Document:

Exhibit 4.1

 

Supplemental Indenture

Dated November 1, 2006

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. 21

DUE JUNE 1, 2036)

 

 

THIS SUPPLEMENTAL INDENTURE, dated November 1, 2006,
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. 21
(hereinafter sometimes referred to as the “bonds of Series No. 21” 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 $16,693,620 in principal amount of
its Environmental Facilities Revenue Bonds, 2006 Series C (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, 2006 (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, 2006, 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. 21 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. 21
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. 21 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.
21)

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, 2006, hereinafter
referred to.

	
  No.

  	
   

  	
  $

  	
   

  

 

Kentucky Utilities Company

First Mortgage Bond, Pollution Control Series No. 21

Due June 1, 2036

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,
2006, 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 Sixteen Million Six Hundred
Ninety-Three Thousand Six Hundred Twenty 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 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.

 2
 

 

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                     ,
2006

	
   

  	
  KENTUCKY UTILITIES COMPANY

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Vice President

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Secretary

  	
   

  	
   

  

 

(Form of reverse side of bond of Series
No. 21)

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, 2006, 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 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. 21 (hereinafter called the

 3
 

 

“bonds of Series No. 21”
or the “bonds of said Series”).  The
bonds of Series No. 21 have been issued to the County Trustee under the County
Indenture to secure payment of the Environmental Facilities Revenue Bonds, 2006
Series C (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, 2006 (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. 21 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. 21.  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. 21 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, 2036, 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, 2036. 
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, 2036, 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. 21 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 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. 21 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

 4
 

 

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. 21 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. 21 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. 21 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. 21 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, 19, 20 and 21) 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. 21 shall be surrendered by the County Trustee to the Trustee
whereupon the bonds of Series No. 21 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 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

 5
 

 

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. 21 (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 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

 6
 

 

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. 21 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. 21” (hereinafter sometimes
referred to as the “bonds of Series No. 21” or the “bonds of said Series”), and
which shall be executed, authenticated and issued only in the form of
registered bonds without coupons, in a denomination or denominations equal to the principal amount of the
Revenue Bonds from time to time outstanding.  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 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. 21 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, 2036.  The bonds of said Series shall
be payable, both as to principal and interest, at the office or agency of the
Company in

 7
 

 

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. 21 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. 21.  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. 21 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, 2036, 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,
2036.  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, 2036, 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. 21 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 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. 21 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

 8
 

 

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. 21 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. 21 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. 21 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, 18, 19 and 20) 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. 21 so surrendered shall be
cancelled by the Trustee.

ARTICLE II.

Section 1.  The bonds of Series No. 21 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:

 9
 

 

(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. 21 are outstanding.  The bonds
outstanding on the date hereof to which said Section 10 applies are Series P,
Nos. 10, 11, 12, 13, 14, 15, 16, 17, 18, 19 and 20.

No covenant to provide a maintenance and renewal fund
is made in respect of the bonds of Series No. 21.  The absence of such a covenant shall not,
however, limit the right of the Company to use, apply or certify bonds of
Series No. 21 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. 21 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 No. 21 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.

 10
 

 

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 15%.  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.

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 $358,951,140, consisting of and represented
by First

 11
 

 

Mortgage
Bonds, Series P and Pollution Control Series No. 10, No. 11, No. 12, No. 13,
No. 14, No. 15, No. 16, No. 17, No. 18, No. 19, No. 20 and No. 21 of the
Company, as follows:

 12
 

 

 

	
  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

  	
   

  
	
  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

  	
   

  
	
  No. 20

  	
   

  	
  Variable

  	
   

  	
  June
  1, 2036

  	
   

  	
  16,693,620

  	
   

  
	
  No. 21

  	
   

  	
  Variable

  	
   

  	
  June 1, 2036

  	
   

  	
  16,693,620

  	
  (a)

  
									

 

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

All of said bonds of Series P 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
Indenture dated May 15, 1992 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.

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.

 13
 

 

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 Nos. 18, 19, and 20 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 Sixteen Million Six Hundred Ninety-Three Thousand
Six Hundred Twenty Dollars ($16,693,620) in principal amount of bonds of Series
No. 21 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.

Section 5.  The Company hereby expressly gives, grants,
bargains, sells, transfers, assigns, pledges, mortgages, warrants the title to
and conveys unto the Trustees under the Indenture, upon the trusts and for the
purposes of the Indenture, as hereby modified and amended, the following
described properties:

FIRST.  The
following described real estate of the Company situated on Bullitt County,
Kentucky:

Item
1.  Being
all of Tract 1 as shown on the Boundary Survey of part of S&F Investment
Property recorded in Plat Cabinet 3, Slide 71, in the Office of the Clerk of
Bullitt County, Kentucky.

Being part of the property conveyed to S&F Investments, LLC, by
Deed dated June 16, 2005, recorded in Deed Book 642, Page 718, in the Office
aforesaid.

Being the same property conveyed to Kentucky Utilities
Company by deed dated July 21, 2006 and recorded in Deed Book 671, Page 866 in
the office of the Bullitt County Clerk.

 14

 

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, /s/ Betty L. Brinly, 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 27th day of November, 2006.

	
  

  	
  /s/ Betty L. Brinly

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
   

  	
  My commission expires:  06/21/2010

  

 

(NOTARIAL SEAL)

 

 

	
  STATE OF MINNESOTA

   

  COUNTY OF RAMSEY

  	
  }

  	
   

  
	
  SS:

  
	
   

  

 

I, L. Elaine Eby, 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 27th day of November, 2006.

	
  

  	
  /s/ L. Elaine Eby

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
   

  	
  My commission expires:  January 31, 2010

  

 

(NOTARIAL SEAL)

 

 

	
  This instrument prepared by:

  
	
   

  
	
  /s/ James Dimas,
  Esq.

  	
   

  	
   

  	
   

  
	
  James Dimas, Esq.

  
	
  220 West Main Street

  
	
  Louisville, Kentucky 40202Exhibit 4.2

COUNTY OF CARROLL,
KENTUCKY

AND

KENTUCKY UTILITIES
COMPANY

A Kentucky and Virginia
Corporation

*   * 
*  *  *

LOAN AGREEMENT IN
CONNECTION

WITH ENVIRONMENTAL FACILITIES

*   *  
*   *   *

Dated as October 1,
2006

*   *  
*   *   *

NOTICE:                        The interest of the County of
Carroll, Kentucky, in and to this Loan Agreement has been assigned to Deutsche
Bank Trust Company Americas, as Trustee, under the Indenture of Trust dated as
of October 1, 2006

 

TABLE OF
CONTENTS

	
  ARTICLE I DEFINITIONS

  	
  2

  
	
   

  	
   

  
	
  SECTION 1.1.

  	
   

  	
  USE
  OF DEFINED TERMS

  	
  2

  
	
  SECTION 1.2.

  	
   

  	
  INCORPORATION
  OF CERTAIN TERMS BY REFERENCE

  	
  2

  
	
  SECTION 1.3.

  	
   

  	
  ADDITIONAL
  DEFINITIONS

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II REPRESENTATIONS,
  WARRANTIES AND COVENANTS

  	
  5

  
	
   

  	
   

  
	
  SECTION 2.1.

  	
   

  	
  REPRESENTATIONS,
  WARRANTIES AND COVENANTS BY ISSUER

  	
  5

  
	
  SECTION 2.2.

  	
   

  	
  REPRESENTATIONS,
  WARRANTIES AND COVENANTS BY COMPANY

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III
  COMPLETION AND OWNERSHIP OF PROJECT

  	
  10

  
	
   

  	
   

  
	
  SECTION 3.1.

  	
   

  	
  COMPLETION
  AND EQUIPPING OF PROJECT

  	
  10

  
	
  SECTION 3.2.

  	
   

  	
  ESTABLISHMENT
  OF COMPLETION DATE

  	
  10

  
	
  SECTION 3.3.

  	
   

  	
  AGREEMENT
  AS TO OWNERSHIP OF PROJECT

  	
  11

  
	
  SECTION 3.4.

  	
   

  	
  USE
  OF PROJECT

  	
  11

  
	
  SECTION 3.5.

  	
   

  	
  FINANCING
  OF ADDITIONAL SOLID WASTE DISPOSAL FACILITIES

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV ISSUANCE
  OF 2006 SERIES C BONDS; APPLICATION OF PROCEEDS; COMPANY TO ISSUE FIRST
  MORTGAGE BONDS

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.1.

  	
   

  	
  AGREEMENT
  TO ISSUE 2006 SERIES C BONDS; APPLICATION OF 2006 SERIES C BOND PROCEEDS

  	
  12

  
	
  SECTION 4.2.

  	
   

  	
  DISBURSEMENTS
  FROM CONSTRUCTION FUND

  	
  12

  
	
  SECTION 4.3.

  	
   

  	
  FURNISHING
  DOCUMENTS TO THE TRUSTEE

  	
  12

  
	
  SECTION 4.4.

  	
   

  	
  COMPANY
  REQUIRED TO PAY IN EVENT CONSTRUCTION FUND INSUFFICIENT

  	
  12

  
	
  SECTION 4.5.

  	
   

  	
  INVESTMENT
  OF CONSTRUCTION FUND, BOND FUND AND REBATE FUND MONEYS

  	
  13

  
	
  SECTION 4.6.

  	
   

  	
  SPECIAL
  ARBITRAGE CERTIFICATIONS

  	
  13

  
	
  SECTION 4.7.

  	
   

  	
  OPINION
  OF BOND COUNSEL

  	
  14

  
	
  SECTION 4.8.

  	
   

  	
  FIRST
  MORTGAGE BONDS

  	
  15

  
	
  SECTION 4.9.

  	
   

  	
  CONSTRUCTION
  FUND PLEDGED AS FURTHER SECURITY

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V PROVISIONS
  FOR PAYMENT

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.1.

  	
   

  	
  LOAN
  PAYMENTS AND OTHER AMOUNTS PAYABLE

  	
  16

  
	
  SECTION 5.2.

  	
   

  	
  PAYMENTS
  ASSIGNED

  	
  17

  
	
  SECTION 5.3.

  	
   

  	
  TAXES
  AND OTHER GOVERNMENTAL CHARGES

  	
  17

  
	
  SECTION 5.4.

  	
   

  	
  OBLIGATIONS
  OF COMPANY UNCONDITIONAL

  	
  18

  
	
  SECTION 5.5.

  	
   

  	
  REBATE
  FUND

  	
  18

  
	
  SECTION 5.6.

  	
   

  	
  REDEMPTION
  OF THE 2006 SERIES C BONDS IN ADVANCE OF SCHEDULED MATURITY

  	
  19

  
	
  SECTION 5.7.

  	
   

  	
  CANCELLATION
  OF 2006 SERIES C BONDS

  	
  19

  
	
   

  	
   

  	
   

  	
   

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

  	
  19

  
	
   

  	
   

  
	
  SECTION 6.1.

  	
   

  	
  MAINTENANCE

  	
  19

  
	
  SECTION 6.2.

  	
   

  	
  INSURANCE

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII SPECIAL
  COVENANTS

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.1.

  	
   

  	
  NO
  WARRANTY OF CONDITION OR SUITABILITY BY ISSUER

  	
  20

  
	
  SECTION 7.2.

  	
   

  	
  COMPANY
  TO MAINTAIN ITS CORPORATE EXISTENCE; CONDITIONS UNDER WHICH EXCEPTIONS
  PERMITTED

  	
  20

  
	
  SECTION 7.3.

  	
   

  	
  FINANCIAL
  STATEMENTS

  	
  20

  
	
  SECTION 7.4.

  	
   

  	
  FURTHER
  ASSURANCES AND CORRECTIVE INSTRUMENTS

  	
  21

  
	
  SECTION 7.5.

  	
   

  	
  ISSUER
  REPRESENTATIVE

  	
  21

  
	
  SECTION 7.6.

  	
   

  	
  COMPANY
  REPRESENTATIVE

  	
  21

  
	
  SECTION 7.7.

  	
   

  	
  FINANCING
  STATEMENTS

  	
  21

  
	
  SECTION 7.8.

  	
   

  	
  COMPANY’S
  PERFORMANCE UNDER INDENTURE

  	
  21

  
	
  SECTION 7.9.

  	
   

  	
  NEGATIVE
  PLEDGE

  	
  22

  

 

 i
 

 

 

	
  ARTICLE VIII ASSIGNMENT;
  INDEMNIFICATION; REDEMPTION

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  SECTION 8.1.

  	
   

  	
  ASSIGNMENT

  	
   

  	
  23

  
	
  SECTION 8.2.

  	
   

  	
  RELEASE
  AND INDEMNIFICATION COVENANTS

  	
   

  	
  23

  
	
  SECTION 8.3.

  	
   

  	
  ASSIGNMENT
  OF INTEREST IN AGREEMENT BY ISSUER

  	
   

  	
  24

  
	
  SECTION 8.4.

  	
   

  	
  REDEMPTION
  OF 2006 SERIES C BONDS

  	
   

  	
  24

  
	
  SECTION 8.5.

  	
   

  	
  REFERENCE
  TO 2006 SERIES C BONDS INEFFECTIVE AFTER 2006 SERIES C BONDS PAID

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX EVENTS OF
  DEFAULT AND REMEDIES

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  SECTION 9.1.

  	
   

  	
  EVENTS
  OF DEFAULT DEFINED

  	
   

  	
  24

  
	
  SECTION 9.2.

  	
   

  	
  REMEDIES
  ON DEFAULT

  	
   

  	
  26

  
	
  SECTION 9.3.

  	
   

  	
  NO
  REMEDY EXCLUSIVE

  	
   

  	
  27

  
	
  SECTION 9.4.

  	
   

  	
  AGREEMENT
  TO PAY REASONABLE ATTORNEYS’ FEES AND EXPENSES

  	
   

  	
  27

  
	
  SECTION 9.5.

  	
   

  	
  WAIVER
  OF EVENTS OF DEFAULT

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X PREPAYMENT
  OF LOAN

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.1.

  	
   

  	
  OPTIONS
  TO PREPAY LOAN

  	
   

  	
  28

  
	
  SECTION 10.2.

  	
   

  	
  ADDITIONAL
  OPTION TO PREPAY LOAN

  	
   

  	
  29

  
	
  SECTION 10.3.

  	
   

  	
  OBLIGATIONS
  TO PREPAY LOAN

  	
   

  	
  29

  
	
  SECTION 10.4.

  	
   

  	
  NOTICE
  OF PREPAYMENT; REDEMPTION PROCEDURES

  	
   

  	
  31

  
	
  SECTION 10.5.

  	
   

  	
  RELATIVE
  POSITION OF THIS ARTICLE AND INDENTURE

  	
   

  	
  31

  
	
  SECTION 10.6.

  	
   

  	
  CONCURRENT
  DISCHARGE OF FIRST MORTGAGE BONDS

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI
  MISCELLANEOUS

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.1.

  	
   

  	
  TERM
  OF AGREEMENT

  	
   

  	
  31

  
	
  SECTION 11.2.

  	
   

  	
  NOTICES

  	
   

  	
  32

  
	
  SECTION 11.3.

  	
   

  	
  BINDING
  EFFECT; BOND COUNSEL OPINIONS

  	
   

  	
  32

  
	
  SECTION 11.4.

  	
   

  	
  SEVERABILITY

  	
   

  	
  32

  
	
  SECTION 11.5.

  	
   

  	
  AMOUNTS
  REMAINING IN CONSTRUCTION FUND, BOND FUND AND REBATE FUND

  	
   

  	
  32

  
	
  SECTION 11.6.

  	
   

  	
  AMENDMENTS,
  CHANGES AND MODIFICATIONS

  	
   

  	
  33

  
	
  SECTION 11.7.

  	
   

  	
  EXECUTION
  IN COUNTERPARTS

  	
   

  	
  33

  
	
  SECTION 11.8.

  	
   

  	
  APPLICABLE
  LAW

  	
   

  	
  33

  
	
  SECTION 11.9.

  	
   

  	
  CAPTIONS

  	
   

  	
  33

  
	
  SECTION 11.10.

  	
   

  	
  NO PECUNIARY LIABILITY OF ISSUER

  	
   

  	
  33

  
	
  SECTION 11.11.

  	
   

  	
  PAYMENTS DUE ON OTHER THAN BUSINESS DAYS

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A - Description of
  Project

  	
                  

  	
   

  

 

 ii

 

LOAN
AGREEMENT IN CONNECTION

WITH ENVIRONMENTAL FACILITIES

This LOAN AGREEMENT, dated as of
October 1, 2006, by and between the COUNTY OF CARROLL, KENTUCKY, 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 KENTUCKY UTILITIES COMPANY, a corporation organized and
existing under the laws of Kentucky and Virginia;

W  I
T  N  E  S  S  E  T  H:

WHEREAS, the County of Carroll,
Kentucky is 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 (“Issuer”), and pursuant to the provisions of Sections
103.200 to 103.285, inclusive, of the Kentucky Revised Statutes (“Act”), Issuer
has the power to enter into the transactions contemplated by this Loan
Agreement and to carry out its obligations hereunder; and

WHEREAS, 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 solid waste disposal facilities, one of the categories of “pollution
control facilities,” as defined by the Act for the collection, storage,
treatment, processing and final disposal of solid wastes; and

WHEREAS, Issuer is further
authorized pursuant to the Act to enter into a loan agreement, which may
include such provisions as Issuer shall deem appropriate to effect the securing
of a financing or refinancing undertaken in respect of solid waste disposal
facilities, including the pledge of direct securities of a utility company; and

WHEREAS, the Act further provides
that title to solid waste disposal facilities shall not be acquired by Issuer
in the case of a loan transaction; and

WHEREAS, Kentucky Utilities Company,
a Kentucky and Virginia corporation (“Company”), is desirous of financing the
qualified costs of acquisition, construction, installation and equipping of
certain solid waste disposal facilities to serve the Ghent Generating Station
of Company, which facilities constitute the Project, as defined in the
Indenture and as described in Exhibit A hereto (the “Project”), which
Project is located within the corporate boundaries of Issuer and consists of
certain solid waste disposal facilities and which Project qualifies for
financing within the meaning of the Act; and

WHEREAS, the Project is described
and has been previously approved for tax-exempt bond financing in a preliminary
resolution adopted by the Fiscal Court of Issuer on February 22, 2005 and
amended by the Fiscal Court of Issuer on January 24, 2006 for the purpose
of increasing the principal amount of bonds to be issued from $30,000,000 to
$100,000,000; and

 1
 

 

WHEREAS, pursuant to and in
accordance with the provisions of the Act, a Memorandum of Agreement between
the Issuer and Company dated February 22, 2005 and an Ordinance duly
adopted by the Fiscal Court of Issuer on October 24, 2006, and in furtherance
of the purposes of the Act, Issuer proposes to issue, sell and deliver a series
of its bonds in fully registered form which will be designated “County of
Carroll, Kentucky, Environmental Facilities Revenue Bonds, 2006 Series C
(Kentucky Utilities Company Project)” (the “2006 Series C Bonds”), the proceeds
of which will be lent to Company to finance the acquisition, construction,
installation and equipping of the Project; and

WHEREAS, the Project will provide
for the collection, storage, treatment, processing and final disposal of solid
wastes in the Commonwealth of Kentucky; and

WHEREAS, the 2006 Series C Bonds are
to be issued under and pursuant to and are secured by an Indenture of Trust by
and between Issuer and Deutsche Bank Trust Company Americas, as trustee
thereunder, dated as of  October 1,
2006 (the “Indenture”); and

WHEREAS, Issuer proposes to lend to
Company and Company desires to borrow from Issuer the proceeds from the sale of
the 2006 Series C Bonds to finance the acquisition, construction, installation
and equipping of the Project;

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:

ARTICLE I

DEFINITIONS

Section 1.1.         Use of Defined Terms.  In addition to the words and terms defined
elsewhere in this Agreement or in the Indenture or by reference to another
document, the words and terms set forth in Section 1.2 and Section 1.3 shall have the
meanings set forth therein unless the context or use clearly indicates another
meaning or intent.  Such definitions
shall be equally applicable to both the singular and plural forms of any of the
words and terms defined therein.

Section 1.2.         Incorporation of Certain Terms by
Reference.  When and if used in this
Agreement, the following terms shall have the meaning set forth in ARTICLE I
of the Indenture:

“Act”

“Agreement”

“Authorized Denomination”

“Bond Counsel”

“Bond Insurer”

“Bond Fund”

“Bond Year”

“Business Day”

“Code”

“Company”

“Company Bonds”

 2
 

 

“Company Representative”

“Construction Fund”

“Cost of Construction”

“Cumulative Excess Earnings”

“Excess Earnings”

“First Mortgage Bonds”

“First Mortgage Indenture”

“First Mortgage Trustee”

“Governmental Obligations”

“Indenture”

“Initial Broker-Dealer”

“Interest Payment Date”

“Issuer”

“Issuer Representative”

“Loan”

“Net Proceeds”

“No Auction Rate”

“Paying Agent”

“Permitted Investments”

“Plans and Specifications”

“Pollution Control Facilities”

“Prevailing Rating”

“Project”

“Project Site”

“Purchase Date”

“Purchase Fund”

“Rating Service”

“Rebate Fund”

“Redemption Date”

“Redemption Demand”

“Release Date”

“2006 Series C Bonds”

“Solid Waste Disposal Facilities”

“Supplemental Indenture”

“Tender Agent”
 “Trustee”

Section 1.3.         Additional Definitions.  In addition to the terms whose definitions
are incorporated by reference herein pursuant to Section 1.2, the
following terms shall have the meanings set forth in this Section unless the
use or context clearly indicates otherwise:

“Capitalization” means the total of all the
following items appearing on, or included in, the balance sheet of the Company:

(1)        liabilities for
indebtedness, including short-term debt, long-term debt and current maturities
of long-term debt; and

 3
 

 

(2)        common stock,
preferred stock, capital surplus, premium on capital stock, capital in excess
of par value and retained earnings (however the foregoing may be designated),
less to the extent not otherwise deducted, the cost of shares of capital stock
of the Company held in its treasury.

Capitalization shall be determined in accordance with
generally accepted accounting principles and practices applicable to the type
of business in which the Company is engaged and that are approved by the
independent accountants regularly retained by the Company, and shall be
determined as of the date that is the end of the most recent fiscal quarter
prior to the happening of an event for which such determination is being made.

“Completion Date” means the date of completion
of the construction of the Project, as that date shall be certified as provided
in Section 3.2 of this Agreement.

“Debt” shall mean any outstanding debt for
money borrowed.

“Determination of Taxability” shall have the
meaning ascribed to such term in Section 10.3 of this Agreement.

“Net Tangible Assets” means the amount shown as
total assets on the balance sheet of the Company, less the following:

(1)        intangible assets
including, but without limitation, such items as goodwill, trademarks, trade
names, patents and unamortized debt discount and expense carried as an asset on
said balance sheet; and

(2)        appropriate
adjustments, if any, on account of minority interests.

Net Tangible Assets shall be determined in accordance
with generally accepted accounting principles and practices applicable to the
type of business in which the Company is engaged and that are approved by the
independent accountants regularly retained by the Company, and shall be
determined as of the date that is the end of the most recent fiscal quarter
prior to the happening of an event for which such determination is being made.

“Operating Property” means (i) any interest in
real property owned by the Company and (ii) any asset owned by the Company that
is depreciable in accordance with generally accepted accounting principles.

In addition to the definitions herein, terms used in
this agreement and not defined herein shall have the meanings ascribed to such
terms in the Indenture.

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.

 4
 

 

ARTICLE II

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 2.1.         Representations, Warranties and
Covenants by Issuer.  Issuer
represents, warrants and covenants that:

(a)      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, Issuer has the power and duty to issue the 2006 Series C Bonds, to
enter into this Agreement and the Indenture and the transactions contemplated
hereby and to carry out its obligations hereunder and thereunder.  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 2006 Series C Bonds or the
consummation of the transactions contemplated hereby or in connection with such
issuance, and has been duly authorized to issue the 2006 Series C Bonds and to
execute and deliver this Agreement and the Indenture.  Issuer agrees that it will do or cause to be
done in 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)      Issuer agrees to loan funds derived from
the sale of the 2006 Series C Bonds to Company to provide for the financing of
the construction, acquisition, installation and equipping of the Project, which
Project shall provide for solid wastes to be collected, stored, treated,
processed and disposed of at the Project Site.

(c)      To accomplish the foregoing, Issuer agrees
to issue $16,693,620 aggregate principal amount of its 2006 Series C Bonds
following the execution of this Agreement on such terms and conditions as are
set forth in the Indenture.  The proceeds
from the sale of the 2006 Series C Bonds shall be applied to finance the Cost
of Construction of the Project.

(d)      Issuer will cooperate with Company and
take all actions necessary for Company to comply with Section 2.2(n), (z)
and (aa) hereof and take other actions reasonably requested by Company in
furtherance of this Agreement.

(e)      Issuer has received its allocation from
the Commonwealth for the issuance of the 2006 Series C Bonds, as prescribed by
Section 146 of the Code.

(f)       The Project Site is located within the
boundaries of Issuer.

(g)      Each of 
Resolution No. 2005-0222 of the Fiscal Court of the Issuer adopted
February 22, 2005 in respect of approval of the Project and its financing,
the Memorandum of Agreement between Issuer and Company, dated February 22,
2005, Resolution No. 2006-0124 of the Fiscal Court of the Issuer adopted
on January 24, 2006, in respect of amending Resolution No. 2005-0222 and
the Memorandum of Agreement, and Ordinance No. 2006-1025 of the Fiscal
Court of the Issuer adopted on second reading on October 24, 2006 has been
in continuous effect since the respective dates of adoption thereof.

 5
 

 

Section 2.2.         Representations, Warranties and
Covenants by Company.  Company
represents, warrants and covenants that:

(a)      Company (i) is a corporation duly
incorporated, validly existing and in good standing under the laws of the
Commonwealths of Kentucky and Virginia, (ii) 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 (iii)
is not in violation of any provision of its Articles of Incorporation, its
By-Laws or any laws of the Commonwealths of Kentucky and Virginia relevant to
the transactions contemplated hereby or in connection with the issuance of the
2006 Series C Bonds.

(b)      Company has full and complete legal power
and authority to execute and deliver this Agreement, the Supplemental Indenture
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 Supplemental Indenture and the First Mortgage Bonds.

(c)      The Project financed by application of the
proceeds of the 2006 Series C Bonds has been designed and will be constructed
to collect, store, treat, process and dispose of solid wastes at the Project
Site.  The Project was and is necessary
for the public health and welfare, and has been designed and will be
constructed solely for the purposes of solid waste collection, storage,
treatment, processing and final disposal of solid wastes, consisting of
contaminated scrubber sludge solid wastes created by operation of
desulphurization facilities at the Project Site.  The Project constitutes solid waste disposal
facilities and facilities functionally related and subordinate to such
facilities under Section 142(a)(6) of the Code and the Act.

(d)      Not less than substantially all of the net
proceeds of the 2006 Series C Bonds (i.e., at least 95% of the net proceeds
thereof, including investment earnings thereon) will be applied and used to
finance the Cost of Construction of the Project, and all of such Solid Waste
Disposal Facilities consist either of land or of property of a character
subject to the allowance for depreciation provided in Section 167 of the Code.

(e)      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 2006 Series C Bonds from gross income for federal
income tax purposes.  Except for certain
environmental or building permits which will be required from time to time in
connection with the construction, occupation and use of the Project (which the
Company has no reason to believe will not be received in the ordinary course as
and when required), no consent, approval, authorization or other order of any
federal, state or local governmental authority (other than the Issuer), not
previously obtained or given is required in connection with the acquisition,
construction, installation or equipping of the Project or the consummation of
the transactions contemplated thereby.

(f)       The Project is of the type authorized and
permitted by the Act, and the Cost of Construction of the Project is not less
than $16,693,620.

 6
 

 

(g)      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 Supplemental Indenture, the First
Mortgage Bonds or the transactions contemplated hereby or thereby.  Neither the execution and delivery of this
Agreement, the Supplemental Indenture, the First Mortgage Bonds, the
consummation of the transactions contemplated hereby 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
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 Company under the terms of any instrument or agreement.

(h)      Company intends to
operate or cause the Project to be operated as Solid Waste Disposal Facilities
until all of the 2006 Series C Bonds are paid and discharged.

(i)       No portion of the
proceeds of 2006 Series C Bonds will be invested at a yield in excess of the
yield on the 2006 Series C Bonds except (i) during any permitted temporary
period provided by the Code, (ii) proceeds of a reasonably required reserve or
replacement fund and (iii) as part of a minor portion of the proceeds of
the 2006 Series C Bonds, not in excess of the lesser of 5% of the proceeds of
the 2006 Series C Bonds or $100,000.  As
used herein, “yield” shall have the meaning assigned to it for purposes of
Section 148 of  the Code and applicable
tax regulations.

(j)       No part or component of
the Project to be financed with proceeds of the 2006 Series C Bonds was
acquired, constructed or installed by Company prior to the date which is 60
days prior to February 22, 2005; and no part of the proceeds of the 2006
Series C Bonds will be used by Company, directly or indirectly, as working
capital or to finance inventory.

(k)      At
least 95% of the net proceeds of the 2006 Series C Bonds (including investment
earnings thereon) will be used to pay costs of the Project incurred after the
date which is 60 days prior to February 22, 2005; and the facilities
constituting the Project constitute and will constitute (i) land or property of
a character subject to the allowance for depreciation under Section 167 of the
Code and (ii) Solid Waste Disposal Facilities.

(l)       Company will cause no
investment of 2006 Series C 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 2006 Series C
Bonds or any funds reasonably expected to be used to pay the 2006 Series C
Bonds which will cause the 2006 Series C Bonds or any of them to be arbitrage
bonds within the meaning of Section 148 of the Code or would otherwise result
in the loss or impairment of the exclusion of the interest on such 2006 Series
C Bonds from gross income for federal income tax purposes.

 7
 

 

(m)     The average maturity of
the 2006 Series C Bonds does not exceed one hundred twenty percent (120%) of
the average reasonably expected remaining economic life (as of the date of
issuance of the 2006 Series C Bonds) of the Solid Waste Disposal Facilities.

(n)      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 filed by Issuer with respect to the 2006 Series C
Bonds and the Solid Waste Disposal Facilities constituting the Project, and
such information will be true and correct in all material respects.

(o)      Within the meaning of
Section 149 of the Code, no portion of the payment of the principal or interest
on the 2006 Series C Bonds shall be guaranteed directly or indirectly by the
United States or any agency or instrumentality thereof.

(p)      The Project financed by
the proceeds of the 2006 Series C Bonds will not have been placed in operation
at substantially its design level, pursuant to and within the meaning of
Section 1.150-2(c)(2) of the Treasury Regulations, more than 18 months prior to
the date of the issuance of the 2006 Series C Bonds.

(q)      For purposes of Section
147(c) of the Code, the allocable cost of the land portion of the Project, if
any, to be financed with the proceeds of the 2006 Series C Bonds shall be less
than 25% of the proceeds of the 2006 Series C Bonds, and none of the 2006
Series C Bond proceeds shall be used to finance land to be used for farming.

(r)       Within the meaning of
Section 147(e) of the Code, no portion of the proceeds of the 2006 Series C
Bonds shall be used to provide any airplane, skybox or other private luxury
box, any health club facility, any facilities used primarily for gambling, or
any store the principal business of which is the sale of alcoholic beverages
for consumption off the premises.

(s)      The costs of the issuance
of the 2006 Series C Bonds paid from the proceeds of the 2006 Series C Bonds,
if any, shall not exceed 2% of the proceeds of the 2006 Series C Bonds to the
public (less accrued interest).

(t)       None of the proceeds of
the 2006 Series C Bonds will be used to acquire, construct or install any
property or interest therein unless the first use of such property shall be
pursuant to such acquisition, construction or installation.

(u)      No portion of the
proceeds of the 2006 Series C Bonds will be deposited to the account of any
reserve or replacement fund.

(v)      Company shall not cause
an amount less than 95% of the net proceeds, as defined in the Code and
Treasury Regulations, of the 2006 Series C Bonds (including all investment
income therefrom) to be expended for the Solid Waste Disposal Facilities
constituting the Project to be financed by the 2006 Series C Bonds and will
direct the Trustee to make payments and transfers of 2006 Series C Bond
proceeds to the extent necessary to satisfy such covenant.  In furtherance of such covenant, moneys may
not be withdrawn from the Construction Fund until there has been filed with the
Trustee prior to each drawing a written requisition as required by Section
4.2 hereof.  For purposes of
foregoing provisions of this subsection (v) the portion of the 

 8
 

 

proceeds used
to finance the costs of issuing the 2006 Series C Bonds, including underwriter’s
discount or underwriting compensation, is not considered used to provide Solid
Waste Disposal Facilities.

(w)     Except for Company or any “related
person” or group of “related persons”, no person has (i) guaranteed, arranged,
participated in, assisted with or paid any portion of the cost of the issuance
of, the 2006 Series C Bonds, or (ii) provided any property or any franchise,
trademark or trade name (within the meaning of Section 1253 of the Code) which
is to be used in connection with the solid waste disposal facilities
constituting the Project financed with the 2006 Series C Bonds.

(x)       Company reasonably
expects that (i) all of the spendable proceeds of the 2006 Series C Bonds will
be used for the governmental purpose of the issue within three years from date
of issuance of such 2006 Series C Bonds and (ii) none of the proceeds of such
2006 Series C Bonds will be invested in nonpurpose obligations having a
substantially guaranteed yield for three years or more.

(y)      All of the depreciable
properties which were taken into account in determining the qualifying costs of
the Project constitute properties either (i) used for the collection, storage,
treatment, processing and final disposal of solid waste or (ii) facilities
which are functionally related and subordinate to the solid waste disposal
facilities constituting the Project.  All
of such functionally related and subordinate facilities are of a size and
character commensurate with the character and size of the solid waste disposal
facilities constituting the Project.

(z)       The Company will cause
the Issuer to comply in all respects with the requirements of Section 148 of
the Code in respect of the rebate of Excess Earnings with respect to the 2006
Series C Bonds to the United States of America.

(aa)    Upon the date of issuance
of the 2006 Series C Bonds, the Company will have caused the Issuer to comply
with the public approval requirements of Section 147 of the Code and at or
following the issuance of the 2006 Series C Bonds the Company will cause the
Issuer to comply with the information reporting requirements of Section 149 of
the Code by the filing of Internal Revenue Service Form 8038 with the United
States Internal Revenue Service.

(bb)    All of the documents,
instruments and written information furnished by Company on behalf of Company
to Issuer or Trustee in connection with the issuance of the 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.

(cc)    The solid waste which is
to be collected, stored, treated, processed and 
disposed of by the Project is and will be useless, unused and unwanted
and constitute discarded solid waste materials which have no market or other
value at the place where it is located.  
To the best knowledge of the Company, no person is or would be willing
to purchase such solid waste material in its condition when disposed of in
waste pits at any price.  Such solid
waste, being sludge created by sulphur dioxide removal facilities at the Ghent
Generating Station of the

 9
 

 

Company will
be disposed of by placing such SO2 scrubber sludge into solid waste landfills,
as required by law.

(dd)    It
is not anticipated, as of the date hereof, that there will be created any “replacement
proceeds”, within the meaning of Section 1.148-1(c) of the Treasury
Regulations, with respect to the 2006 Series C Bonds; however, in the event
that any such replacement proceeds are deemed to have been created, such
amounts will be invested in compliance with Section 148 of the Code.

(ee)    Company
covenants to perform and observe all provisions of the Indenture required to be
performed or observed by it.

Company need not comply with the covenants or
representations in this Section if and to the extent that Issuer and Company
receive a written opinion of Bond Counsel that such failure to comply will not
affect adversely the exclusion of interest on any of the 2006  Series C Bonds from gross income for federal
income tax purposes under Section 103(a) of the Code.

ARTICLE
III

COMPLETION
AND OWNERSHIP OF PROJECT

Section 3.1.         Completion and Equipping of Project.  Company represents that:

(a)      it will cause or has
caused the Project to be constructed as herein provided on the Project Site in
accordance with the Plans and Specifications as the same may be amended from
time to time.

(b)      it will make, execute,
acknowledge and deliver any contracts, orders, receipts, writings and
instructions with any other persons, firms or corporations and in general do
all  things which may be requisite or
proper, all for acquiring, constructing, installing and equipping the Project.

(c)      It will ask, demand, sue
for, levy and use its best efforts to recover and receive such sums of money,
debts or other demands whatsoever in connection with the Project, to which it
may be entitled under any contract, order, guaranty, warranty, writing or
instruction in connection with any of the foregoing, and it will enforce the
provisions of any contract, agreement, obligation, bond or other security in
connection with the Project.  Any amounts
received in connection with the foregoing, after deduction of expenses incurred
in such recovery, prior to the Completion Date and full disposition of the
Construction Fund in accordance with this Agreement and the Indenture, shall be
paid into the Construction Fund.

(d)      It will promptly commence
and thereafter diligently pursue and continue the acquisition, construction,
installation and equipping of the Project to completion and placement in
service.

Section 3.2.         Establishment of Completion Date.  The Completion Date of the Project shall be
evidenced to the Trustee by a certificate signed by Company Representative
stating that, except for amounts retained by the Trustee at the Company’s
direction for any amount of the 

 10
 

 

Cost of Construction not then due and payable or the
liability for payment of which is being contested or disputed by Company, (i)
construction of the Project has been completed in accordance with the Plans and
Specifications and all labor, services, materials and supplies used in such
construction, installation and equipping have been paid for, (ii) all other
facilities necessary in connection with the Project have been acquired,
constructed, installed and equipped in accordance with the Plans and
Specifications and all costs and expenses incurred in connection therewith have
been paid, and (iii) to the best of Company’s knowledge and belief and based
upon reasonable inquiry, the Project is suitable and sufficient for its
intended purposes.  Notwithstanding the
foregoing, such certificate shall state that it is given without prejudice to
any rights against third parties which exist at the date of such certificate or
which may subsequently come into being. 
Upon receipt of such certificate, the Trustee shall retain in the
Construction Fund a sum (specified in writing to it by Company) equal to the
amounts necessary for payment of any portion of the Cost of Construction of the
Project not then due and payable or the liability for payment of which is being
contested or disputed by Company.  The
remaining amounts in the Construction Fund shall be applied by the Trustee as
provided in Section 6.06 of the Indenture.

Section 3.3.         Agreement as to Ownership of  Project. Issuer and Company agree that
title to and ownership of the Project shall remain in and be the sole property
of Company in which 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 the opinion of Bond Counsel that such
sale or disposition shall not adversely affect the exclusion of the interest on
the 2006 Series C Bonds from gross income for federal income tax purposes and
provided further that in the event of any assignment, in whole or in part, of
this Agreement, such assignment shall be in accordance with Section 8.1
hereof.

Section 3.4.         Use of Project.  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 Company’s ownership of the Project or to prevent Company from
having possession, custody, use and enjoyment of the Project.

Section 3.5.         Financing of Additional Solid Waste
Disposal Facilities.  Company and
Issuer hereby recognize that additional Solid Waste Disposal Facilities at the
Project Site (other than those Solid Waste Disposal Facilities which 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 Issuer’s solid waste disposal
facility revenue bonds issued in addition to the 2006 Series C Bonds issued
pursuant to the Indenture, to the extent permitted by law.

 11
 

 

ARTICLE
IV

ISSUANCE
OF 2006 SERIES C BONDS; APPLICATION OF PROCEEDS; 

COMPANY TO ISSUE FIRST MORTGAGE BONDS

Section 4.1.         Agreement to Issue 2006 Series C
Bonds; Application of 2006 Series C Bond Proceeds.  In order to provide funds to make the Loan,
Issuer will issue, sell and deliver the 2006 Series C Bonds to the initial
purchasers thereof and deposit the proceeds thereof with Trustee, as follows:

(a)      Into the Bond Fund, a sum
equal to the accrued interest, if any, to be paid by the initial purchasers of
the 2006 Series C Bonds.

(b)      Into the Construction
Fund, the balance of the proceeds of the 2006 Series C Bonds for application as
provided in the Indenture.

Section 4.2.         Disbursements from Construction Fund.  The Issuer has, in the Indenture, authorized
and directed Trustee to make payments from the Construction Fund to pay the
Cost of Construction or to reimburse Company for any amount of the Cost of
Construction paid or incurred by it. 
Except for requisitions for costs of issuance of the 2006 Series C
Bonds  (which costs shall not be
considered to be qualifying), requisitions made in the form and manner
described below shall be made initially exclusively for expenditures which
qualify as solid waste disposal facilities and none, except for the
requisitions for such costs of issuance, shall be made for expenditures which
do not so qualify until such time as the ratio of qualifying expenditures to
nonqualifying expenditures can be maintained at not less than 95% qualifying to
5% nonqualifying.  Notwithstanding the
foregoing exception for costs of issuance of the 2006 Series C Bonds, amounts
requisitioned for such purposes shall not exceed two percent (2%) of the
proceeds of the 2006 Series C Bonds and shall be considered part of the 5%
nonqualifying portion.  Payments for Cost
of Construction shall be made upon receipt in the case of every disbursement of
a requisition signed by the Company Representative stating with respect to each
payment to be made: (i) the requisition number, (ii) the name and address of
the person, firm or corporation to whom payment has been made or is due, (iii)
the amount paid or to be paid, (iv) that each obligation mentioned therein has
been properly incurred, is a proper charge against the Construction Fund, is
unpaid or unreimbursed, and has not been the basis of any previous withdrawal,
and (v) that either (a) the expenditures qualify exclusively as Solid Waste
Disposal Facilities or (b) the 95%-5% ratio as required above has been
satisfied and the payment of the amount shown in such requisition will not
result in less than 95% of the proceeds of the 2006 Series C Bonds expended at
such time being used for the acquisition, construction or installation of Solid
Waste Disposal Facilities.

Section 4.3.         Furnishing Documents to the Trustee.  Company agrees to cause such requisitions to
be directed to the Trustee as may be necessary to effect payments out of the
Construction Fund in accordance with Section 4.2 hereof.

Section 4.4.         Company Required to Pay in Event Construction Fund
Insufficient.  In the event the
moneys in the Construction Fund available for payment of the Cost of
Construction should not be sufficient to pay such Cost of Construction in full,
Company agrees to pay such 

 12
 

 

portion of the Cost of
Construction in excess of the moneys available therefor in the Construction
Fund.  Issuer does not make any warranty,
either express or implied, that the moneys paid into the Construction Fund and
available for payment of the Cost of Construction will be sufficient to pay all
of such Cost of Construction.  Company
agrees that if, after exhaustion of such moneys in the Construction Fund,
Company should directly pay any portion of the Cost of Construction pursuant to
the provisions of this Section, it shall not be entitled to any diminution or
abatement of the amounts payable under Section 5.1 hereof.

Section 4.5.         Investment of Construction Fund, Bond Fund and Rebate
Fund Moneys.  Subject to the
provisions of Section 148 of the Code, any moneys held as a part of the
Construction Fund, Bond Fund or the Rebate Fund, shall be invested or
reinvested by Trustee, at the written request of and as specifically directed
by Company, in one or more of the 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 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.  Trustee shall sell and reduce
to cash a sufficient amount of applicable investments whenever the cash balance
in the Construction Fund or Bond Fund is insufficient to pay the principal of,
premium, if any, and interest on the 2006 Series C 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.

Section 4.6.         Special Arbitrage Certifications.

(a)      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 2006 Series C 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 Section 147(a) of the Code) or adversely affects
the validity of the 2006 Series C Bonds.

(b)      Company warrants, represents
and certifies to Issuer that the proceeds of the 2006 Series C Bonds will not
be used in any manner that would cause the 2006 Series C Bonds to be “arbitrage
bonds” under Sections 103(b)(2) and 148 and other applicable sections of the
Code.  To the best knowledge and belief
of Company, there are no facts, estimates or circumstances that would
materially change the foregoing conclusion.

(c)      Company hereby covenants
that it will at all times comply and cause 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 2006 Series C Bonds, in such manner and to such
extent, if any, as may be necessary, and remit Excess Earnings with respect to
all of the 2006 Series C 

 13
 

 

Bonds, if any,
to the United States of America pursuant to Section 148(f)(2) of the Code and
carry out such actions so that the 2006 Series C Bonds will not constitute “arbitrage
bonds” under Sections 103(b)(2) and 148 of the Code.  An officer or officers of Issuer having
responsibility with respect to the issuance of the 2006 Series C Bonds is or
are hereby authorized and directed to give an appropriate certificate of
Issuer, for inclusion in the transcript of proceedings for the 2006 Series C
Bonds, setting forth the reasonable expectations of Issuer regarding the amount
and use of the proceeds of the 2006 Series C 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 2006 Series C Bonds pursuant to said Section
148 of the Code.  Company shall provide
the Issuer, and Issuer’s certificate may be expressly based on, a certificate
of Company setting forth the facts, estimates and circumstances and reasonable
expectations of Company on the date of delivery of and payment for the 2006
Series C Bonds regarding the amount and use of the proceeds of the 2006 Series
C Bonds and related matters.  In the
event any such representation of Company relied upon by the Issuer is untrue or
inaccurate and Issuer thereby suffers costs or damages, Company shall indemnify
Issuer for any such costs or damages.

(d)      Consistent with the
foregoing, Company covenants and certifies to the Issuer and to and for the
benefit of the purchasers of the 2006 Series C Bonds, that no use will be made
of the proceeds of the sale of the 2006 Series C Bonds which would cause the
2006 Series C Bonds to be classified as “arbitrage bonds” within the meaning of
Sections 103(b)(2) and 148 of the Code and that Company and Issuer will, after
issuance of the 2006 Series C Bonds, comply with the provisions of the Code at
all times, including after the 2006 Series C Bonds are discharged, to the
extent Excess Earnings with respect to the 2006 Series C Bonds are required to be
rebated to the United States of America pursuant to Section 148(f)(2) of the
Code.  Pursuant to such covenant, Issuer
and Company obligate themselves throughout the term of this Agreement and
thereafter not to violate the requirements of Section 148 of the Code.

(e)      Company warrants,
represents and certifies to Issuer that the proceeds of the 2006 Series C Bonds
will be applied and invested in compliance with the current requirements of
Section 149(g) of the Code and that consequently the 2006 Series C Bonds will
not be “hedge bonds” under such Section 149(g) of the Code.

(f)       Company hereby covenants
and agrees that it will at all times comply with the provisions of Section 148,
including Section 148(f) of the Code and with Section 6.07 of the
Indenture.  Specifically, Company shall
carry out, do and perform all acts stipulated to be performed by Company
pursuant to such Section 6.07 of the Indenture.  Company shall further undertake to assure and
cause rebate payments to be calculated and made to the United States of America
in accordance with Section 148(f)(2) of the Code from moneys on deposit in the
Rebate Fund from time to time after the end of each Computation Period, as
defined in the Indenture, and following discharge of the 2006 Series C Bonds.  Company also covenants to take all necessary
acts and steps as required to cause Issuer to comply with the provisions of Sections
7.02 and  7.03 of the Indenture.

Section 4.7.         Opinion of Bond Counsel.  Company need not comply with the covenants or
representations in Section 4.6 if and to the extent that Issuer and
Company (with a copy to Trustee) receive a written opinion of Bond Counsel that
such failure to comply will not affect 

 14
 

 

adversely the exclusion
of interest on any of the 2006 Series C Bonds from gross income for federal
income tax purposes under Section 103(a) of the Code.

Section 4.8.         First Mortgage Bonds. 
Company covenants and agrees with Issuer that it will, for the purpose
of providing security for the 2006 Series C Bonds, execute and deliver on the
date of issuance of the 2006 Series C Bonds, the First Mortgage Bonds to
Trustee in aggregate principal amount not less than the aggregate principal
amount of the 2006 Series C Bonds.  The
First Mortgage Bonds shall mature as to principal identically as in the case of
the 2006 Series C Bonds and, upon the giving of a Redemption Demand to the
First Mortgage Trustee and completion of other conditions precedent set forth
in the Supplemental Indenture, shall bear interest identically as in the case
of the 2006 Series C Bonds.

Prior to the Release Date, in the event of a default
under ARTICLE IX of this Agreement or in the event of a default in
payment of the principal of, premium, if any, or interest on the 2006 Series C
Bonds as and when the same come due, whether at maturity, by purchase,
redemption, acceleration or otherwise, and upon receipt by First Mortgage
Trustee of a Redemption Demand from Trustee, the First Mortgage Bonds shall
bear interest, and principal and interest thereon will be payable in accordance
with the provisions specified in the Supplemental Indenture at the rate of
interest of the 2006 Series C Bonds and principal and interest thereon will be
payable at the same time and in the same manner in which such amounts are
payable with respect to the 2006 Series C Bonds, whether on schedule, at
maturity, by redemption, by acceleration or otherwise.

Upon payment of the principal of, premium, if any, and
interest on any of the 2006 Series C Bonds, whether at maturity or prior to
maturity by redemption or otherwise, and the surrender thereof to, and
cancellation thereof by, 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 2006 Series C Bonds so surrendered and cancelled or for
the payment of which provision has been made shall be deemed fully paid and the
obligations of Company thereunder terminated and such First Mortgage Bonds shall
be surrendered by 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 Trustee and shall
be non-transferable, except to effect transfers to any successor trustee under
the Indenture.

Notwithstanding anything in this Agreement to the
contrary, from and after the Release Date, the obligation of the Company to
make payment with respect to the principal of and premium, if any, and interest
on the First Mortgage Bonds shall be deemed satisfied and discharged as
provided in the Supplemental Indenture and the First Mortgage Bonds shall cease
to secure in any manner the 2006 Series C Bonds.  As a result, on the Release Date, the
obligations under this Agreement shall become unsecured general obligations of
the Company, subject, however to Section 7.9.

The Company shall notify the Issuer and the Trustee in
writing promptly upon the occurrence of the Release Date.  Upon receiving written notice of the Release
Date from the Company, the Trustee shall deliver for cancellation to the First
Mortgage Trustee all of the First Mortgage Bonds.

 15

 

Section 4.9.         Construction Fund Pledged as Further
Security.  Pending complete
disbursement of all moneys in the Construction Fund pursuant to the provisions
of this Agreement, pursuant to the Indenture all of such moneys or investments
of such moneys are pledged to the Trustee and the holders of the 2006 Series C
Bonds for the further security of the 2006 Series C Bonds.

ARTICLE V

PROVISIONS FOR PAYMENT

Section 5.1.         Loan Payments and Other Amounts Payable.

(a)      Company
hereby covenants and agrees to repay the Loan, as follows:  on or before any Interest Payment Date for
the 2006 Series C 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 2006 Series C 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 2006 Series C 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 or acceleration or otherwise), premium, if any, and interest on
the 2006 Series C Bonds as provided in the Indenture; provided that such
payments by Company to enable the Tender Agent to pay the purchase price of
Bonds shall be made within the times required by Section 3.05 of the
Indenture.

It is understood and agreed that all payments payable
by Company under this subsection (a) of Section 5.1 are assigned by the
Issuer to the Trustee, the Paying Agent and the Tender Agent, as applicable,
for the benefit of the Bondholders. 
Company assents to such assignment. 
Issuer hereby directs Company and Company hereby agrees to pay to
Trustee and/or Paying Agent or Tender Agent, as appropriate, at the Principal
Office of the Trustee and/or Paying Agent or Tender Agent, as appropriate, all
payments payable by Company pursuant to this subsection.

(b)      Company will also pay the
reasonable expenses of the Issuer related to the issuance of the 2006 Series C
Bonds and incurred upon the request of Company.

(c)      Company will also pay the agreed upon fees
and expenses of 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, the Initial Broker-Dealer, the Auction Agent
and the Tender Agent, as applicable from time to time, under the Indenture,
such amounts to be paid directly to Trustee, the Bond Registrar, the Paying
Agent, the Tender Agent, the Initial Broker-Dealer and the Auction Agent for
their respective own accounts as and when such amounts become due and payable.

 16
 

 

(d)      The Company further
agrees to hold harmless the Trustee, Bond Registrar and 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 2006 Series C 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 Bondholders, 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 2006 Series C Bonds
delivered to it for purchase, all as more particularly described in Sections
3.03 and 3.05 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 2006 Series
C Bonds delivered to it for purchase, as provided in the Indenture.

(f)       In
the event 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 Company until the amount in default shall have been fully paid, and 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 Company
pursuant to this Agreement (except payments pursuant to Section 5.1(b) and
(c) or pursuant to Section 8.2 hereof) are assigned by Issuer to
Trustee.  Company assents to such
assignment and hereby agrees that, as to Trustee, Paying Agent, Initial
Broker-Dealer,  Auction Agent and 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, Issuer hereby directs Company and Company hereby agrees to pay directly
to Trustee, Paying Agent, Initial Broker-Dealer, Auction Agent, Bond Registrar,
Tender Agent and Issuer, as appropriate, all said payments payable by Company
pursuant to Section 5.1 of this Agreement.

Section 5.3.         Taxes and Other Governmental Charges.  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,
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
Company to pay taxes on any interest or principal on the 2006 Series C Bonds
disbursed to Bondholders.

Company may, at
its expense and in its own name, in good faith contest any such taxes,
assessments and other governmental charges and, in the event of any such
contest, may permit the taxes, assessments or other governmental charges so
contested to remain unpaid during the

 17
 

 

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 charges shall be paid forthwith.  Issuer will cooperate fully with Company in
any such contest.  In the event Company
shall fail to pay any of the foregoing items required by this Section to be
paid by Company, Issuer or Trustee may (but shall be under no obligation to)
pay the same and any amounts so advanced therefor by Issuer or Trustee shall
become an additional obligation of Company to the one making the advancement,
which amounts, together with interest thereon 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 ninety-day commercial loans to its prime
commercial borrowers or the maximum rate permitted by law, whichever is lesser,
until paid; provided, however, that no such advancement shall
operate to relieve the Company from any default hereunder.  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 Company Unconditional.  The obligation of 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 6.07 of the Indenture
shall be absolute and unconditional. 
Until such time as the principal of, premium, if any, and interest on
the 2006 Series C Bonds shall have been fully paid or provision for the payment
thereof shall have been made in accordance with the Indenture, Company (i) will
not suspend or discontinue any payments pursuant to this Agreement and (ii)
except as provided in ARTICLE X hereof, will not terminate this
Agreement for any cause including, without limiting the generality of the
foregoing, 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 Issuer or
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 shall be construed to release Issuer from the performance of any of the
agreements on its part herein contained; and in the event Issuer should fail to
perform any such agreement on its part, Company may institute such action
against Issuer as Company may deem necessary to compel performance so long as
such action shall be in accordance with the agreements on the part of Company
contained in the preceding sentence. 
Company may, however, at its own cost and expense and in its own name or
in the name of Issuer, prosecute or defend any action or proceeding or take any
other action involving third persons which 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 Issuer hereby agrees to cooperate fully
with Company.

Section 5.5.         Rebate Fund.  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 Section 6.07 of the Indenture.  The obligation of Company to make such
payments shall remain in effect and be binding upon Company notwithstanding the
release and discharge of the Indenture.

 18
 

 

Section 5.6.         Redemption of the 2006 Series C
Bonds in Advance of Scheduled Maturity. 
Under the terms of the Indenture, the 2006 Series C Bonds are and will
be subject to redemption prior to their scheduled maturity.  The Issuer agrees that it shall direct the Trustee
to redeem and call 2006 Series C Bonds at the written direction of the Company.

Section 5.7.         Cancellation of 2006 Series C Bonds.  The cancellation by the Bond Registrar of any
2006 Series C Bond or Bonds purchased by the Company and delivered to the Bond
Registrar for cancellation or of any 2006 Series C Bond or Bonds redeemed or
purchased by the Issuer through funds other than funds received as Loan
payments hereunder shall constitute a Loan repayment equal to the principal
amount of the 2006 Series C 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 2006 Series C Bonds are
Outstanding, as that term is defined in the Indenture, 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 Solid Waste Disposal
Facilities; provided, however, that 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 Company because of damage or
destruction by a cause not within the control of 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 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 Company has furnished to Issuer and Trustee a certificate executed by
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 2006 Series C Bonds from gross income
for federal income tax purposes under Section 103(a) of the Code.

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; provided, however, that Company shall take no
actions which will change or alter the basic nature of the Project as Solid
Waste Disposal Facilities.

If, prior to full
payment of all 2006 Series C 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

 19
 

 

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, Company (unless it shall have exercised its option to
prepay the Loan pursuant to provisions of Section 10.1(b) or (c) hereof)
shall either (i) cause such Net Proceeds to be used to repair, reconstruct,
restore or improve the Project, or (ii) take any other action, including the
redemption of 2006 Series C 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 2006 Series C Bonds from gross income
for federal income tax purposes under Section 103(a) of the Code; provided that
if the 2006 Series C Bonds bear interest at the Flexible Rate or Semi-Annual
Rate, such redemption must occur on a date on which the 2006 Series C Bonds are
otherwise subject to optional redemption.

Section 6.2.         Insurance.  Prior to the Release Date, Company agrees to
insure the Project at all times in accordance with the provisions of First
Mortgage Indenture.  From and after the
Release Date, the Company agrees to insure, or self-insure, the Project at all
times reasonably in accordance with investor-owned public utility industry
general practices and standards.

ARTICLE VII

SPECIAL COVENANTS

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

Section 7.2.         Company to Maintain its Corporate Existence; Conditions
under Which Exceptions Permitted. 
Company agrees that during the term of this Agreement it will maintain
its corporate existence and good standing, will continue to be a corporation
organized under the laws of the Commonwealths of Kentucky and Virginia or
qualified and admitted to do business in the Commonwealths of Kentucky and
Virginia, and will neither dispose of all or substantially all of its assets
nor consolidate with nor merge into another corporation unless the acquirer of
its assets or the corporation with which it shall consolidate or into which it
shall merge, (i) 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, (ii) shall be
qualified and admitted to do business in the Commonwealth of Kentucky, (iii)
shall assume in writing all of the obligations and covenants of Company herein
and (iv) shall deliver a copy of such assumption to the Issuer and Trustee.

Section
7.3.         Financial
Statements.  Company agrees to
furnish 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 Company and its consolidated
subsidiary or subsidiaries, if any, at the close of such fiscal year and the
results of operations of 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 Company in accordance with generally

 20
 

 

accepted accounting
principles.  The requirements of this
Section may be satisfied by the submission to Trustee of Company’s annual
report on Form 10-K.  The information so
provided to Trustee shall be kept in its files and is not required to be
distributed to any Registered 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 Officers’ Certificates).

Section 7.4.         Further Assurances and Corrective Instruments. Issuer
and 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.         Issuer Representative.  Whenever under the provisions of this
Agreement the approval of Issuer is required or Issuer is required to take some
action at the request of Company, such approval shall be made or such action
shall be taken by Issuer Representative and Company or Trustee shall be
authorized to act on any such approval or action, and Issuer shall have no
redress against Company or Trustee as a result of any such action taken.

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

Section 7.7.         Financing Statements. 
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 and the Supplemental Indenture.  Issuer shall cooperate fully with Company in
taking any such action.  Concurrently
with the execution and delivery of the 2006 Series C Bonds, 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 of the Commonwealth of Kentucky, or (ii) no
such action is necessary to so perfect such lien, 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.         Company’s
Performance Under Indenture.  The
Company agrees, for the benefit of Bondholders to do and perform all acts and
things contemplated in the Indenture to be done and performed by it.

 21
 

 

Section 7.9.         Negative Pledge.

(a)      The Company agrees that,
subsequent to the Release Date (as defined in the Indenture) and so long as any
2006 Series C Bonds remain outstanding, the Company will not issue, assume or
guarantee any Debt secured by any mortgage, security interest, pledge or lien
(herein referred to as a “mortgage”) of or upon any Operating Property of the
Company, whether owned at the date of the Indenture or thereafter acquired, and
will not permit to exist any Debt secured by a mortgage on any Operating
Property, which Debt was created on or prior to the Release Date, without in
any such case effectively securing, on the later to occur of the issuance,
assumption or guaranty of any such Debt, the 2006 Series C Bonds equally and
ratably with such Debt; provided, however, that the foregoing restriction shall
not apply to Debt secured by any of the following:

(i)         mortgages on any property existing at
the time of acquisition thereof;

(ii)        mortgages on property of a corporation
existing at the time such corporation is merged into or consolidated with the
Company, or at the time of a sale, lease or other disposition of the properties
of such corporation or a division thereof as an entirety or substantially as an
entirety to the Company, provided that such mortgage as a result of such
merger, consolidation, sale, lease or other disposition is not extended to
property owned by the Company immediately prior thereto;

(iii)       mortgages on property to secure all or
part of the cost of acquiring, substantially repairing or altering,
constructing, developing or substantially improving such property, or to secure
indebtedness incurred to provide funds for any such purpose or for
reimbursement of funds previously expended for any such purpose, provided such
mortgages are created or assumed contemporaneously with, or within 18 months
after, such acquisition or completion of substantial repair or alteration,
construction, development or substantial improvement or within six months
thereafter pursuant to a commitment for financing arranged with a lender or
investor within such 18 month period;

(iv)       mortgages in favor of the United States
of America or any State thereof, or any department, agency or instrumentality
or political subdivision of the United States of America or any state thereof,
or for the benefit of holders of securities issued by any such entity, to
secure any Debt incurred for the purpose of financing all or any part of the
purchase price or the cost of substantially repairing or altering,
constructing, developing or substantially improving the property subject to
such mortgages; or

(v)        any extension, renewal
or replacement (or successive extensions, renewals or replacements), in whole
or in part, of any mortgage referred to in the foregoing clauses (1) to (4),
inclusive; provided, however, that the principal amount of indebtedness secured
thereby and not otherwise authorized by said clauses (1) to (4), inclusive,
shall not exceed the principal amount of indebtedness, plus any premium or fee
payable in connection with any such extension, renewal or replacement, so
secured at the time of such extension, renewal or replacement.

 22
 

 

(b)      Notwithstanding the
provisions of Section 7.9(a) from and after the Release Date and so long
as any 2006 Series C Bonds remain outstanding, the Company may issue, assume or
guarantee Debt, or permit to exist Debt, secured by mortgages which would
otherwise be subject to the restrictions of this Section up to an aggregate
principal amount that, together with the principal amount of all other Debt of
the Company secured by mortgages (other than mortgages permitted by Section
7.9(a) that would otherwise be subject to the foregoing restrictions) does
not at the time exceed the greater of 10% of Net Tangible Assets or 10% of
Capitalization.

(c)      Notwithstanding the
provisions of Section 7.9(a) and Section 7.9(b), the Company will
not, from and after the Release Date, issue, assume, guarantee or permit to
exist any debt of the Company secured by a mortgage, the creditor of which
controls, is controlled by, or is under common control with, the Company.

(d)      If
at any time the Company shall issue, assume or guarantee any Debt secured by
any mortgage and if Section 7.9(a) requires that the 2006 Series C Bonds
be secured equally and ratably with such Debt, the Company will promptly
execute, at its expense, any instruments necessary to so equally and ratably
secure such 2006 Series C Bonds.

ARTICLE VIII

ASSIGNMENT; INDEMNIFICATION; REDEMPTION

Section 8.1.         Assignment. 
This Agreement may be assigned by Company without the necessity of
obtaining the consent of either Issuer or Trustee, subject, however, to each of
the following conditions:

(a)      No assignment (other than
pursuant to Section 7.2 hereof) shall relieve Company from primary
liability for any of its obligations hereunder, and in the event of any such
assignment 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 Company hereunder to the extent of the interest assigned;

(c)      Company shall, within
thirty days after the delivery thereof, furnish or cause to be furnished to
Issuer and to Trustee a true and complete copy of each such assignment and
assumption of obligation; and

(d)      prior to such assignment,
the Company shall have obtained an opinion of Bond Counsel to the effect that
such assignment will not adversely affect the exclusion of interest on the 2006
Series C Bonds from gross income for Federal income tax purposes under Section
103(a) of the Code.

Section
8.2.         Release
and Indemnification Covenants. 
Company releases Issuer from and covenants and agrees that Issuer shall
not be liable for, and agrees to indemnify and hold Issuer harmless against,
any expense or liability incurred by Issuer, including attorneys’ fees,

 23
 

 

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, Issuer agrees to give prompt notice to
the Company and Company will assume the defense thereof, with full power to
litigate, compromise or to settle the same in its sole discretion, it being
understood that Issuer will not settle or consent to the settlement of the same
without the consent of Company.

Section 8.3.         Assignment of Interest in Agreement by Issuer.  Any assignment by Issuer to 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 2006 Series C Bonds.  Upon the agreement of Company to deposit
moneys in the Bond Fund in an amount sufficient to redeem 2006 Series C Bonds
subject to redemption, Issuer, at the request of 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 2006 Series C Bonds outstanding, as may be specified
by Company, on the redemption date specified by the Company.

Section 8.5.         Reference to 2006 Series C Bonds Ineffective after 2006
Series C Bonds Paid.  Upon payment in
full of the 2006 Series C 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 pursuant to Section
4.6 hereof and payment of all fees and charges of the Trustee (including
reasonable attorney’s fees and expenses), the Bond Registrar, the
Authenticating Agent and any Paying Agent, all references in this Agreement to
the 2006 Series C Bonds, the First Mortgage Bonds and the Trustee shall be
ineffective and neither the Trustee nor the holders of any of the 2006 Series C
Bonds shall thereafter have any rights hereunder except as set forth in Section
11.1.

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 they
are used in this Agreement, any 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 2006 Series C Bonds, and such failure
shall cause an event of default under the Indenture.

(b)      Failure by 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, for a period of
thirty days after written notice, specifying such failure and requesting that
it be remedied, is given to Company by Issuer or Trustee, unless Issuer and
Trustee shall agree in writing to an extension of such time prior to its
expiration; provided,

 24
 

 

however, if
the failure stated in the notice cannot be corrected within the applicable
period, Issuer and 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 Company within the applicable period and is being
diligently pursued.

(c)      All
bonds outstanding under the First Mortgage Indenture shall, if not already due,
have become immediately due and payable whether by declaration of the First
Mortgage Trustee or otherwise, and such acceleration shall not have been
rescinded or annulled by the First Mortgage Trustee.

(d)      An involuntary proceeding
shall be commenced or an involuntary petition shall be filed in a court of
competent jurisdiction seeking (i) relief in respect of Company, or of a
substantial part of the property or assets of 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, (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for Company or for a substantial part of the property or
assets of Company or (iii) the winding-up or liquidation of Company; and such
proceeding or petition shall continue undismissed or unstayed for 90 days or an
order or decree approving or ordering any of the foregoing shall be entered.

(e)      Company shall (i)
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,
(ii) 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
(d) above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for Company
or for a substantial part of the property or assets of Company, (iv) file an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to pay its
debts as they become due or (vii) take any action for the purpose of effecting
any of the foregoing.

(f)       The occurrence of an
Event of Default under the Indenture.

The provisions of Section
9.1(b) are subject to the following limitations:  If by reason of force majeure 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 Company contained in Section
2.2(k) and (l), Section 4.6, Section 4.8 or Section 7.2 or ARTICLE V
hereof and the general covenant and obligation of Company to take all necessary
actions for the continued exclusion of interest on the 2006 Series C Bonds from
gross income for federal and Kentucky income taxes, 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 Company, including
without limitation the following:  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;

 25
 

 

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.  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 Company, and 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
Company unfavorable to Company.

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, on behalf of the Issuer,
may take any one or more of the following remedial steps:

(a)      By written notice to
Company, the Trustee, on behalf of the Issuer, may declare an amount equal to
the principal and accrued interest on the 2006 Series C Bonds then Outstanding,
as defined in the Indenture, 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 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 Company under this Agreement, including, until the Release Date, 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(d) or (e) above, 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 Trustee allowed in such judicial proceedings
relative to 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, without limitation a receiver, trustee or liquidator) of
Company appointed in connection with such proceedings is hereby authorized to
make such payments to Trustee, and to pay to 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 (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 2006 Series C 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

 26
 

 

Trustee and any paying
agents accrued and to accrue through final payment of the 2006 Series C Bonds,
and all other liabilities of Company accrued and to accrue hereunder or under
the Indenture through final payment of the 2006 Series C Bonds have been paid,
such amounts so collected shall be paid to Company.

Section 9.3.         No Remedy Exclusive. 
No remedy herein conferred upon or reserved to 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
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 Issuer to
exercise any remedy reserved to it in this Article, 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 Issuer hereunder shall also extend to Trustee, and Trustee and the
holders of the 2006 Series C Bonds, 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.  In the event Company should default under any
of the provisions of this Agreement and Issuer and/or 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 Company herein contained, Company agrees that it will
on demand therefor pay to Issuer and/or Trustee the reasonable fees and expenses
of such attorneys and such other reasonable expenses so incurred by Issuer
and/or Trustee.

Section 9.5.         Waiver of Events of Default.  If, after the acceleration of the maturity of
the outstanding 2006 Series C Bonds by 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, Company shall
cause to be deposited with Trustee a sum sufficient to pay all matured
installments of interest upon all 2006 Series C Bonds and the principal of, and
premium, if any, on any and all 2006 Series C 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 2006 Series C
Bond, until paid), and such amounts as shall be sufficient to cover all
expenses of Trustee in connection with such default, and all defaults under the
Indenture and this Agreement, other than nonpayment of principal of 2006 Series
C 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 Trustee in accordance with Section 9.12 of the Indenture with the
consequence that under the Indenture such acceleration is rescinded, then
Company’s default hereunder shall be deemed to have been waived by Issuer and
no further action or consent by Trustee or Issuer shall be required.  In the event 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.

 27
 

 

ARTICLE X

PREPAYMENT
OF LOAN

Section 10.1.       Options to Prepay Loan. 
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
Company so elects, if certain events shall have occurred within the 180 days
preceding the giving of written notice by Company to Trustee of such election,
as follows:

(a)      If
in the judgment of Company, unreasonable burdens or excessive liabilities shall
have been imposed after the issuance of the 2006 Series C Bonds upon 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 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
Company in connection with which the Project is used unsatisfactory to 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 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 Company in
connection with which the Project is used unsatisfactory to Company for its
intended use;

(d)      In the event 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 Ghent Generating Station of the Company
shall have occurred which, in the judgment of the Company, render the continued
operation of the Ghent Generating Station or any generating unit at such
station uneconomical; or changes in circumstances, after the issuance of the
2006 Series C Bonds including but not limited to changes in solid waste
abatement, control and disposal requirements, shall have occurred such that the
Company shall determine that use of the Project is no longer required or
desirable;

(e)      In the event 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 2006 Series C
Bonds shall require the Company to cease a substantial part of its operations
at the Ghent 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.

 28
 

 

In the case of prepayment pursuant to this Section (or if any 2006
Series C 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 Trustee and available for such purpose, to redeem
all 2006 Series C Bonds then outstanding (or, in the case any 2006 Series C
Bonds are redeemed in part pursuant to Section 6.1 hereof, such portion
of the 2006 Series C Bonds then outstanding) under the Indenture at a price
equal to 100% of the principal amount thereof plus interest accrued and to
accrue to the date of redemption of the 2006 Series C Bonds and to pay all
reasonable and necessary fees and expenses of Trustee and any Paying Agents and
all other liabilities of Company accrued and to accrue hereunder to the date of
redemption of the 2006 Series C 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, Company is required to give written notice
to 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.  Company shall have, and is hereby granted,
further options, to the extent that the 2006 Series C 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 Trustee moneys sufficient to pay,
together with other funds deposited with 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 2006 Series C Bonds then outstanding under the Indenture and,
upon depositing with Trustee moneys sufficient to pay the principal, applicable
premium, if any, and accrued interest, through the date of redemption, on all
2006 Series C Bonds then outstanding under the Indenture, as well as all
reasonable and necessary expenses of Trustee and any Paying Agents and all
other liabilities of Company accrued and to accrue hereunder, to cancel or
terminate the term of this Agreement.

Section 10.3.       Obligations to Prepay Loan.  Company shall be obligated to prepay the
entire Loan or any part thereof, as provided below, prior to the required full
payment of the 2006 Series C Bonds (or prior to making provision for payment
thereof in accordance with the Indenture) on the 180th day (or such earlier date
as may be designated by Company), which, in every case, must be a Business Day,
upon the occurrence of a Determination of Taxability.  The Issuer and Company shall take all actions
required to mandatorily redeem the 2006 Series C 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,
but not limited to, prepaying appropriate amounts due on the 2006 Series C
Bonds in order to effect such redemption. 
The 2006 Series C 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, a “Determination of Taxability” shall mean the receipt by the Trustee
of written notice from a current or former registered owner of a 2006 Series C
Bond or from the Company or the Issuer of (i) 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

 29
 

 

further right of
administrative or judicial review or appeal exists, or (ii) 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 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 2006 Series C Bonds,
the interest on the 2006 Series C 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 the Section 147 of Internal Revenue Code of 1986, as
amended (the “Code”); 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 2006 Series C Bond or
from the Issuer unless (i) the Issuer or the registered owner or
former registered owner of the 2006 Series C 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
2006 Series C Bond in the computation of minimum or indirect taxes.  All of the 2006 Series C 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 2006 Series C Bonds of
one or more series or one or more maturities would have the result that
interest payable on the remaining 2006 Series C Bonds outstanding after the
redemption would not be so included in any such gross income.

In the event any of 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 2006 Series C 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, the Company shall give notice
thereof to the Trustee and the Issuer.

In the case of the mandatory obligation of Company to
prepay the Loan or any part thereof after the occurrence of a Determination of
Taxability, 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 this
Section hereof and to provide to 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 2006 Series C 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 2006 Series C
Bonds and to pay all reasonable and necessary fees and expenses of Trustee and
any paying agents and all other liabilities of Company accrued and to accrue
hereunder to the date of redemption of the 2006 Series C Bonds.

 30
 

 

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, Company shall give written
notice to Issuer and Trustee which notice shall (i) contain the agreement of
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 2006 Series C 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 2006 Series C Bonds, and any other amounts required under this
Agreement and (ii) specify the prepayment date (which must be a Business Day
and which shall also be the redemption date), which date shall not be less than
30 days (45 days if the 2006 Series C Bonds are bearing interest at the
Semi-annual, Annual or Long Term Rate or in all cases such shorter period as
may be acceptable to the Trustee) nor more than 90 days from the date the
notice is mailed by Company to Issuer and Trustee.

Section 10.5.       Relative Position of this Article and Indenture.  The rights and options granted to Company in
this Article, except the option granted to 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 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.  Prior to the Release Date, in the event any
of the 2006 Series C Bonds shall be paid and discharged pursuant to any
provisions of this Agreement, so that same are not thereafter Outstanding, as
the term “Outstanding” is defined in the Indenture, a like principal amount of
First Mortgage Bonds shall be deemed fully paid and the obligations of Company
thereunder terminated.  Thereupon, Trustee
shall deliver to First Mortgage Trustee such like principal amount of First
Mortgage Bonds for cancellation pursuant to Section 2.13 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 June 1, 2036, or until such earlier or
later time as all of the 2006 Series C Bonds shall have been fully paid (or
provision made for such payment pursuant to the Indenture), whichever shall be later;
provided, however, that this Agreement may be cancelled and terminated prior to
said date if Company shall prepay all of the Loan pursuant to ARTICLE X
hereof; and provided further, however, that all obligations of Company under ARTICLE
V and Section 8.1 hereof (a) to pay the agreed fees and expenses of
Trustee, the Bond Insurer, 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 2006 Series C Bonds may no longer be
outstanding and this Agreement may otherwise be terminated.  All representations and certifications by
Company as to all matters affecting the tax-exempt status of interest on the
2006 Series C Bonds shall be for the equal and ratable benefit, protection and
security of the holders of any and all of the 2006 Series C Bonds and shall
survive the termination of this Agreement and all obligations of Company
contained herein relating to indemnification of Issuer, Trustee, Bond

 31
 

 

Registrar, Authenticating
Agent, 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:

If to Issuer, at 440 Main Street, Carrollton, Kentucky
41008, Attention: County Judge/ Executive;

If to Company, at its corporate headquarters, One
Quality Street, Lexington, Kentucky 40507, Attention:  Treasurer, with a copy to E.ON U.S. LLC, 220
West Main Street, Louisville, Kentucky 40202, Attention: Treasurer, and

If to Trustee, at 60 Wall Street, 27th Floor, Mailstop NYC60-2715, New York, New York
10005, Attn: Trust & Securities Services (Municipal Group).

If to Paying Agent, Remarketing Agent, Auction Agent,
Initial Broker-Dealer or Tender Agent, at such addresses for notices as are set
forth in the Indenture.

A duplicate copy of each notice, certificate or other
communication given hereunder by either Issuer or Company to the other shall
also be given to Trustee.  Issuer,
Company and 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 Issuer, 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.  In
the event 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.

Section 11.5.       Amounts Remaining in Construction Fund, Bond Fund and
Rebate Fund.  It is agreed by the
parties hereto that any amounts remaining in the Construction Fund and 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 2006 Series C 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 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 Company by 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
6.07 of the Indenture.

 32
 

 

Section 11.6.       Amendments, Changes and Modifications.  Subsequent to the issuance of the 2006 Series
C Bonds and prior to payment in full of all 2006 Series C 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 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 governed by and construed in accordance with the
laws of the Commonwealth of Kentucky.

Section 11.9.       Captions.  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.

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

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.

(remainder of page left
blank intentionally)

 33

 

IN WITNESS WHEREOF, Issuer and
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.

	
   

  	
   

  	
  COUNTY OF CARROLL, KENTUCKY

  
	
   

  	
   

  	
   

  
	
  (SEAL)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Harold “Shorty” Tomlinson

  
	
   

  	
   

  	
  HAROLD TOMLINSON

  
	
   

  	
   

  	
  County
  Judge/Executive

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Traci Courtney

  	
   

  	
   

  
	
  Fiscal Court
  Clerk

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  KENTUCKY UTILITIES COMPANY

  
	
   

  	
   

  	
   

  
	
  (SEAL)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Daniel K. Arbough

  
	
   

  	
   

  	
  DANIEL K.
  ARBOUGH

  
	
   

  	
   

  	
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ John R. McCall

  	
   

  	
   

  
	
  JOHN R. McCALL

  	
   

  	
   

  
	
  Secretary

  	
   

  	
   

  

 

 

	
  COMMONWEALTH OF KENTUCKY

  	
  )

  
	
   

  	
  )  SS

  
	
  COUNTY OF CARROLL

  	
  )

  

 

I, the undersigned Notary
Public in and for the State and County aforesaid, do hereby certify that on the
1st day of
December, 2006, the foregoing instrument was produced to me in said County by
Harold Tomlinson and Traci Courtney, personally known to me and personally
known by me to be the County Judge/Executive and Fiscal Court Clerk,
respectively, of the COUNTY OF CARROLL, 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 1st day of
December, 2006.  My commission expires June
28, 2009.

(SEAL)

	
   

  	
  /s/ Debra R. Ewen

  
	
   

  	
  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
1st day of
December, 2006, the foregoing instrument was produced to me in said County by
Daniel K. Arbough and John R. McCall, personally known to me and personally
known by me to be the Treasurer and the Secretary, respectively, of KENTUCKY
UTILITIES 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 1st day of
December, 2006.  My commission expires September
11, 2008.

(SEAL)

	
   

  	
  /s/ Kimberly M. Walters

  
	
   

  	
  Notary Public

  
	
   

  	
  State at Large,
  Kentucky

  

 

This
Instrument Prepared by the

Undersigned, Attorney at Law of

STOLL KEENON OGDEN PLLC
 2000 PNC Plaza

500 West Jefferson Street

Louisville, Kentucky 40202

	
  

  	
  /s/ Spencer E.
  Harper, JR.

  	
   

  
	
   

  	
  SPENCER E.
  HARPER, JR.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]