EXHIBIT 4.2
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PPL ELECTRIC UTILITIES CORPORATION
TO
THE CHASE MANHATTAN BANK,
TRUSTEE
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SUPPLEMENTAL INDENTURE NO. [1]
DATED AS OF ________, 200[1]
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SUPPLEMENTAL TO THE INDENTURE
DATED AS OF _________, 2001
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ESTABLISHING TERMS OF
[SENIOR SECURED] BONDS [______ SERIES __]
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SUPPLEMENTAL INDENTURE NO. [1]
SUPPLEMENTAL INDENTURE No. [1], dated as of the ___ day of ____, 200[1]
made and entered into by and between PPL ELECTRIC UTILITIES CORPORATION, a
corporation of the Commonwealth of Pennsylvania, whose address is Xxx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxx 00000 (hereinafter sometimes called the
"Company"), and THE CHASE MANHATTAN BANK,, a corporation of the State of New
York, whose address is 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 (hereinafter sometimes called the "Trustee"), as Trustee under the
Indenture, dated as of __________, 2001 (hereinafter called the "Original
Indenture"), this Supplemental Indenture No. [1] being supplemental thereto. The
Original Indenture and any and all indentures and instruments supplemental
thereto are hereafter sometimes collectively called the "Indenture."
RECITALS OF THE COMPANY
The Original Indenture was authorized, executed and delivered by the
Company to provide for the issuance from time to time of its Securities (such
term and all other capitalized terms used herein without definition having the
meanings assigned to them in the Original Indenture), to be issued in one or
more series as contemplated therein, and to provide security for the payment of
the principal of and premium, if any, and interest, if any, on the Securities.
Pursuant to [Article Four] of the Original Indenture, the Company has
established a series of Securities to be designated ["Senior Secured Bonds"],
limited in aggregate principal amount (except as contemplated in Section 301(b)
of the Original Indenture) to $[900,000,000], such series of Securities to be
hereinafter sometimes called "Securities of the [First] Series."
As contemplated in Section 301 of the Original Indenture, the Company
wishes to establish certain terms of the Securities of the [First] Series. The
Company has duly authorized the execution and delivery of this Supplemental
Indenture No. [1] to establish certain terms of the Securities of the [First]
Series and has duly authorized the issuance of such Securities; and all acts
necessary to make this Supplemental Indenture No. [1] a valid agreement of the
Company, and to make the Securities of the [First] Series valid obligations of
the Company, have been performed.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE NO. [1] WITNESSETH, that, for
and in consideration of the premises and of the purchase of the Securities by
the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities of the [First] Series, as
follows:
ARTICLE ONE.
[FIRST] SERIES OF SECURITIES
SECTION 101. The Securities of the [First] Series shall have the terms
provided therefor in this Article One of this Supplemental Indenture No. [1],
and such terms are hereby established for such Securities of the [First] Series
as contemplated in Article Four and Section 301 of the Original Indenture. The
form or forms and additional terms of the Securities of the [First] Series shall
be established in an Officer's Certificate of the Company, as contemplated by
Article Four and Section 301 of the Original Indenture.
SECTION 102. COVENANTS.
So long as any Securities of the [First] Series shall remain Outstanding,
each of the following shall be an additional covenant of the Company under the
Indenture:
(a) The Company shall not declare any dividends on its shares of
common stock or commit to make any other distribution on its shares of common
stock (other than dividends and distributions payable in shares of its common
stock), or purchase or redeem any shares of its common stock, other than with
the proceeds of additional common stock financing (each such payment or
distribution or purchase, a "Restricted Payment"), if and for so long as the
average of the Interest Coverage Ratios for the four most recently ended fiscal
quarters immediately preceding the date of declaration of any such Restricted
Payment falls below 1.5. The Company shall not declare any cash dividend on
shares of its common stock, or otherwise commit to making any other Restricted
Payment, unless such dividend or other Restricted Payment is payable within 120
days of the date of declaration or other commitment.
(b) If the Company receives a Dividend Notice from the Independent
Administrator the Company shall not make any Restricted Payment until such time
as the Company has corrected the noncompliance giving rise to the Dividend
Notice in accordance with Section __ of the Compliance Administration Agreement.
(c) If and for so long as the average of the Interest Coverage Ratios
for the four consecutive fiscal quarters immediately preceding any date of
determination falls below 1.5, the Company shall initiate a filing for rate
relief with the Pennsylvania Public Utility Commission ("PUC") within 90 days,
unless the Company is not eligible for such rate relief under applicable law,
regulation or orders or policies of the PUC then in effect.
(d) The Company will not issue additional Securities (other than (i)
Securities issued to refund Outstanding Securities, outstanding bonds issued
under the PPL 1945 Mortgage, or any other Class A Bonds and (ii) Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities of such series pursuant to Section 304,
305, 306, 506 or 1306 of the Indenture), unless the Company shall have received
Rating Agency Confirmations from the applicable Rating Agencies, each to the
effect that the issuance of such additional Securities will not result in the
reduction or withdrawal of the ratings on the Outstanding Securities of the
[First] Series below the lower of (x) such Rating Agency's rating on such
Outstanding Securities then in effect or (y) such Rating Agency's Threshold
Rating.
(e) The Company shall not, subject to the requirements of applicable
law, regulation and policies of applicable regulatory bodies, engage in any
business, either directly or through subsidiaries of the Company, other than its
electric transmission and distribution businesses and businesses related to or
arising out of the electric transmission and distribution businesses.
(f) The Company will not consolidate with or merge with or into, or
convey or otherwise transfer, or lease, as or substantially as an entirety, its
Electric Utility Property to any Person, unless:
(i) the provisions of Section 1201 of the Indenture are complied
with;
(ii) immediately after giving effect to such transaction, the
Consolidated Net Worth of the Company or the Successor Company, as the case may
be, is not less than that of the Company immediately prior to the transaction;
and
(iii) the Company shall have received Rating Agency Confirmations
from the applicable Rating Agencies, each to the effect that the merger,
consolidation or other transaction will not result in the reduction or
withdrawal of the ratings on the Outstanding Securities of the [First] Series
below the lower of (x) such Rating Agency's rating on such Outstanding
Securities then in effect or (y) such Rating Agency's Threshold Rating.
(g) The Company will not acquire tangible electric transmission and
distribution assets of any other electric transmission and distribution company
having a value in excess of 20% of the total assets of the Company and its
consolidated subsidiaries as shown on the Company's most recent audited
consolidated balance sheet unless the Company shall have received Rating Agency
Confirmations from the applicable Rating Agencies, each to the effect that the
acquisition will not result in the reduction or withdrawal of the ratings on the
Outstanding Securities of the [First] Series below the lower of (x) such Rating
Agency's rating on such Outstanding Securities then in effect or (y) such Rating
Agency's Threshold Rating.
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(h) After the date of the first authentication of Securities of the
[First] Series, the Company shall not issue additional Class A Bonds under the
PPL 1945 Mortgage except for Class A Bonds (i) to replace mutilated, destroyed,
lost or stolen Class A Bonds of the same series or to effect transfers,
exchanges, or partial redemptions, payments or retirements of Class A Bonds;
(ii) to be delivered to the Trustee under the Indenture; or (iii) to refund or
refinance outstanding Class A Bonds.
(i) The Securities of the [First] Series shall have the benefit of the
covenant of the Company contained in Section 707 of the Indenture.
(j) The Company will comply in all material respects with Articles X
and XI of its Amended and Restated Articles of Incorporation and Article IX of
its Bylaws, in each case as such documents may be amended from time to time in
accordance with the terms thereof.
(k) The Company will not solicit its affiliates to obtain, or accept
from any of its affiliates, any guarantee by such affiliate of any obligation of
the Company.
SECTION 103. RELEASE OF MORTGAGED PROPERTY.
So long as any Securities of the [First] Series shall remain Outstanding,
any Officer's Certificate delivered pursuant to Section 1803(c) of the Original
Indenture shall also state that (except in any case where a Governmental
Authority has lawfully ordered the Company to divest itself of such property)
such release is, in the judgment of the signers, desirable in the conduct of the
business of the Company.
SECTION 104. ADDITIONAL CONDITION TO RELEASE DATE.
So long as any Securities of the [First] Series shall remain Outstanding,
it shall be a condition to the occurrence of the Release Date under Section 1811
of the Original Indenture, that the Company deliver to the Trustee Rating Agency
Confirmations from the applicable Rating Agencies, each to the effect that the
discharge of the Lien of the Indenture will not result in the reduction or
withdrawal of the ratings on the Outstanding Securities of the [First] Series
below the lower of (x) such Rating Agency's rating on such Outstanding
Securities then in effect or (y) such Rating Agency's Threshold Rating.
SECTION 105. EVENTS OF DEFAULT.
So long as any Securities of the [First] Series shall remain Outstanding,
the occurrence and continuation of the following shall be an additional Event of
Default under the Indenture: the Company shall receive a Noncompliance Notice
from the Independent Administrator under the Compliance Administration
Agreement, unless and until the Independent Administrator shall have informed
the Trustee that such Noncompliance Notice is no longer in effect.
SECTION 106. DEFINITIONS. For purposes of this Supplemental Indenture,
"COMPLIANCE ADMINISTRATION AGREEMENT" shall mean that Compliance
Administration Agreement between the Company and ___________________, as
Independent Administrator as such agreement shall be amended from time to time.
"CONSOLIDATED NET WORTH" shall mean, with respect to any Person, the excess
of such Person's consolidated assets over its consolidated liabilities,
determined in accordance with generally accepted accounting principles;
"DIVIDEND NOTICE" shall mean a notice from the Independent Administrator as
contemplated by Section of the Compliance Administration Agreement.
"FUNDS FROM OPERATION" means for any period with respect to the Company and
its consolidated subsidiaries, the aggregate amount of consolidated net income
of the Company and its consolidated subsidiaries (x) plus deferred income taxes,
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depreciation and amortization expense, preferred dividends, extraordinary
expense items, any non-recurring or non-cash charges to net income (whether or
not an extraordinary item) and any expense associated with intangible transition
charges, and (y) minus any deferred investment tax credit, any extraordinary
revenue items and any income associated with intangible transition charges, all
computed in accordance with generally accepted accounting principles in effect
on the date of original issue of the Securities of the [First] Series;
"GROSS INTEREST EXPENSE" means for any period, the interest expense on
indebtedness of the Company and its consolidated subsidiaries minus any interest
expense associated with intangible transition debt;
"INDEPENDENT ADMINISTRATOR" shall mean, initially,
[_______________________________], as Administrator under the Compliance
Administration Agreement, and its successors in such capacity from time to time.
"INTEREST COVERAGE RATIO" means the ratio of (i) the sum of Funds from
Operation plus Gross Interest Expense to (ii) Gross Interest Expense;
"NONCOMPLIANCE NOTICE" shall mean a notice from the Independent
Administrator as contemplated by Section _____ of the Compliance Administration
Agreement.
"RATING AGENCY" shall mean any of Fitch Investor Services ("Fitch"),
Xxxxx'x Investors Service, Inc. ("Moody's"), and Standard and Poor's Ratings
Group, a division of McGraw Hill, Inc. ("S&P"), and, in each case, its
respective successors and assigns, or absent a successor to any such Rating
Agency, or if such entity shall cease to rate Securities of the [First] Series,
such other nationally recognized statistical rating organization as may be
selected by the Company and designated a Rating Agency with respect to the
Securities of the [First] Series.
"RATING AGENCY CONFIRMATIONS" shall mean written evidence of the ratings on
the Securities of the [First] Series of Fitch, Moody's and S&P; provided that if
any of such Rating Agencies ceases to exist or to rate the Securities of the
[First] Series, and no other Rating Agency has been designated by the Company
with respect to the Securities of the [First] Series, "Rating Agency
Confirmations" shall mean the written evidence of the ratings on the Securities
of the [First] Series by any remaining Rating Agency or Rating Agencies.
"RESTRICTED PAYMENT" shall have the meaning set forth in Section 101; and
"THRESHOLD RATING" shall mean, with respect to the Securities of the
[First] Series, A- in the case of Fitch, A3 in the case of Moody's, and A- in
the case of S&P, or, in each case, the equivalent rating if any such Rating
Agency shall change its rating designations.
SECTION 107. SATISFACTION AND DISCHARGE. The Company hereby agrees that, if
the Company shall make any deposit of money and/or Eligible Obligations with
respect to any Securities of the [First] Series, or any portion of the principal
amount thereof, as contemplated by Section 801 of the Indenture, the Company
shall not deliver an Officer's Certificate described in clause (z) in the first
paragraph of said Section 801 unless the Company shall also deliver to the
Trustee, together with such Officer's Certificate, either:
(a) an instrument wherein the Company, notwithstanding the
satisfaction and discharge of its indebtedness in respect of such Securities,
shall retain the obligation (which shall be absolute and unconditional) to
irrevocably deposit with the Trustee or Paying Agent such additional sums of
money, if any, or additional Eligible Obligations (meeting the requirements of
Section 801), if any, or any combination thereof, at such time or times, as
shall be necessary, together with the money and/or Eligible Obligations
theretofore so deposited, to pay when due the principal of and premium, if any,
and interest due and to become due on such Securities or portions thereof, all
in accordance with and subject to the provisions of said Section 801; provided,
however, that such instrument may state that the obligation of the Company to
make additional deposits as aforesaid shall be subject to the delivery to the
Company by the Trustee of a notice asserting the deficiency accompanied by an
opinion of an independent public accountant of nationally recognized standing,
selected by the Trustee, showing the calculation thereof (which opinion shall be
obtained at the expense of the Company); or
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(b) an Opinion of Counsel to the effect that the Holders of such
Securities, or portions of the principal and amount thereof, will not recognize
income, gain or loss for United States federal income tax purposes as a result
of the satisfaction and discharge of the Company's indebtedness in respect
thereof and will be subject to United States federal income tax on the same
amounts, at the same times and in the same manner as if such satisfaction and
discharge had not been effected.
ARTICLE TWO.
MISCELLANEOUS PROVISIONS
SECTION 201. This Supplemental Indenture No. [1] is a supplement to the
Original Indenture. As supplemented by this Supplemental Indenture No [1], the
Indenture is in all respects ratified, approved and confirmed, and the Original
Indenture and this Supplemental Indenture No. [1] shall together constitute the
Indenture.
SECTION 202. The recitals contained in this Supplemental Indenture No. [1]
shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for their correctness and makes no representations as to the
validity or sufficiency of this Supplemental Indenture No. [1].
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture No. [1] to be duly executed, and their respective corporate seals to
be hereunto affixed and attested, all as of the day and year first written
above.
PPL ELECTRIC UTILITIES CORPORATION
By
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Treasurer
Attest:
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Assistant Secretary
THE CHASE MANHATTAN BANK, as Trustee
By
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[Vice President]
Attest:
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[Assistant Vice President]
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COMMONWEALTH OF PENNSYLVANIA )
) ss.:
COUNTY OF LEHIGH )
On this ____ day of _____, 2001, before me, a notary public, the
undersigned officer, personally appeared , who acknowledged himself to be the
Treasurer of PPL ELECTRIC UTILITIES CORPORATION, a corporation of the
Commonwealth of Pennsylvania and that he, as such Treasurer, being authorized to
do so, executed the foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as Treasurer.
In witness whereof, I hereunto set my hand and official seal.
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Notary Public
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ___ day of ____, 2001, before me, a notary public, the undersigned
officer, personally appeared ______________________, who acknowledged herself to
be a [Vice President] of THE CHASE MANHATTAN BANK, a corporation and that
[he/she], as such [Vice President], being authorized to do so, executed the
foregoing instrument for the purposes therein contained, by signing the name of
the corporation by herself as [Vice President].
In witness whereof, I hereunto set my hand and official seal.
By:
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Notary Public, State of
No.
Qualified in
Commission Expires
The Chase Manhattan Bank, hereby certifies that its precise name and
address as Trustee hereunder are:
The Chase Manhattan Bank
Institutional Trust Services
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxxx, International/Project Finance Group
THE CHASE MANHATTAN BANK
By:
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[Vice President]
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