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.
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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. <Section> 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. <Section> 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
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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
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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.