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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the fiscal year ended December 31, 1993 Commission file number 2-26720
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LOUISVILLE GAS AND ELECTRIC COMPANY
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(Exact name of registrant as specified in its charter)
Kentucky 61-0264150
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
220 West Main Street
P.O. Box 32010
Louisville, Kentucky 40232
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (502) 627-2000
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Securities registered pursuant to Section 12(b) of the Act:
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Name of each exchange on
Title of each class which registered
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First Mortgage Bonds, Series due
July 1, 2002, 7 1/2% New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
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5% Cumulative Preferred Stock, $25 Par Value
7.45% Cumulative Preferred Stock, $25 Par Value
$5.875 Cumulative Preferred Stock, Without Par Value
Auction Rate Series A Preferred Stock, Without Par Value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
-- --
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
As of February 28, 1994, the aggregate market value of the registrant's
voting stock held by non-affiliates was $37,310,812 and the number of
outstanding shares of the registrant's common stock, without par value, was
21,294,223 all of which were held by LG&E Energy Corp.
DOCUMENTS INCORPORATED BY REFERENCE
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The proxy statement of Louisville Gas and Electric Company filed with
the Commission on March 28, 1994, is incorporated by reference into Part III
of this Form 10-K.
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TABLE OF CONTENTS
PART I PAGE
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Item 1. Business................................................ 4
General............................................... 4
Electric Operations................................... 7
Gas Operations........................................ 9
Regulation and Rates.................................. 10
Construction Program and Financing.................... 11
Coal Supply........................................... 12
Gas Supply............................................ 12
Environmental Matters................................. 14
Labor Relations....................................... 14
Employees............................................. 14
Item 2. Properties.............................................. 15
Item 3. Legal Proceedings....................................... 16
Item 4. Submission of Matters to a Vote of Security Holders..... 18
Executive Officers of the Company................................. 18
PART II
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Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters................................... 20
Item 6. Selected Financial Data................................. 20
Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition.................... 20
Item 8. Financial Statements and Supplementary Data............. 29
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................... 56
PART III
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Item 10. Directors and Executive Officers of the Registrant (a).. 57
Item 11. Executive Compensation (a).............................. 57
Item 12. Security Ownership of Certain Beneficial Owners
and Management (a).................................... 57
Item 13. Certain Relationships and Related Transactions (a)...... 57
PART IV
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Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K............................... 57
Signatures........................................................ 84
(a) Incorporated by reference.
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PART I
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ITEM 1. Business.
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General
Incorporated July 2, 1913, Louisville Gas and Electric Company (the
Company) is an operating public utility that supplies natural gas to
approximately 258,000 customers and electricity to approximately 336,000
customers in Louisville and adjacent areas in Kentucky. The Company's
service area covers approximately 700 square miles in 17 counties and has an
estimated population of 800,000. Included in this area is the Fort Knox
Military Reservation, to which the Company provides both gas and electric
service, but which maintains its own distribution systems. The Company also
provides gas service in limited additional areas. The Company's coal fired
generating plants, which are all equipped with systems to remove sulfur
dioxide, produce most of the Company's electricity; the remainder is
generated by a hydroelectric power plant and combustion turbines.
Underground gas storage fields help the Company provide economical and
reliable gas service to customers.
In August 1990, the Company and LG&E Energy Corp. (Energy Corp.)
implemented a corporate reorganization pursuant to a mandatory share
exchange whereby each share of outstanding common stock of the Company was
exchanged on a share-for-share basis for the common stock of Energy Corp.
The reorganization created a corporate structure that gives the holding
company the flexibility to take advantage of opportunities to expand into
other businesses while insulating the Company's utility customers and senior
security holders from any risks associated with such businesses. The
Company's preferred stock and first mortgage bonds were not exchanged and
remained securities of the Company.
The Company's Trimble County Unit 1 (Trimble County or the Unit), a
495-megawatt, coal-fired electric generating unit, which the Company began
constructing in 1979, was placed in commercial operation on December 23,
1990. The Unit has been subject to numerous reviews by the Public Service
Commission of Kentucky (the "Kentucky Commission" or "Commission"). In July
1988, the Kentucky Commission issued an order stating that 25% of the total
cost of the Unit would not be allowed for ratemaking purposes. For a more
detailed discussion of the proceedings relating to Trimble County Unit 1, see
Note 8 of the Notes to Financial Statements under Item 8.
In February 1993, the Company sold a 12.88% ownership interest in the Unit
to Indiana Municipal Power Agency, completing the Company's plan to sell the
25% not allowed for ratemaking. The Company had previously sold a 12.12%
ownership interest in the Unit to the Illinois Municipal Electric Agency in
1991. See Note 9 of the Notes to Financial Statements, Jointly Owned
Electric Utility Plant, under Item 8 for a further discussion.
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The Clean Air Act Amendments of 1990 impose stringent limits on emissions
of sulfur dioxide and nitrogen oxides by electric utility generating plants.
The legislation is extremely complex and its effect will substantially depend
on regulations issued by the U.S. Environmental Protection Agency. The
Company is closely monitoring the continuing rule-making process, in order
to assess the precise impact of the legislation on the Company. All of the
Company's coal-fired boilers are equipped with sulfur dioxide "scrubbers" and
already achieve the final sulfur dioxide emission rates required by the year
2000 under the legislation. However, as part of its ongoing capital
construction program, the Company anticipates incurring capital expenditures
during the next four years of approximately $40 million for remedial measures
necessary to meet the Act's requirements for nitrogen oxides. The overall
impact of the legislation on the Company is expected to be minimal. The
Company is well-positioned in the market to be a "clean" power provider
without the large capital expenditures which are expected to be incurred by
many other utilities. For a more detailed discussion of the Clean Air Act
and other environmental issues, see Environmental Matters under this Item,
Item 3, Item 7, and Note 7 of the Notes to Financial Statements under Item 8.
Competition among energy suppliers is increasing. In particular,
competition for off-system sales, which is based primarily on price and
availability of energy, has become much more intense in recent years. The
addition of electric generating capacity by other utilities in the Midwest
has reduced the opportunities for the Company to make interchange sales and
has heightened price competition for such sales. However, such additional
capacity has made lower cost power available for purchase by the Company
which, in certain instances, is at a cost lower than the variable cost of
generating power from the generating stations owned by the Company. In
addition, the 1992 Energy Policy Act provides utilities a wider choice of
sources for their electrical supply than previously available. The Act also
creates generating supply options that did not exist under previous
legislation and is expected to increase competition for wholesale electric
sales. (See Energy Policy Act of 1992 under Item 7 for a further
discussion.) The Company is responding to increased competition in a number
of ways designed to lower its costs and increase sales.
One such response has been for the Company's parent, LG&E Energy Corp.,
to realign into new business units effective January 1, 1994. Under the
realignment, Energy Corp. formed a national business unit, LG&E Energy
Services, to develop and manage all of its utility and non-utility electric
power generation and concentrate on the marketing and brokering of electric
power on a regional and national basis. The realignment will allow the
Company to increase its focus on customer service and to develop more
customer options as the utility industry becomes more competitive. The
realignment does not affect the regulation of the Company by the Commission.
In addition to the realignment, the Company is re-evaluating its regulatory
strategy to pursue full cost recovery of certain deferred expenses which are
recorded as a regulatory asset. See Notes 1, 2, and 7 of Notes to Financial
Statements under Item 8, for a discussion of these regulatory assets.
On May 24, 1993, the Federal Energy Regulatory Commission (FERC) gave
final approval for a market-based rate tariff and two transmission service
tariffs that were filed by the Company. The market-based rate tariff enables
the Company to sell up to 75 Mw of firm generation capacity at market-based
rates. It also enables the Company to sell an unlimited amount of non-firm
power at market-based rates, as long as the power is from the Company's own
generation resources.
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Under the two transmission service tariffs that were approved by FERC,
utilities, independent power producers, and qualifying co-generation or small
power production facilities may obtain firm or coordination transmission
service from the Company. These tariffs provide open access to the Company's
transmission system and enable parties requesting either type of transmission
service to transmit wholesale power across the Company's system. However,
service under these tariffs is not available to ultimate consumers of
electric utility service.
In responding to competition in the gas distribution business, the Company
has upgraded gas storage facilities and invested in new equipment. By using
the storage fields strategically, the Company can buy gas when prices are
low, store it, and retrieve the gas when demand is high. Accessing least
cost gas was made easier in November 1993 when FERC's Order No. 636 went into
effect. Previously, the Company and other utilities purchased most of their
gas services from pipeline companies. The order "unbundled" gas services,
allowing utilities to purchase gas, transportation, and storage services
separately from many different sources. Currently, the Company buys
competitively priced gas from several large producers under contracts of
varying duration. By purchasing from multiple suppliers, and storing any
excess gas, the Company is able to secure favorably priced gas for its
customers. Without storage capacity, the Company would be forced to buy gas
when customer demand increases, which is usually when the price is highest.
(See FERC Order No. 636 under Item 7 for a further discussion.)
The Company is experiencing some of the issues common to electric and gas
utility companies, namely, increased competition for customers, delays and
uncertainties in the regulatory process and costs of compliance with
environmental laws and regulations.
For the year ended December 31, 1993, 74% of total operating revenues was
derived from electric operations and 26% from gas operations. Electric and
gas operating revenues and the percentages by classes of service on a
combined basis for this period were as follows:
(Thousands of $)
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Electric Gas Combined % Combined
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Residential................. $195,273 $112,508 $307,781 44%
Commercial.................. 154,337 43,568 197,905 28
Industrial.................. 104,506 28,310 132,816 19
Public authorities.......... 52,183 13,846 66,029 9
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Total-ultimate consumers.. 506,299 198,232 704,531 100%
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---
Other utilities............. 58,959 - 58,959
Gas transportation-net...... - 5,147 5,147
Miscellaneous............... 4,952 1,536 6,488
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Total.................... $570,210 $204,915 $775,125
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See Note 10 of the Notes to Financial Statements under Item 8 for
financial information concerning segments of business for the three years
ended December 31, 1993.
<PAGE>7
Electric Operations
The sources of electric operating revenues and the volumes of sales for
the three years ended December 31, 1993, were as follows:
1993 1992 1991
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ELECTRIC OPERATING REVENUES
(Thousands of $):
Residential........................ $195,273 $174,559 $193,923
Small commercial and industrial.... 70,106 66,183 68,332
Large commercial................... 84,231 80,041 81,171
Large industrial................... 104,506 101,699 102,558
Public authorities................. 52,183 49,599 51,390
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Total-ultimate consumers.......... 506,299 472,081 497,374
Other electric utilities........... 58,959 45,698 40,745
Miscellaneous...................... 4,952 3,890 4,296
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Total............................. $570,210 $521,669 $542,415
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ELECTRIC SALES (Thousands of kwh):
Residential.......................... 3,230,463 2,923,517 3,229,153
Small commercial and industrial...... 1,056,977 1,010,830 1,042,543
Large commercial..................... 1,696,686 1,624,441 1,650,894
Large industrial..................... 2,736,269 2,671,212 2,625,915
Public authorities................... 1,053,928 1,004,911 1,046,035
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Total-ultimate consumers............ 9,774,323 9,234,911 9,594,540
Other electric utilities............. 3,299,510 3,234,758 2,476,921
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Total............................... 13,073,833 12,469,669 12,071,461
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At December 31, 1993, the Company had 336,124 electric customers.
The Company uses efficient coal-fired boilers that are fully equipped with
sulfur dioxide removal systems to generate electricity. The Company's system
wide emission rate for sulfur dioxide in 1993 was approximately .78
lbs./MMBtu of heat input, which is significantly below the Phase II limit of
1.2 lbs./MMBtu established by the Clean Air Act Amendments for the year 2000.
On Monday, August 30, 1993, the Company set a record local peak load of
2,239 Mw, when the temperature at the time of peak reached 94 degrees
Fahrenheit (average for the day was 84 degrees Fahrenheit). The record
system peak of 3,223 Mw (which included purchases from and short-term sales
to other electric utilities) occurred on Thursday, May 30, 1991.
The reliability criterion for generation capacity planning is to provide
a minimum reserve margin of 18%. At February 28, 1994, the Company owned
steam and combustion turbine generating facilities with a capacity of 2,613
Mw and an 80 Mw hydroelectric facility on the Ohio River. See Item 2,
Properties.
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The Company is a participating owner with 14 other electric utilities of
Ohio Valley Electric Corporation (OVEC) whose primary customer is the
Portsmouth Area uranium-enrichment complex of the U.S. Department of Energy
at Piketon, Ohio. The Company has electric transmission interconnections
and/or interconnection/interchange agreements with PSI Energy, Kentucky
Utilities Company, Southern Indiana Gas and Electric Company, The Cincinnati
Gas & Electric Company, Indiana Michigan Power Company, OVEC, Big Rivers
Electric Corporation, Tennessee Valley Authority, Wabash Valley Power
Association, Indiana Municipal Power Agency, East Kentucky Power Cooperative
(East Kentucky), Illinois Municipal Electric Agency, Jacksonville Electric
Authority, and Ogelthorpe Power Corporation providing for various
interchanges, emergency services, and other working arrangements.
The Company and East Kentucky have an agreement that allows East Kentucky
to purchase power during its peak season, that period during which the
utility's customers use the greatest amount of power, and the Company to sell
power during its off-peak season. The agreement entitles East Kentucky to
buy from the Company 30 to 145 megawatts from mid-December to mid-February
through 1994-95.
On February 28, 1991, the Company sold a 12.12% ownership interest in
Trimble County Unit 1 to the Illinois Municipal Electric Agency (IMEA), based
in Springfield, Illinois, which is an agency of 30 municipalities that own
and operate their own electric systems. On February 1, 1993, the Indiana
Municipal Power Agency (IMPA), based in Carmel, Indiana, purchased a 12.88%
interest in the Trimble County Unit. IMPA is composed of 31 municipalities
that have joined together to meet their long-term electric power needs. Both
IMEA and IMPA pay their proportionate share for operation and maintenance
expenses of the Unit and for fuel and reactant used. They are also
responsible for their proportionate share of incremental capital assets
acquired.
Electric and magnetic fields (sometimes referred to as EMF) surround
electric wires or conductors of electricity such as electrical tools,
household wiring and appliances, and high voltage electric transmission lines
such as those owned by the Company. Certain studies have suggested a
possible association between electric and magnetic fields and adverse health
effects. The Electric Power Research Institute, of which the Company is a
participating member, has expended approximately $65 million since 1987 in
its investigation and research with regard to possible health effects posed
by exposure to electric and magnetic fields.
<PAGE>9
Gas Operations
The sources of gas operating revenues and the volumes of sales for the
three years ended December 31, 1993, were as follows:
1993 1992 1991
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GAS OPERATING REVENUES
(Thousands of $):
Residential........................ $112,508 $ 96,175 $ 92,142
Commercial......................... 43,568 36,801 34,913
Industrial......................... 28,310 26,156 18,683
Public authorities................. 13,846 13,884 13,107
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Total-ultimate consumers.......... 198,232 173,016 158,845
Gas transportation-net............. 5,147 4,169 5,886
Miscellaneous...................... 1,536 1,341 1,560
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Total............................. $204,915 $178,526 $166,291
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GAS SALES (Millions of cu. ft.):
Residential........................ 24,330 22,465 21,795
Commercial......................... 10,308 9,527 9,160
Industrial......................... 7,817 8,077 5,945
Public authorities................. 3,515 3,864 3,721
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Total-ultimate consumers.......... 45,970 43,933 40,621
Gas transported.................... 5,249 4,155 6,231
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Total............................. 51,219 48,088 46,852
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At December 31, 1993, the Company had 258,185 gas customers.
The Company has extensive underground natural gas storage fields that help
provide economical and reliable gas service to ultimate consumers.
Reflecting the changing nature of the gas business, a number of industrial
customers purchase their natural gas requirements directly from producers or
brokers for delivery through the Company's distribution system.
Transportation of natural gas for the Company's customers does not have an
adverse effect on earnings because of the offsetting decrease in gas supply
expenses. The transportation rates are designed to make the Company
economically indifferent as to whether gas is sold or merely transported.
The all-time maximum day gas sendout of 545,000 Mcf occurred on Sunday,
January 20, 1985, when the average temperature for the day was -11 degrees
Fahrenheit. During 1993, the maximum day gas sendout was 447,000 Mcf,
occurring on February 18, when the average temperature for the day was
11 degrees Fahrenheit. Supply on that day consisted of 171,000 Mcf from
purchases, 238,000 Mcf delivered from underground storage, and 38,000 Mcf
transported for industrial customers. For further discussion, see Gas
Supply.
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On November 1, 1993, the Company began purchasing and transporting its
natural gas supplies under the new requirements created by FERC Order No. 636
which was issued in 1992. While the Company had previously been able to
purchase natural gas and pipeline transportation services from Texas Gas
Transmission Corporation (Texas Gas), the Company now purchases only
transportation services from Texas Gas pursuant to its FERC-approved tariff
and acquires its supply of natural gas from several other sources.
Throughout 1993, the Company undertook a review to evaluate and select the
pipeline services and gas supplies needed. As a result of this review, the
Company entered into several distinct transportation and purchase agreements.
The Company should benefit from FERC Order No. 636 through enhanced access
to competitively priced natural gas supplies as well as more flexible
transportation services. The Company has made the necessary modifications
to its operations and to its gas supply clause to reflect these Order No. 636
changes. (For further discussion see Gas Supply.)
Regulation and Rates
The Kentucky Commission has regulatory jurisdiction over the rates and
service of the Company and over the issuance of certain of its securities.
The Company is a "public utility" as defined in the Federal Power Act, and
is subject to the jurisdiction of the Department of Energy and the FERC with
respect to the matters covered in such Act, including the sale of electric
energy at wholesale in interstate commerce. In addition, the FERC has sole
jurisdiction over the issuance by the Company of short-term securities.
For a discussion of the most recent rate order of the Kentucky Commission,
see Rates and Regulation under Item 7 and Note 8 of the Notes to Financial
Statements under Item 8.
Increases and decreases in the cost of fuel for electric generation are
reflected in the rates charged to all of the Company's electric customers by
means of the Company's fuel adjustment clause. The Kentucky Commission
requires public hearings at six-month intervals to examine past fuel
adjustments, and at two-year intervals for the purpose of additional
examination and transfer of the then current fuel adjustment charge or credit
to the base charges. The Commission also requires that electric utilities,
including the Company, file certain documents relating to fuel procurement
and the purchase of power and energy from other utilities.
The Company's gas rates contain a gas supply clause (GSC), whereby
increases or decreases in the cost of gas supply are reflected in the
Company's rates, subject to approval of the Kentucky Commission. The GSC
procedure prescribed by order of the Commission provides for quarterly rate
adjustments to reflect the expected cost of gas supply in that quarter. In
addition, the GSC contains a mechanism whereby any over- or under-recoveries
of gas supply cost from prior quarters will be refunded to or recovered from
customers through the adjustment factor determined for subsequent quarters.
<PAGE>11
In November 1993, the Commission approved a comprehensive agreement on
demand side management (DSM) programs. The agreement contains a rate
mechanism that provides for the recovery of DSM program costs, allows the
Company to recover revenues due to lost sales associated with the DSM
programs and provides the Company an incentive for implementing DSM programs.
See Rates and Regulation under Item 7 for a further discussion of DSM.
As part of the corporate reorganization whereby the Company became the
subsidiary of LG&E Energy Corp., the Company obtained the approval of the
Kentucky Commission. The order of the Kentucky Commission authorizing the
Company to reorganize into a holding company structure contains certain
provisions, which, among other things, ensure the Kentucky Commission access
to books and records of Energy Corp. and its affiliates which relate to
transactions with the Company; require Energy Corp. and its subsidiaries to
employ accounting and other procedures and controls to protect against
subsidization of non-utility activities by the Company's customers; and
preclude the Company from guaranteeing any obligations of Energy Corp.
without prior written consent from the Kentucky Commission. In addition,
such order provides that the Company's board of directors has the
responsibility to use its dividend policy consistent with preserving the
financial strength of the Company and that the Kentucky Commission, through
its authority over the Company's capital structure, can protect the Company's
ratepayers from the financial effects resulting from non-utility activities.
Construction Program and Financing
The Company's construction program is designed to assure that there will
be adequate capacity to meet the future electric and gas needs of its service
area. These needs are continually being reassessed and appropriate revisions
are made, when necessary, in construction schedules. The Company's estimates
of its construction expenditures can vary substantially due to numerous items
beyond the Company's control, such as changes in rates, economic conditions,
construction costs, and new environmental or other governmental laws and
regulations.
At December 31, 1993, the Company's embedded cost of long-term debt was
6.4% and its ratio of earnings to fixed charges was 3.87. See Exhibit 12.
For a further discussion of construction expenditures and financing, see
Construction Expenditures and Capitalization and Liquidity under Item 7.
During the five years ended December 31, 1993, gross property additions
amounted to $580 million. Funds for about 97% of these gross additions were
generated internally. The gross additions during this period amounted to
approximately 24% of total utility plant at December 31, 1993, and consisted
of $480 million for electric properties and $100 million for gas properties.
Gross retirements during the same period were $40 million, consisting of $29
million for electric properties and $11 million for gas properties.
<PAGE>12
Coal Supply
Ninety percent of the Company's present electric generating capacity is
coal-fired, the remainder being made up of a hydroelectric plant and
combustion turbine peaking units fueled by natural gas and oil. Coal will
be the predominant fuel used by the Company in the foreseeable future, with
natural gas and oil being used for peaking capacity and flame stabilization
in coal-fired boilers or in emergencies. The Company has no nuclear
generating units and has no plans to build any in the foreseeable future.
In 1992, the Company entered into coal supply agreements with various
suppliers for coal deliveries for 1993 and beyond. The Company normally
augments its coal supply agreements with spot market purchases which, during
1993, were about 10% of total purchases. The Company has a coal inventory
policy, which is in compliance with the Kentucky Commission's directives and
which the Company believes provides adequate protection under most
contingencies. The Company had on hand at December 31, 1993, a coal
inventory of approximately 433,000 tons, or a 28 day supply.
The Company expects, for the foreseeable future, to continue purchasing
most of its coal from western Kentucky and southwest Indiana, which has a
sulfur content in the 2%-3.5% range. The abundant supply of this relatively
low priced coal, combined with present and future desulfurization
technologies, is expected to enable the Company to continue to provide
adequate electric service in a manner acceptable under existing environmental
laws and regulations.
Coal for the Company's Mill Creek plant is delivered by rail and barge,
whereas deliveries to the Cane Run plant are primarily by rail and also by
truck. Deliveries to the Trimble County plant are by barge only.
The average delivered cost of coal purchased by the Company, per ton and
per million Btu, for the periods shown were as follows:
1993 1992 1991
---- ---- ----
Per ton.............................. $26.58 $25.17 $24.51
Per million Btu...................... 1.14 1.09 1.06
Gas Supply
During 1993, the Company continued to purchase natural gas from and
transport other natural gas supplies through Texas Gas at rates and terms
regulated by the FERC. The Company also continued purchasing a portion of
its natural gas supplies on the spot-market and transporting those supplies
under various transportation agreements with Texas Gas pursuant to applicable
FERC-approved tariffs. The Company received standby service from Texas Gas
until its implementation of FERC Order No. 636.
<PAGE>13
As a result of FERC Order No. 636 and effective November 1, 1993, the
Company entered into new transportation service agreements with Texas Gas.
These agreements provide for 30,000 MMBtu (29,268 Mcf) per day in Firm
Transportation (FT) throughout the year. This FT agreement expires
October 31, 1997. During the winter months, the Company also has 184,900
MMBtu (180,390 Mcf) per day in No-Notice Service (NNS); during the summer
months that NNS level is 135,000 MMBtu (131,707 Mcf) per day. The Company's
NNS agreements with Texas Gas incorporate terms of 2, 5, and 8 years, and
include unilateral roll-over provisions at the Company's option. These
transportation services are provided by Texas Gas pursuant to its
FERC-approved tariff.
Contemporaneously with the conclusion of its transportation arrangements
with Texas Gas, the Company also entered into a series of long-term firm
supply arrangements with various suppliers in order to meet its firm sales
obligations. The gas supply arrangements include pricing provisions which
are market-responsive. These firm supplies, in tandem with pipeline
transportation services, provide the reliable and flexible supply needed to
replace the bundled sales service formerly supplied by the pipeline.
During 1994, the Company will be participating in several regulatory
proceedings at FERC. Particularly, the Company will be involved in reviewing
Texas Gas' most recent rate filing, and Texas Gas' filing to recover certain
transition costs associated with the FERC-mandated implementation of FERC
Order No. 636. As a separate matter, the Kentucky Commission has indicated
in an order issued in its Administrative Case No. 346 that transition costs,
which are clearly identified as being related to the cost of the commodity
itself, are appropriately recovered as a gas cost through the Company's
purchased gas adjustment.
The Company operates five underground gas storage fields with a current
working gas capacity of 14.6 million Mcf. Gas is purchased and injected into
storage during the summer season and is then withdrawn to supplement pipeline
supplies to meet the gas-system load requirements during the winter heating
season.
The estimated maximum deliverability from storage during the early part
of the 1992-1993 heating season was approximately 373,000 Mcf per day.
Deliverability decreases during the latter portion of the heating season as
the storage inventory is reduced by seasonal withdrawals.
The average cost per Mcf of natural gas purchased by the Company was $2.91
in 1993, $2.77 in 1992, and $2.39 in 1991. Although upcoming regulatory
changes may alter the ways in which the Company contracts for natural gas
supplies, it is expected that the Company will continue to have adequate
access to natural gas supplies at market sensitive prices.
<PAGE>14
Environmental Matters
Protection of the environment is a major priority for the Company. The
Company engages in a variety of activities within the jurisdiction of
federal, state, and local regulatory agencies. Those agencies have issued
the Company permits for various activities subject to air quality, water
quality, and waste management laws and regulations. For the five year period
ending with 1993, expenditures for pollution control facilities represented
$128 million or 22% of total construction expenditures. The cost of operating
and maintaining these facilities amounted to $22 million in both 1993 and
1992. The Company's anticipated capital expenditures for 1994 to comply with
environmental laws are approximately $22 million. See Item 3 and Note 7 of
Notes to Financial Statements under Item 8 for a discussion of specific
environmental proceedings affecting the Company.
Labor Relations
The Company's 1,652 operating, maintenance and construction employees are
members of the International Brotherhood of Electrical Workers (IBEW) Local
2100. On May 31, 1992, the IBEW voted to ratify a new three-year collective
bargaining agreement. The new agreement became effective in November 1992
and will expire in November 1995.
Employees
The Company had 2,749 full-time employees at December 31, 1993. During
the last quarter of 1993 and early 1994, the Company eliminated a number of
full-time positions, and made early retirement available to a number of other
employees. See Note 2 of Notes to Financial Statements under Item 8 for a
further discussion of this matter.
<PAGE>15
ITEM 2. Properties.
- --------------------
At February 28, 1994, the Company owned and operated the following
electric generating stations:
Year in
Steam Stations: Service Capability Rating (Kw)
------- ----------------------
Mill Creek-Kosmosdale, Ky.
Unit 1.......................... 1972 303,000
Unit 2.......................... 1974 301,000
Unit 3.......................... 1978 386,000
Unit 4.......................... 1982 466,000 1,456,000
-------
Cane Run-near Louisville, Ky.
Unit 3.......................... 1958 115,000
Unit 4.......................... 1962 155,000
Unit 5.......................... 1966 168,000
Unit 6.......................... 1969 240,000 678,000
-------
Trimble County-Bedford, Ky.
Unit 1.......................... 1990 371,000 (1)
Combustion Turbine Generators (Peaking capability):
Zorn............................ 1969 16,000
Paddy's Run..................... 1968 43,000
Cane Run........................ 1968 16,000
Waterside....................... 1964 33,000 108,000
------- ---------
2,613,000
---------
---------
(1) Amount shown represents the Company's 75% interest in the Unit.
See Note 9 of the Notes to Financial Statements, Jointly Owned
Electric Utility Plant, under Item 8 for a discussion of the sale
of 25% of the Unit to IMEA and IMPA. The Company is responsible
for operation of the Unit and is reimbursed by IMEA and IMPA for
expenditures related to the Unit based on their proportionate
share of ownership interest.
The Company's steam stations consist mainly of coal-fired units except for
Cane Run Unit 3 which must use natural gas because of restrictions mandated
by environmental regulations.
The Company also owns an 80 Mw hydroelectric generating station located
in Louisville, operated under license issued by the FERC.
At December 31, 1993, the Company's electric transmission system included
20 substations with a total capacity of approximately 10,518,897 Kva and
approximately 645 structure miles of lines. The electric distribution system
included 84 substations with a total capacity of approximately 2,948,768 Kva,
3,499 structure miles of overhead lines, 231 miles of underground conduit,
and 5,170 miles of underground conductors.
<PAGE>16
The Company's gas transmission system includes 177 miles of transmission
mains, and the gas distribution system includes 3,226 miles of distribution
mains.
The Company operates underground gas storage facilities with a current
working gas capacity of approximately 14.6 million Mcf. See Gas Supply under
Item 1.
In 1990, the Company entered into an operating lease for its corporate
office building located in downtown Louisville, Kentucky. The lease is for
a period of 15 years and is scheduled to expire June 30, 2005.
Other properties owned by the Company include office buildings, service
centers, warehouses, garages, and other structures and equipment, the use of
which is common to both the electric and gas departments.
The trust indenture securing the Company's First Mortgage Bonds
constitutes a direct first mortgage lien upon substantially all property
owned by the Company.
ITEM 3. Legal Proceedings.
- ---------------------------
Rate Case and Trimble County Station
For a discussion of the most recent rate order of the Public Service
Commission of Kentucky and a detailed discussion of the orders of the
Kentucky Commission and rulings of the Franklin Circuit Court and the
Kentucky Court of Appeals concerning Trimble County Unit 1, see Item 7 and
Note 8 of Notes to Financial Statements under Item 8.
Statewide Power Planning
As required by the regulations of the Kentucky Commission, on November 15,
1993, the Company filed its 1993 biennial Integrated Resource Plan with the
Kentucky Commission. The plan which updates the Company's first Integrated
Resource Plan filed in 1991, proposes to meet customers' future demand
through 2007 by adding resources in small increments such as short-term power
purchases (1996-1999), a customer-owned standby generation program (1997),
two combustion turbines (1999-2000), an air conditioner load controls program
(2001-2003), an upgrade to the Company's existing hydroelectric plant (2003),
and a compressed air energy storage plant (2004). The Kentucky Commission
staff is in the process of reviewing the Company's plan, and is not expected
to issue its report and recommendations concerning the plan until late 1994
at the earliest. The Kentucky Commission's regulations do not require it to
hold any hearings or issue any formal orders regarding the Plan.
<PAGE>17
Environmental
The Clean Air Act Amendments of 1990 impose stringent limits on emissions
of sulfur dioxide and nitrogen oxides by electric utility generating plants.
This legislation is extremely complex and its effect will substantially
depend on regulations issued by the U.S. Environmental Protection Agency.
While the Company will incur some capital expenditures to comply with the
Act's requirements, the overall impact of the Act on the Company is expected
to be minimal. The Company is closely monitoring the continuing rule-making
process in order to assess the precise impact of the legislation on the
Company.
For a complete discussion of the Company's environmental issues concerning
its Mill Creek and Cane Run generating plants, manufacturing gas plant sites,
and certain other environmental issues, see Note 7 of the Notes to Financial
Statements under Item 8.
Based upon prior precedents established by the Kentucky Commission and the
Environmental Cost Recovery legislation, the Company expects to have an
opportunity to recover through future ratemaking proceedings, its costs
associated with remedial measures required to comply with environmental laws
and regulations.
Other
The Company is a defendant in lawsuits seeking compensatory and, in
certain instances, punitive damages for injuries purportedly incurred by
individuals coming into contact with the Company's electric or gas facilities
and/or services. To the extent that damages are assessed in any of these
lawsuits, the Company believes that its insurance coverage is adequate and
that the effect of any such damages will not be material.
<PAGE>18
ITEM 4. Submission of Matters to a Vote of Security Holders.
- -------------------------------------------------------------
None
Executive Officers of the Company.
Effective Date of Election
Name Age Position to Present Position
- ---- --- -------- --------------------------
Roger W. Hale 50 Chairman of the
Board and Chief
Executive Officer January 1, 1992
Victor A. Staffieri 38 President January 1, 1994
David R. Carey 40 Senior Vice
President,
Operations January 1, 1994
Raymond A. Bennett 60 Vice President,
Gas Service
Business January 1, 1994
M. Lee Fowler 57 Vice President
and Controller September 1, 1988
Wendy C. Heck 40 Vice President,
Information
Services January 1, 1994
Chris Hermann 46 Vice President
and General
Manager, Wholesale
Electric Business January 1, 1993
Charles A. Markel III 46 Treasurer January 1, 1993
<PAGE>19
The present term of office of each of the above executive officers extends
to the meeting of the Board of Directors following the Annual Meeting of
Stockholders, scheduled to be held May 24, 1994.
There are no family relationships between executive officers of the
Company.
Mr. Fowler, Ms. Heck, Mr. Hermann, and Mr. Markel have been employed for
more than five years in executive or management positions with the Company.
Prior to election to the position shown in the table, the following executive
officers held other positions with the Company since January 1, 1989:
Ms. Heck was Manager-Internal Audit prior to January 1990, Vice
President-Internal Auditing prior to January 1, 1992, Vice President-Fuels
and Operating Services prior to January 1, 1993, and Vice President-Fuels and
Information Services thereafter; Mr. Hermann was Manager-Administration,
Power Production prior to November 1989, General Manager-Power Production
prior to January 1992 and General Manager-Wholesale Electric thereafter;
Mr. Markel was Vice President and Treasurer prior to March 1, 1990, Vice
President-Finance and Treasurer prior to January 1, 1992, and Senior Vice
President and Chief Financial Officer thereafter. Effective January 1, 1993,
Mr. Markel was named Corporate Vice President-Finance and Treasurer of the
parent company, LG&E Energy Corp.
Prior to election to his current position, Mr. Hale was Chairman of the
Board, President and Chief Executive Officer of the Company, and prior to
February 1, 1990, President and Chief Executive Officer. Prior to June 1,
1989, Mr. Hale was employed by BellSouth Enterprises, Inc. and held the
position of Executive Vice President.
Prior to election to his current position, Mr. Staffieri was Senior Vice
President-Public Policy, and General Counsel of the Company, and prior to
November 15, 1992, Senior Vice President, General Counsel and Corporate
Secretary. Prior to March 15, 1992, Mr. Staffieri was employed by Long
Island Lighting Company and held the position of General Counsel and
Secretary from April 1989 to March 1992, and Deputy General Counsel prior to
April 1989.
Prior to election to his current position, Mr. Carey was Vice President
and General Manager, Retail Electric Business of the Company, prior to
January 1, 1993, Vice President-Marketing and General Manager, Electric
Service, prior to January 1, 1992, Vice President-Marketing and Planning, and
prior to July 14, 1990, Vice President-Marketing and Sales. Prior to January
1990, Mr. Carey was employed by AT&T General Business Systems and held the
position of Director-Strategic and Business Planning.
Prior to election to his current position, Mr. Bennett was Vice President
and General Manager, Gas Service Business of the Company, and prior to
January 1, 1992, General Manager, Gas Operations. Prior to May 1990,
Mr. Bennett was employed by the Railroad Commission of Texas and held the
position of Director of Transportation-Gas Utility Division.
<PAGE>20
PART II
-------
ITEM 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
- --------------------------------------------------------------------------
All Louisville Gas and Electric Company common stock, 21,294,223 shares,
is held by LG&E Energy Corp. Therefore, there is no public trading market
for the Company's common stock.
The following table sets forth the cash distributions on common stock paid
to LG&E Energy Corp. for the periods indicated:
1993 1992
---- ----
(Thousands of $)
First Quarter................................ $17,000 $16,000
Second Quarter............................... 16,500 16,000
Third Quarter................................ 16,500 17,000
Fourth Quarter............................... 17,000 17,500
ITEM 6. Selected Financial Data.
- ---------------------------------
Years Ended December 31
(Thousands of $)
-----------------------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
Operating Revenues.... $775,125 $700,195 $708,706 $698,758 $686,996
Net Operating Income.. 136,118 125,829 142,730 137,717 127,560
Net Income............ 90,535 73,793 94,643 101,686 76,091
Net Income Available
for Common Stock.... 84,554 66,620 85,179 92,221 66,625
Total Assets.......... 2,072,910 1,973,039 1,948,410 1,995,782 1,905,306
Long-Term Obligations
(including amounts
due within one
year)............... 662,800 686,262 687,662 688,250 629,500
ITEM 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
- --------------------------------------------------------------------------
OVERVIEW
The Company's financial condition improved during 1993. Net income
increased $16.7 million or 23% over 1992 due primarily to higher electric
sales which resulted from the warmer summer weather experienced in 1993. The
Company also maintained its strong credit ratings throughout 1993.
<PAGE>21
Effective January 1, 1994, the Company's parent, LG&E Energy Corp.,
announced a major realignment of its business units to reflect its outlook
for rapidly emerging competition in all segments of the energy services
industry. In addition to the organizational change implemented by the
parent, the Company is presently re-evaluating its regulatory strategy to
pursue full cost recovery of certain deferred expenses which the Company has
recorded as regulatory assets. See Future Outlook for a further discussion
of this matter.
The following discussion and analysis by management focuses on those
factors that had a material effect on the Company's financial results of
operations and financial condition during 1993 and 1992 and should be read
in connection with the financial statements and notes thereto.
RESULTS OF OPERATIONS
Net Income Available for Common Stock
The $17.9 million increase in earnings for 1993 over 1992 resulted
primarily from increased electric sales attributable to warmer summer weather
experienced in 1993, higher sales to other utilities, reduced costs for debt
and preferred stock attributable to favorable refinancing activities, and a
gain recognized on the sale of the remaining disallowed portion of the
Trimble County plant to the Indiana Municipal Power Agency (IMPA). These
items were partially offset by a higher level of operation and maintenance
expense.
The decrease in earnings for 1992 from 1991 resulted primarily from
decreased electric sales to residential customers as a result of the cooler
summer weather experienced in 1992, the gain recognized in 1991 on the sale
of a portion of the Trimble County plant to the Illinois Municipal Electric
Agency (IMEA), higher depreciation and operation expenses and decreased
interest earned on temporary cash investments. These decreases were
partially offset by favorable financing activities and decreased maintenance
expenses.
Rates and Regulation
The Company is subject to the jurisdiction of the Public Service
Commission of Kentucky (Commission) in virtually all matters related to
electric and gas utility regulation. The Company last filed for a rate
increase with the Commission in June 1990 based on the test-year ended
April 30, 1990. The request was for a general rate increase of $34.9 million
($31.0 million electric and $3.9 million gas). A final order was issued in
September 1991 that effectively granted the Company an annual increase in
rates of $6.8 million ($6.1 million electric and $.7 million gas). The
Commission's order authorized a rate of return on common equity of 12.5%.
<PAGE>22
On April 21, 1993, the Company, the Kentucky Attorney General, the
Jefferson County Attorney, and representatives of several customer-interest
groups filed with the Commission a request for approval of a comprehensive
agreement on demand side management (DSM) programs. Under the agreement, the
Company will commit up to $3.3 million over three years (from 1994 through
1996) for initial programs that include a residential energy conservation and
education program and a commercial conservation audit program. Future
programs will be developed through a formal collaborative process. The
agreement contains a rate mechanism that will (1) provide the Company
concurrent recovery of DSM program costs, (2) provide the Company an
incentive for implementing DSM programs, and (3) allow the Company to recover
revenues due to lost sales associated with the DSM programs. On November 12,
1993, the Commission approved the agreement.
Revenues from lost sales to residential customers are collected through
a "decoupling mechanism". The Company's residential decoupling mechanism
breaks the link between the level of the Company's residential kilowatt-hour
and Mcf sales and its non-fuel revenues. Under traditional regulation, a
utility's revenue varies with changes in its level of kilowatt-hour or Mcf
sales. The residential decoupling mechanism will allow the Company to
recover a predetermined level of revenue per customer based on the rate set
in the Company's last rate case, which will not vary with the level of
kilowatt-hour or Mcf sales. Residential revenues will be adjusted to reflect
(1) changes in the number of residential customers and (2) a pre-established
annual growth factor in residential revenue per customer. Decoupling, in
effect, removes the impact on the Company's non-fuel revenues from changes
in kilowatt-hour or Mcf sales due to weather, fluctuations in the economy,
and conservation efforts. Under this mechanism, if actual sales produce
lower revenues than are produced by the predetermined per-customer amount,
the difference is deferred for recovery from customers through an adjustment
in rates over a period that will not exceed two years. Conversely, if actual
sales produce more revenues than would be realized using the predetermined
per-customer amount, the difference will be returned to customers through
subsequent rate adjustments over a period not to exceed two years.
Residential revenues reported in the financial statements for 1994 through
1996 will be determined in accordance with the agreed upon predetermined
amount per-customer plus growth, and recovery of fuel and gas costs. The
difference between the revenues shown in the financial statements and the
amounts billed to customers will be recorded on the balance sheet and
deferred for future recovery from or return to customers.
As more fully discussed in Note 8 of Notes to Financial Statements under
Item 8, the Commission has set a procedural schedule to determine the
appropriate ratemaking treatment to exclude 25% of the Trimble County plant
from customer rates.
On May 24, 1993, the Federal Energy Regulatory Commission (FERC) gave
final approval for a market-based rate tariff and two transmission service
tariffs that were filed by the Company. This tariff enables the Company to
sell up to 75 Mw of firm generation capacity at market-based rates. It also
enables the Company to sell an unlimited amount of non-firm power at market-
based rates, as long as the power is from the Company's own generation
resources.
<PAGE>23
Under the two transmission service tariffs that were approved by FERC,
utilities, independent power producers, and qualifying co-generation or small
power production facilities may obtain firm or coordination transmission
service from the Company. These tariffs provide open access to the Company's
transmission system and enable parties requesting either type of transmission
service to transmit wholesale power across the Company's system. However,
service under these tariffs is not available to ultimate consumers of
electric utility service.
Revenues
A comparison of operating revenues for the years 1993 and 1992 with the
immediately preceding years reflects both increases and decreases which have
been segregated by the following principal causes (in thousands of $):
Increase (Decrease) From Prior Period
----------------------------------------
Electric Revenues Gas Revenues
------------------ -------------------
Cause 1993 1992 1993 1992
----- ---- ---- ---- ----
Sales to Ultimate Consumers:
Rate increases effective in 1991. $ - $ 748 $ - $ 173
Fuel and gas supply
adjustments, etc............... 6,832 313 19,479 1,044
Variation in sales volumes....... 27,385 (26,354) 5,736 12,954
------ ------ ------ ------
Total.......................... 34,217 (25,293) 25,215 14,171
Sales to other utilities........... 13,261 4,953 - -
Gas transportation-net............. - - 978 (1,717)
Other.............................. 1,063 (406) 196 (219)
------ ------ ------ -------
Total.......................... $48,541 $(20,746) $26,389 $12,235
------ ------ ------ ------
------ ------ ------ ------
Electric revenues increased in 1993 primarily because of the warmer summer
weather. Sales of electricity to other utilities increased over 1992 levels
due to the Company's aggressive efforts in marketing off-system sales of
energy. The increase in gas sales for 1993 is largely attributable to cooler
winter weather in the region and customer growth.
Expenses
Fuel for electric generation and gas supply expenses account for a large
segment of the Company's total operating costs. The Company's electric and
gas rates contain a fuel adjustment clause and a gas supply clause,
respectively, whereby increases or decreases in the cost of fuel and gas
supply may be reflected in the Company's rates, subject to the approval of
the Commission.
<PAGE>24
Fuel expenses increased in 1993 primarily because of an increase in
generation and the higher cost of coal purchased. The average delivered cost
per ton of coal purchased was $26.58 in 1993, $25.17 in 1992, and $24.51 in
1991.
The increase in power purchased expense reflects an increase in the
quantity of power purchased mainly because of wheeling arrangements with
other utilities.
Gas supply expenses increased in 1993 and 1992 largely because of an
increase in both the cost and the volume of gas purchased. The average unit
cost per Mcf of purchased gas was $2.91 in 1993, $2.77 in 1992, and $2.39 in
1991.
Other operation and maintenance expenses increased $7.4 million in 1993.
This increase is primarily attributable to increased expenses for the
operation and maintenance of electric generating plants and higher
administrative and general costs. The increase in 1992 over 1991 resulted
primarily from costs associated with legal settlements relating to personal
injury claims and storm damage expenses. General increases in labor and
material costs are also reflected in operation and maintenance expenses.
Variations in income tax expenses are largely attributable to changes in
pre-tax income and an increase in the corporate Federal income tax rate from
34% to 35% effective January 1, 1993.
Other income and (deductions) increased in 1993 primarily because of a
$3.2 million after-tax gain recorded on the sale of a 12.88% ownership
interest in the Trimble County plant to IMPA in February 1993. A decrease
in 1992 from 1991 resulted primarily from a $4.2 million after-tax gain
recorded in 1991 on the sale of a 12.12% ownership interest in Trimble County
to IMEA and decreased interest income of $1.1 million from temporary cash
investments.
Interest charges decreased in 1993 and 1992 primarily because of an
aggressive program to refinance at lower interest rates. The Company
refinanced approximately $205 million of its outstanding debt in 1993. The
embedded cost of long-term debt at December 31, 1993, was 6.4%; at
December 31, 1992, 7.0%.
Preferred dividends reflect the lower dividend rates that resulted from
the Company's refunding of the $25 million, $8.90 Series with a $5.875 Series
in May 1993. In February 1992, the Company refunded the $8.72 and $9.54
Series with $50 million of Auction Rate Series. The weighted average
preferred dividend rate at December 31, 1993, was 4.72%; at December 31,
1992, 5.36%.
The rate of inflation may have a significant impact on the Company's
operations, its ability to control costs, and the need to seek timely and
adequate rate adjustments. However, relatively low rates of inflation in the
past few years have moderated the impact on current operating results.
<PAGE>25
Reference is made to Note 2 of Notes to Financial Statements under Item 8
for a discussion of SFAS No. 112, Employers' Accounting for Post-Employment
Benefits which will be effective in 1994. Reference is also made to Notes 1
and 2 which refer to the adoption of SFAS No. 106, Employers' Accounting for
Post-Retirement Benefits Other Than Pensions and SFAS No. 109, Accounting for
Income Taxes.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's need for capital funds is primarily related to the
construction of plant and equipment necessary to meet electric and gas
customers' needs and protection of the environment.
The Company's capital needs, earnings and cash flow are somewhat dependent
on events beyond the Company's control, such as weather, regulatory actions,
the state of the economy, and changes in existing governmental and
environmental regulations. Based on current conditions, the Company expects
to have sufficient cash flow and the ability to raise sufficient capital in
1994 and 1995 to meet its capital requirements and operating expenses.
Construction Expenditures
New construction expenditures for 1993 were $99 million compared with $101
million in 1992 and $88 million in 1991. Internally generated funds provided
for 100% of the construction expenditures in 1993, 87% in 1992, and 100% in
1991.
Construction expenditures for the calendar years 1994 and 1995 are
estimated to total approximately $200 million. The Company presently expects
to fund its construction expenditures for the two years mainly from internal
cash generation.
Capitalization and Liquidity
The Company maintains a strong capital structure. Reference is made to
Notes 4 and 5 of Notes to Financial Statements under Item 8 for a discussion
of preferred stock and long-term debt refinancings during the year which have
produced significant savings from lower interest and preferred dividend
rates.
The Company has outstanding interest rate swap agreements totaling $30
million. Under the agreements, which were entered into in 1992, the Company
pays a fixed rate of 4.35% on $15 million for a five-year period and 4.74%
on $15 million for a seven-year period. In return, the Company receives a
floating rate based on the weighted average JJ Kenny index. At December 31,
1993, the rate on the JJ Kenny index was 3.25%.
At December 31, 1993, the Company had unused lines of credit of $145
million for which it pays commitment fees. The lines are scheduled to expire
at various periods during 1994 and the Company intends to renegotiate such
lines when they expire.
<PAGE>26
Environmental Matters
The Clean Air Act Amendments of 1990 impose stringent limits on emissions
of sulfur dioxide and nitrogen oxides by electric utility generating plants.
The Company is closely monitoring the continuing rule-making process in order
to assess the precise impact of the legislation on the Company. All of the
Company's coal-fired boilers are equipped with sulfur dioxide "scrubbers" and
already achieve the final sulfur dioxide emission rates required by the year
2000 under the legislation. However, as part of its ongoing construction
program, the Company anticipates incurring capital expenditures during the
next four years of approximately $40 million for remedial measures necessary
to meet the Act's requirements for nitrogen oxides. The overall financial
impact of the legislation on the Company is expected to be minimal. The
Company is well-positioned in the market to be a "clean" power provider
without the large capital expenditures that are expected to be incurred by
many other utilities.
Reference is made to Note 7 of Notes to Financial Statements,
Environmental, under Item 8 for a complete discussion of the Company's
environmental issues concerning its Mill Creek and Cane Run generating
plants, manufactured gas plant sites, and certain other environmental issues.
Based upon prior precedents established by the Commission and the
Environmental Cost Recovery legislation, the Company expects to have an
opportunity to recover through future ratemaking proceedings, its costs
associated with remedial measures required to comply with environmental laws
and regulations.
Energy Policy Act of 1992
The Energy Policy Act of 1992 (EPA92), passed by Congress and signed into
law on October 24, 1992, outlines standards for utility industry structure,
competition in wholesale power generation and energy conservation. It
represents a thorough overhaul of legislation and related regulations that,
for the most part, have guided the industry since the 1930s -- the Public
Utility Holding Company Act (PUHCA) and the Federal Power Act.
EPA92 eliminates the statutory barriers to increased participation by
non-utility generators in wholesale power markets. PUHCA was amended to
allow qualifying non-utility generators (called "Exempt Wholesale
Generators") to operate without the Act's restrictions and to permit
utilities subject to PUHCA to invest in non-utility generators. The
legislation grants FERC authority to order transmission access and directs
FERC to use certain guidelines in establishing transmission rates. The
transmission tariffs that FERC approved for the Company provide the type of
open access mandated in EPA92.
<PAGE>27
The Act is designed to give utilities a wider choice of sources for their
electrical supply than previously available, while creating generating supply
options that did not exist under the old law. In passing this legislation,
Congress also anticipated that greater competition among electric supply
options should result in lower consumer rates. Although the Company cannot
predict the exact impact of this legislation, the Company is planning to be
a competitive supplier of electric energy.
FERC Order No. 636
On November 1, 1993, the Company began purchasing and transporting its
natural gas supplies under the new requirements created by FERC Order No. 636
issued in 1992. Whereas the Company had previously been able to purchase
natural gas and pipeline transportation services from Texas Gas Transmission
Corporation (Texas Gas), the Company now purchases only transportation
services from Texas Gas pursuant to its FERC-approved tariff and acquires its
supply of natural gas from several other sources.
Throughout 1993, the Company undertook a review to evaluate and select the
pipeline services and gas supplies needed. As a result of this review, the
Company entered into the appropriate transportation and purchase agreements.
The Company should benefit from Order No. 636 through enhanced access to
competitively priced natural gas supplies as well as more flexible
transportation services. The Company has made the necessary modifications
to its operations and to its gas supply clause to reflect these Order No. 636
changes.
Certain aspects of Order No. 636 have yet to be resolved by the courts,
and still others await resolution at FERC. Issues still to be resolved at
FERC include the determination and recovery of pipeline costs associated with
the transition to and implementation of Order No. 636. Based on pipeline
filings to date, the Company estimates that its share of transition costs,
which must be approved by FERC, will be approximately $2 million to $3
million a year for both 1994 and 1995. The Commission issued an order, based
on proceedings that were held to investigate the impact of Order No. 636 on
utilities and ratepayers in Kentucky, providing that transition costs
assessed on utilities by the pipelines, which are clearly identified as being
related to the cost of the commodity itself, are appropriate to be recovered
from customers through the gas supply clause.
FUTURE OUTLOOK
Work Force Reduction
In the fourth quarter of 1993, the Company announced it was reducing its
construction, warehouse, and janitorial work force primarily because no new
major construction projects are expected in the near future. The Company
also offered voluntary separation, primarily through early retirement, to
various other employees. This reduction in work force of about 350 employees
is projected to cost approximately $11.5 million. The Company will realize
significant savings in future years as a result of this work force reduction.
<PAGE>28
Business Realignment
In November 1993, LG&E Energy Corp. announced a major realignment and
formation of new business units, effective January 1, 1994, to reflect its
outlook for rapidly emerging competition in all segments of the energy
service industry. The realignment does not affect the regulation of the
Company by the Commission.
Under the realignment, LG&E Energy Corp. is forming a national business
unit, LG&E Energy Services, to develop and manage all of its utility and
non-utility electric power generation and concentrate on the marketing and
brokering of wholesale electric power on a regional and national basis. The
realignment will allow the Company to increase its focus on customer service
and to develop more customer options as the local utility industry becomes
more competitive in the future.
Other
In addition to the business realignment mentioned above, the Company is
currently in the process of re-evaluating its regulatory strategy to pursue
full cost recovery of certain deferred expenses which are recorded as
regulatory assets. Depending on the results of this re-evaluation, which
should be completed in early 1994, all or part of such regulatory assets may
be immediately expensed. See Notes 1, 2, and 7 of Notes to Financial
Statements under Item 8 for a discussion of these regulatory assets.
The Board of Directors of the Company recently approved the formation of
a tax-exempt charitable foundation which will make local, regional, and
national charitable contributions to qualified persons and entities. The
Board has authorized an initial contribution to the foundation of up to $15
million. The effect of this contribution will be an after-tax charge against
income of up to $9 million for the first quarter of 1994. The Company
believes this action to be beneficial because it will provide a vehicle to
make contributions in support of community needs on a consistent basis. It
will also reduce charges against income in future years as contributions will
be made by the foundation, rather than directly by the Company. The Company
anticipates that funding will occur following the receipt of exempt status
for the foundation under the Internal Revenue Code.
<PAGE>29
Item 8. Financial Statements and Supplementary Data
- ---------------------------------------------------
LOUISVILLE GAS AND ELECTRIC COMPANY
STATEMENTS OF INCOME
(Thousands of $)
Years Ended December 31
------------------------------
1993 1992 1991
---- ---- ----
Operating Revenues
Electric................................. $570,210 $521,669 $542,415
Gas...................................... 204,915 178,526 166,291
------- ------- -------
Total operating revenues (Note 1)...... 775,125 700,195 708,706
------- ------- -------
Operating Expenses
Fuel for electric generation............. 149,436 132,551 132,392
Power purchased.......................... 17,228 12,044 11,478
Gas supply expenses...................... 139,054 115,521 104,212
Other operation expenses................. 136,693 130,740 126,842
Maintenance.............................. 48,414 46,931 49,079
Depreciation and amortization............ 79,655 76,903 73,273
Federal and State income
taxes (Note 3)......................... 52,334 43,840 53,195
Property and other taxes................. 16,193 15,836 15,505
------- ------- -------
Total operating expenses............... 639,007 574,366 565,976
------- ------- -------
Net Operating Income....................... 136,118 125,829 142,730
Other Income and (Deductions).............. 1,913 (2,203) 4,593
------- ------- -------
Income before Interest Charges............. 138,031 123,626 147,323
Interest Charges........................... 47,496 49,833 52,680
------- ------- -------
Net Income................................. 90,535 73,793 94,643
Preferred Stock Dividends.................. 5,981 7,173 9,464
------- ------- -------
Net Income Available for Common Stock...... $ 84,554 $ 66,620 $ 85,179
------- ------- -------
------- ------- -------
The accompanying notes are an integral part of these financial statements.
<PAGE>30
LOUISVILLE GAS AND ELECTRIC COMPANY
STATEMENTS OF RETAINED EARNINGS
(Thousands of $)
Years Ended December 31
------------------------------
1993 1992 1991
---- ---- ----
Balance January 1.......................... $178,667 $181,694 $219,515
Add net income............................. 90,535 73,793 94,643
------- ------- -------
269,202 255,487 314,158
------- ------- -------
Deduct: Cash dividends declared on stock:
5% cumulative preferred........... 1,075 1,076 1,076
7.45% cumulative preferred........ 1,598 1,598 1,598
$8.72 cumulative preferred........ - 454 2,180
$8.90 cumulative preferred........ 1,113 2,225 2,225
$9.54 cumulative preferred........ - 497 2,385
Auction rate cumulative preferred. 1,322 1,323 -
$5.875 cumulative preferred....... 873 - -
Common............................ 67,500 67,500 123,000
Preferred stock redemption expense. 818 2,147 -
------- ------- -------
74,299 76,820 132,464
------- ------- -------
Balance December 31........................ $194,903 $178,667 $181,694
------- ------- -------
------- ------- -------
The accompanying notes are an integral part of these financial statements.
<PAGE>31
LOUISVILLE GAS AND ELECTRIC COMPANY
BALANCE SHEETS
(Thousands of $)
ASSETS
December 31
-----------------------------
1993 1992
---- ----
Utility Plant, at original cost
Electric................................... $2,019,139 $1,976,206
Gas........................................ 260,485 240,818
Common..................................... 132,692 121,105
--------- ---------
2,412,316 2,338,129
Less: Reserve for depreciation............ 823,141 754,429
--------- ---------
1,589,175 1,583,700
Construction work in progress.............. 51,785 35,367
--------- ---------
1,640,960 1,619,067
--------- ---------
Other Property and Investments -
less reserve (Note 1)...................... 22,067 98,832
--------- ---------
Current Assets
Cash and temporary cash investments........ 44,105 946
Accounts receivable - less reserve of
$1,474 in 1993 and $1,109 in 1992........ 104,397 92,719
Materials and supplies - at average cost
Fuel (predominantly coal)................ 12,075 21,360
Gas stored underground................... 33,370 34,079
Other.................................... 40,357 41,034
Prepayments................................ 360 467
--------- ---------
234,664 190,605
--------- ---------
Deferred Debits and Other Assets
Unamortized debt expense................... 24,698 17,282
Accumulated deferred income taxes (Notes 1
and 3)................................... 58,675 12,179
Regulatory asset-income taxes (Note 1)..... 39,651 -
Other...................................... 52,195 35,074
--------- ---------
175,219 64,535
--------- ---------
$2,072,910 $1,973,039
--------- ---------
--------- ---------
The accompanying notes are an integral part of these financial statements.
<PAGE>32
LOUISVILLE GAS AND ELECTRIC COMPANY
CAPITAL AND LIABILITIES
(Thousands of $)
December 31
-----------------------------
1993 1992
---- ----
Capitalization (see Statements
of Capitalization)
Common equity.............................. $ 619,237 $ 603,001
Cumulative preferred stock................. 116,716 116,740
Long-term debt............................. 662,879 686,119
--------- ---------
1,398,832 1,405,860
--------- ---------
Current Liabilities
Long-term debt due within one year......... - 400
Notes payable (Note 6)..................... - 8,000
Accounts payable........................... 93,551 72,452
Dividends declared......................... 18,878 18,522
Accrued taxes.............................. 9,494 7,151
Accrued interest........................... 12,864 12,107
Other...................................... 11,127 11,494
--------- ---------
145,914 130,126
--------- ---------
Deferred Credits and Other Credits
Accumulated deferred income taxes (Notes 1
and 3)................................... 340,235 295,677
Investment tax credit,
in process of amortization............... 91,572 104,623
Customers' advances for construction....... 7,384 6,849
Regulatory liability-income taxes (Note 1). 46,528 -
Other...................................... 42,445 29,904
--------- ---------
528,164 437,053
--------- ---------
Commitments and Contingencies (Notes 7 and 8)
$2,072,910 $1,973,039
--------- ---------
--------- ---------
The accompanying notes are an integral part of these financial statements.
<PAGE>33
LOUISVILLE GAS AND ELECTRIC COMPANY
STATEMENTS OF CASH FLOWS
(Thousands of $)
Years Ended December 31
--------------------------------
1993 1992 1991
---- ---- ----
Cash Flows from Operating Activities
Net income............................. $ 90,535 $ 73,793 $ 94,643
Items not requiring cash currently:
Depreciation and amortization........ 79,887 79,686 76,431
Deferred income taxes - net.......... 4,938 28,911 23,292
Investment tax credit - net.......... (7,821) (5,033) (11,472)
Gain on sale of capital asset........ (3,869) - (7,908)
Other................................ 5,877 3,768 3,548
(Increase) decrease in certain net
current assets:
Accounts receivable.................. (11,678) (7,494) (4,629)
Materials and supplies............... 10,671 (8,014) 5,390
Accounts payable..................... 21,099 4,546 (2,963)
Accrued taxes........................ 2,343 1,967 (6,353)
Accrued interest..................... 757 (1,716) 471
Prepayments and other................ (260) 538 71
Other.................................. (15,587) (11,321) (1,928)
------- ------- -------
Net cash provided from
operating activities............... 176,892 159,631 168,593
------- ------- -------
Cash Flows from Investing Activities
Sale of capital asset.................. 91,076 - 94,164
Long-term investment in securities..... (11,097) (10,441) -
Construction expenditures.............. (98,787) (101,175) (88,052)
------- ------- -------
Net cash provided from (used for)
investing activities............... (18,808) (111,616) 6,112
------- ------- -------
Cash Flows from Financing Activities
Issuance of preferred stock............ 24,716 49,099 -
Issuance of first mortgage bonds and
pollution control bonds.............. 198,918 88,462 4,233
Redemption of preferred stock.......... (25,558) (51,443) -
Retirement of first mortgage bonds
and pollution control bonds.......... (231,876) (92,400) (5,088)
Decrease in notes payable.............. (8,000) (4,000) (13,000)
Payment of dividends................... (73,125) (74,517) (131,662)
------- ------- -------
Net cash used for financing
activities......................... (114,925) (84,799) (145,517)
------- ------- -------
The accompanying notes are an integral part of these financial statements.
<PAGE>34
LOUISVILLE GAS AND ELECTRIC COMPANY
STATEMENTS OF CASH FLOWS
(Thousands of $)
Years Ended December 31
--------------------------------
1993 1992 1991
---- ---- ----
Net Increase (Decrease) in Cash and
Temporary Cash Investments............. $ 43,159 $(36,784) $ 29,188
Cash and Temporary Cash Investments at
Beginning of Year...................... 946 37,730 8,542
------- ------- -------
Cash and Temporary Cash Investments at
End of Year............................ $ 44,105 $ 946 $ 37,730
------- ------- -------
------- ------- -------
Supplemental Disclosures of Cash Flow Information
Cash paid during the year for:
Income taxes......................... $ 54,686 $ 19,741 $ 46,481
Interest on borrowed money........... 45,360 50,508 50,744
The accompanying notes are an integral part of these financial statements.
<PAGE>35
LOUISVILLE GAS AND ELECTRIC COMPANY
STATEMENTS OF CAPITALIZATION
(Thousands of $)
December 31
-----------------------------
1993 1992
---- ----
Common Equity
Common stock, without par value -
Authorized 75,000,000 shares,
outstanding 21,294,223 shares........... $ 425,170 $ 425,170
Common stock expense...................... (836) (836)
Retained earnings......................... 194,903 178,667
--------- ---------
$ 619,237 $ 603,001
--------- ---------
Cumulative Preferred Stock (Note 4)
Redeemable on 30 days notice by the Company
Shares Current
Outstanding Redemption Price
----------- ----------------
$25 par value, 1,720,000 shares authorized -
5% series........ 860,287 $ 28.00 $ 21,507 $ 21,507
7.45% series..... 858,128 25.75 21,453 21,453
Without par value, 6,750,000 shares authorized -
$8.90 series..... - - - 25,000
Auction Rate..... 500,000 100.00 50,000 50,000
$5.875 series.... 250,000 Not Redeemable 25,000 -
Preferred stock expense..................... (1,244) (1,220)
--------- ---------
$ 116,716 $ 116,740
--------- ---------
The accompanying notes are an integral part of these financial statements.
<PAGE>36
LOUISVILLE GAS AND ELECTRIC COMPANY
STATEMENTS OF CAPITALIZATION
(Thousands of $)
December 31
-----------------------------
1993 1992
---- ----
Long-Term Debt (Note 5)
First mortgage bonds -
Series due June 1, 1996, 5 5/8%......... $ 16,000 $ 16,000
Series due June 1, 1998, 6 3/4%......... 20,000 20,000
Series due August 1, 2001, 8 1/4%....... - 19,700
Series due July 1, 2002, 7 1/2%......... 20,000 20,000
Series due August 15, 2003, 6%.......... 42,600 -
Series due November 1, 2006, 8 1/2%..... - 21,362
Pollution control series:
B due September 1, 2006, 6 1/8%....... - 35,200
C due June 1, 1998, 6 1/8%............ - 7,000
C due June 1, 2008, 6 3/8%............ - 35,000
D due October 1, 2004, 6.6%........... - 20,000
D due October 1, 2009, 6.7%........... - 40,000
I due February 15, 2011, 9 3/4%....... - 26,000
J due July 1, 2015, 9 1/4%............ 40,000 40,000
K due December 1, 2016, 7 1/4%........ 27,500 27,500
L due December 1, 2016, 7 1/4%........ 22,500 22,500
N due February 1, 2019, 7 3/4%........ 35,000 35,000
O due February 1, 2019, 7 3/4%........ 35,000 35,000
P due June 15, 2015, 7.45%............ 25,000 25,000
Q due November 1, 2020, 7 5/8%........ 83,335 100,000
R due November 1, 2020, 6.55%......... 41,665 50,000
S due September 1, 2017, variable..... 31,000 31,000
T due September 1, 2017, variable..... 60,000 60,000
U due August 15, 2013, variable....... 35,200 -
V due August 15, 2019, 5 5/8%......... 102,000 -
W due October 15, 2020, 5.45%......... 26,000 -
--------- ---------
Total bonds outstanding................. 662,800 686,262
Less long-term debt due within one year. - 400
--------- ---------
Long-term first mortgage bonds.......... 662,800 685,862
Unamortized premium on bonds.............. 79 257
--------- ---------
662,879 686,119
--------- ---------
Total Capitalization........................ $1,398,832 $1,405,860
--------- ---------
--------- ---------
The accompanying notes are an integral part of these financial statements.
<PAGE>37
LOUISVILLE GAS AND ELECTRIC COMPANY
-----------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Note 1 - Summary of Significant Accounting Policies
- ---------------------------------------------------
Louisville Gas and Electric Company (the Company) completed a corporate
restructuring on August 17, 1990, pursuant to which the Company became the
primary subsidiary of LG&E Energy Corp. All of the Company's Common Stock
is held by LG&E Energy Corp.
The Company conforms with generally accepted accounting principles as applied
to regulated public utilities and as prescribed by the Federal Energy
Regulatory Commission (FERC) and the Public Service Commission of Kentucky
(Commission). The Company is subject to Statement of Financial Accounting
Standards No. 71, Accounting for the Effects of Certain Types of Regulation.
The Company has recorded certain regulatory assets at December 31, 1993,
totaling approximately $31 million. See Note 2, Post-Retirement Benefits and
Early Retirement/Work Force Reduction, and Note 7, Environmental, for a
discussion of these regulatory assets. See Future Outlook under Item 7,
Management's Discussion and Analysis, for a discussion of the Company's
re-evaluation of its current regulatory strategy in regards to these assets.
Utility Plant. The Company's plant is stated at original cost, which
includes payroll-related costs such as taxes, fringe benefits, and
administrative and general costs. Construction work in progress has been
included in the rate base, and, accordingly, the Company has not recorded any
allowance for funds used during construction.
The cost of plant retired or disposed of in the normal course of business is
deducted from plant accounts and such cost plus removal expense less salvage
value is charged to the reserve for depreciation. When complete operating
units are disposed of, appropriate adjustments are made to the reserve for
depreciation and gains and losses, if any, are recognized.
In December 1990, the 25% portion of the construction costs of the Trimble
County Generating Station (Trimble County), which the Commission disallowed
in setting customer rates, was reclassified from the Utility Plant section
on the balance sheet to Other Property and Investments. In February 1991,
the Company sold a 12.12% undivided interest in Trimble County to the
Illinois Municipal Electric Agency (IMEA). In February 1993, the remaining
12.88% of Trimble County not allowed in rates was sold to the Indiana
Municipal Power Agency (IMPA). See Notes 8 and 9, Trimble County Generating
Plant and Jointly Owned Electric Utility Plant, respectively, for a further
discussion.
<PAGE>38
Depreciation. Depreciation is provided on the straight-line method over the
estimated service lives of depreciable plant. The amounts provided for 1993
were approximately 3.3% (3.2% electric, 3.2% gas, and 5% common); for 1992,
3.3% (3.2% electric, 3.2% gas, and 5.4% common); and for 1991, 3.3% (3.2%
electric, 3% gas, and 6.3% common) of average depreciable plant.
Cash and Temporary Cash Investments. The Company considers all highly liquid
debt instruments purchased with a maturity of three months or less to be cash
equivalents. Temporary cash investments are carried at cost, which
approximates fair value.
Deferred Income Taxes. Deferred income taxes have been provided for all
book-tax temporary differences.
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 109, Accounting for Income Taxes, effective January 1, 1993. SFAS No.
109 adopts the liability method of accounting for income taxes, requiring
deferred income tax assets and liabilities to be computed using tax rates
that will be in effect when the book and tax temporary differences reverse.
For the Company, the change in tax rates applied to accumulated deferred
income taxes was not immediately recognized in operating results because of
ratemaking treatment. At December 31, 1993, the deferred tax asset, which
resulted primarily from unamortized investment tax credits, amounted to
approximately $47 million. The deferred tax liability, which resulted
primarily from book/tax utility property basis differences, totaled
approximately $40 million. Regulatory assets and liabilities were
established to recognize the future revenue requirement impact from these
deferred taxes. The adoption of SFAS No. 109 did not have a material impact
on the results of operations or financial position. The deferred tax
balances and related regulatory assets and liabilities have been adjusted to
reflect the increase in the corporate income tax rate from 34% to 35%.
Investment Tax Credits. Investment tax credits resulted from provisions of
the tax law which permitted a reduction of the Company's tax liability based
on credits for certain construction expenditures. Investment tax credits
deferred and charged to income in prior years are being amortized to income
over the estimated lives of the related property that gave rise to the
credits.
Debt Premium and Expense. Debt premium and expense are amortized over the
lives of the related debt issues, consistent with regulatory practices.
Revenue Recognition. Revenues are recorded based on service rendered to
customers through month end. The Company accrues an estimate for unbilled
revenues from the date of each meter reading date to the end of the
accounting period. See Management's Discussion and Analysis, Rates and
Regulation, under Item 7, for changes in recording residential revenues
effective January 1, 1994.
Fuel and Gas Costs. The cost of fuel for electric generation is charged to
expense as used, and the cost of gas supply is charged to expense as
delivered to the distribution system.
<PAGE>39
Revenues and Customer Receivables. The Company is an operating public
utility that supplies natural gas to approximately 258,000 customers and
electricity to approximately 336,000 customers in Louisville and adjacent
areas in Kentucky. Customer receivables and gas and electric revenues arise
from deliveries of natural gas and electric energy to a diversified base of
residential, commercial and industrial customers and to public authorities
and other utilities. For the year ended December 31, 1993, 74% of total
operating revenues was derived from electric operations and 26% from gas
operations.
Fair Value of Financial Instruments. Pursuant to the Financial Accounting
Standards Board SFAS No. 107, Disclosures about Fair Value of Financial
Instruments, the Company is required to disclose the fair value of financial
instruments where practicable.
The fair value for certain of the Company's investments and debt are
estimated based on quoted market prices for those or similar instruments.
Investments for which there are no quoted market prices are stated at cost
because a reasonable estimate of fair value cannot be made without incurring
excessive costs.
The cost and estimated fair value of the Company's financial instruments as
of December 31, 1993 and 1992, are as follows (in thousands of $):
1993 1992
------------------ ------------------
Fair Fair
Cost Value Cost Value
---- ----- ---- -----
Long-term investments:
Practicable to estimate
fair value................. $ 21,538 $ 21,538 $ 10,441 $ 10,441
Not practicable.............. 490 490 557 557
Preferred stock subject to
mandatory redemption......... 25,000 24,750 - -
Long-term debt................. 662,800 706,078 686,262 726,801
Note 2 - Pension Plans and Retirement Benefits
- ----------------------------------------------
Pension Plans. The Company has two non-contributory, defined-benefit pension
plans, covering all eligible employees. Retirement benefits are based on the
employee's years of service and compensation. The Company's policy is to
fund annual actuarial costs, up to the maximum amount deductible for income
tax purposes, as determined under the frozen entry age actuarial cost method.
In addition, the Company has a supplemental executive retirement plan that
covers officers of the Company. The plan provides retirement benefits based
on average earnings during the final three years prior to retirement, reduced
by social security benefits, any pension benefits received from plans of
prior employers, and by amounts received under the pension plans referred to
above.
<PAGE>40
Pension cost was $2,669,000 for 1993, $2,598,000 for 1992, and $2,245,000 for
1991, of which approximately $425,000, $241,000, and $306,000, respectively,
were charged to construction. The components of periodic pension expense are
shown below (in thousands of $):
1993 1992 1991
---- ---- ----
Service cost-benefits earned
during the period.................. $ 4,516 $ 5,459 $ 4,098
Interest cost on projected
benefit obligation................. 12,117 11,006 9,340
Actual return on plan assets......... (13,602) (8,850) (26,805)
Amortization of transition asset..... (1,112) (1,076) (1,076)
Net amortization and deferral........ 750 (3,941) 16,688
------ ------ ------
Net pension cost..................... $ 2,669 $ 2,598 $ 2,245
------ ------ ------
------ ------ ------
The assets of the plans consist primarily of common stocks, corporate bonds,
United States government securities, and interests in a pooled real estate
investment fund.
The funded status of the pension plans at December 31 is shown below (in
thousands of $):
1993 1992
---- ----
Actuarial present value of accumulated plan benefits:
Vested.............................................. $137,655 $102,980
Non-Vested.......................................... 17,158 12,900
------- -------
Accumulated benefit obligation...................... 154,813 115,880
Effect of projected future compensation............. 25,234 31,336
------- -------
Projected benefit obligation........................ 180,047 147,216
Plan assets at fair value........................... 165,088 155,937
------- -------
Plan assets (less than) in excess of
projected benefit obligation...................... (14,959) 8,721
Unrecognized net transition asset................... (13,636) (14,403)
Unrecognized prior service cost..................... 28,671 25,863
Unrecognized net gain............................... (23,860) (41,703)
------- -------
Accrued pension liability............................. $(23,784) $(21,522)
------- -------
------- -------
The projected benefit obligation was determined using an assumed discount
rate of 7.5% for 1993 and 8.5% for 1992. An assumed annual rate of increase
in future compensation levels ranged from 3.5% to 4.5% for 1993 and 3.5% to
6.5% for 1992. The assumed long-term rate of return on plan assets was 8.5%
for both periods. Transition assets and prior service costs are being
amortized over the average remaining service period of active participants.
<PAGE>41
Post-Retirement Benefits. The Company adopted Statement of Financial
Accounting Standards No. 106, Employers' Accounting for Post-Retirement
Benefits Other Than Pensions (SFAS No. 106) January 1, 1993. SFAS No. 106
requires the accrual of the expected cost of retiree benefits other than
pensions during the employee's years of service with the Company. The
Company is amortizing the discounted present value of the post-retirement
benefit obligation at the date of adoption over 20 years.
The Company provides certain health care and life insurance benefits for
eligible retired employees. Post-retirement health care benefits are subject
to a maximum amount payable by the Company. Prior to January 1, 1993, the
cost of retiree health care and life insurance benefits was generally
recognized when paid. Beginning in 1993, the Company began to account for
post-retirement benefits according to the provisions of SFAS No. 106.
The Company, based on an order from the Commission, has created a regulatory
asset and is deferring the level of SFAS No. 106 expense in excess of the
previous level of pay-as-you-go expense. The Commission's generic order
stated that the proper level of expense for SFAS No. 106 would be determined
in each utility's next general rate case.
The components of the net periodic post-retirement benefit cost for 1993 as
calculated under SFAS No. 106 are as follows (in thousands of $):
Service cost .............................................. $ 701
Interest cost.............................................. 2,614
Amortization of transition obligation...................... 1,395
------
Post-retirement benefit cost............................... $ 4,710
------
------
The accumulated post-retirement benefit obligation as calculated under SFAS
No. 106 at December 31, 1993, is shown below (in thousands of $):
Retirees................................................... $(17,826)
Fully eligible active employees............................ (4,001)
Other active employees..................................... (15,945)
------
Accumulated post-retirement benefit obligation............. (37,772)
Unrecognized net loss...................................... 4,966
Unrecognized transition obligation......................... 26,508
Previously recognized amount............................... 3,696
------
Accrued post-retirement benefit liability.................. $ (2,602)
------
------
The annual service cost was calculated using an assumed discount rate of 8.5%
at January 1, 1993, and 7.5% at December 31, 1993. A medical cost increase
factor that ranged between 6% and 11% was also used.
<PAGE>42
A 1% increase in the health care cost trend rate would increase the
Accumulated Post-Retirement Benefit Obligation by approximately $1.8 million
and the annual service and interest cost by approximately $200,000. No
funding has been established by the Company for post-retirement benefits.
Post-Employment Benefits. The Financial Accounting Standards Board issued
SFAS No. 112, Employers' Accounting for Post-Employment Benefits, which
requires the accrual of the expected cost of benefits to former or inactive
employees after employment but before retirement. The Company adopted the
new standard effective January 1, 1994, as required. Adoption of SFAS
No. 112 will not have a material adverse impact on the financial position or
results of operation of the Company.
Early Retirement/Work Force Reduction. During the last quarter of 1993 and
early 1994, the Company eliminated approximately 350 full-time positions.
The cost of the employee reduction program, approximately $11.5 million,
consists primarily of separation payments, enhanced early retirement
benefits, and health care benefits.
In 1992, an early retirement program was made available to all the Company
union employees who had reached age 55, or who had 35 years or more of
continuous service regardless of age. The cost of the program was
approximately $7 million and consisted primarily of enhanced early retirement
and post-retirement health care benefits.
Thrift Savings Plan. The Company has a Thrift Savings Plan under
Section 401(k) of the Internal Revenue Code. The plan covers all regular
full-time employees with one year or more of service at the Company. Under
the plan, eligible employees may defer and contribute to the plan a portion
of current compensation in order to provide future retirement benefits. The
Company makes contributions to the plan by matching a portion of employee
contributions according to a formula established by the plan. These costs
were approximately $1,795,000 for 1993, $767,000 for 1992, and $584,000 for
1991. The increase in 1993 401(k) expenses is due to the expansion of the
program to the Company's union employees.
<PAGE>43
Note 3 - Federal and State Income Taxes
- ---------------------------------------
Components of income tax expense are shown in the table below (in thousands
of $):
1993 1992 1991
---- ---- ----
Included in Operating:
Current - Federal.................... $31,082 $20,756 $33,727
- State...................... 8,920 6,354 8,126
Deferred - Federal-net................ 13,185 15,771 16,642
- State-net.................. 3,933 5,774 5,939
Deferred investment tax credit........ - - (6,385)
Amortization of investment tax credit. (4,786) (4,815) (4,854)
------ ------ ------
Total............................... $52,334 $43,840 $53,195
------ ------ ------
Included in Other Income and (Deductions):
Current - Federal.................... $11,009 $(6,971) $ 1,763
- State...................... 4,034 (3,214) 299
Deferred - Federal-net................ (8,473) 4,670 565
- State-net.................. (3,707) 2,696 146
Deferred investment tax credit........ - 390 26
Amortization of investment tax credit. (3,035) (608) (259)
------ ------ ------
Total............................... $ (172) $(3,037) $ 2,540
------ ------ ------
Total Income Tax Expense................ $52,162 $40,803 $55,735
------ ------ ------
------ ------ ------
Variations in the 1993 income tax expense from 1992 and 1991 are largely
attributable to changes in pre-tax income and an increase in the corporate
Federal income tax rate from 34% to 35%, effective January 1, 1993.
Provisions for deferred income taxes consist of the tax effects of the
following temporary differences (in thousands of $):
1993 1992 1991
---- ---- ----
Depreciation and amortization........... $ (255) $33,839 $23,440
Alternative minimum tax................. 5,387 (5,387) -
Other................................... (194) 459 (148)
----- ------ ------
Total................................. $4,938 $28,911 $23,292
----- ------ ------
----- ------ ------
<PAGE>44
Depreciation and amortization fluctuations for 1993 are primarily
attributable to the reversal of prior years' accumulated taxes as a result
of the sale of a portion of Trimble County Unit 1 to IMPA. See Note 8,
Trimble County Generating Plant, for a further discussion of the sale.
The following are the tax effects of book-tax temporary differences resulting
in deferred tax assets and liabilities as of December 31, 1993 (in thousands
of $):
Deferred Tax Assets:
Investment tax credit................................. $ 36,961
Income taxes due to customers......................... 14,361
Other assets.......................................... 7,353
-------
$ 58,675
-------
-------
Deferred Tax Liabilities:
Depreciation and other plant related items............ $322,544
Income taxes due from customers....................... 10,233
Other liabilities..................................... 7,458
-------
$340,235
-------
-------
The Company's effective income tax rate is computed by dividing the aggregate
of current income taxes, deferred income taxes-net, and the investment tax
credit-net, by net income before the deduction of such taxes. Reconciliation
of the statutory Federal income tax rate to the effective income tax rate is
shown in the table below:
1993 1992 1991
---- ---- ----
Statutory Federal income tax rate........ 35.0% 34.0% 34.0%
State income taxes net of Federal benefit. 6.0 6.7 6.4
Amortization of investment tax credit..... (5.5) (4.7) (3.4)
Other differences-net..................... 1.1 (.4) .1
---- ---- ----
Effective Income Tax Rate................. 36.6% 35.6% 37.1%
---- ---- ----
---- ---- ----
Note 4 - Preferred Stock
- ------------------------
In May 1993, the Company issued $25 million of $5.875 Cumulative Preferred
Stock. The proceeds from the sale were used to redeem the outstanding $8.90
Cumulative Preferred Stock.
<PAGE>45
Note 5 - First Mortgage Bonds
- -----------------------------
Annual requirements for the sinking funds of the Company's First Mortgage
Bonds (other than the First Mortgage Bonds issued in connection with the
Pollution Control Bonds) are the amounts necessary to redeem 1% of the
highest principal amount of each series of bonds at any time outstanding.
Property additions (166 2/3% of principal amounts of bonds otherwise required
to be so redeemed) have been applied in lieu of cash. It is the intent of
the Company to apply property additions to meet 1994 sinking fund
requirements of the First Mortgage Bonds.
The trust indenture securing the First Mortgage Bonds constitutes a direct
first mortgage lien upon substantially all property owned by the Company.
The indenture, as supplemented, provides in substance that, under certain
specified conditions, portions of retained earnings will not be available for
the payment of dividends on common stock. No portion of retained earnings
is presently restricted by this provision.
Pollution Control Bonds (Louisville Gas and Electric Company Projects) issued
by Jefferson and Trimble Counties, Kentucky, are secured by the assignment
of loan payments by the Company to the Counties pursuant to loan agreements,
and further secured by the delivery from time to time of an equal amount of
the Company's First Mortgage Bonds, Pollution Control Series. First Mortgage
Bonds so delivered are summarized in the Statements of Capitalization. No
principal or interest on these First Mortgage Bonds is payable unless default
on the loan agreements occurs. The interest rate reflected in the Statements
of Capitalization applies to the Pollution Control Bonds.
In March 1993, due to the sale of 12.88% of Trimble County Unit 1, the
Company completed the defeasance of $25 million of its Pollution Control
Bonds ($16.665 million of the 7.625% Series and $8.335 million of the 6.55%
Series).
The Company issued several series of lower interest bearing First Mortgage
and Pollution Control Bonds in 1993 to refinance bonds with higher interest
rates. In August, the Company issued two separate series of Pollution
Control Bonds (a $35.2 million, Variable Rate Series, which had an interest
rate of 2.586% at December 31, 1993, and a $102 million, 5.625% Series) and
redeemed five series of Pollution Control Bonds totaling $137.2 million with
interest rates ranging from 6.125% to 6.7%. In August, the Company also
issued $42.6 million of 6% First Mortgage Bonds and redeemed two series of
First Mortgage Bonds ($19.7 million at 8.25% and $21.362 million at 8.5%).
In November, the Company issued $26 million of Pollution Control Bonds, 5.45%
Series and redeemed the $26 million, 9.75% Series.
The Company also entered into an agreement in November 1993 with Goldman,
Sachs & Co. to issue $40 million of tax-exempt Pollution Control Bonds in
1995 at a 5.9% rate. The issuance of the bonds in 1995 is subject to certain
conditions. If issued, the proceeds will be used to redeem, in 1995, the
outstanding 9.25% Series of Pollution Control Bonds due July 1, 2015.
<PAGE>46
The Company has outstanding interest rate swap agreements totaling $30
million. Under the agreements, which were entered into in 1992, the Company
pays a fixed rate of 4.35% on $15 million for a five-year period and 4.74%
on $15 million for a seven-year period. In return, the Company receives a
floating rate based on the weighted average JJ Kenny index. At December 31,
1993, the rate on the JJ Kenny index was 3.25%.
The Company's First Mortgage Bonds, 5.625% Series of $16 million is scheduled
to mature in 1996 and the 6.75% Series of $20 million is scheduled to mature
in 1998. There are no scheduled maturities of Pollution Control Bonds for
the five years subsequent to December 31, 1993.
Note 6 - Notes Payable
- ----------------------
The Company had no notes payable at December 31, 1993. At December 31, 1992,
trust demand notes amounted to $8 million on which the composite interest
rate was 3.45%.
At December 31, 1993, the Company had unused lines of credit of $145 million,
for which it pays commitment fees. The credit lines are scheduled to expire
at various periods throughout 1994. Management intends to renegotiate these
lines when they expire.
Note 7 - Commitments and Contingencies
- --------------------------------------
Construction Program. The Company had commitments, primarily in connection
with its construction program, aggregating approximately $6 million at
December 31, 1993. Construction expenditures for the calendar years 1994 and
1995 are estimated to total approximately $200 million.
FERC Order No. 636. Order No. 636, which was issued by FERC in 1992,
required the Company and all other local distribution companies to revise
their practices for purchasing and transporting gas. Whereas the Company had
previously purchased natural gas and pipeline transportation services from
Texas Gas Transmission Corporation (Texas Gas), the Company now purchases
only transportation services from Texas Gas and purchases natural gas from
other sources.
Under Order No. 636 pipelines may recover costs associated with the
transition to and implementation of this order from pipeline customers,
including the Company. Based on pipeline filings to date, the Company
estimates that its share of transition costs, which must be approved by FERC,
will be approximately $2 million to $3 million a year for both 1994 and 1995.
The Commission issued an order, based on proceedings that were held to
investigate the impact of Order No. 636 on utilities and ratepayers in
Kentucky, providing that transition costs assessed on utilities by the
pipelines, which are clearly identifiable as being related to the cost of the
commodity itself, are appropriate to be recovered from customers through the
gas supply clause.
<PAGE>47
Operating Lease. The Company has an operating lease for its corporate office
building that is scheduled to expire in June 2005. Total expense in
connection with this lease for 1993, 1992, and 1991 was $2,436,000,
$2,478,000, and $2,471,000, respectively. The future minimum annual lease
payments under the lease agreement for years subsequent to December 31, 1993,
are as follows (in thousands of $):
1994.............................. $ 2,148
1995.............................. 2,499
1996.............................. 2,850
1997.............................. 2,850
1998.............................. 2,850
Thereafter........................ 21,810
------
Total.......................... $35,007
------
------
Environmental. The Clean Air Act Amendments of 1990 impose stringent limits
on emissions of sulfur dioxide and nitrogen oxides by electric utility
generating plants. The legislation is extremely complex and its effect will
substantially depend on regulations issued by the U.S. Environmental
Protection Agency (USEPA). The Company is closely monitoring the continuing
rule-making process in order to assess the precise impact of the legislation
on the Company. All of the Company's coal-fired boilers are equipped with
sulfur dioxide "scrubbers" and already achieve the final sulfur dioxide
emission rates required by the year 2000 under the legislation. However, as
part of its ongoing capital construction program, the Company anticipates
incurring capital expenditures during the next four years of approximately
$40 million for remedial measures necessary to meet the Act's requirements
for nitrogen oxides. The overall financial impact of the legislation on the
Company is expected to be minimal. The Company is well-positioned in the
market to be a "clean" power provider without the large capital expenditures
that are expected to be incurred by many other utilities.
In 1992, the Company entered two agreed orders with the Air Pollution Control
District (APCD) of Jefferson County in which the Company committed to
undertake remedial measures to address certain particulate emissions and
excess sulfur dioxide emissions from its Mill Creek generating plant. The
Company is currently conducting work in compliance with the agreed-upon
schedule for remedial measures and has incurred total capital expenditures
of approximately $24 million through 1993. Based on current remedial
designs, the Company anticipates incurring additional capital costs of
approximately $14 million for this project in 1994 as part of its ongoing
capital construction program.
<PAGE>48
In an effort to resolve property damage claims relating to particulate
emissions from the Mill Creek plant, in July 1993, the Company commenced
extensive negotiations and property damage settlements with adjacent
residents. The Company currently estimates that property damage claims for
the particulate emissions should be settled for an aggregate amount of
approximately $12 million. Accordingly, the Company has recorded an accrual
of this amount. In August 1993, 34 persons filed a complaint in Jefferson
Circuit Court against the Company in which they are seeking certification of
a class consisting of all persons within 2.5 miles of the Mill Creek plant.
The court has not acted on the request for certification of a class. The
plaintiffs seek compensation for alleged personal injury and property damage
attributable to the particulate emissions from the Mill Creek plant,
injunctive relief, a fund to finance future medical monitoring of area
residents, and other relief. The Company intends to vigorously defend itself
in the pending litigation.
In response to a notification from the APCD that the Company's Cane Run plant
may be the source of a potential exceedance of the National Ambient Air
Quality Standards for sulfur dioxide, the Company retained a contractor to
conduct certain air dispersion modeling. In 1992, the Company submitted a
draft action plan and modeling schedule to the APCD and USEPA. The APCD and
USEPA have approved the submittals and the Company's contractor is currently
conducting additional modeling activities. Although it is expected that
corrective action will be accomplished through capital improvements, until
the contractor completes its modeling activities, the Company cannot
determine the precise impact of this matter.
The Company owns or formerly owned three primary sites where manufactured gas
plant operations were located. Such manufactured gas plant operations,
conducted in the 1838 to 1960 time period, typically produced coal tar
byproducts and other constituents that may necessitate cleanup measures. The
Company commenced site investigations at the two Company owned sites to
determine if significant levels of contaminants are present. The Company has
commenced discussions with the current owner of the third site regarding
joint performance of a site investigation. The Company anticipates spending
a total of approximately $1.3 million on site investigations expected to be
completed by 1995. Preliminary testing at all three sites has identified
contaminants typical of manufactured gas plant operations. Until an
investigation and associated regulatory review is completed for each site,
the Company will be unable to predict what, if any, cleanup activities may
be necessary.
In November 1993, the Company was served with a third-party complaint filed
in federal district court in Illinois by three third-party plaintiffs. The
third-party plaintiffs allege that the Company and 31 other parties are
liable for contributions under the Comprehensive Environmental Response,
Compensation, and Liability Act as amended (CERCLA) for $1.4 million in costs
allegedly incurred by USEPA in conducting cleanup activities at the M.T.
Richards site in Crossville, Illinois. A number of de minimis third-party
defendants, including the Company, have commenced preliminary discussions
with the third-party plaintiffs. In the Company's opinion, the resolution
of the issue will not have a material adverse impact on its financial
position or results of operations.
<PAGE>49
In February 1993, the Company was served with an amended complaint filed in
federal district court in West Virginia by three potentially responsible
parties (PRPs) against the Company and 39 other parties. The plaintiffs
alleged that the parties were liable under CERCLA for in excess of $3 million
in costs allegedly incurred by the plaintiffs in conducting cleanup
activities at the Spencer Transformer Site located in Roane County, West
Virginia. In November 1993, the federal court approved a consent decree that
resolved the case as to the Company and nine other de minimis parties. Under
the terms of the consent decree, the Company reimbursed the plaintiffs for
$10,000 in cleanup costs. No further involvement of the Company is
anticipated.
In June 1992, USEPA identified the Company as a PRP allegedly liable under
CERCLA for $1.6 million in costs allegedly incurred by USEPA in cleanup of
the Sonora Site and Carlie Middleton Burn Site located in Hardin County,
Kentucky. In November 1992, USEPA demanded immediate payment from the PRPs.
To date, USEPA has identified nine PRPs for the site. The Company and
several other parties have commenced discussions with USEPA. In the
Company's opinion, the resolution of this issue will not have a material
adverse impact on its financial position or results of operations.
In 1987, USEPA identified the Company as one of the numerous PRPs allegedly
liable under CERCLA for the Smith's Farm site in Bullitt County, Kentucky.
In March 1990, USEPA issued an administrative order requiring the Company and
35 other PRPs to conduct certain cleanup activities. In February 1992, four
PRPs filed a complaint in federal district court in Kentucky against the
Company and 52 other PRPs. Under the law, each PRP could be held jointly and
severally liable for the cost of site cleanup, but would have the right to
seek contributions from other PRPs. In July 1993, upon motion of the
plaintiffs, the federal court dismissed the Company and a number of others
from the litigation in order to facilitate settlement negotiations among the
parties. Cleanup costs for the site are currently estimated at approximately
$70 million. The Company and several other parties have shared certain
cleanup costs in the interim until a voluntary allocation of liability can
be reached among the parties. It is not possible at this time to predict the
outcome or precise impact of this matter. However, management believes that
this matter should not have a material adverse impact on the financial
position or results of operations of the Company as other financially viable
PRPs appear to have primary liability for the site.
Based upon prior precedents established by the Commission and the
Environmental Cost Recovery legislation, the Company expects to have an
opportunity to recover, through future ratemaking proceedings, its costs
associated with remedial measures required to comply with environmental laws
and regulations.
Charitable Foundation. The Board of Directors of the Company has approved
the formation of a tax-exempt charitable foundation with an initial
contribution of up to $15 million. See Future Outlook under Item 7,
Management's Discussion and Analysis, for a further discussion of this
matter.
Note 8 - Trimble County Generating Plant
- ----------------------------------------
Trimble County Unit 1, a 495-megawatt, coal-fired electric generating unit,
was placed in commercial operation on December 23, 1990.
<PAGE>50
This Unit, which during its first three years of commercial operations has
operated more reliably than projected, has been the subject of numerous
regulatory and legal proceedings. The current regulatory process involving
Trimble County is related to an order issued by the Commission on July 1,
1988, which stated that 25% of the total cost of the Unit would not be
allowed for ratemaking purposes. In a rehearing order issued in April 1989,
the Commission reaffirmed its decision that the Company would not be allowed
to include 25% of the cost of the Unit in customer rates; however, this order
stated that "the disallowed portion of Trimble County remains with the
Company and stockholders for their use."
In 1989, the Commission initiated a proceeding to determine the appropriate
ratemaking treatment to carry out the order that disallowed rate recovery for
25% of the Unit. Prior to the start of the hearings in this proceeding, the
Company filed a motion requesting the Commission to adopt a proposed plan to
settle all of the issues surrounding Trimble County. Settlement discussions
ensued between the Company, intervenors, and the Commission staff. On
October 2, 1989, the Commission approved the settlement agreement reached
between the Company and the Commission staff and, in accordance with the
terms of the agreement, the Company refunded $2.5 million to its customers
in 1989 and reduced its electric rates by $8.5 million for the year beginning
January 1, 1990.
Certain intervenors, who participated in the proceedings but did not agree
to the settlement, appealed the Commission's order approving the settlement
to Franklin Circuit Court, claiming, among other things, that the Commission
lacked the statutory authority to approve the agreement and that the
intervenors who refused to sign the agreement were deprived of due process
rights.
In February 1991, the Franklin Circuit Court vacated the October 2, 1989
order of the Commission approving the settlement agreement. On September 27,
1991, the Court issued an opinion requiring a refund to ratepayers in excess
of $100 million as a result of the Commission's order that disallowed 25% of
the total cost of Trimble County from customer rates. The Court further
ordered the Company to post a bond if it appealed the Circuit Court's
decision.
The Company posted a bond of $107 million and appealed all orders of the
Circuit Court to the Kentucky Court of Appeals.
On April 23, 1993, the Kentucky Court of Appeals overturned the Franklin
Circuit Court ruling previously entered in the case. Although the decision
upheld the Circuit Court's order vacating the 1989 settlement agreement
approved by the Commission, the appeals court ruled that the Franklin Circuit
Court order of September 27, 1991, improperly set utility rates in ordering
refunds. The intervenor parties requested the Kentucky Supreme Court to
review the case, and their request for review was denied on October 20, 1993.
Under Kentucky procedural rules, this ruling makes final the Court of Appeals
decision and returns the case to the Commission for further proceedings.
The Commission has issued orders which set a portion of the procedural
schedule for the case. Pursuant to the Commission's orders, the Company
filed direct testimony on January 7, 1994. Intervenor parties are scheduled
to file testimony on March 28, 1994. No date has been set for a hearing.
<PAGE>51
The Company anticipates that the focus of Commission proceedings will be the
determination of the appropriate ratemaking treatment to insulate ratepayers
from 25% of Trimble County's costs and the amount of additional refunds, if
any, that the Company should return to ratepayers. In previous proceedings
in 1988, the Commission had authorized rate increases, subject to refund, of
$11.4 million on an annual basis, pending a determination of the appropriate
ratemaking treatment for the disallowance. The order remained in effect from
May 1988 through December 1990, resulting in an amount subject to refund of
approximately $30 million. The Company, through refunds and rate reductions,
has already returned to its customers approximately $11 million of the total
amount subject to refund. The Company's position is that no additional
refunds are needed to carry out the Commission's objective of reflecting the
disallowance of 25% of Trimble County in customer rates and the Company may
be entitled to recover a portion, or all, of the amounts previously returned
to customers. However, the Company is unable to predict the outcome of the
Commission proceedings, the amount of additional refunds or recoveries, if
any, that may be ordered or whether the Commission will revise its earlier
position.
Sale of Portion of Trimble County. On February 28, 1991, the Company sold
a 12.12% ownership interest in the Trimble County Unit to the Illinois
Municipal Electric Agency, based in Springfield, Illinois, which is an agency
of 30 municipalities that own and operate their own electric systems. The
sale price was $94.2 million and a book gain of $4.2 million, after-tax, was
recognized in 1991 as a result of this sale.
On February 1, 1993, the Indiana Municipal Power Agency (IMPA), based in
Carmel, Indiana, purchased a 12.88% interest in the Trimble County plant.
IMPA is composed of 31 municipalities that have joined together to meet their
long-term electric power needs. The sale price was $91.1 million and an
after-tax book gain of $3.2 million was recorded in 1993 as a result of this
sale.
The Company has now completed the sale of the entire 25% of Trimble County
that the Commission disallowed from customer rates.
<PAGE>52
Note 9 - Jointly Owned Electric Utility Plant
- ---------------------------------------------
As of December 31, 1993, the Company owned a 75% undivided interest in
Trimble County Unit 1.
Accounting for the 75% portion of the Unit, which the Commission has allowed
to be reflected in customer rates, is similar to the Company's accounting for
other wholly owned utility plants. Of the remaining 25% of the Unit:
. Illinois Municipal Electric Agency (IMEA) purchased a 12.12% undivided
interest in the Unit on February 28, 1991. IMEA pays for 12.12% of the
operation and maintenance expenses, their proportionate share of
incremental assets acquired and for fuel used.
. Indiana Municipal Power Agency (IMPA) purchased a 12.88% undivided
interest in the Unit on February 1, 1993. IMPA is responsible for 12.88%
of the operation and maintenance expenses, their proportionate share of
incremental assets acquired and for fuel used.
The following data represent shares of the jointly owned property:
Trimble County
--------------------------------------
LG&E IMPA IMEA Total
---- ---- ---- -----
Ownership interest.......... 75% 12.88% 12.12% 100%
Mw capacity................. 371.25 63.75 60 495
<PAGE>53
Note 10 - Segments of Business
- ------------------------------
The Company is an operating public utility engaged in the generation,
transmission, distribution, and sale of electricity and the transmission,
distribution, and sale of natural gas.
1993 1992 1991
---- ---- ----
(Thousands of $)
Operating Information
Operating Revenues
Electric........................ $ 570,210 $ 521,669 $ 542,415
Gas............................. 204,915 178,526 166,291
--------- --------- ---------
Total......................... $ 775,125 $ 700,195 $ 708,706
--------- --------- ---------
--------- --------- ---------
Pre-tax Operating Income
Electric........................ $ 171,016 $ 154,547 $ 182,349
Gas............................. 17,436 15,122 13,576
--------- --------- ---------
Total......................... $ 188,452 $ 169,669 $ 195,925
--------- --------- ---------
--------- --------- ---------
Other Information
Depreciation and Amortization
Electric........................ $ 69,753 $ 67,869 $ 65,236
Gas............................. 9,902 9,034 8,037
Non-Jurisdictional.............. 232 2,783 3,158
--------- --------- ---------
Total......................... $ 79,887 $ 79,686 $ 76,431
--------- --------- ---------
--------- --------- ---------
Construction Expenditures
Electric........................ $ 74,165 $ 75,630 $ 69,514
Gas............................. 24,622 25,545 18,538
--------- --------- ---------
Total......................... $ 98,787 $ 101,175 $ 88,052
--------- --------- ---------
--------- --------- ---------
Investment Information-December 31
Identifiable Assets
Electric........................ $1,616,595 $1,537,219 $1,524,018
Gas............................. 261,048 226,041 195,251
--------- --------- ---------
Total......................... $1,877,643 $1,763,260 $1,719,269
Trimble County (a)................ - 87,794 89,824
Other Assets (b).................. 195,267 121,985 139,317
--------- --------- ---------
Total Assets.................... $2,072,910 $1,973,039 $1,948,410
--------- --------- ---------
--------- --------- ---------
(a) Represents the portion of Trimble County not allowed in customer
rates.
(b) Includes cash and temporary cash investments, accounts receivable,
unamortized debt expense, and other property and investments.
<PAGE>54
REPORT OF MANAGEMENT
The management of Louisville Gas and Electric Company is responsible for
the preparation and integrity of the financial statements and related
information included in this Annual Report. These statements have been
prepared in accordance with generally accepted accounting principles applied
on a consistent basis and, necessarily, include amounts that reflect the best
estimates and judgment of management.
The Company's financial statements have been audited by Arthur Andersen
& Co., independent public accountants whose report follows this Report of
Management. Management has made available to Arthur Andersen & Co. all the
Company's financial records and related data as well as the minutes of
shareholders' and directors' meetings.
Management has established and maintains a system of internal controls
that provide reasonable assurance that transactions are completed in
accordance with management's authorization, that assets are safeguarded and
that financial statements are prepared in conformity with generally accepted
accounting principles. Management believes that an adequate system of
internal controls is maintained through the selection and training of
personnel, appropriate division of responsibility, establishment and
communication of policies and procedures and by regular reviews of internal
accounting controls by the Company's internal auditors. Management reviews
and modifies its system of internal controls in light of changes in
conditions and operations, as well as in response to recommendations from the
internal auditors and the independent public accountants. These
recommendations for the year ended December 31, 1993 did not identify any
significant deficiencies in the design and operation of the Company's
internal control structure.
The Audit Committee of the Board of Directors is composed entirely of
outside directors. In carrying out its oversight role for the financial
reporting and internal controls of the Company, the Audit Committee meets
regularly with the Company's independent public accountants, internal
auditors and management. The Audit Committee reviews the results of the
independent accountants' audit of the financial statements and their audit
procedures, and discusses the adequacy of internal accounting controls. The
Audit Committee also approves the annual internal auditing program, and
reviews the activities and results of the internal auditing function. Both
the independent public accountants and the internal auditors have access to
the Audit Committee at any time.
Louisville Gas and Electric Company maintains and internally communicates
a written code of business conduct that addresses, among other items,
potential conflicts of interest, compliance with laws, including those
relating to financial disclosure, and the confidentiality of proprietary
information.
<PAGE>55
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO LOUISVILLE GAS AND ELECTRIC COMPANY:
We have audited the accompanying balance sheets and statements of
capitalization of Louisville Gas and Electric Company (a Kentucky corporation
and a wholly owned subsidiary of LG&E Energy Corp.) as of December 31, 1993
and 1992, and the related statements of income, retained earnings and cash
flows for each of the three years in the period ended December 31, 1993.
These financial statements and the schedules referred to below are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Louisville Gas and
Electric Company as of December 31, 1993 and 1992, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting
principles.
As further discussed in Note 8, the potential amount of future rate
refunds that may be required, if any, once the outcome of the legal and
regulatory process is known, is uncertain at this time.
As discussed in Notes 1 and 2 to the financial statements, effective
January 1, 1993, the Company changed its methods of accounting for income
taxes and post-retirement benefits other than pensions.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed under Item
14(a)2 are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial
statements. These schedules have been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in our opinion,
fairly state in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
Louisville, Kentucky, Arthur Andersen & Co.
January 28, 1994
--------------------------------------
<PAGE>56
SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
Operating revenues, net operating income, net income and net income
available for common stock for the four quarters of 1993 and 1992 are shown
below. Because of seasonal fluctuations in temperature and other factors,
results for quarters may fluctuate throughout the year.
Quarters Ended
----------------------------------------------
(Thousands of $) March June September December
----- ---- --------- --------
1993
Operating Revenues...... $208,631 $166,906 $200,408 $199,180
Net Operating Income.... 32,754 28,395 47,786 27,183
Net Income.............. 20,786 16,566 36,447 16,736
Net Income Available for
Common Stock.......... 19,199 14,898 35,099 15,358
1992
Operating Revenues...... $182,699 $150,908 $179,491 $187,097
Net Operating Income.... 28,985 27,849 41,850 27,145
Net Income.............. 15,915 15,301 29,050 13,527
Net Income Available for
Common Stock.......... 13,510 13,676 27,474 11,960
--------------------------------------
ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
- ---------------------------------------------------------------------
None.
<PAGE>57
PART III
--------
ITEMS 10, 11, 12 and 13 are omitted pursuant to General Instruction G,
inasmuch as the Company filed copies of a definitive proxy statement with the
Commission on March 28, 1994, pursuant to Regulation 14A under the Securities
Exchange Act of 1934. Such proxy statement is incorporated herein by this
reference. In accordance with General Instruction G of Form 10-K, the
information required by Item 10 relating to executive officers has been
included in Part I of this Form 10-K. The Louisville Gas and Electric
Company (LG&E) is a subsidiary of LG&E Energy Corp. At December 31, 1993,
LG&E Energy Corp. controlled 100% of the common stock of LG&E. There are
situations where LG&E Energy Corp. interacts with its affiliated companies
through the use of shared facilities, common employees, and other business
relationships. In these situations, LG&E receives payment in accordance with
regulatory requirements for the services provided to affiliated companies.
PART IV
-------
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
- ----------------------------------------------------------------------------
(a) 1. Financial Statements (included in Item 8):
Statements of Income for the three years ended
December 31, 1993 (page 29).
Statements of Retained Earnings for the three years
ended December 31, 1993 (page 30).
Balance Sheets - December 31, 1993, and 1992 (page 31-32).
Statements of Cash Flows for the three years ended
December 31, 1993 (page 33-34).
Statements of Capitalization - December 31, 1993,
and 1992 (page 35-36).
Notes to Financial Statements (pages 37-53).
Report of Management (page 54).
Report of Independent Public Accountants (page 55).
Selected Quarterly Financial Data for 1993, and
1992 (page 56).
2. Financial Statement Schedules (included in Part IV):
Schedule V - Property, Plant and Equipment for the
three years ended December 31, 1993
(pages 72-77).
Schedule VI - Accumulated Depreciation, Depletion,
and Amortization of Property, Plant
and Equipment for the three years
ended December 31, 1993 (pages 78-80).
Schedule VIII - Valuation and Qualifying Accounts for
the three years ended December 31,
1993 (page 81).
Schedule IX - Short-Term Borrowings for the three
years ended December 31, 1993
(page 82).
Schedule X - Supplementary Income Statement
Information for the three years ended
December 31, 1993 (page 83).
All other schedules have been omitted as not applicable or not required
or because the information required to be shown is included in the Financial
Statements or the accompanying Notes to Financial Statements.
<PAGE>58
3. Exhibits:
Exhibit
No. Description
-------- -----------
3.01 Copy of Restated Articles of Incorporation, as
amended. [Filed as Exhibit 4.01 to Registration
Statement 33-18302 and incorporated by reference
herein]
3.02 Copy of Amendment to Articles of Incorporation,
effective May 25, 1989. [Filed as Exhibit 3.01
to the Company's Form 10-Q for the quarter ended
June 30, 1989 and incorporated by reference
herein]
3.03 Copy of Amendment to Articles of Incorporation,
effective February 6, 1992. [Filed as Exhibit
3.03 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1991, and
incorporated by reference herein]
3.04 Copy of Amendment to Articles of Incorporation,
effective April 8, 1993. [Filed as Exhibit 3.01
to the Company's Form 10-Q for the quarter ended
March 31, 1993, and incorporated by reference
herein]
3.05 Copy of Amendment to Articles of Incorporation,
effective May 19, 1993.
3.06 Copy of Bylaws, as amended through May 13, 1993.
[Filed as Exhibit 3.01 to the Company's
Form 10-Q for the quarter ended June 30, 1993,
and incorporated by reference herein]
4.01 Copy of Trust Indenture dated November 1, 1949,
from the Company to Harris Trust and Savings
Bank, Trustee. [Filed as Exhibit 7.01 to
Registration Statement 2-8283 and incorporated
by reference herein]
4.02 Copy of Supplemental Indenture dated February 1,
1952, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 4.05 to
Registration Statement 2-9371 and incorporated
by reference herein]
4.03 Copy of Supplemental Indenture dated February 1,
1954, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 4.03 to
Registration Statement 2-11923 and incorporated
by reference herein]
<PAGE>59
4.04 Copy of Supplemental Indenture dated
September 1, 1957, which is a supplemental
instrument to Exhibit 4.01 hereto. [Filed as
Exhibit 2.04 to Registration Statement 2-17047
and incorporated by reference herein]
4.05 Copy of Supplemental Indenture dated October 1,
1960, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 2.05 to
Registration Statement 2-24920 and incorporated
by reference herein]
4.06 Copy of Supplemental Indenture dated June 1,
1966, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 2.06 to
Registration Statement 2-28865 and incorporated
by reference herein]
4.07 Copy of Supplemental Indenture dated June 1,
1968, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 2.07 to
Registration Statement 2-37368 and incorporated
by reference herein]
4.08 Copy of Supplemental Indenture dated June 1,
1970, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 2.08 to
Registration Statement 2-37368 and incorporated
by reference herein]
4.09 Copy of Supplemental Indenture dated August 1,
1971, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 2.09 to
Registration Statement 2-44295 and incorporated
by reference herein]
4.10 Copy of Supplemental Indenture dated June 1,
1972, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 2.10 to
Registration Statement 2-52643 and incorporated
by reference herein]
4.11 Copy of Supplemental Indenture dated February 1,
1975, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 2.11 to
Registration Statement 2-57252 and incorporated
by reference herein]
4.12 Copy of Supplemental Indenture dated
September 1, 1975, which is a supplemental
instrument to Exhibit 4.01 hereto. [Filed as
Exhibit 2.12 to Registration Statement 2-57252
and incorporated by reference herein]
<PAGE>60
4.13 Copy of Supplemental Indenture dated
September 1, 1976, which is a supplemental
instrument to Exhibit 4.01 hereto. [Filed as
Exhibit 2.13 to Registration Statement 2-57252
and incorporated by reference herein]
4.14 Copy of Supplemental Indenture dated October 1,
1976, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 2.14 to
Registration Statement 2-65271 and incorporated
by reference herein]
4.15 Copy of Supplemental Indenture dated June 1,
1978, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 2.15 to
Registration Statement 2-65271 and incorporated
by reference herein]
4.16 Copy of Supplemental Indenture dated
February 15, 1979, which is a supplemental
instrument to Exhibit 4.01 hereto. [Filed as
Exhibit 2.16 to Registration Statement 2-65271
and incorporated by reference herein]
4.17 Copy of Supplemental Indenture dated
September 1, 1979, which is a supplemental
instrument to Exhibit 4.01 hereto. [Filed as
Exhibit 4.17 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1980,
and incorporated by reference herein]
4.18 Copy of Supplemental Indenture dated
September 15, 1979, which is a supplemental
instrument to Exhibit 4.01 hereto. [Filed as
Exhibit 4.18 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1980,
and incorporated by reference herein]
4.19 Copy of Supplemental Indenture dated
September 15, 1981, which is a supplemental
instrument to Exhibit 4.01 hereto. [Filed as
Exhibit 4.19 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1981,
and incorporated by reference herein]
4.20 Copy of Supplemental Indenture dated March 1,
1982, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 4.20 to
the Company's Annual Report on Form 10-K for the
year ended December 31, 1982, and incorporated
by reference herein]
<PAGE>61
4.21 Copy of Supplemental Indenture dated March 15,
1982, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 4.21 to
the Company's Annual Report on Form 10-K for the
year ended December 31, 1982, and incorporated
by reference herein]
4.22 Copy of Supplemental Indenture dated
September 15, 1982, which is a supplemental
instrument to Exhibit 4.01 hereto. [Filed as
Exhibit 4.22 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1982,
and incorporated by reference herein]
4.23 Copy of Supplemental Indenture dated
February 15, 1984, which is a supplemental
instrument to Exhibit 4.01 hereto. [Filed as
Exhibit 4.23 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1984,
and incorporated by reference herein]
4.24 Copy of Supplemental Indenture dated July 1,
1985, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 4.24 to
the Company's Annual Report on Form 10-K for the
year ended December 31, 1985, and incorporated
by reference herein]
4.25 Copy of Supplemental Indenture dated
November 15, 1986, which is a supplemental
instrument to Exhibit 4.01 hereto. [Filed as
Exhibit 4.25 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1986,
and incorporated by reference herein]
4.26 Copy of Supplemental Indenture dated
November 16, 1986, which is a supplemental
instrument to Exhibit 4.01 hereto. [Filed as
Exhibit 4.26 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1986,
and incorporated by reference herein]
4.27 Copy of Supplemental Indenture dated August 1,
1987, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 4.27 to
the Company's Annual Report on Form 10-K for the
year ended December 31, 1987, and incorporated
by reference herein]
4.28 Copy of Supplemental Indenture dated February 1,
1989, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 4.28 to
the Company's Annual Report on Form 10-K for the
year ended December 31, 1988, and incorporated
by reference herein]
<PAGE>62
4.29 Copy of Supplemental Indenture dated February 2,
1989, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 4.29 to
the Company's Annual Report on Form 10-K for the
year ended December 31, 1988, and incorporated
by reference herein]
4.30 Copy of Supplemental Indenture dated June 15,
1990, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 4.30 to
the Company's Annual Report on Form 10-K for the
year ended December 31, 1990, and incorporated
by reference herein]
4.31 Copy of Supplemental Indenture dated November 1,
1990, which is a supplemental instrument to
Exhibit 4.01 hereto. [Filed as Exhibit 4.31 to
the Company's Annual Report on Form 10-K for the
year ended December 31, 1990, and incorporated
by reference herein]
4.32 Copy of Supplemental Indenture dated
September 1, 1992, which is a supplemental
instrument to Exhibit 4.01 hereto. [Filed as
Exhibit 4.32 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992,
and incorporated by reference herein]
4.33 Copy of Supplemental Indenture dated
September 2, 1992, which is a supplemental
instrument to Exhibit 4.01 hereto. [Filed as
Exhibit 4.33 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992,
and incorporated by reference herein]
4.34 Copy of Supplemental Indenture dated August 15,
1993, which is a supplemental instrument to
Exhibit 4.01 hereto.
4.35 Copy of Supplemental Indenture dated August 16,
1993, which is a supplemental instrument to
Exhibit 4.01 hereto.
4.36 Copy of Supplemental Indenture dated October 15,
1993, which is a supplemental instrument to
Exhibit 4.01 hereto.
10.01 Copy of Agreement dated September 1, 1970,
between Texas Gas Transmission Corporation and
the Company covering the purchase of natural
gas. [Filed as Exhibit 4.01 to Registration
Statement 2-40985 and incorporated by reference
herein]
<PAGE>63
10.02 Copies of Agreement between Sponsoring Companies
re: Project D of Atomic Energy Commission, dated
May 12, 1952, Memorandums of Understanding
between Sponsoring Companies re: Project D of
Atomic Energy Commission, dated September 19,
1952 and October 28, 1952, and Power Agreement
between Ohio Valley Electric Corporation and
Atomic Energy Commission, dated October 15,
1952. [Filed as Exhibit 13(y) to Registration
Statement 2-9975 and incorporated by reference
herein]
10.03 Copy of Modification No. 1 dated July 23, 1953,
to the Power Agreement between Ohio Valley
Electric Corporation and Atomic Energy
Commission. [Filed as Exhibit 4.03(b) to
Registration Statement 2-24920 and incorporated
by reference herein]
10.04 Copy of Modification No. 2 dated March 15, 1964,
to the Power Agreement between Ohio Valley
Electric Corporation and Atomic Energy
Commission. [Filed as Exhibit 5.02c to
Registration Statement 2-61607 and incorporated
by reference herein]
10.05 Copy of Modification No. 3 and No. 4 dated
May 12, 1966 and January 7, 1967, respectively,
to the Power Agreement between Ohio Valley
Electric Corporation and Atomic Energy
Commission. [Filed as Exhibits 4(a)(13) and
4(a)(14) to Registration Statement 2-26063 and
incorporated by reference herein]
10.06 Copy of Modification No. 5 dated August 15,
1967, to the Power Agreement between Ohio Valley
Electric Corporation and Atomic Energy
Commission. [Filed as Exhibit 13(c) to
Registration Statement 2-27316 and incorporated
by reference herein]
10.07 Copies of (i) Inter-Company Power Agreement,
dated July 10, 1953, between Ohio Valley
Electric Corporation and Sponsoring Companies
(which Agreement includes as Exhibit A the Power
Agreement, dated July 10, 1953, between Ohio
Valley Electric Corporation and Indiana-Kentucky
Electric Corporation); (ii) First Supplementary
Transmission Agreement, dated July 10, 1953,
between Ohio Valley Electric Corporation and
Sponsoring Companies; (iii) Inter-Company Bond
Agreement, dated July 10, 1953, between Ohio
Valley Electric Corporation and Sponsoring
Companies; (iv) Inter-Company Bank Credit
Agreement, dated July 10, 1953, between Ohio
Valley Electric Corporation and Sponsoring
Companies. [Filed as Exhibit 5.02f to
Registration Statement 2-61607 and incorporated
by reference herein]
<PAGE>64
10.08 Copy of Modification No. 1 and No. 2 dated
June 3, 1966 and January 7, 1967, respectively,
to Inter-Company Power Agreement dated July 10,
1953. [Filed as Exhibits 4(a)(8) and 4(a)(10)
to Registration Statement 2-26063 and
incorporated by reference herein]
10.09 Copies of Amendments to Agreements (iii) and
(iv) referred to under 10.07 above as follows:
(i) Amendment to Inter-Company Bond Agreement
and (ii) Amendment to Inter-Company Bank Credit
Agreement. [Filed as Exhibit 5.02h to
Registration Statement 2-61607 and incorporated
by reference herein]
10.10 Copy of Modification No. 1, dated August 20,
1958, to First Supplementary Transmission
Agreement, dated July 10, 1953, among Ohio
Valley Electric Corporation and the Sponsoring
Companies. [Filed as Exhibit 5.02i to
Registration Statement 2-61607 and incorporated
by reference herein]
10.11 Copy of Modification No. 2, dated April 1, 1965,
to the First Supplementary Transmission
Agreement, dated July 10, 1953, among Ohio
Valley Electric Corporation and the Sponsoring
Companies. [Filed as Exhibit 5.02j to
Registration Statement 2-6l607 and incorporated
by reference herein]
10.12 Copy of Modification No. 3, dated January 20,
1967, to First Supplementary Transmission
Agreement, dated July 10, 1953, among Ohio
Valley Electric Corporation and the Sponsoring
Companies. [Filed as Exhibit 4(a)(7) to
Registration Statement 2-26063 and incorporated
by reference herein]
10.13 Copy of Modification No. 6 dated November 15,
1967, to the Power Agreement between Ohio Valley
Electric Corporation and Atomic Energy
Commission. [Filed as Exhibit 4(g) to
Registration Statement 2-28524 and incorporated
by reference herein]
10.14 Copy of Modification No. 3 dated November 15,
1967, to the Inter-Company Power Agreement dated
July 10, 1953. [Filed as Exhibit 4.02m to
Registration Statement 2-37368 and incorporated
by reference herein]
10.15 Copy of Modification No. 7 dated November 5,
1975, to the Power Agreement between Ohio Valley
Electric Corporation and Atomic Energy
Commission. [Filed as Exhibit 5.02n to
Registration Statement 2-56357 and incorporated
by reference herein]
<PAGE>65
10.16 Copy of Modification No. 4 dated November 5,
1975, to the Inter-Company Power Agreement dated
July 10, 1953. [Filed as Exhibit 5.02o to
Registration Statement 2-56357 and incorporated
by reference herein]
10.17 Copy of Modification No. 4 dated April 30, 1976,
to First Supplementary Transmission Agreement,
dated July 10, 1953, among Ohio Valley Electric
Corporation and the Sponsoring Companies.
[Filed as Exhibit 5.02p to Registration
Statement 2-6l607 and incorporated by reference
herein]
10.18 Copy of Modification No. 8 dated June 23, 1977,
to the Power Agreement between Ohio Valley
Electric Corporation and Atomic Energy
Commission. [Filed as Exhibit 5.02q to
Registration Statement 2-61607 and incorporated
by reference herein]
10.19 Copy of Modification No. 9 dated July 1, 1978,
to the Power Agreement between Ohio Valley
Electric Corporation and Atomic Energy
Commission. [Filed as Exhibit 5.02r to
Registration Statement 2-63149 and incorporated
by reference herein]
10.20 Copy of Modification No. 10 dated August 1,
1979, to the Power Agreement between Ohio Valley
Electric Corporation and Atomic Energy
Commission. [Filed as Exhibit 2 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1979, and incorporated
by reference herein]
10.21 Copy of Modification No. 11 dated September 1,
1979, to the Power Agreement between Ohio Valley
Electric Corporation and Atomic Energy
Commission. [Filed as Exhibit 3 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1979, and incorporated
by reference herein]
10.22 Copy of Modification No. 5 dated September 1,
1979, to Inter-Company Power Agreement dated
July 5, 1953, among Ohio Valley Electric
Corporation and Sponsoring Companies. [Filed as
Exhibit 4 to the Company's Annual Report on Form
10-K for the year ended December 31, 1979, and
incorporated by reference herein]
<PAGE>66
10.23 Copy of Agreement dated December 16, 1966,
between Peabody Coal Company and the Company
covering the purchase of coal. [Filed as
Exhibit 10.23 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1980,
and incorporated by reference herein]
10.24 Copy of Amendments to Coal Supply Agreement
referred to in 10.23 above as follows: (i)
Amendment effective July 1, 1970, (ii) effective
January 1, 1975, and (iii) effective December 1,
1976. [Filed as Exhibit 10.24 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1980, and incorporated by reference
herein]
10.25 Copy of Modification No. 12 dated August 1,
1981, to the Power Agreement between Ohio Valley
Electric Corporation and Atomic Energy
Commission. [Filed as Exhibit 10.25 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1981, and incorporated
by reference herein]
10.26 Copy of Modification No. 6 dated August 1, 1981,
to Inter-Company Power Agreement dated July 5,
1953, among Ohio Valley Electric Corporation and
Sponsoring Companies. [Filed as Exhibit 10.26
to the Company's Annual Report on Form 10-K for
the year ended December 31, 1981, and
incorporated by reference herein]
10.27 Copy of Agreement dated December 20, 1985,
between Shawnee Coal Company and the Company
covering the purchase of coal. [Filed as
Exhibit 10.27 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1985,
and incorporated by reference herein]
10.28 Copy of Diversity Power Agreement dated
September 9, 1987, between East Kentucky Power
Cooperative and the Company covering the
purchase and sale of power between the two
companies from 1988 through 1995. [Filed as
Exhibit 10.28 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1987,
and incorporated by reference herein]
10.29 Copy of Supplemental Executive Retirement Plan
as amended through January 3, 1990, covering all
officers of the Company. [Filed as Exhibit
10.29 to the Company's Annual Report on Form
10-K for the year ended December 31, 1989, and
incorporated by reference herein]
<PAGE>67
10.30 Copy of Termination Agreement and Release dated
February 1, 1989, between Peabody Coal Company
and the Company canceling the Coal Supply
Agreement dated December 16, 1966 referred to in
Exhibit Nos. 10.23 and 10.24. [Filed as Exhibit
10.30 to the Company's Annual Report on Form
10-K for the year ended December 31, 1988, and
incorporated by reference herein]
10.31 Copy of Agreements dated February 1 and
February 15, 1989, between Peabody Development
Company and the Company covering the purchase of
coal. [Filed as Exhibit 10.31 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1988, and incorporated by reference
herein]
10.32 Copy of Omnibus Long-Term Incentive Plan
effective January 1, 1990, covering officers and
key employees of the Company. [Filed as Exhibit
4.01 to the Company's Registration Statement
33-38557 and incorporated by reference herein]
10.33 Copy of Key Employee Incentive Plan effective
January 1, 1990, covering officers and key
employees of the Company. [Filed as Exhibit
10.33 to the Company's Annual Report on Form
10-K for the year ended December 31, 1989, and
incorporated by reference herein]
10.34 Copy of LG&E Energy Corp. Deferred Stock
Compensation Plan effective January 1, 1992,
covering non-employee directors of LG&E Energy
Corp. and its subsidiaries. [Filed as
Exhibit 10.34 to LG&E Energy Corp.'s Annual
Report on Form 10-K for the year ended
December 31, 1991, and incorporated by reference
herein]
10.35 Copy of Agreement dated August 1, 1991, between
Texas Gas Transmission Corporation and the
Company covering the purchase of natural gas.
[Filed as Exhibit 10.35 to the Company's Annual
Report on Form 10-K for the year ended
December 31, 1991, and incorporated by reference
herein]
10.36 Copy of Sales Service Agreement between Texas
Gas Transmission Corporation and the Company
effective February 1, 1992. [Filed as
Exhibit 10.36 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992,
and incorporated by reference herein]
<PAGE>68
10.37 Copy of Sales Service Agreement between Texas
Gas Transmission Corporation and the Company
effective November 1, 1992. [Filed as
Exhibit 10.37 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992,
and incorporated by reference herein]
10.38 Copy of form of change in control agreement for
officers of Louisville Gas and Electric Company.
[Filed as Exhibit 10.38 to the Company's Annual
Report on Form 10-K for the year ended
December 31, 1992, and incorporated by reference
herein]
10.39 Copy of Employment Agreement between Roger W.
Hale and Louisville Gas and Electric Company,
effective June 1, 1989, as amended. [Filed as
Exhibit 10.39 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992,
and incorporated by reference herein]
10.40 Copy of Supplemental Executive Retirement Plan
for R. W. Hale, effective June 1, 1989. [Filed
as Exhibit 10.40 to the Company's Annual Report
on Form 10-K for the year ended December 31,
1992, and incorporated by reference herein]
10.41 Copy of Nonqualified Savings Plan covering
officers of the Company, effective January 1,
1992. [Filed as Exhibit 10.41 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1992, and incorporated by reference
herein]
10.42 Copy of Modification No. 13 dated September 1,
1989, to the Power Agreement between Ohio Valley
Electric Corporation and Atomic Energy
Commission.
10.43 Copy of Modification No. 14 dated January 15,
1992, to the Power Agreement between Ohio Valley
Electric Corporation and Atomic Energy
Commission.
10.44 Copy of Modification No. 7 dated January 15,
1992, to Inter-Company Power Agreement dated
July 10, 1953, among Ohio Valley Electric
Corporation and Sponsoring Companies.
10.45 Copy of Modification No. 15 dated February 15,
1993, to the Power Agreement between Ohio Valley
Electric Corporation and Atomic Energy
Commission.
<PAGE>69
10.46 Firm Transportation Agreement, dated November 1,
1993, between Texas Gas Transmission Corporation
and the Company covering the transmission of
natural gas.
10.47 Firm No Notice Transportation Agreement
effective November 1, 1993, between Texas Gas
Transmission Corporation and the Company (8-year
term) covering the transmission of natural gas.
Firm No Notice Transportation Agreement
effective November 1, 1993, between Texas Gas
Transmission Corporation and the Company (2-year
term) covering the transmission of natural gas.
Firm No Notice Transportation Agreement
effective November 1, 1993, between Texas Gas
Transmission Corporation and the Company (5-year
term) covering the transmission of natural gas.
10.48 Employment Contract between LG&E Energy Corp.
and Roger W. Hale effective November 3, 1993.
[Filed as Exhibit 10.50 to LG&E Energy Corp.'s
Annual Report on Form 10-K for the year ended
December 31, 1993, and incorporated by reference
herein]
10.49 Copy of LG&E Energy Corp. Stock Option Plan for
Non-Employee Directors. [Filed as Exhibit 10.51
to LG&E Energy Corp.'s Annual Report on
Form 10-K for the year ended December 31, 1993,
and incorporated by reference herein]
12 Computation of Ratio of Earnings to Fixed
Charges
23 Consent of Independent Public Accountants
24 Power of Attorney
<PAGE>70
(b) Executive Compensation Plans and Arrangements:
Supplemental Executive Retirement Plan as amended through
January 3, 1990, covering all officers of the Company.
[Filed as Exhibit 10.29 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1989, and
incorporated by reference herein]
Omnibus Long-Term Incentive Plan effective January 1,
1990, covering officers and key employees of the Company.
[Filed as Exhibit 4.01 to the Company's Registration
Statement 33-38557 and incorporated by reference herein]
Key Employee Incentive Plan effective January 1, 1990,
covering officers and key employees of the Company.
[Filed as Exhibit 10.33 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1989, and
incorporated by reference herein]
LG&E Energy Corp. Deferred Stock Compensation Plan
effective January 1, 1992, covering non-employee
directors of LG&E Energy Corp. and its subsidiaries.
[Filed as Exhibit 10.34 to LG&E Energy Corp.'s Annual
Report on Form 10-K for the year ended December 31, 1991,
and incorporated by reference herein]
Form of change in control agreement for officers of
Louisville Gas and Electric Company. [Filed as
Exhibit 10.38 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1992]
Employment Agreement between Roger W. Hale and Louisville
Gas and Electric Company, effective June 1, 1989, as
amended. [Filed as Exhibit 10.39 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1992]
Supplemental Executive Retirement Plan for R. W. Hale,
effective June 1, 1989. [Filed as Exhibit 10.40 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1992]
Nonqualified Savings Plan covering officers of the
Company effective January 1, 1992. [Filed as
Exhibit 10.41 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1992]
Employment Contract between LG&E Energy Corp. and Roger
W. Hale effective November 3, 1993. [Filed as
Exhibit 10.50 to LG&E Energy Corp.'s Annual Report on
Form 10-K for the year ended December 31, 1993, and
incorporated by reference herein]
LG&E Energy Corp. Stock Option Plan for Non-Employee
Directors. [Filed as Exhibit 10.51 to LG&E Energy
Corp.'s Annual Report on Form 10-K for the year ended
December 31, 1993, and incorporated by reference herein]
<PAGE>71
(c) Reports on Form 8-K:
The following 8-K reports were filed during the fourth
quarter of 1993:
(i) On October 27, 1993, a report on Form 8-K was filed
announcing the following:
Trimble County Generating Plant. On October 20,
1993, the Kentucky Supreme Court declined to review
a Kentucky Court of Appeals order overturning a
lower court's order that had improperly directed the
Company to refund approximately $150 million to its
customers in a case involving the Company's Trimble
County electric generating station.
Management Change. Walter M. Higgins, III,
President and Chief Operating Officer of the Company
resigned to accept the position of President and
Chief Operating Officer of Sierra Pacific Resources.
Sierra Pacific Resources indicated plans for
Mr. Higgins to become Chief Executive Officer early
in 1994.
(ii) On November 23, 1993, a report on Form 8-K was filed
announcing that LG&E Energy Corp., of which the Company
is the principal subsidiary, would undergo a major
realignment and formation of new business units
effective January 1, 1994, to reflect its outlook for
rapidly emerging competition in all segments of the
energy services industry.
<PAGE>72
<TABLE>
LOUISVILLE GAS AND ELECTRIC COMPANY
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(INCLUDING INTANGIBLES)
FOR THE YEAR ENDED DECEMBER 31, 1993
(Thousands of $)
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- ---------- ---------- ----------- ---------- ----------
Other
Balance Changes Balance
Beginning Additions Retirements Add End of
Classification of Year at Cost at Cost (Deduct) Year
-------------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Electric Department:
Intangible..................... $ 2 $ 2
Steam production............... 1,371,584 $ 10,904 $ 2,024 $ (615) <F5> 1,379,849
Hydraulic production........... 8,222 40 19 8,243
Other production............... 11,147 39 2 11,184
Transmission................... 163,407 9,817 291 { 1,020 <F2> 173,837
{ (116) <F1>
Distribution................... 406,046 25,483 2,392 { 116 <F1> 429,252
{ (1) <F3>
General........................ 15,799 1,640 628 (39) <F1> 16,772
Construction work in progress.. 30,948 17,084 48,032
--------- --------- --------- --------- ---------
Total electric department.... 2,007,155 65,007 5,356 365 2,067,171
--------- --------- --------- --------- ---------
Gas Department:
Intangible..................... 1 1
Storage:
Land rights and leaseholds... 568 568
Other........................ 32,282 628 60 32,850
Transmission................... 11,783 4 37 11,750
Distribution................... 186,007 20,217 1,839 204,385
General........................ 8,037 1,407 624 (29) <F1> 8,791
Construction work in progress.. 3,090 (851) 2,239
Gas stored underground-
noncurrent................... 2,140 2,140
--------- --------- --------- --------- ---------
Total gas department......... 243,908 21,405 2,560 (29) 262,724
--------- --------- --------- --------- ---------
Common Utility:
Intangible..................... 17,498 4,025 98 21,425
General........................ 103,606 8,165 458 { 68 <F1> 111,267
{ (114) <F4>
Construction work in progress.... 1,329 185 1,514
--------- --------- --------- --------- ---------
Total common utility......... 122,433 12,375 556 (46) 134,206
--------- --------- --------- --------- ---------
Total utility plant at
original cost.............. $2,373,496 $ 98,787 $ 8,472 $ 290 $2,464,101
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
<PAGE>73
<FN>
NOTES:
<F1> Transfer between functional groups.
<F2> Transfer from Nonutility Property.
<F3> Sale of land.
<F4> Transfer to LG&E Energy Corp.
<F5> Transfer to Nonutility Property.
</TABLE>
<PAGE>74
<TABLE>
LOUISVILLE GAS AND ELECTRIC COMPANY
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(INCLUDING INTANGIBLES)
FOR THE YEAR ENDED DECEMBER 31, 1992
(Thousands of $)
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- ---------- ---------- ----------- ---------- ----------
Other
Balance Changes Balance
Beginning Additions Retirements Add End of
Classification of Year at Cost at Cost (Deduct) Year
-------------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Electric Department:
Intangible..................... $ 2 $ 2
Steam production............... 1,364,349 $ 8,224 $ 1,000 $ 11 <F1> 1,371,584
Hydraulic production........... 8,204 18 8,222
Other production............... 11,147 11,147
Transmission................... 160,904 2,957 419 (35) <F1> 163,407
Distribution................... 378,582 29,804 2,386 { 47 <F1> 406,046
{ (1) <F3>
General........................ 2,246 3,729 1,532 11,356 <F1> 15,799
Construction work in progress.. 15,729 16,084 { (853) <F2> 30,948
{ (12) <F1>
--------- --------- --------- --------- ---------
Total electric department.... 1,941,163 60,816 5,337 10,513 2,007,155
--------- --------- --------- --------- ---------
Gas Department:
Intangible..................... 1 1
Storage:
Land rights and leaseholds... 568 568
Other........................ 31,412 1,089 219 32,282
Transmission................... 11,902 (2) 117 11,783
Distribution................... 170,878 16,853 1,724 186,007
General........................ 1,454 1,804 449 5,228 <F1> 8,037
Construction work in progress.. 2,494 596 3,090
Gas stored underground-
noncurrent................... 2,140 2,140
--------- --------- --------- --------- ---------
Total gas department......... 220,849 20,340 2,509 5,228 243,908
--------- --------- --------- --------- ---------
Common Utility:
Intangible..................... 6,573 10,925 17,498
General........................ 105,498 19,169 4,444 { (16,595) <F1> 103,606
{ (22) <F4>
Construction work in progress.... 11,405 (10,075) (1) <F4> 1,329
--------- --------- --------- --------- ---------
Total common utility......... 123,476 20,019 4,444 (16,618) 122,433
--------- --------- --------- --------- ---------
Total utility plant at
original cost.............. $2,285,488 $ 101,175 $ 12,290 $ (877) $2,373,496
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
<PAGE>75
<FN>
NOTES:
<F1> Transfer between functional groups.
<F2> Transfer 25% of Trimble County to Nonutility Property.
<F3> Sale of land.
<F4> Transfer to LG&E Energy Corp.
</TABLE>
<PAGE>76
<TABLE>
LOUISVILLE GAS AND ELECTRIC COMPANY
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(INCLUDING INTANGIBLES)
FOR THE YEAR ENDED DECEMBER 31, 1991
(Thousands of $)
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- ---------- ---------- ----------- ---------- ----------
Other
Balance Changes Balance
Beginning Additions Retirements Add End of
Classification of Year at Cost at Cost (Deduct) Year
-------------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Electric Department:
Intangible..................... $ 3 $ 1 $ $ 2
Steam production............... 1,343,270 $ 21,407 2,318 { 2,568 <F1> 1,364,349
{ (578) <F3>
Hydraulic production........... 8,049 156 1 8,204
Other production............... 11,155 8 11,147
Transmission................... 157,662 3,685 423 { (18) <F1> 160,904
{ (2) <F3>
Distribution................... 353,842 27,369 2,647 18 <F1> 378,582
General........................ 2,076 181 11 2,246
Construction work in progress.. 18,272 798 (3,341) <F2> 15,729
--------- --------- --------- --------- ---------
Total electric department.... 1,894,329 53,596 5,409 (1,353) 1,941,163
--------- --------- --------- --------- ---------
Gas Department:
Intangible..................... 1 1
Storage:
Land rights and leaseholds... 568 568
Other........................ 29,850 1,676 114 31,412
Transmission................... 10,622 1,290 10 11,902
Distribution................... 161,192 10,663 976 (1) <F3> 170,878
General........................ 1,255 250 51 1,454
Construction work in progress.. 2,590 (96) 2,494
Gas stored underground-
noncurrent................... 2,140 2,140
--------- --------- --------- --------- ---------
Total gas department......... 208,218 13,783 1,151 (1) 220,849
--------- --------- --------- --------- ---------
Common Utility:
Intangible..................... 4,968 1,605 6,573
General........................ 89,472 21,382 2,717 { (2,568) <F1> 105,498
{ (71) <F4>
Construction work in progress.... 18,169 (2,314) (4,450) <F5> 11,405
--------- --------- --------- --------- ---------
Total common utility......... 112,609 20,673 2,717 (7,089) 123,476
--------- --------- --------- --------- ---------
Total utility plant at
original cost.............. $2,215,156 $ 88,052 $ 9,277 $ (8,443) $2,285,488
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
<PAGE>77
<FN>
NOTES:
<F1> Transfer between functional groups.
<F2> Transfer 25% of Trimble County to Nonutility Property.
<F3> Sale of land.
<F4> Transfer to LG&E Energy Corp.
<F5> Transfer to Preliminary Survey and Investigation Charges.
</TABLE>
<PAGE>78
<TABLE>
LOUISVILLE GAS AND ELECTRIC COMPANY
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1993
(Thousands of $)
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- ---------- ------------------------- ---------- ---------- ----------
Additions Charged to
Costs and Expenses
-------------------------
Provisions
Charged Other
Balance Provisions to Clearing Changes Balance
Beginning Charged and Other Retire- Add End of
Classification of Year to Income Accounts ments <F1> (Deduct) Year
-------------- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Electric Department:
Steam production............... $ 401,102 $ 43,449 $ 503 $ 2,818 $ 442,236
Hydraulic production........... 7,794 154 25 7,923
Other production............... 10,668 1 2 $ 10,667
Transmission................... 73,981 4,098 356 { (79) <F2> 77,695
{ 51 <F3>
Distribution................... 131,883 14,258 3,212 79 <F2> 143,008
General........................ 8,719 89 1,353 615 (11) <F2> 9,535
--------- --------- --------- --------- --------- ---------
Total electric department.... 634,147 62,049 1,856 7,028 40 $ 691,064
--------- --------- --------- --------- --------- ---------
Gas Department:
Intangible..................... 1 1
Storage:
Land rights and leaseholds... 397 21 418
Other........................ 16,660 1,247 79 17,828
Transmission................... 8,343 275 37 8,581
Distribution................... 60,711 5,574 2,791 63,494
General........................ 3,181 72 853 623 (29) <F2> 3,454
--------- --------- --------- --------- --------- ---------
Total gas department......... 89,293 7,189 853 3,530 (29) 93,776
--------- --------- --------- --------- --------- ---------
Common Utility:
Intangible..................... 4,462 2,528 98 6,892
General........................ 26,527 4,978 297 422 { 40 <F2> 31,409
{ (11) <F4>
--------- --------- --------- --------- --------- ---------
Total common utility......... 30,989 7,506 297 520 29 38,301
--------- --------- --------- --------- --------- ---------
Totals....................... $ 754,429 $ 76,744 $ 3,006 $ 11,078 $ 40 $ 823,141
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
<FN>
NOTES:
<F1> Net of gross retirements, salvage, and removal expense.
<F2> Transfer of depreciation reserve between functional groups.
<F3> Transfer from Nonutility Property.
<F4> Transfer of depreciation reserve to LG&E Energy Corp.
</TABLE>
<PAGE>79
<TABLE>
LOUISVILLE GAS AND ELECTRIC COMPANY
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1992
(Thousands of $)
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- ---------- ------------------------- ---------- ---------- ----------
Additions Charged to
Costs and Expenses
-------------------------
Provisions
Charged Other
Balance Provisions to Clearing Changes Balance
Beginning Charged and Other Retire- Add End of
Classification of Year to Income Accounts ments <F1> (Deduct) Year
-------------- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Electric Department:
Steam production............... $ 359,701 $ 43,502 $ 504 $ 2,606 $ 1 <F3> $ 401,102
Hydraulic production........... 7,661 150 17 7,794
Other production............... 10,667 1 10,668
Transmission................... 70,639 3,927 568 (17) <F2> 73,981
Distribution................... 121,322 13,397 2,853 17 <F2> 131,883
General........................ 551 70 1,104 1,533 8,527 <F2> 8,719
--------- --------- --------- --------- --------- ---------
Total electric department.... 570,541 61,047 1,608 7,577 8,528 634,147
--------- --------- --------- --------- --------- ---------
Gas Department:
Intangible..................... 1 1
Storage:
Land rights and leaseholds... 376 21 397
Other........................ 15,709 1,223 271 (1) <F2> 16,660
Transmission................... 8,183 277 117 8,343
Distribution................... 58,526 5,118 2,933 60,711
General........................ 300 55 567 441 2,700 <F2> 3,181
--------- --------- --------- --------- --------- ---------
Total gas department......... 83,095 6,694 567 3,762 2,699 89,293
--------- --------- --------- --------- --------- ---------
Common Utility:
Intangible..................... 2,909 1,553 4,462
General........................ 36,695 4,704 886 4,528 { (11,226) <F2> 26,527
{ (4) <F4>
--------- --------- --------- --------- --------- ---------
Total common utility......... 39,604 6,257 886 4,528 (11,230) 30,989
--------- --------- --------- --------- --------- ---------
Totals....................... $ 693,240 $ 73,998 $ 3,061 $ 15,867 $ (3) $ 754,429
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
<FN>
NOTES:
<F1> Net of gross retirements, salvage, and removal expense.
<F2> Transfer of depreciation reserve between functional groups.
<F3> Transfer to Nonutility Property.
<F4> Transfer of depreciation reserve to LG&E Energy Corp.
</TABLE>
<PAGE>80
<TABLE>
LOUISVILLE GAS AND ELECTRIC COMPANY
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 1991
(Thousands of $)
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- ---------- ------------------------- ---------- ---------- ----------
Additions Charged to
Costs and Expenses
-------------------------
Provisions
Charged Other
Balance Provisions to Clearing Changes Balance
Beginning Charged and Other Retire- Add End of
Classification of Year to Income Accounts ments <F1> (Deduct) Year
-------------- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Electric Department:
Steam production............... $ 316,739 $ 43,000 $ 504 $ 2,596 $ 2,054 <F2> $ 359,701
Hydraulic production........... 7,514 148 1 7,661
Other production............... 11,091 1 425 10,667
Transmission................... 67,386 3,862 574 (35) <F2> 70,639
Distribution................... 111,484 12,511 2,708 35 <F2> 121,322
General........................ 496 66 11 551
--------- --------- --------- --------- --------- ---------
Total electric department.... 514,710 59,588 504 6,315 2,054 570,541
--------- --------- -------- --------- --------- ---------
Gas Department:
Intangible..................... 1 1
Storage:
Land rights and leaseholds... 354 22 376
Other........................ 14,734 1,183 208 15,709
Transmission................... 7,932 264 13 8,183
Distribution................... 55,771 4,775 2,020 58,526
General........................ 311 48 59 300
--------- --------- --------- --------- --------- ---------
Total gas department......... 79,103 6,292 2,300 83,095
--------- --------- --------- --------- --------- ---------
Common Utility:
Intangible..................... 2,121 788 2,909
General........................ 35,477 3,708 2,312 2,735 { (13) <F3> 36,695
{ (2,054) <F2>
--------- --------- --------- --------- --------- ---------
Total common utility......... 37,598 4,496 2,312 2,735 (2,067) $ 39,604
--------- --------- --------- --------- --------- ---------
Totals....................... $ 631,411 $ 70,376 $ 2,816 $ 11,350 $ (13) $ 693,240
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
<FN>
NOTES:
<F1> Net of gross retirements, salvage, and removal expense.
<F2> Transfer of depreciation reserve between functional groups and LG&E Energy Corp.
<F3> Transfer of depreciation reserve to LG&E Energy Corp.
</TABLE>
<PAGE>81
<TABLE>
LOUISVILLE GAS AND ELECTRIC COMPANY
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
(Thousands of $)
<CAPTION>
Reserves Deducted from
Assets in Balance Sheet
--------------------------------------
Other Accounts
Property Receivable
and (Uncollectible
Investments Accounts)
----------- --------------
<S> <C> <C>
Balance January 1, 1991..................................... $ 190 $ 1,596
Additions:
Charged to costs and expenses...........................
Trimble County - non-jurisdictional depreciation...... 3,158
Other................................................. 2,000
Deductions:
Net charges of nature for which reserves were created... 2,183
Other................................................... 486
----- -----
Balance December 31, 1991................................... 2,862 1,413
Additions:
Charged to costs and expenses
Trimble County - non-jurisdictional depreciation...... 2,783
Other................................................. 2,158
Deductions:
Net charges of nature for which reserves were created... 2,462
Other...................................................
----- -----
Balance December 31, 1992................................... 5,645 1,109
Additions:
Charged to costs and expenses
Trimble County - non-jurisdictional depreciation...... 233
Other................................................. 2,500
Deductions:
Net charges of nature for which reserves were created... 2,135
Other................................................... 5,815
----- -----
Balance December 31, 1993................................... $ 63 $ 1,474
----- -----
----- -----
</TABLE>
<PAGE>82
<TABLE>
LOUISVILLE GAS AND ELECTRIC COMPANY
SCHEDULE IX - SHORT-TERM BORROWINGS
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
(Thousands of $)
<CAPTION>
Column A Column B Column C Column D Column E Column F
-------- ---------- ------------- --------------- ----------- --------------
Weighted Maximum Average Weighted
Average Amount Amount Average
Short-Term Balance at Interest Rate Outstanding Outstanding Interest Rate
Bank End of at End at Month-End During the During the
Borrowings <F1> Year of Year During the Year Year <F2> Year <F3>
--------------- ---------- ------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
1993
Trust Demand Notes........... $ - -
Other Notes.................. - -
--------- -------------
Total $ - - $16,000 $2,000 3.73%
--------- ------------- --------------- ----------- -------------
--------- ------------- --------------- ----------- -------------
1992
Trust Demand Notes........... $ 8,000 3.45%
Other Notes.................. - -
--------- -------------
Total $ 8,000 3.45% $12,800 $11,358 3.89%
--------- ------------- --------------- ----------- -------------
--------- ------------- --------------- ----------- -------------
1991
Trust Demand Notes........... $ 12,000 4.21%
Other Notes.................. - -
--------- -------------
Total $ 12,000 4.21% $28,200 $20,933 6.32%
--------- ------------- --------------- ----------- -------------
--------- ------------- --------------- ----------- -------------
<FN>
NOTES:
<F1> See Note 6 of Notes to Financial Statements under Item 8.
<F2> Computed on average monthly balances.
<F3> Computed on a daily weighted average basis.
</TABLE>
<PAGE>83
<TABLE>
LOUISVILLE GAS AND ELECTRIC COMPANY
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
(Thousands of $)
<CAPTION>
Charged to
Operating Expenses
------------------
Years Ended December 31
-----------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Taxes other than income taxes:
Real estate and personal property (including franchise)..... $ 7,580 $ 7,525 $ 7,344
Payroll..................................................... 7,301 7,189 7,156
Other....................................................... 1,312 1,122 1,005
------ ------ ------
Total taxes other than income taxes per
statements of income.................................... $16,193 $15,836 $15,505
------ ------ ------
------ ------ ------
</TABLE>
The amounts of royalties and advertising costs charged to operating
expenses were each less than one percent of total operating revenues.
<PAGE>84
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
LOUISVILLE GAS AND ELECTRIC COMPANY
-----------------------------------
Registrant
March 28, 1994 By M. L. Fowler
- -------------- -----------------------------------
Vice President and Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
ROGER W. HALE Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer);
CHARLES A. MARKEL III Treasurer
(Principal Financial Officer);
M. L. FOWLER Vice President and Controller
(Principal Accounting Officer);
WILLIAM C. BALLARD, JR. Director;
OWSLEY BROWN II Director;
S. GORDON DABNEY Director;
GENE P. GARDNER Director;
DAVID B. LEWIS Director;
ANNE H. MCNAMARA Director;
T. BALLARD MORTON, JR. Director; and
DR. DONALD C. SWAIN Director.
By M. L. FOWLER March 28, 1994
- ------------------------------------------------
(Attorney-In-Fact)
<PAGE>
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
LOUISVILLE GAS AND ELECTRIC COMPANY
To the Secretary of State of Kentucky:
Pursuant to the provisions of Chapter 271B of the Kentucky
Revised Statutes, the undersigned corporation hereby amends its
Articles of Incorporation, and for that purpose, submits the
following statement:
1. The name of the corporation is Louisville Gas and
Electric Company.
2. On May 13, 1993, the Executive Committee of the Board of
Directors, acting on behalf of the corporation, duly
adopted the following Amendments to its Articles of
Incorporation. A copy of the text is attached hereto as
Exhibit A and incorporated by reference herein as the
text of a new subarticle B of Article Thirteenth.
3. If not contained in the amendment itself, the manner in
which any exchange, reclassification, or cancellation of
issued shares provided for in the Amendment shall be
implemented as follows:
4. The amendment is to be effective upon the filing of these
articles by the Secretary of State.
5. The amendment was duly adopted by the Executive Committee
of the Board of Directors without shareholder approval
pursuant to 271B.10-020 and 271B.6-020 of the Kentucky
Revised Statutes, and shareholder action was not
required.
Dated: May 19, 1993 LOUISVILLE GAS AND ELECTRIC COMPANY
s/C.A. Markel
Charles A. Markel, III
Treasurer
<PAGE>
AMENDMENT
The Restated Articles of Incorporation are hereby amended by
adding thereto a new subarticle B to Article Thirteenth which
subarticle B shall read in its entirety as follows:
B. Terms of $5.875 Cumulative Preferred Stock
(without par value).
The Company has classified 250,000 shares of the Preferred Stock
(without par value) as a series of such Preferred Stock designated
as "$5.875 Cumulative Preferred Stock (without par value)." The
preferences, rights, qualifications and restrictions of the shares
of the "$5.875 Cumulative Preferred Stock (without par value),"
shall be as follows:
(1) The annual dividend payable in respect of each share
of said series shall be $5.875; and the initial dividend in
respect of each share of said series shall be payable on July
15, 1993, when and as declared by the Board of Directors of
this Company, to holders of record on June 30, 1993, and will
accrue from the date of original issuance of said series;
thereafter, such dividends shall be payable on January 15,
April 15, July 15 and October 15 in each year (or the next
business date thereafter in each case), when and as declared
by the Board of Directors of this Company, for the quarter-
yearly period ending on the last business day of the preceding
month.
(2) The shares of said series are not subject to
redemption prior to July 1, 1998. On and after July 1, 1998,
the shares of said series shall be subject to redemption, in
whole or in part, in the manner and with the effect provided
in these Articles; and the redemption price or prices
applicable to shares of said series shall be $105.875 per
share plus accrued and unpaid dividends to the date of
redemption if such date of redemption is on or subsequent to
July 1, 1998, and prior to July 1, 1999; $104.700 per share
plus accrued and unpaid dividends to the date of redemption if
such date of redemption is on or subsequent to July 1,1999,
and prior to July 1, 2000; $103.525 per share plus accrued and
unpaid dividends to the date of redemption if such date of
redemption is on or subsequent to July 1, 2000, and prior to
July 1, 2001; $102.350 per share plus accrued and unpaid
dividends to the date of redemption if such date of redemption
is on or subsequent to July 1, 2001, and prior to July 1,
2002; $101.175 per share plus accrued and unpaid dividends to
the date of redemption if such date of redemption is on or
subsequent to July 1, 2002, and prior to July 1, 2003; and
$100.000 per share plus accrued and unpaid dividends
thereafter.
1
<PAGE>
Notice of every such redemption shall be mailed at least
thirty (30) days prior to redemption to the holders of record
of the $5.875 Cumulative Preferred Stock (without par value)
so to be redeemed, at their respective addresses as the same
shall appear on the books of the Company, but no failure to
mail a particular notice nor any defect therein or in the
mailing thereof shall affect the validity of the proceedings
for the redemption of those shares of $5.875 Cumulative
Preferred Stock (without par value) for which proper notice
has been given.
(3) So long as any shares of said series shall remain
outstanding, the Company shall on or before July 15, 2003, and
on or before July 15 of each year thereafter to and including
July 15, 2007, set aside, separate and apart from its other
funds, an amount equal to $1,250,000 (or such lesser amount as
may be sufficient to redeem all of the shares of said series
then outstanding) and shall on or before July 15, 2008 (each
such July 15 being hereinafter in this Section 3 called a
"Sinking Fund Redemption Date"), set aside, separate and apart
from its other funds, an amount equal to $18,750,000 (or such
lesser amount as may be sufficient to redeem all the shares of
said series then outstanding) as a mandatory sinking fund
payment for the exclusive benefit of shares of said series,
plus such further amount as shall equal the accrued and unpaid
dividends on the shares of said series to be redeemed out of
such payment (as hereinafter in this Section 3 provided)
through the day preceding the applicable Sinking Fund
Redemption Date. The obligation of the Company to make such
payment shall be cumulative, so that if for any reason the
full amount thereof shall not be set aside for any year, the
amount of the deficiency from time to time shall be added to
the amount due from the Company on subsequent Sinking Fund
Redemption Dates (or, if such deficiency exists on July 15,
2008, on subsequent quarterly dividend payment dates
thereafter for such series) until the deficiency shall have
been fully satisfied. The Company shall be entitled to credit
against any such mandatory sinking fund payment shares of said
series redeemed by the Company at the Company's option,
purchased by the Company in the open market or otherwise
acquired by the Company, except through application of any
sinking fund payment, and not theretofore so credited, at the
sinking fund redemption price hereinafter specified in this
Section 3.
2
<PAGE>
Any amounts set aside by the Company pursuant to this
Section 3 shall be applied on the date of such setting aside
if a Sinking Fund Redemption Date or otherwise on the first
Sinking Fund Redemption Date occurring thereafter to the
redemption of shares of said series at $100.000 per share,
plus accrued and unpaid dividends through the day preceding
the applicable Sinking Fund Redemption Date, in the manner and
upon the notice provided in Section 2 of this sub article B.
If any Sinking Fund Redemption Date shall be a Saturday,
Sunday or other day on which banking institutions in
Louisville, Kentucky are authorized or obligated to remain
closed, such term shall be construed to refer to the next
preceding business day.
Notwithstanding anything to the contrary set forth above,
no sinking fund payments on the shares of said series of
$5.875 Cumulative Preferred Stock shall be made: (i) unless
the full dividends on all shares of Preferred Stock and
Preferred Stock (without par value) at the time outstanding
for all past dividend periods shall have been paid or declared
and set apart for payment or (ii) if such sinking fund payment
would be contrary to applicable law.
(4) The preferential amounts to which the holders of
shares of such series shall be entitled upon any liquidation,
dissolution or winding up of the Company, in addition to
dividends accumulated but unpaid thereon, shall be $100.000
per share, in the event of any voluntary liquidation,
dissolution or winding up of the Company, except that if such
voluntary liquidation, dissolution or winding up of the
Company shall have been approved by the vote in favor thereof
given at a meeting called for that purpose or by the written
consent of the holders of a majority of the total shares of
the $5.875 Cumulative Preferred Stock (without par value) then
outstanding, the amount so payable on such voluntary
liquidation, dissolution or winding up shall be $100.000 per
share; or $100.000 per share, in the event of any involuntary
liquidation, dissolution or winding up of the Company.
3
<PAGE>
(5) The shares of said series of $5.875 Cumulative
Preferred Stock (without par value) shall be subject to all
other terms, provisions and restrictions set forth in these
Articles with respect to the shares of the Preferred Stock
(without par value) and, excepting only as to the rates of
dividend payable in respect of the shares of said series, the
dividend periods and dividend payment dates, the redemption
price or prices applicable to the shares of said series, the
sinking fund provisions applicable to the shares of said
series, and the liquidation price applicable to shares of said
series, shall have the same relative rights and preferences
as, shall be of equal rank with, and shall confer rights equal
to those conferred by, all other shares of the Preferred Stock
(without par value) of the Company.
(6) The stated value of the shares of said series shall
be $100.000 per share.
4
<PAGE>
RESTATED
ARTICLES OF INCORPORATION
OF
LOUISVILLE GAS AND ELECTRIC COMPANY
These Restated Articles of Incorporation of Louisville Gas and
Electric Company correctly set forth without change the
corresponding provisions of the Articles of Incorporation as
theretofore amended of Louisville Gas and Electric Company and
supersede the original Articles of Incorporation and all amendments
thereto of Louisville Gas and Electric Company.
The Articles of Incorporation of Louisville Gas and Electric
Company, as originally filed and as thereafter amended from time to
time, are hereby restated to read as follows:
FIRST. The corporate name is
LOUISVILLE GAS AND ELECTRIC COMPANY.
SECOND. The principal office or place of business of the
Company is in the City of Louisville, County of Jefferson, State of
Kentucky.
THIRD. The purpose of the Company is the transaction of any
or all lawful business for which corporations may be incorporated
under the Business Corporation Law of Kentucky, as amended.
FOURTH. The Capital stock of the Company shall be divided
into (a) one million, seven hundred twenty thousand (1,720,000)
shares of Preferred Stock of the par value of $25 each, (b) six
million, seven hundred fifty thousand (6,750,000) shares of
Preferred Stock (without par value) (the aggregate stated value
thereof not to exceed $225,000,000), and (c) seventy-five million
(75,000,000) shares of Common Stock without par value. The
Preferred Stock and Preferred Stock (without par value) shall be
issued in series having the preferences, rights, qualifications and
restrictions hereinafter provided for.
PREFERRED STOCK AND PREFERRED STOCK (WITHOUT PAR VALUE)
(1) In addition to the series of Cumulative Preferred Stock,
described in paragraphs (10) through (13) hereof, the Board of
Directors is hereby authorized, subject to and in accordance with
the provisions of paragraphs (1) through (9), inclusive, to cause
Preferred Stock (without par value) to be issued in series, each
such series to have such variations in respect thereof as may be
determined by the Board of Directors prior to the issuance thereof.
<PAGE>
The shares of the Preferred Stock of different series may vary
as to:
(a) The distinctive serial designations and number of shares
of such series;
(b) The rate of dividends (within such limits as shall be
permitted by law not exceeding 8% per annum) payable on the shares
of the particular series;
(c) The prices (not less than the amount limited by law) and
terms upon which the shares of the particular series may be
redeemed; and
(d) The amount or amounts which shall be paid to the holders
of the shares of the particular series in case of voluntary or
involuntary dissolution or any distribution of assets.
The shares of the Preferred Stock (without par value) of
different series may vary as to:
(a) The distinctive serial designations and number of shares
of such series;
(b) The stated value thereof;
(c) The rate of dividends (within such limits as shall be
permitted by law) payable on the shares of the particular series;
(d) The prices (not less than the amount limited by law) and
terms (including sinking fund provisions) upon which the shares of
the particular series may be redeemed; and
(e) The amount or amounts which shall be paid to the holders
of the shares of the particular series in case of voluntary or
involuntary dissolution or any distribution of assets.
The shares of all series of Preferred Stock and Preferred Stock
(without par value) shall in all other respects be identical,
except that the Preferred Stock (without par value) shall not have
the voting rights of the Preferred Stock provided by paragraph 9(A)
hereof.
(2) The holders of each series of the Preferred Stock and the
Preferred Stock (without par value) at the time outstanding shall
be entitled, pari passu with the holders of every other series of
the Preferred Stock and the Preferred Stock (without par value), to
receive, but only when and as declared by the Board of Directors,
out of funds legally available for the payment of dividends,
cumulative preferential dividends, at the annual dividend rate for
the particular series fixed therefore as herein provided, payable
quarter-yearly in substantially equal amounts, on dates to be fixed
2
<PAGE>
in the by-laws, to stockholders of record on the respective dates,
not exceeding thirty (30) days and not less than ten (10) days
preceding such dividend payment dates, fixed for the purpose by the
Board of Directors. No dividends shall be declared on any series of
the Preferred Stock or the Preferred Stock (without par value) in
respect of any quarter-yearly dividend period unless there shall
likewise be declared on all shares of all other series of the
Preferred Stock and the Preferred Stock (without par value) at the
time outstanding, like proportionate dividends, ratably, in
proportion to the respective annual dividend rates fixed therefore,
in respect of the same quarter-yearly dividend period, to the
extent that such shares are entitled to receive dividends for such
quarter-yearly dividend period. The dividends on shares of all
series of the Preferred Stock and the Preferred Stock (without par
value) shall be cumulative. In the case of all shares of each
particular series, the dividends on shares of such series shall be
cumulative from the date of issue thereof unless the Company shall
have established regular quarter-yearly dividend periods with
respect to such series, in which case such dividends shall be
cumulative from the first day of the current quarter-yearly
dividend period in which shares of such series shall have been
issued, so that unless dividends on all outstanding shares of each
series of the Preferred Stock and the Preferred Stock (without par
value), at the annual dividend rate and from the dates for
accumulation thereof fixed as herein provided shall have been paid
for all past quarter-yearly dividend periods, but without interest
on cumulative dividends, no dividends shall be paid or declared and
no other distribution shall be made on the Common Stock and no
Common Stock shall be purchased or otherwise acquired for value.
The holders of the Preferred Stock and the Preferred Stock (without
par value) of any series shall not be entitled to receive any
dividends thereon other than the dividends referred to in this
paragraph (2).
(3) The Company, by action of its Board of Directors, may
redeem the whole or any part of any series of the Preferred Stock
or the Preferred Stock (without par value), at any time or from
time to time, by paying in cash the redemption price of the shares
of the particular series, fixed therefore as herein provided,
together with a sum in the case of each share of each series so to
be redeemed, computed at the annual dividend rate for the series of
which the particular share is a part, from the date from which
dividends on such share became cumulative to the date fixed for
such redemption, less the aggregate of the dividends theretofore or
on such redemption date paid thereon. Notice of every such
redemption shall be given by publication at least once in one daily
newspaper printed in the English language and of general
circulation in Louisville, Kentucky, the first publication in such
newspaper to be at least thirty (30) days prior to the date fixed
for such redemption. At least thirty (30) days' previous notice of
every such redemption shall also be mailed to the holders of record
of the shares of the Preferred Stock or the Preferred Stock
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<PAGE>
(without par value) so to be redeemed, at their respective
addresses as the same shall appear on the books of the Company; but
no failure to mail such notice nor any defect therein or in the
mailing thereof shall affect the validity of the proceedings for
the redemption of any shares of the Preferred Stock or the
Preferred Stock (without par value) so to be redeemed. In case of
redemption of a part only of any series of the Preferred Stock or
the Preferred Stock (without par value) at the time outstanding,
the Board of Directors shall fix and determine the stock to be so
redeemed either by lot or by redemption pro rata or by designation
of particular shares for redemption or in any other manner the
Board of Directors may see fit. The Board of Directors shall have
full power and authority, subject to the limitations and provisions
herein contained, to prescribe the manner in which, and the terms
and conditions upon which, the shares of the Preferred Stock or the
Preferred Stock (without par value) shall be redeemed from time to
time. If such notice of redemption shall have been duly given by
publication, and if on or before the redemption date specified in
such notice all funds necessary for such redemption shall have been
set aside by the Company, separate and apart from its other funds,
in trust for the account of the holders of the shares to be
redeemed, so as to be and continue to be available therefore, then,
notwithstanding that any certificate for such shares so called for
redemption shall not have been surrendered for cancellation, from
and after the date fixed for redemption, the shares represented
thereby shall no longer be deemed outstanding, the right to receive
dividends thereon shall cease to accrue and all rights with respect
to such shares so called for redemption shall forthwith on such
redemption date cease and terminate, except only the right of the
holders thereof to receive out of the funds so set aside in trust,
the amount payable upon redemption thereof, without interest;
provided, however, that the Company may, after giving notice by
publication of any such redemption as hereinbefore provided or
after giving to the bank or trust company hereinafter referred to
irrevocable authorization to give such notice by publication, and
at any time prior to the redemption date specified in such notice,
deposit in trust, for the account of the holders of the shares to
be redeemed, so as to be and continue to be available therefore,
funds necessary for such redemption with a bank or trust company in
good standing, organized under the laws of the United States of
America or of the Commonwealth of Kentucky or of the State of New
York doing business in the City of Louisville, or in the Borough of
Manhattan, The City of New York, and having capital, surplus and
undivided profits aggregating at least $1,000,000, designated in
such notice of redemption, and, upon such deposit in trust, all
shares with respect to which such deposit shall have been made
shall no longer be deemed to be outstanding, and all rights with
respect to such shares shall forthwith cease and terminate, except
only the right of the holders thereof to receive at any time from
and after the date of such deposit, the amount payable upon the
redemption thereof, without interest.
4
<PAGE>
(4) Before any amount shall be paid to, or any assets
distributed among, the holders of the Common Stock or any other
stock ranking junior to the Preferred Stock and the Preferred Stock
(without par value) of each series, upon any liquidation,
dissolution or winding up of the Company, and after paying or
providing for the payment of all creditors of the Company, the
holders of each series of the Preferred Stock and the Preferred
Stock (without par value) at the time outstanding shall be
entitled, pari passu with the holders of every other series of the
Preferred Stock and the Preferred Stock (without par value), to be
paid in cash the amount for the particular series fixed therefore
as herein provided, together with a sum in the case of each share
of each series, computed at the annual dividend rate for the series
of which the particular share is a part, from the date from which
dividends on such share became cumulative to the date fixed for the
payment of such distributive amount, less the aggregate of the
dividends theretofore or on such date paid thereon; but no payments
on account of such distributive amounts shall be made to the
holders of any series of the Preferred Stock or the Preferred Stock
(without par value) unless there shall likewise be paid at the same
time to the holders of each other series of the Preferred Stock and
the Preferred Stock (without par value) at the time outstanding,
like proportionate distributive amounts, ratably, in proportion to
the full distributive amounts to which they are respectively
entitled as herein provided. The holders of the Preferred Stock and
the Preferred Stock (without par value) of any series shall not be
entitled to receive any amounts with respect thereto upon any
liquidation, dissolution or winding up of the Company other than as
provided in this paragraph. Neither the consolidation or merger of
the Company with any other corporation or corporations, nor the
sale or transfer by the Company of all or any part of its assets,
shall be deemed to be a liquidation, dissolution or winding up of
the Company.
(5) Whenever the full dividends on all series of the
Preferred Stock and the Preferred Stock (without par value) at the
time outstanding for all past quarter-yearly dividend periods shall
have been paid or declared and set apart for payment, then such
dividends as may be determined by the Board of Directors may be
declared and paid on the Common Stock or any other stock ranking
junior to the Preferred Stock and the Preferred Stock (without par
value) of each series, but only out of funds legally available for
the payment of dividends; provided, however, that no dividend shall
be declared or paid and no other distributions shall be made on the
Common Stock or on any such other stock and no shares of the Common
Stock or of any such other stock shall be purchased or otherwise
acquired for value out of capital surplus arising from a reduction
in capital.
(6) In the event of any liquidation, dissolution or winding
up of the Company, all assets and funds of the Company remaining
after paying or providing for the payment of all creditors of the
5
<PAGE>
Company and after paying or providing for the payment to the
holders of all series of the Preferred Stock and the Preferred
Stock (without par value) of the full distributive amounts to which
they are respectively entitled as herein provided, shall be divided
among and paid to the holders of the Common Stock or any other
stock ranking junior to the Preferred Stock and the Preferred Stock
(without par value) of each series, according to their respective
rights and interests.
(7)(A) So long as any shares of the Preferred Stock or the
Preferred Stock (without par value) of any series are outstanding,
the Company shall not, without the affirmative vote or written
consent of the holders of at least two-thirds of the total number
of shares of such Preferred Stock and Preferred Stock (without par
value) then outstanding:
Amend, alter, change or repeal any of the express terms
of any series of the Preferred Stock or the Preferred Stock
(without par value) then outstanding in a manner prejudicial
to the holders thereof; provided, however, that if any such
amendment, alteration, change or repeal shall be prejudicial
to the holders of one or more, but not all, of the series of
Preferred Stock or the Preferred Stock (without par value) at
the time outstanding, only such consent of the holders of two-
thirds of the total number of shares of all series so affected
shall be required.
(B) So long as any shares of the Preferred Stock or the
Preferred Stock (without par value) of any series are out-
standing, the Company shall not, without the affirmative vote
or written consent of the holders of a majority of the total
number of shares of such Preferred Stock and Preferred Stock
(without par value) then outstanding:
(a) Create or authorize any class of stock ranking
prior to or (other than a series of the 1,720,000
authorized shares of Preferred Stock or 6,750,000
authorized shares of Preferred Stock (without par value))
ranking on a parity with any series of the Preferred
Stock and the Preferred Stock (without par value) as to
dividends or distributions, or create or authorize any
obligation or security convertible into shares of stock
of any such class; or
(b) Issue, sell or otherwise dispose of any shares
of the Preferred Stock or the Preferred Stock (without
par value), or of any class of stock ranking prior to or
on a parity with the Preferred Stock and the Preferred
Stock (without par value) of each series as to dividends
or distributions, unless the net income of the Company,
determined in accordance with generally accepted
accounting practices, to be available for the payment of
6
<PAGE>
dividends on the Preferred Stock, the Preferred Stock
(without par value) and any class of stock ranking prior
thereto or on a parity therewith as aforesaid, for a
period of twelve (12) consecutive calendar months within
the fifteen (15) calendar months immediately preceding
the issuance, sale or disposition of such stock, is at
least equal to twice the annual dividend requirements on
the entire amount of all Preferred Stock, all Preferred
Stock (without par value), and of all such other classes
of stock ranking prior thereto or on a parity therewith,
as to dividends or distributions to be outstanding
immediately after the issuance, sale or disposition of
such additional shares; or
(c) Merge or consolidate with or into any other
corporation or corporations, unless such merger or
consolidation, or the issuance or assumption of all
securities, to be issued or assumed in connection with
any such merger or consolidation, shall have been
ordered, approved, or permitted by the Securities and
Exchange Commission under the provisions of the Public
Utility Holding Company Act of 1935 or by any successor
commission or regulatory authority of the United States
of America having jurisdiction in the premises; provided
that the provisions of this clause (c) shall not apply to
a purchase or other acquisition by the Company of
franchises or assets of another corporation in any manner
which does not involve a merger or consolidation.
(C) So long as any shares of the Preferred Stock or
Preferred Stock (without par value) of any series are
outstanding, the Company shall not without written consent of
the holders of a majority of the total number of shares of
such Preferred Stock and Preferred Stock (without par value)
then outstanding or, in the alternative and subject to the
proviso hereinafter set forth in this subdivision 7(C), the
affirmative vote of the holders of a majority of the total
number of the shares of such Preferred Stock and Preferred
Stock (without par value) which are represented, by the
attendance of the holders thereof in person or by proxy, at a
meeting duly called for the purpose:
Issue or assume any unsecured notes, debentures or other
securities representing unsecured indebtedness for any purpose
other than (1) the refunding of outstanding unsecured
securities theretofore issued or assumed by the Company, (2)
the financing of pollution control facilities (as defined in
the Internal Revenue Code, as amended or as hereafter amended,
and the regulations and rulings thereunder) through the
issuance or assumption of unsecured notes, debentures or other
securities representing unsecured indebtedness the receipt of
interest on which is exempt from federal income
7
<PAGE>
tax at the time of such issuance or assumption, or (3) the
redemption or other retirement of outstanding shares of one or
more series of the Preferred Stock or Preferred Stock (without
par value) if, immediately after such issuance or assumption,
the total principal amount of all unsecured notes, debentures
or other unsecured securities representing unsecured
indebtedness issued or assumed by the Company and then
outstanding (including unsecured securities then to be issued
or assumed but excluding unsecured securities theretofore
consented to by the holders of such Preferred Stock and
Preferred Stock (without par value)) will exceed 20% of the
sum of (i) the total principal amount of all bonds or other
securities representing secured indebtedness issued or assumed
by the Company and then to be outstanding, and (ii) the
capital and surplus of the Company as then to be stated on the
books of account of the Company.
Provided, however, that if, at any such meeting, at least
one-third of all shares of such Preferred Stock and Preferred
Stock (without par value) then outstanding shall be voted
against the action then proposed, of the character aforesaid,
such action may be taken only with the affirmative vote of a
majority of all shares of such Preferred Stock and Preferred
Stock (without par value) then outstanding.
If at any meeting of such Preferred Stock and Preferred
Stock (without par value) for the purpose of taking action on
matters set forth in this subdivision 7(C), the presence in
person or by proxy of the holders of a majority of such stock
shall not have been obtained and shall not be obtained for a
period of thirty days from the date of such meeting, the
presence in person or by proxy of the holders of one-third of
such stock then outstanding shall be sufficient to constitute
a quorum.
(8) No holder of shares of Preferred Stock or Preferred Stock
(without par value) shall be entitled as such as a matter of right
to subscribe for or purchase any part of any new or additional
issue of stock, or securities convertible into stock, of any class
whatsoever, whether now or hereafter authorized, and whether issued
for cash, property, services, by way of dividends, or otherwise.
(9)(A)Every holder of Preferred Stock of any series shall have
one vote for each share of such Preferred Stock held by him, and
every holder of the Common Stock shall have one vote for each share
of Common Stock held by him, for the election of Directors and upon
all other matters, except as otherwise provided in this paragraph
(9) hereof. At all elections of directors, any stockholder may vote
cumulatively. The foregoing shall not modify or affect the special
votes and consents provided for in paragraph (7) hereof.
8
<PAGE>
(B) If and when dividends shall be in default in an
amount equivalent to six (6) full quarter-yearly dividends on
all shares of all series of the Preferred Stock and the
Preferred Stock (without par value) at the time outstanding,
and until all dividends in default on such Preferred Stock and
such Preferred Stock (without par value) shall have been paid,
the holders of all shares of the Preferred Stock and all
shares of the Preferred Stock (without par value), voting
separately as one class, shall be entitled to elect the
smallest number of Directors necessary to constitute a
majority of the full Board of Directors, and the holders of
the Common Stock, voting separately as a class, shall be
entitled to elect the remaining Directors of the Company. At
all elections of directors held pursuant to this subdivision
9(B), any stockholder may vote cumulatively. The terms of
office of all persons who may be Directors of the Company at
the time shall terminate upon the election of a majority of
the Board of Directors by the holders of the Preferred Stock
and the Preferred Stock (without par value), whether or not
the holders of the Common Stock shall then have elected the
remaining Directors of the Company.
(C) If and when all dividends then in default on the
Preferred Stock and the Preferred Stock (without par value) at
the time outstanding shall be paid (and such dividends shall
be declared and paid, or declared and funds set aside for that
purpose out of any funds legally available therefore as soon
as reasonably practicable), the Preferred Stock and the
Preferred Stock (without par value) shall thereupon be
divested of any special right with respect to the election of
Directors provided in subparagraph (B) hereof, and the voting
power of the Preferred Stock, the Preferred Stock (without par
value) and the Common Stock shall revert to the status
existing before the occurrence of such default; but always
subject to the same provisions for vesting such special rights
in the Preferred Stock and the Preferred Stock (without par
value) in case of further like default or defaults in
dividends thereon.
(D) In case of any vacancy in the Board of Directors
occurring among the Directors elected by the holders of the
Preferred Stock and the Preferred Stock (without par value),
as a class, pursuant to subparagraph (B) hereof, a majority of
the remaining Directors elected by the holders of the
Preferred Stock and the Preferred Stock (without par value)
(including, as elected by such holders, any Directors then in
office who were chosen by other Directors as successor
Directors to fill vacancies as provided in this sentence) may
elect a successor to hold office for the unexpired term of the
Director whose place shall be vacant. In case of a vacancy in
the Board of Directors occurring among the Directors elected
by the holders of the Common Stock, as a
9
<PAGE>
class, pursuant to subparagraph (B) hereof, a majority of the
remaining Directors elected by the holders of the Common Stock
(including, as elected by such holders, any Directors then in
office who were chosen by other directors as successor
directors to fill vacancies as provided in this sentence) may
elect a successor to hold office for the unexpired term of the
Director whose place shall be vacant. In all other cases, any
vacancy occurring among the Directors shall be filled by the
vote of a majority of the remaining Directors.
(E) At all meetings of stockholders held for the purpose
of electing directors during such times as the holders of
shares of the Preferred Stock and the Preferred Stock (without
par value) shall have the special right, voting separately as
one class, to elect directors pursuant to subparagraph (B)
hereof, the presence in person or by proxy of the holders of
a majority of the outstanding shares of the Common Stock shall
be required to constitute a quorum of such class for the
election of directors, and the presence in person or by proxy
of the holders of Preferred Stock and Preferred Stock (without
par value) entitled to cast a majority of all the votes to
which the holders of the Preferred Stock and the Preferred
Stock (without par value) are entitled, shall be required to
constitute a quorum of such class for the election of
directors; provided, however, that the absence of a quorum
(according to votes, as aforesaid) of the holders of stock of
any such class shall not prevent the election at any such
meeting or adjournment thereof of directors by the other such
class if such quorum of the holders of stock of such other
class is present in person or by proxy at such meeting; and
provided further that in the absence of such quorum of the
holders of stock of any such class, a majority (according to
votes, as aforesaid) of those holders of the stock of such
class who are present in person or by proxy shall have power
to adjourn the election of the directors to be elected by such
class from time to time without notice other than announcement
at the meeting until the holders of the requisite number of
shares of such class shall be present in person or by proxy.
(F) Except when some mandatory provision of law shall be
controlling and except as otherwise provided in paragraph (7)
hereof whenever shares of two or more series of the Preferred
Stock or of the Preferred Stock (without par value) are
outstanding, no particular series shall be entitled to vote as
a separate series on any matter and all shares of the
Preferred Stock and the Preferred Stock (without par value)
shall be deemed to constitute but one class for any purpose
for which a vote of the stockholders of the Company by classes
may now or hereafter be required.
10
<PAGE>
5% CUMULATIVE PREFERRED STOCK, $25 PAR VALUE
(10) The Company has classified $21,519,300 par value of the
Preferred Stock as a series of such Preferred Stock designated as
"5% Cumulative Preferred Stock, $25 Par Value," consisting of
860,772 shares of the par value of $25 per share.
(11) The preferences, rights, qualifications and restric-
tions of the shares of the "5% Cumulative Preferred Stock, $25 Par
Value," shall be as follows:
(a) The annual dividend rate for such series shall be 5%
per annum;
(b) The redemption price for such series shall be $28.00
per share; and
(c) The preferential amounts to which the holders of
shares of such series shall be entitled upon any liquidation,
dissolution or winding up of the Company, in addition to
dividends accumulated but unpaid thereon, shall be:
$27.25 per share, in the event of any voluntary
liquidation, dissolution or winding up of the Company, except
that if such voluntary liquidation, dissolution or winding up
of the Company shall have been approved by the vote in favor
thereof given at a meeting called for that purpose or by the
written consent of the holders of a majority of the total
shares of the 5% Cumulative Preferred Stock, $25 Par Value
then outstanding, the amount so payable on such voluntary
liquidation, dissolution, or winding up shall be $25 per
share; or
$25 per share, in the event of any involuntary liqui-
dation, dissolution or winding up of the Company.
7.45% CUMULATIVE PREFERRED STOCK, PAR VALUE $25 PER SHARE
(12) The Company has classified $21,480,700 Par Value of the
Preferred Stock as a series of such Preferred Stock designated as
"7.45% Cumulative Preferred Stock, Par Value $25 per share,"
consisting of 859,228 shares with par value of $25 per share.
(13) The preferences, rights, qualifications and restric-
tions of shares of the "7.45% Cumulative Preferred Stock, Par Value
$25 per share," shall be as follows:
(a) The annual dividend rate for such series shall
be 7.45% per annum;
(b) The redemption price for such series will be
$27.50 per share prior to April 15, 1978; $26.75 per share
11
<PAGE>
thereafter and prior to April 15, 1983; $26.00 per share thereafter
and prior to April 15, 1988; and $25.75 per share thereafter.
However, no shares of such series may be redeemed prior to April
15, 1978 from proceeds received through the incurring of debt, or
through the issuance of preferred stock ranking equal or prior to
the stock of such series as to dividends or on liquidation, where
such debt has an effective interest cost or such preferred stock
has an effective dividend cost to the Company of less than the
effective dividend cost to the Company of the stock of such series;
and
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any liquida-
tion, dissolution or winding up of the Company, in addition to
dividends accumulated but unpaid thereon, shall be:
$25.50 per share, in the event of any voluntary liqui-
dation, dissolution or winding up of the Company, except that
if such voluntary liquidation, dissolution or winding up of
the Company shall have been approved by the vote in favor
thereof given at a meeting called for that purpose or by the
vote in favor thereof given at a meeting called for that
purpose or by the written consent of the holders of a majority
of the total shares of the 7.45% Cumulative Preferred Stock,
Par Value $25 per share, then outstanding, the amount so
payable on such voluntary liquidation, dissolution, or winding
up shall be $25 per share; or
$25 per share, in the event of any involuntary
liquidation, dissolution or winding up of the Company.
COMMON STOCK
(Without par value)
The Board of Directors is hereby authorized to cause shares of
Common Stock, without par value, to be issued from time to time for
such consideration as may be fixed from time to time by the Board
of Directors, or by way of stock split pro rata to the holders of
the Common Stock. The Board of Directors may also determine the
proportion of the proceeds received from the sale of such stock
which shall be credited upon the books of the Company to Capital or
Capital Surplus.
Each share of the Common Stock shall be equal in all respects
to every other share of the Common Stock.
No holder of shares of Common Stock shall be entitled as such
as a matter of right to subscribe for or purchase any part of any
new or additional issue of stock, or securities convertible into
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<PAGE>
stock, of any class whatsoever, whether now or hereafter
authorized, and whether issued for cash, property, services or
otherwise.
FIFTH. The Company shall commence business as soon as
authorized as provided by law and shall continue for a period of
nine hundred ninety-nine (999) years from July 2, 1913.
SIXTH. The private property of the stockholders of the
Company shall not be subject to the payment of corporate debts.
SEVENTH. A. CERTAIN DEFINITIONS. For purposes of this Article
Seventh:
(1) "Affiliate," including the term "affiliated person,"
means a person who directly, or indirectly through one (1) or more
intermediaries, controls, or is controlled by, or is under common
control with, a specified person.
(2) "Associate," when used to indicate a relationship with
any person, means:
(a) Any corporation or organization (other than the
Company or a Subsidiary), of which such person is an officer,
director or partner or is, directly or indirectly, the
Beneficial Owner of ten percent (10%) or more of any class of
Equity Securities;
(b) Any trust or other estate in which such person has
a substantial beneficial interest or as to which such person
serves as trustee or in a similar fiduciary capacity; and
(c) Any relative or spouse of such person, or any
relative of such spouse, any one (1) of whom has the same home
as such person or is a director or officer of the corporation
or any of its Affiliates.
(3) "Beneficial Owner," when used with respect to any Voting
Stock, means a person:
(a) Who, individually or with any of its Affiliates or
Associates, beneficially owns Voting Stock, directly or
indirectly; or
(b) Who, individually or with any of its Affiliates or
Associates has:
1. The right to acquire Voting Stock, whether such
right is exercisable immediately or only after the
passage of time and whether or not such right is
exercisable only after specified conditions are met,
pursuant to any agreement, arrangement, or understanding
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<PAGE>
or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise;
2. The right to vote Voting Stock pursuant to any
agreement, arrangement, or understanding; or
3. Any agreement, arrangement, or understanding for
the purpose of acquiring, holding, voting or disposing of
Voting Stock with any other person who beneficially owns,
or whose Affiliates or Associates beneficially own,
directly or indirectly, such shares of Voting Stock.
(4) "Business Combination" means:
(a) Any merger or consolidation of the Company or any
Subsidiary with any Interested Shareholder, or any other
corporation, whether or not itself an Interested Shareholder,
which is, or after the merger or consolidation would be, an
Affiliate of an Interested Shareholder who was an Interested
Shareholder prior to the transaction;
(b) Any sale, lease, transfer, or other disposition,
other than in the ordinary course of business, in one (1)
transaction or a series of transactions in any twelve-month
period, to any Interested Shareholder or any Affiliate of any
Interested Shareholder, other than the Company or any
Subsidiary, of any assets of the Company or any Subsidiary
having, measured at the time the transaction or transactions
are approved by the Board of Directors of the Company, an
aggregate book value as of the end of the Company's most
recently ended fiscal quarter of five percent (5%) or more of
the total Market Value of the outstanding stock of the Company
or of its net worth as of the end of its most recently ended
fiscal quarter;
(c) The issuance or transfer by the Company, or any
Subsidiary, in one transaction or a series of transactions in
any twelve-month period, of any Equity Securities of the
Company or any Subsidiary which have an aggregate Market Value
of five percent (5%) or more of the total Market Value of the
outstanding stock of the Company, determined as of the end of
the Company's most recently ended fiscal quarter prior to the
first such issuance or transfer, to any Interested Shareholder
or any Affiliate of any Interested Shareholder, other than the
Company or any of its Subsidiaries, except pursuant to the
exercise of warrants or rights to purchase securities offered
pro rata to all holders of the Company's Voting Stock or any
other method affording substantially proportionate treatment
to the holders of Voting Stock;
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(d) The adoption of any plan or proposal for the
liquidation or dissolution of the Company in which any thing
other than cash will be received by an Interested Shareholder
or any Affiliate of any Interested Shareholder; or
(e) Any reclassification of securities, including any
reverse stock split; or recapitalization of the Company; or
any merger or consolidation of the Company with any of its
Subsidiaries; or any other transaction which has the effect,
directly or indirectly, in one transaction or a series of
transactions, of increasing by five percent (5%) or more the
proportionate amount of the outstanding shares of any class of
Equity Securities of the Company or any Subsidiary which is
directly or indirectly beneficially owned by any Interested
Shareholder or any Affiliate of any Interested Shareholder.
(5) "Common Stock" means any stock of the Company other than
preferred or preference stock of the Company.
(6) "Continuing Director" means any member of the Company's
Board of Directors who is not an Interested Shareholder or an
Affiliate or Associate of an Interested Shareholder or any of its
Affiliates, other than the Company or any of its Subsidiaries, and
who was a director of the Company prior to the time the Interested
Shareholder became an Interested Shareholder, and any successor to
such Continuing Director who is not an Interested Shareholder or an
Affiliate or Associate of an Interested Shareholder or any of its
Affiliates, other than the Company or any of its Subsidiaries, and
was recommended or elected by a majority of the Continuing
Directors at a meeting at which a quorum consisting of a majority
of the Continuing Directors is present.
(7) "Control," including the terms "controlling," "controlled
by" and "under common control with," means the possession, directly
or indirectly, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership
of voting securities, by contract, or otherwise, and the beneficial
ownership of ten percent (10%) or more of the votes entitled to be
cast by a corporation's Voting Stock creates a presumption of
control.
(8) "Equity Security" means:
(a) Any stock or similar security, certificate of
interest, or participation in any profit-sharing agreement,
voting trust certificate, or certificate of deposit for the
foregoing;
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(b) Any security convertible, with or without consid-
eration, into an Equity Security, or any warrant or other
security carrying any right to subscribe to or purchase an
Equity Security; or
(c) Any put, call, straddle, or other option, right or
privilege of acquiring an Equity Security from or selling an
Equity Security to another without being bound to do so.
(9) "Interested Shareholder" means any person, other than the
Company or any of its Subsidiaries, who:
(a) Is the Beneficial Owner, directly or indirectly, of
ten percent (10%) or more of the voting power of the
outstanding Voting Stock of the Company; or is an Affiliate of
the Company and at any time within the two-year period
immediately prior to the date in question was the Beneficial
Owner directly or indirectly, of ten percent (10%) or more of
the voting power of the then outstanding Voting Stock of the
Company.
(b) For the purpose of determining whether a person is
an Interested Shareholder, the number of shares of Voting
Stock deemed to be outstanding shall include shares deemed
owned by the person through application of Subsection (3) of
this Paragraph A of Article Seventh but shall not include any
other shares of Voting Stock which may be issuable pursuant to
any agreement, arrangement, or understanding, or upon exercise
of conversion rights, warrants or options or otherwise.
(10) "Market Value" means:
(a) In the case of stock, the highest closing sale price
during the thirty-day period immediately preceding the date in
question of a share of such stock on the composite tape for
New York Stock Exchange listed stocks, or, if such stock is
not quoted on the composite tape, on the New York Stock
Exchange, or if such stock is not listed on such exchange, on
the principal United States securities exchange registered
under the Securities Exchange Act of 1934 on which such stock
is listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a
share of such stock during the thirty-day period preceding the
date in question on the National Association of Securities
Dealers, Inc., Automated Quotations System or any system then
in use, or if no such quotations are available, the fair
market value on the date in question of a share of such stock
as determined by a majority of the Continuing Directors at a
meeting of the Board of Directors at which a quorum consisting
of at least a majority of the Continuing Directors is present;
and
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(b) In the case of property other than cash or stock, the
fair market value of such property on the date in question as
determined by a majority of the Continuing Directors at a
meeting of the Board of Directors at which a quorum consisting
of at least a majority of the Continuing Directors is present.
(11) "Subsidiary" means any corporation of which Voting Stock
having a majority of the votes entitled to be cast is owned,
directly or indirectly, by the Company.
(12) "Voting Stock" means shares of capital stock of a
corporation entitled to vote generally in the election of its
directors.
B. MINIMUM SHARE VOTE REQUIREMENTS FOR APPROVAL OF BUSINESS
COMBINATIONS.
(1) In addition to any vote otherwise required by law or
these Articles of Incorporation, a Business Combination shall
be recommended by the Board of Directors of the Company and
approved by the affirmative vote of at least:
(a) Eighty percent (80%) of the votes entitled to
be cast by outstanding shares of Voting Stock of the
Company, voting together as a single voting group; and
(b) Two-thirds of the votes entitled to be cast by
holders of Voting Stock other than Voting Stock
beneficially owned by the Interested Shareholder who is,
or whose Affiliate is, a party to the Business
Combination or by an Affiliate or Associate of such
Interested Shareholder, voting together as a single
voting group.
(2) Unless a Business Combination is exempted from the
operation of this Paragraph B in accordance with Paragraph C of
this Article Seventh, the failure to comply with the voting
requirements of Subsection (1) of this Paragraph B shall render
such Business Combination void.
C. EXEMPTIONS FROM MINIMUM SHARE VOTE REQUIREMENTS.
(1) For purposes of Section (2) of this Paragraph C:
(a) "Announcement Date" means the first general public
announcement of the proposal or intention to make a proposal
of the Business Combination or its first communication
generally to stockholders of the Company, whichever is
earlier;
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(b) "Determination Date" means the date on which an
Interested Shareholder first became an Interested Shareholder;
and
(c) "Valuation Date" means
1. For a Business Combination voted upon by
stockholders, the latter of the day prior to the date of
the stockholders' vote or the date twenty (20) days prior
to the consummation of the Business Combination; and
2. For a Business Combination not voted upon by
stockholders, the date of the consummation of the
Business Combination.
(2) The vote required by Section B of this Article Seventh
does not apply to a Business Combination if each of the following
conditions is met:
(a) The aggregate amount of the cash and the Market
Value as of the Valuation Date of consideration other than
cash to be received per share by holders of Common Stock in
such Business Combination is at least equal to the highest of
the following:
1. The highest per share price (including any
brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by the Interested Shareholder for any
shares of Common Stock of the same class or series
acquired by it:
a. Within the two-year period immediately
prior to the Announcement Date of the proposal of
the Business Combination; or
b. In the transaction in which it became an
Interested Shareholder, whichever is higher; or
2. The Market Value per share of Common Stock of
the same class or series on the Announcement Date or on
the Determination Date, whichever is higher; or
3. The price per share equal to the Market Value
per share of Common Stock of the same class or series
determined pursuant to clause 2 of this Subsection (a),
multiplied by the fraction of:
a. The highest per share price, including
any brokerage commissions, transfer taxes and
soliciting dealers' fees, paid by the Interested
Shareholder for any shares of Common Stock of the
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same class or series acquired by it within the two-
year period immediately prior to the Announcement
Date, over
b. The Market Value per share of Common
Stock of the same class or series on the first day
in such two-year period on which the Interested
Shareholder acquired any shares of Common Stock.
(b) The aggregate amount of the cash and the Market Value as
of the Valuation Date of consideration other than cash to be
received per share by holders of shares of any class or series of
outstanding stock other than Common Stock is at least equal to the
highest of the following, whether or not the Interested Shareholder
has previously acquired any shares of a particular class or series
of stock:
1. The highest per share price, including any brokerage
commissions, transfer taxes and soliciting dealers' fees,
paid by the Interested Shareholder for any shares of such
class of stock acquired by it:
a. Within the two-year period immediately
prior to the Announcement Date of the proposal of
the Business Combination; or
b. In the transaction in which it became an
Interested Shareholder, whichever is higher; or
2. The highest preferential amount per share to which
the holders of shares of such class of stock are entitled in
the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company; or
3. The Market Value per share of such class of stock on
the Announcement Date or on the Determination Date, whichever
is higher; or
4. The price per share equal to the Market Value per
share of such class of stock determined pursuant to clause 3
of this Subsection (b), multiplied by the fraction of:
a. The highest per share price, including any
brokerage commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested Shareholder for any
shares of any class of Voting Stock acquired by it within
the two-year period immediately prior to the Announcement
Date, over
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b. The Market Value per share of the same class of
Voting Stock on the first day in such two-year period on
which the Interested Shareholder acquired any shares of
the same class of Voting Stock.
(c) In making any price calculation under Section (2) of this
Paragraph C, appropriate adjustments shall be made to reflect any
reclassification, including any reverse stock split;
recapitalization; reorganization; or any similar transaction which
has the effect of reducing the number of outstanding shares of the
stock. The consideration to be received by holders of any class or
series of outstanding stock is to be in cash or in the same form as
the Interested Shareholder has previously paid for shares of the
same class or series of stock. If the Interested Shareholder has
paid for shares of any class of stock with varying forms of
consideration, the form of consideration for such class of stock
shall be either cash or the form used to acquire the largest number
of shares of such class or series of stock previously acquired by
it.
(d) 1. After the Interested Shareholder has become an
Interested Shareholder and prior to the consummation of such
Business Combination:
a. There shall have been no failure to declare
and pay at the regular date therefore any full
periodic dividends, whether or not cumulative, on
any outstanding preferred stock of the Company;
b. There shall have been no reduction in the
annual rate of dividends paid on any class or
series of stock of the Company that is not pre-
ferred stock, except as necessary to reflect any
subdivision of the stock; and an increase in such
annual rate of dividends as necessary to reflect
any reclassification, including any reverse stock
split; recapitalization; reorganization; or any
similar transaction which has the effect of
reducing the number of outstanding shares of the
stock; and
c. The Interested Shareholder shall not
become the Beneficial owner of any additional
shares of stock of the Company except as part of
the transaction which resulted in such Interested
Shareholder becoming an Interested Shareholder or
by virtue of proportionate stock splits or stock
dividends.
2. The provisions of subclauses a and b of clause
1 do not apply if no Interested Shareholder or an
Affiliate or Associate of the Interested Shareholder
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voted as a director of the Company in a manner
inconsistent with such subclauses and the Interested
Shareholder, within ten (10) days after any act or
failure to act inconsistent with such subclauses,
notifies the Board of Directors of the Company in writing
that the Interested Shareholder disapproves thereof and
requests in good faith that the Board of Directors
rectify such act or failure to act.
(e) After the Interested Shareholder has become an Interested
Shareholder, the Interested Shareholder may not have received the
benefit, directly or indirectly, except proportionately as a
stockholder, of any loans, advances, guarantees, pledges or other
financial assistance provided by the Company or any Subsidiary,
whether in anticipation of or in connection with such Business
Combination or otherwise.
(3) (a) The vote required by Section B of this Article
Seventh does not apply to any Business Combination that is
approved by a majority of Continuing Directors at a meeting of
the Board of Directors at which a quorum consisting of at
least a majority of the Continuing Directors is present.
(b) Unless by its terms a resolution adopted under the
foregoing subsection (a) of this Section (3) is made
irrevocable, it may be altered or repealed by the Board of
Directors, but this shall not affect any Business Combinations
that have been consummated, or are the subject of an existing
agreement entered into, prior to the alteration or repeal.
D. Powers of the Board of Directors. A majority of the
Continuing Directors of the Company shall have the power and
duty to determine, on the basis of information known to them
after reasonable inquiry, all facts necessary to determine
compliance with this Article Seventh, including without
limitation, (a) whether a person is an Interested Shareholder,
(b) the number of shares of Voting Stock beneficially owned by
any person, (c) whether a person is an Affiliate or Associate
of another, (d) whether the assets which are the subject of
any Business Combination have, or the consideration to be
received for the issuance or transfer of securities by the
Company or any Subsidiary in any Business Combination has, an
aggregate book value or Market Value of five percent (5%) or
more of the total Market Value of the outstanding stock of the
Company or of its net worth, and (e) whether the requirements
of Paragraph C of this Article Seventh have been met.
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E. No Effect on Fiduciary Obligations of Interested
Shareholders. Nothing contained in this Article Seventh shall
be construed to relieve any Interested Shareholder from any
fiduciary obligation imposed by law.
F. Amendment or Repeal. Notwithstanding any other
provisions of this Article Seventh or of any other Article
hereof, or of the By-Laws of the Company (and notwithstanding
the fact that a lesser percentage may be specified from time
to time by law, this Article Seventh, any other Article
hereof, or the By-Laws of the Company), the provisions of this
Article Seventh may not be altered, amended or repealed in any
respect, nor may any provision inconsistent therewith be
adopted, unless such alteration, amendment, repeal or adoption
is approved by the affirmative vote of the holders of at
least: (i) 80% of the combined voting power of the then
outstanding Voting Stock of the Company, voting together as a
single class and (ii) 66-2/3% of the combined voting power of
the then outstanding Voting Stock (which is not beneficially
owned by any Interested Shareholder), voting together as a
single class.
EIGHTH. A. Number, Election and Terms of Directors. The
business of the Company shall be managed by a Board of
Directors. The number of directors of the Company shall be
fixed from time to time by or pursuant to the By-Laws of the
Company. Except as otherwise provided in or fixed by or
pursuant to the provisions of Article Fourth hereof relating
to the rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or
upon liquidation to elect directors under specified
circumstances, the directors shall be classified, with respect
to the time for which they severally hold office, into three
classes, as nearly equal in number as possible, as shall be
provided in the manner specified in the By-Laws of the
Company, one class to be originally elected for a term
expiring at the annual meeting of stockholders to be held in
1988, another class to be originally elected for a term
expiring at the annual meeting of stockholders to be held in
1989, and another class to be originally elected for a term
expiring at the annual meeting of stockholders to be held in
1990, with each member of each class to hold office until his
successor is elected and qualified. At each annual meeting of
stockholders of the Company and except as otherwise provided
in or fixed by or pursuant to the provisions of Article Fourth
hereof relating to the rights of the holders of any class or
series of stock having a preference over the Common Stock as
to dividends or upon liquidation to elect directors under
specified circumstances, the successors of the class of
directors whose term expires at that meeting shall be elected
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<PAGE>
to hold office for a term expiring at the annual meeting of
stockholders held in the third year following the year of
their election.
B. Stockholder Nomination of Director Candidates and
Introduction of Business. Advance notice of stockholder
nominations for the election of directors, and advance notice
of business to be brought by stockholders before an annual
meeting of stockholders, shall be given in the manner provided
in the By-Laws of the Company.
C. Newly Created Directorships and Vacancies. Except
as otherwise provided in or fixed by or pursuant to the
provisions of Article Fourth hereof relating to the rights of
the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon
liquidation to elect directors under specified circumstances:
(i) newly created directorships resulting from any increase in
the number of directors and any vacancies on the Board of
Directors resulting from death, resignation, disqualification,
removal or other cause shall be filled by the affirmative vote
of a majority of the remaining directors then in office, even
though less than a quorum of the Board of Directors; (ii) any
director elected in accordance with the preceding clause (i)
shall hold office for the remainder of the full term of the
class of directors in which the new directorship was created
or the vacancy occurred and until such director's successor
shall have been elected and qualified; and (iii) no decrease
in the number of directors constituting the Board of Directors
shall shorten the term of any incumbent director.
D. Removal. Except as otherwise provided in or fixed
by or pursuant to the provisions of Article Fourth hereof
relating to the rights of the holders of any class or series
of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect directors under
specified circumstances, any director may be removed from
office, with or without cause, only by the affirmative vote of
the holders of at least 80% of the combined voting power of
the then outstanding shares of the Company's stock entitled to
vote generally, voting together as a single class.
Notwithstanding the foregoing provisions of this Paragraph D,
if at any time any stockholders of the Company have cumulative
voting rights with respect to the election of directors and
less than the entire Board of Directors is to be removed, no
director may be removed from office if the votes cast against
his removal would be sufficient to elect him as a director if
then cumulatively voted at an election of the class of
directors of which he is a part. Whenever in this Article
Eighth or in Article Ninth hereof or in Article Tenth hereof,
the phrase, "the then outstanding shares of the
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Company's stock entitled to vote generally" is used, such
phrase shall mean each then outstanding share of any class or
series of the Company's stock that is entitled to vote
generally in the election of the Company's directors.
E. Amendment or Repeal. Notwithstanding any other
provisions of this Article Eighth or of any other Article
hereof or of the By-Laws of the Company (and notwithstanding
the fact that a lesser percentage may be specified from time
to time by law, this Article Eighth, any other Article hereof,
or the By-Laws of the Company), the provisions of this Article
Eighth may not be altered, amended or repealed in any respect,
nor may any provision inconsistent therewith be adopted,
unless such alteration, amendment, repeal or adoption is
approved by the affirmative vote of at least 80% of the
combined voting power of the then outstanding shares of the
Company's stock entitled to vote generally, voting together as
a single class.
NINTH. Any action required or permitted to be taken by
the stockholders of the Company at a meeting of such holders
may be taken without such a meeting only if a consent in
writing setting forth the action so taken shall be signed by
all of the stockholders entitled to vote with respect to the
subject matter thereof. Except as otherwise mandated by
Kentucky law and except as otherwise provided in or fixed by
or pursuant to the provisions of Article Fourth hereof
relating to the rights of the holders of any class or series
of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect directors under
specified circumstances, special meetings of stockholders of
the Company may be called only by the Board of Directors
pursuant to a resolution approved by a majority of the entire
Board of Directors or by the President of the Company.
Notwithstanding any other provisions of this Article Ninth or
of any other Article hereof or of the By-Laws of the Company
(and notwithstanding the fact that a lesser percentage may be
specified from time to time by law, this Article Ninth, any
other Article hereof, or the By-Laws of the Company), the
provisions of this Article Ninth may not be altered, amended
or repealed in any respect, nor may any provision inconsistent
therewith be adopted, unless such alteration, amendment,
repeal or adoption is approved by the affirmative vote of the
holders of at least 80% of the combined voting power of the
then outstanding shares of the Company's stock entitled to
vote generally, voting together as a single class.
TENTH. The Board of Directors shall have power to adopt,
amend and repeal the By-Laws of the Company to the maximum
extent permitted from time to time by Kentucky law; provided,
however, that any By-Laws adopted by the Board of
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Directors under the powers conferred hereby may be amended or
repealed by the Board of Directors or by the holders of at
least a majority of the combined voting power of the then
outstanding shares of the Company's stock entitled to vote
generally, voting together as a single class, except that, and
notwithstanding any other provisions of this Article Tenth or
of any other Article hereof or of the By-Laws of the Company
(and notwithstanding the fact that a lesser percentage may be
specified from time to time by law, this Article Tenth, any
other Article hereof or the By-Laws of the Company), no
provision of Section 2, Section 4 or Section 5 of Article I of
the By-Laws or of Section 1 of Article II of the By-Laws or of
Section 2 of Article IV of the By-Laws or of Article IX of the
By-Laws may be altered, amended or repealed in any respect,
nor may any provision inconsistent therewith be adopted,
unless such alteration, amendment, repeal or adoption is
approved by the affirmative vote of the holders of at least
80% of the combined voting power of the then outstanding
shares of the Company's stock entitled to vote generally,
voting together as a single class. Notwithstanding any other
provisions of this Article Tenth or of any other Article
hereof or of the By-Laws of the Company (and notwithstanding
the fact that a lesser percentage may be specified from time
to time by law, this Article Tenth, any other Article hereof
or the By-Laws of the Company), the provisions of this Article
Tenth may not be altered, amended or repealed in any respect,
nor may any provision inconsistent therewith be adopted,
unless such alteration, amendment, repeal or adoption is
approved by the affirmative vote of the holders of at least
80% of the combined voting power of the then outstanding
shares of the Company's stock entitled to vote generally,
voting together as a single class.
[The following are resolutions that were duly adopted by the
Company's Board of Directors and that set forth in accordance with
the Kentucky Business Corporation Act certain of the terms of
several series of the Company's Preferred Stock (without par
value).]
PREFERRED STOCK RESOLUTIONS
RESOLVED, By the Board of Directors of Louisville Gas and
Electric Company, a Kentucky corporation,
(1) That a series consisting of 250,000 shares of the
Preferred Stock (without par value) of the Company is hereby
created and established out of the authorized and unissued shares
of the Preferred Stock (without par value) of the Company; said
series, and each share thereof, shall be designated "$8.72
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Cumulative Preferred Stock (without par value)"; and all of said
two hundred and fifty thousand (250,000) shares of said series are
hereby authorized to be issued by the Company;
(2) That the annual dividend payable in respect of each
share of said series shall be $8.72; the initial dividend in
respect of such share of said series shall be payable on October
15, 1976, when and as declared by the Board of Directors of this
Company, to holders of record on September 30, 1976, and will
accrue from the date of original issuance of said series;
thereafter, such dividends shall be payable on January 15, April
15, July 15, and October 15 in each year (or the next business date
thereafter in each case), when and as declared by the Board of
Directors of this Company, for the quarter-yearly period ending on
the last business day of the preceding month;
(3) That the shares of said series shall be subject to
redemption, in whole at any time or in part from time to time, upon
the notice and in the manner and with the effect provided in the
Articles of Incorporation (as amended) of the Company; and the
redemption price or prices applicable to shares of said series
shall be $108.72 per share plus accrued and unpaid dividends to the
date of redemption if such date of redemption is prior to July 1,
1981; $105.00 per share plus accrued and unpaid dividends to the
date of redemption if such date of redemption is on or subsequent
to July 1, 1981, and prior to July 1, 1986; $103.00 per share plus
accrued and unpaid dividends to the date of redemption if such date
of redemption is on or subsequent to July 1, 1986, and prior to
July 1, 1991; and $101.00 per share plus accrued and unpaid
dividends to the date of redemption if such date of redemption is
on or subsequent to July 1, 1991; provided, that none of the shares
of said series may be redeemed by the Company prior to July 1,
1981, from the proceeds received through the incurring of debt, or
through the issuance of preferred stock ranking equally with or
prior to said series as to dividends or on liquidation, where such
debt has an effective interest cost or such preferred stock has an
effective dividend cost to the Company of less than the effective
dividend cost to the Company of said series.
(4) That the preferential amounts to which the holders of
shares of such series shall be entitled upon any liquidation,
dissolution or winding up of the Company, in addition to dividends
accumulated but unpaid thereon, shall be $100 per share, in the
event of any voluntary liquidation, dissolution or winding up of
the Company, except that if such voluntary liquidation, dissolution
or winding up of the Company shall have been approved by the vote
in favor thereof given at a meeting called for that purpose or by
the written consent of the holders of a majority of the total
shares of the $8.72 Cumulative Preferred Stock (without par value)
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<PAGE>
then outstanding, the amount so payable on such voluntary
liquidation, dissolution or winding up shall be $100 per share; or
$100 per share, in the event of any involuntary liquidation,
dissolution or winding up of the Company.
(5) That the shares of said series shall be subject to all
the terms, provisions and restrictions set forth in the Articles of
Incorporation (as amended) of the Company with respect to shares of
the Preferred Stock (without par value) of the Company and,
excepting only as to the rate of dividend per annum payable in
respect of the shares of said series, the redemption price or
prices applicable to the shares of said series, and the liquidation
price applicable to shares of said series, shall have the same
relative rights and preferences as, shall be of equal rank with,
and shall confer rights equal to those conferred by, all other
shares of the Preferred Stock (without par value) of the Company.
(6) That the stated value of the shares of said series
shall be $100 per share.
AND FURTHER RESOLVED: That prior to the issuance by the
Company of any shares of said $8.72 Cumulative Preferred Stock
(without par value), the Company shall execute and file in the
office of the Secretary of State of the State of Kentucky such
statement or certificate with respect to said shares as is required
by statutes of the State of Kentucky; and, after such filing of
said statement or certificate, the officers of the Company shall
cause the duplicate original thereof, when returned to the Company
by the Secretary of State, to be filed for record in the office of
the Clerk of the County Court of Jefferson County being the county
in which the registered office of the Company is situated.
____________________________
RESOLVED, By the Board of Directors of Louisville Gas and
Electric Company, a Kentucky corporation,
(1) That a series consisting of 250,000 shares of the
Preferred Stock (without par value) of the Company is hereby
created and established out of the authorized and unissued shares
of the Preferred Stock (without par value) of the Company; said
series, and each share thereof, shall be designated "$8.90
Cumulative Preferred Stock (without par value)"; and all of said
two hundred and fifty thousand (250,000) shares of said series are
hereby authorized to be issued by the Company;
(2) That the annual dividend payable in respect of each
share of said series shall be $8.90; the initial dividend in
respect of such share of said series shall be payable on October
16, 1978, when and as declared by the Board of Directors of this
Company, to holders of record on September 29, 1978, and will
accrue from the date of original issuance of said series;
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<PAGE>
thereafter, such dividends shall be payable on January 15, April
15, July 15, and October 15 in each year (or the next business date
thereafter in each case), when and as declared by the Board of
Directors of this Company, for the quarter-yearly period ending on
the last business day of the preceding month;
(3) That the shares of said series shall be subject to
redemption, in whole at any time or in part from time to time, upon
the notice and in the manner and with the effect provided in the
Articles of Incorporation (as amended) of the Company; and the
redemption price or prices applicable to shares of said series
shall be $108.90 per share plus accrued and unpaid dividends to the
date of redemption if such date of redemption is prior to July 1,
1983; $106.68 per share plus accrued and unpaid dividends to the
date of redemption if such date of redemption is on or subsequent
to July 1, 1983, and prior to July 1, 1988; $104.45 per share plus
accrued and unpaid dividends to the date of redemption if such date
of redemption is on or subsequent to July 1, 1988, and prior to
July 1, 1993; and $102.23 per share plus accrued and unpaid
dividends to the date of redemption if such date of redemption is
on or subsequent to July 1, 1993; provided, that none of the shares
of said series may be redeemed by the Company prior to July 1,
1983, from the proceeds received through the incurring of debt, or
through the issuance of preferred stock ranking equally with or
prior to said series as to dividends or on liquidation, where such
debt has an effective interest cost or such preferred stock has an
effective dividend cost to the Company of less than the effective
dividend cost to the Company of said series.
(4) That the preferential amounts to which the holders of
shares of such series shall be entitled upon any liquidation,
dissolution or winding up of the Company, in addition to dividends
accumulated but unpaid thereon, shall be $100 per share, in the
event of any voluntary liquidation, dissolution or winding up of
the Company, except that if such voluntary liquidation, dissolution
or winding up of the Company shall have been approved by the vote
in favor thereof given at a meeting called for that purpose or by
the written consent of the holders of a majority of the total
shares of the $8.90 Cumulative Preferred Stock (without par value)
then outstanding, the amount so payable on such voluntary
liquidation, dissolution or winding up shall be $100 per share; or
$100 per share, in the event of any involuntary liquidation,
dissolution or winding up of the Company.
(5) That the shares or said series shall be subject to all
the terms, provisions and restrictions set forth in the Articles of
Incorporation (as amended) of the Company with respect to shares of
the Preferred Stock (without par value) of the Company and,
excepting only as to the rate of dividend per annum payable in
respect of the shares of said series, the redemption price or
prices applicable to the shares of said series, and the liquidation
price applicable to shares of said series, shall have the same
28
<PAGE>
relative rights and preferences as, shall be of equal rank with,
and shall confer rights equal to those conferred by, all other
shares of the Preferred Stock (without par value) of the Company.
(6) That the stated value of the shares of said series
shall be $100 per share.
AND FURTHER RESOLVED: That prior to the issuance by the
Company of any shares of said $8.90 Cumulative Preferred Stock
(without par value), the Company shall execute and file in the
office of the Secretary of State of the State of Kentucky such
statement or certificate with respect to said shares as is required
by statutes of the State of Kentucky; and, after such filing of
said statement or certificate, the officers of the Company shall
cause the duplicate original thereof, when returned to the Company
by the Secretary of State, to be filed for record in the office of
the Clerk of the County Court of Jefferson County being the county
in which the registered office of the Company is situated.
__________________________
RESOLVED, By the Board of Directors of Louisville Gas and
Electric Company, a Kentucky corporation,
(1) That a series consisting of 250,000 shares of the
Preferred Stock (without par value) of the Company is hereby
created and established out of the authorized and unissued shares
of the Preferred Stock (without par value) of the Company; said
series, and each share thereof, shall be designated "$9.54
Cumulative Preferred Stock (without par value)"; and all of said
two hundred and fifty thousand (250,000) shares of said series are
hereby authorized to be issued by the Company;
(2) That the annual dividend payable in respect of each
share of said series shall be $9.54, the initial dividend in
respect of such share of said series shall be payable on January
15, 1980, when and as declared by the Board of Directors of this
Company, to holders of record on December 31, 1979, and will accrue
from the date of original issuance of said series; thereafter, such
dividends shall be payable on January 15, April 15, July 15, and
October 15 in each year (or the next business date thereafter in
each case), when and as declared by the Board of Directors of this
Company, for the quarter-yearly period ending on the last business
day of the preceding month;
(3) That the shares of said series shall be subject to
redemption, in whole at any time or in part from time to time, upon
the notice and in the manner and with the effect provided in the
Articles of Incorporation (as amended) of the Company; and the
redemption price or prices applicable to shares of said series
shall be $109.54 per share plus accrued and unpaid dividends to the
date of redemption if such date of redemption is prior to October
1, 1984; $107.16 per share plus accrued and unpaid dividends to the
29
<PAGE>
date of redemption if such date of redemption is on or subsequent
to October 1, 1984, and prior to October 1, 1989; $104.77 per share
plus accrued and unpaid dividends to the date of redemption if such
date of redemption is on or subsequent to October 1, 1989, and
prior to October 1, 1994; and $102.39 per share plus accrued and
unpaid dividends to the date of redemption if such date of
redemption is on or subsequent to October 1, 1994; provided, that
none of the shares of said series may be redeemed by the Company
prior to October 1, 1984, from the proceeds received through the
incurring of debt, or through the issuance of preferred stock
ranking equally with or prior to said series as to dividends or on
liquidation, where such debt has an effective interest cost or such
preferred stock has an effective dividend cost to the Company of
less than the effective dividend cost to the Company of said
series.
(4) That the preferential amounts to which the holders of
shares of such series shall be entitled upon any liquidation,
dissolution or winding up of the Company, in addition to dividends
accumulated but unpaid thereon, shall be $100 per share, in the
event of any voluntary liquidation, dissolution or winding up of
the Company, except that if such voluntary liquidation, dissolution
or winding up of the Company shall have been approved by the vote
in favor thereof given at a meeting called for that purpose or by
the written consent of the holders of a majority of the total
shares of the $9.54 Cumulative Preferred Stock (without par value)
then outstanding, the amount so payable on such voluntary
liquidation, dissolution or winding up shall be $100 per share; or
$100 per share, in the event of any involuntary liquidation,
dissolution or winding up of the Company.
(5) That the shares of said series shall be subject to all
the terms, provisions and restrictions set forth in the Articles of
Incorporation (as amended) of the Company with respect to shares of
the Preferred Stock (without par value) of the Company and,
excepting only as to the rate of dividend per annum payable in
respect of the shares of said series, the redemption price or
prices applicable to the shares of said series, and the liquidation
price applicable to shares of said series, shall have the same
relative rights and preferences as, shall be of equal rank with,
and shall confer rights equal to those conferred by, all other
shares of the Preferred Stock (without par value) of the Company.
(6) That the stated value of the shares of said series
shall be $100 per share.
AND FURTHER RESOLVED: That prior to the issuance by the
Company of any shares of said $9.54 Cumulative Preferred Stock
(without par value), the Company shall execute and file in the
office of the Secretary of State of the State of Kentucky such
statement or certificate with respect to said shares as is required
by statutes of the State of Kentucky; and, after such filing of
30
<PAGE>
said statement or certificate, the officers of the Company shall
cause the duplicate original thereof, when returned to the Company
by the Secretary of State, to be filed for record in the office of
the Clerk of the County Court of Jefferson County being the county
in which the registered office of the Company is situated.
STATE OF KENTUCKY
COUNTY OF JEFFERSON
I, C.M. HAYS, a notary public, do hereby certify that on this
7th day of October, 1987, personally appeared before me R. L. Royer
and W. W. Hancock, Jr., who, being by me first duly sworn,
severally declared and acknowledged before me that they are
President and Secretary, respectively, of Louisville Gas and
Electric Company, that they signed foregoing document as President
and Secretary, respectively, of the Corporation and that the
statements therein contained are true.
My Commission Expires: September 20, 1988
C. M. HAYS
Notary Public
This instrument prepared by:
______________________________
Charles G. Middleton, III
MIDDLETON & REUTLINGER
2500 Brown & Williamson Tower
Louisville, Kentucky 40242
(502) 584-1135
IN WITNESS WHEREOF, Louisville Gas and Electric Company has
caused these Restated Articles of Incorporation to be duly executed
by its President and its Secretary this 7th day of October 1987.
LOUISVILLE GAS AND ELECTRIC COMPANY
By: R. L. ROYER
President
By: W. W. HANCOCK, JR.
Secretary
31
<PAGE>
ARTICLES OF AMENDMENT TO
THE RESTATED ARTICLES OF INCORPORATION OF
LOUISVILLE GAS AND ELECTRIC COMPANY
Pursuant to the provisions of Kentucky Revised Statutes
271B.10-060, et seq., the undersigned Corporation adopts the
following Articles of Amendment to its Restated Articles of
Incorporation:
1. The name of the Corporation is Louisville Gas and
Electric Corporation.
2. The following Amendment to the Restated Articles of
Incorporation of Louisville Gas and Electric Company was
recommended by the Board of Directors and adopted at its Annual
Meeting of Shareholders on May 9, 1989 by its shareholders in the
manner prescribed by the Kentucky Business Corporation Act:
The Restated Articles of Incorporation of Louisville Gas and
Electric Company shall be amended by adding the following as
Article Eleventh and Twelfth:
ELEVENTH. A director of the Company shall not be
personally liable to the Company or its stockholders for
monetary damages for breach of his duties as a director,
except for liability (i) for any transaction in which the
director's personal financial interest is in conflict
with the financial interests of the Company or its
stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or are
known to the director to be a violation of law, (iii)
under Kentucky Revised Statutes 271B.8-330, or (iv) for
any transaction from which the director derived any
improper personal benefit. If the Kentucky Business
Corporation Act is amended after approval by the
stockholders of this Article to authorize corporate
action further eliminating or limiting the personal
liability of directors, then the liability of a director
of the Company shall be eliminated or limited to the
fullest extent permitted by the Kentucky Business
Corporation Act, as so amended.
Any repeal or modification of the foregoing
1
<PAGE>
paragraph by the stockholders of the Company shall not
adversely affect any right or protection of a director of the
Company existing at the time of such repeal or modification.
TWELFTH. A. RIGHT TO INDEMNIFICATION. Each person who was or is a
director of the Company and who was or is made a party or is
threatened to be made a party to or is otherwise involved
(including, without limitation, as a witness) in any action, suit
or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact
that he or she is or was a director or officer of the Company or is
or was serving at the request of the Company as a director,
officer, partner, trustee, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan
(hereinafter an "Indemnified Director"), whether the basis of such
proceeding is alleged action in an official capacity as a director
or officer or in any other capacity while serving as a director or
officer, shall be indemnified and held harmless by the Company to
the fullest extent permitted by the Kentucky Business Corporation
Act, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment
permits the Company to provide broader indemnification rights than
such law permitted the Company to provide prior to such amendment),
against all liability, all reasonable expense and all loss
(including, without limitation, judgments, fines, reasonable
attorneys' fees, ERISA excise taxes or penalties and amounts paid
in settlement) incurred or suffered by such Indemnified Director in
connection therewith and such indemnification shall continue as to
an Indemnified Director who has ceased to be a director and shall
inure to the benefit of the Indemnified Director's heirs, executors
and administrators. Each person who was or is an officer of the
Company and not a director of the Company and who was or is made a
party or is threatened to be made a party to or is otherwise
involved (including, without limitation, as a witness) in any
proceeding, by reason of the fact that he or she is or was an
officer of the Company or is or was serving at the request of the
Company as a director, officer, partner, trustee, employee or agent
of another corporation or of a partnership, joint venture, trust or
other enterprise, including service with respect to an employee
benefit plan (hereinafter an "Indemnified Officer"), whether the
basis of such proceeding is alleged action in an official capacity
as an officer or in any other capacity while serving as an officer,
shall be indemnified and held harmless by the Company against all
liability, all reasonable expense and all loss (including, without
limitation, judgments, fines, reasonable attorneys' fees, ERISA
excise taxes or penalties and amounts paid in settlement) incurred
or suffered by such Indemnified Officer to the same extent and
under the same conditions that the Company must indemnify an
Indemnified Director pursuant to the immediately preceding sentence
and to such further extent as is not contrary to public policy and
2
<PAGE>
such indemnification shall continue as to an Indemnified Officer
who has ceased to be an officer and shall inure to the benefit of
the Indemnified Officer's heirs, executors and administrators.
Notwithstanding the foregoing and except as provided in Paragraph
B of this Article Twelfth with respect to proceedings to enforce
rights to indemnification, the Company shall indemnify any
Indemnified Director or Indemnified Officer in connection with a
proceeding (or part thereof) initiated by such Indemnified Director
or Indemnified Officer only if such proceeding (or part thereof)
was authorized by the Board of Directors of the Company. As
hereinafter used in this Article Twelfth, the term "indemnitee"
means any Indemnified Director or Indemnified Officer. Any person
who is or was a director or officer of a subsidiary of the Company
shall be deemed to be serving in such capacity at the request of
the Company for purposes of this Article Twelfth. The right to
indemnification conferred in this Article shall include the right
to be paid by the Company the expenses incurred in defending any
such proceeding in advance of its final disposition (hereinafter an
"advancement of expenses"); provided, however, that, if the
Kentucky Business Corporation Act requires, an advancement of
expenses incurred by an indemnitee who at the time of receiving
such advance is a director of the Company shall be made only upon:
(i) delivery to the Company of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal
(hereinafter, a "final adjudication") that such indemnitee is not
entitled to be indemnified for such expenses under this Article or
otherwise; (ii) delivery to the Company of a written affirmation of
the indemnitee's good faith belief that he or she has met the
standard of conduct that makes indemnification by the Company
permissible under the Kentucky Business Corporation Act; and (iii)
determination that the facts then known to those making the
determination would not preclude indemnification under the Kentucky
Business Corporation Act. The right to indemnification and
advancement of expenses conferred in this Paragraph A shall be a
contract right.
B. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under
Paragraph A of this Article Twelfth is not paid in full by the
Company within sixty days after a written claim has been received
by the Company (except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty
days), the indemnitee may at any time thereafter bring suit against
the Company to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit or in a suit
brought by the Company to recover an advancement of expenses
pursuant to the terms of an undertaking, the indemnitee also shall
be entitled to be paid the expense of prosecuting or defending such
suit. In (i) any suit brought by the indemnitee to enforce a right
to indemnification hereunder (other than a suit to enforce a right
to an advancement of expenses brought by an indemnitee who will not
3
<PAGE>
be a director of the Company at the time such advance is made) it
shall be a defense that, and in (ii) any suit by the Company to
recover an advancement of expenses pursuant to the terms of an
undertaking the Company shall be entitled to recover such expenses
upon a final adjudication that, the indemnitee has not met the
standard that makes it permissible hereunder or under the Kentucky
Business Corporation Act (the "applicable standard") for the
Company to indemnify the indemnitee for the amount claimed. Neither
the failure of the Company (including its Board of Directors, a
committee of the Board of Directors, independent legal counsel or
its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee is
proper in the circumstances because the indemnitee has met the
applicable standard, nor an actual determination by the Company
(including its Board of Directors, a committee of the Board of
Directors, independent legal counsel or its stockholders) that the
indemnitee has not met the applicable standard, shall create a
presumption that the indemnitee has not met the applicable standard
or, in the case of such a suit brought by the indemnitee, shall be
a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses
hereunder, or by the Company to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that
the indemnitee is not entitled to be indemnified or to such
advancement of expenses under this Article Twelfth or otherwise
shall be on the Company.
C. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification
and to the advancement of expenses conferred in this Article
Twelfth shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute, these Articles of
Incorporation, any By-Law, any agreement, any vote of stockholders
or disinterested directors or otherwise.
D. INSURANCE. The Company may maintain insurance, at its
expense, to protect itself and any director, officer, employee or
agent of the Company or another corporation, partnership, joint
venture, trust or other enterprise against any expense, liability
or loss, whether or not the Company would have the power to
indemnify such person against such expense, liability or loss under
the Kentucky Business Corporation Act.
E. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Company
may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the advancement
of expenses to any employee or agent of the Company and to any
person serving at the request of the Company as an agent or
employee of another corporation or of a joint venture, trust or
other enterprise to the fullest extent of the provisions of this
Article Twelfth with respect to the indemnification and advancement
of expenses of either directors or officers of the Company.
4
<PAGE>
F. REPEAL OR MODIFICATION. Any repeal or modification of any
provision of this Article Twelfth shall not adversely affect any
rights to indemnification and to advancement of expenses that any
person may have at the time of such repeal or modification with
respect to any acts or omissions occurring prior to such repeal or
modification.
G. SEVERABILITY. In case any one or more of the provisions
of this Article Twelfth, or any application thereof, shall be
invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions in this
Article Twelfth, and any other application thereof, shall not in
any way be affected or impaired thereby.
3. The only voting group entitled to vote on the foregoing
amendment was owners of record on March 24, 1989 of the
Corporation's Common Stock (without par value) and Preferred Stock
($25 par value), voting together as one class.
4. The designation, number of outstanding shares, number of
votes entitled to be cast by the voting group entitled to vote on
the amendments and number of votes of the voting group indisputably
represented at the meeting were as follows:
Number of votes
Designation Number of Number of indisputably
(voting together outstanding votes represented at
as one class) shares entitled to the meeting
be cast
Common Stock
(without par
value) and
Preferred Stock
($25 par value) 22,442,261 22,442,261 19,098,496
5. The total number of votes cast for the amendment, against
the amendment and abstaining regarding the amendment by the voting
group entitled to vote on the amendment was as follows: 17,726,543
votes for, 960,522 votes against and 411,431 votes abstaining.
Therefore, the amendment passed by a favorable vote of 78.9%.
5
<PAGE>
IN TESTIMONY WHEREOF, witness the signatures of the duly
qualified officers of Louisville Gas and Electric Company this 25th
day of May 1989.
LOUISVILLE GAS AND ELECTRIC COMPANY
By:________________________________
R. L. Royer
President
By:________________________________
W. W. Hancock, Jr.
Secretary
STATE OF KENTUCKY
COUNTY OF JEFFERSON
I, C.M. HAYS, a notary public, do hereby certify that on this
25th day of May, 1989, personally appeared before me R. L. Royer
and W. W. Hancock, Jr., who, being by me first duly sworn,
severally declared and acknowledged before me that they are
President and Secretary, respectively, of Louisville Gas and
Electric Company, that they signed foregoing document as President
and Secretary, respectively, of the Corporation and that the
statements therein contained are true.
My Commission Expires: September 20, 1988
C. M. HAYS
Notary Public
This instrument prepared by:
______________________________
Charles G. Middleton, III
MIDDLETON & REUTLINGER
2500 Brown & Williamson Tower
Louisville, Kentucky 40242
(502) 584-1135
6
<PAGE>
ARTICLE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
LOUISVILLE GAS AND ELECTRIC COMPANY
To the Secretary of State of Kentucky:
Pursuant to the provisions of Chapter 271B of the Kentucky
Revised Statutes, the undersigned corporation hereby amends its
Articles of Incorporation, and for that purpose, submits the
following statement:
1. The name of the corporation is Louisville Gas and
Electric Company.
2. On February 5, 1992, the Board of Directors, acting on
behalf of the corporation, duly adopted the Amendment to
the Company's Articles of Incorporation attached hereto
as Exhibit A.
3. If not contained in the Amendment itself, the manner in
which any exchange, reclassification, or cancellation of
issued shares provided for in the Amendment shall be
implemented as follows:
Not Applicable
4. The Amendment is to be effective upon the filing of these
articles by the Secretary of State.
5. The amendment was duly adopted by the Board of Directors
without shareholder approval pursuant to 271B.10-020 and
271B.6-020 of the Kentucky Revised Statutes, and
shareholder action was not required.
Dated: February 5, 1992 LOUISVILLE GAS AND ELECTRIC COMPANY
Charles A. Markel, III
Senior Vice President and
Chief Financial Officer
7
<PAGE>
EXHIBIT A
AMENDMENT
The Restated Articles of Incorporation are hereby amended by
adding thereto a new Article Thirteenth which shall read in its
entirety as follows:
THIRTEENTH. A. Terms of Preferred Stock, Auction Series A (without
par value). The Company has classified 500,000 shares of the
Preferred Stock (without par value) as a series of such Preferred
Stock designated as "Preferred Stock, Auction Series A (without
par value)." The preferences, rights, qualifications and
restrictions of the shares of the "Preferred Stock, Auction Series
A (without par value)" shall be as follows:
(1) Authorized Shares: Units.
The shares of Preferred Stock, Auction Series A (without par
value) (hereinafter referred to as the "Series A Stock") shall be
purchased, sold, transferred and redeemed only in Units of 1,000
shares per unit (a "Unit"), except as provided in subsection (d)
of Section (5).
(2) Dividends.
(a) The Holders shall be entitled to receive, when and as
declared by the Board of Directors of the Company, out
of funds legally available therefor, cumulative cash
dividends at the dividend rate per annum, determined as,
and payable on the respective dates, set forth below.
(b) The dividend rate on shares of Series A Stock shall be
3.30% per annum during the period (the "Initial Dividend
Period") from February 11, 1992 (the "Date of Original
Issue") and ending on April 14, 1992 and shall be
payable on April 15, 1992 (the "Initial Dividend Payment
Date"). Subsequent dividends shall be equal to the rate
per annum that results from implementation of the
Auction Procedures, except in the case of a Payment
Failure. Notwithstanding the results of any Auction,
however, and subject to subsection (1) of this Section
(2), the dividend rate on the Series A Stock will not
exceed 25% per annum for any Dividend Period (as
hereinafter defined). Dividends on shares of Series A
Stock shall accrue from February 11, 1992.
(c) As of the end of the Initial Dividend Period and any
subsequent Dividend Period, the Board of Directors of
the Company may designate either (i) a Dividend Period
of three months which shall commence on the day imme-
1
<PAGE>
diately following the last day of the preceding Dividend
Period and shall end on the fourteenth day of January,
April, July or October next succeeding (a "Quarterly
Period") or (ii) a Dividend Period of either 49 days or
13 weeks (in either case, subject to adjustment for non-
Business Days and to meet the Minimum Holding Period, as
provided in subsection (g) of this Section (2)) (a
"Short-Term Period"). (The Initial Dividend Period, each
subsequent Quarterly Period and any Short-Term Period,
individually, is referred to herein as a "Dividend
Period".) If and when the Board of Directors designates
a Short-Term Period, each subsequent Dividend Period
shall be a Short-Term Period. In the event of a change
in law altering the minimum holding period (currently
found in Section 246(c) of the Internal Revenue Code of
1986, as amended (the "code")) (the "Minimum Holding
Period") required for taxpayers to be entitled to the
Dividends-Received Deduction, the length of each Short-
Term Period commencing after the effective date of such
change in law shall be adjusted so that the number of
days in such Short-Term Periods shall exceed the then-
current Minimum Holding Period; provided that, (i) the
Short-Term Period that originally was a 49-day Short-
Term Period shall not exceed by more than nine days the
length of the then-current Minimum Holding Period, (ii)
the number of days in any Short Term Period shall be
evenly divisible by seven, and (iii) the maximum number
of days in any Short-Term Period shall in no event
exceed 98 days. Upon any such change in the number of
days in a Short-Term Period, the Company shall give
notice of such change to the Trust Company, the
Securities Depository and each Existing Holder.
Notwithstanding the provisions of this subsection (c),
designation of a Short-Term Period shall be permitted
only after such amendments to these Articles as are
necessary to accommodate the payment of dividends for a
Short-Term Period have been duly adopted.
(d) The initial Short-Term Period shall end on a Wednesday
designated by the Board of Directors of the Company
which will be no earlier than the 46th day and no later
than the 98th day after the last day of the preceding
Quarterly Period (in any case, subject to adjustment for
non-Business Days and to meet the Minimum Holding
Period, as provided in subsection (g) of this Section
(2)). Each subsequent Short-Term Period will commence on
the day immediately following the last day of the
preceding Short-Term Period and will end (i) on the
seventh Wednesday thereafter, in the case of a 49-day
Short-Term Period or (ii) on the thirteenth Wednesday
thereafter, in the case of a 13-week Short-Term Period
(in each case, subject to adjustment for non-Business
2
<PAGE>
Days and to meet the Minimum Holding Period as provided
in subsection (g) of this Section (2)). In the absence
of a designation by the Board of Directors of the
Company to the contrary, each 49-day Short-Term Period
will be followed by a 49-day Short-Term Period and each
13-week Short Term Period will be followed by a 13-week
Short-Term Period.
(e) Following any amendment of these Articles to permit
dividend payments on a basis other than quarterly, and
without regard to the designation by the Board of
Directors of the Company of the duration of the next
succeeding Dividend Period, (i) if Sufficient Clearing
Bids do not result from an Auction, then the Dividend
Period to which such Auction relates will be a 49-day
Short-Term Period or (ii) if a Payment Failure has
occurred, then the Dividend Period during which such
Payment Failure has occurred, and each subsequent
Dividend Period until such Payment Failure has been
cured, will be a 49-day Short-Term Period (in each case,
subject to adjustment for non-Business Days and to meet
the Minimum Holding Period, as described in subsection
(g) of this Section (2)).
(f) Dividends with respect to any Quarterly Period will be
payable in arrears, when and as declared, on the
fifteenth day of each January, April, July and October,
unless such day is not a Business Day, in which case
they shall be payable on the next succeeding Business
Day (each a "Quarterly Dividend Payment Date").
Dividends with respect to any Short-Term Period shall be
payable in arrears, when and as declared, on the
Thursday next following the last day of the Short-Term
Period (a "Short-Term Dividend Payment Date"), except as
provided in subsection (g) of this Section (2). (Each
Quarterly Dividend Payment Date and Short-Term Dividend
Payment Date, individually, is referred to herein as a
"Dividend Payment Date.")
(g) Notwithstanding the provisions of subsections (c), (d),
(e) and (f), with respect to the Short-Term Dividend
Payment Date:
1. If the Thursday is not a Business Day, then the
Short-Term Dividend Payment Date shall be the
preceding Tuesday if both such Tuesday and the
Wednesday following such Tuesday are Business Days;
or
2. If the Friday following such Thursday is not a
Business Day, then the Short-Term Dividend Payment
Date will be the Wednesday preceding such Thursday
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<PAGE>
if both such Wednesday and such Thursday are
Business Days; or
3. If either (a) such Thursday is not a Business Day
and either the preceding Tuesday or Wednesday is
not a Business Day or (b) such Thursday is a
Business Day and the Friday following such Thursday
and such preceding Wednesday are not Business Days,
then the Short-Term Dividend Payment Date shall be
the first Business Day preceding such Thursday that
is next succeeded by a Business Day.
Even though any particular Short-Term Dividend Payment
Date may not occur on the originally scheduled Short-Term
Dividend Payment Date because of the adjustments provided
for in this subsection (g), the next succeeding Short-
Term Dividend Payment Date shall occur, subject to such
adjustments, on the seventh or the thirteenth Thursday,
as applicable, following the originally scheduled Short-
Term Dividend Payment Date. Notwithstanding the
foregoing, if any Short-Term Dividend Payment Date set
pursuant to this subsection (g) would occur in a number
of days after the immediately preceding Short-Term
Dividend Payment Date that is less than the number of
days in the then-current Minimum Holding Period, the
Short-Term Dividend Payment Date shall instead be the
next Business Day that (i) is at least a number of days
after the preceding Dividend Payment Date as to include
the then-current Minimum Holding Period and (ii) is next
succeeded by a Business Day. After any such adjustment
pursuant to this subsection (g) to the Dividend Payment
Date for any Short-Term Period, the last day of such
Short-Term Period shall also be adjusted so as to be the
day immediately preceding such Dividend Payment Date.
(h) Any designation by the Board of Directors of a Short Term
Period following a Quarterly Period shall be effective
upon written notice thereof given by the Company to the
Trust Company and to the Securities Depository prior to
1:00 P.M., New York City time, on the fifth Business Day
prior to the Auction Date. Any designation by the Board
of Directors of a change in the duration of the Short-
Term Period shall be effective upon written notice
thereof given by the Company to the Trust Company and to
the Securities Depository prior to 1:00 P.M., New York
City time, on the third Business Day prior to the Auction
Date.
(i) Dividends shall be payable to the Holders as their names
appear on the stock books of the Company or of the
registrar of the Series A Stock on the Business Day next
preceding the Dividend Payment Date in the case of a
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<PAGE>
Short-Term Period and on such date, not more than 30 days
and not less than 10 days, as may be fixed by the Board
of Directors, next preceding the Dividend Payment Date in
the case of a Quarterly Period; provided that, if a
Payment Failure exists, then such dividends shall be paid
to the Holders as their names appear on the stock books
on such date, not exceeding 15 days preceding the payment
date thereof, as may be fixed by the Board of Directors.
(j) Dividend rates for the shares of Series A Stock for each
Dividend Period (other than the Initial Dividend Period)
shall be equal to the rate per annum that results from
the Auction with respect to such Dividend Period;
provided that, (i) if a Payment Failure shall have
occurred, the dividend rate for all Dividend Periods
commencing on or after such Dividend Payment Date or
redemption date and until such Payment Failure has been
cured shall be a rate per annum equal to 250% of the
Applicable AA Composite Commercial Paper Rate on the
Business Day next preceding the commencement-of each such
Dividend Period (notwithstanding the results of any
Auction for any such Dividend Period); and (ii) if a
Payment Failure is remedied by reason of the Company
having paid all dividends accrued and unpaid, and all
unpaid redemption payments, on all shares of Series A
Stock, the dividend rate for each Dividend Period
commencing after the date on which the Payment Failure is
remedied shall again be determined by an Auction.
Notwithstanding the foregoing, and subject to subsection
(1) of this Section (2), the dividend rate for any
Dividend Period shall not exceed 25% per annum. The rate
per annum at which dividends are payable on shares of
Series A Stock for any Dividend Period (other than the
Initial Dividend Period) is hereinafter referred to as
the "Applicable Rate."
(k) The dividend per share to accrue and be payable on each
share of Series A Stock for the Initial Dividend Period
shall be computed by multiplying the product of 3.30%
(the dividend rate for the Initial Dividend Period) and
$100 by a fraction, the numerator of which shall be the
number of days in the Initial Dividend Period, including
the first and last days of such Initial Dividend Period,
and the denominator of which shall be 360. The dividend
per share to accrue and be payable on each share of
Series A Stock for each Quarterly Period shall be
computed by dividing by four the product of the
Applicable Rate for such Dividend Period and $100. The
dividend per share to accrue and be payable on each share
of Series A Stock for any Short-Term Period shall be
computed by multiplying the Applicable Rate for such
Short-Term Period by a fraction, the numerator of which
5
<PAGE>
shall be the number of days in such Short-Term Period,
including the first and last days of such Dividend
Period, and the denominator of which shall be 360, and
multiplying by $100 the rate so obtained.
(l) Notwithstanding anything to the contrary contained in
subarticle A of this Article Thirteenth, the dividend
rate for any Dividend Period on the Series A Stock shall
not exceed 25% per annum; provided, however, that if
paragraph (7)(B)(b) of Article Fourth hereof is amended
to provide a method for computing the dividend rate on
preferred stock having dividends determined pursuant to
an adjustable, floating or variable rate, then from and
after the date such amendment becomes effective, this
subsection (l), including the 25% restriction contained
in this subsection (l), shall cease to be operative, and
shall be of no force and effect and all references to
this subsection (l) in subarticle A of this Article
Thirteenth shall be of no force and effect.
(3) Definitions.
As used with respect to the shares of Series A Stock, the
following terms shall have the following meanings, unless the
context otherwise requires:
"Affiliate" shall mean any Person known to the Trust
Company to be controlled by, in control of or under
common control with the Company.
"Agent Member" shall mean a member of the Securities
Depository that will act on behalf of a Bidder and is
identified as such in such Bidder's Master Purchaser's
Letter.
"Applicable AA Composite Commercial Paper Rate," on any date,
shall mean (i) with respect to a 49-day Short-Term Period, (A)
the Interest Equivalent of the 60-day rate on commercial paper
placed on behalf of issuers whose corporate bonds are rated
"AA" by Standard & Poor's Corporation or its successor
("S&P"), or the equivalent of such rating by S&P or another
rating agency, as such 60-day rate is made available on a
discount basis or otherwise by the Federal Reserve Bank of New
York for the Business Day immediately preceding such date, or
(B) in the event that the Federal Reserve Bank of New York
does not make available such a rate, then the arithmetic
average of the Interest Equivalent of the 60-day rate on
commercial paper placed on behalf of such issuers, and as
quoted, on a discount basis or otherwise, to the Trust Company
for the close of business on the Business Day immediately
preceding such date by the Commercial Paper Dealers or (ii)
with respect to a Quarterly Period or a 13-week Short-Term
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<PAGE>
Period, the Interest Equivalent of the 90-day rate on such
commercial paper as so determined. In the event that either of
the Commercial Paper Dealers does not quote a rate required to
determine the Applicable AA Composite Commercial Paper Rate,
the Applicable AA Composite Commercial Paper Rate shall be
determined on the basis of the quotations furnished by the
remaining Commercial Paper Dealer and the Substitute
Commercial Paper Dealer selected by the Company to provide
such rate or, if the Company does not select any such
Substitute Commercial Paper Dealer, the remaining Commercial
Paper Dealer. If an adjustment is made to the length of a
Short-Term Period to comply with the Minimum Holding Period
pursuant to subsection (c) of Section (2), then if the
resulting number of days in each subsequent Short-Term Period,
before any adjustment shall be (i) 70 or more days but fewer
than 85 days, such rate shall be the arithmetic average of the
Interest Equivalent of the 60-day and 90-day rates on such
commercial paper, or (ii) 85 or more days but 98 or fewer
days, such rate shall be the Interest Equivalent of the 90-day
rate on such commercial paper.
"Applicable Rate" shall have the meaning specified in Section
(2), subsection (j).
"Auction" shall mean periodic implementation of the Auction
Procedures set forth herein.
"Auction Date" shall mean the Business Day immediately
preceding a Dividend Payment Date.
"Auction Procedures" shall mean the procedures for conducting
Auctions set forth in Section (4).
"Available Units" shall have the meaning specified in Section
(4), subsection (c), paragraph 1, subparagraph a.
"Bid" and "Bids" shall have the respective meanings specified
in Section (4), subsection (a), paragraph 1, subparagraph c.
"Bidder" and "Bidders" shall have the respective meanings
specified in Section (4), subsection (a), paragraph 1,
subparagraph c.
"Board of Directors" shall mean the Board of Directors of the
Company or any committee authorized by the Board of Directors
to perform any or all of the duties of the Board with respect
to the Series A Stock.
"Broker-Dealer" shall mean any broker-dealer or other entity
permitted by law to perform the functions required of a
Broker-Dealer in Sections (4) and (5), that is a member of, or
a participant in, the Securities Depository and that has been
7
<PAGE>
selected by the Company and has entered into a Broker-Dealer
Agreement with the Trust Company that remains effective.
"Broker-Dealer Agreement" shall mean an agreement between the
Trust Company and a Broker-Dealer pursuant to which such
Broker-Dealer agrees to follow the procedures specified in
Sections (4) and (5).
"Business Day" shall mean a day on which the New York Stock
Exchange, Inc. is open for trading and which is not a day on
which banks in New York City are authorized by law to close.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Commercial Paper Dealers" shall mean Goldman, Sachs & Co. and
Morgan Stanley & Co. Incorporated or, in lieu thereof, their
respective affiliates or successors that are engaged in the
business of buying and selling commercial paper.
"Date of Original Issue" shall have the meaning specified in
Section (2), subsection (b).
"Dividend Payment Date" shall have the meaning specified in
Section (2), subsection (f).
"Dividend Period" shall have the meaning specified in Section
(2), subsection (c).
"Dividends-Received Deduction" shall mean the dividends-
received deduction on preferred stock held by nonaffiliate
corporations (currently found in Section 243(a) of the Code).
"Existing Holder" shall mean a Person who has executed a
Master Purchaser's Letter and who is listed as the beneficial
owner of shares of Series A Stock in the records of the Trust
Company.
"Hold Order" and "Hold Orders" shall have the respective
meanings specified in Section (4), subsection (a), paragraph
1, subparagraph c.
"Holders" shall mean the holders of shares of the Series A
Stock as the same appear on the stock books of the Company or
the registrar of the Series A Stock.
"Initial Dividend Payment Date" shall have the meaning
specified in Section (2), subsection (b).
"Initial Dividend Period" shall have the meaning specified in
Section (2), subsection (b).
8
<PAGE>
"Interest Equivalent" shall mean the equivalent yield on a
360-day basis of a discount basis security to an interest-
bearing security.
"Master Purchaser's Letter" shall mean a letter addressed to
the Company, the Trust Company, the re-marketing agent, a
Broker-Dealer and an Agent Member in which the executing
Person agrees, among other things, to offer to purchase, to
purchase, to offer to sell and to sell shares of Series A
Stock as set forth in Section (4).
"Maximum Rate" for any Auction shall mean, subject to
subsection (1) of Section (2), the product of the Applicable
AA Composite Commercial Paper Rate on the Auction Date for
such Auction and the Rate Multiple.
"Minimum Holding Period" shall have the meaning specified in
Section (2), subsection (c).
"Minimum Rate" for any Auction shall mean, subject to
subsection (1) of Section (2), 58% of the Applicable AA
Composite Commercial Paper Rate on the Auction Date for such
Auction.
"Order" and "Orders" shall have the respective meanings
specified in Section (4), subsection (a), paragraph 1,
subparagraph c.
"Outstanding Shares" shall mean, as of any date, shares of
Series A Stock theretofore issued by the Company except,
without duplication, (i) any shares theretofore cancelled or
delivered to the Trust Company for cancellation or redeemed or
deemed to have been redeemed by the Company, (ii) any shares
as to which the Company or any Affiliate thereof shall be an
Existing Holder, and (iii) any shares represented by any
certificate in lieu of which a new certificate has been
executed and delivered by the Company.
"Outstanding Units" shall mean Units comprised of Outstanding
Shares.
"Payment Failure" shall mean a failure by the Company to pay
to the Holders on or within three Business Days (i) after any
Dividend Payment Date, the full amount of any dividends to be
paid on such Dividend Payment Date on any share of the Series
A Stock or (ii) after any redemption date, the redemption
price to be paid on that redemption date on any share of the
Series A Stock with respect to which a notice of redemption
has been given.
"Person" shall mean an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint
9
<PAGE>
venture or other entity or a government or any agency or
political subdivision thereof.
"Potential Holder" shall mean any Person, including any
Existing Holder, (i) who shall have executed a Master
Purchaser's Letter and (ii) who may be a prospective purchaser
of Units (or, in the case of an Existing Holder, additional
Units).
"Quarterly Dividend Payment Date" shall have the meaning
specified in Section (2), subsection (f).
"Quarterly Period" shall have the meaning specified in Section
(2), subsection (c).
"Rate Multiple," on any Auction Date, shall mean the
percentage determined as set forth below based on the
Prevailing Rating (as defined below) of the Series A Stock in
effect at the close of business on the Business Day
immediately preceding such Auction Date:
Prevailing Rating Percentage
AA/aa or above........................110%
A/a...................................150%
BBB/baa...............................200%
Below BBB/baa.........................250%
For purposes of this definition, the "Prevailing Rating" of
the Series A Stock shall be (i) AA/aa or above, if the Series
A Stock has a rating of AA- or better by S&P and a rating of
aa3 or better by Moody's Investors Service, Inc. or its
successor ("Moody's"), or the equivalent of both of such
ratings by a substitute rating agency or substitute rating
agencies selected as provided below, (ii) if not AA/aa or
above, then A/a, if the Series A Stock has a rating of A- or
better by S&P and a rating of a3 or better by Moody's, or the
equivalent of both of such ratings by a substitute rating
agency or substitute rating agencies selected as provided
below, (iii) if not AA/aa or above or A/a, then BBB/baa, if
the Series A Stock has a rating of BBB- or better by S&P and
a rating of baa3 or better by Moody's, or the equivalent of
both of such ratings by a substitute rating agency or substi-
tute rating agencies selected as provided below, and (iv) if
not AA/aa or above, A/a or BBB/baa, then Below BBB/baa. If
both S&P and Moody's fail to make such a rating available,
Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated, or
their successors and assigns, will select one or two
nationally recognized securities rating agencies to act as a
10
<PAGE>
substitute rating agency or agencies. The Company will take
all reasonable action necessary to enable S&P and Moody's, or
such substitute rating agency or agencies, to provide a rating
for the Series A Stock.
"Remaining Units" shall have the meaning specified in Section
(4), subsection (d), paragraph 1, subparagraph d.
"Securities Depository" shall mean The Depository Trust
Company and its successors and assigns or any other securities
depository selected by the Company which agrees to follow the
procedures required to be followed by such securities
depository in connection with shares of the Series A Stock.
"Sell Order" and "Sell Orders" shall have the respective
meanings specified in Section (4), subsection (a), paragraph
1, subparagraph c.
"Short-Term Dividend Payment Date" shall have the meaning
specified in Section (2), subsection (f).
"Short-Term Period" shall have the meaning specified in
Section (2), subsection (c).
"Submission Deadline" shall mean 1:00 P.M., New York City
time, on any Auction Date or such other time on any Auction
Date by which Broker-Dealers are required to submit Orders to
the Trust Company as specified by the Trust Company from time
to time.
"Submitted Bid" and "Submitted Bids" shall have the respective
meanings specified in Section (4), subsection (c), paragraph
1.
"Submitted Hold Order" and "Submitted Hold Orders" shall have
the respective meanings specified in Section (4), subsection
(c), paragraph 1.
"Submitted Order" shall have the meaning specified in Section
(4), subsection (c), paragraph 1.
"Submitted Sell Order" and "Submitted Sell Orders" shall have
the respective meanings specified in Section (4), subsection
(c), paragraph 1.
"Substitute Commercial Paper Dealer" shall mean any commercial
paper dealer that is a leading dealer in the commercial paper
market.
"Sufficient Clearing Bids" shall have the meaning specified in
Section (4), subsection (c), paragraph 1, subparagraph b.
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<PAGE>
"Trust Company" shall mean a bank or trust company duly
appointed as such with respect to the shares of the Series A
Stock.
"Unit" shall have the meaning specified in Section (1).
"Winning Bid Rate" shall have the meaning specified in Section
(4), subsection (c), paragraph 1, subparagraph c.
(4) Auction Procedures.
(a) Orders by Existing Holders and Potential Holders.
1. Prior to the Submission Deadline on each Auction Date:
a. Each Existing Holder may submit to a Broker-Dealer
by telephone information as to:
(i) the number of Outstanding Units, if any,
held by such Existing Holder that such
Existing Holder desires to continue to hold
for the next succeeding Dividend Period
without regard to the rate determined by the
Auction Procedures;
(ii) the number of Outstanding Units, if any,
that such Existing Holder desires to
continue to hold for the next succeeding
Dividend Period, if the rate determined by
the Auction Procedures shall not be less
than the rate per annum specified by such
Existing Holder; and/or
(iii) the number of Outstanding Units, if any,
held by such Existing Holder that such
Existing Holder offers to sell without
regard to the rate determined by the Auction
Procedures for the next succeeding Dividend
Period; and
b. Each Broker-Dealer, using a list of Potential
Holders, in good faith for the purpose of
conducting a competitive Auction in a commercially
reasonable manner, shall contact Potential Holders,
including Persons that are not Existing Holders, on
such list to determine the number of Outstanding
Units, if any, that each such Potential Holder
offers to purchase, if the rate determined by the
Auction Procedures for the next succeeding Dividend
Period shall not be less than the rate per annum
specified by such Potential Holder.
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<PAGE>
c. For the purposes hereof, the communication to a
Broker-Dealer of information referred to in
subparagraph a or subparagraph b of this paragraph
1 is referred to hereinafter as an "Order" and
collectively as "Orders," and each Existing Holder
and each Potential Holder placing an Order is
referred to hereinafter as a "Bidder" and
collectively as "Bidders;" an Order containing the
information referred to in clause (i) of
subparagraph a of this paragraph 1 is referred to
hereinafter as a "Hold Order" and collectively as
"Hold Orders;" an Order containing the information
referred to in clause (ii) of subparagraph a or
subparagraph b of this paragraph 1 is referred to
hereinafter as a "Bid" and collectively as "Bids;"
and an Order containing the information referred
to in clause (iii) of subparagraph a of this
paragraph 1 is referred to hereinafter as a "Sell
Order" and collectively as "Sell Orders."
d. On any Auction Date, a Bid submitted by an Existing
Holder shall constitute an irrevocable offer to
sell:
(i) the number of Outstanding Units specified in
such Bid if the rate determined by the
Auction Procedures on such Auction Date
shall be less than the rate specified in
such Bid; or
(ii) such number or a lesser number of
Outstanding Units to be determined as set
forth in subsection (d), paragraph 1,
subparagraph d, of this Section (4), if the
rate determined by the Auction Procedures on
such Auction Date shall be equal to the rate
specified in such Bid; or
(iii) a lesser number of Outstanding Units than
was specified in such Bid, to be determined
as set forth in subsection (d), paragraph 2,
subparagraph c, of this Section (4), if the
rate specified therein shall be higher than
the Maximum Rate and Sufficient Clearing
Bids do not exist.
e. On any Auction Date, a Sell Order by an Existing
Holder shall constitute an irrevocable offer to
sell:
(i) the number of Outstanding Units specified in
such Sell Order; or
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<PAGE>
(ii) such number or a lesser number of
Outstanding Units as set forth in subsection
(d), paragraph 2, subparagraph c, of this
Section (4) if Sufficient Clearing Bids do
not exist.
f. On any Auction Date, a Bid by a Potential Holder
shall constitute an irrevocable offer to purchase:
(i) the number of Outstanding Units specified in
such Bid if the rate determined by the
Auction Procedures on such Auction Date
shall be higher than the rate specified in
such Bid; or
(ii) such number or a lesser number of
Outstanding Units as set forth in subsection
(d), paragraph 1, subparagraph e, of this
Section (4) if the rate determined by the
Auction Procedures on such Auction Date
shall be equal to the rate specified in such
Bid.
g. On each Auction Date, the Trust Company shall
determine the Applicable AA Composite Commercial
Paper Rate and the Maximum Rate and shall notify
the Company and each Broker-Dealer of each such
rate not later than 9:30 A.M. on such Auction Date
or such other time on such Auction Date as
specified by the Trust Company with the consent of
the Company (which consent shall not be
unreasonably withheld).
(b) Submission of Orders by Broker-Dealers to Trust Company.
1. Each Broker-Dealer shall submit in writing to the Trust
Company prior to the Submission Deadline on each Auction
Date all Orders obtained by such Broker-Dealer and
specifying with respect to each Order:
a. The name of the Bidder placing such Order;
b. The aggregate number of Units that are the subject
of such Order;
c. To the extent that such Bidder is an Existing
Holder:
(i) the number of Units, if any, subject to any
Hold Order placed by such Existing Holder;
(ii) the number of Units, if any, subject to any
Bid placed by such Existing Holder and the
rate specified in such Bid; and
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<PAGE>
(iii) the number of Units, if any, subject to any
Sell Order placed by such Existing Holder;
and
d. To the extent such Bidder is a Potential Holder,
the number of Units and the rate specified in such
Potential Holder's Bid.
2. If any rate specified in any Bid contains more than three
figures to the right of the decimal point, the Trust
Company shall round such rate up to the next highest one
thousandth (.001) of 1%.
3. If, for any reason, an Order or Orders covering all of
the Outstanding Units held by any Existing Holder is not
submitted to the Trust Company prior to the Submission
Deadline, the Trust Company shall deem a Hold Order to
have been submitted on behalf of such Existing Holder
covering the number of Outstanding Units held by such
Existing Holder and not subject to Orders submitted to
the Trust Company.
4. If one or more Orders by an Existing Holder covering in
the aggregate more than the number of Outstanding Units
held by such Existing Holder are submitted to the Trust
Company by one or more Broker-Dealers on behalf of such
Existing Holder, such Orders shall be considered valid as
follows and in the following order of priority:
a. Any Hold Orders submitted on behalf of such
Existing Holder shall be considered valid up to and
including, in the aggregate, the number of
Outstanding Units held by such Existing Holder;
provided that, if more than one Hold Order is
submitted on behalf of such Existing Holder and the
number of Units subject to such Hold Orders exceeds
the number of Outstanding Units held by such
Existing Holder, the number of Units subject to
such Hold Orders shall be reduced pro rata so that
such Hold Orders shall cover only the number of
Outstanding Units held by such Existing Holder;
b. (i) Any Bid submitted on behalf of an Existing
Holder shall be considered valid up to and
including the excess of the number of
Outstanding Units held by such Existing
Holder over the number of Units subject to
valid Hold Orders of such Existing Holder
referred to in subparagraph a of this
paragraph 4,
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<PAGE>
(ii) subject to clause (i) of this subparagraph
b, if more than one Bid with the same rate
is submitted on behalf of such Existing
Holder and the aggregate number of
Outstanding Units subject to such Bids is
greater than the excess referred to in
clause (i) of this subparagraph b, such Bids
shall be considered valid up to the amount
of such excess and the number of Units
subject to such Bids shall be reduced pro
rata so that such Bids shall cover only the
number of Units equal to such excess,
(iii) subject to clause (i) of this subparagraph
b, if more than one Bid with different rates
is submitted on behalf of such Existing
Holder, such Bids shall be considered valid
in their entirety up to the excess referred
to in clause (i) of this subparagraph b in
the ascending order of their respective
rates, and
(iv) in any such event specified in this
subparagraph b, the number, if any, of such
Units subject to Bids not valid under this
subparagraph b shall be treated as the
subject of a Bid by a Potential Holder; and
c. Any Sell Order shall be considered valid up to and
including, in the aggregate, the excess of the
number of Outstanding Units held by such Existing
Holder over the sum of the Units subject to valid
Hold Orders of such Existing Holder referred to in
subparagraph a of this paragraph 4 and valid Bids
by such Existing Holder referred to in subparagraph
b of this paragraph 4.
5. In any Auction, if more than one Bid is submitted on
behalf of any Potential Holder, each Bid submitted shall
be a separate Bid with the rate and number of Units
therein specified.
6. Orders by Existing Holders and Potential Holders must
specify a whole number of Units. An Order that does not
specify a whole number of Units will not be considered a
Submitted Order for purposes of the Auction.
(c) Determination of Sufficient Clearing Bids, Winning Bid Rate
and Applicable Rate.
1. Not earlier than the Submission Deadline on each Auction
Date, the Trust Company shall assemble all Orders
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<PAGE>
submitted or deemed submitted to it by Broker-Dealers
(each such Order as submitted or deemed submitted by a
Broker-Dealer being referred to hereinafter individually
as a "Submitted Hold Order," a "Submitted Bid" or a
"Submitted Sell Order," as the case may be, or as a
"Submitted Order") and shall determine:
a. The excess of the total number of Outstanding Units
over the number of Outstanding Units that are the
subject of Submitted Hold Orders (such excess being
hereinafter referred to as the "Available Units");
b. From the Submitted Orders, whether the number of
Outstanding Units that are the subject of Submitted
Bids by Existing Holders and Potential Holders
specifying one or more rates equal to or lower than
the Maximum Rate exceeds or is equal to the sum of:
(i) the number of Outstanding Units that are the
subject of Submitted Bids by Existing
Holders specifying one or more rates higher
than the Maximum Rate, and
(ii) the number of Outstanding Units that are
subject to Submitted Sell Orders
(in the event of such excess or of such equality
(other than because the number of Units specified
in each of clauses (i) and (ii) of this
subparagraph b is zero because all of the
Outstanding Units are the subject of Submitted Hold
Orders) such Submitted Bids in this subparagraph b
are hereinafter referred to collectively as
"Sufficient Clearing Bids"); and
c. If Sufficient Clearing Bids exist, the lowest rate
specified in the Submitted Bids (the "Winning Bid
Rate") which if:
(i) (A) Each Submitted Bid from Existing Holders
specifying such Winning Bid Rate and (B) all
other Submitted Bids from Existing Holders
specifying lower rates were accepted, thus
entitling such Existing Holders to continue
to hold the Outstanding Units that are the
subject of such Submitted Bids, and
(ii) (A) Each Submitted Bid from Potential
Holders specifying such Winning Bid Rate and
(B) all other Submitted Bids from Potential
Holders specifying lower rates were
accepted, thus requiring the Potential
17
<PAGE>
Holders to purchase the Outstanding Units
that are subject to such Submitted Bids,
would result in such Existing Holders described in
clause (i) of this subparagraph c continuing to
hold an aggregate number of Outstanding Units that,
when added to the number of Outstanding Units to be
purchased by such Potential Holders described in
clause (ii) of this subparagraph c, would at least
equal the Available Units.
2. In connection with any Auction and promptly after the
Trust Company has made the determinations pursuant to
paragraph 1 of this subsection (c), the Trust Company
shall advise the Company of the Applicable AA Composite
Commercial Paper Rate and the Maximum Rate and, based on
such determinations, of the Applicable Rate for the next
succeeding Dividend Period and such other information as
follows:
a. If Sufficient Clearing Bids exist, that the
Applicable Rate for the next succeeding Dividend
Period shall be equal to the Winning Bid Rate so
determined;
b. If Sufficient Clearing Bids do not exist (other
than because all of the Outstanding Units are the
subject of Submitted Hold Orders), that the
Applicable Rate for the next succeeding Dividend
Period shall be the Maximum Rate; or
c. If all of the Outstanding Units are the subject of
Submitted Hold Orders, that the Applicable Rate for
the next succeeding Dividend Period shall be equal
to the Minimum Rate.
(d) Acceptance and Rejection of Submitted Bids and Submitted Sell
Orders and Allocation of Units.
Based on the determinations made pursuant to subsection (c),
paragraph 1, of this Section (4), the Submitted Bids and
Submitted Sell Orders shall be accepted or rejected and the
Trust Company shall take such other action as set forth below:
1. If Sufficient Clearing Bids have been made, subject to
the provisions of paragraphs 4 and 5 of this subsection
(d), Submitted Bids and Submitted Sell Orders shall be
accepted or rejected in the following order of priority
and all other Submitted Bids shall be rejected:
a. The Submitted Sell Orders of each Existing Holder
shall be accepted and the Submitted Bids of each
18
<PAGE>
Existing Holder specifying any rate that is higher
than the Winning Bid Rate shall be rejected, thus
requiring each such Existing Holder to sell the
Outstanding Units that are the subject of such
Submitted Sell Orders or Submitted Bids;
b. The Submitted Bids of each Existing Holder
specifying any rate that is lower than the Winning
Bid Rate shall be accepted, thus entitling each
such Existing Holder to continue to hold the
Outstanding Units that are the subject of such
Submitted Bids;
c. The Submitted Bids of each Potential Holder
specifying any rate that is lower than the Winning
Bid Rate shall be accepted, thus requiring such
Potential Holder to purchase the number of
Outstanding Units that are the subject of such
Submitted Bids;
d. The Submitted Bids of each Existing Holder
specifying a rate that is equal to the Winning Bid
Rate shall be accepted, thus entitling such
Existing Holder to continue to hold the Outstanding
Units that are the subject of each such Submitted
Bid, unless the number of Outstanding Units subject
to all such Submitted Bids of Existing Holders
shall be greater than the number of Outstanding
Units ("Remaining Units") equal to the excess of
the Available Units over the number of Outstanding
Units subject to Submitted Bids described in
subparagraphs b and c of this paragraph 1, in which
event the Submitted Bids of each such Existing
Holder shall be rejected, and each such Existing
Holder shall be required to sell Units, but only in
an amount equal to the difference between (i) the
number of Outstanding Units then held by such
Existing Holder subject to such Submitted Bid and
(ii) the number of Outstanding Units obtained by
multiplying (x) the number of Remaining Units by
(y) a fraction (the numerator of which shall be the
number of Outstanding Units held by such Existing
Holder subject to such Submitted Bid and the
denominator of which shall be the sum of the number
of Outstanding Units subject to such Submitted Bids
made by all such Existing Holders that specified a
rate equal to the Winning Bid Rate); and
e. The Submitted Bid of each Potential Holder
specifying a rate that is equal to the Winning Bid
Rate shall be accepted, but only in an amount equal
to the number of Outstanding Units obtained by
19
<PAGE>
multiplying (x) the difference between the
Available Units and the number of Outstanding Units
subject to Submitted Bids described in
subparagraphs b, c, and d of this paragraph 1 by
(y) a fraction (the numerator of which shall be the
number of Outstanding Units subject to such
Submitted Bid of such Potential Holder and the
denominator of which shall be the sum of the number
of Outstanding Units subject to Submitted Bids that
specified rates equal to the Winning Bid Rate
submitted by all such Potential Holders).
2. If Sufficient Clearing Bids have not been made (other
than because all of the Outstanding Units are subject to
Submitted Hold Orders), subject to the provisions of
paragraph 4 of this subsection (d), Submitted Orders
shall be accepted or rejected in the following order of
priority and all other Submitted Bids shall be rejected:
a. The Submitted Bids of each Existing Holder
specifying any rate that is equal to or lower than
the Maximum Rate shall be accepted, thus entitling
such Existing Holder to continue to hold the
Outstanding Units that are the subject of such
Submitted Bids;
b. The Submitted Bids of each Potential Holder
specifying any rate that is equal to or lower than
the Maximum Rate shall be accepted, thus requiring
such Potential Holder to purchase the Outstanding
Units that are the subject of such Submitted Bids;
and
c. The Submitted Bids of each Existing Holder
specifying any rate that is higher than the Maximum
Rate shall be rejected, and each Submitted Sell
Order of each Existing Holder shall be accepted,
thus requiring such Existing Holder to sell the
Outstanding Units that are the subject of each such
Submitted Bid or Submitted Sell Order, in both
cases only in an amount equal to the difference
between (i) the number of Outstanding Units then
held by such Existing Holder subject to such
Submitted Bid or Submitted Sell Order and (ii) the
number of Outstanding Units obtained by multiplying
(x) the difference between the Available Units and
the aggregate number of Outstanding Units subject
to Submitted Bids described in subparagraphs a and
b of this paragraph 2 by (y) a fraction (the
numerator of which shall be the number of
Outstanding Units held by such Existing Holder
subject to such Submitted Bid or Submitted Sell
20
<PAGE>
Order and the denominator of which shall be the
number of Outstanding Units subject to all such
Submitted Bids and Submitted Sell Orders of
Existing Holders).
3. If all of the Outstanding Units are the subject of
Submitted Hold Orders, all Submitted Bids shall be
rejected.
4. If, as a result of the procedures described in paragraph
1 or 2 of this subsection (d), any Existing Holder would
be entitled to hold or required to sell, or any Potential
Holder would be required to purchase, a fraction of a
Unit on any Auction Date, the Trust Company shall, in
such manner as, in its sole discretion, it shall
determine, round up or down the number of Units to be
held or sold by any Existing Holder or purchased by any
Potential Holder on such Auction Date so that the number
of Units held or sold by each Existing Holder or
purchased by any Potential Holder on such Auction Date
shall be a whole number of Units.
5. If, as a result of the procedures described in paragraph
1 of this subsection (d), any Potential Holder would be
entitled or required to purchase less than a whole Unit
on any Auction Date, the Trust Company shall, in such
manner as, in its sole discretion, it shall determine,
allocate Units for purchase among Potential Holders so
that only whole Units are purchased on such Auction Date
by any Potential Holder, even if such allocation results
in one or more of such Potential Holders not purchasing
Units on such Auction Date.
6. Based on the results of each Auction, the Trust Company
shall determine the aggregate number of Outstanding Units
to be purchased and the aggregate number of Outstanding
Units to be sold by Potential Holders and Existing
Holders on whose behalf each Broker-Dealer submitted Bids
or Sell Orders and, with respect to each Broker-Dealer,
to the extent that such aggregate number of Units to be
sold differ, determine to which other Broker-Dealer or
Broker-Dealers acting for one or more purchasers such
Broker-Dealer shall deliver, or from which other Broker-
Dealer or Broker-Dealers acting for one or more sellers
such Broker-Dealer shall receive, as the case may be,
Units.
(5) Miscellaneous.
(a) So long as the Applicable Rate is based on the results of
an Auction, an Existing Holder (i) may sell, transfer or
otherwise dispose of shares of Series A Stock only in
21
<PAGE>
Units and only pursuant to a Bid or Sell Order in
accordance with the Auction Procedures, or to or through
a Broker-Dealer or to a Person that has delivered a
signed copy of a Master Purchaser's Letter to the Trust
Company; provided that, in the case of all transfers
other than pursuant to Auctions, Such Existing Holder or
its Broker-Dealer or its Agent Member advises the Trust
Company of Such transfer, and (ii) shall have the
ownership of the shares of Series A Stock held by it
maintained in book entry form by the Securities
Depository in the account of its Agent Member, which in
turn will maintain account records of Such Existing
Holder's beneficial ownership.
(b) Neither the Company nor any Affiliate thereof may submit
an Order in any Auction.
(c) All references to time of day refer to New York City
time.
(d) From and during the continuance of a Payment Failure and
during any period in which there shall not be a
Securities Depository, shares of Series A Stock may be
registered for transfer or exchange and new certificates
issued upon surrender of the old certificates properly
endorsed for transfer, with (i) all necessary endorsers'
signatures guaranteed in such manner and form as the
Trust Company (or such other transfer agent or registrar)
may require by a guarantor reasonably believed by the
Trust Company (or such other transfer agent or registrar)
to be responsible, (ii) accompanied by such assurances as
the Trust Company (or such other transfer agent or
registrar) shall deem necessary or appropriate to
evidence the genuineness and effectiveness of each
necessary endorsement and (iii) satisfactory evidence of
compliance with all applicable laws relating to the
collection of taxes or funds necessary for the payment of
such taxes.
(e) Commencing with the Dividend Payment Date for which a
Payment Failure occurs, the Company or an Affiliate
thereof, at the option of the Company, may perform any of
the functions to be performed by the Trust Company or the
Securities Depository set forth herein.
(f) The Board of Directors of the Company may interpret the
provisions of the Auction Procedures as set forth herein
to resolve any inconsistency or ambiguity which may arise
or be revealed in connection therewith, and, if such
inconsistency or ambiguity reflects an inaccurate
22
<PAGE>
provision hereof, the Board of Directors of the Company
may, in appropriate circumstances, authorize the filing
of a corrected Articles of Amendment.
(g) Shares of Series A Stock which have been redeemed or
otherwise acquired by the Company or any Affiliate are
not subject to reissuance as Series A Stock.
(6) Redemption.
The shares of Series A Stock shall be subject to
redemption, in whole or in part on any Dividend Payment Date,
upon the notice and in the manner and with the effect provided
in Article Fourth of these Articles; provided that if such
Article Fourth is amended to grant the Company's Board of
Directors in certain instances the authority to determine the
time, form and manner of a notice of redemption, from and
after the date such amendment becomes effective, publication
of notice of the redemption of the Series A Stock shall not be
required and notice of such redemption shall be sufficient if
mailed at least thirty (30) days prior to redemption to the
holders of record of the Series A Stock so to be redeemed, at
their respective addresses as the same shall appear on the
books of the Company, but no failure to mail a particular
notice nor any defect therein or in the mailing thereof shall
affect the validity of the proceedings for the redemption of
those shares of Series A Stock for which proper notice has
been given; provided further that all other terms of Article
Fourth, as amended, relating to the redemption of shares of
Preferred Stock and Preferred Stock (without par value) shall
continue to apply to the redemption of the Series A Stock. The
notice of redemption shall include a statement setting forth
(i) the number of shares of the Series A Stock to be redeemed
(if applicable to be denominated in Units), (ii) the date
fixed for redemption and (iii) the redemption price. So long
as shares of Series A Stock are held of record by the nominee
of the Securities Depository, the Company need only give
notice to the Securities Depository of any such redemption.
The redemption price or prices applicable to shares of said
series shall be $100.00 per share plus accrued and unpaid
dividends to the date of redemption. Unless the shares of
Series A Stock shall have been registered for transfer and
exchange as provided in subsection (d) of Section (5),
redemptions shall be made only in whole Units.
(7) Voluntary or Involuntary Liquidation.
The preferential amounts to which the holders of Series
A Stock shall be entitled upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, in
addition to dividends accumulated but unpaid thereon, shall be
$100 per share.
23
<PAGE>
(8) Stated Value.
The stated value of the Series A Stock shall be $100 per
share.
* * *
24
<PAGE>
ARTICLE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
LOUISVILLE GAS AND ELECTRIC COMPANY
To the Secretary of State of Kentucky:
Pursuant to the provisions of Chapter 271B of the Kentucky
Revised Statutes, the undersigned corporation hereby amends its
Articles of Incorporation, and for that purpose, submits the
following statement:
1. The name of the corporation is Louisville Gas and
Electric Company.
2. On April 21, 1992, the stockholders of the corporation
duly adopted the Amendment to the Company's Articles of
Incorporation attached hereto as Exhibit A.
3. If not contained in the Amendment itself, the manner in
which any exchange, reclassification, or cancellation of
issued shares provided for in the Amendment shall be
implemented as follows:
Not Applicable
4. The Amendment was duly adopted on April 21, 1992, to be
effective from the date of filing with the Secretary of
State.
5. The Amendment was duly adopted by the shareholders of the
corporation and:
(i) the designation, number of outstanding shares and
number of votes entitled to be cast by each voting
group entitled to vote separately on the Amendment
were:
Number of Number of Votes
Designation Outstanding Shares Entitled to be Cast
Common Stock 21,294,223 21,294,223
Preferred Stock 750,000 750,000
(without par value)
Preferred Stock 1,718,415 1,718,415
(par value $25 per
share)
Preferred Stock 2,468,415 2,468,415
(without par value
and par value $25
per share)
25
<PAGE>
(ii) the total number of undisputed votes cast for the
plan by each voting group entitled to vote
separately on the Amendment was:
Total Number of Undisputed
Voting Group Votes Case for the Amendment
Common Stock 21,294,223
Preferred Stock 488,246
(without par value)
Preferred Stock 1,231,844
(par value $25 per
share)
Preferred Stock 1,720,090
(without par value
and par value $25
per share)
and the number of votes cast for the Amendment by each voting
group was sufficient for approval by that group.
Dated: March 24, 1993 LOUISVILLE GAS AND ELECTRIC COMPANY
Charles A. Markel, III
Treasurer
26
<PAGE>
EXHIBIT A
AMENDMENTS TO ARTICLE FOURTH OF
RESTATED ARTICLES OF INCORPORATION OF
LOUISVILLE GAS AND ELECTRIC COMPANY
1. Paragraph (1) of Article Fourth shall be amended to read as
follows:
PREFERRED STOCK AND PREFERRED STOCK (WITHOUT PAR VALUE)
(1) In addition to the series of Cumulative Preferred
Stock, described in paragraphs (10) through (13)
hereof, the Board of Directors is hereby authorized,
subject to and in accordance with the provisions of
paragraphs (1) through (9), inclusive, to cause
Preferred Stock (without par value) to be issued in
series, each such series to have such variations in
respect thereof as may be determined by the Board of
Directors prior to the issuance thereof.
The shares of the Preferred Stock of different
series may vary as to:
(a) The distinctive serial designations and
number of shares of such series;
(b) The rate of dividends (within such
limits as shall be permitted by law not exceeding
8% per annum) payable on the shares of the
particular series;
(c) The prices (not less than the amount
limited by law) and terms upon which the shares of
the particular series may be redeemed; and
(d) The amount or amounts which shall be
paid to the holders of the shares of particular
series in case of voluntary or involuntary
dissolution or any distribution of assets.
The shares of the Preferred Stock (without par
value) of different series may vary as to:
(a) The distinctive serial designations and
number of shares of such series;
(b) The stated value thereof;
(c) The rate or rates of dividends (within
such limits as shall be permitted by law) payable
on the shares of the particular series, which may
be expressed in terms of a formula or other method
by which such rate or rates shall be calculated
from time to time, and the dividend periods,
1
<PAGE>
including the date or dates on which dividends are
payable;
(d) The prices (not less than the amount
limited by law) and terms (including sinking fund
provisions) upon which the shares of the
particular series may be redeemed; and
(e) The amount or amounts which shall be
paid to the holders of the shares of the
particular series in case of voluntary or
involuntary dissolution or any distribution of
assets.
The shares of all series of Preferred Stock and
Preferred Stock (without par value) shall in all
other respects be identical, except that the
Preferred Stock (without par value) shall not have
the voting rights of the Preferred Stock provided
by paragraph 9(A) hereof.
2. Paragraph (2) of Article Fourth shall be amended to read as
follows:
(2) The holders of each series of the Preferred Stock and
the Preferred Stock (without par value) at the time
outstanding shall be entitled, pari passu with the holders
of every other series of the Preferred Stock and the
Preferred Stock (without par value), to receive, but only
when and as declared by the Board of Directors, out of funds
legally available for the payment of dividends, cumulative
preferential dividends, at the dividend rate or rates for
the particular series fixed therefor as herein provided,
payable on such dates or for such period or periods as may
be specified by the Board of Directors at the time of
establishment of such series, to stockholders of record on
the respective dates, not exceeding thirty (30) days
preceding such dividend payment dates, fixed for the purpose
by the Board of Directors. No dividends shall be declared on
any series of the Preferred Stock or the Preferred Stock
(without par value) in respect of any dividend period unless
there shall likewise be declared on all shares of all other
series of the Preferred Stock and the Preferred Stock
(without par value) at the time outstanding, like
proportionate dividends, ratably, in proportion to the
respective dividend rates fixed therefor, in respect of the
same dividend period, to the extent that such shares are
entitled to receive dividends for such dividend period. The
dividends on shares of all series of the Preferred Stock and
the Preferred Stock (without par value) shall be cumulative.
In the case of all shares of each particular series, the
dividends on shares of such series shall be cumulative from
2
<PAGE>
the date of issue thereof unless the Board of Directors at
the time of establishing such series specifies that such
dividends shall be cumulative from the first day of the
current dividend period in which shares of such series shall
have been issued, so that unless dividends on all
outstanding shares of each series of the Preferred Stock and
the Preferred Stock (without par value), at the dividend
rate or rates and from the dates for accumulation thereof
fixed as herein provided shall have been paid for all past
dividend periods, but without interest on cumulative
dividends, no dividends shall be paid or declared and no
other distribution shall be made on the Common Stock and no
Common Stock shall be purchased or otherwise acquired for
value. The holders of the Preferred Stock and the Preferred
Stock (without par value) of any series shall not be
entitled to receive any dividends thereon other than the
dividends referred to in this paragraph (2).
3. The first sentence of paragraph (3) of Article Fourth shall
be amended by deleting the phrase "annual dividend rate" and
inserting in lieu thereof the phrase "dividend rate or
rates."
4. The second and third sentences of paragraph (3) of Article
Fourth shall be amended to read as follows:
Notice of every such redemption shall be given (i) at
such time, in such form and in such manner as may have been
determined and fixed for each series of Preferred Stock and
Preferred Stock (without par value) at the time of
establishment of such series or (ii) if such matters shall
not have been so fixed by the Board of Directors, by
publication at least once in one daily newspaper printed in
the English language and of general circulation in
Louisville, Kentucky, the first publication in such
newspaper to be at least thirty (30) days prior to the date
fixed for such redemption, and at least thirty (30) days'
previous notice of every such redemption shall also be
mailed to the holders of record of the shares of the
Preferred Stock or the Preferred Stock (without par value)
so to be redeemed, at their respective addresses as the same
shall appear on the books of the Company; but no failure to
mail such notice nor any defect therein or in the mailing
thereof shall affect the validity of the proceedings for the
redemption of any shares of the Preferred Stock or the
Preferred Stock (without par value) so to be redeemed.
5. The last sentence of paragraph (3) of Article Fourth shall
be amended by deleting the phrase "by publication" wherever
it appears.
3
<PAGE>
6. The first sentence of paragraph (4) of Article Fourth shall
be amended by deleting the phrase "annual dividend rate" and
inserting in lieu thereof the phrase "dividend rate or
rates."
7. Paragraph 5 of Article Fourth shall be amended by deleting
the phrase "quarterly-yearly."
8. Subdivision 7(B)(b) of Article Fourth shall be amended to
read as follows:
(b) Issue, sell or otherwise dispose of any shares of
the Preferred Stock or the Preferred Stock (without par
value), or of any class of stock ranking prior to or on a
parity with the Preferred Stock and the Preferred Stock
(without par value) of each series as to dividends or
distributions, unless the net income of the Company,
determined in accordance with generally accepted accounting
practices, to be available for the payment of dividends on
the Preferred Stock, the Preferred Stock (without par value)
and any class of stock ranking prior thereto or on a parity
therewith as aforesaid, for a period of twelve (12)
consecutive calendar months within the fifteen (15) calendar
months immediately preceding the issuance, sale or
disposition of such stock, is at least equal to twice the
annual dividend requirements on the entire amount of all
Preferred Stock, all Preferred Stock (without par value),
and of all such other classes of stock ranking prior thereto
or on a parity therewith, as to dividends or distributions
to be outstanding immediately after the issuance, sale or
disposition of such additional shares; provided that for
purposes of calculating the annual dividend requirements
applicable to any series of Preferred Stock (without par
value) proposed to be issued which will have dividends
determined according to an adjustable, floating or variable
rate, the dividend rate used shall be the higher of (1) the
dividend rate applicable to such series of Preferred Stock
(without par value) on the date of such calculation or (2)
the average dividend rate payable on all series of Preferred
Stock and Preferred Stock (without par value) during the
twelve month period immediately preceding the date of such
calculation; provided further that for purposes of
calculating the annual dividend requirements applicable to
any series of Preferred Stock (without par value)
outstanding at the date of such proposed issue and having
dividends determined according to an adjustable, floating or
variable rate, the dividend rate used shall be: (1) if such
series of Preferred Stock (without par value) has been
outstanding for at least twelve months, the actual amount of
dividends paid on account of such series of Preferred Stock
(without par value) for the twelve-month period immediately
preceding the date of such calculation, or (2) if such
4
<PAGE>
series of Preferred Stock (without par value) has been
outstanding for less than twelve months, the average
dividend rate payable on such series of Preferred Stock
(without par value) during the period immediately preceding
the date of such calculation; or
9. The first sentence of Subdivision 9(B) of Article Fourth
shall be amended to read as follows:
(B) If and when dividends shall be in default in an amount
equivalent to dividends for the immediately preceding
eighteen months on all shares of all series of the Preferred
Stock and the Preferred Stock (without par value) at the
time outstanding, and until all dividends in default on such
Preferred Stock and such Preferred Stock (without par value)
shall have been paid, the holders of all shares of the
Preferred Stock and all shares of the Preferred Stock
(without par value), voting separately as one class, shall
be entitled to elect the smallest number of Directors
necessary to constitute a majority of the full Board of
Directors, and the holders of the Common Stock, voting
separately as a class, shall be entitled to elect the
remaining Directors of the Company.
5
<PAGE>
ARTICLE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
LOUISVILLE GAS AND ELECTRIC COMPANY
To the Secretary of State of Kentucky:
Pursuant to the provisions of Chapter 271B of the Kentucky
Revised Statutes, the undersigned corporation hereby amends its
Articles of Incorporation, and for that purpose, submits the
following statement:
1. The name of the corporation is Louisville Gas and
Electric Company.
2. On May 13, 1993, the Executive Committee of the Board
of Directors, acting on behalf of the corporation, duly
adopted the following Amendments to its Articles of
Incorporation. A copy of the text is attached hereto
as Exhibit A and incorporated by reference herein as
the text of a new subarticle B of Article Thirteenth.
3. If not contained in the Amendment itself, the manner in
which any exchange, reclassification, or cancellation
of issued shares provided for in the Amendment shall be
implemented as follows:
Not Applicable
4. The Amendment is to be effective upon the filing of
these articles by the Secretary of State.
5. The amendment was duly adopted by the Executive
Committee of the Board of Directors without shareholder
approval pursuant to 271B.10-020 and 271B.6-020 of the
Kentucky Revised Statutes, and shareholder action was
not required.
Dated: May 19, 1993 LOUISVILLE GAS AND ELECTRIC COMPANY
Charles A. Markel, III
Treasurer
6
<PAGE>
AMENDMENT
The Restated Articles of Incorporation are hereby amended
by adding thereto a new subarticle B to Article Thirteenth which
subarticle B shall read in its entirety as follows:
B. Terms of $5.875 Cumulative Preferred Stock
(without par value).
The Company has classified 250,000 shares of the Preferred Stock
(without par value) as a series of such Preferred Stock
designated as "$5.875 Cumulative Preferred Stock (without par
value)." The preferences, rights, qualifications and restrictions
of the shares of the "$5.875 Cumulative Preferred Stock (without
par value)," shall be as follows:
(1) The annual dividend payable in respect of each
share of said series shall be $5.875; and the initial
dividend in respect of each share of said series shall be
payable on July 15, 1993, when and as declared by the Board
of Directors of this Company, to holders of record on June
30, 1993, and will accrue from the date of original issuance
of said series; thereafter, such dividends shall be payable
on January 15, April 15, July 15 and October 15 in each year
(or the next business date thereafter in each case), when
and as declared by the Board of Directors of this Company,
for the quarter-yearly period ending on the last business
day of the preceding month.
(2) The shares of said series are not subject to
redemption prior to July 1, 1998. On and after July 1, 1998,
the shares of said series shall be subject to redemption, in
whole or in part, in the manner and with the effect provided
in these Articles; and the redemption price or prices
applicable to shares of said series shall be $105.875 per
share plus accrued and unpaid dividends to the date of
redemption if such date of redemption is on or subsequent to
July 1, 1998, and prior to July 1, 1999; $104.700 per share
plus accrued and unpaid dividends to the date of redemption
if such date of redemption is on or subsequent to July
1,1999, and prior to July 1, 2000; $103.525 per share plus
accrued and unpaid dividends to the date of redemption if
such date of redemption is on or subsequent to July 1, 2000,
and prior to July 1, 2001; $102.350 per share plus accrued
and unpaid dividends to the date of redemption if such date
of redemption is on or subsequent to July 1, 2001, and prior
to July 1, 2002; $101.175 per share plus accrued and unpaid
dividends to the date of redemption if such date of
redemption is on or subsequent to July 1, 2002, and prior to
July 1, 2003; and $100.000 per share plus accrued and unpaid
dividends thereafter.
1
<PAGE>
Notice of every such redemption shall be mailed at
least thirty (30) days prior to redemption to the holders of
record of the $5.875 Cumulative Preferred Stock (without par
value) so to be redeemed, at their respective addresses as
the same shall appear on the books of the Company, but no
failure to mail a particular notice nor any defect therein
or in the mailing thereof shall affect the validity of the
proceedings for the redemption of those shares of $5.875
Cumulative Preferred Stock (without par value) for which
proper notice has been given.
(3) So long as any shares of said series shall remain
outstanding, the Company shall on or before July 15, 2003,
and on or before July 15 of each year thereafter to and
including July 15, 2007, set aside, separate and apart from
its other funds, an amount equal to $1,250,000 (or such
lesser amount as may be sufficient to redeem all of the
shares of said series then outstanding) and shall on or
before July 15, 2008 (each such July 15 being hereinafter in
this Section 3 called a "Sinking Fund Redemption Date"), set
aside, separate and apart from its other funds, an amount
equal to $18,750,000 (or such lesser amount as may be
sufficient to redeem all the shares of said series then
outstanding) as a mandatory sinking fund payment for the
exclusive benefit of shares of said series, plus such
further amount as shall equal the accrued and unpaid
dividends on the shares of said series to be redeemed out of
such payment (as hereinafter in this Section 3 provided)
through the day preceding the applicable Sinking Fund
Redemption Date. The obligation of the Company to make such
payment shall be cumulative, so that if for any reason the
full amount thereof shall not be set aside for any year, the
amount of the deficiency from time to time shall be added to
the amount due from the Company on subsequent Sinking Fund
Redemption Dates (or, if such deficiency exists on July 15,
2008, on subsequent quarterly dividend payment dates
thereafter for such series) until the deficiency shall have
been fully satisfied. The Company shall be entitled to
credit against any such mandatory sinking fund payment
shares of said series redeemed by the Company at the
Company's option, purchased by the Company in the open
market or otherwise acquired by the Company, except through
application of any sinking fund payment, and not theretofore
so credited, at the sinking fund redemption price
hereinafter specified in this Section 3.
Any amounts set aside by the Company pursuant to this
Section 3 shall be applied on the date of such setting aside
if a Sinking Fund Redemption Date or otherwise on the first
Sinking Fund Redemption Date occurring thereafter to the
redemption of shares of said series at $100.000 per share,
plus accrued and unpaid dividends through the day preceding
2
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the applicable Sinking Fund Redemption Date, in the manner
and upon the notice provided in Section 2 of this sub
article B. If any Sinking Fund Redemption Date shall be a
Saturday, Sunday or other day on which banking institutions
in Louisville, Kentucky are authorized or obligated to
remain closed, such term shall be construed to refer to the
next preceding business day.
Notwithstanding anything to the contrary set forth
above, no sinking fund payments on the shares of said series
of $5.875 Cumulative Preferred Stock shall be made: (i)
unless the full dividends on all shares of Preferred Stock
and Preferred Stock (without par value) at the time
outstanding for all past dividend periods shall have been
paid or declared and set apart for payment or (ii) if such
sinking fund payment would be contrary to applicable law.
(4) The preferential amounts to which the holders of
shares of such series shall be entitled upon any
liquidation, dissolution or winding up of the Company, in
addition to dividends accumulated but unpaid thereon, shall
be $100.000 per share, in the event of any voluntary
liquidation, dissolution or winding up of the Company,
except that if such voluntary liquidation, dissolution or
winding up of the Company shall have been approved by the
vote in favor thereof given at a meeting called for that
purpose or by the written consent of the holders of a
majority of the total shares of the $5.875 Cumulative
Preferred Stock (without par value) then outstanding, the
amount so payable on such voluntary liquidation, dissolution
or winding up shall be $100.000 per share; or $100.000 per
share, in the event of any involuntary liquidation,
dissolution or winding up of the Company.
(5) The shares of said series of $5.875 Cumulative
Preferred Stock (without par value) shall be subject to all
other terms, provisions and restrictions set forth in these
Articles with respect to the shares of the Preferred Stock
(without par value) and, excepting only as to the rates of
dividend payable in respect of the shares of said series,
the dividend periods and dividend payment dates, the
redemption price or prices applicable to the shares of said
series, the sinking fund provisions applicable to the shares
of said series, and the liquidation price applicable to
shares of said series, shall have the same relative rights
and preferences as, shall be of equal rank with, and shall
confer rights equal to those conferred by, all other shares
of the Preferred Stock (without par value) of the Company.
(6) The stated value of the shares of said series
shall be $100.000 per share.
3
<PAGE>
SUPPLEMENTAL INDENTURE
FROM
LOUISVILLE GAS AND ELECTRIC COMPANY
TO
HARRIS TRUST AND SAVINGS BANK
Trustee
________________________
DATED AUGUST 15, 1993
________________________
SUPPLEMENTAL TO TRUST INDENTURE
DATED NOVEMBER 1, 1949
<PAGE>
Table of Contents
Page
Parties 1
Recitals 1
Form of Bonds 5
Further Recitals 8
ARTICLE I.
SPECIFIC SUBJECTION OF PROPERTY TO THE LIEN
OF THE ORIGINAL INDENTURE.
Section 1.01 Grant of certain property, including
all personal property to comply with
Uniform commercial Code of the State
of Kentucky, subject to permissible
encumbrances and other exceptions
contained in Original Indenture 8
ARTICLE II.
PROVISIONS OF BONDS OF POLLUTION
CONTROL SERIES DUE AUGUST 15, 2003.
Section 2.01 Terms of Bonds 10
Section 2.02 Redemption Provisions 12
Section 2.03 Interchangeability of Bonds 12
Section 2.04 Charges upon exchange or transfer of
bonds 12
ARTICLE III.
APPOINTMENT OF AUTHENTICATING AGENT.
Section 3.01 Appointment of Agent or Agents for
Bonds of this Series 12
Section 3.02 (a) Qualifications of Agents 12
(b) Continuation of Agent upon
merger or consolidation 13
(c) Successor Agent 13
(d) Compensation of Agent 13
Section 3.03 Form of Alternate Certificate of
Authentication 13
Section 3.04 Limit on location and number
of Agents 14
i.
<PAGE>
ARTICLE IV.
MISCELLANEOUS
Section 4.01 Recitals of fact, except as stated,
are statements of the Company 14
Section 4.02 Supplemental Indenture to be 14
construed as a part of the Original
Indenture
Section 4.03 (a) Trust Indenture Act to control 14
(b) Severability of provisions contained 14
in Supplemental Indenture and bonds
Section 4.04 Word "Indenture" as used herein
includes in its meaning the Original
Indenture and all indentures
supplemental thereto 14
Section 4.05 References to either party in
Supplemental Indenture include
successors or assigns 14
Section 4.06 (a) Provision for execution in
counterparts 15
(b) Table of contents and descriptive
headings of Articles not to affect
meaning 15
Schedule A A-1
ii
<PAGE>
Supplemental Indenture made as of the sixteenth day of August,
1993, by and between LOUISVILLE GAS AND ELECTRIC COMPANY, a
corporation duly organized and existing under and by virtue of the
laws of the State of Kentucky, having its principal office in the
City of Louisville, County of Jefferson, in said State of Kentucky
(the "Company"), the party of the first part, and HARRIS TRUST AND
SAVINGS BANK, a corporation duly organized and existing under and
by virtue of the laws of the State of Illinois, having its
principal office at 111 West Monroe Street, City of Chicago, County
of Cook, State of Illinois 60690, as Trustee (the "Trustee"), party
of the second part;
WITNESSETH:
WHEREAS, the Company has heretofore executed and delivered to
the Trustee its Trust Indenture (the "Original Indenture"), made as
of November 1, 1949, whereby the Company granted, bargained, sold,
warranted, released, conveyed, assigned, transferred, mortgaged,
pledged, set over and confirmed unto the Trustee and to its
respective successors in trust, all property, real, personal and
mixed then owned or thereafter acquired or to be acquired by the
Company (except as therein excepted from the lien thereof) and
subject to the rights reserved by the Company in and by the
provisions of the Original Indenture, to be held by said Trustee in
trust in accordance with the provisions of the Original Indenture
for the equal pro rata benefit and security of all and each of the
bonds issued and to be issued thereunder in accordance with the
provisions thereof; and
WHEREAS, Section 2.01 of the Original Indenture provides that
bonds may be issued thereunder in one or more series, each series
to have such distinctive designation as the Board of Directors of
the Company may select for such series; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture, bonds of a series
designated "First Mortgage Bonds, Series due November 1, 1979,"
bearing interest at the rate of 2% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated February 1, 1952, bonds of a series
designated "First Mortgage Bonds, Series due February 1, 1982,"
bearing interest at the rate of 3 1/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated February 1, 1954, bonds of a series
designated "First Mortgage Bonds, Series due February 1, 1984,"
bearing interest at the rate of 3 1/8% per annum; and
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WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 1, 1957, bonds of a series
designated "First Mortgage Bonds, Series due September 1, 1987,"
bearing interest at the rate of 4 7/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated October 1, 1960, bonds of a series
designated "First Mortgage Bonds, Series due October 1, 1990,"
bearing interest at the rate of 4 7/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 1, 1966, bonds of a series
designated "First Mortgage Bonds, Series due June 1, 1996," bearing
interest at the rate of 5 5/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 1, 1968, bonds of a series
designated "First Mortgage Bonds, Series due June 1, 1998," bearing
interest at the rate of 6% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 1, 1970, bonds of a series
designated "First Mortgage Bonds, Series due July 1, 2000," bearing
interest at the rate of 9 1/4% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated August 1, 1971, bonds of a series
designated "First Mortgage Bonds, Series due August 1, 2001,"
bearing interest at the rate of 8 1/4% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 1, 1972, bonds of a series
designated "First Mortgage Bonds, Series due July 1, 2002," bearing
interest at the rate of 7 1/2% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated February 1, 1975, bonds of a series
designated "First Mortgage Bonds, Series due March 1, 2005,"
bearing interest at the rate of 8 7/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 1, 1975, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series A,"
2
<PAGE>
bearing interest as provided therein and maturing September 1,
2000; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 1, 1976, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series B,"
bearing interest as provided therein and maturing September 1,
2006; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated October 1, 1976, bonds of a series
designated "First Mortgage Bonds, Series due November 1, 2006,"
bearing interest at the rate of 8 1/2% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 1, 1978, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series C,"
bearing interest as provided therein and maturing June 1,
1998/2008; and
WHEREAS, the Company has heretofore executed and delivered to
the Trustee a Supplemental Indenture dated February 15, 1979,
setting forth duly adopted modifications and alterations to the
Original Indenture and all Supplemental Indentures thereto; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 1, 1979, bonds of a series
designated "First Mortgage Bonds, Series due October 1, 2009,"
bearing interest at the rate of 10 1/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 15, 1979, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series D,"
bearing interest as provided therein and maturing October 1,
2004/2009; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 15, 1981, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series E,"
bearing interest as provided therein and maturing September 15,
1984; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated March 1, 1982, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series F,"
3
<PAGE>
bearing interest as provided therein and maturing March 1, 2012;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated March 15, 1982, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series G,"
bearing interest as provided therein and maturing March 1, 2012;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 15, 1982, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series H,"
bearing interest as provided therein and maturing September 15,
1992; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated February 15, 1984, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series I,"
bearing interest as provided therein and maturing February 15,
2011; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated July 1, 1985, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series J,"
bearing interest as provided therein and maturing July 1,
1995/2015; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated November 15, 1986, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series K,"
bearing interest as provided therein and maturing December 1, 2016;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated November 16, 1986, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series L,"
bearing interest as provided therein and maturing December 1, 2016;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated August 1, 1987, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series M,"
bearing interest as provided therein and maturing August 1, 1997;
and
4
<PAGE>
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Or,Original Indenture as supplemented by the
Supplemental Indenture dated February 1, 1989, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series N,"
bearing interest as provided therein and maturing February 1, 2019;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated February 2, 1989, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series O,"
bearing interest as provided therein and maturing February 1, 2019;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 15, 1990, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series P,"
bearing interest as provided therein and maturing June 15, 2015;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated November 1, 1990, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series Q," and
bonds of a series designated "First Mortgage Bonds, Pollution
Control Series R," each series bearing interest as provided therein
and maturing November 1, 2020; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 1, 1992, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series S,"
bearing interest as provided therein and maturing September 1,
2017; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 2, 1992, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series T,"
bearing interest as provided therein and maturing September 1,
2017; and
WHEREAS, the Company is desirous of providing for the issuance
under the Original Indenture of a new series of bonds designated
"First Mortgage Bonds, Series due August 15, 2003" (sometimes
called Bonds of this Series), the bonds of said series to be issued
as registered bonds without coupons in denominations of a multiple
of $1,000, and the bonds of said series are to be substantially in
the form and of the tenor following (with the redemption prices, if
any, inserted therein in conformity with the provisions of Section
2.02 hereof) to wit:
5
<PAGE>
LOUISVILLE GAS AND ELECTRIC COMPANY
(Incorporated under the laws of the State of Kentucky)
First Mortgage Bond
Series Due August 15, 2003
No.___________ $___________
Louisville Gas and Electric Company, a corporation organized
and existing under and by virtue of the laws of the State of
Kentucky (herein called the "Company"), for value received, hereby
promises to pay or registered assigns, at
the office of the Trustee, in Chicago, Illinois, or, at the option
of the registered holder, at the agency of the Company in the
Borough of Manhattan, City and State of New York, the sum of
Dollars in lawful money of the United States of America, on the
fifteenth day of August, 2003, and to pay interest hereon from the
date hereof, at the rate of six percent per annum, in like money,
until the principal hereof becomes due and payable and thereafter,
if the Company should default in the payment of the principal
hereof, at the interest rate of this bond until the Company's
obligation with respect to the payment of such principal shall be
discharged as provided in the Indenture hereinafter mentioned; said
interest being payable at the option of the person entitled to such
interest either at the office of the Trustee, in Chicago, Illinois,
or at the agency of the Company in the Borough of Manhattan, City
and State of New York, on the fifteenth day of February and on the
fifteenth day of August in each year; provided that, as long as
there is no existing default in the payment of interest and except
for the payment of defaulted interest, the interest payable on any
February 15 or August 15 will be paid to the person in whose name
this bond was registered at the close of business on the record ate
(the February 1 prior to such February 15 or the August 1 prior to
such August 15 unless any such date is not a business day, in which
event it will be the next preceding business day).
This bond is one of a duly authorized issue of bonds of the
Company, known as its First Mortgage Bonds, unlimited in aggregate
principal amount, which issue of bonds consists, or may consist of
several series of varying denominations, dates and tenors, all
issued and to be issued under and equally secured (except in so far
as a sinking fund, or similar fund, established in accordance with
the provisions of the Indenture may afford additional security for
the bonds of any specific series) by a Trust Indenture dated
November 1, 1949, and Supplemental Indentures thereto dated
February 1, 1952, February 1, 1954, September 1, 1957, October 1,
1960, June 1, 1966, June 1, 1968, June 1, 1970, August 1, 1971,
June 1, 1972, February 1, 1975, September 1, 1975, September
1,1976, October 1, 1976, June 1, 1978, February 15, 1979, September
1, 1979, September 15,1979, September 15,1981, March 1, 1982, March
15, 1982, September 15, 1982, February 15, 1984, July 1, 1985,
November 15, 1986, November 16,1986, August 1, 1987, February
1,1989, February 2, 1989, June 15, 1990, November 1, 1990,
6
<PAGE>
September 1, 1992, September 2, 1992 and August 15, 1993 (all of
which instruments are herein collectively called the "Indenture"),
executed by the Company to the Trustee, to which Indenture
reference is hereby made for a description of the property
mortgaged and pledged, the nature and extent of the security, the
rights of the holders of the bonds as to such security, and the
terms and conditions upon which the bonds may be issued under the
Indenture and are secured. The principal hereof may be declared or
may become due on the conditions, in the manner and at the time set
forth in the Indenture, upon the happening of a completed default
as in the Indenture provided. The Indenture provides that such
declaration may in certain events be waived by the holders of a
majority in principal amount of the bonds outstanding.
With the consent of the Company and to the extent permitted by
and as provided in the Indenture, the rights and obligations of the
Company and/or of the holders of the bonds, and/or the terms and
provisions of the Indenture and/or of any instruments supplemental
thereto may be modified or altered by affirmative vote of the
holders of at least seventy percent in principal amount of the
bonds then outstanding under the Indenture and any instruments
supplemental thereto (excluding bonds disqualified from voting by
reason of the interest of the Company or of certain related persons
therein as provided in the Indenture), and by the affirmative vote
of at least seventy percent in principal amount of the bonds of any
series entitled to vote then outstanding under the Indenture and
any instruments supplemental thereto (excluding bonds disqualified
from voting as aforesaid) and affected by such modification or
alteration, in case one or more but less than all of the series of
bonds then outstanding are so affected; provided that no such
modification or alteration shall permit the extension of the
maturity of the principal of this bond or the reduction in the rate
of interest, if any, hereon or any other modification in the terms
of payment of such principal or interest, if any, or the taking of
certain other action as more fully set forth in the Indenture,
without the consent of the holder hereof.
The Company, the Trustee and any paying agent may deem and
treat the person in whose name this bond is registered as the
absolute owner hereof for the purpose of receiving payment of or on
account of the principal hereof and interest hereon and for all
other purposes and shall not be affected by any notice to the
contrary.
This bond is not redeemable prior to maturity for any reason
and is not subject to any sinking fund.
This bond is transferable as prescribed in the Indenture by
the registered holder hereof in person, or by his duly authorized
attorney, at the office of the Trustee in Chicago, Illinois, or at
the option of the owner at the agency of the Company in the Borough
of Manhattan, City and State of New York, or elsewhere if
7
<PAGE>
authorized by the Company, upon surrender and cancellation of this
bond, and thereupon a new bond or bonds of the same series and of
a like aggregate principal amount will be issued to the transferee
in exchange therefor as provided in the Indenture.
Bonds of this Series are interchangeable as to denominations
in the manner and upon the conditions prescribed in the Indenture.
No charge shall be made by the Company for any exchange or
transfer of bonds of the Series due August 15, 2003, other than for
taxes or other governmental charges, if any, that may be imposed in
relation thereto.
No recourse shall be had for the payment of principal of or
interest on this bond, or any part thereof, or of any claim based
hereon or in respect hereof or of the indenture, against any
incorporator, or any past, present or future stockholder, officer
or director of the Company or of any predecessor or successor
corporation, either directly or through the Company, or through any
such predecessor or successor corporation, or through any receiver
or trustee in bankruptcy, whether by virtue of any constitution,
statute of rule of law or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue thereof,
expressly waived and released, as more fully provided in the
Indenture.
This bond shall not be valid or become obligatory for any
purpose unless and until the certificate of authentication hereof
shall have been signed by or on behalf of Harris Trust and Savings
Bank, as Trustee under the Indenture, or its successor thereunder.
IN WITNESS WHEREOF, LOUISVILLE GAS AND ELECTRIC COMPANY has
caused this instrument to be signed in its name by its President or
a Vice President or with the facsimile signature of its President,
and its corporate seal, or a facsimile thereof, to be hereto
affixed and attested by its Secretary or with the facsimile
signature of its Secretary.
Dated
LOUISVILLE GAS AND ELECTRIC COMPANY
Attest: By:_____________________________________________
(Vice) President
___________________________________
Secretary
and
8
<PAGE>
WHEREAS, the Company is desirous of specifically assigning,
conveying, mortgaging, pledging, transferring and setting over
additional property unto the Trustee and to its respective
successors in trust; and
WHEREAS, Sections 4.01 and 21.03 of the Original Indenture
provide in substance that the Company and the Trustee may enter
into indentures supplemental thereto for the purposes, among
others, of creating and setting forth the particulars of any new
series of bonds and of providing the terms and conditions of the
issue of the bonds of any series not expressly provided for in the
Original Indenture and of assigning, conveying, mortgaging,
pledging and transferring unto the Trustee additional property of
the Company, and for any other purpose not inconsistent with the
terms of the Original Indenture; and
WHEREAS, the execution and delivery of this Supplemental
Indenture have been duly authorized by a resolution adopted by the
Board of Directors of the Company;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
Louisville Gas and Electric Company, in consideration of the
premises and of one dollar to it duly paid by the Trustee at or
before the ensealing and delivery of these presents, the receipt
whereof is hereby acknowledged, and other good and valuable
considerations, does hereby covenant and agree to and with Harris
Trust and Savings Bank, as Trustee, and its successors in the trust
under the Indenture for the benefit of those who hold or shall hold
the bonds issued or to be issued thereunder, as follows:
ARTICLE I.
SPECIFIC SUBJECTION OF PROPERTY TO THE
LIEN OF THE ORIGINAL INDENTURE
SECTION 1.01. The Company in order better to secure the
payment, both of principal and interest, of all bonds of the
Company at any time outstanding under the Indenture, according to
their tenor and effect, and the performance of and compliance with
the covenants and conditions in the Indenture contained, has
granted, bargained, sold, warranted, released, conveyed, assigned,
transferred, mortgaged, pledged, set over and confirmed and by
these presents does grant, bargain, sell, warrant, release, convey,
assign, transfer, mortgage, pledge, set over and confirm unto
Harris Trust and Savings Bank as Trustee and to its respective
successors in said trust forever, subject to the rights reserved by
the Company in and by the provisions of the Indenture, all the
property described and mentioned or enumerated in a schedule hereto
annexed and marked Schedule A, reference to said schedule being
hereby made with the same force and effect as if the same were
incorporated herein at length; together with all and singular the
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tenements, hereditaments and appurtenances belonging or in any wise
appertaining to the aforesaid property or any part thereof with the
reversion and reversions, remainder and remainders, tolls, rents
and revenues, issues, income, product and profits thereof;
Also, in order to subject all of the personal property and
chattels of the Company to the lien of the Indenture in conformity
with the provisions of the Uniform Commercial Code of the State of
Kentucky, all steam, hydro and other electric generating plants,
including buildings and other structures, turbines, generators,
boilers, condensing equipment, and all other equipment;
substations; electric transmission and distribution systems,
including structures, poles, towers, fixtures, conduits,
insulators, wires, cables, transformers, services and meters;
steam and heating mains and equipment; gas generating and coke
plants, including buildings, holders and other structures, boilers
and other boiler plant equipment, benches, retorts, coke ovens,
water gas sets, condensing and purification equipment, piping and
other accessory works equipment; facilities for gas storage whether
above or below surface; gas transmission and distribution systems,
including structures, mains, compressor stations, purifier
stations, pressure holders, governors, services and meters; office,
shop, garage and other general buildings and structures, furniture
and fixtures; and all municipal and other franchises and all
leaseholds, licenses, permits, easements, and privileges; all as
now owned or hereafter acquired by the Company pursuant to the
provisions of the Original Indenture; and
All the estate, right, title and interest and claim
whatsoever, at law as well as in equity, which the Company now has
or may hereafter acquire in and to the aforesaid property and
franchises and every part and parcel thereof;
Excluding, however, (1) all shares of stock, bonds, notes,
evidences of indebtedness and other securities other than such as
may be or are required to be deposited from time to time with the
Trustee in accordance with the provisions of the Indenture; (2)
cash on hand and in banks other than such as may be or is required
to be deposited from time to time with the Trustee in accordance
with the provisions of the Indenture; (3) contracts, claims, bills
and accounts receivable and chooses in action other than such as
may be or are required to be from time to time assigned to the
Trustee in accordance with the provisions of the Indenture; (4)
motor vehicles; (5) any stock of goods, wares and merchandise,
equipment, materials and supplies acquired for the purpose of sale
or lease in the usual course of business or for the purpose of
consumption in the operation, construction or repair of any of the
properties of the Company; and (6) the properties described in
Schedule B annexed to the Original Indenture.
To have and to hold all said property, real, personal and
mixed, mortgaged, pledged or conveyed by the Company as aforesaid,
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or intended so to be, unto the Trustee and its successors and
assigns forever, subject, however, to permissible encumbrances as
defined in Section 1.09 of the Original Indenture and to the
further reservations, covenants, conditions, uses and trusts set
forth in the Indenture, in trust nevertheless for the same purposes
and upon the same conditions as are set forth in the Indenture.
ARTICLE II.
PROVISIONS OF BONDS OF SERIES DUE AUGUST 15, 2003
SECTION 2.01. There is hereby created, for issuance under the
Original Indenture, a series of bonds designated Series due August
15, 2003, each of which shall bear the descriptive title "First
Mortgage Bonds, Series due August 15, 2003" and the form thereof
shall contain suitable provisions with respect to the matters
specified in this Section. The bonds of said series shall be
substantially of the tenor and purport previously recited. The
bonds of said series shall mature August 15, 2003, and shall be
issued as registered bonds without coupons in denominations of a
multiple of $1,000. The bonds of said series shall bear interest
at the rate of 6% per annum payable semiannually on February 15 and
August 15 of each year, and the principal shall be payable at the
office of the Trustee in Chicago, Illinois, or, at the option of
the registered holder, at the agency of the Company in the Borough
of Manhattan, City and State of New York, in lawful money of the
United States of America, and the interest shall be payable in like
money at the option of the person entitled to such interest either
at said office of the Trustee in Chicago, Illinois, or at the
agency of the Company in the Borough of Manhattan, City and State
of New York. Bonds of the Series due August 15, 2003, shall be
dated as of the interest payment date next preceding the
authentication thereof by the Trustee except that (i) if any bond
shall be authenticated before February 15, 1994, it shall be dated
as of August 15, 1993 unless (iii) below is applicable, (ii) if the
Company shall at the time of the authentication of a bond of the
Series due August 15, 2003, be in default in the payment of
interest upon bonds of the Series due August 15, 20031 such bond
shall be dated as of the date of the beginning of the period for
which such interest is so in default, and (iii) as long as there is
no existing default in the payment of interest on the bonds of the
Series due August 15, 2003, if any bond of the Series due August
15, 2003, shall be authenticated after the close of business on any
Record Date but on or prior to the interest payment date relating
to such Record Date, it shall be dated as of such interest payment
date.
As long as there is no existing default in the payment of
interest on the bonds of the Series due August 15, 2003, the person
in whose name any bond of the Series due August IS, 2003, is
registered at the close of business on any Record Date with respect
to any interest payment date shall be entitled to receive the
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interest payable on such interest payment date notwithstanding any
transfer or exchange of such bond of the Series due August 15,
2003, subsequent to the Record Date and on or prior to such
interest payment date, except as and to the extent the Company
shall default in the payment of the interest due on such interest
payment date, in which case such defaulted interest shall be paid
to the person in whose name such bond of the Series due August 15,
2003, is registered at the close of business on a Special Record
Date for the payment of such defaulted interest to be fixed by the
Trustee, notice whereof shall be given to the registered holder of
any bond of the Series due August 15, 2003, not less than 10 days
prior to such Special Record Date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of
any securities exchange on which the bonds of the Series due August
15, 2003, may be listed, and upon such notice as may be required by
such exchange.
The term "Record Date" as used herein with respect to any
interest payment date (February 15 or August 15) shall mean the
February 1 prior to such February 15 or the August 1 prior to such
August 15 unless such February 1 or August 1 shall not be a
business day, in which event "Record Date" shall mean the next
preceding business day. The term "business day" as used herein
shall mean any day other than a Saturday or a Sunday or a day on
which the offices of the Trustee in the City of Chicago, Illinois
are closed pursuant to authorization of law.
As used in this Section 2.01, the term "default in the payment
of interest" means failure to pay interest on the applicable
interest payment date disregarding any period of grace permitted by
the Indenture.
The "Special Record Date'" as used herein shall be fixed in
the following manner. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on
each bond of the Series due August 15, 2003, and the date of the
proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such defaulted interest or shall
make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the persons
entitled to such defaulted interest as provided in this Section
2.01. Thereupon the Trustee shall fix a Special Record Date for the
payment of such defaulted interest which shall be not more than 15
nor less than 10 days prior to the date of the proposed payment and
not less than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment
12
<PAGE>
of such defaulted interest and the Special Record Date therefor to
be mailed, first class postage prepaid, to each holder of the bonds
of the Series due August 15, 2003, at his address as it appears in
the bond register, not less than 10 days prior to such Special
Record Date. The Trustee may, in its discretion, in the name and at
the expense of the Company, cause a similar notice to be published
at least once in an English language newspaper of general
circulation in Chicago, Illinois or New York, New York, but such
publication shall not be a condition precedent to the establishment
of the Special Record Date. Notice of the proposed payment of such
defaulted interest and the Special Record Date therefor having been
mailed as aforesaid, such defaulted interest shall be paid to the
persons in whose names the bonds of the Series due August 15, 2003,
are registered on such Special Record Date and shall not be payable
pursuant to the paragraph immediately following in this Section
2.01.
The Company may make payment of any defaulted interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the bonds of the Series due August 15,
2003, may be listed, and upon such notice as may be required by
such exchange, if, after notice is given by the Company to the
Trustee of the proposed payment pursuant to this Section 2.01, such
payment shall be deemed practicable by the Trustee.
SECTION 2.02. The Bonds of this Series are not redeemable
prior to maturity for any reason and are not subject to any sinking
fund.
SECTION 2.03. The registered holder of any of the Bonds of
this Series at his option may surrender the same at the office of
the Trustee, in Chicago, Illinois, or at the agency of the Company
in the Borough of Manhattan, City and State of New York, or
elsewhere, if authorized by the Company, for cancellation, in
exchange for other Bonds of this Series of the same aggregate
principal amount bearing interest as provided in Section 2.09 of
the Original Indenture. Thereupon, and upon receipt of any payment
required under the provisions of Section 2.04 hereof, the Company
shall execute and deliver to the Trustee and the Trustee shall
authenticate and deliver such other registered bonds to such
registered holder at its office or at any other place specified as
aforesaid.
SECTION 2.04. NO charge shall be made by the Company for any
exchange or transfer of bonds of the Series due August 15, 2003
other than for taxes or other governmental charges, if any, that
may be imposed in relation thereto.
13
<PAGE>
ARTICLE III.
APPOINTMENT OF AUTHENTICATING AGENT
SECTION 3.01. The Trustee shall, if requested in writing so to
do by the Company, promptly appoint an agent or agents of the
Trustee who shall have authority to authenticate registered Bonds
of this Series in the name and on behalf of the Trustee. Such
appointment by the Trustee shall be evidenced by a certificate of
vice-president of the Trustee delivered to the Company prior to the
effectiveness of such appointment.
SECTION 3.02. (a) Any such authenticating agent shall be
acceptable to the Company and shall at all times be a corporation
which is organized and doing business under the laws of the United
States or of any State, is authorized under such laws to act as
authenticating agent, has a combined capital and surplus of at
least $10,000,000, and is subject to supervision or examination by
Federal or State authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section 3.02 the combined capital and
surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of
condition so published.
(b) Any corporation into which any authenticating agent may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation
to which any authenticating agent shall be a party, or any
corporation succeeding to the corporate agency business of any
authenticating agent, shall continue to be the authenticating agent
without the execution or filing of any paper or any further act on
the part of the Trustee or the authenticating agent.
(c) Any authenticating agent may at any time resign by giving
written notice of resignation to the Trustee and to the Company.
The Trustee may at any time, and upon written request of the
Company to the Trustee shall, terminate the agency of any
authenticating agent by giving written notice of termination to
such authenticating agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at
any time any authenticating agent shall cease to be eligible in
accordance with the provisions of this Section 3.02, the Trustee,
unless otherwise requested in writing by the Company, promptly
shall appoint a successor authenticating agent, which shall be
acceptable to the Company. Any successor authenticating agent upon
acceptance of its appointment hereunder shall become vested with
all the rights, powers, duties, and responsibilities of its
predecessor hereunder, with like effect as if originally named. No
successor authenticating agent shall be appointed unless eligible
under the provisions of this Section 3.02.
14
<PAGE>
(d) The Trustee agrees to pay any authenticating agent,
appointed in accordance with the provisions of this Section 3.02,
reasonable compensation for its services, and the Trustee shall be
entitled to be reimbursed for such payments.
SECTION 3.03. If an appointment is made pursuant to this
Article III, the Bonds of this Series shall have endorsed thereon,
in addition to the Trustee's Certificate, an alternate Trustee's
Certificate in the following form:
This bond is one of the bonds of the Series designated
therein, described in the within mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By:____________________________________
Authenticating Agent,
By:____________________________________
Authorized Officer.
SECTION 3.04. No provision of this Article III shall require
the Trustee to have at any time more than one such authenticating
agent for any one State or to appoint any such authenticating agent
in the State in which the Trustee has its principal place of
business.
ARTICLE IV.
MISCELLANEOUS
SECTION 4.01. The recitals of fact herein and in the bonds
(except the Trustee's Certificate) shall be taken as statements of
the Company and shall not be construed as made or warranted by the
Trustee. The Trustee makes no representations as to the value of
any of the property subject to the lien of the Indenture, or any
part thereof, or as to the title of the Company thereto, or as to
the security afforded thereby and hereby, or as to the validity of
this Supplemental Indenture and the Trustee shall incur no
responsibility in respect of such matters.
SECTION 4.02. This Supplemental Indenture shall be construed
in connection with and as a part of the Original Indenture.
SECTION 4.03.(a) If any provision of this Supplemental
Indenture limits, qualifies or conflicts with another provision of
the Original Indenture or this Supplemental Indenture required to
be included in indentures qualified under the Trust Indenture act
of 1939, as amended (as enacted prior to the date of this
Supplemental Indenture) by any of the provisions of Sections 310 to
317, inclusive, of the said Act, such required provision shall
control.
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<PAGE>
(b) In case any one or more of the provisions contained in
this Supplemental Indenture or in the bonds issued hereunder shall
be invalid, illegal, or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected, impaired,
prejudiced or disturbed thereby.
SECTION 4.04. Wherever in this Supplemental Indenture the
word "Indenture" is used without either prefix, "Original" or
"Supplemental," such word was used intentionally to include in its
meaning both the Original Indenture and all indentures supplemental
thereto.
SECTION 4.05. Wherever in this Supplemental Indenture either
of the parties hereto is named or referred to, this shall be deemed
to include the successors or assigns of such party, and all the
covenants and agreements in this Supplemental Indenture contained
by or on behalf of the Company or by or on behalf of the Trustee
shall bind and inure to the benefit of the respective successors
and assigns of such parties, whether so expressed or not.
SECTION 4.06.(a) This Supplemental Indenture may be
simultaneously executed in several counterparts, and all said
counterparts executed and delivered, each as an original, shall
constitute but one and the same instrument.
(b) The Table of Contents and the descriptive headings of the
several Articles of this Supplemental Indenture were formulated,
used and inserted in this Supplemental Indenture for convenience
only and shall not be deemed to affect the meaning or construction
of any of the provisions hereof.
IN WITNESS WHEREOF, the party of the first part has caused its
corporate name and seal to be hereunto affixed and this
Supplemental Indenture to be signed by its President or a Vice
President, and attested by its Secretary for and in its behalf, and
the party of the second part to evidence its acceptance of the
trust hereby created, has caused its corporate name and seal to be
hereunto affixed, and this Supplemental Indenture to be signed by
its President, a Vice President or an Assistant Vice President, and
attested by its Secretary or an Assistant Secretary, for and in its
behalf, all done as of the sixteenth day of August, 1993.
LOUISVILLE GAS AND ELECTRIC COMPANY
By:_____________________________________
M. LEE FOWLER
Vice President
(Corporate Seal)
16
<PAGE>
ATTEST:
______________________________________
VICTOR A. STAFFIERI
Senior Vice President, General
Counsel and Secretary
HARRIS TRUST AND SAVINGS BANK, TRUSTEE
By:_____________________________________
C. POTTER
Assistant Vice President
(Corporate Seal)
ATTEST:
______________________________________
J. BARTOLINI
Assistant Secretary
STATE OF KENTUCKY )
) SS:
COUNTY OF JEFFERSON )
BE IT REMEMBERED that on this 25th day of August, 1993, before
me, a Notary Public duly commissioned in and for the County and
State aforesaid, personally appeared M. LEE FOWLER and VICTOR A.
STAFFIERI, respectively, Vice President and Senior Vice President,
General Counsel and Secretary of Louisville Gas and Electric
Company, a corporation organized and existing under and by virtue
of the laws of the State of Kentucky, who are personally known to
me to be such officers, respectively, and who are personally known
to me to be the same persons who executed as officers the foregoing
instrument of writing, and such persons duly acknowledged before me
the execution of the foregoing instrument of writing to be their
act and deed and the act and deed of said corporation.
WITNESS my hand and notarial seal this 25th day of August,
1993.
PATRICIA A. ROSE
_______________________________
NOTARY PUBLIC
My commission expires: 1-23-96
17
<PAGE>
STATE OF ILLINOIS )
) SS:
COUNTY OF COOK )
BE IT REMEMBERED that on this 24th day of August, 1993, before
me, a Notary Public duly commissioned in and for the County and
State aforesaid, personally appeared C. POTTER and J. BARTOLINI,
respectively, Assistant Vice President and Assistant Secretary of
Harris Trust and Savings Bank, a corporation organized and existing
under and by virtue of the laws of the State of Illinois, who are
personally known to me to be such officers, respectively, and who
are personally known to me to be the same persons who executed as
officers the foregoing instrument of writing, and such persons duly
acknowledged before me the execution of the foregoing instrument of
writing to be their act and deed and the act and deed of said
corporation.
WITNESS my hand and notarial seal this 24th day of August,
1993.
T. MUZQUIZ
___________________________________
NOTARY PUBLIC
My commission expires: 7-12-97
This Instrument Prepared by:
Susan M. Jenkins
LG&E Energy Corp.
220 West Main Street
Louisville, Kentucky 40202
By:_______________________________
Susan M. Jenkins, Esq.
18
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SCHEDULE A
The following property situated, lying and being in the County of
Jefferson, State of Kentucky, to-wit:
Transmission Lines
A 138KV wood and steel transmission line circuit #3859 in
Louisville, Jefferson County, Kentucky. This line is built between
Magazine Substation to Hancock Substation at a distance of
approximately 2.44 miles. This distance reflects 2.36 miles of
overhead lines and .08 miles of underground lines.
A-1
<PAGE>
SUPPLEMENTAL INDENTURE
FROM
LOUISVILLE GAS AND ELECTRIC COMPANY
TO
HARRIS TRUST AND SAVINGS BANK
Trustee
___________________
DATED AUGUST 16, 1993
___________________
SUPPLEMENTAL TO TRUST INDENTURE
DATED NOVEMBER 1, 1949
<PAGE>
Table of Contents
Page
Parties 1
Recitals 1
Form of Bonds of Pollution Control
Series U and V 5
Further Recitals 8
ARTICLE I.
SPECIFIC SUBJECTION OF PROPERTY TO THE LIEN
OF THE ORIGINAL INDENTURE.
Section 1.01 Grant of certain property, including
all personal property to comply with
Uniform Commercial Code of the State
of Kentucky, subject to permissible
encumbrances and other exceptions
contained in Original Indenture 8
ARTICLE II.
PROVISIONS OF BONDS OF POLLUTION
CONTROL SERIES U AND V.
Section 2.01 Terms of Bonds of Pollution Control
Series U 9
Section 2.02 Terms of Bonds of Pollution Control
Series V 10
Section 2.03 Payment of principal and interest -
Bonds of Pollution Control Series U 10
Section 2.04 Payment of principal and interest -
Bonds of Pollution Control Series V 11
Section 2.05 Bonds of Pollution Control Series U
deemed fully paid upon payment of
corresponding Pollution Control
Revenue Bonds 12
Section 2.06 Bonds of Pollution Control Series V
deemed fully paid upon payment of
corresponding Pollution Control
Revenue Bonds 12
Section 2.07 Interchangeability of bonds 13
Section 2.08 Charges upon exchange or transfer
of bonds 13
i
<PAGE>
ARTICLE III.
MISCELLANEOUS.
Section 3.01 Recitals of fact, except as stated,
are statements of the Company 13
Section 3.02 Supplemental Indenture to be
construed as a part of the
Original Indenture 13
Section 3.03(a) Trust Indenture Act to control 13
(b) Severability of provisions
contained in Supplemental
Indenture and bonds 13
Section 3.04 Word "Indenture" as used herein
includes in its meaning the Original
Indenture and all indentures
supplemental thereto 13
Section 3.05 References to either party in
Supplemental Indenture include
successors or assigns 13
Section 3.06(a) Provision for execution in
counterparts 14
(b) Table of contents and descriptive
headings of Articles not to affect
meaning 14
Schedule A A-1
ii
<PAGE>
Supplemental Indenture made as of the sixteenth day of August,
1993, by and between LOUISVILLE GAS AND ELECTRIC COMPANY, a
corporation duly organized and existing under and by virtue of the
laws of the State of Kentucky, having its principal office in the
City of Louisville, County of Jefferson, in said State of Kentucky
(the "Company"), the party of the first part, and HARRIS TRUST AND
SAVINGS BANK, a corporation duly organized and existing under and
by virtue of the laws of the State of Illinois, having its
principal office at 111 West Monroe Street, City of Chicago, County
of Cook, State of Illinois 60690, as Trustee (the "Trustee"), party
of the second part;
WITNESSETH:
WHEREAS, the Company has heretofore executed and delivered to
the Trustee its Trust Indenture (the "Original Indenture"), made as
of November 1, 1949, whereby the Company granted, bargained, sold,
warranted, released, conveyed, assigned, transferred, mortgaged,
pledged, set over and confirmed unto the Trustee and to its
respective successors in trust, all property, real, personal and
mixed then owned or thereafter acquired or to be acquired by the
Company (except as therein excepted from the lien thereof) and
subject to the rights reserved by the Company in and by the
provisions of the Original Indenture, to be held by said Trustee in
trust in accordance with the provisions of the Original Indenture
for the equal pro rata benefit and security of all and each of the
bonds issued and to be issued thereunder in accordance with the
provisions thereof; and
WHEREAS, Section 2.01 of the Original Indenture provides that
bonds may be issued thereunder in one or more series, each series
to have such distinctive designation as the Board of Directors of
the Company may select for such series; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture, bonds of a series
designated "First Mortgage Bonds, Series due November 1, 1979,"
bearing interest at the rate of 2% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated February 1, 1952, bonds of a series
designated "First Mortgage Bonds, Series due February 1, 1982,"
bearing interest at the rate of 3 1/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated February 1, 1954, bonds of a series
designated "First Mortgage Bonds, Series due February 1, 1984,"
bearing interest at the rate of 3 1/8% per annum; and
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<PAGE>
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 1, 1957, bonds of a series
designated "First Mortgage Bonds, Series due September 1, 1987,"
bearing interest at the rate of 4 7/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated October 1, 1960, bonds of a series
designated "First Mortgage Bonds, Series due October 1, 1990,"
bearing interest at the rate of 4 7/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 1, 1966, bonds of a series
designated "First Mortgage Bonds, Series due June 1, 1996," bearing
interest at the rate of 5 5/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 1, 1968, bonds of a series
designated "First Mortgage Bonds, Series due June 1, 1998," bearing
interest at the rate of 6% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 1, 1970, bonds of a series
designated "First Mortgage Bonds, Series due July 1, 2000," bearing
interest at the rate of 9 1/4% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated August 1, 1971, bonds of a series
designated "First Mortgage Bonds, Series due August 1, 2001,"
bearing interest at the rate of 8 1/4% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 1, 1972, bonds of a series
designated "First Mortgage Bonds, Series due July 1, 2002," bearing
interest at the rate of 7 1/2% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated February 1, 1975, bonds of a series
designated "First Mortgage Bonds, Series due March 1, 2005,"
bearing interest at the rate of 8 7/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 1, 1975, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series A,"
2
<PAGE>
bearing interest as provided therein and maturing September 1,
2000; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 1, 1976, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series B,"
bearing interest as provided therein and maturing September 1,
2006; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated October 1, 1976, bonds of a series
designated "First Mortgage Bonds, Series due November 1, 2006,"
bearing interest at the rate of 8 1/2% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 1, 1978, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series C,"
bearing interest as provided therein and maturing June 1,
1998/2008; and
WHEREAS, the Company has heretofore executed and delivered to
the Trustee a Supplemental Indenture dated February 15, 1979,
setting forth duly adopted modifications and alterations to the
Original Indenture and all Supplemental Indentures thereto; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 1, 1979, bonds of a series
designated "First Mortgage Bonds, Series due October 1, 2009,"
bearing interest at the rate of 10 1/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 15, 1979, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series D,"
bearing interest as provided therein and maturing October 1,
2004/2009; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 15, 1981, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series E,"
bearing interest as provided therein and maturing September 15,
1984; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated March 1, 1982, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series F,"
3
<PAGE>
bearing interest as provided therein and maturing March 1, 2012;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated March 15, 1982, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series G,"
bearing interest as provided therein and maturing March 1, 2012;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 15, 1982, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series H,"
bearing interest as provided therein and maturing September 15,
1992; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated February 15, 1984, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series I,"
bearing interest as provided therein and maturing February 15,
2011; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated July 1, 1985, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series J,"
bearing interest as provided therein and maturing July 1,
1995/2015; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated November 15, 1986, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series K,"
bearing interest as provided therein and maturing December 1, 2016;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated November 16, 1986, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series L,"
bearing interest as provided therein and maturing December 1, 2016;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated August 1, 1987, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series M,"
bearing interest as provided therein and maturing August 1, 1997;
and
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<PAGE>
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Or,Original Indenture as supplemented by the
Supplemental Indenture dated February 1, 1989, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series N,"
bearing interest as provided therein and maturing February 1, 2019;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated February 2, 1989, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series O,"
bearing interest as provided therein and maturing February 1, 2019;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 15, 1990, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series P,"
bearing interest as provided therein and maturing June 15, 2015;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated
November 1, 1990, bonds of a series designated "First Mortgage
Bonds, Pollution Control Series Q," and bonds of a series
designated "First Mortgage Bonds, Pollution Control Series R," each
series bearing interest as provided therein and maturing November
1, 2020; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 1, 1992, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series S,"
bearing interest as provided therein and maturing September 1,
2017; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 2, 1992, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series T,"
bearing interest as provided therein and maturing September 1,
2017; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated August 15, 1993, bonds of a series
designated "First Mortgage Bonds, Series due August 15, 2003,"
bearing interest at the rate of 6% per annum; and
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<PAGE>
WHEREAS, the County of Jefferson in the Commonwealth of
Kentucky (the "County") has agreed to issue $35,200,000 principal
amount of its Pollution Control Revenue Bonds, 1993 Series A
(Louisville Gas and Electric Company Project) (the "1993 Series A
Pollution Control Revenue Bonds") pursuant to the provisions of the
Indenture of Trust, dated as of August 15, 1993 (the "Series A
Pollution Control Indenture"), between and among the County and
BankAmerica National Trust Company, New York, New York, as Trustee,
Paying Agent and Bond Registrar (said Trustee or any successor
trustee under the Series A Pollution Control Indenure being
hereinafter referred to as the "Series A Pollution Control
Trustee"); and
WHEREAS, the County also has agreed to issue $102,000,000
principal amount of its Pollution Control Revenue Bonds, 1993
Series B, (Louisville Gas and Electric Company Project) (the "1993
Series B Pollution Control Revenue Bonds, and, together with the
1993 Series A Pollution Control Revenue Bonds, the "Pollution
Control Revenue Bonds") pursuant to the provisions of the Indenture
of Trust, dated as of August 15, 1993 (the "Series B Pollution
Control Indenture"), between and among the County and PNC Bank,
Kentucky, Inc., Louisville, Kentucky, as Trustee, Paying Agent and
Bond Registrar (said Trustee or any successor trustee under the
Series B Pollution Control Indenture being hereinafter referred to
as the Series B Pollution Control Trustee); and
WHEREAS, the proceeds of the 1993 Series A Pollution Control
Revenue Bonds and 1993 Series B Pollution Control Revenue Bonds
(other than any accrued interest, if any, thereon) will be loaned
by the County to the Company pursuant to the provisions of separate
Loan Agreements, each dated as of August 15, 1993, between the
County and the Company (the "Series A Agreement" and the "Series B
Agreement," respectively, and, collectively, the "Agreements"), to
provide a portion of the funds required to pay and discharge
$35,200,000 in outstanding principal amount of "County of
Jefferson, Kentucky, Pollution Control Revenue Bonds, 1976 Series
A (Louisville Gas and Electric Company Project)," dated September
1, 1976, $42,000,000 in outstanding principal amount of "County of
Jefferson, Kentucky, Pollution Control Revenue Bonds, 1978 Series
A (Louisville Gas and Electric Company Project)," dated June 1,
1978 and $60,000,000 in outstanding principal amount of "County of
Jefferson, Kentucky, Pollution Control Revenue Bonds, 1979 Series
A (Louisville Gas and Electric Company Project)," dated October 1,
1979 (collectively, the "Refunded Bonds"), which refunded Bonds
were used to finance the acquisition, construction and installation
of certain facilities for the control, containment, reduction and
abatement of air and water pollution and for the disposal of solid
waste at the Mill Creek and Cane Run Generating Stations of the
Company, which facilities are sometimes referred to as the
"Project" which Project is located in the County and is more fully
described in Exhibit A to the Agreements; and
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WHEREAS, payments by the Company under and pursuant to the
Agreements have been assigned by the County to the applicable
Pollution Control Trustee in order to secure the payment of the
applicable Pollution Control Revenue Bonds; and
WHEREAS, in order to further secure the payment of the 1993
Series A Pollution Control Revenue Bonds, the Company desires to
provide for the issuance under the Original Indenture to the Series
A Pollution Control Trustee of a new series of bonds designated
"First Mortgage Bonds, Pollution Control Series U" (sometimes
called "Bonds of Pollution Control Series U"), in a principal
amount equal to the principal amount of the 1993 Series A Pollution
Control Revenue Bonds, and with corresponding terms and maturity,
the Bonds of Pollution Control Series U to be issued as registered
bonds without coupons in denominations of a multiple of $1,000, and
in order to further secure the payment of the 1993 Series B
Pollution Control Revenue Bonds, the Company desires to provide for
the issuance under the Original Indenture to the Series B Pollution
Control Trustee of a new series of bonds designated "First Mortgage
Bonds, Pollution Control Series V" (sometimes called "Bonds of
Pollution Control Series V"), in a principal amount equal to the
principal amount of the 1993 Series B Pollution Control Revenue
Bonds, and with corresponding terms and maturity, the bonds of
Pollution Control Series V to be issued as registered bonds without
coupons in denominations of a multiple of $1,000; and the Bonds of
Pollution Control Series U and the Bonds of Pollution Control
Series V are to be substantially in the form and tenor following,
to-wit:
(Form of Bonds of Pollution Control Series U and V)
This Bond has not been registered under the Securities Act of
1933, as amended, and may not be offered or sold in contravention
of said Act and is not transferable except to a successor Trustee
under the Indenture of Trust dated as of August 15, 1993, from the
County of Jefferson, Kentucky, to [BankAmerica National Trust
Company, New York, New York] [PNC Bank, Kentucky, Inc., Louisville,
Kentucky], as Trustee, Paying Agent and Bond Registrar.
LOUISVILLE GAS AND ELECTRIC COMPANY
(Incorporated under the laws of the State of Kentucky)
First Mortgage Bond
Pollution Control Series
No.___________ $___________
Louisville Gas and Electric Company, a corporation organized
and existing under and by virtue of the laws of the State of
Kentucky (herein called the "Company"), for value received, hereby
promises to pay to [BankAmerica National Trust Company, New York,
New York][PNC Bank, Kentucky, Inc., Louisville, Kentucky], as
Trustee under the Indenture of Trust (the "Pollution Control
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<PAGE>
Indenture") dated as of August 15, 1993, from the County of
Jefferson, Kentucky, to [BankAmerica National Trust Company, New
York, New York][PNC Bank, Kentucky, Inc., Louisville, Kentucky], or
any successor trustee under the Pollution Control Indenture (the
"Pollution Control Trustee") and at the office of Harris Trust and
Savings Bank, Chicago, Illinois (the "Trustee") the sum of
_______________________ Dollars in lawful money of the United
States of America on the Demand Redemption Date, as hereinafter
defined, and to pay on the Demand Redemption Date to the Pollution
Control Trustee, interest hereon from the Initial Interest Accrual
Date, as hereinafter defined, to the Demand Redemption Date at the
same rate or rates per annum then and thereafter from time to time
borne by the [1993 Series A Pollution Control Revenue Bonds (for
the Bonds of Pollution Control Series U)] [1993 Series B Pollution
Control Revenue Bonds (for the Bonds of Pollution Control Series
V)], in like money, said interest being payable at the office of
the Trustee in Chicago, Illinois, subject to the provisions
hereinafter set forth in the event of a rescission of a Redemption
Demand, as hereinafter defined.
This bond is one of a duly authorized issue of bonds of the
Company, known as its First Mortgage Bonds, unlimited in aggregate
principal amount, which issue of bonds consists, or may consist of
several series of varying denominations, dates and tenors, all
issued and to be issued under and equally secured (except in so far
as a sinking fund, or similar fund, established in accordance with
the provisions of the Indenture may afford additional security for
the bonds of any specific series) by a Trust Indenture dated
November 1, 1949, and Supplemental Indentures thereto dated
February 1, 1952, February 1, 1954, September 1, 1957, October 1,
1960, June 1, 1966, June 1, 1968, June 1, 1970, August 1, 1971,
June 1, 1972, February 1, 1975, September 1, 1975, September
1,1976, October 1, 1976, June 1, 1978, February 15, 1979, September
1, 1979, September 15,1979, September 15,1981, March 1, 1982, March
15, 1982, September 15, 1982, February 15, 1984, July 1, 1985,
November 15, 1986, November 16,1986, August 1, 1987, February
1,1989, February 2, 1989, June 15, 1990, November 1, 1990,
September 1, 1992, September 2, 1992, August 15, 1993 and August
16, 1993 (all of which instruments are herein collectively called
the "Indenture"), executed by the Company to the Trustee, to which
Indenture reference is hereby made for a description of the
property mortgaged and pledged, the nature and extent of the
security, the rights of the holders of the bonds as to such
security, and the terms and conditions upon which the bonds may be
issued under the Indenture and are secured. The principal hereof
may be declared or may become due on the conditions, in the manner
and at the time set forth in the Indenture, upon the happening of
a completed default as in the Indenture provided. The Indenture
provides that such declaration may in certain events be waived by
the holders of a majority in principal amount of the bonds
outstanding.
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<PAGE>
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 . The bonds of this Series have been
issued to the Pollution Control Trustee under the Pollution Control
Indenture to secure payment of the Pollution Control Revenue Bonds,
Series (Louisville Gas and Electric Company Project)
(the "Pollution Control Revenue Bonds") issued by the County of
Jefferson, Kentucky (the "County") under the Pollution Control
Indenture, the proceeds of which have been or are to be loaned to
the Company pursuant to the provisions of the Loan Agreement dated
as of October 15, 1993 (the "Agreement") between the Company and
the County. The maturity of the obligation represented by the bonds
of this Series is [October 15, 2020] [April 15, 2023]. The date of
maturity of the obligation represented by the bonds of this Series
is hereinafter referred to as the Final Maturity Date. The bonds of
this Series shall bear interest from the Initial Interest Accrual
Date, as hereinafter defined, at the same rate or rates per annum
then and thereafter from time to time borne by the Pollution
Control Revenue Bonds.
With the consent of the Company and to the extent permitted
by and as provided in the Indenture, the rights and obligations of
the Company and/or of the holders of the bonds, and/or the terms
and provisions of the Indenture and/or of any instruments
supplemental thereto may be modified or altered by affirmative vote
of the holders of at least seventy percent in principal amount of
the bonds then outstanding under the Indenture and any instruments
supplemental thereto (excluding bonds disqualified from voting by
reason of the interest of the Company or of certain related persons
therein as provided in the Indenture), and by the affirmative vote
of at least seventy percent in principal amount of the bonds of any
series entitled to vote then outstanding under the Indenture and
any instruments supplemental thereto (excluding bonds disqualified
from voting as aforesaid) and affected by such modification or
alteration, in case one or more but less than all of the series of
bonds then outstanding are so affected; provided that no such
modification or alteration shall permit the extension of the
maturity of the principal of this bond or the reduction in the rate
of interest, if any, hereon or any other modification in the terms
of payment of such principal or interest, if any, or the taking of
certain other action as more fully set forth in the Indenture,
without the consent of the holder hereof.
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
Pollution Control Indenture and the Pollution Control Revenue
Bonds) on the Pollution Control 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
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<PAGE>
bonds of this Series shall be redeemable in whole upon receipt by
the Trustee of a written demand (hereinafter called a "Redemption
Demand") from the Pollution Control 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 Pollution Control
Indenture, specifying the last date to which interest on the
Pollution Control Revenue Bonds has been paid (such date being
hereinafter referred to as the "Initial Interest Accrual Date") and
demanding redemption of the bonds of this Series. 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 this Series 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) the Final Maturity Date, 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) the Final Maturity Date. The Trustee
shall mail notice of the Demand Redemption Date (such notice being
hereinafter called the "Demand Redemption Notice") to the Pollution
Control 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 the
Final Maturity Date, such date shall be deemed to be the Demand
Redemption Date without further action (including actions specified
in this paragraph) by the Pollution Control Trustee, the Trustee or
the Company. The bonds of this Series shall be redeemed by the
Company on the Demand Redemption Date, upon surrender thereof by
the Pollution Control Trustee to the Trustee, at a redemption price
equal to the principal amount thereof, plus accrued interest
thereon at the rate per annum set forth in the third paragraph of
this Bond, from the Initial Interest Accrual Date to the Demand
Redemption Date. If a Redemption Demand is rescinded by the
Pollution Control 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 this Series shall cease to accrue, all
interest accrued thereon shall be automatically rescinded and
cancelled and the Company shall not be obligated to make any
payments of principal of or interest on the bonds of this Series;
but no such rescission shall extend to or affect any subsequent
default or impair any right consequent thereon.
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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 this Series shall bear interest at the rate
per annum set forth in the third paragraph of this Bond, from the
Initial Interest Accrual Date, as specified in a written notice to
the Trustee from the Pollution Control Trustee, and the principal
of and interest on the bonds of this Series from the Initial
Interest Accrual Date shall be payable in accordance with the
provisions of the Indenture.
Upon payment of the principal of and premium, if any, and
interest on the Pollution Control Revenue Bonds, whether at
maturity or prior to maturity by redemption or otherwise, and the
surrender thereof to and cancellation thereof by the Pollution
Control Trustee (other than any Pollution Control Revenue Bond that
was cancelled by the Pollution Control Trustee and for which one or
more other Pollution Control Revenue Bonds were delivered and
authenticated pursuant to the Pollution Control Indenture in lieu
of or in exchange or substitution for such cancelled Pollution
Control Revenue Bond), or upon provision for the payment thereof
having been made in accordance with the Pollution Control
Indenture, bonds of this Series in a principal amount equal to the
principal amount of the Pollution Control 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 this
Series shall be surrendered by the Pollution Control Trustee to the
Trustee and shall be cancelled by the Trustee.
No recourse shall be had for the payment of principal of, or
interest, if any, on this bond, or any part thereof, or of any
claim based hereon or in respect hereof or of the Indenture,
against any incorporator, or any past, present or future
stockholder, officer or director of the Company or of any
predecessor or successor corporation, either directly or through
the Company, or through any such predecessor or successor
corporation, or through any receiver or trustee in bankruptcy,
whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released,
as more fully provided in the Indenture.
This bond shall not be valid or become obligatory for any
purpose unless and until the certificate of authentication hereon
shall have been signed by or on behalf of Harris Trust and Savings
Bank, as Trustee under the Indenture, or its successor thereunder.
11
<PAGE>
IN WITNESS WHEREOF, LOUISVILLE GAS AND ELECTRIC COMPANY has
caused this instrument to be signed in its name by its President or
a Vice President or with the facsimile signature of its President,
and its corporate seal, or a facsimile thereof, to be hereto
affixed and attested by its Secretary or with the facsimile
signature of its Secretary.
Dated
LOUISVILLE GAS AND ELECTRIC COMPANY
Attest: By:_____________________________________________
(Vice) President
___________________________________
Secretary
and
WHEREAS, the Company is desirous of specifically assigning,
conveying, mortgaging, pledging, transferring and setting over
additional property unto the Trustee and to its respective
successors in trust; and
WHEREAS, Sections 4.01 and 21.03 of the Original Indenture
provide in substance that the Company and the Trustee may enter
into indentures supplemental thereto for the purposes, among
others, of creating and setting forth the particulars of any new
series of bonds and of providing the terms and conditions of the
issue of the bonds of any series not expressly provided for in the
Original Indenture and of assigning, conveying, mortgaging,
pledging and transferring unto the Trustee additional property of
the Company, and for any other purpose not inconsistent with the
terms of the Original Indenture; and
WHEREAS, the execution and delivery of this Supplemental
Indenture have been duly authorized by a resolution adopted by the
Board of Directors of the Company;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
Louisville Gas and Electric Company, in consideration of the
premises and of one dollar to it duly paid by the Trustee at or
before the ensealing and delivery of these presents, the receipt
whereof is hereby acknowledged, and other good and valuable
considerations, does hereby covenant and agree to and with Harris
Trust and Savings Bank, as Trustee, and its successors in the trust
under the Indenture for the benefit of those who hold or shall hold
the bonds issued or to be issued thereunder, as follows:
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<PAGE>
ARTICLE I.
SPECIFIC SUBJECTION OF PROPERTY TO THE
LIEN OF THE ORIGINAL INDENTURE
SECTION 1.01. The Company in order better to secure the
payment, both of principal and interest, of all bonds of the
Company at any time outstanding under the Indenture, according to
their tenor and effect, and the performance of and compliance with
the covenants and conditions in the Indenture contained, has
granted, bargained, sold, warranted, released, conveyed, assigned,
transferred, mortgaged, pledged, set over and confirmed and by
these presents does grant, bargain, sell, warrant, release, convey,
assign, transfer, mortgage, pledge, set over and confirm unto
Harris Trust and Savings Bank as Trustee and to its respective
successors in said trust forever, subject to the rights reserved by
the Company in and by the provisions of the Indenture, all the
property described and mentioned or enumerated in a schedule hereto
annexed and marked Schedule A, reference to said schedule being
hereby made with the same force and effect as if the same were
incorporated herein at length; together with all and singular the
tenements, hereditaments and appurtenances belonging or in any wise
appertaining to the aforesaid property or any part thereof with the
reversion and reversions, remainder and remainders, tolls, rents
and revenues, issues, income, product and profits thereof;
Also, in order to subject all of the personal property and
chattels of the Company to the lien of the Indenture in conformity
with the provisions of the Uniform Commercial Code of the State of
Kentucky, all steam, hydro and other electric generating plants,
including buildings and other structures, turbines, generators,
boilers, condensing equipment, and all other equipment;
substations; electric transmission and distribution systems,
including structures, poles, towers, fixtures, conduits,
insulators, wires, cables, transformers, services and meters;
steam and heating mains and equipment; gas generating and coke
plants, including buildings, holders and other structures, boilers
and other boiler plant equipment, benches, retorts, coke ovens,
water gas sets, condensing and purification equipment, piping and
other accessory works equipment; facilities for gas storage whether
above or below surface; gas transmission and distribution systems,
including structures, mains, compressor stations, purifier
stations, pressure holders, governors, services and meters; office,
shop, garage and other general buildings and structures, furniture
and fixtures; and all municipal and other franchises and all
leaseholds, licenses, permits, easements, and privileges; all as
now owned or hereafter acquired by the Company pursuant to the
provisions of the Original Indenture; and
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All the estate, right, title and interest and claim
whatsoever, at law as well as in equity, which the Company now has
or may hereafter acquire in and to the aforesaid property and
franchises and every part and parcel thereof;
Excluding, however, (1) all shares of stock, bonds, notes,
evidences of indebtedness and other securities other than such as
may be or are required to be deposited from time to time with the
Trustee in accordance with the provisions of the Indenture; (2)
cash on hand and in banks other than such as may be or is required
to be deposited from time to time with the Trustee in accordance
with the provisions of the Indenture; (3) contracts, claims, bills
and accounts receivable and chooses in action other than such as
may be or are required to be from time to time assigned to the
Trustee in accordance with the provisions of the Indenture; (4)
motor vehicles; (5) any stock of goods, wares and merchandise,
equipment, materials and supplies acquired for the purpose of sale
or lease in the usual course of business or for the purpose of
consumption in the operation, construction or repair of any of the
properties of the Company; and (6) the properties described in
Schedule B annexed to the Original Indenture.
To have and to hold all said property, real, personal and
mixed, mortgaged, pledged or conveyed by the Company as aforesaid,
or intended so to be, unto the Trustee and its successors and
assigns forever, subject, however, to permissible encumbrances as
defined in Section 1.09 of the Original Indenture and to the
further reservations, covenants, conditions, uses and trusts set
forth in the Indenture, in trust nevertheless for the same purposes
and upon the same conditions as are set forth in the Indenture.
ARTICLE II.
PROVISIONS OF BONDS OF POLLUTION CONTROL SERIES U AND V
SECTION 2.01. There is hereby created, for issuance under the
Original Indenture, a series of bonds designated Pollution Control
Series U, each of which shall bear the descriptive title "First
Mortgage Bonds, Pollution Control Series U" and the form thereof
shall contain suitable provisions with respect to the matters
specified in this section. The Bonds of Pollution Control Series U
shall be printed, lithographed or typewritten and shall be
substantially of the tenor and purport previously recited. The
Bonds of Pollution Control Series U shall be issued as registered
bonds without coupons in denominations of a multiple of $1,000 and
shall be registered in the name of the Series A Pollution Control
Trustee. The Bonds of Pollution Control Series U shall be dated as
of the date of their authentication.
The Bonds of Pollution Control Series U shall be payable, both
as to principal and interest, at the office of the Trustee in
Chicago, Illinois, in lawful money of the United States of America.
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The maturity of the obligation represented by the Bonds of
Pollution Control Series U is August 15, 2013. The date of maturity
of the obligation represented by the Bonds of Pollution Control
Series U is hereinafter referred to as the Series U Final Maturity
Date. The Bonds of Pollution Control Series U shall bear interest
from the Series U Initial Interest Accrual Date, as hereinafter
defined, at the same rate or rates then and thereafter from time to
time borne by the 1993 Series A Pollution Control Revenue Bonds.
SECTION 2.02. There is hereby created, for issuance under the
Original Indenture, a series of bonds designated Pollution Control
Series V, each of which shall bear the descriptive title "First
Mortgage Bonds, Pollution Control Series V" and the form thereof
shall contain suitable provisions with respect to the matters
specified in this section. The Bonds of Pollution Control Series V
shall be printed, lithographed or typewritten and shall be
substantially of the tenor and purport previously recited. The
Bonds of Pollution Control Series V shall be issued as registered
bonds without coupons in denominations of a multiple of $1,000 and
shall be registered in the name of the Pollution Control Trustee.
The Bonds of Pollution Control Series V shall be dated as of the
date of their authentication.
The Bonds of Pollution Control Series V shall be payable, both
as to principal and interest, at the office of the Trustee in
Chicago, Illinois, in lawful money of the United States of America.
The maturity of the obligation represented by the bonds of
Pollution Control Series V is August 15, 2019. The date of maturity
of the obligation represented by the Bonds of Pollution Control
Series V is hereinafter referred to as the Series V Final Maturity
Date. The Bonds of Pollution Control Series V shall bear interest
from the Series V Initial Interest Accrual Date, as hereinafter
defined, at the same rate or rates then and thereafter from time to
time borne by the 1993 Series B Pollution Control Revenue Bonds.
SECTION 2.03. Except as provided in the next succeeding
paragraph of this Section 2.03, in the event of a default under
Section 9.1 of the Series A 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 1993 Series A Pollution
Control Indenture and the 1993 Pollution Control Revenue Bonds) on
the Series A Pollution Control 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 Pollution Control Series U shall be redeemable in whole
upon receipt by the Trustee of a written demand (hereinafter called
a "Series U Redemption Demand") from the 1993 Pollution Control
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 Series A Pollution Control Indenture, specifying the last
date to which interest on the 1993 Series A Pollution Control
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<PAGE>
Revenue Bonds has been paid (such date being hereinafter referred
to as the "Series U Initial Interest Accrual Date") and demanding
redemption of the Bonds of Pollution Control Series U. The Trustee
shall, within 10 days after receiving such Series U 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 Series U Redemption Demand, the Company
shall fix a date on which it will redeem the Bonds of Pollution
Control Series U so demanded to be redeemed hereinafter called the
"Series U Demand Redemption Date"). Notice of the date fixed as
the Series U Demand Redemption Date shall be mailed by the Company
to the Trustee at least 30 days prior to such Series U Demand
Redemption Date. The date to be fixed by the Company as and for
the Series U 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 Series U Redemption Demand or (ii) the Series U
Final Maturity Date; provided that if the Trustee shall not have
received such notice fixing the Series U Demand Redemption Date
within 90 days after receipt by it of the Series U Redemption
Demand, the Series U Demand Redemption Date shall be deemed to be
the earlier of (i) the 120th day after receipt by the Trustee of
the Series U Redemption Demand or (ii) the Series U Final Maturity
Date. The Trustee shall mail notice of the Series U Demand
Redemption Date (such notice being hereinafter called the "Series
U Demand Redemption Notice") to the Series A Pollution Control
Trustee not more than 10 nor less than five days prior to the
Series U Demand Redemption Date. Notwithstanding the foregoing, if
a default to which this paragraph is applicable is existing on the
Series U Final Maturity Date, such date shall be deemed to be the
Series U Demand Redemption Date without further action (including
actions specified in this paragraph) by the 1993 Series A Pollution
Control Trustee, the Trustee or the Company. The Bonds of
Pollution Control Series U shall be redeemed by the Company on the
Series U Demand Redemption Date, upon surrender thereof by the
Series A Pollution Control Trustee to the Trustee, at a redemption
price equal to the principal amount thereof, plus accrued interest
thereon at the rate per annum set forth in Section 2.01 hereof,
from the Series U Initial Interest Accrual Date to the Series U
Demand Redemption Date. If a Series U Redemption Demand is
rescinded by the Series A Pollution Control Trustee by written
notice to the Trustee prior to the Series U Demand Redemption Date,
no Series U Demand Redemption Notice shall be given, or, if already
given, shall be automatically annulled, and interest on the Bonds
of Pollution Control Series U shall cease to accrue, all interest
accrued thereon shall be automatically rescinded and cancelled and
the Company shall not be obligated to make any payments of
principal of or interest on the Bonds of Pollution Control Series
U; but no such rescission shall extend to or affect any subsequent
default or impair any right consequent thereon.
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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 Pollution Control Series U shall bear
interest at the rate per annum set forth in Section 2.01 hereof,
from the Series U Initial Interest Accrual Date, as specified in a
written notice to the Trustee from the 1993 Pollution Control
Trustee, and the principal of and interest on the Bonds of
Pollution Control Series U from the Series U Initial Interest
Accrual Date shall be payable in accordance with the provisions of
the Indenture.
Anything herein contained to the contrary notwithstanding, the
Trustee is not authorized to take any action pursuant to a Series
U Redemption Demand or a rescission thereof or a written notice
required by this Section 2.03, and such Series U Redemption Demand,
rescission or notice shall be of no force or effect, unless it is
executed in the name of the Series A Pollution Control Trustee by
one of its Vice Presidents.
SECTION 2.04. Except as provided in the next succeeding
paragraph of this Section 2.04, in the event of a default under
Section 9.1 of the 1995 Agreement or in the event of a default in
the payment of the principal of, premium of, if any, or interest
(and such default in the payment of interest continues for the full
grace period, if any, permitted by the Series B Pollution Control
Indenture and the 1993 Series B Pollution Control Revenue Bonds) on
the 1993 Series B Pollution Control 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 Pollution Control Series V shall be redeemable in whole
upon receipt by the Trustee of a written demand (hereinafter called
a "Series V Redemption Demand") from the Series B Pollution Control
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 Series B Pollution Control Indenture, specifying the last
date to which interest on the 1993 Series B Pollution Control
Revenue Bonds has been paid (such date being hereinafter referred
to as the "Series V Initial Interest Accrual Date") and demanding
redemption of the Bonds of Pollution Control Series V. The Trustee
shall, within 10 days after receiving such Series V 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 Series V Redemption Demand, the Company
shall fix a date on which it will redeem the Bonds of Pollution
Control Series V so demanded to be redeemed (hereinafter called the
"Series V Demand Redemption Date"). Notice of the date fixed as the
Series V Demand Redemption Date shall be mailed by the Company to
the Trustee at least 30 days prior to such Series V Demand
Redemption Date. The date to be fixed by the Company as and for the
Series V Demand Redemption Date may be any date up to and including
the earlier of (i) the 120th day after receipt by the Trustee of
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<PAGE>
the Series V Redemption Demand or (ii) the Series V Final Maturity
Date; provided that if the Trustee shall not have received such
notice fixing the Series V Demand Redemption Date within 90 days
after receipt by it of the Series V Redemption Demand, the Series
V Demand Redemption Date shall be deemed to be the earlier of (i)
the 120th day after receipt by the Trustee of the Series V
Redemption Demand or (ii) the Series V Final Maturity Date. The
Trustee shall mail notice of the Series V Demand Redemption Date
(such notice being hereinafter called the "Series V Demand
Redemption Notice") to the Series B Pollution Control Trustee not
more than 10 nor less than five days prior to the Series V Demand
Redemption Date. Notwithstanding the foregoing, if a default to
which this paragraph is applicable is existing on the Series V
Final Maturity Date, such date shall be deemed to be the Series V
Demand Redemption Date without further action (including actions
specified in this paragraph) by the Series B Pollution Control
Trustee, the Trustee or the Company. The Bonds of Pollution Control
Series V shall be redeemed by the Company on the Series V Demand
Redemption Date, upon surrender thereof by the Series Pollution
Control Trustee to the Trustee, at a redemption price equal to the
principal amount thereof, plus accrued interest thereon at the rate
per annum set forth in Section 2.02 hereof, from the Series V
Initial Interest Accrual Date to the Series V Demand Redemption
Date. If a Series V Redemption Demand is rescinded by the Series B
Pollution Control Trustee by written notice to the Trustee prior to
the Series V Demand Redemption Date, no Series V Demand Redemption
Notice shall be given, or, if already given, shall be automatically
annulled, and interest on the Bonds of Pollution Control Series V
shall cease to accrue, all interest accrued thereon shall be
automatically rescinded and cancelled and the Company shall not be
obligated to make any payments of principal of or interest on the
Bonds of Pollution Control Series V; 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 Pollution Control Series V shall bear
interest at the rate per annum set forth in Section 2.02 hereof,
from the Series V Initial Interest Accrual Date, as specified in a
written notice to the Trustee from the Series B Pollution Control
Trustee, and the principal of and interest on the Bonds of
Pollution Control Series V from the Series V Initial Interest
Accrual Date shall be payable in accordance with the provisions of
the Indenture.
Anything herein contained to the contrary notwithstanding, the
Trustee is not authorized to take any action pursuant to a Series
V Redemption Demand or a rescission thereof or a written notice
required by this Section 2.04, and such Series V Redemption Demand,
rescission or notice shall be of no force or effect, unless it is
18
<PAGE>
executed in the name of the Series B Pollution Control Trustee by
one of its Vice Presidents.
SECTION 2.05. Upon payment of the principal of and premium,
if any, and interest on the 1993 Series A Pollution Control Revenue
Bonds, whether at maturity or prior to maturity by redemption or
otherwise, and the surrender thereof to and cancellation thereof by
the Series A Pollution Control Trustee (other than any 1993 Series
A Pollution Control Revenue Bond that was cancelled by the Series
A Pollution Control Trustee and for which one or more other 1993
Series A Pollution Control Revenue Bonds were delivered and
authenticated pursuant to the Series A Pollution Control Indenture
in lieu of or in exchange or substitution for such cancelled 1993
Series A Pollution Control Revenue Bond), or upon provision for the
payment thereof having been made in accordance with the Series A
Pollution Control Indenture, Bonds of Pollution Control Series U in
a principal amount equal to the principal amount of the 1993 Series
A Pollution Control 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 Pollution Control Series U shall be
surrendered by the Series A Pollution Control Trustee to the
Trustee and shall be cancelled and destroyed by the Trustee, and a
certificate of such cancellation and destruction shall be delivered
to the Company.
SECTION 2.06. Upon payment of the principal of and premium,
if any, and interest on the 1993 Series B Pollution Control Revenue
Bonds, whether at maturity or prior to maturity by redemption or
otherwise, and the surrender thereof to and cancellation thereof by
the Series B Pollution Control Trustee (other than any 1993 Series
B Pollution Control Revenue Bond that was cancelled by the Series
B Pollution Control Trustee and for which one or more other 1993
Series B Pollution Control Revenue Bonds were delivered and
authenticated pursuant to the Series B Pollution Control Indenture
in lieu of or in exchange or substitution for such cancelled 1993
Series B Pollution Control Revenue Bond), or upon provision for the
payment thereof having been made in accordance with the Series B
Pollution Control Indenture, Bonds of Pollution Control Series V in
a principal amount equal to the principal amount of the 1993 Series
B Pollution Control 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 Pollution Control Series V shall be
surrendered by the Series B Pollution Control Trustee to the
Trustee and shall be cancelled and destroyed by the Trustee, and a
certificate of such cancellation and destruction shall be delivered
to the Company.
SECTION 2.07. The Series A Pollution Control Trustee as the
registered holder of the Bonds of Pollution Control Series U and
the Series B Pollution Control Trustee as the registered holder of
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<PAGE>
the Bonds of Pollution Control Series V at its option may surrender
the same at the office of the Trustee, in Chicago, Illinois, or
elsewhere, if authorized by the Company, for cancellation, in
exchange for other bonds of the same series of the same aggregate
principal amount. Thereupon, and upon receipt of any payment
required under the provisions of Section 2.08 hereof, the Company
shall execute and deliver to the Trustee and the Trustee shall
authenticate and deliver such other registered bonds to such
registered holder at its office or at any other place specified as
aforesaid.
SECTION 2.08. No charge shall be made by the Company for any
exchange or transfer of Bonds of Pollution Control Series U or
Pollution Control Series V other than for taxes or other
governmental charges, if any, that may be imposed in relation
thereto.
ARTICLE III.
MISCELLANEOUS
SECTION 3.01. The recitals of fact herein and in the bonds
(except the Trustee's Certificate) shall be taken as statements of
the Company and shall not be construed as made or warranted by the
Trustee. The Trustee makes no representations as to the value of
any of the property subject to the lien of the Indenture, or any
part thereof, or as to the title of the Company thereto, or as to
the security afforded thereby and hereby, or as to the validity of
this Supplemental Indenture and the Trustee shall incur no
responsibility in respect of such matters.
SECTION 3.02. This Supplemental Indenture shall be construed
in connection with and as a part of the Original Indenture.
SECTION 3.03.(a) If any provision of this Supplemental
Indenture limits, qualifies or conflicts with another provision of
the Original Indenture or this Supplemental Indenture required to
be included in indentures qualified under the Trust Indenture act
of 1939, as amended (as enacted prior to the date of this
Supplemental Indenture) by any of the provisions of Sections 310 to
317, inclusive, of the said Act, such required provision shall
control.
(b) In case any one or more of the provisions contained in
this Supplemental Indenture or in the bonds issued hereunder shall
be invalid, illegal, or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected, impaired,
prejudiced or disturbed thereby.
SECTION 3.04. Wherever in this Supplemental Indenture the
word "Indenture" is used without either prefix, "Original" or
"Supplemental," such word was used intentionally to include in its
meaning both the Original Indenture and all indentures supplemental
thereto.
20
<PAGE>
SECTION 3.05. Wherever in this Supplemental Indenture either
of the parties hereto is named or referred to, this shall be deemed
to include the successors or assigns of such party, and all the
covenants and agreements in this Supplemental Indenture contained
by or on behalf of the Company or by or on behalf of the Trustee
shall bind and inure to the benefit of the respective successors
and assigns of such parties, whether so expressed or not.
SECTION 3.06.(a) This Supplemental Indenture may be
simultaneously executed in several counterparts, and all said
counterparts executed and delivered, each as an original, shall
constitute but one and the same instrument.
(b) The Table of Contents and the descriptive headings of the
several Articles of this Supplemental Indenture were formulated,
used and inserted in this Supplemental Indenture for convenience
only and shall not be deemed to affect the meaning or construction
of any of the provisions hereof.
IN WITNESS WHEREOF, the party of the first part has caused its
corporate name and seal to be hereunto affixed and this
Supplemental Indenture to be signed by its President or a Vice
President, and attested by its Secretary for and in its behalf, and
the party of the second part to evidence its acceptance of the
trust hereby created, has caused its corporate name and seal to be
hereunto affixed, and this Supplemental Indenture to be signed by
its President, a Vice President or an Assistant Vice President, and
attested by its Secretary or an Assistant Secretary, for and in its
behalf, all done as of the sixteenth day of August, 1993.
LOUISVILLE GAS AND ELECTRIC COMPANY
By:_____________________________________________
M. LEE FOWLER
Vice President
(Corporate Seal)
ATTEST:
______________________________________
VICTOR A. STAFFIERI
Senior Vice President, General
Counsel and Secretary
HARRIS TRUST AND SAVINGS BANK, TRUSTEE
By:_____________________________________________
C. POTTER
Assistant Vice President
21
<PAGE>
(Corporate Seal)
ATTEST:
______________________________________
J. BARTOLINI
Assistant Secretary
STATE OF KENTUCKY )
) SS:
COUNTY OF JEFFERSON )
BE IT REMEMBERED that on this 25th day of August, 1993, before
me, a Notary Public duly commissioned in and for the County and
State aforesaid, personally appeared M. LEE FOWLER and VICTOR A.
STAFFIERI, respectively, Vice President and Senior Vice President,
General Counsel and Secretary of Louisville Gas and Electric
Company, a corporation organized and existing under and by virtue
of the laws of the State of Kentucky, who are personally known to
me to be such officers, respectively, and who are personally known
to me to be the same persons who executed as officers the foregoing
instrument of writing, and such persons duly acknowledged before me
the execution of the foregoing instrument of writing to be their
act and deed and the act and deed of said corporation.
WITNESS my hand and notarial seal this 25th day of August,
1993.
PATRICIA A. ROSE
NOTARY PUBLIC
My commission expires: 1-23-96
STATE OF ILLINOIS )
) SS:
COUNTY OF COOK )
BE IT REMEMBERED that on this 24th day of August, 1993, before
me, a Notary Public duly commissioned in and for the County and
State aforesaid, personally appeared C. POTTER and J. BARTOLINI,
respectively, Assistant Vice President and Assistant Secretary of
Harris Trust and Savings Bank, a corporation organized and existing
under and by virtue of the laws of the State of Illinois, who are
personally known to me to be such officers, respectively, and who
are personally known to me to be the same persons who executed as
officers the foregoing instrument of writing, and such persons duly
22
<PAGE>
acknowledged before me the execution of the foregoing instrument of
writing to be their act and deed and the act and deed of said
corporation.
WITNESS my hand and notarial seal this 24th day of August,
1993.
T. MUZQUIZ
NOTARY PUBLIC
My commission expires: 7-12-97
This Instrument Prepared by:
Susan M. Jenkins
LG&E Energy Corp.
220 West Main Street
Louisville, Kentucky 40202
By:_______________________________
Susan M. Jenkins, Esq.
23
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SCHEDULE A
The following property situated, lying and being in the County of
Jefferson, State of Kentucky, to-wit:
Electric Transmission Lines
A 138KV wood, concrete and steel transmission line circuit #3888
in Louisville, Jefferson County, Kentucky. This line is built
between Breckenridge Substation and Hurstbourne Substation at a
distance of approximately 4.04 miles.
A-1
<PAGE>
SUPPLEMENTAL INDENTURE
FROM
LOUISVILLE GAS AND ELECTRIC COMPANY
TO
HARRIS TRUST AND SAVINGS BANK
Trustee
__________________________
DATED OCTOBER 15, 1993
__________________________
SUPPLEMENTAL TO TRUST INDENTURE
DATED NOVEMBER 1, 1949
<PAGE>
Table of Contents
Page
Parties 1
Recitals 1
Form of Bonds of Pollution Control Series W and X 5
Further Recitals 8
ARTICLE I.
SPECIFIC SUBJECTION OF PROPERTY TO THE LIEN
OF THE ORIGINAL INDENTURE.
Section 1.01 Grant of certain property, including
all personal property to comply with
Uniform commercial Code of the State
of Kentucky, subject to permissible
encumbrances and other exceptions
contained in Original Indenture 8
ARTICLE II.
PROVISIONS OF BONDS OF POLLUTION
CONTROL SERIES W AND X.
Section 2.01 Terms of Bonds of Pollution Control
Series W 9
Section 2.02 Terms of Bonds of Pollution Control
Series X 10
Section 2.03 Payment of principle and interest
- Bonds of Pollution Control Series W 10
Section 2.04 Payment of principle and interest
- Bonds of Pollution Control Series X 11
Section 2.05 Bonds of Pollution Control Series
W deemed fully paid upon payment of
corresponding Pollution Control
Revenue Bonds 12
Section 2.06 Bonds of Pollution Control Series X
deemed fully paid upon payment of
corresponding Pollution Control
Revenue Bonds 12
Section 2.07 Interchangeability of Bonds 13
Section 2.08 Charges upon exchange or transfer
of bonds 13
i.
<PAGE>
ARTICLE III.
MISCELLANEOUS.
Section 3.01 Recitals of fact, except as stated,
are statements of the Company 13
Section 3.02 Supplemental Indenture to be
construed as a part of the
Original Indenture 13
Section 3.03 (a) Trust Indenture Act to control 13
(b) Severability of provisions contained
in Supplemental Indenture and bonds 13
Section 3.04 Word "Indenture" as used herein
includes in its meaning the
Original Indenture and all
indentures supplemental thereto 13
Section 3.05 References to either party in
Supplemental Indenture include
successors or assigs 13
Section 3.06 (a) Provision for execution in
counterparts 14
(b) Table of contents and descriptive
headings of Articles not to
affect meaning 14
Schedule A A-1
ii.
<PAGE>
Supplemental Indenture made as of the fifteenth day of October,
1993, by and between LOUISVILLE GAS AND ELECTRIC COMPANY, a
corporation duly organized and existing under and by virtue of the
laws of the State of Kentucky, having its principal office in the
City of Louisville, County of Jefferson, in said State of Kentucky
(the "Company"), the party of the first part, and HARRIS TRUST AND
SAVINGS BANK, a corporation duly organized and existing under and
by virtue of the laws of the State of Illinois, having its
principal office at 111 West Monroe Street, City of Chicago, County
of Cook, State of Illinois 60690, as Trustee (the "Trustee"), party
of the second part;
WITNESSETH:
WHEREAS, the Company has heretofore executed and delivered to
the Trustee its Trust Indenture (the "Original Indenture"), made as
of November 1, 1949, whereby the Company granted, bargained, sold,
warranted, released, conveyed, assigned, transferred, mortgaged,
pledged, set over and confirmed unto the Trustee and to its
respective successors in trust, all property, real, personal and
mixed then owned or thereafter acquired or to be acquired by the
Company (except as therein excepted from the lien thereof) and
subject to the rights reserved by the Company in and by the
provisions of the Original Indenture, to be held by said Trustee in
trust in accordance with the provisions of the Original Indenture
for the equal pro rata benefit and security of all and each of the
bonds issued and to be issued thereunder in accordance with the
provisions thereof; and
WHEREAS, Section 2.01 of the Original Indenture provides that
bonds may be issued thereunder in one or more series, each series
to have such distinctive designation as the Board of Directors of
the Company may select for such series; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture, bonds of a series
designated "First Mortgage Bonds, Series due November 1, 1979,"
bearing interest at the rate of 2% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated February 1, 1952, bonds of a series
designated "First Mortgage Bonds, Series due February 1, 1982,"
bearing interest at the rate of 3 1/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated February 1, 1954, bonds of a series
designated "First Mortgage Bonds, Series due February 1, 1984,"
bearing interest at the rate of 3 1/8% per annum; and
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<PAGE>
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 1, 1957, bonds of a series
designated "First Mortgage Bonds, Series due September 1, 1987,"
bearing interest at the rate of 4 7/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated October 1, 1960, bonds of a series
designated "First Mortgage Bonds, Series due October 1, 1990,"
bearing interest at the rate of 4 7/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 1, 1966, bonds of a series
designated "First Mortgage Bonds, Series due June 1, 1996," bearing
interest at the rate of 5 5/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 1, 1968, bonds of a series
designated "First Mortgage Bonds, Series due June 1, 1998," bearing
interest at the rate of 6% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 1, 1970, bonds of a series
designated "First Mortgage Bonds, Series due July 1, 2000," bearing
interest at the rate of 9 1/4% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated August 1, 1971, bonds of a series
designated "First Mortgage Bonds, Series due August 1, 2001,"
bearing interest at the rate of 8 1/4% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 1, 1972, bonds of a series
designated "First Mortgage Bonds, Series due July 1, 2002," bearing
interest at the rate of 7 1/2% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated February 1, 1975, bonds of a series
designated "First Mortgage Bonds, Series due March 1, 2005,"
bearing interest at the rate of 8 7/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 1, 1975, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series A,"
2
<PAGE>
bearing interest as provided therein and maturing September 1,
2000; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 1, 1976, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series B,"
bearing interest as provided therein and maturing September 1,
2006; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated October 1, 1976, bonds of a series
designated "First Mortgage Bonds, Series due November 1, 2006,"
bearing interest at the rate of 8 1/2% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 1, 1978, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series C,"
bearing interest as provided therein and maturing June 1,
1998/2008; and
WHEREAS, the Company has heretofore executed and delivered to
the Trustee a Supplemental Indenture dated February 15, 1979,
setting forth duly adopted modifications and alterations to the
Original Indenture and all Supplemental Indentures thereto; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 1, 1979, bonds of a series
designated "First Mortgage Bonds, Series due October 1, 2009,"
bearing interest at the rate of 10 1/8% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 15, 1979, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series D,"
bearing interest as provided therein and maturing October 1,
2004/2009; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 15, 1981, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series E,"
bearing interest as provided therein and maturing September 15,
1984; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated March 1, 1982, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series F,"
3
<PAGE>
bearing interest as provided therein and maturing March 1, 2012;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated March 15, 1982, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series G,"
bearing interest as provided therein and maturing March 1, 2012;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 15, 1982, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series H,"
bearing interest as provided therein and maturing September 15,
1992; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated February 15, 1984, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series I,"
bearing interest as provided therein and maturing February 15,
2011; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated July 1, 1985, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series J,"
bearing interest as provided therein and maturing July 1,
1995/2015; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated November 15, 1986, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series K,"
bearing interest as provided therein and maturing December 1, 2016;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated November 16, 1986, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series L,"
bearing interest as provided therein and maturing December 1, 2016;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated August 1, 1987, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series M,"
bearing interest as provided therein and maturing August 1, 1997;
and
4
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WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Or,Original Indenture as supplemented by the
Supplemental Indenture dated February 1, 1989, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series N,"
bearing interest as provided therein and maturing February 1, 2019;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated February 2, 1989, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series O,"
bearing interest as provided therein and maturing February 1, 2019;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated June 15, 1990, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series P,"
bearing interest as provided therein and maturing June 15, 2015;
and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated November 1, 1990, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series Q," and
bonds of a series designated "First Mortgage Bonds, Pollution
Control Series R," each series bearing interest as provided therein
and maturing November 1, 2020; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 1, 1992, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series S,"
bearing interest as provided therein and maturing September 1,
2017; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated September 2, 1992, bonds of a series
designated "First Mortgage Bonds, Pollution Control Series T,"
bearing interest as provided therein and maturing September 1,
2017; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated August 15, 1993, bonds of a series
designated "First Mortgage Bonds, Series due August 15, 2003,"
bearing interest at the rate of 6% per annum; and
WHEREAS, the Company has heretofore issued in accordance with
the provisions of the Original Indenture as supplemented by the
Supplemental Indenture dated August 16, 1993, bonds of a series
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designated "First Mortgage Bonds, Pollution Control Series U,"
bearing interest as provided therein and maturing August 15, 2013,
and bonds designated "First Mortgage Bonds, Pollution Control
Series V," bearing interest as provided therein and maturing August
15, 2019; and
WHEREAS, the County of Jefferson in the Commonwealth of
Kentucky (the "County") has agreed to issue $26,000,000 principal
amount of its Pollution Control Revenue Bonds, 1993 Series C
(Louisville Gas and Electric Company Project) (the "1993 Pollution
Control Revenue Bonds") pursuant to the provisions of the Indenture
of Trust, dated as of October 15, 1993 (the "1993 Pollution Control
Indenture"), between and among the County and Liberty National Bank
and Trust Company of Louisville, Louisville, Kentucky, as Trustee,
Paying Agent and Bond Registrar (said Trustee or any successor
trustee under the 1993 Pollution Control Indenture being
hereinafter referred to as the "1993 Pollution Control Trustee");
and
WHEREAS, the County also has agreed to issue $40,000,000
principal amount of its Pollution Control Revenue Bonds, 1995
Series A, (Louisville Gas and Electric Company Project) (the "1995
Pollution Control Revenue Bonds, and, together with the 1993
Pollution Control Revenue Bonds, the "Pollution Control Revenue
Bonds") pursuant to the provisions of the Indenture of Trust, dated
as of October 15, 1993 (the "1995 Pollution Control Indenture"),
between and among the County and Liberty National Bank and Trust
Company of Louisville, Louisville, Kentucky, as Trustee, Paying
Agent and Bond Registrar (said Trustee or any successor trustee
under the 1995 Pollution Control Indenture being hereinafter
referred to as the 1995 Pollution Control Trustee); and
WHEREAS, the proceeds of the 1993 Pollution Control Revenue
Bonds and 1995 Pollution Control Revenue Bonds (other than any
accrued interest, if any, thereon) will be loaned by the County to
the Company pursuant to the provisions of separate Loan Agreements,
each dated as of October 15, 1993, between the County and the
Company (the "1993 Agreement" and the "1995 Agreement,"
respectively, and, collectively, the "Agreements"), to provide a
portion of the funds required to pay and discharge $26,000,000 in
outstanding principal amount of "County of Jefferson, Kentucky,
Pollution Control Revenue Bonds, 1984 Series A (Louisville Gas and
Electric Company Project)," dated February 15, 1984 (the "Refunded
1984 Series A Bonds) and $40,000,000 in outstanding principal
amount of "County of Jefferson, Kentucky, Pollution Control Revenue
Bonds, 1985 Series A (Louisville Gas and Electric Company
Project)," dated July 1, 1985 (the "Refunded 1985 Series A Bonds").
The Refunded 1984 Series A Bonds were used to finance the
acquisition, construction and installation of certain facilities
for the control, containment, reduction and abatement of air and
water pollution and for the disposal of solid waste at the Mill
Creek Generating Station of the Company, which facilities are
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located in the County and are more fully described in Exhibit A to
the 1993 Agreement. The Refunded 1985 Series A Bonds were used to
finance the acquisition, construction and installation of certain
facilities for the control, containment, reduction and abatement of
air pollution at the Mill Creek and Cane Run Generating Stations of
the Company, which facilities are located in the County and are
more fully described in Exhibit A to the 1995 Agreement; and
WHEREAS, payments by the Company under and pursuant to the
Agreements have been assigned by the County to the applicable
Pollution Control Trustee in order to secure the payment of the
applicable Pollution Control Revenue Bonds; and
WHEREAS, in order to further secure the payment of the 1993
Pollution Control Revenue Bonds, the Company desires to provide for
the issuance under the Original Indenture to the 1993 Pollution
Control Trustee of a new series of bonds designated "First Mortgage
Bonds, Pollution Control Series W" (sometimes called "Bonds of
Pollution Control Series W"), in a principal amount equal to the
principal amount of the 1993 Pollution Control Revenue Bonds, and
with corresponding terms and maturity, the Bonds of Pollution
Control Series W to be issued as registered bonds without coupons
in denominations of a multiple of $1,000, and in order to further
secure the payment of the 1995 Pollution Control Revenue Bonds, the
Company desires to provide for the issuance under the Original
Indenture to the 1995 Pollution Control Trustee of a new series of
bonds designated "First Mortgage Bonds, Pollution Control Series X"
(sometimes called "Bonds of Pollution Control Series X"), in a
principal amount equal to the principal amount of the 1995
Pollution Control Revenue Bonds, and with corresponding terms and
maturity, the bonds of Pollution Control Series X to be issued as
registered bonds without coupons in demoninations of a multiple of
$1,000; and the Bonds of Pollution Control Series W and the Bonds
of Pollution Control Series X are to be substantially in the form
and tenor following, to-wit:
(Form of Bonds of Pollution Control Series W and X)
This Bond has not been registered under the Securities Act of
1933, as amended, and may not be offered or sold in contravention
of said Act and is not transferable except to a successor Trustee
under the Indenture of Trust dated as of October 15, 1993, from the
County of Jefferson, Kentucky, to Liberty National Bank and Trust
Company of Louisville, Louisville, Kentucky, as Trustee, Paying
Agent and Bond Registrar.
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LOUISVILLE GAS AND ELECTRIC COMPANY
(Incorporated under the laws of the State of Kentucky)
First Mortgage Bond
Pollution Control Series
No.___________ $___________
Louisville Gas and Electric Company, a corporation organized
and existing under and by virtue of the laws of the State of
Kentucky (herein called the "Company"), for value received, hereby
promises to pay to Liberty National Bank and Trust Company of
Louisville, Louisville, Kentucky, as Trustee under the Indenture of
Trust (the "Pollution Control Indenture") dated as of October 15,
1993, from the County of Jefferson, Kentucky, to Liberty National
Bank and Trust Company of Louisville, Louisville, Kentucky, or any
successor trustee under the Pollution Control Indenture (the
"Pollution Control Trustee") and at the office of Harris Trust and
Savings Bank, Chicago, Illinois (the "Trustee") the sum of
_______________________ Dollars in lawful money of the United
States of America on the Demand Redemption Date, as hereinafter
defined, and to pay on the Demand Redemption Date to the Pollution
Control Trustee, interest hereon from the Initial Interest Accrual
Date, as hereinafter defined, to the Demand Redemption Date at the
same rate or rates per annum then and thereafter from time to time
borne by the Pollution Control Revenue Bonds (as hereinafter
defined), in like money, said interest being payable at the office
of the Trustee in Chicago, Illinois, subject to the provisions
hereinafter set forth in the event of a rescission of a Redemption
Demand, as hereinafter defined.
This bond is one of a duly authorized issue of bonds of the
Company, known as its First Mortgage Bonds, unlimited in aggregate
principal amount, which issue of bonds consists, or may consist of
several series of varying denominations, dates and tenors, all
issued and to be issued under and equally secured (except in so far
as a sinking fund, or similar fund, established in accordance with
the provisions of the Indenture may afford additional security for
the bonds of any specific series) by a Trust Indenture dated
November 1, 1949, and Supplemental Indentures thereto dated
February 1, 1952, February 1, 1954, September 1, 1957, October 1,
1960, June 1, 1966, June 1, 1968, June 1, 1970, August 1, 1971,
June 1, 1972, February 1, 1975, September 1, 1975, September
1,1976, October 1, 1976, June 1, 1978, February 15, 1979, September
1, 1979, September 15,1979, September 15,1981, March 1, 1982, March
15, 1982, September 15, 1982, February 15, 1984, July 1, 1985,
November 15, 1986, November 16,1986, August 1, 1987, February
1,1989, February 2, 1989, June 15, 1990, November 1, 1990,
September 1, 1992, September 2, 1992, August 15, 1993, August 16,
1993 and October 15, 1993 (all of which instruments are herein
collectively called the "Indenture"), executed by the Company to
the Trustee, to which Indenture reference is hereby made for a
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description of the property mortgaged and pledged, the nature and
extent of the security, the rights of the holders of the bonds as
to such security, and the terms and conditions upon which the bonds
may be issued under the Indenture and are secured. The principal
hereof may be declared or may become due on the conditions, in the
manner and at the time set forth in the Indenture, upon the
happening of a completed default as in the Indenture provided. The
Indenture provides that such declaration may in certain events be
waived by the holders of a majority in principal amount of the
bonds outstanding.
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 . The bonds of this Series have been
issued to the Pollution Control Trustee under the Pollution Control
Indenture to secure payment of the Pollution Control Revenue Bonds,
Series (Louisville Gas and Electric Company Project) (the
"Pollution Control Revenue Bonds") issued by the County of
Jefferson, Kentucky (the "County") under the Pollution Control
Indenture, the proceeds of which have been or are to be loaned to
the Company pursuant to the provisions of the Loan Agreement dated
as of October 15, 1993 (the "Agreement") between the Company and
the County. The maturity of the obligation represented by the bonds
of this Series is [October 15, 2020] [April 15, 2023]. The date of
maturity of the obligation represented by the bonds of this Series
is hereinafter referred to as the Final Maturity Date. The bonds of
this Series shall bear interest from the Initial Interest Accrual
Date, as hereinafter defined, at the same rate or rates per annum
then and thereafter from time to time borne by the Pollution
Control Revenue Bonds.
With the consent of the Company and to the extent permitted by
and as provided in the Indenture, the rights and obligations of the
Company and/or of the holders of the bonds, and/or the terms and
provisions of the Indenture and/or of any instruments supplemental
thereto may be modified or altered by affirmative vote of the
holders of at least seventy percent in principal amount of the
bonds then outstanding under the Indenture and any instruments
supplemental thereto (excluding bonds disqualified from voting by
reason of the interest of the Company or of certain related persons
therein as provided in the Indenture), and by the affirmative vote
of at least seventy percent in principal amount of the bonds of any
series entitled to vote then outstanding under the Indenture and
any instruments supplemental thereto (excluding bonds disqualified
from voting as aforesaid) and affected by such modification or
alteration, in case one or more but less than all of the series of
bonds then outstanding are so affected; provided that no such
modification or alteration shall permit the extension of the
maturity of the principal of this bond or the reduction in the rate
of interest, if any, hereon or any other modification in the terms
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of payment of such principal or interest, if any, or the taking of
certain other action as more fully set forth in the Indenture,
without the consent of the holder hereof.
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
Pollution Control Indenture and the Pollution Control Revenue
Bonds) on the Pollution Control 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 this Series shall be redeemable in whole upon receipt by
the Trustee of a written demand (hereinafter called a "Redemption
Demand") from the Pollution Control 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 Pollution Control
Indenture, specifying the last date to which interest on the
Pollution Control Revenue Bonds has been paid (such date being
hereinafter referred to as the "Initial Interest Accrual Date") and
demanding redemption of the bonds of this Series. 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 this Series 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) the Final Maturity Date, 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) the Final Maturity Date. The Trustee
shall mail notice of the Demand Redemption Date (such notice being
hereinafter called the "Demand Redemption Notice") to the Pollution
Control 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 the
Final Maturity Date, such date shall be deemed to be the Demand
Redemption Date without further action (including actions specified
in this paragraph) by the Pollution Control Trustee, the Trustee or
the Company. The bonds of this Series shall be redeemed by the
Company on the Demand Redemption Date, upon surrender thereof by
the Pollution Control Trustee to the Trustee, at a redemption price
equal to the principal amount thereof, plus accrued interest
thereon at the rate per annum set forth in the third paragraph of
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this Bond, from the Initial Interest Accrual Date to the Demand
Redemption Date. If a Redemption Demand is rescinded by the
Pollution Control 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 this Series shall cease to accrue, all
interest accrued thereon shall be automatically rescinded and
cancelled and the Company shall not be obligated to make any
payments of principal of or interest on the bonds of this Series;
but no such rescission shall extend to or affect any subsequent
default or impair any right consequent thereon.
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 this Series shall bear interest at the rate
per annum set forth in the third paragraph of this Bond, from the
Initial Interest Accrual Date, as specified in a written notice to
the Trustee from the Pollution Control Trustee, and the principal
of and interest on the bonds of this Series from the Initial
Interest Accrual Date shall be payable in accordance with the
provisions of the Indenture.
Upon payment of the principal of and premium, if any, and
interest on the Pollution Control Revenue Bonds, whether at
maturity or prior to maturity by redemption or otherwise, and the
surrender thereof to and cancellation thereof by the Pollution
Control Trustee (other than any Pollution Control Revenue Bond that
was cancelled by the Pollution Control Trustee and for which one or
more other Pollution Control Revenue Bonds were delivered and
authenticated pursuant to the Pollution Control Indenture in lieu
of or in exchange or substitution for such cancelled Pollution
Control Revenue Bond), or upon provision for the payment thereof
having been made in accordance with the Pollution Control
Indenture, bonds of this Series in a principal amount equal to the
principal amount of the Pollution Control 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 this
Series shall be surrendered by the Pollution Control Trustee to the
Trustee and shall be cancelled by the Trustee.
No recourse shall be had for the payment of principal of, or
interest, if any, on this bond, or any part thereof, or of any
claim based hereon or in respect hereof or of the Indenture,
against any incorporator, or any past, present or future
stockholder, officer or director of the Company or of any
predecessor or successor corporation, either directly or through
the Company, or through any such predecessor or successor
corporation, or through any receiver or trustee in bankruptcy,
whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such
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liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released,
as more fully provided in the Indenture.
This bond shall not be valid or become obligatory for any
purpose unless and until the certificate of authentication hereon
shall have been signed by or on behalf of Harris Trust and Savings
Bank, as Trustee under the Indenture, or its successor thereunder.
IN WITNESS WHEREOF, LOUISVILLE GAS AND ELECTRIC COMPANY has
caused this instrument to be signed in its name by its President or
a Vice President or with the facsimile signature of its President,
and its corporate seal, or a facsimile thereof, to be hereto
affixed and attested by its Secretary or with the facsimile
signature of its Secretary.
Dated
LOUISVILLE GAS AND ELECTRIC COMPANY
Attest: By:____________________________________
(Vice) President
___________________________________
Secretary
and
WHEREAS, the Company is desirous of specifically assigning,
conveying, mortgaging, pledging, transferring and setting over
additional property unto the Trustee and to its respective
successors in trust; and
WHEREAS, Sections 4.01 and 21.03 of the Original Indenture
provide in substance that the Company and the Trustee may enter
into indentures supplemental thereto for the purposes, among
others, of creating and setting forth the particulars of any new
series of bonds and of providing the terms and conditions of the
issue of the bonds of any series not expressly provided for in the
Original Indenture and of assigning, conveying, mortgaging,
pledging and transferring unto the Trustee additional property of
the Company, and for any other purpose not inconsistent with the
terms of the Original Indenture; and
WHEREAS, the execution and delivery of this Supplemental
Indenture have been duly authorized by a resolution adopted by the
Board of Directors of the Company;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
Louisville Gas and Electric Company, in consideration of the
premises and of one dollar to it duly paid by the Trustee at or
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before the ensealing and delivery of these presents, the receipt
whereof is hereby acknowledged, and other good and valuable
considerations, does hereby covenant and agree to and with Harris
Trust and Savings Bank, as Trustee, and its successors in the trust
under the Indenture for the benefit of those who hold or shall hold
the bonds issued or to be issued thereunder, as follows:
ARTICLE I.
SPECIFIC SUBJECTION OF PROPERTY TO THE
LIEN OF THE ORIGINAL INDENTURE
SECTION 1.01. The Company in order better to secure the
payment, both of principal and interest, of all bonds of the
Company at any time outstanding under the Indenture, according to
their tenor and effect, and the performance of and compliance with
the covenants and conditions in the Indenture contained, has
granted, bargained, sold, warranted, released, conveyed, assigned,
transferred, mortgaged, pledged, set over and confirmed and by
these presents does grant, bargain, sell, warrant, release, convey,
assign, transfer, mortgage, pledge, set over and confirm unto
Harris Trust and Savings Bank as Trustee and to its respective
successors in said trust forever, subject to the rights reserved by
the Company in and by the provisions of the Indenture, all the
property described and mentioned or enumerated in a schedule hereto
annexed and marked Schedule A, reference to said schedule being
hereby made with the same force and effect as if the same were
incorporated herein at length; together with all and singular the
tenements, hereditaments and appurtenances belonging or in any wise
appertaining to the aforesaid property or any part thereof with the
reversion and reversions, remainder and remainders, tolls, rents
and revenues, issues, income, product and profits thereof;
Also, in order to subject all of the personal property and
chattels of the Company to the lien of the Indenture in conformity
with the provisions of the Uniform Commercial Code of the State of
Kentucky, all steam, hydro and other electric generating plants,
including buildings and other structures, turbines, generators,
boilers, condensing equipment, and all other equipment;
substations; electric transmission and distribution systems,
including structures, poles, towers, fixtures, conduits,
insulators, wires, cables, transformers, services and meters;
steam and heating mains and equipment; gas generating and coke
plants, including buildings, holders and other structures, boilers
and other boiler plant equipment, benches, retorts, coke ovens,
water gas sets, condensing and purification equipment, piping and
other accessory works equipment; facilities for gas storage whether
above or below surface; gas transmission and distribution systems,
including structures, mains, compressor stations, purifier
stations, pressure holders, governors, services and meters; office,
shop, garage and other general buildings and structures, furniture
and fixtures; and all municipal and other franchises and all
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leaseholds, licenses, permits, easements, and privileges; all as
now owned or hereafter acquired by the Company pursuant to the
provisions of the Original Indenture; and
All the estate, right, title and interest and claim
whatsoever, at law as well as in equity, which the Company now has
or may hereafter acquire in and to the aforesaid property and
franchises and every part and parcel thereof;
Excluding, however, (1) all shares of stock, bonds, notes,
evidences of indebtedness and other securities other than such as
may be or are required to be deposited from time to time with the
Trustee in accordance with the provisions of the Indenture; (2)
cash on hand and in banks other than such as may be or is required
to be deposited from time to time with the Trustee in accordance
with the provisions of the Indenture; (3) contracts, claims, bills
and accounts receivable and chooses in action other than such as
may be or are required to be from time to time assigned to the
Trustee in accordance with the provisions of the Indenture; (4)
motor vehicles; (5) any stock of goods, wares and merchandise,
equipment, materials and supplies acquired for the purpose of sale
or lease in the usual course of business or for the purpose of
consumption in the operation, construction or repair of any of the
properties of the Company; and (6) the properties described in
Schedule B annexed to the Original Indenture.
To have and to hold all said property, real, personal and
mixed, mortgaged, pledged or conveyed by the Company as aforesaid,
or intended so to be, unto the Trustee and its successors and
assigns forever, subject, however, to permissible encumbrances as
defined in Section 1.09 of the Original Indenture and to the
further reservations, covenants, conditions, uses and trusts set
forth in the Indenture, in trust nevertheless for the same purposes
and upon the same conditions as are set forth in the Indenture.
ARTICLE II.
PROVISIONS OF BONDS OF POLLUTION CONTROL SERIES W AND X
SECTION 2.01. There is hereby created, for issuance under the
Original Indenture, a series of bonds designated Pollution Control
Series W, each of which shall bear the descriptive title "First
Mortgage Bonds, Pollution Control Series W" and the form thereof
shall contain suitable provisions with respect to the matters
specified in this section. The Bonds of Pollution Control Series W
shall be printed, lithographed or typewritten and shall be
substantially of the tenor and purport previously recited. The
Bonds of Pollution Control Series W shall be issued as registered
bonds without coupons in denominations of a multiple of $1,000 and
shall be registered in the name of the 1993 Pollution Control
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Trustee. The Bonds of Pollution Control Series W shall be dated as
of the date of their authentication.
The Bonds of Pollution Control Series W shall be payable, both
as to principal and interest, at the office of the Trustee in
Chicago, Illinois, in lawful money of the United States of America.
The maturity of the obligation represented by the Bonds of
Pollution Control Series W is October 15, 2020. The date of
maturity of the obligation represented by the Bonds of Pollution
Control Series W is hereinafter referred to as the Series W Final
Maturity Date. The Bonds of Pollution Control Series W shall bear
interest from the Series W Initial Interest Accrual Date, as
hereinafter defined, at the same rate or rates then and thereafter
from time to time borne by the 1993 Pollution Control Revenue
Bonds.
SECTION 2.02. There is hereby created, for issuance under the
Original Indenture, a series of bonds designated Pollution Control
Series X, each of which shall bear the descriptive title "First
Mortgage Bonds, Pollution Control Series X" and the form thereof
shall contain suitable provisions with respect to the matters
specified in this section. The Bonds of Pollution Control Series X
shall be printed, lithographed or typewritten and shall be
substantially of the tenor and purport previously recited. The
Bonds of Pollution Control Series X shall be issued as registered
bonds without coupons in denominations of a multiple of $1,000 and
shall be registered in the name of the Pollution Control Trustee.
The Bonds of Pollution Control Series X shall be dated as of the
date of their authentication.
The Bonds of Pollution Control Series X shall be payable, both
as to principal and interest, at the office of the Trustee in
Chicago, Illinois, in lawful money of the United States of America.
The maturity of the obligation represented by the bonds of
Pollution Control Series X is April 15, 2023. The date of maturity
of the obligation represented by the Bonds of Pollution Control
Series X is hereinafter referred to as the Series X Final Maturity
Date. The Bonds of Pollution Control Series X shall bear interest
from the Series X Initial Interest Accrual Date, as hereinafter
defined, at the same rate or rates then and thereafter from time to
time borne by the 1995 Pollution Control Revenue Bonds.
SECTION 2.03. Except as provided in the next succeeding
paragraph of this Section 2.03, in the event of a default under
Section 9.1 of the 1993 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 1993 Pollution Control
Indenture and the 1993 Pollution Control Revenue Bonds) on the 1993
Pollution Control 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 Pollution
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Control Series W shall be redeemable in whole upon receipt by the
Trustee of a written demand (hereinafter called a "Series W
Redemption Demand") from the 1993 Pollution Control 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
1993 Pollution Control Indenture, specifying the last date to which
interest on the 1993 Pollution Control Revenue Bonds has been paid
(such date being hereinafter referred to as the "Series W Initial
Interest Accrual Date") and demanding redemption of the Bonds of
Pollution Control Series W. The Trustee shall, within 10 days after
receiving such Series W 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
Series W Redemption Demand, the Company shall fix a date on which
it will redeem the Bonds of Pollution Control Series W so demanded
to be redeemed hereinafter called the "Series W Demand Redemption
Date"). Notice of the date fixed as the Series W Demand Redemption
Date shall be mailed by the Company to the Trustee at least 30 days
prior to such Series W Demand Redemption Date. The date to be
fixed by the Company as and for the Series W 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 Series W Redemption Demand
or (ii) the Series W Final Maturity Date; provided that if the
Trustee shall not have received such notice fixing the Series W
Demand Redemption Date within 90 days after receipt by it of the
Series W Redemption Demand, the Series W Demand Redemption Date
shall be deemed to be the earlier of (i) the 120th day after
receipt by the Trustee of the Series W Redemption Demand or (ii)
the Series W Final Maturity Date. The Trustee shall mail notice of
the Series W Demand Redemption Date (such notice being hereinafter
called the "Series W Demand Redemption Notice") to the 1993
Pollution Control Trustee not more than 10 nor less than five days
prior to the Series W Demand Redemption Date. Notwithstanding the
foregoing, if a default to which this paragraph is applicable is
existing on the Series W Final Maturity Date, such date shall be
deemed to be the Series W Demand Redemption Date without further
action (including actions specified in this paragraph) by the 1993
Pollution Control Trustee, the Trustee or the Company. The Bonds
of Pollution Control Series W shall be redeemed by the Company on
the Series W Demand Redemption Date, upon surrender thereof by the
1993 Pollution Control Trustee to the Trustee, at a redemption
price equal to the principal amount thereof, plus accrued interest
thereon at the rate per annum set forth in Section 2.01 hereof,
from the Series W Initial Interest Accrual Date to the Series W
Demand Redemption Date. If a Series W Redemption Demand is
rescinded by the 1993 Pollution Control Trustee by written notice
to the Trustee prior to the Series W Demand Redemption Date, no
Series W Demand Redemption Notice shall be given, or, if already
given, shall be automatically annulled, and interest on the Bonds
of Pollution Control Series W 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
16
<PAGE>
principal of or interest on the Bonds of Pollution Control Series
W; 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 Pollution Control Series W shall bear
interest at the rate per annum set forth in Section 2.01 hereof,
from the Series W Initial Interest Accrual Date, as specified in a
written notice to the Trustee from the 1993 Pollution Control
Trustee, and the principal of and interest on the Bonds of
Pollution Control Series W from the Series W Initial Interest
Accrual Date shall be payable in accordance with the provisions of
the Indenture.
Anything herein contained to the contrary notwithstanding, the
Trustee is not authorized to take any action pursuant to a Series
W Redemption Demand or a rescission thereof or a written notice
required by this Section 2.03, and such Series W Redemption Demand,
rescission or notice shall be of no force or effect, unless it is
executed in the name of the 1993 Pollution Control Trustee by one
of its Vice Presidents.
SECTION 2.04. Except as provided in the next succeeding
paragraph of this Section 2.04, in the event of a default under
Section 9.1 of the 1995 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 1995 Pollution Control
Indenture and the 1995 Pollution Control Revenue Bonds) on the 1995
Pollution Control 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 Pollution
Control Series X shall be redeemable in whole upon receipt by the
Trustee of a written demand (hereinafter called a "Series X
Redemption Demand") from the 1995 Pollution Control 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
1995 Pollution Control Indenture, specifying the last date to which
interest on the 1995 Pollution Control Revenue Bonds has been paid
(such date being hereinafter referred to as the "Series X Initial
Interest Accrual Date") and demanding redemption of the Bonds of
Pollution Control Series X. The Trustee shall, within 10 days after
receiving such Series X 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
Series X Redemption Demand, the Company shall fix a date on which
it will redeem the Bonds of Pollution Control Series X so demanded
to be redeemed (hereinafter called the "Series X Demand Redemption
Date"). Notice of the date fixed as the Series X Demand Redemption
Date shall be mailed by the Company to the Trustee at least 30 days
17
<PAGE>
prior to such Series X Demand Redemption Date. The date to be fixed
by the Company as and for the Series X 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 Series X Redemption Demand or
(ii) the Series X Final Maturity Date; provided that if the Trustee
shall not have received such notice fixing the Series X Demand
Redemption Date within 90 days after receipt by it of the Series X
Redemption Demand, the Series X Demand Redemption Date shall be
deemed to be the earlier of (i) the 120th day after receipt by the
Trustee of the Series X Redemption Demand or (ii) the Series X
Final Maturity Date. The Trustee shall mail notice of the Series X
Demand Redemption Date (such notice being hereinafter called the
"Series X Demand Redemption Notice") to the 1995 Pollution Control
Trustee not more than 10 nor less than five days prior to the
Series X Demand Redemption Date. Notwithstanding the foregoing, if
a default to which this paragraph is applicable is existing on the
Series X Final Maturity Date, such date shall be deemed to be the
Series X Demand Redemption Date without further action (including
actions specified in this paragraph) by the 1995 Pollution Control
Trustee, the Trustee or the Company. The Bonds of Pollution Control
Series X shall be redeemed by the Company on the Series X Demand
Redemption Date, upon surrender thereof by the 1995 Pollution
Control Trustee to the Trustee, at a redemption price equal to the
principal amount thereof, plus accrued interest thereon at the rate
per annum set forth in Section 2.02 hereof, from the Series X
Initial Interest Accrual Date to the Series X Demand Redemption
Date. If a Series X Redemption Demand is rescinded by the 1995
Pollution Control Trustee by written notice to the Trustee prior to
the Series X Demand Redemption Date, no Series X Demand Redemption
Notice shall be given, or, if already given, shall be automatically
annulled, and interest on the Bonds of Pollution Control Series X
shall cease to accrue, all interest accrued thereon shall be
automatically rescinded and cancelled and the Company shall not be
obligated to make any payments of principal of or interest on the
Bonds of Pollution Control Series X; 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 Pollution Control Series X shall bear
interest at the rate per annum set forth in Section 2.02 hereof,
from the Series X Initial Interest Accrual Date, as specified in a
written notice to the Trustee from the 1995 Pollution Control
Trustee, and the principal of and interest on the Bonds of
Pollution Control Series X from the Series X Initial Interest
Accrual Date shall be payable in accordance with the provisions of
the Indenture.
Anything herein contained to the contrary notwithstanding, the
Trustee is not authorized to take any action pursuant to a Series
18
<PAGE>
X Redemption Demand or a rescission thereof or a written notice
required by this Section 2.04, and such Series X Redemption Demand,
rescission or notice shall be of no force or effect, unless it is
executed in the name of the 1995 Pollution Control Trustee by one
of its Vice Presidents.
SECTION 2.05. Upon payment of the principal of and premium,
if any, and interest on the 1993 Pollution Control Revenue Bonds,
whether at maturity or prior to maturity by redemption or
otherwise, and the surrender thereof to and cancellation thereof by
the 1993 Pollution Control Trustee (other than any 1993 Pollution
Control Revenue Bond that was cancelled by the 1993 Pollution
Control Trustee and for which one or more other 1993 Pollution
Control Revenue Bonds were delivered and authenticated pursuant to
the 1993 Pollution Control Indenture in lieu of or in exchange or
substitution for such cancelled 1993 Pollution Control Revenue
Bond), or upon provision for the payment thereof having been made
in accordance with the 1993 Pollution Control Indenture, Bonds of
Pollution Control Series W in a principal amount equal to the
principal amount of the 1993 Pollution Control 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 Pollution
Control Series W shall be surrendered by the 1993 Pollution Control
Trustee to the Trustee and shall be cancelled and destroyed by the
Trustee, and a certificate of such cancellation and destruction
shall be delivered to the Company.
SECTION 2.06. Upon payment of the principal of and premium,
if any, and interest on the 1995 Pollution Control Revenue Bonds,
whether at maturity or prior to maturity by redemption or
otherwise, and the surrender thereof to and cancellation thereof by
the 1995 Pollution Control Trustee (other than any 1995 Pollution
Control Revenue Bond that was cancelled by the 1995 Pollution
Control Trustee and for which one or more other 1995 Pollution
Control Revenue Bonds were delivered and authenticated pursuant to
the 1995 Pollution Control Indenture in lieu of or in exchange or
substitution for such cancelled 1995 Pollution Control Revenue
Bond), or upon provision for the payment thereof having been made
in accordance with the 1995 Pollution Control Indenture, Bonds of
Pollution Control Series X in a principal amount equal to the
principal amount of the 1995 Pollution Control 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 Pollution
Control Series X shall be surrendered by the 1995 Pollution Control
Trustee to the Trustee and shall be cancelled and destroyed by the
Trustee, and a certificate of such cancellation and destruction
shall be delivered to the Company.
SECTION 2.07. The 1993 Pollution Control Trustee as the
registered holder of the Bonds of Pollution Control Series W and
19
<PAGE>
the 1995 Pollution Control Trustee as the registered holder of the
Bonds of Pollution Control Series X at its option may surrender the
same at the office of the Trustee, in Chicago, Illinois, or
elsewhere, if authorized by the Company, for cancellation, in
exchange for other bonds of the same series of the same aggregate
principal amount. Thereupon, and upon receipt of any payment
required under the provisions of Section 2.08 hereof, the Company
shall execute and deliver to the Trustee and the Trustee shall
authenticate and deliver such other registered bonds to such
registered holder at its office or at any other place specified as
aforesaid.
SECTION 2.08. No charge shall be made by the Company for any
exchange or transfer of Bonds of Pollution Control Series W or
Pollution Control Series X other than for taxes or other
governmental charges, if any, that may be imposed in relation
thereto.
ARTICLE III.
MISCELLANEOUS
SECTION 3.01. The recitals of fact herein and in the bonds
(except the Trustee's Certificate) shall be taken as statements of
the Company and shall not be construed as made or warranted by the
Trustee. The Trustee makes no representations as to the value of
any of the property subject to the lien of the Indenture, or any
part thereof, or as to the title of the Company thereto, or as to
the security afforded thereby and hereby, or as to the validity of
this Supplemental Indenture and the Trustee shall incur no
responsibility in respect of such matters.
SECTION 3.02. This Supplemental Indenture shall be construed
in connection with and as a part of the Original Indenture.
SECTION 3.03.(a) If any provision of this Supplemental
Indenture limits, qualifies or conflicts with another provision of
the Original Indenture or this Supplemental Indenture required to
be included in indentures qualified under the Trust Indenture act
of 1939, as amended (as enacted prior to the date of this
Supplemental Indenture) by any of the provisions of Sections 310 to
317, inclusive, of the said Act, such required provision shall
control.
(b) In case any one or more of the provisions contained in
this Supplemental Indenture or in the bonds issued hereunder shall
be invalid, illegal, or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected, impaired,
prejudiced or disturbed thereby.
20
<PAGE>
SECTION 3.04. Wherever in this Supplemental Indenture the
word "Indenture" is used without either prefix, "Original" or
"Supplemental," such word was used intentionally to include in its
meaning both the Original Indenture and all indentures supplemental
thereto.
SECTION 3.05. Wherever in this Supplemental Indenture either
of the parties hereto is named or referred to, this shall be deemed
to include the successors or assigns of such party, and all the
covenants and agreements in this Supplemental Indenture contained
by or on behalf of the Company or by or on behalf of the Trustee
shall bind and inure to the benefit of the respective successors
and assigns of such parties, whether so expressed or not.
SECTION 3.06.(a) This Supplemental Indenture may be
simultaneously executed in several counterparts, and all said
counterparts executed and delivered, each as an original, shall
constitute but one and the same instrument.
(b) The Table of Contents and the descriptive headings of the
several Articles of this Supplemental Indenture were formulated,
used and inserted in this Supplemental Indenture for convenience
only and shall not be deemed to affect the meaning or construction
of any of the provisions hereof.
IN WITNESS WHEREOF, the party of the first part has caused its
corporate name and seal to be hereunto affixed and this
Supplemental Indenture to be signed by its President or a Vice
President, and attested by its Secretary for and in its behalf, and
the party of the second part to evidence its acceptance of the
trust hereby created, has caused its corporate name and seal to be
hereunto affixed, and this Supplemental Indenture to be signed by
its President, a Vice President or an Assistant Vice President, and
attested by its Secretary or an Assistant Secretary, for and in its
behalf, all done as of the fifteenth day of October, 1993.
LOUISVILLE GAS AND ELECTRIC COMPANY
By:____________________________________
M. LEE FOWLER
Vice President and Controller
(Corporate Seal)
ATTEST:
______________________________________
VICTOR A. STAFFIERI
Senior Vice President, General
Counsel and Secretary
21
<PAGE>
HARRIS TRUST AND SAVINGS BANK, TRUSTEE
By:_________________________________
C. POTTER
Assistant Vice President
(Corporate Seal)
ATTEST:
______________________________________
F.A. PIERSON
Assistant Secretary
STATE OF KENTUCKY )
) SS:
COUNTY OF JEFFERSON )
BE IT REMEMBERED that on this 10th day of November, 1993,
before me, a Notary Public duly commissioned in and for the County
and State aforesaid, personally appeared M. LEE FOWLER and VICTOR
A. STAFFIERI, respectively, Vice President and Controller and
Senior Vice President, General Counsel and Secretary of Louisville
Gas and Electric Company, a corporation organized and existing
under and by virtue of the laws of the State of Kentucky, who are
personally known to me to be such officers, respectively, and who
are personally known to me to be the same persons who executed as
officers the foregoing instrument of writing, and such persons duly
acknowledged before me the execution of the foregoing instrument of
writing to be their act and deed and the act and deed of said
corporation.
WITNESS my hand and notarial seal this 10th day of November,
1993.
PATRICIA A. ROSE
NOTARY PUBLIC
My commission expires: 1-23-96
STATE OF ILLINOIS )
) SS:
COUNTY OF COOK )
BE IT REMEMBERED that on this 9th day of November, 1993,
before me, a Notary Public duly commissioned in and for the County
and State aforesaid, personally appeared C. POTTER and F.A.
22
<PAGE>
PIERSON, respectively, Assistant Vice President and Assistant
Secretary of Harris Trust and Savings Bank, a corporation organized
and existing under and by virtue of the laws of the State of
Illinois, who are personally known to me to be such officers,
respectively, and who are personally known to me to be the same
persons who executed as officers the foregoing instrument of
writing, and such persons duly acknowledged before me the execution
of the foregoing instrument of writing to be their act and deed and
the act and deed of said corporation.
WITNESS my hand and notarial seal this 9th day of November,
1993.
T. MUZQUIC
NOTARY PUBLIC
My commission expires: 7-12-97
This Instrument Prepared by:
Victor A. Staffieri
LG&E Energy Corp.
220 West Main Street
Louisville, Kentucky 40202
By:_______________________________
Victor A. Staffieri, Esq.
23
<PAGE>
SCHEDULE A
The following property situated, lying and being in the County of
Jefferson, State of Kentucky, to-wit:
Electric Substation
Hancock Substation was constructed during 1992 on property owned
by the Company at Clay and Caldwell Streets located in Louisville,
Jefferson County, Kentucky. This includes a 138kV transmission
line which serves the 138/12kV power transformer rated at 44.8MVA,
and five feeder 12kV switchgear which serves electrical
distribution circuits for the surrounding neighborhood.
A-1
<PAGE>1
________________________________________________________________
Modification No. 13
to
POWER AGREEMENT
Dated October 15, 1952
between
OHIO VALLEY ELECTRIC CORPORATION
AND
UNITED STATES OF AMERICA
Acting By and Through the
SECRETARY OF ENERGY,
the statutory head of the
DEPARTMENT OF ENERGY
Dated as of
September 1, 1989
________________________________________________________________
<PAGE>2
Contract No. DE-AC05-76OR01530
(Modification No. 13)
THIS MODIFICATION NO. 13, dated as of the 1st day of September
, 1989, by and between OHIO VALLEY ELECTRIC CORPORATION, a
corporation organized under the laws of the State of Ohio
(hereinafter called the "Corporation") and the UNITED STATES OF
AMERICA (hereinafter sometimes called the "Government"), acting by
and through the SECRETARY OF ENERGY, the statutory head of the
DEPARTMENT OF ENERGY (hereinafter called "DOE");
W I T N E S S E T H T H A T
-----------------------------
WHEREAS, Corporation and the Government have heretofore
entered into a contract dated October 15, 1952, providing for the
supply by Corporation of electric utility services to the United
States Atomic Energy Commission (hereinafter called "AEC") at AEC's
project near Portsmouth, Ohio (hereinafter called the "Project"),
which contract has heretofore been modified by Modification No. 1,
dated July 23, 1953, Modification No. 2, dated as of March 15,
1964, Modification No. 3, dated as of May 12, 1966, Modification
No. 4, dated as of January 7, 1967, Modification No. 5, dated as of
August 15, 1967, Modification No. 6, dated as of November 15, 1967,
Modification No. 7, dated as of November 5, 1975, Modification No.
8, dated as of June 23, 1977, Modification No. 9, dated as of July
1, 1978, Modification No. 10, dated as of August 1, 1979,
Modification No. 11, dated as of September 1, 1979, 2nd
<PAGE>3
Modification No. 12, dated as of August 1, 1981 (said contract, as
so modified, is hereinafter called the "DOE Power Agreement"); and
WHEREAS, pursuant to the Energy Reorganization Act of 1974,
the AEC was abolished on January 19, 1975 and certain of its
functions, including the procurement of electric utility services
for the Project, were transferred to and vested in the
Administrator of Energy Research and Development; and
WHEREAS, pursuant to the Department of Energy Organization
Act, all of the functions vested by law in the Administrator of
Energy Research and Development or the Energy Research and
Development Administration were transferred to, and vested in, the
Secretary of Energy on October 1, 1977; and
WHEREAS, Corporation and DOE desire to amend the DOE Power
Agreement further for the purposes hereinafter provided;
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. Paragraph 1 of Section 2.08 is amended in its entirety to
read as follows:
"1. In the event that permanent power
(together with any occasional energy) and
supplemental power, and the energy associated
therewith, to be supplied by Corporation to DOE will
not be sufficient to supply the DOE requirements for
electric power at the Project, at the request of DOE
and upon reasonable notice, and provided that
arrangements for the supply to Corporation of other
power and energy from sources other than the project
generating stations have been effected, Corporation
will schedule the delivery of such other power and
associated energy to DOE, such other power being
herein called 'arranged power' and the energy
associated therewith scheduled to be delivered to the
point of delivery being herein called 'scheduled kwh
of arranged energy'."
<PAGE>4
2. Paragraph 3 of Section 2.08 is amended in its entirety to
read as follows:
"2. DOE shall pay to Corporation for arranged
power and/or for billing kwh of arranged energy
during any month an amount equal to the 'out-of-
pocket costs of arranged power,' determined as
provided in paragraph 5 of this Section 2.08, plus a
charge for difficult to quantify costs of 1 mill per
scheduled kwh of arranged energy. No portion of such
1 mill charge for difficult to quantify costs shall
be included in the computations under Sections 3.03
and 3.04."
3. Clause (c) of Paragraph 3 of Section 3.04 is amended in
its entirety to read as follows:
"(c) Component (C) shall consist of the total
expenses for taxes, including all taxes on income
(other than (i) Federal income taxes, (ii) any taxes
that are now or may hereafter be levied based on
revenue, energy generated or sold or on any other
basis capable of direct distribution, the cost of
which taxes shall be allocated directly to DOE and
Corporation in amounts reflecting the proper share of
each, and DOE shall pay to Corporation its share
thereof, (iii) taxes arising from payments received
by Corporation for difficult to quantify costs under
Section 2.08) properly chargeable to Account 507 of
the Uniform System of Accounts; provided, however,
that any taxes for which DOE reimburses Corporation
under Sections 1.05, 4.02 and 4.08 shall not be
included in Component (C)."
4. Section 4.08 is amended in its entirety to read as
follows:
"SECTION 4.08 Arranged Power and Occasional Energy.
Corporation shall submit to DOE as early as practicable in
each month a bill for the costs incurred during the
immediately preceding month pursuant to Sections 2.08 and
2.09, respectively."
5. This Modification No. 13 to the DOE Power Agreement shall
become effective at 12:00 Midnight on the date on which Corporation
shall deliver to DOE a written notice to the effect that:
<PAGE>5
All applicable requirements as to approval by or
filings with regulatory agencies having jurisdiction in
respect of the transactions constituting the subject
matter of this Modification No. 13 (including expiration
of any specified period after the date of any filing) have
been complied with and all requisite approvals of such
regulatory agencies are in full force and effect and none
is the subject of attack on appeal by direct proceeding or
otherwise, and (except to the extent that Corporation
shall waive such condition) any requisite approvals of
regulatory agencies having such jurisdiction have become
final and not subject to judicial review in any court.
6. The DOE Power Agreement, as modified by Modifications No.
1 through No. 12, both inclusive, and by this Modification No. 13,
is hereby in all respects confirmed.
IN WITNESS WHEREOF, the parties hereto have executed this
Modification No. 13 as of the date and year first above written.
OHIO VALLEY ELECTRIC CORPORATION
By_________________________________
UNITED STATES OF AMERICA
By ROBERT E. LYNCH
Authorized Contracting Officer
<PAGE>
Modification No. 14
to
POWER AGREEMENT
Dated October 15, 1952
between
OHIO VALLEY ELECTRIC CORPORATION
AND
UNITED STATES OF AMERICA
Acting By and Through the
SECRETARY OF ENERGY,
the statutory head of the
DEPARTMENT OF ENERGY
Dated as of
January 15, 1992
<PAGE>
Contract No. DE-AC05-760R01520
(Modification No. 14)
THIS MODIFICATION NO. 14, dated as of the 15th day of January,
1992, by and between OHIO VALLEY ELECTRIC CORPORATION, a
corporation organized under the laws of the State of Ohio
(hereinafter called the "Corporation") and the UNITED STATES OF
AMERICA (hereinafter sometimes called the "Government"), acting by
and through the SECRETARY OF ENERGY, the statutory head of the
DEPARTMENT OF ENERGY (hereinafter called "DOE");
W I T N E S S E T H T H A T
WHEREAS, Corporation and the Government have heretofore
entered into a contract dated October 15, 1952, providing for the
supply by Corporation of electric utility services to the United
States Atomic Energy Commission (hereinafter called "AEC") at AEC's
project near Portsmouth, Ohio (hereinafter called the "Project"),
which contract has heretofore been modified by Modification No. 1,
dated July 23, 1953, Modification No. 2, dated as of March 15,
1964, Modification No. 3, dated as of May 12, 1966, Modification
No. 4, dated as of January 7, 1967, Modification No. 5, dated as of
August 15, 1967, Modification No. 6, dated as of November 15, 1967,
Modification No. 7, dated as of November 5, 1975, Modification No.
8, dated as of June 23, 1977, Modification No. 9, dated as of July
1, 1979, Modification No. 10, dated as of August 1, 1979,
Modification No. 11, dated as of September 1, 1979, Modification
1
<PAGE>
No. 12, dated as of August 1, 1981, and Modification No. 13, dated
as of September 1, 1989 (said contract, as so modified, is
hereinafter called the "DOE Power Agreement"); and
WHEREAS, pursuant to the Energy Reorganization Act of 1974,
the AEC was abolished on January 19, 1975 and certain of its
functions, including the procurement of electric utility services
for the Project, were transferred to and vested in the
Administrator of Energy Research and Development; and
WHEREAS, pursuant to the Department of Energy Organization
Act, all of the functions vested by law in the Administrator of
Energy Research and Development or the Energy Research and
Development Administration were transferred to, and vested in, the
Secretary of Energy on October 1, 1977; and
WHEREAS, Corporation and DOE desire to amend the DOE Power
Agreement further for the purpose of extending its term and for
certain other purposes as more particularly hereinafter provided;
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. The Equity Participation Ratios of American Gas and
Electric Company (now American Electric Power Company, Inc.) and
Louisville Gas and Electric Company shall be 39.9 Percent and 4.9
Percent, respectively, in lieu of the percentages listed in the
table in the second clause of the preamble to the DOE Power
Agreement. In connection therewith, the third clause of the
preamble to the DOE Power Agreement is hereby modified to read as
follows:
"WHEREAS, Corporation proposes to issue from time to
time to the Participating Companies, as required, shares
2
<PAGE>
of the capital stock of Corporation for cash at the par
value thereof of $100 per share in amounts presently
estimated not to exceed the aggregate number of shares of
such capital stock indicated in the tabulation below:
Aggregate Number
Name of of Shares of
Participating Company Corporation
American Gas and Electric Company 79,800
The Cincinnati Gas & Electric Company 18,000
Columbus and Southern Ohio Electric Company 8,600
The Dayton Power and Light Company 9,800
Kentucky Utilities Company 5,000
Louisville Gas and Electric Company 9,800
Ohio Edison Company 33,000
Southern Indiana Gas and Electric Company 3,000
The Toledo Edison Company 8,000
The West Penn Electric Company 25,000"
2. Paragraph 1 of Section 2.04 is amended in its entirety to read
as follows:
"1. Whenever, for any clock hour, the aggregate
amount of permanent power and the energy associated
therewith furnished by Corporation to DOE pursuant to
Section 2.03 and the scheduled kwh of occasional energy
for which provision has been made by Corporation pursuant
to Section 2.09 is insufficient to supply the part of the
DOE contract demand which is then being demanded by DOE,
Corporation shall, unless Corporation shall be excused as
a result of conditions contemplated by Section 7.05 of
this Agreement or DOE shall have otherwise excused
Corporation from meeting such demand, furnish additional
generating capacity and the energy associated therewith
to DOE at the point of delivery to make up for such
insufficiency in any amount necessary up to a number of
kilowatts which will equal the Applicable Percentage
(which percentage, for purposes of this Section 2.04,
shall not exceed thirty percent) of the sum of (i) the
DOE contract demand and (ii) the transmission losses
thereon from the 345 kv busses of the project generating
stations. At the request of DOE, during any clock hour
Corporation may, at its option, furnish to DOE
supplemental power which, when added to the permanent
power and occasional energy then being furnished, shall
exceed the DOE contract demand; provided that, in such
event, DOE shall, if requested to do so by Corporation,
forthwith take action to reduce its power and energy
3
<PAGE>
requirements to an amount not exceeding the aggregate
amount which Corporation would otherwise be obligated to
supply. Notwithstanding the foregoing, the aggregate
amount of supplemental power and energy which Corporation
shall be obligated to furnish to D0E pursuant to this
paragraph l during any calendar year shall not exceed the
product of 900,000,000 kwh multiplied by the average DOE
capacity ratio of such calendar year, weighted with
respect to the periods of time during which DOE capacity
ratios were in effect."
3. Paragraph 1 of Section 2.05 is amended by deleting
subsection (b) of clause (B) of said paragraph 1 and substituting
therefor the following:
"(b) in the event that any of the events specified
in clause (i), clause (ii), clause (iii) or clause (iv)
of Section 6.05 of this Agreement shall occur on the
effective date of Modification No. 14 to this Agreement
or thereafter during the term of this Agreement, then,
and in such event, if Corporation so elects pursuant to
Section 6.05, for the purpose of computing the demand
charges or modified demand charges payable by DOE as
cancellation costs pursuant to Section 6.02 of this
Agreement, and for all other purposes of this Agreement,
the DOE contract demand in effect on the date of the
occurrence of such event and thereafter shall be, and be
deemed to be, the Full Contract Quantity; and provided
further"
4. Section 2.05 is further amended by deleting paragraphs 2,
3 and 4 in their entirety and substituting therefor the following:
"2. DOE shall have the right at any time to sell or
provide permanent or supplemental power and energy to
which it is entitled hereunder to its vendors,
contractors and concessionaires for their consumption at
or in the vicinity of the Project. In addition, DOE
shall have the right at any time to sell or provide
permanent or supplemental power and energy in an amount
up to 2,500 kw to its tenants for their consumption at or
in the vicinity of the Project.
"3. Except as hereinafter provided, DOE shall have
the right, at any time during the term of this Agreement,
to the extent that power and energy shall no longer be
required at the Project, to transfer all or part of the
power and energy to which DOE is entitled hereunder in a
block or blocks not less than 20,000 kw in any one case
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to supply a Governmental requirement at DOE's uranium
enrichment facility near Paducah, Kentucky for
consumption in operations at such installation. In the
event that DOE desires to exercise such right, it shall
give notice of its intention to Corporation. If
arrangements are mutually agreed upon for such transfer
over transmission facilities provided by Corporation,
such power and energy shall be delivered by Corporation
to the point agreed upon at the rates provided in this
Agreement, adjusted to reflect any increase in cost to
Corporation as well as applicable transmission charges.
If, however, within 60 days after receipt of the notice
provided for in this paragraph, Corporation undertakes to
release DOE from liability with respect to charges
payable by DOE with respect to such power and energy as
of (a) one year after such notice, or (b) the day on
which such power and energy could have been used at the
Paducah facility, whichever is later, or (c) as of such
earlier date, if any, when Corporation can absorb such
power and energy in its system or in the systems of
Sponsoring Companies, then Corporation shall, as of the
date when DOE is released from such liability, have the
right to dispose of such power and energy in any manner
it may determine."
5. A new Section 2.10 is to be inserted after Section 2.09
as follows:
"SECTION 2.10 Transmission Revenues. From time to
time Corporation may receive payments from other
utilities or entities for the transmission over
transmission facilities of Corporation of electric power
and energy not associated with the Project. In such
event, no portion of the payments received by Corporation
for the use of Corporation's transmission facilities
shall be included in the computations under Sections 3.03
and 3.04."
6. A new Section 2.11 is to be inserted after Section 2.10
as follows:
"SECTION 2.11 Transmission Payments. In the event
that Corporation is required to make payments to other
utilities and/or entities of transmission or
transmission-related charges for or in connection with
the delivery of electric power and energy to DOE under
this Agreement, which charges would not, pursuant to any
other provision of this Agreement, be billed by
Corporation to, and paid by, DOE, DOE shall pay to
Corporation the full amount paid by Corporation for such
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charges; provided, however, that such amount shall be
reduced, to not less than zero, by any amount which
Corporation receives from other utilities and/or entities
under Section 2.10 during the calendar year when the
obligation to make payments to other utilities and/or
entities arises."
7. Clauses (c) and (d) of paragraph 3 of Section 3.04 are
amended in their entirety to read as follows:
"(c) Component (C) shall consist of the total
expenses for taxes, including all taxes on income (other
than (i) Federal income taxes, (ii) any taxes that are
now or may hereafter be levied based on revenue, energy
generated or sold or on any other basis capable of direct
distribution, the cost of which taxes shall be allocated
directly to DOE and Corporation in amounts reflecting the
proper share of each, and DOE shall pay to Corporation
its share thereof, (iii) taxes arising from payments
received by Corporation for difficult to quantify costs
under Section 2.08 and (iv) taxes arising from payments
received by Corporation for use of Corporation's
transmission facilities under Section 2.10), properly
chargeable to Account 507 of the Uniform System of
Accounts; provided, however, that any taxes for which DOE
reimburses Corporation under Sections 1.05, 3.06, 3.07,
4.02, and 4.08 shall not be included in Component (C)."
"(d) Component (D) shall consist of an amount
equal to the product of $2.089 multiplied by the total
number of shares of capital stock of the par value of
$100 per share of Ohio Valley Electric Corporation which
shall have been issued and which are outstanding on the
last day of such month."
8. The second paragraph of paragraph 8 of Section 3.04 is
amended by deleting the first sentence thereof and substituting
therefor the following:
"Prior to the effectiveness of any assignment of
this Agreement by DOE, the 'Review Board,' for the
purposes of this paragraph 8, shall be the DOE Board of
Contract Appeals."
9. Section 3.06 is amended in its entirety to read as
follows:
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<PAGE>
"SECTION 3.06 Additional Facilities. In connection
with the operation of the Paducah or Portsmouth
installations of DOE, as a part of the cost structure of
this Agreement and for the purpose of providing funds in
the amount necessary to cover the entire cost to
Corporation of additional facilities and/or spare parts
associated with the provision of electric utility
services to DOE, including, without limitation, such
facilities as fuel processing plants, flue gas or waste
product processing facilities and additional generating
units or stations at the location of the existing
facilities or elsewhere, as shall be purchased and/or
installed or being installed by Corporation pursuant to
the provisions of this Section 3.06, DOE shall pay to
Corporation amounts sufficient, after provision for any
estimated income taxes that may be applicable thereto, to
enable Corporation to cover the entire cost of such
additional facilities and/or spare parts; provided,
however, that neither any single additional facility
and/or spare part costing more than $100,000 nor any
single additional facility or spare part costing less
than $100,000 ('small additional facility or spare part')
after the total cost of all small additional facilities
or spare parts in one calendar year has reached $5
million shall be purchased or installed by Corporation
pursuant to this Section 3.06 without the prior written
approval of DOE unless the purchase or installation of
such additional facilities and/or spare parts is ordered
or required by any regulatory body having jurisdiction
over the emission of pollutants or the discharge of
wastes by Corporation or is reasonably required to enable
Corporation to limit the emission of pollutants or the
discharge of wastes or is otherwise reasonably necessary
in order to comply with any governmental requirement as
to health, safety or the protection of the environment.
"Corporation agrees, upon the request of DOE, to use
its best efforts to arrange, to the extent that, in
Corporation's judgment, such financing is feasible,
financing for a period not to extend beyond December 31,
2005, from sources of capital funds other than DOE of the
cost of each additional facility and/or spare part which
has a cost in excess of $5,000,000, or such lesser amount
as may be specified by Corporation, and also agrees where
the cost is so financed in whole or in part (1) to
reimburse or credit DOE from any proceeds of such
financing to the extent such proceeds are, under the
financing arrangements, available for such purpose, for
any amount which DOE may have previously paid to
Corporation under this Section 3.06 for the cost of such
additional facility and/or spare part and (2) to apply
the balance of any such proceeds in payment of the
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<PAGE>
remaining cost, if any, of such additional facility
and/or spare part; DOE shall be relieved of its
obligation under this Section 3.06 to pay Corporation for
the cost of any additional facility and/or spare part to
the extent that Corporation pays such cost from the
balance of any proceeds as contemplated under clause (2)
of this sentence.
"DOE agrees that, if DOE requests that Corporation
arrange for financing from sources of capital funds other
than DOE the cost of any additional facility and/or spare
part, DOE will provide to Corporation assurance in a form
satisfactory to Corporation that DOE will pay to
Corporation (or, if the right to receive principal
payments, interest payments, and any other financing
expenses under an installment sale, loan, lease or
similar agreement shall have been assigned by the seller,
lender, lessor or other party to any such similar
agreement with the written consent of Corporation and DOE
to a trustee under an indenture pursuant to which bonds
or other debt securities have been issued and sold, will
pay directly to such assignee rather than to Corporation)
the full amount of principal payments, interest payments
and any other expenses of financing the cost of the
additional facility and/or spare part.
"If Corporation requests a ruling to the effect that
amounts paid by DOE under this Section 3.06 do not
constitute taxable income to Corporation, but is unable
to obtain a ruling satisfactory to Corporation, or in
case such ruling once obtained shall be reversed or
rescinded, then DOE shall pay to Corporation such
amounts, in lieu of the amounts to be paid as above
provided, which, after provision for all estimated income
taxes that may be applicable thereto, shall equal the
entire costs of the additional facilities and/or spare
parts payable by DOE to Corporation as above provided.
"If Corporation charges to expense any item of
additional facilities and/or spare parts which is later
determined to be an item which should have been
capitalized for tax purposes, then DOE shall, as part of
the cost structure of this Agreement, pay to Corporation
such amount which, after provision for all estimated
income taxes that may be applicable thereto, when added
to any amount previously paid for the item by DOE, shall
equal the entire cost of the additional facilities and/or
spare parts payable by DOE to Corporation as above
provided.
8
<PAGE>
"DOE shall not pay to Corporation any amount
pursuant to paragraph 3(a) and paragraph 3(d) of Section
3.04 with respect to all or such portion of the cost of
such additional facilities and/or spare parts as has been
paid by DOE and has not thereafter been financed from
sources other than DOE.
If the purchase, acquisition or installation of any
additional facility and/or spare part is ordered or
required by any regulatory agency having jurisdiction
over the emission of pollutants or the discharge of
wastes by Corporation or by a court in any proceeding
relating to the control of pollutants or the discharge of
wastes by Corporation, or if in the judgment of
Corporation any additional facility and/or spare part is
reasonably required to enable Corporation to limit the
emission of pollutants or the discharge of wastes of is
otherwise reasonably necessary in order to comply with
any governmental requirement as to health, safety or the
protection of the environment, then until such additional
facility and/or spare part shall be purchased, acquired
or installed and operating effectively (A) Corporation
shall be entitled so to operate the project generating
stations as, in the judgment of Corporation, will (i)
limit emissions of pollutants and the discharge of wastes
to permissible amounts, and (ii) otherwise comply with
all governmental requirements as to health, safety and
the protection of the environment, and (B) Corporation
shall not be held responsible or liable for any loss or
damage to DOE on account of non-delivery of energy, and
DOE shall not be relieved from its obligation to pay any
charges payable under this Agreement."
10. Section 3.07 is amended in its entirety to read as
follows:
"SECTION 3.07 Replacements. In connection with the
operation of the Paducah or Portsmouth installations of
DOE, as a part of the cost structure of this Agreement
and for the purpose of providing funds in the amount
necessary to cover the entire cost to Corporation of
replacements chargeable to property and plant pursuant to
the provisions of this Section 3.07 necessary or
desirable to keep the project generating stations and
project transmission facilities in a dependable and
efficient operating condition in order to facilitate the
provision of electric utility services to DOE, DOE shall
pay to Corporation amounts sufficient, after provision
for any estimated income taxes that may be applicable
thereto, to enable Corporation to cover the entire cost
of such replacements made or being made by Corporation
9
<PAGE>
during any month or prior thereto (and not previously
reimbursed), which costs are incurred after October 14,
1977, whether or not the purchase and installation of
such replacements occurred in whole or in part prior to
such date; provided, however, that neither any single
replacement costing more than $500,000 nor any single
replacement costing less than $500,000 ('small
replacement') after the total cost of all small
replacements in one calendar year has reached $1,000,000
shall be effected by Corporation pursuant to this Section
3.07 without the written approval of DOE unless such
replacements are ordered or required by any regulatory
body having jurisdiction over the emission of pollutants
or the discharge of wastes by Corporation or are
reasonably required to enable Corporation to limit the
emission of pollutants or the discharge of wastes or are
otherwise reasonably necessary in order to comply with
any governmental requirement as to health, safety or the
protection of the environment.
"Corporation agrees, upon the request of DOE, to use
its best efforts to arrange, to the extent that, in
Corporation's judgment, such financing is feasible,
financing for a period not to extend beyond December 31,
2005, from sources of capital funds other than DOE of the
cost of each replacement which has a cost in excess of
$5,000,000, or such lesser amount as may be specified by
Corporation, and also agrees where the cost of a
replacement is so financed in whole or in part (1) to
reimburse or credit DOE from any proceeds of such
financing to the extent such proceeds are, under the
financing arrangements, available for such purpose, for
any amount which DOE may have previously paid to
Corporation under this Section 3.07 for the cost of such
replacement and (2) to apply the balance of any such
proceeds in payment of the remaining cost, if any, of
such replacement; DOE shall be relieved of its obligation
under this Section 3.07 to pay Corporation for the cost
of any replacement to the extent that Corporation pays
such cost from the balance of any proceeds as
contemplated under clause (2) of this sentence.
"DOE agrees that, if DOE requests that Corporation
arrange financing from source of capital funds other than
DOE or the cost of any replacement, DOE will provide to
Corporation assurance in a form satisfactory to
Corporation that DOE will pay to Corporation (or, if the
right to receive principal payments, interest payments,
and any other financing expenses under an installment
sale, loan, lease or similar agreement shall have been
assigned by the seller, lender, lessor or other party to
any such similar agreement with the written consent of
10
<PAGE>
Corporation and DOE to a trustee under an indenture
pursuant to which bonds or other debt securities have
been issued and sold, will pay directly to such assignee
rather than to Corporation) the full amount of principal
payments, interest payments and any other expenses of
financing the cost of the replacement.
"If Corporation requests a ruling to the effect that
amounts paid by DOE under this Section 3.07 do not
constitute taxable income to Corporation, but is unable
to obtain a ruling satisfactory to Corporation, or in
case such ruling once obtained shall be reversed or
rescinded, then DOE shall pay to Corporation such
amounts, in lieu of any amounts paid as above provided,
which, after provision for all estimated income taxes
that may be applicable thereto, shall equal the entire
cost of the replacements payable to DOE as above
provided.
"If Corporation charges to expense any replacement
item which is later determined to be an item which should
have been capitalized for tax purposes, then DOE shall,
as part of the cost structure of this Agreement, pay to
Corporation such amount which, after provision for all
estimated income taxes that may be applicable thereto,
when added to any amount previously paid for the item by
DOE, shall equal the entire cost of the replacements
payable by DOE to Corporation as above provided.
"For the purposes of this Section 3.07 the term
'replacement' shall include, in addition to electric
plant constructed or installed in place of property
retired, any facilities or equipment (i) the installation
of which shall require some physical alteration of the
project generating facilities and/or the project
transmission facilities and (ii) which are designed to
limit the emission of pollutants or the discharge of
wastes or are otherwise reasonably necessary to comply
with any governmental requirement as to health, safety or
the protection of the environment, whether or not the
project generating facilities or the project transmission
facilities previously included facilities or equipment
serving the same purpose or function as the replacement.
"No replacement costs paid for out of the proceeds
of insurance, or out of amounts recovered from third
parties, shall be included in the cost of replacements.
The term 'costs of replacements' shall include all
components of cost plus removal expenses, less salvage.
DOE shall not pay to Corporation any amounts pursuant to
paragraph 3 (a) and paragraph 3 (d) of Section 3.04 with
respect to all or such portion of the cost of such
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<PAGE>
replacements as has been paid by DOE and not thereafter
been financed from sources other than DOE.
"If the purchase, acquisition or installation of any
replacement is ordered or required by any regulatory
agency having jurisdiction over the emission of
pollutants or the discharge of wastes by Corporation or
by a court in any proceeding relating to the control of
pollutants or the discharge of wastes by Corporation, or
if in the judgment of Corporation any replacement is
reasonably required to enable Corporation to limit the
emission of pollutants or the discharge of wastes or is
otherwise reasonably necessary in order to comply with
any governmental requirement as to health, safety or the
protection of the environment, then until such
replacement shall be installed and operating effectively
(A) Corporation shall be entitled so to operate the
project generating stations as, in the judgment of
Corporation, will (i) limit emissions of pollutants and
the discharge of wastes to permissible amounts, and (ii)
otherwise comply with all governmental requirements as to
health, safety and the protection of the environment, and
(B) Corporation shall not be held responsible or liable
for any loss or damage to DOE on account of non-delivery
of energy, and DOE shall not be relieved from its
obligation to pay any charges payable under this
Agreement."
11. Section 4.05 is amended in its entirety to read as
follows:
"SECTION 4.05 Taxes and Insurance Allocated
Directly to DOE. Corporation shall bill DOE for (i) its
share of the cost of any estimated taxes allocated
directly to DOE pursuant to clause (c) of paragraph 3 of
Section 3.04, (ii) the cost of any estimated taxes or
other charges to be paid by DOE pursuant to Sections 3.06
and 3.07, and (iii) the cost of any Insurance to be paid
by DOE pursuant to clause (b) of paragraph 3 of Section
3.04."
12. A new Section 4.09 is to be inserted after Section 4.08
as follows:
"SECTION 4.09 Transmission Payments. Corporation
shall submit to DOE as early as practicable in each month
a bill or the amount by which costs incurred during the
current calendar year pursuant to Section 2.11 exceed the
total of (i) the amounts paid by DOE during the current
calendar year under this Section 4.09, and (ii) the
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amount of any transmission revenues received by the
Corporation during the current calendar year pursuant to
Section 2.10."
13. Section 6.01 is amended in its entirety to read as
follows:
"SECTION 6.01 Duration. The term of this
Agreement, unless otherwise terminated in accordance with
the provisions hereof, shall terminate at 12:00 Midnight,
Central Standard Time, on December 31, 2005. The parties
recognize that the project generating stations were
constructed to service the United States of America's
load requirements at the Project, and therefore recognize
the principle that power and associated energy produced
by the project generating stations beyond the term of
this Agreement are to be made available, at least to the
extent of DOE's contract demand as in effect on December
31, 2005, to serve such load, provided Corporation's
equipment is then serviceable and mutually agreeable
arrangements can be evolved by the parties hereto.
Accordingly, Corporation and DOE agree to review the
possibility of negotiating power supply arrangements for
the delivery of power and associated energy produced by
the project generating stations to DOE subsequent to
December 31, 2005, at least two years in advance of such
date."
14. The first sentence of Section 6.02 is amended by deleting
the words "not less than five years" and substituting therefor the
words "not less than three years."
15. Section 6.04 is amended in its entirety to read as
follows:
"SECTION 6.04 Payments for Employee Benefits.
"1. As part of the cost structure of this
Agreement, beginning in 1993, and in any event not later
than the effective date of termination of this Agreement,
DOE shall pay to Corporation amounts, after provision for
any estimated taxes that may be applicable thereto,
determined by an actuary or actuaries selected in
accordance with the provisions of paragraph 2 of this
Section 6.04 to be sufficient to pay the premiums due or
expected to become due, as well as administrative fees
and costs, on life insurance medical insurance or other
post-retirement benefits other than pensions attributable
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to the employment and employee service of active
employees, retirees, or other employees prior to such
effective date, such amounts being sufficient to provide
payment with respect to all periods for which Corporation
has committed or is otherwise obligated to make such
payments, including amounts attributable to current
employee service and any unamortized transition
obligation attributable to prior service years ("Post--
Retirement Benefit Obligation"); further provided, that,
not later than the effective dates of termination, DOE
will pay to Corporation additional amounts, after
provision for any estimated taxes that may be applicable
thereto, sufficient to purchase insurance policies, or
DOE will provide other forms of assurance, together with
provisions for estimated taxes, if any, that may be
applicable thereto, satisfactory to DOE and to
Corporation, such insurance policies or other forms of
assurance being adequate to cover any shortfall if the
amount of the Post-Retirement benefit Obligation is
insufficient to permit Corporation to fulfill its
commitments or obligations with respect to post-
retirement benefits other than pensions; further provided
that if, after the decease of the last person entitled
to life and/or medical insurance coverage or other post-
retirement benefits other than pensions, the amounts paid
by DOE to Corporation plus earnings thereon are found to
have exceeded Corporation's commitments or obligations,
such excess shall be refunded to DOE; and further
provided, that should Corporation be required by law or
by regulation of governmental agencies to provide funds
in connection with life and/or medical insurance premiums
for employees whose employment with Corporation
terminates or has terminated before retirement, DOE shall
pay Corporation amounts, after provision for any
estimated taxes that may be applicable thereto, required
to provide funds sufficient to pay life and/or medical
insurance benefits for such employees, such payments to
be made on or before the dates when any accruals in
connection therewith are required by Generally Accepted
Accounting Principles to be recorded or in any event by
the effective date of termination of this Agreement.
2. The actuary selected by Corporation to
determine the amounts sufficient to make payments
referenced in paragraph 1 of this Section 6.04 shall be
a person classified under the Employee Retirement income
Security Act as an 'Enrolled Actuary' unless such actuary
is selected by Corporation with the approval of DOE. An
actuary retained by DOE shall have the right to review
and approve any actuarial or other assumption or
calculation performed with respect to Section 6.04 by or
on behalf of the actuary retained by Corporation and the
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actuary retained by Corporation shall have the right to
review any actuarial or other assumption or calculation
performed with respect to Section 6.04 by or on behalf
of an actuary retained by DOE. If there is a dispute
between Corporation's actuary and DOE's actuary
concerning any actuarial or other assumption or
calculation pursuant to this Section 6.04 and the
respective actuaries are not able to resolve such dispute
within 30 days, they shall within 30 days thereafter
select and appoint a third actuary to resolve the
dispute. If the actuaries retained by Corporation and DOE
are unable to agree within 30 days upon the selection of
a third actuary to resolve the dispute, an Enrolled
Actuary who has no professional relationship with either
party or to the actuaries retained by either party shall
be chosen by the Executive Director of the Society of
Actuaries or its successor. The fees and expenses of the
third actuary shall be divided equally between
Corporation and DOE."
16. Section 6.05 is amended in its entirety to read as
follows:
"SECTION 6.05 Termination as Result of Certain
Conditions. In the event of the occurrence of any of the
events specified in clause (i), clause (ii), clause (iii)
or clause (iv) of this Section 6.05, Corporation may in
its sole discretion elect, by notice in writing delivered
to DOE within 270 days following such occurrence, to
treat such occurrence as the delivery by DOE to
Corporation on the data of such occurrence of a notice
of termination pursuant to Section 6.02 hereof
designating an effective date of termination as the
earlier of (a) the date when this Agreement would
otherwise terminate in accordance with Section 6.01
hereof, or (b) a date three years subsequent to the date
of such occurrence and, in the event of such election by
Corporation, this Agreement shall terminate upon the
earlier of (a) the date when this Agreement would
otherwise terminate in accordance with Section 6.01
hereof, or (b) a date three years subsequent to the date
of such occurrence and, in the event of such election by
Corporation, this Agreement shall terminate upon the
earlier of (a) the date when this Agreement would
otherwise terminate in accordance with Section 6.01
hereof, or (b) a date three years subsequent to the date
of such occurrence:
(i) DOE shall have failed to pay any amount
required to be paid by DOE pursuant to the provisions of
this Agreement within a period of 30 days after the
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receipt of a written notice from Corporation to DOE of
DOE's failure to pay any such amount; or
(ii) DOE shall have made any payment required to be
made by DOE pursuant to the provisions of this Agreement
without having full authority to make such payment; or
(iii) DOE shall have claimed as a reason for
failing to pay any amount billed to DOE by Corporation
that DOE was prevented from doing so by Section 165(b)
of the Atomic Energy Act, unless Corporation specifically
identifies all or a portion of such billing as requiring
a direct payment or direct reimbursement of Federal
income taxes; or
(iv) DOE shall have assigned this Agreement or
rights under this Agreement and the assignee shall not
have been at the time of the assignment, or shall have
ceased to be at any time after the assignment, wholly
owned by the United States of America."
17. A new Section 6.09 is to be inserted after Section 6.08
as follows:
"SECTION 6.09 Decommissioning, Shutdown, Demolition
and Closing. DOE recognizes that a part of the cost of
supplying power to it under this Agreement is the amount
that may be incurred in connection with the
decommissioning, shutdown, demolition and closing of
Corporation's Ohio Station and its Indiana Station when
production of electric power and energy is discontinued
at each of these facilities. Such cost (net of salvage
credits) shall include, but is not limited to, the costs
of demolishing the plant's building structures, disposal
of non-salvageable materials, removal and disposal of
insulating materials, removal and disposal of storage
tanks and associated piping, disposal or removal of
materials and supplies (including fuel oil and coal),
grading, covering and reclaiming storage and disposal
areas, disposing of ash in ash ponds to the extent
required by regulatory authorities, undertaking
corrective or remedial action required bv regulatory
authorities, and any other costs incurred in putting the
facilities in a condition necessary to protect health or
the environment or which are required by regulatory
authorities, or which are incurred to fund continuing
obligations to monitor or to correct environmental
problems which result, or are later discovered to result,
from the facilities' operation, closure or post-closure
activities.
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"DOE agrees to pay as incurred or, if not incurred,
not later than the effective date of the termination of
the Agreement its pro rata share of any of the above--
referenced costs incurred or, if not incurred, as
estimated by the Independent Engineer in accordance with
the methodology described below. The pro rata share to
be paid by DOE and the estimated total amount of the
above-referenced costs are to be determined by a
recognized firm of Independent Engineers to be selected
by Corporation with the approval of DOE (hereinafter
called "Independent Engineer"). The Independent Engineer
shall determine DOE's pro rata share on the basis of the
following ratio:
(i) The total number of megawatt-hours produced
and estimated to be produced at the generating
station incurring such costs for sale to DOE
subsequent to the effective date of this
Modification No. 14 to this Agreement, as
compared to
(ii) The total number of megawatt-hours produced
and estimated to be produced at the generating
station incurring such costs subsequent to the
effective date of this Modification No. 14 to
this Agreement."
18. Section 7.04 is amended by deleting paragraph 1 in its
entirety and substituting therefor the following:
"1. Corporation shall keep books of account in
accordance with the Federal Power Commission (FPC)
Uniform System of Accounts of 1937 (Uniform System of
Accounts) and, with the consent of DOE, such other
systems of accounts prescribed by other governmental
regulatory authorities having jurisdiction as may be
applicable. In addition, Corporation shall keep such
records and memorandum accounts as may be required for
the computation of amounts payable by DOE hereunder. The
Uniform System of Accounts shall be used for the
determination of any question relative to costs and
expenses arising under this Agreement except that where
specific methods of computations of amounts are set forth
in this Agreement such methods shall be employed in lieu
of any other method which might be required by the
Uniform System of Accounts."
19. Section 7.07 is amended in its entirety to read as
follows:
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"SECTION 7.07 - FAR 52.222-3 Convict Labor (APR 1984).
"Corporation agrees not to employ any person
undergoing sentence of imprisonment in performing this
contract except as provided by 18 U.S.C. 4082(c)(2) and
Executive Order 11755, December 29, 1973."
20. Section 7.08 is amended in its entirety to read as
follows:
"SECTION 7.08 - FAR 52.203-1 Officials Not to Benefit (APR
1984).
"No member of or delegate to Congress, or resident
commissioner, shall be admitted to any share or part of
this contract, or to any benefit arising from it.
However, this clause does not apply to this contract to
the extent that this contract is made with a corporation
for the corporation's general benefit."
21. Section 7.12 is amended in its entirety to read as
follows:
"SECTION 7.12 Successors and Assigns.
"1. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective
successors and assigns. Neither this Agreement nor any rights
under this Agreement may be assigned by either party without
the written consent of the other, provided, however, that
consent shall not be unreasonably withheld and provided
further that, in the case of an assignment by DOE, reasonable
grounds for refusal of consent shall include, without
limitation, that such assignment may be prejudicial to
Corporation or the holders of any indebtedness of Corporation,
except that (A) DOE may without Corporation's consent assign
this Agreement or any of its rights under this Agreement,
provided that (i) the assignee is a successor to DOE for
purposes of operating the Project, (ii) the assignee is wholly
owned by the United States of America, (iii) the assignee is
authorized by law to assume, and does assume (by written
instrument that is in form satisfactory to Corporation), all
of the obligations and responsibilities of DOE and the United
States of America under this Agreement, and (iv) the
assignment does not have the effect of relieving the United
States of America of any of its obligations or
responsibilities under this Agreement, and (B) Corporation may
without the consent of DOE assign this Agreement or any of its
rights under this Agreement to a successor to all or
substantially all of its property and assets and may pledge
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this Agreement to secure its indebtedness incurred or to
be incurred for the purpose of constructing facilities,
and this Agreement or rights under this Agreement may be
assigned or transferred without the consent of DOE to one
or more persons who shall assume the obligations of
Corporation hereunder in connection with the enforcement
of any such pledge. Corporation may without the consent
of DOE assign pursuant to the provisions of the
Assignment of Claims Act of 1940, as amended, to any
bank, trust company, or other financing institution,
including any Federal lending agency, any moneys due or
to become due under this Agreement, and any such
assignment may cover all or any part of the amounts
payable by DOE to Corporation under this Agreement and
may be made to more than one such bank, trust company or
financing institution either for the account of such
bank, trust company or financing institution or as agent
or trustee for two or more parties who are holders of
indebtedness of Corporation. Payments to be made to the
assignee of any moneys due or to become due under this
Agreement shall not be subject to reduction or set off.
"2. Notwithstanding any other provision of this
Agreement, any assignment by DOE shall not become effective
if the same would require any shareholder of the Corporation
to dispose of its shares or until the date upon which all
authorizations, consents, approvals, exemptions, franchises,
permissions, permits and licenses of Federal, State or other
governmental authorities, free of conditions deemed burdensome
by the Corporation or any of its shareholders, shall have been
issued and there have been made all recordings and filings
with such authorities which are necessary to enable
Corporation legally to furnish to such successor operator of
the Project the electric service required to be furnished to
DOE under this Agreement and to enable Corporation legally to
carry out is obligations under this Agreement, and all such
authorizations, consents, approvals, exemptions, franchises,
permissions, permits, licenses, recordings and filings are
valid and in full force and effect, are not the subject of
attack on the appeal, by direct proceedings or otherwise, and
(except to the extent that Corporation shall waive such
condition) that either the time within which any appeal
therefrom may be taken or any review thereof may be had has
expired or that no review thereof may be had nor appeal
therefrom taken.
"3. In the event that any assignment of this Agreement
or rights under this Agreement shall become effective as
herein provided, Corporation shall thereafter be entitled to
take such action before, or make such filings with, any
regulatory authority having jurisdiction with respect to any
term or condition of this Agreement as Corporation shall deem
appropriate and in the event of such action by Corporation,
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the terms and conditions under which service shall be
rendered shall be the terms and conditions as so changed
or as shall result from such action by or before any such
regulatory authority.
"4. Notwithstanding nay other provision of this
Agreement, no assignment contemplated by this Section 7.12 or
transfer, by operation of law or otherwise, of any of the
rights, obligations or responsibilities of DOE and the United
States of America under this Agreement shall relieve the
United States of America of its obligations or
responsibilities to pay interest and principal or amortization
components of purchase price, amortization, rental or other
payments under installment sale, loan, lease or similar
agreements directly to a trustee as provided in subclauses(i)
and (iii) of clause (a) of paragraph 3 of Section 3.04 or as
provided in Sections 3.06 and 3.07 of this Agreement."
22. Section 7.13 is amended in its entirety to read as
follows:
"SECTION 7.13 FAR 52.2222-6 Equal Opportunity (APR
1984).
"(a) If, during any 12-month period (including the 12
months preceding the award of this contract), Corporation has
been or is awarded non-exempt Federal contracts and/or
subcontracts that have an aggregate value in excess of
$10,000, Corporation shall comply with the subparagraph (b)(1)
through (11) below. Upon request, Corporation shall provide
information necessary to determine the applicability of this
clause.
"(b) During performing this contract, Corporation agrees
as follows:
(1) Corporation shall not discriminate against any
employee or applicant for employment because of race,
color, religion, sex or national origin.
(2) Corporation shall take affirmative action to
ensure that applicants are employed, and that employees
are treated during employment, without regard to their
race, color, religion, sex or national origin. This
shall include, but not be limited to, (i) employment,
(ii) upgrading, (iii) demotion, (iv) transfer, (v)
recruitment or recruitment advertising, (vi) layoff or
termination, (vii) rates of pay or other forms of
compensation, and (viii) selection for training,
including apprenticeship.
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(3) Corporation shall post in conspicuous places
available to employees and applicants for employment the
notices to be provided by the Contracting Officer that
explain this clause.
(4) Corporation shall, in all solicitations or
advertisement for employees placed by or on behalf of the
Corporation, state that all qualified applicants will
receive consideration for employment without regard to
race, color, religion, sex or national origin.
(5) Corporation shall send to each labor union or
representative of workers with which it has a collective
bargaining agreement or other contract or understanding,
the notice to be provided by the Contracting Officer
advising the labor union or workers' representative of
Corporation's commitments under this clause, and post
copies of the notice in conspicuous places available to
employees and applicants for employment.
(6) Corporation shall comply with Executive Order
11246, as amended, and the rules, regulations and orders
of the Secretary of Labor.
(7) Corporation shall furnish to the contracting
agency all information required by Executive Order 11246,
as amended, and by the rules, regulations and orders of
the Secretary of Labor. Standard Form 100 (EEO-1), or
any successor form, is the prescribed form to be filed
within 30 days following the award, unless filed within
12 months preceding the date of award.
(8) Corporation shall permit access to its books,
records and accounts by the contracting agency or the
Office of Federal Contract Compliance Programs (OFCCP)
for the purposes of investigation to ascertain
Corporation's compliance with the applicable rules,
regulations and orders.
(9) In the event of Corporation's non-compliance
with this clause or any rule, regulation or order of the
Secretary of Labor, this contract may be canceled,
terminated or suspended in whole or in part and
Corporation may be declared ineligible for further
Government contracts under the procedures authorized in
Executive Order 11246, as amended. In addition,
sanctions may be imposed and remedies invoked against
Corporation as provided in Executive Order 11246, as
amended, the rules, regulations and orders of the
Secretary of Labor, or as otherwise provided by law.
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(10) Corporation shall include the terms and
conditions of subparagraph (b)(1) through (11) of this
clause in every subcontract or purchase order that is not
exempted by the rules, regulations or orders of the
Secretary of Labor issued under Executive Order 11246,
as amended, so that these terms and conditions will be
binding upon each subcontractor or vendor.
(11) Corporation shall take such action with
respect to any subcontract or purchase order as the
contracting agency may direct as a means of enforcing
these terms and conditions, including sanctions for non-
compliance; provided, that if Corporation becomes
involved in, or is threatened with, litigation with a
subcontractor or vendor as a result of any direction,
Corporation may request the United States to enter into
the litigation to protect the interests of the United
States.
"(c) If, pursuant to this section, DOE elects, in whole
or in part, to cancel, terminate, annul or suspend this
Agreement, to terminate the right of Corporation to proceed
or to suspend contract payments, such action by DOE may only
be taken by delivering to Corporation a notice in writing of
DOE's election to terminate not less than three years prior
to the effective date of termination pursuant to Section 6.02
of this Agreement."
23. Section 7.14 is amended in its entirety to read as
follows:
"SECTION 7.14. Security.
"1. Corporation's Duty to Safeguard Restricted
Data, Formerly Restricted Data, and Other Classified
Information. Corporation shall, in accordance with DOE's
security regulations and requirements, be responsible for
safeguarding all classified information and protecting
against sabotage, espionage, loss and theft the
classified documents and material in the Corporation's
possession in connection with work under this Agreement.
Except as otherwise expressly provided in this Agreement,
Corporation shall, upon completion or termination of this
Agreement, transmit to DOE any classified matter in the
possession of Corporation or any person under
Corporation's control in connection with the performance
of the Agreement. If retention by Corporation of any
classified matter is required after the completion or
termination of the Agreement and such retention is
approved by the Contracting Officer, Corporation will
complete a certificate of possession to be furnished to
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DOE specifying the classified matter to be retained. The
certification shall identify the items and types of
categories of matter retained, the conditions governing
the retention of the matter and the period of retention,
if known. If the retention is approved by the
Contracting Officer, the security provisions of the
Agreement will continue to be applicable to the matter
retained.
"2. Regulations. Corporation agrees to conform to
all security regulations and requirements of DOE.
"3. Definition of Classified Information. The
term 'Classified Information' means Restricted Data,
Formerly Restricted Data, or National Security
Information.
"4. Definition of Restricted Data. The term
'Restricted Data,' as used in this paragraph, means all
data concerning (a) design, manufacture, or utilization
of atomic weapons; (b) the production of special nuclear
material; or (c) the use of special nuclear material in
the production of energy, but shall not include data
declassified or removed from the Restricted Data category
pursuant to Section 142 of the Atomic Energy Act of 1954,
as amended.
"5. Definition of Formerly Restricted Data. The
term 'Formerly Restricted Data,' as used in this
paragraph, means all data removed from the Restricted
Data category under Section 142(d) of the Atomic Energy
Act of 1954, as amended.
"6. Definition of National Security Information.
The term 'National Security Information' means any
information or material, regardless of its physical form
or characteristics, that is owned by, produced for or by,
or is under the control of the United States Government,
that has been determined pursuant to Executive Order
12356 or prior Orders to require protection against
unauthorized disclosure, and which is so designated.
"7. Security Clearance of Personnel. Corporation
shall not permit any individual to have access to any
classified information, except in accordance with the
Atomic Energy Act of 1954,
"8. Criminal Liability. It is understood that
disclosure of any classified information relating to the
work or services ordered hereunder to any person not
entitled to receive it, or failure to safeguard any
classified matter that may come to Corporation or any
23
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person under Corporation's control in connection with
work under this Agreement, may subject Corporation, its
agents, employees, or subcontractors to criminal
liability under the laws of the United States. (See the
Atomic Energy Act of 1954, as amended, 42 U.S.C. 2011 et
seq.; 18 U.S.C. 793 and 794; and Executive Order 12356.)
"9. Subcontracts and Purchase Orders. Except as
otherwise authorized in writing by the Contracting
Officer, Corporation shall insert provisions similar to
the foregoing provisions of this Section 7.14 in all
subcontracts and purchase orders under this Agreement."
24. Section 7.15 is amended in its entirety to read as
follows:
"SECTION 7.15 Contract Work Hours and Safety Standards
Act -- Overtime Compensation.
"Prior to any assignment or transfer by DOE under
Section 7.12, this Agreement, to the extent that it is
of a character specified in the Contract Work Hours and
Safety Standards Act (40 U.S.C. 327-333), is subject to
the following provisions and to all other applicable
provisions and exceptions of such Act and the regulations
of the Secretary of Labor thereunder.
"1. Overtime Requirements. No contractor or
subcontractor contracting for any part of the contract
work which may require or involve the employment of
laborers or mechanics shall require or permit any laborer
or mechanic, in any workweek in which he is employed on
such work, to work in excess of 40 hours in such workweek
on work unless such laborer or mechanic receives
compensation at a rate not less than one and one-half
times the basic rate of pay for all such hours worked in
excess of 40 hours in such workweek.
"2. Violation; liability for unpaid wages;
liquidated damages. In the event of any violation of the
provisions of paragraph 1 of this Section 7.15,
Corporation and any subcontractor responsible therefor
shall be liable to any affected employee for the unpaid
wages. In addition, such Corporation and subcontractor
shall be liable to the United States for liquidated
damages. Such liquidated damages shall be computed with
respect to each individual laborer or mechanic employed
in violation of the provisions of paragraph 1 of this
Section 7.15 in the sum of $10 for each calendar day bon
which such employee was required or permitted to be
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employee on such work in excess of his standard workweek
of 40 hours without payment of the overtime wages
required by paragraph 1 of this Section 7.15.
"3. Withholding of unpaid wages and liquidated
damages. Except as otherwise provided in Section 7.12
of this Agreement, the Contracting Officer may withhold
from Corporation, from any moneys payable on account of
work performed by Corporation or subcontractor under any
such contract or other Federal contract with Corporation,
or any other Federally Assisted contract subject to the
Contract Work Hours and Safety Standards Act which is
held by Corporation, such sums as may administratively
be determined to be necessary to satisfy any liabilities
of Corporation or subcontractor for unpaid wages and
liquidated damages as provided in the provisions of
paragraph 2 of this Section 7.15.
"4. Payrolls and basic records. Corporation or
subcontractor shall maintain payrolls and basic payroll
records during the course of contract work and shall
preserve them for a period of 3 years from the completion
of this Agreement for all laborers and mechanics working
on this Agreement. Such records shall contain the name
and address of each such employee, social security
number, correct classifications, hourly rates of wages
paid, daily and weekly number of hours worked, deductions
made, and actual wages paid. Nothing in this paragraph
shall require the duplication of records required to be
maintained for construction work by Department of labor
regulations at 29 CFR 5.5(a)(3) implementing the Davis-
Bacon Act.
"5. Subcontracts. Corporation shall insert
paragraphs 1 through 4 of this Section 7.15 in all
subcontracts, and shall require their inclusion in all
subcontracts of any tier."
25. Paragraph (a) of Section 7.18 is amended by adding a
second sentence to read as follows:
"It is further the policy of the United States that
its prime contractors establish procedures to ensure the
timely payment of amounts due pursuant to the terms of
their subcontracts with small business concerns and small
business concerns owned and controlled by socially and
economically disadvantaged individuals."
26. Paragraph (c) of Section 7.18 is amended in its entirety
to read as follows:
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<PAGE>
"(c) As used in this Agreement, the term 'small
business concern' shall mean a small business as defined
pursuant to section 3 of the Small Business Act (15
U.S.C. 632) and relevant regulations promulgated pursuant
thereto. The term 'small business concern owned and
controlled by socially and economically disadvantaged
individuals' shall mean a small business concern:
(1) which is at least 51 percent owned by one or
more socially and economically disadvantaged individuals;
or, in the case of any publicly-owned business, at least
51 percent of the stock of which is owned by one or more
socially and economically disadvantaged individuals; and
(2) whose management and daily business operations
are controlled by one or more of such individuals.
This term also means a small business concern that
is at least 51 percent unconditionally owned by an
economically disadvantaged Indian tribe or Native
Hawaiian organization, or a publicly-owned business
having at least 51 percent of its stock unconditionally
owned by one of these entities which has its management
economically disadvantaged Indian tribe or Native
Hawaiian organization which meet the requirements of 13
CFR 124.
Corporation shall presume that socially and
economically disadvantaged individuals include Black
Americans, Hispanic Americans, Native Americans, Asian-
Pacific Americans, Asian-Indian Americans, and other
specified minorities, or any other individual found to
be disadvantaged by the Small Business Administration
pursuant to section 8(a) of the Small Business Act.
Corporation shall presume that socially and economically
disadvantaged entities also include Indian Tribes and
Native Hawaiian Organizations."
27. Section 7.19 is amended by deleting subparagraph (1) of
paragraph (c) thereof in its entirety and substituting therefor the
following:
"(1) The term 'labor surplus area' means a geographical
area identified by the Department of Labor, in accordance with
20 CFR 654, Subpart A, as an area of concentrated unemployment
and under-employed or an area of labor surplus."
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<PAGE>
28. Paragraph (g) of Section 7.22 is amended in its entirety
to read as follows:
"(g) If, pursuant to this section, DOE elects, in
whole or in part, to cancel, terminate, annul or suspend
this Agreement, to terminate the right of Corporation to
proceed or to suspend contract payments, such action by
DOE may only be taken by delivering to Corporation a
notice in writing of DOE's election to terminate not less
than three years prior to the effective date of
termination pursuant to Section 6.02 of this Agreement."
29. Section 7.23 is amended in its entirety to read as
follows:
"Section 7.23 Clean Air and Water.
"(a) Corporation agrees as follows:
(i) to comply with all applicable requirements of
Section 114 of the Clean Air Act (42 U.S.C. 7414) and
Section 308 of the Clean Water Act (33 U.S.C. 1518),
respectively, relating to inspection, monitoring, entry,
reports and information, as well as other applicable
requirements specified in Section 114 and Section 308 of
the Air Act and the Water Act, respectively, and all
applicable regulations and guidelines issued thereunder
before the execution of Modification No. 14 to this
Agreement;
(ii) that no portion of the work required by this
Agreement will be performed in a facility listed on the
Environmental Protection Agency list of violating
facilities on the date when Modification No. 14 to this
Agreement was executed unless and until the Environmental
Protection Agency eliminates the name of such facility
or facilities from such listing;
(iii) to use its best efforts to comply with
clean air standards and clean water standards at the
facilities in which the Agreement is being performed;
(iv) to insert the substance of the provisions of
this Section 7.23 in any non-exempt subcontract,
including this paragraph (iv).
"(b) The terms used in this Section 7.23 have the
following meanings:
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(i) the term 'Air Act' means the Clean Air Act, as
amended (42 U.S.C. 7401 et seq.);
(ii) the term 'Water Act' means Clean Water Act, as
amended (33 U.S.C. 1251 et seq.);
(iii) the term 'Clean Air Standards' means any
applicable and enforceable rules, regulations, guidelines,
standards, limitations, orders, controls, prohibitions, or
other requirements which are contained in, issued under, or
otherwise adopted pursuant to the Air Act or Executive Order
11,738, an applicable implementation plan as described in
Section 110(d) of the Air Act (42 U.S.C. 7410(d)), an approved
implementation procedure or plan under Section 111(c) or
Section 111(d), respectively, of the Air Act (42 U.S.C 7411(c)
or (d), or an approved implementation procedure under Section
112 (d) of the Air Act (42 U.S.C. 7412 (d));
(iv) the term 'Clean Water Standards' means any
applicable and enforceable limitation, control, condition,
prohibition, standard, or other requirement which is
promulgated pursuant to the Water Act or contained in a permit
issued to a discharger by the Environmental Protection Agency
or by a state under an approved program, as authorized by
Section 402 of the Water Act (33 U.S.C. 1342), or by a local
government to ensure compliance with pretreatment regulations
as required by Section 307 of the Water Act (33 U.S.C. 1317);
(v) the term 'compliance' means compliance with
applicable clean air or water standards. Compliance shall also
mean compliance with a schedule or plan ordered or approved
by a court of competent jurisdiction, the Environmental
Protection Agency or an air or water pollution control agency
in accordance with the requirements of the Air Act or Water
Act and regulations issue pursuant thereto;
(vi) the term 'facility' means any building, plant,
installation, structure, mine, vessel, or other loading craft,
location, or site of operations, owned, leased or supervised
by a contractor or subcontractor, to be utilized in the
performance of a contract or subcontract. Where a location or
site of operations contains or includes more than one
building, plant, installation, or structure, the entire
location shall be deemed to be a facility except where the
Director, Office of Federal Activities, Environmental
Protection Agency, determines that independent facilities are
located in one geographical area."
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30. Paragraph (b) of Section 7.24 is amended by deleting the
words "Modification No. 11" and substituting therefor the words
"Modification No. 14."
31. Paragraph (d) of Section 7.24 is amended in its entirety
to read as follows:
"(d)(l) Corporation shall report at least annually, as
required by the Secretary of Labor, on:
(i) The number of special disabled veterans and the
number of veterans of the Vietnam era in the work force of
Corporation by job category and hiring location; and
(ii) The total number of new employees hired during the
period covered by the report, and of that total, the number
of special disabled veterans,and the number of veterans of the
Vietnam era.
(2) The above items shall be reported by completing the
form entitled Federal Contractor Veterans' Employment Report
VETS-100.'
(3) Reports shall be submitted no later than March 31
of each year.
(4) The employment activity report required by paragraph
(d) (1) (ii) of this clause shall reflect total hires during
the most recent 12-month period as of the ending date selected
for the employment profile report required by paragraph (d)
(1) (i) of this clause. Contractors may select an ending date:
(i) As of the end of any pay period during the period January
through March 1st of the year the report is due, or (ii) as
of December 31, if the contractor has previous written
approval from the Equal Opportunity Commission to do so for
purposes of submitting the Employer Information Report EEQ-l
(Standard Form 100).
(5) The count of veterans reported according to
paragraph (d) (1) of this clause shall be based on voluntary
disclosure. Each contractor subject to the reporting
requirements at 38 U.S.C. 2012(d) shall invite all special
disabled veterans and veterans of the Vietnam era who wish to
benefit under the affirmative action program at 38 U.S.C. 2012
to identify themselves to the contractor. The invitation shall
state that the information is voluntarily provided. that the
information will be kept confidential, that disclosure or
refusal to provide the information will not subject the
applicant or employee to any adverse treatment and that the
29
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information will be used only in accordance with the
regulations promulgated under 38 U.S.C. 2012."
32. Paragraph (f) of Section 7.24 is amended to read as
follows:
"(f) This clause does not apply to the listing of
employment openings which occur and are filled outside of the
50 states, the District of Columbia, Puerto Rico, Guam, Virgin
Islands, American Samoa, and the Trust Territory of the
Pacific Islands."
33. Subparagraph (2) of paragraph (h) of Section 7.24 is
amended in its entirety to read as follows:
"(2) Appropriate office of the State employment service
system means the local office of the Federal-State national
system of public employment offices with assigned
responsibility for serving the areas where the employment
opening is to be filled, including the District of Columbia,
Guam, Puerto Rico, the Virgin Islands, American Samoa, and the
Trust Territory of the Pacific Islands."
34. Paragraph (i) of Section 7.24 is amended in its entirety
to read as follows:
"(i) Corporation agrees to comply with the rules,
regulations, and relevant orders of the Secretary of Labor
issued pursuant to the Vietnam Era Veterans Readjustment
Assistance Act of 1972 (the 'Act'), as amended."
35. Paragraph (n) of Section 7.24 is amended in its entirety
to read as follows:
"(n) If, pursuant to this section, DOE elects, in whole
or in part, to cancel, terminate, annul or suspend this
Agreement, to terminate the right of Corporation to proceed
or to suspend contract payments, such action by DOE may only
be taken by delivering to Corporation a notice in writing of
DOE's election to terminate not less than three years prior
to the effective date of termination pursuant to Section 6.02
of this Agreement."
36. Section 7.25 is amended in its entirety to read as
follows:
"SECTION 7.25 Covenant Against Contingent Fees.
"(a) The Corporation warrants that no person or selling
agency has been employed or retained to solicit or secure this
contract upon an agreement or understanding for a commission,
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percentage, brokerage, or contingent fee, excepting bona
fide employees or bona fide established commercial or
selling agencies maintained by the Corporation for the
purpose of securing business. For breach or violation of
this warranty the Government shall have the right to
annul this contract without liability or in its
discretion to deduct from the contract price or
consideration, or otherwise recover, the full amount of
such commission, percentage, brokerage, or contingent
fee; provided, however, that if, pursuant to this
section, DOE elects, in whole or in part, to cancel,
terminate, annul or suspend this Agreement, to terminate
the right of Corporation to proceed or to suspend
contract payments, such action by DOE may only be taken
by delivering to Corporation a notice in writing of DOE's
election to terminate not less than three years prior to
the effective date of termination pursuant to Section
6.02 of this Agreement.
"(b) 'Bona fide agency,' as used in this clause, means
an established commercial or selling agency, maintained by a
contractor for the purpose of securing business, that neither
exerts nor proposes to exert improper influence to solicit or
obtain Government contracts nor holds itself out as being able
to obtain any Government contract or contracts through
improper influence.
'Bona fide employee,' as used in this clause, means a
person, employed by a contractor and subject to the
contractor's supervision and control as to time, place, and
manner of performance, who neither exerts nor proposes to
exert improper influence to solicit or obtain Government
contracts nor holds out as being able to obtain any Government
contract or contracts through improper influence.
'Contingent fee,' as used in this clause, means any
commission, percentage, brokerage, or other fee that is
contingent upon the success that a person or concern has in
securing a Government contract.
'Improper influence,' as used in this clause, means any
influence that induces or tends to induce a Government
employee or officer to give consideration or to act regarding
a Government contract on any basis other than the merits of
the matter."
37. Section 7.26 is amended by deleting its third and fourth
sentences.
38. A new Section 7.30 is to be inserted after Section 7.29
as follows:
"SECTION 7.30 - DEAR 952.202-l Definitions (APR 1984).
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"(a) 'Contracting Officer' means a person with the
authority to enter into, administer, and/or terminate
contracts and make related determinations and findings. The
term includes certain authorized representatives of the
Contracting Officer acting within the limits of their
authority as delegated by the Contracting Officer.
"(b) Except as otherwise provided in this Agreement, the
term 'subcontracts' includes, but is not limited to, purchase
orders and changes and modifications to purchase orders under
this Agreement."
39. A new Section 7.31 is to be inserted after 7.30 as
follows:
"SECTION 7.31 - FAR 52.203-3 Gratuities (APR 1984).
"(a) The right of Corporation to proceed may be
terminated by written notice if, after notice and hearing, the
agency head or a designee determines that Corporation, its
agent, or another representative --
(1) Offered or gave a gratuity (e.g., an
entertainment or gift) to an officer, official, or
employee of the Government; and
(2) Intended, by the gratuity, to obtain a
contract or favorable treatment under a contract.
"(b) The facts supporting this determination may be
reviewed by any court having lawful jurisdiction.
"(c) If this Agreement is terminated under paragraph (a)
above, the Government is entitled --
(1) To pursue the same remedies as in a breach of
this Agreement; and
(2) In addition to any other damages provided by
law, to exemplary damages of not less than 3 nor more
than 10 times the cost incurred by Corporation in giving
gratuities to the person concerned, as determined by the
agency head or a designee. (This subparagraph (c) (2)
is applicable only if this contract uses money
appropriated to the Department of Defense.)
"(d) If, pursuant to this section, DOE elects, in whole
or in part, to cancel, terminate, annul or suspend this
Agreement, to terminate the right of Corporation to proceed
or to suspend contract payments, such action by DOE may only
be taken by delivering to Corporation a notice in writing of
DOE's election to terminate not less than three years prior
to the effective date of termination pursuant to Section 6.02
of this Agreement."
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40. A new Section 7.32 is to be inserted after Section 7.31
as follows:
"SECTION 7.32 - FAR 52.203-6 Restrictions on Subcontractor
Sales to the Government (JUL 1985)
"(a) Except as provided in (b) below, Corporation shall
not enter into any agreement with an actual or prospective
subcontractor, nor otherwise act in any manner, which has or
may have the effect of unreasonably restricting sales by such
subcontractors directly to the Government of any item or
process (including computer software) made or furnished by the
subcontractor under this Agreement or under any follow-on
production contract.
"(b) The prohibition in (a) above does not preclude
Corporation from asserting rights that are otherwise
authorized by law or regulation.
41. A new Section 7.33 is to be inserted after Section 7.32
as follows:
"SECTION 7.33 - FAR 52.203-7 Anti-Kickback Procedures (OCT
1988).
"(a) Definitions.
'Kickback,' as used in this clause, means any
money, fee, commission, credit, gift, gratuity, thing of
value, or compensation of any kind which is provided,
directly or indirectly, to any prime Contractor, prime
Contractor employee, sub-contractor, or subcontractor
employee for the purpose of improperly obtaining or
rewarding favorable treatment in connection with a prime
contract or in connection with a subcontractor relating
to a prime contract.
'Person,' as used in this clause, means a
corporation, partnership, business association of any
kind, trust, joint-stock company, or individual.
'Prime contract,' as used in this clause, means a
contract or contractual action entered into by the United
States for the purpose of obtaining supplies, materials,
equipment, or services of any kind.
'Prime Contractor,' as used in this clause, means
a person who has entered into a prime contract with the
United States.
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'Prime Contractor employee,' as used in this
clause, means any officer, partner, employee, or agent
of a prime Contractor.
'Subcontract,' as used in this clause, means a
contract or contractual action entered into by a prime
Contractor or subcontractor for the purpose of obtaining
supplies, materials, equipment or services of any kind
under a prime contract.
'Subcontractor,' as used in this clause, (1) means
any person, other than the prime Contractor, who offers
to furnish or furnishes any supplies, materials,
equipment, or services of any kind under a prime
contractor or subcontract entered into in connection with
such prime contract, and (2) includes any person who
offers to furnish or furnishes general supplies to the
prime Contractor or a higher tier subcontractor.
'Subcontractor employee,' as used in this clause,
means any officer, partner, employee, or agent of a
subcontractor.
"(b) The Anti-Kickback Act of 1986 (41 U.S.C. 51-
58) (the Act), prohibits any person from --
(1) Providing or attempting to provide or
offering to provide any kickback;
(2) Soliciting, accepting, or attempting to
accept any kickback; or
(3) Including, directly or indirectly, the
amount of any kickback in the contract price charged by
a prime Contractor to the United States or in the
contract price charged by a subcontractor to a prime
contractor or higher tier subcontractor.
"(c)(1) Corporation shall have in place and follow
reasonable procedures designed to prevent and detect
possible violations described in paragraph (b) of this
clause in its own operations and direct business
relationships.
(2) When Corporation has reasonable grounds to
believe that a violation described in paragraph (b) of
this clause may have occurred, Corporation shall promptly
report in writing the possible violation. Such reports
shall be made to the inspector general of the contracting
agency, the head of the contracting agency if the agency
does not have an inspector general, or the Department of
Justice.
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<PAGE>
(3) Corporation shall cooperate fully with any
Federal Agency investigating a possible violation
described in paragraph (b) of this clause.
(4) The Contracting Officer may (i) offset the
amount of the kickback against any monies owed by the
United States under the prime contract and/or (ii) direct
that the Prime Contractor withhold, from sums owed a
subcontractor under the prime contract, the amount of any
kickback. The Contracting Officer may order that monies
withheld under subdivision (c)(4)(ii) of this clause be
paid over to the Government unless the Government has
already offset those monies under subdivision (c)(4)(i)
of this clause. In either case, the Prime Contractor
shall notify the Contracting Officer when the monies are
withheld.
(5) Corporation agrees to incorporate the
substance of this clause, including this subparagraph (c)
(5) but excepting subparagraph (c) (1), in all
subcontracts under this Agreement."
42. A new Section 7.34 is to be inserted after Section 7.33
as follows:
"SECTION 7.34 - FAR 52.219-9 Small Business And Small
Disadvantaged Business Subcontracting Plan (FEB 1990).
"(a) This clause does not apply to small business
concerns.
"(b) 'Commercial product,' as used in this clause,
means a product in regular production that is sold in
substantial quantities to the general public and/or
industry at established catalog or market prices. It also
means a product which, in the opinion of the Contracting
Officer, differs only insignificantly from Corporation's
commercial product.
'Subcontract,' as used in this clause, means any
agreement (other than one involving an employer-employee
relationship) entered into by a Federal Government prime
Contractor or subcontractor calling for supplies or
services rendered for performance of the contract or
subcontract.
"(c) The offeror, upon request by the Contracting
Officer, shall submit and negotiate a subcontracting
plan, where applicable, which separately addresses
subcontracting with small business concerns and small
disadvantaged business concerns. If the offeror is
submitting an individual contract plan, the plan must
separately address subcontracting with small business
concerns and with small disadvantaged business concerns
35
<PAGE>
with a separate part for each option (if any). The plan
shall be included in and made a part of the resultant
contract. The subcontracting plan shall be negotiated
within the time specified by the Contracting Officer.
Failure to submit and negotiate the subcontracting plan
shall make the offeror ineligible for award of a
contract.
"(d) The offeror's subcontracting plan shall
include the following:
(1) Goals, expressed in terms of
percentages of total planned subcontracting
dollars, for use of small business concerns
and small disadvantaged business concerns as
subcontractors. The offeror shall include all
subcontracts that contribute to contract
performance, and may include a proportionate
share of products and services that are
normally allocated as indirect costs.
(2) A statement of --
(i) Total dollars planned to
be subcontracted;
(ii) Total dollars planned to
be subcontracted to small business
concerns; and
(iii) Total dollars
planned to be subcontracted to small
disadvantaged business concerns.
(3) A description of the principal types
of supplies and services to be subcontracted,
and an identification of the types planned for
subcontracting to (i) small business concerns
and (ii) small disadvantaged business
concerns.
(4) A description of the method used to
develop the subcontracting goals in (1) above.
(5) A description of the method used to
identify potential sources for solicitation
purposes (e.g., existing company source lists,
the Procurement Automated Source System (PASS)
of the Small Business Administration, the
National Minority Purchasing Council Vendor
Information Service, the Research and
Information Division of the Minority Business
Development Agency in the Department of
Commerce, or small and small disadvantaged
concerns trade associations).
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<PAGE>
(6) A statement as to whether or not the
offeror included indirect costs in
establishing subcontracting goals, and a
description of the method used to determine
the proportionate share of indirect costs to
be incurred with (in small business concerns
and (ii) small disadvantaged business
concerns.
(7) The name of the individual employed
by the offeror who will administer the
offeror's subcontracting program, and a
description of the duties of the individual.
(8) A description of the efforts the
offeror will make to assure that small
business concerns and small disadvantaged
business concerns have an equitable
opportunity to compete for subcontracts.
(9) Assurances that the offeror will
include the clause in this Agreement entitLed
'Utilization of Small Business Concerns and
Small Disadvantaged Business Concerns in all
subcontracts that offer further subcontracting
opportunities, and that the offeror will
require all subcontractors (except small
business concerns) who receive subcontracts in
excess of $500,000 ($1,000,000 for
construction of any public facility) to adopt
a plan similar to the plan agreed to by the
offeror.
(10) Assurances that the offeror will (i)
cooperate in any studies or surveys as may be
required, (ii) submit periodic reports in
order to allow the Government to determine the
extent of compliance by the offeror with the
subcontracting plan, (iii) submit, not later
than the 25th day of the succeeding month,
Standard Form (SF) 294 only, (DOE contractors
need not submit SF 295) on a quarterly basis
current as the last day of March, June,
September, and December, and upon contract
completion, in accordance with the
instructions on the form except the report
shall be submitted quarterly rather than
semiannually and additionally shall indicate
at the remarks block the number and dollar
amount of award made to labor surplus area
concerns to the extent such reporting is
required by the terms of their contract, and
(iv) ensure that its subcontractors agree to
submit Standard Form 294 in accordance with
the instructions of (iii) above.
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<PAGE>
(11) A recitation of the types of records
the offeror will maintain to demonstrate
procedures that have been adopted to comply
with the requirements and goals in the plan,
including establishing source lists; and a
description of its efforts to locate small and
small disadvantaged business concerns and
award subcontracts to them. The records shall
include at least the following (on a plant--
wide or company-wide basis, unless otherwise
indicated):
(i) Source lists, guides, and
other data that identify small and
small disadvantaged business
concerns.
(ii) Organizations contacted
in an attempt to locate sources that
are small or small disadvantaged
business concerns.
(iii) Records on each
subcontract solicitation resulting
in an award of more than $100,000,
indicating (A) whether small
business concerns were solicited and
if not, why not, (B) whether small
disadvantaged business concerns were
solicited and if not, why not, and
(C) if applicable, the reason award
was not made to a small business
concern.
(iv) Records of any outreach
efforts to contact (A) trade
Associations, (B) business development
organizations, and (C) conferences
and trade fairs to locate small and
small disadvantaged business
sources.
(v) Records of internal
guidance and encouragement provided
to buyers through (A) workshops,
seminars, training etc., and (B)
monitoring performance to evaluate
compliance with the program's
requirements.
(vi) On a contract-by-contract
basis, records to support award data
submitted by the offeror to the
Government, including the name,
address, and business size of each
38
<PAGE>
subcontractor. Contractors having
company or division-wide annual
plans need not comply with this
requirements.
"(e) In order to effectively implement this plan to
the extent consistent with efficient contract
performance, Corporation shall perform the following
functions:
(1) Assist small business and small
disadvantaged business concerns by arranging
solicitations, time for the preparation of
bids, quantities, specifications, and delivery
schedules so as to facilitate the
participation by such concerns.
Where Corporation's lists of potential small
business and small disadvantaged subcontractors are
excessively long, reasonable effort shall be made
to give all small business concerns an opportunity
to compete over a period of time.
(2) Provide adequate and timely
consideration of the potentialities of small
business and small disadvantaged business
concerns in all 'make-or-buy' decisions.
(3) Counsel and discuss subcontracting
opportunities with representatives of small
and small disadvantaged business firms.
(4) Provide notice to subcontractors,
similar to that in the solicitation provision
at 52.219-l, concerning penalties from its
representations of business status as small
business or small disadvantaged business for
the purpose of obtaining a subcontract that is
to be included as part or all of a goal
contained in Corporation's subcontracting
plan.
"(f) A master subcontracting plan on a plant or
division-wide basis which contains all the elements
required by (d) above, except goals, may be incorporated
by reference as a part of the subcontracting plan
required of the offeror by this clause; provided, (1) the
master plan has been approved, (2) the offeror provides
copies of the approved master plan and evidence of its
approval to the Contracting Officer, and (3) goals and
any deviations from the master plan deemed necessary by
the Contracting Officer to satisfy the requirements of
this contract are set forth in the individual
subcontracting plan.
39
<PAGE>
"(g)(1) If a commercial product is offered, the
subcontracting plan required by this clause may relate
to the offeror's production generally, for both
commercial and non-commercial products, rather than
solely to the Government contract. In these cases, the
offeror shall, with the concurrence of the Contracting
Officer, submit one company-wide or division-wide annual
plan.
(2) The annual plan shall be reviewed for approval
by the agency awarding the offeror its first prime
contract requiring a subcontracting plan during the
fiscal year, or by an agency satisfactory to the
Contracting Officer.
(3) The approved plan shall remain in effect during the
offeror's fiscal year for all of the offeror's commercial
products.
"(h) Prior compliance of the offeror with other such
subcontracting plans under previous contracts will be
considered by the Contracting Officer in determining the
responsibility of the Offeror for award of the contract.
"(i) The failure of the Corporation to comply in good
faith with (1) the clause of this Agreement entitled
Utilization of Small Business Concerns and Small Disadvantaged
Business Concerns,' or (2) an approved plan required by this
clause, shall be a material breach of this Agreement.
"(j) If, pursuant to this section, DOE elects, in whole
or in part, to cancel, terminate, annul or suspend this
Agreement, to terminate the right of Corporation to proceed
or to suspend contract payments, such action by DOE may only
be taken by delivering to Corporation a notice in writing of
DOE's election to terminate not less than three years prior
to the effective date of termination pursuant to Section 6.02
of this Agreement. "
43. A new Section 7.35 is to be inserted after Section 7.34
as follows:
"SECTION 7.35 - FAR 52.291-13 Utilization of Women-Owned Small
Businesses (AUG 1986).
"(a) 'Women-owned small businesses,' as used in this
clause, means small business concerns that are at least 51
percent owned by women who are United States citizens and who
also control and operate the business.
'Control,' as used in this clause, means exercising the
power to make policy decisions.
40
<PAGE>
'Operate,' as used in this clause, means being actively
involved in the day-to-day management of the business.
'Small business concern,' as used in this clause, means
a concern including its affiliates, that is independently
owned and operated, not dominant in the field of operation in
which it is bidding on government contracts, and qualified as
a small business under the criteria and size standards in 13
CFR 121.
"(b) It is the policy of the United States that women-
owned small businesses shall have the maximum practicable
opportunity to participate in performing contracts awarded by
any Federal agency.
"(c) Corporation agrees to use its best efforts to give
women-owned small businesses the maximum practicable
opportunity to participate in the subcontracts it awards to
the fullest extent consistent with the efficient performance
of this Agreement.
"(d) Corporation may rely on written representations by
its subcontractors regarding their status as women-owned small
businesses."
44. A new Section 7.36 is to be inserted after Section 7.35
as follows:
"SECTION 7.36 - FAR 52.223-6 Drug-Free Work place (JUL 1990).
"(a) Definitions. As used in this clause,
'Controlled substance' means a controlled substance in
schedules I through V of section 202 of the Controlled
Substances Act (21 U.S.C. 812) and as further defined in
regulation at 21 CFR 1308.11 - 1308.15.
'Conviction' means a finding of guilt (including a plea
of nolo contendere) or imposition of sentence, or both, by any
judicial body charged with the responsibility to determine
violations of the Federal or State criminal drug statutes.
'Criminal drug statute' means a Federal or non-Federal
criminal statute involving the manufacture, distribution,
dispensing, possession or use of any controlled substance.
'Drug-free work place' means the site(s) for the
performance of work done by the Contractor in connection with
a specific contract at which employees of the Contractor are
prohibited from engaging in the unlawful manufacture,
distribution, dispensing, possession, or use of a controlled
substance.
41
<PAGE>
'Employee' means an employee of a Contractor directly
engaged in the performance of work under a Government
contract.
'Directly engaged' is defined to include all direct cost
employees and any other Contractor employee who has other than
a minimal impact or involvement in contract performance.
"(b) Corporation, if other than an individual, shall --
within 30 calendar days after award (unless a longer period
is agreed to in writing for contracts of 30 calendar days or
more performance duration); or as soon as possible for
contracts of less than 30 days performance duration -
(1) Publish a statement notifying its
employees that the unlawful manufacture,
distribution, dispensing, possession, or use
of a controlled substance is prohibited in
Corporation's work place and specifying the
actions that will be taken against employees
for violations of such prohibition;
(2) Establish an ongoing drug-free
awareness program to inform such employees
about --
(i) The dangers o f drug
abuse in the work place;
(ii) Corporation's policy of
maintaining a drug-free work place;
(iii) Any available drug
counseling, rehabilitation, and
employee assistance program; and
(iv) The penalties that may be
imposed upon employees for drug
abuse violations occurring in the
work place.
(3) Provide all employees engaged in
performance of the Agreement with a copy of
the statement required by subparagraph (b)(1)
of this clause;
(4) Notify such employees in writing in
the statement required by subparagraph (b)(1)
of this clause that, as a condition of
continued employment of this Agreement, the
employee will --
(i) Abide by the terms of the
statement;
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<PAGE>
(ii) Notify the employer in
writing of the employee's conviction
under a criminal drug statute for a
violation occurring in the work
place no later than five (5)
calendar days after such conviction.
(5) Notify the Contracting Officer
within 10 calendar days after receiving notice
under subdivision (b)(4)(ii) of this clause,
from an employee or otherwise receiving actual
notice of such conviction. The notice shall
include the position title of the employee;
(6) Within 30 calendar days after
receiving notice under subdivision (b)(4)(ii)
of this clause of a conviction, take one of
the following actions with respect to any
employee who is convicted of a drug abuse
violation occurring in the work place:
(i) Taking appropriate
personnel action against such
employee up to and including
termination; or
(ii) Require such employee to
satisfactorily participate in a drug
abuse assistance or rehabilitation
program approved for such purposes
by a Federal, State, or local
health, law enforcement, or other
appropriate agency.
(7) Make a good faith effort to maintain
a drug-free work place through implementation
of subparagraphs (b)(l) through (b)(6) of this
clause.
"(c) Corporation, if an individual, agrees by award of
this Agreement or acceptance of a purchase order, not to
engage in the unlawful manufacture, distribution, dispensing,
possession, or use of a controlled substance in the
performance of this Agreement.
"(d) In addition to other remedies available to the
Government, Corporation's failure to comply with the
requirements of paragraphs (b) and (c) of this clause may,
pursuant to FAR 23.506, render Corporation subject to
suspension of contract payments, termination of the Agreement
for default, and suspension or debarment.
"(e) If, pursuant to this section, DOE elects, in whole
or in part, to cancel, terminate, annul or suspend this
Agreement, to terminate the right of Corporation to proceed
43
<PAGE>
or to suspend contract payments, such action by DOE may
only be taken by delivering to Corporation a notice in
writing of DOE's election to terminate not less than
three years prior to the effective date of termination
pursuant to Section 6.02 of this Agreement."
45. A new Section 7.37 is to be inserted after Section 7.36
follows:
"SECTION 7.37 - FAR 52.232-28 Electronic Funds Transfer
Payment Methods
(APR 1989).
"Payments under this Agreement will be made by the
Government either by check or electronic funds transfer
(through the Treasury Fedline Payment System (FEDLINE) or the
Automated Clearing House (ACH)), at the option of the
Government. After award, but no later than 14 days before an
invoice or contract financing request is submitted,
Corporation shall designate a financial institution for
receipt of electronic funds transfer payments, and shall
submit this designation to the Contracting Officer or other
Government official, as directed.
"(a) For payments through FEDLINE, Corporation shall
provide the following information:
(1) Name, address, and telegraphic
abbreviation of the financial institution
receiving payment.
(2) The American Bankers Association 9-
digit identifying number for wire transfers of
the financing institution receiving payment if
the institution has access to the Federal
Reserve Communications System.
(3) Payee's account number at the
financial institution where funds are to be
transferred.
(4) If the financial institution does
not have access to the Federal Reserve
Communications System, name, address, and
telegraphic abbreviation of the correspondent
financial institution through which the
financial institution receiving payment
obtains wire transfer activity. Provide the
telegraphic abbreviation and American Bankers
Association identifying number for the
correspondent institution.
"(b) For payment through ACH, Corporation shall provide
the following information:
44
<PAGE>
(1) Routing transit number of the
financial institution receiving payment (same
as American Bankers Association identifying
number used for FEDLINE).
(2) Number of account to which funds are
to be deposited.
(3) Type of depositor account ('C' for
checking, 'S' for savings).
(4) If Corporation is a new enrollee to
the ACH system, a 'Payment Information Form,'
SF 3881, must be completed before payment can
be processed.
"(c) In the event Corporation, during the performance of
this Agreement, elects to designate a different financial
institution for the receipt of any payment made using
electronic funds transfer procedures, notification of such
change and the required information specified above must be
received by the appropriate Government official 30 days prior
to the date of such change is to become effective.
"(d) The documents furnishing the information required
in this clause must be dated and contain the signature, title,
and telephone number of the Corporation official authorized
to provide it, as well as Corporation's name and contract
number.
"(e) Corporation's failure to properly designate a
financial institution or to provide appropriate payee bank
account information may delay payments of amounts otherwise
properly due."
46. A new Section 7.38 is to be inserted after Section 7.37
as follows:
"SECTION 7.38 - Payment of Interest.
"(a) Notwithstanding any other clause of this Agreement,
all amounts that become payable by Corporation to the
Government under this Agreement (net of any applicable tax
credit under the Internal Revenue Code (26 U.S.C. 1481)) shall
bear simple interest from the date due until paid unless paid
within 30 days of becoming due. The interest rate shall be the
interest rate established by the Secretary of the Treasury as
provided in Section 12 of the Contract Disputes Act of 1978
(Public Law 95-563), which is applicable to the period in
which the amount becomes due, as provided in paragraph (b) of
this clause, and then at the rate applicable for each six-
month period as fixed by the Secretary until the amount is
paid.
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"(b) Amounts shall be due at the earliest of the
following dates:
(1) The date fixed under this Agreement.
(2) The date of the first written demand
for payment consistent with this Agreement.
"(c) The interest charge made under this clause may be
reduced under the procedures prescribed in 32.614-2 of the
Federal Acquisition Regulation in effect on the date of this
Agreement."
47. A new Section 7.39 is to be inserted after Section 7.38
as follows:
"SECTION 7.39 - FAR 52.203-10 Price or Fee Adjustment for
Illegal or Improper Activity (SEP 1990).
"(a) The Government, at its election, may reduce
the price of a fixed-price type contract or contract
modification and the total cost and fee under a cost-type
contract or contract modification by the amount of profit
or fee determined as set forth in paragraph (b) of this
clause if the head of the contracting activity or his or
her designee determines that there was a violation of
subsection 27(a) of the Office of Federal Procurement
Policy Act, as amended (41 U.S.C. 423), as implemented
in the FAR. In the case of a contract modification, the
fee subject to reduction is the fee specified in the
particular contract modification at the time of
execution, except as provided in subparagraph (b)(5) of
this clause.
"(b) The price or fee reduction referred to in
paragraph (a) of this clause shall be --
(1) For cost-plus-fixed-fee contracts,
the amount of the fee specified in the
contract at the time of award;
(2) For cost-plus-incentive-fee
contracts, the target fee specified in the
contract at the time of award, notwithstanding
any minimum fee or 'fee floor' specified in
the contract;
(3) For cost-plus-award-fee contracts --
(i) The base fee established
in the contract at the time of
contract award;
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(ii) If no base fee is
specified in the contract, 30
percent of the amount of each award
fee otherwise payable to the
Contractor for each award fee
evaluation period or at each award
fee determination point.
(4) For fixed price incentive contracts,
the Government may --
(i) Reduce the contract
target price and contract target
profit both by an amount equal to
the initial target profit specified
in the contract at the time of
contract award; or
(ii) If an immediate
adjustment to the contract target
price and contract target profit
would have a significant adverse
impact on the incentive price
revision relationship under the
contract, or adversely affect the
contract financing provisions, the
Contracting Officer may defer such
adjustment until establishment of
the total final price of the
contract. The total final price
established in accordance with the
incentive price revision provisions
of the contract shall be reduced by
an amount equal to the initial
target profit specified in the
contract at the time of contract
award and such reduced price shall
be the total final contract price.
(5) For firm-fixed-price contracts or
contract modifications, by 10 percent of the
initial contract price; 10 percent of the
contract modification price; or a profit
amount determined by the Contracting Officer
from records or documents in existence prior
to the date of the contract award or
modification.
"(c) The Government may, at its election,
reduce a prime contractor's price or fee in
accordance with the procedures of paragraph
(b) of this clause for violations of the Act
by its subcontractors by an amount not to
exceed the amount of profit or fee reflected
47
<PAGE>
in the subcontract at the time the subcontract
was first definitively priced.
"(d) In addition to the remedies in
paragraphs (a) and (c) of this clause, the
Government may terminate this contract for
default. The rights and remedies of the
Government specified herein are not exclusive
and are in addition to any other rights and
remedies provided by law or under this
contract.
"(e) Notwithstanding the provisions of
paragraphs (a),(b),(c) and (d) of this Section
7.39 :
(1) The cumulative total of
all reductions, made pursuant to
this Section 7.39, in price, profit,
fee or other compensation shall not
exceed $140,000; and
(2) If, pursuant to this
section, DOE elects, in whole or in
part, to cancel, terminate, annul or
suspend this Agreement, to terminate
the right of Corporation to proceed
or to suspend contract payments,
such action by DOE may only be taken
by delivering to Corporation a
notice in writing of DOE's election
to terminate not less than three
years prior to the effective date of
termination pursuant to Section 6.02
of this Agreement."
48. The term "indebtedness" referred to in the DOE Power
Agreement shall include any indebtedness of Corporation for
borrowed money incurred in connection with the acquisition,
financing, construction and completion of the project generating
stations, or the project transmission facilities, and shall include
any indebtedness (including, without limitation any indebtedness
relating to the interest component, the principal or amortization
component and any other component of any purchase price,
amortization, rental or other payment under an installment sale,
loan, lease or similar agreement) relating to the purchase, lease
or acquisition by Corporation of additional facilities under
Section 3.06 and replacements under Section 3.07.
49. Appendix II is amended in its entirety to read as
follows:
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<PAGE>
APPENDIX II
"DEFINITION OF OUT-OF-POCKET COSTS
OF SUPPLEMENTAL ENERGY
"Out-of-pocket costs associated with the furnishing
of supplemental energy mean such operating and tax
expenses incurred that would not have been otherwise
incurred if such supplemental energy had not been
furnished.
"Such operating expenses, under usual
circumstances, include the incremental production
expenses incurred in the production of the energy so
furnished. Incremental production expenses associated
with the production of such energy will be influenced by
the type or class of generating station used for such
purpose. If the station used is normally operating and
carrying load, the incremental production expenses will
include, without limitation, the fuel expense normally
charged at the time in question by the producer of the
power plus an appropriate allowance for maintenance,
plus, in the case of supplemental energy scheduled to be
delivered to Corporation from the Sponsoring Companies
for redelivery to DOE, 0.5 mills per kwh for incremental
operating labor. The appropriate unit allowance for
maintenance shall be one-half of the weighted average
unit cost (expressed in mills per kwh of net generation)
normally charged at the time in question by the producer
of the power. If the station or part thereof used is
normally held in reserve as standby, all expenses
incurred that are in excess of the expenses that would
have been incurred for standby operation of such station
or part thereof will be considered incremental production
expenses. Incremental production expenses associated with
fuel for each kwh of supplemental energy not scheduled
for redelivery to DOE from the Sponsoring Companies shall
be an amount determined by dividing (i) the total amount
determined under Section 3.03 of this Agreement, by (ii)
the billing kwh of permanent power for such month, plus
the transmission losses thereon from the 345 kv busses
of the project generating stations to the point of
delivery.
"To the operating expenses as hereinabove
determined, there will be added a charge of 0.7 mills per
kwh to cover accounting, administration and billing
expenses. Tax expenses will be the expenses that are
payable as taxes either in connection with the sale or
production of such energy.
"The above-described charges for operating labor
and for accounting, administration and billing shall be
adjusted in the following manner:
49
<PAGE>
(i) Operating Labor. Effective January 1 of each
year, commencing January 1, 1989, the value for average
hourly earnings of production or non-supervisory workers
in electric services (1972 SIC Code 491) published by the
U.S. Department of Labor, Bureau of Labor Statistics for
the month of August in the preceding calendar year shall
be compared to the March 1988 base value of such average
hourly earnings of $14.28 per hour. The percentage change
thereof (carried out four decimal places, e.g., 6.124%
shall be .0612) in such average hourly earnings shall be
multiplied by the initial charge for operating labor of
0.5 mills per kwh. The amount of increase or decrease
shall be added to or subtracted from, as the case may be,
the initial charge for operating labor; and the amount
obtained in this manner (carried out four decimal places)
shall become the then effective charge for operating
labor.
(ii) Accounting, Administration and Billing.
Effective January 1 of each year, commencing January 1,
1989, the value for average hourly earnings of production
or non-supervisory workers in accounting, auditing and
bookkeeping services (1972 SIC Code 893) published by the
U.S. Department of Labor, Bureau of Labor Statistics for
the month of August in the preceding calendar year shall
be compared to the March 1988 base value of such average
hourly earnings of $10.26 per hour. The percentage change
thereof (carried out four decimal places, e.g., 6.124%
shall be .0612) in such average hourly earnings shall be
multiplied by the initial charge for accounting,
administration and billing of 0.7 mills per kwh. The
amount of increase or decrease shall be added to or
subtracted from, as the case may be, the initial charge
for accounting, administration and billing; and the
amount obtained in this manner (carried out four decimal
places) shall become the then effective charge for
accounting, administration and billing.
"Should publication of average hourly earnings be
discontinued for either or both of the above-referenced
statistical codes, a statistical code or codes which is
or are, as nearly as practicable, equivalent shall be
substituted by mutual agreement of the parties hereto.:
50. This Modification No. 14 to the DOE Power Agreement shall
become effective at 12:00 Midnight on the date on which Corporation
shall deliver to DOE a written notice to the effect that:
(a) All applicable requirements as to approval by
or filings with regulatory agencies having jurisdiction
in respect of the transactions constituting the subject
matter of this Modification No. 14 (including expiration
of any specified period after the date of any filing)
50
<PAGE>
have been complied with and all requisite approvals of
such regulatory agencies are in full force and effect and
none is the subject of attack on appeal by direct
proceeding or otherwise, and (except to the extent that
Corporation shall waive such condition) any requisite
approvals of regulatory agencies having such jurisdiction
have become final and not subject to judicial review in
any court; and
(b) All applicable requirements as to approval by
or filings with regulatory agencies having jurisdiction
in respect of a modification, if any of the Inter-Company
Power Agreement dated July 10, 1953, as amended
(including expiration of any specified period after the
date of any filing) have been complied with and all
requisite approvals of such regulatory agencies are in
full force and effect and none is the subject of attack
on appeal by direct proceeding or otherwise, and (except
to the extent that Corporation shall waive such
condition) any requisite approvals of regulatory agencies
having such jurisdiction have become final and not
subject to judicial review in any court; and
(c) The General Counsel of DOE shall have
delivered to Corporation an opinion satisfactory to
Corporation that the Agreement as modified herein
constitutes a valid and legally binding obligation of the
United States of America enforceable in accordance with
its terms.
51. The DOE Power Agreement, as modified by Modifications No.
1 through No. 13, both inclusive, and by this Modification No. 14,
is hereby in all respects confirmed.
IN WITNESS WHEREOF, the parties hereto have executed this
Modification No. 14 as of the date and year first above written.
OHIO VALLEY ELECTRIC CORPORATION
By
51
<PAGE>
UNITED STATES OF AMERICA
By: SECRETARY OF ENERGY
By WILLIS DAVIS
Authorized Contracting Officer
52
<PAGE>1
MODIFICATION NO. 7
TO
INTER-COMPANY POWER AGREEMENT
DATED JULY 10, 1953
AMONG
OHIO VALLEY ELECTRIC CORPORATION,
APPALACHIAN POWER COMPANY,
THE CINCINNATI GAS & ELECTRIC COMPANY,
COLUMBUS SOUTHERN POWER COMPANY (formerly
COLUMBUS AND SOUTHERN OHIO ELECTRIC COMPANY),
THE DAYTON POWER AND LIGHT COMPANY,
INDIANA MICHIGAN POWER COMPANY (formerly
INDIANA & MICHIGAN ELECTRIC COMPANY),
KENTUCKY UTILITIES COMPANY,
LOUISVILLE GAS AND ELECTRIC COMPANY,
MONONGAHELA POWER COMPANY,
OHIO EDISON COMPANY,
OHIO POWER COMPANY,
PENNSYLVANIA POWER COMPANY,
THE POTOMAC EDISON COMPANY,
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY,
THE TOLEDO EDISON COMPANY, and
WEST PENN POWER COMPANY.
Dated as of January 15, 1992
<PAGE>2
MODIFICATION NO. 7
TO
INTER-COMPANY POWER AGREEMENT
THIS AGREEMENT dated as of the 15th day of January, 1992, by
and among OHIO VALLEY ELECTRIC CORPORATION (herein called "OVEC" or
"Corporation"), APPALACHIAN POWER COMPANY (herein called
"Appalachian"), THE CINCINNATI GAS & ELECTRIC COMPANY (herein
called "Cincinnati"), COLUMBUS SOUTHERN POWER COMPANY (formerly
COLUMBUS AND SOUTHERN OHIO ELECTRIC COMPANY) (herein called
"Columbus"), THE DAYTON POWER AND LIGHT COMPANY (herein called
"Dayton"), INDIANA MICHIGAN POWER COMPANY (formerly INDIANA &
MICHIGAN ELECTRIC COMPANY) (herein called "Indiana"), KENTUCKY
UTILITIES COMPANY (herein called "Kentucky"), LOUISVILLE GAS AND
ELECTRIC COMPANY (herein called "Louisville"), MONONGAHELA POWER
COMPANY (herein called "Monongahela"), OHIO EDISON COMPANY (herein
called "Ohio Edison"), OHIO POWER COMPANY (herein called "Ohio
Power"), PENNSYLVANIA POWER COMPANY (herein called "Pennsylvania"),
THE POTOMAC EDISON COMPANY (herein called "Potomac"), SOUTHERN
INDIANA GAS AND ELECTRIC COMPANY (herein called "Southern
Indiana"), THE TOLEDO EDISON COMPANY (herein called "Toledo"), and
WEST PENN POWER COMPANY (herein called "West Penn"), all of the
foregoing, other than OVEC, being herein sometimes collectively
referred to as the Sponsoring Companies and individually as a
Sponsoring Company.
W I T N E S S E T H T H A T
<PAGE>3
WHEREAS, Corporation and the United States of America have
heretofore entered into a Contract No. AT-(40-1)-1530,
(redesignated Contract No. E-(40-1)1530, later redesignated
Contract No. EY-76-C-05-1530 and later redesignated Contract No.
DE-AC05-76OR01530), dated October 15, 1952, providing for the
supply by Corporation of electric utility services to the United
States Atomic Energy Commission (hereinafter called "AEC") at AEC's
project near Portsmouth, Ohio (hereinafter called the "Project"),
which contract has heretofore been modified by Modification No. 1,
dated July 23, 1953, Modification No. 2, dated as of March 15,
1964, Modification No. 3, dated as of May 12, 1966, Modification
No. 4, dated as of January 7, 1967, Modification No. 5, dated as of
August 15, 1967, Modification No. 6, dated as of November 15, 1967,
Modification No. 7, dated as of November 5, 1975, Modification No.
8, dated as of June 23, 1977, Modification No. 9, dated as of July
1, 1978, Modification No. 10, dated as of August 1, 1979,
Modification No. 11, dated as of September 1, 1979, Modification
No. 12, dated as of August 1, 1981, and Modification No. 13, dated
as of September 1, 1989 (said contract, as so modified, is
hereinafter called the "DOE Power Agreement"); and
WHEREAS, pursuant to the Energy Reorganization Act of 1974,
the AEC was abolished on January 19, 1975 and certain of its
functions, including the procurement of electric utility services
for the Project, were transferred to and vested in the
Administrator of Energy Research and Development; and
WHEREAS, pursuant to the Department of Energy Organization
Act, on October 1, 1977, all of the functions vested by law in the
<PAGE>4
Administrator of Energy Research and Development or the Energy
Research and Development Administration were transferred to, and
vested in, the Secretary of Energy, the statutory head of the
Department of Energy (hereinafter called "DOE"); and
WHEREAS, OVEC and DOE propose to execute and deliver
Modification No. 14, dated as of January 15, 1992, to the DOE Power
Agreement, and the parties hereto hereby consent to the execution
and delivery thereof by OVEC; and
WHEREAS, the parties hereto have entered into a contract,
herein called the "Inter-Company Power Agreement," dated July 10,
1953, governing, among other things, (a) the supply by the
Sponsoring Companies of Supplemental Power in order to enable
Corporation to fulfill its obligations under the DOE Power
Agreement, and (b) the rights of the Sponsoring Companies to
receive Surplus Power (as defined in the Agreement identified in
the next clause in this preamble) as may be available at the
Project Generating Stations and the obligations of the Sponsoring
Companies to pay therefor; and
WHEREAS, the Inter-Company Power Agreement has heretofore been
amended by Modification No. 1, dated as of June 3, 1966,
Modification No. 2, dated as of January 7, 1967, Modification No.
3, dated as of November 15, 1967, Modification No. 4, dated as of
November 5, 1975, Modification No. 5, dated as of September 1,
1979, and Modification No. 6, dated as of August 1, 1981 (said
contract so amended and as modified and amended by this
Modification No. 7 being herein and therein sometimes called the
"Agreement"); and
<PAGE>5
WHEREAS, OVEC and the Sponsoring Companies desire to enter
into this Modification No. 7 to reflect in the Agreement the
provisions of the DOE Power Agreement in effect after modification
by Modification No. 14 thereto and certain other purposes as more
particularly hereinafter provided;
NOW, THEREFORE, the parties hereto agree with each other as
follows:
1. In the first sentence of Section 2.03 of Article 2,
delete the words "Section 2.02 and 12.13" and substitute therefor
the words "Section 2.02."
2. In Article 4, delete Section 4.01, and substitute
therefor the following:
"4.01 Supply of Supplemental Power. Paragraph 1 and the
first sentence of Paragraph 2 of Section 2.04 of the DOE
Power Agreement read as follows:
'1. Whenever, for any clock hour, the
aggregate amount of permanent power and the
energy associated therewith furnished by
Corporation to DOE pursuant to Section 2.03
and the scheduled kwh of occasional energy for
which provision has been made by Corporation
pursuant to Section 2.09 is insufficient to
supply the part of the DOE contract demand
which is then being demanded by DOE,
Corporation shall, unless Corporation shall be
excused as a result of conditions contemplated
by Section 7.05 of this Agreement or DOE shall
have otherwise excused Corporation from
meeting such demand, furnish additional
generating capacity and the energy associated
therewith to DOE at the point of delivery to
make up for such insufficiency in any amount
necessary up to a number of kilowatts which
will equal the Applicable Percentage (which
percentage, for purposes of this Section 2.04,
shall not exceed thirty percent) of the sum of
(i) the DOE contract demand and (ii) the
transmission losses thereon from the 345 kv
busses of the project generating stations. At
the request of DOE, during any clock hour
Corporation may, at its option, furnish to DOE
<PAGE>6
supplemental power which, when added to the permanent
power and occasional energy then being furnished, shall
exceed the DOE contract demand; provided that, in such
event, DOE shall, if requested to do so by Corporation,
forthwith take action to reduce its power and energy
requirements to an amount not exceeding the aggregate
amount which Corporation would otherwise be obligated to
supply. Notwithstanding the foregoing, the aggregate
amount of supplemental power and energy which Corporation
shall be obligated to furnish to DOE pursuant to this
paragraph 1 during any calendar year shall not exceed the
product of 900,000,000 kwh multiplied by the average DOE
capacity ratio of such calendar year, weighted with
respect to the periods of time during which DOE capacity
ratios were in effect.
'2. The additional generating capacity
and the energy associated therewith furnished
to DOE pursuant to paragraph 1. above is
called "supplemental power."'...
"In order to enable Corporation to fulfill its
obligation under the DOE Power Agreement to supply
Supplemental Power to DOE, each Sponsoring Company shall
stand ready to supply, either from its own capacity,
capacity to which it is entitled at the Project
Generating Stations or through arrangements with other
companies, its Power Participation Ratio of the amounts
of power and energy required for such supply of
Supplemental Power plus its Power Participation Ratio of
the aggregate of all electrical losses incurred by all
Sponsoring Companies in so supplying required amounts of
power and energy. It is understood, however, that
Corporation shall endeavor to obtain such power from the
most economical source without respect to Power
Participation Ratios, including power classified as
Surplus Power to which the Sponsoring Companies are
entitled but which they are not utilizing."
3. In Article 6, delete the portion of the first
paragraph of subsection 6.031 which quotes clauses (c) and (d) of
paragraph 3 of Section 3.04 of the DOE Power Agreement, and
substitute therefor the following:
"(c) Component (C) shall consist of the total
expenses for taxes, including all taxes on income (other
than (i) Federal income taxes, (ii) any taxes that are
now or may hereafter be levied based on revenue, energy
<PAGE>7
generated or sold or on any other basis capable of direct
distribution, the cost of which taxes shall be allocated
directly to DOE and Corporation in amounts reflecting the
proper share of each, and DOE shall pay to Corporation its
share thereof, (iii) taxes arising from payments received by
Corporation for difficult to quantify costs under Section 2.08
and (iv) taxes arising from payments received by Corporation
for use of Corporation's transmission facilities under Section
2.10), properly chargeable to Account 507 of the Uniform
System of Accounts; provided, however, that any taxes for
which DOE reimburses Corporation under Sections 1.05, 3.06,
3.07, 4.02, and 4.08 shall not be included in Component (C).
"(d) Component (D) shall consist of an amount equal
to the product of $2.089 multiplied by the total number
of shares of capital stock of the par value of $100 per
share of Ohio Valley Electric Corporation which shall
have been issued and which are outstanding on the last
day of such month."
4. In Article 6, delete the first sentence of the
second paragraph of subsection 6.031, and substitute therefor the
following:
"The amount specified in the computation of
Component (D) in subparagraph (d) of paragraph 3 of
Section 3.04 of the DOE Power Agreement is subject to
modification or adjustment as provided in the DOE Power
Agreement."
5. Change the title of Article 9 so that it reads
"COSTS OF REPLACEMENTS AND ADDITIONAL FACILITIES; ADVANCE PAYMENTS
FOR ENERGY CHARGES."
6. In Article 9, delete the first sentence of Section
9.01, and substitute therefor the following:
"The Sponsoring Companies shall reimburse
Corporation for the difference between (a) the total cost
of replacements chargeable to property and plant (other
than facilities described in Section 2.02) made by
Corporation during any month prior thereto (and not
previously reimbursed) and (b) the amounts received by
Corporation from DOE as reimbursement for the cost of
replacements under the provisions of the DOE Power
<PAGE>8
Agreement, or paid for out of proceeds of fire or other
applicable insurance protection, or out of amounts recovered
from third parties responsible for damages requiring
replacement."
7. In Article 9, delete in its entirety the last
sentence of Section 9.01.
8. In Article 9, renumber Section 9.02 as Section 9.03,
and then insert a new Section 9.02 after Section 9.01 as follows:
"9.02 Additional Facility Costs. The Sponsoring
Companies shall reimburse Corporation for the difference
between (a) the total cost of additional facilities
and/or spare parts (other than facilities described in
Section 2.02) purchased and/or installed by Corporation
during any month prior thereto (and not previously
reimbursed) and (b) the amounts received by Corporation
from DOE as reimbursement for the cost of additional
facilities and/or spare parts under the provisions of the
DOE Power Agreement. If Corporation is unable to secure
a satisfactory ruling to the effect that amounts paid by
the Sponsoring Companies in reimbursement of additional
facility and/or spare part costs do not constitute
taxable income to Corporation, or in case such ruling
once obtained shall be reversed or rescinded, then the
Sponsoring Companies shall pay to Corporation such
amount, in lieu of the amounts to be paid as above
provided, which, after provision for all taxes on income,
shall equal the costs of the additional facilities and/or
spare parts reimbursable by the Sponsoring Companies to
Corporation as above provided. Each Sponsoring Company's
share of such payment shall be the percentage of such
difference represented by its Power Participation Ratio."
9. In Article 10, delete Section 10.04 in its entirety,
and substitute therefor the following:
"10.04 Replacement and Additional Facility Costs.
As soon as practicable after the end of each month
Corporation shall render to each Sponsoring Company a
separate statement indicating the appropriate charge
against such Sponsoring Company for reimbursement of the
cost of replacements and additional facilities and/or
spare parts incurred during such month as provided in
Article 9 above. Such Sponsoring Company shall make
payment therefor promptly upon receipt of such
statement."
10. Delete Article 11, and substitute therefor the
<PAGE>9
following:
"11.01 DOE Requirements for Service Following
Termination of the DOE Power Agreement. The last two
sentences of Section 6.01 of the DOE Power Agreement read
as follows:
'The parties recognize that the project generating
stations were constructed to service the United States of
America's load requirements at the Project, and therefore
recognize the principle that power and associated energy
produced by the project generating stations beyond the
term of this Agreement are to be made available, at least
to the extent of DOE's contract demand as in effect on
December 31, 2005, to serve such load, provided
Corporation's equipment is then serviceable and mutually
agreeable arrangements can be evolved by the parties
hereto. Accordingly, Corporation and DOE agree to review
the possibility of negotiating power supply arrangements
for the delivery of power and associated energy produced
by the project generating stations to DOE subsequent to
December 31, 2005, at least two years in advance of such
date.'
"In the event the said last two sentences of Section
6.01 result in Corporation's and DOE's reaching agreement
for the supply of service to DOE following termination of
the DOE Power Agreement, the provisions of this Agreement
shall be appropriately amended and modified, consistently
with the principles herein, to conform with any agreement
so reached."
11. In Article 12, delete Section 12.13 in its entirety.
12. In Article 12, delete Section 12.15, and substitute
therefor the following:
"12.15 Certain Provisions of the DOE Power
Agreement. The parties hereto each agree that the
clauses specified (a) in paragraph 4 of Section 7.04, (b)
in paragraph (b) (10) of Section 7.13, (c) in paragraph
9 of Section 7.14, (d) in paragraph 5 of Section 7.15,
(e) in clause (f) of Section 7.22, (f) in paragraph
(a)(iv) of Section 7.23, (g) in paragraph (m) of Section
7.24, (h) in paragraph (c) (5) of Section 7.33, and/or
(i) in paragraph (d) (9) of Section 7.34, of the DOE
Power Agreement, shall (i) to the extent required to be
included in a subcontract or a purchase order, and (ii)
to the extent that this Agreement constitutes a
subcontract or a purchase order, as the case may be, be
deemed, unless exempted by applicable rules, regulations
or orders, to be included herein as if set forth in full
herein; provided, however, that the parties hereto do not
<PAGE>10
concede by the inclusion of this Section 12.15 in this
Agreement that either the United States of America or OVEC
intended by their execution and delivery of the DOE Power
Agreement, or any modification thereof, to include contractual
arrangements such as this Agreement within the concept of a
subcontract or purchase order as such terms are used in the
DOE Power Agreement."
13. Delete APPENDIX I, and substitute therefor the
following:
"APPENDIX I
"DEFINITION OF OUT-OF-POCKET COSTS
OF SUPPLEMENTAL ENERGY
"Out-of-pocket costs associated with the furnishing
of supplemental energy mean such operating and tax
expenses incurred that would not have been otherwise
incurred if such supplemental energy had not been
furnished.
"Such operating expenses, under usual circumstances,
include the incremental production expenses incurred in
the production of the energy so furnished. Incremental
production expenses associated with the production of
such energy will be influenced by the type or class of
generating station used for such purpose. If the station
used is normally operating and carrying load, the
incremental production expenses will include, without
limitation, the fuel expense normally charged at the time
in question by the producer of the power plus an
appropriate allowance for maintenance, plus, in the case
of supplemental energy scheduled to be delivered to
Corporation from the Sponsoring Companies for redelivery
to DOE, 0.5 mills per kwh for incremental operating
labor. The appropriate unit allowance for maintenance
shall be one-half of the weighted average unit cost
(expressed in mills per kwh of net generation) normally
charged at the time in question by the producer of the
power. If the station or part thereof used is normally
held in reserve as standby, all expenses incurred that
are in excess of the expenses that would have been
incurred for standby operation of such station or part
thereof will be considered incremental production
expenses. Incremental production expenses associated
with fuel for each kwh of supplemental energy not
scheduled for redelivery to DOE from the Sponsoring
Companies shall be an amount determined by dividing (i)
the total amount determined under Section 3.03 of the DOE
Power Agreement, by (ii) the billing kwh of permanent
power for such month, plus the transmission losses
thereon from the 345 kv busses of the project generating
<PAGE>11
stations to the point of delivery.
"To the operating expenses as hereinabove
determined, there will be added a charge of 0.7 mills per
kwh to cover accounting, administration and billing
expenses. Tax expenses will be the expenses that are
payable as taxes either in connection with the sale or
production of such energy.
"The above-described charges for operating labor and
for accounting, administration and billing shall be
adjusted in the following manner:
(i) Operating Labor. Effective January 1 of each
year, commencing January 1, 1989, the value for average
hourly earnings of production or non-supervisory workers
in electric services (1972 SIC Code 491) published by the
U.S. Department of Labor, Bureau of Labor Statistics for
the month of August in the preceding calendar year shall
be compared to the march 1988 base value of such average
hourly earnings of $14.28 per hour. The percentage
change thereof (carried out four decimal places, e.g.,
6.124% shall be .0612) in such average hourly earnings
shall be multiplied by the initial charge for operating
labor of 0.5 mills per kwh. The amount of increase or
<PAGE>12
decrease shall be added to or subtracted from, as the
case may be, the initial charge for operating labor; and
the amount obtained in this manner (carried out four
decimal places) shall become the then effective charge
for operating labor.
(ii) Accounting, Administration and Billing.
Effective January 1 of each year, commencing January 1,
1989, the value for average hourly earnings of production
or non-supervisory workers in accounting, auditing and
bookkeeping services (1972 SIC Code 893) published by the
U.S. Department of Labor, Bureau of Labor Statistics for
the month of August in the preceding calendar year shall
be compared to the March 1988 base value of such average
hourly earnings of $10.26 per hour. The percentage
change thereof (carried out four decimal places, e.g.,
6.124% shall be .0612) in such average hourly earnings
shall be multiplied by the initial charge for accounting,
administration and billing of 0.7 mills per kwh. The
amount of increase or decrease shall be added to or
subtracted from, as the case may be, the initial charge
for accounting, administration and billing; and the
amount obtained in this manner (carried out four decimal
places) shall become the then effective charge for
accounting, administration and billing.
"Should publication of average hourly earnings be
discontinued for either or both of the above-referenced
statistical codes, a statistical code or codes which is
or are, as nearly as practicable, equivalent shall be
substituted by mutual agreement of the parties hereto."
14. This Modification No. 7 shall become effective at
12:00 o' clock Midnight on the day on which Corporation shall
advise the other parties to this Modification No. 7 (to be later
confirmed in writing) that all conditions precedent to the
effectiveness of this Modification No. 7 shall have been satisfied
including the conditions precedent set forth below:
(a) Modification No. 14 to the DOE Power Agreement
shall have been executed and delivered; and
(b) Corporation shall be in a position to deliver
to DOE the notice described in Paragraph 49 of
Modification No. 14 to the DOE Power Agreement.
<PAGE>13
15. The Inter-Company Power Agreement, as modified by
Modifications Nos. 1, 2, 3, 4, 5, and 6 and as hereinbefore
provided, is hereby in all respects confirmed.
16. This Modification No. 7 may be executed in any
number of copies and by the different parties hereto on separate
counterparts, each of which shall be deemed an original but all of
which together shall constitute a single agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Modification No. 7 as of the day and year first written above.
OHIO VALLEY ELECTRIC CORPORATION
By:
APPALACHIAN POWER COMPANY
By:
THE CINCINNATI GAS & ELECTRIC COMPANY
By:
COLUMBUS SOUTHERN POWER COMPANY
By:
THE DAYTON POWER AND LIGHT COMPANY
By:
INDIANA MICHIGAN POWER COMPANY
By:
<PAGE>14
KENTUCKY UTILITIES COMPANY
By:
LOUISVILLE GAS AND ELECTRIC COMPANY
By: FRED WRIGHT
MONONGAHELA POWER COMPANY
By:
OHIO EDISON COMPANY
By:
OHIO POWER COMPANY
By:
PENNSYLVANIA POWER COMPANY
By:
THE POTOMAC EDISON COMPANY
By:
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
By:
THE TOLEDO EDISON COMPANY
By:
<PAGE>15
WEST PENN POWER COMPANY
By:
<PAGE>1
Modification No. 15
to
POWER AGREEMENT
Dated October 15, 1952
between
OHIO VALLEY ELECTRIC CORPORATION
AND
UNITED STATES OF AMERICA
Acting By and Through the
SECRETARY OF ENERGY,
the statutory head of the
DEPARTMENT OF ENERGY
Dated as of
February 1, 1993
<PAGE>2
Contract No. DE-AC05-76OR01530
(Modification No. 15)
THIS MODIFICATION NO. 15, dated as of the 1st day of February,
1993, by and between OHIO VALLEY ELECTRIC CORPORATION, a
corporation organized under the laws of the State of Ohio
(hereinafter called the "Corporation"), and the UNITED STATES OF
AMERICA (hereinafter sometimes called the "Government"), acting by
and through the SECRETARY OF ENERGY, the statutory head of the
DEPARTMENT OF ENERGY (hereinafter called "DOE");
W I T N E S S E T H T H A T
-----------------------------
WHEREAS, Corporation and the Government have heretofore
entered into a contract dated October 15, 1952, providing for the
supply by Corporation of electric utility services to the United
States Atomic Energy Commission (hereinafter called "AEC") at AEC's
project near Portsmouth, Ohio (hereinafter called the "Project"),
which contract has heretofore been modified by Modification No. 1,
dated July 23, 1953, Modification No. 2, dated as of March 15,
1964, Modification No. 3, dated as of May 12, 1966, Modification
No. 4, dated as of January 7, 1967, Modification No. 5, dated as of
August 15, 1967, Modification No. 6, dated as of November 15, 1967,
Modification No. 7, dated as of November 5, 1975, Modification No.
8, dated as of June 23, 1977, Modification No. 9, dated as of July
1, 1978, Modification No. 10, dated as of August 1, 1979,
Modification No. 11, dated as of September 1, 1979, Modification
No. 12, dated as of August 1, 1981, Modification No. 13, dated as
<PAGE>3
of September 1, 1989, and Modification No. 14, dated as of January
15, 1992 (said contract, as so modified, is hereinafter called the
"DOE Power Agreement"); and
WHEREAS, pursuant to the Energy Reorganization Act of 1974,
the AEC was abolished on January 19, 1975, and certain of its
functions, including the procurement of electric utility services
for the Project, were transferred to and vested in the
Administrator of Energy Research and Development; and
WHEREAS, pursuant to the Department of Energy Organization
Act, all of the functions vested by law in the Administrator of
Energy Research and Development or the Energy Research and
Development Administration were transferred to, and vested in, the
Secretary of Energy on October 1, 1977; and
WHEREAS, pursuant to the Energy Policy Act of 1992, the United
States Enrichment Corporation (hereinafter called "USEC") was
established to lease from DOE its uranium enrichment facilities
beginning July 1, 1993; and the DOE was authorized by such Act to
continue to receive electricity under the DOE Power Agreement and
to resell it to USEC; and
WHEREAS, Corporation and DOE desire to amend the DOE Power
Agreement further as hereinafter provided;
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. Paragraph 2 of Section 2.05 is amended by deleting the
second sentence thereof in its entirety and substituting therefor
<PAGE>4
the following:
In addition, DOE shall have the right at any time to
sell or provide permanent or supplemental power and
energy in an amount up to 2,500 kw to its tenants for
their consumption at or in the vicinity of the Project;
provided, however, that DOE's right to sell to its
tenant, the United States Enrichment Corporation
("USEC"), a corporation established by the Energy Policy
Act of 1992, for consumption at the Project, power and
energy purchased from Corporation shall not be limited in
amount and provided further that DOE's right to sell to
its tenant USEC for consumption at DOE's uranium
enrichment facility near Paducah, Kentucky, power and
energy purchased from Corporation shall not be limited in
amount except as provided in paragraph 3 of this Section
2.05.
2. Paragraph 3 of Section 2.05 is amended by deleting from
its first sentence the word "Governmental."
3. This Modification No. 15 to the DOE Power Agreement shall
become effective at 12:01 A.M. on July 1, 1993, if Corporation has
delivered to DOE a written notice to the effect that:
All applicable requirements as to approval by or
filings with regulatory agencies or other governmental
bodies having jurisdiction in respect of the transactions
constituting the subject matter of this Modification No.
15 (including expiration of any specified period after
the date of any filing) have been complied with and all
requisite approvals are in full force and effect and none
is the subject of attack on appeal by direct proceeding
or otherwise, and (except to the extent that Corporation
shall waive such condition) any requisite approvals have
become final and not subject to judicial review in any
court.
4. The DOE Power Agreement, as modified by Modifications No.
1 through No. 14, both inclusive, and by this Modification No. 15,
is hereby in all respects confirmed.
<PAGE>5
IN WITNESS WHEREOF, the parties hereto have executed this
Modification No. 15 as of the date and year first above written.
OHIO VALLEY ELECTRIC CORPORATION
By________________________________
President
UNITED STATES OF AMERICA
By________________________________
Authorized Contracting Officer
<PAGE>
GAS TRANSPORTATION AGREEMENT
BETWEEN
TEXAS GAS TRANSMISSION CORPORATION
AND
LOUISVILLE GAS AND ELECTRIC COMPANY
DATED NOVEMBER 1, 1993
<PAGE>
INDEX
Page
No.
ARTICLE I Definitions 1
ARTICLE II Transportation Service 1
ARTICLE III Scheduling and Transportation 2
Limitations
ARTICLE IV Points of Receipt, Delivery,
and Supply Lateral Allocation 3
ARTICLE V Term of Agreement 3
ARTICLE VI Point(s) of Measurement 3
ARTICLE VII Facilities 4
ARTICLE VIII Rates and Charges 4
ARTICLE IX Miscellaneous 5
EXHIBIT "A"
FIRM POINT(S) OF RECEIPT
EXHIBIT "A-I"
SECONDARY POINT(S) OF RECEIPT
EXHIBIT "B"
FIRM POINT(S) OF DELIVERY
EXHIBIT "C"
SUPPLY LATERAL CAPACITY
STANDARD FACILITIES KEY
<PAGE>
FIRM TRANSPORTATION AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of
November, 1993, by and between Texas Gas Transmission Corporation,
a Delaware corporation, hereinafter referred to as "Texas Gas," and
Louisville Gas and Electric Company, a Kentucky corporation,
hereinafter referred to as "Customer,"
WITNESSETH:
WHEREAS, Customer has natural gas which cannot be moved into
its system through its existing facilities; and
WHEREAS, Texas Gas has the ability in its pipeline system to
move natural gas for the account of Customer; and
WHEREAS, Customer desires that Texas Gas transport such
natural gas for the account of Customer; and
WHEREAS, Customer and Texas Gas are of the opinion that the
transaction referred to above falls within the provisions of
Section 284.223 of Subpart G of Part 284 of the Federal Energy
Regulatory Commission's (Commission) regulations and the blanket
certificate issued to Texas Gas in Docket No. CP88-686-000, and can
be accomplished without the prior approval of the Commission;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto covenant and
agree as follows:
ARTICLE I
Definitions
1.1 Definition of Terms of the General Terms and Conditions of
Texas Gas's FERC Gas Tariff on file with the Commission is hereby
incorporated by reference and made a part of this Agreement.
ARTICLE II
Transportation Service
2.1 Subject to the terms and provisions of this Agreement,
Customer agrees to deliver or cause to be delivered to Texas Gas,
at the Point(s) of Receipt in Exhibit "A" hereunder, Gas for
Transportation, and Texas Gas agrees to receive, transport, and re-
deliver, at the Point(s) of Delivery in Exhibit "B" hereunder,
Equivalent Quantities of Gas to Customer or for the account of
Customer, in accordance with Section 3 of Texas Gas's effective FT
Rate Schedule and the terms and conditions contained herein, up to
30,000 MMBtu per day during the winter season, and up to 30,000
MMBtu per day during the summer season which shall be Customer's
1
<PAGE>
Firm Transportation Contract Demand, and up to 4,530,000 MMBtu
during the winter season, and up to 6,420,000 MMBtu during the
summer season, which shall be Customer's Seasonal Quantity Levels.
2.2 Customer shall reimburse Texas Gas for the Quantity of Gas
required for fuel, company use, and unaccounted for associated with
the transportation service hereunder in accordance with Section 16
of the General Terms and Conditions of Texas Gas's FERC Gas Tariff.
The applicable fuel retention percentage(s) is shown on Exhibit
"A". Texas Gas may adjust the fuel retention percentage as
operating circumstances warrant; however, such change shall not be
retroactive. Texas Gas agrees to give Customer thirty (30) days
written notice before changing such percentage.
2.3 Texas Gas, at its sole option, may, if tendered by Customer,
transport daily quantities in excess of the Transportation Contract
Demand.
2.4 In order to protect its system, the delivery of gas to its
customers and/or the safety of its operations, Texas Gas shall have
the right to vent excess natural gas delivered to Texas Gas by
Customer or Customer's supplier(s) in that part of its system
utilized to transport gas received hereunder. Prior to venting
excess gas, Texas Gas will use its best efforts to contact Customer
or Customer's supplier in an attempt to correct such excess
deliveries to Texas Gas. Texas Gas may vent such excess gas solely
within its reasonable judgment and discretion without liability to
Customer, and a pro rata share of any gas so vented shall be
allocated to Customer. Customer's pro rata share shall be
determined by a fraction, the numerator of which shall be the
quantity of gas delivered to Texas Gas at the Point of Receipt by
Customer or Customer's suppliers in excess of Customer's confirmed
nomination and the denominator of which shall be the total quantity
of gas in excess of total confirmed nominations flowing in that
part of the Texas Gas's system utilized to transport gas,
multiplied by the total quantity of gas vented or lost hereunder.
2.5 Any gas imbalance between receipts and deliveries of gas, less
fuel and PVR adjustments, if applicable, shall be cleared each
month in accordance with Section 17 of the General Terms and
Conditions in Texas Gas's FERC Gas Tariff. Any imbalance remaining
at the termination of this Agreement shall also be cashed-out as
provided herein.
ARTICLE III
Scheduling
3.1 Customer shall be obligated five (5) working days prior to the
end of each month to furnish Texas Gas with a schedule of the
estimated daily quantity(ies) of gas it desires to be received,
transported, and re-delivered for the following month. Such
2
<PAGE>
schedules will show the quantity(ies) of gas Texas Gas will receive
from Customer at the Point(s) of Receipt, along with the identity
of the supplier(s) that is delivering or causing to be delivered to
Texas Gas quantities for Customer's account at each Point of
Receipt for which a nomination has been made.
3.2 Customer shall give Texas Gas, after the first of the month,
at least twenty-four (24) hours notice prior to the commencement of
any day in which Customer desires to change the quantity(ies) of
gas it has scheduled to be delivered to Texas Gas at the Point(s)
of Receipt. If Customer's nomination change does not require Texas
Gas to interrupt service to another Customer, Texas Gas will agree
to waive this 24-hour prior notice and implement nomination changes
requested by Customer to commence in such lesser time frame subject
to Texas Gas's being able to confirm and verify such nomination
change at both Receipt and Delivery Points, and receive PDAs
reflecting this nomination change at both Receipt and Delivery
Points. Texas Gas will use its best efforts to make the nomination
change effective at the time requested by Customer; however, if
Texas Gas is unable to do so, the nomination change will be
implemented as soon as confirmation is received.
ARTICLE IV
Points of Receipt, Delivery, and Supply Lateral Allocation
4.1 Customer shall deliver or cause to be delivered natural gas to
Texas Gas at the Point(s) of Receipt specified in Exhibit "A"
attached hereto and Texas Gas shall redeliver gas to Customer or
for the account of Customer at the Point(s) of Delivery specified
in Exhibit "B" attached hereto in accordance with Sections 7 and 15
of the General Terms and Conditions of Texas Gas's FERC Gas Tariff.
4.2 Customer's preferential capacity rights on each of Texas Gas's
supply laterals shall be as set forth in Exhibit "C" attached
hereto, in accordance with Section 34 of the General Terms and
Conditions of Texas Gas's FERC Gas Tariff.
ARTICLE V
Term of Agreement
5.1 This Agreement shall become effective November 1, 1993, and
shall remain in full force and effect for a primary term of two (2)
years ending October 31, 1995, and year-to-year thereafter, unless
cancelled by either party by giving the other party at least 365
days advance written notice prior to the expiration of the primary
term or any subsequent roll-over term. Provided however, Texas Gas
and Customer agree that, as provided in Section 32.3 of the General
Terms and Conditions of Texas Gas's FERC Gas Tariff, Texas Gas will
3
<PAGE>
not terminate service to Customer under this Agreement without
receiving specific abandonment approval under Section 7 of the
Natural Gas Act.
ARTICLE VI
Point(s) of Measurement
6.1 The gas shall be delivered by Customer to Texas Gas and re-
delivered by Texas Gas to Customer at the Point(s) of Receipt and
Delivery hereunder.
6.2 The gas shall be measured or caused to be measured by Customer
and/or Texas Gas at the Point(s) of Measurement which shall be as
specified in Exhibits A, A-I, and B herein. In the event of a line
loss or leak between the Point of Measurement and the Point of
Receipt, the loss shall be determined in accordance with the
methods described contained in Section 3, "Measuring and Measuring
Equipment," contained in the General Terms and Conditions of First
Revised Volume No. 1 of Texas Gas's FERC Gas Tariff.
ARTICLE VII
Facilities
7.1 Texas Gas and Customer agree that any facilities required at
the Point(s) of Receipt, Point(s) of Delivery, and Point(s) of
Measurement, shall be installed, owned, and operated as specified
in Exhibits A, A-I, and B herein. Customer may be required to pay
or cause Texas Gas to be paid for the installed cost of any new
facilities required as contained in Sections 1.3, 1.4, and 1.5 of
Texas Gas's FT Rate Schedule. Customer shall only be responsible
for the installed cost of any new facilities described in this
Section if agreed to in writing between Texas Gas and Customer.
ARTICLE VIII
Rates and Charges
8.1 Each month, Customer shall pay Texas Gas for the service
hereunder, an amount determined in accordance with Section 5 of
Texas Gas's FT Rate Schedule contained in Texas Gas's FERC Gas
Tariff and as indicated on Exhibit "A" herein, which Rate Schedule
is by reference made a part of this Agreement. The maximum rates
for such service consist of a monthly reservation charge multiplied
by Customer's firm transportation demand as specified in Section
2.1 herein. The reservation charge shall be billed as of the
effective date of this Agreement. In addition to the monthly
reservation charge, Customer agrees to pay Texas Gas each month the
maximum commodity charge up to Customer's Transportation Contract
Demand. For any quantities delivered by Texas Gas in excess of
4
<PAGE>
Customer's Transportation Contract Demand, Customer agrees to pay
the maximum FT overrun commodity charge. In addition, Customer
agrees to pay:
(a) Texas Gas's Fuel Retention percentage(s).
(b) The currently effective GRI funding unit, if applicable,
the currently effective FERC Annual Charge Adjustment
unit charge (ACA), the currently effective Take-or-Pay
surcharge, or any other then currently effective
surcharges, including but not limited to Order 636
Transition Costs.
If Texas Gas declares force majeure which renders it unable to
perform service herein, then Customer shall be relieved of its
obligation to pay demand charges for that part of its FT Contract
Demand affected by such force majeure event until the force majeure
event is remedied.
Unless otherwise agreed to in writing by Texas Gas and Customer,
Texas Gas may, from time to time, and at any time selectively after
negotiation, adjust the rate(s) applicable to any individual
Customer; provided, however, that such adjusted rate(s) shall not
exceed the applicable Maximum Rate(s) nor shall they be less than
the Minimum Rate(s) set forth in the currently effective Sheet No.
10 of this Tariff. If Texas Gas so adjusts any rates to any
Customer, Texas Gas shall file with the Commission any and all
required reports respecting such adjusted rate.
8.2 In the event Customer utilizes a Secondary Point(s) of Receipt
or Delivery for transportation service herein, Customer will
continue to pay the monthly reservation charges as described in
Section 8.1 above. In addition, Customer will pay the maximum
commodity charge applicable to the zone in which gas is received
and re-delivered up to Customer's Transportation Contract Demand
and the maximum overrun commodity charge for any quantities
delivered by Texas Gas in excess of Customer's winter season or
summer season Transportation Contract Demand. Customer also agrees
to pay the ACA, Take-or-Pay Surcharge, GRI charges, fuel retention
charge, and any other effective surcharges, if applicable, as
described in Section 8.1 above.
8.3 It is further agreed that Texas Gas may seek authorization
from the Commission and/or other appropriate body for such changes
to any rate(s) and terms set forth herein or in Rate Schedule FT,
as may be found necessary to assure Texas Gas just and reasonable
rates. Nothing herein contained shall be construed to deny
Customer any rights it may have under the Natural Gas Act, as
amended, including the right to participate fully in rate
proceedings by intervention or otherwise to contest increased rates
in whole or in part.
5
<PAGE>
8.4 Customer agrees to fully reimburse Texas Gas for all filing
fees, if any, associated with the service contemplated herein which
Texas Gas is required to pay to the Commission or any agency having
or assuming jurisdiction of the transactions contemplated herein.
8.5 Customer agrees to execute or cause its supplier or processor
to execute a separate agreement with Texas Gas providing for the
transportation of any liquids and/or liquefiables, and agrees to
pay or reimburse Texas Gas, or cause Texas Gas to be paid or
reimbursed, for any applicable rates or charges associated with the
transportation of such liquids and/or liquefiables, as specified in
Section 24 of the General Terms and Conditions of Texas Gas' FERC
Gas Tariff.
ARTICLE IX
Miscellaneous
9.1 Texas Gas's Transportation Service hereunder shall be subject
to receipt of all requisite regulatory authorizations from the
Commission, or any successor regulatory authority, and any other
necessary governmental authorizations, in a manner and form
acceptable to Texas Gas. The parties agree to furnish each other
with any and all information necessary to comply with any laws,
orders, rules, or regulations.
9.2 Except as may be otherwise provided, any notice, request,
demand, statement, or bill provided for in this Agreement or any
notice which a party may desire to give the other shall be in
writing and mailed by regular mail, or by postpaid registered mail,
effective as of the postmark date, to the post office address of
the party intended to receive the same, as the case may be, or by
facsimile transmission, as follows:
Texas Gas
Texas Gas Transmission Corporation
3800 Frederica Street
Post Office Box 1160
Owensboro, Kentucky 42302
Attention: Gas Revenue Accounting (Billings and Statements)
Transportation & Exchange (Other Matters)
Nomination & Allocation (Nominations)
Fax (502) 926-8686
6
<PAGE>
Customer
Louisville Gas and Electric Company
220 West Main Street
Louisville, Kentucky 40202
Attention: Mr. Clay Murphy
The address of either party may, from time to time, be changed by
a party mailing, by certified or registered mail, appropriate
notice thereof to the other party. Furthermore, if applicable,
certain notices shall be considered duly delivered when posted to
Texas Gas's Electronic Bulletin Board, as specified in Texas Gas's
tariff.
9.3 This Agreement shall be governed by the laws of the State of
Kentucky.
9.4 Each party agrees to file timely all statements, notices, and
petitions required under the Commission's Regulations or any other
applicable rules or regulations of any governmental authority
having jurisdiction hereunder and to exercise due diligence to
obtain all necessary governmental approvals required for the
implementation of this Transportation Agreement.
9.5 All terms and conditions of Rate Schedule FT and the attached
Exhibits A, A-I, B, and C are hereby incorporated to and made a
part of this Agreement.
9.6 This contract shall be binding upon and inure to the benefit
of the successors, assigns, and legal representatives of the
parties hereto.
9.7 Neither party hereto shall assign this Agreement or any of its
rights or obligations hereunder without the consent in writing of
the other party. Notwithstanding the foregoing, either party may
assign its right, title and interest in, to and by virtue of this
Agreement including any and all extensions, renewals, amendments,
and supplements thereto, to a trustee or trustees, individual or
corporate, as security for bonds or other obligations or
securities, without such trustee or trustees assuming or becoming
in any respect obligated to perform any of the obligations of the
assignor and, if any such trustee be a corporation, without its
being required by the parties hereto to qualify to do business in
the state in which the performance of this Agreement may occur,
nothing contained herein shall require consent to transfer this
Agreement by virtue of merger or consolidation of a party hereto or
a sale of all or substantially all of the assets of a party hereto,
or any other corporate reorganization of a party hereto.
7
<PAGE>
9.8 This Agreement insofar as it is affected thereby, is subject
to all valid rules, regulations, and orders of all governmental
authorities having jurisdiction.
9.9 No waiver by either party of any one or more defaults by the
other in the performance of any provisions hereunder shall operate
or be construed as a waiver of any future default or defaults
whether of a like or a different character.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective representatives
thereunto duly authorized, on the day and year first above written.
ATTEST: TEXAS GAS TRANSMISSION CORPORATION
______________________ By Kathy Kirk
Secretary Vice President
WITNESSES: LOUISVILLE GAS AND ELECTRIC COMPANY
______________________ By Wendy C. Heck
Vice President
______________________ Attest: Beverly J. Bradford
Secretary
Date of Execution by Customer:
10-22-93
___________________________
8
<PAGE>
<TABLE>
Firm Transportation Agreement
Contract No. T4041
Exhibit "A"
Firm Point(s) of Receipt
LOUISVILLE GAS AND ELECTRIC COMPANY
<CAPTION>
Meter Daily Firm Fuel Use/ Loss(%)
Zone Number Name Capacity (MMBtu) Winter Summer
<S> <C> <C> <C> <C> <C>
SL 2740 Superior-Pure 4,047 2.68 2.02
SL 2790 Henry Hub 10,275 2.68 2.02
SL 9836 Texaco-Dog Lake 5,138 2.68 2.02
SL 2845 Lake Pagie 5,911 2.68 2.02
SL 9471 Sohio 10,276 2.68 2.02
SL 9383 WC 293/HI 167/ 3,402 2.68 2.02
HI 167-166
SL 8170 Iowa 659 2.68 2.02
</TABLE>
Notes:1) Further information on Receipt Point Description,
Facilities, and MAOP can be found under the Receipt Point
tab in Texas Gas's Gas Quest Manual.
Demand Commodity
FT Charges:
1
<PAGE>
Exhibit "A - I"
Secondary Points of Receipt
SUPPLY
Lateral Segment Meter No. Supply Point
North Louisiana
Carthage - Haughton
2102 Champlin
9805 Delhi
9051 Grigsby
9860 Nelson-
Greenwood/
Waskom
8116 Texas Eastern
-Sligo
9884 Valero
-Carthage
Haughton - Sharon
8003 Barksdale
2455 Beacon
9866 Cornerstone
-Ada
2173 Crystal Oil
-West
Arcadia
2340 F.E.
Hargraves-
Minden
2186 LGI #1
2456 McCormick
2459 Minden Pan-
Am #1
2457 Minden-Hunt
9819 Nelson-Sibley
9461 Olin-McGoldrick
2760 Sligo Plant
9834 Texaco-Athens
Sharon - East
2631 Calhoun Plant
2202 Ergon-Monroe
8760 Lonewa
8020 MRT-Bastrop
9302 Munce
9812 Par Minerals/Downsville
9823 Reliance
-Bernice
2612 Reliance-
West Monroe
2
<PAGE>
Exhibit "A - I"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
Sharon (Cont.) 2634 Southwest
-Guthrie
Sharon
2145 Claiborne
2010 Fina Oil-HICO
9818 PGC-Bodcaw
2757 Texas Eastern-
Sharon
2756 Texas Eastern- Sharon
(Master List)
West
Iowa-Eunice 2091 Caribbean-China #1
2092 Caribbean-China #2
2093 Caribbean-China #3
9038 Coastal/ANR-Iowa
9839 Great Southern -
Woodlawn
8170 Iowa
9445 Kilroy Riseden -
Woodlawn
9890 Source Petroleum - S.
Elton #1
9896 Source Petroleum - S.
Elton #2
2883 Tee Oil-Woodlawn
9802 Trimble No. 1
Mallard Bay-Woodlawn
2140 California Co.- South
Thornwell
2615 Caroline Hunt Sands -
S. Thornwell
2170 Cockrell-North
Chalkley
9828 Denovo-Lake Arthur
2207 Franks Petroleum -
Chalkley
9028 Gas Energy
Development-Hayes
2355 Humble-Chalkley
2383 IMC Wintershall -
Chalkley
3
<PAGE>
Exhibit "A - I"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
Mallard Bay-Woodlawn 9848 Lamson Onshore
-Mallard Bay
8071 LRC-Mallard Bay
9813 Rio Bravo
2701 Samedan-N Chalkley
2635 Shell-Chalkley
(Cont.)
2266 South Mallard
-BayAmerical
2822 Superior-S. Thornwell
9879 Total Minatone-Bell
City
2885 Union Texas-Welsh
2853 Welsh Field
Southwest
East Cameron-Lowry
2581 E.C. 14
9872 E.C. 9A
2033 Little Cheniere-Arco
2034 Little Cheniere
-Linder
2392 LRC-Grand Cheniere
Lowry-Eunice
2860 Lake Arthur
9843 Mobile-Lowry
9446 NGPL - Lowry
2438 Willis Meter Station
2431 Fletcher-Schmeburger
2432 Fletcher-Patterson
2433 Fletcher-IAMS
2434 Fletcher-Young/Bert
2436 Caddo County, OK
2437 Washita County, OK
South
Egan-Eunice
9851 Booher-Iota
9003 Egan
Offshore points
entering at Egan. 9130 E.I. 278/S.S. 247F
9131 E.I. 278/S.S. 248D
9128 E.I. 299/S.S. 271A
9129 E.I. 299/S.S.
271A/S.S.
271B
4
<PAGE>
Exhibit "A - I"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
South (Cont.) 9122 E.I. 320/325A
9123 E.I. 342/366A
2793 E.I. 342/372A
9399 E.I. 342/384A
2787 E.I. 342A
2767 E.I. 342C
2786 E.I. 343B
Offshore points 9363 E.I. 349/349A
entering at 9364 E.I. 349/349A/349B
Egan (Cont.) 9369 E.I. 365A/365A/348
2781 S.S. 247F
2776 S.S. 248D
2778 S.S. 271A
2785 S.S. 271B/271A/271B
2788 E.I. 365
9342 Vermillion 255/256E
2774 Vermillion 256D
9105 Vermillion 267/275A
9340 Vermillion 267/287A
9341 Vermillion
267/287A/276
9374 Vermillion 267/289A
2782 Vermillion 267C
2770 Vermillion 267F
9159 Vermillion
267/287A/277
Southeast
Lafayette - Eunice
2153 Branch-Cox
2125 Calif. Co.-North
Duson
2137 California Co.-South
Bosco #1
2138 California Co.-South
Bosco #2
2600 Cayman-anslem Coulee
9852 CNG-South Rayne
2389 Duson
9837 Excel-Judice
8068 Exch. O&G-No. Maurice
2601 Fina Oil-anslem
Coulee
8041 Florida
2290 Gulf Transport-Church
Pt
5
<PAGE>
Exhibit "A - 1"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
Southeast (Cont.) 2148 Maurice Cox
9906 Quintana-South Bosco
9005 Rayne-Columbia Gulf
2045 Riceland-North
Tepetate
8067 South Scott
2810 Tidewater-North Duson
8053 Youngsville
Henry-Lafayette
8190 Faustina-Henry
2790 Henry Hub
9822 Cities Service-Nunez
Maurice - Freshwater
2147 CNG-Hell Hole Bayou
2203 Deck Oil-Perry/Hope
9808 Duhon/Parcperdue
9044 EDC-N. Parcperdue
9160 LLOG-Abbeville
2394 LRC-Theall
9800 May Petroleum
2424 Mccain-Maurice
2748 Parc Perdue
2749 Parc Perdue 2
9830 R&R Res-Abbeville
2706 Sun Ray
2840 Unical-N Fresh Bayou
Morgan City - Lafayette
2064 Amoco-Charenton
9803 Atlantic
9809 BH Petroleum-SE Avery
2080 Bayou Sale-British Am
2085 British American-
Ramos 9425 Charenton
9047 Florida Gas-E.B.
Pigeon
2454 FMP/Bayou Postillion
2750 FMP/S Bayou Pigeon
8059 Franklin
2208 Frantzen
9898 Hadson-East Bayou
Pigeon
2188 Lamson
9811 Lanaux-Jeff Island
6
<PAGE>
Exhibit "A - I"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
Southeast (Cont.) 9854 Linder Oil-Bayou
Penchant
9853 Linder Oil-
Garden City
2189 Rutledge Deas
2636 Shell-Bayou Pigeon
9902 Smith Production
-Charenton
2035 Southwest-Jeanerette
9895 Texaco-Bayou Sale
8205 Transco-Myette Point
9829 Trunkline-Centerville
Morgan City -
Lafayette 2832 Union Oil-Bayou
Pigeon
9350 Vulcan
9835 W.T. Burton-Lake
Palourde
9040 ANR-Calumet (Rec.)
Offshore points
entering at Calumet 2583 EI 273A
2158 EI 273A/273A/284B
2584 EI 273B
2834 EI 276C
2771 EI 287D
2151 EI 292B
9339 EI 292B/286I
2550 EI 293/308/315
2773 EI 307E
2154 EI 309C
2155 EI 309G
2157 EI 309H
9886 EI 309H/309H/309J
2156 EI 314F/309C/314F
2780 SMI 11C
2425 SMI 161
2783 SS 204/219
Blk. 8-Morgan City 2198 Bois D'Arc
9142 Bois D'Arc-Pelican
Lake
2109 Chevron-Block 8
2638 Coon Point
2845 Lake Pagie
9817 Linder Oil-Bayou
Piquant
2460 Peltex Deep Saline #1
2480 SS 41
7
<PAGE>
Exhibit "A - I"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
Southeast (Cont.) 9471 Sohio
9888 Star Oil & Gas-
Bay Junop
2755 Texaco-Bay Junop
9836 Texaco-Dog Lake
2463 Toce Oil
2850 Union Oil-N. Lake
Pagie
9883 Zeit-Lake Pagie
Thibodaux-
Morgan City 2250 A. Glassell
-Chacahoula
2047 Alliance Exploration
9029 Coastal-Chacahoula
2835 Lake Palourde
9873 Linder Oil-Chacahoula
2440 Magna-Chacahoula #1
2445 Magna-St. John #2
2470 Patterson-Chacahoula
2135 Simon Pass
East
Bosco-Eunice
2015 Amerada Hess
2016 Amerada Hess-
South Lewisburg
2385 D.B. Mcclinton #1
2240 Faul Energy
9844 Germany Oil-
Church Point
2288 Great Southern-Mowata
#2
9804 Great Southern-Mowata
#3
2289 Great Southern-South
Lewisburg
8145 Ritchie
9119 Sevarg
2740 Superior-Pure
HIOS Offshore points
entering at 9035 ANR-Eunice
ANR-Eunice 9135 WC 167/HIOS Main Line
HI 247
2868 HIA-244A/A-231
8
<PAGE>
Exhibit "A - I"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
HIOS Offshore points HI 283
9894 HIA-283/A-231A
2855 HIA-285/A-282
HI 303
2858 HIA-302A/A-303
entering at ANR 2863 HIA-334A/A-335
Eunice (Cont.) 9327 HIA-345/A-325A
HIA-498
2536 HIA-498/462/VARIOUS
2867 HIA-462
9375 HIA-477/A-462/A-486
2534 HIA-498/A-489
2533 HIA-498/A-489/A-474
2535 HIA-498/A-489/A-499
9371 HIA-498/A-490
2856 HIA-498/A-517
HIA-539
2537 HIA-539/A-480
9365 HIA-539/A-511
9376 HIA-539/A-532
9328 HIA-539/A-550
9901 HIA-539/A-552/A-551
9889 HIA-539/A-552/A-553
2539 HIA-539/A-567
9380 HIA-539/A-568
HIA-555
2857 HIA-531A
2861 HIA-536C
2862 HIA-537B
9127 HIA-537B/A-537D/A-556
9308 HIA-555
9125 HIA-555/A-537D/A-556
9887 HIA-555/A-557A/A-556
HIA-573
2859 HIA-573B COMPLEX
9909 HIA-573/A-384/GB 224
2542 HIA-595CF COMPLEX
9
<PAGE>
Exhibit "A - I"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
HIOS (Cont.) HIA-582
Offshore points 9165 HIA-582/A-561A
entering at ANR- 9133 HIA-582/EB 110
Eunice (Cont.) 9134 HIA-582/EB 165
9377 HIA-582/EB
-160/VARIOUS
W.C. 294
entering at ANR 9026 WC 167/132
Eunice (Cont.) 9396 WC 293/HI 120/HI
120-128
9383 WC 293/HI 167/HI 167
-166
2838 WC 294
9136 WC 167/Near Shore
Mainline
Bastrop-Eunice
2020 Arkla-Perryville
9870 Channel Explo.
-Chicksaw Creek
9826 Delhi-Ewing
8112 Evangeline
2361 Guffrey-Millhaven
9877 Hadson
-Olla/Summerville
9814 Hogan-Davis Lake
8147 Mamou
8063 Pineville (LIG)
3800 Pooling Receipt-
Zone O
9832 Wintershall-Clarks
Bastrop-North
2399 ANR-Slaughters
2061 BeeHunter
2072 Blair
8125 Dyersburg
2373 HarKen/Addison-G #1
2352 HarKen/Cox
2376 HarKen/I.C.C. #12
2379 HarKen/I.C.C. #15
2022 HarKen/I.C.C. #16
2381 HarKen/I.C.C. #17
2367 HarKen/I.C.C. #9
9530 HarKen/Murray
10
<PAGE>
Exhibit "A - I"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
Mainline (Cont.)
2362 HarKen/P. Gannon
Est. #1
Bastrop-North (Cont.)
2351 HarKen/Qualls
2966 HarKen/Stearman #1
2960 HarKen/W. Ky. #1
2962 HarKen/W. Ky. #2
2375 HarKen/W. Ky. #6
2087 Heathville-Trenton
9303 Helena #2
9876 Hux Oil-Russellville
1715 Lebanon-Columbia
1247 Lebanon-Congas
1859 Lebanon-Texas Eastern
9527 Liberty-South Hill
3801 Pooling Receipt-
Zone 1
9525 Pride Energy No. 1
9931 Reynolds-Narge Creek
2648 Spears
5700 Storage Receipt
9868 United Cities
-Barnsley
11
<PAGE>
<TABLE>
EXHIBIT "B"
FIRM POINT(S) OF DELIVERY
LOUISVILLE GAS AND ELECTRIC COMPANY
<CAPTION>
Firm Capacity
Point Meter (MMBtu/D) MAOP MDP*
No. No. Name/Description Facilities Winter Summer (psig) (psig)
<S> <C> <C> <C> <C> <C> <C> <C>
1. 1529 Louisville Gas and Electric Company 30,000 30,000
BARDSTOWN ROAD - LON 85-36-0, LAT 38-12-0,
Jefferson County, KY (1) 674 400
BEDFORD-LG&E - LON 85-18-15, LAT 38-34-30,
Trimble County, KY (1) 810 400
CRESTWOOD - LON 85-25-15, LAT 38-20-0,
Oldham County, KY (1) 810 400
DOE RUN - LON 86-2-30, LAT 37-55-30,
Meade County, KY (1) 810 400
ELDER PARK - LON 85-25-0, LAT 38-22-0,
Oldham County, KY (1) 810 400
ELLINGSWORTH LANE - LON 85-33-0, LAT 38-13-15,
Jefferson County, KY (1) 810 350
LAGRANGE - LON 85-24-15, LAT 38-24-0,
Oldham County, KY (1) 810 400
PENILE ROAD - LON 85-47-0, LAT 38-6-0,
Jefferson County, KY (1) 674 400
PRESTON STREET ROAD - LON 85-41-30, LAT 38-9-45,
Jefferson County, KY (1) 674 400
</TABLE>
<PAGE>
Firm Transportation Agreement
Exhibit "C"
Supply Lateral Capacity
Louisville Gas and Electric Company
Preferential Rights
Supply Lateral MMBtu/d
Zone 1 Supply Lateral(s)
- ------------------------
North Louisiana Leg: 0
------
Total Zone 1: 0
Zone SL Supply Lateral(s)
- -------------------------
East Leg: 4,047
Southeast Leg: 31,600
South Leg: 0
Southwest Leg: 0
West Leg: 1,637
WC-294: 3,402
HIOS: 0
-----
Total Zone SL: 40,686
------
Grand Total: 40,686
------
------
C-1
<PAGE>
STANDARD FACILITIES KEY FOR
EXHIBIT "B", POINT(S) OF RECEIPT
EXHIBIT "C", POINT(S) OF DELIVERY
(1) Measurement facilities are owned, operated, and maintained
by Texas Gas Transmission Corporation.
(2) Measurement facilities are owned, operated, and maintained
by ANR Pipeline Company.
(3) Measurement facilities are owned, operated, and maintained
by Arkansas Louisiana Gas Company.
(4) Measurement facilities are owned by Texas Gas Transmission
Corporation and operated and maintained by Kerr-McGee
Corporation.
(5) Measurement facilities are owned, operated, and maintained
by United Gas Pipe Line Company.
(6) Measurement facilities are owned by Texas Gas Transmission
Corporation and operated and maintained by Delhi Gas
Pipeline Corporation.
(7) Measurement facilities are owned, operated, and maintained
by Kerr-McGee Corporation.
(8) Measurement facilities are owned, operated, and maintained
by Louisiana Intrastate Gas Corporation.
(9) Measurement facilities are owned, operated, and maintained
by Trunkline Gas Company.
(10) Measurement facilities are owned, operated, and maintained
by Columbia Gulf Transmission Company.
(11) Measurement facilities are owned by Texas Gas Transmission
Corporation and operated and maintained by Columbia Gulf
Transmission Company.
(12) Measurement facilities are owned, operated, and maintained
by Florida Gas Transmission Company.
(13) Measurement facilities are owned by Texas Gas Transmission
Corporation and operated and maintained by ANR Pipeline
Company.
(14) Measurement facilities are owned by Champlin Petroleum
Company and operated and maintained by ANR Pipeline
Company.
1
<PAGE>
(15) Measurement facilities are owned by Transcontinental Gas
Pipe Line Corporation and operated and maintained by ANR
Pipeline Company.
(16) Measurement facilities are jointly owned by others and
operated and maintained by ANR Pipeline Company.
(17) Measurement facilities are owned by United Gas Pipe Line
Company and operated and maintained by ANR Pipeline
Company.
(18) Measurement facilities are owned by Texas Gas Transmission
Corporation and operated and maintained by Texas Eastern
Transmission Corporation.
(19) Measurement facilities are owned by Texas Gas Transmission
Corporation and operated and maintained by Natural Gas
Pipeline Company of America.
(20) Measurement facilities are owned by Louisiana Intrastate
Gas Corporation and operated and maintained by Texas Gas
Transmission Corporation.
(21) Measurement facilities are owned, operated, and maintained
by Texas Eastern Transmission Corporation.
(22) Measurement facilities are owned by Kerr-McGee Corporation
and operated and maintained by ANR Pipeline Company.
(23) Measurement facilities are operated and maintained by ANR
Pipeline Company.
(24) Measurement facilities are owned, operated, and maintained
by Transcontinental Gas Pipe Line Corporation.
(25) Measurement facilities are owned by Texas Gas Transmission
Corporation and operated and maintained by Tennessee Gas
Pipeline Company.
(26) Measurement facilities are owned, operated, and maintained
by Northern Natural Gas Company.
(27) Measurement facilities are owned and maintained by
Faustina Pipeline Company and operated by Texas Gas
Transmission Corporation.
(28) Measurement facilities are owned by Samedan and operated
and maintained by ANR Pipeline Company.
(29) Measurement facilities are owned by Texas Gas Transmission
Corporation and operated and maintained by CNG Producing.
2
<PAGE>
(30) Measurement facilities are owned, operated, and maintained
by Devon Energy Corporation.
(31) Measurement facilities are owned by Total Minatome
Corporation and operated and maintained by Texas Gas
Transmission Corporation.
(32) Measurement and interconnecting pipeline facilities are
owned by Transco-Louisiana Intrastate Pipeline Company.
The measurement facilities are operated and maintained by
Trunkline Gas Company.
(33) Measurement and interconnecting pipeline facilities are
owned and maintained by Transco-Louisiana Intrastate
Pipeline Company. The measurement facilities are operated
and flow controlled by Texas Gas Transmission Corporation.
(34) Measurement facilities are owned, operated, and maintained
by Mississippi River Transmission Corporation.
(35) Measurement facilities are owned, operated, and maintained
by Texaco Inc.
(36) Measurement facilities are owned by Texas Gas Transmission
Corporation and operated and maintained by Louisiana
Resources Company.
(37) Measurement facilities are owned, operated, and maintained
by Louisiana Resources Company.
(38) Measurement facilities are owned by Oklahoma Gas Pipeline
Company and operated and maintained by ANR Pipeline
Company.
(39) Measurement and interconnecting pipeline facilities are
owned and maintained by Louisiana Resources Company. The
measurement facilities are operated and flow controlled by
Texas Gas Transmission Corporation.
(40) Measurement facilities are owned by Hall-Houston and
operated and maintained by ANR Pipeline Company.
(41) Measurement facilities are owned, operated, and maintained
as specified in Exhibit "B".
(42) Measurement facilities are owned by Enron Corporation and
operated and maintained by Texas Gas Transmission
Corporation.
(43) Measurement facilities are owned by United Cities Gas
Company and operated and maintained by TXG Engineering,
Inc.
3
<PAGE>
(44) Measurement facilities are owned, operated, and maintained
by Arkla Energy Resources.
(45) Measurement facilities are owned by Falcon Seaboard Gas
Company and operated and maintained by Texas Gas
Transmission Corporation.
(46) Measurement facilities are owned by ANR Pipeline Company
and operated and maintained by High Island Offshore
System.
(47) Measurement facilities are owned by Forest Oil
Corporation, et al., and operated and maintained by
Tenneco Gas Transportation Company.
(48) Measurement facilities are owned by PSI, Inc., and
operated and maintained by ANR Pipeline Company.
(49) Measurement facilities are owned, operated, and maintained
by Tennessee Gas Pipeline Company.
(50) Measurement facilities are owned, operated, and maintained
by Colorado lnterstate Gas Company.
(51) Measurement facilities are owned by Producer's Gas Company
and operated and maintained by Natural Gas Pipeline
Company of America.
(52) Measurement facilities are owned by Zapata Exploration and
operated and maintained by ANR Pipeline Company.
(53) Measurement facilities are jointly owned by Amoco, Mobil,
and Union; operated and maintained by ANR Pipeline
Company.
(54) Measurement facilities are owned, operated, and maintained
by VHC Gas Systems, L.P.
(55) Measurement facilities are owned by Walter Oil and Gas and
operated and maintained by Columbia Gulf Transmission
Company.
4
<PAGE>
Schedule to Exhibit 10.47
Exhibit 10.47 references three material contracts:
Firm No Notice Transportation Agreement between Texas Gas
Transmission Corporation and LG&E (8-Year Term), effective
November 1, 1993, for the transmission of natural gas (the "8-
Year Agreement").
Firm No Notice Transportation Agreement between Texas Gas
Transmission Corporation and LG&E (2-Year Term), effective
November 1, 1993, for the transmission of natural gas (the "2-
Year Agreement").
Firm No Notice Transportation Agreement between Texas Gas
Transmission Corporation and LG&E (5-Year Term), effective
November 1, 1993, for the transmission of natural gas (the "5-
Year Agreement").
Pursuant to Item 601(a) and the instructions thereto, as all of the
listed contracts are substantially similar in all material
respects, except as to the initial term (length in years) of the
contracts, only the 8-Year Agreement has been filed with this
Annual report on Form 10-K for the year ended December 31, 1993.
The 2-Year Agreement and the 5-Year Agreement, while listed in the
Exhibit Index, have not been filed as Exhibits hereto.
As stated above, each contract is identical in all material
respects, save for the initial term (length in years) as specified
in "Article V. Term of Agreement." Under Article V, each contract
became effective November 1, 1993, and each shall be automatically
extended for an additional term of five years upon expiration of
the initial term. The initial term of the 8-Year Agreement is
eight years, expiring on October 31, 2001, while the initial term
of the 5-Year Agreement is five years, expiring on October 31,
1998, and the initial term of the 2-Year Agreement is two years,
expiring on October 31, 1995.
<PAGE>
Contract No. NO415
FIRM NO NOTICE TRANSPORTATION AGREEMENT
between
TEXAS GAS TRANSMISSION CORPORATION
and
LOUISVILLE GAS AND ELECTRIC COMPANY
(8-YEAR TERM)
Effective
November 1, 1993
<PAGE>
FIRM NO NOTICE TRANSPORTATION AGREEMENT
Rate Schedule NNS
THIS AGREEMENT, made and entered into this 1st day of
November, 1993, by and between Texas Gas Transmission Corporation,
a Delaware corporation, hereinafter referred to as "Texas Gas," and
Louisville Gas and Electric Company, a Kentucky corporation,
hereinafter referred to as "Customer,"
WITNESSETH:
WHEREAS, Customer was receiving a firm, bundled city-gate
sales service from Texas Gas on May 18, 1992, under provisions of
a sales service agreement effective November 1, 1992; and
WHEREAS, Customer desires to continue receiving the equivalent
transportation service formerly embedded in its bundled sales
service, or portion thereof, as no-notice service; and
WHEREAS, Texas Gas desires to provide and Customer desires to
receive such no-notice service under its NNS Rate Schedule on the
terms and conditions set forth herein;
NOW THEREFORE, in consideration of the premises and of the
mutual covenants herein contained, the parties hereto covenant and
agree as follows:
ARTICLE I. DEFINITIONS
1.1 The definitions in Section 3 of Rate Schedule NNS, as well as
Section 1 of the General Terms and Conditions of Texas Gas's FERC
Gas Tariff, are hereby incorporated by reference and made a part of
this Agreement.
ARTICLE II. QUANTITY
2.1 Pursuant to Texas Gas's Rate Schedule NNS and subject to the
terms and provisions of this Agreement, Customer agrees to deliver
or cause to be delivered to Texas Gas at the Point(s) of Receipt in
Exhibit "A" hereunder, gas for transportation and Texas Gas agrees
to receive, transport, and re-deliver to Customer at the Point(s)
of Delivery in Exhibit "B" hereunder, the daily and seasonal
quantities of gas set forth herein. The parties agree that the
transportation service provided hereunder shall be a firm service
provided by combining pipeline capacity (the "Nominated" portion of
the service) and storage capacity (the "Unnominated" portion of the
service) into a single transportation service.
2.2 The maximum daily quantity of gas which Texas Gas shall be
obligated to transport and re-deliver to Customer, and which
Customer shall be obligated to receive, is Customer's applicable
Contract Demand expressed on a seasonal basis as set forth below:
1
<PAGE>
Daily
Contract Demand MMBtu/d
Winter 61,634
Summer 45,000
Shoulder Month (April) 57,480
Shoulder Month (October) 61,634
2.3 The above Contract Demands consist of a Nominated Daily
Quantity, for which Customer is responsible for scheduling the
delivery of gas supplies into Texas Gas's system, and an
Unnominated Daily Quantity, which is automatically delivered from
storage by Texas Gas to meet Customer's requirements. Those
quantities, expressed on a seasonal basis, are set forth below:
Nominated Daily Quantity MMBtu/d
Winter 49,000
Summer (except October) 45,000
October 49,000
Unnominated Daily Quantity MMBtu/d
Winter 12,634
Shoulder Month (April) 6,317
Shoulder Month (October) 8,844
2.4 Customer's Excess Unnominated Daily Quantity shall be 6,163
MMBtu per day, which is ten percent (10%) of its Winter Contract
Demand.
2.5 The maximum seasonal quantities of gas which Texas Gas shall
be obligated to transport and deliver to Customer, and which
Customer shall be obligated to receive, are Customer's Seasonal
Quantity Entitlements as set forth below:
Seasonal
Quantity Entitlement MMBtu
Winter 8,740,000
Summer 7,026,667
2.6 A portion of Customer's Winter Quantity Entitlement consists
of unnominated quantities of gas delivered by Texas Gas from
storage. The maximum net quantity of gas Texas Gas is obligated to
deliver to Customer from storage during any Winter Season is
Customer's Unnominated Seasonal Quantity, which is 1,516,000 MMBtu.
In addition to scheduling the receipt of Customer's Summer Quantity
Entitlement, Customer is also responsible for the re-delivery each
summer of that portion of Customer's Unnominated Seasonal Quantity
actually used the prior winter, as more fully set forth herein.
2
<PAGE>
2.7 Customer shall reimburse Texas Gas for the Quantity of Gas
required for fuel, company use, and unaccounted for associated with
the transportation service hereunder in accordance with Section 16
of the General Terms and Conditions of Texas Gas's FERC Gas Tariff.
Texas Gas may adjust the fuel retention percentage as operating
circumstances warrant pursuant to Section 16 of the General Terms
and Conditions; however, such change shall not be retroactive.
Texas Gas agrees to give Customer thirty (30) days written notice
before changing such percentage.
2.8 Texas Gas, at its sole option, may, if tendered by Customer,
transport daily quantities in excess of Customer's Contract Demand.
2.9 In order to protect its system, the delivery of gas to its
customers and/or the safety of its operations, Texas Gas shall have
the right to vent excess natural gas delivered to Texas Gas by
Customer or Customer's supplier(s) in that part of its system
utilized to transport gas received hereunder. Prior to venting
excess gas, Texas Gas will use its best efforts to contact Customer
or Customer's supplier in an attempt to correct such excess
deliveries to Texas Gas. Texas Gas may vent such excess gas solely
within its reasonable judgment and discretion without liability to
Customer, and a pro rata share of any gas so vented shall be
allocated to Customer. Customer's pro rata share shall be
determined by a fraction, the numerator of which shall be the
quantity of gas delivered to Texas Gas at the Point of Receipt by
Customer or Customer's suppliers in excess of Customer's confirmed
nomination and the denominator of which shall be the total quantity
of gas in excess of total confirmed nominations flowing in that
part of the Texas Gas's system utilized to transport gas,
multiplied by the total quantity of gas vented or lost hereunder.
2.10 Customer shall have the right to elect to reduce its Daily
Contract Demand by an amount up to the Daily Contract Demand which
was contracted for by Customer to serve any end use customer of
Customer which is bypassed to Texas Gas. Any such reduction right,
if exercised by customer providing thirty (30) days prior written
notice, shall be effective on the day which such end use Customer
commences receipt of direct or indirect deliveries of natural gas
from Texas Gas. To the extent that Texas Gas bypasses an end-use
customer of Customer and Texas Gas enters into a firm contract with
the end-use customer pursuant to which the end-use customer shall
be responsible for the transition costs associated with such
Contract Demand, Texas Gas shall adjust any Order 636 transition
costs billed to Customer to reflect Customer's loss of such end-use
customer load. If Customer recommences service to any such end-use
customer, in whole or in part, Customer's Daily Contract Demand may
be increased, at Customer's request, by an amount up to the prior
such reduction made for that particular end-use customer, subject
to the availability of capacity and FERC authorization, if
applicable.
3
<PAGE>
ARTICLE III. SCHEDULING OF
CUSTOMER'S NOMINATED DAILY QUANTITY
3.1 This Article III only applies to the scheduling of the
Nominated Daily Quantity portion of Customer's Contract Demand and
not to the Unnominated Daily Quantity of Unnominated Seasonal
Quantity delivered from storage.
3.2 Customer shall be obligated five (5) working days prior to the
end of each month to furnish Texas Gas with a schedule of the
estimated daily quantity(ies) of gas it desires to be received,
transported, and redelivered for the following month. Such
schedules will show the quantity(ies) of gas Texas Gas will receive
from Customer at the Point(s) of Receipt, along with the identity
of the supplier(s) that is delivering or causing to be delivered to
Texas Gas quantities for Customer's account at each Point of
Receipt for which a nomination has been made.
3.3 Customer shall give Texas Gas, after the first of the month,
twenty-four (24) hours notice prior to the commencement of any day
in which Customer desires to change the quantity(ies) of gas it has
scheduled to be delivered to Texas Gas at the Point(s) of Receipt.
If Customer's nomination change does not require Texas Gas to
interrupt service to another customer, Texas Gas will agree to
waive this 24-hour prior notice and implement nomination changes
requested by customer to commence in such lesser time frame subject
to Texas Gas's being able to confirm and verify such nomination
change at both receipt and delivery points, and receive PDA's
reflecting this nomination change at both receipt and delivery
points. Texas Gas will use its best efforts to make the nomination
change effective at the time requested by customer; however, if
Texas Gas is unable to do so, the nomination change will be
implemented as soon as confirmation is received.
ARTICLE IV. POINTS OF RECEIPT AND DELIVERY
AND SUPPLY LATERAL ALLOCATION
4.1 Customer shall deliver or cause to be delivered natural gas to
Texas Gas at the Point(s) of Receipt specified in Exhibit "A"
attached hereto and Texas Gas shall redeliver gas to Customer or
for the account of Customer at the Point(s) of Delivery specified
in Exhibit "B" attached hereto, in accordance with Sections 7 and
15 of the General Terms and Conditions of Texas Gas's FERC Gas
Tariff.
4.2 Customer's preferential capacity rights on each of Texas Gas's
supply laterals shall be as set forth in Exhibit "C" attached
hereto, in accordance with Section 34 of the General Terms and
Conditions of Texas Gas's FERC Gas Tariff.
4
<PAGE>
ARTICLE V. TERM OF AGREEMENT
5.1 This Agreement shall become effective November 1, 1993, and
shall remain in full force and effect for a primary term of eight
(8) years ending October 31, 2001. At the end of such primary
term, or any subsequent rollover term, this Agreement shall
automatically be extended for an additional rollover term of five
(5) years, unless Customer terminates this Agreement at the end of
such primary or rollover term by giving Texas Gas at least 365 days
advance written notice prior to the expiration of the primary term
or any subsequent rollover term.
ARTICLE VI. POINT OF MEASUREMENT
6.1 The gas shall be measured or caused to be measured by Customer
and/or Texas Gas at the Point(s) of Measurement which shall be as
specified in Exhibits A, A-I, and B herein. In the event of a line
loss or leak between the Point of Measurement and the Point of
receipt, the loss shall be determined in accordance with the
methods described in Section 3, "Measuring and Measuring
Equipment," contained in the General Terms and Conditions of First
Revised Volume No. 1 of Texas Gas's FERC Gas Tariff.
ARTICLE VII. FACILITIES
7.1 Texas Gas and Customer agree that any facilities required at
the Point(s) of receipt, Point(s) of Delivery, and Point(s) of
Measurement, shall be installed, owned, and operated as specified
in Exhibits A, A-I, and B herein. Customer may be required to pay
or cause Texas Gas to be paid for the installed cost of any new
facilities required as contained in Sections 1.3, 1.4 and 1.5 of
Texas Gas's FT Rate Schedule. Customer shall only be responsible
for the installed cost of any new facilities described in this
Section if agreed to in writing between Texas Gas and Customer.
ARTICLE VIII. RATES AND CHARGES
8.1 Unless otherwise agreed to in writing by Texas Gas and
Customer, Customer shall pay to Texas Gas each month a Reservation
Charge which shall consist of the applicable Contract Demand as
specified in this Agreement multiplied by the applicable demand
rate per MMBtu. The Reservation Charge shall be billed as of the
effective date of this Agreement. Unless otherwise agreed to in
writing by Texas Gas and Customer, Customer shall also pay Texas
Gas the Maximum Commodity Rate per MMBtu of gas delivered by Texas
Gas for no-notice transportation services rendered to Customer up
to Customer's applicable Contract Demand. For all gas quantities
delivered in excess of Customer's applicable Contract Demand on any
day, Customer shall pay the NNS Overrun Rate per MMBtu, as
described in the NNS Rate Schedule. In addition, Customer shall
pay any and all currently effective demand or commodity surcharges,
including but not limited to, the GRI Funding Unit, the FERC ACA
5
<PAGE>
Unit Charge, Texas Gas's Take-or-Pay surcharge, and Order 636
Transition Costs surcharge.
If Texas Gas declares force majeure which renders it unable to
perform service for Customer under this Agreement either in whole
or part, then Customer shall be relieved
of its obligation to pay NNS demand charges for that part of its
NNS contract demand affected by such force majeure event until the
force majeure event is remedied.
Unless otherwise agreed to in writing by Texas Gas and
Customer, Texas Gas may, from time to time, and at any time
selectively after negotiation, adjust the rate(s) applicable to any
individual Customer; provided, however, that such adjusted rate(s)
shall not exceed the applicable Maximum Rate(s) nor shall they be
less than the Minimum Rate(s) set forth in the currently effective
Sheet No. 10 of Texas Gas's FERC Gas Tariff. If Texas Gas so
adjusts any rates to any Customer, Texas Gas shall file with the
Commission any and all required reports respecting such adjusted
rate.
8.2 In the event Customer utilizes a Secondary Point(s) of
Delivery for transportation service herein, Customer will continue
to pay the monthly reservation charges as described in Section 8.1
above. In addition, Customer will pay the maximum commodity charge
applicable to the zone in which gas is delivered up to Customer's
applicable Contract Demand and the maximum overrun commodity charge
for any quantities delivered by Texas Gas in excess of Customer's
Seasonal Quantity Entitlement. Customer also agrees to pay the
ACA, Take-or-Pay Surcharge, GRI charges, fuel retention charge, and
any other effective surcharges, if applicable, as described in
Section 8.1 above.
8.3 It is further agreed that Texas Gas may seek authorization
from the Commission and/or other appropriate body for such changes
to any rate(s) and terms set forth herein or in Texas Gas's tariff,
as may be found necessary to assure Texas Gas just and reasonable
rates. Nothing herein contained shall be construed to deny
Customer any rights it may have under the Natural Gas Act, as
amended, including the right to participate fully in rate
proceedings by intervention or otherwise to contest increased rates
in whole or in part.
8.4 Customer agrees to fully reimburse Texas Gas for all filing
fees, if any, associated with the service contemplated herein which
Texas Gas is required to pay to the Commission or any agency having
or assuming jurisdiction of the transactions contemplated herein.
8.5 Customer agrees to execute or cause its supplier or processor
to execute a separate agreement with Texas Gas providing for the
transportation of any liquids and/or liquefiables, and agrees to
6
<PAGE>
pay or reimburse Texas Gas, or cause Texas Gas to be paid or
reimbursed, for any applicable rates or charges associated with the
transportation of such liquids and/or liquefiables, as specified in
Section 24 of the General Terms and Conditions of Texas Gas' FERC
Gas Tariff.
ARTICLE IX. WINTER SERVICE
9.1 Customer will only be required to nominate into Texas Gas's
system a quantity of gas up to the Nominated Daily Quantity.
9.2 In addition to the Nominated Daily Quantity actually scheduled
by Customer, Texas Gas will adjust deliveries from storage up to
Customer's Unnominated Daily Quantity to meet Customer's city-gate
requirements up to Customer's Winter Contract Demand.
9.3 In addition, Customer may exceed its Unnominated Daily
Quantity by a quantity equal to its Excess Unnominated Daily
Quantity (i.e. 10% of its Winter Contract Demand) for up to two
consecutive gas days without a penalty; however, total deliveries
to the Customer may not exceed the Customer's Winter Contract
Demand. Texas Gas will notify the Customer within four (4) hours
of the end of the gas day in which Customer has exceeded its
Unnominated Daily Quantity. If the Customer does not cease taking
such Excess Unnominated Daily Quantity from Texas Gas's storage
after two consecutive gas days, then pipeline may assess a penalty
of $15 per MMBtu of such excess gas taken and may issue an
operational flow order requiring Customer to immediately inject
additional gas supply and/or reduce city-gate deliveries so that
the customer is no longer exceeding his Unnominated Daily Quantity.
9.4 Monthly Maximum Withdrawal: No more than 50% of Customer's
Unnominated Seasonal Quantity shall be withdrawn in any consecutive
thirty (30) day period.
9.5 Seasonal Minimum and Maximum Withdrawal: No more than 105% of
Customer's Unnominated Seasonal Quantity shall be withdrawn by
March 1; provided further, that no less than 68% and no more than
100% of Customer's Unnominated Seasonal Quantity shall be withdrawn
by April 1 (the end of the Winter Season).
9.6 Adjusted Unnominated Daily Quantity: As Customer's Unnominated
Seasonal Quantity (USQ) is withdrawn, that portion of Customer's
Unnominated Daily Quantity (UDQ) available to Customer shall be
adjusted. Customer's Adjusted Unnominated Daily Quantity (UDQ)
shall be equal to the greater of its average winter daily
unnominated quantity (i.e., Customer's USQ divided by the total
number of Winter days the UDQ is available) or the applicable
percentage of its Unnominated Daily Quantity (UDQ) as set forth in
the following table:
7
<PAGE>
% USQ Withdrawn % UDQ Available
75% 90%
80% 85%
85% 80%
90% 75%
Notwithstanding the adjustments described above, Customer's
UDQ shall be available for a total of 120 days each Winter Season.
9.7 During the Winter Season, Texas Gas will also inject gas into
storage on a best efforts basis as part of NNS service. Although
such injections will be done on a best efforts basis, Texas Gas
will be presumed, unless it gives notice to the contrary, to be
able to inject into storage such quantities of gas as to take into
account routine variations in no-notice deliveries. If Texas Gas
is unable to make such best efforts injections, it will advise
Customer by posting on its electronic bulletin board. However, no
presumption will exist for non-routine situations (e.g. injections
in excess of 15% of Customer's Winter Contract Demand or sustained
injections of more than five days) and Customer must give 24 hours
advance written notice to Texas Gas of quantities it desires to
inject into storage, so that Texas Gas can determine the extent to
which it can make such injections and adjust its operations
accordingly.
ARTICLE X. SUMMER SERVICE
10.1 Texas Gas shall deliver to Customer at the city-gate during
each Summer Season up to the Customer's Summer Contract Demand and
Summer Quantity Entitlement as nominated by Customer.
10.2 Pursuant to the provisions set forth below, Customer shall
deliver in kind to Texas Gas during each Summer Season a quantity
of gas equal to that portion of Customer's Unnominated Seasonal
Quantity actually utilized by Customer (including any in-field
transfers pursuant to Section 25.8(c) of the General Terms and
Conditions of this tariff) during the prior Winter Season (as well
as any Shoulder Month quantities delivered to customer during the
Summer Season). Customer shall reserve and utilize such portion of
its Summer Contract Demand as necessary to redeliver such volumes
into storage.
10.3 Maximum Daily Injection Quantity: To protect the storage
formations and allow uniform filling of the storage reservoirs,
Customer will be required to adhere to certain injection limits
(calculated as a percentage of the Unnominated Seasonal Quantity),
throughout the summer injection period. During the Summer Season
Customer may, on a daily basis, inject according to the following
table:
8
<PAGE>
% of Unnominated Maximum Available
Seasonal Quantity Injection Rate
Injected % of USQ
0% - 65% 1.3%
65% - 90% 1.1%
> 90% 0.6%
10.4 Inventory verification tests will be conducted on a
semiannual basis. These tests require the temporary suspension of
individual storage field activities (injections and withdrawals)
for a period of approximately two weeks. If conditions will not
permit the full maximum daily injection or withdrawal quantity,
Texas Gas may temporarily adjust the limit and allow make-up
quantities on succeeding days. Texas Gas will provide at least 45
days prior notice in regard to the scheduling of these shut-in
periods.
10.5 During the Summer Season (except as provided in Section 11
below), Texas Gas will also withdraw gas from storage on a best
efforts basis as part of the NNS service. Although such withdrawals
will be done on a best efforts basis, Texas Gas will be presumed,
unless it gives notice to the contrary, to be able to withdraw from
storage such quantities of gas as to take into account routine
variations in no-notice services. If Texas Gas is unable to make
such best efforts withdrawals, it will advise Customer by posting
on its electronic bulletin board. However, no presumption will
exist for non-routine situations (e.g. withdrawals in excess of
10% of Customer's Winter Contract Demand or sustained withdrawals
of more than five days) and Customer must give 24 hours advance
written notice to Texas Gas of quantities it desires to withdraw
from storage, so that Texas Gas can determine the extent to which
it can make such withdrawals and adjust its operations accordingly.
10.6 To assist Texas Gas's operational and maintenance scheduling
through the Summer Season, Customer will notify Texas Gas by April
1 of each year, with updates monthly, of the quantities it intends
to inject monthly during the immediately upcoming Summer Season;
such injection schedule provided by Customer is a best efforts
estimate and may be revised as necessary. Texas Gas will use its
reasonable efforts to coordinate its test, maintenance, alteration
and repair activities during such Summer Season to accommodate
Customer's request.
ARTICLE XI. SHOULDER MONTH FLEXIBILITY
11.1 During the Shoulder Months of April and October, Texas Gas
will deliver to Customer at the city-gate the Customer's Shoulder
Month Contract Demand, which shall, unless otherwise agreed, be the
sum of Customer's Summer Contract Demand, Customer's Excess
9
<PAGE>
Unnominated Quantity and the applicable percentage as set forth
below of Customer's Unnominated Daily Quantity for the Winter
Season:
Shoulder Month Percent of Unnominated Daily Quantity
April 50%
October 70%
In the event that Customer's Unnominated Seasonal Quantity is
available in quantities sufficient to support additional access to
Customer's Unnominated Daily Quantity the applicable percentage
available to Customer during such Shoulder Month will be as
follows:
% of Unnominated % of Unnominated
Shoulder Month Seasonal Quantity Withdrawn Daily Quantity
Available
April/October 75% 90%
80% 85%
85% 80%
90% 75%
95% 70%
Although such Shoulder Month Contract Demand shall be
available during any day of the Shoulder Month, it shall only be
available for a maximum of fifteen (15) gas days during such month.
However, Customer shall neither exceed nor be billed in excess of
the applicable Winter Daily Contract Demand set forth in Article
2.2.
11.2 In the event that Customer's Unnominated Seasonal Quantity
has been exhausted prior to the April Shoulder Month period,
Customer shall retain access to fifty (50) percent of its
Unnominated Daily Quantity up to an aggregate monthly total
equivalent to ten (10) percent of Customer's Unnominated Seasonal
Quantity, as set forth above from that date until April 30.
ARTICLE XII. MISCELLANEOUS
12.1 Texas Gas's Transportation Service hereunder shall be
subject to receipt of all requisite regulatory authorizations from
the Commission, or any successor regulatory authority, and any
other necessary governmental authorizations, in a manner and form
acceptable to Texas Gas. The parties agree to furnish each other
with any and all information necessary to comply with any laws,
orders, rules, or regulations.
12.2 Except as may be otherwise provided, any notice, request,
demand, statement, or bill provided for in this Agreement or any
notice which a party may desire to give the other shall be in
writing and mailed by regular mail, or by postpaid registered mail,
10
<PAGE>
effective as of the postmark date, to the post office address of
the party intended to receive the same, as the case may be, or by
facsimile transmission, as follows:
Texas Gas
Texas Gas Transmission Corporation
3800 Frederica Street
Post Office Box 1160
Owensboro, Kentucky 42302
Attention: Gas Revenue Accounting (Billings and Statements)
Nomination & Allocation (Nominations)
Transportation & Exchange (Contractual Matters)
Marketing Services (Other Matters)
Fax #: 502/926-8686
Customer
Louisville Gas and Electric Company
220 West Main Street
Post Office Box 32010
Louisville, Kentucky 40232
Attention: Gas Supply Department
The address of either party may, from time to time, be changed
by a party mailing, by certified or registered mail, appropriate
notice thereof to the other party. Furthermore, if applicable,
certain notices shall be considered duly delivered when posted to
Texas Gas's Electronic Bulletin Board, as specified in Texas Gas's
Tariff.
12.3 This Agreement shall be governed by the laws of the State of
Kentucky.
12.4 Each party agrees to file timely all statements, notices,
and petitions required under the Commission's Regulations or any
other applicable rules or regulations of any governmental authority
having jurisdiction hereunder and to exercise due diligence to
obtain all necessary governmental approvals required for the
implementation of this Transportation Agreement.
12.5 All terms and conditions of Rate Schedule NNS and the
attached Exhibits A, A-I, B, and C are hereby incorporated to and
made a part of this Agreement.
12.6 This contract shall be binding upon and inure to the benefit
of the successors, assigns, and legal representatives of the
parties hereto.
12.7 Neither party hereto shall assign this Agreement or any of
its rights or obligations hereunder without the consent in writing
of the other party. Notwithstanding the foregoing, either party
may assign its right, title and interest in, to and by virtue of
this Agreement including any and all extensions, renewals,
amendments, and supplements thereto, to a trustee or trustees,
11
<PAGE>
individual or corporate, as security for bonds or other obligations
or securities, without such trustee or trustees assuming or
becoming in any respect obligated to perform any of the obligations
of the assignor and, if any such trustee be a corporation, without
its being required by the parties hereto to qualify to do business
in the state in which the performance of this Agreement may occur,
nothing contained herein shall require consent to transfer this
Agreement by virtue of merger or consolidation of a party hereto or
a sale of all or substantially all of the assets of a party hereto,
or any other corporate reorganization of a party hereto.
12.8 This Agreement insofar as it is affected thereby, is subject
to all valid rules, regulations, and orders of all governmental
authorities having jurisdiction.
12.9 No waiver by either party of any one or more defaults by the
other in the performance of any provisions hereunder shall operate
or be construed as a waiver of any future default or defaults
whether of a like or a different character.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective representatives
thereunto duly authorized, as indicated below.
ATTEST: TEXAS GAS TRANSMISSION CORPORATION
___________________________ By_________________________________
Secretary Vice President
Date of Execution by Texas Gas:
___________________________
WITNESSES: LOUISVILLE GAS AND ELECTRIC COMPANY
___________________________ By WENDY C. HECK
Vice President
___________________________ Attest: BEVERLY J. BRADFORD
Date of Execution by Customer:
10-22-93
12
<PAGE>
<TABLE>
Firm No-Notice Transportation Agreement
Exhibit "A"
Firm Point(s) of Receipt
LOUISVILLE GAS AND ELECTRIC COMPANY
<CAPTION>
Meter Daily Firm
Zone Number Name Capacity (MMBtu)
<S> <C> <C> <C>
1 2145 Claiborne 13,455
1 9303 Helena #2 10,000
1 8063 Pineville (LIG) 20,000
1 2631 Calhoun Plant 5,000
1 2020 Arkla-Perryville 10,000
1 8760 Lonewa 15,000
1 2102 Champlin 16,715
3 9868 U.Cities-Barnsley (ref. #9404) 12,000
3 2399 ANR-Slaughters (ref. #8082) 20,000
SL 2774 Vermillon 256D 951
SL 9342 Vermillon 255/256E 225
SL 2776 S.S. 248D 4,811
SL 2781 S.S. 247F 3,592
SL 2782 Vermillon 267C 1,254
SL 9446 NGPL - Lowry 6,161
SL 9003 Egan 19,379
SL 9044 EDC-N. Parcperdue 3,040
SL 9135 WC167/HIOS Mainline 3,800
SL 2770 Vermillon 267F 2,116
SL 2840 Unical - N Fresh Bayou 15,789
SL 2550 EI 293/308/315 11,592
SL 2845 Lake Pagie 3,007
SL 9471 Sohio 5,743
SL 9887 HIA-555/A-557A/A-556 2,000
SL 2859 HIA-573B COMPLEX 17,743
SL 9383 WC 293/HI 167/HI 167-166 4,819
SL 8147 Mamou (ref. #8046) 2,092
SL 2790 Henry Hub 26,682
Notes: 1) Please refer to Sheet No. 14 in Texas Gas's FERC Gas
Tariff, First Revised Volume No. 1 for Fuel
Retention Percentages.
2) Further information on Receipt Point Description,
Facilities, and MAOP can be found under the Receipt
Point tab in Texas Gas's Gas Quest Manual.
</TABLE>
13
<PAGE>
Exhibit "A - 1"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
North Louisiana
Carthage - Haughton
2102 Champlin
9805 Delhi
9051 Grigsby
9860 Nelson-
Greenwood/Waskom
8116 Texas Eastern
-Sligo
9884 Valero-Carthage
Haughton - Sharon
8003 Barksdale
2455 Beacon
9866 Cornerstone-Ada
2173 Crystal Oil-West
Arcadia
2340 F.E. Hargraves
-Minden
2186 LGI #1
2456 McCormick
2459 Minden Pan
-Am #1
2457 Minden-Hunt
9819 Nelson-Sibley
9461 Olin-McGoldrick
2760 Sligo Plant
9834 Texaco-Athens
Sharon - East
2631 Calhoun Plant
2202 Ergon-Monroe
8760 Lonewa
8020 MRT-Bastrop
9302 Munce
9812 Par
Minerals/
Downsville
9823 Reliance-Bernice
2612 Reliance-West
Monroe
2634 Southwest-Guthrie
Sharon
2145 Claiborne
2010 Fina Oil-HICO
9818 PGC-Bodcaw
1
<PAGE>
Exhibit "A-1"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
Sharon (Cont.)
2757 Texas Eastern -
Sharon
2756 Texas Eastern -
Sharon
(Master List)
West
Iowa-Eunice
2091 Caribbean-
China #1
2092 Caribbean-
China #2
2093 Caribbean-
China #3
9038 Coastal/ANR-Iowa
9839 Great Southern
- Woodlawn
8170 Iowa
9445 Kilroy Riseden-
Woodlawn
9890 Source Petroleum
-S. Elton #1
9896 Source Petroleum
-S. Elton #2
2883 Tee Oil-Woodlawn
9802 Trimble No. 1
Mallard Bay-Woodlawn
2140 California Co.
-South Thornwell
2615 Caroline Hunt
Sands-S.
Thornwell
2170 Cockrell-North Chalkley
9828 Denovo-Lake
Arthur
2207 Franks
Petroleum-
Chalkley
9028 Gas Energy
Development
-Hayes
2355 Humble-Chalkley
2383 IMC Wintershall-
Chalkley
9848 Lamson Onshore-
Mallard Bay
2
<PAGE>
Exhibit "A - 1"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
West (Cont.)
8071 LRC-Mallard Bay
9813 Rio Bravo
2701 Samedan-N
Chalkley
2635 Shell-Chalkley
2266 South Mallard-
BayAmerical
2822 Superior-S.
Thornwell
9879 Total Minatone
-Bell City
2885 Union Texas
-Welsh
2853 Welsh Field
Southwest
East Cameron-Lowry
2581 E.C. 14
9872 E.C. 9A
2033 Little Chenlere
-Arco
2034 Little Chenlere
-Linder
2392 LRC-Grand
Chenlere
Lowry-Eunice
2860 Lake Arthur
9843 Mobile-Lowry
9446 NGPL - Lowry
2438 Willis Meter
Station
2431 Fletcher
-Schmeburger
2432 Fletcher
-Patterson
2433 Fletcher-IAMS
2434 Fletcher-
Young/Bert
2436 Caddo County,
OK
2437 Washita County,
OK
South
Egan-Eunice
9851 Booher-Iota
9003 Egan
Offshore points
entering at Egan 9130 E.I. 278/S.S.
247F
3
<PAGE>
Exhibit "A - 1"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
South
Offshore points 9131 E.I. 278/S.S.
entering at Egan 248D
9128 E.I. 299/S.S.
271A
9129 E.I. 299/S.S.
271A/S.S.
271B
9122 E.I. 320/325A
9123 E.I. 342/366A
2793 E.I. 342/372A
9399 E.I. 342/384A
2787 E.I. 342A
2767 E.I. 342C
2786 E.I. 343B
9363 E.I. 349/349A
9364 E.I.
349/349A/349B
9369 E.I. 365A/365A/
348
2781 S.S. 247F
2776 S.S. 248D
2778 S.S. 271A
2785 S.S.
271B/271A/271B
2788 E.I. 365
9342 Vermillion
255/256E
2774 Vermillion
256D
9105 Vermillion
267/275A
9340 Vermillion
267/287A
9341 Vermillion
267/287A/276
9374 Vermillion
267/289A
2782 Vermillion 267C
2770 Vermillion 267F
9159 Vermillion
267/287A/277
Southeast
Lafayette - Eunice
2153 Branch-Cox
2125 Calif. Co.-North
Duson
2137 California Co.
-South Bosco #1
4
<PAGE>
Exhibit "A - 1"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
Southeast (Cont.)
2138 California Co.
-South Bosco #2
2600 Cayman-anslem
Coulee
9852 CNG-South Rayne
2389 Duson
9837 Excel-Judice
8068 Exch. O&G-No.
Maurice
2601 Fina Oil-anslem
Coulee
8041 Florida
2290 Gulf Transport
-Church Pt
2148 Maurice Cox
9906 Quintana-South
Bosco
9005 Rayne-Columbia
Gulf
2045 Riceland-North
Tepetate
8067 South Scott
2810 Tidewater-North
Duson
8053 Youngsville
Henry-Lafayette
8190 Faustina-Henry
2790 Henry Hub
9822 Cities Service
-Nunez
Maurice - Freshwater
2147 CNG-Hell Hole
Bayou
2203 Deck Oil
-Perry/Hope
9808 Duhon/Parcperdue
9044 EDC-N.
Parcperdue
9160 LLOG-Abbeville
2394 LRC-Theall
9800 May Petroleum
2424 Mccain-Maurice
2748 Parc Perdue
2749 Parc Perdue 2
9830 R&R Res-Abbeville
2706 Sun Ray
2840 Unical-N Fresh
Bayou
5
<PAGE>
Exhibit "A - 1"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
Southeast (Cont.)
Morgan City - Lafayette
2064 Amoco-Charenton
9803 Atlantic
9809 BH Petroleum-SE
Avery
2080 Bayou Sale
-British Am
2085 British
American-Ramos
9425 Charenton
9047 Florida Gas-E.B.
Pigeon
2454 FMP/Bayou
Postillion
2750 FMP/S Bayou
Pigeon
8059 Franklin
2208 Frantzen
9898 Hadson-East
Bayou Pigeon
2188 Lamson
9811 Lanaux-Jeff
Island
9854 Linder Oil-Bayou
Penchant
9853 Linder Oil-
Garden City
2189 Rutledge Deas
2636 Shell-Bayou
Pigeon
9902 Smith
Production-
Charenton
2035 Southwest
-Jeanerette
9895 Texaco-Bayou
Sale
8205 Transco-Myette
Point
9829 Trunkline
-Centerville
Morgan City - Lafayette
2832 Union Oil-Bayout
Pigeon
9350 Vulcan
9835 W.T. Burton-Lake
Palourde
9040 ANR-Calumet
(Rec.)
6
<PAGE>
Exhibit "A - 1"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
Southeast (Cont.)
Offshore points
entering at Calumet
2583 EI 273A
2158 EI
273A/273A/284B
2584 EI 273B
2834 EI 276C
2771 EI 287D
2151 EI 292B
9339 EI 292B/286I
2550 EI 293/308/315
2773 EI 307E
2154 EI 309C
2155 EI 309G
2157 EI 309H
9886 EI
309H/309H/309J
2156 EI
314F/309C/314F
2780 SMI 11C
2425 SMI 161
2783 SS 204/219
Blk. 8-Morgan City
2198 Bois D'Arc
9142 Bois D'Arc
-Pelican Lake
2109 Chevron-Block
8
2638 Coon Point
2845 Lake Pagle
9817 Linder Oil-Bayou
Piquant
2460 Peltex Deep
Saline #1
2480 SS 41
9471 Sohio
9888 Star Oil & Gas
-Bay Junop
2755 Texaco-Bay Junop
9836 Texaco-Dog Lake
2463 Toce Oil
2850 Union Oil-N.
Lake Pagle
9883 Zelt-Lake Pagle
Thibodaux-Morgan
City 2250 A. Glassell
Chacahoula
2047 Alliance
Exploration
9029 Coastal
-Chacahoula
7
<PAGE>
Exhibit "A - 1"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
Southeast (Cont.)
Thibodaux-Morgan
City (Cont.)
2835 Lake Palourde
9873 Linder Oil
-Chacahoula
2440 Magna-
Chacahoula #1
2445 Magna-St.
John #2
2470 Patterson
-Chacahoula
2135 Simon Pass
East
Bosco-Eunice
2015 Amerada Hess
2016 Amerada Hess
-South
Lewisburg
2385 D.B.
Mcclinton #1
2240 Faul Energy
9844 Germany Oil
-Church Point
2288 Great
Southern-
Mowata #2
9804 Great
Southern-
Mowata #3
2289 Great
Southern
-South
Lewisburg
8145 Ritchie
9119 Sevarg
2740 Superior-Pure
HIOS Offshore points
entering at
ANR-Eunice 9035 ANR-Eunice
9135 WC 167/HIOS
Main Line
HI 247
2868 HIA-244A/
A-231
8
<PAGE>
Exhibit "A - 1"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
HIOS Offshore points
entering at ANR-Eunice
(Cont.) HI 283
9894 HIA-283/
A-231A
2855 HIA-285/A-282
HI 303
2858 HIA A-302/
A-303
HIA-345
2863 HIA-334A/
A-335
9327 HIA-345/
A-325A
HIA-498
2536 HIA-498/462/
VARIOUS
2867 HIA-462
9375 HIA-477/
A-462/
A-486
2534 HIA-498/A-489
2533 HIA-498/
A-489/
A-474
2535 HIA-498/
A-489/
A-499
9371 HIA-498/A-490
2856 HIA-498/A-517
HIA-539
2537 HIA-539/A-480
9365 HIA-539/A-511
9376 HIA-539/A-532
9328 HIA-539/A-550
9901 HIA-539/
A-552/A-551
9889 HIA-539/
A-552/A-553
2539 HIA-539/A-567
9380 HIA-539/A-568
9
<PAGE>
Exhibit "A - 1"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
HIOS Offshore points
entering at ANR-
Eunice (Cont.) HIA-555
2857 HIA-531A
2861 HIA-536C
2862 HIA-537B
9127 HIA-537B/
A-537D/A-556
9308 HIA-555
9125 HIA-555/
A-537D/A-556
9887 HIA-555/
A-557A/A-556
HIA-573
2859 HIA-573B
COMPLEX
9909 HIA-573/
A-384/GB 224
2542 HIA-595CF
COMPLEX
HIA-582
9165 HIA-582/
A-561A
9133 HIA-582/
EB 110
9134 HIA-582/
EB 165
9377 HIA-582/EB-
160/VARIOUS
W.C. 294
9026 WC 167/132
9396 WC 293/
HI 120/
HI 120-128
9383 WC 293/
HI 167/
HI 167-166
2838 WC 294
9136 WC 167/
Near Shore
10
<PAGE>
Exhibit "A - 1"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
Mainline
Bastrop-Eunice
2020 Arkla-
Perryville
9870 Channel
Explo.-
Chicksaw Creek
9826 Delhi-Ewing
8112 Evangeline
2361 Guffrey
-Millhaven
9877 Hadson-Olla/
Summerville
9814 Hogan-Davis
Lake
8147 Mamou
8063 Pineville
(LIG)
3800 Pooling
Receipt-
Zone O
Bastrop-Eunice
9832 Wintershall
-Clarks
Bastrop-North
2399 ANR-
Slaughters
2061 BeeHunter
2072 Blair
8125 Dyersburg
2373 HarKen/
Addison-
G #1
2352 HarKen/Cox
2376 HarKen/I.C.C.
#12
2379 HarKen/I.C.C.
#15
2022 HarKen/I.C.C.
#16
2381 HarKen/I.C.C.
#17
2367 HarKen/I.C.C.
#9
9530 HarKen/Murray
2362 HarKen/P.
Gannon
Est. #1
2351 HarKen/Qualls
2966 HarKen/
Stearman #1
2960 HarKen/W. Ky.
#1
11
<PAGE>
Exhibit "A - 1"
Secondary Points of Receipt
SUPPLY
LATERAL SEGMENT METER NO. SUPPLY POINT
Mainline (Cont.)
Bastrop-North
(Cont.)
2962 HarKen/W. Ky.
#2
2375 HarKen/W. Ky.
#6
2087 Heathville
-Trenton
9303 Helena #2
9876 Hux Oil
-Russellville
1715 Lebanon-
Columbia
1247 Lebanon-
Congas
1859 Lebanon-Texas
Eastern
9527 Liberty-South
Hill
3801 Pooling
Receipt-
Zone 1
9525 Pride Energy
No. 1
9931 Reynolds-
Narge
Creek
2648 Spears
5700 Storage
Receipt
9868 United Cities
-Barnsley
12
<PAGE>
<TABLE>
EXHIBIT "B"
FIRM POINT(S) OF DELIVERY
LOUISVILLE GAS AND ELECTRIC COMPANY
<CAPTION>
Nomination
Point Meter MAOP MDP*
No. No. Name/Description Facilities (psig) (psig)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. 1529 Louisville Gas and Electric Company Z-4
BARDSTOWN ROAD - LON 85-36-0, LAT 38-12-0,
Jefferson County, KY (#1524) (1) 675 400
BEDFORD-LG&E - LON 85-18-15, LAT 38-34-30,
Trimble Countym, KY (#1523) (1) 810 400
CRESTWOOD - LON 85-25-15, LAT 38-20-0,
Oldham County, KY (#1525) (1) 810 400
DOE RUN - LON 86-2-30, LAT 37-55-30,
Meade County, KY (#1526) (1) 810 400
ELDER PARK - LON 85-25-0, LAT 38-22-0,
Oldham County, KY (#1527) (1) 810 400
ELLINGSWORTH LANE - LON 85-33-0, LAT 38-13-15,
Jefferson County, KY (#1528) (1) 810 350
LAGRANGE - LON 85-24-15, LAT 38-24-0,
Oldham County, KY (#1531) (1) 810 400
PENILE ROAD - LON 85-47-0, LAT 38-6-0,
Jefferson County, KY (#1535) (1) 674 400
PRESTON STREET ROAD - LON 85-41-30, LAT 38-9-45,
Jefferson County, KY (#1536) (1) 674 400
* Minimum Delivery Pressure
(1) Measurement facilities are owned, operated, and maintained by Texas Gas Transmission
Corporation.
</TABLE>
B-1
<PAGE>
Firm No.-Notice Transportation Agreement
Exhibit "C"
Supply Lateral Capacity
LOUISVILLE GAS AND ELECTRIC COMPANY
Preferential Rights
Supply Lateral MMBtu/d
Zone 1 Supply Lateral(s)
- ------------------------
North Louisiana Leg: 50,170
-------
Total Zone 1: 50,170
Zone SL Supply Lateral(s)
- -------------------------
East Leg: 0
Southeast Leg: 65,853
South Leg: 32,328
Southwest Leg: 22,648
West Leg: 0
WC-294: 4,819
HIOS: 23,543
-------
Total Zone SL: 149,191
-------
Grand Total: 199,361
-------
<TABLE> EXHIBIT 12
LOUISVILLE GAS AND ELECTRIC COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Thousands of $)
<CAPTION>
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings:
Net Income per statements of income................. $ 90,535 $ 73,793 $ 94,643 $ 83,450 $ 76,091
Add:
Federal income taxes - current...................... 42,091 13,785 35,490 24,966 27,938
State income taxes - current........................ 12,954 3,140 8,425 8,232 8,800
Deferred Federal income taxes - net................. 4,712 20,441 17,207 13,142 1,730
Deferred State income taxes - net................... 226 8,470 6,085 4,475 1,193
Investment tax credit - net......................... (7,821) (5,033) (11,472) (1,964) 5,788
Fixed charges....................................... 49,640 52,196 55,171 56,061 52,578
------- ------- ------- ------- -------
Earnings.......................................... 192,337 166,792 205,549 188,362 174,118
------- ------- ------- ------- -------
Fixed Charges:
Interest Charges per statements of income........... 47,496 49,833 52,680 53,663 51,141
Add:
Interest income <F1>.............................. - 4 98 251 7
One-third of rentals charged to operating
expense <F2>.................................... 2,144 2,359 2,393 2,147 1,430
------- ------- ------- ------- -------
Fixed charges................................. $ 49,640 $ 52,196 $ 55,171 $ 56,061 $ 52,578
------- ------- ------- ------- -------
Ratio of Earnings to Fixed Charges.................... 3.87 3.20 3.73 3.36 3.31
------- ------- ------- ------- -------
------- ------- ------- ------- -------
<FN>
NOTES:
<F1> Interest income earned on pollution control revenue bond proceeds held and invested by trustees--netted
against interest charges above.
<F2> In the Company's opinion, one-third of rentals represents a reasonable approximation of the interest
factor.
</TABLE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference of our report dated January 28, 1994, included in this Form
10-K, into the Company's previously filed Registration Statement
No. 33-13427, relating to the issuance of $5.875 Series Cumulative Preferred
Stock.
Louisville, Kentucky
March 28, 1994 Arthur Andersen & Co.
POWER OF ATTORNEY
WHEREAS, LOUISVILLE GAS AND ELECTRIC COMPANY, a Kentucky corporation,
is to file with the Securities and Exchange Commission, under the provisions
of the Securities Act of 1934, as amended, its Annual Report on Form 10-K for
the year ended December 31, 1993 (the 1993 Form 10-K); and
WHEREAS, each of the undersigned holds the office or offices in
LOUISVILLE GAS AND ELECTRIC COMPANY set opposite his name;
NOW, THEREFORE, each of the undersigned hereby constitutes and appoints
ROGER W. HALE and M. L. FOWLER, and each of them, individually, his attorney,
with full power to act for him and in his name, place, and stead, to sign his
name in the capacity or capacities set forth below to the 1993 Form 10-K and
to any and all amendments to such 1993 Form 10-K and hereby ratifies and
confirms all that said attorney may or shall lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals this 2nd day of March 1994.
Roger W. Hale, Principal
Executive Officer and Director J. David Grissom, Director
- --------------------------------- ---------------------------------
William C. Ballard, Jr., Director David B. Lewis, Director
- --------------------------------- ---------------------------------
Charles A. Markel III, Principal
Owsley Brown II, Director Financial Officer
- --------------------------------- ---------------------------------
S. Gordon Dabney, Director Anne H. McNamara, Director
- --------------------------------- ---------------------------------
M. L. Fowler, Principal
Accounting Officer T. Ballard Morton, Jr., Director
- --------------------------------- ---------------------------------
Gene P. Gardner, Director Dr. Donald C. Swain, Director
- --------------------------------- ---------------------------------
STATE OF KENTUCKY )
) ss.
COUNTY OF JEFFERSON )
On this 2nd day of March 1994, before me, Kathryn M. Carpenter, a Notary
Public, State of Kentucky at Large, personally appeared the above named
directors and officers of LOUISVILLE GAS AND ELECTRIC COMPANY, a Kentucky
corporation, and known to me to be the persons whose names are subscribed to
the foregoing instrument, and they severally acknowledged to me that they
executed the same as their own free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on the date above set forth.
My Commission expires: Kathryn M. Carpenter
November 2, 1996 ------------------------------
Notary Public
State of Kentucky at Large
