CALCULATION AGENCY AGREEMENT
Between
XXXXXX XXXXXXX & 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 Xxxxxx Xxxxxxx & 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 Xxxxxx 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
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Company hereby appoints Xxxxxx Xxxxxxx & 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
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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
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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
Xxxxxx Xxxxxxx & 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,
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however, that if such Calculation Agent has not received a
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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
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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
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Agent. The Calculation Agent shall incur no liability for, or in
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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.
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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
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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
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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
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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.
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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
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indemnify and hold harmless Xxxxxx Xxxxxxx & 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 Xxxxxx Xxxxxxx & 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
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by Calculation Agent. Any corporation or other entity into
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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
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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.
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Treasurer
Telephone No.:000-000-0000
Telecopy No.:000-000-0000
To the Trustee:
Bankers Trust Company
0 Xxxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxx Xxxxx
Telephone No.:000-000-0000
Telecopy No.:000-000-0000
To the Calculation Agent:
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: DPG
Telephone No: (000) 000-0000
Telecopy No.: (000) 000-0000
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
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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
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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
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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
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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
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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:
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Name:
XXXXXX XXXXXXX & CO. INCORPORATED
By:
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Name:
Title:
Appendix A
(Form of Bond)
