--
Exhibit 10.02
                                     
                             U.S. $200,000,000
                                     
                             Credit Agreement
                                     
                       Dated as of September 5, 1997
                                     
                                   Among
                                     
                            LG&E Capital Corp.,
                                     
                               as Borrower,
                                     
                          The Banks Named Herein,
                                     
                                as Lenders,
                                     
                          Chase Securities Inc.,
                                     
                           as Syndication Agent,
                                     
                             Bank of Montreal,
                                     
                         as Administrative Agent,
                                     
                Morgan Guaranty Trust Company of New York,
                                     
                         PNC Bank, Kentucky, Inc.,
                                     
                           The Bank of New York,
                                     
                    The First National Bank of Chicago
                                     
                                    and
                                     
                           Wachovia Bank, N.A.,
                                     
                                as CoAgents

                             Table of Contents

Section                        Description                             Page

Article I      Definitions and Accounting Terms                         1
               
   Section 1.01.Certain Defined Terms                                 1
   Section 1.02.Computation of Time Periods                          12
   Section 1.03.Accounting Terms                                     12

Article II     Amounts and Terms of the Advances                       12
               
   Section 2.01.The Contract Advances                                12
   Section 2.02.Making the Contract Advances                         13
   Section 2.03.The Auction Advances                                 14
   Section 2.04.Fees                                                 18
   Section 2.05.Reduction of the Commitments                         19
   Section 2.06.Repayment of Contract Advances                       19
   Section 2.07.Interest on Contract Advances                        19
   Section 2.08.Additional Interest on Eurodollar Rate Advances
                 and Eurodollar Rate Auction Advances                 20
   Section 2.09.Interest Rate Determination                          20
   Section 2.10.Conversion of Contract Advances                      21
   Section 2.11.Prepayments                                          22
   Section 2.12.Increased Costs                                      23
   Section 2.13.Illegality                                           24
   Section 2.14.Payments and Computations                            25
   Section 2.15.Taxes                                                26
   Section 2.16.Sharing of Payments, Etc.                            28
   Section 2.17.Extension of Termination Date.                       29

Article III    Conditions of Lending                                   29
               
   Section 3.01.Conditions Precedent to Initial Advances             29
   Section 3.02.Condition Precedent to Each Contract Borrowing       32
   Section 3.03.Conditions Precedent to Each Auction Borrowing       32
   Section 3.04.Condition Precedent to Certain Conversions           33

Article IV     Representations and Warranties                          33
               
   Section 4.01.Representations and Warranties of the Borrower       33

Article V      Covenants of the Borrower                               36
               
   Section 5.01.Affirmative Covenants                                36
   Section 5.02.Negative Covenants                                   39

Article VI     Events of Default                                       41
               
   Section 6.01.Events of Default                                    41

Article VII    The AGENTS                                              44
               
   Section 7.01.Authorization and Action                             44
   Section 7.02.Administrative Agent's Reliance, Etc                 44
   Section 7.03.Agents and Affiliates                                45
   Section 7.04.Lender Credit Decision                               45
   Section 7.05.Indemnification                                      45
   Section 7.06.Successor Administrative Agent                       46

Article VIII   Miscellaneous                                           46
               
   Section 8.01.Amendments, Etc                                      46
   Section 8.02.Notices, Etc                                         47
   Section 8.03.No Waiver, Remedies                                  47
   Section 8.04.Costs and Expenses; Indemnification                  47
   Section 8.05.Right of Set-off                                     48
   Section 8.06.Binding Effect                                       48
   Section 8.07.Assignments and Participations                       49
   Section 8.08.Discretion of Lender as to Manner of Funding         51
   Section 8.09.Governing Law                                        52
   Section 8.10.Waiver of Jury Trial                                 52
   Section 8.11.Execution in Counterparts                            52
   Section 8.12.Termination of Existing Credit Agreements            52

Signatures                                                             53

Schedule I-                            List of Applicable Lending Offices
Exhibit A-1-Form of Contract Note
Exhibit A-2-Form of Auction Note
Exhibit B-1-Form of Notice of Contract Borrowing
Exhibit B-2-Form of Notice of Auction Borrowing
Exhibit C-     Form of Assignment and Acceptance
Exhibit D-     Form of Opinion of Special Counsel for the Borrower and  the
Parent
Exhibit  E-     Form of Opinion of Corporate Attorney for the Borrower  and
the Parent
Exhibit  F-      Form  of  Opinion  of  Special  Illinois  Counsel  to  the
Administrative Agent
Exhibit G-     Form of Support Agreement
                             Credit Agreement
                                     
                       Dated as of September 5, 1997
     
     LG&E  Capital  Corp., a Kentucky corporation, the banks (the  "Banks")
listed   on  the  signature  pages  hereof,  Chase  Securities,  Inc.,   as
Syndication  Agent, and Bank of Montreal, as Administrative Agent  for  the
Lenders hereunder, agree as follows:
                                     
                                     
                                 Article I
                                     
                     Definitions and Accounting Terms

Section  1.01.    Certain Defined Terms.  As used in  this  Agreement,  the
following  terms  shall have the following meanings (such  meanings  to  be
equally  applicable  to both the singular and plural  forms  of  the  terms
defined):
     
     "Adjusted CD Rate" means, for any Interest Period for each Adjusted CD
Rate  Advance made as part of the same Contract Borrowing, an interest rate
per annum equal to the sum of:
     
          (a)    the  rate per annum obtained by dividing (i) the  rate  of
     interest  determined by the Administrative Agent  to  be  the  average
     (rounded upward to the nearest whole multiple of 1/100 of 1% per annum
     if  such  average  is not such a multiple) of the consensus  bid  rate
     determined by each of the Reference Banks for the bid rates per annum,
     at  9:00 A.M. (Chicago time) (or as soon thereafter as practicable) on
     the  first  day  of  such  Interest Period, of  Chicago  or  New  York
     certificate of deposit dealers of recognized standing selected by such
     Reference  Bank  for  the purchase at face value  of  certificates  of
     deposit  of  such Reference Bank in an amount substantially  equal  to
     such  Reference Bank's Adjusted CD Rate Advance made as part  of  such
     Contract Borrowing and with a maturity equal to such Interest  Period,
     by  (ii) a percentage equal to 100% minus the Adjusted CD Rate Reserve
     Percentage for such Interest Period, plus
     
         (b)   the Assessment Rate for such Interest Period.

The  Adjusted  CD  Rate for the Interest Period for each Adjusted  CD  Rate
Advance made as part of the same Contract Borrowing shall be determined  by
the  Administrative Agent on the basis of applicable rates furnished to and
received by the Administrative Agent from the Reference Banks on the  first
day of such Interest Period, subject, however, to the provisions of Section
2.09.
     
     "Adjusted  CD  Rate  Advance"  means a  Contract  Advance  that  bears
interest as provided in Section 2.07(b).
     
     "Adjusted CD Rate Reserve Percentage" for the Interest Period for each
Adjusted CD Rate Advance made as part of the same Contract Borrowing  means
the  reserve percentage applicable on the first day of such Interest Period
under regulations issued from time to time by the Board of Governors of the
Federal  Reserve  System  (or any successor) for  determining  the  maximum
reserve   requirement  (including,  but  not  limited  to,  any  emergency,
supplemental  or other marginal reserve requirement) for a member  bank  of
the  Federal  Reserve System in New York City with deposits  exceeding  one
billion  dollars  with respect to liabilities consisting  of  or  including
(among  other  liabilities) U.S. dollar nonpersonal time  deposits  in  the
United States with a maturity equal to such Interest Period.
     
     "Adjusted  Debt"  means  Debt of the kind  described  in  clauses  (i)
through (vi) of the definition of "Debt" of the Parent and its Consolidated
Subsidiaries;  provided, however, that for all purposes of  this  Agreement
"Adjusted Debt" shall not include Non-Recourse Debt.
     
     "Administrative  Agent"  means  Bank of  Montreal  and  any  successor
thereto appointed pursuant to the terms of Section 7.06 hereof.
     
     "Advance" means a Contract Advance or an Auction Advance.
     
     "Affiliate"  means, as to any Person, any other Person that,  directly
or  indirectly, controls, is controlled by or is under common control  with
such Person or is a director or officer of such Person.
     
     "Agents"  means  the Administrative Agent, the Syndication  Agent  and
those banks named as Co-Agents on the facing page hereof.
     
     "Applicable  Lending Office" means, with respect to each Lender,  such
Lender's  Domestic Lending Office in the case of a Base Rate Advance,  such
Lender's CD Lending Office in the case of an Adjusted CD Rate Advance,  and
such  Lender's  Eurodollar Lending Office in the case of a Eurodollar  Rate
Advance  and, in the case of an Auction Advance, the office of such  Lender
notified  by  such  Lender to the Administrative Agent  as  its  Applicable
Lending Office with respect to such Auction Advance.
     
     "Applicable Margin" means, for any Contract Advance, the interest rate
per annum set forth below in the column entitled "Base Rate", "CD Rate", or
"Eurodollar Rate," as appropriate:
                                                                 
                                                          Eurodollar Rate
               Level              Base Rate    CD Rate
                                                                 
   For each day Level I Status        0%       0.300%         0.175%
   exists
                                                                 
   For each day Level II Status       0%       0.310%         0.185%
   exists
                                                                 
   For each day Level III Status      0%       0.325%         0.200%
   exists
                                                                 
   For each day Level IV Status       0%       0.375%         0.250%
   exists
                                                                 
   For each day Level V Status        0%       0.565%         0.440%
   exists
     
     "Assessment  Rate" for the Interest Period for each Adjusted  CD  Rate
Advance  made  as  part  of the same Contract Borrowing  means  the  annual
assessment rate estimated by the Administrative Agent on the first  day  of
such  Interest  Period for determining the then current  annual  assessment
payable  by  a  member of the Bank Insurance Fund classified as  adequately
capitalized and within supervisory subgroup "A" (or a comparable  successor
assessment  risk  classification) within the meaning of 12  C.F.R.  Section
327.3(d)  (or  any  successor provision) to the Federal  Deposit  Insurance
Corporation (or such successor's) insuring time deposits at offices of such
institution  in the United States.  The Adjusted CD Rate shall be  adjusted
automatically  on  and  as  of the effective date  of  any  change  in  the
Assessment Rate.
     
     "Assignment and Acceptance" means an assignment and acceptance entered
into  by  a  Lender  and  an Eligible Assignee, and  consented  to  by  the
Administrative Agent and the Borrower, in substantially the form of Exhibit
C hereto.
     
     "Auction Advance" means an advance by a Lender to the Borrower as part
of  an  Auction  Borrowing  resulting from the  auction  bidding  procedure
described in Section 2.03.
     
     "Auction  Borrowing"  means  a borrowing  consisting  of  simultaneous
Auction  Advances from each of the Lenders whose offer to make one or  more
Auction  Advances  as  part  of such borrowing has  been  accepted  by  the
Borrower under the auction bidding procedure described in Section 2.03.
     
     "Auction Note" means a promissory note of the Borrower payable to  the
order  of  any  Lender, in substantially the form of  Exhibit  A-2  hereto,
evidencing  the indebtedness of the Borrower to such Lender resulting  from
an Auction Advance made by such Lender.
     
     "Base  Rate"  means, for any period, a fluctuating interest  rate  per
annum as shall be in effect from time to time which rate per annum shall at
all times be equal to the higher of:
     
          (a)    the rate of interest announced by the Administrative Agent
     from  time  to  time as its prime commercial rate, or equivalent,  for
     U.S. Dollar loans to borrowers located in the United States, with  any
     change  in  the  Base  Rate resulting from  a  change  in  said  prime
     commercial rate to be effective as of the date of the relevant  change
     in said prime commercial rate; and
     
          (b)    1/2 of 1% per annum above the Federal Funds Rate in effect
     from time to time.
     
     "Base  Rate  Advance" means a Contract Advance that bears interest  as
provided in Section 2.07(a).
     
     "Borrower"  means  LG&E  Capital Corp.,  a  Kentucky  corporation,  as
successor by merger to Energy Systems and Gas Systems.
     
     "Borrowing" means a Contract Borrowing or an Auction Borrowing.
     
     "Business Day" means a day of the year on which banks are not required
or authorized to close in Chicago, Illinois and, if the applicable Business
Day  relates  to  any Eurodollar Rate Advances or Eurodollar  Rate  Auction
Advances,  on  which  dealings are carried on in the interbank  market  for
eurodollars.
     
     "Capitalization Ratio" means the ratio of Adjusted Debt of the  Parent
and its Consolidated Subsidiaries to the sum of Adjusted Debt of the Parent
and its Consolidated Subsidiaries plus capital stock (including capital  in
excess  of par and any other capital surplus), net of treasury shares  plus
(or minus in the case of a deficit) retained earnings of the Parent and its
Consolidated  Subsidiaries,  plus  minority  interests,  all  computed   in
accordance with GAAP.
     
     "CD  Lending Office" means, with respect to any Lender, the office  of
such  Lender  specified as its "CD Lending Office"  opposite  its  name  on
Schedule I hereto or in the Assignment and Acceptance pursuant to which  it
became  a Lender (or, if no such office is specified, its Domestic  Lending
Office),  or such other office of such Lender as such Lender may from  time
to time specify to the Borrower and the Administrative Agent.
     
     "Closing Date" means the first date on which all conditions set  forth
in Section 3.01 hereof have been satisfied or waived.
     
     "Commitment" has the meaning specified in Section 2.01.
     
     "Consolidated  Subsidiary" means for any Person,  each  Subsidiary  of
such  Person  (whether now existing or hereafter created or  acquired)  the
financial  statements of which shall be (or should have been)  consolidated
with the financial statements of such Person in accordance with GAAP.
     
     "Consolidated Tangible Net Worth" means, at any time the same is to be
determined,   the  total  assets  of  the  Borrower  and  its  Consolidated
Subsidiaries minus the sum of (i) total liabilities of the Borrower and its
Consolidated  Subsidiaries  and  (ii)  the  aggregate  book  value  of  all
intangible assets, each as determined in accordance with GAAP.
     
     "Constituent Companies" means Gas Systems and Energy Systems.
     
     "Contract  Advance" means an advance by a Lender to  the  Borrower  as
part  of a Contract Borrowing and refers to an Adjusted CD Rate Advance,  a
Base  Rate Advance or a Eurodollar Rate Advance, each of which shall  be  a
"Type" of Contract Advance.
     
     "Contract  Borrowing"  means  a borrowing consisting  of  simultaneous
Contract  Advances of the same Type with the same Interest Period  made  by
each  of  the  Lenders  pursuant to Section 2.01 or Converted  pursuant  to
Section 2.09 or 2.10.
     
     "Contract Note" means a promissory note of the Borrower payable to the
order  of  any  Lender, in substantially the form of  Exhibit  A-1  hereto,
evidencing  the  aggregate  indebtedness of the  Borrower  to  such  Lender
resulting from the Contract Advances made by such Lender.
     
     "Convert", "Conversion" and "Converted" each refers to a conversion of
Advances  of one Type into Advances of another type or the selection  of  a
new,  or  the  renewal  of the same, Interest Period  for  Eurodollar  Rate
Advances  or  Adjusted CD Rate Advances, as the case may  be,  pursuant  to
Section 2.09 or 2.10.
     
     "Debt"  of  any  Person means (without duplication), all  liabilities,
obligations  and indebtedness of such Person (i) for borrowed  money,  (ii)
evidenced by bonds, indentures, notes, or other similar instruments,  (iii)
to  pay the deferred purchase price of property or services, (iv) as lessee
under  leases that shall have been or should be, in accordance  with  GAAP,
recorded  as capital leases, (v) under reimbursement agreements or  similar
agreements  with respect to the issuance of letters of credit  (other  than
obligations in respect of letters of credit (to the extent undrawn)  opened
to  provide  for  the  payment  of goods or  services  purchased  or  other
obligations incurred in the ordinary course of business), (vi) under direct
guaranties  and  indemnities in respect of, and to  purchase  or  otherwise
acquire, or otherwise to assure a creditor against loss in respect  of,  or
to  assure  an  obligee  against failure to make  payment  in  respect  of,
liabilities, obligations or indebtedness of others of the kinds referred to
in  clauses  (i)  through (v) above, in each case to the extent  reasonably
quantifiable, and (vii) liabilities in respect of unfunded vested  benefits
under  plans covered by Title IV of ERISA; provided, however, that for  all
purposes of this Agreement "Debt" shall not include any Nonrecourse Debt or
Trade Obligations.
     
     "Domestic  Lending  Office" means, with respect  to  any  Lender,  the
office  of such Lender specified as its "Domestic Lending Office"  opposite
its  name on Schedule I hereto or in the Assignment and Acceptance pursuant
to  which it became a Lender, or such other office of such Lender  as  such
Lender may from time to time specify to the Borrower and the Administrative
Agent.
     
     "Eligible  Assignee" means (i) a commercial bank organized  under  the
laws  of  the  United States, or any State thereof; (ii) a commercial  bank
organized under the laws of any other country that is a member of the  OECD
or  has  concluded  special  lending arrangements  with  the  International
Monetary  Fund  associated with its General Arrangements to  Borrow,  or  a
political  subdivision  of any such country, provided  that  such  bank  is
acting  through  a branch or agency located in the United States;  (iii)  a
finance  company, insurance company or other financial institution or  fund
(whether  a corporation, partnership or other entity) engaged generally  in
making,  purchasing  or  otherwise investing in  commercial  loans  in  the
ordinary course of its business; (iv) the central bank of any country  that
is  a member of the OECD; or (v) any Bank; provided, however, that (A)  any
such  Person described in clause (i), (ii), (iii) or (iv) above shall  also
(x)  have outstanding unsecured indebtedness that is rated A- or better  by
S&P  or  A3  or  better  by  Moody's (or an equivalent  rating  by  another
nationally  recognized credit rating agency of similar standing if  neither
such  corporation  is in the business of rating unsecured  indebtedness  of
entities  engaged  in  such businesses) and (y) have combined  capital  and
surplus  (as  established in its most recent report  of  condition  to  its
primary  regulator)  of not less than $250,000,000 (or  its  equivalent  in
foreign  currency), and (B) any Person described in clause (ii),  (iii)  or
(iv)  above shall, on the date on which it is to become a Lender hereunder,
be  entitled to receive payments hereunder without deduction or withholding
of  any  United  States  Federal income taxes (as contemplated  by  Section
2.15(d)).
     
     "Energy   Systems"  means  LG&E  Energy  Systems  Inc.,   a   Kentucky
corporation, a predecessor company of the Borrower.
     
     "Environmental  Laws"  means  any  federal,  state  or   local   laws,
ordinances or codes, rules, orders, or regulations relating to pollution or
protection of the environment, including, without limitation, laws relating
to hazardous substances, laws relating to reclamation of land and waterways
and laws relating to emissions, discharges, releases or threatened releases
of  pollutants, contaminants, chemicals, or industrial, toxic or  hazardous
substances  or wastes into the environment (including, without  limitation,
ambient  air,  surface  water, ground water,  land  surface  or  subsurface
strata) or otherwise relating to the manufacture, processing, distribution,
use,  treatment,  storage, disposal, transport or  handling  of  pollution,
contaminants,  chemicals, or industrial, toxic or hazardous  substances  or
wastes.
     
     "ERISA" means the Employee Retirement Income Security Act of 1974,  as
amended  from  time  to time, and the regulations promulgated  and  rulings
issued thereunder, each as in effect and amended and modified from time  to
time.
     
     "ERISA  Affiliate" of a person or entity means any trade  or  business
(whether  or  not incorporated) that is a member of a group of  which  such
person  or  entity is a member and that is under common control  with  such
person  or entity within the meaning of Section 414 of the Internal Revenue
Code   of  1986,  and  the  regulations  promulgated  and  rulings   issued
thereunder, each as in effect and amended or modified from time to time.
     
     "ERISA  Plan" means an employee benefit plan maintained for  employees
of  any Person or any ERISA Affiliate of such Person subject to Title IV of
ERISA.
     
     "ERISA  Termination Event" means (i) a Reportable Event  described  in
Section 4043 of ERISA and the regulations issued thereunder (other  than  a
Reportable Event not subject to the provision for 30-day notice  to  PBGC),
or  (ii) the withdrawal of the Borrower or any of its ERISA Affiliates from
an  ERISA Plan during a plan year in which the Borrower or any of its ERISA
Affiliates was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, or (iii) the filing of a notice of intent to terminate an ERISA Plan
or  the treatment of an ERISA Plan amendment as a termination under Section
4041 of ERISA, or (iv) the institution of proceedings to terminate an ERISA
Plan  by the PBGC or to appoint a trustee to administer any ERISA Plan,  or
(v)  any  other  event  or  condition that would constitute  grounds  under
Section  4042  of  ERISA for the termination of, or the  appointment  of  a
trustee to administer any ERISA Plan.
     
     "Eurocurrency Liabilities" has the meaning assigned to  that  term  in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
     
     "Eurodollar  Lending Office" means, with respect to  any  Lender,  the
office of such Lender specified as its "Eurodollar Lending Office" opposite
its  name on Schedule I hereto or in the Assignment and Acceptance pursuant
to  which  it  became  a Lender (or, if no such office  is  specified,  its
Domestic  Lending  Office), or such other office of  such  Lender  as  such
Lender may from time to time specify to the Borrower and the Administrative
Agent.
     
     "Eurodollar  Rate" means, for the Interest Period for each  Eurodollar
Rate Advance made as part of the same Contract Borrowing or for the term of
each  Eurodollar  Rate Auction Advance made as part  of  the  same  Auction
Borrowing, an interest rate per annum equal to the average (rounded  upward
to  the nearest whole multiple of 1/16 of 1% per annum, if such average  is
not  such  a  multiple)  of the rate per annum at which  deposits  in  U.S.
dollars are offered by the principal office of each of the Reference  Banks
to  prime  banks  in the interbank market at 9:00 A.M. (Chicago  time)  two
Business Days before the first day of such Interest Period or such  Auction
Borrowing,  as  the case may be, in an amount substantially equal  to  such
Reference  Bank's  Eurodollar Rate Advance made as part  of  such  Contract
Borrowing  or,  in  the  case  of  an  Auction  Borrowing,  in  an   amount
substantially  equal to such Auction Borrowing and for a  period  equal  to
such Interest Period or such term, as the case may be.  The Eurodollar Rate
for  the  Interest Period for each Eurodollar Rate Advance made as part  of
the same Contract Borrowing or for the term of each Eurodollar Rate Auction
Advance  comprising part of the same Auction Borrowing shall be  determined
by the Administrative Agent as the average of applicable rates furnished to
and  received  by  the  Administrative Agent from the Reference  Banks  two
Business Days before the first day of such Interest Period or such  Auction
Borrowing, subject, however, to the provisions of Section 2.09.
     
     "Eurodollar Rate Advance" means a Contract Advance that bears interest
as provided in Section 2.07(c).
     
     "Eurodollar  Rate  Auction  Advances"  means  an  Auction  Advance  in
connection  with which the Eurodollar Rate shall be the basis used  by  the
Lenders in determining the rates of interest to be offered by them pursuant
to  Section 2.03 and with a term of 1, 2, 3 or 6 months; provided,  if  the
last day of the term of any Eurodollar Rate Auction Advance would occur  on
a day other than a Business Day the last day of such term shall be extended
to  occur  on the next succeeding Business Day unless such extension  would
cause  the  last  day of such term to occur in the next following  calendar
month, the last day of such term shall occur on the next preceding Business
Day.
     
     "Eurodollar  Rate Reserve Percentage" of any Lender for  the  Interest
Period  for any Eurodollar Rate Advance or Eurodollar Rate Auction  Advance
means the reserve percentage applicable during such Interest Period or such
term,  as the case may be (or if more than one such percentage shall be  so
applicable,  the daily average of such percentages for those days  in  such
Interest  Period during which any such percentage shall be  so  applicable)
under regulations issued from time to time by the Board of Governors of the
Federal  Reserve  System  (or any successor) for  determining  the  maximum
reserve   requirement  (including,  without  limitation,   any   emergency,
supplemental  or other marginal reserve requirement) for such  Lender  with
respect  to  liabilities or assets consisting of or including  Eurocurrency
Liabilities  having a term equal to such Interest Period or such  term,  as
the case may be.
     
     "Events of Default" has the meaning specified in Section 6.01.
     
     "Exchange  Act"  means the Securities Exchange Act of  1934,  and  the
regulations  promulgated thereunder, in each case as amended from  time  to
time.
     
     "Existing  Credit Agreements" means the May 12, 1995 Credit  Agreement
among  Gas Systems, the Banks named therein and Bank of Montreal, as Agent,
as amended, the February 11, 1997 Credit Agreement among Energy Systems and
Bank  of  Montreal, as Lender and as Agent, as amended and the January  29,
1996  Credit Agreement among Citibank N.A., as Agent, Bank of Montreal,  as
letter  of credit issuer, the other banks party thereto and Energy Systems,
as amended.
     
     "Federal  Funds  Rate"  means, for any period, a fluctuating  interest
rate  per  annum  equal  for each day during such period  to  the  weighted
average  of the rates on overnight Federal funds transactions with  members
of  the  Federal  Reserve  System arranged by  Federal  funds  brokers,  as
published for such day (or, if such day is not a Business Day, for the next
preceding  Business Day) by the Federal Reserve Bank of New  York,  or,  if
such  rate  is  not so published for any day which is a Business  Day,  the
average of the quotations for such day on such transactions received by the
Administrative  Agent  from  three  Federal  funds  brokers  of  recognized
standing selected by it.
     
     "First  Mortgage  Bonds"  means the bonds issued  from  time  to  time
pursuant  to  the  Trust Indenture, dated November  1,  1949,  between  the
Utility  and  Harris  Trust and Savings Bank, as Trustee,  as  amended  and
supplemented from time to time.
     
     "Fixed  Rate  Auction Advance" means an Auction Advance in  connection
with which the rates of interest offered by the Lenders pursuant to Section
2.03 shall be fixed rates per annum and with a term of 1 to 180 days.
     
     "GAAP"  means  generally accepted accounting principles applied  on  a
basis  consistent  with those used in the preparation of the  audit  report
referred to in Section 4.01(f) hereof.
     
     "Gas  Systems" means LG&E Gas Systems Inc., a Delaware corporation,  a
predecessor company to the Borrower.
     
     "Initial  Borrowing"  means the time at which  the  Lenders  make  the
initial  Advances to the Borrower hereunder in accordance  with  the  terms
hereof.
     
     "Interest Period" means, for each Contract Advance made as part of the
same Contract Borrowing, the period commencing on the date of such Contract
Advance or the date of the Conversion of any Contract Advance into  such  a
Contract Advance and ending on the last day of the period selected  by  the
Borrower  pursuant to the provisions below and, thereafter, each subsequent
period  commencing  on the last day of the immediately  preceding  Interest
Period  and  ending on the last day of the period selected by the  Borrower
pursuant  to  the  provisions below.  The duration of  each  such  Interest
Period  shall be 30, 60, 90 or 180 days in the case of an Adjusted CD  Rate
Advance,  and 1, 2, 3 or 6 months in the case of a Eurodollar Rate Advance,
in  each  case  as  the Borrower may select, upon notice  received  by  the
Administrative Agent not later than 10:00 A.M. (Chicago time) on the  third
Business  Day  prior  to the first day of such Interest  Period;  provided,
however, that:
     
          (i)    the Borrower may not select any Interest Period that  ends
     after the Termination Date;
     
         (ii)    Interest Periods commencing on the same date for  Contract
     Advances made as part of the same Contract Borrowing shall be  of  the
     same duration; and
     
       (iii)   whenever the last day of any Interest Period would otherwise
     occur  on  a  day  other than a Business Day, the  last  day  of  such
     Interest  Period  shall be extended to occur on  the  next  succeeding
     Business  Day,  provided, in the case of any  Interest  Period  for  a
     Eurodollar Rate Advance, that if such extension would cause  the  last
     day  of  such Interest Period to occur in the next following  calendar
     month,  the last day of such Interest Period shall occur on  the  next
     preceding Business Day.
     
     "Lenders"  means  the Banks listed on the signature pages  hereof  and
each Eligible Assignee that shall become a party hereto pursuant to Section
8.07.
     
     "Level  I  Status" means the S&P Rating is A or higher or the  Moody's
Rating is A2 or higher.
     
     "Level  II  Status" means Level I Status does not exist  and  the  S&P
Rating is A- or the Moody's Rating is A3.
     
     "Level  III Status" means neither Level I Status nor Level  II  Status
exists and the S&P Rating is BBB+ or the Moody's Rating is Baa1.
     
     "Level  IV  Status" means neither Level I Status, Level II Status  nor
Level III Status exists and the S&P Rating is BBB or the Moody's Rating  is
Baa2.
     
     "Level V Status" means neither Level I Status, Level II Status,  Level
III  Status nor Level IV Status exists and the S&P Rating is BBB- or  lower
and  the  Moody's  Rating  is  Baa3 or lower  or  both  ratings  have  been
suspended, withdrawn or otherwise not provided.
     
     "Majority  Lenders"  means  Lenders  having  at  least  51%   of   the
Commitments or if the Commitments have terminated in whole, the holders  of
51%  or  more of the Advances, (provided that, for purposes hereof, neither
the Borrower, nor any of its Affiliates, if a Lender, shall be included  in
(i)  the  Lenders having such amount of the Commitments or the Advances  or
(ii) determining the total amount of the Commitments or the Advances).
     
     "Material   Consolidated  Subsidiary"  means  for   any   Person   any
Consolidated Subsidiary of such Person the assets, net income or net  worth
of  which constituted 10% or more of the consolidated assets, net income or
net  worth  of such Person and all of its Subsidiaries computed as  of  the
last  day  of  the  fiscal  quarter most recently completed  prior  to  the
determination  of  whether  such  Consolidated  Subsidiary  is  a  Material
Consolidated Subsidiary (in the case of assets and net worth)  or  for  the
twelve  months ended as of the close of such calendar quarter (in the  case
of net income).
     
     "Moody's"  means  Moody's Investors Services, Inc.  or  any  successor
thereto.
     
     "Moody's  Rating" means at any time the rating assigned by Moody's  to
the  outstanding  unsecured long-term senior indebtedness of  the  Borrower
which  is  supported  by the Parent pursuant to the  Support  Agreement,  a
guarantee  or other credit support, or if such debt is not then rated,  the
rating  one  level  below the rating assigned by Moody's to  the  corporate
credit  of the Parent, or if there is no such rating, the rating two levels
below the rating assigned by Moody's to the First Mortgage Bonds.
     
     "Multiemployer  Plan"  means  a "multiemployer  plan"  as  defined  in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making  or accruing an obligation to make contributions, or has within  any
of  the  preceding three plan years made or accrued an obligation  to  make
contributions.
     
     "Nonrecourse Debt" means all liabilities, obligations and indebtedness
of  the  types described in clauses (i) through (vii) of the definition  of
"Debt"  (such  liabilities, obligations and indebtedness being  hereinafter
referred  to  as  "Obligations"), of any Person which is a special  purpose
entity or which Obligations are nonrecourse to such Person, other than with
respect  to the interest of such Person in the collateral, if any, securing
such Obligations.
     
     "Note" means a Contract Note or an Auction Note.
     
     "Notice  of  Contract Borrowing" has the meaning specified in  Section
2.02(a).
     
     "Notice  of  Auction Borrowing" has the meaning specified  in  Section
2.03(a).
     
     "OECD"   means   the   Organization  for  Economic   Cooperation   and
Development.
     
     "Parent"  means  LG&E  Energy Corp., a Kentucky corporation,  and  its
successors and assigns.
     
     "PBGC"  means the Pension Benefit Guaranty Corporation and any  entity
succeeding to any or all of its functions under ERISA.
     
     "Person"  means an individual, partnership, limited liability company,
corporation  (including  a  business trust), joint  stock  company,  trust,
unincorporated association, joint venture or other entity, or a  government
or any political subdivision or agency thereof.
     
     "Reference  Banks" means The Chase Manhattan Bank, Bank  of  Montreal,
and Morgan Guaranty Trust Company of New York and any Lender designated  as
a successor or replacement Reference Bank pursuant to Section 2.09(a).
     
     "Register" has the meaning specified in Section 8.07(c).
     
     "Reportable Event" has the meaning assigned to that term in  Title  IV
of ERISA.
     
     "S&P" means Standard & Poor's Ratings Group, a division of the McGraw-
Hill Companies, Inc. or any successor thereto.
     
     "S&P  Rating"  means at any time the rating assigned  by  S&P  to  the
outstanding  unsecured long-term senior indebtedness of the Borrower  which
is  supported by the Parent pursuant to the Support Agreement, a  guarantee
or  other credit support, or if such debt is not then rated, the rating one
level  below  the  rating assigned by S&P to the corporate  credit  of  the
Parent,  or  if  there is no such rating, the rating two levels  below  the
rating assigned by S&P to the First Mortgage Bonds.
     
     "SEC  Reports"  means  the  reports  filed  by  the  Parent  with  the
Securities and Exchange Commission on Form 10-K, Form 10-Q and/or Form  8-K
(or any successor form(s) to any thereof).
     
     "Subsidiary"  means, for any Person, any corporation,  partnership  or
other  entity  of  which  at least a majority of the  securities  or  other
ownership  interests having by the terms thereof ordinary voting  power  to
elect  a  majority  of the board of directors or other  persons  performing
similar  functions  of  such  corporation,  partnership  or  other   entity
(irrespective  of whether or not at the time securities or other  ownership
interests of any other class or classes of such corporation, partnership or
other  entity  shall  have or might have voting  power  by  reason  of  the
happening  of any contingency) is at the time directly or indirectly  owned
or  controlled by such Person or one or more Subsidiaries of such Person or
by  such Person and one or more Subsidiaries of such Person.  "Wholly Owned
Subsidiary" shall mean any such corporation, partnership or other entity of
which  all  of  the  equity securities or other ownership interests  (other
than,  in the case of a corporation, directors' qualifying shares)  are  so
owned or controlled.
     
     "Support Agreement" means the Support Agreement, dated as of September
5,  1997, between the Parent and the Borrower in the form annexed hereto as
Exhibit  G  , as the same may be amended or modified from time to  time  in
accordance with the terms thereof and of this Agreement together  with  the
letter dated September 5, 1997 from the Parent to the Administrative  Agent
designating the Debt arising hereunder as entitled to the benefit thereof.
     
     "Syndication Agent" means Chase Securities Inc.
     
     "Termination Date" means September 4, 1998 or such later date  as  may
be  established pursuant to Section 2.17 or the earlier date of termination
in  whole  of  the  Commitments pursuant to Section 2.05  or  Section  6.01
hereof.
     
     "Trade Obligations" means future obligations for the payment of  goods
or  services  or  other  obligations (other than obligations  for  borrowed
money) incurred in the ordinary course of its energy marketing business.
     
     "Transaction"  means the merger of Gas Systems with  and  into  Energy
Systems, which then changes its name to LG&E Capital Corp.
     
     "Utility"  means  Louisville  Gas and  Electric  Company,  a  Kentucky
corporation, and any successor thereto.
     
     "Yield"  means, for any Auction Advance, the effective rate per  annum
at which interest on such Auction Advance is payable, computed on the basis
of  a  year of 360 days for the actual number of days (including the  first
day  but  excluding the last day) occurring in the period  for  which  such
interest is payable.

Section  1.02.    Computation of Time Periods.  In this  Agreement  in  the
computation  of periods of time from a specified date to a later  specified
date,  the  word "from" means "from and including" and the words  "to"  and
"until" each means "to but excluding".

Section  1.03.    Accounting Terms.  All accounting terms not  specifically
defined herein shall be construed in accordance with GAAP.
                                     
                                     
                                Article II
                                     
                     Amounts and Terms of the Advances

Section  2.01.   The Contract Advances.  Each Lender severally  agrees,  on
the  terms and conditions hereinafter set forth, to make Contract  Advances
to  the  Borrower from time to time on any Business Day during  the  period
from the date hereof until the Termination Date in an aggregate amount  not
to  exceed  at  any time outstanding the amount set opposite such  Lender's
name on the signature pages hereof or, if such Lender has entered into  any
Assignment  and  Acceptance,  set forth for such  Lender  in  the  Register
maintained by the Administrative Agent pursuant to Section 8.07(c), as such
amount   may   be   reduced  pursuant  to  Section  2.05   (such   Lender's
"Commitment"), provided that the aggregate amount of the Commitments of the
Lenders  shall  be  deemed used from time to time  to  the  extent  of  the
aggregate amount of the Auction Advances then outstanding, and such  deemed
use  of  the  aggregate amount of the Commitments shall be applied  to  the
Lenders  ratably according to their respective Commitments.  Each  Contract
Borrowing  shall be in an aggregate amount not less than $5,000,000  or  an
integral  multiple  of $1,000,000 in excess thereof and  shall  consist  of
Contract Advances of the same Type and having the same Interest Period made
or  Converted  on  the same day by the Lenders ratably according  to  their
respective Commitments.  Within the limits of each Lender's Commitment, the
Borrower may from time to time borrow, prepay pursuant to Section 2.11  and
reborrow  under this Section 2.01. Subject to the restriction set forth  in
Section  2.02(e),  more than one Contract Borrowing  may  be  made  on  any
Business Day.

Section  2.02.   Making the Contract Advances. (a) Each Contract  Borrowing
shall be made on notice, given not later than (i) 10:00 A.M. (Chicago time)
on  the  third  Business  Day prior to the date of  any  proposed  Contract
Borrowing comprising Eurodollar Rate Advances or Adjusted CD Rate Advances,
and  (ii)  9:00  A.M. (Chicago time) on the date of any  proposed  Contract
Borrowing   comprising  Base  Rate  Advances,  by  the  Borrower   to   the
Administrative  Agent,  which  shall give  to  each  Lender  prompt  notice
thereof;  provided,  that  the Lenders will,  to  the  extent  feasible  to
transfer  funds and fund in the relevant market, fund the initial  Contract
Borrowing on less notice in order to accommodate the needs of the  Borrower
in  refunding borrowings outstanding under the Existing Credit  Agreements.
Each such notice of a Contract Borrowing (a "Notice of Contract Borrowing")
shall  be  by telecopier, telex or cable, confirmed immediately in writing,
in  substantially  the form of Exhibit B-1 hereto, specifying  therein  the
requested  (i)  date  of  such Contract Borrowing, (ii)  Type  of  Contract
Advances  to  be  made  in connection with such Contract  Borrowing,  (iii)
aggregate  amount of such Contract Borrowing, and (iv) in  the  case  of  a
Contract Borrowing comprising Adjusted CD Rate Advances or Eurodollar  Rate
Advances,  initial  Interest Period for each such Contract  Advance.   Each
Lender shall, before 11:00 A.M. (Chicago time) on the date of such Contract
Borrowing, make available for the account of its Applicable Lending  Office
to  the Administrative Agent at its address referred to in Section 8.02, in
same  day  funds, such Lender's ratable portion (according to the  Lenders'
respective   Commitments)   of   such  Contract   Borrowing.    After   the
Administrative  Agent's receipt of such funds and upon fulfillment  of  the
applicable  conditions set forth in Article III, the  Administrative  Agent
will  make  such  funds  available to the Borrower  at  the  Administrative
Agent's aforesaid address.

     (b)    Each  Notice  of Contract Borrowing shall  be  irrevocable  and
binding  on the Borrower.  In the case of any Contract Borrowing  that  the
related  Notice of Contract Borrowing specifies is to comprise Adjusted  CD
Rate  Advances  or Eurodollar Rate Advances, the Borrower  shall  indemnify
each Lender against any loss, cost or expense incurred by such Lender as  a
result  of any failure to fulfill on or before the date specified  in  such
Notice  of  Contract Borrowing for such Contract Borrowing  the  applicable
conditions  set  forth in Article III, including, without  limitation,  any
loss, cost or expense incurred by reason of the liquidation or reemployment
of  deposits  or other funds acquired by such Lender to fund  the  Contract
Advance  to be made by such Lender as part of such Contract Borrowing  when
such  Contract Advance, as a result of such failure, is not  made  on  such
date.

    (c)   Unless the Administrative Agent shall have received notice from a
Lender  prior to the date of any Contract Borrowing that such  Lender  will
not  make  available  to  the Administrative Agent  such  Lender's  ratable
portion  of  such Contract Borrowing, the Administrative Agent  may  assume
that  such  Lender  has made such portion available to  the  Administrative
Agent  on the date of such Contract Borrowing in accordance with subsection
(a) of this Section 2.02 and the Administrative Agent may, in reliance upon
such   assumption,  make  available  to  the  Borrower  on  such   date   a
corresponding amount.  If and to the extent that such Lender shall not have
so  made  such ratable portion available to the Administrative Agent,  such
Lender  and  the  Borrower severally agree to repay to  the  Administrative
Agent  forthwith on demand such corresponding amount together with interest
thereon,  for each day from the date such amount is made available  to  the
Borrower until the date such amount is repaid to the Administrative  Agent,
at  (i)  in the case of the Borrower, the interest rate applicable  at  the
time  to  Contract Advances made in connection with such Contract Borrowing
and  (ii)  in  the case of such Lender, the Federal Funds  Rate.   If  such
Lender  shall repay to the Administrative Agent such corresponding  amount,
such  amount so repaid shall constitute such Lender's Contract  Advance  as
part of such Contract Borrowing for purposes of this Agreement.  Nothing in
this  subsection shall be deemed to relieve any Lender from its  obligation
to  make  any Contract Advance required to be made by such Lender hereunder
or  to prejudice any rights the Borrower may have against any Lender  as  a
result of any default by such Lender hereunder.

    (d)   The failure of any Lender to make the Contract Advance to be made
by  it as part of any Contract Borrowing shall not relieve any other Lender
of  its  obligation, if any, hereunder to make its Contract Advance on  the
date of such Contract Borrowing, but no Lender shall be responsible for the
failure of any other Lender to make the Contract Advance to be made by such
other Lender on the date of any Contract Borrowing.

     (e)    Notwithstanding anything to the contrary contained  herein,  no
more  than  eight  Contract Borrowings which do not consist  of  Base  Rate
Advances may be outstanding at any time.

Section 2.03.   The Auction Advances. (a) Each Lender severally agrees that
the  Borrower may request Auction Borrowings comprised of either Fixed Rate
Auction  Advances  or Eurodollar Rate Auction Advances under  this  Section
2.03  from time to time on any Business Day during the period from the date
hereof  until the date occurring one day prior to the Termination Date,  in
the  case of an Auction Borrowing comprised of Fixed Rate Auction Advances,
or  the date occurring one month prior to the Termination Date, in the case
of  an  Auction Borrowing comprised of Eurodollar Rate Auction Advances  in
the  manner  set forth below; provided that, following the making  of  each
Auction  Borrowing, the aggregate amount of the Advances  then  outstanding
shall  not  exceed the aggregate amount of the Commitments of the  Lenders.
Each  Auction  Borrowing  shall be in an aggregate  amount  not  less  than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof.
     
          (i)   The Borrower may request an Auction Borrowing by delivering
     to  the  Administrative  Agent  (A) by  telecopier,  telex  or  cable,
     confirmed immediately in writing, a notice of an Auction Borrowing  (a
     "Notice  of Auction Borrowing"), in substantially the form of  Exhibit
     B-2  hereto, specifying the date and aggregate amount of the  proposed
     Auction  Borrowing, the maturity date for repayment  of  each  Auction
     Advance  to be made as part of such Auction Borrowing (which  maturity
     date may be the date occurring one, two, three or six months after the
     date  of such Auction Borrowing in the case of Eurodollar Rate Auction
     Advances,  or  the date occurring between one and 180 days  after  the
     date  of  such  Auction Borrowing in the case of  Fixed  Rate  Auction
     Advances  and  in  any case no later than the Termination  Date),  the
     interest payment date or dates relating thereto (which shall occur  at
     least  every  three months, in the case of a Eurodollar  Rate  Auction
     Advance,  and  every  90  days, in the  case  of  Fixed  Rate  Auction
     Advances),  and  any  other  terms to be applicable  to  such  Auction
     Borrowing,  not later than 9:00 A.M. (Chicago time) (x) at  least  one
     Business  Day prior to the date of the proposed Auction Borrowing,  in
     the  case  of  a  Fixed Rate Auction Advance, and (y)  at  least  four
     Business Days prior to the date of the proposed Auction Borrowing,  in
     the  case of a Eurodollar Rate Auction Advance and (B) payment in full
     to  the  Administrative Agent of the aggregate auction  administration
     fee  specified  in  Section 2.04(c) hereof.  The Administrative  Agent
     shall  in  turn  promptly notify each Lender of each  request  for  an
     Auction  Borrowing received by it from the Borrower  by  sending  such
     Lender a copy of the related Notice of Auction Borrowing.
     
        (ii)   Each Lender may, if, in its sole discretion, it elects to do
     so,  irrevocably  offer to make one or more Auction  Advances  to  the
     Borrower as part of such proposed Auction Borrowing at a rate or rates
     of  interest  specified  by such Lender in  its  sole  discretion,  by
     notifying  the  Administrative Agent (which shall give  prompt  notice
     thereof to the Borrower), before 9:00 A.M. (Chicago time) (A)  on  the
     date  of such proposed Auction Borrowing, in the case of a Fixed  Rate
     Auction Advance and (B) three Business Days prior to the date of  such
     proposed  Auction Borrowing, in the case of a Eurodollar Rate  Auction
     Advance,  of  the  minimum amount and maximum amount of  each  Auction
     Advance  that  such Lender would be willing to make as  part  of  such
     proposed Auction Borrowing (which amounts may, subject to the  proviso
     to  the  first sentence of this Section 2.03(a), exceed such  Lender's
     Commitment), the rate or rates of interest therefor and the Yield  (if
     different from such rate or rates) with respect thereto, the  interest
     period  relating thereto and such Lender's Applicable  Lending  Office
     with   respect  to  such  Auction  Advance;  provided  that   if   the
     Administrative Agent in its capacity as a Lender shall,  in  its  sole
     discretion, elect to make any such offer, it shall notify the Borrower
     of  such  offer before 8:45 A.M. (Chicago time) on the date  on  which
     notice of such election is to be given to the Administrative Agent  by
     the  other  Lenders.  If any Lender shall elect not to  make  such  an
     offer,  such  Lender shall so notify the Administrative Agent,  before
     9:00  A.M. (Chicago time) on the date on which notice of such election
     is  to be given to the Administrative Agent by the other Lenders,  and
     such  Lender shall not be obligated to, and shall not make any Auction
     Advance  as part of such Auction Borrowing; provided that the  failure
     by  any Lender to give such notice shall not cause such Lender  to  be
     obligated to make any Auction Advance as part of such proposed Auction
     Borrowing.
     
        (iii)    The  Borrower shall, in turn, before 10:00  A.M.  (Chicago
     time) (A) on the date of such proposed Auction Borrowing, in the  case
     of a Fixed Rate Auction Advance and (B) three Business Days before the
     date  of  such proposed Auction Borrowing, in the case of a Eurodollar
     Rate Auction Advance, either
          
                (A)     cancel  such  Auction  Borrowing  by   giving   the
          Administrative Agent notice to that effect, or
          
               (B)    irrevocably accept one or more of the offers made  by
          any  Lender or Lenders pursuant to paragraph (ii) above,  in  its
          sole discretion, subject only to the provisions of this paragraph
          (iii), by giving notice to the Administrative Agent of the amount
          of  each  Auction  Advance (which amount shall  be  equal  to  or
          greater  than  the minimum amount and equal to or less  than  the
          maximum  amount,  notified to the Borrower by the  Administrative
          Agent  on behalf of such Lender for such Auction Advance pursuant
          to  paragraph (ii) above) to be made by each Lender  as  part  of
          such  Auction Borrowing, and reject any remaining offers made  by
          Lenders   pursuant  to  paragraph  (ii)  above  by   giving   the
          Administrative  Agent notice to that effect;  provided,  however,
          that (x) the Borrower shall not accept an offer made pursuant  to
          paragraph (ii) above, at any Yield if the Borrower shall have, or
          shall  be  deemed to have, rejected any other offer made pursuant
          to  paragraph  (ii) above, at a lower Yield, (y) if the  Borrower
          declines  to accept, or is otherwise restricted by the provisions
          of this Agreement from accepting, the maximum aggregate principal
          amount  of Auction Borrowings offered at the same Yield  pursuant
          to  paragraph  (ii) above, then the Borrower shall accept  a  pro
          rata portion of each offer made at such Yield, based as nearly as
          possible on the ratio of the aggregate principal amount  of  such
          offers  to  be accepted by the Borrower to the maximum  aggregate
          principal  amount of such offers made pursuant to paragraph  (ii)
          above  (rounding up or down to the next higher or lower  multiple
          of  $1,000,000), and (z) no offer made pursuant to paragraph (ii)
          above  shall be accepted unless the Auction Borrowing in  respect
          of  such  offer is in an integral multiple of $1,000,000 and  the
          aggregate amount of such offers accepted by the Borrower is equal
          to at least $5,000,000.
     
     Any  offer  or  offers  made  pursuant to  paragraph  (ii)  above  not
     expressly accepted or rejected by the Borrower in accordance with this
     paragraph (iii) shall be deemed to have been rejected by the Borrower.
     
         (iv)   If the Borrower notifies the Administrative Agent that such
     Auction  Borrowing  is canceled pursuant to clause  (A)  of  paragraph
     (iii) above, the Administrative Agent shall give prompt notice thereof
     to the Lenders and such Auction Borrowing shall not be made.
     
          (v)    If the Borrower accepts one or more of the offers made  by
     any Lender or Lenders pursuant to clause (B) of paragraph (iii) above,
     the Administrative Agent shall in turn promptly notify (A) each Lender
     that  has made an offer as described in paragraph (ii) above,  of  the
     date and aggregate amount of such Auction Borrowing and whether or not
     any  offer  or  offers made by such Lender pursuant to paragraph  (ii)
     above  have been accepted by the Borrower, (B) each Lender that is  to
     make  an  Auction  Advance as part of such Auction  Borrowing  of  the
     amount  of each Auction Advance to be made by such Lender as  part  of
     such Auction Borrowing, and (C) each Lender that is to make an Auction
     Advance  as  part  of such Auction Borrowing, upon receipt,  that  the
     Administrative  Agent  has received forms of  documents  appearing  to
     fulfill  the  applicable conditions set forth in  Article  III.   Each
     Lender  that  is  to make an Auction Advance as part of  such  Auction
     Borrowing shall, before 11:00 A.M. (Chicago time) on the date of  such
     Auction   Borrowing  specified  in  the  notice  received   from   the
     Administrative Agent pursuant to clause (A) of the preceding  sentence
     or any later time when such Lender shall have received notice from the
     Administrative Agent pursuant to clause (C) of the preceding sentence,
     make available for the account of its Applicable Lending Office to the
     Administrative Agent at its address referred to in Section  8.02  such
     Lender's  portion of such Auction Borrowing, in same day funds.   Upon
     fulfillment of the applicable conditions set forth in Article III  and
     after  receipt  by  the  Administrative  Agent  of  such  funds,   the
     Administrative Agent will make such funds available to the Borrower at
     the  Administrative  Agent's aforesaid address.  Promptly  after  each
     Auction Borrowing the Administrative Agent will notify each Lender  of
     the amount of the Auction Borrowing and the maturities thereof.
     
         (vi)    The  acceptance by the Borrower of any offer made  by  any
     Lender pursuant to paragraph (iii) (B) above shall be irrevocable  and
     binding  on  the  Borrower.   In the case  of  any  Auction  Borrowing
     comprised  of  Eurodollar Rate Auction Advances,  the  Borrower  shall
     indemnify  such Lender against any loss, cost or expense  incurred  by
     such  Lender  as a result of any failure to fulfill on or  before  the
     date  specified  in the related Notice of Auction Borrowing  for  such
     Auction Borrowing the applicable conditions set forth in Article  III,
     including,  without  limitation,  any  loss  (excluding  any  loss  of
     anticipated  profits),  cost or expense  incurred  by  reason  of  the
     liquidation  or  reemployment of deposits or other funds  acquired  by
     such Lender to fund the Eurodollar Rate Auction Advance to be made  by
     such  Lender  as  part of such Auction Borrowing when such  Eurodollar
     Rate Auction Advance, as a result of such failure, is not made on such
     date.

    (b)   Within the limits and on the conditions set forth in this Section
2.03 (including, without limitation, the condition set forth in the proviso
to  the first sentence of subsection (a) above), the Borrower may from time
to  time  borrow  under  this Section 2.03, repay  or  prepay  pursuant  to
subsection  (c) below, and reborrow under this Section 2.03, provided  that
no  Auction Borrowing may be made within three Business Days of the date of
any other Auction Borrowing.

     (c)    The  Borrower shall repay to the Administrative Agent  for  the
account  of  each Lender that has made an Auction Advance,  or  each  other
holder  of  an  Auction Note, on the maturity date of each Auction  Advance
(such  maturity date being that specified by the Borrower for repayment  of
such  Auction Advance in the related Notice of Auction Borrowing  delivered
pursuant  to  subsection  (a)(i) above and provided  in  the  Auction  Note
evidencing such Auction Advance), the then unpaid principal amount of  such
Auction  Advance.  The Borrower shall have no right to prepay any principal
amount  of  any  Fixed Rate Auction Advance unless, and then  only  on  the
terms, specified by the Borrower for such Fixed Rate Auction Advance in the
related Notice of Auction Borrowing delivered pursuant to subsection (a)(i)
above  and set forth in the Auction Note evidencing such Fixed Rate Auction
Advance.  The Borrower may, upon at least two Business Days' notice to  the
Administrative Agent and the relevant Lender stating the proposed date  and
aggregate principal amount of the prepayment, and if such notice  is  given
the Borrower shall, prepay the outstanding principal amount of a Eurodollar
Rate  Auction Advance in whole, together with accrued interest to the  date
of such prepayment on the principal amount prepaid; provided, however, that
the Borrower shall be obligated to reimburse the relevant Lender in respect
thereof pursuant to Section 8.04(b) on the date of such prepayment.

    (d)   The Borrower shall pay interest on the unpaid principal amount of
each Auction Advance from the date of such Auction Advance to the date  the
principal amount of such Auction Advance is repaid in full, at the rate  of
interest  for  such  Auction Advance specified by the  Lender  making  such
Auction  Advance in its notice with respect thereto delivered  pursuant  to
subsection  (a)(ii) above, payable in arrears on the interest payment  date
or  dates specified by the Borrower for such Auction Advance in the related
Notice  of Auction Borrowing delivered pursuant to subsection (a)(i) above,
as provided in the Auction Note evidencing such Auction Advance.

     (e)    The  indebtedness of the Borrower resulting from  each  Auction
Advance  made  to  the Borrower as part of an Auction  Borrowing  shall  be
evidenced  by a separate Auction Note of the Borrower payable to the  order
of the Lender making such Auction Advance.

Section 2.04.   Fees.  (a)  Facility Fees.  The Borrower agrees to  pay  to
the  Administrative Agent for the account of each Lender a facility fee  on
the average daily aggregate amount of such Lender's Commitment (whether  or
not  used)  from the date hereof in the case of each Lender  and  from  the
effective date specified in the Assignment and Acceptance pursuant to which
it  became  a Lender in the case of each other Lender until the Termination
Date, payable in arrears on the 15th day of each August, November, February
and  May during such period, and on the Termination Date at a rate  of  (i)
0.050% per annum for each day Level I Status exists, (ii) 0.060% per  annum
for  each  day Level II Status exists, (iii) 0.080% per annum for each  day
Level III Status exists, (iv) 0.100% per annum for each day Level IV Status
exists and (v) 0.185% per annum for each day Level V Status exists.

     (b)    Other  Fees.  The Borrower shall pay to each of the Syndication
Agent  and  the  Administrative Agent for their own use  and  benefit  such
agency and/or other fees as the Borrower and such Agent may mutually agree.

    (c)   Auction Fees.  The Borrower shall pay to the Administrative Agent
for  its  own account an auction administration fee in the amounts  as  the
Borrower and Administrative Agent may mutually agree from time to  time  in
respect of each Auction Borrowing requested.

Section 2.05.   Reduction of the Commitments.  The Borrower shall have  the
right, upon at least two Business Days' notice to the Administrative Agent,
to  terminate in whole or reduce ratably in part the unused portions of the
respective  Commitments of the Lenders, provided that the aggregate  amount
of the Commitments of the Lenders shall not be reduced to an amount that is
less  than  the aggregate principal amount of the Advances then outstanding
and  provided,  further,  that  each partial  reduction  shall  be  in  the
aggregate amount of $5,000,000 or an integral multiple thereof.

Section  2.06.   Repayment of Contract Advances.  The Borrower shall  repay
the  principal amount of each Contract Advance made by each Lender  on  the
Termination Date in accordance with the Contract Note to the order of  such
Lender.

Section  2.07.    Interest on Contract Advances.  The  Borrower  shall  pay
interest  on the unpaid principal amount of each Contract Advance  made  by
each  Lender  from the date of such Contract Advance until  such  principal
amount shall be paid in full, at the following rates per annum:
     
         (a)   Base Rate Advances.  If such Contract Advance is a Base Rate
     Advance,  a rate per annum equal at all times to the sum of  the  Base
     Rate  in effect from time to time plus the Applicable Margin for  such
     Base  Rate in effect from time to time, payable quarterly on the  15th
     day of each August, November, February and May during such periods and
     on the date such Base Rate Advance shall be Converted or paid in full.
     
          (b)   Adjusted CD Rate Advances.  If such Contract Advance is  an
     Adjusted  CD Rate Advance, a rate per annum equal at all times  during
     the  Interest  Period for such Contract Advance  to  the  sum  of  the
     Adjusted  CD Rate for such Interest Period plus the Applicable  Margin
     for  such Adjusted CD Rate in effect from time to time, payable on the
     last  day  of  each Interest Period for such Adjusted CD Rate  Advance
     (and, in the case of any Interest Period of 180 days, on the 90th  day
     of such Interest Period) and on the date such Adjusted CD Rate Advance
     shall be Converted or paid in full.
     
          (c)   Eurodollar Rate Advances.  Subject to Section 2.08, if such
     Contract Advance is a Eurodollar Rate Advance, a rate per annum  equal
     at  all times during the Interest Period for such Contract Advance  to
     the  sum  of  the  Eurodollar Rate for such Interest Period  plus  the
     Applicable Margin for such Eurodollar Rate Advance in effect from time
     to  time,  payable on the last day of each Interest  Period  for  such
     Eurodollar  Rate Advance (and, in the case of any Interest  Period  of
     six  months,  on  the  last day of the third month  of  such  Interest
     Period)  and  on  the  date  such Eurodollar  Rate  Advance  shall  be
     Converted or paid in full.
     
          (d)   Split Ratings.  Notwithstanding the definitions of Level  I
     Status, Level II Status, Level III Status, Level IV Status and Level V
     Status,  (i)  if the S&P Rating and the Moody's Rating differ  by  one
     tier,  then the Applicable Margins and the facility fee shall be based
     on the status level which would be applicable to the higher of the two
     ratings  and (ii) if the S&P Rating and the Moody's Rating  differ  by
     two  or  more tiers, then the Applicable Margins and the facility  fee
     shall  be  based  on the status level which would be applicable  to  a
     rating which is one tier above the lower of the two ratings.

Section  2.08.    Additional  Interest  on  Eurodollar  Rate  Advances  and
Eurodollar  Rate Auction Advances.  The Borrower shall pay to each  Lender,
so  long as such Lender shall be required under regulations of the Board of
Governors  of the Federal Reserve System to maintain reserves with  respect
to   liabilities   or  assets  consisting  of  or  including   Eurocurrency
Liabilities,  additional interest on the unpaid principal  amount  of  each
Eurodollar  Rate Advance and each Eurodollar Rate Auction Advance  of  such
Lender,  from the date of such Advance until such principal amount is  paid
in  full, at an interest rate per annum equal at all times to the remainder
obtained by subtracting (i) the Eurodollar Rate for the Interest Period for
such  Contract Advance or term for such Auction Advance from (ii) the  rate
obtained  by  dividing such Eurodollar Rate by a percentage equal  to  100%
minus  the  Eurodollar  Rate Reserve Percentage of  such  Lender  for  such
Interest  Period  or  term, as applicable, payable on each  date  on  which
interest  is  payable on such Advance.  Such additional interest  shall  be
determined  by  such  Lender  and notified  to  the  Borrower  through  the
Administrative  Agent,  and  such determination  shall  be  conclusive  and
binding for all purposes, absent manifest error.

Section  2.09.    Interest  Rate Determination.  (a)  Each  Reference  Bank
agrees  to furnish to the Administrative Agent timely information  for  the
purpose  of  determining  each  Adjusted CD Rate  or  Eurodollar  Rate,  as
applicable.   If any one or more of the Reference Banks shall  not  furnish
such  timely  information to the Administrative Agent for  the  purpose  of
determining  any  such  interest  rate,  the  Administrative  Agent   shall
determine  such interest rate on the basis of timely information  furnished
by the remaining Reference Banks.  If any Reference Bank shall no longer be
a  Lender  hereunder,  shall no longer wish to serve as  a  Reference  Bank
hereunder or shall fail to perform hereunder, the Administrative Agent  and
the  Borrower  may  appoint  another Lender to  serve  as  a  successor  or
replacement Reference Bank hereunder.

    (b)   The Administrative Agent shall give prompt notice to the Borrower
and  the  Lenders  of  the  applicable  interest  rate  determined  by  the
Administrative Agent for purposes of Section 2.07(a), (b), (c) or  (d)  and
the  applicable  rate,  if any, furnished by each Reference  Bank  for  the
purpose  of determining the applicable interest rate under Section 2.07(b),
(c) or (d).

     (c)    If  fewer  than two Reference Banks (or such lesser  number  of
Lenders  as  shall  then  be  acting  as Reference  Banks)  furnish  timely
information  to  the Administrative Agent for determining the  Adjusted  CD
Rate  for  any  Adjusted CD Rate Advances, or the Eurodollar Rate  for  any
Eurodollar Rate Advances or Eurodollar Rate Auction Advances,
     
         (i)   the Administrative Agent shall forthwith notify the Borrower
     and  the Lenders that the interest rate cannot be determined for  such
     Adjusted CD Rate Advances, Eurodollar Rate Advances or Eurodollar Rate
     Auction Advances, as the case may be,
     
         (ii)   each such Contract Advance will automatically, on the  last
     day of the then existing Interest Period therefor, Convert into a Base
     Rate  Advance  (or if such Advance is then a Base Rate  Advance,  will
     continue as a Base Rate Advance), and
     
        (iii)    the  obligation  of the Lenders to  make,  or  to  Convert
     Contract  Advances into, Adjusted CD Rate Advances or Eurodollar  Rate
     Advances,   as  the  case  may  be,  shall  be  suspended  until   the
     Administrative  Agent shall notify the Borrower and the  Lenders  that
     the circumstances causing such suspension no longer exist.

     (d)    If  with respect to any Eurodollar Rate Advances, the  Majority
Lenders  notify the Administrative Agent that the Eurodollar Rate  for  any
Interest Period for such Advances will not adequately reflect the  cost  to
such  Majority  Lenders of making, funding or maintaining their  respective
Eurodollar Rate Advances for such Interest Period, the Administrative Agent
shall forthwith so notify the Borrower and the Lenders, whereupon
     
         (i)   each Eurodollar Rate Advance will automatically, on the last
     day of the then existing Interest Period therefor, Convert into a Base
     Rate Advance (unless, with respect to any Eurodollar Rate Advance, the
     Borrower  shall  have delivered to the Administrative Agent  a  timely
     notice  of  Conversion  specifying that such Eurodollar  Rate  Advance
     shall  be Converted to an Adjusted CD Rate Advance on the last day  of
     the then existing Interest Period therefor), and
     
         (ii)    the  obligation  of the Lenders to  make,  or  to  Convert
     Contract  Advances into, Eurodollar Rate Advances shall  be  suspended
     until  the  Administrative Agent shall notify  the  Borrower  and  the
     Lenders  that  the  circumstances causing such  suspension  no  longer
     exist.

Section  2.10.    Conversion  of Contract Advances.   (a)  Voluntary.   The
Borrower  may  on any Business Day, upon notice given to the Administrative
Agent  not  later than 10:00 A.M. (Chicago time) on the third Business  Day
prior  to the date of any proposed Conversion into Eurodollar Rate Advances
or  Adjusted  CD Rate Advances, and on the date of any proposed  Conversion
into Base Rate Advances, and subject to the provisions of Sections 2.09 and
2.13, Convert all Contract Advances of one Type made in connection with the
same  Contract Borrowing into Advances of another Type or Types or Advances
of  the  same  Type  having  the  same or new Interest  Periods;  provided,
however, that any Conversion of, or with respect to, any Adjusted  CD  Rate
Advances or Eurodollar Rate Advances into Advances of another Type or Types
or  Advances of the same Type having the same or new Interest Periods shall
be  made  on,  and  only on, the last day of an Interest  Period  for  such
Adjusted  CD Rate Advances or Eurodollar Rate Advances, unless the Borrower
shall  also  reimburse the Lenders in respect thereof pursuant  to  Section
8.04(b)  on  the date of such Conversion.  Each such notice of a Conversion
shall,  within the restrictions specified above, specify (i)  the  date  of
such  Conversion, (ii) the Contract Advances to be Converted, and (iii)  if
such  Conversion is into, or with respect to, Adjusted CD Rate Advances  or
Eurodollar Rate Advances, the duration of the Interest Period for each such
Contract Advance.

     (b)   Mandatory. If the Borrower shall fail to select the Type of  any
Contract  Advance or the duration of any Interest Period for  any  Contract
Borrowing comprising Adjusted CD Rate Advances or Eurodollar Rate  Advances
in  accordance with the provisions contained in the definition of "Interest
Period"  in Section 1.01 and Section 2.10(a), or if any proposed Conversion
of  a  Contract Borrowing that is to comprise Adjusted CD Rate Advances  or
Eurodollar Rate Advances upon Conversion shall not occur as a result of the
circumstances  described in paragraph (c) below, the  Administrative  Agent
will  forthwith  so notify the Borrower and the Lenders and  such  Advances
will  automatically, on the last day of the then existing  Interest  Period
therefor, Convert into Base Rate Advances.

     (c)   Failure to Convert.  Each notice of Conversion given pursuant to
subsection (a) above shall be irrevocable and binding on the Borrower.   In
the  case  of any Contract Borrowing that is to comprise Adjusted  CD  Rate
Advances  or  Eurodollar Rate Advances upon Conversion, the Borrower  shall
indemnify  each Lender against any loss, cost or expense incurred  by  such
Lender as a result of any failure to fulfill on the date specified for such
Conversion  the applicable conditions set forth in Article III,  including,
without  limitation, any loss, cost or expense incurred by  reason  of  the
liquidation  or  reemployment of deposits or other funds acquired  by  such
Lender  to fund such Adjusted CD Rate Advances or Eurodollar Rate Advances,
as the case may be, upon such Conversion, when such Conversion, as a result
of such failure, does not occur.

Section  2.11.    Prepayments.  (a) Optional.  The Borrower  may,  upon  at
least  two  Business Days' notice (or same day notice in the  case  of  any
prepayment  of Base Rate Advances) to the Administrative Agent stating  the
proposed date and aggregate principal amount of the prepayment, and if such
notice  is  given  the  Borrower shall, prepay  the  outstanding  principal
amounts  of  the  Advances made as part of the same Contract  Borrowing  in
whole  or  ratably in part, together with accrued interest to the  date  of
such  prepayment on the principal amount prepaid; provided,  however,  that
(i)  each  partial  prepayment of any Contract Borrowing  shall  be  in  an
aggregate principal amount not less than $5,000,000 and (ii) in the case of
any  such  prepayment  of an Adjusted CD Rate Advance  or  Eurodollar  Rate
Advance,  the  Borrower  shall be obligated to  reimburse  the  Lenders  in
respect thereof pursuant to Section 8.04(b) on the date of such prepayment.

     (b)    Mandatory.   If and to the extent that the aggregate  principal
amount  of  Advances  outstanding on any date hereunder  shall  exceed  the
aggregate  amount of the Commitments hereunder on such date,  the  Borrower
shall pay to the Administrative Agent on such date an amount at least equal
to  such  excess,  together  with accrued interest  to  the  date  of  such
prepayment on such amount and, in the case of any such payment which is  to
be  applied  to  Adjusted  CD Rate Advances, Eurodollar  Rate  Advances  or
Auction  Advances, the Borrower shall be obligated to reimburse the Lenders
in  respect  thereof  pursuant  to Section 8.04(b)  on  the  date  of  such
prepayment.

     (c)   Application.  Upon each payment pursuant to Section 2.11(b), the
Administrative Agent shall apply amounts received from the Borrower in  the
following order of priority:
          
          First,  to  the  prepayment in whole or ratably in  part  of  the
     principal amount of all outstanding Base Rate Advances,
          
          Second,  to  the prepayment in whole or ratably in  part  of  the
     principal  amount  of  outstanding  Adjusted  CD  Rate  Advances   and
     Eurodollar  Rate Advances, in such order of maturity as will,  in  the
     reasonable  judgment  of  the Administrative Agent,  minimize  to  the
     fullest  extent practicable amounts payable by the Borrower in respect
     of such prepayment pursuant to Section 8.04(b), and
          
          Third,  to  the  prepayment in whole or ratably in  part  of  the
     principal  amount of outstanding Auction Advances, in  such  order  of
     maturity  as  will,  in the reasonable judgment of the  Administrative
     Agent,  minimize to the fullest extent practicable amounts payable  by
     the  Borrower  in  respect  of  such prepayment  pursuant  to  Section
     8.04(b).

Section   2.12.    Increased  Costs.   (a)  If,  due  to  either  (i)   the
introduction  of or any change (other than any change by way of  imposition
or  increase  of  reserve requirements included in  the  Adjusted  CD  Rate
Reserve Percentage or any Assessment Rate, in the case of Adjusted CD  Rate
Advances,  or,  in the case of Eurodollar Rate Advances,  included  in  the
Eurodollar Rate Reserve Percentage) in or in the interpretation of any  law
or regulation or (ii) the compliance with any guideline or request from any
central  bank  or other governmental authority (whether or not  having  the
force  of  law) issued, promulgated or made, as the case may be, after  the
date  hereof,  there shall be any increase in the cost  to  any  Lender  of
agreeing  to  make  or  making,  funding or maintaining  Adjusted  CD  Rate
Advances, Eurodollar Rate Advances or any other Advances, then the Borrower
shall  from time to time, within 30 days of demand by such Lender  together
with  the certificate referred to below (with a copy of such demand to  the
Administrative Agent), pay to the Administrative Agent for the  account  of
such  Lender  additional amounts sufficient to compensate such  Lender  for
such  increased cost; provided, that no Lender shall be entitled to  demand
such  compensation more than 90 days following the last day of the Interest
Period  in respect of which such demand is made; provided further, however,
that the foregoing proviso shall in no way limit the right of any Lender to
demand  or  receive such compensation to the extent that such  compensation
relates to the retroactive application of any law, regulation, guideline or
request described in clause (i) or (ii) above if such demand is made within
90  days  after the implementation of such retroactive law, interpretation,
guideline  or request.  A certificate as to the nature and amount  of  such
increased cost, submitted to the Borrower and the Administrative  Agent  by
such  Lender  in  good  faith,  shall be conclusive  and  binding  for  all
purposes, absent manifest error.

     (b)    If  any  Lender  determines that compliance  with  any  law  or
regulation  or  any  guideline or request from any central  bank  or  other
governmental  authority (whether or not having the force  of  law)  issued,
promulgated or made, as the case may be, after the date hereof  affects  or
would affect the amount of capital required or expected to be maintained by
such  Lender or any corporation controlling such Lender and that the amount
of  such  capital  is  increased by or based upon  the  existence  of  such
Lender's  Commitment hereunder and other commitments of this  type  or  the
Advances, then, within 30 days of demand by such Lender together  with  the
certificate  referred  to  below  (with  a  copy  of  such  demand  to  the
Administrative  Agent), the Borrower shall pay to the Administrative  Agent
for  the  account  of such Lender, from time to time as specified  by  such
Lender,  additional amounts sufficient to compensate such  Lender  or  such
corporation  in  the light of such circumstances, to the extent  that  such
Lender determines such increase in capital to be allocable to the existence
of  such Lender's Commitment hereunder or the Advances made by such  Lender
hereunder,  provided,  that  no Lender shall be  entitled  to  demand  such
compensation more than one year following the last day of the  fiscal  year
of  such Lender during which such capital requirement was applicable and in
respect  of  which  such Lender is seeking compensation; provided  further,
however, that the foregoing proviso shall in no way limit the right of  any
Lender  to  demand  or receive such compensation to the  extent  that  such
compensation relates to the retroactive application of any law, regulation,
guideline or request described above if such demand is made within one year
after   the   implementation  of  such  retroactive  law,   interpretation,
guidelines or request.  A certificate as to such amounts submitted  to  the
Borrower and the Administrative Agent by such Lender in good faith shall be
conclusive and binding for all purposes, absent manifest error.

Section  2.13.   Illegality.  Notwithstanding any other provision  of  this
Agreement,  if  any Lender shall notify the Administrative Agent  that  the
introduction  of or any change in or in the interpretation of  any  law  or
regulation  makes  it unlawful, or any central bank or  other  governmental
authority  asserts  that it is unlawful, for any Lender or  its  Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to fund or maintain Eurodollar Rate Advances hereunder, (i) the
obligation  of  the Lenders to make, or to Convert Contract Advances  into,
Eurodollar Rate Advances shall be suspended until the Administrative  Agent
shall  notify  the Borrower and the Lenders that the circumstances  causing
such  suspension  no  longer exist and (ii) the  Borrower  shall  forthwith
prepay   in  full  all  Eurodollar  Rate  Advances  of  all  Lenders   then
outstanding,  together with interest accrued thereon, unless the  Borrower,
within five Business Days of notice from the Administrative Agent, Converts
all  Eurodollar Rate Advances of all Lenders then outstanding into Advances
of  another  Type  in  accordance with Section 2.10. Any  Lender  that  has
notified the Administrative Agent of any illegality under this Section 2.13
shall  use its best efforts (consistent with its internal policy and  legal
and  regulatory restrictions) to change the jurisdiction of its  Applicable
Lending  Office if the making of such change would avoid or eliminate  such
illegality  and  would not, in the reasonable judgment of such  Lender,  be
otherwise disadvantageous to such Lender.

Section  2.14.    Payments  and  Computations.   (a)  Except  as  otherwise
expressly  provided herein, the Borrower shall make each payment  hereunder
and  under  the Notes not later than 11:00 A.M. (Chicago time) on  the  day
when  due  in  U.S.  dollars to the Administrative  Agent  at  its  address
referred to in Section 8.02 in same day funds, and any such payment to  the
Administrative Agent shall constitute payment by the Borrower hereunder  or
under  the  Notes,  as  the case may be, for all purposes,  and  upon  such
payment the Lenders shall look solely to the Administrative Agent for their
respective  interests  in  such  payment.  The  Administrative  Agent  will
promptly after any such payment cause to be distributed like funds relating
to the payment of principal or interest or fees ratably (other than amounts
payable  pursuant to Section 2.02(c), 2.03, 2.04(b), 2.04(c),  2.08,  2.12,
2.15 or 8.04(b)) (according to the Lenders' respective Commitments) to  the
Lenders for the account of their respective Applicable Lending Offices, and
like  funds  relating  to the payment of any other amount  payable  to  any
Lender to such Lender for the account of its Applicable Lending Office,  in
each  case  to  be applied in accordance with the terms of this  Agreement.
Upon  its acceptance of an Assignment and Acceptance and recording  of  the
information contained therein in the Register pursuant to Section  8.07(d),
from  and  after  the  effective  date specified  in  such  Assignment  and
Acceptance, the Administrative Agent shall make all payments hereunder  and
under  the Notes in respect of the interest assigned thereby to the  Lender
assignee  thereunder,  and  the parties to such Assignment  and  Acceptance
shall  make all appropriate adjustments in such payments for periods  prior
to such effective date directly between themselves.

     (b)   The Borrower hereby authorizes each Lender, if and to the extent
payment  owed  to such Lender is not made when due hereunder or  under  any
Note held by such Lender, to charge from time to time against any or all of
the Borrower's accounts with such Lender any amount so due.

     (c)    All  computations  of  interest based  on  clause  (a)  of  the
definition  of  the  term "Base Rate" shall be made by  the  Administrative
Agent  on the basis of a year of 365 or 366 days, as the case may  be,  and
all  computations of interest based on the Adjusted CD Rate, the Eurodollar
Rate  or the Federal Funds Rate and of interest payable on Auction Advances
and  of  facility fees shall be made by the Administrative Agent,  and  all
computations  of  interest pursuant to Section 2.09  shall  be  made  by  a
Lender,  on  the basis of a year of 360 days, in each case for  the  actual
number  of  days  (including  the first day but  excluding  the  last  day)
occurring in the period for which such interest, facility fees are payable.
Each  determination by the Administrative Agent (or, in the case of Section
2.08,  by  a Lender) of an interest rate hereunder shall be conclusive  and
binding for all purposes, absent manifest error.

    (d)   Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on
the  next succeeding Business Day, and such extension of time shall in such
case  be  included  in the computation of payment of interest  or  facility
fees,  as the case may be; provided, however, if such extension would cause
payment of interest on or principal of Eurodollar Rate Advances to be  made
in  the  next following calendar month, such payment shall be made  on  the
next  preceding Business Day, and such reduction of time shall in such case
be  taken into account in the computation of interest or fees, as the  case
may be.

     (e)    Unless the Administrative Agent shall have received notice from
the  Borrower prior to the date on which any payment is due to the  Lenders
hereunder  that  the  Borrower will not make  such  payment  in  full,  the
Administrative Agent may assume that the Borrower has made such payment  in
full  to the Administrative Agent on such date and the Administrative Agent
may,  in  reliance  upon such assumption, cause to be distributed  to  each
Lender on such due date an amount equal to the amount then due such Lender.
If  and to the extent that the Borrower shall not have so made such payment
in  full  to  the  Administrative Agent, each Lender  shall  repay  to  the
Administrative  Agent forthwith on demand such amount distributed  to  such
Lender  together  with interest thereon, for each day from  the  date  such
amount is distributed to such Lender until the date such Lender repays such
amount to the Administrative Agent, at the Federal Funds Rate.

     (f)    Notwithstanding anything to the contrary contained herein, upon
the  occurrence  and  during the continuance of an Event  of  Default  each
Advance shall (automatically, in the case of an Event of Default arising as
a  result of a failure of the Borrower to pay any principal on any  Advance
when  due  (whether by acceleration or otherwise) and if but  only  if  the
Borrower is so notified by the Administrative Agent at the request  of  the
Majority  Lenders in the case of any other Event of Default) bear  interest
(computed  on  the  same basis as in effect thereon at  the  time  of  such
default), payable on demand, at a rate per annum equal to:
     
          (i)    with  respect to any Base Rate Advance,  the  sum  of  two
     percent (2%) per annum plus the Base Rate from time to time in  effect
     plus the Applicable Margin for such Base Rate; and
     
         (ii)    with  respect to any Eurodollar Rate Advance, Adjusted  CD
     Rate  Advance  and  Auction Advance, the sum of two percent  (2%)  per
     annum plus the rate of interest in effect thereon at the time of  such
     default  until  the  end  of the Interest Period  or  term  applicable
     thereto and, thereafter, at a rate per annum equal to the sum  of  two
     percent (2%) per annum plus the Base Rate from time to time in  effect
     plus the Applicable Margin for such Base Rate.

Section  2.15.   Taxes.  (a) Any and all payments by the Borrower hereunder
or under the Notes shall be made, in accordance with Section 2.14, free and
clear  of  and  without deduction for any and all present or future  taxes,
levies,  imposts, deductions, charges or withholdings, and all  liabilities
with  respect  thereto,  excluding, in the case  of  each  Lender  and  the
Administrative  Agent, taxes imposed on its income and any withholdings  in
connection   therewith,  and  franchise  taxes  imposed  on  it,   by   the
jurisdiction  under  the laws of which such Lender  or  the  Administrative
Agent  (as  the  case  may  be) is organized or any  political  subdivision
thereof  and, in the case of each Lender, taxes imposed on its income,  and
franchise  taxes  imposed  on  it, by the  jurisdiction  of  such  Lender's
Applicable  Lending Office or any political subdivision thereof  (all  such
non-excluded taxes, levies, imposts, deductions, charges, withholdings  and
liabilities  being hereinafter referred to as "Taxes").   If  the  Borrower
shall be required by law to deduct any Taxes from or in respect of any  sum
payable  hereunder  or under any Note to any Lender or  the  Administrative
Agent,  (i) the sum payable shall be increased as may be necessary so  that
after  making  all required deductions (including deductions applicable  to
additional  sums  payable  under this Section  2.15)  such  Lender  or  the
Administrative Agent (as the case may be) receives an amount equal  to  the
sum  it  would  have received had no such deductions been  made,  (ii)  the
Borrower  shall make such deductions and (iii) the Borrower shall  pay  the
full  amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.

     (b)    In  addition, the Borrower agrees to pay any present or  future
stamp  or documentary taxes or any other excise or property taxes,  charges
or  similar levies which arise from any payment made hereunder or under the
Notes or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or the Notes (hereinafter referred to as  "Other
Taxes").

     (c)    The  Borrower will indemnify each Lender and the Administrative
Agent  for  the  full  amount of Taxes or Other Taxes  (including,  without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable  under this Section 2.15) paid by such Lender or the Administrative
Agent (as the case may be) and any liability (including penalties, interest
and  expenses, other than those arising from such Lender's gross negligence
or  willful misconduct) arising therefrom or with respect thereto,  whether
or  not such Taxes or Other Taxes were correctly or legally asserted.  This
indemnification shall be made within 30 days from the date such  Lender  or
the  Administrative  Agent  (as  the case  may  be)  makes  written  demand
therefor.

     (d)    Prior to the Closing Date in the case of each Bank, and on  the
date  of the Assignment and Acceptance pursuant to which it became a Lender
in  the  case  of  each other Lender, and from time to time  thereafter  if
requested  by  the  Borrower  or  the  Administrative  Agent,  each  Lender
organized under the laws of a jurisdiction outside the United States  shall
provide the Administrative Agent and the Borrower with the forms prescribed
by  the Internal Revenue Service of the United States certifying that  such
Lender  is exempt from United States withholding taxes with respect to  all
payments to be made to such Lender hereunder and under the Notes.   If  for
any reason during the term of this Agreement, any Lender becomes unable  to
submit  the  forms referred to above or the information or  representations
contained  therein  are  no longer accurate in any material  respect,  such
Lender  shall promptly notify the Administrative Agent and the Borrower  in
writing  to that effect.  Unless the Borrower and the Administrative  Agent
have received forms or other documents satisfactory to them indicating that
payments  hereunder  or  under any Note are not subject  to  United  States
withholding  tax, the Borrower or the Administrative Agent  shall  withhold
taxes  from such payments at the applicable statutory rate in the  case  of
payments  to  or for any Lender organized under the laws of a  jurisdiction
outside the United States.

     (e)    Any Lender claiming any additional amounts payable pursuant  to
this  Section 2.15 shall use its best efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of
its  Applicable Lending Office if the making of such a change  would  avoid
the  need  for, or reduce the amount of, any such additional amounts  which
may  thereafter  accrue and would not, in the reasonable judgment  of  such
Lender, be otherwise disadvantageous to such Lender.

     (f)    If  the  Borrower makes any additional payment  to  any  Lender
pursuant  to this Section 2.15 in respect of any Taxes or Other Taxes,  and
such  Lender determines that it has received (i) a refund of such Taxes  or
Other  Taxes  or  (ii) a credit against or relief or remission  for,  or  a
reduction in the amount of, any tax or other governmental charge solely  as
a  result  of  any  deduction or credit for any Taxes or Other  Taxes  with
respect  to  which it has received payments under this Section  2.15,  such
Lender  shall,  to  the extent that it can do so without prejudice  to  the
retention  of such refund, credit, relief, remission or reduction,  pay  to
the  Borrower  such  amount  as such Lender shall  have  determined  to  be
attributable to the deduction or withholding of such Taxes or Other  Taxes.
If  such  Lender later determines that it was not entitled to such  refund,
credit,  relief, remission or reduction to the full extent of  any  payment
made  pursuant to the first sentence of this Section 2.15(f), the  Borrower
shall  upon  demand  of  such Lender promptly  repay  the  amount  of  such
overpayment.   Any  determination made by  such  Lender  pursuant  to  this
Section  2.15(f)  shall in the absence of bad faith or  manifest  error  be
conclusive,  and  nothing in this Section 2.15(f)  shall  be  construed  as
requiring any Lender to conduct its business or to arrange or alter in  any
respect its tax or financial affairs so that it is entitled to receive such
a  refund,  credit or reduction or as allowing any person  to  inspect  any
records, including tax returns, of any Lender.

     (g)   Without prejudice to the survival of any other agreement of  the
Borrower   hereunder,  the  agreements  and  obligations  of  the  Borrower
contained  in  this  Section 2.15 shall survive  the  payment  in  full  of
principal,  interest and all other amounts hereunder and under  the  Notes;
provided, that no Lender shall be entitled to demand any payment under this
Section  2.15 more than one year following the last day of the fiscal  year
of such Lender during which the liability in respect of such Taxes or Other
Taxes  was incurred; provided further, however, that the foregoing  proviso
shall  in  no  way limit the right of any Lender to demand or  receive  any
payment under this Section 2.15 to the extent that such payment relates  to
the  retroactive application of any Taxes or Other Taxes if such demand  is
made within one year after the implementation of such Taxes or Other Taxes.

Section  2.16.   Sharing of Payments, Etc.  If any Lender shall obtain  any
payment (whether voluntary, involuntary, through the exercise of any  right
of  set-off  or otherwise) on account of the Contract Advances made  by  it
(other than pursuant to Section 2.02(c), 2.04(b), 2.04(c), 2.08, 2.12, 2.15
or  8.04(b)) in excess of its ratable share of payments on account  of  the
Contract  Advances obtained by all the Lenders, such Lender shall forthwith
purchase  from  the  other  Lenders such  participations  in  the  Contract
Advances made by them as shall be necessary to cause such purchasing Lender
to  share  the excess payment ratably with each of them, provided, however,
that  if  all or any portion of such excess payment is thereafter recovered
from  such  purchasing  Lender, such purchase from  each  Lender  shall  be
rescinded and such Lender shall repay to the purchasing Lender the purchase
price to the extent of such recovery together with an amount equal to  such
Lender's  ratable share (according to the proportion of (i) the  amount  of
such Lender's required repayment to (ii) the total amount so recovered from
the  purchasing Lender) of any interest or other amount paid or payable  by
the  purchasing  Lender in respect of the total amount so  recovered.   The
Borrower agrees that any Lender so purchasing a participation from  another
Lender  pursuant to this Section 2.16 may, to the fullest extent  permitted
by law, exercise all its rights of payment (including the right of set-off)
with  respect  to  such participation as fully as if such Lender  were  the
direct creditor of the Borrower in the amount of such participation.

Section  2.17.    Extension of Termination Date.  Not later  than  60  days
prior  to the Termination Date the Borrower may request in a written notice
to  the  Administrative Agent that the Termination Date then in  effect  be
extended by three hundred sixty-four (364) days.  The Administrative  Agent
will  promptly inform the Lenders of any such request and each Lender shall
notify the Administrative Agent in writing no later than 30 days after  its
receipt  of  such  notice whether it agrees to such  extension  (each  such
Lender  agreeing  to such extension being a "Consenting Lender").   In  the
event that a Lender shall fail timely to so notify the Administrative Agent
whether  it agrees to such extension, such Lender shall be deemed  to  have
refused   to   grant  the  requested  extension.   Upon  receipt   by   the
Administrative Agent of the consent to such extension of all the Lenders no
later  than 30 days after its receipt of such notice, the Termination  Date
shall  be  automatically  extended an additional three  hundred  sixty-four
(364)  days.  If the Majority Lenders consent to such extension  but  fewer
than  all  the  Lenders so consent, and if the Borrower  still  desires  to
extend  the Termination Date, it may seek to assign to an Eligible Assignee
(including any Lender) subject (in the case of any Eligible Assignee  which
is  not  a  Lender)  to  the approval of the Administrative  Agent,  (which
approval  shall  not  be  unreasonably withheld  or  delayed)  all  of  the
Commitments  and Contract Advances of a non-Consenting Lender  pursuant  to
Section 8.07(i).

If  the  Borrower and all the Lenders do not agree to the extension and  an
assignment  of each non-Consenting Lender's Commitment is not  consummated,
the  Termination  Date shall take place as scheduled.  If  the  Termination
Date is extended, any non-Consenting Lender shall have its Commitment fully
assumed on the effective date of the assignment as set forth above and  all
amounts  owing to such Lender hereunder shall, on such effective  date,  be
paid in full pursuant to the terms of Section 8.07 hereof.
                                     
                                     
                                Article III
                                     
                           Conditions of Lending

Section  3.01.   Conditions Precedent to Initial Advances.  The obligations
of  each Lender to make its initial Advance is subject to the satisfaction,
prior to or concurrently with, the making of such initial Advance, of  each
of the following conditions precedent:
     
          (a)    Documents and Other Agreements.  The Administrative  Agent
     shall have received on or before the day of the initial Borrowing  the
     following,  each properly dated and completed, in form  and  substance
     satisfactory  to the Administrative Agent and (except for  the  Notes)
     with one copy for each Lender:
          
               (i)   The Contract Notes payable to the order of each of the
          Lenders, respectively;
          
              (ii)    A  true  and  correct copy of the Support  Agreement,
          together with (A) a schedule of all "Obligations" thereunder  and
          (B)  a  letter (the "Designation Letter") from the Parent to  the
          Administrative  Agent  and  the  Lenders  confirming   that   the
          obligations  of  the  Borrower  hereunder  and  under  the  Notes
          constitute  "Obligations" under the Support Agreement,  that  the
          Lenders constitute "Lenders" under the Support Agreement and that
          the  Lenders  will  receive the benefit  of  any  more  favorable
          support  agreement or guaranty issued by the Parent  to  a  third
          party  for  the purpose of guaranteeing or supporting payment  of
          Adjusted  Debt  of the Borrower if and so long  as  such  a  more
          favorable  agreement  remains  outstanding  and  subject  to  any
          amendments thereto or waivers thereof by such third party;
          
             (iii)    Pro forma consolidated balance sheets of the Borrower
          and  its  Consolidated Subsidiaries prepared as of June 30,  1997
          and  showing the consolidated financial condition of the Borrower
          and its Consolidated Subsidiaries immediately after giving effect
          to the consummation of the Transaction;
          
              (iv)    Certified copies of the resolutions of the  Board  of
          Directors of the Borrower approving this Agreement, the Notes and
          the  Support  Agreement  and  of all documents  evidencing  other
          necessary  corporate action with respect to this  Agreement,  the
          Notes and the Support Agreement;
          
               (v)    A  certificate  of  the  Secretary  or  an  Assistant
          Secretary  of  the  Borrower certifying (A) the  names  and  true
          signatures  of  the officers of the Borrower authorized  to  sign
          this Agreement, the Notes and the Support Agreement and the other
          documents  to  be delivered hereunder; (B) that attached  thereto
          are  true and correct copies of the Articles of Incorporation and
          the  By-laws of the Borrower, in each case as in effect  on  such
          date;  (C)  that attached thereto are true and correct copies  of
          all  governmental  and  regulatory authorizations  and  approvals
          required for the due execution, delivery and performance  by  the
          Borrower of this Agreement, the Notes and the Support Agreement;
          
              (vi)    A  certificate  of  the  Secretary  or  an  Assistant
          Secretary  of the Parent certifying that the execution,  delivery
          and  performance by the Parent of the Support Agreement  and  the
          designation  by  the Parent of the obligations  of  the  Borrower
          hereunder  as "Obligations" under the Support Agreement  and  the
          Lenders  as "Lenders" under the Support Agreement have been  duly
          authorized  by the Board of Directors of the Parent  pursuant  to
          resolutions duly adopted at a meeting duly called;
          
             (vii)    A  certificate  of  the  Secretary  or  an  Assistant
          Secretary  of  the  Parent certifying  (A)  the  names  and  true
          signatures of the officers of the Parent authorized to  sign  the
          Support Agreement and the other documents to be delivered by  the
          Parent  hereunder; (B) that attached thereto are true and correct
          copies  of  the  Articles of Incorporation  and  By-laws  of  the
          Parent,  in  each case as in effect on such date;  and  (C)  that
          attached  thereto are true and correct copies of all governmental
          and  regulatory authorizations and approvals required for the due
          execution, delivery and performance by the Parent of the  Support
          Agreement  and the other documents to be delivered by the  Parent
          hereunder;
          
            (viii)    A certificate of the chief financial officer  of  the
          Borrower, or such other officer of the Borrower acceptable to the
          Administrative  Agent, stating that (A) the  representations  and
          warranties  contained  in  Section 4.01  of  this  Agreement  are
          correct on and as of the date of such certificate as though  made
          on  and as of such date and (B) no Event of Default, and no event
          that  with the giving of notice or the passage of time, or  both,
          would  constitute  an  Event  of Default,  has  occurred  and  is
          continuing;
          
              (ix)    A  favorable  opinion of Gardner, Carton  &  Douglas,
          special counsel for the Borrower and the Parent, substantially in
          the  form of Exhibit D hereto and as to such other matters as any
          Lender through the Administrative Agent may reasonably request;
          
               (x)   A favorable opinion of John R. McCall, General Counsel
          of  the Parent, substantially in the form of Exhibit E hereto and
          to  such  other  matters as any Lender through the Administrative
          Agent may reasonably request; and
          
              (xi)   A favorable opinion of Chapman and Cutler, counsel for
          the Administrative Agent, substantially in the form of Exhibit  F
          hereto.
     
           (b)    Payment  of  Fees.   The  Administrative  Agent  and  the
     Syndication  Agent shall have received from the Borrower for  its  own
     account,  any  fees  payable  to  the  Administrative  Agent  and  the
     Syndication Agent, as set forth in any written agreements between them
     and the Borrower.
     
           (c)     Termination   of   Existing   Credit   Agreement.    The
     Administrative Agent shall have received evidence satisfactory  to  it
     that  (i) the Transaction has been consummated and (ii) promptly  upon
     funding the initial Advance the Commitments under the Existing  Credit
     Agreements  shall  have terminated and the indebtedness  for  borrowed
     money outstanding thereunder shall have been retired.

Section  3.02.    Condition  Precedent to  Each  Contract  Borrowing.   The
obligation  of  each Lender to make a Contract Advance on the  occasion  of
each Contract Borrowing (including the initial Contract Borrowing) shall be
subject  to  the  further condition precedent that  on  the  date  of  such
Contract Borrowing the following statements shall be true (and each of  the
giving of the applicable Notice of Contract Borrowing and the acceptance by
the Borrower of the proceeds of such Contract Borrowing shall constitute  a
representation  and  warranty by the Borrower that  on  the  date  of  such
Contract Borrowing such statements are true):
     
         (i)   The representations and warranties contained in Section 4.01
     are  correct on and as of the date of such Contract Borrowing,  before
     and  after  giving  effect  to  such Contract  Borrowing  and  to  the
     application  of the proceeds therefrom, as though made on  and  as  of
     such  date  except to the extent any such representation  or  warranty
     expressly  relates  solely  to an earlier date  and  except  that  the
     reference to the December 31, 1996 financial statements of the  Parent
     and its Consolidated Subsidiaries in Section 4.01(f) shall be deemed a
     reference  to the most recent quarterly or annual financial statements
     of  the  Parent  and its Consolidated Subsidiaries  submitted  to  the
     Lenders pursuant to Section 5.01(a) hereof; and
     
         (ii)    No  event has occurred and is continuing, or would  result
     from  such Contract Borrowing or from the application of the  proceeds
     therefrom, that constitutes an Event of Default or would constitute an
     Event of Default but for the requirement that notice be given or  time
     elapse or both.

Section  3.03.    Conditions  Precedent to  Each  Auction  Borrowing.   The
obligation  of  each  Lender  that is to make an  Auction  Advance  on  the
occasion  of an Auction Borrowing (including the initial Auction Borrowing)
to  make  such Auction Advance as part of such Auction Borrowing is subject
to  the  conditions precedent that (i) the Administrative Agent shall  have
received the written confirmatory Notice of Auction Borrowing with  respect
thereto, (ii) on or before the date of such Auction Borrowing, but prior to
such  Auction  Borrowing, the Administrative Agent shall have  received  an
Auction  Note payable to the order of such Lender for each of  the  Auction
Advances to be made by such Lender as part of such Auction Borrowing, in  a
principal amount equal to the principal amount of the Auction Advance to be
evidenced  thereby and otherwise on such terms as were agreed to  for  such
Auction  Advance in accordance with Section 2.03, and (iii) on the date  of
such Auction Borrowing the following statements shall be true (and each  of
the giving of the applicable Notice of Auction Borrowing and the acceptance
by  the Borrower of the proceeds of such Auction Borrowing shall constitute
a  representation  and warranty by the Borrower that on the  date  of  such
Auction Borrowing such statements are true):
     
         (A)   The representations and warranties contained in Section 4.01
     are  correct  on and as of the date of such Auction Borrowing,  before
     and  after  giving  effect  to  such  Auction  Borrowing  and  to  the
     application  of the proceeds therefrom, as though made on  and  as  of
     such  date  except to the extent any such representation  or  warranty
     expressly  relates  solely  to an earlier date  and  except  that  the
     reference to the December 31, 1996 financial statements of the  Parent
     and its Consolidated Subsidiaries in Section 4.01(f) shall be deemed a
     reference  to the most recent quarterly or annual financial statements
     of  the  Parent  and its Consolidated Subsidiaries  submitted  to  the
     Lenders pursuant to Section 5.01(a) hereof, and
     
          (B)    No  event has occurred and is continuing, or would  result
     from  such  Auction Borrowing or from the application of the  proceeds
     therefrom,  which  constitutes an Event  of  Default  or  which  would
     constitute an Event of Default but for the requirement that notice  be
     given or time elapse or both.

Section 3.04.   Condition Precedent to Certain Conversions.  The obligation
of   each  Lender  to  Convert  any  Contract  Borrowing  that,  upon  such
Conversion,  is  to comprise Adjusted CD Rate Advances or  Eurodollar  Rate
Advances  is  subject to the condition precedent that on the date  of  such
Conversion  no Event of Default shall have occurred and be continuing,  and
the giving by the Borrower of the applicable notice of Conversion described
in  Section 2.10(a) shall constitute a representation and warranty  by  the
Borrower that no Event of Default has occurred and is continuing.
                                     
                                     
                                Article IV
                                     
                      Representations and Warranties

Section  4.01.    Representations  and Warranties  of  the  Borrower.   The
Borrower represents and warrants as follows:
     
           (a)    The  Borrower  and  each  of  its  Material  Consolidated
     Subsidiaries is a corporation duly organized, validly existing and  in
     good  standing under the laws of the jurisdiction of its incorporation
     and  is duly qualified to do business as a foreign corporation in each
     jurisdiction  in  which the nature of the business  conducted  or  the
     property  owned, operated or leased by it requires such qualification,
     except  where  failure  to so qualify would not  materially  adversely
     affect  the financial condition, operations, business, properties,  or
     prospects   of   the  Borrower  or  the  Borrower  and  its   Material
     Consolidated Subsidiaries, taken as a whole.
     
          (b)    Except  as  described below, the execution,  delivery  and
     performance by the Borrower of this Agreement and the Notes are within
     the  Borrower's  corporate powers, have been duly  authorized  by  all
     necessary  corporate action, and do not contravene (i) the  Borrower's
     Certificate  of  Incorporation  or By-laws,  (ii)  law  or  (iii)  any
     contractual or legal restriction binding on or affecting the  Borrower
     or  its  properties, the violation of which could result  in  material
     adverse  effect  on  the  financial condition,  operations,  business,
     properties  or  prospects  of the Borrower or  the  Borrower  and  its
     Material  Consolidated Subsidiaries, taken as a whole.  The  Agreement
     and  Plan  of  Merger  dated  as  of May  20,  1997  (the  "KU  Merger
     Agreement") by and between LG&E Energy Corp. and KU Energy Corporation
     contains  restrictions on the incurrence or guarantee of  indebtedness
     by  the  Parent  and the Borrower.  Pursuant to the terms  of  the  KU
     Merger  Agreement, the Parent must obtain the written  consent  of  KU
     Energy  Corporation  prior  to  the  incurrence  by  the  Borrower  of
     indebtedness in excess of the limitations set forth in the  KU  Merger
     Agreement.   At  or  prior  to the time that the  Borrower  makes  any
     request  for an Advance hereunder, all necessary consents, if any,  of
     KU Energy Corporation under the KU Merger Agreement for the incurrence
     of  the indebtedness by the Borrower represented by such Advance shall
     have been obtained.
     
          (c)    No  authorization or approval or other action by,  and  no
     notice  to  or  filing with, any governmental authority or  regulatory
     body  (each, a "Governmental Approval") is required as of the date  of
     this Agreement for the due execution, delivery and performance by  the
     Borrower  of  this  Agreement or the Notes or by  the  Parent  of  the
     Support  Agreement or to consummate the Transaction except  for  those
     Governmental Approvals which have been obtained and are in full  force
     and  effect; and no Governmental Approval will be required  after  the
     date  of  this  Agreement for the due execution and  delivery  by  the
     Borrower of the Auction Notes, the performance by the Borrower of this
     Agreement or the Notes or the performance of the Support Agreement  by
     the  Parent or to consummate the Transaction except in either instance
     for  such  Governmental Approvals (notice of each of  which  shall  be
     promptly given to the Lenders) that shall be in full force and  effect
     as and when required and not subject to appeal.
     
          (d)    This  Agreement is, and the Notes when delivered hereunder
     will  be,  legal,  valid  and  binding  obligations  of  the  Borrower
     enforceable  against the Borrower in accordance with their  respective
     terms,  except  as  the  enforceability  thereof  may  be  limited  by
     equitable   principles  or  bankruptcy,  insolvency,   reorganization,
     moratorium  or  similar laws affecting the enforcement  of  creditors'
     rights generally.
     
          (e)    The Support Agreement is in full force and effect and  has
     not been amended, modified, waived or terminated, except in accordance
     with the terms hereof and thereof, and the Parent is not in default of
     any  of  its obligations thereunder.  The indebtedness of the Borrower
     supported  by  the Parent under the Support Agreement  and  any  other
     support  agreement  shall  not exceed the amount  from  time  to  time
     authorized by the Parent's board of directors.
     
          (f)    The  balance  sheets of the Parent  and  its  Consolidated
     Subsidiaries  as at December 31, 1996, and the related  statements  of
     income  and  retained  earnings of the  Parent  and  its  Consolidated
     Subsidiaries  for the fiscal periods then ended, certified  by  Arthur
     Andersen  &  Co., copies of which have been furnished to each  Lender,
     fairly  present  the  financial  condition  of  the  Parent  and   its
     Consolidated  Subsidiaries as at such date  and  the  results  of  the
     operations  of  the Parent and its Consolidated Subsidiaries  for  the
     period  ended on such date, all in accordance with generally  accepted
     accounting  principles consistently applied, and  since  December  31,
     1996,  and  except  as otherwise disclosed in the SEC  Reports  and/or
     written  materials furnished to the Lenders there has been no material
     adverse  change  in the financial condition, operations,  business  or
     prospects of the Parent and its Consolidated Subsidiaries, taken as  a
     whole, as reflected in such financial statements.
     
          (g)    Except  as  disclosed  in the Parent's  Annual  Report  to
     Stockholders  for  the  year  ended December  31,  1996  or  otherwise
     disclosed in the SEC Reports and/or written materials furnished to the
     Lenders, there is as of the date hereof and will be as of the  Closing
     Date  no  pending  or  threatened action or proceeding  affecting  the
     Borrower,  the  Parent or any of its Consolidated Subsidiaries  before
     any court, governmental agency or arbitrator that could reasonably  be
     expected to have a material adverse effect on the financial condition,
     operations,  business or prospects of the Borrower or the  Parent  and
     its  Consolidated Subsidiaries, taken as a whole, and there is not and
     will  not be any such pending or threatened action or proceeding  that
     purports   to  affect  the  legality,  validity,  binding  effect   or
     enforceability of this Agreement, any Note or the Support Agreement.
     
          (h)    No  proceeds  of any Advance have been  or  will  be  used
     directly  or indirectly in connection with any transaction subject  to
     the  requirements of Section 14 of the Exchange Act  with  respect  to
     which  proxies,  consents or authorizations are being  sought  by  any
     person (as defined in the Exchange Act) other than the majority of the
     board  of  directors of the issuer in respect of which  such  proxies,
     consents or authorizations, as the case may be, are being sought.
     
          (i)    The  Borrower is not engaged in the business of  extending
     credit  for the purpose of purchasing or carrying margin stock (within
     the  meaning of Regulation U issued by the Board of Governors  of  the
     Federal Reserve System).  Not more than 25% of the value of the assets
     of  the  Parent or of the Borrower and its Subsidiaries is represented
     by margin stock.
     
          (j)    The Borrower (i) is not a "public utility holding company"
     within the meaning of the Public Utility Holding Company Act of  1935,
     as  amended,  and  (ii) is not an "investment company"  or  a  company
     "controlled"  by  an "investment company" within the  meaning  of  the
     Investment Company Act of 1940, as amended, or an "investment advisor"
     within the meaning of the Investment Company Act of 1940, as amended.
     
          (k)    No  ERISA Termination Event has occurred, or is reasonably
     expect  to  occur, with respect to any ERISA Plan that may  materially
     and adversely affect the financial condition, operations, business  or
     prospects of the Borrower or of the Parent and its Subsidiaries, taken
     as a whole.
     
          (l)    The  pro-forma consolidated balance sheets of the Borrower
     and its Consolidated Subsidiaries delivered to the Lenders pursuant to
     Section  3.01(a)(iii)  fairly present in  all  material  respects  the
     financial  condition of the Borrower and its Consolidated Subsidiaries
     as of June 30, 1997 but after giving effect to the Transaction.
     
          (m)    The  information contained in the July, 1997  Confidential
     Information Memorandum, the SEC Reports and other information provided
     to  the  Lenders  by or on behalf of the Parent and/or  the  Borrower,
     taken  as a whole, does not contain any untrue statement of a material
     fact or omit a material fact necessary, in the context in which it  is
     furnished, to make the material statements contained therein or herein
     not  misleading  in  the  light  of the circumstances  in  which  such
     statements  were  made,  the  Lenders acknowledging  that  as  to  any
     projections,  financial  models or estimates  contained  therein,  the
     Borrower only represents that the same were prepared in good faith and
     on  reasonable  assumptions  and actual results  may  vary  materially
     therefrom and that statements contained therein as to the terms hereof
     and  of  the  Support  Agreement are qualified in  their  entirety  by
     reference to the actual terms of such agreements.
                                     
                                     
                                 Article V
                                     
                         Covenants of the Borrower

Section  5.01.   Affirmative Covenants.  Unless the Majority Lenders  shall
otherwise consent in writing, so long as any Note or any amount payable  by
the  Borrower  hereunder shall remain unpaid or any Lender shall  have  any
Commitment  hereunder,  the Borrower will, and,  in  the  case  of  Section
5.01(b), will cause its Consolidated Subsidiaries to:
     
          (a)    Reporting  Requirements.  Furnish  to  the  Administrative
     Agent:
          
               (i)    as soon as available and in any event within 50  days
          after  the end of each of the first three quarters of each fiscal
          year  of the Parent, consolidated and consolidating (showing each
          direct Subsidiary of the Parent) balance sheets of the Parent and
          its  Consolidated  Subsidiaries as of the end  of  such  quarter,
          consolidated and consolidating (showing each direct Subsidiary of
          the Parent) statements of income, cash flow and retained earnings
          of  the  Parent and its Consolidated Subsidiaries for the  period
          commencing at the end of the previous fiscal year and ending with
          the  end  of  such quarter, consolidated balance  sheets  of  the
          Borrower and its Consolidated Subsidiaries as of the end of  such
          quarter  and  consolidated  statements  of  income  and  retained
          earnings  of  the Borrower and its Consolidated Subsidiaries  for
          the  period commencing at the end of the previous fiscal year and
          ending with the end of such quarter, each certified by the  chief
          financial officer of the Borrower, or such other officer  of  the
          Borrower acceptable to the Administrative Agent;
          
              (ii)   as soon as available and in any event within 120  days
          after  the end of each fiscal year of the Parent, a copy  of  the
          annual  report for such year for the Parent and its  Consolidated
          Subsidiaries,  containing consolidated financial  statements  for
          such  year,  certified  by  Arthur  Andersen  &  Co.  or  another
          nationally recognized firm of independent public accountants, and
          a  copy  of  the  unaudited consolidating  (showing  each  direct
          Subsidiary of the Parent) financial statements of the Parent  and
          its  Consolidated  Subsidiaries and  the  consolidated  financial
          statements of the Borrower and its Consolidated Subsidiaries  for
          such year;
          
             (iii)    as soon as available and in any event within 50  days
          after  the end of each of the first three quarters of each fiscal
          year  of  the Borrower and within 120 days after the end  of  the
          fiscal year of the Borrower, a certificate of the chief financial
          officer of the Borrower, or such other officer of the Borrower or
          Parent acceptable to the Administrative Agent, (A) demonstrating,
          in reasonable detail and with supporting calculations, compliance
          with  the financial covenants set forth in Section 5.02(a) hereof
          and  (B) stating that no Event of Default and no event that, with
          the giving of notice or lapse of time or both, will constitute an
          Event  of Default has occurred and is continuing, or if an  Event
          of  Default  or  such  event has occurred and  is  continuing,  a
          statement setting forth details of such Event of Default or event
          and  the action that the Borrower has taken and proposes to  take
          with respect thereto;
          
              (iv)    as soon as available and in any event within 50  days
          after  the end of each of the first three quarters of each fiscal
          year  of  the  Parent and within 120 days after the  end  of  the
          fiscal  year of the Parent, a certificate of the chief  financial
          officer  of  the  Parent, or such other  officer  of  the  Parent
          acceptable  to  the  Administrative Agent, (A) demonstrating,  in
          reasonable detail, the calculation of the Parent's Capitalization
          Ratio  as  of the last day of such fiscal period and (B)  stating
          that  the  Parent  is  not  in  default  in  the  performance  or
          observance  of any term, covenant or agreement contained  in  the
          Support Agreement;
          
               (v)    as soon as possible and in any event within five days
          after  the  occurrence of each Event of Default  and  each  event
          that,  with the giving of notice or lapse of time or both,  would
          constitute  an Event of Default, continuing on the date  of  such
          statement,  a  statement of the chief financial  officer  of  the
          Borrower, or such other officer of the Borrower acceptable to the
          Administrative  Agent, setting forth details  of  such  Event  of
          Default or event and the actions that the Borrower has taken  and
          proposes to take with respect thereto;
          
              (vi)   as soon as possible and in any event within five  days
          after the commencement of litigation against the Borrower or  any
          of  its Material Consolidated Subsidiaries, or the receipt  of  a
          notice  of  default  by  the Borrower  or  any  of  its  Material
          Consolidated Subsidiaries, that could reasonably be  expected  to
          have  a  material adverse effect on the Borrower or  any  of  its
          Material Consolidated Subsidiaries, notice of such litigation  or
          notice  of default describing in reasonable detail the facts  and
          circumstances  concerning  such litigation  or  default  and  the
          Borrower's  or  such Material Consolidated Subsidiary's  proposed
          actions in connection therewith;
          
            (vii)   promptly after the sending or filing thereof, copies of
          annual, quarterly or current reports on Forms 10-K, 10-Q  or  8-K
          (or  any  successor  forms  thereto) and registration  statements
          (other  than  any  registration statement on  Form  S-8  and  any
          registration statement in connection with a dividend reinvestment
          plan)  that  the Parent or the Borrower or any other Consolidated
          Subsidiary  of the Parent files with the Securities and  Exchange
          Commission pursuant to the Securities Act of 1933, as amended, or
          the Exchange Act, or with any national securities exchange; and
          
            (viii)    such  other information respecting the  condition  or
          operations,  financial or otherwise, of the Parent, the  Utility,
          the  Borrower  or any of the Parent's other Material Consolidated
          Subsidiaries as any Lender through the Administrative  Agent  may
          from time to time reasonably request.
     
          (b)   Keep Books; Corporate Existence; Maintenance of Properties;
     Compliance with Laws; Insurance.
          
               (i)    keep  proper  books of record  and  account,  all  in
          accordance with generally accepted accounting principles;
          
              (ii)    preserve  and  keep  in full  force  and  effect  its
          existence  (except  in  each instance  to  the  extent  otherwise
          permitted pursuant to Section 5.02(d)) and preserve and  keep  in
          full force and effect its licenses, rights and franchises to  the
          extent necessary to carry on its business;
          
             (iii)   maintain and keep, or cause to be maintained and kept,
          its  properties in good repair, working order and condition,  and
          from time to time make or cause to be made all needful and proper
          repairs, renewals, replacements and improvements, in each case to
          carry on its business;
          
              (iv)    comply  in all material respects with all  applicable
          laws,  rules, regulations and orders, such compliance to include,
          without limitation, paying before the same become delinquent  all
          taxes,  assessments and governmental charges imposed upon  it  or
          its  property, except to the extent being contested in good faith
          by   appropriate  proceedings,  and  compliance  with  ERISA  and
          Environmental  Laws, except in each case to the extent  that  any
          noncompliance could not reasonably be expected to have a material
          adverse  effect on the financial condition, operations,  business
          or  prospects of the Borrower and its Subsidiaries,  taken  as  a
          whole; and
          
               (v)    maintain  insurance  with responsible  and  reputable
          insurance companies or associations in such amounts and  covering
          such  risks as is usually carried by companies engaged in similar
          businesses  and  owning similar properties in  the  same  general
          areas in which it operates.
     
          (c)    Use  of  Proceeds.   Use the proceeds  of  each  Borrowing
     hereunder   exclusively  for  general  corporate  purposes,  including
     acquisitions  and  working  capital requirements  in  connection  with
     energy related businesses.

Section  5.02.    Negative  Covenants.  Unless the Majority  Lenders  shall
otherwise consent in writing, so long as any Note or any amount payable  by
the  Borrower  hereunder shall remain unpaid or any Lender shall  have  any
Commitment hereunder, the Borrower will not:
     
          (a)    Consolidated  Tangible Net  Worth.   At  any  time  permit
     Consolidated Tangible Net Worth to be less than $25,000,000.
     
          (b)    Disposition  of Assets.  Sell lease, transfer,  convey  or
     otherwise  dispose of (whether in one transaction or in  a  series  of
     transactions) all or substantially all of its assets, or permit any of
     its  Subsidiaries  to do so, except that (i) any such  Subsidiary  may
     transfer assets to any other such Subsidiary or to the Borrower,  (ii)
     any  such  Subsidiary may sell, lease, transfer, convey  or  otherwise
     dispose  of all or substantially all of such assets to a Person  other
     than  the Borrower and its Subsidiaries (each a "Disposition"),  (iii)
     any  such  Subsidiary may transfer its assets to any other  Person  in
     connection  with a sale and leaseback financing entered into  by  such
     Subsidiary, and (iv) the Borrower may sell, lease, transfer, convey or
     otherwise dispose of all or substantially all of its assets in a  cash
     transaction,  provided,  in the case of any transaction  described  in
     clause (ii), (iii) or (iv), the consideration (as hereinafter defined)
     received  for  such  assets is at least equal to the  fair  value  (as
     determined  in  good faith by the board of directors of the  Borrower)
     thereof, and (A) such consideration constitutes, is reinvested in,  or
     is held in cash or cash-equivalents for reinvestment in, other energy-
     related  assets owned or to be owned by the Borrower  or  any  of  its
     Subsidiaries  or (B) such net consideration is applied immediately  to
     the  payment  or  prepayment of Debt of the Borrower  or  any  of  its
     Subsidiaries,  provided further in each case, that  immediately  after
     giving  effect to any such transaction, no Event of Default  or  event
     that  with the giving of notice or the passage of time, or both, would
     constitute  an Event of Default shall have occurred and be continuing.
     As  used in this Section 5.02(b), the term "consideration" shall  mean
     cash  consideration  or the fair value of non-cash  consideration  (as
     determined  in  good faith by the board of directors of the  Borrower)
     and the term "net consideration" shall mean the consideration less (i)
     any  provision for income or other taxes payable as a result  of  such
     Disposition  or  other  sale,  lease, transfer,  conveyance  or  other
     disposition  and  (ii) all brokerage commissions and  other  fees  and
     expenses incurred in respect of such Disposition or other sale, lease,
     transfer, conveyance or other disposition.
     
         (c)   Liens, Etc.  Create or suffer to exist, or permit any of its
     direct  or  indirect Subsidiaries to create or suffer  to  exist,  any
     lien,  security interest or other charge or encumbrance, or any  other
     type  of preferential arrangement, upon or with respect to any of  its
     properties,  whether now owned or hereafter acquired,  or  assign,  or
     permit any of its direct or indirect Subsidiaries to assign, any right
     to  receive income, in each case to secure or provide for the  payment
     of  any  Debt, other than (i) liens or security interests existing  on
     such property at the time of its acquisition (other than any such lien
     or  security interest created in the contemplation of such acquisition
     or  of  such  Person  becoming a Subsidiary), (ii)  liens  created  by
     purchase  money mortgages or other security interests upon or  in  any
     property  acquired  or held by the Borrower or any Subsidiary  in  the
     ordinary  course  of  business to secure the purchase  price  of  such
     property or to secure indebtedness incurred solely for the purpose  of
     financing  the acquisition of such property, (iii) liens  or  security
     interests  upon or with respect to any of the Borrower's interests  in
     its  Subsidiaries (other than direct Subsidiaries of the Borrower)  or
     any  of  the Borrower's Subsidiaries' assets incurred solely to secure
     repayment  of project financing for, or utility obligations  of,  such
     Subsidiary, (iv) margin deposits securing Debt of up to $10,000,000 at
     any  one  time  outstanding relating to obligations  incurred  in  the
     ordinary  course of its energy marketing business, (v) liens  securing
     obligations, neither assumed by the Borrower or any Subsidiary nor  on
     account  of  which  the  Borrower or any Subsidiary  customarily  pays
     interest,  upon  real estate upon or under which the Borrower  or  any
     Subsidiary has a right-of-way, easement, franchise or other  servitude
     or  of which the Borrower or any Subsidiary is the lessee of the whole
     thereof  or  any  interest therein for the purpose  of  locating  pipe
     lines,  substations, measuring stations, tanks or pumping or  delivery
     equipment,  (vi) liens or security interests on assets of a Subsidiary
     securing   Debt  of  such  Subsidiary,  provided  that  the  aggregate
     principal amount of Debt of Subsidiaries secured by liens or  security
     interests  incurred pursuant to this subsection (vi) shall not  exceed
     $10,000,000  at any time, (vii) liens on any assets of any  Subsidiary
     of  the  Borrower  in favor of the Borrower or any Subsidiary  of  the
     Borrower,  and (viii) extensions and renewals of any lien or  security
     interest  described in clauses (i) through (vii) above, provided  that
     (A)  any  such  extension or renewal shall be limited to the  property
     theretofore  subject to such lien or security interest  and  additions
     and/or  improvements thereto and (B) the principal amount of the  Debt
     secured by such lien or security interest shall not be increased.
     
          (d)    Mergers and Consolidations.  Merge or consolidate with  or
     into  any  Person, or permit any of its Subsidiaries to do so,  except
     (i)  any  Subsidiary of the Borrower may merge or consolidate with  or
     into  any  Person  if after giving effect thereto the  survivor  is  a
     Subsidiary  of the Borrower, (ii) any Subsidiary of the  Borrower  may
     merge  with the Borrower, (iii) the Borrower may merge with the Parent
     and  (iv) any Subsidiary may merge into any other corporation if after
     giving effect thereto the survivor is no longer a Subsidiary hereunder
     and  the  assets of such Subsidiary could have been sold under Section
     5.02(b) hereof for the consideration to be received or retained by the
     Borrower and its Subsidiaries on account of such merger (and any  such
     transaction referred to in this clause (iv) shall be accounted for and
     treated  as  a  disposition of assets for purposes of Section  5.02(b)
     hereof);  provided in each case that, immediately after giving  effect
     to  such proposed transaction, (A) no Event of Default or event  that,
     with  the giving of notice or lapse of time, or both, would constitute
     an  Event  of  Default would exist and (B) in the  case  of  any  such
     transaction  to  which the Borrower is a party, the  Borrower  is  the
     surviving corporation or the survivor shall have expressly assumed the
     obligations of the Borrower hereunder and under the Notes pursuant  to
     an  assumption agreement in form and substance reasonably satisfactory
     to the Majority Lenders.
     
         (e)   Modification of Support Agreement.  Amend, modify, terminate
     or  waive any provision of the Support Agreement, or consent to any of
     the foregoing, except in each case in accordance with the terms of the
     Support Agreement.
     
         (f)   Certain Restrictions during Defaults Hereunder.  If an Event
     of  Default has occurred and is continuing hereunder or an  event  has
     occurred  which  will  constitute such an Event of  Default  upon  the
     passage of a period of grace (and any notice the giving of which is  a
     condition to the commencement of such period of grace has been  given)
     then  and  in  any such event and without in any manner  limiting  the
     remedies  available to the Lenders upon the occurrence of  a  Default,
     the  Borrower will not declare or pay any dividend, either in cash  or
     property, on any share of its capital stock or any series or class  or
     purchase, redeem or otherwise acquire or retire any such capital stock
     or  any  warrants, rights or options to purchase or acquire  any  such
     capital  stock  or  make  any  other payment  or  distribution  either
     directly or indirectly in respect of its capital stock, make or permit
     any  Subsidiary  to make any investment in or loan or advance  to  the
     Parent  or  any Subsidiaries thereof (other than the Borrower  or  any
     Subsidiaries  of the Borrower) or otherwise directly or indirectly  in
     any  manner make or permit any Subsidiary to make any payment  to,  or
     transfer  any  cash  or any other asset to, the  Parent  or  any  such
     Subsidiary;  provided, however, that the foregoing shall not  preclude
     the  Borrower  and its Subsidiaries during the pendency  of  any  such
     Default,  from  making payments to the Parent under any equitable  tax
     sharing  arrangements or in respect of goods or  services  then  being
     provided  by or to the Parent or any Subsidiary thereof to or  by,  as
     the  case  may  be,  the  Borrower or its  Subsidiaries  at  fair  and
     reasonable terms.
                                     
                                     
                                Article VI
                                     
                             Events of Default

Section 6.01.   Events of Default.  If any of the following events ("Events
of Default") shall occur and be continuing:
     
         (a)   The Borrower shall fail to pay any principal of any Advance,
     or  interest thereon or any other amount payable under this  Agreement
     within two days after the same becomes due and payable; or
     
          (b)    Any representation or warranty made or deemed made by  the
     Borrower  herein  or  by  the Borrower (or any  of  its  officers)  in
     connection  with  this  Agreement or by the  Parent  (or  any  of  its
     officers)  in connection with this Agreement or the Support  Agreement
     shall  prove to have been incorrect in any material respect when made;
     or
     
          (c)   (i) The Borrower shall fail to perform or observe any term,
     covenant or agreement contained in Section 5.02, (ii) the Parent shall
     fail  to  perform or observe any term, covenant or agreement contained
     in  the Support Agreement, (iii) the Capitalization Ratio shall at any
     time  exceed 65% or (iv) the Borrower shall fail to perform or observe
     any  other term, covenant or agreement contained in this Agreement  on
     its  part  to  be performed or observed if the failure to  perform  or
     observe such other term, covenant or agreement shall remain unremedied
     for  20 days after written notice thereof shall have been given to the
     Borrower by the Administrative Agent or any Lender, or
     
          (d)    The  Borrower,  the Parent, the Utility  or  any  Material
     Consolidated  Subsidiary  of  the Borrower,  shall  fail  to  pay  any
     principal  of or premium or interest on any Debt which is  outstanding
     in  a  principal amount in excess of $15,000,000 in the aggregate (but
     excluding  Debt evidenced by the Notes) of the Borrower,  the  Parent,
     the  Utility or any Material Consolidated Subsidiary of the  Borrower,
     as  the case may be, when the same becomes due and payable (whether by
     scheduled  maturity,  required  prepayment,  acceleration,  demand  or
     otherwise), and such failure shall continue after the applicable grace
     period,  if any, specified in the agreement or instrument relating  to
     such  Debt;  or any other event shall occur or condition  shall  exist
     under  any agreement or instrument relating to any such Debt and shall
     continue after the applicable grace period, if any, specified in  such
     agreement  or instrument, if the effect of such event or condition  is
     to  accelerate, or to permit the acceleration of, the maturity of such
     Debt;  or  any such Debt shall be declared to be due and  payable,  or
     required  to be prepaid (other than by a regularly scheduled  required
     prepayment), prior to the stated maturity thereof; or
     
          (e)    The  Borrower,  the Parent, the Utility  or  any  Material
     Consolidated Subsidiary of the Borrower, shall generally not  pay  its
     debts  as  such  debts  become  due, or shall  admit  in  writing  its
     inability  to  pay  its  debts generally,  or  shall  make  a  general
     assignment  for the benefit of creditors; or any proceeding  shall  be
     instituted by or against the Borrower, the Parent, the Utility or  any
     Material   Consolidated  Subsidiary  of  the  Borrower,   seeking   to
     adjudicate it a bankrupt or insolvent, or seeking liquidation, winding
     up,  reorganization, arrangement, adjustment, protection,  relief,  or
     composition  of it or its debts under any law relating to  bankruptcy,
     insolvency  or  reorganization or relief of debtors,  or  seeking  the
     entry  of  an  order  for  relief or the appointment  of  a  receiver,
     trustee,  custodian  or  other similar official  for  it  or  for  any
     substantial  part  of  its  property and, in  the  case  of  any  such
     proceeding  instituted against it (but not instituted by  it),  either
     such  proceeding shall remain undismissed or unstayed for a period  of
     90  days,  or any of the actions sought in such proceeding (including,
     without limitation, the entry of an order for relief against,  or  the
     appointment  of  a  receiver,  trustee,  custodian  or  other  similar
     official  for,  it or for any substantial part of its property)  shall
     occur;  or  the  Borrower,  the Parent, the Utility  or  any  Material
     Consolidated  Subsidiary  of the Borrower, shall  take  any  corporate
     action  to  authorize or to consent to any of the  actions  set  forth
     above in this subsection (e); or
     
          (f)   Any judgment or order for the payment of money in excess of
     $15,000,000  shall be rendered against the Borrower, the  Parent,  the
     Utility  or any Material Consolidated Subsidiary of the Borrower,  and
     shall remain unpaid and either (i) enforcement proceedings shall  have
     been  commenced by any creditor upon such judgment or  order  or  (ii)
     there  shall be any period of 30 consecutive days during which a  stay
     of  enforcement  of  such judgment or order, by reason  of  a  pending
     appeal or otherwise, shall not be in effect; or
     
          (g)   (i) An ERISA Plan of the Borrower or any ERISA Affiliate of
     the  Borrower  shall  fail to maintain the minimum  funding  standards
     required  by  Section 412 of the Internal Revenue  Code  of  1986,  as
     amended from time to time (the "Code"), for any plan year or a  waiver
     of  such  standard is sought or granted under Section  412(d)  of  the
     Code, or (ii) an ERISA Plan of the Borrower or any ERISA Affiliate  of
     the  Borrower shall have been terminated or the subject of termination
     proceedings under ERISA, or (iii) the Borrower or any ERISA  Affiliate
     of the Borrower shall have incurred a liability to or on account of an
     ERISA  Plan under Section 4062, 4063 or 4064 of ERISA and there  shall
     result  from  such  event either a liability or  a  material  risk  of
     incurring a liability to the PBGC or an ERISA Plan, or (iv) any  ERISA
     Termination Event with respect to an ERISA Plan of the Borrower or any
     ERISA  Affiliate of the Borrower shall have occurred, and in the  case
     of  any event described in clauses (i) through (iv) of this subsection
     (g), (A) such event (if correctable) shall not have been corrected and
     (B)  the  then-present  value  of such ERISA  Plan's  vested  benefits
     exceeds  the  then-current value of assets accumulated in  such  ERISA
     Plan  by  more than the amount of $15,000,000 (or in the  case  of  an
     ERISA  Termination  Event involving the withdrawal of  a  "substantial
     employer" (as defined in Section 4001(a)(2) of ERISA), the withdrawing
     employer's  proportionate  share of  such  excess  shall  exceed  such
     amount); or
     
          (h)   Any provision of the Support Agreement shall for any reason
     cease  to  be  valid  and binding on any party thereto  or  any  party
     thereto shall so state in writing; or
     
          (i)    Any  authorization  or approval or  other  action  by  any
     governmental authority or regulatory body required for the  execution,
     delivery  or  performance  of (i) this Agreement,  the  Notes  or  the
     Support Agreement by the Borrower or (ii) the Support Agreement by the
     Parent shall be terminated, revoked or rescinded or shall otherwise no
     longer be in full force and effect;

then,  and  in  any such event, the Administrative Agent (i) shall  at  the
request, or may with the consent, of the Majority Lenders, by notice to the
Borrower,  declare  the obligation of each Lender to make  Advances  to  be
terminated, whereupon the same shall forthwith terminate, and (ii) shall at
the request or may with the consent, of the Majority Lenders, by notice  to
the Borrower, declare the Notes, all interest thereon and all other amounts
payable under this Agreement to be forthwith due and payable, whereupon the
Notes, all such interest and all such amounts shall become and be forthwith
due and payable, without presentment, demand, protest or further notice  of
any  kind,  all  of  which  are hereby expressly waived  by  the  Borrower;
provided,  however, that in the event of an actual or deemed  entry  of  an
order  for relief with respect to the Borrower under the Federal Bankruptcy
Code,   (A)   the  obligation  of  each  Lender  to  make  Advances   shall
automatically  be  terminated and (B) the Notes, or such interest  and  all
such  amounts  shall automatically become and be due and  payable,  without
presentment,  demand, protest or any notice of any kind, all of  which  are
hereby expressly waived by the Borrower.
                                     
                                     
                                Article VII
                                     
                                     
                                The AGENTS

Section 7.01.   Authorization and Action.  Each Lender hereby appoints  and
authorizes  the  Administrative Agent to take such action as Administrative
Agent on its behalf and to exercise such powers under this Agreement as are
delegated  to  the Administrative Agent by the terms hereof, together  with
such  powers  as are reasonably incidental thereto.  As to any matters  not
expressly  provided  for by this Agreement (including, without  limitation,
enforcement or collection of the Notes), the Administrative Agent shall not
be  required  to exercise any discretion or take any action, but  shall  be
required to act or to refrain from acting (and shall be fully protected  in
so  acting or refraining from acting) upon the instructions of the Majority
Lenders,  and such instructions shall be binding upon all Lenders  and  all
holders  of  Notes; provided, however, that the Administrative Agent  shall
not  be required to take any action which exposes the Administrative  Agent
to  personal liability or which is contrary to this Agreement or applicable
law.   The Administrative Agent agrees to give to each Lender prompt notice
of  each  notice given to it by the Borrower pursuant to the terms of  this
Agreement.

Section   7.02.    Administrative  Agent's  Reliance,  Etc.   Neither   the
Administrative  Agent  nor  any of its directors, officers,  administrative
agents  or employees shall be liable to any Lender or the Borrower for  any
action  taken  or omitted to be taken by it or them under or in  connection
with  this  Agreement,  except for its or their  own  gross  negligence  or
willful misconduct.  Without limitation of the generality of the foregoing,
the  Administrative Agent (i) may treat the payee of any Note as the holder
thereof  until the Administrative Agent receives and accepts an  Assignment
and  Acceptance entered into by the Lender which is the payee of such Note,
as  assignor, and an Eligible Assignee, as assignee, as provided in Section
8.07  and  (ii) may consult with legal counsel (including counsel  for  the
Borrower), independent public accountants and other experts selected by  it
and shall not be liable for any action taken or omitted to be taken in good
faith  by it in accordance with the advice of such counsel, accountants  or
experts.   The Agents make no warranty or representation to any Lender  and
shall  not  be responsible to any Lender for any statements, warranties  or
representations  (whether written or oral) made in or  in  connection  with
this Agreement; (iv) shall not have any duty to ascertain or to inquire  as
to  the  performance  or  observance of any  of  the  terms,  covenants  or
conditions of this Agreement on the part of the Borrower or to inspect  the
property  (including the books and records) of the Borrower; (v) shall  not
be  responsible  to  any Lender for the due execution, legality,  validity,
enforceability,  genuineness, sufficiency or value of this  Agreement,  the
Notes  or  any  other instrument or document furnished pursuant  hereto  or
thereto;  and  (vi) shall incur no liability under or in  respect  of  this
Agreement  by  acting  upon  any  notice,  consent,  certificate  or  other
instrument  or  writing  (which may be by telecopier,  telegram,  cable  or
telex) believed by it to be genuine and signed or sent by the proper  party
or  parties.  The Lenders and the Borrower acknowledge that no Agent  other
than the Administrative Agent has any duties or responsibilities hereunder.

Section 7.03.   Agents and Affiliates.  With respect to its Commitment, the
Advances  made by it and the Notes issued to it, each Agent shall have  the
same  rights  and powers under this Agreement as any other Lender  and  may
exercise the same as though it were not an Agent; and the term "Lender"  or
"Lenders"  shall, unless otherwise expressly indicated, include the  Agents
in  their individual capacities.  Each Agent and its affiliates may  accept
deposits  from,  lend  money to, act as trustee under  indentures  of,  and
generally  engage in any kind of business with, the Borrower,  any  of  its
subsidiaries  and any Person who may do business with or own securities  of
the  Borrower  or any such subsidiary, all as if it were not an  Agent  and
without any duty to account therefor to the Lenders.

Section  7.04.   Lender Credit Decision.  Each Lender acknowledges that  it
has, independently and without reliance upon the Agents or any other Lender
and  based  on the financial statements referred to in Section 4.01(f)  and
such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.  Each Lender
also acknowledges that it will, independently and without reliance upon the
Agents  or any other Lender and based on such documents and information  as
it  shall  deem  appropriate at the time, continue to make its  own  credit
decisions in taking or not taking action under this Agreement.

Section  7.05.    Indemnification.   The Lenders  agree  to  indemnify  the
Administrative  Agent  (to  the  extent not reimbursed  by  the  Borrower),
ratably  according to (i) at any time on or prior to the Termination  Date,
the respective principal amounts of the Contract Notes then held by each of
them  (or  if  no  Contract Notes are at the time  outstanding  or  if  any
Contract Notes are held by Persons which are not Lenders, ratably according
to  the respective amounts of their Commitments) and (ii) at any time after
the  Termination Date, the respective principal amounts of the  Notes  then
held  by  each  of them (or if any Notes are held by Persons that  are  not
Lenders,  ratably according to the respective unpaid principal  amounts  of
the   Advances  made  by  each  Lender),  from  and  against  any  and  all
liabilities,  obligations, losses, damages, penalties, actions,  judgments,
suits,  costs,  expenses or disbursements of any kind or nature  whatsoever
which   may   be  imposed  on,  incurred  by,  or  asserted   against   the
Administrative  Agent  in  any way relating  to  or  arising  out  of  this
Agreement or any action taken or omitted by the Administrative Agent  under
this Agreement, provided that no Lender shall be liable for any portion  of
such   liabilities,  obligations,  losses,  damages,  penalties,   actions,
judgments,  suits,  costs,  expenses or disbursements  resulting  from  the
Administrative  Agent's  gross negligence or willful  misconduct.   Without
limitation   of  the  foregoing,  each  Lender  agrees  to  reimburse   the
Administrative Agent promptly upon demand for its ratable share of any out-
of-pocket  expenses  (including reasonable counsel fees)  incurred  by  the
Administrative  Agent  in  connection  with  the  preparation,   execution,
delivery,  administration, modification, amendment or enforcement  (whether
through  negotiations, legal proceedings or otherwise) of, or legal  advice
in  respect  of  rights or responsibilities under, this Agreement,  to  the
extent  that such expenses are reimbursable by the Borrower but  for  which
the Administrative Agent is not reimbursed by the Borrower.

Section  7.06.   Successor Administrative Agent.  The Administrative  Agent
may  resign at any time by giving written notice thereof to the Lenders and
the  Borrower and may be removed at any time with or without cause  by  the
Majority  Lenders.   Upon  any such resignation or  removal,  the  Majority
Lenders  shall have the right to appoint a successor Administrative  Agent.
If  no  successor Administrative Agent shall have been so appointed by  the
Majority Lenders, and shall have accepted such appointment, within 30  days
after  the  retiring Administrative Agent's giving of notice of resignation
or the Majority Lenders' removal of the retiring Administrative Agent, then
the retiring Administrative Agent may, on behalf of the Lenders, appoint  a
successor  Administrative Agent, which shall be a commercial bank described
in clause (i) or (ii) of the definition of "Eligible Assignee" and having a
combined capital and surplus of at least $150,000,000.  Upon the acceptance
of  any  appointment  as  Administrative Agent  hereunder  by  a  successor
Administrative  Agent, such successor Administrative Agent shall  thereupon
succeed  to  and become vested with all the rights, powers, privileges  and
duties   of   the   retiring  Administrative  Agent,   and   the   retiring
Administrative  Agent shall be discharged from its duties  and  obligations
under   this   Agreement.    After  any  retiring  Administrative   Agent's
resignation or removal hereunder as Administrative Agent, the provisions of
this  Article  VII  shall inure to its benefit as to any actions  taken  or
omitted  to  be  taken by it while it was Administrative Agent  under  this
Agreement.   Notwithstanding the foregoing if no Event of Default,  and  no
event that with the giving of notice or the passage of time, or both, would
constitute an Event of Default, shall have occurred and be continuing, then
no  successor  Administrative Agent shall be appointed under  this  Section
7.06 without the prior written consent of the Borrower, which consent shall
not be unreasonably withheld or delayed.
                                     
                                     
                               Article VIII
                                     
                               Miscellaneous

Section  8.01.   Amendments, Etc.  No amendment or waiver of any  provision
of  this  Agreement or the Contract Notes, nor consent to any departure  by
the  Borrower  therefrom, shall in any event be effective unless  the  same
shall  be  in  writing and signed by the Majority Lenders,  and  then  such
waiver or consent shall be effective only in the specific instance and  for
the specific purpose for which given; provided, however, that no amendment,
waiver  or  consent shall, unless in writing and signed by all the  Lenders
(other  than  any  Lender  that is the Borrower  or  an  Affiliate  of  the
Borrower),  do  any  of  the following: (a) waive  any  of  the  conditions
specified in Section 3.01, 3.02 or 3.03, (b) increase the Commitments of  a
Lender  or  subject a Lender to any additional obligations, (c) reduce  the
principal  of,  or  interest on, the Contract Notes or any  fees  or  other
amounts  payable to the Lenders hereunder, (d) postpone any date fixed  for
any payment of principal of, or interest on, the Contract Notes or any fees
or  other  amounts  payable  to  the  Lenders  hereunder,  (e)  change  the
percentage  of the Commitments or of the aggregate unpaid principal  amount
of  the  Contract Notes, or the number of Lenders, which shall be  required
for  the Lenders or any of them to take any action hereunder, (f) amend  or
waive compliance with Sections 5.02(e) or 6.01(h) (except that Sections  2,
3  and  4  of the Support Agreement may be amended or compliance  therewith
waived  by  the  Majority  Lenders) or (g) amend  this  Section  8.01;  and
provided,  further, that no amendment, waiver or consent shall,  unless  in
writing  and signed by the Administrative Agent in addition to the  Lenders
required  above  to take such action, affect the rights or  duties  of  the
Administrative Agent under this Agreement or any Note.

Section  8.02.    Notices,  Etc.   All  notices  and  other  communications
provided   for  hereunder  shall  be  in  writing  (including   telecopier,
telegraphic,   telex  or  cable  communication)  and  mailed,   telecopied,
telegraphed,  telexed,  cabled or delivered, if to  the  Borrower,  at  its
address  at  220  W.  Main Street, Louisville, Kentucky  40202,  Attention:
Treasurer,  if  to  any  Bank,  at its Domestic  Lending  Office  specified
opposite  its  name on Schedule I hereto; if to any other  Lender,  at  its
Domestic Lending Office specified in the Assignment and Acceptance pursuant
to  which  it became a Lender; and if to the Administrative Agent,  at  its
address  at  115 South LaSalle Street, Chicago, Illinois  60603, Attention:
Natural Resources; or, as to each party, at such other address as shall  be
designated  by  such party in a written notice to the other  parties.   All
such   notices   and   communications  shall,  when   mailed,   telecopied,
telegraphed, telexed or cabled, be effective when deposited in  the  mails,
telecopied,  delivered  to  the  telegraph  company,  confirmed  by   telex
answerback  or  delivered to the cable company, respectively,  except  that
notices  and communications to the Administrative Agent pursuant to Article
II  or  VII  shall  not be effective until received by  the  Administrative
Agent.

Section 8.03.   No Waiver, Remedies.  No failure on the part of any  Lender
or  the  Administrative Agent to exercise, and no delay in exercising,  any
right  hereunder or under any Note shall operate as a waiver  thereof;  nor
shall  any single or partial exercise of any such right preclude any  other
or  further  exercise  thereof or the exercise of  any  other  right.   The
remedies  herein provided are cumulative and not exclusive of any  remedies
provided by law.

 .  (a) The Borrower agrees to pay on demand all costs and expenses incurred
by  the Administrative Agent in connection with the preparation, execution,
delivery,  syndication administration, modification and amendment  of  this
Agreement, the Notes, the Support Agreement and the other documents  to  be
delivered hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent with respect
thereto  and with respect to advising the Administrative Agent  as  to  its
rights  and  responsibilities under this Agreement.  The  Borrower  further
agrees  to pay on demand all costs and expenses, if any (including, without
limitation,  counsel fees and expenses of outside counsel and  of  internal
counsel),  incurred  by  the  Administrative  Agent  and  the  Lenders   in
connection  with  the  enforcement  (whether  through  negotiations,  legal
proceedings  or  otherwise)  of  this Agreement,  the  Notes,  the  Support
Agreement  and  the  other documents to be delivered hereunder,  including,
without limitation, reasonable counsel fees and expenses in connection with
the enforcement of rights under this Section 8.04(a).

    (b)   If any payment of principal of, or Conversion of, any Adjusted CD
Rate Advance, Eurodollar Rate Advance or Eurodollar Rate Auction Advance is
made  other  than  on  the  last day of the Interest  Period  or  term,  as
applicable  for  such  Advance, as a result  of  a  payment  or  Conversion
pursuant  to Section 2.10 or 2.13 or a prepayment pursuant to Section  2.11
or  acceleration of the maturity of the Notes pursuant to Section  6.01  or
for any other reason, the Borrower shall, upon demand by any Lender (with a
copy of such demand to the Administrative Agent), pay to the Administrative
Agent  for  the  account of such Lender any amounts required to  compensate
such  Lender  for  any additional losses, costs or expenses  which  it  may
reasonably  incur  as  a  result of such payment or Conversion,  including,
without  limitation, any loss, cost or expense incurred by  reason  of  the
liquidation  or  reemployment of deposits or other funds  acquired  by  any
Lender to fund or maintain such Advance.

     (c)    The  Borrower hereby agrees to indemnify and hold each  Lender,
each  Agent and their respective Affiliates and their respective  officers,
directors,  employees  and  professional advisors  (each,  an  "Indemnified
Person")  harmless  from and against any and all claims,  damages,  losses,
liabilities,  costs or expenses (including reasonable attorney's  fees  and
expenses, whether or not such Indemnified Person is named as a party to any
proceeding  or is otherwise subjected to judicial or legal process  arising
from  any  such  proceeding) that any of them may incur  or  which  may  be
claimed  against  any of them by any person or entity by reason  of  or  in
connection  with the execution, delivery or performance of this  Agreement,
the  Notes, the Support Agreement or any transaction contemplated  thereby,
or  the  use by the Borrower or any of its subsidiaries of the proceeds  of
any Advance, except to the extent such claim, damage, loss, liability, cost
or  expense  is  found in a final, non-appealable judgment by  a  court  of
competent  jurisdiction  to  have resulted from such  Indemnified  Person's
gross  negligence or willful misconduct.  The Borrower's obligations  under
this  Section 8.04(c) shall survive the repayment of all amounts  owing  to
the  Lenders  and  the Agents under this Agreement and the  Notes  and  the
termination  of the Commitments.  If and to the extent that the obligations
of  the  Borrower  under  this Section 8.04(c) are  unenforceable  for  any
reason, the Borrower agrees to make the maximum contribution to the payment
and satisfaction thereof which is permissible under applicable law.

Section  8.05.   Right of Set-off.  Upon (i) the occurrence and during  the
continuance of any Event of Default and (ii) the making of the  request  or
the  granting  of  the consent specified by Section 6.01 to  authorize  the
Administrative Agent to declare the Notes due and payable pursuant  to  the
provisions  of Section 6.01, each Lender is hereby authorized at  any  time
and  from time to time, to the fullest extent permitted by law, to set  off
and  apply  any  and  all  deposits (general or special,  time  or  demand,
provisional or final) at any time held and other indebtedness at  any  time
owing  by  such Lender to or for the credit or the account of the  Borrower
against  any  and all of the obligations of the Borrower now  or  hereafter
existing under this Agreement and any Note held by such Lender, whether  or
not  such  Lender shall have made any demand under this Agreement  or  such
Note  and  although such obligations may be unmatured.  Each Lender  agrees
promptly to notify the Borrower after any such set-off and application made
by  such  Lender, provided that the failure to give such notice  shall  not
affect  the validity of such set-off and application.  The rights  of  each
Lender under this Section 8.05 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which such  Lender
may have.

Section 8.06.   Binding Effect.  This Agreement shall become effective when
it  shall have been executed by the Borrower, the Administrative Agent  and
Syndication  Agent  and  when  the Administrative  Agent  shall  have  been
notified  by each Bank that such Bank has executed it and thereafter  shall
be  binding  upon and inure to the benefit of the Borrower, the Agents  and
each  Lender and their respective successors and permitted assigns,  except
that  the  Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Lenders.

Section  8.07.   Assignments and Participations. (a) Each Lender may,  with
the  prior  written  consent of the Borrower and the  Administrative  Agent
(which  consent shall not be unreasonably withheld or delayed),  assign  to
one  or  more  banks or other entities all or a portion of its  rights  and
obligations under this Agreement (including, without limitation, all  or  a
portion  of  its Commitment, its rights and obligations in respect  of  the
Contract Advances owing to it and the Contract Note or Notes held  by  it);
provided,  however, that (i) each such assignment shall be of  a  constant,
and  not  a  varying, percentage of all such rights and  obligations,  (ii)
unless  both  parties  to the assignment are Lenders immediately  prior  to
giving  effect  to  the  assignment, the amount of the  Commitment  of  the
assigning   Lender  being  assigned  pursuant  to  each   such   assignment
(determined as of the date of the Assignment and Acceptance with respect to
such  assignment) shall not be less than $5,000,000 (or if less, the entire
amount  of  such Lender's Commitment) and shall be an integral multiple  of
$1,000,000 (or such Lender's entire Commitment), (iii) each such assignment
shall  be  to  an  Eligible Assignee, and (iv) the  parties  to  each  such
assignment shall execute and deliver to the Administrative Agent,  for  its
acceptance  and  recording in the Register, an Assignment  and  Acceptance,
together with any Contract Note or Notes subject to such assignment  and  a
processing and recordation fee of $3,500; provided further that  the  prior
written  consent  of  the  Borrower  shall  not  be  required  during   the
continuance  of  an  Event  of  Default.  Upon  such  execution,  delivery,
acceptance  and recording, from and after the effective date  specified  in
each  Assignment  and Acceptance, (x) the assignee thereunder  shall  be  a
party hereto and, to the extent that rights and obligations hereunder  have
been  assigned to it pursuant to such Assignment and Acceptance,  have  the
rights  and  obligations of a Lender hereunder and (y) the Lender  assignor
thereunder shall, to the extent that rights and obligations hereunder  have
been  assigned by it pursuant to such Assignment and Acceptance, relinquish
its  rights and be released from its obligations under this Agreement (and,
in  the  case of an Assignment and Acceptance covering all or the remaining
portion  of  an  assigning  Lender's  rights  and  obligations  under  this
Agreement, such Lender shall cease to be a party hereto).

     (b)    By  executing and delivering an Assignment and Acceptance,  the
Lender assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than  as
provided in such Assignment and Acceptance, such assigning Lender makes  no
representation  or warranty and assumes no responsibility with  respect  to
any statements, warranties or representations made in or in connection with
this  Agreement  or  the  execution,  legality,  validity,  enforceability,
genuineness, sufficiency or value of this Agreement or any other instrument
or  document furnished pursuant hereto; (ii) such assigning Lender makes no
representation  or warranty and assumes no responsibility with  respect  to
the financial condition of the Borrower or the performance or observance by
the  Borrower of any of its obligations under this Agreement or  any  other
instrument  or  document  furnished pursuant hereto;  (iii)  such  assignee
acknowledges  that it has received a copy of this Agreement, together  with
copies of the financial statements referred to in Section 4.01(f) and  such
other  documents and information as it has deemed appropriate to  make  its
own  credit  analysis  and  decision to  enter  into  such  Assignment  and
Acceptance;  (iv)  such assignee will, independently and  without  reliance
upon  the  Agents, upon such assigning Lender or upon any other Lender  and
based on such documents and information as it shall deem appropriate at the
time,  continue to make its own credit decisions in taking  or  not  taking
action  under  this Agreement; (v) such assignee confirms  that  it  is  an
Eligible   Assignee;  (vi)  such  assignee  appoints  and  authorizes   the
Administrative  Agent to take such action as Administrative  Agent  on  its
behalf and to exercise such powers under this Agreement as are delegated to
the Administrative Agent by the terms hereof, together with such powers  as
are  reasonably incidental thereto; and (vii) such assignee agrees that  it
will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.

     (c)    The Administrative Agent shall maintain at its address referred
to  in  Section 8.02 a copy of each Assignment and Acceptance delivered  to
and  accepted  by it and a register for the recordation of  the  names  and
addresses of the Lenders and the Commitment of, and principal amount of the
Contract Advances owing to, each Lender from time to time (the "Register").
The  entries  in  the  Register shall be conclusive  and  binding  for  all
purposes, absent manifest error, and the Borrower, the Administrative Agent
and  the  Lenders  may  treat each Person whose name  is  recorded  in  the
Register  as  a  Lender hereunder for all purposes of this Agreement.   The
Register shall be available for inspection by the Borrower or any Lender at
any reasonable time and from time to time upon reasonable prior notice.

     (d)   Upon its receipt of an Assignment and Acceptance executed by  an
assigning  Lender  and  an assignee representing that  it  is  an  Eligible
Assignee,  together  with  any  Contract Note  or  Notes  subject  to  such
assignment,  the  Administrative  Agent  shall,  if  such  Assignment   and
Acceptance has been completed and is in substantially the form of Exhibit C
hereto,  (i)  accept  such  Assignment  and  Acceptance,  (ii)  record  the
information contained therein in the Register and (iii) give prompt  notice
thereof  to  the Borrower.  Within five Business Days after its receipt  of
such notice, the Borrower, at its own expense, shall execute and deliver to
the  Administrative Agent in exchange for the surrendered Contract Note  or
Notes  a  new  Contract Note to the order of such Eligible Assignee  in  an
amount  equal  to the Commitment assumed by it pursuant to such  Assignment
and  Acceptance  and,  if the assigning Lender has  retained  a  Commitment
hereunder, a new Contract Note to the order of the assigning Lender  in  an
amount equal to the Commitment retained by it hereunder.  Such new Contract
Note  or  Notes  shall  be in an aggregate principal amount  equal  to  the
aggregate  principal  amount of such surrendered Contract  Note  or  Notes,
shall  be  dated  the effective date of such Assignment and Acceptance  and
shall otherwise be in substantially the form of Exhibit A-1 hereto.

    (e)   Each Lender may assign to one or more banks or other entities any
Auction Note or Notes held by it.

    (f)   Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement  (including,  without  limitation,  all  or  a  portion  of   its
Commitment,  the Advances owing to it and the Note or Notes  held  by  it);
provided,  however, that (i) such Lender's obligations under this Agreement
(including,  without limitation, its Commitment to the Borrower  hereunder)
shall remain unchanged, (ii) such Lender shall remain solely responsible to
the  other  parties  hereto for the performance of such obligations,  (iii)
such  Lender  shall remain the holder of any such Note for all purposes  of
this  Agreement, and (iv) the Borrower, the Administrative  Agent  and  the
other  Lenders shall continue to deal solely and directly with such  Lender
in  connection  with  such  Lender's  rights  and  obligations  under  this
Agreement.

      (g)     Any  Lender  may,  in  connection  with  any  assignment   or
participation  or  proposed assignment or participation  pursuant  to  this
Section  8.07, disclose to the assignee or participant or proposed assignee
or  participant any information relating to the Borrower furnished to  such
Lender  by or on behalf of the Borrower; provided that, prior to  any  such
disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any confidential information
relating to the Borrower received by it from such Lender.

     (h)    Notwithstanding anything to the contrary set forth herein,  any
Lender  may assign, as collateral or otherwise, any of its rights hereunder
and  under the Notes (including, without limitation, its rights to  receive
payments  of principal and interest hereunder and under the Notes)  to  any
Federal  Reserve Bank without notice to or consent of the Borrower  or  the
Administrative Agent.

     (i)    If  any  Lender  shall make demand for  payment  under  Section
2.12(a), 2.12(b) or 2.15, or shall deliver any notice to the Administrative
Agent  pursuant  to  Section 2.13 resulting in the  suspension  of  certain
obligations  of  the Lenders with respect to Eurodollar  Rate  Advances  or
shall refuse to consent to any amendment, modification or waiver which  has
been  approved  by the Majority Lenders but can only become effective  upon
the  consent of all Lenders then within 60 days of such demand,  notice  or
refusal, the Borrower may demand that such Lender assign in accordance with
this  Section  8.07  to one or more Eligible Assignees  designated  by  the
Borrower and approved by the Administrative Agent (which approval will  not
be  unreasonably withheld or delayed) all (but not less than all)  of  such
Lender's  Commitment, its rights and obligations in respect of the Contract
Advances  owing  to  it within the next 30 days but such  Lender  shall  be
entitled  to  any  amount which would have been due  to  it  under  Section
8.04(b)  hereof  if  such Contract Advances had been  prepaid  rather  than
assigned.   If any such Eligible Assignee designated by the Borrower  shall
fail  to consummate such assignment on terms acceptable to such Lender,  or
if  the Borrower shall fail to designate any such Eligible Assignee for all
of  such Lender's Commitment or Advances, then such Lender may assign  such
Commitment  and Advances to any other Eligible Assignee in accordance  with
this Section 8.07 during such 30-day period.

Section   8.08.     Discretion  of  Lender  as  to   Manner   of   Funding.
Notwithstanding any other provision of this Agreement, each Lender shall be
entitled  to  fund  and maintain its funding of all  or  any  part  of  its
Advances in any manner it sees fit, it being understood, however, that  for
the  purposes of this Agreement all determinations hereunder shall be  made
as if each Lender had actually funded and maintained each Eurocurrency Rate
Advance  and  each Eurodollar Rate Auction Advance through the purchase  of
deposits   in   the  eurocurrency  interbank  market  having   a   maturity
corresponding to such Advance's Interest Period or term, as applicable, and
bearing  an  interest rate equal to the Eurodollar Rate for  such  Interest
Period or term, as applicable.

Section  8.09.    Governing Law.  This Agreement and  the  Notes  shall  be
governed  by,  and construed in accordance with, the laws of the  State  of
Illinois.

Section  8.10.    Waiver of Jury Trial.  The Borrower, the Agents  and  the
Lenders  hereby irrevocably waive all right to trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement  or
any note, or any other instrument or document hereunder or thereunder.

Section  8.11.   Execution in Counterparts.  This Agreement may be executed
in  any  number of counterparts and by different parties hereto in separate
counterparts,  each  of which when so executed shall be  deemed  to  be  an
original and all of which taken together shall constitute one and the  same
agreement.

Section  8.12.   Termination of Existing Credit Agreements.   The  Borrower
and  each  of the Lenders hereunder that is a party to any of the  Existing
Credit  Agreements,  consents  to  the  termination  of  the  "Commitments"
thereunder  effective  and  the  repayment of  any  "Advances"  outstanding
thereunder on the date the conditions set forth in Section 3.01 hereof  are
fulfilled,  notwithstanding  any applicable notice  requirements  for  such
termination  or  prepayment  set forth in any  Existing  Credit  Agreement.
Because such Lenders hereunder constitute the "Majority Lenders" under each
of  the  Existing  Credit Agreements, the Existing Credit Agreements  shall
terminate and all amounts payable thereunder, including accrued and  unpaid
facility  fees, shall be payable, and the fees payable under  Section  2.04
hereof  shall begin to accrue, on the date this Agreement has been executed
by  all  the  parties hereto and the conditions set forth in  Section  3.01
hereof have been fulfilled.
     
     In  Witness Whereof, the parties hereto have caused this Agreement  to
be  executed by their respective officers thereunto duly authorized, as  of
the date first above written.
                                    
                                    LG&E Capital Corp.
                                       
                                       
                                    By
                                      Name:
                                      Title:
                                    
                                    
                                    
                                    Chase Securities Inc., as Syndication
                                       Agent
                                       
                                       
                                    By
                                      Name:
                                      Title:
                                    
                                    
                                    
                                    Bank of Montreal, as Administrative
                                       Agent
                                       
                                       
                                    By
                                      Name:
                                      Title:



Commitment                            Bank of Montreal
$17,142,857.15
                                    
                                    
                                    By
                                      Name:
                                      Title:
                                    



Commitment                            The Chase Manhattan Bank
$17,142,857.16
                                    
                                    
                                    By
                                      Name:
                                                                  Title:



Commitment                          Morgan Guaranty Trust Company of
$13,142,857.14                         New York

                                    
                                    
                                    By
                                      Name:
                                                                  Title:



Commitment                          PNC Bank, Kentucky, Inc.
$13,142,857.14
                                    
                                    
                                    By
                                      Name:
                                                                  Title:




Commitment                            The Bank of New York
$13,142,857.14
                                    
                                    
                                    By
                                      Name:
                                                                  Title:



Commitment                            The First National Bank of Chicago
$13,142,857.14
                                    
                                    
                                    By
                                      Name:
                                                                  Title:




Commitment                            Wachovia Bank, N.A.
$13,142,857.14
                                    
                                    
                                    By
                                      Name:
                                                                  Title:




Commitment                            Fleet National Bank
$11,428,571.43
                                    
                                    
                                    By
                                      Name:
                                                                  Title:




Commitment                          Bank of America National Trust and
$8,571,428.57                          Savings Association

                                    
                                    
                                    By
                                      Name:
                                                                  Title:



Commitment                            Bank One, Kentucky, N.A.
$8,571,428.57
                                    
                                    
                                    By
                                      Name:
                                                                  Title:



Commitment                            BankBoston N.A.
$8,571,428.57
                                    
                                    
                                    By
                                      Name:
                                                                  Title:



Commitment                            Banque Paribas
$8,571,428.57
                                    
                                    
                                    By
                                      Name:
                                                                  Title:

Commitment                            Citibank, N.A.
$8,571,428.57
                                    
                                    
                                    By
                                      Name:
                                                                  Title:



Commitment                            First Union National Bank
$8,571,428.57
                                    
                                    
                                    By
                                      Name:
                                                                  Title:



Commitment                          Kredietbank N.V., Grand Cayman
$8,571,428.57                         Branch

                                    
                                    
                                    By
                                      Name:
                                                                  Title:

                                    
                                    
                                    By
                                      Name:
                                                                  Title:


Commitment                            Mellon Bank, N.A.
$8,571,428.57
                                    
                                    
                                    By
                                      Name:
                                                                  Title:


Commitment                            NationsBank, N.A.
$8,571,428.57
                                    
                                    
                                    By
                                      Name:
                                                                  Title:




Commitment                          The Bank of Tokyo-Mitsubishi, Ltd.,
$8,571,428.57                         Chicago Branch

                                    
                                    
                                    By
                                      Name:
                                                                  Title:





Commitment                            Fifth Third Bank of Kentucky, Inc.
$2,857,142.86
                                    
                                    
                                    By
                                      Name:
                                                                  Title:


                                Schedule I
                                     
                                     
                            LG&E Capital Corp.
                                     
                       $200,000,000 Credit Agreement
                                     
                                     
                                     
                             Eurodollar          Domestic      CD Lending
     Name of Bank          Lending Office        Lending         Office
                                                  Office
                                                             
Bank of Montreal       115 S. LaSalle Street  Same as        Same as
                       Chicago, IL  60603     Eurodollar     Eurodollar
Notices other than     Contact:  Patrick      Lending        Lending
for Borrowings and     Escalante              Office         Office
Repayments:            Tel:  (312) 750-4356
                       Fax:  (312) 750-3808
115 S. LaSalle Street
Chicago, IL  60603
Contact:  Greg Watland
Tel:  (312) 750-4356
Fax:  (312) 750-3808
                                                             
The Chase Manhattan    1 Chase Manhattan      Same as        Same as
Bank                   Plaza                  Eurodollar     Eurodollar
                       8th Floor              Lending        Lending
Notices other than     New York, NY  10081    Office         Office
for Borrowings and     Contact:  Lynette
Repayments:            Lang
                       Tel:  (212) 552-__92
1 Chase Manhattan      Fax:  (212) 552-5777
Plaza
3rd Floor
New York, NY  10081
Contact:  Thomas Casey
      Vice President
Tel:  (212) 552-7518
Fax:  (212) 968-7485
                                                              
Morgan Guaranty Trust  Nassau Bahamas Office  60 Wall        Same as
Company of New York    c/o J.P. Morgan        Street         Domestic
                       Services, Inc.         New York, NY   Lending
Notices other than     500 Stanton              10260-0060   Office
for Borrowings and     Christiana Road        
Repayments:            Newark, DE  19713      
                       Contact:  Euro-Loan
60 Wall Street, 22nd   Servicing
Floor                        Unit
New York, NY  10260-   Tel:  (302)
0060                   Fax:  (302) 634-1094
Contact:  Jim Finch
Tel:  (212) 648-7141
Fax:  (212) 648-5014
                                                             
PNC Bank, Kentucky,    500 W. Jefferson       Same as        Same as
Inc.                   Street                 Eurodollar     Eurodollar
                       8th Floor              Lending        Lending
Notices other than     Louisville, KY  40202  Office         Office
for Borrowings and     Contact:  Jamie
Repayments:            Argenbright
                       Tel:  (502) 581-2086
500 W. Jefferson       Fax:  (502) 581-2302
Street
8th Floor
Louisville, KY  40202
Contact:  Brennan T.
Danile
      Corporate
Banking
      Officer
Tel:  (502) 581-3022
Fax:  (502) 581-2302
                                                             
The Bank of New York   101 Barclay Street     Same as        Same as
                       New York, New York     Eurodollar     Eurodollar
Notices other than     Contact:  Jo-Ann       Lending        Lending
for Borrowings and     Evans                  Office         Office
Repayments:            Tel:  (212) 635-7535
                       Fax:  (212) 635-7923
One Wall Street, 19th
Floor
New York, New York
10286
Contact:  Timothy M.
Lynch
Tel:  (212) 635-7863
Fax:  (212) 635-7923

                                                              
The First National BankOne First National     Same as        Same as
of Chicago             Plaza                  Eurodollar     Eurodollar
                       Suite 0634             Lending        Lending
Notices other than     Chicago, IL  60670     Office         Office
for Borrowings and     Contact:  Lynn
Repayments:            Pozsgay
                       Tel:  (312) 732-8705
 One First National    Fax:  (312) 732-4840
 Plaza
Suite 0363
Chicago, IL  60670
Contact:  Cristiana
 Freeman
Tel:  (312) 732-6321
Fax:  (312) 732-3055
                                                             
Wachovia Bank, N.A.    191 Peachtree Street   Same as        Same as
                       29th Floor             Eurodollar     Eurodollar
Notices other than     Atlanta, GA  30303     Lending        Lending
for Borrowings and     Contact:  Karen        Office         Office
Repayments:            Mathews
                       Tel:  (404) 332-5149
191 Peachtree Street   Fax:  (404) 332-5016
29th Floor
Atlanta, GA  30303
Contact:  John B. Tibe
      Assistant Vice
President
Tel:  (404) 332-1040
Fax:  (404) 332-5016
                                                             
Fleet National Bank    One Federal Street     Same as        Same as
                       Boston, MA  02211      Eurodollar     Eurodollar
Notices other than     Contact:  Anahid       Lending        Lending
for Borrowings and     Vaeiabedian            Office         Office
Repayments:            Tel:  (617) 346-0626
                       Fax:  (617) 346-0595
One Federal Street
Boston, MA  02211
Contact:  Thomas L.
Rose
Tel:  (617) 346-0572
Fax:  (617) 346-0580
                                                              
Bank of America        350 Gatewat Blvd.,     Same as        Same as
National Trust and     4th Floor              Eurodollar     Eurodollar
Savings Association    Concord, CA  94520     Lending        Lending
                       Contact:  Bonnie       Office         Office
Notices other than     Carden
for Borrowings and           Account
Repayments:            Administration
                       Tel:  (510) 675-7766
 Bank of America NT&SA Fax:  (510) 675-
555 So. Flower Street, 7531/7632
 10th Floor
Los Angeles, CA  90071
Contact:  Vanessa Sheh
Meyer
      Vice President
Tel:  (213) 228-9737
Fax:  (213) 228-4062
                                                             
Bank One, Kentucky, NA P.O. Box 32500         Same as        Same as
                       Louisville, KY  40232- Eurodollar     Eurodollar
Notices other than     2500                   Lending        Lending
for Borrowings and     Contact:  Sari Lea     Office         Office
Repayments:            Pelkey-Offutt
                       Tel:  (502) 566-8855
416 West Jefferson     Fax:  (502) 566-8621
Street
Louisville, KY  40202
Contact:  Todd D.
Munson
      Senior Vice
President
Tel:  (502) 566-2650
Fax:  (502) 566-8339
                                                             
BankBoston N.A.        100 Federal St.        Same as        Same as
                       Boston, MA  02110      Eurodollar     Eurodollar
Notices other than     Contact:  Debora       Lending        Lending
for Borrowings and     Williams               Office         Office
Repayments:            Tel:  (617) 434-9623
                       Fax:  (617) 434-9820
100 Federal St.
Boston, MA  02110
Contact:  Rita M.
Cahill
      Vice President
Tel:  (617) 434-2613
Fax:  (617) 434-3652
                                                             
Banque Paribas         787 Seventh Avenue     Same as        Same as
                       New York, New York     Eurodollar     Eurodollar
Notices other than     10019                  Lending        Lending
for Borrowings and     Contact:  Robyn        Office         Office
Repayments:            Gewanter
                       Tel:  (212) 841-2950
787 Seventh Avenue     Fax:  (12) 841-2217
New York, New York
10019
Contact:  Olivier
Serra
Tel:  (212) 841-2573
Fax:  (12) 841-2555
                                                             
Citibank, N.A.         2 Penn's Way, Suite    Same as        Same as
                       200                    Eurodollar     Eurodollar
Notices other than     New Castle, DE  19720  Lending        Lending
for Borrowings and     Contact:  Kate Bohen   Office         Office
Repayments:            Tel:  (302) 894-6077
                       Fax:  (302) 894-6120
399 Park Avenue
4th Floor, Zone 20
New York, NY  10043
Contact:  Philip C.
Kron
      Attorney-in-fact
Tel:  (212) 559-1500
Fax:  (212) 793-6130
                                                             
First Union National   301 South Collete St.  Same as        Same as
Bank                   Charlotte, NC  28288-  Eurodollar     Eurodollar
                       0735                   Lending        Lending
Notices other than     Contact:  Dana         Office         Office
for Borrowings and     Maloney
Repayments:            Tel:  (704) 383-0296
                       Fax:  (704) 383-6670
301 South Collete St.
Charlotte, NC  28288-
0735
Contact:  Tom Bohrer
      Director
Tel:  (704) 374-6272
Fax:  (704) 383-6670
                                                              
Kredietbank NV, Grand    Kredietbank NV, GrandSame as        Same as
Cayman Branch            Cayman Branch        Eurodollar     Eurodollar
                       125 West 55th Street   Lending        Lending
Notices other than     New York, NY  10019    Office         Office
for Borrowings and     Contact:  Lynda
Repayments:            Resuma
                             Loan
1349 West Peachtree    Administration
Street                 Tel:  (212) 541-0667
Suite 1750             Fax:  (212) 956-5580
Atlanta, GA  30308
Contact:  Jackie K.
Brunetto
      Vice President
Tel:  (404) 876-2558
Fax:  (404) 876-3212
                                                             
Mellon Bank, N.A.      Three Mellon Bank      Same as        Same as
                       Center                 Eurodollar     Eurodollar
Notices other than     Room 2332              Lending        Lending
for Borrowings and     Pittsburg, PA  15259-  Office         Office
Repayments:            0003
                       Contact:  Jacqueline
One Mellon Bank Center Terry
Room 4425              Tel:  (412) 234-8285
Pittsburg, PA  15258-  Fax:  (412) 236-2037-
0001                   2028
Contact:  Richard A.
Matthews
      Vice President
Tel:  (412) 234-9759
Fax:  (412) 236-1840
                                                             
NationsBank, N.A.      100 North Tryon        Same as        Same as
                       Charlotte, NC  28255   Eurodollar     Eurodollar
Notices other than     Contact:  Judy Dudley  Lending        Lending
for Borrowings and     Tel:  (704) 386-8201   Office         Office
Repayments:            Fax:  (704) 386-8694

100 North Tryon
Charlotte, NC  28255
Contact:  Gretchen P.
Burud
      Vice President
Tel:  (704) 386-8394
Fax:  (704) 386-1260
                                                              
The Bank of Tokyo-     227 West Monroe        Same as        Same as
Mitsubishi, Ltd.,      Street                 Eurodollar     Eurodollar
Chicago Branch         Suite 2300             Lending        Lending
                       Chicago, IL  60606     Office         Office
Notices other than     Contact:  Jean Chaney
for Borrowings and           Julie Galligan
Repayments:            Tel:  (312) 696-
                       4712/4711
227 West Monroe Street Fax:  (312) 696-4532
Suite 2300
Chicago, IL  60606
Contact:  Christopher
D. Jones
      Assistant Vice
President
Tel:  (312) 696-4656
Fax:  (312) 696-4535
                                                              
Fifth Third Bank of    401 S. Fourth Avenue   Same as        Same as
Kentucky, Inc.         Louisville, KY  40202  Eurodollar     Eurodollar
                       Contact:  Judy R.      Lending        Lending
Notices other than     Semarie                Office         Office
for Borrowings and     Tel:  (502) 562-5531
Repayments:            Fax:  (502) 562-5540

401 S. Fourth Avenue
Louisville, KY  40202
Contact:  Robert M.
Eversole
      Senior Vice
President
Tel:  (502) 562-5533
Fax:  (502) 562-5540
                                Exhibit A-1
                                     
                           Form of Contract Note



U.S. $_______________                          Dated:  ____________, ____
     
     For  Value  Received, the undersigned, LG&E Capital Corp., a  Kentucky
corporation  (the  "Borrower"), hereby promises to  pay  to  the  order  of
_______________  (the "Lender") for the account of its  Applicable  Lending
Office  (such term and other capitalized terms herein being used as defined
in  the  Credit  Agreement referred to below) the  principal  sum  of  U.S.
$[amount  of the Lender's Commitment in figures] or, if less, the aggregate
principal  amount  of  the Contract Advances made  by  the  Lender  to  the
Borrower  pursuant to the Credit Agreement outstanding on  the  Termination
Date, payable on the Termination Date.
     
     The  Borrower promises to pay interest on the unpaid principal  amount
of  each Contract Advance from the date of such Contract Advance until such
principal  amount is paid in full, at such interest rates, and  payable  at
such times, as are specified in the Credit Agreement.
     
     Both  principal and interest are payable in lawful money of the United
States  of  America to Bank of Montreal, as Administrative  Agent,  at  115
South  LaSalle Street, Chicago, Illinois  60603, in same day  funds.   Each
Contract Advance made by the Lender to the Borrower pursuant to the  Credit
Agreement, and all payments made on account of principal thereof, shall  be
recorded by the Lender and, prior to any offer hereof endorsed on the  grid
attached hereto which is part of this Promissory Note.
     
     This Promissory Note is one of the Contract Notes referred to in,  and
is entitled to the benefits of, the Credit Agreement, dated as of September
5,  1997  (the  "Credit Agreement"), among the Borrower  (as  successor  by
merger  to LG&E Energy Systems Inc., a Kentucky corporation, and  LG&E  Gas
Systems  Inc., a Delaware corporation), the Lender and certain other  banks
parties  thereto, Chase Securities Inc., as Syndication Agent, and Bank  of
Montreal, as Administrative Agent for the Lender and such other banks.  The
Credit  Agreement,  among  other things, (i) provides  for  the  making  of
Contract  Advances by the Lender to the Borrower from time to  time  in  an
aggregate  amount  not to exceed at any time outstanding  the  U.S.  dollar
amount  first  above mentioned, the indebtedness of the Borrower  resulting
from  each  such Contract Advance being evidenced by this Promissory  Note,
and  (ii) contains provisions for acceleration of the maturity hereof  upon
the  happening of certain stated events and also for prepayments on account
of  principal  hereof  prior  to the maturity hereof  upon  the  terms  and
conditions therein specified.
     
     The Borrower hereby waives presentment, demand, protest and notice  of
any  kind.  No failure to exercise, and no delay in exercising, any  rights
hereunder  on the part of the holder hereof shall operate as  a  waiver  of
such rights.
     
     This Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of Illinois.
                                    
                                    LG&E Capital Corp.
                                       
                                       
                                    By
                                      Name:
                                      Title:
           Advances, Interest Periods and Payments of Principal

___________________________________________________________________________


                                                                  
                         Interest                 Amount of       
                        Period (if   Principal     Unpaid         
             Amount of    any) of     Paid or     Principal   Notation
   Date       Advance     Advance     Prepaid      Balance     Made By
                                                             
                                                             

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________
                                     
                                     
                                Exhibit A-2
                                     
                           Form of Auction Note



U.S. $_______________                          Dated:  ___________, _____
     
     For  Value  Received, the undersigned, LG&E Capital Corp., a  Kentucky
corporation  (the  "Borrower"), hereby promises to  pay  to  the  order  of
_______________  (the "Lender") for the account of its  Applicable  Lending
Office  (as  defined  in  the  Credit  Agreement  referred  to  below),  on
_______________________,     _____,     the     principal     amount     of
_________________________________________ Dollars ($___________).
     
     The  Borrower promises to pay interest on the unpaid principal  amount
hereof from the date hereof until such principal amount is paid in full, at
the  interest  rate  and  payable on the interest  payment  date  or  dates
provided below:
          
          Interest  Rate:  ______% per annum (calculated  on  the
          basis of a year of _____ days for the actual number  of
          days elapsed).
          
          Interest Payment Date or Dates:  ______________________
     
     Both  principal and interest are payable in lawful money of the United
States  of  America to ________________________________ for the account  of
the  Lender at the office of Bank of Montreal, as Administrative Agent,  at
115 South LaSalle Street, Chicago, Illinois  60603, in same day funds, free
and  clear  of and without any deduction, with respect to the  payee  named
above,  for  any and all present and future taxes, deductions,  charges  or
withholdings, and all liabilities with respect thereto to the extent and in
the manner provided in the Credit Agreement.
     
     This  Promissory Note is one of the Auction Notes referred to in,  and
is entitled to the benefits of, the Credit Agreement, dated as of September
5,  1997  (the  "Credit Agreement"), among the Borrower  (as  successor  by
merger  to LG&E Energy Systems Inc., a Kentucky corporation, and  LG&E  Gas
Systems  Inc., a Delaware corporation), the Lender and certain other  banks
parties  thereto, Chase Securities Inc., as Syndication Agent and  Bank  of
Montreal, as Administrative Agent for the Lender and such other banks.  The
Credit  Agreement, among other things, contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events.
     
     The Borrower hereby waives presentment, demand, protest and notice  of
any  kind.  No failure to exercise, and no delay in exercising, any  rights
hereunder  on the part of the holder hereof shall operate as  a  waiver  of
such rights.
     
     This Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of Illinois
                                    
                                    LG&E Capital Corp.
                                       
                                       
                                    By
                                      Name:
                                      Title:
                                     
                                     
                                Exhibit B-1
                                     
                                     
                   Form of Notice of Contract Borrowing



Bank of Montreal, as
 Administrative Agent
 for the Lenders
 parties to the
 Credit Agreement
 referred to below
115 South LaSalle Street
Chicago, Illinois  60603
                                                                           
                                                                           
                                                                     [Date]
Attention:

Ladies and Gentlemen:
     
     The  undersigned, LG&E Capital Corp., refers to the Credit  Agreement,
dated  as  of September 5, 1997 (the "Credit Agreement", the terms  defined
therein  being  used  herein as therein defined),  among  the  undersigned,
certain  Lenders  parties thereto, Chase Securities  Inc.,  as  Syndication
Agent, and Bank of Montreal, as Administrative Agent for said Lenders,  and
hereby  gives  you  notice, irrevocably, pursuant to Section  2.02  of  the
Credit  Agreement that the undersigned hereby requests a Contract Borrowing
under  the  Credit Agreement, and in that connection sets forth  below  the
information  relating  to such Contract Borrowing (the  "Proposed  Contract
Borrowing") as required by Section 2.02(a) of the Credit Agreement:
     
          (i)    The  Business  Day of the Proposed Contract  Borrowing  is
     _________, ____.
     
         (ii)   The Type of Contract Advances to be made in connection with
     the  Proposed Contract Borrowing is [Adjusted CD Rate Advances]  [Base
     Rate Advances] [Eurodollar Rate Advances].
     
        (iii)   The aggregate amount of the Proposed Contract Borrowing  is
     $_______________________.
     
         (iv)   The Interest Period for each Contract Advance made as  part
     of  the  Proposed Contract Borrowing is [__________ days] [___________
     month[s]].
     
     The  undersigned  hereby certifies that the following  statements  are
true  on  the  date hereof, and will be true on the date  of  the  Proposed
Contract Borrowing:
     
         (A)   the representations and warranties contained in Section 4.01
     are  correct, before and after giving effect to the Proposed  Contract
     Borrowing and to the application of the proceeds therefrom, as  though
     made   on  and  as  of  such  date  except  to  the  extent  any  such
     representation or warranty expressly relates solely to an earlier date
     and  except  that  the reference to the December  31,  1996  financial
     statements of the Parent and its Consolidated Subsidiaries in  Section
     4.01(f)  shall be deemed a reference to the most recent  quarterly  or
     annual  financial  statements  of  the  Parent  and  its  Consolidated
     Subsidiaries  submitted  to the Lenders pursuant  to  Section  5.01(a)
     hereof; and
     
          (B)    no  event has occurred and is continuing, or would  result
     from  such Proposed Contract Borrowing or from the application of  the
     proceeds  therefrom,  that constitutes an Event of  Default  or  would
     constitute an Event of Default but for the requirement that notice  be
     given or time elapse or both.
                                    
                                    Very truly yours,
                                       
                                    
                                    LG&E Capital Corp.
                                       
                                       
                                    By
                                      Name:
                                      Title:
                                     
                                     
                                Exhibit B-2
                                     
                                     
                    Form of Notice of Auction Borrowing



Bank of Montreal, as
 Administrative Agent
 for the Lenders parties
 to the Credit Agreement
 referred to below
115 South LaSalle Street
Chicago, Illinois  60603
                                     
                                  [Date]



Attention:

Ladies and Gentlemen:
     
     The  undersigned, LG&E Capital Corp., refers to the Credit  Agreement,
dated  as  of September 5, 1997 (the "Credit Agreement," the terms  defined
therein  being  used  herein as therein defined),  among  the  undersigned,
certain  Lenders  parties thereto, Chase Securities  Inc.,  as  Syndication
Agent  and Bank of Montreal, as Administrative Agent for said Lenders,  and
hereby  gives  you notice pursuant to Section 2.03 of the Credit  Agreement
that  the undersigned hereby requests an Auction Borrowing under the Credit
Agreement,  and  in  that connection sets forth the  terms  on  which  such
Auction  Borrowing (the "Proposed Auction Borrowing") is  requested  to  be
made:

     (A)  Date of Auction Borrowing        _________________
     (B)  Amount of Auction Borrowing      _________________
     (C)  Maturity Date                    _________________
     (D)  Interest Payment Date(s)         _________________
     (E)  Type of Auction Borrowing *      _________________
     
     *     Either  Fixed Rate Auction Borrowing or Eurodollar Rate  Auction
Borrowing.
     
     The  undersigned  hereby certifies that the following  statements  are
true  on  the  date hereof, and will be true on the date  of  the  Proposed
Auction Borrowing:
     
         (a)   the representations and warranties contained in Section 4.01
     are  correct,  before and after giving effect to the Proposed  Auction
     Borrowing and to the application of the proceeds therefrom, as  though
     made   on  and  as  of  such  date  except  to  the  extent  any  such
     representation or warranty expressly relates solely to an earlier date
     and  except  that  the reference to the December  31,  1996  financial
     statements of the Parent and its Consolidated Subsidiaries in  Section
     4.01(f)  shall be deemed a reference to the most recent  quarterly  or
     annual  financial  statements  of  the  Parent  and  its  Consolidated
     Subsidiaries  submitted  to the Lenders pursuant  to  Section  5.01(a)
     hereof;
     
          (b)    no  event has occurred and is continuing, or would  result
     from  the  Proposed Auction Borrowing or from the application  of  the
     proceeds  therefrom, which constitutes an Event of  Default  or  would
     constitute an Event of Default but for the requirement that notice  be
     given or time elapse or both; and
     
          (c)   the aggregate amount of the Proposed Auction Borrowing  and
     all  other  Borrowings  to be made on the same day  under  the  Credit
     Agreement is within the aggregate amount of the unused Commitments  of
     the Lenders.
     
     The undersigned hereby confirms that the Proposed Auction Borrowing is
to  be  made available to it in accordance with Section 2.03(a)(v)  of  the
Credit Agreement.
                                    
                                    Very truly yours,
                                       
                                    LG&E Capital Corp.
                                    
                                    
                                    By
                                      Name:
                                      Title:
                                     
                                     
                                 Exhibit C
                                     
                                     
                     Form of Assignment and Acceptance
                                     
                       Dated ________________, _____
     
     Reference  is  made to the Credit Agreement, dated as of September  5,
1997  (the  "Credit  Agreement"),  among LG&E  Capital  Corp.,  a  Kentucky
corporation, as successor by merger to LG&E Energy Systems Inc., a Kentucky
corporation,  and  LG&E  Gas  Systems Inc.,  a  Delaware  corporation  (the
"Borrower"),  the  Lenders  (as  defined in the  Credit  Agreement),  Chase
Securities   Inc.,  as  Syndication  Agent,  and  Bank  of   Montreal,   as
Administrative  Agent for the Lenders (the "Administrative Agent").   Terms
defined in the Credit Agreement are used herein with the same meaning.
     
     __________________________        (the         "Assignor")         and
_______________________ (the "Assignee") agree as follows:

      1.    The Assignor hereby sells and assigns without recourse  to  the
Assignee,  and the Assignee hereby purchases and assumes from the Assignor,
that  interest in and to all of the Assignor's rights and obligations under
the  Credit  Agreement  as of the date hereof (other  than  in  respect  of
Auction  Advances  and  Auction  Notes)  which  represents  the  percentage
interest  specified on Schedule 1 of all outstanding rights and obligations
under  the Credit Agreement (other than in respect of Auction Advances  and
Auction  Notes),  including,  without  limitation,  such  interest  in  the
Assignor's  Commitment, the Contract Advances owing to  the  Assignor,  the
Contract Note[s] held by the Assignor. After giving effect to such sale and
assignment,  the  Assignee's  Commitment and the  amount  of  the  Contract
Advances  owing  to  the  Assignee will be as set forth  in  Section  2  of
Schedule 1.

     2.   The Assignor (i) represents and warrants that it is the legal and
beneficial  owner of the interest being assigned by it hereunder  and  that
such  interest  is  free  and clear of any adverse  claim;  (ii)  makes  no
representation  or warranty and assumes no responsibility with  respect  to
any statements, warranties or representations made in or in connection with
the  Credit Agreement or the execution, legality, validity, enforceability,
genuineness,  sufficiency or value of the Credit  Agreement  or  any  other
instrument  or  document  furnished  pursuant  thereto;  (iii)   makes   no
representation  or warranty and assumes no responsibility with  respect  to
the financial condition of the Borrower or the performance or observance by
the  Borrower of any of its obligations under the Credit Agreement  or  any
other  instrument or document furnished pursuant thereto; and (iv) attaches
the Contract Note[s] referred to in paragraph 1 above and requests that the
Administrative Agent exchange such Contract Note[s] for a new Contract Note
payable  to  the order of the Assignee in an amount equal to the Commitment
assumed  by  the Assignee pursuant hereto or new Contract Notes payable  to
the  order of the Assignee in an amount equal to the Commitment assumed  by
the  Assignee  pursuant hereto and the Assignor in an amount equal  to  the
Commitment   retained   by  the  Assignor  under  the   Credit   Agreement,
respectively, as specified on Schedule 1 hereto.

      3.    The  Assignee (i) confirms that it has received a copy  of  the
Credit Agreement, together with copies of the financial statements referred
to  in Section 4.01 thereof and such other documents and information as  it
has  deemed  appropriate to make its own credit analysis  and  decision  to
enter  into  this  Assignment and Acceptance; (ii)  agrees  that  it  will,
independently  and  without  reliance upon the  Administrative  Agent,  the
Assignor or any other Lender and based on such documents and information as
it  shall  deem  appropriate at the time, continue to make its  own  credit
decisions in taking or not taking action under the Credit Agreement;  (iii)
confirms that it is an Eligible Assignee; (iv) appoints and authorizes  the
Administrative  Agent to take such action as Administrative  Agent  on  its
behalf  and  to  exercise  such powers under the Credit  Agreement  as  are
delegated  to the Administrative Agent by the terms thereof, together  with
such  powers as are reasonably incidental thereto; (v) agrees that it  will
perform in accordance with their terms all of the obligations which by  the
terms  of  the Credit Agreement are required to be performed  by  it  as  a
Lender  [and]  (vi)  specifies as its CD Lending Office,  Domestic  Lending
Office  (and address for notices) and Eurodollar Lending Office the offices
set forth beneath its name on the signature pages hereof [and (vi) attaches
the  forms prescribed by the Internal Revenue Service of the United  States
certifying  that  it  is exempt from United States withholding  taxes  with
respect  to  all  payments  to be made to the  Assignee  under  the  Credit
Agreement and the Notes]. 1

1 If the Assignee is organized under the laws of a jurisdiction outside the
United States.

      4.   Following the execution of this Assignment and Acceptance by the
Assignor and the Assignee, it will be delivered to the Administrative Agent
for  acceptance  and recording by the Administrative Agent.  The  effective
date  of  this  Assignment and Acceptance shall be the date  of  acceptance
thereof by the Administrative Agent, unless otherwise specified on Schedule
1 hereto (the "Effective Date").

      5.    Upon such acceptance and recording by the Administrative Agent,
as  of  the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement  and,  to the extent provided in this Assignment and  Acceptance,
have  the  rights  and  obligations of a Lender  thereunder  and  (ii)  the
Assignor  shall, to the extent provided in this Assignment and  Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.

      6.    Upon such acceptance and recording by the Administrative Agent,
from and after the Effective Date, the Administrative Agent shall make  all
payments  under the Credit Agreement and the Contract Notes in  respect  of
the  interest assigned hereby (including, without limitation, all  payments
of  principal,  interest  and facility fees with respect  thereto)  to  the
Assignee.  The Assignor and Assignee shall make all appropriate adjustments
in  payments under the Credit Agreement and the Contract Notes for  periods
prior to the Effective Date directly between themselves.

      7.    This  Assignment  and  Acceptance shall  be  governed  by,  and
construed in accordance with, the laws of the State of Illinois.
     
     In Witness Whereof, the parties hereto have caused this Assignment and
Acceptance  to  be  executed by their respective  officers  thereunto  duly
authorized, as of the date entered above written, such execution being made
on Schedule 1 hereto.
                                    
                                    [Name of Assignor]
                                       
                                       
                                    By
                                      Name:
                                      Title:
                                    
                                    
                                    [Name of Assignee]
                                       
                                       
                                    By
                                      Name:
                                      Title:
                                    
                                    
                                    
                                    CD Lending Office:
                                    [Address]
                                    
                                    
                                    
                                    Domestic Lending Office (and address
                                       for notices):
                                    [Address]
                                    
                                    
                                    
                                    Eurodollar Lending Office:
                                    [Address]
Consented to this day
of ____________, ______             Contact for notices other than
                                    Borrowings and Repayments:
Bank of Montreal, as Administrative
  Agent


By_______________________________
   Name:
   Title:

LG&E Capital Corp.


By_______________________________
   Name:
   Title:
                                Schedule 1
                                    to
                         Assignment and Acceptance
                                     
                        Dated _____________, _____

Section 1.
     
     Percentage Interest:                                       _______%

Section 2.
     
     Assignee's Commitment:                                  $___________
     
     Aggregate Outstanding Principal
       Amount of Contract Advances owing to the Assignee:    $___________
     
     A Contract Note payable to the order of the Assignee
                      Dated:  _____________, _____

                                             Principal amount:$___________
     
     A Contract Note payable to the order of the Assignor
     
                                            Dated:  _____________, _____
     Principal amount:                                        $_________

Section 3.
     
     Effective Date 1             ______________, ___
     
     1  This  date should be no earlier than the date of acceptance by  the
     Administrative Agent.
                                 Exhibit D
                                     
                    Form of Opinion of Special Counsel
                      for the Borrower and the Parent
                                     
                             September 5, 1997



To each of the Banks which
 is a party to the Credit
 Agreement (as herein
 defined)
                                     
                                     
                          Re: LG&E Capital Corp.

Ladies and Gentlemen:
     
     This  opinion  is  furnished to you pursuant to Section  3.01  of  the
Credit  Agreement, dated as of September 5, 1997 (the "Credit  Agreement"),
among  LG&E  Capital  Corp., a Kentucky corporation (the  "Borrower"),  the
Banks  named therein, Chase Securities Inc., as Syndication Agent and  Bank
of  Montreal, as Administrative Agent, relating to a $200,000,000 revolving
credit  facility.   Capitalized terms used herein and  not  defined  herein
shall have the meaning assigned thereto in the Credit Agreement.
     
     We have served as counsel to LG&E Energy Corp., a Kentucky corporation
(the  "Parent"),  and  the  Borrower in connection  with  the  preparation,
execution and delivery of the Credit Agreement, the Contract Notes and  the
Support Agreement.
     
     In that connection, we have examined:
     
         (1)   the Credit Agreement;
     
         (2)   the Contract Notes executed and delivered on the date hereof
     (the "Issued Notes");
     
          (3)    the  form  of  the Auction Notes to be  delivered  by  the
     Borrower in connection with any Auction Borrowing;
     
         (4)   the Support Agreement;
     
          (5)    the  documents furnished by the Borrower  and  the  Parent
     pursuant to Section 3.01 of the Credit Agreement;
     
          (6)    the  Articles  of Incorporation of the  Borrower  and  all
     amendments thereto (the "Borrower Charter");
     
          (7)   the by-laws of the Borrower and all amendments thereto (the
     "Borrower By-laws");
     
          (8)    a  certificate of the Secretary of the State of  Kentucky,
     dated __________, 1997, attesting to the continued corporate existence
     and good standing of the Borrower in that State;
     
          (9)    the  Articles  of  Incorporation of  the  Parent  and  all
     amendments thereto (the "Parent Charter"); and
     
         (10)    the by-laws of the Parent and all amendments thereto  (the
     "Parent By-laws").

Collectively,  the documents identified in clauses (1), (2) and  (4)  above
are referred to herein as the "Documents".

We   have  also  examined  the  originals,  or  copies  certified  to   our
satisfaction,  of  such other corporate records of  the  Borrower  and  the
Parent,  certificates of public officials and of officers of  the  Borrower
and the Parent, and agreements, instruments and other documents, as we have
deemed  necessary  as  a  basis for the opinions expressed  below.   As  to
questions  of fact material to such opinions, we have, when relevant  facts
were  not independently established by us, relied upon certificates of  the
Borrower  or  the  Parent,  or  their respective  officers,  or  of  public
officials.
     
     We  have assumed the genuineness of all signatures, the legal capacity
of  all individuals who have executed the Documents and all other documents
we  have  reviewed, the authenticity of all documents submitted  to  us  as
originals  and  the  conformity  to original  documents  of  all  documents
submitted to us as certified, photostatic, reproduced or conformed  copies.
We  have  also assumed that the Credit Agreement has been duly  authorized,
executed and delivered by each of the Agents and each of the Banks  and  is
enforceable in accordance with its terms against such parties and that  the
execution, delivery and performance of the Credit Agreement by each of  the
Agents  and each of the Banks does not and will not result in a breach  of,
or  constitute a default under, any agreement, instrument or other document
to  which  such  party is a party or any order, judgment,  writ  or  decree
applicable to such party to which such party's property is subject.
     
     The  opinions expressed herein are limited to the Federal laws of  the
United States and the laws of the State of Illinois.  With your permission,
we  have  relied without independent investigation upon the  opinion  being
delivered to you of John R. McCall, Esq., a member of the Kentucky Bar,  as
to  all  matters of Kentucky law involved in opinions set forth below.   In
our  opinion,  you and we are justified in so relying upon the  opinion  of
John R. McCall, Esq.
     
     Based  upon  the  foregoing  and subject  to  the  qualifications  and
exceptions set forth herein, we are of the following opinion:
     
           1.    The Borrower is a corporation validly existing and in good
     standing under the laws of the Commonwealth of Kentucky.
     
           2.    The  Parent is a corporation validly existing and in  good
     standing under the laws of the Commonwealth of Kentucky.
     
           3.   The execution, delivery and performance by the Borrower  of
     the  Credit Agreement, the Notes and the Support Agreement are  within
     the  Borrower's  corporate powers, have been duly  authorized  by  all
     necessary  corporate action, and do not contravene  (i)  the  Borrower
     Charter  or  the  Borrower By-Laws or (ii) any Federal  law,  rule  or
     regulation  applicable to the Borrower (including, without limitation,
     Regulation X of the Board of Governors of the Federal Reserve System).
     
          4.   No authorization, approval or other action by, and no notice
     to  or filing with, any agency or instrumentality of the government of
     the  United  States  is required for the due execution,  delivery  and
     performance by the Borrower of the Credit Agreement, the Notes and the
     Support Agreement or by the Parent of the Support Agreement.
     
           5.    The  Credit Agreement and the Issued Notes have been  duly
     executed  and  delivered  on  behalf  of  the  Borrower.   The  Credit
     Agreement  and  the  Issued  Notes are the legal,  valid  and  binding
     obligations  of  the  Borrower enforceable  against  the  Borrower  in
     accordance with their respective terms.
     
          6.   The execution, delivery and performance by the Parent of the
     Support Agreement are within the Parent's corporate powers, have  been
     duly  authorized  by  all  necessary  corporate  action,  and  do  not
     contravene  (i) the Parent Charter or the Parent By-laws or  (ii)  any
     Federal  law, rule or regulation applicable to the Parent  (including,
     without  limitation,  Regulation X of the Board of  Governors  of  the
     Federal Reserve System).
     
           7.    The Support Agreement has been duly executed and delivered
     by  the  Parent and the Borrower.  The Support Agreement is the legal,
     valid   and  binding  obligation  of  the  Parent  and  the   Borrower
     enforceable  against  the  Parent and the Borrower,  respectively,  in
     accordance with its terms.
     
     The   opinions   set  forth  above  are  subject  to   the   following
qualifications:
     
          (a)   Our opinions in paragraphs 5 and 7 above are subject to the
     effect   of   any   applicable  bankruptcy,   insolvency,   fraudulent
     conveyance,  reorganization, moratorium or  similar  laws  of  general
     application relating to or affecting the enforcement of the rights  of
     creditors.
     
          (b)   Our opinions in paragraphs 5 and 7 above are subject to the
     effect of general principles of equity, including (without limitation)
     concepts  of materiality, reasonableness, good faith and fair  dealing
     (regardless  of  whether considered in a proceeding in  equity  or  at
     law).
     
          (c)   Except as set forth below, we express no opinion herein  as
     to the validity or enforceability of any provision regarding choice of
     law  to govern the Documents or of any provision of the Documents  for
     indemnification.   However, we understand that  this  transaction  was
     principally negotiated in Illinois and the Documents were delivered by
     the  Borrower in Illinois and the monetary obligations of the Borrower
     are  payable  in Illinois.  Accordingly, we believe that  an  Illinois
     court  would have a reasonable basis to and should recognize and  give
     effect  to  the  provisions of Section 8.08 of  the  Credit  Agreement
     wherein  the parties thereto agree that the Credit Agreement  and  the
     Notes shall be governed by, and construed in accordance with, the laws
     of the State of Illinois.
     
          (d)    The authorization of the Board of Directors of the  Parent
     limits  the indebtedness of the Borrower to be covered by the  Support
     Agreement   and  any  other  support  agreements  of  the  Parent   to
     $700,000,000.   Thus,  additional  authorization  of  the   Board   of
     Directors  of the Parent is required if the aggregate indebtedness  of
     the  Borrower  covered by the Support Agreement and any other  support
     agreements of the Parent exceeds $700,000,000.  Officers of the Parent
     have  certified  that  as of the date hereof no  indebtedness  of  the
     Borrower is covered by any other support agreements of the Parent.
     
          (e)    The Agreement and Plan of Merger dated as of May 20,  1997
     (the  "KU Merger Agreement") by and between LG&E Energy Corp.  and  KU
     Energy   Corporation  contains  restrictions  on  the  incurrence   or
     guarantee of indebtedness by the Parent and the Borrower.  Pursuant to
     the  terms  of  the KU Merger Agreement, the Parent  must  obtain  the
     written  consent of KU Energy Corporation prior to the  incurrence  by
     the Borrower of indebtedness in excess of the limitations set forth in
     the KU Merger Agreement.
     
     This  opinion  is  rendered only with respect  to  the  laws  and  the
regulations  which  are  in effect as of the date  hereof.   We  assume  no
responsibility  for updating this opinion to take into account  any  event,
action,  interpretation or change of law occurring subsequent to  the  date
hereof  that  may  affect  the validity of any of  the  opinions  expressed
herein.
     
     The  foregoing  opinion is furnished solely for  the  benefit  of  the
addressees  hereof  in connection with the Documents and  the  transactions
contemplated  thereby,  and,  except  as  set  forth  in  the   immediately
succeeding sentence, may not be relied upon by any other Person (other than
any  Person that may become a Lender under the Credit Agreement  after  the
date  hereof who may rely hereon to the extent that the addressees  may  so
rely)  or for any other purpose without our prior written consent.  We  are
aware  that Chapman and Cutler will rely upon the opinions set forth herein
in rendering their opinion furnished pursuant to Section 3.01 of the Credit
Agreement.
                                    
                                    Very truly yours,
                                 Exhibit E
                                     
                   Form of Opinion of Corporate Attorney
                      for the Borrower and the Parent
                                     
                                     
                             September 5, 1997



To each of the Banks which
 is a party to the Credit
 Agreement
 (as herein defined)
     
     
                        Re:  LG&E Capital Corp.

Ladies and Gentlemen:
     
     This  opinion  is  furnished to you pursuant to Section  3.01  of  the
Credit  Agreement, dated as of September 5, 1997 (the "Credit  Agreement"),
among  LG&E  Capital  Corp., a Kentucky corporation (the  "Borrower"),  the
Banks named therein, Chase Securities, Inc., as Syndication Agent and  Bank
of  Montreal, as Administrative Agent, relating to a $200,000,000 revolving
credit  facility.   Capitalized terms used herein and  not  defined  herein
shall have the meaning assigned thereto in the Credit Agreement.
     
     I  am  General  Counsel for LG&E Energy Corp., a Kentucky  corporation
(the  "Parent"), and have served as counsel to the Parent and the  Borrower
in  connection with the preparation, execution and delivery of  the  Credit
Agreement, the Contract Notes and the Support Agreement.
     
     In that connection, I have examined:
     
         (1)   the Credit Agreement;
     
         (2)   the Contract Notes executed and delivered on the date hereof
     (the "Issued Notes");
     
          (3)    the  form  of  the Auction Notes to be  delivered  by  the
     Borrower in connection with any Auction Borrowing;
     
         (4)   the Support Agreement;
     
          (5)    the  documents furnished by the Borrower  and  the  Parent
     pursuant to Section 3.01 of the Credit Agreement;
     
          (6)    the  Articles  of Incorporation of the  Borrower  and  all
     amendments thereto (the "Borrower Charter");
     
          (7)   the by-laws of the Borrower and all amendments thereto (the
     "Borrower By-laws");
     
          (8)    the  Articles  of  Incorporation of  the  Parent  and  all
     amendments thereto (the "Parent Charter");
     
          (9)    the by-laws of the Parent and all amendments thereto  (the
     "Parent By-Laws");
     
         (10)    the  Agreement and Plan of Merger dated as of  __________,
     1997 between Energy Systems and Gas Systems;
     
         (11)   the Articles of Merger of LG&E Energy Systems Inc. and LG&E
     Gas  Systems  Inc. dated _________, 1997, filed with the Secretary  of
     State of the Commonwealth of Kentucky; and
     
         (12)    the Certificate of Merger of LG&E Energy Systems Inc.  and
     LG&E Gas Systems dated ___________, 1997, filed with the Secretary  of
     State of the State of Delaware.
     
     Collectively,  the documents identified in clauses (1),  (2)  and  (4)
above are referred to herein as the "Documents".
     
     I  have  also  examined  the  originals, or  copies  certified  to  my
satisfaction,  of  such other corporate records of  the  Borrower  and  the
Parent,  certificates of public officials and of officers of  the  Borrower
and  the Parent, and agreements, instruments and other documents, as I have
deemed  necessary  as  a  basis for the opinions expressed  below.   As  to
questions  of  fact material to such opinions, I have, when relevant  facts
were  not independently established by me, relied upon certificates of  the
Borrower  or  the  Parent,  or  their respective  officers,  or  of  public
officials.
     
     I  have assumed the genuineness of all signatures (other than those of
officers  of  the  Parent  and the Borrower), the  legal  capacity  of  all
individuals  (other than the officers of the Parent and the  Borrower)  who
have  executed  the Documents and all other documents I have reviewed,  the
authenticity  of  all  documents submitted  to  me  as  originals  and  the
conformity  to  original  documents of all documents  submitted  to  me  as
certified,  photostatic,  reproduced or  conformed  copies.   I  have  also
assumed  that  the Credit Agreement has been duly authorized, executed  and
delivered  by  the  Agents  and each of the Banks  and  is  enforceable  in
accordance  with  its  terms against such parties and that  the  execution,
delivery and performance of the Credit Agreement by the Agents and each  of
the  Banks  does  not and will not result in a breach of, or  constitute  a
default  under, any agreement, instrument or other document to  which  such
party is a party or any order, judgment, writ or decree applicable to  such
party or to which such party's property is subject.
     
     I  am qualified to practice law in the Commonwealth of Kentucky and do
not  purport  to  be  expert  on  any laws  other  than  the  laws  of  the
Commonwealth of Kentucky.
     
     Based  upon  the  foregoing  and subject  to  the  qualifications  and
exceptions set forth herein, I am of the following opinion:
     
           1.    The Borrower is a corporation validly existing and in good
     standing under the laws of the Commonwealth of Kentucky.
     
           2.    The  Parent is a corporation validly existing and in  good
     standing under the laws of the Commonwealth of Kentucky.
     
           3.   The execution, delivery and performance of the Borrower  of
     the  Credit Agreement, the Notes and the Support Agreement are  within
     the  Borrower's  corporate powers, have been duly  authorized  by  all
     necessary  corporate action, and do not contravene  (i)  the  Borrower
     Charter or the Borrower By-Laws or (ii) any law, rule or regulation of
     the  Commonwealth of Kentucky or (iii) any order, writ, injunction  or
     decree  of  any  court  or government instrumentality,  to  which  the
     Borrower  is subject or by which it or its property is bound  or  (iv)
     any  contractual or legal restriction contained in any indenture, loan
     or  credit  agreement,  mortgage or note of the  Borrower  or,  to  my
     knowledge,  contained in any other similar agreement or instrument  to
     which the Borrower is a party.
     
          4.   The execution, delivery and performance by the Parent of the
     Support Agreement are within the Parent's corporate powers, have  been
     duly  authorized  by  all  necessary  corporate  action,  and  do  not
     contravene (i) the Parent Charter or the Parent By-Laws, (ii) any law,
     rule  or regulation of the Commonwealth of Kentucky, (iii) any  order,
     writ, injunction or decree of any court or government instrumentality,
     to which the Parent is subject or by which it or its property is bound
     or  (iv)  any  contractual  or  legal  restriction  contained  in  any
     indenture,  loan or credit agreement, mortgage or note of  the  Parent
     or,  to  my  knowledge,  contained in any other similar  agreement  or
     instrument to which the Parent is a party.
     
          5.   No authorization, approval or other action by, and no notice
     to  or filing with, any agency or instrumentality of the government of
     the  Commonwealth  of  Kentucky is required  for  the  due  execution,
     delivery and performance by the Borrower of the Credit Agreement,  the
     Notes  and  the  Support  Agreement or by the Parent  of  the  Support
     Agreement.
     
           6.    The  Credit Agreement and the Issued Notes have been  duly
     executed and delivered on behalf of the Borrower.  I believe  that  in
     any  action  or  proceeding arising out of or relating to  the  Credit
     Agreement or the Notes in any court of the Commonwealth of Kentucky or
     in  any  federal  court sitting in the Commonwealth of Kentucky,  such
     court  would have a reasonable basis to and should recognize and  give
     effect  to  the  provisions of Section 8.08 of  the  Credit  Agreement
     wherein  the parties thereto agree that the Credit Agreement  and  the
     Notes shall be governed by, and construed in accordance with, the laws
     of  the  State  of Illinois, including the usury law of the  State  of
     Illinois.   However, if a court were to hold that the Credit Agreement
     and the Notes are governed by, and to be construed in accordance with,
     the  laws  of the Commonwealth of Kentucky, the Credit Agreement,  the
     Contract Notes and the Auction Notes, when duly executed and delivered
     by  the Borrower in accordance with the terms of the Credit Agreement,
     would be, under the laws of the Commonwealth of Kentucky, legal, valid
     and  binding  obligations  of  the Borrower  enforceable  against  the
     Borrower in accordance with their respective terms.
     
           7.    The Support Agreement has been duly executed and delivered
     by  the  Parent and the Borrower.  The Support Agreement is the legal,
     valid   and  binding  obligation  of  the  Parent  and  the   Borrower
     enforceable  against  the  Parent and the Borrower,  respectively,  in
     accordance with its terms.
     
          8.   There are no pending or, to my knowledge, overtly threatened
     actions  or  proceedings against the Borrower, the Parent  or  any  of
     their respective subsidiaries before any court, governmental agency or
     arbitrator  that  purport  to effect the legality,  validity,  binding
     effect  or  enforceability of the Credit Agreement, any  Note  or  the
     Support Agreement or, except as disclosed in the SEC Reports or to the
     Banks in writing, that could reasonably be expected to have a material
     adverse  effect upon the financial condition, operations, business  or
     prospects of the Parent and its subsidiaries, taken as a whole.
     
           9.    The  Transaction has become effective and all property  of
     each  of  the Constituent Companies is vested in the Borrower and  the
     Borrower  shall  have  all  liabilities of  each  of  the  Constituent
     Companies.
     
     The   opinions   set  forth  above  are  subject  to   the   following
qualifications:
     
          (a)   My opinions in paragraphs 6 and 7 above are subject to  the
     effect   of   any   applicable  bankruptcy,   insolvency,   fraudulent
     conveyance,  reorganization, moratorium or  similar  laws  of  general
     application relating to or affecting the enforcement of the rights  of
     creditors.
     
          (b)   My opinions in paragraphs 6 and 7 above are subject to  the
     effect of general principles of equity, including (without limitation)
     concepts  of materiality, reasonableness, good faith and fair  dealing
     (regardless  of  whether considered in a proceeding in  equity  or  at
     law).
     
          (c)    Except as expressly set forth herein, I express no opinion
     herein as to the validity or enforceability of any provision regarding
     choice  of  law  to  govern the Documents or of any provision  of  the
     Documents for indemnification.
     
          (d)    I express no opinion as to whether the execution, delivery
     and  performance  of the Documents will constitute  a  breach  of,  or
     constitute a default under, any covenant or provision with respect  to
     financial ratios or tests or any aspect of the financial condition  or
     results  of operations of the Parent or the Borrower contained  in  an
     agreement to which the Parent or the Borrower is a party.
     
          (e)    The authorization of the Board of Directors of the  Parent
     limits  the indebtedness of the Borrower to be covered by the  Support
     Agreement   and  any  other  support  agreements  of  the  Parent   to
     $700,000,000.   Thus,  additional  authorization  of  the   Board   of
     Directors  of the Parent is required if the aggregate indebtedness  of
     the  Borrower  covered by the Support Agreement and any other  support
     agreements of the Parent exceeds $700,000,000.  Officers of the Parent
     have  certified  that  as of the date hereof no  indebtedness  of  the
     Borrower is covered by any other support agreements of the Parent.
     
          (f)    The Agreement and Plan of Merger dated as of May 20,  1997
     (the  "KU Merger Agreement") by and between LG&E Energy Corp.  and  KU
     Energy   Corporation  contains  restrictions  on  the  incurrence   or
     guarantee of indebtedness by the Parent and the Borrower.  Pursuant to
     the  terms  of  the KU Merger Agreement, the Parent  must  obtain  the
     written  consent of KU Energy Corporation prior to the  incurrence  by
     the Borrower of indebtedness in excess of the limitations set forth in
     the KU Merger Agreement.
     
     This  opinion  is  rendered only with respect  to  the  laws  and  the
     regulations  which are in effect as of the date hereof.  I  assume  no
     responsibility  for  updating this opinion to take  into  account  any
     event, action, interpretation or change of law occurring subsequent to
     the  date  hereof that may affect the validity of any of the  opinions
     expressed herein.
     
     The  foregoing  opinion is furnished solely for  the  benefit  of  the
addressees  hereof  in connection with the Documents and  the  transactions
contemplated  thereby,  and,  except  as  set  forth  in  the   immediately
succeeding sentence, may not be relied upon by any other Person (other than
any  Person that may become a Lender under the Credit Agreement  after  the
date  hereof who may rely hereon to the extent that the addressees  may  so
rely)  or  for  any other purpose without my prior written consent.   I  am
aware  that Chapman and Cutler will rely upon the opinions set forth herein
in rendering their opinion furnished pursuant to Section 3.01 of the Credit
Agreement.
                                    
                                    Very truly yours,
                                       
                                 Exhibit F
                                     
                                     
                        Form of Opinion of Special
               Illinois Counsel to the ADMINISTRATIVE AGENT
                                     
                                     
                             September 5, 1997



To each of the Banks which
 is a party to the Credit
 Agreement (as herein
 defined)
     
     
                        Re:  LG&E Capital Corp.

Ladies and Gentlemen:
     
     We  have  acted  as  special Illinois counsel  to  Bank  of  Montreal,
individually   and  as  Administrative  Agent,  in  connection   with   the
preparation, execution and delivery of the Credit Agreement,  dated  as  of
September  5, 1997 (the "Credit Agreement"), among LG&E Capital Corp.  (the
"Borrower"),  the  banks  parties thereto (the "Banks"),  Chase  Securities
Inc.,  as Syndication Agent and Bank of Montreal, as Administrative  Agent,
relating  to  a  $200,000,000 revolving credit facility.  Unless  otherwise
defined  herein, terms defined in the Credit Agreement are used  herein  as
therein defined.
     
     In  that  connection, we have examined (i) counterparts of the  Credit
Agreement, executed by the Borrower, the Banks, the Syndication  Agent  and
the  Administrative Agent (ii) the Contract Notes, executed by the Borrower
and (iii) the form of the Auction Notes to be delivered by the Borrower  in
connection with any Auction Borrowing  (the "Credit Documents") as well  as
the opinion of John R. McCall, Esq., General Counsel for LG&E Energy Corp.,
a  Kentucky  corporation  and  counsel for the  Borrower  (the  "Borrower's
Counsel  Opinion"), and the opinion of Gardner, Carton &  Douglas,  special
counsel  for  the Borrower and the Parent (the "Special Counsel  Opinion"),
each  furnished to the Administrative Agent pursuant to Section 3.01(a)  of
the Credit Agreement.
     
     In our examination of the documents referred to above, we have assumed
the  authenticity of all such documents submitted to us as  originals,  the
genuineness  of all signatures, the due authority of the parties  executing
such  documents  and the conformity to the originals of all such  documents
submitted  to us as copies.  We have also assumed that each of  the  Banks,
the  Syndication Agent and the Administrative Agent have duly executed  and
delivered,   with  all  necessary  power  and  authority   (corporate   and
otherwise), the Credit Agreement.
     
     To the extent that our opinions expressed below involve conclusions as
to  matters governed by law other than the law of the State of Illinois  or
as  to  consummation of the Transaction, we have relied upon the Borrower's
Counsel  Opinion  and the Special Counsel Opinion and have assumed  without
independent investigation the correctness of the matters set forth therein,
our   opinions   expressed  below  being  subject   to   the   assumptions,
qualifications and limitations set forth in the Borrower's Counsel  Opinion
and  the  Special Counsel Opinion.  As to matters of fact, we  have  relied
solely upon the documents we have examined.
     
     Based  upon  the  foregoing,  and subject to  the  qualifications  and
assumptions set forth below, we are of the opinion that:
     
         (i)   The Credit Agreement and each of the Contract Notes are, and
     the Auction Notes, when duly executed and delivered by the Borrower in
     accordance with the terms of the Credit Agreement, will be, the legal,
     valid and binding obligations of the Borrower enforceable against  the
     Borrower in accordance with their respective terms.
     
         (ii)    While  we  have not independently considered  the  matters
     covered  by  the  Borrower's Counsel Opinion and the  Special  Counsel
     Opinion  to  the  extent  necessary  to  enable  us  to  express   the
     conclusions  stated therein, each of the Borrower's  Counsel  Opinion,
     the  Special  Counsel  Opinion  are substantially  responsive  to  the
     corresponding  requirements set forth in Section 3.01  of  the  Credit
     Agreement pursuant to which the same have been delivered.
     
     Our   opinions  are  subject  to  the  following  qualifications   and
assumptions:
     
          (a)    We  have  assumed  the  due authorization,  execution  and
     delivery  of  the Credit Documents in accord with all  relevant  legal
     requirements applicable to the Borrower.
     
         (b)   The enforceability of the Credit Documents may be limited by
     bankruptcy,   insolvency,   reorganization,   moratorium,   fraudulent
     conveyance, preference or similar laws affecting creditors' rights.
     
         (c)   The enforceability of the Credit Documents may be limited by
     general principles of materiality, reasonableness, good faith and fair
     dealing,  the availability of the remedies of specific performance  or
     injunction  relief may be subject to the discretion of the  court  and
     certain  remedial provisions may be limited by applicable law; however
     such  limitations do not in our opinion make the remedies afforded  by
     the Credit Documents taken as a whole inadequate.
     
         (d)   The Credit Documents provide that they are to be governed by
     the   laws  of  the  State  of  Illinois.   We  understand  that  this
     transaction  was  principally negotiated in Illinois  and  the  Credit
     Documents were delivered by the Borrower in Illinois and the  monetary
     obligations of the Borrower are payable in Illinois.  Accordingly,  we
     believe that an Illinois court would respect the choice of law of  the
     parties.
     
         (e)   We express no opinion herein as to (i) the enforceability of
     provisions  purporting  to  grant to  a  party  conclusive  rights  of
     determination, (ii) the availability of specific performance or  other
     equitable  remedies, (iii) the enforceability of rights  to  indemnity
     under Federal or state securities laws and (iv) the enforceability  of
     waivers by parties of their respective rights and remedies under law.
     
          (f)   Our opinions expressed above are limited to the law of  the
     State of Illinois and the Federal law of the United States, and we  do
     not  express  any  opinion herein concerning any other  law.   Without
     limiting the generality of the foregoing, we express no opinion as  to
     the  effect  of the law of any jurisdiction other than  the  State  of
     Illinois  wherein any Lender may be located or wherein enforcement  of
     the  Credit Agreement or the Notes may be sought that limits the rates
     of interest legally chargeable or collectible.
     
     The foregoing opinion is solely for your benefit and may not be relied
upon  by  any other Person other than any Person that may become  a  Lender
under the Credit Agreement after the date hereof.
                                    
                                    Very truly yours,



TAMcIlroy/rm
                                 Exhibit G
                                     
                             Support Agreement