EX-4 3 exhibit45supp.txt EXHIBIT 4.2 EXHIBIT 4.2 ================================================================================ PPL ELECTRIC UTILITIES CORPORATION TO THE CHASE MANHATTAN BANK, TRUSTEE ----------------------------- SUPPLEMENTAL INDENTURE NO. [1] DATED AS OF ________, 200[1] ----------------------------- SUPPLEMENTAL TO THE INDENTURE DATED AS OF _________, 2001 ----------------------------- ESTABLISHING TERMS OF [SENIOR SECURED] BONDS [______ SERIES __] ================================================================================ SUPPLEMENTAL INDENTURE NO. [1] SUPPLEMENTAL INDENTURE No. [1], dated as of the ___ day of ____, 200[1] made and entered into by and between PPL ELECTRIC UTILITIES CORPORATION, a corporation of the Commonwealth of Pennsylvania, whose address is Two North Ninth Street, Allentown, Pennsylvania 18101 (hereinafter sometimes called the "Company"), and THE CHASE MANHATTAN BANK,, a corporation of the State of New York, whose address is 450 West 33rd Street, 15th Floor, New York, New York 10001 (hereinafter sometimes called the "Trustee"), as Trustee under the Indenture, dated as of __________, 2001 (hereinafter called the "Original Indenture"), this Supplemental Indenture No. [1] being supplemental thereto. The Original Indenture and any and all indentures and instruments supplemental thereto are hereafter sometimes collectively called the "Indenture." RECITALS OF THE COMPANY The Original Indenture was authorized, executed and delivered by the Company to provide for the issuance from time to time of its Securities (such term and all other capitalized terms used herein without definition having the meanings assigned to them in the Original Indenture), to be issued in one or more series as contemplated therein, and to provide security for the payment of the principal of and premium, if any, and interest, if any, on the Securities. Pursuant to [Article Four] of the Original Indenture, the Company has established a series of Securities to be designated ["Senior Secured Bonds"], limited in aggregate principal amount (except as contemplated in Section 301(b) of the Original Indenture) to $[900,000,000], such series of Securities to be hereinafter sometimes called "Securities of the [First] Series." As contemplated in Section 301 of the Original Indenture, the Company wishes to establish certain terms of the Securities of the [First] Series. The Company has duly authorized the execution and delivery of this Supplemental Indenture No. [1] to establish certain terms of the Securities of the [First] Series and has duly authorized the issuance of such Securities; and all acts necessary to make this Supplemental Indenture No. [1] a valid agreement of the Company, and to make the Securities of the [First] Series valid obligations of the Company, have been performed. NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE NO. [1] WITNESSETH, that, for and in consideration of the premises and of the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities of the [First] Series, as follows: ARTICLE ONE. [FIRST] SERIES OF SECURITIES SECTION 101. The Securities of the [First] Series shall have the terms provided therefor in this Article One of this Supplemental Indenture No. [1], and such terms are hereby established for such Securities of the [First] Series as contemplated in Article Four and Section 301 of the Original Indenture. The form or forms and additional terms of the Securities of the [First] Series shall be established in an Officer's Certificate of the Company, as contemplated by Article Four and Section 301 of the Original Indenture. SECTION 102. COVENANTS. So long as any Securities of the [First] Series shall remain Outstanding, each of the following shall be an additional covenant of the Company under the Indenture: (a) The Company shall not declare any dividends on its shares of common stock or commit to make any other distribution on its shares of common stock (other than dividends and distributions payable in shares of its common stock), or purchase or redeem any shares of its common stock, other than with the proceeds of additional common stock financing (each such payment or distribution or purchase, a "Restricted Payment"), if and for so long as the average of the Interest Coverage Ratios for the four most recently ended fiscal quarters immediately preceding the date of declaration of any such Restricted Payment falls below 1.5. The Company shall not declare any cash dividend on shares of its common stock, or otherwise commit to making any other Restricted Payment, unless such dividend or other Restricted Payment is payable within 120 days of the date of declaration or other commitment. (b) If the Company receives a Dividend Notice from the Independent Administrator the Company shall not make any Restricted Payment until such time as the Company has corrected the noncompliance giving rise to the Dividend Notice in accordance with Section __ of the Compliance Administration Agreement. (c) If and for so long as the average of the Interest Coverage Ratios for the four consecutive fiscal quarters immediately preceding any date of determination falls below 1.5, the Company shall initiate a filing for rate relief with the Pennsylvania Public Utility Commission ("PUC") within 90 days, unless the Company is not eligible for such rate relief under applicable law, regulation or orders or policies of the PUC then in effect. (d) The Company will not issue additional Securities (other than (i) Securities issued to refund Outstanding Securities, outstanding bonds issued under the PPL 1945 Mortgage, or any other Class A Bonds and (ii) Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of such series pursuant to Section 304, 305, 306, 506 or 1306 of the Indenture), unless the Company shall have received Rating Agency Confirmations from the applicable Rating Agencies, each to the effect that the issuance of such additional Securities will not result in the reduction or withdrawal of the ratings on the Outstanding Securities of the [First] Series below the lower of (x) such Rating Agency's rating on such Outstanding Securities then in effect or (y) such Rating Agency's Threshold Rating. (e) The Company shall not, subject to the requirements of applicable law, regulation and policies of applicable regulatory bodies, engage in any business, either directly or through subsidiaries of the Company, other than its electric transmission and distribution businesses and businesses related to or arising out of the electric transmission and distribution businesses. (f) The Company will not consolidate with or merge with or into, or convey or otherwise transfer, or lease, as or substantially as an entirety, its Electric Utility Property to any Person, unless: (i) the provisions of Section 1201 of the Indenture are complied with; (ii) immediately after giving effect to such transaction, the Consolidated Net Worth of the Company or the Successor Company, as the case may be, is not less than that of the Company immediately prior to the transaction; and (iii) the Company shall have received Rating Agency Confirmations from the applicable Rating Agencies, each to the effect that the merger, consolidation or other transaction will not result in the reduction or withdrawal of the ratings on the Outstanding Securities of the [First] Series below the lower of (x) such Rating Agency's rating on such Outstanding Securities then in effect or (y) such Rating Agency's Threshold Rating. (g) The Company will not acquire tangible electric transmission and distribution assets of any other electric transmission and distribution company having a value in excess of 20% of the total assets of the Company and its consolidated subsidiaries as shown on the Company's most recent audited consolidated balance sheet unless the Company shall have received Rating Agency Confirmations from the applicable Rating Agencies, each to the effect that the acquisition will not result in the reduction or withdrawal of the ratings on the Outstanding Securities of the [First] Series below the lower of (x) such Rating Agency's rating on such Outstanding Securities then in effect or (y) such Rating Agency's Threshold Rating. 2 (h) After the date of the first authentication of Securities of the [First] Series, the Company shall not issue additional Class A Bonds under the PPL 1945 Mortgage except for Class A Bonds (i) to replace mutilated, destroyed, lost or stolen Class A Bonds of the same series or to effect transfers, exchanges, or partial redemptions, payments or retirements of Class A Bonds; (ii) to be delivered to the Trustee under the Indenture; or (iii) to refund or refinance outstanding Class A Bonds. (i) The Securities of the [First] Series shall have the benefit of the covenant of the Company contained in Section 707 of the Indenture. (j) The Company will comply in all material respects with Articles X and XI of its Amended and Restated Articles of Incorporation and Article IX of its Bylaws, in each case as such documents may be amended from time to time in accordance with the terms thereof. (k) The Company will not solicit its affiliates to obtain, or accept from any of its affiliates, any guarantee by such affiliate of any obligation of the Company. SECTION 103. RELEASE OF MORTGAGED PROPERTY. So long as any Securities of the [First] Series shall remain Outstanding, any Officer's Certificate delivered pursuant to Section 1803(c) of the Original Indenture shall also state that (except in any case where a Governmental Authority has lawfully ordered the Company to divest itself of such property) such release is, in the judgment of the signers, desirable in the conduct of the business of the Company. SECTION 104. ADDITIONAL CONDITION TO RELEASE DATE. So long as any Securities of the [First] Series shall remain Outstanding, it shall be a condition to the occurrence of the Release Date under Section 1811 of the Original Indenture, that the Company deliver to the Trustee Rating Agency Confirmations from the applicable Rating Agencies, each to the effect that the discharge of the Lien of the Indenture will not result in the reduction or withdrawal of the ratings on the Outstanding Securities of the [First] Series below the lower of (x) such Rating Agency's rating on such Outstanding Securities then in effect or (y) such Rating Agency's Threshold Rating. SECTION 105. EVENTS OF DEFAULT. So long as any Securities of the [First] Series shall remain Outstanding, the occurrence and continuation of the following shall be an additional Event of Default under the Indenture: the Company shall receive a Noncompliance Notice from the Independent Administrator under the Compliance Administration Agreement, unless and until the Independent Administrator shall have informed the Trustee that such Noncompliance Notice is no longer in effect. SECTION 106. DEFINITIONS. For purposes of this Supplemental Indenture, "COMPLIANCE ADMINISTRATION AGREEMENT" shall mean that Compliance Administration Agreement between the Company and ___________________, as Independent Administrator as such agreement shall be amended from time to time. "CONSOLIDATED NET WORTH" shall mean, with respect to any Person, the excess of such Person's consolidated assets over its consolidated liabilities, determined in accordance with generally accepted accounting principles; "DIVIDEND NOTICE" shall mean a notice from the Independent Administrator as contemplated by Section of the Compliance Administration Agreement. "FUNDS FROM OPERATION" means for any period with respect to the Company and its consolidated subsidiaries, the aggregate amount of consolidated net income of the Company and its consolidated subsidiaries (x) plus deferred income taxes, 3 depreciation and amortization expense, preferred dividends, extraordinary expense items, any non-recurring or non-cash charges to net income (whether or not an extraordinary item) and any expense associated with intangible transition charges, and (y) minus any deferred investment tax credit, any extraordinary revenue items and any income associated with intangible transition charges, all computed in accordance with generally accepted accounting principles in effect on the date of original issue of the Securities of the [First] Series; "GROSS INTEREST EXPENSE" means for any period, the interest expense on indebtedness of the Company and its consolidated subsidiaries minus any interest expense associated with intangible transition debt; "INDEPENDENT ADMINISTRATOR" shall mean, initially, [_______________________________], as Administrator under the Compliance Administration Agreement, and its successors in such capacity from time to time. "INTEREST COVERAGE RATIO" means the ratio of (i) the sum of Funds from Operation plus Gross Interest Expense to (ii) Gross Interest Expense; "NONCOMPLIANCE NOTICE" shall mean a notice from the Independent Administrator as contemplated by Section _____ of the Compliance Administration Agreement. "RATING AGENCY" shall mean any of Fitch Investor Services ("Fitch"), Moody's Investors Service, Inc. ("Moody's"), and Standard and Poor's Ratings Group, a division of McGraw Hill, Inc. ("S&P"), and, in each case, its respective successors and assigns, or absent a successor to any such Rating Agency, or if such entity shall cease to rate Securities of the [First] Series, such other nationally recognized statistical rating organization as may be selected by the Company and designated a Rating Agency with respect to the Securities of the [First] Series. "RATING AGENCY CONFIRMATIONS" shall mean written evidence of the ratings on the Securities of the [First] Series of Fitch, Moody's and S&P; provided that if any of such Rating Agencies ceases to exist or to rate the Securities of the [First] Series, and no other Rating Agency has been designated by the Company with respect to the Securities of the [First] Series, "Rating Agency Confirmations" shall mean the written evidence of the ratings on the Securities of the [First] Series by any remaining Rating Agency or Rating Agencies. "RESTRICTED PAYMENT" shall have the meaning set forth in Section 101; and "THRESHOLD RATING" shall mean, with respect to the Securities of the [First] Series, A- in the case of Fitch, A3 in the case of Moody's, and A- in the case of S&P, or, in each case, the equivalent rating if any such Rating Agency shall change its rating designations. SECTION 107. SATISFACTION AND DISCHARGE. The Company hereby agrees that, if the Company shall make any deposit of money and/or Eligible Obligations with respect to any Securities of the [First] Series, or any portion of the principal amount thereof, as contemplated by Section 801 of the Indenture, the Company shall not deliver an Officer's Certificate described in clause (z) in the first paragraph of said Section 801 unless the Company shall also deliver to the Trustee, together with such Officer's Certificate, either: (a) an instrument wherein the Company, notwithstanding the satisfaction and discharge of its indebtedness in respect of such Securities, shall retain the obligation (which shall be absolute and unconditional) to irrevocably deposit with the Trustee or Paying Agent such additional sums of money, if any, or additional Eligible Obligations (meeting the requirements of Section 801), if any, or any combination thereof, at such time or times, as shall be necessary, together with the money and/or Eligible Obligations theretofore so deposited, to pay when due the principal of and premium, if any, and interest due and to become due on such Securities or portions thereof, all in accordance with and subject to the provisions of said Section 801; provided, however, that such instrument may state that the obligation of the Company to make additional deposits as aforesaid shall be subject to the delivery to the Company by the Trustee of a notice asserting the deficiency accompanied by an opinion of an independent public accountant of nationally recognized standing, selected by the Trustee, showing the calculation thereof (which opinion shall be obtained at the expense of the Company); or 4 (b) an Opinion of Counsel to the effect that the Holders of such Securities, or portions of the principal and amount thereof, will not recognize income, gain or loss for United States federal income tax purposes as a result of the satisfaction and discharge of the Company's indebtedness in respect thereof and will be subject to United States federal income tax on the same amounts, at the same times and in the same manner as if such satisfaction and discharge had not been effected. ARTICLE TWO. MISCELLANEOUS PROVISIONS SECTION 201. This Supplemental Indenture No. [1] is a supplement to the Original Indenture. As supplemented by this Supplemental Indenture No [1], the Indenture is in all respects ratified, approved and confirmed, and the Original Indenture and this Supplemental Indenture No. [1] shall together constitute the Indenture. SECTION 202. The recitals contained in this Supplemental Indenture No. [1] shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness and makes no representations as to the validity or sufficiency of this Supplemental Indenture No. [1]. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 5 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture No. [1] to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first written above. PPL ELECTRIC UTILITIES CORPORATION By ------------------------------------- Treasurer Attest: ------------------------------------- Assistant Secretary THE CHASE MANHATTAN BANK, as Trustee By ------------------------------------- [Vice President] Attest: ------------------------------------- [Assistant Vice President] 6 COMMONWEALTH OF PENNSYLVANIA ) ) ss.: COUNTY OF LEHIGH ) On this ____ day of _____, 2001, before me, a notary public, the undersigned officer, personally appeared , who acknowledged himself to be the Treasurer of PPL ELECTRIC UTILITIES CORPORATION, a corporation of the Commonwealth of Pennsylvania and that he, as such Treasurer, being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by himself as Treasurer. In witness whereof, I hereunto set my hand and official seal. ------------------------------------- Notary Public 7 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On this ___ day of ____, 2001, before me, a notary public, the undersigned officer, personally appeared ______________________, who acknowledged herself to be a [Vice President] of THE CHASE MANHATTAN BANK, a corporation and that [he/she], as such [Vice President], being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by herself as [Vice President]. In witness whereof, I hereunto set my hand and official seal. By: --------------------------------- Notary Public, State of No. Qualified in Commission Expires The Chase Manhattan Bank, hereby certifies that its precise name and address as Trustee hereunder are: The Chase Manhattan Bank Institutional Trust Services 450 West 33rd Street, 15th Floor New York, New York 10001 Attn: Annette Marsula, International/Project Finance Group THE CHASE MANHATTAN BANK By: ------------------------------------- [Vice President] 8