Exhibit 1.1
PP&L CAPITAL FUNDING, INC.
$400,000,000
MEDIUM-TERM NOTES, SERIES A
DUE NINE MONTHS TO FORTY YEARS FROM DATE OF ISSUE
UNCONDITIONALLY GUARANTEED
AS TO PAYMENT OF PRINCIPAL, PREMIUM, IF ANY,
AND INTEREST BY PP&L RESOURCES, INC.
DISTRIBUTION AGREEMENT
_________ __, 1997
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.,
▇▇▇▇▇▇▇ LYNCH, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED,
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters,
World Financial Center,
North Tower, 10th Floor,
New York, New York 10281-1310.
[OTHER AGENTS]
[ADDRESSES]
Dear Sirs:
PP&L Capital Funding, Inc., a Delaware corporation (the "Company"), and
PP&L Resources, Inc., a Pennsylvania corporation (the "Guarantor"), confirm
their agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated, [OTHER AGENTS] (each, an "Agent", and collectively, the "Agents")
with respect to the issue and sale by the Company of its Medium-Term Notes,
Series A, Due Nine Months to Forty Years From Date of Issue (the "Notes"). The
Notes will be unconditionally guaranteed as to payment of principal, premium, if
any, and interest by the Guarantor pursuant to guarantees of the Guarantor (the
"Guarantees"). Certain terms of the Notes are set forth in Schedule A hereto.
The Notes are to be issued pursuant to an Indenture, dated as of
October 1, 1997, as amended or modified from time to time (the "Base
Indenture"), among the Company, the Guarantor and The Chase Manhattan Bank, as
trustee (the "Trustee"), as supplemented by a Supplemental Indenture No. 1,
dated as of _______, 1997 (the
"Supplemental Indenture" and, together with the Base Indenture, the
"Indenture"), among the Company, the Guarantor and the Trustee. As of the date
hereof, the Company has authorized the issuance and sale of up to $400,000,000
aggregate principal amount of Notes to or through the Agents pursuant to the
terms of this Agreement. It is understood, however, that the Company may from
time to time authorize the issuance of additional Notes and that such additional
Notes may be sold to or through the Agents pursuant to the terms of this
Agreement, all as though the issuance of such Notes were authorized as of the
date hereof.
This Agreement provides both for the sale of Notes by the Company to
one or more Agents as principal for resale to investors and other purchasers and
for the sale of Notes by the Company directly to investors through one or more
agents (as may from time to time be agreed to by the Company and the applicable
Agent), in which case the applicable Agent will act as an agent of the Company
in soliciting offers for the purchase of Notes.
In connection with the foregoing, the Company and the Guarantor have
filed with the Securities and Exchange Commission (the "Commission") a joint
registration statement on Form S-3 (Nos. 333-_____ and 333-_____) for the
registration of debt securities, including the Notes and the Guarantees, under
the Securities Act of 1933, as amended (the "1933 Act") and the offering thereof
from time to time in accordance with Rule 415 of the rules and regulations of
the Commission under the 1933 Act (the "1933 Act Regulations"). Such
registration statement (as so amended, if applicable) has been declared
effective by the Commission and the Indenture has been duly qualified under the
Trust Indenture Act of 1939, as amended (the "1939 Act"). Such registration
statement (as so amended, if applicable) is referred to herein as the
"Registration Statement"; and the final prospectus and all applicable amendments
or supplements thereto (including the final prospectus supplement relating to
the offering of Notes), in the form first furnished to the applicable Agent(s)
and to be transmitted for filing pursuant to Rule 424(b) of the 1933 Act
Regulations, are collectively referred to herein as the "Prospectus"; provided,
however, that all references to the "Registration Statement" and the
"Prospectus" shall also be deemed to include all documents incorporated therein
by reference pursuant to the Securities Exchange Act of 1934,
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as amended (the "1934 Act"), prior to any acceptance by the Company of an offer
for the purchase of Notes; provided, further, that if the Company files a
registration statement with the Commission pursuant to Rule 462(b) of the 1933
Act Regulations (the "Rule 462(b) Registration Statement"), then, after such
filing, all references to the "Registration Statement" shall also be deemed to
include the Rule 462(b) Registration Statement. For purposes of this Agreement,
all references to the Registration Statement or Prospectus or to any amendment
or supplement thereto shall be deemed to include any copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("▇▇▇▇▇"). All references in this Agreement to financial statements and
schedules and other information that is "contained," "included" or "stated" in
the Registration Statement or Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information that are or are deemed to be incorporated by
reference in the Registration Statement or Prospectus, as the case may be; and
all references in this Agreement to amendments or supplements to the
Registration Statement or Prospectus shall be deemed to mean and include the
filing of any document under the 1934 Act that is or is deemed to be
incorporated by reference in the Registration Statement or Prospectus, as the
case may be.
1. Appointment as Agent.
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(a) Appointment. On the basis of the representations, warranties and
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agreements herein contained, but subject to the terms and conditions herein
contained and subject to the reservation by the Company of the right to sell
Notes directly to investors on its own behalf (and not through any Agent),
offers for the purchase of Notes may be solicited by an Agent as agent for the
Company at such times and in such amounts as such Agent deems advisable. The
Company may appoint additional agents in connection with the offering of the
Notes; provided that (i) the Company promptly notifies the Agents of such
appointment and (ii) the commission paid to any such additional agent with
respect to the sale of Notes by the Company as a result of a solicitation made
by such additional agent does not exceed that percentage specified in Schedule B
hereto of the aggregate principal amount of such Notes sold by the Company; and
provided further that, unless the appointment of such additional agent is
expressly limited to the
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solicitation of offers to purchase a specified principal amount of Notes on
specified terms, such additional agent enters into an agreement with the Company
making such agent an Agent under this Agreement or enters into an agreement with
the Company on terms which are substantially similar to those contained in this
Agreement, which agreement shall include appropriate changes to reflect the
arrangements between the Company and such additional agent.
(b) Sale of Notes. The Company shall not sell or approve the
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solicitation of offers for the purchase of Notes in excess of the amount which
shall be authorized by the Company from time to time or in excess of the
aggregate principal amount of Notes registered pursuant to the Registration
Statement. The Agents shall have no responsibility for maintaining records with
respect to the aggregate principal amount of Notes sold, or of otherwise
monitoring the availability of Notes for sale, under the Registration Statement.
(c) Purchases as Principal. The Agents shall not have any obligation to
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purchase Notes from the Company as principal. However, absent an agreement
between an Agent and the Company that such Agent shall be acting solely as an
agent for the Company, such Agent shall be deemed to be acting as principal in
connection with any offering of Notes by the Company through such Agent.
Accordingly, the Agents, individually or in a syndicate, may agree from time to
time to purchase Notes from the Company as principal for resale to investors and
other purchasers determined by such Agents. Any purchase of Notes from the
Company by an Agent as principal shall be made in accordance with Section 3(a)
hereof.
(d) Solicitations as Agent. If agreed upon between an Agent and the
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Company, such Agent, acting solely as an agent for the Company and not as
principal, will solicit offers for the purchase of Notes. Such Agent will
communicate to the Company, orally or in writing, each offer for the purchase of
Notes solicited by it on an agency basis other than those offers rejected by
such Agent. Such Agent shall have the right, in its discretion reasonably
exercised, to reject any offer for the purchase of Notes, in whole or in part,
and any such rejection shall not be deemed a breach of its agreement contained
herein. The Company may accept or reject any offer for the purchase of Notes, in
whole or in part. Such Agent shall make reasonable efforts
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to assist the Company in obtaining performance by each purchaser whose offer for
the purchase of Notes has been solicited by it on an agency basis and accepted
by the Company. Such Agent shall not have any liability to the Company in the
event that any such purchase is not consummated for any reason. If the Company
shall default on its obligation to deliver Notes against payment tendered by a
purchaser whose offer has been solicited by such Agent on an agency basis and
accepted by the Company, the Company shall hold such Agent harmless against any
loss, claim or damage arising from or as a result of such default by the
Company.
(e) Reliance. The Company and the Agents agree that any Notes purchased
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from the Company by one or more Agents as principal shall be purchased, and any
Notes the placement of which an Agent arranges as an agent of the Company shall
be placed by such Agent, in reliance on the representations, warranties,
covenants and agreements of the Company contained herein and on the terms and
conditions and in the manner provided herein.
2. Representations and Warranties.
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(a) The Company and the Guarantor jointly and severally represent and
warrant to, and agree with, each Agent as of the date hereof, as of the date of
each acceptance by the Company of an offer for the purchase of Notes (whether to
such Agent as principal or through such Agent as agent), as of the date of each
delivery of Notes (whether to such Agent as principal or through such Agent as
agent) (the date of each such delivery to such Agent as principal is referred to
herein as a "Settlement Date"), and as of any time that the Registration
Statement or the Prospectus shall be amended or supplemented (each of the times
referenced above is referred to herein as a "Representation Date"), that:
(i) The Registration Statement, when it became effective and
at each Representation Date, and the Prospectus and any amendment or
supplement thereto, when filed or transmitted for filing with the
Commission and at each Representation Date, complied or will comply in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and the 1939 Act and the rules and regulations of
the Commission under the 1939 Act (the
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"1939 Act Regulations"), and did not or will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the representations and warranties
in this subsection shall not apply to statements in or omissions from
the Registration Statement or Prospectus made in reliance upon and in
conformity with the information furnished to the Company in writing by
the Agents expressly for use in the Registration Statement or
Prospectus or to that part of the Registration Statement which
constitutes the Trustee's Statement of Eligibility and Qualification
under the 1939 Act (the "T-1").
(ii) The documents incorporated or deemed to be incorporated
by reference in the Registration Statement or Prospectus, at the time
they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the 1934 Act
and the rules and regulations of the Commission under the 1934 Act (the
"1934 Act Regulations"), and, when read together with the other
information in the Prospectus, at the date hereof, at the date of the
Prospectus and at each Representation Date, did not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations
and warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in
reliance upon and in conformity with information furnished to the
Company in writing by or through any Agent expressly for use in the
Registration Statement or Prospectus.
(iii) The Guarantor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Pennsylvania with corporate power and authority to
enter into and perform its obligations under this Agreement, the
Indenture and the Guarantees.
(iv) The Company has been duly incorporated and is validly
existing as a corporation in good standing
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under the laws of the State of Delaware with corporate power and
authority to conduct its business as described in the Prospectus and to
enter into and perform its obligations under this Agreement, the
Indenture and the Notes; and the Company is and will be treated as a
consolidated subsidiary of the Guarantor pursuant to generally accepted
accounting principles.
(v) Neither the Guarantor nor the Company is an "investment
company" that is required to be registered under the Investment Company
Act of 1940, as amended (the "1940 Act").
(vi) This Agreement has been duly authorized, executed and
delivered by each of the Company and the Guarantor.
(vii) The Indenture has been duly authorized, executed and
delivered by the Company and the Guarantor and, assuming due
authorization, execution and delivery by the Trustee, constitutes a
valid and binding agreement of the Company and the Guarantor
enforceable in accordance with its terms except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency,
fraudulent transfer, or reorganization, moratorium, and other similar
laws relating to or affecting the enforcement of creditors' rights and
by general equity principles, regardless of whether enforcement is
considered in a proceeding at law or in equity (the "Bankruptcy
Exceptions"); the Indenture conforms and will conform in all material
respects to the statements relating thereto contained in the
Prospectus; and at the effective date of the Registration Statement,
the Indenture was duly qualified under the 1939 Act.
(viii) The Notes have been duly authorized and, when issued,
authenticated and delivered in the manner provided for in the Indenture
and delivered against payment of the consideration therefor, will
constitute valid and binding obligations of the Company enforceable in
accordance with their terms except to the extent that enforcement
thereof may be limited by the Bankruptcy Exceptions; the Notes will be
in the forms established pursuant to, and entitled to the benefits of,
the Indenture; and the Notes will conform
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in all material respects to the statements relating thereto
contained in the Prospectus.
(ix) The Guarantees have been duly authorized and, when duly
executed pursuant to the Indenture and delivered, will constitute valid
and binding obligations of the Guarantor enforceable in accordance with
their terms except to the extent that enforcement thereof may be
limited by the Bankruptcy Exceptions; the Guarantees will be in the
forms established pursuant to the Indenture; and the Guarantees will
conform in all material respects to the statements relating thereto
contained in the Prospectus.
(x) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein or contemplated thereby, there has been no
event or occurrence that would result in a material adverse change, or
any development involving a material adverse change, in the financial
position or results of operations of the Guarantor and its subsidiaries
considered as one enterprise (a "Material Adverse Effect").
(xi) The Medium-Term Note Program under which the Notes are
issued (the "Program"), as well as the Notes, are rated _____ by
▇▇▇▇▇'▇ Investors Service, Inc. and ______ by Standard & Poor's Ratings
Service, or such other rating as to which the Company or the Guarantor
shall have most recently notified the Agents pursuant to Section 5(a)
hereof.
(b) Each of the several Agents represents and warrants to, and agrees
with, the Company and the Guarantor, their respective directors and such of
their respective officers who shall have signed the Registration Statement, and
to each other Agent, that the information furnished in writing to the Company
and the Guarantor by such Agent expressly for use in the Registration Statement
or the Prospectus does not contain an untrue statement of a material fact and
does not omit to state a material fact in connection with such information
required to be stated therein or necessary to make such information not
misleading.
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(c) Additional Certifications. Any certificate signed by any officer
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of the Company or the Guarantor and delivered to one or more Agents or to
counsel for the Agents in connection with an offering of Notes to one or more
Agents as principal or through an Agent as agent shall be deemed a
representation and warranty by the Company or the Guarantor, as the case may
be, to such Agent or Agents as to the matters covered thereby on the date of
such certificate.
3. Purchases as Principal; Solicitations as Agent.
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(a) Purchases as Principal. Notes purchased from the Company by the
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Agents, individually or in a syndicate, as principal shall be made in accordance
with terms agreed upon between such Agent or Agents and the Company in a
separate agreement (which may be an oral agreement confirmed in writing between
the applicable Agent and the Company). Each such separate agreement is herein
referred to as a "Terms Agreement". Each such Terms Agreement, whether oral (and
confirmed in writing, which may be a facsimile transmission) or in writing,
shall include such information (as applicable) as is specified in Schedule A
hereto. An Agent's commitment to purchase Notes as principal shall be deemed to
have been made on the basis of the representations, warranties and agreements of
the Company herein contained, but subject to the terms and conditions herein
contained. Unless the context otherwise requires, references herein to "this
Agreement" shall include the applicable Terms Agreement of one or more Agents to
purchase Notes from the Company as principal. Each purchase of Notes, unless
otherwise agreed, shall be at a discount from the principal amount of each such
Note equivalent to the applicable commission set forth in Schedule B hereto. The
Agents may engage the services of any broker or dealer in connection with the
resale of the Notes purchased by them as principal and may allow all or any
portion of the discount received from the Company in connection with such
purchases to such brokers or dealers. At the time of each Terms Agreement to
purchase Notes from the Company by one or more Agents as principal, such Agent
or Agents shall specify the requirements for the comfort letter, opinions of
counsel and officers' certificate pursuant to Section 8 hereof.
(b) Solicitations as Agent. On the basis of the representations,
----------------------
warranties and agreements herein contained, but subject to the terms and
conditions herein contained, when agreed by the Company and an Agent, such
Agent, as an
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agent of the Company, will use its reasonable efforts to solicit offers for the
purchase of Notes upon the terms set forth in the Prospectus. The Agents are not
authorized to appoint sub-agents with respect to Notes sold through them as
agent. All Notes sold through an Agent as agent will be sold at 100% of their
principal amount unless otherwise agreed upon between the Company and such
Agent.
The Company reserves the right, in its sole discretion, to suspend
solicitation of offers for the purchase of Notes through an Agent, as an agent
of the Company, commencing at any time for any period of time or permanently. As
soon as practicable after receipt of instructions from the Company, such Agent
will suspend solicitation of offers for the purchase of Notes from the Company
until such time as the Company has advised such Agent that such solicitation may
be resumed.
The Company agrees to pay each Agent a commission, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Note sold by the Company as a result of a solicitation made by such Agent, as an
agent of the Company, at the time of settlement of any such sale, as set forth
in Schedule B hereto.
(c) Administrative Procedures. The purchase price, interest rate or
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formula, maturity date and other terms of the Notes specified in Schedule A
hereto (as applicable) shall be agreed upon between the Company and the
applicable Agent(s) and specified in a pricing supplement to the Prospectus
(each, a "Pricing Supplement") to be prepared by the Company in connection with
each sale of Notes. Except as otherwise specified in the applicable Pricing
Supplement, the Notes will be issued in denominations of $1,000 or any larger
amount that is an integral multiple of $1,000. Administrative procedures with
respect to the issuance and sale of the Notes (the "Procedures") shall be agreed
upon from time to time among the Company, the Agents and the Trustee. The
initial Procedures, which are set forth in Schedule C hereto, shall remain in
effect until changed by agreement among the Company, the Agents and the Trustee.
The Agents and the Company agree to perform, and the Company agrees to request
the Trustee to perform, their respective duties and obligations specifically
provided to be performed by them in the Procedures.
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4. Delivery and Payment for Notes Sold through an Agent as Agent.
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Delivery of Notes sold through an Agent as an agent of the Company
shall be made by the Company to such Agent for the account of any purchaser only
against payment therefor in immediately available funds. In the event that a
purchaser shall fail either to accept delivery of or to make payment for a Note
on the date fixed for settlement, such Agent shall promptly notify the Company
and deliver such Note to the Company and, if such Agent has theretofore paid the
Company for such Note, the Company will promptly return such funds to such
Agent. If such failure has occurred for any reason other than default by such
Agent in the performance of its obligations hereunder, the Company will
reimburse such Agent on an equitable basis for its loss of the use of the funds
for the period such funds were credited to the Company's account.
5. Certain Covenants of the Company and the Guarantor.
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Each of the Company and the Guarantor jointly and severally covenant
with the several Agents as follows:
(a) To notify the Agents promptly, and confirm the notice in writing,
of (i) any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for additional
information, (ii) the institution by the Commission of any stop order
proceedings in respect of the Registration Statement, or the initiation of
proceedings for that purpose, and to make every reasonable effort to prevent the
issuance of any such stop order and to obtain as soon as possible its lifting,
if issued, and (iii) any change in the rating assigned by any nationally
recognized statistical rating organization to the Program or any debt securities
(including the Notes) of the Company or the Guarantor, or the public
announcement by any nationally recognized statistical rating organization that
it has under surveillance or review, with possible negative implications, its
rating of the Program or any such debt securities, or the withdrawal by any
nationally recognized statistical rating organization of its rating of the
Program or any such debt securities;
(b) To advise the Agents, or ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ as counsel to the
Agents, promptly of any such filing, and
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to advise the Agents, or ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, as counsel to the Agents,
promptly of any proposal to file or prepare (i) any amendment to the
Registration Statement (including any post-effective amendment), (ii) any
amendment or supplement to the Prospectus (other than an amendment or supplement
providing solely for the determination of the variable terms of the Notes or
relating solely to the offering of securities other than the Notes), or (iii)
any document that would as a result thereof be incorporated by reference in the
Prospectus whether pursuant to the 1933 Act, the 1934 Act or otherwise; and will
furnish the Agents with copies of any such amendment, supplement or other
document a reasonable amount of time prior to such proposed filing or use, as
the case may be;
(c) To endeavor, in cooperation with the Agents, to qualify the Notes
for offer and sale under the securities or blue sky laws of such states and the
other jurisdictions of the United States as the Agents may from time to time
designate, to continue such qualifications in effect so long as required for the
distribution of the Notes and to reimburse the Agents for any expenses
(including filing fees and reasonable fees and disbursements of counsel) paid by
the Agents or on their behalf to qualify the Notes for offer and sale, to
continue such qualification, to determine the eligibility of the Notes for
investment and to print the memoranda relating thereto; provided that neither
the Company nor the Guarantor shall be required to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified, to consent to
service of process in any jurisdiction other than with respect to claims arising
out of the offering or sale of the Notes, or to meet any other requirement in
connection with this paragraph (c) deemed by them to be unduly burdensome;
(d) To deliver promptly to the Agents signed copies of the Registration
Statement as originally filed and of all amendments thereto heretofore or
hereafter filed, including conformed copies of all exhibits except those
incorporated by reference, and such number of conformed copies of the
Registration Statement (but excluding the exhibits), the Prospectus, and any
amendments and supplements thereto, as the Agents may reasonably request;
(e) To prepare, with respect to any Notes to be sold to or through
one or more Agents pursuant to this Agreement, a Pricing Supplement with respect
to such Notes
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in a form previously approved by the Agents. The Company will deliver such
Pricing Supplement no later than 11:00 A.M., New York City time, on the
business day following the date of the Company's acceptance of the offer for
the purchase of such Notes and will file such Pricing Supplement pursuant to
Rule 424(b)(3) under the 1933 Act not later than the close of business of the
Commission on the fifth business day after the date on which such Pricing
Supplement is first used;
(f) Except as otherwise provided in subsection (l) of this Section 5,
if at any time during the term of this Agreement any event occurs as a result of
which the Prospectus, as then amended or supplemented, would include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances existing at the time the Prospectus is delivered to a purchaser,
not misleading, or if it shall be necessary at any time to amend the
Registration Statement or amend or supplement the Prospectus to comply with the
1933 Act or the 1933 Act Regulations, to advise the Agents immediately,
confirmed in writing, to cease the solicitation of offers for the purchase of
Notes in their capacity as agents and to cease sales of any Notes they may then
own as principal, and to promptly prepare and file with the Commission, subject
to Section 5(b) hereof, such amendment or supplement which will correct such
statement or omission or an amendment which will effect such compliance;
provided, however, that the cost of any amendment or supplement which relates
solely to the activities of any Agent shall be borne by the Agent or Agents
requiring the same;
(g) Except as otherwise provided in subsection (l) of this Section 5,
on or prior to the date on which there shall be released to the general public
interim financial statement information related to the Company or the Guarantor
with respect to each of the first three quarters of any fiscal year or
preliminary financial statement information with respect to any fiscal year, or
financial information included in the audited consolidated financial statements
of the Company or the Guarantor for the preceding fiscal year, the Company and
the Guarantor shall furnish such information to the Agents;
(h) As soon as practicable, the Guarantor will make generally
available to its security holders an earnings
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statement covering a period of at least twelve months beginning after the
"effective date of the registration statement" within the meaning of Rule 158
under the 1933 Act which will satisfy the provisions of Section 11(a) of the
1933 Act;
(i) The Company and the Guarantor during the period when the Prospectus
is required to be delivered under the 1933 Act, will file all documents required
to be filed with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the 1934 Act within the time periods prescribed by the 1934 Act and the 1934
Act Regulations;
(j) Unless otherwise agreed upon between one or more Agents acting as
principal and the Company, between the date of any Terms Agreement by such
Agent(s) to purchase Notes from the Company and the Settlement Date with respect
thereto, the Company will not, without the prior written consent of such
Agent(s), issue, sell, offer or contract to sell, grant any option for the sale
of, or otherwise dispose of, any debt securities of the Company with maturities
and other terms substantially similar to the Notes being sold pursuant to such
Terms Agreement (other than the Notes that are to be sold pursuant to such Terms
Agreement, notes to banks under the Revolving Credit Agreement of the Company or
commercial paper in the ordinary course of business);
(k) The Company will apply the net proceeds from the sale of the Notes
for the purposes set forth in the Prospectus;
(l) The Company shall not be required to comply with the provisions of
subsections (f) or (g) of this Section 5 during any period from the time the
Agents shall have suspended solicitation of offers for the purchase of Notes in
their capacity as agents pursuant to a request from the Company until the time
the Company shall determine that solicitation of offers for the purchase of
Notes should be resumed; provided, however, that compliance with such
subsections shall be required for any portion of such period during which an
Agent shall hold any Notes as principal purchased pursuant to a Terms Agreement;
and provided further that the Agents shall, upon inquiry by the Company or the
Guarantor, advise the Company and the Guarantor whether or not any of them
retains any Notes for purposes of this subsection (1), and from the 30th day
immediately following the issuance of such Notes, unless otherwise
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advised by an Agent, the Company and the Guarantor shall be entitled to assume
that the distribution of such Notes is complete; and
(m) The Company will comply with the conditions set forth in Rule 3a-5
under the 1940 Act ("Rule 3a-5"), necessary for the Company to not be considered
an "investment company" under the 1940 Act.
6. Payment of Expenses.
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The Company will pay or bear (i) all expenses in connection with the
matters herein required to be performed by the Company or the Guarantor,
including all expenses in connection with the preparation and filing of the
Registration Statement and the Prospectus, and any amendment or supplement
thereto, and the furnishing of copies thereof to the Agents, and all audits,
statements or reports in connection therewith, and all expenses in connection
with the issue and delivery of the Notes and the related Guarantees, including
the reasonable fees and disbursements of counsel to the Agents incurred in
connection with the establishment of the Program and incurred from time to time
in connection with the transactions contemplated hereby, any fees and expenses
relating to the eligibility and issuance of Notes in book-entry form and the
cost of obtaining CUSIP or other identification numbers for the Notes, all
Federal and State taxes (if any) payable (not including any transfer taxes) upon
the issue of the Notes or the related Guarantees, any fee charged by securities
ratings services for rating the Program and the Notes, the fees and expenses
incurred in connection with any listing of the Notes on a securities exchange,
and the fee of the National Association of Securities Dealers, Inc., if any, and
(ii) all expenses in connection with the printing, reproduction and delivery of
this Agreement and the printing, reproduction and delivery of such other
documents or certificates as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Notes or the Guarantees.
7. Conditions of Agents' Obligations.
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The obligations of one or more Agents to purchase Notes as principal
and to solicit offers for the purchase of Notes as an agent of the Company, and
the obligations of any purchasers of Notes sold through an Agent as an agent of
the Company, will be subject to the following conditions:
-15-
(a) The Agents shall have received from Price Waterhouse LLP a letter,
dated the date of this Agreement, in form and substance satisfactory to you, to
the effect that:
(i) They are independent accountants with respect to the
Guarantor and its subsidiaries within the meaning of the 1933 Act and
the 1933 Act Regulations;
(ii) In their opinion, the consolidated financial statements
of the Guarantor and its subsidiaries audited by them and incorporated
by reference in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the
1933 Act and the 1934 Act and the published rules and regulations
thereunder with respect to registration statements on Form S-3;
(iii) On the basis of procedures (but not an audit in
accordance with generally accepted auditing standards) consisting of:
(A) Reading the minutes of meetings of the shareowners
and the Boards of Directors of the Guarantor and the Company
and their Executive, Compensation and Corporate Governance,
Finance and the Audit and Corporate Responsibility Committees
since the day after the end of the last audited period as set
forth in the minute books through a specified date not more
than five business days prior to the date of delivery of
such letter;
(B) With respect to the unaudited consolidated balance
sheet as of the most recent quarter ended and the unaudited
consolidated statements of income and of cash flows included
in the Guarantor's Quarterly Report on Form 10-Q for the most
recent quarter ended ("Form 10-Q") incorporated by reference
in the Registration Statement,
(i) Performing the procedures specified by the American
Institute of Certified Public Accountants for a review of
interim financial information as described in SAS No. 71, Interim
--------
Financial Information, on the unaudited consolidated balance sheet and
---------------------
the unaudited consolidated statements of income and of cash
-16-
flows for the most recent quarter ended and year to date, and prior
year periods, included in the Guarantor's Form 10-Q incorporated by
reference in the Registration Statement;
(ii) Making inquiries of certain officials of the Guarantor who
have responsibility for financial and accounting matters as to whether
the unaudited consolidated financial statements referred to in (B)(i)
comply as to form in all material respects with the applicable accounting
requirements of the 1934 Act, as it applies to Form 10-Q and the
related published rules and regulations thereunder;
(C) Reading the unaudited interim financial data for the
period from the date of the latest balance sheet included or
incorporated in the Registration Statement to the date of the
latest available interim financial data; and
(D) Making inquiries of certain officials of the Guarantor
who have responsibility for financial and accounting matters
regarding the specific items for which representations are
requested below;
nothing has come to their attention as a result of the
foregoing procedures that caused them to believe that (i) the
unaudited consolidated financial statements described in
(B)(i), included in the Form 10-Q and incorporated by
reference in the Registration Statement, do not comply as to
form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1934 Act, as it applies
to Form 10-Q, and the related published rules and regulations
thereunder; or (ii) any material modifications should be made
to the unaudited consolidated financial statements described
in (B)(i), included in the Form 10-Q and incorporated by
reference in the Registration Statement, for them to be in
conformity with generally accepted accounting principles; or
(iii) at the date of the latest available interim financial
data and at a specified date not more than five business days
prior to the date of delivery of such letter, there was any
change in the capital stock (except
-17-
for changes in shares of certain series of preferred stock of
a subsidiary of the Guarantor redeemed for, purchased or
otherwise retired in anticipation of, sinking fund
requirements for such series or as a result of the surrender
by the Guarantor of any preferred stock of PP&L, Inc.
theretofore purchased by the Guarantor), or increase in
long-term debt of the Guarantor and subsidiaries consolidated
as compared with amounts shown in the latest balance sheet
incorporated by reference in the Registration Statement or
(iv) for the period from the closing date of the latest
consolidated income statement incorporated by reference in the
Registration Statement to the date of the latest available
interim financial data there were any decreases, as compared
with the corresponding period in the preceding year, in net
income, except in all instances for changes, increases or
decreases which the Registration Statement, including the
documents incorporated therein by reference, discloses have
occurred or may occur, or they shall state any specific
changes or decreases.
(iv) The letter shall also state that the information set forth in
Schedule D hereto, which is expressed in dollars (or percentages
derived from such dollar amounts) and has been obtained from accounting
records which are subject to the internal controls of the Guarantor's
accounting system or which has been derived directly from such
accounting records by analysis or computation, is in agreement with
such records or computations made therefrom, except as otherwise
specified in such letter.
(b) The Registration Statement has become effective under the 1933 Act
and no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted, or, to the knowledge of the Company or the Guarantor, shall be
contemplated by the Commission and the Agents shall have received certificates
of the Company and of the Guarantor dated the date hereof to such effect.
(c) On the date hereof the Agents shall have received from ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq., Senior Counsel, or such other counsel for the Company and the
Guarantor as may
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be acceptable to you, an opinion, dated as of the date hereof, in form and
substance satisfactory to counsel for the Agents, to the effect that:
(i) The Guarantor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Pennsylvania with power and authority (corporate and
other) to own its properties and conduct its business as described in
the Prospectus;
(ii) The portions of the information contained in the
Prospectus, which are stated therein to have been made on the authority
of any such counsel, have been reviewed by such counsel and, as to
matters of law and legal conclusions, are correct;
(iii) The Guarantor is a "holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended, but is
exempt from such Act (except for the provisions of Section 9(a)(2)
thereof) by virtue of an order of the Commission pursuant to Section
3(a)(1) thereof;
(iv) The descriptions in the Registration Statement and the
Prospectus of statutes, legal and governmental proceedings and
contracts and other documents are accurate and fairly present the
information required to be shown; and such counsel does not know of any
legal or governmental proceedings required to be described in the
Registration Statement or Prospectus which are not described, or of any
contracts or documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to
the Registration Statement which are not described and filed as
required; it being understood that such counsel need express no opinion
as to the financial statements and other financial data contained or
incorporated by reference in the Registration Statement or the
Prospectus;
(v) This Agreement has been duly authorized, executed and
delivered by each of the Guarantor and the Company;
-19-
(vi) The Indenture has been duly authorized, executed and
delivered by the Guarantor and, assuming due authorization, execution,
and delivery by the Company and the Trustee, is a valid and binding
obligation of the Guarantor, enforceable in accordance with its terms,
except to the extent limited by the Bankruptcy Exceptions;
(vii) The Guarantees are in the form established pursuant to
the Indenture, have been duly authorized by the Guarantor, and, when
duly executed pursuant to the Indenture and delivered in accordance
with the provisions of this Agreement, will constitute valid and
binding obligations of the Guarantor, as guarantor, enforceable in
accordance with their terms, except to the extent limited by the
Bankruptcy Exceptions;
(viii) No approval, authorization, consent or other order of
any public board or body is legally required for the authorization of
the offering, issuance and sale of the Notes, except (a) such as may be
required under the 1933 Act or the 1933 Act Regulations or the
securities or "blue sky" laws of any jurisdiction and (b) the
qualification of the Indenture under the 1939 Act and 1939 Act
Regulations.
In rendering such opinion, such counsel may rely as to matters
governed by New York and Delaware corporate law upon the opinion of ▇▇▇▇
& Priest LLP referred to in Section 7(d) of this Agreement.
(d) On the date hereof, the Agents shall have received from ▇▇▇▇ &
Priest LLP, special counsel to the Company and the Guarantor, an opinion, dated
as of the date hereof, in form and substance satisfactory to counsel for the
Agents, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware;
(ii) The Notes are in the form established pursuant to the
Indenture, have been duly authorized by the Company, and, when issued,
authenticated and delivered in the manner provided for in the Indenture
and delivered against payment therefor, will constitute valid and
binding obligations of the Company
-20-
enforceable in accordance with their terms, except to the extent
limited by the Bankruptcy Exceptions, and are entitled to the
benefits of the Indenture;
(iii) The Guarantees are in the form established pursuant to
the Indenture, have been duly authorized by the Guarantor, and, when
duly executed pursuant to the Indenture and delivered in accordance
with the provisions of this Agreement, will constitute valid and
binding obligations of the Guarantor, as guarantor, enforceable in
accordance with their terms, except to the extent limited by the
Bankruptcy Exceptions;
(iv) This Agreement has been duly authorized, executed and
delivered by each of the Guarantor and the Company;
(v) The Indenture has been duly authorized, executed and
delivered by the Company and the Guarantor and, assuming due
authorization, execution, and delivery by the Trustee, is a valid and
binding obligation of the Company and the Guarantor, enforceable in
accordance with its terms, except to the extent limited by the
Bankruptcy Exceptions; and the Indenture has been duly qualified under
the 1939 Act;
(vi) The Registration Statement has become effective under the
1933 Act and any required filing of the Prospectus pursuant to Rule
424(b) has been made in the manner and within the time period required,
and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement or any part
thereof has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933 Act, and the
Registration Statement, as of its effective date, and any amendment
thereto, as of its date, and the Prospectus, as of its date, and each
amendment or supplement thereto, as of its date, complied as to form in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations, and nothing has come to the attention of such
counsel which would lead such counsel to believe either that the
Registration Statement or any amendment thereto, as of such dates,
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make
the statements
-21-
therein not misleading, or that the Prospectus or any amendment or
supplement thereto, as of the date issued or the date of such opinion,
contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; it being understood that such counsel need
express no opinion as to the financial statements and other financial
or statistical data contained or incorporated by reference in the
Registration Statement or the Prospectus;
(vii) The statements in the Prospectus under the captions
"Description of the Debt Securities" and "Description of Notes",
insofar as they purport to constitute summaries of certain terms of the
Indenture, the Notes and the Guarantees, in each case constitute
accurate summaries of such terms of such documents and securities, in
all material respects;
(viii) The Company is a "finance subsidiary within the meaning
of Rule 3a-5 of the 1940 Act, and the Guarantees satisfy the conditions
of clauses (a)(1) and (3) of Rule 3a-5. Assuming that the Company
continues to qualify as a "finance subsidiary" within the meaning of
Rule 3a-5, satisfies the conditions of clauses (a)(5) and (6) of Rule
3a-5 and satisfies the conditions of Rule 3a-5 in respect of any
securities other than the Notes issued by the Company, upon giving
effect to the transactions contemplated by this Agreement, the
Prospectus and the application of the proceeds from the sale of the
Notes contemplated in the Prospectus, the Company will not be an
"investment company" within the meaning of the 1940 Act. The Guarantor
is not an "investment company" within the meaning of the 1940 Act; and
(ix) No approval, authorization, consent or other order of any
public board or body is legally required under federal or New York law
for the authorization of the offering, issuance and sale of the Notes,
except (a) such as may be required under the 1933 Act or the 1933 Act
Regulations or the securities or "blue sky" laws of any jurisdiction
and (b) the qualification of the Indenture under the 1939 Act and 1939
Act Regulations.
-22-
In rendering their opinion, ▇▇▇▇ & Priest LLP may rely as to
matters governed by Pennsylvania law upon the opinion of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq., or such other counsel referred to in Section 7(c) of
this Agreement.
(e) On the date hereof, the Agents shall have received from ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, counsel for the Agents, such opinion or opinions, dated as of the date
hereof, with respect to the validity of the Notes and the Guarantees, this
Agreement, the Registration Statement, the Prospectus and other related matters
as the Agents may require, and the Company and the Guarantor shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters. In rendering such opinion or opinions,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ may assume the due incorporation and valid existence of the
Company and the Guarantor and may rely as to matters governed by Pennsylvania
law upon the opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. or such other counsel for the
Company and the Guarantor referred to in Section 7(c) of this Agreement.
(f) On the date hereof, the Agents shall have received certificates,
dated the date hereof, of the President or a Vice President and a financial or
accounting officer of the Guarantor and of a Vice President or Treasurer of the
Company in which such officers, to the best of their knowledge after reasonable
investigation, shall state that (i) the representations and warranties of the
Company or the Guarantor, as the case may be, in this Agreement are true and
correct (except for immaterial details) as of the date of such certificate, (ii)
the Company or Guarantor, as the case may be, has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied at or
prior to the date of such certificate, (iii) no stop order suspending the
effectiveness of the Registration Statement has been issued, and no proceedings
for that purpose have been instituted or are pending by the Commission, and (iv)
subsequent to the date of the latest financial statements in the Prospectus,
there has been no Material Adverse Effect, whether or not arising in the
ordinary course of business, except as set forth or contemplated in the
Prospectus or as described in such certificate.
In case any such condition shall not have been satisfied, this
Agreement may be terminated by the
-23-
applicable Agent or Agents upon notice in writing or by telegram to the Company
and the Guarantor without liability or obligation of any party, except as
provided in Sections 5(c), 6, 9, 11, 12 and 14 hereof.
8. Additional Covenants of the Company and the Guarantor.
-----------------------------------------------------
The Company and the Guarantor further covenant and agree with each
Agent as follows:
(a) Reaffirmation of Representations and Warranties. Each acceptance by
-----------------------------------------------
the Company of an offer for the purchase of Notes (whether to one or more Agents
as principal or through an Agent as agent), and each delivery of Notes (whether
to one or more Agents as principal or through an Agent as Agent), shall be
deemed to be an affirmation that the representations and warranties of the
Company and the Guarantor herein contained and contained in any certificate
delivered therewith to the Agents pursuant to this Agreement are true and
correct at the time of such acceptance or sale, as the case may be (it being
understood that such representations and warranties shall relate to the
Registration Statement and Prospectus as amended and supplemented to each such
time).
(b) Subsequent Delivery of Certificates. Each time that (i) the
-----------------------------------
Registration Statement or the Prospectus shall be amended or supplemented (other
than by an amendment or supplement providing solely for the determination of the
variable terms of the Notes or relating solely to the offering of securities
other than the Notes) or (ii) (if required by the Terms Agreement relating to
such Notes) the Company sells Notes to one or more Agents as principal, each of
the Company and the Guarantor shall furnish or cause to be furnished to the
Agent(s), forthwith a certificate dated the date of filing with the Commission
or the date of effectiveness of such amendment or supplement, as applicable, or
the date of such sale, as the case may be, in form satisfactory to the Agent(s)
to the effect that the statements contained in the certificate referred to in
Section 7(f) hereof which were last furnished to the Agents are true and correct
at the time of the filing or effectiveness of such amendment or supplement, as
applicable, or the time of such sale, as the case may be, as though made at and
as of such time (except that such statements shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to
-24-
such time) or, in lieu of such certificate, a certificate of the same tenor as
the certificate referred to in Section 7(f) hereof, modified as necessary to
relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such certificate (it being understood
that, in the case of clause (ii) above, any such certificates shall also include
a certification that there has been no Material Adverse Effect since the date of
the agreement by such Agent(s) to purchase Notes from the Company as principal).
(c) Subsequent Delivery of Legal Opinions. Each time that (i) the
-------------------------------------
Registration Statement or the Prospectus shall be amended or supplemented (other
than (A) by an amendment or supplement providing solely for the determination of
the variable terms of the Notes or relating solely to the offering of securities
other than the Notes or (B) unless an Agent shall otherwise reasonably request,
by filing of any Current Report on Form 8-K) or (ii) (if required by the Terms
Agreement relating to such Notes) the Company sells Notes to one or more Agents
as principal, the Company shall furnish or cause to be furnished forthwith to
the Agent(s) and to counsel to the Agents the written opinions of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq., Senior Counsel to the Guarantor (or such other counsel as may be
acceptable to the Agent(s)) and ▇▇▇▇ & Priest LLP, special counsel to the
Company and the Guarantor, each dated the date of filing with the Commission or
the date of effectiveness of such amendment or supplement, as applicable, or the
date of such sale, as the case may be, in form and substance satisfactory to the
Agent(s), of the same tenor as the opinions referred to in Section 7(c) and (d)
hereof, but modified, as necessary, to relate to the Registration Statement and
the Prospectus as amended and supplemented to the time of delivery of such
opinions; or, in lieu of such opinions, counsel last furnishing such opinions to
the Agents shall furnish the Agent(s) with a letter substantially to the effect
that the Agent(s) may rely on such last opinion to the same extent as though it
was dated the date of such letter authorizing reliance (except that statements
in such last opinion shall be deemed to relate to the Registration Statement and
the Prospectus as amended and supplemented to the time of delivery of such
letter authorizing reliance).
(d) Subsequent Delivery of Comfort Letters. Each time that (i) the
--------------------------------------
Registration Statement or the Prospectus shall be amended or supplemented to
include additional
-25-
financial information (other than by an amendment or supplement relating solely
to the issuance and/or offering of securities other than the Notes) or (ii) (if
required by the Terms Agreement relating to such Notes) the Company sells Notes
to one or more Agents as principal, the Company shall cause Price Waterhouse LLP
forthwith to furnish to the Agent(s) a letter, dated the date of filing with the
Commission or the date of effectiveness of such amendment or supplement, as
applicable, or the date of such sale, as the case may be, in form satisfactory
to the Agent(s), of the same tenor as the letter referred to in Section 7(a)
hereof but modified to relate to the Registration Statement and Prospectus as
amended and supplemented to the date of such letter; provided, however, that if
the Registration Statement or the Prospectus is amended or supplemented solely
to include financial information as of and for a fiscal quarter, Price
Waterhouse LLP may limit the scope of such letter to the unaudited financial
statements included in such amendment or supplement unless any other information
included therein of an accounting, financial or statistical nature is of such a
nature that, in the reasonable judgment of the Agents, such letter should cover
such other information.
[(e) The Company shall not sell Notes which are not substantially in
a form previously certified without prior notification to each Agent.]
9. Indemnification and Contribution.
--------------------------------
(a) The Company and the Guarantor agree that they will jointly and
severally indemnify and hold harmless each Agent and each person, if any, who
controls any Agent within the meaning of Section 15 of the 1933 Act, against any
and all loss, expense, claim, damage or liability to which, jointly or
severally, such Agent or such controlling person may become subject, under the
1933 Act or otherwise, insofar as such loss, expense, claim, damage or liability
(or actions in respect thereof) arises out of or is based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement to any
thereof, or arises out of or is based upon the omission or alleged omission to
state therein any material fact required to be stated therein or necessary to
make the statements therein not misleading; and, except as hereinafter in this
Section provided, the Company and the Guarantor agree to reimburse
-26-
each Agent and each person who controls any Agent as aforesaid for any
reasonable legal or other expenses as incurred by such Agent or such controlling
person in connection with investigating or defending any such loss, expense,
claim, damage or liability; provided, however, that the Company and the
Guarantor shall not be liable in any such case to the extent that any such loss,
expense, claim, damage or liability arises out of or is based on an untrue
statement or alleged untrue statement or omission or alleged omission made in
any such document in reliance upon, and in conformity with, written information
furnished to the Guarantor or the Company by or through any such Agent expressly
for use in any such document or arises out of, or is based on, statements in or
omissions from that part of the Registration Statement which shall constitute
the T-1; and provided further, that with respect to any untrue statement or
alleged untrue statement or omission or alleged omission made in any prospectus
or supplement, the indemnity agreement contained in this subsection (a) shall
not inure to the benefit of any Agent from whom the person asserting any such
loss, expense, claim, damage or liability purchased the Notes concerned (or to
the benefit of any person controlling such Agent), if a copy of the Prospectus
(not including documents incorporated by reference therein) or of the Prospectus
as then amended or supplemented (not including documents incorporated by
reference therein) was not sent or given to such person at or prior to the
written confirmation of the sale of such Notes to such person.
(b) Each Agent severally agrees that it will indemnify and hold
harmless the Company and the Guarantor, their officers and directors, and each
of them, and each person, if any, who controls the Company and the Guarantor
within the meaning of Section 15 of the 1933 Act, against any loss, expense,
claim, damage or liability to which it or they may become subject, under the
1933 Act or otherwise, insofar as such loss, expense, claim, damage or liability
(or actions in respect thereof) arises out of or is based on any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement to any
thereof, or arises out of or is based upon the omission or alleged omission to
state therein any material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, and only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any
-27-
such documents in reliance upon, and in conformity with, written information
furnished to the Guarantor or the Company by or through any Agent expressly for
use in any such document; and, except as hereinafter in this Section provided,
each Agent agrees to reimburse the Company and the Guarantor, their officers and
directors, and each of them, and each person, if any, who controls the Company
and the Guarantor within the meaning of Section 15 of the 1933 Act, for any
reasonable legal or other expenses incurred by it or them in connection with
investigating or defending any such loss, expense, claim, damage or liability.
(c) Upon receipt of notice of the commencement of any action against
an indemnified party, the indemnified party shall, with reasonable promptness,
if a claim in respect thereof is to be made against an indemnifying party under
its agreement contained in this Section 9, notify such indemnifying party in
writing of the commencement thereof; but the omission so to notify an
indemnifying party shall not relieve it from any liability which it may have to
the indemnified party otherwise than under its agreement contained in this
Section 9. In the case of any such notice to an indemnifying party, it shall be
entitled to participate at its own expense in the defense, or if it so elects,
to assume the defense, of any such action, but, if it elects to assume the
defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the indemnified party and to any other indemnifying party,
defendant in the suit. In the event that any indemnifying party elects to assume
the defense of any such action and retain such counsel, the indemnified party
shall bear the fees and expenses of any additional counsel retained by it. No
indemnifying party shall be liable in the event of any settlement of any such
action effected without its consent except as provided in Section 9(e) hereof.
Each indemnified party agrees promptly to notify each indemnifying party of the
commencement of any litigation or proceedings against it in connection with the
issue and sale of the Notes.
(d) If any Agent or person entitled to indemnification by the terms
of subsection (a) of this Section 9 shall have given notice to the Company and
the Guarantor of a claim in respect thereof pursuant to Section 9(c) hereunder,
and if such claim for indemnification is thereafter held by a court to be
unavailable for any reason other than by reason of the terms of this Section 9
or if such claim is unavailable under controlling precedent, such
-28-
Agent or person shall be entitled to contribution from the Company and the
Guarantor to liabilities and expenses, except to the extent that contribution is
not permitted under Section 11(f) of the 1933 Act. In determining the amount of
contribution to which such Agent or person is entitled, there shall be
considered the relative benefits received by such Agent or person and the
Company and the Guarantor from the offering of the Notes that were the subject
of the claim for indemnification (taking into account the portion of the
proceeds of the offering realized by each), the Agent or person's relative
knowledge and access to information concerning the matter with respect to which
the claim was asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate under the
circumstances. The Company and the Guarantor and the Agents agree that it would
not be equitable if the amount of such contribution were determined by pro rata
or per capita allocation (even if the Agents were treated as one entity for such
purpose).
(e) No indemnifying party shall, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 9 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party and all liability
arising out of such litigation, investigation, proceeding or claim, and (ii)
does not include a statement as to or an admission of fault, culpability or the
failure to act by or on behalf of any indemnified party.
(f) The indemnity and contribution provided for in this Section 9 and
the representations and warranties of the Company, the Guarantor and the several
Agents set forth in this Agreement shall remain operative and in full force and
effect regardless of (i) any investigation made by or on behalf of any Agent or
any person controlling any Agent, the Company, its directors or officers, the
Guarantor or any person controlling the Guarantor, (ii) acceptance of any Notes
and payment therefor under this Agreement, and (iii) any termination of this
Agreement.
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10. Default of Agents.
-----------------
If the Company and two or more Agents enter into an agreement pursuant
to which such Agents agree to purchase Notes from the Company as principal and
one or more of such Agents shall fail at the Settlement Date to purchase the
Notes which it or they are obligated to purchase (the "Defaulted Notes"), then
the non-defaulting Agents may make arrangements satisfactory to the Company for
one of them or one or more other Agents or any other agents to purchase all, but
not less than all, of the Defaulted Notes in such amounts as may be agreed upon
and upon the terms herein set forth in this Agreement. If, however, no such
arrangements shall have been made within 24 hours thereafter, then the
non-defaulting Agents shall be obligated, severally and not jointly, to purchase
the full amount thereof in the proportions which their respective initial
underwriting obligations bear to the underwriting obligations of all
non-defaulting Agents. In the event of any such default, either the
non-defaulting Agents or the Company may by prompt written notice to such other
parties postpone the Settlement Date for a period of not more than seven full
business days in order to effect whatever changes may thereby be made necessary
in the Registration Statement or Prospectus or in any other documents or
arrangements, and the Company will promptly file any amendments to the
Registration Statement or Supplements to the Prospectus which may thereby be
made necessary. As used in this Agreement, the term "Agent" includes any person
substituted for an Agent under this Section 10.
Nothing in this Section 10 shall relieve an Agent from liability for
its default.
11. Survival of Certain Representations and Obligations.
---------------------------------------------------
The respective indemnities, agreements, representations and warranties
of the Company and the Guarantor and of or on behalf of the Agents set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made by
or on behalf of any Agent or the Company and the Guarantor or any of their
respective officers, directors, or any controlling person, and will survive
delivery of and payment for the Notes. If for any reason the purchase of the
Notes by the Agents is not consummated, the Company shall remain responsible for
the
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expenses to be paid or reimbursed by it pursuant to Sections 5(c) and 6, and the
respective obligations of the Company, the Guarantor and the Agents pursuant to
Sections 9, 11, 12 and 14 hereof shall remain in effect.
12. Termination.
-----------
(a) This Agreement (excluding any agreement by one or more Agents to
purchase Notes as principal) may be terminated, for any reason at any time, by
either the Company or an Agent, as to itself, upon the giving of 30 days' prior
written notice of such termination to the other party hereto.
(b) The applicable Agent(s) may terminate any agreement by such
Agent(s) to purchase Notes as principal, immediately upon notice to the Company
and the Guarantor, at any time prior to the Settlement Date relating thereto, if
(i) there has been, since the date of such Terms Agreement or since the
respective dates as of which information is given in the Prospectus, as amended
or supplemented to such date, any change or any development involving a
prospective change in or affecting particularly the business or properties of
the Guarantor, which, in the judgment of any such Agent, materially impairs the
investment quality of such Notes; (ii) there has been any suspension or
limitation of trading in securities generally on the New York Stock Exchange, or
any setting of minimum or maximum prices for trading on such exchange, or any
suspension or limitation of trading of any securities of the Company or the
Guarantor on any exchange or in the over-the-counter market; (iii) a general
banking moratorium has been declared by Federal or New York authorities; (iv)
there shall have occurred any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or any
other substantial national or international calamity or emergency if, in the
reasonable judgment of such Agent, in each case the effect of which makes it
impractical and inadvisable to proceed with completion of the sale of and
payment for the Notes and such Agent makes a similar determination with respect
to all other underwritings of medium-term notes of utilities or utility holding
companies in which it is participating and has the contractual right to make
such a determination; or (v) there has been any decrease in the ratings of the
Program or any debt securities of the Company or the Guarantor (including the
Notes) that existed as of the date of such agreement by any
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"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the 1933 Act) or if such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of the Program or any such debt securities.
(c) In the event of any such termination, no party will have any
liability to the other parties hereto, except that (i) the Agents shall be
entitled to any commissions earned in accordance with the third paragraph of
Section 3(b) hereof, (ii) if at the time of termination (a) any Agent shall own
any Notes purchased by it as principal pursuant to a Terms Agreement or (b) an
offer to purchase any of the Notes has been accepted by the Company but the time
of delivery to the purchaser or his agent of such Notes relating thereto has not
occurred, the covenants set forth in Sections 5 and 8 hereof shall remain in
effect until such Notes are so resold or delivered, as the case may be, and
(iii) the covenant set forth in Section 5(h) hereof, the provisions of Section 6
hereof, the indemnity and contribution agreements set forth in Section 9 hereof,
and the provisions of Sections 11, 14 and 15 hereof shall remain in effect.
13. Notices.
-------
The Company and the Guarantor shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of each of the Agents if
the same shall have been made or given by the Agents. All statements, requests,
notices, consents and agreements hereunder shall be in writing, or by telegraph
subsequently confirmed in writing, to the following addresses:
If to the Company or the Guarantor:
PP&L Resources, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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If to ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated:
World Financial Center
North Tower - 10th Floor
New York, New York 10281-1310
Attention: MTN Product Management
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
[Other Agents]
[Addresses]
14. Parties in Interest.
-------------------
This Agreement shall each inure solely to the benefit of the Company,
the Guarantor and the Agents and, to the extent provided in Section 9 hereof, to
any person who controls any Agent, to the officers and directors of the Company
and the Guarantor, and to any person who controls the Company or the Guarantor,
and their respective successors. No other person, partnership, association or
corporation shall acquire or have any right under or by virtue of this
Agreement. The term "successor" shall not include any assignee of an Agent
(other than a person substituted for an Agent under Section 10 hereof or one who
shall acquire all or substantially all of an Agent's business and properties),
nor shall it include any purchaser of Notes from any Agent merely because of
such purchase.
15. Applicable Law.
--------------
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
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16. Counterparts.
------------
This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such respective counterparts shall together constitute one and the same
instrument.
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose, whereupon
this Distribution Agreement shall constitute a binding agreement between the
Company and the Guarantor and the several Agents in accordance with its terms.
Yours very truly,
PP&L RESOURCES, INC.
By: _____________________________________
Name:
Title:
PP&L CAPITAL FUNDING, INC.
By: _____________________________________
Name:
Title:
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The foregoing Distribution Agreement is
hereby confirmed and accepted as of the date
first above written.
▇▇▇▇▇▇▇ LYNCH, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By:__________________________________
Name:
Title:
[OTHER AGENTS]
By:__________________________________
Name:
Title:
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SCHEDULE A
----------
PRICING TERMS
Principal Amount: $______________
Interest Rate or Formula:
If Fixed Rate Note,
Interest Rate:
Interest Payment Dates:
If Floating Rate Note,
Interest Rate Basis(es):
If LIBOR,
|_| LIBOR Reuters Page:
|_| LIBOR Telerate Page:
Designated LIBOR Currency:
If CMT Rate,
Designated CMT Telerate Page:
If Telerate Page 7052:
|_| Weekly Average
|_| Monthly Average
Designated CMT Maturity Index:
Index Maturity:
Spread and/or Spread Multiplier, if any:
Initial Interest Rate, if any:
Initial Interest Reset Date:
Interest Reset Dates:
Interest Payment Dates:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Fixed Rate Commencement Date, if any:
Fixed Interest Rate, if any:
Day Count Convention:
Calculation Agent:
Redemption Provisions:
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction, if any:
Repayment Provisions:
Optional Repayment Date(s)
Original Issue Date:
Stated Maturity Date
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Exchange Rate Agent:
Authorized Denomination:
Purchase Price: ___%, plus accrued interest, if any, from
---------
Price to Public: ___%, plus accrued interest, if any, from
---------
Issue Price:
Settlement Date and Time:
Additional/Other Terms:
Also, in connection with the purchase of Notes from the Company by one or more
Agents as principal, agreement as to whether the following will be required:
Officers' Certificate pursuant to Section 7(f) of the Distribution
Agreement
Legal Opinions pursuant to Section 7(c)and(d) of the Distribution Agreement
Comfort Letter pursuant to Section 7(a) of the Distribution Agreement
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SCHEDULE B
----------
As compensation for the services of the Agents hereunder, the Company
shall pay the applicable Agent, on a discount basis, a commission for the sale
of each Note equal to the principal amount of such Notes multiplied by the
appropriate percentage set forth below:
PERCENT OF
MATURITY RANGES PRINCIPAL AMOUNT
--------------- ----------------
From 9 months to less than 1 year.............................. .125%
From 1 year to less than 18 months............................. .150
From 18 months to less than 2 years............................ .200
From 2 years to less than 3 years.............................. .250
From 3 years to less than 4 years.............................. .350
From 4 years to less than 5 years.............................. .450
From 5 years to less than 6 years.............................. .500
From 6 years to less than 7 years.............................. .550
From 7 years to less than 10 years............................. .600
From 10 years to less than 15 years............................ .625
From 15 years to less than 20 years............................ .700
From 20 years to 30 years...................................... .750
From 30 years to 40 Years...................................... *
---------------------
* As agreed to by the Company and the applicable Agent at
the time of sale.
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SCHEDULE D
----------
Additional Matters to be Included
in Accountants' Comfort Letter Pursuant to
Section 7(a)(iv) of Distribution Agreement
------------------------------------------
PROSPECTUS CAPTION ITEMS
------------------ -----
"Ratio of Earnings to "Ratio of Earnings to
Fixed Charges" Fixed Charges" and
supporting calculations
shown on Exhibit 12.1 to
the Registration Statement
FORM 10-K OR 10-Q ITEMS
----------------- -----
CAPTION
-------
"REVIEW OF THE Changes in total operating
FINANCIAL CONDITION revenues
AND RESULTS OF
OPERATIONS OF PP&L
RESOURCES, INC. AND
PENNSYLVANIA POWER &
LIGHT COMPANY" --
"Operating Revenues"
(or similar caption)
"REVIEW OF THE The Company's actual
FINANCIAL CONDITION construction expenditures
AND RESULTS OF during the year ended
OPERATIONS OF PP&L [last year ended] and
RESOURCES, INC. AND [prior year ended]
PENNSYLVANIA POWER &
LIGHT COMPANY"--
"Capital Expenditure
Requirements"
(or similar caption)
"SELECTED FINANCIAL The Company's times
AND OPERATING DATA OF interest earned before
PENNSYLVANIA POWER & income taxes for [last
LIGHT COMPANY" -- year ended] and [prior
"Financial Ratios" year ended]
(or similar caption)
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