-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PfDqJ9wjZrIl9OHJLhoGLaEL3NI3CBi9xSLHnJtIEFWO/GRXT4dTsB96YLD2qV8x 56zv+UaJnIbF1BySew0a+A== 0000950120-98-000180.txt : 19980504 0000950120-98-000180.hdr.sgml : 19980504 ACCESSION NUMBER: 0000950120-98-000180 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19980428 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980501 SROS: NYSE SROS: PHLX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PP&L INC CENTRAL INDEX KEY: 0000317187 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 230959590 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-00905 FILM NUMBER: 98608309 BUSINESS ADDRESS: STREET 1: TWO N NINTH ST CITY: ALLENTOWN STATE: PA ZIP: 18101 BUSINESS PHONE: 6107745151 MAIL ADDRESS: STREET 1: TWO NORTH NINTH STREET CITY: ALLENTOWN STATE: PA ZIP: 18101-1179 FORMER COMPANY: FORMER CONFORMED NAME: PP & L INC DATE OF NAME CHANGE: 19970912 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PP&L RESOURCES INC CENTRAL INDEX KEY: 0000922224 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 232758192 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-11459 FILM NUMBER: 98608310 BUSINESS ADDRESS: STREET 1: TWO N NINTH ST CITY: ALLENTOWN STATE: PA ZIP: 18101 BUSINESS PHONE: 6107745151 MAIL ADDRESS: STREET 1: TWO NORTH NINTH ST STREET 2: TWO NORTH NINTH STREET CITY: ALLENTOWN STATE: PA ZIP: 181011179 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 28, 1998 PP&L RESOURCES, INC. ------------------------------------------------------ (Exact Name of Registrant as Specified in Its Charter) Pennsylvania 1-11459 23-2758192 ------------ ------- ---------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) Two North Ninth Street, Allentown, Pennsylvania 18101-1179 ---------------------------------------------------------- (Address of principal executive offices) Registrant's Telephone Number, including Area Code: (610) 774-5151 --------------- PP&L, INC. ------------------------------------------------------ (Exact Name of Registrant as Specified in Its Charter) Pennsylvania 1-905 23-0959590 ------------ ----- ---------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) Two North Ninth Street, Allentown, Pennsylvania 18101-1179 ---------------------------------------------------------- (Address of principal executive offices) Registrant's Telephone Number, including Area Code: (610) 774-5151 ----------------- ITEM 5. OTHER EVENTS ------------ On April 28, 1998, PP&L Inc. (the "Company") entered into an Underwriting Agreement among the Company, Morgan Stanley & Co. Incorporated, Credit Suisse First Boston Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated and First Chicago Capital Markets, Inc. (collectively, the "Underwriters") for the sale to the Underwriters of the Company's First Mortgage Bonds, 6 1/8% REset Put Securities Series Due 2006 (the "Bonds"). In connection with the issuance of the Bonds under the Underwriting Agreement, the Company intends to enter into a Calculation Agency Agreement with Morgan Stanley & Co. Incorporated and a Securities Purchase Option Letter Agreement with Morgan Stanley & Co. International Limited and Morgan Stanley & Co. Incorporated. The Bonds will be issued and sold pursuant to the Company's Mortgage and Deed of Trust, dated as of October 1, 1945, to Bankers Trust Company (successor to Morgan Guaranty Trust Company of New York), as Trustee, as amended and supplemented by sixty-five indentures supplemental thereto (the "Mortgage"), and as to be amended and supplemented by the Sixty- Sixth Supplemental Indenture to be dated as of May 1, 1998 (the "Sixty-Sixth Supplemental Indenture"). Forms of such Underwriting Agreement, Calculation Agency Agreement, Call Option Letter Agreement and Sixty-Sixth Supplemental Indenture are attached hereto as exhibits to this Current Report on Form 8-K and are incorporated herein by reference. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. The ----------------------------------------------- Company does hereby incorporate by reference into its Registration Statement (File No. 333-48809), as Exhibit 8 thereto, the opinion of Reid & Priest LLP as to certain statements in the Prospectus Supplement dated April 28, 1998 relating to the Bonds under the caption "Certain United States Federal Income Tax Considerations," such opinion being filed herewith as Exhibit 8 to this Form 8-K. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION ----------------------------------------------------- AND EXHIBITS ------------ (c) Exhibits (1.1) Form of Underwriting Agreement, dated April 28, 1998, among PP&L, Inc., Morgan Stanley & Co. Incorporated, Credit Suisse First Boston Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated and First Chicago Capital Markets, Inc. (4.1) Form of Calculation Agency Agreement between PP&L, Inc. and Morgan Stanley & Co. Incorporated. (4.2) Form of Securities Purchase Option Letter Agreement among PP&L, Inc., Morgan Stanley & Co. International Limited and Morgan Stanley & Co. Incorporated. (4.3) Form of Sixty-Sixth Supplemental Indenture between PP&L, Inc. and Bankers Trust Company (successor to Morgan Guaranty Trust Company of New York). (8) Opinion of Reid & Priest LLP, dated April 28, 1998, as to certain statements in the Prospectus Supplement, filed with the Commission in connection with the Registration Statement of PP&L, Inc. (File No. 333-48809), under the caption "Certain United States Federal Income Tax Considerations." (23) Consent of Reid & Priest LLP (included in Exhibit 8). SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PP&L Resources, Inc. PP&L, Inc. Date: May 1, 1998 By: /s/ James E. Abel ------------------------ James E. Abel Treasurer EHIBIT INDEX Exhibit Description ------- ----------- (1.1) Form of Underwriting Agreement, dated April 28, 1998, among PP&L, Inc., Morgan Stanley & Co. Incorporated, Credit Suisse First Boston Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated and First Chicago Capital Markets, Inc. (4.1) Form of Calculation Agency Agreement between PP&L, Inc. and Morgan Stanley & Co. Incorporated. (4.2) Form of Securities Purchase Option Letter Agreement among PP&L, Inc., Morgan Stanley & Co. International Limited and Morgan Stanley & Co. Incorporated. (4.3) Form of Sixty-Sixth Supplemental Indenture between PP&L, Inc. and Bankers Trust Company (successor to Morgan Guaranty Trust Company of New York). (8) Opinion of Reid & Priest LLP, dated April 28, 1998, as to certain statements in the Prospectus Supplement, filed with the Commission in connection with the Registration Statement of PP&L, Inc. (File No. 333-48809), under the caption "Certain United States Federal Income Tax Considerations." (23) Consent of Reid & Priest LLP (included in Exhibit 8). EX-1 2 EXHIBIT 1.1 PP&L, INC. $200,000,000 First Mortgage Bonds, 6 1/8% REset Put Securities Series due 2006 UNDERWRITING AGREEMENT ---------------------- April 28, 1998 Morgan Stanley & Co. Incorporated, Credit Suisse First Boston Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, First Chicago Capital Markets, Inc., As Underwriters, c/o Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036. Ladies and Gentlemen: 1. Introductory. ------------ PP&L, Inc., a Pennsylvania corporation ("Company"), proposes to issue and sell $200,000,000 principal amount of its First Mortgage Bonds, 6 1/8% REset Put Securities Series due 2006 (the "Bonds"), to be issued under the Company's Mortgage and Deed of Trust, dated as of October 1, 1945, to Bankers Trust Company (successor to Morgan Guaranty Trust Company of New York), as Trustee, as amended and supplemented by sixty-five indentures supplemental thereto (the "Mortgage"), and as to be amended and supplemented by a Sixty-Sixth Supplemental Indenture to be dated as of May 1, 1998 (the "Sixty-Sixth Supplemental Indenture") (such Mortgage and Deed of Trust, as amended and supplemented by such sixty-six supplemental indentures, being hereinafter called the "Indenture"), and hereby agrees with the several Underwriters named above ("Underwriters") as follows: 2. Representations and Warranties. ------------------------------ The Company represents and warrants to, and agrees with, the several Underwriters that: (a) The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement (No. 333-48809) on Form S-3, including a prospectus, covering the registration of the Bonds under the Securities Act of 1933, as amended (the "Act"), and such registration statement has become effective. Such registration statement, as amended at the time of its effectiveness, is hereinafter referred to as the "Registration Statement" and such prospectus, as supplemented to reflect the terms of offering and sale of the Bonds by a prospectus supplement to be filed with the Commission pursuant to Rule 424(b) ("Rule 424(b)") under the Act, including all material incorporated by reference therein, is hereinafter 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 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 Act). (b) On its effective date, the Registration Statement conformed in all material respects to the requirements of the Act, the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the published rules and regulations ("Rules and Regulations") of the Commission thereunder and did 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, and on the date of this Agreement, the Prospectus and the Indenture conform in all material respects to the requirements of the Act, the Trust Indenture Act and the Rules and Regulations, and the Prospectus does 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 and, as of the date of this Agreement, no post-effective amendment to the Registration Statement was required to be filed under the Act and the Rules and Regulations; provided that the foregoing representations and warranties in this subsection (b) shall not apply to statements or omissions made in reliance upon and in conformity with information furnished hereunder or otherwise in writing to the Company by or on behalf of any Underwriter for use in connection with the preparation of the Registration Statement or the Prospectus or to any statements in or omissions from the Statement of Eligibility of the Trustee under the Indenture. Each of the several Underwriters represents and warrants to, and agrees with, the Company, its directors and such of its officers as shall have signed the Registration Statement, and to each other Underwriter, that the information furnished in writing to the Company 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 Bonds. -------------------------- On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein contained, the Company agrees to sell to the Underwriters, and the Underwriters agree, severally and not jointly, to purchase from the Company, (i) at a purchase price of 99.59% of the principal amount thereof, plus accrued interest, if any, from the date of the first authentication of the Bonds to the Closing Date (as hereinafter defined), the respective principal amounts of the Bonds set forth below opposite the names of such Underwriters. Principal Amount of Underwriter Bonds ----------- --------- Morgan Stanley & Co. Incorporated . . . . . . . $ 70,000,000 Credit Suisse First Boston Corporation . . . . 50,000,000 Merrill Lynch, Pierce, Fenner & Smith Incorporated . . . . . . . . . . . . . . . . 50,000,000 First Chicago Capital Markets, Inc. . . . . . . 30,000,000 ------------ Total . . . . . . . . . . . . . . . . . . $200,000,000 ============ 4. Public Offering. --------------- The several Underwriters agree that as soon as practicable, in their judgment, they will make a public offering of their respective portions of the Bonds in accordance with the terms set forth in the Prospectus. 5. Delivery and Payment. -------------------- Payment of the full purchase price of the Bonds shall be made by the wire transfer of immediately available funds to the Company's account (No. 2-334-233) at Mellon Bank, N.A. (ABA Routing Number 031000037) by 10:00 A.M., New York Time, on the Closing Date, as hereinafter defined. Such payment shall be made upon delivery of the Bonds to you or upon your order at the office of Reid & Priest, 40 West 57th Street, New York, New York 10019, for the account of the Underwriters. The Bonds so to be delivered will be in fully registered form in such authorized denominations and registered in such names as you may timely request, or to the extent not so requested, registered in the names of the respective Underwriters in such authorized denominations as the Company shall determine. For the purpose of expediting the checking and packaging of the Bonds, the Company will make the Bonds available for inspection by you at the office of Bankers Trust Company, Four Albany Street, New York, New York 10006, Attention: Scott Thiel 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 May 5, 1998 or such other date (i) not later than the seventh full business day thereafter as may be agreed upon in writing by the Company and you, or (ii) as shall be determined by postponement pursuant to the provisions of Section 10 hereof. 6. Certain Covenants of the Company. -------------------------------- The Company covenants and agrees with the several Underwriters: (a) To file the Prospectus with the Commission pursuant to Rule 424(b) not later than the second business day following the execution and delivery of this Agreement; to advise you promptly of any such filing pursuant to Rule 424(b); to advise you promptly of any proposal to amend or supplement the Registration Statement or the Prospectus (including through the filing of any document that would as a result of such filing be incorporated or deemed to be incorporated by reference into the Prospectus), and not to effect such amendment or supplement if you have reasonably objected in writing; also to advise you promptly of (i) any amendment or supplement to the Registration Statement or the Prospectus (including through the filing of any document that would as a result of such filing be incorporated or deemed to be incorporated by reference into the Prospectus), (ii) any request by the Commission for any amendment or supplement to the Registration Statement or the Prospectus or for additional information, and (iii) the institution by the Commission of any stop order proceedings in respect of the Registration Statement or the initiation of any 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 use its best efforts to qualify the Bonds and to assist in the qualification of the Bonds by you or on your behalf for offer and sale under the securities or blue sky laws of such States as you may designate, to continue such qualification in effect so long as required for the distribution of the Bonds 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 Bonds for offer and sale, to continue such qualification, to determine its eligibility for investment and to print the memoranda relating thereto; provided that the Company shall not be required to qualify as a foreign corporation in any State, to consent to service of process in any State other than with respect to claims arising out of the offering or sale of the Bonds, or to meet any other requirement in connection with this paragraph (b) deemed by the Company to be unduly burdensome; (c) Promptly to deliver to you one signed copy 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 you may reasonably request; (d) If at any time when a prospectus relating to the Bonds is required to be delivered under the Act in connection with sales by an Underwriter or dealer, 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 Prospectus to comply with the Act in connection with sales by an Underwriter or dealer, to advise you of such event or necessity, as the case may be, and, promptly upon request made by you, to prepare and file with the Commission 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 and filing any such amendment or supplement (i) which is necessary in connection with such a delivery of a 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 you 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 Bonds and, for the purposes of this subsection (d), the Company shall be entitled to assume that the distribution of the Bonds has been completed when it is advised by you that no Underwriter or such dealer retains any Bonds; (e) As soon as practicable, to 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 Act which will satisfy the provisions of Section 11(a) of the Act; (f) To pay or bear (i) all expenses in connection with the matters herein required to be performed by it, including all expenses (except as provided in Section 6(d) 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 Bonds to the Underwriters at the place designated in Section 5 hereof, and all Federal and State taxes (if any) payable (not including any transfer taxes) upon the original issue of the Bonds, and (ii) all expenses in connection with the printing of this Agreement and to reimburse the Underwriters for expenses incurred in distributing any preliminary prospectus or supplement to the Underwriters; and (g) During the period from the date of this Agreement through the Closing Date, the Company shall not, 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 Bonds, any security convertible into or exchangeable into or exercisable for Bonds or any debt securities substantially similar to the Bonds (except for the Bonds issued pursuant to this Agreement). 7. Conditions of Underwriters' Obligations. --------------------------------------- The obligations of the several Underwriters to purchase and pay for the Bonds on the Closing Date shall be subject to the following conditions: (a) You shall have received from Price Waterhouse LLP a letter, dated the date of this Agreement, confirming that they are independent public accountants within the meaning of the Act and the Rules and Regulations, and stating in effect that: (i) in their opinion the consolidated financial statements and supplemental financial statement schedules examined by them and included or incorporated by reference in the Registration Statement comply as to form in all material respects with the applicable accounting requirements of the Act and the Securities Exchange Act of 1934, as amended, and the related published rules and regulations thereunder; (ii) they have made a review of the unaudited interim financial statements included or incorporated by reference in the Registration Statement in accordance with standards established by the American Institute of Certified Public Accountants; (iii) on the basis of the review referred to in clause (ii) above, a reading of the latest available financial statements of the Company, inquiries of officials of the Company who have responsibility for financial and accounting matters and other specified procedures, nothing came to their attention that caused them to believe that: (A) any material modifications should be made to the unaudited interim financial statements included or incorporated by reference in the Registration Statement for them to be in conformity with generally accepted accounting principles; (B) the unaudited interim financial statements included or incorporated by reference in the Registration Statement do not comply as to form in all material respects with the applicable accounting requirements of the Act and the related published Rules and Regulations; (C) (i) at the date of the latest available balance sheet of the Company read by such accountants, there was any decrease in the common equity (except for shares of certain series of the Company's preferred and preference stocks redeemed for, or purchased and retired in anticipation of, sinking fund requirements for such series or for shares of common stock issued to PP&L Resources, Inc.), or any increase in long-term debt, as compared with amounts shown on the latest consolidated balance sheet included or incorporated by reference in the Registration Statement; or (D) at a date not more than five days prior to the date of this Agreement, there was any decrease in the common equity (except for shares of certain series of the Company's preferred and preference stocks redeemed for, or purchased and retired in anticipation of, sinking fund requirements for such series or for shares of common stock issued to PP&L Resources, Inc.), or any increase in long-term debt, as compared with amounts shown on the latest consolidated balance sheet included or incorporated by reference in the Registration Statement; except in all cases for changes, increases or decreases that the Prospectus discloses have occurred or may occur or that are described in such letter; and (iv) they have compared certain financial and statistical amounts included or incorporated by reference in the Registration Statement and the Prospectus, which amounts are set forth in Schedule A hereto, with the results obtained from inquiries, reading of the general accounting records and financial statements of the Company and other procedures specified in such letter and have found such amounts to be in agreement with such results, except as otherwise specified in such letter. (b) The Prospectus shall have been filed with the Commission in accordance with the Rules and Regulations and Section 6(a) of this Agreement; and prior to such closing 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, shall be contemplated by the Commission and you shall have received at such closing, a certificate, dated the Closing Date, of the Company to such effect. (c) Subsequent to the execution of this Agreement, there shall not have occurred (i) any material adverse change not contemplated by the Prospectus in or affecting particularly the business or properties of the Company which, in the judgment of Morgan Stanley & Co. Incorporated, materially impairs the investment quality of the Bonds; (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 Morgan Stanley & Co. Incorporated, 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 Bonds and Morgan Stanley & Co. Incorporated shall have made a similar determination with respect to all other underwritings of debt securities in which they are participating and have the contractual right to make such a determination; or (v) any decrease in the ratings of the Bonds by Standard & Poor s Ratings Group or Moody s Investors Service, Inc. or either such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of the Bonds. (d) At or before the Closing Date, the Pennsylvania Public Utility Commission and any other regulatory authority whose consent or approval shall be required for the issue and sale of the Bonds by the Company as herein provided shall have taken all requisite action, or all such 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. (e) You shall have received from Michael A. McGrail, Esq., Senior Counsel, or such other counsel for the Company as may be acceptable to you, an opinion, dated the Closing Date, 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 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 Bonds have been duly authorized, authenticated and delivered and are valid and legally binding obligations of the Company entitled to the benefits and security of the Indenture, enforceable in accordance with their terms (except to the extent limited by bankruptcy, insolvency or reorganization laws or by laws relating to or affecting the enforcement of creditors' rights and by general equity principles) and are secured equally and ratably with all other bonds outstanding under the Mortgage except insofar as any sinking or other fund may afford additional security for the bonds of any particular series; (iii) The Indenture has been duly authorized, executed and delivered, and constitutes a valid and legally binding obligation of the Company enforceable in accordance with its terms (except to the extent limited by bankruptcy, insolvency or reorganization laws or by laws relating to or affecting the enforcement of creditors' rights and by general equity principles); and no authorization, vote, consent or action by the holders of any of the outstanding shares of capital stock of the Company is necessary with respect thereto; (iv) The Mortgage constitutes, and together with the Sixty-Sixth Supplemental Indenture, when the latter has been duly recorded, will constitute, the valid direct first mortgage lien such instruments purport to create upon the interest of the Company in the property and franchises therein described (except any which have been duly released from the lien thereof); (v) The Company has fee title to all the real property and has good and valid title to all of the personal property described in the Indenture as owned by it and as subject to the lien thereof, subject only to (1) minor leases which, in the opinion of such counsel, do not interfere with the Company's business; (2) minor defects, irregularities and deficiencies in titles of properties and rights-of-way which, in the opinion of such counsel, do not materially impair the use of such property and rights-of-way for the purposes for which they are held by the Company; (3) other excepted encumbrances as defined in Section 6 of the Company's Mortgage; and (4) the provisions of the licenses and the limited power permits covering the Company's Wallenpaupack and Holtwood hydroelectric projects; the Mortgage, subject only as set forth above, constitutes, and the Sixty-Sixth Supplemental Indenture, subject only as set forth above, when it shall have been duly recorded, will constitute, together and as a single instrument, a valid direct first mortgage lien upon said properties, which include all of the physical properties and franchises of the Company (except such property as may have been duly released from the lien thereof and such property as may not be subjected to the lien thereof under the laws of the Commonwealth of Pennsylvania without the delivery thereof to the Trustee, and certain other classes of property expressly excepted in the Indenture); and all physical properties and franchises (other than those of the character not subject to the lien of the Mortgage as aforesaid) acquired by the Company after the respective dates of the Mortgage and the Sixty-Sixth Supplemental Indenture have become or will, upon such acquisition, become subject to the lien thereof, subject, however, to excepted encumbrances and to liens, if any, existing or placed thereon at the time of the acquisition thereof by the Company; (vi) The Mortgage has been duly filed and recorded in all jurisdictions in which it is necessary to be filed and recorded in order to constitute a lien of record on the property subject thereto; (vii) The portions of the information contained in the Prospectus, which are stated therein to have been made on his authority, have been reviewed by him and, as to matters of law and legal conclusions, are correct; (viii) 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 in the Registration Statement or the Prospectus; (ix) This Agreement has been duly authorized, executed and delivered by the Company; and each of the Calculation Agency Agreement (the Calculation Agency Agreement ) between Morgan Stanley & Co. Incorporated and the Company and the Call Option Agreement (the Call Option Agreement ) between Morgan Stanley & Co. International Limited and Morgan Stanley & Co. Incorporated, on the one hand, and the Company, on the other hand, has been duly authorized, executed and delivered by the Company, and constitutes a valid and legally binding obligation of the Company enforceable in accordance with its terms (except to the extent limited by bankruptcy, insolvency or reorganization laws or by laws relating to or affecting the enforcement of creditors' rights and by general equity principles); (x) All legally required proceedings in connection with the authorization and issue of the Bonds and the sale of the Bonds by the Company in the manner set forth herein, have been had and remain in effect, the Securities Certificate of the Company with respect to the Bonds has been duly registered pursuant to Section 1903 of the Pennsylvania Public Utility Code (66 Pa. C.S.
1903), as amended, and such registration remains in effect, and all requisite action of public boards or bodies (other than in connection or in compliance with the provisions of the securities or "blue sky" laws of any jurisdiction) as may be legally required with respect to all or any of such matters or related thereto has been taken and remains in effect, and the Company is exempt from the provisions of the Public Utility Holding Company Act of 1935 applicable to it as a holding company and with respect to such authorization, issue and sale; (xi) Except as described in the Registration Statement and the Prospectus, the Company holds all franchises, certificates of public convenience, licenses and permits necessary to carry on the utility business in which it is engaged; and (xii) All taxes payable to any State or subdivision thereof in connection with the execution, delivery and recordation of the Mortgage and the Sixty-Sixth Supplemental Indenture, the execution, authentication, issuance and delivery of the Bonds being delivered on this date, and the mortgaging of property under the Mortgage and the Sixty-Sixth Supplemental Indenture have been paid, except that a Commonwealth of Pennsylvania tax of fifty cents must be paid in each county in which the Sixty-Sixth Supplemental Indenture is recorded, at the time of recording. (f) You shall have received from Reid & Priest LLP, special counsel to the Company, an opinion, dated the Closing Date, to the effect that: (i) The Bonds have been duly authorized, authenticated and delivered and are valid and legally binding obligations of the Company entitled to the benefits and security of the Indenture, enforceable in accordance with their terms (except to the extent limited by bankruptcy, insolvency or reorganization laws or by laws relating to or affecting the enforcement of creditors' rights and by general equity principles); (ii) The Indenture has been duly authorized, executed and delivered, is duly qualified under the Trust Indenture Act and constitutes a valid and legally binding obligation of the Company enforceable in accordance with its terms (except to the extent limited by bankruptcy, insolvency or reorganization laws or by laws relating to or affecting the enforcement of creditors' rights and by general equity principles); (iii) The Registration Statement has become effective under the 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 proceedings for that purpose have been instituted or are pending or contemplated under the Act, and the Registration Statement, as of its effective date, the Prospectus, as of the date of this Agreement, and any amendment or supplement thereto, as of its date, complied as to form in all material respects with the requirements of the Act, the Trust Indenture Act and the Rules and Regulations and nothing has come to the attention of such counsel which would lead such counsel to believe either that the Registration Statement, at its effective date, 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 supplemented, as of the date of this Agreement, and as it shall have been amended or supplemented, as of the Closing Date, contained any untrue statement of a material fact or omits or omitted 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; (iv) The Indenture and the Bonds conform, as to legal matters, in all material respects, with the statements concerning them made in the Prospectus; (v) This Agreement has been duly authorized, executed and delivered by the Company; and each of the Calculation Agency Agreement and the Call Option Agreement has been duly authorized, executed and delivered by the Company, and constitutes a valid and legally binding obligation of the Company enforceable in accordance with its terms (except to the extent limited by bankruptcy, insolvency or reorganization laws or by laws relating to or affecting the enforcement of creditors' rights and by general equity principles); (vi) The Securities Certificate of the Company with respect to the Bonds has been duly registered pursuant to Section 1903 of the Pennsylvania Public Utility Code (66 Pa. C.S.
1903), as amended, and no further approval, authorization, consent or other order of any public board or body (other than in connection or compliance with the provisions of the securities or "blue sky" laws of any jurisdiction) is legally required for the authorization of the issuance and sale of the Bonds; and (vii) The statements in the Prospectus under the caption Certain United States Federal Income Tax Considerations constitute an accurate summary of matters described therein, in all material respects. In rendering such opinion, Reid & Priest LLP may rely as to matters governed by Pennsylvania law upon the opinion of Michael A. McGrail, Esq. or such other counsel referred to in subsection (e). (g) You shall have received from Sullivan & Cromwell, counsel for the Underwriters, such opinion or opinions, dated the Closing Date, with respect to the validity of the Bonds, the Registration Statement, the Prospectus, this Agreement and other related matters as you 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 or opinions, Sullivan & Cromwell may rely as to matters governed by Pennsylvania law upon the opinion of Michael A. McGrail, Esq. or such other counsel referred to above. (h) You 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, in which such officers, to the best of their knowledge after reasonable investigation, shall state that (i) the representations and warranties of the Company in this Agreement are true and correct (except for immaterial details) as of the Closing Date, (ii) the Company has complied in all material respects 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 except as set forth or contemplated in the Prospectus or as described in such certificate. (i) You shall have received a letter from Price Waterhouse LLP, dated the Closing Date, which meets the requirements of subsection (a) of this Section, except that the specified date referred to in such subsection will be a date not more than five days prior to the Closing Date for the purposes of this subsection and references to the prospectus shall be changed to refer to the Prospectus. The Company will furnish you as promptly as practicable after the Closing Date with such conformed copies of such opinions, certificates, letters and documents as you may reasonably request. In case any such condition shall not have been satisfied, this Agreement may be terminated by you upon notice in writing or by telegram to the Company without liability or obligation on the part of the Company or any Underwriter, except as provided in Sections 6(b), 6(f), 9, 11 and 13 hereof. 8. Conditions of Company's Obligations. ----------------------------------- The obligations of the Company to sell and deliver the Bonds 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 Company, shall be contemplated. (b) At or before the Closing Date, the Pennsylvania Public Utility Commission and any other regulatory authority whose consent or approval shall be required for the issue and the sale of the Bonds by the Company 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. (c) At or before the Closing Date, Morgan Stanley & Co. International Limited as the initial callholder shall have paid all amounts payable under Sections 6 and 7 of the Call Option Agreement. If any such conditions shall not have been satisfied, then the Company shall be entitled, by notice in writing or by telegram to you, to terminate this Agreement without any liability on the part of the Company or any Underwriter, except as provided in Sections 6(b), 6(f), 9, 11 and 13 hereof. 9. Indemnification and Contribution. -------------------------------- (a) The Company agrees that it will indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Act, against any loss, expense, claim, damage or liability to which, jointly or severally, such Underwriter or such controlling person may become subject, under the 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 Company agrees to reimburse each Underwriter and each person who controls any Underwriter as aforesaid for any reasonable legal or other expenses 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 -------- Company 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 Company by or through you on behalf of any Underwriter 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 Statement of Eligibility under the Trust Indenture Act of the Trustee under the Indenture; 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 Bonds 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 Bonds to such person. (b) Each Underwriter agrees that it will indemnify and hold harmless the Company and its officers and directors, and each of them, and each person, if any, who controls the Company within the meaning of Section 15 of the Act, against any loss, expense, claim, damage or liability to which it or they may become subject, under the 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 furnished to the Company by or through you on behalf of such Underwriter expressly for use in any such document; and, except as hereinafter in this Section provided, each Underwriter agrees to reimburse the Company and its officers and directors, and each of them, and each person, if any, who controls the Company within the meaning of Section 15 of the 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. 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 Bonds. (d) If any Underwriter or person entitled to indemnification by the terms of subsection (a) of this Section 9 shall have given notice to the Company of a claim in respect thereof pursuant to subsection (c) of this Section 9, 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 Company to liabilities and expenses, except to the extent that contribution is not permitted under Section 11(f) of the 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 Company from the offering of the Bonds (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 Company 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). 10. Default of Underwriters. ----------------------- If any Underwriter or Underwriters default in their obligations to purchase Bonds hereunder, you may make arrangements satisfactory to the Company for the purchase of such Bonds by other persons, including any of the Underwriters, but if no such arrangements are made by the Closing Date, the other Underwriters shall be obligated, severally in the proportion which their respective commitments hereunder bear to the total commitment of the non-defaulting Underwriters, to purchase the Bonds which such defaulting Underwriter or Underwriters agreed but failed to purchase. In the event that any Underwriter or Underwriters default in their obligations to purchase Bonds hereunder, the Company may by prompt written notice to the non- defaulting Underwriters postpone the Closing 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 the Prospectus or in any other documents, 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 "Underwriter" includes any person substituted for an Underwriter under this Section. Nothing herein will 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 of or on behalf of the several 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 Company or any of its officers or directors or any controlling person, and will survive delivery of and payment for the Bonds. If for any reason the purchase of the Bonds by the Underwriters is not consummated, the Company shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 6 and the respective obligations of the Company and the Underwriters pursuant to Section 9 hereof shall remain in effect. 12. Notices. ------- The Company 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 you jointly or by Morgan Stanley & Co. Incorporated. All statements, requests, notices, consents and agreements hereunder shall be in writing, or by telegraph subsequently confirmed in writing, and, if to the Company, shall be sufficient in all respects if delivered or mailed to the Company, attention of its Treasurer, at Two North Ninth Street, Allentown, Pennsylvania 18101, and, if to you, shall be sufficient in all respects if delivered or mailed to you at the address set forth on the first page hereof; 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 any, of such Underwriter furnished to the Company in writing for the purpose of communications hereunder. 13. Parties in Interest. ------------------- This Agreement shall inure solely to the benefit of the Company 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 to any person who controls the Company, 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 one who shall acquire all or substantially all of such Underwriter's business and properties), nor shall it include any purchaser of Bonds from any Underwriter merely because of such purchase. 14. Representation of Underwriters. ------------------------------ Any action under this Agreement taken by Morgan Stanley & Co. Incorporated will be binding upon all the Underwriters. 15. Applicable Law. -------------- This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. 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 several Underwriters in accordance with its terms. Yours very truly, PP&L, INC. By: -------------------------------- Name: Title: The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written. MORGAN STANLEY & CO. INCORPORATED, CREDIT SUISSE FIRST BOSTON CORPORATION, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, FIRST CHICAGO CAPITAL MARKETS, INC. By MORGAN STANLEY & CO. INCORPORATED By: ------------------------------ Name: Title: SCHEDULE A ---------- Additional Matters to be Included in Accountants' Comfort Letter Pursuant to Section 7(a)(iv) of Underwriting Agreement --------------------------------------------- PROSPECTUS CAPTION PAGE ITEMS ------------------ ---- --------------------------- "SUMMARY FINANCIAL INFORMATION" . "Ratio of Earnings to Fixed Charges -- Total Enterprise Basis" and supporting calculations shown on Exhibit 12 to the Registration Statement. "RECENT DEVELOPMENTS". Quarterly net income and net income per share FORM 10-K CAPTION PAGE ITEMS ----------------- ---- --------------------------- "REVIEW OF THE COMPANY'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Operating Revenues" Table entitled "Changes in Operating Revenues". "REVIEW OF THE COMPANY'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS --Capital Expenditures Requirements" The Company's actual construction expenditures during the three years 1995- 1997. "REVIEW OF THE COMPANY'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Financial Indicators" The Company's ratio of pre-tax income to interest charges for 1996 and 1997. EX-4 3 EXHIBIT 4.1 CALCULATION AGENCY AGREEMENT Between MORGAN STANLEY & CO. INCORPORATED and PP&L, INC. This Calculation Agency Agreement (the "Agreement"), dated as of May 5, 1998, is made between PP&L, Inc. (the "Company") and Morgan Stanley & Co. Incorporated (the "Calculation Agent"). The Company proposes to issue and sell its First Mortgage Bonds, 6 1/8% REset Put Securities Series Due 2006 (the "Bonds"), described in a Prospectus Supplement dated April 28, 1998 (the "Prospectus Supplement"), to the Prospectus dated April 2, 1998 (the "Prospectus"), and issued pursuant to a Mortgage and Deed of Trust dated as of October 1, 1945, between the Company and Bankers Trust Company (successor to Morgan Guaranty Trust Company of New York), as Trustee, as amended and supplemented by sixty-six supplemental indentures (as so amended and supplemented, the "Indenture"), in an aggregate principal amount of $200,000,000. The Bonds will be issued and the terms thereof established in accordance with the Indenture, the form of bond (the "Form of Bond"), the Prospectus Supplement and the Prospectus included in the registration statement on Form S-3 filed with the Securities and Exchange Commission (the "Commission") (Registration No. 333-48809). The Company may from time to time file with the Commission additional registration statements and prospectuses relating to the Bonds. The interest rate on the Bonds will be 6 1/8% upon issuance and may be reset in accordance with Section 3 hereof and the Form of Bond attached hereto as Appendix A. Capitalized terms used but not defined herein shall have the same meanings as in the Form of Bond. SECTION 1. Appointment of Calculation Agent. The -------------------------------- Company hereby appoints Morgan Stanley & Co. Incorporated as the Calculation Agent for the purpose of calculating the Coupon Reset Rate (as defined below). SECTION 2. Status of Calculation Agent. Any acts --------------------------- taken by the Calculation Agent under this Agreement or in connection with any Bonds, including, specifically, but without limitation, the calculation of any interest rate for the Bonds, shall be deemed to have been taken by the Calculation Agent solely in its capacity as an agent acting on behalf of the Company and shall not create or imply any obligation to, or any agency or trust relationship with, any of the owners or holders of the Bonds. SECTION 3. Coupon Reset Process. If the Call Option -------------------- is exercised in accordance with the terms of the Form of Bond under "Call Option; Put Option", then the following steps (the "Coupon Reset Process") shall be taken in order to determine the interest rate to be paid on the Bonds from and including the Coupon Reset Date to the Final Maturity Date. The Company and the Calculation Agent shall use reasonable efforts to cause the actions contemplated below to be completed in as timely a manner as possible. (i) The Company shall provide the Calculation Agent with (a) a list (the "Dealer List"), no later than five Business Days prior to the Coupon Reset Date, containing the names and addresses of three dealers, one of which shall be Morgan Stanley & Co. Incorporated, from which the Company desires the Calculation Agent to obtain the Bids (as defined below) for the purchase of such Bonds, and (b) a copy of any other material reasonably requested by the Calculation Agent to facilitate a successful Coupon Reset Process. (ii) Within one Business Day following receipt by the Calculation Agent of the Dealer List, the Calculation Agent shall provide to each dealer ("Dealer") on the Dealer List (a) a copy of the Prospectus Supplement and the Prospectus, relating to the offering of the Bonds, (b) a copy of the Form of Bond and (c) a written request that each such Dealer submit a Bid to the Calculation Agent by 12:00 noon, New York time, on the third Business Day prior to the Coupon Reset Date (the "Bid Date"). The time on the Bid Date upon which Bids will be requested may be changed by the Calculation Agent to as late as 3:00 p.m. New York City time. "Bid" shall mean an irrevocable written offer given by a Dealer for the purchase of all of the Bonds settling on the Coupon Reset Date, and shall be quoted by such Dealer as a stated yield to maturity on the Bonds ("Yield to Maturity"). Each Dealer shall also be provided with (a) the name of the Company, (b) an estimate of the Purchase Price (which shall be stated as a US Dollar amount and be calculated by the Calculation Agent in accordance with clause (iii) below), (c) the principal amount and Maturity Date of the Bonds and (d) the method by which interest will be calculated on the Bonds. (iii) The purchase price to be paid by any Dealer for the Bonds (the "Purchase Price") shall be equal to (a) the principal amount of the Bonds, plus (b) a premium (the "Bond Premium") which shall be equal to the excess, if any, of (1) the discounted present value to the Coupon Reset Date of a bond with a maturity of May 1, 2006 which has an interest rate of 5.72%, semi-annual interest payments on each May 1 and November 1, commencing November 1, 2001, and a principal amount equal to the principal amount of the Bonds, and assuming a discount rate equal to the Treasury Rate over (2) the principal amount of Bonds. The "Treasury Rate" means the per annum rate equal to the offer side yield to maturity of the current on-the-run 5-year United States Treasury security per Telerate page 500, or any successor page, at 11:00 a.m., New York time, on the Bid Date (or such other date and time that may be agreed upon by the Company and the Calculation Agent) or, if such rate does not appear on Telerate page 500, or any successor page, at such time, such rate on GovPx End-of-Day Pricing at 3:00 p.m., New York time, on the Bid Date (or such other date and time that may be agreed upon by the Company and the Calculation Agent). (iv) The Calculation Agent shall provide written notice to the Company by 12:30 p.m., New York time, on the Bid Date (or within 1/2 hour following the deadline for submission of Bids, if the deadline has been extended as provided above) setting forth (a) the names of each of the Dealers from whom such Calculation Agent received Bids on the Bid Date, (b) the Bid submitted by each such Dealer and (c) the Purchase Price as determined pursuant to paragraph (iii) hereof. Except as provided below, the Calculation Agent shall thereafter select from the Bids received the Bid with the lowest Yield to Maturity (the "Selected Bid"); provided, -------- however, that if such Calculation Agent has not received a ------- timely Bid from a Dealer on or before the Bid Date, the Selected Bid shall be the lowest of all Bids received by such time; and provided further that if any two or more of -------- ------- the lowest Bids submitted are equivalent, the Company shall in its sole discretion select any of such equivalent Bids (and such selected Bid shall be the Selected Bid). The Calculation Agent shall set the Coupon Reset Rate equal to the lesser of 9% (the "Maximum Rate") and the rate required to produce a semi-annual bond equivalent yield on the Bonds equal to the Yield to Maturity indicated by the Selected Bid and assuming a purchase price of 100% plus the Bond Premium on the Coupon Reset Date and payment of the Bonds on the Final Maturity Date. The Calculation Agent will notify the Dealer that submitted the Selected Bid by 4:00 p.m., New York time, on the Bid Date that its Bid was determined to be the Selected Bid. (v) Immediately after calculating the Coupon Reset Rate, the Calculation Agent shall provide written notice to the Company and the Trustee, setting forth such Coupon Reset Rate. At the request of the Holders, the Calculation Agent will provide to the Holders the Coupon Reset Rate. The Coupon Reset Rate for such Bonds will be effective from and including the Coupon Reset Date. (vi) The Callholder shall sell such Bonds to the Dealer that made the Selected Bid at the Purchase Price; such sale to be settled on the Coupon Reset Date in immediately available funds. (vii) In the event that the Call Option is terminated in accordance with its terms, the Coupon Reset Process shall also terminate. SECTION 4. Rights and Liabilities of the Calculation ----------------------------------------- Agent. The Calculation Agent shall incur no liability for, or in ----- respect of, any action taken, omitted to be taken or suffered by it in reliance upon any certificate, affidavit, instruction, notice, request, direction, order, statement or other paper, document or communication reasonably believed by it to be genuine. Any order, certificate, affidavit, instruction, notice, request, direction, statement or other communication from the Company made or given by it and sent, delivered or directed to the Calculation Agent under, pursuant to, or as permitted by, any provision of this Agreement shall be sufficient for purposes of this Agreement if such communication is in writing and signed by any officer or attorney-in-fact of the Company. The Calculation Agent may consult with counsel satisfactory to it and the advice of such counsel shall constitute full and complete authorization and protection of such Calculation Agent with respect to any action taken, omitted to be taken or suffered by it hereunder in good faith and in accordance with and in reliance upon the advice of such counsel. SECTION 5. Right of Calculation Agent to Own Bonds. --------------------------------------- The Calculation Agent, in its individual capacity, and its officers, employees and shareholders, may buy, sell, hold and deal in the Bonds and may exercise any vote or join in any action which any holder of the Bonds may be entitled to exercise or take as if it were not the Calculation Agent. The Calculation Agent, in its individual capacity as such, may also engage in or have an interest in any transaction with the Company or its affiliates as if it were not the Calculation Agent. SECTION 6. Duties of Calculation Agent. In acting --------------------------- under this Agreement in connection with the Bonds, the Calculation Agent shall be obligated only to perform such duties as are specifically set forth herein and no other duties or obligations on the part of such Calculation Agent, in its capacity as such, shall be implied by this Agreement. In acting under this Agreement, the Calculation Agent (in its capacity as such) assumes no obligation towards, or any relationship of agency or trust for or with, the holders of the Bonds. SECTION 7. Registration Procedures. If, at any time ----------------------- when a prospectus is required by the Securities Act of 1933 (the "Act") to be delivered in connection with sales of the Bonds (including any sale of Bonds by a Callholder or the underwriters of the Bonds set forth in the Prospectus Supplement (the "Underwriters") or any of their affiliates following any exercise of the Bond Call Option), any event shall occur or condition shall exist as a result of which it is necessary, in the reasonable opinion of counsel for the Underwriters or for the Company, to amend any registration statement or amend or supplement any prospectus or prospectus supplement in order that such prospectus or prospectus supplement will not include any untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the opinion of such counsel, at any such time to amend any registration statement or file a new registration statement or amend or supplement any prospectus or issue a new prospectus or prospectus supplement in order to comply with the requirements of the Act or the Commission s interpretations of the Act, the Company shall prepare and file with the Commission such amendment or supplement as may be necessary to correct such statement or omission or to make any such registration statement or any such prospectus or prospectus supplement comply with such requirements, or prepare and file any such new registration statement and prospectus as may be necessary for such purpose, and furnish to the Underwriters such number of copies of such amendment, supplement, prospectus or other documents as they may reasonably request. In addition, the Company shall, in connection with any such sale of the applicable principal amount of Bonds by a Callholder or the Underwriters or any of their affiliates following the exercise by such Callholder of its Bond Call Option in which a prospectus is required by the Act to be delivered, (i) execute and deliver or cause to be executed and delivered legal documentation (including, without limitation, a purchase agreement or underwriting agreement with customary indemnities and contribution, covenants, representations and warranties, expense provisions, conditions, comfort letters and legal opinions) in form and substance reasonably satisfactory to such Callholder, (ii) provide promptly upon request updated consolidated financial statements to the date of its latest report filed with the Commission, and (iii) to the extent the Company and the Callholder deem reasonably necessary for successful completion of the Coupon Reset Process, make available senior management of the Company for road show and one-on-one presentations. This Section 7 shall not supercede or modify the provisions of Section 6(e) of the Underwriting Agreement referred to in the Prospectus Supplement with respect to the negotiated public offering and sale of the Bonds pursuant to such Underwriting Agreement and the Prospectus Supplement and the Basic Prospectus referred to therein. SECTION 8. Resignation of the Calculation Agent. The ------------------------------------ Calculation Agent may resign at any time as Calculation Agent, such resignation to be effective ten Business Days after the delivery to the Company and the Trustee of notice of such resignation. The Company may appoint a new Calculation Agent other than the incumbent Calculation Agent if the incumbent Calculation Agent resigns. If a new Calculation Agent is appointed pursuant to this Section 8, the Company shall provide the Trustee with notice thereof. SECTION 9. Appointment of Successor Calculation Agent. ------------------------------------------ Any successor Calculation Agent appointed by the Company pursuant to the provisions of Section 8 or by a court of competent jurisdiction shall execute and deliver to the incumbent Calculation Agent and to the Company an instrument accepting such appointment and thereupon such successor Calculation Agent shall, without any further act or instrument, become vested with all the rights, immunities, duties and obligations of the incumbent Calculation Agent, with like effect as if originally named as initial Calculation Agent hereunder, and the incumbent Calculation Agent shall thereupon be obligated to transfer and deliver, and such successor Calculation Agent shall be entitled to receive and accept, copies of any available records maintained by the incumbent Calculation Agent in connection with the performance of its obligations hereunder. SECTION 10. Indemnification. The Company shall --------------- indemnify and hold harmless Morgan Stanley & Co. Incorporated, or any successor Calculation Agent thereof, and their respective officers and employees from and against all actions, claims, damages, liabilities and losses, and costs and expenses related thereto (including but not limited to reasonable legal fees and costs) relating to or arising out of actions or omissions in any capacity hereunder, except actions, claims, damages, liabilities, losses, costs and expenses caused by the bad faith, gross negligence or wilful misconduct of Morgan Stanley & Co. Incorporated or any successor Calculation Agent, or their respective officers or employees. This Section 10 shall survive the termination of the Agreement and the payment in full of all obligations under the Bonds, whether by redemption, repayment or otherwise. SECTION 11. Merger, Consolidation or Sale of Business ----------------------------------------- by Calculation Agent. Any corporation or other entity into --------------------- which the Calculation Agent may be merged, converted or consolidated, or any corporation or other entity resulting from any merger, conversion or consolidation to which such Calculation Agent may be a party, or any corporation or other entity to which such Calculation Agent may sell or otherwise transfer all or substantially all of its business, shall, to the extent permitted by applicable law, become the Calculation Agent under this Agreement without the execution of any document or any further act by the parties hereto. SECTION 12. Notices. Any notice or other ------- communication required to be given hereunder shall be delivered in person, sent by letter, telecopy or telex or communicated by telephone (subject, in the case of communication by telephone, to written confirmation dispatched within twenty-four (24) hours) to the addresses given below or such other address as each party hereto may subsequently designate in writing. To the Company: PP&L, Inc. Two North Ninth Street Allentown, PA 18101 Attention: Treasurer Telephone No.:610-774-5151 Telecopy No.:610-774-5106 To the Trustee: Bankers Trust Company 4 Albany Street New York, N.Y. 10008 Attention: Scott Thiel Telephone No.:212-250-8327 Telecopy No.:212-250-6392 To the Calculation Agent: Morgan Stanley & Co. Incorporated 1585 Broadway, 3rd Floor New York, New York 10036 Attention: DPG Telephone No: (212) 761-2566 Telecopy No.: (212) 761-0580 Any notice hereunder given by telecopy or telex shall be deemed to have been given when transmitted. Any notice hereunder given by letter shall be deemed to have been given five business days after mailing such notice. SECTION 13. Benefit of Agreement. Except as provided -------------------- herein, this Agreement is solely for the benefit of the parties hereto and their successors and assigns, and no other person shall acquire or have any rights under or by virtue hereof. The terms "successors" and "assigns" shall not include any purchasers of any Bonds merely because of such purchase. SECTION 14. Governing Law. This Agreement shall be ------------- governed by and construed in accordance with the laws of the State of New York applicable to agreements entered into and performed in such State. SECTION 15. Severability. If any provision of this ------------ Agreement shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any or all jurisdictions because it conflicts with any provision of any constitution, statute, rule or public policy or for any other reason, such circumstances shall not have the effect of rendering the provision in question invalid, inoperative or unenforceable in any other case, circumstances or jurisdiction, or of rendering any other provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatsoever. SECTION 16. Counterparts. This Agreement may be ------------ executed in several counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same instrument. SECTION 17. Amendments. This Agreement may be amended ---------- by any instrument in writing executed and delivered by each of the parties hereto. IN WITNESS WHEREOF, this Agreement has been entered into as of the fifth day of May, 1998. PP&L, INC. By: --------------------------- Name: MORGAN STANLEY & CO. INCORPORATED By: --------------------------- Name: Title: Appendix A (Form of Bond) EX-4 4 EXHIBIT 4.2 May 5, 1998 PP&L, Inc. Two North Ninth Street Allentown, PA 18101 Attn: Treasurer Facsimile: Our Reference: PP&L Call Option TRANSACTION: (SECURITIES PURCHASE OPTION AGREEMENT -- PP&L, INC. CALL OPTION WITH MORGAN STANLEY & CO. INTERNATIONAL LIMITED) The purpose of this letter agreement (this "Agreement") is to confirm the terms and conditions of the Transaction entered into between MORGAN STANLEY & CO. INTERNATIONAL LIMITED, a corporation organized under the laws of England ("Morgan Stanley" or "Seller"), and PP&L, INC., a corporation organized under the laws of the State of Pennsylvania ("Counterparty" or "Buyer"), on the Trade Date specified below (the "Transaction"). The definitions and provisions contained in the 1991 ISDA Definitions (as published by the International Swaps and Derivatives Association, Inc.)(the "1991 Definitions") are hereby incorporated into this Agreement. In the event of any inconsistency between those definitions and provisions and this Agreement, this Agreement will govern. Capitalized terms not otherwise defined herein shall have the meanings set forth in the 1991 Definitions. This Agreement will be governed by and construed in accordance with the laws of the State of New York without reference to choice of law doctrine. The terms of the Transaction to which this Agreement relates are as follows: 1. GENERAL TERMS: Trade Date: April 28, 1998. Option Style: American Option. Option Type: Call. Seller: Morgan Stanley & Co. International Limited. Buyer: Counterparty. Bonds: US$ 200,000,000 First Mortgage Bonds 6 % REset Put Securities Series due 2006 of the Issuer. Indenture: The Mortgage and Deed of Trust dated as of October 1, 1945, between the Issuer and Bankers Trust Company (successor to Morgan Guaranty Trust Company of New York), as trustee, as amended and supplemented by sixty-six supplemental indentures (as so amended and supplemented, the "Indenture"), pursuant to which the Bonds were issued. Issuer: Counterparty. Aggregate Face US$ 200,000,000. Amount of Bonds: Settlement Amount: The excess, if any, on the Coupon Reset Date of (a) the aggregate present value of the principal and interest payments that would have been due on the Aggregate Face Amount of Bonds after such date if such Bonds bore interest at the rate of 5.72% and remained outstanding until May 1, 2006, determined by discounting, on a semi-annual basis, such principal and interest payments at the Treasury Rate from the respective dates on which such payments would have been due, over (b) the Aggregate Face Amount of Bonds. Settlement The Coupon Reset Date. Date: Treasury Rate: The per annum rate equal to the offer side yield to maturity of the current on-the- run 5-year United States Treasury Security per Telerate page 500, or any successor page, at 11:00 a.m., New York time, on the third Business Day prior to the Coupon Reset Date (the "Bid Date") (or such other date that may be agreed upon by the Counterparty and the Calculation Agent) or, if such rate does not appear on Telerate page 500, or any successor page, at such time, such rate on GovPX End-of- Day Pricing at 3:00 p.m., New York time, on the Bid Date (or such other date and time that may be agreed upon by the Counterparty and the Calculation Agent). Coupon Reset Date: May 1, 2001. Premium: None. Business Day: Any day other than a Saturday, a Sunday or a day on which banking institutions in the City of New York are authorized or required by law or regulation to be closed. Business Day Following. Convention: Calculation Morgan Stanley & Co. Incorporated Agent: ("MS&Co."), as described in the Calculation Agency Agreement dated as of May 5, 1998, between the Counterparty and MS&Co., whose determinations shall be binding in the absence of manifest error. 2. PROCEDURE FOR EXERCISE: Exercise Period: Any Business Day from, and including, 15 calendar days prior to the Coupon Reset Date to, and including, the Expiration Date, between 9:00 a.m. and 3:00 p.m., New York City time. Condition to It shall be a condition to exercise of Exercise: the right granted to the Counterparty pursuant to this Agreement that the Bond Call Option shall have been exercised. Bond Call Option: The call option on the Bonds provided for in the terms of the Bonds and as assigned to Morgan Stanley in Section 7. Exercise Date: The date on which notice of exercise is given during the Exercise Period. Expiration Date: The fourth Business Day after 15 calendar days prior to the Coupon Reset Date; provided, however, that in the event of a -------- ------- Market Disruption Event, the Expiration Date shall be the Bid Date. Notice of Exercise The Counterparty must deliver and Written irrevocable notice to Morgan Stanley Confirmation: (which may be delivered orally, including by telephone) of its exercise of the right granted pursuant to this Agreement during the hours of 9:00 a.m. to 3:00 p.m, New York time, on any Business Day during the Exercise Period. If a notice of exercise is delivered orally, the Counterparty will execute and deliver a written confirmation confirming the substance of that notice and account details or delivery instructions within one Business Day of that notice. Failure to provide that written confirmation will not affect the validity of that oral notice. 3. SETTLEMENT TERMS: If (a) this Agreement has not been terminated and (b) Morgan Stanley actually has received a Notice of Exercise from the Counterparty during the Exercise Period, then: (1) Morgan Stanley shall promptly deliver to the Counterparty an assignment of all its right, title and interest and obligations in, to and under the Bond Call Option; (2) the Counterparty shall automatically and without further action assume and be liable for the performance of all of Morgan Stanley's obligations under the Bond Call Option; and (3) the Counterparty shall pay the Settlement Amount (in immediately available funds) to Morgan Stanley on the Settlement Date. 4. NOTICE AND ACCOUNT DETAILS: Morgan Stanley Morgan Stanley & Co. International Details for Limited Notice: In care of Morgan Stanley & Co. Incorporated 1585 Broadway, 3rd Floor New York, NY 10036 Telephone: 212-761-2566 Telefax: 212-761-0580 Attention: Derivative Products Group -- Legal & Documentation with a copy to: Morgan Stanley & Co. Incorporated 1585 Broadway, 3rd Floor New York, NY 10036 Telephone: 212-761-2566 Telefax: 212-761-0580 Attention: Derivative Products Group -- Legal & Documentation Counterparty PP&L, Inc. Details for Two North Ninth Street Notice: Allentown, PA 18101 Attention: Treasurer Account Details: Account Citibank, New York Details of ABA 021-000-089 Morgan A/c No. 4072-4601 Stanley: BIC: CITIUS 33 Account Mellon Bank, N.A., Philadelphia, Details of ABA 031-000-037 Counterparty: A/C No. 2-334-233 BIC: MELNUS 3P 5. TERMINATION OF OPTION. Subject to any payment or delivery obligations pursuant to this Agreement, upon the termination of the Bond Call Option by its terms this Transaction shall automatically terminate. If the Counterparty exercises its rights under this Agreement as set forth in Section 3, the Counterparty shall deliver the Settlement Amount to Morgan Stanley and Morgan Stanley shall assign its rights under the Bond Call Option in accordance with Section 3 and this Agreement shall terminate. No other amount shall be payable by Morgan Stanley or the Counterparty in respect of this Agreement unless the Bond Call Option was terminated due to any of the following: (a) at any time prior to the sale of the Bonds on the Bid Date, an Event of Default has occurred and is continuing under subsections (a), (b), (c), (d) or (g) of Section 65 under the Indenture or a Cross-Default has occurred and is continuing (in such event, termination is at Morgan Stanley's option) or under subsections (e) or (f) of Section 65 under the Indenture (in such event, termination is automatic), (b) if following the Call Notice (as defined in the Bonds), fewer than two Dealers (as defined in the Bonds) have submitted Bids (as defined in the Bonds) in a timely manner substantially as provided in the Bonds, or (c) if, following the Call Notice, Morgan Stanley fails to pay the Call Price (as defined in the Bonds) by 2:00 p.m., New York time, on the Business Day prior to the Coupon Reset Date due to the occurrence of a Market Disruption Event. If any of the events set forth in (a), (b) or (c) above has occurred and the Bond Call Option so terminates, the Counterparty shall, on the first date the Termination Amount is calculated (and in no event later than the fifteenth Business Day following the date of termination of the Bond Call Option), pay to Morgan Stanley, or its assignee, the Termination Amount in respect of Morgan Stanley's losses under the Bond Call Option. Following such termination and upon payment of the Termination Amount, Morgan Stanley shall deliver any and all of its remaining rights, if any, under the Bond Call Option as described under Section 3. For purposes of this Agreement: "Market Disruption Event" shall mean any of the following events, if such events occur or are continuing on any day from, and including, 15 calendar days prior to the Coupon Reset Date to, and including, the Bid Date in the judgment of the Calculation Agent: (a) a suspension or material limitation in trading in securities generally on the New York Stock Exchange or the establishment of minimum prices on such exchange; (b) a general moratorium on commercial banking activities declared by either federal or New York State authorities; (c) any material adverse change in the existing financial, political or economic conditions in the United States of America; (d) an outbreak or escalation, of major hostilities involving the United States of America or the declaration of a national emergency or war by the United States of America; or (e) any material disruption of the U.S. Treasury securities market, U.S. corporate bond market or U.S. federal wire system; provided, in each case, that in the judgment of the Calculation Agent the effect of the foregoing makes it impractical to conduct the coupon reset process. "Cross Default" shall mean the occurrence or existence of (i) a default, event of default or other similar condition or event (however described) in respect of the Counterparty (after giving effect to any applicable notice requirement or grace period) under one or more agreements or instruments relating to any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) for the payment or repayment of any money ("Specified Indebtedness"), individually or collectively, in an aggregate amount of not less than $100,000,000, which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared, due and payable under such agreements or instruments, before it would otherwise have been due and payable, or (ii) a default by the Counterparty in making one or more payments on the due date thereof in an aggregate amount of not less than $100,000,000 under such agreements or instruments (after giving effect to any applicable notice requirement or grace period). "Termination Amount" shall mean the fair market value, as of the date of the termination of this Agreement, of the option to receive the Settlement Amount on the Settlement Date. If this Agreement terminates on or after 15 calendar days prior to the Coupon Reset Date, then the Termination Amount shall be deemed to equal the Settlement Amount. Fair market value shall be determined by MS&Co., by requesting bids from five Reference Dealers, one of which shall be MS&Co., within five Business Days of the date this Agreement terminates. MS&Co. shall (i) if five bids were made, disregard the lowest and the highest bid and (ii) average the remaining bids to determine the fair market value; provided that, if MS&Co. has not received all five bids within 10 Business Days following the request for such bids, the fair market value shall be the average of the bids that have been received by 5:00 p.m. as of the tenth Business Day following MS&Co.'s initial request for such bids. If MS&Co. determines that the bids provided do not reflect a reasonably accurate valuation of the Termination Amount, the Termination Amount shall equal the amount that MS&Co. reasonably determines in good faith to be the total losses and costs of Morgan Stanley in connection with this Agreement. "Reference Dealer" shall mean a market dealer, selected in good faith by MS&Co., that makes markets in derivative transactions for corporate and U.S. Treasury securities in the normal course of business. "Affiliate" shall mean, in relation to any party, any entity controlled, directly or indirectly, by the party, any entity that controls, directly or indirectly, the party or any entity directly or indirectly under a common control with the party. For this purpose, "control" of any entity or party means ownership of a majority of the voting power of the entity or party. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by either party without the prior written consent of the other party; provided, however, that Morgan Stanley may assign its right to -------- ------- receive the Termination Amount hereunder to any Affiliate, to which assignment the Counterparty hereby agrees, upon giving written notice of such assignment to the Counterparty. MS&Co.'s sole role under this Agreement and with respect to the Transaction is as an agent of Morgan Stanley and the Counterparty on a disclosed basis. MS&Co. is authorized to act as agent for the Counterparty only to the extent required to enable Morgan Stanley to satisfy the requirements of Rule 15a-6 of the Securities Exchange Act of 1934, as amended ("Rule 15a-6"), in respect of the Transaction described herein. MS&Co. shall have no authority to act as agent for the Counterparty with respect to the Transaction or other matters governed by this Agreement, except in accordance with instructions from the Counterparty. MS&Co. does not guarantee the performance of Morgan Stanley. 6. PAYMENT BY MORGAN STANLEY. Morgan Stanley will make a payment of US$100,000 to the Counterparty on May 5, 1998, which amount represents a reasonable payment for the right to receive the Termination Amount upon the termination of this Transaction in the circumstances described in Section 5. 7. ASSIGNMENT OF BOND CALL OPTION. Morgan Stanley will make a payment of US$2,800,000 to the Counterparty on May 5, 1998, which amount represents a reasonable payment for the Counterparty assigning, and the Counterparty hereby assigns, all its right, title and interest and obligations in, to and under the Bond Call Option to Morgan Stanley and Morgan Stanley hereby assumes all the obligations and liabilities of the Counterparty under the Bond Call Option. 8. REPRESENTATIONS OF THE PARTIES: (a) Each party represents and warrants to the other party that: (i) Status. It is duly organized and validly ------ existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing; (ii) Powers. It has the corporate power to ------ execute, deliver and perform its obligations under this Agreement and has taken all necessary action to authorize such execution, delivery and performance; (iii) No Violation or Conflict. Such execution, ------------------------ delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any contractual restriction binding on or affecting it or any of its assets; (iv) Consents. All governmental and other -------- consents that are required to have been obtained by it with respect to this Agreement have been obtained and are in full force and effect and all conditions of any such consents have been complied with; (v) Obligations Binding. Its obligations under ------------------- this Agreement constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)); (vi) Absence of Litigation. There is not pending --------------------- or, to its knowledge, threatened against it or any of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or its ability to perform its obligations under this Agreement; (vii) Non-Reliance. It is acting for its own ------------ account, and it had made its own independent decisions to enter into this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into this Agreement; it being understood that information and explanations related to the terms and conditions of this Agreement shall not be considered investment advice or a recommendation to enter into this Agreement. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of this Agreement; (viii) Assessment and Understanding. It is capable ---------------------------- of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Agreement. It is also capable of assuming, and assumes, the risks of this Agreement; (ix) Status of Parties. The other party is not ----------------- acting as a fiduciary for or an adviser to it in respect of this Agreement; (x) Parties to the Agreement. The Counterparty ------------------------ and Morgan Stanley are the parties to this Agreement, with MS&Co. as agent for Morgan Stanley and, subject to the limitations set forth in Section 5, the Counterparty; and (xi) Other Matters. ------------- (1) This Agreement constitutes a "swap agreement" within the meaning of Commodity Futures Trading Commission ("CFTC") Regulations Section 35.1(b)(1); (2) It is an "eligible swap participant" within the meaning of CFTC Regulations Section 35.1(b)(2); (3) This Agreement is not one of a fungible class of agreements that are standardized as to their material economic terms, within the meaning of CFTC Regulations Section 35.2(b); (4) The creditworthiness of the other party was a material consideration in entering into or determining the terms of this Agreement, including pricing, cost or credit enhancement terms, within the meaning of CFTC Regulations Section 35.2(c); (5) It has entered into this Agreement in conjunction with its line of business (including financial intermediation services) or the financing of its business; and (6) It is a Qualified Institutional Buyer as defined in Rule 144A under the Securities Act of 1933, as amended. (b) The Counterparty represents and warrants to Morgan Stanley that no Event of Default under the Indenture has occurred and is continuing and no such event or circumstance would occur as a result of its entering into or performing its obligations under this Agreement. 9. BASIC COVENANTS: Each party agrees with the other that, so long as either party has or may have any obligation under this Agreement: (a) Maintain Authorizations. It will use all reasonable ----------------------- efforts to maintain in full force and effect all consents of any governmental or other authority that are required to be obtained by it with respect to this Agreement and will use all reasonable efforts to obtain any that may become necessary in the future. (b) Comply with Laws. It will comply in all material ---------------- respects with all applicable laws and orders to which it may be subject if failure so to comply would materially impair its ability to perform its obligations under this Agreement; and (c) Procedures. ---------- (i) This Agreement will be effected through MS&Co., as agent for the parties; (ii) MS&Co. will be responsible for the operational aspects of this Agreement, such as record keeping and reporting; (iii) Unless the Counterparty is a "major U.S. institutional investor" (as defined in Rule 15a-6), neither party will contact the other without the direct involvement of MS&Co.; (iv) MS&Co. has no obligation, by guaranty, endorsement or otherwise, with respect to performance of either party's obligations; and (v) MS&Co.'s sole role under this Agreement is as an agent of the parties on a disclosed basis. (d) Purchase of Bonds. Without the prior approval of ----------------- Morgan Stanley, the Counterparty may not (i) purchase any of the Bonds prior to the Coupon Reset Date or (ii) discontinue use of the system of book- entry transfers through The Depository Trust Company (or a successor securities depositary) prior to the Coupon Reset Date. 10. GENERAL PROVISIONS: (a) Jurisdiction. With respect to any suit, action or ------------ proceedings relating to this Agreement ("Proceedings"), each party irrevocably: (i) submits to the exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City; and (ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party. (b) Waiver of Jury Trial. Each party waives, to the -------------------- fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any Proceedings. Each party (i) certifies that no representative, agent or attorney or other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications set forth above in this Section. (c) Expenses. If either the Counterparty, on the one -------- hand, or Morgan Stanley, on the other hand, is in default of its obligations under this Agreement, such party will, on demand, indemnify and hold harmless the other party for and against all reasonable out-of-pocket expenses, including legal fees, incurred by such other party by reason of the enforcement and protection of its rights under this Agreement in connection with any default, including, but not limited to, costs of collection. (d) Currency. All cash amounts required to be paid -------- under this Agreement shall be in US$. (e) Interpretation. When a reference is made in this -------------- Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. (f) Counterparts. ------------ (i) This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and each of which shall be deemed an original. (ii) This Agreement shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. (g) Entire Agreement; No Third-Party Beneficiaries. ---------------------------------------------- This Agreement constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement and is not intended to confer upon any person other than the parties any rights or remedies. (h) Amendments. No amendment, modification or waiver in ---------- respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties. (i) No Waiver of Rights. A failure or delay in ------------------- exercising any right, power or privilege in respect of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or further exercise, of that right, power or privilege or the exercise of any other right, power or privilege. (j) Remedies Cumulative. Except as provided in this ------------------- Agreement, the rights, powers, remedies and privileges provided in this Agreement are cumulative and not exclusive of any rights, powers, remedies and privileges provided by law. In consideration of the mutual representations, warranties and covenants herein contained, and on the terms and subject to the conditions herein set forth, please confirm that the foregoing correctly sets forth the terms of our agreement by executing this Agreement and returning it to us. Very truly yours, MORGAN STANLEY & CO. INTERNATIONAL LIMITED, by -------------------- Name: Title: MORGAN STANLEY & CO. INCORPORATED, as agent, by -------------------- Name: Title: Accepted and confirmed as of the date first above-written: PP&L, INC., by -------------------- Name: Title: EX-4 5 EXHIBIT 4.3 ----------------------------------------------------------------- PP&L, INC. (FORMERLY PENNSYLVANIA POWER & LIGHT COMPANY) TO BANKERS TRUST COMPANY (SUCCESSOR TO MORGAN GUARANTY TRUST COMPANY OF NEW YORK, FORMERLY GUARANTY TRUST COMPANY OF NEW YORK) AS TRUSTEE UNDER PP&L, INC.'S MORTGAGE AND DEED OF TRUST, DATED AS OF OCTOBER 1, 1945 _____________________________ SIXTY-SIXTH SUPPLEMENTAL INDENTURE PROVIDING AMONG OTHER THINGS FOR FIRST MORTGAGE BONDS, 6 1/8% RESET PUT SECURITIES SERIES DUE 2006 _____________________________ DATED AS OF MAY 1, 1998 ================================================================= SIXTY-SIXTH SUPPLEMENTAL INDENTURE SIXTY-SIXTH SUPPLEMENTAL INDENTURE, dated as of the 1ST day of May, 1998 made and entered into by and between PP&L, INC. (formerly Pennsylvania Power & Light Company), a corporation of the Commonwealth of Pennsylvania, whose address is Two North Ninth Street, Allentown, Pennsylvania 18101 (hereinafter sometimes called the Company), and BANKERS TRUST COMPANY (successor to Morgan Guaranty Trust Company of New York, formerly Guaranty Trust Company of New York), a corporation of the State of New York, whose address is 4 Albany Street, New York, New York 10006 (hereinafter sometimes called the Trustee), as Trustee under the Mortgage and Deed of Trust, dated as of October 1, 1945 (hereinafter called the Mortgage and, together with any indentures supplemental thereto, hereinafter called the Indenture), which Mortgage was executed and delivered by PP&L, Inc. to secure the payment of bonds issued or to be issued under and in accordance with the provisions of the Mortgage, reference to which said Mortgage is hereby made, this instrument (hereinafter called the Sixty-sixth Supplemental Indenture) being supplemental thereto; WHEREAS, said Mortgage was or is to be recorded in various Counties in the Commonwealth of Pennsylvania, which Counties include or will include all Counties in which this Sixty-sixth Supplemental Indenture is to be recorded; and WHEREAS, an instrument, dated August 5, 1994, was executed by the Company appointing Bankers Trust Company as Trustee in succession to said Morgan Guaranty Trust Company of New York (resigned) under the Indenture, and by Bankers Trust Company accepting said appointment, which instrument was or is to be recorded in various Counties in the Commonwealth of Pennsylvania; and WHEREAS, by an amendment to its Articles of Incorporation filed with the Office of the Secretary of State of Pennsylvania on September 12, 1997, the Company changed its name to PP&L, Inc.; and WHEREAS, by the Mortgage the Company covenanted that it would execute and deliver such supplemental indenture or indentures and such further instruments and do such further acts as might be necessary or proper to carry out more effectually the purposes of the Indenture and to make subject to the lien of the Indenture any property thereafter acquired and intended to be subject to the lien thereof; and WHEREAS, the Company executed and delivered to the Trustee, as supplements to the Mortgage, the following supplemental indentures: Designation Dated as of ----------- ----------- First Supplemental Indenture July 1, 1947 Second Supplemental Indenture December 1, 1948 Third Supplemental Indenture February 1, 1950 Fourth Supplemental Indenture March 1, 1953 Fifth Supplemental Indenture August 1, 1955 Sixth Supplemental Indenture December 1, 1961 Seventh Supplemental Indenture March 1, 1964 Eighth Supplemental Indenture June 1, 1966 Ninth Supplemental Indenture November 1, 1967 Tenth Supplemental Indenture December 1, 1967 Eleventh Supplemental Indenture January 1, 1969 Twelfth Supplemental Indenture June 1, 1969 Thirteenth Supplemental Indenture March 1, 1970 Fourteenth Supplemental Indenture February 1, 1971 Fifteenth Supplemental Indenture February 1, 1972 Sixteenth Supplemental Indenture January 1, 1973 Seventeenth Supplemental Indenture May 1, 1973 Eighteenth Supplemental Indenture April 1, 1974 Nineteenth Supplemental Indenture October 1, 1974 Twentieth Supplemental Indenture May 1, 1975 Twenty-first Supplemental Indenture November 1, 1975 Twenty-second Supplemental Indenture December 1, 1976 Twenty-third Supplemental Indenture December 1, 1977 Twenty-fourth Supplemental Indenture April 1, 1979 Twenty-fifth Supplemental Indenture April 1, 1980 Twenty-sixth Supplemental Indenture June 1, 1980 Twenty-seventh Supplemental Indenture June 1, 1980 Twenty-eighth Supplemental Indenture December 1, 1980 Twenty-ninth Supplemental Indenture February 1, 1981 Thirtieth Supplemental Indenture February 1, 1981 Thirty-first Supplemental Indenture September 1, 1981 Thirty-second Supplemental Indenture April 1, 1982 Thirty-third Supplemental Indenture August 1, 1982 Thirty-fourth Supplemental Indenture October 1, 1982 Thirty-fifth Supplemental Indenture November 1, 1982 Thirty-sixth Supplemental Indenture February 1, 1983 Thirty-seventh Supplemental Indenture November 1, 1983 Thirty-eighth Supplemental Indenture March 1, 1984 Thirty-ninth Supplemental Indenture April 1, 1984 Fortieth Supplemental Indenture August 15, 1984 Forty-first Supplemental Indenture December 1, 1984 Designation Dated as of ----------- ----------- Forty-second Supplemental Indenture June 15, 1985 Forty-third Supplemental Indenture October 1, 1985 Forty-fourth Supplemental Indenture January 1, 1986 Forty-fifth Supplemental Indenture February 1, 1986 Forty-sixth Supplemental Indenture April 1, 1986 Forty-seventh Supplemental Indenture October 1, 1986 Forty-eighth Supplemental Indenture March 1, 1988 Forty-ninth Supplemental Indenture June 1, 1988 Fiftieth Supplemental Indenture January 1, 1989 Fifty-first Supplemental Indenture October 1, 1989 Fifty-second Supplemental Indenture July 1, 1991 Fifty-third Supplemental Indenture May 1, 1992 Fifty-fourth Supplemental Indenture November 1, 1992 Fifty-fifth Supplemental Indenture February 1, 1993 Fifty-sixth Supplemental Indenture April 1, 1993 Fifty-seventh Supplemental Indenture June 1, 1993 Fifty-eighth Supplemental Indenture October 1, 1993 Fifty-ninth Supplemental Indenture February 15, 1994 Sixtieth Supplemental Indenture March 1, 1994 Sixty-first Supplemental Indenture March 15, 1994 Sixty-second Supplemental Indenture September 1, 1994 Sixty-third Supplemental Indenture October 1, 1994 Sixty-fourth Supplemental Indenture August 1, 1995 Sixty-fifth Supplemental Indenture April 1, 1997 which supplemental indentures were recorded in various Counties in the Commonwealth of Pennsylvania; and WHEREAS, the Company executed and delivered to the Trustee its Supplemental Indenture, dated July 1, 1954, creating a security interest in certain personal property of the Company, pursuant to the provisions of the Pennsylvania Uniform Commercial Code, as a supplement to the Mortgage, which Supplemental Indenture was filed in the Office of the Secretary of the Commonwealth of Pennsylvania on July 1, 1954, and all subsequent supplemental indentures were so filed; and WHEREAS, in addition to the property described in the Mortgage, as heretofore supplemented, the Company has acquired certain other property, rights and interests in property; and WHEREAS, the Company has heretofore issued, in accordance with the provisions of the Mortgage, as supplemented, the following series of First Mortgage Bonds: PRINCIPAL PRINCIPAL AMOUNT AMOUNT SERIES ISSUED OUTSTANDING ------ --------- ----------- 3% Series due 1975 $93,000,000 None 2-3/4% Series due 1977 20,000,000 None 3-1/4% Series due 1978 10,000,000 None 2-3/4% Series due 1980 37,000,000 None 3-1/2% Series due 1983 25,000,000 None 3-3/8% Series due 1985 25,000,000 None 4-5/8% Series due 1991 30,000,000 None 4-5/8% Series due 1994 30,000,000 None 5-5/8% Series due 1996 30,000,000 None 6-3/4% Series due 1997 30,000,000 None 6-1/2% Series due 1972 15,000,000 None 7% Series due 1999 40,000,000 None 8-1/8% Series due June 1, 1999 40,000,000 None 9% Series due 2000 50,000,000 None 7-1/4% Series due 2001 60,000,000 None 7-5/8% Series due 2002 75,000,000 None 7-1/2% Series due 2003 80,000,000 None Pollution Control Series A 28,000,000 None 9-1/4% Series due 2004 80,000,000 None 10-1/8% Series due 1982 100,000,000 None 9-3/4% Series due 2005 125,000,000 None 9-3/4% Series due November 1, 2005 100,000,000 None 8-1/4% Series due 2006 150,000,000 None 8-1/2% Series due 2007 100,000,000 None 9-7/8% Series due 1983-1985 100,000,000 None 15-5/8% Series due 2010 100,000,000 None 11-3/4% Series due 1984 30,000,000 None Pollution Control Series B 70,000,000 None Pollution Control Series C 20,000,000 None 14% Series due December 1, 1990 125,000,000 None 15% Series due 1984-1986 50,000,000 None 14-3/4% Series A due 1986 30,000,000 None 14-3/4% Series B due 1986 20,000,000 None 16-1/2% Series due 1987-1991 52,000,000 None PRINCIPAL PRINCIPAL AMOUNT AMOUNT SERIES ISSUED OUTSTANDING ------ --------- ----------- 16-1/8% Series due 1992 $100,000,000 None 16-1/2% Series due 1986-1990 92,500,000 None 13-1/4% Series due 2012 100,000,000 None Pollution Control Series D 70,000,000 None 12-1/8% Series due 1989-1993 50,000,000 None 13-1/8% Series due 2013 125,000,000 None Pollution Control Series E 37,750,000 None 13-1/2% Series due 1994 125,000,000 None Pollution Control Series F 115,500,000 None 12-3/4% Series due 2014 125,000,000 None Pollution Control Series G 55,000,000 None 12% Series due 2015 125,000,000 None 10-7/8% Series due 2016 125,000,000 None 9-5/8% Series due 1996 125,000,000 None 9% Series due 2016 125,000,000 None 9-1/2% Series due 2016 125,000,000 None 9-1/4% Series due 1998 125,000,000 None 9-5/8% Series due 1998 125,000,000 None 10% Series due 2019 125,000,000 None 9-1/4% Series due 2019 250,000,000 $215,000,000 9-3/8% Series due 2021 150,000,000 99,750,000 7-3/4% Series due 2002 150,000,000 150,000,000 8-1/2% Series due 2022 150,000,000 150,000,000 Pollution Control Series H 90,000,000 90,000,000 6-7/8% Series due 2003 100,000,000 100,000,000 7-7/8% Series due 2023 200,000,000 200,000,000 5-1/2% Series due 1998 150,000,000 None 6-1/2% Series due 2005 125,000,000 125,000,000 6% Series due 2000 125,000,000 125,000,000 6-3/4% Series due 2023 150,000,000 150,000,000 Pollution Control Series I 53,250,000 53,250,000 6.55% Series due 2006 150,000,000 150,000,000 7.30% Series due 2024 150,000,000 150,000,000 6-7/8% Series due 2004 150,000,000 150,000,000 7-3/8% Series due 2014 100,000,000 100,000,000 Pollution Control Series J 115,500,000 115,500,000 7.70% Series due 2009 200,000,000 200,000,000 Pollution Control Series K 55,000,000 55,000,000 Short-Term Series A 800,000,000 None which bonds are also sometimes called bonds of the First through Seventy-third Series, respectively; and WHEREAS, Section 8 of the Mortgage provides that the form of each series of bonds (other than the First Series) issued thereunder shall be established by Resolution of the Board of Directors of the Company and that the form of such series, as established by said Board of Directors, shall specify the descriptive title of the bonds and various other terms thereof, and may also contain such provisions not inconsistent with the provisions of the Indenture as the Board of Directors may, in its discretion, cause to be inserted therein expressing or referring to the terms and conditions upon which such bonds are to be issued and/or secured under the Indenture; and WHEREAS, Section 120 of the Mortgage provides, among other things, that any power, privilege or right expressly or impliedly reserved to or in any way conferred upon the Company by any provision of the Indenture, whether such power, privilege or right is in any way restricted or is unrestricted, may be in whole or in part waived or surrendered or subjected to any restriction if at the time unrestricted or to additional restriction if already restricted, and the Company may enter into any future covenants, limitations or restrictions for the benefit of any one or more series of bonds issued thereunder, or the Company may cure any ambiguity contained therein or in any supplemental indenture or may establish the terms and provisions of any series of bonds other than said First Series, by an instrument in writing executed and acknowledged by the Company in such manner as would be necessary to entitle a conveyance of real estate to record in all of the States in which any property at the time subject to the lien of the Indenture shall be situated; and WHEREAS, the Company now desires to create a new series of bonds and to add to its covenants and agreements contained in the Mortgage, as heretofore supplemented, certain other covenants and agreements to be observed by it and to alter and amend in certain respects the covenants and provisions contained in the Mortgage; and WHEREAS, the execution and delivery by the Company of this Sixty-sixth Supplemental Indenture, and the terms of the bonds of the Seventy-fourth Series, hereinafter referred to, have been duly authorized by the Board of Directors of the Company by appropriate Resolutions of said Board of Directors; NOW, THEREFORE, THIS INDENTURE WITNESSETH: That PP&L, Inc., in consideration of the premises and of One Dollar to it duly paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, and in further evidence of assurance of the estate, title and rights of the Trustee and in order further to secure the payment both of the principal of and interest and premium, if any, on the bonds from time to time issued under the Indenture, according to their tenor and effect and the performance of all the provisions of the Indenture (including any modification made as in the Mortgage provided) and of said bonds, hereby grants, bargains, sells, releases, conveys, assigns, transfers, mortgages, pledges, sets over and confirms (subject, however, to Excepted Encumbrances as defined in Section 6 of the Mortgage) unto Bankers Trust Company, as Trustee under the Indenture, and to its successor or successors in said trust, and to said Trustee and its successors and assigns forever, all property, real, personal and mixed, of the kind or nature specifically mentioned in the Mortgage, as heretofore supplemented, or of any other kind or nature, acquired by the Company after the date of the execution and delivery of the Sixty-fifth Supplemental Indenture (except any herein or in the Mortgage, as heretofore supplemented, expressly excepted and except any which may not lawfully be mortgaged or pledged under the Indenture), now owned or, subject to the provisions of Section 87 of the Mortgage, hereafter acquired by the Company (by purchase, consolidation, merger, donation, construction, erection or in any other way) and wheresoever situated, including (without in anywise limiting or impairing by the enumeration of the same the scope and intent of the foregoing) all lands, power sites, flowage rights, water rights, water locations, water appropriations, ditches, flumes, reservoirs, reservoir sites, canals, raceways, dams, dam sites, aqueducts, and all other rights or means for appropriating, conveying, storing and supplying water; all rights of way and roads; all plants for the generation of electricity by steam, water and/or other power; all power houses, gas plants, street lighting systems, standards and other equipment incidental thereto, telephone, radio and television systems, air-conditioning systems and equipment incidental thereto, water works, water systems, steam heat and hot water plants, substations, lines, service and supply systems, bridges, culverts, tracks, ice or refrigeration plants and equipment, offices, buildings and other structures and the equipment thereof; all machinery, engines, boilers, dynamos, electric, gas and other machines, regulators, meters, transformers, generators, motors, electrical, gas and mechanical appliances, conduits, cables, water, steam heat, gas or other pipes, gas mains and pipes, service pipes, fittings, valves and connections, pole and transmission lines, wires, cables, tools, implements, apparatus, furniture and chattels; all municipal and other franchises, consents or permits; all lines for the transmission and distribution of electric current, gas, steam heat or water for any purpose including towers, poles, wires, cables, pipes, conduits, ducts and all apparatus for use in connection therewith; all real estate, lands, easements, servitudes, licenses, permits, franchises, privileges, rights of way and other rights in or relating to real estate or the occupancy of the same and (except as herein or in the Mortgage, as heretofore supplemented, expressly excepted) all the right, title and interest of the Company in and to all other property of any kind or nature appertaining to and/or used and/or occupied and/or enjoyed in connection with any property hereinbefore or in the Mortgage, as heretofore supplemented, described. TOGETHER with all and singular the tenements, hereditaments, prescriptions, servitudes, and appurtenances belonging or in anywise appertaining to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders and (subject to the provisions of Section 57 of the Mortgage) the tolls, rents, revenues, issues, earnings, income, product and profits thereof, and all the estate, right, title and interest and claim whatsoever, at law as well as in equity, which the Company now has or may hereafter acquire in and to the aforesaid property and franchises and every part and parcel thereof. IT IS HEREBY AGREED by the Company that, subject to the provisions of Section 87 of the Mortgage and to the extent permitted by law, all the property, rights, and franchises acquired by the Company (by purchase, consolidation, merger, donation, construction, erection or in any other way) after the date hereof, except any herein or in the Mortgage, as heretofore supplemented, expressly excepted, shall be and are as fully granted and conveyed hereby and as fully embraced within the lien hereof and the lien of the Indenture, as if such property, rights and franchises were now owned by the Company and were specifically described herein and conveyed hereby. IT IS HEREBY DECLARED by the Company that all the property, rights and franchises now owned or hereafter acquired by the Company have been, or are, or will be owned or acquired with the intention to use the same in carrying on the business or branches of business of the Company, and it is hereby declared that it is the intention of the Company that all thereof, except any herein or in the Mortgage, as heretofore supplemented, expressly excepted, shall (subject to the provisions of Section 87 of the Mortgage and to the extent permitted by law) be embraced within the lien of this Sixty-sixth Supplemental Indenture and the lien of the Indenture. PROVIDED that the following are not and are not intended to be now or hereafter granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed hereunder and are hereby expressly excepted from the lien and operation of this Sixty-sixth Supplemental Indenture and from the lien and operation of the Indenture, viz: --- (1) cash, shares of stock, bonds, notes and other obligations and other securities not hereafter specifically pledged, paid, deposited, delivered or held under the Indenture or covenanted so to be; (2) goods, wares, merchandise, equipment, apparatus, materials, or supplies held for the purpose of sale or other disposition in the usual course of business; fuel, oil and similar materials and supplies consumable in the operation of any of the properties of the Company; construction equipment acquired for temporary use; all aircraft, rolling stock, trolley coaches, buses, motor coaches, automobiles and other vehicles and materials and supplies held for the purposes of repairing or replacing (in whole or part) any of the same; all timber, minerals, mineral rights and royalties; (3) bills, notes and accounts receivable, judgments, demands and choses in action, and all contracts, leases and operating agreements not specifically pledged under the Indenture or covenanted so to be; the Company's contractual rights or other interest in or with respect to tires not owned by the Company; (4) the last day of the term of any lease or leasehold which may be or become subject to the lien of the Indenture; and (5) electric energy, gas, steam, ice, and other materials or products generated, manufactured, produced or purchased by the Company for sale, distribution or use in the ordinary course of its business; provided, however, that the property and rights expressly excepted from the lien and operation of the Indenture in the above subdivisions (2) and (3) shall (to the extent permitted by law) cease to be so excepted in the event and as of the date that the Trustee or a receiver or trustee shall enter upon and take possession of the Mortgaged and Pledged Property in the manner provided in Article XIII of the Mortgage by reason of the occurrence of a Default as defined in Section 65 thereof, as supplemented by the provisions of this Sixty-sixth Supplemental Indenture. TO HAVE AND TO HOLD all such properties, real, personal and mixed, granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed by the Company as aforesaid, or intended so to be, unto Bankers Trust Company, as Trustee, and its successors and assigns forever. IN TRUST NEVERTHELESS for the same purposes and upon the same terms, trusts and conditions and subject to and with the same provisos and covenants as are set forth in the Mortgage, as heretofore supplemented, this Sixty-sixth Supplemental Indenture being supplemental to the Mortgage. AND IT IS HEREBY COVENANTED by the Company that all the terms, conditions, provisos, covenants and provisions contained in the Mortgage, as heretofore supplemented, shall affect and apply to the property hereinbefore described and conveyed and to the estate, rights, obligations and duties of the Company and the Trustee and the beneficiaries of the trust with respect to said property, and to the Trustee and its successors as Trustee of said property in the same manner and with the same effect as if the said property had been owned by the Company at the time of the execution of the Mortgage, and had been specifically and at length described in and conveyed to the Trustee, by the Mortgage as a part of the property therein stated to be conveyed. The Company further covenants and agrees to and with the Trustee and its successors in said trust under the Indenture, as follows: ARTICLE I SEVENTY-FOURTH SERIES OF BONDS SECTION 1. There shall be a series of bonds designated "6 1/8% REset Put Securities Series Due 2006" (herein sometimes referred to as the "Seventy-fourth Series"), each of which shall also bear the descriptive title First Mortgage Bonds. Bonds of the Seventy-fourth Series shall be limited to $200,000,000 in aggregate principal amount except as provided in Section 16 of the Mortgage and shall mature on the Final Maturity Date and shall be subject to the Call Option and Mandatory Put as provided in the form of bond of the Seventy-fourth Series, and shall be issued as fully registered bonds in denominations of One Thousand Dollars and in any multiple or multiples of One Thousand Dollars; they shall bear interest, payable on the Interest Payment Dates, as provided in the form of bond of the Seventy-fourth Series; the principal of and interest on each said bond to be payable at the office or agency of the Company in the Borough of Manhattan, The City of New York, and interest on each said bond to be also payable at the office of the Company in the City of Allentown, Pennsylvania, in such coin or currency of the United States of America as at the time of payment is legal tender for public and private debts. Bonds of the Seventy-fourth Series shall be dated as in Section 10 of the Mortgage provided. (I) Bonds of the Seventy-fourth Series shall be in substantially the following form, with such insertions, omissions and variations as the officer of the Company executing such bond may determine, such determination to be conclusively evidenced by such officer's execution of such bond: [(SEE LEGEND AT THE END OF THIS BOND FOR RESTRICTIONS ON TRANSFERABILITY AND CHANGE OF FORM)] ([Temporary] Registered Bond) PP&L, INC. First Mortgage Bond, 6 1/8% REset Put Securities Series Due 2006 No. R CUSIP NO.:_____________ Final Maturity Date: May 1, 2006 Initial Interest Rate: 6 1/8% Coupon Reset Date: May 1, 2001 Interest Payment Dates: May 1 and November 1 of each year, commencing November 1, 1998 Maximum Rate: 9% per annum PP&L, INC., a corporation of the Commonwealth of Pennsylvania (hereinafter called the Company), for value received, hereby promises to pay to ______________, or to registered assigns, ________________________________________________________________ ___ Dollars on the Final Maturity Date specified above, at the office or agency of the Company in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as the time of payment is legal tender for public and private debts, and to pay interest thereon as provided for herein. This bond will bear interest at the Initial Interest Rate specified above from and including May 1, 1998 to but excluding the Coupon Reset Date specified above. Interest on this bond will be payable semi-annually on the Interest Payment Dates, specified above, of each year, commencing November 1, 1998. Interest will be calculated based on a 360-day year consisting of twelve 30-day months. On each Interest Payment Date, interest will be payable to the persons in whose name this bond is registered on the fifteenth calendar day (whether or not a Business Day) immediately preceding the related Interest Payment Date (each, a "Record Date"). "Business Day" means any day other than a Saturday, a Sunday or a day on which banking institutions in The City of New York are authorized or obligated by law, executive decree or governmental decree to be closed. If the Callholder (as defined below) elects to purchase this bond pursuant to the Call Option (as defined below), the Calculation Agent (as defined below) will reset the interest rate for this bond effective on the Coupon Reset Date, pursuant to the Coupon Reset Process described below; provided, however, that the annual interest rate on this bond shall not under any circumstance exceed 9% (the "Maximum Rate"). In such circumstance, (i) this bond will be purchased from the holder(s) by the Callholder at a price equal to 100% of the principal amount thereof on the Coupon Reset Date, on the terms and subject to the conditions described herein (interest accrued to the Coupon Reset Date will be paid by the Company on such date to holder(s) as of the most recent Record Date), and (ii) on and after the Coupon Reset Date, this bond will bear interest at the Coupon Reset Rate determined by the Calculation Agent in accordance with the procedures set forth below. This bond [is a temporary bond and] is one of an issue of bonds of the Company issuable in series and is one of a series known as its First Mortgage Bonds, 6 1/8% REset Put Securities Series Due 2006 ("Bonds"), the bonds of this series being limited to $200 million in aggregate principal amount, all bonds of all series issued and to be issued under and equally secured (except insofar as any sinking or other fund, established in accordance with the provisions of the Mortgage hereinafter mentioned, may afford additional security for the bonds of any particular series) by a Mortgage and Deed of Trust (herein, together with any indenture supplemental thereto, including the Sixty-sixth Supplemental Indenture dated as of May 1, 1998, called the Mortgage), dated as of October 1, 1945, executed by the Company to Guaranty Trust Company of New York (Bankers Trust Company, successor), as Trustee. Reference is made to the Mortgage and to any resolutions or written orders filed with the Trustee with respect to the Sixty-sixth Supplemental Indenture or this bond for a description of the property mortgaged and pledged, the nature and extent of the security, the rights of the holders of the bonds and of the Trustee in respect thereof, the duties and immunities of the Trustee and the terms and conditions upon which the bonds are and are to be secured and the circumstances under which additional bonds may be issued. With the consent of the Company and to the extent permitted by and as provided in the Mortgage, the rights and obligations of the Company and/or the rights of the holders of the bonds and/or coupons and/or the terms and provisions of the Mortgage may be modified or altered by such affirmative vote or votes of the holders of bonds then outstanding as are specified in the Mortgage. The principal hereof may be declared or may become due prior to the Final Maturity Date hereinbefore named on the conditions, in the manner and at the time set forth in the Mortgage, upon the occurrence of a default as in the Mortgage provided. This bond is transferable as prescribed in the Mortgage by the registered owner hereof in person, or by his duly authorized attorney, at the office or agency of the Company in the Borough of Manhattan, The City of New York, upon surrender and cancellation of this bond, and, thereupon, a new fully registered temporary or definitive bond of the same series for a like principal amount and like other terms will be issued to the transferee in exchange herefor as provided in the Mortgage. The Company and the Trustee may deem and treat the person in whose name this bond is registered as the absolute owner and holder hereof for the purpose of receiving payment and for all other purposes and neither the Company nor the Trustee shall be affected by any notice to the contrary. [In the manner prescribed in the Mortgage, this temporary bond is exchangeable at the office or agency of the Company in the Borough of Manhattan, The City of New York, without charge, for a definitive bond or bonds of the same series of a like aggregate principal amount and like other terms when such definitive bonds are prepared and ready for delivery. In the manner prescribed in the Mortgage, this temporary bond is exchangeable upon surrender thereof at said office or agency for a like aggregate principal amount of bonds with like other terms in temporary form of this series of other authorized denominations.] As provided in the Mortgage, the Company shall not be required to make transfers or exchanges of bonds of this series for a period of ten (10) days next preceding any interest payment date for bonds of this series. No recourse shall be had for the payment of the principal of (and premium, if any) or interest on this bond against any incorporator or any past, present or future subscriber to the capital stock, stockholder, officer or director of the Company or of any predecessor or successor corporation, as such, either directly or through the Company or any predecessor or successor corporation, under any rule of law, statute or constitution or by the enforcement of any assessment or otherwise, all such liability of incorporators, subscribers, stockholders, officers and directors being released by the holder or owner hereof by the acceptance of this bond and being likewise waived and released by the terms of the Mortgage. This bond shall not become obligatory until Bankers Trust Company, the Trustee under the Mortgage, or its successor thereunder, shall have signed the form of authentication certificate endorsed hereon. CALL OPTION; MANDATORY PUT (i) Call Option. By giving irrevocable notice to the Trustee in the manner described below (the "Call Notice"), the Company has the right to purchase all of the Bonds (including this bond), in whole but not in part, on the Coupon Reset Date (the "Call Option"), at a price equal to 100% of the principal amount thereof (the "Call Price"). The Company may assign to Morgan Stanley & Co. International Limited all its right, title and interest and obligation in, to and under the Call Option, and the Company, or in the event of such an assignment, Morgan Stanley & Co. International Limited, and any successor thereof, is herein referred to as the "Callholder". The Callholder will be required to give the Call Notice to the Trustee, in writing, prior to 4:00 p.m., New York City time, no later than fifteen calendar days prior to the Coupon Reset Date. The Call Notice shall contain delivery details satisfactory to the Trustee, including the identity of the Callholder's account with the Depositary (as defined below). If the Callholder exercises the Call Option by giving the Call Notice, (i) not later than 2:00 p.m., New York City time on the Business Day prior to the Coupon Reset Date, the Callholder shall pay the amount of the Call Price in immediately available funds to the Trustee for payment of the Call Price to the holders of the Bonds (including this bond) on the Coupon Reset Date and (ii) the holders of this bond will be required to deliver, and will be deemed to have delivered, this bond against payment therefor on the Coupon Reset Date through the facilities of The Depositary Trust Company or its successor, as Depository for the Bonds (the "Depository"), and will be required to accept the Call Price on such date in full satisfaction of this bond. The Callholder is not required to exercise the Call Option, and no holder of this bond or any interest therein will have any right or claim against the Callholder as a result of the Callholder's decision whether or not to exercise the Call Option or performance or nonperformance of its obligations with respect thereto. (ii) Mandatory Put. If the Callholder does not purchase the Bonds on the Coupon Reset Date for any reason, the Trustee will be obligated to exercise on behalf of the holders of this bond the right to require the Company to purchase this bond, in whole but not in part (the "Mandatory Put"), on the Coupon Reset Date at a price equal to 100% of the principal amount thereof (the "Put Price"), and by its purchase hereof, each holder irrevocably agrees that the Trustee shall exercise the Mandatory Put for and on its behalf as provided herein. If the Trustee exercises the Mandatory Put, then the Company shall deliver the Put Price in immediately available funds to the Trustee by no later than 12:00 noon, New York City time, on the Coupon Reset Date, and the holders of this bond will be required to deliver, and will be deemed to have delivered, this bond to the Company against payment therefor on the Coupon Reset Date through the facilities of the Depository, and will be required to accept the Put Price on such date in full satisfaction of this bond. No holder of this bond or any interest therein has the right to consent or object to the exercise of the Trustee's duties under the Mandatory Put. COUPON RESET PROCESS Pursuant to and subject to the terms of a Calculation Agency Agreement, dated as of May 5, 1998 between the Company and Morgan Stanley & Co. Incorporated, Morgan Stanley & Co. Incorporated has been appointed the calculation agent for the Bonds (in such capacity as calculation agent, the "Calculation Agent", which term shall include any successor). If the Callholder exercises the Call Option, then the following steps (the "Coupon Reset Process") shall be taken in order to determine the interest rate to be paid on the Bonds (including this bond) from and including such Coupon Reset Date to but excluding the Final Maturity Date (the "Coupon Reset Rate"). The Calculation Agency Agreement provides that the Company and the Calculation Agent will use reasonable efforts to cause the actions contemplated below to be completed in as timely a manner as possible. (a) The Company will provide the Calculation Agent with (i) a list (the "Dealer List") no later than five Business Days prior to the Coupon Reset Date, containing the names and addresses of three dealers, one of which shall be Morgan Stanley & Co. Incorporated, from which the Company desires the Calculation Agent to obtain Bids (as defined below) for the purchase of the Bonds and (ii) such other material reasonably requested by the Calculation Agent to facilitate a successful Coupon Reset Process. (b) Within one Business Day following receipt by the Calculation Agent of the Dealer List, the Calculation Agent will provide to each dealer ("Dealer") on the Dealer List (i) a copy of the Prospectus Supplement dated April 28, 1998, together with the accompanying Prospectus dated April 2, 1998, relating to the offering of the Bonds, (ii) a copy of the form of Bonds and (iii) a written request that each Dealer submit a Bid to the Calculation Agent by 12:00 noon, New York City time, on the third Business Day prior to the Coupon Reset Date (the "Bid Date"). The time on the Bid Date upon which Bids will be requested may be changed by the Calculation Agent to as late as 3:00 p.m., New York City time. "Bid" means an irrevocable written offer given by a Dealer for the purchase of all Bonds, settling on the Coupon Reset Date, quoted by such Dealer as a stated yield to maturity on the Bonds ("Yield to Maturity"). Each Dealer will also be provided with (i) the name of the Company, (ii) an estimate of the Purchase Price (stated as a U.S. dollar amount and calculated by the Calculation Agent in accordance with paragraph (c) below), (iii) the principal amount and Final Maturity Date of the Bonds and (iv) the method by which interest will be calculated on the Bonds, including this bond. (c) The purchase price to be paid by any Dealer for the Bonds (the "Purchase Price") will be equal to (i) the principal amount of the Bonds, plus (ii) a premium (the "Bond Premium") which shall be equal to the excess, if any, of (A) the discounted present value to the Coupon Reset Date of a bond with a maturity of May 1, 2006 which has an interest rate of 5.72%, semi- annual interest payments on each May 1 and November 1, commencing November 1, 2001, and a principal amount equal to the principal amount of the Bonds, and assuming a discount rate equal to the Treasury Rate over (B) the principal amount of the Bonds. The "Treasury Rate" means the per annum rate equal to the offer side yield to maturity of the current on-the-run five-year United States Treasury Security per Telerate page 500 (or any successor or substitute page as may replace such page on such service), at 11:00 a.m., New York City time, on the Bid Date (or such other time or date that may be agreed upon by the Company and the Calculation Agent) or, if such rate does not appear on Telerate page 500 (or any successor or substitute page as may replace such page on such service), at such time, such rate on GovPX End-of-Day Pricing at 3:00 p.m., New York City time, on the Bid Date (or such other time or date that may be agreed upon by the Company and the Calculation Agent). (d) The Calculation Agent will provide written notice to the Company by 12:30 p.m., New York City time on the Bid Date (or within 1/2 hour following the deadline for submission of Bids, if the deadline has been extended as provided above) setting forth (i) the names of each of the Dealers from which the Calculation Agent received Bids on the Bid Date, (ii) the Bid submitted by each such Dealer and (iii) the Purchase Price as determined pursuant to paragraph (c) above. Unless the Call Option has terminated, the Calculation Agent will thereafter select from the Bids timely received the Bid with the lowest Yield to Maturity (the "Selected Bid") and set the Coupon Reset Rate to be the lesser of the Maximum Rate and the rate required to produce a semi-annual bond equivalent yield on the Bonds equal to the Yield to Maturity indicated by the Selected Bid and assuming a purchase price of 100% plus the Bond Premium on the Coupon Reset Date and payment of the Bonds on the Final Maturity Date; provided, however, that if any two or more of the lowest Bids submitted are equivalent, the Company shall in its sole discretion select any of such equivalent Bids (and such selected Bid shall be the Selected Bid). The exercise of the Call Option by the Callholder shall constitute its agreement that the selection of the Selected Bid by the Calculation Agent shall constitute acceptance by the Callholder of the Selected Bid. (e) Immediately after calculating the Coupon Reset Rate for this bond, the Calculation Agent will provide written notice to the Company and the Trustee, setting forth the Coupon Reset Rate. The Coupon Reset Rate for this bond will be effective from and including the Coupon Reset Date. If at any time prior to the sale of this bond on the Bid Date (i) an Event of Default has occurred and is continuing under any of clauses (a), (b), (c), (d) and (g) of Section 65 of the Mortgage or a Cross-Default (as defined below) has occurred and is continuing, the Callholder may terminate the Call Option by written notice to the Company and the Trustee; and (ii) if any Event of Default under clauses (e) or (f) of Section 65 of the Mortgage has occurred and is continuing, the Call Option shall immediately and automatically terminate. If, following the exercise of the Call Option (x) the Calculation Agent determines that a Market Disruption Event (as defined below) has occurred and is continuing, and as a result thereof, the Callholder fails to pay the Call Price by 2:00 p.m., New York City time on the Business Day immediately preceding the Coupon Reset Date, or (y) fewer than two Dealers have submitted Bids in a timely manner substantially as provided above, the exercise of the Call Option will be automatically revoked, and the Call Option shall immediately terminate. If the Call Option terminates as described above, the Trustee will exercise the Mandatory Put on behalf of the holders of the Bonds on the Coupon Reset Date. "Cross-Default" means the occurrence or existence of (a) a default, event of default or other similar condition or event (however described) in respect of the Company (after giving effect to any applicable notice requirement or grace period), in one or more agreements or instruments relating to any obligation (whether present or future, contingent or otherwise, as principal or surety or otherwise) for the payment or repayment of any money ("Specified Indebtedness"), individually or collectively, in an aggregate amount of not less than $100,000,000 which has resulted in such Specified Indebtedness becoming, or becoming capable at such time of being declared due and payable under such agreements or instruments, before it would otherwise have been due and payable or (b) a default by the Company in making one or more payments on the due date thereof in an aggregate amount of not less than $100,000,000 under such agreements or instruments (after giving effect to any applicable notice requirement or grace period). "Market Disruption Event" means any of the following if such events occur and are continuing on any day from and including the date of the Call Notice to and including the Bid Date in the judgment of the Calculation Agent: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange or the establishment of minimum prices on such exchange; (ii) a general moratorium on commercial banking activities declared by either federal or New York State authorities; (iii) any material adverse change in the existing financial, political or economic conditions in the United States of America; (iv) an outbreak or escalation of major hostilities involving the United States of America or the declaration of a national emergency or war by the United States; or (v) any material disruption of the U.S. government securities market, U.S. corporate bond market or U.S. federal wire system; provided, in each case, that in the judgment of the Calculation Agent the effect of the foregoing makes it impractical to conduct the Coupon Reset Process. IN WITNESS WHEREOF, PP&L, INC. has caused this instrument to be signed in its corporate name by its President or one of its Vice Presidents by signature of such officer or a facsimile thereof, and its corporate seal to be impressed or imprinted hereon and attested by its Secretary or one of its Assistant Secretaries by signature of such officer or a facsimile thereof. PP&L, INC. By________________________________ [Vice] President ATTEST: __________________________ [Assistant] Secretary Dated: TRUSTEE'S AUTHENTICATION CERTIFICATE This bond is one of the bonds, of the series herein designated, described or provided for in the within-mentioned Mortgage. BANKERS TRUST COMPANY, as Trustee By___________________________ Authorized Officer [Unless and until this bond is exchanged in whole or in part for certificated bonds registered in the names of the various beneficial holders hereof as then certified to the Trustee by The Depository Trust Company or its successor (the "Depositary"), this bond may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. Unless this certificate is presented by an authorized representative of the Depositary to the Company or its agent for registration of transfer, exchange or payment, and any certificate to be issued is registered in the name of Cede & Co., or in such other name as is requested by an authorized representative of the Depositary and any amount payable thereunder is made payable to Cede & Co., or such other name, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein. This bond may be exchanged for certificated bonds registered in the names of the various beneficial owners hereof if (a) the Depositary is at any time unwilling or unable to continue as depositary and a successor depositary is not appointed by the Company within 90 days, or (b) the Company elects to issue certificated bonds to beneficial owners (as certified to the Company by the Depositary).] [End of Bond Form] (II) The Company has initially designated The Depository Trust Company as the Depository (the "Depository") for the bonds of the Seventy-fourth series. For as long as the bonds of the Seventy-fourth series are registered in the name of the Depository or its nominee, all payments of interest, principal and other amounts in respect of such bonds may be made to the Depository or its nominee in accordance with the Depository's applicable procedures. Notwithstanding any provision hereof or in the Indenture, none of the Company, the Callholder, or the Trustee, nor any agent of any such person, shall have any responsibility with respect to the Depository's procedures or for any payments, transfers or other transactions, or any notices or other communications, among the Depository, any of its direct or indirect participants and any beneficial owners of such bonds. Each of the Company, the Callholder, the Trustee and any agent for any such person may treat the registered holder as the sole and exclusive owner of the bonds of the Seventy-fourth series for all purposes under the Indenture, including for making payments on such bonds and for providing notices and obtaining consents under the Indenture. The Trustee agrees to exercise the Mandatory Put on behalf of the holders of the bonds of the Seventy-fourth series as provided in the form of such bonds set forth herein. In anticipation of the exercise of the Call Option or the Mandatory Put on the Coupon Reset Date, the Trustee will notify the registered holders of such Bonds, not less than 30 days nor more than 60 days prior to the Coupon Reset Date, in the manner provided in the Indenture, that all bonds of the Seventy-fourth series are required to be delivered on the Coupon Reset Date against payment of the Call Price by the Callholder under the Call Option or payment of the Put Price by the Company under the Mandatory Put. Notwithstanding anything herein to the contrary, no failure to give any such notice or any defect in any notice so given shall affect the requirement to deliver the bonds or the validity of the proceedings for such delivery, on the Coupon Reset Date as provided herein. At the option of the registered owner, any bonds of the Seventy-fourth Series, upon surrender thereof, for cancellation, at the office or agency of the Company in the Borough of Manhattan, The City of New York, shall be exchangeable for a like aggregate principal amount of bonds of the same series, interest rate and maturity of other authorized denominations. Bonds of the Seventy-fourth Series shall be transferable, upon the surrender thereof for cancellation, together with a written instrument of transfer in form approved by the registrar duly executed by the registered owner or by his duly authorized attorney, at the office or agency of the Company in the Borough of Manhattan, The City of New York. Upon any transfer or exchange of bonds of the Seventy- fourth Series, the Company may make a charge therefor sufficient to reimburse it for any tax or taxes or other governmental charge, as provided in Section 12 of the Mortgage, but the Company hereby waives any right to make a charge in addition thereto for any exchange or transfer of bonds of the Seventy- fourth Series. The holders of bonds of the Seventy-fourth Series consent that the Company may, but shall not be obligated to, fix a record date for the purpose of determining the holders of bonds of the Seventy-fourth Series entitled to consent to any amendment, supplement or waiver. If a record date is fixed, those persons who were holders at such record date (or their duly designated proxies), and only those persons, shall be entitled to consent to such amendment, supplement or waiver or to revoke any consent previously given, whether or not such persons continue to be holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date. ARTICLE II MAINTENANCE AND REPLACEMENT FUND COVENANT -- DIVIDEND COVENANT -- OTHER RELATED PROVISIONS OF THE MORTGAGE SECTION 2. Subject to the provisions of Section 3 hereof, the Company covenants and agrees that the provisions of Section 39 of the Mortgage, which were to remain in effect so long as any bonds of the First Series remained Outstanding, shall remain in full force and effect so long as any bonds of the Seventy-fourth Series are Outstanding. Clause (d) of subsection (II) of Section 4 of the Mortgage, as heretofore amended, is hereby further amended by inserting the words "and Seventy-fourth Series" after the words "and Seventy-third Series" each time such words appear therein. Clause (6) and clause (e) of Section 5 of the Mortgage and Section 29 of the Mortgage, as heretofore amended, are hereby further amended by inserting therein "Seventy-fourth" before "Seventy-third" each time such words occur therein. ARTICLE III MISCELLANEOUS PROVISIONS SECTION 3. The Company reserves the right to make such amendments to the Mortgage, as supplemented, as shall be necessary in order to delete subsection (I) of Section 39 of the Mortgage, and each holder of bonds of the Seventy-fourth Series hereby consents to such deletion without any other or further action by any holder of bonds of the Seventy-fourth Series. SECTION 4. Pursuant to the right reserved in Section 4 of the Fourteenth Supplemental Indenture, the Company hereby amends the Mortgage, as supplemented, to amend Article XIX to read as described in said Section 4. SECTION 5. The terms defined in the Mortgage, as heretofore supplemented, shall, for all purposes of this Sixty- sixth Supplemental Indenture, have the meanings specified in the Mortgage, as heretofore supplemented. SECTION 6. Whenever in this Sixty-sixth Supplemental Indenture either of the parties hereto is named or referred to, this shall, subject to the provisions of Articles XVI and XVII of the Mortgage, be deemed to include the successors and assigns of such party, and all the covenants and agreements in this Sixty- sixth Supplemental Indenture contained by or on behalf of the Company, or by or on behalf of the Trustee shall, subject as aforesaid, bind and inure to the respective benefits of the respective successors and assigns of such parties, whether so expressed or not. SECTION 7. So long as any bonds of the Seventy-fourth Series remain Outstanding, unless this provision shall have been waived in writing by the holders of seventy per centum (70%) in aggregate principal amount of bonds of the Seventy-fourth Series Outstanding at the time of such consent, subdivision (c) of Section 65 of the Mortgage shall read as follows: "(c) Failure to pay interest or premium, if any, upon or principal (whether at maturity as therein expressed or by declaration, or otherwise) of any Outstanding Qualified Lien Bonds or of any outstanding indebtedness secured by any mortgage or other lien (not included in the term Excepted Encumbrances) prior to the lien of this Indenture, existing upon any property of the Company which is subject to the lien and operation of this Indenture continued beyond the period of grace, if any, specified in such mortgage or Qualified Lien or other lien securing the same;" SECTION 8. A breach of a specified covenant or agreement of the Company contained in this Sixty-sixth Supplemental Indenture shall become a Default under the Indenture upon the happening of the events provided in Section 65(g) of the Mortgage with respect to such a covenant or agreement. SECTION 9. The Trustee hereby accepts the trusts herein declared, provided, created or supplemented and agrees to perform the same upon the terms and conditions herein and in the Mortgage, as heretofore supplemented, set forth and upon the following terms and conditions: The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Sixty-sixth Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely. Each and every term and condition contained in Article XVII of the Mortgage, as heretofore amended by said First through Sixty-fifth Supplemental Indentures, shall apply to and form part of this Sixty-sixth Supplemental Indenture with the same force and effect as if the same were herein set forth in full with such omissions, variations and insertions, if any, as may be appropriate to make the same conform to the provisions of this Sixty-sixth Supplemental Indenture. SECTION 10. Nothing in this Sixty-sixth Supplemental Indenture, expressed or implied, is intended, or shall be construed, to confer upon, or to give to, any person, firm or corporation, other than the parties hereto and the holders of the bonds and coupons Outstanding under the Indenture, any right, remedy or claim under or by reason of this Sixty-sixth Supplemental Indenture or by any covenant, condition, stipulation, promise or agreement hereof, and all the covenants, conditions, stipulations, promises and agreements in this Sixty- sixth Supplemental Indenture contained by or on behalf of the Company shall be for the sole and exclusive benefit of the parties hereto, and of the holders of the bonds and coupons Outstanding under the Indenture. SECTION 11. This Sixty-sixth Supplemental Indenture shall be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. PP&L, INC. does hereby constitute and appoint John R. Biggar to be its attorney for it, and in its name and as and for its corporate act and deed to acknowledge this Sixty-sixth Supplemental Indenture before any person having authority by the laws of the Commonwealth of Pennsylvania to take such acknowledgment, to the intent that the same may be duly recorded, and BANKERS TRUST COMPANY does hereby constitute and appoint ______________ to be its attorney for it, and in its name and as and for its corporate act and deed to acknowledge this Sixty- sixth Supplemental Indenture before any person having authority by the laws of the Commonwealth of Pennsylvania to take such acknowledgment, to the intent that the same may be duly recorded. IN WITNESS WHEREOF, PP&L, INC. has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by its President or one of its Vice Presidents, and its corporate seal to be attested by its Secretary or one of its Assistant Secretaries for and in its behalf, in the City of Allentown, Pennsylvania, and BANKERS TRUST COMPANY has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by one of its Vice Presidents or one of its Trust Officers, and its corporate seal to be attested by one of its Assistant Vice Presidents, in The City of New York, as of the day and year first above written. PP&L, INC. By ---------------------------------- Senior Vice President - Financial Attest: _______________________________________ Assistant Secretary BANKERS TRUST COMPANY, as Trustee By ---------------------------- Assistant Vice President Attest: --------------------------------- Assistant Treasurer COMMONWEALTH OF PENNSYLVANIA ) ) ss.: COUNTY OF LEHIGH ) On this day of , 1998, before me, a notary public, the undersigned officer, personally appeared JOHN R. BIGGAR, who acknowledged himself to be the Senior Vice President Financial of PP&L INC., a corporation and that he, as such Senior Vice President Financial, being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself as Senior Vice President Financial. In witness whereof, I hereunto set my hand and official seal. -------------------------------- Notary Public STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On this 30th day of April, 1998, before me, a notary public, the undersigned officer, personally appeared SCOTT THEIL, who acknowledged himself to be an Assistant Vice President of BANKERS TRUST COMPANY, a corporation and that he, as such Assistant Vice President, being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself as Assistant Vice President. In witness whereof, I hereunto set my hand and official seal. ------------------------------------- SHARON V. ALSTON Notary Public, State of New York No. 31-4966275 Qualified in New York County Commission Expires 5/7/98 Bankers Trust Company hereby certifies that its precise name and address as Trustee hereunder are: Bankers Trust Company 4 Albany Street New York, New York 10006 BANKERS TRUST COMPANY By --------------------------- Assistant Vice President EX-8 6 EXHIBIT 8 REID & PRIEST LLP 40 West 57th Street New York, NY 10019 Telephone 212 603-2000 Fax 212 603-2001 New York, New York May 1, 1998 PP&L, Inc. Two North Ninth Street Allentown, Pennsylvania 18101-1179 Ladies and Gentlemen: Reference is made to the prospectus supplement, (the "Prospectus"), dated April 28, 1998, filed by PP&L, Inc. with the Securities and Exchange Commission on April 30, 1998 pursuant to Rule 424 under the Securities Act of 1933, as amended, relating to the offering of PP&L, Inc.'s First Mortgage Bonds, 6 1/8% REset Put Securities Series due 2006 (the "Bonds"). We are of the opinion that the statements set forth under the caption "Certain United States Federal Income Tax Considerations" in the Prospectus constitute an accurate description, in general terms, of certain United States federal income tax considerations that may be relevant to the prospective holders of the Bonds. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the references to us in the Prospectus under the caption "Certain United States Federal Income Tax Considerations." Very truly yours, /s/ Reid & Priest LLP REID & PRIEST LLP -----END PRIVACY-ENHANCED MESSAGE-----