PRICING SUPPLEMENT
------------------
(To Prospectus dated October 4, 1999 as supplemented
by Prospectus Supplement dated June 6, 2000)
$300,000,000 [LOGO]
PPL Capital Funding, Inc.
8 3/8% Notes Due 2007
Unconditionally Guaranteed as to
Payment of Principal and any Interest and Premium by
PPL Corporation
-------------------
Interest payable on June 15 and December 15
-------------------
The 8 3/8% Notes Due 2007 (the "Offered Notes"), are a tranche of PPL
Capital Funding's securities designated Medium-Term Notes, Series D, and are
described in the accompanying prospectus and prospectus supplement. PPL Capital
Funding's payment obligations on the Offered Notes will be unconditionally
guaranteed by PPL Capital Funding's parent, PPL Corporation. Interest on the
Offered Notes will be payable on June 15 and December 15, commencing December
15, 2000, as described herein and in the accompanying prospectus and prospectus
supplement. The Offered Notes will mature on June 15, 2007, and are redeemable
at the option of PPL Capital Funding, in whole at any time or in part from time
to time, as described herein.
<TABLE>
Underwriting Discounts Proceeds to
Price to Public(1) and Commissions PPL Capital Funding(1)
------------------ ---------------------- -----------------------
<S> <C> <C> <C>
Per Offered Note........... 99.391% .625% 98.766%
Total...................... $298,173,000 $1,875,000 $296,298,000
</TABLE>
--------------
(1) Plus accrued interest, if any, from date of issuance.
---------------------
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this pricing supplement, the accompanying
prospectus supplement or the accompanying prospectus. Any representation to the
contrary is a criminal offense.
The Underwriters expect to deliver the Offered Notes to the purchasers
in book-entry form through the facilities of The Depository Trust Company on or
about June 15, 2000.
---------------------
Joint Book-runners:
Credit Suisse First Boston Morgan Stanley Dean Witter
--------------------
Banc One Capital Markets, Inc.
Goldman, Sachs & Co.
Merrill Lynch & Co.
June 8, 2000
<PAGE>
You should rely on the information contained in or incorporated by
reference in this pricing supplement and the accompanying prospectus supplement
and prospectus. We have not authorized anyone to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information contained
in or incorporated by reference in this pricing supplement and the accompanying
prospectus supplement and prospectus is accurate as of any date after the date
of this pricing supplement.
TABLE OF CONTENTS
PRICING SUPPLEMENT
PAGE
----
Use of Proceeds..............................................................P-3
Description of the Offered Notes.............................................P-3
Underwriters.................................................................P-5
PROSPECTUS SUPPLEMENT
Description of the Notes.....................................................S-2
Certain United States Federal Income Tax Considerations.....................S-19
Validity of the Notes and the Guarantee.....................................S-21
Supplemental Plan of Distribution...........................................S-22
PROSPECTUS
About this Prospectus..........................................................2
Where You Can Find More Information............................................3
PP&L Resources.................................................................5
PP&L Capital Funding...........................................................7
PP&L Capital Funding Trust I...................................................7
Use of Proceeds................................................................7
Ratios of Earnings to Fixed Charges and Earnings to Fixed Changes and
Preferred Dividends............................................................9
Description of PP&L Resources' Capital Stock...................................8
Description of Stock Purchase Contracts and Stock Purchase Units..............10
Description of the Debt Securities............................................10
Description of the Trust Securities...........................................20
Description of the Preferred Securities Guarantee.............................28
Description of the Subordinated Debt Securities...............................31
Information Concerning the Trustees...........................................45
Experts.......................................................................45
Validity of the Securities and the Securities Guarantees......................45
Plan of Distribution..........................................................45
P-2
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by PPL Capital Funding, Inc. from the
sale of the Offered Notes will be used for general corporate purposes, including
making loans to the unregulated subsidiaries of PPL Corporation and reduction of
commercial paper balances. At May 31, 2000, PPL Capital Funding had $384 million
aggregate principal amount of commercial paper notes outstanding, bearing
interest at a weighted average rate of 6.857% per annum. Certain proceeds from
the sale of commercial paper notes were loaned to a subsidiary of PPL
Corporation to partially finance the $757 million acquisition of generation
assets from The Montana Power Company in December 1999.
DESCRIPTION OF THE OFFERED NOTES
The following description of the particular terms of the Offered Notes
supplements, and to the extent inconsistent replaces, the description of the
general terms and provisions of the Debt Securities set forth under "Description
of the Debt Securities" in the accompanying prospectus, and of the Notes set
forth under "Description of the Notes" in the accompanying prospectus
supplement, to which general description reference is hereby made. The following
summary of certain terms and provisions of the Offered Notes, the Guarantees and
the Indenture does not purport to be complete and is qualified in its entirety
by reference to the actual provisions of the Offered Notes, the Guarantees and
the Indenture. Capitalized terms used but not defined herein shall have the
meanings given to them in the accompanying prospectus and prospectus supplement,
the Offered Notes or the Indenture, as the case may be.
GENERAL
The Offered Notes will be issued as a separate tranche of Medium-Term
Notes, Series D, under the Indenture among PPL Capital Funding, PPL Corporation
and The Chase Manhattan Bank, as trustee, which is more fully described in the
accompanying prospectus and prospectus supplement. PPL Corporation will
unconditionally guarantee PPL Capital Funding's obligation to pay principal and
any interest and premium payable with respect to the Offered Notes.
The Offered Notes will be initially issued as Book-Entry Notes as
described under "Description of the Notes-Book-Entry Notes" in the accompanying
prospectus supplement.
MATURITY; INTEREST
The Offered Notes will mature on June 15, 2007 (the "Stated Maturity
Date"), and will be issued as Fixed Rate Notes bearing interest at a rate of 8
3/8% per annum from the date of issuance (the "Original Issue Date"). Interest
on the Offered Notes will be payable on each June 15 and December 15, commencing
December 15, 2000 (each such date, an "Interest Payment Date"). The Regular
Record Date with respect to any Interest Payment Date will be the May 31 or
November 30, as the case may be, immediately preceding such Interest Payment
Date (whether or not any such Regular Record Date is also a Business Day).
REDEMPTION
The information regarding redemption set forth in the accompanying
prospectus supplement in the first paragraph under "Description of the
Notes-Redemption at the Option of PP&L Capital Funding" will not be applicable
to the Offered Notes.
P-3
<PAGE>
The Offered Notes will be redeemable at the election of PPL Capital
Funding, in whole at any time or in part from time to time, at a redemption
price equal to the greater of:
(a) 100% of the principal amount of the Offered Notes to be so
redeemed; or
(b) as determined by an Independent Investment Banker, the sum of the
present values of the remaining scheduled payments of principal
and interest on the Offered Notes to be so redeemed (not
including any portion of such payments of interest accrued to the
date of redemption) discounted to the redemption date on a
semiannual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate, plus 30 basis
points,
plus, in either of the above cases, accrued and unpaid interest to the date of
redemption.
"Adjusted Treasury Rate means, with respect to any redemption date:
(a) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently
published statistical release designated "H.15(519)" or any
successor publication which is published weekly by the Board of
Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury
Constant Maturities," for the maturity corresponding to the
Comparable Treasury Issue (if no maturity is within three months
before or after the Remaining Life (as defined below), yields for
the two published maturities most closely corresponding to the
Comparable Treasury Issue shall be determined and the Adjusted
Treasury Rate shall be interpolated or extrapolated from such
yields on a straight line basis, rounding to the nearest month);
or
(b) if such release (or any successor release) is not published
during the week preceding the calculation date or does not
contain such yields, the rate per annum equal to the semi-annual
equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date.
The Adjusted Treasury Rate shall be calculated on the third Business Day
preceding the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term to the Stated Maturity Date of the Offered Notes to be
redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of such securities (the "Remaining
Life").
"Comparable Treasury Price" means (1) the average of six Reference
Treasury Dealer Quotations for such redemption date, after excluding the highest
and lowest Reference Treasury Dealer Quotations, or (2) if the Independent
Investment Banker obtains fewer than six such Reference Treasury Dealer
Quotations, the average of all such quotations.
Independent Investment Banker means one of the Reference Treasury
Dealers appointed by PPL Capital Funding.
P-4
<PAGE>
"Reference Treasury Dealer" means:
(a) each of Credit Suisse First Boston Corporation, Morgan Stanley &
Co. Incorporated, Banc One Capital Markets, Inc, Goldman, Sachs &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and
their respective successors; provided, however, that if any of
the foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer"),
PPL Capital Funding will substitute another Primary Treasury
Dealer; and
(b) any other Primary Treasury Dealer selected by PPL Capital
Funding.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker at 5:00
p.m., New York City time, on the third Business Day preceding such redemption
date.
Additional information concerning redemption is contained under
"Description of the Debt Securities-Redemption" in the accompanying prospectus.
The Offered Notes will not be subject to a sinking fund or other
mandatory redemption provisions, and will not be repayable at the option of the
Holder prior to the Stated Maturity Date.
UNDERWRITERS
Under the terms and subject to the conditions contained in a Terms
Agreement dated the date hereof, the Underwriters named below have agreed to
purchase, and PPL Capital Funding has agreed to sell to them, severally, the
respective principal amounts of Offered Notes set forth opposite their
respective names below:
Principal Amount
Name of Offered Notes
---- -----------------
Credit Suisse First Boston Corporation.........................$ 114,000,000
Morgan Stanley & Co. Incorporated.............................. 114,000,000
Banc One Capital Markets, Inc.................................. 24,000,000
Goldman, Sachs & Co............................................ 24,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..................................... 24,000,000
----------------
Total......................................................$ 300,000,000
===============
Credit Suisse First Boston Corporation and Morgan Stanley & Co.
Incorporated are acting as joint book-runners for the Offered Notes. The Terms
Agreement provides that the obligation of the several Underwriters to pay for
and accept delivery of the Offered Notes is subject to the approval of certain
legal matters by their counsel and to certain other conditions. The Underwriters
are obligated to take and pay for the Offered Notes if any are taken.
The Underwriters of the Offered Notes propose to offer part of the
Offered Notes directly to the public at the public offering price set forth on
the cover page hereof and part to certain dealers at a price that represents a
concession not in excess of .375% of the principal amount of the Offered Notes.
The Underwriters and such dealers may reallow a discount of .25% of such
principal amount to certain other dealers. After the initial offering of the
P-5
<PAGE>
Offered Notes, the offering price and other selling terms may from time to time
be varied.
PPL Capital Funding and PPL Corporation have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended.
PPL Capital Funding does not intend to apply for listing of the
Offered Notes on a national securities exchange, but has been advised by the
Underwriters that they presently intend to make a market in the Offered Notes as
permitted by applicable laws and regulations. The Underwriters are not
obligated, however, to make a market in the Offered Notes and any such market
making may be discontinued at any time at the sole discretion of the
Underwriters. Accordingly, no assurance can be given as to the liquidity of, or
trading markets for, the Offered Notes.
In order to facilitate the offering of the Offered Notes, the
Underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the Offered Notes. Specifically, the Underwriters may
overallot in connection with the offering, creating a short position in the
Offered Notes for their own account. In addition, to cover overallotments or to
stabilize the price of the Offered Notes, the Underwriters may bid for, and
purchase, the Offered Notes in the open market. Finally, the underwriting
syndicate may reclaim selling concessions allowed to an underwriter or a dealer
for distributing the Offered Notes in the offering, if the syndicate repurchases
previously distributed Offered Notes in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the Offered Notes above
independent market levels. The Underwriters are not required to engage in these
activities, and may end of these activities at any time.
In the ordinary course of their business, Morgan Stanley & Co.
Incorporated and Credit Suisse First Boston Corporation and certain of the other
Underwriters and their affiliates have engaged and may in the future engage in
investment and commercial banking transactions with PPL Corporation, PPL Capital
Funding and certain of their affiliates.
P-6
<PAGE>
PROSPECTUS SUPPLEMENT
---------------------
(TO PROSPECTUS DATED OCTOBER 4, 1999)
$500,000,000 [LOGO]
PPL CAPITAL FUNDING, INC.
MEDIUM-TERM NOTES, SERIES D
DUE FROM NINE MONTHS TO FORTY YEARS FROM DATE OF ISSUE
UNCONDITIONALLY GUARANTEED AS TO
PAYMENT OF PRINCIPAL AND ANY INTEREST
AND PREMIUM BY
PPL CORPORATION
-------------------
PPL Capital Funding, Inc. (formerly called PP&L Capital Funding, Inc.)
may offer from time to time up to $500,000,000 in aggregate principal amount
of its Medium-Term Notes, Series D. The Notes will be unconditionally
guaranteed by PPL Capital Funding's parent, PPL Corporation (formerly called
PP&L Resources, Inc.), as to payment of principal and any premium and interest.
The various terms of each Note will be determined at the time of sale and,
if different from the terms described in the accompanying prospectus or this
prospectus supplement, will be specified in a pricing supplement to this
prospectus supplement, including the following:
o The stated maturity, which will be between 9 months and forty years
from date of issue
o Interest Payment Dates
o Interest rates, if any, which may be fixed or floating. The floating
interest rate may be determined by reference to one or more of the
following indices plus or minus a spread and/or multiplied by a spread
multiplier:
o CMT Rate
o Commercial Paper Rate
o Federal Funds Rate
o LIBOR
o Prime Rate
o Treasury Rate
o Any other interest rate formula
o Any redemption or repayment provisions
o Whether the Note will be offered in book-entry (through The Depository
Trust Company) or certificated form
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING PROSPECTUS
OR ANY PRICING SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
We may sell the Notes to Credit Suisse First Boston Corporation, Morgan
Stanley & Co. Incorporated, Banc One Capital Markets, Inc., Goldman, Sachs &
Co., Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
and any additional agents as may be appointed from time to time individually,
or in a syndicate, as principal for resale at varying or fixed offering prices
or as agents using their reasonable efforts on our behalf.
<TABLE>
<CAPTION>
Public Agent's Discounts Proceeds to
Offering Price and Commissions PPL Capital Funding
-------------- ------------------------ -----------------------------
<S> <C> <C> <C>
Per Note..... 100% .125%-.750% 99.875%-99.250%
Total........ $500,000,000 $625,000-$3,750,000 $499,375,000-$496,250,000
</TABLE>
Such discounts and commissions may exceed these amounts with respect to sales
of Notes with stated maturities in excess of 30 years. We may also sell Notes
without the assistance of any agents or underwriters.
If we sell other Debt Securities as described in the accompanying
prospectus, the aggregate principal amount of Notes that we may offer and sell
under this prospectus supplement would be reduced.
-------------------
CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY DEAN WITTER
BANC ONE CAPITAL MARKETS, INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
-------------------
The date of this prospectus supplement is June 6, 2000.
<PAGE>
TABLE OF CONTENTS
Description of the Notes................................................... S-2
Certain United States Federal Income Tax Considerations.....................S-19
Validity of the Notes and the Guarantees....................................S-22
Supplemental Plan of Distribution...........................................S-22
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes (as defined
below) offered by this prospectus supplement supplements, and to the extent
inconsistent replaces, the description of the general terms and provisions of
the Debt Securities set forth under "Description of the Debt Securities" in the
accompanying prospectus, to which general description reference is hereby made.
The following summary of certain terms and provisions of the Notes, the
Guarantees and the Indenture does not purport to be complete and is qualified in
its entirety by reference to the actual provisions of the Notes, the Guarantees
and the Indenture. Capitalized terms used but not defined herein shall have the
meanings given to them in the accompanying prospectus, the Notes or the
Indenture (as defined below), as the case may be. The particular terms of the
Notes, and provisions of the Notes that vary from the general provisions of the
Notes described below and the general provisions of the Debt Securities
described in the accompanying prospectus, will be described in the applicable
pricing supplement.
GENERAL
Amount of Notes Offered
PPL Capital Funding, Inc. (formerly called PP&L Capital Funding, Inc., "PPL
Capital Funding") will issue from time to time up to $500,000,000 in aggregate
principal amount of its Medium-Term Notes, Series D (the "Notes"). We will issue
the Notes under the Indenture among PPL Capital Funding, PPL Corporation
(formerly called PP&L Resources, Inc.) and The Chase Manhattan Bank, as trustee
(the "Trustee"), dated as of November 1, 1997 (as such indenture has been and
may be supplemented, the "Indenture"), which Indenture is more fully described
in the accompanying prospectus. PPL Capital Funding may, from time to time,
without the consent of the Holders of the Notes, provide for the issuance of
other Indenture Securities under the Indenture in addition to the Notes and Debt
Securities offered by this prospectus supplement and by the accompanying
prospectus. See "Description of the Debt Securities -- General" in the
accompanying prospectus.
The Guarantee of PPL Corporation; Holding Company Structure
The Notes will be unsecured obligations of PPL Capital Funding, and by the
Guarantees will be unconditionally guaranteed by PPL Corporation as to payment
of principal and any premium and interest as set forth in the accompanying
prospectus under "Description of the Debt Securities -- PP&L Resources
Guarantees" and "PP&L Resources -- Holding Company Structure." The Notes will be
denominated in and payable in United States dollars.
PPL Corporation conducts its operations primarily through PPL Electric
Utilities Corporation (formerly called PP&L, Inc., "PPL Electric Utilities") and
PPL Corporation's other wholly-owned subsidiaries, and substantially all of PPL
Corporation's consolidated assets are held by PPL Electric Utilities and these
other subsidiaries. Accordingly, PPL Corporation's cash flow and its ability to
meet its obligations under the Guarantee are largely dependent upon the earnings
of PPL Electric Utilities and the other subsidiaries and the distribution or
other payment of such earnings to PPL Corporation in the form of dividends or
loans or advances and repayment of loans or advances from PPL Corporation. The
subsidiaries are separate and distinct legal entities and, except for PPL
S-2
<PAGE>
Capital Funding, have no obligation to pay any amounts due on the Notes or to
make any funds available for such payment.
Because PPL Corporation is a holding company, its obligations under the
Guarantees will be effectively subordinated to all existing and future
liabilities of its subsidiaries. Therefore, PPL Corporation's rights and the
rights of its creditors, including the rights of the holders of the Notes under
the Guarantees, to participate in the assets of any subsidiary (other than PPL
Capital Funding) in the event that such a subsidiary is liquidated or
reorganized will be subject to the prior claims of such subsidiary's creditors.
To the extent that PPL Corporation may itself be a creditor with recognized
claims against any such subsidiary, PPL Corporation's claims would still be
effectively subordinated to any security interest in, or mortgages or other
liens on, the assets of such subsidiary and would be subordinated to any
indebtedness or other liabilities of such subsidiary senior to that held by PPL
Corporation. Although certain agreements to which PPL Corporation and its
subsidiaries are parties limit the incurrence of additional indebtedness, PPL
Corporation and its subsidiaries retain the ability to incur substantial
additional indebtedness and other liabilities. See "Description of the Debt
Securities -- PP&L Resources Guarantees" and "PP&L Resources -- Holding Company
Structure" in the accompanying prospectus.
Specific Terms to be Determined at Time of Sale and Specified in
Pricing Supplement
Each Note will mature on a date from nine months to forty years from its
date of issue (the "Stated Maturity Date"), as specified in the applicable
pricing supplement, unless the principal thereof becomes due and payable prior
to the Stated Maturity Date, whether by the declaration of acceleration of
maturity, notice of redemption at the option of PPL Capital Funding, notice of
the Holder's option to elect repayment or otherwise (the Stated Maturity Date or
such prior date, as the case may be, is herein referred to as the "Maturity").
PPL Capital Funding may issue Notes that bear interest at fixed rates
("Fixed Rate Notes") or at floating rates ("Floating Rate Notes"), as specified
in the applicable pricing supplement. The applicable pricing supplement will
specify whether a Floating Rate Note is a Regular Floating Rate Note, a Floating
Rate/Fixed Rate Note or an Inverse Floating Rate Note and whether the rate of
interest thereon is determined by reference to one or more of the CMT Rate, the
Commercial Paper Rate, the Federal Funds Rate, LIBOR, the Prime Rate or the
Treasury Rate (each, an "Interest Rate Basis"), or any other interest rate basis
or formula, as adjusted by any Spread and/or Spread Multiplier. Interest on each
Floating Rate Note will accrue from its date of issue and, unless otherwise
specified in the applicable pricing supplement, will be payable monthly,
quarterly, semiannually or annually in arrears, as specified in the applicable
pricing supplement, and at Maturity. Unless otherwise specified in the
applicable pricing supplement, the rate of interest on each Floating Rate Note
will be reset daily, weekly, monthly, quarterly, semiannually or annually, as
specified in the applicable pricing supplement. Interest on each Fixed Rate Note
will accrue from its date of issue and, except in the limited circumstances
described in this prospectus supplement or as otherwise specified in the
applicable pricing supplement, will be payable semiannually in arrears on
February 15 and August 15 of each year and at Maturity. See "Description of the
Notes -- Payment of Principal and any Premium and Interest" and "-- Interest."
The interest rate, or formula for the determination of the interest rate,
if any, applicable to each Note and the other variable terms of each Note will
be established by PPL Capital Funding on the date of issue of such Note and will
be specified in the applicable pricing supplement.
Interest rates on the Notes may differ depending upon, among other factors,
the aggregate principal amount of Notes purchased in any single transaction. We
may also offer Notes with different variable terms to different investors
concurrently. We may change interest rates or formulas and other terms of Notes
from time to time, but no such change will affect any Note previously issued or
as to which we have accepted an offer to purchase.
S-3
<PAGE>
Each Note will be issued in book-entry form (a Note so represented, a
"Book-Entry Note") or in fully registered certificated form (a Note so
represented, a "Certificated Note"), as specified in the applicable pricing
supplement. Each Book-Entry Note will be represented by one or more fully
registered global securities (the "Global Securities") deposited with or on
behalf of The Depository Trust Company (or such other depositary as may be
identified in the applicable pricing supplement), as Depositary, and registered
in the name of the Depositary or the Depositary's nominee. A beneficial interest
in a Global Security will be shown on, and transfers or exchanges thereof will
be effected only through, records maintained by the Depositary and its
participants, as described below under "-- Book-Entry Notes." You may purchase
Book-Entry Notes only in a minimum denomination of $1,000 and in integral
multiples of $1,000, unless otherwise specified in the applicable pricing
supplement. Except in limited circumstances described below, Book-Entry Notes
will not be exchangeable for Certificated Notes.
Certificated Notes will be exchangeable for other Certificated Notes of any
authorized denominations and of a like aggregate principal amount and tenor, and
may be presented for registration of transfer, in each case, as described under
"Description of the Debt Securities -- Form; Transfers; Exchanges" in the
accompanying prospectus.
Unless the applicable pricing supplement provides otherwise, we will issue
each Note at a price (the "Issue Price") equal to 100% of the principal amount
of the Note. Notes will not be issued as discount securities, at prices below
stated principal amounts, or having an original issue discount for U.S. federal
income tax purposes, unless the applicable pricing supplement so provides and,
if applicable, describes potential U.S. federal income tax consequences.
The pricing supplement relating to each Note will describe the following
terms:
(a) whether such Note is a Fixed Rate Note or a Floating Rate Note;
(b) the Issue Price of such Note, which may be expressed as a percentage
of its aggregate principal amount;
(c) the date on which such Note will be issued (the "Original Issue
Date");
(d) the Stated Maturity Date of such Note;
(e) if such Note is a Fixed Rate Note, the rate per annum at which such
Note will bear interest and the Interest Payment Dates;
(f) if such Note is a Floating Rate Note, the Interest Rate Basis, the
Initial Interest Rate, the Interest Reset Period, Interest Reset
Dates, the Interest Payment Dates, the Index Maturity, the Maximum
Interest Rate, if any, the Minimum Interest Rate, if any, the Spread
and/or Spread Multiplier, if any (all as defined below), and other
terms relating to the particular method of calculating the interest
rate or rates on such Note;
(g) whether such Note may be redeemed at the option of PPL Capital Funding
prior to its Stated Maturity Date and, if so, the provisions relating
to such redemption;
(h) any sinking fund or other mandatory redemption provisions applicable
to such Note;
(i) any provisions for the repayment by PPL Capital Funding of such Note
at the option of the Holder; and
(j) any other terms of such Note not inconsistent with the provisions of
the Indenture.
S-4
<PAGE>
PAYMENT OF PRINCIPAL AND ANY PREMIUM AND INTEREST
We will pay interest on the Notes, other than interest payable at Maturity,
by check mailed to the address of the registered Holders of such Notes as of the
regular record date relating to each Interest Payment Date; provided, however,
that
(a) if the Original Issue Date of a Note is after a regular record date
and before the corresponding Interest Payment Date, interest for the
period from and including the Original Issue Date for such Note to but
excluding such Interest Payment Date will be paid on the next
succeeding Interest Payment Date to the Holder of such Note on the
related regular record date;
(b) if and to the extent PPL Capital Funding defaults in the payment of
the interest due on any Note on any Interest Payment Date, such
defaulted interest will be paid as described under "Description of the
Debt Securities--Payment of Debt Securities--Interest" in the
accompanying prospectus;
(c) in the case where the registered Holder is the Depositary or its
nominee (as would be the case for Book-Entry Notes), such payment may
be made in accordance with any other arrangements then in effect among
PPL Capital Funding, the Trustee or other Paying Agent and the
Depositary; and
(d) a registered Holder of $10,000,000 or more in aggregate principal
amount of Notes (whether having identical or different terms and
provisions) will be entitled to receive interest payments, if any, on
any Interest Payment Date other than at Maturity by wire transfer of
immediately available funds if appropriate wire transfer instructions
have been received in writing by the Trustee not less than 15 days
prior to such Interest Payment Date. Any such wire transfer
instructions received by the Trustee shall remain in effect until
revoked by such Holder.
Payment of principal, any premium and interest due on the Notes at maturity
will be made upon presentation of such Notes (and, in the case of any repayment
on any Option Repayment Date provided for such Notes, upon submission of a duly
completed election form in accordance with the provisions described below) at
the office of The Chase Manhattan Bank in New York, New York.
So long as the Depositary is the registered owner of any Global Security,
the Depositary, or its nominee, as the case may be, will be considered the sole
Holder of the Book-Entry Notes represented by such Global Security for all
purposes under the Indenture, including payments. Accordingly, so long as the
Depositary is the registered owner of any Global Security, payments of principal
and any premium and interest on Book-Entry Notes represented by such Global
Security will be made to the Beneficial Owners (as defined herein) of such
Notes, as described below under "-- Book-Entry Notes."
INTEREST
General
Unless otherwise specified in the applicable pricing supplement, each Note
will bear interest from its Original Issue Date at the rate per annum, in the
case of a Fixed Rate Note, or pursuant to the interest rate formula, in the case
of a Floating Rate Note, in each case as specified in the applicable pricing
supplement, until the principal thereof is paid or made available for payment.
Unless otherwise specified in the applicable pricing supplement, interest
payments in respect of Fixed Rate Notes and Floating Rate Notes will be made in
an amount equal to the interest accrued from and including the immediately
preceding Interest Payment Date in respect of which interest has been paid or
made available for payment (or from and including the Original Issue Date, if no
interest has been paid or made available for payment) to but excluding the
applicable Interest Payment Date or the Maturity, as the case may be (each, an
"Interest Period").
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Interest on Fixed Rate Notes and Floating Rate Notes will be payable in
arrears on each Interest Payment Date and at Maturity. Unless otherwise
specified in the applicable pricing supplement, the first payment of interest on
any such Note originally issued between a Regular Record Date (as hereinafter
defined) and the related Interest Payment Date will be made on the Interest
Payment Date immediately following the next succeeding Regular Record Date to
the Holder of such Note on such next succeeding Regular Record Date. Unless
otherwise specified in the applicable pricing supplement, "Regular Record Date"
shall mean, with respect to any Fixed Rate Note, the January 31 or July 31, as
the case may be (whether or not a Business Day), immediately preceding the
related Interest Payment Date, and with respect to any Floating Rate Note, the
fifteenth calendar day (whether or not a Business Day) immediately preceding the
related Interest Payment Date.
Unless otherwise specified in the applicable pricing supplement
(a) "Business Day" means any day, other than a Saturday or Sunday, that is not a
day on which banking institutions or trust companies are generally authorized or
required by law, regulation or executive order to close in The City of New York
or other city in which any Paying Agent for the Notes is located (and, if LIBOR
is an applicable Interest Rate Basis, such day must also be a London Business
Day), and (b) "London Business Day" means a day on which dealings in deposits in
United States dollars are transacted in the London interbank market.
Fixed Rate Notes
Interest on Fixed Rate Notes will be payable on February 15 and August 15
of each year or on such other date(s) specified in the applicable pricing
supplement (each, an "Interest Payment Date" with respect to Fixed Rate Notes)
and at Maturity. Unless otherwise specified in the applicable pricing
supplement, interest on Fixed Rate Notes will be computed on the basis of a
360-day year of twelve 30-day months.
If any Interest Payment Date or the Maturity of a Fixed Rate Note falls on
a day that is not a Business Day, the required payment of principal, premium, if
any, and/or interest will be made on the next succeeding Business Day as if made
on the date such payment was due, and no interest will accrue on such payment
for the period from and after such Interest Payment Date or the Maturity, as the
case may be, to the date of such payment on the next succeeding Business Day.
Floating Rate Notes
Interest on Floating Rate Notes will be determined by reference to the
applicable Interest Rate Basis or Interest Rate Bases, which may, as described
below, include
(a) the CMT Rate,
(b) the Commercial Paper Rate,
(c) the Federal Funds Rate,
(d) LIBOR,
(e) the Prime Rate,
(f) the Treasury Rate or
(g) any other interest rate basis or interest rate formula specified in
the applicable pricing supplement.
The applicable pricing supplement relating to a Floating Rate Note will
also specify the following terms (as they are defined below):
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(a) whether such Floating Rate Note is a "Regular Floating Rate Note," a
"Floating Rate/Fixed Rate Note" or an "Inverse Floating Rate Note,"
(b) the Fixed Rate Commencement Date, if applicable,
(c) the Fixed Interest Rate, if applicable,
(d) the Interest Rate Basis or Bases,
(e) the Initial Interest Rate, if any,
(f) the Initial Interest Reset Date,
(g) the Interest Reset Dates,
(h) the Interest Payment Dates,
(i) the Index Maturity,
(j) the Maximum Interest Rate and/or Minimum Interest Rate, if any, and
(k) the Spread and/or Spread Multiplier, if any.
If one or more of the applicable Interest Rate Bases is LIBOR or the CMT Rate,
the applicable pricing supplement will also specify the Designated LIBOR Page or
the Designated CMT Maturity Index and Designated CMT Telerate Page, as
applicable.
The interest rate borne by the Floating Rate Notes will be determined as
follows:
(a) Unless such Floating Rate Note is designated as a "Floating
Rate/Fixed Rate Note" or an "Inverse Floating Rate Note," or as having an
Addendum attached or having "Other/Additional Provisions" apply, in each
case relating to a different interest rate formula, such Floating Rate Note
will be designated as a "Regular Floating Rate Note" and, except as
described below or in the applicable pricing supplement, will bear interest
at the rate determined by reference to the applicable Interest Rate Basis
or Bases (1) plus or minus the applicable Spread, if any, and/or (2)
multiplied by the applicable Spread Multiplier, if any. Commencing on the
Initial Interest Reset Date, the rate at which interest on such Regular
Floating Rate Note shall be payable shall be reset as of each Interest
Reset Date; provided, however, that the interest rate in effect for the
period, if any, from the date of issue to the Initial Interest Reset Date
will be the Initial Interest Rate.
(b) If such Floating Rate Note is designated as a "Floating Rate/Fixed
Rate Note," then, except as described below or in the applicable pricing
supplement, such Floating Rate Note will bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Bases
(1) plus or minus the applicable Spread, if any, and/or (2) multiplied by
the applicable Spread Multiplier, if any. Commencing on the Initial
Interest Reset Date, the rate at which interest on such Floating Rate/Fixed
Rate Note shall be payable shall be reset as of each Interest Reset Date;
provided, however, that (y) the interest rate in effect for the period, if
any, from the date of issue to the Initial Interest Reset Date will be the
Initial Interest Rate and (z) the interest rate in effect for the period
commencing on the Fixed Rate Commencement Date to the Maturity shall be the
Fixed Interest Rate, if such rate is specified in the applicable pricing
supplement or, if no such Fixed Interest Rate is specified, the interest
rate in effect thereon on the day immediately preceding the Fixed Rate
Commencement Date.
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(c) If such Floating Rate Note is designated as an "Inverse Floating
Rate Note," then, except as described below or in the applicable pricing
supplement, such Floating Rate Note will bear interest at the Fixed
Interest Rate minus the rate determined by reference to the applicable
Interest Rate Basis or Bases (1) plus or minus the applicable Spread, if
any, and/or (2) multiplied by the applicable Spread Multiplier, if any;
provided, however, that, unless otherwise specified in the applicable
pricing supplement, the interest rate thereon will not be less than zero.
Commencing on the Initial Interest Reset Date, the rate at which interest
on such Inverse Floating Rate Note shall be payable shall be reset as of
each Interest Reset Date; provided, however, that the interest rate in
effect for the period, if any, from the date of issue to the Initial
Interest Reset Date will be the Initial Interest Rate.
The "Spread" is the number of basis points (one one-hundredth of a
percentage point) to be added to or subtracted from the related Interest Rate
Basis or Bases applicable to such Floating Rate Note. The "Spread Multiplier" is
the percentage of the related Interest Rate Basis or Bases applicable to such
Floating Rate Note and by which such Interest Rate Basis or Bases will be
multiplied to determine the applicable interest rate on such Floating Rate Note.
The "Index Maturity" is the period to maturity of the instrument or obligation
with respect to which the related Interest Rate Basis or Bases will be
calculated.
Unless otherwise specified in the applicable pricing supplement, the
interest rate with respect to each Interest Rate Basis will be determined in
accordance with the applicable provisions below. Except as set forth above or in
the applicable pricing supplement, the interest rate in effect on each day shall
be (a) if such day is an Interest Reset Date, the interest rate determined as of
the Interest Determination Date (as hereinafter defined) immediately preceding
such Interest Reset Date or (b) if such day is not an Interest Reset Date, the
interest rate determined as of the Interest Determination Date immediately
preceding the most recent Interest Reset Date.
The applicable pricing supplement will specify whether the rate of interest
on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually or on such other specified basis (each, an
"Interest Reset Period") and the dates on which such rate of interest will be
reset (each, an "Interest Reset Date"). Unless otherwise specified in the
applicable pricing supplement, the Interest Reset Dates will be as follows:
(a) in the case of Floating Rate Notes which reset daily, each Business
Day;
(b) in the case of Floating Rate Notes which reset weekly, the Wednesday
of each week (with the exception of weekly reset Floating Rate Notes
as to which the Treasury Rate is an applicable Interest Rate Basis,
which will reset the Tuesday of each week, except as described below);
(c) in the case of Floating Rate Notes which reset monthly, the third
Wednesday of each month;
(d) in the case of Floating Rate Notes which reset quarterly, the third
Wednesday of March, June, September and December of each year,
(e) in the case of Floating Rate Notes which reset semiannually, the third
Wednesday of the two months specified in the applicable pricing
supplement; and
(f) in the case of Floating Rate Notes which reset annually, the third
Wednesday of the month specified in the applicable pricing supplement;
provided, however, that, with respect to Floating Rate/Fixed Rate Notes, the
rate of interest thereon will not reset after the applicable Fixed Rate
Commencement Date. If any Interest Reset Date for any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Reset Date will be
postponed to the next succeeding Business Day, except that in the case of a
Floating Rate Note as to which LIBOR is an applicable Interest Rate Basis and
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such Business Day falls in the next succeeding calendar month, such Interest
Reset Date will be the immediately preceding Business Day.
The interest rate applicable to each Interest Reset Period commencing on
the related Interest Reset Date will be the rate determined by the Calculation
Agent as of the applicable Interest Determination Date and calculated on or
prior to the Calculation Date (as hereinafter defined), except with respect to
LIBOR, which will be calculated on such Interest Determination Date. The
"Interest Determination Date" with respect to the CMT Rate, the Commercial Paper
Rate, the Federal Funds Rate and the Prime Rate will be the second Business Day
immediately preceding the applicable Interest Reset Date; and the "Interest
Determination Date" with respect to LIBOR will be the second London Business Day
immediately preceding the applicable Interest Reset Date. With respect to the
Treasury Rate, the "Interest Determination Date" will be the day in the week in
which the applicable Interest Reset Date falls on which day Treasury Bills (as
hereinafter defined) are normally auctioned (Treasury Bills are normally sold at
an auction held on Monday of each week, unless that day is a legal holiday, in
which case the auction is normally held on the following Tuesday, except that
such auction may be held on the preceding Friday); provided, however, that if an
auction is held on the Friday of the week preceding the applicable Interest
Reset Date, the "Interest Determination Date" will be such preceding Friday;
provided, further, that if the Interest Determination Date would otherwise fall
on an Interest Reset Date, then such Interest Reset Date will be postponed to
the next succeeding Business Day. The "Interest Determination Date" pertaining
to a Floating Rate Note the interest rate of which is determined by reference to
two or more Interest Rate Bases will be the most recent Business Day which is at
least two Business Days prior to the applicable Interest Reset Date for such
Floating Rate Note on which each Interest Rate Basis is determinable. Each
Interest Rate Basis will be determined as of such date, and the applicable
interest rate will take effect on the applicable Interest Reset Date.
Notwithstanding the foregoing, a Floating Rate Note may also have either or
both of the following: (a) a Maximum Interest Rate, or ceiling, that may accrue
during any Interest Period and (b) a Minimum Interest Rate, or floor, that may
accrue during any Interest Period. In addition to any Maximum Interest Rate that
may apply to any Floating Rate Note, the interest rate on Floating Rate Notes
will in no event be higher than the maximum rate permitted by applicable law.
Except as provided in this prospectus supplement, the accompanying
prospectus or in the applicable pricing supplement, interest will be payable as
follows:
(a) in the case of Floating Rate Notes which reset daily, weekly or
monthly, on the third Wednesday of each month or on the third
Wednesday of March, June, September and December of each year, as
specified in the applicable pricing supplement;
(b) in the case of Floating Rate Notes which reset quarterly, on the third
Wednesday of March, June, September and December of each year;
(c) in the case of Floating Rate Notes which reset semiannually, on the
third Wednesday of the two months of each year specified in the
applicable pricing supplement; and
(d) in the case of Floating Rate Notes which reset annually, on the third
Wednesday of the month of each year specified in the applicable
pricing supplement
(each, an "Interest Payment Date" with respect to Floating Rate Notes) and, in
each case, on the Maturity.
If any Interest Payment Date other than the Maturity for any Floating Rate
Note would otherwise be a day that is not a Business Day, such Interest Payment
Date will be postponed to the next succeeding Business Day, except that in the
case of a Floating Rate Note as to which LIBOR is an applicable Interest Rate
Basis and such Business Day falls in the next succeeding calendar month, such
Interest Payment Date will be the immediately preceding Business Day. If the
Maturity of a Floating Rate Note falls on a day that is not a Business Day, the
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required payment of principal and any premium and interest will be made on the
next succeeding Business Day as if made on the date such payment was due, and no
interest will accrue on such payment for the period from and after the Maturity
to the date of such payment on the next succeeding Business Day.
With respect to each Floating Rate Note, accrued interest is calculated by
multiplying its principal amount by an accrued interest factor. This accrued
interest factor is computed by adding the interest factor calculated for each
day in the applicable period for which accrued interest is being calculated.
Unless otherwise specified in the applicable pricing supplement, the interest
factor for each such day will be computed by dividing the interest rate
applicable to such day by 360, in the case of Floating Rate Notes for which the
applicable Interest Rate Basis is the Commercial Paper Rate, the Federal Funds
Rate, LIBOR or the Prime Rate, or by the actual number of days in the year in
the case of Floating Rate Notes for which the applicable Interest Rate Basis is
the CMT Rate or the Treasury Rate. The interest factor for Floating Rate Notes
for which the interest rate is calculated with reference to two or more Interest
Rate Bases will be calculated in the manner specified in the applicable pricing
supplement.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded to the nearest one hundred-thousandth of a percentage point, with
five one-millionths of a percentage point rounded upwards (e.g, 9.876545% (or
.09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used in
or resulting from such calculation on Floating Rate Notes will be rounded to the
nearest cent (with one-half cent being rounded upwards).
Unless otherwise specified in the applicable pricing supplement, the
Trustee will be the "Calculation Agent." Upon request of the Holder of any
Floating Rate Note, the Calculation Agent will disclose the interest rate then
in effect and, if determined, the interest rate that will become effective as a
result of a determination made for the next succeeding Interest Reset Date with
respect to such Floating Rate Note. Unless otherwise specified in the applicable
pricing supplement, the "Calculation Date," if applicable, pertaining to any
Interest Determination Date will be the earlier of (a) the tenth calendar day
after such Interest Determination Date or, if such day is not a Business Day,
the next succeeding Business Day or (b) the Business Day immediately preceding
the applicable Interest Payment Date or the Maturity, as the case may be.
Unless otherwise specified in the applicable pricing supplement, the
Calculation Agent shall determine each applicable interest rate in accordance
with the following provisions. The Calculation Agent's determination of any
interest rate will be conclusive and binding in the absence of any manifest
error.
CMT RATE. Unless otherwise specified in the applicable pricing supplement,
"CMT Rate" means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference to
the CMT Rate (a "CMT Rate Interest Determination Date"), the rate displayed on
the Designated CMT Telerate Page under the caption "...Treasury Constant
Maturities...Federal Reserve Board Release H.15...Mondays Approximately 3:45
P.M.," under the column for the Designated CMT Maturity Index for (a) if the
Designated CMT Telerate Page is 7051, the rate on such CMT Rate Interest
Determination Date and (b) if the Designated CMT Telerate Page is 7052, the
weekly or monthly average, as specified in the applicable pricing supplement,
for the week or the month, as applicable, ended immediately preceding the week
or the month, as applicable, in which the related CMT Rate Interest
Determination Date falls. If such rate is no longer displayed on the relevant
page or is not displayed by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate for such CMT Rate Interest Determination
Date will be such treasury constant maturity rate for the Designated CMT
Maturity Index as published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15 (519), Selected Interest Rates" or any
successor publication ("H.15(519)"). If such rate is no longer published or is
not published by 3:00 P.M., New York City time, on the related Calculation Date,
then the CMT Rate on such CMT Rate Interest Determination Date will be such
treasury constant maturity rate for the Designated CMT Maturity Index (or other
United States Treasury rate for the Designated CMT Maturity Index) for the CMT
Rate Interest Determination Date with respect to such Interest Reset Date as may
then be published by either the Board of Governors of the Federal Reserve System
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or the United States Department of the Treasury that the Calculation Agent
determines to be comparable to the rate formerly displayed on the Designated CMT
Telerate Page and published in H.15(519). If such information is not provided by
3:00 P.M., New York City time, on the related Calculation Date, then the CMT
Rate on the CMT Rate Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity, based on the arithmetic mean
of the secondary market offered rates as of approximately 3:30 P.M., New York
City time, on such CMT Rate Interest Determination Date reported, according to
their written records, by three leading primary United States government
securities dealers in The City of New York (which may include the Agents or
their affiliates) (each, a "Reference Dealer") selected by the Calculation Agent
(from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for the most recently issued direct noncallable fixed rate obligations
of the United States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term to maturity
of not less than such Designated CMT Maturity Index minus one year. If the
Calculation Agent is unable to obtain three such Treasury Note quotations, the
CMT Rate on such CMT Rate Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic mean
of the secondary market offered rates as of approximately 3:30 P.M., New York
City time, on such CMT Rate Interest Determination Date of three Reference
Dealers in The City of New York (from five such Reference Dealers selected by
the Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury Notes with an original maturity of
the number of years that is the next highest to the Designated CMT Maturity
Index and a remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100 million. If three or four (and not five)
of such Reference Dealers are quoting as described above, then the CMT Rate will
be based on the arithmetic mean of the offered rates obtained and neither the
highest nor the lowest of such quotations will be eliminated; provided, however,
that if fewer than three Reference Dealers so selected by the Calculation Agent
are quoting as mentioned herein, the CMT Rate determined as of such CMT Rate
Interest Determination Date will be the CMT Rate in effect on such CMT Rate
Interest Determination Date, or if no such CMT Rate is then in effect, the
interest rate on the applicable Note will be the Initial Interest Rate. If two
Treasury Notes with an original maturity as described in the second preceding
sentence have remaining terms to maturity equally close to the Designated CMT
Maturity Index, the Calculation Agent will obtain quotations for the Treasury
Note with the shorter remaining term to maturity.
"Designated CMT Telerate Page" means the display on Bridge Telerate, Inc.
(or any successor service) on the page specified in the applicable pricing
supplement (or any other page as may replace such page on such service) for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519) or,
if no such page is specified in the applicable pricing supplement, page 7052.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in the applicable pricing supplement with respect to which the CMT
Rate will be calculated or, if no such maturity is specified in the applicable
pricing supplement, 2 years.
COMMERCIAL PAPER RATE. Unless otherwise specified in the applicable pricing
supplement, "Commercial Paper Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest rate
is determined with reference to the Commercial Paper Rate (a "Commercial Paper
Rate Interest Determination Date"), the Money Market Yield (as hereinafter
defined) on such date of the rate for commercial paper having the Index Maturity
specified in the applicable pricing supplement as published in H.15(519) under
the heading "Commercial Paper -- Nonfinancial." In the event that such rate is
not published by 3:00 P.M., New York City time, on the related Calculation Date,
then the Commercial Paper Rate on such Commercial Paper Rate Interest
Determination Date will be the Money Market Yield of the rate for commercial
paper having the Index Maturity specified in the applicable pricing supplement
as published in H.15 Daily Update, or such other recognized electronic source
used for the purpose of displaying such rate, under the caption "Commercial
Paper -- Nonfinancial." "H-15 Daily Update" means the daily update of H.15(519)
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available through the world-wide web site of the Board of Governors of the
Federal Reserve System at http:/www.bog.frb.fed.us/releases/h15/update, or any
successor site or publication. If such rate is not yet published in H.15(519),
H.15 Daily Update or another recognized electronic source by 3:00 P.M., New York
City time, on the related Calculation Date, then the Commercial Paper Rate on
such Commercial Paper Rate Interest Determination Date will be calculated by the
Calculation Agent and will be the Money Market Yield of the arithmetic mean of
the offered rates at approximately 11:00 A.M., New York City time, on such
Commercial Paper Rate Interest Determination Date of three leading dealers of
United States dollar commercial paper in The City of New York (which may include
the Agents or their affiliates) selected by the Calculation Agent for commercial
paper having the Index Maturity specified in the applicable pricing supplement
placed for industrial issuers whose bond rating is "Aa", or the equivalent, from
a nationally recognized statistical rating organization; provided, however, that
if the dealers so selected by the Calculation Agent are not quoting rates as
mentioned in this sentence, the Commercial Paper Rate determined as of such
Commercial Paper Rate Interest Determination Date will be the Commercial Paper
Rate in effect on such Commercial Paper Rate Interest Determination Date, or if
no such Commercial Paper Rate is then in effect, the interest rate on the
applicable Note will be the Initial Interest Rate.
"Money Market Yield" means a yield (expressed as a percentage) calculated
in accordance with the following formula:
D x 360 X 100
Money Market Yield = -------------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the applicable Interest Reset Period.
FEDERAL FUNDS RATE. Unless otherwise specified in the applicable pricing
supplement, "Federal Funds Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest rate
is determined with reference to the Federal Funds Rate (a "Federal Funds Rate
Interest Determination Date"), the rate on such date for United States dollar
federal funds as published in H.15(519) under the heading "Federal Funds
(Effective)", as such rate is displayed on Bridge Telerate, Inc. (or any
successor service) on page 120 (or any other page as may replace such page on
such service) ("Telerate Page 120"), or, if such rate does not appear on
Telerate Page 120 or is not so published by 3:00 P.M., New York City time, on
the related Calculation Date, the rate on such Federal Funds Rate Interest
Determination Date for United States dollar federal funds as published in H.15
Daily Update, or such other recognized electronic source used for the purpose of
displaying such rate, under the caption "Federal Funds (Effective)." If such
rate does not appear on Telerate Page 120 or is not published in H.15(519), H.15
Daily Update or another recognized electronic source by 3:00 P.M., New York City
time, on the related Calculation Date, then the Federal Funds Rate on such
Federal Funds Rate Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean of the rates for the last
transaction in overnight United States dollar federal funds arranged by three
leading brokers of United States dollar federal funds transactions in The City
of New York (which may include the Agents or their affiliates) selected by the
Calculation Agent prior to 9:00 A.M., New York City time, on such Federal Funds
Rate Interest Determination Date; provided, however, that if the brokers so
selected by the Calculation Agent are not quoting rates as mentioned in this
sentence, the Federal Funds Rate determined as of such Federal Funds Rate
Interest Determination Date will be the Federal Funds Rate in effect on such
Federal Funds Rate Interest Determination Date, or if no such Federal Funds Rate
is then in effect, the interest rate on the applicable Note will be the Initial
Interest Rate.
LIBOR. Unless otherwise specified in the applicable pricing supplement,
"LIBOR" means the rate determined in accordance with the following provisions:
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(a) With respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference
to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will be either: (1)
if "LIBOR Reuters" is specified in the applicable pricing supplement, the
arithmetic mean of the offered rates (unless the Designated LIBOR Page by
its terms provides only for a single rate, in which case such single rate
shall be used) for deposits in United States dollars having the Index
Maturity specified in such pricing supplement, commencing on the applicable
Interest Reset Date, that appear (or, if only a single rate is required as
aforesaid, appears) on the Designated LIBOR Page as of 11:00 A.M., London
time, on such LIBOR Interest Determination Date, or (2) if "LIBOR Telerate"
is specified in the applicable pricing supplement or if neither "LIBOR
Reuters" nor "LIBOR Telerate" is specified in the applicable pricing
supplement as the method for calculating LIBOR, the rate for deposits in
United States dollars having the Index Maturity specified in such pricing
supplement, commencing on such Interest Reset Date, that appears on the
Designated LIBOR Page as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date. If fewer than two such offered rates so appear, or if
no such rate so appears, as applicable, LIBOR on such LIBOR Interest
Determination Date will be determined in accordance with the provisions
described in clause (b) below.
(b) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear, or no rate appears, as the case may
be, on the Designated LIBOR Page as specified in clause (a) above, the
Calculation Agent will request the principal London offices of each of four
major reference banks (which may include affiliates of the Agents) in the
London interbank market, as selected by the Calculation Agent, to provide
the Calculation Agent with its offered quotation for deposits in United
States dollars for the period of the Index Maturity specified in the
applicable pricing supplement, commencing on the applicable Interest Reset
Date, to prime banks in the London interbank market at approximately
11:00 A.M., London time, on such LIBOR Interest Determination Date and in a
principal amount that is representative for a single transaction in United
States dollars in such market at such time. If at least two such quotations
are so provided, then LIBOR on such LIBOR Interest Determination Date will
be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination
Date will be the arithmetic mean of the rates quoted at approximately
11:00 A.M., New York City time, on such LIBOR Interest Determination Date
by three major banks (which may include affiliates of the Agents) in The
City of New York selected by the Calculation Agent for loans in United
States dollars to leading European banks, having the Index Maturity
specified in the applicable pricing supplement and in a principal amount
that is representative for a single transaction in United States dollars in
such market at such time; provided, however, that if the banks so selected
by the Calculation Agent are not quoting as mentioned in this sentence,
LIBOR determined as of such LIBOR Interest Determination Date will be LIBOR
in effect on such LIBOR Interest Determination Date, or if no such LIBOR
rate is then in effect, the interest rate on the applicable Note will be
the Initial Interest Rate.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable pricing supplement, the display on the Reuter Monitor Money Rates
Service (or any successor service) on the page specified in such pricing
supplement (or any other page as may replace such page on such service) for the
purpose of displaying the London interbank rates of major banks for United
States dollars or (b) if "LIBOR Telerate" is specified in the applicable pricing
supplement or neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
applicable pricing supplement as the method for calculating LIBOR, the display
on Bridge Telerate, Inc. (or any successor service) on the page specified in
such pricing supplement (or any other page as may replace such page on such
service) for the purpose of displaying the London interbank rates of major banks
for United States dollars.
PRIME RATE. Unless otherwise specified in the applicable pricing
supplement, "Prime Rate" means, with respect to any Interest Determination Date
relating to a Floating Rate Note for which the interest rate is determined with
reference to the Prime Rate (a "Prime Rate Interest Determination Date"), the
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rate on such date as such rate is published in H.15(519) under the caption "Bank
Prime Loan" or, if not published by 3:00 P.M., New York City time, on the
related Calculation Date, the rate on such Prime Rate Interest Determination
Date as published in H.15 Daily Update, or such other recognized electronic
source used for the purpose of displaying such rate, under the caption "Bank
Prime Loan." If such rate is not yet published in H.15 (519), H.15 Daily Update
or another recognized electronic source by 3:00 P.M., New York City time, on the
related Calculation Date, then the Prime Rate shall be the arithmetic mean of
the rates of interest publicly announced by each bank that appears on the
Reuters Screen USPRIME 1 Page (as hereinafter defined) as such bank's prime
rate or base lending rate as of 11:00 A.M., New York City time, on such Prime
Rate Interest Determination Date. If fewer than four such rates appear on the
Reuters Screen US PRIME 1 Page for such Prime Rate Interest Determination Date,
then the Prime Rate shall be the arithmetic mean of the prime rates or base
lending rates quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on such Prime Rate
Interest Determination Date by four major banks (which may include affiliates of
the Agents) in The City of New York selected by the Calculation Agent; provided,
however, that if the banks or trust companies so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Prime Rate determined
as of such Prime Rate Interest Determination Date will be the Prime Rate in
effect on such Prime Rate Interest Determination Date, or, if no such Prime Rate
is then in effect, the interest rate on the applicable Note will be the Initial
Interest Rate.
"Reuters Screen USPRIME 1 Page" means the display on the Reuter Monitor
Money Rates Service (or any successor service) on the "USPRIME 1" page (or such
other page as may replace the USPRIME 1 page on such service) for the purpose
of displaying prime rates or base lending rates of major United States banks.
TREASURY RATE. Unless otherwise specified in the applicable pricing
supplement, "Treasury Rate" means, with respect to any Interest Determination
Date relating to a Floating Rate Note for which the interest rate is determined
by reference to the Treasury Rate (a "Treasury Rate Interest Determination
Date"),
(a) the rate from the auction held on such Treasury Rate Interest
Determination Date (the "Auction") of direct obligations of the United
States ("Treasury Bills") having the Index Maturity specified in the
applicable pricing supplement as such rate is published under the caption
"AVGE INVEST YIELD" on the display on Bridge Telerate, Inc. (or any
successor service) on page 56 (or any other page as may replace such page
on such service) ("Telerate Page 56") or page 57 (or any other page as
may replace such page on such service) ("Telerate Page 57"), as
applicable, or
(b) if the rate referred to in clause (a) is not published by
3:00 P.M., New York City time, on the related Calculation Date, the rate on
such Treasury Rate Interest Determination Date of such Treasury Bills as
published in H.15 Daily Update, or such other recognized electric source
used for the purpose of displaying such rate, under the caption "U.S.
Government Securities/Treasury Bills/Auction High," or
(c) if the rate referred to in clause (b) is not published by
3:00 P.M., New York City time, on the related Calculation Date, the auction
average rate of such Treasury Bills (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) as otherwise announced by the United States Department of the
Treasury.
In the event that the results of the Auction of Treasury Bills having the
Index Maturity specified in the applicable pricing supplement are not so
published or announced by 3:00 P.M., New York City time, on the related
Calculation Date, or if no such Auction is held, then the Treasury Rate will be:
(a) the rate (expressed as a bond equivalent on the basis of a year
of 365 or 366 days, as applicable, and applied on a daily basis) on such
Treasury Rate Interest Determination Date of Treasury Bills having the
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Index Maturity specified in the applicable pricing supplement as published
in H.15(519) under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market," or
(b) if not yet published by 3:00 P.M., New York City time, on the
related Calculation Date, the rate on such Treasury Rate Interest
Determination Date of such Treasury Bills as published in H.15 Daily
Update, or such other recognized electronic source used for the purpose of
displaying such rate, under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market."
If such rate is not yet published in H.15(519), H.15 Daily Update or
another recognized electronic source by 3:00 P.M., New York City time, on the
related Calculation Date, then the Treasury Rate will be calculated by the
Calculation Agent and will be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) of the arithmetic mean of the secondary market bid rates, as
of approximately 3:30 P.M., New York City time, on such Treasury Rate Interest
Determination Date, of three primary United States government securities dealers
(which may include the Agents or their affiliates) selected by the Calculation
Agent, for the issue of Treasury Bills with a remaining maturity closest to the
Index Maturity specified in the applicable pricing supplement; provided however,
that if the dealers so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Treasury Rate determined as of such Treasury
Rate Interest Determination Date will be the Treasury Rate in effect on such
Treasury Rate Interest Determination Date, or if no such Treasury Rate is then
in effect, the interest rate on the applicable Note will be the Initial Interest
Rate.
REDEMPTION AT THE OPTION OF PPL CAPITAL FUNDING
PPL Capital Funding will have the option to redeem the Notes prior to the
Stated Maturity Date if an Initial Redemption Date is specified in the
applicable pricing supplement. If so specified, PPL Capital Funding may redeem
the Notes on any date on and after the applicable Initial Redemption Date in
whole or from time to time in part in increments of $1,000, at the applicable
Redemption Price (calculated as described below), together with accrued interest
to the date of redemption, upon notice given to the Holders by mail between 30
and 60 days prior to the redemption date. The Redemption Price, if applicable,
shall initially be a percentage of the principal amount of such Note to be
redeemed equal to the "Initial Redemption Price" specified in such pricing
supplement for the twelve-month period commencing on the Initial Redemption Date
and shall decline for the twelve-month period commencing on each anniversary of
the Initial Redemption Date by a percentage of principal amount to be redeemed
equal to the "Annual Redemption Percentage Reduction" specified in such pricing
supplement until the redemption price is 100% of such principal amount.
Unless otherwise specified in the applicable pricing supplement, the Notes
will not be subject to any sinking fund or other mandatory redemption
provisions.
Additional information concerning redemption is contained under
"Description of the Debt Securities -- Redemption" in the accompanying
prospectus.
PPL Capital Funding may also, at any time, purchase Notes at any price or
prices in the open market or otherwise. Notes so purchased by PPL Capital
Funding may, at its discretion, be held, resold or surrendered to the Trustee
for cancellation.
REPAYMENT AT THE OPTION OF THE HOLDER
PPL Capital Funding will repay the Notes at the option of the Holders
thereof prior to the Stated Maturity Date only if one or more Option Repayment
Dates are specified in the applicable pricing supplement. If so specified, the
Notes will be subject to repayment at the option of the Holders thereof on any
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Option Repayment Date in whole or from time to time in part in increments of
$1,000, at a repayment price equal to 100% of the unpaid principal amount to be
repaid, together with accrued interest to the date of repayment. For any Note to
be repaid, the Trustee must receive such Note, together with the duly completed
form thereon entitled "Option to Elect Repayment," at its office maintained for
such purpose in The City of New York, currently the Corporate Trust Office of
the Trustee located at 450 West 33rd Street, New York, New York 10001, between
30 and 60 days prior to the date of repayment. Once exercised, a Holder may not
revoke such repayment option.
Only the Depositary may exercise the repayment option in respect of Global
Securities representing Book-Entry Notes. Accordingly, Beneficial Owners (as
hereinafter defined) of Global Securities that desire to have all or any portion
of the Book-Entry Notes represented by such Global Securities repaid must
instruct the Participant (as hereinafter defined) through which they own their
interest to direct the Depositary to exercise the repayment option on their
behalf by delivering the related Global Security and duly completed election
form to the Trustee as described above. In order to ensure that such Global
Security and election form are received by the Trustee on a particular day, the
applicable Beneficial Owner must so instruct the Participant through which it
owns its interest before such Participant's deadline for accepting instructions
for that day. Different firms may have different deadlines for accepting
instructions from their customers. Accordingly, Beneficial Owners should consult
the Participants through which they own their interest for the applicable
deadlines. All instructions given to Participants from Beneficial Owners of
Global Securities relating to the option to elect repayment will be irrevocable.
In addition, at the time such instructions are given, each such Beneficial Owner
shall cause the Participant through which it owns its interest to transfer such
Beneficial Owner's interest in the Global Security or Securities representing
the related Book-Entry Notes, on the Depositary's records, to the Trustee. See
"-- Book-Entry Notes" below.
If applicable, PPL Capital Funding will comply with the requirements of
Section 14(e) of the Exchange Act and the rules thereunder, and any other
applicable securities laws or regulations in connection with any such repayment.
OTHER/ADDITIONAL PROVISIONS; ADDENDUM
Any provisions with respect to the Notes, including the specification and
determination of one or more Interest Rate Bases, the calculation of the
interest rate applicable to a Floating Rate Note, the Interest Payment Dates,
the Stated Maturity Date, any redemption or repayment provisions or any other
term relating thereto, may be modified and/or supplemented as specified under
"Other/Additional Provisions" on the face thereof or in an Addendum relating
thereto, if so specified on the face thereof, and described in the applicable
pricing supplement.
BOOK-ENTRY NOTES
PPL Capital Funding has established a depositary arrangement with The
Depository Trust Company ("DTC"), pursuant to which DTC will act as securities
depository for the Book-Entry Notes. The Book-Entry Notes will be issued as
fully registered securities registered in the name of Cede & Co. (the
Depositary's partnership nominee). DTC and any other depository which may
replace DTC as depository for the Book-Entry Notes are sometimes referred to
herein as the "Depositary."
Upon issuance, all Book-Entry Notes having the same issue date, interest
rate provisions, redemption provisions, provisions for repurchase at the option
of the Holder, stated maturity and other provisions will be represented by one
or more Global Securities. Each Global Security representing Book-Entry Notes
will be deposited with, or on behalf of, the Depositary and will be registered
in the name of the Depositary or a nominee of the Depositary. Except under the
limited circumstances described below, Book-Entry Notes represented by Global
Securities will not be exchangeable for certificated Notes.
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So long as the Depositary or its nominee is the registered owner of a
Global Security, the Depositary or its nominee, as the case may be, will be
considered the sole Holder of the Book-Entry Notes represented thereby for all
purposes under the Indenture. Payments of principal and any premium or interest
on individual Book-Entry Notes represented by a Global Security will be made to
the Depositary or its nominee, as the case may be, as the registered holder of
such Global Security. Except as set forth below, owners of beneficial interests
in a Global Security will not be entitled to have any of the individual
Book-Entry Notes represented by such Global Security registered in their names,
will not receive or be entitled to receive physical delivery of any such
Book-Entry Note and will not be considered the registered holder thereof under
the Indenture, including, without limitation, for purposes of consenting to any
amendment thereof or supplement thereto. Accordingly, each Beneficial Owner must
rely on the procedures of the Depositary and, if such Beneficial Owner is not a
Participant, on the procedures of the Participant through which such Beneficial
Owner owns its interest in order to exercise any rights of a Holder under such
Global Security or the Indenture. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
certificated form. Such limits and laws may impair the ability to transfer
beneficial interests in a Global Security representing Book-Entry Notes.
The following is based on information furnished by DTC:
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement
among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants of DTC
("Direct Participants") include securities brokers and dealers (including
the Agents), banks, trust companies, clearing corporations and certain
other organizations. DTC is owned by a number of its Direct Participants
and by the New York Stock Exchange, Inc., the American Stock Exchange,
Inc., and the National Association of Securities Dealers, Inc. Access to
DTC's system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Purchases of Book-Entry Notes under DTC's system must be made by or
through Direct Participants, which will receive a credit for such
Book-Entry Notes on DTC's records. The ownership interest of each actual
purchaser of each Book-Entry Note represented by a Global Security
("Beneficial Owner") is in turn to be recorded on the records of Direct
Participants and Indirect Participants. Beneficial Owners will not receive
written confirmation from DTC of their purchase, but Beneficial Owners are
expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the
Direct Participants or Indirect Participants through which such Beneficial
Owner entered into the transaction. Transfers of ownership interests in a
Global Security representing Book-Entry Notes are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners of a Global Security representing Book-Entry
Notes will not receive Certificated Notes representing their ownership
interests therein, except in the event that use of the book-entry system
for such Book-Entry Notes is discontinued.
To facilitate subsequent transfers, all Global Securities representing
Book-Entry Notes which are deposited with, or on behalf of, DTC are
registered in the name of DTC's partnership nominee, Cede & Co. The deposit
of Global Securities with, or on behalf of, DTC and their registration in
the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Global Securities
representing the Book-Entry Notes; DTC's records reflect only the identity
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of the Direct Participants to whose accounts such Book-Entry Notes are
credited, which may or may not be the Beneficial Owners. The Participants
will remain responsible for keeping account of their holdings on behalf of
their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Book-Entry Notes of like tenor and terms are being redeemed, DTC's practice
is to determine by lot the amount of the interest of each Direct
Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Global Securities representing the Book-Entry Notes. Under its usual
procedures, DTC mails an Omnibus Proxy to PPL Capital Funding as soon as
possible after the applicable record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Book-Entry Notes are credited on the applicable record date
(identified in a listing attached to the Omnibus Proxy).
Principal and any premium and/or interest payments on the Global
Securities representing the Book-Entry Notes will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the applicable
payment date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payment
on such date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or
registered in "street name", and will be the responsibility of such
Participant and not of DTC, the Trustee, PPL Capital Funding or PPL
Corporation, subject to any statutory or regulatory requirements as may be
in effect from time to time. Payment of principal and any premium and
interest to DTC is the responsibility of PPL Capital Funding and the
Trustee, disbursement of such payments to Direct Participants shall be
the responsibility of DTC, and disbursement of such payments to the
Beneficial Owners shall be the responsibility of Direct Participants
and Indirect Participants.
A Beneficial Owner shall give notice of any option to elect to have
its Book-Entry Notes repaid by PPL Capital Funding, through its
Participant, to the Trustee and to PPL Capital Funding, and shall effect
delivery of such Book-Entry Notes by causing the Direct Participant to
transfer the Participant's interest in the Global Security or Securities
representing such Book-Entry Notes, on DTC's records, to the Trustee. The
requirement for physical delivery of Book-Entry Notes in connection with a
demand for repayment will be deemed satisfied when the ownership rights in
the Global Security or Securities representing such Book-Entry Notes are
transferred by Direct Participants on DTC's records.
DTC may discontinue providing its services as securities depository
with respect to the Book-Entry Notes at any time by giving reasonable
notice to PPL Capital Funding or the Trustee. Under such circumstances, in
the event that a successor securities depository is not obtained,
Certificated Notes are required to be printed and delivered in exchange for
Book-Entry Notes represented by the Global Securities held by DTC.
PPL Capital Funding may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor securities depository). In
that event, Certificated Notes will be printed and delivered.
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The information in this section concerning DTC and DTC's system has been
obtained from DTC. PPL Capital Funding believes such information to be reliable,
but PPL Capital Funding takes no responsibility for the accuracy thereof.
None of PPL Capital Funding, PPL Corporation, any Agents, the Trustee, any
Paying Agent or any Security Registrar for the Notes will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
If the Depositary is at any time unwilling or unable to continue as
depository or ceases to be a clearing agency registered under the Exchange Act
and a successor depository is not appointed by PPL Capital Funding, PPL Capital
Funding will issue Certificated Notes in exchange for the Notes represented by
the Global Securities held by the Depositary. In addition, PPL Capital Funding
may at any time and in its sole discretion determine not to have Notes
represented by a Global Security and, in such event, will issue individual
Certificated Notes in fully registered form, without coupons, in exchange for
the Book-Entry Notes represented by the Global Security.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes certain United States federal income tax
consequences of the purchase, ownership and disposition of the Notes as of the
date hereof and represents the opinion of Thelen Reid & Priest LLP, counsel to
PPL Capital Funding, insofar as it relates to matters of law or legal
conclusions. The following summary is based upon laws, regulations, rulings and
decisions now in effect, all of which are subject to change (including changes
in effective dates) or possible differing interpretations. It deals only with
Notes held as capital assets within the meaning of section 1221 of the Internal
Revenue Code of 1986, as amended (the "Code"), and does not purport to deal with
persons in special tax situations, such as financial institutions, insurance
companies, regulated investment companies, dealers in securities or currencies,
traders in securities that elect to mark to market, persons holding Notes as a
hedge, conversion transaction or as a position in a "straddle" for tax purposes,
tax-exempt organizations, or persons whose functional currency is not the
United States dollar. It also does not deal with holders other than original
purchasers who purchase Notes at the original offering price (except where
otherwise specifically noted). The United States federal income tax
consequences of ownership of Floating Rate Notes or Notes issued with
original issue discount, if any, will be discussed in an applicable pricing
supplement.
PROSPECTIVE PURCHASERS OF NOTES, INCLUDING PERSONS WHO PURCHASE NOTES IN
THE SECONDARY MARKET, ARE ADVISED TO CONSULT WITH THEIR TAX ADVISORS AS TO THE
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF NOTES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE
EFFECT OF ANY STATE, LOCAL OR OTHER TAX LAWS.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States federal income tax purposes:
(a) a citizen or resident of the United States,
(b) a corporation, partnership or other entity created or organized in or
under the laws of the United States or of any political subdivision
thereof,
(c) an estate the income of which is subject to United States federal
income taxation regardless of its source, or
(d) any trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more United States persons have the authority to control all
substantial decisions of the trust.
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As used herein, the term "non-U.S. Holder" means a beneficial owner of a Note
that is not a U.S. Holder.
U.S. HOLDERS
Payments of Interest
Payments of interest on a Note generally will be taxable to a U.S. Holder
as ordinary interest income at the time such payments are accrued or are
received, in accordance with the U.S. Holder's regular method of tax
accounting.
Premium
If a U.S. Holder purchases a Note for an amount that is greater than its
principal amount, such U.S. Holder will be considered to have purchased the Note
with "amortizable bond premium" equal in amount to such excess. A U.S. Holder
may elect to amortize such premium using a constant yield method over the
remaining term of the Note and may offset interest otherwise required to be
included in respect of the Note during any taxable year by the amortized amount
of such excess for the taxable year. However, if the Note may be optionally
redeemed after the U.S. Holder acquires it at a price in excess of its principal
amount, special rules would apply which could result in a deferral of the
amortization of some bond premium until later in the term of the Note. Any
election to amortize bond premium applies to all taxable debt instruments then
owned and thereafter acquired by the U.S. Holder on or after the first day of
the first taxable year to which such election applies and may be revoked only
with the consent of the Internal Revenue Service (the "IRS").
Disposition of a Note
Upon the sale, exchange or retirement of a Note, a U.S. Holder generally
will recognize gain or loss equal to the difference between the amount realized
on the sale, exchange or retirement (other than amounts representing accrued and
unpaid interest) and such U.S. Holder's adjusted tax basis in the Note. A U.S.
Holder's adjusted tax basis in a Note generally will equal such U.S. Holder's
initial investment in the Note decreased by the amount of any payments, other
than stated interest payments, received and amortizable bond premium taken
with respect to such Note. Such gain or loss generally will be long-term
capital gain or loss if the Note were held for more than one year at the time
of the sale, exchange or retirement.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States withholding tax on
payments of principal, premium (if any) or interest on a Note, unless such
non-U.S. Holder (i) directly or indirectly owns 10% or more of the voting stock
of PPL Capital Funding, (ii) is a controlled foreign corporation as defined in
Code section 957 that is related to PPL Capital Funding or (iii) is a bank
receiving interest described in section 881(c)(3)(A) of the Code. To qualify
for the exemption from taxation, the last United States payor in the chain of
payment prior to payment to a non-U.S. Holder (the "Withholding Agent") must
have received in the year in which a payment of interest or principal occurs,
or in either of the two preceding calendar years, a statement that (1) is
signed by the beneficial owner of the Note under penalties of perjury, (2)
certifies that such owner is not a U.S. Holder and (3) provides the name and
address of the beneficial owner. The statement may be made on an IRS Form W-8
or a successor form, and the beneficial owner must inform the Withholding Agent
of any change in the information on the statement within 30 days of such change.
If a Note is held through a securities clearing organization or certain other
financial institutions, the organization or institution may provide a signed
statement to the Withholding Agent. However, in such case, the signed
statement must be accompanied by a copy of the IRS Form W-8 or the successor
form provided by the beneficial owner to the organization or institution.
Recently finalized Treasury regulations (the "Final Withholding
Regulations") will provide alternative methods for satisfying the certification
requirement described above. The Final Withholding Regulations also will
require, in the case of Notes held by a foreign partnership, that (x) the
certification described above be provided by the partners rather than by
the foreign partnership and (y) the partnership provide certain information,
including a United States taxpayer identification number. A look-through
rule would apply in the case of tiered partnerships. The Final Withholding
Regulations will be effective for payments made after December 31, 2000.
Generally, a non-U.S. Holder will not be subject to United States federal
income tax on any amount which constitutes capital gain upon retirement or
disposition of a Note, provided the gain is not effectively connected with the
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conduct of a trade or business in the United States by the non-U.S. Holder.
Certain other exceptions may be applicable, and non-U.S. Holders should consult
their tax advisors in this regard.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Backup withholding of United States federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the Notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would establish
an exemption from backup withholding for those non-U.S. Holders who are not
exempt recipients.
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (1) the broker
determines that the seller is a corporation or other exempt recipient or (2) the
seller provides, in the required manner, certain identifying information and, in
the case of a non-U.S. Holder, certifies that such seller is a non-U.S. Holder
(and certain other conditions are met). Such a sale must also be reported by the
broker to the IRS, unless either (1) the broker determines that the seller is an
exempt recipient or (2) the seller certifies its non-U.S. status (and certain
other conditions are met). Certification of the registered owner's non-U.S.
status would normally be made on IRS Form W-8 or a successor form under
penalties of perjury, although in certain cases it may be possible to submit
other documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States federal income tax provided the required
information is furnished to the IRS.
VALIDITY OF THE NOTES AND THE GUARANTEES
Michael A. McGrail, Esq., Senior Counsel of PPL Electric Utilities, and
Thelen Reid & Priest LLP, New York, New York, counsel to PPL Corporation, will
pass upon the validity of the Guarantees for PPL Corporation. Thelen Reid &
Priest LLP, counsel to PPL Capital Funding, will pass upon the validity of the
Notes for PPL Capital Funding. Sullivan & Cromwell, New York, New York, will
pass upon the validity of the Notes and the Guarantees for the Agents. As to
matters involving the law of the Commonwealth of Pennsylvania, Thelen Reid &
Priest LLP and Sullivan & Cromwell will rely on the opinion of Mr. McGrail. Mr.
McGrail will rely on the opinion of Thelen Reid & Priest LLP as to matters
involving the law of the State of New York. The opinions of Mr. McGrail, Thelen
Reid & Priest LLP and Sullivan & Cromwell will be conditioned upon, and subject
to certain assumptions regarding, future action required to be taken by PPL
Capital Funding, PPL Corporation and the Trustee in connection with the issuance
and sale of any particular Note, the specific terms of Notes and other matters
which may affect the validity of the Notes and the Guarantee but which cannot be
ascertained on the date of such opinions.
SUPPLEMENTAL PLAN OF DISTRIBUTION
The Notes are being offered on a continuous basis for sale by PPL Capital
Funding to or through Credit Suisse First Boston Corporation, Morgan Stanley
& Co. Incorporated, Banc One Capital Markets, Inc., Goldman, Sachs & Co.,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and
any additional agents appointed by PPL Capital Funding from time to time and
named in the applicable pricing supplements (the "Agents"). The Agents,
individually or in a syndicate, may purchase Notes, as principal, from PPL
Capital Funding from time to time for resale to investors and other purchasers
at varying prices relating to prevailing market prices at the time of resale
as determined by the applicable Agent or, if so specified in the applicable
pricing supplement, for resale at a fixed offering price. If agreed to by PPL
Capital Funding and an Agent, such Agent may also utilize its reasonable
efforts on an agency basis to solicit offers to purchase the Notes at 100% of
the principal amount thereof,
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unless otherwise specified in the applicable pricing supplement. PPL Capital
Funding will pay a commission to an Agent, ranging from .125% to .750% of the
principal amount of each Note, depending upon its stated maturity, sold through
such Agent as an agent of PPL Capital Funding. Commissions with respect to
Notes with stated maturities in excess of 30 years that are sold through an
Agent as an agent of PPL Capital Funding will be negotiated between PPL Capital
Funding and such Agent at the time of such sale. In addition, the expenses
incurred by PPL Capital Funding in connection with the offering of the Notes,
including reimbursement of certain of the Agent's expenses, are currently
estimated to be $570,000.
Unless otherwise specified in the applicable pricing supplement, any Note
sold to an Agent as principal will be purchased by such Agent at a price equal
to 100% of the principal amount thereof less a percentage of the principal
amount equal to the commission applicable to an agency sale of a Note of
identical maturity. An Agent may sell Notes it has purchased from PPL Capital
Funding as principal to certain dealers less a concession equal to all or any
portion of the discount received in connection with such purchase. Such Agent
may allow, and such dealers may reallow, a discount to certain other dealers.
After the initial offering of Notes, the offering price (in the case of Notes to
be resold on a fixed offering price basis), the concession and the reallowance
may be changed.
PPL Capital Funding has reserved the right to appoint additional agents to
solicit offers to purchase the Notes on substantially the same terms and
conditions as the Agents. PPL Capital Funding may also sell the Notes directly
to investors on its own behalf. In the case of sales made directly by PPL
Capital Funding, no commission will be payable.
PPL Capital Funding reserves the right to withdraw, cancel or modify the
offer made hereby without notice and may reject offers in whole or in part
(whether placed directly with PPL Capital Funding or through an Agent). Each
Agent will have the right, in its discretion reasonably exercised, to reject in
whole or in part any offer to purchase Notes received by it on an agency basis.
Upon issuance, the Notes will not have an established trading market. The
Notes will not be listed on any securities exchange. The Agents may from time to
time purchase and sell Notes in the secondary market, but the Agents are not
obligated to do so, and there can be no assurance that there will be a secondary
market for the Notes or that there will be liquidity in the secondary market if
one develops. From time to time, the Agents may make a market in the Notes, but
the Agents are not obligated to do so and may discontinue any market-making
activity at any time.
In connection with an offering of Notes purchased by one or more Agents as
principal on a fixed price basis, such Agent(s) will be permitted to engage in
certain transactions that stabilize the price of such Notes. Such transactions
may consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of such Notes. If the Agent(s) create a short position in
such Notes, i.e., if they sell Notes in an aggregate principal amount exceeding
that set forth in the applicable pricing supplement, such Agent(s) may reduce
that short position by purchasing Notes in the open market. In general,
purchases of Notes for the purpose of stabilization or to reduce a short
position could cause the price of Notes to be higher than it might be in the
absence of such purchases.
Neither PPL Capital Funding nor any of the Agents makes any representation
or prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Notes. In addition,
neither PPL Capital Funding nor any of the Agents makes any representation that
the Agents will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act. PPL Capital Funding and PPL Corporation have agreed to indemnify
the Agents against, and to provide contribution with respect to, certain
liabilities (including liabilities under the Securities Act). PPL Capital
Funding and PPL Corporation have also agreed to reimburse the Agents for certain
other expenses.
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In the ordinary course of its business, the Agents and their affiliates
have engaged and may in the future engage in investment and commercial banking
transactions with PPL Capital Funding, PPL Corporation and certain of their
affiliates.
S-23
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PROSPECTUS PP&L RESOURCES, INC.
PP&L CAPITAL FUNDING, INC.
PP&L CAPITAL FUNDING TRUST I
Two North Ninth Street
Allentown, Pennsylvania 18101-1179
(610) 774-5151
$1,200,000,000
PP&L RESOURCES, INC.
COMMON STOCK, STOCK PURCHASE CONTRACTS AND
STOCK PURCHASE UNITS
PP&L CAPITAL FUNDING, INC.
DEBT SECURITIES AND SUBORDINATED DEBT SECURITIES
GUARANTEED AS TO PAYMENT AS DESCRIBED IN THIS
PROSPECTUS BY PP&L RESOURCES, INC.
PP&L CAPITAL FUNDING TRUST I
PREFERRED TRUST SECURITIES
GUARANTEED AS DESCRIBED
IN THIS PROSPECTUS BY PP&L RESOURCES, INC.
We will provide the specific terms of these securities in supplements to
this prospectus. You should read this prospectus and the supplements carefully
before you invest. This prospectus may not be used to sell securities unless
accompanied by a prospectus supplement.
We may offer the securities directly or through underwriters or agents. The
applicable prospectus supplement will describe the terms of any particular plan
of distribution.
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 DETERMINED
THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this prospectus is October 4, 1999.
<PAGE>
TABLE OF CONTENTS
PAGE
About this Prospectus ....................................................... 2
Where You Can Find More Information ......................................... 3
PP&L Resources .............................................................. 5
PP&L Capital Funding ........................................................ 7
PP&L Capital Funding Trust I ................................................ 7
Use of Proceeds ............................................................. 8
Ratios of Earnings to Fixed Charges and Earnings to Fixed Charges and
Preferred Dividends ..................................................... 8
Description of PP&L Resources' Capital Stock ................................ 8
Description of Stock Purchase Contracts and Stock Purchase Units ............10
Description of the Debt Securities ..........................................11
Description of the Trust Securities .........................................21
Description of the Preferred Securities Guarantee ...........................29
Description of the Subordinated Debt Securities .............................32
Information Concerning the Trustees .........................................47
Experts .....................................................................47
Validity of the Securities and the Securities Guarantees ....................48
Plan of Distribution ........................................................48
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that PP&L
Resources, Inc. ("PP&L Resources"), PP&L Capital Funding, Inc. ("PP&L Capital
Funding") and PP&L Capital Funding Trust I (the "Trust") filed with the
Securities and Exchange Commission, or SEC, using a "shelf" registration
process. Under this shelf process, we may, from time to time, sell combinations
of the securities described in this prospectus in one or more offerings up to a
total dollar amount of $1,200,000,000. This amount includes $3,000,000 of Debt
Securities registered under an earlier registration statement. This prospectus
provides a general description of the securities we may offer. Each time we sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may also
add, update or change information contained in this prospectus. You should read
both this prospectus and any prospectus supplement together with additional
information described under "Where You Can Find More Information."
We may use this prospectus to offer from time to time:
(a) shares of PP&L Resources Common Stock, par value $.01 per share
("Common Stock");
(b) contracts to purchase shares of PP&L Resources Common Stock
("Stock Purchase Contracts"); and
(c) stock purchase units, each representing either (1) a Stock
Purchase Contract or (2) a Stock Purchase Contract and debt
securities or preferred trust securities of third parties (such
as Debt Securities or Subordinated Debt Securities of PP&L
Capital Funding, Preferred Trust Securities of the Trust or
United States Treasury securities) that are pledged to secure the
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stock purchase unit holders' obligations to purchase Common Stock
under the Stock Purchase Contracts ("Stock Purchase Units").
We may also use this prospectus to offer from time to time:
(a) PP&L Capital Funding's unsecured and unsubordinated debt
securities ("Debt Securities"); and
(b) PP&L Capital Funding's unsecured subordinated debt securities
("Subordinated Debt Securities").
PP&L Resources will unconditionally guarantee the payment of
principal, premium and interest on the PP&L Capital Funding Debt Securities and
Subordinated Debt Securities as described below in "Description of the Debt
Securities - PP&L Resources Guarantees" and "Description of the Subordinated
Debt Securities - Subordinated Guarantees."
We may also use this prospectus to offer from time to time the Trust's
preferred trust securities ("Preferred Trust Securities"). PP&L Resources will
guarantee the Trust's obligations under the Preferred Trust Securities as
described below under "Description of the Preferred Securities Guarantee."
We sometimes refer to the Common Stock, the Stock Purchase Contracts,
the Stock Purchase Units, the Debt Securities, the Subordinated Debt Securities
and the Preferred Trust Securities collectively as the "Securities." In
addition, we sometimes refer to PP&L Resources' guarantees of Debt Securities
("Guarantees"), guarantees of Subordinated Debt Securities ("Subordinated
Guarantees"), and the guarantee of Preferred Trust Securities ("Preferred
Securities Guarantee"), collectively as "Securities Guarantees."
For more detailed information about the Securities and the Securities
Guarantees, you can read the exhibits to the registration statement. Those
exhibits have been either filed with the registration statement or incorporated
by reference to earlier SEC filings listed in the registration statement.
WHERE YOU CAN FIND MORE INFORMATION
AVAILABLE INFORMATION
PP&L Resources files reports, proxy statements and other information
with the SEC. Information filed with the SEC by PP&L Resources can be inspected
and copied at the Public Reference Room maintained by the SEC and at the
following Regional Offices of the SEC:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2551
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. Further information on the operation of the
SEC's Public Reference Room in Washington, D.C. can be obtained by calling the
SEC at 1-800-SEC-0330.
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The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, such as PP&L
Resources, who file electronically with the Commission. The address of that site
is http://www.sec.gov.
PP&L Resources Common Stock is listed on the New York Stock Exchange
("NYSE") and the Philadelphia Stock Exchange (symbol: PPL), and reports, proxy
statements and other information concerning PP&L Resources can also be inspected
at the offices of the NYSE at 20 Broad Street, New York, New York 10005 and the
Philadelphia Stock Exchange, 1900 Market Street, Philadelphia, Pennsylvania
19103. In addition, reports, proxy statements and other information concerning
PP&L Resources can be inspected at its offices at Two North Ninth Street,
Allentown, Pennsylvania 18101- 1179. PP&L Resources maintains an Internet site
at http://www.pplresources.com which contains information concerning PP&L
Resources and its affiliates. The information at PP&L Resources' Internet site
is not incorporated in this prospectus by reference, and you should not consider
it a part of this prospectus.
INCORPORATION BY REFERENCE
The rules of the SEC allow us to "incorporate by reference"
information into this prospectus, which means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is deemed to be part of this
prospectus, and later information that we file with the SEC will automatically
update and supersede that information. This prospectus incorporates by reference
the documents set forth below that have been previously filed with the SEC.
These documents contain important information about PP&L Resources.
SEC FILINGS (FILE NO. 1-11459) PERIOD/DATE
------------------------------ -----------
Annual Report on Form 10-K Year ended December 31, 1998
Quarterly Reports on Form 10-Q Quarters ended March 31 and
June 30, 1999
Current Reports on Form 8-K February 18, March 11, April 23,
May 24, June 15, July 28, August 11,
September 3, September 27 and
September 30, 1999
PP&L Resources' Registration Statement April 27, 1995
on Form 8-B
We are also incorporating by reference additional documents that PP&L
Resources files with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), between
the date of this prospectus and the termination of the offering of the
Securities.
PP&L Resources will provide without charge to each person, including
any beneficial owner, to whom a copy of this prospectus has been delivered, a
copy of any and all of these filings. You may request a copy of these filings by
writing or telephoning us at:
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PP&L Resources, Inc.
Two North Ninth Street
Allentown, Pennsylvania 18101-1179
Attention: Investor Services Department
Telephone: 1-800-345-3085
We have not included or incorporated by reference any separate
financial statements of PP&L Capital Funding herein. We do not consider those
financial statements to be material to holders of the Debt Securities or
Subordinated Debt Securities because (1) PP&L Capital Funding was formed for the
primary purpose of providing financing for PP&L Resources and its subsidiaries,
(2) PP&L Capital Funding does not currently engage in any independent operations
and (3) PP&L Capital Funding does not currently plan to engage, in the future,
in more than minimal independent operations. See "PP&L Capital Funding." PP&L
Capital Funding has received a "no action" letter from the Staff of the SEC
stating that the Staff would not raise any objection if PP&L Capital Funding
does not file periodic reports under Sections 13 and 15(d) of the Exchange Act.
Accordingly, we do not expect PP&L Capital Funding to file those reports.
We have similarly not included or incorporated by reference any
separate financial statements of the Trust herein. We do not consider those
financial statements to be material to holders of the Preferred Trust Securities
because (1) the Trust is a newly formed special purpose entity and has no
operating history or independent operations, and (2) the Trust is not engaged in
and does not propose to engage in any activity other than holding as trust
assets the Subordinated Debt Securities of PP&L Capital Funding and issuing the
Preferred Trust Securities and the Common Trust Securities. We do not expect the
Trust to file periodic reports under Sections 13 and 15(d) of the Exchange Act.
PP&L RESOURCES
PP&L Resources is a holding company with headquarters in Allentown,
Pennsylvania. Its subsidiaries include PP&L, Inc. ("PP&L"), which provides
electricity delivery service in eastern and central Pennsylvania, generates
electricity and markets wholesale energy in the United States and Canada; PP&L
EnergyPlus Co., L.L.C., which sells competitively priced energy and energy
services to newly deregulated markets; PP&L Global, Inc. ("PP&L Global"), an
international independent power company; PP&L Spectrum, Inc., which provides
energy management services; Penn Fuel Gas, Inc., which provides natural gas
distribution, transmission and storage services and sells propane; PP&L Capital
Funding, which engages in financing for PP&L Resources and its subsidiaries; and
H.T. Lyons, Inc., McClure Company, McCarl's Inc., and Western Mass. Holdings,
Inc., which are mechanical contracting and engineering firms.
PP&L Global, PP&L Resources' principal unregulated subsidiary, has
investments and commitments to invest of approximately $2.4 billion in
distribution, transmission and generation facilities in the United States, the
United Kingdom, Bolivia, Peru, Argentina, Brazil, Spain, Portugal, Chile and El
Salvador. PP&L Global's major investments to date are South Western Electricity
plc, a British regional electric utility company, Empresas Emel, S.A., a Chilean
electric distribution holding company, and DelSur, an El Salvadorian electric
distribution company.
In August 1999, PP&L Global completed its acquisition of Bangor
Hydro-Electric Company's hydroelectric assets, as well as its interest in an
oil-fired generation facility and certain transmission rights, for $89 million.
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PP&L Global has agreed with The Montana Power Company, Portland
General Electric Company and Puget Sound Energy, Inc. to acquire certain Montana
generating assets and related transmission assets, with 2,372 MW of generating
capacity, for a purchase price of $1.672 billion, subject to adjustment under
the terms of the associated asset purchase agreements. PP&L Global expects
to complete the acquisition, which is subject to receipt of state and federal
regulatory approvals, by the end of 1999 or the first quarter of 2000.
The Boards of Directors of PP&L Resources and PP&L have approved the
initiation of a corporate realignment in order to better position PP&L
Resources and its subsidiaries in the new competitive marketplace. The principal
proposed elements of the corporate realignment project include: (1) the
transfer of all of PP&L's electric generating facilities and related assets to
a new generating company subsidiary of PP&L Resources; (2) the transfer
of PP&L's wholesale energy marketing business, along with the energy marketing
business of PP&L EnergyPlus - which currently is a wholly-owned subsidiary of
PP&L - to a new marketing company subsidiary of PP&L Resources; and (3) the
transfer of the U.S. electric generating business of PP&L Global to the new
generating company. As a result of this corporate realignment, PP&L's principal
business would be the transmission and distribution of electricity to serve
retail customers in its franchised territory in eastern and central
Pennsylvania; and PP&L Global's principal business would be the acquisition or
development of both U.S. and international energy projects and the ownership of
international energy projects. With respect to other existing subsidiaries of
PP&L Resources and PP&L, they generally would be aligned in the new corporate
structure according to their principal business functions.
The proposed corporate realignment is subject to the receipt of
favorable regulatory treatment from Pennsylvania Public Utility Commission, the
Federal Energy Regulatory Commission and the Nuclear Regulatory Commission, as
well as certain third-party consents. PP&L Resources expects to complete the
corporate realignment in mid-2000.
HOLDING COMPANY STRUCTURE
PP&L Resources conducts its operations primarily through PP&L and PP&L
Resources' other wholly-owned subsidiaries, and substantially all of PP&L
Resources' consolidated assets are held by PP&L and these other subsidiaries.
Accordingly, PP&L Resources' cash flow, its ability to pay dividends on Common
Stock and its ability to meet its obligations under the Securities Guarantees
are largely dependent upon the earnings of PP&L and the other subsidiaries and
the distribution or other payment of such earnings to PP&L Resources in the form
of dividends, loans or advances or repayment of loans and advances from PP&L
Resources. The subsidiaries are separate and distinct legal entities and have no
obligation to pay any amounts due on any Securities (except for the Securities
issued by such subsidiaries) or to make any funds available for such payment.
Because PP&L Resources is a holding company, its obligations under the
Securities Guarantees will be effectively subordinated to all existing and
future liabilities of its subsidiaries. Therefore, PP&L Resources' rights and
the rights of its shareholders and creditors, including rights of a holder of
any Security under a Securities Guarantee, to participate in the assets of any
subsidiary in the event that such a subsidiary is liquidated or reorganized,
will be subject to the prior claims of such subsidiary's creditors. To the
extent that PP&L Resources may itself be a creditor with recognized claims
against any such subsidiary, PP&L Resources' claims would still be effectively
subordinated to any security interest in, or mortgages or other liens on, the
assets of the subsidiary and would be subordinated to any indebtedness or other
liabilities of the subsidiary senior to that held by PP&L Resources. Although
certain agreements to which PP&L Resources and its subsidiaries are parties
limit the ability to incur additional indebtedness, PP&L Resources and its
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subsidiaries retain the ability to incur substantial additional indebtedness and
other liabilities.
The information above concerning PP&L Resources and its subsidiaries
is only a summary and does not purport to be comprehensive. In addition, certain
statements regarding PP&L Resources and its affiliates contained or incorporated
by reference in this prospectus are "forward-looking statements" within the
meaning of the securities laws. Although PP&L Resources believes that the
expectations reflected in such statements are reasonable, it can give no
assurance that such expectations will prove to have been correct. For additional
information concerning PP&L Resources and its subsidiaries, including certain
assumptions, risks and uncertainties involved in the forward-looking statements
contained or incorporated by reference in this prospectus, you should refer to
the information described in "Where You Can Find More Information."
PP&L Resources' offices are located at Two North Ninth Street,
Allentown, Pennsylvania 18101- 1179 and its telephone number is (610) 774-5151.
PP&L CAPITAL FUNDING
PP&L Capital Funding is a Delaware corporation and a wholly-owned
subsidiary of PP&L Resources. PP&L Capital Funding's primary business is to
provide financing for the operations of PP&L Resources and its subsidiaries.
PP&L Capital Funding's offices are located at Two North Ninth Street,
Allentown, Pennsylvania 18101-1179 and its telephone number is (610) 774-5151.
PP&L CAPITAL FUNDING TRUST I
The Trust is a statutory business trust created under Delaware law
under a trust agreement which is to be amended pursuant to an Amended and
Restated Trust Agreement (as so amended, the "Trust Agreement") among PP&L
Resources, The Chase Manhattan Bank as the Property Trustee, Chase Manhattan
Bank Delaware, as Delaware Trustee and two employees of PP&L Resources as
Administrative Trustees. The Trust exists only to issue and sell its Preferred
Trust Securities and Common Trust Securities, to acquire and hold the
Subordinated Debt Securities as trust assets and to engage in activities
incidental to the foregoing. All of the Common Trust Securities will be owned by
PP&L Resources. The Common Trust Securities will represent at least 3% of the
total capital of the Trust. Payments will be made on the Common Trust Securities
pro rata with the Preferred Trust Securities, except that the Common Trust
Securities' right to payment will be subordinated to the rights of the Preferred
Trust Securities if there is a default under the Trust Agreement resulting from
an event of default under the Subordinated Indenture (as defined herein). The
Trust has a term of approximately 40 years, but may dissolve earlier as provided
in the Trust Agreement. The Trust's business and affairs will be conducted by
its Administrative Trustees, as set forth in the Trust Agreement. The office of
the Delaware Trustee in the State of Delaware is 1201 Market Street, 9th Floor,
Wilmington, Delaware 19801. The Trust's offices are located at Two North Ninth
Street, Allentown, PA 18101-1179, and the telephone number is (610) 774-5151.
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USE OF PROCEEDS
Unless we indicate differently in the applicable prospectus
supplement, the net proceeds from the sale of the Debt Securities, Subordinated
Debt Securities and/or the Preferred Trust Securities will be loaned to PP&L
Resources and/or its subsidiaries. PP&L Resources and/or its subsidiaries are
expected to use the proceeds of such loans, and the proceeds of any other
Securities, for general corporate purposes, including investing in unregulated
business activities and reducing short-term debt incurred to provide interim
financing for such purposes.
RATIOS OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
The following table sets forth PP&L Resources' ratio of earnings to
fixed charges and ratio of earnings to fixed charges and preferred dividends for
the periods indicated:
Twelve Months Ended
--------------------------------
June 30, 1999
-------------
Ratio of earnings to fixed
charges........................... 3.43
Ratio of earnings to fixed
charges and preferred
dividends(b)...................... 3.09
Year Ended December 31,
--------------------------------------------
1998(a) 1997 1996 1995 1994
------- ---- ---- ---- ----
Ratio of earnings to fixed
charges........................... 3.48 3.22 3.45 3.47 2.70
Ratio of earnings to fixed
charges and preferred
dividends(b)...................... 3.12 2.85 2.90 3.13 2.26
(a) Excluding extraordinary items. For purposes of these ratios, earnings for
the year ended December 31, 1998 exclude an extraordinary charge of $948
million (after tax) associated with PP&L's restructuring proceedings before
the Pennsylvania Public Utility Commission and the Federal Energy
Regulatory Commission. See PP&L Resources' reports on file with the SEC
pursuant to the Exchange Act as described under "Where You Can Find More
Information" for more information.
(b) Includes distributions on company-obligated mandatorily redeemable
preferred securities of subsidiary trusts holding solely company
debentures.
DESCRIPTION OF PP&L RESOURCES' CAPITAL STOCK
The description below is a summary of certain provisions of the PP&L
Resources' capital stock. The Pennsylvania Business Corporation Law and the
Restated Articles of Incorporation and By-laws of PP&L Resources determine the
rights and privileges of holders of PP&L Resources' capital stock, including
the Common Stock. We encourage you to read such documents, which have been
filed with the SEC, and the Pennsylvania law for more information regarding
such capital stock.
AUTHORIZED CAPITAL
The authorized capital stock of PP&L Resources consists of 390,000,000
shares of Common Stock, par value $.01 per share and 10,000,000 shares of
preferred stock, par value $.01 per share (the "PP&L Resources Preferred
Stock").
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COMMON STOCK
As of September 10, 1999, 143,694,305 shares of Common Stock were
issued and outstanding. The outstanding Common Stock is, and the Common Stock
offered hereby when issued and paid for will be, fully paid and non-assessable.
Dividends. Dividends on the Common Stock will be paid if, when and as
determined by the Board of Directors of PP&L Resources out of funds legally
available for this purpose. The rate and timing of future dividends will depend
upon the future earnings and financial condition of PP&L Resources and its
subsidiaries, including PP&L, and upon other relevant factors affecting PP&L
Resources' dividend policy which PP&L Resources cannot presently determine. As a
practical matter, the ability of PP&L Resources to pay dividends will be
governed by the ability of PP&L Resources' operating subsidiaries to pay
dividends to PP&L Resources. To date, the funds required by PP&L Resources to
enable it to pay dividends on its Common Stock have been derived predominantly
from dividends paid by PP&L to PP&L Resources. In the future, dividends from
subsidiaries other than PP&L may also be a source of funds for dividend payments
by PP&L Resources. The subsidiaries' ability to pay dividends to PP&L Resources
will be subject to the prior rights of the holders of such subsidiaries'
outstanding debt and preferred securities, the availability of earnings and the
needs of their businesses. See "PP&L Resources - Holding Company Structure." The
restrictions on the payment of dividends contained in PP&L's Amended and
Restated Articles of Incorporation and in its first mortgage bond indenture do
not currently limit the amount of regular quarterly dividends PP&L pays on its
common stock.
Voting Rights. Holders of Common Stock are entitled to one vote for
each share held by them on all matters presented to shareowners. Pursuant to
PP&L Resources' Articles of Incorporation, the holders of Common Stock will not
have cumulative voting rights in the election of directors. PP&L Resources'
bylaws provide for a classified board of directors consisting of three classes
as nearly equal in number as may be. Each class holds office until the third
year following the election of such class, and no director may be removed except
for cause upon a two-thirds vote of all outstanding shares. PP&L Resources'
bylaws also provide for certain notice requirements for shareowner nominations
and proposals at annual meetings and preclude shareowners from bringing business
before any special meeting. PP&L Resources' Articles of Incorporation and
certain provisions of Pennsylvania law would require a supermajority vote of
holders or a majority vote of disinterested directors to approve certain
business combinations and other major transactions involving PP&L Resources.
Liquidation Rights. After satisfaction of the preferential liquidation
rights of any PP&L Resources Preferred Stock, the holders of the Common Stock
are entitled to share, ratably, in the distribution of all remaining net assets.
Preemptive and Other Rights. The holders of Common Stock do not have
preemptive rights as to additional issues of Common Stock or conversion rights.
The shares of Common Stock are not subject to redemption or to any further calls
or assessments and are not entitled to the benefit of any sinking fund
provisions.
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PP&L RESOURCES PREFERRED STOCK
PP&L Resources' Board of Directors is authorized, without further
shareowner action, to divide the PP&L Resources Preferred Stock into one or more
classes or series and to determine voting rights, if any, designations,
preferences, limitations and special rights of any class or series. No shares of
Preferred Stock have been issued.
CERTAIN TAX MATTERS
In the opinion of counsel for PP&L Resources, the Common Stock is
exempt from existing personal property taxes in Pennsylvania.
LISTING
The outstanding shares of Common Stock are, and the shares offered
hereby will be, listed on the New York and Philadelphia Stock Exchanges.
TRANSFER AGENTS AND REGISTRARS
The Transfer Agents and Registrars for the Common Stock are PP&L and
Norwest Bank Minnesota, N.A., St. Paul, Minnesota.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
PP&L Resources may issue Stock Purchase Contracts representing
contracts obligating holders to purchase from PP&L Resources, and PP&L Resources
to sell to the holders, a specified number of shares of Common Stock at a future
date or dates. The price per share of Common Stock and number of shares of
Common Stock may be fixed at the time the Stock Purchase Contracts are issued or
may be determined by reference to a specific formula set forth in the Stock
Purchase Contracts. The Stock Purchase Contracts may be issued separately or as
a part of other Stock Purchase Units that consist of (a) a Stock Purchase
Contract or (b) a Stock Purchase Contract and debt securities or preferred trust
securities of third parties (including, but not limited to, Debt Securities,
Subordinated Debt Securities, Preferred Trust Securities or United States
Treasury securities), that would secure the holders' obligations to purchase the
Common Stock under the Stock Purchase Contracts. The Stock Purchase Contracts
may require PP&L Resources to make periodic payments to the holders of the Stock
Purchase Units or vice-versa. These payments may be unsecured or prefunded on
some basis. The Stock Purchase Contracts may require holders to secure their
obligations thereunder in a specified manner.
The applicable prospectus supplement will describe the terms of any
Stock Purchase Contracts or Stock Purchase Units.
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DESCRIPTION OF THE DEBT SECURITIES
The following description sets forth certain general terms and
provisions of PP&L Capital Funding's unsecured debt securities, consisting of
notes or debentures, that we may offer by this prospectus ("Debt Securities").
We will describe the particular terms of Debt Securities, and provisions that
vary from those described below, in one or more prospectus supplements.
We may issue the Debt Securities from time to time in the future in
one or more series. We will issue the Debt Securities and the guarantee or
guarantees of PP&L Resources relating thereto (the "Guarantee" or "Guarantees")
under the Indenture, dated as of November 1, 1997 (as such indenture has been
and may be supplemented, the "Indenture"), among PP&L Capital Funding, PP&L
Resources and The Chase Manhattan Bank, as trustee (the "Trustee").
The Indenture is filed as an exhibit to the registration statement.
The Indenture and its associated documents contain the full legal text of the
matters described in this section. Because this section is a summary, it does
not describe every aspect of the Debt Securities or the Indenture. This summary
is subject to and qualified in its entirety by reference to all the provisions
of the Indenture, including definitions of certain terms used in the Indenture.
We also include references in parentheses to certain sections of the Indenture.
Whenever we refer to particular sections or defined terms of the Indenture in
this prospectus or in a prospectus supplement, such sections or defined terms
are incorporated by reference herein or in the prospectus supplement. This
summary also is subject to and qualified by reference to the description of the
particular terms of your securities described in the applicable prospectus
supplement or supplements. The Indenture has been qualified under the Trust
Indenture Act, and you should refer to the Trust Indenture Act for provisions
that apply to the Debt Securities.
GENERAL
We may issue an unlimited amount of Debt Securities or other
securities under the Indenture. The Debt Securities and all other debt
securities issued previously or hereafter under the Indenture are collectively
referred to herein as the "Indenture Securities."
The Debt Securities will be unsecured and unsubordinated obligations
of PP&L Capital Funding, and by the Guarantees will be unconditionally
guaranteed by PP&L Resources as to payment of principal and any interest and
premium. See "--PP&L Resources Guarantees."
Prior to the issuance of each series, certain aspects of the
particular Debt Securities have to be specified in a supplemental indenture, in
a board resolution of PP&L Capital Funding, or in one or more officer's
certificates of PP&L Capital Funding pursuant to a supplemental indenture or a
board resolution. We refer you to the applicable prospectus supplement(s) for a
description of the following terms of the series of Debt Securities:
(a) the title of such Debt Securities;
(b) any limit upon the principal amount of such Debt Securities;
(c) the date or dates on which principal will be payable or how to
determine such dates;
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(d) the rate or rates or method of determination of interest; the
date from which interest will accrue; the dates on which interest
will be payable ("Interest Payment Dates"); and any record dates
for the interest payable on such Interest Payment Dates;
(e) any obligation or option of PP&L Capital Funding to redeem,
purchase or repay Debt Securities, or any option of the Holder to
require PP&L Capital Funding to redeem or repurchase Debt
Securities, and the terms and conditions upon which such Debt
Securities will be redeemed, purchased or repaid;
(f) the denominations in which such Debt Securities will be issuable
(if other than denominations of $1,000 and any integral multiple
thereof);
(g) whether such Debt Securities are to be issued in whole or in part
in the form of one or more global Debt Securities and, if so, the
identity of the depositary for such global Debt Securities; and
(h) any other terms of such Debt Securities.
(See Section 301.)
PP&L RESOURCES GUARANTEES
PP&L Resources will unconditionally guarantee the payment of principal
of and any interest and premium on the Debt Securities, when due and payable,
whether at the stated maturity date, by declaration of acceleration, call for
redemption or otherwise, in accordance with the terms of such Debt Securities
and the Indenture. The Guarantees will remain in effect until the entire
principal of and any premium and interest on the Debt Securities has been paid
in full or otherwise discharged in accordance with the provisions of the
Indenture. (See Article Fourteen.) The Guarantees will be unsecured debt of PP&L
Resources, not subordinated by their terms to any other obligations of PP&L
Resources. See "PP&L Resources--Holding Company Structure," above, however, with
regard to the effect of the holding company structure on the status of PP&L
Resources' obligations compared to obligations of its subsidiaries.
PAYMENT OF DEBT SECURITIES
INTEREST
Unless we indicate differently in a prospectus supplement, we will pay
interest on each Debt Security on each Interest Payment Date by check mailed to
the person in whose name such Debt Security is registered (the registered holder
of any Indenture Security being called a "Holder" in this prospectus) as of the
close of business on the regular record date relating to such Interest Payment
Date, except that interest payable at maturity (whether at stated maturity, upon
redemption or otherwise, "Maturity") will be paid to the person to whom
principal is paid.
However, if we default in paying interest on a Debt Security, we will
pay defaulted interest in either of the two following ways:
(a) We will first propose to the Trustee a payment date for such
defaulted interest. Next, the Trustee will choose a Special
Record Date for determining which Holders are entitled to the
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payment. The Special Record Date will be between 10 and 15 days
before the payment date we propose. Finally, we will pay such
defaulted interest on the payment date to the Holder of the Debt
Security as of the close of business on the Special Record Date.
(b) Alternatively, we can propose to the Trustee any other lawful
manner of payment that is consistent with the requirements of any
securities exchange on which such Debt Securities are listed for
trading. If the Trustee thinks the proposal is practicable,
payment will be made as proposed.
(See Section 307.)
PRINCIPAL
Unless we indicate differently in a prospectus supplement, we will pay
principal of and any interest and premium on the Debt Securities at Maturity
upon presentation of the Debt Securities at the office of The Chase Manhattan
Bank in New York, New York, as our Paying Agent. Any other Paying Agent
initially designated for the Debt Securities of a particular series will be
named in the applicable prospectus supplement.
In our discretion, we may change the place of payment on the Debt
Securities, and may remove any Paying Agent and may appoint one or more
additional Paying Agents (including PP&L Capital Funding, PP&L Resources or any
affiliate of either of them). (See Section 602.)
FORM; TRANSFERS; EXCHANGES
Unless otherwise indicated in a prospectus supplement, the Debt
Securities will be issued:
(a) only in fully registered form;
(b) without interest coupons; and
(c) in denominations that are integral multiples of $1,000. (See
Section 302.)
You may have your Debt Securities divided into Debt Securities of
smaller denominations (of at least $1,000) or combined into Debt Securities of
larger denominations, as long as the total principal amount is not changed. This
is called an "exchange."
You may exchange or transfer Debt Securities at the office of the
Trustee. The Trustee acts as our agent for registering Debt Securities in the
names of holders and transferring debt securities. We may appoint another agent
or act as our own agent for this purpose. The entity performing the role of
maintaining the list of registered holders is called the "Security Registrar."
It will also perform transfers.
In our discretion, we may change the place for registration of
transfer of the Debt Securities and may remove and/or appoint one or more
additional Security Registrars (including PP&L Capital Funding, PP&L Resources
or any affiliate of either of them). (See Sections 305 and 602.)
Except as otherwise provided in a prospectus supplement, there will be
no service charge for any transfer or exchange of the Debt Securities, but you
may be required to pay a sum sufficient to cover any tax or other governmental
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charge payable in connection therewith. We may block the transfer or exchange of
(a) Debt Securities during a period of 15 days prior to giving any notice of
redemption or (b) any Debt Security selected for redemption in whole or in part,
except the unredeemed portion of any Debt Security being redeemed in part. (See
Section 305.)
REDEMPTION
We will set forth any terms for the redemption of Debt Securities in a
prospectus supplement. Unless we indicate differently in a prospectus
supplement, and except with respect to Debt Securities redeemable at the option
of the Holder, Debt Securities will be redeemable upon notice by mail between 30
and 60 days prior to the redemption date. If less than all of the Debt
Securities of any series or any tranche thereof are to be redeemed, the Trustee
will select the Debt Securities to be redeemed. In the absence of any provision
for selection, the Trustee will choose a method of random selection as it deems
fair and appropriate. (See Sections 403 and 404.)
Debt Securities will cease to bear interest on the redemption date.
PP&L Capital Funding will pay the redemption price and any accrued interest once
you surrender the Debt Security for redemption. (See Section 405.) If only part
of a Debt Security is redeemed, the Trustee will deliver to you a new Debt
Security of the same series for the remaining portion without charge. (Section
406.)
We may make any redemption at the option of PP&L Capital Funding
conditional upon the receipt by the Paying Agent, on or prior to the date fixed
for redemption, of money sufficient to pay the redemption price. If the Paying
Agent has not received such money by the date fixed for redemption, PP&L Capital
Funding will not be required to redeem such Debt Securities. (See Section 404.)
EVENTS OF DEFAULT
An "Event of Default" occurs with respect to Indenture Securities of
any series if
(a) we do not pay any interest on any Indenture Securities of the
applicable series within 30 days of the due date;
(b) we do not pay principal or premium on any Indenture Securities of
the applicable series on its due date;
(c) we remain in breach of a covenant (excluding covenants solely
applicable to a specific series) or warranty of the Indenture for
90 days after we receive a written notice of default stating we
are in breach and requiring remedy of the breach; the notice must
be sent by either the Trustee or Holders of 25% of the principal
amount of Indenture Securities of the affected series; the
Trustee or such Holders can agree to extend the 90- day period
and such an agreement to extend will be automatically deemed to
occur if we are diligently pursuing action to correct the
default;
(d) the Guarantees on any Indenture Securities of the applicable
series
(1) cease to be effective (except in accordance with their
terms),
(2) are found in any judicial proceeding to be unenforceable or
invalid, or
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(3) are denied or disaffirmed (except in accordance with their
terms);
(e) we file for bankruptcy or certain other events in bankruptcy,
insolvency, receivership or reorganization occur; or
(f) any other Event of Default specified in the prospectus supplement
occurs.
(See Section 801.)
No Event of Default with respect to the Debt Securities necessarily constitutes
an Event of Default with respect to the Indenture Securities of any other series
issued under the Indenture.
REMEDIES
ACCELERATION
ANY ONE SERIES. If an Event of Default occurs and is continuing with
respect to any one series of Indenture Securities, then either the Trustee or
the Holders of 25% in principal amount of the outstanding Indenture Securities
of such series may declare the principal amount of all of the Indenture
Securities of such series to be due and payable immediately.
MORE THAN ONE SERIES. If an Event of Default occurs and is continuing
with respect to more than one series of Indenture Securities, then either the
Trustee or the Holders of 25% in aggregate principal amount of the outstanding
Indenture Securities of all such series, considered as one class, may make such
declaration of acceleration. Thus, if there is more than one series affected,
the action by 25% in principal amount of the Indenture Securities of any
particular series will not, in itself, be sufficient to make a declaration of
acceleration.
(See Section 802.)
RESCISSION OF ACCELERATION
After the declaration of acceleration has been made and before the
Trustee has obtained a judgment or decree for payment of the money due, such
declaration and its consequences will be rescinded and annulled, if
(a) we pay or deposit with the Trustee a sum sufficient to pay
(1) all overdue interest;
(2) the principal of and any premium which have become due
otherwise than by such declaration of acceleration and
overdue interest thereon;
(3) interest on overdue interest to the extent lawful; and
(4) all amounts due to the Trustee under the Indenture; and
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(b) all Events of Default, other than the nonpayment of the principal
which has become due solely by such declaration of acceleration,
have been cured or waived as provided in the Indenture.
(See Section 802.) For more information as to waiver of defaults, see "--Waiver
of Default and of Compliance" below.
CONTROL BY HOLDERS; LIMITATIONS
Subject to the Indenture, if an Event of Default with respect to the
Indenture Securities of any one series occurs and is continuing, the Holders of
a majority in principal amount of the outstanding Indenture Securities of that
series will have the right to
(a) direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or
(b) exercise any trust or power conferred on the Trustee with respect
to the Indenture Securities of such series.
If an Event of Default is continuing with respect to more than one
series of Indenture Securities, the Holders of a majority in aggregate principal
amount of the outstanding Indenture Securities of all such series, considered as
one class, will have the right to make such direction, and not the Holders of
the Indenture Securities of any one of such series. These rights of Holders to
make direction are subject to the following limitations:
(a) the Holders' directions may not conflict with any law or the
Indenture; and
(b) the Holders' directions may not involve the Trustee in personal
liability where the Trustee believes indemnity is not adequate.
The Trustee may also take any other action it deems proper which is consistent
with the Holders' direction. (See Sections 812 and 903.)
In addition, the Indenture provides that no Holder of any Indenture
Security will have any right to institute any proceeding, judicial or otherwise,
with respect to the Indenture for the appointment of a receiver or for any other
remedy thereunder unless
(a) that Holder has previously given the Trustee written notice of a
continuing Event of Default;
(b) the Holders of 25% in aggregate principal amount of the
outstanding Indenture Securities of all affected series,
considered as one class, have made written request to the Trustee
to institute proceedings in respect of that Event of Default and
have offered the Trustee reasonable indemnity against costs and
liabilities incurred in complying with such request; and
(c) for 60 days after receipt of such notice, the Trustee has failed
to institute any such proceeding and no direction inconsistent
with such request has been given to the Trustee during such
60-day period by the Holders of a majority in aggregate principal
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amount of outstanding Indenture Securities of all affected
series, considered as one class.
Furthermore, no Holder will be entitled to institute any such action if and to
the extent that such action would disturb or prejudice the rights of other
Holders. (See Sections 807 and 903.)
However, each Holder has an absolute and unconditional right to
receive payment when due and to bring a suit to enforce that right. (See
Sections 807 and 808.)
NOTICE OF DEFAULT
The Trustee is required to give the Holders of the Indenture
Securities notice of any default under the Indenture to the extent required by
the Trust Indenture Act, unless such default has been cured or waived; except
that in the case of an Event of Default of the character specified above in
clause (c) under "Events of Default," no such notice shall be given to such
Holders until at least 75 days after the occurrence thereof. (See Section 902.)
The Trust Indenture Act currently permits the Trustee to withhold notices of
default (except for certain payment defaults) if the Trustee in good faith
determines the withholding of such notice to be in the interests of the Holders.
We will furnish the Trustee with an annual statement as to the
compliance by PP&L Capital Funding with the conditions and covenants in the
Indenture. (See Section 605.)
WAIVER OF DEFAULT AND OF COMPLIANCE
The Holders of a majority in aggregate principal amount of the
outstanding Indenture Securities of any series may waive, on behalf of the
Holders of all Indenture Securities of such series, any past default under the
Indenture, except a default in the payment of principal, premium or interest, or
with respect to compliance with certain provisions of the Indenture that cannot
be amended without the consent of the Holder of each outstanding Indenture
Security. (See Section 813.)
Compliance with certain covenants in the Indenture or otherwise
provided with respect to Indenture Securities may be waived by the Holders of a
majority in aggregate principal amount of the affected Indenture Securities,
considered as one class. (See Section 606.)
CONSOLIDATION, MERGER AND CONVEYANCE OF ASSETS AS AN ENTIRETY; NO FINANCIAL
COVENANTS
Subject to the provisions described in the next paragraph, each of
PP&L Capital Funding and PP&L Resources will preserve its corporate existence.
(See Section 604.)
PP&L Capital Funding and PP&L Resources have each agreed not to
consolidate with or merge into any other entity or convey, transfer or lease its
properties and assets substantially as an entirety to any entity unless
(a) the entity formed by such consolidation or into which PP&L
Capital Funding or PP&L Resources, as the case may be, is merged
or the entity which acquires or which leases the property and
assets of PP&L Capital Funding or PP&L Resources, as the case may
be, substantially as an entirety is an entity organized and
existing under the laws of the United States of America or any
State thereof or the District of Columbia, and expressly assumes,
by supplemental indenture, the due and punctual payment of the
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principal, premium and interest on all the outstanding Indenture
Securities (or the Guarantees endorsed thereon, as the case may
be) and the performance of all of the covenants of PP&L Capital
Funding or PP&L Resources, as the case may be, under the
Indenture, and
(b) immediately after giving effect to such transactions, no Event of
Default, and no event which after notice or lapse of time or both
would become an Event of Default, will have occurred and be
continuing. (See Section 1101.)
The Indenture does not prevent or restrict:
(a) any consolidation or merger after the consummation of which PP&L
Capital Funding or PP&L Resources would be the surviving or
resulting entity; or
(b) any conveyance or other transfer, or lease, of any part of the
properties of PP&L Capital Funding or PP&L Resources which does
not constitute the entirety, or substantially the entirety,
thereof. (See Section 1103.)
Neither the Indenture nor the Guarantee contains any financial or
other similar restrictive covenants.
MODIFICATION OF INDENTURE
WITHOUT HOLDER CONSENT. Without the consent of any Holders of
Indenture Securities, PP&L Capital Funding, PP&L Resources and the Trustee may
enter into one or more supplemental indentures for any of the following
purposes:
(a) to evidence the succession of another entity to PP&L Capital
Funding or PP&L Resources; or
(b) to add one or more covenants of PP&L Capital Funding or PP&L
Resources or other provisions for the benefit of the Holders of
all or any series or tranche of Indenture Securities, or to
surrender any right or power conferred upon PP&L Capital Funding
or PP&L Resources; or
(c) to add any additional Events of Default for all or any series of
Indenture Securities; or
(d) to change or eliminate any provision of the Indenture or to add
any new provision to the Indenture that does not adversely affect
the interests of the Holders; or
(e) to provide security for the Indenture Securities of any series;
or
(f) to establish the form or terms of Indenture Securities of any
series or tranche or any Guarantees as permitted by the
Indenture; or
(g) to provide for the issuance of bearer securities; or
(h) to evidence and provide for the acceptance of appointment of a
separate or successor Trustee; or
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(i) to provide for the procedures required to permit the utilization
of a noncertificated system of registration for any series or
tranche of Indenture Securities; or
(j) to change any place or places where
(1) we may pay principal, premium and interest,
(2) Indenture Securities may be surrendered for transfer or
exchange, and
(3) notices and demands to or upon PP&L Capital Funding or PP&L
Resources may be served; or
(k) to cure any ambiguity, defect or inconsistency or to make any
other changes that do not adversely affect the interests of the
Holders in any material respect.
If the Trust Indenture Act is amended after the date of the Indenture
so as to require changes to the Indenture or so as to permit changes to, or the
elimination of, provisions which, at the date of the Indenture or at any time
thereafter, were required by the Trust Indenture Act to be contained in the
Indenture, the Indenture will be deemed to have been amended so as to conform to
such amendment or to effect such changes or elimination, and PP&L Capital
Funding, PP&L Resources and the Trustee may, without the consent of any Holders,
enter into one or more supplemental indentures to effect or evidence such
amendment.
(See Section 1201.)
WITH HOLDER CONSENT. Except as provided above, the consent of the
Holders of at least a majority in aggregate principal amount of the Indenture
Securities of all outstanding series, considered as one class, is generally
required for the purpose of adding to, or changing or eliminating any of the
provisions of, the Indenture pursuant to a supplemental indenture. However, if
less than all of the series of outstanding Indenture Securities are directly
affected by a proposed supplemental indenture, then such proposal only requires
the consent of the Holders of a majority in aggregate principal amount of the
outstanding Indenture Securities of all directly affected series, considered as
one class. Moreover, if the Indenture Securities of any series have been issued
in more than one tranche and if the proposed supplemental indenture directly
affects the rights of the Holders of Indenture Securities of one or more, but
less than all, of such tranches, then such proposal only requires the consent of
the Holders of a majority in aggregate principal amount of the outstanding
Indenture Securities of all directly affected tranches, considered as one class.
However, no amendment or modification may, without the consent of the
Holder of each outstanding Indenture Security directly affected thereby,
(a) change the stated maturity of the principal or interest on any
Indenture Security (other than pursuant to the terms thereof), or
reduce the principal amount, interest or premium payable or
change the currency in which any Indenture Security is payable,
or impair the right to bring suit to enforce any payment;
(b) reduce the percentages of Holders whose consent is required for
any supplemental indenture or waiver or reduce the requirements
for quorum and voting under the Indenture; or
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(c) modify certain of the provisions in the Indenture relating to
supplemental indentures and waivers of certain covenants and past
defaults.
A supplemental indenture which changes or eliminates any provision of
the Indenture expressly included solely for the benefit of Holders of Indenture
Securities of one or more particular series or tranches will be deemed not to
affect the rights under the Indenture of the Holders of Indenture Securities of
any other series or tranche. (See Section 1202.)
MISCELLANEOUS PROVISIONS
The Indenture provides that certain Indenture Securities, including
those for which payment or redemption money has been deposited or set aside in
trust as described under "--Satisfaction and Discharge" below, will not be
deemed to be "outstanding" in determining whether the Holders of the requisite
principal amount of the outstanding Indenture Securities have given or taken any
demand, direction, consent or other action under the Indenture as of any date,
or are present at a meeting of Holders for quorum purposes. (See Section 101.)
PP&L Capital Funding or PP&L Resources will be entitled to set any day
as a record date for the purpose of determining the Holders of outstanding
Indenture Securities of any series entitled to give or take any demand,
direction, consent or other action under the Indenture, in the manner and
subject to the limitations provided in the Indenture. In certain circumstances,
the Trustee also will be entitled to set a record date for action by Holders. If
such a record date is set for any action to be taken by Holders of particular
Indenture Securities, such action may be taken only by persons who are Holders
of such Indenture Securities on the record date. (See Section 104.)
SATISFACTION AND DISCHARGE
Any Indenture Securities or any portion will be deemed to have been
paid for purposes of the Indenture, and at PP&L Capital Funding's election, our
entire indebtedness will be satisfied and discharged, if there shall have been
irrevocably deposited with the Trustee or any Paying Agent (other than PP&L
Capital Funding or PP&L Resources), in trust:
(a) money sufficient, or
(b) in the case of a deposit made prior to the maturity of such
Indenture Securities, non-redeemable Government Obligations (as
defined in the Indenture) sufficient, or
(c) a combination of (a) and (b), which in total are sufficient,
to pay when due the principal of, and any premium, and interest due and to
become due on such Indenture Securities or portions thereof on and prior to the
maturity thereof.
(See Section 701.)
The Indenture will be deemed satisfied and discharged when no
Indenture Securities remain outstanding and when we have paid all other sums
payable by us under the Indenture. (See Section 702.)
All moneys we pay to the Trustee or any Paying Agent on Debt
Securities which remain unclaimed at the end of two years after payments have
become due will be paid to or upon the order of PP&L Capital Funding.
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Thereafter, the Holder of such Debt Security may look only to us for payment
thereof. (See Section 603.)
RESIGNATION AND REMOVAL OF THE TRUSTEE; DEEMED RESIGNATION
The Trustee may resign at any time by giving written notice thereof to
us.
The Trustee may also be removed by act of the Holders of a majority in
principal amount of the then outstanding Indenture Securities of any series.
No resignation or removal of the Trustee and no appointment of a
successor trustee will become effective until the acceptance of appointment by a
successor trustee in accordance with the requirements of the Indenture.
Under certain circumstances, we may appoint a successor trustee and if
the successor accepts, the Trustee will be deemed to have resigned.
(See Section 910).
GOVERNING LAW
The Indenture, the Debt Securities and the Guarantees provide that
they are to be governed by and construed in accordance with the laws of the
State of New York.
DESCRIPTION OF THE TRUST SECURITIES
The Trust may issue Preferred Trust Securities and Common Trust
Securities under the Trust Agreement. These Trust securities will represent
undivided beneficial interests in the assets of the Trust. Selected provisions
of the Trust Agreement are summarized below. This summary is not complete. The
form of Trust Agreement was filed with the SEC and you should read the Trust
Agreement for provisions that may be important to you. The Trust Agreement will
be qualified as an indenture under the Trust Indenture Act. You should also
refer to the Trust Indenture Act for provisions that apply to the Preferred
Trust Securities. Wherever particular defined terms of the Trust Agreement are
referred to, such defined terms are incorporated herein by reference.
GENERAL
The Preferred Trust Securities and Common Trust Securities issued by
the Trust will be substantially the same except that, if there is an Event of
Default under the Trust Agreement, as described below, that results from an
Event of Default under the Subordinated Indenture, the rights of the holders of
the Common Trust Securities to payment of distributions and upon liquidation or
redemption will be subordinated to the rights of the holders of the Preferred
Trust Securities. All of the Common Trust Securities of the Trust will be owned
by PP&L Resources.
PP&L Resources will fully and unconditionally guarantee payments due
on the Preferred Trust Securities through a combination of the following:
(a) PP&L Resources' guarantee of PP&L Capital Funding's obligations
under the Subordinated Debt Securities (the "Subordinated
Guarantee");
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(b) the rights of holders of Preferred Trust Securities to enforce
those obligations;
(c) PP&L Resources' agreement to pay the expenses of the Trust; and
(d) PP&L Resources' guarantee of payments due on the Preferred Trust
Securities to the extent of the Trust's assets (the "Preferred
Securities Guarantee").
The Trust will use the proceeds from the sale of the Preferred Trust
Securities and Common Trust Securities to purchase Subordinated Debt Securities
from PP&L Capital Funding. The Subordinated Debt Securities will be guaranteed
by PP&L Resources pursuant to the Subordinated Guarantee described below. The
Subordinated Debt Securities will be held in trust for the benefit of holders of
the Preferred Trust Securities and Common Trust Securities.
A prospectus supplement relating to the Preferred Trust Securities
will include specific terms of those securities and of the Subordinated Debt
Securities. For a description of some specific terms that will affect both the
Preferred Trust Securities and the Subordinated Debt Securities and your rights
under each, see "Description of the Subordinated Debt Securities" below.
DISTRIBUTIONS
The only income of the Trust available for distribution to the holders
of Preferred Trust Securities will be payments on the Subordinated Debt
Securities. If neither PP&L Capital Funding nor PP&L Resources makes interest
payments on the Subordinated Debt Securities, the Trust will not have funds
available to pay distributions on Preferred Trust Securities. The payment of
distributions, if and to the extent the Trust has sufficient funds available for
the payment of such distributions, is guaranteed on a limited basis by PP&L
Resources as described under "Description of the Preferred Securities
Guarantee."
So long as no Event of Default under the Subordinated Indenture has
occurred and is continuing, PP&L Capital Funding may extend the interest payment
period from time to time on the Subordinated Debt Securities for one or more
periods. As a consequence, distributions on Preferred Trust Securities would be
deferred during any such period. Interest would, however, continue to accrue.
During any extended interest period, or for so long as an "Event of Default"
under the Subordinated Indenture resulting from a payment default or any payment
default under the Preferred Securities Guarantee has occurred and is continuing,
PP&L Resources may not:
(a) declare or pay any dividend or distribution on its capital stock,
other than dividends paid in shares of capital stock of PP&L
Resources;
(b) redeem, purchase, acquire or make a liquidation payment with
respect to any of its capital stock;
(c) pay any principal, interest or premium on, or repay, repurchase
or redeem any debt securities that are equal or junior in right
of payment with the Subordinated Guarantees; or
(d) make any payments with respect to any guarantee of debt
securities by PP&L Resources if such guarantee is equal or junior
in right of payment to the Subordinated Guarantees.
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Before an extension period ends, PP&L Capital Funding may further
extend the interest payment period. No extension period as further extended may
exceed 20 consecutive quarters. After any extension period and the payment of
all amounts then due, PP&L Capital Funding may select a new extended interest
payment period. No interest period may be extended beyond the maturity of the
Subordinated Debt Securities.
REDEMPTION
Whenever Subordinated Debt Securities are repaid, whether at maturity
or earlier redemption, the Property Trustee will apply the proceeds to redeem a
like amount of Preferred Trust Securities and Common Trust Securities.
Preferred Trust Securities will be redeemed at the redemption price
plus accrued and unpaid distributions with the proceeds from the contemporaneous
redemption of Subordinated Debt Securities. Redemptions of the Preferred Trust
Securities will be made on a redemption date only if the Trust has funds
available for the payment of the redemption price plus accrued and unpaid
distributions.
Holders of Preferred Trust Securities will be given not less than 30
nor more than 60 days' notice of any redemption. On or before the redemption
date, the Trust will irrevocably deposit with the paying agent for Preferred
Trust Securities sufficient funds and will give the paying agent irrevocable
instructions and authority to pay the redemption price plus accrued and unpaid
distributions to the holders upon surrender of their Preferred Trust Securities.
Distributions payable on or before a redemption date will be payable to the
holders on the record date for the distribution payment. If notice is given and
funds are deposited as required, then on the redemption date all rights of
holders of the Preferred Trust Securities called for redemption will cease,
except the right of the holders to receive the redemption price plus accrued and
unpaid distributions, and the Preferred Trust Securities will cease to be
outstanding. No interest will accrue on amounts payable on the redemption date.
In the event that any date fixed for redemption of Preferred Trust Securities is
not a business day, then payment will be made on the next business day, except
that, if such business day falls in the next calendar year, then payment will be
made on the immediately preceding business day. No interest will be payable
because of any such delay. If payment of Preferred Trust Securities called for
redemption is improperly withheld or refused and not paid either by the Trust or
by PP&L Resources pursuant to the Preferred Securities Guarantee, distributions
on such Preferred Trust Securities will continue to accrue to the date of
payment. The actual payment date will be considered the date fixed for
redemption for purposes of calculating the redemption price plus accrued and
unpaid distributions.
Subject to applicable law, including United States federal securities
law, PP&L Resources or its affiliates may at any time and from time to time
purchase outstanding Preferred Trust Securities by tender, in the open market or
by private agreement.
If Preferred Trust Securities are partially redeemed on a redemption
date, a corresponding percentage of the Common Trust Securities will be
redeemed. The particular Preferred Trust Securities to be redeemed will be
selected not more than 60 days prior to the redemption date by the Property
Trustee by such method as the Property Trustee shall deem fair, taking into
account the denominations in which they were issued. The Property Trustee will
promptly notify the Preferred Trust Security registrar in writing of the
Preferred Trust Securities selected for redemption and, where applicable, the
partial amount to be redeemed.
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SUBORDINATION OF COMMON TRUST SECURITIES
Payment of distributions on, and the redemption price, plus accrued
and unpaid distributions, of, the Preferred Trust Securities and Common Trust
Securities shall be made pro rata based on the liquidation preference amount of
such securities. However, if on any distribution payment date or redemption date
an event of default under the Trust Agreement resulting from an event of default
under the Subordinated Indenture has occurred and is continuing, no payment on
any Common Trust Security shall be made until all payments due on the Preferred
Trust Securities have been made. In that case, funds available to the Property
Trustee shall first be applied to the payment in full of all distributions on,
or the redemption price plus accrued and unpaid distributions of, Preferred
Trust Securities then due and payable.
If an event of default under the Trust Agreement results from an event
of default under the Subordinated Indenture, the holder of Common Trust
Securities cannot take action with respect to the Trust Agreement default until
the effect of all defaults with respect to Preferred Trust Securities has been
cured, waived or otherwise eliminated. Until the event of default under the
Trust Agreement with respect to Preferred Trust Securities has been cured,
waived or otherwise eliminated, the Property Trustee shall, to the fullest
extent permitted by law, act solely on behalf of the holders of Preferred Trust
Securities and not the holders of the Common Trust Securities, and only holders
of Preferred Trust Securities will have the right to direct the Property Trustee
to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
The Trust shall dissolve and shall be liquidated by the Property
Trustee on the first to occur of:
(a) the expiration of the term of the Trust;
(b) the bankruptcy, dissolution or liquidation of PP&L Resources;
(c) redemption of all of the Preferred Trust Securities;
(d) the entry of an order for dissolution of the Trust by a court of
competent jurisdiction; and
(e) at any time, at the election of PP&L Resources.
If a dissolution of the Trust occurs, the Trust will be liquidated by
the Property Trustee as expeditiously as the Property Trustee determines to be
appropriate. If a dissolution of the Trust occurs other than by redemption of
all the Preferred Trust Securities, the Property Trustee will provide for the
satisfaction of liabilities of creditors, if any, and distribute to each holder
of the Preferred Trust Securities and Common Trust Securities a proportionate
amount of Subordinated Debt Securities. If a distribution of Subordinated Debt
Securities is determined by the Property Trustee not to be practical, holders
will be entitled to receive, out of the assets of the Trust after adequate
provision for the satisfaction of liabilities of creditors, if any, an amount
equal to the aggregate liquidation preference of the Preferred Trust Securities
plus accrued and unpaid distributions thereon to the date of payment. If this
liquidation distribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate liquidation
distribution, then the amounts payable by the Trust on the Preferred Trust
Securities shall be paid on a pro rata basis. PP&L Resources, as holder of the
Common Trust Securities, will be entitled to receive distributions upon any
dissolution pro rata with the holders of the Preferred Trust Securities, except
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that if an Event of Default (or event that, with the lapse of time or giving of
notice, would become such an Event of Default) has occurred and is continuing
under the Subordinated Indenture, the Preferred Trust Securities will have a
preference over the Common Trust Securities.
EVENTS OF DEFAULT; NOTICE
Any one of the following events will be an event of default under the
Trust Agreement whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body:
(a) the occurrence of an Event of Default as described in the
Subordinated Indenture;
(b) default by the Trust in the payment of any distribution when it
becomes due and payable, and continuation of that default for a
period of 30 days;
(c) default by the Trust in the payment of any redemption price, plus
accrued and unpaid distributions, of any Preferred Trust Security
or Common Trust Security when it becomes due and payable;
(d) default in the performance, or breach, in any material respect,
of any covenant or warranty of the trustees under the Trust
Agreement which is not dealt with above, and the continuation of
that default or breach for a period of 90 days after written
notice to the Trust and PP&L Resources by the holders of
Preferred Trust Securities having at least 25% of the total
liquidation preference amount of the outstanding Preferred Trust
Securities; or
(e) the occurrence of certain events of bankruptcy or insolvency with
respect to the Trust.
Within 90 days after the occurrence of any event of default actually
known to the Property Trustee, the Property Trustee shall transmit to the
holders of Preferred Trust Securities, PP&L Capital Funding, PP&L Resources and
the Administrative Trustees notice of any such default, unless that default will
have been cured or waived.
A holder of Preferred Trust Securities may directly institute a
proceeding to enforce payment when due directly to the holder of the Preferred
Trust Securities of the principal of or interest on Subordinated Debt Securities
having a principal amount equal to the aggregate liquidation preference amount
of the holder's Preferred Trust Securities. The holders of Preferred Trust
Securities have no other rights to exercise directly any other remedies
available to the holder of the Subordinated Debt Securities unless the trustees
under the Trust Agreement fail to do so.
REMOVAL OF TRUSTEES
Unless an event of default under the Subordinated Indenture has
occurred and is continuing, the holder of the Common Trust Securities may remove
any trustee under the Trust Agreement at any time. If an event of default under
the Subordinated Indenture has occurred and is continuing, the holders of a
majority of the total liquidation preference amount of the outstanding Preferred
Trust Securities may remove the Property Trustee or the Delaware Trustee, or
both of them. The holder of the Common Trust Securities may remove any
Administrative Trustee at any time. Any resignation or removal of a trustee
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under the Trust Agreement will take effect only on the acceptance of appointment
by the successor trustee.
Holders of Preferred Trust Securities will have no right to appoint or
remove the Administrative Trustees of the Trust, who may be appointed, removed
or replaced solely by PP&L Resources as the holder of the Common Trust
Securities.
VOTING RIGHTS
Except as provided below and under "Description of the Preferred
Securities Guarantee --Amendments and Assignments," and as otherwise required by
law or the Trust Agreement, the holders of Preferred Trust Securities will have
no voting rights.
While Subordinated Debt Securities are held by the Property Trustee,
the Property Trustee will not:
(a) direct the time, method and place to conduct any proceeding for
any remedy available to the Subordinated Indenture Trustee, or
execute any trust or power conferred on the Subordinated
Indenture Trustee with respect to the Subordinated Debt
Securities;
(b) waive any past default under the Subordinated Indenture;
(c) exercise any right to rescind or annul a declaration that the
principal of all the Subordinated Debt Securities will be due and
payable; or
(d) consent to any amendment, modification or termination of the
Subordinated Indenture or the Subordinated Debt Securities, where
that consent will be required;
without, in each case, obtaining the prior approval of the holders of Preferred
Trust Securities having at least a majority of the liquidation preference amount
of all outstanding Preferred Trust Securities. Where a consent of each holder of
Subordinated Debt Securities affected is required, no consent shall be given by
the Property Trustee without the prior consent of each holder of the Preferred
Trust Securities affected. The Trustees shall not revoke any action previously
authorized or approved by a vote of the holders of Preferred Trust Securities,
except pursuant to the subsequent vote of the holders of Preferred Trust
Securities. If the Property Trustee fails to enforce its rights under the
Subordinated Debt Securities or the Trust Agreement, a holder of the Preferred
Trust Securities may institute a legal proceeding directly against PP&L Capital
Funding or PP&L Resources, as the case may be, to enforce the Property Trustee's
rights under the Subordinated Debt Securities or the Trust Agreement without
first instituting any legal proceeding against the Property Trustee or anyone
else. The Property Trustee shall notify all holders of Preferred Trust
Securities of any notice of default received from the Subordinated Indenture
Trustee. The Property Trustee shall not take any action approved by the consent
of the holders without an opinion of counsel experienced in those matters to the
effect that the Trust will be classified as a grantor trust and not as an
association taxable as a corporation for United States federal income tax
purposes on account of that action.
Holders of Preferred Trust Securities may give any required approval
at a meeting convened for such purpose or by written consent without prior
notice. The Administrative Trustees will give notice of any meeting at which
holders of Preferred Trust Securities are entitled to vote.
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No vote or consent of the holders of Preferred Trust Securities will
be required for the Trust to redeem and cancel Preferred Trust Securities in
accordance with the Trust Agreement.
Notwithstanding that holders of Preferred Trust Securities are
entitled to vote or consent under any of the circumstances described above, any
Preferred Trust Securities that are owned by PP&L Capital Funding, PP&L
Resources or any affiliate of any of them, shall be treated as if they were not
outstanding for purposes of such vote or consent.
AMENDMENTS
The Trust Agreement may be amended from time to time by a majority of
the Administrative Trustees and PP&L Resources, without the consent of any
holders of Preferred Trust Securities:
(a) to cure any ambiguity, correct inconsistent provisions or make
any other provisions with respect to matters or questions arising
under the Trust Agreement; or
(b) to change the name of the Trust; or
(c) to modify, eliminate or add to any provisions of the Trust
Agreement to the extent necessary to ensure that the Trust will
not be classified for United States federal income tax purposes
other than as a grantor trust (and not an association taxable as
a corporation) at all times that any Preferred Trust Securities
and Common Trust Securities are outstanding or to ensure the
Trust's exemption from the status of an "investment company"
under the Investment Company Act of 1940.
No amendment described above may materially adversely affect the interests of
any holder of Preferred Trust Securities and Common Trust Securities without
such holder's consent. Any of the amendments of the Trust Agreement described in
paragraph (a) above shall become effective when notice of the amendment is given
to the holders of Preferred Trust Securities and Common Trust Securities.
Except as provided below, any provision of the Trust Agreement may be
amended by the Administrative Trustees and PP&L Resources with:
(a) the consent of holders of Preferred Trust Securities and Common
Trust Securities representing not less than a majority in
aggregate liquidation preference amount of the Preferred Trust
Securities and Common Trust Securities then outstanding; and
(b) receipt by the trustees of an opinion of counsel to the effect
that such amendment or the exercise of any power granted to the
trustees in accordance with the amendment will not affect the
Trust's status as a grantor trust for federal income tax purposes
or affect the Trust's exemption from status of an "investment
company" under the Investment Company Act of 1940.
Each affected holder of Preferred Trust Securities or Common Trust
Securities must have consented to any amendment to the Trust Agreement that:
(a) adversely changes the amount or timing of any distribution with
respect to Preferred Trust Securities or Common Trust Securities
or otherwise adversely affects the amount of any distribution
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required to be made in respect of Preferred Trust Securities and
Common Trust Securities as of a specified date; or
(b) restricts the right of a holder of Preferred Trust Securities or
Common Trust Securities to institute suit for the enforcement of
any such payment on or after that date.
FORM, EXCHANGE AND TRANSFER
Preferred Trust Securities may be exchanged for other Preferred Trust
Securities in any authorized denomination and of like tenor and aggregate
liquidation preference.
Subject to the terms of the Trust Agreement, Preferred Trust
Securities may be presented for exchange as provided above or for registration
of transfer, duly endorsed or accompanied by a duly executed instrument of
transfer, at the office of the Preferred Trust Security registrar. The
Administrative Trustees may designate PP&L Resources or PP&L Capital Funding or
any affiliate of either of them as the Preferred Trust Security registrar. The
Property Trustee will initially act as the Preferred Trust Security registrar
and transfer agent. No service charge will be made for any registration of
transfer or exchange of Preferred Trust Securities, but the Preferred Trust
Security registrar may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection with the transfer or exchange. A
transfer or exchange will be made when the Preferred Trust Security registrar
and Administrative Trustees are satisfied with the documents of title and
identity of the person making the request. The Administrative Trustees may at
any time designate additional transfer agents or rescind the designation of any
transfer agent or approve a change in the office through which any transfer
agent acts, except that PP&L Resources will, or will cause the Preferred Trust
Security registrar to, maintain an office or agency in The City of New York
where Preferred Trust Securities may be transferred or exchanged.
The Trust will not be required to (1) issue, register the transfer of,
or exchange any Preferred Trust Securities during the 15 calendar days before
the mailing of a notice of redemption of any Preferred Trust Securities called
for redemption and ending at the close of business on the day the notice is
mailed or (2) register the transfer of or exchange any Preferred Trust
Securities so selected for redemption, in whole or in part, except the
unredeemed portion of any Preferred Trust Securities being redeemed in part.
PAYMENT OF PREFERRED TRUST SECURITIES AND PAYING AGENT
Unless we indicate differently in a prospectus supplement, payments in
respect of the Preferred Trust Securities will be made on the applicable
distribution dates by check mailed to the address of the holder entitled thereto
as such address appears on the Preferred Trust Security register. The paying
agent shall initially be the Property Trustee and any co-paying agent chosen by
the Property Trustee and acceptable to the Administrative Trustees, PP&L Capital
Funding and PP&L Resources, which may be PP&L Resources or PP&L Capital Funding.
The paying agent may resign upon 30 days' written notice to the Administrative
Trustees, the Property Trustee, PP&L Capital Funding and PP&L Resources. In the
event that the Property Trustee shall no longer be the paying agent, the
Administrative Trustees shall appoint a successor, which shall be a bank, trust
company or affiliate of PP&L Resources acceptable to the Property Trustee, PP&L
Capital Funding and PP&L Resources to act as paying agent.
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DUTIES OF THE TRUSTEES
The Delaware Trustee will act as the resident trustee in the State of
Delaware and will have no other significant duties. The Property Trustee will
hold the Subordinated Debt Securities on behalf of the Trust and will maintain a
payment account with respect to the Preferred Trust Securities and Common Trust
Securities, and will also act as trustee under the Trust Agreement for the
purposes of the Trust Indenture Act.
The Administrative Trustees of the Trust are authorized and directed
to conduct the affairs of the Trust and to operate the Trust so that the Trust
will not be deemed to be an "investment company" required to be registered under
the Investment Company Act or taxed as a corporation or classified as other than
a grantor trust for United States federal income tax purposes and so that the
Subordinated Debt Securities will be treated as indebtedness of PP&L Capital
Funding for United States federal income tax purposes. In this regard, PP&L
Resources and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust or the Trust
Agreement, that PP&L Resources and the Administrative Trustees determine in
their discretion to be necessary or desirable for those purposes, as long as the
action does not materially adversely affect the interests of the holders of the
Preferred Trust Securities.
MISCELLANEOUS
Holders of the Preferred Trust Securities have no preemptive or
similar rights.
GOVERNING LAW
The Trust Agreement, the Preferred Trust Securities and the Common
Trust Securities provide that they are to be governed by and construed in
accordance with the laws of the State of Delaware.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
Selected provisions of the Preferred Securities Guarantee that PP&L
Resources will execute and deliver for the benefit of the holders of the
Preferred Trust Securities are summarized below. The summary is not complete.
The form of Preferred Securities Guarantee was filed with the SEC and you should
read the Preferred Securities Guarantee for provisions that may be important to
you. The Preferred Securities Guarantee will be qualified as an indenture under
the Trust Indenture Act. You should refer to the Trust Indenture Act for
provisions that apply to the Preferred Securities Guarantee. Whenever particular
defined terms of the Preferred Securities Guarantee are referred to, those
defined terms are incorporated herein by reference.
The Chase Manhattan Bank will act as Guarantee Trustee under the
Preferred Securities Guarantee. The Guarantee Trustee will hold the Preferred
Securities Guarantee for the benefit of the holders of the Preferred Trust
Securities.
GENERAL
PP&L Resources will irrevocably, fully and unconditionally agree to
make the guarantee payments listed below in full to the holders of the Preferred
Trust Securities if they are not made by the Trust, as and when due, regardless
of any defense, right of set-off or counterclaim that the Trust may have or
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assert. The following payments will be subject to the Preferred Securities
Guarantee (without duplication):
(a) any accrued and unpaid distributions required to be paid on
Preferred Trust Securities, to the extent the Trust has funds
available therefor;
(b) the redemption price, plus all accrued and unpaid distributions,
for any Preferred Trust Securities called for redemption by the
Trust, to the extent the Trust has funds available therefor; and
(c) upon a voluntary or involuntary dissolution, winding-up or
termination of the Trust (except in connection with the
distribution of Subordinated Debt Securities to the holders in
exchange for Preferred Trust Securities as provided in the Trust
Agreement or upon a redemption of all of the Preferred Trust
Securities upon maturity or redemption of the Subordinated Debt
Securities as provided in the Trust Agreement), the lesser of:
(1) the aggregate of the liquidation preference and all accrued
and unpaid distributions on Preferred Trust Securities to
the date of payment, to the extent the Trust has funds
available therefor; and
(2) the amount of assets of the Trust remaining available for
distribution to holders of Preferred Trust Securities in
liquidation of the Trust after satisfaction of liabilities
to creditors of the Trust as required by applicable law.
PP&L Resources' obligation to make a guarantee payment may be satisfied by
direct payment of the required amounts by PP&L Resources to the holders of
Preferred Trust Securities or by causing the Trust to pay such amounts to those
holders.
The Preferred Securities Guarantee will be a guarantee with respect to
the Preferred Trust Securities, but will not apply to any payment of
distributions if and to the extent that the Trust does not have funds available
to make those payments.
If neither PP&L Capital Funding nor PP&L Resources makes interest
payments on the Subordinated Debt Securities held by the Trust, the Trust will
not have funds available to pay distributions on the Preferred Trust Securities.
The Preferred Securities Guarantee will rank subordinate and junior in right of
payment to all other liabilities of PP&L Resources (except those made pari passu
or subordinate by their terms). The Preferred Securities Guarantee does not
limit PP&L Resources from incurring or issuing additional debt, whether secured
or unsecured, senior to or equal in right of payment to the Preferred Securities
Guarantee in the future.
PP&L Resources will agree to provide funds to the Trust as needed to
pay costs, expenses or liabilities of the Trust to parties other than holders of
Preferred Trust Securities or Common Trust Securities. The Subordinated Debt
Securities, the Subordinated Guarantees and the Preferred Securities Guarantee,
together with the obligations of PP&L Resources with respect to the Preferred
Trust Securities under the Subordinated Indenture, the Trust Agreement, the
Preferred Securities Guarantee, including the agreement by PP&L Resources to pay
expenses and obligations of the Trust to parties (other than holders of
Preferred Trust Securities or Common Trust Securities), constitute a full and
unconditional guarantee of the Preferred Trust Securities by PP&L Resources. No
single document standing alone or operating in conjunction with fewer than all
of the other documents constitutes that guarantee. It is only the combined
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operation of these documents that has the effect of providing a full and
unconditional guarantee by PP&L Resources of the Preferred Trust Securities.
AMENDMENTS AND ASSIGNMENT
No consent of holders of Preferred Trust Securities is required for
changes to the Preferred Securities Guarantee that do not materially adversely
affect their rights. Other terms of the Preferred Securities Guarantee may be
changed only with the prior approval of the holders of the Preferred Trust
Securities having at least a majority of the liquidation preference amount of
the outstanding Preferred Trust Securities. All guarantees and agreements
contained in the Preferred Securities Guarantee will bind the successors,
assigns, receivers, trustees and representatives of PP&L Resources and will
inure to the benefit of the holders of the Preferred Trust Securities then
outstanding.
EVENTS OF DEFAULT
An event of default under the Preferred Securities Guarantee will
occur if PP&L Resources fails to perform any of its payment or other obligations
under the Preferred Securities Guarantee and has not cured such failure within
90 days of receipt of notice thereof. The holders of the Preferred Trust
Securities having a majority of the liquidation preference of the Preferred
Trust Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee
under the Preferred Securities Guarantee or to direct the exercise of any trust
or power conferred upon the Guarantee Trustee under the Preferred Securities
Guarantee.
Any holder of the Preferred Trust Securities may enforce the Preferred
Securities Guarantee, or institute a legal proceeding directly against PP&L
Resources to enforce the Guarantee Trustee's rights under the Preferred
Securities Guarantee without first instituting a legal proceeding against the
Trust, the Guarantee Trustee or anyone else.
PP&L Resources will be required to file an annual statement with the
Guarantee Trustee as to its compliance with the Preferred Securities Guarantee.
DUTIES OF THE GUARANTEE TRUSTEE
The Guarantee Trustee will undertake to perform only those duties
specifically set forth in the Preferred Securities Guarantee until a default
occurs. After a default under the Preferred Securities Guarantee, the Guarantee
Trustee must exercise the same degree of care in its duties as a prudent
individual would exercise in the conduct of his or her own affairs. The
Preferred Securities Guarantee Trustee is under no obligation to exercise any of
the powers vested in it by the Preferred Securities Guarantee at the request of
any holder of the Preferred Trust Securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that it might incur.
TERMINATION OF THE PREFERRED SECURITIES GUARANTEE
The Preferred Securities Guarantee will terminate and be of no further
force and effect upon:
(a) full payment of the redemption price, plus accrued and unpaid
distributions, for all the Preferred Trust Securities;
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(b) the distribution of Subordinated Debt Securities to holders of
the Preferred Trust Securities in exchange for all of the
Preferred Trust Securities; or
(c) full payment of the amounts payable upon liquidation of the
Trust.
The Preferred Securities Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any holder of Preferred
Trust Securities must restore payment of any sums paid under the Preferred Trust
Securities or the Preferred Securities Guarantee.
STATUS OF THE PREFERRED SECURITIES GUARANTEE
The Preferred Securities Guarantee will be an unsecured obligation of
PP&L Resources and will rank:
(a) subordinate and junior in right of payment to all other
liabilities of PP&L Resources, including the Subordinated
Guarantees;
(b) equal in right of payment with the most senior preferred or
preference stock that may be issued by PP&L Resources and with
any guarantee that may be entered into by PP&L Resources in
respect of any preferred or preference stock of any affiliate of
PP&L Resources; and
(c) senior to PP&L Resources common stock.
The Trust Agreement provides that by accepting Preferred Trust
Securities, a holder agrees to the subordination provisions and other terms of
the Preferred Securities Guarantee.
The Preferred Securities Guarantee will be a guarantee of payment and
not of collection, that is, the guaranteed party may institute a legal
proceeding directly against PP&L Resources to enforce its rights under the
Preferred Securities Guarantee without first instituting a legal proceeding
against anyone else.
Because PP&L Resources is a holding company that conducts all of its
operations through subsidiaries, obligations under the Preferred Securities
Guarantee, as obligations of a holding company, will generally have a position
junior to claims of creditors and preferred stockholders of the subsidiaries of
PP&L Resources. See "PP&L Resources - Holding Company Structure" above.
GOVERNING LAW
The Preferred Securities Guarantee provides that it is to be governed
by and construed in accordance with the laws of the State of New York.
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
The Subordinated Indenture and its associated documents contain the
full legal text of the matters described in this section. Because this section
is a summary, it does not describe every aspect of the Subordinated Debt
Securities or the Subordinated Indenture. The form of the Subordinated Indenture
has been filed with the SEC, and you should read the Subordinated Indenture for
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provisions that may be important to you. The Subordinated Indenture will be
qualified under the Trust Indenture Act. You should refer to the Trust Indenture
Act for provisions that apply to the Subordinated Debt Securities.
This summary is subject to and qualified in its entirety by reference
to all the provisions of the Subordinated Indenture, including definitions of
certain terms used in the Subordinated Indenture. We also include references in
parentheses to certain sections of the Subordinated Indenture. Whenever we refer
to particular sections or defined terms of the Subordinated Indenture in this
prospectus or in a prospectus supplement, such sections or defined terms are
incorporated by reference herein or in the prospectus supplement. This summary
also is subject to and qualified by reference to the description of the
particular terms of your securities described in the applicable prospectus
supplement or supplements.
GENERAL
The Subordinated Debt Securities, including any Subordinated Debt
Securities which the Property Trustee will hold on behalf of the Trust as trust
assets, will be issued under the Subordinated Indenture (the "Subordinated
Indenture") among PP&L Capital Funding, PP&L Resources and The Chase Manhattan
Bank, as Trustee (the "Subordinated Indenture Trustee"). The Subordinated
Indenture provides for the issuance from time to time of subordinated debt in an
unlimited amount. The Subordinated Debt Securities and all other subordinated
debt issued previously or hereafter under the Subordinated Indenture are
collectively referred to as the "Subordinated Indenture Securities."
Subordinated Debt Securities issued to the Trust will constitute a separate
series under the Subordinated Indenture and will be limited in aggregate
principal amount to the sum of the aggregate liquidation preference amount of
the Preferred Trust Securities and the consideration paid by PP&L Resources for
the Common Trust Securities.
The Subordinated Debt Securities will be unsecured, subordinated
obligations of PP&L Capital Funding which rank junior to all of PP&L Capital
Funding's Senior Indebtedness (as defined herein). The Subordinated Debt
Securities will be unconditionally guaranteed by PP&L Resources as to payment of
principal, and any interest and premium pursuant to subordinated guarantees
("Subordinated Guarantees") of PP&L Resources which rank junior to all of PP&L
Resources' Senior Indebtedness (as defined herein). See "-- Subordinated
Guarantees."
Prior to the issuance of each series, certain aspects of the
particular securities have to be specified in a supplemental indenture, in a
board resolution of PP&L Capital Funding, or in one or more officer's
certificates of PP&L Capital Funding pursuant to a supplemental indenture or a
board resolution. We refer you to the applicable prospectus supplement(s) for a
description of the following terms of the series of Subordinated Debt
Securities:
(a) the title of such Subordinated Debt Securities;
(b) any limit upon the principal amount of such Subordinated Debt
Securities;
(c) the date or dates on which principal will be payable or how to
determine such dates;
(d) the rate or rates or method of determination of interest; the
date from which interest will accrue; the dates on which interest
will be payable ("Subordinated Debt Securities Interest Payment
Dates"); and any record dates for the interest payable on such
Subordinated Debt Securities Interest Payment Dates;
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(e) any obligation or option of PP&L Capital Funding to redeem,
purchase or repay Subordinated Debt Securities, or any option of
the Holder to require PP&L Capital Funding to redeem or
repurchase Subordinated Debt Securities, and the terms and
conditions upon which such Subordinated Debt Securities will be
redeemed, purchased or repaid;
(f) the denominations in which such Subordinated Debt Securities will
be issuable (if other than denominations of $25 and any integral
multiple thereof);
(g) whether such Subordinated Debt Securities are to be issued in
whole or in part in the form of one or more global Subordinated
Debt Securities and, if so, the identity of the depositary for
such global Subordinated Debt Securities; and
(h) any other terms of such Subordinated Debt Securities.
(See Section 301.)
SUBORDINATION
The Subordinated Debt Securities will be subordinate and junior in
right of payment to all Senior Indebtedness of PP&L Capital Funding. (See
Article Fifteen.) No payment of the principal (including redemption and sinking
fund payments) of, or interest on, the Subordinated Debt Securities may be made
by PP&L Capital Funding until all holders of Senior Indebtedness of PP&L Capital
Funding have been paid, if any of the following occurs:
(a) certain events of bankruptcy, insolvency or reorganization of
PP&L Capital Funding;
(b) any Senior Indebtedness of PP&L Capital Funding is not paid when
due and that default continues without waiver;
(c) any other default has occurred and continues without waiver
pursuant to which the holders of Senior Indebtedness of PP&L
Capital Funding are permitted to accelerate the maturity of such
Senior Indebtedness; or
(d) the maturity of any other series of subordinated debentures under
the Subordinated Indenture has been accelerated, because of an
event of default which remains uncured.
Upon any distribution of assets of PP&L Capital Funding to creditors
in connection with any insolvency, bankruptcy or similar proceeding, all
principal of, and premium, if any, and interest due or to become due on all
Senior Indebtedness of PP&L Capital Funding must be paid in full before the
holders of the Subordinated Debt Securities are entitled to receive or retain
any payment from such distribution.
Senior Indebtedness, when used with respect to PP&L Capital Funding or
PP&L Resources, is defined in the Subordinated Indenture to include all
obligations of PP&L Capital Funding or PP&L Resources, as the case may be, for
borrowed money, or guarantees of the same, or for the payment of money pursuant
to capital leases, unless such obligation or guarantee expressly provides that
it is not superior to or equal in right of payment to the Subordinated Debt
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Securities or the Subordinated Guarantees, as the case may be. The obligations
of PP&L Resources under the Preferred Securities Guarantee shall not be deemed
to be Senior Indebtedness. (See Section 101.)
The Subordinated Indenture does not limit the aggregate amount of
Senior Indebtedness that may be issued. As of August 31, 1999, PP&L Capital
Funding had approximately $590 million principal amount of indebtedness for
borrowed money constituting its Senior Indebtedness, and PP&L Resources had
approximately $628 million principal amount of obligations constituting its
Senior Indebtedness (including guarantees of indebtedness of PP&L Capital
Funding and certain of PP&L Resources' other subsidiaries).
SUBORDINATED GUARANTEES
PP&L Resources will unconditionally guarantee the payment of principal
of and any interest and premium on the Subordinated Debt Securities, when due
and payable, whether at the stated maturity date, by declaration of
acceleration, call for redemption or otherwise, in accordance with the terms of
such Subordinated Debt Securities and the Subordinated Indenture. The
Subordinated Guarantees will remain in effect until the entire principal of and
any premium and interest on the Subordinated Debt Securities has been paid in
full or otherwise discharged in accordance with the provisions of the
Subordinated Indenture. (See Article Fourteen.)
The Subordinated Guarantees will be subordinate and junior in right of
payment to all Senior Indebtedness of PP&L Resources. No payment of the
principal (including redemption and sinking fund payments) of, or interest on,
the Subordinated Debt Securities may be made by PP&L Resources under the
Subordinated Guarantees until all holders of Senior Indebtedness of PP&L
Resources have been paid, if any of the following occurs:
(a) certain events of bankruptcy, insolvency or reorganization of
PP&L Resources;
(b) any Senior Indebtedness of PP&L Resources is not paid when due
and that default continues without waiver;
(c) any other default has occurred and continues without waiver
pursuant to which the holders of Senior Indebtedness of PP&L
Resources are permitted to accelerate the maturity of such Senior
Indebtedness; or
(d) the maturity of any other series of subordinated debentures under
the Subordinated Indenture which has been guaranteed by PP&L
Resources and has been accelerated, because of an event of
default which remains uncured.
Upon any distribution of assets of PP&L Resources to creditors in
connection with any insolvency, bankruptcy or similar proceeding, all principal
of, and premium, if any, and interest due or to become due on all Senior
Indebtedness of PP&L Resources must be paid in full before the holders of the
Subordinated Debt Securities are entitled to receive or retain any payment from
such distribution.
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PAYMENT OF SUBORDINATED DEBT SECURITIES
INTEREST
Unless we indicate differently in a prospectus supplement, we will pay
interest on each Subordinated Debt Security on each Subordinated Debt Securities
Interest Payment Date by check mailed to the Holder of the Subordinated Debt
Securities as of the close of business on the regular record date relating to
such Subordinated Debt Securities Interest Payment Date, except, that interest
payable at Maturity will be paid to the person to whom principal is paid.
However, if we default in paying interest on a Subordinated Debt
Security, we will pay defaulted interest in either of the two following ways:
(a) We will first propose to the Subordinated Indenture Trustee a
payment date for such defaulted interest. Next, the Subordinated
Indenture Trustee will choose a Special Record Date for
determining which Holders are entitled to the payment. The
Special Record Date will be between 10 and 15 days before the
payment date we propose. Finally, we will pay such defaulted
interest on the payment date to the Holder of the Subordinated
Debt Security as of the close of business on the Special Record
Date.
(b) Alternatively, we can propose to the Subordinated Indenture
Trustee any other lawful manner of payment that is consistent
with the requirements of any securities exchange on which such
Subordinated Debt Securities are listed for trading. If the
Subordinated Indenture Trustee thinks the proposal is
practicable, payment will be made as proposed.
(See Section 307.)
PRINCIPAL
Unless we indicate differently in a prospectus supplement, we will pay
principal of and any interest and premium on the Subordinated Debt Securities at
Maturity upon presentation of the Subordinated Debt Securities at the office of
The Chase Manhattan Bank in New York, New York, as our Paying Agent. Any other
Paying Agent initially designated for the Subordinated Debt Securities of a
particular series will be named in the applicable prospectus supplement.
In our discretion, we may change the place of payment on the
Subordinated Debt Securities, and may remove any Paying Agent and may appoint
one or more additional Paying Agents (including PP&L Capital Funding, PP&L
Resources or any affiliate of either of them). (See Section 602.)
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Event of Default under the Subordinated Indenture has
occurred and is continuing, PP&L Capital Funding may extend the interest payment
period from time to time on the Subordinated Debt Securities for one or more
periods. As a consequence, distributions on Preferred Trust Securities would be
deferred during any extension period. Interest would, however, continue to
accrue. During any extended interest period, or for so long as an "Event of
Default" under the Subordinated Indenture resulting from a payment default or a
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payment default under the Preferred Securities Guarantee has occurred and is
continuing, PP&L Resources may not:
(a) declare or pay any dividend or distribution on its capital stock,
other than dividends paid in shares of capital stock of PP&L
Resources;
(b) redeem, purchase, acquire or make a liquidation payment with
respect to any of its capital stock;
(c) pay any principal, interest or premium on, or repay, repurchase
or redeem any debt securities that are equal or junior in right
of payment with the Subordinated Guarantees; or
(d) make any payments with respect to any guarantee of debt
securities by PP&L Resources if such guarantee is equal or junior
in right of payment to the Subordinated Guarantees.
(See Section 312.)
Before an extension period ends, PP&L Capital Funding may further
extend the interest payment period. No extension period as further extended may
exceed 20 consecutive quarters. After any extension period and the payment of
all amounts then due, PP&L Capital Funding may select a new extended interest
payment period. No interest period may be extended beyond the maturity of the
Subordinated Debt Securities. PP&L Capital Funding will give the Trust and the
Subordinated Indenture Trustee notice of its election of an extension period
prior to the earlier of (i) one business day before the record date for the
distribution which would occur if PP&L Capital Funding did not make the election
to extend or (ii) the date the Administrative Trustees are required to give
notice to any securities exchange or any other applicable self-regulatory
organization of the record date. The Property Trustee shall send notice of that
election to the holders of Preferred Trust Securities.
ADDITIONAL INTEREST
So long as any Preferred Trust Securities remain outstanding, if the
Trust is required to pay any taxes, duties, assessments or governmental charges
imposed by the United States or any other taxing authority on income derived
from the interest payments on the Subordinated Debt Securities, then PP&L
Capital Funding will pay as interest on the Subordinated Debt Securities any
additional interest that may be necessary in order that the net amounts retained
by the Trust after the payment of those taxes, duties, assessments or
governmental charges will be the same as the Trust would have had in the absence
of such payment. (See Section 313.)
FORM; TRANSFERS; EXCHANGES
Unless we indicated differently in a prospectus supplement, the
Subordinated Debt Securities will be issued
(a) only in fully registered form;
(b) without interest coupons; and
(c) in denominations that are even multiples of $25. (See Section
302.)
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Unless we indicate differently in a prospectus supplement,
Subordinated Debt Securities may be exchanged at the office of the Subordinated
Indenture Trustee. The Subordinated Indenture Trustee will also act as our agent
for registering Subordinated Debt Securities in the names of holders and
transferring debt securities. We may appoint another agent or act as our own
agent for this purpose. The entity performing the role of maintaining the list
of registered holders is called the "Subordinated Indenture Registrar." It will
also perform transfers.
In our discretion, we may change the place for registration of
transfer of the Subordinated Debt Securities and may remove and/or appoint one
or more additional Subordinated Indenture Registrars (including PP&L Capital
Funding, PP&L Resources or any affiliate of either of them). (See Sections 305
and 602.)
Except as otherwise provided in a prospectus supplement, there will be
no service charge for any transfer or exchange of the Debt Securities, but you
may be required to pay a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. We may block the transfer or exchange of
(a) Subordinated Debt Securities during a period of 15 days prior to giving any
notice of redemption or (b) any Subordinated Debt Security selected for
redemption in whole or in part, except the unredeemed portion of any
Subordinated Debt Security being redeemed in part. (See Section 305.)
Unless we indicate differently in a prospectus supplement, if
Subordinated Debt Securities are distributed to holders of Preferred Trust
Securities in a dissolution of the Trust, the Subordinated Debt Securities will
be issued in fully registered certificated form in the denominations and
integral multiples thereof in which the Preferred Trust Securities have been
issued, and they may be transferred or exchanged at the offices of the
Subordinated Indenture Trustee.
REDEMPTION
For so long as the Trust is the holder of all the Subordinated Debt
Securities, the proceeds of any redemption will be used by the Trust to redeem
Preferred Trust Securities and Common Trust Securities in accordance with their
terms.
We will set forth any terms for the redemption of Subordinated Debt
Securities in a prospectus supplement. Unless we indicate differently in a
prospectus supplement, and except with respect to Subordinated Debt Securities
redeemable at the option of the Holder, Subordinated Debt Securities will be
redeemable upon notice by mail between 30 and 60 days prior to the redemption
date. If less than all of the Subordinated Debt Securities of any series or any
tranche thereof are to be redeemed, the Subordinated Indenture Trustee will
select the Subordinated Debt Securities to be redeemed. In the absence of any
provision for selection, the Subordinated Indenture Trustee will choose a method
of random selection as it deems fair and appropriate. (See Sections 403 and
404.)
Subordinated Debt Securities will cease to bear interest on the
redemption date. PP&L Capital Funding will pay the redemption price and any
accrued interest once the Subordinated Debt Securities are surrendered for
redemption. (See Section 405.) If only part of a Subordinated Debt Security is
redeemed, the Subordinated Indenture Trustee will deliver a new Subordinated
Debt Security of the same series for the remaining portion without charge. (See
Section 406.)
We may make any redemption at the option of PP&L Capital Funding
conditional upon the receipt by the paying agent, on or prior to the date fixed
for redemption, of money sufficient to pay the redemption price. If the paying
agent has not received such money by the date fixed for redemption, PP&L Capital
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Funding will not be required to redeem such Subordinated Debt Securities. (See
Section 404.)
EVENTS OF DEFAULT
An "Event of Default" occurs with respect to Subordinated Indenture
Securities of any series if
(a) we do not pay any interest on any Subordinated Indenture
Securities of the applicable series within 30 days of the due
date; provided, however, that a valid extension of the interest
period by us will not constitute an Event of Default;
(b) we do not pay principal or premium on any Subordinated Indenture
Securities of the applicable series on its due date;
(c) we remain in breach of a covenant (excluding covenants solely
applicable to a specific series) or warranty of the Subordinated
Indenture for 90 days after we receive a written notice of
default stating we are in breach and requiring remedy of the
breach; the notice must be sent by either the Subordinated
Indenture Trustee or Holders of 25% of the principal amount of
Subordinated Indenture Securities of the affected series; the
Subordinated Indenture Trustee or such Holders can agree to
extend the 90-day period and such an agreement to extend will be
automatically deemed to occur if we are diligently pursuing
action to correct the default;
(d) the Subordinated Guarantees of PP&L Resources relating to any
Subordinated Indenture Securities of the applicable series
(1) cease to be effective (except in accordance with their
terms),
(2) are found in any judicial proceeding to be unenforceable or
invalid, or
(3) are denied or disaffirmed (except in accordance with their
terms);
(e) we file for bankruptcy or certain other events in bankruptcy,
insolvency, receivership or reorganization occur; or
(f) any other Event of Default specified in the prospectus supplement
occurs.
(See Section 801.)
No Event of Default with respect to the Subordinated Debt Securities necessarily
constitutes an Event of Default with respect to the Subordinated Indenture
Securities of any other series issued under the Subordinated Indenture.
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REMEDIES
ACCELERATION
ANY ONE SERIES. If an Event of Default occurs and is continuing with
respect to any one series of Subordinated Indenture Securities, then either the
Subordinated Indenture Trustee or the Holders of 25% in principal amount of the
outstanding Subordinated Indenture Securities of such series may declare the
principal amount of all of the Subordinated Indenture Securities of such series
to be due and payable immediately.
MORE THAN ONE SERIES. If an Event of Default occurs and is continuing
with respect to more than one series of Subordinated Indenture Securities, then
either the Subordinated Indenture Trustee or the Holders of 25% in aggregate
principal amount of the outstanding Subordinated Indenture Securities of all
such series, considered as one class, may make such declaration of acceleration.
Thus, if there is more than one series affected, the action by 25% in principal
amount of the Subordinated Indenture Securities of any particular series will
not, in itself, be sufficient to make a declaration of acceleration.
(See Section 802.)
RESCISSION OF ACCELERATION
After the declaration of acceleration has been made and before the
Subordinated Indenture Trustee has obtained a judgment or decree for payment of
the money due, such declaration and its consequences will be rescinded and
annulled, if
(a) we pay or deposit with the Subordinated Indenture Trustee a sum
sufficient to pay
(1) all overdue interest;
(2) the principal of and any premium which have become due
otherwise than by such declaration of acceleration and
overdue interest thereon;
(3) interest on overdue interest to the extent lawful; and
(4) all amounts due to the Subordinated Indenture Trustee under
the Subordinated Indenture; and
(b) all Events of Default, other than the nonpayment of the principal
which has become due solely by such declaration of acceleration,
have been cured or waived as provided in the Subordinated
Indenture.
(See Section 802.) For more information as to waiver of defaults, see "--Waiver
of Default and of Compliance" below.
CONTROL BY HOLDERS; LIMITATIONS
Subject to the Subordinated Indenture, if an Event of Default with
respect to the Subordinated Indenture Securities of any one series occurs and is
continuing, the Holders of a majority in principal amount of the outstanding
Subordinated Indenture Securities of that series will have the right to
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(a) direct the time, method and place of conducting any proceeding
for any remedy available to the Subordinated Indenture Trustee,
or
(b) exercise any trust or power conferred on the Subordinated
Indenture Trustee with respect to the Subordinated Indenture
Securities of such series.
If an Event of Default is continuing with respect to more than one
series of Subordinated Indenture Securities, the Holders of a majority in
aggregate principal amount of the outstanding Subordinated Indenture Securities
of all such series, considered as one class, will have the right to make such
direction, and not the Holders of the Subordinated Indenture Securities of any
one of such series. These rights of Holders to make direction are subject to the
following limitations:
(a) the Holders' directions may not conflict with any law or the
Subordinated Indenture; and
(b) the Holders' directions may not involve the Subordinated
Indenture Trustee in personal liability where the Trustee
believes indemnity is not adequate.
The Subordinated Indenture Trustee may also take any other action it deems
proper which is consistent with the Holders' direction. (See Sections 812 and
903.)
In addition, the Subordinated Indenture provides that no Holder of any
Subordinated Indenture Security will have any right to institute any proceeding,
judicial or otherwise, with respect to the Subordinated Indenture for the
appointment of a receiver or for any other remedy thereunder unless
(a) that Holder has previously given the Subordinated Indenture
Trustee written notice of a continuing Event of Default;
(b) the Holders of 25% in aggregate principal amount of the
outstanding Subordinated Indenture Securities of all affected
series, considered as one class, have made written request to the
Subordinated Indenture Trustee to institute proceedings in
respect of that Event of Default and have offered the
Subordinated Indenture Trustee reasonable indemnity against costs
and liabilities incurred in complying with such request; and
(c) for 60 days after receipt of such notice, the Subordinated
Indenture Trustee has failed to institute any such proceeding and
no direction inconsistent with such request has been given to the
Subordinated Indenture Trustee during such 60-day period by the
Holders of a majority in aggregate principal amount of
outstanding Subordinated Indenture Securities of all affected
series, considered as one class.
Furthermore, no Holder will be entitled to institute any such action if and to
the extent that such action would disturb or prejudice the rights of other
Holders. (See Sections 807 and 903.)
However, each Holder has an absolute and unconditional right to
receive payment when due and to bring a suit to enforce that right. (See
Sections 807 and 808.)
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ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED TRUST SECURITIES
If there is an Event of Default with respect to Subordinated Debt
Securities held by the Trust, then the holders of Preferred Trust Securities
will rely on the Property Trustee or the Subordinated Indenture Trustee, acting
for the benefit of the Property Trustee, to enforce the Property Trustee's
rights against PP&L Capital Funding and PP&L Resources as a holder of the
Subordinated Debt Securities. However, a holder of Preferred Trust Securities
may enforce the Subordinated Indenture directly against PP&L Capital Funding and
PP&L Resources to the same extent as if the holder of Preferred Trust Securities
held a principal amount of Subordinated Debt Securities equal to the aggregate
liquidation amount of its Preferred Trust Securities. (See Section 609.)
Subject to their right to bring suit to enforce their right to
payment, the holders of Preferred Trust Securities would not be able to
institute any proceeding with respect to the Subordinated Indenture unless the
Subordinated Indenture Trustee has failed to do so for 60 days after a request
of the holders of 25% in liquidation amount of Preferred Trust Securities. Upon
such failure, the holders of a majority of the aggregate liquidation amount of
the outstanding Preferred Trust Securities would have the right to directly
institute proceedings for enforcement of all other rights of the Subordinated
Indenture Trustee against PP&L Capital Funding to the fullest extent permitted
by law. (See Sections 807, 808 and 812.)
NOTICE OF DEFAULT
The Subordinated Indenture Trustee is required to give the Holders of
the Subordinated Indenture Securities notice of any default under the
Subordinated Indenture to the extent required by the Trust Indenture Act,
unless such default has been cured or waived; except that in the
case of an Event of Default of the character specified above in clause (c) under
"--Events of Default," no such notice shall be given to such Holders until at
least 90 days after the occurrence thereof. (See Section 902.) The Trust
Indenture Act currently permits the Subordinated Indenture Trustee to withhold
notices of default (except for certain payment defaults) if the Subordinated
Indenture Trustee in good faith determines the withholding of such notice to be
in the interests of the Holders.
We will furnish the Subordinated Indenture Trustee with an annual
statement as to the compliance by PP&L Capital Funding with the conditions and
covenants in the Subordinated Indenture. (See Section 605.)
WAIVER OF DEFAULT AND OF COMPLIANCE
The Holders of a majority in aggregate principal amount of the
outstanding Subordinated Indenture Securities of any series may waive, on behalf
of the Holders of all Subordinated Indenture Securities of such series, any past
default under the Subordinated Indenture, except a default in the payment of
principal, premium or interest, or with respect to compliance with certain
provisions of the Subordinated Indenture that cannot be amended without the
consent of the Holder of each outstanding Subordinated Indenture Security. (See
Section 813.)
Compliance with certain covenants in the Subordinated Indenture or
otherwise provided with respect to Subordinated Indenture Securities may be
waived by the Holders of a majority in aggregate principal amount of the
affected Subordinated Indenture Securities, considered as one class. (See
Section 606.)
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CONSOLIDATION, MERGER AND CONVEYANCE OF ASSETS AS AN ENTIRETY
Subject to the provisions described in the next paragraph, each of
PP&L Capital Funding and PP&L Resources will preserve its corporate existence.
(See Section 604.)
PP&L Capital Funding and PP&L Resources have each agreed not to
consolidate with or merge into any other entity or convey, transfer or lease its
properties and assets substantially as an entirety to any entity unless
(a) the entity formed by such consolidation or into which PP&L
Capital Funding or PP&L Resources, as the case may be, is merged
or the entity which acquires or which leases the property and
assets of PP&L Capital Funding or PP&L Resources, as the case may
be, substantially as an entirety is an entity organized and
existing under the laws of the United States of America or any
State thereof or the District of Columbia, and expressly assumes,
by supplemental indenture, the due and punctual payment of the
principal, premium and interest on all the outstanding
Subordinated Indenture Securities (or the Subordinated Guarantees
endorsed thereon, as the case may be) and the performance of all
of the covenants of PP&L Capital Funding or PP&L Resources, as
the case may be, under the Subordinated Indenture, and
(b) immediately after giving effect to such transactions, no Event of
Default, and no event which after notice or lapse of time or both
would become an Event of Default, will have occurred and be
continuing. (See Section 1101.)
The Subordinated Indenture does not prevent or restrict:
(a) any consolidation or merger after the consummation of which PP&L
Capital Funding or PP&L Resources would be the surviving or
resulting entity;
(b) any consolidation of PP&L Capital Funding with PP&L Resources or
any other entity all of the outstanding voting securities of
which are owned, directly or indirectly, by PP&L Resources; or
any merger of any such entity into any other of such entities; or
any conveyance or other transfer, or lease, or properties by any
thereof to any other thereof;
(c) any conveyance or other transfer, or lease, of any part of the
properties of PP&L Capital Funding or PP&L Resources which does
not constitute the entirety, or substantially the entirety,
thereof; or
(d) the approval by PP&L Capital Funding or PP&L Resources of, or the
consent by PP&L Capital Funding or PP&L Resources to, any
consolidation or merger to which any direct or indirect
subsidiary or affiliate of PP&L Capital Funding or PP&L
Resources, as the case requires, may be a party or any
conveyance, transfer or lease by any such subsidiary or affiliate
of any of its assets. (See Section 1103.)
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MODIFICATION OF SUBORDINATED INDENTURE
WITHOUT HOLDER CONSENT. Without the consent of any Holders of
Subordinated Indenture Securities, PP&L Capital Funding, PP&L Resources and the
Subordinated Indenture Trustee may enter into one or more supplemental
indentures for any of the following purposes:
(a) to evidence the succession of another entity to PP&L Capital
Funding or PP&L Resources; or
(b) to add one or more covenants of PP&L Capital Funding or PP&L
Resources or other provisions for the benefit of the Holders of
all or any series or tranche of Subordinated Indenture
Securities, or to surrender any right or power conferred upon
PP&L Capital Funding or PP&L Resources; or
(c) to add any additional Events of Default for all or any series of
Subordinated Indenture Securities; or
(d) to change or eliminate any provision of the Subordinated
Indenture or to add any new provision to the Subordinated
Indenture that does not adversely affect the interests of the
Holders; or
(e) to provide security for the Subordinated Indenture Securities of
any series; or
(f) to establish the form or terms of Subordinated Indenture
Securities of any series or tranche or any Subordinated
Guarantees as permitted by the Subordinated Indenture; or
(g) to provide for the issuance of bearer securities; or
(h) to evidence and provide for the acceptance of appointment of a
separate or successor Subordinated Indenture Trustee or
co-trustee; or
(i) to provide for the procedures required to permit the utilization
of a noncertificated system of registration for any series or
tranche of Subordinated Indenture Securities; or
(j) to change any place or places where
(1) we may pay principal, premium and interest,
(2) Subordinated Indenture Securities may be surrendered for
transfer or exchange, and
(3) notices and demands to or upon PP&L Capital Funding or PP&L
Resources may be served; or
(k) to cure any ambiguity, defect or inconsistency or to make any
other changes that do not adversely affect the interests of the
Holders in any material respect.
If the Trust Indenture Act is amended after the date of the
Subordinated Indenture so as to require changes to the Subordinated Indenture or
so as to permit changes to, or the elimination of, provisions which, at the date
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of the Subordinated Indenture or at any time thereafter, were required by the
Trust Indenture Act to be contained in the Subordinated Indenture, the
Subordinated Indenture will be deemed to have been amended so as to conform to
such amendment or to effect such changes or elimination, and PP&L Capital
Funding, PP&L Resources and the Subordinated Indenture Trustee may, without the
consent of any Holders, enter into one or more supplemental indentures to effect
or evidence such amendment.
(See Section 1201.)
WITH HOLDER CONSENT. Except as provided above, the consent of the
Holders of at least a majority in aggregate principal amount of the Subordinated
Indenture Securities of all outstanding series, considered as one class, is
generally required for the purpose of adding to, or changing or eliminating any
of the provisions of, the Subordinated Indenture pursuant to a supplemental
indenture. However, if less than all of the series of outstanding Subordinated
Indenture Securities are directly affected by a proposed supplemental indenture,
then such proposal only requires the consent of the Holders of a majority in
aggregate principal amount of the outstanding Subordinated Indenture Securities
of all directly affected series, considered as one class. Moreover, if the
Subordinated Indenture Securities of any series have been issued in more than
one tranche and if the proposed supplemental indenture directly affects the
rights of the Holders of Subordinated Indenture Securities of one or more, but
less than all, of such tranches, then such proposal only requires the consent of
the Holders of a majority in aggregate principal amount of the outstanding
Subordinated Indenture Securities of all directly affected tranches, considered
as one class.
However, no amendment or modification may, without the consent of the
Holder of each outstanding Subordinated Indenture Security directly affected
thereby,
(a) change the stated maturity of the principal or (except as
described above under "--Option to Extend Interest Payment
Period") interest on any Subordinated Indenture Security (other
than pursuant to the terms thereof), or reduce the principal
amount, interest or premium payable or change the currency in
which any Subordinated Indenture Security is payable, or impair
the right to bring suit to enforce any payment;
(b) reduce the percentages of Holders whose consent is required for
any supplemental indenture or waiver or reduce the requirements
for quorum and voting under the Subordinated Indenture; or
(c) modify certain of the provisions in the Subordinated Indenture
relating to supplemental indentures and waivers of certain
covenants and past defaults.
A supplemental indenture which changes or eliminates any provision of
the Subordinated Indenture expressly included solely for the benefit of Holders
of Subordinated Indenture Securities of one or more particular series or
tranches will be deemed not to affect the rights under the Subordinated
Indenture of the Holders of Subordinated Indenture Securities of any other
series or tranche. So long as any Preferred Trust Securities are outstanding,
the Subordinated Indenture Trustee may not consent to any supplemental indenture
that would ordinarily require Subordinated Indenture Security Holder consent
without the prior consent of the holders of a majority in aggregate liquidation
preference of all outstanding Preferred Trust Securities affected or, in the
case of changes described in clauses (a) through (c) immediately above, 100% in
aggregate liquidation preference of all such outstanding Preferred Trust
Securities affected. (See Section 1202.)
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MISCELLANEOUS PROVISIONS
The Subordinated Indenture provides that certain Subordinated
Indenture Securities, including those for which payment or redemption money has
been deposited or set aside in trust as described under "--Satisfaction and
Discharge" below, will not be deemed to be "outstanding" in determining whether
the Holders of the requisite principal amount of the outstanding Subordinated
Indenture Securities have given or taken any demand, direction, consent or other
action under the Subordinated Indenture as of any date, or are present at a
meeting of Holders for quorum purposes. (See Section 101.)
PP&L Capital Funding or PP&L Resources will be entitled to set any day
as a record date for the purpose of determining the Holders of outstanding
Subordinated Indenture Securities of any series entitled to give or take any
demand, direction, consent or other action under the Subordinated Indenture, in
the manner and subject to the limitations provided in the Subordinated
Indenture. In certain circumstances, the Subordinated Indenture Trustee also
will be entitled to set a record date for action by Holders. If such a record
date is set for any action to be taken by Holders of particular Subordinated
Indenture Securities, such action may be taken only by persons who are Holders
of such Subordinated Indenture Securities on the record date. (See Section 104.)
SATISFACTION AND DISCHARGE
Any Subordinated Indenture Securities or any portion will be deemed to
have been paid for purposes of the Subordinated Indenture, and at PP&L Capital
Funding's election, the entire indebtedness of PP&L Capital Funding and PP&L
Resources will be satisfied and discharged, if there shall have been irrevocably
deposited with the Subordinated Indenture Trustee or any paying agent (other
than PP&L Capital Funding or PP&L Resources), in trust:
(a) money sufficient, or
(b) in the case of a deposit made prior to the maturity of such
Subordinated Indenture Securities, non-redeemable Eligible
Obligations (as defined in the Subordinated Indenture)
sufficient, or
(c) a combination of (a) and (b), which in total are sufficient,
to pay when due the principal of, and any premium, and interest due and to
become due on such Subordinated Indenture Securities or portions thereof on and
prior to the maturity thereof.
(See Section 701.)
The Subordinated Indenture will be deemed satisfied and discharged
when no Subordinated Indenture Securities remain outstanding and when we have
paid all other sums payable by us under the Subordinated Indenture. (See Section
702.)
All moneys we pay to the Subordinated Indenture Trustee or any paying
agent on Subordinated Debt Securities which remain unclaimed at the end of two
years after payments have become due will be paid to or upon the order of PP&L
Capital Funding. Thereafter, the Holder of such Subordinated Debt Security may
look only to us for payment thereof. (See Section 603.)
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RESIGNATION AND REMOVAL OF THE SUBORDINATED INDENTURE TRUSTEE; DEEMED
RESIGNATION
The Subordinated Indenture Trustee may resign at any time by giving
written notice thereof to us.
The Subordinated Indenture Trustee may also be removed by act of the
Holders of a majority in principal amount of the then outstanding Subordinated
Indenture Securities of any series.
No resignation or removal of the Subordinated Indenture Trustee and no
appointment of a successor trustee will become effective until the acceptance of
appointment by a successor trustee in accordance with the requirements of the
Subordinated Indenture.
Under certain circumstances, we may appoint a successor trustee and if
the successor accepts, the Subordinated Indenture Trustee will be deemed to have
resigned.
(Section 910).
GOVERNING LAW
The Subordinated Indenture and the Subordinated Indenture Securities
provide that they are to be governed by and construed in accordance with the
laws of the State of New York.
INFORMATION CONCERNING THE TRUSTEES
The Chase Manhattan Bank has at various times in the ordinary course
of business made loans to PP&L Resources and its subsidiaries and affiliates,
and acts as Administrative Agent with respect to one of our current revolving
credit facilities. In addition, The Chase Manhattan Bank acts as issuing and
paying agent for PP&L Capital Funding's commercial paper notes, and acts as
guarantee trustee and property trustee for the trust originated preferred
securities and common securities of our affiliates, PP&L Capital Trust and PP&L
Capital Trust I and acts as trustee with respect to junior subordinated
deferrable interest debentures of our affiliate, PP&L. Chase Manhattan Bank
Delaware, an affiliate of the Trustee, also acts as Delaware trustee for the
trust originated preferred securities and common securities of PP&L Capital
Trust and PP&L Capital Trust I.
EXPERTS
The consolidated financial statements of PP&L Resources incorporated
in this prospectus by reference to the Annual Report on Form 10-K of PP&L
Resources for the year ended December 31, 1998, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
Michael A. McGrail, Esq., Senior Counsel of PP&L, has reviewed the
statements made in the incorporated documents as to matters of law and legal
conclusions. Such statements have been made in reliance upon his authority as an
expert.
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VALIDITY OF THE SECURITIES AND THE SECURITIES GUARANTEES
Thelen Reid & Priest LLP, New York, New York, counsel to PP&L
Resources, PP&L Capital Funding and PP&L Capital Funding Trust I, will pass upon
the validity of the Securities and the Securities Guarantees for PP&L Resources,
PP&L Capital Funding and the Trust. Simpson Thacher & Bartlett, counsel to PP&L
Resources, will pass upon the validity of Common Stock for PP&L Resources.
Michael A. McGrail, Esq., Senior Counsel of PP&L, will pass upon the validity of
the PP&L Resources Securities and the Securities Guarantees for PP&L Resources.
Sullivan & Cromwell, New York, New York, will pass upon the validity of the
Securities and the Securities Guarantees for any underwriters or agents. Certain
matters of Delaware law relating to the validity of the Preferred Trust
Securities, the enforceability of the Trust Agreement and the creation of the
Trust will be passed upon by Richards, Layton & Finger, P.A., special Delaware
counsel to PP&L Resources, PP&L Capital Funding and the Trust. Thelen Reid &
Priest LLP, Simpson Thacher & Bartlett and Sullivan & Cromwell will rely on the
opinion of Mr. McGrail as to matters involving the law of the Commonwealth of
Pennsylvania, and on the opinion of Richards, Layton & Finger, P.A., as to
matters involving the law of the State of Delaware in connection with the
Preferred Trust Securities. As to matters involving the law of the State of New
York, Mr. McGrail will rely on the opinion of Thelen Reid & Priest LLP.
PLAN OF DISTRIBUTION
We may sell Securities (a) to purchasers directly; (b) to underwriters
for public offering and sale by them; or (c) through agents or dealers.
DIRECT SALES
We may sell the Securities directly to institutional investors or
others who may be deemed to be underwriters within the meaning of the Securities
Act with respect to any resale of the Securities. A prospectus supplement will
describe the terms of any such sale.
TO UNDERWRITERS
The applicable prospectus supplement will name any underwriter
involved in a sale of Securities. Underwriters may offer and sell Securities at
a fixed price or prices, which may be changed, or from time to time at market
prices or at negotiated prices. Underwriters may be deemed to have received
compensation from us from sales of Securities in the form of underwriting
discounts or commissions and may also receive commissions from purchasers of
Securities for whom they may act as agent.
Underwriters may sell Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions (which may be changed from
time to time) from the purchasers for whom they may act as agent.
Unless otherwise provided in a prospectus supplement, the obligations
of any underwriters to purchase particular Securities will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all
such Securities if any are purchased.
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THROUGH AGENTS
We will name any agent involved in a sale of Securities, as well as
any commissions payable by us to such agent, in a prospectus supplement. Unless
we indicate differently in the prospectus supplement, any such agent will be
acting on a reasonable efforts basis for the period of its appointment.
GENERAL INFORMATION
Underwriters, dealers and agents participating in a sale of Securities
may be deemed to be underwriters as defined in the Securities Act, and any
discounts and commissions received by them and any profit realized by them on
resale of the Securities may be deemed to be underwriting discounts and
commissions, under the Securities Act. We may have agreements with underwriters,
dealers and agents to indemnify them against certain civil liabilities,
including liabilities under the Securities Act, and to reimburse them for
certain expenses.
Underwriters or agents and their associates may be customers of,
engage in transactions with or perform services for us or our affiliates in the
ordinary course of business.
Each series of Securities will be a new issue and, except for the
Common Stock, which is listed on the New York and Philadelphia Stock Exchanges,
will have no established trading market. We may elect to list any series of new
Securities on an exchange, or in the case of the Common Stock, on any additional
exchange, but unless we advise you differently in the prospectus supplement, we
have no obligation to cause any Securities to be so listed. Any underwriters
that purchase Securities for public offering and sale may make a market in the
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. We make no assurance
as to the liquidity of, or the trading markets for, any Securities.
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