EXHIBIT 1.1
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PP&L CAPITAL FUNDING, INC.
$ ___________
MEDIUM-TERM NOTES, SERIES [ ]
UNCONDITIONALLY GUARANTEED
AS TO PAYMENT OF PRINCIPAL, PREMIUM, IF ANY,
AND INTEREST BY PP&L RESOURCES, INC.
DISTRIBUTION AGREEMENT
_____________ ___, ________
[name]
[address]
[name]
[address]
[name]
[address]
[name]
[address]
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 [insert names of Agents] (each, an "Agent", and
collectively, the "Agents") with respect to the issue and sale by the Company of
its Medium-Term Notes, Series [ ] (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
November 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. 3,
dated as of _________ __, 1999 (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 $[ ] 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-_____-01) 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, as amended (the
"1934 Act"), prior to any acceptance by the Company of an offer for the purchase
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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 solicitation of offers to purchase a specified
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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
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to 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 to assist the Company
in obtaining performance by each purchaser whose offer for the purchase of Notes
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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
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purchased 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 "1939 Act Regulations"), and did not or will not contain an untrue
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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 under the laws of the State of Delaware with
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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 in all material respects to the statements relating thereto
contained in the Prospectus.
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(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 [Baa2] by ▇▇▇▇▇'▇
Investors Service, Inc. and [BBB+] 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.
(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
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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,
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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 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
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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.
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
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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 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
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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 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
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424(b) 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 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;0
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(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 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.
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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:
(a) The Agents shall have received from PricewaterhouseCoopers LLP a
letter, dated the date of this Agreement, in form and substance satisfactory to
you, to the effect that:
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(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 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;
16
(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 the date of the latest
available month end, there was any change in the common equity; (iv)
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 common stock or
preferred stock (with or without sinking fund requirements) (except
for changes in shares of certain series of preferred stock of a
17
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 (v)
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
18
Guarantor as may 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
the Guarantor;
(vi) The Indenture has been duly authorized, executed and delivered by
the Guarantor and, assuming due authorization, execution, and delivery by
19
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 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 enforceable in accordance with their terms, except to the
20
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 therein not misleading, or that the Prospectus or any
21
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
(x) The statements in the Prospectus, under the caption "Certain
United States Federal Income Tax Considerations" constitute an accurate
description, in general terms, of certain tax considerations that may be
relevant to a holder of a Note.
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
23
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 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
24
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 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
25
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 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 PricewaterhouseCoopers 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, PricewaterhouseCoopers 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 or ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ as counsel to the Agents.
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
26
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 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
27
thereof, or arises out of or is based upon the omission or alleged omission to
state therein any material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, and only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any such documents in reliance upon,
and in conformity with, written information furnished to the 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.
28
(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 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
29
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.
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,
30
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 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
31
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 "nationally
recognized statistical rating organization" (as defined for purposes of Rule
436(g) under the ▇▇▇▇ ▇▇▇) 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:
32
If to the Company or the Guarantor:
PP&L Resources, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to [name]:
[address]
Attention:
Facsimile:
With a copy in the case of [name]:
[address]
Attention:
Facsimile:
If to [name]:
[address]
Attention:
Facsimile:
If to [name]:
[address]
Attention:
Facsimile:
With a copy in the case
of [name]:
[address]
Attention:
Facsimile:
If to [name]:
[address]
Attention:
Facsimile:
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
33
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.
34
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:
35
The foregoing Distribution Agreement is hereby confirmed and accepted
as of the date first above written.
[NAME]
By:
---------------------------------
Name:
Title:
[NAME]
By:
---------------------------------
Name:
Title:
[NAME]
By:
---------------------------------
Name:
Title:
[NAME]
By:
---------------------------------
Name:
Title:
36
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
Exchange Rate Agent:
Authorized Denomination:
37
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
38
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.
39
SCHEDULE C
----------
PP&L CAPITAL FUNDING, INC.
ADMINISTRATIVE PROCEDURES
FOR FIXED RATE AND FLOATING RATE MEDIUM-TERM
NOTES, SERIES [ ]
(Dated as of _________ __, 1999)
Medium-Term Notes, Series C (the "Notes") in an aggregate principal
amount of up to $[_____________] are to be offered on a continuous basis by
PP&L Capital Funding, Inc., a Delaware corporation (the "Company"), to or
through [insert names of Agents] (each, an "Agent" and, collectively, the
"Agents") pursuant to a Distribution Agreement, dated _________ ____, (the
"Distribution Agreement"), by and among the Company, PP&L Resources, Inc. (the
"Guarantor") and the Agents. Each of the Notes is to be unconditionally
guaranteed as to payment of principal and any premium, and interest by the
Guarantor pursuant to guarantees of the Guarantor (the "Guarantees"). The
Distribution Agreement provides both for the sale of Notes by the Company to one
or more of the 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
related Agent or Agents), in which case each such Agent will act as an agent of
the Company in soliciting purchases of Notes.
Unless otherwise agreed by the related Agent or Agents and the
Company, Notes will be purchased by the related Agent or Agents as principal.
Such purchases will be made in accordance with the applicable Terms Agreement as
provided in the Distribution Agreement. If agreed upon by any Agent or Agents
and the Company, the Agent or Agents, acting solely as agent or agents for the
Company and not as principal, will use reasonable efforts to solicit offers to
purchase the Notes. Only those provisions in these Administrative Procedures
that are applicable to the particular role to be performed by the related Agent
or Agents shall apply to the offer and sale of the relevant Notes.
The Notes will be issued under an Indenture, dated as of November 1,
1997, as amended, supplemented or modified from time to time (the "Indenture"),
between the Company, the Guarantor and The Chase Manhattan Bank ("Chase"), as
40
trustee (together with any successor in such capacity, the "Trustee"). The
Company and the Guarantor have filed a joint Registration Statement with the
Securities and Exchange Commission (the "Commission") registering debt
securities, including the Notes and the Guarantees (the "Registration
Statement", which term shall include any additional registration statements
filed in connection with the Notes and the Guarantees). The most recent base
prospectus deemed part of the Registration Statement, as supplemented by a
Prospectus supplement relating to the Notes, is herein referred to as
"Prospectus". The most recent supplement to the Prospectus setting forth the
purchase price, interest rate or formula, maturity date and other terms of the
Notes (as applicable) is herein referred to as the "Pricing Supplement".
The Notes will either be issued (a) in book-entry form and represented
by one or more fully registered Notes without coupons (each, a "Global Note")
delivered to Chase, as agent for The Depository Company ("DTC"), and recorded in
the book-entry system maintained by DTC, or (b) in certificated form (each, a
"Certificated Note") delivered to the investor or other purchaser thereof or a
person designated by such investor or other purchaser.
General procedures relating to the issuance of all Notes are set forth
in Part I hereof. Additionally, Notes issued in book-entry form will be issued
in accordance with the procedures set forth in Part II hereof, as adjusted from
time to time in accordance with changes in DTC's operating requirements, and
Certificated Notes will be issued in accordance with the procedures set forth in
Part III hereof. To the extent any procedure set forth below conflicts with the
provisions of the Notes, the Indenture or the Distribution Agreement, the
relevant provisions of the Notes, the Indenture and the Distribution Agreement,
respectively, shall control. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed thereto in the Notes, the Indenture or
the Distribution Agreement as the case may be.
41
PART I: PROCEDURES OF GENERAL
APPLICABILITY
Date of Issuance/
Authentication: Each Note will be dated as of the date
of its authentication by the Trustee.
Each Note shall also bear an original
issue date (each, an "Original Issue
Date"). The Original Issue Date shall
remain the same for all Notes
subsequently issued upon transfer,
exchange or substitution of an original
Note regardless of their dates of
authentication.
Price to Public: Unless otherwise agreed to by the
Company and the Agents and specified in a
Pricing Supplement, each Note will be issued
at 100% of the principal amount thereof.
Maturities: Each Note will mature on a date from
nine months to 40 years from its Original
Issue Date (the "Stated Maturity Date")
selected by the investor or other purchaser
and agreed to by the Company.
Guarantees: Each of the Notes is to be
unconditionally guaranteed as to payment
of principal, premium, if any, and
interest pursuant to the Guarantees of
the Guarantor as set forth in the
Indenture.
Registration: Unless otherwise provided in the
applicable Pricing Supplement, Notes will be
issued only in fully registered form.
Denominations: Unless otherwise provided in the
applicable Pricing Supplement, the Notes
will be issued in denominations of
$1,000 and integral multiples thereof.
42
Interest Rate Bases
applicable to
Floating Rate
Notes: Unless otherwise provided in the
applicable Pricing Supplement, Floating
Rate Notes will bear interest at a rate
or rates determined by reference to the
CMT Rate, the Commercial Paper Rate, the
Federal Funds Rate, LIBOR, the Prime
Rate, the Treasury Rate, or such other
interest rate basis or formula as may be
set forth in applicable Pricing
Supplement, or by reference to two or
more such rates, as adjusted by the
Spread and/or Spread Multiplier, if any,
applicable to such Floating Rate Notes.
Redemption/
Repayment: The Notes will be subject to redemption
by the Company in accordance with the
terms of the Notes, which will be fixed
at the time of sale and set forth in the
applicable Pricing Supplement. If no
Initial Redemption Date is indicated
with respect to a Note, such Note will
not be redeemable prior to its Stated
Maturity Date.
The Notes will be subject to repayment at
the option of the Holders thereof in
accordance with the terms of the Notes,
which will be fixed at the time of sale and
set forth in the applicable Pricing
Supplement. If no Optional Repayment Date is
indicated with respect to a Note, such Note
will not be repayable at the option of the
Holder prior to its Stated Maturity Date.
Calculation of
Interest: In case of Fixed Rate Notes, interest
(including payments for partial periods)
will be calculated and paid on the basis
of a 360-day year of twelve 30-day
months.
The interest rate on each Floating Rate Note
will be calculated by reference to the
specified Interest Rate Basis or Bases plus
or minus the applicable Spread, if any,
43
and/or multiplied by the applicable Spread
Multiplier, if any.
Unless and until otherwise authorized by the
Guarantor and the Company and provided in
the applicable Pricing Supplement, the
interest rate on any Fixed Rate Note will
not exceed 8 1/2% per annum.
Unless otherwise provided in the applicable
Pricing Supplement, interest on each
Floating Rate Note will be calculated by
multiplying its principal amount by an
accrued interest factor. Such accrued
interest factor is computed by adding the
interest factor calculated for each day in
the period for which accrued interest is
being calculated. Unless otherwise provided
in the applicable Pricing Supplement, the
interest factor for each such day is
computed by dividing the interest rate
applicable to such day by 360 if the
Commercial Paper Rate, Federal Funds Rate,
LIBOR or Prime Rate is an applicable
Interest Rate Basis, or by the actual number
of days in the year if the CMT Rate or
Treasury Rate is an applicable Interest Rate
Basis. The interest factor for Notes for
which the interest rate is calculated with
reference to two or more Interest Rate Bases
will be calculated as provided in the
applicable Pricing Supplement.
Interest: General. Each Note will bear interest
-------
in accordance with its terms. Unless
otherwise provided in the applicable Pricing
Supplement, interest on each Note will
accrue from and including the Original Issue
Date of such Note for the first interest
period or from the most recent Interest
Payment Date (as defined below) to which
interest has been paid or duly provided for
all subsequent interest periods to but
excluding the next applicable Interest
Payment Date or the Stated Maturity Date or
date of earlier redemption or repayment, as
the case may be (the Stated Maturity Date or
44
date of earlier redemption or repayment is
referred to herein as the "Maturity Date"
with respect to the principal repayable on
such date).
If an Interest Payment Date or the Maturity
Date with respect to any Fixed Rate Note
falls on a day that is not a Business Day
(as defined below), the required payment to
be made on such day need not be made on such
day, but may be made on the next succeeding
Business Day with the same force and effect
as if made on such day, and no interest
shall accrue on such payment for the period
from and after such day to the next
succeeding Business Day. If an Interest
Payment Date other than the Maturity Date
with respect to any Floating Rate Note would
otherwise fall on 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
Note for which LIBOR is an applicable
Interest Rate Basis, if such Business Day
falls in the next succeeding calendar month,
such Interest Payment Date will be the
immediately preceding Business Day. If the
Maturity Date with respect to any Floating
Rate Note falls on a day that is not a
Business Day, the required payment to be
made on such day need not be made on such
day, but may be made on the next succeeding
Business Day with the same force and effect
as if made on such day, and no interest
shall accrue on such payment for the period
from and after the Maturity Date to the next
succeeding Business Day. Unless otherwise
provided in the applicable Pricing
Supplement, "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;
provided that, with respect to Notes for
which LIBOR is an applicable Interest Rate
45
Basis, such day is also a London Business
Day (as defined below). "London Business
Day" means any day on which dealings in
deposits in United States Dollars are
transacted in the London interbank market.
Regular Record Dates. Unless otherwise
--------------------
provided in the applicable Pricing
Supplement, the "Regular Record Date" for a
Fixed Rate Note shall be the January 31 or
July 31 immediately preceding the applicable
Interest Payment Date and the "Regular
Record Date" for a Floating Rate Note shall
be the date 15 calendar days (whether or not
a Business Day) preceding the applicable
Interest Payment Date.
Interest Payment Dates. Interest payments
----------------------
will be made on each Interest Payment Date
commencing with the first Interest Payment
Date following the Original Issue Date;
provided, however, the first payment of
interest on any Note originally issued
between a Regular Record Date and an
Interest Payment Date will occur on the
Interest Payment Date following the next
succeeding Regular Record Date.
Unless otherwise provided in the applicable
Pricing Supplement, interest payments on
Fixed Rate Notes will be made semiannually
in arrears on February 15 and August 15 of
each year and on the Maturity Date, while
interest payments on Floating Rate Notes
will be made as specified in the Prospectus
and the applicable Pricing Supplement.
Acceptance and
Rejection of
Offers from
Solicitation
as Agents: If agreed upon by any Agent and the
Company, then such Agent acting solely
as agent for the Company and not as
principal will solicit purchases of the
Notes. Each Agent will communicate to
46
the Company, orally or in writing, each
reasonable offer to purchase Notes solicited
by such Agent on an agency basis, other than
those offers rejected by such Agent. Each
Agent has the right, in its discretion
reasonably exercised, to reject any proposed
purchase of Notes, as a whole or in part,
and any such rejection shall not be a breach
of such Agent's agreement contained in the
Distribution Agreement. The Company has the
sole right to accept or reject any proposed
purchase of Notes, in whole or in part, and
any such rejection shall not be a breach of
the Company's agreement contained in the
Distribution Agreement. Each Agent has
agreed to make reasonable efforts to assist
the Company in obtaining performance by each
purchaser whose offer to purchase Notes has
been solicited by such Agent and accepted by
the Company.
Preparation of
Pricing
Supplement: If any offer to purchase a Note is
accepted by the Company, the Company and
the Guarantor will promptly prepare a
Pricing Supplement reflecting the terms
of such Note. Information to be
included in the Pricing Supplement shall
include:
1. the name of the Company and the
name of the Guarantor;
2. the title of the Notes;
3. the date of the Pricing Supplement
and the date of the Prospectus to
which the Pricing Supplement
relates;
4. the name of the Offering Agent (as
defined below);
5. whether such Notes are being sold to
the Offering Agent as principal or
to an investor or other purchaser
47
through the Offering Agent acting as
agent for the Company;
6. with respect to Notes sold to the
Offering Agent as principal,
whether such Notes will be resold
by the Offering Agent to investors
and other purchasers at (i) a fixed
public offering price of 100% of
their principal amount or at (ii)
varying prices related to
prevailing market prices at the
time of resale to be determined by
the Offering Agent;
7. the Offering Agent's discount or
commission;
8. Net proceeds to the Company;
9. the Principal Amount, Original
Issue Date, Stated Maturity Date,
Interest Payment Date(s), Initial
Redemption Date, if any, Initial
Redemption Percentage, if any,
Annual Redemption Percentage
Reduction, if any, Optional
Repayment Date(s), if any, and, in
the case of Fixed Rate Notes, the
Interest Rate, and, in the case of
Floating Rate Notes, the Interest
Rate Basis or Bases, the Day Count
Convention, Index Maturity (if
applicable), Initial Interest Rate,
if any, Maximum Interest Rate, if
any, Minimum Interest Rate, if any,
Initial Interest Reset Date,
Interest Reset Dates, Spread and/or
Spread Multiplier, if any, and
Calculation Agent; and
10. any other additional provisions of
the Notes material to investors or
other purchasers of the Notes not
otherwise specified in the
Prospectus.
The Company shall endeavor to send such
Pricing Supplement by telecopy or overnight
express (for delivery by the close of
business on the applicable trade date, but
48
in no event later than 11:00 A.M. New York
City time, on the Business Day following the
applicable trade date) to the Agent which
made or presented the offer to purchase the
applicable Note (in such capacity, the
"Offering Agent") and the Trustee at the
following applicable address: if to [name],
to: [address] Attention: [name/phone],
telecopier [fax]; if to [name], to:
[address], Attention: [name/phone],
telecopier: [fax]; if to [name], to
[address], Attention: [name], telecopier:
[fax]; and if to [name], to: [address],
Attention: [name]; telecopier: [fax]; and if
to the Trustee (or Chase), to: ▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Corporate Trustee Administration, (212)
946-3487, telecopier: (▇▇▇) ▇▇▇-▇▇▇▇. For
record keeping purposes, one copy of such
Pricing Supplement shall also be mailed or
telecopied to [name/address] Attention:
[name/phone], telecopier: [fax], with a
copy, to each of ▇▇▇▇▇▇ ▇▇▇▇ & Priest, LLP,
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
and ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇., Esq.
In each instance that a Pricing Supplement
is prepared, the Offering Agent will provide
a copy of such Pric ing Supplement to each
investor or purchaser of the relevant Notes
or its agent. Pursuant to Rule 434 of the
Securities Act of 1933, as amended ("Rule
434"), the Pricing Supplement may be
delivered separately from the Prospectus.
Outdated Pricing Supplements (other than
those retained for files) will be destroyed.
Settlement: The receipt of immediately available
funds by the Company in payment for a
Note and the authentication and delivery
of such Note shall, with respect to such
Note, constitute "settlement". Offers
accepted by the Company will be settled
49
in three Business Days, or at such time as
the purchaser, the applicable Agent and the
Company shall agree, pursuant to the
timetable for settlement set forth in Parts
II and III hereof under "Settlement
Procedure Timetable" with respect to Global
Notes and Certificated Notes, respectively
(each such date fixed for settlement is
hereinafter referred to as a "Settlement
Date"). If procedures A and B of the
applicable Settlement Procedures with
respect to a particular offer are not
completed on or before the time set forth
under the applicable "Settlement Procedures
Timetable", such offer shall not be settled
until the Business Day following the
completion of settlement procedures A and B
or such later date as the purchaser and the
Company shall agree.
The foregoing settlement procedures may be
modified with respect to any purchase of
Notes by an Agent as principal if so agreed
by the Company and such Agent.
Procedure for
Changing Rates
or Other
Variable Terms: When a decision has been reached to
change the interest rate or any other
variable term on any Notes being sold by
the Company, the Company will promptly
advise the Agents and the Trustee by
facsimile transmission and the Agents
will forthwith suspend solicitation of
offers to purchase such Notes. The
Agents will telephone the Company with
recommendations as to the changed
interest rates or other variable terms.
At such time as the Company notifies the
Agents and the Trustee of the new
interest rates or other variable terms,
the Agents may resume solicitation of
offers to purchase such Notes. Until
such time, only "indications of
interest" may be recorded. Immediately
after acceptance by the Company of an
offer to purchase Notes at a new
interest rate or new variable term, the
Company, the Offering Agent and the Trustee
50
shall follow the procedures set forth under
the applicable "Settlement Procedures".
Suspension of
Solicitation;
Amendment or
Supplement: The Company may instruct the Agents to
suspend solicitation of offers to
purchase Notes at any time. Upon
receipt of such instructions, the Agents
will forthwith suspend solicitation of
offers to purchase from the Company
until such time as the Company has
advised the Agents that solicitation of
offers to purchase may be resumed. If
the Company or the Guarantor decides to
amend or supplement the Registration
Statement or the Prospectus (other than
to establish or change interest rates or
formulas, maturities, prices or other
similar variable terms with respect to
the Notes), it will promptly advise the
Agents and will furnish the Agents and
their counsel with copies of the
proposed amendment or supplement.
Copies of such amendment or supplement
will be delivered or mailed to the
Agents, their counsel and the Trustee in
quantities which such parties may
reasonably request at the following
respective addresses: [name/address],
Attention: [name/phone], telecopier
[fax]; [name/address], Attention:
[name/phone], telecopier: [fax];
[name/address], Attention: [name],
telecopier: [fax]; [name/address],
Attention: [name/phone];
telecopier: [fax]; and [name/address],
Attention: [name/phone];
telecopier: [fax]; and if to the Trustee
(or Chase), to: ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Corporate Trustee Administration, (212)
946-3487, telecopier: (▇▇▇) ▇▇▇-▇▇▇▇.
For record keeping purposes, one copy of
each such amendment or supplement shall
also be mailed or telecopied to each of
▇▇▇▇▇▇ ▇▇▇▇ & Priest LLP, ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
51
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, and
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq., (212) 558-
3812, telecopier: (▇▇▇) ▇▇▇-▇▇▇▇.
In the event that at the time the
solicitation of offers to purchase from the
Company is suspended (other than to
establish or change interest rates or
formulas, maturities, prices or other
similar variable terms with respect to the
Notes) there shall be any offers to purchase
Notes that have been accepted by the Company
which have not been settled, the Company
will promptly advise the Offering Agent and
the Trustee whether such offers may be
settled and whether copies of the Prospectus
as theretofore amended and/or supplemented
as in effect at the time of the suspension
may be delivered in connection with the
settlement of such offers. The Company will
have the sole responsibility for such
decision and for any arrangements which may
be made in the event that the Company
determines that such offers may not be
settled or that copies of such Prospectus
may not be so delivered.
Delivery of
Prospectus and
applicable
Pricing
Supplement: A copy of the most recent Prospectus and
the applicable Pricing Supplement, which
pursuant to Rule 434 may be delivered
separately from the Prospectus, must
accompany or precede the earlier of (a)
the written confirmation of a sale sent
to an investor or other purchaser or its
agent and (b) the delivery of Notes to
an investor or other purchaser or its
agent.
52
Authenticity of
Signatures: The Agents will have no obligation or
liability to the Company, the Guarantor
or the Trustee in respect of the
authenticity of the signature of any
officer, employee or agent of the
Company, the Guarantor or the Trustee on
any Note or Guarantee.
Documents
Incorporated by
Reference: The Company shall supply the Agents with
an adequate supply of all documents
incorporated by reference in the
Registration Statement and the
Prospectus.
53
PART II: PROCEDURES FOR NOTES ISSUED
IN BOOK-ENTRY FORM
In connection with the qualification of Notes issued in book-entry
form for eligibility in the book-entry system maintained by DTC, Chase will
perform the custodial, document control and administrative functions described
below, in accordance with its respective obligations under a Bring-Down Letter
of Representations from the Company, the Guarantor and the Trustee to DTC, dated
_________ __, and a Certificate Agreement, dated December 2, 1988, between Chase
and DTC, as amended (the "Certificate Agreement"), and its obligations as a
participant in DTC, including DTC's Same-Day Funds Settlement System ("SDFS").
Issuance: All Fixed Rate Notes issued in book-
entry form having the same Original
Issue Date, Interest Rate, Interest
Payment Dates, redemption and/or
repayment terms, if any, and Stated
Maturity Date (collectively, the "Fixed
Rate Terms") will be represented
initially by a single Global Note; and
all Floating Rate Notes issued in book-
entry form having the same Original
Issue Date, formula for the calculation
of interest (including the Interest Rate
Basis or Bases, which may be the CMT
Rate, the Commercial Paper Rate, the
Federal Funds Rate, LIBOR, the Prime
Rate or the Treasury Rate or any other
interest rate basis or formula, and
Spread and/or Spread Multiplier, if
any), Day Count Convention, Initial
Interest Rate, Index Maturity (if
applicable), Minimum Interest Rate, if
any, Maximum Interest Rate, if any,
redemption and/or repayment terms, if
any, Interest Payment Dates, Initial
Interest Reset Date, Interest Reset
Dates and Stated Maturity
Date(collectively, the "Floating Rate
Terms") will be represented initially by
a single Global Note.
For other variable terms with respect to
the Fixed Rate Notes and Floating Rate
54
Notes, see the Prospectus and the applicable
Pricing Supplement.
Owners of beneficial interests in Global
Notes will be entitled to physical delivery
of Certificated Notes equal in principal
amount to their respective beneficial
interests only upon certain limited
circumstances described in the Prospectus.
Identification: The Company has arranged with the CUSIP
Service Bureau of Standard & Poor's
Corporation (the "CUSIP Service Bureau")
for the reservation of one series of
CUSIP numbers, which series consists of
approximately 900 CUSIP numbers which
have been reserved for and relating to
Global Notes, and the Company has
delivered to each of Chase and DTC such
list of such CUSIP numbers. Chase will
assign CUSIP numbers to Global Notes as
described below under Settlement
Procedures B. DTC will notify the CUSIP
Service Bureau periodically of the CUSIP
numbers that Chase has assigned to
Global Notes. Chase will notify the
Company at any time when fewer than 100
of the reserved CUSIP numbers remain
unassigned to Global Notes, and, if it
deems necessary, the Company will
reserve and obtain additional CUSIP
numbers for assignment to Global Notes.
Upon obtaining such additional CUSIP
numbers, the Company will deliver a list
of such additional numbers to Chase and
DTC. Notes issued in book-entry form in
excess of $200,000,000 aggregate
principal amount and otherwise required
to be represented by the same Global
Note will instead be represented by two
or more Global Notes which shall all be
assigned the same CUSIP number.
55
Registration: Unless otherwise specified by DTC, each
Global Note will be registered in the
name of Cede & Co., as nominee for DTC,
on the register maintained by Chase
under the Indenture. The beneficial
owner of a Note issued in book-entry
form (i.e., an owner of a beneficial
interest in a Global Note) (or one or
more indirect participants in DTC
designated by such owner) will designate
one or more participants in DTC (with
respect to such Note issued in book-
entry form, the "Participants") to act
as agent for such beneficial owner in
connection with the book-entry system
maintained by DTC, and DTC will record
in book-entry form, in accordance with
instructions provided by such
Participants, a credit balance with
respect to such Note issued in book-
entry form in the account of such
Participants. The ownership interest of
such beneficial owner in such Note
issued in book-entry form will be
recorded through the records of such
Participants or through the separate
records of such Participants and one or
more indirect participants in DTC.
Transfers: Transfers of beneficial ownership
interests in a Global Note will be
accomplished by book entries made by DTC
and, in turn, by Participants (and in
certain cases, one or more indirect
participants in DTC) acting on behalf of
beneficial transferors and transferees
of such Global Note.
Exchanges: Chase may deliver to DTC and the CUSIP
Service Bureau at any time a written
notice specifying (a) the CUSIP numbers
of two or more Global Notes outstanding
on such date that represent Global Notes
having the same Fixed Rate Terms or
Floating Rate Terms, as the case may be
(other than Original Issue Dates), and
for which interest has been paid to the same
56
date; (b) a date, occurring at least 30 days
after such written notice is delivered and
at least 30 days before the next Interest
Payment Date for the related Notes issued in
book-entry form, on which such Global Notes
shall be exchanged for a single replacement
Global Note; and (c) a new CUSIP number,
obtained from the Company, to be assigned to
such replacement Global Note. Upon receipt
of such a notice, DTC will send to its
Participants (including Chase) a written
reorganization notice to the effect that
such exchange will occur on such date. Prior
to the specified exchange date, Chase will
deliver to the CUSIP Service Bureau written
notice setting forth such exchange date and
the new CUSIP number and stating that, as of
such exchange date, the CUSIP numbers of the
Global Notes to be exchanged will no longer
be valid. On the specified exchange date,
Chase will exchange such Global Notes for a
single Global Note bearing the new CUSIP
number and the CUSIP numbers of the
exchanged Notes will, in accordance with
CUSIP Service Bureau procedures, be canceled
and not immediately reassigned.
Notwithstanding the foregoing, if the Global
Notes to be exchanged exceed $200,000,000 in
aggregate principal amount, one replacement
Note will be authenticated and issued to
represent each $200,000,000 in aggregate
principal amount of the exchanged Global
Notes and an additional Global Note or Notes
will be authenticated and issued to
represent any remaining principal amount of
such Global Notes (See "Denominations"
below).
Denominations: Unless otherwise provided in the
applicable Pricing Supplement, Notes
issued in book-entry form will be issued
in denominations of $1,000 and integral
multiples thereof. Global Notes will
57
not be denominated in excess of $200,000,000
aggregate principal amount. If one or more
Notes are issued in book-entry form in
excess of $200,000,000 aggregate principal
amount and would, but for the preceding
sentence, be represented by a single Global
Note, then one Global Note will be issued to
represent each $200,000,000 in aggregate
principal amount of such Notes issued in
book-entry form and an additional Global
Note or Notes will be issued to represent
any remaining aggregate principal amount of
such Note or Notes issued in book-entry
form. In such a case, each of the Global
Notes representing Notes issued in
book-entry form shall be assigned the same
CUSIP number.
Payments of
Principal
and Interest: Payments of Interest Only. Promptly
-------------------------
after each Regular Record Date, Chase
will deliver to the Company and DTC a
written notice specifying by CUSIP
number the amount of interest to be paid
(to the extent known) on each Global
Note on the following Interest Payment
Date (other than an Interest Payment
Date coinciding with the Maturity Date)
and the total of such amounts. DTC will
confirm the amount payable on each
Global Note on such Interest Payment
Date by reference to the appropriate
(daily or weekly) bond reports published
by Standard & Poor's Corporation. On
such Interest Payment Date, the Company
will pay to Chase in immediately
available funds an amount sufficient to
pay the interest then due and owing on
the Global Notes, and upon receipt of
such funds from the Company, Chase in
turn will pay to DTC such total amount
of interest due on such Global Notes
(other than on the Maturity Date) at the
58
times and in the manner set forth below
under "Manner of Payment".
Notice of Interest Rates. Promptly after
------------------------
each Interest Determination Date or
Calculation Date, as the case may be, for
Floating Rate Notes issued in book-entry
form, Chase will notify each of ▇▇▇▇▇'▇
Investors Service, Inc. and Standard &
Poor's Corporation of the interest rates
determined as of such Interest Determination
Date.
Payments at Maturity. On or about the first
--------------------
Business Day of each month, Chase will
deliver to the Company and DTC a written
list of principal, premium, if any, and
interest (to the extent known) to be paid on
each Global Note maturing or otherwise
becoming due in the following month. Chase,
the Company and DTC will confirm the amounts
of such principal, premium, if any, and
interest payments with respect to each such
Global Note on or about the fifth Business
Day preceding the Maturity Date of such
Global Note. On the Maturity Date, the
Company will pay to Chase in immediately
available funds an amount sufficient to make
the required payments, and upon receipt of
such funds Chase in turn will pay to DTC the
principal amount of Global Notes, together
with premium, if any, and interest due on
the Maturity Date, at the times and in the
manner set forth below under "Manner of
Payment". Promptly after payment to DTC of
the principal, premium, if any, and interest
due on the Maturity Date of such Global
Note, the Trustee will cancel such Global
Note and deliver it to the Company with an
appropriate debit advice. On the first
Business Day of each month, the Trustee will
deliver to the Company a written statement
indicating the total principal amount of
outstanding Global Notes as of the close of
59
business on the immediately preceding
Business Day.
Manner of Payment. The total amount of any
-----------------
principal, premium, if any, and interest due
on Global Notes on any Interest Payment Date
or the Maturity Date, as the case may be,
shall be paid by the Company to Chase in
funds available for use by the Trustee no
later than 10:00 A.M., New York City time,
on such date. The Company will make such
payment on such Global Notes to an account
specified by Chase. Upon receipt of such
funds, Chase will pay by separate wire
transfer (using Fedwire message entry
instructions in a form previously specified
by DTC) to an account at the Federal Reserve
Bank of New York previously specified by
DTC, in funds available for immediate use by
DTC, each payment of principal, premium, if
any, and interest due on Global Notes on
such date. Thereafter on such date, DTC will
pay, in accordance with its SDFS operating
procedures then in effect, such amounts in
funds available for immediate use to the
respective Participants in whose names the
beneficial interests in such Global Notes
are recorded in the book-entry system
maintained by DTC. Neither the Company, the
Guarantor nor Chase shall have any
responsibility or liability for the payment
by DTC of the principal of, or premium, if
any, or interest on, the Global Notes.
Withholding Taxes. The amount of any taxes
-----------------
required under applicable law to be withheld
from any interest payment on a Global Note
will be determined and withheld by the
Participant, indirect participant in DTC or
other Person responsible for forwarding
payments and materials directly to the
beneficial owner of such Global Note.
60
Settlement
Procedures: Settlement Procedures with regard to
each Note in book-entry form sold by an
Agent, as agent of the Company, or
purchased by an Agent, as principal,
will be as follows:
A. The Offering Agent will advise the
Company by telephone, confirmed by
facsimile, of the following
settlement information:
1. Principal amount and
Authorized Denomination.
2. (a) Fixed Interest Notes:
(i) Interest Rate.
(ii) Interest Payment Dates.
(b) Floating Rate Notes:
(i) Whether such Note is a
Regular Floating Rate
Note, Inverse Floating
Rate Note or Floating
Rate/Fixed Rate Note.
(ii) Interest Rate Basis or
Bases.
(iii) Initial Interest Rate.
(iv) Spread and/or Spread
Multiplier, if any.
(v) Initial Interest Reset
Date and Interest Reset
Dates.
(vi) Interest Payment Dates.
(vii) Index Maturity, if any.
(viii) Maximum and/or
Minimum Interest
Rates, if any.
61
(ix) Day Count Convention.
(x) Calculation Agent.
(xi) Fixed Rate
Commencement Date, if
any, and Fixed
Interest Rate, if any.
(xii) Other terms, if any.
4. Price to public, if any, of
such Note (or whether such
Note is being offered at
varying prices relating to
prevailing market prices at
time of resale as
determined by the Offering
Agent).
5. Trade Date.
6. Settlement Date (Original
Issue Date).
7. Stated Maturity Date.
8. Redemption provisions, if
any.
9. Repayment provisions, if
any.
10. Net proceeds to the
Company.
11. The Offering Agent's
discount or commission.
12. Whether such Note is being
sold to the Offering Agent
as principal or to an
investor or other purchaser
through the Offering Agent
acting as agent for the
Company.
13. Such other information
specified with respect to
such Note (whether by
Addendum or otherwise).
62
B. The Company will advise Chase by
facsimile transmission or other
electronic transmission of the
above settlement information
received from the Offering Agent,
and the name of the Offering Agent.
Chase will assign a CUSIP number to
the Global Note representing such
Note. Chase will also advise the
Offering Agent of the CUSIP number
assigned to the Global Note.
C. The Company will transmit to the
Trustee by telex or facsimile its
written request for the
authentication and delivery of such
Global Note and the name of such
Agent. Each such request by the
Company shall constitute a
representation and warranty by the
Company to the Trustee that (i) the
Global Note representing such Book-
Entry Note is then, and at the time
of issuance and sale thereof will
be, duly authorized for issuance
and sale by the Company, (ii) the
Global Note representing such Book-
Entry Note will conform to the
terms of the Indenture, (iii) such
Global Note, when completed,
authenticated and delivered
pursuant to the Indenture, will
constitute the valid and legally
binding obligation of the Company,
and (iv) upon authentication and
delivery of such Global Note, the
aggregate principal amount of all
Notes initially offered and issued
under the Indenture will not exceed
$[_____________] (except for Notes
represented by and authenticated
and delivered in exchange for or in
lieu of Notes in accordance with
the Indenture).
Chase will communicate to DTC and
the Offering Agent through DTC's
63
Participant Terminal System a
pending deposit message specifying
the following settlement
information:
1. The information set forth in
the Settlement Procedure A.
2. Identification numbers of
the participant accounts
maintained by DTC on behalf
of the Trustee and the
Offering Agent.
3. Identification of the Global
Note as a Fixed Rate Global
Note or Floating Rate Global
Note.
4. Initial Interest Payment Date
for such Note, number of days
by which such date succeeds
the related record date for
DTC purposes (or, in the case
of Floating Rate Notes which
reset daily or weekly, the
date five calendar days
preceding the Interest Payment
Date) and, if then calculable,
the amount of interest payable
on such Interest Payment Date
(which amount shall have been
confirmed by Chase).
5. CUSIP number of the Global
Note representing such
Note.
6. Whether such Global Note
represents any other Notes
issued or to be issued in
book-entry form.
DTC will arrange for each pending
deposit message described above to
be transmitted to Standard & Poor's
Corporation, which will use the
64
information in the message to
include certain terms of the related
Global Note in the appropriate daily
bond report published by Standard &
Poor's Corporation.
▇. ▇▇▇▇▇ will complete the Global Note
and send a copy thereof by facsimile
to the Company for verification.
In the event any Note is incorrectly
prepared, Chase shall promptly
prepare a corrected Note in exchange
for such incorrectly prepared Note.
Chase will authenticate the Global
Note representing such Note.
E. DTC will credit such Note to the
participant account of Chase
maintained by DTC.
▇. ▇▇▇▇▇ will enter an SDFS deliver
order through DTC's Participant
Terminal System instructing DTC (i)
to debit such Note to Chase's
participant account and credit such
Note to Chase's participant account
of the Offering Agent maintained by
DTC and (ii) to debit the
settlement account of the Offering
Agent and credit the settlement
account of Chase maintained by DTC,
in an amount equal to the price of
such Note less such Offering
Agent's discount or underwriting
commission, as applicable. Any
entry of such a deliver order shall
be deemed to constitute a
representation and warranty by
Chase to DTC that (i) the Global
Note representing such Note has
been issued and authenticated and
(ii) Chase is holding such Global
65
Note pursuant to the Certificate
Agreement.
G. In the case of Notes in book-entry
form sold through the Offering
Agent, as agent, the Offering Agent
will enter an SDFS deliver order
through DTC's Participant Terminal
System instructing DTC (i) to debit
such Note to the Offering Agent's
participant account and credit such
Note to the participant account of
the Participants maintained by DTC
and (ii) to debit the settlement
accounts of such Participants and
credit the settlement account of
the Offering Agent maintained by
DTC in an amount equal to the
initial public offering price of
such Note.
H. Transfers of funds in accordance
with SDFS deliver orders described
in Settlement Procedures F and G
will be settled in accordance with
SDFS operating procedures in effect
on the Settlement Date.
I. Upon receipt, Chase will pay the
Company, by wire transfer of
immediately available funds to an
account specified by the Company to
Chase from time to time, the amount
transferred to Chase in accordance
with Settlement Procedure ▇.
▇. ▇▇▇▇▇ will send a copy of the
Global Note by telecopy to the
Company together with a statement
setting forth the principal amount
of Notes Outstanding as of the
related Settlement Date after
giving effect to such transaction
and all other offers to purchase
Notes of which the Company has
advised Chase but which have not
yet been settled.
66
K. If such Note was sold through the
Offering Agent, as agent, the
Offering Agent will confirm the
purchase of such Note to the
investor or other purchaser either
by transmitting to the Participant
with respect to such Note a
confirmation order through DTC's
Participant Terminal System or by
mailing a written confirmation to
such investor or other purchaser.
Settlement
Procedures
Timetable: For offers to purchase Notes accepted by
the Company, Settlement Procedures A
through K set forth above shall be com
pleted as soon as possible following the
trade but not later than the respective
times (New York City time) set forth
below:
SETTLEMENT
PROCEDURE TIME
---------- ----
A 11:00 A.M. on the trade
date or within one hour
following the trade
B 12:00 noon on the trade
date or within one hour
following the trade
C No later than the close of
business on the trade date
D 9:00 A.M. on Settlement
Date
E 10:00 A.M. on Settlement
Date
F-G No later than 2:00 P.M. on
Settlement Date
H 4:00 P.M. on Settlement
Date
I-K 5:00 P.M. on Settlement
Date
Settlement Procedure H is subject to
extension in accordance with any
67
extension of Fedwire closing deadlines and
in the other events specified in the SDFS
operating procedures in effect on the
Settlement Date.
If settlement of a Note issued in book-entry
form is rescheduled or canceled, Chase will
deliver to DTC, through DTC's Participant
Terminal System, a cancellation message to
such effect by no later than 5:00 P.M., New
York City time, on the Business Day
immediately preceding the scheduled
Settlement Date.
Failure to Settle: If Chase fails to enter an SDFS deliver
order with respect to a Note issued in
book-entry form pursuant to Settlement
Procedure F, Chase may deliver to DTC,
through DTC's Participant Terminal
System, as soon as practicable, a
withdrawal message instructing DTC to
debit such Note to the participant
account of Chase maintained at DTC. DTC
will process the withdrawal message,
provided that such participant account
contains a principal amount of the
Global Note representing such Note that
is at least equal to the principal
amount to be debited. If withdrawal
messages are processed with respect to
all the Notes represented by a Global
Note, the Trustee will ▇▇▇▇ such Global
Note "canceled", make appropriate
entries in its records and send
certification of destruction of such
canceled Global Note to the Company.
The CUSIP number assigned to such Global
Note shall, in accordance with CUSIP
Service Bureau procedures, be canceled
and not immediately reassigned. If
withdrawal messages are processed with
respect to a portion of the Notes
represented by a Global Note, Chase will
exchange such Global Note for two Global
Notes, one of which shall represent the
Global Notes for which withdrawal
messages are processed and shall be
68
canceled immediately after issuance and the
other of which shall represent the other
Notes previously represented by the
surrendered Global Note and shall bear the
CUSIP number of the surrendered Global Note.
In the case of any Note in book-entry form
sold through the Offering Agent, as agent,
if the purchase price for any such Note is
not timely paid to the Participants with
respect thereto by the beneficial investor
or other purchaser thereof (or a person,
including an indirect participant in DTC,
acting on behalf of such investor or other
purchaser), such Participants and, in turn,
the related Offering Agent may enter SDFS
deliver orders through DTC's Participant
Terminal System reversing the orders entered
pursuant to Settlement Procedures F and G,
respectively. Thereafter, Chase will deliver
the withdrawal message and take the related
actions described in the preceding
paragraph. If such failure shall have
occurred for any reason other than default
by the applicable Offering Agent to perform
its obligations hereunder or under the
Distribution Agreement, the Company will
reimburse such Offering Agent on an
equitable basis for its reasonable loss of
the use of funds during the period when the
funds were credited to the account of the
Company.
Notwithstanding the foregoing, upon any
failure to settle with respect to a Note in
book-entry form, DTC may take any actions in
accordance with its SDFS operating
procedures then in effect. In the event of a
failure to settle with respect to a Note
that was to have been represented by a
Global Note also representing other Notes,
the Trustee will provide, in accordance with
69
Settlement Procedure D, for the
authentication and issuance of a Global Note
representing such remaining Notes and will
make appropriate entries in its
records.
70
PART III: PROCEDURES FOR CERTIFICATED NOTES
Denominations: Unless otherwise provided in the
applicable Pricing Supplement, the
Certificated Notes will be issued in
denominations of $1,000 and integral
multiples thereof.
Payments of
Principal,
Premium, if any,
and Interest: Upon presentment and delivery of the
Certificated Note, Chase upon receipt of
immediately available funds from the
Company will pay the principal of,
premium, if any, and interest on, each
Certificated Note on the Maturity Date
in immediately available funds. All
interest payments on a Certificated
Note, other than interest due on the
Maturity Date, will be made by check
mailed to the address of the person
entitled thereto as such address shall
appear in the Security Register;
provided, however, that registered
Holders of $10,000,000 or more in
aggregate principal amount of
Certificated Notes (whether having
identical or different terms and
provisions) shall be entitled to receive
such interest payments by wire transfer
of immediately available funds if
appropriate wire transfer instructions
have been received in writing by Chase
not less than 15 calendar days prior to
the applicable Interest Payment Date.
Chase will provide monthly to the Company a
list of the principal, premium, if any, and
interest (to the extent known) to be paid on
Certificated Notes maturing in the next
succeeding month. Chase will be responsible
for withholding taxes on interest paid as
required by applicable law.
71
Certificated Notes presented to Chase on the
Maturity Date for payment will be canceled
by the Trustee. All canceled Certificated
Notes held by the Trustee shall be disposed
of by the Trustee in accordance with its
customary procedures, and the Trustee shall
furnish to the Company a certificate with
respect to such disposition.
Settlement
Procedures: Settlement Procedures with regard to
each Certificated Note purchased by an
Agent, as principal, or through an
Agent, as agent, shall be as follows:
A. The Offering Agent will advise the
Company by telephone (and confirm
in writing by facsimile) of the
following Settlement information
with regard to each Certificated
Note:
1. Exact name in which the
Certificated Note(s) is to
be registered (the
"Registered Owner").
2. Exact address or addresses
of the Registered Owner for
delivery, notices and
payments of principal,
premium, if any, and
interest.
3. Taxpayer identification
number of the Registered
Owner.
4. Principal amount and
Authorized Denomination.
5. (a) Fixed Rate Notes:
(i) Interest Rate.
(ii) Interest Payment
Dates.
72
(b) Floating Rate Notes:
(i) Whether such Note
is a Regular
Floating Rate
Note, Inverse
Floating Rate
Note or Floating
Rate/Fixed Rate
Note.
(ii) Interest Rate
Basis or Bases.
(iii) Initial Interest
Rate.
(iv) Spread and/or
Spread Multiplier
if any.
(v) Initial Interest
Reset Date and
Interest Reset
Dates.
(vi) Interest Payment
Dates.
(vii) Index Maturity,
if any.
(viii) Maximum and/or
Minimum Interest
Rates, if any.
(ix) Day Count
Convention.
(x) Calculation Agent
(xi) Fixed Rate
Commencement
Date, if any, and
Fixed Interest
Rate, if any.
(xii) Other terms,
if any.
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6. Price to public of such
Certificated Note (or
whether such Note is being
offered at varying prices
relating to prevailing
market prices at time of
resale as determined by
the Offering Agent).
7. Trade Date.
8. Settlement Date
(Original Issue Date).
9. Stated Maturity Date.
10. Redemption provisions,
if any.
11. Repayment provisions,
if any.
12. Net proceeds to the
Company.
13. The Offering Agent's
discount or commission.
14. Whether such Note is being
sold to the Offering Agent
as principal or to an
investor or other purchaser
through the Offering Agent
acting as agent for the
Company.
15. Such other information
specified with respect to
such Note (whether by
Addendum or otherwise).
B. After receiving such settlement
information from the Offering Agent,
74
the Company will advise Chase of the
above settlement information by
facsimile transmission confirmed by
telephone. The Company will transmit
to the Trustee by telex or facsimile
its written request for the
authentication and delivery of such
Certificated Note and the name of
such Agent. Each such request by
the Company shall constitute a
representation and warranty by the
Company to the Trustee that (i) the
Certificated Note is then, and at
the time of issuance and sale
thereof will be, duly authorized for
issuance and sale by the Company,
(ii) the Certificated Note will
conform with the terms of the
Indenture, (iii) such Certificated
Note, when completed, authenticated
and delivered pursuant to the
Indenture, will constitute the
valid and legally binding obligation
of the Company, and (iv) upon
authentication and delivery of such
Certificated Note, the aggregate
principal amount of all Notes
initially offered and issued under
the Indenture will not exceed $[ ]
(except for Notes represented by
and authenticated and delivered
in exchange for or in lieu of Notes
in accordance with the Indenture).
▇. ▇▇▇▇▇ will complete the Certificated
Note and send a copy thereof by
facsimile to the Company for
verification.
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In the event any Note is incorrectly
prepared, Chase shall promptly
prepare a corrected Note in exchange
for such incorrectly prepared Note.
The Trustee will authenticate the
Certificated Note in the form
approved by the Company and the
Offering Agent, and will make three
copies thereof (herein called "Stub
1", "Stub 2" and "Stub 3"):
1. Certificated Note with the
Offering Agent's
confirmation, if traded on
a principal basis, or the
Offering Agent's customer
confirmation, if traded on
an agency basis.
2. Stub 1 for Trustee.
3. Stub 2 for Offering Agent.
4. Stub 3 for the Company.
D. With respect to each trade, the
Trustee will deliver the
Certificated Note and Stub 2
thereof to the Offering Agent at
the following applicable address:
[name/address], Attention:
[name/phone], tele copier: [fax];
[name/address], Attention:
[name/phone], tele copier: [fax];
[name/address], Attention:
[name/phone], tele copier: [fax];
and [name/address], Attention:
[name/phone], telecopier: [fax];
and the Trustee will keep Stub 1.
The Offering Agent will acknowl
edge receipt of the Certificated
Note through a broker's receipt and
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will keep Stub 2. Delivery of the
Certificated Note will be made only
against such acknowledgment of
receipt. Upon determination that
the Certificated Note has been
authorized, delivered and completed
as aforementioned, the Offering
Agent will wire the net proceeds of
the Certificated Note after deduc
tion of its applicable commission
to the Company pursuant to standard
wire instructions given by the
Company.
E. In the case of a Certificated
Note sold through the Offering
Agent, as agent, the Offering Agent
will deliver such Certificated Note
(with the confirmation) to the
purchaser against payment in
immediately available funds.
F. The Trustee will send Stub 3
to the Company.
Settlement
Procedures
Timetable: For offers to purchase Certificated
Notes accepted by the Company,
Settlement Procedures A through F set
forth above shall be completed as soon
as possible following the trade but not
later than the respective times (New
York City time) set forth below:
SETTLEMENT
PROCEDURE TIME
---------- ----
--------- ----
A 11:00 A.M. on the trade
date or within one hour
following the trade
77
B 12:00 noon on the trade
date or within one hour
following the trade
C-D 2:15 P.M. on Settlement
Date
E 3:00 P.M. on Settlement
Date
F 5:00 P.M. on Settlement
Date
Failure to
Settle: In the case of Certificated Notes sold
through the Offering Agent, as agent, if
an investor or other purchaser of a
Certificated Note from the Company shall
either fail to accept delivery of or
make payment for such Certificated Note
on the date fixed for settlement, the
Offering Agent will forthwith notify the
Trustee and the Company by telephone,
confirmed in writing, and return such
Certificated Note to the Trustee.
The Trustee, upon receipt of such
Certificated Note from the Offering Agent,
will immediately advise the Company and the
Company will promptly arrange to credit the
account of the Offering Agent in an amount
of immedi ately available funds equal to the
amount previously paid to the Company by
such Offering Agent in settlement for such
Certificated Note. Such credits will be made
on the Settlement Date if possible, and in
any event not later than the Business Day
following the Settlement Date; provided that
the Company has received notice on the same
day. If such failure shall have occurred for
any reason other than fail ure by such
Offering Agent to perform its obligations
hereunder or under the Distribution
Agreement, the Company will reimburse such
Offering Agent on an equitable basis for its
reasonable loss of the use of funds during
the period when the funds were credited to
78
the account of the Company. Immediately upon
receipt of the Certificated Note in respect
of which the failure occurred, the Trustee
will cancel and dispose of such Certificated
Note in accordance with its customary
procedures, make appropriate entries in its
records to reflect the fact that such
Certificated Note was never issued, and
accordingly notify in the Company writing.
79
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
CAPTION Items
------- -----
"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)
80