EXHIBIT 1.1
S&C Draft of 6/2/97
6,000,000 PREFERRED SECURITIES
PP&L CAPITAL TRUST II
(a Delaware Trust)
Trust Originated Preferred Securities ("TOPrS")/SM/
UNDERWRITING AGREEMENT
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June , 1997
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED,
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INCORPORATED,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED,
PAINEWEBBER INCORPORATED,
PRUDENTIAL SECURITIES INCORPORATED,
As Underwriters,
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated,
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters,
▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
Dear Sirs:
1. Introductory.
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PP&L Capital Trust II (the "Trust"), a statutory business trust
organized under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. (S)(S) 3801 et
--
seq.), and Pennsylvania Power & Light Company, a Pennsylvania corporation (the
---
"Company" and, together with the Trust, the "Offerors"), confirm their agreement
(the "Agreement") with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"),
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/SM/ "Trust Originated Preferred Securities" and "TOPrS" are service marks of
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& Co. Incorporated, PaineWebber Incorporated and Prudential Securities
Incorporated and the other underwriters named in Schedule A hereto (collectively
the "Underwriters" which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), with respect to the sale by the
Trust and the purchase by the Underwriters, acting severally and not jointly, of
the respective numbers of Trust Originated Preferred Securities (Liquidation
Amount of $25 per Preferred Security) of the Trust ("Preferred Securities") set
forth in Schedule A hereto. The Preferred Securities will be fully, irrevocably
and unconditionally guaranteed by the Company as and to the extent described in
the Prospectus (the "Guarantee") pursuant to the Guarantee Agreement (the
"Guarantee Agreement"), dated as of June , 1997, between the Company and The
Chase Manhattan Bank, as trustee (the "Guarantee Trustee"). The Preferred
Securities and the related Guarantee are referred to herein as the "Securities".
Certain terms of the Securities are set forth in Schedule B hereto.
The Offerors understand that the Underwriters propose to make a public
offering of the Securities. The entire proceeds from the sale of the Securities
will be combined with the entire proceeds from the sale by the Trust to the
Company of its common securities (the "Common Securities"), as guaranteed by the
Company as and to the extent set forth in the Prospectus pursuant to the
Guarantee Agreement, and will be used by the Trust to purchase junior
subordinated deferrable interest debentures (the "Junior Subordinated
Debentures") issued by the Company. The Preferred Securities and the Common
Securities will be issued pursuant to the Amended and Restated Trust Agreement
of the Trust, dated as of June , 1997 (the "Trust Agreement"), among the
Company, as Depositor, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇, as administrative
trustees (each of whom is an employee of the Company) (the "Administrative
Trustees"), The Chase Manhattan Bank, as property trustee (the "Property
Trustee"), and Chase Manhattan Bank Delaware, as Delaware trustee (the "Delaware
Trustee" and, together with the Administrative Trustees and the Property
Trustees, the "Trustees"). The Junior Subordinated Debentures will be issued
pursuant to an indenture, dated as of April 1, 1997 (the "Indenture"), between
the Company and The Chase Manhattan Bank, as trustee (the "Indenture Trustee").
In connection with the foregoing, the Offerors have filed with the
Securities and Exchange Commission (the "Commission") a registration statement
on Form S-3 (No. 333-27773) for the registration under the Securities
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Act of 1933, as amended (the "1933 Act"), of the Securities, and the Junior
Subordinated Debentures. A prospectus setting forth the terms of the Securities
and the Junior Subordinated Debentures and of their sale and distribution has
been or will be prepared and will be filed or transmitted for filing pursuant to
Rule 424 under the 1933 Act. Such registration statement (as amended, if
applicable) and the prospectus constituting a part thereof, as from time to time
amended or supplemented pursuant to the 1933 Act, the Securities Exchange Act of
1934, as amended (the "1934 Act"), or otherwise, are hereinafter referred to as
the "Registration Statement" and the "Basic Prospectus", respectively; and the
Basic Prospectus, as it may be amended or supplemented, is herein referred to as
the "Prospectus" (including, in each case, all documents incorporated or deemed
to be incorporated by reference therein pursuant to Item 12 of Form S-3 under
the 1933 Act and the information, if any, deemed to be part thereof pursuant to
Rule 430A(b) of the published rules and regulations of the Commission under the
1933 Act (the "1933 Act Regulations")), except that, if any revised prospectus
shall be provided to the Underwriters by the Offerors for use in connection with
the offering of the Preferred Securities which differs from the Prospectus on
file at the Commission at the time the Registration Statement becomes effective
(whether or not such revised prospectus is required to be filed by the Offerors
pursuant to Rule 424(b) of the 1933 Act Regulations), the term "Prospectus"
shall refer to such revised prospectus from and after the time it is first
provided to the Underwriters for such use. All references in this Agreement to
financial statements and schedules and other information that is "contained",
"included" or "stated" in the Registration Statement or the 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 the Prospectus,
as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement or the 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 the
Prospectus, as the case may be.
2. Representations and Warranties.
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(a) The Offerors jointly and severally represent and warrant to, and
agree with, each Underwriter that:
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(i) The Registration Statement, when it became or becomes effective,
and the Prospectus and any amendment or supplement thereto, when filed or
transmitted for filing with the Commission and on the date of this
Agreement, complied or will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and the Trust
Indenture Act of 1939, as amended (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 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 Offerors in writing by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement or Prospectus.
(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 1933 Act, the 1933
Act Regulations, the 1934 Act and the rules and regulations of the
Commission under the 1934 Act (the "1934 Act Regulations"), as applicable,
and, at the time the Registration Statement and any amendments thereto
become effective and at the Closing Date, 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 Offerors in writing by any Underwriter through ▇▇▇▇▇▇▇
▇▇▇▇▇ expressly for use in the Registration Statement or Prospectus.
(iii) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the Commonwealth of
Pennsylvania with corporate power and authority to enter into and perform
its obligations under this Agreement, the Trust Agreement, the Indenture,
and the Guarantee and to
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purchase, own, and hold the Common Securities issued by the Trust.
(iv) The Trust has been duly created and is validly existing in good
standing as a business trust under the laws of the State of Delaware with
the power and authority to own property and to conduct its business as
described in the Registration Statement and Prospectus and to enter into
and perform its obligations under this Agreement, the Preferred Securities,
the Common Securities and the Trust Agreement; the Trust is not a party to
or otherwise bound by any agreement other than those described in the
Prospectus; the Trust is and will be classified for United States federal
income tax purposes as a grantor trust and not as an association taxable as
a corporation; and the Trust is and will be treated as a consolidated
subsidiary of the Company pursuant to generally accepted accounting
principles.
(v) The Common Securities have been duly authorized by the Trust
Agreement and, when issued and delivered by the Trust to the Company
against payment therefor as described in the Registration Statement and
Prospectus, will be validly issued and (subject to the terms of the Trust
Agreement) fully paid and non-assessable undivided beneficial interests in
the assets of the Trust and will conform in all material respects to the
statements relating thereto contained in the Prospectus; the issuance of
the Common Securities is not subject to preemptive or other similar rights;
and at the Closing Date all of the issued and outstanding Common Securities
of the Trust will be directly owned by the Company free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity.
(vi) This Agreement has been duly authorized, executed and delivered
by each of the Offerors.
(vii) The Trust Agreement has been duly authorized by the Company
and, at the Closing Date, will have been duly executed and delivered by the
Company and, assuming due authorization, execution and delivery of the
Trust Agreement by the Trustees, the Trust Agreement will be a valid and
binding obligation enforceable in accordance with its terms except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency or
reorganization laws relating to or affecting the enforcement of creditors'
rights and by general equity principles (the "Bankruptcy Exceptions"), and
will conform in all material respects
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to the statements relating thereto contained in the Prospectus; and at the
effective date of the Registration Statement, the Trust Agreement was or
will have been duly qualified under the 1939 Act.
(viii) The Guarantee Agreement has been duly authorized by the
Company and, at the Closing Date, will have been duly executed and
delivered by the Company and, assuming due authorization, execution and
delivery of the Guarantee by the Guarantee Trustee, will constitute a valid
and binding obligation of the Company enforceable in accordance with its
terms except to the extent that enforcement thereof may be limited by the
Bankruptcy Exceptions, and the Guarantee and the Guarantee Agreement 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 Guarantee Agreement was or will have been duly qualified
under the 1939 Act.
(ix) The Preferred Securities have been duly authorized by the Trust
Agreement and, when issued and delivered pursuant to this Agreement, will
be validly issued and (subject to the terms of the Trust Agreement) fully
paid and non-assessable undivided beneficial interests in the Trust, will
be entitled to the benefits of the Trust Agreement and will conform in all
material respects to the statements relating thereto contained in the
Prospectus; the issuance of the Preferred Securities is not subject to
preemptive or other similar rights.
(x) The Indenture has been duly authorized by the Company and, at the
Closing Date, will have been duly executed and delivered by the Company
and, assuming due authorization, execution and delivery by the Indenture
Trustee, will constitute a valid and binding agreement of the Company
enforceable in accordance with its terms except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions, 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 or will have been duly qualified under the
1939 Act.
(xi) The Junior Subordinated Debentures have been duly authorized by
the Company and, at the Closing Date, will have been duly executed by the
Company and, when authenticated in the manner provided for in the Indenture
and delivered against payment therefor as
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described in the Prospectus, 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; will be in the form contemplated by, and entitled to the
benefits of, the Indenture; and will conform in all material respects to
the statements relating thereto contained in the Prospectus.
(b) Each of the several Underwriters represents and warrants to, and
agrees with, the Offerors, their respective directors and such of their
respective officers who shall have signed the Registration Statement, and to
each other Underwriter, that the information set forth in Schedule C hereto
furnished to the Offerors by or through you on behalf of such Underwriter
expressly for use in the Registration Statement or the Prospectus does not
contain an untrue statement of a material fact and does not omit to state a
material fact in connection with such information required to be stated therein
or necessary to make such information not misleading.
3. Purchase and Sale of Preferred Securities.
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On the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein contained, the Trust
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees, to purchase from the Trust the
number of Preferred Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Preferred Securities that such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof at the price per security set forth in Schedule B hereto.
4. Delivery and Payment.
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Payment of the full purchase price of the Preferred Securities shall
be made by or on behalf of the several Underwriters by the wire transfer of
immediately available funds to the Trust's account (No. ) at The Chase
Manhattan Bank (ABA Routing No. ) Reference: PP&L Capital Trust II by
10:00 A.M., New York Time, on the Closing Date (as hereinafter defined). Such
payment shall be made against delivery to The Depository Trust Company ("DTC")
for the respective accounts of the Underwriters of a global certificate for the
Preferred Securities to be purchased by them. Certificates for the Preferred
Securities shall be in such denominations and registered in such names as
▇▇▇▇▇▇▇ ▇▇▇▇▇ may request in
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writing at least two business days before the Closing Date, or to the extent not
so requested, registered in the names of the several Underwriters in such
authorized denominations as the Offerors may determine. It is understood that
each Underwriter has authorized ▇▇▇▇▇▇▇ ▇▇▇▇▇, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Preferred Securities which it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇,
individually and not as representative of the Underwriters, may (but shall not
be obligated to) make payment of the purchase price for the Preferred Securities
to be purchased by any Underwriter whose wire transfer has not been received by
the Closing Date, but such payment shall not relieve such Underwriter from its
obligations hereunder.
At the Closing Date, the Company will pay, or cause to be paid, the
commission payable at such time to the Underwriters set forth in Schedule B
hereto by the wire transfer of immediately available funds to the account of
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated (No. )at The
Chase Manhattan Bank (ABA Routing No. ) Reference: PP&L Capital Trust
II (No. ).
For the purpose of expediting the checking and packaging of the
certificates evidencing the Preferred Securities, the Offerors will make the
global certificate for the Preferred Securities available for inspection by the
Underwriters at the offices of The Chase Manhattan Bank not later than 10:00
A.M., New York time, on the business day next preceding the Closing Date.
The term "Closing Date" wherever used in this Agreement shall mean the
date set forth in Schedule B hereto, or such other date (i) not later than the
eighth full business day thereafter as may be agreed upon in writing by the
Company, the Trust and the Underwriters, or (ii) as shall be determined by
postponement pursuant to the provisions of Section 10 hereof.
5. Certain Covenants of the Offerors.
---------------------------------
Each of the Offerors jointly and severally covenant with the several
Underwriters as follows:
(a) To notify the Underwriters promptly, and confirm the notice in
writing, (i) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or
for additional information, and (ii) the institution by the Commission of
any stop order proceedings in respect of the Registration Statement,
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or the initiation of proceedings for that purpose, and to use its best
efforts to prevent the issuance of any such stop order and to obtain as
soon as possible its lifting, if issued;
(b) To file the Prospectus with the Commission pursuant to Rule
424(b) under the 1933 Act not later than the second business day following
the execution and delivery of this Agreement, or, if applicable, such
earlier time as may be required by Rule 430A(a)(3) under the 1933 Act; to
advise you promptly of any such filing; and to advise you 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 (including any revised prospectus which the Offerors
propose for use by the Underwriters in connection with the offering of the
Preferred Securities which differs from the prospectus on file at the
Commission at the time the Registration Statement becomes effective,
whether or not such revised prospectus is required to be filed pursuant to
Rule 424(b) of the 1933 Act Regulations), 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
Underwriters 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, and will not file any such amendment, supplement or
other document or use any such prospectus to which the Underwriters or
counsel for the Underwriters shall reasonably object in writing;
(c) To use their best efforts, in cooperation with the Underwriters,
to qualify the Preferred Securities (and the Guarantee) and the Junior
Subordinated Debentures for offer and sale under the securities or blue sky
laws of such states and the other jurisdictions of the United States as the
Underwriters may designate, to continue such qualifications in effect so
long as required for the distribution of the Preferred Securities and to
reimburse you for any expenses (including filing fees and fees and
disbursements of counsel) paid by you or on your behalf to qualify the
Preferred Securities for offer and sale, to continue such qualification, to
determine the eligibility of the Preferred Securities for investment and to
print the memoranda relating thereto; provided that none of the Offerors
shall be required to qualify as a foreign corporation in any
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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 Preferred Securities, or to meet any other
requirement in connection with this paragraph (c) deemed by such Offeror to
be unduly burdensome; and the Company will advise ▇▇▇▇▇▇▇ ▇▇▇▇▇ promptly of
any order or communication of any public authority known to the Company
suspending or threatening to suspend the qualification of the Preferred
Securities for sale, or the eligibility of the Preferred Securities for
purchase by such institutions, in any jurisdiction;
(d) Promptly to deliver to you two 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 unsigned copies of the
Registration Statement (but excluding the exhibits), each related
preliminary prospectus, the Prospectus, and any amendments and supplements
thereto, as the Underwriters may reasonably request;
(e) Promptly to furnish to each Underwriter, from time to time during
the period when the Prospectus is required to be delivered under the 1933
Act, such number of copies of the Prospectus (as amended or supplemented)
as such Underwriter may reasonably request for the purposes contemplated by
the 1933 Act or the 1933 Act Regulations;
(f) If, at any time when the Prospectus relating to the Preferred
Securities is required to be delivered under the 1933 Act in connection
with sales of the Preferred Securities, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any
time to amend the Registration Statement or amend or supplement the
Prospectus to comply with the 1933 Act or the 1933 Act Regulations, to
advise the Underwriters of such event or necessity, as the case may be,
and, promptly upon request made by the Underwriters, to prepare and file
with the Commission subject to paragraph (b) above an amendment or
supplement which will correct such statement or omission or an amendment
which will effect such compliance; provided that the expense of preparing
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and
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filing any such amendment or supplement (i) which is necessary in
connection with such a delivery of the Prospectus more than nine months
after the date of this Agreement or (ii) which relates solely to the
activities of any Underwriter shall be borne by the Underwriter or
Underwriters or the dealer or dealers requiring the same; and provided
further that the Underwriters shall, upon inquiry by the Company, advise
the Company whether or not any Underwriter or dealer which shall have been
selected by you retains any unsold Preferred Securities and, for the
purposes of this paragraph (f), the Company shall be entitled to assume
that the distribution of the Preferred Securities has been completed when
it is advised by you that no Underwriter or such dealer retains any
Preferred Securities;
(g) As soon as practicable, the Trust will make generally available
to its security holders an earnings statement of the Company 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;
(h) The Offerors will use best efforts to effect the listing of the
Preferred Securities on the New York Stock Exchange; if the Preferred
Securities are exchanged for Junior Subordinated Debentures, the Company
will use its best efforts to effect the listing of the Junior Subordinated
Debentures on the exchange on which the Preferred Securities were then
listed;
(i) During a period of 30 days from the date of this Agreement,
neither the Trust nor the Company will, without the Underwriters' prior
written consent, directly or indirectly, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of, any Preferred Securities,
any security convertible into or exchangeable into or exercisable for
Preferred Securities or the Junior Subordinated Debentures or any debt
securities substantially similar to the Junior Subordinated Debentures or
equity securities substantially similar to the Preferred Securities (except
for the Junior Subordinated Debentures and the Preferred Securities issued
pursuant to this Agreement); and
(j) The Trust will apply the net proceeds from the sale of the
Preferred Securities for the purposes set forth in the Prospectus.
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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 Offerors, including all expenses
(except as provided in Section 5(f) hereof) in connection with the preparation
and filing of the Registration Statement and the Prospectus, and any amendment
or supplement thereto, and the furnishing of copies thereof to the Underwriters,
and all audits, statements or reports in connection therewith, and all expenses
in connection with the original issue and delivery of the Preferred Securities
to the Underwriters at the place designated in Section 4 hereof, and all Federal
and State taxes (if any) payable (not including any transfer taxes) upon the
original issue of the Preferred Securities, the Guarantee or the Junior
Subordinated Debentures, any fee charged by securities ratings services for
rating the Preferred Securities, the Guarantee and the Junior Subordinated
Debentures, the fees and expenses incurred in connection with the listing of the
Preferred Securities, and the fee of the National Association of Securities
Dealers, Inc., if any, (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
Preferred Securities, the Guarantee and the Junior Subordinated Debentures, and
to reimburse the Underwriters for expenses incurred in distributing any
preliminary prospectus or supplement to the Underwriters, and (iii) any
additional costs of effecting payment of the purchase price of the Preferred
Securities in immediately available funds as compared with New York Clearing
House (next day) funds.
7. Conditions of Underwriters' Obligations.
---------------------------------------
The obligations of the Underwriters hereunder are subject to the
following conditions:
(a) The Underwriters shall have received from Price Waterhouse LLP, a
letter, dated the date of this Agreement, in form and substance
satisfactory to you, to the effect that:
(i) They are independent accountants with respect to the Company
within the meaning of the 1933 Act and the 1933 Act Regulations;
(ii) In their opinion, the consolidated financial statements of
the Company and its subsidiaries audited by them and incorporated by
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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 Board of Directors of the Company and its Executive, Compensation
and Corporate Governance, Finance and Nuclear Oversight Committees
since December 31, 1996 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 March 31, 1997, and the unaudited consolidated statements of
income and of cash flows included in the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997 ("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 included in the
Company's Form 10-Q;
(ii) Making inquiries of certain officials of the Company 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 1933 Act and 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 in the
Registration
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Statement to the date of the latest available interim financial data;
and
(D) Making inquiries of certain officials of the Company who
have responsibility for financial and accounting matters regarding the
specific items for which representations are requested below;
nothing has come to their attention as a result of the foregoing
procedures that caused them to believe that (i) the unaudited
consolidated financial statements described in (B)(i), included in the
Form 10-Q and incorporated by reference in the Registration Statement,
do not comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1934 Act, as it
applies to Form 10-Q, and the related published rules and regulations
thereunder; or (ii) any material modifications should be made to the
unaudited consolidated financial statements described in (B)(i),
included in the Form 10-Q and incorporated by reference in the
Registration Statement, for them to be in conformity with generally
accepted accounting principles; or (iii) at the date of the latest
available interim financial data and at a specified date not more than
five business days prior to the date of delivery of such letter, there
was any change in the capital stock (except for shares of certain
series of the Company's preferred stocks redeemed for, or purchased
and retired in anticipation of, sinking fund requirements for such
series, or increase in long-term debt of the Company and subsidiaries
consolidated as compared with amounts shown in the latest balance
sheet incorporated by reference in the Registration Statement or (iv)
for the period from the closing date of the latest consolidated income
statement incorporated by reference in the Registration Statement to
the date of the latest available interim financial data there were any
decreases, as compared with the corresponding period in the preceding
year, in net income before dividends on preferred stock of the
Company, 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.
-14-
(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
Company'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 Prospectus shall have been filed with the Commission in
accordance with the 1933 Act Regulations and Section 5(b) of this Agreement
and prior to the Closing Date 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
Offerors, shall be contemplated by the Commission and the Underwriters
shall have received at the Closing Date certificates, dated the Closing
Date, of the Company and of the Trust.
(c) Subsequent to the execution of this Agreement, there shall not
have occurred (i) any change or any development involving a prospective
change not contemplated by the Prospectus in or affecting particularly the
business or properties of the Trust or the Company, which, in the judgment
of ▇▇▇▇▇▇▇ ▇▇▇▇▇, materially impairs the investment quality of the
Preferred Securities; (ii) any suspension or limitation of trading in
securities generally on the New York Stock Exchange, or any setting of
minimum prices for trading on such exchange, or any suspension of trading
of any securities of the Company on any exchange or in the over-the-counter
market; (iii) a general banking moratorium declared by Federal or New York
authorities; (iv) any outbreak or escalation of major hostilities in which
the United States is involved, any declaration of war by Congress or any
other substantial national or international calamity or emergency if, in
the reasonable judgment of ▇▇▇▇▇▇▇ ▇▇▇▇▇, the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical and
inadvisable to proceed with completion of the sale of and payment for the
Preferred Securities and ▇▇▇▇▇▇▇ ▇▇▇▇▇ makes a similar determination with
respect to all other underwritings of Trust Originated Preferred Securities
in which it is participating and has the contractual right to make such a
determination; or (v) any decrease
-15-
in the ratings of the Preferred Securities by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g)
under the ▇▇▇▇ ▇▇▇) or such organization shall have publicly announced that
it has under surveillance or review, with possible negative implications,
its rating of the Preferred Securities.
(d) On the Closing Date the Underwriters shall have received:
(1) The favorable opinions, dated as of the Closing Date, of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., Senior Counsel (or such other counsel for the Company
as may be acceptable to you), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel to the
Company, and ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A., special Delaware counsel to the
Offerors, each in form and substance satisfactory to counsel for the
Underwriters, to the cumulative effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Pennsylvania with power and authority (corporate and other)
to own its properties and conduct its business as described in the
Prospectus;
(ii) The Trust has been duly created and is validly existing in
good standing as a business trust under the laws of the State of Delaware;
all filings required under the laws of the State of Delaware with respect
to the creation and valid existence of the Trust as a business trust have
been made; the Trust has all necessary power and authority to own property
and to conduct its business as described in the Prospectus and to enter
into and perform its obligations under this Agreement, the Preferred
Securities and the Common Securities;
(iii) The Trust Agreement has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and
delivery of the Trust Agreement by the Trustees, is a valid and binding
obligation enforceable in accordance with its terms, except to the extent
that enforcement thereof may be limited by the Bankruptcy Exceptions; and
the Trust Agreement has been duly qualified under the 1939 Act;
(iv) The Common Securities have been duly authorized for
issuance and, when issued, delivered and
-16-
paid for in accordance with the Trust Agreement and as described in the
Prospectus, will be validly issued and fully paid and non-assessable
undivided beneficial interests in the assets of the Trust, and the issuance
of the Common Securities is not subject to preemptive or other similar
rights;
(v) The Preferred Securities have been duly authorized for
issuance and, when issued, delivered and paid for in accordance with this
Agreement, will be validly issued, fully paid and non-assessable undivided
beneficial interests in the assets of the Trust; the holders of the
Preferred Securities will be entitled to the same limitation of personal
liability under Delaware law as is extended to stockholders of private
corporations for profit; and the issuance of the Preferred Securities is
not subject to preemptive or other similar rights. Such counsel may note
that the Preferred Securities holders may be obligated, pursuant to the
Trust Agreement, to (a) provide indemnity and/or security in connection
with and pay taxes or governmental charges arising from transfers of
Preferred Securities and the issuance of replacement Preferred Securities,
and (b) provide security and indemnity in connection with requests of or
directions to the Trustees to exercise their rights and powers under the
Trust Agreement;
(vi) The holders of the Preferred Securities and Common
Securities (other than those holders who reside or are domiciled in the
State of Delaware) will have no liability for income taxes imposed by the
State of Delaware or any taxing authority thereof solely as a result of
their participation in the Trust, and the Trust will not be liable for any
income tax imposed by the State of Delaware or any taxing authority
thereof;
(vii) The statements in the Prospectus under the captions "PP&L
Capital Trust II", "Description of Preferred Securities", "Description of
Subordinated Debentures", "Description of Guarantee" and "Relationship
Among the Preferred Securities, the Subordinated Debentures and the
Guarantee", insofar as they purport to constitute summaries of certain
terms of the Preferred Securities, the Junior Subordinated Debentures, the
Guarantee and the Company agreements with respect thereto, in each case
constitute accurate summaries of the terms of such documents and
securities, in all material respects;
-17-
(viii) 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;
(ix) Each of the Company and PP&L Resources, Inc. are exempt
from the provisions of the Public Utility Holding Company Act of 1935, as
amended, applicable to it as a holding company;
(x) Except as described in the Registration Statement and the
Prospectus, the Company holds all franchises, certificates of public
convenience, licenses and permits necessary to own and to operate its
properties and to carry on the utility business in which it is engaged;
(xi) The Registration Statement has become effective under the
1933 Act and the Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the date specified
therein, and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement or any part
thereof has been issued and no proceeding 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 or
supplement thereto, as of its date, and the Prospectus, as of the date of
this Agreement, 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 such amendment or supplement, 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, as of the
date of this Agreement and as of the Closing Date, 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 data contained or incorporated by reference
in the Registration Statement or the
-18-
Prospectus and that only ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ will pass on federal
income tax consequences;
(xii) 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 and that only ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ will pass on federal income tax consequences pursuant to
Section 7(d)(3);
(xiii) This Agreement has been duly authorized, executed and
delivered by each of the Trust and the Company;
(xiv) The Guarantee Agreement has been duly authorized, executed
and delivered by the Company; the Guarantee Agreement, assuming it is duly
authorized, executed, and delivered by the Guarantee Trustee, constitutes a
valid and binding obligation of the Company enforceable in accordance with
its terms, except to the extent that enforcement thereof may be limited by
the Bankruptcy Exceptions; and the Guarantee Agreement has been duly
qualified under the 1939 Act;
(xv) The Indenture has been duly executed and delivered by the
Company and, assuming due authorization, execution, and delivery by the
Indenture Trustee, is a valid and binding obligation of the Company
enforceable in accordance with its terms, except to the extent that
enforcement thereof may be limited by the Bankruptcy Exceptions; and the
Indenture has been duly qualified under the 1939 Act;
(xvi) The Junior Subordinated Debentures are in the form
contemplated by the Indenture, have been duly authorized, executed and
delivered by the Company and, when authenticated by the Indenture Trustee
in the manner provided for in the Indenture and delivered
-19-
against payment 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, and are entitled to the benefits of the Indenture;
(xvii) Neither the Company nor the Trust is now, and giving
effect to the transactions contemplated by this Agreement, the Prospectus,
and the application of the proceeds from the sale of the Preferred
Securities will be, an "investment company" within the meaning of the 1940
Act; and
(xviii) No approval, authorization, consent or other order of
any public board or body is legally required for the authorization of the
issuance and sale of the Common Securities or the offering, issuance and
sale of the Preferred Securities, the Junior Subordinated Debentures or the
Guarantee, 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, (b) the qualification of the Trust Agreement, the Guarantee
Agreement and the Indenture under the 1939 Act and 1939 Act Regulations and
(c) the approvals by the Pennsylvania Public Utility Commission which have
been received.
In rendering their opinion, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A. may rely as to matters governed by
Pennsylvania law upon the opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. or such other
counsel referred to in Section 7(d) of this Agreement, and as to matters
governed by Delaware law ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ may rely upon the
opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A. In rendering his opinion,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., or such other counsel referred to in Section 7(d)
of this Agreement, may rely as to matters governed by Delaware law upon the
opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A. All such counsel may also state
that, insofar as such opinion involves factual matters, they have relied,
to the extent they deem proper, upon representations of officers of the
Company and of the Trustees and certificates of public officials; provided
that such certificates have been delivered to the Underwriters.
(2) The favorable opinion, dated as of the Closing Date, of
Pryor, Cashman, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for The Chase Manhattan Bank and Chase
Manhattan Bank Delaware, in their respective capacities as Trustees under
-20-
the Trust Agreement, the Guarantee Agreement, and the Indenture, in form and
substance satisfactory to counsel for the Underwriters, to the effect that:
(i) Such Trustees are banking corporations with trust powers,
duly organized, validly existing and in good standing under the laws of
their respective jurisdictions of incorporation, with all necessary power
and authority to execute and deliver, and to carry out and perform their
respective obligations under the terms of, the Trust Agreement, the
Guarantee Agreement and the Indenture;
(ii) The execution, delivery and performance of the Trust
Agreement, the Guarantee Agreement and the Indenture have been duly
authorized by all necessary corporate action on the part of such Trustees,
and constitute valid and binding obligations of such Trustees in accordance
with their terms, except as enforcement thereof may be limited by the
Bankruptcy Exceptions;
(iii) The execution, delivery and performance of the Trust
Agreement, the Guarantee Agreement and the Indenture by such Trustees do
not conflict with or constitute a breach of the Articles of Incorporation
or Bylaws or other governing instruments of such Trustees; and
(iv) No consent, approval or authorization of, or registration
with or notice to, any state or federal banking authority is required for
the execution, delivery or performance by the Trustees, the Trust
Agreement, the Guarantee Agreement or the Indenture.
Such opinion may be conditioned on, among other things, the
initial and continuing accuracy of the facts, financial and other
information, covenants and representations set forth in certificates of
officers of the Company and the Trust and other documents deemed necessary
for such opinion.
(3) The opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special tax
counsel to the Company and the Trust, generally to the effect that the
statements made in the Prospectus under the caption "Certain Federal Income Tax
Consequences," insofar as they purport to constitute summaries of matters of
United States federal tax law and regulations or legal conclusions with respect
thereto,
-21-
constitute accurate summaries of the matters described therein in all material
respects.
(4) The favorable opinion or opinions, dated as of the Closing
Date, of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters, with respect to the
incorporation and legal existence of the Company, the validity of the Guarantee
and the Junior Subordinated Debentures, this Agreement, the Registration
Statement, the Prospectus and other related matters as the Underwriters may
require, and the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters. In
rendering such opinion, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ may rely as to matters governed by
Pennsylvania law upon the opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. or such other
counsel for the Company referred to in Section 7(d), and as to matters governed
by Delaware law upon the opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A.
(e) The Underwriters shall have received a certificate, dated the
Closing Date, of the President or a Vice President and a financial or
accounting officer of the Company and a certificate of an Administrative
Trustee of the Trust in which such officers or trustee, as the case may be,
to the best of their knowledge after reasonable investigation, shall state
that (i) the representations and warranties of the Company or the Trust, as
the case may be, in this Agreement are true and correct (except for
immaterial details) as of the Closing Date, (ii) the Company and or Trust,
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
Closing Date, (iii) no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose
have been instituted or are pending by the Commission, and (iv) subsequent
to the date of the latest financial statements in the Prospectus, there has
been no material adverse change in the financial position or results of
operations of the Company or the Trust, as the case may be, except as set
forth or contemplated in the Prospectus or as described in such
certificate.
(f) The Underwriters shall have received a letter from Price
Waterhouse LLP, dated the Closing Date, which meets the requirements of
Section 7(a) of this Agreement, except that the specified date referred to
in paragraph (D) of Section 7(a)(iii) will be a date not more than five
days prior to the Closing Date for the purposes of this Section 7(f).
-22-
(g) At the Closing Date, the Preferred Securities and the Junior
Subordinated Debentures shall be rated in one of the four highest rating
categories for long term debt ("Investment Grade") by any nationally
recognized statistical rating agency, and the Company or the Trust shall
have delivered to the Underwriters a letter, dated the Closing Date, from
such nationally recognized statistical rating agency, or other evidence
satisfactory to the Underwriters, confirming that the Preferred Securities
and the Junior Subordinated Debentures have Investment Grade ratings.
(h) At the Closing Date, the Preferred Securities shall have been
approved for listing on the New York Stock Exchange subject to notice of
issuance.
The Company will furnish the Underwriters as promptly as practicable
after the Closing Date with such conformed copies of such opinions,
certificates, letters and documents as the Underwriters may reasonably request.
In case any such condition shall not have been satisfied, this
Agreement may be terminated by the Underwriters upon notice in writing or by
telegram to the Offerors without liability or obligation of any party, except as
provided in Sections 5(c), 6, 9, 11 and 13 hereof.
8. Conditions of Offeror's Obligations.
-----------------------------------
The obligations of the Offerors to sell and deliver the Preferred
Securities on the Closing Date are subject to the following conditions:
(a) At the Closing Date no stop order suspending the effectiveness of
the Registration Statement shall be in effect or proceeding therefor shall
have been instituted or, to the knowledge of the Offerors, shall be
contemplated.
(b) At or before the Closing Date, the Pennsylvania Utility
Commission and any other regulatory authority whose consent or approval
shall be required for the issue and the sale of the Securities, the
Guarantee and the Junior Subordinated Debentures as herein provided shall
have taken all requisite action, or all requisite action shall be deemed in
fact and law to have been taken, to authorize such issue and sale on the
terms set forth in the Prospectus.
If either of the foregoing conditions shall not have been satisfied,
then the Offerors shall be entitled, by
-23-
notice in writing or by telegram to the Underwriters, to terminate this
Agreement without any liability of any party, except as provided in Sections
5(c), 6, 9, 11 and 13 hereof.
9. Indemnification and Contribution.
--------------------------------
(a) The Offerors agree that they will jointly and severally
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter 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 Underwriter or such controlling person may become subject,
under the 1933 Act or otherwise, insofar as such loss, expense, claim, damage or
liability (or actions in respect thereof) arises out of or is based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, any related preliminary prospectus,
or any amendment or supplement to any thereof, or arises out of or is based upon
the omission or alleged omission to state therein any material fact required to
be stated therein or necessary to make the statements therein not misleading;
and, except as hereinafter in this Section provided, the Offerors agree to
reimburse each Underwriter and each person who controls any Underwriter as
aforesaid for any reasonable legal or other expenses as incurred by such
Underwriter or such controlling person in connection with investigating or
defending any such loss, expense, claim, damage or liability; provided, however,
-------- -------
that the Offerors 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 specified in Schedule B hereto furnished to the Trust or the Company
by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in any such document;
and provided further, that with respect to any untrue statement or alleged
-------- -------
untrue statement or omission or alleged omission made in any preliminary
prospectus or supplement, the indemnity agreement contained in this subsection
(a) shall not inure to the benefit of any Underwriter from whom the person
asserting any such loss, expense, claim, damage or liability purchased the
Securities concerned (or to the benefit of any person controlling such
Underwriter), if a copy of the Prospectus (not including documents incorporated
by reference therein) or of the Prospectus as then amended or supplemented (not
including documents incorporated by reference therein) was not sent or given to
such person at or prior to the written confirmation of the sale of such
Securities to such person and any untrue statement or
-24-
alleged untrue statement or omission or alleged omission of a material fact
contained in any preliminary prospectus or supplement thereto was corrected in
the Prospectus, provided that the Company has delivered the Prospectus to the
several Underwriters in requisite quantity on a timely basis to permit such
sending or delivery.
(b) The Company agrees to indemnify the Trust against all loss,
expense, claim, damage or liability as due from the Trust under Section 9(a)
hereunder.
(c) Each Underwriter severally agrees that it will indemnify and hold
harmless the Offerors, their officers, directors and Trustees, and each of them,
and each person, if any, who controls the Offerors 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, any
related preliminary prospectus, or any amendment or supplement to any thereof,
or arises out of or is based upon the omission or alleged omission to state
therein any material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, and only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in any such documents in reliance upon, and in
conformity with, written information specified in Schedule B hereto furnished to
the Trust or the Company by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for
use in any such document; and, except as hereinafter in this Section provided,
each Underwriter agrees to reimburse the Offerors, their officers, directors and
Trustees, and each of them, and each person, if any, who controls the Offerors
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.
(d) 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
-25-
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(f) 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 Securities.
(e) If any Underwriter or person entitled to indemnification by the
terms of subsection (a) of this Section 9 shall have given notice to the
Offerors of a claim in respect thereof pursuant to Section 9(d) 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 Underwriter or
person shall be entitled to contribution from the Offerors 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
Underwriter or person is entitled, there shall be considered the relative
benefits received by such Underwriter or person and the Offerors from the
offering of the Securities (taking into account the portion of the proceeds of
the offering realized by each), the Underwriter or person's relative knowledge
and access to information concerning the matter with respect to which the claim
was asserted, the opportunity to correct and prevent any statement or omission,
and any other equitable considerations appropriate under the circumstances. The
Offerors and the Underwriters agree that it would not be equitable if the amount
of such contribution were determined by pro rata or per capita allocation (even
if the Underwriters were treated as one entity for such purpose).
(f) 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
-26-
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.
(g) The indemnity and contribution provided for in this Section 9 and
the representations and warranties of the Company, the Trust and the several
Underwriters set forth in this Agreement shall remain operative and in full
force and effect regardless of (i) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter, the Company, its
directors or officers, the Trust or any person controlling the Trust or any
Trustee, (ii) acceptance of any Preferred Securities and payment therefor under
this Agreement, and (iii) any termination of this Agreement.
10. Default of Underwriters.
-----------------------
If one or more of the Underwriters shall fail at the Closing Date to
purchase the Preferred Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Default Securities in such amounts as may be agreed upon
and upon the terms herein set forth in this Agreement. If, however, ▇▇▇▇▇▇▇
▇▇▇▇▇ shall not have completed such arrangements within such 24-hour period,
then: (i) if the number of Defaulted Securities does not exceed 10% of the
number of Preferred Securities to be purchased on such date, each of the non-
defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or (ii) if the number of Defaulted Securities
exceeds 10% of the number of Securities to be purchased on such date, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter. In the event of any such default which does not result in a
termination of this Agreement, either ▇▇▇▇▇▇▇ ▇▇▇▇▇ or the Company shall have
the right to postpone the Closing Date for a period not exceeding seven days in
order to effect any required changes in the
-27-
Registration Statement or Prospectus or in an any other documents or
arrangements, and the Offerors will promptly file any amendments to the
Registration Statement or supplements to the Prospectus which may thereby be
necessary. As used in this Agreement, the term "Underwriter" includes for all
purposes of this Agreement any person substituted for an Underwriter under this
Section 10.
Nothing in this Section 10 shall relieve an Underwriter from liability
for its default.
11. Survival of Certain Representations and Obligations.
---------------------------------------------------
The respective indemnities, agreements, representations and warranties
of the Company and the Trust and of or on behalf of the Underwriters set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made by
or on behalf of any Underwriter or the Offerors or any of their respective
officers, directors, Trustees or any controlling person, and will survive
delivery of and payment for the Preferred Securities. If for any reason the
purchase of the Preferred Securities by the Underwriters 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 Trust and the Underwriters pursuant to Section 9 hereof shall remain in
effect.
12. Notices.
-------
The Offerors shall be entitled to act and rely upon any statement,
request, notice or agreement on behalf of each of the Underwriters if the same
shall have been made or given by the Underwriters jointly or by ▇▇▇▇▇▇▇ ▇▇▇▇▇.
All statements, requests, notices, consents and agreements hereunder shall be in
writing, or by telegraph subsequently confirmed in writing, and, if to the
Company or the Trust, shall be sufficient in all respects if delivered or mailed
to the Company, attention of its Treasurer, at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and, if to an Underwriter, shall be sufficient in
all respects if delivered or mailed to ▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ World
Headquarters, North Tower, World Financial Center, New York, New York 10281-
1201, attention of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Managing Director; provided, however, that
any notice to an Underwriter pursuant to Section 9 hereof will also be delivered
or mailed to such Underwriter at the address, if
-28-
any, of such Underwriter furnished to the Company in writing for the purpose of
communications hereunder.
13. Parties in Interest.
-------------------
This Agreement shall each inure solely to the benefit of the Company,
the Trust and the Underwriters and, to the extent provided in Section 9 hereof,
to any person who controls any Underwriter, to the officers and directors of the
Company and the Trust and the Trustees of the Trust, and to any person who
controls the Company or the Trust, and their respective successors. No other
person, partnership, association or corporation shall acquire or have any right
under or by virtue of this Agreement. The term "successor" shall not include
any assignee of an Underwriter (other than a person substituted for an
Underwriter under Section 10 hereof or one who shall acquire all or
substantially all of an Underwriter's business and properties), nor shall it
include any purchaser of Securities from any Underwriter merely because of such
purchase.
14. Applicable Law.
--------------
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
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15. 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 letter shall constitute a binding agreement between the Company and the
Trust and the several Underwriters in accordance with its terms.
Yours very truly,
PENNSYLVANIA POWER & LIGHT COMPANY
By:
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President - Finance
PP&L CAPITAL TRUST II
By:
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Administrative Trustee
By:
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Administrative Trustee
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The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the date
first above written.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED,
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INCORPORATED,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED,
▇▇▇▇▇ ▇▇▇▇▇▇ INCORPORATED,
PRUDENTIAL SECURITIES INCORPORATED,
By ▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
By:
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
For itself and each of the other
Underwriters named in Schedule A hereto.
-31-
SCHEDULE A
NUMBER
OF
NAME OF UNDERWRITER SECURITIES
------------------- ----------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated........................
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc...............
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated...
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated......
PaineWebber Incorporated...............
Prudential Securities Incorporated ....
_________
Total.................................. 6,000,000
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SCHEDULE B
----------
Certain Information Regarding The
Securities And The Sale Thereof
-------------------------------
1. Title of Securities: % Trust Originated Preferred Securities/SM/
-------------------
("TOPrS"/SM/)
2. (a) Title of Senior Subordinated Debentures:
---------------------------------------
% Junior Subordinated Deferrable Interest Debentures due July 1,
2027
(b) Aggregate Principal Amount of Junior Subordinated Debentures: $
------------------------------------------------------------
4. Liquidation Amount per Security: $25
-------------------------------
5. Initial Public Offering Price per Security: $25 plus accrued
------------------------------------------
distributions, if any, from the date of issuance
6. Proceeds Per Security to be Paid to the Trust: $25, plus accrued
---------------------------------------------
distributions, if any, from the date of issuance
7. Compensation Payable to Underwriters: $
------------------------------------
8. Closing Date: June , 1997; 9:30 a.m. New York Time
------------
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SCHEDULE C
----------
Information Represented and
Warranted by the Underwriters
Pursuant to Section 2(b) of
Underwriting Agreement.
-----------------------------
1. The first sentence in the last paragraph or the cover page of the
Prospectus (page 1).
2. The stabilization legend on page 2 of the Prospectus.
3. Under the caption "Underwriting" in the Prospectus, the following:
(a) The first paragraph of text following the table.
(b) The last two sentences in the fourth paragraph following the table.
(c) The second sentence in the fifth paragraph following the table.
(d) The twelfth paragraph following the table.
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SCHEDULE D
----------
Additional Matters to be Included
in Accountants' Comfort Letter Pursuant to
Section 7(a)(iv) of Underwriting Agreement
__________________________________________
PROSPECTUS CAPTION PAGE ITEMS
------------------ ---- -----
"SELECTED FINANCIAL 14 "Ratio of Earnings to
DATA" Combined Fixed Charges
and Preferred Dividend
Requirements" and
supporting calculations
shown on Exhibit 12.2 to
the Registration
Statement; and
"CAPITALIZATION" 15 Dollar amounts and
percentages in "As
Adjusted" and
"Percentage" columns
after giving effect to
the transactions
described in the
paragraph preceding the
table and the footnotes
thereto.
FORM 10-K CAPTION PAGE ITEMS
----------------- ---- -----
"REVIEW OF THE 26 Sentence following table
FINANCIAL CONDITION with respect to increases
AND RESULTS OF in total operating
OPERATIONS OF PP&L revenues
RESOURCES, INC. AND
PENNSYLVANIA POWER &
LIGHT COMPANY --
"Operating Revenues"
"REVIEW OF THE 32 The Company's actual
FINANCIAL CONDITION construction expenditures
AND RESULTS OF during the year ended
OPERATIONS OF PP&L 1996.
RESOURCES, INC. AND
PENNSYLVANIA POWER &
LIGHT COMPANY --
Capital Expenditure
Requirements"
-35-
"SELECTED FINANCIAL 80 The Company's times
AND OPERATING DATA OF interest earned before
PENNSYLVANIA POWER & income taxes for 1995 and
LIGHT COMPANY -- 1996.
"Financial Ratios"
-36-