SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 28, 1998
PP&L RESOURCES, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Pennsylvania 1-11459 23-2758192
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
Two North Ninth Street, Allentown, Pennsylvania 18101-1179
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(Address of principal executive offices)
Registrant's Telephone Number, including Area Code: (610) 774-5151
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PP&L, INC.
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(Exact Name of Registrant as Specified in Its Charter)
Pennsylvania 1-905 23-0959590
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
Two North Ninth Street, Allentown, Pennsylvania 18101-1179
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(Address of principal executive offices)
Registrant's Telephone Number, including Area Code: (610) 774-5151
-----------------
<PAGE>
ITEM 5. OTHER EVENTS
------------
On April 28, 1998, PP&L Inc. (the "Company") entered
into an Underwriting Agreement among the Company, Morgan Stanley
& Co. Incorporated, Credit Suisse First Boston Corporation,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and First
Chicago Capital Markets, Inc. (collectively, the "Underwriters")
for the sale to the Underwriters of the Company's First Mortgage
Bonds, 6 1/8% REset Put Securities Series Due 2006 (the "Bonds").
In connection with the issuance of the Bonds under the
Underwriting Agreement, the Company intends to enter into a
Calculation Agency Agreement with Morgan Stanley & Co.
Incorporated and a Securities Purchase Option Letter Agreement
with Morgan Stanley & Co. International Limited and Morgan
Stanley & Co. Incorporated. The Bonds will be issued and sold
pursuant to the Company's Mortgage and Deed of Trust, dated as of
October 1, 1945, to Bankers Trust Company (successor to Morgan
Guaranty Trust Company of New York), as Trustee, as amended and
supplemented by sixty-five indentures supplemental thereto (the
"Mortgage"), and as to be amended and supplemented by the Sixty-
Sixth Supplemental Indenture to be dated as of May 1, 1998 (the
"Sixty-Sixth Supplemental Indenture"). Forms of such
Underwriting Agreement, Calculation Agency Agreement, Call Option
Letter Agreement and Sixty-Sixth Supplemental Indenture are
attached hereto as exhibits to this Current Report on Form 8-K
and are incorporated herein by reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The
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Company does hereby incorporate by reference into its
Registration Statement (File No. 333-48809), as Exhibit 8
thereto, the opinion of Reid & Priest LLP as to certain
statements in the Prospectus Supplement dated April 28, 1998
relating to the Bonds under the caption "Certain United States
Federal Income Tax Considerations," such opinion being filed
herewith as Exhibit 8 to this Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
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AND EXHIBITS
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(c) Exhibits
(1.1) Form of Underwriting Agreement,
dated April 28, 1998, among PP&L,
Inc., Morgan Stanley & Co.
Incorporated, Credit Suisse First
Boston Corporation, Merrill Lynch,
Pierce, Fenner & Smith Incorporated
and First Chicago Capital Markets,
Inc.
(4.1) Form of Calculation Agency
Agreement between PP&L, Inc. and
Morgan Stanley & Co. Incorporated.
<PAGE>
(4.2) Form of Securities Purchase Option
Letter Agreement among PP&L, Inc.,
Morgan Stanley & Co. International
Limited and Morgan Stanley & Co.
Incorporated.
(4.3) Form of Sixty-Sixth Supplemental
Indenture between PP&L, Inc. and
Bankers Trust Company (successor to
Morgan Guaranty Trust Company of
New York).
(8) Opinion of Reid & Priest LLP, dated
April 28, 1998, as to certain
statements in the Prospectus
Supplement, filed with the
Commission in connection with the
Registration Statement of PP&L,
Inc. (File No. 333-48809), under
the caption "Certain United States
Federal Income Tax Considerations."
(23) Consent of Reid & Priest LLP
(included in Exhibit 8).
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act
of 1934, each Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
PP&L Resources, Inc.
PP&L, Inc.
Date: May 1, 1998 By: /s/ James E. Abel
------------------------
James E. Abel
Treasurer
<PAGE>
EHIBIT INDEX
Exhibit Description
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(1.1) Form of Underwriting Agreement, dated April
28, 1998, among PP&L, Inc., Morgan Stanley &
Co. Incorporated, Credit Suisse First Boston
Corporation, Merrill Lynch, Pierce, Fenner &
Smith Incorporated and First Chicago Capital
Markets, Inc.
(4.1) Form of Calculation Agency Agreement between
PP&L, Inc. and Morgan Stanley & Co.
Incorporated.
(4.2) Form of Securities Purchase Option Letter
Agreement among PP&L, Inc., Morgan Stanley &
Co. International Limited and Morgan Stanley
& Co. Incorporated.
(4.3) Form of Sixty-Sixth Supplemental Indenture
between PP&L, Inc. and Bankers Trust Company
(successor to Morgan Guaranty Trust Company
of New York).
(8) Opinion of Reid & Priest LLP, dated April 28,
1998, as to certain statements in the
Prospectus Supplement, filed with the
Commission in connection with the
Registration Statement of PP&L, Inc. (File
No. 333-48809), under the caption "Certain
United States Federal Income Tax
Considerations."
(23) Consent of Reid & Priest LLP (included in
Exhibit 8).
PP&L, INC.
$200,000,000 First Mortgage Bonds,
6 1/8% REset Put Securities Series due 2006
UNDERWRITING AGREEMENT
----------------------
April 28, 1998
Morgan Stanley & Co. Incorporated,
Credit Suisse First Boston Corporation,
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
First Chicago Capital Markets, Inc.,
As Underwriters,
c/o Morgan Stanley & Co. Incorporated,
1585 Broadway,
New York, New York 10036.
Ladies and Gentlemen:
1. Introductory.
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PP&L, Inc., a Pennsylvania corporation ("Company"),
proposes to issue and sell $200,000,000 principal amount of its
First Mortgage Bonds, 6 1/8% REset Put Securities Series due 2006
(the "Bonds"), to be issued under the Company's Mortgage and Deed
of Trust, dated as of October 1, 1945, to Bankers Trust Company
(successor to Morgan Guaranty Trust Company of New York), as
Trustee, as amended and supplemented by sixty-five indentures
supplemental thereto (the "Mortgage"), and as to be amended and
supplemented by a Sixty-Sixth Supplemental Indenture to be dated
as of May 1, 1998 (the "Sixty-Sixth Supplemental Indenture")
(such Mortgage and Deed of Trust, as amended and supplemented by
such sixty-six supplemental indentures, being hereinafter called
the "Indenture"), and hereby agrees with the several Underwriters
named above ("Underwriters") as follows:
2. Representations and Warranties.
------------------------------
The Company represents and warrants to, and agrees
with, the several Underwriters that:
(a) The Company has filed with the Securities and
Exchange Commission (the "Commission") a registration
statement (No. 333-48809) on Form S-3, including a
prospectus, covering the registration of the Bonds under the
Securities Act of 1933, as amended (the "Act"), and such
registration statement has become effective. Such
registration statement, as amended at the time of its
effectiveness, is hereinafter referred to as the
"Registration Statement" and such prospectus, as
supplemented to reflect the terms of offering and sale of
the Bonds by a prospectus supplement to be filed with the
Commission pursuant to Rule 424(b) ("Rule 424(b)") under the
Act, including all material incorporated by reference
therein, is hereinafter referred to as the "Prospectus"
(including, in each case, all documents incorporated or
deemed to be incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Act and the information, if
any, deemed to be part thereof pursuant to Rule 430A(b) of
the published rules and regulations of the Commission under
the Act).
(b) On its effective date, the Registration Statement
conformed in all material respects to the requirements of
the Act, the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), and the published rules and
regulations ("Rules and Regulations") of the Commission
thereunder and did not contain an untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein not misleading, and on the date of this Agreement,
the Prospectus and the Indenture conform in all material
respects to the requirements of the Act, the Trust Indenture
Act and the Rules and Regulations, and the Prospectus does
not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and,
as of the date of this Agreement, no post-effective
amendment to the Registration Statement was required to be
filed under the Act and the Rules and Regulations; provided
that the foregoing representations and warranties in this
subsection (b) shall not apply to statements or omissions
made in reliance upon and in conformity with information
furnished hereunder or otherwise in writing to the Company
by or on behalf of any Underwriter for use in connection
with the preparation of the Registration Statement or the
Prospectus or to any statements in or omissions from the
Statement of Eligibility of the Trustee under the Indenture.
Each of the several Underwriters represents and
warrants to, and agrees with, the Company, its directors and such
of its officers as shall have signed the Registration Statement,
and to each other Underwriter, that the information furnished in
writing to the Company by, or through you on behalf of, such
Underwriter expressly for use in the Registration Statement or
the Prospectus does not contain an untrue statement of a material
fact and does not omit to state a material fact in connection
with such information required to be stated therein or necessary
to make such information not misleading.
3. Purchase and Sale of Bonds.
--------------------------
On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and
conditions herein contained, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not
jointly, to purchase from the Company, (i) at a purchase price of
99.59% of the principal amount thereof, plus accrued interest, if
any, from the date of the first authentication of the Bonds to
the Closing Date (as hereinafter defined), the respective
principal amounts of the Bonds set forth below opposite the names
of such Underwriters.
Principal
Amount of
Underwriter Bonds
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Morgan Stanley & Co. Incorporated . . . . . . . $ 70,000,000
Credit Suisse First Boston Corporation . . . . 50,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . . 50,000,000
First Chicago Capital Markets, Inc. . . . . . . 30,000,000
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Total . . . . . . . . . . . . . . . . . . $200,000,000
============
4. Public Offering.
---------------
The several Underwriters agree that as soon as
practicable, in their judgment, they will make a public offering
of their respective portions of the Bonds in accordance with the
terms set forth in the Prospectus.
5. Delivery and Payment.
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Payment of the full purchase price of the Bonds shall
be made by the wire transfer of immediately available funds to
the Company's account (No. 2-334-233) at Mellon Bank, N.A. (ABA
Routing Number 031000037) by 10:00 A.M., New York Time, on the
Closing Date, as hereinafter defined. Such payment shall be made
upon delivery of the Bonds to you or upon your order at the
office of Reid & Priest, 40 West 57th Street, New York, New York
10019, for the account of the Underwriters. The Bonds so to be
delivered will be in fully registered form in such authorized
denominations and registered in such names as you may timely
request, or to the extent not so requested, registered in the
names of the respective Underwriters in such authorized
denominations as the Company shall determine. For the purpose of
expediting the checking and packaging of the Bonds, the Company
will make the Bonds available for inspection by you at the office
of Bankers Trust Company, Four Albany Street, New York, New York
10006, Attention: Scott Thiel not later than 10:00 A.M., New
York Time, on the business day next preceding the Closing Date.
The term "Closing Date" wherever used in this Agreement
shall mean May 5, 1998 or such other date (i) not later than the
seventh full business day thereafter as may be agreed upon in
writing by the Company and you, or (ii) as shall be determined by
postponement pursuant to the provisions of Section 10 hereof.
6. Certain Covenants of the Company.
--------------------------------
The Company covenants and agrees with the several
Underwriters:
(a) To file the Prospectus with the Commission pursuant
to Rule 424(b) not later than the second business day
following the execution and delivery of this Agreement; to
advise you promptly of any such filing pursuant to
Rule 424(b); to advise you promptly of any proposal to amend
or supplement the Registration Statement or the Prospectus
(including through the filing of any document that would as
a result of such filing be incorporated or deemed to be
incorporated by reference into the Prospectus), and not to
effect such amendment or supplement if you have reasonably
objected in writing; also to advise you promptly of (i) any
amendment or supplement to the Registration Statement or the
Prospectus (including through the filing of any document
that would as a result of such filing be incorporated or
deemed to be incorporated by reference into the Prospectus),
(ii) any request by the Commission for any amendment or
supplement to the Registration Statement or the Prospectus
or for additional information, and (iii) the institution by
the Commission of any stop order proceedings in respect of
the Registration Statement or the initiation of any
proceedings for that purpose, and to use its best efforts to
prevent the issuance of any such stop order and to obtain as
soon as possible its lifting, if issued;
(b) To use its best efforts to qualify the Bonds and
to assist in the qualification of the Bonds by you or on
your behalf for offer and sale under the securities or blue
sky laws of such States as you may designate, to continue
such qualification in effect so long as required for the
distribution of the Bonds and to reimburse you for any
expenses (including filing fees and fees and disbursements
of counsel) paid by you or on your behalf to qualify the
Bonds for offer and sale, to continue such qualification, to
determine its eligibility for investment and to print the
memoranda relating thereto; provided that the Company shall
not be required to qualify as a foreign corporation in any
State, to consent to service of process in any State other
than with respect to claims arising out of the offering or
sale of the Bonds, or to meet any other requirement in
connection with this paragraph (b) deemed by the Company to
be unduly burdensome;
(c) Promptly to deliver to you one signed copy of the
registration statement as originally filed and of all
amendments thereto heretofore or hereafter filed, including
conformed copies of all exhibits except those incorporated
by reference, and such number of unsigned copies of the
Registration Statement (but excluding the exhibits), each
related preliminary prospectus, the Prospectus, and any
amendments and supplements thereto, as you may reasonably
request;
(d) If at any time when a prospectus relating to the
Bonds is required to be delivered under the Act in
connection with sales by an Underwriter or dealer, any event
occurs as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a
material fact, or omit to state any material fact necessary
to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or
if it is necessary at any time to amend the Prospectus to
comply with the Act in connection with sales by an
Underwriter or dealer, to advise you of such event or
necessity, as the case may be, and, promptly upon request
made by you, to prepare and file with the Commission an
amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance,
provided that the expense of preparing and filing any such
amendment or supplement (i) which is necessary in connection
with such a delivery of a prospectus more than nine months
after the date of this Agreement or (ii) which relates
solely to the activities of any Underwriter shall be borne
by the Underwriter or Underwriters or the dealer or dealers
requiring the same; and provided further that you shall,
upon inquiry by the Company, advise the Company whether or
not any Underwriter or dealer which shall have been selected
by you retains any unsold Bonds and, for the purposes of
this subsection (d), the Company shall be entitled to assume
that the distribution of the Bonds has been completed when
it is advised by you that no Underwriter or such dealer
retains any Bonds;
(e) As soon as practicable, to make generally
available to its security holders an earnings statement
covering a period of at least twelve months beginning after
the "effective date of the registration statement" within
the meaning of Rule 158 under the Act which will satisfy the
provisions of Section 11(a) of the Act;
(f) To pay or bear (i) all expenses in connection with
the matters herein required to be performed by it, including
all expenses (except as provided in Section 6(d) hereof) in
connection with the preparation and filing of the
Registration Statement and the Prospectus, and any amendment
or supplement thereto, and the furnishing of copies thereof
to the Underwriters, and all audits, statements or reports
in connection therewith, and all expenses in connection with
the original issue and delivery of the Bonds to the
Underwriters at the place designated in Section 5 hereof,
and all Federal and State taxes (if any) payable (not
including any transfer taxes) upon the original issue of the
Bonds, and (ii) all expenses in connection with the printing
of this Agreement and to reimburse the Underwriters for
expenses incurred in distributing any preliminary prospectus
or supplement to the Underwriters; and
(g) During the period from the date of this Agreement
through the Closing Date, the Company shall not, without the
Underwriters' prior written consent, directly or indirectly,
sell, offer to sell, grant any option for the sale of, or
otherwise dispose of, any Bonds, any security convertible
into or exchangeable into or exercisable for Bonds or any
debt securities substantially similar to the Bonds (except
for the Bonds issued pursuant to this Agreement).
7. Conditions of Underwriters' Obligations.
---------------------------------------
The obligations of the several Underwriters to purchase
and pay for the Bonds on the Closing Date shall be subject to the
following conditions:
(a) You shall have received from Price Waterhouse LLP
a letter, dated the date of this Agreement, confirming that
they are independent public accountants within the meaning
of the Act and the Rules and Regulations, and stating in
effect that:
(i) in their opinion the consolidated financial
statements and supplemental financial statement
schedules examined by them and included or incorporated
by reference in the Registration Statement comply as to
form in all material respects with the applicable
accounting requirements of the Act and the Securities
Exchange Act of 1934, as amended, and the related
published rules and regulations thereunder;
(ii) they have made a review of the unaudited
interim financial statements included or incorporated
by reference in the Registration Statement in
accordance with standards established by the American
Institute of Certified Public Accountants;
(iii) on the basis of the review referred to in
clause (ii) above, a reading of the latest available
financial statements of the Company, inquiries of
officials of the Company who have responsibility for
financial and accounting matters and other specified
procedures, nothing came to their attention that caused
them to believe that:
(A) any material modifications should be
made to the unaudited interim financial statements
included or incorporated by reference in the
Registration Statement for them to be in
conformity with generally accepted accounting
principles;
(B) the unaudited interim financial
statements included or incorporated by reference
in the Registration Statement do not comply as to
form in all material respects with the applicable
accounting requirements of the Act and the related
published Rules and Regulations;
(C) (i) at the date of the latest available
balance sheet of the Company read by such
accountants, there was any decrease in the common
equity (except for shares of certain series of the
Company's preferred and preference stocks redeemed
for, or purchased and retired in anticipation of,
sinking fund requirements for such series or for
shares of common stock issued to PP&L Resources,
Inc.), or any increase in long-term debt, as
compared with amounts shown on the latest
consolidated balance sheet included or
incorporated by reference in the Registration
Statement; or
(D) at a date not more than five days prior
to the date of this Agreement, there was any
decrease in the common equity (except for shares
of certain series of the Company's preferred and
preference stocks redeemed for, or purchased and
retired in anticipation of, sinking fund
requirements for such series or for shares of
common stock issued to PP&L Resources, Inc.), or
any increase in long-term debt, as compared with
amounts shown on the latest consolidated balance
sheet included or incorporated by reference in the
Registration Statement; except in all cases for
changes, increases or decreases that the
Prospectus discloses have occurred or may occur or
that are described in such letter; and
(iv) they have compared certain financial and
statistical amounts included or incorporated by
reference in the Registration Statement and the
Prospectus, which amounts are set forth in Schedule A
hereto, with the results obtained from inquiries,
reading of the general accounting records and financial
statements of the Company and other procedures
specified in such letter and have found such amounts to
be in agreement with such results, except as otherwise
specified in such letter.
(b) The Prospectus shall have been filed with the
Commission in accordance with the Rules and Regulations and
Section 6(a) of this Agreement; and prior to such closing no
stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that
purpose shall have been instituted, or, to the knowledge of
the Company, shall be contemplated by the Commission and you
shall have received at such closing, a certificate, dated
the Closing Date, of the Company to such effect.
(c) Subsequent to the execution of this Agreement,
there shall not have occurred (i) any material adverse
change not contemplated by the Prospectus in or affecting
particularly the business or properties of the Company
which, in the judgment of Morgan Stanley & Co. Incorporated,
materially impairs the investment quality of the Bonds;
(ii) any suspension or limitation of trading in securities
generally on the New York Stock Exchange, or any setting of
minimum prices for trading on such Exchange, or any
suspension of trading of any securities of the Company on
any exchange or in the over-the-counter market; (iii) a
general banking moratorium declared by Federal or New York
authorities; (iv) any outbreak or escalation of major
hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial
national or international calamity or emergency if, in the
reasonable judgment of Morgan Stanley & Co. Incorporated,
the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical and inadvisable
to proceed with completion of the sale of and payment for
the Bonds and Morgan Stanley & Co. Incorporated shall have
made a similar determination with respect to all other
underwritings of debt securities in which they are
participating and have the contractual right to make such a
determination; or (v) any decrease in the ratings of the
Bonds by Standard & Poor s Ratings Group or Moody s
Investors Service, Inc. or either such organization shall
have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of
the Bonds.
(d) At or before the Closing Date, the
Pennsylvania Public Utility Commission and any other
regulatory authority whose consent or approval shall be
required for the issue and sale of the Bonds by the
Company as herein provided shall have taken all
requisite action, or all such requisite action shall be
deemed in fact and law to have been taken, to authorize
such issue and sale on the terms set forth in the
Prospectus.
(e) You shall have received from Michael A.
McGrail, Esq., Senior Counsel, or such other counsel
for the Company as may be acceptable to you, an
opinion, dated the Closing Date, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing
under the laws of the Commonwealth of Pennsylvania,
with power and authority (corporate and other) to own
its properties and conduct its business as described in
the Prospectus;
(ii) The Bonds have been duly authorized,
authenticated and delivered and are valid and legally
binding obligations of the Company entitled to the
benefits and security of the Indenture, enforceable in
accordance with their terms (except to the extent
limited by bankruptcy, insolvency or reorganization
laws or by laws relating to or affecting the
enforcement of creditors' rights and by general equity
principles) and are secured equally and ratably with
all other bonds outstanding under the Mortgage except
insofar as any sinking or other fund may afford
additional security for the bonds of any particular
series;
(iii) The Indenture has been duly authorized,
executed and delivered, and constitutes a valid and
legally binding obligation of the Company enforceable
in accordance with its terms (except to the extent
limited by bankruptcy, insolvency or reorganization
laws or by laws relating to or affecting the
enforcement of creditors' rights and by general equity
principles); and no authorization, vote, consent or
action by the holders of any of the outstanding shares
of capital stock of the Company is necessary with
respect thereto;
(iv) The Mortgage constitutes, and together with
the Sixty-Sixth Supplemental Indenture, when the latter
has been duly recorded, will constitute, the valid
direct first mortgage lien such instruments purport to
create upon the interest of the Company in the property
and franchises therein described (except any which have
been duly released from the lien thereof);
(v) The Company has fee title to all the real
property and has good and valid title to all of the
personal property described in the Indenture as owned
by it and as subject to the lien thereof, subject only
to (1) minor leases which, in the opinion of such
counsel, do not interfere with the Company's business;
(2) minor defects, irregularities and deficiencies in
titles of properties and rights-of-way which, in the
opinion of such counsel, do not materially impair the
use of such property and rights-of-way for the purposes
for which they are held by the Company; (3) other
excepted encumbrances as defined in Section 6 of the
Company's Mortgage; and (4) the provisions of the
licenses and the limited power permits covering the
Company's Wallenpaupack and Holtwood hydroelectric
projects; the Mortgage, subject only as set forth
above, constitutes, and the Sixty-Sixth Supplemental
Indenture, subject only as set forth above, when it
shall have been duly recorded, will constitute,
together and as a single instrument, a valid direct
first mortgage lien upon said properties, which include
all of the physical properties and franchises of the
Company (except such property as may have been duly
released from the lien thereof and such property as may
not be subjected to the lien thereof under the laws of
the Commonwealth of Pennsylvania without the delivery
thereof to the Trustee, and certain other classes of
property expressly excepted in the Indenture); and all
physical properties and franchises (other than those of
the character not subject to the lien of the Mortgage
as aforesaid) acquired by the Company after the
respective dates of the Mortgage and the Sixty-Sixth
Supplemental Indenture have become or will, upon such
acquisition, become subject to the lien thereof,
subject, however, to excepted encumbrances and to
liens, if any, existing or placed thereon at the time
of the acquisition thereof by the Company;
(vi) The Mortgage has been duly filed and recorded
in all jurisdictions in which it is necessary to be
filed and recorded in order to constitute a lien of
record on the property subject thereto;
(vii) The portions of the information contained in
the Prospectus, which are stated therein to have been
made on his authority, have been reviewed by him and,
as to matters of law and legal conclusions, are
correct;
(viii) The descriptions in the Registration
Statement and the Prospectus of statutes, legal and
governmental proceedings and contracts and other
documents are accurate and fairly present the
information required to be shown; and such counsel does
not know of any legal or governmental proceedings
required to be described in the Registration Statement
or Prospectus which are not described, or of any
contracts or documents of a character required to be
described in the Registration Statement or the
Prospectus or to be filed as exhibits to the
Registration Statement which are not described and
filed as required; it being understood that such
counsel need express no opinion as to the financial
statements and other financial data contained in the
Registration Statement or the Prospectus;
(ix) This Agreement has been duly authorized,
executed and delivered by the Company; and each of the
Calculation Agency Agreement (the Calculation Agency
Agreement ) between Morgan Stanley & Co. Incorporated
and the Company and the Call Option Agreement (the
Call Option Agreement ) between Morgan Stanley & Co.
International Limited and Morgan Stanley & Co.
Incorporated, on the one hand, and the Company, on the
other hand, has been duly authorized, executed and
delivered by the Company, and constitutes a valid and
legally binding obligation of the Company enforceable
in accordance with its terms (except to the extent
limited by bankruptcy, insolvency or reorganization
laws or by laws relating to or affecting the
enforcement of creditors' rights and by general equity
principles);
(x) All legally required proceedings in
connection with the authorization and issue of the
Bonds and the sale of the Bonds by the Company in the
manner set forth herein, have been had and remain in
effect, the Securities Certificate of the Company with
respect to the Bonds has been duly registered pursuant
to Section 1903 of the Pennsylvania Public Utility Code
(66 Pa. C.S. <Section> 1903), as amended, and such
registration remains in effect, and all requisite
action of public boards or bodies (other than in
connection or in compliance with the provisions of the
securities or "blue sky" laws of any jurisdiction) as
may be legally required with respect to all or any of
such matters or related thereto has been taken and
remains in effect, and the Company is exempt from the
provisions of the Public Utility Holding Company Act of
1935 applicable to it as a holding company and with
respect to such authorization, issue and sale;
(xi) Except as described in the Registration
Statement and the Prospectus, the Company holds all
franchises, certificates of public convenience,
licenses and permits necessary to carry on the utility
business in which it is engaged; and
(xii) All taxes payable to any State or subdivision
thereof in connection with the execution, delivery and
recordation of the Mortgage and the Sixty-Sixth
Supplemental Indenture, the execution, authentication,
issuance and delivery of the Bonds being delivered on
this date, and the mortgaging of property under the
Mortgage and the Sixty-Sixth Supplemental Indenture
have been paid, except that a Commonwealth of
Pennsylvania tax of fifty cents must be paid in each
county in which the Sixty-Sixth Supplemental Indenture
is recorded, at the time of recording.
(f) You shall have received from Reid & Priest
LLP, special counsel to the Company, an opinion, dated
the Closing Date, to the effect that:
(i) The Bonds have been duly authorized,
authenticated and delivered and are valid and legally
binding obligations of the Company entitled to the
benefits and security of the Indenture, enforceable in
accordance with their terms (except to the extent
limited by bankruptcy, insolvency or reorganization
laws or by laws relating to or affecting the
enforcement of creditors' rights and by general equity
principles);
(ii) The Indenture has been duly authorized,
executed and delivered, is duly qualified under the
Trust Indenture Act and constitutes a valid and legally
binding obligation of the Company enforceable in
accordance with its terms (except to the extent limited
by bankruptcy, insolvency or reorganization laws or by
laws relating to or affecting the enforcement of
creditors' rights and by general equity principles);
(iii) The Registration Statement has become
effective under the Act and the Prospectus was filed
with the Commission pursuant to the subparagraph of
Rule 424(b) specified in such opinion on the date
specified therein, and, to the best of the knowledge of
such counsel, no stop order suspending the
effectiveness of the Registration Statement or any part
thereof has been issued and no proceedings for that
purpose have been instituted or are pending or
contemplated under the Act, and the Registration
Statement, as of its effective date, the Prospectus, as
of the date of this Agreement, and any amendment or
supplement thereto, as of its date, complied as to form
in all material respects with the requirements of the
Act, the Trust Indenture Act and the Rules and
Regulations and nothing has come to the attention of
such counsel which would lead such counsel to believe
either that the Registration Statement, at its
effective date, contained any untrue statement of a
material fact or omitted to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading, or that the
Prospectus, as supplemented, as of the date of this
Agreement, and as it shall have been amended or
supplemented, as of the Closing Date, contained any
untrue statement of a material fact or omits or omitted
to state any material fact necessary to make the
statements therein, in the light of the circumstances
under which they were made, not misleading; it being
understood that such counsel need express no opinion as
to the financial statements and other financial or
statistical data contained or incorporated by reference
in the Registration Statement or the Prospectus;
(iv) The Indenture and the Bonds conform, as to
legal matters, in all material respects, with the
statements concerning them made in the Prospectus;
(v) This Agreement has been duly authorized,
executed and delivered by the Company; and each of the
Calculation Agency Agreement and the Call Option
Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid and
legally binding obligation of the Company enforceable
in accordance with its terms (except to the extent
limited by bankruptcy, insolvency or reorganization
laws or by laws relating to or affecting the
enforcement of creditors' rights and by general equity
principles);
(vi) The Securities Certificate of the Company
with respect to the Bonds has been duly registered
pursuant to Section 1903 of the Pennsylvania Public
Utility Code (66 Pa. C.S. <Section> 1903), as amended,
and no further approval, authorization, consent or
other order of any public board or body (other than in
connection or compliance with the provisions of the
securities or "blue sky" laws of any jurisdiction) is
legally required for the authorization of the issuance
and sale of the Bonds; and
(vii) The statements in the Prospectus under the
caption Certain United States Federal Income Tax
Considerations constitute an accurate summary of
matters described therein, in all material respects.
In rendering such opinion, Reid & Priest LLP may rely as to
matters governed by Pennsylvania law upon the opinion of
Michael A. McGrail, Esq. or such other counsel referred to
in subsection (e).
(g) You shall have received from Sullivan & Cromwell,
counsel for the Underwriters, such opinion or opinions,
dated the Closing Date, with respect to the validity of the
Bonds, the Registration Statement, the Prospectus, this
Agreement and other related matters as you may require, and
the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them
to pass upon such matters. In rendering such opinion or
opinions, Sullivan & Cromwell may rely as to matters
governed by Pennsylvania law upon the opinion of Michael A.
McGrail, Esq. or such other counsel referred to above.
(h) You shall have received a certificate, dated the
Closing Date, of the President or a Vice President and a
financial or accounting officer of the Company, in which
such officers, to the best of their knowledge after
reasonable investigation, shall state that (i) the
representations and warranties of the Company in this
Agreement are true and correct (except for immaterial
details) as of the Closing Date, (ii) the Company has
complied in all material respects with all agreements and
satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Date, (iii) no stop
order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for that
purpose have been instituted or are pending by the
Commission, and, (iv) subsequent to the date of the latest
financial statements in the Prospectus, there has been no
material adverse change in the financial position or results
of operations of the Company except as set forth or
contemplated in the Prospectus or as described in such
certificate.
(i) You shall have received a letter from Price
Waterhouse LLP, dated the Closing Date, which meets the
requirements of subsection (a) of this Section, except that
the specified date referred to in such subsection will be a
date not more than five days prior to the Closing Date for
the purposes of this subsection and references to the
prospectus shall be changed to refer to the Prospectus.
The Company will furnish you as promptly as practicable
after the Closing Date with such conformed copies of such
opinions, certificates, letters and documents as you may
reasonably request.
In case any such condition shall not have been
satisfied, this Agreement may be terminated by you upon notice in
writing or by telegram to the Company without liability or
obligation on the part of the Company or any Underwriter, except
as provided in Sections 6(b), 6(f), 9, 11 and 13 hereof.
8. Conditions of Company's Obligations.
-----------------------------------
The obligations of the Company to sell and deliver the
Bonds on the Closing Date are subject to the following
conditions:
(a) At the Closing Date no stop order suspending the
effectiveness of the Registration Statement shall be in
effect or proceeding therefor shall have been instituted or,
to the knowledge of the Company, shall be contemplated.
(b) At or before the Closing Date, the Pennsylvania
Public Utility Commission and any other regulatory authority
whose consent or approval shall be required for the issue
and the sale of the Bonds by the Company as herein provided
shall have taken all requisite action, or all requisite
action shall be deemed in fact and law to have been taken,
to authorize such issue and sale on the terms set forth in
the Prospectus.
(c) At or before the Closing Date, Morgan Stanley &
Co. International Limited as the initial callholder shall
have paid all amounts payable under Sections 6 and 7 of the
Call Option Agreement.
If any such conditions shall not have been satisfied,
then the Company shall be entitled, by notice in writing or by
telegram to you, to terminate this Agreement without any
liability on the part of the Company or any Underwriter, except
as provided in Sections 6(b), 6(f), 9, 11 and 13 hereof.
9. Indemnification and Contribution.
--------------------------------
(a) The Company agrees that it will indemnify and hold
harmless each Underwriter and each person, if any, who controls
any Underwriter within the meaning of Section 15 of the Act,
against any loss, expense, claim, damage or liability to which,
jointly or severally, such Underwriter or such controlling person
may become subject, under the Act or otherwise, insofar as such
loss, expense, claim, damage or liability (or actions in respect
thereof) arises out of or is based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, any related preliminary
prospectus, or any amendment or supplement to any thereof, or
arises out of or is based upon the omission or alleged omission
to state therein any material fact required to be stated therein
or necessary to make the statements therein not misleading; and,
except as hereinafter in this Section provided, the Company
agrees to reimburse each Underwriter and each person who controls
any Underwriter as aforesaid for any reasonable legal or other
expenses incurred by such Underwriter or such controlling person
in connection with investigating or defending any such loss,
expense, claim, damage or liability; provided, however, that the
--------
Company shall not be liable in any such case to the extent that
any such loss, expense, claim, damage or liability arises out of
or is based on an untrue statement or alleged untrue statement or
omission or alleged omission made in any such document in
reliance upon, and in conformity with, written information
furnished to the Company by or through you on behalf of any
Underwriter expressly for use in any such document or arises out
of, or is based on, statements in or omissions from that part of
the Registration Statement which shall constitute the Statement
of Eligibility under the Trust Indenture Act of the Trustee under
the Indenture; and provided further, that with respect to any
-------- -------
untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary prospectus or
supplement, the indemnity agreement contained in this subsection
(a) shall not inure to the benefit of any Underwriter from whom
the person asserting any such loss, expense, claim, damage or
liability purchased the Bonds concerned (or to the benefit of any
person controlling such Underwriter), if a copy of the Prospectus
(not including documents incorporated by reference therein) or of
the Prospectus as then amended or supplemented (not including
documents incorporated by reference therein) was not sent or
given to such person at or prior to the written confirmation of
the sale of such Bonds to such person.
(b) Each Underwriter agrees that it will indemnify and
hold harmless the Company and its officers and directors, and
each of them, and each person, if any, who controls the Company
within the meaning of Section 15 of the Act, against any loss,
expense, claim, damage or liability to which it or they may
become subject, under the Act or otherwise, insofar as such loss,
expense, claim, damage or liability (or actions in respect
thereof) arises out of or is based on any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, any related preliminary
prospectus, or any amendment or supplement to any thereof, or
arises out of or is based upon the omission or alleged omission
to state therein any material fact required to be stated therein
or necessary to make the statements therein not misleading, in
each case to the extent, and only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged
omission was made in any such documents in reliance upon, and in
conformity with, written information furnished to the Company by
or through you on behalf of such Underwriter expressly for use in
any such document; and, except as hereinafter in this Section
provided, each Underwriter agrees to reimburse the Company and
its officers and directors, and each of them, and each person, if
any, who controls the Company within the meaning of Section 15 of
the Act, for any reasonable legal or other expenses incurred by
it or them in connection with investigating or defending any such
loss, expense, claim, damage or liability.
(c) Upon receipt of notice of the commencement of any
action against an indemnified party, the indemnified party shall,
with reasonable promptness, if a claim in respect thereof is to
be made against an indemnifying party under its agreement
contained in this Section 9, notify such indemnifying party in
writing of the commencement thereof; but the omission so to
notify an indemnifying party shall not relieve it from any
liability which it may have to the indemnified party otherwise
than under its agreement contained in this Section 9. In the
case of any such notice to an indemnifying party, it shall be
entitled to participate at its own expense in the defense, or if
it so elects, to assume the defense, of any such action, but, if
it elects to assume the defense, such defense shall be conducted
by counsel chosen by it and satisfactory to the indemnified party
and to any other indemnifying party, defendant in the suit. In
the event that any indemnifying party elects to assume the
defense of any such action and retain such counsel, the
indemnified party shall bear the fees and expenses of any
additional counsel retained by it. No indemnifying party shall
be liable in the event of any settlement of any such action
effected without its consent. Each indemnified party agrees
promptly to notify each indemnifying party of the commencement of
any litigation or proceedings against it in connection with the
issue and sale of the Bonds.
(d) If any Underwriter or person entitled to
indemnification by the terms of subsection (a) of this Section 9
shall have given notice to the Company of a claim in respect
thereof pursuant to subsection (c) of this Section 9, and if such
claim for indemnification is thereafter held by a court to be
unavailable for any reason other than by reason of the terms of
this Section 9 or if such claim is unavailable under controlling
precedent, such Underwriter or person shall be entitled to
contribution from the Company to liabilities and expenses, except
to the extent that contribution is not permitted under
Section 11(f) of the Act. In determining the amount of
contribution to which such Underwriter or person is entitled,
there shall be considered the relative benefits received by such
Underwriter or person and the Company from the offering of the
Bonds (taking into account the portion of the proceeds of the
offering realized by each), the Underwriter or person's relative
knowledge and access to information concerning the matter with
respect to which the claim was asserted, the opportunity to
correct and prevent any statement or omission, and any other
equitable considerations appropriate under the circumstances.
The Company and the Underwriters agree that it would not be
equitable if the amount of such contribution were determined by
pro rata or per capita allocation (even if the Underwriters were
treated as one entity for such purpose).
10. Default of Underwriters.
-----------------------
If any Underwriter or Underwriters default in their
obligations to purchase Bonds hereunder, you may make
arrangements satisfactory to the Company for the purchase of such
Bonds by other persons, including any of the Underwriters, but if
no such arrangements are made by the Closing Date, the other
Underwriters shall be obligated, severally in the proportion
which their respective commitments hereunder bear to the total
commitment of the non-defaulting Underwriters, to purchase the
Bonds which such defaulting Underwriter or Underwriters agreed
but failed to purchase. In the event that any Underwriter or
Underwriters default in their obligations to purchase Bonds
hereunder, the Company may by prompt written notice to the non-
defaulting Underwriters postpone the Closing Date for a period of
not more than seven full business days in order to effect
whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus or in any other
documents, and the Company will promptly file any amendments to
the Registration Statement or supplements to the Prospectus which
may thereby be made necessary. As used in this Agreement, the
term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve an
Underwriter from liability for its default.
11. Survival of Certain Representations and Obligations.
---------------------------------------------------
The respective indemnities, agreements, representations
and warranties of the Company and of or on behalf of the several
Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation,
or statement as to the results thereof, made by or on behalf of
any Underwriter or the Company or any of its officers or
directors or any controlling person, and will survive delivery of
and payment for the Bonds. If for any reason the purchase of the
Bonds by the Underwriters is not consummated, the Company shall
remain responsible for the expenses to be paid or reimbursed by
it pursuant to Section 6 and the respective obligations of the
Company and the Underwriters pursuant to Section 9 hereof shall
remain in effect.
12. Notices.
-------
The Company shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of each of the
Underwriters if the same shall have been made or given by you
jointly or by Morgan Stanley & Co. Incorporated. All statements,
requests, notices, consents and agreements hereunder shall be in
writing, or by telegraph subsequently confirmed in writing, and,
if to the Company, shall be sufficient in all respects if
delivered or mailed to the Company, attention of its Treasurer,
at Two North Ninth Street, Allentown, Pennsylvania 18101, and, if
to you, shall be sufficient in all respects if delivered or
mailed to you at the address set forth on the first page hereof;
provided, however, that any notice to an Underwriter pursuant to
Section 9 hereof will also be delivered or mailed to such
Underwriter at the address, if any, of such Underwriter furnished
to the Company in writing for the purpose of communications
hereunder.
13. Parties in Interest.
-------------------
This Agreement shall inure solely to the benefit of the
Company and the Underwriters and, to the extent provided in
Section 9 hereof, to any person who controls any Underwriter, to
the officers and directors of the Company, and to any person who
controls the Company, and their respective successors. No other
person, partnership, association or corporation shall acquire or
have any right under or by virtue of this Agreement. The term
"successor" shall not include any assignee of an Underwriter
(other than one who shall acquire all or substantially all of
such Underwriter's business and properties), nor shall it include
any purchaser of Bonds from any Underwriter merely because of
such purchase.
14. Representation of Underwriters.
------------------------------
Any action under this Agreement taken by Morgan Stanley
& Co. Incorporated will be binding upon all the Underwriters.
15. Applicable Law.
--------------
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
<PAGE>
Please confirm that the foregoing correctly sets forth
the agreement between us by signing in the space provided below
for that purpose, whereupon this letter shall constitute a
binding agreement between the Company and the several
Underwriters in accordance with its terms.
Yours very truly,
PP&L, INC.
By:
--------------------------------
Name:
Title:
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the date
first above written.
MORGAN STANLEY & CO. INCORPORATED,
CREDIT SUISSE FIRST BOSTON CORPORATION,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED,
FIRST CHICAGO CAPITAL MARKETS, INC.
By MORGAN STANLEY & CO. INCORPORATED
By:
------------------------------
Name:
Title:
<PAGE>
SCHEDULE A
----------
Additional Matters to be Included
in Accountants' Comfort Letter Pursuant to
Section 7(a)(iv) of Underwriting Agreement
---------------------------------------------
PROSPECTUS CAPTION PAGE ITEMS
------------------ ---- ---------------------------
"SUMMARY FINANCIAL
INFORMATION" . "Ratio
of Earnings to Fixed
Charges -- Total
Enterprise Basis" and
supporting
calculations shown on
Exhibit 12 to the
Registration
Statement. "RECENT
DEVELOPMENTS".
Quarterly net income
and net income per
share
FORM 10-K CAPTION PAGE ITEMS
----------------- ---- ---------------------------
"REVIEW OF THE
COMPANY'S FINANCIAL
CONDITION AND RESULTS
OF OPERATIONS --
Operating Revenues"
Table entitled
"Changes in Operating
Revenues". "REVIEW
OF THE COMPANY'S
FINANCIAL CONDITION
AND RESULTS OF
OPERATIONS --Capital
Expenditures
Requirements"
The Company's actual
construction
expenditures during
the three years 1995-
1997. "REVIEW OF THE
COMPANY'S FINANCIAL
CONDITION AND RESULTS
OF OPERATIONS --
Financial Indicators"
The Company's ratio
of pre-tax income to
interest charges for
1996 and 1997.
CALCULATION AGENCY AGREEMENT
Between
MORGAN STANLEY & CO. INCORPORATED
and
PP&L, INC.
This Calculation Agency Agreement (the "Agreement"),
dated as of May 5, 1998, is made between PP&L, Inc. (the
"Company") and Morgan Stanley & Co. Incorporated (the
"Calculation Agent").
The Company proposes to issue and sell its First
Mortgage Bonds, 6 1/8% REset Put Securities Series Due 2006 (the
"Bonds"), described in a Prospectus Supplement dated April 28,
1998 (the "Prospectus Supplement"), to the Prospectus dated April
2, 1998 (the "Prospectus"), and issued pursuant to a Mortgage and
Deed of Trust dated as of October 1, 1945, between the Company
and Bankers Trust Company (successor to Morgan Guaranty Trust
Company of New York), as Trustee, as amended and supplemented by
sixty-six supplemental indentures (as so amended and
supplemented, the "Indenture"), in an aggregate principal amount
of $200,000,000. The Bonds will be issued and the terms thereof
established in accordance with the Indenture, the form of bond
(the "Form of Bond"), the Prospectus Supplement and the
Prospectus included in the registration statement on Form S-3
filed with the Securities and Exchange Commission (the
"Commission") (Registration No. 333-48809). The Company may from
time to time file with the Commission additional registration
statements and prospectuses relating to the Bonds. The interest
rate on the Bonds will be 6 1/8% upon issuance and may be reset
in accordance with Section 3 hereof and the Form of Bond attached
hereto as Appendix A. Capitalized terms used but not defined
herein shall have the same meanings as in the Form of Bond.
SECTION 1. Appointment of Calculation Agent. The
--------------------------------
Company hereby appoints Morgan Stanley & Co. Incorporated as the
Calculation Agent for the purpose of calculating the Coupon Reset
Rate (as defined below).
SECTION 2. Status of Calculation Agent. Any acts
---------------------------
taken by the Calculation Agent under this Agreement or in
connection with any Bonds, including, specifically, but without
limitation, the calculation of any interest rate for the Bonds,
shall be deemed to have been taken by the Calculation Agent
solely in its capacity as an agent acting on behalf of the
Company and shall not create or imply any obligation to, or any
agency or trust relationship with, any of the owners or holders
of the Bonds.
SECTION 3. Coupon Reset Process. If the Call Option
--------------------
is exercised in accordance with the terms of the Form of Bond
under "Call Option; Put Option", then the following steps (the
"Coupon Reset Process") shall be taken in order to determine the
interest rate to be paid on the Bonds from and including the
Coupon Reset Date to the Final Maturity Date. The Company and
the Calculation Agent shall use reasonable efforts to cause the
actions contemplated below to be completed in as timely a manner
as possible.
(i) The Company shall provide the Calculation Agent
with (a) a list (the "Dealer List"), no later than five
Business Days prior to the Coupon Reset Date, containing the
names and addresses of three dealers, one of which shall be
Morgan Stanley & Co. Incorporated, from which the Company
desires the Calculation Agent to obtain the Bids (as defined
below) for the purchase of such Bonds, and (b) a copy of any
other material reasonably requested by the Calculation Agent
to facilitate a successful Coupon Reset Process.
(ii) Within one Business Day following receipt by the
Calculation Agent of the Dealer List, the Calculation Agent
shall provide to each dealer ("Dealer") on the Dealer List
(a) a copy of the Prospectus Supplement and the Prospectus,
relating to the offering of the Bonds, (b) a copy of the
Form of Bond and (c) a written request that each such Dealer
submit a Bid to the Calculation Agent by 12:00 noon, New
York time, on the third Business Day prior to the Coupon
Reset Date (the "Bid Date"). The time on the Bid Date upon
which Bids will be requested may be changed by the
Calculation Agent to as late as 3:00 p.m. New York City
time. "Bid" shall mean an irrevocable written offer given
by a Dealer for the purchase of all of the Bonds settling on
the Coupon Reset Date, and shall be quoted by such Dealer as
a stated yield to maturity on the Bonds ("Yield to
Maturity"). Each Dealer shall also be provided with (a) the
name of the Company, (b) an estimate of the Purchase Price
(which shall be stated as a US Dollar amount and be
calculated by the Calculation Agent in accordance with
clause (iii) below), (c) the principal amount and Maturity
Date of the Bonds and (d) the method by which interest will
be calculated on the Bonds.
(iii) The purchase price to be paid by any Dealer for
the Bonds (the "Purchase Price") shall be equal to (a) the
principal amount of the Bonds, plus (b) a premium (the "Bond
Premium") which shall be equal to the excess, if any, of (1)
the discounted present value to the Coupon Reset Date of a
bond with a maturity of May 1, 2006 which has an interest
rate of 5.72%, semi-annual interest payments on each May 1
and November 1, commencing November 1, 2001, and a principal
amount equal to the principal amount of the Bonds, and
assuming a discount rate equal to the Treasury Rate over (2)
the principal amount of Bonds. The "Treasury Rate" means
the per annum rate equal to the offer side yield to maturity
of the current on-the-run 5-year United States Treasury
security per Telerate page 500, or any successor page, at
11:00 a.m., New York time, on the Bid Date (or such other
date and time that may be agreed upon by the Company and the
Calculation Agent) or, if such rate does not appear on
Telerate page 500, or any successor page, at such time, such
rate on GovPx End-of-Day Pricing at 3:00 p.m., New York
time, on the Bid Date (or such other date and time that may
be agreed upon by the Company and the Calculation Agent).
(iv) The Calculation Agent shall provide written notice
to the Company by 12:30 p.m., New York time, on the Bid Date
(or within 1/2 hour following the deadline for submission of
Bids, if the deadline has been extended as provided above)
setting forth (a) the names of each of the Dealers from whom
such Calculation Agent received Bids on the Bid Date, (b)
the Bid submitted by each such Dealer and (c) the Purchase
Price as determined pursuant to paragraph (iii) hereof.
Except as provided below, the Calculation Agent shall
thereafter select from the Bids received the Bid with the
lowest Yield to Maturity (the "Selected Bid"); provided,
--------
however, that if such Calculation Agent has not received a
-------
timely Bid from a Dealer on or before the Bid Date, the
Selected Bid shall be the lowest of all Bids received by
such time; and provided further that if any two or more of
-------- -------
the lowest Bids submitted are equivalent, the Company shall
in its sole discretion select any of such equivalent Bids
(and such selected Bid shall be the Selected Bid). The
Calculation Agent shall set the Coupon Reset Rate equal to
the lesser of 9% (the "Maximum Rate") and the rate required
to produce a semi-annual bond equivalent yield on the Bonds
equal to the Yield to Maturity indicated by the Selected Bid
and assuming a purchase price of 100% plus the Bond Premium
on the Coupon Reset Date and payment of the Bonds on the
Final Maturity Date. The Calculation Agent will notify the
Dealer that submitted the Selected Bid by 4:00 p.m., New
York time, on the Bid Date that its Bid was determined to be
the Selected Bid.
(v) Immediately after calculating the Coupon Reset
Rate, the Calculation Agent shall provide written notice to
the Company and the Trustee, setting forth such Coupon Reset
Rate. At the request of the Holders, the Calculation Agent
will provide to the Holders the Coupon Reset Rate. The
Coupon Reset Rate for such Bonds will be effective from and
including the Coupon Reset Date.
(vi) The Callholder shall sell such Bonds to the Dealer
that made the Selected Bid at the Purchase Price; such sale
to be settled on the Coupon Reset Date in immediately
available funds.
(vii) In the event that the Call Option is terminated
in accordance with its terms, the Coupon Reset Process shall
also terminate.
SECTION 4. Rights and Liabilities of the Calculation
-----------------------------------------
Agent. The Calculation Agent shall incur no liability for, or in
-----
respect of, any action taken, omitted to be taken or suffered by
it in reliance upon any certificate, affidavit, instruction,
notice, request, direction, order, statement or other paper,
document or communication reasonably believed by it to be
genuine. Any order, certificate, affidavit, instruction, notice,
request, direction, statement or other communication from the
Company made or given by it and sent, delivered or directed to
the Calculation Agent under, pursuant to, or as permitted by, any
provision of this Agreement shall be sufficient for purposes of
this Agreement if such communication is in writing and signed by
any officer or attorney-in-fact of the Company. The Calculation
Agent may consult with counsel satisfactory to it and the advice
of such counsel shall constitute full and complete authorization
and protection of such Calculation Agent with respect to any
action taken, omitted to be taken or suffered by it hereunder in
good faith and in accordance with and in reliance upon the advice
of such counsel.
SECTION 5. Right of Calculation Agent to Own Bonds.
---------------------------------------
The Calculation Agent, in its individual capacity, and its
officers, employees and shareholders, may buy, sell, hold and
deal in the Bonds and may exercise any vote or join in any action
which any holder of the Bonds may be entitled to exercise or take
as if it were not the Calculation Agent. The Calculation Agent,
in its individual capacity as such, may also engage in or have an
interest in any transaction with the Company or its affiliates as
if it were not the Calculation Agent.
SECTION 6. Duties of Calculation Agent. In acting
---------------------------
under this Agreement in connection with the Bonds, the
Calculation Agent shall be obligated only to perform such duties
as are specifically set forth herein and no other duties or
obligations on the part of such Calculation Agent, in its
capacity as such, shall be implied by this Agreement. In acting
under this Agreement, the Calculation Agent (in its capacity as
such) assumes no obligation towards, or any relationship of
agency or trust for or with, the holders of the Bonds.
SECTION 7. Registration Procedures. If, at any time
-----------------------
when a prospectus is required by the Securities Act of 1933 (the
"Act") to be delivered in connection with sales of the Bonds
(including any sale of Bonds by a Callholder or the underwriters
of the Bonds set forth in the Prospectus Supplement (the
"Underwriters") or any of their affiliates following any exercise
of the Bond Call Option), any event shall occur or condition
shall exist as a result of which it is necessary, in the
reasonable opinion of counsel for the Underwriters or for the
Company, to amend any registration statement or amend or
supplement any prospectus or prospectus supplement in order that
such prospectus or prospectus supplement will not include any
untrue statement of material fact or omit to state a material
fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time
it is delivered to a purchaser, or if it shall be necessary, in
the opinion of such counsel, at any such time to amend any
registration statement or file a new registration statement or
amend or supplement any prospectus or issue a new prospectus or
prospectus supplement in order to comply with the requirements of
the Act or the Commission s interpretations of the Act, the
Company shall prepare and file with the Commission such amendment
or supplement as may be necessary to correct such statement or
omission or to make any such registration statement or any such
prospectus or prospectus supplement comply with such
requirements, or prepare and file any such new registration
statement and prospectus as may be necessary for such purpose,
and furnish to the Underwriters such number of copies of such
amendment, supplement, prospectus or other documents as they may
reasonably request. In addition, the Company shall, in
connection with any such sale of the applicable principal amount
of Bonds by a Callholder or the Underwriters or any of their
affiliates following the exercise by such Callholder of its Bond
Call Option in which a prospectus is required by the Act to be
delivered, (i) execute and deliver or cause to be executed and
delivered legal documentation (including, without limitation, a
purchase agreement or underwriting agreement with customary
indemnities and contribution, covenants, representations and
warranties, expense provisions, conditions, comfort letters and
legal opinions) in form and substance reasonably satisfactory to
such Callholder, (ii) provide promptly upon request updated
consolidated financial statements to the date of its latest
report filed with the Commission, and (iii) to the extent the
Company and the Callholder deem reasonably necessary for
successful completion of the Coupon Reset Process, make available
senior management of the Company for road show and one-on-one
presentations. This Section 7 shall not supercede or modify the
provisions of Section 6(e) of the Underwriting Agreement referred
to in the Prospectus Supplement with respect to the negotiated
public offering and sale of the Bonds pursuant to such
Underwriting Agreement and the Prospectus Supplement and the
Basic Prospectus referred to therein.
SECTION 8. Resignation of the Calculation Agent. The
------------------------------------
Calculation Agent may resign at any time as Calculation Agent,
such resignation to be effective ten Business Days after the
delivery to the Company and the Trustee of notice of such
resignation. The Company may appoint a new Calculation Agent
other than the incumbent Calculation Agent if the incumbent
Calculation Agent resigns. If a new Calculation Agent is
appointed pursuant to this Section 8, the Company shall provide
the Trustee with notice thereof.
SECTION 9. Appointment of Successor Calculation Agent.
------------------------------------------
Any successor Calculation Agent appointed by the Company pursuant
to the provisions of Section 8 or by a court of competent
jurisdiction shall execute and deliver to the incumbent
Calculation Agent and to the Company an instrument accepting such
appointment and thereupon such successor Calculation Agent shall,
without any further act or instrument, become vested with all the
rights, immunities, duties and obligations of the incumbent
Calculation Agent, with like effect as if originally named as
initial Calculation Agent hereunder, and the incumbent
Calculation Agent shall thereupon be obligated to transfer and
deliver, and such successor Calculation Agent shall be entitled
to receive and accept, copies of any available records maintained
by the incumbent Calculation Agent in connection with the
performance of its obligations hereunder.
SECTION 10. Indemnification. The Company shall
---------------
indemnify and hold harmless Morgan Stanley & Co. Incorporated, or
any successor Calculation Agent thereof, and their respective
officers and employees from and against all actions, claims,
damages, liabilities and losses, and costs and expenses related
thereto (including but not limited to reasonable legal fees and
costs) relating to or arising out of actions or omissions in any
capacity hereunder, except actions, claims, damages, liabilities,
losses, costs and expenses caused by the bad faith, gross
negligence or wilful misconduct of Morgan Stanley & Co.
Incorporated or any successor Calculation Agent, or their
respective officers or employees. This Section 10 shall survive
the termination of the Agreement and the payment in full of all
obligations under the Bonds, whether by redemption, repayment or
otherwise.
SECTION 11. Merger, Consolidation or Sale of Business
-----------------------------------------
by Calculation Agent. Any corporation or other entity into
---------------------
which the Calculation Agent may be merged, converted or
consolidated, or any corporation or other entity resulting from
any merger, conversion or consolidation to which such Calculation
Agent may be a party, or any corporation or other entity to which
such Calculation Agent may sell or otherwise transfer all or
substantially all of its business, shall, to the extent permitted
by applicable law, become the Calculation Agent under this
Agreement without the execution of any document or any further
act by the parties hereto.
SECTION 12. Notices. Any notice or other
-------
communication required to be given hereunder shall be delivered
in person, sent by letter, telecopy or telex or communicated by
telephone (subject, in the case of communication by telephone, to
written confirmation dispatched within twenty-four (24) hours) to
the addresses given below or such other address as each party
hereto may subsequently designate in writing.
To the Company:
PP&L, Inc.
Two North Ninth Street
Allentown, PA 18101
Attention: Treasurer
Telephone No.:610-774-5151
Telecopy No.:610-774-5106
To the Trustee:
Bankers Trust Company
4 Albany Street
New York, N.Y. 10008
Attention: Scott Thiel
Telephone No.:212-250-8327
Telecopy No.:212-250-6392
To the Calculation Agent:
Morgan Stanley & Co. Incorporated
1585 Broadway, 3rd Floor
New York, New York 10036
Attention: DPG
Telephone No: (212) 761-2566
Telecopy No.: (212) 761-0580
Any notice hereunder given by telecopy or telex shall be deemed
to have been given when transmitted. Any notice hereunder given
by letter shall be deemed to have been given five business days
after mailing such notice.
SECTION 13. Benefit of Agreement. Except as provided
--------------------
herein, this Agreement is solely for the benefit of the parties
hereto and their successors and assigns, and no other person
shall acquire or have any rights under or by virtue hereof. The
terms "successors" and "assigns" shall not include any purchasers
of any Bonds merely because of such purchase.
SECTION 14. Governing Law. This Agreement shall be
-------------
governed by and construed in accordance with the laws of the
State of New York applicable to agreements entered into and
performed in such State.
SECTION 15. Severability. If any provision of this
------------
Agreement shall be held or deemed to be or shall, in fact, be
invalid, inoperative or unenforceable as applied in any
particular case in any or all jurisdictions because it conflicts
with any provision of any constitution, statute, rule or public
policy or for any other reason, such circumstances shall not have
the effect of rendering the provision in question invalid,
inoperative or unenforceable in any other case, circumstances or
jurisdiction, or of rendering any other provision or provisions
of this Agreement invalid, inoperative or unenforceable to any
extent whatsoever.
SECTION 16. Counterparts. This Agreement may be
------------
executed in several counterparts, each of which shall be regarded
as an original and all of which shall constitute one and the same
instrument.
SECTION 17. Amendments. This Agreement may be amended
----------
by any instrument in writing executed and delivered by each of
the parties hereto.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been entered
into as of the fifth day of May, 1998.
PP&L, INC.
By:
---------------------------
Name:
MORGAN STANLEY & CO. INCORPORATED
By:
---------------------------
Name:
Title:
<PAGE>
Appendix A
(Form of Bond)
May 5, 1998
PP&L, Inc.
Two North Ninth Street
Allentown, PA 18101
Attn: Treasurer
Facsimile: Our Reference: PP&L Call Option
TRANSACTION: (SECURITIES PURCHASE OPTION AGREEMENT -- PP&L, INC.
CALL OPTION WITH MORGAN STANLEY & CO. INTERNATIONAL
LIMITED)
The purpose of this letter agreement (this "Agreement") is to
confirm the terms and conditions of the Transaction entered
into between MORGAN STANLEY & CO. INTERNATIONAL LIMITED, a
corporation organized under the laws of England ("Morgan
Stanley" or "Seller"), and PP&L, INC., a corporation
organized under the laws of the State of Pennsylvania
("Counterparty" or "Buyer"), on the Trade Date specified
below (the "Transaction").
The definitions and provisions contained in the 1991 ISDA
Definitions (as published by the International Swaps and
Derivatives Association, Inc.)(the "1991 Definitions") are
hereby incorporated into this Agreement. In the event of
any inconsistency between those definitions and provisions
and this Agreement, this Agreement will govern. Capitalized
terms not otherwise defined herein shall have the meanings
set forth in the 1991 Definitions.
This Agreement will be governed by and construed in accordance
with the laws of the State of New York without reference to
choice of law doctrine.
The terms of the Transaction to which this Agreement relates are
as follows:
1. GENERAL TERMS:
Trade Date: April 28, 1998.
Option Style: American Option.
Option Type: Call.
Seller: Morgan Stanley & Co.
International Limited.
Buyer: Counterparty.
Bonds: US$ 200,000,000 First Mortgage Bonds 6 %
REset Put Securities Series due 2006 of
the Issuer.
Indenture: The Mortgage and Deed of Trust dated as of
October 1, 1945, between the Issuer and
Bankers Trust Company (successor to Morgan
Guaranty Trust Company of New York), as
trustee, as amended and supplemented by
sixty-six supplemental indentures (as so
amended and supplemented, the
"Indenture"), pursuant to which the Bonds
were issued.
Issuer: Counterparty.
Aggregate Face US$ 200,000,000.
Amount of Bonds:
Settlement Amount: The excess, if any, on the Coupon Reset
Date of (a) the aggregate present value of
the principal and interest payments that
would have been due on the Aggregate Face
Amount of Bonds after such date if such
Bonds bore interest at the rate of 5.72%
and remained outstanding until May 1,
2006, determined by discounting, on a
semi-annual basis, such principal and
interest payments at the Treasury Rate
from the respective dates on which such
payments would have been due, over (b) the
Aggregate Face Amount of Bonds.
Settlement The Coupon Reset Date.
Date:
Treasury Rate: The per annum rate equal to the offer side
yield to maturity of the current on-the-
run 5-year United States Treasury Security
per Telerate page 500, or any successor
page, at 11:00 a.m., New York time, on the
third Business Day prior to the Coupon
Reset Date (the "Bid Date") (or such other
date that may be agreed upon by the
Counterparty and the Calculation Agent)
or, if such rate does not appear on
Telerate page 500, or any successor page,
at such time, such rate on GovPX End-of-
Day Pricing at 3:00 p.m., New York time,
on the Bid Date (or such other date and
time that may be agreed upon by the
Counterparty and the Calculation Agent).
Coupon Reset Date: May 1, 2001.
Premium: None.
Business Day: Any day other than a Saturday, a Sunday or
a day on which banking institutions in the
City of New York are authorized or
required by law or regulation to be
closed.
Business Day Following.
Convention:
Calculation Morgan Stanley & Co. Incorporated
Agent: ("MS&Co."), as described in the
Calculation Agency Agreement dated as of
May 5, 1998, between the Counterparty and
MS&Co., whose determinations shall be
binding in the absence of manifest error.
2. PROCEDURE FOR EXERCISE:
Exercise Period: Any Business Day from, and including,
15 calendar days prior to the Coupon Reset
Date to, and including, the Expiration
Date, between 9:00 a.m. and 3:00 p.m., New
York City time.
Condition to It shall be a condition to exercise of
Exercise: the right granted to the Counterparty
pursuant to this Agreement that the Bond
Call Option shall have been exercised.
Bond Call Option: The call option on the Bonds provided for
in the terms of the Bonds and as assigned
to Morgan Stanley in Section 7.
Exercise Date: The date on which notice of exercise is
given during the Exercise Period.
Expiration Date: The fourth Business Day after 15 calendar
days prior to the Coupon Reset Date;
provided, however, that in the event of a
-------- -------
Market Disruption Event, the Expiration
Date shall be the Bid Date.
Notice of Exercise The Counterparty must deliver
and Written irrevocable notice to Morgan Stanley
Confirmation: (which may be delivered orally, including
by telephone) of its exercise of the right
granted pursuant to this Agreement during
the hours of 9:00 a.m. to 3:00 p.m, New
York time, on any Business Day during the
Exercise Period.
If a notice of exercise is delivered
orally, the Counterparty will execute and
deliver a written confirmation confirming
the substance of that notice and account
details or delivery instructions within
one Business Day of that notice. Failure
to provide that written confirmation will
not affect the validity of that oral
notice.
3. SETTLEMENT TERMS:
If (a) this Agreement has not been terminated and
(b) Morgan Stanley actually has received a Notice of Exercise
from the Counterparty during the Exercise Period, then:
(1) Morgan Stanley shall promptly deliver to the
Counterparty an assignment of all its right, title and
interest and obligations in, to and under the Bond Call
Option;
(2) the Counterparty shall automatically and without
further action assume and be liable for the performance
of all of Morgan Stanley's obligations under the Bond
Call Option; and
(3) the Counterparty shall pay the Settlement Amount (in
immediately available funds) to Morgan Stanley on the
Settlement Date.
4. NOTICE AND ACCOUNT DETAILS:
Morgan Stanley Morgan Stanley & Co. International
Details for Limited
Notice: In care of Morgan Stanley & Co.
Incorporated
1585 Broadway, 3rd Floor
New York, NY 10036
Telephone: 212-761-2566
Telefax: 212-761-0580
Attention: Derivative Products Group --
Legal & Documentation
with a copy to:
Morgan Stanley & Co. Incorporated
1585 Broadway, 3rd Floor
New York, NY 10036
Telephone: 212-761-2566
Telefax: 212-761-0580
Attention: Derivative Products Group --
Legal & Documentation
Counterparty PP&L, Inc.
Details for Two North Ninth Street
Notice: Allentown, PA 18101
Attention: Treasurer
Account Details:
Account Citibank, New York
Details of ABA 021-000-089
Morgan A/c No. 4072-4601
Stanley: BIC: CITIUS 33
Account Mellon Bank, N.A., Philadelphia,
Details of ABA 031-000-037
Counterparty: A/C No. 2-334-233
BIC: MELNUS 3P
5. TERMINATION OF OPTION.
Subject to any payment or delivery obligations pursuant
to this Agreement, upon the termination of the Bond Call
Option by its terms this Transaction shall automatically
terminate. If the Counterparty exercises its rights under
this Agreement as set forth in Section 3, the Counterparty
shall deliver the Settlement Amount to Morgan Stanley and
Morgan Stanley shall assign its rights under the Bond Call
Option in accordance with Section 3 and this Agreement shall
terminate. No other amount shall be payable by Morgan Stanley
or the Counterparty in respect of this Agreement unless the
Bond Call Option was terminated due to any of the following:
(a) at any time prior to the sale of the Bonds on the Bid
Date, an Event of Default has occurred and is continuing under
subsections (a), (b), (c), (d) or (g) of Section 65 under the
Indenture or a Cross-Default has occurred and is continuing
(in such event, termination is at Morgan Stanley's option) or
under subsections (e) or (f) of Section 65 under the Indenture
(in such event, termination is automatic), (b) if following
the Call Notice (as defined in the Bonds), fewer than two
Dealers (as defined in the Bonds) have submitted Bids (as
defined in the Bonds) in a timely manner substantially as
provided in the Bonds, or (c) if, following the Call Notice,
Morgan Stanley fails to pay the Call Price (as defined in the
Bonds) by 2:00 p.m., New York time, on the Business Day prior
to the Coupon Reset Date due to the occurrence of a Market
Disruption Event.
If any of the events set forth in (a), (b) or (c) above
has occurred and the Bond Call Option so terminates, the
Counterparty shall, on the first date the Termination Amount
is calculated (and in no event later than the fifteenth
Business Day following the date of termination of the Bond
Call Option), pay to Morgan Stanley, or its assignee, the
Termination Amount in respect of Morgan Stanley's losses under
the Bond Call Option. Following such termination and upon
payment of the Termination Amount, Morgan Stanley shall
deliver any and all of its remaining rights, if any, under the
Bond Call Option as described under Section 3.
For purposes of this Agreement:
"Market Disruption Event" shall mean any of the
following events, if such events occur or are continuing
on any day from, and including, 15 calendar days prior to
the Coupon Reset Date to, and including, the Bid Date in
the judgment of the Calculation Agent: (a) a suspension
or material limitation in trading in securities generally
on the New York Stock Exchange or the establishment of
minimum prices on such exchange; (b) a general moratorium
on commercial banking activities declared by either
federal or New York State authorities; (c) any material
adverse change in the existing financial, political or
economic conditions in the United States of America;
(d) an outbreak or escalation, of major hostilities
involving the United States of America or the declaration
of a national emergency or war by the United States of
America; or (e) any material disruption of the U.S.
Treasury securities market, U.S. corporate bond market or
U.S. federal wire system; provided, in each case, that in
the judgment of the Calculation Agent the effect of the
foregoing makes it impractical to conduct the coupon
reset process.
"Cross Default" shall mean the occurrence or
existence of (i) a default, event of default or other
similar condition or event (however described) in respect
of the Counterparty (after giving effect to any
applicable notice requirement or grace period) under one
or more agreements or instruments relating to any
obligation (whether present or future, contingent or
otherwise, as principal or surety or otherwise) for the
payment or repayment of any money ("Specified
Indebtedness"), individually or collectively, in an
aggregate amount of not less than $100,000,000, which has
resulted in such Specified Indebtedness becoming, or
becoming capable at such time of being declared, due and
payable under such agreements or instruments, before it
would otherwise have been due and payable, or (ii) a
default by the Counterparty in making one or more
payments on the due date thereof in an aggregate amount
of not less than $100,000,000 under such agreements or
instruments (after giving effect to any applicable notice
requirement or grace period).
"Termination Amount" shall mean the fair market
value, as of the date of the termination of this
Agreement, of the option to receive the Settlement Amount
on the Settlement Date. If this Agreement terminates on
or after 15 calendar days prior to the Coupon Reset Date,
then the Termination Amount shall be deemed to equal the
Settlement Amount. Fair market value shall be determined
by MS&Co., by requesting bids from five Reference
Dealers, one of which shall be MS&Co., within five
Business Days of the date this Agreement terminates.
MS&Co. shall (i) if five bids were made, disregard the
lowest and the highest bid and (ii) average the remaining
bids to determine the fair market value; provided that,
if MS&Co. has not received all five bids within 10
Business Days following the request for such bids, the
fair market value shall be the average of the bids that
have been received by 5:00 p.m. as of the tenth Business
Day following MS&Co.'s initial request for such bids. If
MS&Co. determines that the bids provided do not reflect a
reasonably accurate valuation of the Termination Amount,
the Termination Amount shall equal the amount that MS&Co.
reasonably determines in good faith to be the total
losses and costs of Morgan Stanley in connection with
this Agreement.
"Reference Dealer" shall mean a market dealer,
selected in good faith by MS&Co., that makes markets in
derivative transactions for corporate and U.S. Treasury
securities in the normal course of business.
"Affiliate" shall mean, in relation to any party,
any entity controlled, directly or indirectly, by the
party, any entity that controls, directly or indirectly,
the party or any entity directly or indirectly under a
common control with the party. For this purpose,
"control" of any entity or party means ownership of a
majority of the voting power of the entity or party.
Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by either
party without the prior written consent of the other party;
provided, however, that Morgan Stanley may assign its right to
-------- -------
receive the Termination Amount hereunder to any Affiliate, to
which assignment the Counterparty hereby agrees, upon giving
written notice of such assignment to the Counterparty.
MS&Co.'s sole role under this Agreement and with respect to
the Transaction is as an agent of Morgan Stanley and the
Counterparty on a disclosed basis. MS&Co. is authorized to
act as agent for the Counterparty only to the extent required
to enable Morgan Stanley to satisfy the requirements of Rule
15a-6 of the Securities Exchange Act of 1934, as amended
("Rule 15a-6"), in respect of the Transaction described
herein. MS&Co. shall have no authority to act as agent for
the Counterparty with respect to the Transaction or other
matters governed by this Agreement, except in accordance with
instructions from the Counterparty. MS&Co. does not guarantee
the performance of Morgan Stanley.
6. PAYMENT BY MORGAN STANLEY.
Morgan Stanley will make a payment of US$100,000 to the
Counterparty on May 5, 1998, which amount represents a
reasonable payment for the right to receive the Termination
Amount upon the termination of this Transaction in the
circumstances described in Section 5.
7. ASSIGNMENT OF BOND CALL OPTION.
Morgan Stanley will make a payment of US$2,800,000 to the
Counterparty on May 5, 1998, which amount represents a
reasonable payment for the Counterparty assigning, and the
Counterparty hereby assigns, all its right, title and interest
and obligations in, to and under the Bond Call Option to
Morgan Stanley and Morgan Stanley hereby assumes all the
obligations and liabilities of the Counterparty under the Bond
Call Option.
8. REPRESENTATIONS OF THE PARTIES:
(a) Each party represents and warrants to the other
party that:
(i) Status. It is duly organized and validly
------
existing under the laws of the jurisdiction
of its organization or incorporation and, if
relevant under such laws, in good standing;
(ii) Powers. It has the corporate power to
------
execute, deliver and perform its obligations
under this Agreement and has taken all
necessary action to authorize such execution,
delivery and performance;
(iii) No Violation or Conflict. Such execution,
------------------------
delivery and performance do not violate or
conflict with any law applicable to it, any
provision of its constitutional documents,
any order or judgment of any court or other
agency of government applicable to it or any
of its assets or any contractual restriction
binding on or affecting it or any of its
assets;
(iv) Consents. All governmental and other
--------
consents that are required to have been
obtained by it with respect to this Agreement
have been obtained and are in full force and
effect and all conditions of any such
consents have been complied with;
(v) Obligations Binding. Its obligations under
-------------------
this Agreement constitute its legal, valid
and binding obligations, enforceable in
accordance with their respective terms
(subject to applicable bankruptcy,
reorganization, insolvency, moratorium or
similar laws affecting creditors' rights
generally and subject, as to enforceability,
to equitable principles of general
application (regardless of whether
enforcement is sought in a proceeding in
equity or at law));
(vi) Absence of Litigation. There is not pending
---------------------
or, to its knowledge, threatened against it
or any of its Affiliates any action, suit or
proceeding at law or in equity or before any
court, tribunal, governmental body, agency or
official or any arbitrator that is likely to
affect the legality, validity or
enforceability against it of this Agreement
or its ability to perform its obligations
under this Agreement;
(vii) Non-Reliance. It is acting for its own
------------
account, and it had made its own independent
decisions to enter into this Agreement and as
to whether this Agreement is appropriate or
proper for it based upon its own judgment and
upon advice from such advisers as it has
deemed necessary. It is not relying on any
communication (written or oral) of the other
party as investment advice or as a
recommendation to enter into this Agreement;
it being understood that information and
explanations related to the terms and
conditions of this Agreement shall not be
considered investment advice or a
recommendation to enter into this Agreement.
No communication (written or oral) received
from the other party shall be deemed to be an
assurance or guarantee as to the expected
results of this Agreement;
(viii) Assessment and Understanding. It is capable
----------------------------
of assessing the merits of and understanding
(on its own behalf or through independent
professional advice), and understands and
accepts, the terms, conditions and risks of
this Agreement. It is also capable of
assuming, and assumes, the risks of this
Agreement;
(ix) Status of Parties. The other party is not
-----------------
acting as a fiduciary for or an adviser to
it in respect of this Agreement;
(x) Parties to the Agreement. The Counterparty
------------------------
and Morgan Stanley are the parties to this
Agreement, with MS&Co. as agent for Morgan
Stanley and, subject to the limitations set
forth in Section 5, the Counterparty; and
(xi) Other Matters.
-------------
(1) This Agreement constitutes a "swap
agreement" within the meaning of
Commodity Futures Trading Commission
("CFTC") Regulations Section 35.1(b)(1);
(2) It is an "eligible swap participant"
within the meaning of CFTC Regulations
Section 35.1(b)(2);
(3) This Agreement is not one of a fungible
class of agreements that are
standardized as to their material
economic terms, within the meaning of
CFTC Regulations Section 35.2(b);
(4) The creditworthiness of the other party
was a material consideration in entering
into or determining the terms of this
Agreement, including pricing, cost or
credit enhancement terms, within the
meaning of CFTC Regulations Section
35.2(c);
(5) It has entered into this Agreement in
conjunction with its line of business
(including financial intermediation
services) or the financing of its
business; and
(6) It is a Qualified Institutional Buyer as
defined in Rule 144A under the
Securities Act of 1933, as amended.
(b) The Counterparty represents and warrants to Morgan
Stanley that no Event of Default under the Indenture
has occurred and is continuing and no such event or
circumstance would occur as a result of its entering
into or performing its obligations under this
Agreement.
9. BASIC COVENANTS:
Each party agrees with the other that, so long as either
party has or may have any obligation under this Agreement:
(a) Maintain Authorizations. It will use all reasonable
-----------------------
efforts to maintain in full force and effect all
consents of any governmental or other authority that
are required to be obtained by it with respect to
this Agreement and will use all reasonable efforts
to obtain any that may become necessary in the
future.
(b) Comply with Laws. It will comply in all material
----------------
respects with all applicable laws and orders to
which it may be subject if failure so to comply
would materially impair its ability to perform its
obligations under this Agreement; and
(c) Procedures.
----------
(i) This Agreement will be effected through
MS&Co., as agent for the parties;
(ii) MS&Co. will be responsible for the
operational aspects of this Agreement, such
as record keeping and reporting;
(iii) Unless the Counterparty is a "major U.S.
institutional investor" (as defined in Rule
15a-6), neither party will contact the other
without the direct involvement of MS&Co.;
(iv) MS&Co. has no obligation, by guaranty,
endorsement or otherwise, with respect to
performance of either party's obligations;
and
(v) MS&Co.'s sole role under this Agreement is as
an agent of the parties on a disclosed basis.
(d) Purchase of Bonds. Without the prior approval of
-----------------
Morgan Stanley, the Counterparty may not (i)
purchase any of the Bonds prior to the Coupon Reset
Date or (ii) discontinue use of the system of book-
entry transfers through The Depository Trust Company
(or a successor securities depositary) prior to the
Coupon Reset Date.
10. GENERAL PROVISIONS:
(a) Jurisdiction. With respect to any suit, action or
------------
proceedings relating to this Agreement
("Proceedings"), each party irrevocably:
(i) submits to the exclusive jurisdiction of the
courts of the State of New York and the
United States District Court located in the
Borough of Manhattan in New York City; and
(ii) waives any objection which it may have at any
time to the laying of venue of any
Proceedings brought in any such court, waives
any claim that such Proceedings have been
brought in an inconvenient forum and further
waives the right to object, with respect to
such Proceedings, that such court does not
have any jurisdiction over such party.
(b) Waiver of Jury Trial. Each party waives, to the
--------------------
fullest extent permitted by applicable law, any
right it may have to a trial by jury in respect of
any Proceedings. Each party (i) certifies that no
representative, agent or attorney or other party has
represented, expressly or otherwise, that such other
party would not, in the event of litigation, seek to
enforce the foregoing waiver and (ii) acknowledges
that it has been induced to enter into this
Agreement by, among other things, the mutual waivers
and certifications set forth above in this Section.
(c) Expenses. If either the Counterparty, on the one
--------
hand, or Morgan Stanley, on the other hand, is in
default of its obligations under this Agreement,
such party will, on demand, indemnify and hold
harmless the other party for and against all
reasonable out-of-pocket expenses, including legal
fees, incurred by such other party by reason of the
enforcement and protection of its rights under this
Agreement in connection with any default, including,
but not limited to, costs of collection.
(d) Currency. All cash amounts required to be paid
--------
under this Agreement shall be in US$.
(e) Interpretation. When a reference is made in this
--------------
Agreement to a Section, such reference shall be to
a Section of this Agreement unless otherwise
indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect
in any way the meaning or interpretation of this
Agreement.
(f) Counterparts.
------------
(i) This Agreement may be executed in one or more
counterparts, all of which shall be
considered one and the same agreement and
each of which shall be deemed an original.
(ii) This Agreement shall become effective when
one or more counterparts have been signed by
each of the parties and delivered to the
other parties.
(g) Entire Agreement; No Third-Party Beneficiaries.
----------------------------------------------
This Agreement constitutes the entire agreement,
and supersedes all prior agreements and
understandings, both written and oral, among the
parties with respect to the subject matter of this
Agreement and is not intended to confer upon any
person other than the parties any rights or
remedies.
(h) Amendments. No amendment, modification or waiver in
----------
respect of this Agreement will be effective unless
in writing (including a writing evidenced by a
facsimile transmission) and executed by each of the
parties.
(i) No Waiver of Rights. A failure or delay in
-------------------
exercising any right, power or privilege in respect
of this Agreement will not be presumed to operate as
a waiver, and a single or partial exercise of any
right, power or privilege will not be presumed to
preclude any subsequent or further exercise, of that
right, power or privilege or the exercise of any
other right, power or privilege.
(j) Remedies Cumulative. Except as provided in this
-------------------
Agreement, the rights, powers, remedies and
privileges provided in this Agreement are cumulative
and not exclusive of any rights, powers, remedies
and privileges provided by law.
<PAGE>
In consideration of the mutual representations,
warranties and covenants herein contained, and on the terms
and subject to the conditions herein set forth, please confirm
that the foregoing correctly sets forth the terms of our
agreement by executing this Agreement and returning it to us.
Very truly yours,
MORGAN STANLEY & CO.
INTERNATIONAL LIMITED,
by
--------------------
Name:
Title:
MORGAN STANLEY & CO.
INCORPORATED, as agent,
by
--------------------
Name:
Title:
Accepted and confirmed as of the date
first above-written:
PP&L, INC.,
by
--------------------
Name:
Title:
-----------------------------------------------------------------
PP&L, INC.
(FORMERLY PENNSYLVANIA POWER & LIGHT COMPANY)
TO
BANKERS TRUST COMPANY
(SUCCESSOR TO MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
FORMERLY GUARANTY TRUST COMPANY OF NEW YORK)
AS TRUSTEE UNDER PP&L, INC.'S
MORTGAGE AND DEED OF TRUST,
DATED AS OF OCTOBER 1, 1945
_____________________________
SIXTY-SIXTH SUPPLEMENTAL INDENTURE
PROVIDING AMONG OTHER THINGS FOR
FIRST MORTGAGE BONDS, 6 1/8% RESET PUT SECURITIES SERIES DUE 2006
_____________________________
DATED AS OF MAY 1, 1998
=================================================================
<PAGE>
SIXTY-SIXTH SUPPLEMENTAL INDENTURE
SIXTY-SIXTH SUPPLEMENTAL INDENTURE, dated as of the 1ST
day of May, 1998 made and entered into by and between PP&L, INC.
(formerly Pennsylvania Power & Light Company), a corporation of
the Commonwealth of Pennsylvania, whose address is Two North
Ninth Street, Allentown, Pennsylvania 18101 (hereinafter
sometimes called the Company), and BANKERS TRUST COMPANY
(successor to Morgan Guaranty Trust Company of New York, formerly
Guaranty Trust Company of New York), a corporation of the State
of New York, whose address is 4 Albany Street, New York, New York
10006 (hereinafter sometimes called the Trustee), as Trustee
under the Mortgage and Deed of Trust, dated as of October 1, 1945
(hereinafter called the Mortgage and, together with any
indentures supplemental thereto, hereinafter called the
Indenture), which Mortgage was executed and delivered by PP&L,
Inc. to secure the payment of bonds issued or to be issued under
and in accordance with the provisions of the Mortgage, reference
to which said Mortgage is hereby made, this instrument
(hereinafter called the Sixty-sixth Supplemental Indenture) being
supplemental thereto;
WHEREAS, said Mortgage was or is to be recorded in
various Counties in the Commonwealth of Pennsylvania, which
Counties include or will include all Counties in which this
Sixty-sixth Supplemental Indenture is to be recorded; and
WHEREAS, an instrument, dated August 5, 1994, was
executed by the Company appointing Bankers Trust Company as
Trustee in succession to said Morgan Guaranty Trust Company of
New York (resigned) under the Indenture, and by Bankers Trust
Company accepting said appointment, which instrument was or is to
be recorded in various Counties in the Commonwealth of
Pennsylvania; and
WHEREAS, by an amendment to its Articles of
Incorporation filed with the Office of the Secretary of State of
Pennsylvania on September 12, 1997, the Company changed its name
to PP&L, Inc.; and
WHEREAS, by the Mortgage the Company covenanted that it
would execute and deliver such supplemental indenture or
indentures and such further instruments and do such further acts
as might be necessary or proper to carry out more effectually the
purposes of the Indenture and to make subject to the lien of the
Indenture any property thereafter acquired and intended to be
subject to the lien thereof; and
WHEREAS, the Company executed and delivered to the
Trustee, as supplements to the Mortgage, the following
supplemental indentures:
Designation Dated as of
----------- -----------
First Supplemental Indenture July 1, 1947
Second Supplemental Indenture December 1, 1948
Third Supplemental Indenture February 1, 1950
Fourth Supplemental Indenture March 1, 1953
Fifth Supplemental Indenture August 1, 1955
Sixth Supplemental Indenture December 1, 1961
Seventh Supplemental Indenture March 1, 1964
Eighth Supplemental Indenture June 1, 1966
Ninth Supplemental Indenture November 1, 1967
Tenth Supplemental Indenture December 1, 1967
Eleventh Supplemental Indenture January 1, 1969
Twelfth Supplemental Indenture June 1, 1969
Thirteenth Supplemental Indenture March 1, 1970
Fourteenth Supplemental Indenture February 1, 1971
Fifteenth Supplemental Indenture February 1, 1972
Sixteenth Supplemental Indenture January 1, 1973
Seventeenth Supplemental Indenture May 1, 1973
Eighteenth Supplemental Indenture April 1, 1974
Nineteenth Supplemental Indenture October 1, 1974
Twentieth Supplemental Indenture May 1, 1975
Twenty-first Supplemental Indenture November 1, 1975
Twenty-second Supplemental Indenture December 1, 1976
Twenty-third Supplemental Indenture December 1, 1977
Twenty-fourth Supplemental Indenture April 1, 1979
Twenty-fifth Supplemental Indenture April 1, 1980
Twenty-sixth Supplemental Indenture June 1, 1980
Twenty-seventh Supplemental Indenture June 1, 1980
Twenty-eighth Supplemental Indenture December 1, 1980
Twenty-ninth Supplemental Indenture February 1, 1981
Thirtieth Supplemental Indenture February 1, 1981
Thirty-first Supplemental Indenture September 1, 1981
Thirty-second Supplemental Indenture April 1, 1982
Thirty-third Supplemental Indenture August 1, 1982
Thirty-fourth Supplemental Indenture October 1, 1982
Thirty-fifth Supplemental Indenture November 1, 1982
Thirty-sixth Supplemental Indenture February 1, 1983
Thirty-seventh Supplemental Indenture November 1, 1983
Thirty-eighth Supplemental Indenture March 1, 1984
Thirty-ninth Supplemental Indenture April 1, 1984
Fortieth Supplemental Indenture August 15, 1984
Forty-first Supplemental Indenture December 1, 1984
<PAGE>
Designation Dated as of
----------- -----------
Forty-second Supplemental Indenture June 15, 1985
Forty-third Supplemental Indenture October 1, 1985
Forty-fourth Supplemental Indenture January 1, 1986
Forty-fifth Supplemental Indenture February 1, 1986
Forty-sixth Supplemental Indenture April 1, 1986
Forty-seventh Supplemental Indenture October 1, 1986
Forty-eighth Supplemental Indenture March 1, 1988
Forty-ninth Supplemental Indenture June 1, 1988
Fiftieth Supplemental Indenture January 1, 1989
Fifty-first Supplemental Indenture October 1, 1989
Fifty-second Supplemental Indenture July 1, 1991
Fifty-third Supplemental Indenture May 1, 1992
Fifty-fourth Supplemental Indenture November 1, 1992
Fifty-fifth Supplemental Indenture February 1, 1993
Fifty-sixth Supplemental Indenture April 1, 1993
Fifty-seventh Supplemental Indenture June 1, 1993
Fifty-eighth Supplemental Indenture October 1, 1993
Fifty-ninth Supplemental Indenture February 15, 1994
Sixtieth Supplemental Indenture March 1, 1994
Sixty-first Supplemental Indenture March 15, 1994
Sixty-second Supplemental Indenture September 1, 1994
Sixty-third Supplemental Indenture October 1, 1994
Sixty-fourth Supplemental Indenture August 1, 1995
Sixty-fifth Supplemental Indenture April 1, 1997
which supplemental indentures were recorded in various Counties
in the Commonwealth of Pennsylvania; and
WHEREAS, the Company executed and delivered to the
Trustee its Supplemental Indenture, dated July 1, 1954, creating
a security interest in certain personal property of the Company,
pursuant to the provisions of the Pennsylvania Uniform Commercial
Code, as a supplement to the Mortgage, which Supplemental
Indenture was filed in the Office of the Secretary of the
Commonwealth of Pennsylvania on July 1, 1954, and all subsequent
supplemental indentures were so filed; and
WHEREAS, in addition to the property described in the
Mortgage, as heretofore supplemented, the Company has acquired
certain other property, rights and interests in property; and
WHEREAS, the Company has heretofore issued, in
accordance with the provisions of the Mortgage, as supplemented,
the following series of First Mortgage Bonds:
PRINCIPAL PRINCIPAL
AMOUNT AMOUNT
SERIES ISSUED OUTSTANDING
------ --------- -----------
3% Series due 1975 $93,000,000 None
2-3/4% Series due 1977 20,000,000 None
3-1/4% Series due 1978 10,000,000 None
2-3/4% Series due 1980 37,000,000 None
3-1/2% Series due 1983 25,000,000 None
3-3/8% Series due 1985 25,000,000 None
4-5/8% Series due 1991 30,000,000 None
4-5/8% Series due 1994 30,000,000 None
5-5/8% Series due 1996 30,000,000 None
6-3/4% Series due 1997 30,000,000 None
6-1/2% Series due 1972 15,000,000 None
7% Series due 1999 40,000,000 None
8-1/8% Series due
June 1, 1999 40,000,000 None
9% Series due 2000 50,000,000 None
7-1/4% Series due 2001 60,000,000 None
7-5/8% Series due 2002 75,000,000 None
7-1/2% Series due 2003 80,000,000 None
Pollution Control
Series A 28,000,000 None
9-1/4% Series due 2004 80,000,000 None
10-1/8% Series due 1982 100,000,000 None
9-3/4% Series due 2005 125,000,000 None
9-3/4% Series due
November 1, 2005 100,000,000 None
8-1/4% Series due 2006 150,000,000 None
8-1/2% Series due 2007 100,000,000 None
9-7/8% Series due
1983-1985 100,000,000 None
15-5/8% Series due 2010 100,000,000 None
11-3/4% Series due 1984 30,000,000 None
Pollution Control
Series B 70,000,000 None
Pollution Control
Series C 20,000,000 None
14% Series due
December 1, 1990 125,000,000 None
15% Series due 1984-1986 50,000,000 None
14-3/4% Series A due
1986 30,000,000 None
14-3/4% Series B
due 1986 20,000,000 None
16-1/2% Series
due 1987-1991 52,000,000 None
<PAGE>
PRINCIPAL PRINCIPAL
AMOUNT AMOUNT
SERIES ISSUED OUTSTANDING
------ --------- -----------
16-1/8% Series due 1992 $100,000,000 None
16-1/2% Series due 1986-1990 92,500,000 None
13-1/4% Series due 2012 100,000,000 None
Pollution Control Series D 70,000,000 None
12-1/8% Series due 1989-1993 50,000,000 None
13-1/8% Series due 2013 125,000,000 None
Pollution Control Series E 37,750,000 None
13-1/2% Series due 1994 125,000,000 None
Pollution Control Series F 115,500,000 None
12-3/4% Series due 2014 125,000,000 None
Pollution Control Series G 55,000,000 None
12% Series due 2015 125,000,000 None
10-7/8% Series due 2016 125,000,000 None
9-5/8% Series due 1996 125,000,000 None
9% Series due 2016 125,000,000 None
9-1/2% Series due 2016 125,000,000 None
9-1/4% Series due 1998 125,000,000 None
9-5/8% Series due 1998 125,000,000 None
10% Series due 2019 125,000,000 None
9-1/4% Series due 2019 250,000,000 $215,000,000
9-3/8% Series due 2021 150,000,000 99,750,000
7-3/4% Series due 2002 150,000,000 150,000,000
8-1/2% Series due 2022 150,000,000 150,000,000
Pollution Control Series H 90,000,000 90,000,000
6-7/8% Series due 2003 100,000,000 100,000,000
7-7/8% Series due 2023 200,000,000 200,000,000
5-1/2% Series due 1998 150,000,000 None
6-1/2% Series due 2005 125,000,000 125,000,000
6% Series due 2000 125,000,000 125,000,000
6-3/4% Series due 2023 150,000,000 150,000,000
Pollution Control Series I 53,250,000 53,250,000
6.55% Series due 2006 150,000,000 150,000,000
7.30% Series due 2024 150,000,000 150,000,000
6-7/8% Series due 2004 150,000,000 150,000,000
7-3/8% Series due 2014 100,000,000 100,000,000
Pollution Control
Series J 115,500,000 115,500,000
7.70% Series due 2009 200,000,000 200,000,000
Pollution Control Series K 55,000,000 55,000,000
Short-Term Series A 800,000,000 None
which bonds are also sometimes called bonds of the First through
Seventy-third Series, respectively; and
WHEREAS, Section 8 of the Mortgage provides that the
form of each series of bonds (other than the First Series) issued
thereunder shall be established by Resolution of the Board of
Directors of the Company and that the form of such series, as
established by said Board of Directors, shall specify the
descriptive title of the bonds and various other terms thereof,
and may also contain such provisions not inconsistent with the
provisions of the Indenture as the Board of Directors may, in its
discretion, cause to be inserted therein expressing or referring
to the terms and conditions upon which such bonds are to be
issued and/or secured under the Indenture; and
WHEREAS, Section 120 of the Mortgage provides, among
other things, that any power, privilege or right expressly or
impliedly reserved to or in any way conferred upon the Company by
any provision of the Indenture, whether such power, privilege or
right is in any way restricted or is unrestricted, may be in
whole or in part waived or surrendered or subjected to any
restriction if at the time unrestricted or to additional
restriction if already restricted, and the Company may enter into
any future covenants, limitations or restrictions for the benefit
of any one or more series of bonds issued thereunder, or the
Company may cure any ambiguity contained therein or in any
supplemental indenture or may establish the terms and provisions
of any series of bonds other than said First Series, by an
instrument in writing executed and acknowledged by the Company in
such manner as would be necessary to entitle a conveyance of real
estate to record in all of the States in which any property at
the time subject to the lien of the Indenture shall be situated;
and
WHEREAS, the Company now desires to create a new series
of bonds and to add to its covenants and agreements contained in
the Mortgage, as heretofore supplemented, certain other covenants
and agreements to be observed by it and to alter and amend in
certain respects the covenants and provisions contained in the
Mortgage; and
WHEREAS, the execution and delivery by the Company of
this Sixty-sixth Supplemental Indenture, and the terms of the
bonds of the Seventy-fourth Series, hereinafter referred to, have
been duly authorized by the Board of Directors of the Company by
appropriate Resolutions of said Board of Directors;
NOW, THEREFORE, THIS INDENTURE WITNESSETH: That PP&L,
Inc., 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 in further evidence of assurance of the estate, title and
rights of the Trustee and in order further to secure the payment
both of the principal of and interest and premium, if any, on the
bonds from time to time issued under the Indenture, according to
their tenor and effect and the performance of all the provisions
of the Indenture (including any modification made as in the
Mortgage provided) and of said bonds, hereby grants, bargains,
sells, releases, conveys, assigns, transfers, mortgages, pledges,
sets over and confirms (subject, however, to Excepted
Encumbrances as defined in Section 6 of the Mortgage) unto
Bankers Trust Company, as Trustee under the Indenture, and to its
successor or successors in said trust, and to said Trustee and
its successors and assigns forever, all property, real, personal
and mixed, of the kind or nature specifically mentioned in the
Mortgage, as heretofore supplemented, or of any other kind or
nature, acquired by the Company after the date of the execution
and delivery of the Sixty-fifth Supplemental Indenture (except
any herein or in the Mortgage, as heretofore supplemented,
expressly excepted and except any which may not lawfully be
mortgaged or pledged under the Indenture), now owned or, subject
to the provisions of Section 87 of the Mortgage, hereafter
acquired by the Company (by purchase, consolidation, merger,
donation, construction, erection or in any other way) and
wheresoever situated, including (without in anywise limiting or
impairing by the enumeration of the same the scope and intent of
the foregoing) all lands, power sites, flowage rights, water
rights, water locations, water appropriations, ditches, flumes,
reservoirs, reservoir sites, canals, raceways, dams, dam sites,
aqueducts, and all other rights or means for appropriating,
conveying, storing and supplying water; all rights of way and
roads; all plants for the generation of electricity by steam,
water and/or other power; all power houses, gas plants, street
lighting systems, standards and other equipment incidental
thereto, telephone, radio and television systems,
air-conditioning systems and equipment incidental thereto, water
works, water systems, steam heat and hot water plants,
substations, lines, service and supply systems, bridges,
culverts, tracks, ice or refrigeration plants and equipment,
offices, buildings and other structures and the equipment
thereof; all machinery, engines, boilers, dynamos, electric, gas
and other machines, regulators, meters, transformers, generators,
motors, electrical, gas and mechanical appliances, conduits,
cables, water, steam heat, gas or other pipes, gas mains and
pipes, service pipes, fittings, valves and connections, pole and
transmission lines, wires, cables, tools, implements, apparatus,
furniture and chattels; all municipal and other franchises,
consents or permits; all lines for the transmission and
distribution of electric current, gas, steam heat or water for
any purpose including towers, poles, wires, cables, pipes,
conduits, ducts and all apparatus for use in connection
therewith; all real estate, lands, easements, servitudes,
licenses, permits, franchises, privileges, rights of way and
other rights in or relating to real estate or the occupancy of
the same and (except as herein or in the Mortgage, as heretofore
supplemented, expressly excepted) all the right, title and
interest of the Company in and to all other property of any kind
or nature appertaining to and/or used and/or occupied and/or
enjoyed in connection with any property hereinbefore or in the
Mortgage, as heretofore supplemented, described.
TOGETHER with all and singular the tenements,
hereditaments, prescriptions, servitudes, and appurtenances
belonging or in anywise appertaining to the aforesaid property or
any part thereof, with the reversion and reversions, remainder
and remainders and (subject to the provisions of Section 57 of
the Mortgage) the tolls, rents, revenues, issues, earnings,
income, product and profits thereof, 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.
IT IS HEREBY AGREED by the Company that, subject to the
provisions of Section 87 of the Mortgage and to the extent
permitted by law, all the property, rights, and franchises
acquired by the Company (by purchase, consolidation, merger,
donation, construction, erection or in any other way) after the
date hereof, except any herein or in the Mortgage, as heretofore
supplemented, expressly excepted, shall be and are as fully
granted and conveyed hereby and as fully embraced within the lien
hereof and the lien of the Indenture, as if such property, rights
and franchises were now owned by the Company and were
specifically described herein and conveyed hereby.
IT IS HEREBY DECLARED by the Company that all the
property, rights and franchises now owned or hereafter acquired
by the Company have been, or are, or will be owned or acquired
with the intention to use the same in carrying on the business or
branches of business of the Company, and it is hereby declared
that it is the intention of the Company that all thereof, except
any herein or in the Mortgage, as heretofore supplemented,
expressly excepted, shall (subject to the provisions of Section
87 of the Mortgage and to the extent permitted by law) be
embraced within the lien of this Sixty-sixth Supplemental
Indenture and the lien of the Indenture.
PROVIDED that the following are not and are not
intended to be now or hereafter granted, bargained, sold,
released, conveyed, assigned, transferred, mortgaged, pledged,
set over or confirmed hereunder and are hereby expressly excepted
from the lien and operation of this Sixty-sixth Supplemental
Indenture and from the lien and operation of the Indenture, viz:
---
(1) cash, shares of stock, bonds, notes and other obligations and
other securities not hereafter specifically pledged, paid,
deposited, delivered or held under the Indenture or covenanted so
to be; (2) goods, wares, merchandise, equipment, apparatus,
materials, or supplies held for the purpose of sale or other
disposition in the usual course of business; fuel, oil and
similar materials and supplies consumable in the operation of any
of the properties of the Company; construction equipment acquired
for temporary use; all aircraft, rolling stock, trolley coaches,
buses, motor coaches, automobiles and other vehicles and
materials and supplies held for the purposes of repairing or
replacing (in whole or part) any of the same; all timber,
minerals, mineral rights and royalties; (3) bills, notes and
accounts receivable, judgments, demands and choses in action, and
all contracts, leases and operating agreements not specifically
pledged under the Indenture or covenanted so to be; the Company's
contractual rights or other interest in or with respect to tires
not owned by the Company; (4) the last day of the term of any
lease or leasehold which may be or become subject to the lien of
the Indenture; and (5) electric energy, gas, steam, ice, and
other materials or products generated, manufactured, produced or
purchased by the Company for sale, distribution or use in the
ordinary course of its business; provided, however, that the
property and rights expressly excepted from the lien and
operation of the Indenture in the above subdivisions (2) and (3)
shall (to the extent permitted by law) cease to be so excepted in
the event and as of the date that the Trustee or a receiver or
trustee shall enter upon and take possession of the Mortgaged and
Pledged Property in the manner provided in Article XIII of the
Mortgage by reason of the occurrence of a Default as defined in
Section 65 thereof, as supplemented by the provisions of this
Sixty-sixth Supplemental Indenture.
TO HAVE AND TO HOLD all such properties, real, personal
and mixed, granted, bargained, sold, released, conveyed,
assigned, transferred, mortgaged, pledged, set over or confirmed
by the Company as aforesaid, or intended so to be, unto Bankers
Trust Company, as Trustee, and its successors and assigns
forever.
IN TRUST NEVERTHELESS for the same purposes and upon
the same terms, trusts and conditions and subject to and with the
same provisos and covenants as are set forth in the Mortgage, as
heretofore supplemented, this Sixty-sixth Supplemental Indenture
being supplemental to the Mortgage.
AND IT IS HEREBY COVENANTED by the Company that all the
terms, conditions, provisos, covenants and provisions contained
in the Mortgage, as heretofore supplemented, shall affect and
apply to the property hereinbefore described and conveyed and to
the estate, rights, obligations and duties of the Company and the
Trustee and the beneficiaries of the trust with respect to said
property, and to the Trustee and its successors as Trustee of
said property in the same manner and with the same effect as if
the said property had been owned by the Company at the time of
the execution of the Mortgage, and had been specifically and at
length described in and conveyed to the Trustee, by the Mortgage
as a part of the property therein stated to be conveyed.
The Company further covenants and agrees to and with
the Trustee and its successors in said trust under the Indenture,
as follows:
ARTICLE I
SEVENTY-FOURTH SERIES OF BONDS
SECTION 1. There shall be a series of bonds designated
"6 1/8% REset Put Securities Series Due 2006" (herein sometimes
referred to as the "Seventy-fourth Series"), each of which shall
also bear the descriptive title First Mortgage Bonds. Bonds of
the Seventy-fourth Series shall be limited to $200,000,000 in
aggregate principal amount except as provided in Section 16 of
the Mortgage and shall mature on the Final Maturity Date and
shall be subject to the Call Option and Mandatory Put as provided
in the form of bond of the Seventy-fourth Series, and shall be
issued as fully registered bonds in denominations of One Thousand
Dollars and in any multiple or multiples of One Thousand Dollars;
they shall bear interest, payable on the Interest Payment Dates,
as provided in the form of bond of the Seventy-fourth Series; the
principal of and interest on each said bond to be payable at the
office or agency of the Company in the Borough of Manhattan, The
City of New York, and interest on each said bond to be also
payable at the office of the Company in the City of Allentown,
Pennsylvania, in such coin or currency of the United States of
America as at the time of payment is legal tender for public and
private debts. Bonds of the Seventy-fourth Series shall be dated
as in Section 10 of the Mortgage provided.
(I) Bonds of the Seventy-fourth Series shall be in
substantially the following form, with such insertions, omissions
and variations as the officer of the Company executing such bond
may determine, such determination to be conclusively evidenced by
such officer's execution of such bond:
[(SEE LEGEND AT THE END OF THIS
BOND FOR RESTRICTIONS ON TRANSFERABILITY
AND CHANGE OF FORM)]
([Temporary] Registered Bond)
PP&L, INC.
First Mortgage Bond, 6 1/8% REset Put Securities Series Due 2006
No. R CUSIP NO.:_____________
Final Maturity Date: May 1, 2006
Initial Interest Rate: 6 1/8%
Coupon Reset Date: May 1, 2001
Interest Payment Dates: May 1 and November 1 of each year,
commencing November 1, 1998
Maximum Rate: 9% per annum
PP&L, INC., a corporation of the Commonwealth of Pennsylvania
(hereinafter called the Company), for value received, hereby
promises to pay to ______________, or to registered assigns,
________________________________________________________________
___ Dollars on the Final Maturity Date specified above, at the
office or agency of the Company in the Borough of Manhattan, The
City of New York, in such coin or currency of the United States
of America as the time of payment is legal tender for public and
private debts, and to pay interest thereon as provided for
herein.
This bond will bear interest at the Initial Interest
Rate specified above from and including May 1, 1998 to but
excluding the Coupon Reset Date specified above. Interest on
this bond will be payable semi-annually on the Interest Payment
Dates, specified above, of each year, commencing November 1,
1998. Interest will be calculated based on a 360-day year
consisting of twelve 30-day months. On each Interest Payment
Date, interest will be payable to the persons in whose name this
bond is registered on the fifteenth calendar day (whether or not
a Business Day) immediately preceding the related Interest
Payment Date (each, a "Record Date"). "Business Day" means any
day other than a Saturday, a Sunday or a day on which banking
institutions in The City of New York are authorized or obligated
by law, executive decree or governmental decree to be closed.
If the Callholder (as defined below) elects to purchase
this bond pursuant to the Call Option (as defined below), the
Calculation Agent (as defined below) will reset the interest rate
for this bond effective on the Coupon Reset Date, pursuant to the
Coupon Reset Process described below; provided, however, that the
annual interest rate on this bond shall not under any
circumstance exceed 9% (the "Maximum Rate"). In such
circumstance, (i) this bond will be purchased from the holder(s)
by the Callholder at a price equal to 100% of the principal
amount thereof on the Coupon Reset Date, on the terms and subject
to the conditions described herein (interest accrued to the
Coupon Reset Date will be paid by the Company on such date to
holder(s) as of the most recent Record Date), and (ii) on and
after the Coupon Reset Date, this bond will bear interest at the
Coupon Reset Rate determined by the Calculation Agent in
accordance with the procedures set forth below.
This bond [is a temporary bond and] is one of an issue
of bonds of the Company issuable in series and is one of a series
known as its First Mortgage Bonds, 6 1/8% REset Put Securities
Series Due 2006 ("Bonds"), the bonds of this series being limited
to $200 million in aggregate principal amount, all bonds of all
series issued and to be issued under and equally secured (except
insofar as any sinking or other fund, established in accordance
with the provisions of the Mortgage hereinafter mentioned, may
afford additional security for the bonds of any particular
series) by a Mortgage and Deed of Trust (herein, together with
any indenture supplemental thereto, including the Sixty-sixth
Supplemental Indenture dated as of May 1, 1998, called the
Mortgage), dated as of October 1, 1945, executed by the Company
to Guaranty Trust Company of New York (Bankers Trust Company,
successor), as Trustee. Reference is made to the Mortgage and to
any resolutions or written orders filed with the Trustee with
respect to the Sixty-sixth Supplemental Indenture or this bond
for a description of the property mortgaged and pledged, the
nature and extent of the security, the rights of the holders of
the bonds and of the Trustee in respect thereof, the duties and
immunities of the Trustee and the terms and conditions upon which
the bonds are and are to be secured and the circumstances under
which additional bonds may be issued. With the consent of the
Company and to the extent permitted by and as provided in the
Mortgage, the rights and obligations of the Company and/or the
rights of the holders of the bonds and/or coupons and/or the
terms and provisions of the Mortgage may be modified or altered
by such affirmative vote or votes of the holders of bonds then
outstanding as are specified in the Mortgage.
The principal hereof may be declared or may become due
prior to the Final Maturity Date hereinbefore named on the
conditions, in the manner and at the time set forth in the
Mortgage, upon the occurrence of a default as in the Mortgage
provided.
This bond is transferable as prescribed in the Mortgage
by the registered owner hereof in person, or by his duly
authorized attorney, at the office or agency of the Company in
the Borough of Manhattan, The City of New York, upon surrender
and cancellation of this bond, and, thereupon, a new fully
registered temporary or definitive bond of the same series for a
like principal amount and like other terms will be issued to the
transferee in exchange herefor as provided in the Mortgage. The
Company and the Trustee may deem and treat the person in whose
name this bond is registered as the absolute owner and holder
hereof for the purpose of receiving payment and for all other
purposes and neither the Company nor the Trustee shall be
affected by any notice to the contrary.
[In the manner prescribed in the Mortgage, this
temporary bond is exchangeable at the office or agency of the
Company in the Borough of Manhattan, The City of New York,
without charge, for a definitive bond or bonds of the same series
of a like aggregate principal amount and like other terms when
such definitive bonds are prepared and ready for delivery. In
the manner prescribed in the Mortgage, this temporary bond is
exchangeable upon surrender thereof at said office or agency for
a like aggregate principal amount of bonds with like other terms
in temporary form of this series of other authorized
denominations.]
As provided in the Mortgage, the Company shall not be
required to make transfers or exchanges of bonds of this series
for a period of ten (10) days next preceding any interest payment
date for bonds of this series.
No recourse shall be had for the payment of the
principal of (and premium, if any) or interest on this bond
against any incorporator or any past, present or future
subscriber to the capital stock, stockholder, officer or director
of the Company or of any predecessor or successor corporation, as
such, either directly or through the Company or any predecessor
or successor corporation, under any rule of law, statute or
constitution or by the enforcement of any assessment or
otherwise, all such liability of incorporators, subscribers,
stockholders, officers and directors being released by the holder
or owner hereof by the acceptance of this bond and being likewise
waived and released by the terms of the Mortgage.
This bond shall not become obligatory until Bankers Trust
Company, the Trustee under the Mortgage, or its successor
thereunder, shall have signed the form of authentication
certificate endorsed hereon.
CALL OPTION; MANDATORY PUT
(i) Call Option. By giving irrevocable notice to the
Trustee in the manner described below (the "Call Notice"), the
Company has the right to purchase all of the Bonds (including
this bond), in whole but not in part, on the Coupon Reset Date
(the "Call Option"), at a price equal to 100% of the principal
amount thereof (the "Call Price"). The Company may assign to
Morgan Stanley & Co. International Limited all its right, title
and interest and obligation in, to and under the Call Option, and
the Company, or in the event of such an assignment, Morgan
Stanley & Co. International Limited, and any successor thereof,
is herein referred to as the "Callholder". The Callholder will
be required to give the Call Notice to the Trustee, in writing,
prior to 4:00 p.m., New York City time, no later than fifteen
calendar days prior to the Coupon Reset Date. The Call Notice
shall contain delivery details satisfactory to the Trustee,
including the identity of the Callholder's account with the
Depositary (as defined below). If the Callholder exercises the
Call Option by giving the Call Notice, (i) not later than 2:00
p.m., New York City time on the Business Day prior to the Coupon
Reset Date, the Callholder shall pay the amount of the Call Price
in immediately available funds to the Trustee for payment of the
Call Price to the holders of the Bonds (including this bond) on
the Coupon Reset Date and (ii) the holders of this bond will be
required to deliver, and will be deemed to have delivered, this
bond against payment therefor on the Coupon Reset Date through
the facilities of The Depositary Trust Company or its successor,
as Depository for the Bonds (the "Depository"), and will be
required to accept the Call Price on such date in full
satisfaction of this bond. The Callholder is not required to
exercise the Call Option, and no holder of this bond or any
interest therein will have any right or claim against the
Callholder as a result of the Callholder's decision whether or
not to exercise the Call Option or performance or nonperformance
of its obligations with respect thereto.
(ii) Mandatory Put. If the Callholder does not
purchase the Bonds on the Coupon Reset Date for any reason, the
Trustee will be obligated to exercise on behalf of the holders of
this bond the right to require the Company to purchase this bond,
in whole but not in part (the "Mandatory Put"), on the Coupon
Reset Date at a price equal to 100% of the principal amount
thereof (the "Put Price"), and by its purchase hereof, each
holder irrevocably agrees that the Trustee shall exercise the
Mandatory Put for and on its behalf as provided herein. If the
Trustee exercises the Mandatory Put, then the Company shall
deliver the Put Price in immediately available funds to the
Trustee by no later than 12:00 noon, New York City time, on the
Coupon Reset Date, and the holders of this bond will be required
to deliver, and will be deemed to have delivered, this bond to
the Company against payment therefor on the Coupon Reset Date
through the facilities of the Depository, and will be required to
accept the Put Price on such date in full satisfaction of this
bond. No holder of this bond or any interest therein has the
right to consent or object to the exercise of the Trustee's
duties under the Mandatory Put.
COUPON RESET PROCESS
Pursuant to and subject to the terms of a Calculation
Agency Agreement, dated as of May 5, 1998 between the Company and
Morgan Stanley & Co. Incorporated, Morgan Stanley & Co.
Incorporated has been appointed the calculation agent for the
Bonds (in such capacity as calculation agent, the "Calculation
Agent", which term shall include any successor). If the
Callholder exercises the Call Option, then the following steps
(the "Coupon Reset Process") shall be taken in order to determine
the interest rate to be paid on the Bonds (including this bond)
from and including such Coupon Reset Date to but excluding the
Final Maturity Date (the "Coupon Reset Rate"). The Calculation
Agency Agreement provides that the Company and the Calculation
Agent will use reasonable efforts to cause the actions
contemplated below to be completed in as timely a manner as
possible.
(a) The Company will provide the Calculation
Agent with (i) a list (the "Dealer List") no later than
five Business Days prior to the Coupon Reset Date,
containing the names and addresses of three dealers,
one of which shall be Morgan Stanley & Co.
Incorporated, from which the Company desires the
Calculation Agent to obtain Bids (as defined below) for
the purchase of the Bonds and (ii) such other material
reasonably requested by the Calculation Agent to
facilitate a successful Coupon Reset Process.
(b) Within one Business Day following receipt by
the Calculation Agent of the Dealer List, the
Calculation Agent will provide to each dealer
("Dealer") on the Dealer List (i) a copy of the
Prospectus Supplement dated April 28, 1998, together
with the accompanying Prospectus dated April 2, 1998,
relating to the offering of the Bonds, (ii) a copy of
the form of Bonds and (iii) a written request that each
Dealer submit a Bid to the Calculation Agent by 12:00
noon, New York City time, on the third Business Day
prior to the Coupon Reset Date (the "Bid Date"). The
time on the Bid Date upon which Bids will be requested
may be changed by the Calculation Agent to as late as
3:00 p.m., New York City time. "Bid" means an
irrevocable written offer given by a Dealer for the
purchase of all Bonds, settling on the Coupon Reset
Date, quoted by such Dealer as a stated yield to
maturity on the Bonds ("Yield to Maturity"). Each
Dealer will also be provided with (i) the name of the
Company, (ii) an estimate of the Purchase Price (stated
as a U.S. dollar amount and calculated by the
Calculation Agent in accordance with paragraph (c)
below), (iii) the principal amount and Final Maturity
Date of the Bonds and (iv) the method by which interest
will be calculated on the Bonds, including this bond.
(c) The purchase price to be paid by any Dealer
for the Bonds (the "Purchase Price") will be equal to
(i) the principal amount of the Bonds, plus (ii) a
premium (the "Bond Premium") which shall be equal to
the excess, if any, of (A) the discounted present value
to the Coupon Reset Date of a bond with a maturity of
May 1, 2006 which has an interest rate of 5.72%, semi-
annual interest payments on each May 1 and November 1,
commencing November 1, 2001, and a principal amount
equal to the principal amount of the Bonds, and
assuming a discount rate equal to the Treasury Rate
over (B) the principal amount of the Bonds. The
"Treasury Rate" means the per annum rate equal to the
offer side yield to maturity of the current on-the-run
five-year United States Treasury Security per Telerate
page 500 (or any successor or substitute page as may
replace such page on such service), at 11:00 a.m., New
York City time, on the Bid Date (or such other time or
date that may be agreed upon by the Company and the
Calculation Agent) or, if such rate does not appear on
Telerate page 500 (or any successor or substitute page
as may replace such page on such service), at such
time, such rate on GovPX End-of-Day Pricing at 3:00
p.m., New York City time, on the Bid Date (or such
other time or date that may be agreed upon by the
Company and the Calculation Agent).
(d) The Calculation Agent will provide written
notice to the Company by 12:30 p.m., New York City time
on the Bid Date (or within 1/2 hour following the
deadline for submission of Bids, if the deadline has
been extended as provided above) setting forth (i) the
names of each of the Dealers from which the Calculation
Agent received Bids on the Bid Date, (ii) the Bid
submitted by each such Dealer and (iii) the Purchase
Price as determined pursuant to paragraph (c) above.
Unless the Call Option has terminated, the Calculation
Agent will thereafter select from the Bids timely
received the Bid with the lowest Yield to Maturity (the
"Selected Bid") and set the Coupon Reset Rate to be the
lesser of the Maximum Rate and the rate required to
produce a semi-annual bond equivalent yield on the
Bonds equal to the Yield to Maturity indicated by the
Selected Bid and assuming a purchase price of 100% plus
the Bond Premium on the Coupon Reset Date and payment
of the Bonds on the Final Maturity Date; provided,
however, that if any two or more of the lowest Bids
submitted are equivalent, the Company shall in its sole
discretion select any of such equivalent Bids (and such
selected Bid shall be the Selected Bid). The exercise
of the Call Option by the Callholder shall constitute
its agreement that the selection of the Selected Bid by
the Calculation Agent shall constitute acceptance by
the Callholder of the Selected Bid.
(e) Immediately after calculating the Coupon
Reset Rate for this bond, the Calculation Agent will
provide written notice to the Company and the Trustee,
setting forth the Coupon Reset Rate. The Coupon Reset
Rate for this bond will be effective from and including
the Coupon Reset Date.
If at any time prior to the sale of this bond on the
Bid Date (i) an Event of Default has occurred and is continuing
under any of clauses (a), (b), (c), (d) and (g) of Section 65 of
the Mortgage or a Cross-Default (as defined below) has occurred
and is continuing, the Callholder may terminate the Call Option
by written notice to the Company and the Trustee; and (ii) if any
Event of Default under clauses (e) or (f) of Section 65 of the
Mortgage has occurred and is continuing, the Call Option shall
immediately and automatically terminate. If, following the
exercise of the Call Option (x) the Calculation Agent determines
that a Market Disruption Event (as defined below) has occurred
and is continuing, and as a result thereof, the Callholder fails
to pay the Call Price by 2:00 p.m., New York City time on the
Business Day immediately preceding the Coupon Reset Date, or (y)
fewer than two Dealers have submitted Bids in a timely manner
substantially as provided above, the exercise of the Call Option
will be automatically revoked, and the Call Option shall
immediately terminate. If the Call Option terminates as
described above, the Trustee will exercise the Mandatory Put on
behalf of the holders of the Bonds on the Coupon Reset Date.
"Cross-Default" means the occurrence or existence of (a) a
default, event of default or other similar condition or event
(however described) in respect of the Company (after giving
effect to any applicable notice requirement or grace period), in
one or more agreements or instruments relating to any obligation
(whether present or future, contingent or otherwise, as principal
or surety or otherwise) for the payment or repayment of any money
("Specified Indebtedness"), individually or collectively, in an
aggregate amount of not less than $100,000,000 which has resulted
in such Specified Indebtedness becoming, or becoming capable at
such time of being declared due and payable under such agreements
or instruments, before it would otherwise have been due and
payable or (b) a default by the Company in making one or more
payments on the due date thereof in an aggregate amount of not
less than $100,000,000 under such agreements or instruments
(after giving effect to any applicable notice requirement or
grace period). "Market Disruption Event" means any of the
following if such events occur and are continuing on any day from
and including the date of the Call Notice to and including the
Bid Date in the judgment of the Calculation Agent: (i) a
suspension or material limitation in trading in securities
generally on the New York Stock Exchange or the establishment of
minimum prices on such exchange; (ii) a general moratorium on
commercial banking activities declared by either federal or New
York State authorities; (iii) any material adverse change in the
existing financial, political or economic conditions in the
United States of America; (iv) an outbreak or escalation of major
hostilities involving the United States of America or the
declaration of a national emergency or war by the United States;
or (v) any material disruption of the U.S. government securities
market, U.S. corporate bond market or U.S. federal wire system;
provided, in each case, that in the judgment of the Calculation
Agent the effect of the foregoing makes it impractical to conduct
the Coupon Reset Process.
IN WITNESS WHEREOF, PP&L, INC. has caused this
instrument to be signed in its corporate name by its President or
one of its Vice Presidents by signature of such officer or a
facsimile thereof, and its corporate seal to be impressed or
imprinted hereon and attested by its Secretary or one of its
Assistant Secretaries by signature of such officer or a facsimile
thereof.
PP&L, INC.
By________________________________
[Vice] President
ATTEST:
__________________________
[Assistant] Secretary
Dated:
TRUSTEE'S AUTHENTICATION CERTIFICATE
This bond is one of the bonds, of the series herein
designated, described or provided for in the within-mentioned
Mortgage.
BANKERS TRUST COMPANY,
as Trustee
By___________________________
Authorized Officer
[Unless and until this bond is exchanged in whole or in part
for certificated bonds registered in the names of the various
beneficial holders hereof as then certified to the Trustee by The
Depository Trust Company or its successor (the "Depositary"),
this bond may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor
Depositary or a nominee of such successor Depositary.
Unless this certificate is presented by an authorized
representative of the Depositary to the Company or its agent for
registration of transfer, exchange or payment, and any
certificate to be issued is registered in the name of Cede & Co.,
or in such other name as is requested by an authorized
representative of the Depositary and any amount payable
thereunder is made payable to Cede & Co., or such other name, ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede
& Co., has an interest herein.
This bond may be exchanged for certificated bonds registered
in the names of the various beneficial owners hereof if (a) the
Depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by the
Company within 90 days, or (b) the Company elects to issue
certificated bonds to beneficial owners (as certified to the
Company by the Depositary).]
[End of Bond Form]
(II) The Company has initially designated The
Depository Trust Company as the Depository (the "Depository") for
the bonds of the Seventy-fourth series. For as long as the bonds
of the Seventy-fourth series are registered in the name of the
Depository or its nominee, all payments of interest, principal
and other amounts in respect of such bonds may be made to the
Depository or its nominee in accordance with the Depository's
applicable procedures. Notwithstanding any provision hereof or
in the Indenture, none of the Company, the Callholder, or the
Trustee, nor any agent of any such person, shall have any
responsibility with respect to the Depository's procedures or for
any payments, transfers or other transactions, or any notices or
other communications, among the Depository, any of its direct or
indirect participants and any beneficial owners of such bonds.
Each of the Company, the Callholder, the Trustee and any agent
for any such person may treat the registered holder as the sole
and exclusive owner of the bonds of the Seventy-fourth series for
all purposes under the Indenture, including for making payments
on such bonds and for providing notices and obtaining consents
under the Indenture.
The Trustee agrees to exercise the Mandatory Put on
behalf of the holders of the bonds of the Seventy-fourth series
as provided in the form of such bonds set forth herein. In
anticipation of the exercise of the Call Option or the Mandatory
Put on the Coupon Reset Date, the Trustee will notify the
registered holders of such Bonds, not less than 30 days nor more
than 60 days prior to the Coupon Reset Date, in the manner
provided in the Indenture, that all bonds of the Seventy-fourth
series are required to be delivered on the Coupon Reset Date
against payment of the Call Price by the Callholder under the
Call Option or payment of the Put Price by the Company under the
Mandatory Put. Notwithstanding anything herein to the contrary,
no failure to give any such notice or any defect in any notice so
given shall affect the requirement to deliver the bonds or the
validity of the proceedings for such delivery, on the Coupon
Reset Date as provided herein.
At the option of the registered owner, any bonds of the
Seventy-fourth Series, upon surrender thereof, for cancellation,
at the office or agency of the Company in the Borough of
Manhattan, The City of New York, shall be exchangeable for a like
aggregate principal amount of bonds of the same series, interest
rate and maturity of other authorized denominations.
Bonds of the Seventy-fourth Series shall be
transferable, upon the surrender thereof for cancellation,
together with a written instrument of transfer in form approved
by the registrar duly executed by the registered owner or by his
duly authorized attorney, at the office or agency of the Company
in the Borough of Manhattan, The City of New York.
Upon any transfer or exchange of bonds of the Seventy-
fourth Series, the Company may make a charge therefor sufficient
to reimburse it for any tax or taxes or other governmental
charge, as provided in Section 12 of the Mortgage, but the
Company hereby waives any right to make a charge in addition
thereto for any exchange or transfer of bonds of the Seventy-
fourth Series.
The holders of bonds of the Seventy-fourth Series
consent that the Company may, but shall not be obligated to, fix
a record date for the purpose of determining the holders of bonds
of the Seventy-fourth Series entitled to consent to any
amendment, supplement or waiver. If a record date is fixed,
those persons who were holders at such record date (or their duly
designated proxies), and only those persons, shall be entitled to
consent to such amendment, supplement or waiver or to revoke any
consent previously given, whether or not such persons continue to
be holders after such record date. No such consent shall be
valid or effective for more than 90 days after such record date.
ARTICLE II
MAINTENANCE AND REPLACEMENT FUND COVENANT -- DIVIDEND COVENANT --
OTHER RELATED PROVISIONS OF THE MORTGAGE
SECTION 2. Subject to the provisions of Section 3
hereof, the Company covenants and agrees that the provisions of
Section 39 of the Mortgage, which were to remain in effect so
long as any bonds of the First Series remained Outstanding, shall
remain in full force and effect so long as any bonds of the
Seventy-fourth Series are Outstanding.
Clause (d) of subsection (II) of Section 4 of the
Mortgage, as heretofore amended, is hereby further amended by
inserting the words "and Seventy-fourth Series" after the words
"and Seventy-third Series" each time such words appear therein.
Clause (6) and clause (e) of Section 5 of the Mortgage
and Section 29 of the Mortgage, as heretofore amended, are hereby
further amended by inserting therein "Seventy-fourth" before
"Seventy-third" each time such words occur therein.
ARTICLE III
MISCELLANEOUS PROVISIONS
SECTION 3. The Company reserves the right to make such
amendments to the Mortgage, as supplemented, as shall be
necessary in order to delete subsection (I) of Section 39 of the
Mortgage, and each holder of bonds of the Seventy-fourth Series
hereby consents to such deletion without any other or further
action by any holder of bonds of the Seventy-fourth Series.
SECTION 4. Pursuant to the right reserved in Section 4
of the Fourteenth Supplemental Indenture, the Company hereby
amends the Mortgage, as supplemented, to amend Article XIX to
read as described in said Section 4.
SECTION 5. The terms defined in the Mortgage, as
heretofore supplemented, shall, for all purposes of this Sixty-
sixth Supplemental Indenture, have the meanings specified in the
Mortgage, as heretofore supplemented.
SECTION 6. Whenever in this Sixty-sixth Supplemental
Indenture either of the parties hereto is named or referred to,
this shall, subject to the provisions of Articles XVI and XVII of
the Mortgage, be deemed to include the successors and assigns of
such party, and all the covenants and agreements in this Sixty-
sixth Supplemental Indenture contained by or on behalf of the
Company, or by or on behalf of the Trustee shall, subject as
aforesaid, bind and inure to the respective benefits of the
respective successors and assigns of such parties, whether so
expressed or not.
SECTION 7. So long as any bonds of the Seventy-fourth
Series remain Outstanding, unless this provision shall have been
waived in writing by the holders of seventy per centum (70%) in
aggregate principal amount of bonds of the Seventy-fourth Series
Outstanding at the time of such consent, subdivision (c) of
Section 65 of the Mortgage shall read as follows:
"(c) Failure to pay interest or premium, if any,
upon or principal (whether at maturity as therein
expressed or by declaration, or otherwise) of any
Outstanding Qualified Lien Bonds or of any outstanding
indebtedness secured by any mortgage or other lien (not
included in the term Excepted Encumbrances) prior to
the lien of this Indenture, existing upon any property
of the Company which is subject to the lien and
operation of this Indenture continued beyond the period
of grace, if any, specified in such mortgage or
Qualified Lien or other lien securing the same;"
SECTION 8. A breach of a specified covenant or
agreement of the Company contained in this Sixty-sixth
Supplemental Indenture shall become a Default under the Indenture
upon the happening of the events provided in Section 65(g) of the
Mortgage with respect to such a covenant or agreement.
SECTION 9. The Trustee hereby accepts the trusts
herein declared, provided, created or supplemented and agrees to
perform the same upon the terms and conditions herein and in the
Mortgage, as heretofore supplemented, set forth and upon the
following terms and conditions:
The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of
this Sixty-sixth Supplemental Indenture or for or in respect of
the recitals contained herein, all of which recitals are made by
the Company solely. Each and every term and condition contained
in Article XVII of the Mortgage, as heretofore amended by said
First through Sixty-fifth Supplemental Indentures, shall apply to
and form part of this Sixty-sixth Supplemental Indenture with the
same force and effect as if the same were herein set forth in
full with such omissions, variations and insertions, if any, as
may be appropriate to make the same conform to the provisions of
this Sixty-sixth Supplemental Indenture.
SECTION 10. Nothing in this Sixty-sixth Supplemental
Indenture, expressed or implied, is intended, or shall be
construed, to confer upon, or to give to, any person, firm or
corporation, other than the parties hereto and the holders of the
bonds and coupons Outstanding under the Indenture, any right,
remedy or claim under or by reason of this Sixty-sixth
Supplemental Indenture or by any covenant, condition,
stipulation, promise or agreement hereof, and all the covenants,
conditions, stipulations, promises and agreements in this Sixty-
sixth Supplemental Indenture contained by or on behalf of the
Company shall be for the sole and exclusive benefit of the
parties hereto, and of the holders of the bonds and coupons
Outstanding under the Indenture.
SECTION 11. This Sixty-sixth Supplemental Indenture
shall be executed in several counterparts, each of which shall be
an original and all of which shall constitute but one and the
same instrument.
PP&L, INC. does hereby constitute and appoint John R.
Biggar to be its attorney for it, and in its name and as and for
its corporate act and deed to acknowledge this Sixty-sixth
Supplemental Indenture before any person having authority by the
laws of the Commonwealth of Pennsylvania to take such
acknowledgment, to the intent that the same may be duly recorded,
and BANKERS TRUST COMPANY does hereby constitute and appoint
______________ to be its attorney for it, and in its name and as
and for its corporate act and deed to acknowledge this Sixty-
sixth Supplemental Indenture before any person having authority
by the laws of the Commonwealth of Pennsylvania to take such
acknowledgment, to the intent that the same may be duly recorded.
<PAGE>
IN WITNESS WHEREOF, PP&L, INC. has caused its corporate
name to be hereunto affixed, and this instrument to be signed and
sealed by its President or one of its Vice Presidents, and its
corporate seal to be attested by its Secretary or one of its
Assistant Secretaries for and in its behalf, in the City of
Allentown, Pennsylvania, and BANKERS TRUST COMPANY has caused its
corporate name to be hereunto affixed, and this instrument to be
signed and sealed by one of its Vice Presidents or one of its
Trust Officers, and its corporate seal to be attested by one of
its Assistant Vice Presidents, in The City of New York, as of the
day and year first above written.
PP&L, INC.
By
----------------------------------
Senior Vice President - Financial
Attest:
_______________________________________
Assistant Secretary
<PAGE>
BANKERS TRUST COMPANY,
as Trustee
By
----------------------------
Assistant Vice President
Attest:
---------------------------------
Assistant Treasurer
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
) ss.:
COUNTY OF LEHIGH )
On this day of , 1998, before me, a notary
public, the undersigned officer, personally appeared JOHN R.
BIGGAR, who acknowledged himself to be the Senior Vice President
Financial of PP&L INC., a corporation and that he, as such Senior
Vice President Financial, being authorized to do so, executed the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as Senior Vice
President Financial.
In witness whereof, I hereunto set my hand and official
seal.
--------------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 30th day of April, 1998, before me, a notary
public, the undersigned officer, personally appeared SCOTT THEIL,
who acknowledged himself to be an Assistant Vice President of
BANKERS TRUST COMPANY, a corporation and that he, as such
Assistant Vice President, being authorized to do so, executed the
foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as Assistant Vice
President.
In witness whereof, I hereunto set my hand and official
seal.
-------------------------------------
SHARON V. ALSTON
Notary Public, State of New York
No. 31-4966275
Qualified in New York County
Commission Expires 5/7/98
Bankers Trust Company hereby certifies that its precise name
and address as Trustee hereunder are:
Bankers Trust Company
4 Albany Street
New York, New York 10006
BANKERS TRUST COMPANY
By
---------------------------
Assistant Vice President
REID & PRIEST LLP
40 West 57th Street
New York, NY 10019
Telephone 212 603-2000
Fax 212 603-2001
New York, New York
May 1, 1998
PP&L, Inc.
Two North Ninth Street
Allentown, Pennsylvania 18101-1179
Ladies and Gentlemen:
Reference is made to the prospectus supplement, (the
"Prospectus"), dated April 28, 1998, filed by PP&L, Inc. with the
Securities and Exchange Commission on April 30, 1998 pursuant to
Rule 424 under the Securities Act of 1933, as amended, relating
to the offering of PP&L, Inc.'s First Mortgage Bonds, 6 1/8%
REset Put Securities Series due 2006 (the "Bonds").
We are of the opinion that the statements set forth
under the caption "Certain United States Federal Income Tax
Considerations" in the Prospectus constitute an accurate
description, in general terms, of certain United States federal
income tax considerations that may be relevant to the prospective
holders of the Bonds.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the references to us
in the Prospectus under the caption "Certain United States
Federal Income Tax Considerations."
Very truly yours,
/s/ Reid & Priest LLP
REID & PRIEST LLP
