GPU INC /PA/
35-CERT, EX-99.3, 2000-12-18
ELECTRIC SERVICES
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                                                            Exhibit B-3

                                    GPU, Inc.

                                  $300,000,000
                       7.70% Debentures, Series A due 2005

                             Underwriting Agreement

                                                           New York, New York
                                                             December 1, 2000
Salomon Smith Barney Inc.
ABN AMRO Incorporated
Chase Securities Inc.
First Union Securities, Inc.
    As Representatives of the several Underwriters,
    c/o Salomon Smith Barney Inc.
    388 Greenwich Street
    New York, New York 10013

Ladies and Gentlemen:

      GPU, Inc., a corporation  organized  under the laws of  Pennsylvania  (the
"Company"),  proposes  to sell to the several  underwriters  named in Schedule I
hereto (the "Underwriters"),  for whom you (the "Representatives") are acting as
representative,  $300,000,000 principal amount of its 7.70% Debentures, Series A
due 2005 (the  "Securities"),  to be issued under an indenture (the "Indenture")
to be dated as of December 1, 2000,  between the Company and United States Trust
Company,  as trustee  (the  "Trustee").  To the extent  there are no  additional
Underwriters  listed on Schedule I other than you, the term  Representatives  as
used herein shall mean you, as Underwriter,  and the terms  Representatives  and
Underwriters  shall mean either the singular or plural as the context  requires.
Any reference herein to the Registration  Statement, a Preliminary Prospectus or
the  Prospectus   shall  be  deemed  to  refer  to  and  include  the  documents
incorporated  by  reference  therein  pursuant to Item 12 of Form S-3 which were
filed under the Exchange Act on or before the Effective Date of the Registration
Statement or the issue date of such Preliminary Prospectus or the Prospectus, as
the case may be; and any reference  herein to the terms "amend",  "amendment" or
"supplement"  with  respect  to  the  Registration  Statement,  any  Preliminary
Prospectus or the Prospectus  shall be deemed to refer to and include the filing
of any  document  under  the  Exchange  Act  after  the  Effective  Date  of the
Registration  Statement,  or the issue date of any Preliminary Prospectus or the
Prospectus,  as the case may be, deemed to be incorporated therein by reference.
Certain terms used herein are defined in Section 17 hereof.

      1. Representations and Warranties. The Company represents and warrants to,
and agrees with, each Underwriter as set forth below in this Section 1.

            (a) The Company meets the requirements for use of Form S-3 under the
      Act  and has  prepared  and  filed  with  the  Commission  a  registration

<PAGE>


      statement  (file  number  333-07895)  on Form  S-3,  including  a  related
      preliminary prospectus, for registration under the Act of the offering and
      sale of the  Securities.  The  Company  has filed  one or more  amendments
      thereto,  including a related  preliminary  prospectus,  each of which has
      previously  been  furnished  to you.  The Company  will next file with the
      Commission one of the following: either (1) prior to the Effective Date of
      such  registration  statement,  a further  amendment to such  registration
      statement,  including  the  form of  final  prospectus  or (2)  after  the
      Effective  Date of such  registration  statement,  a final  prospectus  in
      accordance  with Rules 430A and  424(b).  In the case of clause  (2),  the
      Company has  included in such  registration  statement,  as amended at the
      Effective  Date,  all  information  (other  than  Rule  430A  Information)
      required  by the Act and  the  rules  thereunder  to be  included  in such
      registration  statement and the Prospectus.  As filed,  such amendment and
      form of final prospectus, or such final prospectus, shall contain all Rule
      430A Information,  together with all other such required information, and,
      except to the  extent  the  Representatives  shall  agree in  writing to a
      modification,  shall be in all substantive  respects in the form furnished
      to you prior to the Execution  Time or, to the extent not completed at the
      Execution Time,  shall contain only such specific  additional  information
      and  other  changes  (beyond  that  contained  in the  latest  Preliminary
      Prospectus) as the Company has advised you,  prior to the Execution  Time,
      will be included or made therein.

            (b) On the Effective Date, the  Registration  Statement did or will,
      and when the  Prospectus is first filed (if  required) in accordance  with
      Rule 424(b) and on the Closing Date (as defined  herein),  the  Prospectus
      (and any supplements  thereto) will,  comply in all material respects with
      the  applicable  requirements  of the Act,  the Exchange Act and the Trust
      Indenture Act and the respective rules  thereunder;  on the Effective Date
      and at the Execution Time, the Registration  Statement did not or will not
      contain  any  untrue  statement  of a  material  fact or omit to state any
      material fact required to be stated  therein or necessary in order to make
      the statements  therein not  misleading;  on the Effective Date and on the
      Closing Date the  Indenture  did or will comply in all  material  respects
      with the applicable  requirements of the Trust Indenture Act and the rules
      thereunder;  and, on the  Effective  Date,  the  Prospectus,  if not filed
      pursuant to Rule 424(b),  will not, and on the date of any filing pursuant
      to Rule 424(b) and on the Closing Date, the Prospectus  (together with any
      supplement  thereto) will not,  include any untrue statement of a material
      fact or omit to  state a  material  fact  necessary  in  order to make the
      statements  therein,  in the light of the  circumstances  under which they
      were made, not misleading;  provided,  however,  that the Company makes no
      representations or warranties as



                                        2


<PAGE>


      to (i) that part of the Registration  Statement which shall constitute the
      Statement  of  Eligibility  and  Qualification  (Form T-1) under the Trust
      Indenture  Act of the  Trustee  or (ii) the  information  contained  in or
      omitted  from  the  Registration  Statement,  or the  Prospectus  (or  any
      supplement  thereto) in reliance upon and in conformity  with  information
      furnished  in  writing to the  Company by or on behalf of any  Underwriter
      through the Representatives specifically for inclusion in the Registration
      Statement or the Prospectus (or any supplement thereto).

            (c) The Securities  have been duly  authorized and will, when issued
      and paid for as contemplated in this Agreement and duly  authenticated  by
      the Trustee under the Indenture,  be legal, valid and binding  obligations
      of the Company  enforceable  in  accordance  with their  terms  (except as
      limited by bankruptcy, insolvency, reorganization,  moratorium, fraudulent
      conveyance or other laws affecting the  enforcement  of creditors'  rights
      and by general  principles of equity) and will be entitled to the security
      afforded by the Indenture.

            (d) The Indenture has been duly authorized,  executed and delivered,
      has been duly qualified  under the Trust  Indenture Act, and constitutes a
      legal,  valid and binding  instrument  enforceable  against the Company in
      accordance  with its terms  (subject,  as to enforcement  of remedies,  to
      applicable bankruptcy, reorganization,  insolvency, moratorium, fraudulent
      conveyance or other laws affecting  creditors'  rights generally from time
      to time in effect and to general principles of equity, including,  without
      limitation, concepts of materiality,  reasonableness,  good faith and fair
      dealing,  regardless of whether considered in a proceeding in equity or at
      law).

            (e)  PricewaterhouseCoopers  LLP, the  accountants who certified the
      financial   statements  included  or  incorporated  by  reference  in  the
      Prospectus,  are  independent  certified  accountants  with respect to the
      Company within the meaning of the Securities Act and the respective  rules
      thereunder (hereinafter, the "Independent Accountants").

            (f) The Company is duly  incorporated  and validly  subsisting  as a
      corporation  in  good  standing  under  the  laws of the  Commonwealth  of
      Pennsylvania  with corporate power and authority to own, lease and operate
      its properties and to conduct its business as described in the Prospectus;
      and the Company is duly  qualified  as a foreign  corporation  to transact
      business  and is in good  standing  in each  jurisdiction  in  which  such
      qualification  is required,  whether by reason of the ownership or leasing
      of  property or the conduct of  business,  except  where the failure to so
      qualify  would  not  have a  material  adverse  effect  on the  condition,
      financial or otherwise, or the earnings, business



                                        3


<PAGE>


      affairs,   business  prospects  or  properties  of  the  Company  and  its
      subsidiaries, taken as a whole.

            (g)  Each of  Jersey  Central  Power & Light  Company,  Metropolitan
      Edison Company,  Pennsylvania  Electric  Company,  GPU Capital,  Inc., GPU
      Electric,  Inc.,  Midlands  Electricity  plc, EI UK Holdings,  Inc.,  Avon
      Energy Partners  Holdings and Avon Energy  Partners plc (the  "Significant
      Subsidiaries")   is  duly  incorporated  and  is  validly  existing  as  a
      corporation  in good standing  under the laws of the  jurisdiction  of its
      incorporation, has corporate power and authority to own, lease and operate
      its  properties and to conduct its business as described in the Prospectus
      and is duly qualified as a foreign corporation to transact business and is
      in good  standing  in each  jurisdiction  in which such  qualification  is
      required, whether by reason of the ownership or leasing of property or the
      conduct of business, except where the failure to so qualify would not have
      a material adverse effect on the condition, financial or otherwise, or the
      earnings,  business  affairs,  business  prospects  or  properties  of the
      Company  and its  subsidiaries,  taken as a whole;  all of the  issued and
      outstanding capital stock of each of the Significant Subsidiaries has been
      duly authorized and validly issued, is fully paid and non-assessable  and,
      other than the preferred stock of the Significant  Subsidiaries,  is owned
      by the Company or one of the other Significant Subsidiaries directly, free
      and clear of any security interest, mortgage, pledge, lien or claim. There
      are no other  subsidiaries  of the  Company  which would be  considered  a
      "significant  subsidiary"  under  Rule  405  of  Regulation  C  under  the
      Securities Act.

            (h) No  consent,  approval,  authorization,  order or  decree of any
      court or governmental  agency or body is required for the  consummation by
      the Company of the  transactions  contemplated by this  Agreement,  except
      such as may be required under the Trust Indenture Act, the Securities Act,
      the Public Utility  Holding  Company Act, or state  securities or Blue Sky
      laws. The Company possesses such material certificates,  authorizations or
      permits issued by the  appropriate  state,  federal or foreign  regulatory
      agencies  or  bodies  necessary  to  conduct  its  business  as  currently
      operated.

            (i) Since the respective  dates as of which  information is given in
      the  Registration  Statement and  Prospectus,  except as otherwise  stated
      therein  or  contemplated  thereby,  there  has been no  material  adverse
      change,  nor any  development  involving a  prospective  material  adverse
      change,  in the  condition,  financial or  otherwise,  or in the earnings,
      business affairs,  business prospects or properties of the Company and its
      subsidiaries,  taken as a whole,  whether or not  arising in the  ordinary
      course of business, and, since such respective dates, there has not been


                                        4


<PAGE>



      any transaction entered into by the Company or its subsidiaries,  which is
      material to the Company and its subsidiaries  taken as a whole, other than
      transactions  in the ordinary  course of business,  except in each case as
      set  forth  in  or  contemplated  in  the  Prospectus  (exclusive  of  any
      supplement thereto).

            (j) The consolidated  financial  statements included or incorporated
      by reference in the  Registration  Statement  and the  Prospectus  present
      fairly the financial  position of the Company and its  subsidiaries  as at
      the dates  indicated and the results of their  operations  for the periods
      specified;  except as otherwise stated in the Registration Statement, such
      financial  statements  have been  prepared in  conformity  with  generally
      accepted  accounting  principles  applied on a consistent  basis;  and the
      supporting   schedules  included  or  incorporated  by  reference  in  the
      Registration  Statement  present  fairly the  information  required  to be
      stated therein.

            (k) The pro forma  financial  statements of the Company  included or
      incorporated by reference in the Registration Statement and the Prospectus
      comply as to form in all material respects with the applicable  accounting
      requirements  of Regulation  S-X and the pro forma  adjustments  have been
      properly  applied to the  historical  amounts in the  compilation  of such
      statements.

            (l) Neither the Company nor any of the  Significant  Subsidiaries is
      in  violation  of  its  Articles  of   Incorporation   or  Certificate  of
      Incorporation,  as the case may be, or in  default in the  performance  or
      observance of any material  obligation,  agreement,  covenant or condition
      contained in any material contract,  indenture,  mortgage, loan agreement,
      note,  lease  or  other  instrument  to which  the  Company  or any of the
      Significant  Subsidiaries  is a party or by which it or any of them may be
      bound,  or to which any of the property or assets of the Company or any of
      the  Significant  Subsidiaries  is subject,  other than as disclosed in or
      contemplated by the Registration  Statement;  and the execution,  delivery
      and  performance of this Agreement and the Indenture and the  consummation
      of the transactions  contemplated  herein have been duly authorized by all
      necessary  corporate  action and will not  conflict  with or  constitute a
      breach of, or default  under,  or result in the creation or  imposition of
      any lien, charge or encumbrance upon any property or assets of the Company
      or any of the Significant Subsidiaries pursuant to, any material contract,
      indenture,  mortgage,  loan agreement,  note, lease or other instrument to
      which the Company or any of the Significant  Subsidiaries is a party or by
      which it or any of them may be bound  (including  without  limitation  the
      Merger Agreement,  dated August 8, 2000 between First Energy Corp. and the
      Company), or to which any of the property or assets of the



                                        5


<PAGE>


      Company or any of the Significant  Subsidiaries is subject,  nor will such
      action  result in any  violation  of the  provisions  of the  Articles  of
      Incorporation   or  by-laws  of  the  Company  or  any   applicable   law,
      administrative  or court decree or, to the  knowledge of the Company,  any
      administrative regulation.

            (m) There is no action, suit or proceeding before or by any court or
      governmental agency or body,  domestic or foreign,  now pending or, to the
      knowledge of the Company,  overtly threatened,  against the Company or any
      of the  Significant  Subsidiaries  that is required to be disclosed in the
      Registration  Statement,  or which, if adversely decided,  would result in
      any material adverse change in the condition,  financial or otherwise,  or
      in the earnings, business affairs, business prospects or properties of the
      Company and its  subsidiaries,  taken as a whole,  or which,  if adversely
      decided,  would  materially and adversely  affect the properties or assets
      thereof or would  materially and adversely affect the consummation of this
      Agreement  other  than  such  actions,  suits  or  proceedings  which  are
      disclosed in or contemplated by the Registration Statement;  and there are
      no contracts or documents of the Company or any of its subsidiaries  which
      are required to be filed as exhibits to the Registration  Statement by the
      Act which have not been so filed.

            (n)  The  Company  and  the  Significant  Subsidiaries  possess  all
      required certificates, authorizations or permits issued by the appropriate
      state,  federal or foreign regulatory agencies or bodies except such as to
      which the failure to possess the same would not  materially  and adversely
      affect the condition,  financial or otherwise,  or the earnings,  business
      affairs,   business  prospects  or  properties  of  the  Company  and  its
      Significant  Subsidiaries,  taken as a whole,  and neither the Company nor
      any of the Significant Subsidiaries has received any notice of proceedings
      relating  to the  revocation  or  modification  of any  such  certificate,
      authority or permit that, singly or in the aggregate, if the subject of an
      unfavorable  decision,  ruling or finding,  would materially and adversely
      affect the condition,  financial or otherwise,  or the earnings,  business
      affairs,   business  prospects  or  properties  of  the  Company  and  its
      subsidiaries, taken as a whole, other than as disclosed in or contemplated
      by the Registration Statement.

      Any certificate  signed by any officer of the Company and delivered to the
Representatives  or counsel for the Underwriters in connection with the offering
of the Securities shall be deemed a representation  and warranty by the Company,
as to matters covered thereby, to each Underwriter.

      2. Purchase and Sale.  Subject to the terms and conditions and in reliance
upon the representations and warranties herein



                                        6


<PAGE>


set forth, the Company agrees to sell to each Underwriter,  and each Underwriter
agrees,  severally and not jointly,  to purchase from the Company, at a purchase
price of 99.211% of the principal  amount thereof,  the principal  amount of the
Securities set forth opposite such Underwriter's name in Schedule I hereto.

      3. Delivery and Payment.  Delivery of and payment for the Securities shall
be made at 10:00 AM, New York City time, on December 6, 2000, or at such time on
such later date not more than three  Business Days after the  foregoing  date as
the  Representatives  shall  designate,  which date and time may be postponed by
agreement between the  Representatives and the Company or as provided in Section
9 hereof  (such date and time of delivery and payment for the  Securities  being
herein called the "Closing  Date").  Delivery of the Securities shall be made to
the  Representatives  for the  respective  accounts of the several  Underwriters
against payment by the several  Underwriters  through the Representatives of the
purchase  price  thereof to or upon the order of the  Company  by wire  transfer
payable in same-day  funds to an account  specified by the Company.  Delivery of
the  Securities  shall be made through the  facilities of The  Depository  Trust
Company unless the Representatives shall otherwise instruct.

      4.  Offering  by   Underwriters.   It  is  understood   that  the  several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.

      5.    Agreements.

            The Company agrees with the several Underwriters that:

            (a) The Company will use its best efforts to cause the  Registration
      Statement,  if not  effective at the  Execution  Time,  and any  amendment
      thereof, to become effective.  Prior to the termination of the offering of
      the   Securities,   the  Company  will  not  file  any  amendment  of  the
      Registration  Statement or supplement to the Prospectus or any Rule 462(b)
      Registration  Statement  unless the Company has  furnished  you a copy for
      your review prior to filing and will not file any such proposed  amendment
      or supplement  to which you  reasonably  object.  Subject to the foregoing
      sentence,  if the Registration  Statement has become or becomes  effective
      pursuant to Rule 430A, or filing of the  Prospectus is otherwise  required
      under  Rule  424(b),  the  Company  will  cause the  Prospectus,  properly
      completed,  and any  supplement  thereto to be filed  with the  Commission
      pursuant to the applicable paragraph of Rule 424(b) within the time period
      prescribed and will provide evidence  satisfactory to the  Representatives
      of  such  timely   filing.   The   Company   will   promptly   advise  the
      Representatives (1) when the Registration  Statement,  if not effective at
      the Execution Time, shall have become effective,  (2) when the Prospectus,
      and any supplement thereto, shall have been filed (if



                                        7


<PAGE>


      required)  with the  Commission  pursuant  to Rule 424(b) or when any Rule
      462(b)  Registration  Statement shall have been filed with the Commission,
      (3) when,  prior to  termination  of the offering of the  Securities,  any
      amendment to the  Registration  Statement  shall have been filed or become
      effective,  (4) of any  request  by the  Commission  or its  staff for any
      amendment of the Registration  Statement,  or any Rule 462(b) Registration
      Statement,  or for any  supplement to the Prospectus or for any additional
      information,  (5) of the  issuance  by the  Commission  of any stop  order
      suspending  the  effectiveness  of  the  Registration   Statement  or  the
      institution or threatening of any proceeding for that purpose,  (6) of any
      order  by  the  Commission  directed  to  the  adequacy  of  any  document
      incorporated  by reference in the  Prospectus or of any challenge  made by
      the  Commission  as to the  adequacy of any such  document  and (7) of the
      receipt by the Company of any notification  with respect to the suspension
      of the qualification of the Securities for sale in any jurisdiction or the
      institution or threatening of any proceeding for such purpose. The Company
      will use its best  efforts to prevent the  issuance of any such stop order
      or the suspension of any such  qualification  and, if issued, to obtain as
      soon as possible the withdrawal thereof.

            (b)  If,  at any  time  when,  in the  opinion  of  counsel  for the
      Underwriters,  a prospectus  relating to the  Securities is required to be
      delivered  under  the Act,  any  event  occurs  as a result  of which  the
      Prospectus as then  supplemented  would, in the reasonable  opinion of the
      Company or of counsel for the  Underwriters,  include any untrue statement
      of a material  fact or omit to state any material  fact  necessary to make
      the statements therein, in the light of the circumstances under which they
      were made, not misleading,  or if it shall be necessary, in the reasonable
      opinion of the  Company or of counsel for the  Underwriters,  to amend the
      Registration Statement or supplement the Prospectus to comply with the Act
      or the  Exchange  Act or the  respective  rules  thereunder,  the  Company
      promptly will (1) notify the  Representatives  of such event,  (2) prepare
      and file with the Commission,  subject to the second sentence of paragraph
      (a) of this Section 5, an amendment or supplement  which will correct such
      statement  or  omission  or effect  such  compliance,  and (3)  supply any
      supplemented  Prospectus  to the  Underwriters  in such  quantities as the
      Representatives may reasonably request.

            (c)  As  soon  as  practicable,  the  Company  will  make  generally
      available to its security  holders and to the  Representatives  an earning
      statement or  statements  of the Company and its  subsidiaries  which will
      satisfy the  provisions of Section 11(a) of the Act and Rule 158 under the
      Act.





                                        8


<PAGE>


            (d) The Company will furnish to the  Representatives and counsel for
      the  Underwriters,  without  charge,  signed  copies  of the  Registration
      Statement  (including  exhibits  thereto) and to each other  Underwriter a
      copy of the Registration Statement (without exhibits thereto) and, so long
      as  delivery  of a  prospectus  by an  Underwriter  or dealer  may, in the
      opinion of counsel for any of the Underwriters, be required by the Act, as
      many copies of each  Preliminary  Prospectus  and the  Prospectus  and any
      supplement thereto as the  Representatives  may reasonably  request.  With
      respect to any  delivery of  documents  occurring no more than nine months
      after the first date of public  offering  of the  Securities,  the Company
      will pay the  expenses of printing or other  production  of all  documents
      relating to the offering. Should the delivery of prospectuses with respect
      to any of the Securities be required more than nine months after the first
      date of public  offering  of the  Securities,  the  Underwriter  or dealer
      requesting such prospectuses will pay the reasonable  expenses of printing
      or other production of such prospectuses.

            (e) The Company will arrange, if necessary, for the qualification of
      the  Securities  for  sale  under  the laws of such  jurisdictions  as the
      Representatives may designate, will maintain such qualifications in effect
      so long as required for the  distribution  of the  Securities and will pay
      any fee of the  National  Association  of  Securities  Dealers,  Inc.,  in
      connection  with its  review of the  offering;  provided  that in no event
      shall  the  Company  be  obligated  to  qualify  to  do  business  in  any
      jurisdiction  where it is not now so  qualified or to take any action that
      would subject it to service of process in suits,  other than those arising
      out of the offering or sale of the Securities in any jurisdiction where it
      is not now so subject.

            (f) The  Company  will not,  without  the prior  written  consent of
      Salomon Smith Barney Inc.,  publicly issue, offer, sell, contract to sell,
      pledge,  or otherwise  dispose of, (or enter into any transaction which is
      designed to, or might reasonably be expected to, result in the disposition
      by the Company or any  affiliate of the Company)  directly or  indirectly,
      any long-term debt  securities  issued or guaranteed by the Company (other
      than the Securities) or publicly  announce an intention to effect any such
      transaction,  for a period of 60 days  after the date of the  Underwriting
      Agreement.

            (g) The Company will not take,  directly or  indirectly,  any action
      designed to or which has constituted or which might reasonably be expected
      to cause or result, under the Exchange Act or otherwise,  in stabilization
      or  manipulation of the price of any security of the Company to facilitate
      the sale or resale of any of the Securities.




                                        9


<PAGE>


            (h) The Company  will pay all expenses  and taxes  (except  transfer
      taxes) in  connection  with (1) the  preparation  and  filing by it of the
      Registration  Statement and all amendments  thereto,  (2) the issuance and
      delivery of the Securities,  (3) the qualification of the Securities under
      blue-sky  laws  (including  expenses of counsel  and  counsel  fees not to
      exceed $7,500),  and (4) the printing and delivery to the  Underwriters of
      reasonable  quantities  of  the  Registration  Statement  and,  except  as
      provided in Section 5(d) hereof, of the Prospectus. The Company shall not,
      however,   be  required  to  pay  any  amount  for  any  expenses  of  the
      Underwriters, except as otherwise provided in Section 7. The Company shall
      not in any event be liable to the  Underwriters  for damages on account of
      loss of anticipated profits.

      6. Conditions to the Obligations of the  Underwriters.  The obligations of
the  Underwriters to purchase the Securities shall be subject to the accuracy of
the  representations  and warranties on the part of the Company contained herein
as of the Execution Time and the Closing Date, to the accuracy of the statements
of the Company made in any certificates  pursuant to the provisions  hereof,  to
the performance by the Company of its obligations hereunder and to the following
additional conditions:

            (a) If the Registration  Statement has not become effective prior to
   the Execution Time,  unless the  Representatives  agree in writing to a later
   time, the  Registration  Statement  will become  effective not later than (1)
   6:00 PM New York  City  time,  on the  date of  determination  of the  public
   offering  price,  if such  determination  occurred at or prior to 3:00 PM New
   York City time on such date or (2) 10:00 AM on the Business Day following the
   day on which the public offering price was determined,  if such determination
   occurred  after  3:00 PM New York  City time on such  date;  if filing of the
   Prospectus,  or any supplement  thereto, is required pursuant to Rule 424(b),
   the  Prospectus,  and any such  supplement,  will be filed in the  manner and
   within the time period required by Rule 424(b);  and no stop order suspending
   the effectiveness of the Registration Statement shall have been issued and no
   proceedings for that purpose shall have been instituted or threatened.

            (b) The Company shall have requested and caused Thelen Reid & Priest
   LLP, counsel for the Company, to have furnished to the Representatives  their
   opinion, dated the Closing Date and addressed to the Representatives,  to the
   effect that:

                  (1) the  Company  has been duly  incorporated  and is  validly
            existing  as a  corporation  in  good  standing  under  the  laws of
            Pennsylvania,  with full  corporate  power and  authority  to own or
            lease, as the case may be, and to operate its properties and conduct
            its business as described in the Prospectus, and is duly



                                       10


<PAGE>


            qualified  to do  business as a foreign  corporation  and is in good
            standing  under the laws of each  jurisdiction  which  requires such
            qualification, except where the failure to be so qualified would not
            have a  material  adverse  effect  on the  condition,  financial  or
            otherwise, or the earnings,  business affairs, business prospects or
            properties  of the Company and its  subsidiaries,  taken as a whole;
            the  Company has full  corporate  power and  authority  to issue and
            perform its obligations under the Securities;

                  (2) the  Securities  conform in all  material  respects to the
            description thereof contained in the Prospectus;

                  (3) the  Indenture  has been  duly  authorized,  executed  and
            delivered,  has been duly qualified  under the Trust  Indenture Act,
            and constitutes a legal,  valid and binding  instrument  enforceable
            against the Company in  accordance  with its terms  (subject,  as to
            enforcement of remedies, to applicable  bankruptcy,  reorganization,
            insolvency,   moratorium,   fraudulent   conveyance  or  other  laws
            affecting  creditors'  rights  generally from time to time in effect
            and to general principles of equity, including,  without limitation,
            concepts  of  materiality,   reasonableness,  good  faith  and  fair
            dealing,  regardless of whether considered in a proceeding in equity
            or at law); and the Securities  have been duly  authorized and, when
            executed and  authenticated in accordance with the provisions of the
            Indenture and delivered to and paid for by the Underwriters pursuant
            to  this  Agreement,   will  constitute  legal,  valid  and  binding
            obligations  of  the  Company   entitled  to  the  benefits  of  the
            Indenture;

                  (4) to the knowledge of such  counsel,  there is no pending or
            threatened  action,  suit or  proceeding  by or before  any court or
            governmental  agency,  authority or body or any arbitrator involving
            the Company or any of its subsidiaries or its or their property of a
            character  required to be  disclosed in the  Registration  Statement
            which is not adequately disclosed in the Prospectus, and there is no
            franchise,  contract or other document of a character required to be
            described  in the  Registration  Statement or  Prospectus,  or to be
            filed as an  exhibit  thereto,  which is not  described  or filed as
            required;

                  (5) the Registration  Statement has become effective under the
            Act;  any required  filing of the  Prospectus,  and any  supplements
            thereto,  pursuant  to Rule  424(b)  has been made in the manner and
            within the time period required by Rule 424(b);  to the knowledge of
            such counsel, no stop order suspending the



                                       11


<PAGE>


            effectiveness  of the  Registration  Statement  has been issued,  no
            proceedings  for that purpose have been instituted or threatened and
            the Registration Statement, at the time it became effective, and the
            Prospectus,  at the time first filed with the commission pursuant to
            Rule 424(b) under the Act (other than (i) the  financial  statements
            and  other  financial  and  statistical   information  contained  or
            incorporated   by   reference   therein,   (ii)  the  parts  of  the
            Registration  Statement that constitute statements of eligibility of
            the  Trustee  and  (iii)  the  information   concerning  FirstEnergy
            contained   or   incorporated   by  reference  in  the  Joint  Proxy
            Statement/Prospectus,  as to which  such  counsel  need  express  no
            opinion)  complied  as to form in all  material  respects  with  the
            applicable  requirements  of the Act, the Exchange Act and the Trust
            Indenture Act and the respective rules thereunder;

            (6) this Agreement has been duly authorized, executed and delivered
             by the Company;

                  (7)  the  Company  is not  and,  after  giving  effect  to the
            offering  and  sale of the  Securities  and the  application  of the
            proceeds  thereof as  described  in the  Prospectus,  will not be an
            "investment  company"  as defined in the  Investment  Company Act of
            1940, as amended;

                  (8) no consent, approval, authorization,  filing with or order
            of  any  court  or  governmental  agency  or  body  is  required  in
            connection with the transactions contemplated herein, except such as
            have been  obtained or made under the Act, the Trust  Indenture  Act
            and the  Public  Utility  Holding  Company  Act  and  such as may be
            required under the blue sky laws of any  jurisdiction  in connection
            with  the  purchase  and  distribution  of  the  Securities  by  the
            Underwriters in the manner contemplated in this Agreement and in the
            Prospectus;  the  consents,  approvals,  authorizations,  filings or
            orders  which have been  obtained or made are adequate to permit the
            execution  and delivery of this  Agreement and the Indenture and the
            issuance  and  sale  of  the  Securities  in  accordance  with  this
            Agreement;

                  (9) neither the execution and delivery of the  Indenture,  the
            issue and sale of the Securities,  nor the consummation of any other
            of the transactions  herein  contemplated nor the fulfillment of the
            terms hereof will conflict with,  result in a breach or violation of
            or imposition of any lien,  charge or encumbrance  upon any property
            or assets of the Company  pursuant to, (i) the charter or by-laws of
            the  Company,  (ii) the  terms of any  indenture,  contract,  lease,
            mortgage, deed of trust, note agreement, loan agreement



                                       12


<PAGE>


            or other agreement,  obligation,  condition,  covenant or instrument
            known to such counsel to which the Company is a party or bound or to
            which  its  property  is  subject,  other  than any such  conflicts,
            breaches,  violations or  impositions  which would not result in any
            material adverse change in the condition, financial or otherwise, or
            in the earnings,  business affairs, business prospects or properties
            of the Company or (iii) any statute,  law, rule, or  regulation,  or
            any judgment,  order or decree known to such counsel,  applicable to
            the Company of any court,  regulatory body,  administrative  agency,
            governmental body, arbitrator or other authority having jurisdiction
            over the Company or any of its properties.

      In  addition,  such  counsel  shall state that it has no reason to believe
      that, on the Effective  Date,  the  Registration  Statement  contained any
      untrue  statement of a material fact or omitted to state any material fact
      required to be stated therein or necessary to make the statements  therein
      not misleading or that the  Prospectus,  as of its date and on the Closing
      Date,  included or includes  any untrue  statement  of a material  fact or
      omitted or omits to state a material fact necessary to make the statements
      therein, in the light of the circumstances under which they were made, not
      misleading  (in each case,  other than (i) the  financial  statements  and
      other financial and statistical  information  contained therein,  (ii) the
      parts  of  the  Registration   Statement  that  constitute  statements  of
      eligibility of the Trustee,  (iii) the information  concerning FirstEnergy
      contained   or    incorporated   by   reference   in   the   Joint   Proxy
      Statement/Prospectus,  and (iv) the  information  concerning DTC and DTC's
      book-entry system included under the subheading  "Book-Entry Only Issuance
      - The Depository Trust Company",  as to which such counsel need express no
      view or belief);

      In  rendering  such  opinion,  such  counsel  may rely  (i) as to  matters
      involving the application of laws of any jurisdiction other than the State
      of New York or the Federal laws of the United  States,  to the extent they
      deem  proper and  specified  in such  opinion,  upon the  opinion of other
      counsel of good  standing  whom they  believe to be  reliable  and who are
      satisfactory  to counsel  for the  Underwriters  and (ii) as to matters of
      fact,  to the extent they deem  proper,  on  certificates  of  responsible
      officers of the Company and public officials. References to the Prospectus
      in this paragraph (b) include any supplements thereto at the Closing Date.

            (c) The Representatives shall have received from Winthrop,  Stimson,
   Putnam & Roberts,  counsel for the  Underwriters,  such  opinion or opinions,
   dated the Closing Date and addressed to the Representatives,  with respect to
   the



                                       13


<PAGE>


   issuance  and  sale  of  the  Securities,  the  Indenture,  the  Registration
   Statement,  the Prospectus  (together with any supplement  thereto) and other
   related  matters  as the  Representatives  may  reasonably  require,  and the
   Company shall have  furnished to such counsel such  documents as they request
   for the purpose of enabling them to pass upon such matters.

            (d) The  Company  shall  have  furnished  to the  Representatives  a
   certificate of the Company,  signed by the President,  or a Vice-President of
   the Company, dated the Closing Date, to the effect that:

                  (1) the  representations and warranties of the Company in this
            Agreement are true and correct in all material respects on and as of
            the Closing Date with the same effect as if made on the Closing Date
            and the Company has complied with all the  agreements  and satisfied
            all the  conditions  on its part to be  performed or satisfied at or
            prior to the Closing Date; and

                  (2)  no  stop  order  suspending  the   effectiveness  of  the
            Registration  Statement has been issued and no proceedings  for that
            purpose  have  been  instituted  or,  to  the  Company's  knowledge,
            threatened;  and no order  directed to the  adequacy of any document
            incorporated  by reference in the  Prospectus has been issued by the
            Commission,  and no challenge by the Commission has been made to the
            adequacy of any such documents.

            (e) The Company shall have requested and caused to have furnished to
   the  Representatives,  at the  Closing  Date,  a  letter  of the  Independent
   Accountants, dated as of the Closing Date, in form and substance satisfactory
   to the  Representatives,  confirming  (through a specified date not more than
   five days prior to the Closing  Date) that they are  independent  accountants
   within  the  meaning  of the Act and the  Exchange  Act and  that  they  have
   performed a review of the  unaudited  interim  financial  information  of the
   Company  for the  three-month  period  ended  March 31,  2000,  the three and
   six-month  periods ended June 30, 2000 and the three and  nine-month  periods
   ended  September  30,  3000 and as at December 1, 2000,  in  accordance  with
   Statement on Auditing Standards No. 71, and stating in effect that:

                  (1) in their  opinion the  audited  financial  statements  and
            financial  statement schedules included or incorporated by reference
            in the Registration  Statement and the Prospectus and reported on by
            them comply as to form in all material  respects with the applicable
            accounting requirements of the Act and the Exchange Act;





                                       14


<PAGE>


                  (2)  on  the  basis  of a  reading  of  the  latest  unaudited
            consolidated  financial  statements  made  available by the Company;
            their limited review, in accordance with standards established under
            Statement on Auditing  Standards  No. 71, of the  unaudited  interim
            financial  information  for the  three-month  period ended March 31,
            2000,  the three and  six-month  periods ended June 30, 2000 and the
            three and  nine-month  periods  ended  September  30, 3000 and as at
            December 1, 2000; carrying out certain specified procedures (but not
            an  examination  in  accordance  with  generally  accepted  auditing
            standards)   which   would  not   necessarily   reveal   matters  of
            significance  with respect to the comments set forth in such letter;
            a reading of the minutes of the  meetings of the  stockholders,  the
            Boards of  Directors  and the  Executive  Committee of the Boards of
            Directors  of the Company and its  subsidiaries  as set forth in the
            respective  minute books since December 31; and inquiries of certain
            officials of the Company who have  responsibility  for financial and
            accounting  matters  of  the  Company  and  its  subsidiaries  as to
            transactions  and events  subsequent to September 30, 2000,  nothing
            came to their attention which caused them to believe that:

                        (a)  any  unaudited  financial  statements  included  or
                  incorporated  by reference in the  Registration  Statement and
                  the  Prospectus  do not  comply  as to  form  in all  material
                  respects with  applicable  accounting  requirements of the Act
                  and the  Exchange  Act with  respect to  financial  statements
                  included or incorporated by reference in quarterly  reports on
                  Form 10-Q; or that said unaudited financial statements are not
                  in conformity with generally  accepted  accounting  principles
                  applied on a basis  substantially  consistent with that of the
                  audited  financial  statements  included  or  incorporated  by
                  reference in the Registration Statement and the Prospectus;

                        (b) with respect to the period  subsequent  to September
                  30, 2000, there were any changes, at a specified date not more
                  than  five  days  prior  to the  date  of the  letter,  in the
                  consolidated  common stock,  preferred stock without mandatory
                  redemption,  preferred  stock  with  mandatory  redemption  or
                  long-term  debt  (except  for such  stock and  long-term  debt
                  acquired  for sinking  fund  purposes or redeemed  pursuant to
                  sinking  fund  provisions,  or  changes in  obligations  under
                  capital leases incurred in the ordinary course of the business
                  of the Company and its  subsidiaries),  of the Company and its
                  subsidiaries,  or any  decrease  in  consolidated  net  assets
                  (except as



                                       15


<PAGE>


                  occasioned by the  declaration of dividends),  in each case as
                  compared  with the amounts  shown on the  September  30, 2000,
                  consolidated   balance  sheet  included  or   incorporated  by
                  reference in the Registration Statement and the Prospectus, or
                  for the period  from  October 1, 2000 to such  specified  date
                  there were any decreases,  as compared with the  corresponding
                  period in the preceding year, in consolidated  revenues or net
                  income,  except in all  instances for changes or decreases set
                  forth in such  letter,  in  which  case  the  letter  shall be
                  accompanied  by an  explanation  by  the  Company  as  to  the
                  significance  thereof  unless said  explanation  is not deemed
                  necessary by the Representatives;

                        (c)  the   information   included  or   incorporated  by
                  reference in the  Registration  Statement  and  Prospectus  in
                  response  to  Regulation  S-K,  Item 301  (Selected  Financial
                  Data), Item 302 (Supplementary Financial Information) and Item
                  503(d)  (Ratio  of  Earnings  to  Fixed  Charges)  is  not  in
                  conformity  with the  applicable  disclosure  requirements  of
                  Regulation S-K; and

                  (3) they have performed certain other specified  procedures as
            a result of which they  determined  that certain  information  of an
            accounting,  financial or  statistical  nature  (which is limited to
            accounting,  financial or statistical  information  derived from the
            general  accounting  records of the  Company  and its  subsidiaries)
            included or incorporated by reference in the Registration  Statement
            and the Prospectus and in Exhibit 12 to the Registration  Statement,
            including the information  included in the "Management's  Discussion
            and  Analysis of  Financial  Condition  and  Results of  Operations"
            included or incorporated by reference in the Company's Annual Report
            on Form 10-K for 1999 and subsequent Quarterly Reports on Form 10-Q,
            incorporated  by reference  in the  Registration  Statement  and the
            Prospectus,  agrees with the  accounting  records of the Company and
            its subsidiaries,  excluding any questions of legal interpretation ;
            and

                  (4) on the  basis of a  reading  of the  unaudited  pro  forma
            financial  statements  of the Company  included or  incorporated  by
            reference in the Registration Statement and the Prospectus (the "pro
            forma  financial   statements");   carrying  out  certain  specified
            procedures;  inquiries of certain  officials of the Company who have
            responsibility for financial and accounting matters; and proving the
            arithmetic  accuracy of the application of the pro forma adjustments
            to the  historical  amounts in the pro forma  financial  statements,
            nothing came to their attention which



                                       16


<PAGE>


            caused them to believe that the pro forma  financial  statements  do
            not comply as to form in all material  respects with the  applicable
            accounting  requirements of Rule 11-02 of Regulation S-X or that the
            pro  forma  adjustments  have  not  been  properly  applied  to  the
            historical amounts in the compilation of such statements.

            References  to the  Prospectus  in this  paragraph  (e)  include any
      supplement thereto at the date of the letter.

            (f) Subsequent to the Execution Time or, if earlier, the dates as of
   which  information is given in the Registration  Statement  (exclusive of any
   amendment thereof) and the Prospectus  (exclusive of any supplement thereto),
   there  shall  not have  been  any  change,  or any  development  involving  a
   prospective  change,  in or affecting the condition,  financial or otherwise,
   earnings,  business affairs,  business prospects or properties of the Company
   and  its  subsidiaries,  taken  as a  whole,  whether  or  not  arising  from
   transactions  in the ordinary  course of business,  except as set forth in or
   contemplated  in the Prospectus  (exclusive of any supplement  thereto),  the
   effect of which, in any case, is, in the judgment of the Representatives,  so
   material and adverse as to make it  impractical  to proceed with the offering
   or delivery of the Securities as contemplated by the  Registration  Statement
   (exclusive of any  amendment  thereof) and the  Prospectus  (exclusive of any
   supplement thereto).

            (g) Subsequent to the Execution Time,  there shall not have been any
   decrease  in  the  rating  of any of the  Company's  debt  securities  by any
   "nationally  recognized  statistical  rating  organization"  (as  defined for
   purposes of Rule 436(g) under the Act) or any notice given of any intended or
   potential  decrease  in any such  rating or of a possible  change in any such
   rating that does not indicate the direction of the possible change.

            (h) Prior to the Closing Date,  the Company shall have  furnished to
   the Representatives such further  information,  certificates and documents as
   the Representatives may reasonably request.

            If any of the conditions  specified in this Section 6 shall not have
been fulfilled in all material  respects when and as provided in this Agreement,
or if any of the opinions and certificates  mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably  satisfactory in form
and  substance to the  Representatives  and counsel for the  Underwriters,  this
Agreement and all obligations of the Underwriters  hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of such
cancellation  shall  be given to the  Company  in  writing  or by  telephone  or
facsimile confirmed in writing.



                                       17


<PAGE>


            The  documents  required to be  delivered by this Section 6 shall be
delivered at the office of Thelen Reid & Priest LLP, counsel for the Company, at
40 West 57th Street, New York, NY 10019, on the Closing Date.

      7. Reimbursement of Underwriters'  Expenses. If the sale of the Securities
provided for herein is not consummated  because any condition to the obligations
of the Underwriters  set forth in Section 6 hereof is not satisfied,  because of
any  termination  pursuant  to  Section  10 hereof or  because  of any  refusal,
inability or failure on the part of the Company to perform any agreement  herein
or comply with any provision  hereof other than by reason of a default by any of
the Underwriters,  the Company will reimburse the Underwriters severally through
Salomon  Smith  Barney  on  demand  for all  reasonable  out-of-pocket  expenses
(including the reasonable  fees and  disbursements  of their counsel) that shall
have been  incurred by them in  connection  with this  Agreement or the offering
contemplated hereunder.

      8.  Indemnification and Contribution.  (a) The Company agrees to indemnify
   and hold harmless each Underwriter,  the directors,  officers,  employees and
   agents of each  Underwriter  and each  person who  controls  any  Underwriter
   within the meaning of either the Act or the  Exchange Act against any and all
   losses,  claims,  damages or liabilities,  joint or several, to which they or
   any of them may  become  subject  under the Act,  the  Exchange  Act or other
   Federal or state  statutory  law or  regulation,  at common law or otherwise,
   insofar as such losses, claims, damages or liabilities (or actions in respect
   thereof)  arise out of or are based  upon any  untrue  statement  or  alleged
   untrue statement of a material fact contained in the  registration  statement
   for  the  registration  of  the  Securities  as  originally  filed  or in any
   amendment thereof, or in any Preliminary Prospectus or the Prospectus,  or in
   any  amendment  thereof or supplement  thereto,  or arise out of or are based
   upon the  omission  or alleged  omission  to state  therein a  material  fact
   required to be stated therein or necessary to make the statements therein not
   misleading, and agrees to reimburse each such indemnified party, as incurred,
   for any legal or other  expenses  reasonably  incurred by them in  connection
   with  investigating or defending any such loss, claim,  damage,  liability or
   action;  provided,  however,  that the Company will not be liable in any such
   case to the extent that any such loss, claim,  damage or liability arises out
   of or is based upon any such untrue  statement or alleged untrue statement or
   omission or alleged  omission made therein in reliance upon and in conformity
   with  written  information  furnished  to the  Company by or on behalf of any
   Underwriter through the  Representatives  specifically for inclusion therein;
   provided,  however, that such indemnity with respect to the Prospectus or any
   Preliminary Prospectus shall not inure to the benefit of any Underwriter from
   whom the person asserting any such loss, liability,  claim, damage or expense
   purchased the Securities concerned, to the extent that it



                                       18


<PAGE>


   shall have been determined by a court of competent  jurisdiction by final and
   nonappealable  judgment that (w) the Company  furnished to such  Underwriter,
   prior  to the  written  confirmation  of the sale of the  Securities  to such
   purchasing  person,  copies  of such  Prospectus  or  Preliminary  Prospectus
   (including,  in each case, any amendment or supplement thereto), (x) delivery
   of such  Prospectus or Preliminary  Prospectus was required by the Securities
   Act to be made to such  person,  (y) the untrue  statement  or  omission of a
   material fact  contained in such  Prospectus or  Preliminary  Prospectus  was
   corrected in an amendment or  supplement to such  Prospectus  or  Preliminary
   Prospectus,  and (z) there was not sent or given to such person,  at or prior
   to the written  confirmation of the sale of the Securities to such person,  a
   copy of such  Prospectus  or  Preliminary  Prospectus,  as  then  amended  or
   supplemented  (excluding any documents  incorporated  by reference  therein).
   This  indemnity  agreement  will be in  addition to any  liability  which the
   Company may otherwise have.

            (b) Each  Underwriter  severally and not jointly agrees to indemnify
   and hold harmless the Company,  each of its  directors,  each of its officers
   who signs the  Registration  Statement,  and each  person  who  controls  the
   Company within the meaning of either the Act or the Exchange Act, to the same
   extent as the foregoing  indemnity from the Company to each Underwriter,  but
   only with  reference  to written  information  relating  to such  Underwriter
   furnished  to the  Company by or on behalf of such  Underwriter  through  the
   Representatives  specifically  for inclusion in the documents  referred to in
   the foregoing indemnity.  This indemnity agreement will be in addition to any
   liability which any Underwriter may otherwise have. The Company  acknowledges
   that the  statements  set  forth  in the last  paragraph  of the  cover  page
   regarding  delivery of the Securities and, under the heading  "Underwriting",
   (1) the list of Underwriters and their  respective  participation in the sale
   of the Securities,  (2) the sentences related to concessions and reallowances
   and  (3)  the  paragraphs   related  to  stabilization,   syndicate  covering
   transactions  and  penalty  bids  in  any  Preliminary   Prospectus  and  the
   Prospectus  constitute  the only  information  furnished  in writing by or on
   behalf  of  the  several   Underwriters  for  inclusion  in  any  Preliminary
   Prospectus or the Prospectus.

            (c)  Promptly  after  receipt  by an  indemnified  party  under this
   Section 8 of notice of the commencement of any action, such indemnified party
   will,  if a claim in respect  thereof is to be made against the  indemnifying
   party under this Section 8, notify the  indemnifying  party in writing of the
   commencement  thereof;  but the failure so to notify the  indemnifying  party
   will not, in any event,  relieve the indemnifying  party from any obligations
   to any indemnified party other than the  indemnification  obligation provided
   in paragraph (a) or (b) above. In case any such action shall be



                                       19


<PAGE>


   brought  against any indemnified  party and it shall notify the  indemnifying
   party of the commencement  thereof,  the indemnifying party shall be entitled
   to  participate  therein  and, to the extent it shall wish,  jointly with any
   other indemnifying party similarly  notified,  to assume the defense thereof,
   with counsel satisfactory to such indemnified party (which counsel shall not,
   except  with  the  consent  of  the  indemnified  party,  be  counsel  to the
   indemnifying  party),  and, after notice from the indemnifying  party to such
   indemnified  party of its  election  so to assume the  defense  thereof,  the
   indemnifying  party  shall  not,  except as set forth  below,  thereafter  be
   responsible  for any  subsequently  incurred  fees and  expenses  (other than
   reasonable  costs of  investigation)  of any separate counsel retained by the
   indemnified  party or  parties).  Notwithstanding  the  indemnifying  party's
   election to assume the defense in an action, the indemnified party shall have
   the right to employ  separate  counsel  (including  local  counsel),  and the
   indemnifying party shall bear the reasonable fees, costs and expenses of such
   separate counsel if (1) the use of counsel chosen by the  indemnifying  party
   to represent the indemnified party would present such counsel with a conflict
   of interest,  (2) the actual or potential  defendants  in, or targets of, any
   such action include both the indemnified party and the indemnifying party and
   the indemnified party shall have reasonably concluded that there may be legal
   defenses available to it and/or other indemnified parties which are different
   from or  additional to those  available to the  indemnifying  party,  (3) the
   indemnifying  party  shall  not have  employed  counsel  satisfactory  to the
   indemnified party to represent the indemnified party within a reasonable time
   after notice of the institution of such action or (4) the indemnifying  party
   shall  authorize  the  indemnified  party to employ  separate  counsel at the
   expense of the indemnifying party. In no event shall the indemnifying parties
   be liable for the fees and  expenses of more than one counsel  separate  from
   their own  counsel for all  indemnified  parties in  connection  with any one
   action or separate  but similar or related  actions in the same  jurisdiction
   arising out of the same general allegations or circumstances. An indemnifying
   party will not, without the prior written consent of the indemnified parties,
   settle or  compromise or consent to the entry of any judgment with respect to
   any pending or  threatened  claim,  action,  suit or proceeding in respect of
   which indemnification or contribution may be sought hereunder (whether or not
   the  indemnified  parties  are actual or  potential  parties to such claim or
   action)  unless  such  settlement,  compromise  or consent  (i)  includes  an
   unconditional  release of each indemnified  party from all liability  arising
   out of such claim,  action,  suit or  proceeding  and (ii) does not include a
   statement as to, or an admission of, fault,  culpability or a failure to act,
   by or on behalf of any indemnified party.





                                       20


<PAGE>


            (d) In the event that the indemnity provided in paragraph (a) or (b)
   of this Section 8 is held to be unenforceable to hold harmless an indemnified
   party for any reason,  the Company and the  Underwriters  severally  agree to
   contribute  to  the  aggregate  losses,   claims,   damages  and  liabilities
   (including  legal or other expenses  reasonably  incurred in connection  with
   investigating or defending same) (collectively "Losses") to which the Company
   and one or more of the  Underwriters  may be subject in such proportion as is
   appropriate to reflect the relative  benefits  received by the Company on the
   one hand and by the  Underwriters  on the  other  from  the  offering  of the
   Securities.  If the allocation provided by the immediately preceding sentence
   is unavailable  for any reason,  the Company and the  Underwriters  severally
   shall  contribute in such  proportion as is  appropriate  to reflect not only
   such relative  benefits but also the relative fault of the Company on the one
   hand and of the  Underwriters  on the other in connection with the statements
   or  omissions  which  resulted in such  Losses as well as any other  relevant
   equitable considerations. Benefits received by the Company shall be deemed to
   be equal to the  total  net  proceeds  from the  offering  (before  deducting
   expenses)  received by it, and benefits received by the Underwriters shall be
   deemed to be equal to the total  underwriting  discounts and commissions,  in
   each case as set forth on the cover page of the  Prospectus.  Relative  fault
   shall be determined  by reference to, among other things,  whether any untrue
   or any alleged untrue statement of a material fact or the omission or alleged
   omission  to state a material  fact  relates to  information  provided by the
   Company on the one hand or the  Underwriters on the other,  the intent of the
   parties and their relative  knowledge,  access to information and opportunity
   to correct or prevent such untrue statement or omission.  The Company and the
   Underwriters  agree that it would not be just and  equitable if  contribution
   were  determined  by pro rata  allocation  or any other method of  allocation
   which  does not take  account of the  equitable  considerations  referred  to
   above. The amount paid or payable by an indemnified  party as a result of the
   Losses  shall be deemed to  include  any legal or other  expenses  reasonably
   incurred  by such  indemnified  party in  connection  with  investigating  or
   defending  any  action  or  claim.  Notwithstanding  the  provisions  of this
   paragraph (d), an Underwriter  shall not be required to contribute any amount
   in excess of the amount by which the total public offering price at which the
   Securities  purchased  by or through it were sold  exceeds  the amount of any
   damages which such  Underwriter  has otherwise been required to pay by reason
   of such untrue or alleged untrue  statement or omission or alleged  omission.
   Notwithstanding  the  provisions of this  paragraph  (d), no person guilty of
   fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
   shall be entitled to contribution  from any person who was not guilty of such
   fraudulent misrepresentation.  The obligations of each Underwriter under this
   paragraph (d) to contribute are several



                                       21


<PAGE>


   in proportion to the respective purchases made by or through it to which such
   Losses relate and are not joint.  For purposes of this Section 8, each person
   who  controls  an  Underwriter  within  the  meaning of either the Act or the
   Exchange Act and each director, officer, employee and agent of an Underwriter
   shall have the same rights to receive  contribution as such Underwriter,  and
   each person who controls the Company  within the meaning of either the Act or
   the  Exchange  Act,  each  officer of the  Company  who shall have signed the
   Registration  Statement  and each director of the Company shall have the same
   rights to receive  contribution  as the Company,  subject in each case to the
   applicable terms and conditions of this paragraph (d).

      9. Default by an Underwriter.  If any one or more Underwriters  shall fail
to purchase  and pay for any of the  Securities  agreed to be  purchased by such
Underwriter  or  Underwriters  hereunder  and such  failure  to  purchase  shall
constitute a default in the performance of its or their  obligations  under this
Agreement,  the remaining  Underwriters shall be obligated  severally to take up
and pay for (in  the  respective  proportions  which  the  principal  amount  of
Securities  as to which the purchase  default has  occurred  set forth  opposite
their  names in Schedule I hereto  bears to the  aggregate  principal  amount of
Securities set forth opposite the names of all the remaining  Underwriters)  the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase;  provided,  however,  that in the event that the  aggregate  principal
amount of Securities which the defaulting Underwriter or Underwriters agreed but
failed  to  purchase  shall  exceed  10% of the  aggregate  principal  amount of
Securities set forth in Schedule I hereto, the remaining Underwriters shall have
the right to purchase  all,  but shall not be under any  obligation  to purchase
any, of the Securities,  and if such nondefaulting  Underwriters do not purchase
all the  Securities,  this  Agreement will  terminate  without  liability to any
nondefaulting  Underwriter  or the  Company.  In the event of a  default  by any
Underwriter  as set forth in this Section 9, the Closing Date shall be postponed
for such period, not exceeding five Business Days, as the Representatives  shall
determine in order that the required changes in the  Registration  Statement and
the  Prospectus  or in any other  documents  or  arrangements  may be  effected.
Nothing contained in this Agreement shall relieve any defaulting  Underwriter of
its  liability,  if any, to the Company and any  nondefaulting  Underwriter  for
damages occasioned by its default hereunder.

      10.  Termination.  This  Agreement  shall be subject to termination in the
absolute discretion of the Representatives, by notice given to the Company prior
to delivery of and payment for the Securities, if at any time prior to such time
(a) trading in any of the Company's  securities shall have been suspended by the
Commission  or any  exchange  or in any  over-the-counter  market or  trading in
securities generally shall have been suspended or



                                       22


<PAGE>


limited or  minimum  prices  shall  have been  established  on any  exchange  or
over-the-counter  market,  (b) a banking  moratorium  shall  have been  declared
either by Federal or New York State authorities or (c) there shall have occurred
any outbreak or escalation of hostilities, declaration by the United States of a
national  emergency  or war, or other  calamity or crisis the effect of which on
financial markets is such as to make it, in the judgment of the Representatives,
impractical  to proceed  with the  offering  or delivery  of the  Securities  as
contemplated by the Prospectus (exclusive of any supplement thereto).

      11. Representations and Indemnities to Survive. The respective agreements,
representations,  warranties, indemnities and other statements of the Company or
its  officers  and of the  Underwriters  set forth in or made  pursuant  to this
Agreement will remain in full force and effect,  regardless of any investigation
made by or on behalf of any  Underwriter  or the Company or any of the officers,
directors,  employees,  agents or controlling  persons  referred to in Section 8
hereof,  and will  survive  delivery  of and  payment  for the  Securities.  The
provisions  of  Sections  7  and 8  hereof  shall  survive  the  termination  or
cancellation of this Agreement.

      12.  Notices.  All  communications  hereunder  will  be in  writing  and
effective  only  on  receipt,  and,  if  sent  to the  Representatives,  will be
telefaxed to the Salomon  Smith  Barney Inc.  General  Counsel  (fax no.:  (212)
816-7912)  and  confirmed  by mail or delivery to the General  Counsel,  Salomon
Smith  Barney  Inc.,  at 388  Greenwich  Street,  New  York,  New  York,  10013,
Attention:  General  Counsel;  or,  if sent  to the  Company,  will  be  mailed,
delivered or telefaxed to GPU,  Inc.,  Attention:  Vice  President and Treasurer
(fax no.: (973)  644-4224),  with a copy thereof to Douglas E.  Davidson,  Esq.,
Thelen Reid & Priest LLP, 40 West 57th Street, New York, New York 10019.

      13. Successors. This Agreement will inure to the benefit of and be binding
upon the  parties  hereto  and their  respective  successors  and the  officers,
directors,  employees,  agents and controlling  persons referred to in Section 8
hereof,  and no other person will have any right or  obligation  hereunder.  The
term  "successor"  as used  herein  shall not  include  any  purchaser,  as such
purchaser, of any of the Securities from any Underwriter.

      14.   Applicable Law. This Agreement will be governed by and construed in
accordance  with the laws of the State of New York  applicable to contracts made
and to be performed within the State of New York.

      15.   Counterparts.   This  Agreement  may  be  signed  in  one  or  more
counterparts,  each of  which  shall  constitute  an  original  and all of which
together shall constitute one and the same agreement.

      16.   Headings. The section headings used herein are for convenience only
and shall not affect the construction hereof.


                                       23


<PAGE>


      17.    Definitions.  The terms which follow,  when used in this Agreement,
shall have the meanings indicated.

            "Act" shall mean the  Securities  Act of 1933,  as amended,  and the
      rules and regulations of the Commission promulgated thereunder.

            "Business Day" shall mean any day other than a Saturday, a Sunday or
      a legal holiday or a day on which banking  institutions or trust companies
      are authorized or obligated by law to close in New York City.

            "Commission" shall mean the Securities and Exchange Commission.

            "Effective Date" shall mean each date and time that the Registration
      Statement, any post-effective amendment or amendments thereto and any Rule
      462(b) Registration Statement became or become effective.

            "Exchange  Act" shall mean the  Securities  Exchange Act of 1934, as
      amended,  and the  rules and  regulations  of the  Commission  promulgated
      thereunder.

            "Execution Time" shall mean the date and time that this Agreement is
      executed and delivered by the parties hereto.

            "Preliminary  Prospectus"  shall  mean  any  preliminary  prospectus
      referred  to in  paragraph  1(a)  above  and  any  preliminary  prospectus
      included in the  Registration  Statement at the Effective  Date that omits
      Rule 430A Information.

            "Prospectus"  shall mean the  prospectus  relating to the Securities
      that is first filed  pursuant to Rule 424(b) after the Execution  Time or,
      if no filing  pursuant to Rule 424(b) is required,  shall mean the form of
      final prospectus  relating to the Securities  included in the Registration
      Statement at the Effective Date.

            "Public  Utility  Holding Company Act" shall mean the Public Utility
      Holding Company Act of 1935, as amended,  and the rules and regulations of
      the Commission promulgated thereunder.

            "Registration  Statement"  shall  mean  the  registration  statement
      referred to in paragraph  1(a) above,  including  exhibits  and  financial
      statements,  as amended at the Execution Time (or, if not effective at the
      Execution  Time, in the form in which it shall become  effective)  and, in
      the  event  any  post-effective  amendment  thereto  or  any  Rule  462(b)
      Registration  Statement becomes effective prior to the Closing Date, shall
      also mean such  registration  statement  as so amended or such Rule 462(b)
      Registration



                                       24


<PAGE>


      Statement,  as the case may be.  Such  term  shall  include  any Rule 430A
      Information  deemed  to be  included  therein  at the  Effective  Date  as
      provided by Rule 430A.

            "Rule 424", "Rule 430A" and "Rule 462" refer to such rules under the
      Act.

            "Rule 430A  Information"  shall mean information with respect to the
      Securities  and the  offering  thereof  permitted  to be omitted  from the
      Registration Statement when it becomes effective pursuant to Rule 430A.

            "Rule  462(b)  Registration  Statement"  shall  mean a  registration
      statement  and any  amendments  thereto  filed  pursuant  to  Rule  462(b)
      relating to the offering covered by the registration statement referred to
      in Section 1(a) hereof.

            "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, as
      amended,  and the  rules and  regulations  of the  Commission  promulgated
      thereunder.



                                       25


<PAGE>



            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 and the several Underwriters.

                                    Very truly yours, GPU, Inc.



                                    By: /s/ T. G. Howson
                                        --------------------------------
                                    Name: T. G. Howson
                                    Title: Vice President and Treasurer





The  foregoing  Agreement is hereby
confirmed  and  accepted  as of the
date first above written.


Salomon Smith Barney Inc.
ABN AMRO Incorporated
Chase Securities Inc.
First Union Securities, Inc.

   By:  Salomon Smith Barney Inc.



   By:  /s/ Scott Sanders
        ----------------------------
   Name:
   Title:


For   themselves   and  the   other
several   Underwriters   named   in
Schedule   I   to   the   foregoing
Agreement.




                                       26


<PAGE>
                                   SCHEDULE I




                                               Principal Amount
                                             of Securities to be
             Underwriters                         Purchased
             ------------                    -------------------

    Salomon Smith Barney Inc.                    $210,000,000
    ABN AMRO Incorporated                          30,000,000
    Chase Securities Inc.                          30,000,000
    First Union Securities, Inc.                   30,000,000
                                               --------------
                Total                            $300,000,000







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