Document:

Exhibit 10.1

 

AMENDMENT NO. 1

TO LIMITED DURATION WAIVER AGREEMENT
AND AMENDMENT

 

This AMENDMENT NO. 1 TO LIMITED DURATION WAIVER AGREEMENT AND AMENDMENT
(this “Amendment No. 1”) is dated as of February     ,
2008, and is effective as of January 25, 2008, is entered into by and
among KIMBALL HILL, INC., an Illinois corporation (the “Borrower”),
the Guarantors (defined below), and HARRIS N.A., as administrative agent (in
such capacity, the “Administrative Agent”)
for the Lenders (defined below).

 

RECITALS:

 

WHEREAS, the Borrower, the Guarantors party thereto from time to time
(the “Guarantors”), the Lenders party thereto
from time to time (the “Lenders”), the
Administrative Agent, Bank of America, N.A., as the Syndication Agent, KeyBank
National Association and Wachovia Bank, National Association, as the
Co-Documentation Agents, and BMO Capital Markets and Banc of America
Securities, LLC, as the Co-Lead Arrangers and the Joint Book Runners, have
entered into that certain Amended and Restated Credit Agreement dated as of August 10,
2007 (as amended (including amendments set forth in the Limited Duration Waiver
Agreement (defined below)), restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”);
and

 

WHEREAS,
as a consequence of the Credit Agreement Defaults (defined in the Limited
Duration Waiver Agreement), the Borrower, the Guarantors party thereto, the
Lenders party thereto and the Administrative Agent entered into that certain
Limited Duration Waiver Agreement and Amendment dated as of January 25,
2008 (the “Limited Duration Waiver Agreement”);
and

 

WHEREAS,
the Borrower has concluded that it will not be able to meet the covenant levels
in Section 4 to the Limited Duration Waiver Agreement and has asked the
Lenders to amend said Schedule 4; and

 

WHEREAS,
the Lenders are willing to amend Schedule 4 to the Limited Duration Waiver
Agreement, subject to the terms and conditions set forth in this Amendment No. 1.

 

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

SECTION 1.           DEFINITIONS

 

1.1           Each
capitalized term used herein and not otherwise defined shall have the meanings
ascribed to such term in the Limited Duration Waiver Agreement.  The following terms used in this Amendment No. 1
shall have the meaning set forth below:

 

“Effective
Date” is defined in Section 4.2.

 

“Loan Party”
means the Borrower and the Guarantors.

 

 

“Prior Loans
Principal Amount” is defined in Section 3.6.

 

SECTION 2.           AMENDMENTS

 

2.1           From
and after the Effective Date, Schedule 4 to the Limited Duration Waiver
Agreement shall be deleted in its entirety and Schedule 4 attached hereto shall
be substituted in its place.

 

2.2           From
and after the Effective Date, all references to the Limited Duration Waiver
Agreement shall be deemed for all purposes to be references to the Limited
Duration Waiver Agreement, as amended by this Amendment No. 1.

 

SECTION 3.           REPRESENTATIONS
AND WARRANTIES

 

In
consideration of the agreement of the Administrative Agent on behalf of the
Lenders to enter into this Amendment No. 1, each Loan Party hereby
represents and warrants to the Administrative Agent and the Lenders as follows:

 

3.1           The
execution and delivery of this Amendment No. 1 by such Loan Party are
within its power and have been duly authorized by all necessary action, and
this Amendment No. 1 constitutes a valid and legally binding agreement,
enforceable against such Loan Party in accordance with its terms.

 

3.2           Except as
contemplated by the Limited Duration Waiver Agreement, neither any Loan Party
nor any Subsidiary of any Loan Party is in violation in any respect of (a) any
term of its charter, bylaws or other constitutive documents or (b) any
term in any material agreement or other material instrument to which it is a
party or by which it or any of its property may be bound, in each case, where
such violation, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.

 

3.3           After giving
effect to the provisions of this Amendment No. 1, the representations and
warranties of the Borrower contained in Section 6 of the Credit Agreement
and in Section 4 of the Limited Duration Waiver Agreement are true and
correct as though made on and as of the 
date thereof (except to the extent that such representations and
warranties relate to an earlier date, in which case they are true and correct
as of such date, and disregarding any breaches or adverse effects arising out
of the Credit Agreement Defaults, Borrowed Money Defaults or Material Agreement
Defaults or any of the other matters expressly set forth in the Limited
Duration Waiver Agreement); provided, however, that no Default or
Event of Default exists other than the Credit Agreement Defaults.

 

3.4           Attached to the
Limited Duration Waiver Agreement (i) as Schedule 1 is a list of
the Credit Agreement Defaults of which senior management of the Borrower has
knowledge as of the date hereof, (ii) as Schedule 2 is a list of
the Borrowed Money Defaults of which the senior
management of the Borrower has knowledge as of the date hereof, and (iii) as
Schedule 3 is a list of all Material Agreement Defaults.

 

3.5           Attached to this Amendment No. 1 as Schedule A is a schedule
of all accounts of the Loan Parties (including the name and address of  the depository where such accounts are 

 

 

maintained and the
contact information for the person at such depository administering such
accounts) as of February     . 2008.

 

3.6           Except as
expressly provided in Section 2, the execution and delivery of this
Amendment No. 1 shall not:  (a) constitute
an extension or modification of the Credit Agreement, the Limited Duration
Waiver Agreement or the other Loan Documents; (b) extend the terms of the
Credit Agreement or the Limited Duration Waiver Agreement or the due date of
any of the Obligations; or (c) give rise to any obligation on the part of
the Administrative Agent or the Lenders to extend or modify any term or
condition of the Credit Agreement, the Limited Duration Waiver Agreement or any
of the other Loan Documents.

 

3.7           As of February     ,
2008, the total aggregate outstanding amount of principal under the Credit
Agreement with respect to the Revolving Loans, the Swing Loans and the Letters
of Credit is $                    
(the “Prior Loans Principal Amount”), and the
Prior Loans Principal Amount has accrued, and continues to accrue, interest at
the rates provided in the Credit Agreement.

 

3.8           No Loan Party
has any knowledge of any challenge to the Administrative Agent’s or any Lender’s
claims arising under the Loan Documents, or to the effectiveness of the Loan
Documents.

 

SECTION 4.           COVENANTS
AND AGREEMENTS.

 

In order to induce
Administrative Agent and the Lenders to enter into this Limited Duration Waiver
Agreement, the Loan Parties covenant and agree as follows:

 

4.1           The
Administrative Agent has requested that the Loan Parties enter into such
documentation as is necessary to create and perfect first priority security
interests in the accounts and the proceeds thereof listed on Schedule A annexed
hereto, and the Loan Parties covenant and agree to do either of the following,
on or before February 26, 2008: (a) agree with the Administrative
Agent on the form and substance of a blocked account agreement to be
implemented with all depository institutions, and promptly after such agreement
has been made, to enter into such agreements with the Administrative Agent and
the depository or (b) move all cash into deposit accounts with a Lender,
except for amounts representing uncollected checks.  If after the date of this Amendment No. 1
any of the Loan Parties establish or acquire any interest in any accounts not listed on Schedule A,
then contemporaneously therewith, the applicable Loan Parties shall enter into
documentation necessary to grant and perfect a first priority security interest
in such accounts and the proceeds thereof. 
All such documentation shall be reasonably satisfactory to the
depository, the Administrative Agent and the applicable Loan Parties.

 

4.2           This
Amendment No. 1 shall become effective (the “Effective
Date”) on the date that the Administrative Agent shall have received
counterparts of this Amendment No. 1 duly executed and delivered by the
Administrative Agent, on behalf of the Lenders, the Borrower and the Guarantors.

 

SECTION 5.           MISCELLANEOUS

 

 

5.1           THIS LIMITED
WAIVER AGREEMENT, AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL BE
CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.

 

5.2           This Amendment No. 1
may be executed in multiple counterparts, each of which shall be deemed to be
an original and all of which, taken together, shall constitute one and the same
agreement.  In proving this Amendment No. 1
in any judicial proceedings, it shall not be necessary to produce or account
for more than one such counterpart signed by the party against whom such
enforcement is sought.  Any signatures
delivered by a party by facsimile transmission or by electronic mail
transmission shall be deemed an original signature hereto.

 

 

                IN WITNESS WHEREOF, the parties
hereto have caused this Amendment No. 1 to Limited Duration Waiver
Agreement and Amendment to be executed as of the date first set forth above, by
their respective duly authorized officers.

 

	
  “Borrower”

  
	
   

  
	
  KIMBALL HILL, INC., an Illinois
  corporation, as the Borrower

  
	
   

  
	
  By:

  	
  /s/ C. Kenneth Love

  
	
   

  	
  C. Kenneth Love

  
	
   

  	
  President and Chief
  Executive Officer

  

 

	
   

  	
  “Guarantors”

  
	
   

  	
   

  
	
   

  	
  CACTUS
  HILLS, LLC

  
	
   

  	
  KIMBALL
  HILL HOMES TEXAS

  
	
   

  	
  INVESTMENTS,
  L.L.C.

  
	
   

  	
  KIMBALL
  HILL HOMES TEXAS

  
	
   

  	
  OPERATIONS,
  L.L.C.

  
	
   

  	
  KIMBALL
  HILL TEXAS INVESTMENT

  
	
   

  	
  COMPANY,
  L.L.C.

  
	
   

  	
  KIMBALL
  HILL FAR EAST DETROIT, LLC

  
	
   

  	
  KH
  FINANCIAL HOLDING COMPANY

  
	
   

  	
  KHH
  TEXAS TRADING COMPANY L.P.

  
	
   

  	
  KIMBALL
  HILL HOMES AUSTIN, L.P.

  
	
   

  	
  KIMBALL
  HILL HOMES CALIFORNIA, INC.

  
	
   

  	
  KIMBALL
  HILL HOMES DALLAS, L.P.

  
	
   

  	
  KIMBALL
  HILL HOMES FLORIDA, INC.

  
	
   

  	
  KIMBALL
  HILL HOMES HOUSTON, L.P.

  
	
   

  	
  KIMBALL
  HILL HOMES ILLINOIS, LLC

  
	
   

  	
  KIMBALL
  HILL HOMES NEVADA, INC.

  
	
   

  	
  KIMBALL
  HILL HOMES OHIO, INC.

  
	
   

  	
  KIMBALL
  HILL HOMES OREGON, INC.

  
	
   

  	
  KIMBALL
  HILL HOMES REALTY FLORIDA,

  
	
   

  	
  INC.

  
	
   

  	
  KIMBALL
  HILL HOMES SAN ANTONIO, L.P.

  
	
   

  	
  KIMBALL
  HILL HOMES TEXAS, INC.

  
	
   

  	
  KIMBALL
  HILL HOMES WASHINGTON, INC.

  
	
   

  	
  KIMBALL
  HILL HOMES WISCONSIN, INC.

  
	
   

  	
  NATIONAL
  CREDIT AND GUARANTY CORPORATION

  
	
   

  	
  RIVER
  OAKS REALTY, L.P.

  
	
   

  	
  18TH
  AND PEORIA, LLC

  
	
   

  	
  KIMBALL
  HILL URBAN CENTERS, L.L.C.

  
	
   

  	
  KIMBALL
  HILL URBAN CENTERS CHICAGO

  

 

 

	
   

  	
  ONE, L.L.C.

  
	
   

  	
  KIMBALL HILL URBAN CENTERS
  CHICAGO 

  
	
   

  	
  TWO,
  L.L.C.

  
	
   

  	
  KIMBALL
  HILL STATEWAY, INC.

  
	
   

  	
  KIMBALL
  HILL BELLEVUE RANCH, LLC

  
	
   

  	
  KIMBALL
  HILL SHELDON LAKES, LLC

  
	
   

  	
  KIMBALL
  HILL VILLAGES, LLC

  
	
   

  	
  KH INGHAM
  PARK SOUTH, LLC

  
	
   

  	
  KH
  SRAV II, LLC

  
	
   

  	
  RIVER
  OAKS HOMES, LLP

  
	
   

  	
  PARKVIEW
  LIMITED PARTNERSHIP

  
	
   

  	
  RIVER
  POINTE LIMITED PARTNERSHIP

  
	
   

  	
  KIMBALL
  HILL CHADWICK FARMS 

  
	
   

  	
  LIMITED
  PARTNERSHIP

  
	
   

  	
  KIMBALL
  HILL MARBELLA ESTATES

  
	
   

  	
    LIMITED PARTNERSHIP

  
	
   

  	
  INDIAN
  TRAILS LIMITED PARTNERSHIP

  
	
   

  	
  EDGEWATER
  LIMITED PARTNERSHIP

  
	
   

  	
  HUNTINGTON
  CHASE LIMITED

  
	
   

  	
    PARTNERSHIP

  
	
   

  	
  LEGEND
  LAKES LIMITED PARTNERSHIP

  
	
   

  	
  WATERFORD
  LIMITED PARTNERSHIP

  
	
   

  	
  WHISPERING
  MEADOW LIMITED

  
	
   

  	
    PARTNERSHIP

  
	
   

  	
  WHITE
  OAK LIMITED PARTNERSHIP

  
	
   

  	
  KIMBALL
  MOUNTAIN FIRST LIMITED

  
	
   

  	
    PARTNERSHIP

  
	
   

  	
  GABLES
  AT HIDDENBROOK LIMITED

  
	
   

  	
    PARTNERSHIP

  
	
   

  	
  KIMBALL
  HILL URBAN CENTERS SPECIAL

  
	
   

  	
  PURPOSES,
  L.L.C.

  
	
   

  	
  TERRAMINA,
  LLC

  

 

	
   

  	
  By:

  	
  /s/
  C. Kenneth Love

  
	
   

  	
   

  	
  C.
  Kenneth Love 

  
	
   

  	
   

  	
  Vice
  Chairman

  

 

 

 

	
  KIMBALL
  HILL TX PROPERTIES, LLC

  
	
   

  	
   

  
	
  By:

  	
  Kimball
  Hill Homes Houston, L.P., its manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ C. Kenneth Love

  
	
   

  	
   

  	
  C.
  Kenneth Love

  
	
   

  	
   

  	
  Vice
  Chairman

  
	
   

  	
   

  
	
  THE
  HAMILTON PLACE PARTNERSHIP

  
	
   

  	
   

  
	
  By:

  	
  Kimball
  Hill Homes Illinois, LLC, its general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ C. Kenneth Love

  
	
   

  	
   

  	
  C. Kenneth Love

  
	
   

  	
   

  	
  Vice Chairman

  
				

 

 

	
   

  	
  HARRIS
  N.A., in its capacity as the Administrative Agent for the Lenders

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James A. Jerz

  
	
   

  	
  Name:

  	
  James A. Jerz

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

SCHEDULE A

TO AMENDMENT NO. 1

 

 

SCHEDULE A

 

Attached

 

 

SCHEDULE 4

TO AMENDMENT NO. 1

 

SCHEDULE 4

 

AMENDED FINANCIAL COVENANTS

 

	
   

  	
   

  	
   

  	
   

  	
  Original Covenants

  	
   

  	
  Amended Covenants

  	
   

  
	
  Section 8.7(h)

  	
   

  	
  Guaranties of JV Indebtedness to ATNW <

  	
   

  	
  35

  	
  %

  	
  45

  	
  %

  
	
  Section 8.22(a)

  	
   

  	
  Tangible Net Worth >

  	
   

  	
  $

  	
  302,000,000

  	
   

  	
  $

  	
  154,000,000

  	
   

  
	
  Section 8.22(b)

  	
   

  	
  Leverage Ratio <

  	
   

  	
  1.75

  	
   

  	
  2.75

  	
   

  
	
  Section 8.22(c)

  	
   

  	
  Builder Leverage Ratio <

  	
   

  	
  1.50

  	
   

  	
  2.25

  	
   

  
	
  Section 8.22(e)

  	
   

  	
  Global Land Value to ATNW <

  	
   

  	
  1.50

  	
   

  	
  1.75

  	
   

  
	
  Section 8.22(f)

  	
   

  	
  Minimum LTM EBITDA >

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  $

  	
  10,000,000Exhibit 4(x)

 

 

THE DAYTON POWER AND LIGHT COMPANY

 

AND

 

THE BANK OF NEW YORK

(formerly Irving Trust Company)

	
  Trustee

  	
   

  

 

 

Forty-Fifth Supplemental Indenture

 

 

Dated as of November 1, 2007

 

 

 

THE DAYTON POWER AND LIGHT COMPANY

 

FORTY-FIFTH SUPPLEMENTAL INDENTURE

DATED AS OF NOVEMBER 1, 2007

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PARTIES

  	
   

  	
   

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RECITALS

  	
   

  	
   

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GRANTING CLAUSES

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   FIRST.

  	
   

  	
  REAL
  PROPERTY AND INTERESTS IN REAL PROPERTY

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECOND.

  	
   

  	
  ELECTRIC
  GENERATING PLANTS

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  THIRD.

  	
   

  	
  TRANSMISSION
  LINES

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FOURTH.

  	
   

  	
  SUBSTATIONS
  AND SUBSTATION SITES

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FIFTH.

  	
   

  	
  ELECTRIC
  DISTRIBUTION SYSTEMS

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SIXTH.

  	
   

  	
  LIQUEFIED
  PETROLEUM GAS PRODUCTION AND STORAGE FACILITIES

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SEVENTH.

  	
   

  	
  GAS
  DISTRIBUTION SYSTEMS

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EIGHTH.

  	
   

  	
  OFFICE
  AND DEPARTMENTAL BUILDINGS

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NINTH.

  	
   

  	
  TELEPHONE
  LINES

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TENTH.

  	
   

  	
  FRANCHISES

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ELEVENTH.

  	
   

  	
  OTHER
  REAL ESTATE AND APPURTENANCES

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TWELFTH.

  	
   

  	
  PROPERTY
  HEREAFTER TO BECOME SUBJECT TO THE LIEN OF THE FIRST MORTGAGE AS AMENDED

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HABENDUM
  CLAUSE

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SUBJECT
  CLAUSE

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GRANT
  IN TRUST

  	
   

  	
  13

  

 

i

 

	
  ARTICLE ONE.

  	
   

  	
  BONDS OF THE VARIABLE RATE
  POLLUTION CONTROL SERIES 2007 DUE 2040 AND ISSUE THEREOF

  	
   

  	
  13

  
	
  SECTION 1.

  	
   

  	
  SERIES AND FORM OF NEW BONDS

  	
   

  	
  13

  
	
  SECTION 2.

  	
   

  	
  ISSUE OF NEW BONDS

  	
   

  	
  13

  
	
  SECTION 3.

  	
   

  	
  DATES, INTEREST, ETC. OF NEW BONDS

  	
   

  	
  13

  
	
  SECTION 4.

  	
   

  	
  DEFINITIONS

  	
   

  	
  14

  
	
  SECTION 5.

  	
   

  	
  DENOMINATIONS AND EXCHANGEABILITY OF NEW BONDS;
  TEMPORARY BONDS MAY BE AUTHENTICATED AND DELIVERED

  	
   

  	
  14

  
	
  SECTION 6.

  	
   

  	
  MANDATORY REDEMPTION

  	
   

  	
  15

  
	
  SECTION 7.

  	
   

  	
  EXTRAORDINARY OPTIONAL REDEMPTION

  	
   

  	
  15

  
	
  SECTION 8.

  	
   

  	
  OPTIONAL REDEMPTION

  	
   

  	
  15

  
	
  SECTION 9.

  	
   

  	
  NOTICE OF REDEMPTION

  	
   

  	
  16

  
	
  SECTION 10.

  	
   

  	
  CANCELLATION

  	
   

  	
  16

  
	
  SECTION 11.

  	
   

  	
  NEW BONDS DEEMED PAID IN ADDITIONAL CIRCUMSTANCES

  	
   

  	
  16

  
	
  SECTION 12.

  	
   

  	
  SURRENDER OF NEW BONDS IN CERTAIN CIRCUMSTANCES

  	
   

  	
  17

  
	
  SECTION 13.

  	
   

  	
  APPLICATION OF ARTICLE TEN OF FIRST MORTGAGE AS
  AMENDED

  	
   

  	
  17

  
	
  SECTION 14.

  	
   

  	
  FORM OF NEW BONDS

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE TWO.

  	
   

  	
  COVENANTS OF THE COMPANY

  	
   

  	
  17

  
	
  SECTION 1.

  	
   

  	
  CONFIRMATION OF COVENANTS BY COMPANY IN FIRST
  MORTGAGE

  	
   

  	
  17

  
	
  SECTION 2.

  	
   

  	
  COVENANT OF THE COMPANY AND LEGAL OPINION AS TO
  RECORDING

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE THREE.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  18

  
	
  SECTION 1.

  	
   

  	
  AUTHENTICATION AND DELIVERY OF NEW BONDS IN ADVANCE
  OF THE RECORDING OF FORTY-FIFTH SUPPLEMENTAL INDENTURE

  	
   

  	
  18

  
	
  SECTION 2.

  	
   

  	
  FORTY-FIFTH SUPPLEMENTAL INDENTURE TO FORM PART OF
  FIRST MORTGAGE

  	
   

  	
  18

  
	
  SECTION 3.

  	
   

  	
  DEFINITIONS IN FIRST MORTGAGE SHALL APPLY TO
  FORTY-FIFTH SUPPLEMENTAL INDENTURE

  	
   

  	
  18

  
	
  SECTION 4.

  	
   

  	
  EXECUTION IN COUNTERPARTS

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TESTIMONIUM

  	
   

  	
   

  	
   

  	
  S-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURES

  	
   

  	
   

  	
   

  	
  S-1, S-2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACKNOWLEDGMENTS

  	
   

  	
  S-3, S-4

  
	
   

  	
   

  	
   

  
	
  Exhibit A –
  Form of New Bond

  	
   

  	
   

  

 

ii

 

FORTY-FIFTH SUPPLEMENTAL INDENTURE, dated as of November 1,
2007, between THE DAYTON POWER AND LIGHT COMPANY, a corporation of the State of
Ohio (hereinafter sometimes called the Company), party of the first part, and
THE BANK OF NEW YORK (formerly Irving Trust Company), a corporation of the
State of New York (hereinafter sometimes called the Trustee), as Trustee, party
of the second part.

 

WHEREAS, the Company has heretofore executed and
delivered to Irving Trust Company (now The Bank of New York) a certain
Indenture, dated as of October 1, 1935 (hereinafter sometimes called the
First Mortgage), to secure the payment of the principal of and interest on an
issue of bonds of the Company, unlimited in aggregate principal amount
(hereinafter sometimes called the Bonds); and

 

WHEREAS, the Company has issued under the First
Mortgage its Bonds of a series known as the First and Refunding Mortgage
Bonds, 31⁄2% Series Due 1960, authorized in unlimited aggregate principal
amount, all of which have been redeemed or otherwise retired; and

 

WHEREAS, in Article Two of the First Mortgage it
is provided in substance, among other things, that the Bonds may be issued
in series, the Bonds of each series maturing on such dates and bearing
interest at such rates, respectively, as the Board of Directors of the Company may determine
prior to the authentication thereof; and

 

WHEREAS, the Company has heretofore executed and
delivered to the Trustee forty-four supplemental Indentures numbered, dated
and, except as set forth below, providing for their respective series of
First Mortgage Bonds, all as set forth in the tabulation below:

 

	
  Supplemental

  Indenture

  	
   

  	
  Dated
  As Of

  	
   

  	
  Series

  Provided For

  	
   

  	
  Principal

  Amount

  Outstanding

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First

  	
   

  	
  March 1,
  1937

  	
   

  	
  31/4%
  Series

  Due 1962

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Second

  	
   

  	
  January 1,
  1940

  	
   

  	
  3% Series

  Due 1970

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Third

  	
   

  	
  October 1,
  1945

  	
   

  	
  23/4% Series

  Due 1975

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fourth

  	
   

  	
  January 1,
  1948

  	
   

  	
  3% Series 

  Due 1978

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fifth

  	
   

  	
  December 1,
  1948

  	
   

  	
  3% Series A

  Due 1978

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sixth

  	
   

  	
  February 1,
  1952

  	
   

  	
  31/4%
  Series

  Due 1982

  	
   

  	
  None

  

 

1

 

	
  Supplemental

  Indenture

  	
   

  	
  Dated
  As Of

  	
   

  	
  Series

  Provided For

  	
   

  	
  Principal

  Amount

  Outstanding

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Seventh

  	
   

  	
  September 1,
  1954

  	
   

  	
  3% Series

  Due 1984

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eighth

  	
   

  	
  November 1,
  1957

  	
   

  	
  5% Series

  Due 1987

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ninth

  	
   

  	
  March 1,
  1960

  	
   

  	
  51/8
  % Series

  Due 1990

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tenth

  	
   

  	
  June 1,
  1963

  	
   

  	
  4.45% Series

  Due 1993

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eleventh

  	
   

  	
  May 1,
  1967

  	
   

  	
  55/8
  % Series

  Due 1997

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Twelfth

  	
   

  	
  June 15,
  1968

  	
   

  	
  63/4%
  Series

  Due 1998

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thirteenth

  	
   

  	
  October 1,
  1969

  	
   

  	
  81/4%
  Series

  Due 1999

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fourteenth

  	
   

  	
  June 1,
  1970

  	
   

  	
  91/2%
  Series

  Due 2000

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fifteenth

  	
   

  	
  August 1,
  1971

  	
   

  	
  81/8
  % Series

  Due 2001

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sixteenth

  	
   

  	
  October 3,
  1972

  	
   

  	
  None issued

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Seventeenth

  	
   

  	
  November 1,
  1973

  	
   

  	
  8% Series

  Due 2003

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Eighteenth

  	
   

  	
  October 1,
  1974

  	
   

  	
  101/8
  % Series

  Due 1981

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Nineteenth

  	
   

  	
  August 1,
  1975

  	
   

  	
  10.70% Series

  Due 2005

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Twentieth

  	
   

  	
  November 15,
  1976

  	
   

  	
  83/4%
  Series

  Due 2006

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Twenty-First

  	
   

  	
  April 15,
  1977

  	
   

  	
  6.35% Series

  Due 2007

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Twenty-Second

  	
   

  	
  October 15,
  1977

  	
   

  	
  81/2%
  Series

  Due 2007

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Twenty-Third

  	
   

  	
  April 1,
  1978

  	
   

  	
  8.95% Series

  Due 1998

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Twenty-Fourth

  	
   

  	
  November 1,
  1978

  	
   

  	
  91/2%
  Series

  Due 2003

  	
   

  	
  None

  

 

2

 

	
  Supplemental

  Indenture

  	
   

  	
  Dated
  As Of

  	
   

  	
  Series

  Provided For

  	
   

  	
  Principal

  Amount

  Outstanding

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Twenty-Fifth

  	
   

  	
  August 1,
  1979

  	
   

  	
  101/4% Series

  Due 1999

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Twenty-Sixth

  	
   

  	
  December 1,
  1979

  	
   

  	
  121/8 % Series

  Due 2009

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Twenty-Seventh

  	
   

  	
  February 1,
  1981

  	
   

  	
  145/8 % Series

  Due 1988

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Twenty-Eighth

  	
   

  	
  February 18,
  1981

  	
   

  	
  141/2% Series

  Due 1988

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Twenty-Ninth

  	
   

  	
  September 1,
  1981

  	
   

  	
  17% Series

  Due 1991

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thirtieth

  	
   

  	
  March 1,
  1982

  	
   

  	
  163/4% Series

  Due 2012

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thirty-First

  	
   

  	
  November 1,
  1982

  	
   

  	
  111/2% Series

  Due 2012-A

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thirty-Second

  	
   

  	
  November 1,
  1982

  	
   

  	
  111/2% Series

  Due 2012-B

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thirty-Third

  	
   

  	
  December 1,
  1985

  	
   

  	
  91/2% Series

  Due 2015

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thirty-Fourth

  	
   

  	
  April 1,
  1986

  	
   

  	
  9% Series

  Due 2016

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thirty-Fifth

  	
   

  	
  December 1,
  1986

  	
   

  	
  87/8 % Series

  Due 2016

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thirty-Sixth

  	
   

  	
  August 15,
  1992

  	
   

  	
  6.40% Pollution

  Control Series

  1992-A

  Due 2027

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  6.40% Pollution

  Control Series

  1992-B

  Due 2027

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thirty-Seventh

  	
   

  	
  November 15,
  1992

  	
   

  	
  6.50% Pollution

  Control Series

  1992-C

  Due 2022

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thirty-Eighth

  	
   

  	
  November 15,
  1992

  	
   

  	
  8.40% Series

  Due 2022

  	
   

  	
  None

  

 

3

 

	
  Supplemental

  Indenture

  	
   

  	
  Dated
  As Of

  	
   

  	
  Series

  Provided For

  	
   

  	
  Principal

  Amount

  Outstanding

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thirty-Ninth

  	
   

  	
  January 15,
  1993

  	
   

  	
  8.15% Series

  Due 2026

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fortieth

  	
   

  	
  February 15,
  1993

  	
   

  	
  77/8 % Series

  Due 2024

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Forty-First

  	
   

  	
  February 1,
  1999

  	
   

  	
  None issued

  	
   

  	
  None

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Forty-Second

  	
   

  	
  September 1,
  2003

  	
   

  	
  5.125% Series

  Due 2013

  	
   

  	
  $470,000,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Forty-Third

  	
   

  	
  August 1,
  2005

  	
   

  	
  4.80%

  Pollution

  Control Series

  2005-A

  Due 2034

  	
   

  	
  $41,300,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  4.80%

  Pollution

  Control Series

  2005-B

  Due 2034

  	
   

  	
  $137,800,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  4.70%

  Pollution

  Control

  Series 2005-C

  Due 2028

  	
   

  	
  $35,275,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Forty-Fourth

  	
   

  	
  September 1,
  2006

  	
   

  	
  4.80%

  Pollution

  Control

  Series 2006

  Due 2036

  	
   

  	
  $100,000,000

  

 

WHEREAS, said Eleventh Supplemental Indenture, which
created the 55/8 % Series Due
1997, provided in its Article Three for certain amendments to the First
Mortgage, as theretofore amended, each such amendment to become effective on
the earliest date on which either (a) there shall not be any Bonds
outstanding of Series Due 1975, Series Due 1978, Series A, Due
1978, Series Due 1982, Series Due 1984, or Series Due 1993, or (b) there
shall have been executed and delivered a supplemental indenture or indentures
embodying said amendment (either alone or with other amendments) consented to
by the holders of seventy-five per centum (75%) in aggregate principal
amount of the Bonds at the time outstanding of the series enumerated in
the foregoing clause (a), or of each said series of which Bonds are
then outstanding; and

 

4

 

WHEREAS, said Fifteenth Supplemental Indenture, which
created the 81/8 % Series Due
2001, provided (a) in its Article Four for an amendment to the First
Mortgage, as theretofore amended, to become effective on the date on which the
amendments provided for by Section 3 of Article Three of said
Eleventh Supplemental Indenture shall become effective and (b) in its Article Five
for certain additional amendments to the First Mortgage, as theretofore
amended, to become effective on the earliest date on which either (i) there
shall not be any Bonds outstanding of Series Due 1975, Series Due
1978, Series A, Due 1978, Series Due 1982, Series Due 1984, Series Due
1993, Series Due 1997, Series Due 1998, Series Due 1999, or Series Due
2000, or (ii) there shall have been executed and delivered a supplemental
indenture or indentures embodying said amendments (either alone or with other
amendments) consented to by the holders of seventy-five per centum (75%)
in aggregate principal amount of the Bonds at the time outstanding of the series enumerated
in the foregoing clause (i), or of each said series of which Bonds
are then outstanding; and

 

WHEREAS, the Company has heretofore executed and
delivered to the Trustee a Sixteenth Supplemental Indenture dated as of October 3,
1972, which provided in its Article One for an amendment of Article Five
of the First Mortgage, as theretofore amended, altering the requirements for
the opinion of counsel to be delivered to the Trustee as a condition precedent
to the authentication and delivery of additional Bonds under Article Five
or the withdrawal of cash under Article Seven of the First Mortgage, as
theretofore amended; and

 

WHEREAS, none of the Bonds of Series Due 1975, Series Due
1978, Series A, Due 1978, Series Due 1982, Series Due 1984, or Series Due
1993 remain outstanding and the amendments contained in said Eleventh
Supplemental Indenture have become effective; and

 

WHEREAS, none of the Bonds of Series Due 1975, Series Due
1978, Series A, Due 1978, Series Due 1982, Series Due 1984, Series Due
1993, Series Due 1997, Series Due 1998, Series Due 1999, or Series Due
2000 remain outstanding and the amendments contained in said Fifteenth
Supplemental Indenture that did not theretofore become effective by virtue of
the Sixteenth Supplemental Indenture have become effective; and

 

WHEREAS, said Forty-Second Supplemental Indenture,
which created the 51/8 % Series Due
2013, provided in its Article Two for certain amendments to the First
Mortgage, as theretofore amended, to become effective on the earliest date on
which either (i) there shall not be any Bonds outstanding of 6.35% Series Due
2007, Pollution Control Series 1992-A Due 2027, Pollution Control Series 1992-B
Due 2027, Pollution Control Series 1992-C Due 2022, Series Due 2026
and Series Due 2024, or (ii) there shall have been executed and
delivered a supplemental indenture or indentures embodying said amendment
(either alone or with other amendments) consented to by the holders of
seventy-five per centum (75%) in aggregate principal amount of the Bonds
at the time outstanding of the series enumerated in the foregoing
clause (i); and

 

WHEREAS, none of the Bonds of 6.35% Series Due
2007, Pollution Control Series 1992-A Due 2027, Pollution Control Series 1992-B
Due 2027, Pollution Control Series 1992-C 

 

5

 

Due 2022, Series Due 2026 and Series Due
2024 remain outstanding and the amendments contained in said Forty-Second
Supplemental Indenture have become effective; and

 

WHEREAS, the First Mortgage as amended by the First
through the Forty-Fourth Supplemental Indentures is hereinafter called the
First Mortgage as amended; and

 

WHEREAS, it is provided in Article Seven of the
First Mortgage as amended, among other things, that the Company may issue
additional Bonds thereunder upon the deposit with the Trustee of cash equal to
the principal amount of such additional Bonds to be issued; it is provided in Article Six
of the First Mortgage as amended, among other things, that if Bonds are paid,
retired, redeemed, canceled or surrendered to the Trustee for cancellation
(except when canceled pursuant to certain provisions of the First Mortgage as
amended), the Company may issue additional Bonds thereunder in principal
amount equivalent to the principal amount of the Bonds so paid, retired,
redeemed, canceled or surrendered to the Trustee for cancellation; it is
provided in Article Five of the First Mortgage as amended, among other
things, that the Company may issue additional Bonds thereunder upon the
basis of property additions in accordance with and subject to the conditions,
provisions and limitations set forth in said Article Five; and it is
provided in Article Eighteen of the First Mortgage as amended, among other
things, that the Company and the Trustee may from time to time enter into
one or more indentures supplemental to the First Mortgage as amended for the
purposes, among other things which may be therein set forth, to mortgage
or pledge additional property under the First Mortgage as amended and to
establish the terms and provisions of any series of Bonds other than the
31⁄2 % Series Due 1960; and

 

WHEREAS, the Company, pursuant to resolutions duly
adopted by its Board of Directors at a meeting of said Board of Directors duly
called and held, has determined under and in accordance with the provisions of
the First Mortgage as amended and of this Forty-Fifth Supplemental Indenture to
create a new series of Bonds to be known as its First Mortgage Bonds,
Variable Rate Pollution Control Series 2007 Due 2040 (hereinafter
sometimes called the New Bonds), which shall be limited to the aggregate
principal amount of $90,000,000; and

 

WHEREAS, the New Bonds are to be issued by the Company
to the Ohio Air Quality Development Authority (hereinafter called the
Authority), or its assignee, to evidence and secure the obligations of the
Company to repay the loan of the proceeds of the sale of the Project Bonds (as
hereinafter defined) made by the Authority to the Company, pursuant to a
certain Loan Agreement, dated as of November 1, 2007, between the
Authority and the Company (hereinafter called the Loan Agreement), to assist in
the financing of the Company’s portion of the cost of acquisition, construction
and installation of certain “air quality facilities” (as that term is defined
and used in Section 3706.01, of the Ohio Revised Code) installed in
connection with: Units 7 and 8 at the Miami Fort Generating Station located in
Hamilton County, Ohio as to which the Company at the date hereof owns an
undivided 36% interest as tenant in common with another public utility company,
Unit 2 at the Killen Generating Station located in Adams County, Ohio as to
which the Company at the date hereof owns an undivided 67% interest as tenant in
common with another public utility company, Units 1-4 at the J. M. Stuart
Generating Station located in Brown and Adams Counties, Ohio as to which the
Company at the date hereof owns an 

 

6

 

undivided 35% interest as tenant in common with two
other public utility companies, and Unit 4 at the Conesville Generating Station
in Coshocton County, Ohio as to which the Company at the date hereof owns an
undivided 16.5% interest as tenant in common with two other public utility
companies (such interests in said facilities being hereinafter called the
Project); and

 

WHEREAS, the loan by the Authority in respect of the
Project is to be funded by the proceeds derived from the sale by the Authority
of State of Ohio Collateralized Air Quality Development Revenue Bonds, 2007 Series A
(The Dayton Power and Light Company Project), in the aggregate principal amount
of $90,000,000 (hereinafter called the Project Bonds); and

 

WHEREAS, the Project Bonds are to be issued under a certain
Trust Indenture, dated as of November 1, 2007 (hereinafter called the
Project Bonds Indenture), between the Authority and The Bank of New York, as
Trustee (hereinafter in such capacity called the Project Bond Trustee), and the
New Bonds are to be assigned by the Authority to the Project Bond Trustee as
security for the payment of the principal of, and premium, if any, and interest
on the Project Bonds and are to be delivered by the Company on behalf of the
Authority directly to the Project Bond Trustee; and

 

WHEREAS, the New Bonds and the Trustee’s certificate
to be endorsed on all the New Bonds are to be respectively and substantially in
the forms established hereby and approved by the aforesaid resolutions, which
are substantially in the form of Exhibit A hereto; and

 

WHEREAS, at a meeting of the Board of Directors of the
Company, the Board of Directors adopted a resolution that authorized officers
of the Company to approve the form, terms and provisions of this Forty-Fifth
Supplemental Indenture (including the form of the New Bonds), and the
execution by the Company of this Forty-Fifth Supplemental Indenture; and

 

WHEREAS, all things necessary to make the New Bonds
hereinafter described, when duly authenticated by the Trustee and issued by the
Company, valid, binding and legal obligations of the Company, and to make this
Indenture a valid and binding agreement supplemental to the First Mortgage as
amended, have been done and performed.

 

NOW, THEREFORE, THIS INDENTURE WITNESSETH

 

that, in order further to secure the payment of all
the Bonds at any time issued and outstanding under the First Mortgage as
amended or this Forty-Fifth Supplemental Indenture according to their tenor,
purport and effect, as well the interest thereon as the principal thereof, and
further to secure the performance and observance of all the covenants and
conditions therein and in the First Mortgage as amended and herein contained,
and further to set forth the terms and conditions upon which the New Bonds are
to be issued, secured and held, and for and in consideration of the premises
and of the acceptance or purchase of the New Bonds by the holders or registered
owners thereof, and of the sum of one dollar, lawful money of the United States
of America, to the Company duly paid by the Trustee at or before the ensealing
and delivery of this Forty-Fifth Supplemental Indenture, the receipt whereof is
hereby acknowledged, the Company has executed and delivered this Forty-Fifth
Supplemental Indenture, and has granted, bargained, 

 

7

 

sold, released, conveyed, assigned, transferred,
pledged, set over and confirmed, and by these presents does grant, bargain,
sell, release, convey, assign, transfer, pledge, set over and confirm unto the
Trustee, and to its successor or successors in said trust, and to it and its
and their assigns forever, and does hereby subject to the lien of the First
Mortgage as heretofore and hereby amended all the following described
properties (all of which properties are included in and constitute a part of
the “mortgaged property” and the “mortgaged and pledged property” as such terms
are used and defined in the First Mortgage as heretofore and hereby amended and
whenever used in the First Mortgage as heretofore and hereby amended such terms
include and refer to such properties), to wit:

 

FIRST.

REAL PROPERTY AND INTERESTS IN REAL PROPERTY.

 

All and singular, all real property and interests in
real property acquired by the Company between September 1, 2006, the date
of the Forty-Fourth Supplemental Indenture, and the date of this Forty-Fifth
Supplemental Indenture, and owned by the Company at the latter date.

 

SECOND.

ELECTRIC GENERATING PLANTS.

 

All electric generating plants and stations of the
Company acquired by it between September 1, 2006, the date of the
Forty-Fourth Supplemental Indenture, and the date of this Forty-Fifth
Supplemental Indenture, and owned by it at the latter date, including all power
houses, buildings, structures and works, and the land on which the same are
situated, and all other lands and easements, rights-of-way, permits,
privileges, towers, poles, wires, machinery, equipment, appliances,
appurtenances and supplies forming a part of such plants and stations, or
any of them, or occupied, enjoyed or used in connection therewith.

 

THIRD.

TRANSMISSION LINES.

 

All electric overhead and underground transmission
lines of the Company acquired by it between September 1, 2006, the date of
the Forty-Fourth Supplemental Indenture, and the date of this Forty-Fifth
Supplemental Indenture, and owned by it at the latter date, including towers,
poles, pole lines, conduits, manholes, switching devices, insulators, and other
structures, appliances, devices and equipment, and all the property forming a part thereof
or appertaining thereto, and all service lines extending therefrom, together
with all real property, rights-of-way, easements, permits, privileges,
franchises, and rights for or relating to the construction, maintenance or
operation thereof, through, over, under or upon any private property or any
public way within as well as without the corporate limits of any municipal
corporation.

 

8

 

FOURTH.

 

SUBSTATIONS AND SUBSTATION SITES.

 

All substations and switching stations of the Company
acquired by it between September 1, 2006, the date of the Forty-Fourth
Supplemental Indenture, and the date of this Forty-Fifth Supplemental
Indenture, and owned by it at the latter date, for transforming or otherwise
regulating electric current at any of its plants, together with all buildings,
transformers, wires, cables, insulators, structures, appliances, devices,
equipment and all other property, real or personal, forming a part of, or
appertaining thereto, or used, occupied or enjoyed in connection with any of
such substations and switching stations.

 

FIFTH.

 

ELECTRIC DISTRIBUTION SYSTEMS.

 

All electric distribution systems of the Company
acquired by it between September 1, 2006, the date of the Forty-Fourth
Supplemental Indenture, and the date of this Forty-Fifth Supplemental
Indenture, and owned by it at the latter date, including substations,
transformers, switchboards, towers, poles, wires, insulators, conduits, cables,
manholes, appliances, devices, equipment and all other property, real or
personal, forming a part of or appertaining thereto, or used, occupied or
enjoyed in connection with such distribution systems or any of them, together
with all rights-of-way, easements, permits, privileges, franchises, and rights
in or relating to the construction, maintenance or operation thereof, through,
over, under or upon any private property or public ways within as well as
without the corporate limits of any municipal corporation.

 

SIXTH.

 

LIQUEFIED PETROLEUM GAS PRODUCTION
AND STORAGE FACILITIES.

 

All additions to liquefied petroleum gas production
plants and storage facilities of the Company acquired by it between September 1,
2006, the date of the Forty-Fourth Supplemental Indenture, and the date of this
Forty-Fifth Supplemental Indenture, and owned by it at the latter date,
including all buildings, structures, underground storage caverns, and works,
and the land on which the same are situated, and all other lands and easements,
rights-of-way, permits, privileges, pipe lines, machinery, equipment,
appliances, appurtenances and supplies forming a part of such plants and
stations, or any of them, or occupied, enjoyed or used in connection therewith.

 

SEVENTH.

 

GAS DISTRIBUTION SYSTEMS.

 

All gas distribution systems of the Company acquired
or constructed by it between September 1, 2006, the date of the
Forty-Fourth Supplemental Indenture, and the date of this

 

9

 

Forty-Fifth Supplemental Indenture, and owned by it at
the latter date, for distribution of gas, including pipes, mains, conduits,
meters, appliances, equipment, and all other property, real or personal,
forming a part of or appertaining to or used, occupied or enjoyed in
connection with such distribution systems, or any of them, together with all
rights-of-way, easements, permits, privileges, franchises and rights, for or
relating to the construction, maintenance or operation thereof, through, over,
under or upon any private property or any public streets or highways, within as
well as without the corporate limits of any municipal corporation.

 

EIGHTH.

 

OFFICE AND DEPARTMENTAL BUILDINGS.

 

All office and departmental buildings of the Company,
including the real estate on which such structures stand, acquired by it
between September 1, 2006, the date of the Forty-Fourth Supplemental
Indenture, and the date of this Forty-Fifth Supplemental Indenture, and owned
by it at the latter date, appertaining to, used, occupied or enjoyed in
connection with the rendition of public utility service.

 

NINTH.

 

TELEPHONE LINES.

 

All telephone lines of the Company acquired by it
between September 1, 2006, the date of the Forty-Fourth Supplemental
Indenture, and the date of this Forty-Fifth Supplemental Indenture, and owned
by it at the latter date, used or available for use in the operation of its
properties or otherwise.

 

TENTH.

 

FRANCHISES.

 

All and singular the franchises, grants, immunities,
privileges and rights of the Company granted to or acquired by it between September 1,
2006, the date of the Forty-Fourth Supplemental Indenture, and the date of this
Forty-Fifth Supplemental Indenture, and to which it was entitled at the latter
date, including all and singular the franchises, grants, immunities, privileges
and rights of the Company granted by all municipalities or political
subdivisions, and all right, title and interest therein owned by the Company on
the date of the execution of this Forty-Fifth Supplemental Indenture, and all
renewals, extensions and modifications of said franchises, grants, immunities,
privileges and rights, or any of them, and of all other franchises, grants,
immunities, privileges and rights now subject to the lien of the First Mortgage
as amended.

 

10

 

ELEVENTH.

 

OTHER REAL ESTATE AND
APPURTENANCES.

 

A.                                   All
other real estate and interests in real estate and all other physical electric
power and light, gas and other property owned by the Company at the date of
execution of this Forty-Fifth Supplemental Indenture.

 

B.                                     All
other real estate and interests in real estate and all other physical electric
power and light, gas and other property which the Company may hereafter
acquire or construct.

 

C.                                     All
present and future appurtenances of the real estate and interests in real
estate which now are, or hereafter shall be, subject to the lien of the First
Mortgage as amended, and all plants, works, buildings, structures, fixtures,
improvements, betterments and additions now owned, or hereafter acquired or
constructed by the Company, upon any of the real estate which, or interests in
which, now are or hereafter shall be subject to the lien of the First Mortgage
as amended.

 

D.                                    All
corporate rights, privileges, immunities and franchises, powers, licenses,
easements, leases, contracts and other rights and all renewals and extensions
thereof held or acquired for use or used upon, or in connection with or
appertaining to, any of the properties which now are or hereafter shall be
subject to the lien of the First Mortgage as amended, or which the Company has
or may have the right to exercise in respect of any of said properties.

 

E.                                      All
machinery, tools and equipment now owned or hereafter acquired by the Company,
which now or hereafter belong or appertain to or are used in connection with
the plants, works, transmission lines, distribution systems, buildings,
structures and fixtures which now are or hereafter shall be subject to the lien
of the First Mortgage as amended.

 

Together with all and singular the tenements,
hereditaments and appurtenances belonging or in any way appertaining to the
aforesaid property or any part thereof, with the reversion and reversions,
remainder and remainders, rents, issues, income and profits thereof, and all
the estate, right, title, interest and claim whatsoever at law or in equity,
which the Company now has or which it may hereafter acquire in and to the
aforesaid property and every part and parcel thereof.

 

It is not intended to include in the lien of the First
Mortgage as amended and this grant shall not be deemed to apply (1) to any
revenues, earnings, rents, issues, income or profits of the mortgaged property,
or any cash (except cash deposited with the Trustee pursuant to any of the provisions
of the First Mortgage as heretofore and hereby amended), or any bills, notes or
accounts receivable, contracts or choses in action, or any materials or
supplies or construction equipment, or any merchandise, equipment or apparatus
manufactured or acquired for the purpose of sale or resale in the usual course
of business, except in case of the happening of a completed default as defined
in Section 1 of Article Twelve of the First Mortgage as heretofore
and hereby amended, and following such completed default, in case the Trustee
or a receiver or trustee shall enter upon and take possession of the mortgaged
property, or (2) in any case, to any cars, trucks or other vehicles of any
nature for the transportation of personnel, materials or equipment by any means
which may have been acquired after the effective date of the

 

11

 

amendment to this Clause made by or pursuant to the
provisions of the Eleventh Supplemental Indenture, or to any bonds, notes,
evidences of indebtedness, shares of stock or other securities, except such as may be
specifically subjected to the lien of the First Mortgage as amended.

 

TWELFTH.

 

PROPERTY HEREAFTER TO BECOME
SUBJECT TO THE LIEN OF THE FIRST MORTGAGE AS AMENDED.

 

A.                                   Any
and all property, real, personal and mixed, including franchises, grants,
immunities, privileges and rights, which the Company may hereafter acquire
or to which it may hereafter become entitled, excepting, however, the
following property which is not intended to be subjected to the lien of the
First Mortgage:  (1) any revenues,
earnings, rents, issues, income or profits of the mortgaged property, or any
cash (except cash deposited with the Trustee pursuant to any of the provisions
of the First Mortgage as heretofore and hereby amended), or any bills, notes or
accounts receivable, contracts or choses in action, or any materials or
supplies or construction equipment, or any merchandise, equipment or apparatus
manufactured or acquired for the purpose of sale or resale in the usual course
of business, except in case of the happening of a completed default as defined
in Section 1 of Article Twelve of the First Mortgage as heretofore
and hereby amended, and following such completed default, in case the Trustee
or a receiver or trustee shall enter upon and take possession of the mortgaged
property, or (2) in any case, any cars, trucks or other vehicles of any
nature for the transportation of personnel, materials or equipment by any
means, or any bonds, notes, evidences of indebtedness, shares of stock or other
securities, except such as may be specifically subjected to the lien of
the First Mortgage as amended.

 

B.                                     Any
and all property of every name and nature, including shares of stock, bonds,
other securities or obligations and cars, trucks or other vehicles for the
transportation of personnel, materials or equipment by any means, which, from
time to time after the execution of this Forty-Third Supplemental Indenture, by
delivery or by writing of any kind for the purposes hereof, shall have been
conveyed, mortgaged, pledged, assigned or transferred by, or by anyone on
behalf of, the Company to the Trustee, which is hereby authorized to receive
any property at any and all times, as and for additional security, and also,
when and as provided in the First Mortgage as amended as and for substituted
security, for the payment of the Bonds to be issued under the First Mortgage as
amended, and to hold and apply any and all such property subject to the terms
hereof and of the First Mortgage as amended.

 

TO HAVE AND TO HOLD all such properties, real,
personal and mixed, mortgaged, pledged or conveyed by the Company as aforesaid,
or intended so to be, unto the Trustee and its successors and assigns forever.

 

SUBJECT, HOWEVER, as to property hereby conveyed, to
liens for taxes, assessments and other charges levied or to be levied by the
State of Ohio and any of the subdivisions thereof for the years 2006 and 2007
and thereafter and, as to any property hereafter acquired by the Company and which
may become subject to the lien of the First Mortgage as amended, to any
lien or charge thereon existing at the time of the acquisition thereof by the
Company;

 

12

 

IN TRUST NEVERTHELESS, upon and subject to the terms,
conditions and stipulations hereinafter and in the First Mortgage as amended
set forth, for the equal and proportionate benefit and security of the holders
from time to time of the Bonds and interest coupons issued and to be issued
under the First Mortgage as amended and this and other indentures supplemental
thereto, without preference, priority or distinction as to lien or otherwise of
any of the Bonds and coupons over any others by reason of priority in time of
issue, sale or negotiation thereof or otherwise howsoever, and for the uses and
purposes and upon and subject to the terms, conditions, provisions and
agreements in the Bonds and hereinafter and in the First Mortgage as amended
expressed and declared.

 

ARTICLE ONE.

 

BONDS OF THE VARIABLE RATE POLLUTION CONTROL

SERIES 2007 DUE 2040 AND ISSUE THEREOF.

 

SECTION 1.                                Series and Form of
New Bonds. There shall be a series of Bonds designated “Variable Rate
Pollution Control Series 2007 Due 2040,” each of which shall bear the
descriptive title First Mortgage Bond. The aggregate principal amount of New
Bonds which may be outstanding under the First Mortgage as amended and
this Forty-Fifth Supplemental Indenture shall be limited to $90,000,000 except
as provided in Section 9 of Article Two of the First Mortgage as
amended.

 

SECTION 2.                                Issue of New Bonds.
Upon the execution and delivery of this Forty-Fifth Supplemental Indenture and
upon delivery of $90,000,000 aggregate principal amount of the New Bonds,
executed by the Company, and upon compliance by the Company with the provisions
of Article Five, Article Six or Article Seven or any or all of
said Articles, as the case may be, of the First Mortgage as amended, the
Trustee shall, without awaiting the filing or recording of this Forty-Fifth
Supplemental Indenture, authenticate the New Bonds and deliver the New Bonds as
provided in said Article Five, Article Six or Article Seven.

 

SECTION 3.                                Dates, Interest,
Etc. of New Bonds. The New Bonds shall be dated as provided in Section 3
of Article Two of the First Mortgage as amended; shall mature on November 1,
2040; and shall bear interest from November 15, 2007 as provided in said Section 3
of Article Two, at such rate or rates per annum as shall cause the amount
of interest payable on each interest payment date (as hereinafter defined) on
the New Bonds to equal the amount of interest payable on such interest payment
date on the corresponding Project Bonds, such interest to be payable on the
same date as interest is payable on said Project Bonds (each such date herein
called an “interest payment date”), until the maturity of the New Bonds, or, in
the case of any such New Bonds duly called for redemption, until the redemption
date, or in the case of any default by the Company in the payment of the
principal due on any such New Bonds, until the Company’s obligation with
respect to the payment of the principal shall be discharged as provided in the
First Mortgage, as amended. The amount of interest payable on each interest
payment date shall be computed on the same basis as the amount of interest is
computed on the corresponding Project Bonds; provided, however,
that the aggregate amount of interest payable on any interest payment date
shall not exceed an amount which results in an interest rate of more than the
Maximum Interest Rate per annum on the aggregate principal amount of the New
Bonds outstanding on that interest payment date.

 

13

 

The Trustee shall be entitled to request, receive and
conclusively rely upon the certification of the Project Bond Trustee of the
interest rate of, interest payment date of, Regular Record Date of and basis on
which interest is computed for, each Project Bond, from time to time as
necessary to enable the Trustee to determine for the New Bonds their
corresponding interest rate, interest payment date, Record Date and basis on
which interest shall be computed.

 

The interest payable on the New Bonds on any interest
payment date shall be paid to the holders in whose names such New Bonds are
registered on the Record Date, except that if the Company shall default in the
payment of any installment of interest on any New Bonds, such interest in
default shall be paid to the holders in whose names the New Bonds are
registered at the close of business on a date established for the payment of
such defaulted interest by the Company in any lawful manner. The New Bonds
shall be payable as to both principal and interest in such coin or currency of
the United States of America as at the time of payment is legal tender for the
payment of public and private debts, at the office or agency of the Company in
the Borough of Manhattan, The City of New York.

 

SECTION 4.                                Definitions. In addition to the words and terms defined in the First
Mortgage as amended, unless the context or use clearly indicates another
meaning or intent, the following terms shall have the following meanings in
this Forty-Fifth Supplemental Indenture:

 

“Maximum Interest Rate”
means the least of (a) 12% per annum and (b) the maximum rate of
interest permitted under the law of the State of Ohio.

 

“Record Date” means the date
which would be a “Regular Record Date” as defined in the Project Bonds
Indenture.

 

SECTION 5.                                Denominations and
Exchangeability of New Bonds; Temporary Bonds May Be Authenticated and
Delivered. The New Bonds shall be issued in denominations of $5,000 and any
integral multiple of $5,000.

 

Whenever any New Bond or New Bonds shall be
surrendered at the office or agency of the Company in said Borough of Manhattan
for exchange for a New Bond or New Bonds of other authorized denomination or
denominations, the Company shall execute, and the Trustee shall authenticate
and deliver, upon cancellation of the New Bond or New Bonds so surrendered, a
New Bond or New Bonds of such other authorized denomination or denominations of
like aggregate principal amount as the holder making the exchange shall have
requested and shall be entitled to receive. On presentation of any New Bond
which is to be redeemed pursuant to the provisions of this Forty-Fifth
Supplemental Indenture in part only, the Company shall execute, and the
Trustee shall authenticate and deliver, a New Bond or New Bonds in principal
amount equal to the unredeemed portion of the New Bond so presented.

 

The Company shall not be required to (a) register
a transfer of, or exchange, any New Bond during a period of fifteen (15)
days next preceding any selection of New Bonds to be redeemed or (b) register
a transfer of, or exchange, any New Bond which shall have been selected for redemption
in whole or in part.

 

14

 

A service charge will not be made for any registration
of transfer or exchange of New Bonds, but the Company may require payment
of a sum sufficient to cover any stamp tax or other governmental charge payable
in connection therewith.

 

Until definitive New Bonds shall be ready for
delivery, the Company may execute and, upon request of the Company, the
Trustee shall authenticate and deliver, in lieu of such definitive New Bonds but
subject to the same provisions, limitations and conditions except as to the
denominations thereof, temporary printed or lithographed New Bonds as provided
in Section 8 of Article One of the First Mortgage as amended. Such
temporary New Bonds shall be exchangeable for definitive New Bonds, when ready
for delivery, in the manner provided in the First Mortgage as amended, and
shall in all other respects be subject to and entitled to the benefits of the
terms and provisions and lien of this Forty-Fifth Supplemental Indenture, and
the terms and provisions and lien of the First Mortgage as amended as therein
provided.

 

SECTION 6.                                Mandatory Redemption.
The New Bonds shall be subject to mandatory redemption by the Company prior to
maturity at any time in whole or in part at a redemption price of 100% of
the principal amount to be redeemed, plus accrued and unpaid interest, if any,
to the redemption date, upon receipt by the Trustee of notice from the Project
Bond Trustee to the effect that (a) the Company is required to deliver
moneys to the Project Bond Trustee for the redemption of the corresponding
Project Bonds in whole or in part, as the case may be, as provided in Section 6.3
of the Loan Agreement and (b) an equivalent principal amount of such
Project Bonds are being concurrently called for redemption. Said notice shall
specify the redemption date of such New Bonds (which redemption date shall be
the same date as the redemption date specified in said notice for the Project
Bonds being currently redeemed). Any such redemption shall be made upon the
notice and in the manner provided in this Article One, subject to the
provisions of the First Mortgage as amended.

 

SECTION 7.                                Extraordinary
Optional Redemption. The New Bonds shall be subject to redemption, at the option
of the Company, prior to maturity at any time, in whole or in part, at a
redemption price of 100% of the principal amount to be redeemed, plus accrued
and unpaid interest, if any, to the redemption date, upon receipt by the
Trustee of an officers’ certificate to the effect that (a) the Company has
given notice to the Project Bond Trustee that the Company is exercising its
option to direct the redemption of corresponding Project Bonds in whole or in
part, as provided in Section 6.2 of the Loan Agreement and (b) an
equivalent principal amount of such Project Bonds are being concurrently called
for redemption. Such officers’ certificate shall have attached to it a copy of
said notice to the Project Bond Trustee and shall specify the redemption date
of such New Bonds (which redemption date shall be not less than 45 days (unless
a shorter period shall be acceptable to the Trustee) after the date of the
mailing of such certificate and shall be the same date as the redemption date
specified in said attached notice for the Project Bonds being concurrently
redeemed). Any such redemption shall be made upon the notice, which may be
conditional as provided in Section 9 of this Article One, and in the
manner provided in this Article One, subject to the provisions of the
First Mortgage as amended.

 

SECTION 8.                                Optional Redemption.
The New Bonds shall also be subject to redemption prior to maturity, at the
option of the Company, in whole or in part, at any time, at the same redemption
price, plus accrued and unpaid interest, if any, to the redemption date, as
shall be payable on the Project Bonds to be redeemed concurrently therewith,
upon receipt by the Trustee

 

15

 

of an officers’ certificate to the effect that (a) the
Company has given notice to the Project Bond Trustee that the Company is
exercising its option to deliver moneys to the Project Bond Trustee for the
redemption of corresponding Project Bonds in whole or in part, as the case may be,
as provided in Section 6.1 of the Loan Agreement and (b) an
equivalent principal amount of such Project Bonds are being concurrently called
for redemption. Such officers’ certificate shall specify the principal amount
of the New Bonds to be redeemed and the redemption price thereof, shall have
attached to it a copy of said notice to the Project Bond Trustee and shall
specify the redemption date of such New Bonds (which redemption date shall be
not less than 45 days (unless a shorter period shall be acceptable to the
Trustee) after the date of the mailing of such certificate and shall be the
same date as the redemption date specified in said attached notice for the
Project Bonds being concurrently redeemed). Any such redemption shall be made
upon the notice, which may be conditional as provided in Section 9 of
this Article One, and in the manner provided in this Article One,
subject to the provisions of the First Mortgage as amended.

 

SECTION 9.                                Notice of Redemption.
Subject to the provisions of the First Mortgage as amended, written notice of
redemption of the New Bonds pursuant to any of Sections 6, 7 or 8  of this Article One shall be given by
the Trustee by mailing, first class postage prepaid, or delivering by hand
to the registered owner of such New Bonds to be redeemed a notice of such
redemption at its last address as it shall appear upon the books of the Company
for the registration of transfer of such New Bonds. Any notice of redemption
pursuant to said Sections 6, 7 or 8 shall be mailed or delivered by hand as
least 30 days and not earlier than 60 days before the redemption date;
provided, however, that the registered owner or owners of all New Bonds may consent
in writing to a shorter notice period, and such consent, if filed with the
Trustee, shall be binding upon the Company and such registered owners and their
transferees. In the case of any notice of redemption of New Bonds pursuant to
said Sections 7 or 8, such notice shall state that such redemption is
conditional to the same extent and with the same effect, if any, as the notice
of redemption of the Project Bonds being concurrently redeemed.

 

SECTION 10.                          Cancellation. In the
event any Project Bonds shall be purchased by the Company and surrendered by
the Company to the Project Bond Trustee for cancellation or shall be otherwise
surrendered to the Project Bond Trustee for cancellation pursuant to the
Project Bonds Indenture (except upon exchange for other Project Bonds),
corresponding New Bonds equivalent in principal amount to the Project Bonds so
surrendered shall be deemed to have been paid, but only when and to the extent
that (a) such payment of the principal amount of such New Bonds shall be
noted by an agency of the Company on the schedule of payments on such New
Bonds and (if such agency is not the Trustee) written notice by such agency of
such notation shall have been received by the Trustee or (b) such New
Bonds shall have been surrendered to and cancelled by the Trustee as provided
in Section 12 of this Article One.

 

SECTION 11.                          New Bonds Deemed Paid in
Additional Circumstances. In the event and to the extent the principal of,
or premium, if any, or interest on any Project Bonds shall be paid, whether at
maturity, upon redemption or otherwise, out of funds held by the Project Bond
Trustee or out of any other funds or shall otherwise be deemed to be paid, an
equal amount of principal or premium, if any, or interest, as the case may be,
payable with respect to an aggregate principal amount of corresponding New
Bonds equal to an aggregate principal amount of such Project Bonds shall be
deemed to have been paid, but, in the case of such payment of principal of such
New Bonds, only when and to the extent that (a) such payment of the
principal amount

 

16

 

thereof shall be noted by an agency of the Company on
the schedule of payments on such New Bonds and (if such agency is not the
Trustee) written notice by such agency of such notation shall have been
received by the Trustee or (b) such New Bonds shall have been surrendered
to and cancelled by the Trustee as provided in Section 12 of this Article One.

 

SECTION 12.                          Surrender of New Bonds in
Certain Circumstances. When payment of any principal amount of a New Bond
is made as provided in Section 10 or 11 of this Article One, the registered
owner thereof shall surrender it to an agency of the Company for notation and
notification or to the Trustee for cancellation as provided in such Section. All
New Bonds deemed to have been paid in full as provided in Section 10 or 11
of this Article One shall be surrendered to the Trustee for cancellation
and the Trustee shall forthwith cancel the same. In the event that part of
a New Bond shall be deemed to have been paid as provided in said Section 10
or 11, the registered owner may at its option surrender such New Bond to
the Trustee for cancellation, in which event the Trustee shall cancel such New
Bond and the Company shall execute and the Trustee shall authenticate and
deliver, without charge to the registered owner, New Bonds in such authorized
denominations as shall be specified by the registered owner in an aggregate
principal amount equal to  the unpaid
balance of the principal amount of such surrendered New Bond.

 

SECTION 13.                          Application of Article Ten
of First Mortgage as Amended. Except as in this Forty-Fifth Supplemental
Indenture otherwise provided with respect to any matter or question, the
provisions of Article Ten of the First Mortgage as amended shall be
applicable in the case of the redemption of all or any part of the New
Bonds at any time outstanding. The term “officers’ certificate” as used in this
Article One shall mean a certificate signed by the President or a Vice
President and any other Vice President, the Treasurer, Assistant Treasurer, the
Secretary or Assistant Secretary or any other officer of the Company.

 

SECTION 14.                          Form of New Bonds.
The New Bonds shall be in fully registered form only. The form of the
New Bonds, and of the Trustee’s certificate of authentication thereon, shall be
substantially as set forth in Exhibit A.

 

ARTICLE TWO.

 

COVENANTS OF THE COMPANY.

 

SECTION 1.                                All covenants and
agreements by the Company in the First Mortgage as heretofore and hereby
amended are hereby confirmed.

 

SECTION 2.                                Promptly after the
execution and delivery of this Forty-Fifth Supplemental Indenture, the Company
will take such action with respect to the recording, filing, re-recording and
refiling of the First Mortgage as amended and this Forty-Fifth Supplemental
Indenture as may be necessary to make effective the lien intended to be
created hereby, and will furnish to the Trustee an opinion of counsel selected
by the Company and satisfactory to the Trustee (who may be of counsel to
the Company) either (a) stating that in the opinion of such counsel such
action has been taken with respect to the recording, filing, re-recording and
refiling of the First Mortgage as amended and this Forty-Fifth Supplemental
Indenture as to make effective the lien

 

17

 

intended to be created thereby, and reciting the
details of such action, or (b) stating that in the opinion of such counsel
no such action is necessary to make such lien effective.

 

ARTICLE THREE.

 

MISCELLANEOUS.

 

SECTION 1.                                The New Bonds may be
authenticated and delivered by the Trustee and issued by the Company in advance
of the recording or filing of this Forty-Fifth Supplemental Indenture.

 

SECTION 2.                                The provisions of this
Forty-Fifth Supplemental Indenture shall become effective immediately upon the
execution and delivery hereof  From and after
the initial issue of the New Bonds, this Forty-Fifth Supplemental Indenture
shall form a part of the First Mortgage and all the terms and
conditions herein contained shall be deemed to be part of the terms of the
First Mortgage, as fully and with the same effect as if all the terms and
provisions of this Forty-Fifth Supplemental Indenture had been set forth in the
First Mortgage as originally executed. Except as modified or amended by this
Forty-Fifth Supplemental Indenture, the First Mortgage as amended shall remain
and continue in full force and effect in accordance with the terms and
provisions thereof, and all the covenants, conditions, terms and provisions of
the First Mortgage, as heretofore modified and amended and as further modified
and amended by this Forty-Fifth Supplemental Indenture, shall be applicable
with respect to the New Bonds, except insofar as such covenants, conditions,
terms and provisions are limited and applicable only to the Bonds of another or
other series, or are expressed to continue only so long as Bonds of another or
other series are outstanding, and all the covenants, conditions, terms and
provisions of the First Mortgage as amended with respect to the Trustee shall
remain in full force and effect and be applicable to the Trustee under this
Forty-Fifth Supplemental Indenture in the same manner as though set out herein
at length. All representations and recitals contained in this Forty-Fifth
Supplemental Indenture and in the New Bonds (save only the Trustee’s
certificates upon said New Bonds) are made by and on behalf of the Company, and
the Trustee is in no way responsible therefor or for any statement therein
contained.

 

SECTION 3.                                The terms defined in Article One
of the First Mortgage as heretofore and hereby amended, when used in this
Forty-Fifth Supplemental Indenture, shall, respectively, have the meanings set
forth in said Article One.

 

SECTION 4.                                This Forty-Fifth
Supplemental Indenture may be simultaneously executed in several
counterparts and each counterpart shall be an original instrument.

 

18

 

IN WITNESS WHEREOF, THE DAYTON POWER AND LIGHT COMPANY
has caused this instrument to be signed on its behalf by its President or a
Vice President and its corporate seal to be hereunto affixed and attested by
its Corporate Secretary or a Corporate Assistant Secretary, in the City of
Dayton, Ohio, and THE BANK OF NEW YORK has caused this instrument to be signed
on its behalf by a Vice President or an Assistant Vice President and its
corporate seal to be hereunto affixed and attested by a Vice President, Assistant
Vice President or an Assistant Treasurer, in The City of New York, New York, as
of the day and year first above written.

 

 

	
   

  	
   

  	
  THE DAYTON POWER
  AND LIGHT

    COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  Joseph R. Boni III,
  Vice President and

  
	
   

  	
   

  	
   

  	
  Treasurer

  
	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Timothy G. Rice

  	
   

  	
   

  
	
  Interim Senior
  Vice President, General Counsel

  	
   

  	
   

  
	
  and Corporate
  Secretary

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed and
  acknowledged in our presence by

  	
   

  	
   

  
	
  The Dayton Power
  and Light Company

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

S-1

 

[Forty-Fifth Supplemental Indenture, dated as of November 1,
2007, to Indenture dated as of October 1, 1935, executed by The Dayton
Power and Light Company to Irving Trust Company (now The Bank of New York), as
Trustee]

 

 

	
   

  	
   

  	
  THE BANK OF NEW YORK,

  
	
   

  	
   

  	
     as
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  Carlos R. Luciano

  
	
   

  	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed and
  acknowledged in our presence by

  	
   

  	
   

  
	
  The Bank of New
  York

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

S-2

 

	
  STATE OF NEW
  YORK,

  	
  )

  	
  ss.:

  	
   

  	
   

  
	
  COUNTY OF NEW
  YORK

  	
  )

  	
   

  	
   

  	
   

  

 

On this 14th day of November, 2007,
personally appeared before me, a Notary Public within and for said County in
the State aforesaid, Joseph R. Boni III, and Timothy G. Rice, to me known and
known to me to be, respectively, the Vice President and Treasurer and the
Interim Senior Vice President, General Counsel and Corporate Secretary of THE
DAYTON POWER AND LIGHT COMPANY, one of the corporations which executed the
foregoing instrument, who severally acknowledged that they did sign and seal
said instrument as such Senior Vice President and Treasurer and Interim Senior
Vice President, General Counsel and Corporate Secretary for and on behalf of
said corporation and that the same is their free act and deed as such Vice
President and Treasurer and Interim Senior Vice President, General Counsel and
Corporate Secretary, respectively, and the free and corporate act and deed of
said corporation; and said Joseph R. Boni III, being by me duly sworn, did
depose and say: that he resides in Delaware County, Pennsylvania; that he is
the Vice President and Treasurer of THE DAYTON POWER AND LIGHT COMPANY, one of
the corporations described in and which executed the above instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by order of the Board of Directors
of said corporation; and that he signed his name thereto by like order.

 

IN WITNESS WHEREOF I have hereunto set my hand and
official seal.

 

	
  [SEAL]

  
	
   

  
	
   

  	
   

  

 

S-3

 

	
  STATE OF NEW
  YORK,

  	
  )

  	
  ss.:

  	
   

  	
   

  
	
  COUNTY OF NEW
  YORK

  	
  )

  	
   

  	
   

  	
   

  

 

On this [  ] day of November, 2007,
personally appeared before me, a Notary Public within and for said County in
the State aforesaid, Carlos R. Luciano and
                  ,
to me known and known to me to be, respectively, a Vice President and
                  
of THE BANK OF NEW YORK, one of the corporations which executed the foregoing
instrument, who severally acknowledged that they did sign and seal said
instrument as such Vice President and
                
for and on behalf of said corporation and that the same is their free act and
deed as such Vice President and
              ,
respectively, and the free and corporate act and deed of said corporation; and
said Carlos R. Luciano being by me duly sworn, did depose and say: that he
resides in Queens, New York; that he is a Vice President of THE BANK OF NEW
YORK, one of the corporations described in and which executed the above
instrument; that he knows the seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed by order of
the Board of Directors of such corporation; and that he signed his name thereto
by like order.

 

IN WITNESS WHEREOF I have hereunto set my hand and
official seal.

 

 

	
  [SEAL]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  This instrument prepared by

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Timothy G. Rice, Esq.

  
	
   

  	
  Attorney at Law

  
	
   

  	
  The Dayton Power and Light Company

  
	
   

  	
  1065 Woodman Drive

  
	
   

  	
  Dayton, Ohio 45432

  

 

S-4

 

EXHIBIT A

 

[FORM OF NEW BOND]

 

This bond is not transferable except to a successor
trustee under the Trust Indenture, dated as of November 1, 2007, between
Ohio Air Quality Development Authority relating to its Collateralized Air
Quality Development Revenue Bonds, 2007 Series A (The Dayton Power and
Light Company Project) and The Bank of New York as Trustee.

 

	
  No.

  	
   

  	
  $

  	
  [   

  	
  ]

  

 

THE DAYTON POWER AND LIGHT COMPANY

(Incorporated under the laws of the State of Ohio)

 

First Mortgage Bond,

Variable Rate Pollution Control Series 2007 Due 2040

Due November 1, 2040

 

THE DAYTON POWER AND LIGHT COMPANY, a corporation of
the State of Ohio (hereinafter called the Company), for value received, hereby
promises to pay to
[                      ],
as Project Bond Trustee (as hereinafter defined) or registered assigns, on November 1,
2040, at the office or agency of the Company in the Borough of Manhattan, The
City of New York, $[  ] Dollars in such coin or currency of the
United States of America as at the time of payment is legal tender for the
payment of public and private debts, and to pay to the registered owner hereof
interest thereon from the interest payment date to which interest has been paid
or duly provided for last preceding the date hereof (unless the date hereof is
an interest payment date to which interest has been paid or duly provided for,
in which case from the date hereof, or, if no interest has been paid or duly
provided for, from November 15, 2007), at such rate or rates per annum on
each interest payment date (as hereinafter defined) as shall cause the amount
of interest payable on such interest payment date on this Bond to equal the
amount of interest payable on such interest payment date on the corresponding
Project Bonds (as hereinafter defined), such interest to be payable on the same
dates as interest is payable on said Project Bonds (each such date herein
called “an interest payment date”) until the maturity of this Bond, or if this
Bond shall be duly called for redemption, until the redemption date, or if the
Company shall default in the payment of the principal amount of this Bond,
until the Company’s obligation with respect to the payment of such principal
shall be discharged as provided in the Indenture (as hereinafter defined). The
amount of interest payable on each interest payment date shall be computed on
the same basis as the amount of interest is computed on the corresponding said
Project Bonds; provided, however, that the aggregate amount of interest payable
on any interest payment date shall not exceed an amount which results in an
interest rate of more than the Maximum Interest Rate (as such term is defined
in the Forty-Fifth Supplemental Indenture referred to herein) per annum on the
aggregate principal amount of the New Bonds (as hereinafter defined)
outstanding on that interest payment date.

 

A-1

 

The interest payable on any interest payment date
shall be paid to the holder in whose name this Bond is registered on the Record
Date (as such term is defined in the Forty-Fifth Supplemental Indenture
referred to above), except that if the Company shall default in the payment of
any installment of interest on this Bond, such interest in default shall be
paid to the holder in whose name this Bond is registered at the close of
business on a date established for the payment of such defaulted interest by
the Company in any lawful manner. This Bond shall be payable as to principal,
premium, if any, and interest in such coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public and
private debts, at the office or agency of the Company in the Borough of
Manhattan, The City of New York.

 

This Bond is one of an issue of First Mortgage Bonds
(hereinafter called the Bonds) of the Company issued and to be issued in series under
and pursuant to and equally secured by an indenture of mortgage and deed of
trust dated as of October 1, 1935, executed by the Company to Irving Trust
Company (now The Bank of New York), as Trustee, as said indenture has been
amended and supplemented as hereinafter stated, and is one of a series of
said First Mortgage Bonds, which series is designated as the First Mortgage
Bonds, Variable Rate Pollution Control Series 2007 Due 2040, of the
Company (hereinafter called the New Bonds) created and described in a
Forty-Fifth Supplemental Indenture dated as of November 1, 2007, executed
by the Company to The Bank of New York, as Trustee. Subsequent to the execution
and delivery of said indenture of mortgage and deed of trust there have been
executed and delivered forty-five indentures supplemental thereto, including
said Forty-Fifth Supplemental Indenture dated as of November 1, 2007,
supplementing and amending as therein set forth certain provisions thereof. Said
indenture of mortgage and deed of trust and such supplemental indentures
collectively are hereinafter sometimes called the “Indenture.”

 

For a description of the property mortgaged and
pledged, the nature and extent of the security, the rights of the holders of
the Bonds and of the Trustee therein and thereto, the duties and immunities of
the Trustee, and the terms and conditions upon which the Bonds are issued and
secured, reference is hereby made to the Indenture. The rights and obligations
of the Company and of the holders and registered owners of the Bonds of this
issue may be modified or amended at the request of the Company by an
indenture or indentures supplemental to the Indenture, executed pursuant to the
consent in writing of the holders or registered owners of a majority in
principal amount of the Bonds then outstanding affected by such modification or
amendment, all in the manner and subject to the limitations set forth in the
Indenture, any consent by the holder or registered owner of any Bond being
conclusive and binding upon such holder or registered owner and upon all future
holders and owners of such Bond, irrespective of whether or not any notation of
such consent is made upon such Bond; provided that no such modification or
amendment by such supplemental indenture shall extend the maturity of, or
reduce the rate of interest on, or otherwise modify the terms of payment of the
principal or interest of, this Bond, which obligations are absolute and
unconditional, nor permit the creation of any lien ranking prior to or equal
with the lien of the Indenture on any of the mortgaged property. The New Bonds
are to be issued by the Company to the Ohio Air Quality Development Authority
(hereinafter called the Authority), or its assignee, to evidence and secure the
obligations of the Company to repay the loan of the proceeds of the sale of the
Project Bonds (as hereinafter defined) made by the Authority to the Company,
pursuant to a certain Loan Agreement, dated as of November 1, 2007,
between the Authority and the Company, to assist in

 

A-2

 

the financing of the Company’s portion of the cost of
acquisition, construction and installation of certain air quality facilities
(as that term is defined and used in Section 3706.01 of the Ohio Revised
Code) installed in connection with: Units 7 and 8 at the Miami Fort Generating
Station located in Hamilton County, Ohio as to which the Company at the date
hereof owns an undivided 36% interest as tenant in common with another public
utility company; Unit 2 at the Killen Generating Station located in Adams
County, Ohio as to which the Company at the date hereof owns an undivided 67% interest
as tenant in common with another public utility company; Units 1-4 at the J. M.
Stuart Generating Station located in Brown and Adams Counties, Ohio as to which
the Company at the date hereof owns an undivided 35% interest as tenant in
common with two other public utility companies; and Unit 4 at the Conesville
Generating Station in Coshocton County, Ohio as to which the Company at the
date hereof owns an undivided 16.5% interest as tenant in common with two other
public utility companies (such interests in said facilities being hereinafter
called the Project). The loan by the Authority in respect of the Project is to
be funded by the proceeds derived from the sale by the Authority of State of
Ohio Collateralized Air Quality Development Revenue Bonds, 2007 Series A
(The Dayton Power and Light Company Project) in the aggregate principal amount
of $90,000,000 (hereinafter called the Project Bonds). The Project Bonds are to
be issued under a certain Trust Indenture, dated as of November 1, 2007
(hereinafter called the Project Bonds Indenture), between the Authority and The
Bank of New York, as Trustee (hereinafter in such capacity called the Project
Bond Trustee) and the New Bonds are to be assigned by the Authority to the
Project Bond Trustee as security for the payment of the principal of, and
premium, if any, and interest on, the Project Bonds and are to be delivered by
the Company on behalf of the Authority directly to the Project Bond Trustee.
The New Bonds shall not be assignable or transferable except as may be
required to effect a transfer to any successor trustee under the Project Bond
Indenture, or, subject to compliance with applicable law, as may be
involved in the course of the exercise of rights and remedies consequent upon
an Event of Default under the Project Bond Indenture.

 

In the event any Project Bonds shall be surrendered to
the Project Bond Trustee for cancellation pursuant to the Project Bonds
Indenture (except upon exchange for other Project Bonds), New Bonds equivalent
in principal amount to such Project Bonds shall be deemed to have been paid,
but only when and to the extent (a) so noted on the schedule of
payments hereon by an agency of the Company and (if such agency is not the
Trustee) written notice by such agency of such notation has been received by
the Trustee or (b) such New Bond is surrendered to and canceled by the
Trustee as provided in the next paragraph; and in the event and to the extent
the principal of, or premium, if any, or interest on, any Project Bonds shall
be paid or deemed to be paid, an equal amount of principal or premium, if any,
or interest, as the case may be, payable with respect to an aggregate
principal amount of corresponding New Bonds equal to the aggregate principal
amount of such Project Bonds shall be deemed to have been paid, but, in the
case of such payment of principal, only when and to the extent (i) so
noted on the schedule of payments hereon by an agency of the Company and
(if such agency is not the Trustee) written notice by such agency of such notation
has been received by the Trustee or (ii) such New Bond is surrendered to
and canceled by the Trustee as provided in the next paragraph. When any such
payment of principal of this Bond is made, it shall be surrendered by the
registered owner hereof to an agency of the Company for such notation and
notification or to the Trustee for cancellation.

 

A-3

 

In the event that this Bond shall be deemed to have
been paid in full, this Bond shall be surrendered to the Trustee for
cancellation. In the event that this Bond shall be deemed to have been paid in
part, this Bond may, at the option of the registered owner, be surrendered to
the Trustee for cancellation, in which event the Trustee shall cancel this Bond
and the Company shall execute and the Trustee shall authenticate and deliver
New Bonds in authorized denominations in aggregate principal amount equal to
the unpaid balance of the principal amount of this Bond.

 

The New Bonds are subject to mandatory redemption by
the Company prior to maturity at any time in whole or in part as provided
in Section 6 of Article One of the Forty-Fifth Supplemental Indenture
at a redemption price of 100% of the principal amount to be redeemed, plus
accrued interest, if any, to the redemption date.

 

The New Bonds are subject to optional redemption by
the Company prior to maturity at any time in whole or in part as provided
in Section 7 of Article One of the Forty-Fifth Supplemental Indenture
at a redemption price equal to 100% of the principal amount to be redeemed,
plus accrued interest, if any, to the redemption date.

 

The New Bonds are subject to optional redemption by
the Company prior to maturity at any time in whole or in part as provided
in Section 8 of Article One of the Forty-Fifth Supplemental Indenture
at the same redemption price, plus accrued interest, if any, to the redemption
date, as shall be payable on the Project Bonds to be redeemed concurrently
therewith.

 

Any redemption of the New Bonds shall be made after
written notice to the registered owner of such New Bonds, sent by the Trustee
by mail, first class postage prepaid, or hand delivered at least 30 days
and not earlier than 60 days before the redemption date, unless a shorter
notice period is consented to in writing by the registered owner or owners of
all New Bonds and such consent is filed with the Trustee, and shall be made in
the manner provided in Section 9 of Article One of the Forty-Fifth
Supplemental Indenture, subject to the provisions of the First Mortgage as
amended.

 

The principal hereof may be declared or may become
due on the conditions, in the manner and at the time set forth in the
Indenture, upon the happening of a completed default as provided in the
Indenture.

 

This Bond may be exchanged for a like principal
amount of other New Bonds, or transferred as prescribed in the Indenture by the
registered owner hereof in person, or by his duly authorized attorney, at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, upon surrender and cancellation of this Bond and thereupon a new
registered New Bond or New Bonds without coupons for a like principal amount
and of authorized denominations will be issued in exchange therefor as provided
in the Indenture. The Company and the Trustee may deem and treat the
person in whose name this Bond is registered as the absolute owner hereof for
the purpose of receiving payment of or on account of the principal and premium,
if any, and interest due hereon and for all other purposes.

 

A-4

 

No service charge will be made for any such exchange
or transfer of New Bonds, but the Company may require payment of a sum
sufficient to cover any stamp tax or other governmental charge payable in
connection therewith.

 

The New Bonds are issuable as registered Bonds without
coupons in denominations of $5,000 and any integral multiple of $5,000.

 

No recourse shall be had for the payment of the
principal of, or premium, if any, or interest on, this Bond, or under or upon
any obligation, covenant or agreement contained in the Indenture, against any
incorporator, or any past, present, or future subscriber to capital stock,
shareholder, officer or director, as such, of the Company or of any predecessor
or successor corporation, either directly or through the Company or any
predecessor or successor corporation, under any present or future rule of
law, statute or constitution or by the enforcement of any assessment or
otherwise, all such liability of incorporators, subscribers, shareholders,
officers and directors being released by the registered owner hereof by the
acceptance of this Bond and being likewise waived and released by the terms of
the Indenture.

 

This Bond shall not become valid or obligatory for any
purpose until The Bank of New York, the Trustee under the Indenture, or its
successor thereunder, shall have signed the form of certificate endorsed
hereon.

 

IN WITNESS WHEREOF, The Dayton Power and Light Company
has caused this Bond to be executed in its name by the manual or facsimile
signature of its President or any Vice President and its corporate seal to be
hereunto affixed or a facsimile thereof reproduced hereon and attested by the
manual or facsimile signature of its Corporate Secretary or an Assistant
Corporate Secretary.

 

	
  Dated:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE DAYTON POWER AND
  LIGHT

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  [President] [Vice
  President]

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  
	
   

  	
  [Corporate Secretary]

  	
   

  
	
   

  	
  [Assistant Corporate
  Secretary]

  	
   

  
					

 

A-5

 

TRUSTEE’S CERTIFICATE

 

This Bond is one of the Bonds of the Series designated
therein, described in the within-mentioned Indenture.

 

 

	
   

  	
  THE BANK OF NEW YORK,
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  

 

A-6

 

SCHEDULE OF PAYMENTS

 

 

	
  Principal

  Payment

  	
   

  	
  Unpaid Principal

  Amount

  	
   

  	
  Redemption

  Premium

  	
   

  	
  Interest

  Payment

  	
   

  	
  Agency of the Company

  Making Notation

  	
   

  	
  Authorized

  Officer

  	
   

  	
  Title

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