S-4

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

PPL Corporation (Exact name of registrant as specified in its charter)	PPL Capital Funding, Inc. (Exact name of registrant as specified in its charter)
Pennsylvania (State or other jurisdiction of incorporation or organization)	Delaware (State or other jurisdiction of incorporation or organization)
4911 (Primary Standard Industrial Classification Code Number)	4911 (Primary Standard Industrial Classification Code Number)
23-2758192 (I.R.S. Employer Identification No.)	23-2926644 (I.R.S. Employer Identification No.)
Two North Ninth Street Allentown, Pennsylvania 18101-1179 (610) 774-5151 (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)	Two North Ninth Street Allentown, Pennsylvania 18101-1179 (610) 774-5151 (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

James E. Abel, Vice President—Finance and Treasurer

PPL Corporation

Two North Ninth Street

Allentown, Pennsylvania 18101-1179

(610) 774-5151

(Address, including zip code, and telephone number, including area code,

of agent for service)

with a copy to:

Vincent Pagano, Jr.

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

(212) 455-2000

         Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and all other conditions to the exchange offer described herein (the “Exchange Offer”) have been satisfied or waived.

     If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.    o

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

     If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

CALCULATION OF REGISTRATION FEE

			Proposed
		Proposed	Maximum
Title of each Class of	Amount	Maximum	Aggregate	Amount of
Securities to be	to be	Offering Price	Offering	Registration
Registered	Registered	Per Unit(1)	Price(1)(2)	Fee
7 3/4% Premium Equity Participating Security Units (PEPSSM Units), Series B(3)			$572,500,000	$46,316
Stock Purchase Contracts(4)
1/40th Beneficial Interest in PPL Capital Funding Notes(5)
PPL Corporation Guarantee of PPL Capital Funding Notes(6)
PPL Corporation Common Stock, par value $0.01 per share(7)
Total			$572,500,000	$46,316

(1)	Estimated solely for the purpose of determining the registration fee based on Rule 457 under the Securities Act of 1933, as amended.
(2)	Excluding accrued interest, if any.
(3)	Each 7 3/4% PEPS Unit will consist of (a) a stock purchase contract, described under note (4) below, and (b) a 1/40, or 2.5%, undivided beneficial ownership interest in a $1,000 principal amount note. Each note will be pledged to secure the obligation of the holder to purchase the common stock.
(4)	Each stock purchase contract will be issued only as part of an equity unit, designated as a “7 3/4% PEPS Unit.” A stock purchase contract obligates the holder, upon settlement, to purchase and PPL Corporation to sell to the holder an indeterminate number of shares of common stock of PPL Corporation. Since the stock purchase contract will only be issued as part of a 7 3/4% PEPS Unit, no separate consideration will be received for the stock purchase contract. The value, if any, attributable to the stock purchase contracts is reflected in the price of the 7 3/4% PEPS Units.
(5)	Notes will be issued only as part of 7 3/4% PEPS Units.
(6)	PPL Corporation has fully and unconditionally guaranteed all payments, including principal and interest, on the notes. Pursuant to Rule 457(n) under the Securities Act of 1933, as amended, no registration fee is required with respect to this guarantee.
(7)	Common stock will be issued upon settlement of stock purchase contracts which are registered hereby.

     The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

EXCHANGE OFFER PROSPECTUS (Subject to Completion)

Issued September 2, 2003

Offer to Exchange

7 3/4% PEPS^SM Units, Series B and

a Cash Payment

For the 7 3/4% PEPS^SM Units

subject to the terms and conditions described in this prospectus

The Exchange Offer and Withdrawal Rights will expire at 5 p.m., New York City time, on                       , 2003,
unless earlier terminated or extended by us.

PPL Corporation hereby offers, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal, to exchange 7 3/4% Premium Equity Participating Security Units (PEPS^SM Units), Series B, referred to herein as the New PEPS Units, plus a cash payment of $0.375 for each validly tendered and accepted 7 3/4% Premium Equity Participating Security Units (PEPS^SM Units), referred to herein as the Outstanding PEPS Units.

We are offering to exchange up to 22,900,000 Outstanding PEPS Units. However, the exchange offer is subject to the conditions described in this prospectus, including the condition that the Outstanding PEPS Units remain listed on the New York Stock Exchange, or the NYSE, and the minimum condition that there are validly tendered at the expiration of the exchange offer at least 35% of the Outstanding PEPS Units. In the event that we determine there is any likelihood that the NYSE continued-listing condition may not be met, we may accept a pro rata amount of the Outstanding PEPS Units tendered in the offer in order to ensure that the Outstanding PEPS Units continue to be listed on the NYSE.

You may withdraw your tenders at any time prior to 5 p.m. New York City time on the expiration date.

For a description of the investment decision you are being asked to make, see the Summary on page 1.

Each New PEPS Unit consists of a new purchase contract issued by PPL Corporation and a  1/40, or 2.5%, undivided beneficial ownership interest in a $1,000 principal amount note due May 2006 issued by PPL Capital Funding, Inc. and guaranteed by PPL Corporation.

• The new purchase contract will obligate you to purchase from us, no later than May 18, 2004, for a price of $25, the following number of shares of PPL Corporation common stock, $0.01 par value:

— if the average of the closing prices of PPL Corporation’s common stock over the 20-trading day period ending on the third trading day prior to May 18, 2004 multiplied by 1.017 is equal to or greater than $65.03, 0.3910 shares;

— if the average of the closing prices of PPL Corporation’s common stock over the same period multiplied by 1.017 is less than $65.03 but greater than $53.30, a number of shares having a value, based on the 20-trading day average closing prices, equal to $25; and

— if the average of the closing prices of PPL Corporation’s common stock over the same period multiplied by 1.017 is less than or equal to $53.30, 0.4770 shares.

• We will also pay you contract adjustment payments at a rate of 0.46% per year of the stated amount of $25 per New PEPS Unit, or $0.1150 per year, as described in this prospectus.

• From the date of issuance until May 18, 2004, the notes will constitute subordinated obligations of PPL Capital Funding and will be guaranteed on a subordinated basis by PPL Corporation. On and after May 18, 2004, the notes will constitute senior obligations of PPL Capital Funding and will be guaranteed on a senior basis by PPL Corporation. Prior to the new purchase contract settlement date, the ownership interest in the note will be pledged to secure your obligation to purchase PPL Corporation’s common stock under the new purchase contract. You may use the proceeds from the remarketing of the notes to satisfy your payment obligations under the new purchase contract.

• PPL Capital Funding will pay you interest at a rate of 7.29% per year of your ownership interest in the principal amount of the note. If there is a successful remarketing of the notes, the interest rate will be reset and may be greater or less than 7.29% per year. PPL Corporation will unconditionally guarantee the payment of principal and interest on the notes of PPL Capital Funding.

We intend to list the New PEPS Units on the NYSE, subject to the New PEPS Units meeting the listing requirements of the NYSE.

For a discussion of the risks that you should consider in evaluating the exchange offer, see “Risk Factors” beginning on page 22.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities being offered in the exchange offer or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

None of PPL Corporation, PPL Capital Funding, the exchange agent, the information agent or the dealer manager makes any recommendation as to whether or not holders of Outstanding PEPS Units should exchange their securities in the exchange offer.

The dealer manager for the exchange offer is:

Morgan Stanley

                  , 2003

TABLE OF CONTENTS

	Page
Summary		1
Risk Factors		22
Forward-Looking Information		33
Price Range of the Outstanding PEPS Units		35
Price Range of Common Stock		35
Dividend Policy		36
The Exchange Offer		37
Accounting Treatment		46
Description of the New PEPS Units		47
Description of the New Purchase Contracts		50
Certain Provisions of the New Purchase Contracts, the New Purchase Contract Agreement and the Pledge Agreement		59
Book-Entry System		62
Description of the Notes		64
Description of PPL Corporation’s Capital Stock		72
United States Federal Income Tax Considerations		74
Certain ERISA Considerations		83
Legal Matters		85
Experts		85
Where You Can Find More Information		86

As used in this prospectus, the terms “company,” “we,” “our,” “ours” and “us” may, depending on the context, refer to PPL Corporation, to PPL Capital Funding, to one or more of PPL Corporation’s consolidated subsidiaries or to all of them taken as a whole.

You should rely only on the information contained in this prospectus and those documents incorporated by reference herein. We have not authorized any other person to provide you with different or additional information. If anyone provides you with different or additional information, you should not rely on it. We are offering to sell, and are seeking offers to buy, the New PEPS Units only in jurisdictions where offers and sales are permitted. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any New PEPS Unit offered by this prospectus by any person in any jurisdiction in which it is unlawful for such person to make such an offer or solicitation. Neither the delivery of this prospectus nor any sale made under it implies that there has been no change in our affairs or that the information in this prospectus is correct as of any date after the date of this prospectus.

This prospectus has been prepared based on information provided by us and other sources we believe to be reliable. We do not represent that information provided by other sources is accurate or complete. In making an investment decision, prospective investors must rely on their own examinations of PPL Corporation and PPL Capital Funding, and the terms of the offering, including the merits and risks involved.

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SUMMARY

      The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus and the information contained in documents incorporated by reference in the registration statement of which this prospectus forms a part. Reference is made to “Risk Factors” beginning on page 22 for a discussion of certain issues that should be considered in evaluating an investment in the New PEPS Units.

      We are offering to exchange with you a New PEPS Unit and a cash payment of $0.375 for each Outstanding PEPS Unit that you own subject to the terms and conditions described in this prospectus. As an owner of an Outstanding PEPS Unit, you have both an equity investment and a fixed income investment in us. The equity investment is in the form of a purchase contract, which, unless earlier terminated, requires you to purchase a variable number of shares of PPL Corporation common stock. The fixed income investment is in the form of a trust preferred security that represents an undivided beneficial interest in the subordinated notes of PPL Capital Funding, Inc. guaranteed on a subordinated basis by PPL Corporation.

      In making your investment decision whether to exchange, you need to determine whether the New PEPS Units together with the cash payment on the exchange is worth more than your Outstanding PEPS Units. The equity components of the New PEPS Units are essentially identical to the equity components of the Outstanding PEPS Units, except for modifications of your right to effect early settlement of the purchase contracts. See “Principal Differences Between the Outstanding PEPS Units and New PEPS Units.” The fixed income component of the New PEPS Units differs in several respects from the fixed income component of the Outstanding PEPS Units. Most of those differences are designed to make the new fixed income securities attractive to potential buyers in the remarketing. See “Principal Differences Between the Outstanding PEPS Units and New PEPS Units.”

      As the fixed income component of the Outstanding PEPS Units, the trust preferred securities have the following three key features:

• they provide quarterly distributions at the rate of 7.29% per year;

• they serve as collateral to secure your obligation under the purchase contracts to purchase the common stock of PPL Corporation; and

• if you continue to own Outstanding PEPS Units on the initial remarketing date and choose to settle your purchase contract out of the proceeds of a successful remarketing of the trust preferred securities, you will receive extra proceeds to the extent that the remarketing agent is able to obtain a price in excess of 100.25% of the cost of the treasury portfolio (or 100.25% of $25 in the case of the final remarketing) with the distribution rate set at 7.29%. If the yield to maturity of the remarketed trust preferred securities is significantly lower than 7.29%, the proceeds of the remarketing in excess of the treasury portfolio purchase price could be substantial. This potential for extra proceeds results from a “one-way reset” feature that prevents the distribution rate from being reset below 7.29%.

      With respect to these three key features, only the third feature will change if you exchange the Outstanding PEPS Units for the New PEPS Units. Prior to the remarketing date, the income stream on the New PEPS Units will be the same as the income stream on the Outstanding PEPS Units. Like the fixed income component of the Outstanding PEPS Units, the fixed income component of the New PEPS Units will adequately collateralize your obligation to purchase the common stock of PPL Corporation.

      The new fixed income securities, however, do not contain a one-way reset. Instead, the remarketing agent will attempt to generate proceeds of 100.50% of $25, regardless of the reset rate, which will have no limit as to how high it can be set (except for the maximum rate permitted by any applicable law). If the remarketing succeeds at 100.50% of $25, then $0.0625 (0.25% of $25) will be paid to you on or about the remarketing date. In addition, we will pay to you on the exchange date a cash payment of $0.375 for each exchanged Outstanding PEPS Unit. The new notes that are part of New PEPS Units have been designed to maximize the probability of a successful remarketing at 100.50%.

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      In deciding whether to participate in the exchange, you should consider at what rate you believe the remarketing of the trust preferred securities that are a part of the Outstanding PEPS Units is likely to succeed. Assuming the trust preferred securities that are part of the Outstanding PEPS Units are successfully remarketed in February 2004, holders will receive extra proceeds equal to the excess, if any, of the remarketing proceeds over 100.25% of the treasury portfolio purchase price. Assuming a 3-month Treasury rate of 1.00%, the treasury portfolio purchase price will be $25.39 and 100.25% of the treasury portfolio purchase price will be $25.46. The following table presents the remarketing proceeds and extra proceeds, assuming various yields-to-maturity and reset rates of the remarketed trust preferred securities:

		Reset		Remarketing		Extra
Yield to Maturity		Rate		Proceeds		Proceeds
	8.00%		8.90%	$	25.46	$	0.00
	7.50%		8.40%	$	25.46	$	0.00
	7.00%		7.89%	$	25.46	$	0.00
	6.50%		7.39%	$	25.46	$	0.00
	6.41%		7.29%	$	25.46	$	0.00
	6.00%		7.29%	$	25.67	$	0.21
	5.59%		7.29%	$	25.90	$	0.44
	5.50%		7.29%	$	25.94	$	0.48
	5.00%		7.29%	$	26.21	$	0.75

      Investors who participate in the exchange and who settle their new purchase contracts that are components of the New PEPS Units out of the proceeds of a successful remarketing will receive cash payments totaling $0.4375, assuming a successful remarketing at 100.50% of $25. Of this amount, $0.375 is assured, because this amount represents the cash payment paid for each Outstanding PEPS Unit exchanged. Given the assumptions above, the remarketing of the Outstanding PEPS Units would have to succeed at a yield-to-maturity of less than 5.59% in order for investors who do not participate in the exchange and who elect to settle their purchase contracts out of the proceeds of a successful remarketing to receive extra proceeds of more than $0.4375. Furthermore, if the remarketing of the trust preferred securities succeeds only at a yield-to-maturity of 6.41% or greater, investors who do not participate in the exchange will receive no extra proceeds.

      We cannot predict the yield to maturity that would occur upon the remarketing of the trust preferred securities. Because of a downgrade of our long-term debt that occurred after we issued the Outstanding PEPS Units, the trust preferred securities are no longer rated investment grade. The downgrade alone, and the effect of the downgrade on some of the other features of the trust preferred securities, may lead fixed income investors to demand a relatively high yield on the trust preferred securities. For instance, the trust preferred securities are subordinated obligations (because they represent an interest in subordinated notes and a subordinated guarantee) and, unlike typical sub-investment grade fixed income securities, have minimum denominations of $25 and pay distributions quarterly. In addition, unlike typical sub-investment grade fixed income securities, the trust preferred securities will have a relatively short maturity following a successful remarketing and will not have the financial covenants that investors in such securities expect. As a result, the remarketing of the trust preferred securities may only succeed at a yield-to-maturity that exceeds 5.59%. If such turns out to be the case, holders of Outstanding PEPS Units would achieve a better return on their investment by exchanging each of their Outstanding PEPS Units for a New PEPS Unit and $0.375 in cash assuming a successful remarketing of the new notes.

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Questions And Answers About The Exchange Offer

Q1:	What will I receive if I tender in the exchange offer?
A1:	For each Outstanding PEPS Unit validly tendered and accepted in the exchange offer, subject to certain conditions described below, you will receive a New PEPS Unit and a cash payment equal to $0.375. However, as described below, even if you tender all of your Outstanding PEPS Units, we may not accept all of your Outstanding PEPS Units for exchange.

If you exchange in this offer, we will pay you on November 18, 2003, any accrued and unpaid purchase contract adjustment payments and interest payments on the new notes accruing from August 18, 2003 (the last date on which such payments were paid on the Outstanding PEPS Units). We will not pay purchase contract adjustments and distributions on trust preferred securities relating to Outstanding PEPS Units that are exchanged for New PEPS Units for any periods after August 18, 2003.

Q2:

What are the differences in value to me between my Outstanding PEPS Units and accepting the New PEPS Units and cash consideration in the exchange offer?

A2:

The principal difference between the Outstanding PEPS Units and the New PEPS Units are described in the chart on page 9 of this prospectus, “Summary—Principal Differences Between the Outstanding PEPS Units and New PEPS Units.” Fundamentally, however, in exchange for the uncertain value of the one way reset feature and, therefore, the uncertainty of receiving extra proceeds in a remarketing of the trust preferred securities related to the Outstanding PEPS Units, we are offering you:

    • a cash payment of $0.375 for each Outstanding PEPS Unit you exchange, plus

    • if you elect to settle your new purchase contracts out of the proceeds of a remarketing and the remarketing is successful at 100.5% of the aggregate principal amount of the new notes, an additional $0.0625 for each of your New PEPS Units.

Q3:	Why are we conducting this exchange offer?
A3:	We are conducting this exchange offer to reduce our future interest expense. Both the Outstanding PEPS Units and the New PEPS Units require us to remarket the fixed income securities that are components of the PEPS Units. When we initially offered the Outstanding PEPS Units they had an investment grade rating. Since then they have been downgraded to below investment grade status. In contrast, after May 18, 2004, the new notes which are the fixed income components of the New PEPS Units are expected to have an investment grade rating because currently our senior debt is rated investment grade. Because we expect these new notes to be more attractive to potential buyers than the trust preferred securities, and because the new notes will not be subject to a minimum interest rate, we expect to be able to remarket the new notes at a lower rate, thereby generating less interest expense.
Q4:	Is the exchange offer subject to any conditions?
A4:	Yes. The exchange offer is subject to the conditions described on pages 37 and 38 of this prospectus. The conditions to the exchange offer require, without limitation:

    • that at least 35% of the Outstanding PEPS Units are validly tendered and not withdrawn immediately prior to the expiration of the exchange offer, and

    • that the Outstanding PEPS Units remain listed on the NYSE, and, as described below, we might prorate our acceptances of tenders of Outstanding PEPS Units to satisfy this condition.

We may waive any or all of the conditions to the exchange offer. In the event any such waiver results in a material change to the terms of the exchange offer, we will extend the expiration date so that the exchange offer remains open for any additional period required by law.

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Q5:	What happens if the minimum condition is not satisfied?
A5:	If the number of Outstanding PEPS Units tendered in the exchange offer results in less than 35% of the Outstanding PEPS Units being validly tendered and not withdrawn, we may choose not to complete the exchange offer or we could choose to waive the minimum condition for any reason. If we choose not to complete the exchange offer, we will promptly return any Outstanding PEPS Units that have been tendered.
Q6:	Will you accept all Outstanding PEPS Units that I tender?
A6:	In some limited cases, no. We are offering to exchange up to 22,900,000 Outstanding PEPS Units. However, the exchange offer is subject to the conditions described in this prospectus, including the condition that the Outstanding PEPS Units remain listed on the NYSE and the minimum condition that there are validly tendered at the expiration of the exchange offer at least 35% of the Outstanding PEPS Units. In the event that we determine there is any likelihood that the NYSE continued-listing condition may not be met, we may accept a pro rata amount of the Outstanding PEPS Units tendered in the offer in order to ensure that the Outstanding PEPS Units continue to be listed on the NYSE. Any Outstanding PEPS Units that are tendered but not accepted because of proration will be returned to you.
Q7:	Will the New PEPS Units be listed on any stock exchange?
A7:	We intend to list the New PEPS Units on the NYSE, subject to the New PEPS Units meeting the listing requirements of the NYSE.
Q8:	What are the U.S. federal income tax consequences to U.S. holders that tender in the exchange offer?
A8:	We intend to treat the exchange of the trust preferred security for the new note plus a cash payment of $0.375 as a taxable exchange, and to treat the exchange of the old purchase contract for the new purchase contract as merely a continuation of the old purchase contract. It is possible that the Internal Revenue Service, or the IRS, could assert alternative characterizations. Please consult your tax advisor about the tax consequences to you of the exchange. See “United States Federal Income Tax Considerations.”
Q9:	What is the position of your board of directors with respect to the exchange offer?
A9:	Neither we nor any of our directors make any recommendation to any holder of Outstanding PEPS Units as to whether to tender or refrain from tendering Outstanding PEPS Units in the exchange offer.

Q10:	Is the settlement rate of the New PEPS Units the same as the Outstanding PEPS Units and could it change?
A10:	The New PEPS Units are being issued with identical purchase contract settlement rates as the Outstanding PEPS Units (including all adjustments already made on the Outstanding PEPS Units to reflect the dividends paid through July 1, 2003) and will carry identical anti-dilution provisions (including adjustment in respect of taxable dividends paid to holders of our common stock). Following the issuance of the Outstanding PEPS Units we have paid quarterly cash dividends to holders of our common stock that resulted in adjustments to the settlement rate of the old purchase contracts. Prior to settlement we will be required to adjust the settlement rate in both the Outstanding PEPS Units and the New PEPS Units to reflect the dividend to be paid on October 1, 2003. In addition, although there is no assurance that we will continue to do so, if we continue to pay quarterly cash dividends at the current rate, we would have to adjust the settlement rate further on account of such dividends.
Q11:	Would there be any tax consequences to a change in the settlement rate of the New PEPS Units?
A11:	Similar to holders of the Outstanding PEPS Units, holders of the New PEPS Units will be deemed to have received taxable distributions on account of any adjustments to the settlement rate as a result of anti-dilution provisions even though they will not receive any cash or property as a result of such adjustments.

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Q12:	What do you intend to do with the Outstanding PEPS Units that are tendered in the exchange offer?
A12:	We intend to cancel and retire all Outstanding PEPS Units accepted in the exchange offer.
Q13:	Will there be any cash proceeds from the exchange offer?
A13:	No. We will not receive any cash proceeds from the exchange offer.
Q14:	When does the exchange offer expire?
A14:	The exchange offer expires at 5 p.m., New York City time, on                     , 2003. However, we may at any time prior to closing the tender offer in our sole discretion extend the expiration date of the exchange offer or amend or withdraw the exchange offer by giving oral or written notice to the exchange agent. Any such extension, amendment or withdrawal will be followed as promptly as practicable by a public announcement thereof, which, in the case of an extension, will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. References in this prospectus to the expiration date of the exchange offer mean                     , 2003 or, if later, the last date to which we extend the exchange offer.
Q15:	When will I receive my New PEPS Units?
A15:	Your ownership of New PEPS Units will be recorded in book-entry form on the exchange date, as described below, if all conditions to the exchange offer are satisfied or waived, provided we have timely received your properly completed and executed letter of transmittal, an “agent’s message,” as described on page 41 of this prospectus, or properly completed and executed notice of guaranteed delivery, and you have not withdrawn your tender prior to the expiration of the exchange offer. We anticipate that the exchange date will be the third business day following the expiration date of the exchange offer, after giving effect to any extensions of the offer. However, if we need to prorate, the exchange date may be the third through seventh business day following the expiration date.
Q16:	What happens if I change my mind after tendering in the exchange offer?
A16:	You may withdraw your tender any time before 5 p.m., New York City time, on the expiration date. However, if we extend the exchange offer you may withdraw your tender at any time prior to the expiration date, as extended. In addition, tenders of Outstanding PEPS Units may be withdrawn after expiration of 40 business days from the commencement of the exchange offer in the event that we have not yet accepted Outstanding PEPS Units in the exchange offer by such time. If you decide to withdraw your tender, you must withdraw all Outstanding PEPS Units previously tendered by you, as partial withdrawals will not be permitted.
Q17:	How will my Outstanding PEPS Units be affected if I do not tender them in the exchange offer or if not all of my Outstanding PEPS Units are accepted by you in the exchange offer?
A17:	The terms of any of your Outstanding PEPS Units will not be changed as a result of the consummation of the exchange offer. In addition, it is a condition to the exchange offer that the Outstanding PEPS Units remain listed on the NYSE. However, to the extent that we close the exchange offer, there will be fewer Outstanding PEPS Units. The liquidity and the trading market of the remaining Outstanding PEPS Units may be adversely affected due to the smaller number of Outstanding PEPS Units available for trading.
Q18:	How do I exchange my Outstanding PEPS Units if I am the beneficial owner of Outstanding PEPS Units held by a custodian bank, commercial bank, depository institution, broker, dealer, trust company, or other record holder?
A18:	You must promptly contact that record holder and instruct it to exchange your Outstanding PEPS Units on your behalf.
Q19:	What steps must the record holder take in order to tender my Outstanding PEPS Units on my behalf?
A19:	In order to exchange the Outstanding PEPS Units on your behalf, the record holder must effect a book-entry transfer into the account

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of the exchange agent at DTC by electronically transmitting its acceptance of the exchange offer through DTC’s Automated Tender Offer Program, or ATOP, procedures for transfer. Alternatively, the record holder may complete a letter of transmittal according to the instructions and deliver it with any signature guarantees or other required documents to the exchange agent at its address shown on the back cover of the document.

Q20:	What if the record holder cannot complete book-entry transfer of my Outstanding PEPS Units, together with an “agent’s message” or a letter of transmittal, to the exchange agent on my behalf, prior to the expiration date of the exchange offer?
A20:	The record holder may follow the guaranteed delivery procedures described in “The Exchange Offer—Procedures for Tendering—Guaranteed Delivery” on page 41 of this prospectus.
Q21:	Will I have an opportunity to exchange my Outstanding PEPS Units if I do not participate in the exchange offer?
A21:	After the exchange offer is consummated, we do not expect to solicit and enter into discussions with holders of remaining Outstanding PEPS Units with regard to exchanging such Outstanding PEPS Units for New PEPS Units. However, we reserve the right to enter into any such transactions or purchase Outstanding PEPS Units after the closing of the exchange offer.
Q22:	To whom should I address questions?
A22:	If you have questions about the terms of the exchange offer or about tender procedures or if you need additional copies of this prospectus or the letter of transmittal, you should contact Innisfree M&A Incorporated, the information agent. The information agent may be reached by toll-free telephone at (877) 825-8777. (Banks and brokers may call collect at (212) 750-5833.)

The address of the information agent is on the back cover of this prospectus.

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PPL Corporation

      PPL Corporation is an energy and utility holding company that, through its subsidiaries, is primarily engaged in the generation and marketing of electricity in the northeastern and western United States and in the delivery of electricity in Pennsylvania, the United Kingdom and Latin America. As of June 30, 2003, we owned or controlled 11,533 megawatts, or MW, of low-cost and diverse power generation capacity. We are also developing or constructing 645 MW of new electric generation capacity in Pennsylvania. Additionally, we provide energy-related services to businesses primarily in the mid-Atlantic and northeastern United States.

      Approximately 6,500 MW of our total generation capacity is currently committed to meeting the obligation of our Pennsylvania delivery company to provide electricity through the year 2009 under fixed-price tariffs pursuant to Pennsylvania’s Customer Choice Act. We have another 450 MW of generation capacity committed to providing electricity to a delivery company in Montana through June 2007. These two commitments, combined with other contractual sales to other counterparties for terms of various lengths, commit, on average, over 70% of our expected annual output for the period 2003 through 2007. These arrangements are consistent with and are an integral part of our overall business strategy, which includes the use of long-term energy supply contracts to capture profits while reducing our exposure to movements in energy prices.

      We operate through three principal lines of business:

Energy Supply

      We are a leading supplier of competitively priced energy in the United States through our subsidiaries, PPL Generation and PPL EnergyPlus, and acquire and develop U.S. generation projects through our PPL Global subsidiary. These entities are direct, wholly-owned subsidiaries of PPL Energy Supply, LLC. PPL Energy Supply is a wholly-owned subsidiary of PPL Corporation.

• PPL Generation owns or controls a portfolio of domestic power generation assets, with a total capacity of 11,533 MW as of June 30, 2003. These power plants are located in Pennsylvania (8,579 MW), Montana (1,157 MW), Arizona (750 MW), Illinois (540 MW), Connecticut (252 MW), New York (159 MW) and Maine (96 MW) and use well-diversified fuel sources including coal, nuclear, natural gas, oil and hydro.

• PPL EnergyPlus markets electricity produced by PPL Generation, along with purchased power and natural gas, in competitive wholesale and deregulated retail markets, primarily in the northeastern and western portions of the United States. PPL EnergyPlus also provides energy-related products and services, such as engineering and mechanical contracting, construction and maintenance services, to commercial and industrial customers.

• PPL Global (domestic operations) acquires and develops U.S. generation projects that are, in turn, operated by PPL Generation as part of its portfolio of generation assets.

Energy Delivery

      We provide energy delivery services in the mid-Atlantic regions of the United States through our subsidiaries, PPL Electric Utilities and PPL Gas Utilities, and in the United Kingdom and Latin America through our PPL Global subsidiary.

• PPL Electric Utilities is a regulated public utility company, incorporated in 1920, providing electricity delivery services to approximately 1.3 million customers in eastern and central Pennsylvania.

• PPL Gas Utilities is a regulated public utility providing gas delivery services to approximately 103,000 customers in Pennsylvania and Maryland.

International Operations

      We acquire and hold international energy projects that are primarily focused on the distribution of electricity through our PPL Global subsidiary.

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• PPL Global (international operations) currently owns and operates energy delivery businesses serving approximately 3.5 million customers in the United Kingdom and Latin America. In September 2002, PPL Global acquired a controlling interest in, and consequently gained 100% ownership of, Western Power Distribution Holdings Limited and WPD Investment Holdings Limited, which together we refer to as WPD. WPD operates two electric distribution companies in the U.K., which together serve approximately 2.5 million end-users. WPD delivered 28,074 million kWh of electricity in 2002.

PPL Capital Funding, Inc.

      PPL Capital Funding, Inc. is a Delaware corporation and a wholly-owned subsidiary of PPL Corporation. PPL Capital Funding’s primary business is to provide PPL Corporation with financing for its operations.

      The address of our principal executive offices is Two North Ninth Street, Allentown, Pennsylvania 18101-1179 and our telephone number is (610) 774-5151.

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PRINCIPAL DIFFERENCES BETWEEN THE

OUTSTANDING PEPS UNITS AND NEW PEPS UNITS

      Some of the principal differences between the Outstanding PEPS Units and New PEPS Units are illustrated in the table below. The comparisons below relate primarily to the differences between your ownership interest in trust preferred securities under the Outstanding PEPS Units and your ownership interest in notes under the New PEPS Units, although we also describe some differences between the purchase contracts included in the Outstanding PEPS Units and those included in the New PEPS Units. The table below is qualified by the information contained in this prospectus. For a more detailed description of the Outstanding PEPS Units, see the prospectus supplement and related prospectus filed with the Securities and Exchange Commission, or the SEC, dated May 3, 2001 (Registration Statement Nos. 333-54504, 333-54504-01 and 333-54504-02).

	Outstanding PEPS Units	New PEPS Units
Successful Remarketing Reset Rate:	•   The reset distribution rate for the trust preferred securities and the reset interest rate for the subordinated notes must be equal to or greater than 7.29% (but not exceed the maximum rate permitted by any applicable law).	•   The reset distribution rate for the notes may be less than, equal to, or greater than 7.29% (but not exceed the maximum rate permitted by any applicable law).
Failed Remarketing Rate:	•   The reset distribution rate for the trust preferred securities and the reset interest rate for the subordinated notes is computed based on a formula of a spread related to the ratings of the subordinated notes over a two-year benchmark treasury rate, but must be equal to or greater than 7.29% (but not exceed the maximum rate permitted by any applicable law).	•   The interest rate on the notes remains at the initial rate of 7.29%.
Remarketing Dates:	•   An initial remarketing date of the trust preferred securities is on the third business day preceding February 18, 2004. Additional remarketings may occur from time to time thereafter before the tenth business day preceding May 18, 2004.	•   The remarketing dates of the Notes are May 11, 2004, and, if necessary, May 12, 2004 and, if necessary, May 13, 2004, the fifth, fourth and third business days immediately preceding May 18, 2004.
Collateral:	•   Trust preferred securities representing undivided beneficial interests in the assets of the trust consisting solely of subordinated notes of PPL Capital Funding, guaranteed by PPL Corporation.	•   A 1/40, or 2.5%, undivided beneficial ownership interest in a $1,000 principal amount note of PPL Capital Funding, guaranteed by PPL Corporation.

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	Outstanding PEPS Units	New PEPS Units
Payment Dates:	•   Until maturity, distributions on the trust preferred securities and interest on the related subordinated notes are payable quarterly in arrears on February 18, May 18, August 18 and November 18 of each year.	•   Interest on each note will be payable, initially, from August 18, 2003 to May 18, 2004, quarterly in arrears on November 18, 2003, February 18, 2004 and May 18, 2004. On and after May 18, 2004, interest on each note will be payable semi-annually in arrears on May 18 and November 18 of each year, commencing November 18, 2004.
Ranking:	•   The subordinated notes constitute subordinated obligations of PPL Capital Funding guaranteed on a subordinated basis by PPL Corporation.	•   The notes will constitute subordinated obligations of PPL Capital Funding guaranteed on a subordinated basis by PPL Corporation until May 18, 2004. On and after May 18, 2004, the notes will constitute senior obligations of PPL Capital Funding, guaranteed on a senior basis by PPL Corporation.
Ratings:	•   The Outstanding PEPS Units currently are rated Ba1 by Moody’s Investors Service Inc., BB+ by Standard & Poor’s and BBB- by Fitch Ratings. •   On and after May 18, 2004, any subordinated notes outstanding, which would be the sole assets of the issuer of any trust preferred securities outstanding, are expected to be assigned the same credit ratings as all of the other subordinated debt obligations of PPL Capital Funding which are guaranteed on a subordinated basis by PPL Corporation. Currently, that subordinated rating is a Ba1 rating by Moody’s Investors Service Inc. and a BB+ rating by Standard & Poor’s.	•   PPL Corporation expects that the New PEPS Units will carry ratings the same as or higher than the ratings on the Outstanding PEPS Units. •   On and after May 18, 2004, any notes outstanding are expected to be assigned the same credit ratings as all of the other senior obligations of PPL Capital Funding guaranteed by PPL Corporation on a senior basis. Currently, that senior rating is a Baa3 rating by Moody’s Investors Service Inc., a BBB- rating by Standard & Poor’s and a BBB rating by Fitch Ratings.
Optional Redemption:	•   Tax event optional redemption.	•   None.
Put rights:	•   None.	•   Upon a failed remarketing, holders of notes that were not part of New PEPS Units may put the notes to us, in whole or in part, at par plus accrued but unpaid interest on May 18, 2004.

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	Outstanding PEPS Units	New PEPS Units
Early Settlement:	•   Holders of Outstanding PEPS Units may settle early any number of Outstanding PEPS Units.	•   Holders of New PEPS Units may settle early only in integral multiples of 40 New PEPS Units, including in the case of a merger early settlement. The early settlement right is subject to the condition that, if required under applicable securities laws, PPL Corporation has a registration statement in effect covering the common stock deliverable upon settlement of a new purchase contract.
Listing:	•   The Outstanding PEPS Units are listed on the NYSE.	•   PPL Corporation intends to list the New PEPS Units on the NYSE, subject to the New PEPS Units meeting the listing requirements of the NYSE.

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Questions and Answers about the New PEPS Units

Q23:	What are the components of a New PEPS Unit?
A23:	Each New PEPS Unit consists of a new purchase contract and, initially, a  1/40, or 2.5%, undivided beneficial ownership interest in a $1,000 principal amount note issued by PPL Capital Funding and guaranteed as to payment by PPL Corporation. The undivided beneficial ownership interest in a note that is a component of each New PEPS Unit is owned by you, but it will be pledged to us to secure your obligations under the new purchase contract.
Q24:	What is a new purchase contract?
A24:	Each new purchase contract underlying a New PEPS Unit obligates the holder of the new purchase contract to purchase, and obligates us to sell, on May 18, 2004 a number of shares of our common stock equal to the settlement rate for $25 in cash. The settlement rate will be calculated, subject to adjustment under the circumstances set forth in “Description of the New Purchase Contracts—Anti-Dilution Adjustments,” as follows:

• if the average of the closing prices of our common stock over the 20-trading day period ending on the third trading day prior to May 18, 2004 multiplied by 1.017 is equal to or greater than $65.03, the settlement rate will be 0.3910;

• if the average of the closing prices of our common stock over the same period multiplied by 1.017 is less than $65.03 but greater than $53.30, the settlement rate will be a number of shares having a value, based on the 20-trading day average closing price, equal to $25; and

• if the average of the closing prices of our common stock over the same period multiplied by 1.017 is less than or equal to $53.30, the settlement rate will be 0.4770.

The settlement rates reflect all dividends paid by us up to and including the dividend paid on July 1, 2003 and will be adjusted for any dividend payments after July 1, 2003 pursuant to the terms of the purchase contract agreement including the dividend to be paid on October 1, 2003.

Q25:	Can I settle a new purchase contract early?
A25:	You may settle a new purchase contract at any time on or prior to May 7, 2004, using cash, in which case we will sell, and you will be entitled to buy 0.3910 shares of common stock subject to adjustment for each new purchase contract being settled.

If you are a Treasury Unit holder, as described immediately below, you may settle your new purchase contracts early at any time on or prior to May 14, 2004 using cash.

In addition, if we are involved in a merger in which 30% or more of the total of the consideration paid to our shareholders consists of cash or cash equivalents, then you may settle your new purchase contract with cash at the applicable settlement rate.

If you choose to settle the new purchase contract early, including in the case of a merger early settlement, you may settle only in integral multiples of 40 New PEPS Units or 40 Treasury Units. If you exercise the merger early settlement right, we will deliver to you on the merger early settlement date the kind and amount of securities, cash or other property that you would have been entitled to receive if you had settled the new purchase contract immediately before the cash merger at the settlement rate in effect at that time. You will also receive the notes or treasury securities underlying the New PEPS Units. Your right to receive future contract adjustment payments will terminate.

Your early settlement right is subject to the condition that, if required under the United States federal securities laws, we have a registration statement under the Securities Act of 1933 in effect covering the common stock deliverable upon settlement of a new purchase contract. We will use our reasonable best efforts to have a registration statement in effect covering the common stock if so required by United States federal securities laws.

Q26:	What are Treasury Units?
A26:	Treasury Units are equity units consisting of a new purchase contract and a treasury security. The treasury security is a 2.5% undivided

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	beneficial interest in a zero-coupon U.S. treasury security (CUSIP No. 912820BJ5) with a principal amount at maturity equal to $1,000 and maturing on May 17, 2004. The treasury security that is a component of each Treasury Unit will be owned by the holder of the Treasury Unit, but it will be pledged to us to secure the holder’s obligations under the new purchase contract.
Q27:	How can I create Treasury Units from New PEPS Units?
A27:	Each holder of New PEPS Units will have the right, at any time on or prior to May 7, 2004, to substitute for the related notes held by the collateral agent the zero-coupon treasury securities (CUSIP No. 912820BJ5) and maturing on May 17, 2004, in a total principal amount at maturity equal to the aggregate principal amount of the notes for which substitution is being made. This substitution would create Treasury Units that have treasury securities as a component, and the applicable notes would be released to the holder. Because the notes and treasury securities are issued in integral multiples of $1,000, holders of New PEPS Units may make this substitution only in integral multiples of 40 New PEPS Units.
Q28:	How can I recreate New PEPS Units from Treasury Units?
A28:	Each holder of Treasury Units will have the right, at any time on or prior to May 7, 2004, to substitute for the related treasury securities held by the collateral agent, notes in an aggregate principal amount equal to the aggregate principal amount at the stated maturity of the treasury securities for which substitution is being made. This substitution would recreate New PEPS Units that have notes as a component, and the applicable treasury securities would be released to the holder. Because the notes and treasury securities are issued in integral multiples of $1,000, holders of Treasury Units may make this substitution only in integral multiples of 40 Treasury Units.
Q29:	What payments am I entitled to as a holder of New PEPS Units?
A29:	Holders of New PEPS Units will be entitled to receive cash payments accruing from August 18, 2003, consisting of 1/40, or 2.5%, of the interest payment payable initially quarterly on the $1,000 principal amount note at the rate of 7.29% per year and quarterly cash distributions of contract adjustment payments at the rate of 0.46% per year of the stated amount of each New PEPS Unit of $25.
Q30:	What payments will I be entitled to if I convert my New PEPS Units to Treasury Units?
A30:	Holders of Treasury Units will be entitled only to receive quarterly cash distributions of contract adjustment payments at the rate of 0.46% per year of the stated amount of each Treasury Unit of $25. In addition, acquisition discount will accrue on each related treasury security.
Q31:	What are the payment dates for the New PEPS Units?
A31:	The contract adjustment payments described above in respect of the New PEPS Units will be payable quarterly in arrears on November 18, 2003, February 18, 2004 and May 18, 2004 (which are the same payment dates as the Outstanding PEPS Units), except in the case of an early settlement of the related new purchase contracts. Interest payments on the notes are described below under the questions and answers beginning with “What payments will I receive on the notes?”
Q32:	What is remarketing?
A32:	Remarketing allows New PEPS Unit holders to satisfy their obligations under the related new purchase contracts by reselling the notes through the remarketing agent. Remarketing of the notes will be attempted on May 11, 2004 and, if the remarketing on such date fails, on May 12, 2004 and, if the remarketing on such date fails, on May 13, 2004. The remarketing agent will use its reasonable efforts to obtain a price for the notes to be remarketed that results in proceeds of approximately 100.5% of the aggregate principal amount of such notes. However, remarketing will be considered successful if the resulting proceeds are at least equal to 100% of the aggregate principal amount of notes to be remarketed.

Upon a successful remarketing, the portion of the proceeds derived from a successful

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remarketing of the notes that were components of New PEPS Units equal to the total principal amount of such notes will automatically be applied to satisfy in full the New PEPS Unit holders’ obligations to purchase common stock under the related new purchase contracts. If any proceeds remain after this application, the remarketing agent will deduct as a remarketing fee an amount not exceeding 25 basis points (0.25%) of the aggregate principal amount of such remarketed notes, and remit any remaining proceeds for the benefit of the holders.

Q33:

What happens if the notes are not successfully remarketed?

A33:

If a successful remarketing of the notes has not occurred prior to or on May 13, 2004, we will deliver our common stock to you pursuant to the new purchase contracts and, unless you have delivered the purchase price in cash to us before May 10, 2004, we will exercise our rights as a secured party to dispose of the notes that have been pledged to us through the collateral agent to secure your obligation under the related new purchase contracts in accordance with applicable law and such disposition will be deemed to satisfy in full your obligation to purchase our common stock under the related purchase contracts.

Notes outstanding after a failed remarketing will retain the same interest rate as in effect before the remarketing, but will move from quarterly to semi-annual interest payment dates and will rank as senior obligations of PPL Capital Funding, instead of subordinated obligations.

In addition, holders of notes that are not pledged to us and remain outstanding after a failed remarketing will have the right to put their notes to us, in whole or in part, for an amount equal to the principal amount of such notes, plus accrued and unpaid interest, on May 18, 2004, which we call the put exercise date, by notifying the indenture trustee prior to 5:00 p.m., New York City time, on May 14, 2004.

Q34:	If I am holding a note as a separate security from a New PEPS Unit, may I still participate in a remarketing of my notes?
A34:	Holders of notes that are not components of New PEPS Units may elect, in the manner described in this prospectus, to have their notes remarketed by the remarketing agent.
Q35:	Besides participating in a remarketing, how else may I satisfy my obligations under the new purchase contracts?
A35:	Holders of New PEPS Units may satisfy their obligations, or their obligations will be terminated, under the new purchase contracts:

• in the case of holders of Treasury Units, by the application of the cash received upon maturity of the pledged zero-coupon treasury securities;

• through early settlement by the delivery of cash to the purchase contract agent, in the case of New PEPS Units, prior to or on May 7, 2004, and in the case of Treasury Units, prior to or on May 14, 2004;

• in the case of holders of New PEPS Units that include notes, by settling the related new purchase contracts with separate cash prior to or on May 10, 2004 pursuant to prior notice given to the purchase contract agent; or

• without any further action, upon the termination of the new purchase contracts as a result of bankruptcy, insolvency or reorganization of PPL Corporation.

Q36:	What payments will I receive on the notes? Will the interest rate on the notes be reset and to what rate?
A36:	Each note will bear interest initially at the rate of 7.29% per year from August 18, 2003 to May 18, 2004. On and after May 18, 2004, interest on each note will be payable at the reset interest rate or, if the interest rate has not been reset, at the rate of 7.29% per year.

The interest rate on the notes will be reset on the date of a successful remarketing and the reset rate will become effective on May 18, 2004. If this occurs, the reset rate will be the rate determined by the remarketing agent as the annual interest rate the notes should bear in order for the notes to be remarketed to have

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an approximate aggregate market value on the reset date of 100.5% of the aggregate principal amount of such notes. The reset rate may be less or greater than 7.29%. However, in no event will the reset rate exceed the maximum rate permitted by applicable law.

If the notes are not successfully remarketed, the interest rate will not be reset and the notes will continue to bear interest at the initial annual interest rate of 7.29%.

Q37:	What are the payment dates on the notes?
A37:	Interest on each note will be payable initially quarterly in arrears on November 18, 2003, February 18, 2004 and to May 18, 2004. On and after May 18, 2004, interest on each note will be payable semi-annually in arrears on May 18 and November 18 of each year, commencing November 18, 2004.
Q38:	What is the maturity of the notes?
A38:	The notes will mature on May 18, 2006.
Q39:	May you redeem the notes?
A39:	The notes may not be redeemed by us before their maturity. However, we reserve the right to acquire notes before their maturity through open market, privately negotiated or other purchases made in compliance with applicable law.
Q40:	What is the put option on the notes?
A40:	As described above under Answer 33 holders of notes that are not pledged to us and remain outstanding after a failed remarketing will have the right to put their notes to us, in whole or in part, on May 18, 2004.
Q41:	What is the ranking of the notes?
A41:	From the date of issuance until May 18, 2004, the notes will be PPL Capital Funding’s direct, unsecured obligations and will rank without preference or priority among themselves and equally with all of PPL Capital Funding’s existing and future unsecured and subordinated indebtedness, subordinate and junior in right of payment to all of PPL Capital Funding’s senior indebtedness.

On and after May 18, 2004, the notes will be PPL Capital Funding’s direct, unsecured senior obligations and will rank without preference or priority among themselves and equally with all of PPL Capital Funding’s existing and future unsecured senior indebtedness, senior in right of payment to all of PPL Capital Funding’s subordinated indebtedness.

Q42:

What is the PPL Corporation guarantee of the notes?

A42:

PPL Corporation will unconditionally guarantee the payment of principal of and any interest on the notes, when due and payable, whether at the stated maturity date, by declaration of acceleration, put for repurchase or otherwise, in accordance with the terms of such notes and the indenture. The guarantee will remain in effect until the entire principal of and interest on the notes has been paid in full or otherwise discharged in accordance with the provisions of the indenture.

From the date of issuance until May 18, 2004, the guarantee of the notes will be PPL Corporation’s unsecured obligation and will rank equally with all of PPL Corporation’s existing and future, unsecured and subordinated indebtedness, subordinate and junior in right of payment to all of PPL Corporation’s senior indebtedness.

On and after May 18, 2004, the guarantee of the notes will be PPL Corporation’s unsecured senior obligation and will rank equally with all of PPL Corporation’s existing and future unsecured senior indebtedness, senior in right of payment to all of PPL Corporation’s subordinated indebtedness.

Q43:	What are the credit ratings of the notes expected to be?
A43:	The Outstanding PEPS Units currently are rated Ba1 by Moody’s Investors Service Inc., BB+ by Standard & Poor’s and BBB- by Fitch Ratings. We expect that the New PEPS Units will carry the same ratings as the Outstanding PEPS Units.

On and after May 18, 2004, any subordinated notes outstanding, which would be the sole assets of the issuer of the trust preferred securities, are expected to be assigned the same credit ratings as all of the other subordinated debt obligations of PPL Capital Funding which are guaranteed on a subordinated basis by PPL Corporation. Currently, that subordinated rating is a Ba1 rating by Moody’s

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Investors Service Inc. and a BB+ rating by Standard & Poor’s.

On and after May 18, 2004, any notes outstanding are expected to be assigned the same credit ratings as all of the other senior obligations of PPL Capital Funding guaranteed by PPL Corporation on a senior basis. Currently, that senior rating is a Baa3 rating by Moody’s Investors Service Inc., a BBB-rating by Standard & Poor’s and a BBB rating by Fitch Ratings.

There is no guarantee that at any time any ratings will be assigned to the New PEPS Units or the notes. The ratings of Moody’s Investors Service Inc., Standard & Poor’s and Fitch Ratings are not a recommendation to buy, sell or hold any securities of PPL Corporation or its subsidiaries. Such ratings may be subject to revisions or withdrawal by the agencies at any time and should be evaluated independently of each other and any other rating that may be assigned to their securities.

Q44:

What are the principal United States federal income tax consequences related to the New PEPS Units, Treasury Units and notes?

A44:

If you exchange your Outstanding PEPS Units for New PEPS Units, you will have agreed to treat your New PEPS Unit as a unit consisting of the note and new purchase contract. You will be required to include payments of interest in income as it is paid or accrued, in accordance with your regular method of tax accounting and you may be required to accrue original issue discount on the notes. See “United States Federal Income Tax Consequences—Ownership of the New PEPS Units” in this prospectus.

If you acquire New PEPS Units and you later create Treasury Units, and you are an accrual basis taxpayer, you will be required to include in gross income your allocable share of any acquisition discount on the treasury securities that accrues in such year.

We intend to report the contract adjustment payments as income to you, but you may want to consult your tax advisor concerning alternative characterizations.

Please consult your tax advisor concerning the tax consequences of an investment in the New PEPS Units in light of your particular circumstances. For additional information, see “United States Federal Income Tax Consequences” in this prospectus.

Q45:	What are the principal differences between the Outstanding PEPS Units and New PEPS Units?
A45:	See the chart on page 9 of this prospectus, “Summary—Principal Differences Between the Outstanding PEPS Units and New PEPS Units.”

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Illustration of Terms and Features of New PEPS Units

      The following illustrates some of the key terms and features of the New PEPS Units.

Components of each New PEPS Unit at issue:	— A contract to purchase shares of our common stock on or prior to May 18, 2004;
	and
	— a 1/40, or 2.5%, undivided beneficial ownership interest in a $1,000 principal amount note issued by PPL Capital Funding, Inc. and guaranteed as to payment by PPL Corporation.
Yield on each New PEPS Unit:	7.75% per year, consisting of quarterly cash distributions of contract adjustment payments at the rate of 0.46% per year of the stated amount of each New PEPS Unit and 1/40, or 2.5%, of the quarterly interest payment payable on the $1,000 principal amount note at the rate of 7.29% per year until May 18, 2004.
Reference price (or price of common stock at time of sale of Outstanding PEPS Units on May 3, 2001):	$53.30
Threshold appreciation price:	$65.03 (a 22% premium to the reference price)

      A New PEPS Unit consists of two components, a new purchase contract and an undivided beneficial ownership interest in a note. The return to an investor on a New PEPS Unit will depend upon the return provided by each of these components. For an investor that holds the New PEPS Unit until the new purchase contract settlement date, the return would be comprise the following:

Value of shares of our common stock delivered at maturity of the new purchase contract on May 18, 2004 + 1/40, or 2.5%, of the interest on the $1,000 principal amount note at the rate of 7.29% per year until May 18, 2004 + Contract adjustment payments at the a rate of 0.46% per year of the stated amount of each New PEPS Unit until May 18, 2004

New Purchase Contract

      Each new purchase contract obligates you to purchase, and PPL Corporation to sell, on May 18, 2004 our common stock equal to the settlement rate for $25 in cash and entitles you to receive cash distributions of contract adjustment payments. Besides participating in a remarketing, you can satisfy your new purchase contract obligation by settling early in cash prior to or on May 7, 2004 or by electing to pay with separate cash prior to or on May 10, 2004. If you settle early you will receive for each New PEPS Unit 0.3910 shares of our common stock subject to anti-dilution adjustment, regardless of the market price of our common stock on the date of early settlement. Otherwise, the settlement rate will be calculated, subject to adjustment under the circumstances set forth in “Description of the New Purchase Contracts— Anti-Dilution Adjustments,” as follows:

• if the average closing prices of our common stock over the 20-trading day period ending on the third trading day prior to May 18, 2004 multiplied by 1.017 is equal to or greater than $65.03, the settlement rate will be 0.3910;

• if the average closing prices of our common stock over the same period multiplied by 1.017 is less than $65.03, which is the threshold appreciation price, but greater than $53.30, which is the reference price, the settlement rate will be a number of shares having a value, based on the 20-trading day average closing price, equal to $25; and

• if the average closing prices of our common stock over the same period multiplied by 1.017 is less than or equal to $53.30, the settlement rate will be 0.4770.

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      The purchase contract settlement rates reflected above are identical to the Outstanding PEPS Unit purchase contract settlement rates as adjusted for certain anti-dilution adjustments related to the payment of cash dividends up to and including the dividend paid on July 1, 2003. The purchase contract settlement rates will be adjusted for any dividend payments after July 1, 2003 pursuant to the terms of the purchase contract agreement including the dividend to be paid on October 1, 2003.

      The following graphs show the number of shares of our common stock that will be delivered for each new purchase contract on May 18, 2004 and the value of the shares that will be delivered on May 18, 2004, depending upon our common stock share price performance and without giving effect to any future adjustments of the settlement rate.

Fraction of a Share Deliverable Per New Purchase Contract on May 18, 2004

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Value of Fraction of a Share Deliverable Per New Purchase Contract on May 18, 2004

Note

      PPL Capital Funding will pay interest initially quarterly on each note at a rate of 7.29% per year of its $1,000 principal amount until the business day immediately preceding the reset date. If there is a successful remarketing, on the reset date, the interest rate will be reset in connection with the remarketing of the notes and interest thereafter will be paid semi-annually. If there is not a successful remarketing, the interest rate will continue at 7.29% per year and will be paid semi-annually. The notes will mature on May 18, 2006.

      Your undivided beneficial ownership interest in the note will serve as collateral for your new purchase contracts obligation. If you do not substitute treasury securities for the notes or elect to settle the new purchase contracts for cash or to settle the new purchase contracts early, the note will be remarketed and the proceeds will be used to settle the new purchase contracts.

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PPL Corporation Selected Financial Data

      The selected financial data set forth below should be read in conjunction with our consolidated financial statements and related notes and other financial and operating data incorporated by reference in this prospectus. The Statement of Income Data, Balance Sheet Data, Basic EPS (loss) and Diluted EPS (loss) for the years ended December 31, 2002, 2001 and 2000 have been derived from the audited consolidated financial statements incorporated by reference in this prospectus, and for the six months ended June 30, 2003 and 2002 have been derived from the unaudited consolidated financial statements incorporated by reference in this prospectus. Some previously reported amounts have been reclassified to conform with the current period presentation.

	Six Months Ended					Year Ended
	June 30,					December 31,
	2003		2002			2002		2001		2000
Statement of Income Data—$ millions:
Operating revenues	$	2,825	$	2,653		$	5,429	$	5,077	$	4,545
Operating income		644		578			1,240		849		1,194
Income before cumulative effect of a change in accounting principle(a)		319		156			425		221		524
Net income (loss)(a)		355		(30	)		208		179		498
Balance Sheet Data—$ millions (end of period):
Cash and cash equivalents		370		193			245		933		480
Property, plant and equipment, net		9,931		6,248			9,563		5,947		5,948
Recoverable transition costs		1,820		2,069			1,946		2,172		2,425
Total assets		16,012		12,194			15,547		12,562		12,360
Short-term debt, including current maturities of long-term debt		437		847			1,309		616		1,354
Long-term debt, excluding current maturities		6,589		4,882			5,901		5,081		4,467
Company-obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely company debentures		661		725			661		825		250
Preferred stock		72		82			82		82		97
Shareowners’ common equity		2,880		1,870			2,224		1,857		2,012
Other Data:
Number of shares outstanding—thousands Period-end		176,689		147,165			165,736		146,580		145,041
Average—basic		169,482		146,927			152,492		145,974		144,350
Average—diluted		170,061		147,275			152,809		146,614		144,781
Basic EPS (loss)(a)	$	2.10	$	(0.20	)	$	1.37	$	1.23	$	3.45
Diluted EPS (loss)(a)		2.09		(0.20	)		1.36		1.22		3.44
Dividends declared per share		0.77		0.72			1.44		1.06		1.06
Sales Data—Millions of Kilowatt-Hours:
Electric energy supplied—retail		20,459		21,291			42,065		43,470		41,493
Electric energy supplied—wholesale		20,194		15,948			37,060		27,683		40,925
Electric energy delivered—retail(b)		35,150		35,141			69,105		41,453		37,642

(a)

On January 1, 2003, we adopted the provisions of SFAS 143, “Accounting for Asset Retirement Obligations.” See Note 12 to our financial statements included in our Form 10-Q for the quarter ended June 30, 2003, which is incorporated herein by reference. On January 1, 2002, we adopted the provisions of SFAS 142, “Goodwill and Other Intangible Assets,” which provides that goodwill no longer be amortized. See Note 18 to our financial statements included in our Form 10-K for the year ended December 31, 2002, which is also incorporated herein by reference.

(b)

Deliveries for 2002 include the electricity deliveries of WPD for the full year and of Companhia Energética do Maranhão, or CEMAR, prior to deconsolidation in August 2002. See Note 6 to our financial statements included in our Form 10-Q for our quarter ended June 30, 2003, which is incorporated herein by reference.

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Ratio of Earnings To Fixed Charges

The following table sets forth our ratios of earnings to fixed charges for the periods indicated:

			Year Ended December 31,
	Twelve Months Ended
	June 30, 2003		2002		2001		2000		1999		1998
Ratio of Earnings to Fixed Charges(a)		2.1		1.9		1.7		2.5		2.7		3.1

(a) Computed using earnings and fixed charges of PPL Corporation and its subsidiaries. Fixed charges consist of interest on short- and long-term debt, other interest charges, interest on capital lease obligations and the estimated interest component of other rentals.

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RISK FACTORS

      You should carefully consider the risks associated with PPL Corporation and its subsidiaries described below before making an investment decision regarding the New PEPS Units. The risks described below are not the only ones facing us. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Our business, financial condition or results of operations could be materially adversely affected by any of these risks.

      Because a New PEPS Unit consists of a new purchase contract to acquire shares of PPL Corporation common stock and a beneficial interest in a PPL Capital Funding note guaranteed by PPL Corporation, you are making an investment decision with regard to the common stock and the notes and related guarantee, as well as the New PEPS Units by exchanging your Outstanding PEPS Units for the New PEPS Units in this offer.

      This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this prospectus.

Risks Related to Our Supply Businesses

Changes in commodity prices may increase the cost of producing power or decrease the amount we receive from selling power, which could adversely affect our financial performance.

      Changes in power prices or fuel costs may impact our financial results and financial position by increasing the cost of producing power or decreasing the amount we receive from the sale of power. The market prices for these commodities may fluctuate substantially over relatively short periods of time. Among the factors that could influence such prices are:

• prevailing market prices for coal, natural gas, fuel oil and other fuels used in our generation facilities, including associated transportation costs and supplies of such commodities;

• demand for energy and the extent of additional supplies of energy available from current or new competitors;

• capacity and transmission service into, or out of, our markets;

• changes in the regulatory framework for wholesale power markets;

• liquidity in the general wholesale electricity market; and

• weather conditions impacting demand for electricity.

      In the absence of long-term power sales agreements, we must sell the energy, capacity and other products from our facilities into the competitive wholesale power markets. Unlike most other commodities, electric power cannot be stored and must be produced at the time of use. As a result, the wholesale power markets are subject to significant price fluctuations over relatively short periods of time and can be unpredictable. In addition, power prices may not change at the same rate as changes in fuel and other costs. Given the volatility and potential for material differences between actual power prices and fuel and other costs, if we cannot secure or maintain long-term power sales and fuel purchase agreements for our power generation facilities, our revenues will be subject to increased volatility and our financial results may be materially adversely affected.

Our facilities may not operate as planned, which may increase our expenses or decrease our revenues and, thus, have an adverse effect on our financial performance.

      Operation of power plants involves many risks, including the breakdown or failure of equipment or processes, accidents, labor disputes, fuel interruption and performance below expected levels. In addition, weather-related incidents and other natural disasters can disrupt both generation and transmission delivery systems. Operation of our power plants below expected capacity levels may result in lost revenues or increased expenses, including higher maintenance costs and, if we are unable to perform our contractual obligations as a result, penalties or damages.

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We may not be able to obtain adequate fuel supplies, which could adversely affect our ability to operate our facilities.

      We purchase fuel from a number of suppliers. Disruption in the delivery of fuel, including disruptions as a result of weather, labor relations or environmental regulations affecting our fuel suppliers, could adversely affect our ability to operate our facilities and, thus, our results of operations.

We have agreed to provide electricity to PPL Electric Utilities in amounts sufficient to satisfy its “provider of last resort,” or PLR, obligations at prices which may be below our cost, which could adversely affect our financial condition.

      PPL Electric Utilities has PLR obligations to serve those electric retail customers that did not select an alternate supplier under the Customer Choice Act. PPL EnergyPlus has entered into long-term contracts to supply PPL Electric Utilities’ PLR requirements at agreed prices through 2009. This obligation currently represents a significant portion of the normal operating capacity of our existing generation assets. The prices we receive are established under the contracts and may not have any relationship to the cost to us of supplying this power. This means that we are required to absorb increasing costs, including the risk of fuel price increases and increased costs of production.

      The PLR contract obligations do not provide us with any guaranteed level of sales. If the customers of PPL Electric Utilities obtain service from alternate suppliers, which they are entitled to do at any time, our sales of power under the contract may decrease. Alternatively, customers could switch back to PPL Electric Utilities from alternative suppliers, which may increase demand above our facilities’ available capacity. Any such switching by customers could have a material adverse effect on our results of operations or financial position.

We are subject to the risks of nuclear generation, including the risk that our Susquehanna nuclear plant could become subject to revised safety requirements that would increase our capital and operating expenditures, and uncertainties associated with decommissioning our plant at the end of its licensed life.

      Nuclear generation accounts for about 20% of our generation capacity. The risks of nuclear generation generally include:

• the potential harmful effects on the environment and human health resulting from the operation of nuclear facilities and the storage, handling and disposal of radioactive materials;

• limitations on the amounts and types of insurance commercially available to cover losses and liabilities that might arise in connection with nuclear operations; and

• uncertainties with respect to the technological and financial aspects of decommissioning nuclear plants at the end of their licensed lives.

      The Nuclear Regulatory Commission, or NRC, has broad authority under federal law to impose licensing and safety-related requirements for the operation of nuclear generation facilities. In the event of non-compliance, the NRC has the authority to impose fines or shut down a unit, or both, depending upon its assessment of the severity of the situation, until compliance is achieved. In addition, revised safety requirements promulgated by the NRC could necessitate substantial capital or operating expenditures at our Susquehanna nuclear plant. In addition, although we have no reason to anticipate a serious nuclear incident at our Susquehanna plant, if an incident did occur, it could have a material adverse effect on our results of operations or financial condition.

We have a limited history of operating many of our generation facilities in a competitive environment, in which we are not assured of any return on our investment.

      Many of our facilities were historically operated within vertically-integrated, regulated utilities that sold electricity to consumers at prices based on predetermined rates set by state public utility commissions. Unlike regulated utilities, we are not assured any rate of return on our capital investments through predetermined rates, and our revenues and results of operations are likely to depend, in large part, upon prevailing market prices for

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electricity in our regional markets and other competitive markets, the volume of demand, capacity factors and ancillary services.

Changes in technology may impair the value of our power plants.

      A basic premise of our business is that generating power at central power plants achieves economies of scale and produces electricity at a relatively low price. There are other technologies that produce electricity, most notably fuel cells, microturbines, windmills and photovoltaic (solar) cells. Research and development activities are ongoing to seek improvements in the alternate technologies. It is possible that advances will reduce the cost of alternate methods of electric production to a level that is equal to or below that of most central station electric production. If this were to happen, the value of our power plants may be significantly impaired.

We are exposed to operational, price and credit risks associated with selling and marketing products in the wholesale power markets.

      We purchase and sell power at the wholesale level under market-based tariffs authorized by the Federal Energy Regulatory Commission, or FERC, throughout the United States and also enter into short-term agreements to market available energy and capacity from our generation assets with the expectation of profiting from market price fluctuations. If we are unable to deliver firm capacity and energy under these agreements, we could be required to pay damages. These damages would generally be based on the difference between the market price to acquire replacement capacity or energy and the contract price of the undelivered capacity or energy. Depending on price volatility in the wholesale energy markets, such damages could be significant. Extreme weather conditions, unplanned power plant outages, transmissions disruptions, and other factors could affect our ability to meet our obligations, or cause significant increases in the market price of replacement capacity and energy. We also face credit risk that parties with whom we contract will default in their performance, in which case we may have to sell our power into a lower-priced market or make purchases in a higher priced market than existed at the time of contract. Although we attempt to mitigate these risks, there can be no assurance that we will be able to fully meet our obligations, that we will not be required to pay damages for failure to perform or that we will not experience counterparty non-performance.

We do not always hedge against risks associated with energy and fuel price volatility.

      We attempt to mitigate risks associated with satisfying our contractual power sales arrangements by reserving generation capacity to deliver electricity to satisfy our net firm sales contracts and, when necessary, by purchasing firm transmission service. We also routinely enter into contracts, such as fuel and power purchase and sale commitments, to hedge our exposure to weather conditions, fuel requirements and other energy-related commodities. We may not, however, hedge the entire exposure of our operations from commodity price volatility. To the extent we fail to hedge against commodity price volatility, our results of operations and financial position may be affected unfavorably.

Our trading, marketing and risk management policies may not work as planned and we may suffer economic losses despite such policies.

      We actively manage the market risk inherent in our energy and fuel, debt and foreign currency positions. Nonetheless, adverse changes in energy and fuel prices, interest rates and foreign currency exchange rates may result in losses in our earnings or cash flows and adversely affect our balance sheet. Our trading, marketing and risk management program may not work as planned. As a result, we cannot always predict the impact that our trading, marketing and risk management decisions may have on our business, operating results or financial position.

      In addition, our trading, marketing and risk management activities are exposed to the credit risk that counterparties that owe us money or energy will breach their obligations. We have established risk management policies and programs, including credit policies to evaluate counterparty credit risk. However, if counterparties to these arrangements fail to perform, we may be forced to enter into alternative hedging arrangements or honor

24

underlying commitments at then-current market prices. In that event, our financial results are likely to be adversely affected.

Our operating results may fluctuate on a seasonal and quarterly basis.

      Electrical power supply may be seasonal. For example, in some parts of the country, demand for, and market prices of, electricity peak during the hot summer months, while in other parts of the country such peaks occur in the cold winter months. As a result, our overall operating results in the future may fluctuate substantially on a seasonal basis. The pattern of this fluctuation may change depending on the nature and location of the facilities we acquire or develop and the terms of our contracts to sell electricity.

We rely on transmission and distribution assets that we do not own or control to deliver our wholesale electricity and natural gas. If transmission is disrupted, or if capacity is inadequate, our ability to sell and deliver power may be hindered.

      We depend on transmission and distribution facilities owned and operated by utilities and other energy companies to deliver the electricity and natural gas we sell to the wholesale market, as well as the natural gas we purchase for use in our electric generation facilities. If transmission is disrupted, or if capacity is inadequate, our ability to sell and deliver products and satisfy our contractual obligations may be hindered.

      The FERC has issued regulations that require wholesale electric transmission services to be offered on an open-access, non-discriminatory basis. Although these regulations are designed to encourage competition in wholesale market transactions for electricity, there is the potential that fair and equal access to transmission systems will not be available or that sufficient transmission capacity will not be available to transmit electric power as we desire. We cannot predict the timing of industry changes as a result of these initiatives or the adequacy of transmission facilities in specific markets.

Risks Related to Our Business Generally and to Our Industry

A downgrade in our or our subsidiaries’ credit ratings could negatively affect our ability to access capital and increase the cost of maintaining our credit facilities and any new debt.

      On May 13, 2003, Moody’s Investors Service, Inc. downgraded by one notch the credit ratings on PPL Energy Supply’s senior unsecured debt, to “Baa2” from “Baa1,” PPL Electric Utilities’ senior secured debt, to “Baa1” from “A3,” and PPL Capital Funding’s senior unsecured debt, to “Baa3” from “Baa2.” Also on May 13, 2003, Fitch Ratings downgraded by one notch the ratings of PPL Capital Funding’s senior unsecured debt, to “BBB” from “BBB+,” and placed PPL Corporation, PPL Energy Supply and PPL Capital Funding on negative outlook. In addition, on April 29, 2003, Standard & Poor’s Ratings Services, a Division of the McGraw-Hill Companies, affirmed its “BBB” corporate credit ratings for PPL Corporation and PPL Energy Supply, downgraded by one notch the rating of PPL Capital Funding’s senior unsecured debt, to “BBB— ” from “BBB,” and placed PPL Electric Utilities on negative outlook. Standard & Poor’s also indicated that PPL Corporation and PPL Energy Supply remain on negative outlook. While we do not expect these recent ratings decisions to limit our ability to fund our short-term liquidity needs and we expect these ratings decisions to have an immaterial impact on the cost to maintain our credit facilities and to access any new long-term debt, any future ratings downgrades, including downgrades to our short-term debt ratings, could negatively affect our ability to fund our short-term liquidity needs and more significantly impact the cost to maintain our credit facilities and to access new long-term debt.

We face intense competition in our energy supply and development businesses, which may adversely affect our ability to operate profitably.

      The electric power industry has experienced a significant increase in the level of competition in the energy markets in response to federal and state deregulation initiatives. This competition may negatively impact our ability to sell energy and related products and the prices which we may charge for such products, which could adversely affect our results of operations and our ability to grow our business.

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      In addition, while demand for electricity is generally increasing throughout the United States, the rate of construction and development of new electric assets may exceed the increase in demand in some regional markets. The commencement of commercial operation of new facilities in the regional markets where we own or control generation capacity will likely increase the competitiveness of the wholesale power market in those regions, which could have a material adverse effect on our business and financial condition.

Our investments and projects located outside of the United States expose us to risks related to laws of other countries, taxes, economic conditions, fluctuations in currency rates, political conditions and policies of foreign governments. These risks may delay or reduce our realization of value from our international projects.

      We have operations outside of the United States. The acquisition, financing, development and operation of projects outside of the United States entail significant financial risks, which vary by country, including:

• changes in foreign laws or regulations relating to foreign operations, including tax laws and regulations;

• changes in United States laws related to foreign operations, including tax laws and regulations;

• changes in government policies, personnel or approval requirements;

• changes in general economic conditions affecting each country;

• regulatory reviews of tariffs for local distribution companies;

• changes in labor relations in foreign operations;

• limitations on foreign investment or ownership of projects and returns or distributions to foreign investors;

• limitations on ability of foreign companies to borrow money from foreign lenders and lack of local capital or loans;

• fluctuations in currency exchange rates and difficulty in converting our foreign funds to U.S. dollars, which can increase our expenses and/or impair our ability to meet such expenses, and difficulty moving funds out of the country in which the funds were earned;

• limitations on ability to import or export property and equipment;

• compliance with United States foreign corrupt practices laws;

• political instability and civil unrest; and

• expropriation and confiscation of assets and facilities.

      Our international operations are subject to regulation by various foreign governments and regulatory authorities. The laws and regulations of some countries may limit our ability to hold a majority interest in some of the projects that we may develop or acquire, thus limiting our ability to control the development, construction and operation of those projects. In addition, the legal environment in foreign countries in which we currently own assets or projects or may develop projects in the future could make it more difficult for us to enforce our rights under agreements relating to such projects. Our international projects may also be subject to risks of being delayed, suspended or terminated by the applicable foreign governments or may be subject to risks of contract invalidation by commercial or governmental entities. In addition, WPD is a regulated regional monopoly distribution business in Great Britain subject to control on the prices it can charge and the quality of supply it must provide. The current distribution price control formula that governs WPD’s allowed revenue is scheduled to operate until 2005. Any significant lowering of rates implemented by the regulatory authority upon the 2005 regulatory review could lower the amount of revenue WPD generates in relation to its operational costs and could materially lower the income of WPD.

      Despite contractual protections we have against many of these risks for our international operations or potential investments in the future, our actual results and the value of our investment may be adversely affected by the occurrence of any of these events.

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We operate in competitive segments of the electric power industry created by deregulation initiatives at the state and federal levels. If the present trend towards competition is reversed, discontinued or delayed, our business prospects and financial condition could be materially adversely affected.

      Some restructured markets have recently experienced supply problems and price volatility. In some of these markets, government agencies and other interested parties have made proposals to delay market restructuring or even re-regulate areas of these markets that have previously been deregulated. In California, legislation has been passed placing a moratorium on the sale of generation plants by public utilities regulated by the California Public Utilities Commission. In 2001, the FERC instituted a series of price controls designed to mitigate (or cap) prices in the entire western U.S. to address the extreme volatility in the California energy markets. These price controls have had the effect of significantly lowering spot and forward energy prices in the western market.

      In addition, the independent system operators, or ISOs, that oversee the transmission systems in certain wholesale power markets have from time to time been authorized to impose price limitations and other mechanisms to address volatility in the power markets. These types of price limitations and other mechanisms may adversely impact the profitability of our wholesale power marketing and trading business.

      Other proposals to re-regulate our industry may be made, and legislative or other action affecting the electric power restructuring process may cause the process to be delayed, discontinued or reversed in the states in which we currently, or may in the future, operate. If the current trend towards competitive restructuring of the wholesale and retail power markets is delayed, discontinued or reversed, our business prospects and financial condition could be materially adversely affected.

Our business is subject to extensive regulation, which may increase our costs, reduce our revenues, or prevent or delay operation of our facilities.

      Our U.S. generation subsidiaries are exempt wholesale generators, or EWGs, which sell electricity into the wholesale market. Generally, our EWGs and our marketing subsidiaries are subject to regulation by the FERC. The FERC has authorized us to sell generation from our facilities and power from our marketing subsidiaries at market-based prices. The FERC retains the authority to modify or withdraw our market-based rate authority and to impose “cost of service” rates if it determines that the market is not workably competitive, that we possess market power or that we are not charging just and reasonable rates. Any reduction by the FERC of the rate we may receive or any unfavorable regulation of our business by state regulators could materially adversely affect our results of operations.

      The acquisition, ownership and operation of power generation facilities require numerous permits, approvals, licenses and certificates from federal, state and local governmental agencies. We may not be able to obtain or maintain all required regulatory approvals. If there is a delay in obtaining any required regulatory approvals or if we fail to obtain or maintain any required approval or comply with any applicable law or regulation, the operation of our assets and our sales of electricity could be prevented or delayed or become subject to additional costs.

Our costs of compliance with environmental laws are significant and the costs of compliance with new environmental laws could adversely affect our profitability.

      Our operations are subject to extensive federal, state, local and foreign statutes, rules and regulations relating to environmental protection. To comply with these legal requirements, we must spend significant sums on environmental monitoring, pollution control and emission fees.

      New environmental laws and regulations affecting our operations, and new interpretations of existing laws and regulations, may be adopted or become applicable to us. For example, the laws governing air emissions from coal-burning plants are being re-interpreted by federal and state authorities. These re-interpretations could result in the imposition of substantially more stringent limitations on these emissions than those currently in effect.

      We may not be able to obtain or maintain all environmental regulatory approvals necessary to our business. If there is a delay in obtaining any required environmental regulatory approval or if we fail to obtain, maintain or comply with any such approval, operations at our affected facilities could be halted or subjected to additional

27

costs. Further, at some of our older facilities it may be uneconomical for us to install the necessary equipment, which may cause us to shut down those generation units.

Our business development activities may not be successful and our projects under construction may not commence operation as scheduled, which could increase our costs and impair our ability to recover our investment.

      The acquisition, development and construction of generating facilities involves numerous risks. We may be required to expend significant sums for preliminary engineering, permitting, fuel supply, resource exploration, legal and other expenses in preparation for competitive bids which we may not win or before it can be established whether a project is feasible, economically attractive or capable of being financed. Our success in developing a particular project is contingent upon, among other things, negotiation of satisfactory engineering, construction, fuel supply and power sales contracts, receipt of required governmental permits and timely implementation and satisfactory completion of construction. If we were unable to complete the development of a facility, we would generally not be able to recover our investment in the project.

      Currently, we have power plants with 645 MW of generation capacity under development or construction and we intend to continue to evaluate opportunities to acquire and develop new, low-cost and efficient electric power generation facilities in key northeastern and western markets. Successful completion of these facilities is subject to numerous factors, including:

• changes in market prices of power and fuel;

• our ability to obtain permits and approvals and comply with applicable regulations;

• availability and timely delivery of gas turbine generators and other equipment;

• unforeseen engineering problems;

• construction delays and contractor performance shortfalls;

• shortages and inconsistent quality of equipment, material and labor;

• work stoppages;

• adverse weather conditions;

• environmental and geological conditions; and

• unanticipated cost increases.

      Any of these factors could give rise to delays, cost overruns or the termination of a project.

      The failure to complete construction according to specifications and on time can result in cost overruns, liabilities, reduced plant efficiency, higher operating and other costs and reduced earnings.

Risks Related to Corporate and Financial Structure

Our cash flow and ability to meet debt obligations largely depend on the performance of our subsidiaries and affiliates, some of which we do not control.

      We are a holding company and conduct our operations primarily through wholly-owned subsidiaries. Substantially all of our consolidated assets are held by these subsidiaries. Accordingly, our cash flow and our ability to meet our obligations under the notes are largely dependent upon the earnings of our subsidiaries and the distribution or other payment of such earnings to us in the form of dividends or loans or advances and repayment of loans or advances from us. The subsidiaries are separate and distinct legal entities and have no obligation to pay any amounts due on the notes or to make any funds available for such payment.

      Because we are a holding company, our obligations under the notes will be effectively subordinated to all existing and future liabilities of our subsidiaries. Therefore, our rights and the rights of our creditors, including the rights of the holders of the notes, to participate in the assets of any subsidiary in the event that such a

28

subsidiary is liquidated or reorganized will be subject to the prior claims of such subsidiary’s creditors. To the extent that either we may be a creditor with recognized claims against any such subsidiary, our claims would still be effectively subordinated to any security interest in, or mortgages or other liens on, the assets of such subsidiary and would be subordinated to any indebtedness or other liabilities of such subsidiary senior to that held by us. Although certain agreements to which we and our subsidiaries are parties limit the incurrence of additional indebtedness, we and our subsidiaries retain the ability to incur substantial additional indebtedness and other liabilities.

      The debt agreements of some of our subsidiaries and affiliates restrict their ability to pay dividends, make distributions or otherwise transfer funds to us prior to the payment of other obligations, including operating expenses, debt service and reserves. Further, if we elect to receive distributions of earnings from our foreign operations, we may incur United States taxes, net of any available foreign tax credits, on such amounts. Distributions to us from our international projects are, in some countries, also subject to withholding taxes.

We may need significant additional financing to pursue growth opportunities.

      We continually review potential acquisitions and development projects and may enter into significant acquisitions or development projects in the future. Any acquisition or development project will likely require access to substantial capital from outside sources on acceptable terms. We can give no assurance that we will obtain the substantial debt and equity capital required to invest in, acquire and develop new generation projects or to refinance existing projects. We may also need external financing to fund capital expenditures, including capital expenditures necessary to comply with environmental regulations or other regulatory requirements.

      Our ability to arrange financing and our cost of capital are dependent on numerous factors, including:

• general economic conditions, including the conditions in the energy industry;

• credit availability from banks and other financial institutions;

• market prices for electricity and fuels;

• our capital structure and the maintenance of acceptable credit ratings;

• our financial performance;

• the success of current projects and the perceived quality of new projects; and

• provisions of relevant tax and securities laws.

      The inability to obtain sufficient financing on terms that are acceptable to us could adversely affect our ability to pursue acquisition and development opportunities and fund capital expenditures.

Risk Factors Relating to the New PEPS Units

You will bear the entire risk of a decline in the price of our common stock.

      The value of the shares of our common stock that you will receive upon the settlement of the new purchase contract is not fixed, but rather will depend on the market value of our common stock near the time of settlement. Because the price of our common stock fluctuates, the aggregate market value of the shares of our common stock receivable upon settlement of the new purchase contract may be more or less than the stated amount of $25 per New PEPS Unit. If the market value of our common stock near the time of settlement is less than $52.41, the aggregate market value of the shares issuable upon settlement generally will be less than the stated amount of the new purchase contract, and your investment in a New PEPS Unit may result in a loss. Therefore, you will bear the full risk of a decline in the market value of our common stock prior to settlement of the new purchase contract.

You will receive only a portion of any appreciation in the market price of our common stock.

      The aggregate market value of the shares of our common stock receivable upon settlement of the new purchase contract generally will exceed the stated amount of $25 only if the average closing price of our common stock over the 20-trading day period ending on the third trading day prior to May 18, 2004 multiplied by 1.017

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equals or exceeds the threshold appreciation price of $65.03. Therefore, during the period prior to settlement, an investment in a New PEPS Unit affords less opportunity for equity appreciation than a direct investment in shares of our common stock. Furthermore, if the applicable average closing price multiplied by 1.017 equals or exceeds the threshold appreciation price of $65.03, you will realize only a fraction of the equity appreciation on the common stock underlying the New PEPS Units for that period above the threshold appreciation price.

The trading prices for the New PEPS Units will be directly affected by the trading prices of our common stock.

      The trading prices of New PEPS Units and Treasury Units in the secondary market will be directly affected by the trading prices of our common stock, the general level of interest rates and our credit quality. It is impossible to predict whether the price of our common stock or interest rates will rise or fall. Trading prices of our common stock will be influenced by our operating results and prospects and by economic, financial and other factors, including conditions in the energy industry, such as competition, commodity prices and regulatory developments. In addition, general market conditions, including the level of, and fluctuations in, the trading prices of stocks generally, and sales of substantial amounts of our common stock by us in the market after the offering of the New PEPS Units, or the perception that such sales could occur, could affect the price of our common stock. Some of these industry and market factors may be outside of our control and could lead to volatility in the price of our common stock. Fluctuations in interest rates may give rise to arbitrage opportunities based upon changes in the relative value of our common stock underlying the new purchase contracts and of the other components of the New PEPS Units. Any arbitrage could, in turn, affect the trading prices of the New PEPS Units, Treasury Units, notes and our common stock.

The New PEPS Units and the Treasury Units provide limited settlement rate adjustments.

      The number of shares of our common stock issuable upon settlement of each new purchase contract is subject to adjustment only for stock splits and combinations, stock dividends and certain other specified transactions. The number of shares of our common stock issuable upon settlement of each new purchase contract is not subject to adjustment for other events, such as employee stock option grants, offerings of our common stock for cash or in connection with certain acquisitions or other transactions, which may adversely affect the price of our common stock. The terms of the New PEPS Units do not restrict PPL Corporation’s ability to offer its common stock in the future or to engage in other transactions that could dilute the value of our common stock. PPL Corporation has no obligation to consider the interests of the holders of the New PEPS Units and Treasury Units for any reason.

You have no shareholder rights with respect to our common stock.

      Until you acquire shares of our common stock upon settlement of your purchase contract, you will have no rights with respect to the shares of our common stock, including voting rights, rights to respond to tender offers and rights to receive any dividends or other distributions on our common stock. Upon settlement of your purchase contract, you will be entitled to exercise the rights of a holder of shares of our common stock only as to actions for which the applicable record date occurs after the settlement date.

The secondary market for the New PEPS Units may be illiquid.

      It is not possible to predict how New PEPS Units, Treasury Units or notes will trade in the secondary market or whether the market will be liquid or illiquid. There is currently no secondary market for either our New PEPS Units or our Treasury Units. We intend to list the New PEPS Units on the NYSE but will only be able to list the New PEPS Units if there is sufficient participation in the exchange offer such that the New PEPS Units meet the NYSE listing requirements. However, listing on the NYSE does not guarantee the depth or liquidity of the market for the New PEPS Units. If holders of the New PEPS Units create Treasury Units, the liquidity of the New PEPS Units could be adversely affected.

      If the Treasury Units or the notes are separately traded to a sufficient extent that applicable exchange listing requirements are met, we will try to list the notes or the Treasury Units on the same exchange as the New PEPS

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Units. There can be no assurance as to the liquidity of any market that may develop for the New PEPS Units, the Treasury Units or the notes, your ability to sell these securities or whether a trading market, if it develops, will continue. In addition, in the event you were to substitute treasury securities for notes or notes for treasury securities, thereby converting your New PEPS Units for Treasury Units or your Treasury Units for New PEPS Units, as the case may be, the liquidity of New PEPS Units or Treasury Units could be adversely affected.

Your pledged notes will be encumbered by our security interest.

      Although you will be the beneficial owner of the underlying pledged interest in the notes, that pledged interest in the notes will be pledged with the collateral agent to secure your obligation under the new purchase contract. Therefore, for so long as the new purchase contract remains in effect, you will not be allowed to withdraw your pledged note from this pledge arrangement, except to create Treasury Units or if you settle the new purchase contract early or settle the new purchase contracts for cash on the new purchase contract settlement date as described in this prospectus.

The delivery of securities is subject to potential delay.

      The new purchase contracts will terminate automatically if certain bankruptcy, insolvency or reorganization events occur with respect to PPL Corporation. If the new purchase contracts terminate upon one of these events, your rights and obligations under your new purchase contract also will terminate, including your obligation to pay for, and your right to receive, shares of our common stock. Upon termination, you will receive your interest in the note or your treasury security. Notwithstanding the automatic termination of the new purchase contracts, procedural delays may affect the timing of the delivery to you of your securities being held as collateral under the pledge arrangement.

The new purchase contract agreement is not qualified under the trust indenture act and therefore the obligations of the purchase contract agent are limited.

      The new purchase contract agreement is not an indenture under the Trust Indenture Act. Therefore, the purchase contract agent will not qualify as a trustee under the Trust Indenture Act, and you will not benefit from the protections of that law, such as disqualification of an indenture trustee for “conflicting interests,” provisions preventing an indenture trustee from improving its own position at the expense of the security holders and the requirement that an indenture trustee deliver reports at least annually with respect to the indenture trustee and the securities. Under the terms of the new purchase contract agreement, the purchase contract agent will have only limited obligations to you as a holder of the New PEPS Unit.

Risks Related to the Exchange Offer

The United States federal income tax consequences of the exchange of the Outstanding PEPS Units for the New PEPS Units are unclear.

      No statutory, judicial or administrative authority directly addresses the treatment of the exchange of the Outstanding PEPS Units for the New PEPS Units for United States federal income tax purposes. As a result, the United States federal income tax consequences of the exchange are unclear. For a discussion of related risks, see “Summary—The Offering” and “United States Federal Income Tax Considerations.”

If you do not tender for exchange your Outstanding PEPS Units, or any of your Outstanding PEPS Units are not accepted as a result of proration, the Outstanding PEPS Units you retain are expected to become less liquid as a result of the exchange offer.

      If a significant number of Outstanding PEPS Units are tendered for exchange in the offer, the liquidity of the trading market for the Outstanding PEPS Units, if any, after the completion of the exchange offer may be substantially reduced. Any Outstanding PEPS Units tendered and exchanged in the exchange offer will reduce the

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aggregate number of Outstanding PEPS Units outstanding. Even if we prorate the offer and the Outstanding PEPS Units held after the completion of the offer are listed on the NYSE, there may be little to no liquidity in the trading market.

The subordinated notes, which you may hold directly or through your ownership interest in the trust preferred securities if you retain Outstanding PEPS Units after this offer, are our subordinated obligations whereas the notes which are part of the New PEPS Units will become our senior obligations.

      If you do not tender any of your Outstanding PEPS Units in the offer or you continue to hold a portion of your Outstanding PEPS Units due to proration by us, you may hold the trust preferred securities (or PPL Capital Funding subordinated notes) which were part of the Outstanding PEPS Units after the new purchase contract settlement date of May 18, 2004. Such trust preferred securities represent an interest in the subordinated notes, and the subordinated notes are the unsecured, subordinated obligations of PPL Capital Funding and rank junior to all of PPL Capital Funding’s senior indebtedness. The PPL Corporation guarantee of the subordinated notes is also subordinated, ranking junior to all of PPL Corporation’s senior indebtedness. On and after May 18, 2004, the notes offered as part of the New PEPS Units will rank as senior indebtedness of PPL Capital Funding, senior in right of payment to PPL Capital Funding subordinated obligations, and will be guaranteed by PPL Corporation on a senior basis, senior in right of payment to PPL Corporation subordinated obligations, including subordinated guarantees. Therefore, by retaining Outstanding PEPS Units, you could be in a position in which you hold subordinated debt (or interests in such subordinated debt) and your interests are junior to those of holders of the notes that were acquired in this exchange for the New PEPS Units.

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FORWARD-LOOKING INFORMATION

      Certain statements included or incorporated by reference in this prospectus, including statements with respect to future earnings, energy supply and demand, costs, subsidiary performance, growth, new technology, project development, energy prices, strategic initiatives, and generating capacity and performance, are “forward looking statements.” Although we believe that the expectations and assumptions reflected in these statements are reasonable, there can be no assurance that these expectations will prove to be correct. These forward-looking statements involve a number of risks and uncertainties, and actual results may differ materially from the results discussed in the forward-looking statements. In addition to the specific factors discussed in the “Risk Factors” sections in this prospectus and our reports that are incorporated by reference, the following are among the important factors that could cause actual results to differ materially from the forward-looking statements:

• market demand and prices for energy, capacity and fuel;

• weather variations affecting customer energy usage;

• competition in retail and wholesale power markets;

• effect of any business or industry restructuring;

• profitability and liquidity of PPL Corporation and our subsidiaries;

• new accounting requirements or new interpretations or applications of existing requirements;

• operation of existing facilities and operating costs of PPL Corporation and our subsidiaries;

• environmental conditions and requirements;

• transmission and distribution system conditions and operating costs;

• development of new projects, markets and technologies;

• performance of new ventures;

• political, regulatory or economic conditions in states, regions or countries where PPL Corporation or our subsidiaries conduct business;

• receipt and renewals of necessary governmental permits and approvals;

• impact of state or federal investigations applicable to us or our industry;

• outcome of litigation against us;

• capital markets conditions and decisions regarding capital structure;

• stock price performance of PPL Corporation;

• market prices of equity securities and resultant cash funding requirements for defined benefit pension plans;

• securities and credit ratings of PPL Corporation and our subsidiaries;

• state and federal regulatory developments;

• foreign exchange rates;

• new state or federal legislation;

• national or regional economic conditions, including any potential effects arising from the September 11, 2001 terrorist attacks in the United States, the situation in Iraq and any consequential hostilities or other hostilities; and

• commitments and liabilities of PPL Corporation and our subsidiaries.

Any such forward-looking statements should be considered in light of such important factors and in conjunction with other documents of PPL Corporation and our subsidiaries that are on file with the SEC.

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      New factors that could cause actual results to differ materially from those described in forward-looking statements emerge from time to time, and it is not possible for us to predict all of such factors, or the extent to which any such factor or combination of factors may cause actual results to differ from those contained in any forward-looking statement. Any forward-looking statement speaks only as of the date on which such statement is made, and we do not undertake any obligation to update the information contained in such statement to reflect subsequent developments or information.

      We caution you that any one of these factors or other factors described under the heading “Risk Factors” in this prospectus, or a combination of these factors, could materially affect our future results of operations and whether our forward-looking statements ultimately prove to be accurate. These forward-looking statements are not guarantees of our future performance, and our actual results and future performance may differ materially from those suggested in our forward-looking statements. When considering these forward-looking statements, you should keep in mind the factors described under the heading “Risk Factors” in this prospectus and other cautionary statements in this prospectus and the documents we have incorporated by reference.

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PRICE RANGE OF THE OUTSTANDING PEPS UNITS

      The Outstanding PEPS Units are traded on the NYSE under the symbol “PPL-PrE.” The following table sets forth, for the periods indicated, the range of high and low sale prices for the Outstanding PEPS Units. On August 29, 2003, the closing price for the Outstanding PEPS Units was $19.80 per Outstanding PEPS Unit.

	Outstanding
	PEPS Unit Price
	High		Low
Year Ended December 31, 2001
Second Quarter (since May 9, 2001)		28.31		24.65
Third Quarter		26.30		17.50
Fourth Quarter		20.63		17.76
Year Ended December 31, 2002
First Quarter		20.75		17.60
Second Quarter		22.00		17.05
Third Quarter		19.88		15.30
Fourth Quarter		19.50		15.10
Year Ending December 31, 2003
First Quarter		19.61		16.27
Second Quarter		21.46		18.07
Third Quarter (through August 29, 2003)		21.58		19.40

As of August 29, 2003, there were 23,000,000 Outstanding PEPS Units.

PRICE RANGE OF COMMON STOCK

      PPL Corporation common stock is traded on the NYSE under the symbol “PPL.” The following table sets forth, for the periods indicated, the range of high and low sale prices for PPL Corporation common stock. On August 29, 2003, the last reported sale price for PPL Corporation common stock was $39.67 per share.

	Common Stock
	Price
	High		Low
Year Ended December 31, 2001
First Quarter	$	46.75	$	33.88
Second Quarter		62.36		44.03
Third Quarter		56.50		30.99
Fourth Quarter		37.65		31.20
Year Ended December 31, 2002
First Quarter	$	39.85	$	31.40
Second Quarter		39.95		28.97
Third Quarter		37.60		26.00
Fourth Quarter		36.26		26.47
Year Ended December 31, 2003
First Quarter	$	38.10	$	31.65
Second Quarter		44.34		35.04
Third Quarter (through August 29, 2003)		42.81		38.66

As of June 2, 2003, there were 83,669 holders of record of PPL Corporation common stock.

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DIVIDEND POLICY

      PPL Corporation has paid quarterly cash dividends on its common stock in every year since 1946. The annual dividends paid per share in 2002 and in 2001 were $1.44 and $1.06, respectively. In February 2003, PPL Corporation increased its dividend level to an annualized rate of $1.54 per share ($0.385 per share on a quarterly basis). PPL Corporation declared a quarterly dividend of $0.385 per share to be paid on October 1, 2003 to shareowners of record on September 10, 2003. Future dividends, declared at the discretion of PPL Corporation’s board of directors, will be dependent upon future earnings, cash flows, financial requirements and other factors.

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THE EXCHANGE OFFER

Outstanding PEPS Units Subject to the Exchange Offer

      We are offering, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal, to exchange a New PEPS Unit plus a cash payment of $0.375 for each validly tendered and accepted Outstanding PEPS Unit. We are offering to exchange up to 22,900,000 Outstanding PEPS Units. However, the exchange offer is subject to the conditions described in this prospectus, including the condition that the Outstanding PEPS Units remain listed on the NYSE and the minimum condition that there are validly tendered at the expiration of the exchange offer at least 35% of the Outstanding PEPS Units. In the event that we determine there is any likelihood that the NYSE continued-listing condition may not be met, we may accept a pro rata amount of the Outstanding PEPS Units tendered in the offer in order to ensure that the Outstanding PEPS Units continue to be listed on the NYSE.

      Holders whose Outstanding PEPS Units are tendered and accepted in the exchange offer will be paid contract adjustment payments and interest payments on the new notes relating to the New PEPS Units accruing from August 18, 2003, the last date on which such payments were paid on the Outstanding PEPS Units, on November 18, 2003. No purchase contract adjustments and distributions on trust preferred securities relating to the Outstanding PEPS Units that are exchanged for New PEPS Units will be paid for any periods after August 18, 2003.

      Paul T. Champagne, President of PPL EnergyPlus, LLC, owns 500 Outstanding PEPS Units that may be exchanged pursuant to the exchange offer. PPL Corporation has purchased in market transactions up to 39 Outstanding PEPS Units. These 39 Outstanding PEPS Units may be exchanged pursuant to the exchange offer solely to ensure that the aggregate number of Outstanding PEPS Units exchanged and the aggregate number of New PEPS Units issued in the exchange offer are in integral multiples of 40 Outstanding PEPS Units and 40 New PEPS Units, respectively. To our knowledge, no other officer, director or affiliate of PPL Corporation and PPL Capital Funding own any Outstanding PEPS Unit.

Source and Amount of the Cash Consideration

      We are offering to exchange a New PEPS Unit plus a cash payment of $0.375 for each validly tendered and accepted Outstanding PEPS Unit. To exchange the minimum number of Outstanding PEPS Units under the minimum condition that at least 35% of the Outstanding PEPS Units are validly tendered, an aggregate cash consideration of $3,018,750 would be required. To exchange the maximum possible number of Outstanding PEPS Units sought in the exchange offer, an aggregate cash consideration of $8,587,500 would be required. PPL Corporation will use cash on hand as the source of the funds needed to pay the exchange offer cash consideration.

Conditions Precedent to the Exchange Offer

      Notwithstanding any other provisions of this exchange offer, we will not be required to accept for exchange any Outstanding PEPS Units tendered, and we may terminate or amend this offer if any of the following conditions precedent to the exchange offer is not satisfied, or is reasonably determined by us not to be satisfied, and, in our reasonable judgment and regardless of the circumstances giving rise to the failure of the condition precedent, including any action or omission to act by us, the failure of the condition precedent makes it inadvisable to proceed with the offer or with the acceptance for exchange or exchange and issuance of the New PEPS Units and the payment of the cash consideration:

Condition 1.

At least 35% of the Outstanding PEPS Units are validly tendered and not withdrawn immediately prior to the expiration of the exchange offer.

Condition 2.

There shall not be any reasonable likelihood that the acceptance for exchange of the Outstanding PEPS Units pursuant to the offer will cause the Outstanding PEPS Units to be delisted from the NYSE for any reason, after giving effect to the pro rata provision described hereafter. The NYSE will consider the delisting of the Outstanding PEPS Units if, among other factors, the number of publicly-held Outstanding PEPS Units is less than 100,000 units,

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	the number of holders of Outstanding PEPS Units is less than 100 or the aggregate market value of the Outstanding PEPS Units is less than $1,000,000. In the event that a significant number of holders tender their Outstanding PEPS Units or a significant number of the Outstanding PEPS Units are tendered in the offer such that we believe there is any reasonable likelihood that the Outstanding PEPS Units could be delisted from the NYSE, we may accept a pro rata amount of the Outstanding PEPS Units tendered in order to ensure that the Outstanding PEPS Units continue to be listed on the NYSE. Therefore, while we are making this exchange offer for up to 22,900,000 Outstanding PEPS Units, we may not accept 22,900,000 Outstanding PEPS Units if we are required to prorate the offer to ensure the Outstanding PEPS Units remain listed on the NYSE.
Condition 3.	No action or event shall have occurred, failed to occur or been threatened, no action shall have been taken, and no statute, rule, regulation, judgment, order, stay, decree or injunction shall have been promulgated, enacted, entered, enforced or deemed applicable to the exchange offer, by or before any court or governmental, regulatory or administrative agency, authority or tribunal, which either:
	•      challenges the making of the exchange offer or the exchange of Outstanding PEPS Units under the exchange offer or might, directly or indirectly, prohibit, prevent, restrict or delay consummation of, or might otherwise adversely affect in any material manner, the exchange offer or the exchange of Outstanding PEPS Units under the exchange offer, or
	•      in the reasonable judgment of PPL Corporation, could materially adversely affect the business, condition (financial or otherwise), income, operations, properties, assets, liabilities or prospects of PPL Corporation and its subsidiaries, taken as a whole, or materially impair the contemplated benefits to PPL Corporation of the exchange offer or the exchange of Outstanding PEPS Units under the exchange offer, or might be material to holders of Outstanding PEPS Units in deciding whether to accept the exchange offer.
Condition 4.	(i) Trading generally shall not have been suspended or materially limited on or by, as the case may be, any of the NYSE, the Philadelphia Stock Exchange or the National Association of Securities Dealers, Inc.; (ii) there shall not have been any suspension or limitation of trading of any securities of PPL Corporation on any exchange or in the over-the-counter market; (iii) no general banking moratorium shall have been declared by Federal or New York authorities; or (iv) there shall not have occurred any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if the effect of any such outbreak, escalation, declaration, calamity or emergency has a reasonable likelihood to make it impractical and inadvisable to proceed with completion of the exchange offer.
Condition 5.	None of the purchase contract agent, the collateral agent, the securities intermediary, the trustees of the trust nor the subordinated indenture trustee with respect to the Outstanding PEPS Units shall have objected in any respect to, or taken any action that could in our reasonable judgment adversely affect the consummation of the exchange offer, the exchange of Outstanding PEPS Units under the exchange offer, nor shall such parties have taken any action that challenges the validity or effectiveness of the procedures used by us in making the exchange offer or the exchange of the Outstanding PEPS Units under the exchange offer.

      All of the foregoing conditions are for the sole benefit of us and may be waived by us, in whole or in part, in our sole discretion. Any determination that we make concerning an event, development or circumstance described or referred to above shall be conclusive and binding.

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      If any of the foregoing conditions are not satisfied, we may, at any time before the expiration of the exchange offer:

(a)  terminate the exchange offer and return all tendered Outstanding PEPS Units to the holders thereof;

(b)  modify, extend or otherwise amend the exchange offer and retain all tendered Outstanding PEPS Units until the expiration date, as may be extended, subject, however, to the withdrawal rights of holders (see “—Expiration Date; Extensions; Amendments” and “—Proper Execution and Delivery of Letter of Transmittal—Withdrawal of Tenders” below); or

(c)  waive the unsatisfied conditions and accept all Outstanding PEPS Units tendered and not previously withdrawn.

      Except for the requirements of applicable U.S. federal and state securities laws, there are no federal or state regulatory requirements to be complied with or approvals to be obtained by us in connection with the exchange offer which, if not complied with or obtained, would have a material adverse effect on us.

Expiration Date; Extensions; Amendments

      For purposes of the exchange offer, the term “expiration date” shall mean 5 p.m., New York City time, on                     , 2003, subject to our right to extend such date and time for the exchange offer in our sole discretion, in which case, the expiration date shall mean the latest date and time to which the exchange offer is extended.

      We reserve the right, in our sole discretion, to (1) delay accepting any validly tendered Outstanding PEPS Units, (2) extend the exchange offer, (3) terminate the exchange offer upon failure to satisfy any of the conditions listed above or (4) amend the exchange offer, by giving oral (promptly confirmed in writing) or written notice of such delay, extension, termination or amendment to the exchange agent. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by a public announcement thereof which, in the case of an extension, will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date.

      If we amend the exchange offer in a manner that we determine constitutes a material change, we will extend the exchange offer for a period of five to ten business days, depending upon the significance of the amendment, if the exchange offer would otherwise have expired during such five to ten business day period. Any change in the consideration offered to holders of Outstanding PEPS Units in the exchange offer shall be paid to all holders whose Outstanding PEPS Units have previously been tendered pursuant to the exchange offer.

      Without limiting the manner in which we may choose to make a public announcement of any delay, extension, amendment or termination of the exchange offer, we will comply with applicable securities laws by disclosing any such amendment by means of a prospectus supplement that we distribute to the holders of the Outstanding PEPS Units. We will have no other obligation to publish, advertise or otherwise communicate any such public announcement other than by making a timely release to any appropriate news agency, including Bloomberg Business News and the Dow Jones News Service.

Effect of Tender

      Any tender by a holder of Outstanding PEPS Units that is not withdrawn prior to the expiration date of the exchange offer will constitute a binding agreement between that holder and us upon the terms and subject to the conditions of the exchange offer and the letter of transmittal. The acceptance of the exchange offer by a tendering holder of Outstanding PEPS Units will constitute the agreement by that holder to deliver good and marketable title to the tendered Outstanding PEPS Units, free and clear of all liens, charges, claims, encumbrances, interests and restrictions of any kind.

Absence of Dissenters’ Rights

      Holders of the Outstanding PEPS Units do not have any appraisal or dissenters’ rights under applicable law in connection with the exchange offer.

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Acceptance of Outstanding PEPS Units for Exchange; Proration

      The conditions to the exchange offer require, among other things, that the Outstanding PEPS Units remain listed on the NYSE. In the event that we determine there is any likelihood that this condition may not be met, we may accept a pro rata amount of the Outstanding PEPS Units tendered in the offer in order to ensure that the Outstanding PEPS Units continue to be listed on the NYSE. In such case, the proration may result in our accepting less than the 22,900,000 Outstanding PEPS Units sought in the exchange offer. To avoid the purchase of fractional Outstanding PEPS Units, fractional Outstanding PEPS Units will be rounded up to the nearest whole Outstanding PEPS Unit. We reserve the right to accept all Outstanding PEPS Units tendered by persons who own, beneficially or of record, an aggregate of not more than 40 Outstanding PEPS Units and who tender all their Outstanding PEPS Units, before we prorate the Outstanding PEPS Units tendered by others. Any Outstanding PEPS Units that are not accepted because of proration will be returned.

      In addition, the offer is conditioned upon at least 35% of the Outstanding PEPS Units being validly tendered and not withdrawn immediately prior to the expiration of the exchange offer.

      The New PEPS Units will be delivered in book-entry form on the exchange date which we anticipate will be the third business day following the expiration date of the exchange offer, after giving effect to any extensions. However, if proration of tendered Outstanding PEPS Units is required, we do not expect that we would be able to notify you of that fact or to accept Outstanding PEPS Units for exchange from three up to seven business days after the expiration date.

      The payment of the cash consideration shall be made on the exchange date by the deposit of the aggregate amount of cash consideration due in immediately available funds by us with the exchange agent, which will act as agent for tendering holders for the purpose of receiving payment from us and transmitting such payment to tendering holders. Under no circumstances will interest on the cash consideration be paid by us by reason of any delay in making payment.

      We will be deemed to have accepted validly tendered Outstanding PEPS Units when, and if, we have given oral (promptly confirmed in writing) or written notice thereof to the exchange agent. Subject to the terms and conditions of the exchange offer, the issuance of New PEPS Units will be recorded in book-entry form and the cash consideration will be paid for Outstanding PEPS Units so accepted and will be effected by the exchange agent on the exchange date upon receipt of such notice. The exchange agent will act as agent for tendering holders of the Outstanding PEPS Units for the purpose of receiving book-entry transfers of Outstanding PEPS Units in the exchange agent’s account at DTC. If any tendered Outstanding PEPS Units are not accepted for any reason set forth in the terms and conditions of the exchange offer, including if proration of tendered Outstanding PEPS Units is required, or if Outstanding PEPS Units are withdrawn, such unaccepted or withdrawn Outstanding PEPS Units will be returned without expense to the tendering holder or such Outstanding PEPS Units will be credited to an account maintained at DTC designated by the DTC participant who so delivered such Outstanding PEPS Units, in either case, as promptly as practicable after the expiration or termination of the exchange offer.

Procedures for Tendering

      If you hold Outstanding PEPS Units and wish to have such securities exchanged for New PEPS Units and the cash payment, you must validly tender, or cause the valid tender of, your Outstanding PEPS Units using the procedures described in this prospectus and in the accompanying letter of transmittal.

      Only registered holders of Outstanding PEPS Units are authorized to tender the Outstanding PEPS Units. The procedures by which you may tender or cause to be tendered Outstanding PEPS Units will depend upon the manner in which the Outstanding PEPS Units are held, as described below.

Tender of Outstanding PEPS Units Held Through a Nominee

      If you are a beneficial owner of Outstanding PEPS Units that are held of record by a custodian bank, depositary, broker, trust company or other nominee, and you wish to tender Outstanding PEPS Units in the exchange offer, you should contact the record holder promptly and instruct the record holder to tender the Outstanding PEPS Units on your behalf using one of the procedures described below.

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Tender of Outstanding PEPS Units Through DTC

      Pursuant to authority granted by DTC, if you are a DTC participant that has Outstanding PEPS Units credited to your DTC account and thereby held of record by DTC’s nominee, you may directly tender your Outstanding PEPS Units as if you were the record holder. Because of this, references herein to registered or record holders include DTC participants with Outstanding PEPS Units credited to their accounts. If you are not a DTC participant, you may tender your Outstanding PEPS Units by book-entry transfer by contacting your broker or opening an account with a DTC participant. Within two business days after the date of this prospectus, the exchange agent will establish accounts with respect to the Outstanding PEPS Units at DTC for purposes of the exchange offer.

      Any participant in DTC may tender Outstanding PEPS Units by:

(a)  effecting a book-entry transfer of the Outstanding PEPS Units to be tendered in the exchange offer into the account of the exchange agent at DTC by electronically transmitting its acceptance of the exchange offer through DTC’s Automated Tender Offer Program, or ATOP, procedures for transfer; if ATOP procedures are followed, DTC will then verify the acceptance, execute a book-entry delivery to the exchange agent’s account at DTC and send an agent’s message to the exchange agent. An “agent’s message” is a message, transmitted by DTC to and received by the exchange agent and forming part of a book-entry confirmation, which states that DTC has received an express acknowledgment from a DTC participant tendering Outstanding PEPS Units that the participant has received and agrees to be bound by the terms of the letter of transmittal and that PPL Corporation may enforce the agreement against the participant. DTC participants following this procedure should allow sufficient time for completion of the ATOP procedures prior to the expiration date of the exchange offer;

(b)  completing and signing the letter of transmittal according to the instructions and delivering it, together with any signature guarantees and other required documents, to the exchange agent at its address on the back cover page of this prospectus; or

(c)  complying with the guaranteed delivery procedures described below.

      With respect to option (a) above, the exchange agent and DTC have confirmed that the exchange offer is eligible for ATOP.

      The letter of transmittal (or facsimile thereof), with any required signature guarantees and other required documents, or (in the case of book-entry transfer) an agent’s message in lieu of the letter of transmittal, must be transmitted to and received by the exchange agent prior to the expiration date of the exchange offer at one of its addresses set forth on the back cover page of this prospectus. Delivery of such documents to DTC does not constitute delivery to the exchange agent.

Guaranteed Delivery

      If a DTC participant desires to participate in the exchange offer and the procedure for book-entry transfer of Outstanding PEPS Units cannot be completed on a timely basis, a tender of Outstanding PEPS Units may be effected if the exchange agent has received at one of its addresses on the back cover page of this prospectus prior to the applicable expiration date of the exchange offer, a letter, telegram or facsimile transmission from a firm or other entity identified in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, referred to as an Eligible Guarantor Institution, including (as each of the following terms are defined in the Rule), (1) a bank, (2) a broker, dealer, municipal securities dealer or government securities dealer or government securities broker, (3) a credit union, (4) a national securities exchange, registered securities association or clearing agency, or (5) a savings institution that is a participant in a Securities Transfer Association recognized program, which:

• indicates the account number of the DTC participant;

• indicates the name(s) in which the Outstanding PEPS Units are held and the amount of the Outstanding PEPS Units tendered;

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• states that the tender is being made thereby; and

• guarantees that, within three NYSE trading days after the date of execution of the letter, telegram or facsimile transmission by the Eligible Guarantor Institution, the procedure for book-entry transfer with respect to the Outstanding PEPS Units will be completed.

      Unless the Outstanding PEPS Units being tendered by the above-described method are deposited with the exchange agent within the time period indicated above according to DTC’s ATOP procedures and an agent’s message or letter of transmittal is received within the time period indicated above, we may, at our option, reject the tender. The notice of guaranteed delivery which may be used by an Eligible Guarantor Institution for the purposes described in the preceding paragraph is contained in the solicitation materials provided with this prospectus.

Letter of Transmittal

      Subject to and effective upon the acceptance for exchange and exchange of New PEPS Units and payment of the cash consideration for Outstanding PEPS Units tendered by a letter of transmittal, by executing and delivering a letter of transmittal (or agreeing to the terms of a letter of transmittal pursuant to an agent’s message), a tendering holder of Outstanding PEPS Units:

• irrevocably sells, assigns and transfers to or upon the order of PPL Corporation all right, title and interest in and to, and all claims in respect of or arising or having arisen as a result of the holder’s status as a holder of the Outstanding PEPS Units tendered thereby;

• waives any and all rights with respect to the Outstanding PEPS Units;

• releases and discharges PPL Corporation, PPL Capital Funding, the purchase contract agent, the collateral agent, the securities intermediary, the trustees of the trust, the guarantee trustee and the subordinated indenture trustee with respect to the Outstanding PEPS Units from any and all claims such holder may have, now or in the future, arising out of or related to the Outstanding PEPS Units, including, without limitation, any claims that such holder is entitled to participate in any redemption of the Outstanding PEPS Units;

• represents and warrants that the Outstanding PEPS Units tendered were owned as of the date of tender, free and clear of all liens, charges, claims, encumbrances, interests and restrictions of any kind;

• designates an account number of a DTC participant in which the New PEPS Units are to be credited; and

• irrevocably appoints the exchange agent the true and lawful agent and attorney-in-fact of the holder with respect to any tendered Outstanding PEPS Units, with full powers of substitution and revocation (such power of attorney being deemed to be an irrevocable power coupled with an interest) to cause the Outstanding PEPS Units tendered to be assigned, transferred and exchanged in the exchange offer.

Proper Execution and Delivery of Letter of Transmittal

      If you wish to participate in the exchange offer, delivery of your Outstanding PEPS Units, signature guarantees and other required documents is your responsibility. Delivery is not complete until the required items are actually received by the exchange agent. If you mail these items, we recommend that you (1) use registered mail with return receipt requested, properly insured, and (2) mail the required items sufficiently in advance of the expiration date with respect to the exchange offer to allow sufficient time to ensure timely delivery.

      Except as otherwise provided below, all signatures on a letter of transmittal or a notice of withdrawal must be guaranteed by a recognized participant in the Securities Transfer Agents Medallion Program, the NYSE Medallion Signature Program or the Stock Exchange Medallion Program. Signatures on a letter of transmittal need not be guaranteed if:

• the letter of transmittal is signed by a participant in DTC whose name appears on a security position listing of DTC as the owner of the Outstanding PEPS Units and the holder(s) has not completed the portion entitled “Special Issuance and Payment Instructions” on the letter of transmittal; or

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• the Outstanding PEPS Units are tendered for the account of an Eligible Guarantor Institution. See Instruction 3 in the letter of transmittal.

Withdrawal of Tenders

      Tenders of Outstanding PEPS Units in connection with the exchange offer may be withdrawn at any time prior to the expiration date of the exchange offer, but you must withdraw all of your Outstanding PEPS Units previously tendered. Tenders of Outstanding PEPS Units may not be withdrawn at any time after such date unless the exchange offer is extended, in which case tenders of Outstanding PEPS Units may be withdrawn at any time prior to the expiration date, as extended. In addition, tenders of Outstanding PEPS Units may be withdrawn after expiration of 40 business days from the commencement of the exchange offer in the event that we have not yet accepted Outstanding PEPS Units in the exchange offer by such time.

      Beneficial owners desiring to withdraw Outstanding PEPS Units previously tendered should contact the DTC participant through which such beneficial owners hold their Outstanding PEPS Units. In order to withdraw Outstanding PEPS Units previously tendered, a DTC participant may, prior to the expiration date of the exchange offer, withdraw its instruction previously transmitted through ATOP by (1) withdrawing its acceptance through ATOP or (2) delivering to the exchange agent by mail, hand delivery or facsimile transmission, notice of withdrawal of such instruction. The notice of withdrawal must contain the name and number of the DTC participant. The method of notification is at the risk and election of the holder and must be timely received by the exchange agent. Withdrawal of a prior instruction will be effective upon receipt of the notice of withdrawal by the exchange agent. All signatures on a notice of withdrawal must be guaranteed by a recognized participant in the Securities Transfer Agents Medallion Program, the NYSE Medallion Signature Program or the Stock Exchange Medallion Program. However, signatures on the notice of withdrawal need not be guaranteed if the Outstanding PEPS Units being withdrawn are held for the account of an Eligible Guarantor Institution. A withdrawal of an instruction must be executed by a DTC participant in the same manner as such DTC participant’s name appears on its transmission through ATOP to which such withdrawal relates. A DTC participant may withdraw a tender only if such withdrawal complies with the provisions described in this paragraph.

      Withdrawals of tenders of Outstanding PEPS Units may not be rescinded and any Outstanding PEPS Units withdrawn will thereafter be deemed not validly tendered for purposes of the exchange offer. Properly withdrawn Outstanding PEPS Units, however, may be retendered by following the procedures described above at any time prior to the expiration date of the exchange offer.

Miscellaneous

      All questions as to the validity, form, eligibility (including time of receipt) and acceptance for exchange of any tender of Outstanding PEPS Units in connection with the exchange offer will be determined by us, in our sole discretion, and our determination will be final and binding. We reserve the absolute right to reject any and all tenders not in proper form or the acceptance for exchange of which may, in the opinion of our counsel, be unlawful. We also reserve the absolute right to waive any defect or irregularity in the tender of any Outstanding PEPS Units in the exchange offer, and the interpretation by us of the terms and conditions of the exchange offer (including the instructions in the letter of transmittal) will be final and binding on all parties. None of PPL Corporation, PPL Capital Funding, the exchange agent, the information agent, the dealer manager or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification.

      Tenders of Outstanding PEPS Units involving any irregularities will not be deemed to have been made until such irregularities have been cured or waived. Outstanding PEPS Units received by the exchange agent in connection with the exchange offer that are not validly tendered and as to which the irregularities have not been cured or waived will be returned by the exchange agent to the DTC participant who delivered such Outstanding PEPS Units by crediting an account maintained at DTC designated by such DTC participant as promptly as practicable after the expiration date of the exchange offer or the withdrawal or termination of the exchange offer.

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Transfer Taxes

      We will pay all transfer taxes, if any, applicable to the transfer and exchange of Outstanding PEPS Units to us in the exchange offer. If transfer taxes are imposed for any other reason, the amount of those transfer taxes, whether imposed on the registered holder or any other persons, will be payable by the tendering holder. Other reasons transfer taxes could be imposed include:

• if New PEPS Units in book-entry form are to be registered in the name of any person other than the person signing the letter of transmittal; or

• if tendered Outstanding PEPS Units are registered in the name of any person other than the person signing the letter of transmittal.

      If satisfactory evidence of payment of or exemption from those transfer taxes is not submitted with the letter of transmittal, the amount of those transfer taxes will be billed directly to the tendering holder and/or withheld from any payments due with respect to the Outstanding PEPS Units tendered by such holder.

Exchange Agent

      JPMorgan Chase Bank has been appointed the exchange agent for the exchange offer. Letters of transmittal, notices of guaranteed delivery and all correspondence in connection with the exchange offer should be sent or delivered by each holder of Outstanding PEPS Units, or a beneficial owner’s custodian bank, depositary, broker, trust company or other nominee, to the exchange agent at the address set forth on the back cover page of this prospectus. We will pay the exchange agent reasonable and customary fees for its services and will reimburse it for its reasonable, out-of-pocket expenses in connection therewith.

      JPMorgan Chase Bank and its affiliates maintain banking relationships with us.

Information Agent

      Innisfree M&A Incorporated has been appointed as the information agent for the exchange offer, and will receive customary compensation for its services. Questions concerning tender procedures and requests for additional copies of this prospectus, the letter of transmittal or the notice of guaranteed delivery should be directed to the information agent at the address set forth on the back cover page of this prospectus. Holders of Outstanding PEPS Units may also contact their custodian bank, depositary, broker, trust company or other nominee for assistance concerning the exchange offer.

Dealer Manager

      We have retained Morgan Stanley & Co. Incorporated to act as dealer manager in connection with the exchange offer.

      We have agreed to pay to the dealer manager compensation for its services in connection with the exchange offer according to a predetermined rate.

      We will also reimburse the dealer manager for certain out-of-pocket expenses, including the fees and expenses of its legal counsel incurred in connection with the exchange offer. The obligations of the dealer manager are subject to certain conditions. We have agreed to indemnify the dealer manager against certain liabilities, including liabilities under the federal securities laws, or to contribute to payments that the dealer manager may be required to make in respect thereof. Questions regarding the terms of the exchange offer may be directed to the dealer manager at the address set forth on the back cover page of this prospectus.

      From time to time, the dealer manager and its affiliates have provided investment banking and other services to us for customary compensation.

Other Fees and Expenses

      Tendering holders of Outstanding PEPS Units will not be required to pay any expenses of soliciting tenders in the exchange offer, including any fee or commission to the dealer manager. However, if a tendering holder

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handles the transaction through its broker, dealer, commercial bank, trust company or other institution, such holder may be required to pay brokerage fees or commissions.

      The principal solicitation is being made by mail. However, additional solicitations may be made by telegraph, facsimile transmission, telephone or in person by the dealer manager and the information agent, as well as by officers and other employees of PPL Corporation and its affiliates.

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ACCOUNTING TREATMENT

      The new notes and the new purchase contracts will be recorded in our accounting records at the same carrying value as the trust preferred securities and the old purchase contracts, respectively, as reflected in our accounting records on the date of the exchange. Accordingly, we will not recognize any gain or loss for accounting purposes upon the completion of the exchange offer. Any cash payments made to you for tendering Outstanding PEPS Units will be treated like a discount and amortized as an adjustment of interest expense over the remaining term of the notes. Any other costs incurred directly related to the exchange offer (such as legal fees, registration fees, etc.) will be expensed as incurred.

      The new purchase contracts are forward transactions in our common stock. Upon settlement of a new purchase contract, we will receive $25 on that purchase contract and will issue the requisite number of shares of our common stock. The consideration we receive at that time will be credited to shareholders’ equity allocated between our common stock and capital in excess of par value accounts.

      Before the issuance of shares of our common stock upon anticipated settlement of the new purchase contracts for cash, the new purchase contracts will be reflected in our diluted earnings per share calculations using the treasury stock method in accordance with Statement of Financial Accounting Standards No. 128, “Earnings Per Share.” Under this method, the number of shares of our common stock used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of shares of our common stock that would be issued upon settlement of the new purchase contracts less the number of shares of our common stock that could be purchased by us in the market, at the average market price during the period, using the proceeds received upon settlement of the new purchase contracts. Consequently, we anticipate that there will be no dilutive effect on our earnings per share except during periods when the average market price of our common stock is above $63.94.

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DESCRIPTION OF THE NEW PEPS UNITS

      The following is a summary of some of the terms of the New PEPS Units. This summary together with the summary of some of the terms of the new purchase contracts, the new purchase contract agreement, the pledge agreement and the notes set forth under the captions “Description of the New Purchase Contracts,” “Certain Provisions of the New Purchase Contracts, the New Purchase Contract Agreement and the Pledge Agreement” and “Description of the Notes” in this prospectus contains a description of all of the material terms of the New PEPS Units but is not complete. We refer you to the forms of the new purchase contract agreement, the pledge agreement and the form of note that have been filed as exhibits to the registration statement of which this prospectus form a part.

General

      Each New PEPS Unit offered will initially consist of:

• a new purchase contract under which the holder will purchase from PPL Corporation on May 18, 2004, which we call the new purchase contract settlement date, or upon early settlement, for $25, a number of shares of our common stock equal to the applicable settlement rate described under “Description of the New Purchase Contracts— General” or “Description of the New Purchase Contracts— Early Settlement” in this prospectus, as the case may be, and under which we will pay to the holder contract adjustment payments at the rate of 0.46% of the stated amount per year, or $0.1150 per year, paid quarterly; and

• a 1/40, or 2.5%, undivided beneficial ownership interest in a $1,000 principal amount note issued by PPL Capital Funding and guaranteed as to payment by PPL Corporation, and under which we will pay to the holder interest at the rate of 7.29% of the 1/40 interest in the note per year, or $1.8225 per year, paid quarterly.

      The notes will be pledged under the pledge agreement to secure your obligation to purchase our common stock under the new purchase contract.

      The notes and the new purchase contracts will be recorded in our accounting records at the same carrying value as the trust preferred securities and the original purchase contracts, respectively, as reflected in our accounting records on the date of the exchange.

      So long as the units are in the form of New PEPS Units, the related undivided beneficial ownership interest in the note will be pledged to the collateral agent to secure the holders’ obligations to purchase our common stock under the related new purchase contracts.

Creating Treasury Units by Substituting a Treasury Security for a Note

      Each holder of 40 New PEPS Units may create, at any time on or prior to May 7, 2004, 40 Treasury Units by substituting for a note a treasury security having an aggregate principal amount at maturity equal to $1,000. Because treasury securities and notes are issued in integral multiples of $1,000, holders of New PEPS Units may make the substitution only in integral multiples of 40 New PEPS Units.

      Each Treasury Unit will consist of:

• a new purchase contract under which the holder will purchase from us on the new purchase contract settlement date, or upon early settlement, for $25, a number of shares of our common stock equal to the applicable settlement rate, and under which we will pay to the holder contract adjustment payments at the rate of 0.46% of the stated amount per year; and

• a 1/40, or 2.5%, undivided beneficial ownership interest in a related zero-coupon U.S. treasury security (CUSIP No. 912820BJ5) with a principal amount at maturity equal to $1,000 and maturing on May 17, 2004, the business day preceding the new purchase contract settlement date.

      The term “business day” means any day other than a Saturday or a 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

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which JPMorgan Chase Bank, acting as indenture trustee with respect to the notes of PPL Capital Funding, is closed for business.

      The Treasury Unit holder’s beneficial ownership in the treasury security will be pledged under the pledge agreement to secure the holder’s obligation to purchase shares of our common stock under the new purchase contract.

      To create 40 Treasury Units, a holder is required to:

• deposit with JPMorgan Chase Bank, which is acting as the securities intermediary under the pledge agreement, a zero-coupon U.S. treasury security (CUSIP No. 912820BJ5) with a principal amount at maturity equal to $1,000 and maturing on May 17, 2004; and

• transfer to the purchase contract agent 40 New PEPS Units, accompanied by a notice stating that the holder of the New PEPS Units has deposited a treasury security with the securities intermediary, and requesting that the purchase contract agent instruct the collateral agent to release the related note.

      Upon receiving instructions from the purchase contract agent and confirmation of receipt of the treasury security by the securities intermediary, the collateral agent will cause the securities intermediary to release the related note from the pledge and deliver it to the purchase contract agent, free and clear of our security interest. The purchase contract agent then will:

• cancel the 40 New PEPS Units;

• transfer the related note to the holder; and

• deliver 40 Treasury Units to the holder.

      A treasury security will be substituted for the note and will be pledged to the collateral agent to secure the holder’s obligation to purchase shares of our common stock under the related new purchase contracts. The note thereafter will trade separately from the Treasury Units.

      Holders who create Treasury Units or recreate New PEPS Units, as discussed below, will be responsible for any fees or expenses payable to the collateral agent in connection with substitutions of collateral. See “Certain Provisions of the New Purchase Contracts, the New Purchase Contract Agreement and the Pledge Agreement— Miscellaneous” in this prospectus.

Recreating New PEPS Units

      Each holder of Treasury Units will have the right, at any time on or prior to May 7, 2004, to substitute for the related treasury securities held by the collateral agent notes in an aggregate principal amount equal to the aggregate principal amount at stated maturity of the treasury securities for which substitution is being made. This substitution would recreate New PEPS Units, that have notes as a component, and the applicable treasury securities would be released to the holder.

      Because treasury securities and notes are issued in integral multiples of $1,000, holders of Treasury Units may make this substitution only in integral multiples of 40 Treasury Units and 40 New PEPS Units.

      Each holder of 40 Treasury Units may recreate 40 New PEPS Units by:

• depositing with the securities intermediary a note of $1,000 principal amount; and

• transferring to the purchase contract agent 40 Treasury Units, accompanied by a notice stating that such holder has deposited a note with the securities intermediary and requesting that the purchase contract agent instruct the collateral agent to release the related treasury security.

      Upon receiving instructions from the purchase contract agent and confirmation of receipt of the note by the securities intermediary, the collateral agent will cause the securities intermediary to release the related treasury

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security from the pledge and deliver it to the purchase contract agent, on behalf of the holder, free and clear of our security interest. The purchase contract agent then will:

• cancel the 40 Treasury Units;

• transfer the related treasury security to the holder; and

• deliver 40 New PEPS Units to the holder.

      The substituted note will be pledged with the collateral agent to secure the New PEPS Unit holder’s obligation to purchase our common stock under the related new purchase contracts.

Current Payments

      The payments on the New PEPS Units will consist of cash payments consisting of 1/40, or 2.5%, of the interest payment payable on the $1,000 principal amount note by PPL Capital Funding at the rate of 7.29% per year, payable, initially, quarterly in arrears from August 18, 2003 (the last date on which such interest payments were paid on the Outstanding PEPS Units) on November 18, 2003, February 18, 2004 and May 18, 2004. In addition, holders of both New PEPS Units and Treasury Units will be entitled to receive cash distributions of contract adjustment payments payable by us at the rate of 0.46% per year of the stated amount payable quarterly in arrears from August 18, 2003 (the last date on which such contract adjustment payments were paid on the Outstanding PEPS Units) on November 18, 2003, February 18, 2004 and May 18, 2004.

      If a holder of New PEPS Units creates Treasury Units by substituting a treasury security for a note, such holder will not receive any distributions on the Treasury Units other than the contract adjustment payments. If a Treasury Unit holder continues to hold notes that have been separated from New PEPS Units, it will continue to receive interest payments on the notes.

Listing

      We intend to list the New PEPS Units on the NYSE but will only be able to list the New PEPS Units if there is sufficient participation in the exchange offer such that they meet the NYSE listing requirements. Unless and until substitution has been made as described in “—Creating Treasury Units” or “—Recreating New PEPS Units,” neither the note component of a New PEPS Unit nor the treasury security component of a Treasury Unit will trade separately from New PEPS Units or Treasury Units. The note component will trade as a unit with the new purchase contract component of the New PEPS Units, and the treasury security component will trade as a unit with the new purchase contract component of the Treasury Units. In addition, if Treasury Units or notes are separately traded to a sufficient extent that the applicable exchange listing requirements are met, we will endeavor to cause the Treasury Units or notes to be listed on the exchange on which the New PEPS Units are then listed, including, if applicable, the NYSE.

Repurchase of the New PEPS Units

      We may purchase from time to time any of the New PEPS Units offered by this prospectus that are then outstanding by tender, in the open market, by private agreement or otherwise.

Tax Treatment

      We covenant and agree and, by exchanging your Outstanding PEPS Unit for a New PEPS Unit, a holder will have covenanted and agreed, for U.S. federal income tax purposes, (i) to treat a holder’s acquisition of the New PEPS Units as the acquisition of the notes and new 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 new 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.

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DESCRIPTION OF THE NEW PURCHASE CONTRACTS

General

      The following description is a summary of some of the terms of the new purchase contracts. The new purchase contracts will be issued pursuant to the new purchase contract agreement between us and JPMorgan Chase Bank, as purchase contract agent. The description of the new purchase contracts and the new purchase contract agreement in this prospectus contain a summary of their material terms but do not purport to be complete, and reference is hereby made to the form of the new purchase contract agreement that is filed as an exhibit to the registration statement.

      On the business day immediately preceding May 18, 2004, unless:

• a holder has settled early the related new purchase contracts by delivery of cash to the purchase contract agent, in the case of New PEPS Units, on or prior to May 7, 2004, and in the case of Treasury Units, on or prior to May 14, 2004 in the manner described under “—Early Settlement;”

• a holder of New PEPS Units that include notes has settled the related new purchase contracts with separate cash prior to or on May 10, 2004 pursuant to prior notice given in the manner described under “—Notice to Settle with Cash;”

• a holder of New PEPS Units has had the notes related to the holder’s new purchase contracts successfully remarketed in the manner described under “—Remarketing” below;

• an event described under “—Termination” has occurred,

      then,

• in the case of New PEPS Units, we will exercise our rights as a secured party to dispose of the notes in accordance with applicable law; and

• in the case of Treasury Units, the principal amount of the related treasury securities, when paid at maturity, will automatically be applied to satisfy in full the holder’s obligation to purchase common stock under the related new purchase contracts.

      The common stock will then be issued and delivered to the holder or the holder’s designee, upon presentation and surrender of the certificate evidencing the New PEPS Units or Treasury Units and payment by the holder of any transfer or similar taxes payable in connection with the issuance of the common stock to any person other than the holder.

      Each new purchase contract that is a part of a New PEPS Unit or a Treasury Unit will obligate its holder to purchase, and PPL Corporation to sell, on the new purchase contract settlement date (unless the new purchase contract terminates prior to that date or is settled early at the holder’s option), a number of shares of our common stock equal to the settlement rate, for $25 in cash. The number of shares of our common stock issuable upon settlement of each new purchase contract on the new purchase contract settlement date (which we refer to as the “settlement rate”) will be determined by us as follows, subject to adjustment as described under “—Anti-Dilution Adjustments” below:

• if the average of the closing prices of our common stock over the 20 trading-day period ending on the third trading day prior to the new purchase contract settlement date of May 18, 2004 multiplied by 1.017 is equal to or greater than $65.03, the “threshold appreciation price,” the settlement rate will be 0.3910;

• if the average of the closing prices of our common stock over the 20 trading-day period ending on the third trading day prior to the new purchase contract settlement date of May 18, 2004 multiplied by 1.017 is less than $65.03 but greater than $53.30, the closing price of our common stock at time of sale of Outstanding PEPS Units, or the “reference price,” the settlement rate will be a number of shares having a value, based on the 20-trading day average closing prices, equal to $25; and

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• if the average of the closing prices of our common stock over the 20 trading-day period ending on the third trading day prior to the new purchase contract settlement date of May 18, 2004 multiplied by 1.017 is less than or equal to the reference price of $53.30, the settlement rate will be 0.4770.

      Except under the limited circumstances described under “—Anti-Dilution Adjustments,” if you elect to settle your new purchase contract early, the number of shares of our common stock issuable upon settlement of such new purchase contract will be 0.3910.

      For illustrative purposes only, the following table shows the fraction of a share of our common stock issuable upon settlement of each new purchase contract at various assumed values for the average of the closing prices of our common stock on the 20 trading days ending on the third trading day prior to the new purchase contract settlement date of May 18, 2004, which we call the “applicable market value.” The $65.03 threshold appreciation price represents an appreciation of 22% above the reference price of $53.30. The table assumes that there will be no adjustments to the settlement rate described under “—Anti-Dilution Adjustments” below. We cannot assure you that the actual applicable market value will be within the range set forth below. A holder of a New PEPS Unit or a Treasury Unit will receive on the new purchase contract settlement date, in settlement of each new purchase contract, the following fractions of a share of our common stock at the following assumed applicable market values:

Assumed Applicable	Fraction of a Share of
Market Value	Our Common Stock
$25		0.4770
$30		0.4770
$35		0.4770
$40		0.4770
$45		0.4770
$50		0.4770
$55		0.4545
$60		0.4167
$65		0.3910
$70		0.3910
$75		0.3910
$80		0.3910

      As the above table illustrates, if, on the new purchase contract settlement date of May 18, 2004, the applicable market value of a share of our common stock multiplied by 1.017 is greater than or equal to the threshold appreciation price of $65.03, we would be obligated to deliver 0.3910 shares of our common stock for each new purchase contract. As a result, the holder would receive 81.97% of the appreciation in the market value of the shares of our common stock underlying each new purchase contract above $63.94. If, on the new purchase contract settlement date, the applicable market value of a share of our common stock multiplied by 1.017 is less than the threshold appreciation price of $65.03 but greater than the reference price of $53.30, we would be obligated to deliver a number of shares of our common stock having a value, based on the applicable market value, equal to $25 and we would retain all appreciation in the market value of the shares of our common stock underlying each new purchase contract for that period. If, on the new purchase contract settlement date, the applicable market value of a share of our common stock multiplied by 1.017 is less than or equal to the reference price of $53.30, we would be obligated to deliver in settlement of the new purchase contract 0.4770 shares of our common stock for each new purchase contract, regardless of the market price of the shares of our common stock. As a result, the holder would realize the entire loss on the decline in market value of the shares of our common stock underlying each new purchase contract for that period.

      The term “closing price” of shares of our common stock means, on any date of determination (1) the closing sale price (or, if no closing sale price is reported, the reported last sale price) of shares of our common stock on the NYSE on such date or, if shares of our common stock are not listed for trading on the NYSE on any such date, the closing sale price as reported in the composite transactions for the principal United States securities

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exchange on which the shares of our common stock are so listed, or if shares of our common stock are not so listed on a United States national or regional securities exchange, as reported by the Nasdaq National Market or (2) if shares of our common stock are not so reported, the last quoted bid price for the shares of our common stock in the over-the-counter market as reported by the National Quotation Bureau or a similar organization, or, if such bid price is not available, the average of the mid-point of the last bid and ask prices of shares of our common stock on such date from at least three nationally recognized independent investment banking firms retained for this purpose by us.

      The term “trading day” means a day on which the shares of our common stock (1) are 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 shares of our common stock.

      We will not issue any fractional shares of our common stock upon settlement of a new purchase contract. Instead of a fractional share, the holder will receive an amount of cash equal to such fraction multiplied by the applicable market value. If, however, a holder surrenders for settlement at one time more than one new purchase contract, then the number of shares of our common stock issuable pursuant to such new purchase contracts will be computed based upon the aggregate number of new purchase contracts surrendered.

      Prior to the settlement of a new purchase contract, the shares of our common stock underlying each purchase contract will not be outstanding, and the holder of the new purchase contract will not have any voting rights, rights to dividends or other distributions or other rights of a holder of our common stock by virtue of holding such new purchase contract.

      By purchasing a New PEPS Unit or a Treasury Unit, a holder will be deemed to have, among other things:

• irrevocably authorized the purchase contract agent as its attorney-in-fact to enter into and perform that holder’s obligations under the related new purchase contract and pledge agreement on behalf of such holder;

• agreed to be bound by the terms and provisions of the related new purchase contract; and

• agreed to be bound by the pledge arrangement contained in the related pledge agreement.

      In addition, each holder will be deemed to have agreed to treat itself as the owner of the related note or treasury security, as the case may be, and to treat the notes of PPL Capital Funding as indebtedness for United States federal, state and local income and franchise tax purposes.

Remarketing

      Pursuant to the remarketing agreement and subject to the terms of the supplemental remarketing agreement among the remarketing agent, PPL Corporation, PPL Capital Funding and the purchase contract agent (as attorney-in-fact of the holders), remarketing of the notes will be attempted on May 11, 2004 and, if the remarketing on such date fails, on May 12, 2004 and, if the remarketing on such date fails, on May 13, 2004, the fifth, fourth and third business days immediately preceding the new purchase contract settlement date of May 18, 2004. The remarketing agent will use its reasonable efforts to obtain a price for the notes to be remarketed that results in proceeds of approximately 100.5% of the aggregate principal amount of such notes. However, remarketing will be considered successful if the resulting proceeds are at least equal to 100% of the aggregate principal amount of the notes to be remarketed.

      New PEPS Unit holders have the option to notify the purchase contract agent on or prior to May 7, 2004 of their intention to settle the related purchase contracts with separate cash and provide such cash on or prior to May 10, 2004. The notes of any holder who has failed to give this notice and deliver such cash will be remarketed on May 11, 2004, and, if necessary, on May 12, 2004, and, if necessary, on May 13, 2004.

      Upon a successful remarketing, the portion of the proceeds equal to the total principal amount of the notes will automatically be applied to satisfy in full the New PEPS Unit holders’ obligations to purchase common stock under the related new purchase contracts. If any proceeds remain after this application, the remarketing agent will

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deduct as a remarketing fee an amount not exceeding 25 basis points (0.25%) of the aggregate principal amount of the notes, and remit any remaining proceeds for the benefit of the holders. New PEPS Unit holders whose notes are remarketed will not otherwise be responsible for the payment of any remarketing fee in connection with the remarketing.

      If (1) despite using its reasonable efforts, the remarketing agent cannot remarket the related notes in a remarketing prior to or on May 13, 2004, other than to PPL Corporation, at a price equal to or greater than 100% of the aggregate principal amount of the notes, or (2) the remarketing has not occurred because a condition precedent to the remarketing has not been fulfilled, in each case resulting in a failed remarketing, we will exercise our rights as a secured party to dispose of the notes that have been pledged to us through the collateral agent to secure your obligation under the related new purchase contracts in accordance with applicable law and such disposition will be deemed to satisfy in full each holder’s obligation to purchase our common stock under the related purchase contracts. In addition, holders of notes that are not pledged to us and remain outstanding after a failed remarketing will have the right to put their notes to us, in whole or in part, for an amount equal to the principal amount of their notes being put, plus accrued and unpaid interest, on May 18, 2004, which we call the put exercise date, by notifying the indenture trustee prior to 5:00 p.m., New York City time, on May 14, 2004.

      If there is no successful remarketing on May 11, 2004, we 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, we 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, we 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 New York City, which is expected to be The Wall Street Journal. In addition, PPL Corporation will request, not later than seven nor more than 15 calendar days prior to May 11, 2004, that DTC notify its participants holding notes, New PEPS Units and Treasury Units of the remarketings to take place on May 11, 2004, and, if necessary, on May 12 and, if necessary, on May 13, 2004.

      If required, we will endeavor to ensure that a registration statement with regard to the full amount of the notes to be remarketed will be effective in a form that will enable the remarketing agent to rely on it in connection with the remarketing process. If the registration statement is not effective as described in the preceding sentence or if we are unable to deliver a current prospectus in connection with the remarketing, we will use reasonable best efforts to assist the remarketing agent in conducting the remarketing pursuant to an exemption from the registration requirements, if such exemption is available.

Remarketing Agent

      The remarketing agent will be Morgan Stanley & Co. Incorporated. PPL Corporation, PPL Capital Funding and the remarketing agent will enter into the supplemental remarketing agreement which provides, among other things, that Morgan Stanley & Co. Incorporated will act as the exclusive remarketing agent and will use reasonable efforts to remarket notes tendered. Under certain circumstances, some portion of the notes tendered in the remarketing may be purchased by the remarketing agent.

      The supplemental remarketing agreement provides that the remarketing agent will incur no liability to PPL Corporation or PPL Capital Funding, Inc. or to any holder of New PEPS Units or notes in its individual capacity or as remarketing agent for any action or failure to act in connection with a remarketing or otherwise, except as a result of the negligence or willful misconduct on its part.

      We have agreed to indemnify the remarketing agent against certain liabilities, including liabilities under the Securities Act of 1933, arising out of or in connection with its duties under the remarketing agreement.

      The supplemental remarketing agreement also will provide that the remarketing agent may resign and be discharged from its duties and obligations under the remarketing agreement. No such resignation, however, will

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become effective unless a nationally recognized broker-dealer has been appointed by us as successor remarketing agent and that successor remarketing agent has entered into a remarketing agreement with us. In such case, we will use reasonable efforts to appoint a successor remarketing agent and enter into a remarketing agreement with such person as soon as reasonably practicable.

Early Settlement

      A holder of New PEPS Units may settle a new purchase contract at any time on or prior to 5:00 p.m., New York City time on May 7, 2004, only in integral multiples of 40 new purchase contracts, by delivering to the purchase contract agent (1) a completed “Election to Settle Early” form and (2) a cash payment in the form of a wire transfer of immediately available funds payable to, or upon the order of, PPL Corporation in an amount equal to:

• $25 times the number of new purchase contracts being settled; plus

• if the delivery is made with respect to any new purchase contract 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 the payment date with respect to the new purchase contract.

      If you are a Treasury Unit holder you may settle your new purchase contracts early only in integral multiples of 40 new purchase contracts at any time on or prior to May 14, 2004, by delivering to the purchase contract agent (1) a completed “Election to Settle Early” form and (2) a cash payment in immediately available funds of an amount equal to:

• $25 times the number of new purchase contracts being settled; plus

• if the delivery is made with respect to any new purchase contract 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 the payment date with respect to the new purchase contract.

      Upon early settlement, we will sell, and the holder will be entitled to buy, 0.3910 shares of our common stock for each new purchase contract being settled (regardless of the market price of one share of our common stock on the date of early settlement), subject to adjustment under the circumstances described under “—Anti-Dilution Adjustments” below. We will cause (1) the shares of our common stock to be delivered and (2) the related note or treasury security, as the case may be, securing such new purchase contracts to be released from the pledge under the pledge agreement, and, within three business days following the settlement date, each will be transferred to the purchase contract agent for delivery to the holder. The holder’s right to receive future contract adjustment payments will terminate, and no adjustment will be made to or for the holder on account of any amounts accrued in respect of contract adjustment payments.

      If the purchase contract agent receives a completed “Election to Settle Early” and payment of $25 for each new purchase contract being settled earlier than 5:00 p.m., New York City time, on any business day, then that day will be considered the settlement date. If the purchase contract agent receives the foregoing on or after 5:00 p.m., New York City time, on any business day or at any time on a day that is not a business day, then the next business day will be considered the settlement date. As long as the New PEPS Units or Treasury Units, as applicable, are evidenced by one or more global New PEPS Unit or Treasury Unit certificates deposited with DTC, procedures for early settlement also will be governed by standing arrangements between DTC and the purchase contract agent.

      The early settlement right is subject to the condition that, if required under the United States federal securities laws, we have a registration statement under the Securities Act of 1933 in effect covering the common stock deliverable upon settlement of a new purchase contract. We have agreed that, if required under the United States federal securities laws, we will use our reasonable best efforts to (1) have in effect a registration statement covering the common stock deliverable upon settlement of a new purchase contract and (2) provide a prospectus in connection therewith, in each case in a form that may be used in connection with the early settlement right.

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Notice to Settle with Cash

      A holder of New PEPS Units may settle the related new purchase contract with separate cash on May 10, 2004. A holder of a New PEPS Unit wishing to settle the related new purchase contract with cash must notify the purchase contract agent by delivering the New PEPS Unit certificate evidencing the New PEPS Unit at the offices of the purchase contract agent with the “Notice to Settle with Cash” prior to 5:00 p.m., New York City time, on May 7, 2004. If you hold a Treasury Unit, you have until 5:00 p.m., New York City time, on May 14, 2004 to deliver your “Notice to Settle with Cash.” Holders of New PEPS Units or Treasury Units may only settle new purchase contracts in integral multiples of 40 new purchase contracts.

      The holder must also deliver to the securities intermediary a cash payment in the form of a wire transfer of immediately available funds payable to, or upon the order of the securities intermediary. Such payment must be delivered, in the case of New PEPS Units, prior to 5:00 p.m., New York City time, on May 10, 2004. If you hold a Treasury Unit, you have until 5:00 p.m., New York City time, on May 17, 2004 to deliver your payment.

      Upon receipt of the cash payment, the related note or treasury security, as the case may be, will be released from the pledge arrangement and transferred to the purchase contract agent for distribution to the holder of the related New PEPS Units or Treasury Units, as the case may be. The holder of the New PEPS Unit or Treasury Units, as the case may be will then receive the applicable number of shares of our common stock on the new purchase contract settlement date.

      If a holder that has given notice of its intention to settle with cash fails to deliver the cash by the applicable time and date specified above, such holder’s note will automatically be remarketed if a successful remarketing takes place. Otherwise, we will exercise our right as a secured party to dispose of, in accordance with applicable law, the related note, and such disposition will be deemed to satisfy in full the holder’s obligation to purchase common stock under the related new purchase contracts.

      Any cash received by the securities intermediary upon cash settlement will be invested promptly in permitted investments, as defined in the pledge agreement (including, as more fully described in the pledge agreement, certain indebtedness issued by the United States of America, certain deposits of any institution which is a member of the Federal Reserve System, certain investments in commercial paper having a rating at the time of purchase at least equal to “A-1” by Standard & Poor’s Ratings Services or at least equal to “P-1” by Moody’s Investors Service, Inc. and certain investments in money market funds rated in the highest applicable rating category by Standard & Poor’s Ratings Services or Moody’s Investors Service, Inc.), and paid to us on the new purchase contract settlement date. Any funds received by the securities intermediary in excess of the funds necessary to settle the new purchase contracts in respect of the investment earnings from such investments will be distributed to the purchase contract agent for payment to the holders who settled with cash.

Contract Adjustment Payments

      Contract adjustment payments in respect of New PEPS Units and Treasury Units will be fixed at a rate per year of 0.46% of the stated amount per new purchase contract. Contract adjustment payments payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. Contract adjustment payments will accrue from August 18, 2003 (the last date on which contract adjustment payments were paid on the Outstanding PEPS Units) and will be payable quarterly in arrears on November 18, 2003, February 18, 2004 and May 18, 2004.

      Contract adjustment payments will be payable to the holders of new purchase contracts as they appear on the books and records of the purchase contract agent on the close of business on the 15th day (whether or not a business day) prior to the relevant payment date, except that when either the New PEPS Units or the Treasury Units are represented by global security certificates held by the depositary, the record date will be one business day prior to the interest payment date.

      These distributions will be paid through the purchase contract agent, who will hold amounts received in respect of the contract adjustment payments for the benefit of the holders of the new purchase contracts relating to the New PEPS Units and Treasury Units. Subject to any applicable laws and regulations, each such payment will be made as described under “Book Entry Systems.”

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      If any date on which contract adjustment payments are to be made on the new purchase contracts related to the New PEPS Units and Treasury Units is not a business day, then payment of the contract adjustment payments payable on that date will be made on the next succeeding day which is a business day, and no interest or payment will be paid in respect of the delay.

      Our obligations with respect to contract adjustment payments will be subordinated and junior in right of payment to our obligations under any of our senior indebtedness.

Anti-Dilution Adjustments

      The formula for determining the settlement rate will be adjusted if certain events occur, including:

• the payment of dividends (and other distributions) on our common stock made in our common stock;

• the issuance to all holders of our common stock of rights, warrants or options entitling them, for a period of up to 45 days, to subscribe for or purchase our common stock at less than the “current market price,” as defined below, of our common stock;

• subdivisions, splits or combinations of our common stock;

• distributions to all holders of our common stock of evidences of PPL Corporation indebtedness, shares of capital stock, securities, cash or property (excluding any dividend or distribution covered by the first and second bullets above and any dividend or distribution paid exclusively in cash);

• distributions consisting exclusively of cash to all holders of our common stock after June 30, 2003, excluding any quarterly cash dividend on our common stock to the extent that the aggregate cash dividend per share of our common stock in any fiscal quarter does not exceed $0.265, and excluding any dividend or distribution in connection with a liquidation, dissolution or termination of PPL Corporation (if an adjustment is required to be made as set forth in this clause as a result of a distribution (1) that is a quarterly dividend, such an adjustment would be based on the amount by which such dividend exceeds $0.265 or (2) that is not a quarterly dividend, such an adjustment would be based on the full amount of such distribution); and

• the successful completion of a tender or exchange offer made by PPL Corporation or any of its subsidiaries for its common stock that involves an aggregate consideration having a fair market value that, when combined with (a) any cash and the fair market value of other consideration payable in respect of any tender or exchange offer by PPL Corporation or any of its subsidiaries for its common stock concluded within the preceding 12 months and (b) the aggregate amount of any all-cash distributions to all holders of our common stock made within the preceding 12 months exceeds 15% of PPL Corporation’s aggregate market capitalization on the expiration of such tender or exchange offer.

      The term “current market price” per share of our common stock on any day means the average of the daily closing prices for the five consecutive trading days selected by us commencing not more than 30 trading days before, and ending not later than, the earlier of the day in question and the day before the “ex date” with respect to the issuance or distribution requiring such computation. For purposes of this paragraph, the term “ex date,” when used with respect to any issuance or distribution, will mean the first date on which the shares of our common stock trade on the applicable exchange or in the applicable market without the right to receive such issuance or distribution.

      The adjustments for cash distributions set forth under the fifth bullet point above will be measured for the fiscal quarters commencing after June 30, 2003 in order to track the adjusted settlement rates on the Outstanding PEPS Units.

      In the case of certain reclassifications, consolidations, mergers, sales or transfers of assets or other transactions pursuant to which our common stock is converted into the right to receive other securities, cash or property, each new purchase contract then outstanding would become, without the consent of the holder of the related New PEPS Unit or Treasury Unit, as the case may be, a contract to purchase only the kind and amount of securities, cash and other property receivable upon consummation of the transaction by a holder of the number of

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shares that would have been received by the holder of the related New PEPS Unit or Treasury Unit if the new purchase contract settlement date had occurred immediately prior to the date of consummation of such transaction.

      In the case of PPL Corporation’s consolidation with or merger into any other person, any merger of another person into PPL Corporation (other than a merger that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of our common stock) in which 30% or more of the total consideration paid to PPL Corporation’s shareholders consists of cash or cash equivalents, you may settle your new purchase contract with cash, only in integral multiples of 40 new purchase contracts, during the one-week period beginning on the twenty-third trading day following the closing date of the merger at the applicable settlement rate. For this purpose, the twenty-third trading day after the closing date of the merger will be deemed to be the “new purchase contract settlement date” for the purpose of determining the “applicable market value.” The merger early settlement right is subject to the condition that, if required under the United States federal securities laws, we have a registration statement under the Securities Act of 1933 in effect covering the common stock deliverable upon settlement of a new purchase contract. We have agreed that, if required under the United States federal securities laws, we will use our reasonable best efforts to (1) have in effect a registration statement covering the common stock deliverable upon settlement of a new purchase contract and (2) provide a prospectus in connection therewith, in each case in a form that may be used in connection with the merger early settlement right.

      If at any time PPL Corporation makes a distribution of property to holders of its common stock that would be taxable to such shareholders as a dividend for United States federal income tax purposes (i.e., distributions of evidences of PPL Corporation’s indebtedness or assets, but generally not stock dividends or rights to subscribe for capital stock) and, pursuant to the settlement rate adjustment provisions of the new purchase contract agreement, the settlement rate is increased, such increase may give rise to a taxable dividend to holders of the New PEPS Units and Treasury Units. See “United States Federal Income Tax Considerations— Ownership of the New PEPS Units— New Purchase Contracts— Adjustment to Settlement Rate” in this prospectus.

      In addition, we may make such increases in the settlement rate as we deem advisable in order to avoid or diminish any income tax to holders of our common stock resulting from any dividend or distribution of our common stock (or rights to acquire our common stock) or from any event treated as such for income tax purposes or for any other reason.

      Adjustments to the settlement rate will be calculated to the nearest 1/10,000th of a share. No adjustment in the settlement rate will be required unless such adjustment would require an increase or decrease of at least 1% in the settlement rate; provided that any adjustments not made by reason of the foregoing will be carried forward and taken into account in any subsequent adjustment.

      Whenever the settlement rate is adjusted, PPL Corporation must deliver to the purchase contract agent a certificate setting forth the settlement rate, detailing the calculation of the settlement rate and describing the facts upon which the adjustment is based. In addition, PPL Corporation must notify the holders of the New PEPS Units and Treasury Units in writing of the adjustment within ten business days of any event requiring such adjustment and describe in reasonable detail the method by which the settlement rate was adjusted.

      Each adjustment to the settlement rate will result in a corresponding adjustment to the number of shares of our common stock issuable upon early settlement of a new purchase contract.

      If an adjustment is made to the settlement rate, an adjustment also will be made to the applicable market value solely to determine which settlement rate will be applicable on the purchase contract settlement date.

Termination

      The new purchase contracts and the obligations and rights of PPL Corporation and of the holders of the New PEPS Units and Treasury Units thereunder (including the holders’ obligation and right to purchase and receive shares of our common stock and the right to receive accrued contract adjustment payments) will terminate automatically upon the occurrence of certain events of bankruptcy, insolvency or reorganization with respect to PPL Corporation. Upon such termination, the collateral agent will release the related interests in the notes or

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treasury securities, as the case may be, from the pledge arrangement and cause the securities intermediary to transfer such interests in the notes or treasury securities to the purchase contract agent for distribution to the holders of the New PEPS Units and Treasury Units. If a holder would otherwise have been entitled to receive less than $1,000 principal amount at maturity of any treasury security upon termination of the purchase contract, the purchase contract agent will dispose of the security for cash and pay the cash to the holder. Upon such termination, however, such release and distribution may be subject to a delay. In the event that PPL Corporation becomes the subject of a case under the U.S. Bankruptcy Code, such delay may occur as a result of the automatic stay under the U.S. Bankruptcy Code and continue until such automatic stay has been lifted.

Pledged Securities and Pledge

      The notes that are a part of the New PEPS Units or, if substituted, the treasury securities that are a part of the Treasury Units, collectively, the “pledged securities,” will be pledged to the collateral agent for our benefit pursuant to the pledge agreement to secure your obligation to purchase shares of our common stock under the related new purchase contracts. The rights of the holders of the New PEPS Units and Treasury Units with respect to such pledged securities will be subject to PPL Corporation’s security interest therein. No holder of New PEPS Units or Treasury Units will be permitted to withdraw the pledged securities related to such New PEPS Units or Treasury Units from the pledge arrangement except:

• in the case of a New PEPS Unit, to substitute a treasury security for the related note;

• in the case of a Treasury Unit, to substitute a note for the related treasury security (for this bullet point and the one above, as provided for under “Description of the New Equity Units— Creating Treasury Units by Substituting a Treasury Security for a Note” and “—Recreating New PEPS Units” in this prospectus); and

• upon early settlement, settlement for cash or termination of the related new purchase contracts.

      Subject to PPL Corporation’s security interest and the terms of the new purchase contract agreement and the pledge agreement, each holder of New PEPS Units will be entitled, through the purchase contract agent and the collateral agent, to all of the proportional rights and preferences of the related notes (including distribution, voting, redemption, repayment and liquidation rights), and each holder of Treasury Units will retain beneficial ownership of the related treasury securities pledged in respect of the related new purchase contracts. PPL Corporation will have no interest in the pledged securities other than its security interest.

      Upon receipt of distributions on the pledged securities, the securities intermediary will distribute such payments to the purchase contract agent, which in turn will distribute those payments, together with contract adjustment payments received from us, to the holders in whose names the New PEPS Units or Treasury Units are registered at the close of business on the record date preceding the date of such distribution.

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CERTAIN PROVISIONS OF THE NEW PURCHASE CONTRACTS, THE NEW PURCHASE CONTRACT AGREEMENT AND THE PLEDGE AGREEMENT

General

      Payments on the New PEPS Units and Treasury Units will be payable, the new purchase contracts will be settled and transfers of the New PEPS Units and Treasury Units will be registrable at the office of the purchase contract agent in the Borough of Manhattan, New York City. In addition, if the New PEPS Units or Treasury Units do not remain in book-entry form, we have the option to make payments on the New PEPS Units and Treasury Units by check mailed to the address of the person entitled thereto as shown on the security register.

      No service charge will be made for any registration of transfer or exchange of the New PEPS Units or Treasury Units, except for any tax or other governmental charge that may be imposed in connection therewith.

Modification

      Subject to certain limited exceptions, neither we nor the purchase contract agent may modify the terms of the new purchase contracts or the new purchase contract agreement without the consent of the holders of not less than a majority of the outstanding new purchase contracts, except that no such modification may, without the consent of the holder of each outstanding new purchase contract affected thereby:

• change any payment date;

• change the amount or type of collateral required to be pledged to secure a holder’s obligations under the new purchase contract, impair the right of the holder of any new purchase contract to receive distributions on such collateral, or otherwise adversely affect the holder’s rights in or to such collateral;

• reduce any contract adjustment payment or change any place where, or the coin or currency in which, any contract adjustment payment is payable

• impair the right to institute suit for the enforcement of a new purchase contract or any contract adjustment payment;

• reduce the number of shares of our common stock purchasable under a new purchase contract, increase the purchase price of the shares of our common stock on settlement of any new purchase contract, change the new purchase contract settlement date or otherwise adversely affect the holder’s rights under a new purchase contract; or

• reduce the above-stated percentage of outstanding new purchase contracts whose holders’ consent is required for the modification or amendment of the provisions of the new purchase contracts, the new purchase contract agreement or the pledge agreement;

provided that if any amendment or proposal would adversely affect only the New PEPS Units or only the Treasury Units, then only the affected voting group of holders will be entitled to vote on such amendment or proposal, and such amendment or proposal will not be effective except with the consent of the holders of not less than a majority of such voting group or, if referred to in the first through sixth bullets above, all of the holders of such voting group.

      Subject to certain limited exceptions, we, the collateral agent, the securities intermediary and the purchase contract agent may not modify the terms of the pledge agreement without the consent of the holders of not less than a majority of the outstanding purchase contracts, except that no such modification may, without the consent of the holder of each outstanding purchase contract affected thereby:

• change the amount or type of collateral required to be pledged to secure a holder’s obligations under the new purchase contract, impair the right of the holder of any new purchase contract to receive interest payments on such collateral or otherwise adversely affect the holder’s rights in or to such collateral;

• otherwise effect any action that under the new purchase contract agreement would require the consent of the holders of each outstanding new purchase contract affected thereby; or

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• reduce the above-stated percentage of outstanding new purchase contracts whose holders’ consent is required for the modification or amendment;

provided that if any amendment or proposal would adversely affect only the New PEPS Units or only the Treasury Units, then only the affected voting group of holders will be entitled to vote on such amendment or proposal, and such amendment or proposal will not be effective except with the consent of the holders of not less than a majority of such voting group or, if referred to in the first through third bullets above, all of the holders of such voting group.

      If three or more holders apply in writing to the purchase contract agent, and furnish to the purchase contract agent reasonable proof that each such applicant has owned a New PEPS Unit or a Treasury Unit 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 the purchase contract agreement or under the New PEPS Unit or a Treasury Unit, as the case may be, 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.

No Consent to Assumption

      Each holder of a New PEPS Unit or a Treasury Unit will be deemed under the terms of the new purchase contract agreement, by the purchase of such New PEPS Unit or Treasury Unit, to have expressly withheld any consent to the assumption (i.e., affirmance) of the related new purchase contracts by PPL Corporation, its receiver, liquidator or trustee in the event that PPL Corporation becomes the subject of a case under the U.S. Bankruptcy Code or other similar state or federal law providing for reorganization or liquidation.

Merger, Sale or Lease

      PPL Corporation will covenant in the new purchase contract agreement that it will not merge, consolidate or enter into a share exchange with any other entity or sell, assign, transfer, lease or convey all or substantially all of its properties and assets to any other entity or group of affiliated entities unless:

• either PPL Corporation is the continuing corporation or the successor corporation is a corporation organized under the laws of the United States of America, a state thereof or the District of Columbia and such corporation expressly assumes all of PPL Corporation’s obligations under the new purchase contracts, the new purchase contract 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 collateral agent by such corporation; and

• PPL Corporation or such successor corporation is not, immediately after such merger, consolidation, sale, assignment, transfer, lease or conveyance, in default in the performance of any covenant or condition under any of the new purchase contracts, the new purchase contract agreement or the pledge agreement.

Governing Law

      The new purchase contracts, the new purchase contract agreement and the pledge agreement will be governed by, and construed in accordance with, the laws of the State of New York.

Information Concerning the Purchase Contract Agent

      JPMorgan Chase Bank will be the purchase contract agent. The purchase contract agent will act as the agent for the holders of the New PEPS Units and Treasury Units. The purchase contract agent will not be obligated to take any discretionary action in connection with a default under the terms of the New PEPS Units, the Treasury Units or the new purchase contract agreement.

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      JPMorgan Chase Bank and its affiliates maintain banking relationships with us.

      The new purchase contract agreement will contain provisions limiting the liability of the purchase contract agent. The new purchase contract agreement also will contain provisions under which the purchase contract agent may resign or be replaced. Such resignation or replacement will be effective upon the appointment of a successor.

Information Concerning the Collateral Agent

      JPMorgan Chase Bank will be the collateral agent. The collateral agent will act solely as our agent and will not assume any obligation or relationship of agency or trust for or with any of the holders of the New PEPS Units and the Treasury Units except for the obligations owed by a pledgee of property to the owner thereof under the pledge agreement and applicable law.

      JPMorgan Chase Bank and its affiliates maintain banking relationships with us.

      The pledge agreement will contain provisions limiting the liability of the collateral agent. The pledge agreement also will contain provisions under which the collateral agent may resign or be replaced. Such resignation or replacement will be effective upon the appointment of a successor.

Information Concerning the Securities Intermediary

      JPMorgan Chase Bank will be the securities intermediary. All property delivered to the securities intermediary pursuant to the new purchase contract agreement or the pledge agreement will be credited to a collateral account established by the securities intermediary for the collateral agent. The securities intermediary will treat the purchase contract agent as entitled to exercise all rights relating to any financial asset credited to such collateral account, subject to the provisions of the pledge agreement.

      JPMorgan Chase Bank and its affiliates maintain banking relationships with us.

Information Concerning the Custodial Agent

      JPMorgan Chase Bank will be the custodial agent. The custodial agent will act solely as our agent and will not assume any obligation or relationship of agency or trust for holders of notes that are not components of New PEPS Units.

      JPMorgan Chase Bank and its affiliates maintain banking relationships with us.

      The pledge agreement will contain provisions limiting the liability of the custodial agent.

Miscellaneous

      The new purchase contract agreement will provide that we will pay all fees and expenses related to (1) the retention of the collateral agent and the securities intermediary and (2) the enforcement by the purchase contract agent of the rights of the holders of the New PEPS Units and Treasury Units. Holders who elect to substitute the related pledged securities, thereby creating Treasury Units or recreating New PEPS Units, however, will be responsible for any fees or expenses payable in connection with such substitution, as well as for any commissions, fees or other expenses incurred in acquiring the pledged securities to be substituted. We will not be responsible for any such fees or expenses.

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BOOK-ENTRY SYSTEM

      The Depository Trust Company, or DTC, which we refer to along with its successors in this capacity as the depositary, will act as securities depositary for the New PEPS Units and Treasury Units. The New PEPS Units and Treasury Units will be issued only as fully registered securities registered in the name of Cede & Co., the depositary’s nominee. One or more fully registered global security certificates, representing the total aggregate number of New PEPS Units and Treasury Units, will be issued and will be deposited with the depositary and will bear a legend regarding the restrictions on exchanges and registration of transfer referred to below.

      The laws of some jurisdictions may require that some purchasers of securities take physical delivery of securities in definitive form. These laws may impair the ability to transfer beneficial interests in the New PEPS Units and Treasury Units so long as the New PEPS Units and Treasury Units are represented by global security certificates.

      The depositary is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. The depositary holds securities that its participants deposit with the depositary. The depositary also facilitates the settlement among participants of securities transactions, including transfers and pledges, in deposited securities through electronic computerized book-entry changes in participants’ accounts, thereby eliminating the need for physical movement of securities certificates. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. The depositary is owned by a number of its direct participants and by the NYSE, the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the depositary’s system is also available to others, including securities brokers and dealers, banks and trust companies that clear transactions through or maintain a direct or indirect custodial relationship with a direct participant either directly, or indirectly. The rules applicable to the depositary and its participants are on file with the SEC.

      Although the depositary has agreed to the foregoing procedures in order to facilitate transfer of interests in the global security certificates among participants, the depositary is under no obligation to perform or continue to perform these procedures, and these procedures may be discontinued at any time. We will not have any responsibility for the performance by the depositary or its direct participants or indirect participants under the rules and procedures governing the depositary.

      In the event that

• the depositary notifies us that it is unwilling or unable to continue as a depositary for the global security certificates and no successor depositary has been appointed within 90 days after this notice,

• the depositary at any time ceases to be a clearing agency registered under the Securities Exchange Act when the depositary is required to be so registered to act as the depositary and no successor depositary has been appointed within 90 days after we learn that the depositary has ceased to be so registered, or

• we, in our sole discretion, determine that we will no longer have units represented by global securities,

certificates for the New PEPS Units and Treasury Units will be printed and delivered in exchange for beneficial interests in the global security certificates. Any global New PEPS Unit or Treasury Units that is exchangeable pursuant to the preceding sentence will be exchangeable for New PEPS Unit or Treasury Unit certificates, as the case may be, registered in the names directed by the depositary. We expect that these instructions will be based upon directions received by the depositary from its participants with respect to ownership of beneficial interests in the global security certificates.

      As long as the depositary or its nominee is the registered owner of the global security certificates, the depositary or its nominee, as the case may be, will be considered the sole owner and holder of the global security certificates and all New PEPS Units and Treasury Units represented by these certificates for all purposes under the New PEPS Units, Treasury Units and the purchase contract agreement. Except in the limited circumstances referred to above, owners of beneficial interests in global security certificates

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• will not be entitled to have the global security certificates, the New PEPS Units or the Treasury Units represented by these certificates registered in their names,

• will not receive or be entitled to receive physical delivery of New PEPS Unit or Treasury Unit certificates in exchange for beneficial interests in global security certificates, and

• will not be considered to be owners or holders of the global security certificates or any New PEPS Units or Treasury Units represented by these certificates for any purpose under the New PEPS Units , Treasury Units or the purchase contract agreement.

      All payments on the New PEPS Units and Treasury Units represented by the global security certificates and all transfers and deliveries of related notes, Treasury securities and common stock will be made to the depositary or its nominee, as the case may be, as the holder of the securities.

      Ownership of beneficial interests in the global security certificates will be limited to participants or persons that may hold beneficial interests through institutions that have accounts with the depositary or its nominee. Ownership of beneficial interests in global security certificates will be shown only on, and the transfer of those ownership interests will be effected only through, records maintained by the depositary or its nominee, with respect to participants’ interests, or any participant, with respect to interests of persons held by the participant on their behalf. Procedures for settlement of purchase contracts on May 18, 2004, or upon early settlement will be governed by arrangements among the depositary, participants and persons that may hold beneficial interests through participants designed to permit settlement without the physical movement of certificates. Payments, transfers, deliveries, exchanges and other matters relating to beneficial interests in global security certificates may be subject to various policies and procedures adopted by the depositary from time to time. None of PPL Corporation, PPL Capital Funding, the purchase contract agent or any agent of PPL Corporation, PPL Capital Funding or the purchase contract agent will have any responsibility or liability for any aspect of the depositary’s or any participant’s records relating to, or for payments made on account of, beneficial interests in global security certificates, or for maintaining, supervising or reviewing any of the depositary’s records or any participant’s records relating to these beneficial ownership interests.

      The information in this section concerning the depositary and its book-entry system has been obtained from sources that we believe to be reliable, but we have not attempted to verify the accuracy of this information.

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DESCRIPTION OF THE NOTES

      The notes will be issued under the indenture dated as of November 1, 1997 and a related supplemental indenture number 5 to be dated upon the issuance date of the notes.

      The descriptions in this prospectus contain a description of the material terms of the notes and the indenture but do not purport to be complete, and reference is hereby made to the indenture and the form of note that are filed as exhibits to the registration statement and to the Trust Indenture Act.

General

      The notes will be issued as a separate series under supplemental indenture number 5 in a maximum aggregate principal amount up to $575 million. The actual aggregate principal amount of the notes issued will be determined based on the results of the exchange offer. The indenture does not limit the aggregate principal of notes that we may issue under it.

      The notes will be issued in denominations of $1,000 and integral multiples of $1,000, provided, however, 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 new 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, each as described under “Description of the New Purchase Contracts”) the notes will be issuable in denominations of $25 principal amount and integral multiples thereof.

      Each New PEPS Unit includes a 1/40, or 2.5%, undivided beneficial ownership interest in a $1,000 principal amount note, and will therefore correspond to the stated amount of $25 per New PEPS Unit.

      Payment of interest and principal on the notes will be guaranteed by PPL Corporation as described under “—Guarantee.”

      The notes will not be subject to a sinking fund provision. The entire principal amount of the notes will mature and become due and payable, together with any accrued and unpaid interest thereon, on May 18, 2006. As described below under “—Right to Put the Notes,” holders will have a put right under certain circumstances.

      The indenture does not contain provisions that afford holders of the notes protection in the event PPL Capital Funding or PPL Corporation are involved in a highly leveraged transaction or other similar transaction that may adversely affect the holders.

Ranking

      From the date of issuance until May 18, 2004, the notes will be PPL Capital Funding’s direct, unsecured obligations and will rank without preference or priority among themselves and equally with all of PPL Capital Funding’s existing and future unsecured and subordinated indebtedness, subordinate and junior in right of payment to all of PPL Capital Funding’s senior indebtedness.

      On and after May 18, 2004, the notes will be PPL Capital Funding’s direct, unsecured obligations and will rank without preference or priority among themselves and equally with all of PPL Capital Funding’s existing and future unsecured and unsubordinated indebtedness, senior in right of payment to all of PPL Capital Funding’s subordinated indebtedness.

Interest

      Each note will bear interest initially at the rate of 7.29% per year from August 18, 2003 (the last date on which interest was paid on the Outstanding PEPS Units) to May 18, 2004, payable, initially, quarterly in arrears on November 18, 2003, February 18, 2004 and May 18, 2004. On and after May 18, 2004, interest on each note will be payable semi-annually in arrears on May 18 and November 18 of each year, commencing November 18, 2004, at the reset interest rate or, if the interest rate has not been reset, at the rate of 7.29% per year. The interest rate on the notes will be reset in connection with the remarketing as described below under “—Interest Rate

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Reset.” However, if there is not a successful remarketing of the notes, the interest rate will not be reset and the notes will continue to bear interest at the initial interest rate, all as described below under “—Interest Rate Reset.” Interest will be payable to the person in whose name the note is registered at the close of business on the 15th day (whether or not a business day) prior to the interest payment date, except that when either the New PEPS Units or the notes are represented by global security certificates held by the depositary, the record date will be one business day prior to the interest payment date.

      The amount of interest payable on the notes for any period will be computed (1) for any full quarterly or semi-annual period, as applicable, on the basis of a 360-day year of twelve 30-day months and (2) for any period shorter than a full quarterly or semi-annual period, as applicable, on the basis of a 30-day month and, for any period less than a month, on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which interest is payable on the notes is not a business day, then payment of the interest payable on that date will be made on the next day that is a business day (and without any interest or other payment in respect of any delay).

Remarketing

      The notes will be remarketed as described under “Description of the New Purchase Contracts—Remarketing.”

Optional Remarketing of Notes which are not Included in New PEPS Units

      On or before May 5, 2004, holders of notes that are not components of New PEPS Units may elect to have their notes remarketed in the same manner as notes that are components of New PEPS Units by delivering their notes along with a notice of this election to the custodial agent. The custodial agent will hold the notes in an account separate from the collateral account in which the pledged securities will be held. Holders of notes electing to have their notes remarketed will also have the right to withdraw the election on or before May 7, 2004.

Interest Rate Reset

      The interest rate on the notes will be reset on the date of a successful remarketing and the reset rate will become effective on May 18, 2004. If this occurs, the reset rate will be the rate determined by the remarketing agent as the annual interest rate the notes should bear in order for the notes to be remarketed to have an approximate aggregate market value on the reset date of 100.5% of the aggregate principal amount of such notes. The reset rate may be less or greater than 7.29%. However, in no event will the reset rate exceed the maximum rate permitted by applicable law.

      If the notes are not successfully remarketed, the interest rate will not be reset and the notes will continue to bear interest at the initial annual interest rate of 7.29%.

      The remarketing agent is not obligated to purchase any notes that would otherwise remain unsold in the remarketing. None of PPL Corporation, PPL Capital Funding nor the remarketing agent or any of their affiliates will be obligated in any case to provide funds to make payment upon tender of notes for remarketing.

Right to Put the Notes

      Holders of notes that are not pledged to us and remain outstanding after a failed remarketing will have the right to put their notes to us, in whole or in part, for an amount equal to the principal amount of their notes being put, plus accrued and unpaid interest, on May 18, 2004, which we call the put exercise date, by notifying the indenture trustee prior to 5:00 p.m., New York City time, on May 14, 2004.

Agreement By Purchasers of Certain Tax Treatment

      Each note will provide that, by acceptance of the note or a beneficial interest therein, you agree for United States federal income tax purposes to treat the acquisition of a New PEPS Unit as the acquisition of a unit consisting of a purchase contract and a beneficial ownership interest in a note issued by us and to treat the note as indebtedness.

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Guarantee

      PPL Corporation will unconditionally guarantee the payment of principal of and any interest on the notes, when due and payable, whether at the stated maturity date, by declaration of acceleration, put for repurchase or otherwise, in accordance with the terms of such notes and the indenture. The guarantee will remain in effect until the entire principal of and any interest on the notes has been paid in full or otherwise discharged in accordance with the provisions of the indenture.

      From the date of issuance until May 18, 2004, the guarantee of the notes will be PPL Corporation’s unsecured obligation and will rank equally with all of PPL Corporation’s existing and future, unsecured and subordinated indebtedness, subordinate and junior in right of payment to all of PPL Corporation’s senior indebtedness. On and after May 18, 2004, the guarantee of the notes will be PPL Corporation’s unsecured obligation and will rank equally with all of PPL Corporation’s existing and future unsecured and unsubordinated indebtedness, senior in right of payment to all of PPL Corporation’s subordinated indebtedness.

Events of Default

      An “Event of Default” occurs with respect to the notes if

(i)	we do not pay any interest on the notes within 30 days of the due date;
(ii)	we do not pay principal on the notes when due on the due date or on the put date;
(iii)	we remain in breach of a covenant (excluding covenants solely applicable to the notes) or warranty of the indenture for 90 days after we receive a written notice of default stating we are in breach and requiring remedy of the breach; the notice must be sent by either the trustee or holders of 25% of the principal amount of the notes and any other affected securities; the trustee or such holders can agree to extend the 90-day period and such an agreement to extend will be automatically deemed to occur if we are diligently pursuing action to correct the default;

      (iv)      the guarantee on the notes

(a)	cease to be effective (except in accordance with its terms),
(b)	is found in any judicial proceeding to be unenforceable or invalid, or
(c)	is denied or disaffirmed (except in accordance with its terms), or

(v) we file for bankruptcy or certain other events in bankruptcy, insolvency, receivership or reorganization occur.

      No Event of Default with respect to the notes necessarily constitutes an Event of Default with respect to the notes of any other series issued under the indenture.

Remedies

Acceleration

The Notes

      If an Event of Default occurs and is continuing with respect to the notes, then either the trustee or the holders of 25% in principal amount of the outstanding notes may declare the principal amount of all of the notes to be due and payable immediately.

More Than One Series

      If an Event of Default occurs and is continuing with respect to more than one series of notes issued under the indenture, then either the trustee or the holders of 25% in aggregate principal amount of the outstanding notes issued under the indenture of all such series, considered as one class, may make such declaration of acceleration. Thus, if there is more than one series affected, the action by 25% in principal amount of the notes of any particular series will not, in itself, be sufficient to make a declaration of acceleration.

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Rescission of Acceleration

      After the declaration of acceleration has been made and before the trustee has obtained a judgment or decree for payment of the money due, such declaration and its consequences will be rescinded and annulled, if

(a) we pay or deposit with the trustee a sum sufficient to pay

(1)	all overdue interest,
(2)	the principal of and any premium which have become due otherwise than by such declaration of acceleration and overdue interest thereon,
(3)	interest on overdue interest to the extent lawful, and
(4)	all amounts due to the trustee under the indenture, and

(b) all Events of Default, other than the nonpayment of the principal which has become due solely by such declaration of acceleration, have been cured or waived as provided in the indenture.

      For more information as to waiver of defaults, see “—Waiver of Default and of Compliance” below.

Control by Holders; Limitations

      Subject to the indenture, if an Event of Default with respect to the notes occurs and is continuing, the holders of a majority in principal amount of the outstanding notes will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee with respect to the notes.

      If an Event of Default is continuing with respect to more than one series of notes issued under the indenture, the holders of a majority in aggregate principal amount of the outstanding notes issued under the indenture of all such series, considered as one class, will have the right to make such direction, and not the holders of the notes of any one of such series. These rights of holders to make direction are subject to the following limitations:

(a)	the holders’ directions may not conflict with any law or the indenture, and
(b)	the holders’ directions may not involve the trustee in personal liability where the trustee believes indemnity is not adequate.

      The trustee may also take any other action it deems proper which is consistent with the holders’ direction.

      In addition, the indenture provides that no holder of any notes will have any right to institute any proceeding, judicial or otherwise, with respect to the indenture for the appointment of a receiver or for any other remedy thereunder unless

(a)	that holder has previously given the trustee written notice of a continuing Event of Default;
(b)	the holders of 25% in aggregate principal amount of the outstanding notes under the indenture of all affected series, considered as one class, have made written request to the trustee to institute proceedings in respect of that Event of Default and have offered the trustee reasonable indemnity against costs and liabilities incurred in complying with such request; and
(c)	for 60 days after receipt of such notice, the trustee has failed to institute any such proceeding and no direction inconsistent with such request has been given to the trustee during such 60-day period by the holders of a majority in aggregate principal amount of outstanding notes issued under the indenture of all affected series, considered as one class.

Furthermore, no holder will be entitled to institute any such action if and to the extent that such action would disturb or prejudice the rights of other holders.

      However, each holder has an absolute and unconditional right to receive payment when due and to bring a suit to enforce that right.

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Notice of Default

      The trustee is required to give the holders of the notes notice of any default under the indenture to the extent required by the Trust Indenture Act, unless such default has been cured or waived; except that in the case of an Event of Default of the character specified above in clause (c) under “Events of Default,” no such notice shall be given to such holders until at least 75 days after the occurrence thereof. The Trust Indenture Act currently permits the trustee to withhold notices of default (except for certain payment defaults) if the trustee in good faith determines the withholding of such notice to be in the interests of the holders.

      We will furnish the trustee with an annual statement as to the compliance by PPL Capital Funding with the conditions and covenants in the indenture.

Waiver of Default and of Compliance

      The holders of a majority in aggregate principal amount of the outstanding notes may waive, on behalf of the holders of all notes, any past default under the indenture, except a default in the payment of principal, premium or interest, or with respect to compliance with certain provisions of the indenture that cannot be amended without the consent of the holder of each outstanding note affected.

      Compliance with certain covenants in the indenture or otherwise provided with respect to the all of the notes issued under the indenture may be waived by the holders of a majority in aggregate principal amount of the outstanding notes affected, considered as one class.

Consolidation, Merger and Conveyance of Assets as an Entirety; No Financial Covenants

      Subject to the provisions described in the next paragraph, each of PPL Capital Funding and PPL Corporation will preserve its corporate existence.

      PPL Capital Funding and PPL Corporation have each agreed not to consolidate with or merge into any other entity or convey, transfer or lease its properties and assets substantially as an entirety to any entity unless

(a)

the entity formed by such consolidation or into which PPL Capital Funding or PPL Corporation, as the case may be, is merged or the entity which acquires or which leases the property and assets of PPL Capital Funding or PPL Corporation, as the case may be, substantially as an entirety is an entity organized and existing under the laws of the United States of America or any State thereof or the District of Columbia, and expressly assumes, by supplemental indenture, the due and punctual payment of the principal, premium and interest on all the outstanding notes issued under the indenture (or the guarantee endorsed thereon, as the case may be) and the performance of all of the covenants of PPL Capital Funding or PPL Corporation, as the case may be, under the indenture, and

(b)

immediately after giving effect to such transactions, no Event of Default, and no event which after notice or lapse of time or both would become an Event of Default, will have occurred and be continuing.

      The indenture does not prevent or restrict:

(a)	any consolidation or merger after the consummation of which PPL Capital Funding or PPL Corporation would be the surviving or resulting entity; or
(b)	any conveyance or other transfer, or lease, of any part of the properties of PPL Capital Funding or PPL Corporation which does not constitute the entirety, or substantially the entirety, thereof.

      Neither the indenture nor the guarantee contains any financial or other similar restrictive covenants.

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Modification of Indenture

Without Holder Consent

      Without the consent of any holders of notes issued under the indenture, PPL Capital Funding, PPL Corporation and the trustee may enter into one or more supplemental indentures for any of the following purposes:

(a)	to evidence the succession of another entity to PPL Capital Funding or PPL Corporation;
(b)	to add one or more covenants of PPL Capital Funding or PPL Corporation or other provisions for the benefit of the holders of all or any series or tranche of notes issued under the indenture, or to surrender any right or power conferred upon PPL Capital Funding or PPL Corporation;
(c)	to add any additional Events of Default for all or any series of notes issued under the indenture;
(d)	to change or eliminate any provision of the indenture or to add any new provision to the indenture that does not adversely affect the interests of the holders;
(e)	to provide security for the notes issued under the indenture of any series;
(f)	to establish the form or terms of notes under the indenture of any series or tranche or any guarantee as permitted by the indenture;
(g)	to provide for the issuance of bearer securities;
(h)	to evidence and provide for the acceptance of appointment of a separate or successor trustee;
(i)	to provide for the procedures required to permit the utilization of a noncertificated system of registration for any series or tranche of notes issued under the indenture;
(j)	to change any place or places where

(1)	we may pay principal, premium and interest,
(2)	notes may be surrendered for transfer or exchange, and
(3)	notices and demands to or upon PPL Capital Funding or PPL Corporation may be served; or

(k) to cure any ambiguity, defect or inconsistency or to make any other changes that do not adversely affect the interests of the holders in any material respect.

If the Trust Indenture Act is amended after the date of the indenture so as to require changes to the indenture or so as to permit changes to, or the elimination of, provisions which, at the date of the indenture or at any time thereafter, were required by the Trust Indenture Act to be contained in the indenture, the indenture will be deemed to have been amended so as to conform to such amendment or to effect such changes or elimination, and PPL Capital Funding, PPL Corporation and the trustee may, without the consent of any holders, enter into one or more supplemental indentures to effect or evidence such amendment.

With Holder Consent

      Except as provided above, the consent of the holders of at least a majority in aggregate principal amount of the notes issued under the indenture of all outstanding series, considered as one class, is generally required for the purpose of adding to, or changing or eliminating any of the provisions of, the indenture pursuant to a supplemental indenture. However, if less than all of the series of outstanding notes issued under the indenture are directly affected by a proposed supplemental indenture, then such proposal only requires the consent of the holders of a majority in aggregate principal amount of the outstanding notes issued under the indenture of all directly affected series, considered as one class. Moreover, if the notes issued under the indenture of any series have been issued in more than one tranche and if the proposed supplemental indenture directly affects the rights of the holders of the notes issued under the indenture of one or more, but less than all, of such tranches, then such proposal only requires the consent of the holders of a majority in aggregate principal amount of the outstanding notes of all directly affected tranches, considered as one class.

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      However, no amendment or modification may, without the consent of the holder of each outstanding note issued under the indenture directly affected thereby:

(a) change the stated maturity of the principal or interest on any notes (other than pursuant to the terms thereof), or reduce the principal amount, interest or premium payable or change the currency in which any note is payable, or impair the right to bring suit to enforce any payment;

(b) reduce the percentages of holders whose consent is required for any supplemental indenture or waiver or reduce the requirements for quorum and voting under the indenture; or

(c) modify certain of the provisions in the indenture relating to supplemental indentures and waivers of certain covenants and past defaults.

      A supplemental indenture which changes or eliminates any provision of the indenture expressly included solely for the benefit of holders of notes issued under the indenture of one or more particular series or tranches will be deemed not to affect the rights under the indenture of the holders of notes of any other series or tranche.

Miscellaneous Provisions

      The indenture provides that certain notes, including those for which payment or redemption money has been deposited or set aside in trust as described under “—Satisfaction and Discharge” below, will not be deemed to be “outstanding” in determining whether the holders of the requisite principal amount of the outstanding notes have given or taken any demand, direction, consent or other action under the indenture as of any date, or are present at a meeting of holders for quorum purposes.

      PPL Capital Funding or PPL Corporation will be entitled to set any day as a record date for the purpose of determining the holders of outstanding notes issued under the indenture of any series entitled to give or take any demand, direction, consent or other action under the indenture, in the manner and subject to the limitations provided in the indenture. In certain circumstances, the trustee also will be entitled to set a record date for action by holders. If such a record date is set for any action to be taken by holders of particular notes issued under the indenture, such action may be taken only by persons who are holders of such notes on the record date.

Satisfaction and Discharge

      Any notes issued under the indenture or any portion will be deemed to have been paid for purposes of the indenture, and at PPL Capital Funding’s election, our entire indebtedness will be satisfied and discharged, if there shall have been irrevocably deposited with the trustee (other than PPL Capital Funding or PPL Corporation), in trust:

(a) money sufficient;

(b) in the case of a deposit made prior to the maturity of such notes, non-redeemable Government Obligations (as defined in the indenture) sufficient; or

(c) a combination of (a) and (b), which in total are sufficient,

to pay when due the principal of, and any premium, and interest due and to become due on such notes or portions thereof on and prior to the maturity thereof.

      The indenture will be deemed satisfied and discharged when no notes remain outstanding and when we have paid all other sums payable by us under the indenture.

      All moneys we pay to the trustee on notes which remain unclaimed at the end of two years after payments have become due will be paid to or upon the order of PPL Capital Funding. Thereafter, the holder of such notes may look only to us for payment thereof.

Resignation and Removal of the Trustee; Deemed Resignation

      The trustee may resign at any time by giving written notice thereof to us.

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      The trustee may also be removed by act of the holders of a majority in principal amount of the then outstanding notes of any series.

      No resignation or removal of the trustee and no appointment of a successor trustee will become effective until the acceptance of appointment by a successor trustee in accordance with the requirements of the indenture.

      Under certain circumstances, we may appoint a successor trustee and if the successor accepts, the trustee will be deemed to have resigned.

Governing Law

      The indenture, the notes and the guarantee provide that they are to be governed by and construed in accordance with the laws of the State of New York.

Book-Entry System

      Notes that are released from the pledge following substitution or early settlement will be issued in the form of one or more global certificates, registered in the name of Cede & Co., the depositary’s nominee. One or more fully registered global security certificates, representing the total aggregate number of notes, will be issued and will be deposited with the depositary and will bear a legend regarding the restrictions on exchanges and registration of transfer referred to below. The description related to the global New PEPS Unit certificates under “Book-Entry System” is applicable to the notes when and if they are issued in global form. In addition, in the event that PPL Capital Funding will issue notes in certificated form, PPL Capital Funding will only issue certificates in denominations of $1,000 principal amount and integral multiples of $1,000 (unless the notes are issuable in denominations of $25 and integral multiples thereof, as described under “—General” above, in which case notes will be issued in certificates in denominations of $25 principal amount and integral multiples thereof).

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DESCRIPTION OF PPL CORPORATION’S CAPITAL STOCK

      The description below is a summary of certain provisions of PPL Corporation’s capital stock. The Pennsylvania Business Corporation Law, or BCL, and the Restated Articles of Incorporation and Bylaws of PPL Corporation determine the rights and privileges of holders of PPL Corporation’s capital stock. We encourage you to read such documents, which have been filed with the SEC as set forth in “Where You Can Find More Information,” and the Pennsylvania law for more information regarding such capital stock.

Authorized Capital

      The authorized capital stock of PPL Corporation consists of 390,000,000 shares of common stock, par value $0.01 per share and 10,000,000 shares of preferred stock, par value $0.01 per share.

Common Stock

      As of July 31, 2003, 176,704,662 shares of common stock were issued and outstanding and, as of June 2, 2003, the outstanding shares of common stock were held by 83,669 registered holders. The outstanding common stock is, and the common stock offered hereby upon settlement of the new purchase contracts when issued and paid for will be, fully paid and non-assessable.

Dividends

      Dividends on the common stock will be paid if, when and as determined by the board of directors of PPL Corporation out of funds legally available for this purpose. The rate and timing of future dividends will depend upon the future earnings and financial condition of PPL Corporation and its subsidiaries and upon other relevant factors affecting PPL Corporation’s dividend policy which PPL Corporation cannot presently determine. As a practical matter, the ability of PPL Corporation to pay dividends will be governed by the ability of PPL Corporation’s operating subsidiaries to pay dividends to PPL Corporation. The subsidiaries’ ability to pay dividends to PPL Corporation will be subject to the prior rights of the holders of such subsidiaries’ outstanding debt and preferred securities, the availability of earnings and the needs of their businesses.

Voting Rights

      Holders of common stock are entitled to one vote for each share held by them on all matters presented to shareowners. Pursuant to PPL Corporation’s Articles of Incorporation, the holders of common stock will not have cumulative voting rights in the election of directors. PPL Corporation’s bylaws provide for a classified board of directors consisting of three classes as nearly equal in number as may be. Each class holds office until the third year following the election of such class, and no director may be removed except for cause upon a two-thirds vote of all outstanding shares. PPL Corporation’s bylaws also provide for certain notice requirements for shareowner nominations and proposals at annual meetings and preclude shareowners from bringing business before any special meeting. PPL Corporation’s Articles of Incorporation and certain provisions of Pennsylvania law would require a supermajority vote of the holders of common stock or a majority vote of disinterested directors to approve certain business combinations and other major transactions involving PPL Corporation. See “—Possible Anti-Takeover Effects of the Articles and Bylaws” below for additional information.

Liquidation Rights

      After satisfaction of the preferential liquidation rights of any preferred stock, the holders of common stock are entitled to share, ratably, in the distribution of all remaining net assets.

Preemptive and Other Rights

      The holders of common stock do not have preemptive rights as to additional issues of common stock or conversion rights. The shares of common stock are not subject to redemption or to any further calls or assessments and are not entitled to the benefit of any sinking fund provisions.

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Preferred Stock

      PPL Corporation’s board of directors is authorized, without further shareowner action, to divide the preferred stock into one or more classes or series and to determine the designations, preferences, limitations and special rights of any class or series including, but not limited to, the following:

a)	the rate of dividend, if any;
b)	the rights, if any, of the holders of shares of the series upon voluntary or involuntary liquidation, dissolution or winding up of PPL Corporation;
c)	the terms and conditions upon which shares may be converted into shares of other series or other capital stock, if issued with the privilege of conversion;
d)	the price at and the terms and conditions upon which shares may be redeemed; and
e)	the voting rights, if any.

No shares of preferred stock have been issued.

      Unless otherwise provided when a series of preferred stock is created, holders of preferred stock will not have any preemptive rights to subscribe for or purchase any additional shares of the capital stock of PPL Corporation, or other securities or other right or option to purchase shares of capital stock. See “—Possible Anti- Takeover Effects of the Articles and Bylaws” below for additional information.

Possible Anti-Takeover Effects of the Articles and Bylaws

      Certain provisions of the Articles and Bylaws may have the effect of discouraging unilateral tender offers or other attempts to takeover and acquire the business of PPL Corporation. As permitted by the BCL, our Articles and Bylaws:

a)	do not provide for cumulative voting in the election of directors;
b)	restrict shareholders from bringing any business before a special meeting of shareowners;
c)	require prior written notice of any business to be brought by a shareowner before the annual meeting; and
d)	require advance notice for shareowner nominations for directors.

      In addition, the Articles and Bylaws authorize the board of directors to create and issue a new class or series of preferred stock, provide for a classified board of directors, and include certain fair price provisions and supermajority voting requirements relating to business combinations, removal of directors and amendments to the Articles and Bylaws. These provisions in our Articles and Bylaws may limit the ability of individuals to bring matters before shareowner meetings, change the composition of the board of directors and pursue a merger, takeover, business combination or tender offer involving PPL Corporation, which, under certain circumstances, could encourage a potentially interested purchaser to negotiate with the board of directors rather than pursue a non-negotiated takeover attempt, including one which shareowners might favor, and could reduce the market value of our common stock.

Listing

      The outstanding shares of PPL Corporation common stock are, and the shares of PPL Corporation common stock issuable upon settlement of the new purchase contracts offered as a component of the New PEPS Units will be, listed on the NYSE and Philadelphia Stock Exchanges.

Transfer Agents and Registrars

      The Transfer Agents and Registrars for the PPL Corporation common stock are PPL Services Corporation and Wells Fargo Bank Minnesota, N.A., St. Paul, Minnesota.

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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

      The following summary describes the material U.S. federal income tax consequences arising from the exchange offer as of the date hereof. Except where noted, it deals only with Outstanding PEPS Units and New PEPS Units held as capital assets by U.S. Holders (as described below) and does not deal with special situations. For example, this summary does not address:

• tax consequences to holders who may be subject to special tax treatment, such as dealers in securities or currencies, traders in securities that elect to use the mark-to-market method of accounting for their securities, financial institutions, regulated investment companies, real estate investment trusts, tax-exempt entities or insurance companies;

• tax consequences to persons holding Outstanding PEPS Units or New PEPS Units as part of a hedging, integrated, constructive sale or conversion transaction or a straddle;

• tax consequences to U.S. Holders of Outstanding PEPS Units or New PEPS Units whose “functional currency” is not the U.S. dollar;

• alternative minimum tax consequences, if any; or

• any state, local or foreign tax consequences.

      Furthermore, this discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified so as to result in U.S. federal income tax consequences different from those discussed below.

      There is no authority directly addressing the U.S. federal income tax consequences arising from the exchange offer and the Internal Revenue Service (the “IRS”) or the courts could disagree with the conclusions contained in this summary. In such case, the timing, character or amount of any income, gain, deduction or loss could be affected.

      The IRS recently issued a ruling addressing the tax considerations relating to instruments substantially similar to the Outstanding PEPS Units and the New PEPS Units. In the ruling, the IRS concluded that the notes issued as part of a unit with a purchase contract were debt for U.S. federal income tax purposes. However, notwithstanding the ruling, there is no assurance that the IRS will agree with the treatment of the exchange or the ownership of the New PEPS Units described below. You should consult your own tax advisor regarding the tax consequences to you of the exchange and the acquisition, ownership and disposition of New PEPS Units, Treasury Units, new notes and PPL Corporation common stock, including the tax consequences under state, local, foreign and other tax laws.

Consequences to United States Holders

      The following is a summary of the U.S. federal income tax consequences that will apply to you if you are a U.S. holder of Outstanding PEPS Units and New PEPS Units. Certain consequences to “Non-U.S. Holders” of Outstanding PEPS Units and New PEPS Units are described under “—Consequences to Non-U.S. Holders” below. “U.S. Holder” means a beneficial owner of an Outstanding PEPS Unit and New PEPS Unit that is for federal income tax purposes:

• a citizen or resident of the United States;

• a corporation or partnership created or organized in or under the laws of the United States or any political subdivision of the United States;

• an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

• a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

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      If a partnership holds Outstanding PEPS Units or New PEPS Units, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding Outstanding PEPS Units or New PEPS Units, you should consult your tax advisor.

Acquisition of New PEPS Units

      Your acquisition of the Outstanding PEPS Unit was treated as the acquisition of an ownership interest in the trust preferred security and purchase contract (the “old purchase contract”) constituting the Outstanding PEPS Unit. The trust preferred security represents an undivided beneficial ownership interest in the underlying note (the “old note”), and, therefore, your ownership of a trust preferred security constitutes a pro rata ownership interest in the old note. Your acquisition of a New PEPS Unit in the exchange of your Outstanding PEPS Unit will similarly be treated as the acquisition of a note (the “new note”) and a new purchase contract. The remainder of this discussion assumes that the acquisition of the New PEPS Unit will be treated as an acquisition of the new note and new purchase contract.

      The purchase price of your Outstanding PEPS Unit was allocated between the trust preferred security and old purchase contract in proportion to their respective fair market values at the time of your purchase. Such allocation established your initial tax bases in the trust preferred security and the old purchase contract. The determination of your bases in the trust preferred security and old purchase contract is not clear if, at the time you acquired the Outstanding PEPS Unit, the old purchase contract had a negative value and, in such case, it is possible that your tax basis in the trust preferred security was increased by the negative value of the old purchase contract. Although there are several possible alternative characterizations, the discussion that follows treats any negative value of the old purchase contract (at the time you acquired the Outstanding PEPS Units) as carrying over to your new purchase contract and ultimately (i) reducing your basis in the stock you acquire upon settlement of the new purchase contract or (ii) being treated as additional consideration received upon the sale, exchange, disposition or termination of the New PEPS Unit you receive in the exchange. See discussion under “Ownership of New PEPS Units—New Purchase Contracts—Acquisition of PPL Corporation Common Stock Under a New Purchase Contract”; “Sale or Disposition of New PEPS Units or Treasury Units” and “Termination of New Purchase Contract” below. However, you should consult your tax advisor concerning alternative characterizations.

Exchange of Outstanding PEPS Units for New PEPS Units

      Because only minor modifications of the old purchase contract will occur as a result of the exchange, the discussion that follows treats the exchange of the old purchase contract for the new purchase contract as merely a continuation of the old purchase contract. However, as discussed more fully below, because of the substantial differences between the trust preferred security and the new note, it is expected that the exchange of the trust preferred security for the new note plus a cash payment of $0.375 will be treated as a taxable exchange. The discussion below assumes such treatment. It is possible that the IRS could assert that portions of each of the old purchase contract and trust preferred security were exchanged for a portion of each of the new purchase contract and the new note. Please consult your own tax advisor about the taxability of the exchange.

     Exchange of Trust Preferred Securities for New Notes

      You will generally recognize gain or loss upon the exchange of the trust preferred security for the new note in an amount equal to the difference between (i) the sum of the issue price of the new note and the cash payment received with respect to the new note and (ii) your adjusted tax basis in the trust preferred security. While the matter is not free from doubt, PPL Capital Funding intends to take the position that the issue price of the new notes is the stated principal amount of the new notes because we do not believe the new notes will be treated as publicly traded within the meaning of Treasury regulations §1.1273-2. However, if the new notes are deemed to be publicly traded, the issue price of the new notes will be the fair market value of such new notes. You should consult your tax advisor regarding the issue price of the new notes.

      The old notes underlying the trust preferred securities are subject to the contingent payment debt regulations (the “Contingent Debt Regulations”). Accordingly, gain realized on the disposition of the trust preferred security

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will be treated as ordinary income. Loss realized on the disposition will be treated as ordinary loss to the extent of your prior income inclusions (reduced by the total net negative adjustment previously allowed as an ordinary loss). Any loss in excess of such amount will be treated as a capital loss. The deductibility of capital losses by individuals and corporations is subject to limitations. A U.S. Holder that disposes of the trust preferred security at a loss that meets certain thresholds may be required to file a disclosure statement with the IRS under recently promulgated Treasury regulations.

      For purposes of determining gain or loss on the exchange of the trust preferred security for the new note, your adjusted tax basis in the trust preferred security generally will equal the portion of your purchase price of the Outstanding PEPS Unit that was allocated to the trust preferred security, increased by the amount of any interest income recognized under the Contingent Debt Regulations (without regard to adjustments), and reduced by projected payments scheduled to be made with respect to the old note under the Contingent Debt Regulations.

      Your initial tax basis in the new notes will be the issue price of the new notes on the date of the exchange, and in determining your holding period, you would begin to count the days on the day after the day of the exchange.

     Exchange of Old Purchase Contracts for New Purchase Contracts

      As discussed above, PPL Corporation intends to take the position that the exchange of the old purchase contracts for the new purchase contracts is not a taxable exchange for federal income tax purposes. Assuming this treatment, you will recognize no gain or loss with respect to the old purchase contract upon the exchange of Outstanding PEPS Units for New PEPS Units. Your adjusted tax basis in the new purchase contract will equal your adjusted basis in the old purchase contract and your holding period in the new purchase contract will include your holding period in the old purchase contract.

     Information Reporting and Backup Withholding

      In general, if you tender your Outstanding PEPS Units, information reporting requirements will apply to the payments made to you, unless you are an exempt recipient (such as a corporation). You may be subject to backup withholding at a rate of 28% on payments received with respect to the exchange of Outstanding PEPS Units unless you (1) come within certain exempt categories (such as corporations) and demonstrate this fact when required, or (2) provide a correct taxpayer identification number, certify as to no loss of exemption from backup withholding and otherwise comply with applicable requirements of the backup withholding rules. You will be asked to provide your correct taxpayer identification number and certify that you are not subject to backup withholding by completing the Substitute Form W-9 that is included in the letter of transmittal.

      Backup withholding is not an additional tax. If you are subject to the backup withholding rules, you will be entitled to a credit in the amount withheld against your U.S. federal income tax liability and, if withholding results in an overpayment of tax, you may be entitled to a refund, provided that the requisite information is furnished to the IRS.

Ownership of the New PEPS Units

     New Notes

     Accrual of Interest

      PPL Capital Funding intends to take the position that, except as set forth below, interest on a new note will constitute “qualified stated interest” and generally will be taxable to you as ordinary income at the time it is paid or accrued in accordance with your method of accounting for tax purposes.

      Because of the manner in which the rate on the new notes is reset, the new notes should be deemed to be issued with original issue discount (“OID”) in an amount equal to the difference between the value at which the new notes are reset (100.5% of their stated principal amount) and their “issue price” (the stated principal amount of the new notes). For purposes of accruing such OID, the new notes should be deemed to have a maturity of one

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year or less from the date of their issue. As a result, in general, only accrual basis taxpayers would be required to include such OID in income as it accrues. Cash basis taxpayers would recognize ordinary income on the reset date of the new notes in an amount equal to such OID. Unless you are an accrual basis holder who elects to accrue such OID on a constant yield to maturity basis, you would accrue such OID on a straight-line basis. However, the IRS could disagree with this treatment and assert that the amount of OID or the period for accruing such OID is different than as described above, which could affect the amount, timing and character of income you are required to recognize. You should consult your own tax advisor regarding the existence and accrual of any OID on the new notes.

     Sale, Exchange or Other Disposition

      You will generally recognize gain or loss upon the sale, exchange, retirement or other disposition of a new note equal to the difference between the amount realized upon the sale, exchange, retirement or other disposition (less any accrued and unpaid interest not previously included in income, which will be taxed as interest income) and the adjusted tax basis of the new note. Your adjusted tax basis in a new note will, in general, be the issue price of the new note (as discussed above under “Exchange of Outstanding PEPS Units for New PEPS Units—Exchange of Trust Preferred Securities for New Notes”) increased by any OID previously included in income reduced by cash payments on the new note other than qualified stated interest. Such gain or loss will be capital gain or loss. If you are an individual and have held the new note for more than one year, any capital gain will subject to tax at preferential rates. The deductibility of capital losses by individuals and corporations is subject to limitations.

     Treasury Units

     Substitution of Treasury Security to Create Treasury Units

      If you deliver a treasury security to the collateral agent in substitution for the new note, you generally will not recognize gain or loss upon the delivery of the treasury security or the release of the new note. You will continue to take into account items of income or deduction otherwise includible or deductible, respectively, with respect to the new note and treasury security, and your tax basis in the new note, treasury security and the new purchase contract will not be affected by the delivery and release.

     Ownership of Treasury Securities

      By acquiring Treasury Units, you agree to treat yourself as the owner of the treasury security that is a part of the Treasury Units beneficially owned by you. PPL Corporation also agrees to treat you as the owner of the treasury security. Your initial tax basis in the treasury security that is a part of the Treasury Units will be equal to the amount paid for the treasury security. Your adjusted tax basis in the treasury security will be increased by the amount of any acquisition discount included in income with respect thereto.

     Interest Income and Acquisition Discount

      A holder of Treasury Units will be required to treat its pro rata portion of the treasury security as a bond that was originally issued on the date acquired by such holder and that has acquisition discount equal to the holder’s pro rata portion of the excess of the amount payable on such treasury security over the value of the treasury security at the time the holder acquires it. Consequently, a portion of the scheduled payment to holders will be treated as a return of such holder’s investment in the treasury security and will not be considered current income for U.S. federal income tax purposes.

      Because the treasury security will have a maturity of one year or less from the date of its issue (a “short-term U.S. treasury security”), in general, only accrual basis taxpayers will be required to include acquisition discount in income as it accrues. Cash basis taxpayers will recognize ordinary income upon the maturity of the treasury security in an amount equal to such acquisition discount. Unless you are an accrual basis holder who elects to accrue the acquisition discount on a short-term U.S. treasury security on a constant yield to maturity basis, you will accrue such acquisition discount on a straight-line basis.

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     Substitution of New Notes to Recreate New PEPS Units

      If you deliver new notes to the collateral agent to recreate New PEPS Units, you generally will not recognize gain or loss upon the delivery of the new notes or the release of the treasury security. You will continue to take into account items of income or deduction otherwise includible or deductible, respectively, with respect to the treasury security and the new notes, and your tax basis in the new notes, the treasury security and the purchase contract will not be affected by the delivery and release.

     New Purchase Contracts

     Contract Adjustment Payments

      No direct authority addresses the treatment of the contract adjustment payments under current law, and their treatment is unclear. PPL Corporation intends to take the position that contract adjustment payments constitute taxable income to you when received or accrued, in accordance with your method of tax accounting. To the extent PPL Corporation is required to file information returns with respect to contract adjustment payments, it intends to report such payments as taxable income to you. You should consult your own tax advisor concerning the treatment of contract adjustment payments. The treatment of contract adjustment payments could affect your tax basis in a new purchase contract and in the PPL Corporation common stock received under a new purchase contract and it could affect your amount realized upon the sale or disposition of a New PEPS Unit or a Treasury Unit or the termination of a new purchase contract. See “—Acquisition of PPL Corporation Common Stock Under a New Purchase Contract,” “—Sale or Disposition of New PEPS Units or Treasury Units” and “—Termination of New Purchase Contract.”

     Acquisition of PPL Corporation Common Stock Under a New Purchase Contract

      You generally will not recognize gain or loss on the purchase of PPL Corporation common stock under a new purchase contract, except with respect to any cash paid in lieu of a fractional share of common stock. Subject to the following discussion, your aggregate initial tax basis in PPL Corporation common stock received under a new purchase contract generally should equal (a) the purchase price paid for such common stock, plus (b) your tax basis in the new purchase contract, if any, less (c) the portion of such purchase price and tax basis allocable to the fractional share, and less (d) any negative value in the new purchase contract at the time of the acquisition of your new purchase contract. In determining the holding period for common stock received under a new purchase contract, you begin to count the days on the day after the common stock is acquired.

     Early Settlement of New Purchase Contract

      You will not recognize gain or loss on the receipt of your proportionate share of the new notes or treasury security upon early settlement of a new purchase contract, and you will have the same tax basis in such new notes or treasury security, as the case may be, as before such early settlement.

     Termination of New Purchase Contract

      If a new purchase contract terminates, you will recognize capital gain or loss equal to the difference between the amount you realize, if any, upon such termination and your adjusted tax basis, if any, in the new purchase contract at the time of such termination. If you acquired your old purchase contract at a time when it had a negative value, your amount realized may be equal to such negative value at the time of termination. Capital gains of individuals derived in respect of capital assets held for more than one year are subject to tax at preferential rates. The deductibility of capital losses by individuals and corporations is subject to limitations.

      You will not recognize gain or loss on the receipt of your proportionate share of the new notes or treasury security upon termination of the new purchase contract and you will have the same tax basis in such new notes or treasury security, as the case may be, as before such termination.

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     Adjustment to Settlement Rate

      You might be treated as receiving a constructive distribution from PPL Corporation if (i) the settlement rate is adjusted and as a result of such adjustment your proportionate interest in assets or earnings and profits of PPL Corporation is increased and (ii) the adjustment is not made pursuant to a bona fide, reasonable anti-dilution formula. Certain of the possible settlement rate adjustments provided in the new purchase contracts (including, without limitation, adjustments in respect of taxable dividends to holders of our common stock) will not qualify as being pursuant to a bona fide, reasonable anti-dilution formula. If such adjustments are made, you will be deemed to have received a distribution even though you have not received any cash or property as a result of such adjustments. Thus under certain circumstances, an increase in the settlement rate might give rise to a taxable dividend, return of capital or capital gain to you in accordance with the earnings and profits rules under the Code even though you would not receive any cash related thereto. In addition, in certain situations, you might be treated as receiving a constructive distribution if we fail to adjust the settlement rate.

Sale or Disposition of New PEPS Units or Treasury Units

      Upon a disposition of New PEPS Units or Treasury Units, you will be treated as having sold, exchanged or disposed of the new purchase contract and the new note or treasury security, as the case may be, that constitute such New PEPS Units or Treasury Units. You generally will have gain or loss equal to the difference between the portion of your proceeds allocable to the new purchase contract and the new note or treasury security, as the case may be, and your respective adjusted tax bases in the new purchase contract and the new note or treasury security. If you acquired your old purchase contract at a time when the old purchase contract had a negative value, you may be deemed to have received an additional amount realized upon the sale or disposition of the new purchase contract in an amount equal to such negative value. For purposes of determining gain or loss, your proceeds will not include an amount equal to accrued but unpaid interest on the treasury security or new note not previously included in income, which amount will be treated as ordinary interest income. Further, to the extent you are treated as having received an amount with respect to accrued contract adjustment payments, such amounts may be treated as ordinary income to the extent not previously included in income. A U.S. Holder that sells the New PEPS Units, Treasury Units, new notes, treasury securities or new purchase contracts at a loss that meets certain thresholds may be required to file a disclosure statement with the IRS under recently promulgated Treasury regulations.

      Such gain or loss generally will be capital gain or loss. If you are an individual and have held the note for more than one year, any capital gain will subject to tax at preferential rates. The deductibility of capital losses by individuals and corporations is subject to limitations. If the disposition of New PEPS Units or Treasury Units occurs when the new purchase contract has a negative value, you may be considered to have received additional consideration for the new note or treasury security in an amount equal to such negative value, and to have paid such amount to be released from your obligation under the new purchase contract. You should consult your tax advisor regarding a disposition of New PEPS Units or Treasury Units at a time when the new purchase contract has a negative value.

Remarketing of the New Notes

      If you elect to have your new notes remarketed, the remarketing of your new notes will be taxable in the manner described above under “—Sale or Disposition of New PEPS Units or Treasury Units.”

Consequences to Non-United States Holders

      The following discussion only applies to Non-U.S. Holders. You are a “Non-U.S. Holder” if you are a beneficial owner that is not a U.S. Holder. Special rules may apply to certain Non-U.S. Holders such as “controlled foreign corporations,” “passive foreign investment companies,” “foreign personal holding companies,” corporations that accumulate earnings to avoid U.S. federal income tax or, in certain circumstances, U.S. expatriates. Such Non-U.S. Holders should consult their own tax advisors to determine the U.S. federal, state, local, foreign and other tax consequences that may be relevant to them.

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      As described under the caption “—Consequences to United States Holders— Exchange of Outstanding PEPS Units for New PEPS Units,” PPL Corporation intends to take the position that the exchange of the old purchase contracts for the new purchase contracts is not a taxable exchange for federal income tax purposes. Any gain realized upon the exchange of the trust preferred security for the new note will be subject to the rules described below in respect of the disposition of a new note.

     United States Federal Withholding Tax

      The 30% U.S. federal withholding tax will generally not apply to any payment of principal or interest (including OID or acquisition discount) on the new notes or treasury securities under the “portfolio interest rule,” provided that:

• interest paid on the new note or treasury security is not effectively connected with your conduct of a trade or business in the United States;

• you do not (actually or constructively) own 10% or more of the total combined voting power of all classes of our voting stock within the meaning of Section 871(h)(3) of the Code and the Treasury regulations;

• you are not a controlled foreign corporation that is related to us (actually or constructively) through stock ownership;

• you are not a bank whose receipt of interest on the new notes or treasury securities is described in section 881(c)(3)(A) of the Code; and

• (a) you provide your name and address on an IRS Form W-8BEN (or other applicable form), and certify, under penalties of perjury, that you are not a U.S. person, or (b) if you hold your New PEPS Units, Treasury Units, new notes or treasury securities through certain foreign intermediaries, you satisfy the certification requirements of applicable U.S. Treasury regulations.

Special certification requirements apply to certain Non-U.S. Holders that are pass-through entities rather than individuals.

      If you cannot satisfy the requirements described above, payments of interest (including OID or acquisition discount) made to you will be subject to the 30% U.S. federal withholding tax, unless you provide us with a properly executed:

• IRS Form W-8BEN (or other applicable form) claiming an exemption from, or reduction in the rate of, withholding under an applicable income tax treaty; or

• IRS Form W-8ECI (or other applicable form) stating that interest paid on the new notes or treasury securities is not subject to withholding tax because it is effectively connected with your conduct of a trade or business in the United States.

      The 30% U.S. federal withholding tax will not apply to any gain that you realize on the sale, exchange or other disposition of the New PEPS Units, Treasury Units, treasury securities, new notes and PPL Corporation common stock acquired under the new purchase contract.

      PPL Corporation will generally withhold tax at a 30% rate on contract adjustment payments and dividends paid on PPL Corporation common stock acquired under a new purchase contract (and generally any deemed dividends resulting from certain adjustments or failure to make adjustments, see “—Adjustment to Settlement Rate”) or such lower rate as may be specified by an applicable income tax treaty. It is possible that U.S. withholding tax on deemed dividends would be withheld from the interest paid to a Non-U.S. Holder. However, contract adjustment payments or dividends that are effectively connected with the conduct of a trade or business by the Non-U.S. Holder within the United States and, where a tax treaty applies, are attributable to a U.S. permanent establishment of the Non-U.S. Holder, are not subject to the withholding tax, provided the relevant certification requirements are satisfied, but instead are subject to U.S. federal income tax, as described below.

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      A Non-U.S. Holder of PPL Corporation common stock or a new purchase contract who wishes to claim the benefit of an applicable treaty rate for dividends or contract adjustment payments will be required to satisfy certain certification and disclosure requirements described in the fifth bullet point above. A Non-U.S. Holder eligible for a reduced rate of U.S. withholding tax on payments pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS.

     United States Federal Income Tax

      If you are engaged in a trade or business in the United States and interest (including OID and acquisition discount) on the new notes or treasury securities, dividends on PPL Corporation common stock, or to the extent they constitute taxable income, contract adjustment payments from the new purchase contracts are effectively connected with the conduct of that trade or business, you will be subject to U.S. federal income tax on the interest, dividends or contract adjustment payments on a net income basis (although exempt from the 30% withholding tax), in the same manner as if you were a United States person as defined under the Code. Certain certification and disclosure requirements must be complied with in order for effectively connected income to be exempt from withholding. In addition, if you are a foreign corporation, you may be subject to a branch profits tax equal to 30% (or lower applicable income tax treaty rate) of your earnings and profits for the taxable year, subject to adjustments, that are effectively connected with the conduct by you of a trade or business in the United States.

      Any gain realized on the disposition of a treasury security, new note, new purchase contract or share of PPL Corporation common stock generally will not be subject to U.S. federal income tax unless:

• that gain or income is effectively connected with the conduct of a trade or business by you in the United States; or

• you are an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or

• in the case of New PEPS Units, Treasury Units or PPL Corporation common stock, PPL Corporation is or has been a “U.S. real property holding corporation” for U.S. federal income tax purposes (subject to the discussion below).

      An individual Non-U.S. Holder described in the first bullet above will be subject to tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates. An individual Non-U.S. Holder described in the second bullet point above will be subject to a flat 30% tax on the gain derived from the sale, which may be offset by U.S. source capital losses (even though the individual is not considered a resident of the United States). If you are a Non-U.S. Holder that is a foreign corporation and is described under the first bullet above, you will be subject to tax on your gain under regular graduated U.S. federal income tax rates and, in addition, may be subject to the branch profits tax equal to 30% of your effectively connected earnings and profits or at such lower rate as may be specified by an applicable income tax treaty.

      PPL Corporation has not determined whether it is a “U.S. real property holding corporation” for U.S. federal income tax purposes. If PPL Corporation was or becomes a “U.S. real property holding corporation,” so long as PPL Corporation common stock continues to be regularly traded on an established securities market:

• you will not be subject to U.S. federal income tax on the disposition of your shares of PPL Corporation common stock if you hold or held (at all times during the shorter of the five-year period preceding the date of disposition or such holder’s holding period) less than or equal to 5% of the total outstanding shares of PPL Corporation common stock; and

• you will not be subject to U.S. federal income tax on the disposition of the purchase contracts if the old purchase contracts you acquired (i) had a fair market value less than or equal to 5% of the fair market value of all of the old purchase contracts at all times during the shorter of the five-year period preceding the date of disposition or your holding period (if the purchase contracts are considered to be regularly traded) or (ii) had a fair market value less than or equal to the fair market value of 5% of the common stock on the day you acquired the old purchase contracts (if the purchase contracts are not considered to be regularly traded).

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United States Federal Estate Tax

      Your estate will not be subject to U.S. federal estate tax on the new notes or treasury securities beneficially owned by you at the time of your death, provided that any payments made to you on the new notes or treasury securities would be eligible for exemption from the 30% withholding tax under the rules described above under “Consequences to Non-U.S. Holders— U.S. Federal Withholding Tax” without regard to the certification requirement described in the fifth bullet point.

      PPL Corporation common stock acquired under a new purchase contract and owned by you at the time of your death will be subject to U.S. federal estate tax unless an applicable estate tax treaty provides otherwise. New purchase contracts owned by you at the time of your death may be subject to U.S. federal estate tax unless an applicable estate tax treaty provides otherwise.

Information Reporting and Backup Withholding

     United States Holders

      In general, information reporting requirements will apply to payments on New PEPS Units, Treasury Units, new notes, treasury securities and PPL Corporation common stock made to you and to the proceeds of the sale or other disposition of such instruments, unless you are an exempt recipient such as a corporation. Backup withholding will apply to such payments if you fail to supply an accurate taxpayer identification number or certification of foreign or other exempt status or otherwise fail to comply with applicable U.S. information reporting or certification requirements.

      Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax liability provided the required information is furnished to the IRS.

     Non-United States Holders

      The amount of the interest, contract adjustment payments and dividends on PPL Corporation common stock paid to you and the tax withheld with respect to such interest, contract adjustment payments and dividends, regardless of whether withholding was required, generally must be reported annually to the IRS and to you. Copies of the information returns reporting the amount of such interest, contract adjustment payments, dividends and the amount of withholding may also be made available to the tax authorities in the country in which you reside under the provisions of an applicable income tax treaty.

      In general, no backup withholding will be required regarding payments on the New PEPS Units, Treasury Units, new notes, treasury securities or PPL Corporation common stock (except possibly with respect to contract adjustment payments) that we make to you provided that you have delivered the statement described above under “Consequences to Non-U.S. Holders— U.S. Federal Withholding Tax” and we do not have actual knowledge or reason to know that you are a United States person.

      In addition, information reporting and, depending on the circumstances, backup withholding will be required regarding the proceeds of the sale of New PEPS Units, Treasury Units, new notes, treasury securities or PPL Corporation common stock made within the United States or conducted through certain U.S. financial intermediaries, unless the payor receives the statement described above and does not have actual knowledge or reason to know that you are a U.S. person, or you otherwise establish an exemption.

      Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax liability provided the required information is furnished to the IRS.

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CERTAIN ERISA CONSIDERATIONS

      The following is a summary of certain considerations associated with the acquisition, holding and disposition of New PEPS Units (or any component security of such units) by employee benefit plans that are subject to Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended “ERISA”), plans, individual retirement accounts and other arrangements that are subject to Section 4975 of the Code or provisions under any federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of the Code or ERISA (collectively, “similar laws”), and entities whose underlying assets are considered to include “plan assets” of such plans, accounts and arrangements (each, a “plan”).

General Fiduciary Matters

      ERISA and the Code impose certain duties on persons who are fiduciaries of a plan subject to Title I of ERISA or Section 4975 of the Code and prohibit certain transactions involving the assets of a plan and its fiduciaries or other interested parties. Under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of such a plan or the management or disposition of the assets of such a plan, or who renders investment advice for a fee or other compensation to such a plan, is generally considered to be a fiduciary of the plan.

      In considering an investment of a portion of the assets of any plan in the New PEPS Units (or any component security of such units), a plan fiduciary should determine whether the investment is in accordance with the documents and instruments governing the plan and the applicable provisions of ERISA, the Code or any similar law relating to a fiduciary’s duties to the plan including, without limitation, the prudence, diversification, delegation of control and prohibited transaction provisions of ERISA, the Code and any of the applicable similar laws.

      Any insurance company proposing to invest assets of its general account in the New PEPS Units (or any component security of such units) should consider the extent that such investment would be subject to the requirements of ERISA in light of the U.S. Supreme Court’s decision in John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank and under any subsequent legislation or other guidance that has or may become available relating to that decision, including the enactment of Section 401(c) of ERISA by the Small Business Job Protection Act of 1996 and the regulations promulgated thereunder.

Prohibited Transaction Issues

      Section 406 of ERISA and Section 4975 of the Code prohibit plans subject to Title I of ERISA or Section 4975 of the Code from engaging in specified transactions involving plan assets with persons or entities who are “parties in interest,” within the meaning of ERISA, or “disqualified persons,” within the meaning of Section 4975 of the Code, unless an exemption is available. A party in interest or disqualified person who engages in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code. In addition, the fiduciary of a plan that engages in such a non-exempt prohibited transaction may be subject to penalties and liabilities under ERISA and the Code.

      If the New PEPS Units (or any component security of such units) are acquired by any plan, the acquisition, holding and disposition of the New PEPS Units (or any component security of such units) may constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code if (i) we, PPL Capital Funding or any affiliates thereof are a party in interest or disqualified person with respect to such plan or (ii) the plan sells or disposes of such New PEPS Units (or any component security of such units) to a counterparty that is a party in interest or disqualified person with respect to such plan, in each case, unless an exemption is available. In this regard, the U.S. Department of Labor (the “DOL”) has issued prohibited transaction class exemptions, or “PTCEs,” that may apply to these transactions. These class exemptions include, without limitation, PTCE 84-14 (respecting transactions determined by independent qualified professional asset managers), PTCE 90-1 (respecting insurance company pooled separate accounts), PTCE 91-38 (respecting bank collective investment trust partnerships), PTCE 95-60 (respecting life insurance company general accounts), PTCE 96-23 (respecting transactions determined by in-house asset managers), and PTCE 75-1 (respecting principal transactions by a broker-dealer), although there can be no assurance that all of the conditions of any

83

such exemptions will be satisfied. Governmental plans (as defined in Section 3(32) of ERISA), certain church plans (as defined in Section 3(33) of ERISA) and foreign plans (as described in Section 4(b)(4) of ERISA), while not subject to the prohibited transaction provisions of ERISA and Section 4975 of the Code, may nevertheless be subject to similar laws. Fiduciaries of any such plans should consult with their counsel before acquiring New PEPS Units (or any component security of such units).

      Accordingly, 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 new 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.

      Any plan or other entity whose assets include plan assets subject to ERISA, Section 4975 of the Code or substantially similar federal, state or local law should consult their advisors and/or counsel regarding the consequence of an investment in the New PEPS Units (or any component security of such units).

84

LEGAL MATTERS

      Simpson Thacher & Bartlett LLP, New York, New York, counsel to PPL Corporation and PPL Capital Funding, will pass upon the validity of the New PEPS Units and the guarantee for PPL Corporation and PPL Capital Funding and certain tax matters with respect to the offering of the New PEPS Units. Thomas D. Salus, Esq., Senior Counsel of PPL Services Corporation, will pass upon the validity of the guarantee for PPL Corporation. Davis Polk & Wardwell, New York, New York, will pass upon the validity of the New PEPS Units and the guarantee for the dealer manager. Simpson Thacher & Bartlett LLP and Davis Polk & Wardwell will rely on the opinion of Mr. Salus as to matters involving the law of the Commonwealth of Pennsylvania.

EXPERTS

      The consolidated financial statements incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2002 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

85

WHERE YOU CAN FIND MORE INFORMATION

Available Information

      PPL Corporation file reports, proxy statements and other information with the SEC. You may read and obtain copies of this information by mail from the Public Reference Room of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Further information on the operation of the SEC’s Public Reference Room in Washington, D.C. can be obtained by calling the SEC at 1-800-SEC-0330.

      PPL Corporation’s Internet website is www.pplweb.com. On the Investor Center page of that website, PPL Corporation provides access to all SEC filings of PPL Corporation registrants free of charge, as soon as reasonably practicable after filing with the SEC. Additionally, PPL Corporation registrants’ filings are available at the SEC’s website (www.sec.gov).

      PPL Corporation’s common stock is listed on the NYSE and the Philadelphia Stock Exchange (symbol: PPL), and reports, proxy statements and other information concerning PPL Corporation can also be inspected at the offices of the NYSE at 20 Broad Street, New York, New York 10005 and the Philadelphia Stock Exchange, 1900 Market Street, Philadelphia, Pennsylvania 19103. In addition, reports, proxy statements and other information concerning PPL Corporation can be inspected at its offices at Two North Ninth Street, Allentown, Pennsylvania 18101-1179. PPL Corporation’s Internet site at www.pplweb.com contains information concerning PPL Corporation and its affiliates. The information at PPL Corporation’s Internet site is not incorporated in this prospectus by reference, and you should not consider it a part of this prospectus.

Incorporation by Reference

      We will “incorporate by reference” information into this prospectus by disclosing important information to you by referring you to another document that is filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus, and later information that we file with the SEC will automatically update and supersede that information. This prospectus incorporates by reference the documents set forth below that have been previously filed with the SEC. These documents contain important information about PPL Corporation.

SEC Filings (File No. 1-11459)	Period/Date
Annual Report on Form 10-K	Year ended December 31, 2002
Quarterly Report on Form 10-Q	Quarters ended March 31, 2003 and June 30, 2003
Current Reports on Form 8-K	April 2, May 16, June 19, July 2 and July 9, 2003
PPL Corporation’s Registration Statement on Form 8-B	April 27, 1995

      We are also incorporating by reference additional documents that PPL Corporation files with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, between the date of this prospectus and the termination of the offering.

      PPL Corporation will provide without charge to each person, including any beneficial owner, to whom a copy of this prospectus has been delivered, a copy of any and all of these filings. You may request a copy of these filings by writing or telephoning us at:

PPL Corporation
Two North Ninth Street
Allentown, Pennsylvania 18101-1179
Attention: Investor Services Department
Telephone: 1-800-345-3085

86

Dealer Manager

Morgan Stanley & Co. Incorporated

1585 Broadway

New York, New York 10036

Information Agent

Innisfree M&A Incorporated

501 Madison Avenue—20th Fl.

New York, New York 10022

Call Toll-free at: (877) 825-8777

(Banks and Brokers call collect: (212) 750-5833)

Exchange Agent

JPMorgan Chase Bank

4 New York Plaza

New York, New York 10004

PART II.     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors And Officers.

      Section 7.01 of the Bylaws of PPL Corporation provides:

(a)

Right to Indemnification. Except as prohibited by law, every director and officer of the corporation shall be entitled as of right to be indemnified by the corporation against reasonable expense and any liability paid or incurred by such person in connection with any actual or threatened claim, action, suit or proceeding, civil, criminal, administrative, investigative or other, whether brought by or in the right of the corporation or otherwise, in which he or she may be involved, as a party or otherwise, by reason of such person being or having been a director or officer of the corporation or by reason of the fact that such person is or was serving at the request of the corporation as a director, officer, employee, fiduciary or other representative of another corporation, partnership, joint venture, trust, employee benefit plan or other entity (such claim, action, suit or proceeding hereinafter being referred to as “action”). Such indemnification shall include the right to have expenses incurred by such person in connection with an action paid in advance by the corporation prior to final disposition of such action, subject to such conditions as may be prescribed by law. Persons who are not directors or officers of the corporation may be similarly indemnified in respect of service to the corporation or to another such entity at the request of the corporation to the extent the board of directors at any time denominates such person as entitled to the benefits of this Section 7.01. As used herein, “expense” shall include fees and expenses of counsel selected by such persons; and “liability” shall include amounts of judgments, excise taxes, fines and penalties, and amounts paid in settlement.

(b)

Right of Claimant to Bring Suit. If a claim under paragraph (a) of this Section 7.01 is not paid in full by the corporation within thirty days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim, and, if successful in whole or in part, the claimant shall also be entitled to be paid the expense of prosecuting such claim. It shall be a defense to any such action that the conduct of the claimant was such that under Pennsylvania law the corporation would be prohibited from indemnifying the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its board of directors, independent legal counsel and its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because the conduct of the claimant was not such that indemnification would be prohibited by law, nor an actual determination by the corporation (including its board of directors, independent legal counsel or its shareholders) that the conduct of the claimant was such that indemnification would be prohibited by law, shall be a defense to the action or create a presumption that the conduct of the claimant was such that indemnification would be prohibited by law.

(c) Insurance and Funding. The corporation may purchase and maintain insurance to protect itself and any person eligible to be indemnified hereunder against any liability or expense asserted or incurred by such person in connection with any action, whether or not the corporation would have the power to indemnify such person against such liability or expense by law or under the provisions of this Section 7.01. The corporation may create a trust fund, grant a security interest, cause a letter of credit to be issued or use other means (whether or not similar to the foregoing) to ensure the payment of such sums as may become necessary to effect indemnification as provided herein.

(d) Non-Exclusivity; Nature and Extent of Rights. The right of indemnification provided for herein (1) shall not be deemed exclusive of any other rights, whether now existing or hereafter created, to which those seeking indemnification hereunder may be entitled under any agreement, bylaw or charter provision, vote of shareholders or directors or otherwise, (2) shall be deemed to

II-1

create contractual rights in favor of persons entitled to indemnification hereunder, (3) shall continue as to persons who have ceased to have the status pursuant to which they were entitled or were denominated as entitled to indemnification hereunder and shall inure to the benefit of the heirs and legal representatives of persons entitled to indemnification hereunder and (4) shall be applicable to actions, suits or proceedings commenced after the adoption hereof, whether arising from acts or omissions occurring before or after the adoption hereof. The right of indemnification provided for herein may not be amended, modified or repealed so as to limit in any way the indemnification provided for herein with respect to any acts or omissions occurring prior to the effective date of any such amendment, modification or repeal.

      Directors and officers of PPL Corporation may also be indemnified in certain circumstances pursuant to the statutory provisions of general application contained in Pennsylvania law.

      PPL Corporation presently has insurance policies which, among other things, include liability insurance coverage for their officers and directors and officers and directors of PPL Corporation’s subsidiaries under which such officers and directors are covered against any “loss” by reason of payment of damages, judgments, settlements and costs, as well as charges and expenses incurred in the defense of actions, suits or proceedings. “Loss” is specifically defined to exclude fines and penalties, as well as matters deemed uninsurable under the law pursuant to which the insurance policy shall be construed. The policies also contain other specific exclusions, including illegally obtained personal profit or advantage, and dishonesty.

Item 16.     Exhibits.

      Reference is made to the information contained in the Exhibit Index filed as part of this Registration Statement, which information is incorporated herein by reference pursuant to Rule 411 of the Securities and Exchange Commission’s Rules and Regulations under the Securities Act of 1933.

Item 22. Undertakings.

(a) The undersigned registrants hereby undertake:

(1)

That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form.

(2)

The registrant undertakes that every prospectus (i) that is filed pursuant to paragraph (h)(1) immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415 (§230.415 of this chapter), will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(b) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

(c) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

II-2

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Allentown, and Commonwealth of Pennsylvania, on the 2nd day of September, 2003.

PPL CORPORATION

By:  /s/ JOHN R. BIGGAR

John R. Biggar

Executive Vice President and

Chief Financial Officer

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on the 2nd day of September, 2003.

Signature		Title
/s/ WILLIAM F. HECHT William F. Hecht, Chairman, President and Chief Executive Officer		Principal Executive Officer and Director
/s/ JOHN R. BIGGAR John R. Biggar, Executive Vice President and Chief Financial Officer		Principal Financial Officer and Director
/s/ JOSEPH J. MCCABE Joseph J. McCabe Vice President and Controller		Principal Accounting Officer
Frederick M. Bernthal, John W. Conway,		Directors
E. Allen Deaver, Louise K. Goeser, Stuart Heydt, W. Keith Smith and Susan M. Stalnecker
By:	/s/ WILLIAM F. HECHT William F. Hecht, Attorney-in-fact

II-3

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-4 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Allentown, and Commonwealth of Pennsylvania, on the 2nd day of September, 2003.

PPL CAPITAL FUNDING, INC.

By:  /s/ JOHN R. BIGGAR

John R. Biggar

President

      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated on the 2nd of September, 2003.

Signature	Title
/s/ WILLIAM F. HECHT William F. Hecht	Director
/s/ JOHN R. BIGGAR John R. Biggar President	Principal Executive and Financial Officer and Director
/s/ JAMES E. ABEL James E. Abel Treasurer	Principal Accounting Officer and Director

II-4

EXHIBIT INDEX

      The following Exhibits indicated by an asterisk preceding the Exhibit number are filed herewith. The Exhibits indicated by two asterisks were previously filed with the Commission. The Exhibits indicated by three asterisks will be filed by amendment. The balance of the Exhibits have heretofore been filed with the Commission and pursuant to Rule 411 are incorporated herein by reference.

***1.4	Form of Dealer Manager Agreement.
3.1	Restated Articles of PPL Corporation (Exhibit B to Proxy Statement of PPL Electric Utilities Corporation and Prospectus of PPL Corporation, dated March 9, 1995).
3.2	Articles of Amendment of PPL Corporation (Exhibit 3.2 to PPL Corporation Form S-3 (Registration Statement Nos. 333-54504, 333-54504-01 and 333-54504-02)).
3.3	By-laws of PPL Corporation (Exhibit 3(ii)(a) to PPL Corporation Form 10-Q Report for the quarter ended September 30, 1998).
3.4	Certificate of Incorporation of PPL Capital Funding, Inc. (Exhibit 3.3 to PPL Corporation and PPL Capital Funding, Inc. Registration Statement Nos. 333-38003 and 333-38003-01).
3.5	Amended Certificate of Incorporation of PPL Capital Funding, Inc., (Exhibit 3.5 to PPL Corporation, PPL Capital Funding, Inc. and PPL Capital Funding Trust I Registration Statement Nos. 333-54504, 333-54504-1 and 333-54504-2).
3.6	By-Laws of PPL Capital Funding, Inc. (Exhibit 3.4 to PPL Corporation and PPL Capital Funding, Inc. Registration Statement Nos. 333-38003 and 333-38003-01).
*4.1	Form of Purchase Contract Agreement.
*4.2-A	Form of Premium Equity Participating Security Units, Series B Certificate (included as Exhibit A to Exhibit 4.1).
*4.2-B	Form of Treasury Units Certificate (included as Exhibit B to Exhibit 4.1).
*4.3	Form of Pledge Agreement.
*4.4	Form of Remarketing Agreement.
4.5	Indenture dated as of November 1, 1997 among PPL Corporation, PPL Capital Funding, Inc. and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as trustee (Exhibit 4.1 to PPL Corporation Current Report on Form 8-K dated November 12, 1997).
4.6	Supplemental Indenture No. 1 to Indenture (Exhibit 4.2 to PPL Corporation Current Report on Form 8-K dated November 12, 1997).
4.7	Supplemental Indenture No. 2 to Indenture (Exhibit 4.3 to PPL Corporation, PPL Capital Funding, Inc. and PPL Capital Funding Trust I Registration Statement Nos. 333-87847, 333-87847-01 and 333-87847-02).
4.8	Supplemental Indenture No. 3 to Indenture (Exhibit 4(c)-4 to PPL Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 1999, as amended by Form 10-K/A filed on June 28, 2000).
4.9	Supplemental Indenture No. 4 to Indenture (Exhibit 4 to PPL Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).
*4.10	Form of Supplemental Indenture No. 5.
*4.11	Form of Note (Included as Exhibit A to Exhibit 4.10).
4.12	Form of Common Stock Certificate (Exhibit 4.21 to PPL Corporation Form S-3 (Registration Statement Nos. 333-54504, 333-54504-01 and 333-54504-02))
*5.1	Opinion of Thomas D. Salus, Esq. with respect to legality of securities being registered hereunder.
*5.2	Opinion of Simpson Thacher & Bartlett LLP with respect to legality of securities being registered hereunder.
*8.1	Tax Opinion of Simpson Thacher & Bartlett LLP.

12.1	Statement of Computation of Ratio of Earnings to Fixed Charges (Exhibit 12(a) to PPL Corporation 10-Q Report for the quarter ended June 30, 2003).
*23.1	Consent of PricewaterhouseCoopers LLP.
*23.2	Consent of Thomas D. Salus, Esq. (Reference is made to Exhibit 5.1 filed herewith).
*23.3	Consent of Simpson Thacher & Bartlett LLP (Reference is made to Exhibit 5.2 filed herewith).
*24.1	Power of Attorney of PPL Corporation.
*25.1	Statement of Eligibility of Trustee under Indenture on Form T-1.
*99.1	Form of Letter of Transmittal for 7 3/4% PEPSSM Units.
*99.2	Form of Notice of Guaranteed Delivery for 7 3/4% PEPSSM Units.
*99.3	Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
*99.4	Form of Letter to Clients.

EX-4.1

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

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     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;

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     (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.

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     “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

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be administered, which office at the date hereof is located at 4 New York Plaza, 15^th 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.

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

     “New PEPS Units Certificate” means a certificate evidencing the rights and obligations of a Holder in respect of the number of New PEPS Units specified on such certificate.

     “New York Office” shall have the meaning set forth in Section 10.02.

     “non-electing share” has the meaning set forth in Section 5.05(b).

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     “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

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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.

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     “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.

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     “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

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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

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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.”

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     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

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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

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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, 15^th Floor

     New York, New York 10004

     Attention: Institutional Trust Services

     Telecopier No.: (212) 623-6216

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If to the Company:

     PPL Corporation

     Two North Ninth Street

     Allentown, Pennsylvania 18101-1179

     Telecopier No.: (610) 774-5106

     Attention: Treasurer

If to the Collateral Agent:

     JPMorgan Chase Bank

     4 New York Plaza, 15^th Floor

     New York, New York 10004

     Attention: Institutional Trust Services

     Telecopier No.: (212) 623-6216

If to the Custodial Agent:

     JPMorgan Chase Bank

     4 New York Plaza, 15^th Floor

     New York, New York 10004

     Attention: Institutional Trust Services

     Telecopier No.: (212) 623-6216

If to the Indenture Trustee:

     JPMorgan Chase Bank

     4 New York Plaza, 15^th Floor

     New York, New York 10004

     Attention: Institutional Trust Services

     Telecopier No.: (212) 623-6216

     SECTION 1.06. Notice to Holders; Waiver.

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

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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

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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.

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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

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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.

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     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.

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     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

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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

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     (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.

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     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

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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.

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     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.

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     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.

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     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

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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

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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.

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     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

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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

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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.

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     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

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     (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

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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

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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

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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.

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     (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

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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

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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

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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

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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

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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).

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     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

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     (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

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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:

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      (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

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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

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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

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     (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

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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.

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     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

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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.

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     (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

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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

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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

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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

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     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.

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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.

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     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 7¾% 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.

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     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).

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     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:

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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

(7¾% Premium Equity Participating Security Units (PEPS^SM Units), Series B)

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

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

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

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

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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.

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     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.

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     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:

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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

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(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.

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     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.

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     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 7¾% 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.

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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:

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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

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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:

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     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:

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[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

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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 7¾% 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, 15^th 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, 15^th 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, 15^th 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-2 EX-4.3 4 y89600exv4w3.htm FORM 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 7¾% 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.

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     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.

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     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

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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

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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

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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

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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

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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.

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     (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.

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     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.

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     (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,

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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)

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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

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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

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     (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

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     (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

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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.

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     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

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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

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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.

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     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

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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.

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          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

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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.

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          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.

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          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.

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          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

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JPMORGAN CHASE BANK,

As Custodial Agent
By:                 Name:
                Title:

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

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EXHIBIT A

INSTRUCTION
FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
(Establishment of Treasury Units)

JPMorgan Chase Bank
4 New York Plaza, 15^th 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, 15^th 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, 15^th 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, 15^th 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, 15^th 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, 15^th 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, 15^th 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 EX-4.4 5 y89600exv4w4.htm FORM OF REMARKETING AGREEMENT

EXHIBIT 4.4

REMARKETING AGREEMENT

, 2003

MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036

Ladies and Gentlemen:

               Morgan Stanley & Co. Incorporated is undertaking to remarket the 7.29% notes due May 18, 2006 (the “Notes”), issued by PPL Capital Funding, Inc., a Delaware corporation (“PPL Capital Funding”), and guaranteed PPL Corporation, a Pennsylvania corporation (the “Company”).

               The Remarketing (as defined below) of the Notes is provided for in the Pledge Agreement and the Purchase Contract Agreement (as defined below).

               Section 1.     Definitions.

               (a) Capitalized terms used and not defined in this Agreement shall have the meanings set forth in the Purchase Contract Agreement, dated as of          , 2003 (the “Purchase Contract Agreement”), between the Company and JPMorgan Chase Bank, as Purchase Contract Agent (the “Purchase Contract Agent”), Collateral Agent and Custodial Agent or, if not therein defined, in the Pledge Agreement, dated as of                    , 2003, between JPMorgan Chase Bank, as Collateral Agent, Securities Intermediary and Custodial Agent, and the Purchase Contract Agent (the “Pledge Agreement”) or, if not therein defined, in the Dealer Manager Agreement, dated as of                    , 2003, between the Company, PPL Capital Funding and Morgan Stanley & Co. Incorporated.

               (b) As used in this Agreement, the following terms have the following meanings:

               “Issuers” means the Company and PPL Capital Funding, collectively.

               “Morgan Stanley” means Morgan Stanley & Co. Incorporated.

               “New PEPS Units Agreements” means the Purchase Contracts, the Purchase Contract Agreement and the Pledge Agreement, collectively.

               “Offering Materials” means the Prospectus and the preliminary remarketing memorandum and final remarketing memorandum referred to in Section 5(j)(2), as applicable.

               “Prospectus” means the prospectus relating to the Remarketed Notes, in the form in which first filed, or transmitted for filing, with the Commission after the effective date of the Registration Statement pursuant to Rule 424(b), including the documents incorporated by reference therein as of the date of such Prospectus; and any reference to any amendment or supplement to such Prospectus shall be deemed to refer to and include any documents filed after the date of such Prospectus, under the Exchange Act, and incorporated by reference in such Prospectus.

               “Registration Statement” means the registration statement to be filed by the Company with the Securities and Exchange Commission on Form S-3 (or other appropriate form) under the Securities Act of 1933 in respect of the Remarketed Notes, including all exhibits thereto and documents incorporated by reference in such registration statement and any post-effective amendments thereto.

                “Remarketed Notes” means the Notes, as the Purchase Contract Agent and the Custodial Agent shall have notified the Remarketing Agent by noon, 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.

               “Remarketing” means the remarketing of the Remarketed Notes pursuant to the Remarketing Procedures.

               “Remarketing Agent” shall have the meaning set forth in Section 2(a) hereof.

               “Remarketing Procedures” means the procedures in connection with the Remarketing of the Notes described in the Purchase Contract Agreement and the Pledge Agreement, as the case may be.

               “Transaction Documents” means the Purchase Contract Agreement and the Pledge Agreement, collectively.

               Section 2.     Appointment and Obligations of the Remarketing Agent.

               (a) The Company hereby appoints Morgan Stanley as exclusive remarketing agent (the “Remarketing Agent”) and Morgan Stanley hereby accepts appointment:

     (i) as the Reset Agent to determine in consultation with the Company, in the manner provided for herein with respect to the Notes, the Reset Rate that, in the opinion of the Reset Agent, will, when applied to the Notes, enable the aggregate principal amount of the Remarketed Notes to have an approximate aggregate value of 100.5% of the aggregate principal amount of such Remarketed Notes, and provided that the

2

Company, by notice to the Reset Agent prior to the tenth Business Day preceding the Purchase Contract Settlement Date shall, if applicable, limit the Reset Rate so that it does not exceed the maximum rate permitted by applicable law, and

     (ii) as the exclusive Remarketing Agent (subject to the right of Morgan Stanley to appoint additional remarketing agents hereunder as described below), either as sole remarketing agent or as representative of a group of remarketing agents appointed as described below (the “Representative”), to remarket 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 Remarketed Notes.

In connection with the remarketing contemplated hereby, the Remarketing Agent will enter into a Supplemental Remarketing Agreement (the “Supplemental Remarketing Agreement”) with the Company and the Purchase Contract Agent, which shall either be:

     (i) substantially in the form attached hereto as Exhibit A (with such changes as the Company and the Remarketing Agent may agree upon, it being understood that changes may be necessary in the provisions of the Supplemental Remarketing Agreement due to changes in law or facts and circumstances or in the event that Morgan Stanley is not the sole remarketing agent, and with such further changes therein as the Remarketing Agent may reasonably request); or

     (ii) in such other form as the Remarketing Agent may reasonably request, subject to the approval of the Company (such approval not to be unreasonably withheld). Anything herein to the contrary notwithstanding, to the extent that the parties hereto are unable to agree on the form or substance of the Supplemental Remarketing Agreement, Morgan Stanley shall not act as Remarketing Agent or Reset Agent hereunder. The Company agrees that Morgan Stanley shall have the right, on 15 Business Days’ notice to the Company to appoint one or more additional remarketing agents so long as any such additional remarketing agents shall be reasonably acceptable to the Company. Upon any such appointment, the parties shall enter into an appropriate amendment to this Agreement to reflect the addition of any such remarketing agent.

               (b) Pursuant to the Supplemental Remarketing Agreement, the Remarketing Agent will agree, subject to the terms and conditions set forth herein and therein, to use its reasonable efforts to remarket, in its reasonable judgment in consultation with the Company, 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 Remarketed Notes at a price of approximately 100.5% (but not less than 100%) of the aggregate principal amount of the Remarketed Notes. After deducting the fee specified in Section 3 below, the proceeds of such Remarketing shall be paid to the Collateral Agent and the Custodial Agent in accordance with Section 5.7 of the Pledge Agreement and

3

Section 5.03 of the Purchase Contract Agreement (each of which Sections are incorporated herein by reference).

               (c) It is understood and agreed that neither the Remarketing Agent nor the Reset Agent shall have any obligation whatsoever to purchase any Notes, whether in the Remarketing or otherwise, and shall in no way be obligated to provide funds to make payment upon tender of Notes for remarketing or to otherwise expend or risk their own funds or incur or be exposed to financial liability in the performance of their respective duties under this Agreement or the Supplemental Remarketing Agreement, and, without limitation of the foregoing, the Remarketing Agent shall not be deemed an underwriter of the remarketed Notes. The Company and PPL Capital Funding shall not be obligated in any case to provide funds to make payment upon tender of Notes for remarketing.

               Section 3.     Fees.

               In the event of a Successful Remarketing, the Remarketing Agent shall retain as the Remarketing Fee an amount not exceeding 25 basis points (0.25%) of the aggregate principal amount of the Remarketed Notes from any amount received in connection with such Remarketing in excess of the aggregate principal amount of such Remarketed Notes. In addition, the Reset Agent shall, in the event of a Successful Remarketing, receive from the Company a reasonable and customary fee (the “Reset Agent Fee”); provided, however, that if the Remarketing Agent shall also act as the Reset Agent, then the Reset Agent shall not be entitled to receive any such Reset Agent Fee. Payment of such Reset Agent Fee shall be made by the Company on the Remarketing Closing Date (as defined in Schedule I to the Supplemental Remarketing Agreement) at the location and time specified in Schedule I to the Supplemental Remarketing Agreement in immediately available funds or, upon the instructions of the Reset Agent, by certified or official bank check or checks or by wire transfer.

               Section 4.     Representations and Warranties of the Company and PPL Capital Funding.

               The Company and PPL Capital Funding jointly and severally represent and warrant (i) on and as of the date hereof, (ii) on and as of the date the Offering Materials are first distributed in connection with the Remarketing (the “Commencement Date”), (iii) on and as of the fifth Business Day immediately preceding the Purchase Contract Settlement Date, and (iv) on and as of the Purchase Contract Settlement Date that:

               (a) The Issuers meet the requirements for use of Form S-3 under the Securities Act; the Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose have been instituted or threatened by the Commission.

               (b) Each part of the Registration Statement, when such part became or becomes effective, and the Prospectus and any amendment or supplement thereto, on the date of filing thereof with the Commission and at the Remarketing Closing Date conformed or will conform in all material respects with the requirements of the Securities Act; each part of the Registration Statement, when such part became or becomes effective, did not or will not contain an untrue

4

statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and the Offering Materials and any amendment or supplement thereto, on the date of filing thereof with the Commission and on the Remarketing Closing Date did not or will not include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; except that the representations and warranties set forth in this paragraph do not apply to statements in or omissions from any such document in reliance upon, and in conformity with, written information furnished to the Company by the Representative, specifically for use in the Registration Statement, the Offering Materials or any amendment or supplement thereto.

               (c) The documents incorporated by reference in the Registration Statement or the Offering Materials, or any amendment or supplement thereto, when they became effective under the Securities Act or were filed with the Commission under the Securities Exchange Act of 1934 (the “Exchange Act”), as the case may be, conformed in all material respects with the requirements of the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, as applicable, and any further documents so filed and incorporated by reference in the Offering Materials or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable.

               (d) The consolidated financial statements of the Company and its subsidiaries, together with the related notes and schedules, set forth or incorporated by reference in the Registration Statement and Offering Materials comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the Exchange Act; such audited financial statements have been prepared in all material respects in accordance with generally accepted accounting principles consistently applied throughout the periods involved, except as disclosed therein; and no material modifications are required to be made to the unaudited interim financial statements for them to be in conformity with generally accepted accounting principles.

               (e) Each of PPL Capital Funding and the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation with corporate power and authority to enter into and perform its obligations under this Agreement, the New PEPS Units Agreements, the Indenture, the Notes and the Guarantee to the extent a party thereto.

               (f) This Agreement has been duly and validly authorized, executed and delivered by each of the Issuers.

               (g) The authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Offering Materials.

               (h) The shares of Common Stock outstanding prior to the issuance of the Securities have been duly authorized and are validly issued, fully paid and non-assessable, and are not subject to any preemptive or similar rights.

5

               (i) The shares of Common Stock to be issued and sold by the Company pursuant to the settlement of the Purchase Contracts have been duly and validly authorized and reserved for issuance; such shares of Common Stock, when issued and delivered in accordance with the provisions of the New PEPS Units Agreements, will be validly issued, fully paid and non-assessable; and the issuance of such shares of Common Stock will not be subject to any preemptive or similar rights.

               (j) The shares of Common Stock outstanding prior to the issuance of the Securities are, and upon issuance of the shares of Common Stock to be issued and sold by the Company pursuant to the settlement of the Purchase Contracts will be, listed on the New York and Philadelphia Stock Exchanges.

               (k) The Securities (as defined in Schedule I to the Supplemental Remarketing Agreement) and the New PEPS Units Agreements have been duly authorized and, at the Exchange Date (as defined in the Dealer Manager Agreement), will have been duly executed and delivered by the Company, and, as of the Exchange Date, assuming due authorization, execution and delivery by parties thereto other than the Company, the New PEPS Units Agreements will constitute valid and binding agreements of the Company, enforceable in accordance with their terms, except to the extent limited by bankruptcy, insolvency, fraudulent conveyance, reorganization or moratorium laws or by other laws now or hereafter in effect relating to or affecting the enforcement of creditors’ rights and by general equitable principles (regardless of whether considered in a proceeding in equity or at law), an implied covenant of good faith and fair dealing and consideration of public policy, and Federal or state securities law limitations on indemnification and contribution (the “Enforceability Exceptions”); provided, however, that upon the occurrence of a Termination Event (as defined in the Purchase Contract Agreement), assuming termination of the Purchase Contract Agreement has not been stayed, voided or otherwise limited by order of any court or administrative agency pursuant to the Securities Investor Protection Act of 1970 or any statute administered by the Securities and Exchange Commission, Section 365(e)(1) of the United States Bankruptcy Code (11 U.S.C. Sections 101-1330, as amended) and Section 541 of the Bankruptcy Code should not substantively limit the provisions of Section 3.15 and 5.07 of the Purchase Contract Agreement and Section 5.4 of the Pledge Agreement that require termination of the Purchase Contracts and release of the Collateral Agent’s security interest in the Notes or the Treasury Securities (as defined in the Purchase Contract Agreement); the Securities and the New PEPS Units Agreements conform in all material respects to the descriptions thereof contained in the Offering Materials.

               (l) The Remarketing Agreement (the “Remarketing Agreement”) has been duly authorized by each of the Issuers and when executed and delivered by each of the Issuers will constitute a valid and binding agreement of each of the Issuers, enforceable in accordance with its terms, except to the extent limited by the Enforceability Exceptions; and the Remarketing Agreement conforms in all material respects to the description thereof in the Offering Materials.

               (m) The Notes have been duly authorized, executed and issued by PPL Capital Funding and the Guarantee has been duly authorized by the Company and, assuming due authentication of the Notes by the Indenture Trustee and upon delivery of the Notes upon the exchange for the Company’s outstanding 7¾% Premium Equity Participating Security Units and in accordance with the provisions of the Indenture, the Notes and the Guarantee will constitute

6

valid and binding obligations of PPL Capital Funding and the Company, as applicable, enforceable in accordance with their terms and, in the case of the Notes, entitled to the benefits of the Indenture.

               (n) The Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”).

               (o) None of the Issuers is an “investment company” within the meaning of and subject to regulation under the Investment Company Act of 1940, as amended.

               (p) Since the respective dates as of which information is given in the Registration Statement and the Offering Materials, except as otherwise stated therein or contemplated thereby, there has been no event or occurrence that would result in a material adverse change, or any development involving a material adverse change, in the financial position or results of operations of the Company and its subsidiaries considered as one enterprise.

               (q) The issue and sale of the Securities and the compliance by each Issuer with all of the provisions of this Agreement, the New PEPS Units Agreement, the Indenture, the Notes and the Guarantee to the extent a party thereto and the consummation of the transactions contemplated herein and therein will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any constituent document of any Issuer or any material agreement or instrument to which the Company or any of its subsidiaries is a party or by which it is bound except for such breaches or defaults that would not in the aggregate have a material adverse effect on the Issuers’ ability to perform their respective obligations under this Agreement, the New PEPS Units Agreement, the Indenture, the Notes and the Guarantee to the extent a party thereto.

               (r) The certificate delivered pursuant to paragraph (e) of Section 6 hereof and all other documents delivered by the Company or its representatives in connection with the issuance and sale of the Remarketed Notes were on the dates on which they were delivered, or will be on the dates on which they are to be delivered, in all material respects true and complete.

               Section 5.     Covenants of the Company and PPL Capital Funding.

Each of the Company and PPL Capital Funding covenants and agrees as follows:

(a) (1) To prepare any Registration Statement or Prospectus, if required in connection with the Remarketing, in a form approved by the Remarketing Agent and to file any such prospectus pursuant to the Securities Act of 1933 as amended (the “Act”) within the period required by the Act and the rules and regulations thereunder;

     (2) to advise the Remarketing Agent, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish the Remarketing Agent with copies thereof;

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     (3) to file promptly all reports and any definitive proxy or information statements required to be filed with the Securities and Exchange Commission (the “Commission”) pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus is required in connection with the offering or sale of the Remarketed Notes; and

     (4) to advise the Remarketing Agent, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of the Prospectus, of the suspension of the qualification of any of the Remarketed Notes for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information, and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Prospectus or suspending any such qualification, to use promptly its best efforts to obtain its withdrawal;

     (b) To furnish promptly to the Remarketing Agent and to counsel to the Remarketing Agent a conformed copy of the Registration Statement as originally filed with the Commission, and each amendment thereto filed with the Commission, including all consents and exhibits filed therewith;

     (c) To furnish to the Remarketing Agent in New York City such copies of the following documents as the Remarketing Agent shall reasonably request: (1) conformed copies of the Registration Statement as originally filed with the Commission and each amendment thereto (in each case excluding exhibits); (2) the Prospectus and any amended or supplemented Prospectus; and (3) any document incorporated by reference in the Prospectus (excluding exhibits thereto); and, if the delivery of a prospectus is required at any time in connection with the Remarketing and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Securities Act or the Exchange Act, to notify the Remarketing Agent and, upon its request, to file such document and to prepare and furnish without charge to the Remarketing Agent and to any dealer in securities as many copies as the Remarketing Agent may from time to time reasonably request of an amended or supplemented Prospectus which will correct such statement or omission or effect such compliance;

     (d) To file promptly with the Commission any amendment to the Registration Statement or the Prospectus or any supplement to the Prospectus that may, in the reasonable judgment of the Company or the Remarketing Agent, be required by the Securities Act or requested by the Commission;

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     (e) Prior to filing with the Commission (1) any amendment to the Registration Statement or supplement to the Prospectus or (2) any Prospectus pursuant to Rule 424 of the Rules and Regulations, to furnish a copy thereof to the Remarketing Agent and counsel to the Remarketing Agent; and not to file any such amendment or supplement which shall be reasonably disapproved by the Remarketing Agent promptly after reasonable notice;

     (f) As soon as practicable, but in no event later than eighteen months, after the Effective Date of the Registration Statement, to make “generally available to its security holders” an “earnings statement” of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Securities Act and the Rules and Regulations (including, at the option of the Company, Rule 158). The terms “generally available to its security holders” and “earnings statement” shall have the meanings set forth in Rule 158 of the Rules and Regulations;

     (g) To take such action as the Remarketing Agent may reasonably request in order to qualify the Remarketed Notes for offer and sale under the securities or “blue sky” laws of such jurisdictions as the Remarketing Agent may reasonably request; provided that in no event shall the Company be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction.; and

     (h) To pay: (1) the costs incident to the preparation and printing of the Registration Statement and Prospectus and any amendments or supplements thereto; (2) the costs of distributing the Registration Statement and Prospectus and any amendments or supplements thereto; (3) the fees and expenses of qualifying the Remarketed Notes under the securities laws of the several jurisdictions as provided in Section 5(g) and of preparing, printing and distributing a Blue Sky Memorandum (including related fees and expenses of counsel to the Remarketing Agent); (4) all other costs and expenses incident to the performance of the obligations of the Company, hereunder; and (5) the reasonable fees and expenses of counsel to the Remarketing Agent in connection with its duties hereunder;

     (i) To 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 Notes, 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 Notes, New PEPS Units or Treasury Units are held in global form by DTC, to cause DTC to notify its participants); and

     (j) If in connection with the Remarketing, it shall not be advisable, in the view of counsel (which need not be an opinion) for each of the Remarketing Agent and the Company, under applicable law, regulations or interpretations in effect as of the fifth, the fourth or the third Business Day immediately preceding the Purchase Contract Settlement Date, as the case may be, to register the offer and sale by the Remarketing Agent of the

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Notes under the Securities Act of 1933 as otherwise contemplated by this Section 5 or to deliver a Prospectus in connection with the Remarketing, to:

     (1) use its reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper and advisable to permit and effectuate the offer and sale of the Notes in connection with the Remarketing hereunder without registration under the Securities Act of 1933 pursuant to an exemption therefrom, if available, including the exemption afforded by Rule 144A promulgated under the Securities Act of 1933 by the Securities and Exchange Commission, and

     (2) if requested by the Remarketing Agent, furnish a current preliminary remarketing memorandum and a current final remarketing memorandum (in such quantities as the Remarketing Agent may reasonably request) to be used by the Remarketing Agent in the Remarketing hereunder by a date that is not later than fifteen Business Days prior to the Purchase Contract Settlement Date (or such earlier date as the Remarketing Agent may reasonably request). The Company shall pay all expenses relating thereto.

               Section 6.     Conditions to the Remarketing Agent’s Obligations.

               The obligations of the Remarketing Agent hereunder are subject to the following conditions:

     (a) The Remarketing Agent is able to find a purchaser or purchasers for Remarketed Notes at a price not less than 100% of the aggregate principal amount of such Remarketed Notes thereof.

     (b) The Purchase Contract Agent, the Collateral Agent, the Custodial Agent and the Company shall have performed their respective obligations in connection with the Remarketing pursuant to the Purchase Contract Agreement, the Pledge Agreement, this Agreement and the Supplemental Remarketing Agreement, including, without limitation, giving the Remarketing Agent notice of the aggregate principal amount of the Remarketed Notes by noon, New York City time, on the sixth Business Day prior to the Purchase Contract Settlement Date and concurrently delivering the Remarketed Notes to the Remarketing Agent.

     (c) The Prospectus shall have been timely filed with the Commission; no stop order suspending the effectiveness of the Registration Statement or any part thereof or suspending the qualification of the Indenture shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and any request of the Commission for inclusion of additional information in the Registration Statement or the Prospectus or otherwise shall have been complied with.

     (d) The Remarketing Agent shall not have discovered and disclosed to the Company prior to or on the Remarketing Date that the Prospectus, the Registration Statement, or any amendment or supplement thereto contains any untrue statement of a fact which, in the opinion of counsel for the Remarketing Agent, is material or omits to

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state any fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein not misleading.

     (e) Since the respective dates as of which information is given in the Prospectus (i) trading generally shall not have been suspended or materially limited on or by, as the case may be, any of the New York Stock Exchange, the Philadelphia Stock Exchange or the National Association of Securities Dealers, Inc.; (ii) trading of any securities of the Company shall not have been suspended on any exchange or in any over-the-counter market; (iii) no material disruption in securities settlement, payment or clearance services in the United States shall have occurred; (iv) no moratorium on commercial banking activities shall have been declared by Federal or New York State authorities; (v) there shall not have occurred any change or any development involving or prospective change not contemplated by the Registration Statement or Prospectus in or affecting particularly the business or properties of the Company and its subsidiaries considered as one enterprise; (vi) there shall not have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis that, in your judgment, is material and adverse and which, singly or together with any other event specified in this clause or (vii) makes it, in the judgment of the Remarketing Agent, impracticable to proceed with the Remarketing on the terms and in the manner contemplated in the Prospectus.

     (f) The representations and warranties of the Company and PPL Capital Funding contained herein shall be true and correct in all material respects on and as of the Remarketing Date, and each of the Company and PPL Capital Funding shall have performed in all material respects all covenants and agreements herein contained to be performed on its part at or prior to the Remarketing Date.

     (g) The Company shall have furnished to the Remarketing Agent a certificate, dated the Remarketing Date, of the President or a Vice President and a financial or accounting officer of the Company, satisfactory to the Remarketing Agent, stating that to the best of their knowledge after reasonable investigation: (1) no order suspending the effectiveness of the Registration Statement or prohibiting the sale of the Remarketed Notes is in effect, and no proceedings for such purpose are pending before or, to the knowledge of such officers, threatened by the Commission; (2) the representations and warranties of the Company and PPL Capital Funding in Section 3 are true and correct on and as of the Remarketing Date and each of the Company and PPL Capital Funding has performed in all material respects all covenants and agreements contained herein to be performed on its part at or prior to the Remarketing Date; (3) the Registration Statement, as of its Effective Date did not contain any untrue statement of a material fact and did not omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and the Prospectus did not contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

     (h) On the Remarketing Date, the Remarketing Agent shall have received a letter addressed to the Remarketing Agent and dated such date, in form and substance

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satisfactory to the Remarketing Agent, of PricewaterhouseCoopers LLP, or such other firm of nationally recognized independent public accountants satisfactory to the Remarketing Agent, containing statements and information of the type ordinarily included in accountants’ “comfort letters” with respect to certain financial information contained in the Prospectus.

     (i) Simpson Thacher & Bartlett LLP, outside counsel to the Company, Thomas D. Salus, Senior Counsel to the Company and PPL Capital Funding, shall have furnished to the Remarketing Agent their opinion letters addressed to the Remarketing Agent and dated the Remarketing Date, in form and substance reasonably satisfactory to the Remarketing Agent addressing such matters as are set forth in such counsels’ opinions furnished pursuant to Sections 11(a)(ii) and 11(a)(i), respectively, of the Dealer Manager Agreement dated                    , 2003 among the Company, PPL Capital Funding and the Dealer Manager relating to the securities being remarketed hereunder.

     (j) Davis Polk & Wardwell, counsel for the Remarketing Agent, shall have furnished to the Remarketing Agent its opinion, addressed to the Remarketing Agent and dated the Remarketing Date, in form and substance satisfactory to the Remarketing Agent.

               Section 7.     Indemnification and Contribution.

               (a) The Issuers agree that they will jointly and severally indemnify and hold harmless the Remarketing Agent and each person, if any, who controls the Remarketing Agent within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act, against any and all loss, expense, claim, damage or liability to which, jointly or severally, the Remarketing Agent or such controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, expense, claim, damage or liability (or actions in respect thereof) arises out of or is based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, any related preliminary prospectus, or any amendment or supplement to any thereof, or arises out of or is based upon the omission or alleged omission to state therein any material fact required to be stated therein or necessary to make the statements therein not misleading; and, except as hereinafter in this Section provided, PPL Capital Funding and the Company agree to reimburse the Remarketing Agent and each person who controls the Remarketing Agent as aforesaid for any reasonable legal or other expenses as incurred by the Remarketing Agent or such controlling person in connection with investigating or defending any such loss, expense, claim, damage or liability; provided, however, that the Issuers shall not be liable in any such case to the extent that any such loss, expense, claim, damage or liability arises out of or is based on an untrue statement or alleged untrue statement or omission or alleged omission made in any such document in reliance upon, and in conformity with, written information furnished to the Company by the Representative expressly for use in any such document or arises out of, or is based on, statements in or omissions from that part of the Registration Statement which shall constitute the T-1; provided further, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of the Remarketing Agent from whom the person asserting any such losses, expenses, claims, damages or liabilities purchased Securities in the Remarketing, or any person controlling the Remarketing Agent, if a copy of the Prospectus (as then amended or

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supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of the Remarketing Agent to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Securities to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities, unless such failure is the result of noncompliance by the Company with Section 7(a) hereof.

               (b) The Remarketing Agent agrees that it will indemnify and hold harmless the Issuers, their officers, trustees and directors, and each of them, and each person, if any, who controls any Issuer within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act, against any loss, expense, claim, damage or liability to which it or they may become subject, under the Securities Act or otherwise, insofar as such loss, expense, claim, damage or liability (or actions in respect thereof) arises out of or is based on any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, any related preliminary prospectus, or any amendment or supplement to any thereof, or arises out of or is based upon the omission or alleged omission to state therein any material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, and only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any such documents in reliance upon, and in conformity with, written information furnished to the Company by the Representative, expressly for use in any such document and, except as hereinafter in this Section provided, the Remarketing Agent agrees to reimburse the Issuers, their officers, trustees and directors, and each of them, and each person, if any, who controls any Issuer within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act, for any reasonable legal or other expenses incurred by it or them in connection with investigating or defending any such loss, expense, claim, damage or liability.

               (c) Upon receipt of notice of the commencement of any action against an indemnified party, the indemnified party shall, with reasonable promptness, if a claim in respect thereof is to be made against an indemnifying party under its agreement contained in this Section 7, notify such indemnifying party in writing of the commencement thereof; but the omission so to notify an indemnifying party shall not relieve it from any liability which it may have to the indemnified party otherwise than under its agreement contained in this Section 7. In the case of any such notice to an indemnifying party, it shall be entitled to participate at its own expense in the defense, or if it so elects, to assume the defense, of any such action, but, if it elects to assume the defense, such defense shall be conducted by counsel chosen by it and satisfactory to the indemnified party and to any other indemnifying party, defendant in the suit, and the indemnifying party shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the indemnified party has reasonably concluded (based on advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any

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local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by Morgan Stanley & Co. Incorporated, in the case of parties indemnified pursuant to Section 7(a), and by the Company, in the case of parties indemnified pursuant to Section 7(b). No indemnifying party shall be liable in the event of any settlement of any such action effected without its consent except as provided in Section 7(e) hereof. Each indemnified party agrees promptly to notify each indemnifying party of the commencement of any litigation or proceedings against it in connection with the issue and sale of the Securities.

               (d) If the Remarketing Agent or person entitled to indemnification by the terms of subsection (a) of this Section 7 shall have given notice to any Issuer of a claim in respect thereof pursuant to Section 7(c) hereunder, and if such claim for indemnification is thereafter held by a court to be unavailable for any reason other than by reason of the terms of this Section 7 or if such claim is unavailable under controlling precedent, the Remarketing Agent or person shall be entitled to contribution from the Issuers to liabilities and expenses, except to the extent that contribution is not permitted under Section 11(f) of the Securities Act. In determining the amount of contribution to which the Remarketing Agent or person is entitled, there shall be considered the relative benefits received by the Remarketing Agent or person and the Issuers from the offering of the Securities that were the subject of the claim for indemnification (taking into account the portion of the proceeds of the offering realized by each), the Remarketing Agent’s or person’s and the Issuers’ knowledge and access to information concerning the matter with respect to which the claim was asserted, the opportunity to correct and prevent any statement or omission, and any other equitable considerations appropriate under the circumstances. The Issuers and the Remarketing Agent agree that it would not be equitable if the amount of such contribution were determined by pro rata or per capita allocation.

               (e) No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 7 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party and all liability arising out of such litigation, investigation, proceeding or claim, and (ii) does not include a statement as to or an admission of fault, culpability or the failure to act by or on behalf of any indemnified party.

               (f) The indemnity and contribution provided for in this Section 7 and the representations and warranties of the Issuers and the Remarketing Agent set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of the Remarketing Agent or any person controlling the Remarketing Agent, the Issuers, their directors, trustees or officers or any person controlling any of them, (ii) acceptance of any Securities and payment therefor under this Agreement, and (iii) any termination of this Agreement.

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               Section 8.     Resignation and Removal of the Remarketing Agent.

               The Remarketing Agent may resign and be discharged from its duties and obligations hereunder, and the Company may remove the Remarketing Agent, by giving 60 days’ prior written notice, in the case of a resignation, to the Company, the Purchase Contract Agent, the Custodial Agent, the Collateral Agent and the Indenture Trustee and, in the case of a removal, the removed Remarketing Agent, the Purchase Contract Agent, the Custodial Agent, the Collateral Agent and the Indenture Trustee; provided, however, that:

         (a) the Company may not remove the Remarketing Agent unless (1) the Remarketing Agent becomes involved as a debtor in a bankruptcy, insolvency or similar proceeding, (2) the Remarketing Agent shall not be among the 15 underwriters with the largest volume underwritten in dollars, on a lead or co-managed basis, of U.S. domestic debt securities during the twelve-month period ended as of the last calendar quarter preceding the Remarketing Date, (3) the Remarketing Agent shall be subject to one or more legal restrictions preventing the performance of its obligations hereunder, or (4) the Remarketing Agent shall determine that (i) the Company has not met its obligation under Section 6(c) or (ii) using its reasonable efforts, the Remarketing Agent would be unable to consummate the Remarketing on the terms and in the manner contemplated in the Prospectus;

         (b) the Remarketing Agent may not resign without reasonable cause; and

         (c) no such resignation nor any such removal shall become effective until the Company shall have appointed (with notice to the Purchase Contract Agent, the Custodial Agent, the Collateral Agent and the Indenture Trustee) at least one nationally recognized broker-dealer as successor Remarketing Agent and such successor Remarketing Agent shall have entered into a remarketing agreement with the Company and PPL Capital Funding, in which it shall have agreed to conduct the Remarketing in accordance with the Remarketing Procedures in all material respects.

In any such case, the Company will use its reasonable efforts to appoint a successor Remarketing Agent and enter into such a remarketing agreement with such person as soon as reasonably practicable. The provisions of Sections 7 and 8 shall survive the resignation or removal of any Remarketing Agent pursuant to this Agreement.

               Section 9.     Dealing in the Remarketed Notes.

               The Remarketing Agent, when acting as a Remarketing Agent or in its individual or any other capacity, may, to the extent permitted by law, buy, sell, hold and deal in any of the Remarketed Notes. The Remarketing Agent may exercise any vote or join in any action which any beneficial owner of Remarketed Notes may be entitled to exercise with like effect as if it did not act in any capacity hereunder. The Remarketing Agent, in its individual capacity, either as principal or agent, may also engage in or have an interest in any financial or other transaction with the Company as freely as if it did not act in any capacity hereunder.

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               Section 10.     Remarketing Agent’s Performance; Duty of Care.

               The duties and obligations of the Remarketing Agent shall be determined solely by the express provisions of this Agreement, the Pledge Agreement and the Purchase Contract Agreement. No implied covenants or obligations of or against the Remarketing Agent shall be read into this Agreement, the Pledge Agreement or the Purchase Contract Agreement. In the absence of bad faith on the part of the Remarketing Agent, the Remarketing Agent may conclusively rely upon any document furnished to it, as to the truth of the statements expressed in any of such documents. The Remarketing Agent shall be protected in acting upon any document or communication reasonably believed by it to have been signed, presented or made by the proper party or parties except as otherwise set forth herein. The Remarketing Agent, acting under this Agreement, shall incur no liability to the Company or to any holder of Remarketed Notes in its individual capacity or as Remarketing Agent for any action or failure to act, on its part in connection with a Remarketing or otherwise, except if such liability is judicially determined to have resulted from its failure to comply with the material terms of this Agreement or the gross negligence or willful misconduct on its part.

               Section 11.     Termination.

               This Agreement shall terminate as to the Remarketing Agent on the effective date of the resignation or removal of the Remarketing Agent pursuant to Section 8. In addition, this Agreement may be terminated (a) by the Company or PPL Capital Funding, as the case may be, by notifying the Remarketing Agent at any time before the time when the Remarketed Notes are first generally offered by the Remarketing Agent to dealers by letter or telegram, or (b) by the Remarketing Agent by notifying the Company and PPL Capital Funding at or prior to 10:00 a.m. (New York City time) ten business days prior to the Purchase Contract Settlement Date by letter or telegram if any of the conditions described in Section 6 are not satisfied.

               If this Agreement is terminated pursuant to any of the provisions hereof, except as otherwise provided herein, the Company shall not be under any liability to the Remarketing Agent and the Remarketing Agent shall not be under any liability to the Company, except that (a) if this Agreement is terminated by the Remarketing Agent because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, the Company will reimburse the Remarking Agent for all of its out-of-pocket expenses (including the fees and disbursements of its counsel) reasonably incurred by it, and (b) if the Remarketing Agent failed or refused to purchase the Remarketed Notes hereunder, without some reason sufficient hereunder to justify the cancellation or termination of if obligations hereunder, the Remarketing Agent shall not be relieved of liability to the Company for damages occasioned by its default.

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               Section 12.     Notices.

               All statements, requests, notices and agreements hereunder shall be in writing, and:

         (a) if to the Remarketing Agent, shall be delivered or sent by mail, telex or facsimile transmission to Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036, Attention: David Sun (Fax: 212-761-0358);

         (b) if to the Company, shall be delivered or sent by mail, telex or facsimile transmission to Two North Ninth Street, Allentown, Pennsylvania 18101-1179, Attention: Treasurer (Fax: 610-774-5106);

         (c) if to PPL Capital Funding, shall be delivered or sent by mail, telex or facsimile transmission to Two North Ninth Street, Allentown, Pennsylvania 18101-1179, Attention: Treasurer (Fax: 610-774-5106).

         (d) if to the Purchase Contract Agent, Custodial Agent, Collateral Agent or Indenture Trustee, shall be delivered or sent by mail, telex or facsimile transmission to JPMorgan Chase Bank, 4 New York Plaza, New York, New York 10004, Attention: Institutional Trust Services (Fax: 212-623-6216).

Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof.

               Section 13.     Persons Entitled to Benefit of Agreement.

               This Agreement shall inure to the benefit of and be binding upon the Remarketing Agent, the Company, PPL Capital Funding, the Purchase Contract Agent and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except that (a) the representations, warranties, indemnities and agreements of the Company and PPL Capital Funding contained in this Agreement shall also be deemed to be for the benefit of the Remarketing Agent and the person or persons, if any, who control the Remarketing Agent within the meaning of Section 15 of the Securities Act and (b) the indemnity agreement of the Remarketing Agent contained in Section 7(b) of this Agreement shall be deemed to be for the benefit of the Company’s and PPL Capital Funding’s directors and officers who sign the Registration Statement and any person controlling the Company or PPL Capital Funding within the meaning of Section 15 of the Securities Act. Nothing contained in this Agreement is intended or shall be construed to give any person, other than the persons referred to herein, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein.

               Section 14.     Survival.

               The respective indemnities, representations, warranties and agreements of the Company and PPL Capital Funding and the Remarketing Agent contained in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall survive the

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Remarketing and shall remain in full force and effect, regardless of any investigation made by or on behalf of any of them or any person controlling any of them.

               Section 15.     Governing Law.

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

               Section 16.     Counterparts.

               This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument.

               Section 17.     Headings.

               The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.

If the foregoing correctly sets forth the agreement between the Company, PPL Capital Funding and the Remarketing Agent, please indicate your acceptance in the space provided for that purpose below.

[SIGNATURES ON THE FOLLOWING PAGE]

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Very truly yours,
PPL CORPORATION
By:
	Name:
	Title:

PPL CAPITAL FUNDING, INC.
By:
	Name:
	Title:

Accepted:

MORGAN STANLEY & CO. INCORPORATED

By:
	Name:
	Title:

JPMORGAN CHASE BANK,
not individually but solely as Purchase
Contract Agent and as attorney-in-fact
of the holders from time to time of the
New PEPS Units

By:
	Name:
	Title:

19

Exhibit A to
Remarketing Agreement

Form of Supplemental Remarketing Agreement

               Supplemental Remarketing Agreement dated                      among PPL Corporation, a Pennsylvania corporation (the “Company”), PPL Capital Funding, Inc. (“PPL Capital Funding”), Morgan Stanley & Co. Incorporated (the “Remarketing Agent”), and JPMorgan Chase Bank, as Purchase Contract Agent and attorney-in-fact for the Holders of the New PEPS Units (as such terms are defined in the Purchase Contract Agreement referred to in Schedule I hereto).

               NOW, THEREFORE, for and in consideration of the covenants herein made, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

          1.  Definitions. Capitalized terms used and not defined in this Agreement shall have the meanings assigned to them in the Remarketing Agreement dated as of                    , 2003 (the “Remarketing Agreement”) among the Company, PPL Capital Funding, the Purchase Contract Agent and Morgan Stanley & Co. Incorporated or, if not defined in the Remarketing Agreement, the meanings assigned to them in the Purchase Contract Agreement (as defined in Schedule I hereto).

          2.  Registration Statement and Prospectus. The Company and PPL Capital Funding have filed with the Commission, and there has become effective, a registration statement on Form S-3, including a prospectus, relating to the Securities (as such term is defined on Schedule I hereto). Such Registration Statement, as amended, and including the information deemed to be a part thereof pursuant to Rule 430A under the Act, and the documents incorporated or deemed to be incorporated by reference therein, are hereinafter called, collectively, the “Registration Statement”; [the related preliminary prospectus dated            , including the documents incorporated or deemed to be incorporated by reference therein, [and preliminary prospectus supplement dated         ] are hereinafter called, [collectively] the “preliminary prospectus”;] and the related prospectus dated         , including the documents incorporated or deemed to be incorporated by reference therein, [and prospectus supplement dated      ] are hereinafter called, [collectively,] the “Prospectus.” The Company and PPL Capital Funding have provided copies of the Registration Statement [, the preliminary prospectus] and the Prospectus to the Remarketing Agent, and hereby consents to the use of the [preliminary prospectus] and the Prospectus in connection with the remarketing of the Securities. [In the event that a Registration Statement is not required, insert the following: The Company and PPL Capital Funding have provided to the Remarketing Agent, for use in connection with remarketing of the Securities (as such term is defined on Schedule I hereto), a [preliminary remarketing memorandum and] remarketing memorandum and [describe other materials, if any]. Such remarketing memorandum (including the documents incorporated or deemed to be incorporated by reference therein, [and] [describe other materials] are hereinafter called, collectively, the “Prospectus,” [and such preliminary marketing memorandum (including the documents incorporated or deemed to be incorporated by reference therein) is hereinafter called a “preliminary prospectus”)]. The Company and PPL Capital Funding hereby consent to the use of the Prospectus [and the preliminary prospectus] in connection with the remarketing of the Securities.] All references in this Agreement to amendments or supplements to the Registration Statement [the preliminary prospectus] or the Prospectus shall be deemed to mean and include the

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filing of any document under the Exchange Act, which is incorporated or deemed to be incorporated by reference in the Registration Statement [,the preliminary prospectus] or the Prospectus, as the case may be.

          3.  Provisions Incorporated by Reference.

               (a)     Subject to Section 3(b) hereof, the provisions of the Dealer Manager Agreement (other than Section 6, Section 7, Section 8, Section 10 and Section 11 thereof) are incorporated herein by reference, mutatis mutandis, and the Company and PPL Capital Funding hereby make the representations and warranties, and agrees to comply with the covenants and obligations, set forth in the provisions of the Dealer Manager Agreement incorporated by reference herein, as modified by the provisions of Section 3(b) hereof.

               (b)     With respect to the provisions of the Dealer Manager Agreement incorporated herein, for the purposes hereof, (i) all references therein to the “Dealer Manager” or “Dealer Managers” shall be deemed to refer to the Remarketing Agent; (ii) all references therein to the “New PEPS Units” shall be deemed to refer to the Securities as defined herein; (iii) all references therein to the “Commencement Date” shall be deemed to refer to the Remarketing Date specified in Schedule I hereto; (iv) all references therein to the “Registration Statement” or the “Prospectus” shall be deemed to refer to the Registration Statement or the Prospectus, respectively, as defined herein; (v) all references therein to this “Agreement,” the “Dealer Manager Agreement,” “hereof,” “herein” and all references of similar import, shall be deemed to mean and refer to this Supplemental Remarketing Agreement; (vi) all references therein to “the date hereof,” “the date of this Agreement” and all similar references shall be deemed to refer to the date of this Supplemental Remarketing Agreement; (vii) all references therein to any “Exchange Date” shall be to the Remarketing Closing Date; and (viii) [other changes].

          4.  Remarketing. Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth or incorporated by reference herein and in the Remarketing Agreement, the Remarketing Agent agrees to use its reasonable efforts to remarket, in the manner set forth in Section 2(b) of the Remarketing Agreement, the aggregate principal amount of Securities set forth in Schedule I hereto at a purchase price of approximately 100.5% (but not less than 100%) of the aggregate principal amount of the Securities. In connection therewith, the registered holder or holders thereof agree, in the manner specified in Section 5 hereof, to pay to the Remarketing Agent a Remarketing Fee equal to an amount not exceeding 25 basis points (0.25%) of such aggregate principal amount, payable by deduction from any amount received in connection from such Remarketing in excess of the aggregate principal amount of the Securities. As more fully provided in Section 2(c) of the Remarketing Agreement (which is incorporated by reference herein), the Remarketing Agent is not obligated to purchase any Securities in the remarketing or otherwise, and neither the Company nor the Remarketing Agent shall be obligated in any case to provide funds to make payment upon tender of Securities for remarketing.

     5.  Delivery and Payment. Delivery of payment for the remarketed Securities by the purchasers thereof identified by the Remarketing Agent and payment of the Remarketing Fee shall be made on the Remarketing Closing Date at the location and time specified in Schedule I

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hereto (or such later date not later than five Business Days after such date as the Remarketing Agent shall designate), which date and time may be postponed by agreement between the Remarketing Agent and the Company and PPL Capital Funding. Delivery of the remarketed Securities and payment of the Remarketing Fee shall be made to the Remarketing Agent against payment by the respective purchasers of the remarketed Securities of the consideration therefor as specified herein, which consideration shall be paid to the Collateral Agent or the Custodial Agent, as the case may be, for the account of the persons entitled thereto by certified or official bank check or checks drawn on or by a New York Clearing House bank and payable in immediately available funds or in immediately available funds by wire transfer to an account or accounts designated by the Collateral Agent or the Custodial Agent, as the case may be.

               If the Securities are not represented by a Global Security held by or on behalf of The Depository Trust Company, certificates for the Securities shall be registered in such names and denominations as the Remarketing Agent may request not less than one full Business Day in advance of the Remarketing Closing Date, and the Company, the Collateral Agent and the registered holder or holders thereof agree to have such certificates available for inspection, packaging and checking by the Remarketing Agent in New York, New York not later than 1:00 p.m. on the Business Day prior to the Remarketing Closing Date.

          6.  Notices. Unless otherwise specified, any notices, requests, consents or other communications given or made hereunder or pursuant hereto shall be made in writing or transmitted by any standard form of telecommunication, including telephone or telecopy, and confirmed in writing. All written notices and confirmations of notices by telecommunication shall be deemed to have been validly given or made when delivered or mailed, by registered or certified mail, return receipt requested and postage prepaid. All such notices, requests, consents or other communications shall be addressed as follows: if to the Company, to Two North Ninth Street, Allentown, Pennsylvania 18101-1179, Attention: Treasurer, with a copy to Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, NY 10017, Attention: Vincent Pagano Jr.; if to the Remarketing Agent, to Morgan Stanley & Co. Incorporated, at 1585 Broadway, New York, NY 10036, Attention: David Sun, with a copy to Davis Polk & Wardwell, [      ], New York, NY [      ], Attention: [     ]; and if to the Purchase Contract Agent, to JPMorgan Chase Bank, [4 New York Plaza, New York, NY 10004], Attention: [Institutional Trust Services], or to such other address as any of the above shall specify to the other in writing.

          7.  Conditions to Obligations of Remarketing Agent. Anything herein to the contrary notwithstanding, the parties hereto agree that the obligations of the Remarketing Agent under this Agreement are subject to the satisfaction, on the Remarketing Closing Date, of the conditions incorporated by reference herein from Section 6 of the Dealer Manager Agreement as modified by Section 6 under the Remarketing Agreement (including, without limitation, the delivery of opinions of counsel, officers’ certificates and accountants’ comfort letters as reasonably requested by the Remarketing Agent and in form and substance reasonably satisfactory to the Remarketing Agent, the accuracy as of the Remarketing Closing Date of the representations and warranties of the Company and PPL Capital Funding included and incorporated by reference herein and the performance by the Company and PPL Capital Funding of their obligations under the Remarketing Agreement and this Agreement as and when required hereby and thereby). In addition, anything herein to the contrary notwithstanding, this Agreement may be terminated by the Remarketing Agent, by notice to the Company and PPL

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Capital Funding at any time prior to the time of settlement on the Remarketing Closing Date, if any of the events or conditions set forth in Section 6 of the Dealer Manager Agreement, as modified by Section 11 of the Remarketing Agreement, shall have occurred or shall exist.

          8.  Indemnity and Contribution. Anything herein to the contrary notwithstanding, the Remarketing Agent shall be entitled to indemnity and contribution on the terms and conditions set forth in the Remarketing Agreement.

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               If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement among the Company, PPL Capital Funding and the Remarketing Agent.

Very truly yours,
PPL CORPORATION
By:
	Name:
	Title:
PPL CAPITAL FUNDING, INC.
By:
	Name:
	Title:

CONFIRMED AND ACCEPTED:
MORGAN STANLEY & CO. INCORPORATED

By:
	Authorized Signatory

[Add other Remarketing Agents, if any]

By:
	Name:
	Title:

JPMORGAN CHASE BANK,
not individually but solely as Purchase
Contract Agent and as attorney-in-fact
of the holders from time to time of the
New PEPS Units

By:
	Name:
	Title:

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SCHEDULE I

Securities subject to the remarketing: 7.29% Notes due 2006 of PPL Capital Funding, Inc. (the “Securities”).

Purchase Contract Agreement, dated as of                    , 2003         (the “Purchase Contract Agreement”) by and between PPL Corporation, a Pennsylvania corporation, and JPMorgan Chase Bank, a New York banking corporation.

Pledge Agreement dated as of                    , 2003 (the “Pledge Agreement”) by and between PPL Corporation, a Pennsylvania corporation and JPMorgan Chase Bank.

Aggregate Principal Amount of Securities:

$

Dealer Manager Agreement, dated                    , 2003 (the “Dealer Manager Agreement”) among PPL Corporation, PPL Capital Funding, Inc. and Morgan Stanley & Co. Incorporated.

Remarketing Closing Date, Time and Location:

A-6 EX-4.10 6 y89600exv4w10.htm FORM OF SUPPLEMENTAL INDENTURE NO. 5

EXHIBIT 4.10

PPL CAPITAL FUNDING, INC.,
Issuer

and

PPL CORPORATION,
Guarantor

to

JPMORGAN CHASE BANK,
Trustee

SUPPLEMENTAL INDENTURE NUMBER 5

Dated as of          , 2003

Supplemental to the Indenture
dated as of November 1, 1997

Notes due May 18, 2006

TABLE OF CONTENTS¹

		Page
ARTICLE ONE NOTES DUE MAY 18, 2006			1
	Section 1.01   Establishment		1
	Section 1.02   Definitions		2
	Section 1.03   Ranking of the Notes		5
	Section 1.04   Stated Maturity; Payment of Principal and Interest		5
	Section 1.05   Form; Denominations		6
	Section 1.06   Global Notes		7
	Section 1.07   Paying Agents; Transfer Agents; Place of Payment		7
	Section 1.08   Trust Indenture Act		8
ARTICLE TWO SUBORDINATION OF NOTES			8
	Section 2.01   Notes Subordinate to Senior Indebtedness of the Corporation		8
	Section 2.02   Payment Over of Proceeds of Notes		8
	Section 2.03   Disputes with Holders of Certain Senior Indebtedness of the Corporation		10
	Section 2.04   Subrogation		10
	Section 2.05   Obligation of the Corporation Unconditional		11
	Section 2.06   Priority of Senior Indebtedness of the Corporation Upon Maturity		11
	Section 2.07   Trustee as Holder of Senior Indebtedness of the Corporation		12
	Section 2.08   Notice to Trustee to Effectuate Subordination		12
	Section 2.09    Modification, Extension, etc. of Senior Indebtedness of the Corporation		12
	Section 2.10  Trustee Has No Fiduciary Duty to Holders of Senior Indebtedness of the Corporation		13
	Section 2.11   Paying Agents Other Than the Trustee		13
	Section 2.12    Rights of Holders of Senior Indebtedness of the Corporation Not Impaired		13

¹ This Table of Contents does not constitute part of the Indenture or have any bearing upon the interpretation of any of its terms and provisions.

		Page
	Section 2.13   Effect of Subordination Provisions; Termination		13
ARTICLE THREE FORM OF GUARANTEE			14
ARTICLE FOUR REMARKETING			21
	Section 4.01   Remarketing; Payment of Purchase Price		21
	Section 4.02   Failed Final Remarketing		23
ARTICLE FIVE MISCELLANEOUS PROVISIONS			24
	Section 5.01    Recitals by Corporation		24
	Section 5.02   Ratification and Incorporation of Original Indenture		24
	Section 5.03   Executed in Counterparts		25
ARTICLE SIX TAX TREATMENT; ERISA			25
	Section 6.01   Tax Agreements		25
	Section 6.02   ERISA Agreements		25

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     THIS SUPPLEMENTAL INDENTURE NUMBER 5 (the “Supplemental Indenture”) is made as of            , 2003, by and between PPL CAPITAL FUNDING, INC. (formerly known as PP&L Capital Funding, Inc.) a corporation duly organized and existing under the laws of the state of Delaware, having its principal office at Two North Ninth Street Allentown, Pennsylvania, 18101 (herein called the “Corporation”), PPL CORPORATION (formerly known as PP&L Resources, Inc.), a corporation duly organized and existing under the laws of the Commonwealth of Pennsylvania (herein called the “Guarantor”), and JPMORGAN CHASE BANK (formerly known as The Chase Manhattan Bank), a New York banking corporation, as Trustee (herein called the “Trustee”).

W I T N E S S E T H :

     WHEREAS, the Corporation has heretofore entered into an Indenture, dated as of November 1, 1997 (the “Original Indenture”) with The Chase Manhattan Bank, as Trustee;

     WHEREAS, the Original Indenture is incorporated herein by this reference and the Indenture, as amended and supplemented to the date hereof, including by this Supplemental Indenture Number 5, is herein called the “Indenture;”

     WHEREAS, under the Indenture, a new series of Securities may at any time be established in accordance with the provisions of the Indenture and the terms of such series may be described by a supplemental indenture executed by the Corporation, the Guarantor and the Trustee;

     WHEREAS, the Corporation proposes to create under the Indenture a new series of Securities;

     WHEREAS, additional Securities of other series hereafter established, except as may be limited in the Indenture as at the time supplemented and modified, may be issued from time to time pursuant to the Indenture as at the time supplemented and modified; and

     WHEREAS, all conditions necessary to authorize the execution and delivery of this Supplemental Indenture and to make it a valid and binding obligation of the Corporation and the Guarantor have been done or performed.

     NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE ONE

NOTES DUE MAY 18, 2006

Section 1.01 Establishment

     There is hereby established a new series of Securities to be issued under the Indenture, to be designated as the Corporation’s Notes due May 18, 2006 (the “Notes”).

     There are to be authenticated and delivered an aggregate principal amount equal to $           of Notes and no further Notes shall be authenticated and delivered except as provided by Section 304, 305, 306 or 1206 of the Original Indenture. The Notes may be issued pursuant to a Company Order delivered to the Trustee for the authentication and delivery of Notes pursuant to Section 303 of the Original Indenture. The Notes shall be issued in fully registered form without coupons.

     The Notes shall be in substantially the form set out in Exhibit A hereto, and the form of the Trustee’s Certificate of Authentication for the Notes shall be in substantially the form set forth in Exhibit B hereto.

     Each Note shall be dated the date of authentication thereof and shall bear interest from August 18, 2003 or from the most recent Interest Payment Date to which interest has been paid or duly provided for.

     Section 1.02 Definitions

     The following defined terms used herein shall, unless the context otherwise requires, have the meanings specified below. Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Original Indenture.

     (a)  The following terms have the meanings given to them in the Purchase Contract Agreement:

     (i) Cash Settlement; (ii) Collateral Account; (iii) New PEPS Units; (iv) Purchase Price; (v) Reset Agent; (vi) Securities Intermediary; and (vii) Treasury Units.

     (b)  The following terms have the meanings given to them in this Section 1.02(b):

     “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.

     “Clearing Agency” means an organization registered as a “clearing agency” pursuant to Section 17A of the Exchange Act that is acting as a Depositary with respect to the Notes and in whose name, or in the name of a nominee of that organization, shall be registered a Global Note and which shall undertake to effect book entry transfers and pledges of the Notes.

     “Clearing Agency Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to time the Clearing Agency effects book entry transfers and pledges of securities deposited with the Clearing Agency.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Coupon Rate” shall have the meaning set forth in Section 1.04.

     “Custodial Agent” shall have the meaning set forth in the Pledge Agreement.

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     “Depositary” means a clearing agency registered under the Exchange Act that is designated to act as Depositary for the Notes as contemplated by Sections 1.05 and 1.06.

     “DTC” means The Depository Trust Company.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     “Failed Final Remarketing” shall have the meaning set forth in Section 4.02.

     “Global Notes” shall have the meaning set forth in Section 1.06.

     “Guarantor” means the Person named as “Guarantor” in the first paragraph of this Supplemental Indenture until a successor Person shall have become such pursuant to the applicable provisions of the Original Indenture, and thereafter Guarantor shall include such successor Person.

     “Indenture” shall have the meaning set forth in the Recitals.

     “Interest Payment Date” shall have the meaning set forth in Section 1.04(b).

     “Notes” shall have the meaning specified in Section 1.01.

     “Original Indenture” shall have the meaning set forth in the Recitals.

     “Original Issue Date” means           , 2003.

     “Plan” means any employee benefit plan that is subject to Title I of ERISA, plan, individual retirement account or other arrangement that is subject to Section 4975 of the Code or any Similar Law, and any entity whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement.

     “Pledge Agreement” means the Pledge Agreement dated as of            , 2003 among PPL Corporation and JPMorgan Chase Bank, as collateral agent (the “Collateral Agent”), custodial agent, securities intermediary, purchase contract agent and attorney-in-fact.

     “Pledged Notes” shall have the meaning set forth in the Pledge Agreement.

     “Purchase Contract” shall have the meaning set forth in the Purchase Contract Agreement.

     “Purchase Contract Agent” means the “Agent” under the Purchase Contract Agreement.

     “Purchase Contract Agreement” means the Purchase Contract Agreement dated as of            , 2003, between PPL Corporation and JPMorgan Chase Bank, as purchase contract agent, collateral agent and custodial agent.

     “Purchase Contract Settlement Date” means May 18, 2004.

3

     “Regular Record Date” means, (1) with respect to any Interest Payment Date for the Notes when represented by a Global Note, the Business Day immediately preceding such Interest Payment Date and (2) with respect to any Interest Payment Date for the Notes when held in certificated form, the 15th day (whether or not a Business Day) prior to such Interest Payment Date.

     “Remarketed Notes” means the Notes, as the Purchase Contract Agent and the Custodial Agent shall have notified the Remarketing Agent prior to noon, 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.

     “Remarketing” shall have the meaning set forth in Section 4.01(b).

     “Remarketing Agent” means Morgan Stanley & Co. Incorporated, as remarketing agent under the Remarketing Agreement, or any successor remarketing agent appointed in accordance therewith.

     “Remarketing Agreement” means the Remarketing Agreement dated as of            , 2003, among the Guarantor, the Corporation, Morgan Stanley & Co. Incorporated, in its capacity as Remarketing Agent, and JPMorgan Chase Bank, as purchase contract agent and attorney-in-fact, which term shall include any supplemental remarketing agreement among such parties entered into in connection therewith, or any replacement remarketing agreement entered into in accordance with such Remarketing Agreement.

     “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 aggregate principal amount of such Remarketed Notes; provided, however, that the Reset Rate shall not exceed the maximum rate permitted by applicable law.

     “Senior Indebtedness,” when used with respect to the Corporation or the Guarantor for purposes of the Indenture prior to May 18, 2004, means all obligations (other than non-recourse obligations) of, or guaranteed or assumed by, the Corporation or the Guarantor, as the case may be, for borrowed money, including both senior and subordinated indebtedness for borrowed money (other than the Notes prior to May 18, 2004 and other than securities issued under the Subordinated Indenture dated as of May 9, 2001 (the “Subordinated Indenture”), among the Corporation, the Guarantor and the Trustee and the Guarantor’s guarantee thereof), or for the payment of money relating to any lease which is capitalized on the consolidated balance sheet of the Corporation or the Guarantor, as the case may be, and its subsidiaries in accordance with generally accepted accounting principles as in effect from time to time, or evidenced by bonds,

4

debentures, notes or other similar instruments, and in each case, amendments, renewals, extensions, modifications and refundings of any such indebtedness or obligations, whether existing as of the date of the Indenture or subsequently incurred by the Corporation or the Guarantor, as the case may be, unless, in the case of any particular indebtedness, renewal, extension or refunding, the instrument creating or evidencing the same or the assumption or guarantee of the same expressly provides that such indebtedness, renewal, extension or refunding is not superior in right of payment to or is pari passu with the Notes prior to May 18, 2004 or the Guarantee prior to May 18, 2004, as the case may be; provided that the Guarantor’s obligations under the trust preferred securities guarantee shall not be deemed to be Senior Indebtedness of the Guarantor (as specified in the documents governing such trust preferred securities), and provided further that Senior Indebtedness shall not include (i) any obligation of the Corporation to any of its subsidiaries or (ii) trade accounts payable or accrued liabilities arising in the ordinary course of business or (iii) any obligations to an employee.

     “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 Maturity” shall have the meaning set forth in Section 1.04(a).

     “Successful Remarketing” shall have the meaning set forth in Section 4.01(b).

     Section 1.03 Ranking of the Notes

     From the Original Issue Date until May 18, 2004, the Notes will be the Corporation’s direct, unsecured obligations and will rank without preference or priority among themselves and equally with all of the Corporation’s existing and future unsecured and subordinated indebtedness, subordinate and junior in right of payment to all of the Corporation’s Senior Indebtedness.

     On and after May 18, 2004, the Notes will become the Corporation’s direct, unsecured obligations and will rank without preference or priority among themselves and equally with all of the Corporation’s existing and future unsecured and unsubordinated indebtedness (including ranking equally with all prior unsubordinated Securities issued pursuant to the Original Indenture), senior in right of payment to all of the Corporation’s subordinated indebtedness.

     Section 1.04 Stated Maturity; Payment of Principal and Interest

     (a)  The date upon which the principal of the Notes shall become due and payable at final maturity, together with any accrued and unpaid interest, is May 18, 2006 (the “Stated Maturity”).

     (b)  Each Note will bear interest (i) at the rate of 7.29% per year (the “Coupon Rate”) from August 18, 2003 through and including the day immediately preceding May 18, 2004 and (ii)(A) in the case of a Successful Remarketing, at the Reset Rate on and after the Purchase Contract Settlement Date and (B) in the case of a Failed Final Remarketing, at the Coupon Rate on and after the Purchase Contract Settlement Date, until the principal thereof is paid or duly made available for payment. Interest will be payable, initially, quarterly in arrears on November 18, 2003, February 18, 2004 and May 18, 2004 (each, an “Interest Payment Date”) to the

5

Person in whose name such Note, or any Predecessor Security, is registered at the close of business on the Regular Record Date for such interest installment; provided, however, that following the Purchase Contract Settlement Date, interest will be payable semi-annually in arrears on May 18 and November 18 of each year, commencing November 18, 2004, and such dates shall then be the “Interest Payment Dates.”

     (c)  The amount of interest payable on the Notes for any period will be computed (1) for any full quarterly or semi-annual period, as applicable, on the basis of a 360-day year of twelve 30-day months and (2) for any period shorter than a full quarterly or semi-annual period, as applicable, on the basis of a 30-day month and, for any period less than a month, on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which interest is payable on the Notes is not a Business Day, then payment of the interest payable on that date will be made on the next day that is a Business Day (and without any interest or other payment in respect of any such delay).

     (d)  Payment of principal and interest on the Notes shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Principal and interest on the Notes will be payable, at the office or agency of the Corporation maintained for such purpose as described in Section 1.07 below; provided, however, that payment of interest may be made at the option of the Corporation (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least 16 days prior to the date for payment by the Person entitled thereto. Payments of principal of and interest on Global Notes shall be made by wire transfer of immediately available funds to the Holder of such Global Notes; provided, that, in the case of payments of principal, such Global Notes are first surrendered to the Paying Agent.

     Section 1.05 Form; Denominations

     Except as provided in Section 1.06, the Notes shall be issued in fully registered definitive form without interest coupons, bearing identical terms.

     The Notes may be issued, in whole or in part, in global form and, if issued in global form, the Depositary shall be The Depository Trust Company or such other Depositary as the Corporation may from time to time designate.

     The Notes shall be issuable in denominations of $1,000 and any integral multiples thereof except that an interest in a Note held as part of one New PEPS Unit represents a 1/40, or 2.5%, undivided beneficial ownership interest in a $1,000 principal amount of a Note; provided, however, 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, of the Purchase Contract Agreement) the Notes will be issuable in denominations of $25 principal amount and integral multiples thereof.

6

     Section 1.06 Global Notes

     Any Notes that are no longer part of New PEPS Units will be issued initially in the form of one or more Global Notes (the “Global Notes”) registered in the name of the Depositary or its nominee. Unless and until they are exchanged for Notes in definitive registered form, such Global Notes may be transferred, in whole but not in part, only to the Clearing Agency or a nominee of the Clearing Agency, or to a successor Clearing Agency selected or approved by the Corporation or to a nominee of such successor Clearing Agency.

     If at any time (i) the Depositary notifies the Corporation that it is unwilling or unable to continue as Depositary for the Global Notes and no successor Depositary has been appointed within 90 days after this notice, (ii) the Depositary at any time ceases to be a Clearing Agency registered under the Exchange Act when the Depositary is required to be so registered to act as the Depositary and no successor Depositary has been appointed within 90 days after the Corporation learns that the Depositary has ceased to be so registered, or (iii) the Corporation, in its sole discretion, determines that it will no longer have the Notes represented by Global Notes, the Corporation will execute, and subject to Article Three of the Original Indenture, the Trustee, upon receipt of a Company Order therefor, will authenticate and deliver the Notes in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Note or Notes in exchange for such Global Senior or Notes. Upon exchange of the Global Note or Notes for such Notes in definitive registered form without coupons, in authorized denominations, the Global Note or Notes shall be cancelled by the Trustee. Such Notes in definitive registered form issued in exchange for the Global Note or Notes shall be registered in such names and in such authorized denominations as the Clearing Agency, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Securities to the Clearing Agency for delivery to the Persons in whose names such Securities are so registered.

     None of the Corporation, the Guarantor, the Trustee or any agent of the Corporation, the Guarantor or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Note or maintaining, supervising or reviewing any records relating to such beneficial ownership interest.

     Section 1.07 Paying Agents; Transfer Agents; Place of Payment

     The Paying Agent for the Notes shall initially be the Trustee, and the Place of Payment for the Notes shall initially be the Corporate Trust Office, which as of the date hereof for such purpose is located at 4 New York Plaza, New York, New York 10004. The Trustee shall also serve as Security Registrar for the purpose of registering Notes and transfers or exchanges of Notes. The Corporation may from time to time designate one or more additional offices or agencies where Notes may be presented or surrendered for payment or may be surrendered for registration of transfer or exchange in accordance with Section 602 of the Original Indenture; provided, that the Corporation shall at all times maintain a Paying Agent and an office or agency where Notes may be surrendered for registration of transfer or exchange, in each case in the Borough of Manhattan, The City of New York.

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     Section 1.08 Trust Indenture Act

     The Subordinated Indenture is hereby excluded from the operation of the proviso to Section 310(b)(i) of the Trust Indenture Act.

ARTICLE TWO

SUBORDINATION OF NOTES

     From the Original Issue Date to, but excluding, May 18, 2004, the following provisions shall apply:

     Section 2.01 Notes Subordinate to Senior Indebtedness of the Corporation.

     The Corporation, for itself, its successors and assigns, covenants and agrees, and each Holder of the Notes, by its acceptance thereof, likewise covenants and agrees, that the payment of the principal and interest, if any, on each and all of the Notes is hereby expressly subordinated and subject to the extent and in the manner set forth in this Article, in right of payment to the prior payment in full of all Senior Indebtedness of the Corporation.

     Each Holder of the Notes, by its acceptance thereof, authorizes and directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article, and appoints the Trustee its attorney-in-fact for any and all such purposes.

     The Notes are not superior in right of payment to, and rank pari passu with, the securities issued under the Subordinated Indenture.

     Section 2.02 Payment Over of Proceeds of Notes.

     In the event (a) of any insolvency or bankruptcy proceedings or any receivership, liquidation, reorganization or other similar proceedings in respect of the Corporation or a substantial part of its property, or of any proceedings for liquidation, dissolution or other winding up of the Corporation, whether or not involving insolvency or bankruptcy, or (b) subject to the provisions of Section 2.03, that (i) a default shall have occurred with respect to the payment of principal of or interest on or other monetary amounts due and payable on any Senior Indebtedness of the Corporation, or (ii) there shall have occurred a default (other than a default in the payment of principal or interest or other monetary amounts due and payable) in respect of any Senior Indebtedness of the Corporation, as defined therein or in the instrument under which the same is outstanding, permitting the holder or holders thereof to accelerate the maturity thereof (with notice or lapse of time, or both), and such default shall have continued beyond the period of grace, if any, in respect thereof, and, in the cases of subclauses (i) and (ii) of this clause (b), such default shall not have been cured or waived or shall not have ceased to exist, or (c) that the principal of and accrued interest on the Notes shall have been declared due and payable pursuant to Section 801 of the Original Indenture and such declaration shall not have been rescinded and annulled as provided in Section 802 of the Original Indenture, then:

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     (1)     the holders of all Senior Indebtedness of the Corporation shall first be entitled to receive payment of the full amount due thereon, or provision shall be made for such payment in money or money’s worth, before the Holders of any of the Notes are entitled to receive a payment on account of the principal or interest on the indebtedness evidenced by the Securities, including, without limitation, any payments made pursuant to Articles Four and Five of the Original Indenture;

     (2)     any payment by, or distribution of assets of, the Corporation of any kind or character, whether in cash, property or securities, to which any Holder or the Trustee would be entitled except for the provisions of this Article, 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 of the Corporation or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness of the Corporation may have been issued, ratably according to the aggregate amounts remaining unpaid on account of such Senior Indebtedness of the Corporation held or represented by each, to the extent necessary to make payment in full of all Senior Indebtedness of the Corporation remaining unpaid after giving effect to any concurrent payment or distribution (or provision therefor) to the holders of such Senior Indebtedness of the Corporation, before any payment or distribution is made to the Holders of the indebtedness evidenced by the Notes or to the Trustee under the Indenture; and

     (3)     in the event that, notwithstanding the foregoing, any payment by, or distribution of assets of, the Corporation of any kind or character, whether in cash, property or securities, in respect of principal or interest on the Notes or in connection with any repurchase by the Corporation of the Notes, shall be received by the Trustee or any Holder before all Senior Indebtedness of the Corporation is paid in full, or provision is made for such payment in money or money’s worth, such payment or distribution in respect of principal or interest on the Notes or in connection with any repurchase by the Corporation of the Notes shall be paid over to the holders of such Senior Indebtedness of the Corporation or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any such Senior Indebtedness of the Corporation may have been issued, ratably as aforesaid, for application to the payment of all Senior Indebtedness of the Corporation remaining unpaid until all such Senior Indebtedness of the Corporation 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 of the Corporation.

     Notwithstanding the foregoing, at any time after the 123rd day following the date of deposit of cash or Eligible Obligations pursuant to Section 701 or 702 of the Original Indenture (provided all conditions set out in such Section shall have been satisfied), the funds so deposited and any interest thereon will not be subject to any rights of holders of Senior Indebtedness of the Corporation including, without limitation, those arising under this Article; provided that no event described in clauses (e) and (f) of Section 801 of the Original Indenture with respect to the Corporation has occurred during such 123-day period.

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     For purposes of this Article only, the words “cash, property or securities” shall not be deemed to include shares of stock of the Corporation as reorganized or readjusted, or securities of the Corporation or any other corporation provided for by a plan or reorganization or readjustment which are subordinate in right of payment to all Senior Indebtedness of the Corporation which may at the time be outstanding to the same extent as, or to a greater extent than, the Notes are so subordinated as provided in this Article. The consolidation of the Corporation with, or the merger of the Corporation into, another corporation or the liquidation or dissolution of the Corporation following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided for in Article Eleven of the Original Indenture shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 2.02 if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article Eleven of the Original Indenture. Nothing in Section 2.01 or in this Section 2.02 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 907 of the Original Indenture.

     Section 2.03 Disputes with Holders of Certain Senior Indebtedness of the Corporation.

     Any failure by the Corporation to make any payment on or perform any other obligation in respect of Senior Indebtedness of the Corporation, other than any indebtedness incurred by the Corporation or assumed or guaranteed, directly or indirectly, by the Corporation for money borrowed (or any deferral, renewal, extension or refunding thereof) or any other obligation as to which the provisions of this Section shall have been waived by the Corporation in the instrument or instruments by which the Corporation incurred, assumed, guaranteed or otherwise created such indebtedness or obligation, shall not be deemed a default under clause (b) of Section 2.02 if (i) the Corporation 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 Corporation 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, or (B) in the event that a judgment that is subject to further review or appeal has been issued, the Corporation shall in good faith be prosecuting an appeal or other proceeding for review and a stay or execution shall have been obtained pending such appeal or review.

     Section 2.04 Subrogation.

     Senior Indebtedness of the Corporation shall not be deemed to have been paid in full unless the holders thereof shall have received cash (or securities or other property satisfactory to such holders) in full payment of such Senior Indebtedness of the Corporation then outstanding. Upon the payment in full of all Senior Indebtedness of the Corporation, the rights of the Holders of the Notes shall be subrogated to the rights of the holders of Senior Indebtedness of the Corporation to receive any further payments or distributions of cash, property or securities of the Corporation applicable to the holders of the Senior Indebtedness of the Corporation until all amounts owing on the Notes shall be paid in full; and such payments or distributions of cash, property or securities received by the Holders of the Notes, by reason of such subrogation, which otherwise would be paid or distributed to the holders of such Senior Indebtedness of the Corporation shall, as between the Corporation, its creditors other than the holders of Senior

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Indebtedness of the Corporation, and the Holders, be deemed to be a payment by the Corporation to or on account of Senior Indebtedness of the Corporation, it being understood that the provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of the Senior Indebtedness of the Corporation, on the other hand.

     Section 2.05 Obligation of the Corporation Unconditional.

     Nothing contained in this Article or elsewhere in the Indenture or in the Notes is intended to or shall impair, as among the Corporation, its creditors other than the holders of Senior Indebtedness of the Corporation and the Holders, the obligation of the Corporation, which is absolute and unconditional, to pay to the Holders the principal and interest on the Notes 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 Corporation other than the holders of Senior Indebtedness of the Corporation, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon default under the Indenture, subject to the rights, if any, under this Article of the holders of Senior Indebtedness of the Corporation in respect of cash, property or securities of the Corporation received upon the exercise of any such remedy.

     Upon any payment or distribution of assets or securities of the Corporation referred to in this Article, the Trustee and the Holders shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness of the Corporation and other indebtedness of the Corporation, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon, and all other facts pertinent thereto or to this Article.

     The Trustee 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 of the Corporation (or a representative of such holder or a trustee under any indenture under which any instruments evidencing any such Senior Indebtedness of the Corporation may have been issued) to establish that such notice has been given by a holder of such Senior Indebtedness of the Corporation or such representative or trustee on behalf of such holder. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness of the Corporation to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness of the Corporation 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 right of such Person under this Article, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment or distribution.

     Section 2.06 Priority of Senior Indebtedness of the Corporation Upon Maturity.

     Upon the maturity of the principal of any Senior Indebtedness of the Corporation by lapse of time, acceleration or otherwise, all matured principal of Senior Indebtedness of the

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Corporation and interest and premium, if any, thereon shall first be paid in full before any payment of principal or interest, if any, is made upon the Notes or before any Notes can be acquired by the Corporation.

     Section 2.07 Trustee as Holder of Senior Indebtedness of the Corporation.

     The Trustee shall be entitled to all rights set forth in this Article with respect to any Senior Indebtedness of the Corporation at any time held by it, to the same extent as any other holder of Senior Indebtedness of the Corporation. Nothing in this Article shall deprive the Trustee of any of its rights as such holder.

     Section 2.08 Notice to Trustee to Effectuate Subordination.

     Notwithstanding the provisions of this Article or any other provision of the Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by the Trustee unless and until the Trustee shall have received written notice thereof from the Corporation, from a Holder or from a holder of any Senior Indebtedness of the Corporation or from any representative or representatives of such holder or any trustee or trustees under any indenture under which any instruments evidencing any such Senior Indebtedness of the Corporation may have been issued and, prior to the receipt of any such written notice, the Trustee shall be entitled, subject to Section 901 of the Original Indenture, in all respects to assume that no such facts exist; provided, however, that, if prior to the fifth Business Day preceding the date upon which by the terms hereof any such moneys may become payable for any purpose, or in the event of the execution of an instrument pursuant to Section 701 or 702 of the Original Indenture acknowledging that Notes or portions thereof are deemed to have been paid for all purposes of the Indenture, acknowledging that the entire indebtedness of the Corporation in respect thereof has been satisfied and discharged or acknowledging satisfaction and discharge of the Indenture, then if prior to the second Business Day preceding the date of such execution, the Trustee 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 Trustee may, in its discretion, receive such moneys and/or apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary, which may be received by it on or after such date; provided, however, that no such application shall affect the obligations under this Article of the persons receiving such moneys from the Trustee.

     Section 2.09 Modification, Extension, etc. of Senior Indebtedness of the Corporation.

     The holders of Senior Indebtedness of the Corporation may, without affecting in any manner the subordination of the payment of the principal and interest, if any, on the Notes, at any time or from time to time and in their absolute discretion, agree with the Corporation to change the manner, place or terms of payment, change or extend the time of payment of, or renew or alter, any Senior Indebtedness of the Corporation, or amend or supplement any instrument pursuant to which any Senior Indebtedness of the Corporation is issued, or exercise or refrain from exercising any other of their rights under the Senior Indebtedness of the Corporation including, without limitation, the waiver of default thereunder, all without notice to or assent from the Holders or the Trustee.

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     Section 2.10 Trustee Has No Fiduciary Duty to Holders of Senior Indebtedness of the Corporation.

     With respect to the holders of Senior Indebtedness of the Corporation, the Trustee undertakes to perform or to observe only such of its covenants and objectives as are specifically set forth in the Indenture, and no implied covenants or obligations with respect to the holders of Senior Indebtedness of the Corporation shall be read into the Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of the Corporation, and shall not be liable to any such holders if it shall mistakenly pay over or deliver to the Holders or the Corporation or any other Person, money or assets to which any holders of Senior Indebtedness of the Corporation shall be entitled by virtue of this Article or otherwise.

     Section 2.11 Paying Agents Other Than the Trustee.

     In case at any time any Paying Agent other than the Trustee shall have been appointed by the Corporation and be then acting hereunder, the term “Trustee” as used in this Article shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however, that Sections 2.07, 2.08 and 2.10 shall not apply to the Corporation if it acts as Paying Agent.

     Section 2.12 Rights of Holders of Senior Indebtedness of the Corporation Not Impaired.

     No right of any present or future holder of Senior Indebtedness of the Corporation 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 Corporation or by any noncompliance by the Corporation with the terms, provisions and covenants of the Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with.

     Section 2.13 Effect of Subordination Provisions; Termination.

     Notwithstanding anything contained herein to the contrary, other than as provided in the immediately succeeding sentence, all the provisions of the Indenture shall be subject to the provisions of this Article, so far as the same may be applicable thereto.

     Notwithstanding anything contained herein to the contrary, the provisions of this Article Two shall be of no further effect, and the Notes shall no longer be subordinated in right of payment to the prior payment of Senior Indebtedness of the Corporation on or after May 18, 2004.

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ARTICLE THREE

FORM OF GUARANTEE

     The Guarantee to be endorsed on the Notes shall be in substantially the form set forth below:

[FORM OF GUARANTEE]

     PPL Corporation (formerly called PP&L Resources, Inc.), a corporation organized under the laws of the Commonwealth of Pennsylvania (the “Guarantor”, which term includes any successor under the Indenture, dated as of November 1, 1997 (the “Original Indenture”) with JPMorgan Chase Bank (formerly known as the Chase Manhattan Bank), as Trustee, as amended and supplemented, including the Supplemental Indenture Number 5 dated , 2003 (the “Indenture”), which is referred to in the Note upon which this Guarantee is endorsed), for value received, hereby unconditionally guarantees to the Holder of the Note upon which this Guarantee is endorsed, the due and punctual payment of the principal and interest, if any, on such Note when and as the same shall become due and payable, whether at the Stated Maturity, by declaration of acceleration, or otherwise, in accordance with the terms of such Note and of the Indenture. In case of the failure of PPL Capital Funding, Inc. (formerly called PP&L Capital Funding, Inc.), a corporation organized under the laws of the State of Delaware (the “Corporation”, which term includes any successor under the Indenture), punctually to make any such payment, the Guarantor hereby agrees to cause such payment to be made punctually when and as the same shall become due and payable, whether at the Stated Maturity or by declaration of acceleration, or otherwise, and as if such payment were made by the Corporation.

     From      , 2003 until May 18, 2004, the Guarantee will be the Guarantor’s unsecured obligation and will rank without preference or priority equally with all of the Guarantor’s existing and future unsecured and subordinated indebtedness, subordinate and junior in right of payment to all of the Guarantor’s Senior Indebtedness.

     On and after May 18, 2004, the Guarantee will become the Guarantor’s unsecured obligation and will rank without preference or priority equally with all of the Guarantor’s existing and future unsecured and unsubordinated indebtedness (including ranking equally with all prior unsubordinated Securities issued pursuant to the Original Indenture), senior in right of payment to all of the Guarantor’s subordinated indebtedness.

     The Guarantor hereby agrees that its obligations hereunder shall be absolute and unconditional irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of such Note or the Indenture, any failure to enforce the provisions of such Note or the Indenture, or any waiver, modification or indulgence granted to the Corporation with respect thereto, by the Holder of such Note or the Trustee or any other circumstance which may otherwise constitute a legal or equitable discharge or defense of a surety or guarantor; provided, however, that notwithstanding the foregoing, no such waiver, modification or indulgence shall, without the consent of the Guarantor, increase the principal amount of such Note, or increase the interest rate thereon or change the Stated Maturity thereof.

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     The Guarantor hereby waives the benefits of diligence, presentment, demand for payment, any requirement that the Trustee or the Holder of such Note exhaust any right or take any action against the Corporation or any other Person, filing of claims with a court in the event of insolvency or bankruptcy of the Corporation, any right to require a proceeding first against the Corporation, protest or notice with respect to such Note or the indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee will not be discharged in respect of such Note except by complete performance of the obligations contained in such Note and in this Guarantee. This Guarantee shall constitute a guaranty of payment and not of collection. The Guarantor hereby agrees that, in the event of a default in payment of principal or interest, if any, on such Note, whether at its Stated Maturity, by declaration of acceleration, or otherwise, legal proceedings may be instituted by the Trustee on behalf of, or by, the Holder of such Note, subject to the terms and conditions set forth in the Indenture, directly against the Guarantor to enforce this Guarantee without first proceeding against the Corporation.

     The obligations of the Guarantor hereunder with respect to such Note shall be continuing and irrevocable until the date upon which the entire principal and interest, if any, on such Note has been, or has been deemed pursuant to the provisions of Article Seven of the Original Indenture to have been, paid in full or otherwise discharged.

     The Guarantor shall be subrogated to all rights of the Holder of such Note upon which this Guarantee is endorsed against the Corporation in respect of any amounts paid by the Guarantor on account of such Note pursuant to the provisions of this Guarantee or the Indenture; provided, however, that the Guarantor shall not be entitled to enforce or to receive any payments arising out of, or based upon, such right of subrogation until the principal and interest, if any, on all Notes issued under the Indenture shall have been paid in full.

     This Guarantee shall remain in full force and effect and continue notwithstanding any petition filed by or against the Corporation for liquidation or reorganization, the Corporation becoming insolvent or making an assignment for the benefit of creditors or a receiver or trustee being appointed for all or any significant part of the Corporation’s assets, and shall, to the fullest extent permitted by law, continue to be effective or reinstated, as the case may be, if at any time payment of the Note upon which this Guarantee is endorsed, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by the Holder of such Note, whether as a “voidable preference,” “fraudulent transfer,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned on such Note, such Note shall, to the fullest extent permitted by law, be reinstated and deemed paid only by such amount paid and not so rescinded, reduced, restored or returned.

     From the Original Issue Date to, but excluding, May 18, 2004, the following provisions shall apply:

     1.     The Guarantor, for itself, its successors and assigns, covenants and agrees, and each Holder of the Notes, by its acceptance thereof, likewise covenants and agrees, that the payment under the Guarantee of the principal and interest, if any, on each and all of the Notes is hereby expressly subordinated and subject to the extent and in the manner set forth herein, in right of payment to the prior payment in full of all Senior Indebtedness of the Guarantor.

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     2.     Each Holder of the Notes, by its acceptance thereof, authorizes and directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Guarantee, and appoints the Trustee its attorney-in-fact for any and all such purposes.

     3.     In the event (a) of any insolvency or bankruptcy proceedings or any receivership, liquidation, reorganization or other similar proceedings in respect of the Guarantor or a substantial part of its property, or of any proceedings for liquidation, dissolution or other winding up of the Guarantor, whether or not involving insolvency or bankruptcy, or (b) subject to the provisions of paragraph 6 below, that (i) a default shall have occurred with respect to the payment of principal or interest on or other monetary amounts due and payable on any Senior Indebtedness of the Guarantor, or (ii) there shall have occurred a default (other than a default in the payment of principal or interest or other monetary amounts due and payable) in respect of any Senior Indebtedness of the Guarantor, as defined therein or in the instrument under which the same is outstanding, permitting the holder or holders thereof to accelerate the maturity thereof (with notice or lapse of time, or both), and such default shall have continued beyond the period of grace, if any, in respect thereof, and, in the cases of subclauses (i) and (ii) of this clause (b), such default shall not have been cured or waived or shall not have ceased to exist, or (c) that the principal and accrued interest on the Notes shall have been declared due and payable pursuant to Section 801 of the Original Indenture and such declaration shall not have been rescinded and annulled as provided in Section 802 in the Original Indenture, then:

     (1) the holders of all Senior Indebtedness of the Guarantor shall first be entitled to receive payment of the full amount due thereon, or provision shall be made for such payment in money or money’s worth, before the Holders of any of the Notes are entitled to receive a payment on account of the Guarantee of the principal or interest on the indebtedness evidenced by the Notes, including, without limitation, any payments made pursuant to Articles Four and Five of the Original Indenture;

     (2) any payment by, or distribution of assets of, the Guarantor of any kind or character, whether in cash, property or securities, to which any Holder or the Trustee would be entitled except for the provisions of this Guarantee, 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 of the Guarantor or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness of the Guarantor may have been issued, ratably according to the aggregate amounts remaining unpaid on account of such Senior Indebtedness of the Guarantor held or represented by each, to the extent necessary to make payment in full of all Senior Indebtedness of the Guarantor remaining unpaid after giving effect to any concurrent payment or distribution (or provision therefor) to the holders of such Senior Indebtedness of the Guarantor, before any payment or distribution is made to the Holders of the indebtedness evidenced by the Notes or to the Trustee under the Guarantee and the Indenture; and

     (3) in the event that, notwithstanding the foregoing, any payment by, or distribution of assets of, the Guarantor of any kind or character, whether in cash, property

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or securities, in respect of principal or interest on the Notes or in connection with any repurchase by the Guarantor of the Notes, shall be received by the Trustee or any Holder before all Senior Indebtedness of the Guarantor is paid in full, or provision is made for such payment in money or money’s worth, such payment or distribution in respect of principal or interest on the Notes or in connection with any repurchase by the Guarantor of the Notes shall be paid over to the holders of such Senior Indebtedness of the Guarantor or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any such Senior Indebtedness of the Guarantor may have been issued, ratably as aforesaid, for application to the payment of all Senior Indebtedness of the Guarantor remaining unpaid until all such Senior Indebtedness of the Guarantor 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 of the Guarantor.

     4.     Notwithstanding the foregoing, at any time after the 123rd day following the date of deposit of cash or Eligible Obligations pursuant to Section 701 or 702 of the Original Indenture (provided all conditions set out in such Section shall have been satisfied), the funds so deposited and any interest thereon will not be subject to any rights of holders of Senior Indebtedness of the Guarantor including, without limitation, those arising under this Guarantee; provided that no event described in clauses (e) and (f) of Section 801 of the Original Indenture with respect to the Guarantor has occurred during such 123-day period.

     5.     For purposes of this Guarantee only, the words “cash, property or securities” shall not be deemed to include shares of stock of the Guarantor as reorganized or readjusted, or securities of the Guarantor or any other corporation provided for by a plan or reorganization or readjustment which are subordinate in right of payment to all Senior Indebtedness of the Guarantor which may at the time be outstanding to the same extent as, or to a greater extent than, the Guarantee of the Notes are so subordinated as provided in this Guarantee. The consolidation of the Guarantor with, or the merger of the Guarantor into, another corporation or the liquidation or dissolution of the Guarantor following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided for in Article Eleven of the Original Indenture shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of paragraphs 3, 4 and 5 if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article Eleven of the Original Indenture. Nothing in paragraphs 1 and 2 above or in paragraphs 3, 4 and 5 above shall apply to claims of, or payments to, the Trustee under or pursuant to Section 907 in the Original Indenture.

     6.     Any failure by the Guarantor to make any payment on or perform any other obligation in respect of Senior Indebtedness of the Guarantor, other than any indebtedness incurred by the Guarantor or assumed or guaranteed, directly or indirectly, by the Guarantor for money borrowed (or any deferral, renewal, extension or refunding thereof) or any other obligation as to which the provisions of this paragraph shall have been waived by the Guarantor in the instrument or instruments by which the Guarantor incurred, assumed, guaranteed or otherwise created such indebtedness or obligation, shall not be deemed a default under clause (b) of paragraph 3 above if (i) the Guarantor 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

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against the Guarantor 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, or (B) in the event that a judgment that is subject to further review or appeal has been issued, the Guarantor shall in good faith be prosecuting an appeal or other proceeding for review and a stay or execution shall have been obtained pending such appeal or review.

     7.     Senior Indebtedness of the Guarantor shall not be deemed to have been paid in full unless the holders thereof shall have received cash (or securities or other property satisfactory to such holders) in full payment of such Senior Indebtedness of the Guarantor then outstanding. Upon the payment in full of all Senior Indebtedness of the Guarantor, the rights of the Holders of the Notes shall be subrogated to the rights of the holders of Senior Indebtedness of the Guarantor to receive any further payments or distributions of cash, property or securities of the Guarantor applicable to the holders of the Senior Indebtedness of the Guarantor until all amounts owing on the Notes shall be paid in full; and such payments or distributions of cash, property or securities received by the Holders of the Notes, by reason of such subrogation, which otherwise would be paid or distributed to the holders of such Senior Indebtedness of the Guarantor shall, as between the Guarantor, its creditors other than the holders of Senior Indebtedness of the Guarantor, and the Holders, be deemed to be a payment by the Guarantor to or on account of Senior Indebtedness of the Guarantor, it being understood that the provisions of this Guarantee are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of the Senior Indebtedness of the Guarantor, on the other hand.

     8.     Nothing contained in this Guarantee or elsewhere in the Indenture or in the Guarantee is intended to or shall impair, as among the Guarantor, its creditors other than the holders of Senior Indebtedness of the Guarantor and the Holders, the obligation of the Guarantor, which is absolute and unconditional, to pay to the Holders, pursuant to the terms of the Guarantee, the principal and interest on the Notes 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 Guarantor other than the holders of Senior Indebtedness of the Guarantor, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon default under the Indenture, subject to the rights, if any, under this Guarantee of the holders of Senior Indebtedness of the Guarantor in respect of cash, property or securities of the Guarantor received upon the exercise of any such remedy.

     9.     Upon any payment or distribution of assets or securities of the Guarantor referred to in this Guarantee, the Trustee and the Holders shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness of the Guarantor and other indebtedness of the Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon, and all other facts pertinent thereto or to this Guarantee.

     10.     The Trustee 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 of the Guarantor (or a representative of such holder or a trustee under any indenture under which any instruments evidencing any such Senior Indebtedness of the Guarantor may have been issued) to establish

18

that such notice has been given by a holder of such Senior Indebtedness of the Guarantor or such representative or trustee on behalf of such holder. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness of the Guarantor to participate in any payment or distribution pursuant to this Guarantee, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness of the Guarantor 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 right of such Person under this Guarantee, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment or distribution.

     11.     Upon the maturity of the principal of any Senior Indebtedness of the Guarantor by lapse of time, acceleration or otherwise, all matured principal of Senior Indebtedness of the Guarantor and interest, if any, thereon shall first be paid in full before any payment of principal or interest, if any, is made upon the Notes under the Guarantee.

     12.     The Trustee shall be entitled to all rights set forth in this Guarantee with respect to any Senior Indebtedness of the Guarantor at any time held by it, to the same extent as any other holder of Senior Indebtedness of the Guarantor. Nothing in this Guarantee shall deprive the Trustee of any of its rights as such holder.

     13.     Notwithstanding the provisions of this Guarantee or any other provision of the Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by the Trustee unless and until the Trustee shall have received written notice thereof from the Guarantor, from a Holder or from a holder of any Senior Indebtedness of the Guarantor or from any representative or representatives of such holder or any trustee or trustees under any indenture under which any instruments evidencing any such Senior Indebtedness of the Guarantor may have been issued and, prior to the receipt of any such written notice, the Trustee shall be entitled, subject to Section 901 of the Original Indenture, in all respects to assume that no such facts exist; provided, however, that, if prior to the fifth Business Day preceding the date upon which by the terms hereof any such moneys may become payable for any purpose, or in the event of the execution of an instrument pursuant to Section 701 or 702 of the Original Indenture acknowledging that Notes or portions thereof are deemed to have been paid for all purposes of the Indenture, acknowledging that the entire indebtedness of the Corporation in respect thereof has been satisfied and discharged or acknowledging satisfaction and discharge of the Indenture, then if prior to the second Business Day preceding the date of such execution, the Trustee 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 Trustee may, in its discretion, receive such moneys and/or apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary, which may be received by it on or after such date; provided, however, that no such application shall affect the obligations under this Guarantee of the Persons receiving such moneys from the Trustee.

     14.     The holders of Senior Indebtedness of the Guarantor may, without affecting in any manner the subordination of the payment of the principal and interest, if any, on the Notes under the Guarantee, at any time or from time to time and in their absolute discretion, agree with the

19

Guarantor to change the manner, place or terms of payment, change or extend the time of payment of, or renew or alter, any Senior Indebtedness of the Guarantor, or amend or supplement any instrument pursuant to which any Senior Indebtedness of the Guarantor is issued, or exercise or refrain from exercising any other of their rights under the Senior Indebtedness of the Guarantor including, without limitation, the waiver of default thereunder, all without notice to or assent from the Holders or the Trustee.

     15.     With respect to the holders of Senior Indebtedness of the Guarantor, the Trustee undertakes to perform or to observe only such of its covenants and objectives as are specifically set forth in the Indenture, and no implied covenants or obligations with respect to the holders of Senior Indebtedness of the Guarantor shall be read into the Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of the Guarantor, and shall not be liable to any such holders if it shall mistakenly pay over or deliver to the Holders or the Guarantor or any other Person, money or assets to which any holders of Senior Indebtedness of the Guarantor shall be entitled by virtue of this Guarantee or otherwise.

     16.     In case at any time any Paying Agent other than the Trustee shall have been appointed by the Guarantor and be then acting hereunder, the term “Trustee” as used in this Guarantee shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Guarantee in addition to or in place of the Trustee; provided, however, that paragraphs 12, 13 and 15 above shall not apply to the Guarantor if it acts as Paying Agent.

     17.     No right of any present or future holder of Senior Indebtedness of the Guarantor 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 Guarantor or by any noncompliance by the Guarantor with the terms, provisions and covenants of the Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with.

     18.     Notwithstanding anything contained herein to the contrary, other than as provided in the immediately succeeding paragraph, all the provisions of the Indenture shall be subject to the provisions of this Guarantee, so far as the same may be applicable thereto.

     19.     Notwithstanding anything contained herein to the contrary, the provisions of this Guarantee shall be of no further effect, and the Guarantee shall no longer be subordinated in right of payment to the prior payment of Senior Indebtedness of the Guarantor, if the Guarantor shall have delivered to the Trustee a notice to such effect. Any such notice delivered by the Guarantor shall not be deemed to be a supplemental indenture for purposes of Article Twelve of the Original Indenture.

     This Guarantee is not superior in right of payment to, and ranks pari passu with, the guarantees of the securities issued under the Subordinated Indenture.

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     This Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication of the Note upon which this Guarantee is endorsed shall have been manually executed by or on behalf of the Trustee under the Indenture.

     All terms used in this Guarantee which are defined in the Indenture shall have the meanings assigned to them in such Indenture.

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

     IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be executed as of the date first written above.

PPL CORPORATION

By:

[END OF FORM]

ARTICLE FOUR

REMARKETING

     Section 4.01 Remarketing; Payment of Purchase Price

     (a)  The Corporation 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 Notes 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 Notes are held in global form by DTC, the Corporation will cause DTC to notify its participants).

     (b)  The Notes of holders of New PEPS Unit who have not notified the Purchase Contract Agent of their intention to effect a Cash Settlement or have failed to pay the Purchase Price to the Securities Intermediary 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 Trustee and the Guarantor of the aggregate principal amount of Notes that are part of New PEPS Units to be remarketed. Concurrently, the Collateral Agent, pursuant to the terms of the Pledge Agreement, will present for remarketing

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such Notes to the Remarketing Agent. Upon receipt of such notice from the Purchase Contract Agent and such Notes from the Collateral Agent, the Remarketing Agent will use its reasonable efforts to remarket the Remarketed Notes, at a price of approximately 100.5% (but not less than 100%) of the aggregate principal amount of such Remarketed Notes, on the fifth Business Day immediately preceding the Purchase Contract Settlement Date and, if the remarketing on such date fails, on the fourth Business Day immediately preceding the Purchase Contract Settlement Date and, if the remarketing on such date fails, on the third Business Day immediately preceding the Purchase Contract Settlement Date. If the Remarketing Agent is able to remarket the Remarketed Notes at a price equal to or greater than 100% of the aggregate principal amount of the Remarketed Notes (a “Successful Remarketing”), the Remarketing Agent will remit the entire amount of the proceeds derived from the Successful Remarketing of the Notes that were components of New PEPS Units to the Collateral Agent; provided, however, that the Remarketing Agent may deduct as the remarketing fee (“Remarketing Fee”), an amount not exceeding 25 basis points (0.25%) of the aggregate principal amount of the Remarketed Notes from any amount of the proceeds of a Successful Remarketing in excess of the aggregate principal amount of the Remarketed Notes. The portion of the proceeds equal to the aggregate principal amount of the Remarketed Notes that were components of New PEPS Units will automatically be applied by the Collateral Agent, in accordance with the Pledge Agreement, to satisfy in full such New PEPS Units Holders’ obligations to pay the Purchase Price for the common stock under the related Purchase Contracts on the Purchase Contract Settlement Date. Any proceeds in excess of those required to pay the Purchase Price and the Remarketing Fee will be remitted to the Purchase Contract Agent for payment to the holders of the related New PEPS Units. Holders of the New PEPS Units 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 Remarketed Notes (other than to the Guarantor), 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 Guarantor will exercise its rights as a secured party with respect to such Notes that are components of New PEPS Units including those actions specified in paragraph (d) below.

     (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 Notes that are not pledged pursuant to the Pledge Agreement (“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 to the Pledge Agreement, 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 to the Pledge Agreement, 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

22

Corporation 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 Section 5.7(c) of the Pledge Agreement and not withdrawn pursuant to the terms in Section 5.7(c) of the Pledge Agreement 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)  With respect to Notes that are components of New PEPS Units and which are subject to a Failed Final Remarketing, the Collateral Agent for the benefit of the Corporation reserves all of its rights as a secured party with respect thereto and, subject to applicable law, 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 of New PEPS Units obligation’s under the Purchase Contracts.

     (e)  If in connection with the Remarketing, it shall not be advisable, in the view of counsel (which need not be an opinion) for each of the Remarketing Agent and the Guarantor, under applicable law, regulations or interpretations in effect as of the fifth, the fourth or the third Business Day immediately preceding the Purchase Contract Settlement Date, as the case may be, to register the offer and sale by the Remarketing Agent of the Notes under the Securities Act of 1933 as otherwise contemplated by Section 5 of the Remarketing Agreement or to deliver a Prospectus in connection with the Remarketing, the Guarantor will:

     (i) use its reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper and advisable to permit and effectuate the offer and sale of the Notes in connection with the Remarketing hereunder without registration under the Securities Act of 1933 pursuant to an exemption therefrom, if available, including the exemption afforded by Rule 144A promulgated under the Securities Act of 1933 by the Securities and Exchange Commission, and

     (ii) if requested by the Remarketing Agent, furnish a current preliminary remarketing memorandum and a current final remarketing memorandum (in such quantities as the Remarketing Agent may reasonably request) to be used by the Remarketing Agent in the Remarketing hereunder by a date that is not later than fifteen Business Days prior to the Purchase Contract Settlement Date (or such earlier date as the Remarketing Agent may reasonably request). The Guarantor shall pay all expenses relating thereto.

     Section 4.02 Failed Final Remarketing.

     (a)  If a Failed Final Remarketing occurs Holders of Notes that are not part of a New PEPS Unit will retain possession of their Notes.

     (b)  Holders of Notes that are not pledged to the Corporation and remain outstanding after a Failed Final Remarketing will have the right to put their Notes in whole or in part to the

23

Corporation for an amount equal to the principal amount of their Notes being put, plus accrued and unpaid interest, on the Purchase Contract Settlement Date (the “Put Exercise Date”), by delivering to the Trustee prior to 5:00 p.m., New York City time, on or prior to the second Business Day before the Put Exercise Date a Put Notice substantially in the form contained in the form of Note attached hereto as Exhibit A.

     (c)  In addition to the events listed as Events of Default in Section 801 of the Original Indenture, it shall be an additional Event of Default with respect to the Notes, if the Corporation defaults in the payment of an amount equal to the principal amount of, plus accrued and unpaid interest on, any Note following the exercise by the Holder of such Note of the put right established pursuant to this Section.

     (d)  If there is no Successful Remarketing on May 11, 2004, the Guarantor 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 Guarantor 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 Guarantor 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.

ARTICLE FIVE

MISCELLANEOUS PROVISIONS

     Section 5.01 Recitals by Corporation

     The recitals in this Supplemental Indenture are made by the Corporation and the Guarantor only and not by the Trustee, and all of the provisions contained in the Original Indenture in respect of the rights, privileges, immunities, powers and duties of the Trustee shall be applicable in respect of the Notes and this Supplemental Indenture as fully and with like effect as if set forth herein full and the Trustee makes no representations as to the validity or sufficiency of this Supplemental Indenture.

     Section 5.02 Ratification and Incorporation of Original Indenture

     As supplemented hereby, the Original Indenture is in all respects ratified and confirmed, and the Original Indenture and this Supplemental Indenture shall be read, taken and construed as one and the same instrument.

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     Section 5.03 Executed in Counterparts

     This Supplemental Indenture may be executed in several counterparts, each of which shall be deemed to be an original, and such counterparts shall together constitute but one and the same instrument.

ARTICLE SIX

TAX TREATMENT; ERISA

     Section 6.01 Tax Agreements

     The Corporation agrees, and by purchasing a beneficial ownership interest in the Notes each Holder of the Notes will be deemed to have agreed, for United States federal income tax purposes to treat the acquisition of a New PEPS Unit as the acquisition of a unit consisting of a Purchase Contract and a beneficial ownership interest in a Note issued by the Corporation and to treat the Notes as indebtedness.

     Section 6.02 ERISA Agreements

     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 new 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.

25

     IN WITNESS WHEREOF, each party hereto has caused this instrument to be signed in its name and behalf by its duly authorized officers, all as of the day and year first above written.

	PPL CAPITAL FUNDING, INC.
	By:
		Name:
Attest:		Title:
	PPL CORPORATION
	By:
		Name:
Attest:		Title:
	JPMORGAN CHASE BANK, as Trustee
	By:
		Name:
Attest:		Title:

26

EXHIBIT A

(Form of Face of Note)

     If the Note is to be a Global Note, insert: 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 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.

CUSIP No.

$

No.

PPL FUNDING CAPITAL, INC.
NOTES DUE MAY 18, 2006

     PPL Capital Funding, Inc., a Delaware corporation (the “Corporation,” which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to          , or registered assigns, the principal sum of           DOLLARS ($          ), [or such other principal amount as shall be set forth in the Schedule of Increases or Decreases attached hereto]* on May 18, 2006 (such date is hereinafter referred to as the “Stated Maturity”). This Note will bear interest (i) at the rate of

* Insert in Global Notes and Pledged Notes

A-1

7.29% per year (the “Coupon Rate”) from August 18, 2003 through and including the day immediately preceding May 18, 2004 and (ii)(A) in the case of a Successful Remarketing, at the Reset Rate on and after the Purchase Contract Settlement Date and (B) in the case of a Failed Final Remarketing, at the Coupon Rate on and after the Purchase Contract Settlement Date, until the principal thereof is paid or duly made available for payment. Interest will be payable, initially, quarterly in arrears on November 18, 2003, February 18, 2004 and May 18, 2004 (each, an “Interest Payment Date”) to the Person in whose name this Note, or any Predecessor Security, is registered at the close of business on the Regular Record Date for such interest installment; provided, however, that following the Purchase Contract Settlement Date, interest will be payable semi-annually in arrears on May 18 and November 18 of each year, commencing November 18, 2004, and such dates shall then be the “Interest Payment Dates.”

     The amount of interest payable on this Note for any period will be computed (1) for any full quarterly or semi-annual period, as applicable, on the basis of a 360-day year of twelve 30-day months and (2) for any period shorter than a full quarterly or semi-annual period, as applicable, on the basis of a 30-day month and, for any period less than a month, on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which interest is payable on the Notes is not a Business Day, then payment of the interest payable on that date will be made on the next day that is a Business Day (and without any interest or other payment in respect of any delay). The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest installment which shall be, (1) with respect to any Interest Payment Date for the Notes when represented by a Global Note, the Business Day immediately preceding such Interest Payment Date and (2) with respect to any Interest Payment Date for the Notes when held in certificated form, the 15^th day (whether or not a Business Day) prior to such Interest Payment Date. Any such interest installment not punctually paid or duly provided for on any Interest Payment Date shall forthwith cease to be payable to the Holders at the close of business on such Regular Record Date and may be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date to be fixed by the Trustee for the payment of such Defaulted Interest, notice whereof shall be given to the Holders of the Notes not less than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange, if any, on which the Notes shall be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. The principal and the interest on this Note shall be payable at the office or agency of the Corporation maintained for that purpose in the Borough of Manhattan, The City of New York, in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Corporation (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least sixteen (16) days prior to the date for payment by the Person entitled thereto.

     From the          , 2003 until May 18, 2004, the Notes will be the Corporation’s direct, unsecured obligations and will rank without preference or priority among themselves and equally with all of the Corporation’s existing and future unsecured and subordinated

A-2

indebtedness, subordinate and junior in right of payment to all of the Corporation’s Senior Indebtedness.

     On and after May 18, 2004, the Notes will become the Corporation’s direct, unsecured obligations and will rank without preference or priority among themselves and equally with all of the Corporation’s existing and future unsecured and unsubordinated indebtedness (including equal to all prior unsubordinated Securities issued pursuant to the Indenture), senior in right of payment to all of the Corporation’s subordinated indebtedness.

     If a Successful Remarketing of the Notes has not occurred prior to or on the third Business Day immediately preceding the Purchase Contract Settlement Date, Holders of Notes that remain outstanding will have the right to put their Notes to the Corporation for an amount equal to the principal amount of their Notes, plus accrued and unpaid interest, on May 18, 2004 (the “Put Exercise Date”), by notifying the Trustee on or prior to the second Business Day before the Put Exercise Date.

     In addition to the events listed as Events of Default in Section 801 of the Indenture, it shall be an additional Event of Default with respect to the Notes, if the Corporation defaults in the payment of an amount equal to the principal amount of, plus accrued and unpaid interest on, any Note following the exercise by the Holder of such Note of the put right referred to in the preceding paragraph.

     REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE 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 Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

     IN WITNESS WHEREOF, the Corporation has caused this instrument to be duly executed under its corporate seal.

Dated:
	PPL CAPITAL FUNDING, INC.
	By:
Attest:

A-3

CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

	JPMORGAN CHASE BANK, as Trustee
	By:
Dated:		Authorized Officer

A-4

(Form of Reverse of Note)

     This Note is one of a duly authorized issue of Securities of the Corporation (the “Securities”) issued and issuable in one or more series under an Indenture, dated as of November 1, 1997 (such Indenture as originally executed and delivered and as supplemented and amended from time to time thereafter including by Supplemental Indenture Number 5 dated as of August         , 2003, being herein called the “Indenture”), among the Corporation (formerly known as PP&L Capital Funding, Inc.), PPL Corporation (formerly known as PP&L Ressources, Inc.), as Guarantor (herein called the “Guarantor”, which term includes any successor under the Indenture), and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee (herein called the “Trustee”, which term includes any successor under the Indenture). This Security is one of the series designated on the face hereof as Notes due May 18, 2006 (the “Notes”). Such series is limited in aggregate principal amount up to         . Capitalized terms used herein for which no definition is provided herein shall have the meanings set forth in the Indenture.

     The Notes are not subject to a sinking fund provision and are not redeemable prior to Stated Maturity.

     The Indenture permits, with certain exceptions as therein provided, the Trustee to enter into one or more supplemental indentures for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, the Indenture with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities of all series then Outstanding under the Indenture, considered as one class; provided, however, that if there shall be Securities of more than one series Outstanding under the Indenture and if a proposed supplemental indenture shall directly affect the rights of the Holders of Securities of one or more, but less than all, of such series, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all series so directly affected, considered as one class, shall be required; and provided, further, that if the Securities of any series shall have been issued in more than one Tranche and if the proposed supplemental indenture shall directly affect the rights of the Holders of Securities of one or more, but less than all, of such Tranches, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all Tranches so directly affected, considered as one class, shall be required; and provided, further, that the Indenture permits the Trustee to enter into one or more supplemental indentures for limited purposes without the consent of any Holders of Securities. The Indenture also contains provisions permitting the Holders of a majority in principal amount of the Securities then Outstanding, on behalf of the Holders of all Securities, to waive compliance by the Corporation with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

     No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Corporation, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed.

A-5

     As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Corporation for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Corporation and the Security Registrar and duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of this series, of authorized denominations and of like tenor and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer or exchange, but the Corporation may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

     As provided in and subject to the provisions of the Indenture, the Holder of this Note shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Notes, the Holders of not less than 25% in principal amount of the Notes at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in principal amount of Notes at the time Outstanding a direction inconsistent with such request and shall have failed to institute any such proceeding for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Note for the enforcement of any payment of principal hereof or interest hereon on or after the respective due dates expressed herein.

     The provisions for defeasance and covenant defeasance in the Indenture shall not apply to the Notes.

     Prior to due presentment of this Note for registration of transfer, the Corporation, the Trustee and any agent of the Corporation or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Corporation, the Trustee nor any such agent shall be affected by notice to the contrary.

     No recourse shall be had for the payment of the principal or the interest on this Note, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, shareholder, officer or director, as such, past, present or future, of the Corporation or the Guarantor, as the case may be, subject to the provisions of the Guarantee of the Notes, or of any successor corporations, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released.

     The Notes shall be issuable in denominations of $1,000 and any integral multiples thereof except that an interest in a Note held as part of one New PEPS Unit represents a 1/40, or 2.5%, undivided beneficial ownership interest in a $1,000 principal amount of a Note; provided, however, that upon release by the Collateral Agent of Notes underlying the beneficial ownership

A-6

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, of the Purchase Contract Agreement) the Notes will be issuable in denominations of $25 principal amount and integral multiples thereof. As provided in the Indenture and subject to the limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by the Holder surrendering the same upon surrender of the Note or Notes to be exchanged at the office or agency of the Corporation.

     The Corporation agrees, and by purchasing a beneficial ownership interest in the Notes each Holder of the Notes will be deemed to (i) have agreed, for United States federal income tax purposes to treat the acquisition of a New PEPS Unit as the acquisition of a unit consisting of a Purchase Contract and a beneficial ownership interest in a Note issued by the Corporation and to treat the Notes as indebtedness and (ii) 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 new purchase contract and/or the disposition of any such New PEPS Unit (or any component security of such unit) either (a) 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 employee benefit plan that is subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), plan, individual retirement account or other arrangement that is subject to Section 4975 of the Internal Revenue Code of 1986 as amended (the “Code”) or provisions under any federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code (collectively, “Similar Laws”), or any entity whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement or (b) 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.

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

[Insert Form of Guarantee]

A-7

ABBREVIATIONS

     The following abbreviations, when used in the inscription on the fact 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)

TEN ENT — as tenants by the entireties	Under Uniform Gifts to Minors Act _________________
		(State)

JT TEN —	as joint tenants with rights of
	survivorship and not as
	tenants in common

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

FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto                                (please insert Social Security or other identifying number of assignee) PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF ASSIGNEE the within Security and all rights thereunder, hereby irrevocably constituting and appointing Agent to transfer said Security on the books of the Corporation, with full power of substitution in the premises.

Dated:_____________________

NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular without alteration or enlargement, or any change whatever.

Signature Guarantee:                                                   

A-8

SIGNATURE GUARANTEE

     Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

A-9

PUT NOTICE

     The undersigned elects have this Note (or portion thereof specified below) purchased by the Corporation pursuant to the put right provided for in Section 4.02(b) of Supplemental Indenture Number 5, payment of the principal amount thereof together with accrued and unpaid interest to the Put Exercise Date to be made to the undersigned at:

(Please print or typewrite name and address of the undersigned)

     If less than the entire principal amount of the within Note is to be repaid, specify the portion thereof which the holder elects to have repaid:         ; and specify the denomination or denominations (which shall not be less than the minimum authorized denomination) of the Notes to be issued to the holder for the portion of the within Note not being repaid (in the absence of any such specification, one such Note will be issued for the portion not being repaid);         .

Date:	Signature:
	(sign exactly as name appears on the other side of the Note)

Signature Guarantee:
	(Signature must be guaranteed)

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to Securities and Exchange Commission Rule 17Ad-15.

A-10

[TO BE ATTACHED TO GLOBAL CERTIFICATES AND PLEDGED NOTES]

SCHEDULE OF INCREASES OR DECREASES

The following increases or decreases in this [Global Certificate] [Pledged Note]
have been made:

	Amount of decrease	Amount of increase	Principal amount of
	in principal amount	in principal amount	Note evidenced by	Signature of
	of Note evidenced by	of Note evidenced	the [Global	authorized
	the [Global	by the [Global	Certificate] [Pledged	officer of Trustee
	Certificate] [Pledged	Certificate] [Pledged	Note] following such	or Custodial
Date	Note]	Note]	decrease or increase	Agent

A-11

EXHIBIT B

CERTIFICATE OF AUTHENTICATION

     This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

JPMORGAN CHASE BANK, as Trustee

By:

Authorized Officer

B-1 EX-5.1 7 y89600exv5w1.htm OPINION OF THOMAS D. SALUS, ESQ.

EXHIBIT 5.1

[PPL Corporation Letterhead]

September 2, 2003

PPL Corporation
PPL Capital Funding, Inc.
Two North Ninth Street
Allentown, Pennsylvania 18101

Ladies and Gentlemen:

     I am Senior Counsel of PPL Services Corporation, a wholly owned subsidiary of PPL Corporation, a Pennsylvania corporation (the “Guarantor”), and an affiliate of PPL Capital Funding, Inc., a Delaware corporation (the “Company”) (collectively “PPL”), and as such am familiar with their affairs, including the Registration Statement on Form S-4 (the “Registration Statement”) to be filed by PPL with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Act”), relating to the issuance of (i) Notes due May 18, 2006 (the “Notes”) issued by the Company and guaranteed by the Guarantor (the “Guarantee”); (ii) contracts (the “Purchase Contracts”) for purchase and sale of shares of the Guarantor’s common stock, par value $0.01 per share (the “Common Stock”); (iii) 7 3/4% Premium Equity Participating Security Units, Series B (the “Equity Units”) issued by PPL, consisting of (a) a Purchase Contract under which the holder, upon settlement, will purchase shares of Common Stock and (b) an undivided beneficial ownership interest of 1/40, or

PPL Corporation	- -2-	September 2, 2003
PPL Capital Funding, Inc.

2.5%, of a Note in a principal amount of $1,000; and (iv) Common Stock which may be issued on or before settlement of the Purchase Contracts. The Notes, the Guarantee, the Purchase Contracts, the Equity Units and the Common Stock are hereinafter referred to collectively as the “Securities.” The Securities will be issued in exchange (the “Exchange”) for PPL’s outstanding 7 3/4% Premium Equity Participating Security Units.

     The Notes and the Guarantee will be issued pursuant to an Indenture (the “Original Indenture”), dated as of November 1, 1997, as supplemented by a supplemental indenture relating to the terms of the Notes, dated as of             , 2003 (the “Supplemental Indenture” and, together with the Original Indenture, the “Indenture”) in each case, entered into between the Guarantor, the Company and JPMorgan Chase Bank, as Trustee (the “Trustee”).

     The Purchase Contracts will be issued pursuant to a Purchase Contract Agreement (the “Purchase Contract Agreement”), dated as of         , 2003, entered into between the Guarantor and JPMorgan Chase Bank, as purchase contract agent (the “Purchase Contract Agent”).

     In rendering the opinions below, I have assumed that (i) at the time of execution, authentication, issuance and delivery of the Notes and the Guarantee, the Supplemental Indenture will be the valid and legally binding obligation of the Trustee and (ii) at the time of execution, authentication, issuance and delivery of the Purchase Contracts and the Equity Units, the Purchase Contract Agreement will be the valid and legally binding obligation of the Purchase Contract Agent.

PPL Corporation	- -3-	September 2, 2003
PPL Capital Funding, Inc.

     I have examined the Registration Statement, the Original Indenture, the form of the Supplemental Indenture, the form of the Notes, the form of the Guarantee, the form of the Purchase Contract Agreement, the form of the Purchase Contracts, the form of certificate representing the Equity Units and a specimen of the share certificate evidencing the Common Stock, each of which have been filed with the Commission as exhibits to the Registration Statement. I have also examined or caused to be examined on my behalf, or there have been examined by predecessors of mine, the franchises under which the Guarantor operates, consisting of charter rights from the Commonwealth of Pennsylvania and local consents. Based upon such examination, upon my familiarity with the Guarantor, and upon an examination of such other documents and questions of law as I have deemed appropriate for purposes of this opinion, I am of the opinion that:

          (1) Each of the Guarantor and the Company is validly organized and existing as a corporation in good standing under the laws of the jurisdiction of its organization and is duly qualified to carry on the business which it is now conducting.

          (2) The Notes have been duly authorized by the Guarantor and by the Company. All other requisite action necessary to make the Notes valid, legal and binding obligations of the Company will have been taken when:

               (a) the Registration Statement, as it may be amended, shall have become effective under the Act;

               (b) the Supplemental Indenture shall have been duly executed by the Company and the Guarantor and delivered to the trustee thereunder in accordance with the necessary authorizations; and

               (c) the Notes shall have been duly executed, issued and delivered upon the Exchange and in accordance with the provisions of the definitive Indenture.

          (3)  The Guarantee has been duly authorized by the Guarantor. All other requisite action necessary to make the Guarantee the valid, legal and binding obligation of the Guarantor, enforceable in accordance with its terms, will have been taken when:

PPL Corporation	- -4-	September 2, 2003
PPL Capital Funding, Inc.

          (a) the Registration Statement, as it may be amended, shall have become effective under the Act;

          (b) the Supplemental Indenture shall have been duly executed, authenticated, issued and delivered to the trustee thereunder in accordance with the necessary authorizations; and

          (c) the Guarantee shall have been duly executed, issued and delivered upon the Exchange and in accordance with the provisions of the definitive Indenture (assuming the Notes shall have been duly executed, authorized, issued and delivered as described above).

     (4)  The Purchase Contract Agreement has been duly authorized by the Guarantor. All other requisite action necessary to make the Purchase Contract Agreement the valid, legal and binding obligation of the Guarantor will have been taken when:

          (a) the Registration Statement, as it may be amended, shall have become effective under the Act; and

          (b) the Purchase Contract Agreement shall have been duly executed, issued and delivered to the to the Purchase Contract Agent.

     (5)  The Purchase Contracts have been duly authorized by the Guarantor. All other requisite action necessary to make the Purchase Contracts valid, legal and binding obligations of the Guarantor will have been taken when:

          (a) the Registration Statement, as it may be amended, shall have become effective under the Act;

          (b) the Purchase Contracts shall have been duly executed and delivered by the Guarantor in accordance with the necessary corporate authorizations; and

          (c) the Purchase Contracts shall have been issued and delivered upon the Exchange and in accordance with the terms of the provisions of the Purchase Contract Agreement (assuming the Purchase Contract Agreement shall have been duly executed, authorized, issued and delivered as described above).

     (6)  The Equity Units have been duly authorized by the Guarantor. All other requisite action necessary to make the Equity Units valid, legal and binding obligations of the Guarantor will have been taken when:

          (a) the Registration Statement, as it may be amended, shall have become effective under the Act; and

PPL Corporation	- -5-	September 2, 2003
PPL Capital Funding, Inc.

          (b) the Equity Units shall have been issued and delivered upon the Exchange and in accordance with the terms of the provisions of the definitive Purchase Contract Agreement (assuming the due execution, authentication, issuance and delivery of the Purchase Contracts, the Notes, the Purchase Contract Agreement and the Guarantee, each as described above).

     (7)  The issuance and sale of the Common Stock has been duly authorized by the Guarantor. The Common Stock will be validly issued, fully paid and non-assessable when:

          (a) the Registration Statement, as it may be amended, shall have become effective under the Act; and

          (b) the Common Stock shall have been issued and delivered for the consideration contemplated by, and otherwise in conformity with, the acts and proceedings referred to above.

     My opinions set forth in paragraphs 2 through 6 above are subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, (ii) general equitable principles (whether considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing.

     I am a member of the Pennsylvania Bar and the Delaware Bar and do not hold myself out as an expert on the laws of any other jurisdiction. Insofar as the opinions herein relate to or are dependent upon matters governed by laws of the State of New York, I have relied upon the opinion of Simpson Thacher & Bartlett LLP dated the date hereof.

     I hereby consent to the use of this opinion as an exhibit to said Registration Statement and to the use of my name in the Registration Statement and in the Prospectus constituting a part thereof under the caption “Legal Matters.” I also hereby give my consent to the use of my name in the opinion of Simpson Thacher & Bartlett LLP, filed as Exhibit 5.2 to said Registration Statement.

PPL Corporation	- -6-	September 2, 2003
PPL Capital Funding, Inc.

     In rendering its opinion, Simpson Thacher & Bartlett LLP may rely upon this opinion as to matters of Pennsylvania law addressed herein as if this opinion were addressed directly to them. Except as aforesaid, without my prior written consent, this opinion may not be furnished or quoted to, or relied upon by, any other person or entity for any purpose.

Very truly yours,
 

/s/ Thomas D. Salus

Thomas D. Salus

EX-5.2 8 y89600exv5w2.htm OPINION OF SIMPSON THACHER & BARTLETT LLP

EXHIBIT 5.2

[Letterhead of Simpson Thacher & Bartlett LLP]

September 2, 2003

PPL Corporation
PPL Capital Funding, Inc.
Two North Ninth Street
Allentown, Pennsylvania 18101

Ladies and Gentlemen:

     We have acted as counsel to PPL Corporation, a Pennsylvania corporation (the “Company”), and to PPL Capital Funding, Inc., a Delaware corporation (“Capital Funding”) (collectively “PPL”), in connection with the Registration Statement on Form S-4 (the “Registration Statement”) filed by PPL with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Act”), relating to the issuance of (i) Notes due May 18, 2006 (the “Notes”) issued by Capital Funding and guaranteed by the Company (the “Guarantee”); (ii) contracts (the “Purchase Contracts”) for the purchase and sale of shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”); (iii) 7 3/4% Premium Equity Participating Security Units, Series B (the “Equity Units”), issued by PPL, consisting of (a) a Purchase Contract under which the holder, upon settlement, will purchase shares of Common Stock and (b) an undivided beneficial ownership interest of 1/40, or 2.5%, of a Note in a principal amount of $1,000; and (iv) Common Stock which may be issued on or before settlement of the Purchase Contracts. The Notes, the Guarantee, the

-2-

PPL Corporation
PPL Capital Funding, Inc. September 2, 2003

Purchase Contracts, the Equity Units and the Common Stock are hereinafter referred to collectively as the “Securities.” The Securities will be issued in exchange (the “Exchange”) for PPL’s outstanding 7 3/4% Premium Equity Participating Security Units.

     The Notes and the Guarantee will be issued pursuant to an Indenture (the “Original Indenture”), dated as of November 1, 1997, as supplemented by a supplemental indenture relating to the terms of the Notes, dated as of      , 2003 (the “Supplemental Indenture” and, together with the Original Indenture, the “Indenture”), in each case, entered into between the Company, Capital Funding and JPMorgan Chase Bank, as Trustee (the “Trustee”).

     The Purchase Contracts will be issued pursuant to a Purchase Contract Agreement (the “Purchase Contract Agreement”), dated as of                    , 2003, entered into between the Company and JPMorgan Chase Bank, as purchase contract agent (the “Purchase Contract Agent”).

     We have examined the Registration Statement, the Original Indenture, the form of the Supplemental Indenture, the form of the Notes, the form of the Guarantee, the form of the Purchase Contract Agreement, the form of the Purchase Contracts, the form of certificate representing the Equity Units and a specimen of the share certificate evidencing the Common Stock, each of which has been filed with the Commission as an exhibit to the Registration Statement. We also have examined the originals, or duplicates or certified or conformed copies, of such records, agreements, instruments and other documents and have made such other and further investigations as we have deemed relevant and necessary in connection with the opinions expressed herein. As to questions of fact material to this opinion, we have relied upon certificates of public officials and of officers and representatives of PPL.

-3-

PPL Corporation
PPL Capital Funding, Inc. September 2, 2003

     In rendering the opinions set forth below, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as duplicates or certified or conformed copies, and the authenticity of the originals of such latter documents. We also have assumed that: (i) at the time of execution, authentication, issuance and delivery of the Notes and the Guarantee, the Supplemental Indenture will be the valid and legally binding obligation of the Trustee; and (ii) at the time of execution, authentication, issuance and delivery of the Purchase Contracts and the Equity Units, the Purchase Contract Agreement will be the valid and legally binding obligation of the Purchase Contract Agent. We have assumed further that: (i) at the time of execution, authentication, issuance and delivery of the Notes, the Guarantee will have been duly executed and delivered by the Company and the Supplemental Indenture will have been duly executed and delivered by Capital Funding; and (ii) at the time of execution, authentication, issuance and delivery of the Purchase Contracts and the Equity Units, the Purchase Contract Agreement will have been duly executed and delivered by the Company.

     Based upon the foregoing, and subject to the qualifications and limitations stated herein, we are of the opinion that:

     1.     When the Notes have been duly executed, authenticated, issued and delivered upon the Exchange and in accordance with the provisions of the Indenture, the Notes will constitute valid and legally binding obligations of Capital Funding, enforceable against Capital Funding in accordance with their terms.

     2.     When the Guarantee has been duly executed and issued upon the Exchange and in accordance with the provisions of the Indenture (assuming the due execution, authentication, issuance and delivery of the Notes upon the Exchange and in accordance with the provisions of the Indenture), the Guarantee will constitute a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms.

     3.     When the Purchase Contracts have been duly executed, authenticated, issued and delivered upon the Exchange and in accordance with the provisions of the definitive

-4-

PPL Corporation
PPL Capital Funding, Inc. September 2, 2003

Purchase Contract Agreement, the Purchase Contracts will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms.

     4.     When the Equity Units have been duly executed, authenticated, issued and delivered upon the Exchange (assuming the due execution, authentication, issuance and delivery of the Purchase Contracts, the Notes and the Guarantee, each as described above) and in accordance with the provisions of the definitive Purchase Contract Agreement, the Equity Units will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms.

     5.     When the Common Stock has been issued and delivered, upon payment of the consideration therefor in accordance with the Purchase Contracts approved by the Board of Directors of the Company, the Common Stock will be validly issued, fully paid and nonassessable.

     Our opinions set forth in paragraphs 1 through 4 above are subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, (ii) general equitable principles (whether considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing.

     Insofar as the opinions expressed herein relate to or are dependent upon matters governed by the laws of the Commonwealth of Pennsylvania, we have relied upon the opinion of Thomas D. Salus, Esq., Senior Counsel of PPL Services Corporation, dated the date hereof and filed as Exhibit 5.1 to the Registration Statement.

     We are members of the Bar of the State of New York, and we do not express any opinion herein concerning any law other than the law of the State of New York, the federal law of the United States and, to the extent set forth herein, the laws of the Commonwealth of Pennsylvania.

-5-

PPL Corporation
PPL Capital Funding, Inc. September 2, 2003

     We hereby consent to the filing of this opinion letter as Exhibit 5.2 to the Registration Statement and to the use of our name under the caption “Legal Matters” in the Prospectus included in the Registration Statement.

     In rendering his opinion, Thomas D. Salus, Esq. may rely upon this opinion as to matters of New York law addressed herein as if this opinion were addressed directly to him. Except as aforesaid, without prior written consent, this opinion may not be furnished or quoted to, or relied upon by, any other person or entity for any purpose.

Very truly yours,

/s/ Simpson Thacher & Bartlett LLP

SIMPSON THACHER & BARTLETT LLP

EX-8.1 9 y89600exv8w1.htm TAX OPINION OF SIMPSON THACHER & BARTLETT LLP

EXHIBIT 8.1

SIMPSON THACHER & BARTLETT LLP
425 LEXINGTON AVE.
NEW YORK, NY 10017
(212) 455-2000

FACSIMILE: (212) 455-2502

September 2, 2003

PPL Corporation
PPL Capital Funding, Inc.
Two North Ninth Street
Allentown, Pennsylvania 18101

Ladies and Gentlemen:

     We have acted as counsel to PPL Capital Funding, Inc., a Delaware Corporation (the “Company”), and PPL Corporation, a Pennsylvania corporation (the “Parent” and together the “Issuers”), in connection with the preparation and filing by the Issuers with the Securities and Exchange Commission of the Registration Statement on Form S-4 dated as of September [], 2003 under the Securities Act of 1933, as amended, (the “Registration Statement”) with respect to the offer to exchange for each Outstanding PEPS Unit a cash payment of $0.375 plus a 7 3/4 Premium Equity Participating Security Units, Series B (a “New PEPS Unit”) comprising (i) a purchase contract under which the holder agrees to purchase a formula number of shares of common stock of the Parent and (ii) a 7.29% note issued by the Company. All capitalized terms used in this opinion letter and not otherwise defined herein shall have the meanings ascribed to such terms in the Registration Statement.

     In delivering this opinion letter, we have reviewed and relied upon the Registration Statement and the related documents. In such examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies, and the authenticity of the originals of such latter documents.

     Based upon the foregoing, and subject to the qualifications and limitations stated herein and in the Registration Statement, we are of the opinion that the statements set forth in the Registration Statement under the caption “United States Federal Income Tax Considerations,” insofar as they purport to constitute summaries of matters of United States federal tax law and regulations or legal conclusions with respect thereto, constitute accurate summaries of the matters described therein in all material respects.

     We are members of the Bar of the State of New York, and we do not express any opinion herein concerning any law other than the federal tax law of the United States.

     We hereby consent to the use of our name in the Registration Statement under the caption “Legal Matters”.

Very truly yours,
 

/s/ Simpson Thacher & Bartlett LLP
 

SIMPSON THACHER & BARTLETT LLP

EX-23.1 10 y89600exv23w1.htm CONSENT OF PRICEWATERHOUSECOOPERS LLP

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Registration Statement on Form S-4 of PPL Corporation and PPL Capital Funding, Inc. of our report dated February 3, 2003 relating to the consolidated financial statements and financial statement schedule, which appears in the PPL Corporation Annual Report on Form 10-K for the year ended December 31, 2002. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

Philadelphia, PA
September 2, 2003

EX-24.1 11 y89600exv24w1.htm POWER OF ATTORNEY OF PPL CORPORATION

Exhibit 24.1

PPL CORPORATION

POWER OF ATTORNEY

     The undersigned directors of PPL Corporation, a Pennsylvania corporation, hereby appoint William F. Hecht, John R. Biggar and Robert J. Grey their true and lawful attorney, and each of them their true and lawful attorney, with power to act without the other and with full power of substitution and resubstitution, to execute for the undersigned directors and in their names to file with the Securities and Exchange Commission, Washington, D.C., under provision of the Securities Act of 1933, as amended, a registration statement or registration statements for the registration under provisions of the Securities Act of 1933, as amended, and any other rules, regulations or requirements of the Securities and Exchange Commission in respect thereof, of (i) equity-linked units (the “New PEPS Units”) to be issued by PPL Corporation and its subsidiaries, including the common stock and the guarantee to be issued by PPL Corporation in connection therewith, and (ii) the exchange of any or all of the currently outstanding 7-3/4% Premium Equity Participating Security Units issued by PPL Corporation and its subsidiaries (the “Existing PEPS Units”) for the New PEPS Units plus a cash payment for each validly tendered and accepted Existing PEPS Unit, and any and all amendments thereto, whether said amendments add to, delete from or otherwise alter any such registration statement or registration statements, or add or withdraw any exhibits or schedules to be filed therewith and any and all instruments in connection therewith. The undersigned hereby grant to said attorneys and each of them full power and authority to do and perform in the name of and on behalf of the undersigned, and in any and all capabilities, any act and thing whatsoever required or necessary to be done in and about the

premises, as fully and to all intents and purposes as the undersigned might do, hereby ratifying and approving the acts of said attorneys and each of them.

      IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 27th day of August, 2003.

/s/ Frederick M. Bernthal	/s/ Stuart Heydt
Frederick M. Bernthal	Stuart Heydt
/s/ John W. Conway	/s/ W. Keith Smith
John W. Conway	W. Keith Smith
/s/ E. Allen Deaver	/s/ Susan M. Satinecker
E. Allen Deaver	Susan M. Satinecker
/s/ Louise K. Goeser
Louise K. Goeser

2 EX-25.1 12 y89600exv25w1.htm STATEMENT OF ELIGIBILITY OF TRUSTEE

EXHIBIT 25.1

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)

JPMORGAN CHASE BANK
(Exact name of trustee as specified in its charter)

New York
(State of incorporation
if not a national bank) 13-4994650
(I.R.S. employer
identification No.)

270 Park Avenue
New York, New York
(Address of principal executive offices) 10017
(Zip Code)

William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)

PPL Corporation
PPL Capital Funding, Inc.
(Exact name of obligor as specified in its charter)

Pennsylvania
Delaware
(State or other jurisdiction of
incorporation or organization) 23-2758192
23-2926644
(I.R.S. employer
identification No.)

Two North Ninth Street
Allentown, Pennsylvania
(Address of principal executive offices) 18101-1179
(Zip Code)

PPL Capital Funding Notes guaranteed by PPL Corporation
(Title of the indenture securities)

GENERAL

Item 1. General Information.

     Furnish the following information as to the trustee:

     (a)  Name and address of each examining or supervising authority to which it is subject.

     New York State Banking Department, State House, Albany, New York 12110.

     Board of Governors of the Federal Reserve System, Washington, D.C., 20551

     Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y.

     Federal Deposit Insurance Corporation, Washington, D.C., 20429.

     (b)  Whether it is authorized to exercise corporate trust powers.

     Yes.

Item 2. Affiliations with the Obligor and Guarantors.

     If the obligor or any Guarantor is an affiliate of the trustee, describe each such affiliation.

     None.

Item 16. List of Exhibits

     List below all exhibits filed as a part of this Statement of Eligibility.

     1.     A copy of the Restated Organization Certificate of the Trustee dated March 25, 1997 and the Certificate of Amendment dated October 22, 2001 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-76894, which is incorporated by reference.)

     2.     A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). On November 11, 2001, in connection with the merger of The Chase Manhattan Bank and Morgan Guaranty Trust Company of New York, the surviving corporation was renamed JPMorgan Chase Bank.

     3.     None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2.

     4.     A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-76894, which is incorporated by reference.)

     5.     Not applicable.

     6.     The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). On November 11, 2001, in connection with the merger of The Chase Manhattan Bank and Morgan Guaranty Trust Company of New York, the surviving corporation was renamed JPMorgan Chase Bank.

     7.     A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority.

     8.     Not applicable.

     9.     Not applicable.

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SIGNATURE

     Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, JPMorgan Chase Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 29th day of August, 2003.

JPMORGAN CHASE BANK
By	/s/ Alfia Monastra
	Alfia Monastra
	Vice President

Item 16. List of Exhibits

     List below all exhibits filed as a part of this Statement of Eligibility.

     1.     A copy of the Restated Organization Certificate of the Trustee dated March 25, 1997 and the Certificate of Amendment dated October 22, 2001 (see Exhibit 1 to Form T-1 filed in connections with Registration Statement No. 333-76894, which is incorporated by reference.)

     2.     A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). On November 11, 2001, in connection with the merger of The Chase Manhattan Bank and Morgan Guaranty Trust Company of New York, the surviving corporation was renamed JPMorgan Chase Bank.

     3.     None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2.

     4.     A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement 333-76894, which is incorporated by reference.)

     5.     Not applicable.

     6.     The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference). On November 11, 2001, in connection with the merger of The Chase Manhattan Bank and Morgan Guaranty Trust Company of New York, the surviving corporation was renamed JPMorgan Chase Bank.

     7.     A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority.

     8.     Not applicable.

     9.     Not applicable.

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SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, JPMorgan Chase Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 29th day of August, 2003.

JPMORGAN CHASE BANK
By	/s/ Alfia Monastra
	Vice President

EX-99.1 13 y89600exv99w1.htm FORM OF LETTER OF TRANSMITTAL

EXHIBIT 99.1

LETTER OF TRANSMITTAL

for

7 3/4% PEPS^SM Units

(Cusip No. 69352F204)

PPL Corporation

Offer to Exchange

7 3/4% PEPS^SM Units, Series B and

a Cash Payment

For the 7 3/4% PEPS^SM Units

Pursuant to, and subject to the terms and conditions described in, the Prospectus

dated                         , 2003

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5 P.M., NEW YORK CITY TIME, ON                         , 2003, UNLESS EARLIER TERMINATED OR EXTENDED BY PPL CORPORATION

The Exchange Agent for the Exchange Offer is:

JPMORGAN CHASE BANK

		By Registered or	By Facsimile
By Hand:	By Courier:	Certified Mail:	(Eligible Institutions Only):
Institutional Trust Services Window 4 New York Plaza, 1st Floor New York, New York 10004-2413	Institutional Trust Services 2001 Bryan Street 9th Floor Dallas, TX 75201 Attn: Frank Ivins Personal & Confidential	Institutional Trust Services P.O. Box 2320 Dallas, TX 75221-2320 Attn: Frank Ivins Personal & Confidential	Attn: Frank Ivins Personal & Confidential (214) 468-6494

      For Information Call: (800) 275-2048

      For Confirmation by Telephone: (214) 468-6464

      DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE VALID DELIVERY.

      Capitalized terms used but not defined herein shall have the same meaning given them in the Prospectus (as defined below).

      This Letter of Transmittal need not be completed if (a) the 7 3/4% Premium Equity Participating Security Units (PEPS^SM Units) (the “Outstanding PEPS Units”) are being tendered by book-entry transfer to the account maintained by the Exchange Agent at The Depository Trust Company (“DTC”) pursuant to the procedures set forth in the Prospectus under “The Exchange Offer—Procedures for Tendering” beginning on page 40 and (b) an “agent’s message” is delivered to the Exchange Agent as described on page 41 of the Prospectus.

      THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. If Outstanding PEPS Units are registered in different names, a separate Letter of Transmittal must be submitted for each registered owner. See Instruction 2.

      This Letter of Transmittal (the “Letter”) relates to the offer (the “Exchange Offer”) of PPL Corporation (“PPL”) to exchange 7 3/4% Premium Equity Participating Security Units (PEPS^SM Units), Series B (the “New PEPS Units”) plus a cash payment of $0.375 for each validly tendered and accepted Outstanding PEPS Unit, pursuant to the prospectus dated,                     2003 (as may be amended or supplemented from time to time, the “Prospectus”). For each Outstanding PEPS Unit validly tendered and accepted for exchange, you will receive a New PEPS Unit and a cash payment equal to $0.375. All tenders of Outstanding PEPS Units pursuant to the Exchange Offer must be received by the Exchange Agent prior to 5:00 p.m., New York City time, on                      2003; provided that PPL reserves the right, at any time or from time to time, to extend the Exchange Offer at its discretion, in which event the term “Expiration Date” shall mean the latest time and date to which the Exchange Offer is extended. PPL will notify holders of the Outstanding PEPS Units of any extension by means of a press release or other public announcement prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date.

      The Exchange Offer is subject to certain conditions precedent as set forth in the Prospectus under the caption “The Exchange Offer—Conditions Precedent to the Exchange Offer,” including the condition that the Outstanding PEPS Units remain listed on the New York Stock Exchange, or the NYSE, and the minimum condition that there are validly tendered at the expiration of the exchange offer at least 35% of the Outstanding PEPS Units. In the event that PPL determines there is any likelihood that the NYSE continued-listing condition may not be met, PPL may accept a pro rata amount of the Outstanding PEPS Units tendered in the offer in order to ensure that the Outstanding PEPS Units continue to be listed on the NYSE.

      This Letter is to be completed by a holder of Outstanding PEPS Units if a tender is to be made by book-entry transfer to the account maintained by the Exchange Agent at DTC pursuant to the procedures set forth in the Prospectus under “The Exchange Offer—Procedures for Tendering” beginning on page 40, but only if an agent’s message is not delivered through DTC’s Automated Tender Offer Program (“ATOP”). Tenders by book-entry transfer may also be made through ATOP. DTC participants that are accepting the Exchange Offer must transmit their acceptance to DTC through ATOP. DTC will then verify the acceptance and execute a book-entry delivery to the Exchange Agent’s account at DTC. DTC will also send an agent’s message to the Exchange Agent for its acceptance. The agent’s message will state that DTC has received an express acknowledgment from the tendering holder of Outstanding PEPS Units, which acknowledgment will confirm that such holder of Outstanding PEPS Units received and agrees to be bound by, and makes each of the representations and warranties contained in, this Letter, and that PPL may enforce this Letter against such holder of Outstanding PEPS Units. Delivery of the agent’s message by DTC will satisfy the terms of the Exchange Offer in lieu of execution and delivery of this Letter by the DTC participant identified in the agent’s message. Accordingly, this Letter need not be completed by a holder tendering through ATOP.

      Holders of Outstanding PEPS Units who are unable to complete the procedures for book-entry transfer of their Outstanding PEPS Units into the Exchange Agent’s account at DTC prior to the Expiration Date must tender their Outstanding PEPS Units according to the guaranteed delivery procedures set forth in the Prospectus under “The Exchange Offer—Procedures for Tendering—Guaranteed Delivery” on page 41.

DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

      The undersigned has completed, executed and delivered this Letter to indicate the action the undersigned desires to take with respect to the Exchange Offer.

      List below the Outstanding PEPS Units to which this Letter relates. If Outstanding PEPS Units are registered in different names, a separate Letter must be submitted for each registered owner. See Instruction 2.

DESCRIPTION OF OUTSTANDING PEPS UNITS TENDERED

Name of DTC Participant
and Participant’s DTC Account Number	Number of Outstanding
in which Outstanding PEPS Units are Held	PEPS Units Tendered

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PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS

Ladies and Gentlemen:

      By execution hereof, the undersigned acknowledges that he or she has received the Prospectus and this Letter, which together constitute PPL’s Exchange Offer, to exchange New PEPS Units plus a cash payment of $0.375 for each Outstanding PEPS Unit, on the terms and subject to the conditions of the Prospectus.

      Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to PPL the number of Outstanding PEPS Units indicated above pursuant to the Exchange Offer for New PEPS Units plus a cash payment of $0.375 for each validly tendered Outstanding PEPS Unit. As used herein, “Exchange Date” shall mean the third business day following               , 2003, or, if PPL extends the Exchange Offer, the third business day following the latest date and time to which the Exchange Offer is extended (as so extended, the “Expiration Date”); provided, however, if proration of tendered Outstanding PEPS Units is required, PPL does not expect that it would be able to notify you of that fact or to accept Outstanding PEPS Units for exchange from three up to seven business days after the expiration date.

      Subject to, and effective upon, the acceptance of Outstanding PEPS Units tendered hereby, by executing and delivering this Letter (or agreeing to the terms of this Letter pursuant to an agent’s message) the undersigned: (i) irrevocably sells, assigns, and transfers to or upon the order of PPL all right, title and interest in and to, and all claims in respect of or arising or having arisen as a result of the undersigned’s status as a holder of the Outstanding PEPS Units tendered thereby; (ii) waives any and all rights with respect to the Outstanding PEPS Units tendered; and (iii) releases and discharges PPL, the purchase contract agent, the collateral agent, the securities intermediary, the trustees of the trust and the subordinated indenture trustee with respect to the Outstanding PEPS Units from any and all claims such holder may have, now or in the future, arising out of or related to the Outstanding PEPS Units. The undersigned acknowledges and agrees that the tender of Outstanding PEPS Units made hereby may not be withdrawn except in accordance with the procedures set forth in the Prospectus.

      The undersigned represents and warrants that it has full power and authority to legally tender, exchange, assign and transfer the Outstanding PEPS Units tendered hereby and to acquire the New PEPS Units issuable upon the exchange of such tendered Outstanding PEPS Units, and that, when and if the Outstanding PEPS Units tendered hereby are accepted for exchange, PPL will acquire good and unencumbered title to the tendered Outstanding PEPS Units, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim or right. The undersigned also warrants that it will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or PPL to be necessary or desirable to transfer ownership of such Outstanding PEPS Units on the account books maintained by DTC.

      The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as the true and lawful agent and attorney-in-fact of the undersigned (with full knowledge that the Exchange Agent also acts as the agent of PPL) with respect to such Outstanding PEPS Units with full power of substitution to: (i) transfer ownership of such Outstanding PEPS Units on the account books maintained by DTC to, or upon the order of, PPL; (ii) present such Outstanding PEPS Units for transfer of ownership on the books of PPL; (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Outstanding PEPS Units; and (iv) deliver, in book-entry form, the New PEPS Units issuable upon acceptance of the Outstanding PEPS Units tendered hereby, plus a cash payment of $0.375 for each Outstanding PEPS Unit accepted, together with any Outstanding PEPS Units not accepted in the Exchange Offer, to the DTC account designated herein by the undersigned, all in accordance with the terms and conditions of the Exchange Offer as described in the Prospectus.

      All authority conferred or agreed to be conferred in this Letter shall survive the death or incapacity of the undersigned and all obligations of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators and legal representatives of the undersigned.

      The Exchange Offer is subject to certain conditions as set forth in the Prospectus under the caption “The Exchange Offer — Conditions Precedent to the Exchange Offer.” The undersigned recognizes that as a result of these conditions (which may be waived by PPL, in whole or in part, in the sole discretion of PPL), as more particularly set forth in the Prospectus, PPL may not be required to accept all or any of the Outstanding PEPS Units tendered hereby.

      The undersigned understands that a valid tender of Outstanding PEPS Units is not made in acceptable form and risk of loss therefore does not pass until receipt by the Exchange Agent of this Letter (or an agent’s message in lieu thereof) or a facsimile hereof, duly completed, dated and signed, together with all accompanying evidences of authority and any other

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required documents and signature guarantees in form satisfactory to PPL (which may delegate power in whole or in part to the Exchange Agent). All questions as to validity, form and eligibility of any tender of the Outstanding PEPS Units hereunder (including time of receipt) and acceptance of tenders and withdrawals of Outstanding PEPS Units will be determined by PPL in its sole judgment (which may delegate power in whole or in part to the Exchange Agent) and such determination shall be final and binding.

      Upon the terms and subject to the conditions of the Exchange Offer, in the event that PPL determines there is any likelihood that the NYSE continued-listing condition may not be met, PPL may accept a pro rata amount of the Outstanding PEPS Units tendered in the offer in order to ensure that the Outstanding PEPS Units continue to be listed on the NYSE.

      The undersigned acknowledges and agrees that issuance of the New PEPS Units plus the cash payment in exchange for validly tendered Outstanding PEPS Units that are accepted in the Exchange Offer, will be made as promptly as practicable after the Exchange Date.

      In the event that the “Special Issuance and Payment Instructions” box is completed, the undersigned hereby understands and acknowledges that any Outstanding PEPS Units tendered but not accepted in the Exchange Offer will be issued in the name(s), and delivered by book-entry transfer to the DTC account number(s), indicated in such box. However, the undersigned understands and acknowledges that PPL has no obligation pursuant to the “Special Issuance and Payment Instructions” box to transfer any Outstanding PEPS Units from the name(s) of the registered holders thereof to the person indicated in such box, if PPL does not accept any Outstanding PEPS Units so tendered. The undersigned acknowledges and agrees that PPL and the Exchange Agent may, in appropriate circumstances, defer effecting transfer of Outstanding PEPS Units, and may retain such Outstanding PEPS Units, until satisfactory evidence of payment of transfer taxes payable on account of such transfer by the undersigned, or exemption therefrom, is received by the Exchange Agent.

      Your bank or broker can assist you in completing this form. The instructions included with this Letter must be followed. Questions and requests for assistance or for additional copies of the Prospectus, this Letter and the Notice of Guaranteed Delivery may be directed to the Information Agent, whose address and telephone number appear on the final page of this Letter. See Instruction 8 below.

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METHOD OF DELIVERY

o CHECK HERE IF TENDERED OUTSTANDING PEPS UNITS ARE BEING DELIVERED BY BOOK- ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC, AND COMPLETE THE FOLLOWING:

Name of Tendering Institution

Account Number

Transaction Code Number

o CHECK HERE IF TENDERED OUTSTANDING PEPS UNITS ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT, AND COMPLETE THE FOLLOWING:

Name of Registered Holder(s)

Window Ticket Number (if any)

Date of Execution of Notice of Guaranteed Delivery

Name of Eligible Institution that Guaranteed Delivery

Delivered by Book-Entry Transfer?      Yes     o  No     o

Account Number

Transaction Code Number

Signature(s) of Holder(s) of Outstanding PEPS Units

     Must be signed by registered holder(s) of Outstanding PEPS Units exactly as such participant’s name appears on a security position listing as the owner of Outstanding PEPS Units, or by person(s) authorized to become holder(s) by endorsements and documents transmitted with this Letter. If signing is by attorney, executor, administrator, trustee or guardian, agent or other person acting in a fiduciary or representative capacity, please set forth full title. See Instructions 2 & 3.

Date

Name(s)

Capacity

Address (Include Zip Code)

DTC Account to which New PEPS Units should be delivered and cash payments of $0.375 for each Outstanding PEPS Unit accepted should be credited

Tax Identification or Social Security Number (See Instruction 9)

Telephone Number (Include Area Code)

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SPECIAL ISSUANCE AND PAYMENT INSTRUCTIONS

(See Instructions 2 & 7)

      To be completed ONLY if New PEPS Units plus cash payment of $0.375 for each Outstanding PEPS Unit accepted are to be issued, and Outstanding PEPS Units tendered but not accepted in the Exchange Offer are to be issued, in the name of someone other than the undersigned registered owner and to a DTC account number other than the account number specified on page 2 above.

      Record ownership of New PEPS Units in book-entry form and cash payment on each Outstanding PEPS Unit accepted, and issue Outstanding PEPS Units tendered but not accepted in the Exchange Offer, in the name and to the DTC account number set forth below.

Name

DTC Account #

Address (Including Zip Code)

(Tax Identification or Social Security Number)

(See Instruction 9)

MEDALLION SIGNATURE GUARANTEE (SEE INSTRUCTIONS 2 & 3 BELOW)

(CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION)

Name of Eligible Institution Guaranteeing Signatures

Address (Including Zip Code)

Telephone Number (Including Area Code)

Authorized Signature

Printed Name

Title

Date

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INSTRUCTIONS

      1.     Delivery of Letter of Transmittal. To tender Outstanding PEPS Units in the Exchange Offer, book-entry transfer of the Outstanding PEPS Units into the Exchange Agent’s account with DTC, as well as a properly completed and duly executed copy or manually signed facsimile of this Letter, or an agent’s message in lieu of this Letter, and any other documents required by this Letter, must be received by the Exchange Agent, at its address set forth herein, prior to 5 p.m. New York City time on the Expiration Date. Tenders of Outstanding PEPS Units in the Exchange Offer may be made prior to the Expiration Date in the manner described in the preceding sentence and otherwise in compliance with this Letter.

      THE METHOD OF DELIVERY OF THIS LETTER, AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT, INCLUDING DELIVERY THROUGH DTC AND ANY ACCEPTANCE OF AN AGENT’S MESSAGE TRANSMITTED THROUGH DTC’S AUTOMATED TENDER OFFER PROGRAM, IS AT THE ELECTION AND RISK OF THE TENDERING HOLDER OF OUTSTANDING PEPS UNITS. IF SUCH DELIVERY IS MADE BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED AND THAT SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS OF OUTSTANDING PEPS UNITS WILL BE ACCEPTED. EXCEPT AS OTHERWISE PROVIDED BELOW, DELIVERY WILL BE MADE WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. THIS LETTER AND ANY OTHER REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO PPL OR DTC.

      Outstanding PEPS Units tendered pursuant to the Exchange Offer may be withdrawn at any time prior to 5 p.m. New York City time on the Expiration Date, unless the Exchange Offer is extended, in which case tenders of Outstanding PEPS Units may be withdrawn under the conditions described in the extension. In order to be valid, notice of withdrawal of tendered Outstanding PEPS Units must comply with the requirements set forth in the Prospectus under the caption “The Exchange Offer — Proper Execution and Delivery of Letters of Transmittal — Withdrawal of Tenders” on page 43.

      2.     Signatures on Letter of Transmittal, Powers and Endorsements. This Letter must be signed by or on behalf of the registered holder(s) of the Outstanding PEPS Units tendered hereby. The signature(s) on this Letter must be exactly the same as the name(s) that appear(s) on the security position listing of DTC in which such holder of Outstanding PEPS Units is a participant, without alteration or enlargement or any change whatsoever. IN ALL OTHER CASES, ALL SIGNATURES ON LETTERS OF TRANSMITTAL MUST BE GUARANTEED BY A MEDALLION SIGNATURE GUARANTOR.

      If any of the Outstanding PEPS Units tendered hereby are registered in the name of two or more holders, all such holders must sign this Letter.

      If this Letter or any Outstanding PEPS Units or powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by PPL, proper evidence satisfactory to PPL of their authority so to act must be submitted with this Letter.

      3.     Guarantee of Signatures. Except as otherwise provided below, all signatures on a letter of transmittal or a notice of withdrawal must be guaranteed by a recognized participant in the Securities Transfer Agents Medallion Program, the NYSE Medallion Signature Program or the Stock Exchange Medallion Program. Signatures on a letter of transmittal need not be guaranteed if:

• the letter of transmittal is signed by a participant in DTC whose name appears on a security position listing of DTC as the owner of the Outstanding PEPS Units and the holder(s) has not completed the portion entitled “Special Issuance and Payment Instructions” on the letter of transmittal; or

• the Outstanding PEPS Units are tendered for the account of an Eligible Guarantor Institution (defined below).

      If this Letter is not signed by the holder, the holder must transmit a separate, properly completed power with this Letter (in either case, executed exactly as the name(s) of the participant(s) appear(s) on such security position listing), with the signature on the endorsement or power guaranteed by a Medallion Signature Guarantor, unless such powers are executed by an Eligible Guarantor Institution (defined below).

      An Eligible Guarantor Institution (as defined in Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), means:

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      (i)     Banks (as defined in Section 3(a) of the Federal Deposit Insurance Act);

      (ii)     Brokers, dealers, municipal securities dealers, municipal securities brokers, government securities dealers, and government securities brokers, as those terms are defined under the Exchange Act;

      (iii)     Credit unions (as that term is defined in Section 19b(1)(A) of the Federal Reserve Act);

      (iv)     National securities exchanges, registered securities associations, and clearing agencies, as those terms are used under the Exchange Act; and

      (v)     Savings associations (as that term is defined in Section 3(b) of the Federal Deposit Insurance Act).

      For a correction of name or a change in name which does not involve a change in ownership, you may proceed as follows: for a change in name by marriage, etc., this Letter should be signed, e.g., “Mary Doe, now by marriage, Mary Jones.” For a correction in name, this Letter should be signed, e.g., “James E. Brown, incorrectly inscribed as J. E. Brown.” In any such case, the signature on this Letter must be guaranteed as provided above, and the holder must complete the Special Issuance and Payment Instructions above.

      You should consult your own tax advisor as to possible tax consequences resulting from the issuance of New PEPS Units, as described above, in a name other than that of the registered holder(s) of the surrendered Outstanding PEPS Units.

      4.     Transfer Taxes. PPL will pay all transfer taxes, if any, applicable to the transfer and exchange of Outstanding PEPS Units to PPL in the Exchange Offer. If transfer taxes are imposed for any other reason, the amount of those transfer taxes, whether imposed on the registered holder or any other persons, will be payable by the tendering holder. Other reasons transfer taxes could be imposed include:

• if New PEPS Units in book-entry form are to be registered in the name of any person other than the person signing the Letter; or

• if tendered Outstanding PEPS Units are registered in the name of any person other than the person signing the Letter.

      If satisfactory evidence of payment of or exemption from those transfer taxes is not submitted with the Letter, the amount of those transfer taxes will be billed directly to the tendering holder and/or withheld from any payments due with respect to the Outstanding PEPS Units tendered by such holder.

      5.     Validity of Surrender; Irregularities. All questions as to validity, form and eligibility of any surrender of the Outstanding PEPS Units hereunder will be determined by PPL, in its sole judgment (which may delegate power in whole or in part to the Exchange Agent), and such determination shall be final and binding. PPL reserves the right to waive any irregularities or defects in the surrender of any Outstanding PEPS Units and its interpretations of the terms and conditions of this Letter (including these instructions) with respect to such irregularities or defects shall be final and binding. A surrender will not be deemed to have been made until all irregularities have been cured or waived.

      6.     Special Issuance and Payment Instructions and Special Delivery Instructions. Indicate the name in which ownership of the New PEPS Units on the DTC security listing position is to be recorded and the name and DTC account number to which a credit for cash payments of $0.375 for each Outstanding PEPS Unit accepted is to be made if different from the name and account number of the person(s) signing this Letter. A Social Security Number will be required.

      7.     Additional Copies. Additional copies of this Letter may be obtained from the Information Agent at the address listed below.

      8.     Substitute Form W-9. You are required, unless an exemption applies, to provide the Exchange Agent with a correct Taxpayer Identification Number (“TIN”), generally the holder’s social security number or employer identification number, and with certain other information, on Substitute Form W-9, which is provided below and to certify under penalties of perjury, that such TIN is correct and that you are not subject to backup withholding by checking the box in Part 2 of the form. Failure to provide the information on the form may subject the holder (or other payee) to a penalty of $50 imposed by the Internal Revenue Service (“IRS”) and a federal income tax backup withholding on the payment of the amounts due. The box in Part 3 of the form may be checked if you have not been issued a TIN and have applied for a number or intend to apply for a number in the near future. If the box in Part 3 is checked and the Exchange Agent is not provided with a TIN within 60 days, the Exchange Agent will backup withhold on payment of the amounts due until a TIN is provided to the Exchange Agent.

8

IF FURTHER INSTRUCTIONS ARE DESIRED, CONTACT THE INFORMATION AGENT

Innisfree M&A Incorporated

501 Madison Avenue — 20th Fl.

New York, New York 10022

Call Toll-free at: (877) 825-8777

(Banks and Brokers call collect: (212) 750-5833)

IMPORTANT TAX INFORMATION

      Under U.S. federal income tax law, a holder whose Outstanding PEPS Units are accepted for exchange is required by law to provide the Exchange Agent with such holder’s correct TIN on Substitute Form W-9 (provided below). If such holder is an individual, the TIN is his or her social security number. If the Exchange Agent is not provided with the correct TIN, the holder may be subject to a $50 penalty imposed by the Internal Revenue Service (the “IRS”). In addition, payments that are made to such holder pursuant to this Letter may be subject to backup withholding.

      Certain holders (including, among others, all corporations and certain foreign individuals and entities) may be exempted from these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, that holder must submit a statement, signed under penalties of perjury, attesting to that individual’s exempt status. Such statements can be obtained from the Exchange Agent. Holders are urged to consult their own tax advisors to determine whether they are exempt from these backup withholding and reporting requirements.

      If backup withholding applies, the Exchange Agent may be required to backup withhold on any such payments made to the holder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If backup withholding results in an overpayment of taxes, a refund may be obtained from the IRS.

What Number to Give the Paying Agent

      The holder is required to give the Exchange Agent the TIN, generally the social security number or employer identification number, of the record owner of the tendered Outstanding PEPS Units. If the Outstanding PEPS Units are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidelines on which number to report. If the holder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, he or she should check the box in Part 3 of the Substitute Form W-9, sign and date the Substitute Form W-9. If the box in Part 3 is checked and the Exchange Agent is not provided with a TIN within 60 days, the Exchange Agent will backup withhold on all cash payments until a TIN is provided to the Exchange Agent.

9

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION

NUMBER ON SUBSTITUTE FORM W-9

Guidelines for Determining the Proper Identification Number for the Payee (You) to Give the Payer.—Social security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employee identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer. All “Section” references are to the Internal Revenue Code of 1986, as amended. “IRS” is the Internal Revenue Service.

For this type of account:		Give the social security number of —
1.	Individual	The Individual
2.	Two or more individuals (joint account)	The actual owner of the account or, if combined funds, the first individual on the account(1)
3.	Custodian account of a minor (Uniform Gift to Minors Act)	The minor(2)
4.	a. The usual revocable savings trust account (grantor is also trustee)	The grantor-trustee(1)
	b. So-called trust account that is not a legal or valid trust under state law	The actual owner(1)
5.	Sole proprietorship	The owner(3)
For this type of account:		Give the employer identification number of —
6.	Sole proprietorship	The owner(3)
7.	A valid trust, estate, or pension trust	The legal entity(4)
8.	Corporate	The corporation
9.	Association, club, religious, charitable, educational, or other tax-exempt organization	The organization
10.	Partnership	The partnership
11.	A broker or registered nominee	The broker or nominee
12.	Account with the Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments	The public entity

1.	List first and circle the name of the person whose number you furnish. If only one person on a joint account has a social security number, that person’s number must be furnished.
2.	Circle the minor’s name and furnish the minor’s social security number.
3.	You must show your individual name, but you may also enter your business or “doing business as” name. You may use either your social security number of your employer identification number (if you have one).
4.	List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the taxpayer identification number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)

NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed.

Obtaining a Number

If you don’t have a taxpayer identification number or you don’t know your number, obtain Form SS-5, Application for a Social Security Card, at the local Social Administration office, or Form SS-4, Application for Employer Identification Number, by calling 1 (800) TAX-FORM, and apply for a number.

Payees Exempt from Backup Withholding

Payees specifically exempted from withholding include:

•  An organization exempt from tax under Section 501(a), an individual retirement account (IRA), or a custodial account under Section 403(b)(7), if the account satisfies the requirements of Section 401(f)(2).

•  The United States or a state thereof, the District of Columbia, a possession of the United States, or a political subdivision or instrumentality of any one or more of the foregoing.

•  An international organization or any agency or instrumentality thereof.

•  A foreign government and any political subdivision, agency or instrumentality thereof.

Payees that may be exempt from backup withholding include:

•  A corporation.

•  A financial institution.

•  A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States.

•  A real estate investment trust.

•  A common trust fund operated by a bank under Section 584(a).

•  An entity registered at all times during the tax year under the Investment Company Act of 1940.

•  A middleman known in the investment community as a nominee or custodian.

•  A futures commission merchant registered with the Commodity Futures Trading Commission.

•  A foreign central bank of issue.

•  A trust exempt from tax under Section 664 or described in Section 4947.

Payments of dividends and patronage dividends generally exempt from backup withholding include:

•  Payments to nonresident aliens subject to withholding under Section 1441.

•  Payments to partnerships not engaged in a trade or business in the United States and that have at least one nonresident alien partner.

•  Payments of patronage dividends not paid in money.

•  Payments made by certain foreign organizations.

•  Section 404(k) payments made by an ESOP.

Payments of interest generally exempt from backup withholding include:

•  Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and you have not provided your correct taxpayer identification number to the payer.

•  Payments of tax-exempt interest (including exempt-interest dividends under Section 852).

•  Payments described in Section 6049(b)(5) to nonresident aliens.

•  Payments on tax-free covenant bonds under Section 1451.

•  Payments made by certain foreign organizations.

•  Mortgage interest paid to you.

    Certain payments, other than payments of interest, dividends, and patronage dividends, that are exempt from information reporting are also exempt from backup withholding. For details, see the regulations under sections 6041, 6041A, 6042, 6044, 6045, 6049, 6050A and 6050N.

Exempt payees described above must file Form W-9 or a substitute Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE “EXEMPT” IN PART II OF THE FORM, SIGN AND DATE THE FORM, AND RETURN IT TO THE PAYER.

Privacy Act Notice—Section 6109 requires you to provide your correct taxpayer identification number to payers, who must report the payments to the IRS. The IRS uses the number for identification purposes and may also provide this information to various government agencies for tax enforcement or litigation purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold up to 28% of taxable interest, dividends, and certain other payments to a payee who does not furnish a taxpayer identification number to payer. Certain penalties may also apply.

Penalties

(1) Failure to Furnish Taxpayer Identification Number.—If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

(2) Civil Penalty for False Information With Respect to Withholding.—If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty.

(3) Criminal Penalty for Falsifying Information.—Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX

CONSULTANT OR THE INTERNAL REVENUE SERVICE

PAYER’S NAME: JPMorgan Chase Bank
SUBSTITUTE FORM W-9	Part 1 — PLEASE PROVIDE YOUR NAME AND TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW.	Name
Department of the Treasury Internal Revenue Service Payer’s Request for Taxpayer Identification Number (TIN)	PART 2 Certification — Under penalty of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding because (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the “IRS”) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding, and (3) I am a U.S. person (including a U.S. resident alien).	Social Security Number OR Employer Identification Number ------------------------------- Part 3 — o   Awaiting TIN
	CERTIFICATE INSTRUCTIONS — You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of under-reporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out such item (2).
	The Internal Revenue Service does not require your consent to any provision of this document other than the certifications required to avoid backup withholding.
	SIGNATURE
Sign Here	DATE

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF UP TO 28% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER

IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED

THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

      I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, up to 28% of all reportable payments made to me will be withheld.

Signature ______________________________  Date _________________________ , 20      EX-99.2 14 y89600exv99w2.htm FORM OF NOTICE OF GUARANTEED DELIVERY

EXHIBIT 99.2

PPL CORPORATION

NOTICE OF GUARANTEED DELIVERY

FOR EXCHANGE OF

7 3/4% PEPS^SM UNITS

        This Notice of Guaranteed Delivery (“Notice”) relates to the offer (the “Exchange Offer”) of PPL Corporation (“PPL”) to exchange 7 3/4% Premium Equity Participating Security Units (PEPS^SM Units), Series B (the “New PEPS Units”) plus a cash payment of $0.375 for each validly tendered and accepted 7 3/4% Premium Equity Participating Security Units (PEPS^SM Units) (Cusip No. 69352F204) (the “Outstanding PEPS Units”). You must use this Notice, or one substantially equivalent to this form, to tender your Outstanding PEPS Units in the Exchange Offer if the procedures for book-entry transfer of your Outstanding PEPS Units cannot be completed on or prior to                     , 2003 (or any such later date to which the Exchange Offer may be extended, the “Expiration Date”). This Notice may be delivered by hand, overnight courier or mail, or transmitted via facsimile, to JPMorgan Chase Bank (the “Exchange Agent”) and must be received by the Exchange Agent prior to the Expiration Date from an Eligible Guarantor Institution (as defined on the last page hereof). In order to utilize the guaranteed delivery procedure to tender Outstanding PEPS Units pursuant to the Exchange Offer, (a) you must guarantee that the procedures for book-entry transfer of your Outstanding PEPS Units will be completed, and that the Exchange Agent will receive an agent’s message or a properly completed, dated and duly executed Letter of Transmittal relating to your Outstanding PEPS Units (or facsimile thereof), with any required signature guarantees, in each case, within three New York Stock Exchange trading days after the date of execution of this Notice and (b) the Exchange Agent must actually receive a book-entry transfer of your Outstanding PEPS Units into the account of the Exchange Agent at The Depository Trust Company, together with an agent’s message or a properly completed, dated and duly executed Letter of Transmittal (or facsimile thereof), within three New York Stock Exchange trading days after the date of execution of this Notice. Capitalized terms not defined herein have the meanings assigned to them in the prospectus of PPL dated                     , 2003 relating to the Exchange Offer (as may be amended or supplemented from time to time, the “Prospectus”).

The Exchange Agent for the Exchange Offer is:

JPMorgan Chase Bank

			By Facsimile
		By Registered or	(Eligible Institutions
By Hand:	By Courier:	Certified Mail:	Only):
Institutional Trust Services Window 4 New York Plaza, 1st Floor New York, New York 10004-2413	Institutional Trust Services 2001 Bryan Street 9th Floor Dallas, TX 75201 Attn: Frank Ivins Personal & Confidential	Institutional Trust Services P.O. Box 2320 Dallas, TX 75221-2320 Attn: Frank Ivins Personal & Confidential	Attn: Frank Ivins Personal & Confidential (214) 468-6494

      For Information Call: (800) 275-2048

      For Confirmation by Telephone:     (214) 468-6464

      DELIVERY OF THIS NOTICE TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

      This Notice is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by a “Medallion Signature Guarantor” under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal.

Ladies and Gentlemen:

      The undersigned hereby tenders to PPL, upon the terms and subject to the conditions set forth in the Prospectus and the related Letter of Transmittal, receipt of which are hereby acknowledged, the aggregate principal amount of Outstanding PEPS Units set forth below pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption “The Exchange Offer — Procedures for Tendering — Guaranteed Delivery” on page 41.

Number of Outstanding PEPS Units Tendered:

Name(s) of Registered Holder(s):

Name of Eligible Guarantor Institution

Guaranteeing Delivery:

Provide the following information for Outstanding PEPS Units to be tendered by book-entry transfer:

Name of Tendering Institution:

DTC Account Number: 

All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned.

PLEASE SIGN HERE

X 

X 

Signature(s) of Owner(s) Date                        

or Authorized Signatory

Area Code and Telephone Number

Must be signed by the holder(s) of the Outstanding PEPS Units as their name(s) appear(s) on a security position listing, or by person(s) authorized to become registered holder(s) by endorsement and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below. Please print name(s) and address(es).

Name(s): 

Capacity: 

Address(es): 

GUARANTEE

(Not To Be Used For Signature Guarantee)

      The undersigned, a firm or other entity identified in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, as an “Eligible Guarantor Institution,” which definition includes: (i) Banks (as that term is defined in Section 3(a) of the Federal Deposit Insurance Act); (ii) Brokers, dealers, municipal securities dealers, municipal securities brokers, government securities dealers, and government securities brokers, as those terms are defined under the Exchange Act; (iii) Credit unions (as that term is defined in Section 19(b)(1)(A) of the Federal Reserve Act); (iv) National securities exchanges, registered securities associations, and clearing agencies, as those terms are used under the Exchange Act; and (v) Savings associations (as that term is defined in Section 3(b) of the Federal Deposit Insurance Act), hereby guarantees to deliver to the Exchange Agent, by book-entry transfer, the Outstanding PEPS Units tendered hereby to the Exchange Agent’s account at The Depository Trust Company (“DTC”), pursuant to the procedures for book-entry transfer set forth in the Prospectus, together with an agent’s message or one or more properly completed, dated and duly executed Letter(s) of Transmittal (or facsimile thereof), with any signature guarantees and any other required documents within three New York Stock Exchange trading days after the date of execution of this Notice of Guaranteed Delivery.

      The undersigned acknowledges that it must deliver, by book-entry transfer into the account of the Exchange Agent at DTC, the Outstanding PEPS Units tendered hereby, together with an agent’s message or Letter(s) of Transmittal (or facsimile thereof), and any other required documents, to the Exchange Agent within the time period set forth above and that failure to do so could result in a financial loss to the undersigned.

(Please Type or Print)

(Firm Name)

(Firm Address)

(Area Code and Telephone Number) (Authorized Signature)

(Title)

(Date)

EX-4.3

FORM OF PLEDGE AGREEMENT

EX-4.4

FORM OF REMARKETING AGREEMENT

EX-4.10

FORM OF SUPPLEMENTAL INDENTURE NO. 5

EX-5.1

OPINION OF THOMAS D. SALUS, ESQ.

EX-5.2

OPINION OF SIMPSON THACHER & BARTLETT LLP

EX-8.1

TAX OPINION OF SIMPSON THACHER & BARTLETT LLP

EX-23.1

CONSENT OF PRICEWATERHOUSECOOPERS LLP

EX-24.1

POWER OF ATTORNEY OF PPL CORPORATION

EX-25.1

STATEMENT OF ELIGIBILITY OF TRUSTEE

EX-99.1

FORM OF LETTER OF TRANSMITTAL

EX-99.2

FORM OF NOTICE OF GUARANTEED DELIVERY

EX-99.3

EXHIBIT 99.3

PPL Corporation

Offer to Exchange

7 3/4% PEPS^SM Units, Series B and

a Cash Payment

For the 7 3/4% PEPS^SM Units (Cusip No. 69352F204)

Pursuant to, and subject to the terms and conditions described in, the Prospectus Dated                                    , 2003

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5 P.M., NEW YORK CITY TIME, ON                          , 2003, UNLESS EARLIER TERMINATED OR EXTENDED BY PPL CORPORATION

, 2003

To Brokers, Dealers, Commercial Banks,

     Trust Companies and other Nominees:

      PPL Corporation (“PPL”) is offering to exchange 7 3/4% Premium Equity Participating Security Units (PEPS^SM Units), Series B (the “New PEPS Units”) plus a cash payment of $0.375 for each validly tendered and accepted 7 3/4% Premium Equity Participating Security Units (PEPS^SM Units) (the “Outstanding PEPS Units”).

      Capitalized terms used but not defined herein shall have the same meaning given them in the Prospectus (as defined below).

      The exchange offer is made on the terms and are subject to the conditions set forth in PPL’s prospectus dated                               , 2003 (as may be amended or supplemented from time to time, the “Prospectus”) and the accompanying Letter of Transmittal, including the condition that the Outstanding PEPS Units remain listed on the New York Stock Exchange, or the NYSE, and the minimum condition that there are validly tendered at the expiration of the exchange offer at least 35% of the Outstanding PEPS Units. In the event that PPL determines there is any likelihood that the NYSE continued-listing condition may not be met, PPL may accept a pro rata amount of the Outstanding PEPS Units tendered in the offer in order to ensure that the Outstanding PEPS Units continue to be listed on the NYSE.

      We will not pay any fees or commissions to you for soliciting tenders of Outstanding PEPS Units pursuant to the exchange offer.

      We are asking you to contact your clients for whom you hold Outstanding PEPS Units. For your use and for forwarding to those clients, we are enclosing copies of the Prospectus, as well as a Letter of Transmittal and a Notice of Guaranteed Delivery for the Outstanding PEPS Units.

      We are also enclosing a printed form of letter which you may send to your clients, with space provided for obtaining their instructions with regard to the Exchange Offer. We urge you to contact your clients as promptly as possible.

      Innisfree M&A Incorporated has been appointed Information Agent for the Exchange Offer. Any inquiries you may have with respect to the exchange offer should be addressed to the Information Agent or to the Dealer Manager, at the respective addresses and telephone numbers as set forth on the back cover of the Prospectus. Additional copies of the enclosed materials may be obtained from the Information Agent.

Very truly yours,

PPL CORPORATION

NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE AGENT OF THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT, THE EXCHANGE AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN. EX-99.4 16 y89600exv99w4.htm FORM OF LETTER TO CLIENTS

EXHIBIT 99.4

PPL Corporation

Offer to Exchange

7 3/4% PEPS^SM Units, Series B and

a Cash Payment

For the 7 3/4% PEPS^SM Units (Cusip No. 69352F204)

Pursuant to, and subject to the terms and conditions described in, the Prospectus Dated                                    , 2003

THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON                          , 2003, UNLESS EARLIER TERMINATED OR EXTENDED BY PPL CORPORATION

, 2003

To Our Clients:

      PPL Corporation (“PPL”) is offering to exchange 7 3/4% Premium Equity Participating Security Units (PEPS^SM Units), Series B (the “New PEPS Units”) plus a cash payment of $0.375 for each validly tendered and accepted 7 3/4% Premium Equity Participating Security Units (PEPS^SM Units) (the “Outstanding PEPS Units”).

      Capitalized terms used but not defined herein shall have the same meaning given them in the Prospectus (as defined below).

      The exchange offer is made on the terms and are subject to the conditions set forth in PPL’s prospectus dated                          , 2003 (as may be amended or supplemented from time to time, the “Prospectus”) and the accompanying Letter of Transmittal, including the condition that the Outstanding PEPS Units remain listed on the New York Stock Exchange, or the NYSE, and the minimum condition that there are validly tendered at the expiration of the exchange offer at least 35% of the Outstanding PEPS Units. In the event that PPL determines there is any likelihood that the NYSE continued-listing condition may not be met, PPL may accept a pro rata amount of the Outstanding PEPS Units tendered in the offer in order to ensure that the Outstanding PEPS Units continue to be listed on the NYSE.

      The enclosed Prospectus is being forwarded to you as the beneficial owner of Outstanding PEPS Units held by us for your account but not registered in your name. The accompanying Letter of Transmittal is furnished to you for informational purposes only and may not be used by you to tender Outstanding PEPS Units held by us for your account. A tender of such Outstanding PEPS Units may be made only by us as the registered holder and only pursuant to your instructions.

      Accordingly, we request instructions as to whether you wish us to tender and deliver the Outstanding PEPS Units held by us for your account. If you wish to have us do so, please so instruct us by completing, executing and returning to us the instruction form that appears below.

INSTRUCTIONS

      The undersigned acknowledge(s) receipt of your letter and the enclosed materials referred to therein relating to PPL’s exchange offer with respect to the Outstanding PEPS Units (CUSIP No. 69352F204).

      This will instruct you to tender the specified number of the Outstanding PEPS Units indicated below held by you for the account of the undersigned pursuant to the terms and conditions set forth in the Prospectus, and the related Letter of Transmittal.

Number of Outstanding PEPS Units to be tendered: 

Signature(s)

Please print name(s)

Address

Zip Code

Area Code and Telephone No.

Tax Identification or Social Security No.

My Account Number with You

Date

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EX-99.4

FORM OF LETTER TO CLIENTS