<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 3, 1995
REGISTRATION NO. 33-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
PP&L RESOURCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COMMONWEALTH OF 4911 23-2758192
PENNSYLVANIA (PRIMARY STANDARD (I.R.S. EMPLOYER
(STATE OR OTHER INDUSTRIAL IDENTIFICATION NUMBER)
JURISDICTION OF CLASSIFICATION CODE
INCORPORATION OR NUMBER)
ORGANIZATION)
TWO NORTH NINTH STREET, ALLENTOWN, PENNSYLVANIA 18101
(610) 774-5151
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
JOHN R. BIGGAR, VICE PRESIDENT-FINANCE
PENNSYLVANIA POWER & LIGHT COMPANY
TWO NORTH NINTH STREET
ALLENTOWN, PENNSYLVANIA 18101
(610) 774-5151
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
WITH COPIES TO:
VINCENT PAGANO, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 455-3125
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
----------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box: [_]
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE FEE(3)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value................. 159,980,922 $20.5625 $3,289,607,708.63 $533,798.41
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Includes (a) 156,392,018 shares to be issued in exchange for shares of
Common Stock of Pennsylvania Power & Light Company ("PP&L") upon the
effectiveness of the proposed Restructuring referred to herein and (b)
3,588,904 shares in connection with the Dividend Reinvestment Plan of the
PP&L, which is to be assumed by the Registrant upon the effectiveness of
the restructuring.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(1), based on the average of the high and low sales
prices for shares of Common Stock of Pennsylvania Power & Light Company on
the New York Stock Exchange consolidated tape on February 27, 1995.
(3) Pursuant to Rule 457(b), the total required fee of $1,134,347.49 has been
reduced by the $600,549.08 filing fee previously paid at the time of
filing of preliminary proxy materials in connection with this transaction
on January 10, 1995.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PP&L RESOURCES, INC.
CROSS REFERENCE SHEET PURSUANT TO RULE 404(A) AND ITEM 501 OF REGULATION S-K
SHOWING THE LOCATION IN THE PROXY STATEMENT AND PROSPECTUS OF THE INFORMATION
REQUIRED TO BE INCLUDED THEREIN IN ACCORDANCE WITH
PART 1 OF FORM S-4
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER LOCATION OR HEADING IN THE
AND CAPTION PROXY STATEMENT AND PROSPECTUS
-------------------- ------------------------------
<C> <C> <S>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus. Facing page; Outside Front Cover Page
of Proxy Statement and Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus.................... "Available Information";
"Incorporation of Certain Documents
by Reference"; "Table of Contents"
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information.......... Outside Front Cover Page of Proxy
Statement and Prospectus; "Summary"
4. Terms of the Transaction................ "Summary"; "Proposal No. 1; Holding
Company Restructuring"
5. Pro Forma Financial Information......... *
6. Material Contacts With the Company Being
Acquired............................... "Proposal No. 1: Holding Company
Restructuring"
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters.............. *
8. Interests of Named Experts and Counsel.. *
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................ *
10. Information with Respect to S-3
Registrants............................ "Available Information";
"Incorporation of Certain Documents
by Reference"
11. Incorporation of Certain Information by
Reference.............................. "Available Information";
"Incorporation of Certain Documents
by Reference"
12. Information with Respect to S-2 or S-3
Registrants............................ *
13. Incorporation of Certain Information by
Reference.............................. *
14. Information with Respect to Registrants
other Than S-3 or S-2 Registrants...... *
15. Information with Respect to S-3
Companies.............................. "Available Information";
"Incorporation of Certain Documents
by Reference"
16. Information with Respect to S-2 or S-3
Companies.............................. *
17. Information with Respect to Companies
Other Than S-3 or S-2 Companies........ *
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER LOCATION OR HEADING IN THE
AND CAPTION PROXY STATEMENT AND PROSPECTUS
-------------------- ------------------------------
<C> <C> <S>
18. Information if Proxies, Consents or
Authorizations are to be Solicited..... "Summary"; "Information About the Annual
Meeting"; "Outstanding Stock and Voting
Rights"; "Proposal No. 1: Holding
Company Restructuring--Rights of
Dissenting Shareowners";
"Miscellaneous"; "Method and Expense of
Solicitation of Proxies"; "Annual
Report"
19. Information if Proxies, Consents or
Authorizations are not to be Solicited
or in an Exchange Offer................ *
</TABLE>
- -------
* Item is omitted because the answer is negative or the item is inapplicable.
2
<PAGE>
[LOGO OF PENNSYLVANIA POWER AND LIGHT APPEARS HERE]
Dear Shareowner:
It is a pleasure to invite you to attend the 1995 Annual Meeting of
Shareowners, which will be held at 1:30 p.m. on Wednesday, April 26, 1995, at
Lehigh University's Stabler Arena, Lower Saucon Valley Goodman Campus Complex,
Bethlehem, Pennsylvania.
We especially look forward to your attendance this year because, in addition
to observing PP&L's 75th anniversary, we will be asking for your approval of
the proposal to form a holding company. As more fully explained in Proposal 1
of the accompanying Proxy Statement and Prospectus, our industry is becoming
increasingly subject to the forces of market-driven competition. To maintain
continued growth and financial strength in this competitive environment, we
must position the Company to take advantage of new business opportunities as
they arise. These opportunities include those in the unregulated power
business, which we are already pursuing through Power Markets Development
Company -- a new subsidiary created for this purpose.
The formation of a holding company will provide a structure more conducive to
the pursuit of these and other potential business opportunities. We are taking
these actions to ultimately maximize the value of your investment in the
Company, as we position ourselves to be winners in the new electric energy
marketplace. FOR THESE REASONS, THE BOARD OF DIRECTORS CONSIDERS THIS PROPOSED
STRUCTURE TO BE IN THE BEST INTERESTS OF PP&L AND ITS SHAREOWNERS, AND STRONGLY
RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO FORM A HOLDING COMPANY STRUCTURE.
Detailed information as to the business to be transacted at the meeting is
contained in the accompanying Notice of Annual Meeting and combined Proxy
Statement and Prospectus. We will conclude the formal portion of the meeting
with a discussion of PP&L's operations, and a question and answer period will
follow.
We hope that you will be able to attend in person. If you plan to attend,
please complete and return the enclosed reservation card to facilitate making
arrangements for the meeting. If you are unable to attend the meeting but have
any questions or comments on PP&L's operations, we would like to hear from you.
YOUR VOTE IS EXTREMELY IMPORTANT. WHETHER YOU OWN ONE SHARE OR MANY, PLEASE
MARK, SIGN, DATE AND RETURN YOUR PROXY AS SOON AS POSSIBLE SO THAT YOU WILL BE
REPRESENTED AT THE MEETING IN ACCORDANCE WITH YOUR WISHES.
Sincerely yours,
/s/ William F. Hecht
William F. Hecht
Chairman, President
and Chief Executive Officer
<PAGE>
[LOGO OF PP&L APPEARS HERE]
PENNSYLVANIA POWER & LIGHT COMPANY
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
APRIL 26, 1995
The Annual Meeting of Shareowners of Pennsylvania Power & Light Company
("PP&L") will be held at Lehigh University's Stabler Arena, Lower Saucon
Valley Goodman Campus Complex, Bethlehem, Pennsylvania, on Wednesday, April
26, 1995, at 1:30 p.m., for the purposes stated below and more fully described
in the accompanying Proxy Statement and Prospectus, and to transact such other
business as may properly come before the Meeting or any adjournments thereof:
1. The approval of a restructuring pursuant to an Agreement and Plan
of Exchange whereby PP&L Resources, Inc., a Pennsylvania
corporation formed by PP&L ("Resources"), will become the parent
company of PP&L.
2. The election of five directors of PP&L for a term of three years.
3. The approval of the Amended and Restated Directors Deferred
Compensation Plan.
4. The approval of the Amended and Restated Incentive Compensation
Plan for officers and other key employees.
5. The ratification of the appointment of Price Waterhouse LLP as
independent auditors for PP&L and Resources for the year ending
December 31, 1995.
The Board of Directors is not aware of any other matters to be presented for
action at the Annual Meeting. If any other business should properly come
before the meeting, it is the intention of the Board of Directors that the
persons named in the Proxy will vote in accordance with their best judgment.
IN ACCORDANCE WITH PENNSYLVANIA LAW, SHAREOWNERS DO NOT HAVE DISSENTERS
APPRAISAL RIGHTS IN CONNECTION WITH THE RESTRUCTURING DESCRIBED ABOVE.
If the Annual Meeting is interrupted or delayed for any reason, the
shareowners attending the adjourned Meeting shall constitute a quorum and may
act upon such business as may properly come before the Meeting.
AFTER READING THE PROXY STATEMENT AND PROSPECTUS, PLEASE MARK, SIGN, DATE
AND RETURN YOUR PROXY AS SOON AS POSSIBLE, TO ASSURE YOUR REPRESENTATION AT
THIS IMPORTANT MEETING.
Only shareowners of record at the close of business on Tuesday, February 28,
1995, will be entitled to vote at the Annual Meeting or any adjournments
thereof.
By Order of the Board of Directors.
/s/ Diane M. Koch
Diane M. Koch
Assistant Secretary
March 9, 1995
<PAGE>
PROXY STATEMENT
FOR
PENNSYLVANIA POWER & LIGHT COMPANY
PROSPECTUS
FOR
PP&L RESOURCES, INC.
COMMON STOCK
This Proxy Statement and Prospectus contains both a Proxy Statement for the
Annual Meeting of Shareowners of Pennsylvania Power & Light Company, a
Pennsylvania corporation ("PP&L"), to be held on April 26, 1995 (the "Annual
Meeting") and a Prospectus of PP&L Resources, Inc., a Pennsylvania corporation
("Resources"), relating to the issuance of up to 159,980,922 shares of common
stock of Resources (the "Resources Common Shares"), upon the consummation of
and subsequent to the proposed formation of a holding company structure for
PP&L described herein.
PP&L proposes to form a holding company structure pursuant to an Agreement
and Plan of Exchange, a copy of which is attached hereto as Exhibit A (the
"Plan of Exchange"). Under the terms of the Plan of Exchange, all of the
outstanding Resources Common Shares, which will then be owned by PP&L, will be
cancelled and all of the outstanding common stock of PP&L (the "PP&L Common
Shares") will be exchanged on a share-for-share basis for Resources Common
Shares (the "Share Exchange"). Upon consummation of the Share Exchange, each
person that owned PP&L Common Shares immediately prior to the Share Exchange
will own a corresponding number of the outstanding Resources Common Shares, and
Resources will own all of the outstanding PP&L Common Shares. See "Proposal 1:
Holding Company Restructuring -- Terms of the Restructuring."
If the Share Exchange is implemented, it will not be necessary for
holders of PP&L Common Shares to surrender their existing stock
certificates for stock certificates of Resources. See "Proposal 1:
Holding Company Restructuring -- Exchange of Stock Certificates."
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
---------------
The principal executive offices of PP&L and Resources are located at Two
North Ninth Street, Allentown, Pennsylvania 18101, telephone number (610) 774-
5151. This Proxy Statement and Prospectus and the accompanying Proxy, solicited
on behalf of the Board of Directors of PP&L, were first released to Shareowners
on or about March 9, 1995.
The date of this Proxy Statement and Prospectus is March 9, 1995.
<PAGE>
AVAILABLE INFORMATION
PP&L is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "SEC"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Suite
1400, Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois
60661; and Seven World Trade Center, Suite 1306, New York, New York 10048.
Copies of this material can also be obtained at prescribed rates from the
Public Reference Section of the Commission at its principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. Certain securities of PP&L are listed on
the New York Stock Exchange (the "NYSE") and the Philadelphia Stock Exchange
(the "PhSE"). Reports, proxy statements and other information concerning PP&L
can be inspected and copied at the respective offices of those exchanges at 20
Broad Street, New York, New York 10005, and at 1900 Market Street,
Philadelphia, Pennsylvania 19103. In addition, reports, proxy statements and
other information concerning PP&L can be inspected at the offices of PP&L, Two
North Ninth Street, Allentown, Pennsylvania 18101. Following completion of the
Share Exchange, both PP&L and Resources will file such reports and other
information under the Exchange Act.
Resources has filed with the SEC a Registration Statement on Form S-4 (the
"Registration Statement") under the Securities Act of 1933 registering the
Resources Common Shares that will be issued in exchange for PP&L Common Shares
pursuant to the Share Exchange described herein, as well as Resources Common
Shares that will be issued in lieu of PP&L Common Shares under certain PP&L
common stock plans. See "Proposal 1: Holding Company Restructuring." As
permitted by the rules and regulations of the SEC, this Proxy Statement and
Prospectus does not contain all of the information set forth in the
Registration Statement. For further information, reference is made to the
Registration Statement.
Upon completion of the Share Exchange, the Resources Common Shares will be
listed on the NYSE and the PhSE. At the time of such listing, the PP&L Common
Shares will be delisted and will no longer be registered pursuant to Section 12
of the Exchange Act.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the SEC by PP&L (File No. 1-905) are
incorporated herein by reference and made a part hereof:
1. PP&L's Annual Report on Form 10-K for the year ended December 31, 1994.
2. PP&L's Current Reports on Form 8-K filed since December 31, 1994.
All documents filed by PP&L pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, after the date of this Proxy Statement and Prospectus and
prior to the termination of the offering made by this Proxy Statement and
Prospectus, shall be deemed to be incorporated by reference herein and to be a
part hereof from the date of filing of such documents (such documents, and the
documents enumerated above, being hereinafter referred to as "Incorporated
Documents"). Any statement contained in an Incorporated Document shall be
deemed to be modified or superseded for purposes of this Proxy Statement and
Prospectus to the extent that a statement contained herein or in any other
subsequently filed Incorporated Document modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement and
Prospectus.
THIS PROXY STATEMENT AND PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF THE INCORPORATED
DOCUMENTS (OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE THEREIN) WILL BE FURNISHED UPON REQUEST
WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROXY STATEMENT AND PROSPECTUS IS
DELIVERED. WRITTEN OR TELEPHONE REQUESTS SHOULD BE DIRECTED TO PENNSYLVANIA
POWER & LIGHT COMPANY, TWO NORTH NINTH STREET, ALLENTOWN, PENNSYLVANIA 18101,
ATTENTION: INVESTOR SERVICES DEPARTMENT (800-345-3085). IN ORDER TO ENSURE
TIMELY DELIVERY OF THE INCORPORATED DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
APRIL 19, 1995.
2
<PAGE>
---------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROXY STATEMENT AND PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROXY STATEMENT AND PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION.
Neither the delivery of this Proxy Statement and Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of PP&L since the date of this Proxy Statement
and Prospectus.
3
<PAGE>
TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION...................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ 2
SUMMARY.................................................................... 5
INFORMATION ABOUT THE ANNUAL MEETING....................................... 10
OUTSTANDING STOCK AND VOTING RIGHTS........................................ 10
PROPOSAL 1: HOLDING COMPANY RESTRUCTURING.................................. 11
Terms of the Restructuring............................................... 11
Special Considerations Applicable to the Restructuring................... 11
Recommendation of the Board of Directors................................. 12
Present Businesses....................................................... 13
Reasons for Restructuring................................................ 15
Plan of Exchange......................................................... 16
Amendment of PP&L Articles............................................... 17
Termination or Amendment of Plan of Exchange............................. 17
Conditions to Restructuring.............................................. 18
Rights of Dissenting Shareowners......................................... 18
Exchange of Stock Certificates........................................... 18
Common Stock Plans....................................................... 18
Listing of Resources Common Shares....................................... 18
Transfer Agents and Registrars........................................... 18
Market Value of PP&L Common Shares....................................... 19
Regulatory Matters....................................................... 19
Dividend Policy.......................................................... 19
Directors and Executive Officers......................................... 20
Description of PP&L Capital Stock........................................ 20
Description of Resources Capital Stock................................... 21
Comparison of PP&L Common Shares and Resources Common Shares............. 23
Treatment of PP&L Preferred Stock........................................ 25
Treatment of PP&L Indebtedness........................................... 26
Certain Income Tax Consequences.......................................... 26
Pennsylvania Personal Property Taxes..................................... 27
Legal Opinions........................................................... 27
Experts.................................................................. 27
PROPOSAL 2: ELECTION OF DIRECTORS.......................................... 28
Nominees for Directors................................................... 28
PAGE
----
Directors Continuing in Office...................................... 29
Retiring Director................................................... 32
General Information Regarding Directors and Executive Officers...... 32
Summary Compensation Table.......................................... 36
Report of the Management Development and Compensation Committee
Regarding Executive Compensation................................... 36
Stock Performance Graph............................................. 40
PROPOSAL 3: APPROVAL OF AMENDED AND RESTATED DIRECTORS DEFERRED
COMPENSATION PLAN.................................................... 40
PROPOSAL 4: APPROVAL OF AMENDED AND RESTATED INCENTIVE COMPENSATION
PLAN FOR OFFICERS AND OTHER KEY EMPLOYEES............................ 41
Current Provisions.................................................. 42
Amended and Restated ICP............................................ 43
Federal Income Tax Consequences..................................... 43
Amendment and Termination........................................... 44
PROPOSAL 5: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS... 44
GLOSSARY.............................................................. 45
MISCELLANEOUS......................................................... 46
METHOD AND EXPENSE OF SOLICITATION OF PROXIES......................... 46
PROPOSALS FOR 1996 ANNUAL MEETING..................................... 46
ANNUAL REPORT......................................................... 46
AGREEMENT AND PLAN OF EXCHANGE
(including the Amended and Restated
Articles of Pennsylvania Power & Light Company)...................... A-1
AMENDED AND RESTATED ARTICLES OF
PP&L RESOURCES, INC.................................................. B-1
AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN............. C-1
AMENDED AND RESTATED INCENTIVE COMPENSATION PLAN FOR OFFICERS
AND OTHER KEY EMPLOYEES.............................................. D-1
4
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the detailed
information appearing elsewhere, or incorporated by reference, in this Proxy
Statement and Prospectus and the Exhibits attached hereto. Reference is made to
the "Glossary" in this Proxy Statement and Prospectus for the location of
defined terms used herein.
DATE, TIME AND PLACE
OF MEETING............ The Annual Meeting of Shareowners of PP&L will be
held at 1:30 p.m. on April 26, 1995 at Lehigh
University's Stabler Arena, Lower Saucon Valley
Goodman Campus Complex, Bethlehem, Pennsylvania.
RECORD DATE AND
ELIGIBLE VOTERS....... Holders of (i) PP&L Common Shares, (ii) 4 1/2%
Preferred Stock, par value $100 per share, of PP&L
(the "4 1/2% Preferred Stock"), and (iii) Series
Preferred Stock, par value $100 per share, of PP&L
(the "Series Preferred Stock"), at the close of
business on February 28, 1995 are entitled to vote at
the Annual Meeting. Such holders are referred to
herein as the "Shareowners."
PP&L................... PP&L is a regulated public utility incorporated under
the laws of the Commonwealth of Pennsylvania. PP&L
supplies electric light, heat and power service to
the public in twenty-nine counties in central eastern
Pennsylvania. See "Proposal 1: Holding Company
Restructuring -- Present Businesses."
RESOURCES.............. Resources was incorporated in Pennsylvania on March
15, 1994 for the purpose of carrying out the
Restructuring described herein. See "Proposal 1:
Holding Company Restructuring." Currently, Resources
is a direct wholly owned subsidiary of PP&L.
Following the approval of the SEC and the fulfillment
of the other conditions described under "Proposal 1:
Holding Company Restructuring -- Conditions to
Restructuring," at the Effective Time of the Share
Exchange, Resources will become the parent of PP&L.
See "Proposal 1: Holding Company Restructuring --
Present Businesses."
PROPOSALS AT THE
ANNUAL MEETING........ The following proposals are to be presented to the
Shareowners for approval at the Annual Meeting: (i)
the Holding Company Restructuring; (ii) the election
of directors of PP&L; (iii) the approval of the
Amended and Restated Directors Deferred Compensation
Plan; (iv) the approval of the Amended and Restated
Incentive Compensation Plan for officers and other
key employees and (v) the ratification of the
appointment of independent auditors.
THE HOLDING COMPANY
RESTRUCTURING
General............... The Board of Directors of PP&L has approved a
restructuring pursuant to the Plan of Exchange
whereby Resources will serve as the parent company of
PP&L. Although the Restructuring will result in a
change in the organizational structure of PP&L and
its subsidiaries, the new holding company system will
continue to conduct its public utility business
through PP&L.
As part of the Restructuring, all common stock of
PP&L, without par value, will be exchanged for common
stock of Resources, par value $.01 per share, on a
share-for-share basis. It will not be necessary for
holders of PP&L
5
<PAGE>
Common Shares to turn in their certificates for stock
certificates of Resources. Such certificates of PP&L
will automatically represent Resources Common Shares.
As an additional aspect of the Restructuring, PP&L
intends to transfer to Resources all of the capital
stock of Power Markets Development Company ("Power
Markets"), a current subsidiary of PP&L. Power
Markets was formed in March 1994 to conduct
unregulated business activities. See "Proposal 1:
Holding Company Restructuring."
The 4 1/2% Preferred Stock and the Series Preferred
Stock (collectively, the "PP&L Preferred Stock") and
the first mortgage bonds and other indebtedness of
PP&L will remain securities and obligations of PP&L
after the restructuring. The decision to have the
PP&L Preferred Stock and the indebtedness of PP&L
continue as securities and obligations of PP&L is
based upon a desire not to alter, or potentially
alter, the nature of the investment represented by
such fixed income securities and obligations, namely
a direct investment in a regulated utility. See
"Proposal 1: Holding Company Restructuring --
Treatment of PP&L Preferred Stock" and "Proposal 1:
Holding Company Restructuring -- Treatment of PP&L
Indebtedness."
Reasons for the
Restructuring....... The purpose of the Restructuring is to establish a
more appropriate corporate structure for the conduct
of unregulated business activities. Resources and
PP&L believe that the Restructuring will better
enable PP&L to establish a broad base of income
generation which will enhance the overall financial
strength of the enterprise. See "Proposal 1: Holding
Company Restructuring -- Reasons for Restructuring."
Vote Required......... Approval of the Restructuring will require the
affirmative vote, in person or by proxy, of a
majority of the votes cast by the Shareowners, voting
as a single class. Pursuant to the terms of the PP&L
Articles and the applicable provisions of the
Pennsylvania Business Corporation Law of 1988, as
amended ("BCL"), each Shareowner (including each
holder of PP&L Preferred Stock) is entitled to one
vote per share on the Restructuring. The holders of
PP&L Preferred Stock are not entitled to vote as a
separate class in connection with the Restructuring.
A total of 161,055,763 shares was outstanding on the
Record Date, consisting of 156,392,018 PP&L Common
Shares (representing 97.1% of the total votes which
may be cast at the Annual Meeting) and 4,663,745
shares of PP&L Preferred Stock (representing 2.9% of
the total votes which may be cast at the Annual
Meeting). In determining whether a quorum is present,
all duly executed proxies (including those marked
"abstain") will be counted. See "Outstanding Stock
and Voting Rights."
Dividends on
Resources Common
Shares.............. The Board of Directors of Resources has no current
intention to change the present PP&L dividend policy.
It is expected that quarterly dividends on the
Resources Common Shares will be declared and paid on
the same schedule of dates currently followed by
PP&L. There can be no guarantee, however, of the
amount of the initial quarterly dividend or of the
payment of future dividends, as the declaration of
such dividends will primarily be dependent upon the
receipt of dividends from subsidiaries of Resources
which, in turn, will be dependent upon the future
earnings and financial condition of these
subsidiaries. As is the case with the currently
outstanding PP&L Preferred Stock, any preferred stock
that may be issued by PP&L in the future will have
preference over the PP&L Common Shares as to the
payment of dividends
6
<PAGE>
and, therefore, will reduce the amount of funds
available to PP&L for the payment of common stock
dividends to Resources. See "Proposal 1: Holding
Company Restructuring -- Dividend Policy."
Effective Time........ It is expected that the Share Exchange will be
effective promptly after the requisite shareowner and
other approvals are obtained. See "Proposal 1:
Holding Company Restructuring -- Terms of the
Restructuring" and "Proposal 1: Holding Company
Restructuring -- Conditions to Restructuring."
Certain Income Tax
Consequences........ No gain or loss will be recognized for federal or
Pennsylvania income tax purposes by holders of PP&L
Common Shares whose shares are exchanged for
Resources Common Shares as a result of the
Restructuring. In addition, the Restructuring will
not give rise to the recognition of gain or loss for
federal or Pennsylvania income tax purposes by any
holders of the PP&L Preferred Stock. See "Proposal 1:
Holding Company Restructuring --Certain Income Tax
Consequences."
Dissenters Appraisal
Rights.............. Under applicable Pennsylvania law, the Shareowners
will not have dissenters appraisal rights in
connection with the Restructuring. See "Proposal 1:
Holding Company Restructuring -- Rights of Dissenting
Shareowners."
Regulatory Matters.... PP&L, which will continue to operate an electric
utility business, will remain subject to regulation
by the Public Utility Commission (the "PUC") and the
Federal Energy Regulatory Commission (the "FERC").
Resources will not be subject to regulation by the
PUC or the FERC. Both Resources and PP&L will be
reporting companies under the Exchange Act. The
proposed Restructuring has already been approved by
the PUC, subject to certain conditions described
herein, the FERC and the Nuclear Regulatory
Commission ("NRC"). After the SEC Order is obtained
and the Restructuring is completed, Resources will be
exempt from registration as a holding company under
the Public Utility Holding Company Act of 1935, as
amended (the "Holding Company Act"). See "Proposal 1:
Holding Company Restructuring -- Regulatory Matters"
and "Proposal 1: Holding Company Restructuring --
Conditions to Restructuring."
Comparison of PP&L
Common Shares and
Resources Common
Shares.............. Pursuant to the Share Exchange, holders of PP&L
Common Shares will become holders of Resources Common
Shares. The principal difference between the rights
of the holders of Resources Common Shares and the
rights of the holders of PP&L Common Shares is that
holders of Resources Common Shares will not be
entitled to cumulate their votes in the election of
directors. In addition, (i) Resources will be
authorized to issue significantly more shares of
common stock than PP&L, (ii) in general, Resources
shareowners must provide prior written notice of the
business to be brought before annual meetings of
shareowners and will not be entitled to bring any
business before special meetings of shareowners and
(iii) certain statutory "anti-takeover" provisions
which are currently applicable to PP&L will not apply
to Resources. With the exception of these
differences, the Board of Directors believes that the
rights of the holders of Resources Common Shares will
not be materially different from the rights of the
holders of PP&L Common Shares. For a further
discussion of the differences between the
7
<PAGE>
rights of the holders of Resources Common Shares and
the rights of the holders of PP&L Common Shares, see
"Proposal 1: Holding Company Restructuring --
Description of Resources Capital Stock" and
"Proposal 1: Holding Company Restructuring --
Comparison of PP&L Common Shares and Resources
Common Shares."
The Company is currently considering the issuance of
up to $100 million of common stock during 1995, the
proceeds of which will be used for general corporate
purposes. If the Restructuring is approved by
Shareowners and the Share Exchange is effected, such
common stock will consist of Resources Common Shares.
Whether such common stock consists of Resources
Common Shares or, if the Share Exchange is not
effected, PP&L Common Shares, shareowner approval
will not be required. See "Proposal 1: Holding
Company Restructuring -- Description of Resources
Capital Stock" below.
Stock Exchange
Listing............. PP&L Common Shares are currently traded on the NYSE
and the PhSE under the stock symbol "PPL." The
Resources Common Shares are expected to be approved
for listing on the NYSE and the PhSE and, after the
Effective Time, expected to trade under the stock
symbol "PPL." See "Proposal 1: Holding Company
Restructuring -- Listing of Resources Common Shares."
Amendments to PP&L's
Articles............ Shareowner approval of the Plan of Exchange will also
constitute Shareowner approval of certain amendments
to the Restated Articles of Incorporation of PP&L
(the "PP&L Articles"). See "Proposal 1: Holding
Company Restructuring -- Amendment of PP&L Articles."
ELECTION OF PP&L
DIRECTORS.............. PP&L has a classified Board of Directors, currently
consisting of sixteen directors divided into three
classes. These directors consist of five directors
whose terms will expire at the 1995 Annual Meeting,
six directors whose terms will expire at the 1996
Annual Meeting and five directors whose terms will
expire at the 1997 Annual Meeting.
The nominees this year are Derek C. Hathaway, Stuart
Heydt, Clifford L. Jones, Robert Y. Kaufman and Ruth
Leventhal. All of the nominees other than Mr.
Hathaway are currently serving as directors. See
"Proposal 2: Election of Directors."
At the Effective Time, the Board of Directors of
Resources shall consist of the same members, with the
same terms, as the Board of Directors of PP&L.
APPROVAL OF THE
AMENDED AND RESTATED
DIRECTORS DEFERRED
COMPENSATION PLAN..... The PP&L Board of Directors has adopted, subject to
approval by the Shareowners, the Amended and Restated
Directors Deferred Compensation Plan (the "Directors
Plan") which permits non-employee directors to elect
to defer any portion, up to 100%, of their cash
directors' compensation fee into either an interest-
bearing deferred cash account or into a deferred
stock account. If approved by the Shareowners, the
Directors Plan will also provide that, effective July
1, 1995, any increases in a director's yearly
compensation over 1994 levels will automatically be
received as deferred stock. See "Proposal 3: Approval
of the Amended and Restated Directors Deferred
Compensation Plan."
8
<PAGE>
APPROVAL OF THE
AMENDED AND RESTATED
INCENTIVE
COMPENSATION PLAN..... The PP&L Board of Directors has adopted, subject to
approval by the Shareowners, the Amended and Restated
Incentive Compensation Plan for officers and other
key employees. The following amendments to the
Incentive Compensation Plan for officers and other
key employees (the "ICP") are contained in the
Amended and Restated ICP: (i) incentive stock option
awards may be made during the ten years following
adoption of the Amended and Restated ICP (as compared
to the January 1, 1997 expiration date under the
current ICP), (ii) restricted stock and nonqualified
stock option awards may be made for an indefinite
period of time (as compared to the January 1, 1997
expiration date under the current ICP), (iii) the
aggregate number of shares of common stock subject to
awards may not exceed 100,000 annually (as compared
to the current limitation of 400,000 shares over the
life of the ICP), and (iv) the term "retirement" has
been expanded to include any retirement within the
meaning of PP&L's Supplemental Executive Retirement
Plan (the "SERP").
RATIFICATION OF THE
APPOINTMENT OF
INDEPENDENT AUDITORS.. The Board of Directors of PP&L and the Board of
Directors of Resources have respectively appointed
Price Waterhouse LLP independent auditors of PP&L and
Resources for the year ending December 31, 1995. If
the Shareowners do not ratify the selection of Price
Waterhouse LLP, the selection of independent auditors
will be reconsidered by the Boards of Directors. See
"Proposal 5: Ratification of the Appointment of
Independent Auditors."
9
<PAGE>
INFORMATION ABOUT THE ANNUAL MEETING
This Proxy Statement and Prospectus has been prepared under the direction of
the Board of Directors of PP&L as a basis for soliciting your proxy for use at
the Annual Meeting at 1:30 p.m. on April 26, 1995 at Lehigh University's
Stabler Arena, Lower Saucon Valley Goodman Campus Complex, Bethlehem,
Pennsylvania.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors of PP&L has established Tuesday, February 28, 1995, as
the record date for shareowners entitled to vote at the Annual Meeting (the
"Record Date"). The transfer books of PP&L will not be closed.
The PP&L Articles divide PP&L's voting stock into four classes: PP&L Common
Shares, 4 1/2% Preferred Stock, Series Preferred Stock and PP&L Preference
Stock. There were no shares of PP&L Preference Stock outstanding on the Record
Date.
Each outstanding share of each class of stock of PP&L entitles the holder to
one vote upon any business properly presented to the Annual Meeting. A total of
161,055,763 shares was outstanding on the Record Date, consisting of
156,392,018 PP&L Common Shares, 530,189 shares of 4 1/2% Preferred Stock and
4,133,556 shares of Series Preferred Stock.
As of February 15, 1995, the following are the only entities known by PP&L to
own more than five percent of any class or series of stock entitled to vote at
the Annual Meeting:
<TABLE>
<CAPTION>
NAME AND NUMBER OF
ADDRESS OF SHARES PERCENT OF
TITLE BENEFICIAL OWNER BENEFICIALLY OWNED CLASS OR SERIES
----- ---------------- ------------------ ---------------
<S> <C> <C> <C>
6.15% 57,500 23%
Series Government Employees Insurance Company
Preferred GEICO Plaza
Stock Washington, D.C. 20076
6.33% Chancellor Capital Management, Inc. 85,000(a) 8.5%
Series and Chancellor Trust Company
Preferred 1166 Avenue of the Americas
Stock New York, New York 10036
6.75% 85,000(b) 10%
Series Wellington Management Company
Preferred 75 State Street
Stock Boston, MA 02109
</TABLE>
- -------
(a) Chancellor Capital Management, Inc. and Chancellor Trust Company, as
investment advisers for various fiduciary accounts, have sole power to vote
or to direct the vote, and sole power to dispose of or to direct the
disposal of, all of the indicated shares.
(b) Number of shares beneficially owned includes shares for which Wellington
exercises investment and/or voting power, but which are held by one of its
wholly owned subsidiaries and/or investment advisory clients.
Execution of the Proxy will not affect a Shareowner's right to attend the
Annual Meeting and vote in person. Any Shareowner giving a Proxy has the right
to revoke it at any time before it is voted by giving notice in writing to the
Secretary of PP&L. Shares represented by Proxy will be voted in accordance with
the instructions given. In the absence of instructions to the contrary, the
Proxy solicited hereby will be voted FOR the Holding Company Restructuring, FOR
the election of directors, FOR the approval of the Amended and Restated
Directors Deferred Compensation Plan, FOR the approval of the Amended and
Restated Incentive Compensation Plan for officers and other key employees, and
FOR the Ratification of the Appointment of Independent Auditors. Abstentions
and broker non-votes are not counted as either "yes" or "no" votes.
Full and fractional shares held by PP&L for each participant in the Dividend
Reinvestment Plan will be voted by PP&L, as the registered owner of such
shares, in the same manner as shares held of record by that participant are
voted. If a participant owns no shares of record, full and fractional shares
credited to that participant's account will be voted in accordance with the
participant's instructions on the Proxy.
To preserve voter confidentiality, PP&L voluntarily limits access to
Shareowner voting records to a few designated employees. These employees sign a
confidentiality agreement which prohibits them from disclosing the manner in
which a Shareowner has voted to any employee of PP&L or to any other person
(except the person in whose name the shares are registered), unless otherwise
required by law.
10
<PAGE>
In order to be approved, each of Proposal 1 (the Holding Company
Restructuring), Proposal 3 (the approval of the Amended and Restated Directors
Deferred Compensation Plan), Proposal 4 (the approval of the Amended and
Restated Incentive Compensation Plan for officers and other key employees), and
Proposal 5 (the Ratification of the Appointment of Independent Auditors) must
receive a majority of the votes cast, in person or by proxy, by the Shareowners
voting as a single class. With respect to Proposal 2 (the election of
directors), Shareowners have the unconditional right of cumulative voting.
Shareowners may vote in this manner by multiplying the number of shares
registered in their respective names on the Record Date by the total number of
directors to be elected at the Annual Meeting and casting all of such votes for
one nominee or distributing them among any two or more nominees. The nominees
receiving the highest number of votes, up to the number of directors to be
elected, will be elected. Authority to vote for any individual nominee can be
withheld by writing that person's name on the line below the list of nominees
on the accompanying Proxy. Shares will be voted cumulatively for the remaining
nominees on a pro rata basis.
PROPOSAL 1: HOLDING COMPANY RESTRUCTURING
TERMS OF THE RESTRUCTURING
PP&L proposes to reorganize its operations pursuant to an Agreement and Plan
of Exchange, a copy of which is attached hereto as Exhibit A. Under the terms
of the Plan of Exchange, all of the outstanding Resources Common Shares, which
will then be owned by PP&L, will be cancelled and all of the outstanding PP&L
Common Shares will be exchanged by Resources on a share-for-share basis for
Resources Common Shares. Upon consummation of the Share Exchange, each owner of
PP&L Common Shares immediately prior to the Share Exchange will own a
corresponding number and percentage of the outstanding Resources Common Shares,
and Resources will own all of the outstanding PP&L Common Shares.
If the Share Exchange is implemented, it will not be necessary for holders of
PP&L Common Shares to surrender their existing stock certificates for stock
certificates of Resources. See "Exchange of Stock Certificates."
The Boards of Directors of PP&L and of Resources believe that the
Restructuring is in the best interests of the Shareowners, as further detailed
below under "Reasons for Restructuring." The Plan of Exchange has been approved
by the Board of Directors of PP&L and by the Board of Directors of Resources,
and has been executed by authorized officers of each company. If the
Shareowners approve the Plan of Exchange and the other conditions described
below under "Conditions to Restructuring" are satisfied, the Share Exchange
will become effective upon the filing of Articles of Exchange in the Department
of State of the Commonwealth of Pennsylvania (the "Effective Time"). Shareowner
approval of Proposal 1 will constitute approval of the Plan of Exchange as well
as certain amendments to the PP&L Articles. See "Proposal 1: Holding Company
Restructuring -- Amendment of PP&L Articles."
Shareowner approval of Proposal 1 will also constitute approval of certain
amendments to the Common Stock Plans providing for the future use of Resources
Common Shares in lieu of PP&L Common Shares under the Common Stock Plans. See
"Common Stock Plans" below.
After the Effective Time of the Share Exchange, the holders of Resources
Common Shares will have the right to vote on corporate actions concerning
Resources in accordance with the BCL, the Amended and Restated Articles of
Incorporation of Resources (the "Resources Articles") and the Bylaws of
Resources (the "Resources Bylaws") then and thereafter in effect. The Resources
Articles are attached hereto as Exhibit B.
The Share Exchange will not result in any change in the outstanding PP&L
Preferred Stock, which will continue to be securities of PP&L after the
Restructuring. Debt securities and other indebtedness of PP&L will continue to
be obligations of PP&L and, in the case of PP&L's first mortgage bonds, will
continue to be secured by a first mortgage lien on all properties of PP&L that
are currently subject to such a lien. See "Treatment of PP&L Preferred Stock,"
"Treatment of PP&L Indebtedness" and "Dividend Policy."
SPECIAL CONSIDERATIONS APPLICABLE TO THE RESTRUCTURING
FUTURE PERFORMANCE OF RESOURCES COMMON SHARES CANNOT BE GUARANTEED. The
purpose of the Restructuring is to establish a corporate structure that will
enhance the Company's ability to take advantage of business opportunities
outside of PP&L's present markets. The Board of Directors believes that the
Restructuring is in the best interests of Shareowners. Nevertheless, the future
performance of Resources Common Shares cannot be guaranteed.
11
<PAGE>
UNREGULATED BUSINESS ACTIVITIES MAY INVOLVE MORE RISK. Following consummation
of the Restructuring, the Company will be able to pursue business opportunities
through unregulated operating subsidiaries without obtaining the prior approval
of the PUC. The Restructuring therefore will enable the Company to pursue
certain business opportunities that might involve more risk than would be
permitted to be pursued by PP&L as a regulated electric utility. Pursuit of
business opportunities with greater risk could, in turn, have either a positive
or an adverse effect on the value of a Shareowners' investment, depending upon
the return realized from such opportunities. As the Company engages in more
such business activities, the market price of the Company's stock will be
affected to a lesser extent by the performance of PP&L.
DIVIDENDS ON RESOURCES COMMON SHARES WILL BE DEPENDENT ON COMMON STOCK
DIVIDENDS PAID BY PP&L. For a period of time following the Restructuring, the
funds required by Resources to enable it to pay dividends on Resources Common
Shares are expected to be derived predominantly from the dividends paid by
PP&L. Accordingly, the ability of Resources to pay such dividends, as a
practical matter, will be governed by the ability of PP&L to pay common stock
dividends. The ability of PP&L to pay dividends on its common stock will
continue to be subject to the preferential dividend rights of the holders of
the PP&L Preferred Stock and to the common stock dividend restrictions
currently contained in the PP&L Articles in favor of the PP&L Preferred Stock.
In addition, although it has no present intention to do so, it is expected that
PP&L may need to issue additional preferred stock in the future to meet its
capital requirements. Such additional preferred stock will also have
preferential dividend rights. The Board of Directors of Resources has no
current intention to change the current PP&L dividend policy.
UNREGULATED BUSINESS ACTIVITIES WILL NOT BE AVAILABLE AS SOURCES FOR
DIVIDENDS ON PP&L PREFERRED STOCK. Following consummation of the Restructuring,
the Company expects to engage in business activities through unregulated
subsidiaries of Resources. Such activities, and the assets employed in
connection therewith, will not be available to the holders of PP&L Preferred
Stock as a source of cash for the payment of dividends or other amounts. The
PP&L Preferred Stock will continue to have priority over the PP&L Common Shares
and PP&L Preference Stock, if any, as to the payment of dividends and upon any
liquidation, and will be on a parity with any additional Series Preferred Stock
that may be issued by PP&L.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of PP&L recommends that Shareowners vote FOR Proposal
1. In making its decision to recommend the Restructuring to the Shareowners,
the Board of Directors considered many factors, including the factors set forth
below.
With the passage of the Public Utility Regulatory Policies Act of 1978
("PURPA") and the Energy Policy Act of 1992 ("Energy Act'), the electric
utility industry in general, including PP&L, has experienced a significant
increase in the level of competition in the market for the generation and sale
of electricity. PP&L has already been required under PURPA to purchase
substantial amounts of energy from non-utility generators. Further, the Energy
Act reduces barriers to market entry for companies that wish to build, own and
operate electric generating facilities, and it also promotes competition by
authorizing the FERC to require wheeling for wholesale power transactions. The
clear intent of the Energy Act is to permit wholesale buyers of electricity to
reach multiple sellers. The increased competition facing the electric utility
industry has been well documented and is undoubtedly the most significant issue
facing the industry today.
To respond effectively to this increased competition, the Board of Directors
of PP&L determined that in addition to responding to competition in its
existing markets, PP&L must also position itself to explore and take advantage
of potential business opportunities outside its present markets in central
eastern Pennsylvania. Pursuit of these opportunities will play an important
role in maintaining the long-term financial viability necessary for PP&L to
continue to provide reliable service to its customers.
In the opinion of the Board of Directors of PP&L, it is desirable in the long
run to pursue these business opportunities through a holding company structure.
As discussed below under "Reasons for Restructuring --Benefits of a Holding
Company Structure," the Restructuring will enable the Company to separate its
regulated business from its unregulated businesses, thereby increasing the
Company's flexibility in operating its unregulated businesses, enhancing the
Company's ability to take advantage of new business opportunities in a timely
manner and broadening the Company's range of financing techniques. Furthermore,
the separation of the Company's regulated and unregulated businesses will
provide a better structure for regulators to assure that there is no cross-
subsidization of costs or transfer of business risk from unregulated to
regulated lines of business.
The Board of Directors considered the financial cost to the Company of
implementing the Restructuring, including the expenses associated with
obtaining required approvals, the costs of this proxy solicitation and the
other expenses incurred in connection with registering the Resources Common
Shares with the Commission. In
12
<PAGE>
addition, after the Restructuring both Resources and PP&L will be required to
provide reports to public investors and file periodic reports and make certain
other filings with the Commission, thereby increasing the expense to the
Company on an ongoing basis. In the Board's view, these expenses, although in
some cases significant, are acceptable in light of the benefits to the Company
of the Restructuring.
The Board of Directors also considered the effects on the holders of the PP&L
Common Shares and the holders of PP&L Preferred Stock in determining that the
Share Exchange should only involve the PP&L Common Shares. The Board's decision
to exchange PP&L Common Shares for Resources Common Shares was primarily based
on the Board's desire to confer the expected benefits of the Restructuring on
those investors who are best placed to enjoy such benefits, namely the holders
of PP&L Common Shares. Conversely, if the PP&L Preferred Stock were to be
exchanged for preferred stock of Resources, investors in such preferred stock
would continue to receive fixed dividend payments in respect of their
investment. The expected benefits of the Restructuring include those discussed
above, such as increased flexibility in operating the Company's unregulated
businesses and enhanced ability to take advantage of new business opportunities
in a timely manner. The Board's decision not to exchange PP&L Preferred Stock
in the Share Exchange was primarily based on the Board's desire not to alter,
or potentially alter, the nature of the investment decision represented by the
PP&L Preferred Stock (namely, a direct investment in a regulated utility) and
the priority position of the holders of the PP&L Preferred Stock with respect
to dividends and assets on liquidation. As to holders of PP&L Preferred Stock,
the benefits of continuing as investors in PP&L's regulated utility business
outweigh any loss of access to the return on future investments made by the
unregulated businesses of Resources. In that regard, investors in priority
position securities, such as the holders of PP&L Preferred Stock, benefit to
the extent that such securities have been issued by the corporate entity that
holds directly and/or has unrestricted access to the principal assets of the
enterprise. As discussed above under the caption "Sources for Dividends on
Resources Common Shares," the funds required to pay dividends on Resources
Common Shares for a period of time following the Restructuring are expected to
be derived predominantly from dividends paid by PP&L. If the PP&L Preferred
Stock also were to be exchanged pursuant to the Share Exchange and become
preferred stock of Resources, the funds required to pay dividends on that
preferred stock would also be derived predominantly from dividends paid by
PP&L. Although it has no present intention to do so, it is expected that PP&L
may need to issue preferred stock in the future to meet its capital
requirements. The preferred stock that would be issued by PP&L would have
preference over the PP&L Common Shares as to the payment of dividends and,
therefore, would reduce the amount of funds available to PP&L for the payment
of dividends to Resources. As a result, the conversion of the PP&L Preferred
Stock to Resources preferred stock would result in the dividend payments and
distributions upon liquidation with respect to those shares being subordinated
to the dividend and distribution rights of the newly created preferred stock of
PP&L.
---------------
On balance, the Board of Directors of PP&L concluded that the benefits to the
Company and the Shareowners of a holding company structure far outweighed the
time and expense of implementing the Restructuring.
THE BOARD OF DIRECTORS OF PP&L
RECOMMENDS THAT SHAREOWNERS VOTE FOR PROPOSAL 1
PRESENT BUSINESSES
PP&L
PP&L is an operating electric utility, incorporated under the laws of the
Commonwealth of Pennsylvania in 1920.
PP&L supplies electric light, heat and power service to approximately 1.2
million customers in a 10,000 square mile territory in 29 counties of central
eastern Pennsylvania, with a population of approximately 2.6 million persons.
This service area has 128 communities with populations over 5,000, the largest
cities of which are Allentown, Bethlehem, Harrisburg, Hazleton, Lancaster,
Scranton, Wilkes-Barre and Williamsport.
PP&L owns a 90% undivided interest in each of two nuclear-fueled generating
units at its Susquehanna station, and Allegheny Electric Cooperative, Inc. owns
a 10% undivided interest in each of those units. PP&L operates its generation
and transmission facilities as part of the Pennsylvania-New Jersey-Maryland
Interconnection Association (the "PJM"). The PJM, one of the world's largest
power pools, includes 11 companies serving 21 million people in a 50,000 square
mile territory covering all or part of Pennsylvania, New Jersey, Maryland,
Delaware, Virginia and Washington, D.C.
13
<PAGE>
During the twelve months ended December 31, 1994, 56.9% of the energy
generated by PP&L's plants came from coal-fired stations, 36.4% from the
Susquehanna nuclear station, 4.7% from oil-fired stations and 2.0% from
hydroelectric stations.
PP&L's current corporate structure is as follows:
CURRENT CORPORATE STRUCTURE
[CHART APPEARS HERE]
Wholly owned direct and indirect subsidiary companies of PP&L principally are
engaged in holding coal reserves, coal mining-related activities, oil pipeline
operations, and passive investments. In particular, Interstate Energy Company
operates oil pipeline facilities that supply fuel to a PP&L electric generation
station. Pennsylvania Coal Resources Corporation and its subsidiaries are
completing PP&L's phase-out of its coal operations which had been supplying
fuel to PP&L's electric generation stations. Realty Company of Pennsylvania and
BDW Corporation own real estate and other interests related to the operation of
PP&L's electric generation stations. Greene Hill Coal Company and Green Manor
Coal Company own undeveloped bituminous coal reserves and Lady Jane Collieries,
Inc. purchases and cleans bituminous coal from non-affiliated suppliers. CEP
Group, Inc. ("CEP") holds passive investments. Finally, PP&L also owns one-
third of the outstanding capital stock (which represents one-half of the
outstanding voting stock) of Safe Harbor Water Power Corporation, a
Pennsylvania corporation and an electric utility company ("Safe Harbor"), which
operates a hydroelectric plant used to generate electricity for sale to PP&L
and the other owner, Baltimore Gas and Electric Company.
Power Markets, which is currently a wholly owned subsidiary of CEP, was
formed to conduct unregulated business activities either directly or through
subsidiaries. Power Markets is currently exploring potential business
opportunities, but at this time has not engaged in any business. Power Markets
is expected to engage in unregulated business activities, including the
construction and/or operation of power plants in North America and elsewhere.
See "Reasons for Restructuring" below.
RESOURCES
Resources was incorporated in Pennsylvania on March 15, 1994 for the purpose
of carrying out the Restructuring. Resources is a direct wholly owned
subsidiary of PP&L. At the Effective Time of the Share Exchange, Resources will
become the parent of PP&L. PP&L and Resources are collectively referred to
herein as the "Company."
Currently, Resources has only nominal assets and has not engaged in any
business operations. All the business operations conducted by PP&L and its
subsidiaries immediately before the Effective Time will continue to be
conducted by PP&L and its subsidiaries immediately after the Effective Time as
subsidiaries of Resources, and the consolidated assets and liabilities of PP&L
and its subsidiaries immediately before the Effective Time will be the same as
the consolidated assets and liabilities of Resources and its subsidiaries
immediately after the Effective Time. It is currently anticipated that
Resources will not be an operating company at the parent company level.
14
<PAGE>
Subsequent to the Effective Time, CEP will transfer the common stock of Power
Markets to Resources. It is expected that this transfer will be made in the
form of a series of stock dividends. The reorganization pursuant to the Plan of
Exchange and the subsequent transfer of Power Markets to Resources are herein
referred to as the "Restructuring." After consummation of the Restructuring,
Resources will engage in unregulated business activities through Power Markets
and other subsidiaries. Such unregulated activities are expected to include the
construction and/or operation of power plants in North America and elsewhere.
The reorganized corporate structure of the Company immediately after the
Restructuring is expected to be as follows:
HOLDING COMPANY STRUCTURE
[CHART APPEARS HERE]
REASONS FOR RESTRUCTURING
GENERAL
The purpose of the restructuring is to establish a more appropriate corporate
structure to take advantage of business opportunities outside of PP&L's present
markets. As is more fully described below, Resources and PP&L believe that the
establishment of a broad base of income generation will enhance the overall
financial strength of the enterprise.
THE REGULATORY FRAMEWORK
With the passage of PURPA and the Energy Act, the electric utility industry
in general, including PP&L, has experienced a significant increase in the level
of competition in the market for the generation and sale of electricity. PP&L
has already been required under PURPA to purchase substantial amounts of output
from qualifying non-utility generators. Further, the Energy Act reduces
barriers to market entry for companies that wish to build, own and operate
electric generating facilities, and it also promotes competition by authorizing
the FERC to require wheeling for wholesale power transactions. The clear intent
of the Energy Act is to permit wholesale buyers of electricity to reach
multiple sellers. The increased competition facing the electric utility
industry has been well documented and is undoubtedly the most significant issue
facing the industry today.
15
<PAGE>
In order to respond effectively to this increased competition, PP&L has
determined that it must position itself to explore and take advantage of new
and emerging business opportunities. Pursuit of these new opportunities will
play an important role in maintaining the long-term financial viability
necessary for PP&L to continue to provide reliable service to its customers.
PP&L and its subsidiaries are currently investigating a variety of business
opportunities, both in domestic and international markets. PP&L has not made
any specific investments, but is currently focusing on those opportunities
which relate to its present core business, namely the generation, transmission,
distribution and use of electric energy. PP&L's focus on geographic rather than
product diversification will enable it to take full advantage of its extensive
experience in owning and operating electric utility facilities.
Initially, these unregulated business activities will be conducted through
Power Markets, which was formed to take advantage of current business
opportunities. PP&L provided an initial capital contribution of $50 million to
Power Markets.
BENEFITS OF A HOLDING COMPANY STRUCTURE
PP&L could continue to pursue unregulated business opportunities through
Power Markets and other unregulated subsidiaries of PP&L. It is, however, more
desirable in the long run to conduct these unregulated activities through a
holding company structure.
The holding company structure is a well-established form of organization for
companies conducting multiple lines of business. It is a common form of
organization for unregulated companies and for those regulated companies, such
as telephone utilities and water utilities, which are not subject to the
Holding Company Act. In addition, it is utilized by many electric companies
which are involved in unregulated activities. In recognition of the increased
competition in the electric utility industry, the Energy Act permits electric
utilities to conduct certain business activities which were previously limited
by the Holding Company Act. PP&L wishes to take advantage of this opportunity,
and desires to do so by utilizing the most efficient and effective corporate
structure.
There are many benefits of a holding company structure. The holding company
structure will enable Resources to engage in unregulated businesses without
obtaining the prior approval of the PUC, thereby enabling Resources to pursue
unregulated business opportunities in a timely manner. The new corporate
structure also will permit the use of financing techniques that are more
directly suited to the particular requirements, characteristics and risks of
unregulated operations without affecting the capital structure or
creditworthiness of PP&L, and will increase financial flexibility by allowing
the design and implementation of capitalization ratios appropriate for the
capital and business requirements of each subsidiary.
The holding company structure separates the operations of regulated and
unregulated businesses. As a result, it provides a better structure for
regulators to assure that there is no cross-subsidization of costs or transfer
of business risk from unregulated to regulated lines of business. A holding
company structure also is preferred by the investment community because it is
easier to analyze and value individual lines of business. Moreover, the use of
a holding company structure provides legal protection against the imposition of
liability on regulated utilities for the results of unregulated business
activities. In short, the holding company structure is a highly desirable form
of conducting regulated and unregulated businesses within the same corporate
group.
PLAN OF EXCHANGE
The Plan of Exchange has been approved by the Board of Directors of PP&L and
by the Board of Directors of Resources, and has been executed by authorized
officers of each company. A copy of the Plan of Exchange is attached to this
Proxy Statement and Prospectus as Exhibit A.
The Plan of Exchange provides that (i) each Resources Common Share
outstanding immediately prior to the Effective Time shall be cancelled and
thereupon shall constitute an authorized but unissued Resources Common Share
and (ii) each PP&L Common Share outstanding at the Effective Time shall, by
virtue of the Share Exchange and without any action on the part of the holder
thereof, at such time be converted and exchanged into one Resources Common
Share and Resources shall thereupon have acquired and be the holder of each
outstanding PP&L Common Share. The Plan of Exchange further provides that,
without any further action on the part of PP&L or Resources, each outstanding
certificate which, immediately before the Effective Time, represented PP&L
Common Shares, shall be deemed and treated for all corporate purposes to
represent the ownership of the same number of Resources Common Shares as though
a surrender or transfer and exchange had taken place.
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<PAGE>
AMENDMENT OF PP&L ARTICLES
Approval of the Plan of Exchange by the Shareowners will also constitute
approval and adoption of amendments to the PP&L Articles which will render
inapplicable to PP&L Section 2538 of the BCL, which relates to transactions
with "interested shareholders," and Subchapter 25E of the BCL, which relates to
"control transactions." PP&L has decided to render the provisions of Section
2538 inapplicable to PP&L because PP&L believes that such provisions have been
rendered largely superfluous in light of the subsequent enactment of the more
modern, detailed and comprehensive business combination provisions contained in
Subchapter 25F of the BCL (which is applicable to PP&L) and that the
applicability of Section 2538 is more likely to result in confusion and
uncertainty as to its potential effect rather than to provide additional
benefits for shareowners. PP&L has decided to render the provisions of
Subchapter 25E inapplicable to PP&L so that the consummation of the Share
Exchange will not result in a technical violation of such provisions. See
"Comparison of PP&L Common Shares and Resources Common Shares -- Statutory
Regulation" below.
In addition, pursuant to the Plan of Exchange, the PP&L Articles also will be
amended and restated to effect the following changes: (i) to delete the
provisions of Article IX of the PP&L Articles (relating to "business
combinations"); (ii) to delete the provisions of the PP&L Articles that are no
longer applicable as a result of the passage of time and/or the occurrence of
subsequent events (such as the redemption of certain series of Series Preferred
Stock); and (iii) to grant the Board of Directors of PP&L the full authority
permitted by the BCL to determine the terms of any class or series of any class
of PP&L Preference Stock (no shares of Preference Stock are issued and
outstanding as of this time).
PP&L has decided to delete Article IX of the PP&L Articles because, after the
Share Exchange, the PP&L Common Shares will no longer be publicly traded and a
substantially similar provision will be included in Article VIII of the
Resources Articles to protect the holders of Resources Common Shares. In
general, Article IX of the PP&L Articles provides that transactions with
shareowners beneficially owning more than 10% of PP&L's voting securities who
seek to effect certain business combinations with PP&L (such as a merger,
consolidation, transfer of substantial assets or recapitalization) (1) be
approved by a two-thirds vote of the outstanding voting shares, (2) be approved
by a majority of disinterested directors or (3) satisfy certain "fair price"
criteria with respect to the remaining shareowners. Such "business
combinations" provisions will no longer be appropriate for PP&L once it becomes
a subsidiary of Resources following the Share Exchange.
PP&L has decided to grant its Board of Directors the full authority permitted
by the BCL to determine the terms of PP&L Preference Stock in order to increase
PP&L's flexibility to access equity markets without having to incur the delay
and expense of obtaining specific prior shareowner approval of such terms.
Although the Board of Directors currently has a substantial amount of
flexibility and authority to establish the terms of series Preference Stock
without shareowner approval, this amendment provides the full flexibility of
the more modern "blank check" preference stock now permissible under the BCL,
which will enable the Board to fix dividend rates, dividend payment dates,
redemption provisions and other terms of each series Preference Stock at the
time of issuance to the maximum extent permitted by BCL. No shares of PP&L
Preference Stock are outstanding. The outstanding PP&L Preferred Stock has
preference over the PP&L Common Shares, and would have preference over any
shares of outstanding Preference Stock, as to dividends and assets on
liquidation. If any shares of PP&L Preference Stock were issued and
outstanding, such shares would have preference over the PP&L Common Shares as
to dividends and assets on liquidation. The Board of Directors currently has no
intention of designating or issuing any series of PP&L Preference Stock.
See "Conditions to Restructuring" and "Description of Resources Capital Stock
- -- Possible Anti-Takeover Effects of Certain Provisions of the Articles and
Bylaws of Resources -- Business Combinations" below.
TERMINATION OR AMENDMENT OF PLAN OF EXCHANGE
Notwithstanding Shareowner approval of the Restructuring, the Plan of
Exchange may be terminated at any time prior to the Effective Time either by
Resources by written notice to PP&L prior to the Effective Time or by PP&L at
any time prior to the Effective Time by resolution approved by its Board of
Directors. If the Plan of Exchange is so terminated, the Share Exchange and the
other transactions that comprise the Restructuring will be abandoned.
By mutual consent of their respective boards of directors, PP&L and Resources
may amend the Plan of Exchange at any time prior to the Effective Time.
However, following adoption of the Plan of Exchange by the Shareowners, no such
amendments may be made which either change the amount or kind of shares to be
received pursuant to the Share Exchange or adversely affect the rights of the
shareowners of PP&L.
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<PAGE>
CONDITIONS TO RESTRUCTURING
In addition to the required approval of the Shareowners at the Annual
Meeting, consummation of the Restructuring is subject to receipt of
satisfactory approvals from the SEC, as discussed below.
Pursuant to Sections 9(a)(2) and 10 of the Holding Company Act, Resources has
applied to the SEC for an order (the "SEC Order") approving (i) the acquisition
by Resources of the PP&L Common Shares pursuant to the Share Exchange and (ii)
the indirect acquisition (through its ownership of PP&L) of one-third of the
outstanding capital stock (which represents one-half of the outstanding voting
stock) of Safe Harbor. Also, pursuant to Section 3(a)(1) of the Holding Company
Act, Resources has applied to the SEC for an order exempting Resources, and
each of its subsidiary companies as such, from all provisions of the Holding
Company Act (other than certain provisions which are applicable to all persons
whether or not they are public utility holding companies).
RIGHTS OF DISSENTING SHAREOWNERS
Pursuant to the BCL, neither the owners of PP&L Common Shares nor the owners
of PP&L Preferred Stock will have "dissenters appraisal rights" in connection
with the Restructuring. Pursuant to Section 1571 of the BCL, the owners of PP&L
Common Shares will not have dissenters appraisal rights because, among other
reasons, such shares are listed on a national securities exchange. Pursuant to
the provisions of Section 1931 of the BCL, the owners of PP&L Preferred Stock
will not have dissenters appraisal rights because such stock will not be
exchanged pursuant to the Plan of Exchange.
EXCHANGE OF STOCK CERTIFICATES
If the Plan of Exchange is approved and the Share Exchange is carried out, it
will not be necessary for holders of PP&L Common Shares to surrender their
existing stock certificates for stock certificates of Resources. The holders of
PP&L Common Shares will automatically become holders of Resources Common Shares
and the present stock certificates representing PP&L Common Shares will
automatically represent Resources Common Shares on a share-for-share basis.
After the Effective Time, when presently outstanding certificates representing
PP&L Common Shares are presented for transfer, new certificates bearing the
name of Resources will be issued.
COMMON STOCK PLANS
PP&L currently maintains two stock-related employee plans, the ICP and the
Employee Stock Ownership Plan (the "ESOP"), and, assuming the approval of
Shareowners at the Annual Meeting, will maintain the Directors Plan. In
addition, PP&L currently maintains a dividend reinvestment plan (the "Dividend
Reinvestment Plan"). The ICP, ESOP, Directors Plan and Dividend Reinvestment
Plan are referred to herein as the "Common Stock Plans."
From and after the Effective Time, Resources Common Shares will be used in
lieu of PP&L Common Shares whenever stock is required in connection with the
Common Stock Plans. Amendments to the Common Stock Plans to provide for the
foregoing will take effect at the Effective Time.
Shareowner approval of the Plan of Exchange also will constitute Shareowner
approval of amendments to the Common Stock Plans providing for the future use
of Resources Common Shares in lieu of PP&L Common Shares thereunder.
LISTING OF RESOURCES COMMON SHARES
The Resources Common Shares are expected to be approved for listing on the
NYSE and the PhSE and, after the Effective Time, expected to trade under the
stock symbol "PPL." At the time of the listing of Resources Common Shares, the
PP&L Common Shares will be delisted.
TRANSFER AGENTS AND REGISTRARS
The transfer agents and registrars for Resources Common Shares will be PP&L
and Norwest Bank Minnesota, N.A. At the Effective Time, the addresses for the
transfer agents and registrars will be:
Pennsylvania Power & Light CompanyNorwest Bank Minnesota, N.A.
Investor Services Department Shareowner Services
Two North Ninth Street 161 North Concord Exchange
Allentown, Pennsylvania 18101 South St. Paul, MN 55075
(800) 345-3085 (800) 468-9716
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<PAGE>
MARKET VALUE OF PP&L COMMON SHARES
PP&L Common Shares are listed on the NYSE and PhSE Exchanges. The high and
low sales prices of the PP&L Common Shares on February 28, 1994 were $24.125
and $23.875, respectively.
REGULATORY MATTERS
In connection with the proposed Restructuring, PP&L has already received
required regulatory approvals from the PUC, the FERC and the NRC. On February
9, 1995 the PUC approved the Restructuring subject to certain conditions. The
conditions commit PP&L: (1) to limit the ability of its affiliates to
participate in any future competitive procurement of generating capacity
resources conducted by PP&L; (2) to provide broad access to affiliate company
records and personnel; (3) to provide the PUC with regular affiliate company
financial statements; (4) to limit the amount of investments in diversified
businesses other than the energy business and ancillary activities; (5) to
calculate its cost of capital in Pennsylvania base rate cases on a stand-alone
division basis; and (6) to establish reasonable accounting and pricing
protocols for transactions with affiliates. None of these conditions is
expected to materially restrict Resources' entry into unregulated business
activities.
Also, on December 30, 1994, the FERC approved the Restructuring under Section
203 of the Federal Power Act; and, on December 29, 1994, the NRC consented to
the Restructuring.
Upon completion of the Restructuring, PP&L will continue to operate an
electric utility business and will remain subject to regulation by the PUC and
the FERC. Resources will not be subject to regulation by the PUC or the FERC.
PP&L is currently, and after the Restructuring will continue to be, a public
utility holding company under the Holding Company Act. Nevertheless, pursuant
to an order of the SEC granted pursuant to Section 3(a)(2) of the Holding
Company Act in 1976, PP&L is exempt from all provisions of the Holding Company
Act other than certain provisions which are applicable to all persons whether
or not they are public utility holding companies.
After the Restructuring is completed, Resources will be a public utility
holding company under the Holding Company Act. Nevertheless, pursuant to the
SEC Order described under "Conditions to Restructuring" above, Resources, and
each of its subsidiary companies as such, will be exempt from all provisions of
the Holding Company Act other than certain provisions which are applicable to
all persons whether or not they are public utility holding companies.
Also, following the Restructuring, both Resources and PP&L will be subject to
the reporting requirements of the Exchange Act by virtue of having classes of
securities registered under that act.
DIVIDEND POLICY
The Board of Directors of Resources has no current intention to change the
current PP&L dividend policy. It is expected that quarterly dividends on the
Resources Common Shares will be declared and paid on the same schedule of dates
currently followed by PP&L with respect to dividends. The most recent quarterly
dividend declared by the Board of Directors of PP&L on the PP&L Common Shares
was $.4175 per share payable on April 1, 1995 to holders of record on March 10,
1995 of PP&L Common Shares.
There can be no guarantee of the amount of the initial quarterly dividend or
of the payment of future dividends because the rate and timing of dividends of
Resources will depend upon the future earnings and financial condition of
Resources and its subsidiaries, including PP&L, and upon other relevant factors
affecting the Company's dividend policy which are not presently determinable.
As a practical matter, the ability of Resources to pay dividends will be
governed by the ability of Resources' operating subsidiaries to pay such
dividends to Resources. For a period of time following the Restructuring, the
funds required by Resources to enable it to pay dividends on Resources Common
Shares are expected to be derived predominantly from the dividends paid by
PP&L. In the future, dividends from subsidiaries other than PP&L may also be a
source of funds for dividend payments by Resources.
PP&L intends to pay dividends to Resources, if available, in amounts which,
to the extent not otherwise provided by dividends and other funds from
subsidiaries of Resources, will be sufficient for Resources to pay cash
dividends on its Common Stock. The amount of dividends to be paid by PP&L will
also be used to pay the operating expenses of Resources and for such other
corporate purposes as the Board of Directors of Resources may determine.
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<PAGE>
PP&L's ability to make regular cash payments to Resources in the form of
dividends on outstanding PP&L Common Shares will be subject to the availability
of earnings and the needs of its utility business. Because PP&L will remain
subject to regulation by the PUC, the amount of its earnings and dividends
thereof will be affected by the manner in which the PUC regulates PP&L. In
addition, PP&L is subject to restrictions on the payment of dividends contained
in the PP&L Articles and in its first mortgage bond indenture. Neither the PP&L
Articles nor the first mortgage bond indenture would limit the amount of
regular quarterly dividends that PP&L pays on its common stock.
Dividends on the PP&L Preferred Stock will continue to be paid at the times,
at the rates and pursuant to the terms provided for in the various series of
such stock, depending upon the earnings, financial condition and other relevant
factors affecting PP&L.
DIRECTORS AND EXECUTIVE OFFICERS
At the Effective Time, the Board of Directors of Resources shall consist of
the same members, with the same terms, as the Board of Directors of PP&L.
Following the Share Exchange, it is expected that the following persons, each
of whom is currently an executive officer of PP&L, will hold, in addition, the
offices of Resources indicated below.
<TABLE>
<CAPTION>
NAME OFFICE
---- ------
<S> <C>
William F. Hecht Chairman, President and Chief Executive Officer
Frank A. Long Executive Vice President
Ronald E. Hill Senior Vice President-Financial, Treasurer and Secretary
</TABLE>
Resources and PP&L each may have directors or executive officers who are not
directors or executive officers of the other.
For information with respect to the directors and executive officers of PP&L,
executive compensation and certain relationships and related transactions, see
"Proposal 2: Election of Directors" in this Proxy Statement and Prospectus and
"Executive Officers" in part 5 of PP&L's Annual Report on Form 10-K for the
year ended December 31, 1994, which is incorporated by reference herein.
Initially, Resources will not have full-time officers and employees of its
own, but will share services of officers and employees of PP&L. Resources and
PP&L each expect, from time to time, to render to the other certain services
and to make available the use of certain facilities and equipment. Such
services are expected to include, but are not expected to be limited to,
executive management, administration, accounting, finance, legal,
communications, purchasing, billing, information systems, corporate
secretarial, human resources, insurance and other similar types of services.
The agreements and arrangements between Resources and PP&L for the provision of
such services and the use of such facilities are subject to approval by the
PUC.
DESCRIPTION OF PP&L CAPITAL STOCK
PP&L has an authorized capitalization consisting of: (i) 170,000,000 PP&L
Common Shares, without par value, of which 155,481,962 shares were issued and
outstanding as of December 31, 1994; (ii) 629,936 shares of 4 1/2% Preferred
Stock, par value $100 per share, of which 530,189 shares were issued and
outstanding as of December 31, 1994; (iii) 10,000,000 shares of Series
Preferred Stock, par value $100 per share, of which 4,133,556 shares were
issued and outstanding as of December 31, 1994; and (iv) 5,000,000 shares of
Preference Stock, without par value ("PP&L Preference Stock"), none of which
shares are issued and outstanding. The outstanding PP&L Preferred Stock has
preference over the PP&L Common Shares, and would have preference over shares
of PP&L Preference Stock if any such shares were outstanding, as to dividends
and assets on liquidation. If shares of PP&L Preference Stock were issued and
outstanding, such shares would have preference over the PP&L Common Shares as
to dividends and assets on liquidation.
The holders of PP&L Common Shares and PP&L Preferred Stock will each have one
vote per share, and will vote together as a single class, at the Annual
Meeting. See "Outstanding Stock and Voting Rights."
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<PAGE>
DESCRIPTION OF RESOURCES CAPITAL STOCK
GENERAL
The Resources Articles, as amended and restated as of the Effective Time, a
copy of which is attached hereto as Exhibit B, provide for an authorized
capitalization consisting of (i) 390,000,000 Resources Common Shares, par value
$.01 per share, and (ii) 10,000,000 shares of preferred stock, par value $.01
per share ("Resources Preferred Stock").
The principal difference between the rights of the holders of Resources
Common Shares and the rights of the holders of PP&L Common Shares is that
holders of Resources Common Shares will not be entitled to cumulate their votes
in the election of directors. In addition, (i) Resources will be authorized to
issue significantly more shares of common stock than PP&L; (ii) in general,
Resources shareowners must provide prior written notice of the business to be
brought before annual meetings of shareowners and will not be entitled to bring
any business before special meetings of shareowners; and (iii) certain
statutory "anti-takeover" provisions which are currently applicable to PP&L
will not apply to Resources. With the exception of these differences, the Board
of Directors believes that the rights of the holders of Resources Common Shares
will not be materially different from the rights of the holders of PP&L Common
Shares. See "Comparison of PP&L Common Shares and Resources Common Shares"
below.
The Board of Directors of Resources has the authority to divide the Resources
Preferred Stock into one or more classes or series and has the full authority
permitted by the BCL to determine the voting rights, if any, and designations,
preferences, limitations and special rights of any class or series of any class
of the Resources Preferred Stock.
As of the Record Date, 100 Resources Common Shares were outstanding and held
by PP&L, and no other shares of Resources capital stock were issued or
outstanding.
DIVIDENDS
Dividends on Resources Common Shares will be paid if, when and as determined
by the Board of Directors of Resources from time to time out of funds legally
available for this purpose. See "Dividend Policy" above for a description of
the Company's current dividend policy.
VOTING RIGHTS
Holders of Resources Common Shares are entitled to one vote for each share
held by them on all matters submitted to the shareowners of Resources. Pursuant
to Article VI of the Resources Articles, holders of Resources Common Shares
will not have cumulative voting rights in the election of directors. Pursuant
to Article IX of the Resources Articles, the affirmative vote of shareowners
entitled to cast at least two-thirds of the votes which all shareowners are
entitled to cast are required to amend, alter or repeal, or to adopt any
provision inconsistent with, Article VI of the Resources Articles.
LIQUIDATION
In the event of any liquidation, dissolution or winding up of Resources, the
holders of Resources Common Shares would be entitled to receive the assets and
funds of Resources available for distribution to its shareowners, after the
payment to the holders of shares of all series of the Resources Preferred Stock
of the full distributive amounts to which they are respectively entitled. Such
assets and funds would be divided among and paid to the holders of Resources
Common Shares according to their respective shares.
PREEMPTIVE AND OTHER RIGHTS
The holders of Resources Common Shares have no preemptive rights or
conversion rights. The Resources Common Shares are not subject to redemption or
to any further calls or assessments and are not entitled to the benefit of any
sinking fund provisions.
POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE ARTICLES AND BYLAWS
OF RESOURCES
Certain provisions of the Resources Articles and the Resources Bylaws may
have the effect of discouraging unilateral tender offers or other attempts to
take over and acquire the business of Resources. These provisions
21
<PAGE>
might discourage a potentially interested purchaser from attempting a
unilateral takeover bid for Resources on terms which some shareowners might
favor. Although the Company does not believe these provisions will depress the
stock price of Resources Common Shares as compared to PP&L Common Shares, by
discouraging potential takeover bids, these provisions might diminish the
opportunity for the Company's shareowners to sell their shares at a premium
over then prevailing market prices.
Set forth below is a discussion of the possible anti-takeover effects of the
provisions of the Resources Articles and the Resources Bylaws that are
substantially different from the current provisions of the PP&L Articles and
the PP&L Bylaws. Reference is hereby made to the Resources Articles, attached
hereto as Exhibit B, and to the Resources Bylaws, which are filed as an exhibit
to the Registration Statement of which this Proxy Statement and Prospectus is a
part.
NO CUMULATIVE VOTING. As expressly permitted under the BCL, the Resources
Articles (Article VI) do not provide for cumulative voting in the election of
directors. The procedure known as cumulative voting permits shareowners to
multiply the number of votes to which they may be entitled by the total number
of directors to be elected in the same election by the holders of the class or
classes of shares of which their shares are a part and to cast their whole
number of votes for one candidate or to distribute them among any two or more
candidates.
Under cumulative voting it is possible for representation on the Board of
Directors to be obtained by an individual or group of individuals who own less
than a majority of the voting stock. Such a shareowner or group may have
interests and goals which are not consistent with, and indeed might be in
conflict with, those of a majority of the shareowners. The Board of Directors
believes that each director should represent all shareowners, rather than the
interests of any special constituency, and that the presence on the Board of
one or more directors representing such a constituency could disrupt and impair
the efficient management of Resources. The lack of cumulative voting could
discourage the accumulation of blocks of Resources' Common Shares and therefore
could tend to make temporary increases in the market price of the Resources
Common Shares, which could result therefrom, less likely to occur. Shareowners
may, therefore, in these limited instances, not be able to sell their Resources
Common Shares at a market price temporarily influenced by this type of
activity.
ADVANCE NOTICE OF BUSINESS TO BE BROUGHT BEFORE SHAREOWNER MEETINGS. Except
as otherwise provided with respect to the nomination of directors, Section 3.17
of the Resources Bylaws restricts the business that shareowners may properly
bring before a shareowner meeting. The Bylaws of PP&L (the "PP&L Bylaws") do
not contain a provision comparable to Section 3.17 of the Resources Bylaws. In
general, shareowners are not entitled to bring any business before a special
meeting of shareowners and, with respect to annual meetings of shareowners,
shareowners must provide prior written notice of the business to be brought
before the annual meeting. With certain exceptions, Section 3.17 of the
Resources Bylaws requires such written notice to be received by the secretary
of Resources no later than 75 days prior to such annual meeting; provided that
if Resources gives less than 85 days' notice or prior public disclosure of the
date of the annual meeting, such shareowner notice must be received not later
than the tenth day following the date that Resources gives such notice or makes
such prior public disclosure.
The shareowner notice would be required to contain or be accompanied by the
following information: (1) the name and address of the shareowner proposing
such business; (2) a brief description of such business; (3) the class, series
and number of shares of Resources' capital stock owned by such shareowner; (4)
a description of all arrangements or understandings between such shareowner and
any other person or persons in connection with such business; (5) all other
information as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the SEC had proxies been solicited with respect
to such business by such shareowner; and (6) a representation that the
shareowner intends to appear in person or by proxy at the meeting to bring such
business before the meeting.
The provisions in the Resources Bylaws prohibiting shareowners from bringing
business before special shareowner meetings may delay the ability of
individuals to bring matters before shareowner meetings other than matters
which Resources deems desirable. The provisions in the Resources Bylaws
requiring advance notification of business to be brought before annual meetings
may provide sufficient time for Resources to institute litigation or take other
appropriate steps to respond to such business, or to prevent such business from
being acted upon, if such response or prevention is thought to be necessary or
desirable for any reason.
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<PAGE>
ADVANCE NOTICE OF NOMINEES FOR THE BOARD OF DIRECTORS. Each of the Resources
Bylaws and the PP&L Bylaws prohibits shareowners from nominating individuals
for election as directors unless advance notice of such nomination is received
by the corporation's secretary. The provisions contained in the Resources
Bylaws are essentially the same as the provisions contained in the PP&L Bylaws
with the exception that a shorter notice period is required under the Resources
Bylaws.
These Bylaw provisions may tend to inhibit shareowners who do not have any
intention of controlling the Company or the Board of Directors from
participating in the nomination process. In addition, such provisions may also
provide sufficient time for the Company to institute litigation or take other
appropriate steps to prevent the nominee from being elected or serving if such
prevention is thought to be necessary or desirable for any reason.
"BLANK-CHECK" PREFERRED STOCK. The Resources Articles authorize the issuance
of 10,000,000 shares of Resources Preferred Stock. The Board of Directors of
Resources has the full authority permitted by the BCL to determine the terms of
any class or series of any class of the Resources Preferred Stock. Although the
Board of Directors of Resources currently has no intention of doing so, shares
of Resources Preferred Stock could be issued in a manner (e.g., with
disproportionate or class voting rights) which could have the effect of
discouraging takeover attempts.
FAIR PRICE PROVISIONS. The Resources Articles contain "fair price" provisions
which are essentially the same as the "fair price" provisions contained in the
PP&L Articles, with some minor editorial revisions which the Company made for
the purpose of clarifying such provisions. See the proposed Resources Articles
attached hereto as Exhibit B.
COMPARISON OF PP&L COMMON SHARES AND RESOURCES COMMON SHARES
Holders of Resources Common Shares will have certain rights which differ from
the rights of holders of PP&L Common Shares. The primary difference in the
holders' rights are that holders of Resources Common Shares may not cumulate
their votes in the election of directors. In addition, Resources has more
shares of Common Stock available for issuance than PP&L.
As Pennsylvania corporations, both PP&L and Resources are governed primarily
by the BCL. As discussed below, however, certain BCL provisions currently
applicable to PP&L will not apply to Resources. Holders of PP&L Common Shares,
whose rights as shareowners are currently governed by the PP&L Bylaws and the
PP&L Articles, will become as a result of the Share Exchange holders of
Resources Common Shares, whose rights as shareowners will be governed by the
Resources Articles and the Resources Bylaws. Certain differences arise due to
this change in governing articles and bylaws. The following discussion is not
intended to be a complete statement of all differences affecting the rights of
shareowners, but summarizes material differences between the BCL provisions
applicable to PP&L and Resources and between the articles and bylaws of PP&L
and Resources. This discussion is qualified in its entirety by reference to
applicable Pennsylvania corporate law and to the full texts of the Resources
Articles, Resources Bylaws, PP&L Articles and PP&L Bylaws. The Resources
Articles, substantially in the form to be in effect at the Effective Time, are
attached hereto as Exhibit B, and the Resources Bylaws, substantially in the
form to be in effect at the Effective Time, are included as an exhibit to the
Registration Statement. The PP&L Articles and the PP&L Bylaws in effect on the
date hereof are included as exhibits to PP&L's annual report on Form 10-K for
the year ended December 31, 1994, which is incorporated herein by reference.
AUTHORIZED SHARES
Resources is authorized to issue significantly more shares of common stock
than PP&L. After the Effective Time, Resources will have authorized and
unissued approximately 235,000,000 Resources Common Shares and 10,000,000
shares of Resources Preferred Stock. The Board of Directors of Resources has
the full authority permitted by the BCL to determine the terms of any class or
series of any class of the Resources Preferred Stock. For a discussion of the
authorized Resources capital stock, see "Description of Resources Capital
Stock --General."
At the Effective Time, each outstanding PP&L Common Share will be exchanged
into one Resources Common Share. Shareowners of Resources have no preemptive
rights to receive or purchase any of the unissued Resources Common Shares.
After the Effective Time, the Board of Directors of Resources will have the
authority to determine the terms of the Resources Preferred Stock and to issue
the unissued Resources Common Shares and Resources Preferred Stock, or any part
thereof, without further action by the shareowners except as required
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by law or applicable stock exchange requirements. For example, the NYSE, on
which the Resources Common Shares will be listed, currently specifies
shareowner approval as a prerequisite for listing shares in several instances,
including acquisition transactions where the present or potential issuance of
shares could result in an increase in the number of shares outstanding by 20%
or more.
The Company is currently considering the issuance of up to $100 million of
common stock during 1995, the proceeds of which will be used for general
corporate purposes. If the Restructuring is approved by Shareowners and the
Share Exchange is effected, such common stock will consist of Resources Common
Shares. Whether such common stock consists of Resources Common Shares or, if
the Share Exchange is not effected, PP&L Common Shares, shareowner approval
will not be required. Although Resources has no other plans for the issuance of
any of the Resources Common Shares or Resources Preferred Stock (other than in
connection with the Share Exchange and pursuant to the Common Stock Plans),
such shares could be useful in connection with acquisitions of stock or assets
of other companies, to provide funds for construction of capital equipment and
facilities and for other corporate purposes. Dividend requirements and any
redemption, sinking fund or conversion provision pertaining to shares of the
Resources Preferred Stock, if authorized and issued, may have an adverse effect
on the availability of earnings for distribution to holders of Resources Common
Shares and for use with respect to other corporate purposes. While there is no
present intention to issue such shares except as set forth above, the number of
authorized Resources Common Shares and shares of Resources Preferred Stock will
insure that shares will be available, if needed, for issuance in connection
with raising additional capital, acquisitions, joint ventures and other
corporate purposes and, in the case of Resources Common Shares, to support the
issuance of Resources Preferred Stock or other securities convertible into or
exercisable for Resources Common Shares.
VOTING RIGHTS
PP&L GENERALLY. Holders of PP&L Common Shares, 4 1/2% Preferred Stock and
Series Preferred Stock have one vote per share on all matters voted upon by
Shareowners. Shareowners are entitled to cumulate their votes in the election
of directors. For a discussion of the Shareowners' right to cumulative voting,
see "Outstanding Stock and Voting Rights."
RESOURCES GENERALLY. All voting rights of shareowners of Resources will, at
the Effective Time, be vested in the holders of Resources Common Shares, each
share being entitled to one vote on all matters. Holders of Resources Common
Shares are not entitled to cumulative voting. See "Description of Resources
Capital Stock -- Possible Anti-Takeover Effects of Certain Provisions of the
Articles and Bylaws of Resources -- No Cumulative Voting."
SUPERMAJORITY APPROVAL REQUIRED FOR CERTAIN AMENDMENTS TO BYLAWS AND ARTICLES
In general, the bylaws of Resources and PP&L may be amended by a majority
vote of the Board of Directors or by a majority of the votes cast at a meeting
of shareowners, and amendments to the Resources Articles or PP&L Articles may
be approved by a majority of the votes cast at a meeting of shareowners. Each
of the PP&L Articles and the Resources Articles requires a supermajority
approval for amendments of certain specified and substantially similar
provisions of the respective bylaws and articles. Such bylaw amendments require
a two-thirds approval by the board of directors or by the outstanding shares;
and such articles amendments require a two-thirds approval by the outstanding
shares.
In addition, the Resources Articles provide that, except as otherwise
provided in the express terms of any series of Resources Preferred Stock, this
supermajority approval by directors or shareowners is required to amend, alter
or repeal, or adopt any provision inconsistent with, two additional provisions
of the Resources Bylaws: Section 3.05(b), which provides that action by written
consent of shareowners without a meeting must be unanimous, and Section 3.17,
which relates to restrictions on the shareowners' ability to present business
at shareowner meetings (and which is described under "Description of Resources
Capital Stock -- Possible Anti-Takeover Effects of Certain Provisions of the
Articles and Bylaws of Resources -- Advance Notice of Business to be Brought
Before Shareowner Meetings" above). The Resources Articles also provide that a
two-thirds vote of the outstanding shares is required to amend, alter or
repeal, or adopt any provision inconsistent with, two additional provisions of
the Resources Articles: Article VI, which provides that shareowners of
Resources shall not have the right to cumulate their votes for the election of
directors, and Article VII, which provides that, as described under "Statutory
Regulation" below, Section 2538 of the BCL (relating to approval of
transactions with interested shareholders) and BCL Subchapter 25G (relating to
control-share acquisitions) shall not be applicable to Resources.
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STATUTORY REGULATION
The BCL contains a number of statutory "anti-takeover" provisions, including
Subchapters 25E, F, G and H, which may be applicable to a publicly traded
Pennsylvania corporation. All such statutory provisions currently apply to
PP&L. As described below, pursuant to Article VII of the Resources Articles,
certain of these provisions do not apply to Resources; and certain of these
provisions will not apply to PP&L following the Share Exchange.
Subchapter 25E (relating to control transactions) provides that if any person
or group acquires 20% or more of the voting power of a covered corporation, the
remaining shareowners may demand from such person or group the fair value of
their shares, including a proportionate amount of any control premium.
Subchapter 25E applies to Resources but will not apply to PP&L following the
Share Exchange.
Subchapter 25F (relating to business combinations) delays for five years and
imposes conditions upon "business combinations" between an "interested
shareholder" and the corporation. The term "business combination" is defined
broadly to include various transactions utilizing a corporation's assets for
purchase price amortization or refinancing purposes. An "interested
shareholder" is defined generally as the beneficial owner of at least 20% of a
corporation's voting shares. Subchapter 25F applies to Resources and will
continue to apply to PP&L following the Share Exchange.
Subchapter 25G (relating to control-share acquisitions) prevents a person who
has acquired 20% or more of the voting power of a covered corporation from
voting such shares unless the "disinterested" shareowners approve such voting
rights. Failure to obtain such approval exposes the owner to the risk of a
forced sale of the shares to the issuer. If shareowner approval is obtained,
the corporation is also subject to Subchapters 25I and J of the BCL. Subchapter
25I provides for a minimum severance payment to certain employees terminated
within two years of the approval. Subchapter 25J prohibits the abrogation of
certain labor contracts prior to their stated date of expiration. The
provisions of Subchapter 25G (and the related provisions of Subchapters 25I and
J) do not apply to Resources but will continue to apply to PP&L following the
Share Exchange.
Subchapter 25H (relating to disgorgement) applies in the event that (1) any
person or group publicly discloses that the person or group may acquire control
of the corporation or (2) a person or group acquires (or publicly discloses an
offer or intent to acquire) 20% or more of the voting power of the corporation
and, in either case, sells shares within 18 months thereafter. Any profits from
sales of equity securities of the corporation by the person or group during the
18-month period belong to the corporation if the securities that were sold were
acquired during the 18-month period or within the preceding 24 months.
Subchapter 25H applies to Resources and will continue to apply to PP&L
following the Share Exchange.
Subchapters 25E, F, G and H contain a wide variety of transactional and
status exemptions, exclusions and safe harbors. The foregoing descriptions are
qualified in their entirety by reference to such provisions of the BCL.
Section 2538 of the BCL establishes certain shareowner approval requirements
with respect to specified transactions with "interested shareholders." The
Company believes that Section 2538 has been rendered largely superfluous in
light of the subsequent enactment of the more modern, detailed and
comprehensive business combination provisions contained in Subchapter 25F of
the BCL (which is applicable to both PP&L and Resources) and that the
applicability of Section 2538 is more likely to result in confusion and
uncertainty as to its potential effect rather than to provide additional
benefits for shareowners. Section 2538 is not applicable to Resources and will
not apply to PP&L following the Share Exchange.
TREATMENT OF PP&L PREFERRED STOCK
The Share Exchange will not result in any change in the outstanding PP&L
Preferred Stock, several series of which are listed on the NYSE and/or the
PhSE. The shares of PP&L Preferred Stock issued and outstanding immediately
prior to the Share Exchange will not be converted or otherwise affected by the
Share Exchange and will continue as equity securities of PP&L with the same
preferences, designations, relative rights, privileges and powers, and subject
to the same restrictions, limitations and qualifications, as were applicable to
such securities prior to the Share Exchange. The decision to have the PP&L
Preferred Stock continue as securities of PP&L is based upon a desire not to
alter, or potentially alter, the nature of the investment represented by such
fixed income
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securities, namely a direct investment in a regulated utility. It is
anticipated that the current listings of PP&L's Preferred Stock on the NYSE
and/or the PhSE will continue after the Share Exchange. If such listings do
continue, it is currently anticipated that PP&L will continue to file reports
pursuant to the Exchange Act.
Due to the start-up nature and comparatively small initial capitalization of
Power Markets, the consolidated assets and liabilities of PP&L immediately
before the Restructuring will be substantially the same as the consolidated
assets and liabilities of PP&L immediately after the Restructuring.
TREATMENT OF PP&L INDEBTEDNESS
All of PP&L's indebtedness outstanding immediately prior to the Share
Exchange, which is expected to consist of first mortgage bonds and commercial
paper, will continue to be outstanding indebtedness of PP&L after the Share
Exchange and, in the case of PP&L's first mortgage bonds, will continue to be
secured by first mortgage liens on all of the properties of PP&L that are
currently subject to such liens. Such indebtedness will be neither assumed nor
guaranteed by Resources in connection with the Share Exchange. The decision to
have the indebtedness of PP&L continue as obligations of PP&L is based upon a
desire not to alter, or potentially alter, the nature of the investment
represented by such fixed income obligations, namely a direct investment in a
regulated utility.
CERTAIN INCOME TAX CONSEQUENCES
GENERAL
The following general discussion summarizes certain income tax considerations
relating to the restructuring of PP&L. These summaries are included for general
information only. They do not discuss all aspects of income taxation that may
be relevant to a particular Shareowner in light of the personal tax
circumstances of the Shareowner or to certain types of Shareowners subject to
special treatment under the income tax laws.
Except as otherwise indicated, statements of legal conclusion regarding
federal tax treatments, effects or consequences reflect the opinion of Reid &
Priest LLP, special federal income tax counsel for the Company; and statements
of legal conclusion regarding Pennsylvania tax treatments, effects or
consequences (other than those pertaining to personal property taxes) reflect
the opinion of Ballard Spahr Andrews & Ingersoll, special Pennsylvania income
tax counsel for the Company. No rulings have been requested from the Internal
Revenue Service ("IRS") or the Pennsylvania Department of Revenue. Accordingly,
each Shareowner should consult such Shareowner's own tax advisor as to the
specific tax consequences to such Shareowner, including the application and
effect of state or local income and other tax laws.
The following discussion is based on existing statutory provisions, existing
and proposed regulations and existing administrative interpretations and court
decisions. Future legislation, regulations, administrative interpretations, or
court decisions could significantly change such authorities either
prospectively or retroactively.
The Share Exchange will be treated as a transfer of all of the outstanding
PP&L Common Shares by the PP&L shareowners to Resources solely in exchange for
all of the outstanding Resources Common Shares, in an exchange qualifying for
nonrecognition under Section 351 of the Internal Revenue Code of 1986, as
amended (the "Code"), and under Section 303(a)(3) of the Pennsylvania Tax
Reform Code of 1971, as amended.
TAX IMPLICATIONS TO THE HOLDERS
For federal and Pennsylvania income tax purposes, no gain or loss will be
recognized by the holders of PP&L Common Shares from the Share Exchange. The
tax basis of the Resources Common Shares received by each Shareowner will be
the same as the Shareowner's basis in the PP&L Common Shares surrendered in the
Share Exchange. The holding period of the Resources Common Shares held by each
Shareowner for determining long-term capital gains for federal income tax
purposes will include the period during which such Shareowner held the PP&L
Common Shares, provided that the PP&L Common Shares were held as a capital
asset on the date of the exchange. In addition, the restructuring will not give
rise to the recognition of gain or loss for federal or Pennsylvania income tax
purposes by any holders of the PP&L Preferred Stock.
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TAX IMPLICATIONS TO RESOURCES
No gain or loss will be recognized by Resources for federal or Pennsylvania
income tax purposes upon receipt of the PP&L Common Shares. For federal income
tax purposes, the basis of the PP&L Common Shares received by Resources will be
the same as PP&L's net asset basis immediately after the Share Exchange,
subject to certain adjustments under Treasury Regulations relating to
consolidated groups; and Resources' holding period in the PP&L Common Shares
received in the Share Exchange includes the period during which such stock was
held by the Shareowners. For Pennsylvania income tax purposes, the basis of the
PP&L Common Shares received by Resources will be the same as the Shareowners'
basis for such PP&L Common Shares immediately prior to the Share Exchange.
OTHER TAX ASPECTS
Apart from federal income, Pennsylvania income, and Pennsylvania personal
property tax aspects discussed below, no attempt has been made to determine any
tax that may be imposed on a Shareowner by the country, state or jurisdiction
in which the holder resides or is a citizen. Shareowners may be subject to
other taxes, such as state or local income taxes that may be imposed by various
jurisdictions. Shareowners may also be subject to intangible property, estate
and inheritance taxes in their state of domicile. Shareowners should consult
their own tax advisors with regard to state and local income, inheritance and
estate taxes.
THE FEDERAL AND PENNSYLVANIA INCOME TAX DISCUSSION SET FORTH ABOVE IS
INTENDED TO PROVIDE ONLY A GENERAL SUMMARY, AND DOES NOT ADDRESS TAX
CONSEQUENCES WHICH MAY VARY WITH, OR ARE CONTINGENT ON, INDIVIDUAL
CIRCUMSTANCES. MOREOVER, THIS DISCUSSION DOES NOT ADDRESS ANY FOREIGN, FEDERAL,
STATE OR LOCAL TAX CONSEQUENCES OF THE DISPOSITION OF STOCK IN PP&L OR
RESOURCES EITHER BEFORE OR AFTER THE SHARE EXCHANGE. ACCORDINGLY, EACH
SHAREOWNER IS STRONGLY URGED TO CONSULT WITH SUCH SHAREOWNER'S TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH SHAREOWNER OF THE SHARE
EXCHANGE OR SUCH DISPOSITION OF STOCK.
PENNSYLVANIA PERSONAL PROPERTY TAXES
The PP&L Common Shares which will cease to be held by the public after
consummation of the Restructuring are, in the opinion of Michael A. McGrail,
Esq., currently exempt under Pennsylvania law, as presently in effect, from all
personal property taxes in Pennsylvania. The Resources Common Shares will be
similarly exempt after the Share Exchange.
The PP&L Preferred Stock, which will remain outstanding as stock of PP&L, is,
in the opinion of Mr. McGrail, currently exempt under Pennsylvania law, as
presently in effect, from all personal property taxes in Pennsylvania. This
exemption will continue after the Share Exchange on the basis of present law
and PP&L's current activities in Pennsylvania. PP&L does not have any present
intent to change such activities.
LEGAL OPINIONS
The validity of the Resources Common Stock will be passed upon for the
Company by Mr. McGrail, Senior Counsel of PP&L, and Simpson Thacher & Bartlett
(a partnership which includes professional corporations), New York, New York.
As to matters involving the law of the Commonwealth of Pennsylvania, Simpson
Thacher & Bartlett will rely on the opinion of Mr. McGrail. Mr. McGrail is a
full-time employee of PP&L.
EXPERTS
The consolidated financial statements and related financial statement
schedules of PP&L incorporated in this Proxy Statement and Prospectus by
reference from PP&L's Annual Report on Form 10-K have been audited by Deloitte
& Touche LLP, independent public accountants, as stated in their reports which
are incorporated herein by reference, and have been so incorporated in reliance
upon such reports given upon the authority of that firm as experts in
accounting and auditing.
Statements made herein under the heading "Certain Income Tax Consequences"
regarding the federal income tax effect of the Share Exchange have been
reviewed by Reid & Priest LLP, special federal tax counsel
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for the Company, and have been made in reliance upon such counsel as an
expert. Statements made herein under the heading "Certain Income Tax
Consequences" regarding the Pennsylvania income tax effect of the Share
Exchange have been reviewed by Ballard Spahr Andrews & Ingersoll, special
Pennsylvania tax counsel for the Company, and have been made in reliance upon
such counsel as an expert. All other statements made herein and in the
documents incorporated by reference in this Prospectus as to matters of law
and legal conclusions have been reviewed by Michael A. McGrail, Esq., Senior
Counsel of PP&L, and have been made in reliance upon his authority as an
expert.
PROPOSAL 2: ELECTION OF DIRECTORS
PP&L has a classified Board of Directors, currently consisting of sixteen
directors divided into three classes. These classes consist of five directors
whose terms will expire at the 1995 Annual Meeting, six directors whose terms
will expire at the 1996 Annual Meeting, and five directors whose terms will
expire at the 1997 Annual Meeting.
The nominees this year are Derek C. Hathaway, Stuart Heydt, Clifford L.
Jones, Robert Y. Kaufman, and Ruth Leventhal. (Jeffrey J. Burdge, a member of
the class of 1995, is retiring from the Board of Directors and will not be
standing for re-election.) All of the nominees other than Mr. Hathaway are
currently serving as directors. Dr. Heydt, Mr. Jones and Dr. Leventhal were
elected by the shareowners at the 1992 Annual Meeting. Admiral Kaufman was
elected by the Board of Directors effective October 1, 1992. If elected by the
shareowners, the above nominees, with the exception of Admiral Kaufman, will
serve until the 1998 Annual Meeting and until their successors shall be
elected and qualified. Under PP&L's current Directors Retirement Policy,
Admiral Kaufman will retire as of the 1996 Annual Meeting.
Dr. Heydt will seek authorization from the FERC under Section 305(b) of the
Federal Power Act to continue to hold the positions of director of PP&L and
director of PNC Bank, N.A. ("PNC Bank"). PNC Bank is an indirect subsidiary of
PNC Bank Corp., a multi-bank holding company. The FERC application is
occasioned by the fact that another indirect subsidiary of PNC Bank Corp., PNC
Securities Corp., is authorized to engage in the underwriting and marketing of
industrial development bonds and commercial paper.
The Board of Directors has no reason to believe that any of the nominees
will become unavailable for election, but, if any nominee should become
unavailable prior to the meeting, the accompanying Proxy will be voted for the
election of such other person as the Board of Directors may recommend in place
of that nominee.
---------------
THE BOARD OF DIRECTORS OF PP&L
RECOMMENDS THAT SHAREOWNERS VOTE FOR PROPOSAL 2
NOMINEES FOR DIRECTORS:
DEREK C. HATHAWAY is Chairman, President and Chief Executive
Officer of Harsco Corporation, Camp Hill, Pa., a diversified
Fortune 500 manufacturing company. In 1966, Mr. Hathaway
founded Dartmouth Investments Ltd. in the United Kingdom and
built a group of engineering businesses into a public
corporation, which was acquired by Harsco in 1979. After
[PHOTO coming to the U.S. in 1984, Mr. Hathaway became a citizen in
APPEARS 1991. Mr. Hathaway served as Senior Vice President --
HERE] Operations of Harsco's Engineered Products Group from 1986
until 1991, when he became President and Chief Operating
Officer. In January 1994 he was named President and Chief
Executive Officer, and was elected to his present position
three months later. Mr. Hathaway is a director of Harsco and
a number of civic and charitable organizations, including the
National Association of Manufacturers, the Pennsylvania
Business Roundtable, the Pennsylvania Chamber of Business and
Industry, and the Polyclinic Medical Center. He is 50.
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STUART HEYDT is President and Chief Executive Officer of
Geisinger Health System, Danville, Pa. Dr. Heydt attended
Dartmouth College and received his M.D. from the University
of Nebraska. He specializes in maxillofacial surgery. He had
been President and Chief Executive Officer of Geisinger
Medical Center since May 1990, and then was President and
[PHOTO Chief Operating Officer of Geisinger Foundation until being
APPEARS appointed to his present position in December 1991. From 1982
HERE] to May 1990, he had been President and Chief Executive
Officer of Geisinger Wyoming Valley Medical Center. He is
past president of the American College of Physician
Executives and a director of Bucknell University, Wilkes
University, PNC Bank (Northeast PA) and PNC Bank, N.A. He is
55. Dr. Heydt is a member of the Corporate Responsibility and
Nominating Committees of the Board. He has been a PP&L
director since 1991.
CLIFFORD L. JONES served as President of the Capital Region
Economic Development Corporation, Camp Hill, Pa., from
October 1992 until February 1994. Prior to that, he served as
President of the Pennsylvania Chamber of Business and
Industry from 1983 until his retirement in December 1991. Mr.
[PHOTO Jones received his B.A. from Westminster College. He served
APPEARS from 1981 to 1983 as a member, and then as Chairman, of the
HERE] Pennsylvania Public Utility Commission. From 1979 until his
appointment to the PUC, he was Secretary of the Pennsylvania
Department of Environmental Resources. He is also a director
of U.S. Radio, Inc. and Mercom, Inc., a Michigan-based cable
television company. He is 67. Mr. Jones is a member of the
Corporate Responsibility and Nominating Committees of the
Board. He has been a PP&L director since 1989.
VICE ADMIRAL ROBERT Y. KAUFMAN, USN (RET.) is Chairman and
President of Yogi, Inc., a consulting firm located in
Potomac, Md. Admiral Kaufman received his B.S. at the U.S.
Naval Academy, and his M.S. in International Affairs at
George Washington University. Admiral Kaufman participated in
[PHOTO the early planning, development and operation of nuclear
APPEARS submarines, including Polaris, Trident and the newest attack
HERE] submarines. He served as a Navy representative to the Atomic
Energy Commission. Before retiring from the U.S. Navy in
1980, he was director of Command, Control & Communications,
Office of Chief of Naval Operations. A noted wildlife and
nature photographer, Admiral Kaufman has also served as a
technical adviser for the Discovery Channel on cable
television. He is 70. Admiral Kaufman is a member of the
Corporate Responsibility and Nuclear Oversight Committees of
the Board. He has been a PP&L director since 1992.
RUTH LEVENTHAL served as Provost and Dean of Penn State
Harrisburg (The Capital College) from 1984 through 1994. Dr.
Leventhal earned her B.S. in Medical Technology, her Ph.D. in
Parasitology and her M.B.A. from the University of
Pennsylvania. From 1981 until her appointment at The Capital
College, Dr. Leventhal was Dean of the School of Health
[PHOTO Sciences and Professor of Medical Laboratory Sciences at
APPEARS Hunter College of The City University of New York. She
HERE] previously served four years as Acting Dean of The School of
Allied Medical Professions at the University of Pennsylvania.
Dr. Leventhal is a director of Mellon Bank (Commonwealth
region) and founding chair of the Council for Public
Education. She is active in a number of charitable, civic and
professional organizations, including the Greater Harrisburg
Chamber of Commerce. She is 54. Dr. Leventhal is a member of
the Audit and Corporate Responsibility Committees of the
Board. She has been a PP&L director since 1988.
DIRECTORS CONTINUING IN OFFICE:
RICHARD S. BARTON is President of United States Customer
Operations and a Corporate Vice President of Xerox
Corporation, Rochester, New York. Mr. Barton earned his B.A.
from Adelphi University and completed the Wharton Executive
Development Program at the University of Pennsylvania. He
previously held the position of Chairman, President and Chief
[PHOTO Executive Officer of Xerox Canada Inc. From 1989 to 1991, he
APPEARS was Vice President, North American Systems Sales, for the
HERE] Xerox Integrated Systems Operations, and was elected to his
current position in 1993. Mr. Barton serves on the boards of
Avon Products, Inc. and the American Management Association.
He is 46. Mr. Barton is a member of the Corporate
Responsibility and Management Development and Compensation
Committees of the Board. He has been a PP&L director since
January 1994. Mr. Barton's term expires in 1997.
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E. ALLEN DEAVER is Executive Vice President, a member of the
President's Office, and a director of Armstrong World
Industries, Inc., Lancaster, Pa., a manufacturer of interior
furnishings and specialty products. He graduated from the
University of Tennessee with a B.S. in Mechanical Engineering
and joined Armstrong in 1960. In 1980, he became General
Production Manager for Building and Industry Products
[PHOTO Operations. He was elected Group Vice President for Corporate
APPEARS Technology and New Business Development in 1983. He has
HERE] served as Executive Vice President and a director of
Armstrong since 1988. Mr. Deaver is a director of the
National Association of Manufacturers, the Pennsylvania
Economy League and Internacional de Ceramica S.A. (Mexico).
He is 59. Mr. Deaver is chair of the Management Development
and Compensation Committee and a member of the Nuclear
Oversight Committee of the Board. He has been a PP&L director
since 1991. Mr. Deaver's term expires in 1997.
NANCE K. DICCIANI is Vice President and Business Director,
Petroleum Chemicals Division, Rohm and Haas Company,
Philadelphia, Pa. Dr. Dicciani received a B.S. from Villanova
University, an M.S. from the University of Virginia, an
M.B.A. from the Wharton School of Business and a Ph.D. from
the University of Pennsylvania. Prior to joining Rohm and
[PHOTO Haas in 1991 as Business Unit Director, Petroleum Chemicals,
APPEARS she had been named General Manager, Business Development and
HERE] Technology (Chemicals group), at Air Products and Chemicals,
Inc. in 1990, where her prior position was Director,
Commercial Development and Technology, Specialty Chemicals
Division. Dr. Dicciani is a director of the World Affairs
Council. She is 47. Dr. Dicciani is a member of the Audit and
Nuclear Oversight Committees of the Board. She has been a
PP&L director since February 1994. Dr. Dicciani's term
expires in 1997.
WILLIAM J. FLOOD is Secretary-Treasurer of Highway Equipment
& Supply Co. (HESCO), Harrisburg, Pa., supplier of heavy
equipment for highway construction, industry and general
contractors. Mr. Flood received his B.A. from Dartmouth
[PHOTO College and joined HESCO in 1960 after serving in the U.S.
APPEARS Air Force as a navigator with the Strategic Air Command. Mr.
HERE] Flood is a director of HESCO, Geisinger Foundation, Hescorp,
Inc. and PNC Bank (Northeast PA). He is 59. Mr. Flood is a
member of the Audit and Nominating Committees of the Board.
He has been a PP&L director since 1990. Mr. Flood's term
expires in 1996.
DANIEL G. GAMBET is President of Allentown College of St.
Francis de Sales, Center Valley, Pa. Father Gambet received
his Ph.D. in Classical Studies from the University of
Pennsylvania. He joined Allentown College in 1965 as Academic
[PHOTO Dean, became Vice President in 1970 and President in 1978. He
APPEARS is a director of a number of civic and charitable
HERE] organizations, including Lehigh Valley Hospital and Health
Network, Inc. and the Better Business Bureau of Eastern
Pennsylvania. He is 65. Father Gambet is chair of the
Corporate Responsibility Committee and a member of the Audit
Committee of the Board. He has been a PP&L director since
1986. Father Gambet's term expires in 1996.
ELMER D. GATES is Vice Chairman of Fuller Company, Bethlehem,
Pa., a company involved in the design and manufacture of
plants, machinery and equipment used in the cement, paper,
power and processing industries. He has a B.S. in Mechanical
Engineering from Clarkson College. Prior to joining Fuller
Company as President in 1982, Mr. Gates spent thirty-one
[PHOTO years at General Electric Company. Mr. Gates assumed his
APPEARS present position at Fuller Company in 1990. Mr. Gates is vice
HERE] chairman and a director of Ambassador Bank and president of
the Lehigh Valley Partnership. He is also Chairman, Chief
Executive Officer and a director of Birdsboro Ferrocast,
Inc., a steel foundry located in Birdsboro, Pa. In 1992,
Birdsboro Ferrocast filed a voluntary petition under Chapter
11 of the Bankruptcy Code. He is 65. Mr. Gates is chair of
the Nuclear Oversight Committee and a member of the
Management Development and Compensation Committee of the
Board. He has been a PP&L director since 1989. Mr. Gates'
term expires in 1997.
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<PAGE>
WILLIAM F. HECHT is Chairman, President and Chief Executive
Officer of Pennsylvania Power & Light Co. Mr. Hecht received
his B.S. and M.S. in Electrical Engineering from Lehigh
University. Employed since 1964, he was elected Executive
[PHOTO Vice President -- Operations in 1990. He was named President
APPEARS and Chief Operating Officer in 1991, and was named to his
HERE] present position in 1993. Mr. Hecht is a director of a number
of civic and charitable organizations. He is 51. Mr. Hecht is
chair of the Executive Committee of the Board and of the
Corporate Management Committee, an internal committee
comprised of PP&L's senior officers. He has been a PP&L
director since 1990. Mr. Hecht's term expires in 1996.
JOHN T. KAUFFMAN served as Chairman and Chief Executive
Officer of Pennsylvania Power & Light Co. from October 1991
until his retirement on December 31, 1992. He had served as
Chairman, President and Chief Executive Officer from 1990 to
October 1991. Mr. Kauffman earned a B.S. in Mechanical
Engineering from Purdue University and a B.S. in Marine
[PHOTO Engineering from the U.S. Merchant Marine Academy. He is past
APPEARS chairman of the Pennsylvania Electric Association, chairman
HERE] of Lehigh Valley 2000: Business-Education Partnerships and a
director of Conestoga Title Insurance Company, Alliance for
the Chesapeake Bay, the Eastern Pennsylvania Chapter of The
Nature Conservancy, the AMERICA 2000 Coalition and the Center
for Workforce Preparation and Quality Education, an affiliate
of the U.S. Chamber of Commerce. He is 68. Mr. Kauffman is a
member of the Executive and Nuclear Oversight Committees of
the Board. He has been a PP&L director since 1978. Mr.
Kauffman's term expires in 1996.
FRANK A. LONG is Executive Vice President and Chief Operating
Officer of Pennsylvania Power & Light Co. Mr. Long received a
B.S. in Electrical Engineering from Northeastern University,
and joined PP&L in 1963. He was elected Senior Vice
[PHOTO President -- System Power & Engineering in 1990, and was
APPEARS named to his present position in 1993. Mr. Long is a member
HERE] of the Executive Committee of the Pennsylvania Electric
Association and a trustee of the North American Electric
Reliability Council. He is a director of the Homemaker/Home
Health Aide Services of Lehigh County. He is 54. He has been
a PP&L director since 1993. Mr. Long's term expires in 1996.
NORMAN ROBERTSON retired as Senior Vice President and Chief
Economist of Mellon Bank N.A., Pittsburgh, Pa. in 1992. Mr.
Robertson received his B.S. in Economics from the University
of London, England, and attended the London School of
Economics. He joined Mellon Bank in 1963 and advanced to Vice
[PHOTO President and Chief Economist in 1970 and Senior Vice
APPEARS President and Chief Economist in 1973. Mr. Robertson is a
HERE] director of Mellon Bank (Maryland) and Economics America--
Pennsylvania Council on Economic Education. He is also an
Adjunct Professor of Economics at Carnegie Mellon University.
He is 67. Mr. Robertson is a member of the Executive and
Management Development and Compensation Committees of the
Board. He has been a PP&L director since 1969. Mr.
Robertson's term expires in 1997.
DAVID L. TRESSLER is Executive Director of the Center for
Public Initiatives at the University of Scranton, and
President, Chief Executive Officer and a director of the
Northeast Regional Cancer Institute, Scranton, Pa. Mr.
Tressler is a graduate of The Pennsylvania State University,
the University of Pittsburgh and Stonier Graduate School of
[PHOTO Banking (Rutgers University). He had served as Chairman and
APPEARS Chief Executive Officer of Northeastern Bank of Pennsylvania
HERE] from 1982 to 1991. Mr. Tressler is Past President of
Economics America -- Pennsylvania Council on Economic
Education, and a trustee of Lackawanna Industrial Fund
Enterprises. He is a director of the Pennsylvania Industrial
Development Authority and PHICO Insurance Company. He is 58.
Mr. Tressler is chair of the Audit Committee and a member of
the Executive Committee of the Board. He has been a PP&L
director since 1981. Mr. Tressler's term expires in 1996.
31
<PAGE>
RETIRING DIRECTOR:
JEFFREY J. BURDGE, the former Chairman of the Board of Harsco
Corporation, Camp Hill, Pa., is retiring from the Board of
Directors as of the 1995 Annual Meeting. Mr. Burdge joined
Harsco in 1953 and became Harsco's President and Chief
Executive Officer in 1977. He served as Chairman from 1983
[PHOTO until his retirement in 1991. He is a trustee of the George
APPEARS C. Marshall Foundation and a director of Harsco; Millers
HERE] Mutual Insurance Company; the South Central Pennsylvania
Housing Development Foundation; and the Polyclinic Health
System of Harrisburg. In recent years, Mr. Burdge has served
as chair of the Nominating Committee and as a member of the
Executive Committee of the Board. A PP&L director since 1982,
Mr. Burdge has provided valued advice and leadership, and we
wish him well in his retirement.
GENERAL INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR ATTENDANCE AT BOARD MEETINGS
The Board of Directors held ten meetings during 1994. Each director attended
80% or more of the meetings held by the Board and the Committees during the
year. The average attendance of directors at Board and Committee meetings held
during 1994 was 95%.
COMPENSATION OF DIRECTORS
Directors who are PP&L employees receive no separate compensation for
service on the Board of Directors or Committees of the Board of Directors.
Non-employee directors receive a retainer of $18,000 per year, a fee of $850
for attending Board of Directors meetings, Committee meetings and other
meetings at PP&L's request, and a fee of $150 for participating in meetings
held by telephone conference call. These directors may elect to defer all or
any part of their retainer and fees, together with applicable interest,
pursuant to the Directors Deferred Compensation Plan. Under this Plan, non-
employee directors can defer payment of this compensation and interest until
their retirement from the Board of Directors, at which time they can receive
these funds in one or more annual installments for a period of up to ten
years.
In addition, PP&L has established a Retirement Plan for non-employee
directors. Upon completion of at least three years of service on the Board,
these directors are eligible for a retirement benefit payable at age 65, or
the date of retirement, whichever is later. This benefit cannot exceed 50% of
the annual retainer in effect during the last year of their service on the
Board and is payable for ten years.
CERTAIN TRANSACTIONS INVOLVING DIRECTORS OR EXECUTIVE OFFICERS
The SEC requires disclosure of certain business transactions or
relationships between PP&L, or its subsidiaries, and other organizations with
which any of PP&L's directors or executive officers is affiliated as an owner,
partner, director, or executive officer.
From time to time, when it has been appropriate and reasonable, PP&L and its
subsidiaries have engaged in transactions with, or have used products or
services of, organizations with which PP&L directors or executive officers are
affiliated. It is expected that the Company will continue to do so.
During 1994, PP&L paid Highway Equipment & Supply Co. (HESCO) $175,899 for
certain equipment and materials. Mr. Flood, a PP&L director, is secretary-
treasurer and a principal owner of HESCO.
32
<PAGE>
STOCK OWNERSHIP
All directors and executive officers as a group own less than 1% of PP&L's
common stock, and own no preferred stock. The following table sets forth
certain ownership of PP&L stock as of December 31, 1994:
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
NAME OWNED (1)
---- ------------
<S> <C>
R. S. Barton 1,634
J. J. Burdge 3,000
R. G. Byram 4,637
E. A. Deaver 1,021
N. K. Dicciani 971
W. J. Flood 2,044
D. G. Gambet 1,264
E. D. Gates 4,641
D. C. Hathaway 201
W. F. Hecht 15,408
S. Heydt 1,609
R. E. Hill 4,958
C. L. Jones 397
J. T. Kauffman 18,900
R. Y. Kaufman 114
J. C. Krum 5,945
R. Leventhal 507
F. A. Long 8,785
N. Robertson 1,354
D. L. Tressler 2,337
All 33 executive officers and directors as a group 123,192
</TABLE>
(1) The number of shares beneficially owned includes: (i) shares directly
owned by certain relatives with whom directors or officers share voting or
investment power; (ii) shares held of record individually by a director or
officer or jointly with others or held in the name of a bank, broker or
nominee for such individual's account; (iii) shares in which certain directors
or officers maintain exclusive or shared investment or voting power whether or
not the securities are held for their benefit; and (iv) with respect to PP&L
executive officers, shares held for their benefit by the Trustee under the
ESOP.
BOARD COMMITTEES
The Board of Directors has six standing committees -- the Executive, Audit,
Corporate Responsibility, Management Development and Compensation, Nominating
and Nuclear Oversight Committees. Each non-employee director usually serves on
two or more of these committees. The Audit, Corporate Responsibility,
Management Development and Compensation, Nominating and Nuclear Oversight
Committees are composed entirely of directors who are not PP&L employees.
EXECUTIVE COMMITTEE. The Executive Committee exercises during the periods
between Board meetings all of the powers of the Board of Directors, except
that the Executive Committee may not elect directors, change the membership of
or fill vacancies in the Executive Committee, fix the compensation of the
directors or change the Bylaws. The Executive Committee met eight times in
1994. The members of the Executive Committee are Mr. Hecht (Chair) and Messrs.
Burdge, Kauffman, Robertson and Tressler.
AUDIT COMMITTEE. The principal functions of the Audit Committee are (1) to
oversee PP&L's financial reporting process, including review of the year-end
financial statements; (2) to confirm that PP&L's control environment,
management's commitment to an effective system of internal control and PP&L's
program for monitoring compliance with its code of conduct are satisfactory;
(3) to recommend to the Board of Directors the engagement (or discharge) of
independent auditors; (4) to review the plans for audits and the results of
these audits, as well as the audit results of governmental agencies and other
third parties; (5) to review the effectiveness of the internal audit function;
and (6) to review the independence of the auditors. The Audit Committee met
three times in 1994. The members of the Audit Committee are Mr. Tressler
(Chair), Dr. Dicciani, Mr. Flood, Father Gambet and Dr. Leventhal.
33
<PAGE>
CORPORATE RESPONSIBILITY COMMITTEE. The principal functions of the Corporate
Responsibility Committee are to review various policies and practices of
management in the areas of corporate governance and corporate responsibility,
and to review PP&L's response to actions, investigations, sanctions or warnings
by governmental and regulatory authorities. The Corporate Responsibility
Committee met twice in 1994. The members of the Corporate Responsibility
Committee are Father Gambet (Chair), Mr. Barton, Dr. Heydt, Mr. Jones, Admiral
Kaufman and Dr. Leventhal.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE. The principal functions of
the Management Development and Compensation Committee are to review and
evaluate at least annually the performance of the chief executive officer and
the members of the Corporate Management Committee, and to set their
remuneration, including incentive awards; to review the fees paid to outside
directors for their services on the Board of Directors and its Committees; and
to review management's succession planning. The Management Development and
Compensation Committee met eleven times in 1994. The members of the Management
Development and Compensation Committee are Mr. Deaver (Chair) and Messrs.
Barton, Gates and Robertson.
NOMINATING COMMITTEE. The principal functions of the Nominating Committee are
to develop and review criteria for the qualifications of potential Board
members and to identify and recommend to the Board of Directors new candidates
for election to the Board. The Nominating Committee met twice during 1994. The
members of the Nominating Committee are Mr. Burdge (Chair), Mr. Flood, Dr.
Heydt, and Mr. Jones. (Upon Mr. Burdge's retirement, a new Chair of this
Committee will be appointed by the Board of Directors.)
Nominees for directors may be proposed by shareowners in accordance with the
procedures set forth in the Bylaws. Recommendations for the 1996 Annual Meeting
of PP&L must be received by November 15, 1995. Shareowners interested in
recommending nominees for directors should submit their recommendations in
writing to the Chair of the Nominating Committee, c/o PP&L Secretary, Two North
Ninth Street, Allentown, Pennsylvania 18101.
Recommendations for the 1996 Annual Meeting of Resources must be received by
75 days prior to the date of the Annual Meeting of Resources.
NUCLEAR OVERSIGHT COMMITTEE. The principal function of the Nuclear Oversight
Committee is to oversee management systems and processes which assure (1)
safety of the public, (2) regulatory compliance, (3) preservation of nuclear
plant assets, and (4) fulfillment of operational and financial objectives.
Committee reviews focus on issues critical to the long-term safe, reliable and
economic operation of the nuclear plant. Industry experts are retained to
provide technical advice and assistance to committee members. The Nuclear
Oversight Committee met three times in 1994. The members of the Nuclear
Oversight Committee are Mr. Gates (Chair), Mr. Deaver, Dr. Dicciani, Mr.
Kauffman and Admiral Kaufman.
RETIREMENT PLANS FOR EXECUTIVE OFFICERS
Executive officers who retire from PP&L are eligible for benefits under
PP&L's Retirement Plan and the SERP. The following table shows the estimated
annual retirement benefits for executive officers payable under these Plans.
ESTIMATED ANNUAL RETIREMENT BENEFITS AT NORMAL RETIREMENT AGE OF 65
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
-----------------------------------------------------------------
ASSUMED ANNUAL 30 YEARS
COMPENSATION 15 YEARS 20 YEARS 25 YEARS OR MORE
-------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$200,000 $ 66,612 $ 93,612 $103,612 $113,612
250,000 86,862 120,612 133,112 145,612
300,000 107,112 147,612 162,612 177,612
350,000 127,362 174,612 192,112 209,612
400,000 147,612 201,612 221,612 241,612
450,000 167,862 228,612 251,112 273,612
500,000 188,112 255,612 280,612 305,612
</TABLE>
34
<PAGE>
Benefits under both the Retirement Plan and the SERP benefit formulas are
based on length of service and the average compensation for the highest 60
consecutive months in the final 120 months of employment. For purposes of
calculating benefits under the Retirement Plan, the compensation used is base
salary less amounts deferred pursuant to the Officers Deferred Compensation
Plan. Base salary, including any amounts deferred, is listed in the Summary
Compensation Table which follows. (Of the officers listed in that Table, Mr.
Long deferred $26,032, $39,860, and $32,094 of compensation for the years 1992,
1993 and 1994, respectively. No other officer listed in the Table deferred
compensation in those years.) For purposes of calculating benefits under the
SERP, the compensation used is base salary, bonus and the value of any
restricted stock grant for the year in which earned, as listed in the Table, as
well as dividends paid on restricted stock.
Benefits payable under the Retirement Plan are subject to limits set forth in
the Code and are not subject to any deduction for Social Security benefits or
other offset. They are computed on the basis of the life annuity form of
pension at the normal retirement age of 65. Benefits payable under the SERP are
computed on the same basis; are offset by Retirement Plan benefits, the maximum
Social Security benefit payable at the time of retirement and, in some cases,
by pensions received from prior employment; and are reduced for retirement
prior to age 60.
As of January 1, 1995, the years of credited service under the Retirement
Plan for Messrs. Hecht, Long, Byram, Krum and Hill were 21.8, 24.4, 18.3, 27.8
and 22.4, respectively. The years of credited service under the SERP for each
of these officers are the same as under the Retirement Plan, except in the case
of Mr. Byram, who is entitled to nine months of additional credited service
under the SERP for prior employment.
In the event of certain changes in control, executive officers would be
eligible for benefits under the Executive Retirement Security Plan. For
purposes of this Plan, compensation and years of credited service are the same
as under the SERP, except that, under this Plan, benefits become immediately
vested for participants, salary levels used to determine benefits are based on
earnings for the twelve-month period immediately preceding the change in
control and the penalties for early retirement are eliminated.
In addition, in the event of a change in control or certain circumstances
that may lead to a change in control, the Management Development and
Compensation Committee of the Board of Directors may change or eliminate the
restriction period applicable to any outstanding restricted stock awards under
the ICP.
35
<PAGE>
SUMMARY COMPENSATION TABLE
The following table summarizes all compensation for the Chief Executive
Officer and the next four most highly compensated PP&L executives for the last
three fiscal years. Messrs. Hecht and Long also served as PP&L directors but
received no separate remuneration in that capacity.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------------------------------------
OTHER ANNUAL RESTRICTED ALL OTHER
NAME AND PRINCIPAL POSITION/1/ YEAR SALARY/2/ BONUS/2/ COMPENSATION/3/ STOCK AWARD/4/ COMPENSATION/5/
($) ($) ($) ($) ($)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William F. Hecht 1994 470,000 0/6/ 0 0/6/ 4,042
Chairman, President and 1993 375,000 45,000 0 71,070 3,346
Chief Executive Officer 1992 300,000 43,200 1,000 72,930 3,155
Frank A. Long
Executive Vice 1994 325,000 24,375 7,050 42,525 4,078
President and 1993 231,000 27,720 1,000 43,775 3,134
Chief Operating Officer 1992 181,000 26,064 3,481 43,924 2,725
Robert G. Byram 1994 220,000 16,500 0 28,755 3,423
Senior Vice President- 1993 167,300 20,076 0 31,673 1,031
Nuclear 1992 125,300 12,031 2,410 18,288 927
Joseph C. Krum 1994 205,000 15,375 11,826 26,933 27,741
Senior Vice President- 1993 190,500 22,860 14,652 36,050 3,045
Division Operations 1992 181,000 26,064 13,924 43,924 2,830
Ronald E. Hill 1994 173,000 12,975 1,100 22,680 3,840
Senior Vice President- 1993 145,600 11,611 0 16,480 2,481
Financial 1992 138,300 11,066 0 16,796 2,301
</TABLE>
/1/Effective December 31, 1994, Mr. Krum retired as Senior Vice President-
Division Operations.
/2/Salaries listed are those in effect at year-end. Salary and bonus data
include deferred compensation.
/3/Includes longevity pay (which is compensation for vacation earned, but not
taken) and fees earned by certain officers for serving as directors of Safe
Harbor, an affiliate of PP&L. The Safe Harbor fees earned are as follows: Mr.
Hecht -- $1,000 in 1992; Mr. Long -- $1,000 in 1993 and $800 in 1994; and Mr.
Hill -- $1,100 in 1994.
/4/The dollar value of restricted common stock awards was calculated by
multiplying the number of shares awarded by the closing price per share on
the date of the grant. As of December 31, 1994, the officers listed in this
table held the following number of shares of restricted common stock, with
the following values: Mr. Hecht -- 7,860 shares ($149,340); Mr. Long -- 4,630
shares ($87,970); Mr. Byram -- 2,492 shares ($47,348); Mr. Krum -- 4,270
shares ($81,130); and Mr. Hill -- 1,814 shares ($34,466). These year-end data
do not include awards made in January 1995 for 1994 performance, or awards
which had originally been restricted and for which the restriction periods
have lapsed or been lifted. Dividends are paid currently on restricted stock
awards. All outstanding restricted stock awards have a restriction period of
three years. Upon Mr. Krum's retirement, the Management Development and
Compensation Committee lifted the restriction period applicable to his stock
awards.
/5/Includes PP&L contributions to the officers' Deferred Savings Plan and the
ESOP accounts. In addition, the 1994 amount shown for Mr. Krum includes
approximately $23,652, which he received following his retirement. This
payment reflects the value of vacation which Mr. Krum earned while an
employee, but had not yet taken at the time of his retirement.
/6/As described in the following report of the Management Development and
Compensation Committee, Mr. Hecht requested to forgo his incentive award for
1994.
REPORT OF THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE REGARDING
EXECUTIVE COMPENSATION
GENERALLY
The Management Development and Compensation Committee of the Board of
Directors (the "Committee") is comprised entirely of independent outside
directors. One of the primary functions of the Committee is to review and
evaluate the performance and leadership of the Chief Executive Officer and
other members of the Corporate Management Committee ("CMC") -- an internal
committee comprised of the senior officers of PP&L -- and to establish the
compensation of and benefit practices applicable to these officers.
36
<PAGE>
The CMC is now comprised of four senior officers who meet periodically to
guide the direction of PP&L. The members of the CMC are William F. Hecht,
Chairman, President and Chief Executive Officer; Frank A. Long, Executive Vice
President and Chief Operating Officer; Robert G. Byram, Senior Vice
President -- Nuclear; and Ronald E. Hill, Senior Vice President -- Financial.
(Joseph C. Krum, who is named in the Summary Compensation Table shown on page
36, served as a member of the CMC throughout 1994 and retired at the end of the
year.)
PP&L has in place two major components of executive compensation for members
of the CMC and other officers of PP&L -- base salary and incentive
compensation. Base salaries reflect the value of the various PP&L positions
relative to similar positions -- both within PP&L and in other companies -- and
variations in individual performance. Incentive compensation is developed
within the framework of a plan that measures attainment of key corporate goals
and reflects variations in corporate performance. These goals were developed by
the Committee and then approved by the Board of Directors (the "predetermined
corporate goals").
BASE SALARIES
In January 1994, the Committee reviewed salary ranges for the CMC positions
by comparing actual salary levels paid for positions with similar levels of
responsibility by twelve comparable electric utilities. Although the companies
included in the Standard & Poor's Electric Utilities Index shown in the stock
performance graph (on page 40) vary from time to time, as of early 1995, eight
of the electric utilities used by the Committee for comparison purposes were
included in that Index. All of the twelve comparison companies were included in
the EEI (Edison Electric Institute) 100 Index of Investor-owned Electric
Utilities, which is also displayed in the stock graph. The twelve electric
utilities used for comparison purposes in 1994 were selected based on their
similarity to PP&L in terms of annual revenues, service territory
characteristics or economic conditions.
In general, the Committee's objective is to provide salary ranges that are
sufficiently competitive with comparable electric utilities to enable PP&L to
attract and retain high-quality executive talent. In assessing CMC salary
ranges, the Committee also sought to maintain equity within the internal PP&L
salary structure.
In addition, after establishing the salary ranges, the Committee reviewed the
actual salaries and performance appraisals of each of the CMC members. The
Committee also solicited input and recommendations from the Chief Executive
Officer regarding the performance and individual salaries of the other CMC
members. Upon completion of this review, the Committee set the 1994 salaries of
the CMC members.
In July 1994, the Committee established the average of the twelve comparable
electric utilities as the target for CMC members' compensation. As of that
time, Mr. Hecht's total compensation was about 34% less than the average total
compensation of the chief executive officers of these twelve comparable
companies. Also, the total compensation of the other CMC members was
approximately 35% less than the average paid to their counterparts at these
companies. Considering this information and individual performance, the
salaries for Mr. Hecht and two other members of the CMC were increased in
August 1994.
Regarding the base salaries of other corporate officers, the Board of
Directors has delegated the authority to review and set the salaries of these
officers to certain members of the CMC. This enables the CMC members to
establish the salaries of the officers who report to them. As a result,
officers' salaries closely reflect their individual performance and
contribution to the achievement of corporate goals.
INCENTIVE AWARDS
In establishing the second component of executive compensation -- incentive
awards -- the Committee reviews annually PP&L's performance in relation to the
predetermined corporate goals. This component of compensation is intended to
relate executive compensation directly to corporate performance during the past
year.
PP&L currently has an incentive compensation system designed to compensate
officers and other key employees of PP&L in relation to the performance of
PP&L. Officers can receive incentive compensation in the form of restricted
stock grants and/or stock options, pursuant to the Incentive Compensation Plan,
and in the form of cash grants.
The 1994 incentive awards made to the five most highly compensated officers
are shown in the Summary Compensation Table. The amounts shown in the column
entitled, "Bonus," are the cash grants; and the amounts shown in the column
entitled, "Restricted Stock Award," are the values of the stock grants.
37
<PAGE>
The Committee established that the awards for 1994 performance made to the
CMC members under the Incentive Compensation Plan and the related cash grants
would not exceed 25% and 15%, respectively, of their salaries. The
corresponding amounts for all other officers were smaller percentages of the
salaries of that group.
In March 1994, the Committee recommended goals under these incentive programs
relating to 1994 corporate performance; and the Board of Directors subsequently
approved these goals without change. How well PP&L performed on each of these
goals determined the officers' incentive awards. The 1994 goals included
financial, operational and corporate strategy objectives. In 1994, the
weighting for the goals was as follows: financial -- 35%, operational -- 45%
and corporate strategy -- 20%.
The financial objectives were the following:
(1) earnings performance -- measured by the achievement of earnings
applicable to common shareowners;
(2) common stock dividend and market price -- measured by the performance of
the market price of common stock and the ratio of market price to the book
value of common stock, in comparison to industry performance on these
indicators; and
(3) liquidity and credit worthiness -- measured by PP&L's ability to pay
interest on its outstanding debt and the ability to pay common stock dividends.
The operational objectives were the following:
(1) price of electricity -- measured by continued stability in base rates;
(2) marketing and economic development -- measured by sales growth achieved
primarily through PP&L's marketing and economic development activities;
(3) power plant performance -- measured by the operating performance of
PP&L's nuclear and fossil-fired generating stations;
(4) environmental -- measured by PP&L's performance in complying with
environmental laws and regulations, with the objective of minimizing any
violations and associated fines and penalties;
(5) customer service -- measured by minimizing customer interruptions and the
number of customer complaints filed with the Pennsylvania Public Utility
Commission;
(6) employee safety -- measured by having no work-related fatalities and by
improvements in the number of employee on-the-job accidents; and
(7) affirmative action -- measured by actions taken to advance women and
minorities in management positions and maintain or enhance their representation
in the workforce.
The corporate strategy objectives were the following:
(1) vision, mission and objectives -- measured by the development and
communication of new vision and mission statements and long-term objectives
that reflect PP&L's new strategic direction;
(2) worldwide markets -- measured by the development and implementation of a
plan for worldwide energy activities;
(3) new opportunities -- measured by the identification and development of
opportunities for revenue enhancement through allied business and improved
utilization of assets within PP&L; and
(4) cost reduction and improvement -- measured by the continued development
of PP&L's Continuous Performance Improvement Process and utilization of this
process to meet target generation costs and cost reduction and improvements
goals throughout PP&L.
The Incentive Compensation Plan provides that stock issued under this Plan
must be "restricted." The Committee determines the applicable restriction
period at the time of grant, which, under the terms of the Plan,
38
<PAGE>
must be at least three years and not more than ten years from the date of
grant. That is, the officer can be divested of this stock during the
restriction period if he or she terminates employment with PP&L. The Incentive
Compensation Plan also provides that, upon retirement, death or disability of
an officer, the outstanding restricted stock awards made to that officer will
be prorated. In such cases, the Committee may provide the officer with the
entire award rather than the prorated portion.
In this way, grants of restricted stock serve as an incentive for senior
management to continue their employment with PP&L and, therefore, contribute to
continuity in top management. In the past, the grants of restricted stock made
under the Incentive Compensation Plan have been restricted for a period of
three years. No awards of stock options have ever been made under this Plan.
The Committee based the CMC members' incentive awards for 1994 performance
solely on the predetermined corporate goals achieved. In January 1995, the
Committee reviewed performance achieved during 1994 for each of the
predetermined corporate goals under the incentive compensation programs. In
1994, PP&L achieved 49.9% of all the predetermined goals. Under this evaluation
process, each member of the CMC was eligible to receive the same percentage
(20%) of his base salary in the form of an incentive award, divided between
grants of restricted stock and cash. This uniform percentage award was intended
to foster teamwork, recognizing that each member of the CMC is directly
responsible for the achievement of each and every corporate goal, and to result
in cooperation between major departments of PP&L in the pursuit of corporate
goals.
The sum of the values shown as "Bonus" and "Restricted Stock Award" in the
Summary Compensation Table for officers other than Mr. Hecht equals this 20%
incentive award. Although entitled to an incentive award in an amount based on
this same percentage, Mr. Hecht requested that he receive no incentive award
for 1994.
In connection with the awards for 1994 performance made to other officers of
PP&L, the Committee based one-half of these incentive awards on individual
performance, and one-half on the number of predetermined corporate goals
achieved. In determining the individual performance component, the Committee
relied on recommendations of senior management.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In establishing Mr. Hecht's 1994 salary, in January 1994, the Committee
reviewed the salaries of chief executive officers of the twelve electric
utilities used for comparison purposes which are referenced above. In
conducting this review, the Committee concluded that Mr. Hecht's 1993 salary
was lower than the average earned by incumbents in similar positions at
comparable electric utilities.
As a result of this review and Mr. Hecht's performance, the Committee set his
1994 salary at $425,000. Subsequently, in July 1994, the Committee established
the average of the twelve comparable electric utilities as the target for Mr.
Hecht's compensation. Considering this information and his performance, in
August 1994, the Committee set Mr. Hecht's salary at $470,000, which is still
below the average paid to incumbents in comparable positions.
As noted above, based on PP&L's performance during 1994 on the predetermined
corporate goals under the incentive compensation programs, Mr. Hecht was also
eligible to receive a total incentive award of 20% of his year-end salary (or,
about $94,000), divided between awards of restricted stock and cash. Mr. Hecht,
however, noting the adverse short-term impact of the various restructuring
initiatives that are positioning PP&L for long-term growth, decided to forgo
his award. At the same time, Mr. Hecht emphasized that it was appropriate for
the other officers to receive their awards, which recognize the positive
effects that their efforts are having on corporate performance, as well as the
value of their talent in the highly competitive marketplace for effective
executive skills.
The Committee, in commending Mr. Hecht for his strategic vision, leadership
and performance, reluctantly accepted his decision to forgo an award for 1994.
The Management Development
and Compensation Committee
E. Allen Deaver, Chair
Richard S. Barton
Elmer D. Gates
Norman Robertson
39
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph depicts the performance of PP&L's common stock over the
past five years. For comparison purposes, three other indices are also shown.
The Standard & Poor's 500 Index provides some indication of the performance of
the overall stock market, and both the EEI 100 Index of Investor-owned Electric
Utilities and the Standard & Poor's Electric Utilities Index reflect the
performance of electric utilities' stock generally. The Standard & Poor's
Electric Utilities Index, which includes only 24 companies, is shown here
because it was used last year; it will be dropped in 1996 in favor of the EEI
100 Index. The EEI 100 Index is a comprehensive, widely recognized industry
index that includes 100 investor-owned domestic electric utility companies.
These 100 companies serve 99% of the customers of the investor-owned domestic
electric utility industry.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
For PP&L, S&P 500 Index, EEI 100 Index of Investor-owned Electric Utilities,
and S&P Electric Utilities Index*
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PP&L $100.00 $109.47 $140.58 $154.71 $162.17 $123.81
S&P 500 Index 100.00 96.89 126.42 136.05 149.76 151.74
EEI 100 Index of
Investor-owned Electric
Utilities 100.00 101.37 130.64 140.59 156.22 138.14
S&P Electric Utilities
Index 100.00 102.61 133.58 141.43 159.26 138.44
</TABLE>
* Assumes investing $100 on 12/31/89 and reinvesting dividends in
PP&L common stock, S&P 500 Index, EEI 100 Index of Investor-owned
Electric Utilities, and S&P Electric Utilities Index.
PROPOSAL 3: APPROVAL OF AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION
PLAN
The PP&L Board of Directors has adopted the Directors Plan (a copy of which
is attached to this Proxy Statement and Prospectus as Exhibit C), subject to
approval by the Shareowners, in order to continue to attract
40
<PAGE>
and retain highly qualified individuals to serve as directors of PP&L and to
increase the stock ownership of non-employee directors, thereby more closely
aligning their interests with those of PP&L's other shareowners.
The Directors Plan permits non-employee directors of the Company to elect to
receive their director's fee in cash or to defer any portion, up to 100%, of
the cash fee into either an interest-bearing deferred cash account or into a
deferred stock account. If approved by the Shareowners, the Directors Plan will
also provide that, effective July 1, 1995, any increases in a director's yearly
compensation over 1994 levels will automatically be received as deferred stock.
The Directors Plan provides that the automatic deferral feature will not be
amended more than once every six months other than to comply with changes in
the Code or the Employee Retirement Income Security Act or the rules
thereunder. Under either the "stock deferral election" or the "automatic
deferral," an amount of common shares having a fair market value equal to the
amount of the deferred compensation would be credited to the non-employee
director's deferred stock account. Prior to the Effective Time, shares in the
deferred stock account will represent PP&L Common Shares and, after the
Effective Time, will represent Resources Common Shares.
Compensation deferred under the Directors Plan will be distributed to a
participating director at the time of termination of the director's service on
the Board of Directors or, at the director's option, at a later time up to age
72. At the time of distribution, shares in the deferred stock account and
amounts in the cash account would be distributed either in one distribution or
in installments as elected by the non-employee director. Amounts in the
deferred stock account may be transferred from the stock account to the cash
account on an irrevocable election by the participant made six months before
the transfer, except for compensation deferred under the automatic deferral
which may not be transferred until three years after the deferral. Similarly,
deferred amounts in the cash account may be transferred to the stock account on
an irrevocable election by the participant made six months before the transfer,
and in such event an amount of shares having a fair market value equal to the
amount transferred would be credited to the stock account. Alternatively, an
election to effect a transfer from the stock account to the cash account, or
from the cash account to the stock account, may be made during the period
beginning on the third business day following the date of release of PP&L's
quarterly or annual financial results and ending on the twelfth business day
following such date, provided that any such transfer election is at least six
months after the date of the previous such election. Dividends paid on deferred
shares will be credited in the form of additional shares of stock.
---------------
The PP&L Board of Directors believes that the best interests of the Company
will be served by the Shareowners' approval of the Directors Plan.
THE BOARD OF DIRECTORS OF PP&L RECOMMENDS THAT SHAREOWNERS VOTE FOR PROPOSAL 3
PROPOSAL 4: APPROVAL OF AMENDED AND RESTATED INCENTIVE COMPENSATION PLAN FOR
OFFICERS AND OTHER KEY EMPLOYEES
The ICP was adopted by shareowners at PP&L's 1987 annual meeting. The growth,
development and financial success of the Company depends upon attracting and
retaining the best possible management. PP&L's Board of Directors believes the
ICP will promote the success of the Company by providing a method whereby
officers and other key employees of the Company may be awarded additional
remuneration for performance in meeting specific Company objectives in a way
that increases their ownership interest in the Company and encourages them to
remain in the employ of the Company.
The types of awards that may be granted under the ICP are restricted stock
awards and stock option awards. Awards granted prior to the Effective Time will
be made in PP&L Common Shares and awards granted after the Effective Time will
be made in Resources Common Shares. The ICP currently provides that up to
400,000 shares may be granted under either of these types of awards prior to
January 1, 1997. As of February 28, 1995, an aggregate of 173,600 PP&L Common
Shares had been awarded as restricted stock under the ICP, including the awards
of restricted stock described under "Proposal 2: Election of Directors --
Report of the Management Development and Compensation Committee Regarding
Executive Compensation" above. The shares issued
41
<PAGE>
under the ICP may be authorized and unissued stock, treasury stock or stock
purchased on the open market. To the extent that an award is forfeited or the
right of a participant to whom it was granted terminates, any shares subject to
the award will again be available for awards under the ICP.
A summary of the principal provisions of the current ICP is set forth under
"Current Provisions" below. A summary of the proposed amendments to the ICP is
set forth under "Amended and Restated ICP" below.
CURRENT PROVISIONS
ADMINISTRATION
The ICP is administered by a plan committee (the "Plan Committee"), which has
the full power and authority to make awards to eligible employees pursuant to
the provisions of the ICP, to interpret the provisions of the ICP and to
supervise the administration of the ICP. The Plan Committee must consist of not
less than three directors who are not employees of PP&L and, therefore, are not
eligible to receive awards under the ICP. The PP&L Board of Directors has
designated the Management Development and Compensation Committee to serve as
the Plan Committee.
ELIGIBILITY
Officers and other key employees of PP&L (including officers or employees who
are members of the Board of Directors) who, in the opinion of the Plan
Committee, are mainly responsible for the continued growth, development and
financial success of PP&L are eligible to be granted awards under the ICP.
Subject to the provisions of the ICP, the Plan Committee shall from time to
time select from such eligible persons those to whom awards shall be granted
and determine the amount of such awards. Eligibility to receive awards under
the ICP and the amount of awards so made are determined by subjective criteria
including an assessment of an eligible employee's performance against criteria
established by the Board from time to time based on corporate performance.
Accordingly, it is not possible at this time to determine the number of
employees eligible to participate in the ICP or the amount of awards that may
be made.
RESTRICTED STOCK AWARDS
Restricted stock is common stock issued in the name of the participant that
bears a restrictive legend prohibiting the sale, transfer, pledge or
hypothecation of such common stock until the expiration of the restriction
period. The restriction period is determined by the Plan Committee at the time
each award is granted and will not be less than three years and not more than
ten years from the date of the grant.
Restricted stock is issued without the payment of consideration by the
participant. During the restriction period, the participant has the right to
vote the common stock and receive dividends with respect thereto.
Upon a participant's termination of employment prior to the end of the
restriction period for retirement or death or upon disability, awards are
prorated for service during the restriction period. If a participant's
employment with PP&L is terminated prior to the end of the restriction period
for any other reason, the award is forfeited. In any instance where a payment
is to be prorated, the Plan Committee may choose to provide the participant (or
the participant's estate) with the entire award rather than the prorated
portion.
Twenty employees received awards of restricted stock under the ICP with
respect to their performance during 1994.
STOCK OPTIONS
Options granted under the ICP may be either incentive stock options, as
defined in Section 422A of the Code, or options which do not so qualify
("nonqualified options"). At the time an option is granted under the ICP, the
Plan Committee will determine the number of shares subject to the option, the
option price per share and the manner and time of the exercise of the option.
The option price per share will be equal to or greater than the fair market
value of a share on the date of grant. The option exercise price may be paid
with cash and/or shares of common stock valued at the fair market value of the
common stock when the option is exercised. Options granted under the ICP may
not be exercised more than ten years after the date of grant.
42
<PAGE>
The granting of an option will not entitle the participant to any dividend,
voting or other rights of a shareowner unless and until the participant
receives common stock upon the exercise of the option.
To date, no stock options have been granted under the ICP.
AMENDED AND RESTATED ICP
The PP&L Board of Directors has adopted, subject to approval by the
Shareowners, the Amended and Restated ICP, a copy of which is attached to this
Proxy Statement and Prospectus as Exhibit D (the "Amended and Restated ICP").
The information set forth under this heading should be read in conjunction with
the full text of the Amended and Restated ICP.
The Board of Directors adopted the Amended and Restated ICP as part of its
overall review of PP&L's executive compensation programs. During 1994, the
Board determined that these programs should be revised in 1995 to more closely
correlate incentive awards to corporate performance and shareowner value. To
carry out this goal, the Board of Directors concluded that a larger portion of
the total compensation of officers and other key employees should be placed at
risk and awarded only if certain challenging goals are achieved. Presenting
highly challenging goals to PP&L management will continue to spur superior
corporate performance in the future competitive market.
The long-term component of this revised compensation program will focus
solely upon increasing shareowner value, by establishing objectives which will
require PP&L to compare favorably with peer group electric utilities, not only
on an annual basis, but over a sustained period of time of several years as
well. Awards for this long-term component will be made in the form of
restricted stock grants or stock option awards, as under the current ICP
described above. This revised compensation program will apply to incentive
awards to be made to officers and other key employees for performance during
1995.
The following amendments to the ICP are contained in the Amended and Restated
ICP: (i) stock option awards may be made prior to April 26, 2005 (as compared
to the January 1, 1997 expiration date under the current ICP), (ii) restricted
stock awards may be made for an indefinite period of time (as compared to the
January 1, 1997 expiration date under the current ICP), (iii) the aggregate
number of shares of common stock subject to awards may not exceed 100,000
annually (as compared to the current limitation of 400,000 shares over the life
of the ICP), and (iv) the term "retirement" has been expanded to include any
retirement within the meaning of the SERP. The SERP provides certain executive
officers of PP&L with additional retirement income.
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax consequences of an award under the ICP will depend on
the type of award that is granted. At the time a restricted stock award is
granted, a participant may elect to be taxed at ordinary income tax rates in
the year the award is granted based on the fair market value of the common
stock as of the date of grant. If the election is not exercised within the time
prescribed under Section 83(b) of the Code, the participant will be taxed in
the year the restrictions expire based on the fair market value of the common
stock as of the date the restrictions expire. PP&L is entitled to a
corresponding federal income tax deduction for the year in which the
participant is taxed. If the participant is taxed in the year the restrictions
expire, dividends paid to the participant during the restriction period will be
taxed as additional compensation and PP&L will be entitled to a corresponding
deduction. If the participant is taxed in the year in which the award is
granted, dividends paid to the participant during the restriction period with
respect to the common stock will be treated as dividend income and PP&L will
not be entitled to a corresponding deduction.
If the minimum holding periods established by Section 422A of the Code are
met, a recipient of an incentive stock option will not recognize taxable income
at the time of the grant or upon the exercise of the option, and PP&L will not
be entitled to an income tax deduction. If such minimum holding periods are not
satisfied, a participant will be taxed as though he exercised a nonqualified
option and PP&L will be entitled to a corresponding income tax deduction.
The grant of a nonqualified option does not result in taxable income to a
recipient or a tax deduction for PP&L. Upon exercise of a nonqualified stock
option, a recipient will recognize ordinary income in an amount equal to the
excess of the fair market value of the common stock on the date of exercise of
the option over the option price, and PP&L will be entitled to a corresponding
income tax deduction.
43
<PAGE>
AMENDMENT AND TERMINATION
The Board of Directors may at any time alter, amend, suspend or terminate the
Amended and Restated ICP in whole or in part except that: (i) shareowner
approval is required if such action (a) increases the maximum number of shares
of common stock which may be issued under the Amended and Restated ICP, (b)
materially increases the benefits accruing to participants under the Amended
and Restated ICP, or (c) materially modifies the eligibility requirements for
participants in the Amended and Restated ICP; and (ii) the consent of the
participant is required if such action is not required by law or regulation and
diminishes, reduces or cancels an award previously granted to such participant.
---------------
The PP&L Board of Directors believes that the best interests of the Company
will be served by the foregoing amendments.
THE BOARD OF DIRECTORS OF PP&L RECOMMENDS THAT SHAREOWNERS VOTE FOR PROPOSAL 4
PROPOSAL 5: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, which is composed of
directors who are not Company employees, the Board of Directors of PP&L
appointed Price Waterhouse LLP on February 22, 1995 to serve as independent
auditors of PP&L for the year ending December 31, 1995. In addition, the Board
of Directors of Resources has appointed Price Waterhouse LLP as independent
auditors of Resources for the year ending December 31, 1995.
Deloitte & Touche LLP ("Deloitte") served as independent auditors of PP&L for
the year ended December 31, 1994. Based upon a recommendation of its Audit
Committee, the Board of Directors of PP&L decided on January 25, 1995 that
Deloitte would not be retained as PP&L's independent auditors for the year
ending December 31, 1995. Deloitte's reports on PP&L's financial statements for
each of the two most recent fiscal years reported upon, ending December 31,
1994, did not contain any adverse opinion or disclaimer of opinion, nor were
the reports modified or qualified in any manner. During the period of such two
fiscal years and during the period from December 31, 1994 through January 25,
1995, there were no disagreements with Deloitte on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure. During such periods, there were no "reportable events" as that term
is defined in Item 304(a)(1)(v) of Regulation S-K promulgated by the SEC.
Representatives of Price Waterhouse LLP and of Deloitte are expected to be
present at the Annual Meeting. They will have an opportunity to make a
statement if they want to do so, and they will also be available to respond to
appropriate questions.
The Boards of Directors have determined that it would be desirable to request
an expression of opinion from the Shareowners on the appointments of Price
Waterhouse LLP. If the Shareowners do not ratify the selection of Price
Waterhouse LLP, the selection of independent auditors will be reconsidered by
the Boards of Directors.
THE BOARD OF DIRECTORS OF PP&L
RECOMMENDS THAT SHAREOWNERS VOTE FOR PROPOSAL 5
44
<PAGE>
GLOSSARY
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
4 1/2% Preferred Stock..................................................... 5
Amended and Restated ICP................................................... 43
Annual Meeting............................................................. 1
BCL........................................................................ 6
CEP........................................................................ 14
CMC........................................................................ 36
Code....................................................................... 26
Committee.................................................................. 36
Common Stock Plans......................................................... 18
Company.................................................................... 14
Deloitte................................................................... 44
Directors Plan............................................................. 8
Dividend Reinvestment Plan................................................. 18
Effective Time............................................................. 11
Energy Act................................................................. 12
ESOP....................................................................... 18
Exchange Act............................................................... 2
FERC....................................................................... 7
Holding Company Act........................................................ 7
ICP........................................................................ 8
Incorporated Documents..................................................... 2
IRS........................................................................ 26
Nonqualified options....................................................... 42
NRC........................................................................ 7
NYSE....................................................................... 2
PhSE....................................................................... 2
PJM........................................................................ 13
Plan Committee............................................................. 42
Plan of Exchange........................................................... 1
Power Markets.............................................................. 6
PP&L....................................................................... 1
PP&L Articles.............................................................. 8
PP&L Bylaws................................................................ 22
PP&L Common Shares......................................................... 1
PP&L Preference Stock...................................................... 20
PP&L Preferred Stock....................................................... 6
Predetermined Corporate Goals.............................................. 37
PUC........................................................................ 7
PURPA...................................................................... 12
Record Date................................................................ 10
Registration Statement..................................................... 2
Resources.................................................................. 1
Resources Articles......................................................... 11
Resources Bylaws........................................................... 11
Resources Common Shares.................................................... 1
Resources Preferred Stock.................................................. 21
Restructuring.............................................................. 15
Safe Harbor................................................................ 14
SEC........................................................................ 2
SEC Order.................................................................. 18
Series Preferred Stock..................................................... 5
SERP....................................................................... 9
Share Exchange............................................................. 1
Shareowners................................................................ 5
</TABLE>
45
<PAGE>
MISCELLANEOUS
The Board of Directors is not aware of any other matters to be presented for
action at the meeting. If any other matter requiring a vote of the shareowners
should arise, it is intended that the persons named in the enclosed proxy (or
their substitutes) will vote in accordance with their best judgment.
METHOD AND EXPENSE OF SOLICITATION OF PROXIES
The cost of soliciting proxies on behalf of the Board of Directors will be
paid by PP&L. In addition to the solicitation by mail, a number of regular
employees of PP&L may solicit proxies in person or by telephone or telegraph.
PP&L has retained Corporate Investor Communications, Inc. ("CIC") to assist in
the solicitation of proxies for the Annual Meeting. It is expected that the
remuneration to CIC for its services will not exceed $20,000. Brokers, dealers,
banks and their nominees who hold shares for the benefit of others will be
asked to send proxy material to the beneficial owners of the shares, and PP&L
will reimburse them for their expenses.
PROPOSALS FOR 1996 ANNUAL MEETING
To be included in the proxy material for the 1996 Annual Meeting, any
proposal intended to be presented at that meeting by a shareowner must be
received by the PP&L Secretary no later than November 15, 1995.
ANNUAL REPORT
A copy of PP&L's Annual Report for 1994, including financial statements, is
being mailed to each Shareowner of record on February 28, 1995.
By Order of the Board of Directors,
Diane M. Koch
Assistant Secretary
March 9, 1995
46
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF EXCHANGE
BETWEEN
PENNSYLVANIA POWER & LIGHT COMPANY
(A PENNSYLVANIA CORPORATION)
AND
PP&L RESOURCES, INC.
(A PENNSYLVANIA CORPORATION)
RECITALS
A. PENNSYLVANIA POWER & LIGHT COMPANY (the "Exchanging Corporation") is a
corporation duly organized, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania, which is authorized to issue
170,000,000 shares of Common Stock, no par value ("PP&L Common Stock"), of
which 156,392,018 shares are issued and outstanding.
B. PP&L RESOURCES, INC. (the "Acquiring Person"), a wholly owned subsidiary
of the Exchanging Corporation, is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania, which is authorized to issue 100 shares of Common Stock, par
value $.01 per share ("Resources Common Stock"), and which, at the time of the
share exchange contemplated hereby (the "Exchange"), will be authorized to
issue 390,000,000 shares of Resources Common Stock, of which 100 shares are
issued and outstanding and held of record by the Exchanging Corporation.
C. The Board of Directors of the Exchanging Corporation has adopted
resolutions approving this Agreement and Plan of Exchange (the "Agreement") in
accordance with the Pennsylvania Business Corporation Law of 1988 (the "BCL")
and directing that it be submitted to the shareholders of the Exchanging
Corporation for adoption.
ARTICLE I
General
1.01. Parties to Exchange. The Exchanging Corporation and the Acquiring
Person shall effect the Exchange in accordance with and subject to the terms of
this Agreement.
1.02. Effectiveness. Articles of Exchange, and such other documents and
instruments as are required by, and complying in all respects with, the BCL
shall be delivered to the appropriate state officials for filing. The Exchange
shall become effective upon the filing of Articles of Exchange in the
Department of State of the Commonwealth of Pennsylvania (the "Effective Time").
1.03. Termination. Notwithstanding shareholder approval of this Agreement,
this Agreement may be terminated at any time prior to the Effective Time by
either the Acquiring Person by written notice to the Exchanging Corporation
prior to the Effective Time or by the Exchanging Corporation at any time prior
to the Effective Time by resolution approved by its Board of Directors.
1.04. Amendment. This Agreement may be amended by the written agreement of
the Exchanging Corporation and the Acquiring Person at any time prior to
submission of the Agreement to the shareholders of the Exchanging Corporation
for approval and, to the extent permitted by law, at any time thereafter prior
to the Effective Time.
ARTICLE II
Capital Stock
2.01. Exchange. At the Effective Time each share of PP&L Common Stock issued
and outstanding immediately prior to the Effective Time shall, by virtue of the
Exchange and without any action on the part of the
A-1
<PAGE>
holder thereof, be converted and exchanged into one share of Resources Common
Stock and the Acquiring Person shall thereupon have acquired and be the holder
of each share of PP&L Common Stock covered and exchanged in the Exchange. No
shares of PP&L Common Stock shall cease to exist by reason of such conversion
and exchange. No other shares of capital stock of the Exchanging Corporation
shall be exchanged pursuant to the Exchange.
2.02. Certificates. Following the Effective Time, each holder of an
outstanding certificate or certificates theretofore representing shares of PP&L
Common Stock may, but shall not be required to, surrender the same to the
Acquiring Person for reissuance of a new certificate or certificates in
holders' name or for transfer, and each such holder or transferee will be
entitled to receive a certificate or certificates representing the same number
of shares of the Acquiring Person. Without any further action on the part of
the Exchanging Corporation or the Acquiring Person, each outstanding
certificate which, immediately before the Effective Time, represented PP&L
Common Stock, shall be deemed and treated for all corporate purposes to
represent the ownership of the same number of shares of Resources Common Stock
as though a surrender or transfer and exchange had taken place.
2.03. Cancellation of Resources Common Stock Held by the Exchanging
Corporation. Immediately prior to the Effective Time, each share of Resources
Common Stock issued and outstanding immediately before the Effective Time shall
be cancelled and thereupon shall constitute an authorized but unissued share,
and all rights in respect thereof shall cease. The Exchanging Corporation, as
the sole holder of such Resources Common Stock, consents to such cancellation.
ARTICLE III
3.01. Articles of Incorporation of the Exchanging Corporation. At the
Effective Time, the Restated Articles of Incorporation of the Exchanging
Corporation shall be amended and restated as set forth on Attachment 1 hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and Plan
of Exchange as of February 24, 1995.
PENNSYLVANIA POWER & LIGHT COMPANY
/s/ William F. Hecht
By: ______________________________
Name:William F. Hecht
Title:Chairman, President and Chief
Executive Officer
PP&L RESOURCES, INC.
/s/ William F. Hecht
By: ______________________________
Name:William F. Hecht
Title:Chairman, President and Chief
Executive Officer
A-2
<PAGE>
ATTACHMENT 1
PROPOSED
PENNSYLVANIA POWER & LIGHT COMPANY
AMENDED AND RESTATED ARTICLES OF INCORPORATION
ARTICLE I. The name of the Corporation is
PENNSYLVANIA POWER & LIGHT COMPANY
ARTICLE II. The location and post office address of the registered office of
the Corporation in this Commonwealth is
Two North Ninth Street
Allentown, Pennsylvania 18101
ARTICLE III. The purpose or purposes for which the Corporation is
incorporated under the Business Corporation Law of the Commonwealth of
Pennsylvania are to engage in, and do any lawful act concerning, any or all
lawful business for which a corporation may be incorporated under said Business
Corporation Law, including but not limited to:
1. The supply of light, heat or power to the public by means of
electricity or by any other means.
2. The production, generation, manufacture, transmission, storage,
distribution or furnishing of artificial or natural gas, electricity or
steam or air conditioning or refrigerating services, or any combination
thereof to or for the public.
3. The diverting, pumping or impounding of water for the development or
furnishing of hydroelectric power to or for the public.
4. The transportation of artificial or natural gas, electricity,
petroleum or petroleum products or water or any combination of such
substances for the public.
5. The diverting, developing, pumping, impounding, distributing or
furnishing of water from either surface or subsurface sources to or for the
public.
6. Manufacturing, processing, owning, using and dealing in personal
property of every class and description, engaging in research and
development, the furnishing of services, and acquiring, owning, using and
disposing of real property of every nature whatsoever.
ARTICLE IV. The term for which the Corporation is to exist is perpetual.
ARTICLE V. The aggregate number of shares which the Corporation shall have
authority to issue is 185,629,936 shares, divided into 629,936 shares of 4 1/2%
Preferred Stock, par value $100 per share; 10,000,000 shares of Series
Preferred Stock, par value $100 per share; 5,000,000 shares of Preference
Stock, without nominal or par value; and 170,000,000 shares of Common Stock,
without nominal or par value.
ARTICLE VI. The designations, preferences, qualifications, limitations,
restrictions, and the special or relative rights in respect of the shares of
each class shall be as follows:
DIVISION A -- 4 1/2% PREFERRED STOCK
Section 1. Dividend Rate. The 4 1/2% Preferred Stock shall be entitled to
dividends, as provided in Division C, at the rate of four and one-half percent
(4 1/2%) per annum, such dividends to be cumulative from the date of issuance
thereof.
Section 2. Restrictions on Certain Corporate Action. (A) Upon the vote of a
majority of all the Directors of the Corporation and of a majority of the total
number of shares of stock then issued and outstanding and entitled to vote, the
Corporation may from time to time create or authorize one or more other classes
of stock with such designations, rights, privileges, limitations, preferences,
voting powers, prohibitions, restrictions or qualifications of
A-3
<PAGE>
the voting and other rights and powers and terms as to redemption as may be
determined by said vote, which may be the same or different from the
designations, rights, privileges, limitations, preferences, voting powers,
prohibitions, restrictions or qualifications of the classes of stock of the
Corporation then authorized; provided, however, that no new class of stock
shall hereafter be created or authorized which is entitled to dividends or
shares in distribution of assets on a parity with or in priority to the 4%
Preferred Stock, nor shall there be created or authorized any securities
convertible into shares of any such stock, unless the holders of record of not
less than two-thirds of the number of shares of 4 1/2% Preferred Stock then
outstanding shall consent thereto in writing or by voting therefor in person or
by proxy at the meeting of shareholders at which the creation or authorization
of such new class of stock or such convertible securities is considered. Any
such vote may authorize any shares of any class then authorized but unissued to
be issued as shares of such new class or classes.
(B) The expressed rights, privileges, terms and conditions of the 4 1/2%
Preferred Stock then outstanding shall not be amended, altered, changed or
repealed in a manner substantially prejudicial to the holders thereof unless
the holders of record of not less than two-thirds of the number of shares of
the 4 1/2% Preferred Stock then outstanding shall consent thereto in writing or
by voting therefor in person or by proxy at the meeting of shareholders at
which such amendment, alteration, change or repeal is considered.
(C) So long as any shares of the 4 1/2% Preferred Stock are outstanding, the
Corporation shall not, without the consent (given by vote at a meeting held
pursuant to notice containing a statement of such purpose) of the holders of a
majority of the total number of shares of the 4 1/2% Preferred Stock then
outstanding:
(1) Increase in Authorized 4 1/2% Preferred Stock. Increase the total
authorized amount of the 4 1/2% Preferred Stock; or
(2) Merger or Consolidation. Merge or consolidate with or into any other
corporation or corporations, unless such merger or consolidation (or the
exchange, issuance or assumption of all securities to be issued or assumed
in connection with any such merger or consolidation) shall have been
ordered, approved or permitted by the Securities and Exchange Commission
under the provisions of the Public Utility Holding Company Act of 1935 or
by any successor commission or other regulatory authority of the United
States of America having jurisdiction over the exchange, issuance or
assumption of securities in connection with such merger or consolidation;
provided that such consent shall not apply to a purchase or other
acquisition by the Corporation of property or assets of another corporation
in any manner which does not involve a merger or consolidation; and
provided further that such consent of the holders of the 4 1/2% Preferred
Stock shall not be required if the net plant on the books of the company to
be merged or consolidated shall amount to less than 2% of the then
capitalization of the Corporation, including surplus; or
(3) Issuance of Senior Stock in Absence of Satisfaction of Certain
Earnings Requirements. Issue any share of Senior Stock (the term "Senior
Stock" whenever used in this Article VI shall include the 4 1/2% Preferred
Stock, the Series Preferred Stock and any other class of stock ranking
prior to or on a parity with the 4 1/2% Preferred Stock and the Series
Preferred Stock as to the payment of dividends or distribution of assets)
in addition to the shares of Senior Stock then outstanding, even though
such stock has been authorized pursuant to the provisions of Section 2(A)
of this Division A and the provisions of Section 2(A) of Division B;
provided, however, that such consent of the holders of the 4 1/2% Preferred
Stock shall not be required for the issuance of such stock if the net
income of the Corporation determined after provisions for depreciation and
all taxes, and in accordance with generally accepted accounting practices,
for a period of twelve consecutive calendar months within the fifteen
calendar months immediately preceding the issuance, sale or disposition of
such stock is at least equal to twice the annual dividend requirements on
all outstanding shares of the Senior Stock, including the shares proposed
to be issued, and if the gross income of the Corporation for said period,
determined in accordance with generally accepted accounting practices (but
in any event after deducting the amount for said period charged by the
Corporation on its books to depreciation expense and all taxes) to be
available for the payment of interest shall have been at least one and one-
half times the sum of:
(a) the annual interest charges on all interest-bearing indebtedness
of the Corporation; and
(b) the annual dividend requirements on all outstanding shares of the
Senior Stock, including the shares proposed to be issued.
There shall be excluded from the foregoing computation, interest charges on
all indebtedness and dividends on all stock which are to be retired in
connection with the issue of such additional shares of Senior Stock.
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Where such additional shares of Senior Stock are to be issued in connection
with the acquisition of new property, the net earnings of the property to
be so acquired may be included on a pro forma basis in the foregoing
computation, computed on the same basis as the net earnings of the
Corporation; or
(4) Issuance of Unsecured Indebtedness in Excess of Certain
Limitations. Issue any unsecured notes, debentures or other securities
representing unsecured indebtedness, or assume any such unsecured
securities, for purposes other than:
(a) the refunding of outstanding unsecured securities, theretofore
issued or assumed by the Corporation,
(b) the reacquisition, redemption or other retirement of any
indebtedness, if such reacquisition, redemption or other retirement has
been authorized by the Securities and Exchange Commission under the
provisions of the Public Utility Holding Company Act of 1935 or by any
successor commission or other regulatory authority of the United States
of America having jurisdiction over the reacquisition, redemption or
other retirement of such indebtedness, or
(c) the reacquisition, redemption or other retirement of any or all of
the outstanding shares of the 4 1/2% Preferred Stock;
if, immediately after such issue or assumption, the total principal amount
of all unsecured securities then outstanding would exceed twenty per centum
(20%) of
(i) the total principal amount of all bonds or other securities
representing secured indebtedness issued or assumed by the Corporation
and then to be outstanding, and
(ii) the capital and surplus of the Corporation as then to be stated
on the books of account of the Corporation; or
(5) Issuance of 4 1/2% Preferred Stock in Absence of Satisfaction of
Certain Capital Requirements. Issue any shares of the 4 1/2% Preferred
Stock, in addition to the then outstanding shares of the 4 1/2% Preferred
Stock, unless at the time of the issuance thereof the amount of the capital
of the Corporation applicable to the Common Stock shall exceed $25,007,520
(exclusive of any common capital arising subsequent to the date of
establishment of said amount in the Common Stock capital account from the
transfer of earned surplus or payment of stock dividends payable in Common
Stock) by an amount equal to the sum of the par value of the proposed issue
of such additional 4 1/2% Preferred Stock and the par value of any shares
of 4 1/2% Preferred Stock theretofore issued.
DIVISION B -- SERIES PREFERRED STOCK
Section 1. Division into Series. (A) All shares of Series Preferred Stock
shall be identical except that the dividend rate, the amount to which such
shares shall be entitled upon redemption and upon liquidation, the sinking
fund, if any, as well as the provisions, if any, with respect to convertibility
may vary between different series. The Series Preferred Stock may be divided
into, and issued from time to time, in one or more series, each of such series
to have such distinctive designation, terms, relative rights, privileges,
limitations, preferences and voting powers and such prohibitions, restrictions,
and qualifications of the voting and other rights and powers as are fixed and
determined in this Article VI or in a resolution or resolutions providing for
the issue of such series adopted by the Board of Directors as provided in this
Division B.
(B) Authority is hereby expressly granted to the Board of Directors to
establish one or more series of Series Preferred Stock and with respect to each
series to fix and determine by resolution or resolutions providing for the
issue of such series:
(1) the number of shares to constitute such series and the distinctive
designation thereof to distinguish the shares thereof from the shares of
all other series and classes;
(2) the dividend rate on the shares of such series, and the date or dates
from which dividends shall be cumulative;
(3) the amount to which shares of such series shall be entitled upon
redemption;
(4) the amount to which shares of such series shall be entitled upon
liquidation;
A-5
<PAGE>
(5) the amount of the sinking fund, if any, for the purchase or
redemption of shares of such series; and
(6) the terms and conditions, if any, upon which the shares of such
series may be converted into other securities of the Corporation.
Section 2. Restrictions on Certain Corporate Action. (A) Upon the vote of a
majority of all of the Directors of the Corporation and of a majority of the
total number of shares of stock then issued and outstanding and entitled to
vote, the Corporation may from time to time create or authorize one or more
classes of stock in addition to the Series Preferred Stock, the 4 1/2%
Preferred Stock, the Preference Stock and the Common Stock, with such
designations, rights, privileges, limitations, preferences, voting powers,
prohibitions, restrictions or qualifications of the voting and other rights and
powers and terms as to redemption as may be determined by said vote, which may
be the same or different from the designations, rights, privileges,
limitations, preferences, voting powers, prohibitions, restrictions or
qualifications of the classes of stock of the Corporation then authorized;
provided, however, that no new class of stock shall hereafter be created or
authorized which is entitled to dividends or shares in distribution of assets
on a parity with or in priority to the Series Preferred Stock, nor shall there
be created or authorized any securities convertible into shares of any such
stock, unless the holders of record of not less than two-thirds of the number
of shares of the Series Preferred Stock and the 4 1/2% Preferred Stock then
outstanding (consenting or voting as a single class separate from the holders
of the Preference Stock and the Common Stock) shall consent thereto in writing
or by voting therefor in person or by proxy at the meeting of shareholders at
which the creation or authorization of such new class of stock or such
convertible securities is considered. Any such vote may authorize any shares of
any class then authorized but unissued to be issued as shares of such new class
or classes.
(B) So long as any shares of the Series Preferred Stock are outstanding, the
Corporation shall not, without the consent (given by vote at a meeting held
pursuant to notice containing a statement of such purpose) of the holders of a
majority of the total number of shares of the Series Preferred Stock and the 4
1/2% Preferred Stock then outstanding (voting as a single class separate from
the holders of the Common Stock and the holders of any series of Preference
Stock with voting rights):
(1) Increase to Authorized Series Preferred Stock. Increase the total
authorized amount of the Series Preferred Stock; or
(2) Merger or Consolidation. Merge or consolidate with or into any other
corporation or corporations, unless such merger or consolidation (or the
exchange, issuance or assumption of all securities to be issued or assumed
in connection with any such merger or consolidation) shall have been
ordered, approved or permitted by the Securities and Exchange Commission
under the provisions of the Public Utility Holding Company Act of 1935 or
by any successor commission or other regulatory authority of the United
States of America having jurisdiction over the exchange, issuance or
assumption of securities in connection with such merger or consolidation;
provided that such consent shall not apply to a purchase or other
acquisition by the Corporation of property or assets of another corporation
in any manner which does not involve a merger or consolidation; and
provided further that such consent of the holders of the Series Preferred
Stock and the 4 1/2% Preferred Stock shall not be required if the net plant
on the books of the company to be merged or consolidated shall amount to
less than 2% of the then capitalization of the Corporation, including
surplus; or
(3) Issuance of Senior Stock in Absence of Satisfaction of Certain
Earnings Requirements. Issue any shares of the Senior Stock, in addition to
the shares of Senior Stock, then outstanding, even though such stock has
been authorized pursuant to the provisions of Section 2(A) of Division A
and the provisions of Section 2(A) of this Division B; provided, however,
that such consent of the Series Preferred Stock and the 4 1/2% Preferred
Stock shall not be required for the issuance of such stock if the net
income of the Corporation, determined after provisions for depreciation and
all taxes, and in accordance with generally accepted accounting practices
for a period of twelve consecutive calendar months within the fifteen
calendar months immediately preceding the issuance, sale or disposition of
such stock is at least equal to twice the annual dividend requirements on
all outstanding shares of the Senior Stock, including the shares proposed
to be issued, and if the gross income of the Corporation for said period,
determined in accordance with generally accepted accounting practices (but
in any event after deducting the amount for said period charged by the
Corporation on its books to depreciation expense and all taxes) to be
available for the payment of interest shall have been at least one and one-
half times the sum of:
(a) the annual interest charges on all interest-bearing indebtedness
of the Corporation; and
A-6
<PAGE>
(b) the annual dividend requirements on all outstanding shares of the
Senior Stock, including the shares proposed to be issued.
There shall be excluded, from the foregoing computation, interest charges
on all indebtedness and dividends on all stock which are to be retired in
connection with the issue of such additional shares of Senior Stock. Where
such additional shares of Senior Stock are to be issued in connection with
the acquisition of new property, the net earnings of the property to be so
acquired may be included on a pro forma basis in the foregoing computation,
computed on the same basis as the net earnings of the Corporation; or
(4) Issuance of Unsecured Indebtedness in Excess of Certain
Limitations. Issue any unsecured notes, debentures or other securities
representing unsecured indebtedness or assume any such unsecured
securities, for purposes other than:
(a) the refunding of outstanding unsecured securities, theretofore
issued or assumed by the Corporation,
(b) the reacquisition, redemption or other retirement of any
indebtedness, if such reacquisition, redemption or other retirement has
been authorized by the Securities and Exchange Commission under the
provisions of the Public Utility Holding Company Act of 1935 or by any
successor commission or other regulatory authority of the United States
of America having jurisdiction over the reacquisition, redemption or
other retirement of such indebtedness, or
(c) the reacquisition, redemption or other retirement of any or all of
the outstanding shares of the Series Preferred Stock or the 4 1/2%
Preferred Stock;
if immediately after such issue or assumption, the total principal amount
of all unsecured securities then outstanding would exceed twenty per centum
(20%) of:
(i) the total principal amount of all bonds or other securities
representing secured indebtedness issued or assumed by the Corporation
and then to be outstanding, and
(ii) the capital and surplus of the Corporation as then to be stated
on the books of account of the Corporation.
(C) The provisions of this Section 2 of this Division B requiring the
approval of a specified percentage of the holders of the Series Preferred Stock
and the 4 1/2% Preferred Stock voting or consenting as a class shall be
construed as in addition to and not in substitution for, any provisions of
Division A of this Article VI requiring the approval of the holders of a
specified percentage of the 4 1/2% Preferred Stock.
(D) The expressed rights, privileges, terms and conditions of the Series
Preferred Stock then outstanding, insofar as they are set forth in the
foregoing subsections of this Section 2 shall not be amended, altered, changed
or repealed in a manner substantially prejudicial to the holders thereof unless
(1) the holders of record of not less than two-thirds of the number of shares
of the Series Preferred Stock and the 4 1/2% Preferred Stock then outstanding
(consenting or voting as a single class separate from the holders of the
Preference Stock and the Common Stock) shall consent thereto in writing or by
voting therefor in person or by proxy at the meeting of shareholders at which
such amendment, alteration, change or repeal is considered, and (2) the
expressed rights, privileges, terms and conditions of the 4 1/2% Preferred
Stock, are, at the same time, similarly amended, altered, changed or repealed.
The expressed rights, privileges, terms and conditions of the Series Preferred
Stock then outstanding, other than those set forth in the foregoing subsections
of this Section 2, shall not be amended, altered, changed or repealed in a
manner substantially prejudicial to the holders thereof unless the holders of
record of not less than two-thirds of the number of shares of the Series
Preferred Stock then outstanding shall consent thereto in writing or by voting
therefor in person or by proxy at the meeting of shareholders at which such
amendment, alteration, change or repeal is considered.
Section 3. Variations Among Series of Series Preferred Stock. (A) 4.60%
Series Preferred Stock. The terms of the "4.60% Series Preferred Stock," in the
respects in which the shares of such series may vary from shares of other
series of the Series Preferred Stock shall be as follows: the dividend rate
shall be 4.60% per annum, and dividends on each share of such series shall be
cumulative from the date or dates of initial issue of shares of such series:
the redemption price shall be $103 per share at any time; $103 per share shall
be payable upon any voluntary liquidation, dissolution or winding up of the
Corporation and $100 per share shall be payable
A-7
<PAGE>
upon any involuntary liquidation, dissolution or winding up of the Corporation.
The number of shares of this series authorized is 63,000 shares.
(B) 4.40% Series Preferred Stock. The terms of the "4.40% Series Preferred
Stock" in the respects in which the shares of such series may vary from shares
of other series of the Series Preferred Stock shall be as follows: the dividend
rate shall be 4.40% per annum, and dividends on each share of such series shall
be cumulative from the date or dates of the initial issue of shares of such
series; the redemption price shall be $102 per share at any time; $102 per
share shall be payable upon any voluntary liquidation, dissolution or winding
up of the Corporation and $100 per share shall be payable upon any involuntary
liquidation, dissolution or winding up of the Corporation. The number of shares
of this series authorized is 229,214 shares.
(C) 3.35% Series Preferred Stock. The terms of the "3.35% Series Preferred
Stock" in the respects in which the shares of such series may vary from shares
of other series of the Series Preferred Stock shall be as follows: the dividend
rate shall be 3.35% per annum and dividends on each share of such Series shall
be cumulative from the date or dates of the initial issue of shares of such
series; the redemption price shall be $103.50 per share at any time; $103.50
per share shall be payable upon any voluntary liquidation, dissolution or
winding up of the Corporation and $100 per share shall be payable upon any
involuntary liquidation, dissolution or winding up of the Corporation. The
number of shares of this series authorized is 53,248 shares.
(D) 6.75% Series Preferred Stock. The terms of the "6.75% Series Preferred
Stock" in the respects in which the shares of such series may vary from shares
of other series of the Series Preferred Stock shall be as follows:
(1) The dividend rate shall be 6.75% per annum and dividends on each
share of such Series shall be cumulative from the date or dates of the
initial issue of shares of such series;
(2) Shares of this Series are not redeemable prior to October 1, 2003. On
or after October 1, 2003, the Corporation may, by resolution of the Board
of Directors or the Executive Committee of the Board of Directors, redeem
all, or from time to time, any part of the outstanding shares of this
Series, at the following redemption prices per share:
<TABLE>
<CAPTION>
IF REDEEMED DURING TWELVE MONTH REDEMPTION
PERIOD ENDING SEPTEMBER 30 PRICES
------------------------------- ----------
<S> <C>
2004........................................................... 103.38%
2005........................................................... 103.04
2006........................................................... 102.70
2007........................................................... 102.36
2008........................................................... 102.03
2009........................................................... 101.69
2010........................................................... 101.35
2011........................................................... 101.01
2012........................................................... 100.68
2013........................................................... 100.34
</TABLE>
and thereafter at $100.00 per share. Any shares of this Series which are
redeemed, repurchased or otherwise reacquired by the Corporation shall,
until further action by the Board of Directors or the Executive
Committee of the Board of Directors, have the status of authorized and
unissued shares of Series Preferred Stock, without designation as to
series.
(3) $100.00 per share shall be payable upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation. The shares of
this Series shall not be convertible into shares of any other class or
classes or into any other securities of the Corporation. The number of
shares of this series authorized is 850,000 shares.
(E) 6.125% Series Preferred Stock. The terms of the "6.125% Preferred Stock"
in the respects in which the shares of such series may vary from shares of
other series of the Series Preferred Stock shall be as follows:
(1) The dividend rate shall be 6.125% per share per annum and dividends
on each share of such Series shall be cumulative from the date or dates of
the initial issue of shares of such Series;
A-8
<PAGE>
(2) So long as any shares of this Series remain outstanding, the
Corporation, after full dividends on all outstanding shares of the 4 1/2%
Preferred Stock and the Series Preferred Stock, including this Series, for
all past dividend periods shall have been paid or set aside, shall redeem
as and for a sinking fund for the retirement of this Series (the "6.125%
Sinking Fund"), out of funds legally available therefor, (i) annually on
October 1 in each of the years 2003 through 2007, 57,500 shares of this
Series, and (ii) on October 1, 2008, the remaining shares of this Series.
The Corporation's obligation to make redemptions for the 6.125% Sinking
Fund on any such October 1 as provided in this subparagraph (2) (such
obligations on each such date being herein called the "6.125% Sinking Fund
Obligation") shall be cumulative so that if on any such October 1 the funds
of the Corporation legally available for the 6.125% Sinking Fund shall be
insufficient to permit the Corporation to discharge its 6.125% Sinking Fund
Obligation on such date, or if for any other reason such 6.125% Sinking
Fund Obligation shall not have been discharged in full on such date, then
such 6.125% Sinking Fund Obligation, to the extent not discharged, shall
become an additional 6.125% Sinking Fund Obligation for each succeeding
October 1 until fully discharged. The price at which shares of this Series
shall be called for redemption through the 6.125% Sinking Fund shall be
$100 per share, plus an amount equal to accumulated and unpaid dividends to
the date of such redemption computed as provided in Section 5 of Division C
of Article VI of these Amended and Restated Articles of Incorporation. The
Corporation's 6.125% Sinking Fund Obligation may be discharged, in whole or
part, by the application of any shares of this Series purchased or
otherwise acquired by the Corporation on or before such date. If the
Corporation shall for any reason fail to discharge in full its 6.125%
Sinking Fund Obligation on any such October 1, the Corporation shall not
thereafter, unless and until such 6.125% Sinking Fund Obligation and its
6.125% Sinking Fund Obligation for each and every prior October 1 shall
have been discharged in full, declare or pay any dividend on, or make any
other distribution of property with respect to, or purchase or otherwise
acquire, any of its Common Stock.
(3) Shares of this Series are not redeemable prior to October 1, 2003. On
and after October 1, 2003, the Corporation may, by resolution of the Board
of Directors or the Executive Committee of the Board of Directors, redeem
all, or from time to time, any part of the outstanding shares of this
Series at $100 per share. Any shares of this Series which are redeemed,
repurchased or otherwise reacquired by the Corporation shall, until further
action by the Board of Directors or the Executive Committee of the Board of
Directors, have the status of authorized and unissued shares of Series
Preferred Stock, without designation as to series.
(4) $100.00 per share shall be payable upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation. The shares of
this Series shall not be convertible into shares of any other class or
classes or into any other securities of the Corporation. The number of
shares of this series authorized is 1,150,000 shares.
(F) 6.33% Series Preferred Stock. The terms of the "6.33% Preferred Stock" in
the respects in which the shares of such series may vary from shares of other
series of the Series Preferred Stock shall be as follows:
(1) The dividend rate shall be 6.33% per share per annum and dividends on
each share of such Series shall be cumulative from the date or dates of the
initial issue of shares of such Series;
(2) So long as any shares of this Series remain outstanding, the
Corporation, after full dividends on all outstanding shares of the 4 1/2%
Preferred Stock and the Series Preferred Stock, including this Series, for
all past dividend periods shall have been paid or set aside, shall redeem
as and for a sinking fund for the retirement of this Series (the "6.33%
Sinking Fund"), out of funds legally available therefor, (i) annually on
July 1 in each of the years 2003 through 2007, 50,000 shares of this
Series, and (ii) on July 1, 2008, the remaining shares of this Series. The
Corporation's obligation to make redemptions for the 6.33% Sinking Fund on
any such July 1 as provided in this subparagraph (2) (such obligations on
each such date being herein called the "6.33% Sinking Fund Obligation")
shall be cumulative so that if on any such July 1 the funds of the
Corporation legally available for the 6.33% Sinking Fund shall be
insufficient to permit the Corporation to discharge its 6.33% Sinking Fund
obligation on such date, or if for any other reason such 6.33% Sinking Fund
Obligation shall not have been discharged in full on such date, then such
6.33% Sinking Fund Obligation, to the extent not discharged, shall become
an additional 6.33% Sinking Fund Obligation for each succeeding July 1
until fully discharged. The price at which shares of this Series shall be
called for redemption through the 6.33% Sinking Fund shall be $100 per
share, plus an amount equal to accumulated and unpaid dividends to the date
of such redemption computed as provided in Section 5 of Division C of
Article VI of these Amended and Restated Articles of Incorporation. The
Corporation's 6.33% Sinking Fund Obligation may be discharged, in whole or
part, by the application of any shares of this Series purchased or
otherwise acquired by the
A-9
<PAGE>
Corporation on or before such date. If the Corporation shall for any reason
fail to discharge in full its 6.33% Sinking Fund Obligation on any such
July 1, the Corporation shall not thereafter, unless and until such 6.33%
Sinking Fund Obligation and its 6.33% Sinking Fund Obligation for each and
every prior July 1 shall have been discharged in full, declare or pay any
dividend on, or make any other distribution of property with respect to, or
purchase or otherwise acquire, any of its Common Stock.
(3) Shares of this Series are not redeemable prior to October 1, 2003. On
and after October 1, 2003, the Corporation may, by resolution of the Board
of Directors or the Executive Committee of the Board of Directors, redeem
all, or from time to time, any part of the outstanding shares of this
Series at $100 per share. Any shares of this Series which are redeemed,
repurchased or otherwise reacquired by the Corporation shall, until further
action by the Board of Directors or the Executive Committee of the Board of
Directors, have the status of authorized and unissued shares of Series
Preferred Stock, without designation as to series.
(4) $100.00 per share shall be payable upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation. The shares of
this Series shall not be convertible into shares of any other class or
classes or into any other securities of the Corporation. The number of
shares of this series authorized is 1,000,000 shares.
(G) 5.95% Series Preferred Stock. The terms of the "5.95% Preferred Stock" in
the respects in which the shares of such series may vary from shares of other
series of the Series Preferred Stock shall be as follows:
(1) The dividend rate shall be 5.95% per share per annum and dividends on
each share of such Series shall be cumulative from the date or dates of the
initial issue of shares of such Series;
(2) The Corporation, after full dividends on all outstanding shares of
the 4 1/2% Preferred Stock and the Series Preferred Stock including this
Series, for all past dividend periods shall have been paid or set aside,
shall redeem as and for a sinking fund for the retirement of this Series
(the "5.95% Sinking Fund"), out of funds legally available therefor, on
April 1, 2001, all of the outstanding shares of this Series. If on April 1,
2001, the required number of shares shall not be redeemed because of the
lack of legally available funds, or for any other reason, the amount
required to be redeemed shall be carried forward until such obligation is
fully discharged. The price at which shares of this Series shall be called
for redemption through the 5.95% Sinking Fund shall be $100 per share, plus
an amount equal to accumulated and unpaid dividends to the date of such
redemption computed as provided in Section 5 of Division C of Article VI of
these Amended and Restated Articles of Incorporation. If the Corporation
shall for any reason fail to discharge in full its 5.95% Sinking Fund
obligation on April 1, 2001, the Corporation shall not thereafter, unless
and until such 5.95% Sinking Fund obligation shall have been discharged in
full, declare or pay any dividend on, or make any other distribution of
property with respect to, or purchase or otherwise acquire, any of its
Common Stock. Any shares of this Series which are redeemed, repurchased or
otherwise reacquired by the Corporation shall, until further action by the
Board of Directors or the Executive Committee of the Board of Directors,
have the status of authorized and unissued shares of Series Preferred
Stock, without designation as to series.
(3) The amount per share for this Series payable to the holders thereof
upon any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation shall be $100. The shares of this Series shall not be
convertible into shares of any other class or classes or into any other
securities of the Corporation. The number of shares of this Series
authorized is 300,000 shares.
(H) 6.05% Series Preferred Stock. The terms of the "6.05% Preferred Stock" in
the respects in which the shares of such series may vary from shares of other
series of the Series Preferred Stock shall be as follows:
(1) The dividend rate shall be 6.05% per share per annum and dividends on
each share of such Series shall be cumulative from the date or dates of the
initial issue of shares of such Series;
(2) The Corporation, after full dividends on all outstanding shares of
the 4 1/2% Preferred Stock and the Series Preferred Stock, including this
Series, for all past dividend periods shall have been paid or set aside,
shall redeem as and for a Sinking Fund for the retirement of this Series
(the "6.05% Sinking Fund"), out of funds legally available therefor, on
April 1, 2002, all of the outstanding shares of this Series. If on April 1,
2002, the required number of shares shall not be redeemed because of the
lack of legally available funds, or for any other reason, the amount
required to be redeemed shall be carried forward until such obligation is
fully discharged. The price at which shares of this Series shall be called
for redemption through the 6.05% Sinking Fund shall be $100 per share, plus
an amount equal to accumulated and unpaid dividends to the date of such
redemption computed as provided in Section 5 of Division C of Article VI of
these Amended and
A-10
<PAGE>
Restated Articles of Incorporation. If the Corporation shall for any reason
fail to discharge in full its 6.05% Sinking Fund obligation on April 1,
2002, the Corporation shall not thereafter, unless and until such 6.05%
Sinking Fund obligation shall have been discharged in full, declare or pay
any dividend on, or make any other distribution of property with respect
to, or purchase or otherwise acquire, any of its Common Stock. Any shares
of this Series which are redeemed, repurchased or otherwise reacquired by
the Corporation shall, until further action by the Board of Directors or
the Executive Committee of the Board of Directors, have the status of
authorized and unissued shares of Series Preferred Stock, without
designation as to series.
(3) The amount per share for this Series payable to the holders thereof
upon any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation shall be $100. The shares of this Series shall not be
convertible into shares of any other class or classes or into any other
securities of the Corporation. The number of shares of this Series
authorized is 250,000 shares.
(I) 6.15% Series Preferred Stock. The terms of the "6.15% Preferred Stock" in
the respects in which the shares of such series may vary from shares of other
series of the Series Preferred Stock shall be as follows:
(1) The dividend rate shall be 6.15% per share per annum and dividends on
each share of such Series shall be cumulative from the date or dates of the
initial issue of shares of such Series;
(2) The Corporation, after full dividends on all outstanding shares of
the 4 1/2% Preferred Stock and the Series Preferred Stock, including this
Series, for all past dividend periods shall have been paid or set aside,
shall redeem as and for a sinking fund for the retirement of this Series
(the "6.15% Sinking Fund"), out of funds legally available therefor, on
April 1, 2003, all of the outstanding shares of this Series. If on April 1,
2003, the required number of shares shall not be redeemed because of the
lack of legally available funds, or for any other reason, the amount
required to be redeemed shall be carried forward until such obligation is
fully discharged. The price at which shares of this Series shall be called
for redemption through the 6.15% Sinking Fund shall be $100 per share, plus
an amount equal to accumulated and unpaid dividends to the date of such
redemption computed as provided in Section 5 of Division C of Article VI of
these Amended and Restated Articles of Incorporation. If the Corporation
shall for any reason fail to discharge in full its 6.15% Sinking Fund
obligation on April 1, 2003, the Corporation shall not thereafter, unless
and until such 6.15% Sinking Fund obligation shall have been discharged in
full, declare or pay any dividend on, or make any other distribution of
property with respect to, or purchase or otherwise acquire, any of its
Common Stock. Any shares of this Series which are redeemed, repurchased or
otherwise reacquired by the Corporation shall, until further action by the
Board of Directors or the Executive Committee of the Board of Directors,
have the status of authorized and unissued shares of Series Preferred
Stock, without designation as to series.
(3) The amount per share for this Series payable to the holders thereof
upon any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation shall be $100. The shares of this Series shall not be
convertible into shares of any other class or classes or into any other
securities of the Corporation. The number of shares of this Series
authorized is 250,000 shares.
(J) For the purposes of the foregoing paragraphs (A) through (I), the terms
"involuntary liquidation, dissolution or winding up" shall include, without
being limited to, a liquidation, dissolution or winding up of the Corporation
resulting in the distribution of all of the net proceeds of a sale, lease or
conveyance of all or substantially all of the property or business of the
Corporation to any governmental body including, without limitation, any
municipal corporation or political subdivision or authority.
DIVISION C -- PROVISIONS APPLICABLE TO BOTH THE 4 1/2% PREFERRED STOCK AND THE
SERIES PREFERRED STOCK
Section 1. General. The term "Preferred Stock" whenever used in this Article
VI, shall be deemed to include the 4 1/2% Preferred Stock, the Series Preferred
Stock and any other class of stock entitled to dividends on a parity with the 4
1/2% Preferred Stock and Series Preferred Stock.
Section 2. Dividends. (A) The shares of Preferred Stock shall be entitled to
the payment of dividends on a parity with each other at the rate or rates
established by or pursuant to the provisions of this Article VI and in
preference to the Preference Stock and the Common Stock, but only when and as
declared by the Board of Directors, out of funds legally available for the
payment of dividends.
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(B) Said dividends shall be payable quarterly on January 1, April 1, July 1
and October 1 of each year or otherwise as the Board of Directors may
determine, to shareholders of record as of a date not exceeding forty (40) days
and not less than ten (10) days preceding such dividend payment dates, to be
fixed by the Board of Directors. The holders of the Preferred Stock shall not
be entitled to receive any dividends thereon out of net profits or surplus
earnings other than dividends established by or pursuant to this Article VI.
Section 3. Preferences In Distribution. The shares of the 4 1/2% Preferred
Stock and the Series Preferred Stock shall be entitled to share on a parity
with each other, and shall have a preference over the Preference Stock and the
Common Stock, upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, or upon any distribution of assets, other than
net profits or surplus earnings until there shall have been paid in respect of
the shares of:
(a) 4 1/2% Preferred Stock -- the full par value thereof, or
(b) Series Preferred Stock -- the liquidation price fixed as provided in
Division B;
plus, in either case, an amount, if any, by which an amount equivalent to the
annual dividend upon such shares from the date after which dividends thereon
became cumulative to the date of liquidation exceeds the dividends actually
paid thereon or declared and set apart for payment thereon from such date to
the date of liquidation. The 4 1/2% Preferred Stock and the Series Preferred
Stock shall not receive any share in any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation or in any distribution of assets
in excess of the aggregate amount specified in this section.
Section 4. Voting Rights. (A) Except as otherwise provided in these Amended
and Restated Articles of Incorporation, each share of the 4 1/2% Preferred
Stock, the Series Preferred Stock, the Common Stock and (if, and to the extent,
stated in the resolution or resolutions providing for the issue of a series of
Preference Stock) the Preference Stock shall be equal in voting power and shall
entitle the holder thereof to one vote upon any question presented to any
shareholders meeting, it being hereby agreed and declared that a majority in
number of shares regardless of the class to which such shares may belong is a
majority in value or in interest within the meaning of any statute or law
requiring the consent of stockholders holding a majority in interest or a
greater amount in value of stock of the Corporation.
(B) If and when dividends payable on any shares of Preferred Stock shall be
in default in an amount equivalent to the annual dividend, or more, per share,
and thereafter until all dividends on the Preferred Stock (of all classes and
series) in default shall have been paid, the holders of the Preferred Stock
voting as a single class, separate from the holders of the Preference Stock and
the Common Stock, shall be entitled to elect the smallest number of directors
necessary to constitute a majority of the full Board of Directors, and the
holders of the Common Stock and the Preference Stock (if, and to the extent,
stated in the resolution or resolutions providing for the issue of a series of
Preference Stock), voting separately as a class, shall have the right to elect
the remaining directors of the Corporation. The terms of office, as directors,
of all persons who may be directors of the Corporation at the time shall
terminate upon the election of a majority of the Board of Directors by the
holders of the Preferred Stock, except that, if the holders of the Preference
Stock and/or the Common Stock shall not have exercised their right to elect
directors of the Corporation (either by voting together as a single class or by
voting separately as two distinct classes, as the case may be) because of the
lack of a quorum consisting of a majority of the required class, then such
remaining directors shall be elected by the directors whose term of office is
thus terminated and who have not been elected by the holders of the Preferred
Stock as a class; and in that event, such elected directors shall hold office
for the interim period, pending such time s a quorum of the requisite class
shall be present at a meeting held for the election of directors.
(C) If and when all dividends then in default on the Preferred Stock, then
outstanding, shall be paid (and such dividends shall be declared and paid out
of any funds legally available therefor as soon as reasonably practicable), the
holders of the Preferred Stock shall be divested of any special right with
respect to the election of directors and the voting power of the holders of the
Preferred Stock and the holders of the Common Stock and the Preference Stock
(to the extent stated in the resolution or resolutions providing for the issue
of a series of Preference Stock) shall revert to the status existing before the
first dividend payment date on which dividends on any shares of the Preferred
Stock were not paid in full; but always subject to the same provisions for
vesting such special rights in the holders of the Preferred Stock in case of
further like default or defaults on dividends thereon. Upon the termination of
any such special voting right, the terms of office of all persons who may have
been elected directors of the Corporation by vote of the holders of the
Preferred Stock, as a class, pursuant to such special
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voting right shall forthwith terminate, and the resulting vacancies shall be
filled by the vote of a majority of the remaining directors.
(D) In case of any vacancy in the office of a director occurring among the
directors elected by the holders of the Preferred Stock, voting as a single
class separate from the holders of the Common Stock and the holders of any
series of Preference Stock with voting rights, the remaining directors elected
by the holders of the Preferred Stock, by affirmative vote of a majority
thereof, or the remaining director so elected if there be but one, may elect a
successor or successors to hold office for the unexpired terms of the director
or directors whose place or places shall be vacant.
(E) In case of any vacancy in the office of a director occurring among the
directors not elected by the holders of the Preferred Stock, the remaining
directors not elected by the holders of the Preferred Stock, by affirmative
vote of a majority thereof, or the remaining such director if there be but one,
may elect a successor or successors to hold office for the unexpired term of
the director or directors whose place or places shall be vacant.
(F) Whenever the right shall have accrued to the holders of the Preferred
Stock to elect directors, voting as a single class separate from the holders of
the Common Stock and the holders of any series of Preference Stock with voting
rights, then upon request in writing signed by any holder of the Preferred
Stock entitled to vote, delivered by registered mail or in person to the
president, a vice president or secretary of the Corporation, it shall be the
duty of such officer forthwith to cause notice to be given to the shareholders
entitled to vote of a meeting to be held at such time as such officer may fix,
not less than ten (10) nor more than sixty (60) days after the receipt of such
request, for the purpose of electing directors. At all meetings of shareholders
held for the purpose of electing directors during such time as the holders of a
class or classes of stock shall have the special right, voting as a single
class, separate from the holders of the other class or classes of stock (not
entitled to such special right), to elect directors, the presence in person or
by proxy of the holders of a majority of such other class or classes of stock
(counted either separately as single classes or together as a single class, as
the case may be) shall be required to constitute a quorum of such class or
classes for the election of directors, and the presence in person or by proxy
of the holders of a majority of the outstanding shares of the class or classes
of stock entitled to such special right shall be required to constitute a
quorum of such class or classes for the election of directors; provided,
however, that the absence of a quorum of the holders of any such class or
classes of stock shall not prevent the election at any such meeting or any
adjournment thereof of directors by any other class or classes if the necessary
quorum of the holders of stock of such other class or classes is present in
person or by proxy at such meeting or adjournment thereof; and provided further
that in the event a quorum of the holders of the Preferred Stock is not
present, then the election of the directors elected by the holders of any other
class or classes of stock shall not become effective and the directors so
elected by such other class or classes of stock shall not assume their offices
and duties until the holders of the Preferred Stock shall have elected the
directors they shall be entitled to elect; and provided further, however, that
in the absence of a quorum of the holders of stock of any class, a majority of
the holders of the stock of such class who are present in person or by proxy
shall have the power to adjourn the election of the directors to be elected by
such class from day to day or for such longer periods, not exceeding 15 days,
each, as such majority shall direct without notice other than announcement at
the meeting until the requisite number of holders of such class shall be
present in person or by proxy.
Section 5. Redemption. (A) By a majority vote of the Board of Directors of
the Corporation:
(1) the 4 1/2% Preferred Stock may be redeemed in whole or in part at any
time at One Hundred Ten Dollars ($110.00) per share, or
(2) any series of Series Preferred Stock may be redeemed in whole or in
part at any time at the redemption price fixed and determined as specified
in Division B;
plus, in either case, an amount, if any, by which an amount equivalent to the
annual dividend upon such shares from the date after which dividends thereon
became cumulative to the date of redemption exceeds the dividends actually paid
thereon or declared and set apart for payment thereon from such date to the
date of redemption. If, pursuant to such vote, less than all of the shares of
any class or series thereof of the Preferred Stock are to be redeemed, the
shares to be redeemed shall be selected by lot, in such manner as the Board of
Directors of the Corporation shall determine, by a bank or trust company chosen
for that purpose by the Board of Directors of the Corporation.
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(B) Nothing herein contained shall limit any right of the Corporation to
purchase or otherwise acquire any shares of the Preferred Stock.
(C) Notice of the intention of the Corporation to redeem shares of the
Preferred Stock or any thereof shall be mailed thirty (30) days before the date
of redemption to each holder of record of the shares to be redeemed, at his
last known post office address as shown by the records of the Corporation. At
any time after such notice has been mailed as aforesaid, the Corporation may
deposit the aggregate redemption price (or the portion thereof not already paid
in the redemption of shares so to be redeemed) with any bank or trust company
in the City of Philadelphia, Pennsylvania; City of Allentown, Pennsylvania; or
in the City of New York, New York, named in such notice, payable in amounts
aforesaid to the respective orders of the record holders of the shares so to be
redeemed, on endorsement and surrender of their certificates, and thereupon
said holders shall cease to be shareholders with respect to said shares and
from and after the making of such deposit, said holders shall have no interest
in or claim against the Corporation with respect to said shares, but shall be
entitled only to receive said moneys from said bank or trust company with
interest, if any, allowed by such bank or trust company on such moneys
deposited as provided in this subsection (C), on endorsement and surrender of
their certificates as aforesaid.
(D) Any moneys so deposited, plus interest thereon, if any, and remaining
unclaimed at the end of six years from the date fixed for redemption, if
thereafter requested by resolution of the Board of Directors of the
Corporation, shall be repaid to the Corporation and in the event of such
repayment to the Corporation, such holders of record of the shares so redeemed
as shall not have made claim against such moneys prior to such repayment to the
Corporation shall be deemed to be unsecured creditors of the Corporation for an
amount without interest equivalent to the amount deposited, plus interest
thereon, if any, allowed by such bank or trust company, as above stated, for
the redemption of such shares and so paid to the Corporation.
DIVISION D -- PREFERENCE STOCK
Section 1. General. To the extent permitted by these Amended and Restated
Articles of Incorporation, the Board of Directors, by majority vote of a
quorum, shall have the authority to issue shares of Preference Stock from time
to time in one or more series, and to fix by resolution, at the time of
issuance of each of such series, the distinctive designations, terms, relative
rights, privileges, qualifications, limitations, options, conversion rights,
preferences, and voting powers, and such prohibitions, restrictions and
qualifications of voting or other rights and powers thereof except as they are
fixed and determined in this Article VI. The dividend rate or rates, dividend
payment dates or other terms of a series of Preference Stock may vary from time
to time dependent upon facts ascertainable outside of these Amended and
Restated Articles of Incorporation if the manner in which the facts will
operate to fix or change such terms is set forth in the express terms of the
series or upon terms incorporated by reference to an existing agreement between
the Corporation and one or more other parties or to another document of
independent significance or otherwise to the extent permitted by the Business
Corporation Law of 1988.
Section 2. Dividends. Subject to the provisions of Section 2(A) of Division
C, the holders of shares of each series of Preference Stock shall be entitled
to receive, when and as declared by the Board of Directors, out of any funds
legally available for the purpose under 15 Pa.C.S. (S) 1551 (relating to
distributions to shareholders) or any superseding provision of law subject to
any additional limitations in the express terms of the series, cash dividends
at the rate or rates and on the terms which shall have been fixed by or
pursuant to the authority of the Board of Directors with respect to such series
and no more, payable at such time or times as may be fixed by or pursuant to
the authority of the Board of Directors. If and to the extent provided by the
express terms of any series of Preference Stock, the holders of the series
shall be entitled to receive such other dividends as may be declared by the
Board of Directors.
Section 3. Liquidation of the Corporation. Subject to the provisions of
Section 3 of Division C, in the event of voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of
Preference Stock shall be entitled to receive from the assets of the
Corporation (whether capital or surplus), prior to any payment to the holders
of shares of Common Stock or of any other class of stock of the Corporation
ranking as to assets subordinate to the Preference Stock, the amount per share
(which, in the case of an involuntary liquidation, dissolution or winding up,
shall not be in excess of the original offering price per share (not including
accrued dividends, if any) or $100 per share, whichever is less) which shall
have been fixed and determined by
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the Board of Directors with respect thereto, plus the accrued and unpaid
dividends thereon computed to the date on which payment thereof is made
available, whether or not earned or declared. For the purposes of this section,
the terms "involuntary liquidation, dissolution or winding up" shall include,
without being limited to, a liquidation, dissolution or winding up of the
Corporation resulting in the distribution of all of the net proceeds of a sale,
lease or conveyance of all or substantially all of the property or business of
the Corporation to any governmental body including, without limitation, any
municipal corporation or political subdivision or authority.
Section 4. Conversion Privileges. In the event any series of the Preference
Stock is issued with the privilege of conversion, such stock may be converted,
at the option of the record holder thereof, at any time or from time to time,
as determined by the Board of Directors, in the manner and upon the terms and
conditions stated in the resolution establishing and designating the series and
fixing and determining the relative rights and preferences thereof.
Section 5. Redemption. The Corporation, at its option to be exercised by its
Board of Directors, may redeem the whole or any part of the Preference Stock or
of any series thereof at such time or times as may be fixed by the Board, at
the applicable price for each share, and upon the terms and conditions which
shall have been fixed and determined by the Board with respect thereto.
Section 6. Voting Rights. Each holder of record of shares of a series of
Preference Stock shall have full voting rights of one vote per share or such
other limited, multiple, fractional or conditional or no voting rights as shall
be stated in the resolution or resolutions of the Board of Directors providing
for the issue of the shares of such series. Unless provided in such resolution
or resolutions, no holder of shares of Preference Stock shall have cumulative
voting rights.
DIVISION E -- COMMON STOCK
Section 1. Dividends And Shares In Distribution On Common Stock. (A) Subject
to the rights of the holders of the Senior Stock, and the Preference Stock and
subordinate thereto, the Common Stock alone shall receive all further dividends
and shares upon liquidation, dissolution, winding up or distribution.
(B) A consolidation or merger of the Corporation with or into any other
corporation or corporations shall not be deemed a distribution of assets of the
Corporation within the meaning of any provision of this Article VI.
(C) So long as any shares of the 4 1/2% Preferred Stock and the Series
Preferred Stock are outstanding, no dividends on or distributions, purchases or
acquisitions of Common Stock shall be paid or made, aggregating an amount in
excess of 75% of the current year's earnings otherwise available for Common
Stock, if after such payment, distribution, purchase or acquisition, the ratio
of the aggregate of capital for Common Stock and surplus to the total
capitalization, including surplus, will be less than 25%, and no dividends on
or distributions, purchases or acquisitions of Common Stock shall be paid or
made, aggregating an amount in excess of 50% of the current year's earnings
otherwise available for Common Stock, if after such payment, distribution,
purchase or acquisition, the ratio of the aggregate of capital for Common Stock
and surplus to the total capitalization, including surplus will be less than
20%.
Section 2. Voting Rights. Except as otherwise provided in these Amended and
Restated Articles of Incorporation, each share of the 4 1/2% Preferred Stock,
the Series Preferred Stock and the Common Stock shall be equal in voting power
and shall entitle the holder thereof to one vote upon any question presented to
any shareholders' meeting, it being hereby agreed and declared that a majority
in number of shares (including, if and to the extent provided pursuant to
Division D, shares of Preference Stock) regardless of the class to which such
shares may belong is a majority in value or in interest within the meaning of
any statute or law requiring the consent of stockholders holding a majority in
interest or a greater amount in value of stock of the Corporation.
DIVISION F -- GENERAL
PRE-EMPTIVE RIGHTS. The Corporation may issue or sell shares, option rights,
or securities having conversion or option rights for money or otherwise without
first offering them to shareholders of any class or classes.
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REDEMPTION. Any shares of the 4 1/2% Preferred Stock, the Series Preferred
Stock, the Preference Stock and the Common Stock which are redeemed,
repurchased or otherwise reacquired by the Corporation shall, until further
action by the Board of Directors or the Executive Committee of the Board of
Directors, have the status of authorized and unissued shares, without, in the
case of the Series Preferred Stock, designation as to series.
CONVERTIBILITY. Unless otherwise provided in the terms of a series of Series
Preferred Stock or Preference Stock or otherwise in these Amended and Restated
Articles of Incorporation, the shares of each of the 4 1/2% Preferred Stock,
the Series Preferred Stock, the Preference Stock and the Common Stock,
respectively, shall not be convertible into shares of any other class or
classes or into any other securities of the Corporation.
ARTICLE VII. A majority of the directors may amend, alter or repeal the
Bylaws, subject to the power of the shareholders to change such action;
provided, however, that any amendment, alteration or repeal of, or the adoption
of any provision inconsistent with, Sections 3.01, 3.01.1, 3.04, 3.05, or 3.13
of the Bylaws, if by action of the shareholders, shall be only upon the
affirmative vote of the shareholders entitled to cast at least two-thirds of
the votes which all shareholders are entitled to cast, and if by action of the
directors, shall be only upon the approval of two-thirds of the directors.
ARTICLE VIII. These Amended and Restated Articles of Incorporation may be
amended in the manner from time to time prescribed by statute and all rights
conferred upon shareholders herein are granted subject to this reservation;
provided, however, that, notwithstanding the foregoing (and in addition to any
vote that may be required by law, these Amended and Restated Articles of
Incorporation or the Bylaws), the affirmative vote of the shareholders entitled
to cast at least two-thirds of the votes which all shareholders are entitled to
cast shall be required to amend, alter or repeal, or to adopt any provision
inconsistent with, Articles VII or VIII of these Amended and Restated Articles
of Incorporation.
ARTICLE IX. The following provisions of the Business Corporation Law of 1988
shall not be applicable to the Corporation: 15 Pa.C.S. (S) 2538 (relating to
approval of transactions with interested shareholders) and 15 Pa.C.S.
Subchapter E (relating to control transactions).
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EXHIBIT B
PROPOSED AMENDED AND RESTATED ARTICLES OF INCORPORATION OF PP&L RESOURCES, INC.
ARTICLE I.
The name of the Corporation is PP&L Resources, Inc.
ARTICLE II.
The address of the registered office of the Corporation in this Commonwealth
is Two North Ninth Street, Allentown, Lehigh County, Pennsylvania 18101-1179.
ARTICLE III.
The Corporation is incorporated under the provisions of the Business
Corporation Law of 1988.
ARTICLE IV.
The aggregate number of shares which the Corporation shall have the authority
to issue is 400,000,000 shares, divided into 10,000,000 shares of Preferred
Stock, par value $.01 per share, and 390,000,000 shares of Common Stock, par
value $.01 per share.
ARTICLE V.
The designations, preferences, qualifications, limitations, restrictions, and
the special or relative rights in respect of the shares of each class shall be
as follows:
DIVISION A -- PREFERRED STOCK
Section 1. General. To the extent permitted by these Amended and Restated
Articles of Incorporation, the Board of Directors, by majority vote of a
quorum, shall have the authority to issue shares of Preferred Stock from time
to time in one or more classes or series, and to fix by resolution, at the time
of issuance of each of such class or series, the distinctive designations,
terms, relative rights, privileges, qualifications, limitations, options,
conversion rights, preferences, and voting powers, and such prohibitions,
restrictions and qualifications of voting or other rights and powers thereof
except as they are fixed and determined in this Article V. The dividend rate or
rates, dividend payment dates or other terms of a class or series of Preferred
Stock may vary from time to time dependent upon facts ascertainable outside of
these Amended and Restated Articles of Incorporation if the manner in which the
facts will operate to fix or change such terms is set forth in the express
terms of the class or series or upon terms incorporated by reference to an
existing agreement between the Corporation and one or more other parties or to
another document of independent significance or otherwise to the extent
permitted by the Business Corporation Law of 1988.
Section 2. Dividends. The holders of shares of each class or series of
Preferred Stock shall be entitled to receive, when and as declared by the Board
of Directors, out of any funds legally available for the purpose under 15
Pa.C.S. (S) 1551 (relating to distributions to shareholders) or any superseding
provision of law subject to any additional limitations in the express terms of
the class or series, cash dividends at the rate or rates and on the terms which
shall have been fixed by or pursuant to the authority of the Board of Directors
with respect to such class or series and no more, payable at such time or times
as may be fixed by or pursuant to the authority of the Board of Directors. If
and to the extent provided by the express terms of any class or series of
Preferred Stock, the holders of the class or series shall be entitled to
receive such other dividends as may be declared by the Board of Directors.
Section 3. Liquidation of the Corporation. In the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
holders of shares of Preferred Stock shall be entitled to receive from the
assets of the Corporation (whether capital or surplus), an amount per share,
prior to the payment to the holders of shares of Common Stock or of any other
class of stock of the Corporation ranking as to liquidation subordinate to the
Preferred Stock, which shall have been fixed and determined by the Board of
Directors with respect thereto.
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For the purposes of this section, the terms "involuntary liquidation,
dissolution or winding up" shall include, without being limited to, a
liquidation, dissolution or winding up of the Corporation resulting in the
distribution of all of the net proceeds of a sale, lease or conveyance of all
or substantially all of the property or business of the Corporation to any
governmental body including, without limitation, any municipal Corporation or
political subdivision or authority.
Section 4. Conversion Privileges. In the event any class or series of the
Preferred Stock is issued with the privilege of conversion, such stock may be
converted, at the option of the record holder thereof, at any time or from time
to time, as determined by the Board of Directors, in the manner and upon the
terms and conditions stated in the resolution establishing and designating the
class or series and fixing and determining the relative rights and preferences
thereof.
Section 5. Redemption. The Corporation, at its option to be exercised by its
Board of Directors, may redeem the whole or any part of the Preferred Stock or
of any class or series thereof at such time or times as may be fixed by the
Board, at the applicable price for each share, and upon the terms and
conditions which shall have been fixed and determined by the Board with respect
thereto.
Section 6. Voting Rights. Each holder of record of shares of Preferred Stock
shall have full, limited, multiple, fractional, conditional or no voting rights
as shall be stated in the resolution or resolutions of the Board of Directors
providing for the issue of such shares. Unless provided in such resolution or
resolutions, no holder of shares of Preferred Stock shall have cumulative
voting rights.
DIVISION B -- COMMON STOCK
Section 1. Dividends and Shares in Distribution on Common Stock. Subject to
the rights of the holders of the Preferred Stock and subordinate thereto, the
Common Stock alone shall receive all further dividends and shares upon
liquidation, dissolution, winding up or distribution.
Section 2. Voting Rights. At any meeting of the shareholders, each holder of
Common Stock shall be entitled to one vote per share.
ARTICLE VI.
The shareholders of the Corporation shall not have the right to cumulate
their votes for the election of directors of the Corporation.
ARTICLE VII.
The following provisions of the Business Corporation Law of 1988 shall not be
applicable to the Corporation: 15 Pa.C.S. (S) 2538 (relating to approval of
transactions with interested shareholders) and 15 Pa.C.S. Subchapter 25G
(relating to control-share acquisitions).
ARTICLE VIII.
Business Combinations.
Section 1. Definitions. For the purposes of this Article VIII, the following
terms shall have the meanings hereinafter set forth:
(A) "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in the General Rules and Regulations under the
Securities Exchange Act of 1934 as in effect from time to time.
(B) A person shall be a "Beneficial Owner" of any Voting Stock:
(i) which such person or any of its Affiliates or Associates (as
herein defined) beneficially owns, directly or indirectly; or
(ii) which such person or any of its Affiliates or Associates has (A)
the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding,
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except that a person shall not be deemed the Beneficial Owner of any
Voting Stock under this paragraph (B) if the agreement, arrangement or
understanding to vote such Voting Stock (X) arises solely from a
revocable proxy or consent given in response to a proxy or consent
solicitation made in accordance with the applicable rules and
regulations under the Securities and Exchange Act of 1934 as in effect
from time to time, and (Y) is not then reportable on a Schedule 13D
under the Securities and Exchange Act of 1934 as in effect from time to
time (or any comparable or successor report); or
(iii) which is beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
Voting Stock.
(C) "Business Combination" shall mean any of the following:
(i) any merger or consolidation of the Corporation or any Subsidiary
with (A) any Interested Shareholder, or (B) any other Corporation
(whether or not itself an Interested Shareholder) which is, or after
such merger or consolidation would be, an Affiliate of an Interested
Shareholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with
any Interested Shareholder or any Affiliate of any Interested
Shareholder of any assets of the Corporation or any Subsidiary having an
aggregate Fair Market Value of $25,000,000 or more; or
(iii) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of transactions) of any securities of
the Corporation or any Subsidiary to any Interested Shareholder or any
Affiliate of any Interested Shareholder in exchange for cash, securities
or other property (or a combination thereof) having an aggregate Fair
Market Value of $25,000,000 or more; or
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Shareholder or any Affiliate of any Interested Shareholder; or
(v) any reclassification of securities of the Corporation (including
any reverse stock split), or recapitalization of the Corporation,
statutory share exchange, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any other transaction
(whether or not with or into or otherwise involving an Interested
Shareholder), exclusive of any repurchase or redemption of securities of
the Corporation in accordance with or solely in anticipation of the
terms of any mandatory sinking fund or redemption provisions thereof,
which has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary which is
directly or indirectly owned by an Interested Shareholder or any
Affiliate of any Interested Shareholder.
(D) "Disinterested Director" shall mean any member of the Board of
Directors of the Corporation (the "Board") who is unaffiliated with, and
not a nominee of, the Interested Shareholder (as such term is used in the
context of a particular proposed Business Combination) and was a member of
the Board prior to the time that the Interested Shareholder became an
Interested Shareholder and any successor of a Disinterested Director who is
unaffiliated with, and not a nominee of, the Interested Shareholder and is
designated to succeed a Disinterested Director by a majority of
Disinterested Directors then on the Board.
(E) "Fair Market Value" means:
(i) in the case of stock, the highest closing sale price during the
thirty-day period immediately preceding the date in question of a share
of such stock on the Composite Tape for the New York Stock Exchange --
Listed Stocks, or, if such stock is not quoted on the Composite Tape
for the New York Stock Exchange, or, if such stock is not listed on such
exchange, on the principal United States securities exchange registered
under the Securities Exchange Act of 1934 on which such stock is listed,
or, if such stock is not listed on any such Exchange, the highest bid
quotation with respect to a share of such stock during the thirty-day
period preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations Systems ("NASDAQ") or the
NASDAQ National Market System or, if NASDAQ and the NASDAQ National
Market System are not then in use, any other system then in use, or, if
no such quotations are available, the fair market value on the date in
question of a share of such stock as determined by a majority of the
Disinterested Directors in good faith; and
(ii) in the case of property other than cash or stock, the fair market
value of such property on the date in question as determined by a
majority of the Disinterested Directors in good faith.
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(F) "Privately Held Stock" shall mean any class or series of the
Preferred Stock which has not been registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
(G) "Interested Shareholder" shall mean any person (other than the
Corporation, any Subsidiary or any benefit plan for the employees of the
Corporation or any subsidiary) who or which:
(i) is the Beneficial Owner, directly or indirectly, of more than ten
percent of the voting power of the then outstanding Voting Stock; or
(ii) is an Affiliate of the Corporation and at any time within the
two-year period immediately prior to the date in question became the
Beneficial Owner, directly or indirectly, of ten percent or more of the
voting power of the then outstanding Voting Stock, or
(iii) is an assignee of or has otherwise succeeded to any shares of
Voting Stock which were at any time within the two-year period
immediately prior to the date in question beneficially owned by any
Interested Shareholder, if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act of
1933.
For the purpose of determining whether a person is an Interested
Shareholder pursuant to this paragraph (G), the number of shares of Voting
Stock deemed to be outstanding shall include shares deemed owned by such
person through application of paragraph (B) of this Section 1, but shall
not include any other shares of Voting Stock which may be issuable pursuant
to any agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise. An Interested
Shareholder as defined in this paragraph (G) shall not include a person
engaged in business as an underwriter of securities who acquires the shares
directly from the Corporation or any Affiliate or Associate of the
Corporation through such person's participation in good faith in a firm
commitment underwriting registered under the Securities Act of 1933 as in
effect from time to time.
(H) In the event of any Business Combination in which the Corporation
survives, the phrase "consideration other than cash to be received" as used
in Sections (A) and (B) of Section 2 of this Article VIII shall include the
shares of Common Stock and/or the shares of any other class of outstanding
Voting Stock retained by the holders of such shares.
(I) A "person" shall mean any individual, firm, partnership, trust,
Corporation or other entity.
(J) "Subsidiary" means any Corporation of which a majority of any class
of equity security is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of
Interested Shareholder set forth in paragraph (G) of this Section 1, the
term "Subsidiary" shall mean only (1) Pennsylvania Power & Light Company
for so long as the Corporation owns, directly or indirectly, equity
securities entitling it to cast a majority of the votes generally entitled
to be cast in elections of Pennsylvania Power & Light Company directors and
(2) each other corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(K) "Voting Stock" shall mean each share of stock of the Corporation
generally entitled to vote in elections of directors.
A majority of the Disinterested Directors of the Corporation shall have the
power and duty to determine, for the purposes of this Article VIII on the basis
of information known to them after reasonable inquiry, all facts necessary to
determine the applicability of the various provisions of this Article VIII. Any
such determination made in good faith shall be binding and conclusive on all
parties.
Section 2. Unless a Business Combination shall have been approved by the
affirmative vote of either a majority of Disinterested Directors or the holders
of at least two-thirds of the voting power of all shares of Voting Stock,
voting together as a single class, then, in addition to any vote of
shareholders otherwise required by law or these Amended and Restated Articles
of Incorporation, the consummation of any Business Combination shall require
that all of the following conditions shall have been met:
(A) The aggregate amount of the cash and the fair market value as of the
date of the consummation of the Business Combination of consideration other
than cash to be received per share by holders of Common Stock in such
Business Combination shall be at least equal to the highest of the
following:
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid
by the Interested Shareholder for any shares of Common Stock acquired
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by it (A) within the two-year period immediately prior to the first
public announcement of the proposal of the Business Combination (the
"Announcement Date") or (B) in the transaction in which it became an
Interested Shareholder, whichever is highest;
(ii) the fair market value per share of Common Stock on the
Announcement Date or on the date on which the Interested Shareholder
became an Interested Shareholder (such later date is referred to in this
Article VIII as the "Determination Date"), whichever is higher; and
(iii) (if applicable) the price per share equal to the fair market
value per share of Common Stock determined pursuant to paragraph (ii)
above, multiplied by the ratio of (A) the highest per share price
(including any brokerage commissions, transfer taxes and soliciting
dealers' fees) paid by the Interested Shareholder for any shares of
Common Stock acquired by it within the two-year period immediately prior
to the Announcement Date to (B) the fair market value per share of
Common Stock on the first day in such two-year period upon which the
Interested Shareholder acquired any shares of Common Stock.
(B) The aggregate amount of the cash and the fair market value as of the
date of the consummation of the Business Combination of consideration other
than cash to be received per share by holders of shares of any class or
series of outstanding Voting Stock other than Common Stock (and other than
any series or class of Privately Held Voting Stock), shall be at least
equal to the highest of the following (it being intended that the
requirements of this paragraph (B) shall be required to be met with respect
to every such class or series of outstanding Voting Stock, whether or not
the Interested Shareholder has previously acquired any shares of a
particular class or series of Voting Stock):
(i) (if applicable) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid
by the Interested Shareholder for any shares of such class or series of
Voting Stock acquired by it (A) within the two-year period immediately
prior to the Announcement Date, or (B) in the transaction in which it
became an Interested Shareholder, whichever is higher;
(ii) (if applicable) the highest preferential amount per share to
which the holders of shares of such class or series of Voting Stock are
entitled in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation or, if higher, the
voluntary redemption price per share for such class or series;
(iii) the fair market value per share of such class or series of
Voting Stock on the Announcement Date or on the Determination Date,
whichever is higher; and
(iv) (if applicable) the price per share equal to the fair market
value per share of such class or series of Voting Stock determined
pursuant to paragraph (iii) above, multiplied by the ratio of (A) the
highest per share price (including any brokerage commissions, transfer
taxes and soliciting dealers' fees) paid by the Interested Shareholder
for any shares of such class or series of Voting Stock acquired by it
within the two-year period immediately prior to the Announcement Date to
(B) the fair market value per share of such class or series of Voting
Stock on the first day in such two-year period upon which the Interested
Shareholder acquired any shares of such class or series of Voting Stock.
(C) The consideration to be received by holders of a particular class or
series of outstanding Voting Stock (including Common Stock) shall be in
cash or in the same form as the Interested Shareholder has previously paid
for shares of such class or series of Voting Stock. If the Interested
Shareholder has paid for shares of any class or series of Voting Stock with
varying forms of consideration, the form of consideration for such class or
series of Voting Stock shall be either cash or the form used to acquire the
largest number of shares of such class or series of Voting Stock previously
acquired by it.
(D) After such Interested Shareholder has become an Interested
Shareholder and prior to the consummation of such Business Combination
except as approved by a majority of the Disinterested Directors:
(i) There shall have been no failure to declare and pay at the regular
date therefor any full quarterly dividends (whether or not cumulative)
on any outstanding Preferred Stock;
(ii) there shall have been (A) no reduction in the annual rate of
dividends paid on the Common Stock (except as necessary to reflect any
subdivision of the Common Stock) and (B) an increase in such annual rate
of dividends as necessary to reflect any reclassification (including any
reverse stock split), recapitalization, reorganization or any similar
transaction which has the effect of reducing the number of outstanding
shares of the Common Stock, unless the failure so to increase such
annual rate is approved by a majority of the Disinterested Directors;
and
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(iii) such Interested Shareholder shall have not become the beneficial
owner of any additional shares of Voting Stock except as part of the
transaction which results in such Interested Shareholder becoming an
Interested Shareholder.
(E) After such Interested Shareholder has become an Interested
Shareholder, such Interested Shareholder shall not have received the
benefit, directly or indirectly (except proportionately as a shareholder),
of any loans, advances, guarantees, pledges or other financial assistance
or any tax credits or other tax advantages provided by the Corporation,
whether in anticipation of or in connection with such Business Combination
or otherwise.
(F) A proxy or information statement describing the proposed Business
Combination and containing the information specified for proxy or
information statements under the Securities Exchange Act of 1934 and the
rules and regulations thereunder (or any subsequent provisions replacing
such Act, rules or regulations) shall be mailed to shareholders of the
Corporation at least thirty days prior to the consummation of such Business
Combination (whether or not such proxy or information statement is required
to be mailed pursuant to such Act or subsequent provisions).
Section 3. Nothing contained in this Article VIII shall be construed to
relieve any Interested Shareholder from any fiduciary obligation imposed by
law.
ARTICLE IX.
Amendment of Articles. These Amended and Restated Articles of Incorporation
may be amended in the manner from time to time prescribed by statute and all
rights conferred upon shareholders herein are granted subject to this
reservation; provided, however, that, notwithstanding the foregoing (and in
addition to any vote that may be required by law, these Amended and Restated
Articles of Incorporation or the bylaws), the affirmative vote of the
shareholders entitled to cast at least two-thirds of the votes which all
shareholders are entitled to cast shall be required to amend, alter or repeal,
or to adopt any provision inconsistent with, Articles VI, VII, VIII, IX and X
of these Amended and Restated Articles of Incorporation; provided further that
such two-thirds vote shall not be required for any such amendment, alteration
or repeal of, or adoption of any provision inconsistent with, Article VIII
which is recommended to the shareholders by a majority of the Disinterested
Directors (which shall mean all the directors then in office when there is no
Interested Shareholder).
ARTICLE X.
Amendment of Bylaws. Except as otherwise provided in the express terms of any
class or series of Preferred Stock, the bylaws may be amended or repealed, or
new bylaws may be adopted, either (i) by vote of the shareholders at a duly
organized annual or special meeting of shareholders, or (ii) with respect to
those matters that are not by statute committed expressly to the shareholders
and regardless of whether the shareholders have previously adopted or approved
the bylaw being amended or repealed, by vote of a majority of the board of
directors of the corporation in office at any regular or special meeting of
directors; provided, however, that any amendment, alteration or repeal of, or
the adoption of any provision inconsistent with, Sections 3.05(b), 3.16, 3.17,
4.03(a), 4.03(c), 4.04 or 4.05(a) of the bylaws, if by action of the
shareholders, shall be only upon the affirmative vote of the shareholders
entitled to cast at least two-thirds of the votes which all shareholders are
entitled to cast and, if by action of the directors, shall be only upon the
approval of at least two-thirds of the directors of the Corporation in office.
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EXHIBIT C
AMENDED AND RESTATED
DIRECTORS DEFERRED COMPENSATION PLAN
1. Purpose. The purpose of this Directors Deferred Compensation Plan is to
provide certain Directors of the Pennsylvania Power & Light Company an
additional means to increase their incomes after service as a Director, while
at the same time increasing their equity interest in the Company, and to enable
them to meet other important personal and financial needs.
2. Definitions.
(a) "Board of Directors" means the board of directors of the Company.
(b) "Cash Account" means the account of Deferred Cash Compensation
established for each Participant solely as a bookkeeping entry and
described in Paragraph 7.2 of this Plan.
(c) "Cash Compensation" means the cash compensation payable to a
Director, including retainer, meeting fees and other fees payable for
service as Director as requested by the Company, minus the Mandatory
Deferral Amount.
(d) "Common Stock" means the Common Stock, without par value, of the
Company.
(e) "Company" means Pennsylvania Power & Light Company.
(f) "Compensation" means the total compensation payable to a Director,
including retainer, meeting fees and other fees payable for service as
Director.
(g) "Deferred Cash Compensation" means the Cash Compensation of a
Participant deferred under the terms of this Plan.
(h) "Deferred Savings Plan" means the Pennsylvania Power & Light Company
Deferred Savings Plan for Managers Compensation Plan Employees.
(i) "Director" means an individual elected to the Board of Directors who
is not an employee of the Company.
(j) "EBPB" means the Employee Benefit Plan Board, the members of which
are appointed by the Board of Directors of the Company.
(k) "Fair Market Value" on any date means the mean of the high and the
low sale prices of Common Stock on the New York Stock Exchange composite
tape on such date if such date is a day on which the common stock actually
trades or otherwise on the next preceding date on which the common stock
trades. If, as of any valuation date, the Common Stock is not traded on the
New York Stock Exchange, valuations shall be based on the mean of the high
and low sale prices on the principal national securities exchange on which
the Common Stock is then traded or, if the Common Stock is not traded on
any national securities exchange, on the mean of the high and low bid
prices of the Common Stock in the over-the-counter market.
(l) "Mandatory Deferral Amount" means the lesser of (i) that portion of
the retainer fee payable to the Participant in respect of the calendar year
which exceeds the retainer fee payable to Directors for 1994, or (ii) one-
third of the total amount of the retainer fee payable to the Participant in
respect of a calendar year.
(m) "Participant" means an eligible Director of the Company, any or all
of whose Compensation is deferred under this Plan.
(n) "Plan" means this Directors Deferred Compensation Plan as set forth
herein and as hereafter amended from time to time.
(o) "Stock Account" means the account of Deferred Compensation
established for each Participant solely as a bookkeeping entry and
described in Paragraph 7.1 of this Plan.
(p) "Stock Unit" means a unit equal in value from time-to-time to the
Fair Market Value of one share of Common Stock.
(q) "Total Amount Payable" means the amount credited to a Participant's
Cash Account and the Participant's Stock Account.
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The masculine pronoun shall be deemed to include the feminine and the
singular to include the plural unless a different meaning is plainly required
by the context.
3. Effective Date. The Plan, as hereby amended and restated to provide for a
Stock Account, shall become effective as of July 1, 1995, provided that prior
to such date the Plan as amended and restated shall have been approved by the
shareowners of the Company.
4. Eligibility. All Directors of the Company who are or become duly elected
Directors shall be eligible to participate in this Plan as of the effective
date of first election as a Director.
5. Mandatory Deferral.
(a) A Participant's Mandatory Deferral Amount shall automatically be
deferred to such Participant's Stock Account on the date such amount would
otherwise be payable to such Participant. Mandatory Deferral Amounts shall
be subject to the rules set forth in this Plan, and each Participant shall
have the right to receive payments of Common Stock on account of Mandatory
Deferral Amounts under the circumstances hereinafter set forth.
(b) A Participant may not convert any portion of such Participant's Stock
Account attributable to the Mandatory Deferral Amount or dividends thereon,
as described in Paragraph 7.1(c), to the Participant's Cash Account for a
period of 3 years from the date such Mandatory Deferral Amount was credited
to the Participant's Stock Account.
6. Deferred Cash Compensation.
(a) Participant shall have the right to elect to have all, or a portion,
of his Cash Compensation deferred hereunder, either to his Stock Account or
his Cash Account and may change the allocation between such accounts of any
such Cash Compensation so deferred. The amount of Cash Compensation
credited to either the Stock Account or the Cash Account will be limited to
the Cash Compensation earned after the date of the election; provided,
however, that no election to defer Cash Compensation to the Stock Account
or to change the allocation of deferred amounts between the Stock Account
and the Cash Account shall be effective until the expiration of six months
from the date that the election was made by the Participant.
(b) Any election to defer future Cash Compensation for the first calendar
year that Participant is eligible to participate in this Plan shall be made
by the Participant in writing by the thirtieth (30th) day following the
date on which the Participant is first eligible to participate by filing
with the EBPB the appropriate election form. Any such election shall be
limited to Cash Compensation earned after the date of the election.
(c) Any election to defer or change the amount of Cash Compensation to be
deferred for any subsequent calendar year after the first calendar year of
eligibility may be made by Participant not later than December 31 of the
year preceding such calendar year by filing with the EBPB an election form;
provided, however, that an election once made will be presumed to continue
with respect to subsequent years unless changed or revoked by Participant.
Participant may, prior to December 31, 1994, elect to defer some or all of
his Cash Compensation otherwise payable after July 1, 1995 to his Stock
Account. Any such election shall be subject to the approval of shareowners
contemplated by Paragraph 3. In the event shareowners do not approve the
Plan as hereby amended and restated, Participant's Cash Compensation shall
not be deferred or shall be deferred to his Cash Account, as and to the
extent Participant shall specify prior to December 31, 1994.
(d) Participant may revoke his election to defer Cash Compensation at any
time by so notifying the EBPB in writing not later than December 31 of the
year preceding the year for which the revocation will be effective;
provided, however, that the revocation of an election to defer Cash
Compensation into the Stock Account is made at least six months prior to
the date that such amount was to be credited to the Stock Account. For any
subsequent calendar year, Participant may resume his election to defer if
he files with the EBPB an election form not later than December 31 of the
year preceding such subsequent calendar year; provided, however, that the
election to defer Cash Contribution to the Stock Account shall not be
effective until the expiration of six months from the date that the
election was made by the Participant.
(e) The deferral of Cash Compensation shall be made in amounts elected
for the calendar year in which such Cash Compensation is to be earned,
unless the election specifies otherwise.
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(f) Any election will be effective when actually received by the
Company's Payroll Section; provided, however, that no election to defer
Cash Contribution to the Stock Account shall be effective until the
expiration of six months from the date of such Participant's election.
(g) An election, once made, will be irrevocable as to Cash Compensation
already deferred.
7.1 Stock Account. The Company shall maintain a Stock Account in the name of
each Participant. Such Stock Account shall be maintained as follows:
(a) The Company shall credit to Participant's Stock Account the number of
Stock Units equal to the Mandatory Deferral Amount on the date such amount
would otherwise be payable to such Participant, divided by the Fair Market
Value of one share of Common Stock on such date.
(b) The Company shall credit to Participant's Stock Account, after the
expiration of six months from the date of such Participant's election, the
number of Stock Units equal to the amount of Deferred Cash Compensation
elected by Participant to be credited to his Stock Account, divided by the
Fair Market Value of one share of Common Stock on such date.
(c) As of each date a dividend or other distribution is paid or made on
Common Stock to holders of record on and after the date of deferral
hereunder, the Participant's Stock Account shall be credited with a number
of additional Stock Units equal to the product of: (i) the amount of such
dividend or distribution paid with respect to one share of Common Stock,
multiplied by (ii) the number of Stock Units held by the Participant,
divided by (iii) the Fair Market Value of one share of Common Stock on such
date. If an in-kind dividend or distribution is made on Common Stock, the
Fair Market Value of such in-kind dividend or distribution paid with
respect to one share of Common Stock will be equal to the amount of the
dividend or distribution for purposes of subparagraph (i) of this Section.
(d) Subject to the limitations of Paragraph 5(b), a Participant may elect
to convert all or any portion of his Stock Account into interests in such
Participant's Cash Account by filing with the EBPB an election form. If
such an election is made, on the later of the date specified in the
election form or the expiration of six months from the date of the
election, such Participant's Cash Account shall be credited with an amount
equal to the number of Stock Units being converted, multiplied by the Fair
Market Value of one share of Common Stock on the date such amount is
credited. Alternatively, an election to effect such a conversion may be
filed with the EBPB during the period beginning on the third business day
following the date of release of quarterly or annual financial results and
ending on the twelfth business day following such date; provided that such
an election is at least six months after the date of the previous transfer
election by the Participant between the Stock Account and Cash Account.
7.2 Cash Account. The Company shall maintain a Cash Account in the name of
each Participant. Such Cash Account shall be maintained as follows:
(a) The Company shall credit to Participant's Cash Account as of the same
day on which the last Cash Compensation for the month would have been paid
to said Participant an amount equal to the Deferred Cash Compensation
elected by Participant to be credited to his Cash Account.
(b) Participant's Cash Account shall be credited with interest monthly
based on a rate of interest substantially equivalent to that applied on
account balances in the Blended Interest Rate Fund in the Deferred Savings
Plan or such other comparable fund as may be selected by the EBPB.
(c) A Participant may elect to convert all or any portion of his Cash
Account into interests in such Participant's Stock Account by filing with
the EBPB an election form. If such an election is made, on the later of the
date specified in the election or the expiration of six months from the
date of such Participant's election, such Participant's Stock Account shall
be credited with a number of Stock Units equal to the Cash Account amount
to be converted, divided by the Fair Market Value of one share of Common
Stock on such date. Alternatively, an election to effect such a conversion
may be filed with the EBPB during the period beginning on the third
business day following the date of release of quarterly or annual financial
results and ending on the twelfth business day following such date;
provided that such an election is at least six months after the date of the
previous transfer election by the Participant between the Stock Account and
Cash Account.
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8. Payment of Accounts.
(a) The Total Amount Payable shall be payable at the election of the
Participant within thirty (30) days after:
(i) Participant ceases serving on the Board of Directors; or
(ii) the later of:
(A) the Participant's cessation of service on the Board of
Directors or
(B) the age elected by the Participant, provided such age is not
greater than 72.
Such election must be made before the applicable Cash Compensation is
deferred and may not be changed with respect to Cash Compensation once it has
been deferred. The Participant may defer commencement of distribution until
January of the next calendar year after such event occurs. If the Participant
has made no election, payments will commence within thirty (30) days after a
Participant ceases to be a Director.
(b) (i) The Total Amount Payable shall be paid to the Participant in a
single sum or, if elected by the Participant, in annual installments up to
a maximum of ten (10) years. Such election must be made before the
applicable Cash Compensation is deferred and may not be changed with
respect to Cash Compensation once it has been deferred.
(ii) Payments in respect of the Stock Account shall be made in Common
Stock and payments in respect of the Cash Account shall be made in cash. A
Participant shall receive a number of shares of Common Stock equal to the
number of Stock Units in his Stock Account.
(iii) All annual installments shall, except for the final payment, be not
less than $5,000. To the extent necessary, the number of annual
installments may be reduced to ensure that annual installments are at least
$5,000.
(iv) The amount of each annual installment shall be determined by
dividing the Total Amount Payable less any payments already made to
Participant by the remaining number of annual installments to be made
(i.e., a 10-year payout shall pay 1/10 of the Total Amount Payable as the
first installment, 1/9 as the second annual installment, etc.).
(c) (i) If Participant dies while a Director or before all installments
have been paid under Paragraph 8(b), payments shall be made to
Participant's estate within 30 days after Participant's death.
(ii) Payments made to Participant's estate will be made in a single sum.
(d) As long as there is a balance in Participant's Cash Account, the
balance shall be credited with interest pursuant to Paragraph 7.2(b). For
any installment or other payment from the Cash Account, interest shall
accrue up to the last day of the month prior to that payment to Participant
or his estate. As long as there is a balance in Participant's Stock
Account, the remaining balance shall be credited with dividend amounts
pursuant to Paragraph 7.1(c).
(e) The EBPB may determine, in its sole discretion, that the Total Amount
Payable shall be paid to Participant or his estate in different amounts or
at different times than provided under this Plan if, in the opinion of the
EBPB, it would be necessary as the result of a personal emergency or
hardship which results in a severe and immediate financial burden to the
Participant, in which case payment shall be made only to the extent
necessary to alleviate the Participant's hardship. Any determination by
EBPB to change the amount or timing of a Participant's distribution shall
not, however, result in the Participant receiving distributions in lesser
amounts or over a longer period of time.
9. Administration. The EBPB shall have the discretionary authority and final
right to interpret, construe and make benefit determinations (including
eligibility and amount) under the Plan. The decisions of EBPB are final and
conclusive for all purposes.
10. Miscellaneous.
(a) If the person to receive payment is deemed by the EBPB or is adjudged
to be legally incompetent, the payments shall be made to the duly appointed
guardian or committee of such incompetent, or they may be made to such
person or persons whom the EBPB believes are caring for or supporting the
incompetent.
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(b) Nothing in this Plan shall confer any right on the Participant to
continue as a Director.
(c) The expenses of the administration hereunder shall be borne by the
Company.
(d) This Plan shall be construed, administered and enforced according to
the laws of the Commonwealth of Pennsylvania.
(e) All payments from this Plan shall be made from the general assets of
the Company. This Plan shall not require the Company to set aside,
segregate, earmark, pay into trust or special account or otherwise restrict
the use of its assets in the operation of the business. Participants shall
have no greater right or status than as an unsecured general creditor of
the Company with respect to any amounts owed to Participant hereunder.
(f) The Plan shall be unfunded.
(g) All payments to persons entitled to benefits hereunder shall be made
to such persons and shall not be grantable, transferable, pledged or
otherwise assignable in anticipation of payment thereof, or subject to
attachment, alienation, garnishment, levy, execution or other legal or
equitable process in whole or in part, by the voluntary or involuntary acts
of any such persons, or by operation of law, and shall not be liable or
taken for any obligation of such person. The Company will observe the terms
of the Plan unless and until ordered to do otherwise by a state or Federal
court. As a condition of participation, a Participant agrees to hold the
Company harmless from any claim that arises out of the Company's obeying
any such order whether such order effects a judgment of such court or is
issued to enforce a judgment or order of another court.
(h) Participant's benefits under group life insurance, and other benefit
plans as may be maintained by Company for Directors will be provided based
on all Compensation to Participant.
(i) This Plan is intended to be administered in accordance with Rule 16b-
3 of the Securities Exchange Act of 1934 and therefore, the provisions (i)
that require a Participant's election to be made at least six months before
an amount is credited to a Participant's account or (ii) that require that
at least six months elapse between elections to transfer between the Cash
Account and the Stock Account shall cease to be effective when such
provisions are no longer required by Rule 16b-3 or shall be deemed to be
amended to conform to amendments adopted by the Securities and Exchange
Commission to such Rule.
11. Termination or Amendment.
(a) The Board of Directors may, in its discretion, terminate or amend
this Plan from time to time. In addition, the EBPB may make such amendments
to the Plan as it deems necessary or desirable except those amendments
which substantially increase the cost of the Plan to the Company or
significantly alter the benefit design or eligibility requirements of the
Plan. No termination or amendment shall (without Participant's consent)
alter: a) Participant's right to payments of amounts previously credited to
Participant's Accounts, which amounts shall continue to earn interest or
accumulate dividends as provided for herein as though termination or
amendment had not been effected, or b) the amount or times of payment of
such amounts which have commenced prior to the effective date of such
termination or amendment; provided, however, that no such consent may
accelerate the Participant's payments. Notwithstanding the foregoing, if
the Company is liquidated, the EBPB shall have the right to determine the
Total Amount Payable under Paragraph 8 to Participant, and to cause the
amount so determined to be paid in one or more installments or upon such
other terms and conditions and at such other time (not beyond the time
provided for herein) as the EBPB determines to be just and equitable. Any
determinations made pursuant to the preceding sentence shall be consistent
as to all Participants.
(b) Notwithstanding subparagraph (a) of this Section, this Plan is
intended to be administered in accordance with Rule 16b-3 of the Securities
Exchange Act of 1934 and therefore, material plan amendments will be
required to be approved by shareowners to the extent shareowner approval is
required as a condition to the exemption under Rule 16b-3.
12. Parent Company. If a publicly held parent company of the Company (a
"Parent") is created, the Parent by action of its Board of Directors may assume
this Plan. In such event, all references to Company will be to the Parent and
all references to the Board of Directors and Directors will be to the Board of
Directors and the Directors of the Parent. All references to Common Stock will
be deemed to be Common Stock of the Parent.
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EXHIBIT D
AMENDED AND RESTATED
INCENTIVE COMPENSATION PLAN
Section 1. Purpose of the Plan.
The purpose of the Incentive Compensation Plan (the "Plan") is to provide a
method whereby officers and other key employees of Pennsylvania Power & Light
Company (the "Company") may be awarded additional remuneration for performance
in meeting specific Company objectives in a form that increases their ownership
interest in the Company and encourages them to remain in the employ of the
Company.
Section 2. Definitions.
The following definitions are applicable to the Plan:
A. "Award" means, individually or collectively, Options or Restricted
Stock granted hereunder.
B. "Board" means the Board of Directors of the Company.
C. "Code" means the Internal Revenue Code of 1986, as may be amended from
time to time. Reference in the Plan to any section of the Code shall be
deemed to include any amendments or successor provisions to such section
and any regulations promulgated thereunder.
D. "Committee" means not less than three members of the Board who are not
eligible to receive Awards, have been designated by the Board to act as the
Committee and qualify as disinterested directors under the Securities
Exchange Act of 1934.
E. "Common Stock" means the Common Stock of the Company.
F. "Date of Grant" means the date on which the granting of an Award is
authorized by the Committee or such later date as may be specified by the
Committee in such authorization.
G. "Disability" or "Disabled" means the inability of the Participant to
perform each and every duty pertaining to the Participant's regular
occupation by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than six
months.
H. "Early Retirement" means Retirement prior to the Normal Retirement
Date.
I. "Early Retirement Date" means the Early Retirement Date as that term
is defined in the Company's retirement plan.
J. "Eligible Employee" means any person employed by the Company, on a
regularly scheduled basis during any portion of a period for which an Award
is made and who satisfies all of the requirements of Section 6.
K. "Fair Market Value" means the average of the high and low sale prices
of the Common Stock in regular way New York Stock Exchange Composite
Transactions on the day immediately preceding the date as of which Fair
Market Value is being determined or, if no Common Stock is traded on the
date immediately preceding the date as of which Fair Market Value is being
determined, Fair Market Value shall be the average of the high and low sale
prices of the Common Stock in regular way New York Stock Exchange Composite
Transactions on the next preceding day on which the Common Stock is traded.
L. "Incentive Stock Option" means an incentive stock option within the
meaning of Section 422A of the Code.
M. "Late Retirement Date" means the Late Retirement Date as that term is
defined in the Company's retirement plan.
N. "Normal Retirement Date" means the Normal Retirement Date as that term
is defined in the Company's retirement plan.
O. "Option" or "Stock Option" means either an Incentive Stock Option or a
nonqualified stock option granted under Section 8.
P. "Option Period" or "Option Periods" means the period or periods during
which an Option is exercisable as described in Section 8F.
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Q. "Participant" means an Eligible Employee who has been granted an Award
under the Plan.
R. "Plan" means the Pennsylvania Power & Light Company Incentive
Compensation Plan.
S. "Restricted Stock" means Common Stock awarded to a Participant under
Section 7.
T. "Restriction Period" means that period of time determined by the
Committee pursuant to Section 7B that a Restricted Stock Award is subject
to restriction.
U. "Retirement" means retirement (whether on the Early Retirement Date,
the Normal Retirement Date or the Late Retirement Date) pursuant to the
Company's retirement plan or retirement under the Supplemental Executive
Retirement Plan.
V. "Retirement Date" means the Early Retirement Date, the Normal
Retirement Date, or the Late Retirement Date of a Participant, as the case
may be or the date Participant commences benefits under the Supplemental
Executive Retirement Plan.
W. "Termination" means resignation or discharge from employment with the
Company except in the event of death, Disability or Retirement.
Section 3. Effective Date and Duration.
Upon the approval of the Plan by the holders of a majority of the shares of 4
1/2% Preferred Stock, Series Preferred Stock, Preference Stock and Common Stock
present (either in person or by proxy) at the 1987 Annual Meeting of
shareowners, the Plan became effective on January 1, 1987. The Plan as amended
and restated shall become effective on January 1, 1995 upon the approval of the
amended and restated Plan by the holders of a majority of the shares of 4 1/2%
Preferred Stock, Series Preferred Stock, Preference Stock and Common Stock
present (either in person or by proxy) at the 1995 Annual Meeting of
shareowners. Awards of Incentive Stock Options may be made under the Plan for a
period of ten years after April 26, 1995. The Plan shall continue in effect
until all matters relating to the payment of Awards and the administration of
the Plan have been settled.
Section 4. Administration of the Plan.
The Plan shall be administered by the Committee. The Committee shall have
full power and authority to make Awards to Eligible Employees pursuant to the
provisions of the Plan, to interpret the provisions of the Plan and to
supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the Plan
shall be final, conclusive and binding upon all parties affected thereby.
Section 5. Grant of Awards and Limitation of Number of Shares Awarded.
The Committee may, from time to time, grant Awards to one or more Eligible
Employees, provided that: (i) subject to any adjustment pursuant to Section
10G, the aggregate number of shares of Common Stock subject to Awards
(including Incentive Stock Options) may not exceed 100,000 shares annually;
(ii) to the extent that an Award lapses or is forfeited or the rights of the
Participant to whom an Award was granted terminate, any shares of Common Stock
subject to such Award shall again be available for the grant of an Award under
the Plan; and (iii) shares delivered by the Company under the Plan may be
authorized and unissued Common Stock, Common Stock held in the treasury of the
Company or Common Stock purchased on the open market (including private
purchases) in accordance with applicable securities laws. In determining the
size of the Awards, the Committee shall assess the performance of the Eligible
Employees against criteria to be established by the Committee from time to time
based on corporate performance, including shareowner and customer-related
factors, and shall take into account the Participant's responsibility level,
potential, cash compensation level and the Fair Market Value of the Common
Stock at the time of Awards, as well as such other matters as the Committee
deems appropriate.
Section 6. Eligibility.
Officers and other key employees of the Company (including officers or
employees who are members of the Board, but excluding directors who are not
officers or employees) who, in the opinion of the Committee, are mainly
responsible for the continued growth, development and financial success of the
Company shall be eligible to be granted Awards under the Plan. Subject to the
provisions of the Plan, the Committee shall from time to time select from such
eligible persons those to whom Awards shall be granted and determine the amount
of such Award. No officer or employee of the Company shall have any right to be
granted an Award under the Plan.
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Section 7. Restricted Stock.
A. Grants of Restricted Stock. An Award of Restricted Stock shall be granted
in the form of shares of Common Stock, restricted as provided in this Section
7. The Restricted Stock shall be issued without the payment of consideration by
the Participant. The certificates for the Restricted Stock shall be issued in
the name of the Participant to whom the Award is made, shall be retained by the
Company on behalf of the Participant (together with a stock power endorsed in
blank) and shall bear a restrictive legend prohibiting the sale, transfer,
pledge or hypothecation of the Restricted Stock until the expiration of the
Restriction Period.
The Committee may also impose such other restrictions and conditions on the
Restricted Stock as it deems appropriate.
Upon the issuance to the Participant of Restricted Stock, the Participant
shall have the right to vote the Restricted Stock and receive cash dividends
distributable with respect to such Stock.
Upon completion of the Restriction Period, all restrictions on the Award will
expire and new certificates representing the Restricted Stock will be issued
without the restrictive legend described in this Section 7. As a condition
precedent to the receipt of new certificates, the Participant (or the
Participant's designated beneficiary or personal representative) will agree to
make payment to the Company in the amount of any Federal, state or local taxes,
payable by the Participant, which are required to be withheld by the Company
with respect to the Award.
B. Restriction Period. At the time a Restricted Stock Award is granted, the
Committee shall establish a Restriction Period applicable to such Award which
shall be not less than three years and not more than ten years from the Date of
Grant, subject to the provisions of Section 7C. Each Restricted Stock Award may
have a different Restriction Period.
Notwithstanding the other provisions of this Section 7: (i) in the event of a
public tender offer for all or any portion of the Common Stock or in the event
that any proposal to merge or consolidate the Company with another company is
submitted to the shareowners of the Company for a vote, the Committee in its
sole discretion may change or eliminate the Restriction Period and; (ii) the
Committee is authorized in its sole discretion to accelerate the time at which
any or all of the restrictions on all or any part of a Restricted Stock Award
shall lapse or to remove any or all of such restrictions whenever the Committee
may decide that changes in tax or other laws or other circumstances arising
after the granting of a Restricted Stock Award make such action appropriate;
provided, however, that no acceleration or removal of restrictions shall result
in payout of stock to the Participant less than six months after the Date of
Grant except pursuant to Section 7C below upon the termination, death,
Disability or Retirement of the Participant.
C. Forfeiture or Payout of Award. Restricted Stock Awards are subject to
forfeiture or payout (i.e., removal of restrictions) as follows:
(i) Termination -- the Restricted Stock Award will be completely
forfeited.
(ii) Retirement -- payout of the Restricted Stock Award will be prorated
for service during the restriction period.
(iii) Early Retirement -- payout of the Restricted Stock Award will be
prorated for service during the restriction period.
(iv) Disability -- payout of the Restricted Stock Award will be prorated
as if the Participant had maintained active employment until the Normal
Retirement Date.
(v) Death -- payout of the Restricted Stock Award will be prorated as if
the Participant had maintained active employment until the Normal
Retirement Date.
In any instance where payout of a Restricted Stock Award is to be prorated,
the Committee may choose to provide the Participant (or the Participant's
estate) with the entire Award rather than the prorated portion thereof.
Any Restricted Stock which is forfeited will be transferred to the Company.
D. Section 83(b) Election. As a condition of receiving Restricted Stock, a
Participant shall agree in writing to notify the Company within 30 days of the
Date of Grant whether or not the Participant has made an election under Section
83(b) of the Code to report the value of the Restricted Stock as income on the
Date of Grant.
D-3
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Section 8. Stock Options.
A. Grant of Option. One or more Options may be granted to any Eligible
Employee.
B. Notification of the Grant of an Option. Each Option granted under the Plan
shall be evidenced by a Notification of the Grant of an Option
("Notification"). The Notification shall contain such provisions determined by
the Committee, including, without limitation, provisions to qualify Incentive
Stock Options as such under Section 422A of the Code; provided, however, that
each Notification must include the following terms and conditions: (i) that the
Options are exercisable either in whole or in part, with a partial exercise not
affecting the exercisability of the balance of the Option; (ii) every share of
Common Stock purchased through the exercise of an Option shall be paid for in
full at the time of the exercise; (iii) each Option shall cease to be
exercisable, as to any share of Common Stock, upon the first to occur of (a)
the Participant's purchase of the Common Stock to which the Option relates; or
(b) the lapse of the Option; (iv) Options shall not be transferable by the
Participant except by will or the laws of descent and distribution and shall be
exercisable during the Participant's lifetime only by the Participant or by the
Participant's guardian or legal representative; and (v) notwithstanding any
other provision, in the event of a public tender for all or any portion of the
Common Stock or in the event that any proposal to merge or consolidate the
Company with another company is submitted to the shareowners of the Company for
a vote, the Committee, in its sole discretion, may declare any previously
granted Option to be immediately exercisable.
C. Exercise of an Option. A Participant shall exercise an Option by executing
and delivering to the Company an "Election to Exercise an Option." The Election
to Exercise an Option shall be in such form and shall contain such provisions
consistent with the terms of this Plan and the Notification with respect to
such Option as determined by the Committee, including, without limitation,
provisions to qualify Incentive Stock Options as such under Section 422A of the
Code.
D. Option Price. The Option price per share of Common Stock shall be set
forth in the Notification, but shall not be less than 100% of the Fair Market
Value as of the Date of Grant.
E. Form of Payment. At the time of the exercise of the Option, the Option
price shall be payable in cash in United States dollars or in other shares of
Common Stock or in a combination of cash and other shares of Common Stock. When
Common Stock is used in full or partial payment of the Option price, it shall
be valued at the Fair Market Value as of the date the Option is exercised.
F. Other Terms and Conditions. The Option shall become exercisable in such
manner and within such Option Period or Periods, not to exceed ten years from
its Date of Grant, as set forth in the Notification upon payment in full.
Except as otherwise provided in this Plan or in the Notification, any Option
may be exercised in whole or in part at any time more than six months after the
Date of Grant.
G. Lapse of Option. An Option will lapse upon the first to occur of any of
the following circumstances: (i) ten years from the Date of Grant; (ii) on the
90th day following the Participant's Retirement Date; (iii) at the time of a
Participant's Termination; or (iv) at the expiration of the Option Period set
forth in the Notification. However, if the Participant dies within the Option
Period and prior to the lapse of the Option, the Option shall lapse unless it
is exercised within the Option Period or one year from the date of the
Participant's death, whichever is earlier, by the Participant's legal
representative or representatives or by the person or persons entitled to do so
under the Participant's will or, if the Participant shall fail to make
testamentary disposition of such Option or shall die intestate, by the person
or persons entitled to receive said Option under the applicable laws of descent
and distribution.
H. Rights as a Shareowner. A Participant or a transferee of a Participant
shall have no rights as a shareowner with respect to any shares of Common Stock
covered by an Option until the date of the issuance of a certificate for such
shares of Common Stock. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date such certificate
is issued, except as provided in Section 10G.
I. Modification, Extension and Renewal of Options. Subject to the terms and
conditions and within the limitations of the Plan, the Committee may modify,
extend or renew outstanding Options granted under the Plan, or accept the
exchange of outstanding Options (to the extent not theretofore exercised) for
the granting of new Options in substitution therefor. Notwithstanding the
foregoing, no modification of an Option shall, without the consent of the
Participant, alter or adversely affect the rights or obligations of a
Participant under any Option theretofore granted under the Plan.
D-4
<PAGE>
J. Early Disposition of Common Stock. If a Participant shall dispose of any
shares of Common Stock purchased pursuant to an Incentive Stock Option within
one year from the date the shares were acquired or within two years from the
Date of Grant of the Option under which such shares of Common Stock were
purchased, then, to provide the Company with the opportunity to claim the
benefit of any income tax deduction which may be available to it under the
circumstances, the Participant shall within ten days of such disposition notify
the Company of the dates of acquisition and disposition of such shares of
Common Stock, the number of shares so disposed and the consideration, if any,
received therefor.
K. Individual Dollar Limitations. In the case of an Incentive Stock Option,
the aggregate fair market value (determined at the time such Option is granted)
of the Common Stock with respect to which an Incentive Stock Option is
exercisable for the first time by an Eligible Employee during any calendar year
(whether under this Plan or another plan or arrangement of the Company or any
of its subsidiaries) shall not exceed $100,000 (or such other limit as may be
in effect under the Code on the date of exercise).
L. No Obligation to Exercise Option. The granting of an Option shall impose
no obligation on the Participant to exercise such Option.
Section 9. Amendment of the Plan.
The Board may at any time and from time to time alter, amend, suspend or
terminate the Plan in whole or in part, except: (i) no such action may be taken
without shareowner approval which materially increases the benefits accruing to
Participants pursuant to the Plan, increases the number of shares of Common
Stock which may be issued pursuant to the Plan (except as provided in Section
10G) or materially modifies the requirements as to eligibility for
participation in the Plan; and (ii) no such action may be taken without the
consent of the Participant to whom any Award shall theretofore have been
granted, which adversely affects the rights of such Participant concerning such
Award, except as such termination or amendment of the Plan is required by
statute, or rules and regulations promulgated thereunder.
Section 10. Miscellaneous Provisions.
A. Nontransferability. No benefit provided under the Plan shall be subject to
alienation or assignment by a Participant (or by any person entitled to such
benefit pursuant to the terms of the Plan) or subject to attachment or other
legal process of whatever nature. Any attempted alienation, assignment or
attachment shall be void and of no effect. Payment shall be made only to the
Participant entitled to receive the same or to the Participant's authorized
legal representative. Deposit of any sum in any financial institution to the
credit of any Participant (or of a person entitled to such sum pursuant to the
terms of the Plan) shall constitute payment to that Participant (or such
person). The Company will observe the terms of the Plan unless and until
ordered to do otherwise by a state or Federal court. As a condition of
participation, a Participant agrees to hold the Company harmless from any claim
that arises out of the Company's obeying any such order whether such order
effects a judgment of such court or is issued to enforce a judgment or order of
another court.
B. No Employment Right. Neither this Plan nor any action taken hereunder
shall be construed as giving any right to be retained as an employee of the
Company.
C. Tax Withholding. Participants may be required to pay to the Company the
amount of any Federal, state or local taxes which the Company is required to
withhold with respect to an Award. At the request of a Participant, or as
required by law, such sums as may be required for the payment of any estimated
or accrued income tax liability may be withheld by the Company and paid over to
the governmental entity entitled to receive the same. The Committee, in its
sole discretion, may permit a Participant to satisfy all or part of such
Participant's withholding tax obligation incident to the vesting of Restricted
Stock by having the Company withhold a portion of the shares of Restricted
Stock that otherwise would be issued to the Participant. Such shares shall be
valued at their Fair Market Value on the date when taxes otherwise would be
withheld in cash. The payment of withholding taxes by surrendering shares to
the Company, if permitted by the Committee, shall be subject to such
restrictions as the Committee may impose, including any restrictions required
by the rules of the Securities and Exchange Commission.
D. Government and Other Regulations. The obligation of the Company to make
payment of Awards shall be subject to all applicable laws, rules and
regulations, and to such approvals by any government agencies as may be
required.
D-5
<PAGE>
E. Indemnification. Each person who is or at any time serves as a member of
the Board or the Committee shall be indemnified and held harmless by the
Company against and from: (i) any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit or proceeding to which such person may
be a party or in which such person may be involved by reason of any action or
failure to act under the Plan; and (ii) any and all amounts paid by such person
in satisfaction of judgment in any such action, suit or proceeding relating to
the Plan. Each person covered by this indemnification shall give the Company an
opportunity, at its own expense, to handle and defend the same before such
person undertakes to handle and defend it on such person's own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights
of indemnification to which such persons may be entitled under the Bylaws of
the Company, as a matter of law, or otherwise, or any power that the Company
may have to indemnify such person or hold such person harmless.
F. Reliance on Reports. Each member of the Board and the Committee shall be
fully justified in relying or acting in good faith upon any report made by the
independent public accountants of, or counsel for, the Company and upon any
other information furnished in connection with the Plan. In no event shall any
person who is or shall have been a member of the Board or the Committee be
liable for any determination made or other action taken or any omission to act
in reliance upon any such report or information or for any action taken,
including the furnishing of information, or failure to act, if in good faith.
G. Changes in Capital Structure. In the event of any change in the
outstanding shares of Common Stock by reason of any stock dividend or split,
recapitalization, combination or exchange of shares or other similar changes in
the Common Stock, appropriate adjustments shall be made in the shares of
Restricted Stock theretofore awarded to the Participants, the shares of Common
Stock subject to outstanding and unexercised Options and the aggregate number
of shares of Common Stock which may be awarded pursuant to the Plan. Such
adjustments shall be conclusive and binding for all purposes. Additional shares
of Restricted Stock issued to a Participant as the result of any such change
shall bear the same restrictions as the shares of Common Stock to which they
relate.
H. Company Successors. In the event the Company becomes a party to a merger,
consolidation, sale of substantially all of its assets or any other corporate
reorganization in which the Company will not be the surviving corporation or in
which the holders of the Common Stock will receive securities of another
corporation, then such other corporation shall assume the rights and
obligations of the Company under this Plan.
I. Governing Law. All matters relating to the Plan or to Awards granted
hereunder shall be governed by the laws of the Commonwealth of Pennsylvania
without regard to the principles of conflict of laws.
J. Relationship to Other Benefits. The value of Awards hereunder and
dividends paid on the Common Stock during the Restriction Period, will be
considered earnings for purposes of the Company's Supplemental Executive
Retirement Plan and Executive Retirement Security Plan to the extent provided
for therein. Otherwise, Awards under the Plan shall not be taken into account
in determining any benefits under any pension, retirement, profit sharing,
disability or group insurance plan of the Company except as may be required by
Federal tax law and regulation or to meet other applicable legal requirements.
K. Expenses. The expenses of administering the Plan shall be borne by the
Company.
L. Titles and Headings. The titles and headings of the sections in the Plan
are for convenience of reference only, and in the event of any conflict, the
text of the Plan, rather than such titles or headings, shall control.
M. Compliance with Rule 16b-3. With respect to Participants subject to
Section 16 of the Securities Exchange Act of 1934, transactions under the Plan
are intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the 1934 Act. To the extent any provision of the Plan or
action by the Committee involving such a Participant is deemed not to comply
with an applicable condition of Rule 16b-3, it shall be null and void to the
extent permitted by law and deemed advisable by the Committee.
D-6
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For any questions you may have or additional information you may require
about your account, change in stock ownership, dividend payments and the
reinvestment of dividends, please call the toll-free number listed below, or
write to:
George I. Kline, Manager
Investor Services Department
Pennsylvania Power & Light Company
Two North Ninth Street
Allentown, PA 18101
Toll-Free Phone Number: 800-345-3085
----------------------------
PP&L files a Form 10-K Report annually with the Securities and
Exchange Commission. The Form 10-K Report for 1994 is available
without charge by writing to PP&L's Investor Services Department at
the address printed above, or by calling the toll-free number.
WHETHER YOU PLAN TO ATTEND THE MEETING OR NOT, PLEASE MARK, DATE,
SIGN AND MAIL THE ACCOMPANYING PROXY AS SOON AS POSSIBLE. AN
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES,
IS INCLUDED FOR YOUR CONVENIENCE.
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 7.01 of the By-laws of the registrant reads as follows:
"Section 7.01. Indemnification of Directors and Officers.
(a) RIGHT TO INDEMNIFICATION. Except as prohibited by law, every director
and officer of the corporation shall be entitled as of right to be
indemnified by the corporation against reasonable expense and any liability
paid or incurred by such person in connection with any actual or threatened
claim, action, suit or proceeding, civil, criminal, administrative,
investigative or other, whether brought by or in the right of the
corporation or otherwise, in which he or she may be involved, as a party or
otherwise, by reason of such person being or having been a director or
officer of the corporation or by reason of the fact that such person is or
was serving at the request of the corporation as a director, officer,
employee, fiduciary or other representative of another corporation,
partnership, joint venture, trust, employee benefit plan or other entity
(such claim, action, suit or proceeding hereinafter being referred to as
"action"). Such indemnification shall include the right to have expenses
incurred by such person in connection with an action paid in advance by the
corporation prior to final disposition of such action, subject to such
conditions as may be prescribed by law. Persons who are not directors or
officers of the corporation may be similarly indemnified in respect of
service to the corporation or to another such entity at the request of the
corporation to the extent the board of directors at any time denominates
such person as entitled to the benefits of this Section 7.01. As used
herein, "expense" shall include fees and expenses of counsel selected by
such persons; and "liability" shall include amounts of judgments, excise
taxes, fines and penalties, and amounts paid in settlement.
(b) RIGHT OF CLAIMANT TO BRING SUIT. If a claim under paragraph (a) of
this Section 7.01 is not paid in full by the corporation within thirty days
after a written claim has been received by the corporation, the claimant
may at any time thereafter bring suit against the corporation to recover
the unpaid amount of the claim, and, if successful in whole or in part, the
claimant shall also be entitled to be paid the expense of prosecuting such
claim. It shall be a defense to any such action that the conduct of the
claimant was such that under Pennsylvania law the corporation would be
prohibited from indemnifying the claimant for the amount claimed, but the
burden of proving such defense shall be on the corporation. Neither the
failure of the corporation (including its board of directors, independent
legal counsel and its shareholders) to have made a determination prior to
the commencement of such action that indemnification of the claimant is
proper in the circumstances because the conduct of the claimant was not
such that indemnification would be prohibited by law, nor an actual
determination by the corporation (including its board of directors,
independent legal counsel or its shareholders) that the conduct of the
claimant was such that indemnification would be prohibited by law, shall be
a defense to the action or create a presumption that the conduct of the
claimant was such that indemnification would be prohibited by law.
(c) INSURANCE AND FUNDING. The corporation may purchase and maintain
insurance to protect itself and any person eligible to be indemnified
hereunder against any liability or expense asserted or incurred by such
person in connection with any action, whether or not the corporation would
have the power to indemnify such person against such liability or expense
by law or under the provisions of this Section 7.01. The corporation may
create a trust fund, grant a security interest, cause a letter of credit to
be issued or use other means (whether or not similar to the foregoing) to
ensure the payment of such sums as may become necessary to effect
indemnification as provided herein.
(d) NON-EXCLUSIVITY; NATURE AND EXTENT OF RIGHTS. The right of
indemnification provided for herein (1) shall not be deemed exclusive of
any other rights, whether now existing or hereafter created, to which those
seeking indemnification hereunder may be entitled under any agreement, by-
law or charter provision, vote of shareholders or directors or otherwise,
(2) shall be deemed to create contractual rights in favor of persons
entitled to indemnification hereunder, (3) shall continue as to persons who
have ceased to have the status pursuant to which they were entitled or were
denominated as entitled to indemnification hereunder and shall inure to the
benefit of the heirs and legal representatives of persons entitled to
indemnification hereunder and (4) shall be applicable to actions, suits or
proceedings commenced after the adoption hereof, whether arising from acts
or omissions occurring before or after the adoption hereof. The right of
indemnification provided for herein may not be amended, modified or
repealed so as to limit in any way the indemnification provided for herein
with respect to any acts or omissions occurring prior to the effective date
of any such amendment, modification or repeal."
II-1
<PAGE>
Directors and officers of the registrant may also be indemnified in certain
circumstances pursuant to the statutory provisions of general application
contained in Pennsylvania law.
The registrant presently has insurance policies which, among other things,
include liability insurance coverage for officers and directors under which
officers and directors are covered against any "loss" by reason of payment of
damages, judgments, settlements and costs, as well as charges and expenses
incurred in the defense of actions, suits or proceedings. "Loss" is
specifically defined to exclude fines and penalties, as well as matters deemed
uninsurable under the law pursuant to which the insurance policy shall be
construed. The policies also contain other specific exclusions, including
illegally obtained personal profit or advantage, and dishonesty.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
An Exhibit Index, containing a list of all exhibits filed with this
Registration Statement, commences on page II-4.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plans's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 20 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ALLENTOWN,
COMMONWEALTH OF PENNSYLVANIA, ON THE 3RD DAY OF MARCH, 1995.
PP&L RESOURCES, INC.
(Registrant)
/s/ William F. Hecht
By _______________________________________
WILLIAM F. HECHT, CHAIRMAN,
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES ON THE 3RD DAY OF MARCH, 1995.
SIGNATURE TITLE
/s/ William F. Hecht Principal
- --------------------------------- Executive Officer
WILLIAM F. HECHT, CHAIRMAN and Director
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
/s/ Ronald E. Hill Principal
- --------------------------------- Financial and
RONALD E. HILL, SENIOR VICE Accounting
PRESIDENT--FINANCIAL, TREASURER Officer
AND SECRETARY
/s/ Frank A. Long Director
- ---------------------------------
FRANK A. LONG EXECUTIVE VICE
PRESIDENT
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. METHOD OF FILING PAGE
----------- ---------------- ----
<C> <S> <C> <C>
2.1 Agreement and Plan of Exchange....... Included as Exhibit A
to the Proxy Statement
and Prospectus
3.1 Articles of Incorporation of PP&L Included as Exhibit B
Resources, Inc...................... to the Proxy
Statement and
Prospectus
3.2 By-Laws of PP&L Resources, Inc....... Filed herewith
5.1 Opinion of Michael A. McGrail, Esq. . Filed herewith
5.2 Opinion of Simpson Thacher &
Bartlett............................ Filed herewith
8.1 Opinion of Michael A. McGrail, Esq. . See Exhibit 5.1
8.2 Opinion of Reid & Priest LLP......... Filed herewith
8.3 Opinion of Ballard Spahr Andrews &
Ingersoll........................... Filed herewith
10.1 Agreement and Plan of Exchange....... See Exhibit 2.1
23.1 Consent of Counsel................... See Exhibits 5.1,
5.2, 8.2 and 8.3
23.2 Consent of Deloitte & Touche LLP..... Filed herewith
24.1 Power of Attorney.................... Filed herewith
99.1 Form of Proxy and Related Proxy
Materials........................... Filed herewith
</TABLE>
II-4
<PAGE>
Exhibit 3.2
-----------
BYLAWS
OF
PP&L RESOURCES, INC.
(a Pennsylvania Registered Corporation)
ARTICLE I
Offices and Fiscal Year
Section 1.01. Registered Office.--The registered office of the corporation
-----------------
in the Commonwealth of Pennsylvania shall be at Two North Ninth Street,
Allentown, PA 18101-1179, until otherwise established by an amendment of the
articles of incorporation (the "articles") or by the board of directors and a
record of such change is filed with the Pennsylvania Department of State in the
manner provided by law.
Section 1.02. Other Offices.--The corporation may also have offices at
-------------
such other places within or without the Commonwealth of Pennsylvania as the
board of directors may from time to time appoint or the business of the
corporation may require.
Section 1.03. Fiscal Year.--The fiscal year of the corporation shall begin
-----------
on the 1st day of January in each year.
ARTICLE II
Notice--Waivers--Meetings Generally
Section 2.01. Manner of Giving Notice.
-----------------------
(a) General Rule.--Whenever written notice is required to be given to any
------------
person under the provisions of the Business Corporation Law or by the articles
or these bylaws, it may be given to the person either personally or by sending a
copy thereof by first class or express mail, postage prepaid, or by telegram
(with messenger service specified), telex or TWX (with answerback received) or
courier service, charges prepaid, or by facsimile transmission to the address
(or to the telex, TWX, facsimile or telephone number) of the person appearing on
the books of the corporation or, in the case of directors, supplied by the
director to the corporation for the purpose of notice. If the notice is sent by
mail, telegraph or courier service, it shall be deemed to have been given to the
person entitled thereto when deposited in the United States mail or with a
telegraph office or courier service for delivery to that person or, in the case
of telex or TWX, when dispatched or, in the case of facsimile transmission when
received. A notice of meeting shall specify the place, day and hour of the
meeting and any other information required by any other provision of the
Business Corporation Law, the articles or these bylaws.
- 1 -
<PAGE>
(b) Bulk Mail.--Notice of any regular or special meeting of the
---------
shareholders, or any other notice required by the Business Corporation Law or by
the articles or these bylaws to be given to all shareholders or to all holders
of a class or series of shares, may be given by any class of postpaid mail if
the notice is deposited in the United States mail at least 20 days prior to the
day named for the meeting or any corporate or shareholder action specified in
the notice.
(c) Adjourned Shareholder Meetings.--When a meeting of shareholders is
------------------------------
adjourned, it shall not be necessary to give any notice of the adjourned meeting
or of the business to be transacted at an adjourned meeting, other than by
announcement at the meeting at which the adjournment is taken, unless the board
fixes a new record date for the adjourned meeting in which event notice shall be
given in accordance with Section 2.03.
Section 2.02. Notice of Meetings of Board of Directors.--Notice of a
----------------------------------------
regular meeting of the board of directors need not be given. Notice of every
special meeting of the board of directors shall be given to each director by
telephone or in writing at least 24 hours (in the case of notice by telephone,
telex, TWX or facsimile transmission) or 48 hours (in the case of notice by
telegraph, courier service or express mail) or five days (in the case of notice
by first class mail) before the time at which the meeting is to be held. Every
such notice shall state the time and place of the meeting. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of the
board need be specified in a notice of the meeting.
Section 2.03. Notice of Meetings of Shareholders.
----------------------------------
(a) General Rule.--Except as otherwise provided in Section 2.01(b), written
------------
notice of every meeting of the shareholders shall be given by, or at the
direction of, the secretary or other authorized person to each shareholder of
record entitled to vote at the meeting at least (1) ten days prior to the day
named for a meeting (and, in case of a meeting called to consider a merger,
consolidation, share exchange or division, to each shareholder of record not
entitled to vote at the meeting) called to consider a fundamental change under
15 Pa.C.S. Chapter 19 or (2) five days prior to the day named for the meeting in
any other case. If the secretary neglects or refuses to give notice of a
meeting, the person or persons calling the meeting may do so. In the case of a
special meeting of shareholders, the notice shall specify the general nature of
the business to be transacted.
(b) Notice of Action by Shareholders on Bylaws.--In the case of a meeting
------------------------------------------
of shareholders that has as one of its purposes action on the bylaws, written
notice shall be given to each shareholder that the purpose, or one of the
purposes, of the meeting is to consider the adoption, amendment or repeal of the
- 2 -
<PAGE>
bylaws. There shall be included in, or enclosed with, the notice a copy of the
proposed amendment or a summary of the changes to be effected thereby.
(c) Notice of Action by Shareholders on Fundamental Change.--In the case of
------------------------------------------------------
a meeting of the shareholders that has as one of its purposes action with
respect to any fundamental change under 15 Pa.C.S. Chapter 19, each shareholder
shall be given, together with written notice of the meeting, a copy or summary
of the amendment or plan to be considered at the meeting in compliance with the
provisions of Chapter 19.
(d) Notice of Action by Shareholders Giving Rise to Dissenters Rights.--In
-----------------------------------------------------------------
the case of a meeting of the shareholders that has as one of its purposes action
that would give rise to dissenters rights under the provisions of 15 Pa.C.S.
Subchapter 15D, each shareholder shall be given, together with written notice of
the meeting:
(1) a statement that the shareholders have a right to dissent and
obtain payment of the fair value of their shares by complying with the
provisions of Subchapter 15D (relating to dissenters rights); and
(2) a copy of Subchapter 15D.
Section 2.04. Waiver of Notice.
----------------
(a) Written Waiver.--Whenever any written notice is required to be given
--------------
under the provisions of the Business Corporation Law, the articles or these
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
the notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of the notice. Neither the business to be transacted
at, nor the purpose of, a meeting need be specified in the waiver of notice of
the meeting.
(b) Waiver by Attendance.--Attendance of a person at any meeting shall
--------------------
constitute a waiver of notice of the meeting except where a person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting was not lawfully called
or convened.
Section 2.05. Modification of Proposal Contained in Notice.--Whenever the
--------------------------------------------
language of a proposed resolution is included in a written notice of a meeting
required to be given under the provisions of the Business Corporation Law or the
articles or these bylaws, the meeting considering the resolution may without
further notice adopt it with such clarifying or other amendments as do not
enlarge its original purpose.
- 3 -
<PAGE>
Section 2.06. Exception to Requirement of Notice.
----------------------------------
(a) General Rule.--Whenever any notice or communication is required to be
------------
given to any person under the provisions of the Business Corporation Law or by
the articles or these bylaws or by the terms of any agreement or other
instrument or as a condition precedent to taking any corporate action and
communication with that person is then unlawful, the giving of the notice or
communication to that person shall not be required.
(b) Shareholders Without Forwarding Addresses.--Notice or other
-----------------------------------------
communications need not be sent to any shareholder with whom the corporation has
been unable to communicate for more than 24 consecutive months because
communications to the shareholder are returned unclaimed or the shareholder has
otherwise failed to provide the corporation with a current address. Whenever
the shareholder provides the corporation with a current address, the corporation
shall commence sending notices and other communications to the shareholder in
the same manner as to other shareholders.
Section 2.07. Use of Conference Telephone and Similar Equipment.--Any
-------------------------------------------------
director may participate in any meeting of the board of directors, and the board
of directors may provide by resolution with respect to a specific meeting or
with respect to a class of meetings that one or more persons may participate in
a meeting of the shareholders of the corporation, by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in a meeting
pursuant to this section shall constitute presence in person at the meeting.
ARTICLE III
Shareholders
Section 3.01. Place of Meeting.--All meetings of the shareholders of the
----------------
corporation shall be held at the registered office of the corporation or such
other place as may be designated by the board of directors in the notice of a
meeting.
Section 3.02. Annual Meeting.--The board of directors may fix and
--------------
designate the date and time of the annual meeting of the shareholders, but if no
such date and time is fixed and designated by the board, the meeting for any
calendar year shall be held on the fourth Wednesday in April in such year, if
not a legal holiday under the laws of Pennsylvania, and, if a legal holiday,
then on the next succeeding business day, not a Saturday, at 1:30 o'clock P.M.,
and at said meeting the shareholders then entitled to vote shall elect directors
and shall transact such other business as may properly be brought before the
meeting. If the annual meeting shall not have been called and held
- 4 -
<PAGE>
within six months after the designated time, any shareholder may call the
meeting at any time thereafter.
Section 3.03. Special Meetings.--Special meetings of the shareholders may
----------------
be called at any time by the chairman of the board, if there be one, or by
resolution of the board of directors, which may fix the date, time and place of
the meeting. If the chairman of the board or the board does not fix the date,
time or place of the meeting, it shall be the duty of the secretary to do so. A
date fixed by the secretary shall not be more than 60 days after the date of the
receipt of the request from the chairman of the board or adoption of the
resolution of the board calling the special meeting.
Section 3.04. Quorum and Adjournment.
----------------------
(a) General Rule.--A meeting of shareholders of the corporation duly called
------------
shall not be organized for the transaction of business unless a quorum is
present. The presence of shareholders entitled to cast at least a majority of
the votes that all shareholders are entitled to cast on a particular matter to
be acted upon at the meeting shall constitute a quorum for the purposes of
consideration and action on the matter. Shares of the corporation owned,
directly or indirectly, by it and controlled, directly or indirectly, by the
board of directors of this corporation, as such, shall not be counted in
determining the total number of outstanding shares for quorum purposes at any
given time.
(b) Withdrawal of a Quorum.--The shareholders present at a duly organized
----------------------
meeting can continue to do business until adjournment notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
(c) Adjournments Generally.--Any regular or special meeting of the
----------------------
shareholders, including one at which directors are to be elected and one which
cannot be organized because a quorum has not attended, may be adjourned for such
period and to such place as the shareholders present and entitled to vote shall
direct.
(d) Electing Directors at Adjourned Meeting.--Those shareholders entitled
---------------------------------------
to vote who attend a meeting called for the election of directors that has been
previously adjourned for lack of a quorum, although less than a quorum as fixed
in this section, shall nevertheless constitute a quorum for the purpose of
electing directors.
(e) Other Action in Absence of Quorum.--Those shareholders entitled to vote
---------------------------------
who attend a meeting of shareholders that has been previously adjourned for one
or more periods aggregating at least 15 days because of an absence of a quorum,
although less than a quorum as fixed in this section, shall nevertheless
- 5 -
<PAGE>
constitute a quorum for the purpose of acting upon any matter set forth in the
notice of the meeting if the notice states that those shareholders who attend
the adjourned meeting shall nevertheless constitute a quorum for the purpose of
acting upon the matter.
Section 3.05. Action by Shareholders.
----------------------
(a) Except as otherwise provided in the Business Corporation Law or the
articles or these bylaws, whenever any corporate action is to be taken by vote
of the shareholders of the corporation, it shall be authorized upon receiving
the affirmative vote of a majority of the votes cast by all shareholders
entitled to vote thereon and, if any shareholders are entitled to vote thereon
as a class, upon receiving the affirmative vote of a majority of the votes cast
by the shareholders entitled to vote as a class.
(b) Except as otherwise provided in the Business Corporation Law or the
articles or these bylaws, any action required or permitted to be taken at a
meeting of the shareholders may be taken without a meeting if, prior or
subsequent to the action, a consent or consents thereto by all of the
shareholders who would be entitled to vote at a meeting for such purpose shall
be filed with the secretary of the corporation.
Section 3.06. Organization.--At every meeting of the shareholders, the
------------
chairman of the board, if there be one, or, in the case of vacancy in office or
absence of the chairman of the board, one of the following persons present in
the order stated: the vice chairman of the board, if there be one, the
president, the vice presidents in their order of rank and seniority, or a person
chosen by vote of the shareholders present, shall act as chairman of the
meeting. The secretary or an assistant secretary, or, a person appointed by the
chairman of the meeting, shall act as secretary of the meeting.
Section 3.07. Voting Rights of Shareholders.--Unless otherwise provided in
-----------------------------
the articles, every shareholder of the corporation shall be entitled to one vote
for every share standing in the name of the shareholder on the books of the
corporation.
Section 3.08. Voting and Other Action by Proxy.
--------------------------------
(a) General Rule.--
------------
(1) Every shareholder entitled to vote at a meeting of shareholders
may authorize another person to act for the shareholder by proxy.
- 6 -
<PAGE>
(2) The presence of, or vote or other action at a meeting of
shareholders by, a proxy of a shareholder shall constitute the presence of,
or vote or action by, the shareholder.
(3) Where two or more proxies of a shareholder are present, the
corporation shall, unless otherwise expressly provided in the proxy, accept
as the vote of all shares represented thereby the vote cast by a majority
of them and, if a majority of the proxies cannot agree whether the shares
represented shall be voted or upon the manner of voting the shares, the
voting of the shares shall be divided equally among those persons.
(b) Execution and Filing.--Every proxy shall be executed in writing by the
--------------------
shareholder or by the duly authorized attorney-in-fact of the shareholder and
filed with the secretary of the corporation. A telegram, telex, cablegram,
datagram or similar transmission from a shareholder or attorney-in-fact, or a
photographic, facsimile or similar reproduction of a writing executed by a
shareholder or attorney-in-fact:
(1) may be treated as properly executed for purposes of this
subsection; and
(2) shall be so treated if it sets forth a confidential and unique
identification number or other mark furnished by the corporation to the
shareholder for the purposes of a particular meeting or transaction.
(c) Revocation.--A proxy, unless coupled with an interest, shall be
----------
revocable at will, notwithstanding any other agreement or any provision in the
proxy to the contrary, but the revocation of a proxy shall not be effective
until written notice thereof has been given to the secretary of the corporation.
An unrevoked proxy shall not be valid after three years from the date of its
execution unless a longer time is expressly provided therein. A proxy shall not
be revoked by the death or incapacity of the maker unless, before the vote is
counted or the authority is exercised, written notice of the death or incapacity
is given to the secretary of the corporation.
(d) Expenses.--The corporation shall pay the reasonable expenses of
--------
solicitation of votes, proxies or consents of shareholders by or on behalf of
the board of directors or its nominees for election to the board, including
solicitation by professional proxy solicitors and otherwise.
Section 3.09. Voting by Fiduciaries and Pledgees.--Shares of the
----------------------------------
corporation standing in the name of a trustee or other fiduciary and shares held
by an assignee for the benefit of creditors or by a receiver may be voted by the
trustee,
- 7 -
<PAGE>
fiduciary, assignee or receiver. A shareholder whose shares are pledged shall
be entitled to vote the shares until the shares have been transferred into the
name of the pledgee, or a nominee of the pledgee, but nothing in this section
shall affect the validity of a proxy given to a pledgee or nominee.
Section 3.10. Voting by Joint Holders of Shares.
---------------------------------
(a) General Rule.--Where shares of the corporation are held jointly or as
------------
tenants in common by two or more persons, as fiduciaries or otherwise:
(1) if only one or more of such persons is present in person or by
proxy, all of the shares standing in the names of such persons shall be
deemed to be represented for the purpose of determining a quorum and the
corporation shall accept as the vote of all the shares the vote cast by a
joint owner or a majority of them; and
(2) if the persons are equally divided upon whether the shares held by
them shall be voted or upon the manner of voting the shares, the voting of
the shares shall be divided equally among the persons without prejudice to
the rights of the joint owners or the beneficial owners thereof among
themselves.
(b) Exception.--If there has been filed with the secretary of the
---------
corporation a copy, certified by an attorney at law to be correct, of the
relevant portions of the agreement under which the shares are held or the
instrument by which the trust or estate was created or the order of court
appointing them or of an order of court directing the voting of the shares, the
persons specified as having such voting power in the document latest in date of
operative effect so filed, and only those persons, shall be entitled to vote the
shares but only in accordance therewith.
Section 3.11. Voting by Corporations.
----------------------
(a) Voting by Corporate Shareholders.--Any corporation that is a
--------------------------------
shareholder of this corporation may vote at meetings of shareholders of this
corporation by any of its officers or agents, or by proxy appointed by any
officer or agent, unless some other person, by resolution of the board of
directors of the other corporation or a provision of its articles or bylaws, a
copy of which resolution or provision certified to be correct by one of its
officers has been filed with the secretary of this corporation, is appointed its
general or special proxy in which case that person shall be entitled to vote the
shares.
(b) Controlled Shares.--Shares of this corporation owned, directly or
-----------------
indirectly, by it and controlled, directly or indirectly, by the board of
directors of this corporation, as such,
- 8 -
<PAGE>
shall not be voted at any meeting and shall not be counted in determining the
total number of outstanding shares for voting purposes at any given time.
Section 3.12. Determination of Shareholders of Record.
---------------------------------------
(a) Fixing Record Date.--The board of directors may fix a time prior to the
------------------
date of any meeting of shareholders as a record date for the determination of
the shareholders entitled to notice of, or to vote at, the meeting, which time,
except in the case of an adjourned meeting, shall be not more than 90 days prior
to the date of the meeting of shareholders. Only shareholders of record on the
date fixed shall be so entitled notwithstanding any transfer of shares on the
books of the corporation after any record date fixed as provided in this
subsection. The board of directors may similarly fix a record date for the
determination of shareholders of record for any other purpose. When a
determination of shareholders of record has been made as provided in this
section for purposes of a meeting, the determination shall apply to any
adjournment thereof unless the board fixes a new record date for the adjourned
meeting.
(b) Determination When a Record Date is Not Fixed.--If a record date is not
---------------------------------------------
fixed:
(1) The record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of business
on the day next preceding the day on which notice is given.
(2) The record date for determining shareholders for any other purpose
shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
(c) Certification by Nominee.--The board of directors may adopt a procedure
------------------------
whereby a shareholder of the corporation may certify in writing to the
corporation that all or a portion of the shares registered in the name of the
shareholder are held for the account of a specified person or persons. Upon
receipt by the corporation of a certification complying with the procedure, the
persons specified in the certification shall be deemed, for the purposes set
forth in the certification, to be the holders of record of the number of shares
specified in place of the shareholder making the certification.
Section 3.13. Voting Lists.
------------
(a) General Rule.--The officer or agent having charge of the transfer books
------------
for shares of the corporation shall make a complete list of the shareholders
entitled to vote at any meeting of shareholders, arranged in alphabetical order,
with the address
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of and the number of shares held by each. The list shall be produced and kept
open at the time and place of the meeting and shall be subject to the inspection
of any shareholder during the whole time of the meeting for the purposes thereof
except that if the corporation has 5,000 or more shareholders, in lieu of the
making of the list, the corporation may make the information therein available
at the meeting by any other means.
(b) Effect of List.--Failure to comply with the requirements of this
--------------
section shall not affect the validity of any action taken at a meeting prior to
a demand at the meeting by any shareholder entitled to vote thereat to examine
the list. The original share register or transfer book, or a duplicate thereof
kept in the Commonwealth of Pennsylvania, shall be prima facie evidence as to
who are the shareholders entitled to examine the list or share register or
transfer book or to vote at any meeting of shareholders.
Section 3.14. Judges of Election.
------------------
(a) Appointment.--In advance of any meeting of shareholders of the
-----------
corporation, the board of directors may appoint judges of election, who need not
be shareholders, to act at the meeting or any adjournment thereof. If judges of
election are not so appointed, the presiding officer of the meeting may, and on
the request of any shareholder shall, appoint judges of election at the meeting.
The number of judges shall be one or three. A person who is a candidate for an
office to be filled at the meeting shall not act as a judge.
(b) Vacancies.--In case any person appointed as a judge fails to appear or
---------
fails or refuses to act, the vacancy may be filled by appointment made by the
board of directors in advance of the convening of the meeting or at the meeting
by the presiding officer thereof.
(c) Duties.--The judges of election shall determine the number of shares
------
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, and the authenticity, validity and effect of proxies,
receive votes or ballots, hear and determine all challenges and questions in any
way arising in connection with nominations by shareholders or the right to vote,
count and tabulate all votes, determine the result and do such acts as may be
proper to conduct the election or vote with fairness to all shareholders. The
judges of election shall perform their duties impartially, in good faith, to the
best of their ability and as expeditiously as is practical. If there are three
judges of election, the decision, act or certificate of a majority shall be
effective in all respects as the decision, act or certificate of all.
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<PAGE>
(d) Report.--On request of the presiding officer of the meeting or of any
------
shareholder, the judges shall make a report in writing of any challenge or
question or matter determined by them, and execute a certificate of any fact
found by them. Any report or certificate made by them shall be prima facie
evidence of the facts stated therein.
Section 3.15. Minors as Securityholders.--The corporation may treat a
-------------------------
minor who holds shares or obligations of the corporation as having capacity to
receive and to empower others to receive dividends, interest, principal and
other payments or distributions, to vote or express consent or dissent and to
make elections and exercise rights relating to such shares or obligations
unless, in the case of payments or distributions on shares, the corporate
officer responsible for maintaining the list of shareholders or the transfer
agent of the corporation or, in the case of payments or distributions on
obligations, the treasurer or paying officer or agent has received written
notice that the holder is a minor.
Section 3.16. Nominations for Election of Directors.--Except as otherwise
-------------------------------------
provided in or fixed by or pursuant to the provisions of Article V of the
articles of incorporation, nominations for the election of directors may be made
by the board of directors or a committee appointed by the board of directors or
by any shareholder entitled to vote in the election of directors generally.
However, any shareholder entitled to vote in the election of directors generally
may nominate one or more persons for election as directors at a meeting only if
written notice (meeting the requirements hereinafter set forth) of such
shareholder's intent to make such nomination or nominations has been given by
the shareholder and received by the secretary of the corporation in the manner
and within the time specified by this Section. The notice shall be delivered to
the secretary of the corporation not later than (i) with respect to an election
to be held at an annual meeting of shareholders, 75 days in advance of the date
of such meeting; provided, however, that in the event that less than 85 days'
-------- -------
notice or prior public disclosure of the date of the annual meeting is given,
notice from the shareholders to be timely must be received not later than the
tenth day following the date on which such notice of the date of the annual
meeting was mailed or such public disclosure was made, whichever first occurs,
and (ii) with respect to an election to be held at a special meeting of
shareholders for the election of directors, the close of business on the earlier
of (A) the seventh day following the date on which notice of such meeting is
first given to shareholders or (B) the fourth day prior to the meeting. In lieu
of delivery to the secretary, the notice may be mailed to the secretary by
certified mail, return receipt requested, but shall be deemed to have been given
only upon actual receipt by the secretary. Each such notice shall set forth:
(a) the name and address of the shareholder who intends
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to make the nomination and of the person or persons to be nominated; (b) a
representation that the shareholder is a holder of record of stock of the
corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the shareholder; (d) such other information regarding each nominee proposed by
such shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission had
proxies been solicited with respect to such nominee by the management or board
of directors of the corporation; and (e) the consent of each nominee to serve as
a director of the corporation if so elected. If a judge or judges of election
shall not have been appointed pursuant to these bylaws, the presiding officer of
the meeting may, if the facts warrant, determine and declare to the meeting that
any nomination made at the meeting was not made in accordance with the
procedures of this Section and, in such event, the nomination shall be
disregarded. Any decision by the presiding officer of the meeting made in good
faith shall be conclusive and binding upon all shareholders of the corporation
for any purpose.
Section 3.17. Other Business to be Transacted.--Except as otherwise
--------------------------------
provided in Section 3.16 of these bylaws, at any annual meeting or special
meeting of shareholders, only such business as is properly brought before the
meeting in accordance with this Section may be transacted. To be properly
brought before any meeting, any proposed business that is to be brought pursuant
to this Section must be either (i) specified in the notice of the meeting (or
any supplement thereto) given by or at the direction of the board of directors,
(ii) otherwise properly brought before the meeting by or at the direction of the
board of directors, or (iii) in the case of an annual meeting of shareholders,
otherwise properly brought before the meeting by a shareholder (x) who is a
shareholder of record on the date of giving notice provided for in these bylaws
and on the record date for the determination of shareholders entitled to vote at
such annual meeting, and (y) who complies with the notice provisions set forth
in this Section. For business to be properly brought before an annual meeting
by a shareholder, the shareholder must have given timely notice thereof in
writing to the secretary of the corporation. To be timely, a shareholder's
notice must be delivered to the secretary of the corporation not later than 75
days in advance of the date of such meeting; provided, however, that in the
-------- -------
event that less than 85 days' notice or prior public disclosure of the date of
the annual meeting is given, notice from the shareholders to be timely must be
received not later than the tenth day following the date on which such notice of
the date of the annual meeting was mailed or such public disclosure was made,
whichever first
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<PAGE>
occurs. In lieu of delivery to the secretary, the notice may be mailed to the
secretary by certified mail, return receipt requested, but shall be deemed to
have been given only upon actual receipt by the secretary. A shareholder's
notice to the secretary of the corporation, as required by this Section, shall
set forth as to each matter the shareholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and record address of the shareholder proposing such
business, (iii) the class, series and number of shares of the corporation's
stock which are beneficially owned by the shareholder, (iv) a description of all
arrangements or understandings between such shareholder and any other person or
persons (including their names) in connection with the proposal of such business
by such shareholder in such business, (v) all other information which would be
required to be included in a proxy statement or other filing required to be
filed with the Securities and Exchange Commission if, with respect to any such
item of business, such shareholder were a participant in a solicitation subject
to Regulation 14A under the Securities Exchange Act of 1934, as amended, and
(vi) a representation that such shareholder intends to appear in person or by
proxy at the annual meeting of shareholders to bring such business before the
meeting. Except as provided in Section 3.16 of these bylaws, notwithstanding
anything in the bylaws to the contrary, no business shall be conducted at any
meeting of shareholders except in accordance with the procedures set forth in
this Section, provided, however, that nothing in this Section shall be deemed to
-------- -------
preclude discussion by any shareholders of any business properly brought before
any such meeting. The presiding officer of a meeting may, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section, and if he
should so determine, he shall so declare to the meeting and any such business
not properly brought before the meeting shall not be transacted. Any decision
by the presiding officer of the meeting made in good faith shall be conclusive
and binding upon all shareholders of the corporation for any purpose.
ARTICLE IV
Board of Directors
Section 4.01. Powers; Personal Liability.
--------------------------
(a) General Rule.--Unless otherwise provided by statute, all powers vested
------------
by law in the corporation shall be exercised by or under the authority of, and
the business and affairs of the corporation shall be managed under the direction
of, the board of directors.
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<PAGE>
(b) Personal Liability of Directors.--
-------------------------------
(1) To the fullest extent that the laws of the Commonwealth of
Pennsylvania, as now in effect or as hereafter amended, permit elimination
or limitation of the liability of directors, no director of the corporation
shall be personally liable for monetary damages as such for any action
taken, or any failure to take any action, as a director.
(2) Any amendment or repeal of this Section 4.01 which has the effect
of increasing directors' liability shall operate prospectively only, and
shall not affect any action taken, or any failure to act, prior to its
adoption.
Section 4.02. Qualifications and Selection of Directors.
-----------------------------------------
(a) Qualifications.--Each director of the corporation shall be a natural
--------------
person of full age who need not be a resident of the Commonwealth of
Pennsylvania or a shareholder of the corporation.
(b) Election of Directors.--In elections for directors, voting need not be
---------------------
by ballot, unless required by vote of the shareholders before the voting for the
election of directors begins. The candidates receiving the highest number of
votes from each class or group of classes, if any, entitled to elect directors
separately up to the number of directors to be elected by the class or group of
classes shall be elected. If at any meeting of shareholders, directors of more
than one class are to be elected, each class of directors shall be elected in a
separate election.
Section 4.03. Number and Term of Office.
-------------------------
(a) Number.--The board of directors shall consist of such number of
------
directors, not less than ten nor more than twenty, as may be determined from
time to time by resolution of the board of directors.
(b) Resignation.--Any director may resign at any time upon written notice
-----------
to the corporation. The resignation shall be effective upon receipt thereof by
the corporation or at such subsequent time as shall be specified in the notice
of resignation.
(c) Classification of Directors.--Except as otherwise provided in or fixed
---------------------------
by or pursuant to the articles of incorporation, the board of directors shall be
divided into three classes as nearly equal in number as may be. The initial
term of office of each director in the first class shall expire at the annual
meeting of shareholders in 1996; the initial term of office of each director in
the second class shall expire at the annual meeting of shareholders in 1997; and
the initial term of office
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<PAGE>
of each director in the third class shall expire at the annual meeting of
shareholders in 1998. At each annual election commencing at the annual meeting
of shareholders in 1996 and thereafter, the successors to the class of directors
whose term expires at that time shall be elected to hold office for a term of
three years to succeed those whose term expires, so that the term of one class
of directors shall expire each year. Each director shall hold office for the
term of which he or she is elected or appointed and until a successor has been
selected and qualified or until his or her earlier death, resignation or
removal. In the event of any increase or decrease in the authorized number of
directors, (a) each director then serving as such shall nevertheless continue as
a director of the class of which he or she is a member until the expiration of
his or her current term, or his or her earlier death, resignation or removal,
and (b) the newly created or eliminated directorships resulting from such
increase or decrease shall be apportioned by the board of directors among the
three classes of directors so as to maintain such classes as nearly equal in
number as may be.
Section 4.04. Vacancies.
---------
(a) General Rule.--Vacancies in the board of directors, including vacancies
------------
resulting from an increase in the number of directors, may be filled by a
majority vote of the remaining members of the board though less than a quorum,
or by a sole remaining director, and each person so selected shall be a director
to serve until the next selection of the class for which such director has been
chosen, and until a successor has been selected and qualified or until his or
her earlier death, resignation or removal.
(b) Action by Resigned Directors.--When one or more directors resign from
----------------------------
the board effective at a future date, the directors then in office, including
those who have so resigned, shall have power by the applicable vote to fill the
vacancies, the vote thereon to take effect when the resignations become
effective.
Section 4.05 Removal of Directors.
--------------------
(a) Removal by the Shareholders.--Any director may be removed from office,
---------------------------
but only (i) for cause, and (ii) upon the affirmative vote of the shareholders
entitled to cast at least two-thirds of the votes which all shareholders would
be entitled to cast at any annual election of directors and upon any additional
vote of shareholders that may be required by law. In case one or more directors
are so removed, new directors may be elected at the same meeting. The repeal of
a provision of the articles or bylaws prohibiting, or the addition of a
provision to the articles or bylaws permitting, the removal by the shareholders
of a director without assigning any cause shall not apply
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<PAGE>
to any incumbent director during the balance of the term for which the director
was selected.
(b) Removal by the Board.--The board of directors may declare vacant the
--------------------
office of a director who has been judicially declared of unsound mind or who has
been convicted of an offense punishable by imprisonment for a term of more than
one year or if, within 60 days after notice of his or her selection, the
director does not accept the office either in writing or by attending a meeting
of the board of directors.
Section 4.06. Place of Meetings.--Meetings of the board of directors may
-----------------
be held at such place within or without the Commonwealth of Pennsylvania as the
board of directors may from time to time appoint or as may be designated in the
notice of the meeting.
Section 4.07. Organization of Meetings.--At every meeting of the board of
------------------------
directors, the chairman of the board, if there be one, or, in the case of a
vacancy in the office or absence of the chairman of the board, one of the
following officers present in the order stated: the vice chairman of the board,
if there be one, the president, the vice presidents in their order of rank and
seniority, or a person chosen by a majority of the directors present, shall act
as chairman of the meeting. The secretary or, in the absence of the secretary,
an assistant secretary, or, in the absence of the secretary and the assistant
secretaries, any person appointed by the chairman of the meeting, shall act as
secretary of the meeting.
Section 4.08. Regular Meetings.--Regular meetings of the board of
----------------
directors shall be held at such time and place as shall be designated from time
to time by resolution of the board of directors.
Section 4.09. Special Meetings.--Special meetings of the board of
----------------
directors shall be held whenever called by the chairman or by two or more of the
directors.
Section 4.10. Quorum of and Action by Directors.
---------------------------------
(a) General Rule.--A majority of the directors in office of the corporation
------------
shall be necessary to constitute a quorum for the transaction of business and
the acts of a majority of the directors present and voting at a meeting at which
a quorum is present shall be the acts of the board of directors.
(b) Action by Written Consent.--Any action required or permitted to be
-------------------------
taken at a meeting of the directors may be taken without a meeting if, prior or
subsequent to the action, a consent or consents thereto by all of the directors
in office is filed with the secretary of the corporation.
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<PAGE>
(c) Notation of Dissent.--A director of the corporation who is present at a
-------------------
meeting of the board of directors, or of a committee of the board, at which
action on any corporate matter is taken on which the director is generally
competent to act, shall be presumed to have assented to the action taken unless
his or her dissent is entered in the minutes of the meeting or unless the
director files his or her written dissent to the action with the secretary of
the meeting before the adjournment thereof or transmits the dissent in writing
to the secretary of the corporation immediately after the adjournment of the
meeting. The right to dissent shall not apply to a director who voted in favor
of the action. Nothing in this section shall bar a director from asserting that
minutes of the meeting incorrectly omitted his or her dissent if, promptly upon
receipt of a copy of such minutes, the director notifies the secretary, in
writing, of the asserted omission or inaccuracy.
Section 4.11. Executive and Other Committees.
------------------------------
(a) Establishment and Powers.--The board of directors may, by resolution
------------------------
adopted by a majority of the directors in office, establish one or more
committees to consist of one or more directors of the corporation. Any
committee, to the extent provided in the resolution of the board of directors,
shall have and may exercise all of the powers and authority of the board of
directors except that a committee shall not have any power or authority as to
the following:
(1) The submission to shareholders of any action requiring approval of
shareholders under the Business Corporation Law.
(2) The creation or filling of vacancies in the board of directors.
(3) The adoption, amendment or repeal of these bylaws.
(4) The amendment or repeal of any resolution of the board that by its
terms is amendable or repealable only by the board.
(5) Action on matters committed by a resolution of the board of
directors to another committee of the board.
(b) Alternate Committee Members.--The board may designate one or more
---------------------------
directors as alternate members of any committee who may replace any absent or
disqualified member at any meeting of the committee or for the purposes of any
written action by the committee. In the absence or disqualification of a member
and alternate member or members of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint
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another director to act at the meeting in the place of the absent or
disqualified member.
(c) Term.--Each committee of the board shall serve at the pleasure of the
----
board.
(d) Committee Procedures.--The term "board of directors" or "board," when
--------------------
used in any provision of these bylaws relating to the organization or procedures
of or the manner of taking action by the board of directors, shall be construed
to include and refer to any executive or other committee of the board.
Section 4.12. Compensation.--The board of directors shall have the
------------
authority to fix the compensation of directors for their services as directors
and a director may be a salaried officer of the corporation.
ARTICLE V
Officers
Section 5.01. Officers Generally.
------------------
(a) Number, Qualifications and Designation.--The officers of the
--------------------------------------
corporation shall be a president, one or more vice presidents, a secretary, a
treasurer, and such other officers as may be elected in accordance with the
provisions of Section 5.03. Officers may but need not be directors or
shareholders of the corporation. The president and secretary shall be natural
persons of full age. The treasurer may be a corporation, but if a natural
person shall be of full age. The board of directors may elect from among the
members of the board a chairman of the board and a vice chairman of the board
who may be officers of the corporation. Any number of offices may be held by
the same person.
(b) Bonding.--The corporation may secure the fidelity of any or all of its
-------
officers by bond or otherwise.
(c) Standard of Care.--In lieu of the standards of conduct otherwise
----------------
provided by law, officers of the corporation shall be subject to the same
standards of conduct, including standards of care and loyalty and rights of
justifiable reliance, as shall at the time be applicable to directors of the
corporation. An officer of the corporation shall not be personally liable, as
such, to the corporation or its shareholders for monetary damages (including,
without limitation, any judgment, amount paid in settlement, penalty, punitive
damages or expense of any nature (including, without limitation, attorneys' fees
and disbursements)), for any action taken, or any failure to take any action,
unless the officer has breached or failed to perform the duties of his or her
office under the articles of incorporation, these
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<PAGE>
bylaws, or the applicable provisions of law and the breach or failure to perform
constitutes self-dealing, willful misconduct or recklessness. The provisions of
this subsection shall not apply to the responsibility or liability of an officer
pursuant to any criminal statute or for the payment of taxes pursuant to local,
state or federal law.
Section 5.02. Election, Term of Office and Resignations.
-----------------------------------------
(a) Election and Term of Office.--The officers of the corporation, except
---------------------------
those elected by delegated authority pursuant to Section 5.03, shall be elected
annually by the board of directors, and each such officer shall hold office for
a term of one year and until a successor has been selected and qualified or
until his or her earlier death, resignation or removal.
(b) Resignations.--Any officer may resign at any time upon written notice
------------
to the corporation. The resignation shall be effective upon receipt thereof by
the corporation or at such subsequent time as may be specified in the notice of
resignation.
Section 5.03. Subordinate Officers, Committees and Agents.--The board of
-------------------------------------------
directors may from time to time elect such other officers and appoint such
committees, employees or other agents as the business of the corporation may
require, including one or more assistant secretaries, and one or more assistant
treasurers, each of whom shall hold office for such period, have such authority,
and perform such duties as are provided in these bylaws, or as the board of
directors may from time to time determine. The board of directors may delegate
to any officer or committee the power to elect subordinate officers and to
retain or appoint employees or other agents, or committees thereof, and to
prescribe the authority and duties of such subordinate officers, committees,
employees or other agents.
Section 5.04. Removal of Officers and Agents.--Any officer or agent of the
------------------------------
corporation may be removed by the board of directors with or without cause. The
removal shall be without prejudice to the contract rights, if any, of any person
so removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
Section 5.05. Vacancies.--A vacancy in any office because of death,
---------
resignation, removal, disqualification, or any other cause, may be filled by the
board of directors or by the officer or committee to which the power to fill
such office has been delegated pursuant to Section 5.03, as the case may be, and
if the office is one for which these bylaws prescribe a term, shall be filled
for the unexpired portion of the term.
Section 5.06. Authority.
---------
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<PAGE>
(a) General Rule.--All officers of the corporation, as between themselves
------------
and the corporation, shall have such authority and perform such duties in the
management of the corporation as may be provided by or pursuant to resolutions
or orders of the board of directors or, in the absence of controlling provisions
in the resolutions or orders of the board of directors, as may be determined by
or pursuant to these bylaws.
(b) Chief Executive Officer.--The chairman of the board or the president,
-----------------------
as designated from time to time by the board of directors, shall be the chief
executive officer of the corporation.
Section 5.07. The Chairman and Vice Chairman of the Board.--The chairman
-------------------------------------------
of the board or in the absence of the chairman, the vice chairman of the board,
or in the absence of a chairman or vice chairman of the Board, a chairman
appointed at the meeting, shall preside at meetings of the shareholders and of
the board of directors, and shall perform such other duties as may from time to
time be requested by the board of directors.
Section 5.08. The President.--The president shall have general supervision
-------------
over the business and operations of the corporation, subject however, to the
control of the board of directors and the chairman of the board, if the chairman
is not also the president. The president shall sign, execute, and acknowledge,
in the name of the corporation, deeds, mortgages, bonds, contracts or other
instruments, authorized by the board of directors, except in cases where the
signing and execution thereof shall be expressly delegated by the board of
directors, or by these bylaws, to some other officer or agent of the
corporation; and, in general, shall perform all duties incident to the office of
president and such other duties as from time to time may be assigned by the
board of directors and the chairman of the board, if the chairman is not also
the president.
Section 5.09. The Vice Presidents.--The vice presidents shall perform the
-------------------
duties of the president in the absence of the president and such other duties as
may from time to time be assigned to them by the board of directors or the
president.
Section 5.10. The Secretary.--The secretary or an assistant secretary
-------------
shall attend all meetings of the shareholders and of the board of directors and
all committees thereof and shall record all the votes of the shareholders and of
the directors and the minutes of the meetings of the shareholders and of the
board of directors and of committees of the board in a book or books to be kept
for that purpose; shall see that notices are given and records and reports
properly kept and filed by the corporation as required by law; shall be the
custodian of the seal of the corporation and see that it is affixed to all
documents to be executed on behalf of the corporation under its seal; and, in
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general, shall perform all duties incident to the office of secretary, and such
other duties as may from time to time be assigned by the board of directors or
the president.
Section 5.11. The Treasurer.--The treasurer or an assistant treasurer
-------------
shall have or provide for the custody of the funds or other property of the
corporation; shall collect and receive or provide for the collection and receipt
of moneys earned by or in any manner due to or received by the corporation;
shall deposit all funds in his or her custody as treasurer in banks or other
places of deposit; shall, whenever so required by the board of directors, render
an account showing all transactions as treasurer, and the financial condition of
the corporation; and, in general, shall discharge such other duties as may from
time to time be assigned by the board of directors or the president.
Section 5.12. Salaries.--The salaries or other compensation of the
--------
officers elected by the board of directors shall be fixed from time to time by
the board of directors or in such manner as the board of directors shall from
time to time provide. The salaries or other compensation of any other officers,
employees and other agents shall be fixed from time to time by the officer or
committee to which the power to elect such officers or to retain or appoint such
employees or other agents has been delegated pursuant to Section 5.03. No
officer shall be prevented from receiving such salary or other compensation by
reason of the fact that the officer is also a director of the corporation.
ARTICLE VI
Certificates of Stock, Transfer, Etc.
Section 6.01. Share Certificates.
------------------
(a) Form of Certificates.--Certificates for shares of the corporation shall
--------------------
be in such form as approved by the board of directors, and shall state that the
corporation is incorporated under the laws of the Commonwealth of Pennsylvania,
the name of the person to whom issued, and the number and class of shares and
the designation of the series (if any) that the certificate represents. If the
corporation is authorized to issue shares of more than one class or series,
certificates for shares of the corporation shall set forth upon the face or back
of the certificate (or shall state on the face or back of the certificate that
the corporation will furnish to any shareholder upon request and without
charge), a full or summary statement of the designations, voting rights,
preferences, limitations and special rights of the
- 21 -
<PAGE>
shares of each class or series authorized to be issued so far as they have been
fixed and determined and the authority of the board of directors to fix and
determine the designations, voting rights, preferences, limitations and special
rights of the classes and series of shares of the corporation.
(b) Share Register.--The share register or transfer books and blank share
--------------
certificates shall be kept by the secretary or by any transfer agent or
registrar designated by the board of directors for that purpose.
Section 6.02. Issuance.--The share certificates of the corporation shall
--------
be numbered and registered in the share register or transfer books of the
corporation as they are issued. They shall be executed in such manner as the
board of directors shall determine.
Section 6.03. Transfer.--Transfers of shares shall be made on the share
--------
register or transfer books of the corporation upon surrender of the certificate
therefor, endorsed by the person named in the certificate or by an attorney
lawfully constituted in writing.
Section 6.04. Record Holder of Shares.--The corporation shall be entitled
-----------------------
to treat the person in whose name any share or shares of the corporation stand
on the books of the corporation as the absolute owner thereof, and shall not be
bound to recognize any equitable or other claim to, or interest in, such share
or shares on the part of any other person.
Section 6.05. Lost, Destroyed or Mutilated Certificates.--The holder of
------------------------------------------
any shares of the corporation shall immediately notify the corporation of any
loss, destruction or mutilation of the certificate therefor, and the board of
directors may, in its discretion, cause a new certificate or certificates to be
issued to such holder, in case of mutilation of the certificate, upon the
surrender of the mutilated certificate or, in case of loss or destruction of the
certificate, upon satisfactory proof of such loss or destruction and, if the
board of directors shall so determine, the deposit of a bond in such form and in
such sum, and with such surety or sureties, as it may direct.
ARTICLE VII
Indemnification of Directors, Officers
and Other Authorized Representatives
Section 7.01. Indemnification of Directors and Officers.
-----------------------------------------
(a) Right to Indemnification. Except as prohibited by law, every director
------------------------
and officer of the corporation shall be entitled as of right to be indemnified
by the corporation against reason-
- 22 -
<PAGE>
able expense and any liability paid or incurred by such person in connection
with any actual or threatened claim, action, suit or proceeding, civil,
criminal, administrative, investigative or other, whether brought by or in the
right of the corporation or otherwise, in which he or she may be involved, as a
party or otherwise, by reason of such person being or having been a director or
officer of the corporation or by reason of the fact that such person is or was
serving at the request of the corporation as a director, officer, employee,
fiduciary or other representative of another corporation, partnership, joint
venture, trust, employee benefit plan or other entity (such claim, action, suit
or proceeding hereinafter being referred to as "action"). Such indemnification
shall include the right to have expenses incurred by such person in connection
with an action paid in advance by the corporation prior to final disposition of
such action, subject to such conditions as may be prescribed by law. Persons
who are not directors or officers of the corporation may be similarly
indemnified in respect of service to the corporation or to another such entity
at the request of the corporation to the extent the board of directors at any
time denominates such person as entitled to the benefits of this Section 7.01.
As used herein, "expense" shall include fees and expenses of counsel selected by
such person; and "liability" shall include amounts of judgments, excise taxes,
fines and penalties, and amounts paid in settlement.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of
-------------------------------
this Section 7.01 is not paid in full by the corporation within thirty days
after a written claim has been received by the corporation, the claimant may at
any time thereafter bring suit against the corporation to recover the unpaid
amount of the claim, and, if successful in whole or in part, the claimant shall
also be entitled to be paid the expense of prosecuting such claim. It shall be
a defense to any such action that the conduct of the claimant was such that
under Pennsylvania law the corporation would be prohibited from indemnifying the
claimant for the amount claimed, but the burden of proving such defense shall be
on the corporation. Neither the failure of the corporation (including its board
of directors, independent legal counsel and its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because the conduct of the claimant
was not such that indemnification would be prohibited by law, nor an actual
determination by the corporation (including its board of directors, independent
legal counsel or its shareholders) that the conduct of the claimant was such
that indemnification would be prohibited by law, shall be a defense to the
action or create a presumption that the conduct of the claimant was such that
indemnification would be prohibited by law.
- 23 -
<PAGE>
(c) Insurance and Funding. The corporation may purchase and maintain
---------------------
insurance to protect itself and any person eligible to be indemnified hereunder
against any liability or expense asserted or incurred by such person in
connection with any action, whether or not the corporation would have the power
to indemnify such person against such liability or expense by law or under the
provisions of this Section 7.01. The corporation may create a trust fund, grant
a security interest, cause a letter of credit to be issued or use other means
(whether or not similar to the foregoing) to ensure the payment of such sums as
may become necessary to effect indemnification as provided herein.
(d) Non-Exclusivity; Nature and Extent of Rights. The right of
--------------------------------------------
indemnification provided for herein (1) shall not be deemed exclusive of any
other rights, whether now existing or hereafter created, to which those seeking
indemnification hereunder may be entitled under any agreement, bylaw or charter
provision, vote of shareholders or directors or otherwise, (2) shall be deemed
to create contractual rights in favor of persons entitled to indemnification
hereunder, (3) shall continue as to persons who have ceased to have the status
pursuant to which they were entitled or were denominated as entitled to
indemnification hereunder and shall inure to the benefit of the heirs and legal
representatives of persons entitled to indemnification hereunder and (4) shall
be applicable to actions, suits or proceedings commenced after the adoption
hereof, whether arising from acts or omissions occurring before or after the
adoption hereof. The right of indemnification provided for herein may not be
amended, modified or repealed so as to limit in any way the indemnification
provided for herein with respect to any acts or omissions occurring prior to the
effective date of any such amendment, modification or repeal.
Section 7.02. Indemnification of Persons Not Indemnified Under Section
--------------------------------------------------------
7.01.
- ----
(a) The provisions of this Section 7.02 are applicable only to employees
and other authorized representatives of the corporation who are not entitled to
the benefits of Section 7.01 pursuant to either the terms of Section 7.01 or a
resolution of the board of directors of the corporation.
(b) Employees; Third Party Actions. The corporation shall indemnify any
------------------------------
employee of the corporation who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that such person is
or was an authorized representative of the corporation (which, for the purposes
of this Section 7.02, shall mean an employee or agent of the corporation, or a
person who is or was serving at the request of the corporation as a director,
officer,
- 24 -
<PAGE>
employee, fiduciary or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise) against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which that
person reasonably believed to be in, or not opposed to, the best interests of
the corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
(c) Employees; Derivative Actions. The corporation shall indemnify any
-----------------------------
employee of the corporation who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
such person is or was an authorized representative of the corporation, against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection with the defense or settlement of such action or suit if
such person acted in good faith and in a manner such person reasonably believed
to be in, or not opposed to, the best interests of the corporation and except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his or her duty to the corporation unless and
only to the extent that the court of common pleas of the county in which the
registered office of the corporation is located or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
the court of common pleas or such other court shall deem proper.
(d) Other Authorized Representatives. To the extent that an authorized
--------------------------------
representative of the corporation who is not an employee of the corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (b) and (c) of this Section 7.02 or in
defense of any claim, issue or matter therein, such person shall be indemnified
by the corporation against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith. Such an authorized
representative may, at the discretion of the corporation, be indemnified by the
corporation in any other circumstances and to any extent if the
- 25 -
<PAGE>
corporation would be required by subsections (b) and (c) of this Section 7.02 to
indemnify such person in such circumstances and to such extent if such person
were or had been an employee of the corporation.
(e) Procedure for Effecting Indemnification. Indemnification under
---------------------------------------
subsections (b), (c) or (d) of this Section 7.02 shall be made when ordered by a
court (in which case the expenses, including attorneys' fees, of the authorized
representative in enforcing such right of indemnification shall be added to and
be included in the final judgment against the corporation) or shall be made upon
a determination that indemnification of the authorized representative is
required or proper in the circumstances because such person has met the
applicable standard of conduct set forth in subsections (b) and (c) of this
Section 7.02. Such determination shall be made:
(1) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, or
(2) if such a quorum is not obtainable, or, even if obtainable, a
majority vote of a quorum of disinterested directors so direct, by
independent legal counsel in a written opinion, or
(3) by the shareholders.
(f) Advancing Expenses. Expenses (including attorneys' fees) incurred in
------------------
defending a civil or criminal action, suit or proceeding shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding, upon receipt of an undertaking by or on behalf of an employee to
repay such amount unless it shall ultimately be determined that such person is
entitled to be indemnified by the corporation as required in this Section 7.02
or as authorized by law and may be paid by the corporation in advance on behalf
of any other authorized representative when authorized by the board of directors
upon receipt of a similar undertaking.
(g) Non-Exclusivity; Nature and Extent of Rights. Each person who shall
--------------------------------------------
act as an authorized representative of the corporation and who is not entitled
to the benefits of Section 7.01, shall be deemed to be doing so in reliance upon
such rights of indemnification as are provided in this Section 7.02.
The indemnification provided by this Section 7.02 shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any agreement, vote of shareholders or disinterested directors,
statute or otherwise, both as to action in his or her official capacity and as
to action in another capacity while holding such office or position,
- 26 -
<PAGE>
and shall continue as to a person who has ceased to be an authorized
representative of the corporation and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ARTICLE VIII
Miscellaneous
Section 8.01. Corporate Seal.--The corporation shall have a corporate seal
--------------
in the form of a circle containing the name of the corporation, the year of
incorporation and such other details as may be approved by the board of
directors. The affixation of the corporate seal shall not be necessary to the
valid execution, assignment or endorsement by the corporation of any instrument
or other document.
Section 8.02. Checks.--All checks, notes, bills of exchange or other
------
similar orders in writing shall be signed by such one or more officers or
employees of the corporation as the board of directors may from time to time
designate.
Section 8.03. Contracts.--Except as otherwise provided in the Business
---------
Corporation Law in the case of transactions that require action by the
shareholders, the board of directors may authorize any officer or agent to enter
into any contract or to execute or deliver any instrument on behalf of the
corporation, and such authority may be general or confined to specific
instances.
Section 8.04. Interested Directors or Officers; Quorum.
----------------------------------------
(a) General Rule.--A contract or transaction between the corporation and
------------
one or more of its directors or officers or between the corporation and another
corporation, partnership, joint venture, trust or other enterprise in which one
or more of its directors or officers are directors or officers or have a
financial or other interest, shall not be void or voidable solely for that
reason, or solely because the director or officer is present at or participates
in the meeting of the board of directors that authorizes the contract or
transaction, or solely because his, her or their votes are counted for that
purpose, if:
(1) the material facts as to the relationship or interest and as to
the contract or transaction are disclosed or are known to the board of
directors and the board authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors even though
the disinterested directors are less than a quorum;
(2) the material facts as to his or her relationship or interest and
as to the contract or transaction are dis-
- 27 -
<PAGE>
closed or are known to the shareholders entitled to vote thereon and the
contract or transaction is specifically approved in good faith by vote of
those shareholders; or
(3) the contract or transaction is fair as to the corporation as of
the time it is authorized, approved or ratified by the board of directors
or the shareholders.
(b) Quorum.--Common or interested directors may be counted in determining
------
the presence of a quorum at a meeting of the board which authorizes a contract
or transaction specified in subsection (a).
Section 8.05. Deposits.--All funds of the corporation shall be deposited
--------
from time to time to the credit of the corporation in such banks, trust
companies or other depositaries as the board of directors may approve or
designate, and all such funds shall be withdrawn only upon checks signed by such
one or more officers or employees of the corporation as the board of directors
shall from time to time designate.
Section 8.06. Corporate Records.
-----------------
(a) Required Records.--The corporation shall keep complete and accurate
----------------
books and records of account, minutes of the proceedings of the incorporators,
shareholders and directors and a share register giving the names and addresses
of all shareholders and the number and class of shares held by each. The share
register shall be kept at either the registered office of the corporation in the
Commonwealth of Pennsylvania or at its principal place of business wherever
situated or at the office of its registrar or transfer agent. Any books,
minutes or other records may be in written form or any other form capable of
being converted into written form within a reasonable time.
(b) Right of Inspection.--Every shareholder shall, upon written verified
-------------------
demand stating the purpose thereof, have a right to examine, in person or by
agent or attorney, during the usual hours for business for any proper purpose,
the share register, books and records of account, and records of the proceedings
of the incorporators, shareholders and directors and to make copies or extracts
therefrom. A proper purpose shall mean a purpose reasonably related to the
interest of the person as a shareholder. In every instance where an attorney or
other agent is the person who seeks the right of inspection, the demand shall be
accompanied by a verified power of attorney or other writing that authorizes the
attorney or other agent to so act on behalf of the shareholder. The demand
shall be directed to the corporation at its registered office in the
Commonwealth of Pennsylvania or at its principal place of business wherever
situated.
- 28 -
<PAGE>
Section 8.07. Amendment of Bylaws. These bylaws may be amended or
-------------------
repealed, or new bylaws may be adopted, by the shareholders and by the board of
directors of the corporation in the manner provided in Article X of the
articles. Any change in these bylaws shall take effect when adopted unless
otherwise provided in the resolution effecting the change. See Section 2.03(b)
(relating to notice of action by shareholders on bylaws).
- 29 -
<PAGE>
PENNSYLVANIA BUSINESS CORPORATION LAW
BYLAW DERIVATION TABLE
-------------------------------------
<TABLE>
<CAPTION>
Bylaw BCL Section Bylaw BCL Section
- ----- ----------- ----- -----------
<S> <C> <C> <C>
1.01 1507 4.03(a) 1723
1.02 1502(a)(15) (b) 1724(a)
1.03 1554 (c) 1724(b)
4.04 1725(b)
2.01 1702 4.05 1726
2.02 1703(b) 4.06 1703(a)
2.03(a) 1704(b) 4.07 none
(b) 1504(a) 4.08 none
(c) 1913(a) 1923(a), 1952(c), 4.09 none
1962(b), 1973 4.10 1714, 1727
(d) 1571(d), 1906(c) 4.11 1731
2.04 1705 4.12 1730
2.05 1706
2.06 1707 5.01 1712, 1732(a)
2.07 1708 5.02 1732(a)
5.03 1732(a)
3.01 1704(a) 5.04 1733
3.02 1755(a) 5.05 1732(a)
3.03 1755(b), 2521 5.06 1732(b)
3.04(a) 1756(a)(1), 1762(c) 5.07 none
(b) 1756(a)(2) 5.08 none
(c) 1755(c), 1756(a)(3), 2522 5.09 none
(d) 1756(b)(1) 5.10 none
(e) 1756(b)(2) 5.11 none
3.05 1726(a)(4), 1757(a), 1766(a) 5.12 none
3.06 none
3.07 1758(a) 6.01(a) 1528(c), (d)
3.08(a) 1759(a) (b) 1508(a), 1732(b)
(b) 1759(b) 6.02 none
(c) 1759(c) 6.03 1529(a)
(d) 1757(c) 6.04 1103 ("shareholder"),
3.09 1760 1764(b)
3.10 1761 6.05 none
3.11 1762(a), (c)
3.12 1763 7.01 1741-1747, 1750
3.13 1764 7.02 1741-1747, 1750
3.14 1765
3.15 1769(a) 8.01 1502(a)(3); cf. 1109 and
3.16 1758(b) 1506(b)
3.17 none 8.02 1502
8.03 1502(a)(17)
4.01(a) 1721 8.04 1728
(b) 1713 8.05 1502(a)(8)
4.02(a) 1722 8.06 1508(a), (b)
(b) 1725(a) 8.07 1504
</TABLE>
- 30 -
<PAGE>
Exhibit 5.1
[LETTERHEAD OF PP&L APPEARS HERE]
March 3, 1995
PP&L Resources, Inc.
Two North Ninth Street
Allentown, Pennsylvania 18101
Dear Sirs:
I am Senior Counsel of Pennsylvania Power & Light Company ("PP&L")
and, as such, am familiar with the affairs of PP&L and its subsidiaries.
With respect to the Registration Statement on Form S-4 to be filed by
PP&L Resources, Inc., a wholly owned subsidiary of PP&L ("Resources"), on or
about the date hereof with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act"), in connection with the issuance
by Resources of not in excess of 156,392,018 shares of its Common Stock, par
value $.01 per share ("Common Stock"), in exchange for shares of common stock of
PP&L and 3,588,904 shares of Common Stock in connection with the Dividend
Reinvestment Plan of PP&L (the "DRIP") which is to be assumed by Resources
(together, the "Shares"), I wish to advise you as follows:
I am of the opinion that Resources is a corporation validly organized
and existing under the laws of the Commonwealth of Pennsylvania and is duly
qualified to carry on the business which it is now conducting in that
Commonwealth.
I am further of the opinion that when the Shares have been issued and
exchanged in accordance with the transactions proposed in said Registration
Statement, as the same may be amended, or under the DRIP, when the appropriate
actions by the Securities and Exchange Commission under the Act and the Public
Utility Holding Company Act of 1935, as amended, have been taken, and when the
Articles of Exchange relating to the Shares has been filed with the Pennsylvania
Department of State, the Shares will be legally issued, fully paid and
nonassessable.
I am further of the opinion that the description of certain personal
property tax consequences appearing under the heading "Pennsylvania Personal
Property Taxes" in the Proxy Statement and Prospectus contained in the
Registration Statement is accurate in all material respects. I express no
opinion as to federal or state tax issues other than with respect to such
personal property tax consequences.
I hereby consent to the use of this opinion as an exhibit to said
Registration Statement and to the use of my name in the Registration Statement
and in the Proxy Statement and
<PAGE>
Prospectus constituting a part thereof under the captions "Pennsylvania Personal
Property Taxes," "Legal Opinions" and "Experts." I also hereby give my consent
to the use of my name, and reliance upon the aforesaid opinion, in the opinion
of Simpson Thacher & Bartlett, filed as Exhibit 5.2 to said Registration
Statement.
Very truly yours,
/s/ Michael A. McGrail
Michael A. McGrail
<PAGE>
Exhibit 5.2
[LETTERHEAD OF SIMPSON THACHER & BARTLETT APPEARS HERE)
March 3, 1995
PP&L Resources, Inc.
Two North Ninth Street
Allentown, Pennsylvania 18101
Dear Sirs:
With respect to the Registration Statement on Form S-4 (the
"Registration Statement") of PP&L Resources, Inc. (the "Company") relating to
the issuance of not in excess of 156,392,018 shares of its Common Stock, par
value $.01 per share ("Common Stock") in exchange for shares of common stock of
Pennsylvania Power & Light Company ("PP&L") and 3,588,904 shares of Common Stock
in connection with the Dividend Reinvestment Plan of PP&L (the "DRIP") which is
to be assumed by the Company (together, the "Shares") we wish to advise you that
in our opinion, when the Shares have been issued and exchanged in accordance
with the transactions proposed in the Registration Statement, as the same may be
amended, or under the DRIP and when the steps mentioned in the next paragraph
have been taken, the Shares will be legally issued, fully paid and
nonassessable.
The steps to be taken which are referred to in the next preceding
paragraph consist of the following:
(1) Appropriate definitive action by the Board of Directors or
Executive Committee of the Company;
<PAGE>
PP&L Resources, Inc. -2- March 3, 1995
(2) Appropriate action by and before the Pennsylvania Public Utility
Commission;
(3) Filing of Articles of Exchange with respect to the Shares with
the Department of State of the Commonwealth of Pennsylvania;
(4) Compliance with the Securities Act of 1933, as amended;
(5) Compliance with the Public Utility Holding Company Act of 1935, as
amended; and
(6) Issuance of the Shares in accordance with the corporate and
governmental authorizations aforesaid.
We are members of the Bar of the State of New York and we do not express
any opinion herein concerning any law other than the law of the State of New
York and the federal law of the United States. Insofar as this opinion relates
to any matters governed by the laws of the Commonwealth of Pennsylvania, we have
relied upon the opinion of Michael A. McGrail, Esq., to be filed as an exhibit
to the Registration Statement.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference of this firm appearing in the
Registration Statement under the caption "Legal Opinions".
Very truly yours,
/s/ Simpson Thacher & Bartlett
SIMPSON THACHER & BARTLETT
<PAGE>
[LETTERHEAD OF REID & PRIEST LLP APPEARS HERE]
Exhibit 8.2
New York, New York
March 1, 1995
Pennsylvania Power & Light Company
Two North Ninth Street
Allentown, Pennsylvania 18101-1179
PP&L Resources, Inc.
Two North Ninth Street
Allentown, Pennsylvania 18101-1179
Gentlemen:
We have acted as special federal income tax counsel to
Pennsylvania Power & Light Company, a Pennsylvania corporation ("PP&L"),
and PP&L Resources, Inc., also a Pennsylvania corporation ("Resources"), in
connection with the Registration Statement on Form S-4 to be filed by
Resources with the Securities & Exchange Commission on or about the date
hereof.
In connection with this opinion, we have reviewed the form of
Agreement and Plan of Exchange to be entered into between PP&L and
Resources (the "Plan of Exchange"), such Registration Statement (the
"Registration Statement") and such other documents and public records as we
have deemed necessary or appropriate for the purposes of this opinion. In
addition, we have expressly relied upon certain representations made to us
by PP&L and Resources. If any statements contained in the Registration
Statement are not true and accurate, or if any such representations made to
us are not true and accurate, then we express no opinion to the extent that
the subject matter of our opinion is affected thereby. Unless otherwise
defined herein, capitalized terms shall have the meanings ascribed to them
in the Registration Statement.
This opinion is based upon the Internal Revenue Code of 1986, as
amended to date (the "Code"), including regulations promulgated thereunder,
and the judicial and administrative interpretations thereof as they exist
on the date hereof. There
<PAGE>
can be no assurance that the legal authorities upon which this opinion is
based will not be modified, revoked, supplemented, amended, revised,
reversed or overruled. We assume no obligation to update or supplement this
opinion to reflect changes in such legal authorities.
Based on the foregoing, it is our opinion that, when the Share
Exchange has been consummated in the manner described in the Registration
Statement, for federal income tax purposes:
1. The Share Exchange will constitute an exchange qualifying
for nonrecognition under Code section 351(a).
2. No income, gain or loss will be recognized by PP&L
or Resources as a result of the Share Exchange.
3. The basis of the PP&L Common Shares received by
Resources will be the same as PP&L's net asset
basis immediately after the Share Exchange,
subject to certain adjustments under Treasury
Regulations relating to consolidated groups.
4. Resources' holding period in the PP&L Common
Shares includes the period during which such
stock was held by the Shareowners.
5. The consolidated group of corporations of which,
prior to the Share Exchange, PP&L is the common
parent for federal income tax purposes will
continue after the Share Exchange with Resources
as the new parent corporation.
6. No income, gain or loss will be recognized by the
holders of PP&L Common Shares from the Share
Exchange.
7. The tax basis of the Resources Common Shares
received by a Shareowner will be the same as the
Shareowner's basis in the PP&L Common Shares
surrendered in the Share Exchange.
8. The holding period of the Resources Common Shares
held by each Shareowner will, for determining
long-term capital gains for federal income tax
purposes, include the holding period during which
<PAGE>
such Shareowner held the PP&L Common Shares,
provided that the PP&L Common Shares were held as
a capital asset on the date of the exchange.
9. No income, gain or loss will be recognized by the
holders of PP&L Preferred Stock from the Share
Exchange.
We also confirm our opinion as set forth under the caption
"Certain Income Tax Consequences" in the Registration Statement.
Our opinion is limited to the matters expressly addressed above.
No opinion is expressed and none should be inferred as to any other matter.
We hereby authorize and consent to your use of this opinion as
Exhibit 8.2 to the Registration Statement. We further authorize and
consent to the reference to our firm as special federal income tax counsel
in the Registration Statement and in the prospectus constituting a part
thereof under the captions "Certain Income Tax Consequences" and "Experts".
This opinion is intended solely for your use and is not to be
made available to or relied upon by other persons or entities without our
prior written consent.
Very truly yours,
/s/ Reid & Priest LLP
REID & PRIEST LLP
<PAGE>
Exhibit 8.3
[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL APPEARS HERE]
March 1, 1995
Pennsylvania Power & Light Company
PP&L Resources, Inc.
Two North Ninth Street
Allentown, PA 18101
Re: Proposed Restructuring --
Pennsylvania Income Tax Consequences
------------------------------------
Gentlemen:
You have requested our opinion regarding certain Pennsylvania income
tax consequences to the holders of Common Stock (the "PP&L Common Shares") of
Pennsylvania Power & Light Company ("PP&L"), to the holders of 4-1/2% Preferred
Stock and Series Preferred Stock of PP&L (the "PP&L Preferred Stock"), and to
PP&L Resources, Inc. ("Resources") in connection with the proposed transfer of
all of the outstanding PP&L Common Shares by the holders thereof to Resources
solely in exchange (the "Share Exchange") for all of the outstanding Common
Stock of Resources (the "Resources Common Shares"), all pursuant to the
Agreement and Plan of Exchange between PP&L and Resources (the "Agreement") in
the form attached to the Proxy Statement and Prospectus that is included in the
Registration Statement on Form S-4 to be filed by Resources with the Securities
and Exchange Commission on or about the date hereof (the "Proxy Statement").
Unless otherwise defined herein, capitalized terms shall have the meanings
ascribed to them in the Proxy Statement.
For purposes of this opinion, we have examined and rely upon the
Agreement, the description of the Share Exchange set forth in the Proxy
Statement, and such other documents and instruments that we have deemed
necessary or appropriate. This opinion is based upon the Internal Revenue Code
of 1986, as amended, the Pennsylvania Tax Reform Code of 1971, as amended,
regulations of the United States Treasury and the Pennsylvania Department of
Revenue (the "PA DOR"), judicial decisions and rulings and pronouncements of the
Internal Revenue Service and PA
<PAGE>
Pennsylvania Power & Light Company
PP&L Resources, Inc.
March 1, 1995
Page 2
DOR, all as in effect on the date hereof. This opinion is conditioned upon
(a) the Share Exchange taking place in the manner described in the Agreement and
in the Proxy Statement and (b) there being no change in the applicable federal
or Pennsylvania law, regulations, judicial decisions or administrative rulings
and pronouncements between the date hereof and the Effective Time of the Share
Exchange.
Based upon and subject to the foregoing, it is our opinion that the
Share Exchange constitutes an exchange qualifying for non-recognition under
Section 303(a)(3) of the Pennsylvania Tax Reform Code of 1971, as amended.
Accordingly, for Pennsylvania corporate net income and personal income tax
purposes:
1. A holder of PP&L Common Shares will recognize no gain or loss by
reason of the exchange of such PP&L Common Shares solely for Resources Common
Shares;
2. The basis of the Resources Common Shares received by a holder will
be the same as the basis of the PP&L Common Shares surrendered in exchange
therefor; and
3. A holder of shares of PP&L Preferred Stock will recognize no gain
or loss by reason of the Share Exchange.
It is further our opinion that, for Pennsylvania corporate net income
tax purposes, Resources will recognize no gain or loss upon receipt of PP&L
Common Shares in exchange for Resources Common Shares, and the basis of the PP&L
Common Shares received by Resources will be the same as the Shareowners' basis
for such PP&L Common Shares immediately prior to the Share Exchange.
We express no opinion as to the tax consequences of the Share Exchange
except as expressly set forth above, or as to any transaction except the Share
Exchange.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-4 that is to be filed by Resources with the
Securities and Exchange Commission and to the use of our name in such
Registration Statement and in the Prospectus constituting a part thereof under
the captions "Certain Income Tax Consequences" and "Experts."
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll
<PAGE>
Exhibit 23.2
------------
INDEPENDENT AUDITORS' CONSENT
-----------------------------
We consent to the incorporation by reference in this Registration Statement of
Pennsylvania Power & Light Company on Form S-4 of our report dated February 3,
1995, appearing in the Annual Report on Form 10-K of Pennsylvania Power & Light
Company for the year ended December 31, 1994 and to the reference to us under
the heading "Experts" in the Proxy Statement and Prospectus, which is part of
this Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
March 3, 1995
<PAGE>
EXHIBIT 24.1
PP&L RESOURCES, INC.
ISSUANCE OF COMMON STOCK IN CONNECTION WITH
SHARE EXCHANGE
POWER OF ATTORNEY
-----------------
I, R.E. Hill, the undersigned principal financial and accounting officer of
PP&L Resources, Inc., a Pennsylvania corporation, hereby appoint John R. Biggar
and John P. Kierzkowski, my true and lawful attorney, and each of them my true
and lawful attorney, with power to act without the other and with full power of
substitution and resubstitution, to execute for me and in my name to file with
the Securities and Exchange Commission, Washington, D.C., under the provisions
of the Securities Act of 1933, as amended, a registration statement for the
registration under provisions of the Securities Act of 1933, as amended, and any
other rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, Common Stock of PP&L Resources, Inc. to be issued
in connection with its Agreement and Plan of Exchange with Pennsylvania Power &
Light Company, and any and all amendments thereto, whether said amendments add
to, delete from or otherwise alter any such registration statement, or add or
withdraw any exhibits or schedules to be filed therewith and any and a11
instruments in connection therewith. I hereby grant to said attorneys and each
of them full power and authority to do and perform in my name and on my behalf,
and in any and all capabilities, any act and thing whatsoever required or
necessary to be done in and about the premises, as fully and to all intents and
purposes as I might do, hereby ratifying and approving the acts of said
attorneys and each of them.
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 24th day of
February, 1995.
/s/ R.E. Hill L.S.
------------------------------
R.E. Hill
<PAGE>
PP&L RESOURCES, INC.
ISSUANCE OF COMMON STOCK IN CONNECTION WITH
SHARE EXCHANGE
POWER OF ATTORNEY
------------------
I, F.A. Long, the undersigned director of PP&L Resources, Inc., a
Pennsylvania corporation, hereby appoint R.E. Hill and John R. Biggar, my true
and lawful attorney, and each of them my true and lawful attorney, with power to
act without the other and with full power of substitution and resubstitution,
to execute for me and in my name to file with the Securities and Exchange
Commission, Washington, D.C., under the provisions of the Securities Act of
1933, as amended, a registration statement for the registration under provisions
of the Securities Act of 1933, as amended, and any other rules, regulations or
requirements of the Securities and Exchange Commission in respect thereof,
Common Stock of PP&L Resources, Inc. to be issued in connection with its
Agreement and Plan of Exchange with Pennsylvania Power & Light Company, and any
and a11 amendments thereto, whether said amendments add to, delete from or
otherwise alter any such registration statement, or add or withdraw any exhibits
or schedules to be filed therewith and any and all instruments in connection
therewith. I hereby grant to said attorneys and each of them full power and
authority to do and perform in my name and on my behalf, and in any and all
capabilities, any act and thing whatsoever required or necessary to be done in
and about the premises, as fully and to all intents and purposes as I might do,
hereby ratifying and approving the acts of said attorneys and each of them.
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 24th day of
February, 1995.
/s/ F.A. Long L.S.
------------------------------
F.A. Long
<PAGE>
PP&L RESOURCES, INC.
ISSUANCE OF COMMON STOCK IN CONNECTION WITH
SHARE EXCHANGE
POWER OF ATTORNEY
-----------------
I, William F. Hecht, the undersigned director and principal executive
officer of PP&L Resources, Inc., a Pennsylvania corporation, hereby appoint
R.E. Hill and John R. Biggar, my true and lawful attorney, and each of them my
true and lawful attorney, with power to act without the other and with full
power of substitution and resubstitution, to execute for me and in my name to
file with the Securities and Exchange Commission, Washington, D.C., under the
provisions of the Securities Act of 1933, as amended, a registration statement
for the registration under provisions of the Securities Act of 1933, as amended,
and any other rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, Common Stock of PP&L Resources, Inc. to be issued
in connection with its Agreement and Plan of Exchange with Pennsylvania Power &
Light Company, and any and all amendments thereto, whether said amendments add
to, delete from or otherwise alter any such registration statement, or add or
withdraw any exhibits or schedules to be filed therewith and any and all
instruments in connection therewith. I hereby grant to said attorneys and each
of them full power and authority to do and perform in my name and on my behalf,
and in any and all capabilities any act and thing whatsoever required or
necessary to be done in and about the premises, as fully and to all intents and
purposes as I might do, hereby ratifying and approving the acts of said
attorneys and each of them.
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 24th day of
February, 1995.
/s/ William F. Hecht L.S.
-------------------------------
William F. Hecht
<PAGE>
Exhibit 99.1
[LOGO OF PP&L Pennsylvania Power & Light Company
APPEARS HERE] ----------------------------------
Two North Ninth Street * Allentown, PA 18101-9968
Proxy Solicited on Behalf of the William F. Hecht, Norman Robertson
Board of Directors for Annual and Daniel G. Gambet, and each of
Meeting of Shareowners, April them, are hereby appointed proxies,
26, 1995 with the power of substitution, to
vote the shares of the undersigned,
as directed on the reverse side of
P this card, at the Annual Meeting of
Shareowners of Pennsylvania Power &
R Light Company to be held on April
26, 1995, and any adjournments
O thereof, and in their discretion to
vote and act upon any other matters
X as may properly come before said
meeting and any adjournments thereof.
Y
Please mark your Proxy on the reverse ------------------------------------
side, sign and date it, and return it (SIGNATURE)
promptly in the envelope provided.
Please sign exactly as your name appears ------------------------------------
above. When signing as executor, (SIGNATURE)
administrator, trustee, custodian, or
other duly authorized person, give Dated 1995
full title. If stock is held jointly, --------------------
each joint owner should sign. (Continued on other side)
<PAGE>
The Board of Directors recommends a vote FOR the following items. Shares
represented by this Proxy will be so voted unless otherwise indicated below, in
which case they will be voted as marked. Information pertaining to each proposal
is included in the Proxy Statement and Prospectus.
FOR AGAINST ABSTAIN
(1) Approval of the Holding Company Restructuring [ ] [ ] [ ] (1)
pursuant to the Plan of Exchange between PP&L
and PP&L Resources, Inc.
(2) Election of Directors - (1) Derek C. Hathaway [ ] VOTE FOR [ ]WITHHOLD (2)
(2) Stuart Heydt all listed AUTHORITY
(3) Clifford L. Jones Nominees to vote for
(4) Robert Y. Kaufman except as all listed
(5) Ruth Leventhal indicated Nominees
(To withhold authority to vote for any individual
Nominee, write that person's name on the line
below.)
--------------------------------------------- FOR AGAINST ABSTAIN
(3) Approval of the Amended and Restated Directors [ ] [ ] [ ] (3)
Deferred Compensation Plan
(4) Approval of the Amended and Restated Incentive [ ] [ ] [ ] (4)
Compensation Plan
(5) Ratification of the appointment of Price [ ] [ ] [ ] (5)
Waterhouse LLP as independent auditors
<PAGE>
Pennsylvania Power & Light Company
Allentown, Pennsylvania
If you plan to attend the Annual Meeting of Shareowners on April 26, 1995,
please fill out and return this reservation form so that an attendance card may
be sent to you. Please use the enclosed envelope for the return of both this
card and your proxy.
You may, of course, attend the meeting without a card upon proper
indentification. However, by indicating your plans in advance, we can make the
necessary arrangements. Your cooperation is appreciated.
<PAGE>
Annual Meeting Reservation
I
We............................................................................
Please type or print name(s)
Address.......................................................................
Please type or print
..........................................................Zip.................
plan to attend the Annual Meeting of Shareowners to be held at Lehigh
University's Stabler Arena, Lower Saucon Valley Goodman Campus Complex,
Bethlehem, Pa., on Wednesday, April 26, 1995, at 1:30 p.m. Please send an
attendance card.
Have You Enclosed Your Signed Proxy?
<PAGE>
RE: ANNUAL MEETING OF SHAREOWNERS
APRIL 26, 1995
PENNSYLVANIA POWER & LIGHT COMPANY
TO PARTICIPANTS IN THE EMPLOYEE STOCK OWNERSHIP PLAN:
We are forwarding to you the enclosed proxy materials which relate to shares
of Common Stock of the Company credited to your account under the Employee
Stock Ownership Plan ("Plan"). As a participant in the Plan, you are entitled
to instruct the Trustees, as record owner of your Plan shares, to vote those
shares in accordance with your wishes.
You may indicate your instructions by completing and returning the enclosed
Proxy. Full and fractional shares credited to your account under the Plan as of
February 28, 1995 will be voted by the Trustees in accordance with your
instructions.
If you sign your Proxy and return it without voting instructions, your shares
will be voted as recommended by the Board of Directors on each of the proposals
described in the Proxy Statement. IF YOU DO NOT RETURN YOUR PROXY, OR RETURN IT
UNSIGNED, YOUR SHARES WILL BE VOTED BY THE TRUSTEES IN ACCORDANCE WITH WHAT
THEY BELIEVE TO BE IN THE BEST INTERESTS OF THE PARTICIPANTS, AS REQUIRED BY
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT (ERISA).
Please mark, sign, date and return your instructions promptly. In this way,
you will be sure that your shares will be represented at the meeting in
accordance with your wishes. A self-addressed, postage-paid envelope is
enclosed for your convenience.
Active employees who wish to attend the Annual Meeting can obtain an
attendance card from Investor Services (ETN 220-5501). The Company will
continue its established policy of permitting active employee-shareowners to
attend the Annual Meeting only with supervisory approval to use vacation or
time off without pay.
The enclosed Proxy shows your current share balance in the Plan and reflects
the recent allocation of Common Stock to your account. For each $100 of
dividends you received on Plan shares in 1994, 3.312 shares were allocated to
your account. For each $10,000 in compensation (up to $53,000) you received in
1994, 2.374 shares were allocated to your account. Details of this allocation
will be shown on your statement of account for April.
<PAGE>
RE: ANNUAL MEETING OF SHAREOWNERS
APRIL 26, 1995
PENNSYLVANIA POWER & LIGHT COMPANY
TO PARTICIPANTS IN THE DIVIDEND REINVESTMENT PLAN:
We are forwarding to you the enclosed proxy materials which relate to shares
of Common Stock of the Company credited to your account under the Dividend
Reinvestment Plan ("Plan"). As a participant in the Plan, you are entitled to
instruct the Company, as record owner of your Plan shares, to vote those shares
in accordance with your wishes.
You may indicate your instructions by completing and returning the enclosed
Proxy. Full and fractional shares credited to your account under the Plan as of
February 28, 1995 will be voted by the Company in accordance with your
instructions.
If you sign your Proxy and return it without voting instructions, your shares
will be voted as recommended by the Board of Directors on each of the proposals
described in the Proxy Statement. HOWEVER, IF YOU DO NOT RETURN YOUR PROXY, OR
RETURN IT UNSIGNED, YOUR SHARES WILL NOT BE VOTED.
Please mark, sign, date and return your instructions promptly. In this way,
you will be sure that your shares will be represented at the meeting in
accordance with your wishes. A self-addressed, postage-paid envelope is
enclosed for your convenience.
