<PAGE>
UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
_____________________________________________
In the Matter of :
:
OHIO VALLEY ELECTRIC CORPORATION :
INDIANA-KENTUCKY ELECTRIC CORPORATION :
P.O. Box 468 : CERTIFICATE OF
Piketon, OH 45661 : NOTIFICATION
:
File No. 70-8337 :
:
(Public Utility Holding Company Act of 1935) :
OHIO VALLEY ELECTRIC CORPORATION ("OVEC") and INDIANA-KENTUCKY
ELECTRIC CORPORATION ("IKEC") hereby certify in connection with the
Application-Declaration on Form U-1 in the above-entitled matter,
that certain of the transactions specified in said Application-
Declaration, as amended, have been carried out in accordance with
the terms and conditions of, and for the purposes represented by,
said Application-Declaration, as amended, and the Order of the
Securities and Exchange Commission with respect thereto, dated April
15, 1994 (HCAR No. 35-26029), as follows:
1. On July 12, 1994, OVEC and IKEC entered into a Letter of
Credit Agreement with Citibank, N.A. A conformed copy of the Letter
of Credit Agreement is attached hereto as Exhibit B-1.
2. A copy of the "past tense" opinion of counsel relating to
the transaction described herein is attached hereto as Exhibit F-1.
3. The transaction described herein was consummated within
the period designated in said Application-Declaration.
OHIO VALLEY ELECTRIC CORPORATION
INDIANA-KENTUCKY ELECTRIC CORPORATION
By:_/s/ G. P. Maloney____
Vice President
Dated: September 9, 1994
ovcfinan.94\70-8337.cn
Exhibit B-1
LETTER OF CREDIT AGREEMENT
AGREEMENT dated as of the 12th day of July, 1994 between
INDIANA-KENTUCKY ELECTRIC CORPORATION, an Indiana corporation (the
"Company"), OHIO VALLEY ELECTRIC CORPORATION, an Ohio corporation
(the "Parent") and Citibank, N.A. (the "Bank").
1. Definitions.
(a) "Credit" means the standby letter of credit issued
by the Bank by order of Company in the favor of Commissioner,
Department of Environmental Management, State of Indiana in the
amount of $7,668,133, a copy of which is Exhibit A to this
Agreement.
(b) "Draft" means any draft or other request for payment
drawn under the Credit.
(c) "Prime Rate" means the rate of interest announced
publicly by the Bank from time to time as its base rate.
(d) "Uniform Customs and Practice" means the Uniform
Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500.
2. Reimbursement Obligation. The Company shall pay the Bank,
on demand, at the Bank's principal office, in immediately available
funds, the amount required to pay each Draft. These payments must
be made with interest at the Prime Rate from the date of the Bank's
payment of such Draft to the date of reimbursement. On 2 business
days' written notice, the Bank may debit any account maintained by
the Company with the Bank, and apply the proceeds to the payment of
any amount owed by the Company to the Bank under this Section 2.
3. Payment of Commission, Expenses and Interest. The Company
shall pay to the Bank a letter of credit fee on the daily average
amount of the difference between the aggregate amount of the Credit
and the sum of the Draws under the Credit at a rate of 0.375% per
year. The fee must be paid in arrears on January 15, April 15, July
15 and October 15, beginning October 15, 1994 and ending on the
expiration date or earlier termination of the Credit. All interest
and fees payable under this Agreement must be computed on the basis
of a year of 360 days and 30 day months.
4. Additional Costs. The Company shall pay to the Bank within
five (5) days after receipt of a written certificate such amounts
as the Bank determines are necessary to compensate it for any costs
attributable to its issuing or having outstanding the Credit
resulting from the introduction of, or change in, any law or
regulation, or the interpretation or administration of any law or
regulation, applicable to the Bank regarding any reserve, assessment,
capital adequacy or similar requirement relating to letters of credit
or the reimbursement agreements with respect to letters of credit
or other similar liabilities or assets of the Bank. If a
participation in the Credit is sold, all amounts payable by the
Company under this paragraph 4 will be determined as if the Bank had
not sold such participation. The Company acknowledges that there
may be various methods of allocating costs (including the cost of
maintaining capital sufficient to permit issuance of the Credit) to
the Credit and agrees that the Bank's allocation for purposes of
determining the costs referred to above shall be conclusive and
binding upon the Company provided such allocation is reasonable.
5. Proper Drawing; Bank's Honoring. The Bank may accept or
pay any Draft presented on or before the expiration date set forth
in the Credit.
6. Amendment, Change, Modification; No Waiver. If the Credit
or any Draft or document under the Credit is amended, changed or
modified with the consent of the Company, including waiver of
noncompliance of the Draft or document with the terms of the Credit,
this Agreement will be binding upon the Company with regard to the
Credit as so amended, changed or modified, and to any related action
taken by the Bank or any of its correspondents. The consent of the
Bank to any amendment, change, waiver or modifica-tion does not mean
that the Bank will consent or has consented to any other request to
amend, change, modify or waive a term of the Credit. Any waiver by
the Bank of any of its rights under this Agreement may only be made
by the Bank or its authorized agent in writing. No waiver, unless
expressly as stated therein, is effective as to any transaction which
occurs subsequent to the date of such waiver, nor as to any
continuance of a breach after such waiver.
7. U.C.P.; Agreements and Acknowledgments; Indemnification.
The Uniform Customs and Practice are binding on the Company and the
Bank except to the extent it is otherwise expressly agreed to in
writing. It is also agreed that: (a) user(s) of the Credit are not
deemed agents of the Bank; (b) none of the Bank, its affiliates,
subsidiaries, or its correspondents are responsible for failure of
any Draft to bear any reference to the Credit, or inadequate
reference in any Draft to the Credit, or failure of documents (other
than documents expressly required to be presented under the Credit)
to accompany any Draft at negotiation; (c) the Bank is not
responsible for any act, error, neglect or default, omission,
insolvency or failure in business of any of its correspondents; (d)
the occurrence of any one or more of the contingencies or events
referred to in the Uniform Customs and Practice or in the preceding
clauses of subparagraphs (b) and (c) do not affect, impair, or
prevent the vesting of any of the Bank's rights or powers under this
Agreement or the Company's obligation to make payment; (e) the
Company shall promptly examine: (i) the copy of the Credit (and of
any amendments thereof) sent to it by the Bank; and (ii) all Drafts
and documents delivered to it from time to time, and, in the event
of any claim of material noncompliance with Company's instructions
or other irregularity, the Company will immediately notify the Bank
in writing; and (f) any action, inaction or omission on the part of
the Bank or any of its correspondents, under or in connection with
the Credit or the relative Drafts, if in good faith, is binding upon
the Company. The Company agrees to indemnify and hold harmless the
Bank, each affiliate and subsidiary of the Bank, and the
correspondents of any of them, against any claim, loss, liability
or damage, including reasonable counsel fees, arising from or in
connection with the Credit, including, without limitation, any claim,
loss, liability or damage arising out of any transfer, sale,
delivery, surrender or endorsement of any document at any time held
by the Bank or any of its affiliates or subsidiaries, or held for
the account of any of them by any correspondent of any of them or
arising out of any action for injunctive or other judicial or
administrative relief and affecting, directly or indirectly, the Bank
or such affiliate or subsidiary, but excluding any claim, loss,
liability or damage arising from or in connection with any negligent
action, inaction or omission on the part of the Bank.
8. Parent Guaranty.
(a) In order to induce the Bank to enter into this
Agreement and to issue the Credit, the Parent unconditionally
agrees that if the Company fails to pay any amount due under
this Agreement, the Parent will, within ten (10) days after
receipt of written notice from the Bank, pay to the Bank the
amount due and unpaid by the Company. The Parent consents that
the performance or observance by the Company of any provisions
of this Agreement may be waived, the time of performance of any
provision may be extended and the payment of any obligation
under this Agreement may be extended or renewed, in whole or
in part, without affecting this guaranty.
(b) The obligations of the Parent under this paragraph
8 are unconditional irrespective of the genuineness, validity,
regularity or enforceability of the obligations of the Company
under this Agreement or, to the fullest extent permitted by
applicable law, any other circumstances which might otherwise
constitute a legal or equitable discharge of a surety or
guarantor.
(c) The Parent expressly waives diligence, presentment,
protest and any requirement that any right or power be exhausted
or any action be taken against the Company and all notices and
demands whatsoever.
(d) The obligations of the Parent under this paragraph
8 shall be reinstated if any payment received by the Bank from
the Company under this Agreement is required to be repaid by
the Bank.
9. Instructions; No Liability. Instructions (whether by oral,
telephone, teleprocess or other means) may be honored by the Bank
when received from any person listed on Exhibit B hereto. The
Company agrees to furnish the Bank with written confirmation of each
such instruction signed by the person giving such instruction or
other authorized officer, but the Bank's responsibility with respect
to any instruction is not affected by its failure to receive or the
content of such confirmation. The Bank shall notify promptly the
Company of any discrepancies between the Company's instructions and
its written confirmation. The Bank is fully protected in, and incurs
no liability to the Company for, acting upon any oral, telephone,
telecopy or other instructions which the Bank in good faith believes
to have been given by any authorized person. The Bank may, at its
option, use any means of verifying any instructions received by it.
10. No Waiver of Bank's Right of Set-Off. It is expressly
recognized and acknowledged by the Company that notwithstanding
anything to the contrary contained herein the Bank does not waive
its common law or statutory rights of set-off or any other rights
generally available to creditors.
11. Representations and Warranties. The Company and the Parent
represent and warrant as follows:
(a) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of Indiana and the Parent is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Ohio.
(b) The execution, delivery and performance by the Company
and by the Parent of this Agreement and the transactions
contemplated hereby are within the Company's and the Parent's
corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (i) the Company's or
the Parent's charter or by-laws or (ii) law or any contractual
restriction binding on or affecting the Company or the Parent.
(c) No authorization or approval or other action by, and
no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and
performance by the Company or the Parent of this Agreement or
the transactions contemplated hereby, except for the authoriza-
tion of the Securities and Exchange Commission, which
authorization has been duly obtained and is in full force and
effect.
(d) This Agreement is the legal, valid and binding
obligation of the Company and the Parent, enforceable against
the Company and the Parent, in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy,
insolvency, or other similar laws affecting the enforcement of
creditors' rights in general, and except as the availability
of the remedy of specific performance is subject to general
principles of equity (regardless of whether such remedy is
sought in a proceeding in equity or at law).
(e) The balance sheet of the Company and the Parent as
at December 31, 1993, and the related statement of income and
retained earnings of the Company for the year then ended (the
"Financial Statements"), copies of which have been furnished
to the Bank, fairly present the financial condition of the
Company and the Parent as of such date and the results of the
operations of the Company and the Parent for the period ended
on such date, all in accordance with generally accepted
accounting principles consistently applied, and since December
31, 1993, there has been no material adverse change in such
condition or operations or in the business prospects of the
Company or the Parent.
(f) There is no pending or threatened action or proceeding
affecting the Company or the Parent, except as otherwise
disclosed in the Financial Statements or otherwise reported to
the Bank prior to the date of this Agreement, before any court,
governmental agency or arbitrator, which may materially
adversely affect the financial condition, operations or business
prospects of the Company or the Parent.
12. Events of Default. If any of the following events ("Events
of Default") shall occur and be continuing:
(a) The Company shall fail to pay any amount due under
paragraph 2 of this Agreement when due; or
(b) The Company shall fail to pay any amount due under
paragraphs 3 and 4 for more than 10 days after the date due;
or
(c) Any representation or warranty made by the Company
or the Parent in connection with this Agreement shall prove to
have been incorrect in any material respect when made; or
(d) The Company or the Parent shall fail to perform or
observe any other term, covenant or agreement contained in this
Agreement on their part to be performed or observed and any such
failure shall remain unremedied for 10 days after written notice
thereof shall have been given to the Company by the Bank; or
(e) The Company or the Parent shall fail to pay the
principal of, or interest on, any obligation of the Company or
the Parent, as the case may be, for borrowed money (other than
under this Agreement) when due, whether by acceleration, by
required prepayment or otherwise, for a period longer than any
period of grace provided in such obligation, or fail to perform
any other term, condition or covenant contained in any such
obligation, the effect of which is to cause, or to permit the
holder of such obligation or others on its behalf to cause, such
obligation then to become due prior to its stated maturity,
unless such failure shall have been cured or effectively waived;
or
(f) The Company or the Parent shall generally not pay its
debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall
be instituted by or against the Company or the Parent seeking
to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee
or other similar official for it or for any substantial part
of its property; or the Company or the Parent shall take any
corporate action to authorize any of the actions set forth above
in this subsection (f); or
(g) The Inter-Company Power Agreement shall terminate in
accordance with any event specified in Section 12.06 thereof;
then, and in any such event, the Bank may, by notice to the Company,
require, and the Company shall, establish a cash collateral account
in the amount of the Credit; provided, however, that in the event
of a default pursuant to subsection (f) of this section or of an
actual or deemed entry of an order for relief with respect to the
Company under the Federal Bankruptcy Code, the Company shall
establish a cash collateral account in the amount of the Credit.
13. Assignment; Applicable Law. This Agreement may not be
assigned by the Company without prior written consent of the Bank.
This Agreement may not be assigned by the Bank without the prior
written consent of the Company. The Bank may sell participation in
all or any part of the Credit or this Agreement to another entity.
This Agreement and all rights, obligations and liabilities arising
under it are binding upon and inure to the benefit of the Bank and
the Company and their respective successors and are governed by, and
construed in accordance with, the internal laws of the state of New
York, without reference to that jurisdiction's principles of
conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers hereto duly
authorized, as of the date first written above.
INDIANA-KENTUCKY ELECTRIC CORPORATION
By: /s/ G. P. Maloney
Vice President
OHIO VALLEY ELECTRIC CORPORATION
By: /s/ G. P. Maloney
Vice President
CITIBANK, N.A.
By: /s/ Paul T. Addison
ovcfinan.94\credtagr.cti
EXHIBIT A
IRREVOCABLE STANDBY LETTER OF CREDIT
CLOSURE/POST-CLOSURE
Commissioner
Department of Environmental Management
State of Indiana
Dear Sir or Madam:
We hereby establish our Irrevocable Standby Letter of Credit No.
__________ in your favor, at the request of and for the account of
INDIANA-KENTUCKY ELECTRIC CORPORATION, an Indiana corporation, up
to the aggregate amount of Seven Million Six Hundred Sixty-Eight
Thousand Three Hundred Thirty-Three U.S. dollars ($7,668,333),
$6,856,153 for closure and $812,180 for post-closure care.
The funds deposited in the Irrevocable Standby Letter of Credit
No. are available upon presentation of:
(1) your sight draft, bearing reference to this Irrevocable
Letter of Credit No. ; and
(2) your signed statement reading as follows: I certify that
the amount of the draft is payable pursuant to regula-
tions issued under authority of IC 13-7 and IC 36-9-30.
This letter of credit is effective as of July 15, 1994 and shall
expire on July 15, 1995 but such expiration date shall be
automatically extended for a period of one year on July 15, 1995 and
each successive expiration date, unless at least one hundred twenty
(120) days before the current expiration date, we notify both you
and Indiana-Kentucky Electric Corporation by certified mail that we
have decided not to extend this letter of credit beyond the current
expiration date. In the event you are so notified, any unused
portion of the credit shall be available upon presentation of your
sight draft for one hundred twenty days after the date of receipt
by both you and Indiana-Kentucky Electric Corporation, as shown on
the signed return receipts.
Whenever this letter of credit is drawn on under and in
compliance with the terms of this credit, we shall duly honor such
draft upon presentation to us, and we shall deposit the amount of
the draft directly into the standby trust fund of Indiana-Kentucky
Electric Corporation in accordance with your instructions.
Vice President
Citibank, N.A.
July 15, 1994
This credit is subject to IC 26-1-5-101 through IC 26-1-5-117
(which sets forth Indiana's version of Article 5 of the Uniform
Commercial Code).
Exhibit F-1
614/223-1632
Securities and Exchange Commission
Office of Public Utility Regulation
450 Fifth Street, N.W.
Washington, D.C. 20549
September 9, 1994
Re: Ohio Valley Electric Corporation
Indiana-Kentucky Electric Corporation
File No. 70-8337
Gentlemen:
In connection with the transactions proposed and described in the
Application or Declaration on Form U-1 filed with this Commission
in the captioned proceeding, to which this opinion is an exhibit,
I have examined, among other things, the Application or Declaration
on Form U-1, as amended.
Based upon such investigation as I have deemed necessary, it is my
opinion that:
(a) all state laws applicable to the proposed transactions
have been complied with;
(b) the Letter Of Credit Agreement is a valid and binding
obligation of the Companies in accordance with its terms;
subject, however, to the qualification that the
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights in general
and by general principles of equity; and
(c) the consummation of the proposed transaction has not
violated the legal rights of the holders of any securities
issued by the Companies or any associate company thereof.
I hereby consent to the filing of this opinion as an exhibit to the
above-mentioned Application or Declaration.
Very truly yours,
/s/ John M. Adams, Jr.
John M. Adams, Jr.,
Counsel for the Companies
