Document:

FORM OF PURCHASE CONTRACT AGREEMENT

 

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

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	PAGE
	 	 	 	 	

	 	 	RECITALS
	 	 	1	 
	ARTICLE 1 Definitions and Other Provisions of General Applications
	 	 	1	 
	 	SECTION 1.01. Definitions
	 	 	1	 
	 	SECTION 1.02. Compliance Certificates and Opinions
	 	 	12	 
	 	SECTION 1.03. Form of Documents Delivered to Purchase Contract Agent
	 	 	12	 
	 	SECTION 1.04. Acts of Holders; Record Dates
	 	 	13	 
	 	SECTION 1.05. Notices
	 	 	14	 
	 	SECTION 1.06. Notice to Holders; Waiver
	 	 	15	 
	 	SECTION 1.07. Effect of Headings and Table of Contents
	 	 	16	 
	 	SECTION 1.08. Successors and Assigns
	 	 	16	 
	 	SECTION 1.09. Separability Clause
	 	 	16	 
	 	SECTION 1.10. Benefits of Agreement
	 	 	16	 
	 	SECTION 1.11. Governing Law
	 	 	16	 
	 	SECTION 1.12. Legal Holidays
	 	 	16	 
	 	SECTION 1.13. Counterparts
	 	 	17	 
	 	SECTION 1.14. Inspection of Agreement
	 	 	17	 
	 	SECTION 1.15. Appointment of Financial Institution as Agent for the Company
	 	 	17	 
	ARTICLE 2 Certificate Forms
	 	 	18	 
	 	SECTION 2.01. Forms of Certificates Generally
	 	 	18	 
	 	SECTION 2.02. Form of Purchase Contract Agent’s Certificate of Authentication
	 	 	19	 
	ARTICLE 3 The Securities
	 	 	19	 
	 	SECTION 3.01. Amount; Form and Denominations
	 	 	19	 
	 	SECTION 3.02. Rights and Obligations Evidenced by the Certificates
	 	 	19	 
	 	SECTION 3.03. Execution, Authentication, Delivery and Dating
	 	 	20	 
	 	SECTION 3.04. Temporary Certificates
	 	 	21	 
	 	SECTION 3.05. Registration; Registration of Transfer and Exchange
	 	 	21	 
	 	SECTION 3.06. Book-entry Interests
	 	 	23	 
	 	SECTION 3.07. Notices to Holders
	 	 	23	 
	 	SECTION 3.08. Appointment of Successor Depositary
	 	 	24	 
	 	SECTION 3.09. Definitive Certificates
	 	 	24	 
	 	SECTION 3.10. Mutilated, Destroyed, Lost and Stolen Certificates
	 	 	24	 
	 	SECTION 3.11. Persons Deemed Owners
	 	 	26	 
	 	SECTION 3.12. Cancellation
	 	 	26	 
	 	SECTION 3.13. Creation of Treasury Units by Substitution of Treasury Securities
	 	 	27	 
	 	SECTION 3.14. Reestablishment of New PEPS Units
	 	 	28	 
	 	SECTION 3.15. Transfer of Collateral upon Occurrence of Termination Event
	 	 	29	 
	 	SECTION 3.16. No Consent to Assumption
	 	 	30	 
	 	SECTION 3.17. CUSIP Numbers
	 	 	31	 
	ARTICLE 4 The Notes
	 	 	31	 
	 	SECTION 4.01. Interest Payments; Rights to Interest Payments Preserved
	 	 	31	 
	 	SECTION 4.02. Notice and Voting
	 	 	32	 
	ARTICLE 5 The Purchase Contracts
	 	 	33	 
	 	SECTION 5.01. Purchase of Shares of Common Stock
	 	 	33	 
	 	SECTION 5.02. Remarketing Agent
	 	 	35	 

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	 	PAGE
	 	 
	 	

	 	SECTION 5.02.A. Contract Adjustment Payments
	 	 	35	 
	 	SECTION 5.03. Payment of Purchase Price; Remarketing
	 	 	41	 
	 	SECTION 5.03.A. Failed Final Remarketing
	 	 	45	 
	 	SECTION 5.04. Issuance of Shares of Common Stock
	 	 	46	 
	 	SECTION 5.05. Adjustment of Settlement Rate
	 	 	46	 
	 	SECTION 5.06. Notice of Adjustments and Certain Other Events
	 	 	53	 
	 	SECTION 5.07. Termination Event; Notice
	 	 	54	 
	 	SECTION 5.08. Early Settlement
	 	 	54	 
	 	SECTION 5.09. No Fractional Shares
	 	 	56	 
	 	SECTION 5.10. Charges and Taxes
	 	 	56	 
	ARTICLE 6 Remedies
	 	 	57	 
	 	SECTION 6.01. Unconditional Right of Holders to Receive Contract Adjustment
Payments and to Purchase Shares of Common Stock
	 	 	57	 
	 	SECTION 6.02. Restoration of Rights and Remedies
	 	 	57	 
	 	SECTION 6.03. Rights and Remedies Cumulative
	 	 	57	 
	 	SECTION 6.04. Delay or Omission Not Waiver
	 	 	57	 
	 	SECTION 6.05. Undertaking for Costs
	 	 	57	 
	 	SECTION 6.06. Waiver of Stay or Extension Laws
	 	 	58	 
	ARTICLE 7 The Purchase Contract Agent
	 	 	58	 
	 	SECTION 7.01. Certain Duties and Responsibilities
	 	 	58	 
	 	SECTION 7.02. Notice of Default
	 	 	59	 
	 	SECTION 7.03. Certain Rights of Purchase Contract Agent
	 	 	60	 
	 	SECTION 7.04. Not Responsible for Recitals or Issuance of Securities
	 	 	61	 
	 	SECTION 7.05. May Hold Securities
	 	 	61	 
	 	SECTION 7.06. Money Held in Custody
	 	 	62	 
	 	SECTION 7.07. Compensation and Reimbursement
	 	 	62	 
	 	SECTION 7.08. Corporate Purchase Contract Agent Required; Eligibility
	 	 	62	 
	 	SECTION 7.09. Resignation and Removal; Appointment of Successor
	 	 	63	 
	 	SECTION 7.10. Acceptance of Appointment by Successor
	 	 	64	 
	 	SECTION 7.11. Merger, Conversion, Consolidation or Succession to Business
	 	 	65	 
	 	SECTION 7.12. Preservation of Information; Communications to Holders
	 	 	65	 
	 	SECTION 7.13. No Obligations of Purchase Contract Agent
	 	 	65	 
	 	SECTION 7.14. Tax Compliance
	 	 	66	 
	ARTICLE 8 Supplemental Agreements
	 	 	67	 
	 	SECTION 8.01. Supplemental Agreements Without Consent of Holders
	 	 	67	 
	 	SECTION 8.02. Supplemental Agreements with Consent of Holders
	 	 	67	 
	 	SECTION 8.03. Execution of Supplemental Agreements
	 	 	68	 
	 	SECTION 8.04. Effect of Supplemental Agreements
	 	 	69	 
	 	SECTION 8.05. Reference to Supplemental Agreements
	 	 	69	 
	ARTICLE 9 Merger, Consolidation, Share Exchange, Sale or Conveyance
	 	 	69	 
	 	SECTION 9.01. Covenant Not to Merge, Consolidate, Enter into a Share
Exchange, Sell or Convey Property Except Under Certain Conditions
	 	 	69	 
	 	SECTION 9.02. Rights and Duties of Successor Corporation
	 	 	70	 
	 	SECTION 9.03. Officers’ Certificate and Opinion of Counsel Given to Purchase
Contract Agent
	 	 	70	 
	ARTICLE 10 Covenants
	 	 	71	 
	 	SECTION 10.01. Performance under Purchase Contracts
	 	 	71	 
	 	SECTION 10.02. Maintenance of Office or Agency
	 	 	71	 

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	 	PAGE
	 	 
	 	

	 	SECTION 10.03. Company to Reserve Common Stock
	 	 	71	 
	 	SECTION 10.04. Covenants as to Common Stock
	 	 	72	 
	 	SECTION 10.05. Statements of Officers of the Company as to Default
	 	 	72	 
	 	SECTION 10.06. Tax Treatment
	 	 	72	 
	 	SECTION 10.07. ERISA
	 	 	72	 
	 	SECTION 10.08. Securities Contract
	 	 	73	 

	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

iii

 

     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

 

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

     “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 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 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.

2

 

     “Cash” shall have the meaning set forth in Section 1.0 of the Pledge
Agreement.

     “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

3

 

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.

     “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).

     “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.

4

 

     “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.

     “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 73⁄4% Premium Equity Participating Security
Units (PEPSSM 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).

5

 

     “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.

     “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

6

 

		
	 	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.

     “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.

7

 

     “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.

     “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.

8

 

     “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 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 Reset
Rate.

     “Reset Rate” means the interest rate per annum (to be determined by the
Reset Agent), rounded to the nearest one-thousandth (0.001) of one percent per
annum, equal to the interest rate that the Notes should bear in order for the
aggregate principal amount of the Remarketed Notes to have an approximate
aggregate market value of 100.5% of the

9

 

aggregate principal amount of such Remarketed Notes; 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.

     “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

10

 

		
	 	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.

     “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.”

11

 

     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
	 
	 	     (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

12

 

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.

     (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

13

 

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.

     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, 15th Floor

     New York, New York 10004

     Attention: Institutional Trust Services

     Telecopier No.: (212) 623-6216

14

 

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, 15th 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, 15th Floor

     New York, New York 10004

     Attention: Institutional Trust Services

     Telecopier No.: (212) 623-6216

If to the Indenture Trustee:

     JPMorgan Chase Bank

     4 New
York Plaza, 15th 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

15

 

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.

     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

16

 

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 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.

17

 

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 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

18

 

		
	 	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.

     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.

19

 

     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.

     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.

20

 

     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 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

21

 

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 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

22

 

		
	 	     (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;
	 
	 	     (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.

23

 

     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 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

24

 

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.

     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.

25

 

     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 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.

26

 

     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 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.

27

 

     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:

		
	 	     (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

28

 

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 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

29

 

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 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.

30

 

     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.

     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

31

 

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).

     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 4.02. 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

32

 

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 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.

33

 

     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.;
	 
	 	     (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

34

 

		
	 	     (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.

     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.

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     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 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

36

 

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 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

37

 

	 	 	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 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

38

 

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 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.

39

 

     (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.

     (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 9.02.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

40

 

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 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

41

 

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 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

42

 

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 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

43

 

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 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

44

 

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.

          (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).

45

 

     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
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

46

 

		
	 	     (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.

     (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

47

 

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 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:

48

 

		
	 	      (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 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

49

 

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 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)     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

50

 

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 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

51

 

		
	 	     (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 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

52

 

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.

     (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.

53

 

     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.

     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

54

 

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.

     (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.

55

 

     (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.

     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.

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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 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

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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, 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

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	 	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;

		
	 	     (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.

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     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, 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;

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	 	     (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;
	 
	 	      (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

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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.

     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

62

 

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.

     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

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	 	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 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

64

 

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 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

65

 

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.

     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.

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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;
	 
	 	    (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

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	 	(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,

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.

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     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.

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

69

 

     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
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.

70

 

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 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.

71

 

     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.

     SECTION 10.06. Tax Treatment.

     The
Company covenants and agrees and, by exchanging outstanding 73⁄4%
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.

72

 

     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).

73

 

     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,

As Collateral Agent	 	
JPMORGAN CHASE BANK,

as Custodial Agent
	By:	 	
By:
	 	
	 	
 	

	 

 	Name:

Title:	 	
 
 	
Name:

Title:

74

 

EXHIBIT A

FACE OF NEW PEPS UNITS CERTIFICATE

[If applicable, insert Global Certificate Legend]

	 	 	 	 
	No.

Number of New PEPS Units	 	
Cusip No.	 

PPL CORPORATION

NEW PEPS UNITS

(73⁄4% Premium Equity
Participating Security Units (PEPSSM 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

 

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

 

     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

 

     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

 

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

 

(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

 

     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

 

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

 

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

 

     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

 

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

 

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 73⁄4%
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

 

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

 

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 than the
Holder, please (i) print such Person’s name
and address and (ii) provide a guarantee of
your signature:	 	

REGISTERED HOLDER

Please print name and address of
Registered Holder:
	 	 	 
	
	 	

	Name	 	
Name
	 	 	 
	
	 	

	Address	 	
Address
	 	 	 
	
	 	

	
	 	

	
	 	

	
Social Security or other

Taxpayer Identification

Number, if any	 	

A-14

 

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

 

     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 the name of
and delivered to and Pledged Notes
are to be transferred to a Person
other than the Holder, please print
such Person’s name and address:	 	

REGISTERED HOLDER

Please print name and address of
Registered Holder:
	 	 	 
	
	 	

	Name	 	
Name
	 	 	 
	
	 	

	Address	 	
Address
	 	 	 
	
	 	

	
	 	

	
	 	

	
Social Security or other

Taxpayer Identification

Number, if any	 	

A-16

 

Transfer Instructions for Pledged Notes transferable upon Early Settlement or a
Termination Event:

A-17

 

[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:

	

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

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

A-18

 

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

 

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

 

     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

 

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

 

(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

 

     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

 

     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

 

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

 

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

 

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 73⁄4%
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

 

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

 

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 than the
Holder, please (i) print such Person’s name
and address and (ii) provide a guarantee of
your signature:	 	

REGISTERED HOLDER

Please print name and address of
Registered Holder:
	 	 	 
	
	 	

	Name	 	
Name
	 	 	 
	
	 	

	Address	 	
Address
	 	 	 
	
	 	

	
	 	

	
	 	

	 	 	 
	Social Security or other

Taxpayer Identification

Number, if any	 	

B-12

 

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

 

     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 the name of and
delivered to and Pledged Treasury
Securities are to be transferred to
a Person other than the Holder,
please print such Person’s name and
address:	 	

REGISTERED HOLDER

Please print name and address of
Registered Holder:
	 	 	 
	
	 	

	Name	 	
Name
	 	 	 
	
	 	

	Address	 	
Address
	 	 	 
	
	 	

	
	 	

	
	 	

	 	 	 
	Social Security or other

Taxpayer Identification

Number, if any	 	

B-14

 

Transfer Instructions for Pledged Treasury Securities transferable upon Early
Settlement or a Termination Event:

B-15

 

[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:

	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	Amount of decrease	 	 	Number of Treasury	 	 	Signature of
	 	 	Amount of increase in	 	 	in Number of	 	 	Units evidenced by this	 	 	authorized officer of
	 	 	Number of Treasury	 	 	Treasury Units	 	 	Global Certificate	 	 	Purchase Contract
	 	 	Units evidenced by	 	 	evidenced by the	 	 	following such decrease	 	 	Agent or Securities
	Date	 	the Global Certificate	 	 	Global Certificate	 	 	or increase	 	 	Custodian
	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

	
	 	
	 	 	
	 	 	
	 	 	

B-16

 

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

 

Please print name and address of Registered Holder:

	 	 	 
	
	 	

	Name	 	
Social Security or other Taxpayer

Identification Number, if any
	 	 	 
	Address	 	 
	 	 	 
	
	 	 
	
	 	 
	
	 	 

C-2

 

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

 

	 	 	 	 	 
	Date:	 	
By:
	 	JPMORGAN CHASE BANK, as

Purchase Contract

Agent
	 	 	 	 	 
	 	 	

	 	 	
Name:	 	 
	 	 	
Title:
	 	Authorized Signatory

D-2

 

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

 

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

 

	 	 	 	 	 
	Date:	 	
By:
	 	JPMORGAN CHASE BANK,
	 	 	as Purchase Contract Agent
	 	 	 	 	 
	 	 	

	 	 	
Name:	 	 
	 	 	
Title:
	 	Authorized Officer

F-2FORM OF PLEDGE AGREEMENT

 

EXHIBIT 4.3

PPL CORPORATION

and

JPMORGAN CHASE BANK, as Collateral Agent,

Securities Intermediary, Custodial Agent and Purchase Contract Agent

PLEDGE AGREEMENT

Dated as of                    , 2003

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	Section 1.	 	Definitions	 	 	2	 
	Section 2.	 	Pledge	 	 	5	 
	 	
Section 2.1
	 	Pledge
	 	 	5	 
	 	
Section 2.2
	 	Control; Financing Statement
	 	 	6	 
	 	
Section 2.3
	 	Termination
	 	 	6	 
	Section 3.	 	Distributions on Pledged Collateral	 	 	6	 
	 	
Section 3.1
	 	Income Distributions
	 	 	6	 
	 	
Section 3.2
	 	Principal Payments Following Termination Event
	 	 	6	 
	 	
Section 3.3
	 	Principal Payments Prior To or On Purchase Contract
Settlement Date
	 	 	6	 
	 	
Section 3.4
	 	Payments to Purchase Contract Agent
	 	 	7	 
	 	
Section 3.5
	 	Assets Not Properly Released
	 	 	7	 
	Section 4.	 	
Control
	 	 	 	 	8	 
	 	
Section 4.1
	 	Establishment of Collateral Account
	 	 	8	 
	 	
Section 4.2
	 	Treatment as Financial Assets
	 	 	8	 
	 	
Section 4.3
	 	Sole Control by Collateral Agent
	 	 	8	 
	 	
Section 4.4
	 	Securities Intermediary’s Location
	 	 	9	 
	 	
Section 4.5
	 	No Other Claims
	 	 	9	 
	 	
Section 4.6
	 	Investment and Release
	 	 	9	 
	 	
Section 4.7
	 	Statements and Confirmations
	 	 	9	 
	 	
Section 4.8
	 	Tax Allocations
	 	 	9	 
	 	
Section 4.9
	 	No Other Agreements
	 	 	9	 
	 	
Section 4.10
	 	Powers Coupled With An Interest
	 	 	10	 
	 	
Section 4.11
	 	Waiver of Lien; Waiver of Set-off
	 	 	10	 
	 	
Section 4.12
	 	Wire Transfer Instructions
	 	 	10	 
	Section 5.	 	Initial Deposit; Establishment of Treasury Units and Re-establishment of New PEPS Units	 	 	10	 
	 	
Section 5.1
	 	Initial Deposit of Notes
	 	 	10	 
	 	
Section 5.2
	 	Establishment of Treasury Units
	 	 	10	 
	 	
Section 5.3
	 	Reestablishment of New PEPS Units
	 	 	11	 
	 	
Section 5.4
	 	Termination Event
	 	 	12	 
	 	
Section 5.5
	 	Cash Settlement
	 	 	13	 
	 	
Section 5.6
	 	Early Settlement
	 	 	15	 
	 	
Section 5.7
	 	Application of Proceeds in Settlement of Purchase Contracts
	 	 	16	 

i

 

	 	 	 	 	 	 	 	 	 
	Section 6.	 	Voting Rights – Pledged Notes	 	 	18	 
	Section 7.	 	Rights and Remedies	 	 	18	 
	 	
Section 7.1
	 	Rights and Remedies of the Collateral Agent
	 	 	18	 
	 	
Section 7.2
	 	Substitutions
	 	 	19	 
	Section 8.	 	Representations and Warranties; Covenants	 	 	19	 
	 	
Section 8.1
	 	Representations and Warranties
	 	 	19	 
	 	
Section 8.2
	 	Covenants
	 	 	20	 
	Section 9.	 	The Collateral Agent, the Securities Intermediary and the Custodial Agent	 	 	21	 
	 	
Section 9.1
	 	Appointment, Powers and Immunities
	 	 	21	 
	 	
Section 9.2
	 	Instructions of the Company
	 	 	22	 
	 	
Section 9.3
	 	Reliance by Collateral Agent, Securities Intermediary and
Custodial Agent
	 	 	22	 
	 	
Section 9.4
	 	Rights in Other Capacities
	 	 	23	 
	 	
Section 9.5
	 	Non-Reliance on Collateral Agent, Securities Intermediary and
Custodial Agent
	 	 	23	 
	 	
Section 9.6
	 	Compensation and Indemnity
	 	 	24	 
	 	
Section 9.7
	 	Failure to Act
	 	 	24	 
	 	
Section 9.8
	 	Resignation of Collateral Agent, Securities Intermediary and
Custodial Agent
	 	 	25	 
	 	
Section 9.9
	 	Right to Appoint Agent or Advisor
	 	 	26	 
	 	
Section 9.10
	 	Survival
	 	 	26	 
	 	
Section 9.11
	 	Exculpation
	 	 	27	 
	Section 10.	 	
Amendment
	 	 	 	 	27	 
	 	
Section 10.1
	 	Amendment Without Consent of Holders
	 	 	27	 
	 	
Section 10.2
	 	Amendment With Consent of Holders
	 	 	27	 
	 	
Section 10.3
	 	Execution of Amendments
	 	 	28	 
	 	
Section 10.4
	 	Effect of Amendments
	 	 	29	 
	 	
Section 10.5
	 	Reference to Amendments
	 	 	29	 
	Section 11.	 	
Miscellaneous
	 	 	 	 	29	 
	 	
Section 11.1
	 	No Waiver
	 	 	29	 
	 	
Section 11.2
	 	Governing Law
	 	 	29	 
	 	
Section 11.3
	 	Notices
	 	 	30	 
	 	
Section 11.4
	 	Successors and Assigns
	 	 	30	 
	 	
Section 11.5
	 	Counterparts
	 	 	30	 
	 	
Section 11.6
	 	Severability
	 	 	30	 
	 	
Section 11.7
	 	Expenses, Etc.
	 	 	31	 
	 	
Section 11.8
	 	Security Interest Absolute
	 	 	32	 
	 	
Section 11.9
	 	Notice of Termination Event
	 	 	32	 
	 	
Section 11.10
	 	Book-entry Interests
	 	 	32	 

ii

 

	 	 	 	 	 
	EXHIBIT A	 	
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO
COLLATERAL AGENT (Establishment of Treasury
Units)
	 	A-1
	EXHIBIT B	 	
INSTRUCTION FROM COLLATERAL AGENT TO
SECURITIES INTERMEDIARY (Establishment of
Treasury Units)
	 	B-1
	EXHIBIT C	 	
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO
COLLATERAL AGENT (Reestablishment of New PEPS
Units )
	 	C-1
	EXHIBIT D	 	
INSTRUCTION FROM COLLATERAL AGENT TO
SECURITIES INTERMEDIARY (Reestablishment of
New PEPS Units)
	 	D-1
	EXHIBIT E	 	
NOTICE OF CASH SETTLEMENT FROM SECURITIES
INTERMEDIARY TO PURCHASE CONTRACT AGENT (Cash
Settlement Amounts)
	 	E-1
	EXHIBIT F	 	
INSTRUCTION TO CUSTODIAL AGENT REGARDING
REMARKETING
	 	F-1
	EXHIBIT G	 	
INSTRUCTION TO CUSTODIAL AGENT REGARDING WITHDRAWAL FROM
REMARKETING
	 	G-1

iii

 

PLEDGE AGREEMENT

     PLEDGE AGREEMENT, dated as of                    , 2003, among PPL Corporation, a
Pennsylvania corporation (the “Company”), JPMorgan Chase Bank, a New York
banking corporation, as collateral agent (in such capacity, together with its
successors in such capacity, the “Collateral Agent”) and as securities
intermediary with respect to the Collateral Account (as defined below) (in such
capacity, together with its successors in such capacity, the “Securities
Intermediary”), JPMorgan Chase Bank, a New York banking corporation, as
custodial agent for the Company (in such capacity, together with its successors
in such capacity, the “Custodial Agent”) and JPMorgan Chase Bank, a New York
banking corporation, as purchase contract agent and as attorney-in-fact of the
Holders from time to time of the Securities under the Purchase Contract
Agreement (in such capacity, together with its successors in such capacity, the
“Purchase Contract Agent”).

RECITALS

     The Company and the Purchase Contract Agent are parties to the Purchase
Contract Agreement dated as of the date hereof (as modified and supplemented
and in effect from time to time, the “Purchase Contract Agreement”), pursuant
to which there may be issued up to $           New PEPS Units (including any
Treasury Units (as referred to below)), the “Securities”).

     Each Security, at issuance, consists of a unit comprised of (a) a stock
purchase contract (the “Purchase Contract”) under which the Holder will
purchase from the Company on May 18, 2004 (the “Purchase Contract Settlement
Date”), for an amount equal to $25 (the “Stated Amount”), a number of shares of
PPL Corporation common stock, par value $0.01 per share (“Common Stock”), equal
to the Settlement Rate, and (b) a 1/40, or 2.5% undivided beneficial ownership
interest in a note (the “Note” and, 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) issued by PPL Capital Funding, Inc. (the “Issuer”), having a
principal amount equal to $1,000 and maturing on May 18, 2006, and guaranteed
by the Company.

     Pursuant to the terms of the Purchase Contract Agreement and the Purchase
Contracts, the Holders of the Securities have irrevocably authorized the
Purchase Contract Agent, as attorney-in-fact of such Holders to, among other
things, execute and deliver this Agreement on behalf of such Holders and grant
the pledge provided herein of the Collateral Account to secure the Obligations
(as defined below).

     Accordingly, the Company, the Collateral Agent, the Securities
Intermediary, the Custodial Agent and the Purchase Contract Agent, on its own
behalf and as attorney-in-fact of the Holders from time to time of the
Securities, agree as follows:

 

 

     Section 1. Definitions

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

     (a)  the terms defined in this Section 1 have the meanings assigned to them
in this Section 1 and include the plural as well as the singular;

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

     (c)  the following terms which are defined in the UCC shall have the
meanings set forth therein: “certificated security,” “control,” “financial
asset,” “entitlement order,” “securities
account” and “security entitlement”;

     (d)  the following terms have the meanings assigned to them in the Purchase
Contract Agreement: “Act,” “Bankruptcy Code,” “Beneficial Owner,” “Business
Day,” “Cash Settlement,” “Certificate,” “Code,” “Dealer Manager Agreement,”
“Depositary,” “Early Settlement,” “Early Settlement Amount,” “Early Settlement
Date,” “Failed Final Remarketing,” “Holder,” “Indenture Trustee” “New PEPS
Unit,” “Notes,” “Officers’ Certificate,” “Opinion of Counsel,” “Outstanding
Securities,” “Person,” “Purchase Contract,” “Purchase Contract Settlement
Date,” “Purchase Price,” “Remarketing Agent,” “Remarketing Agreement,”
“Remarketing Fee,” “Settlement Rate,” “Successful Remarketing,” “Supplemental
Remarketing Agreement,” “Termination Event,” and
“Treasury Unit”; and

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

     “Agreement” means this Pledge Agreement, as the same may be amended,
modified or supplemented from time to time by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.

     “Cash” means any coin or currency of the United States as at the time
shall be legal tender for payment of public and private debts.

     “Collateral Account” means the collective reference to:

		
	 	     (1) the securities account of JPMorgan Chase Bank, as Collateral
Agent, maintained by the Securities Intermediary and designated “JPMorgan
Chase Bank, as Collateral Agent of PPL Corporation, as pledgee of
JPMorgan Chase Bank, as the Purchase Contract Agent on behalf of and as
attorney-in-fact for the Holders of 73⁄4% Premium Equity Participating
Security Units, Series B”;

		
	 	     (2) all investment property and other financial assets from time to
time credited to the Collateral Account, including, without limitation,
(A) the Notes

2

 

		
	 	and security entitlements relating thereto which are a component of
the New PEPS Units from time to time, (B) any Treasury Securities and
security entitlements relating thereto delivered from time to time upon
establishment of Treasury Units in accordance with Section 5.2 hereof and
(C) payments made by Holders pursuant to Section 5.5 hereof;
	 
	 	     (3) all Proceeds of any of the foregoing (whether such Proceeds
arise before or after the commencement of any proceeding under any
applicable bankruptcy, insolvency or other similar law, by or against the
pledgor or with respect to the pledgor); and
	 
	 	     (4) all powers and rights now owned or hereafter acquired under or
with respect to the Collateral Account
	 
	 	     ((2), (3) and (4), being collectively referred to as the “Collateral”).
	 
	 	     “Company” means the Person named as the “Company” in the first
paragraph of this instrument until a successor shall have become such,
and thereafter “Company” shall mean such successor.
	 
	 	     “Obligations” means, with respect to each Holder, the collective
reference to all obligations and liabilities of such Holder under such
Holder’s Purchase Contract, the Purchase Contract Agreement, and this
Agreement or any other document made, delivered or given in connection
herewith or therewith, in each case whether on account of principal,
interest (including, without limitation, interest accruing before and
after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to such
Holder, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of
counsel to the Company or the Collateral Agent or the Securities
Intermediary or the Custodial Agent that are required to be paid by the
Holder pursuant to the terms of any of the foregoing agreements).
	 
	 	     “Permitted Investments” means any one or more of the following which
shall mature not later than the next succeeding Business Day:
	 
	 	     (1) any evidence of indebtedness with an original maturity of 365
days or less issued, or directly and fully guaranteed or insured, by the
United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America
is pledged in support of the timely payment thereof or such indebtedness
constitutes a general obligation of it);
	 
	 	     (2) deposits (including demand deposits and trust accounts
(including the Collateral Agent’s cash escrow product)), certificates of
deposit or acceptances with an original maturity of 365 days or less of
any institution which is a member

3

 

		
	 	of the Federal Reserve System having combined capital and surplus
and undivided profits of not less than $200.0 million at the time of
deposit (and which may include the Collateral Agent);
	 
	 	     (3) investments with an original maturity of 365 days or less of any
Person that is fully and unconditionally guaranteed by a bank referred to
in clause (2);
	 
	 	     (4) repurchase agreements and reverse repurchase agreements relating
to marketable direct obligations issued or unconditionally guaranteed by
the United States Government or issued by any agency thereof and backed
as to timely payment by the full faith and credit of the United States
Government;
	 
	 	     (5) investments in commercial paper, other than commercial paper
issued by the Company or its affiliates, of any corporation incorporated
under the laws of the United States or any State thereof, which
commercial paper has a rating at the time of purchase at least equal to
“A-1” by Standard & Poor’s Ratings Services (“S&P”) or at least equal to
“P-1” by Moody’s Investors Service, Inc. (“Moody’s”); and
	 
	 	     (6) investments in money market funds (including, but not limited
to, money market funds managed by the Collateral Agent or an affiliate of
the Collateral Agent) registered under the Investment Company Act of
1940, as amended, rated in the highest applicable rating category by S&P
or Moody’s.
	 
	 	     “Pledge” means the lien and security interest created by this
Agreement.
	 
	 	     “Pledged Notes” means the Notes and security entitlements with
respect thereto from time to time credited to the Collateral Account and
not then released from the Pledge.
	 
	 	     “Pledged Treasury Securities” means Treasury Securities and security
entitlements with respect thereto from time to time credited to the
Collateral Account and not then released from the Pledge.
	 
	 	     “Proceeds” has the meaning ascribed thereto in the UCC and includes,
without limitation, all interest, dividends, cash, instruments,
securities, financial assets (as defined in § 8-102(a)(9) of the UCC) and
other property received, receivable or otherwise distributed upon the
sale, exchange, collection or disposition of any financial assets from
time to time held in the Collateral Account.
	 
	 	     “Purchase Contract Agent” has the meaning specified in the paragraph
preceding the recitals of this Agreement.
	 
	 	     “Separate Notes” means any Notes that are not Pledged Notes.

4

 

		
	 	     “TRADES” means the Treasury/Reserve Automated Debt Entry System
maintained by the Federal Reserve Bank of New York pursuant to the TRADES
Regulations.
	 
	 	     “TRADES Regulations” means the regulations of the United States
Department of the Treasury, published at 31 C.F.R. Part 357, as amended
from time to time. Unless otherwise defined herein, all terms defined in
the TRADES Regulations are used herein as therein defined.
	 
	 	     “Transfer” means in the case of certificated securities in
registered form, delivery as provided in § 8-301(a) of the UCC, indorsed
to the transferee or in blank by an effective endorsement; in the case of
Treasury Securities, registration of the transferee as the owner of such
Treasury Securities on TRADES; and in the case of security entitlements,
including, without limitation, security entitlements with respect to
Treasury Securities, a securities intermediary indicating by book entry
that such security entitlement has been credited to the transferee’s
securities account.
	 
	 	     “Treasury Securities” means zero-coupon U.S. treasury securities
(Cusip No. 912820BJ5) that mature on May 17, 2004.
	 
	 	     “UCC” means the Uniform Commercial Code as in effect in the State of
New York from time to time.
	 
	 	     “Value” means, with respect to any item of Collateral on any date,
as to (1) Cash, the face amount thereof and (2) Treasury Securities or
Pledged Treasury Securities, the aggregate principal amount thereof due
at maturity and (3) Notes or Pledged Notes, the aggregate principal
amount thereof or portion thereof due at maturity.

     Section 2. Pledge

     Section 2.1 Pledge

     Each Holder, acting through the Purchase Contract Agent as such Holder’s
attorney-in-fact, hereby pledges and grants to the Collateral Agent, as agent
of and for the benefit of the Company, a continuing first priority security
interest in and to, and a lien upon and right of set-off against, all of such
Holder’s right, title and interest in and to the Collateral Account to secure
the prompt and complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of the Obligations. The Collateral
Agent shall have all of the rights, remedies and recourses with respect to the
Collateral afforded a secured party by the UCC, in addition to, and not in
limitation of, the other rights, remedies and recourses afforded to the
Collateral Agent by this Agreement.

5

 

     Section 2.2 Control; Financing Statement

     (a)  The Collateral Agent shall have control of the Collateral Account
pursuant to the provisions of Section 4.3 of this Agreement.

     (b)  As soon as practicable after the date of initial issuance of the
Securities, the Company shall deliver to the Collateral Agent a financing
statement under the UCC which was prepared for filing by the Company in the
Office of the Secretary of State of the State of New York and any other
jurisdictions which the Company deems necessary, naming the Purchase Contract
Agent, as attorney-in-fact for the Holders, as Debtors, and describing the
Collateral, together with evidence of the filing thereof and of the filing
information of the filing officer of each office in which so filed.

     Section 2.3 Termination

     As to each Holder, this Agreement and the Pledge created hereby shall
terminate upon the satisfaction of such Holder’s Obligations. Upon such
termination, the Securities Intermediary shall Transfer such Holder’s portion
of the Collateral, if any, to the Purchase Contract Agent for distribution to
such Holder in accordance with his interest, free and clear of any lien, pledge
or security interest created hereby.

     Section 3. Distributions on Pledged Collateral

     Section 3.1 Income Distributions

     All income distributions received by the Securities Intermediary on
account of the Notes or Permitted Investments from time to time held in the
Collateral Account shall be distributed to the Purchase Contract Agent
(JPMorgan Chase Bank, ABA# 021000021; Account# 507947533; Account: Incoming
Wire - Project Finance; Ref.: PPL Corporation New PEPS Units Account#     *     )
for the benefit of the applicable Holders as provided in the Purchase Contracts
or Purchase Contract Agreement.

     Section 3.2 Principal Payments Following Termination Event

     All payments received by the Securities Intermediary following a
Termination Event of (1) the aggregate principal amount of the Pledged Notes or
securities entitlements thereto, or (2) the principal amount of the Pledged
Treasury Securities or security entitlements with respect thereto, shall be
distributed to the Purchase Contract Agent for the benefit of the applicable
Holders for distribution to such Holders in accordance with their respective
interests.

     Section 3.3 Principal Payments Prior To or On Purchase Contract
Settlement Date

     (a)  Except as provided in clause 3.3(b) below, if no Termination Event
shall have occurred, all payments received by the Securities Intermediary of
(1) an amount equal to

6

 

100% of the aggregate principal amount with respect to the Pledged Notes
or security entitlements with respect thereto or (2) the principal amount of
Pledged Treasury Securities or security entitlements with respect thereto,
shall be held and invested in Permitted Investments until the Purchase Contract
Settlement Date and on the Purchase Contract Settlement Date distributed to the
Company as provided in Section 5.7 hereof. Any balance remaining in the
Collateral Account shall be distributed to the Purchase Contract Agent for the
benefit of the applicable Holders for distribution to such Holders in
accordance with their respective interests. Upon the request of the Securities
Intermediary, the Company shall instruct the Securities Intermediary as to the
type of Permitted Investments in which any payments made under this Section
shall be invested, provided, however, that if the Company fails to deliver such
instructions by 10:30 a.m. (New York City time), the Securities Intermediary
shall invest such Cash in the cash escrow product referred to in clause (2) of
the definition of Permitted Investments.

     (b)  All payments received by the Securities Intermediary of (1) an amount
equal to 100% of the aggregate principal amount with respect to the Notes or
security entitlements with respect thereto or (2) the principal amount of
Treasury Securities or security entitlements with respect thereto, that, in
each case, have been released from the Pledge shall be distributed to the
Purchase Contract Agent for the benefit of the applicable Holders for
distribution to such Holders in accordance with their respective interests.

     Section 3.4 Payments to Purchase Contract Agent

     The Securities Intermediary shall use all commercially reasonable efforts
to deliver payments to the Purchase Contract Agent hereunder to the account
designated by the Purchase Contract Agent for such purpose not later than the
close of business on the Business Day such payment is received by the
Securities Intermediary; provided, however, that if 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 Securities Intermediary shall use all commercially
reasonable efforts to deliver such payment no later than 10:30 a.m. (New York
City time) on the next succeeding Business Day.

     Section 3.5 Assets Not Properly Released

     If the Purchase Contract Agent or any Holder shall receive any principal
payments on account of financial assets credited to the Collateral Account and
not released therefrom in accordance with this Agreement, the Purchase Contract
Agent or such Holder shall hold the same as trustee of an express trust for the
benefit of the Company and, upon receipt of an Officers’ Certificate of the
Company so directing, promptly deliver the same to the Securities Intermediary
for credit to the Collateral Account or to the Company for application to the
Obligations of the Holders, and the Purchase Contract Agent and Holders shall
acquire no right, title or interest in any such payments of principal amounts
so received.

7

 

     Section 4. Control

     Section 4.1 Establishment of Collateral Account

     The Securities Intermediary hereby confirms that:

		
	 	     (1) the Securities Intermediary has established the Collateral
Account;
	 
	 	     (2) the Collateral Account is a securities account;
	 
	 	     (3) subject to the terms of this Agreement, the Securities
Intermediary shall treat the Purchase Contract Agent as entitled to
exercise the rights that comprise any financial asset credited to the
Collateral Account;
	 
	 	     (4) all property delivered to the Securities Intermediary pursuant
to this Agreement or the Purchase Contract Agreement will be credited
promptly to the Collateral Account; and
	 
	 	     (5) all securities or other property underlying any financial assets
credited to the Collateral Account shall be registered in the name of the
Securities Intermediary, indorsed to the Securities Intermediary or in
blank, or credited to another securities account maintained in the name
of the Securities Intermediary, and in no case will any financial asset
credited to the Collateral Account be registered in the name of the
Purchase Contract Agent or any Holder, payable to the order of the
Purchase Contract Agent or any Holder or specially indorsed to the
Purchase Contract Agent or any Holder, unless indorsed to the Securities
Intermediary or in blank.

     Section 4.2 Treatment as Financial Assets

     Each item of property (whether investment property, financial asset,
security, instrument or cash) credited to the Collateral Account shall be
treated as a financial asset.

     Section 4.3 Sole Control by Collateral Agent

     Except as provided in Section 6, at all times prior to the termination of
the Pledge, the Collateral Agent shall have sole control of the Collateral
Account, and the Securities Intermediary shall take instructions and directions
with respect to the Collateral Account solely from the Collateral Agent. If at
any time the Securities Intermediary shall receive an entitlement order issued
by the Collateral Agent and relating to the Collateral Account, the Securities
Intermediary shall comply with such entitlement order without further consent
by the Purchase Contract Agent or any Holder or any other Person. Except as
otherwise permitted by this Agreement, until termination of the Pledge, the
Securities Intermediary will not comply with any entitlement orders issued by
the Purchase Contract Agent or any Holder.

8

 

     Section 4.4 Securities Intermediary’s Location

     The Collateral Account, and the rights and obligations of the Securities
Intermediary, the Collateral Agent, the Purchase Contract Agent and the Holders
with respect thereto, shall be governed by the laws of the State of New York.
Regardless of any provision in any other agreement, for purposes of the UCC,
New York shall be deemed to be the Securities Intermediary’s location.

     Section 4.5 No Other Claims

     Except for the claims and interest of the Collateral Agent and of the
Purchase Contract Agent and the Holders in the Collateral Account, the
Securities Intermediary (without making any investigation) does not know of any
claim to, or interest in, the Collateral Account or in any financial asset
credited thereto. If any Person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment, execution or
similar process) against the Collateral Account or in any financial asset
carried therein, the Securities Intermediary will promptly notify the
Collateral Agent and the Purchase Contract Agent.

     Section 4.6 Investment and Release

     All proceeds of financial assets from time to time deposited in the
Collateral Account shall be invested and reinvested as provided in this
Agreement. At all times prior to termination of the Pledge, no property shall
be released from the Collateral Account except in accordance with this
Agreement or upon written instructions of the Collateral Agent.

     Section 4.7 Statements and Confirmations

     The Securities Intermediary will send copies of all statements,
confirmations and other correspondence concerning the Collateral Account and
any financial assets credited thereto to each of the Purchase Contract Agent
and the Collateral Agent, simultaneously, at their addresses for notices under
this Agreement.

     Section 4.8 Tax Allocations

     The Company shall report all items of income, gain, expense and loss
recognized in the Collateral Account, to the extent such reporting is required
by law, to the Internal Revenue Service and all state and local taxing
authorities under the names and taxpayer identification numbers of the Holders.
None of the Securities Intermediary, the Collateral Agent or the Custodial
Agent shall have any tax reporting duties hereunder.

     Section 4.9 No Other Agreements

     The Securities Intermediary has not entered into, and prior to the
termination of the Pledge will not enter into, any agreement with any other
Person relating to the

9

 

Collateral Account or any financial assets credited thereto, including,
without limitation, any agreement to comply with entitlement orders of any
Person other than the Collateral Agent.

     Section 4.10 Powers Coupled With An Interest

     The rights and powers granted in this Section 4 to the Collateral Agent
have been granted in order to perfect its security interests in the Collateral
Account, are powers coupled with an interest and will be affected neither by
the bankruptcy of the Purchase Contract Agent or any Holder nor by the lapse of
time. The obligations of the Securities Intermediary under this Section 4 shall
continue in effect until the termination of the Pledge.

     Section 4.11 Waiver of Lien; Waiver of Set-off

     The Securities Intermediary waives any security interest, lien or right to
make deductions or setoffs that it may now have or hereafter acquire in or with
respect to the Collateral Account, any financial asset credited thereto or any
security entitlement in respect thereof. Neither the financial assets credited
to the Collateral Account nor the security entitlements in respect thereof will
be subject to deduction, set-off, banker’s lien, or any other right in favor of
any Person other than the Company.

     Section 4.12 Wire Transfer Instructions

     Any moneys transferred hereunder for deposit into the Collateral Account
shall be delivered by wire transfer in immediately available funds addressed as
follows: JPMorgan Chase Bank, ABA# 021000021; Account# 507947533; Account:
Incoming Wire - Project Finance; Ref.: PPL Corporation New PEPS Units
Collateral Account#     *     .

     Section 5. Initial Deposit; Establishment of Treasury Units and
Reestablishment of New PEPS Units

     Section 5.1 Initial Deposit of Notes

     Prior to or concurrently with the execution and delivery of this
Agreement, the Purchase Contract Agent, on behalf of the initial Holders of the
New PEPS Units, shall Transfer to the Securities Intermediary, for credit to
the Collateral Account, the Notes or security entitlements relating thereto,
and the Securities Intermediary shall indicate by book-entry that a securities
entitlement to such Notes has been credited to the Collateral Account.

     Section 5.2 Establishment of Treasury Units

     (a)  At any time on or prior to the seventh Business Day immediately
preceding the Purchase Contract Settlement Date, a Holder of New PEPS Units
shall have the right

10

 

to substitute Treasury Securities or security entitlements with respect
thereto for the Notes securing such Holder’s Obligations under the Purchase
Contract comprising a part of such Holder’s New PEPS Units in integral
multiples of 40 New PEPS Units by:

		
	 	     (1) Transferring to the Securities Intermediary for credit to the
Collateral Account Treasury Securities or security entitlements with
respect thereto having a Value equal to the aggregate principal amount at
maturity of Pledged Notes to be released accompanied by a notice,
substantially in the form of Exhibit C to the Purchase Contract
Agreement, and all applicable fees, whereupon the Purchase Contract Agent
shall deliver to the Collateral Agent a notice, substantially in the form
of Exhibit A hereto, (A) stating that such Holder has Transferred
Treasury Securities or security entitlements with respect thereto to the
Securities Intermediary for credit to the Collateral Account, (B) stating
the Value of the Treasury Securities or securities entitlements with
respect thereto Transferred by or on behalf of such Holder and (C)
requesting that the Collateral Agent release from the Pledge the Pledged
Notes that are a component of such New PEPS Units; and

		
	 	     (2) delivering the related New PEPS Units to the Purchase Contract
Agent.

       Upon receipt of such notice and confirmation that Treasury Securities or
security entitlements with respect thereto have been credited to the Collateral
Account as described in such notice, the Collateral Agent shall instruct the
Securities Intermediary by a notice, substantially in the form of Exhibit B
hereto, to release such Pledged Notes from the Pledge by Transfer to the
Purchase Contract Agent for distribution to such Holder, free and clear of any
lien, pledge or security interest created hereby.

       (b)  Upon credit to the Collateral Account of Treasury Securities or
security entitlements with respect thereto delivered by a Holder of New PEPS
Units and receipt of the related instruction from the Collateral Agent, the
Securities Intermediary shall release the Pledged Notes and shall promptly
transfer the same to the Purchase Contract Agent for distribution to such
Holder, free and clear of any lien, pledge or security interest created hereby.

       (c)  All Treasury Securities delivered under this Agreement for credit to
the Collateral Account shall be delivered addressed as follows: JPMChase/Cust,
ABA# 021000021; Reference Account C29900; F/F/C PPL Corporation New PEPS Units
Collateral Account#     *     ; Contact: Alfia Monastra, (212) 623-5181.

     Section 5.3 Reestablishment of New PEPS Units

       (a)  At any time on or prior to the seventh Business Day immediately
preceding the Purchase Contract Settlement Date, a Holder of Treasury Units
shall have the right to reestablish New PEPS Units by substitution of Notes or
security entitlements with respect

11

 

thereto, for Pledged Treasury Securities or security entitlements with
respect thereto in integral multiples of 40 Treasury Units by:

		
	 	     (1) Transferring to the Securities Intermediary for credit to the
Collateral Account Notes or security entitlements with respect thereto
having a principal amount equal to the Value of the Pledged Treasury
Securities to be released, accompanied by a notice, substantially in the
form of Exhibit C to the Purchase Contract Agreement, and all applicable
fees whereupon the Purchase Contract Agent shall deliver to the
Collateral Agent a notice, substantially in the form of Exhibit C hereto,
stating that such Holder has Transferred Notes or security entitlements
with respect thereto, to the Securities Intermediary for credit to the
Collateral Account and requesting that the Collateral Agent release from
the Pledge the Pledged Treasury Securities related to such Treasury
Units; and

		
	 	     (2) Delivering the related Treasury Units to the Purchase Contract
Agent.

       Upon receipt of such notice and confirmation that Notes or security
entitlements thereto have been credited to the Collateral Account as described
in such notice, the Collateral Agent shall instruct the Securities Intermediary
by a notice in the form provided in Exhibit D hereto to release such Pledged
Treasury Securities from the Pledge by Transfer to the Purchase Contract Agent
for distribution to such Holder, free and clear of any lien, pledge or security
interest created hereby.

       (b)  Upon credit to the Collateral Account of Notes or security
entitlements with respect thereto delivered by a Holder of Treasury Units and
receipt of the related instruction from the Collateral Agent, the Securities
Intermediary shall release the Pledged Treasury Securities and shall promptly
transfer the same to the Purchase Contract Agent for distribution to such
Holder, free and clear of any lien, pledge or security interest created hereby.

       Section 5.4 Termination Event

       (a)  Upon receipt by the Collateral Agent of written notice from the
Company or the Purchase Contract Agent that a Termination Event has occurred,
the Collateral Agent shall release all Collateral from the Pledge and shall
promptly Transfer:

		
	 	     (1) any Pledged Notes or security entitlements with respect thereto;

		
	 	     (2) any Pledged Treasury Securities; and

		
	 	     (3) payments by Holders (or the Permitted Investments of such
payments) pursuant to Section 5.5 hereof,

to the Purchase Contract Agent for the benefit of the Holders for distribution
to such Holders in accordance with their respective interests, free and clear
of any lien, pledge or security interest or other interest created hereby;
provided, however, if any Holder shall

12

 

be entitled to receive less than $1,000 with respect to his ownership interest
in a Treasury Security, the Purchase Contract Agent shall have the right to
dispose of such interest for cash and deliver to such Holder cash in lieu of
delivering the Treasury Security.

       (b)  If such Termination Event shall result from the Company’s becoming a
debtor under the Bankruptcy Code, and if the Collateral Agent shall for any
reason fail promptly to effectuate the release and Transfer of all Pledged
Notes, the Pledged Treasury Securities or payments by Holders (or the Permitted
Investments of such payments) pursuant to Section 5.5 hereof, as the case may
be, as provided by this Section 5.4, the Purchase Contract Agent shall:

		
	 	     (1) use its commercially reasonable efforts to obtain an opinion of
a nationally recognized law firm reasonably acceptable to the Collateral
Agent to the effect that, as a result of the Company’s being the debtor
in such a bankruptcy case, the Collateral Agent will not be prohibited
from releasing or Transferring the Collateral as provided in this Section
5.4, and shall deliver such opinion to the Collateral Agent within ten
days after the occurrence of such Termination Event, and if (A) the
Purchase Contract Agent shall be unable to obtain such opinion within ten
days after the occurrence of such Termination Event or (B) the Collateral
Agent shall continue, after delivery of such opinion, to refuse to
effectuate the release and Transfer of all Pledged Notes, the Pledged
Treasury Securities, the payments by Holders or the Permitted Investments
of such payments pursuant to Section 5.5 hereof or the Proceeds of any of
the foregoing, as the case may be, as provided in this Section 5.4, then
the Purchase Contract Agent shall within fifteen days after the
occurrence of such Termination Event commence an action or proceeding in
the court having jurisdiction of the Company’s case under the Bankruptcy
Code seeking an order requiring the Collateral Agent to effectuate the
release and transfer of all Pledged Notes, the Pledged Treasury
Securities, or the payments by Holders or the Permitted Investments of
such payments pursuant to Section 5.5 hereof, or as the case may be, as
provided by this Section 5.4; or

		
	 	     (2) commence an action or proceeding like that described in clause
5.4(b)(1) hereof within ten days after the occurrence of such Termination
Event.

       Section 5.5 Cash Settlement

       (a)  Upon receipt by the Collateral Agent of (1) (i) in the case of New
PEPS Units, a notice from the Purchase Contract Agent promptly after the
receipt by the Purchase Contract Agent of a notice from a Holder of New PEPS
Units prior to or at 11:00 a.m. (New York City time) on the seventh Business
Day immediately preceding the Purchase Contract Settlement Date that such
Holder has elected, in accordance with the procedures specified in Section
5.03(b)(i) of the Purchase Contract Agreement to effect a Cash Settlement, or
(ii) in the case of Treasury Units, receipt of such notice on the second
Business Day immediately preceding the Purchase Contract Settlement Date that
such

13

 

Holder has elected, in accordance with the procedures specified in Section
5.03(h)(i) of the Purchase Contract Agreement to effect a Cash Settlement, and
(2) payment by such Holder by deposit in the Collateral Account prior to or at
11:00 a.m. (New York City time) (i) in the case of New PEPS Units, on the sixth
Business Day immediately preceding the Purchase Contract Settlement Date, or
(ii) in the case of Treasury Units, on the Business Day immediately preceding
the Purchase Contract Settlement Date, of the Purchase Price in lawful money of
the United States by wire transfer of immediately available funds payable to or
upon the order of the Securities Intermediary, then the Collateral Agent shall:

		
	 	     (1) instruct the Securities Intermediary promptly to invest any such
Cash in Permitted Investments;

		
	 	     (2) release from the Pledge the New PEPS Unit holder’s or the
Treasury Unit holder’s related Pledged Notes or Pledged Treasury
Securities, as applicable, as to which such Holder has elected to effect
a Cash Settlement pursuant to this Section 5.5(a); and

		
	 	     (3) instruct the Securities Intermediary to Transfer all such
Pledged Notes or the Pledged Treasury Securities, as the case may be, to
the Purchase Contract Agent for the benefit of such Holder, in each case
free and clear of the Pledge created hereby, for distribution to such
Holder.

       The Company shall instruct the Securities Intermediary as to the type of
Permitted Investments in which any such Cash shall be invested; provided,
however, that if the Company fails to deliver such instructions by 10:30 a.m.
(New York City time), the Securities Intermediary shall invest such Cash in the
cash escrow product referred to in clause (2) of the definition of Permitted
Investments.

       Upon receipt of the proceeds upon the maturity of the Permitted
Investments on the Purchase Contract Settlement Date, the Collateral Agent
shall (A) instruct the Securities Intermediary to pay the portion of such
proceeds, in an aggregate amount equal to the Purchase Price, to the Company on
the Purchase Contract Settlement Date, and (B) instruct the Securities
Intermediary to release any amounts in excess of the Purchase Price earned from
such Permitted Investments to the Purchase Contract Agent for distribution to
such Holder.

       (b)  If a Holder of New PEPS Units notifies the Purchase Contract Agent as
provided in paragraph 5.03(b)(i) of the Purchase Contract Agreement of its
intention to pay the Purchase Price in cash, but fails to make such payment as
required by paragraph 5.03(b)(ii) of the Purchase Contract Agreement, such
Holder shall be deemed to have consented to the disposition of such Holder’s
Pledged Notes in accordance with the remarketing procedures as described in
paragraph 5.03(b)(iii) of the Purchase Contract Agreement.

14

 

     (c)  If a Holder of a Treasury Unit notifies the Purchase Contract Agent as
provided in paragraph 5.03(h)(i) of the Purchase Contract Agreement of its
intention to pay the Purchase Price in cash, but fails to make such payment as
required by paragraph 5.03(h)(ii) of the Purchase Contract Agreement, such
Holder shall be deemed to have elected to pay the Purchase Price in accordance
with paragraph 5.03(h)(iii) of the Purchase Contract Agreement.

     (d)  In the event of a Failed Final Remarketing as described in Section
5.03(c) of the Purchase Contract Agreement, the Collateral Agent, for the
benefit of the Company, will also exercise its rights as a secured party with
respect to such Pledged Notes at the direction of the Company to retain or
dispose of the Collateral in accordance with applicable law.

     (e)  As soon as practicable after 11:00 a.m. (New York City time) (i) in
the case of New PEPS Units, on the sixth Business Day immediately preceding the
Purchase Contract Settlement Date, and (ii) in the case of Treasury Units, on
the Business Day immediately preceding the Purchase Contract Settlement Date,
the Securities Intermediary shall deliver to the Purchase Contract Agent a
notice, substantially in the form of Exhibit E hereto, stating the amount of
cash that it has received with respect to the Cash Settlement of New PEPS Units
or the amount of cash that it has received with respect to the Cash Settlement
of Treasury Units, as the case may be.

     Section 5.6 Early Settlement

     Upon receipt by the Collateral Agent of a notice from the Purchase
Contract Agent that a Holder of Securities has elected to effect Early
Settlement of its obligations under the Purchase Contracts forming a part of
such Securities in accordance with the terms of the Purchase Contracts and
Section 5.08 of the Purchase Contract Agreement (which notice shall set forth
the number of such Purchase Contracts as to which such Holder has elected to
effect Early Settlement), and that the Purchase Contract Agent has received
from such Holder, and paid to the Company as confirmed in writing by the
Company, the related Early Settlement Amounts pursuant to the terms of the
Purchase Contracts and the Purchase Contract Agreement and that all conditions
to such Early Settlement have been satisfied, then the Collateral Agent shall
release from the Pledge, (1) Pledged Notes in the case of a Holder of New PEPS
Units or (2) Pledged Treasury Securities, in the case of a Holder of Treasury
Units, with a Value equal to the product of (x) the Stated Amount times (y) the
number of Purchase Contracts as to which such Holder has elected to effect
Early Settlement, and shall instruct the Securities Intermediary to Transfer
all such Pledged Notes or Pledged Treasury Securities, as the case may be, to
the Purchase Contract Agent for the benefit of such Holder, in each case free
and clear of the Pledge created hereby, for distribution to such Holder. A New
PEPS Unit holder or Treasury Unit holder may settle early only in integral
multiples of 40 Purchase Contracts.

15

 

     Section 5.7 Application of Proceeds in Settlement of Purchase Contracts

     (a)  If a Holder of New PEPS Units has not elected to make an effective
Cash Settlement by notifying the Purchase Contract Agent in the manner provided
for in Section 5.03(b)(i) of the Purchase Contract Agreement, such Holder shall
be deemed to have elected to pay for the shares of Common Stock to be issued
under such Purchase Contracts from the proceeds of the remarketing of the
related Pledged Notes. Upon notice of such event from the Purchase Contract
Agent, the Collateral Agent shall, by noon, New York City time, on the sixth
Business Day immediately preceding the Purchase Contract Settlement Date,
without any instruction from such Holder of New PEPS Units, instruct the
Securities Intermediary to Transfer the related Pledged Notes to the
Remarketing Agent for remarketing. Upon receiving such Pledged Notes, the
Remarketing Agent, pursuant to the terms of the Remarketing Agreement and the
Supplemental Remarketing Agreement, will use reasonable efforts to remarket the
Pledged Notes, and the Separate Notes of holders electing to have their
Separate Notes remarketed, 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 at a price of approximately 100.5% (but not less than
100%) of the aggregate Value of such Notes. After deducting as the Remarketing
Fee an amount not exceeding 25 basis points (0.25%) of the aggregate Value of
the remarketed Notes from any amount of such proceeds in excess of the
aggregate Value of the remarketed Notes, the Remarketing Agent will remit the
entire amount of the proceeds derived from a successful remarketing of the
Pledged Notes to the Collateral Agent. On the Purchase Contract Settlement
Date, the Purchase Contract Agent shall give written direction to the
Collateral Agent specifying the instruction the Collateral Agent shall give to
the Securities Intermediary in order to apply a portion of the Proceeds from
such remarketing equal to the aggregate principal amount of such Pledged Note
to satisfy in full such Holder’s Obligations to pay the Purchase Price to
purchase the shares of Common Stock under the related Purchase Contracts and
the balance of the Proceeds from the remarketing, if any, that shall be
transferred to the Purchase Contract Agent for the benefit of such Holder for
distribution to such Holder.

     If the Remarketing Agent advises the Collateral Agent in writing that it
cannot remarket the related Pledged Notes of such Holders of New PEPS Units at
a price not less than 100% of the aggregate Value of such Notes on or prior to
the third Business Day immediately preceding the Purchase Contract Settlement
Date or if the remarketing shall not have occurred because a condition
precedent to the remarketing shall not have been fulfilled, thus resulting in a
Failed Final Remarketing, the Collateral Agent, for the benefit of the Company
shall, at the written direction of the Company, retain or dispose of the
Pledged Notes in accordance with applicable law and satisfy in full, from such
retention or disposition, such Holder’s Obligations to pay the Purchase Price
for the shares of Common Stock.

16

 

     (b)  If a Holder of a Treasury Unit has not elected to make an effective
Cash Settlement by notifying the Purchase Contract Agent in the manner provided
for in Section 5.03(h)(i) of the Purchase Contract Agreement, such Holder shall
be deemed to have elected to pay for the shares of Common Stock to be issued
under such Purchase Contracts from the Proceeds of the related Pledged Treasury
Securities. Promptly, after 11:00 a.m. (New York City time) on the Business
Day immediately prior to the Purchase Contract Settlement Date, the Securities
Intermediary shall invest the Cash Proceeds of the maturing Pledged Treasury
Securities in the cash escrow product referred to in clause (2) of the
definition of Permitted Investments, unless prior to 10:30 a.m. (New York City
time), the Company shall otherwise instruct the Securities Intermediary as to
the type of Permitted Investments in which any such Cash Proceeds shall be
invested. Without receiving any instruction from any such Holder, the
Collateral Agent shall apply the Proceeds of the related Pledged Treasury
Securities to the settlement of such Purchase Contracts on the Purchase
Contract Settlement Date. In the event the sum of the Proceeds from the related
Pledged Treasury Securities and the investment earnings from the investment in
Permitted Investments exceeds the aggregate Purchase Price of the Purchase
Contracts being settled thereby, the Collateral Agent shall instruct the
Securities Intermediary to distribute such excess, when received, to the
Purchase Contract Agent for the benefit of such Holder for distribution to such
Holder.

     (c)  Pursuant to the Remarketing Agreement and subject to the terms of the
Supplemental Remarketing Agreement, on or prior to the ninth Business Day
immediately preceding the Purchase Contract Settlement Date, Holders of
Separate Notes may elect to have their Separate Notes remarketed by delivering
their Separate Notes, together with a notice of such election, substantially in
the form of Exhibit F hereto, to the Custodial Agent. The Custodial Agent
shall hold such Separate Notes in an account separate from the Collateral
Account. A Holder of Separate Notes electing to have its Separate Notes
remarketed will also have the right to withdraw such election by written notice
to the Custodial Agent, substantially in the form of Exhibit G hereto, on or
prior to the seventh Business Day immediately preceding the Purchase Contract
Settlement Date, upon receipt of which notice the Custodial Agent shall return
such Separate Notes to such Holder. On the sixth Business Day immediately
preceding the Purchase Contract Settlement Date, the Custodial Agent shall
notify the Remarketing Agent and the Company of the aggregate principal amount
of the Separate Notes to be remarketed and will deliver to the Remarketing
Agent for remarketing all Separate Notes delivered to the Custodial Agent
pursuant to this Section 5.7(c) and not withdrawn pursuant to the terms hereof
prior to such date. After deducting the Remarketing Fee to the extent
permitted under the terms of the Remarketing Agreement, the Remarketing Agent
will remit to the Custodial Agent the remaining portion of the proceeds derived
from a Successful Remarketing of the Separate Notes for the benefit of such
Holders. In the event of a Failed Final Remarketing, the Remarketing Agent
will promptly return such Separate Notes to the Custodial Agent for redelivery
to such Holders.

     (d)  The Purchase Contract Agent, on behalf of itself and the Holders,
acknowledges and irrevocably agrees that any remarketing of the Notes on the
fifth,

17

 

fourth and/or third Business Days immediately preceding the Purchase
Contract Settlement Date shall not constitute a foreclosure of the Pledge of or
other exercise of default remedies with respect to the Notes within the meaning
of the Code, but rather shall constitute a voluntary sale of the Notes by and
on behalf of the Holders and the Purchase Contract Agent.

     Section 6.
Voting Rights – Pledged Notes

     The Purchase Contract Agent may exercise, or refrain from exercising, any
and all voting and other consensual rights pertaining to the Pledged Notes or
any part thereof for any purpose not inconsistent with the terms of this
Agreement and in accordance with the terms of the Purchase Contract Agreement;
provided, that the Purchase Contract Agent shall not exercise or shall not
refrain from exercising such right, as the case may be, if, in the judgment of
the Company, such action would impair or otherwise have a material adverse
effect on the value of all or any of the Pledged Notes; and provided, further,
that the Purchase Contract Agent, upon receipt of notice of any such voting
rights by the Company, shall give the Company and the Collateral Agent at least
five Business Days’ prior written notice of the manner in which it intends to
exercise, or its reasons for refraining from exercising, any such right. Upon
receipt of any notices and other communications in respect of any Pledged
Notes, including notice of any meeting at which holders of the Pledged Notes
are entitled to vote or solicitation of consents, waivers or proxies of holders
of the Notes, the Collateral Agent shall use reasonable efforts to send
promptly to the Purchase Contract Agent such notice or communication, and as
soon as reasonably practicable after receipt of a written request therefor from
the Purchase Contract Agent, execute and deliver to the Purchase Contract Agent
such proxies and other instruments in respect of such Pledged Notes (in form
and substance satisfactory to the Collateral Agent) as are prepared by the
Purchase Contract Agent with respect to the Pledged Notes.

     Section 7. Rights and Remedies

     Section 7.1 Rights and Remedies of the Collateral Agent

     (a)  In addition to the rights and remedies specified in Section 5.7 hereof
or otherwise available at law or in equity, after an event of default (as
specified in Section 7.1(b) below) hereunder, the Collateral Agent shall have
all of the rights and remedies with respect to the Collateral of a secured
party under the UCC (whether or not the UCC is in effect in the jurisdiction
where the rights and remedies are asserted) and the TRADES Regulations and such
additional rights and remedies to which a secured party is entitled under the
laws in effect in any jurisdiction where any rights and remedies hereunder may
be asserted. Without limiting the generality of the foregoing, such remedies
may include, to the extent permitted by applicable law, (1) retention of the
Pledged Notes or Pledged Treasury Securities in full satisfaction of the
Holders’ obligations under the Purchase Contracts and the Purchase Contract
Agreement or (2)

18

 

sale of the Pledged Notes or Pledged Treasury Securities in one or more
public or private sales.

     (b)  Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is unable
to make payments to the Company on account of principal payments of any Pledged
Treasury Securities or proceeds from a successful remarketing of the Notes as
provided in Section 3 hereof, in satisfaction of the Obligations of the Holder
of the New PEPS Units of which such Notes are a part or the Holder of the
Treasury Units of which such Pledged Treasury Securities are a part under the
related Purchase Contracts, the inability to make such payments shall
constitute an event of default hereunder and the Collateral Agent shall have
and may exercise only at the direction of the Company, with reference to such
Pledged Treasury Securities or Notes, as applicable, any and all of the rights
and remedies available to a secured party under the UCC and the TRADES
Regulations after default by a debtor, and as otherwise granted herein or under
any other law.

     (c)  Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of (i) proceeds with respect to
the Pledged Notes and (ii) the principal amount of the Pledged Treasury
Securities, subject, in each case, to the provisions of Section 3 hereof, and
as otherwise granted herein.

     (d)  The Purchase Contract Agent and each Holder of Securities agrees that,
from time to time, upon the written request of the Company or the Purchase
Contract Agent, such Holder shall execute and deliver such further documents
and do such other acts and things as the Company may reasonably request in
order to maintain the Pledge, and the perfection and priority thereof, and to
confirm the rights of the Company and the Collateral Agent hereunder. The
Purchase Contract Agent shall have no liability to any Holder for executing any
documents or taking any such acts requested by the Company hereunder, except
for liability for its own gross negligent acts, its own gross negligent failure
to act or its own willful misconduct.

     Section 7.2 Substitutions

     Whenever a Holder has the right to substitute Treasury Securities, Notes
or security entitlements for any of them, as the case may be, for financial
assets held in the Collateral Account, such substitution shall not constitute a
novation of the security interest created hereby.

     Section 8. Representations and Warranties; Covenants

     Section 8.1 Representations and Warranties

     Each Holder from time to time, acting through the Purchase Contract Agent
as attorney-in-fact (it being understood that the Purchase Contract Agent shall
not be liable for any representation or warranty made by or on behalf of a
Holder), hereby represents

19

 

and warrants to the Collateral Agent and the Company (with respect to such
Holder’s interest in the Collateral), which representations and warranties
shall be deemed repeated on each day a Holder Transfers Collateral that:

		
	 	     (1) such Holder has the power to grant a security interest in and
lien on the Collateral;

		
	 	     (2) such Holder is the sole beneficial owner of the Collateral and,
in the case of Collateral delivered in physical form, is the sole Holder
of such Collateral and is the sole beneficial owner of, or has the right
to Transfer, the Collateral it Transfers to the Securities Intermediary
for credit to the Collateral Account, free and clear of any security
interest, lien, encumbrance, call, liability to pay money or other
restriction other than the security interest and lien granted under
Section 2 hereof;

		
	 	     (3) upon the Transfer of the Collateral to the Securities
Intermediary for credit to the Collateral Account, the Collateral Agent,
for the benefit of the Company, will have a valid and perfected first
priority security interest therein (assuming that any central clearing
operation or any securities intermediary or other entity not within the
control of the Holder involved in the Transfer of the Collateral,
including the Company, or Collateral Agent and the Securities
Intermediary on the Company’s behalf, gives the notices and takes the
action required of it hereunder and under applicable law for perfection
of that interest and assuming the establishment and exercise of control
pursuant to Section 4 hereof); and
	 
	 	     (4) the execution and performance by the Holder of its obligations
under this Agreement will not result in the creation of any security
interest, lien or other encumbrance on the Collateral other than the
security interest and lien granted under Section 2 hereof or violate any
provision of any existing law or regulation applicable to it or of any
mortgage, charge, pledge, indenture, contract or undertaking to which it
is a party or which is binding on it or any of its assets.

     Section 8.2 Covenants

     The Holders from time to time, acting through the Purchase Contract Agent
as their attorney-in-fact (it being understood that the Purchase Contract Agent
shall not be liable for any covenant made by or on behalf of a Holder), hereby
covenant to the Collateral Agent that for so long as the Collateral remains
subject to the Pledge:

		
	 	     (1) neither the Purchase Contract Agent nor such Holders will create
or purport to create or allow to subsist any mortgage, charge, lien,
pledge or any other security interest whatsoever over the Collateral or
any part of it other than pursuant to this Agreement; and

20

 

		
	 	     (2) neither the Purchase Contract Agent nor such Holders will sell
or otherwise dispose (or attempt to dispose) of the Collateral or any
part of it except for the beneficial interest therein, subject to the
Pledge hereunder, transferred in connection with the Transfer of the
Securities.

     Section 9. The Collateral Agent, the Securities Intermediary and the
Custodial Agent

     It is hereby agreed as follows:

     Section 9.1 Appointment, Powers and Immunities

     The Collateral Agent, the Securities Intermediary and the Custodial Agent
shall act as agents for the Company hereunder with such powers as are
specifically vested in the Collateral Agent, the Securities Intermediary and
the Custodial Agent by the terms of this Agreement, together with such other
powers as are reasonably incidental thereto, and shall have no duties,
fiduciary or otherwise, to any other Person. Each of the Collateral Agent, the
Securities Intermediary and the Custodial Agent and the Securities Intermediary
shall:

		
	 	     (1) have no duties or responsibilities except those expressly set
forth in this Agreement and no implied covenants or obligations shall be
inferred from this Agreement against any of them, nor shall any of them
be bound by the provisions of any agreement by any party hereto beyond
the specific terms hereof;

		
	 	     (2) not be responsible for any recitals contained in this Agreement,
or in any certificate or other document referred to or provided for in,
or received by it under, this Agreement, the Securities or the Purchase
Contract Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement (other than
as against the Collateral Agent), the Securities or the Purchase Contract
Agreement or any other document referred to or provided for herein or
therein, or for any failure by the Company or any other Person (except
the Collateral Agent, the Securities Intermediary or the Custodial Agent,
as the case may be) to perform any of its obligations hereunder or
thereunder, or for the attachment, perfection, priority or, except as
expressly required hereby, maintenance of any lien or security interest
created or intended to be created hereunder;

		
	 	     (3) not be required to initiate or conduct any litigation or
collection proceedings hereunder (except in the case of the Collateral
Agent pursuant to directions furnished under Section 9.2 hereof, subject
to Section 9.6 hereof);

		
	 	     (4) not be responsible for any action taken, suffered or omitted to
be taken by it hereunder or under any other document or instrument
referred to or provided for herein or in connection herewith or
therewith, except for its own gross negligence or willful misconduct; and

21

 

		
	 	     (5) not be required to advise any party as to selling or retaining,
or taking or refraining from taking any action with respect to, any
securities or other property deposited hereunder.

Subject to the foregoing, during the term of this Agreement, the Collateral
Agent and the Securities Intermediary shall take all reasonable action in
connection with the safekeeping and preservation of the Collateral hereunder.

     No provision of this Agreement shall require the Collateral Agent, the
Securities Intermediary or the Custodial Agent to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder. In no event shall the Collateral Agent, the Securities
Intermediary or the Custodial Agent be liable for any amount in excess of the
Value of the Collateral. Notwithstanding the foregoing, each of the Collateral
Agent, the Securities Intermediary, the Custodial Agent and the Purchase
Contract Agent in its individual capacity hereby waives any right of setoff,
bankers’ lien, liens or perfection rights as securities intermediary or any
counterclaim with respect to any of the Collateral.

     Section 9.2 Instructions of the Company

     The Company shall have the right, by one or more written instruments
executed and delivered to the Collateral Agent, the Securities Intermediary or
the Custodial Agent, as the case may be, to direct the time, method and place
of conducting any proceeding for the realization of any right or remedy
available to the Collateral Agent, or of exercising any power conferred on the
Collateral Agent, the Securities Intermediary or the Custodial Agent, as the
case may be, or to direct the taking or refraining from taking of any action
authorized by this Agreement; provided, however, that (i) such direction shall
not conflict with the provisions of any law or of this Agreement and (ii) the
Collateral Agent, the Securities Intermediary and the Custodial Agent shall be
adequately indemnified as provided herein and shall not be subject to personal
liability. Nothing contained in this Section 9.2 shall impair the right of the
Collateral Agent in its discretion to take any action or omit to take any
action which it deems proper and which is not inconsistent with such direction.

     Section 9.3 Reliance by Collateral Agent, Securities Intermediary and
Custodial Agent

     Each of the Collateral Agent, the Securities Intermediary and the
Custodial Agent shall be entitled to rely upon any certification, order,
judgment, opinion, notice or other written communication (including, without
limitation, any thereof by telecopy) believed by it to be genuine and to have
been signed or sent by or on behalf of the proper Person or Persons (without
being required to determine the correctness of any fact stated therein) and
consult with and rely upon advice, opinions and statements of legal counsel and
other experts selected by the Collateral Agent, the Securities Intermediary, or
the Custodial Agent, as the case may be. Each of the Collateral Agent and the
Securities Intermediary may consult with counsel and the advice of such counsel
or any Opinion of Counsel shall

22

 

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. As to any matters not expressly provided for by this Agreement, the
Collateral Agent, the Securities Intermediary and the Custodial Agent shall in
all cases be entitled to receive and shall be fully protected in acting, or in
refraining from acting, hereunder in accordance with instructions given by the
Company in accordance with this Agreement.

     Section 9.4 Rights in Other Capacities

     The Collateral Agent, the Securities Intermediary and the Custodial Agent
and their affiliates may (without having to account therefor to the Company)
accept deposits from, lend money to, make their investments in and generally
engage in any kind of banking, trust or other business with the Company, the
Purchase Contract Agent, any other Person interested herein and any Holder of
Securities (and any of their respective subsidiaries or affiliates) as if it
were not acting as the Collateral Agent, the Securities Intermediary or the
Custodial Agent, as the case may be, and the Collateral Agent, the Securities
Intermediary and the Custodial Agent and their affiliates may accept fees and
other consideration from the Purchase Contract Agent and any Holder of
Securities without having to account for the same to the Company; provided that
each of the Securities Intermediary, the Collateral Agent and the Custodial
Agent covenants and agrees with the Company that it shall not accept, receive
or permit there to be created in favor of itself and shall take no affirmative
action to permit there to be created in favor of any other Person, any security
interest, lien or other encumbrance of any kind in or upon the Collateral other
than the lien created by the Pledge.

     Section 9.5 Non-Reliance on Collateral Agent, Securities Intermediary and
Custodial Agent

     Neither the Securities Intermediary, the Collateral Agent nor the
Custodial Agent shall be required to keep itself informed as to the performance
or observance by the Purchase Contract Agent or any Holder of Securities of
this Agreement, the Purchase Contract Agreement, the Securities or any other
document referred to or provided for herein or therein or in connection
herewith or therewith or to inspect the properties or books of the Purchase
Contract Agent or any Holder of Securities. None of the Collateral Agent, the
Securities Intermediary or the Custodial Agent shall have any duty or
responsibility to provide the Company with any credit or other information
concerning the affairs, financial condition or business of the Purchase
Contract Agent or any Holder of Securities (or any of their respective
affiliates) that may come into the possession of the Collateral Agent, the
Securities Intermediary or and the Custodial Agent or any of their respective
affiliates.

23

 

     Section 9.6 Compensation and Indemnity

     The Company agrees to:

		
	 	     (1) pay the Collateral Agent, the Securities Intermediary and the
Custodial Agent from time to time such compensation as shall be agreed in
writing between the Company and the Collateral Agent, the Securities
Intermediary or the Custodial Agent, as the case may be, for all services
rendered by them hereunder;
	 
	 	     (2) indemnify and hold harmless the Collateral Agent, the Securities
Intermediary and the Custodial Agent and each of their respective
directors, officers, agents and employees (collectively, the
“Indemnitees”), harmless from and against any and all claims,
liabilities, losses, damages, fines, penalties and expenses (including
reasonable fees and expenses of counsel) (collectively, “Losses” and
individually, a “Loss”) that may be imposed on, incurred by, or asserted
against, the Indemnitees or any of them for following any instructions or
other directions upon which either the Collateral Agent, the Securities
Intermediary or the Custodial Agent is entitled to rely pursuant to the
terms of this Agreement; and
	 
	 	     (3) in addition to and not in limitation of paragraph (2)
immediately above, indemnify and hold the Indemnitees and each of them
harmless from and against any and all Losses that may be imposed on,
incurred by or asserted against, the Indemnitees or any of them in
connection with or arising out of the Collateral Agent’s, the Securities
Intermediary’s or the Custodial Agent’s acceptance or performance of its
powers and duties under this Agreement, provided the Collateral Agent,
the Securities Intermediary or the Custodial Agent have not acted with
gross negligence or engaged in willful misconduct with respect to the
specific Loss against which indemnification is sought.

     Without prejudice to its rights hereunder, when any of the Collateral
Agent or Securities Intermediary incurs expenses or renders services after a
Termination Event occurs, the expenses and compensation for the services are
intended to constitute expenses of administration under the Bankruptcy Code or
any applicable state bankruptcy, insolvency or other similar law.

     Section 9.7 Failure to Act

     In the event of any ambiguity in the provisions of this Agreement or any
dispute between or conflicting claims by or among the parties hereto or any
other Person with respect to any funds or property deposited hereunder, then at
its sole option, each of the Collateral Agent, the Securities Intermediary and
the Custodial Agent shall be entitled, after prompt notice to the Company and
the Purchase Contract Agent, to refuse to comply with any and all claims,
demands or instructions with respect to such property or funds so long as such
dispute or conflict shall continue, and the Collateral Agent, the Securities
Intermediary and the Custodial Agent shall not be or become liable in any way
to any of

24

 

the parties hereto for its failure or refusal to comply with such
conflicting claims, demands or instructions. The Collateral Agent, the
Securities Intermediary and the Custodial Agent shall be entitled to refuse to
act until either:

		
	 	     (1) such conflicting or adverse claims or demands shall have been
finally determined by a court of competent jurisdiction or settled by
agreement between the conflicting parties as evidenced in a writing
satisfactory to the Collateral Agent, the Securities Intermediary or the
Custodial Agent, as the case may be; or
	 
	 	     (2) the Collateral Agent, the Securities Intermediary or the
Custodial Agent, as the case may be, shall have received security or an
indemnity satisfactory to it sufficient to save it harmless from and
against any and all loss, liability or reasonable out-of-pocket expense
which it may incur by reason of its acting.

The Collateral Agent, the Securities Intermediary and the Custodial Agent may
in addition elect to commence an interpleader action or seek other judicial
relief or orders as the Collateral Agent, the Securities Intermediary or the
Custodial Agent may deem necessary. Notwithstanding anything contained herein
to the contrary, neither the Collateral Agent, the Securities Intermediary nor
the Custodial Agent shall be required to take any action that is in its opinion
contrary to law or to the terms of this Agreement, or which would in its
opinion subject it or any of its officers, employees or directors to liability.

     Section 9.8 Resignation of Collateral Agent, Securities Intermediary and
Custodial Agent

     (a)  Subject to the appointment and acceptance of a successor Collateral
Agent, Securities Intermediary or Custodial Agent as provided below:

		
	 	     (1) the Collateral Agent, the Securities Intermediary and the
Custodial Agent may resign at any time by giving notice thereof to the
Company and the Purchase Contract Agent as attorney-in-fact for the
Holders of Securities;

		
	 	     (2) the Collateral Agent, the Securities Intermediary and the
Custodial Agent may be removed at any time by the Company; and

		
	 	     (3) if the Collateral Agent, Securities Intermediary or the
Custodial Agent fails to perform any of its material obligations
hereunder in any material respect for a period of not less than 20 days
after receiving written notice of such failure by the Purchase Contract
Agent and such failure shall be continuing, the Collateral Agent, the
Securities Intermediary or the Custodial Agent may be removed by the
Purchase Contract Agent.

The Purchase Contract Agent shall promptly notify the Company of any removal of
the Collateral Agent, Securities Intermediary or Custodial Agent pursuant to
clause (3) of the

25

 

immediately preceding sentence. Upon any such resignation or removal, the
Company shall have the right to appoint a successor Collateral Agent,
Securities Intermediary or the Custodial Agent, as the case may be. If no
successor Collateral Agent, Securities Intermediary or Custodial Agent, as the
case may be, shall have been so appointed and shall have accepted such
appointment within 30 days after the retiring Collateral Agent’s, Securities
Intermediary’s or Custodial Agent’s giving of notice of resignation or the
Company or the Purchase Contract Agent giving notice of such removal, then the
retiring Collateral Agent, Securities Intermediary or Custodial Agent, as the
case may be, may petition any court of competent jurisdiction for the
appointment of a successor Collateral Agent, Securities Intermediary or the
Custodial Agent, as the case may be. Each of the Collateral Agent, the
Securities Intermediary and Custodial Agent shall be a bank or a national
banking association which has an office (or an agency office) in New York City
with a combined capital and surplus of at least $50,000,000 and may be the
Purchase Contract Agent or any of its affiliates. Upon the acceptance of any
appointment as Collateral Agent, Securities Intermediary or Custodial Agent, as
the case may be, hereunder by a successor Collateral Agent, Securities
Intermediary or Custodial Agent, as the case may be, such successor shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Collateral Agent, Securities Intermediary, or
Custodial Agent, as the case may be, and the retiring Collateral Agent,
Securities Intermediary or Custodial Agent, as the case may be, shall take all
appropriate action to transfer any money and property held by it hereunder
(including the Collateral) to such successor. The retiring Collateral Agent,
Securities Intermediary or Custodial Agent shall, upon such succession, be
discharged from its duties and obligations as Collateral Agent, Securities
Intermediary or Custodial Agent hereunder. After any retiring Collateral
Agent’s, Securities Intermediary’s or Custodial Agent’s resignation hereunder
as Collateral Agent, Securities Intermediary or Custodial Agent, the provisions
of Sections 9 and 11.7 hereof shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting
as the Collateral Agent, the Securities Intermediary or the Custodial Agent.

     Section 9.9 Right to Appoint Agent or Advisor

     The Collateral Agent shall have the right to appoint agents or advisors in
connection with any of its duties hereunder, and the Collateral Agent shall not
be liable for any action taken or omitted by, or in reliance upon the advice
of, such agents or advisors selected in good faith. The appointment of agents
pursuant to this Section 9.9 shall be subject to prior consent of the Company,
which consent shall not be unreasonably withheld.

     Section 9.10 Survival

     The provisions of Sections 9 and 11.7 hereof shall survive termination of
this Agreement and the resignation or removal of the Collateral Agent, the
Securities Intermediary or the Custodial Agent.

26

 

     Section 9.11 Exculpation

     Anything contained in this Agreement to the contrary notwithstanding, in
no event shall the Collateral Agent, the Securities Intermediary or the
Custodial Agent or their officers, directors, employees or agents be liable
under this Agreement except for their gross negligence or willful misconduct or
for indirect, special, punitive, or consequential loss or damage of any kind
whatsoever, including, but not limited to, lost profits, whether or not the
likelihood of such loss or damage was known to the Collateral Agent, the
Securities Intermediary or the Custodial Agent, or any of them and regardless
of the form of action.

     Section 10. Amendment

     Section 10.1 Amendment Without Consent of Holders

     Without the consent of any Holders, the Company, the Collateral Agent, the
Securities Intermediary, the Custodial Agent and the Purchase Contract Agent,
at any time and from time to time, may amend this Agreement, in form
satisfactory to the Company, the Collateral Agent, the Securities Intermediary,
the Custodial Agent and the Purchase Contract Agent, to:

		
	 	     (1) evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company;
	 
	 	     (2) evidence and provide for the acceptance of appointment hereunder
by a successor Collateral Agent, Securities Intermediary, Custodial Agent
or Purchase Contract Agent;
	 
	 	     (3) add to the covenants of the Company for the benefit of the
Holders, or surrender any right or power herein conferred upon the
Company, provided such covenants or such surrender do not adversely
affect the validity, perfection or priority of the Pledge created
hereunder; or
	 
	 	     (4) cure any ambiguity (or formal defect), correct or supplement any
provisions herein which may be inconsistent with any other such
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 10.2 Amendment With Consent of Holders

     With the consent of the Holders of not less than a majority of the
Purchase Contracts at the time outstanding, by Act of such Holders delivered to
the Company, the Purchase Contract Agent, the Securities Intermediary, the
Collateral Agent and the Custodial Agent, the Company, the Purchase Contract
Agent, the Securities Intermediary, the Collateral Agent and the Custodial
Agent may amend this Agreement for the purpose

27

 

of modifying in any manner the
provisions of this Agreement or the rights of the Holders in respect of the
Securities; provided, however, that no such supplemental agreement shall,
without the unanimous consent of the Holders of each Outstanding Security
adversely affected thereby:

		
	 	     (1) Change the amount or type of Collateral underlying a Security
(except for the rights of holders of New PEPS Units to substitute the
Treasury Securities for the Pledged Notes, as the case may be, or the
rights of Holders of Treasury Units to substitute Notes, as applicable,
for the Pledged Treasury Securities), impair the right of the Holder of
any Security to receive distributions on the underlying Collateral or
otherwise adversely affect the Holder’s rights in or to such Collateral;
or

		
	 	     (2) otherwise effect any action that would require the consent of
the Holder of each Outstanding Security affected thereby pursuant to the
Purchase Contract Agreement if such action were effected by an agreement
supplemental thereto; or

		
	 	     (3) reduce the percentage of Purchase Contracts the consent of whose
Holders is required for any such amendment,

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 voting group 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 voting group; 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 (3) above.

          It shall not be necessary for any Act of Holders under Section 10 hereof
to approve the particular form of any proposed amendment, but it shall be
sufficient if such Act shall approve the substance thereof.

          Section 10.3 Execution of Amendments

          In executing any amendment permitted by Section 10 hereof, the Collateral
Agent, the Securities Intermediary, the Custodial Agent and the Purchase
Contract Agent shall be entitled to receive and (subject to Section 7.01 of the
Purchase Contract Agreement with respect to the Purchase Contract Agent) shall
be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by this Agreement and
that all conditions precedent, if any, to the execution and delivery of such
amendment have been satisfied.

28

 

          Section 10.4 Effect of Amendments

          Upon the execution of any amendment under Section 10 hereof, this
Agreement shall be modified in accordance therewith, and such amendment 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 under the Purchase Contract Agreement shall be bound
thereby.

          Section 10.5 Reference to Amendments

          Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any amendment pursuant to Section 10 hereof
may, and shall if required by the Collateral Agent or the Purchase Contract
Agent, bear a notation in form approved by the Purchase Contract Agent and the
Collateral Agent as to any matter provided for in such amendment. If the
Company shall so determine, new Security Certificates so modified as to
conform, in the opinion of the Collateral Agent, the Purchase Contract Agent
and the Company, to any such amendment may be prepared and executed by the
Company and authenticated, executed on behalf of the Holders and delivered by
the Purchase Contract Agent in accordance with the Purchase Contract Agreement
in exchange for Outstanding Security Certificates.

          Section 11. Miscellaneous

          Section 11.1 No Waiver

          No failure on the part of the Collateral Agent, the Securities
Intermediary, the Custodial Agent or any of their respective agents to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by the Collateral Agent, the Securities
Intermediary, the Custodial Agent or any of their respective agents of any
right, power or remedy hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies herein are
cumulative and are not exclusive of any remedies provided by law.

          Section 11.2 Governing Law

          THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK. The Company, the Collateral Agent, the
Securities Intermediary, the Custodial Agent and the Holders from time to time
of the Securities, acting through the Purchase Contract Agent as their
attorney-in-fact, hereby submit to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and of any New York
state court sitting in New York City for the purposes of all legal proceedings
arising out of or relating to this Agreement or the transactions contemplated
hereby. The Company, the Collateral Agent, the Securities Intermediary, the
Custodial Agent and the Holders from time to time of the Securities, acting
through the Purchase Contract Agent as their

29

 

attorney-in-fact, irrevocably
waive, to the fullest extent permitted by applicable law, any objection which
they may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.

          Section 11.3 Notices

          All notices, requests, consents and other communications provided for
herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made in writing (including,
without limitation, by telecopy) delivered to the intended recipient at the
“Address for Notices” specified below its name on the signature pages hereof
or, as to any party, at such other address as shall be designated by such party
in a notice to the other parties. Except as otherwise provided in this
Agreement, all such communications shall be deemed to have been duly given when
transmitted by telecopier or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid.

          Section 11.4 Successors and Assigns

          This Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of the Company, the Collateral Agent, the
Securities Intermediary, the Custodial Agent and the Purchase Contract Agent,
and the Holders from time to time of the Securities, by their acceptance of the
same, shall be deemed to have agreed to be bound by the provisions hereof and
to have ratified the agreements of, and the grant of the Pledge hereunder by,
the Purchase Contract Agent.

          Section 11.5 Counterparts

          This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument, and any of the
parties hereto may execute this Agreement by signing any such counterpart.

          Section 11.6 Severability

          If any provision hereof is invalid and unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (i) the other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in order to carry out the intentions of the parties hereto
as nearly as may be possible and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.

30

 

          Section 11.7
Expenses, Etc.

          The Company agrees to reimburse the Collateral Agent, the Securities
Intermediary and the Custodial Agent for:

		
	 	     (1) all reasonable costs and expenses of the Collateral Agent, the
Securities Intermediary and the Custodial Agent (including, without
limitation, the reasonable fees and expenses of counsel to the Collateral
Agent, the Securities Intermediary and the Custodial Agent), in
connection with the negotiation, preparation, execution and delivery or
performance of any services under or in connection with this Agreement,
including any modification, supplement or waiver of any of the terms of
this Agreement;

		
	 	     (2) in addition to and not in limitation of paragraph (1)
immediately above, all reasonable costs and expenses of the Collateral
Agent, the Securities Intermediary and the Custodial Agent (including,
without limitation, reasonable fees and expenses of counsel) in
connection with (i) any enforcement or proceedings resulting or incurred
in connection with causing any Holder of Securities to satisfy its
obligations under the Purchase Contracts forming a part of the Securities
and (ii) the enforcement of this Section 11.7;

		
	 	     (3) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any other document referred to herein and
all costs, expenses, taxes, assessments and other charges incurred in
connection with any filing, registration, recording or perfection of any
security interest contemplated hereby (it being understood, however, that
none of the Collateral Agent, Securities Intermediary or Custodial Agent
shall have any duty or obligation in respect of any such filing,
registration, recording or perfection unless and until specifically
requested in writing by the Company to take any action in respect
thereto);

		
	 	     (4) all fees and expenses of any agent, expert or advisor appointed
by the Collateral Agent and, in the case of any agent, consented to by
the Company under Section 9.9 of this Agreement; and

		
	 	     (5) any other out-of-pocket costs and expenses reasonably incurred
by the Collateral Agent, the Securities Intermediary and the Custodial
Agent in connection with the performance of their duties hereunder.

31

 

          Section 11.8 Security Interest Absolute.

          All rights of the Collateral Agent and security interests hereunder, and
all obligations of the Holders from time to time hereunder, shall be absolute
and unconditional irrespective of:

		
	 	     (1) any lack of validity or enforceability of any provision of the
Purchase Contracts or the Securities or any other agreement or instrument
relating thereto;

		
	 	     (2) any change in the time, manner or place of payment of, or any
other term of, or any increase in the amount of, all or any of the
obligations of Holders of the Securities under the related Purchase
Contracts, or any other amendment or waiver of any term of, or any
consent to any departure from any requirement of, the Purchase Contract
Agreement or any Purchase Contract or any other agreement or instrument
relating thereto; or

		
	 	     (3) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor or a
pledger.

          Section 11.9 Notice of Termination Event.

          Upon the occurrence of a Termination Event, the Company shall deliver
written notice to the Collateral Agent and the Securities Intermediary and
unless and until any such notice is so delivered, the Collateral Agent and the
Securities Intermediary may conclusively presume that no such events exist.
Upon the written request of the Collateral Agent or the Securities
Intermediary, the Company shall inform such party whether or not a Termination
Event has occurred.

          Section 11.10 Book-entry Interests

          Unless and until definitive, fully registered Certificates have been
issued to Beneficial Owners pursuant to Section 3.09 of the Purchase Contract
Agreement, the Collateral Agent, Securities Intermediary and Custodial Agent
shall be entitled to deal with the Depositary for all purposes of this
Agreement (including the receipt or transfer of any funds hereunder) as the
Holder of the Securities, shall have no obligation to the Beneficial Owners and
the rights of the Beneficial Owners shall be exercised only through the
Depositary and shall be limited to those established by law and agreement
between such Beneficial Owners and the Depositary or the Depositary
Participants. The provisions of Sections 3.06 and 3.07 of the Purchase
Contract Agreement are hereby made applicable to the Collateral Agent,
Securities Intermediary and Custodial Agent, mutatis mutandis, as if they were
the Purchase Contract Agent as referred to therein.

32

 

          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:

	 	 	 
	Address for Notices:	 	
Address for Notices:
	 	 	 
	PPL Corporation	 	
JPMorgan Chase Bank
	Two North Ninth Street	 	
4 New York Plaza, 15th Floor
	Allentown, Pennsylvania 18101-1179	 	
New York, New York 10004
	Attention: Treasurer	 	
Attention: Institutional Trust Services
	Telecopy: (610) 774-5106	 	
Telecopy: (212) 623-6216
	 	 	 
	JPMORGAN CHASE BANK,	 	
JPMORGAN CHASE BANK,
	As Collateral Agent	 	
as Securities Intermediary

	 	 	 	 	 	 	 	 	 
	By:	 	 	 	     
	 	By:
	 	     
	 	 	

Name:	 	 	 	 	 	

Name:
	 	 	
Title:
	 	 	 	 	 	Title:

	 	 	 
	Addresses for Notices:	 	
Addresses for Notices:
	JPMorgan Chase Bank	 	
JPMorgan Chase Bank
	4 New York Plaza, 15th Floor	 	
4 New York Plaza, 15th Floor
	New York, New York 10004	 	
New York, New York 10004
	Attention: Institutional Trust Services	 	
Attention: Institutional Trust Services
	Telecopy: (212) 623-6216	 	
Telecopy: (212) 623-6216

33

 

JPMORGAN CHASE BANK,

	As Custodial Agent

By: 

                Name:

                Title:

Addresses for Notices:

JPMorgan Chase Bank

4 New York Plaza, 15th Floor

New York, New York 10004

Attention: Institutional Trust Services

Telecopy: (212) 623-6216

34

 

EXHIBIT A

INSTRUCTION

FROM PURCHASE CONTRACT AGENT

TO COLLATERAL AGENT

(Establishment of Treasury Units)

JPMorgan Chase Bank

4 New York Plaza, 15th Floor

New York, New York 10004

Attention: Institutional Trust Services

Telecopy: (212) 623-6216

	 	 	 	 	 
	 	 	
Re:
	 	New PEPS Units of PPL Corporation (the “Company”) and PPL
Capital Funding, Inc.
	 	 	 	 	 
	 	 	 	 	The securities account of JPMorgan Chase Bank, as Collateral
Agent, maintained by the Securities Intermediary and designated
JPMorgan Chase Bank, as Collateral Agent of PPL Corporation, as
pledgee of JPMorgan Chase Bank, as the Purchase Contract Agent on
behalf of and as attorney-in-fact for the Holders” (the
“Collateral Account”)

          Please refer to the Pledge Agreement, dated as of                    , 2003 (the
“Pledge Agreement”), among the Company, you, as Collateral Agent, as Securities
Intermediary and as Custodial Agent, 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. Capitalized terms used herein but not defined shall
have the meanings set forth in the Pledge Agreement.

          We hereby notify you in accordance with Section 5.2 of the Pledge
Agreement that the holder of securities named below (the “Holder”) has elected
to substitute $         Value of Treasury Securities or security entitlements
with respect thereto in exchange for an equal Value of Pledged Notes relating
to          New PEPS Units and has delivered to the undersigned a notice
stating that the Holder has Transferred such Treasury Securities or security
entitlements with respect thereto to the Securities Intermediary for credit to
the Collateral Account.

          We hereby request that you instruct the Securities Intermediary, upon
confirmation that such Treasury Securities or security entitlements with
respect thereto have been credited to the Collateral Account, to release to the
undersigned an equal Value of Pledged Notes in accordance with Section 5.2 of
the Pledge Agreement.

A-1 

 

	 	 	 	 	 
	 	 	 	 	JPMORGAN CHASE BANK,
	Date:	 	

	 	as Purchase Contract
Agent and as attorney-in-fact 

of the Holders from time to time of the Securities

	 	 	 
	By:	 	

Name:
	 	 	
Title:

A-2 

 

Please print name and address of Holder electing to substitute Treasury
Securities or security entitlements thereto for the Pledged Notes:

	 	 	 
	

Name	 	

Social Security or other

Taxpayer Identification Number,
	 	 	
if any
	

Address	 	 
	 	 	 
	
	 	 
	 	 	 
	
	 	 
	 	 	 
	

Trades Account No. of or through 

which Holder transferred Treasury 

Securities	 	 

A-3 

 

EXHIBIT B

INSTRUCTION

FROM COLLATERAL AGENT

TO SECURITIES INTERMEDIARY

(Establishment of Treasury Units)

JPMorgan Chase Bank

4 New York Plaza, 15th Floor

New York, New York 10004

Attention: Institutional Trust Services

Telecopy: (212) 623-6216

	 	 	 	 	 
	 	 	
Re:
	 	New PEPS Units of PPL Corporation (the “Company”) and PPL
Capital Funding, Inc.
	 	 	 	 	 
	 	 	 	 	The securities account of JPMorgan Chase Bank, as Collateral
Agent, maintained by the Securities Intermediary and designated
JPMorgan Chase Bank, as Collateral Agent of PPL Corporation, as
pledgee of JPMorgan Chase Bank, as the Purchase Contract Agent on
behalf of and as attorney-in-fact for the Holders” (the
“Collateral Account”)

          Please refer to the Pledge Agreement, dated as of                    , 2003 (the
“Pledge Agreement”), among the Company, you, as Collateral Agent, as Securities
Intermediary and as Custodial Agent, 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. Capitalized terms used herein but not defined shall
have the meanings set forth in the Pledge Agreement.

          When you have confirmed that $     Value of Treasury Securities or
security entitlements thereto has been credited to the Collateral Account by or
for the benefit of           , as Holder of New PEPS Units (the “Holder”), you
are hereby instructed to release from the Collateral Account an equal Value of
Notes or security entitlements thereto relating to      New PEPS Units of the
Holder by Transfer to the Purchase Contract Agent.

	 	 	 	 	 
	
Dated:	 	

	 	JPMorgan Chase Bank,

as Collateral Agent

	 	 	 
	By:	 	

	 	 	
Name:
	 	 	
Title:

B-1 

 

          Please print name and address of Holder:

	 	 	 
	

Name	 	

Social Security or other
	 	 	
Taxpayer Identification Number,
	 	 	
if any
	 	 	 
	

Address	 	 
	 	 	 
	
	 	 
	 	 	 
	
	 	 
	 	 	 
	
	 	 
	Trades Account No. of or
through 

which Holder
transferred Treasury

Securities	 	 

B-2 

 

EXHIBIT C

INSTRUCTION

FROM PURCHASE CONTRACT AGENT

TO COLLATERAL AGENT

(Reestablishment of New PEPS Units )

JPMorgan Chase Bank

4 New York Plaza, 15th Floor

New York, New York 10004

Attention: Institutional Trust Services

Telecopy: (212) 623-6216

	 	 	 
	Re:	 	
Treasury Units of PPL Corporation (the “Company”) and PPL
Capital Funding, Inc.
	 	 	

The securities account of JPMorgan Chase Bank, as Collateral
Agent, maintained by the Securities Intermediary and designated
JPMorgan Chase Bank, as Collateral Agent of PPL Corporation, as
pledgee of JPMorgan Chase Bank, as the Purchase Contract Agent on
behalf of and as attorney-in-fact for the Holders” (the
“Collateral Account”)

          Please refer to the Pledge Agreement, dated as of                    , 2003 (the
“Pledge Agreement”), among the Company, you, as Collateral Agent, as Securities
Intermediary and as Custodial Agent, 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. Capitalized terms used herein but not defined shall
have the meanings set forth in the Pledge Agreement.

          We hereby notify you in accordance with Section 5.3(a) of the Pledge
Agreement that the holder of securities listed below (the “Holder”) has elected
to substitute $          Value of Notes or security entitlements thereto in
exchange for $          Value of Pledged Treasury Securities and has delivered
to the undersigned a notice stating that the holder has Transferred such Notes
or security entitlements thereto to the Securities Intermediary, for credit to
the Collateral Account.

          We hereby request that you instruct the Securities Intermediary, upon
confirmation that such Notes or security entitlements thereto have been
credited to the Collateral Account, to release to the undersigned
$          
Value of Treasury Securities or security entitlements thereto related to      
Treasury Units of such Holder in accordance with Section 5.3(a) of the Pledge
Agreement.

C-1 

 

	 	 	 	 	 
	 	 	 	 	JPMORGAN CHASE BANK,
	Date:	 	

	 	as Purchase Contract Agent

	 	 	 
	By:	 	

	 	 	
Name:
	 	 	
Title:

C-2 

 

          Please print name and address of Holder electing to substitute [Notes or
security entitlements thereto] for Pledged Treasury Securities:

	 	 	 
	

Name	 	

Social Security or other

Taxpayer Identification Number,

if any
	

Address		
	 
	
	 	 
	 	 	 
	
	 	 
	 	 	 
	
	 	 
	DTC Account No. through which
Holder transferred Notes or security entitlements
thereto	 	 

C-3 

 

EXHIBIT D

INSTRUCTION

FROM COLLATERAL AGENT

TO SECURITIES INTERMEDIARY

(Reestablishment of New PEPS Units)

JPMorgan Chase Bank

4 New York Plaza, 15th Floor

New York, New York 10004

Attention: Institutional Trust Services

Telecopy: (212) 623-6216

	 	 	 	 	 
	 	 	
Re:
	 	New PEPS Units of PPL Corporation (the “Company”) and PPL
Capital Funding, Inc.
	 	 	 	 	 
	 	 	 	 	The securities account of JPMorgan Chase Bank, as Collateral
Agent, maintained by the Securities Intermediary and designated
JPMorgan Chase Bank, as Collateral Agent of PPL Corporation, as
pledgee of JPMorgan Chase Bank, as the Purchase Contract Agent on
behalf of and as attorney-in-fact for the Holders” (the
“Collateral Account”)

          Please refer to the Pledge Agreement, dated as of                    , 2003 (the
“Pledge Agreement”), among the Company, you, as Collateral Agent, as Securities
Intermediary and as Custodial Agent, and JPMorgan Chase Bank, as Purchase
Contract Agent and as attorney-in-fact for the holders of New PEPS Units and
Treasury Units from time to time. Capitalized terms used herein but not defined
shall have the meanings set forth in the Pledge Agreement.

          When
you have confirmed that $         Value of Notes or security
entitlements thereto has been credited to the Collateral Account by or for the
benefit of          , as Holder of Treasury Units (the “Holder”), you
are hereby instructed to release from the Collateral Account $      
Value of Treasury Securities or security entitlements thereto by Transfer to
the Purchase Contract Agent.

	 	 	 	 	 
	 	 	 	 	JPMorgan Chase Bank,
	Dated:	 	

	 	As Collateral Agent

	 	 	 
	By:	 	

	 	 	
Name:
	 	 	
Title:

D-1 

 

          Please print name and address of Holder electing to substitute [Notes or
security entitlements thereto] for Pledged Treasury Securities:

	 	 	 
	

Name	 	

Social Security or other

Taxpayer Identification Number,

if any
	 	 	 
	
	 	 
	Address	 	 
	 	 	 
	
	 	 
	 	 	 
	
	 	 
	 	 	 
	
	 	 
	DTC Account No. through which
Holder transferred Notes or
security entitlements
thereto	 	 

D-2 

 

EXHIBIT E

NOTICE OF CASH SETTLEMENT FROM SECURITIES INTERMEDIARY

TO PURCHASE CONTRACT AGENT

(Cash Settlement Amounts)

JPMorgan Chase Bank

4 New York Plaza, 15th Floor

New York, New York 10004

Attention: Institutional Trust Services

Telecopy: (212) 623-6216

	 	 	 
	Re: 	 	
New PEPS Units of PPL Corporation (the “Company”) and PPL
Capital Funding, Inc.

          Please refer to the Pledge Agreement, dated as of                    , 2003 (the
“Pledge Agreement”), by and among you, the Company and the JPMorgan Chase Bank,
as Collateral Agent, as Custodial Agent, and as Securities Intermediary. Unless
otherwise defined herein, terms defined in the Pledge Agreement are used herein
as defined therein.

          In accordance with Section 5.5(e) of the Pledge Agreement, we hereby
notify you that as of 11:00 a.m. (New York City time) [on the sixth Business
Day immediately preceding the Purchase Contract Settlement Date], [on the
Business Day immediately preceding the Purchase Contract Settlement Date], we
have received [(i) $         in immediately available funds paid in an
aggregate amount equal to the Purchase Price to the Company on the Purchase
Contract Settlement Date with respect to      New PEPS Units] [(ii)
$         in immediately available funds paid in an aggregate amount equal
to the Purchase Price to the Company on the Purchase Contract Settlement Date
with respect to      Treasury Units].

	 	 	 	 	 
	 	 	 	 	JPMorgan Chase Bank,
	Date:	 	

	 	as Securities Intermediary

	 	 	 
	By:	 	

	 	 	
Name:
	 	 	
Title:

E-1 

 

EXHIBIT F

TO CUSTODIAL AGENT REGARDING REMARKETING

JPMorgan Chase Bank

4 New York Plaza, 15th Floor

New York, New York 10004

Attention: Institutional Trust Services

Telecopy: (212) 623-6216

          Re:      Notes due 2006 of PPL Capital Funding, Inc. (the “Notes”)

          The undersigned hereby notifies you in accordance with Section 5.7(c) of
the Pledge Agreement, dated as of                    , 2003 (the “Pledge Agreement”),
among PPL Corporation, yourselves, as Collateral Agent, Securities Intermediary
and Custodial Agent, and JPMorgan Chase Bank, as Purchase Contract Agent and as
attorney-in-fact for the Holders of New PEPS Units and of Treasury Units from
time to time, that the undersigned elects to deliver $     principal amount of
Notes for delivery to the Remarketing Agent on the sixth Business Day
immediately preceding the Purchase Contract Settlement Date for remarketing
pursuant to Section 5.7(c) of the Pledge Agreement. The undersigned will, upon
request of the Remarketing Agent, execute and deliver any additional documents
deemed by the Remarketing Agent or by the Company to be necessary or desirable
to complete the sale, assignment and transfer of the Notes tendered hereby.

          The undersigned hereby instructs you, upon receipt of the Proceeds of such
remarketing from the Remarketing Agent to deliver such Proceeds to the
undersigned in accordance with the instructions indicated herein under “A.
Payment Instructions”. The undersigned hereby instructs you, in the event of a
Failed Final Remarketing, upon receipt of the Notes tendered herewith from the
Remarketing Agent, to deliver the Notes to the person(s) and the address(es)
indicated herein under “B. Delivery Instructions.”

          With this notice, the undersigned hereby (i) represents and warrants that
the undersigned has full power and authority to tender, sell, assign and
transfer the Notes tendered hereby and that the undersigned is the record owner
of any Notes tendered herewith in physical form or a participant in The
Depository Trust Company (“DTC”) and the beneficial owner of any Notes tendered
herewith by book-entry transfer to your account at DTC and (ii) agrees to be
bound by the terms and conditions of Section 5.7(c) of the Pledge Agreement.
Capitalized terms used herein but not defined shall have the meaning set forth
in the Pledge Agreement.

F-1 

 

EXHIBIT F

	 	 	 	 	 	 	 
	Date:	 	

	 	 	 	 
	 	 	 	 	By:	 	

	 	 	 	 	 	 	Name:
	 	 	 	 	 	 	Title:
	 	 	 	 	 	 	Signature Guarantee:

Please print name and address:

	 	 	 
	
	 	

	Name	 	
Social Security or other

Taxpayer Identification

Number, if any
	Address	 	 
	 	 	 
	
	 	 
	 	 	 
	
	 	 
	 	 	 
	
	 	 

	 	 	 
	A. PAYMENT INSTRUCTIONS	 	
B. DELIVERY INSTRUCTIONS
	
	 	

	Proceeds of the remarketing should be paid by
check in the name of the person(s) set forth
below and mailed to the address set forth
below	 	
In the event of a failed final remarketing,
Notes which are in physical form should be
delivered to the person(s) set forth below
and mailed to the address set forth below.

	 	 	 
	Name(s)

(Please Print)	 	
Name(s)

(Please Print)
	 	 	 
	Address	 	
Address
	 	 	 
	

(Please Print)	 	

(Please Print)
	 	 	 
	
	 	

	 	 	 
	

(Zip Code)	 	

(Zip Code)
	 	 	 
	

(Tax Identification or Social Security Number)	 	

(Tax Identification or Social Security Number)
	 	 	 
	
If a DTC Participant, add wire transfer
instructions and DTC Account No.	 	
In the event of a failed final remarketing, Notes
which are in book-entry form should be credited
to the account at The Depository Trust Company
set forth below.

	

Wire transfer instructions	 	

DTC Account Number
	 	 	 
	

DTC Account Number	 	

Name of Account Party:

F-2 

 

EXHIBIT G

INSTRUCTION TO CUSTODIAL AGENT REGARDING

WITHDRAWAL FROM REMARKETING

JPMorgan Chase Bank

4 New York Plaza, 15th Floor

New York, New York 10004

Attention: Institutional Trust Services

Telecopy: (212) 623-6216

          Re:      Notes due 2006 of PPL Capital Funding, Inc. (the “Notes”)

          The undersigned hereby notifies you in accordance with Section 5.7(c) of
the Pledge Agreement, dated as of                    , 2003 (the “Pledge Agreement”),
among PPL Corporation, yourselves, as Collateral Agent, Securities Intermediary
and Custodial Agent, and JPMorgan Chase Bank, as Purchase Contract Agent and as
attorney-in-fact for the Holders of New PEPS Units and Treasury Units from time

to time, that the undersigned elects to withdraw the $     principal amount of
Notes delivered to the Custodial Agent on
         ,
         for
remarketing pursuant to Section 5.7(c) of the Pledge Agreement. The
undersigned hereby instructs you to return such Notes to the undersigned in
accordance with the undersigned’s instructions. With this notice, the
undersigned hereby agrees to be bound by the terms and conditions of Section
5.7(c) of the Pledge Agreement. Capitalized terms used herein but not defined
shall have the meaning set forth in the Pledge Agreement.

	 	 	 	 	 	 	 
	Date:	 	

	 	 	 	 
	 	 	 	 	By:
	 	

	 	 	 	 	 	 	Name:
	 	 	 	 	 	 	Title:
	 	 	 	 	 	 	Signature Guarantee:

G-1 

 

EXHIBIT G 

Please print name and address:

	 	 	 
	

Name	 	

Social Security or other

Taxpayer Identification

Number, if any
	 	 	 
	Address	 	 
	 	 	 
	
	 	 
	 	 	 
	
	 	 
	 	 	 
	
	 	 
	 	 	 
	

DTC Account No. to which
such Notes or security
entitlements thereto are
to be credited at The
Depository Trust Company	 	 

G-2

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