Document:

<PAGE>

                                                                  EXECUTION COPY

                                                                   Exhibit 10.35

                               PURCHASE AGREEMENT

                                     BETWEEN

                               BRENTWOOD BWI, LLC,

                                   AS SELLER,

                                       AND

                           HIGHLAND HOSPITALITY, L.P.,

                                  AS PURCHASER

<PAGE>

Definitions: The following capitalized terms used in this Agreement are defined
in the sections indicated below:

Accountants                                                Section 13.7
Additional Deposit                                         Section 2.3
Agreement                                                  Introduction
Apportionment Date                                         Section 13.1
Bill of Sale                                               Section 9.2
Closing                                                    Section 5.1
Closing Date                                               Section 5.1
Contracts                                                  Section 1.3
Contract Date                                              Introduction
Current Ledger                                             Section 13.3
Deed                                                       Section 9.1
Deposit                                                    Section 2.3
Due Diligence Period                                       Section 6.5
Environmental Laws                                         Section 3.7
Equipment Leases                                           Section 1.3
Escrow Agent                                               Section 2.1
Escrow Instructions                                        Section 2.3
Existing Manager                                           Section 3.6
Existing Management Agreement                              Section 3.6
Extension Deposit                                          Section 5.1
Extension Fee                                              Section 5.1
Extension Notice                                           Section 5.1
FF&E                                                       Section 1.2
Fixed Asset Supplies                                       Section 1.2
Franchise Agreement                                        Section 3.6
Franchisor                                                 Section 3.6
Front Desk Closing Hour                                    Section 13.3
Hazardous Substances                                       Section 3.7
Hotel                                                      Section 1.1
Improvements                                               Section 1.1
Initial Deposit                                            Section 2.3
Inventories                                                Section 1.2
Land                                                       Section 1.1
Permits                                                    Section 3.14
Permitted Exceptions                                       Section 6.2(b)
Personal Property                                          Section 1.2
Property                                                   Section 1.2
Purchase Price                                             Section 2.1
Purchaser                                                  Introduction
Purchaser Indemnitees                                      Section 11.3
Scheduled Closing Date                                     Section 5.1
Seller                                                     Introduction
Seller Knowledge Individual                                Section 3.22

<PAGE>

Space Leases                                               Section 1.3
Survey                                                     Section 6.3
Termination Notice                                         Section 6.5(b)
Title Commitment                                           Section 6.2(a)
Title Company                                              Section 6.2(a)
Uniform System of Accounts                                 Section 1.2
WARN Act                                                   Section 7.8

<PAGE>

                               PURCHASE AGREEMENT

         THIS PURCHASE AGREEMENT (this "Agreement") is entered into this 17th
day of November, 2003 (the "Contract Date") by and between BRENTWOOD BWI, LLC, a
Virginia limited liability company ("Seller"), and HIGHLAND HOSPITALITY, L.P., a
Delaware limited partnership ("Purchaser").

                                    ARTICLE I
                                      Sale

         Subject to the terms and conditions set forth in this Agreement, Seller
agrees to sell and convey to Purchaser, and Purchaser agrees to buy and assume
from Seller:

         1.1 Property. All of Seller's right, title and interest in and to that
certain parcel of land more particularly described in Exhibit A attached hereto
(collectively, the "Land"), situated in Lithicum, Maryland, including all right,
title and interest of Seller, if any, in and to the land lying in the bed of any
street or highway in front of or adjoining the Land to the center line thereof,
all water and mineral rights, development rights and all easements, rights and
other interests appurtenant thereto, and all buildings located on the Land (the
"Improvements"). The Land, and the Improvements located thereon are sometimes
referred to hereinafter together as the "Hotel."

         1.2 Personal Property. The following personalty to the extent owned by
Seller (collectively the "Personal Property"): (a) all furniture, furnishings,
fixtures, vehicles, rugs, mats, carpeting, appliances, devices, engines,
telephone and other communications equipment, televisions and other video
equipment, plumbing fixtures and other equipment located in the Hotel (the
"FF&E"), (b) all items included within the definition of "Property and
Equipment" under the Uniform System of Accounts for the Lodging Industry, Ninth
Revised Edition, as published by the Hotel Association of New York City, Inc.
(the "Uniform System of Accounts") and used in the operation of the Hotel, if
any, including, without limitation, linen, china, glassware, tableware, uniforms
and similar items (the "Fixed Asset Supplies"); (c) all "Inventories" as defined
in the Uniform System of Accounts and used in the operation of the Hotel, if
any, such as provisions in storerooms, refrigerators, pantries, and kitchens,
unopened beverages in wine cellars and bars, other merchandise intended for sale
or resale, fuel, mechanical supplies, stationery, guest supplies, maintenance
and housekeeping supplies and other expensed supplies and similar items (the
"Inventories"); (d) to the extent in Seller's possession or control, all
surveys, architectural, consulting and engineering blueprints, plans and
specifications and reports, if any, related to the Hotel, all books and records,
if any, related to the Hotel (which shall not include the tax or corporate
records of the Seller), and any goodwill of Seller related to the Hotel and (e)
any and all other items of personalty owned by Seller and located at the Hotel
(excluding any and all FF&E reserves relating to the Property).

       1.3 Contracts and Leases. All rights of Seller, to the extent
transferable, under all written service, maintenance, licensing, concession, and
other contracts or agreements related to

<PAGE>

the maintenance, ownership, use, possession or operation of the Personal
Property or the Hotel, other than the Existing Management Agreement (the
"Contracts"), all written leases of personal property located at, or used in the
operation of the Hotel (the "Equipment Leases") to which Seller or Existing
Manager is a party and, if any, all leases, subleases and other occupancy
agreements, which provide for the use or occupancy of space or facilities on or
relating to the Hotel (the "Space Leases") Existing (the Hotel, Personal
Property, Contracts, Equipment Leases and any such Space Leases are
collectively, the "Property").

                                   ARTICLE II
                                 Purchase Price

         2.1 Purchase Price. The purchase price for the Property is TWENTY-ONE
MILLION NINE HUNDRED THOUSAND AND 00/100 DOLLARS ($21,900,000.00) (the "Purchase
Price"), subject to adjustment as provided herein, which shall be payable on the
Closing Date to Seller in cash by wire transfer of immediately available funds
to Fidelity National Title Insurance Company, as escrow agent (the "Escrow
Agent").

         2.2 Allocation of Purchase Price. Seller and Purchaser shall agree,
within ten (10) days after the Contract Date, upon an allocation of the Purchase
Price among the Hotel and various items of Personal Property. If Seller and
Purchaser agree on such allocations, each party agrees to file federal, state
and local tax returns consistent with such allocations agreed upon between the
parties. If Seller and Purchaser cannot agree upon such allocations of the
Purchase Price within ten (10) days after the Contract Date, each party shall
file federal, state and local tax returns based on each party's own
determination of the proper allocations of the Purchase Price, each bearing its
own consequences of any discrepancies.

         2.3 Deposit. Within three (3) business day following the Contract Date,
Purchaser shall deliver to the Escrow Agent a deposit in the amount of ONE
HUNDRED THOUSAND AND 00/100 DOLLARS ($100,000.00) in immediately available funds
(together with any interest earned thereon, the("Initial Deposit"). If Purchaser
does not deliver the Initial Deposit to the Escrow Agent within three (3)
business day following the Contract Date, Seller shall have the right to
terminate this Agreement by giving written notice to Purchaser, and neither
party shall then have any further liability to the other under this Agreement
except as otherwise specifically provided herein. On the date that is the
expiration of the Due Diligence Period, Purchaser shall deliver to the Escrow
Agent an additional deposit in the amount of TWO HUNDRED FIFTY THOUSAND AND
00/100 DOLLARS ($250,000.00) (together with any interest earned thereon, the
"Additional Deposit") (the Initial Deposit and, when and if made, the Additional
Deposit and the Extension Deposit, are sometimes referred to in this Agreement
as the "Deposit"). The Escrow Agent shall hold the Deposit in accordance with
escrow instructions executed by Seller, Purchaser and the Escrow Agent (the
"Escrow Instructions") substantially in the form attached hereto as Exhibit B.

                                       2

<PAGE>

                                   ARTICLE III

               Seller's Representations, Warranties and Covenants

         In order to induce Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller represents and warrants
to, and covenants with, Purchaser as follows:

         3.1 Good Standing. Seller is a limited liability company duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia, is authorized to conduct the business in which it is
now engaged, and is duly qualified and in good standing in all states where the
ownership of its assets or the conduct of its business makes such qualification
necessary.

         3.2 Due Authorization. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all requisite actions of Seller, none of which
actions have been modified or rescinded, and all of which actions are in full
force and effect. This Agreement constitutes a valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms.

         3.3 No Violations or Defaults. The execution, delivery and performance
of this Agreement and the consummation by Seller of the transactions
contemplated hereby will not (a) violate any law or any order of any court or
governmental authority with proper jurisdiction binding against Seller or its
assets; (b) result in a breach or default under any contract or other binding
commitment of Seller or any provision of the organizational documents of Seller;
or (c) require any consent or approval or vote that has not been taken or given,
or as of the Closing Date shall not have been taken or given.

         3.4 Litigation. As of the date hereof, there are no actions, suits,
arbitrations, governmental investigations or other proceedings pending or, to
the knowledge of Seller, threatened against Seller in writing or affecting the
Property before any court or governmental authority.

         3.5 Condemnation Actions. To Seller's knowledge, there are no pending
or threatened condemnation actions or special assessments of any nature with
respect to the Property or any part thereof.

         3.6 Management and Franchise Agreements. There are no existing
management contracts or franchise agreements relating to the Property other than
that certain License Agreement between Seller and Hilton Inns, Inc. (the
"Franchisor"), dated as of December 12, 2000, as amended by that certain
Amendment to License Agreement and Commencement Date Agreement dated as of
February 1, 2002 (as amended, the "Franchise Agreement") and the Hotel
Management Agreement between Seller and LTD Management Co., Inc. (the "Existing
Manager"), dated as of June 15, 2001 (the "Existing Management Agreement"), nor
are there any outstanding or alleged claims, liabilities or amounts due under
any such contracts or agreements.

                                       3

<PAGE>

         3.7 Environmental Matters. Except as disclosed in the environmental
reports listed on Exhibit C, Seller has not received any written notice from any
governmental or regulatory authority of the presence or release of any substance
that is regulated under any Environmental Laws as a pollutant, contaminant or
toxic, radioactive or otherwise hazardous substance, including petroleum, its
derivatives or by-products and other hydrocarbons (collectively and
individually, "Hazardous Substances") that would cause the Hotel to be in
violation of any applicable Environmental Laws and that remains uncured, nor has
Seller received written notice from any applicable governmental or regulatory
authority that the Hotel is not in compliance with applicable Environmental
Laws. Except as otherwise disclosed in such environmental reports, to Seller's
knowledge (a) there are no Hazardous Substances located at, on or under the
Hotel and (b) no Hazardous Substances have leaked, escaped or been discharged,
emitted or otherwise released from the Land underlying the Hotel onto any
adjoining properties other than (i) Hazardous Substances used in the ordinary
course of maintaining and cleaning the Hotel in commercially reasonable amounts,
and (ii) Hazardous Substances used as fuels, lubricants or otherwise in
connection with vehicles, machinery and equipment located at the Hotel in
commercially reasonable amounts. The Hazardous Substances described in the
foregoing clauses (i) and (ii) are being stored, used and disposed of in
compliance with all Environmental Laws. For the purposes of this Section,
"Environmental Laws" means any and all statutes, laws, regulations and rules in
effect on the date hereof relating to the protection of the environment or to
the use, transportation and disposal of Hazardous Substances.

         3.8 Compliance with Applicable Law. To Seller's knowledge, the Hotel is
in compliance in all material respects with all applicable building codes and
zoning laws, and all other applicable laws, ordinances, rules and regulations.
Seller has not received any written notice from any governmental authority of
any violations of law or municipal ordinances, orders or requirements with
respect to the Hotel.

         3.9 Labor and Employment Matters. No employment contracts or collective
bargaining agreements exist with respect to the Property that will subject
Purchaser to liability therefor. Seller is the employer of all persons employed
at, or in connection with, the Property. There are less than one hundred
employees employed at, or in connection with, the Property Seller has no
knowledge of any strike, work stoppage or other labor dispute relating to the
operation of the Property or threatened by any union and has no knowledge of any
application pending or threatened for certification of a collective bargaining
agent.

         3.10 Insurance. Seller has and shall maintain through the Closing Date
insurance policies equivalent in all material respects to those currently
maintained by Seller, as listed on Exhibit D.

         3.11 Contracts. All material Contracts known to Seller and related to
the maintenance ownership, use, possession or operation of the Property, other
than the Existing Management Agreement, the Equipment Leases and the Space
Leases (if any), are listed on Exhibit E attached hereto. Seller has made
available to Purchaser true and complete copies of all such Contracts. To
Seller's knowledge, (a) all such Contracts are in full force and effect, and (b)
there are no defaults or events that with notice or the passage of time or both,
would constitute a default by Seller under any such Contract, nor by any other
party thereto.

                                       4

<PAGE>

         3.12 Equipment Leases. All material Equipment Leases known to Seller to
which Seller or Existing Manager is a party are listed on Exhibit F attached
hereto. Seller has made available to Purchaser true and complete copies of all
such Equipment Leases. To Seller's knowledge, (a) all such Equipment Leases are
in full force and effect, and (b) there are no defaults or events that with
notice or the passage of time or both, would constitute a default by Seller
under any such Equipment Lease, nor by any other party thereto.

         3.13 Space Leases. All material Space Leases known to Seller to which
Seller or Existing Manager is a party are listed on Exhibit G attached hereto.
To Seller's knowledge, (a) all such Space Leases are in full force and effect,
and (b) there are no defaults or events that with notice or the passage of time
or both, would constitute a default by Seller under any such Space Leases, nor
by any other party thereto.

         3.14 Permits. To Seller's knowledge, all material licenses (including,
without limitation, liquor licenses), certificates of occupancy, permits and
approvals required to be issued by any governmental authority or any third party
and used in or necessary to the operation of the Hotel as a fully functioning
full-service hotel (the "Permits") have been obtained and are in full force and
effect. Each such Permit is listed on Exhibit H attached hereto, and Seller has
made available to Purchaser true and complete copies of each such Permit.

         3.15 Not a Foreign Person. Seller is not a "foreign person" within the
meaning of Section 1445 of the United States Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.

         3.16 Bankruptcy. Seller is not the subject debtor under any federal,
state or local bankruptcy or insolvency proceeding, or any other proceeding for
dissolution, liquidation or winding up of its assets, and no attachments,
execution proceedings, assignments for the benefit of creditors, insolvency,
bankruptcy, or similar proceedings are pending or, to Seller's knowledge,
threatened against Seller, nor is Seller contemplating commencing any
proceedings.

         3.17 Title to the Property. Seller has good and valid title to the
Property and, on the Closing Date, except the Personal Property sold or
otherwise disposed of since the Contract Date in the ordinary course consistent
with past practices, the Property shall be transferred to Purchaser free and
clear of all mortgages, liens, encumbrances of any nature whatsoever except the
Permitted Exceptions.

         3.18 Taxes. All federal, state, local and other tax returns, reports
and declarations of every nature required to be filed by or on behalf of Seller
(either separately or as part of a consolidated group) prior to the Closing Date
with respect to the Property have been timely filed (subject to any extensions
that may be permitted by law) and such returns, reports and declarations as so
filed are complete and accurate and disclose all taxes required to be paid for
the periods covered thereby. All taxes and all deficiency assessments, penalties
and interest relating to any period ending prior to the Closing Date with
respect to the Property shall be paid by Seller if due as of or prior to the
Closing Date.

                                       5

<PAGE>

         3.19 Zoning. Seller has received no written notice nor does Seller have
any knowledge of any actual or potential change to or modification of the zoning
applicable to the Hotel (or any component thereof).

         3.20 Complete Copies. All instruments, documents, lists, schedules and
items with respect to the Hotel which Seller has delivered or made available, or
will deliver to or make available to Purchaser pursuant to this Agreement are
true, correct and complete copies of originals.

         3.21 "As-Is, Where-Is" Sale. PURCHASER ACKNOWLEDGES AND AGREES THAT,
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, THE PROPERTY IS SOLD
"AS-IS, WHERE-IS WITH ALL FAULTS," AND EXCEPT AS SET FORTH IN THIS AGREEMENT,
PURCHASER IS NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES FROM SELLER, ITS
AGENTS OR BROKERS AS TO ANY MATTERS CONCERNING THE PROPERTY.

         3.22 Knowledge. Any and all uses in this Agreement of the phrase "to
the knowledge of Seller", "to Seller's knowledge" or "known to Seller" (or any
similar phrase) shall mean the actual and present knowledge of Haribai Kanji
Thakkar, Tammy Constande and the general manager of the Hotel (collectively the
"Seller Knowledge Individual"). Neither the actual, present knowledge of any
other individual or entity, nor the constructive knowledge of the Seller
Knowledge Individual or of any other individual or entity shall be imputed to
the Seller Knowledge Individual.

                                   ARTICLE IV
              Purchaser's Representations, Warranties and Covenants

         In order to induce Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser represents and
warrants to, and covenants with, Seller as follows:

         4.1 Good Standing. Purchaser is a corporation, validly existing and in
good standing under the laws of Maryland, is authorized to conduct the business
in which it is now engaged and is, or as of the Closing Date shall be, qualified
to do business in all jurisdictions where the ownership of its assets or the
conduct of its business makes such qualification necessary.

         4.2 Due Authorization. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all requisite corporate actions of Purchaser,
none of which actions have been modified or rescinded, and all of which actions
are in full force and effect. This Agreement constitutes a valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms.

         4.3 No Violations or Defaults. The execution, delivery and performance
of this Agreement and the consummation by Purchaser of the transactions
contemplated hereby will not (a) violate any law or any order of any court or
governmental authority with proper jurisdiction;

                                       6

<PAGE>

(b) result in a breach or default under any contract or other binding commitment
of Purchaser or any provision of the organizational documents of Purchaser; or
(c) require any consent or approval or vote that has not been taken or given, or
as of the Closing Date shall not have been taken or given.

         4.4 Litigation. There are no actions, suits, arbitrations, governmental
investigations or other proceedings pending or, to the knowledge of Purchaser,
threatened against Purchaser before any court or governmental authority, an
adverse determination of which might adversely affect (a) the financial
condition or operations of Purchaser or (b) Purchaser's ability to enter into or
perform this Agreement.

                                    ARTICLE V
                                     Closing

         5.1 Closing. The consummation of the purchase and sale of the Property
as contemplated by this Agreement (the "Closing") shall take place on January 6,
2004 or on such alternative date or at such alternative location as may be
mutually agreed upon by Seller and Purchaser (the "Scheduled Closing Date").
Purchaser may elect to extend the Scheduled Closing Date for up to sixty (60)
days, at Purchaser's option, by (i) providing Seller with notice of such
election on or before December 15, 2003 (the "Extension Notice"), (ii)
depositing with the Escrow Agent within three (3) business days of the delivery
of the Extension Notice an additional earnest money deposit of ONE HUNDRED
THOUSAND AND 00/100 DOLLARS ($100,000.00) (the "Extension Deposit"), and (iii)
paying to Seller in addition to the Purchase Price an amount equal to the per
diem interest on the amount of the Purchase Price less the Deposit, at an
annualized rate equal to Wachovia Bank's prime rate of interest plus one percent
(1%) for each day subsequent to the Scheduled Closing Date that the Closing is
extended (the "Extension Fee"). The term "Closing Date" when used herein shall
mean the Scheduled Closing Date or the Scheduled Closing Date as may be extended
in accordance with this Section 5.1. The Extension Fee shall be payable on the
Closing Date to Seller in cash by wire transfer of immediately available funds
to the Escrow Agent. All of Seller and Purchaser's deliveries, the cash payment
of the Purchase Price, the Extension Fee, if any, and sufficient additional cash
necessary for the parties to pay the costs contemplated by Section 5.2 shall be
delivered in escrow to the Escrow Agent.

         5.2 Costs. Purchaser shall pay all of the transfer and recording taxes
and fees connected with the transfer of the Property and the recordation of the
Deed, (ii) fees of the Escrow Agent, and (iii) bulk sales taxes and other
personal property taxes associated with the Closing, if any. Purchaser shall pay
for (i) the cost of all environmental and engineering reports, (ii) the title
insurance premiums, including without limitation, the costs of all endorsements
and the Survey, and (iii) any and all sums required to be paid in connection
with the execution of a new franchise agreement; provided, however, that
Purchaser shall not be responsible for any amounts due and owing to Franchisor
pursuant to the Franchise Agreement representing obligations which accrued prior
to the Closing. Each party shall pay its own accountants and attorneys' fees
incurred in connection with the preparation, negotiation and execution of this
Agreement and the consummation of the transactions contemplated hereby.

                                       7

<PAGE>

                                   ARTICLE VI
                  Actions Pending Closing; Due Diligence Period

         6.1 Conduct of Business; Maintenance and Operation of Property. Between
the Contract Date and the Closing Date, Seller shall continue to maintain the
Property in the same manner as it was maintained prior to the date hereof and
keep the Property in its present order and condition, subject to normal wear and
tear, exercising the same degree of care in such matters as Seller has
previously exercised. Seller shall not remove any item of Personal Property from
the Property without replacing the same with property of equal or greater value.

         6.2 Title Insurance. (a) Within ten (10) days after the Contract Date,
Seller shall provide Purchaser a copy of the existing title policy together with
copies of all exception documents listed on such policy. Purchaser shall obtain,
at Purchaser's sole cost, a binding commitment for owner's policy of title
insurance (the "Title Commitment") relating to the Hotel to be issued by a title
insurance company of Purchaser's choosing (the "Title Company"), committing to
insure Purchaser's good and marketable fee simple title to the Hotel. The Title
Policy to be issued at Closing shall show no liens, mortgages, deeds of trust,
security interests, pledges, charges, options, encroachments, easements,
covenants, leases, reservations or restrictions of any kind other than (i)
applicable zoning regulations and ordinances, (ii) liens for taxes, assessments
and governmental charges not yet due and payable, (iii) liens for water and
sewer service not yet due and payable, and (iv) the other Permitted Exceptions.

         (b) At least ten (10) days prior to the expiration of the Due Diligence
Period, Purchaser agrees to notify Seller in writing of any objections to
exceptions appearing in the Title Commitment. Within five (5) days following
Purchaser's notice, Seller shall notify Purchaser (a) that it will, prior to the
Closing Date, eliminate the exceptions to which Purchaser has objected or (b)
that it declines to eliminate specified exceptions. If Seller elects not to take
such actions as may be required by the Title Company to remove all exceptions to
title to which Purchaser has objected, Purchaser may within five (5) days
terminate this Agreement in its sole discretion and receive a return of the
Deposit and the parties shall have no further obligations to the other under
this Agreement, except for those obligations which expressly survive the
termination of this Agreement. If Seller agrees to take the actions necessary to
eliminate all exceptions to which Purchaser has objected, then such exceptions
shall not be Permitted Exceptions and Seller shall cause such exceptions to be
removed prior to or at Closing. If Purchaser elects to accept any exceptions to
which Purchaser has objected or if Purchaser subsequently elects to accept any
such exceptions and continue this Agreement, Purchaser and Seller shall, on or
prior to the date that is five (5) days following Seller's notification to
Purchaser pursuant to the second sentence of this Section 6.2(b), initial a list
of all exceptions that Purchaser agrees to accept (which shall include items
(i), (ii) and (iii) of Section 6.2(a) and all exceptions set forth in the Title
Commitment to which Purchaser did not object) (collectively, the "Permitted
Exceptions"), which shall be attached hereto as Exhibit I.

         6.3 Survey. Within ten (10) days after the Contract Date, Seller shall
provide Purchaser a copy of the survey for the Property. Purchaser shall obtain,
at Purchaser's sole cost,

                                       8

<PAGE>

an as-built survey of the Hotel, certified to Purchaser and the Title Company by
a land surveyor or professional engineer (the "Survey").

         6.4 No Action. Between the Contract Date and the Closing Date, Seller
shall not take or permit any action that would invalidate, void or make untrue
any representation or warranty provided under this Agreement. If any event
occurs prior to Closing that would cause any of Seller's representations or
warranties to become untrue, Seller shall notify Purchaser immediately in
writing of such occurrence.

         6.5 Inspection; Due Diligence Period. (a) Purchaser and Seller agree
for a period from the Contract Date until December 17, 2003 (the "Due Diligence
Period"), Purchaser shall have the right, at its own risk, cost and expense and
at any date or dates prior to Closing, to enter, or cause its agents or
representatives to enter, upon the Hotel at any reasonable time and upon
reasonable prior notice to Seller, for the purpose of making surveys or other
tests, inspections, investigations and/or studies of all or any part of the
Property. In addition, Purchaser may, at its own risk, cost and expense, conduct
such architectural, environmental, economic and other studies of the Property as
Purchaser may, in its sole discretion, deem desirable. Purchaser shall not make
any physical alterations to the Property or any invasive tests. Prior to entry
onto the Property, Purchaser shall provide Seller with a certificate of
insurance evidencing that Purchaser maintains a commercial general liability
policy that names Seller as an additional insured in such amount as Seller shall
reasonably approve. Purchaser shall conduct, and ensure that each of its agents,
employees, contractors or representatives conducts, each such entry in a manner
that does not materially interfere with the Hotel; and Purchaser shall indemnify
and hold Seller harmless from any and all claims, damages, demands, penalties,
causes of action, liabilities, losses, costs or expenses (including, without
limitation, reasonable attorneys' fees and other charges) arising out of or in
any way related to personal injury (including death), property damage,
disruptions of operations, nuisance or other claims asserted by any person or
entity relating to the acts or omissions of Purchaser, or its agents, employees,
contractors or representatives in the course of any such entry or inspection of
the Hotel. The foregoing indemnity shall survive Closing or any termination of
this Agreement. Purchaser shall have reasonable access to all documentation,
agreements and other information in the possession of Seller or Seller's agents
related to the Property and shall have the right to make copies of same. To the
extent not already made available, Seller shall make available to Purchaser
within ten (10) business days of the date hereof, copies of all environmental
reports listed on Exhibit C, and such other information as Purchaser may
reasonably request.

                  (b) If, during the Due Diligence Period, Purchaser gives
Seller written notification (the "Termination Notice") that Purchaser elects not
to consummate the purchase of the Property based upon the results of its
investigations or review of (i) the Title Commitment and the Survey, (ii)
Purchaser's environmental report of the Property, (iii) Purchaser's physical
inspection and/or study of the Property or (iv) the books or records of the
Hotel for the months July, August and September, 2003, this Agreement shall
terminate, whereupon the Deposit shall be returned to Purchaser and neither
party shall have any further liability to the other under this Agreement except
as otherwise specifically provided herein. In the event that the Termination
Notice is not received by Seller by the end of the Due Diligence Period,
Purchaser shall have

                                       9

<PAGE>

been deemed to have elected to proceed hereunder, the Deposit shall become
non-refundable unless otherwise provided herein, and this Agreement shall remain
in full force and effect.

         6.6 Contracts and Equipment Leases. Prior to the expiration of the Due
Diligence Period, Purchaser shall notify Seller of any Contracts or Equipment
Leases that it wishes to have Seller terminate as of the Closing Date; provided
that Seller shall not be required to pay any penalties or termination costs in
connection with the termination of such Contracts or Equipment Leases. Between
the Contract Date and the Closing Date, Seller shall not enter into, terminate,
amend or otherwise modify any Contracts, Space Leases or Equipment Leases,
unless (i) any such contract, space lease or equipment lease will not be binding
on Purchaser after Closing, (ii) any such contract, equipment lease or space
lease is an extension or renewal of, or a new contract, equipment lease or space
lease that replaces, Contract, Equipment Lease or Space Lease existing as of the
Contract Date on substantially similar terms, allowing for a reasonable
adjustment in the price or rent charged thereunder to reflect market conditions
in Seller's reasonable judgment, and which new contract, equipment lease or
space lease may be with a new contracting third party or parties in Seller's
reasonable judgment; provided, however, from and after the expiration of the Due
Diligence Period Seller shall obtain the prior written consent of Purchaser
(which consent may be withheld in Purchaser's sole and absolute discretion)
before entering into any such contract, equipment lease or space lease, (iii)
any such new, amended or modified contract, equipment lease or space lease is
terminable by Purchaser without penalty or premium after Closing on no more than
thirty (30) days' notice, (iv) any such terminated contract, equipment lease or
space lease is terminated as a result of the default or nonperformance of a
party thereto other than Seller, or (v) the same is a purchase order for goods
or services entered into in the ordinary course of business of the Hotel
consistent with the practices and procedures in effect as of the Contract Date.

         6.7 Franchise Agreement. On or prior to the expiration of the Due
Diligence Period, Purchaser shall have obtained the approval of Hilton Hotels
Corporation which shall allow Purchaser or its subsidiary to be a Hilton Garden
Inn franchisee for the Hotel.

                                   ARTICLE VII
           Conditions Precedent to Purchaser's Obligations at Closing

         It shall be a condition to Purchaser's obligation to purchase the
Property that each and every one of the following conditions shall have been
satisfied as of the Closing Date (or waived by Purchaser).

         7.1 Representations and Warranties. Each of Seller's representations
and warranties shall be true and complete in all material respects as if made on
and as of the Closing Date.

         7.2 Covenants of Seller. Seller shall have materially performed and
complied with all covenants and conditions required by this Agreement to be
performed or complied with at or prior to the Closing Date.

         7.3 Intentionally Deleted.

                                       10

<PAGE>

         7.4 Litigation. There shall be no actions, suits arbitrations,
governmental investigations or other proceedings pending or, to the knowledge of
Seller, threatened against Seller in writing or affecting the Property before
any court or governmental authority, an adverse determination of which might
materially and adversely affect (a) the financial condition or operations of
Seller or the Hotel, (b) Seller's ability to enter into or perform this
Agreement or (c) Seller's title to the Property.

         7.5 Franchise Agreement and Existing Management Agreement. Franchisor
shall have approved of Purchaser as a franchisee of the Hotel and shall have
entered into a new franchise agreement with Purchaser on terms and conditions
reasonably acceptable to Purchaser. The Existing Management Agreement shall have
been terminated, at Seller's sole cost and expense. On the Closing Date, there
shall be no contract or agreement in effect between Seller and any third party
for management of the Property after the Closing Date. There shall be no fees,
payments, commissions or other sums due and owing in connection with management
of the Property under the Existing Management Agreement or any other agreement
for the period prior to the Closing Date.

         7.6 Permits. Purchaser shall have been able to obtain a liquor license
or shall have entered into an interim beverage agreement with Seller on terms
and conditions reasonably satisfactory to Purchaser which allows Purchaser to
serve alcoholic beverages at the Property on and subsequent to the Closing Date.

         7.7 Termination of Employees. If necessary, Seller shall terminate the
employment of all individuals employed at or in connection with the Property.
Compliance with the provisions of the Worker Adjustment and Retraining
Notification Act ("WARN Act") 29 U.S.C. 2101 et seq. shall be and remain
Seller's sole responsibility. Seller agrees to indemnify and hold Purchaser
harmless from and against any and all liability, loss, cost, damage and/or
expense (including without limitation, reasonable attorneys' fees and expenses)
arising from or relating to WARN Act insofar as it relates to the purchase and
sale of the Property and the termination of the employees who provide services
at the Property prior to the Closing Date. The indemnity set forth in this
Section 7.7 shall survive Closing and shall not be limited by any claims period
set forth in this Agreement.

         7.8 Failure of Condition. In the event of the failure of any condition
precedent set forth in this Article 7, except a failure that results from the
actions, inactions or material adverse change in the financial condition of
Purchaser or the failure of any of Purchaser's representations and warranties
set forth herein to be true and complete in all material respects, Purchaser, at
its sole election, may (i) terminate this Agreement (and receive a return of the
Deposit), (ii) waive the condition and proceed to Closing or (iii) extend the
Closing Date for such additional period of time, not to exceed thirty (30) days,
as may be reasonably required to allow Seller to remedy such failure. In the
event that any such condition is not satisfied and the transactions contemplated
hereby are not consummated primarily as a result of the actions, inactions or
material adverse change in the financial condition of Purchaser or the failure
of any of Purchaser's representations and warranties set forth herein to be true
and complete in all material respects, then the Deposit shall be forfeited to
Seller as full and complete liquidated damages, this Agreement will be
terminated and the parties shall have no further obligations to the other

                                       11

<PAGE>

under this Agreement, except for those obligations which expressly survive the
termination of this Agreement.

         7.9 Seller Deliveries. Seller shall have delivered all of the other
documents required from it pursuant to Article IX hereof.

                                  ARTICLE VIII
             Conditions Precedent to Seller's Obligations at Closing

         It shall be a condition to Seller's obligation to sell the Property
that each and every one of the following conditions shall have been satisfied as
of the Closing Date (or waived by Seller).

         8.1 Representations and Warranties. Each of Purchaser's representations
and warranties shall be true and complete in all material respects as if made on
and as of the Closing Date.

         8.2 Purchaser Deliveries. Purchaser shall have delivered all of the
other documents and other items required from it pursuant to Article IX hereof.

         8.3 Failure of Condition. In the event of the failure of any condition
precedent set forth in this Article 8, Seller, at its sole election, may (i)
terminate this Agreement, (ii) waive the condition and proceed to Closing or
(iii) extend the Closing Date for such additional period of time, not to exceed
thirty (30) days, as may be reasonably required to allow such failure to be
remedied; provided, however, that if any such condition is not satisfied
primarily as a result of the actions, inactions or material adverse change in
financial condition of Seller or a failure of the representations and warranties
of Seller in this Agreement to be true and complete in all material respects,
then Seller shall be required to return the Deposit to Purchaser and this
Agreement will be terminated and the parties shall have no further obligations
to the other under this Agreement, except for those obligations which expressly
survive the termination of this Agreement.

                                   ARTICLE IX
                               Closing Deliveries

         At Closing, the parties shall make the following deliveries:

         9.1 Deed. Seller shall deliver a special warranty deed in recordable
form conveying Seller's fee simple interest in the Hotel substantially in the
form set forth on Exhibit J attached hereto (the "Deed"), dated as of the
Closing Date, free of all liens, encumbrances and adverse claims other than the
Permitted Exceptions.

         9.2 Bill of Sale. Seller and Purchaser shall each deliver two (2) duly
executed counterparts (one for each party) of the bill of sale and assignment
and assumption of documents substantially in the form set forth on Exhibit K
attached hereto (the "Bill of Sale"), dated as of the Closing Date, conveying to
Purchaser the Personal Property, free of all liens, encumbrances and adverse
claims other than the Permitted Exceptions and assigning all of the applicable

                                       12

<PAGE>

Permits, Contracts, Equipments Leases and Space Leases, to the extent that the
foregoing are assignable.

         9.3 FIRPTA Certificate. Seller shall deliver a certificate, dated as of
the Closing Date, to establish that Seller is not a foreign person for the
purposes of the Foreign Investment in Real Property Tax Act.

         9.5 Intentionally Deleted.

         9.6 Possession; Books and Records, Keys. Seller shall deliver
possession of the Property to Purchaser, together with all books and records
relating to the Property in Seller's possession, in accordance with and subject
to any privacy laws or regulations, necessary or desirable for the operation of
the Hotel and all keys, including, without limitation, keys for all security
systems, rooms and offices.

         9.7 Purchase Price; Extension Fee. Purchaser shall deliver the Purchase
Price and the Extension Fee, if any, payable in the manner provided for in this
Agreement.

         9.8 Other Documents. Seller and Purchaser shall deliver such other
documents and instruments as may be reasonably requested by Seller, Purchaser or
the Title Company to effectuate the transactions contemplated by this Agreement
and to induce the Title Company to insure title to the Hotel as described
herein.

                                    ARTICLE X
                                     Default

         10.1 Purchaser's Default. If Purchaser fails to consummate the purchase
and sale contemplated herein after all conditions precedent to Purchaser's
obligation to do so have been satisfied or waived by Purchaser, Escrow Agent
shall pay the Deposit to Seller in accordance with the Escrow Instructions, as
full and complete liquidated damages, and as the exclusive and sole right and
remedy of Seller, whereupon this Agreement shall terminate, and neither party
shall have any further obligations or liabilities to the other party (except for
such obligations and liabilities as expressly survive the termination hereof).

         10.2 Seller's Default. If Seller fails to consummate the transaction in
accordance with the terms of this Agreement and Purchaser is otherwise willing
and able to proceed as contemplated hereunder, Purchaser shall be entitled, as
its sole remedy, to pursue any or all of the following remedies: (i) specific
performance of this Agreement, (ii) have the Deposit returned to Purchaser by
the Escrow Agent in accordance with the Escrow Instructions and (iii) in the
case of a willful and intentional default by Seller in its obligations to
proceed to Closing, or a willful and intentional failure to satisfy any
condition set forth in Article VII and Purchaser elects not to proceed to
Closing, recovery from Seller of the actual out-of-pocket damages incurred by
Purchaser in connection with the transactions contemplated by this Agreement,
provided that in no event shall the aggregate liability of Seller to Purchaser
under this clause (iii) exceed Five Hundred Thousand Dollars ($500,000).

                                       13

<PAGE>

                                   ARTICLE XI
         Survival; Indemnification Obligations; Post-Closing Obligations

         11.1 Generally. Except as otherwise expressly provided herein, the
respective representations, warranties, obligations, covenants and agreements of
Seller and Purchaser contained herein shall not survive the Closing, and no
action may be brought on any such representation, warranty, obligation, covenant
or agreement.

         11.2 Survival. Any claims for breach of the representations, warranties
and covenants of Seller and Purchaser contained herein shall be made within
twelve (12) months of the Closing Date, otherwise they shall irrevocably be
deemed to have been waived.

         11.3 Agreement to Indemnify. Notwithstanding any provisions of this
Agreement to the contrary, Seller shall hold harmless, indemnify and defend
Purchaser, its affiliates and their respective successors and assigns, and the
respective officers, directors, shareholders, partners, members, employees, and
agents of each of them (the "Purchaser Indemnitees") against any and all
obligations, claims, losses, damages, liabilities and expenses (including,
without limitation, reasonable attorneys' fees and other charges) connected with
the ownership or operation of the Hotel and relating to the period during which
Seller owned the Hotel, including, without limitation, actions or claims
relating to damage to property or injury to or death of any person during the
period of Seller's ownership of the Hotel, or any claims for any debts or
obligations occurring on or about or in connection with the Hotel or any portion
thereof or with respect to the Hotel's operations at any time during such
period. Notwithstanding any provisions of this Agreement to the contrary,
Purchaser shall hold harmless, indemnify and defend Seller its affiliates and
their respective successors and assigns, and the respective officers, directors,
shareholders, partners, members, employees, and agents of each of them against
any and all obligations, claims, losses, damages, liabilities and expenses
(including, without limitation, reasonable attorneys' fees and other charges)
connected with the ownership or operation of the Hotel and relating to the
period from or after the Closing Date, including, without limitation, actions or
claims relating to damage to property or injury to or death of any person during
the period in which the Hotel is owned by Purchaser (or Purchaser's affiliates)
or any claims for any debts or obligations occurring on or about the Hotel or
any portion thereof or with respect to the Hotel's operations at any time during
such period. The foregoing indemnities shall survive the Closing.

         11.4 Indemnification Regarding Assumed Obligations. Whenever it is
provided in this Agreement that an obligation of one party will be assumed by
the other party on or after the Closing, the party so assuming such liability
also shall be deemed to have agreed to indemnify, defend and hold harmless the
other party and its successors and assigns, from and against all claims, losses,
damages, liabilities, costs and expenses (including reasonable attorneys' fees
and other charges) arising from any failure of the assuming party to perform the
obligation so assumed after the Closing and from all third party claims brought
against the other party to the extent relating to the period from and after
assumption of the liability on which the claim is based.

                                       14

<PAGE>

         11.5 Notice and Cooperation on Indemnification. Whenever either party
shall learn through the filing of a claim or the commencement of a proceeding or
otherwise of the existence of any liability for which the other party is or may
be responsible under this Agreement, the party learning of such liability shall
notify the other party promptly and furnish such copies of documents (and make
originals thereof available) and such other information as such party may have
that may be used or useful in the defense of such claims and shall afford said
other party full opportunity to defend the same in the name of the notifying
party and generally shall cooperate with said other party in the defense of any
such claim. Upon receipt of such notice of possible liability, the party
obligated to provide indemnity shall have the right to provide a written notice
to the party entitled to indemnity that the indemnifying party elects to assume
the defense of such matter, including, without limitation, the employment of
counsel reasonably satisfactory to the indemnified party; whereupon the
indemnifying party shall have the right to prosecute such defense and shall be
responsible for the payment of the fees and disbursements of such counsel;
provided, however, if in the reasonable judgment of the indemnified party, (i)
such litigation, action, suit, demand, claim or the resolution thereof, would
have a material adverse effect on the indemnified party or (ii) the indemnifying
party shall have a conflict of interest in defending such action on the
indemnified party's behalf, then at the indemnified party's election, the
indemnified party may defend itself, and in either of such instances it shall be
at the indemnifying party's expense; provided, however, that the indemnifying
party shall be responsible for the reasonable fees of no more than one counsel
in each jurisdiction in each proceeding. No indemnifying party shall be
responsible for any obligation, loss, cost, expense or other liability to the
extent that (a) the party entitled to indemnification failed to provide prompt
notice thereof to the indemnifying party and (b) such obligation, loss, cost,
expense or other liability could have been avoided if prompt notice had been
given.

                                   ARTICLE XII
                            Casualty or Condemnation

         12.1 Notice to Purchaser. Seller agrees to give purchaser prompt notice
of any fire or other casualty occurring at the Hotel between the Contract Date
and the Closing Date; provided, however, that Seller shall not be deemed to be
in default under this Section 12.1 for failure to report minor incidents causing
insignificant damage.

         12.2 Condemnation, Casualty or Litigation. If, prior to Closing, (i)
condemnation proceedings are commenced against all or any material portion of
the Property, or (ii) the Property is damaged by fire or other casualty to the
extent that the cost of repairing such damage shall be Five Hundred Thousand and
00/100 Dollars ($500,000.00) or more, Purchaser shall have the right, upon
notice in writing to Seller delivered within fifteen (15) days after actual
notice of such condemnation, fire or other casualty or litigation, to terminate
this Agreement. Upon such termination, the Deposit shall be returned immediately
to Purchaser, and neither party shall have any further liability to the other
hereunder, except as otherwise expressly provided in this Agreement. If the
Hotel is so damaged but this Agreement is not terminated with respect to the
Hotel, the Purchase Price shall not be reduced, but Purchaser shall be entitled
to an assignment of all of Seller's share of the condemnation award or the
proceeds of any fire or other casualty insurance plus the amount of any
deductible under such insurance that has not been applied to the restoration or
repair of such damage and all rent insurance proceeds (if any) payable with
respect
                                       15

<PAGE>

to the Hotel relating to the period after Closing and Seller shall have no
obligation to repair or restore the Property.

         12.3 Risk of Loss. Subject to the provisions of this Article XII, the
risk of loss or damage to the Property shall remain with Seller until the
delivery of the Deed.

                                  ARTICLE XIII
                                 Apportionments

         13.1 Apportionments. The following apportionments shall be made between
the parties at the Closing as of the close of business on the day immediately
prior to the Closing Date (the "Apportionment Date"):

                  (a) real estate taxes, personal property taxes, special
assessments and vault charges, if any, on the basis of the fiscal period for
which assessed;

                  (b) fuel oil in the tank at the Hotel, if any, (based upon
invoice cost, first in, first out), water and sewer service charges and charges
for gas, electricity, telephone and all other public utilities. If there are
meters measuring the consumption of water, gas or electric current, Seller
shall, not more than one day prior to the Apportionment Date, if possible, cause
such meters to be read, and shall pay all utility bills for which Seller is
liable upon receipt of statements therefor. Purchaser shall be responsible for
causing such utilities and services to be changed to its name and shall be
liable for and shall pay all utility bills for services rendered after the
Apportionment Date. All utility adjustments will be made by the parties outside
of Closing;

       (c) amounts which have been paid or are payable under the Contracts,
Space Leases, Equipment Leases and Permits assigned to and assumed by Purchaser
at Closing;

       (d) prepaid advertising expenses;

       (e) commissions of credit and referral organizations; and

       (f) all other charges and fees customarily prorated and adjusted in
similar transactions.

       In addition to the foregoing apportionments, the Purchase Price shall be
increased by the amount of petty cash at the Hotel on the Closing Date.

         13.2 Deposits. All deposits (including any interest thereon due the
party making such deposit) from guests or others made as security or in
connection with future services to be rendered shall be credited to Purchaser at
the Closing. Purchaser shall assume responsibility for all deposits and shall
hold Seller harmless therefrom. Seller shall hold Purchaser harmless from any
liability for deposits not so credited.

         13.3 Room Revenue. All revenues received or to be received from
transient guests on account of room rents for the period ending on the
Apportionment Date shall belong to Seller,

                                       16

<PAGE>

and for the period beginning on the day immediately following the Apportionment
Date such revenues shall belong to Purchaser; provided, however, that revenues
received or "posted" in the normal course after the time Seller normally closes
its front desk activity for the "night" audit for the Apportionment Date (the
"Front Desk Closing Hour") shall belong to Purchaser. The accounts receivable of
registered guests at the Property who have not checked out and were occupying
rooms as of 12:01 a.m. on the Apportionment Date are collectively called the
"Current Ledger", and Purchaser shall pay over to Seller, Seller's share of the
proceeds of the Current Ledger attributable to payments of each guest's account
for the period ending on the Apportionment Date. In the event that an amount
less than the total amount due from a guest is collected and the guest continued
in occupancy after the Apportionment Date, such amount shall be applied first to
any indebtedness owing by such person to Purchaser and thereafter to such
person's indebtedness to Seller.

         13.4 Accounts Receivable; Accounts Payable. (a) Purchaser shall
purchase from Seller, and Seller shall assign to Purchaser at Closing and
receive a credit for (i) all of Seller's current accounts receivable (i.e.
accounts receivable which are aged not more than ninety (90) days) including,
without limitation, all account receivables from credit card issuers and (ii)
the accounts receivable of registered guests who have not checked out prior to
the Apportionment Date and who are occupying rooms on the evening preceding the
Closing Date. Such credit shall equal the amount of accounts receivable less (i)
credit card charges, travel company charges and similar commissions and (ii) on
all accounts receivable other than credit card receivables, a discount of five
percent (5%). All other accounts receivable relating to the Hotel in respect of
the period prior to the Apportionment Date shall be for Seller's sole account,
and Purchaser shall not be responsible to Seller for the same. Notwithstanding
the foregoing, payments received by Purchaser that are identified as relating to
accounts receivable not purchased by Purchaser shall be promptly turned over to
Seller.

         (b) Any indebtedness, accounts payable, liabilities or obligations of
any kind or nature related to Seller or the Property for the periods prior to
and including the Apportionment Date shall be retained and paid by Seller, and
Purchaser shall not be or become liable therefor, except as assumed by Purchaser
pursuant to this Agreement.

         13.5 Food and Beverage Revenue; Vending Machine Revenue. All monies
received in connection with bar and restaurant services, if any, at the Hotel
(other than amounts due from any guest) during the Apportionment Date shall
belong to Purchaser. Vending machine proceeds shall be counted as close to the
Front Desk Closing Hour as is possible and the net amount thereof shall be
credited to Seller at Closing.

         13.6 Guests' Property. All baggage or other property of patrons of the
Hotel checked or left in care of Seller shall be listed in an inventory to be
prepared in duplicate and signed by Seller's and Purchaser's representatives on
the Closing Date. Purchaser shall be responsible from and after the Closing Date
and will indemnify and hold Seller harmless from and against all claims for all
baggage and property listed in such inventory. All baggage or other property of
guests retained by Seller as security for unpaid accounts receivable may be left
at the Hotel, for a period not to exceed one (1) month from Closing Date, within
which time such baggage or other property shall be removed or otherwise disposed
of by Seller.

                                       17

<PAGE>

         13.7 Accounting. Except as otherwise expressly provided herein, all
apportionments and adjustments shall be made in accordance with the Uniform
System of Accounts, and to the extent not inconsistent therewith, generally
accepted accounting principles. The computation of the adjustments shall be
jointly prepared by Seller and Purchaser, and, upon the request of either
Purchaser or Seller, shall be reviewed by a mutually acceptable reputable
accounting firm (the "Accountants") and reviewed by representatives of both
Purchaser and Seller. To the extent the exact amount of any adjustment item
provided for in this Article XIII cannot be precisely determined on the Closing
Date, Purchaser and Seller shall estimate the amount thereof, for purposes of
computing the net amount due Seller or Purchaser pursuant to this Article XIII
and shall determine the exact amount thereof not later than sixty (60) days
after the Closing Date. All determinations made by the Accountants shall be
binding on both Seller and Purchaser. The fees and expenses of the Accountants
shall be borne one-half each by Seller and Purchaser.

         13.8 Employee Compensation. Seller and Existing Manager shall be
responsible for any liability for payment of all employees' wages, accrued
vacation pay, sick leave, bonuses, pension benefits, including, without
limitation, any COBRA rights, and other benefits earned by and due to employees
at the Property through 12:01 a.m. on the Closing Date, together with F.I.C.A.,
unemployment and other taxes and benefits due from any employer of such
employees. Purchaser shall be responsible for any liability for payment of all
employees' wages, accrued vacation pay, sick leave, bonuses, pension benefits,
including, without limitation, any COBRA rights, and other benefits earned by
and due to employees at the Property that it has hired or caused its manager to
hire after 12:01 a.m. on the Closing Date, together with F.I.C.A., unemployment
and other taxes and benefits due from any employer of such employee.
Notwithstanding the foregoing, Purchaser shall assume and undertake to pay,
defend and discharge and perform when due accrued vacation pay, sick leave and
bonuses for employees at the Property it has hired or caused its manager to
hire, to the extent that (i) such accrued vacation leave, sick pay and bonuses
are reflected properly on a schedule delivered by Seller to Purchaser at Closing
and acknowledged by each of the employees listed on such schedule and (ii)
Purchaser receives a credit therefore against the Purchase Price.

                                   ARTICLE XIV
                                  Miscellaneous

         14.1 Assignment. Neither party shall assign or transfer or permit the
assignment or transfer of its rights or obligations under this Agreement without
the prior written consent of the other, any such assignment or transfer without
such prior consent being hereby declared to be null and void; provided, however,
that Purchaser shall have the right to assign this Agreement in its entirety (a)
without Seller's consent to (i) Highland Hospitality Corporation or a subsidiary
or an affiliate thereof or (ii) a subsidiary or an affiliate of Purchaser or (b)
with Seller's consent, which consent shall not be unreasonably withheld or
delayed, to a third party capital partner provided that Purchaser shall remain
liable to Seller for its obligations hereunder.

         14.2 Consents. If, under this Agreement, the consent of a party is
required, the consent shall be in writing and shall be executed by a duly
authorized officer or agent.

                                       18

<PAGE>

         14.3 Applicable Law. This Agreement shall be governed by the laws of
the State of Maryland, without resort to the choice of law rules thereof.

         14.4 Headings; Exhibits. The headings of articles and sections of this
Agreement are inserted only for convenience; they are not to be construed as a
limitation of the scope of the particular provision to which they refer. All
exhibits attached or to be attached to this Agreement are incorporated herein by
this reference.

         14.5 Notices. Notices and other communications required by this
Agreement shall be in writing and delivered by hand against receipt or sent by
recognized overnight delivery service or by certified or registered mail,
postage prepaid, with return receipt requested. All notices shall be addressed
as follows:

         If to Purchaser:

         Highland Hospitality, L.P.
         8405 Greensboro Drive, Suite 500
         McLean, Virginia 22102
         Attention:  General Counsel

         with a copy to:

         Highland Hospitality, L.P.
         8405 Greensboro Drive, Suite 500
         McLean, Virginia 22102
         Attention:  Chief Operating Officer

         If to Seller:

         Brentwood BWI, LLC
         1564 Crossways Boulevard, Suite 201
         Chesapeake, Virginia  23320
         Attention:  H.K. Thakkar

         With a copy to:

         Faggert & Frieden, P.C.
         222 Central Park Avenue, Suite 1300
         Virginia Beach, Virginia  23462
         Attention:  Alan M. Frieden, Esq.

or to such other address as may be designated by a proper notice. Notices shall
be deemed to be effective when so delivered by hand, or if mailed, three days
after mailing or one business day, in the case of express mail or overnight
courier service or refusal of the addressee to accept delivery.

                                       19

<PAGE>

         14.6 Waiver. The failure of either party to insist on strict
performance of any of the provisions of this Agreement or to exercise any right
granted to it shall not be construed as a relinquishment or future waiver;
rather, the provision or right shall continue in full force. No waiver of any
provision or right shall be valid unless it is in writing and signed by the
party giving it.

         14.7 Partial Invalidity. If any part of this Agreement is declared
invalid by a court of competent jurisdiction, this Agreement shall be construed
as if such portion had never existed, unless this construction would operate as
an undue hardship on Seller or Purchaser or would constitute a substantial
deviation from the general intent of the parties as reflected in this Agreement.

         14.8 Entire Agreement. This Agreement, together with the other writings
signed by the parties and incorporated herein by reference and together with any
instruments to be executed and delivered under this Agreement, constitutes the
entire agreement between the parties with respect to the purchase and sale of
the Property and supersedes all prior oral and written understandings. Any
amendments to this Agreement shall not be effective unless in writing and signed
by the parties hereto.

         14.9 Time is of the Essence. Time is of the essence with respect to
performance of all obligations under this Agreement.

         14.10 Waiver of Jury Trial. Seller and Purchaser each hereby waives any
right to jury trial in the event any party files an action relating to this
Agreement or to the transactions or obligations contemplated hereunder.

         14.11 Counterparts. This Agreement may be executed in separate
counterparts, none of which need contain the signatures of all parties, each of
which shall be deemed to be an original, and all of which taken together
constitute one and the same instrument. It shall not be necessary in making
proof of this Agreement to produce or account for more than the number of
counterparts containing the respective signatures of, or on behalf of, all of
the parties hereto.

         14.12 Brokerage. Purchaser and Seller each represents and warrants to
the other that no broker or agent is entitled to the payment of a commission for
services rendered in connection with the transactions contemplated herein other
than CB Richard Ellis and/or Mr. Douglas Henkel, which commissions shall be due
and payable by Seller pursuant to the terms of a separate agreement. Each of the
parties hereto agrees to indemnify and hold the other harmless from claims made
by any broker, attorney or finder claiming through such party for a commission,
fee or compensation in connection with this Agreement or the sale of the
Property hereunder. The provisions of this Section 14.12 shall survive Closing.

         14.13 Attorneys' Fees. If either party hereto fails to materially
perform any of its obligations under this Agreement or if any dispute arises
between the parties hereto concerning the meaning or interpretation of any
provision of this Agreement, then the defaulting party or the party not
prevailing in such dispute, as the case may be, shall pay any and all reasonable
costs

                                       20

<PAGE>

and expenses incurred by the other party on account of such default and/or in
enforcing or establishing its rights hereunder, including, without limitation,
court costs and reasonable attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Agreement shall be recoverable separately from
and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other provisions
of this Agreement and to survive and not be merged into any such judgment.

         14.14 Intentionally Deleted.

         14.15 Public Announcements. Neither Seller nor Purchaser shall make any
public statement or issue any press release prior to the Closing with respect to
this Agreement or the transactions contemplated hereby without the prior written
consent of the other party.

         14.16 Time for Performance. If the date for the performance of any
obligation, or the giving of any notice, by Seller or Purchaser hereunder falls
upon a Saturday, Sunday or legal holiday recognized by the United States
government, then the time for such performance or notice shall be extended until
the next business day.

         14.17 Further Assurances. Each party agrees to execute and deliver,
after the Closing, such forms of corrective Deeds, bills of sale or other
documentation as the other party may reasonably request to carry out the intent
of this Agreement.

         14.18 Non-Solicitation. During the period from the Contract Date until
the Closing or the earlier termination of this Agreement, Seller shall not
directly make, accept, solicit, negotiate, entertain or otherwise pursue, or
authorize any representative or affiliate of Seller to make, accept, solicit,
negotiate, entertain or otherwise pursue, any offers for the financing, or
direct or indirect sale or disposition of the Property or any portion thereof,
other than the transactions contemplated by this Agreement.

         14.19 Like-Kind Exchange. Seller shall have the absolute right to
assign any of its rights under this Agreement in connection with a like-kind
exchange of property intended to qualify as tax-free under Section 1031 of the
Internal Revenue Code, provided that (i) Seller shall save, protect, defend,
indemnify and hold the Purchaser Indemnitees harmless from any and all
additional costs, liabilities or expenses as a result of such like-kind
exchange, (ii) Seller shall remain liable for any of its obligations under this
Agreement, (iii) such exchange shall not cause or result in any delay of the
Closing, and (iv) Purchaser shall not be obligated to take title to any other
property in connection with such exchange. Upon request of Seller, Purchaser
shall cooperate with Seller, at Seller's sole cost and expense, as Seller may
reasonably request to enable Seller to consummate such like-kind exchange.

                         [SIGNATURES ON FOLLOWING PAGE]

                                       21

<PAGE>

         IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to
be executed as of the Contract Date indicated above.

                               SELLER

                               BRENTWOOD BWI, LLC

                               By:  Brentwood Hotels, LLC,
                                   Its Manager

                               By:  /s/  H.K. Thakkar
                                   ______________________________________

                               Name: H.K. Thakkar
                               Its: Manager

                               PURCHASER

                               HIGHLAND HOSPITALITY, L.P.

                                   By: Highland Hospitality Corporation,
                                       Its General Partner

                                   By:  /s/  Patrick W. Campbell
                                      __________________________________
                                   Name:  Patrick W. Campbell
                                   Its:   Executive Vice President

                                       22<PAGE>

                                                                     EXHIBIT 4.1

                                 PPL CORPORATION

                                       and

                              JPMORGAN CHASE BANK,

                  as Purchase Contract Agent, Collateral Agent
                               And Custodial Agent

                           PURCHASE CONTRACT AGREEMENT

                               Dated as of , 2003
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                         Page
<S>                                                                      <C>
    RECITALS...........................................................   1
ARTICLE 1 Definitions and Other Provisions of General Applications.....   1
   SECTION 1.01.Definitions............................................   1
   SECTION 1.02.Compliance Certificates and Opinions...................  13
   SECTION 1.03.Form of Documents Delivered to Purchase Contract Agent.  14
   SECTION 1.04.Acts of Holders; Record Dates..........................  14
   SECTION 1.05.Notices................................................  16
   SECTION 1.06.Notice to Holders; Waiver..............................  17
   SECTION 1.07.Effect of Headings and Table of Contents...............  17
   SECTION 1.08.Successors and Assigns.................................  17
   SECTION 1.09.Separability Clause....................................  17
   SECTION 1.10.Benefits of Agreement..................................  18
   SECTION 1.11.Governing Law..........................................  18
   SECTION 1.12.Legal Holidays.........................................  18
   SECTION 1.13.Counterparts...........................................  18
   SECTION 1.14.Inspection of Agreement................................  19
   SECTION 1.15.Appointment of Financial Institution as Agent for the
                Company................................................  19
ARTICLE 2 Certificate Forms............................................  19
   SECTION 2.01.Forms of Certificates Generally........................  19
   SECTION 2.02.Form of Purchase Contract Agent's Certificate of
                Authentication.........................................  20
ARTICLE 3 The Securities...............................................  20
   SECTION 3.01.Amount; Form and Denominations.........................  20
   SECTION 3.02.Rights and Obligations Evidenced by the Certificates...  21
   SECTION 3.03.Execution, Authentication, Delivery and Dating.........  21
   SECTION 3.04.Temporary Certificates.................................  22
   SECTION 3.05.Registration; Registration of Transfer and Exchange....  23
   SECTION 3.06.Book-entry Interests...................................  24
   SECTION 3.07.Notices to Holders.....................................  25
   SECTION 3.08.Appointment of Successor Depositary....................  25
   SECTION 3.09.Definitive Certificates................................  25
   SECTION 3.10.Mutilated, Destroyed, Lost and Stolen Certificates.....  26
   SECTION 3.11.Persons Deemed Owners..................................  27
   SECTION 3.12.Cancellation...........................................  27
   SECTION 3.13.Creation of Treasury Units by Substitution of Treasury
                Securities.............................................  28
   SECTION 3.14.Reestablishment of New PEPS Units......................  29
   SECTION 3.15.Transfer of Collateral upon Occurrence of Termination
                Event..................................................  31
   SECTION 3.16.No Consent to Assumption...............................  32
   SECTION 3.17.CUSIP Numbers..........................................  32
ARTICLE 4 The Notes....................................................  32
   SECTION 4.01.Interest Payments; Rights to Interest Payments
                Preserved..............................................  32
   SECTION 4.02.Notice and Voting......................................  34
ARTICLE 5 The Purchase Contracts.......................................  34
   SECTION 5.01.Purchase of Shares of Common Stock.....................  34
   SECTION 5.02.Remarketing Agent......................................  37
</TABLE>

                                       i
<PAGE>
<TABLE>
<S>                                                                       <C>
   SECTION 5.02.A.Contract Adjustment Payments.........................   37
   SECTION 5.03.Payment of Purchase Price; Remarketing.................   42
   SECTION 5.03.A.Failed Final Remarketing.............................   47
   SECTION 5.04.Issuance of Shares of Common Stock.....................   47
   SECTION 5.05.Adjustment of Settlement Rate..........................   48
   SECTION 5.06.Notice of Adjustments and Certain Other Events.........   55
   SECTION 5.07.Termination Event; Notice..............................   55
   SECTION 5.08.Early Settlement.......................................   56
   SECTION 5.09.No Fractional Shares...................................   58
   SECTION 5.10.Charges and Taxes......................................   58
ARTICLE 6 Remedies.....................................................   58
   SECTION 6.01.Unconditional Right of Holders to Receive Contract
                Adjustment Payments and to Purchase Shares of Common
                Stock..................................................   58
   SECTION 6.02.Restoration of Rights and Remedies.....................   59
   SECTION 6.03.Rights and Remedies Cumulative.........................   59
   SECTION 6.04.Delay or Omission Not Waiver...........................   59
   SECTION 6.05.Undertaking for Costs..................................   59
   SECTION 6.06.Waiver of Stay or Extension Laws.......................   60
ARTICLE 7 The Purchase Contract Agent..................................   60
   SECTION 7.01.Certain Duties and Responsibilities....................   60
   SECTION 7.02.Notice of Default......................................   61
   SECTION 7.03.Certain Rights of Purchase Contract Agent..............   61
   SECTION 7.04.Not Responsible for Recitals or Issuance of Securities.   63
   SECTION 7.05.May Hold Securities....................................   63
   SECTION 7.06.Money Held in Custody..................................   63
   SECTION 7.07.Compensation and Reimbursement.........................   64
   SECTION 7.08.Corporate Purchase Contract Agent Required;
                Eligibility............................................   64
   SECTION 7.09.Resignation and Removal; Appointment of Successor......   65
   SECTION 7.10.Acceptance of Appointment by Successor.................   66
   SECTION 7.11.Merger, Conversion, Consolidation or Succession to
                Business...............................................   66
   SECTION 7.12.Preservation of Information; Communications to Holders.   67
   SECTION 7.13.No Obligations of Purchase Contract Agent..............   67
   SECTION 7.14.Tax Compliance.........................................   68
ARTICLE 8 Supplemental Agreements......................................   68
   SECTION 8.01.Supplemental Agreements Without Consent of Holders.....   68
   SECTION 8.02.Supplemental Agreements with Consent of Holders........   69
   SECTION 8.03.Execution of Supplemental Agreements...................   70
   SECTION 8.04.Effect of Supplemental Agreements......................   70
   SECTION 8.05.Reference to Supplemental Agreements...................   70
ARTICLE 9 Merger, Consolidation, Share Exchange, Sale or Conveyance....   71
   SECTION 9.01.Covenant Not to Merge, Consolidate, Enter into a Share
                Exchange, Sell or Convey Property Except Under Certain
                Conditions.............................................   71
   SECTION 9.02.Rights and Duties of Successor Corporation.............   71
   SECTION 9.03.Officers' Certificate and Opinion of Counsel Given to
                Purchase Contract Agent................................   72
ARTICLE 10 Covenants...................................................   72
   SECTION 10.01.Performance under Purchase Contracts..................   72
   SECTION 10.02.Maintenance of Office or Agency.......................   72
</TABLE>

                                       ii
<PAGE>
<TABLE>
<S>                                                                       <C>
   SECTION 10.03.Company to Reserve Common Stock.......................   73
   SECTION 10.04.Covenants as to Common Stock..........................   73
   SECTION 10.05.Statements of Officers of the Company as to Default...   73
   SECTION 10.06.Tax Treatment.........................................   74
   SECTION 10.07.ERISA.................................................   74
   SECTION 10.08.Securities Contract...................................   74
</TABLE>

<TABLE>
<S>         <C>
Exhibit A   Face of New PEPS Units Certificate
Exhibit B   Face of Treasury Certificate
Exhibit C   Instruction to Purchase Contract Agent
Exhibit D   Notice from Purchase Contract Agent to Holders
Exhibit E   Notice to Settle by Cash
Exhibit F   Notice from Purchase Contract Agent to Remarketing Agent,
            Collateral Agent and Indenture Trustee and the Company
</TABLE>

                                      iii
<PAGE>
      PURCHASE CONTRACT AGREEMENT, dated as of , 2003, (the "AGREEMENT") between
PPL CORPORATION, a Pennsylvania corporation (the "COMPANY"), JPMORGAN CHASE
BANK, a New York banking corporation, acting as purchase contract agent for the
Holders of Securities (as defined herein) from time to time (the "PURCHASE
CONTRACT AGENT"), JPMORGAN CHASE BANK, a New York banking corporation, acting as
collateral agent (the "COLLATERAL AGENT") and JPMORGAN CHASE BANK, a New York
banking corporation, acting as custodial agent for the Company (the "CUSTODIAL
AGENT").

                                    RECITALS

      The Company has duly authorized the execution and delivery of this
Agreement and the Certificates evidencing the Securities.

      All things necessary to make the Purchase Contracts, when the Certificates
are executed by the Company and authenticated, executed on behalf of the Holders
and delivered by the Purchase Contract Agent, as provided in this Agreement, the
valid obligations of the Company, and to constitute these presents a valid
agreement of the Company, in accordance with its terms, have been done. For and
in consideration of the premises and the purchase of the Securities by the
Holders thereof, it is mutually agreed as follows:

                                   ARTICLE 1
          DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATIONS

      SECTION 1.01. Definitions.

      For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:

      (a) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular, and nouns and
pronouns of the masculine gender include the feminine and neuter genders;

      (b) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles in
the United States;

      (c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section, Exhibit or other subdivision;

      (d) the following term has the meaning given to it in the Remarketing
Agreement: (a) Remarketing; and (b) Remarketing Procedures;

                                       1
<PAGE>
      (e) the following terms have the meanings given to them in this Section
1.01(e):

      "3-MONTH LIBOR" means the rate determined in accordance with the following
provisions:

            (a) the rate for deposits in United States dollars having a maturity
      of three months, commencing on the applicable Interest Reset Date, that
      appears on the Designated LIBOR Page as of 11:00 A.M., London time, on the
      preceding Interest Determination Date. If no such rate so appears, 3-month
      LIBOR on such Interest Determination Date will be determined in accordance
      with the provisions described in clause (b) below.

            (b) With respect to an Interest Determination Date on which no such
      rate appears on the Designated LIBOR Page as specified in clause (a)
      above, the Calculation Agent will request the principal London offices of
      each of four major reference banks (which may include affiliates of the
      Remarketing Agent, the Indenture Trustee or the Calculation Agent) in the
      London interbank market, as selected by the Calculation Agent, to provide
      the Calculation Agent with its offered quotation for deposits in United
      States dollars for the period of three months, commencing on the
      applicable Interest Reset Date, to prime banks in the London interbank
      market at approximately 11:00 A.M., London time, on such Interest
      Determination Date and in a principal amount that is representative for a
      single transaction in United States dollars in such market at such time.
      If at least two such quotations are so provided, then 3-month LIBOR on
      such Interest Determination Date will be the arithmetic mean of such
      quotations. If fewer than two such quotations are so provided, then
      3-month LIBOR on such Interest Determination Date will be the arithmetic
      mean of the rates quoted at approximately 11:00 A.M., New York City time,
      on such Interest Determination Date by three major banks (which may
      include affiliates of the Remarketing Agent, the Indenture Trustee or the
      Calculation Agent) in The City of New York selected by the Calculation
      Agent for loans in United States dollars to leading European banks, having
      a three months maturity and in a principal amount that is representative
      for a single transaction in United States dollars in such market at such
      time; provided, however, that if the banks so selected by the Calculation
      Agent are not quoting as mentioned in this sentence, 3-month LIBOR
      determined as of such Interest Determination Date will be 3-month LIBOR in
      effect on such Interest Determination Date, or if no such 3-month LIBOR is
      then in effect, the interest rate on the Notes will be the rate in effect
      on such Interest Determination Date.

      "ACT" has the meaning, with respect to any Holder, set forth in Section
1.04.

      "AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such

                                       2
<PAGE>
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

      "AGREEMENT" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental
hereto entered into pursuant to the applicable provisions hereof.

      "APPLICABLE MARKET VALUE" has the meaning set forth in Section 5.01.

      "BANKRUPTCY CODE" means title 11 of the United States Code, or any other
law of the United States that from time to time provides a uniform system of
bankruptcy laws.

      "BENEFICIAL OWNER" means, with respect to a Book-Entry Interest, a Person
who is the beneficial owner of such Book-Entry Interest as reflected on the
books of the Depositary or on the books of a Person maintaining an account with
such Depositary (directly as a Depositary Participant or as an indirect
participant, in each case in accordance with the rules of such Depositary).

      "BOARD OF DIRECTORS" means the board of directors of the Company or a duly
authorized committee of that board.

      "BOARD RESOLUTION" means one or more resolutions of the Board of
Directors, a copy of which has been certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification and delivered
to the Purchase Contract Agent.

      "BOOK-ENTRY INTEREST" means a beneficial interest in a Global Certificate,
registered in the name of a Depositary or a nominee thereof, ownership and
transfers of which shall be maintained and made through book entries by such
Depositary as described in Section 3.06.

      "BUSINESS DAY" means any day other than a Saturday or Sunday or a day on
which banking institutions in New York City are authorized or required by law or
executive order to remain closed or a day on which the Indenture Trustee is
closed for business; provided that, in connection with a Remarketing and
following a Successful Remarketing, such day for the purposes of determining
3-month LIBOR is also a London Business Day; and provided, further, that for
purposes of the second paragraph of Section 1.12 only, the term "Business Day"
shall also be deemed to exclude any day on which trading on the New York Stock
Exchange, Inc. is closed or suspended.

      "CALCULATION AGENT" means JPMorgan Chase Bank, or any successor
Calculation Agent appointed by PPL Capital Funding; provided, however, that for
the initial interest rate reset on May 18, 2004, the Calculation Agent shall be
the Remarketing Agent.

      "CASH" shall have the meaning set forth in Section 1.0 of the Pledge
Agreement.

                                       3
<PAGE>
      "CASH SETTLEMENT" has the meaning set forth in Section 5.03(b)(i).

      "CERTIFICATE" means a New PEPS Units Certificate or a Treasury Units
Certificate.

      "CLEARING AGENCY" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as a depositary for
the Securities and in whose name, or in the name of a nominee of that
organization, shall be registered a Global Certificate and which shall undertake
to effect book-entry transfers and pledges of the Securities.

      "CLOSING PRICE" has the meaning set forth in Section 5.01.

      "CODE" means the Internal Revenue Code of 1986, as amended.

      "COLLATERAL" has the meaning set forth in Section 1 of the Pledge
Agreement.

      "COLLATERAL ACCOUNT" has the meaning set forth in Section 1 of the Pledge
Agreement.

      "COLLATERAL AGENT" means the Person named as the "Collateral Agent" in the
first paragraph of this Agreement until a successor Collateral Agent shall have
become such pursuant to the applicable provisions of this Agreement, and
thereafter "Collateral Agent" shall mean such Person.

      "COLLATERAL SUBSTITUTION" has the meaning set forth in Section 3.13.

      "COMMON STOCK" means the PPL Corporation common stock, par value $0.01 per
share.

      "COMPANY" means the Person named as the "Company" in the first paragraph
of this instrument until a successor shall have become such pursuant to the
applicable provision of this Agreement, and thereafter "Company" shall mean such
successor.

      "CONSTITUENT PERSON" has the meaning set forth in Section 5.05(b).

      "CONTRACT ADJUSTMENT PAYMENTS" means in the case of New PEPS Units and
Treasury Units the amount payable by the Company in respect of each Purchase
Contract constituting a part of a New PEPS Unit or Treasury Unit, equal to 0.46
% per annum of the Stated Amount, or $0.1150 per annum, in each case computed on
the basis of a 360-day year of twelve 30-day months, accruing from August 18,
2003 and payable quarterly in arrears on November 18, 2003, February 18, 2004
and May 18, 2004.

      "CORPORATE TRUST OFFICE" means the principal corporate trust office of the
Purchase Contract Agent at which, at any particular time, its corporate trust
business shall

                                       4
<PAGE>
be administered, which office at the date hereof is located at 4 New York Plaza,
15th Floor, New York, New York 10004, Attention: Institutional Trust Services.

      "COUPON RATE" means (i) the rate of 7.29% per year from August 18, 2003
through and including the day immediately preceding the Purchase Contract
Settlement Date and (ii)(A) in the case of a Successful Remarketing, the Reset
Rate on and after the Purchase Contract Settlement Date and (B) in the case of a
Failed Final Remarketing, the Coupon Rate (as defined in clause (i) of this
definition) on and after the Purchase Contract Settlement Date, until the
principal thereof is paid or duly made available for payment.

      "CUSTODIAL AGENT" means the Person named as the "Custodial Agent" in the
first paragraph of this Agreement until a successor Custodial Agent shall have
become such pursuant to the applicable provisions of the Pledge Agreement, and
thereafter "Custodial Agent" shall mean such Person.

      "CURRENT MARKET PRICE" has the meaning set forth in Section 5.05(a)(8).

      "DEALER MANAGER AGREEMENT" means, the Dealer Manager Agreement, dated as
of , 2003, between the Company, PPL Capital Funding and Morgan Stanley & Co.
Incorporated as dealer manager thereto.

      "DEPOSITARY" means a clearing agency registered under the Exchange Act
that is designated to act as Depositary for the Securities as contemplated by
Sections 3.06, 3.07, 3.08 and 3.09.

      "DEPOSITARY PARTICIPANT" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Depositary effects
book entry transfers and pledges of securities deposited with the Depositary.

      "DESIGNATED LIBOR PAGE" means the display designated as "Page 3750" on
Moneyline Telerate, Inc., or such other page as may replace Page 3750 or such
service or any successor service or services as may be nominated by the British
Bankers' Association for the purpose of displaying the London interbank rates of
major banks for United States dollars.

      "DTC" means The Depository Trust Company.

      "EARLY SETTLEMENT" has the meaning set forth in Section 5.08(a).

      "EARLY SETTLEMENT AMOUNT" has the meaning set forth in Section 5.08(a).

      "EARLY SETTLEMENT DATE" has the meaning set forth in Section 5.08(a).

      "EARLY SETTLEMENT RATE" has the meaning set forth in Section 5.08(b).

                                       5
<PAGE>
      "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

      "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
any statute successor thereto, in each case as amended from time to time, and
the rules and regulations promulgated thereunder.

      "EXPIRATION DATE" has the meaning set forth in Section 1.04(e).

      "EXPIRATION TIME" has the meaning set forth in Section 5.05(a)(6).

      "FAILED FINAL REMARKETING" has the meaning set forth in Section 5.03(c).

      "GLOBAL CERTIFICATE" means a Certificate that evidences all or part of the
Securities and is registered in the name of a Clearing Agency or a nominee
thereof.

      "HOLDER" means, with respect to a Security, the Person in whose name the
Security evidenced by a Certificate is registered in the Security Register;
provided, however, that in determining whether the Holders of the requisite
number of Securities have voted on any matter, then for the purpose of such
determination only (and not for any other purpose hereunder), if the Security
remains in the form of one or more Global Certificates and if the Depositary
which is the registered holder of such Global Certificate has sent an omnibus
proxy assigning voting rights to the Depositary Participants to whose accounts
the Securities are credited on the record date, the term "Holder" shall mean
such Depositary Participant acting at the direction of the Beneficial Owners.

      "INDENTURE" means the Indenture, dated as of November 1, 1997, between the
Company and the Indenture Trustee (including any provisions of the TIA that are
deemed incorporated therein), as supplemented by the Supplemental Indenture No.
5 dated as of , 2003, pursuant to which the Notes will be issued.

      "INDENTURE TRUSTEE" means JPMorgan Chase Bank, a New York banking
corporation, as trustee under the Indenture, or any successor thereto in such
capacity.

      "INTEREST DETERMINATION DATE" means the second London Business Day
immediately preceding the applicable Interest Reset Date; provided, however,
that for the initial interest rate reset on May 18, 2004, the Interest
Determination Date means the second London Business Day immediately preceding
each date of Remarketing if there is a Successful Remarketing on such date.

      "INTEREST RESET DATE" shall have the meaning set forth in Section 1.04(e)
of the Supplemental Indenture No. 5 dated as of , 2003.

      "LONDON BUSINESS DAY" means a day on which dealings in deposits in United
States dollars are transacted in the London interbank market.

                                       6
<PAGE>
      "ISSUER ORDER" or "ISSUER REQUEST" means a written order or request signed
in the name of the Company by its Chairman of the Board, its President or one of
its Vice Presidents, and by its Treasurer, an Assistant Treasurer, its Secretary
or an Assistant Secretary, and delivered to the Purchase Contract Agent.

      "NEW PEPS UNIT" means the 7-3/4% Premium Equity Participating Security
Units (PEPS(SM) Units), Series B which are the collective rights and obligations
of a Holder of a New PEPS Units Certificate in respect of a 1/40, or 2.5%,
undivided beneficial ownership interest in a Note, subject to the Pledge
thereof, and the related Purchase Contract.

      "NEW PEPS UNITS CERTIFICATE" means a certificate evidencing the rights and
obligations of a Holder in respect of the number of New PEPS Units specified on
such certificate.

      "NEW YORK OFFICE" shall have the meaning set forth in Section 10.02.

      "NON-ELECTING SHARE" has the meaning set forth in Section 5.05(b).

      "NOTES" means the series of Notes due 2006 issued by PPL Capital Funding
under the Indenture and guaranteed by the Company. For purposes of this
Agreement, references to a Note or beneficial interests in a Note shall include,
if applicable, a 1/40, or 2.5%, undivided beneficial ownership interest in a
$1,000 principal amount of a Note.

      "NYSE" means the New York Stock Exchange, Inc.

      "OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of the
Board, its President or one of its Vice Presidents, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, and
delivered to the Purchase Contract Agent. Any Officers' Certificate delivered
with respect to compliance with a condition or covenant provided for in this
Agreement shall include:

            (i) a statement that each officer signing the Officers' Certificate
      has read the covenant or condition and the definitions relating thereto;

            (ii) a brief statement of the nature and scope of the examination or
      investigation undertaken by each officer in rendering the Officers'
      Certificate;

            (iii) a statement that, in the opinion of each such officer, each
      such officer has made such examination or investigation as is necessary to
      enable such officer to express an informed opinion as to whether or not
      such covenant or condition has been complied with; and

            (iv) a statement as to whether, in the opinion of each such officer,
      such condition or covenant has been complied with.

                                       7
<PAGE>
      "OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel to the Company (and who may be an employee of the Company), and who
shall be reasonably acceptable to the Purchase Contract Agent or in the case of
an Opinion of Counsel delivered under the Pledge Agreement, reasonably
acceptable to the Collateral Agent, Securities Intermediary or Custodial Agent,
as the case may be. An opinion of counsel may rely on certificates as to matters
of fact.

      "OUTSTANDING SECURITIES" means, with respect to any Security and as of the
date of determination, all Securities evidenced by Certificates theretofore
authenticated, executed and delivered under this Agreement, except:

            (i) If a Termination Event has occurred, (i) Treasury Units and (ii)
      New PEPS Units for which the underlying Notes have been theretofore
      deposited with the Purchase Contract Agent in trust for the Holders of
      such New PEPS Units;

            (ii) Securities evidenced by Certificates theretofore cancelled by
      the Purchase Contract Agent or delivered to the Purchase Contract Agent
      for cancellation or deemed cancelled pursuant to the provisions of this
      Agreement; and

            (iii) Securities evidenced by Certificates in exchange for or in
      lieu of which other Certificates have been authenticated, executed on
      behalf of the Holder and delivered pursuant to this Agreement, other than
      any such Certificate in respect of which there shall have been presented
      to the Purchase Contract Agent proof satisfactory to it that such
      Certificate is held by a protected purchaser in whose hands the Securities
      evidenced by such Certificate are valid obligations of the Company;

provided, however, that in determining whether the Holders of the requisite
number of the Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned by the Company
or any Affiliate of the Company shall be disregarded and deemed not to be
Outstanding Securities, except that, in determining whether the Purchase
Contract Agent shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities that a
Responsible Officer of the Purchase Contract Agent knows to be so owned shall be
so disregarded. Securities so owned that have been pledged in good faith may be
regarded as Outstanding Securities if the pledgee establishes to the
satisfaction of the Purchase Contract Agent the pledgee's right so to act with
respect to such Securities and that the pledgee is not the Company or any
Affiliate of the Company.

            "PAYMENT DATE" means November 18, 2003, February 18, 2004 and May
      18, 2004.

            "PERMITTED INVESTMENTS" has the meaning set forth in Section 1 of
      the Pledge Agreement.

                                       8
<PAGE>
      "PERSON" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, limited
liability company, trust, unincorporated organization or government or any
agency or political subdivision thereof or any other entity of whatever nature.

      "PLAN" means an employee benefit plan that is subject to ERISA, a plan
account or other arrangement that is subject to Section 4975 of the Code or any
Similar Law and any entity whose assets are considered assets of any such plan,
account or arrangement.

      "PLEDGE" means the pledge under the Pledge Agreement of the Notes or the
Treasury Securities, in each case constituting a part of the Securities.

      "PLEDGE AGREEMENT" means the Pledge Agreement, dated as of , 2003, among
the Company, the Collateral Agent, the Securities Intermediary and the Purchase
Contract Agent, on its own behalf and as attorney-in-fact for the Holders from
time to time of the Securities.

      "PLEDGED NOTES" has the meaning set forth in the Pledge Agreement.

      "PPL CAPITAL FUNDING" means PPL Capital Funding, Inc., a Delaware
corporation and the issuer of the Subordinated Notes, and its successors.

      "PREDECESSOR CERTIFICATE" means a Predecessor New PEPS Units Certificate
or a Predecessor Treasury Units Certificate.

      "PREDECESSOR NEW PEPS UNITS CERTIFICATE" of any particular New PEPS Units
Certificate means every previous New PEPS Units Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
New PEPS Units evidenced thereby; and, for the purposes of this definition, any
New PEPS Units Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen New PEPS Units
Certificate shall be deemed to evidence the same rights and obligations of the
Company and the Holder as the mutilated, destroyed, lost or stolen New PEPS
Units Certificate.

      "PREDECESSOR TREASURY UNITS CERTIFICATE" of any particular Treasury Units
Certificate means every previous Treasury Units Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Treasury Units evidenced thereby; and, for the purposes of this definition, any
Treasury Units Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Treasury Units
Certificate shall be deemed to evidence the same rights and obligations of the
Company and the Holder as the mutilated, destroyed, lost or stolen Treasury
Units Certificate.

      "PROCEEDS" has the meaning set forth in Section 1 of the Pledge Agreement.

                                       9
<PAGE>
      "PURCHASE CONTRACT" means, with respect to any Security, the contract
forming a part of such Security and obligating the Company to (i) sell, and the
Holder of such Security to purchase, shares of Common Stock and (ii) pay the
Holder Contract Adjustment Payments on the terms and subject to the conditions
set forth in Article Five hereof.

      "PURCHASE CONTRACT AGENT" means the Person named as the "Purchase Contract
Agent" in the first paragraph of this Agreement until a successor Purchase
Contract Agent shall have become such pursuant to the applicable provisions of
this Agreement, and thereafter "Purchase Contract Agent" shall mean such Person.

      "PURCHASE CONTRACT SETTLEMENT DATE" means May 18, 2004.

      "PURCHASE CONTRACT SETTLEMENT FUND" has the meaning set forth in Section
5.04.

      "PURCHASE PRICE" has the meaning set forth in Section 5.01.

      "PURCHASED SHARES" has the meaning set forth in Section 5.05(a)(6).

      "RECORD DATE" for the interest payable on any Payment Date means, as to
any Global Certificate, the Business Day next preceding such Payment Date, and
as to any other Certificate, the fifteenth day prior to such Payment Date.

      "REDEMPTION PRICE" means the redemption price per Note equal to the
principal amount of such Note plus any accrued and unpaid interest on such Note
to the date of redemption.

      "REFERENCE DEALER" means a dealer engaged in trading of convertible
securities.

      "REFERENCE PRICE" has the meaning set forth in Section 5.01.

      "REMARKETING" has the meaning set forth in Section 5.03(c).

      "REMARKETING AGENT" has the meaning set forth in Section 5.02.

      "REMARKETING AGREEMENT" means the Remarketing Agreement, dated as of ,
2003, among the Company, PPL Capital Funding and the Remarketing Agent.

      "REMARKETING FEE" has the meaning set forth in Section 5.03(c).

      "REMARKETED NOTES" means the Notes, as the Purchase Contract Agent and the
Custodial Agent shall have notified the Remarketing Agent after 11:00 a.m., New
York City time, on the sixth Business Day immediately preceding the Purchase
Contract Settlement Date (i) of the holders electing to have their Notes
remarketed, and (ii) of the Holders of New PEPS Units who have not settled early
the related Purchase Contracts and have failed to notify the Purchase Contract
Agent, on or prior to the seventh Business

                                       10
<PAGE>
Day immediately preceding the Purchase Contract Settlement Date, of their
intention to settle the related Purchase Contracts through Cash Settlement, or
have so notified the Purchase Contract Agent, but failed to deliver sufficient
cash to the Purchase Contract Agent on or prior to the sixth Business Day
preceding the Purchase Contract Settlement Date.

      "REORGANIZATION EVENT" has the meaning set forth in Section 5.05(b).

      "RESET AGENT" means Morgan Stanley & Co. Incorporated or, if Morgan
Stanley & Co. Incorporated is unwilling or unable to act, another nationally
recognized investment banking firm chosen by the Company to determine the
initial Reset Rate.

      "RESET RATE" means 3-month LIBOR plus the Spread; provided, however, that
the Reset Rate shall not exceed the maximum rate permitted by applicable law.

      "RESPONSIBLE OFFICER" means, with respect to the Purchase Contract Agent,
any officer of the Purchase Contract Agent assigned by the Purchase Contract
Agent to administer this Purchase Contract Agreement.

      "SECURITIES INTERMEDIARY" means JPMorgan Chase Bank, as Securities
Intermediary under the Pledge Agreement until a successor Securities
Intermediary shall have become such pursuant to the applicable provisions of the
Pledge Agreement, and thereafter "Securities Intermediary" shall mean such
successor.

      "SECURITY" means a New PEPS Unit or a Treasury Unit, as the case may be.

      "SECURITY REGISTER" and "SECURITIES REGISTRAR" have the respective
meanings set forth in Section 3.05.

      "SENIOR INDEBTEDNESS" means indebtedness of any kind of the Company unless
the instrument under which such indebtedness is incurred expressly provides that
it is on a parity in right of payment with or subordinate in right of payment to
the Contract Adjustment Payments; provided, however, that Senior Indebtedness
does not include obligations to subsidiaries, obligations to employees or trade
accounts payable.

      "SETTLEMENT RATE" has the meaning set forth in Section 5.01.

      "SIMILAR LAW" means any federal, state, local, non-U.S. or other law or
regulation that is similar to any of the provisions contained in Title I of
ERISA or Section 4975 of the Code.

      "SPREAD" means the number of basis points (one one-hundredth of a
percentage point) to be added to 3-month LIBOR that the Remarketing Agent
determines is required for a Successful Remarketing. For the avoidance of doubt,
the Spread will be fixed once determined by the Remarketing Agent in a
Successful Remarketing.

                                       11
<PAGE>
      "STATED AMOUNT" means $25.

      "SUCCESSFUL REMARKETING" has the meaning set forth in Section 5.03(c).

      "SUPPLEMENTAL REMARKETING AGREEMENT" means the Supplemental Remarketing
Agreement between the Company and the Purchase Contract Agent in connection with
the remarketing.

      "TERMINATION DATE" means the date, if any, on which a Termination Event
occurs.

      "TERMINATION EVENT" means the occurrence of any of the following events:

            (i) at any time on or prior to the Purchase Contract Settlement
      Date, a judgment, decree or court order shall have been entered granting
      relief under the Bankruptcy Code, adjudicating the Company to be
      insolvent, or approving as properly filed a petition seeking
      reorganization or liquidation of the Company or any other similar
      applicable Federal or State law, and, unless such judgment, decree or
      order shall have been entered within 60 days prior to the Purchase
      Contract Settlement Date, such decree or order shall have continued
      undischarged and unstayed for a period of 60 days;

            (ii) a judgment, decree or court order for the appointment of a
      receiver or liquidator or trustee or assignee in bankruptcy or insolvency
      of the Company or of its property, or for the termination or liquidation
      of its affairs, shall have been entered, and, unless such judgment, decree
      or order shall have been entered within 60 days prior to the Purchase
      Contract Settlement Date, such judgment, decree or order shall have
      continued undischarged and unstayed for a period of 60 days; or

            (iii) at any time on or prior to the Purchase Contract Settlement
      Date, the Company shall file a petition for relief under the Bankruptcy
      Code, or shall consent to the filing of a bankruptcy proceeding against
      it, or shall file a petition or answer or consent seeking reorganization
      or liquidation under the Bankruptcy Code or any other similar applicable
      Federal or State law, or shall consent to the filing of any such petition,
      or shall consent to the appointment of a receiver or liquidator or trustee
      or assignee in bankruptcy or insolvency of it or of its property, or shall
      make an assignment for the benefit of creditors, or shall admit in writing
      its inability to pay its debts generally as they become due.

      "THRESHOLD APPRECIATION PRICE" has the meaning set forth in Section 5.01.

      "TIA" means the Trust Indenture Act of 1939, as amended from time to time,
or any successor legislation.

      "TRADING DAY" has the meaning set forth in Section 5.01.

                                       12
<PAGE>

         "TRANSFER AGENT" shall mean JPMorgan Chase Bank.

         "TREASURY UNIT" means, following the substitution of Treasury
Securities for Notes as collateral to secure a Holder's obligations under the
Purchase Contract, the collective rights and obligations of a Holder of a
Treasury Units Certificate in respect of such Treasury Securities, subject to
the Pledge thereof, and the related Purchase Contract.

         "TREASURY UNITS CERTIFICATE" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Treasury Units specified
on such certificate.

         "TREASURY SECURITIES" means zero-coupon U.S. Treasury Securities (CUSIP
No. 912820BJ5) which mature on May 17, 2004.

         "VICE PRESIDENT" means any vice president, whether or not designated by
a number or a word or words added before or after the title "vice president."

         SECTION 1.02. Compliance Certificates and Opinions.

         Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Purchase Contract Agent to take any
action in accordance with any provision of this Agreement, the Company shall
furnish to the Purchase Contract Agent an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with and, if requested by the Purchase
Contract Agent, an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Agreement
relating to such particular application or request, no additional certificate or
opinion need be furnished.

         Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:

                  (i) a statement that each individual signing such certificate
         or opinion has read such covenant or condition and the definitions
         herein relating thereto;

                  (ii) a brief statement as to the nature and scope of the
         examination or investigation upon which the statements or opinions
         contained in such certificate or opinion are based;

                  (iii) a statement that, in the opinion of each such
         individual, he or she has made such examination or investigation as is
         necessary to enable such individual to express an informed opinion as
         to whether or not such covenant or condition has been complied with;
         and

                                       13
<PAGE>
                  (iv) a statement as to whether, in the opinion of each such
         individual, such condition or covenant has been complied with.

         SECTION 1.03. Form of Documents Delivered to Purchase Contract Agent.

         In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

         Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.

         Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.

         SECTION 1.04. Acts of Holders; Record Dates.

         (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Purchase Contract Agent and, where it is hereby expressly required, to
the Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "ACT" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and (subject to Section 7.01) conclusive in favor of
the Purchase Contract Agent and the Company, if made in the manner provided in
this Section.

         (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Purchase Contract
Agent deems sufficient.

                                       14
<PAGE>
         (c) The ownership of Securities shall be proved by the New PEPS Units
Register or the Treasury Units Register, as the case may be.

         (d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Certificate evidencing such
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Purchase Contract Agent or the Company in reliance thereon,
whether or not notation of such action is made upon such Certificate.

         (e) The Company may set any date as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Agreement to be given, made or taken by
Holders of Securities. If any record date is set pursuant to this paragraph, the
Holders of the Outstanding New PEPS Units and the Outstanding Treasury Units, as
the case may be, on such record date, and no other Holders, shall be entitled to
take the relevant action with respect to the New PEPS Units or the Treasury
Units, as the case may be, whether or not such Holders remain Holders after such
record date; provided that no such action shall be effective hereunder unless
taken prior to or on the applicable Expiration Date by Holders of the requisite
number of Outstanding Securities on such record date. Nothing contained in this
paragraph shall be construed to prevent the Company from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and be of no effect), and nothing
contained in this paragraph shall be construed to render ineffective any action
taken by Holders of the requisite number of Outstanding Securities on the date
such action is taken. Promptly after any record date is set pursuant to this
paragraph, the Company, at its own expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to be
given to the Purchase Contract Agent in writing and to each Holder of Securities
in the manner set forth in Section 1.06.

         With respect to any record date set pursuant to this Section, the
Company may designate any date as the "EXPIRATION DATE" and from time to time
may change the Expiration Date to any earlier or later day; provided that no
such change shall be effective unless notice of the proposed new Expiration Date
is given to the Purchase Contract Agent in writing, and to each Holder of
Securities in the manner set forth in Section 1.06, prior to or on the existing
Expiration Date. If an Expiration Date is not designated with respect to any
record date set pursuant to this Section, the Company shall be deemed to have
initially designated the 180th day after such record date as the Expiration Date
with respect thereto, subject to its right to change the Expiration Date as
provided in this paragraph. Notwithstanding the foregoing, no Expiration Date
shall be later than the 180th day after the applicable record date.

                                       15
<PAGE>
         SECTION 1.05. Notices.

         Any notice or communication is duly given if in writing and delivered
in Person or mailed by first-class mail (registered or certified, return receipt
requested), telecopier (with receipt confirmed) or overnight air courier
guaranteeing next day delivery, to the others' address; provided that notice
shall be deemed given to the Purchase Contract Agent only upon receipt thereof:

If to the Purchase Contract Agent:

         JPMorgan Chase Bank
         4 New York Plaza, 15(th) Floor
         New York, New York 10004
         Attention:  Institutional Trust Services
         Telecopier No.: (212) 623-6216

If to the Company:

         PPL Corporation
         Two North Ninth Street
         Allentown, Pennsylvania  18101-1179
         Telecopier No.: (610) 774-5106
         Attention: Treasurer

If to the Collateral Agent:

         JPMorgan Chase Bank
         4 New York Plaza, 15(th) Floor
         New York, New York 10004
         Attention:  Institutional Trust Services
         Telecopier No.:  (212) 623-6216

If to the Custodial Agent:

         JPMorgan Chase Bank
         4 New York Plaza, 15(th) Floor
         New York, New York 10004
         Attention:  Institutional Trust Services
         Telecopier No.:    (212) 623-6216

                                       16
<PAGE>
If to the Indenture Trustee:

         JPMorgan Chase Bank
         4 New York Plaza, 15(th) Floor
         New York, New York 10004
         Attention:  Institutional Trust Services
         Telecopier No.:  (212) 623-6216

         SECTION 1.06. Notice to Holders; Waiver.

         Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the applicable Security Register,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Agreement provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Purchase Contract Agent, but such filing shall not be a condition precedent
to the validity of any action taken in reliance upon such waiver.

         In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Purchase
Contract Agent shall constitute a sufficient notification for every purpose
hereunder.

         SECTION 1.07. Effect of Headings and Table of Contents.

         The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.

         SECTION 1.08. Successors and Assigns.

         All covenants and agreements in this Agreement by the Company and the
Purchase Contract Agent shall bind their respective successors and assigns,
whether so expressed or not.

         SECTION 1.09. Separability Clause.

         In case any provision in this Agreement or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.

                                       17
<PAGE>
         SECTION 1.10. Benefits of Agreement.

         Nothing contained in this Agreement or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and, to the extent provided hereby, the Holders, any
benefits or any legal or equitable right, remedy or claim under this Agreement.
The Holders from time to time shall be beneficiaries of this Agreement and shall
be bound by all of the terms and conditions hereof and of the Securities
evidenced by their Certificates by their acceptance of delivery of such
Certificates.

         SECTION 1.11. Governing Law.

         This Agreement and the Securities shall be governed by, and construed
in accordance with, the laws of the State of New York.

         SECTION 1.12. Legal Holidays.

         In any case where any Payment Date shall not be a Business Day, then
(notwithstanding any other provision of this Agreement or the Securities)
payment of the Contract Adjustment Payments shall not be made on such date, but
such payments shall be made on the next succeeding Business Day with the same
force and effect as if made on such Payment Date, provided that no interest
shall accrue or be payable by the Company or any Holder for the period from and
after any such Payment Date unless there shall be a default in the payment due
on such next succeeding Business Day, except that, if such next succeeding
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day with the same force and effect as if
made on such Payment Date.

         In any case where any Purchase Contract Settlement Date or Early
Settlement Date shall not be a Business Day (notwithstanding any other provision
of this Agreement or the Securities), Purchase Contracts shall not be performed
and Early Settlement shall not be effected on such date, but Purchase Contracts
shall be performed or Early Settlement effected, as applicable, on the next
succeeding Business Day with the same force and effect as if made on such
Purchase Contract Settlement Date or Early Settlement Date, as applicable,
provided that no interest shall accrue or be payable by the Company or to any
Holder for the period from and after any such Purchase Contract Settlement Date
or Early Settlement Date, as applicable, except that, if such next succeeding
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day with the same force and effect as if
made on such Purchase Contract Settlement Date or Early Settlement Date, as
applicable.

         SECTION 1.13. Counterparts.

         This Agreement may be executed in any number of counterparts by the
parties hereto on separate counterparts, each of which, when so executed and
delivered, shall be

                                       18
<PAGE>
deemed an original, but all such counterparts shall together constitute one and
the same instrument.

         SECTION 1.14. Inspection of Agreement.

         A copy of this Agreement shall be available at all reasonable times
during normal business hours at the Corporate Trust Office for inspection by any
Holder or Beneficial Owner.

         SECTION 1.15. Appointment of Financial Institution as Agent for the
Company.

         The Company may appoint a financial institution (which may be the
Collateral Agent) to act as its agent in performing its obligations and in
accepting and enforcing performance of the obligations of the Purchase Contract
Agent and the Holders, under this Agreement and the Purchase Contracts, by
giving notice of such appointment in the manner provided in Section 1.05 hereof.
Any such appointment shall not relieve the Company in any way from its
obligations hereunder.

                                   ARTICLE 2
                                CERTIFICATE FORMS

         SECTION 2.01. Forms of Certificates Generally.

         The Certificates (including the form of Purchase Contract forming part
of each Security evidenced thereby) shall be in substantially the form set forth
in Exhibit A hereto (in the case of Certificates evidencing New PEPS Units) or
Exhibit B hereto (in the case of Certificates evidencing Treasury Units), with
such letters, numbers or other marks of identification or designation and such
legends or endorsements printed, lithographed or engraved thereon as may be
required by the rules of any securities exchange on which the Securities are
listed or any depositary therefor, or as may, consistently herewith, be
determined by the officers of the Company executing such Certificates, as
evidenced by their execution of the Certificates.

         The definitive Certificates shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers of the Company executing the Securities evidenced by
such Certificates, consistent with the provisions of this Agreement, as
evidenced by their execution thereof.

         Every Global Certificate authenticated, executed on behalf of the
Holders and delivered hereunder shall bear a legend in substantially the
following form:

                  THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF
                  THE PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS
                  REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY, A NEW
                  YORK CORPORATION (THE "DEPOSITARY"), OR A NOMINEE OF THE
                  DEPOSITARY. THIS CERTIFICATE IS EXCHANGEABLE FOR CERTIFICATES
                  REGISTERED IN THE

                                       19
<PAGE>
                  NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY
                  IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE
                  CONTRACT AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER
                  THAN A TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE
                  DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF
                  THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
                  DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

                  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
                  REPRESENTATIVE OF THE DEPOSITARY FOR REGISTRATION OF TRANSFER,
                  EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REQUESTED
                  IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REGISTERED BY
                  AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY
                  PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
                  AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
                  DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
                  VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
                  REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

         SECTION 2.02. Form of Purchase Contract Agent's Certificate of
Authentication.

         The form of the Purchase Contract Agent's certificate of authentication
of the Securities shall be in substantially the form set forth on the form of
the applicable Certificates.

                                    ARTICLE 3
                                 THE SECURITIES

         SECTION 3.01. Amount; Form and Denominations.

         The aggregate number of Securities evidenced by Certificates
authenticated, executed on behalf of the Holders and delivered hereunder is
limited to       , except for Certificates authenticated, executed and delivered
upon registration of transfer of, in exchange for, or in lieu of, other
Certificates pursuant to Section 3.04, 3.05, 3.10, 3.13, 3.14, 5.08 or 8.05.

                                       20
<PAGE>
         The Certificates shall be issuable only in registered form and only in
denominations of a single New PEPS Unit or Treasury Unit and any integral
multiple thereof.

         SECTION 3.02. Rights and Obligations Evidenced by the Certificates.

         Each New PEPS Units Certificate shall evidence the number of New PEPS
Units specified therein, with each such New PEPS Units representing (1) the
ownership by the Holder thereof of a 1/40, or 2.5%, undivided beneficial
ownership interest in a $1,000 principal amount Note, subject to the Pledge of
such ownership interest in a Note by such Holder pursuant to the Pledge
Agreement, and (2) the rights and obligations of the Holder thereof and the
Company under one Purchase Contract. The Purchase Contract Agent as
attorney-in-fact for, and on behalf of, the Holder of each New PEPS Unit shall
pledge, pursuant to the Pledge Agreement the ownership interest in a Note
forming a part of such New PEPS Unit, to the Collateral Agent and grant to the
Collateral Agent a security interest in the right, title and interest of such
Holder in such ownership interest in a Note, for the benefit of the Company, to
secure the obligation of the Holder under each Purchase Contract to purchase
shares of Common Stock.

         Upon the formation of a Treasury Unit pursuant to Section 3.13, each
Treasury Units Certificate shall evidence the number of Treasury Units specified
therein, with each such Treasury Unit representing (1) a 1/40, or 2.5%,
undivided beneficial ownership interest in a Treasury Security with a principal
amount at maturity equal to $1,000, subject to the Pledge of such Treasury
Security by such Holder pursuant to the Pledge Agreement, and (2) the rights and
obligations of the Holder thereof and the Company under one Purchase Contract.

         Prior to the purchase of shares of Common Stock under each Purchase
Contract, such Purchase Contracts shall not entitle the Holder of a Security to
any of the rights of a holder of shares of Common Stock, including, without
limitation, the right to vote or receive any dividends or other payments or to
consent or to receive notice as a shareholder in respect of the meetings of
shareholders or for the election of directors of the Company or for any other
matter, or any other rights whatsoever as a shareholder of the Company.

         SECTION 3.03. Execution, Authentication, Delivery and Dating.

         Subject to the provisions of Sections 3.13 and 3.14 hereof, upon the
execution and delivery of this Agreement, and at any time and from time to time
thereafter, the Company may deliver Certificates executed by the Company to the
Purchase Contract Agent for authentication, execution on behalf of the Holders
and delivery, together with its Issuer Order for authentication of such
Certificates, and the Purchase Contract Agent in accordance with such Issuer
Order shall authenticate, execute on behalf of the Holders and deliver such
Certificates.

                                       21
<PAGE>
         The Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its President, one of its Vice Presidents or its
Treasurer. The signature of any of these officers on the Certificates may be
manual or facsimile.

         Certificates bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates.

         No Purchase Contract evidenced by a Certificate shall be valid until
such Certificate has been executed on behalf of the Holder by the manual
signature of an authorized signatory of the Purchase Contract Agent, as such
Holder's attorney-in-fact. Such signature by an authorized signatory of the
Purchase Contract Agent shall be conclusive evidence that the Holder of such
Certificate has entered into the Purchase Contracts evidenced by such
Certificate.

         Each Certificate shall be dated the date of its authentication.

         No Certificate shall be entitled to any benefit under this Agreement or
be valid or obligatory for any purpose unless there appears on such Certificate
a certificate of authentication substantially in the form provided for herein
executed by an authorized signatory of the Purchase Contract Agent by manual
signature, and such certificate upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.

         SECTION 3.04. Temporary Certificates.

         Pending the preparation of definitive Certificates, the Company shall
execute and deliver to the Purchase Contract Agent, and the Purchase Contract
Agent shall authenticate, execute on behalf of the Holders, and deliver, in lieu
of such definitive Certificates, temporary Certificates which are in
substantially the form set forth in Exhibit A or Exhibit B hereto, as the case
may be, with such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as may be required by the rules of any securities exchange on which the
New PEPS Units or Treasury Units, as the case may be, are listed, or as may,
consistently herewith, be determined by the officers of the Company executing
such Certificates, as evidenced by their execution of the Certificates.

         If temporary Certificates are issued, the Company will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
Corporate Trust Office, at the expense of the Company and without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Company shall execute and deliver to the Purchase Contract
Agent, and the Purchase Contract Agent shall

                                       22
<PAGE>
authenticate, execute on behalf of the Holder, and deliver in exchange therefor,
one or more definitive Certificates of like tenor and denominations and
evidencing a like number of Securities as the temporary Certificate or
Certificates so surrendered. Until so exchanged, the temporary Certificates
shall in all respects evidence the same benefits and the same obligations with
respect to the Securities, evidenced thereby as definitive Certificates.

         SECTION 3.05. Registration; Registration of Transfer and Exchange.

         The Purchase Contract Agent shall keep at the Corporate Trust Office a
register (the "SECURITY Register") in which, subject to such reasonable
regulations as it may prescribe, the Purchase Contract Agent shall provide for
the registration of Certificates and of transfers of Certificates (the Purchase
Contract Agent, in such capacity, the "SECURITY REGISTRAR"). The Security
Registrar shall record separately the registration and transfer of the
Certificates evidencing New PEPS Units and Treasury Units.

         Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Company shall execute and deliver to the Purchase
Contract Agent, and the Purchase Contract Agent shall authenticate, execute on
behalf of the designated transferee or transferees, and deliver, in the name of
the designated transferee or transferees, one or more new Certificates of any
authorized denominations, like tenor, and evidencing a like number of New PEPS
Units or Treasury Units, as the case may be.

         At the option of the Holder, Certificates may be exchanged for other
Certificates, of any authorized denominations and evidencing a like number of
New PEPS Units or Treasury Units, as the case may be, upon surrender of the
Certificates to be exchanged at the Corporate Trust Office. Whenever any
Certificates are so surrendered for exchange, the Company shall execute and
deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall
authenticate, execute on behalf of the Holder, and deliver the Certificates
which the Holder making the exchange is entitled to receive.

         All Certificates issued upon any registration of transfer or exchange
of a Certificate shall evidence the ownership of the same number of New PEPS
Units or Treasury Units, as the case may be, and be entitled to the same
benefits and subject to the same obligations, under this Agreement as the New
PEPS Units or Treasury Units, as the case may be, evidenced by the Certificate
surrendered upon such registration of transfer or exchange.

         Every Certificate presented or surrendered for registration of transfer
or exchange shall (if so required by the Purchase Contract Agent) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Purchase Contract Agent duly executed, by
the Holder thereof or its attorney duly authorized in writing.

         No service charge shall be made for any registration of transfer or
exchange of a Certificate, but the Company and the Purchase Contract Agent may
require payment from

                                       23
<PAGE>
the Holder of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration of transfer or exchange
of Certificates, other than any exchanges pursuant to Sections 3.06 and 8.05 not
involving any transfer.

         Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Purchase Contract Agent, and the Purchase Contract
Agent shall not be obligated to authenticate, execute on behalf of the Holder
and deliver any Certificate in exchange for any other Certificate presented or
surrendered for registration of transfer or for exchange on or after the
Business Day immediately preceding the earlier of the Purchase Contract
Settlement Date or the Termination Date. In lieu of delivery of a new
Certificate, upon satisfaction of the applicable conditions specified above in
this Section and receipt of appropriate registration or transfer instructions
from such Holder, the Purchase Contract Agent shall:

                  (i) if the Purchase Contract Settlement Date has occurred,
         upon receipt of shares of Common Stock from the Company's Transfer
         Agent, deliver the shares of Common Stock issuable in respect of the
         Purchase Contracts forming a part of the Securities evidenced by such
         other Certificate; or

                  (ii) if a Termination Event shall have occurred prior to the
         Purchase Contract Settlement Date, transfer the Notes or the Treasury
         Securities, as the case may be, evidenced thereby, in each case subject
         to the applicable conditions and in accordance with the applicable
         provisions of Article Five hereof.

         SECTION 3.06. Book-entry Interests.

         The Certificates, on original issuance, will be issued in the form of
one or more fully registered Global Certificates, to be delivered to the
Depositary or its custodian by, or on behalf of, the Company. The Company hereby
designates DTC as the initial Depositary. Such Global Certificates shall
initially be registered on the books and records of the Company in the name of
Cede & Co., the nominee of the Depositary, and no Beneficial Owner will receive
a definitive Certificate representing such Beneficial Owner's interest in such
Global Certificate, except as provided in Section 3.09. The Purchase Contract
Agent shall enter into an agreement with the Depositary if so requested by the
Company. Unless and until definitive, fully registered Certificates have been
issued to Beneficial Owners pursuant to Section 3.09:

                  (i) the provisions of this Section 3.06 shall be in full force
         and effect;

                  (ii) the Company and the Purchase Contract Agent shall be
         entitled to deal with the Depositary for all purposes of this Agreement
         (including the payment of Contract Adjustment Payments and receiving
         approvals, votes or consents hereunder) as the Holder of the Securities
         and the sole holder of the Global Certificates and shall have no
         obligation to the Beneficial Owners;

                                       24
<PAGE>
                  (iii) to the extent that the provisions of this Section 3.06
         conflict with any other provisions of this Agreement, the provisions of
         this Section 3.06 shall control; and

                  (iv) the rights of the Beneficial Owners shall be exercised
         only through the Depositary and shall be limited to those established
         by law and agreements between such Beneficial Owners and the Depositary
         or the Depositary Participants. The Depositary will make book-entry
         transfers among Depositary Participants and receive and transmit
         payments of Contract Adjustment Payments to such Depositary
         Participants.

         SECTION 3.07. Notices to Holders.

         Whenever a notice or other communication to the Holders is required to
be given under this Agreement, the Company or the Company's agent shall give
such notices and communications to the Holders and, with respect to any
Securities registered in the name of the Depositary or the nominee of the
Depositary, the Company or the Company's agent shall, except as set forth
herein, have no obligations to the Beneficial Owners.

         SECTION 3.08. Appointment of Successor Depositary.

         If the Depositary elects to discontinue its services as securities
depositary with respect to the Securities, the Company may, in its sole
discretion, appoint a successor Depositary with respect to the Securities.

         SECTION 3.09. Definitive Certificates.

         In the event that:

                  (i) the Depositary notifies the Company that it is unwilling
         or unable to continue as a Depositary for the Global Certificates and
         no successor depositary has been appointed within 90 days after such
         notice pursuant to Section 3.08;

                  (ii) the Depositary at any time ceases to be a Clearing Agency
         when the Depositary is required to be registered as such to act as the
         Depositary and no successor Depositary has been appointed within 90
         days after the Company learns that the Depositary has ceased to be so
         registered; or

                  (iii) the Company, in its sole discretion, determines that it
         will no longer have the New PEPS Units and the Treasury Units
         represented by Global Certificates,

then (x) definitive Certificates shall be prepared by the Company with respect
to such Securities and delivered to the Purchase Contract Agent and (y) upon
surrender of the Global Certificates representing the Securities by the
Depositary, accompanied by

                                       25
<PAGE>
registration instructions, the Company shall cause definitive Certificates to be
delivered to Beneficial Owners in accordance with the instructions of the
Depositary. The Company shall not be liable for any delay in delivery of such
instructions and may conclusively rely on and shall be protected in relying on,
such instructions. Each definitive Certificate so delivered shall evidence
Securities of the same kind and tenor as the Global Certificate so surrendered
in respect thereof.

         SECTION 3.10. Mutilated, Destroyed, Lost and Stolen Certificates.

         If any mutilated Certificate is surrendered to the Purchase Contract
Agent, the Company shall execute and deliver to the Purchase Contract Agent, and
the Purchase Contract Agent shall authenticate, execute on behalf of the Holder,
and deliver in exchange therefor, a new Certificate, evidencing the same number
of New PEPS Units or Treasury Units, as the case may be, and bearing a
Certificate number not contemporaneously outstanding.

         If there shall be delivered to the Company and the Purchase Contract
Agent (i) evidence to their satisfaction of the destruction, loss or theft of
any Certificate, and (ii) such security or indemnity as may be required by them
to hold each of them and any agent of any of them harmless, then, in the absence
of notice to the Company or the Purchase Contract Agent that such Certificate
has been acquired by a "protected" purchaser (as defined in Article 8 of the
UCC), the Company shall execute and deliver to the Purchase Contract Agent, and
the Purchase Contract Agent shall authenticate, execute on behalf of the Holder,
and deliver to the Holder, in lieu of any such destroyed, lost or stolen
Certificate, a new Certificate, evidencing the same number of New PEPS Units or
Treasury Units, as the case may be, and bearing a Certificate number not
contemporaneously outstanding.

         Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Purchase Contract Agent, and the Purchase Contract
Agent shall not be obligated to authenticate, execute on behalf of the Holder,
and deliver to the Holder, a Certificate on or after the Business Day
immediately preceding the earlier of the Purchase Contract Settlement Date or
the Termination Date. In lieu of delivery of a new Certificate, upon
satisfaction of the applicable conditions specified above in this Section and
receipt of appropriate registration or transfer instructions from such Holder,
the Purchase Contract Agent shall:

                  (1) if the Purchase Contract Settlement Date has occurred,
         upon receipt of shares of Common Stock from the Company's Transfer
         Agent, deliver the shares of Common Stock issuable in respect of the
         Purchase Contracts forming a part of the Securities evidenced by such
         Certificate; or

                  (2) if a Termination Event shall have occurred prior to the
         Purchase Contract Settlement Date, transfer the Notes or the Treasury
         Securities, as the case may be, evidenced thereby, in each case subject
         to the applicable conditions and in accordance with the applicable
         provisions of Article Five hereof.

                                       26
<PAGE>
         Upon the issuance of any new Certificate under this Section, the
Company and the Purchase Contract Agent may require the payment by the Holder of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Purchase Contract Agent) connected therewith.

         Every new Certificate issued pursuant to this Section in lieu of any
destroyed, lost or stolen Certificate shall constitute an original additional
contractual obligation of the Company and of the Holder in respect of the
Security evidenced thereby, whether or not the destroyed, lost or stolen
Certificate (and the Securities evidenced thereby) shall be at any time
enforceable by anyone, and shall be entitled to all the benefits and be subject
to all the obligations of this Agreement equally and proportionately with any
and all other Certificates delivered hereunder.

         The provisions of this Section are exclusive and shall preclude, to the
extent lawful, all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.

         SECTION 3.11. Persons Deemed Owners.

         Prior to due presentment of a Certificate for registration of transfer,
the Company and the Purchase Contract Agent, and any agent of the Company or the
Purchase Contract Agent, may treat the Person in whose name such Certificate is
registered as the owner of the Security evidenced thereby, for the purpose of
receiving interest on the Treasury Securities or Notes (subject to Section
4.01), as applicable, receiving payments of Contract Adjustment Payments
(subject to Section 5.02.A(a)), performance of the Purchase Contracts and for
all other purposes whatsoever, whether or not any interest on the Treasury
Securities or Notes, as applicable, or the Contract Adjustment Payments payable
in respect of the Purchase Contracts, constituting a part of the Security
evidenced thereby, shall be overdue and notwithstanding any notice to the
contrary, and neither the Company nor the Purchase Contract Agent, nor any agent
of the Company or the Purchase Contract Agent, shall be affected by notice to
the contrary.

         Notwithstanding the foregoing, with respect to any Global Certificate,
nothing contained herein shall prevent the Company, the Purchase Contract Agent
or any agent of the Company or the Purchase Contract Agent, from giving effect
to any written certification, proxy or other authorization furnished by the
Depositary (or its nominee), as a Holder, with respect to such Global
Certificate or impair, as between such Depositary and the related Beneficial
Owner, the operation of customary practices governing the exercise of rights of
the Depositary (or its nominee) as Holder of such Global Certificate.

         SECTION 3.12. Cancellation.

         All Certificates surrendered for delivery of shares of Common Stock on
or after the Purchase Contract Settlement Date, upon the transfer of Notes or
Treasury Securities, as the case may be, after the occurrence of a Termination
Event or pursuant to an Early

                                       27
<PAGE>
Settlement, or upon the registration of transfer or exchange of a Security, or a
Collateral Substitution or the reestablishment of New PEPS Units shall, if
surrendered to any Person other than the Purchase Contract Agent, be delivered
to the Purchase Contract Agent and, if not already cancelled, shall be promptly
cancelled by it. The Company may at any time deliver to the Purchase Contract
Agent for cancellation any Certificates previously authenticated, executed and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Certificates so delivered shall, upon Issuer Order, be
promptly cancelled by the Purchase Contract Agent. No Certificates shall be
authenticated, executed on behalf of the Holder and delivered in lieu of or in
exchange for any Certificates cancelled as provided in this Section, except as
expressly permitted by this Agreement. All cancelled Certificates held by the
Purchase Contract Agent shall be disposed of in accordance with its customary
practices.

         If the Company or any Affiliate of the Company shall acquire any
Certificate, such acquisition shall not operate as a cancellation of such
Certificate unless and until such Certificate is delivered to the Purchase
Contract Agent cancelled or for cancellation.

         SECTION 3.13. Creation of Treasury Units by Substitution of Treasury
Securities.

         Subject to the conditions set forth in this Agreement, a Holder may
separate the Notes from the related Purchase Contracts in respect of such
Holder's New PEPS Units by substituting for such Notes, Treasury Securities
having an aggregate principal amount at maturity equal to the aggregate
principal amount of such Notes (a "COLLATERAL SUBSTITUTION"), at any time from
and after the date of this Agreement and prior to or on the seventh Business Day
immediately preceding the Purchase Contract Settlement Date. To effect such
substitution, the Holder must:

                  (i) deposit with the Securities Intermediary Treasury
         Securities having an aggregate amount at maturity equal to the
         aggregate principal amount of the Notes; and

                  (ii) transfer the related New PEPS Units to the Purchase
         Contract Agent accompanied by a notice to the Purchase Contract Agent,
         substantially in the form of Exhibit C hereto, (i) stating that the
         Holder has deposited the relevant amount of Treasury Securities with
         the Securities Intermediary and (ii) requesting that the Purchase
         Contract Agent instruct the Collateral Agent to release the Notes
         underlying such New PEPS Units, whereupon the Purchase Contract Agent
         shall promptly provide an instruction to such effect to the Collateral
         Agent, substantially in the form of Exhibit A to the Pledge Agreement.

         Upon receipt of the Treasury Securities described in clause (i) above
and the instruction described in clause (ii) above, in accordance with the terms
of the Pledge Agreement, the Collateral Agent will cause the Securities
Intermediary to effect the release of such Notes from the Pledge, free and clear
of the Company's security interest

                                       28
<PAGE>
therein, and the transfer of such Notes to the Purchase Contract Agent on behalf
of the Holder. Upon receipt thereof, the Purchase Contract Agent shall promptly:

                  (i) cancel the related New PEPS Units;

                  (ii) transfer the Notes to the Holder; and

                  (iii) authenticate, execute on behalf of such Holder and
         deliver a Treasury Units Certificate executed by the Company in
         accordance with Section 3.03 evidencing the same number of Purchase
         Contracts as were evidenced by the cancelled New PEPS Units.

         Holders who elect to separate the Notes from the related Purchase
Contracts and to substitute Treasury Securities for such Notes, as the case may
be, shall be responsible for any fees or expenses payable to the Collateral
Agent for its services as Collateral Agent in connection with the substitution,
and the Company shall not be responsible for any such fees or expenses.

         Holders may make Collateral Substitutions only in integral multiples of
40 New PEPS Units.

         In the event a Holder making a Collateral Substitution pursuant to this
Section 3.13 fails to effect a book-entry transfer of the New PEPS Units or
fails to deliver New PEPS Units Certificates to the Purchase Contract Agent
after depositing Treasury Securities with the Collateral Agent, any interest on
the Notes constituting a part of such New PEPS Units, as the case may be, shall
be held in the name of the Purchase Contract Agent or its nominee in trust for
the benefit of such Holder, until such New PEPS Units are so transferred or the
New PEPS Units Certificate is so delivered, as the case may be, or, such Holder
provides evidence satisfactory to the Company and the Purchase Contract Agent
that such New PEPS Units Certificate has been destroyed, lost or stolen,
together with any indemnity that may be required by the Purchase Contract Agent
and the Company.

         Except as described in this Section 3.13, for so long as the Purchase
Contract underlying a New PEPS Unit remains in effect, such New PEPS Unit shall
not be separable into its constituent parts, and the rights and obligations of
the Holder in respect of the ownership interest in a Note, and the Purchase
Contract comprising such New PEPS Unit may be acquired, and may be transferred
and exchanged, only as a New PEPS Unit.

         SECTION 3.14. Reestablishment of New PEPS Units.

         Subject to the conditions set forth in this Agreement, a Holder of
Treasury Units may reestablish New PEPS Units at any time prior to or on the
seventh Business Day immediately preceding the Purchase Contract Settlement
Date, by:

                                       29
<PAGE>
                  (i) depositing with the Securities Intermediary Notes having
         an aggregate principal amount equal to the aggregate principal amount
         at maturity of the Treasury Securities comprising part of the Treasury
         Units; and

                  (ii) transferring the related Treasury Units to the Purchase
         Contract Agent accompanied by a notice to the Purchase Contract Agent,
         substantially in the form of Exhibit C hereto, (i) stating that the
         Holder has transferred the relevant amount of Notes to the Securities
         Intermediary and (ii) requesting that the Purchase Contract Agent
         instruct the Collateral Agent to release the Treasury Securities
         underlying such Treasury Units, whereupon the Purchase Contract Agent
         shall promptly provide an instruction to such effect to the Collateral
         Agent, substantially in the form of Exhibit C to the Pledge Agreement.

Upon receipt of the Notes described in clause (i) above and the instruction
described in clause (ii) above, in accordance with the terms of the Pledge
Agreement, the Collateral Agent will cause the Securities Intermediary to effect
the release of the Treasury Securities having a corresponding aggregate
principal amount at maturity from the Pledge, free and clear of the Company's
security interest therein, and the transfer to the Purchase Contract Agent on
behalf of the Holder. Upon receipt thereof, the Purchase Contract Agent shall
promptly:

                  (i) cancel the related Treasury Units;

                  (ii) transfer the Treasury Securities to the Holder; and

                  (iii) authenticate, execute on behalf of such Holder and
         deliver a New PEPS Units Certificate executed by the Company in
         accordance with Section 3.03 evidencing the same number of New PEPS
         Units as were evidenced by the cancelled Treasury Units.

         Holders who elect to reestablish New PEPS Units shall be responsible
for any fees or expenses payable to the Collateral Agent for its services as
Collateral Agent in respect of the reestablishment, and the Company shall not be
responsible for any such fees or expenses.

         Holders of Treasury Units may only reestablish New PEPS Units in
integral multiples of 40 Treasury Units.

         In the event a Holder re-establishing New PEPS Units pursuant to this
Section 3.14 fails to effect a book-entry transfer of the Treasury Units or
fails to deliver a New Treasury Unit Certificate to the Purchase Contract Agent
after depositing Notes with the Collateral Agent, the Treasury Securities
constituting a part of such Treasury Units shall be held in the name of the
Purchase Contract Agent or its nominee in trust for the benefit of such Holder,
until such Treasury Units are so transferred or the Treasury Unit Certificate is
so delivered, as the case may be, or, with respect to a Certificate for Treasury
Units, such Holder provides evidence satisfactory to the Company and the

                                       30
<PAGE>
Purchase Contract Agent that such Certificate has been destroyed, lost or
stolen, together with any indemnity that may be required by the Agent and the
Company.

         Except as provided in this Section 3.14, for so long as the Purchase
Contract underlying a Treasury Unit remains in effect, such Treasury Unit shall
not be separable into its constituent parts and the rights and obligations of
the Holder of such Treasury Unit in respect of the 1/40 undivided beneficial
ownership interest in a Treasury Security and the Purchase Contract comprising
such Treasury Unit may be acquired, and may be transferred and exchanged, only
as a Treasury Unit.

         SECTION 3.15. Transfer of Collateral upon Occurrence of Termination
Event.

         Upon the occurrence of a Termination Event and the transfer to the
Purchase Contract Agent of the Notes or the Treasury Securities, as the case may
be, underlying the New PEPS Units and the Treasury Units, as the case may be,
pursuant to the terms of the Pledge Agreement, the Purchase Contract Agent shall
request transfer instructions with respect to such Notes or Treasury Securities,
as the case may be, from each Holder by written request, substantially in the
form of Exhibit D hereto, mailed to such Holder at its address as it appears in
the Security Register.

         Upon book-entry transfer of the New PEPS Units or the Treasury Units or
delivery of a New PEPS Units Certificate or Treasury Units Certificate to the
Purchase Contract Agent with such transfer instructions, the Purchase Contract
Agent shall transfer the Notes or Treasury Securities, as the case may be,
underlying such New PEPS Units or Treasury Units, as the case may be, to such
Holder by book-entry transfer, or other appropriate procedures, in accordance
with such instructions; provided, however, that, if a Holder of Treasury Units
would otherwise have been entitled to receive less than $1,000 principal amount
at maturity of any Treasury Security upon the occurrence of a Termination Event,
the Purchase Contract Agent will dispose of the security for cash and pay the
appropriate amount of such cash to such Holder in accordance with such Holder's
instructions; and provided, further, that upon release by the Collateral Agent
of Notes underlying the beneficial ownership interest in the Notes pledged to
secure the New PEPS Units holders' obligations under the related Purchase
Contracts (other than any release of the Notes in connection with the creation
of Treasury Units, an early settlement with separate cash, an early settlement
upon a cash merger, a notice to settle with cash or a remarketing, as described
in Sections 3.13, 5.08, 5.05(b)(2), 5.03(b) and 5.03(c), respectively) the Notes
will be issuable in denominations of $25 principal amount and integral multiples
thereof. In the event a Holder of New PEPS Units or Treasury Units fails to
effect such transfer or delivery, the Notes or Treasury Securities, as the case
may be, underlying such New PEPS Units or Treasury Units, as the case may be,
and any interest thereon, shall be held in the name of the Purchase Contract
Agent or its nominee in trust for the benefit of such Holder, until the earlier
to occur of:

                  (i) the transfer of such New PEPS Units or Treasury Units or
         surrender of the New PEPS Units Certificate or Treasury Units
         Certificate or

                                       31
<PAGE>
         receipt by the Company and the Purchase Contract Agent from such Holder
         of satisfactory evidence that such New PEPS Units Certificate or
         Treasury Units Certificate has been destroyed, lost or stolen, together
         with any indemnity that may be required by the Purchase Contract Agent
         and the Company; and

                  (ii) the expiration of the time period specified in the
         abandoned property laws of the relevant State.

         SECTION 3.16. No Consent to Assumption.

         Each Holder of a Security, by acceptance thereof, shall be deemed
expressly to have withheld any consent to the assumption under Section 365 of
the Bankruptcy Code or otherwise, of the Purchase Contract by the Company or its
trustee, receiver, liquidator or a person or entity performing similar functions
in the event that the Company becomes the debtor under the Bankruptcy Code or
subject to other similar state or Federal law providing for reorganization or
liquidation.

         SECTION 3.17. CUSIP Numbers.

         The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Purchase Contract Agent shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Purchase Contract Agent of any changes in the "CUSIP" numbers.

                                    ARTICLE 4
                                    THE NOTES

         SECTION 4.01. Interest Payments; Rights to Interest Payments Preserved.

         Any interest payment on a Note which is paid on any Payment Date shall,
subject to receipt thereof by the Purchase Contract Agent from the Collateral
Agent as provided by the terms of the Pledge Agreement, be paid to the Person in
whose name the New PEPS Units Certificate (or one or more Predecessor New PEPS
Units Certificates) is registered at the close of business on the Record Date
for such Payment Date; provided, however, that if any such payment is received
on a day that is not a Business Day or after 11:00 a.m. (New York City time) on
a Business Day, then the Purchase Contract Agent shall use all commercially
reasonable efforts to deliver any such payment not later than 10:30 a.m. (New
York City time) on the next succeeding Business Day.

                                       32

<PAGE>
      Each New PEPS Units Certificate evidencing the Notes delivered under this
Agreement upon registration of transfer of or in exchange for or in lieu of any
other New PEPS Units Certificate shall carry the right to interest accrued and
unpaid, and to accrue, which were carried by the Notes underlying such other New
PEPS Units Certificate.

      In the case of any New PEPS Units with respect to which Cash Settlement of
the underlying Purchase Contract is properly effected pursuant to Section 5.03
hereof, or with respect to which Early Settlement of the underlying Purchase
Contract is properly effected pursuant to Section 5.08 hereof, or with respect
to which a Collateral Substitution is effected, in each case on a date that is
after any Record Date and prior to or on the next succeeding Payment Date,
interest payments on the Note underlying such New PEPS Unit otherwise payable on
such Payment Date shall be payable on such Payment Date notwithstanding such
Cash Settlement or Early Settlement or Collateral Substitution, and such
interest payments shall, subject to receipt thereof by the Purchase Contract
Agent, be payable to the Person in whose name the New PEPS Units Certificate (or
one or more Predecessor New PEPS Units Certificates) was registered at the close
of business on the Record Date. Except as otherwise expressly provided in the
immediately preceding sentence, in the case of any New PEPS Unit with respect to
which Cash Settlement or Early Settlement of the underlying Purchase Contract is
properly effected, or with respect to which a Collateral Substitution has been
effected, interest payments on the related Notes that would otherwise be payable
after the Purchase Contract Settlement Date or Early Settlement Date or
Collateral Substitution shall not be payable hereunder to the Holder of such New
PEPS Units; provided, however, that to the extent that such Holder continues to
hold separated Notes that formerly comprised a part of such Holder's New PEPS
Units, such Holder shall be entitled to receive interest on such separated
Notes.

      The applicable Coupon Rate on the Notes on and after the Purchase Contract
Settlement Date will be reset in the case of a Successful Remarketing to the
applicable Reset Rate (such Reset Rate to be in effect on and after the Purchase
Contract Settlement Date). Following a Successful Remarketing and commencing on
August 18, 2004, the Reset Rate, as determined by the Calculation Agent on the
applicable Interest Determination Date, shall be reset quarterly on February 18,
May 18, August 18 and November 18 of each year. The Calculation Agent shall
determine each applicable Reset Rate in accordance with the definition of the
term "3-month LIBOR".

      The Calculation Agent's determination of any Reset Rate will be conclusive
and binding in the absence of any manifest error. The interest rate on the Notes
in effect for the period from and including May 18, 2004 to and excluding August
18, 2004 shall be determined by the Calculation Agent on the applicable Interest
Determination Date. After a Successful Remarketing, the interest rate in effect
after May 18, 2004 or on any Interest Reset Date will be the applicable Reset
Rate as reset on May 18, 2004 or on such Interest Reset Date, as the case may
be, and the interest rate applicable to any other day is the interest rate in
effect on May 18, 2004 or the immediately preceding Interest Reset Date, as the
case may be.

                                       33
<PAGE>
      In the event of a Failed Final Remarketing, the applicable Coupon Rate on
the Notes outstanding on and after the Purchase Contract Settlement Date will
not be reset and the Notes will continue to bear interest at the Coupon Rate (as
defined in clause (i) of the definition of such term).

      SECTION 4.01. Notice and Voting.

      Under the terms of the Pledge Agreement, the Purchase Contract Agent will
be entitled to exercise the voting and any other consensual rights pertaining to
the Pledged Notes, but only to the extent instructed in writing by the Holders
as described below. Upon receipt of notice of any meeting at which holders of
Notes are entitled to vote or upon any solicitation of consents, waivers or
proxies of holders of Notes, the Purchase Contract Agent shall, as soon as
practicable thereafter, mail, first class, postage pre-paid, to the Holders of
New PEPS Units a notice:

            (i)   containing such information as is contained in the notice or
      solicitation;

            (ii)  stating that each Holder on the record date set by the
      Purchase Contract Agent therefor (which, to the extent possible, shall be
      the same date as the record date for determining the holders of Notes
      entitled to vote) shall be entitled to instruct the Purchase Contract
      Agent as to the exercise of the voting rights pertaining to such Notes
      underlying their New PEPS Units; and

            (iii) stating the manner in which such instructions may be given.

Upon the written request of the Holders of New PEPS Units on such record date
received by the Purchase Contract Agent at least six days prior to such meeting,
the Purchase Contract Agent shall endeavor insofar as practicable to vote or
cause to be voted, in accordance with the instructions set forth in such
requests, the maximum number of Notes as to which any particular voting
instructions are received. In the absence of specific instructions from the
Holder of a New PEPS Unit, the Purchase Contract Agent shall abstain from voting
the Notes underlying such New PEPS Unit. The Company hereby agrees, if
applicable, to solicit Holders of New PEPS Units to timely instruct the Purchase
Contract Agent in order to enable the Purchase Contract Agent to vote such
Notes.

                                   ARTICLE 5
                             THE PURCHASE CONTRACTS

      SECTION 5.01. Purchase of Shares of Common Stock.

      Each Purchase Contract shall, unless a Cash Settlement has occurred in
accordance with Section 5.03 hereof or an Early Settlement has occurred in
accordance with Section 5.08 hereof, obligate the Holder of the related Security
to purchase, and the

                                       34
<PAGE>
Company to sell, on the Purchase Contract Settlement Date at a price equal to
the Stated Amount (the "PURCHASE PRICE"), a number of shares of Common Stock
(subject to Section 5.09) equal to the Settlement Rate unless, prior to or on
the Purchase Contract Settlement Date, there shall have occurred a Termination
Event with respect to the Security of which such Purchase Contract is a part.
The "SETTLEMENT RATE" is equal to:

            (i)   if the Applicable Market Value (as defined below) multiplied
      by 1.017 is greater than or equal to $65.03 (the "THRESHOLD APPRECIATION
      PRICE"), 0.3910 shares of Common Stock per Purchase Contract;

            (ii)  if the Applicable Market Value multiplied by 1.017 is less
      than the Threshold Appreciation Price but greater than $53.30 (the
      "REFERENCE PRICE"), the number of shares of Common Stock per Purchase
      Contract having a value, based on the Applicable Market Value, equal to
      the Stated Amount; and

            (iii) if the Applicable Market Value multiplied by 1.017 is less
      than or equal to the Reference Price, 0.4770 shares of Common Stock per
      Purchase Contract,

in each case, as determined by the Company and subject to adjustment as provided
in Section 5.05 (and in each case rounded upward or downward to the nearest
1/10,000th of a share). The Purchase Contract Agent shall have no responsibility
for determining the Settlement Rate. The Company shall notify the Purchase
Contract Agent of the Settlement Rate promptly after its determination thereof.

      The "APPLICABLE MARKET VALUE" means the average of the Closing Price per
share of Common Stock on each of the 20 consecutive Trading Days ending on the
third Trading Day immediately preceding the Purchase Contract Settlement Date.

      The "CLOSING PRICE" per share of Common Stock means, on any date of
determination:

            (i)   the closing sale price (or, if no closing sale price is
      reported, the reported last sale price) of the Common Stock on the NYSE on
      such date;

            (ii)  if the Common Stock is not listed for trading on the NYSE on
      any such date, the closing sale price per share as reported in the
      composite transactions for the principal United States securities exchange
      on which the Common Stock is so listed;

            (iii) if the Common Stock is not so listed on a United States
      national or regional securities exchange, the closing sale price per share
      as reported by The NASDAQ Stock Market, Inc.;

                                       35
<PAGE>
            (iv)  if the Common Stock is not so reported, the last quoted bid
      price for the Common Stock in the over-the-counter market as reported by
      the National Quotation Bureau or a similar organization; or

            (v)   if such bid price is not available, the average of the
      mid-point of the last bid and ask prices of the Common Stock on such date
      from at least three nationally recognized independent investment banking
      firms retained for this purpose by the Company.

      A "TRADING DAY" means a day on which the Common Stock (1) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (2) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of the Common
Stock.

      Each Holder of a New PEPS Unit or a Treasury Unit, by its acceptance
thereof:

            (i)   irrevocably authorizes the Purchase Contract Agent to enter
      into and perform the related Purchase Contract on its behalf as its
      attorney-in-fact (including the execution of Certificates on behalf of
      such Holder);

            (ii)  agrees to be bound by the terms and provisions thereof;

            (iii) covenants and agrees to perform its obligations under such
      Purchase Contracts;

            (iv)  consents to the provisions hereof;

            (v)   irrevocably authorizes the Purchase Contract Agent to enter
      into and perform this Agreement and the Pledge Agreement on its behalf as
      its attorney-in-fact; and

            (vi)  consents to, and agrees to be bound by, the Pledge of the
      Notes or the Treasury Securities pursuant to the Pledge Agreement,

provided that upon a Termination Event, the rights of the Holder of such
Security under the Purchase Contract may be enforced without regard to any other
rights or obligations. Each Holder of a New PEPS Unit or a Treasury Unit, by its
acceptance thereof, further covenants and agrees, that to the extent and in the
manner provided in Section 5.03 and the Pledge Agreement, but subject to the
terms thereof, payments in respect of the Notes or the proceeds from the
Treasury Securities at maturity on the Purchase Contract Settlement Date, as the
case may be, shall be paid by the Collateral Agent to the Company in
satisfaction of such Holder's obligations under such Purchase Contract and such
Holder shall acquire no right, title or interest in such payments.

                                       36
<PAGE>
      Upon registration of transfer of a Certificate, the transferee shall be
bound (without the necessity of any other action on the part of such transferee)
by the terms of this Agreement, the Purchase Contracts underlying such
Certificate and the Pledge Agreement and the transferor shall be released from
the obligations under this Agreement, the Purchase Contracts underlying the
Certificate so transferred and the Pledge Agreement. The Company covenants and
agrees, and each Holder of a Certificate, by its acceptance thereof, likewise
covenants and agrees, to be bound by the provisions of this paragraph.

      SECTION 5.02. Remarketing Agent.

      The Company shall engage a nationally recognized investment bank (the
"REMARKETING AGENT") pursuant to the Remarketing Agreement to sell the Notes of
the New PEPS Unit Holders on the fifth Business Day immediately preceding the
Purchase Contract Settlement Date, and, if necessary, on the fourth Business Day
immediately preceding the Purchase Contract Settlement Date and, if necessary,
on the third Business Day immediately preceding the Purchase Contract Settlement
Date.

      SECTION 5.02.A. Contract Adjustment Payments.

      (a) The Company shall pay, on each Payment Date, the Contract Adjustment
Payments payable in respect of each Purchase Contract to the Person in whose
name a Certificate (or one or more Predecessor Certificates) is registered at
the close of business on the Record Date next preceding such Payment Date in
such coin or currency of the United States as at the time of payment shall be
legal tender for payments. The Contract Adjustment Payments will be payable at
the New York Office maintained for that purpose or, at the option of the
Company, by check mailed to the address of the Person entitled thereto at such
Person's address as it appears on the Securities Register or by wire transfer to
the account designated by written notice by such Person delivered to the
Purchase Contract Agent at least 15 days prior to the applicable Payment Date.

      Upon the occurrence of a Termination Event, the Company's obligation to
pay Contract Adjustment Payments shall cease.

      Each Certificate delivered under this Agreement upon registration of
transfer of or in exchange for or in lieu of (including as a result of a
Collateral Substitution or the re-establishment of a New PEPS Unit) any other
Certificate shall carry the rights to any Contract Adjustment Payments, accrued
and unpaid, and to accrue, which were carried by the Purchase Contracts
underlying such other Certificates.

      Subject to Section 5.08, in the case of any Security with respect to which
Early Settlement of the underlying Purchase Contract is effected on an Early
Settlement Date, or in respect of which Cash Settlement of the underlying
Purchase Contract is effected on the sixth Business Day immediately preceding
the Purchase Contract Settlement Date, or with respect to which a Collateral
Substitution or a reestablishment of New PEPS Units pursuant to Section 3.14 is
effected, in each case on a date that is after any Record Date

                                       37
<PAGE>
and on or prior to the next succeeding Payment Date, Contract Adjustment
Payments on the Purchase Contracts underlying such Securities otherwise payable
on such Payment Date shall be payable on such Payment Date notwithstanding such
Cash Settlement, Early Settlement, Collateral Substitution or establishment or
reestablishment of New PEPS Units, and such Contract Adjustment Payments shall
be paid to the Person in whose name the Certificate evidencing such Security (or
one or more Predecessor Certificates) is registered at the close of business on
such Record Date. Except as otherwise expressly provided in the immediately
preceding sentence, in the case of any Security with respect to which Cash
Settlement or Early Settlement of the underlying Purchase Contract is effected
on the sixth Business Day immediately preceding the Purchase Contract Settlement
Date or on an Early Settlement Date, as the case may be, or with respect to
which a Collateral Substitution or an establishment or a reestablishment of New
PEPS Units has been effected, Contract Adjustment Payments that would otherwise
be payable after the Purchase Contract Settlement Date or Early Settlement Date,
Collateral Substitution or such establishment or reestablishment with respect to
such Purchase Contract shall not be payable.

      (b) The Company's obligations with respect to Contract Adjustment Payments
will be subordinated and junior in right of payment to the Company's obligations
under any Senior Indebtedness.

      (c) In the event (i) of any payment by, or distribution of assets of, the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution, winding-up, liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, or (ii) subject to the provisions of
Subsection 5.02.A(e) below, that (A) a default shall have occurred and be
continuing with respect to the payment of principal, interest or any other
monetary amounts due and payable on any Senior Indebtedness and such default
shall have continued beyond the period of grace, if any, specified in the
instrument evidencing such Senior Indebtedness (and the Purchase Contract Agent
shall have received written notice thereof from the Company or one or more
holders of Senior Indebtedness or their representative or representatives or the
trustee or trustees under any indenture pursuant to which any such Senior
Indebtedness may have been issued), or (B) the maturity of any Senior
Indebtedness shall have been accelerated because of a default in respect of such
Senior Indebtedness (and the Purchase Contract Agent shall have received written
notice thereof from the Company or one or more holders of Senior Indebtedness or
their representative or representatives or the trustee or trustees under any
indenture pursuant to which any such Senior Indebtedness may have been issued),
then:

            (1)   the holders of all Senior Indebtedness shall first be entitled
      to receive, in the case of (i) above, payment of all amounts due or to
      become due upon all Senior Indebtedness and, in the case of subclauses (A)
      and (B) of clause (ii) above, payment of all amounts due thereon, or
      provision shall be made for such payment in money or money's worth, before
      the Holders of any of the

                                       38
<PAGE>
      Securities are entitled to receive any Contract Adjustment Payments on the
      Purchase Contracts underlying the Securities;

            (2)   any payment by, or distribution of assets of, the Company of
      any kind or character, whether in cash, property or securities, to which
      the Holders of any of the Securities would be entitled except for the
      provisions of Subsections 5.02.A(b) through (n), including any such
      payment or distribution which may be payable or deliverable by reason of
      the payment of any other indebtedness of the Company being subordinated to
      the payment of such Contract Adjustment Payments on the Purchase Contracts
      underlying the Securities, shall be paid or delivered by the Person making
      such payment or distribution, whether a trustee in bankruptcy, a receiver
      or liquidating trustee or otherwise, directly to the holders of such
      Senior Indebtedness or their representative or representatives or to the
      trustee or trustees under any indenture under which any instruments
      evidencing any of such Senior Indebtedness may have been issued, ratably
      according to the aggregate amounts remaining unpaid on account of such
      Senior Indebtedness held or represented by each, to the extent necessary
      to make payment in full of all Senior Indebtedness remaining unpaid after
      giving effect to any concurrent payment or distribution (or provision
      therefor) to the holders of such Senior Indebtedness, before any payment
      or distribution is made of such Contract Adjustment Payments to the
      Holders of such Securities; and

            (3)   in the event that, notwithstanding the foregoing, any payment
      by, or distribution of assets of, the Company of any kind or character,
      whether in cash, property or securities, including any such payment or
      distribution which may be payable or deliverable by reason of the payment
      of any other indebtedness of the Company being subordinated to the payment
      of Contract Adjustment Payments on the Purchase Contracts underlying the
      Securities, shall be received by the Purchase Contract Agent or the
      Holders of any of the Securities when such payment or distribution is
      prohibited pursuant to Subsections 5.02.A(b) through (n), such payment or
      distribution shall be paid over to the holders of such Senior Indebtedness
      or their representative or representatives or to the trustee or trustees
      under any indenture pursuant to which any instruments evidencing any such
      Senior Indebtedness may have been issued, ratably as aforesaid, for
      application to the payment of all Senior Indebtedness remaining unpaid
      until all such Senior Indebtedness shall have been paid in full, after
      giving effect to any concurrent payment or distribution (or provision
      therefor) to the holders of such Senior Indebtedness.

      (d) For purposes of Subsections 5.02.A(b) through (n), the words "cash,
property or securities" shall not be deemed to include shares of stock of the
Company as reorganized or readjusted, or securities of the Company or any other
Person provided for by a plan of reorganization or readjustment, the payment of
which is subordinated at least to the extent provided in Subsections 5.02.A(b)
through (n) with respect to such Contract Adjustment Payments on the Securities
to the payment of all Senior Indebtedness which

                                       39
<PAGE>
may at the time be outstanding; provided that (i) the indebtedness or guarantee
of indebtedness, as the case may be, that constitutes Senior Indebtedness is
assumed by the Person, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the holders of the Senior Indebtedness are
not, without the consent of each such holder adversely affected thereby, altered
by such reorganization or readjustment.

      (e) Any failure by the Company to make any payment on or perform any other
obligation under Senior Indebtedness, other than any indebtedness incurred by
the Company or assumed or guaranteed, directly or indirectly, by the Company for
money borrowed (or any deferral, renewal, extension or refunding thereof) or any
indebtedness or obligation as to which the provisions of this subsection (e)
shall have been waived by the Company in the instrument or instruments by which
the Company incurred, assumed, guaranteed or otherwise created such indebtedness
or obligation, shall not be deemed a default or event of default if (i) the
Company shall be disputing its obligation to make such payment or perform such
obligation and (ii) either (A) no final judgment relating to such dispute shall
have been issued against the Company which is in full force and effect and is
not subject to further review, including a judgment that has become final by
reason of the expiration of the time within which a party may seek further
appeal or review, and (B) in the event of a judgment that is subject to further
review or appeal has been issued, the Company shall in good faith be prosecuting
an appeal or other proceeding for review and a stay of execution shall have been
obtained pending such appeal or review.

      (f) Subject to the payment in full of all Senior Indebtedness, the Holders
of the Securities shall be subrogated (equally and ratably with the holders of
all obligations of the Company which by their express terms are subordinated to
Senior Indebtedness of the Company to the same extent as payment of the Contract
Adjustment Payments in respect of the Purchase Contracts underlying the
Securities is subordinated and which are entitled to like rights of subrogation)
to the rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company applicable to the
Senior Indebtedness until all such Contract Adjustment Payments owing on the
Securities shall be paid in full, and as between the Company, its creditors
other than holders of such Senior Indebtedness and the Holders, no such payment
or distribution made to the holders of Senior Indebtedness by virtue of
Subsections 5.02.A(b) through (n) that otherwise would have been made to the
Holders shall be deemed to be a payment by the Company on account of such Senior
Indebtedness, it being understood that the provisions of Subsections 5.02.A(b)
through (n) are and are intended solely for the purpose of defining the relative
rights of the Holders, on the one hand, and the holders of Senior Indebtedness,
on the other hand.

      (g) Nothing contained in Subsections 5.02.A(b) through (n) or elsewhere in
this Agreement or in the Securities is intended to or shall impair, as among the
Company, its creditors other than the holders of Senior Indebtedness and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders such Contract Adjustment Payments on the Securities as and
when the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights

                                       40
<PAGE>
of the Holders and creditors of the Company other than the holders of Senior
Indebtedness, nor shall anything herein or therein prevent the Agent or any
Holder from exercising all remedies otherwise permitted by applicable law upon
default under this Agreement, subject to the rights, if any, under these
Subsections 5.02.A(b) through (n), of the Holders of Senior Indebtedness in
respect of cash, property or securities of the Company received upon the
exercise of any such remedy.

      (h) Upon payment or distribution of assets of the Company referred to in
these Subsections 5.02.A(b) through (n), the Purchase Contract Agent and the
Holders shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which any such dissolution, winding up, liquidation or
reorganization proceeding affecting the affairs of the Company is pending or
upon a certificate of the trustee in bankruptcy, receiver, assignee for the
benefit of creditors, liquidating trustee or agent or other person making any
payment or distribution, delivered to the Purchase Contract Agent or to the
Holders, for the purpose of ascertaining the Persons entitled to participate in
such payment or distribution, the holders of the Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to these Subsections 5.02.A(b) through (n).

      (i) The Purchase Contract Agent shall be entitled to rely on the delivery
to it of a written notice by a Person representing himself to be a holder of
Senior Indebtedness (or a trustee or representative on behalf of such holder) to
establish that such notice has been given by a holder of Senior Indebtedness or
a trustee or representative on behalf of any such holder or holders. In the
event that the Purchase Contract Agent determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
Subsections 5.02.A(b) through (n), the Purchase Contract Agent may request such
Person to furnish evidence to the reasonable satisfaction of the Purchase
Contract Agent as to the amount of Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such Person under
Subsections 5.02.A(b) through (n), and, if such evidence is not furnished, the
Purchase Contract Agent may defer payment to such Person pending judicial
determination as to the right of such Person to receive such payment.

      (j) Nothing contained in Subsections 5.02.A(b) through (n) shall affect
the obligations of the Company to make, or prevent the Company from making,
payment of the Contract Adjustment Payments, except as otherwise provided in
these Subsections 5.02.A(b) through (n).

      (k) Each Holder of Securities, by his acceptance thereof, authorizes and
directs the Purchase Contract Agent on his, her or its behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in Subsections 5.02.A(b) through (n) and appoints the Purchase Contract
Agent as his, her or its attorney-in-fact, as the case may be, for any and all
such purposes.

                                       41
<PAGE>
      (l) The Company shall give prompt written notice to the Purchase Contract
Agent of any fact known to the Company that would prohibit the making of any
payment of moneys to or by the Purchase Contract Agent in respect of the
Securities pursuant to the provisions of this Section. Notwithstanding the
provisions of Subsections 5.02.A(b) through (e) or any other provisions of this
Agreement, the Purchase Contract Agent shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment of
moneys to or by the Agent, or the taking of any other action by the Purchase
Contract Agent, unless and until the Purchase Contract Agent shall have received
written notice thereof mailed or delivered to the Purchase Contract Agent at its
Institutional Trust Services department from the Company, any Holder, any paying
agent or the holder or representative of any Senior Indebtedness; provided that
if at least two Business Days prior to the date upon which by the terms hereof
any such moneys may become payable for any purpose, the Purchase Contract Agent
shall not have received with respect to such moneys the notice provided for in
this Section, then, anything herein contained to the contrary notwithstanding,
the Purchase Contract Agent shall have full power and authority to receive such
moneys and to apply the same to the purpose for which they were received and
shall not be affected by any notice to the contrary that may be received by it
within two Business Days prior to or on or after such date.

      (m) The Purchase Contract Agent in its individual capacity shall be
entitled to all the rights set forth in this Section with respect to any Senior
Indebtedness at the time held by it, to the same extent as any other holder of
Senior Indebtedness and nothing in this Agreement shall deprive the Purchase
Contract Agent of any of its rights as such holder.

      (n) No right of any present or future holder of any Senior Indebtedness to
enforce the subordination herein shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Company or by any
noncompliance by the Company with the terms, provisions and covenants of this
Agreement, regardless of any knowledge thereof which any such holder may have or
be otherwise charged with.

      (o) Nothing in this Section 5.02.A shall apply to claims of, or payments
to, the Purchase Contract Agent under or pursuant to Section 7.7.

      (p) With respect to the holders of Senior Indebtedness, (i) the duties and
obligations of the Purchase Contract Agent shall be determined solely by the
express provisions of this Agreement, (ii) the Purchase Contract Agent shall not
be liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, (iii) no implied covenants or
obligations shall be read into this Agreement against the Agent and (iv) the
Purchase Contract Agent shall not be deemed to be a fiduciary as to such
holders.

      SECTION 5.03. Payment of Purchase Price; Remarketing.

      (a) The Company will notify, not later than seven nor more than 15
calendar days prior to the fifth Business Day immediately preceding the Purchase
Contract Settlement Date, Holders of New PEPS Units and Treasury Units of the
remarketing to take place on

                                       42
<PAGE>
the fifth Business Day immediately preceding the Purchase Contract Settlement
Date, and, if necessary, on the fourth Business Day immediately preceding the
Purchase Contract Settlement Date and, if necessary, on the third Business Day
immediately preceding the Purchase Contract Settlement Date (and, if such New
PEPS Units or Treasury Units are held in global form by DTC, the Company will
cause DTC to notify its participants).

      (b) (i) Unless a Termination Event has occurred or a Holder of a New PEPS
Unit effects an Early Settlement of the underlying Purchase Contract in the
manner described in Section 5.08, each Holder who intends to pay in cash to
satisfy such Holder's obligations under the Purchase Contract shall notify the
Purchase Contract Agent by use of a notice in substantially the form of Exhibit
E hereto of his intention to pay in cash ("CASH SETTLEMENT") the Purchase Price
for the shares of Common Stock to be purchased pursuant to the related Purchase
Contract. Such notice shall be given prior to 5:00 p.m. (New York City time) on
the seventh Business Day immediately preceding the Purchase Contract Settlement
Date. Prior to 11:00 a.m. (New York City time) on the next succeeding Business
Day, the Purchase Contract Agent shall notify the Collateral Agent and the
Indenture Trustee of the receipt of such notices from Holders intending to make
a Cash Settlement.

      (ii)  A Holder of a New PEPS Unit who has so notified the Purchase
Contract Agent of his intention to effect a Cash Settlement in accordance with
paragraph 5.03(b)(i) above shall pay the Purchase Price to the Securities
Intermediary for deposit in the Collateral Account prior to 11:00 a.m. (New York
City time) on the sixth Business Day immediately preceding the Purchase Contract
Settlement Date, in lawful money of the United States by certified or cashiers'
check or wire transfer, in each case in immediately available funds payable to
or upon the order of the Securities Intermediary. Any cash received by the
Collateral Agent shall be invested promptly by the Securities Intermediary in
Permitted Investments and paid to the Company on the Purchase Contract
Settlement Date in settlement of the Purchase Contracts in accordance with the
terms of this Agreement and the Pledge Agreement. Any funds received by the
Securities Intermediary in respect of the investment earnings from such
Permitted Investments in excess of the Purchase Price for the shares of Common
Stock to be purchased by such Holder shall be distributed to the Purchase
Contract Agent when received for payment to the Holder.

      (iii) If a Holder of a New PEPS Unit fails to notify the Purchase Contract
Agent of his intention to make a Cash Settlement in accordance with paragraph
5.03(b)(i) above, or has notified the Purchase Contract Agent but fails to pay
the Purchase Price to the Securities Intermediary in accordance with paragraph
5.03(b)(ii) above, such Holder shall be deemed to have consented to the
disposition of the Pledged Notes pursuant to the Remarketing as described in
paragraph 5.03(c) below.

      (c) The Notes of New PEPS Unit Holders who have not notified the Purchase
Contract Agent of their intention to effect a Cash Settlement as provided in
paragraph

                                       43
<PAGE>
5.03(b)(i) above or have failed to pay the Purchase Price to the Securities
Intermediary in accordance with paragraph 5.03(b)(ii) above will be sold by the
Remarketing Agent (the "REMARKETING") on the fifth Business Day immediately
preceding the Purchase Contract Settlement Date, and, if necessary, on the
fourth Business Day immediately preceding the Purchase Contract Settlement Date
and, if necessary, on the third Business Day immediately preceding the Purchase
Contract Settlement Date. The Purchase Contract Agent shall notify, by noon, New
York City time, on the sixth Business Day immediately preceding the Purchase
Contract Settlement Date, the Remarketing Agent, the Collateral Agent, the
Indenture Trustee and the Company of the aggregate principal amount of Notes
that are part of New PEPS Units to be remarketed, such notice to be
substantially in the form of Exhibit F hereto. Concurrently, the Collateral
Agent, pursuant to the terms of the Pledge Agreement, will present for
remarketing such Notes to the Remarketing Agent. Upon receipt of such notice
from the Purchase Contract Agent and such Notes from the Collateral Agent, the
Remarketing Agent will use its reasonable efforts to remarket the Remarketed
Notes, at a price of approximately 100.5% (but not less than 100%) of the
aggregate principal amount of such Remarketed Notes, on the fifth Business Day
immediately preceding the Purchase Contract Settlement Date and, if the
remarketing on such date fails, on the fourth Business Day immediately preceding
the Purchase Contract Settlement Date and, if the remarketing on such date
fails, on the third Business Day immediately preceding the Purchase Contract
Settlement Date. If the Remarketing Agent is able to remarket the Remarketed
Notes at a price equal to or greater than 100% of the aggregate principal amount
of the Remarketed Notes (a "SUCCESSFUL REMARKETING"), the Remarketing Agent will
remit the entire amount of the proceeds derived from the Successful Remarketing
of the Notes that were components of New PEPS Units to the Collateral Agent;
provided, however, that the Remarketing Agent may deduct as the remarketing fee
("REMARKETING FEE"), an amount not exceeding 25 basis points (0.25%) of the
aggregate principal amount of the Remarketed Notes from any amount of the
proceeds of a Successful Remarketing in excess of the aggregate principal amount
of the Remarketed Notes. The portion of the proceeds equal to the aggregate
principal amount of the Remarketed Notes that were components of New PEPS Units
will automatically be applied by the Collateral Agent, in accordance with the
Pledge Agreement, to satisfy in full such New PEPS Units Holders' obligations to
pay the Purchase Price for the Common Stock under the related Purchase Contracts
on the Purchase Contract Settlement Date. Any proceeds in excess of those
required to pay the Purchase Price and the Remarketing Fee will be remitted to
the Purchase Contract Agent for payment to the Holders of the related New PEPS
Units. New PEPS Units Holders whose Notes are so remarketed will not otherwise
be responsible for the payment of any Remarketing Fee in connection therewith.
If, (i) in spite of using its reasonable efforts, the Remarketing Agent cannot
remarket the related Remarketed Notes (other than to the Company), of such
Holders of New PEPS Units at a price not less than 100% of the aggregate
principal amount of the Remarketed Notes on or before the third Business Day
immediately preceding the Purchase Contract Settlement Date or (ii) the
remarketing has not occurred because a condition precedent to the remarketing
has not been fulfilled, the remarketing will be deemed to have failed (a "FAILED
FINAL REMARKETING") and in accordance with the terms of the Pledge Agreement the
Collateral Agent for the benefit

                                       44
<PAGE>
of the Company will exercise its rights as a secured party with respect to such
Notes that were components of New PEPS Units including those actions specified
in paragraph (e) below.

      (d) If there is no Successful Remarketing on May 11, 2004, the Company
will cause a notice of the failure of Remarketing of the Notes to be published
before 9:00 a.m., New York City time, on May 12, 2004 and another Remarketing
will be attempted on that day. If there has not been a Successful Remarketing on
May 12, 2004, the Company will cause a notice of the failure of Remarketing of
the Notes to be published before 9:00 a.m., New York City time, on May 13, 2004
and another Remarketing will be attempted on that day. If there has not been a
Successful Remarketing on May 13, 2004, the Company will cause a notice of the
failure of Remarketing of the Notes to be published before 9:00 a.m., New York
City time, on May 14, 2004. Notices to be published under this paragraph will be
validly published by making a timely release to any appropriate news agency,
including Bloomberg Business News and the Dow Jones News Service, or by
publication in a daily newspaper in the English language of general circulation
in The City of New York, which is expected to be The Wall Street Journal.

      (e) With respect to Notes, which are subject to a Failed Final
Remarketing, the Collateral Agent for the benefit of the Company reserves all of
its rights as a secured party with respect thereto and, subject to applicable
law and paragraph (i) below, may, among other things, (i) retain the Notes or
(ii) sell the Notes in one or more public or private sales, each in full
satisfaction of the Holders' obligations under the Purchase Contracts.

      (f) Unless a Termination Event or an Early Settlement has occurred, the
Purchase Contract underlying each Treasury Unit and will be settled with the
Proceeds at maturity of the Treasury Security. Upon receipt of such Proceeds,
the Collateral Agent will invest the Proceeds promptly in Permitted Investments
and pay the Proceeds to the Company on the Purchase Contract Settlement Date in
accordance with the terms of this Agreement and the Pledge Agreement. Any such
Proceeds received by the Collateral Agent in excess of the Purchase Price and
any funds received by the Collateral Agent in respect of the investment earnings
from the investment in such Permitted Investments will be distributed to the
Purchase Contract Agent when received for payment to the Holder.

      (g) Any distribution to Holders of excess funds and interest described
above, shall be payable at the New York Office maintained for that purpose or,
at the option of the Holder, by check mailed to the address of the Person
entitled thereto at such address as it appears on the Security Register or, at
the option of the Company, by wire transfer to the bank account designated by
such Holder in writing, such payments to be made to the same Persons entitled to
receive Common Stock with respect to Purchase Contracts referred to in
Subsection (f) above.

      (h) (i) Unless a Holder of a Treasury Units effects an Early Settlement of
the underlying Purchase Contract

                                       45
<PAGE>
through the early delivery of cash to the Purchase Contract Agent in the manner
described in Section 5.08, each Holder of a Treasury Unit who intends to pay in
cash shall notify the Purchase Contract Agent by use of a notice in
substantially the form of Exhibit E hereto of his intention to pay in cash the
Purchase Price for the shares of Common Stock to be purchased pursuant to the
related Purchase Contract. Such notice shall be given prior to 5:00 p.m. (New
York City time) on the second Business Day immediately preceding the Purchase
Contract Settlement Date. Prior to 11:00 a.m. (New York City time) on the next
succeeding Business Day, the Purchase Contract Agent shall notify the Collateral
Agent of the receipt of such notices from such Holders intending to make a Cash
Settlement. Treasury Unit holders may make Cash Settlements only in integral
multiples of 40 Treasury Units.

      (ii)  A Holder of a Treasury Unit who has so notified the Purchase
Contract Agent of his intention to make a Cash Settlement in accordance with
paragraph 5.03(h)(i) above shall pay the Purchase Price to the Securities
Intermediary for deposit in the Collateral Account prior to 11:00 a.m. (New York
City time) on the Business Day immediately preceding the Purchase Contract
Settlement Date, in lawful money of the United States by certified or cashiers'
check or wire transfer, in each case in immediately available funds payable to
or upon the order of the Securities Intermediary. Any cash received by the
Collateral Agent shall be invested promptly by the Securities Intermediary in
Permitted Investments and paid to the Company on the Purchase Contract
Settlement Date in settlement of the Purchase Contract in accordance with the
terms of this Agreement and the Pledge Agreement. Any funds received by the
Securities Intermediary in respect of the investment earnings from the
investment in such Permitted Investments in excess of the Purchase Price for the
shares of common stock to be purchased by such Holder shall be distributed to
the Purchase Contract Agent when received for payment to the Holder.

      (iii) If a Holder of a Treasury Unit fails to notify the Purchase Contract
Agent of his intention to make a Cash Settlement in accordance with paragraph
5.03(h)(i) above, or does notify the Purchase Contract Agent as provided in
paragraph 5.03(h)(i) above of his intention to pay the Purchase Price in cash,
but fails to make such payment as required by paragraph 5.03(h)(ii) above, then
upon the maturity of the Pledged Treasury Securities held by the Securities
Intermediary on the Business Day immediately preceding the Purchase Contract
Settlement Date, the principal amount of the Treasury Securities received by the
Securities Intermediary shall be invested promptly in Permitted Investments. On
the Purchase Contract Settlement Date, an amount equal to the Purchase Price
shall be remitted to the Company as payment thereof without receiving any
instructions from the Holder. In the event the sum of the proceeds from the
related Pledged Treasury Securities and the investment earnings earned from such
investments is in excess of the aggregate Purchase Price of the Purchase
Contracts being settled thereby, the Collateral Agent shall cause the Securities
Intermediary to distribute such excess to the Purchase Contract Agent for the
benefit of the Holder of the related Treasury Unit when received.

                                       46
<PAGE>
      (iv)  A holder of a Note that is no longer part of a New PEPS Unit may
elect to have such Note remarketed pursuant to Section 5.7(c) of the Pledge
Agreement.

      (i) Upon Cash Settlement of any Purchase Contract:

            (i)   the Collateral Agent will in accordance with the terms of the
      Pledge Agreement cause the Pledged Notes or the Pledged Treasury
      Securities, as the case may be, underlying the relevant Security to be
      released from the Pledge, free and clear of any security interest of the
      Company, and transferred to the Purchase Contract Agent for delivery to
      the Holder thereof or its designee as soon as practicable; and

            (ii)  subject to the receipt thereof, the Purchase Contract Agent
      shall, by book-entry transfer or other appropriate procedures, in
      accordance with written instructions provided by the Holder thereof,
      transfer such Notes or such Treasury Securities, as the case may be (or,
      if no such instructions are given to the Purchase Contract Agent by the
      Holder, the Purchase Contract Agent shall hold such Notes or such Treasury
      Securities, as the case may be, and any interest payment thereon, in the
      name of the Purchase Contract Agent or its nominee in trust for the
      benefit of such Holder until the expiration of the time period specified
      in the abandoned property laws of the relevant state).

      (j) The obligations of the Holders to pay the Purchase Price are
non-recourse obligations and, except to the extent satisfied by Early Settlement
or Cash Settlement, are payable solely out of the proceeds of any Collateral
pledged to secure the obligations of the Holders and in no event will Holders be
liable for any deficiency between the proceeds of the disposition of Collateral
and the Purchase Price.

      SECTION 5.03.A. Failed Final Remarketing.

      If a Failed Final Remarketing occurs Holders of Notes that are not part of
a New PEPS Unit will retain possession of their Notes, and the Coupon Rate will
not be reset and the Notes will continue to bear interest at the Coupon Rate (as
defined in clause (i) of the definition of such term).

      SECTION 5.04. Issuance of Shares of Common Stock.

      Unless a Termination Event or an Early Settlement shall have occurred,
subject to Section 5.05(b), on the Purchase Contract Settlement Date upon
receipt of the aggregate Purchase Price payable on all Outstanding Securities,
the Company shall issue and deposit with the Purchase Contract Agent, for the
benefit of the Holders of the Outstanding Securities, one or more certificates
representing the shares of Common Stock registered in the name of the Purchase
Contract Agent (or its nominee) as custodian for the Holders (such certificates
for shares of Common Stock, together with any dividends or distributions for
which a record date and payment date for such dividend or distribution has
occurred after the Purchase Contract Settlement Date, being hereinafter

                                       47
<PAGE>
      referred to as the "PURCHASE CONTRACT SETTLEMENT FUND") to which the
      Holders are entitled hereunder.

      Subject to the foregoing, upon surrender of a Certificate to the Purchase
Contract Agent on or after the Purchase Contract Settlement Date, together with
settlement instructions thereon duly completed and executed, the Holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Common Stock which such Holder is
entitled to receive pursuant to the provisions of this Article Five (after
taking into account all Securities then held by such Holder), together with cash
in lieu of fractional shares as provided in Section 5.09 and any dividends or
distributions with respect to such shares constituting part of the Purchase
Contract Settlement Fund, but without any interest thereon, and the Certificate
so surrendered shall be cancelled. Such shares shall be registered in the name
of the Holder or the Holder's designee as specified in the settlement
instructions provided by the Holder to the Purchase Contract Agent. If any
shares of Common Stock issued in respect of a Purchase Contract are to be
registered to a Person other than the Person in whose name the Certificate
evidencing such Purchase Contract is registered, no such registration shall be
made unless the Person requesting such registration has paid any transfer and
other taxes required by reason of such registration in a name other than that of
the registered Holder of the Certificate evidencing such Purchase Contract or
has established to the satisfaction of the Company that such tax either has been
paid or is not payable.

      SECTION 5.05. Adjustment of Settlement Rate.

      (a) Adjustments for Dividends, Distributions, Stock Splits, etc.

      (1) In case the Company shall pay or make a dividend or other distribution
on Common Stock in Common Stock, the Settlement Rate in effect at the opening of
business on the day following the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution shall be
increased by dividing such Settlement Rate by a fraction of which:

            (i)   the numerator shall be the number of shares of Common Stock
      outstanding at the close of business on the date fixed for such
      determination; and

            (ii)  the denominator shall be the sum of such number of shares and
      the total number of shares constituting such dividend or other
      distribution,

such increase to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purposes of
this paragraph (1), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall include
any shares issuable in respect of any scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company shall not pay any dividend or
make any distribution on shares of Common Stock held in the treasury of the
Company.

                                       48
<PAGE>
      (2) In case the Company shall issue rights, warrants or options to all
holders of its Common Stock (not being available on an equivalent basis to
Holders of the Securities upon settlement of the Purchase Contracts underlying
such Securities) entitling them, for a period expiring within 45 days after the
record date for the determination of shareholders entitled to receive such
rights, warrants or options, to subscribe for or purchase shares of Common Stock
at a price per share less than the Current Market Price per share of Common
Stock on the date fixed for the determination of shareholders entitled to
receive such rights, warrants or options the Settlement Rate in effect at the
opening of business on the day following the date fixed for such determination
shall be increased by dividing such Settlement Rate by a fraction of which:

            (i)   the numerator shall be the number of shares of Common Stock
      outstanding at the close of business on the date fixed for such
      determination plus the number of shares of Common Stock which the
      aggregate of the offering price of the total number of shares of Common
      Stock so offered for subscription or purchase would purchase at such
      Current Market Price; and

            (ii)  the denominator shall be the number of shares of Common Stock
      outstanding at the close of business on the date fixed for such
      determination plus the number of shares of Common Stock so offered for
      subscription or purchase,

such increase to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purposes of
this paragraph (2), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall include
any shares issuable in respect of any scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company agrees that it shall not issue
any such rights, warrants or options in respect of shares of Common Stock held
in the treasury of the Company.

      (3) In case outstanding shares of Common Stock shall be subdivided or
split into a greater number of shares of Common Stock, the Settlement Rate in
effect at the opening of business on the day following the day upon which such
subdivision or split becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Settlement Rate in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision, split or
combination becomes effective.

      (4) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness or assets (including
securities, but excluding any rights, warrants or options referred to in
paragraph (2) of this Section 5.05(a), any dividend or distribution paid
exclusively in cash and any dividend or distribution referred to in paragraph
(1) of this Section 5.05(a)), the Settlement Rate shall

                                       49
<PAGE>
be adjusted so that the same shall equal the rate determined by dividing the
Settlement Rate in effect immediately prior to the close of business on the date
fixed for the determination of shareholders entitled to receive such
distribution by a fraction of which:

            (i)   the numerator shall be the Current Market Price per share of
      Common Stock on the date fixed for such determination less the then fair
      market value (as reasonably determined by the Board of Directors, whose
      determination shall be conclusive and the basis for which shall be
      described in a Board Resolution) of the portion of the assets or evidences
      of indebtedness so distributed applicable to one share of Common Stock;
      and

            (ii)  the denominator shall be such Current Market Price per share
      of Common Stock,

such adjustment to become effective immediately prior to the opening of business
on the day following the date fixed for the determination of shareholders
entitled to receive such distribution. In any case in which this paragraph (4)
is applicable, paragraph (2) of this Section 5.05(a) shall not be applicable. In
the event that such dividend or distribution is not so paid or made, the
Settlement Rate shall again be adjusted to be the Settlement Rate which would
then be in effect if such dividend or distribution had not been declared.

      (5) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock after June 30, 2003 cash (excluding:

            (i)   any quarterly cash dividend on Common Stock to the extent that
      the aggregate cash dividend per share of Common Stock in any fiscal
      quarter does not exceed $0.265 per share (the "DIVIDEND THRESHOLD"); and

            (ii)  any dividend or distribution in connection with the
      liquidation, dissolution or termination of the Company, whether voluntary
      or involuntary),

then, in such case, the Settlement Rate shall be increased so that the same
shall equal the rate determined by dividing the Settlement Rate in effect
immediately prior to the close of business on such record date by a fraction of
which:

            (i)   the numerator shall be the Current Market Price of Common
      Stock on the record date less the amount of cash so distributed (and not
      excluded as provided above) applicable to one share of Common Stock; and

            (ii)  the denominator shall be the Current Market Price of Common
      Stock,

such increase to be effective immediately prior to the opening of business on
the day following the record date; provided, however, that in the event the
portion of cash so distributed applicable to one share of Common Stock is equal
to or greater than the Current Market Price per share of Common Stock on the
record date, in lieu of the

                                       50
<PAGE>
foregoing adjustment, adequate provision shall be made so that each holder of a
Security shall have the right to receive upon settlement of the Securities the
amount of cash such Holder would have received had such Holder settled each
Security on the record date. In the event that such dividend or distribution is
not so paid or made, the Settlement Rate shall again be adjusted to be the
Settlement Rate which would then be in effect if such dividend or distribution
had not been declared. If any adjustment is required to be made as set forth in
this Section 5.05(a)(5) as a result of a distribution that is a quarterly
dividend, such adjustment shall be based upon the amount by which such
distribution exceeds the amount of the Dividend Threshold. If an adjustment is
required to be made as set forth in this Section 5.05(a)(5) above as a result of
a distribution that is not a quarterly dividend, such adjustment shall be based
upon the full amount of the distribution.

      (6) In case a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of Common Stock shall expire
and such tender or exchange offer (as amended upon the expiration thereof) shall
require the payment to shareholders (based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of Purchased Shares as
herein defined) of an aggregate consideration having a fair market value (as
reasonably determined by the Board of Directors, whose determination shall be
conclusive and the basis for which shall be described in a Board Resolution)
that combined together with (I) the aggregate of the cash plus the fair market
value (as reasonably determined by the Board of Directors, whose determination
shall be conclusive and the basis for which shall be described in a Board
Resolution), as of the expiration of such tender or exchange offer, of
consideration payable in respect of any other tender or exchange offer, by the
Company or any subsidiary of the Company for all or any portion of Common Stock
expiring within the 12 months preceding the expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to this paragraph
(6) has been made, and (II) the aggregate amount of any distributions to all
holders of Common Stock made exclusively in cash within the 12 months preceding
the expiration of such tender or exchange offer and in respect of which no
adjustment pursuant to paragraph (6) has been made, exceeds 15% of the product
of the Current Market Price per share of Common Stock as of the last time (the
"EXPIRATION TIME") tenders could have been made pursuant to such tender or
exchange offer (as it may be amended) times the number of shares of Common Stock
outstanding (including any tendered shares) on the Expiration Time, then, and in
each such case, immediately prior to the opening of business on the day after
the date of the Expiration Time, the Settlement Rate shall be adjusted so that
the same shall equal the rate determined by dividing the Settlement Rate
immediately prior to the close of business on the date of the Expiration Time by
a fraction:

            (i)   the numerator of which shall be equal to (A) the product of
      (I) the Current Market Price per share of Common Stock on the date of the
      Expiration Time and (II) the number of shares of Common Stock outstanding
      (including any tendered shares) on the Expiration Time less (B) the amount
      of cash plus the fair market value (determined as aforesaid) of the
      aggregate consideration payable to

                                       51
<PAGE>
      shareholders based on the transactions described in clauses (I) and (II)
      above (assuming in the case of clause (I) the acceptance, up to any
      maximum specified in the terms of the tender or exchange offer, of
      Purchased Shares); and

            (ii)  the denominator of which shall be equal to the product of (A)
      the Current Market Price per share of Common Stock as of the Expiration
      Time and (B) the number of shares of Common Stock outstanding (including
      any tendered shares) as of the Expiration Time less the number of all
      shares validly tendered and not withdrawn as of the Expiration Time (the
      shares deemed so accepted, up to any such maximum, being referred to as
      the "PURCHASED SHARES").

      (7) The reclassification of Common Stock into securities including
securities other than Common Stock (other than any reclassification upon a
Reorganization Event to which Section 5.05(b) applies) shall be deemed to
involve:

            (i)   a distribution of such securities other than Common Stock to
      all holders of Common Stock (and the effective date of such
      reclassification shall be deemed to be "the date fixed for the
      determination of shareholders entitled to receive such distribution" and
      the "date fixed for such determination" within the meaning of paragraph
      (4) of this Section); and

            (ii)  a subdivision, split or combination, as the case may be, of
      the number of shares of Common Stock outstanding immediately prior to such
      reclassification into the number of shares of Common Stock outstanding
      immediately thereafter (and the effective date of such reclassification
      shall be deemed to be "the day upon which such subdivision or split
      becomes effective" or "the day upon which such combination becomes
      effective", as the case may be, and "the day upon which such subdivision,
      split or combination becomes effective" within the meaning of paragraph
      (3) of this Section).

      (8) The "CURRENT MARKET PRICE" per share of Common Stock on any day means
the average of the daily Closing Prices for the five consecutive Trading Days
selected by the Company commencing not more than 30 Trading Days before, and
ending not later than, the earlier of the day in question and the day before the
"ex date" with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "ex date," when used with
respect to any issuance or distribution, shall mean the first date on which
Common Stock trades on the applicable exchange or in the applicable market
without the right to receive such issuance or distribution.

      (9) All adjustments to the Settlement Rate shall be calculated to the
nearest 1/10,000th of a share of Common Stock (or if there is not a nearest
1/10,000th of a share, to the next lower 1/10,000th of a share). No adjustment
in the Settlement Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent thereof; provided, however, that
any adjustments which by reason of this subparagraph are not required to be made
shall be carried forward and taken into account in any subsequent adjustment. If
an adjustment is made to the Settlement Rate pursuant

                                       52
<PAGE>
to paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section 5.05(a),
an adjustment shall also be made to the Applicable Market Value solely to
determine which of clauses (i), (ii) or (iii) of the definition of Settlement
Rate in Section 5.01 will apply on the Purchase Contract Settlement Date. Such
adjustment shall be made by multiplying the Applicable Market Value by a
fraction of which the numerator shall be the Settlement Rate immediately after
such adjustment pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10)
of this Section 5.05(a) and the denominator shall be the Settlement Rate
immediately prior to such adjustment; provided, however, that if such adjustment
to the Settlement Rate is required to be made pursuant to the occurrence of any
of the events contemplated by paragraph (1), (2), (3), (4), (5), (6), (7) or
(10) of this Section 5.05(a) during the period taken into consideration for
determining the Applicable Market Value, appropriate and customary adjustments
shall be made to the Settlement Rate.

      (10) The Company may, but shall not be required to, make such increases in
the Settlement Rate, in addition to those required by this Section, as it
considers to be advisable in order to avoid or diminish any income tax to any
holders of shares of Common Stock resulting from any dividend or distribution of
stock or issuance of rights or warrants to purchase or subscribe for stock or
from any event treated as such for income tax purposes or for any other reason.

      (b) Adjustment for Consolidation, Merger or Other Reorganization Event.

      (1) In the event of:

            (i)   any consolidation or merger of the Company with or into
      another Person (other than a merger or consolidation in which the Company
      is the continuing corporation and in which the shares of Common Stock
      outstanding immediately prior to the merger or consolidation are not
      exchanged for cash, securities or other property of the Company or another
      Person);

            (ii)  any sale, transfer, lease or conveyance to another Person of
      the property of the Company as an entirety or substantially as an
      entirety;

            (iii) any statutory share exchange of the Company with another
      Person (other than in connection with a merger or acquisition); or

            (iv)  any liquidation, dissolution or termination of the Company
      other than as a result of or after the occurrence of a Termination Event
      (any such event, a "REORGANIZATION EVENT"),

the Settlement Rate will be adjusted to provide that each Holder of Securities
will receive on the Purchase Contract Settlement Date with respect to each
Purchase Contract forming a part thereof, the kind and amount of securities,
cash and other property receivable upon such Reorganization Event (without any
interest thereon, and without any right to dividends or distribution thereon
which have a record date that is prior to the Purchase Contract Settlement Date)
by a Holder of the number of shares of Common Stock

                                       53
<PAGE>
issuable on account of each Purchase Contract if the Purchase Contract
Settlement Date had occurred immediately prior to such Reorganization Event,
assuming such Holder of Common Stock is not a Person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be (any such Person,
a "CONSTITUENT PERSON"), or an Affiliate of a Constituent Person to the extent
such Reorganization Event provides for different treatment of Common Stock held
by Affiliates of the Company and non-affiliates and such Holder failed to
exercise his rights of election, if any, as to the kind or amount of securities,
cash and other property receivable upon such Reorganization Event (provided that
if the kind or amount of securities, cash and other property receivable upon
such Reorganization Event is not the same for each share of Common Stock held
immediately prior to such Reorganization Event by other than a Constituent
Person or an Affiliate thereof and in respect of which such rights of election
shall not have been exercised ("NON-ELECTING SHARE"), then for the purpose of
this Section the kind and amount of securities, cash and other property
receivable upon such Reorganization Event by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares).

In the event of such a Reorganization Event, the Person formed by such
consolidation, merger or exchange or the Person which acquires the assets of the
Company or, in the event of a liquidation, dissolution or termination of the
Company, the Company or a liquidating trust created in connection therewith,
shall execute and deliver to the Purchase Contract Agent an agreement
supplemental hereto providing that each Holder of an Outstanding Security shall
have the rights provided by this Section 5.05(b). Such supplemental agreement
shall provide for adjustments which, for events subsequent to the effective date
of such supplemental agreement, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section. The above
provisions of this Section shall similarly apply to successive Reorganization
Events.

      (2) In the event of a consolidation or merger of the Company with or into
another Person, any merger of another Person into the Company (other than a
merger that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock) in which 30% or more of the
total consideration paid to the Company's shareholders consists of cash or cash
equivalents, then a Holder of a Security may settle his Purchase Contract for
cash, only in integral multiples of 40 Purchase Contracts, as described in
Section 5.03(b)(i) or 5.03(h)(i) hereof, as applicable, during the one week
period beginning on the twenty-third Trading Day following the closing date of
such merger (the "EARLY SETTLEMENT WEEK"), at the applicable Settlement Rate.
For the purposes of this Section, the twenty-third Trading Day after the closing
of the merger or consolidation shall be deemed to be the Purchase Contract
Settlement Date for the purpose of determining the Applicable Market Value and
the deadline for submitting the notice to settle early and the related cash
payment shall be 5:00 p.m. (New York City time) of the last Business Day of the
Early Settlement Week.

                                       54
<PAGE>
      (c) All calculations and determinations pursuant to this Section 5.05
shall be made by the Company or its agent and the Purchase Contract Agent shall
have no responsibility with respect thereto.

      SECTION 5.06. Notice of Adjustments and Certain Other Events.

      (a) Whenever the Settlement Rate is adjusted as herein provided, the
Company shall:

            (i)   forthwith compute the adjusted Settlement Rate in accordance
      with Section 5.05 and prepare and transmit to the Purchase Contract Agent
      an Officers' Certificate setting forth the Settlement Rate, the method of
      calculation thereof in reasonable detail, and the facts requiring such
      adjustment and upon which such adjustment is based; and

            (ii)  within 10 Business Days following the occurrence of an event
      that requires an adjustment to the Settlement Rate pursuant to Section
      5.05 (or if the Company is not aware of such occurrence, as soon as
      practicable after becoming so aware), provide a written notice to the
      Holders of the Securities of the occurrence of such event and a statement
      in reasonable detail setting forth the method by which the adjustment to
      the Settlement Rate was determined and setting forth the adjusted
      Settlement Rate.

      (b) The Purchase Contract Agent shall not at any time be under any duty or
responsibility to any Holder of Securities to determine whether any facts exist
which may require any adjustment of the Settlement Rate, or with respect to the
nature or extent or calculation of any such adjustment when made, or with
respect to the method employed in making the same. The Purchase Contract Agent
shall not be accountable with respect to the validity or value (or the kind or
amount) of any shares of Common Stock, or of any securities or property, which
may at the time be issued or delivered with respect to any Purchase Contract;
and the Purchase Contract Agent makes no representation with respect thereto.
The Purchase Contract Agent shall not be responsible for any failure of the
Company to issue, transfer or deliver any shares of Common Stock pursuant to a
Purchase Contract or to comply with any of the duties, responsibilities or
covenants of the Company contained in this Article.

      SECTION 5.07. Termination Event; Notice.

      The Purchase Contracts and all obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights of the Holders
to receive and the obligation of the Company to pay Contract Adjustment
Payments, and the rights and obligations of Holders to purchase Common Stock,
shall immediately and automatically terminate, without the necessity of any
notice or action by any Holder, the Purchase Contract Agent or the Company, if,
prior to or on the Purchase Contract Settlement Date, a Termination Event shall
have occurred.

                                       55
<PAGE>
      Upon and after the occurrence of a Termination Event, the Securities shall
thereafter represent the right to receive the Notes or the Treasury Securities,
as the case may be, forming part of such Securities, in accordance with the
provisions of Section 5.2 and 5.3 of the Pledge Agreement. Upon the occurrence
of a Termination Event, the Company shall promptly but in no event later than
two Business Days thereafter give written notice to the Purchase Contract Agent,
the Collateral Agent, the Indenture Trustee and the Holders, at their addresses
as they appear in the Security Register.

      SECTION 5.08. Early Settlement.

      (a) Subject to and upon compliance with the provisions of this Section
5.08, at the option of the Holder thereof, Purchase Contracts underlying
Securities may be settled early ("EARLY SETTLEMENT") in the case of New PEPS
Units on or prior to 5:00 p.m. (New York City time) on the seventh Business Day
immediately preceding the Purchase Contract Settlement Date, and in the case of
Treasury Units on or prior to 5:00 p.m. (New York City time) on the second
Business Day immediately preceding the Purchase Contract Settlement Date, in
each case, as provided herein. Holders of Treasury Units or New PEPS Units may
only settle the related Purchase Contracts in integral multiples of 40 Purchase
Contracts. In order to exercise the right to effect Early Settlement with
respect to any Purchase Contracts, the Holder of the Certificate evidencing
Securities shall deliver to the Purchase Contract Agent at the Corporate Trust
Office an Election to Settle Early form (on the reverse side of the Certificate)
and any other documents requested by the Purchase Contract Agent and accompanied
by payment (payable to the Company in immediately available funds) in an amount
(the "EARLY SETTLEMENT AMOUNT") equal to (i) the product of (a) the Stated
Amount times (b) the number of Purchase Contracts with respect to which the
Holder has elected to effect Early Settlement, plus (ii) if such delivery is
made with respect to any Purchase Contracts during the period from the close of
business on any Record Date next preceding any Payment Date to the opening of
business on such Payment Date, an amount equal to the Contract Adjustment
Payments payable on such Payment Date with respect to such Purchase Contracts.

      Except as provided in the immediately preceding sentence, and subject to
the second to last paragraph of Section 5.02.A(a), no payment or adjustment
shall be made upon Early Settlement of any Purchase Contract on account of any
Contract Adjustment Payments accrued on such Purchase Contract or on account of
dividends on the Common Stock issued upon such Early Settlement. If the
foregoing requirements are first satisfied with respect to Purchase Contracts
underlying any Securities prior to or at 5:00 p.m. (New York City time) on a
Business Day, such day shall be the "EARLY SETTLEMENT DATE" with respect to such
Securities and if such requirements are first satisfied after 5:00 p.m. (New
York City time) on a Business Day or on a day that is not a Business Day, the
"EARLY SETTLEMENT DATE" with respect to such Securities shall be the next
succeeding Business Day.

                                       56
<PAGE>
      (b) Upon Early Settlement of Purchase Contracts by a Holder of the related
Securities, the Company shall issue, and the Holder shall be entitled to receive
0.3910 shares of Common Stock on account of each Purchase Contract as to which
Early Settlement is effected (the "EARLY SETTLEMENT RATE"); provided, however,
that upon the Early Settlement of the Purchase Contracts, the Holder of such
related Securities will forfeit the right to receive any future Contract
Adjustment Payments, except to the extent that the Early Settlement Date is
after the close of business on a Record Date and prior to the opening of
business on the corresponding Payment Date. The Early Settlement Rate shall be
adjusted in the same manner and at the same time as the Settlement Rate is
adjusted. No later than the third Business Day after the applicable Early
Settlement Date, the Company shall cause:

            (i)   upon receipt of the shares of Common Stock from the Company's
      Transfer Agent, the shares of Common Stock issuable upon Early Settlement
      of Purchase Contracts to be issued and delivered, together with payment in
      lieu of any fraction of a share, as provided in Section 5.09; and

            (ii)  the related Notes, in the case of New PEPS Units, or the
      related Treasury Securities, in the case of Treasury Units, to be released
      from the Pledge by the Collateral Agent and transferred, in each case, to
      the Purchase Contract Agent for delivery to the Holder thereof or its
      designee.

      (c) Upon Early Settlement of any Purchase Contracts, and subject to
receipt of shares of Common Stock from the Company and the Notes or Treasury
Securities, as the case may be, from the Securities Intermediary, as applicable,
the Purchase Contract Agent shall, in accordance with the instructions provided
by the Holder thereof on the Election to Settle Early form (on the reverse of
the Certificate evidencing the related Securities):

            (i)   transfer to the Holder the Notes or Treasury Securities, as
      the case may be, forming a part of such Securities; and

            (ii)  deliver to the Holder a certificate or certificates for the
      full number of shares of Common Stock issuable upon such Early Settlement,
      together with payment in lieu of any fraction of a share, as provided in
      Section 5.09.

      (d) In the event that Early Settlement is effected with respect to
Purchase Contracts underlying less than all the Securities evidenced by a
Certificate, upon such Early Settlement the Company shall execute and the
Purchase Contract Agent shall authenticate, countersign and deliver to the
Holder thereof, at the expense of the Company, a Certificate evidencing the
Securities as to which Early Settlement was not effected.

      (e) A Holder of a Security who effects Early Settlement may elect to have
the Notes no longer a part of New PEPS Units remarketed pursuant to Section
5.7(c) of the Pledge Agreement.

                                       57
<PAGE>
      SECTION 5.09. No Fractional Shares.

      No fractional shares or scrip representing fractional shares of Common
Stock shall be issued or delivered upon settlement on the Purchase Contract
Settlement Date or upon Early Settlement of any Purchase Contracts. If
Certificates evidencing more than one Purchase Contract shall be surrendered for
settlement at one time by the same Holder, the number of full shares of Common
Stock which shall be delivered upon settlement shall be computed on the basis of
the aggregate number of Purchase Contracts evidenced by the Certificates so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be deliverable upon settlement of any Purchase Contracts on the
Purchase Contract Settlement Date or upon Early Settlement, the Company, through
the Purchase Contract Agent, shall make a cash payment in respect of such
fractional interest in an amount equal to the value of such fractional shares
times the Applicable Market Value. All determinations pursuant to this Section
5.09 shall be made by the Company or its agent and notified to the Purchase
Contract Agent and the Purchase Contract Agent shall have no responsibility with
respect thereto. The Company shall provide the Purchase Contract Agent from time
to time with sufficient funds to permit the Purchase Contract Agent to make all
cash payments required by this Section 5.09 in a timely manner.

      SECTION 5.10. Charges and Taxes.

      The Company will pay all stock transfer and similar taxes attributable to
the initial issuance and delivery of the shares of Common Stock pursuant to the
Purchase Contracts; provided, however, that the Company shall not be required to
pay any such tax or taxes which may be payable in respect of any exchange of or
substitution for a Certificate evidencing a Security or any issuance of a share
of Common Stock in a name other than that of the registered Holder of a
Certificate surrendered in respect of the Securities evidenced thereby, other
than in the name of the Purchase Contract Agent, as custodian for such Holder,
and the Company shall not be required to issue or deliver such share
certificates or Certificates unless or until the Person or Persons requesting
the transfer or issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.

                                    ARTICLE 6
                                    Remedies

      SECTION 6.01. Unconditional Right of Holders to Receive Contract
Adjustment Payments and to Purchase Shares of Common Stock.

      Each Holder of a Security shall have the right, which is absolute and
unconditional (i) to receive payment of each installment of the Contract
Adjustment Payments with respect to the Purchase Contract constituting a part of
such Security on the respective Payment Date for such Security, and (ii) to
purchase shares of Common Stock pursuant to such Purchase Contract and, in each
such case, to institute suit for the

                                       58
<PAGE>
enforcement of such payment and the right to purchase shares of Common Stock,
and such rights shall not be impaired without the consent of such Holder.

      SECTION 6.02. Restoration of Rights and Remedies.

      If any Holder has instituted any proceeding to enforce any right or remedy
under this Agreement and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to such Holder, then and in every
such case, subject to any determination in such proceeding, the Company and such
Holder shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of such Holder shall continue
as though no such proceeding had been instituted.

      SECTION 6.03. Rights and Remedies Cumulative.

      Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Certificates in the last paragraph of
Section 3.10, no right or remedy herein conferred upon or reserved to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

      SECTION 6.04. Delay or Omission Not Waiver.

      No delay or omission of any Holder to exercise any right or remedy upon a
default shall impair any such right or remedy or constitute a waiver of any such
right. Every right and remedy given by this Article or by law to the Holders may
be exercised from time to time, and as often as may be deemed expedient, by such
Holders.

      SECTION 6.05. Undertaking for Costs.

      All parties to this Agreement agree, and each Holder of a Security, by its
acceptance of such Security shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy under this Agreement, or in any suit against the Purchase Contract Agent
for any action taken, suffered or omitted by it as Purchase Contract Agent, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and costs against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; provided that the provisions of this
Section shall not apply to any suit instituted by the Purchase Contract Agent,
to any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% of the Outstanding Securities, or to any suit instituted
by any Holder for the enforcement of interest on any Note or Contract Adjustment
Payments on any Purchase Contract on or after the respective Payment Date
therefor in respect of any Security held by such Holder,

                                       59
<PAGE>
or for enforcement of the right to purchase shares of Common Stock under the
Purchase Contracts constituting part of any Security held by such Holder.

      SECTION 6.06. Waiver of Stay or Extension Laws.

      The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Agreement; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Purchase Contract Agent or the Holders, but will
suffer and permit the execution of every such power as though no such law had
been enacted.

                                    ARTICLE 7
                           The Purchase Contract Agent

      SECTION 7.01. Certain Duties and Responsibilities.

      (a) The Purchase Contract Agent:

            (i) undertakes to perform, with respect to the Securities, such
      duties and only such duties as are specifically set forth in this
      Agreement and the Pledge Agreement, and no implied covenants or
      obligations shall be read into this Agreement or the Pledge Agreement
      against the Purchase Contract Agent; and

            (ii) in the absence of bad faith or gross negligence on its part,
      may, with respect to the Securities, conclusively rely, as to the truth of
      the statements and the correctness of the opinions expressed therein, upon
      certificates or opinions furnished to the Purchase Contract Agent and
      conforming to the requirements of this Agreement or the Pledge Agreement,
      as applicable, but in the case of any certificates or opinions which by
      any provision hereof are specifically required to be furnished to the
      Purchase Contract Agent, the Purchase Contract Agent shall be under a duty
      to examine the same to determine whether or not they conform to the
      requirements of this Agreement or the Pledge Agreement, as applicable (but
      need not confirm or investigate the accuracy of the mathematical
      calculations or other facts stated therein).

      (b) No provision of this Agreement or the Pledge Agreement shall be
construed to relieve the Purchase Contract Agent from liability for its own
grossly negligent action, its own grossly negligent failure to act, or its own
willful misconduct, except that:

            (i) this Subsection shall not be construed to limit the effect of
      Subsection (a) of this Section;

                                       60
<PAGE>
            (ii) the Purchase Contract Agent shall not be liable for any error
      of judgment made in good faith by a Responsible Officer, unless it shall
      be proved that the Purchase Contract Agent was grossly negligent in
      ascertaining the pertinent facts;

            (iii) no provision of this Agreement or the Pledge Agreement shall
      require the Purchase Contract Agent to expend or risk its own funds or
      otherwise incur any financial liability in the performance of any of its
      duties hereunder, or in the exercise of any of its rights or powers, if
      indemnity satisfactory to the Purchase Contract Agent is not provided to
      it; and

            (iv) the Purchase Contract Agent shall not be liable with respect to
      any action taken or omitted to be taken by it in good faith in accordance
      with the direction of the Holders of a majority in liquidation amount or
      principal amount, as the case may be, of the Outstanding Securities.

      (c) Whether or not therein expressly so provided, every provision of this
Agreement and the Pledge Agreement relating to the conduct or affecting the
liability of or affording protection to the Purchase Contract Agent shall be
subject to the provisions of this Section.

      (d) The Purchase Contract Agent is authorized to execute and deliver the
Pledge Agreement in its capacity as Purchase Contract Agent.

      SECTION 7.02. Notice of Default.

      Within 30 days after the occurrence of any default by the Company
hereunder of which a Responsible Officer of the Purchase Contract Agent has
actual knowledge, the Purchase Contract Agent shall transmit by mail to the
Company and the Holders of Securities, as their names and addresses appear in
the Security Register, notice of such default hereunder, unless such default
shall have been cured or waived.

      SECTION 7.03. Certain Rights of Purchase Contract Agent.

      Subject to the provisions of Section 7.01:

            (i) the Purchase Contract Agent may conclusively rely and shall be
      fully protected in acting or refraining from acting upon any resolution,
      certificate, statement, instrument, opinion, report, notice, request,
      direction, consent, order, bond, note, other evidence of indebtedness or
      other paper or document believed by it to be genuine and to have been
      signed or presented by the proper party or parties;

            (ii) any request or direction of the Company mentioned herein shall
      be sufficiently evidenced by an Officers' Certificate, Issuer Order or
      Issuer Request,

                                       61
<PAGE>
      and any resolution of the Board of Directors of the Company may be
      sufficiently evidenced by a Board Resolution;

            (iii) whenever in the administration of this Agreement or the Pledge
      Agreement the Purchase Contract Agent shall deem it desirable that a
      matter be proved or established prior to taking, suffering or omitting any
      action hereunder, the Purchase Contract Agent (unless other evidence be
      herein specifically prescribed) may, in the absence of bad faith on its
      part, conclusively rely upon an Officers' Certificate of the Company;

            (iv) the Purchase Contract Agent may consult with counsel of its
      selection and the advice of such counsel or any Opinion of Counsel shall
      be full and complete authorization and protection in respect of any action
      taken, suffered or omitted by it hereunder in good faith and in reliance
      thereon;

            (v) the Purchase Contract Agent shall not be bound to make any
      investigation into the facts or matters stated in any resolution,
      certificate, statement, instrument, opinion, report, notice, request,
      direction, consent, order, bond, debenture, note, other evidence of
      indebtedness or other paper or document, but the Purchase Contract Agent,
      in its discretion, and at the expense of the Company, may make reasonable
      further inquiry or investigation into such facts or matters related to the
      execution, delivery and performance of the Purchase Contracts as it may
      see fit, and, if the Purchase Contract Agent shall determine to make such
      further inquiry or investigation, it shall be given a reasonable
      opportunity to examine the relevant books, records and premises of the
      Company, personally or by agent or attorney and shall incur no liability
      or additional liability of any kind by reason of such inquiry or
      investigation;

            (vi) the Purchase Contract Agent may execute any of the powers
      hereunder or perform any duties hereunder either directly or by or through
      agents or attorneys or an Affiliate and the Purchase Contract Agent shall
      not be responsible for any misconduct or negligence on the part of any
      agent or attorney or an Affiliate appointed with due care by it hereunder;

            (vii) the Purchase Contract Agent shall be under no obligation to
      exercise any of the rights or powers vested in it by this Agreement at the
      request or direction of any of the Holders pursuant to this Agreement,
      unless such Holders shall have offered to the Purchase Contract Agent
      security or indemnity satisfactory to the Purchase Contract Agent against
      the costs, expenses and liabilities which might be incurred by it in
      compliance with such request or direction;

            (viii) the Purchase Contract Agent shall not be liable for any
      action taken, suffered, or omitted to be taken by it in good faith and
      reasonably believed by it to be authorized or within the discretion or
      rights or powers conferred upon it by this Agreement;

                                       62
<PAGE>
            (ix) the Purchase Contract Agent shall not be deemed to have notice
      of any default or event of default unless a Responsible Officer of the
      Purchase Contract Agent has actual knowledge thereof or unless written
      notice of any event which is in fact such a default is received by the
      Purchase Contract Agent at the Corporate Trust Office of the Purchase
      Contract Agent, and such notice references the Securities and this
      Agreement;

            (x) the Purchase Contract Agent may request that the Company deliver
      an Officers' Certificate setting forth the names of individuals and/or
      titles of officers authorized at such time to take specified actions
      pursuant to this Agreement, which Officers' Certificate may be signed by
      any person authorized to sign an Officers' Certificate, including any
      person specified as so authorized in any such certificate previously
      delivered and not superseded; and

            (xi) the rights, privileges, protections, immunities and benefits
      given to the Purchase Contract Agent, including, without limitation, its
      right to be indemnified, are extended to, and shall be enforceable by, the
      Purchase Contract Agent in each of its capacities hereunder, and to each
      agent, custodian and other Person employed to act hereunder.

      SECTION 7.04. Not Responsible for Recitals or Issuance of Securities.

      The recitals contained herein and in the Certificates shall be taken as
the statements of the Company, and the Purchase Contract Agent assumes no
responsibility for their accuracy. The Purchase Contract Agent makes no
representations as to the validity or sufficiency of either this Agreement or of
the Securities, or of the Pledge Agreement or the Pledge. The Purchase Contract
Agent shall not be accountable for the use or application by the Company of the
proceeds in respect of the Purchase Contracts.

      SECTION 7.05. May Hold Securities.

      Any Security Registrar or any other agent of the Company, or the Purchase
Contract Agent and its Affiliates, in their individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the
Company, the Collateral Agent or any other Person with the same rights it would
have if it were not Security Registrar or such other agent, or the Purchase
Contract Agent. The Company may become the owner or pledgee of Securities.

      SECTION 7.06. Money Held in Custody.

      Money held by the Purchase Contract Agent in custody hereunder need not be
segregated from the other funds except to the extent required by law or provided
herein. The Purchase Contract Agent shall be under no obligation to invest or
pay interest on any money received by it hereunder except as otherwise provided
hereunder agreed in writing with the Company.

                                       63
<PAGE>
      SECTION 7.07. Compensation and Reimbursement.

      The Company agrees:

            (i) to pay to the Purchase Contract Agent compensation for all
      services rendered by it hereunder and under the Pledge Agreement as the
      Company and the Purchase Contract Agent shall from time to time agree in
      writing;

            (ii) except as otherwise expressly provided for herein, to reimburse
      the Purchase Contract Agent upon its request for all reasonable expenses,
      disbursements and advances incurred or made by the Purchase Contract Agent
      in accordance with any provision of this Agreement or the Pledge Agreement
      (including the reasonable compensation and the expenses and disbursements
      of its agents and counsel), except any such expense, disbursement or
      advance as may be attributable to its gross negligence or willful
      misconduct; and

            (iii) to indemnify the Purchase Contract Agent and any predecessor
      Purchase Contract Agent for, and to hold it harmless against, any loss,
      liability or expense incurred without gross negligence or willful
      misconduct on its part, arising out of or in connection with the
      acceptance or administration of its duties hereunder, including the costs
      and expenses of defending itself against any claim (whether asserted by
      the Company, a Holder or any other Person) or liability in connection with
      the exercise or performance of any of its powers or duties hereunder.

      SECTION 7.08. Corporate Purchase Contract Agent Required; Eligibility.

      There shall at all times be a Purchase Contract Agent hereunder which
shall be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to exercise corporate trust powers, having (or being a member of
a bank holding company having) a combined capital and surplus of at least
$50,000,000, subject to supervision or examination by Federal or State authority
and having a corporate trust office in the Borough of Manhattan, New York City,
if there be such a corporation in the Borough of Manhattan, New York City,
qualified and eligible under this Article and willing to act on reasonable
terms. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Purchase Contract Agent shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.

                                       64
<PAGE>
      SECTION 7.09. Resignation and Removal; Appointment of Successor.

      (a) No resignation or removal of the Purchase Contract Agent and no
appointment of a successor Purchase Contract Agent pursuant to this Article
shall become effective until the acceptance of appointment by the successor
Purchase Contract Agent in accordance with the applicable requirements of
Section 7.10.

      (b) The Purchase Contract Agent may resign at any time by giving written
notice thereof to the Company 60 days prior to the effective date of such
resignation. If the instrument of acceptance by a successor Purchase Contract
Agent required by Section 7.10 shall not have been delivered to the Purchase
Contract Agent within 30 days after the giving of such notice of resignation,
the resigning Purchase Contract Agent may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
Purchase Contract Agent.

      (c) The Purchase Contract Agent may be removed at any time by Act of the
Holders of a majority in number of the Outstanding Securities delivered to the
Purchase Contract Agent and the Company.

      (d) If at any time:

            (i) the Purchase Contract Agent fails to comply with Section 310(b)
      of the TIA, as if the Purchase Contract Agent were an indenture trustee
      under an indenture qualified under the TIA, after written request therefor
      by the Company or by any Holder who has been a bona fide Holder of a
      Security for at least six months;

            (ii) the Purchase Contract Agent shall cease to be eligible under
      Section 7.08 and shall fail to resign after written request therefor by
      the Company or by any such Holder; or

            (iii) the Purchase Contract Agent shall become incapable of acting
      or shall be adjudged a bankrupt or insolvent or a receiver of the Purchase
      Contract Agent or of its property shall be appointed or any public officer
      shall take charge or control of the Purchase Contract Agent or of its
      property or affairs for the purpose of rehabilitation, conservation or
      liquidation,

then, in any such case, (i) the Company by a Board Resolution may remove the
Purchase Contract Agent, or (ii) any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Purchase Contract Agent and the appointment of a successor Purchase
Contract Agent.

      (e) If the Purchase Contract Agent shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Purchase
Contract Agent for any cause, the Company, by a Board Resolution, shall promptly
appoint a successor Purchase

                                       65
<PAGE>
Contract Agent and shall comply with the applicable requirements of Section
7.10. If no successor Purchase Contract Agent shall have been so appointed by
the Company and accepted appointment in the manner required by Section 7.10, any
Holder who has been a bona fide Holder of a Security for at least six months, on
behalf of itself and all others similarly situated, or the Purchase Contract
Agent may petition at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Purchase Contract Agent.

      (f) The Company shall give, or shall cause such successor Purchase
Contract Agent to give, notice of each resignation and each removal of the
Purchase Contract Agent and each appointment of a successor Purchase Contract
Agent by mailing written notice of such event by first-class mail, postage
prepaid, to all Holders as their names and addresses appear in the applicable
Register. Each notice shall include the name of the successor Purchase Contract
Agent and the address of its Corporate Trust Office.

      SECTION 7.10. Acceptance of Appointment by Successor.

      (a) In case of the appointment hereunder of a successor Purchase Contract
Agent, every such successor Purchase Contract Agent so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Purchase Contract
Agent an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Purchase Contract Agent shall become effective and such
successor Purchase Contract Agent, without any further act, deed or conveyance,
shall become vested with all the rights, powers, agencies and duties of the
retiring Purchase Contract Agent; but, on the request of the Company or the
successor Purchase Contract Agent, such retiring Purchase Contract Agent shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Purchase Contract Agent all the rights, powers and trusts of the
retiring Purchase Contract Agent and shall duly assign, transfer and deliver to
such successor Purchase Contract Agent all property and money held by such
retiring Purchase Contract Agent hereunder.

      (b) Upon request of any such successor Purchase Contract Agent, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Purchase Contract Agent all such
rights, powers and agencies referred to in paragraph 7.10(a).

      (c) No successor Purchase Contract Agent shall accept its appointment
unless at the time of such acceptance such successor Purchase Contract Agent
shall be qualified and eligible under this Article.

      SECTION 7.11. Merger, Conversion, Consolidation or Succession to Business.

      Any corporation into which the Purchase Contract Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Purchase Contract
Agent shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business

                                       66
<PAGE>
of the Purchase Contract Agent, shall be the successor of the Purchase Contract
Agent hereunder, provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Certificates
shall have been authenticated and executed on behalf of the Holders, but not
delivered, by the Purchase Contract Agent then in office, any successor by
merger, conversion or consolidation to such Purchase Contract Agent may adopt
such authentication and execution and deliver the Certificates so authenticated
and executed with the same effect as if such successor Purchase Contract Agent
had itself authenticated and executed such Securities.

      SECTION 7.12. Preservation of Information; Communications to Holders.

      (a) The Purchase Contract Agent shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders received by the
Purchase Contract Agent in its capacity as Security Registrar.

      (b) If three or more Holders (herein referred to as "APPLICANTS") apply in
writing to the Purchase Contract Agent, and furnish to the Purchase Contract
Agent reasonable proof that each such applicant has owned a Security for a
period of at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other Holders
with respect to their rights under this Agreement or under the Securities and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Purchase Contract Agent shall mail to
all the Holders copies of the form of proxy or other communication which is
specified in such request, with reasonable promptness after a tender to the
Purchase Contract Agent of the materials to be mailed and of payment, or
provision for the payment, of the reasonable expenses of such mailing.

      SECTION 7.13. No Obligations of Purchase Contract Agent.

      Except to the extent otherwise expressly provided in this Agreement, the
Purchase Contract Agent assumes no obligations and shall not be subject to any
liability under this Agreement, the Pledge Agreement or any Purchase Contract in
respect of the obligations of the Holder of any Security thereunder. The Company
agrees, and each Holder of a Certificate, by his acceptance thereof, shall be
deemed to have agreed, that the Purchase Contract Agent's execution of the
Certificates on behalf of the Holders shall be solely as agent and
attorney-in-fact for the Holders, and that the Purchase Contract Agent shall
have no obligation to perform such Purchase Contracts on behalf of the Holders,
except to the extent expressly provided in Article Five hereof. Anything
contained in this Agreement to the contrary notwithstanding, in no event shall
the Purchase Contract Agent or its officers, employees or agents be liable under
this Agreement for indirect, special, punitive, or consequential loss or damage
of any kind whatsoever, including lost profits, whether or not the likelihood of
such loss or damage was known to the Purchase Contract Agent and regardless of
the form of action.

                                       67
<PAGE>
      SECTION 7.14. Tax Compliance.

      (a) The Company and the Purchase Contract Agent will comply with all
applicable certification, information reporting and withholding (including
"backup" withholding) requirements imposed by applicable tax laws, regulations
or administrative practice with respect to (1) any payments made with respect to
the Securities or (2) the issuance, delivery, holding, transfer, redemption or
exercise of rights under the Securities. Such compliance shall include, without
limitation, the preparation and timely filing of required returns and the timely
payment of all amounts required to be withheld to the appropriate taxing
authority or its designated agent.

      (b) The Purchase Contract Agent shall comply in accordance with the terms
hereof with any written direction received from the Company with respect to the
execution or certification of any required documentation and the application of
such requirements to particular payments or Holders or in other particular
circumstances, and may for purposes of this Agreement conclusively rely on any
such direction in accordance with and subject to the provisions of Section
7.01(a)(ii) hereof.

      (c) The Purchase Contract Agent shall maintain all appropriate records
documenting compliance with such requirements, and shall make such records
available, on written request, to the Company or its authorized representative
within a reasonable period of time after receipt of such request.

                                    ARTICLE 8
                             Supplemental Agreements

      SECTION 8.01. Supplemental Agreements Without Consent of Holders.

      Without the consent of any Holders, the Company and the Purchase Contract
Agent, at any time and from time to time, may enter into one or more agreements
supplemental hereto, in form satisfactory to the Company and the Purchase
Contract Agent, to:

            (i) evidence the succession of another Person to the Company, and
      the assumption by any such successor of the covenants of the Company
      herein and in the Certificates;

            (ii) evidence and provide for the acceptance of appointment
      hereunder by a successor Purchase Contract Agent;

            (iii) add to the covenants of the Company for the benefit of the
      Holders, or surrender any right or power herein conferred upon the
      Company;

                                       68
<PAGE>
            (iv) make provision with respect to the rights of Holders pursuant
      to the requirements of Section 5.05(b); or

            (v) except as provided for in Section 5.05, cure any ambiguity,
      correct or supplement any provisions herein which may be inconsistent with
      any other provisions herein, or make any other provisions with respect to
      such matters or questions arising under this Agreement, provided such
      action shall not adversely affect the interests of the Holders.

      SECTION 8.02. Supplemental Agreements with Consent of Holders.

      With the consent of the Holders of not less than a majority of the
outstanding Securities voting together as one class, by Act of said Holders
delivered to the Company and the Purchase Contract Agent, the Company, when
authorized by a Board Resolution, and the Purchase Contract Agent may enter into
an agreement or agreements supplemental hereto for the purpose of modifying in
any manner the terms of the Purchase Contracts, or the provisions of this
Agreement or the rights of the Holders in respect of the Securities; provided,
however, that, except as contemplated herein, no such supplemental agreement
shall, without the unanimous consent of the Holders of each outstanding Purchase
Contract affected thereby:

            (i) change any Payment Date;

            (ii) change the amount or the type of Collateral required to be
      Pledged to secure a Holder's obligations under the Purchase Contract,
      impair the right of the Holder of any Purchase Contract to receive
      distributions on such Collateral (except for the rights of Holders of New
      PEPS Units to substitute Treasury Securities for the Pledged Notes or the
      rights of Holders or Treasury Units to substitute Notes for the Pledged
      Treasury Securities) or otherwise adversely affect the Holder's rights in
      or to such Collateral;

            (iii) reduce any Contract Adjustment Payments or change any place
      where, or the coin or currency in which, any Contract Adjustment Payment
      is payable;

            (iv) impair the right to institute suit for the enforcement of any
      Purchase Contract or any Contract Adjustment Payment;

            (v) reduce the number of shares of Common Stock to be purchased
      pursuant to any Purchase Contract, increase the price to purchase shares
      of Common Stock upon settlement of any Purchase Contract, change the
      Purchase Contract Settlement Date or otherwise adversely affect the
      Holder's rights under a Purchase Contract; or

            (vi) reduce the percentage of the outstanding Purchase Contracts the
      consent of whose Holders is required for any such supplemental agreement,

                                       69
<PAGE>
provided that if any amendment or proposal referred to above would adversely
affect only the New PEPS Units or only the Treasury Units, then only the
affected class of Holders as of the record date for the Holders entitled to vote
thereon will be entitled to vote on such amendment or proposal, and such
amendment or proposal shall not be effective except with the consent of Holders
of not less than a majority of such class; and provided, further, that the
unanimous consent of the Holders of each outstanding Purchase Contract of such
class affected thereby shall be required to approve any amendment or proposal
specified in clauses (1) through (6) above.

      It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental agreement, but it shall
be sufficient if such Act shall approve the substance thereof.

      SECTION 8.03. Execution of Supplemental Agreements.

      In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by this Agreement, the Purchase Contract Agent shall be
provided, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that the
execution of such supplemental agreement is authorized or permitted by this
Agreement and that all conditions precedent to the execution and delivery of
such supplemental agreement have been satisfied. The Purchase Contract Agent
may, but shall not be obligated to, enter into any such supplemental agreement
which affects the Purchase Contract Agent's own rights, duties or immunities
under this Agreement or otherwise.

      SECTION 8.04. Effect of Supplemental Agreements.

      Upon the execution of any supplemental agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every Holder
of Certificates theretofore or thereafter authenticated, executed on behalf of
the Holders and delivered hereunder, shall be bound thereby.

      SECTION 8.05. Reference to Supplemental Agreements.

      Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any supplemental agreement pursuant to this
Article may, and shall if required by the Purchase Contract Agent, bear a
notation in form approved by the Purchase Contract Agent as to any matter
provided for in such supplemental agreement. If the Company shall so determine,
new Certificates so modified as to conform, in the opinion of the Purchase
Contract Agent and the Company, to any such supplemental agreement may be
prepared and executed by the Company and authenticated, executed on behalf of
the Holders and delivered by the Purchase Contract Agent in exchange for
outstanding Certificates.

                                       70
<PAGE>
                                    ARTICLE 9
            Merger, Consolidation, Share Exchange, Sale or Conveyance

      SECTION 9.01. Covenant Not to Merge, Consolidate, Enter into a Share
Exchange, Sell or Convey Property Except Under Certain Conditions.

      The Company covenants that it will not merge, consolidate or enter into a
share exchange with any other Person or sell, assign, transfer, lease or convey
all or substantially all of its properties and assets to any Person or group of
affiliated Persons in one transaction or a series of related transactions,
unless:

            (i) either the Company shall be the continuing corporation, or the
      successor (if other than the Company) shall be a corporation organized and
      existing under the laws of the United States of America or a State thereof
      or the District of Columbia and such corporation shall expressly assume
      all the obligations of the Company under the Purchase Contracts, this
      Agreement, the Remarketing Agreement and the Pledge Agreement by one or
      more supplemental agreements in form reasonably satisfactory to the
      Purchase Contract Agent and the Collateral Agent, executed and delivered
      to the Purchase Contract Agent and the Collateral Agent by such
      corporation; and

            (ii) the Company or such successor corporation, as the case may be,
      shall not, immediately after such merger, consolidation or share exchange,
      or such sale, assignment, transfer, lease or conveyance, be in default in
      the performance of any covenant or condition hereunder, under any of the
      Securities or under the Pledge Agreement.

      SECTION 9.02. Rights and Duties of Successor Corporation.

      In case of any such merger, consolidation, share exchange, sale,
assignment, transfer, lease or conveyance and upon any such assumption by a
successor corporation in accordance with Section 9.01, such successor
corporation shall succeed to and be substituted for the Company with the same
effect as if it had been named herein as the Company. Such successor corporation
thereupon may cause to be signed, and may issue either in its own name or in the
name of PPL Corporation, any or all of the Certificates evidencing Securities
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Purchase Contract Agent; and, upon the order of such
successor corporation, instead of the Company, and subject to all the terms,
conditions and limitations in this Agreement prescribed, the Purchase Contract
Agent shall authenticate and execute on behalf of the Holders and deliver any
Certificates which previously shall have been signed and delivered by the
officers of the Company to the Purchase Contract Agent for authentication and
execution, and any Certificate evidencing Securities which such successor
corporation thereafter shall cause to be signed and delivered to the Purchase
Contract Agent for that purpose. All the Certificates issued

                                       71
<PAGE>
shall in all respects have the same legal rank and benefit under this Agreement
as the Certificates theretofore or thereafter issued in accordance with the
terms of this Agreement as though all of such Certificates had been issued at
the date of the execution hereof.

      In case of any such merger, consolidation, share exchange, sale,
assignment, transfer, lease or conveyance such change in phraseology and form
(but not in substance) may be made in the Certificates evidencing Securities
thereafter to be issued as may be appropriate.

      SECTION 9.03. Officers' Certificate and Opinion of Counsel Given to
Purchase Contract Agent.

      The Purchase Contract Agent, subject to Sections 7.01 and 7.03, shall
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such merger, consolidation, share exchange, sale, assignment,
transfer, lease or conveyance, and any such assumption, complies with the
provisions of this Article and that all conditions precedent to the consummation
of any such merger, consolidation, share exchange, sale, assignment, transfer,
lease or conveyance have been met.

                                   ARTICLE 10
                                    Covenants

      SECTION 10.01. Performance under Purchase Contracts.

      The Company covenants and agrees for the benefit of the Holders from time
to time of the Securities that it will duly and punctually perform its
obligations under the Purchase Contracts in accordance with the terms of the
Purchase Contracts and this Agreement.

      SECTION 10.02. Maintenance of Office or Agency.

      The Company will maintain in the Borough of Manhattan, New York City an
office or agency (a "NEW YORK OFFICE") where Certificates may be presented or
surrendered for acquisition of shares of Common Stock upon settlement of the
Purchase Contracts on the Purchase Contract Settlement Date or Early Settlement
and for transfer of Collateral upon occurrence of a Termination Event, where
Certificates may be surrendered for registration of transfer or exchange, for a
Collateral Substitution or reestablishment of New PEPS Units and where notices
and demands to or upon the Company in respect of the Securities and this
Agreement may be served. The Company will give prompt written notice to the
Purchase Contract Agent of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Purchase Contract Agent
with the address thereof, such presentations, surrenders, notices and demands
may

                                       72
<PAGE>
be made or served at the Corporate Trust Office, and the Company hereby appoints
the Purchase Contract Agent as its agent to receive all such presentations,
surrenders, notices and demands.

      The Company may also from time to time designate one or more other offices
or agencies where Certificates may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, New York City for such purposes. The Company will give prompt written
notice to the Purchase Contract Agent of any such designation or rescission and
of any change in the location of any such other office or agency. The Company
hereby designates as the place of payment for the Securities the Corporate Trust
Office and appoints the Purchase Contract Agent at its Corporate Trust Office as
paying agent in such city.

      SECTION 10.03. Company to Reserve Common Stock.

      The Company shall at all times prior to the Purchase Contract Settlement
Date reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock the full number of shares of Common Stock
issuable against tender of payment in respect of all Purchase Contracts
constituting a part of the Securities evidenced by Outstanding Certificates.

      SECTION 10.04. Covenants as to Common Stock.

      The Company covenants that all shares of Common Stock which may be issued
against tender of payment in respect of any Purchase Contract constituting a
part of the Outstanding Securities will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable. The Company shall comply, in all
material respects, with all applicable securities laws regulating the offer,
issuance and delivery of shares of Common Stock upon settlement of Purchase
Contracts and will endeavor to list such shares on each national securities
exchange or automated quotation system on which the Common Stock is then listed.

      SECTION 10.05. Statements of Officers of the Company as to Default.

      The Company will deliver to the Purchase Contract Agent, not later than
April 30 in each year, an Officers' Certificate (one of the signers of which
shall be the principal executive officer, principal financial officer or
principal accounting officer of the Company), stating whether or not to the
knowledge of the signers thereof the Company is in default in the performance
and observance of any of the terms, provisions and conditions hereof, and if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.

                                       73
<PAGE>
      SECTION 10.06. Tax Treatment.

      The Company covenants and agrees and, by exchanging outstanding 7-3/4%
Premium Equity Participating Security Units for New PEPS Units, a Holder
covenants and agrees, for United States federal income tax purposes, (i) to
treat a Holder's acquisition of the New PEPS Units as the acquisition of the
Notes and Purchase Contracts constituting the New PEPS Units, (ii) to treat a
Holder's acquisition of the Treasury Units as the acquisition of the Treasury
Securities and Purchase Contracts constituting the Treasury Units, and (iii) to
treat each Holder as the owner of the related Notes or Treasury Securities, as
the case may be.

      SECTION 10.07. ERISA.

      Each purchaser and any subsequent transferee of the New PEPS Units (or any
component security of such units), will be deemed to have represented and
warranted on each day from and including the date of its purchase of the New
PEPS Units (or any component security of such units) through and including the
date of the satisfaction of the obligation under the Purchase Contract and/or
the disposition of any such New PEPS Unit (or any component security of such
unit) either (i) that no portion of the assets used by such purchaser or
subsequent transferee to acquire the New PEPS Units (or any component security
of such units) constitute the assets of any Plan or (ii) that the acquisition,
holding and the disposition of any New PEPS Unit (and any component security of
such unit) by such purchaser or subsequent transferee does not and will not
constitute a non-exempt prohibited transaction under ERISA or Section 4975 of
the Code or a violation of any applicable Similar Laws.

      SECTION 10.08. Securities Contract.

      It is the intention of the Company that this Agreement shall constitute a
"securities contract" for purposes of and subject to the provisions of Section
555 of the Bankruptcy Code. In furtherance thereof, the Company agrees that (i)
prior to an exercise by the Collateral Agent on behalf of the Company of its
rights as a secured party pursuant to the Pledge Agreement, the Company does not
have any ownership right, title or interest in and to the Pledged Notes and (ii)
the Holders of a Security shall not be deemed to have purchased, and the Company
shall not be deemed to have sold any Common Stock pursuant to a Purchase
Contract related to such Security prior to a Cash Settlement, an Early
Settlement or the occurrence of the Purchase Contract Settlement Date (provided
that no prior occurrence of a Termination Event with respect to such Security
has occurred).

                                       74
<PAGE>
      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

PPL CORPORATION                         JPMORGAN CHASE BANK as
                                        Purchase Contract Agent and as
                                        attorney-in-fact of the Holders from
                                        time to time of the Securities

By:                                     By:
   ------------------------                ------------------------
   Name:                                   Name:
   Title:                                  Title:

JPMORGAN CHASE BANK,                    JPMORGAN CHASE BANK,
As Collateral Agent                     as Custodial Agent
By:                                     By:
   ------------------------                ------------------------
   Name:                                   Name:
   Title:                                  Title:

                                       75

<PAGE>

                                                                       EXHIBIT A

                       FACE OF NEW PEPS UNITS CERTIFICATE

                [If applicable, insert Global Certificate Legend]

No.                                                      Cusip No.
Number of New PEPS Units

                                 PPL CORPORATION

                                 NEW PEPS UNITS
(7-3/4% Premium Equity Participating Security Units (PEPS(SM) Units), Series B)

      This New PEPS Units Certificate certifies that         is the registered
Holder of the number of New PEPS Units set forth [above]* [on the Schedule of
Increases or Decreases in Global Certificate attached hereto]**. Each New PEPS
Unit consists of (i) a 1/40, or 2.5%, undivided beneficial ownership interest in
a $1,000 principal amount Note due 2006 (the "NOTE") issued by PPL Capital
Funding, Inc., a Delaware corporation ("PPL CAPITAL FUNDING"), subject to the
Pledge of such ownership interest in the Note by such Holder pursuant to the
Pledge Agreement, and (ii) the rights and obligations of the Holder under one
Purchase Contract with PPL Corporation, a Pennsylvania corporation (the
"COMPANY"). All capitalized terms used herein which are defined in the Purchase
Contract Agreement (as defined on the reverse hereof) have the meaning set forth
therein.

      Pursuant to the Pledge Agreement, the ownership interest in a Note
constituting part of each New PEPS Unit evidenced hereby has been pledged to the
Collateral Agent, for the benefit of the Company, to secure the obligations of
the Holder under the Purchase Contract comprising part of such New PEPS Unit.

      The Pledge Agreement provides that all payments of the principal amount
with respect to any of the Pledged Notes or interest on any of the Pledged Notes
(as defined in the Pledge Agreement) constituting part of the New PEPS Units
received by the Securities Intermediary shall be paid by wire transfer in same
day funds (i) in the case of (A) interest with respect to Pledged Notes and (B)
any payments of the principal amount with respect to any Notes that have been
released from the Pledge pursuant to the Pledge Agreement, to the Purchase
Contract Agent to the account designated by the Purchase

--------
*   Insert in Certificates other than Global Certificates

**  Insert in Global Certificates

                                      A-1
<PAGE>
Contract Agent, no later than 2:00 p.m., New York City time, on the Business Day
such payment is received by the Securities Intermediary (provided that in the
event such payment is received by the Securities Intermediary on a day that is
not a Business Day or after 12:30 p.m., New York City time, on a Business Day,
then such payment shall be made no later than 10:30 a.m., New York City time, on
the next succeeding Business Day) and (ii) in the case of payments of an amount
equal to 100% of the principal amount with respect to any of the Pledged Notes
derived from the proceeds of a Successful Remarketing, to the Company on the
Purchase Contract Settlement Date (as described herein) in accordance with the
terms of the Pledge Agreement, in full satisfaction of the respective
obligations of the Holders of the New PEPS Units of which such Pledged Notes are
a part under the Purchase Contracts forming a part of such New PEPS Units.
Interest on any Note forming part of a New PEPS Unit evidenced hereby, which are
payable quarterly in arrears on November 18, 2003, February 18, 2004 and May 18,
2004, commencing November 18, 2004 (a "PAYMENT DATE"), shall, subject to receipt
thereof by the Purchase Contract Agent from the Securities Intermediary, be paid
to the Person in whose name this New PEPS Unit Certificate (or a Predecessor New
PEPS Unit Certificate) is registered at the close of business on the Record Date
for such Payment Date.

      Each Purchase Contract evidenced hereby obligates the Holder of this New
PEPS Units Certificate to purchase, and the Company to sell, on May 18, 2004
(the "PURCHASE CONTRACT SETTLEMENT DATE"), at a price equal to $25 (the "STATED
AMOUNT"), a number of shares of Common Stock, $0.01 par value ("COMMON STOCK"),
of the Company, equal to the Settlement Rate, unless on or prior to the Purchase
Contract Settlement Date there shall have such occurred a Termination Event or
an Early Settlement with respect to the New PEPS Unit of which such Purchase
Contract is a part, all as provided in the Purchase Contract Agreement and more
fully described on the reverse hereof. The purchase price (the "PURCHASE PRICE")
for the shares of Common Stock purchased pursuant to each Purchase Contract
evidenced hereby, if not paid earlier, shall be paid on the Purchase Contract
Settlement Date by application of payment received in respect of the Remarketing
of the Notes pledged to secure the obligations under such Purchase Contract of
the Holder of the New PEPS Unit of which such Purchase Contract is a part.

      Interest on the Notes will be payable at the office of the Purchase
Contract Agent in New York City or, at the option of the Company, by check
mailed to the address of the Person entitled thereto as such address appears on
the New PEPS Units Register.

      The Company shall pay on each Payment Date in respect of each Purchase
Contract forming part of a New PEPS Unit evidenced hereby an amount (the
"CONTRACT ADJUSTMENT PAYMENTS") equal to 0.46% per annum of the Stated Amount,
or $0.1150 per annum, computed on the basis of a 360-day year of twelve 30 day
months. Contract adjustment payments will accrue from August 18, 2003. Such
Contract Adjustment Payments shall be payable to the Person in whose name this
New PEPS Units Certificate (or a Predecessor New PEPS Units Certificate) is
registered at the close of business on the Record Date for such Payment Date.

                                      A-2
<PAGE>
      Contract Adjustment Payments will be payable at the Corporate Trust Office
of the Purchase Contract Agent and at the New York Office or, at the option of
the Company, by check mailed to the address of the Person entitled thereto as
such address appears on the Securities Register.

      Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.

      Unless the certificate of authentication hereon has been executed by the
Purchase Contract Agent by manual signature, this New PEPS Units Certificate
shall not be entitled to any benefit under the Pledge Agreement or the Purchase
Contract Agreement or be valid or obligatory for any purpose.

                                      A-3
<PAGE>
      IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.

                                 PPL CORPORATION

                                 By:
                                    ---------------------------
                                      Name:
                                      Title:

                                 HOLDER SPECIFIED ABOVE (as to
                                 obligations of such Holder under the
                                 Purchase Contracts)

                                 By:  JPMORGAN CHASE BANK,
                                        not individually but solely as Attorney-
                                        in-Fact of such Holder

                                 By:
                                    ---------------------------
                                      Name:
                                      Title:

DATED:

                                      A-4
<PAGE>
                          CERTIFICATE OF AUTHENTICATION
                           OF PURCHASE CONTRACT AGENT

      This is one of the New PEPS Units Certificates referred to in the within
mentioned Purchase Contract Agreement.

                                            By:  JPMORGAN CHASE BANK, as
                                                 Purchase Contract Agent

                                                 By:
                                                    ---------------------------
                                                         Authorized Officer

                                      A-5
<PAGE>
                 (FORM OF REVERSE OF NEW PEPS UNITS CERTIFICATE)

      Each Purchase Contract evidenced hereby is governed by a Purchase Contract
Agreement, dated as of             , 2003 (as may be supplemented from time to
time, the "PURCHASE CONTRACT AGREEMENT"), between the Company and JPMorgan Chase
Bank, as Purchase Contract Agent (including its successors thereunder, herein
called the "PURCHASE CONTRACT AGENT"), to which the Purchase Contract Agreement
and supplemental agreements thereto reference is hereby made for a description
of the respective rights, limitations of rights, obligations, duties and
immunities thereunder of the Purchase Contract Agent, the Company, and the
Holders and of the terms upon which the New PEPS Units Certificates are, and are
to be, executed and delivered.

      Unless a Cash Settlement or an Early Settlement has occurred, each
Purchase Contract evidenced hereby obligates the Holder of this New PEPS Units
Certificate to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the "PURCHASE PRICE"), a
number of shares of Common Stock equal to the Settlement Rate, unless, prior to
or on the Purchase Contract Settlement Date, there shall have occurred a
Termination Event with respect to the Security of which such Purchase Contract
is a part or an Early Settlement shall have occurred. The "SETTLEMENT RATE" is
equal to:

            (1) if the Applicable Market Value (as defined below) multiplied by
      1.017 is greater than or equal to $65.03 (the "THRESHOLD APPRECIATION
      PRICE"), 0.3910 shares of Common Stock per Purchase Contract;

            (2) if the Applicable Market Value multiplied by 1.017 is less than
      the Threshold Appreciation Price but greater than $53.30 (the "REFERENCE
      PRICE"), the number of shares of Common Stock per Purchase Contract having
      a value, based on the Applicable Market Value, equal to $25; and

            (3) if the Applicable Market Value multiplied by 1.017 is less than
      or equal to the Reference Price, 0.4770 shares of Common Stock per
      Purchase Contract,

in each case subject to adjustment as provided in the Purchase Contract
Agreement (and in each case rounded upward or downward to the nearest 1/10,000th
of a share).

      No fractional shares of Common Stock will be issued upon settlement of
Purchase Contracts, as provided in Section 5.09 of the Purchase Contract
Agreement.

      Each Purchase Contract evidenced hereby, which is settled either through
Early Settlement or Cash Settlement, shall obligate the Holder of the related
New PEPS Unit to purchase at the Purchase Price, and the Company to sell, a
number of shares of Common Stock equal to the Early Settlement Rate or the
Settlement Rate, as applicable.

                                      A-6
<PAGE>
      The "APPLICABLE MARKET VALUE" means the average of the Closing Price per
share of Common Stock on each of the 20 Trading Days ending on the third Trading
Day immediately preceding the Purchase Contract Settlement Date.

      The "CLOSING PRICE" per share of Common Stock on any date of determination
means:

            (1) the closing sale price (or, if no closing price is reported, the
      last reported sale price) per share on the New York Stock Exchange, Inc.
      (the "NYSE") on such date;

            (2) if the Common Stock is not listed for trading on the NYSE on any
      such date, the closing sale price per share as reported in the composite
      transactions for the principal United States securities exchange on which
      the Common Stock is so listed;

            (3) if the Common Stock is not so listed on a United States national
      or regional securities exchange, the closing sale price per share as
      reported by The NASDAQ Stock Market, Inc.;

            (4) if the Common Stock is not so reported, the last quoted bid
      price for the Common Stock in the over-the-counter market as reported by
      the National Quotation Bureau or similar organization; or

            (5) if such bid price is not available, the average of the mid-point
      of the last bid and ask prices of the Common Stock on such date from at
      least three nationally recognized independent investment banking firms
      retained for this purpose by the Company.

      A "TRADING DAY" means a day on which the Common Stock (1) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (2) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of the Common
Stock.

      In accordance with the terms of the Purchase Contract Agreement, the
Holder of this New PEPS Units Certificate may pay the Purchase Price for the
shares of the Common Stock purchased pursuant to each Purchase Contract
evidenced hereby by effecting a Cash Settlement or an Early Settlement or from
the proceeds of a Remarketing of the related Pledged Notes. A Holder of New PEPS
Units who does not elect to make an effective cash settlement, on or prior to
5:00 p.m. (New York City time) on the seventh Business Day immediately preceding
the Purchase Contract Settlement Date, or fails to pay such cash on the sixth
Business Day immediately preceding the Purchase Contract Settlement Date, or
does not elect to make an effective Early Settlement, shall pay the Purchase
Price for the shares of Common Stock to be delivered under the related Purchase
Contract from the proceeds of the sale of the related Pledged Notes held by the

                                      A-7
<PAGE>
Collateral Agent. Such sale will be made by the Remarketing Agent pursuant to
the terms of the Remarketing Agreement and any supplemental remarketing
agreement executed in connection therewith between the parties thereto, on the
fifth Business Day immediately preceding the Purchase Contract Settlement Date,
and, if necessary, on the fourth Business Day immediately preceding the Purchase
Contract Settlement Date and, if necessary, on the third Business Day
immediately preceding the Purchase Contract Settlement Date.

      The Company shall not be obligated to issue any shares of Common Stock in
respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment of the aggregate purchase price for
the shares of Common Stock to be purchased thereunder in the manner herein set
forth.

      Each Purchase Contract evidenced hereby and all obligations and rights of
the Company and the Holder thereunder shall terminate if a Termination Event
shall occur. Upon the occurrence of a Termination Event, the Company shall give
written notice to the Purchase Contract Agent and to the Holders, at their
addresses as they appear in the Security Register. Upon and after the occurrence
of a Termination Event, the Collateral Agent shall release the Pledged Notes
forming a part of each New PEPS Unit from the Pledge. A New PEPS Unit shall
thereafter represent the right to receive the ownership interest in a Note
forming a part of the New PEPS Units in accordance with the terms of the
Purchase Contract Agreement and the Pledge Agreement.

      Under the terms of the Pledge Agreement, the Purchase Contract Agent will
be entitled to exercise the voting and any other consensual rights pertaining to
the Pledged Notes. Upon receipt of notice of any meeting at which holders of
Notes are entitled to vote or upon the solicitation of consents, waivers or
proxies of holders of Notes, the Purchase Contract Agent shall, as soon as
practicable thereafter, mail to the New PEPS Units Holders a notice:

            (1) containing such information as is contained in the notice or
      solicitation;

            (2) stating that each New PEPS Unit Holder on the record date set by
      the Purchase Contract Agent therefor (which, to the extent possible, shall
      be the same date as the record date for determining the holders of Notes
      entitled to vote) shall be entitled to instruct the Purchase Contract
      Agent as to the exercise of the voting rights pertaining to the Notes
      constituting a part of such Holder's New PEPS Unit; and

            (3) stating the manner in which such instructions may be given.

      Upon the written request of the New PEPS Unit Holders on such record date,
the Purchase Contract Agent shall endeavor insofar as practicable to vote or
cause to be voted, in accordance with the instructions set forth in such
requests, the maximum number of Notes as to which any particular voting
instructions are received. In the

                                      A-8
<PAGE>
absence of specific instructions from the Holder of a New PEPS Unit, the
Purchase Contract Agent shall abstain from voting the Notes evidenced by such
New PEPS Unit.

      The New PEPS Units Certificates are issuable only in registered form and
only in denominations of a single New PEPS Unit and any integral multiple
thereof. The transfer of any New PEPS Units Certificate will be registered and
New PEPS Units Certificates may be exchanged as provided in the Purchase
Contract Agreement. The Security Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents permitted by
the Purchase Contract Agreement. No service charge shall be required for any
such registration of transfer or exchange, but the Company and the Purchase
Contract Agent may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. As described below, a
Holder who elects to substitute a Treasury Security for a Note, thereby creating
Treasury Units, or a Holder who elects to substitute a Note for a Treasury
Security, thereby recreating New PEPS Units, shall be responsible for any fees
or expenses payable in connection therewith. Except as provided in the Purchase
Contract Agreement, for so long as the Purchase Contract underlying a New PEPS
Unit remains in effect, such New PEPS Unit shall not be separable into its
constituent parts, and the rights and obligations of the Holder of such New PEPS
Unit in respect of a Note and Purchase Contract constituting such New PEPS Unit
may be transferred and exchanged only as a New PEPS Unit.

      The Holder of New PEPS Units may substitute for the Pledged Notes,
securing such Holder's obligations under the related Purchase Contracts,
Treasury Securities in an aggregate principal amount equal to the aggregate
principal amount of the Pledged Notes, in accordance with the terms of the
Purchase Contract Agreement and the Pledge Agreement. From and after such
Collateral Substitution, each Security for which such Pledged Notes secures the
Holder's obligation under the Purchase Contract shall be referred to as a
"TREASURY UNIT." A Holder may make such Collateral Substitution only in integral
multiples of 40 New PEPS Units for 40 Treasury Units. Such Collateral
Substitution may cause the equivalent aggregate Stated Amount of this
Certificate to be increased or decreased; provided, however, the equivalent
aggregate Stated Amount outstanding under this New PEPS Units Certificate shall
not exceed $500,000,000. All such adjustments to the equivalent aggregate Stated
Amount of this New PEPS Units Certificate shall be duly recorded by placing an
appropriate notation on the Schedule attached hereto.

      A Holder of Treasury Units may recreate New PEPS Units by delivering to
the Collateral Agent Notes, equal to the aggregate principal amount of the
Pledged Treasury Securities in exchange for the release of such Pledged Treasury
Securities in accordance with the terms of the Purchase Contract Agreement and
the Pledge Agreement. A Holder may recreate New PEPS Units in integral multiples
of 40 Treasury Units for 40 New PEPS Units.

                                      A-9
<PAGE>
      The Company shall pay, on each Payment Date, the Contract Adjustment
Payments payable in respect of each Purchase Contract to the Person in whose
name the New PEPS Units Certificate evidencing such Purchase Contract is
registered at the close of business on the Record Date for such Payment Date.
Contract Adjustment Payments will be payable at the Corporate Trust Office of
the Purchase Contract Agent and the New York Office or, at the option of the
Company, by check mailed to the address of the Person entitled thereto at such
address as it appears on the Securities Register or by wire transfer to the
account designated by such Person in writing.

      The Purchase Contracts and all obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights of the Holders
to receive and the obligation of the Company to pay Contract Adjustment Payments
and the rights and obligations of Holders to purchase Common Stock, shall
immediately and automatically terminate, without the necessity of any notice or
action by any Holder, the Purchase Contract Agent or the Company, if, on or
prior to the Purchase Contract Settlement Date, a Termination Event shall have
occurred. Upon the occurrence of a Termination Event, the Company shall promptly
but in no event later than two Business Days thereafter give written notice to
the Purchase Contract Agent, the Collateral Agent and the Holders, at their
addresses as they appear in the Security Register. Upon and after the occurrence
of a Termination Event, the Collateral Agent shall release the Notes from the
Pledge in accordance with the provisions of the Pledge Agreement.

      Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holder thereof, Purchase Contracts
underlying Securities may be settled early ("EARLY SETTLEMENT"), only in
integral multiples of 40 Purchase Contracts, as provided in the Purchase
Contract Agreement. In order to exercise the right to effect Early Settlement
with respect to any Purchase Contracts evidenced by this New PEPS Units
Certificate, the Holder of this New PEPS Units Certificate shall deliver to the
Purchase Contract Agent at the Corporate Trust Office an Election to Settle
Early form set forth below and any other documents requested by the Purchase
Contract Agent duly completed and accompanied by payment in the form of
immediately available funds payable to the order of the Company in an amount
(the "EARLY SETTLEMENT AMOUNT") equal to (i) the product of (A) $25 times (B)
the number of Purchase Contracts with respect to which the Holder has elected to
effect Early Settlement, plus (ii) if such delivery is made with respect to any
Purchase Contracts during the period from the close of business on any Record
Date next preceding any Payment Date to the opening of business on such Payment
Date, an amount equal to the Contract Adjustment Payments payable on such
Payment Date with respect to such Purchase Contracts.

      Upon Early Settlement of Purchase Contracts by a Holder of the related
Securities, the Pledged Notes underlying such Securities shall be released from
the Pledge as provided in the Pledge Agreement and the Holder shall be entitled
to receive a number of shares of Common Stock on account of each Purchase
Contract forming part of a New PEPS Unit as to which Early Settlement is
effected equal to 0.3910 shares of Common Stock per Purchase Contract (the
"EARLY SETTLEMENT RATE"); provided,

                                      A-10
<PAGE>
however, that upon the Early Settlement of the Purchase Contracts, the Holder of
such related Securities will forfeit the right to receive any future Contract
Adjustment Payments, except to the extent that the Early Settlement Date is
after the close of business on a Record Date and prior to the opening of
business on the corresponding Payment Date. The Early Settlement Rate shall be
adjusted in the same manner and at the same time as the Settlement Rate is
adjusted as provided in the Purchase Contract Agreement.

      Upon registration of transfer of this New PEPS Units Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Purchase Contract Agent
pursuant to the Purchase Contract Agreement), under the terms of the Purchase
Contract Agreement and the Purchase Contracts evidenced hereby and the
transferor shall be released from the obligations under the Purchase Contracts
evidenced by this New PEPS Units Certificate. The Company covenants and agrees,
and the Holder, by its acceptance hereof, likewise covenants and agrees, to be
bound by the provisions of this paragraph.

      The Holder of this New PEPS Units Certificate, by its acceptance hereof,
authorizes the Purchase Contract Agent to enter into and perform the related
Purchase Contracts forming part of the New PEPS Units evidenced hereby on its
behalf as its attorney-in-fact, expressly withholds any consent to the
assumption (i.e., affirmance) of the Purchase Contracts by the Company or its
trustee in the event that the Company becomes the subject of a case under the
Bankruptcy Code, agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform his obligations under such Purchase Contracts,
consents to the provisions of the Purchase Contract Agreement, authorizes the
Purchase Contract Agent to enter into and perform the Purchase Contract
Agreement and the Pledge Agreement on its behalf as its attorney-in-fact, and
consents to the Pledge of the Note underlying this New PEPS Units Certificate
pursuant to the Pledge Agreement. The Holder further covenants and agrees that,
to the extent and in the manner provided in the Purchase Contract Agreement and
the Pledge Agreement, but subject to the terms thereof, payments in respect to
the aggregate principal amount of the Pledged Notes on the Purchase Contract
Settlement Date shall be paid by the Collateral Agent to the Company in
satisfaction of such Holder's obligations under such Purchase Contract and such
Holder shall acquire no right, title or interest in such payments.

      Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts.

      The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.

      The Company, the Purchase Contract Agent and its Affiliates and any agent
of the Company or the Purchase Contract Agent may treat the Person in whose name
this New PEPS Units Certificate is registered as the owner of the New PEPS Units
evidenced hereby for the purpose of receiving payments of interest payable
quarterly on the Notes, receiving payments of Contract Adjustment Payments,
performance of the Purchase

                                      A-11
<PAGE>
Contracts and for all other purposes whatsoever, whether or not any payments in
respect thereof be overdue and notwithstanding any notice to the contrary, and
neither the Company, the Purchase Contract Agent nor any such agent shall be
affected by notice to the contrary.

      The Purchase Contracts shall not, prior to the settlement thereof, entitle
the Holder to any of the rights of a holder of shares of Common Stock.

      The Company covenants and agrees and, by exchanging outstanding 7-3/4%
Premium Equity Participating Security Units for New PEPS Units, a Holder
covenants and agrees, for United States federal income tax purposes, (i) to
treat a Holder's acquisition of the New PEPS Units as the acquisition of the
Notes and Purchase Contracts constituting the New PEPS Units, (ii) to treat a
Holder's acquisition of the Treasury Units as the acquisition of the Treasury
Securities and Purchase Contracts constituting the Treasury Units, and (iii) to
treat each Holder as the owner of the related Notes or Treasury Securities, as
the case may be.

      Each purchaser and any subsequent transferee of the New PEPS Units (or any
component security of such units), will be deemed to have represented and
warranted on each day from and including the date of its purchase of the New
PEPS Units (or any component security of such units) through and including the
date of the satisfaction of the obligation under the Purchase Contract and/or
the disposition of any such New PEPS Unit (or any component security of such
unit) either (i) that no portion of the assets used by such purchaser or
subsequent transferee to acquire the New PEPS Units (or any component security
of such units) constitute the assets of any Plan or (ii) that the acquisition,
holding and the disposition of any New PEPS Unit (and any component security of
such unit) by such purchaser or subsequent transferee does not and will not
constitute a non-exempt prohibited transaction under ERISA or Section 4975 of
the Code or a violation of any applicable Similar Laws.

      A copy of the Purchase Contract Agreement is available for inspection at
the Corporate Trust Office of the Purchase Contract Agent.

                                      A-12
<PAGE>
                                  ABBREVIATIONS

      The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM:               as tenants in common

UNIF GIFT MIN ACT:                         Custodian
                       -------------------           -------------------
                              (cust)                       (minor)

                       Under Uniform Gifts to Minors Act of
                                                            -------------------

                       --------------------------------------------------------

TENANT:                as tenants by the entireties

JT TEN:                as joint tenants with right of survivorship and not as
                       tenants in common

Additional abbreviations may also be used though not in the above list.

                                -----------------

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

--------------------------------------------------------------------------------
                 (Please insert Social Security or Taxpayer I.D.
                    or other Identifying Number of Assignee)

--------------------------------------------------------------------------------
  (Please Print or Type Name and Address Including Postal Zip Code of Assignee)

the within New PEPS Units Certificates and all rights thereunder, hereby
irrevocably constituting and appointing attorney __________________, to transfer
said New PEPS Units Certificates on the books of PPL Corporation and PPL Capital
Funding, Inc. with full power of substitution in the premises.

Dated:                                   Signature
       ------------------------                         ------------------------

                                         NOTICE: The signature to this
                                         assignment must correspond with the
                                         name as it appears upon the face of the
                                         within New PEPS Units Certificates in
                                         every particular, without alteration or
                                         enlargement or any change whatsoever.

       Signature Guarantee:
                            -----------------------------------

                                      A-13
<PAGE>
                             SETTLEMENT INSTRUCTIONS

      The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of New PEPS Units evidenced
by this New PEPS Units Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned at
the address indicated below unless a different name and address have been
indicated below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable incident
thereto.

Dated:
       ------------------------                 --------------------------------
                                                Signature
                                                Signature Guarantee:
                                                                    ------------
                                                (if assigned to another person)

If shares are to be registered in the
name of and delivered to a Person other         REGISTERED HOLDER
than the Holder, please (i) print such
Person's name and address and (ii) provide      Please print name and address of
a guarantee of your signature:                  Registered Holder:

-------------------------------                 --------------------------------
Name                                            Name

-------------------------------                 --------------------------------
Address                                         Address

-------------------------------                 --------------------------------

-------------------------------                 --------------------------------

-------------------------------                 --------------------------------

Social Security or other
Taxpayer Identification
Number, if any
                                                --------------------------------

                                      A-14
<PAGE>
                            ELECTION TO SETTLE EARLY

      The undersigned Holder of this New PEPS Units Certificate hereby
irrevocably exercises the option to effect Early Settlement in accordance with
the terms of the Purchase Contract Agreement with respect to the Purchase
Contracts underlying the number of New PEPS Units evidenced by this New PEPS
Units Certificate specified below. The option to effect Early Settlement may be
exercised only in integral multiples of 40 New PEPS Units. The undersigned
Holder directs that a certificate for shares of Common Stock deliverable upon
such Early Settlement be registered in the name of, and delivered, together with
a check in payment for any fractional share and any New PEPS Units Certificate
representing any New PEPS Units evidenced hereby as to which Early Settlement of
the related Purchase Contracts is not effected, to the undersigned at the
address indicated below unless a different name and address have been indicated
below. Pledged Notes deliverable upon such Early Settlement will be transferred
in accordance with the transfer instructions set forth below. If shares or
Pledged Notes are to be registered in the name of a Person other than the
undersigned, the undersigned will pay any transfer tax payable incident thereto.

Dated:
      -------------------------------           --------------------------------
                                                          Signature

Signature Guarantee:
                    ----------------------------------------

                                      A-15
<PAGE>
      Number of Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is being elected:

If shares of Common Stock or New PEPS
Units Certificates are to be registered in      REGISTERED HOLDER
the name of and delivered to and Pledged
Notes are to be transferred to a Person
other than the Holder, please print such        Please print name and address of
Person's name and address:                      Registered Holder:

-------------------------------                 --------------------------------
Name                                            Name

-------------------------------                 --------------------------------
Address                                         Address

-------------------------------                 --------------------------------

-------------------------------                 --------------------------------

-------------------------------                 --------------------------------

Social Security or other
Taxpayer Identification
Number, if any
                                                --------------------------------

                                      A-16
<PAGE>
Transfer Instructions for Pledged Notes transferable upon Early Settlement or a
Termination Event:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                                      A-17

<PAGE>
                    [TO BE ATTACHED TO GLOBAL CERTIFICATES]

            SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE

      The initial number of New PEPS Units evidenced by this Global Certificate
is ___________

      The following increases or decreases in this Global Certificate have been
made:

================================================================================

<TABLE>
<CAPTION>
                                                     Number of New
                                                     PEPS Units        Signature of
         Amount of              Amount of            evidenced by      authorized
         increase in            decrease in          this Global       officer of
         Number of New          Number of New        Certificate       Purchase Contract
         PEPS Units             PEPS Units           following such    Agent or
         evidenced by the       evidenced by the     decrease or       Securities
Date     Global Certificate     Global Certificate   increase          Custodian
<S>      <C>                    <C>                  <C>               <C>

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------
</TABLE>

                                      A-18
<PAGE>
                                                                       EXHIBIT B

                          FACE OF TREASURY CERTIFICATE

               [If applicable, insert Global Certificate Legend]

No.                                                       Cusip No.
Number of Treasury Units

                                PPL CORPORATION

                                 TREASURY UNITS

      This Treasury Units Certificate certifies that         is the registered
Holder of the number of Treasury Units set forth [above]* [on the Schedule of
Increases or Decreases in Global Certificate attached hereto]**. Each Treasury
Unit consists of (i) a 1/40, or 2.5%, undivided beneficial ownership interest in
a Treasury Security having a principal amount at maturity equal to $1,000,
subject to the Pledge of such Treasury Security by such Holder pursuant to the
Pledge Agreement, and (ii) the rights and obligations of the Holder under one
Purchase Contract with PPL Corporation, a Pennsylvania corporation (the
"COMPANY"). All capitalized terms used herein which are defined in the Purchase
Contract Agreement (as defined on the reverse hereof) have the meaning set forth
therein.

      Pursuant to the Pledge Agreement, the Treasury Securities constituting
part of each Treasury Unit evidenced hereby have been pledged to the Collateral
Agent, for the benefit of the Company, to secure the obligations of the Holder
under the Purchase Contract comprising part of such Treasury Unit. Each Purchase
Contract evidenced hereby obligates the Holder of this Treasury Units
Certificate to purchase, and the Company, to sell, on the Purchase Contract
Settlement Date, at a price equal to $25 (the "STATED AMOUNT"), a number of
shares of Common Stock, $0.01 par value ("COMMON STOCK"), of the Company, equal
to the Settlement Rate, unless prior to or on the Purchase Contract Settlement
Date there shall have occurred a Termination Event or an Early Settlement with
respect to the Treasury Unit of which such Purchase Contract is a part, all as
provided in the Purchase Contract Agreement and more fully described on the
reverse hereof. The purchase price (the "PURCHASE PRICE") for the shares of
Common

--------
*     Insert in Certificates other than Global Certificates

**    Insert in Global Certificates

                                      B-1
<PAGE>
Stock purchased pursuant to each Purchase Contract evidenced hereby, if
not paid earlier, shall be paid on the Purchase Contract Settlement Date by
application of the proceeds from the Treasury Securities at maturity pledged to
secure the obligations of the Holder under such Purchase Contract of the
Treasury Unit of which such Purchase Contract is a part.

      The Company shall pay on each Payment Date in respect of each Purchase
Contract forming part of a Treasury Unit evidenced hereby an amount (the
"CONTRACT ADJUSTMENT PAYMENTS") equal to 0.46% per annum of the Stated Amount,
or $0.1150 per annum, computed on the basis of a 360-day year of twelve 30 day
months. Contract adjustment payments will accrue from August 18, 2003. Such
Contract Adjustment Payments shall be payable to the Person in whose name this
Treasury Units Certificate (or a Predecessor Treasury Units Certificate) is
registered at the close of business on the Record Date for such Payment Date.

      Contract Adjustment Payments will be payable at the Corporate Trust Office
of the Purchase Contract Agent and at the New York Office or, at the option of
the Company, by check mailed to the address of the Person entitled thereto as
such address appears on the Securities Register or by wire transfer to the
account designated by such Person by prior written notice.

      Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.

      Unless the certificate of authentication hereon has been executed by the
Purchase Contract Agent by manual signature, this Treasury Units Certificate
shall not be entitled to any benefit under the Pledge Agreement or the Purchase
Contract Agreement or be valid or obligatory for any purpose.

                                      B-2
<PAGE>
      IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.

                                    PPL CORPORATION

                                    By: _________________________
                                        Name:
                                        Title:

                                    HOLDER SPECIFIED ABOVE (as to obligations
                                    of such Holder under the Purchase Contracts)

                                    By:  JPMORGAN CHASE BANK, not individually
                                         but solely as Attorney-in-Fact
                                         of such Holder

                                    By: _________________________
                                        Name:
                                        Title:

DATED:

                                           B-3
<PAGE>
                        CERTIFICATE OF AUTHENTICATION OF
                            PURCHASE CONTRACT AGENT

      This is one of the Treasury Units referred to in the within-mentioned
Purchase Contract Agreement.

                                            By:    JPMORGAN CHASE BANK, as
                                                   Purchase Contract Agent

                                            By:    ___________________________
                                                        Authorized Officer

                                      B-4
<PAGE>
                    (REVERSE OF TREASURY UNITS CERTIFICATE)

      Each Purchase Contract evidenced hereby is governed by a Purchase Contract
Agreement, dated as of           , 2003 (as may be supplemented from time to
time, the "PURCHASE CONTRACT AGREEMENT") between the Company and JPMorgan Chase
Bank, as Purchase Contract Agent (including its successors thereunder, herein
called the "PURCHASE CONTRACT AGENT"), to which the Purchase Contract Agreement
and supplemental agreements thereto reference is hereby made for a description
of the respective rights, limitations of rights, obligations, duties and
immunities thereunder of the Purchase Contract Agent, the Company and the
Holders and of the terms upon which the Treasury Units Certificates are, and are
to be, executed and delivered.

      Unless a Cash Settlement or an Early Settlement has occurred, each
Purchase Contract evidenced hereby obligates the Holder of this Treasury Units
Certificate to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the "PURCHASE PRICE") a
number of shares of Common Stock equal to the Settlement Rate, unless prior to
the Purchase Contract Settlement Date, there shall have occurred a Termination
Event with respect to the Security of which such Purchase Contract is a part or
an Early Settlement shall have occurred. The "SETTLEMENT RATE" is equal to:

            (1)   if the Applicable Market Value (as defined below) multiplied
      by 1.017 is greater than or equal to $65.03 (the "THRESHOLD APPRECIATION
      PRICE"), 0.3910 shares of Common Stock per Purchase Contract;

            (2)   if the Applicable Market Value multiplied by 1.017 is less
      than the Threshold Appreciation Price but greater than $53.30 (the
      "REFERENCE PRICE"), the number of shares of Common Stock per Purchase
      Contract having a value, based on the Applicable Market Value, equal to
      $25; and

            (3)   if the Applicable Market Value multiplied by 1.017 is less
      than or equal to the Reference Price, 0.4770 shares of Common Stock per
      Purchase Contract,

in each case subject to adjustment as provided in the Purchase Contract
Agreement (and in each case rounded upward or downward to the nearest 1/10,000th
of a share).

      No fractional shares of Common Stock will be issued upon settlement of
Purchase Contracts, as provided in Section 5.09 of the Purchase Contract
Agreement.

      Each Purchase Contract evidenced hereby, which is settled either through
Early Settlement or Cash Settlement, shall obligate the Holder of the related
Treasury Unit to purchase at the Purchase Price for cash, and the Company to
sell, a number of shares of Common Stock equal to the Early Settlement Rate or
the Settlement Rate, as applicable.

                                      B-5
<PAGE>
      The "APPLICABLE MARKET VALUE" means the average of the Closing Price per
share of Common Stock on each of the 20 consecutive Trading Days ending on the
third Trading Day immediately preceding the Purchase Contract Settlement Date.

      The "CLOSING PRICE" per share of Common Stock on any date of determination
means:

            (1)   the closing sale price (or, if no closing price is reported,
      the last reported sale price) per share on the New York Stock Exchange,
      Inc. (the "NYSE") on such date;

            (2)   if the Common Stock is not listed for trading on the NYSE on
      any such date, the closing sale price per share as reported in the
      composite transactions for the principal United States securities exchange
      on which the Common Stock is so listed;

            (3)   if the Common Stock is not so listed on a United States
      national or regional securities exchange, the closing sale price per share
      as reported by The NASDAQ Stock Market, Inc.;

            (4)   if the Common Stock is not so reported, the last quoted bid
      price for the Common Stock in the over-the-counter market as reported by
      the National Quotation Bureau or similar organization; or

            (5)   if such bid price is not available, the average of the
      mid-point of the last bid and ask prices of the Common Stock on such date
      from at least three nationally recognized independent investment banking
      firms retained for this purpose by the Company.

      A "TRADING DAY" means a day on which the Common Stock (1) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (2) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of the Common
Stock.

      In accordance with the terms of the Purchase Contract Agreement, the
Holder of this Treasury Unit shall pay the Purchase Price for the shares of the
Common Stock purchased pursuant to each Purchase Contract evidenced hereby
either by effecting a Cash Settlement or an Early Settlement of each such
Purchase Contract or by applying a principal amount of the Pledged Treasury
Securities underlying such Holder's Treasury Unit equal to the Stated Amount of
such Purchase Contract to the purchase of the Common Stock. A Holder of Treasury
Unit who does not effect, prior to 5:00 p.m. (New York City time) on the second
Business Day immediately preceding the Purchase Contract Settlement Date, an
Early Settlement, shall pay the Purchase Price for the shares of Common Stock to
be issued under the related Purchase Contract from the proceeds of the Pledged
Treasury Securities.

                                      B-6
<PAGE>
      The Company shall not be obligated to issue any shares of Common Stock in
respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment of the aggregate purchase price for
the shares of Common Stock to be purchased thereunder in the manner herein set
forth.

      Each Purchase Contract evidenced hereby and all obligations and rights of
the Company and the Holder thereunder shall terminate if a Termination Event
shall occur. Upon the occurrence of a Termination Event, the Company shall give
written notice to the Purchase Contract Agent and to the Holders, at their
addresses as they appear in the Treasury Units Register. Upon and after the
occurrence of a Termination Event, the Collateral Agent shall release the
Pledged Treasury Securities (as defined in the Pledge Agreement) forming a part
of each Treasury Unit. A Treasury Unit shall thereafter represent the right to
receive the ownership interest in the Treasury Security forming a part of such
Treasury Unit in accordance with the terms of the Purchase Contract Agreement
and the Pledge Agreement.

      The Treasury Units Certificates are issuable only in registered form and
only in denominations of a single Treasury Unit and any integral multiple
thereof. The transfer of any Treasury Certificate will be registered and
Treasury Certificates may be exchanged as provided in the Purchase Contract
Agreement. The Treasury Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents permitted by the
Purchase Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Purchase Contract
Agent may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. As described below, a
Holder who elects to substitute a Note for a Treasury Security, thereby
recreating New PEPS Units, or a Holder who elects to substitute a Treasury
Security for a Note, thereby creating Treasury Units, shall be responsible for
any fees or expenses associated therewith. Except as provided in the Purchase
Contract Agreement, for so long as the Purchase Contract underlying a Treasury
Unit remains in effect, such Treasury Unit shall not be separable into its
constituent parts, and the rights and obligations of the Holder of such Treasury
Unit in respect of the Treasury Security and the Purchase Contract constituting
such Treasury Unit may be transferred and exchanged only as a Treasury Unit.

      A Holder of Treasury Units may recreate New PEPS Units by delivering to
the Collateral Agent, Notes with a principal amount equal to the aggregate
principal amount at maturity of the Pledged Treasury Securities in exchange for
the release of such Pledged Treasury Securities in accordance with the terms of
the Purchase Contract Agreement and the Pledge Agreement. From and after such
substitution, the Holder's Security shall be referred to as a "NEW PEPS UNIT".
Any such creation of New PEPS Units may be effected in multiples of 40 Treasury
Units for 40 New PEPS Units. Such substitution may cause the equivalent
aggregate Stated Amount of this Certificate to be increased or decreased;
provided, however, the equivalent aggregate Stated Amount outstanding under this
Treasury Units Certificate shall not exceed $500,000,000. All such adjustments
to

                                      B-7
<PAGE>
the equivalent aggregate Stated Amount of this Treasury Units Certificate shall
be duly recorded by placing an appropriate notation on the Schedule attached
hereto.

      A Holder of New PEPS Units may recreate Treasury Units by delivering to
the Collateral Agent Treasury Securities in an aggregate principal amount equal
to the aggregate principal amount at maturity of the Pledged Notes in accordance
with the terms of the Purchase Contract Agreement and the Pledge Agreement. Any
such recreation of Treasury Units may be effected only in multiples of 40 New
PEPS Units for 40 Treasury Units.

      The Company shall pay, on each Payment Date, the Contract Adjustment
Payments payable in respect of each Purchase Contract to the Person in whose
name the Treasury Units Certificate evidencing such Purchase Contract is
registered at the close of business on the Record Date for such Payment Date.
Contract Adjustment Payments will be payable at the Corporate Trust Office of
the Purchase Contract Agent and the New York Office or at the option of the
Company, by check mailed to the address of the Person entitled thereto at such
address as it appears on the Securities Register.

      The Purchase Contracts and all obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights of the Holders
to receive and the obligation of the Company to pay Contract Adjustment Payments
and the rights and obligations of Holders to purchase Common Stock, shall
immediately and automatically terminate, without the necessity of any notice or
action by any Holder, the Purchase Contract Agent or the Company, if, on or
prior to the Purchase Contract Settlement Date, a Termination Event shall have
occurred. Upon the occurrence of a Termination Event, the Company shall promptly
but in no event later than two Business Days thereafter give written notice to
the Purchase Contract Agent, the Collateral Agent and the Holders, at their
addresses as they appear in the Security Register. Upon and after the occurrence
of a Termination Event, the Collateral Agent shall release the Treasury
Securities from the Pledge in accordance with the provisions of the Pledge
Agreement. A Treasury Unit shall thereafter represent the right to receive the
ownership interest in the Treasury Security forming a part of such Treasury
Unit, in accordance with the terms of the Purchase Contract Agreement and the
Pledge Agreement.

      Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holder thereof, Purchase Contracts
underlying Securities may be settled early ("EARLY SETTLEMENT") as provided in
the Purchase Contract Agreement. In order to exercise the right to effect Early
Settlement with respect to any Purchase Contracts evidenced by this Treasury
Unit, the Holder of this Treasury Units Certificate shall deliver to the
Purchase Contract Agent at the Corporate Trust Office an Election to Settle
Early form set forth below and any other documents requested by the Purchase
Contract Agent duly completed and accompanied by payment in the form of
immediately available funds payable to the order of the Company in an amount
(the "EARLY SETTLEMENT AMOUNT") equal to (i) the product of (A) $25 times (B)
the number of Purchase Contracts with respect to which the Holder has elected to
effect Early

                                      B-8
<PAGE>
Settlement, plus (ii) if such delivery is made with respect to any Purchase
Contracts during the period from the close of business on any Record Date next
preceding any Payment Date to the opening of business on such Payment Date, an
amount equal to the Contract Adjustment Payments payable on such Payment Date
with respect to such Purchase Contracts.

      Upon Early Settlement of Purchase Contracts by a Holder of the related
Securities, the Pledged Treasury Securities underlying such Securities shall be
released from the Pledge as provided in the Pledge Agreement and the Holder
shall be entitled to receive a number of shares of Common Stock on account of
each Purchase Contract forming part of a Treasury Unit as to which Early
Settlement is effected equal to 0.3910 shares of Common Stock per Purchase
Contract (the "EARLY SETTLEMENT RATE"); provided, however, that upon the Early
Settlement of the Purchase Contracts, the Holder of such related Securities will
forfeit the right to receive any future Contract Adjustment Payments, except to
the extent that the Early Settlement Date is after the close of business on a
Record Date and prior to the opening of business on the corresponding Payment
Date. The Early Settlement Rate shall be adjusted in the same manner and at the
same time as the Settlement Rate is adjusted as provided in the Purchase
Contract Agreement.

      Upon registration of transfer of this Treasury Certificate, the transferee
shall be bound (without the necessity of any other action on the part of such
transferee, except as may be required by the Purchase Contract Agent pursuant to
the Purchase Contract Agreement), under the terms of the Purchase Contract
Agreement and the Purchase Contracts evidenced hereby and the transferor shall
be released from the obligations under the Purchase Contracts evidenced by this
Treasury Units Certificate. The Company covenants and agrees, and the Holder, by
its acceptance hereof, likewise covenants and agrees, to be bound by the
provisions of this paragraph.

      The Holder of this Treasury Units Certificate, by its acceptance hereof,
authorizes the Purchase Contract Agent to enter into and perform the related
Purchase Contracts forming part of the Treasury Units evidenced hereby on its
behalf as its attorney-in-fact, expressly withholds any consent to the
assumption (i.e., affirmance) of the Purchase Contracts by the Company or its
trustee in the event that the Company becomes the subject of a case under the
Bankruptcy Code, agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform its obligations under such Purchase Contracts,
consents to the provisions of the Purchase Contract Agreement, authorizes the
Purchase Contract Agent to enter into and perform the Purchase Contract
Agreement and the Pledge Agreement on its behalf as its attorney-in-fact, and
consents to the Pledge of the Treasury Securities underlying this Treasury Units
Certificate pursuant to the Pledge Agreement. The Holder further covenants and
agrees, that, to the extent and in the manner provided in the Purchase Contract
Agreement and the Pledge Agreement, but subject to the terms thereof, payments
in respect to the aggregate principal amount of the Pledged Treasury Securities
on the Purchase Contract Settlement Date shall be paid by the Collateral Agent
to the Company in satisfaction of such Holder's obligations under

                                      B-9
<PAGE>
such Purchase Contract and such Holder shall acquire no right, title or interest
in such payments.

      Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts.

      The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.

      The Company, the Purchase Contract Agent and its Affiliates and any agent
of the Company or the Purchase Contract Agent may treat the Person in whose name
this Treasury Units Certificate is registered as the owner of the Treasury Units
evidenced hereby for the purpose of receiving payments of interest on the
Treasury Securities, receiving payments of Contract Adjustment Payments,
performance of the Purchase Contracts and for all other purposes whatsoever,
whether or not any payments in respect thereof be overdue and notwithstanding
any notice to the contrary, and neither the Company, the Purchase Contract Agent
nor any such agent shall be affected by notice to the contrary.

      The Purchase Contracts shall not, prior to the settlement thereof, entitle
the Holder to any of the rights of a holder of shares of Common Stock.

      The Company covenants and agrees and, by exchanging outstanding 7-3/4%
Premium Equity Participating Security Units for New PEPS Units, a Holder
covenants and agrees, for United States federal income tax purposes, (i) to
treat a Holder's acquisition of the New PEPS Units as the acquisition of the
Notes and Purchase Contracts constituting the New PEPS Units, (ii) to treat a
Holder's acquisition of the Treasury Units as the acquisition of the Treasury
Securities and Purchase Contracts constituting the Treasury Units, and (iii) to
treat each Holder as the owner of the related Notes or Treasury Securities, as
the case may be.

      Each purchaser and any subsequent transferee of the Treasury Units (or any
component security of such units), will be deemed to have represented and
warranted on each day from and including the date of its purchase of the
Treasury Units (or any component security of such units) through and including
the date of the satisfaction of the obligation under the new purchase contract
and/or the disposition of any such Treasury Unit (or any component security of
such unit) either (i) that no portion of the assets used by such purchaser or
subsequent transferee to acquire the Treasury Units (or any component security
of such units) constitute the assets of any Plan or (ii) that the acquisition,
holding and the disposition of any Treasury Unit (and any component security of
such unit) by such purchaser or subsequent transferee does not and will not
constitute a non-exempt prohibited transaction under ERISA or Section 4975 of
the Code or a violation of any applicable Similar Laws.

      A copy of the Purchase Contract Agreement is available for inspection at
the Corporate Trust Office of the Purchase Contract Agent.

                                      B-10
<PAGE>
                                 ABBREVIATIONS

      The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM:                as tenants in common

UNIF GIFT MIN ACT:                             Custodian
                        ---------------------              ---------------------
                               (cust)                              (minor)
                        Under Uniform Gifts to Minors Act of
                                                              ------------------

                        --------------------------------------------------------

TENANT:                 as tenants by the entireties

JT TEN:                 as joint tenants with right of survivorship and not as
                        tenants in common

Additional abbreviations may also be used though not in the above list.

                                -----------------

      FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

--------------------------------------------------------------------------------
      (Please insert Social Security or Taxpayer I.D. or other Identifying
                              Number of Assignee)

--------------------------------------------------------------------------------
  (Please Print or Type Name and Address Including Postal Zip Code of Assignee)

the within Treasury Units Certificates and all rights thereunder, hereby
irrevocably constituting and appointing attorney __________________, to transfer
said Treasury Units Certificates on the books of PPL Corporation and PPL Capital
Funding, Inc. with full power of substitution in the premises.

Dated:                                      Signature
       ----------------------                         --------------------------

                                            NOTICE: The signature to this
                                            assignment must correspond with the
                                            name as it appears upon the face of
                                            the within Treasury Units
                                            Certificates in every particular,
                                            without alteration or enlargement or
                                            any change whatsoever.

       Signature Guarantee:
                            -------------------------------

                                      B-11
<PAGE>
                            SETTLEMENT INSTRUCTIONS

      The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of Treasury Units evidenced
by this Treasury Units Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned at
the address indicated below unless a different name and address have been
indicated below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable incident
thereto.

Dated:_____________________                 ____________________________________
                                            Signature
                                            Signature Guarantee:________________
                                            (if assigned to another person)

If shares are to be registered in the
name of and delivered to a Person other     REGISTERED HOLDER
than the Holder, please (i) print such
Person's name and address and (ii)          Please print name and address of
provide a guarantee of your signature:      Registered Holder:

______________________________              ____________________________________
Name                                        Name

______________________________              ____________________________________
Address                                     Address

______________________________              ____________________________________

______________________________              ____________________________________

______________________________              ____________________________________

Social Security or other
Taxpayer Identification
Number, if any                              ______________________________

                                      B-12
<PAGE>
                            ELECTION TO SETTLE EARLY

      The undersigned Holder of this Treasury Units Certificate irrevocably
exercises the option to effect Early Settlement in accordance with the terms of
the Purchase Contract Agreement with respect to the Purchase Contracts
underlying the number of Treasury Units evidenced by this Treasury Units
Certificate specified below. The option to effect Early Settlement may be
exercised only in integral multiples of 40 Treasury Units. The undersigned
Holder directs that a certificate for shares of Common Stock deliverable upon
such Early Settlement be registered in the name of, and delivered, together with
a check in payment for any fractional share and any Treasury Units Certificate
representing any Treasury Units evidenced hereby as to which Early Settlement of
the related Purchase Contracts is not effected, to the undersigned at the
address indicated below unless a different name and address have been indicated
below. Pledged Treasury Securities deliverable upon such Early Settlement will
be transferred in accordance with the transfer instructions set forth below. If
shares are to be registered in the name of a Person other than the undersigned,
the undersigned will pay any transfer tax payable incident thereto.

Dated:_____________________                     ________________________________
                                                            Signature

Signature Guarantee:______________________

                                      B-13
<PAGE>
      Number of Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is being elected:

If shares of Common Stock or Treasury
Units Certificates are to be registered in  REGISTERED HOLDER
the name of and delivered to and Pledged
Treasury Securities are to be transferred
to a Person other than the Holder, please   Please print name and address of
print such Person's name and address:       Registered Holder:

______________________________              ____________________________________
Name                                        Name

______________________________              ____________________________________
Address                                     Address

______________________________              ____________________________________

______________________________              ____________________________________

______________________________              ____________________________________

Social Security or other
Taxpayer Identification
Number, if any                              ______________________________

                                      B-14
<PAGE>
Transfer Instructions for Pledged Treasury Securities transferable upon Early
Settlement or a Termination Event:

_____________________________________________________________________________

_____________________________________________________________________________

_____________________________________________________________________________

                                      B-15
<PAGE>
                    [TO BE ATTACHED TO GLOBAL CERTIFICATES]

            SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE

      The initial number of Treasury Units evidenced by this Global Certificate
is __________

      The following increases or decreases in this Global Certificate have been
made:

================================================================================

<TABLE>
<CAPTION>
                                                                            Signature of
                              Amount of             Number of Treasury      authorized
        Amount of increase    decrease in           Units evidenced by      officer of
        in Number of          Number of             this Global             Purchase Contract
        Treasury Units        Treasury Units        Certificate             Agent or
        evidenced by the      evidenced by the      following such          Securities
Date    Global Certificate    Global Certificate    decrease or increase    Custodian
<S>     <C>                   <C>                   <C>                     <C>

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------

</TABLE>

                                      B-16
<PAGE>
                                                                       EXHIBIT C

                     INSTRUCTION TO PURCHASE CONTRACT AGENT

JPMorgan Chase Bank
4 New York Plaza, 15th Floor
New York, New York 10004
Attention:  [Institutional Trust Services]

      Re: [_______ New PEPS Units] [_______ Treasury Units] of PPL Corporation,
a Pennsylvania corporation (the "COMPANY"), and PPL Capital Funding, Inc.

      The undersigned Holder hereby notifies you that it has delivered to
JPMorgan Chase Bank, as Securities Intermediary, for credit to the Collateral
Account, $______ aggregate principal amount of [Notes] [Treasury Securities] or
security entitlements with respect thereto in exchange for the [Pledged Notes]
[Pledged Treasury Securities] held in the Collateral Account, in accordance with
the Pledge Agreement, dated as of            , 2003 (the "PLEDGE AGREEMENT";
unless otherwise defined herein, terms defined in the Pledge Agreement are used
herein as defined therein), between you, the Company, the Collateral Agent and
the Securities Intermediary. The undersigned Holder has paid all applicable fees
relating to such exchange. The undersigned Holder hereby instructs you to
instruct the Collateral Agent to release to you on behalf of the undersigned
Holder the [Pledged Notes] [Pledged Treasury Securities] related to such [New
PEPS Units] [Treasury Units].

Dated:_____________________                  ___________________________________
                                                          Signature

                             Signature Guarantee: ______________________________

_________________________________
TRADES Account No. of Holder

_________________________________
DTC Account No. of Holder

                                      C-1
<PAGE>
Please print name and address of Registered Holder:

_________________________________              _________________________________
Name                                           Social Security or other Taxpayer
                                               Identification Number, if any

Address

_________________________________

_________________________________

_________________________________

                                      C-2
<PAGE>
                                                                       EXHIBIT D

                      NOTICE FROM PURCHASE CONTRACT AGENT
                                   TO HOLDERS

        (Transfer of Collateral upon Occurrence of a Termination Event)

[HOLDER]

_____________________________
____________________________
Attention:
Telecopy:___________________

            Re:   [__________ New PEPS Units] [______ Treasury Units] of PPL
                  Corporation, a Pennsylvania corporation (the "COMPANY") and
                  PPL Capital Funding, Inc.

      Please refer to the Purchase Contract Agreement, dated as of           ,
2003 (the "PURCHASE CONTRACT AGREEMENT"; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
between the Company and the undersigned, as Purchase Contract Agent and as
attorney-in-fact for the holders of New PEPS Units and Treasury Units from time
to time.

      We hereby notify you that a Termination Event has occurred and that [the
Notes][the Treasury Securities] underlying your ownership interest in _____ [New
PEPS Units] [Treasury Units] have been released and are being held by us for
your account pending receipt of transfer instructions with respect to such
[Notes][Treasury Securities] (the "RELEASED SECURITIES").

      Pursuant to Section 3.15 of the Purchase Contract Agreement, we hereby
request written transfer instructions with respect to the Released Securities.
Upon receipt of your instructions and upon transfer to us of your [New PEPS
Units][Treasury Units] effected through book-entry or by delivery to us of your
[New PEPS Units Certificate][Treasury Units Certificate], we shall transfer the
Released Securities by book-entry transfer or other appropriate procedures, in
accordance with your instructions. In the event you fail to effect such transfer
or delivery, the Released Securities and any interest thereon, shall be held in
our name, or a nominee in trust for your benefit, until such time as such [New
PEPS Units][Treasury Units] are transferred or your [New PEPS Units Certificate]
[Treasury Units Certificate] is surrendered or satisfactory evidence is provided
that such [New PEPS Units Certificate][Treasury Units Certificate] has been
destroyed, lost or stolen, together with any indemnification that we or the
Company may require.

                                      D-1
<PAGE>
Date:                                      By:  JPMORGAN CHASE BANK, as Purchase
                                                Contract Agent

                                                ------------------------------
                                                Name:
                                                Title: Authorized Signatory

                                      D-2
<PAGE>
                                                                       EXHIBIT E

                            NOTICE TO SETTLE BY CASH

JPMorgan Chase Bank
4 New York Plaza, 15th Floor
New York, New York 10004
Attention:  [Institutional Trust Services]

Re:   [_______ New PEPS Units] [_______ Treasury Units] of PPL Corporation, a
      Pennsylvania corporation (the "COMPANY") and PPL Capital Funding, Inc.

      The undersigned Holder hereby irrevocably notifies you in accordance with
Section 5.03(b)(i) of the Purchase Contract Agreement, dated as of          ,
2003 (the "PURCHASE CONTRACT AGREEMENT"; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
between the Company and you, as Purchase Contract Agent and as Attorney-in-Fact
for the Holders of the Purchase Contracts, that such Holder has elected to pay
to the Securities Intermediary for deposit in the Collateral Account, prior to
or on 11:00 a.m. (New York City time) on the [sixth][first] Business Day
immediately preceding the Purchase Contract Settlement Date (in lawful money of
the United States by certified or cashier's check or wire transfer, in each case
in immediately available funds), $______ as the Purchase Price for the shares of
Common Stock issuable to such Holder by the Company under the related Purchase
Contracts on the Purchase Contract Settlement Date. The undersigned Holder
hereby instructs you to notify promptly the Collateral Agent of the undersigned
Holders' election to make such cash settlement with respect to the Purchase
Contracts related to such Holder's [New PEPS Units] [Treasury Units].

Date:_____________________________        ______________________________________
                                          Signature

                                          Signature Guarantee: _________________

Please print name and address of Registered Holder:

                                      E-1
<PAGE>
                                                                       EXHIBIT F

                      NOTICE FROM PURCHASE CONTRACT AGENT
                     TO REMARKETING AGENT, COLLATERAL AGENT
                     AND INDENTURE TRUSTEE AND THE COMPANY
             (Settlement of Purchase Contract through Remarketing)

Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York  10036
Attention:
Telecopy:

JPMorgan Chase Bank
4 New York Plaza, 15th Floor
New York, New York 10004
Attention:  [Institutional Trust Services]
Telecopy: (212) 623-6216

PPL Corporation
Two North Ninth Street
Allentown, Pennsylvania  18101-1179
Attention:  Treasurer
Telecopy:  (610) 774-5106

                  Re: __________ New PEPS Units of PPL Corporation, a
                  Pennsylvania corporation (the "COMPANY") and PPL Capital
                  Funding, Inc., a Delaware corporation

      Please refer to the Purchase Contract Agreement, dated as of          ,
2003 (the "PURCHASE CONTRACT AGREEMENT"; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
between the Company and the undersigned, as Purchase Contract Agent and as
attorney-in-fact for the Holders of New PEPS Units from time to time.

      In accordance with Section 5.03(c) of the Purchase Contract Agreement and,
based in part on instructions received from Holders of New PEPS Units as of
11:00 a.m. (New York City time), on the seventh Business Day preceding the
Purchase Contract Settlement Date, we hereby notify you that ______ Notes are to
be tendered for purchase in the Remarketing.

                                      F-1
<PAGE>
Date:                                       By: JPMORGAN CHASE BANK, as
                                            Purchase Contract Agent

                                            ____________________________________
                                            Name:
                                            Title: Authorized Officer

                                      F-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}]]