefferson County,
Kentucky. This line is built between Grade Lane Substation to Fern Valley
Substation at a distance of approximately 1.46 miles. This distance was added to
existing Circuit #3835.