Document:

Exhibit 10.3

 

MATHSTAR, INC.

AMENDED AND RESTATED 2004
LONG-TERM INCENTIVE PLAN

 

NON-STATUTORY STOCK OPTION
AGREEMENT

 

	
   

  	
   

  	
   

  
	
  OPTIONEE:

  	
   

  	
   

  
	
  GRANT
  DATE:

  	
   

  	
   

  
	
  NUMBER
  OF OPTION SHARES:

  	
   

  	
  Shares

  
	
  EXERCISE
  PRICE PER SHARE:

  	
   

  	
  $ per Share

  
	
  EXPIRATION
  DATE:

  	
   

  	
   

  

 

                THIS
AGREEMENT is made
as of the Grant Date set forth above by and between MathStar, Inc., a Delaware
corporation (the “Company”), and the Optionee named above, who has provided
services to the Company or an Affiliate of the Company as an employee,
consultant, independent contractor, or other service provider (the “Optionee”).

 

                The Company
desires, by affording the Optionee an opportunity to purchase shares of its
Common Stock, par value $.01 per share (the “Common Stock”), as hereinafter
provided, to carry out the purpose of the MathStar, Inc. Amended and Restated
2004 Long-Term Incentive Plan (the “Option Plan”).

 

                NOW,
THEREFORE, in
consideration of the mutual cove­nants hereinafter set forth, and for other
good and valuable consideration, the parties hereby agree as follows:

 

1.  Grant of Option. 
The Company hereby grants to the Optionee the right and option (the “Option”)
to purchase all or any part of the aggregate number of shares of Common Stock
set forth above (the “Option Shares”) (such number being subject to adjustment
as provided in Section 8 hereof) on the terms and subject to the conditions set
forth in this Agreement.  This Option is
not intended to be an “incentive stock option” within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the “Code”).

2.  Purchase Price. 
The per share purchase price of the Option Shares shall be the Exercise
Price Per Share set forth above (such Exercise Price Per Share being subject to
adjustment as provided in Section 8 hereof).

3.  Term and Exercise of Option.

(a)  The term of
this Option shall commence on the Grant Date set forth above and shall continue
until the Expiration Date set forth above, unless earlier terminated as
provided herein.

 

(b)  Subject to
the earlier termination of this Option pursuant to its terms and to the terms
of the Plan, this Option shall vest and become exercisable as follows but only
if the Optionee then is an employee, consultant, independent contractor, or
other service provider of the Company or an Affiliate:  the Option shall vest as to ___________
percent (_____%) of the Option Shares on ___________, as to _____________
percent (_____%) of the Option Shares on ____________, and as to an additional
_________________ percent (____%) of the Option Shares on _______________.

(c)  To exercise
this Option, the Optionee shall give written notice to the Company, to the
attention of its President or other designated agent, in substantially the form
attached hereto as Exhibit A, and the Optionee shall deliver payment in
full for the Option Shares with respect to which this Option is then being
exercised, as provided in Section 4(a) below.

(d)  Neither the
Optionee nor the Optionee’s legal representatives, legatees or distributees, as
the case may be, will be, or will be deemed to be, a holder of any Option
Shares for any purpose unless and until certificates for such Option Shares are
issued to the Optionee or the Optionee’s legal representatives, legatees or
distributees under the terms of the Option Plan.

5.   Limitations on Exercise of Option.

(a)  The
exercise of this Option will be contingent upon receipt from the Optionee (or
the purchaser acting under Section 7 below) of the full Exercise Price of
such Option Shares.  Payment of the
Exercise Price shall be made in cash or by a certified or cashier’s check.  However, in its sole discretion, the Company
may accept shares of Common Stock of the Company that have been owned by the
Optionee for at least six (6) months, having an aggregate Fair Market Value on
the date of exercise which is not less than the total Exercise Price, or a
combination of cash and such shares of Common Stock, in payment of the Exercise
Price.  No Option Shares will be issued
until full payment therefor has been made and the Optionee has executed any and
all agreements that the Company may require the Optionee to execute.

(b)  The
issuance of Option Shares upon the exercise of this Option shall be subject to
all applicable laws, rules, and regulations. 
If, in the opinion of the Board of Directors of the Company or a
Committee of the Board of Directors, (i) the listing, registration, or
qualification of the Option Shares upon any securities exchange or under any
state or federal law, (ii) the consent or approval of any regulatory body,
or (iii) an agreement of the Optionee with respect to the disposition of
the Option Shares, is necessary or desirable as a condition to the issuance or
sale of the Option Shares, this Option shall not be exercised and/or Option
Shares shall not be sold unless and until such listing, registration,
qualification, consent, approval or agreement is effected or obtained in form
satisfactory to the Board of Directors or the Committee.

6.   Nontransferability of Option. 
This Option shall not be transferable by the 

 

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Optionee other than by
will or the laws of descent and distribution, and during the lifetime of the
Optionee, this Option shall be exercisable only by the Optionee.

7.    Termination of Optionee as an Employee, Consultant, Independent
contractor, or other Service Provider for “Cause”.  Upon termination of Optionee as an Employee, Consultant, Independent contractor, or
other Service Provider with the Company or an Affiliate for “cause” (as “cause”
is determined in the sole discretion of the Board or the Committee), this
Option shall automatically terminate and be immediately forfeited, whether or
not vested, and neither the Optionee nor the Optionee’s heirs, personal
representatives, successors or assigns shall have any rights with respect to
this Option.

8.   Death of Optionee. 
If the Optionee dies , this Option may be exercised to the same extent
that the Optionee would have been entitled to exercise it at the date of death
and may be exercised within a period of one (1) year after the date of death,
but in no case later than the Expiration Date set forth above.  In such event, this Option shall be
exercisable only by the executors or administrators of the Optionee or by the
person or persons to whom the Optionee’s rights under the Option shall pass by
the Optionee’s will or the laws of descent and distribution.  Any portion of an Option that is not
exercisable at the time of an Optionee’s death shall automatically terminate.

9.   Adjustments.  In the event
of any change in the outstanding shares of Common Stock by reason of any stock
dividend, stock split, reverse stock split, reclassification, combination,
exchange of shares, or other similar recapitalization of the Company, there
shall be an appropriate and proportionate adjustment to the number of Option
Shares and the per share Exercise Price Per Share hereunder so that the
Optionee then shall receive for the aggregate Exercise Price paid by the
Optionee upon exercise of this Option the number of shares the Optionee would
have received if this Option had been exercised before such recapitalization
event occurred.  No adjustment shall be
made under this Section 9 upon the issuance by the Company of any warrants,
rights, or options to acquire additional Common Stock or of securities convertible
into Common Stock unless such warrants, rights, options or convertible
securities are issued to all shareholders of the Company on a proportionate
basis.

10.                Effect of Certain Transactions. Notwithstanding any provision in this
Option to the contrary, at the time of the occurrence of any of the events
described in Sections 10(a) through (d) below, the portion of the Option that
is not vested shall immediately and automatically vest, and the Option shall be
automatically converted into an Option to acquire the kind and amount of shares
of stock or other securities or property that the Optionee would have owned or
have been entitled to receive immediately after the occurrence of the event,
had the Option been exercised in full immediately before the effective date of
such event; provided, however, that the Expiration Date of the Option shall
remain unchanged, and, in any such case, appropriate adjustment shall be made
in the application of the provisions of this Option with respect to the rights
and interests thereafter of the Optionee, to the end that the provisions set
forth in this Option shall thereafter correspondingly be made applicable, as
nearly as may reasonably be, in relation to any shares of stock or other
securities or property thereafter deliverable on the exercise of this Option:

 

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(a)  The sale,
lease, exchange or other transfer, directly or indirectly, of all or
substantially all of the assets of the Company (in one transaction or in a
series of related transactions) to a person or entity that is not controlled by
the Company,

(b)  The
approval by the Company’s shareholders of any plan or proposal for the
liquidation or dissolution of the Company;

(c)  Any person
or entity becomes the “beneficial owner” (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (“Exchange Act”)),
directly or indirectly, of more than fifty percent (50%) of the combined voting
power of the outstanding securities of the Company ordinarily having the right
to vote at elections of directors who were not beneficial owners of at least
fifty percent (50%) of such combined voting power as of the date the Company’s
Board of Directors adopted the Option Plan; and

(d)  A merger or
consolidation to which the Company is a party if the shareholders of the
Company immediately prior to the effective date of such merger or consolidation
have, solely on account of ownership of securities of the Company at such time,
“beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act)
immediately following the effective date of such merger or consolidation of
securities of the surviving company representing less than fifty percent (50%)
of the combined voting power of the surviving corporation’s then outstanding
securities ordinarily having the right to vote at elections of directors.

Notwithstanding any provision in the Option Plan or this Option
Agreement to the contrary, the Board of Directors or the Committee shall not
have the power or right, either before or after the occurrence of an event
described in subparagraphs (a) through (d) above, to rescind, modify or amend
the provisions of this Section 10 without the consent of the Optionee.

 

                11.  Limitation
on Payments and Benefits.  Notwithstanding anything in this Agreement to
the contrary, if any of the payments or benefits to be made or provided in
connection with this Agreement, together with any other payments, benefits or
awards which you have the right to receive from the Company, or any corporation
which is a member of an “affiliated group” (as defined in Section 1504(a) of
the Code without regard to Section 1504(b) of the Code) of which the Company is
a member (“Affiliate”), constitute an “excess parachute payment” (as defined in
Section 280G(b) of the Code), such payments, benefits or awards to be made or
provided in connection with this Agreement, or any other agreement between you
and the Company or its Affiliates, may be reduced, eliminated, modified or
waived to the extent necessary to prevent all, or any portion, of such
payments, benefits or awards from becoming “excess parachute payments” and
therefore subject to the excise tax imposed under Section 4999 of the
Code.  The Optionee will have the sole
right and discretion to determine whether the payments, benefits or awards to
be made or provided in connection with this Agreement, or any other agreement
between the Optionee and the Company, should be reduced, whether or not such
other agreement with the Company or an Affiliate expressly addresses the
potential application of Section 280G or Section 4999 of the Code (including,
without limitation, that “payments” under such agreement be reduced).  The Optionee will also have the right to
designate the particular payments, benefits or awards that are to be 

 

 

4

 

reduced, eliminated, modified or waived; provided
that no such adjustment will be made if it results in additional expense to the
Company in excess of expenses the Company would have experienced if no
adjustment had been made.  The
determination as to whether any such decrease in the payments or benefits is
necessary must be made in good faith by legal counsel or a certified public
accountant selected by you and reasonably acceptable to the Company, and such
determination will be conclusive and binding upon you and the Company.  The Company will pay or reimburse you on demand
for the reasonable fees, costs and expenses of the counsel or accountant
selected to make the determinations under this Section 11.

 

                12.  Interpretation. 
The interpretation and construction of any provision of the Option Plan
and this Option shall be made by the Board of Directors or the Committee and
shall be final, conclusive and binding on the Optionee and all other persons.

 

                13.  Definitions; Option Plan Governs. 
Any capitalized term used herein that is not expressly defined herein
shall have the meaning ascribed to it in the Option Plan.  This Option is in all respects subject to and
governed by all of the provisions of the Option Plan.

 

                IN
WITNESS WHEREOF,
the Company has caused this Agreement to be executed in its corporate name by
its duly authorized officer, and the Optionee has executed this Agreement as of
the Grant Date set forth above.

 

	
   

  	
  COMPANY:

  	
  MathStar, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  
	
   

  	
   

  	
   

  
	
   

  	
  OPTIONEE:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SSN:

  	
   

  	
   

  
						

 

 

5

 

EXHIBIT A

NOTICE OF EXERCISE OF

STOCK OPTION

 

TO:

 

FROM:

 

DATE:

 

RE:          Exercise of Stock
Option

 

                I hereby exercise
my option to purchase                          shares of Common Stock at $______ per share
(total exercise price of $                  ).  This notice is given in accordance with the
terms of my Non-Statutory Stock Option Agreement (“Agreement”) dated
________________.  The option price and
vested amount is in accordance with Sections 2 and 3 of the Agreement.

 

Check one:

 

____                    Enclosed is cash, or a cashier’s or certified check
payable to MathStar, Inc. for the total exercise price of the shares being
purchased.

 

____                    Attached is a certificate(s) for                                            shares of common stock duly endorsed in blank
and surrendered for the exercise price of the shares being purchased.*

 

____

 

                                                *The use of each of these alternatives is
subject to the approval of MathStar, Inc.

 

                Please prepare the
stock certificate in the following name(s):

 

Sincerely,

 

                                                                                                

(Signature)

 

                                                                                                

(Print or Type Name)

 

Letter and consideration

received on _______________

(effective date of exercise)

 

 

6Exhibit
4.1

 

 

Supplemental
Indenture

 

 

Dated
November 1, 2005

 

 

KENTUCKY
UTILITIES COMPANY

 

TO

 

U.S.
BANK NATIONAL ASSOCIATION

AND
RICHARD PROKOSCH,

AS TRUSTEES

 

 

(SUPPLEMENTAL
TO THE INDENTURE OF MORTGAGE OR DEED OF TRUST DATED MAY 1, 1947, AS AMENDED,
HERETOFORE EXECUTED BY KENTUCKY UTILITIES COMPANY TO CONTINENTAL ILLINOIS
NATIONAL BANK AND TRUST COMPANY OF CHICAGO AND EDMOND B. STOFFT, AS TRUSTEES.)

 

 

(PROVIDING FOR FIRST MORTGAGE BONDS, 

POLLUTION CONTROL SERIES NO. 19

DUE JUNE 1, 2035)

 

 

 

THIS SUPPLEMENTAL INDENTURE, dated November 1, 2005,
made and entered into by and between KENTUCKY UTILITIES COMPANY, a corporation
organized and existing under the laws of the Commonwealths of Kentucky and
Virginia (hereinafter commonly referred to as the “Company”), and U.S. BANK
NATIONAL ASSOCIATION, a national banking association having its office or place
of business in the City of Chicago, Cook County, State of Illinois, formerly
named First Trust of Illinois, National Association, successor to Bank of America
Illinois, formerly named Continental Bank, National Association and Continental
Illinois National Bank and Trust Company of Chicago (hereinafter commonly
referred to as the “Trustee”), and Richard Prokosch (successor Co-Trustee), of
the City of St. Paul, County of Ramsey, State of Minnesota, as Trustees under
the Indenture of Mortgage or Deed of Trust dated May 1, 1947, as modified and
amended by the several indentures supplemental thereto heretofore executed by
and between the Company and the Trustees from time to time under said Indenture
of Mortgage or Deed of Trust; said Indenture of Mortgage or Deed of Trust, as
so modified and amended, being hereinafter commonly referred to as the “Indenture”;
and said Trustees under the Indenture being hereinafter commonly referred to as
the “Trustees” or the “Trustees under the Indenture”; Witnesseth:

 

WHEREAS, the Company, by resolution of its Board of
Directors or the Pricing Committee thereof duly adopted, has determined to
issue forthwith an additional series of its bonds to be secured by the
Indenture, as hereby modified and amended, such bonds to be known and
designated as First Mortgage Bonds, Pollution Control Series No. 19
(hereinafter sometimes referred to as the “bonds of Series No. 19” or the “bonds
of said Series”), and to be authorized, authenticated and issued only as
registered bonds without coupons; and

 

WHEREAS, the County of Carroll in the Commonwealth of
Kentucky (the “County”) has agreed to issue $13,266,950 in principal amount of
its Environmental Facilities Revenue Bonds, 2005 Series B (Kentucky Utilities
Company Project) (the “Revenue Bonds”), which will be issued pursuant to the
provisions of the Indenture of Trust dated as of October 1, 2005 (the “County
Indenture”), between the County and Deutsche Bank Trust Company Americas, as
Trustee, Paying Agent and Bond Registrar (said Trustee or any successor trustee
under the County Indenture, hereinafter mentioned, being hereinafter referred
to as the “County Trustee”); and

 

WHEREAS, the
proceeds of the Revenue Bonds (other than any accrued interest, if any,
thereon) will be loaned by the County to the Company pursuant to the provisions
of the Loan Agreement, dated as of October 1, 2005, between the County and the
Company (the “Agreement”), to finance a portion of the costs of
construction, acquisition, installation and equipping of certain solid waste
disposal facilities to serve the Ghent Generating Station of the Company, which facilities are hereinafter sometimes
referred to as the “Project,” which Project is located in the County and which
Project is more fully described in Exhibit A to the Agreement; and

 

 

WHEREAS, payments by the Company under and pursuant to
the Agreement have been assigned by the County to the County Trustee in order
to secure the payment of the Revenue Bonds; and in order to further secure the
payment of the Revenue Bonds, the Company desires to issue its bonds of Series
No. 19 to the County Trustee as provided in the Agreement; and

 

WHEREAS, the Company desires, in accordance with the
provisions of Article I, Section 6(e) of Article II and Article XVI of the
Indenture, to execute this supplemental indenture for the purpose of creating
and authorizing its bonds of Series No. 19
and modifying or amending certain provisions of the Indenture in the
particulars and to the extent hereinafter in this supplemental indenture
specifically provided; and

 

WHEREAS, the execution and delivery by the Company of
this supplemental indenture have been duly authorized by the Board of Directors
of the Company or the Pricing Committee thereof, and the Company has requested,
and hereby requests, the Trustees to enter into and join with the Company in
the execution and delivery of this supplemental indenture; and

 

WHEREAS, the bonds of Series No. 19 are to be authorized, authenticated and issued only
in the form of registered bonds without coupons, and each of such bonds shall
be substantially in the following form, to wit:

 

(Form
of face of bond of Series No. 19)

 

This
bond is nontransferable except as may be required to effect a transfer to any
successor trustee under the Indenture of Trust dated as of October 1, 2005,
hereinafter referred to.

 

 

	
  No.

  	
   

  	
   

  	
  $

  	
   

  

 

Kentucky
Utilities Company

First Mortgage Bond, Pollution Control Series No. 19

Due June 1, 2035

 

Kentucky Utilities Company, a Kentucky and Virginia
corporation (hereinafter referred to as the “Company”), for value received,
hereby promises to pay to Deutsche Bank Trust Company Americas, as Trustee
under the Indenture of Trust (the “County Indenture”) dated as of October 1,
2005, from the County of Carroll, Kentucky (the “County”) to Deutsche Bank
Trust Company Americas, or any successor trustee under the County Indenture
(the “County Trustee”), the principal sum of Thirteen Million Two Hundred Sixty-Six
Thousand Nine Hundred Fifty Dollars on the Demand Redemption Date, as
hereinafter defined, and to pay on the Demand Redemption Date to the County
Trustee interest on said sum from the Initial Interest Accrual Date, as
hereinafter defined, to the Demand Redemption Date, at the interest rate or
rates determined for the “Interest Rate Mode” (as described in Section 2.02 of
the County Indenture) applicable to the Revenue Bonds referred to on the
reverse hereof as selected from time to time by the Company, subject to the
provisions hereinafter set forth in the event of a rescission of a

 

2

 

Redemption Demand, as
hereinafter defined.  Both the principal
of and the interest on this bond shall be payable at the office or agency of
the Company in Chicago, Illinois, in any coin or currency of the United States
of America which at the time of payment is legal tender for public and private
debts.

 

The provisions of this bond are continued on the
reverse side hereof and such continued provisions shall have the same effect,
for all purposes, as though fully set forth at this place.  This bond shall not be valid or become
obligatory for any purpose unless and until it shall have been authenticated by
the execution by the Trustee or its successor in trust under the Indenture of
the Trustee’s Certificate endorsed hereon.

 

IN WITNESS WHEREOF, Kentucky Utilities Company has
caused this bond to be executed in its name by the manual or facsimile
signature of its President or one of its Vice-Presidents, and its corporate
seal or a facsimile thereof to be hereto affixed or imprinted hereon and
attested by the manual or facsimile signature of its Secretary or one of its
Assistant Secretaries.

 

	
  Dated as of 

  	
   

  	
  , 2005

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Kentucky Utilities Company

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Secretary

  	
   

  	
   

  	
   

  
								

 

(Form
of reverse side of bond of Series No. 19)

 

This bond is one of the bonds of the Company issued
and to be issued from time to time under and in accordance with and all secured
by the indenture of mortgage or deed of trust dated May 1, 1947, executed and
delivered by the Company to U.S. Bank National Association (formerly named
First Trust of Illinois, National Association, successor to Bank of America
Illinois, formerly Continental Bank, National Association and formerly
Continental Illinois National Bank and Trust Company of Chicago, and
hereinafter referred to as the “Trustee”) and Edmond B. Stofft, as Trustees,
and the indentures supplemental thereto heretofore executed and delivered by
the Company to the Trustees under said indenture of mortgage, including the
indenture supplemental thereto dated November 1, 2005, executed and delivered
by the Company to said U.S. Bank National Association and Richard Prokosch
(successor Co-Trustee), as Trustees (collectively the “Trustees”), prior to the
authentication of this bond (said indenture of mortgage and said supplemental
indentures being hereinafter referred to, collectively, as the “Indenture”).  Reference to the Indenture and to all
supplemental indentures, if any, hereafter executed pursuant to the Indenture
is hereby made for a description of the property mortgaged and pledged, the
nature and extent of the security and the rights of the holders and registered
owners of said bonds and of the Trustees and of the Company in respect of such
security.  By the 

 

3

 

terms of the Indenture,
the bonds to be secured thereby are issuable in series which may vary as to
date, amount, date of maturity, rate of interest, redemption provisions, medium
of payment and in other respects as in the Indenture provided.

 

This bond is one of a series of bonds of the Company
issued under the Indenture and designated as First Mortgage Bonds, Pollution
Control Series No. 19 (hereinafter called the “bonds of Series No. 19” or the “bonds
of said Series”).  The bonds of Series
No. 19 have been issued to the County Trustee under the County Indenture to
secure payment of the Environmental Facilities Revenue Bonds, 2005 Series B
(Kentucky Utilities Company Project) (the “Revenue Bonds”), issued by the
County under the County Indenture, the proceeds of which (other than any
accrued interest thereon) have been loaned to the Company pursuant to the
provisions of the Loan Agreement dated as of October 1, 2005 (the “Agreement”),
between the Company and the County.

 

Except as provided in the next succeeding paragraph,
in the event of a default under Section 9.1 of the Agreement or in the event of
a default in the payment of the principal of, premium, if any, or interest (and
such default in the payment of interest continues for the full grace period, if
any, permitted by the County Indenture and the Revenue Bonds) on the Revenue
Bonds, whether at maturity, by tender for purchase, by acceleration, by sinking
fund, redemption or otherwise, as and when the same becomes due, the bonds of
Series No. 19  shall be redeemable in whole upon receipt by the
Trustee of a written demand (hereinafter called a “Redemption Demand”) from the
County Trustee stating that there has been such a default, stating that it is
acting pursuant to the authorization granted by Section 9.02(c) of the County
Indenture, specifying the last date to which interest on the Revenue Bonds has
been paid (such date being hereinafter referred to as the “Initial Interest
Accrual Date”) and demanding redemption of the bonds of Series No. 19.  The Trustee shall, within 10 days after
receiving such Redemption Demand, mail a copy thereof to the Company marked to
indicate the date of its receipt by the Trustee.  Promptly upon receipt by the Company of such
copy of a Redemption Demand, the Company shall fix a date on which it will
redeem the bonds of Series No. 19 so demanded to be redeemed (hereinafter
called the “Demand Redemption Date”). 
Notice of the date fixed as and for the Demand Redemption Date shall be
mailed by the Company to the Trustee at least 30 days prior to such Demand
Redemption Date.  The date to be fixed by
the Company as and for the Demand Redemption Date may be any date up to and
including the earlier of (i) the 120th day after receipt by the Trustee of the
Redemption Demand or (ii) June 1, 2035, provided that if the Trustee shall not
have received such notice fixing the Demand Redemption Date within 90 days
after receipt by it of the Redemption Demand, the Demand Redemption Date shall
be deemed to be the earlier of (i) the 120th day after receipt by the Trustee
of the Redemption Demand or (ii) June 1, 2035. 
The Trustee shall mail notice of the Demand Redemption Date (such notice
being hereinafter called the “Demand Redemption Notice”) to the County Trustee
not more than 10 nor less than five days prior to the Demand Redemption
Date.  Notwithstanding the foregoing, if
a default to which this paragraph is applicable is existing on June 1, 2035,
such date shall be deemed to be the Demand Redemption Date without further
action (including actions specified in this paragraph) by the County Trustee,
the Trustee or the Company.  The bonds of
Series No. 19 shall be redeemed by the Company on the Demand Redemption Date,
upon surrender thereof by the County Trustee to the Trustee, at a redemption
price equal to the principal amount thereof plus accrued interest thereon at
the rate or rates then applicable to the Revenue Bonds or 

 

4

 

determined under the
provisions of the County Indenture from the Initial Interest Accrual Date to
the Demand Redemption Date.  If a
Redemption Demand is rescinded by the County Trustee by written notice to the
Trustee prior to the Demand Redemption Date, no Demand Redemption Notice shall
be given, or, if already given, shall be automatically annulled, and interest
on the bonds of Series No. 19 shall cease to accrue, all interest accrued
thereon shall be automatically rescinded and cancelled and the Company shall
not be obligated to make any payments of principal of or interest on the bonds
of said Series; but no such rescission shall extend to or affect any subsequent
default or impair any right consequent thereon.

 

In the event that all of the bonds outstanding under
the Indenture shall have become immediately due and payable, whether by
declaration or otherwise, and such acceleration shall not have been annulled,
the bonds of Series No. 19 shall bear interest at the rate or rates applicable
to the Revenue Bonds from the Initial Interest Accrual Date, as specified in a
written notice to the Trustee from the County Trustee, and the principal of and
interest on the bonds of said Series from the Initial Interest Accrual Date
shall be payable in accordance with the provisions of Article X of the
Indenture.

 

Upon payment of the principal of and premium, if any,
and interest on the Revenue Bonds, whether at maturity or prior to maturity by
redemption or otherwise, and the surrender thereof to and cancellation thereof
by the County Trustee (other than any Revenue Bond that was cancelled by the
County Trustee and for which one or more other Revenue Bonds were delivered and
authenticated pursuant to the County Indenture in lieu of or in exchange or
substitution for such cancelled Revenue Bond), or upon provision for the
payment thereof having been made in accordance with the County Indenture, bonds
of Series No. 19 in a principal amount equal to the principal amount of the
Revenue Bonds so surrendered and cancelled or for the provision for which
payment has been made shall be deemed fully paid and the obligations of the
Company thereunder shall be terminated, and such bonds of Series No. 19 shall
be surrendered by the County Trustee to the Trustee and shall be cancelled by
the Trustee.  From and after the Release
Date (as defined below), the bonds of Series No. 19 shall be deemed fully paid,
satisfied and discharged and the obligations of the Company hereunder and
thereunder shall be terminated.   The
Release Date shall be the date that the Bond Insurer (as such term is defined
in the County Indenture), at the request of the Company, consents to the
release of the bonds of this Series, as security for the Revenue Bonds,
provided that in no event shall that date be later than the date as of which
all bonds issued under the Indenture prior to the date of initial issuance of
this bond (and excluding bonds of Series Nos. 11, 12, 13, 14, 15, 16, 17,
18 and 19) have been retired through payment, redemption or otherwise
(including those bonds “deemed to be paid” within the meaning of that term as
used in Article XII of the Indenture) at, before or after the maturity
thereof.  On the Release Date, the bonds
of Series No. 19 shall be surrendered by the County Trustee to the Trustee
whereupon the bonds of Series No. 19 so surrendered shall be cancelled by the
Trustee.

 

No recourse shall be had for the payment of the
principal of or interest on this bond, or for any claim based hereon, or
otherwise in respect hereof or of the Indenture or any indenture supplemental
thereto, to or against any incorporator, stockholder, officer or director,
past, present or future, of the Company, or of any predecessor or successor
corporation, either directly or through the Company or such predecessor or
successor corporation, under any constitution or 

 

5

 

statute or rule of law,
or by the enforcement of any assessment or penalty, or otherwise, all such
liability of incorporators, stockholders, directors and officers being waived
and released by the registered owner hereof by the acceptance of this bond and
being likewise waived and released by the terms of the Indenture.

 

This bond is nontransferable except as may be required
to effect a transfer to any successor trustee under the County Indenture.  Any such transfer may be made by the
registered owner hereof, in person or by attorney duly authorized, at the
principal office or place of business of the Trustee under the Indenture, upon
the surrender and cancellation of this bond and the payment of any stamp tax or
other governmental charge, and upon any such transfer a new registered bond or
bonds without coupons, of the same series and for the same aggregate principal
amount, will be issued to the transferee in exchange herefor.

 

AND WHEREAS, there is to be endorsed on each of the
bonds of Series No. 19 (whether in temporary or definitive form) a certificate
of the Trustee substantially in the following form, to-wit:

 

Trustee’s
Certificate

 

This bond is one of the bonds of the series designated
therein, described in the within mentioned Indenture.

 

	
   

  	
  U.S. Bank National Association

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  	
   

  

 

 

NOW, THEREFORE, in consideration of the premises and
of the sum of One Dollar ($1.00) duly paid by the Trustee to the Company, and
of other good and valuable considerations, the receipt whereof is hereby
acknowledged, and for the purpose of further assuring to the Trustees under the
Indenture their title to, or lien upon, the property hereinafter described,
under and pursuant to the terms of the Indenture and for the purpose of further
securing the due and punctual payment of the principal of and interest and the premium,
if any, on all bonds which have been heretofore or shall be hereafter issued
under the Indenture and indentures supplemental thereto and which shall be at
any time outstanding thereunder and secured thereby, and for the purpose of
securing the faithful performance and observance of all the covenants and
conditions set forth in the Indenture and/or in any indenture supplemental
thereto, the Company has given, granted, bargained, sold, transferred,
assigned, pledged, mortgaged, warranted the title to and conveyed, and by these
presents does give, grant, bargain, sell, transfer, assign, pledge, mortgage,
warrant the title to and convey unto U.S. BANK NATIONAL ASSOCIATION AND RICHARD
PROKOSCH, as Trustees under the Indenture as therein provided, and the
successors in the trusts thereby created, and to their assigns, all the right,
title and interest of the Company in and to any and all premises, plants,
property, leases and leaseholds, franchises, permits, rights and powers, of
every kind and description, real and personal (1) which have been acquired by
the 

 

6

 

Company through
construction, purchase, consolidation or merger, or otherwise, and which at the
date hereof are owned by the Company, and (2) which shall be acquired by the
Company, through construction, purchase, consolidation, merger, or otherwise,
on or subsequent to the date hereof, together, in each case, with the rents,
issues, products and profits therefrom, excepting,
however, and there is hereby expressly reserved and excluded from the lien and
effect of the Indenture and of this supplemental indenture, all
right, title and interest of the Company, now owned, or hereinafter acquired,
in and to (a) all cash, bonds, shares of stock, obligations and other
securities not deposited with the Trustee or Trustees under the Indenture, and
(b) all accounts and bills receivable, judgments (other than for the recovery
of real property or establishing a lien or charge thereon or right therein) and
choses in action not specifically assigned to and pledged with the Trustee or
Trustees under the Indenture, and (c) all lamps and supplies, machinery,
appliances, goods, wares, merchandise, commodities, equipment, apparatus,
materials and/or supplies acquired or held by the Company for sale, lease,
rental or consumption in the ordinary course of business, and (d) the last day
of each of the demised terms created by any lease of property leased to the
Company and under each and every renewal of any such lease, the last day of
each and every such demised term being hereby expressly reserved to and by the
Company, and (e) all gas, oil, ore, copper and other minerals now or hereafter
existing upon, within or under any real estate of the Company subject to, or
hereby subjected to, the lien of the Indenture and (f) the real estate
expressly excepted from the lien and operation of the Indenture.

 

To Have And To Hold all said property, right and interests
hereinabove described or referred to and conveyed, assigned, pledged or
mortgaged, or intended to be conveyed, assigned, pledged or mortgaged, together
with the rents, issues, products and profits therefrom unto said U.S. BANK
NATIONAL ASSOCIATION AND RICHARD PROKOSCH, as Trustees under the Indenture, as
hereby modified and amended, and unto their successor or successors in trust
forever, But In
Trust Nevertheless, upon the
trusts, for the purposes and subject to all the terms, conditions, provisions
and restrictions of the Indenture, as hereby modified and amended.

 

And upon the considerations and for the purposes
aforesaid, and in order to provide, pursuant to the terms of the Indenture, for
the issuance under the Indenture, as hereby modified and amended, of bonds of
Series No. 19 and to fix the terms, provisions and characteristics of the bonds
of said Series, and to modify and amend the Indenture in the particulars and to
the extent hereinafter in this supplemental indenture specifically provided,
the Company hereby covenants and agrees with the Trustees as follows:

 

ARTICLE I.

 

Section 1.  A series of bonds issuable under the
Indenture, as hereby modified and amended, and to be known and designated as “First
Mortgage Bonds, Pollution Control Series No. 19” (hereinafter sometimes
referred to as the “bonds of Series No. 19” or the “bonds of said Series”), and
which shall be executed, authenticated and issued only in the form of
registered bonds without coupons, in denominations of $5,000 and integral
multiples thereof, is hereby created and authorized.  The bonds of said Series shall be payable as
provided in Section 3 of this Article and shall be substantially in the form
thereof hereinbefore recited.  Each bond
of said Series shall be issued to and registered in the name of the County Trustee
and shall be 

 

7

 

nontransferable except as required to effect any transfer of bonds of
said Series to any successor trustee under the County Indenture.  Each bond of said Series shall be dated as of
the date of issuance of the Revenue Bonds.

 

Section 2.  The bonds of Series No. 19 shall bear
interest, and the principal thereof and interest thereon shall be payable, only
to the extent and in the manner provided in Section 3 of this Article.  The bonds of said Series shall mature on June
1, 2035.  The bonds of said Series shall
be payable, both as to principal and interest, at the office or agency of the
Company in Chicago, Illinois in any coin or currency of the United States of
America which at the time of payment is legal tender for public and private
debts.

 

The bonds of said Series shall be deemed fully paid,
and the obligations of the Company thereunder shall be terminated, to the
extent and in the manner provided in Section 4 of this Article.

 

Section 3.  (a)  Except as provided in paragraph
(b) of this Section 3, in the event of a default under Section 9.1 of the
Agreement or in the event of a default in the payment of the principal of,
premium, if any, or interest (and such default in the payment of interest
continues for the full grace period, if any, permitted by the County Indenture
and the Revenue Bonds) on the Revenue Bonds, whether at maturity, by tender for
purchase, by acceleration, by sinking fund, redemption or otherwise, as and
when the same becomes due, the bonds of Series No. 19 shall be redeemable in
whole upon receipt by the Trustee of a written demand (hereinafter in this
Article called a “Redemption Demand”) from the County Trustee stating that
there has been such a default, stating that it is acting pursuant to the authorization
granted by Section 9.02(c) of the County Indenture, specifying the last date to
which interest on the Revenue Bonds has been paid (such date being hereinafter
referred to in this Article as the “Initial Interest Accrual Date”) and
demanding redemption of the bonds of Series No. 19.  The Trustee shall, within 10 days after
receiving such Redemption Demand, mail a copy thereof to the Company marked to
indicate the date of its receipt by the Trustee.  Promptly upon receipt by the Company of such
copy of a Redemption Demand, the Company shall fix a date on which it will
redeem the bonds of Series No. 19 so demanded to be redeemed (hereinafter in
this Article called the “Demand Redemption Date”).  Notice of the date fixed as and for the
Demand Redemption Date shall be mailed by the Company to the Trustee at least
30 days prior to such Demand Redemption Date. 
The date to be fixed by the Company as and for the Demand Redemption
Date may be any date up to and including the earlier of (i) the 120th day after
receipt by the Trustee of the Redemption Demand or (ii) June 1, 2035, provided
that if the Trustee shall not have received such notice fixing the Demand
Redemption Date within 90 days after receipt by it of the Redemption Demand,
the Demand Redemption Date shall be deemed to be the earlier of (i) the 120th
day after receipt by the Trustee of the Redemption Demand or (ii) June 1,
2035.  The Trustee shall mail notice of
the Demand Redemption Date (such notice being hereinafter in this Article
called the “Demand Redemption Notice”) to the County Trustee not more than 10
nor less than five days prior to the Demand Redemption Date.  Notwithstanding the foregoing, if a default
to which this paragraph is applicable is existing on June 1, 2035, such date
shall be deemed to be the Demand Redemption Date without further action
(including actions specified in this paragraph) by the County Trustee, the
Trustee or the Company.  The bonds of
Series No. 19 shall be redeemed by the Company on the Demand Redemption Date,
upon surrender thereof by the County Trustee to 

 

8

 

the Trustee, at a redemption price equal to the principal amount
thereof, plus accrued interest thereon at the rate or rates then applicable to
the Revenue Bonds or determined under the provisions of the County Indenture
from the Initial Interest Accrual Date to the Demand Redemption Date.  If a Redemption Demand is rescinded by the
County Trustee by written notice to the Trustee prior to the Demand Redemption Date,
no Demand Redemption Notice shall be given, or, if already given, shall be
automatically annulled, and interest on the bonds of Series No. 19 shall cease
to accrue, all interest accrued thereon shall be automatically rescinded and
cancelled and the Company shall not be obligated to make any payments of
principal of or interest on the bonds of this Series; but no such rescission
shall extend to or affect any subsequent default or impair any right consequent
thereon.

 

(b)           In the
event that all of the bonds outstanding under the Indenture shall have become
immediately due and payable, whether by declaration or otherwise, and such
acceleration shall not have been annulled, the bonds of Series No. 19 shall
bear interest at the rate or rates applicable to the Revenue Bonds from the
Initial Interest Accrual Date, as specified in a written notice to the Trustee
from the County Trustee, and the principal of and interest on the bonds of said
Series from the Initial Interest Accrual Date shall be payable in accordance
with the provisions of Article X of the Indenture.

 

(c)           Anything
herein contained to the contrary notwithstanding, the Trustee is not authorized
to take any action pursuant to a Redemption Demand or a rescission thereof or a
written notice required by paragraph (b) of this Section 3, and such Redemption
Demand, rescission or notice shall be of no force or effect, unless it is
executed in the name of the County Trustee by one of its Vice-Presidents.

 

Section 4.  Upon payment of the principal of and premium,
if any, and interest on the Revenue Bonds, whether at maturity or prior to
maturity by redemption or otherwise, and the surrender thereof to and
cancellation thereof by the County Trustee, or upon provision for the payment
thereof having been made in accordance with Article VIII of the County
Indenture, bonds of Series No. 19 in a principal amount equal to the principal
amount of the Revenue Bonds so surrendered and cancelled shall be surrendered
by the County Trustee to the Trustee, whereupon the bonds of said Series so
surrendered shall be deemed fully paid and the obligations of the Company
thereunder shall be terminated, and such bonds of said Series shall be
cancelled and destroyed by the Trustee by shredding, compacting or other
suitable means and a certificate of such cancellation and destruction shall be
delivered to the Company.  From and after
the Release Date (as defined below), the bonds of Series No. 19 shall be deemed
fully paid, satisfied and discharged and the obligations of the Company hereunder
and thereunder shall be terminated.  The
Release Date shall be the date that the Bond Insurer (as such term is defined
in the County Indenture), at the request of the Company, consents to the
release of the bonds of this Series, as security for the Revenue Bonds,
provided that in no event shall that date be later than the date as of which all bonds issued under the Indenture prior to the
date of initial issuance of the bonds of said Series (and excluding bonds of
said Series and First Mortgage Bonds, Pollution Control Series Nos. 11, 12, 13,
14, 15, 16, 17 and 18) have been retired through payment, redemption or
otherwise (including those Bonds “deemed to be paid” within the meaning of that
term used in Article XII of the Indenture) at, before or after the maturity
thereof.  On the Release Date, the bonds
of said Series shall be surrendered by the County Trustee to the Trustee
whereupon the bonds of Series No. 19 so surrendered shall be cancelled by the
Trustee.

 

9

 

ARTICLE II.

 

Section 1.  The bonds of Series No. 19 shall be executed
on behalf of the Company and sealed with the corporate seal of the Company, all
in the manner provided in or permitted by Section 6 of Article I of the
Indenture, as follows:

 

(a)           bonds
of said Series executed on behalf of the Company by its President or a
Vice-President and by its Secretary or an Assistant Secretary may be so
executed by the manual or facsimile signature of such President or
Vice-President and of such Secretary or Assistant Secretary, as the case may
be, of the Company, or of any person or persons who shall have been such
officer or officers, as the case may be, of the Company on or subsequent to the
date of this supplemental indenture, notwithstanding that he or they may have
ceased to be such officer or officers of the Company at the time of the actual
execution, authentication, issue or delivery of any of such bonds, and any such
manual or facsimile signature or signatures of such officer or officers of the
Company, as above provided, on any such bonds shall constitute execution of
such bonds on behalf of the Company by such officer or officers of the Company
for the purposes of the Indenture, as hereby modified and amended, and shall be
valid and effective for all purposes, provided that
all bonds of said Series shall always be executed on behalf of the Company by
the manual or facsimile signature of its President or a Vice-President and of
its Secretary or an Assistant Secretary, as above provided, and provided, further, that none of such bonds shall be
executed on behalf of the Company by the manual or facsimile signature of the
same officer or person acting in more than one capacity; and

 

(b)           such
corporate seal of the Company may be facsimile, and the bonds of said Series on
which such facsimile seal of the Company shall be affixed, impressed, imprinted
or reproduced shall be deemed to be sealed with the corporate seal of the
Company for the purposes of the Indenture as hereby modified and amended, and such
facsimile seal shall be valid and effective for all purposes.

 

ARTICLE III.

 

Section 10 of Article III of the Indenture is hereby
further amended to provide that the Company agrees to observe and comply with
the provisions of said section as so amended hereby so long as the bonds of
Series No. 19 are outstanding.  The bonds
outstanding on the date hereof to which said Section 10 applies are Series P,
No. 10, Series S, and Nos. 11, 12, 13, 14, 15, 16, 17 and 18.

 

No covenant to provide a maintenance and renewal fund
is made in respect of the bonds of Series No. 19.  The absence of such a covenant shall not,
however, limit the right of the Company to use, apply or certify bonds of
Series No. 19 to comply with, or to satisfy its obligations under, any provision
of the Indenture (including, without limitation, the provisions of Section 1 of
Article VII of the Indenture).

 

The bonds of Series No. 19 are intended to be used as
collateral for and to secure payment of the Revenue Bonds, as hereinabove
provided, and, accordingly, the bonds of Series 

 

10

 

No. 19 shall be dated as of the date of issuance of
the Revenue Bonds and shall bear interest from the Initial Interest Accrual
Date, as hereinabove provided, notwithstanding anything to the contrary
contained in the Indenture with respect to the dating of bonds and the date
from which interest on bonds shall accrue.

 

ARTICLE IV.

 

Section 1.  Capitalized terms used in this Article IV and
not otherwise defined in this Indenture shall have the meanings set forth in
the County Indenture.

 

Section 2.  Subsequent to the issuance of the Revenue
Bonds, the Company shall not be required to establish compliance with the net
earnings requirements of Section 5 of Article II of the Indenture in connection
with any Conversion of Interest Rate Mode on the Revenue Bonds or any change in
length of Long Term Rate Period.  So long
as the Revenue Bonds operate in any Interest Rate Mode other than the Long Term
Rate where the Long Term Rate Period ends on the day prior to the final
maturity of the Revenue Bonds, the Company shall include, for purposes of any
required calculation of such net earnings requirement (as such requirement
shall then be in effect), interest on the bonds of said Series at an annual
rate of 14%.  If at any time the interest
rate on the Revenue Bonds is a Long Term Rate where the Long Term Rate Period
ends on the day prior to the final maturity of the Revenue Bonds, the Company
may include, for purposes of any calculation of such net earnings requirement,
interest on the bonds of said Series at the Long Term Rate then borne by the
Revenue Bonds.

 

ARTICLE V.

 

Section 1.  The provisions of this supplemental indenture
shall be effective from and after the execution hereof; and the Indenture, as
hereby modified and amended, shall remain in full force and effect.

 

Section 2.  Each holder or registered owner of a bond of
any series not now outstanding which shall be authenticated by the Trustee and
issued by the Company under the Indenture (as hereby amended) subsequent to the
execution of this supplemental indenture and of any coupon pertaining to any
such bond, by the acquisition, holding or ownership of such bond and coupon,
thereby consents and agrees to, and shall be bound by, the provisions of this
supplemental indenture.

 

Section 3.  Each reference in the Indenture, or in this
supplemental indenture, to any article, section, term or provision of the
Indenture shall mean and be deemed to refer to such article, section, term or
provision of the Indenture, as hereby modified and amended, except where the
context otherwise indicates.

 

Section 4.  All the covenants, provisions, stipulations
and agreements in this supplemental indenture contained are and shall be for
the sole and exclusive benefit of the parties hereto, their successors and
assigns, and of the holders and registered owners from time to time of the
bonds and of the coupons issued and outstanding from time to time under and
secured by the Indenture, as hereby modified and amended.

 

11

 

This supplemental indenture has been executed in a
number of identical counterparts, each of which so executed shall be deemed to
be an original.

 

At the time of the execution of this supplemental
indenture, the aggregate principal amount of all indebtedness outstanding, or
to be outstanding, under and secured by the Indenture, as hereby modified and amended, is $361,563,900, consisting of and
represented by First Mortgage Bonds, Series P, Series S, and Pollution Control
Series No. 10, No. 11, No. 12, No. 13, No. 14, No. 15, No. 16, No. 17, No. 18
and No. 19 of the Company, as follows:

 

	
  Series

  	
   

  	
  Interest

  Rate

  	
   

  	
  Maturity Date

  	
   

  	
  Principal

  Amount

  	
   

  
	
  P

  	
   

  	
  7.92

  	
   

  	
  May 15, 2007

  	
   

  	
  $

  	
  53,000,000

  	
   

  
	
  No. 10

  	
   

  	
  Variable

  	
   

  	
  November l, 2024

  	
   

  	
  54,000,000

  	
   

  
	
  S

  	
   

  	
  5.99

  	
   

  	
  January 15, 2006

  	
   

  	
  36,000,000

  	
   

  
	
  No. 11

  	
   

  	
  Variable

  	
   

  	
  May 1, 2023

  	
   

  	
  12,900,000

  	
   

  
	
  No. 12

  	
   

  	
  Variable

  	
   

  	
  February 1, 2032

  	
   

  	
  20,930,000

  	
   

  
	
  No. 13

  	
   

  	
  Variable

  	
   

  	
  February 1, 2032

  	
   

  	
  2,400,000

  	
   

  
	
  No. 14

  	
   

  	
  Variable

  	
   

  	
  February 1, 2032

  	
   

  	
  2,400,000

  	
   

  
	
  No. 15

  	
   

  	
  Variable

  	
   

  	
  February 1, 2032

  	
   

  	
  7,400,000

  	
   

  
	
  No. 16

  	
   

  	
  Variable

  	
   

  	
  October 1, 2032

  	
   

  	
  96,000,000

  	
   

  
	
  No. 17

  	
   

  	
  Variable

  	
   

  	
  October 1, 2034

  	
   

  	
  50,000,000

  	
   

  
	
  No. 18

  	
   

  	
  Variable

  	
   

  	
  June 1, 2035

  	
   

  	
  13,266,950

  	
   

  
	
  No. 19

  	
   

  	
  Variable

  	
   

  	
  June 1, 2035

  	
   

  	
  13,266,950

  	
  (a)

  
									

 

(a)                                  To
be presently issued by the Company under the Indenture, as hereby modified and
amended.

 

All of said bonds of Series P and Series S,
respectively, were sold by the Company to, and upon the issue thereof were
owned and held by, the corporations and partnerships whose names and residences
are stated in the Supplemental Indentures dated May 15, 1992 and January
15, 1996, respectively, executed by the Company to the Trustees under said
Indenture as heretofore modified and amended.

 

All of said bonds of Series No. 10 were heretofore
issued and delivered by the Company to, and upon the issuance thereof were held
by, Bank One, Kentucky, N.A., 201 East Main Street, Lexington, Fayette County,
Kentucky 40507, as trustee.

 

12

 

All of said bonds of Series No. 11 were heretofore
issued and delivered by the Company to, and upon the issuance thereof were held
by, The Bank of New York, 101 Barclay Street, 21st Floor, New
York, New York 10286, as trustee.

 

All of said bonds of Series Nos. 12, 13, 14, 15 and
16, respectively, were heretofore issued and delivered by the Company to, and
upon the issuance thereof were held by, Deutsche Bank Trust Company Americas,
Corporate Trust & Agency Services, c/o DB Services New Jersey, Inc., 100
Plaza One, 6th Floor, Jersey City, New Jersey 07310, as trustee.

 

All of said bonds of Series No. 17 were heretofore
issued and delivered by the Company to, and upon the issuance thereof were held
by, Wachovia Bank of Delaware, National Association, 9300 Shelbyville Road,
Suite 507, Louisville, Kentucky 40222, as trustee.

 

All of said bonds of Series No. 18 were heretofore
issued and delivered by the Company to, and upon the issuance thereof were held
by, Deutsche Bank Trust Company Americas, Corporate Trust & Agency
Services, c/o DB Services New Jersey, Inc., 100 Plaza One, 6th Floor, Jersey
City, New Jersey 07310, as trustee.

 

The Thirteen Million Two Hundred Sixty-Six Thousand
Nine Hundred Fifty Dollars ($13,266,950) in principal amount of bonds of Series
No. 19 proposed to be issued by the Company under the Indenture as hereby
modified and amended, are to be issued and delivered by the Company to, and
upon the issuance thereof held by, Deutsche Bank Trust Company Americas,
Corporate Trust & Agency Services, c/o DB Services New Jersey, Inc., 100
Plaza One, 6th Floor, Jersey City, New Jersey 07310, as County Trustee.

 

13

 

In Witness Whereof,
said Kentucky Utilities Company has caused this instrument to be executed in
its corporate name by its President, Vice-President or its Treasurer and its
corporate seal to be hereunto affixed and to be attested and countersigned by
its Executive Vice President, General Counsel and Corporate Secretary, and said
U.S. Bank National Association, for the purpose of entering into and joining
with the Company in the execution of this supplemental indenture, has caused
this instrument to be executed in its corporate name by one of its Vice Presidents
and to be attested by one of its Vice Presidents, and said Richard Prokosch for
the purpose of entering into and joining with the Company in the execution of
this supplemental indenture, has signed this instrument; all as of the day and
year first above written.

 

	
   

  	
  KENTUCKY
  UTILITIES COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
    /s/
  Daniel K. Arbough

  	
   

  
	
   

  	
   

  	
  Daniel
  K. Arbough

  	
   

  
	
   

  	
   

  	
  Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
    /s/
  John R. McCall

  	
   

  	
   

  
	
   

  	
  John
  R. McCall

  	
   

  	
   

  
	
   

  	
  Executive
  Vice President,

  	
   

  	
   

  
	
   

  	
  General
  Counsel and

  	
   

  	
   

  
	
   

  	
  Corporate
  Secretary

  	
   

  	
   

  
	
   

  	
  (Corporate Seal)

  
	
   

  	
   

  
	
   

  	
  U.S. Bank National Association

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
    /s/ Richard Prokosch

  	
   

  
	
   

  	
   

  	
  Richard Prokosch

  	
   

  
	
   

  	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
    /s/
  Raymond Haverstock

  	
   

  	
   

  
	
   

  	
  Raymond
  Haverstock

  	
   

  	
   

  
	
   

  	
  Vice
  President

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Richard Prokosch

  	
   

  
	
   

  	
   

  	
  Richard
  Prokosch

  	
   

  
												

 

 

	
  Commonwealth
  of Kentucky

   

  County
  of Jefferson

  	
  }

  	
   

  
	
  SS:

  
	
   

  

 

 

I, Harriet Eberle, a Notary Public in and for said
County in the Commonwealth aforesaid, do hereby certify that Daniel K. Arbough,
Treasurer of Kentucky Utilities Company, a Kentucky and Virginia corporation,
and John R. McCall, Executive Vice President, General Counsel and Corporate
Secretary of said corporation, who are both personally known to me to be the
same persons whose names are subscribed to the foregoing instrument as such
officers of said corporation, and who are both personally known to me to be
such officers, appeared before me this day in person and severally acknowledged
before me that they signed, sealed and delivered said instrument as their free
and voluntary act as such officers, and as the free and voluntary act and deed
of said corporation, for the uses and purposes therein set forth; and said
Daniel K. Arbough, upon oath, acknowledged himself to be Treasurer of said
corporation and that, as such officer, being authorized so to do, he executed
said instrument for the purposes therein contained, by signing the name of said
corporation thereto by himself as such officer.

 

Given under my hand and official seal this 4th day of
November, 2005.

 

 

	
   

  	
  /s/
  Harriet Eberle

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
   

  	
  My
  commission expires:  12-24-2007

  

 

(Notarial Seal)

 

 

	
  State
  of Minnesota

   

  County
  of Ramsey

  	
  }

  	
   

  
	
  SS:

  
	
   

  

 

 

I, Mary R. McCarthy, a Notary Public in and for said
County in the State aforesaid, do hereby certify that:

 

(a)           Richard
Prokosch, a Vice President of U.S. Bank National Association, a national
banking association, and Raymond Haverstock, a Vice President of said
corporation, who are both personally known to me to be the same persons whose
names are subscribed to the foregoing instrument as such Vice Presidents of
said corporation, and who are both personally known to me to be such officers,
appeared before me this day in person and severally acknowledged before me that
they signed and delivered said instrument as their free and voluntary act as
such officers, and as the free and voluntary act and deed of said corporation,
for the uses and purposes therein set forth; and said Richard Prokosch upon
oath, acknowledged himself to be a Vice President of said corporation and that,
as such officer, being authorized so to do, he executed said instrument for the
purposes therein contained, by signing the name of said corporation thereto by
himself as such officer; and

 

(b)           Richard
Prokosch, personally known to me to be the same person described in, and whose
name is subscribed to, the foregoing instrument, appeared before me this day in
person and acknowledged before me that he executed, signed and delivered said
instrument as his free and voluntary act and deed, for the uses and purposes therein
set forth.

 

Given under my hand and official seal this 2nd day of
November, 2005.

 

 

	
   

  	
    /s/
  Mary R. McCarthy

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
   

  	
  My
  commission expires: 1-31-2010

  

 

 

(Notarial Seal)

 

 

	
  This
  instrument prepared by:

  
	
   

  
	
    /s/
  James Dimas

  	
   

  
	
  James
  Dimas, Esq.

  
	
  220
  West Main Street

  
	
  Louisville,
  Kentucky 40202

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