Exhibit 10(d)
James E. Abel PP&L, Inc.
Treasurer Two North Ninth Street
610.774.5987 Allentown, PA 18101-1179
Fax: 610.774.5106 610.774.5151
E-mail: jeabel@papl.com http://www.papl.com/
July 8, 1998
Mr. Robert J. Harrity
Managing Director
Citibank, N.A.
399 Park Avenue
4th Floor, Zone 20
New York, NY 10043
Dear Bob:
Pursuant to our conversations, Citibank, N.A. (the "Bank") is making
available to PP&L Capital Funding, Inc. (the "Company") a line of credit in the
aggregate principal amount of $80,000,000.00 (the "Facility"). The Facility
will commence on the date hereof and terminate on July 7, 1999 (the "Termination
Date"), unless sooner terminated in accordance herewith or with the Note (as
hereinafter defined); provided that the Termination Date may be extended from
the initial or any extended Termination Date upon written request of the Company
to the Bank not more than 45 days nor less than 30 days prior to the Termination
Date, and approval of such extension by the Bank.
Approval of any such extension shall be in the sole discretion of the
Bank. The Bank's approval of such extension shall be provided by written notice
to the Company specifying the date to which the Termination Date is extended.
Notwithstanding the foregoing, the Termination Date shall in no event be
extended to a date that is more than 364 days from the date of such notice.
Failure of the Bank to provide written notice of approval of such extension
shall be deemed to mean that the Facility is not so extended.
Borrowings under this Facility shall become due and payable without
setoff, counterclaim or deduction whatsoever on the date selected by the Company
in the Request (as hereinafter defined) with respect to each advance, not later
than the Termination Date, and will be evidenced by a promissory note in the
form of Exhibit A attached hereto (the "Note"). Provided that the aggregate
principal amount outstanding at any one time does not exceed $80,000,000.00,
borrowings may be effected using either of the following alternatives:
1. Domestic Dollar Loans maturing not later than the Termination Date,
bearing an annual interest rate equal to the higher of
(i) the Bank's floating prime lending rate (calculated on the basis
of a 365-day year) as announced from time to time; and
(ii) .5% in excess of the Bank's overnight Federal Funds Rate
(calculated on the basis of a 360-day year) which shall mean the
per annum rate at which the Bank can acquire federal funds in the
interbank overnight federal funds market;
this rate (the "Base Rate") to be determined daily; or
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2. Eurodollar Loans with maturities of one, two, or three months (but in no
event shall a Eurodollar Loan mature later than the Termination Date),
bearing an annual interest rate (calculated on the basis of a 360-day year
for the actual number of days elapsed) equal to .30% over the London
interbank Offered Rate, as quoted by the Bank, for periods and in amounts
corresponding to the terms of such Eurodollar Loans two London business
days prior to the date of the requested advance.
Interest on each Domestic Dollar Loan and Eurodollar Loan
(individually a "Loan" and collectively the "Loans") is due and payable at the
maturity thereof or as set out in this Agreement or Note and, if such maturity
is longer than one month, at one month intervals after the making of such Loan.
Domestic Dollar Loans shall be prepayable at any time without premium or
penalty. In the event the Company repays any Eurodollar Loan on any day other
than the last day of an interest period therefor (whether by acceleration or
otherwise), the Company shall pay to the Bank, on demand, any resulting loss or
expense incurred by the Bank including, without limitation, any loss or expense
incurred in obtaining, liquidating or employing deposits from third parties.
All amounts not paid when due on any Loan (whether by acceleration or otherwise)
will bear interest payable on demand at a rate equal to 1% in excess of the Base
Rate.
The Bank expressly reserves the right to suspend offering Eurodollar
Loans if the Bank determines that making or maintaining any such Loan shall have
become impracticable or unlawful or if the effective cost thereof to the Bank
shall exceed the quoted rate of interest with respect thereto.
The Loans will be used for general corporate purposes of the Company.
No proceeds will be used to purchase or carry margin stock. No part of the
proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board of
Governors of the Federal Reserve System.
BORROWING NOTIFICATION AND FUNDING PROVISIONS
Minimum drawdowns for all Loans made under this Facility shall be
$10,000,000.00. Loans hereunder may be effected by telephone request
("Request") by those individuals authorized to request such Loans as designated
in writing to the Bank by the Company's Treasurer. A request for any Loan is
deemed as confirmation by the Company that no event as described in paragraph 2
of the Note shall have occurred and be continuing and that all representations
and warranties contained in this letter agreement are true as of the date of the
borrowing as if made on such date. Upon receipt of such Request, the Bank shall
transfer the amount of the Loan in immediately available funds to the Company's
Account Number 28065 with Mellon Bank, Delaware, ABA No. 031100047 or such other
bank account of the Company as may be directed in writing by the Company's
Treasurer.
For Domestic Dollar Loans, the Company may initiate a Loan by
providing a Request prior to 11:00 A.M. on the date on which the funds are
required. For Eurodollar Loans, the Company may initiate a Loan by providing a
Request prior to 11:00 A.M. at least three business days prior to the date on
which the funds are required.
LOAN DOCUMENTATION
The Bank shall record all borrowings and repayments of principal and
interest and the dates of such transactions on its records. The Company agrees
that the Bank's records, barring manifest evidence to the contrary, shall
conclusively evidence the Company's outstanding obligations under the terms of
this letter agreement and Note.
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FACILITY FEE
The Company agrees to pay to the Bank a facility fee (the "Fee") of
.10% per annum on the aggregate amount of the Facility. This Fee, which shall
be based on the actual number of days elapsed on a 360-day year, shall begin to
accrue on the date hereof and shall be payable in arrears on the last business
day of each calendar quarter and on any date on which the Bank's commitment
hereunder shall be terminated in full.
All payments made by the Company under this letter agreement or the
Note will be made to the Bank at Citibank Global Loan Support Center, 2 Penns
Way, Suite 200, New Castle, Delaware 19720 or such other address as the Bank
may designate.
CANCELLATION
The Company, in its sole discretion, may cancel the whole or any part
of the unused portion of the Facility in $10,000,000.00 increments by giving the
Bank not less than 10 business days prior notice to that effect, specifying the
date and amount of the proposed cancellation.
ASSIGNABILITY
The Bank shall have the right to transfer, assign or grant
participations in all or any part of its rights and obligations hereunder. Any
assignment pursuant to this clause shall be in the aggregate amount of at least
$5,000,000 and shall require the consent of the Company, which consent shall not
be unreasonably withheld. In addition to the assignments and participations
permitted under the foregoing provisions, the Bank may (without notice to or
consent of the Company and without payment of any fee) (i) assign and pledge all
or any portion of its Loans and its Notes to the Federal Reserve Bank and (ii)
assign all or any portion of its rights under this Agreement and its Loans and
its Notes to an affiliate.
REPRESENTATIONS AND WARRANTIES
The Company is duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
authority to enter into this letter agreement, to execute and deliver the Note
and to incur the obligations provided for herein and therein, all of which have
been duly authorized by all proper and necessary corporate action. No
governmental approval is required in connection with the execution, delivery or
performance of this Agreement, Note, or Guarantee.
Except as provided by applicable laws of bankruptcy, insolvency,
liquidation, or other laws of general application: (i) this letter agreement
constitutes, and the Note, when issued and delivered pursuant hereto, will
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their terms; (ii) the guarantee constitutes a valid and legally
binding obligation of the guarantor enforceable in accordance with its terms;
and (iii) the Loans will rank pari passu in respect of priority of payment with
all other senior unsecured indebtedness of the Company.
The execution, delivery and performance of its obligations under this
Agreement and the Note will not violate in any material respect any provisions
of any agreement to which the Company is bound and will not be in conflict with,
result in a breach of, or constitute (with due notice and/or lapse of time) a
default under any such agreement or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of the properties
or assets of the Company.
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The audited balance sheet of PP&L Resources, Inc. (Resources), parent
corporation of the Company, on a consolidated basis as of December 31, 1997
together with audited statements of income and expense, retained earnings, paid
in capital and surplus and changes in financial position, together with notes
thereto, for the fiscal year then ended, heretofore delivered to the Bank,
fairly present the financial condition of Resources and the results of its
operations, as of the date and for the period referred to and have been prepared
in accordance with generally accepted accounting principles consistently
maintained throughout the period involved. There has been no material adverse
change in the business, properties, condition (financial or other) or operations
of Resources since the date of such audited financial statements which would
adversely affect Resources' ability to meet its obligations under the terms of a
Guarantee by Resources of the Company's obligations hereunder of even date
("Guarantee").
The Company has heretofore delivered to the Bank unaudited financial
statements, specifically an income statement, balance sheet, and statement of
cash flows, for the period ended December 31, 1997. There has been no material
adverse change in the business, properties, condition (financial or other) or
operations of the Company since the date of the statements which would adversely
affect the Company's ability to meet its obligation hereunder.
FINANCIAL STATEMENTS
As long as the Facility is available to the Company, the Company shall
promptly provide the Bank with annual and quarterly financial statements of both
the Company and Resources on a consolidated basis. Annual statements shall be
supplied within 120 days from the closing of the respective annual fiscal period
and Resources' statements shall be audited by a nationally recognized
independent accountant. Quarterly financial statements, prepared in accordance
with generally accepted principles and practices of accounting, shall be
supplied within 60 days of the close of each of the first three quarters of
Resources' fiscal year. The Company will provide the Bank with any other
information the Bank may reasonably request from time to time.
WAIVER OF JURY TRIAL
Each party hereto hereby waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in any legal proceeding
directly or indirectly arising out of or relating to this agreement or the
transactions contemplated hereby (whether based on contract, tort or any other
theory). Each party hereto (a) certifies that no representative, agent or
attorney of any 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 (b) acknowledges that it and the other parties hereto have been
induced to enter into this agreement by, among other things, the mutual waivers
and certifications in this section.
INDEMNIFICATION
The Company agrees to indemnify the Bank and each of its respective
affiliates, directors, officers, employees, agents and representatives (each an
"Indemnitee") from, and hold each of them harmless against any and all losses,
claims, damages, penalties, judgments, liabilities and expenses (including,
without limitation, all expenses of litigation or preparation therefore whether
or not the Bank is a party thereto) which any Indemnitee may pay or incur
arising out of or relating to this Note, the Agreement, or any other agreement
executed in connection therewith, the transactions contemplated hereby, or the
direct or indirect application or proposed application of the proceeds of any
Loan hereunder; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee.
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DOCUMENTATION
As a condition precedent to the first utilization of the Facility, the
Bank shall be in possession of the following:
(i) a copy of this letter agreement duly executed by the Company;
(ii) a Note of the Company, evidencing loans pursuant to both Domestic
Dollar Loans and Eurodollar Loans, in the form of Exhibit A attached
hereto and duly executed;
(iii) corporate resolutions, articles, and bylaws, and an
incumbency/signature certificate of the Company and Resources;
(iv) the Guarantee of Resources of the Company's obligations hereunder in
the form of Exhibit B attached hereto and duly executed;
(v) a Certificate, signed by an officer of the Company, stating that (a)
no default or event of default as described in paragraph 2 of the
Note has occurred and is continuing as of the date of this letter
agreement and Note; (b) all representations and warranties contained
in the letter agreement are true and correct as of the date of this
letter agreement and Note; and (c) no governmental consents or
approvals are required; and
(vi) a legal opinion of counsel to the Company and the Guarantor in form
and substance reasonably satisfactory to the Bank.
Any and all obligations and liabilities incurred under this letter
agreement shall be due and payable without setoff, counterclaim or deduction
whatsoever on the Termination Date.
This letter agreement and the Note shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
All letters, advices, confirmation, notices and other writing required
or permitted hereunder shall be sufficient if sent by first class mail, postage
prepaid, addressed to the Bank as follows:
Citibank, N.A.
399 Park Avenue
4th Floor, Zone 20
New York, NY 10043
Attention: Mr. Robert J. Harrity
---------
and to the Company as follows:
PP&L Capital Funding, Inc.
Two North Ninth Street
Allentown, PA 18101
Attention: Mr. James E. Abel
---------
Treasurer
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If the above stated terms and conditions are satisfactory, please sign
and return to the Company the enclosed copy of this letter agreement.
Very truly yours,
PP&L CAPITAL FUNDING, INC.
By:
______________________________
James E. Abel
Treasurer
AGREED TO AND ACCEPTED BY:
CITIBANK, N.A.
By: _________________________
Title: _________________________
GUARANTEE OF PP&L RESOURCES, INC.
In order to induce Citibank, N.A. (the "Bank") to extend credit to
PP&L Capital Funding, Inc. (the "Company"), under the agreement between the Bank
and the Company dated July 8, 1998 (the "Agreement"), PP&L Resources, Inc.,
(Resources) hereby irrevocably and unconditionally guarantees, as primary
obligor and not merely as a surety, the Company's obligations to the Bank under
the Agreement and the Note (as defined in the Agreement), whether for principal,
interest, fees or otherwise (collectively, the "Company Obligations").
Resources further agrees that the due and punctual payment of Company
Obligations may be extended, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its Guarantee hereunder
notwithstanding any such extension or renewal of any Company Obligation.
Each party hereto hereby waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in any legal proceeding
directly arising out of or relating to this agreement or the transactions
contemplated hereby (whether based on contract, tort or any other theory). Each
party hereto (a) certifies that no representative, agent or attorney of any
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 (b)
acknowledges that it and the other parties hereto have been induced to enter
into this agreement by, among other things, the mutual waivers and
certifications in this section.
Resources waives presentment to, demand of payment from and protest to
the Company of any of the Company Obligations, and also waives notice of
acceptance of its obligations and notice of protest for nonpayment. The
obligations of Resources hereunder shall not be affected by (a) the failure of
the Bank to assert any claim or demand or to enforce any right or remedy against
the Company under the provisions of this Guarantee, the Agreement, the Note or
otherwise, (b) change or increase in the amount of any of the Company
Obligations, whether or not consented to by Resources, or (c) any rescission,
waiver, amendment or modification of any of the terms or provisions of this
Agreement or any other agreement.
Resources further agrees that its agreement hereunder constitutes a
promise of payment when due (whether or not any bankruptcy or similar proceeding
shall have stayed the accrual or collection of any of the Company Obligations or
operated as a discharge thereof) and not merely of collection, and waives any
right to require that any resort be had by the Bank to any balance of any
deposit account or credit on the books of the Bank in favor of any other person.
The obligations of Resources hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, and shall not
be subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever, by reason of the invalidity, illegality or unenforceability of the
Company Obligations, any impossibility in the performance of the Company
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of Resources hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Bank to assert any claim or demand or
to enforce any remedy under the Agreement or any other agreement, by any waiver
or modification in respect of any thereof, by any default, failure or delay,
willful or otherwise, in the performance of Company Obligations, or by any other
act or omission which may or might in any manner or to any extent vary the risk
of Resources or otherwise operate as a discharge of Resources or the Company as
a matter of law or equity.
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Resources further agrees that its obligations hereunder shall continue
to be effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of any Company Obligation is rescinded or must otherwise be
restored by the Bank upon the bankruptcy or reorganization of the Company or
otherwise.
In furtherance of the foregoing and not in limitation of any other
right which the Bank may have at law or in equity against Resources by virtue
hereof, upon the failure of the Company to pay any Company Obligation when and
as the same shall become due, whether at maturity, by acceleration, after notice
of prepayment or otherwise, Resources hereby promises to and will, upon receipt
of written demand by the Bank, forthwith pay, or cause to be paid, in cash the
amount of such unpaid Company Obligations.
Until such time as the Company Obligations shall have been paid in
full, Resources waives any right of subrogation which it may have in connection
with any payment hereunder; provided, however, that upon payment in full of the
Company Obligations the Bank shall, in reasonable manner, assign to Resources
the amount of such Company Obligations owed to it and so paid, such assignment
to be pro tanto to the extent to which the Company Obligations in question was
--- -----
discharged by Resources, or make such disposition thereof as Resources shall
direct (all without recourse to the Bank and without any representation or
warranty by the Bank).
IN WITNESS WHEREOF, PP&L Resources, Inc. has caused this Guaranty to
be executed this 8th day of July, 1998.
PP&L RESOURCES, INC.
By:
____________________________
Senior Vice President-Financial
ATTEST:
By:
____________________________
Robert J. Grey
Secretary
ACCEPTED:
CITIBANK, N.A.
By:
____________________________
(Signature and Title)
EXHIBIT A
PROMISSORY NOTE
$80,000,000.00 July 8, 1998
Commitment of Bank
PP&L Capital Funding, Inc. (the "Company"), for value received, hereby
promises to pay to the order of Citibank, N.A. (the "Bank"), for the account of
its appropriate lending office, at its office, 399 Park Avenue, Fourth Floor,
New York, NY 10043, in lawful money of the United States, the principal sum of
$80,000,000.00, or, if less, the aggregate unpaid principal amount of all loans
made by the Bank to the Company pursuant to the letter agreement dated July 8,
1998, between the Company and the Bank (the "Agreement"), on the dates specified
for the repayment of such loans as set forth on the Bank's records or, if not so
specified, as provided in the Agreement. Each loan evidenced by this Note shall
bear interest, payable as provided in the Agreement.
The Bank may, at its option, declare this Note immediately due and
payable and terminate its commitment under the Agreement without further
formality, if:
(a) neither the Company nor Resources pays (x) within 5 business days of
the due date thereof any interest or fees on this Note or under the
Agreement, or (y) when due, the principal on any loan or any other
amount payable hereunder or under the Agreement;
(b) any representation or warranty by the Company to the Bank in any
financial statement, certificate, or other agreement proves to have
been misleading in any material respect when made or deemed to have
been made;
(c) the Company or PP&L Resources, Inc. ("Resources"), as guarantor under
a guarantee (the "Guarantee") dated the date hereof relating to this
Note, shall (i) fail to pay any principal or interest, regardless of
amount, due in respect of any indebtedness in a principal amount in
excess of $40,000,000, in the case of indebtedness of Resources or
indebtedness of the Company guaranteed by Resources or, in the case
of indebtedness of the Company not guaranteed by Resources,
$10,000,000, if such failure shall continue beyond any period of
grace provided with respect thereto, or (ii) fail to observe or
perform any other term, covenant, condition or agreement contained in
any agreement or instrument (including any term, covenant, condition
or agreement herein or in the Agreement) evidencing or governing any
such indebtedness in a principal amount in excess of, in the case of
indebtedness of Resources or indebtedness of the Company guaranteed
by Resources, $40,000,000 or, in the case of indebtedness of the
Company not guaranteed by Resources, $10,000,000, if such failure
shall continue beyond any period of grace provided with respect
thereto if the effect of any failure referred to in this clause (ii)
is
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to cause, or to permit the holder or holders of such indebtedness or
a trustee on its or their behalf to cause such indebtedness to become
due prior to its stated maturity; or
(d) the Company or Resources ceases to pay its debts or makes an
assignment for the benefit of creditors, or any proceeding relating
to the Company or Resources under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation law or
statute of any jurisdiction, whether now or hereafter in effect, is
commenced by or against the Company or Resources or the Company or
Resources becomes or is adjudicated insolvent or bankrupt, or
petitions or applies to any tribunal for any receiver of or any
trustee for the Company or Resources or any substantial part of the
property of the Company or Resources;
(e) the ratio of Consolidated Indebtedness of Resources to Consolidated
Capitalization of Resources exceeds 70% at any time and Resources
shall have failed to reduce such ratio to 70% or less within 30 days
after written notice to Resources from the Bank. For this purpose,
"Consolidated Indebtedness of Resources" shall mean the Consolidated
Indebtedness of Resources (determined in accordance with United
States generally accepted accounting principles (GAAP)), except that
for purposes of this definition (1) Consolidated Indebtedness of
Resources shall exclude Non-Recourse Indebtedness of Resources and
(2) Consolidated Indebtedness of Resources shall exclude any Hybrid
Preferred Securities of Resources. Also for this purpose,
Consolidated Capitalization of Resources shall mean the sum of (A)
the Consolidated Indebtedness of Resources and (B) (i) the
consolidated shareowners' equity (determined in accordance with GAAP)
of the common, preference and preferred stockholders of Resources and
(ii) the aggregate amount of Hybrid Preferred Securities of
Resources, except that for purposes of calculating Consolidated
Capitalization of Resources, Consolidated Indebtedness of Resources
shall exclude Non-Recourse Indebtedness of Resources and Consolidated
Capitalization of Resources shall exclude that portion of
shareowners' equity attributable to assets securing Non-Recourse
Indebtedness of Resources. "Hybrid Preferred Securities" of Resources
means (1) the preferred securities and subordinated debt described in
the Prospectus dated as of April 3, 1997 of PP&L Capital Trust and
PP&L, Inc. and the preferred securities and subordinated debt
described in the Prospectus dated as of June 9, 1997 of PP&L Capital
Trust II and PP&L, Inc. (collectively, the "Existing TOPrS") and (2)
any additional preferred securities and subordinated debt (with a
maturity of at least twenty years) similar to the Existing TOPrS and
in an aggregate amount not to exceed $100,000,000, issued by business
trusts, limited liability companies, limited partnerships (or similar
entities) (i) all of the common equity, general partner or similar
interests of which are owned (either directly or indirectly through
one or more wholly-owned Subsidiaries) at all times by Resources or
Page 3
PP&L, Inc., (ii) that have been formed for the purpose of issuing
hybrid preferred securities and (iii) substantially all the assets of
which consist of (A) subordinated debt of Resources or a Subsidiary
of Resources, as the case may be, and (B) payments made from time to
time on the subordinated debt. "Indebtedness" of any person shall
mean, without duplication, (a) all obligations of such person for
borrowed money, (b) all obligations of such person with respect to
deposits or advances of any kind, (c) all obligations of such person
evidenced by bonds, debentures, notes or similar instruments, (d) all
obligations of such person under conditional sale or other title
retention agreements relating to property or assets purchased by such
person, (e) all obligations of such person issued or assumed as the
deferred purchase price of property or services (excluding trade
accounts payable and accrued obligations incurred in the ordinary
course of business), (f) all Indebtedness of others secured by (or
for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien or property owned
or acquired by such person, whether or not the obligations secured
thereby have been assumed but shall not include any obligations that
are without recourse to such person, (g) all Guarantees by such
person of Indebtedness of others, (h) all Capital Lease Obligations
of such person, (i) all obligations of such person in respect of
Interest Rate Protection Agreements, foreign currency exchange
agreements or other interest or exchange rate hedging arrangements
(the amount of any such obligation to be the amount that would be
payable upon the acceleration, termination or liquidation thereof)
and (j) all obligations of such person as an account party in respect
of letters of credit and bankers' acceptances. "Non-Recourse
Indebtedness of Resources" shall mean indebtedness that is
nonrecourse to Resources, the Company, PP&L, Inc. ("PP&L") or any of
PP&L's Subsidiaries; or
(f) the Guarantee of Resources shall, for any reason, cease to be in full
force and effect;
provided, that upon the happening of any event specified in subparagraph (d)
above, this Note and any other obligations of the Company to the Bank shall
become immediately due and payable and commitments under the Agreement shall be
terminated without declaration or other notice to the Company.
Resources or the Company will furnish to the Bank within five days of
acquiring knowledge of the existence of a default with respect to the Company or
Resources a certificate of a financial officer of Resources and an officer of
the Company specifying: (i) the nature of such default, (ii) the period of the
existence thereof, and (iii) the actions that Resources and the Company propose
to take with respect thereto.
Page 4
If, for any reason (including acceleration), the principal of any
Eurodollar Loan as defined in the Agreement and evidenced by this Note, or any
portion thereof, is paid prior to the last day of an interest period therefor,
the Company shall reimburse the Bank on demand for any resulting loss or expense
incurred by it including (without limitation) any loss or expense incurred in
obtaining, liquidating or employing deposits from third parties.
If the Bank reasonably determines at any time that any applicable law,
governmental rule or regulation, or any change in interpretation or
administration thereof by any governmental authority, central bank or comparable
agency or compliance by the Bank with any regulatory directive subjects the Bank
to any tax with respect to this Note or payments by the Company of principal or
interest thereunder or hereunder (except for taxes on or measured by the net
income of the Bank), or will have the effect of increasing the Bank's reserve
requirements, deposit requirements, or the amount of capital required or
expected to be maintained by the Bank based on the existence of the Facility or
the Bank's obligations under the Agreement, then promptly upon receipt of a
written demand from the Bank, the Company shall pay the Bank such additional
amounts as shall be required to compensate the Bank for the increased cost to
the Bank as a result of these increases. Each such written demand shall specify
(a) the event pursuant to which the Bank is entitled to claim the additional
amount, (b) the date on which the event occurred and became applicable to the
Bank and (c) the compensation period for which the amount is due. The period
for which the additional amounts may be claimed by the Bank (the "Compensation
Period") shall be the number of days actually elapsed since the date the event
occurred and became applicable to the Bank. Payments made by the Company to the
Bank shall be made on the later of the last day of the Compensation Period
specified in each written demand or 30 days after any such written demand.
Provided that the Bank acts reasonably and in good faith in determining any
additional amounts due, the Bank's determination of compensation owing shall,
absent manifest error, be final, conclusive and binding on the Company.
If any loan evidenced by this Note becomes due and payable on a
Saturday, Sunday or public or other banking holiday under the laws of the
Commonwealth of Pennsylvania, the maturity thereof shall be extended to the next
succeeding business day, and interest shall be payable thereon at the rate
herein specified during such extension; provided, however, that if any such
extension would result in the interest period for a Eurodollar Loan being
carried into another calendar month, such interest period shall end on the
preceding business day.
If the Bank institutes any action for the enforcement or collection of
this Note, the Company shall pay on demand all costs and expenses of such action
including reasonable legal fees.
If the unpaid principal amount of any Loan, interest accrued thereon
or any amount owing by the Company hereunder or under the Agreement shall have
become due and payable (by acceleration or otherwise), the Bank shall have the
right, in addition to all other rights and remedies available to it, without
notice to the Company, to set-off against and to appropriate and apply to such
due and payable amounts any debt owing to, and any other funds held in any
manner for the account of, the Company by the Bank including, without
limitation, all funds in all deposit accounts (whether time or demand, general
or special, provisionally credited or finally credited, or otherwise) now or
hereafter maintained by the Company with the Bank. Such right shall exist
whether or not the Bank shall have given notice or made any demand hereunder,
and regardless of the existence or adequacy of any collateral, guarantee or any
other security, right or remedy available to
Page 5
the Bank. Nothing herein or in the Agreement shall be deemed a waiver or
prohibition of or restriction on the Bank's rights of banker's lien or set-off.
PP&L CAPITAL FUNDING, INC.
By: ________________________