SEC FILE NO. 70-8141
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CERTIFICATE PURSUANT TO
RULE 24
OF PARTIAL COMPLETION OF
TRANSACTIONS
METROPOLITAN EDISON COMPANY
PENNSYLVANIA ELECTRIC COMPANY
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------------
In The Matter of )
)
METROPOLITAN EDISON COMPANY ) Certificate
) Pursuant to
PENNSYLVANIA ELECTRIC COMPANY ) Rule 24 of Partial
SEC File No. 70-8141 ) Completion of
) Transactions
(Public Utility Holding )
Company Act of 1935) )
----------------------------------------
TO THE MEMBERS OF THE SECURITIES AND EXCHANGE COMMISSION:
The undersigned, Metropolitan Edison Company ("Met-Ed")
and Pennsylvania Electric Company ("Penelec"), hereby certify
pursuant to Rule 24 of the Rules and Regulations under the Public
Utility Holding Company Act of 1935 (the "Act") that certain of
the transactions proposed in the Declaration on Form U-1, as
amended, filed in SEC File No. 70-8141, have been carried out in
accordance with the Commission's Order, dated April 14, 1993
(HCAR No. 35-25793) (the "Order") with respect thereto, as
follows:
1. To secure its obligation to Utilities Mutual Life
Insurance Company ("Insurer") to pay a deductible and certain
expenses under its Worker's Compensation and Employee's Life
Insurance Policy, on March 31, 1997 Met-Ed furnished the Insurer
with a letter of credit in the amount of $706,000 issued by the
Fuji Bank, Limited ("Fuji") and expiring December 31, 1998. In
connection therewith, Met-Ed entered into an Uncommitted Stand-By
Letter of Credit and Reimbursement Agreement and a Fee Letter
with Fuji providing, among other things, for the payment of a
letter of credit fee of .2750% per annum on the face amount of
<PAGE>
the letter of credit and obligating Met-Ed to repay the amount of
any drawings thereunder together with interest thereon at a rate
not exceeding Fuji's prime rate as then in effect plus 0.5% per
annum.
2. To secure its obligation to the Insurer to pay a
deductible and certain expenses under its Worker's Compensation
and Employee's Life Insurance Policy, on March 31, 1997 Penelec
furnished the Insurer with a letter of credit in the amount of
$2,725,000 issued by Fuji and expiring on December 31, 1998. In
connection therewith, Penelec entered into an Uncommitted Stand-
By Letter of Credit and Reimbursement Agreement and a Fee Letter
with Fuji providing, among other things, for the payment of a
letter of credit fee of .2750% per annum on the face amount of
the letter of credit and obligating Penelec to repay the amount
of any drawings thereunder together with interest thereon at the
rate not exceeding Fuji s prime rate as then in effect plus 0.5%
per annum.
3. The following exhibits are filed herewith:
A-1 - Letter of Credit dated March 31, 1997
furnished by Met-Ed.
A-2 - Reimbursement Agreement between Met-Ed and
Fuji, dated March 31, 1997.
A-3 - Letter of Credit dated March 31, 1997
furnished by Penelec.
A-4 - Reimbursement Agreement between Penelec and
Fuji, dated March 31, 1997.
<PAGE>
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935, THE UNDERSIGNED COMPANIES HAVE DULY
CAUSED THIS STATEMENT TO BE SIGNED ON THEIR BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
METROPOLITAN EDISON COMPANY
PENNSYLVANIA ELECTRIC COMPANY
By: /s/T. G. Howson
Name: T. G. Howson
Title: Vice President & Treasurer
Date: April 14, 1997
<PAGE>
EXHIBIT TO BE FILED BY EDGAR
3. The following exhibits are filed herewith:
A-1 - Letter of Credit dated March 31, 1997
furnished by Met-Ed.
A-2 - Reimbursement Agreement between Met-Ed and
Fuji, dated March 31, 1997.
A-3 - Letter of Credit dated March 31, 1997
furnished by Penelec.
A-4 - Reimbursement Agreement between Penelec and
Fuji, dated March 31, 1997.
<PAGE>
Exhibit A-1
IRREVOCABLE STANDBY LETTER OF CREDIT NO. CLL901/692131
March 31, 1997
Utilities Mutual Insurance Company
4 Gatehall Drive
Suite 215
Parsippany, NJ 07054
Attention: Mr. Bruce Bertram
Director, Underwriting
Dear Sirs:
At the request and on the instructions of our customer,
Metropolitan Edison Company (the "Account Party"), The Fuji Bank,
Limited, New York Branch ("we" or the "Bank") hereby establish in
your favor, as Beneficiary, this Irrevocable Standby Letter of
Credit No. CLL901/692131 (this "Letter of Credit") in an amount
up to, but not exceeding, Seven Hundred Six Thousand Dollars
(US$706,000) (the "Stated Amount"). The term "Beneficiary"
includes any successor by operation of law of the named
beneficiary, including without limitation, any liquidator,
receiver or conservator.
SECTION 1. Presentation. Effective immediately, we hereby
undertake to make available to you funds under this Letter of
Credit, in lawful currency of the United States against receipt
by us on or before 5:00 p.m. New York City time on December 31,
1998 (the "expiry date") of your sight draft drawn on us
indicating this Letter of Credit number, and stating on its face
"Drawn under Irrevocable Letter of Credit No. CLL901/692131,
dated March 31, 1997", appropriately completed and duly signed by
you. The sight draft must be accompanied by the original Letter
of Credit and a signed statement by you that the Account Party
has not performed its obligations as outlined in the Deductible
Endorsement to the Worker's Compensation and Employer's Liability
Insurance Policy No. PAC-9342 and/or successor policies of the
Account Party in an amount equal to or greater than the amount of
the sight draft. Presentation of such drawing request shall be
made in person by you or a duly authorized attorney-in-fact at
our address above (the "Payment Office").
If the expiry date shall fall on a Saturday, Sunday or a legal
banking holiday in New York City, then the Letter of Credit shall
expire at 5:00 p.m. New York City time on the prior business day.
This Letter of Credit shall be deemed automatically extended
without amendment for one year from its expiry date, or, if
extended, any future expiry date, unless at least thirty days
<PAGE>
prior to any such expiry date we shall notify you by registered
mail, that we elect not to consider the Letter of Credit renewed
for any such additional period. To the extent this Letter of
Credit is automatically extended in accordance herewith for any
one or more additional one-year periods, such extension shall in
no event abrogate our sole right not to grant further extensions.
Upon receipt by you of our notice of election not to renew this
Letter of Credit, you may draw hereunder by your sight draft(s)
drawn on us and bearing the clause "Drawn Under Credit No.
CLL901/692131". The sight draft must be accompanied by the
original Letter of Credit and a statement by you that the
applicant has not delivered a substitute Letter of Credit as
required by the Deductible Endorsement.
SECTION 2. Payments. By delivering a sight draft complying
with the requirements of Section 1 to us on any business day on
or prior to the expiry date, at any time during our business
hours at the Payment Office, you may request a drawing to be made
under this Letter of Credit. Multiple drawings are permitted
hereunder, provided that each drawing honored by the Bank
hereunder shall reduce the Letter of Credit and no drawing shall
be permitted to be made or honored if, after giving effect
thereto, the amount of all draws exceeds the Stated Amount.
SECTION 3. Bank Obligation. Except as expressly stated
herein, the obligation under this Letter of Credit is the
individual obligation of the Bank and is not subject to any
condition or qualification and is not contingent on the ability
of the Bank to perfect a lien, security interest, or any other
reimbursement. This Letter of Credit cannot be modified or
revoked without the consent of the Bank and the Beneficiary.
SECTION 4. Notices, etc. Communications with respect to this
Letter of Credit shall be in writing, shall specifically refer
therein to this Letter of Credit by number, shall be delivered by
registered or certified mail, return receipt requested and shall
be addressed to you at the address above set forth. Attention:
Vice President and Manager, specifically referring thereon to
this Letter of Credit by number. You may designate a change of
address by providing written notice thereof to us. Notices and
other communications shall be deemed to have been given upon
delivery to a post office for mailing as provided above.
SECTION 5. Governing Law. This Letter of Credit is subject
to and governed by the Laws of the State of New York and the 1993
Revision of the Uniform Customs and Practice for Documentary
Credits of the International Chamber of Commerce (Publication no.
500) and, in the event of any conflict, the laws of the State of
New York will control.
SECTION 6. Miscellaneous. This Letter of Credit shall inure
to the benefit of the Beneficiary and its heirs, legal
representatives and assigns. This Letter of Credit shall be
assignable only with the Bank's prior written consent. This
<PAGE>
Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified,
or limited by reference to any document, instrument, or
agreement.
THE FUJI BANK, LIMITED,
NEW YORK BRANCH
By:
Name:
Title:
3
<PAGE>
Exhibit A-2
UNCOMMITTED STAND-BY LETTER OF CREDIT AND REIMBURSEMENT
AGREEMENT, dated as of March 31, 1997 (this "Agreement")
between The Fuji Bank, Limited, New York Branch (the "Bank") and
Metropolitan Edison Company, a Pennsylvania corporation (the
"Company").
WHEREAS, the Company may request the Bank to issue from
time to time irrevocable letters of credit (each, a "Credit");
WHEREAS, the Bank may from time to time, and in its
discretion in each instance, agree to issue one or more Credits;
NOW, THEREFORE, the Bank and the Company wish to
specify the terms and conditions applicable to such Credits, and
hereby agree as follows:
1. The Issuance of Credits. At the request of the Company,
the Bank may, in its sole discretion, issue Credits for the
Company's account, from time to time on a Business Day on or
before March 31, 1998.
2. Reimbursement and Other Payments. (a) The Company
agrees to reimburse the Bank on demand in immediately available
funds for each payment made by the Bank pursuant to a Credit or
a draft honored by the Bank under such Credit and for each amount
otherwise due to the Bank hereunder.
(b) The Company shall pay to the Bank interest on any and
all amounts unpaid by the Company when due hereunder (in the case
of amounts in respect of interest, to the maximum extent
permitted by law) for each day from the date such amounts become
due until payment in full, payable on demand, at a fluctuating
interest rate per annum (computed on the basis of a year of 360
days for the actual number of days elapsed) equal to the higher
of (i) the rate publicly announced by the Bank from time to time
as its base rate or prime rate and (ii) the federal funds rate
plus 0.5% per annum (not to exceed the Bank's base or prime rate
plus 0.5% per annum).
(c) The Company will pay to the Bank a non-refundable
annual commission with respect to the Credits as may be agreed
upon in writing between the Bank and the Company, payable as
provided therein.
(d) All payments by the Company to the Bank hereunder shall
be made in lawful currency of the United States and in
immediately available funds, without any set-off, counterclaim or
deduction whatsoever, at the Bank's principal New York office,
which at the date hereof is located at Two World Trade Center,
New York, New York 10048, Attention: Loan Administration
Department, no later than 2:00 p.m. New York City time, on the
<PAGE>
due date thereof. Whenever any payment hereunder shall be due on
a day which is not a Business Day, the date for payment thereof
shall be extended to the next succeeding Business Day, and any
interest payable thereon shall be payable for such extended time
at the specified rate. All fees hereunder shall be computed on
the basis of a 360 day year and the actual number of days
elapsed.
4. Cancellation. Subject to applicable legal
requirements, Credits issued pursuant to this Agreement may be
canceled subject to the prior written consent of the Beneficiary
submitted to the Bank together with the original thereof.
5. Indemnity. The Company agrees to indemnify the Bank
from and against all liabilities, losses and expenses (including
reasonable legal and other expenses incurred by the Bank in
enforcing its rights or protecting its interest) incurred by the
Bank as a consequence of or resulting from or incurred by the
Bank in connection with the issuance of any Credit or any action,
inaction or omission taken or suffered by the Bank in good faith
without gross negligence. This Section 5 shall survive any
payment of the Bank's obligations and liabilities hereunder and
any termination of this Agreement.
6. Change in Circumstances;Taxes. (a) If the Bank
determines that any change in any law, regulation, guideline or
order or in the interpretation thereof by any court or
administrative or governmental authority charged with the
administration thereof shall either (i) impose, modify or deem
applicable any reserve, special deposit or similar requirement
against Credits issued by the Bank or require the inclusion of
Credits in calculations related to the Bank's capitalization or
(ii) impose any other condition regarding this Agreement or the
Credits, including, without limitation, any requirement that the
Bank pay assessments for deposit insurance with respect to the
Credits, and the result of any event referred to in clause (i) or
(ii) above shall be to increase the cost to the Bank of issuing
or maintaining the Credits or the reimbursement obligations of
the Company or to reduce the amounts receivable by the Bank upon
such reimbursement, then, upon demand by the Bank made not later
than 180 days after the Bank shall have incurred such increased
cost or reduced receivable, the Company shall immediately pay to
the Bank from time to time as specified by the Bank additional
amounts which shall be sufficient to compensate the Bank for such
increased cost or reduced receivables from the date incurred
until payment in full, provided that the Bank shall have used
reasonable efforts to mitigate such increased cost or reduced
receivable, so long as such efforts or the results thereof would
not otherwise be disadvantageous to the Bank. A certificate as
to such amounts submitted by the Bank to the Company, stating in
reasonable detail the basis of computation, shall be presumptive
evidence of additional amounts payable under this Section 6. If
payment is not made on the date demanded, interest will be
charged from the date of demand based on the calculation in
Section 3(d).
(b) All payments by the Company to the Bank under this
<PAGE>
Agreement shall be made free and clear of and without deduction
for any future taxes or other amounts for or on account of
levies, imposts, duties, deductions, withholdings or other
charges of whatsoever nature, imposed, levied, collected,
withheld or assessed by any governmental authority (excluding
income and franchise taxes imposed on the Bank by the
jurisdiction under which the Bank is organized or operating in
connection with this Agreement or any political subdivision
thereof) (the "Taxes"). If the Company shall be required to
withhold or deduct Taxes from any sum payable to the Bank
hereunder, (i) the sum payable to the Bank shall be increased as
may be necessary so that the Bank receives an amount equal to the
sum it would have received had no withholdings or deductions been
made, (ii) the Company shall make such necessary withholdings and
deductions and (iii) the Company shall pay the full amount
withheld or deducted to the relevant authority according to
applicable law so that the Bank shall not be required to make any
deduction or payment of Taxes.
7. Liability of the Bank. The Bank shall not be
responsible (a) for verifying the existence of any act, condition
or statement made by the Beneficiary (or any transferee) in
relation to any drawing or presentment under a Credit, (b) for
the validity or genuineness of certificates or other documents
delivered under or in connection with a Credit, even if such
certificates or other documents should in fact prove to be
invalid, fraudulent or forged, (c) for any breach of contract
between the Beneficiary (or any transferee) and the Company, (d)
for any consequences beyond the Bank's control or (e) for any act
or omission of the Bank or its correspondents or agents so long
as the Bank acts in good faith without gross negligence. The
Bank may accept certificates or other documents that appear on
their face to be in order without responsibility for further
investigation, regardless of any notice or information to the
contrary, unless otherwise ordered by a court of competent
jurisdiction. In furtherance of and not in limitation of the
foregoing, the Company agrees that any action, inaction or
omission taken or suffered by the Bank in good faith without
gross negligence in connection with Credits or related drafts
shall be binding on the Company and shall not result in any
liability of the Bank relating thereto. The Bank may accept
certificates or other documents otherwise in order which may be
signed or issued by one who purports to be the administrator,
executor, trustee in bankruptcy, debtor in possession, assignee
for the benefit of creditors, liquidator, receiver, legal
representative, or any other entity succeeding or purporting to
succeed de facto or de jure to the powers, rights or privileges
of any party who is authorized under the Credit to draw or issue
documents.
8. Obligation Absolute. The Obligations of the Company
under this Agreement shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with
the terms hereof, under all circumstances whatsoever, including
without limitation the following:
3
<PAGE>
(a) any lack of validity or enforceability of
this Agreement or any Credit or of the Company s obligations to
the Beneficiaries thereof;
(b) any amendment or waiver of or any consent to
departure from this Agreement or any Credit;
(c) the existence of any claim, set-off, defense or
other rights which the Company or any other person may have at
any time against the Beneficiaries of any Credit, any Beneficiary
or any transferee of any Credit (or any person for whom the
Beneficiaries, any such Beneficiary or any such transferee may be
acting), the Bank, any participant or any other Person whether in
connection with this Agreement or any unrelated transaction;
(d) any statement or any other document presented under
any Credit proving to be forged, fraudulent or invalid or
insufficient in any respect or any statement therein being untrue
or inaccurate in any respect whatsoever;
(e) payment by the Bank under any Credit against
presentation of a draft or certificate which does not comply with
the terms of such Credit, provided, however, that such payment
shall not have constituted gross-negligence or willful misconduct
on the part of the Bank;
(f) the failure of the Bank to honor any drawing under
any Credit or to make any payment demanded under any Credit on
the ground that the demand for such payment does not conform to
the terms and conditions of such Credit;
(g) any circumstances which might constitute a legal
or equitable discharge of any obligations hereunder; it being
agreed that the obligations hereunder shall not be discharged
except by the performance thereof strictly in accordance with the
terms of this Agreement including, without limitation, the
payment in full as herein provided of all amounts owing
hereunder; and
(h) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
9. Conditions Precedent. It shall be a condition
precedent to the issuance by the Bank of each Credit that:
(a) The Bank shall have received on or before the date of
issuance, in form and substance satisfactory to the Bank, the
following:
(i) a copy of this Agreement, duly executed by the
Company;
(ii) a certificate dated as of the date hereof of an
officer of the Company certifying the name and true signatures of
the officers of the Company authorized to sign this Agreement and
4
<PAGE>
documents related hereto;
(iii) evidence reasonably acceptable to the Bank that
the Company s execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate
action; and
(iv) such other documents, instruments, approvals
(and, if requested by the Bank, certified duplicates of executed
copies thereof) as the Bank may reasonably request.
(b) The representations and warranties contained in Section
10 hereof shall be true and correct on and as of the date of
issuance of such Credit as though made on and as of such date and
no Event of Default or event which, with the passage of time or
the giving of notice or both, will become an Event of Default,
shall have occurred and be continuing.
10. Representations and Warranties. The Company represents
and warrants to the Bank that:
(a) Corporate Existence. The Company is a corporation duly
organized and existing in good standing under the laws of the
Commonwealth of Pennsylvania and has power and authority to own
its properties and assets and to transact the business and to
carry on the operations in which it currently engages. The
Company is duly qualified as a foreign corporation and is in good
standing in each of the jurisdictions in which such qualification
is necessary, except where the failure to be so qualified would
not result in (i) an adverse effect on the validity,
effectiveness or enforceability of this Agreement, (ii) a
material adverse effect on the business, operations, property or
financial or other condition of the Company and its subsidiaries
taken as a whole or (iii) a material adverse effect on the
ability of the Company to perform its obligations hereunder
(clauses (i), (ii) and (iii) are collectively referred to as a
"Material Adverse Effect").
(b) Corporate Authority. The execution, delivery and
performance of this Agreement is within the powers of the
Company, has been duly authorized by all necessary action of the
Company and does not and will not contravene or constitute
default under any requirement of law or any contractual
obligation of the Company. The Company has received all approvals
and consents required by law or regulation or contractual
obligation and made all filings required to enter into, deliver
and perform this Agreement.
(c) Litigation. There are no actions, suits or proceedings
pending or, to the best of the knowledge of any responsible
officer of the Company, threatened against or affecting the
Company or any of its subsidiaries or relating to this Agreement
before any court, administrative office, agency or authority
which would either individually or collectively be reasonably
expected to have, except as set forth in the Annual Report or
5
<PAGE>
Form 10-K of GPU, Inc. (the "Parent") for the year ended December
31, 1996, a Material Adverse Effect.
(d) Enforceability. This Agreement when duly executed and
delivered will be a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by equitable
principles or by applicable bankruptcy, insolvency, moratorium or
similar laws affecting creditors' rights generally.
(e) Defaults. The Company is not in default in the
performance, observance or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument
to which the Company is a party or by which the Company or any of
its property is bound or any judgments, decrees or orders, except
for defaults that, singly or in the aggregate, have not had and
could not be reasonably expected to have a material adverse
effect on the Company's ability to perform its obligations to the
Bank pursuant to this Agreement.
11. Covenants. The Company covenants and agrees that, so
long as any Credit is outstanding and until the payment in full
of all amounts owing to the Bank hereunder:
(a) Compliance with Law. The Company will comply in all
material respects, with all requirements of law, such compliance
to include, without limitation, paying and discharging, as the
same may become due and payable, all taxes, assessments, and
other governmental charges or levies against or on any of its
property, as well as claims of any kind that, if unpaid, might
become a lien upon any of its properties except where the failure
to comply would not have a Material Adverse Effect; provided,
however, that the foregoing shall not require the Company to
comply with such law, and any claims thereunder, so long as the
Company in good faith shall contest the validity thereof and
shall with respect to the payment of any such tax, assessment,
charge, levy or lien, in accordance with generally accepted
accounting principles ("GAAP") and applicable regulations, set
aside and maintain on its books adequate reserves with respect
thereto.
(b) Preservation of Existence. The Company will continue to
preserve, renew and keep in full force and effect its corporate
existence.
(c) Financial Statements. The Company will deliver to the
Bank the Parent's audited annual consolidated financial
statements within 120 days after the closing of the Parent s
fiscal year. Delivery of financial statements to the Bank shall
constitute a representation that such statements fairly represent
the financial condition of the Parent and the Company and that as
of the date of such statements no material contingencies are
known to exist which are required to be disclosed in a balance
sheet prepared in accordance with GAAP except those disclosed in
the notes to the financial statements.
6
<PAGE>
(d) Notices. The Company will deliver to the Bank
forthwith upon acquiring knowledge of the occurrence of any Event
of Default a certificate of an officer of the Company setting
forth the details thereof and the action which the Company is
taking or proposes to take with respect thereto.
12. Events of Default. Each of the following events
constitute an Event of Default (an "Event of Default") hereunder:
(a) Any representation or warranty made by the Company in
this Agreement or in any certificate, financial or other
statement furnished by the Company pursuant to this Agreement
shall prove to have been untrue or incomplete in any material
respect when made; or
(b) The Company shall fail to pay any amount when due
hereunder and any such failure shall remain unremedied for three
business days; or
(c) The Company shall fail to perform or observe any other
term, covenant or provision under this Agreement, and any such
failure shall remain unremedied for 20 days after written notice
thereof shall have been given by the Bank to the Company; or
(d) Any material provision of this Agreement shall at any
time and for any reason cease to be valid and binding on the
Company, or shall be declared to be null and void, or the
validity or enforceability thereof shall be contested by the
Company or any governmental agency or authority or the Company
shall, prior to the satisfaction of the Company's obligations
hereunder, deny that it has any or further liability or
obligation under this Agreement; or
(e) The Company shall (i) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or
the like of itself or all or a substantial amount of its
property, (ii) generally fail to pay its debts when they become
due, (iii) make a general assignment for the benefit of
creditors, (iv) be adjudicated bankrupt or insolvent, or (v)
commence a voluntary case under the federal bankruptcy laws of
the United States of America or file a voluntary petition or
answer seeking reorganization or an arrangement with creditors
under an insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or corporate action shall
be taken by it for the purpose of effecting any of the foregoing;
or
(f) If without the application, approval or consent of the
Company a proceeding shall be instituted in any court of
competent jurisdiction under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors seeking in
respect of the Company an order of relief or an adjudication in
bankruptcy, reorganization, dissolution, winding-up, liquidation,
a composition or arrangement with creditors, a readjustment of
7
<PAGE>
debts, the appointment of a trustee, receiver, liquidator or
custodian or the like of the Company of all or any substantial
part of the assets of the Company or other like relief in respect
thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by the Company in good faith, the
same shall (i) result in the entry of an order of relief or any
such adjudication or appointment or (ii) continue undismissed, or
pending and unstayed, for any period of 60 consecutive days; or
(g) The Company shall default in the performance or
observance of any provision, covenant or restriction contained in
any agreement with respect to indebtedness for borrowed money in
excess of $20,000,000 beyond applicable days of grace and the
effect of such default is to permit the acceleration of maturity
of such indebtedness; or
(h) A judgment or order for the payment of money in excess
of $20,000,000 shall be rendered against the Company and such
judgment or order shall continue unsatisfied and the execution of
enforcement thereof shall no longer be effectively stayed for a
period of 30 days or for such longer period of time, not
exceeding 90 days, during which, under applicable law, an appeal
may be taken from such judgment or order without leave of the
relevant court.
If any Event of Default shall have occurred and be continuing,
the Bank may, (i) by written notice to the Company, declare all
obligations of the Company hereunder to be forthwith due and
payable, whereupon the same shall become due and payable without
demand, presentment, protest or further notice of any kind, all
of which are hereby expressly waived, provided, however that upon
the occurrence of an Event of Default specified in Section 12(e)
or 12(f) of this Agreement the obligations of the Company under
Section 2 hereto shall be automatically due and payable without
demand, presentment, protest or further written notice of any
kind, all of which are expressly waived; (ii) by written notice
to the Company demand payment forthwith of all amounts available
to be drawn under the Credits outstanding on the date of such
demand (provided that if any Credit expires and is not fully
drawn upon then all such amounts applicable to such Credit as
have not been paid in respect of such Credit, plus interest
thereon at the rate customarily paid by the Bank for overnight
deposits, shall be promptly returned to the Company) and all
other obligations of the Company hereunder and/or (iii) pursue
any other remedy available to it under this Agreement or
otherwise.
13. Right of Setoff. Upon the occurrence and during the
continuance of any Event of Default, the Bank is hereby
authorized at any time and from time to time, without notice to
the Company (any such notice being expressly waived by the
Company) to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held
and other indebtedness at any time owing by the Bank to or for
the credit or the account of the Company against any and all of
8
<PAGE>
the obligations of the Company now or thereafter existing under
this Agreement, irrespective of whether or not the Bank shall
have made any demand under this Agreement and although such
obligations may be contingent and unmatured. The Bank agrees
promptly to notify the Company after any such setoff and
application, provided that the failure to give such notice shall
not affect the validity of such setoff and application. The
rights of the Bank under this Section 13 are in addition to other
rights and remedies which the Bank may have including, without
limitation, other rights of setoff.
14. Notices. Notices and demands under this Agreement
shall be in writing and will be sufficient if delivered by hand,
by United States registered or certified mail or by facsimile
transmission or other electronic means. Notices and demands
shall be effective when received and shall be addressed if to the
Company to:
Metropolitan Edison Company
100 Interpace Parkway
Parsippany, NJ 07054
Attention: Vice President & Treasurer
Fax: (201) 263-6719
if to the Bank to:
The Fuji Bank, Limited
New York Branch
Two World Trade Center
New York, New York 10048
Attention: U.S. Corporate Finance
FAX No.: (212) 912-0516
15. No Waivers, Remedies. This Agreement may not be
amended, waived or modified except in writing duly signed by the
Bank and the Company. The Bank may elect in its sole discretion
not to renew any Credit for additional periods. This Agreement
and the terms, covenants and conditions hereof shall be binding
upon and inure to the benefit of the Bank and the Company and
their respective successors. No failure on the Bank's part to
exercise, and no delay on the Bank's part in exercising, any
rights, powers or remedies hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such
rights, powers or remedies by the Bank preclude any other or
further exercising thereof or the exercise of any other right,
power or remedy. All remedies hereunder are cumulative and not
exclusive of any other remedies provided by law.
16. Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction
shall,as to such jurisdiction, be ineffective to the extent
required by law without invalidating the remaining provisions
hereof or affecting the validity, enforceability or legality of
such provision in any other jurisdiction.
17. Jurisdiction; Waiver of Jury Trial. (a) Any legal
9
<PAGE>
action or proceeding against the Company or the Bank with respect
to this Agreement, any Credit or any of the agreements, documents
or instruments delivered in connection herewith or therewith may
be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York as
the party commencing such action or proceeding may elect. By
execution and delivery hereof, each party accepts and consents
to, for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts.
Nothing herein shall limit the right of the Company or the Bank
to bring proceedings against the other party in the courts of any
other jurisdiction.
(b) THE COMPANY AND THE BANK KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY AND ALL RIGHTS THE COMPANY OR THE BANK
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS
AGREEMENT, ANY CREDIT OR ANY OTHER DOCUMENTS AND INSTRUMENTS
EXECUTED IN CONNECTION HEREWITH.
18. Conflict with Terms of Application. In the event of
any conflict between this Agreement and the terms of any
application or request for a Credit, this Agreement shall prevail
in the absence of an express provision to the contrary which
refers specifically to this Agreement.
19. Governing Law; Credits Subject to Uniform Customs and
Practice. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Each Credit
issued by the Bank shall be subject to and governed by the
Uniform Customs and Practice for Documentary Credits, 1993
revision, ICC Publication No. 500 or any subsequent revision (the
"Uniform Customs and Practice").
20. Definitions. Capitalized terms used herein and not
otherwise defined have the meanings ascribed to them in the
Uniform Customs and Practice.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed and delivered as of the day and year first above
written by the undersigned thereunto authorized.
THE FUJI BANK, LIMITED, NEW YORK BRANCH
By:
Name:
Title:
METROPOLITAN EDISON COMPANY
By:
Name:
Title:
10
<PAGE>
Exhibit A-3
IRREVOCABLE STANDBY LETTER OF CREDIT NO. CLL901/692130
March 31, 1997
Utilities Mutual Insurance Company
4 Gatehall Drive
Suite 215
Parsippany, NJ 07054
Attention: Mr. Bruce Bertram
Director, Underwriting
Dear Sirs:
At the request and on the instructions of our customer,
Pennsylvania Electric Company (the "Account Party"), The Fuji
Bank, Limited, New York Branch ("we" or the "Bank") hereby
establish in your favor, as Beneficiary, this Irrevocable
Standby Letter of Credit No. CLL901/692130 (this "Letter of
Credit") in an amount up to, but not exceeding, Two Million,
Seven Hundred Twenty Five Thousand Dollars (US$2,725,000) (the
"Stated Amount"). The term "Beneficiary" includes any successor
by operation of law of the named beneficiary, including without
limitation, any liquidator, receiver or conservator.
SECTION 1. Presentation. Effective immediately, we hereby
undertake to make available to you funds under this Letter of
Credit, in lawful currency of the United States against receipt
by us on or before 5:00 p.m. New York City time on December 31,
1998 (the "expiry date") of your sight draft drawn on us
indicating this Letter of Credit number, and stating on its face
"Drawn under Irrevocable Letter of Credit No. CLL901/692130,
dated March 31, 1997", appropriately completed and duly signed by
you. The sight draft must be accompanied by the original Letter
of Credit and a signed statement by you that the Account Party
has not performed its obligations as outlined in the Deductible
Endorsement to the Worker's Compensation and Employer's Liability
Insurance Policy No. PAC-9343 and/or successor policies of the
Account Party in an amount equal to or greater than the amount of
the sight draft. Presentation of such drawing request shall be
made in person by you or a duly authorized attorney-in-fact at
our address above (the "Payment Office").
If the expiry date shall fall on a Saturday, Sunday or a legal
banking holiday in New York City, then the Letter of Credit shall
expire at 5:00 p.m. New York City time on the prior business day.
This Letter of Credit shall be deemed automatically extended
without amendment for one year from its expiry date, or, if
<PAGE>
extended, any future expiry date, unless at least thirty days
prior to any such expiry date we shall notify you by registered
mail, that we elect not to consider the Letter of Credit renewed
for any such additional period. To the extent this Letter of
Credit is automatically extended in accordance herewith for any
one or more additional one-year periods, such extension shall in
no event abrogate our sole right not to grant further extensions.
Upon receipt by you of our notice of election not to renew this
Letter of Credit, you may draw hereunder by your sight draft(s)
drawn on us and bearing the clause "Drawn Under Credit No.
CLL901/692130". The sight draft must be accompanied by the
original Letter of Credit and a statement by you that the
applicant has not delivered a substitute Letter of Credit as
required by the Deductible Endorsement.
SECTION 2. Payments. By delivering a sight draft complying
with the requirements of Section 1 to us on any business day on
or prior to the expiry date, at any time during our business
hours at the Payment Office, you may request a drawing to be made
under this Letter of Credit. Multiple drawings are permitted
hereunder, provided that each drawing honored by the Bank
hereunder shall reduce the Letter of Credit and no drawing shall
be permitted to be made or honored if, after giving effect
thereto, the amount of all draws exceeds the Stated Amount.
SECTION 3. Bank Obligation. Except as expressly stated
herein, the obligation under this Letter of Credit is the
individual obligation of the Bank and is not subject to any
condition or qualification and is not contingent on the ability
of the Bank to perfect a lien, security interest, or any other
reimbursement. This Letter of Credit cannot be modified or
revoked without the consent of the Bank and the Beneficiary.
SECTION 4. Notices, etc. Communications with respect to this
Letter of Credit shall be in writing, shall specifically refer
therein to this Letter of Credit by number, shall be delivered by
registered or certified mail, return receipt requested and shall
be addressed to you at the address above set forth. Attention:
Vice President and Manager, specifically referring thereon to
this Letter of Credit by number. You may designate a change of
address by providing written notice thereof to us. Notices and
other communications shall be deemed to have been given upon
delivery to a post office for mailing as provided above.
SECTION 5. Governing Law. This Letter of Credit is subject
to and governed by the Laws of the State of New York and the 1993
Revision of the Uniform Customs and Practice for Documentary
Credits of the International Chamber of Commerce (Publication no.
500) and, in the event of any conflict, the laws of the State of
New York will control.
SECTION 6. Miscellaneous. This Letter of Credit shall inure
to the benefit of the Beneficiary and its heirs, legal
representatives and assigns. This Letter of Credit shall be
2
<PAGE>
assignable only with the Bank s prior written consent. This
Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified,
or limited by reference to any document, instrument, or
agreement.
THE FUJI BANK, LIMITED,
NEW YORK BRANCH
By:
Name:
Title:
3
<PAGE>
Exhibit A-4
UNCOMMITTED STAND-BY LETTER OF CREDIT AND REIMBURSEMENT
AGREEMENT, dated as of March 31, 1997 (this "Agreement")
between The Fuji Bank, Limited, New York Branch (the "Bank") and
Pennsylvania Electric Company, a Pennsylvania corporation (the
Company").
WHEREAS, the Company may request the Bank to issue from
time to time irrevocable letters of credit (each, a "Credit");
WHEREAS, the Bank may from time to time, and in its
discretion in each instance, agree to issue one or more Credits;
NOW, THEREFORE, the Bank and the Company wish to
specify the terms and conditions applicable to such Credits, and
hereby agree as follows:
1. The Issuance of Credits. At the request of the Company,
the Bank may, in its sole discretion, issue Credits for the
Company's account, from time to time on a Business Day on or
before March 31, 1998.
2. Reimbursement and Other Payments. (a) The Company
agrees to reimburse the Bank on demand in immediately available
funds for each payment made by the Bank pursuant to a Credit or
a draft honored by the Bank under such Credit and for each amount
otherwise due to the Bank hereunder.
(b) The Company shall pay to the Bank interest on any and
all amounts unpaid by the Company when due hereunder (in the case
of amounts in respect of interest, to the maximum extent
permitted by law) for each day from the date such amounts become
due until payment in full, payable on demand, at a fluctuating
interest rate per annum (computed on the basis of a year of 360
days for the actual number of days elapsed) equal to the higher
of (i) the rate publicly announced by the Bank from time to time
as its base rate or prime rate and (ii) the federal funds rate
plus 0.5% per annum (not to exceed the Bank's base or prime rate
plus 0.5% per annum).
(c) The Company will pay to the Bank a non-refundable
annual commission with respect to the Credits as may be agreed
upon in writing between the Bank and the Company, payable as
provided therein.
(d) All payments by the Company to the Bank hereunder shall
be made in lawful currency of the United States and in
immediately available funds, without any set-off, counterclaim or
deduction whatsoever, at the Bank's principal New York office,
which at the date hereof is located at Two World Trade Center,
New York, New York 10048, Attention: Loan Administration
Department, no later than 2:00 p.m. New York City time, on the
due date thereof. Whenever any payment hereunder shall be due on
<PAGE>
a day which is not a Business Day, the date for payment thereof
shall be extended to the next succeeding Business Day, and any
interest payable thereon shall be payable for such extended time
at the specified rate. All fees hereunder shall be computed on
the basis of a 360 day year and the actual number of days
elapsed.
4. Cancellation. Subject to applicable legal
requirements, Credits issued pursuant to this Agreement may be
canceled subject to the prior written consent of the Beneficiary
submitted to the Bank together with the original thereof.
5. Indemnity. The Company agrees to indemnify the Bank
from and against all liabilities, losses and expenses (including
reasonable legal and other expenses incurred by the Bank in
enforcing its rights or protecting its interest) incurred by the
Bank as a consequence of or resulting from or incurred by the
Bank in connection with the issuance of any Credit or any action,
inaction or omission taken or suffered by the Bank in good faith
without gross negligence. This Section 5 shall survive any
payment of the Bank's obligations and liabilities hereunder and
any termination of this Agreement.
6. Change in Circumstances;Taxes. (a) If the Bank
determines that any change in any law, regulation, guideline or
order or in the interpretation thereof by any court or
administrative or governmental authority charged with the
administration thereof shall either (i) impose, modify or deem
applicable any reserve, special deposit or similar requirement
against Credits issued by the Bank or require the inclusion of
Credits in calculations related to the Bank's capitalization or
(ii) impose any other condition regarding this Agreement or the
Credits, including, without limitation, any requirement that the
Bank pay assessments for deposit insurance with respect to the
Credits, and the result of any event referred to in clause (i) or
(ii) above shall be to increase the cost to the Bank of issuing
or maintaining the Credits or the reimbursement obligations of
the Company or to reduce the amounts receivable by the Bank upon
such reimbursement, then, upon demand by the Bank made not later
than 180 days after the Bank shall have incurred such increased
cost or reduced receivable, the Company shall immediately pay to
the Bank from time to time as specified by the Bank additional
amounts which shall be sufficient to compensate the Bank for such
increased cost or reduced receivables from the date incurred
until payment in full, provided that the Bank shall have used
reasonable efforts to mitigate such increased cost or reduced
receivable, so long as such efforts or the results thereof would
not otherwise be disadvantageous to the Bank. A certificate as
to such amounts submitted by the Bank to the Company, stating in
reasonable detail the basis of computation, shall be presumptive
evidence of additional amounts payable under this Section 6. If
payment is not made on the date demanded, interest will be
charged from the date of demand based on the calculation in
Section 3(d).
(b) All payments by the Company to the Bank under this
Agreement shall be made free and clear of and without deduction
<PAGE>
for any future taxes or other amounts for or on account of
levies, imposts, duties, deductions, withholdings or other
charges of whatsoever nature, imposed, levied, collected,
withheld or assessed by any governmental authority (excluding
income and franchise taxes imposed on the Bank by the
jurisdiction under which the Bank is organized or operating in
connection with this Agreement or any political subdivision
thereof) (the Taxes ). If the Company shall be required to
withhold or deduct Taxes from any sum payable to the Bank
hereunder, (i) the sum payable to the Bank shall be increased as
may be necessary so that the Bank receives an amount equal to the
sum it would have received had no withholdings or deductions been
made, (ii) the Company shall make such necessary withholdings and
deductions and (iii) the Company shall pay the full amount
withheld or deducted to the relevant authority according to
applicable law so that the Bank shall not be required to make any
deduction or payment of Taxes.
7. Liability of the Bank. The Bank shall not be
responsible (a) for verifying the existence of any act, condition
or statement made by the Beneficiary (or any transferee) in
relation to any drawing or presentment under a Credit, (b) for
the validity or genuineness of certificates or other documents
delivered under or in connection with a Credit, even if such
certificates or other documents should in fact prove to be
invalid, fraudulent or forged, (c) for any breach of contract
between the Beneficiary (or any transferee) and the Company, (d)
for any consequences beyond the Bank's control or (e) for any act
or omission of the Bank or its correspondents or agents so long
as the Bank acts in good faith without gross negligence. The
Bank may accept certificates or other documents that appear on
their face to be in order without responsibility for further
investigation, regardless of any notice or information to the
contrary, unless otherwise ordered by a court of competent
jurisdiction. In furtherance of and not in limitation of the
foregoing, the Company agrees that any action, inaction or
omission taken or suffered by the Bank in good faith without
gross negligence in connection with Credits or related drafts
shall be binding on the Company and shall not result in any
liability of the Bank relating thereto. The Bank may accept
certificates or other documents otherwise in order which may be
signed or issued by one who purports to be the administrator,
executor, trustee in bankruptcy, debtor in possession, assignee
for the benefit of creditors, liquidator, receiver, legal
representative, or any other entity succeeding or purporting to
succeed de facto or de jure to the powers, rights or privileges
of any party who is authorized under the Credit to draw or issue
documents.
8. Obligation Absolute. The Obligations of the Company
under this Agreement shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with
the terms hereof, under all circumstances whatsoever, including
without limitation the following:
3
<PAGE>
(a) any lack of validity or enforceability of this
Agreement or any Credit or of the Company's obligations to the
Beneficiaries thereof;
(b) any amendment or waiver of or any consent to
departure from this Agreement or any Credit;
(c) the existence of any claim, set-off, defense or
other rights which the Company or any other person may have at
any time against the Beneficiaries of any Credit, any Beneficiary
or any transferee of any Credit (or any person for whom the
Beneficiaries, any such Beneficiary or any such transferee may be
acting), the Bank, any participant or any other Person whether in
connection with this Agreement or any unrelated transaction;
(d) any statement or any other document presented under
any Credit proving to be forged, fraudulent or invalid or
insufficient in any respect or any statement therein being untrue
or inaccurate in any respect whatsoever;
(e) payment by the Bank under any Credit against
presentation of a draft or certificate which does not comply with
the terms of such Credit, provided, however, that such payment
shall not have constituted gross-negligence or willful misconduct
on the part of the Bank;
(f) the failure of the Bank to honor any drawing under
any Credit or to make any payment demanded under any Credit on
the ground that the demand for such payment does not conform to
the terms and conditions of such Credit;
(g) any circumstances which might constitute a legal
or equitable discharge of any obligations hereunder; it being
agreed that the obligations hereunder shall not be discharged
except by the performance thereof strictly in accordance with the
terms of this Agreement including, without limitation, the
payment in full as herein provided of all amounts owing
hereunder; and
(h) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
9. Conditions Precedent. It shall be a condition
precedent to the issuance by the Bank of each Credit that:
(a) The Bank shall have received on or before the date of
issuance, in form and substance satisfactory to the Bank, the
following:
(i) a copy of this Agreement, duly executed by the
Company;
(ii) a certificate dated as of the date hereof of an
officer of the Company certifying the name and true signatures of
the officers of the Company authorized to sign this Agreement and
4
<PAGE>
documents related hereto;
(iii) evidence reasonably acceptable to the Bank that
the Company s execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate
action; and
(iv) such other documents, instruments, approvals
(and, if requested by the Bank, certified duplicates of executed
copies thereof) as the Bank may reasonably request.
(b) The representations and warranties contained in Section
10 hereof shall be true and correct on and as of the date of
issuance of such Credit as though made on and as of such date and
no Event of Default or event which, with the passage of time or
the giving of notice or both, will become an Event of Default,
shall have occurred and be continuing.
10. Representations and Warranties. The Company represents
and warrants to the Bank that:
(a) Corporate Existence. The Company is a corporation duly
organized and existing in good standing under the laws of the
Commonwealth of Pennsylvania and has power and authority to own
its properties and assets and to transact the business and to
carry on the operations in which it currently engages. The
Company is duly qualified as a foreign corporation and is in good
standing in each of the jurisdictions in which such qualification
is necessary, except where the failure to be so qualified would
not result in (i) an adverse effect on the validity,
effectiveness or enforceability of this Agreement, (ii) a
material adverse effect on the business, operations, property or
financial or other condition of the Company and its subsidiaries
taken as a whole or (iii) a material adverse effect on the
ability of the Company to perform its obligations hereunder
(clauses (i), (ii) and (iii) are collectively referred to as a
Material Adverse Effect ).
(b) Corporate Authority. The execution, delivery and
performance of this Agreement is within the powers of the
Company, has been duly authorized by all necessary action of the
Company and does not and will not contravene or constitute
default under any requirement of law or any contractual
obligation of the Company. The Company has received all approvals
and consents required by law or regulation or contractual
obligation and made all filings required to enter into, deliver
and perform this Agreement.
(c) Litigation. There are no actions, suits or proceedings
pending or, to the best of the knowledge of any responsible
officer of the Company, threatened against or affecting the
Company or any of its subsidiaries or relating to this Agreement
before any court, administrative office, agency or authority
which would either individually or collectively be reasonably
expected to have, except as set forth in the Annual Report or
5
<PAGE>
Form 10-K of GPU, Inc. (the Parent ) for the year ended December
31, 1996, a Material Adverse Effect.
(d) Enforceability. This Agreement when duly executed and
delivered will be a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by equitable
principles or by applicable bankruptcy, insolvency, moratorium or
similar laws affecting creditors' rights generally.
(e) Defaults. The Company is not in default in the
performance, observance or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument
to which the Company is a party or by which the Company or any of
its property is bound or any judgments, decrees or orders, except
for defaults that, singly or in the aggregate, have not had and
could not be reasonably expected to have a material adverse
effect on the Company's ability to perform its obligations to the
Bank pursuant to this Agreement.
11. Covenants. The Company covenants and agrees that, so
long as any Credit is outstanding and until the payment in full
of all amounts owing to the Bank hereunder:
(a) Compliance with Law. The Company will comply in all
material respects, with all requirements of law, such compliance
to include, without limitation, paying and discharging, as the
same may become due and payable, all taxes, assessments, and
other governmental charges or levies against or on any of its
property, as well as claims of any kind that, if unpaid, might
become a lien upon any of its properties except where the failure
to comply would not have a Material Adverse Effect; provided,
however, that the foregoing shall not require the Company to
comply with such law, and any claims thereunder, so long as the
Company in good faith shall contest the validity thereof and
shall with respect to the payment of any such tax, assessment,
charge, levy or lien, in accordance with generally accepted
accounting principles ("GAAP") and applicable regulations, set
aside and maintain on its books adequate reserves with respect
thereto.
(b) Preservation of Existence. The Company will continue to
preserve, renew and keep in full force and effect its corporate
existence.
(c) Financial Statements. The Company will deliver to the
Bank the Parent s audited annual consolidated financial
statements within 120 days after the closing of the Parent's
fiscal year. Delivery of financial statements to the Bank shall
constitute a representation that such statements fairly represent
the financial condition of the Parent and the Company and that as
of the date of such statements no material contingencies are
known to exist which are required to be disclosed in a balance
sheet prepared in accordance with GAAP except those disclosed in
the notes to the financial statements.
6
<PAGE>
(d) Notices. The Company will deliver to the Bank
forthwith upon acquiring knowledge of the occurrence of any Event
of Default a certificate of an officer of the Company setting
forth the details thereof and the action which the Company is
taking or proposes to take with respect thereto.
12. Events of Default. Each of the following events
constitute an Event of Default (an "Event of Default") hereunder:
(a) Any representation or warranty made by the Company in
this Agreement or in any certificate, financial or other
statement furnished by the Company pursuant to this Agreement
shall prove to have been untrue or incomplete in any material
respect when made; or
(b) The Company shall fail to pay any amount when due
hereunder and any such failure shall remain unremedied for three
business days; or
(c) The Company shall fail to perform or observe any other
term, covenant or provision under this Agreement, and any such
failure shall remain unremedied for 20 days after written notice
thereof shall have been given by the Bank to the Company; or
(d) Any material provision of this Agreement shall at any
time and for any reason cease to be valid and binding on the
Company, or shall be declared to be null and void, or the
validity or enforceability thereof shall be contested by the
Company or any governmental agency or authority or the Company
shall, prior to the satisfaction of the Company's obligations
hereunder, deny that it has any or further liability or
obligation under this Agreement; or
(e) The Company shall (i) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or
the like of itself or all or a substantial amount of its
property, (ii) generally fail to pay its debts when they become
due, (iii) make a general assignment for the benefit of
creditors, (iv) be adjudicated bankrupt or insolvent, or (v)
commence a voluntary case under the federal bankruptcy laws of
the United States of America or file a voluntary petition or
answer seeking reorganization or an arrangement with creditors
under an insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or corporate action shall
be taken by it for the purpose of effecting any of the foregoing;
or
(f) If without the application, approval or consent of the
Company a proceeding shall be instituted in any court of
competent jurisdiction under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors seeking in
respect of the Company an order of relief or an adjudication in
bankruptcy, reorganization, dissolution, winding-up, liquidation,
7
<PAGE>
a composition or arrangement with creditors, a readjustment of
debts, the appointment of a trustee, receiver, liquidator or
custodian or the like of the Company of all or any substantial
part of the assets of the Company or other like relief in respect
thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by the Company in good faith, the
same shall (i) result in the entry of an order of relief or any
such adjudication or appointment or (ii) continue undismissed, or
pending and unstayed, for any period of 60 consecutive days; or
(g) The Company shall default in the performance or
observance of any provision, covenant or restriction contained in
any agreement with respect to indebtedness for borrowed money in
excess of $20,000,000 beyond applicable days of grace and the
effect of such default is to permit the acceleration of maturity
of such indebtedness; or
(h) A judgment or order for the payment of money in excess
of $20,000,000 shall be rendered against the Company and such
judgment or order shall continue unsatisfied and the execution of
enforcement thereof shall no longer be effectively stayed for a
period of 30 days or for such longer period of time, not
exceeding 90 days, during which, under applicable law, an appeal
may be taken from such judgment or order without leave of the
relevant court.
If any Event of Default shall have occurred and be continuing,
the Bank may, (i) by written notice to the Company, declare all
obligations of the Company hereunder to be forthwith due and
payable, whereupon the same shall become due and payable without
demand, presentment, protest or further notice of any kind, all
of which are hereby expressly waived, provided, however that upon
the occurrence of an Event of Default specified in Section 12(e)
or 12(f) of this Agreement the obligations of the Company under
Section 2 hereto shall be automatically due and payable without
demand, presentment, protest or further written notice of any
kind, all of which are expressly waived; (ii) by written notice
to the Company demand payment forthwith of all amounts available
to be drawn under the Credits outstanding on the date of such
demand (provided that if any Credit expires and is not fully
drawn upon then all such amounts applicable to such Credit as
have not been paid in respect of such Credit, plus interest
thereon at the rate customarily paid by the Bank for overnight
deposits, shall be promptly returned to the Company) and all
other obligations of the Company hereunder and/or (iii) pursue
any other remedy available to it under this Agreement or
otherwise.
13. Right of Setoff. Upon the occurrence and during the
continuance of any Event of Default, the Bank is hereby
authorized at any time and from time to time, without notice to
the Company (any such notice being expressly waived by the
Company) to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held
and other indebtedness at any time owing by the Bank to or for
8
<PAGE>
the credit or the account of the Company against any and all of
the obligations of the Company now or thereafter existing under
this Agreement, irrespective of whether or not the Bank shall
have made any demand under this Agreement and although such
obligations may be contingent and unmatured. The Bank agrees
promptly to notify the Company after any such setoff and
application, provided that the failure to give such notice shall
not affect the validity of such setoff and application. The
rights of the Bank under this Section 13 are in addition to other
rights and remedies which the Bank may have including, without
limitation, other rights of setoff.
14. Notices. Notices and demands under this Agreement
shall be in writing and will be sufficient if delivered by hand,
by United States registered or certified mail or by facsimile
transmission or other electronic means. Notices and demands
shall be effective when received and shall be addressed if to the
Company to:
Pennsylvania Electric Company
100 Interpace Parkway
Parsippany, NJ 07054
Attention: Vice President & Treasurer
Fax: (201) 263-6719
if to the Bank to:
The Fuji Bank, Limited
New York Branch
Two World Trade Center
New York, New York 10048
Attention: U.S. Corporate Finance
FAX No.: (212) 912-0516
15. No Waivers, Remedies. This Agreement may not be
amended, waived or modified except in writing duly signed by the
Bank and the Company. The Bank may elect in its sole discretion
not to renew any Credit for additional periods. This Agreement
and the terms, covenants and conditions hereof shall be binding
upon and inure to the benefit of the Bank and the Company and
their respective successors. No failure on the Bank's part to
exercise, and no delay on the Bank's part in exercising, any
rights, powers or remedies hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such
rights, powers or remedies by the Bank preclude any other or
further exercising thereof or the exercise of any other right,
power or remedy. All remedies hereunder are cumulative and not
exclusive of any other remedies provided by law.
16. Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction
shall,as to such jurisdiction, be ineffective to the extent
required by law without invalidating the remaining provisions
hereof or affecting the validity, enforceability or legality of
such provision in any other jurisdiction.
9
<PAGE>
17. Jurisdiction; Waiver of Jury Trial. (a) Any legal
action or proceeding against the Company or the Bank with respect
to this Agreement, any Credit or any of the agreements, documents
or instruments delivered in connection herewith or therewith may
be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York as
the party commencing such action or proceeding may elect. By
execution and delivery hereof, each party accepts and consents
to, for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts.
Nothing herein shall limit the right of the Company or the Bank
to bring proceedings against the other party in the courts of any
other jurisdiction.
(b) THE COMPANY AND THE BANK KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY AND ALL RIGHTS THE COMPANY OR THE BANK
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
ON, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT, ANY CREDIT
OR ANY OTHER DOCUMENTS AND INSTRUMENTS EXECUTED IN CONNECTION
HEREWITH.
18. Conflict with Terms of Application. In the event of
any conflict between this Agreement and the terms of any
application or request for a Credit, this Agreement shall prevail
in the absence of an express provision to the contrary which
refers specifically to this Agreement.
19. Governing Law; Credits Subject to Uniform Customs and
Practice. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Each Credit
issued by the Bank shall be subject to and governed by the
Uniform Customs and Practice for Documentary Credits, 1993
revision, ICC Publication No. 500 or any subsequent revision (the
"Uniform Customs and Practice").
20. Definitions. Capitalized terms used herein and not
otherwise defined have the meanings ascribed to them in the
Uniform Customs and Practice.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed and delivered as of the day and year first above
written by the undersigned thereunto authorized.
THE FUJI BANK, LIMITED, NEW YORK BRANCH
By:
Name:
Title:
PENNSYLVANIA ELECTRIC COMPANY
By:
Name:
Title:
10
<PAGE>
