GPU INC /PA/
S-3/A, EX-1, 2000-10-13
ELECTRIC SERVICES
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                                                                    Exhibit 1


                                    GPU, Inc.


                    $------------- % Debentures, Series A due ---------

                    $------------- % Debentures, Series B due ---------

                             Underwriting Agreement

                                                            New York, New York
                                                                          , 2000
Salomon Smith Barney Inc.
As Representative 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  "Representative") are acting as
representative,  $----------- principal amount of its ---% Debentures,  Series A
due ------ (the "Series A Debentures") and $------- principal amount of its ---%
Debentures, Series B due ----- (the "Series B Debentures" and, collectively with
the Series A Debentures, the "Securities"), to be issued under an indenture (the
"Indenture")  to be dated as of  ------------,  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
Representative  as used  herein  shall mean you, as  Underwriter,  and the terms
Representative  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
      statement (file number 333-07895)



<PAGE>


                                                                               2

      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 Representative  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 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



<PAGE>


                                                                               3

      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 Representative
      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)  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").

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

            (f)  Each of  Jersey  Central  Power & Light  Company,  Metropolitan
      Edison Company,  Pennsylvania Electric Company,  [GPU Nuclear,  Inc.,] GPU
      Capital,  Inc. [and] GPU Electric,  Inc.,  [GPU  International,  Inc., GPU
      Power, Inc., GPU Telecom Services, Inc. and Midlands Electricity 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



<PAGE>


                                                                               4

      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.

            (g) 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.

            (h) 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
      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);  the Company and its subsidiaries,  taken as a whole,
      have no  material  contingent  obligation  which  is not set  forth  in or
      contemplated in the Prospectus (exclusive of any supplement thereto).

            (i) 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.



<PAGE>


                                                                               5


            (j) 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 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.

            (k) 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.

            (l)  The  Company  and  the  Significant  Subsidiaries  possess  all
      required certificates, authorizations or permits issued by the appropriate
      state, federal or foreign



<PAGE>


                                                                               6


      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
Representative  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 set forth, the Company agrees to
sell to  each  Underwriter,  and  each  Underwriter  agrees,  severally  and not
jointly, to purchase from the Company,  (a) at a purchase price of -----% of the
principal amount thereof, plus accrued interest,  if any, from ---------,  2000,
to the Closing Date,  the principal  amount of the Series A Debentures set forth
opposite  such  Underwriter's  name in  Schedule  I hereto and (b) at a purchase
price of -----% of the principal amount thereof,  plus accrued interest, if any,
from ----------, 2000, to the Closing Date, the principal amount of the Series B
Debentures 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  -----------,  2000, or at such time
on such later date not more than three Business Days after the foregoing date as
the  Representative  shall  designate,  which date and time may be  postponed by
agreement between the Representative 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  Representative  for the  respective  accounts of the  several  Underwriters
against payment by the several  Underwriters  through the  Representative 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 Representative 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.


<PAGE>


                                                                               7


      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 Representative of
      such timely filing.  The Company will promptly  advise the  Representative
      (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  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



<PAGE>


                                                                               8


      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  Representative  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 Representative may reasonably request.

            (c)  As  soon  as  practicable,  the  Company  will  make  generally
      available to its  security  holders and to the  Representative  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.

            (d) The Company will furnish to the  Representative  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  Representative  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
      Representative 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.


<PAGE>


                                                                               9


            (f) The  Company  will not,  without  the prior  written  consent of
      Salomon  Smith Barney Inc.,  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  (whether by
      actual  disposition  or  effective   economic   disposition  due  to  cash
      settlement or otherwise) by the Company or any affiliate of the Company or
      any person in privity  with the Company or any  affiliate  of the Company)
      directly or  indirectly,  including  the filing (or  participation  in the
      filing) of a registration  statement with the Commission in respect of, or
      establish or increase a put equivalent position or liquidate or decrease a
      call equivalent  position within the meaning of Section 16 of the Exchange
      Act, 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.

            (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  Representative  agrees 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



<PAGE>


                                                                              10


   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 Representative  their
   opinion,  dated the Closing Date and addressed to the Representative,  to the
   effect that:

                  (1) each of the Company and each  Significant  Subsidiary  has
            been duly  incorporated  and is validly existing as a corporation in
            good  standing  under  the laws of the  jurisdiction  in which it is
            chartered or organized,  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
            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



<PAGE>


                                                                              11


            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;  and the statements  included in the Prospectus  under the
            heading  "Description  of Debentures"  fairly  summarize the matters
            therein described;  provided,  however, such counsel need express no
            opinion as to the  information  concerning DTC and DTC's  book-entry
            system included under the subheading "Book-Entry Only Issuance - The
            Depository Trust Company";

                  (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  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 and at the date hereof  (other than (i) the  financial
            statements and other financial 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 and comply 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


<PAGE>


                                                                              12


            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 or its  subsidiaries  pursuant  to, (i) the
            charter  or by-laws of the  Company  or its  subsidiaries,  (ii) the
            terms of any indenture,  contract,  lease, mortgage,  deed of trust,
            note  agreement,  loan  agreement  or other  agreement,  obligation,
            condition, covenant or instrument known to such counsel to which the
            Company or its  subsidiaries  is a party or bound or to which its or
            their 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 and its subsidiaries, taken as a whole or (iii) any statute,
            law, rule, or regulation,  or any judgment, order or decree known to
            such counsel,  applicable to the Company or its  subsidiaries of any
            court,  regulatory body,  administrative agency,  governmental body,
            arbitrator or other authority having  jurisdiction  over the Company
            or its subsidiaries or any of its or their 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



<PAGE>


                                                                              13


      the  circumstances  under which they were made,  not  misleading  (in each
      case,  other  than  (i)  the  financial  statements  and  other  financial
      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 Representative  shall have received from Winthrop,  Stimson,
   Putnam & Roberts,  counsel for the  Underwriters,  such  opinion or opinions,
   dated the Closing Date and addressed to the  Representative,  with respect to
   the issuance and sale of the  Securities,  the  Indenture,  the  Registration
   Statement,  the Prospectus  (together with any supplement  thereto) and other
   related matters as the Representative 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  Representative  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


<PAGE>


                                                                              14


            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  Representative,  at the Execution Time and at the Closing Date, letters,
   dated  respectively  as of the Execution  Time and as of the Closing Date, in
   form and substance satisfactory to the Representative,  confirming (through a
   specified  date not more than five days prior to the  Execution  Date and the
   Closing Date,  respectively) 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 -----
   -month period ended --------,  2000, and as at -------- , 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 [and pro forma financial  statements]
            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;

                  (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 ---- -month  period ended  --------,
            2000 , and as at -------- , 2000, as indicated in their report dated
            --------  , 2000,  incorporated  by  reference  in the  Registration
            Statement  and  the  Prospectus;   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
            --------- , 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



<PAGE>


                                                                              15


                  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 --------,
                  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 occasioned by the  declaration  of  dividends),  in
                  each case as compared  with the amounts shown on the --------,
                  2000,  consolidated  balance sheet included or incorporated by
                  reference in the Registration Statement and the Prospectus, or
                  for the period from  ---------,  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 Representative;

                        (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),  Item
                  402  (Executive   Compensation)  and  Item  503(d)  (Ratio  of
                  Earnings  to  Fixed  Charges)  is not in  conformity  with the
                  applicable disclosure requirements of Regulation S-K; or

                        (d) the  amounts  of  operating  revenues,  net  income,
                  long-term   debt,   preferred   stock,    subsidiary-obligated
                  mandatorily  redeemable preferred securities,  trust preferred
                  securities,  common  equity  and ratios of  earnings  to fixed
                  charges  set forth  under the  heading  "Certain  Consolidated
                  Financial Information" in the Prospectus do not agree with the
                  amounts set forth



<PAGE>


                                                                              16


                  in the  unaudited  financial  statements  for the same periods
                  and, in the case of such amounts which are unaudited, were not
                  determined on a basis  substantially  consistent  with that of
                  the corresponding  amounts in the audited financial statements
                  included or  incorporated  by  reference  in the  Registration
                  Statement and the Prospectus; 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  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 [and FirstEnergy Corp] 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 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 (1) any change or decrease  specified in the letter
   or letters referred to in paragraph (e) of this Section



<PAGE>


                                                                              17


   6 or (2) 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
   referred  to in clause  (1) or (2)  above,  is, in the sole  judgment  of the
   Representative,  so  material  and  adverse  as to  make  it  impractical  or
   inadvisable  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 Representative  such further  information,  certificates and documents as
   the Representative 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  Representative  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 Representative.  Notice of such
cancellation  shall  be given to the  Company  in  writing  or by  telephone  or
facsimile confirmed in writing.

            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



<PAGE>


                                                                              18


(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  Representative  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 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.  This  indemnity
   agreement  will  be in  addition  to any  liability  which  the  Company  may
   otherwise have.


<PAGE>


                                                                              19


            (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
   Representative 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,  the legend in block capital letters on
   page [__]  related to  stabilization,  syndicate  covering  transactions  and
   penalty  bids  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 paragraph 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 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



<PAGE>


                                                                              20


   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.

            (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



<PAGE>


                                                                              21


   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 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 of the series 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 of such series set forth



<PAGE>


                                                                              22


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 of such series
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 Representative 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 Representative,  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 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 sole judgment of the Representative,  impractical or inadvisable
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  Representative,  will be telefaxed to
the Salomon Smith Barney Inc. General Counsel (fax no.: (212) 816-7912) and



<PAGE>


                                                                              23


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.

      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.



<PAGE>


                                                                              24


            "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  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.





<PAGE>

                                                                              25


            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.
By:
     ...........................
     Name:
     Title:
For  itself  and the  other  several  Underwriters  named in  Schedule  I to the
foregoing Agreement.



<PAGE>


                                                                               1

63262147.02


                                   SCHEDULE I



                                 Principal Amount          Principal Amount
                                   of Series A               of Series B
Underwriters                     Debentures to be          Debentures to be
------------                        Purchased                 Purchased
                                    ---------                 ---------
Salomon Smith Barney Inc.        $                         $



      Total $                    $








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