Document:

Exhibit 10.21

 

 

 

NOTE PURCHASE AGREEMENT

THIS NOTE PURCHASE AGREEMENT, is made as of May [___], 2017 (this "Agreement"), by and among OpGen, Inc., a Delaware corporation (the "Company"), and jVen Capital, LLC, a Delaware limited liability company (the "Investor").  Certain capitalized terms used in this Agreement are set forth in Section 1.4.

W I T N E S S E T H

WHEREAS, the Company desires to sell to the Investor, and the Investor desires to purchase from the Company, on the terms and conditions set forth in this Agreement, up to three Secured Convertible Promissory Notes, each with a principal amount of $500,000, having the rights, preferences, privileges and restrictions set forth in the forms attached to this Agreement as Exhibit A-1 and Exhibit A‐2 (each a "Note" and collectively, the "Notes");

WHEREAS, the Notes will each be secured by a security interest pursuant to the terms of a Security Agreement between the Company and the Investor (the "Security Agreement") and such security interest will have priority over all indebtedness of the Company other than the Merck Note and any secured capital or equipment leases in place prior to the issuance of such Note;

WHEREAS, the Company has entered into a Security Agreement, dated July 14, 2015 (the "MGHIF Security Agreement") with Merck Global Health Innovation Fund, LLC ("MGHIF") pursuant to which the Company has granted a first priority security interest in the Collateral (as defined in the MGHIF Security Agreement) of the Company and its subsidiary AdvanDx, Inc. (the "Subsidiary");

WHEREAS, pursuant to the terms of an Intercreditor Agreement by and between the Company, the Subsidiary, the Investor and MGHIF (the "Intercreditor Agreement"), the parties to such Intercreditor Agreement shall set forth the impact of any event of default on the Notes on the security interests held by MGHIF and the Investor;

WHEREAS, upon the occurrence of an event of default, the Investor shall have the option to convert the outstanding Notes into shares of the Company's Series B Convertible Preferred Stock, par value $0.01 per share ("Series B Preferred Stock") having the rights, preferences, privileges and restrictions set forth in the certificate of designation to be filed by the Company with the Secretary of State of the State of Delaware (the "Certificate of Designation") in an amount equal to one (1) share of Series B Preferred Stock for each $1.00 of outstanding principal and interest due on each such Note on the conversion date, with each share of Series B Preferred Stock convertible into ten (10) shares of voting Common Stock of the Company;

WHEREAS, if the Investor determines not to convert the outstanding Notes into shares of Series B Preferred Stock, each outstanding Note provides for repayment of two (2) times the principal amount of and accrued interest on such Note in any liquidation or distribution of the Company assets in order to satisfy the obligations under such Note;

WHEREAS, upon issuance of a Note, the Company shall issue to the Investor a warrant to acquire shares of Common Stock (the "Warrants") in an amount equal to ten percent (10%) of the principal of such Note, immediately exercisable with an exercise price equal to 1.10% of the closing sale price of the Common Stock on the principal exchange on which the Company is then listed or quoted on the date of issuance, anti-dilution protection and a five-year term; provided, however, if a Qualified Financing is consummated, the terms of any outstanding Warrants shall be amended to reflect terms equivalent to any warrants issued in such Qualified Financing; and

 

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WHEREAS, the Investor will be entitled to certain resale registration rights with respect to the shares of Common Stock issuable upon conversion of the Series B Preferred Stock or underlying the Warrants pursuant to the terms of a Registration Rights Agreement, between the Company and the Investor (the "Registration Rights Agreement"), which Registration Rights Agreement will be entered into by the Company and the Investor on the date on which the first Warrant is issued.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the parties, intending to be legally bound, hereby agree as follows:

1. Purchase and Sale of Notes.

1.1      Purchase and Issuance of Notes and Warrants.

(a)    Subject to the terms and conditions of this Agreement, the Investor agrees to purchase and the Company agrees to sell to Investor up to three Notes, in each case on five business days advance written notice from the Company, for a purchase price of $500,000 per Note (the "Purchase Price").  Each purchase by the Investor will occur on a Closing Date.  For the avoidance of doubt, the obligation to issue and sell Notes to the Investor is at the sole election of the Company on five business days advance notice to the Investor, subject to the terms of this Agreement.

(b)    Upon the issuance of a Note, subject to the terms and conditions of this Agreement, the Company shall issue to the Investor a Warrant to purchase shares of Common Stock equal to ten percent (10%) of the principal amount of the Note being purchased, calculated on a Closing Date by dividing ten percent (10%) of the principal amount of the Note being purchased by the closing sale price of the Common Stock on the trading day immediately preceding the Closing Date reported on the principal exchange on which the Company is then listed or quoted.   Each such Warrant shall have an exercise price equal to 1.10% of such closing sale price of the Common Stock, anti-dilution protection as mutually and reasonably agreed to by the Company and the Investor, and a five-year term; provided, however, if a Qualified Financing is consummated after a Warrant is issued, the terms of any outstanding Warrants shall be amended to reflect terms equivalent to any warrants issued in such Qualified Financing.

1.2       Conversion of Notes in a Qualified Financing.  If a Qualified Financing is consummated: (a) within five (5) business days of the Qualified Financing closing, the Company shall have the option to convert the principal and interest of the first Note into the securities issued in the Qualified Financing at a discount of ten percent (10%) of the Qualified Financing offering price; and (b) within five (5) business days of the Qualified Financing closing, the Investor shall have the option to convert the principal and interest of the second and third Notes, if outstanding, into the securities issued in the Qualified Financing at a discount of ten percent (10%) of the Qualified Financing offering price.

1.3       Closing; Delivery.

(a)   The purchase and sale of each Note and related Warrant (each, a "Closing") shall take place either remotely via the exchange of documents and signatures or at the offices of Ballard Spahr LLP, 1735 Market Street, 51st Floor, Philadelphia, PA 19103, at 10:00 a.m. on the date that is five business days after written notice is provided by the Company to the Investor or at such other date and time or such other place as the Company and the Investor mutually agree (the "Closing Date").

(b)   At a Closing, the Company shall issue to the Investor the Note being purchased by the Investor against payment of the Purchase Price therefor by check payable to the Company or by wire transfer to a bank account designated by the Company, and the related Warrant.

 

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1.4       Defined Terms Used in this Agreement.  In addition to the terms defined above, the following terms used in this Agreement shall have the meanings set forth or referenced below.

(a)   "Affiliate" means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including, without limitation, any general partner, managing member, officer or director of such Person or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.

(b)   "Common Stock" means the common stock, par value $0.01 per share, of the Company.

(c)   "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

(d)   "Material Adverse Effect" means a material adverse effect on the business, assets (including intangible assets), liabilities, financial condition, property, or results of operations of the Company.

(e)   "Merck Note" means that certain Senior Secured Promissory Note, dated July 14, 2015, issued by the Company to MGHIF  in the principal amount of $1,000,000.

(f)   "Person" means any individual, corporation, partnership, trust, limited liability company, association or other entity.

(g)   "Qualified Financing" means an offering of equity or debt securities of the Company with net proceeds to the Company of at least $5 million.

(h)   "SEC" means the U.S. Securities and Exchange Commission.

(i)   "SEC Documents" means all forms, reports and documents required to be filed by the Company with the SEC pursuant to the federal securities laws and the SEC's rules and regulations thereunder.

(j)    "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

(k)   "Short Sales" include, without limitation, (i) all "short sales" as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not against the box, and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps, "put equivalent positions" (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements (including on a total return basis), and (ii) sales and other transactions through non-U.S. broker dealers or foreign regulated brokers (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

(l)   "Warrant Shares" means the shares of Common Stock underlying the Warrants.

(m)  "Transaction Documents" means this Agreement, the Notes, the Warrants, the Security Agreement, the Intercreditor Agreement and the Registration Rights Agreement and the Certificate of Designation of the Series B Preferred Stock.

 

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2. Representations and Warranties of the Company.  The Company hereby represents and warrants to Investor that, except as set forth in the SEC Documents (other than any information in the "Risk Factors" or "Forward-Looking Statements" sections of such SEC Documents or other statements in such SEC Documents similarly predictive or forward-looking in nature), the following representations are true and complete as of the Closing Date, except as otherwise indicated.

2.1   Organization, Good Standing, Corporate Power and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as presently conducted and as proposed to be conducted.  The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a Material Adverse Effect.

2.2   Authorization.  All corporate action required to be taken by the Company's Board of Directors and stockholders in order to authorize the Company to enter into this Agreement, to issue and sell the Notes and Warrants at the Closings, and to enter into the Transaction Documents has been taken or will be taken prior to the initial Closing.  All action on the part of the officers of the Company necessary for the execution and delivery of this Agreement, the performance of all obligations of the Company under this Agreement and the other Transaction Documents to be performed as of a Closing, and the issuance and delivery of the Notes and Warrants has been taken or will be taken prior to the initial Closing.  This Agreement, when executed and delivered by the Company, shall constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their respective terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors' rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (iii) to the extent the indemnification provisions contained in the Registration Rights Agreement may be limited by applicable federal or state securities laws.

2.3  Valid Issuance of the Notes, Warrants and Warrant Shares.

(a)   Each Note, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Agreement, will be a valid and binding obligation of the Company enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles, and free of restrictions on transfer other than restrictions on transfer under this Agreement, applicable state and federal securities laws and liens or encumbrances created by or imposed by the Investor.  Assuming the accuracy of the representations of the Investor in Section 3 of this Agreement and subject to the filings described in Section 2.5 below, each such Note will be issued in compliance with all applicable federal and state securities laws.

(b)   The Warrants, when executed and delivered in accordance with the terms set forth in this Agreement, will be valid and binding agreements of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles, and free of restrictions on transfer other than restrictions on transfer under this Agreement, applicable state and federal securities laws and liens or encumbrances created by or imposed by the Investor.  Assuming the accuracy of the representations of the Investor in Section 3 of this Agreement and subject to the filings described in Section 2.5 below, the Warrants will be issued in compliance with all applicable federal and state securities laws.

 

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(c)   The Warrant Shares have been duly authorized and validly reserved for issuance upon exercise of the Warrants. The Warrant Shares, when issued and delivered upon exercise of the Warrants in accordance therewith, will be validly issued, fully paid and non-assessable, and the issuance of the Warrant Shares is not subject to any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase the Warrant Shares.

2.4   Issuance of Series B Preferred Stock.  In the event that any Note or Notes are converted by the Investor upon an event of default, the shares of Series B Preferred Stock, and the shares of Common Stock into which the shares of Series B Preferred Stock are convertible, have each been duly authorized and validly reserved for issuance upon any such conversion.  The shares of Series B Preferred Stock, when issued and delivered in accordance with this Agreement, a Note and the Certificate of Designation, will be validly issued, fully paid and non-assessable, and the issuance of such shares of Series B Common Stock are not subject to any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase the shares of Series B Preferred Stock.  The shares of Common Stock underlying the Series B Preferred Stock, when issued and delivered in accordance with the Certificate of Designation, will be validly issued, fully paid and non-assessable, and the issuance of such shares of Common Stock underlying the Series B Common Stock are not subject to any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase the shares of Common Stock.

2.5   Governmental Consents and Filings.  Assuming the accuracy of the representations made by the Investor in Section 3 of this Agreement, no consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority is required on the part of the Company in connection with the consummation of the transactions contemplated by this Agreement, except for filings pursuant to Regulation D of the Securities Act, and applicable state securities laws, which have been made or will be made in a timely manner.

3. Representations and Warranties of the Investor.  The Investor hereby represents and warrants to the Company that:

3.1   Authorization.  The Investor has full power and authority to enter into this Agreement and the other Transaction Documents to which the Investor is a party.  This Agreement, when executed and delivered by the Investor, will constitute valid and legally binding obligations of the Investor, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors' rights generally, (b) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, or (c) to the extent the indemnification provisions contained in the Registration Rights Agreement may be limited by applicable federal or state securities laws.

3.2   Purchase Entirely for Own Account.  This Agreement is made with the Investor in reliance upon the Investor's representation to the Company, which by the Investor's execution of this Agreement, the Investor hereby confirms, that the Notes and Warrants to be acquired by the Investor will be acquired for investment for the Investor's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same.  By executing this Agreement, the Investor further represents that the Investor does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to any of the Notes and Warrants.  The Investor has not been formed for the specific purpose of acquiring the Notes and Warrants.

 

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3.3   Disclosure of Information.  The Investor is an Affiliate of Evan Jones, the Company's Chief Executive Officer and Chairman of the Board, and has had a full opportunity to discuss the Company's business, management, financial affairs and the terms and conditions of the offering of the Notes with the Company's management and Board.  The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 2 of this Agreement or the right of the Investor to rely thereon.

3.4   Restricted Securities.  The Investor understands that the Notes and the Warrants have not been, and will not be, registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Investor's representations as expressed herein.  The Investor understands that the Notes and Warrants are "restricted securities" under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Investor must hold the Notes indefinitely unless they are registered with the SEC and qualified by state authorities, or an exemption from such registration and qualification requirements is available.  The Investor acknowledges that the Company has no obligation to register or qualify the Notes and Warrant Shares for resale except as set forth in the Registration Rights Agreement.  The Investor further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, and on requirements relating to the Company which are outside of the Investor's control, and which the Company is under no obligation and may not be able to satisfy.

3.5   Legends.  The Investor understands that the Notes and Warrants, including any securities issued in respect of or exchange for the Notes and Warrants, may bear one or all of the following legends:

(a)   "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933."

(b)   Any legend set forth in, or required by, this Agreement or a substantially similar legend set forth in, or required by, this Agreement.

(c)   Any legend required by the securities laws of any state to the extent such laws are applicable to the Notes represented by the certificate so legended.

3.6   Accredited Investor.  The Investor is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

3.7   No Disqualification Event.  With respect to the Notes, neither the Investor nor any of its directors, executive officers, other officers is subject to any of the "Bad Actor" disqualifications described in Rule 506(d)(1)(i) to (viii) promulgated under the Securities Act.

3.8   No General Solicitation.  Neither the Investor, nor any of the Investor's officers, directors, employees, agents, stockholders or partners has either directly or indirectly, including through a broker or finder (a) engaged in any general solicitation, or (b) published any advertisement in connection with the offer and sale of the Notes.

 

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3.9   Certain Trading Activities.  Other than with respect to the transactions contemplated herein, since the time that the Investor was first contacted by the Company or any other Person regarding the transactions contemplated hereby, neither the Investor nor any Affiliate of the Investor which (x) had knowledge of the transactions contemplated hereby, (y) has or shares discretion relating to the Investor's investments or trading or information concerning the Investor's investments, including in respect of the Notes, and (z) is subject to the Investor's review or input concerning such Affiliate's investments or trading (collectively, "Trading Affiliates") has directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Investor or Trading Affiliate, effected or agreed to effect any purchases or sales of the securities of the Company (including, without limitation, any Short Sales involving the Company's securities).  Notwithstanding the foregoing, in the case of the Investor and/or Trading Affiliate that is, individually or collectively, a multi-managed investment bank or vehicle whereby separate portfolio managers manage separate portions of the Investor's or Trading Affiliate's assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of the Investor's or Trading Affiliate's assets, the representation set forth above shall apply only with respect to the portion of assets managed by the portfolio managers that have knowledge about the financing transaction contemplated by this Agreement.  Other than to other Persons party to this Agreement, the Investor has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).  Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect short sales or similar transactions in the future. The Investor is aware that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of Common Stock and other activities with respect to the Common Stock by the Investor.

3.10   Residence.  The Investor's office in which it maintains its principal place of business is 11009 Cripplegate Road, Potomac, Maryland 20854.

4. Conditions to the Investor's Obligations at Closing.  The obligations of the Investor to purchase a Note and Warrants at each Closing are subject to the fulfillment, on or before the respective Closing, of each of the following conditions, unless otherwise waived:

4.1   Representations and Warranties.  The representations and warranties of the Company contained in Section 2 shall be true and correct in all respects as of the Closing.

4.2   Performance.  The Company shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by the Company on or before the Closing.

4.3   Compliance Certificate.  The Chief Financial Officer of the Company shall deliver to the Investor at the Closing a certificate certifying that the conditions specified in Sections 4.1 and 4.2 have been fulfilled or satisfied.

4.4   Qualifications.  All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Note and Warrants pursuant to this Agreement shall be obtained and effective as of the Closing.

4.5   Extension of the Merck Note.  The maturity date of the Merck Note shall have been extended to July 14, 2018.

 

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4.6  Secretary's Certificate.  The Secretary of the Company shall have delivered to the Investor at the initial Closing a certificate certifying with respect to (i) the Amended and Restated Certificate of Incorporation of the Company, (ii) the Amended and Restated Bylaws of the Company, and (iii) resolutions of the Board of Directors of the Company approving the Agreement, the Notes, the Warrants, the other Transaction Documents, and the transactions contemplated under the Transaction Documents.

4.7  Proceedings and Documents.  All corporate and other proceedings in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to Investor, and Investor (or its counsel) shall have received all such counterpart original and certified or other copies of such documents as reasonably requested.  Such documents may include good standing certificates.

4.8  Security Agreement.  The Security Agreement shall have been executed and delivered by the Company and the Investor.

4.9  Intercreditor Agreement.  The Intercreditor Agreement shall have been executed and delivered by the Company, the Investor and MGHIF.

4.10 Registration Rights Agreement.  The Registration Rights Agreement shall have been executed and delivered by the Company and the Investor.

5. Conditions of the Company's Obligations at Closing.  The obligations of the Company to sell a Note and issue Warrants to the Investor at each Closing are subject to the fulfillment, on or before each Closing, of each of the following conditions, unless otherwise waived:

5.1  Representations and Warranties.  The representations and warranties of the Investor contained in Section 3 shall be true and correct in all respects as of such Closing.

5.2  Performance.  The Investor shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by them on or before the Closing.

5.3  Qualifications.  All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Note and Warrants pursuant to this Agreement shall be obtained and effective as of the Closing.

5.4  Extension of the Merck Note.  The maturity date of the Merck Note shall have been extended to July 14, 2018.

5.5  Security Agreement.  The Security Agreement shall have been executed and delivered by the Company and the Investor.

5.6  Intercreditor Agreement.  The Intercreditor Agreement shall have been executed and delivered by the Company, the Investor and MGHIF.

5.7  Registration Rights Agreement.  The Registration Rights Agreement shall have been executed and delivered by the Company and the Investor.

 

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6. Miscellaneous.

6.1   Survival of Warranties.  Unless otherwise set forth in this Agreement, the representations, warranties, covenants and agreements of the Company and the Investor contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation or knowledge of the subject matter thereof made by or on behalf of the Investor or the Company.

6.2   Successors and Assigns.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

6.3   Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware excluding that body of law pertaining to conflict of law.

6.4   Counterparts; Facsimile.  This Agreement may be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

6.5   Titles and Subtitles.  The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

6.6   Notices.  All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or: (a) personal delivery to the party to be notified, (b) when sent, if sent by electronic mail or facsimile during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient's next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt.  All communications shall be sent to the respective parties at their address as set forth below, or to such e-mail address, facsimile number or address as subsequently modified by written notice given in accordance with this Section 6.6.

If notice is given to the Company, to:

OpGen, Inc.

708 Quince Orchard Road, Suite 205

Gaithersburg, Maryland 20878

Attn: Chief Financial Officer

 email: tdec@opgen.com

with a copy to:

Ballard Spahr LLP

1735 Market Street, 51st Floor

Philadelphia, PA 19103-7599

Attn: Mary J. Mullany

 email:  mullany@ballardspahr.com

 

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If notice is given to the Investor, to:

jVen Capital, LLC

11009 Cripplegate Road

Potomac, Maryland 20854

Attn: Evan Jones

 email: ejones@opgen.com

6.7    No Finder's Fees.  Each party represents that it neither is nor will be obligated for any finder's fee or commission in connection with this transaction.  The Investor agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder's or broker's fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which the Investor or any of its officers, employees, or representatives is responsible.  The Company agrees to indemnify and hold harmless the Investor from any liability for any commission or compensation in the nature of a finder's or broker's fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

6.8    Amendments and Waivers.  Any term of this Agreement may be amended, terminated or waived only with the written consent of the Company and the Investor.  Any amendment or waiver effected in accordance with this Section 6.8 shall be binding upon the Investor and each transferee of the Notes, each future holder of all such Notes, and the Company.  Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing; and shall be effective only to the extent specifically set forth in such writing.

6.9    Severability.  The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

6.10  Delays or Omissions.  No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

6.11   Entire Agreement.  This Agreement (including the Exhibits hereto) constitutes the full and entire understanding and agreement between the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties are expressly canceled.

[Remainder of Page Intentionally Left Blank]

 

 

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IN WITNESS WHEREOF, the parties have executed this Note Purchase Agreement as of the date first written above.

	 	
COMPANY:

 

OPGEN, INC.

	 
	 	 	 	 
	
 

	
By: 

	/s/ Timothy C. Dec	 
	 	Name:	
Timothy C. Dec

	 
	 	Its:	Chief Financial Officer	 
	 	 	 	 

 

 

	 	

INVESTOR:

JVEN CAPITAL, LLC

	 
	 	 	 	 
	
 

	
By: 

	/s/ Evan Jones 	 
	 	Name:	
Evan Jones 

	 
	 	Title:	Managing Member	 
	 	 	 	 

 

 

 

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EXHIBIT A-1

FORM OF NOTE (#1)

 

 

 

EXHIBIT A-2

FORM OF NOTES (#2 and #3)Exhibit

Exhibit 4(a)

COUNTY OF TRIMBLE, KENTUCKY
 
And 

LOUISVILLE GAS AND ELECTRIC COMPANY
 
A Kentucky Corporation

* * * * *

LOAN AGREEMENT

* * * * *

Dated as June 1, 2017

* * * * *

		
	NOTICE:
	The interest of the County of Trimble, Kentucky, in and to this Loan Agreement has been assigned to U.S. Bank National Association, as Trustee, under the Indenture of Trust dated as of June 1, 2017

TABLE OF CONTENTS
	
						
	ARTICLE I DEFINITIONS
	3
	

	 
	 
	 
	 

	 
	SECTION 1.1.
	DEFINITIONS
	3
	

	 
	 
	 
	 
	 

	ARTICLE II REPRESENTATIONS, WARRANTIES, AND COVENANTS
	3
	

	 
	 
	 
	 

	 
	SECTION 2.1.
	REPRESENTATIONS, WARRANTIES, AND COVENANTS BY THE ISSUER
	3
	

	 
	SECTION 2.2.
	REPRESENTATIONS, WARRANTIES, AND COVENANTS BY THE COMPANY
	4
	

	 
	 
	 
	 
	 

	ARTICLE III COMPLETION AND OWNERSHIP OF THE PROJECT
	9
	

	 
	 
	 
	 

	 
	SECTION 3.1.
	COMPLETION AND EQUIPPING OF THE PROJECT
	9
	

	 
	SECTION 3.2.
	AGREEMENT AS TO OWNERSHIP OF THE PROJECT
	9
	

	 
	SECTION 3.3.
	USE OF THE PROJECT
	9
	

	 
	SECTION 3.4.
	FINANCING OF ADDITIONAL FACILITIES
	10
	

	 
	 
	 
	 
	 

	ARTICLE IV ISSUANCE OF 2017 SERIES A BONDS; APPLICATION OF PROCEEDS
	10
	

	 
	 
	 
	 

	 
	SECTION 4.1.
	AGREEMENT TO ISSUE 2017 SERIES A BONDS; APPLICATION OF 2017 SERIES A BOND PROCEEDS
	10
	

	 
	SECTION 4.2.
	PAYMENT AND DISCHARGE OF REFUNDED 2007 SERIES A BONDS
	10
	

	 
	SECTION 4.3.
	INVESTMENT OF MONEYS IN THE BOND FUND AND THE REBATE FUND
	10
	

	 
	SECTION 4.4.
	SPECIAL ARBITRAGE CERTIFICATIONS
	11
	

	 
	SECTION 4.5.
	OPINION OF BOND COUNSEL
	12
	

	 
	SECTION 4.6.
	FIRST MORTGAGE BONDS
	12
	

	 
	 
	 
	 
	 

	ARTICLE V PROVISIONS FOR PAYMENT
	13
	

	 
	 
	 
	 

	 
	SECTION 5.1.
	LOAN PAYMENTS AND OTHER AMOUNTS PAYABLE
	13
	

	 
	SECTION 5.2.
	PAYMENTS ASSIGNED
	14
	

	 
	SECTION 5.3.
	TAXES AND OTHER GOVERNMENTAL CHARGES
	15
	

	 
	SECTION 5.4.
	OBLIGATIONS OF THE COMPANY UNCONDITIONAL
	15
	

	 
	SECTION 5.5.
	REBATE FUND
	16
	

	 
	SECTION 5.6.
	REDEMPTION OF THE 2017 SERIES A BONDS IN ADVANCE OF SCHEDULED MATURITY
	16
	

	 
	SECTION 5.7.
	CANCELLATION OF 2017 SERIES A BONDS
	16
	

	 
	 
	 
	 
	 

	ARTICLE VI MAINTENANCE; DAMAGE, DESTRUCTION, AND  CONDEMNATION; USE OF NET PROCEEDS; INSURANCE
	16
	

	 
	 

	 
	 
	 
	 

i

	
						
	 
	SECTION 6.1.
	MAINTENANCE
	16
	

	 
	SECTION 6.2.
	INSURANCE
	17
	

	 
	 
	 
	 
	 

	ARTICLE VII SPECIAL COVENANTS
	17
	

	 
	 
	 
	 

	 
	SECTION 7.1.
	NO WARRANTY OF CONDITION OR SUITABILITY BY THE ISSUER
	17
	

	 
	SECTION 7.2.
	THE COMPANY TO MAINTAIN ITS CORPORATE EXISTENCE; CONDITIONS UNDER WHICH EXCEPTIONS ARE PERMITTED
	17
	

	 
	SECTION 7.3.
	FINANCIAL STATEMENTS
	18
	

	 
	SECTION 7.4.
	FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS
	18
	

	 
	SECTION 7.5.
	THE ISSUER REPRESENTATIVE
	18
	

	 
	SECTION 7.6.
	THE COMPANY REPRESENTATIVE
	18
	

	 
	SECTION 7.7.
	FINANCING STATEMENTS
	18
	

	 
	SECTION 7.8.
	THE COMPANY'S PERFORMANCE UNDER INDENTURE
	19
	

	 
	 
	 
	 
	 

	ARTICLE VIII ASSIGNMENT; INDEMNIFICATION; REDEMPTION
	19
	

	 
	 
	 
	 

	 
	SECTION 8.1.
	ASSIGNMENT
	19
	

	 
	SECTION 8.2.
	RELEASE AND INDEMNIFICATION COVENANTS
	19
	

	 
	SECTION 8.3.
	ASSIGNMENT OF INTEREST IN AGREEMENT BY THE ISSUER
	20
	

	 
	SECTION 8.4.
	REDEMPTION OF 2017 SERIES A BONDS
	20
	

	 
	SECTION 8.5.
	REFERENCE TO 2017 SERIES A BONDS INEFFECTIVE AFTER 2017 SERIES A BONDS PAID
	20
	

	 
	 
	 
	 
	 

	ARTICLE IX EVENTS OF DEFAULT AND REMEDIES
	20
	

	 
	 
	 
	 

	 
	SECTION 9.1.
	EVENTS OF DEFAULT DEFINED
	20
	

	 
	SECTION 9.2.
	REMEDIES ON DEFAULT
	22
	

	 
	SECTION 9.3.
	NO REMEDY EXCLUSIVE
	22
	

	 
	SECTION 9.4.
	AGREEMENT TO PAY REASONABLE ATTORNEYS' FEES AND EXPENSES
	23
	

	 
	SECTION 9.5.
	WAIVER OF EVENTS OF DEFAULT
	23
	

	 
	 
	 
	 
	 

	ARTICLE X PREPAYMENT OF LOAN
	23
	

	 
	 
	 
	 

	 
	SECTION 10.1.
	OPTIONS TO PREPAY LOAN
	23
	

	 
	SECTION 10.2.
	ADDITIONAL OPTION TO PREPAY LOAN
	25
	

	 
	SECTION 10.3.
	OBLIGATIONS TO PREPAY LOAN
	25
	

	 
	SECTION 10.4.
	NOTICE OF PREPAYMENT; REDEMPTION PROCEDURES
	27
	

	 
	SECTION 10.5.
	RELATIVE POSITION OF THIS ARTICLE AND INDENTURE
	27
	

	 
	SECTION 10.6.
	CONCURRENT DISCHARGE OF FIRST MORTGAGE BONDS
	27
	

	 
	 
	 
	 
	 

	ARTICLE XI MISCELLANEOUS
	27
	

	 
	 
	 
	 

ii

	
						
	 
	SECTION 11.1.
	TERM OF AGREEMENT
	27
	

	 
	SECTION 11.2.
	NOTICES
	28
	

	 
	SECTION 11.3.
	BINDING EFFECT; BOND COUNSEL OPINIONS
	30
	

	 
	SECTION 11.4.
	SEVERABILITY
	30
	

	 
	SECTION 11.5.
	AMOUNTS REMAINING IN BOND FUND AND REBATE FUND
	30
	

	 
	SECTION 11.6.
	AMENDMENTS, CHANGES, AND MODIFICATIONS
	30
	

	 
	SECTION 11.7.
	EXECUTION IN COUNTERPARTS
	30
	

	 
	SECTION 11.8.
	APPLICABLE LAW
	30
	

	 
	SECTION 11.9.
	INTERPRETATION
	30
	

	 
	SECTION 11.10.
	NO PECUNIARY LIABILITY OF THE ISSUER
	31
	

	 
	SECTION 11.11.
	PAYMENTS DUE ON OTHER THAN BUSINESS DAYS
	31
	

EXHIBIT A - DESCRIPTION OF THE PROJECT

iii

LOAN AGREEMENT

This LOAN AGREEMENT (this “Agreement”), dated as of June 1, 2017, by and between the COUNTY OF TRIMBLE, KENTUCKY (the “Issuer”), a public body corporate and politic duly created and existing as a county and political subdivision under the Constitution and laws of the Commonwealth of Kentucky, and LOUISVILLE GAS AND ELECTRIC COMPANY, a corporation organized and existing under the laws of Kentucky (the “Company”);
PREAMBLE
WHEREAS, all capitalized terms not otherwise defined in this preamble shall have the meanings set forth in ARTICLE I hereof, unless the context or use clearly indicates another meaning or intent; and
WHEREAS, pursuant to the Act, the Issuer has the power to enter into the transactions contemplated by this Agreement and to carry out its obligations hereunder; and
WHEREAS, the Issuer is authorized pursuant to the Act to issue negotiable bonds and lend the proceeds from the sale of such bonds to a utility company to finance and refinance the acquisition of “pollution control facilities,” as defined by the Act; and
WHEREAS, the Issuer is further authorized pursuant to the Act to enter into a loan agreement, which may include such provisions as the Issuer shall deem appropriate to effect the securing of a financing or refinancing undertaken in respect of Environmental Facilities, including the securing of a letter of credit, other credit facilities, or collateral; and
WHEREAS, the Act further provides that title to the Environmental Facilities shall not be acquired by the Issuer in the case of a loan transaction; and
WHEREAS, the Issuer previously issued the Refunded 2007 Series A Bonds for the purpose of refinancing the costs of the Project constituting certain Environmental Facilities located within Trimble County, Kentucky at the Company’s Trimble County Generating Station consisting of air and water pollution control facilities and solid waste disposal facilities. The Issuer entered into the 2007 Series A Indenture with U.S. Bank National Association (successor to Deutsche Bank Trust Company Americas), as Trustee, Paying Agent, and Bond Registrar thereunder and it is provided in ARTICLE VIII of the 2007 Series A Indenture that the Refunded 2007 Series A Bonds, or any of them, shall be deemed to have been paid within the meaning of such 2007 Series A Indenture when there shall have been irrevocably deposited with the Prior 2007 Series A Trustee, either cash or Governmental Obligations, as defined in the 2007 Series A Indenture, maturing as to principal and interest in such amounts and at such times as will ensure the availability of sufficient moneys to pay the principal and the applicable redemption premium, if any, on the Refunded 2007 Series A Bonds plus interest thereon to the date of payment and discharge thereof (whether at maturity, upon redemption, or otherwise), plus sufficient moneys to pay all necessary and proper fees, compensation, and expenses of the Prior 2007 Series A Trustee, authenticating agent, bond registrar, 

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and any paying agent; together with irrevocable instructions to call and redeem the Refunded 2007 Series A Bonds; and
WHEREAS, the Company has heretofore, by the issuance of the Refunded 2007 Series A Bonds, refinanced all or a portion of the qualified costs of the construction and acquisition of certain air and water pollution control facilities and solid waste disposal facilities, and facilities functionally related and subordinate to such facilities to serve the Trimble County Generating Station of the Company, which facilities constitute the Project, as defined in the Indenture and as described in Exhibit A hereto, which Project is located within the corporate boundaries of the Issuer and consists of certain air and water pollution control facilities and solid waste disposal facilities, and facilities functionally related and subordinate to such facilities in furtherance of the regulations of the Energy and Environment Cabinet of the Commonwealth of Kentucky (formerly the Natural Resources and Environmental Protection Cabinet) and which Project qualifies for refinancing within the meaning of the Act; and
WHEREAS, (i) construction of the Project began before September 26, 1985; completion of the Project occurred after September 26, 1985, and original use of the Project commenced with the Company, (ii) a binding contract to incur significant (i.e., 10% of the then reasonably anticipated cost of construction of the Project) expenditures for construction of the Project was entered into before September 26, 1985 and some of such expenditures were incurred on or after September 26, 1985 and (iii) with respect to both (i) and (ii) above, the Project was described in an inducement resolution or other comparable approval adopted by the Fiscal Court of the Issuer before September 26, 1985 (i.e., on February 29, 1980); and
WHEREAS, the Project has been completed and placed in operation in whole or in part and has contributed to the control, containment, reduction, and abatement of atmospheric pollution and contamination and water pollution and disposal of solid waste in the Commonwealth of Kentucky; and
WHEREAS, in connection with the issuance of the Refunded 2007 Series A Bonds, the right was reserved to the Issuer, upon direction by the Company, to redeem the Refunded 2007 Series A Bonds in advance of their maturity; and the Refunded 2007 Series A Bonds are by their terms subject to redemption at the option of the Issuer in whole or in part on and after June 1, 2017, at the price of 100% of the aggregate principal amount thereof and accrued interest, if any, to their redemption date, as provided in the 2007 Series A Indenture; and the immediate redemption and discharge of the Refunded 2007 Series A Bonds will result in benefits to the general public and the Company and should be carried out forthwith in the public interest by the issuance by the Issuer of the 2017 Series A Bonds, and the application of the proceeds of the 2017 Series A Bonds, together with funds to be provided by the Company, for, among other things, the refunding, payment, and discharge of the Refunded 2007 Series A Bonds on or before the 90th day from the Issuance Date of the 2017 Series A Bonds; and
WHEREAS, pursuant to and in accordance with the provisions of the Act and an Ordinance duly adopted by the Fiscal Court of the Issuer on April 17, 2017, and in furtherance of the purposes of the Act, the Issuer proposes to issue, sell, and deliver its 2017 Series A Bonds, the proceeds of which will be lent to the Company to cause the outstanding principal amount of the Refunded 2007 

- 2 -

Series A Bonds to be refunded, paid, and discharged in full on or before the 90th day from the Issuance Date; and
WHEREAS, the 2017 Series A Bonds are to be issued under and pursuant to and are to be secured by the Indenture of Trust dated as of June 1, 2017 by and between the Issuer and U.S. Bank National Association, as trustee (the “Trustee”);
NOW, THEREFORE for and in consideration of the premises and the mutual covenants and agreements hereinafter contained, the parties hereto agree each with the other, as follows:

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ARTICLE I
DEFINITIONS

Section 1.1.    Definitions. The terms used in this Loan Agreement, except as otherwise defined herein and unless the context requires otherwise, have the meanings set forth in the Indenture. All accounting terms not otherwise defined in the Indenture or herein have the meanings assigned to them in accordance with generally accepted accounting principles then in effect.

ARTICLE II 
REPRESENTATIONS, WARRANTIES, AND COVENANTS

Section 2.1.    Representations, Warranties, And Covenants By The Issuer. The Issuer represents, warrants, and covenants that:
(a)    The Issuer is a public body corporate and politic duly created and existing as a county and de jure political subdivision under the Constitution and laws of the Commonwealth of Kentucky and, pursuant to the Act, the Issuer has the power and duty to issue the 2017 Series A Bonds, to enter into this Agreement, the Indenture, and the transactions contemplated hereby, and to carry out its obligations hereunder and thereunder. The Issuer is not in default under or in violation of the Constitution or any of the laws of the Commonwealth of Kentucky relevant to the issuance of the 2017 Series A Bonds or the consummation of the transactions contemplated hereby or in connection with such issuance, and has been duly authorized to issue the 2017 Series A Bonds and to execute and deliver this Agreement and the Indenture. The Issuer agrees that it will do or cause to be done in a timely manner all things necessary to preserve and keep in full force and effect its existence and to carry out the terms of this Agreement.
(b)    The Issuer agrees to loan funds derived from the sale of the 2017 Series A Bonds to the Company to provide for the refunding, payment, and discharge of the outstanding principal amount of the Refunded 2007 Series A Bonds and to the end that air and water pollution be abated and controlled and solid waste disposed of at the Project Site.
(c)    To accomplish the foregoing, the Issuer agrees to issue $60,000,000 aggregate principal amount of its 2017 Series A Bonds following the execution of this Agreement on the terms and conditions set forth in the Indenture. The proceeds from the sale of the 2017 Series A Bonds shall be allocated and applied exclusively and in whole to refund, pay, and discharge the respective outstanding principal amount of the Refunded 2007 Series A Bonds on or before the 90th day from the Issuance Date.
(d)    The Issuer will cooperate with the Company and take all actions necessary for the Company to comply with Section 2.2(m), (q), and (t) hereof and take other actions reasonably requested by the Company in furtherance of this Agreement.
(e)    The Project Site is located within the Issuer’s jurisdictional boundaries.

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Section 2.2.    Representations, Warranties, And Covenants By The Company. The Company represents, warrants, and covenants that:
(a)    The Company (1) is a corporation duly incorporated, validly existing, and in good standing under the laws of the Commonwealth of Kentucky; (2) is duly qualified, authorized, and licensed to transact business in each jurisdiction wherein failure to qualify would have a material adverse effect on the conduct of its business; and (3) is not in violation of any provision of its Articles of Incorporation, its Bylaws, or any laws of the Commonwealth of Kentucky relevant to the transactions contemplated hereby or in connection with the issuance of the 2017 Series A Bonds.
(b)    The Company has full and complete legal power and authority to execute and deliver this Agreement, the First Mortgage Indenture Supplement, and the First Mortgage Bonds to be issued pursuant thereto, and has by proper corporate action duly authorized the execution and delivery of this Agreement, the First Mortgage Indenture Supplement, and the First Mortgage Bonds.
(c)    The Project currently refinanced by application of the proceeds of the Refunded 2007 Series A Bonds and Company funds was designed and constructed to control, contain, reduce, and abate air and water pollution and dispose of solid waste at the Project Site. The Project was and is necessary for the public health and welfare and has been designed solely for the purposes of controlling air and water pollution and disposal of solid waste and the Project constitutes air and water pollution control facilities and solid waste disposal facilities and facilities functionally related and subordinate to such facilities under Section 103(b)(4)(E) and (F) of the Internal Revenue Code of 1954, as amended.
(d)    All of the proceeds of the 2017 Series A Bonds, exclusive of accrued interest, if any, shall be used on or before the 90th day from the Issuance Date exclusively and only to redeem, pay, and discharge the principal of the Refunded 2007 Series A Bonds, not less than substantially all of the net proceeds of the Refunded 2007 Series A Bonds (i.e., at least 90% of the net proceeds thereof, including investment income thereon) were used to refinance the Cost of Construction of air and water pollution control facilities and solid waste disposal facilities originally financed using the proceeds of the Refunded 1982 Series B Bonds, and subsequently refinanced using the proceeds of the Refunded 1987 Series A Bonds, and the Refunded 1987 Series A Bonds were refinanced with the proceeds of the Refunded 1992 Series A Bonds, and the Refunded 1992 Series A Bonds were refinanced with the proceeds of the Refunded 2007 Series A Bonds, together with facilities functionally related and subordinate to such facilities, and all of such air and water pollution control facilities and solid waste disposal facilities consist either of land or of property of a character subject to the allowance for depreciation provided in Code Section 167. The Company will provide any additional moneys required to pay and discharge the Refunded 2007 Series A Bonds within 90 days following the Issuance Date.
(e)    The Project is of the type authorized and permitted by the Act, and the Cost of Construction of the Project was not less than $60,000,000. All statements of fact contained herein respecting the Trimble County Generating Station, including the Project, which is an integral component of the Trimble County Generating Station, and the Issuer’s authorization of the Project, including the Project’s construction, Trimble County Generating Station expenditures, including 

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Project expenditures, and construction and acquisition contracts and related matters are true and correct in all respects and are incorporated herein.
(f)    No Event of Default, and no event of the type described in clauses (a) through (e) of Section 9.1 hereof, has occurred and is continuing and no condition exists which, with the giving of notice or the lapse of time, or both, would constitute an Event of Default or a default under any agreement or instrument to which the Company is a party or by which the Company is or may be bound or to which any of the property or assets of the Company is or may be subject which would impair in any material respect its ability to carry out its obligations under this Agreement, the First Mortgage Indenture Supplement, the First Mortgage Bonds, or the transactions contemplated hereby or thereby. Neither the execution and delivery of this Agreement, the First Mortgage Indenture Supplement, the First Mortgage Bonds, the consummation of the transactions contemplated hereby or thereby or by the Indenture, nor the fulfillment of or compliance with the terms and conditions hereof or thereof conflicts with or results in a breach of the terms, conditions, or provisions of any corporate restriction or any agreement or instrument to which the Company is now a party or by which it is bound, or constitutes a default under any of the foregoing, or results in the creation or imposition of any prohibited lien, charge, or encumbrance whatsoever upon any of the property or assets of the Company under the terms of any instrument or agreement.
(g)    The Company intends to continue to operate or cause the Project to be operated as air and water pollution control facilities and solid waste disposal facilities and facilities functionally related and subordinate thereto until all of the 2017 Series A Bonds are paid and discharged.
(h)    No portion of the proceeds of 2017 Series A Bonds will be invested at a yield in excess of the yield on the 2017 Series A Bonds except: (1) during any permitted temporary period provided by the Code; (2) proceeds of a reasonably required reserve or replacement fund; and (3) as part of a minor portion of the proceeds of the 2017 Series A Bonds, not in excess of the lesser of 5% of the proceeds of the 2017 Series A Bonds or $100,000. As used herein, “yield” shall have the meaning assigned to it for purposes of Code Section 148.
(i)    No portion of the proceeds from the sale of the 2017 Series A Bonds will be deposited to the account of any reasonably required reserve or replacement fund or used to pay any costs of issuance of the 2017 Series A Bonds or any redemption premium or accrued interest on the Refunded 2007 Series A Bonds, but such proceeds will be applied and used solely and exclusively to refund, pay, and discharge the outstanding principal amount of the Refunded 2007 Series A Bonds on or before the 90th day after the Issuance Date.
(j)    The Company will provide any additional moneys, including investment proceeds of the 2017 Series A Bonds, required for the payment and discharge of the Refunded 2007 Series A Bonds, payment of redemption premium, if any, and accrued interest in respect thereto and payment of all underwriting discount and costs of issuance of the 2017 Series A Bonds. Any investment proceeds of the 2017 Series A Bonds allocated to the Project shall be used exclusively to pay interest or redemption premium due, if any, on the Refunded 2007 Series A Bonds on the Redemption Date.

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(k)    The Company will cause no investment of 2017 Series A Bond proceeds to be made and will make no other use of or omit to take any action with respect to the proceeds of the 2017 Series A Bonds or any funds reasonably expected to be used to pay the 2017 Series A Bonds which will cause the 2017 Series A Bonds or any of them to be “arbitrage bonds” within the meaning of Code Section 148 or would otherwise result in the loss or impairment of the exclusion of the interest on such 2017 Series A Bonds from gross income for federal income tax purposes.
(l)    The average maturity of the 2017 Series A Bonds does not exceed one hundred twenty percent (120%) of the average reasonably expected remaining economic life (as of the Issuance Date) of the Project refinanced by the proceeds of the 2017 Series A Bonds.
(m)    The Company will provide all information requested by the Issuer necessary to evidence compliance with the requirements of the Code, including the information in United States Internal Revenue Service Form 8038 to be filed by the Issuer with respect to the 2017 Series A Bonds and the air and water pollution control facilities and solid waste disposal facilities constituting the Project, and such information will be true and correct in all material respects.
(n)    Within the meaning of Code Section 149, no portion of the payment of the principal or interest on the 2017 Series A Bonds, or the Refunded 2007 Series A Bonds was or shall be guaranteed directly or indirectly by the United States or any agency or instrumentality thereof.
(o)    All of the proceeds of the Refunded 1982 Series B Bonds, the Refunded 1987 Series A Bonds, the Refunded 1992 Series A Bonds, and the Refunded 2007 Series A Bonds have been fully expended and the Project has been completed. All of the actual Cost of Construction of the Project represent amounts paid or incurred which were properly chargeable to the capital account of the Project or would have been so chargeable either with a proper election by the Company or but for a proper election by the Company to deduct such amounts. Substantially all (i.e. at least 90%) of the net proceeds of the sale of the Refunded 1982 Series B Bonds (including investment income therefrom), were used to finance Costs of Construction of the Project as described above, pay costs and expenses of issuing the Refunded 1982 Series B Bonds, within then applicable Code limits, and pay interest and carrying charges on the Refunded 1982 Series B Bonds during the period of construction of the Project and before the date the Project was placed in service. Substantially all (i.e. at least 90%) of the net proceeds of the sale of the Refunded 1987 Series A Bonds (including proceeds of the Refunded 1982 Series B Bonds constituting transferred proceeds of the 1987 Series A Bonds), were used to finance or refinance Costs of Construction of the Project as described above.
(p)    All of the depreciable properties which were taken into account in determining the qualifying costs of the Project constitute properties either: (1) used for the control, containment, reduction, and abatement of atmospheric pollution and contamination and water pollution and collection, storage, treatment, processing and final disposal of solid wastes; or (2) facilities which are functionally related and subordinate to the facilities constituting the Project. All of such functionally related and subordinate facilities are of a size and character commensurate with the size and character of the facilities constituting the Project.

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(q)    The Company will cause the Issuer to comply in all respects with the requirements of Code Section 148 in respect of the rebate of Excess Earnings with respect to the 2017 Series A Bonds to the United States of America.
(r)    None of the proceeds of the 2017 Series A Bonds will be applied and none of the proceeds of the Refunded 1982 Series B Bonds, the Refunded 1987 Series A Bonds, the Refunded 1992 Series A Bonds, and the Refunded 2007 Series A Bonds were applied to provide any: (1) working capital; (2) office space (other than office space located on the premises of the Project where not more than a de minimus amount of the functions to be performed are not directly related to the day-to-day operations of the Project); (3) airplane; (4) skybox or other private luxury box; (5) health club facility; (6) facility primarily used for gambling; or (7) store, the principal business of which is the sale of alcoholic beverages for consumption off premises.
(s)    Less than twenty-five percent (25%) of the net proceeds of the 2017 Series A Bonds will be applied and less than twenty-five percent (25%) of the net proceeds of the Refunded 1982 Series B Bonds, the Refunded 1987 Series A Bonds, the Refunded 1992 Series A Bonds, and the Refunded 2007 Series A Bonds were applied directly or indirectly to acquire land or any interest therein and no portion of such land, if acquired, was or is to be used for farming purposes. No portion of the proceeds of the 2017 Series A Bonds will be used and no portion of the proceeds of the Refunded 1982 Series B Bonds, the Refunded 1987 Series A Bonds, the Refunded 1992 Series A Bonds, and the Refunded 2007 Series A Bonds were used to acquire existing property or any interest therein with respect to which the Company was not the first user for federal income tax purposes.
(t)    Upon the Issuance Date, the Company will have caused the Issuer to comply with the public approval requirements of Code Section 147; and at or following the issuance of the 2017 Series A Bonds, the Company will cause the Issuer to comply with the information reporting requirements of Code Section 149 by the filing of Internal Revenue Service Form 8038 with the United States Internal Revenue Service.
(u)    All of the documents, instruments, and written information furnished by the Company on behalf of the Company to the Issuer or the Trustee in connection with the issuance of the 2017 Series A Bonds are true and correct in all material respects as of the date of delivery thereof and did not, as of the date of delivery thereof, omit or fail to state any material facts necessary to be stated therein to make the information provided not misleading.
(v)    The proceeds derived from the sale of the 2017 Series A Bonds will be used exclusively and solely to refund the outstanding principal amount of the Refunded 2007 Series A Bonds. The principal amount of the 2017 Series A Bonds does not exceed the outstanding principal amount of the Refunded 2007 Series A Bonds. The redemption of the outstanding principal amount of the Refunded 2007 Series A Bonds with proceeds of the 2017 Series A Bonds will occur not later than 90 days after the Issuance Date. Any earnings derived from the investment of proceeds of the 2017 Series A Bonds will be fully needed and used on such redemption date to pay a portion of the interest accrued and payable on the Refunded 2007 Series A Bonds on such date.
(w)    It is not anticipated, as of the date hereof, that there will be created any “replacement proceeds”, within the meaning of Treasury Regulation Section 1.148-1(c) with respect 

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to the 2017 Series A Bonds; however, if any such replacement proceeds are deemed to have been created, such amounts will be invested in compliance with Code Section 148.
(x)    The Company will not use or cause to be used any of the funds provided by the Issuer hereunder (including the earnings on any of such funds) in such a manner as to, or take or omit to take any action with respect to the use of such funds which would, impair the exclusion of the interest on any of the 2017 Series A Bonds from gross income for federal income tax purposes.
(y)    The Company covenants to perform and observe all provisions of the Indenture required to be performed or observed by it.
(z)    The Refunded 2007 Series A Bonds were issued on April 26, 2007.
(aa)    No construction, reconstruction, or acquisition of the Project, of which the Project is an integral part, was commenced before the taking of official action by the Issuer with respect thereto except for preparation of plans and specifications and other preliminary engineering work.
(bb)    The Project, as designed, has been previously certified by the Energy and Environment Cabinet of the Commonwealth of Kentucky (formerly the Natural Resources and Environmental Protection Cabinet), the agency exercising jurisdiction in the premises, to be in furtherance of the purposes of abating or controlling atmospheric pollutants or contaminants and water pollution and disposing of solid wastes.
(cc)    Acquisition, construction, and installation of the Project has been accomplished and the Project is being utilized substantially in accordance with the purposes of the Project and in conformity with all applicable zoning, planning, building, environmental, and other applicable governmental regulations and all permits, variances, and orders issued or granted pursuant thereto, which permits, variances, and orders have not been withdrawn or otherwise suspended, and consistently with the Act.
(dd)    The Company has used, is currently using, and presently intends to use or operate the Project in an manner consistent with the purposes of the Project and the Act until the date on which the 2007 Series A Bonds have been fully paid and knows of no reason why the Project will not be so operated.
(ee)    Except for (i) $31,000,000 Louisville/Jefferson County Metro Government, Kentucky, Environmental Facilities Revenue Refunding Bonds, 2007 Series A (Louisville Gas and Electric Company Project) (the “Louisville Metro 2007 Series A Bonds”), the entire proceeds of which will currently refund a separate series of bonds of Louisville/Jefferson County Metro Government, Kentucky (“Louisville Metro”) and (ii) $35,200,000 Louisville/Jefferson County Metro Government, Kentucky, Environmental Facilities Revenue Refunding Bonds, 2007 Series B (Louisville Gas and Electric Company Project) (the “Louisville Metro 2007 Series B Bonds”), the entire proceeds of which will currently refund a separate series of bonds of Louisville Metro (the Louisville Metro 2007 Series A Bonds, the Louisville Metro 2007 Series B Bonds, and the 2017 Series A Bonds are hereby defined collectively as the “2017 Bonds”), there are no other obligations 

- 9 -

heretofore issued or to be issued by or on behalf of any state, territory, or possession of the United States, or any political subdivision of any of the foregoing, or of the District of Columbia, which (i) were sold less than fifteen days before or after the date of sale of the 2017 Bonds, determined without regard to guarantees from parties unrelated to the obligor as is applicable to the 2017 Bonds. Accordingly, the Company acknowledges and agrees that, pursuant to Treasury Regulation 1.150-1(c), the 2017 Bonds will automatically be treated as a single issue of bonds and, to the extent required by law, elects pursuant to Treasury Regulation 1.150-1(c) that, for purposes of computation of the maturity of the 2017 Bonds, the 2017 Bonds shall be treated as a single issue of bonds.
The Company need not comply with the covenants or representations in this Section 2.2 if and to the extent that the Issuer and the Company receive a Favorable Opinion of Bond Counsel regarding such noncompliance.

ARTICLE III
COMPLETION AND OWNERSHIP OF THE PROJECT

Section 3.1.    Completion And Equipping Of The Project. The Company represents that it has previously caused components of the Project to be financed, constructed, in whole or in part, and placed in service, as applicable, as herein provided on the Project Site as previously evidenced by the filing of a completion certificate by the Company with Citizens Fidelity Bank and Trust Company (now known as The Bank of New York Mellon Trust Company, N.A.), as Trustee for the Refunded 1987 Series A Bonds.

Section 3.2.    Agreement As To Ownership Of The Project. The Issuer and the Company agree that title to and ownership of the Project shall remain in and be the sole property of the Company in which the Issuer shall have no interest. The Project is acknowledged to be subject to the lien of the First Mortgage Indenture. Notwithstanding any other provision hereof, the Company shall be permitted to sell or otherwise dispose of all or any portion of the Project, provided that the Company first receives a Favorable Opinion of Bond Counsel regarding such sale or disposition and provided further that upon any assignment, in whole or in part, of this Agreement, such assignment shall be in accordance with Section 8.1 hereof. 

Section 3.3.    Use Of The Project. The Issuer does hereby covenant and agree that it will not take any action during the term of this Agreement, other than pursuant to ARTICLE IX of this Agreement or ARTICLE IX of the Indenture, to interfere with the Company’s ownership of the Project or to prevent the Company from having possession, custody, use, and enjoyment of the Project.

Section 3.4.    Financing Of Additional Facilities. The Company and the Issuer hereby recognize that additional air or water pollution control facilities and solid waste disposal facilities at the Project Site (other than the air and water pollution control facilities and solid waste disposal facilities that constitute the Project) have in the past been and may in the future be acquired, constructed, installed, and equipped at the Project Site, and that same may be financed with proceeds of one or more series of the Issuer’s revenue bonds issued in addition to the 2017 Series A Bonds issued pursuant to the Indenture, to the extent permitted by law.

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ARTICLE IV
ISSUANCE OF 2017 SERIES A BONDS; APPLICATION OF PROCEEDS

Section 4.1.    Agreement To Issue 2017 Series A Bonds; Application Of 2017 Series A Bond Proceeds. In order to provide funds to make the Loan, the Issuer will issue, sell, and deliver the 2017 Series A Bonds to the initial purchasers thereof and deposit the proceeds thereof with the Trustee into the Prior 2007 Series A Bond Fund held by the Prior 2007 Series A Trustee, for the benefit and payment of the Refunded 2007 Series A Bonds, in an amount equal to the then outstanding principal amount of the Refunded 2007 Series A Bonds.

Section 4.2.    Payment And Discharge Of Refunded 2007 Series A Bonds. The Company covenants and agrees with the Issuer that it will, on or before the Issuance Date, give irrevocable instructions to the Prior 2007 Series A Trustee to call and redeem the Refunded 2007 Series A Bonds in accordance with their terms and on or before the Issuance Date will deposit into the Prior 2007 Series A Bond Fund cash or Governmental Obligations (as defined in the 2007 Series A Indenture) sufficient on the Issuance Date, to fully defease and discharge the Refunded 2007 Series A Bonds on the Issuance Date in accordance with ARTICLE VIII of the 2007 Series A Indenture, without reference to any interest earnings to be accrued during the period from the Issuance Date to the redemption date of the Refunded 2007 Series A Bonds. Such matters shall be confirmed by issuance of an appropriate written certificate of the Prior 2007 Series A Trustee confirming defeasance and full discharge of the Refunded 2007 Series A Bonds upon the Issuance Date.

Section 4.3.    Investment Of Moneys In The Bond Fund And The Rebate Fund. Moneys held as a part of the Bond Fund or the Rebate Fund shall be invested or reinvested by the Trustee, at the written request of and as specifically directed by the Company, in one or more Permitted Investments. If the Trustee is not provided with written investment instructions, the Trustee shall hold such amounts uninvested in cash, without liability for interest. The written investment directions provided to the Trustee shall constitute a certification of the Company that such investments constitute Permitted Investments. The Trustee may make any and all such investments through its own investment department.
Any such investments shall be held by or under the control of the Trustee. All moneys invested shall be deemed at all times a part of the fund for which such investments were made. The interest accruing thereon and any profit realized from such investments shall be credited pro rata to such fund, and any loss resulting from such investments shall be charged pro rata to such fund. The Trustee shall sell and reduce to cash a sufficient amount of applicable investments whenever the cash balance in the Bond Fund is insufficient to pay the principal of, premium, if any, and interest on the 2017 Series A Bonds or any other amount payable from the Bond Fund when due or upon any required disbursement from the Rebate Fund, respectively. The Trustee will not be liable for any investment loss (including any loss upon a sale of any investment) or any fee, tax, or other charge in respect of any investments, reinvestments, or any liquidation of investments made pursuant to this Agreement or the Indenture. The Rebate Fund shall never be commingled with any other fund or account.

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To the extent permitted by applicable law, the Company and the Issuer each specifically waives compliance with 12 C.F.R. § 12 and hereby notify the Trustee that no brokerage confirmations need to be sent relating to the security transactions as they occur. Notwithstanding the foregoing, to the extent the Trustee receives and invests amounts in the Bond Fund and the Rebate Fund, the Trustee shall provide the Company and the Issuer with periodic cash transaction statements which shall include details of all investment transactions made by the Trustee with respect to such accounts.

Section 4.4.    Special Arbitrage Certifications. 
(a)    The Company covenants and agrees that it will not take or authorize or permit any action to be taken and has not taken or authorized or permitted any action to be taken which results or would result in interest paid on any of the 2017 Series A Bonds being included in gross income of any owner thereof for purposes of federal income taxation (other than an owner who is a “substantial user” of the Project or a “related person” within the meaning of Code Section 147(a)) or adversely affects the validity of the 2017 Series A Bonds.
(b)    The Company warrants, represents, and certifies to the Issuer that the proceeds of the 2017 Series A Bonds will not be used in any manner that would cause the 2017 Series A Bonds to be “arbitrage bonds” under Code Sections 103(b)(2) and 148 and other applicable sections thereof. To the best knowledge and belief of the Company, there are no facts, estimates, or circumstances that would materially change the foregoing conclusion.
(c)    The Company hereby covenants that it will at all times comply and cause the Issuer to comply with the provisions of Section 148 and other applicable sections of the Code and will restrict the use of the proceeds of the 2017 Series A Bonds, in such manner and to such extent, if any, as may be necessary, and remit Excess Earnings with respect to all of the 2017 Series A Bonds, if any, to the United States of America pursuant to Code Section 148(f)(2) and carry out such actions so that the 2017 Series A Bonds will not constitute “arbitrage bonds” under Code Sections 103(b)(2) and 148. An officer or officers of the Issuer having responsibility with respect to the issuance of the 2017 Series A Bonds is or are hereby authorized and directed to give an appropriate certificate of the Issuer, for inclusion in the transcript of proceedings for the 2017 Series A Bonds, setting forth the reasonable expectations of the Issuer regarding the amount and use of the proceeds of the 2017 Series A Bonds and the facts, estimates, and circumstances on which they are based and related matters, all as of the date of delivery of and payment for the 2017 Series A Bonds pursuant to said Code Section 148. The Company shall provide the Issuer, and the Issuer’s certificate may be expressly based on, a certificate of the Company setting forth the facts, estimates, circumstances, and reasonable expectations of the Company on the date of delivery of and payment for the 2017 Series A Bonds regarding the amount and use of the proceeds of the 2017 Series A Bonds and related matters. If any such representation of the Company relied upon by the Issuer is untrue or inaccurate and the Issuer thereby suffers costs or damages, the Company shall indemnify the Issuer for any such costs or damages.
(d)    Consistent with the foregoing, the Company covenants and certifies to the Issuer and to and for the benefit of the purchasers of the 2017 Series A Bonds, that no use will be made of the proceeds of the sale of the 2017 Series A Bonds which would cause the 2017 Series A Bonds to be classified as “arbitrage bonds” within the meaning of Code Sections 103(b)(2) and 148 

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and that the Company and the Issuer will, after issuance of the 2017 Series A Bonds, comply with the provisions of the Code at all times, including after the 2017 Series A Bonds are discharged, to the extent Excess Earnings with respect to the 2017 Series A Bonds are required to be rebated to the United States of America pursuant to Code Section 148(f)(2). Pursuant to such covenant, the Issuer and the Company obligate themselves throughout the term of this Agreement and thereafter not to violate the requirements of Code Section 148.
(e)    The Company warrants, represents, and certifies to the Issuer that the proceeds of the 2017 Series A Bonds will be applied and invested in compliance with the current requirements of Code Section 149(g) and that consequently the 2017 Series A Bonds will not be “hedge bonds” under such Code Section 149(g).
(f)    The Company hereby covenants and agrees that it will at all times comply with the provisions of Code Section 148, including Section 148(f) and with Section 6.06 of the Indenture. Specifically, the Company shall carry out, do, and perform all acts stipulated to be performed by the Company pursuant to Section 6.06 of the Indenture. The Company shall further undertake to assure and cause rebate payments, if any, to be calculated and made to the United States of America in accordance with Code Section 148(f)(2) from moneys on deposit in the Rebate Fund from time to time after the end of each Computation Period and following discharge of the 2017 Series A Bonds. The Company also covenants to take all necessary acts and steps as required to cause the Issuer to comply with the provisions of Sections 7.02 and 7.03 of the Indenture.

Section 4.5.    Opinion Of Bond Counsel. The Company need not comply with the covenants or representations in Section 4.4 hereof if and to the extent that the Issuer and the Company (with a copy to the Trustee) receive a Favorable Opinion of Bond Counsel regarding such noncompliance.

Section 4.6.    First Mortgage Bonds. The Company covenants and agrees with the Issuer that it will, for the purpose of providing security for the 2017 Series A Bonds, execute and deliver to the Trustee the First Mortgage Bonds in aggregate principal amount equal to the aggregate principal amount of the 2017 Series A Bonds. The First Mortgage Bonds shall mature as to principal identically as in the case of the 2017 Series A Bonds and, upon the giving of a Redemption Demand to the First Mortgage Trustee and completion of other conditions precedent set forth in the First Mortgage Indenture Supplement, shall bear interest as provided in the First Mortgage Indenture Supplement.
Upon the occurrence of an Event of Default under ARTICLE IX of this Agreement, that has resulted in a default in payment of the principal of, premium, if any, or interest on the 2017 Series A Bonds as and when the same come due, whether at maturity, redemption, acceleration, or otherwise, or a default in payment of the purchase price of any 2017 Series A Bond tendered for purchase, the acceleration of the maturity date of the 2017 Series A Bonds (to the extent not already due and payable) as a consequence of such Event of Default and the receipt by the First Mortgage Trustee of a Redemption Demand from the Trustee, the First Mortgage Bonds shall bear interest, and principal and interest thereon will be payable, in accordance with the provisions specified in the First Mortgage Indenture Supplement.

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Upon payment of the principal of, premium, if any, and interest on any of the 2017 Series A Bonds, whether at maturity or before maturity by redemption or otherwise, and the surrender thereof to, and cancellation thereof by, the Trustee, or upon provision for the payment thereof having been made in accordance with the provisions of ARTICLE VIII of the Indenture, First Mortgage Bonds in an amount equal to the aggregate principal amount of the 2017 Series A Bonds so surrendered and cancelled or for the payment of which provision has been made shall be deemed fully paid and the obligations of the Company thereunder terminated and such First Mortgage Bonds shall be surrendered by the Trustee to the First Mortgage Trustee, and shall be cancelled by the First Mortgage Trustee. All of the First Mortgage Bonds shall be registered in the name of the Trustee and shall be non-transferable, except to effect transfers to any successor trustee under the Indenture.

    
ARTICLE V
PROVISIONS FOR PAYMENT

Section 5.1.    Loan Payments And Other Amounts Payable.
(a)    The Company hereby covenants and agrees to repay the Loan, as follows: on or before any Interest Payment Date for the 2017 Series A Bonds or any other date that any payment of interest, premium, if any, purchase price, or principal is required to be made in respect of the 2017 Series A Bonds at the times specified in accordance with the more specific provisions and requirements of the Indenture, until the principal of, premium, if any, and interest on the 2017 Series A Bonds shall have been fully paid or provision for the payment thereof shall have been made in accordance with the Indenture, it will pay to the Trustee, for disbursement by the Trustee, as Paying Agent, or for disbursement by any Paying Agent such sums which will enable the Paying Agent to pay the amounts payable on such date, in immediately available funds, as principal of (whether at purchase, maturity, or upon redemption, acceleration, or otherwise), premium, if any, and interest on the 2017 Series A Bonds as provided in the Indenture; provided that such payments by the Company to enable the Tender Agent to pay the purchase price of 2017 Series A Bonds shall be made within the times required by Section 3.06 of the Indenture. It is understood and agreed that all payments payable by the Company under this Section 5.1(a) are assigned by the Issuer to the Trustee, the Paying Agent, and the Tender Agent, as applicable, for the benefit of the Holders. The Company assents to such assignment. The Issuer hereby directs the Company and the Company hereby agrees to pay to the Trustee or the Paying Agent or the Tender Agent, as appropriate, at the Designated Office of the Trustee or the Paying Agent or the Tender Agent, as appropriate, all payments payable by the Company pursuant to this Section 5.1(a).
(b)    The Company will also pay the reasonable expenses of the Issuer related to the issuance of the 2017 Series A Bonds and incurred upon the request of the Company.
(c)    The Company will also pay the agreed upon fees and expenses of the Trustee (including those referred to in Section 10.02 of the Indenture), the Bond Registrar, the Tender Agent, and the Paying Agent under the Indenture and all other amounts which may be payable to the Trustee, the Bond Registrar, the Paying Agent, and the Tender Agent, as applicable from time to time, under the Indenture, such amounts to be paid directly to the Trustee, the Bond Registrar, the Paying Agent, 

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and the Tender Agent for their respective own accounts as and when such amounts become due and payable.
(d)    The Company further agrees to hold harmless the Trustee, the Bond Registrar, and the Paying Agent against any loss, liability, or expense, including reasonable attorneys’ fees and expenses, incurred by it without negligence or bad faith on its part in connection with the issuance of the 2017 Series A Bonds or the acceptance or administration of the trusts under the Indenture, including the costs of defending itself against any claim or liability in connection therewith.
(e)    The Company covenants, for the benefit of the Holders, if applicable, to pay or cause to be paid, to the Tender Agent for deposit in the Purchase Fund, such amounts as shall be necessary to enable the Tender Agent to pay the Purchase Price of 2017 Series A Bonds delivered to it for purchase, all as more particularly described in Sections 3.04 and 3.06 of the Indenture, and, in that regard, it will maintain an account with the Tender Agent and will pay in immediately available funds, a sum which will enable the Tender Agent to pay the purchase price of 2017 Series A Bonds delivered to it for purchase, as provided in the Indenture.
(f)    If the Company should fail to make any of the payments required in this Section 5.1, the item or installment so in default shall continue as an obligation of the Company until the amount in default shall have been fully paid, and the Company agrees to pay the same with interest thereon, to the extent permitted by law, from the date when such payment was due to the date of payment.

Section 5.2.    Payments Assigned. As set forth in Section 5.1 hereof, it is understood and agreed that this Agreement and all payments made by the Company pursuant to this Agreement (except payments pursuant to Section 5.1(b) and (c) hereof or pursuant to Section 8.2 hereof) are assigned by the Issuer to the Trustee. The Company assents to such assignment and hereby agrees that, as to the Trustee, the Paying Agent, and the Tender Agent, as applicable from time to time, its obligation to make such payments shall be absolute, irrevocable, and unconditional and shall not be subject to cancellation, termination, or abatement or to any defense or any right of set-off, counterclaim, or recoupment arising out of any breach by any party, whether hereunder or otherwise, or out of any indebtedness or liability at any time owing by any party. Except as provided above, the Issuer hereby directs the Company and the Company hereby agrees to pay directly to the Trustee, the Paying Agent, the Bond Registrar, the Tender Agent, and the Issuer, as appropriate, all said payments payable by the Company pursuant to Section 5.1 hereof.

Section 5.3.    Taxes And Other Governmental Charges. The Company agrees to pay during the term of this Agreement, as the same respectively become due, all taxes, assessments, and other governmental charges of any kind whatsoever that may at any time be lawfully assessed, levied, or charged against or with respect to the Project; provided, that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the Company shall be obligated to pay only such installments as may have become due and provided further that nothing herein shall be construed as obligating the Company to pay taxes on any interest or principal on the 2017 Series A Bonds disbursed to the Holders.

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The Company may, at its expense and in its own name, in good faith contest any such taxes, assessments, and other governmental charges and, upon any such contest, may permit the taxes, assessments, or other governmental charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless, in the opinion of its counsel, by nonpayment of any such items the security provided pursuant to the provisions of the Indenture will be materially endangered, in which event such taxes, charges for payments in lieu of taxes, assessments, or other governmental charges shall be paid forthwith. The Issuer will cooperate fully with the Company in any such contest. If the Company shall fail to pay any of the foregoing items required by this Section 5.3 to be paid by the Company, the Issuer or the Trustee may (but shall be under no obligation to) pay the same and any amounts so advanced therefor by the Issuer or the Trustee shall become an additional obligation of the Company to the one making the advancement, which amounts, together with interest thereon the Company agrees to pay at a rate which shall be one percent above the lowest minimum lending rate publicly quoted at such time as being charged by any commercial bank which is a member of the New York Clearing House on 90-day commercial loans to its prime commercial borrowers or the maximum rate permitted by law, whichever is lesser, until paid; but no such advancement shall operate to relieve the Company from any default hereunder. The Company may at its expense and in its own name and behalf apply for any tax exemption or exemption from payments in lieu of taxes allowed by the Commonwealth of Kentucky, or any political or taxing subdivision thereof under any existing or future provision of law which grants or may grant any such tax exemption or exemption from payments in lieu of taxes.

Section 5.4.    Obligations Of The Company Unconditional. The obligation of the Company to make the payments pursuant to this Agreement and to make any payments required in respect of the Rebate Fund as provided in Section 6.06 of the Indenture shall be absolute and unconditional. Until such time as the principal of, premium, if any, and interest on the 2017 Series A Bonds shall have been fully paid or provision for the payment thereof shall have been made in accordance with the Indenture, the Company (a) will not suspend or discontinue any payments pursuant to this Agreement; and (b) except as provided in ARTICLE X hereof, will not terminate this Agreement for any cause including failure of title to the Project or any part thereof, any acts or circumstances that may constitute failure of consideration, destruction of, or damage to the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the Commonwealth of Kentucky or any political subdivision thereof or any failure of the Issuer or the Trustee to perform and observe any agreement, whether express or implied, or any duty, liability, or obligation arising out of or connected with this Agreement. Nothing contained in this Section 5.4 shall be construed to release the Issuer from the performance of any of the agreements on its part herein contained; and if the Issuer should fail to perform any such agreement on its part, the Company may institute such action against the Issuer as the Company may deem necessary to compel performance so long as such action shall be in accordance with the agreements on the part of the Company contained in the preceding sentence. The Company may, however, at its own cost and expense and in its own name or in the name of the Issuer, prosecute or defend any action or proceeding or take any other action involving third persons which the Company deems reasonably necessary in order to secure or protect its right of ownership, possession, occupancy, and use of the Project, and in such event the Issuer hereby agrees to cooperate fully with the Company.

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Section 5.5.    Rebate Fund. The Company agrees to make all payments to the Trustee and rebate all amounts to the United States of America as are required of it under the Code and the Indenture. The obligation of the Company to make such payments shall remain in effect and be binding upon the Company notwithstanding the release and discharge of the Indenture.

Section 5.6.    Redemption Of The 2017 Series A Bonds In Advance of Scheduled Maturity. Under the terms of the Indenture, the 2017 Series A Bonds are and will be subject to redemption before their scheduled maturity. The Issuer and the Company agree that, if and when the Company shall direct the Trustee to redeem and call 2017 Series A Bonds, it shall do so on behalf of the Issuer.

Section 5.7.    Cancellation Of 2017 Series A Bonds. The cancellation by the Bond Registrar of any 2017 Series A Bond or Bonds purchased by the Company and delivered to the Bond Registrar for cancellation or of any 2017 Series A Bond or Bonds redeemed or purchased by the Issuer through funds other than funds received as Loan payments hereunder shall constitute a Loan payment equal to the principal amount of the 2017 Series A Bond or Bonds so cancelled.

 
ARTICLE VI
MAINTENANCE; DAMAGE, DESTRUCTION, AND  
CONDEMNATION; USE OF NET PROCEEDS; INSURANCE

Section 6.1.    Maintenance. So long as any 2017 Series A Bond is Outstanding, the Company will maintain, preserve, and keep the Project, or cause the Project to be maintained, preserved, and kept, in good repair, working order, and condition and will from time to time make or cause to be made all proper repairs, replacements, and renewals necessary to continue to constitute the Project as Environmental Facilities; provided, however, that the Company will have no obligation to maintain, preserve, keep, repair, replace, or renew any element or portion of the Project (a) the maintenance, preservation, keeping, repair, replacement, or renewal of which becomes uneconomical to the Company because of damage or destruction by a cause not within the control of the Company, or condemnation of all or substantially all of the Project or the generating facilities to which the element or unit of the Project is an adjunct, or obsolescence (including economic obsolescence), or change in government standards and regulations, or the termination by the Company of the operation of the generating facilities to which the element or unit of the Project is an adjunct, and (b) with respect to which the Company has furnished to the Issuer and the Trustee a certificate executed by the Company Representative certifying that the maintenance, preservation, keeping, repair, replacement, or renewal of such element or unit of the Project is being discontinued for one of the foregoing reasons, which shall be stated therein, and that the discontinuance of such element or unit will not adversely affect the exclusion of interest on any of the 2017 Series A Bonds from gross income for federal income tax purposes under Code Section 103(a).
The Company shall have the privilege at its own expense of remodeling the Project or making substitutions, modifications, and improvements to the Project from time to time as it, in its discretion, may deem to be desirable for its uses and purposes, which remodeling, substitutions, modifications, and improvements shall be included under the terms of this Agreement as part of the Project; 

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provided, however, that the Company shall take no actions which will change or alter the basic nature of the Project as Environmental Facilities.
If, before full payment of all 2017 Series A Bonds outstanding (or provision for payment thereof having been made in accordance with the provisions of the Indenture), the Project or any portion thereof is destroyed or damaged in whole or in part by fire or other casualty, or title to, or the temporary use of, the Project or any portion thereof shall have been taken by the exercise of the power of eminent domain, and the Issuer, the Company, or the First Mortgage Trustee receives Net Proceeds from insurance or any condemnation award in connection therewith, the Company (unless it shall have exercised its option to prepay the Loan pursuant to provisions of Section 10.1(b) or (c) hereof) shall, subject to compliance with the terms of the First Mortgage Indenture, either (i) cause such Net Proceeds to be used to repair, reconstruct, restore, or improve the Project; (ii) take any action, including causing the redemption of the 2017 Series A Bonds, in whole or in part, on any date which is a Business Day, which, in the opinion of Bond Counsel, will not adversely affect the exclusion of interest on any of the 2017 Series A Bonds from gross income for federal income tax purposes under Code Section 103(a) provided that if a Credit Facility is then in effect with respect to the 2017 Series A Bonds, the Company shall reimburse the applicable Credit Facility Issuer for drawings under such Credit Facility for such redemption; provided further that if the 2017 Series A Bonds bear interest at the Flexible Rate or the Semi-Annual Rate, such redemption must occur on a date on which the 2017 Series A Bonds are otherwise subject to optional redemption.

Section 6.2.    Insurance. The Company agrees to insure the Project at all times in accordance with the First Mortgage Indenture.

 
ARTICLE VII
SPECIAL COVENANTS

Section 7.1.    No Warranty Of Condition Or Suitability By The Issuer. The Issuer makes no warranty, either express or implied, as to the Project or that it will be suitable for the Company’s purposes or needs.

Section 7.2.    The Company To Maintain Its Corporate Existence; Conditions Under Which Exceptions Are Permitted. The Company agrees that during the term of this Agreement it will maintain its existence and good standing, will continue to be a corporate entity organized under the laws of the Commonwealth of Kentucky or qualified and admitted to do business in the Commonwealth of Kentucky, and will neither dispose of all or substantially all of its assets nor consolidate with nor merge into another entity unless the acquirer of its assets or the entity with which it shall consolidate or into which it shall merge, (a) shall be a corporation or other business organization organized and existing under the laws of the United States or one of the states of the United States of America or the District of Columbia; (b) shall be qualified and admitted to do business in the Commonwealth of Kentucky; (c) shall assume in writing all of the obligations and covenants of the Company herein; and (d) shall deliver a copy of such assumption to the Issuer and the Trustee.

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Section 7.3.    Financial Statements. The Company agrees to furnish the Trustee (within 120 days after the close of each fiscal year) with an audited balance sheet and statements of income, retained earnings, and changes in cash flows showing the financial condition of the Company and its consolidated subsidiary or subsidiaries, if any, at the close of such fiscal year and the results of operations of the Company and its consolidated subsidiary or subsidiaries, if any, for such fiscal year, accompanied by an opinion of its regular independent certified public accountants that such statements fairly represent the financial condition of the Company in accordance with generally accepted accounting principles. The requirements of this Section 7.3 shall be satisfied by the submission to the Trustee of the Company’s annual report on Form 10-K. The information so provided to the Trustee shall be kept in its files and is not required to be distributed to any Holder or other Person. Delivery of such reports, information, and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on certifications of the Company).

Section 7.4.    Further Assurances And Corrective Instruments. The Issuer and the Company agree that they will, from time to time, execute, acknowledge, and deliver, or cause to be executed, acknowledged, and delivered, such supplements hereto and such further instruments as may reasonably be required for carrying out the intention of or facilitating the performance of this Agreement.

Section 7.5.    The Issuer Representative. Whenever under the provisions of this Agreement the approval of the Issuer is required or the Issuer is required to take some action at the request of the Company, such approval shall be made or such action shall be taken by the Issuer Representative and the Company or the Trustee shall be authorized to act on any such approval or action, and the Issuer shall have no redress against the Company or the Trustee as a result of any such action taken.

Section 7.6.    The Company Representative. Whenever under the provisions of this Agreement the approval of the Company is required or the Company is required to take some action at the request of the Issuer, such approval shall be made or such action shall be taken by the Company Representative and the Issuer or the Trustee shall be authorized to act on any such approval or action and the Company shall have no redress against the Issuer or the Trustee as a result of any such action taken.

Section 7.7.    Financing Statements. The Company shall, to the extent required by law, file and record, refile and rerecord, or cause to be filed and recorded, refiled and rerecorded, all documents or notices, including financing statements and continuation statements, required by law in order to perfect, or maintain the perfection of, the lien of the Indenture. The Issuer shall cooperate fully with the Company in taking any such action. Concurrently with the execution and delivery of the 2017 Series A Bonds, the Company shall cause to be delivered to the Trustee an opinion of counsel (a) stating that in the opinion of such counsel, either: (i) such action has been taken, as set forth therein, with respect to the recording and filing of such documents, notices, and financing statements as is necessary to perfect the lien of the Indenture under the Uniform Commercial Code 

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of the Commonwealth of Kentucky; or (ii) no such action is necessary to so perfect such liens; and (b) stating the requirements for the filing of continuation statements or other documentation or notices in order to maintain the perfection of the lien of the Indenture, which filings the Company agrees to undertake.

Section 7.8.    The Company’s Performance Under Indenture. The Company agrees, for the benefit of Holders to do and perform all acts and things contemplated in the Indenture to be done and performed by it.

 
ARTICLE VIII
ASSIGNMENT; INDEMNIFICATION; REDEMPTION

Section 8.1.    Assignment. This Agreement may be assigned by the Company without the necessity of obtaining the consent of either the Issuer or the Trustee, subject, however, to each of the following conditions:
(a)    No assignment (other than pursuant to Section 7.2 hereof) shall relieve the Company from primary liability for any of its obligations hereunder, and upon any such assignment the Company shall remain primarily liable for payments of the amounts specified in Section 5.1 hereof and for performance and observance of the other covenants or agreements on its part herein provided to be performed and observed to the same extent as though no assignment had been made;
(b)    The assignee shall assume the obligations of the Company hereunder to the extent of the interest assigned;
(c)    The Company shall, within 30 days after the delivery thereof, furnish or cause to be furnished to the Issuer and to the Trustee a true and complete copy of each such assignment and assumption of obligation; and
(d)    Before such assignment, the Company shall have obtained a Favorable Opinion of Bond Counsel regarding the assignment.

Section 8.2.    Release And Indemnification Covenants. The Company releases the Issuer from and covenants and agrees that the Issuer shall not be liable for, and agrees to indemnify and hold the Issuer harmless against, any expense or liability incurred by the Issuer, including attorneys’ fees, resulting from any loss or damage to property or any injury to or death of any person occurring on or about or resulting from any defect in the Project or from any action commenced in connection with the financing thereof. If any such claim is asserted, the Issuer agrees to give prompt notice to the Company and the Company will assume the defense thereof, with full power to litigate, compromise, or settle the same in its sole discretion, it being understood that the Issuer will not settle or consent to the settlement of the same without the consent of the Company.

Section 8.3.    Assignment Of Interest In Agreement By The Issuer. Any assignment by the Issuer to the Trustee pursuant to the Indenture or this Agreement of any moneys receivable under this Agreement shall be subject and subordinate to this Agreement.

Section 8.4.    Redemption Of 2017 Series A Bonds. Upon the agreement of the Company to deposit moneys in the Bond Fund in an amount sufficient to redeem 2017 Series A Bonds subject to redemption, the Issuer, at the request of the Company, shall forthwith take all steps (other than the payment of the money required for such redemption) necessary under the applicable redemption provisions of the Indenture to effect redemption of all or part of the 2017 Series A Bonds outstanding, as may be specified by the Company, on the redemption date specified by the Company.

Section 8.5.    Reference To 2017 Series A Bonds Ineffective After 2017 Series A Bonds Paid. Upon payment in full of the 2017 Series A Bonds (or provision for payment thereof having been made in accordance with the provisions of the Indenture) and payment of all amounts required to be paid to the United States of America via the Trustee pursuant to Section 5.5 hereof and payment of all fees and charges of the Trustee (including reasonable attorneys’ fees and expenses), the Bond Registrar, the Authenticating Agent, and any Paying Agent, all references in this Agreement to the 2017 Series A Bonds, the First Mortgage Bonds, and the Trustee shall be ineffective and neither the Trustee nor the Holders thereafter have any rights hereunder except as set forth in Section 11.1 hereof.

ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1.    Events Of Default Defined. The following shall be “Events of Default” under this Agreement and the term “Events of Default” shall mean, whenever it is used in this Agreement, one or more of the following events:
(a)    Failure by the Company to pay any amount required to be paid under subsections (a) and (e) of Section 5.1 hereof which results in failure to pay principal of, premium, or interest on or the purchase price of the 2017 Series A Bonds, and such failure shall cause an Event of Default under the Indenture.
(b)    Failure by the Company to observe and perform any covenant, condition, or agreement on its part to be observed or performed, other than as referred to in subsection (a) of this Section 9.1, for a period of 30 days after written notice, specifying such failure and requesting that it be remedied, is given to the Company by the Issuer or the Trustee, unless the Issuer and the Trustee shall agree in writing to an extension of such time before its expiration; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Issuer and the Trustee will not unreasonably withhold their consent to an extension of such time if such failure is capable of being cured and corrective action is instituted by the Company within the applicable period and is being diligently pursued.
(c)    An involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking: (1) relief in respect of the Company, or of a substantial part of the property or assets of the Company, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal or state bankruptcy, insolvency, receivership, or similar law; (2) the appointment of a receiver, trustee, custodian, sequestrator, conservator, or similar official for the Company or for a substantial part of the property or assets of the Company; or (3) the winding-up or liquidation of the Company; and such proceeding or 

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petition shall continue undismissed or unstayed for 90 days or an order or decree approving or ordering any of the foregoing shall be entered.
(d)    The Company shall: (1) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal or state bankruptcy, insolvency, receivership, or similar law; (2) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in Section 9.1(c) above; (3) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator, or similar official for the Company or for a substantial part of the property or assets of the Company; (4) file an answer admitting the material allegations of a petition filed against it in any such proceeding; (5) make a general assignment for the benefit of creditors; (6) become unable, admit in writing its inability, or fail generally to pay its debts as they become due; or (7) take any action for the purpose of effecting any of the foregoing.
(e)    All bonds outstanding under the First Mortgage Indenture shall, if not already due, have become immediately due and payable, whether by a declaration of the First Mortgage Trustee or otherwise, and such acceleration shall not have been rescinded or annulled by the First Mortgage Trustee.
(f)    The occurrence of an Event of Default under the Indenture.
The provisions of Section 9.1(b) hereof are subject to the following limitations: If by reason of force majeure the Company is unable in whole or in part to carry out its agreements on its part herein contained, other than the obligations on the part of the Company contained in Section 2.2(j), Section 2.2(k), Section 4.2, Section 4.4, Section 4.6, or Section 7.2 or ARTICLE V hereof and the general covenant and obligation of the Company to take all necessary actions for the continued exclusion of interest on the 2017 Series A Bonds from gross income for federal and Kentucky income taxes, the Company shall not be deemed in default during the continuance of such inability. The term “force majeure” as used herein shall mean any cause or event not reasonably within the control of the Company, including acts of God; strikes; wars or national police actions, lockouts or other industrial disturbances; acts of public enemies, including terrorists; orders of any kind of the government of the United States or of the Commonwealth of Kentucky or any of their departments, agencies, or officials, or any civil or military authority; evacuations and quarantines; insurrections; riots; epidemics; plague; famine; landslides; lightning; earthquakes; fire; hurricanes; tornadoes; storms; typhoons; cyclones; volcanic eruptions; floods; washouts; droughts; arrests; restraints of government and people; civil disturbances; explosions; breakage or accident to machinery and transmission lines or pipes; or partial or entire failure of utility services. The Company agrees, however, to remedy with all reasonable dispatch the cause or causes preventing the Company from carrying out its agreements; provided, that the settlement of strikes, lockouts, and other industrial disturbances shall be entirely within the discretion of the Company, and the Company shall not be required to make settlement of strikes, lockouts, and other industrial disturbances by acceding to the demands of the opposing party or parties when such course is in the judgment of the Company unfavorable to the Company.

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Section 9.2.    Remedies On Default. Whenever any Event of Default referred to in Section 9.1 hereof shall have happened and be continuing, the Trustee may take any one or more of the following remedial steps:
(a)    By written notice to the Company, the Trustee, on behalf of the Issuer, may declare an amount equal to the principal and accrued interest on the 2017 Series A Bonds then Outstanding to be immediately due and payable under this Agreement, whereupon the same shall become immediately due and payable.
(b)    The Trustee, on behalf of the Issuer, may have access to and inspect, examine, and make copies of the books and records and any and all accounts, data, and income tax and other tax returns of the Company.
(c)    The Trustee, on behalf of the Issuer, may take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due, or to enforce performance and observance of any obligation, agreement, or covenant of the Company under this Agreement, including any remedies available in respect of the First Mortgage Bonds.
In case there shall be pending a proceeding of the nature described in Section 9.1(c) or (d) hereof, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to file and prove a claim or claims for the whole amount owing and unpaid pursuant to this Agreement and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee allowed in such judicial proceedings relative to the Company, its creditors, or its property, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute the same after the deduction of its charges and expenses; and any custodian (including a receiver, trustee, or liquidator) of the Company appointed in connection with such proceedings is hereby authorized to make such payments to the Trustee, and to pay to the Trustee any amount due it for compensation and expenses, including reasonable counsel fees and expenses incurred by it up to the date of such distribution.
Any amounts collected pursuant to action taken under this Section 9.2 (other than the compensation and expenses referred to in the immediately prior sentence) shall be paid into the Bond Fund and applied in accordance with the provisions of the Indenture or, if the 2017 Series A Bonds have been fully paid (or provision for payment thereof has been made in accordance with the provisions of the Indenture) and all reasonable and necessary fees and expenses of the Trustee and any paying agents accrued and to accrue through final payment of the 2017 Series A Bonds, and all other liabilities of the Company accrued and to accrue hereunder or under the Indenture through final payment of the 2017 Series A Bonds have been paid, such amounts so collected shall be paid to the Company.

Section 9.3.    No Remedy Exclusive. No remedy herein conferred upon or reserved to the Issuer is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to 

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exercise any right or power accruing upon default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Issuer to exercise any remedy reserved to it in this ARTICLE IX, it shall not be necessary to give any notice other than such notice as may be herein expressly required. Such rights and remedies as are given the Issuer hereunder shall also extend to the Trustee, and the Trustee and the Holders, subject to the provisions of the Indenture, shall be entitled to the benefit of all covenants and agreements herein contained.

Section 9.4.    Agreement To Pay Reasonable Attorneys’ Fees And Expenses. If the Company should default under any of the provisions of this Agreement and the Issuer or the Trustee should employ attorneys or incur other expenses for the collection of amounts payable hereunder or the enforcement of performance or observance of any obligation or agreement on the part of the Company herein contained, the Company agrees that it will on demand therefor pay to the Issuer or the Trustee the reasonable fees and expenses of such attorneys and such other reasonable expenses so incurred by the Issuer or the Trustee.

Section 9.5.    Waiver Of Events Of Default. If, after the acceleration of the maturity of the outstanding 2017 Series A Bonds by the Trustee pursuant to the Indenture, and before any judgment or decree for the appointment of a receiver or for the payment of the moneys due shall have been obtained or entered, the Company shall cause to be deposited with the Trustee a sum sufficient to pay all matured installments of interest upon all 2017 Series A Bonds and the principal of, and premium, if any, on any and all 2017 Series A Bonds which shall have become due otherwise than by reason of such declaration (with interest upon such principal and premium, if any, and overdue installments of interest, at the rate per annum which is one percent above the highest rate borne by any 2017 Series A Bond, until paid), and such amounts as shall be sufficient to cover all expenses of the Trustee in connection with such default, and all defaults under the Indenture and this Agreement, other than nonpayment of principal of 2017 Series A Bonds which shall have become due by said declaration, shall have been remedied, and such Event of Default under the Indenture shall be deemed waived by the Trustee in accordance with Section 9.11 of the Indenture with the consequence that under the Indenture such acceleration is rescinded, then the Company’s default hereunder shall be deemed to have been waived by the Issuer and no further action or consent by the Trustee or the Issuer shall be required. If any agreement or covenant contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. 

ARTICLE X
PREPAYMENT OF LOAN

Section 10.1.    Options To Prepay Loan. The Company shall have, and is hereby granted, options to prepay the Loan in whole and to cancel or terminate this Agreement on any Business Day at any time the Company so elects, if certain events shall have occurred within the 180 days preceding the giving of written notice by the Company to the Trustee of such election, as follows:

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(a)    If in the judgment of the Company, unreasonable burdens or excessive liabilities shall have been imposed after the issuance of the 2017 Series A Bonds upon the Company with respect to the Project or the operation thereof, including without limitation federal, state, or other ad valorem, property, income, or other taxes not imposed on the date of this Agreement other than ad valorem taxes presently levied upon privately owned property used for the same general purpose as the Project;
(b)    If the Project or a portion thereof or other property of the Company in connection with which the Project is used shall have been damaged or destroyed to such an extent so as, in the judgment of the Company, to render the Project or other property of the Company in connection with which the Project is used unsatisfactory to the Company for its intended use and such condition shall continue for a period of six months;
(c)    There shall have occurred condemnation of all or substantially all of the Project or the taking by eminent domain of such use or control of the Project or other property of the Company in connection with which the Project is used so as, in the judgment of the Company, to render the Project or other property of the Company in connection with which the Project is used unsatisfactory to the Company for its intended use;
(d)    If changes, which the Company cannot reasonably control, in the economic availability of materials, supplies, labor, equipment, or other properties or things necessary for the efficient operation of the Trimble County Generating Station of the Company shall have occurred which, in the judgment of the Company, render the continued operation of the Trimble County Generating Station or any generating unit at such station uneconomical; or changes in circumstances, after the issuance of the 2017 Series A Bonds including but not limited to changes in clean air or water or other air and water pollution control requirements or solid waste disposal requirements, shall have occurred such that the Company shall determine that use of the Project is no longer required or desirable;
(e)    If this Agreement shall become void or unenforceable or impossible of performance by reason of any changes in the Constitution of the Commonwealth of Kentucky or the Constitution of the United States of America or by reason of legislative or administrative action, whether state or federal, or any final decree, judgment, or order of any court or administrative body, whether state or federal; or
(f)    A final order or decree of any court or administrative body after the issuance of the 2017 Series A Bonds shall require the Company to cease a substantial part of its operations at the Trimble County Generating Station to such extent that the Company will be prevented from carrying on its normal operations at such location for a period of six months.
In the case of prepayment pursuant to this Section 10.1 (or if any 2017 Series A Bonds be redeemed in whole or in part pursuant to Section 6.1 hereof), the Loan prepayment price shall be a sum sufficient, together with other funds deposited with the Trustee and available for such purpose, to redeem all 2017 Series A Bonds then outstanding (or, in the case any 2017 Series A Bonds are redeemed in part pursuant to Section 6.1 hereof, such portion of the 2017 Series A Bonds then outstanding) under the Indenture at a price equal to 100% of the principal amount thereof plus 

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interest accrued and to accrue to the date of redemption of the 2017 Series A Bonds and to pay all reasonable and necessary fees and expenses of the Trustee and any Paying Agents and all other liabilities of the Company accrued and to accrue hereunder to the date of redemption of the 2017 Series A Bonds. In order to exercise any option to prepay the Loan and to cancel or terminate this Agreement by reason of the occurrence of any of the events mentioned in (a) through (f) above, the Company is required to give written notice to the Trustee of its election to prepay the Loan within 180 days of the occurrence of any of the events mentioned in (a) through (f) above.

Section 10.2.    Additional Option To Prepay Loan. The Company shall have, and is hereby granted, further options, to the extent that the 2017 Series A Bonds are, from time to time, subject to optional redemption, during any period of optional redemption, to prepay all, or any portion, of the relevant and applicable Loan payments due or to become due hereunder by depositing with the Trustee moneys sufficient to pay, together with other funds deposited with the Trustee and available for such purpose, the principal of and applicable premium, if any, and accrued interest, through the date of redemption (which must be a Business Day), on all or any portion of the 2017 Series A Bonds then outstanding under the Indenture and, upon depositing with the Trustee moneys sufficient to pay the principal, applicable premium, if any, and accrued interest, through the date of redemption, on all 2017 Series A Bonds then outstanding under the Indenture, as well as all reasonable and necessary expenses of the Trustee and any Paying Agents and all other liabilities of the Company accrued and to accrue hereunder, to cancel or terminate the term of this Agreement.

Section 10.3.    Obligations To Prepay Loan. 
(a)    Mandatory Redemption Upon Determination Of Taxability. The Company shall be obligated to prepay the entire Loan or any part thereof, as provided below, before the required full payment of the 2017 Series A Bonds (or before making provision for payment thereof in accordance with the Indenture) on the 180th day (or such earlier date as may be designated by the Company), which, in every case, must be a Business Day, upon the occurrence of a Determination of Taxability. The Issuer and the Company shall take all actions required to mandatorily redeem the 2017 Series A Bonds at the cost of the Company upon the terms specified in this Agreement and in ARTICLE IV of the Indenture following the occurrence of a Determination of Taxability, including prepaying appropriate amounts due on the 2017 Series A Bonds in order to effect such redemption. The 2017 Series A Bonds shall be redeemed by the Issuer, in whole, or in such part as described below, at a redemption price equal to 100% of the principal amount thereof, without redemption premium, plus accrued interest, if any, to the redemption date, within 180 days following a Determination of Taxability. For purposes of this Section 10.3, a “Determination of Taxability” shall mean the receipt by the Trustee of written notice from a current or former registered owner of a 2017 Series A Bond or from the Company or the Issuer of: (1) the issuance of a published or private ruling or a technical advice memorandum by the Internal Revenue Service in which the Company participated or has been given the opportunity to participate, and which ruling or memorandum the Company, in its discretion, does not contest or from which no further right of administrative or judicial review or appeal exists; or (2) a final determination from which no further right of appeal exists of any court of competent jurisdiction in the United States in a proceeding in which the Company has participated or has been a party, or has been given the opportunity to participate or be a party, in each case, to the effect that as a result of a failure by the Company to 

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perform or observe any covenant or agreement or the inaccuracy of any representation contained in this Agreement or any other agreement or certificate delivered in connection with the 2017 Series A Bonds, the interest on the 2017 Series A Bonds is included in the gross income of the owners thereof for federal income tax purposes, other than with respect to a person who is a “substantial user” or a “related person” of a substantial user within the meaning of Code Section 147; provided, however, that no such Determination of Taxability shall be considered to exist as a result of the Trustee receiving notice from a current or former registered owner of a 2017 Series A Bond or from the Issuer unless (i) the Issuer or the registered owner or former registered owner of the 2017 Series A Bond involved in such proceeding or action (A) gives the Company and the Trustee prompt notice of the commencement thereof; and (B) (if the Company agrees to pay all expenses in connection therewith) offers the Company the opportunity to control unconditionally the defense thereof, and (ii) either (A) the Company does not agree within 30 days of receipt of such offer to pay such expenses and liabilities and to control such defense; or (B) the Company shall exhaust or choose not to exhaust all available proceedings for the contest, review, appeal, or rehearing of such decree, judgment, or action which the Company determines to be appropriate. No Determination of Taxability described above will result from the inclusion of interest on any 2017 Series A Bond in the computation of minimum or indirect taxes. All of the 2017 Series A Bonds shall be redeemed upon a Determination of Taxability as described above unless, in the opinion of Bond Counsel, redemption of a portion of the 2017 Series A Bonds of one or more series or one or more maturities would have the result that interest payable on the remaining 2017 Series A Bonds outstanding after the redemption would not be so included in any such gross income.
If the Issuer, the Company, or the Trustee has been put on notice or becomes aware of the existence or pendency of any inquiry, audit, or other proceedings relating to the 2017 Series A Bonds being conducted by the Internal Revenue Service, the party so put on notice shall give immediate written notice to the other parties of such matters.
Promptly upon learning of the occurrence of a Determination of Taxability (whether or not the same is being contested), or any of the events described in this Section 10.3(a), the Company shall give notice thereof to the Trustee and the Issuer.
(b)    In the case of the mandatory obligation of the Company to prepay the Loan or any part thereof after the occurrence of a Determination of Taxability, pursuant to Section 10.3(a) hereof, the Company shall be obligated to prepay such Loan or such part thereof not later than 180 days after any such final determination as specified in Section 10.3(a) hereof and to provide to the Trustee for deposit in the Bond Fund an amount sufficient, together with other funds deposited with the Trustee and available for such purpose, to redeem such 2017 Series A Bonds at the price of 100% of the principal amount thereof in accordance with Section 5.1 hereof plus interest accrued and to accrue to the date of redemption of the 2017 Series A Bonds and to pay all reasonable and necessary fees and expenses of the Trustee and any paying agents and all other liabilities of the Company accrued and to accrue hereunder to the date of redemption of the 2017 Series A Bonds.
(c)    If a Determination of Taxability occurs when all or any portion of the 2017 Series A Bonds are owned by any Purchaser, the Company hereby agrees to pay to such Purchaser, 

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in addition to the redemption price of the 2017 Series A Bonds owned by such Purchaser, the following additional amounts:
(1)    an additional amount equal to the difference between (A) the amount of interest paid on the 2017 Series A Bonds during the Taxable Period and (B) the amount of interest that would have been paid on the 2017 Series A Bonds during the Taxable Period had the 2017 Series A Bonds borne interest at the Taxable Rate; and
(2)    an amount equal to any interest, penalties on overdue interest, and additions to tax (as referred to in Subchapter A of Chapter 68 of the Code) owed by such Purchaser as a result of an occurrence of a Determination of Taxability.

Section 10.4.    Notice Of Prepayment; Redemption Procedures. It is understood and agreed by the parties hereto that in order to exercise an option granted in, or to consummate a mandatory prepayment required by, this ARTICLE X, the Company shall give written notice to the Issuer and the Trustee which notice shall (a) contain the agreement of the Company to deposit moneys in the Bond Fund on or before the redemption date in an amount sufficient to redeem a principal amount of the 2017 Series A Bonds equal to the amount of the prepayment, including, in the case of a prepayment under Section 10.2 hereof, any applicable redemption premium in respect of such 2017 Series A Bonds, and any other amounts required under this Agreement; (b) specify the prepayment date (which must be a Business Day and which shall also be the redemption date); and (c) comply with Section 4.07 of the Indenture regarding the number of days’ notice the Company is required to give the Issuer and the Trustee for the redemption of 2017 Series A Bonds bearing interest in the then applicable Interest Rate Mode.

Section 10.5.    Relative Position Of This Article And Indenture. The rights and options granted to the Company in this ARTICLE X, except the option granted to the Company pursuant to Section 10.2 to prepay less than all of the Loan payments, shall be and remain prior and superior to the Indenture and may be exercised whether or not the Company is otherwise in default hereunder; provided that such default will not result in nonfulfillment of any condition to the exercise of any such right or option.

Section 10.6.    Concurrent Discharge Of First Mortgage Bonds. If any 2017 Series A Bond shall be paid and discharged pursuant to any provision of this Agreement, so that the 2017 Series A Bond is not thereafter Outstanding, a like principal amount of First Mortgage Bonds shall be deemed fully paid and the obligations of the Company thereunder terminated. Thereupon, the Trustee shall deliver to the First Mortgage Trustee such like principal amount of First Mortgage Bonds for cancellation pursuant to Section 2.22 of the Indenture.

ARTICLE XI
MISCELLANEOUS

Section 11.1.    Term Of Agreement. This Agreement shall remain in full force and effect from the date hereof to and including the later of the Maturity Date, or until such earlier or later time as all of the 2017 Series A Bonds shall have been fully paid (or provision made for such payment pursuant to the Indenture); provided, however, that this Agreement may be cancelled and terminated 

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before said date if the Company shall prepay all of the Loan pursuant to ARTICLE X hereof; and provided further, however, that all obligations of the Company under ARTICLE V and Section 8.2 hereof: (a) to pay the agreed fees and expenses of the Trustee, the Tender Agent, the Bond Registrar, and any Paying Agent; and (b) to pay any amount required by Section 5.5 hereof shall continue in effect even though 2017 Series A Bonds may no longer be outstanding and this Agreement may otherwise be terminated. All representations and certifications by the Company as to all matters affecting the tax-exempt status of interest on the 2017 Series A Bonds shall be for the equal and ratable benefit, protection, and security of the Holders of the 2017 Series A Bonds and shall survive the termination of this Agreement and all obligations of the Company contained herein relating to indemnification of the Issuer, the Trustee, the Bond Registrar, the Authenticating Agent, the Tender Agent, and any Paying Agent shall survive the termination of this Agreement.

Section 11.2.    Notices. All notices, certificates, or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or mailed by registered or certified mail, postage prepaid, addressed as follows:
	
		
	To the Issuer:
	County of Trimble, Kentucky 
P. O. Box 251
123 Church Street 
Bedford, Kentucky 40006 
Attention: County Judge/Executive
Telephone: (502) 255 - 7196
Facsimile: (502) 255 - 4618
Email: jp@tcfcgov.com

	To the Trustee:

	U.S. Bank National Association
One Financial Square
Louisville, Kentucky 40202
Attention: Corporate Trust Department
Telephone: (502) 562-6259
Facsimile: (502) 562-6371
Email: amy.anders@usbank.com

	To the Company:

	Louisville Gas and Electric Company
220 West Main Street
Louisville, Kentucky 40202
Attention: Treasurer
Telephone: (502) 627-4956
Facsimile: (502) 627-4742
Email: Dan.Arbough@lge-ku.com

	If to the Remarketing Agent:

	J.P. Morgan Securities LLC 
383 Madison Avenue, 8th Floor 
New York, New York 10179
Attn:  Municipal Short Term Desk
Telephone:  (212) 834-7224
Facsimile:  (917) 456-3541
Email:  peter.mccarthy@chase.com

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	With a Copy to:
	J.P. Morgan Securities LLC 
383 Madison Avenue, 8th Floor 
New York, New York 10179
Attn:  Ivan Naguit
Telephone:  (212) 270-1584
Facsimile:  (212) 270-9665
Email:  ivan.l.naguit@jpmorgan.com

	If to First Mortgage Trustee:

	The Bank of New York Mellon
500 Ross Street, 12th Floor  
Pittsburgh, Pennsylvania 15262 
Attn: Corporate Trust Administration
Telephone: (412) 236-1215
Facsimile: (412) 234-8377
Email: leslie.lockhart@bnymellon.com

	If to the Tender Agent:

	U.S. Bank National Association
One Financial Square
Louisville, Kentucky 40202
Attention: Corporate Trust Department
Telephone: (502) 562-6259
Facsimile: (502) 562-6371
Email: amy.anders@usbank.com

	If to the Paying Agent:

	U.S. Bank National Association
One Financial Square
Louisville, Kentucky 40202
Attention: Corporate Trust Department
Telephone: (502) 562-6259
Facsimile: (502) 562-6371 
Email: amy.anders@usbank.com

	If to the Bond Registrar:

	U.S. Bank National Association
One Financial Square
Louisville, Kentucky 40202
Attention: Corporate Trust Department
Telephone: (502) 562-6259
Facsimile: (502) 562-6371 
Email: amy.anders@usbank.com

A duplicate copy of each notice, certificate, or other communication given hereunder by either the Issuer or the Company to the other shall also be given to the Trustee. The Issuer, the Company, and the Trustee may by notice given hereunder designate any further or different addresses to which subsequent notices, certificates, or other communications shall be sent.

Section 11.3.    Binding Effect; Bond Counsel Opinions. This Agreement shall inure to the benefit of and shall be binding upon the Issuer, the Company, and their respective successors and assigns, subject, however, to the limitations contained in Section 7.2, Section 8.1, and Section 8.3 hereof.

Section 11.4.    Severability. If any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.

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Section 11.5.    Amounts Remaining In Bond Fund And Rebate Fund. It is agreed by the parties hereto that any amounts remaining in the Bond Fund upon expiration or sooner termination of the term of this Agreement, as provided in this Agreement, after payment in full of the 2017 Series A Bonds (or provision for payment thereof having been made in accordance with the provisions of the Indenture) and the reasonable and necessary fees and expenses of the Trustee (including reasonable attorneys’ fees and expenses) and any Paying Agent in accordance with the Indenture and the payment in full of all other amounts required to be paid under this Agreement or the Indenture, shall belong to and be paid to the Company by the Trustee. Any amounts remaining in the Rebate Fund at such time shall be held, applied, and disbursed strictly and only in accordance with the provisions of Section 6.06 of the Indenture. Following the payment and discharge of the Refunded 2007 Series A Bonds on their redemption date and the making of provision for payment of the Refunded 2007 Series A Bonds not presented for payment, any remaining moneys in the Prior 2007 Series A Bond Fund shall belong to and be paid to Company by the Prior 2007 Series A Trustee.

Section 11.6.    Amendments, Changes, And Modifications. After the issuance of the 2017 Series A Bonds and before payment in full of all 2017 Series A Bonds (or provision for the payment thereof having been made in accordance with the provisions of the Indenture), except as otherwise provided in this Agreement or in the Indenture, this Agreement may not be effectively amended, changed, modified, altered, or terminated, and no provision hereof waived, without the written consent of the Trustee, given in accordance with the Indenture.

Section 11.7.    Execution In Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

Section 11.8.    Applicable Law. This Agreement shall be construed, and the obligations, rights, and remedies of the parties under this Agreement are to be determined, in accordance with the laws of the Commonwealth of Kentucky without regard to conflicts of laws principles, except to the extent that the laws of the United States of America may prevail.

Section 11.9.    Interpretation. The captions or headings in this Agreement are for convenience only and in no way define, limit, or describe the scope or intent of any provisions or sections of this Agreement. The words “hereof”, “herein”, “hereto”, “hereby” and “hereunder” refer to this entire Agreement. Unless otherwise noted, all Section and Article references are to sections and articles in this Agreement. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the term “including” is not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.”

Section 11.10.    No Pecuniary Liability Of The Issuer. No provision, covenant, or agreement contained in this Agreement or breach thereof shall constitute or give rise to a pecuniary liability of the Issuer or a charge upon its general credit or taxing powers. In making such covenants, agreements, or provisions, the Issuer has not obligated itself, except with respect to the Project and the application of the revenues of this Agreement, as hereinabove provided.

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Section 11.11.    Payments Due On Other Than Business Days. If the date for making any payment or the last date for performance of any act or the exercise of any right, as provided in this Agreement, shall not be on a Business Day, such payment may be made or act performed or right exercised on the next succeeding Business Day with the same force and effect as if done on the date provided in this Agreement, and if done on such succeeding Business Day no interest with respect to such payment shall accrue for the period after such nominal date.

(Signature page to follow)

- 31 -

[SIGNATURE PAGE TO LOAN AGREEMENT] 

IN WITNESS WHEREOF, the Issuer and the Company have caused this Agreement to be executed in their respective corporate names and their respective corporate seals to be hereunto affixed and attested by their duly authorized officers, all as of the date first written above.	
		
	

(SEAL)
	COUNTY OF TRIMBLE, KENTUCKY

By /s/ Jerry L. Powell                                 
Jerry L. Powell
County Judge/Executive

	

Attest: 

/s/ Susan Barnes                                     
Fiscal Court Clerk
	 

	 
	

	

(SEAL)
	LOUISVILLE GAS AND ELECTRIC COMPANY

 
By /s/ Daniel K. Arbough                                   
Daniel K. Arbough
Treasurer

	   
	 

	Attest:

/s/ Gerald A. Reynolds                                       
Gerald A. Reynolds
Secretary
	 

400001.156414/1447269.3                                                      S-1

	
		
	COMMONWEALTH OF KENTUCKY
	)

	 
	) SS

	COUNTY OF TRIMBLE
	)

I, the undersigned Notary Public in and for the State and County aforesaid, do hereby certify that on the 22nd day of May, 2017, the foregoing instrument was produced to me in said County by Jerry L. Powell and Susan Barnes, personally known to me and personally known by me to be the County Judge/Executive and the Fiscal Court Clerk, respectively, of the COUNTY OF TRIMBLE, KENTUCKY, and acknowledged before me by them and each of them to be their free act and deed as County Judge/Executive and Fiscal Court Clerk of such County, and the act and deed of said County as authorized by an Ordinance of the Fiscal Court of such County.
Witness my hand and seal this 22nd day of May, 2017. My commission expires February 26, 2018.
(Seal)
/s/ Mark S. Franklin     
Notary Public 
State at Large, Kentucky
	
		
	COMMONWEALTH OF KENTUCKY
	)

	 
	) SS

	COUNTY OF JEFFERSON
	)

I, the undersigned Notary Public in and for the State and County aforesaid, do hereby certify that on the 19th day of May, 2017, the foregoing instrument was produced to me in said County by Daniel K. Arbough and Gerald A. Reynolds, personally known to me and personally known by me to be the Treasurer and the Secretary, respectively, of LOUISVILLE GAS AND ELECTRIC COMPANY, a corporation incorporated under the laws of the Commonwealth of Kentucky, who being by me duly sworn, did say that the seal affixed to said instrument is the corporate seal of said corporation, and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors, and said respective persons acknowledged before me said instrument to be the free act and deed of said corporation and to be their free act and deed as such officers of such corporation.
Witness my hand and seal this 19th day of May, 2017. My commission expires June 21, 2018.
(Seal)
/s/ Betty L. Brinly     
Notary Public 
State at Large, Kentucky
This Instrument Prepared by:  
 
STOLL KEENON OGDEN PLLC 
2000 PNC Plaza 
500 West Jefferson Street 
Louisville, Kentucky 40202 

/s/ Mark S. Franklin             
Mark S. Franklin

400001.156414/1447269.3                                                      S-2

EXHIBIT A

DESCRIPTION OF PROJECT

[See attachment]

TRIMBLE COUNTY GENERATING STATION

LOUISVILLE GAS AND ELECTRIC COMPANY

_____________________

PART I
_____________________
THE PROJECT
_____________________

DESCRIPTION OF CERTAIN POLLUTION CONTROL FACILITIES 
TO SERVE UNIT NO. 1 AND UNIT NO. 2 AT THE TRIMBLE COUNTY 
GENERATING STATION OF LOUISVILLE GAS AND ELECTRIC COMPANY
ELECTROSTATIC PRECIPITATORS
Two electrostatic precipitators will be installed to serve Units l and 2 of the Trimble County Generating Station. Units 1 and 2 of the Trimble County Generating Station will be new coal-fired steam electric generating units, and the precipitators will be installed simultaneously with construction and installation of the generating units themselves. The electrostatic precipitators, together with associated structural supports, ductwork and flue-gas duct system, are solely designed and intended for the removal of flyash and particulates from flue gases exiting the Unit 1 and Unit 2 steam boilers. Ductwork incident to Units 1 and 2 of the Trimble County Generating Station will be designed for the purpose of connecting the coal-fired steam boilers to the precipitators, and thereafter to transport flue gases to a sulphur dioxide removal system following flyash and particulate removal. The precipitators are designed to remove over 99% of particulate emissions and flyash when the steam boilers are being operated. The precipitators operate upon the principle of creation of electromagnetic fields which attract and capture particulate matter (flyash) from the flue gases. The flyash is then removed and conveyed by the water sluice effluent system to either the emergency flyash and sludge storage pond, the ash storage pond or the solid waste processing facilities for ultimate disposal.
COOLING TOWER
A natural draft cooling tower with closed-loop cooling water systems will be provided to serve Units 1 and 2 of the Trimble County Generating Station. The purpose of the cooling tower is to transfer to the atmosphere the heat absorbed by water circulating through the condensers of 

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Generating Units 1 and 2, which condense low pressure steam discharged from steam-driven turbines. The closed-loop system with cooling tower is designed to minimize the release of heated waters (thermal pollution) to the Ohio River and is required to be installed in order to conform to applicable water pollution control regulations. The described water pollution control and abatement facility consists of the natural draft cooling tower, pumps, circulating water systems, water pipes, motors, blow-down system, structural supports and functionally related and subordinate equipment and facilities.
EFFLUENT DRAIN SYSTEMS AND 
SEDIMENTATION AND HOLDING BASINS
The effluent drainage system consists of a sedimentation basin equipped with monitoring devices and skimmers to remove oil, and an extensive plant area drain and runoff system which carries polluted liquids into the sedimentation basin. Certain chemical wastes will be diverted to the ash storage and disposal pond. Additionally, to provide holding and treatment of liquid effluents created by coal storage areas and limestone storage areas, a limestone and coal pile run-off retention basin is situated between the plant sewage treatment systems and the fuel oil storage area on the one side and the reactant chemical (limestone) storage area and active coal pile storage area on the other side. The purpose of the limestone and coal pile run-off retention basin is to capture liquid wastes emanating from the reactant chemical piles and active coal piles, together with any effluents emanating from the fuel oil storage area and the sewage treatment systems. The retention basin holds and neutralizes such liquid wastes pending their further treatment and disposal. Following neutralization and treatment, polluted liquids from the limestone and coal pile retention basin flow to the sedimentation basin for further neutralization. The sedimentation retention basin is situated between the limestone and coal pile retention basin and the Ohio River. The sedimentation retention basin prevents the discharge of pollutants into the Ohio River by holding and neutralizing such pollutants pending their final disposal.
SLUDGE PROCESSING AND DISPOSAL FACILITIES
The operation of sulphur dioxide removal systems at the Trimble County Generating Stations will create a substantial amount of sludge wastes. These sludge wastes must be processed by a sludge processing facility into a suitable waste material for landfill disposal. The sludge processing facility will include a flyash collection system which will transport flyash in a dry state from the particulate removal systems (precipitators) to various holding facilities and processing facilities incident to the sludge processing. The sludge wastes from the sulphur dioxide removal systems will be conveyed by pumping from thickener tanks to holding facilities incident to the sludge processing. Thereafter, following dewatering, the sludge wastes will be mixed with flyash waste and a lime catalyst, forming an acceptable solid waste landfill material. The sludge processing facility will be composed of vacuum filters, waste holding silos and facilities, compressors, blowers, mixers, conveyors, structural elements, land, hardening pads, pumps, electrical components, piping, control systems, and functionally related and subordinate facilities and equipment.
A disposal site for the solid waste landfill material resulting from operation of the scrubber sludge processing facility will be developed on property adjacent to the sludge processing facility. The disposal site, consisting of 1,230 acres, is composed of land, a rain water runoff collection basin 

A-2

and diversion system, water monitoring system, water treatment facility, piping, pumps, electrical components, structural elements, control systems, loading, hauling, spreading, and compaction equipment and functionally related and subordinate facilities and equipment.
ASH STORAGE AND DISPOSAL POND
A large ash storage pond will be constructed and installed, together with appropriate dikes, impervious pond lining, monitoring equipment and other facilities for the purpose of receiving flyash generating by electrostatic precipitators and bottom ash generated by the operation of the coal-fired steam operated generators. The purpose of the ash storage pond is to receive flyash and bottom ash from the operation of the Trimble County Generating Station in order to prevent such air pollutants and solid wastes from being discharged into the environment, including the Ohio River. The ash storage pond will be constantly monitored in order to determine that the impermeability of the ash storage pond remains unimpaired and that no wastes therein are being discharged other than in a controlled manner. Ash wastes in the ash storage pond will be periodically recovered for processing by the sludge processing and disposal facilities or for disposal in the solid waste disposal area adjacent to the Trimble County Generating Plant, consisting of approximately 1,230 acres. The ash storage pond as well as the emergency sludge and flyash storage pond consist of elements including land, transmission facilities to and from the ponds, skimmers, pumps, reclaiming equipment, monitoring equipment and functionally related and subordinate equipment.
EMERGENCY FLYASH AND SLUDGE STORAGE POND
The emergency flyash and sludge storage pond will be provided for the receipt and collection of scrubber sludge and flyash on an emergency basis. This material will be reclaimed on an intermittent basis for processing by the sludge processing facility and for disposal in the solid waste disposal areas adjacent to the Trimble County Generating Plant. The principal components of the emergency flyash and sludge storage pond will be land, facilities for the transmission of sludge and flyash to and from the pond, reclaiming equipment and functionally related and subordinate equipment.
SULPHUR DIOXIDE REMOVAL SYSTEMS; 
REACTANT RECEPTION, TRANSMISSION AND PREPARATION FACILITIES
Two complete sulphur dioxide removal systems (scrubbers) will be provided for Trimble County Generating Station, Units 1 and 2. Following electrostatic precipitation, flue gases will be transmitted from the electrostatic precipitators directly to the scrubbers, where they will be reacted with a liquefied sodium hydroxide solution utilized in the scrubbing process as a reactive agent. Sulphur dioxide contained in flue gases undergoes chemical reaction upon contact with the reactant chemical, with resultant formation of non-commercial sodium sulfite and sodium sulfate waste sludges. The sulphur dioxide scrubbers are designed to remove over 85% of airborne sulphur dioxide, together with a portion of any particulate matter remaining after electrostatic precipitation, before emission of the cleansed gases to the atmosphere. The sulphur dioxide scrubber systems will be composed of the scrubbers themselves, associated ductwork, structural supports and piping, electric elements, reactive tanks to contain the reactive agents and recycling and thickening tanks from which the resulting sludge wastes are withdrawn for final disposal. There will also be acquired and 

A-3

installed certain facilities to prepare reactant materials for use in scrubbers by reducing reactant materials to uniform reactant size, together with pumps, mixers, holding and transport tanks and piping.
The reactant chemical is an integral element in the operation of the sulphur dioxide removal systems. The scrubbers will include facilities designed solely for the receipt, transportation and preparation of reactant chemicals for use in the sulphur dioxide removal systems, which are functionally related and subordinate to such sulphur dioxide removal systems. Such facilities consist of river docking and unloading facilities which will be dedicated to and used only in respect of the receipt of reactant chemicals for use in the sulphur dioxide removal systems, together with conveyor facilities to convey the reactant chemicals in a dry state to both the reactant chemical storage area and to the reactant slurry preparation area. Crushing and grinding mechanisms designed to prepare the reactant chemicals for use in the sulphur dioxide removal systems will also constitute a part of the systems.
ASH SLUICE AND WASTE TRANSMISSION FACILITIES
A complete system of above-ground piping will be provided for the purpose of conveying flyash, bottom ash and sludge effluents from the operation of precipitators, boilers and sulphur dioxide removal systems to the ash storage pond, the emergency flyash and sludge storage pond or to dewatering facilities. The waste transmission system is water motivated and will consist of piping, pumps, water transmission and sluice facilities and will be connected to and constitute a functional element of the sulphur dioxide removal systems, the electrostatic precipitators, the ash storage pond and the emergency flyash and sludge storage pond. Water used in the ash sluice systems will be recycled from the disposal ponds to eliminate discharge to the Ohio River. Excess water in the system will be treated, as required by applicable regulations. The purpose of the effluent transmission system is to convey sludge wastes, flyash wastes and bottom ash wastes from the facilities where they are generated to neutralization and disposal basins. As such, the ash sluice and waste transmission system is functionally related and subordinate to the air pollution and water pollution control devices consisting of the sulphur dioxide removal systems and the electrostatic precipitators as well as the ash storage pond, the emergency flyash and sludge storage pond and the solid waste processing and disposal facilities.
CONTAMINATED LIQUIDS TRANSMISSION AND DISPOSAL SYSTEM
A complete system of underground piping will be constructed and installed for the purpose of capturing all contaminated liquids created as a result of operations of the Trimble County Generating Plant, including contaminations created by oil spillages, metal cleaning, chemical wastes, chemical spills and other liquid pollutants. The liquid waste transmission and disposal system will convey the liquid wastes to one of the sedimentation and ash storage ponds which will be equipped with monitoring devices and skimmers to remove oil. The principal components of the contaminated liquids effluent drain system includes piping, basins, motors, controls and other functionally related and subordinate facilities.
OIL ELIMINATION SYSTEMS

A-4

Units 1 and 2 of the Trimble County Generating station will include concrete or other appropriate subterranean pits or appropriate systems which will collect waste oils and grease from the transformer areas, fuel oil storage areas and generating units. Skimmers will remove oil from the top of the liquid receptacles in order that waters may be transferred to holding basins and ultimately returned to the Ohio River in uncontaminated condition. Waste polluted oils will be disposed of by other pollution abatement facilities.
SANITARY FACILITIES
Operation of Units 1 and 2 of the Trimble County Generating Station will require considerable personnel, and appropriate sanitary facilities will be provided to comply with appropriate water pollution laws and regulations. Such facilities shall include sanitary receptacles, pumps, motors, piping and sanitary wastewater treatment facilities.
*        *        *
PART II
ADDITIONAL POLLUTION CONTROL FACILITIES
The pollution control facilities constituting the Project as described in Part I of this Exhibit A represent a portion of all the pollution control facilities intended to be acquired, constructed and installed at the Trimble County Generating Station of Louisville Gas and Electric Company in Trimble County, Kentucky, which complete pollution control facilities are described in that certain Memorandum of Agreement dated as of February 29, 1980, by and between the County of Trimble, Kentucky, and Louisville Gas and Electric Company, as follows:
DESCRIPTION OF POLLUTION CONTROL 
FACILITIES CONTAINED IN 
MEMORANDUM OF AGREEMENT 
BY AND BETWEEN 
THE COUNTY OF TRIMBLE, KENTUCKY 
AND 
LOUISVILLE GAS AND ELECTRIC COMPANY
__________________________________________________
TRIMBLE COUNTY GENERATING STATION, 
UNITS 1, 2, 3 and 4
COOLING TOWERS
Natural draft cooling towers with closed-loop cooling water systems will be provided for Trimble County Generating Station, Units 1, 2, 3 and 4. The purpose of the cooling towers is to transfer to the atmosphere the heat absorbed by water circulated through the condensers of the generating units, which condense low pressure steam discharged from the steam driven turbines. The closed-loop system with cooling tower is designed to minimize the release of heated waters 

A-5

(thermal pollution) to the Ohio River and is required in order to conform to applicable water pollution control regulations. The described water pollution control abatement facilities consist of natural draft cooling towers, pumps, circulating water systems, motors, blow-down system, structural supports and functionally related and subordinate equipment and facilities.
PARTICULATE REMOVAL
Particulate removal systems and functionally related facilities, which comply with the appropriate laws and regulations and which, at the time of purchase represent the state of the art, will be installed at Units 1, 2, 3 and 4 of the Trimble County Generating Station in order to reduce and remove from flue gases emitted from boiler, flyash and bottom ash generated by the combustion process of the coal-fired steam boilers. These facilities may consist of electrostatic precipitators, baghouses, and/or other devices.
FLUE GAS DUCT SYSTEMS
Ductwork incident to Unit 1, 2, 3 and 4 of the Trimble County Generating Station designed for the purpose of connecting the coal-fired steam boiler to the flyash particulate removal system, including ductwork utilized to transport cleansed flue gases to a chimney or a sulphur dioxide removal system following flyash removal and functionally related and subordinate facilities, will constitute the Flue Gas Duct System.
SULPHUR DIOXIDE REMOVAL SYSTEMS
As and if required by appropriate laws and regulations, complete sulphur dioxide removal systems will be provided for Units 1, 2, 3 and 4 of the Trimble County Generating Station. Following flyash removal, flue gases will be transmitted from the flyash removal systems to the sulphur dioxide removal systems where they will be reacted with reactive agent solutions such as lime, limestone, sodium hydroxide or such other reactant as represents the technology available in the circumstances chosen by the Company. The sulphur dioxide removal systems will be designed to remove a substantial portion of airborne sulphur dioxide, together with a portion of particulate loadings remaining following particulate removal, before emission of cleansed gases into the atmosphere. The sulphur dioxide removal systems are composed of the scrubbers themselves, associated ductwork (including ductwork connecting the scrubbers to a chimney), structural supports and piping, technical elements, reactive tanks, recycling and thickening tanks and reactant reception and disposal facilities. Dependent upon technology, sulphur dioxide removal systems may employ one or more stack gas scrubbing systems (wet or dry) installed in or upon high flue gas diffusers (chimneys) or such other facilities as shall represent the technology for the removal of airborne sulphur dioxide chosen by the Company.
SLUDGE PROCESSING
Dependent upon the sulphur dioxide removal system technology employed on Units 1, 2, 3 and 4 of the Trimble County Generating Station there may be substantial creation of sludge wastes. These wastes must be processed by a sludge processing facility into a suitable material for landfill disposal. The sludge processing facility will include a dry flyash collection system which will, by 

A-6

pneumatic means, transport flyash in a dry state from the particulate removal systems to various holding silos and processing facilities incident to the sludge processing. The sludge wastes from the sulphur dioxide removal systems will be conveyed by pumping from thickener tanks to holding silos incident to the sludge processing. Thereafter, following dewatering, the sludge wastes will be mixed with the flyash waste and a lime catalyst, forming an acceptable solid waste landfill material. The sludge processing facility is expected to be composed of vacuum filters, waste holding silos, compressors, blowers, mixers, conveyors, structural elements, land, hardening pad, pumps, electrical components, piping, control systems and functionally related and subordinate facilities and equipment.
SLUDGE PROCESSING FACILITY LANDFILL
A disposal site for the solid waste landfill material developed by the scrubber sludge processing facility will be developed on property adjacent to the sludge processing facility. The disposal site is composed of land, a rain water runoff collection basin, and diversion system, water monitoring system, water treatment facility, piping, pumps, electrical components, structural elements, control systems, roads, loading, hauling, spreading and compaction equipment and functionally related and subordinate facilities and equipment.
EMERGENCY SLUDGE AND FLYASH STORAGE POND
Provisions will be made for the receipt and collection of scrubber sludge and flyash in a storage pond on an emergency basis. This material will be reclaimed on an intermittent basis for processing by the sludge processing facility. The principal components of the emergency storage pond facility will include land, transmission facilities to and from the pond, reclaiming equipment and functionally related and subordinate equipment.
HIGH FLUE GAS DIFFUSERS
High flue gas diffusers (chimneys) will be constructed with regard to Units 1, 2, 3 and 4 of the Trimble County Generating Station and such diffusers will be significantly higher than would be required from the standpoint of the interaction of airborne effluents with adjacent structures. Those portions of the chimney which are significantly higher than normally required will be provided to furnish an elevated release of flue gases so as to achieve diffusion and consequent low ground level concentrations of gaseous air effluents.
ASH SLUICE AND AIR TRANSPORT SYSTEMS
Dependent upon final design of Units 1, 2, 3 and 4 of the Trimble County Generating Station, flyash captured by the particulate removal system and bottom ash captured by the boiler ash hoppers will be transported to ash ponds, ash silos and/or dewatering bins. Water motivated sluice systems and/or air motivated ash transport systems will be used to transport the ash between the collection, storage and disposal locations. Water used in the ash sluice systems will be recycled from the disposal ponds to eliminate discharge to the river. Excess water in the system will be treated, as required for other plant uses and as required by regulations. The principal components of the water motivated systems will include the ash pond, land, piping, pumps, motors, valves, water treatment and other 

A-7

related equipment. The principal components of air motivated systems will include piping, ductwork, blowers, compressors, motors, valves and other related equipment.
FUGITIVE DUST ELIMINATION EQUIPMENT
Dust elimination equipment consisting of strategically located covers and induced draft fans, together with ducting, dust collecting equipment and a wet dust suppression system will be provided at Units 1, 2, 3 and 4 of the Trimble County Generating Station to collect and suppress dust resulting from the coal handling system and scrubber reactant preparation and handling systems thereby prevent its being discharged into the atmosphere.
OIL ELIMINATION SYSTEM
Units 1, 2, 3 and 4 of the Trimble County Generating Station will include concrete or other appropriate subterranean pits or appropriate systems which will collect waste oils and greases from the transformer areas, fuel oil storage areas and generating units. Skimmers will remove oil from the top of the liquid receptacles in order that waters may be returned to the Ohio River in uncontaminated condition. Waste polluted oils will be disposed of by other pollution abatement facilities.
EFFLUENT DRAIN SYSTEMS
The effluent drainage system consist of a sedimentation basin, equipped with monitoring and skimmers to remove oil and an extensive plant area runoff system which drains into the sedimentation basin and a coal pile and scrubber reactant area runoff basin equipped with monitors and treatment facilities which after treatment will drain into the sedimentation basin. The principal components of such effluent systems include the land, basins, pipes, pumps, motors and controls.
Metal cleaning chemical wastes will be collected and discharged to the ash pond. The components of this system include sumps, pumps, piping and controls.
SANITARY FACILITIES
Operation of Units 1, 2, 3 and 4 of the Trimble County Generating Station will require considerable personnel and appropriate sanitary facilities will be provided to comply with appropriate water pollution laws and regulations. Such facilities shall include sanitary receptacles, pumps, motors, piping and sanitary wastewater treatment facilities.
REACTANT PREPARATION AND SUPPLY FACILITIES
The reactant preparation and supply facilities will supply reactant to the sulphur dioxide removal systems on Units 1, 2, 3 and 4 of Trimble County Generating Station. They will include the facilities to receive, unload, process and store the reactant material used to remove sulphur dioxide in the sulphur dioxide removal systems. The reactant preparation and supply facilities will consist of land, dock, mooring cells, unloading equipment, conveying equipment, grinding equipment, mixing equipment, thickening tanks, pumps, motors, piping, valves, controls, structures and other functionally related and subordinate equipment.

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