**Exhibit 4.25**

 

**January 15, 2004**

 

 

**Kentucky Utilities Company            *(as Borrower)***

 

 

**Fidelia Corporation          *(as Lender)***

 

 

**LOAN AGREEMENT**

 

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**Contents**

 

**Clause**

** **
| 1.     | DEFINITIONS              |   |   |
|--------|--------------------------|--------|--------|
|   |                     |   |   |
| 2.     | TERM LOAN                |   |   |
|   |                     |   |   |
| 3.     | AVAILABILITY OF REQUESTS |   |   |
|   |                     |   |   |
| 4.     | INTEREST                 |   |   |
|   |                     |   |   |
| 5.     | REPAYMENT AND PREPAYMENT |   |   |
|   |                     |   |   |
| 6.     | PAYMENTS                 |   |   |
|   |                     |   |   |
| 7.     | TERMINATION EVENTS       |   |   |
|   |                     |   |   |
| 8.     | OPERATIONAL BREAKDOWN    |   |   |
|   |                     |   |   |
| 9.     | NOTICES                  |   |   |
|   |                     |   |   |
| 10.    | ASSIGNMENT               |   |   |
|   |                     |   |   |
| 11.    | SEVERABILITY             |   |   |
|   |                     |   |   |
| 12.    | COUNTERPARTS             |   |   |
|   |                     |   |   |
| 13.    | LAW                      |   |   |

 

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**THIS AGREEMENT**made on January 15, 2004

 

**Between**

 

**KENTUCKY UTILITIES COMPANY**,a Kentucky corporation, as borrower (the ***Borrower***);and

 

**FIDELIA CORPORATION**,a Delaware corporation, as lender (the ***Lender***).

 

**Whereas**

 

(A)                              TheLender and the Borrower hereby enter into an agreement for the provision by theLender to the Borrower of a loan in the amount of  $50,000,000 (the Loan Amount).

 

**Now it is hereby agreed**as follows:

 

**1.****                                      Definitions**

 

1.1                                 Inthis Agreement

 

***BusinessDay*** means a day on which banks in New York are generallyopen

 

***DefaultInterest Rate*** means: the rate, as determined by theLender, applying to the principal element of an overdue amount under Clause6.3, calculated as the sum of the interest rate in effect immediately beforethe due date of such amount, plus 1%;

 

***EffectiveDate***shall have the meaning given to it in Clause 2.1;

 

***FinalRepayment Date***means January 16, 2012;

 

***InterestPayment Date*** means January 15th and July 15thof each year during the term of this agreement, provided, that:

 

any Interest Payment Datewhich  is not a Business Day shall beextended to the next succeeding Business Day;

 

***LoanAmount*** means $50,000,000;

 

***MaturityDate*** means the Final Repayment Date;

 

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***Request***means a request for the Loan Amount from the Borrower to the Lender under theterms of clause 3.1;

 

***TerminationEvent***means an event specified as such in Clause 7;

 

***ValueDate*** means the date upon which cleared funds are madeavailable to the Borrower by the Lender pursuant to a Request made inaccordance with Clause 3.1. Such date shall be a Business Day as definedherein.

 

**2.****                                      TermLoan**

 

2.1                                 This Agreement shall come into effect on January 15,2004 (the “Effective Date”).

 

2.2                                 The Lender grants to the Borrower upon the termsand conditions of this Agreement a term loan in an amount of $50,000,000.

 

2.3                                 The new indebtedness shall be evidenced by anote in substantially the form of Exhibit “A” attached hereto.

 

**3.****                                      Availabilityof Requests**

 

3.1                                 On the Effective Date, the Borrower will submita request (the “Request”) to the Lender for the Loan Amount, such Requestspecifying the Value Date, the Maturity Date and the bank account to whichpayment is to be made. The Request shall be submitted to the Lender by theBorrower and delivered in accordance with Clause 9.3.

 

**4.****                                      Interest**

 

4.1                                 The rate of interest on the Loan Amount is 4.39%.

 

4.2                                 Interest shall accrue on the basis of a 360-dayyear consisting of twelve 30 day months upon the Loan Amount.

 

4.3                                 Interest shall be payable in arrears on eachInterest Payment Date.

 

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**5.****                                      Repaymentand Prepayment**

 

5.1                                 The Borrower shall repay the Loan Amounttogether with all interest accrued thereon and all other amounts due from theBorrower hereunder on the Final Repayment Date, whereupon this Agreement shallbe terminated.

 

5.2                                 On any Interest Payment Date, and with at leastthree business day’s prior written notice, the Borrower shall be entitled toprepay any amount of the loan outstanding, provided such payment is not lessthan $1,000,000 and, provided further, the Borrower shall pay a prepaymentcharge equal to the present value of the difference between (i) theinterest payable provided in this loan agreement and (ii) the interestpayable at the prevailing interest rate at the time of prepayment, for theperiod from the date of prepayment through the Maturity Date, which difference,if negative, shall be deemed to be zero. The present value will be determinedusing the prevailing interest rate at the time of the prepayment as thediscount rate.

 

5.3                                 A certificate from the Lender as to the amountdue at any time from the Borrower to the Lender under this Agreement shall, inthe absence of manifest error, be conclusive.

 

**6.****                                      Payments**

 

6.1                                 All payments of principal to be made to theLender by the Borrower shall be made on the Final Repayment Date, or on anInterest Payment Date under Clause (5.2) to such account as the Lender shallhave specified.

 

6.2                                 Interest shall be payable in arrears on eachInterest Payment Date.

 

6.3                                 If and to the extent that full payment of anyamount due hereunder is not made by the Borrower on the due date then, interestshall be charged at the Default Interest Rate on such overdue amount from thedate of such default to the date payment is received by the Lender.

 

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**7.**             **Termination Events**

 

7.1           The Borrower shall notify the Lender of any Event of Default(and the steps, if any, being taken to remedy it) promptly upon becoming awareof it.

 

7.2           The following shall constitute an Event of Defaulthereunder:

 

7.2.1        Default is made by the Borrower in the paymentof any sum due under this Agreement and such default continues for a period of10 Business Days;

 

7.2.2        Bankruptcy proceedings are initiated against theBorrower;

 

7.2.3        The Borrower leaves the E.ON Group (i.e. thecompanies consolidated in EON AG’s balance sheet);

 

7.2.4        Securitiesand Exchange Commission or Public Utility Holding Company Act (PUHCA)requirements prohibit the transactions hereunder.

 

Ifa Termination Event occurs under Clause (7.2.2) of this section, the LoanAmount outstanding together with interest will become due and payableimmediately.

 

Ifa Termination Event occurs according to Clauses (7.2.1) or (7.2.3) or (7.2.4)of this Section, Lender shall at its discretion grant Borrower a reasonablegrace period unless such grace period shall be detrimental to the Lender. Ifthe Termination Event is uncured at the expiration of such period, the LoanAmount outstanding together with interest will become due and payableimmediately.

 

**8.****                                  ****OperationalBreakdown**

 

8.1                                 TheBorrower is not liable for any damages incurred by the Lender and the Lender isnot liable for any damages incurred by the Borrower caused by Acts of God orother circumstances incurred by one party for which the other party cannot beheld responsible (i.e. power outages, strikes, lock-outs, domestic and foreignacts of government and the like).

 

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**9.****                                     ****Notices**

 

9.1                                 Each communication to be made in respect of thisAgreement shall be made in writing but, unless otherwise stated, may be made byfacsimile transmission or letter.

 

9.2                                 Communications to the Borrower shall be addressedto: Kentucky Utilities Company, 220 W. Main St., Louisville, KY 40202, Attn:Treasurer fax# (502) 627-4742 except for confirmations which should be sent tothe attention of Mimi Kelly.

 

9.3                                 Communications to the Lender shall be addressedto: Fidelia Corporation, 919 N. Market Street, Suite 504, Wilmington,Delaware 19801, fax# (302) 778-5014, Attn: President.

 

**10.****                              ****Assignment**

 

10.1                           The Lender may at any time assign, novate orotherwise transfer all or any part of its rights and obligations under thisAgreement to any affiliate of the Lender.

 

**11.****                               Severability**

 

11.1                           Ifany of the provisions of this Agreement becomes invalid, illegal orunenforceable in any respect under any law, the validity, legality andenforceability of the remaining provisions shall not in any way be affected orimpaired.

 

**12.****                               Counterparts**

 

12.1                           ThisAgreement may be executed in any number of counterparts that shall togetherconstitute one Agreement. Any party may enter into an Agreement by signing anysuch counterpart.

 

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**13.****                               Law**

 

13.1         ThisAgreement shall be governed by and construed for all purposes in accordancewith the laws of Delaware.

 

**IN WITNESS**whereofthe parties have executed this Agreement the day and year first above written.

 

 
| **SIGNED**by |                  | ) |   |   |
|--------------|-----------------------|---|--------|--------|
|         | for and on  behalf of | ) |   |   |
|         | Kentucky  Utilities   | ) |   |   |
|         |                  |
|         |                  |
| **SIGNED**by |                  | ) |   |   |
|         | Udo Koch,  President  | ) |   |   |
|         | Fidelia  Corporation  | ) |   |   |
|              |                       |   |        |        |  |  |

 

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