Document:

Exhibit
4.1

 

October
25, 2006

 

 

 

 

 

 

Kentucky
Utilities Company

(as Borrower)

 

 

 

 

 

 

Fidelia
Corporation

(as Lender)

 

 

LOAN
AGREEMENT

 

 

 

Contents

 

	
  Clause

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  TERM LOAN

  	
  2

  
	
   

  	
   

  	
   

  
	
  3.

  	
  AVAILABILITY OF REQUESTS

  	
  2

  
	
   

  	
   

  	
   

  
	
  4.

  	
  INTEREST

  	
  2

  
	
   

  	
   

  	
   

  
	
  5.

  	
  REPAYMENT AND PREPAYMENT

  	
  3

  
	
   

  	
   

  	
   

  
	
  6.

  	
  PAYMENTS

  	
  3

  
	
   

  	
   

  	
   

  
	
  7.

  	
  TERMINATION EVENTS

  	
  4

  
	
   

  	
   

  	
   

  
	
  8.

  	
  OPERATIONAL BREAKDOWN

  	
  4

  
	
   

  	
   

  	
   

  
	
  9.

  	
  NOTICES

  	
  5

  
	
   

  	
   

  	
   

  
	
  10.

  	
  ASSIGNMENT

  	
  5

  
	
   

  	
   

  	
   

  
	
  11.

  	
  SEVERABILITY

  	
  5

  
	
   

  	
   

  	
   

  
	
  12.

  	
  COUNTERPARTS

  	
  5

  
	
   

  	
   

  	
   

  
	
  13.

  	
  LAW

  	
  6

  

 

 

THIS AGREEMENT made on October 25, 2006

 

Between

 

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

 

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

 

Whereas

 

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

 

Now it is hereby agreed as follows:

 

1.                                      Definitions

 

1.1                                 In this Agreement

 

Business Day means a day on which banks in New York are generally open

 

Default Interest Rate means: the rate, as determined by the Lender,
applying to the principal element of an overdue amount under Clause 6.3,
calculated as the sum of the interest rate in effect immediately before the due
date of such amount, plus 1%;

 

Effective Date shall have the meaning given to it in Clause 2.1;

 

Final Repayment Date means October 25, 2016;

 

Interest Payment Date means April 25th and October 25th of each year during
the term of this agreement, provided, that:

 

any Interest Payment Date which 
is not a Business Day shall be extended to the next succeeding Business
Day;

 

Loan Amount means $50,000,000;

 

Maturity Date means the Final Repayment Date;

 

1

 

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

 

Termination Event means an event specified as such in Clause 7;

 

Value Date means the date upon which cleared funds are made available to the
Borrower by the Lender pursuant to a Request made in accordance with
Clause 3.1. Such date shall be a Business Day as defined herein.

 

 

2.                                      Term Loan

 

2.1                                 This Agreement shall come into effect on October
25, 2006 (the “Effective Date”).

 

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

 

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

 

3.                                      Availability of Requests

 

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

 

4.                                      Interest

 

4.1                                 The rate of interest on the Loan Amount is 5.675%.

 

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

 

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

 

2

 

5.                                      Repayment and Prepayment

 

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

 

5.2                                 On any Interest Payment Date, and with at least
three business day’s prior written notice, the Borrower shall be entitled to
prepay any amount of the loan outstanding, provided such payment is not less
than $1,000,000 and, provided further, the Borrower shall pay a prepayment
charge equal to the present value of the difference between (i) the interest
payable provided in this loan agreement and (ii) the interest payable at the
prevailing interest rate at the time of prepayment, for the period from the
date of prepayment through the Maturity Date, 
which difference, if negative, shall be deemed to be zero. The present
value will be determined using the prevailing interest rate at the time of the
prepayment as the discount rate.

 

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

 

6.                                      Payments

 

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

 

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

 

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

 

3

 

7.             Termination Events

 

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

 

7.2           The following shall constitute an
Event of Default hereunder:

 

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

 

7.2.2                        Bankruptcy proceedings are initiated against the
Borrower;

 

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

 

If a Termination Event
occurs under Clause (7.2.2) of this section, the Loan Amount outstanding
together with interest will become due and payable immediately.

 

If a Termination Event
occurs according to Clauses (7.2.1) or (7.2.3) of this Section, Lender shall at
its discretion grant Borrower a reasonable grace period unless such grace
period shall be detrimental to the Lender. If the Termination Event is uncured
at the expiration of such period, the Loan Amount outstanding together with
interest will become due and payable immediately.

 

8.             Operational
Breakdown

 

8.1                                 The
Borrower is not liable for any damages incurred by the Lender and the Lender is
not liable for any damages incurred by the Borrower caused by Acts of God or
other circumstances incurred by one party for which the other party cannot be
held responsible (i.e. power outages, strikes, lock-outs, domestic and foreign
acts of government and the like).

 

4

 

9.             Notices

 

9.1                                 Each communication to be made in respect of this
Agreement shall be made in writing but, unless otherwise stated, may be made by
facsimile transmission or letter.

 

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

 

9.3                                 Communications to the Lender shall be addressed
to: Fidelia Corporation, 919 N. Market Street, Suite 504, Wilmington, Delaware
19801, fax# (302) 778-5514, Attn: President.

 

10.                               Assignment

 

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

 

11.          Severability

 

11.1                           If any of the provisions of this
Agreement becomes invalid, illegal or unenforceable in any respect under any
law, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired.

 

12.          Counterparts

 

12.1                           This Agreement may be executed in any
number of counterparts that shall together constitute one Agreement. Any party
may enter into an Agreement by signing any such counterpart.

 

5

 

13.          Law

 

13.1                           This Agreement shall be governed by and
construed for all purposes in accordance with the laws of Delaware.

 

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

 

	
  SIGNED by

  	
  /s/ Daniel K. Arbough

  	
  )

  
	
   

  	
  Daniel K. Arbough,
  Treasurer

  	
  )

  
	
   

  	
  for and on behalf of

  	
  )

  
	
   

  	
  Kentucky Utilities
  Company

  	
  )

  
	
   

  	
   

  	
   

  
	
  SIGNED by

  	
  /s/ Udo Koch

  	
  )

  
	
   

  	
  Udo Koch, President

  	
  )

  
	
   

  	
  Fidelia Corporation

  	
  )

  

 

6Exhibit 4.2

 

PROMISSORY NOTE

 

 

	
  U.S. $50,000,000

  	
   

  	
  Louisville, Kentucky, October 25, 2006

  

 

 

Kentucky Utilities
Company (“KU”), for value received, hereby promises to pay to the order of
FIDELIA Corporation (“FIDELIA”), in lawful money of the United States of
America (in freely transferable U.S. dollars and in same day funds), in
accordance with the method of payment specified in that certain KU Loan
Agreement dated as of October 25, 2006, between FIDELIA and KU (“the Agreement”),
the principal sum of $50,000,000, which amount shall be payable at such times
as provided in the Agreement.

 

KU promises also to pay interest on the unpaid
principal amount hereof in like money and in like manner at the rates which
shall be determined in accordance with the provisions of the Agreement, said
interest to be payable at the time provided for in the Agreement.  This Note is referred to in the Agreement and
is entitled to the benefits thereof and the security contemplated thereby.  This Note evidences a loan made by FIDELIA,
during such time as such loan is being maintained.  This Note is subject to prepayment as
specified in the Agreement.  In case KU
defaults on the loan, the principal and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in
the Agreement.

 

KU hereby waives presentment, demand, protest or
notice of any kind in connection with this Note.

 

This Note shall be governed and construed and
interpreted in accordance with the laws of the State of Delaware.

 

	
   

  	
  Kentucky Utilities Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel K. Arbough

  	
   

  
	
   

  	
   

  	
  Daniel K. Arbough

  
	
   

  	
   

  	
  Director of Corporate Finance & Treasurer

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